I’ve mentioned time and time again on The Simple Dollar that there is one personal finance book that, in my eyes, stands out above all the others. It certainly changed my perspective on money – I read it just as I was becoming aware that I needed to turn my financial life around and it was truly a life-changing read for me. I wound up writing a ton of commentary and supplementary material about the book, simply because it was so profound to me.

That book is Your Money or Your Life by Joe Dominguez and Vicki Robin.

At the time I read it, it had been in print without significant revision for more than a decade. One of the authors, Joe Dominguez, had passed away in 1997, and in order to maintain his vision, the book simply stayed in print without significant change for many years.

By the time I read the book in 2006, many of the numbers in the book were quite outdated, as were some of the cultural references and specific frugality tips. This didn’t really bother me too much – the value of the book doesn’t come from those things.

This brings us to today. Very recently, the “other” author of Your Money or Your Life, Vicki Robin, issued an updated version of the book, adding an additional author (Monique Tilford) and promising to be “revised and updated for the 21st century.”

Many Simple Dollar readers wrote to me and asked if the new version was significantly different than the old. Does the new one offer some additional insights? Did the new version change the meat of the message?

For the most part, the new version of Your Money or Your Life is unchanged from the previous versions. There are quite a few updated statistics throughout and some of the cultural allusions have been modernized or changed.

However, there are two big exceptions to that rule – one good change and one bad change (in my opinion).

The good change is the revision of the final chapter, which discusses investing. In the old version, Dominguez and Robin prescribed an extremely conservative plan for investing, telling readers to stick to bonds and little else. From my perspective, this advice was the weakest part of the original book. Such an undiversified investment strategy is in itself risky – it’s the equivalent of putting all your eggs in one basket.

This time around, the investment advice still leans towards the conservative, but it actually provides a more well-rounded view of investing, including several pages discussing index funds. The general message is that you should balance your investments, but move primarily into more conservative investments as you approach retirement.

The bad change, though, comes in chapter six, which focuses on tactics for cutting your spending. In the earlier version of the book, this chapter featured a list of 101 specific frugality tips, most of which still worked quite well (though a few were dated). I fully expected that this list would merely be refreshed for the new edition.

Instead, though, this list of tips was entirely cut from the new edition. Replacing it is a twelve page discussion of different areas of frugality. While this discussion is worthwhile, it doesn’t work nearly as well as the specific tips of the earlier version. The specific tips were urgent – given the material that had come before in the book, you were ready to jump up off the couch and get started on this stuff, and those tips were the perfect starter material. The newer material doesn’t have that urgency – it’s a solid discussion of frugality, but it doesn’t make you want to jump up and get started right away.

Don’t get me wrong – the revised version of Your Money or Your Life is at least as good as the older version. The minor revisions (that basically eliminate the “dated” feeling) and the rewritten chapter on investing easily outweigh the unfortunate changes to the frugal living chapter, and the underlying message is still as powerful as it ever has been.

There is still no personal finance book I would recommend before Your Money or Your Life. It’s the best one I’ve read.

Still, I know from my own experience that I was really inspired to try out frugality by the tips given in the sixth chapter – it was really the single thing that got me interested in frugality. I can’t help but wonder if the new version would have inspired me in the same way.

As I’ve mentioned many times before, I’m not afraid of the current economic conditions. I simply don’t buy into the fear that is constantly being touted during most news reports about the economy.

Several readers have followed up with me extensively on this. How can I possibly feel positive about the economy when, over the last year, several banks and investment firms have completely failed, the federal government has tossed at least a trillion dollars to bail out many other companies, unemployment has skyrocketed, and the stock market has fallen on its face?

Here’s the truth: I don’t listen to CNBC or other mainstream sources for my economic and personal finance news. Almost always, those sources try to take the actual facts and try to spin it into a larger story, making it sound as though a bad piece of economic news is “proof” of something disastrous and good pieces are often put up as exceptions to the rule.

Instead, I look at the following:

How are the people around me doing? I know a couple of people who have lost jobs – a number that’s completely in line with the rise in unemployment. Quite a few more are cutting back on their spending, mostly as a way to protect themselves against a potential job loss that they fear.

Most of the people I know, though, aren’t changing a single thing. I know people who are buying cars, shopping for homes, buying consumer goods, and so on.

How does that compare to real numbers? Is this just my own experience, or is it in line with the real numbers out there? Well, the actual unemployment rate changed from 4.9% to 7.2% from December 2006 to December 2007 – a difference of 2.3%. In other words, out of every 100 people I know, two more should be unemployed right now than a year ago – and that’s pretty accurate.

What about consumer spending? Most accounts have consumer spending dropping about 4% during 2008, which makes it appear to be a truly terrible year. However, what’s being left out of that picture is that 2008 had virtually no inflation – almost every other year has at least 3% inflation, which artificially boosts that consumer spending number. In a year with normal inflation, the consumer spending would have appeared unchanged and thus there would be little or no panic about it.

What about stocks? The last eighteen months saw a very rapid drop in stock values – about 40%, depending on what index you use.

However, if you go back and look at the last recession, from mid-2000 to late 2002, we saw almost the same exact percentage drop in the stock market – about 40%.

The big difference between the two was the speed of the drop – but the speed of the poor economic news was much more rapid this time around, too. The typical signs of recession – a popping bubble in an economic sector, rising unemployment numbers, and so on – all lined up very tightly this time around – but the numbers themselves weren’t that unusual.

Even more noteworthy is that since November, the stock market has basically leveled off, with behavior that mirrors what happened in late 2002 and early 2003 at the end of the last recession. In fact, the stock market from 2003 through 2008 looks almost exactly like the stock market from 1996 to 2003. The only differences are the speed of the rise (faster in the earlier one) and the speed of the fall (faster this time around).

Things I’m not seeing I’m a student of the Great Depression. I’ve talked to many people who lived through those years about their experiences and read countless books on the subject.

We are not living through anything that even compares to the Great Depression, and to even imply that we are is simultaneously deeply insulting to those who did live through it as well as woefully ignorant as to what it was like.

There are no block-long lines for soup kitchens. More than 90% of the nation is fully employed – not the 60% or so employment of the 1930s. There is no “dust bowl” – soil and water conservation practices have made such a huge loss of our nation’s bread basket impossible. People aren’t going to lose their money to bank failures – the FDIC has them insured.

What do I read to get my information? I read most of the same media sources that everyone else does. The only difference is I don’t care about much of the commentary. I just ignore it and look at the numbers. What do they really mean? How do they compare to what I see in my own life?

The rest of those articles – the pieces that attempt to paint a frightening picture – are mostly spin. Don’t worry yourself about them.

So, my take is… As far as I can tell, this is a pretty typical recession – perhaps a little stronger than a typical one, but nothing comparable to what happened in the 1930s.

Yes, there are a lot of ominous economic signs out there. But there are very ominous economic signs during every recession – virtually every down turn has bubbles that pop and situations that seem apocalyptic.

What I see, though, is that almost everyone I know is still fully employed. The local food pantry doesn’t have a line out the door. No one is seeing their life savings disappear in bank failures.

That’s the state of the economy as I see it – a strong recession, but nothing we won’t survive.

Ronnie writes in:

I’m curious what your thoughts are on fractional reserve banking. It seems to me that this method of banking is a high risk form of financial management on the part of the banks. The difference (sort of) between Maddoff and FRB seems only different by institution: as long as there is more money coming in it doesn’t matter that a small percentage is going out. This system seems based entirely on debt, which is not ideal for a country, I wouldn’t think.

What Ronnie is really asking about is fractional reserve banking, which is the standard practice of pretty much every bank in the modern world.

What’s fractional reserve banking? It’s easiest to illustrate fractional reserve banking by giving an example.

Let’s say a new bank opens up in town and you’re the first person to open an account there. You deposit $100. Then, another person stops in seeking a loan of $80. The bank gives the person that loan, leaving only $20 in their reserves. Of course, the interest rate they’re paying you on your account is low – say, 2% – and the interest rate they’re charging on the loan is likely higher – say, 6%. At the end of the year, they’ll earn $4.80 in interest on their loan to the customer, and then pay you $2 in interest on your deposit, keeping $2.80 for themselves.

Now, if you were to decide that you wanted your full balance back, the bank would obviously be in trouble. They wouldn’t have the money to give back to you, and thus they’d go bankrupt (and you’d have to rely on FDIC insurance).

What actually happens is that a bank has a lot of depositors. Let’s say 1,000 people all deposit $100 in the account, then the bank lends out $80 to a different group of 1,000 people. This would leave $20,000 in their coffers. Thus, even if 150 of the original depositors came in and asked for their money back, the bank would be completely fine.

Fractional reserve banking simply means that a bank is only required to keep a fraction of their deposits on hand – they’re allowed to lend out the rest to people who want to borrow money.

The benefits Without this system, it would be almost impossible to borrow money for any purpose. Loans would basically only exist between individuals – you wouldn’t be able to just go to a bank to borrow money for a car, a home, or to start a business.

At the same time, the idea of a checking or savings account as we know them would go away. We would have to pay a sharp fee for such services – or else keep all of our money at home.

The risks The biggest risk in such a system is the potential for bank runs. If the bank is making poor decisions with the money they’re lending out (or investing), then people who hold accounts at that bank might get nervous and start demanding their money in droves. If enough people tried to withdraw their money at once, the bank would eventually not have enough to pay the depositors and would go out of business. This happened with the Northern Rock bank in 2007 and with IndyMac and Washington Mutual in 2008 – in both cases, the bank showed signs of holding a lot of bad investments, causing depositors to start clearing out their accounts very quickly, driving the banks out of business.

My take On one level, I do understand Ronnie’s comparison of fractional reserve banking to the Ponzi scheme perpetuated by Bernie Madoff – both of them relied on a continual flow of deposits and both collapse if the deposits stop flowing.

The difference between the two is simple, though: Madoff’s scheme could not earn money without new depositors constantly entering the system. He needed new investors so that he could keep paying old ones – and that meant that it was inevitably going to fail.

This system, though, can work forever provided that a large number of depositors don’t demand all of their money at once. Since the rate of interest the banks pay to checking and savings accounts is lower than the rate of interest the banks charge borrowers, the system also earns money in perpetuity, something that Madoff’s scheme doesn’t do.

In short, I think fractional reserve banking is something of a necessary evil, given the benefits (individuals are able to borrow money, banking services are free and often earn depositors some interest).

If this still concerns you… Some people are still left feeling pretty uncomfortable when they learn about fractional reserve banking. If you’re left feeling this way, keep two things in mind:

Your checking and savings accounts are insured by the FDIC. Currently, that insurance is for up to $250,000 – it’s scheduled to drop back to $100,000 at the end of 2009, but that may change. Make sure your account is insured (if it’s in an American bank, it probably is) and hold on to your bank statements, as those may be the proof you need to get your money if your bank were to fail.

You shouldn’t have all of your eggs in one basket. I would personally feel concerned if my account balances were pushing the FDIC limit. Instead, I would be investing some of that money in real estate, stocks, government bonds, or other things – the money will work much better for you there.

I’ll say this much: this has been the craziest winter of my adult life. Right now, as I look out my window, there’s easily two feet of snow on the ground in the back yard. The temperature hasn’t been above freezing (for more than an afternoon hour or two) for weeks, so there’s been no melting. In fact, the snow’s not even good for making snowmen – and even if it were, it’s usually been too cold to go out there and build one.

Three winters ago, there was no snow on the ground for the entire winter save a week or so. What a difference three years makes.

The Razor’s Edge: Lessons in True Wealth This is one of the best pieces of writing on personal finance I’ve read in a while. I don’t know why – it just clicked with me. (@ get rich slowly)

2008 Federal Tax Brackets Explained An excellent explanation of how tax brackets work with real examples for the upcoming year. If you’re going to try doing your own taxes but don’t know where to start, this is a good place. (@ money smart life)

Huge Tax-Free Investment Returns I’ve been reading through some of Philip Brewer’s older articles when I came across this excellent one. It really does a great job of explaining the philosophy behind stocking up on staples. (@ wisebread)

Tips and Tricks to Eat Healthy on a Budget I’ve been working hard to adopt a better diet this year, so lists of tips like these are really useful to me. (@ carrie and danielle)

I spend a lot of time brainstorming articles for The Simple Dollar. Quite often, I don’t even have an article in mind when I’m trying to come up with an idea. Instead, I just try to look for patterns in my own life – or in things I read. If I see a pattern, I try to dig into that pattern to see why it happens, and I’ll usually come up with something interesting.

Yesterday, in my personal journal, I made a list of the ten happiest times of my life. The moments were a mix of the obvious – the birth of my two children, my wedding day and honeymoon – and surprising – a short three day vacation in Wisconsin with my parents when I was a very self-conscious teenager who really needed to reconnect with mom and dad.

What did all of these moments have in common? The elements of those moments that really made them special were, actually, a lack of obligation within that moment. When my children were born, all I had to worry about was holding a beautiful baby in my arms – the exact moment that stuck out with each of their births was holding the baby while their mother rested and no one else was around. The best moments of the time around my wedding revolved around just being with my wife – my best memories of the honeymoon are stunningly simple ones, like eating lunch at a restaurant next door to our hotel. My childhood memory that I mentioned was one where I was able to feel like a kid again – no real responsibilities other than to spend time with mom and dad – for a few days even as I was beginning to grow up.

Looking back, though, I see that each of those great memories were essentially bubbles created by a lot of hard work around the periphery. My childhood’s memories were created by a lot of hard work by my parents, when they would work their tails off to create some very nice moments for me. In adulthood, those great moments were always led by a lot of hard work earning money – and, quite often, a lot of additional work afterwards.

These were the thoughts dancing in my head as I drifted off to sleep last night, and when I woke up this morning, I realized a few things.

For me, money is merely a tool for me to live the life I want to lead. Right now, in most ways, I have the elements of my life that I want: a wonderful, loving wife who both supports and challenges me, two children who are as unique as snowflakes and teach me at least as much as I teach them, a pile of good books, a nice home, a selection of close friends that really matter to me. Those are the things that really matter in my life – but they all cost resources to support. I have to pay for the house. I have to feed the family. Money enables me to acquire these things, and I earn that money in exchange for my work.

At the same time, I work hard to earn the money to enable that life. By work, I don’t just mean my active employment – I also mean my frugal choices as well. I write, even if I don’t feel like it. I manage our money carefully. I choose activities in my downtime that don’t cost a lot of money. With every little choice I make, I effectively earn more money.

The money I earn makes my life more secure. Over the last few years, I’ve slowly been able to eliminate debt and build up something of a safety net for my life. For the first time in many years, I don’t feel like I’m walking a tightrope, and now I’m working towards other things – securing a great childhood for my kids, planning for a great retirement with my wife, and enabling me to follow whatever dreams may come in the future.

People often claim that being frugal, working hard, and saving money means I have no life. I argue just the opposite – my ability to save these resources ensures that I do have a life. I’m building a life that contains exactly what I want the most, and it’s a life that doesn’t require me to walk a constant career tightrope in fear of losing my job and thus losing everything.

This is my path – my journey. I’m building up and securing the things I want out of life. Money is my tool – hard work and frugality are how I acquire it and sensible spending and good money management are how I keep it. In the end, I’m building the life I want. Perhaps frugality is not part of the life you want – but when you choose to throw a useful tool out the window, you also choose to limit the possibilities life has in store for you.

Spend some time this week thinking about the elements of your life that are most important to you – that bring you the most happiness. What are you doing in your life that makes these elements less secure? What can you do to make them more secure? If you want a powerful personal to-do list, that’s one sure way to make it.

Good luck.

As many of you out there know, I’m pretty politically active in my spare time and I truly enjoy following and studying politics, both national and otherwise. Today, of course, is a momentous day in that arena, as George W. Bush peacefully hands over the presidency to Barack Obama.

Regardless of how you feel about Bush or about Obama, there is little question that in many ways this is a very profound change. I think my mother described it best – it’s more than just a shift in leadership, it’s a shift in generations, too. She identifies Bill Clinton and George W. Bush as being presidents from her generation – but Barack Obama is the first president from my generation.

What personal lessons can we take from this moment in time?

The United States is an amazingly stable democracy. For most Americans, the peaceful transition of power seems like a normal, common, and expected thing. Yet, over the course of human history, such peaceful transitions of power are the exception rather than the rule. Revolutions, wars, coups, and bitter transitions are the rule in most areas of the world, and the strong-armed changes that other people face undermine the stability of day-to-day lives. Currencies become worthless. People are driven from their homes and lives. Personal property is “nationalized.” In the United States, we are quite lucky that we don’t have to face such situations – and our safety from those situations is part of what gives us such prosperity.

Today, as Obama simply and quietly takes the reins of leadership, recognize that this transition isn’t taking place at the barrel of a gun – and it’s that stability and safety that plays a major role in the stability and safety in our own lives.

Our choices today do not have to be tied to the preconceptions of the past. Consider where race relations were fifty years ago. In many parts of the United States fifty years ago, segregation was in full effect, with different lunch counters and different water fountains and different bathrooms and different schools and different buses for people based entirely on the color of their skin. Such segregation seems utterly ludicrous today.

In the light of such profound changes in society (and I don’t think anyone would argue that such changes aren’t positive), it’s worthwhile to look at our own lives and ask ourselves what changes we could make. What aspects of our lives are being held back by a preconception that isn’t really true? Why are you working at your current job? Why do you buy the car that you do?

When I watch Obama take the oath of office today, I’ll be thinking about how much the world has changed since my grandmother was my age. The mere thought that an African-American could become president was ludicrous back then. What preconceptions do I have now that will be ludicrous in a year? In five years? What can I change about myself to reflect this?

You can forge your own path. The two people standing on the stage today – George W. Bush and Barack Obama – followed two substantially different paths to reach the presidency. Their courses had almost nothing in common – different childhoods, different schools, different career choices – but both wound up reaching their dream and reaching the pinnacle of what their profession had to offer.

What can we learn from that? There are a lot of different paths to the same dream, no matter how big that dream is. Don’t tell yourself you can’t do it. Don’t tell yourself that your background keeps you from doing it. Don’t tell yourself you don’t have the skills – you can learn many of them. Instead, look at the example today offers – two completely different people from completely different backgrounds who rose to the top. You can rise up, too.

The Obama administration represents new opportunities. From the moment Barack Obama steps to the podium and delivers his inaugural address, he’ll be pushing this country in a new direction. What does this mean for you? It means potential investment opportunities if you’re an investor. It means areas where you might want to move your career. It means subtle societal changes that you’ll gradually notice over time.

Listen to what Obama has to say. What industries is he talking about? What major social programs is he introducing? Right off the bat, you have clues as to where growth is going to be in the near future. Now, what can you do in your own life to take advantage of it? Could you buy some stocks? Could you sharpen your skills in a particular area? Could you even get directly involved by taking advantage of a major new program? Pay attention – and think about how things can directly affect you.

Unsurprisingly, I’ll be spending today watching the inauguration festivities, including the inaugural address. Hopefully you’ll watch (or at least listen) as well – and give some thought as to what this moment actually means for you.

Recently, a reader (CreoleIvy08) suggested that I hold a “de-lurking day” in which I encouraged readers who did not regularly comment on The Simple Dollar to leave a brief comment, in order to get a broader picture of the readership of The Simple Dollar. Why? It would give a much broader picture of the diversity of the readership and some clues as to what makes people come back and keep reading the site.

So, here goes.

In the comment field under this post, please take a minute to leave a comment answering the following questions (you can answer some of them, all of them, or just one of them – whatever you’d like):

What is your geographic location?
How did you find The Simple Dollar?
Are you male or female?
How old are you? (Feel free to say “30s” or “40s” if you don’t want to leave your exact age)
Are you married?
Why do you keep coming back to The Simple Dollar?

You do not have to leave your real name in the “name” field below – feel free to make up whatever name you wish. I fully understand the desire for privacy and I don’t want this to be an intrusion on your privacy at all, just an attempt to get a feel for the people out there reading The Simple Dollar.

If you’re reading this by email and wish to participate, just click on the headline of this article.

Thanks for your time!

Each Monday, The Simple Dollar opens up the reader mailbags and answers ten to twenty simple questions offered up by the readers on personal finance topics and many other things. Got a question? Ask it in the comments. You might also enjoy the archive of earlier reader mailbags.

As usual, we’ll start things off with a few links to older articles that directly answer questions I’ve heard recently. Here are some thoughts on how a new college student can find a career.
The Difference Between a Job and a Career
Ten Things Any College Student Can Do To Prepare For Success In Life
The Five Ps: Breaking Down Big Dreams Into Little Steps

And now for some reader questions!

This summer I reduced my 401k contribution from 20% to 10% in order to rebuild my emergency fund after some unexpected expenses. I now feel comfortable with the emergency fund and am ready to return my contribution to 20%.

Unfortunately, last week our company sent out a statement that due to the economy, the company would no longer be offering an employer match to the 401k funds. So my question is, should I continue contributing to my 401k at all, and instead move my money to a different investment?
- Wayward

If your employer is no longer matching 401(k) contributions, you may want to consider starting a Roth IRA. A Roth IRA is a plan you set up yourself with an investment house – I set mine up with Vanguard and it was quite easy. You contribute directly from your checking account with after-tax dollars. However, when you start withdrawals (when you reach retirement age – roughly 59 1/2), you don’t have to pay taxes on any of it – the contributions or the earnings.

If you believe that income tax rates are going to go up over the long term – and this is something I adamantly believe – then a Roth IRA is likely a better option than an unmatched 401(k). Instead of returning to 20% contributions on your 401(k), consider using some of that money to start your own Roth IRA.

Who’s going to win the Super Bowl?
- Andy

Football is not a professional sport that I follow. I only specifically follow a few individual players because of personal ties I have to them – and Kurt Warner happens to be one of them. Thus, I’ve been rooting for Arizona all the way along this year because of Warner’s amazing comeback. So, I predict an Arizona win.

In all honesty, though, my sports of preference are baseball, college basketball, and a bit of soccer. I’ll watch the Super Bowl, but in my mind it’s more of a cultural phenomenon than anything else.

Since the markets are doing so badly, I want to withdraw about some money from a traditional IRA (about $12,000 over three semesters) to pay for full-time college tuition at a state school. This IRA has pre-tax and after-tax money in it, mixed together from when I contributed more than the employer match when I worked.
Since I am using it for college tuition, I only will have to pay taxes and not the penalty. I plan to convert the traditional IRA to a Roth IRA when I am done with college, so I think this move will lower my eventual conversion tax bill also. When I get re-employed after graduation, I plan to pay the money back to the IRA.
Does this make sense or is there something I am overlooking? My goal is to finish school with no student loans.
- Kate

Your plan makes sense, but you’re also navigating through a number of different rules and situations here, so you may want to be sure that you’re not overlooking any restrictions against withdrawals and conversions.

Whenever you plan on making a withdrawal from a retirement account for a specific reason like this (college education), make sure you know the rules cold, and if you’re unsure at all, call the investing firm through which you hold such investments. They can make sure that your plan does in fact follow the rules and that you won’t get dinged in the end because of a loophole you forgot to step through.

Lost starts up again this Wednesday. Any predictions for the coming season?
- Kat

Those of you who have read The Simple Dollar for a long while know that I’m a borderline obsessive about Lost – as are several of my readers.

Anyway, here are my predictions about the fifth season.

The island has traveled backwards in time, and I don’t think it’s necessarily going to stay in the same time. I actually think it’s going to hit at least two different times in the past – one will be in the 1700s where it pops up under the Black Rock.

Aside from Michael, I don’t think anyone actually died in the boat explosion – that would mean Jin and Sawyer are still alive, at least.

My wife predicts that Ben and Jack carry around Locke’s corpse with Weekend at Bernie’s-style madcappery, but I think that’s a bit of a stretch.

My husband and I have been working really hard and have paid off out student loan and credit card debt. Our plan was to save up 1,000 as a mini emergency fund and then start paying down our auto loans(a total of about 10,000 which we could have paid off in about 7 months) now Im beginning to wonder with this bad economy if it wouldnt be better to continue saving for a more substantial emergency fund? Our interest rates on the cars are higher then we could get right now on a easy to access savings account.
- Katie

In my opinion, the size of a person’s emergency fund directly relates to how much risk they feel they can tolerate in their life. For example, I don’t like risk much at all, having two young children at home, so I try to keep my emergency fund as large as I possibly can. Others with more risk tolerance, though, might have a much smaller emergency fund.

I’m going to assume that the $1,000 number you’re using is due to the conventional Dave Ramsey wisdom – that’s the magic number he often promotes for a starter emergency fund. However, that single number is not a one-size-fits-all number – it’s merely a healthy starting point.

What I’m trying to say is this: if you don’t feel comfortable with a certain level of emergency fund and feel you need to have a larger one, do so, and don’t worry about giving it a higher priority than paying down debt. You’re simply prioritizing one kind of risk – job loss or other disaster – over another – the risk of holding debt over a long period of time, and that’s a reasonable conclusion to make.

You’ve been hinting time and time again about an upcoming project related to The Simple Dollar that you’re working on. Can you give us a hint?
- Sally

I’ve been working on the outlines of a podcast for The Simple Dollar. There are many issues involved with podcasting I don’t like, however – the inaccessibility to people who want the content but can’t listen in, for one. Another problem is figuring out how to make it cost-effective for me – why not start another blog or something else? A third problem – a lot of podcasts are overly long and rather dull – how can I make this one worthwhile?

So I’m working through the steps of how exactly I want to do this. I have a lot of ideas sketched out and have recorded a few “test” episodes, but I still feel like it’s far from ready to go at this point.

Don’t worry – when I decide to go forward with it, you guys will be the first to know.

I believe I was given a counterfeit $20 bill in change from a local business recently. I didn’t notice it at the time, but under closer inspection, the bill clearly seems fake. What should I do?
- Rod

If you think you received a counterfeit bill, you should report it to appropriate law enforcement agencies. I would call your local police department and tell them about the bill – where and when you believe you received it and so on.

Another thing to do is to write your initials and the date in the white border of the bill. This helps to identify who found the bill and when.

Put the counterfeit bill in an envelope and put it in a safe place for the moment. Eventually, a police officer or a Secret Service agent will collect the counterfeit bill from you – make sure you know who collected it and take note of when it was collected.

Mostly, these measures protect you and also help to ensure that the counterfeit bill is treated appropriately.

Are you still enjoying the iPod touch you received for Christmas?
- Becky

Yes, I use it several times every day.

For those who are unaware and think this is basically a music player, an iPod touch is more like a PDA than a music player (though, of course, it can play music). I use it for keeping my schedule, jotting down notes, checking my email, surfing the web, playing games, and so on. It’s not an item I would have purchased for myself, but I was extremely happy to receive it as a gift.

Anyway, I’ve mostly gotten over the desire to download new stuff for it – I now have it set to do pretty much everything I could want it to do short of it actually being an iPhone. Mostly, I use it for “quick checking” of things like email, Twitter, the weather, road directions, and so on, and occasionally to play a game if I’m twiddling my thumbs in a doctor’s office or something.

It’s a great gift and something I use all the time, but it was also very expensive – I would have likely felt like I had spent too much money on it had I not received it as a gift. That being said, I thoroughly love it.

Is it better to give cash as a gift or a gift card to something you’re sure they’ll like if you can get the gift card cheaply enough that you can get them a higher face value gift card? My younger sister downloads music from iTunes all the time – should I give her a $25 iTunes card or a $20 bill when they both cost me the same amount?
- Ed

I’d give the gift card myself, if you’re quite confident that the person will use the card in the very near future.

I use three basic criteria when trying to decide whether or not a gift card is an appropriate gift. First, am I sure the gift card will get the recipient something they’ll like? Second, can I get the gift card for a lower price than the face value of the card? Finally, is the gift card with a reputable business that’s not likely to go belly-up soon?

If a potential gift card passes all three criteria, I don’t mind giving a gift card as a gift in some situations.

How’s the homebrewing going?
- Lee

The most recent batch we made – bottled on January 8 of this year – tastes almost exactly like Sam Adams Light. I wasn’t actually shooting for that – I was attempting to make something closer to a pilsener, but this turned out to be substantially darker than that.

My wife and I tend to brew a batch about once every two months or so on average. We’ll likely make another batch in late February – most likely, a porter of some kind. We tend to try hard to make a wide variety of beers instead of just making the same thing over and over again – variety is the spice of life, after all.

Got any questions? Ask them in the comments and I’ll use them in future mailbags.