In March 2008, I quit a full time job that earned around $50,000 per year. I did not return to the workplace.

My wife’s closest friend has a marketable college degree and a substantial amount of successful organizational experience. She’s made the active choice to be a stay at home mother to her two children, giving up that income.

A friend of mine had a factory job that paid $12 an hour. One day, he turned in his resignation, replacing that job with another where he swept floors for $8 an hour.

In each case, a person walked away from a job or a career, actively choosing another route that earned significantly less. In our modern world, what would possess someone to make this unorthodox choice? Why are there millions of stay-at-home parents out there? Why do people walk away from jobs that pay well and take jobs that pay less?

It’s simple. Money isn’t everything.

A long while back, I read and reviewed Daniel Gilbert’s excellent book Stumbling on Happiness. Today, when I reflect upon that book, I realize that one little point he made stuck in my mind. Gilbert wrote about a study that showed people’s happiness with their lives and correlated that information with their salary.

What did he find? $40,000 is a truly magic number. Below that number, people were much less happy with their lives – people with a household income of $20K or $30K were generally less happy with their state of living than people earning $40K.

What’s interesting, though, is that people earning over $40K were not any happier with their lives. Additional income did nothing to increase people’s happiness with the state of their life.

Gilbert offered a bunch of his own conclusions from that study, but my conclusion was pretty simple: any income above a certain surprisingly-low threshold does not make you happier. I won’t say that threshold is exactly $40K – it’s not, because that number varies a lot based on location, number of dependents, and so on – but I will say that the magical amount of “enough” income is much lower than many people think.

What does that “enough” income represent? It represents the amount of money needed to keep a roof over your head, food on your plate, a car in your driveway, and a little bit of breathing room to enjoy life. Income beyond that does nothing more than inflate our basic standard of living – a nicer house, a nicer car, a nicer vacation.

But over the long run, those “nicer” things don’t contribute at all to lasting happiness. Once we have those “nicer” things, we’re right back where we started, wanting something nicer yet. Our Honda becomes the Acura we’ve wanted, and then before long we want a BMW. Our 1,000 square foot house becomes a 1,600 square foot house, then we want a 2,400 square foot house. Our camping vacation in Minnesota becomes a weeklong trek through Yellowstone, then we want weeklong treks through every national park. Our freebie cell phone becomes a Razr, then we want an iPhone.

Once our bases are covered, more of the same doesn’t bring us fulfillment. Instead, fulfillment comes from the things that make you happy and bring you value in life. It might be that your “value” comes from having a big bank account or the corner office – and that’s great.

But for a lot of people, whether they’re acting on it or not, fulfillment comes from other sources. Perhaps it comes from being a parent. Perhaps it comes from work that they’re passionate about. Maybe it comes from minimalist living.

Whatever that fulfillment is, it rarely comes from acquiring more of the same things you already have.

People ask why I’m so interested in personal finance. “It’s got to be incredibly boring to read about 401(k)s all day.” To me, personal finance is just a series of techniques that allows you to widen your horizons, to make things in your life secure so that you can take that leap and fall headfirst into the things in your life that bring you fulfillment. Whatever they may be. It’s a story that I never get tired of investigating or talking about.

Whenever I see someone making the active choice to earn less, I usually smile. Why? Because there’s no clearer sign that they’ve figured this all out for themselves on some level.

Download it now – for free!

A long time ago, I wrote a very popular post entitled “Everything You Ever Really Needed to Know About Personal Finance on the Back of Five Business Cards“. After posting it, several people contacted me and suggested that I try to turn it into a book of some sort.

Over the following year, I tossed the idea around and eventually developed it into a fifty page short book, intending to use it to shop around to various book publishers. I incorporated a lot of original writing, pieces of various Simple Dollar posts, and lots of other interesting elements.

After reading through it a few times, though, I realized: why don’t I just go ahead and share this with my readers and anyone else who might enjoy it?

So, here it is. “Everything You Ever Really Needed to Know About Personal Finance on Just One Page” is a 49 page personal finance book that weaves together most of my favorite ideas on personal finance and a lot of other goodies into one document. I’m making it available for download under the Creative Commons Attribution-Share Alike 3.0 United States License, which means that this document is free – you can send it to your friends, put it up on your website, or print it out. You can also use if for commercial purposes – if you want to format it as a book and sell it, feel free. You can also modify the contents to your heart’s desire as long as it’s shared in the same way – any derivative works must also be shared under the Creative Commons Attribution-Share Alike 3.0 License.

I only have two requests. One, if you write about this on your website, include a link back to the original source of the document – http://www.thesimpledollar.com/onepage/. Doing this enables new readers to always be able to retrieve the latest version of the document. Two, if you do something interesting with this document (creating something new and compelling with it, use it in a classroom, use it in a major media source), please let me know by dropping me an email.

So, enjoy! If you enjoy it, feel free to pass it along to your friends, print it off, use excerpts in whatever way you like – in short, have fun with it (and hopefully take a bit of the advice to heart).

Download it now – for free!

Over the weekend, I finished an utterly fascinating book that’s (largely) unrelated to The Simple Dollar but still worth mentioning: The Shock Doctrine by Naomi Klein.

The book is basically an alternative look at world history over the last thirty years, particularly in terms of the collapse of various governments and replacement by new regimes (Chile, Argentina, Brazil, Poland, Russia, South Africa, and Iraq, among others). Klein’s book points out a ton of common threads among these seemingly very different governmental shifts – mostly, that as these nations are going through the “shock” of a radical change in their government and way of living, the new government would push through some very radical economic reforms that usually resulted in much of the wealth of the nation as a whole winding up in the hands of a small number of people, leaving many of the rest in a state of poverty.

It’s a really fascinating, complex book that casts a different light on much of what I “knew” about recent world history. Very, very thought provoking and well worth checking out from the library. But be warned – it’s a pretty dense book. I found myself regularly turning to Wikipedia and other sources to find out more about certain people and events that Klein would discuss for just a page or two.

What Percentage of Income Should Be Saved to Be Financially Responsible? I don’t think there is a set percentage, because I think it varies quite a bit depending on your life situation. How secure is your job? Do you have any other dependents? There are lots of questions in the mix here. (@ consumerism commentary)

How to Be Frugal Without Being Miserable I can’t tell you how strongly I agree with the advice in this post. It pretty much sums up how I feel about frugality. Frugality is about being mindful of the real value in your life – and that doesn’t always mean spending as little as possible. (@ dumb little man)

6 Ways that Regular Writing Can Help All Freelancers This article should actually be titled “6 Ways That Regular Writing Can Help Anyone,” because most of these are true for everyone. Writing every day is an incredible release (at least for me – and for my wife, actually, who is an avid diarist). (@ freelance switch)

Ask the Readers: How to Save Money on Books? In my opinion, PaperBackSwap is the greatest thing since sliced bread for saving money on books. It’s reached the point where it beats the library for me, since I can send out and request a book from home and don’t have to worry about late fees or anything like that. (@ get rich slowly)

Ramit’s Inbox: An email from a very confused guy who can’t find a job I like this quote (except for the use of the word “rich” – I think the more appropriate term is “financially sensible”) – “Rich people plan for things before they need them, while others are caught treading water when something bad happens.” (@ i will teach you to be rich)

Take the Time to Play I often feel like there is too much to do. Reminders like this help keep me mentally in line. (@ productivity 501)

Reverse Engineer the Best Time of Your Life Another great article from the always thought-provoking Philip Brewer. I find that when I do such a “reverse engineering,” I always find that the core of the moment was free – and that essence is something I can find again in my own life today. (@ wise bread)

I tend to be an advocate of spending more up front on a large purchase if that purchase will have lower maintenance costs. For example, if I’m buying a car, I’ll spend more on one that has great gas mileage than an equivalent one with poor mileage (which is part of why we bought a Prius, actually), or if I’m buying a washing machine, I’ll pay more for one that uses less energy and less water. There are two pieces worth discussing here.

First, my biggest motivation when making a major purchase is the total cost of ownership. In other words, in my best estimation, how much money am I going to have to invest in this item over its lifetime, including the initial cost, regular maintenance costs, energy use, water use, and so on.

Here’s an example. I’m looking at two different washing machines. One uses 40 gallons of water per load and has an energy use of 550 watts, with a load time of thirty minutes. Another one uses 20 gallons of water per load and has an energy use of 320 watts, also with a load time of thirty minutes. I turn to Consumer Reports and it indicates that the first machine has average reliability and the second has excellent reliability. But the first washing machine costs $300 and the second one costs $600. Which one do I buy?

Well, what’s the total cost? Let’s say I do five loads of laundry a week and I want the best value over the next fifteen years. The first machine would use a total of 156,000 gallons of water – and with water costing $3 per thousand gallons, that’s a water cost of $468. The second machine would use a total of 78,000 gallons of water – and with that same $3 per thousand gallons, that’s a water cost of $234. On electricity, the first machine would use 1072.5 kilowatt hours of energy, and with electricity at roughly $0.11 per kilowatt hour, that’s a lifetime energy cost of $117.98. The second machine uses 624 kilowatt hours of energy, which would cost $68.64.

Adding these up, the first machine (the less reliable one) has a total cost of $885.98, while the second machine has a total cost of $902.64 – roughly the same. Given that the second machine is more reliable, the choice is easy – I’ll buy the $600 one and leave the $300 one at the store.

There’s another factor at work here, too, though. Once the purchase is made, the more expensive machine has a much lower cost per month of use.

Over a given month, the “cheap” machine would run 20 loads – a water cost of $2.60 and an energy cost of $0.66, totaling $3.26. The “expensive” machine, over those same twenty loads, would cost $1.30 in water and $0.38 in energy, totaling $1.68.

Every single month, without thinking, my bills go down $1.58 – and that fraction will go up as energy prices and water prices rise over time.

It’s a very simple example – and it seems like a small amount. It is a small amount. But it’s a reduction of $1.58 in spending every single month, like clockwork. I simply don’t have as much required spending.

Let’s extend that idea a bit. Let’s say I apply the same philosophy to all of the major appliances in my home. I spend a bit more to get the more efficient air conditioner, the more efficient furnace, the more efficient dishwasher, the more efficient clothes dryer, hot water heater, oven, refrigerator, deep freezer, car(s), lawn mowers, computers, microwaves, windows, doors, and so on. All of those purchases will each contribute a bit to lower my energy bills – and the cumulative effect is quite large.

To me, there’s extra value in that savings beyond mere dollars and cents. To put it simply, it’s very hard to tell what one’s future holds. You may succeed in your endeavors, of course, but our health is always a risk, as is our continued employment. Ensuring a lower monthly cost of living in the future is a bit of insurance against these things. It’s also a hedge against inflation, since over time, energy costs and water costs will rise.

Given these factors, if the total cost of ownership of two items is similar, I will almost always choose to purchase the item that is more expensive up front. It’s a great rule of thumb to apply in any purchase, given the uncertainty of the future.

One technique that I’ve always used to make my personal finance management easier is to round up regular debt repayments to the nearest $10 or $100. I do this for two reasons. First, a round number is much easier to handle for simple calculations. With a nice round number, it’s easy to just glance at my checking account balance, subtract those nice round numbers from that total, and get a good grasp of where exactly I’m at with my money. Second, the extra bit that I pay from the rounding usually chops a payment or two at the end, saving me a bit of money over the long haul.

The Dollars and Cents
Let’s walk through three examples that demonstrate quite clearly how rounding up can directly save you money.

The Scenario You’ve just taken out a $150,000 mortgage to buy a home. It’s a thirty year mortgage, locked in at 5%. Thus, your monthly mortgage payment is $805.23.

Rounding up to the nearest dollar If you decide to round the payment up to the nearest dollar, you’ll just submit a payment each month for $806 – an overpayment of just $0.77. Your final payment would be reduced to $165.16, and your total savings over the lifetime of the loan would be $363.64.

Rounding up to the nearest ten dollars If you decide to round the payment up to the nearest ten dollar increment, you’ll submit a payment each month for $810 – an overpayment of $4.77. Your payments would end four months earlier and your final payment would be only $112.15. This would result in a total savings over the life of the loan of $2,220.67.

Rounding up to the nearest hundred dollars If you decide to round the payment up to the nearest hundred dollar increment, you’ll submit a payment each month for $900 – an overpayment of $94.77. Your payments would end six years and four months earlier and your final payment would be only $2.95. This would result in a total savings over the life of the loan of $34,605.19.

The savings numbers are actual savings – the amount that the total interest on the loan would be reduced. I did these calculations using Bankrate.com’s excellent mortgage calculator.

The Psychological Benefits
For me, there are big gains from this method beyond the mere dollars and cents.

First of all, as I mentioned above, it makes personal finance calculations much easier. With rounded payments, I can easily do calculations in my head that, without rounding, would require a spreadsheet or a calculator. That convenience comes through time and time again, from thinking about ATM receipts to doing some basic budgeting on a piece of scratch paper. Rounded payments save time.

Second, I feel good in the realization that I’m paying ahead on the debt. While it’s not a large amount, it is an amount that’s going straight against the principal, and with each month’s overpayment, the interest burden is going down faster and faster and faster. It feels quite good to see that each time on the account statement.

Third, the overpayment amount is small enough that I don’t “miss” it. If I make an $8 overpayment, those $8 are not going to make the difference in my personal finances. I’ll silently make up the difference throughout the month with better buying habits at the store or an impromptu decision to not splurge on something. The “downside” of the early payment is small enough that it has no real impact on my finances – until, of course, the bill goes away earlier than expected.

Automation
Having said that, it’s worth pointing out that automating your finances changes this pattern somewhat. Instead of worrying about a round overpayment on each of my automatic bills, I instead make sure that the total amount of the bills I pay automatically each month is rounded to a nice even number.

Here’s how I do it. Each month, I have a payment due for my student loan, my car, and my mortgage. When I add these together, it comes up to a very odd number. That’s the number I round up, to the nearest hundred, then beyond that I contribute several hundred more in an effort to pay down the debt early. In the end, I have a nice flat number I use each month in my calculations – $2,500, to be exact.

Since I pay all of these bills on the same day automatically, it’s easy for me to look at my balance and do the mental math necessary to make sure everything is in proper order.

Collin writes in:

What personal finance blogs do you read?

You can actually find the answer to this question on any page of The Simple Dollar. If you scroll down a bit, you’ll see a section in the lower right entitled “Blogs I Read.” Under that heading is a list of twenty five blogs that I keep pretty close tabs on – I visit all of them most days.

I update this list about once a year, and because of Collin’s prompting, I decided it was time to give that list a good refreshing. I removed about half of the sites that used to be there (a few are now defunct, the rest have simply become less compelling) and added quite a bit of new blood to the list.

So, which personal finance, career, and personal development blogs do I keep tabs on? Here they are, along with some notes on why I find them so compelling. If you want to visit any of these sites at any time, just visit any page on The Simple Dollar – the full list can always be found in the “Blogs I Read” section.

Ask MetaFilter
http://ask.metafilter.com
Ask MetaFilter is an interesting community blog of sorts. Here’s how it works: members pay a small fee to join, then they’re allowed to ask questions that are on their mind. The questions are all over the place, ranging from whether a person should move from Boston to Colorado to things like how budget reconciliation in the Senate works. The diversity of questions – and the wide range of responses, many of them well thought out – makes Ask MetaFilter a compelling read.

Bargaineering
http://www.bargaineering.com/articles/
Bargaineering (formerly Blueprint for Financial Prosperity) is probably my favorite personal finance blog for interesting ideas. Jim Wang, the author of the site, is quite good at generating compelling core ideas, which usually gets my mind moving. Quite often, I’ll see an intriguing idea on Jim’s site, stew on it for a while, try it out, look at how it works in my own life, and find myself eventually telling a story that goes off in some completely different direction. Two great examples of Jim’s interesting ideas are his post on the meaninglessness of net worth by age and his far-too-short introduction to the “100 boxes” budgeting technique.

ChristianPF
http://www.christianpf.com/
ChristianPF has a distinct take on personal finance: that the themes of Christianity and the themes of money management have quite a bit of overlap. Because the site focuses so heavily on that overlap – and because the author is a solid writer who occasionally throws out a few amazing gems – ChristianPF consistently offers insights that leave me thinking. Some of ChristianPF’s best stuff includes this amazing detailed description of how bloggers earn an income and five essential pieces of scripture that discuss money (although he missed the one that really impacted me, Ecclesiastes 2).

Clever Dude
http://www.cleverdude.com/
Clever Dude keeps me coming back because of the tone and the sense of humor underlying most of the posts. The site does a great job of putting just the right touch of humor on personal finance and frugality issues, often with the humor sneaking up on you and just brushing you when you least expect it. It’s just the right amount – enough to make the articles enjoyable to read, without going too far and making it all into a farce. Two great examples of this include the article about creating a frugal lunch for a lot of people and the post on saving money by reducing waste (with fifty examples).

Consumerism Commentary
http://www.consumerismcommentary.com/
Flexo, the writer at Consumerism Commentary, has the knack of a good essayist. He can turn a simple, seemingly unrelated event or idea into an interesting personal finance take. For example, his article on whether it makes sense to follow what makes you happy does a great job of riffing on Arrested Development, and this piece on money and unintended consequences turns a look at ethanol in fuel into a great discussion of looking at the ramifications of your choices.

Consumerist
http://consumerist.com/
Consumerist is a blog run by Consumers Union, the folks behind Consumer Reports. It focuses directly on consumer issues, which means that it often calls out poor customer service from companies, faulty products, and so forth, mixed in with some great advice on saving money and making good buying choices. This is what I call a “flood” blog, meaning there are a lot of posts each day – I usually find myself just leafing through the piles of posts for the handful that really apply to me. Some great examples of what Consumerist brings to the table include 112 ways to save money and a a great look at the dark underbelly of the housing crisis, where awful homes are built in middle-class neighborhoods.

Deal Seeking Mom
http://www.dealseekingmom.com/
Deal Seeking Mom mostly just provides a lot of great coupons and freebies – the site does a great job of filtering out many of the less-useful items and just provides some of the cream of the crop – and occasionally drops a great article on specific money-saving tactics in the middle there. Two great examples of this dual nature is a great article on the learning curve of saving money and the guide to getting free rentals at Redbox (which I’ve used several times, actually).

Dumb Little Man
http://www.dumblittleman.com/
I keep coming back to Dumb Little Man for the variety. The site posts articles on a wide variety of topics – productivity, personal development, money management, careers, and so on. The author usually gets right to the point, outlining a handful of good suggestions on the topic. For me, it usually serves as a great starting point for ways to improve myself, whether in terms of money or career or even my day-to-day life. Two great examples that I found particularly useful are 14 Simple Ways to Convert Your Sedentary Lifestyle (I’m a high-volume writer, so I’m more sedentary than I’d like to be) and 50 Very Simple Ways to Be Romantic (I’ve used many of these with my wife).

Freelance Switch
http://www.freelanceswitch.com/
Freelance Switch focuses very specifically on the money and career issues that face people who are freelancers – of which, to an extent, I would include myself as a member. Because of that tight focus, Freelance Switch can toss out many of the extraneous details and really hone in on factors that matter specifically to freelancers. Two articles that really clicked with me: 101 Ideas to Get More Freelance Work and Generate New Client Leads and Mixed Marriages: When One Spouse Goes Freelance (which was particularly insightful for our household).

Free Money Finance
http://www.freemoneyfinance.com/
Free Money Finance succeeds for me because the author is very, very effective at combing through the mainstream media, finding the articles on personal money management that are really compelling, and commenting on them in a relatable fashion. The (slight) majority of the posts at FMF follow that general format and, for me, those are the ones that keep me coming back for more. Two good recent examples of this technique are The Little Things Matter to Interview Success and Ten STeps to Becoming a Millionaire.

Frugal Dad
http://frugaldad.com/
Frugal Dad. The name alone tells you exactly what you’re going to get: frugality tips and personal finance thoughts related to kids. Two topics that, unsurprisingly, appeal to me quite a bit. Another factor that works in Frugal Dad’s favor is that the site, over time, tells the story of his life – a meshing of good advice and memoir that I find appealing. Two of my favorite posts from Frugal Dad include The Language of the Perpetual Poor and Planning a Frugal Family Fun Night (from which I’ve used several ideas over the years, in some form or another).

Get Rich Slowly
http://www.getrichslowly.org/blog/
Point blank, this is the best personal finance blog out there (besides TSD, of course). JD and I write with a fairly similar tone and have similar ideas so often that I’ll sometimes check Get Rich Slowly before I post a new article just to make sure that JD hasn’t randomly came up with a similar idea. Here are two examples of that, where JD has written articles I’d be proud to say were my own: The Road to Wealth is Paved with Goals and The Perfect Is the Enemy of the Good – but I could list dozens and dozens of great articles from GRS.

I Will Teach You To Be Rich
http://www.iwillteachyoutoberich.com/
I read I Will Teach You To Be Rich for two reasons. First, Ramit’s focus is largely on entrepreneurship – it’s fairly obvious that his audience is the Silicon Valley startup crowd. Second, his tone is pure entertainment – a pastiche of self-assurance and compelling advice that makes most of the articles there quite worth reading. Two great examples of his style and advice are The $28,000 question: Why are we all hypocrites about weddings? and Money Diaries: The 20-something cube-dweller with an addiction to phone accessories.

Lifehacker
http://lifehacker.com/
Lifehacker is a very frequently updated site (ten or more times a day) focusing on productivity technology issues, but occasionally brushing on personal finance, personal growth, and other areas. I almost always find a gem or two by browsing through Lifehacker – a useful piece of software, a good piece of advice, or something wholly unexpected. Two articles from Lifehacker that really influenced my thinking: Jerry Seinfeld’s Productivity Secret (“don’t break the chain” is utterly brilliant) and How Apple Co-Founder Steve Wozniak Gets Things Done (some great advice from a person I admire a lot).

Money Saving Mom
http://www.moneysavingmom.com/
Money Saving Mom is something like a hybrid between Frugal Dad and Deal Seeking Mom – it’s a real medley of frugality tips, solid coupons (I’ve used more coupons from MSM than from pretty much any other site I’ve visited), and excellent anecdotes about parenting with frugality in mind. Walgreens 101, for example, is a great introduction to saving money at that particular store, and a great example of how the site can really save money is with this method for getting Pepperidge Farm goldfish crackers for $0.16 at Target using coupon stacking and finding deals from flyers (my kids love these crackers – and the post is a good example of the type of thoughtful deal-finding that shows up on MSM).

Pick the Brain
http://www.pickthebrain.com/blog
Pick the Brain is an excellent wide-ranging self-improvement blog, offering up tons of interesting articles on motivation, productivity, money management, and other aspects of self-improvement. The variety of ideas is what keeps me coming back – it’s infrequently updated, but when I do see an update, it’s usually full of solid ideas. Two articles that really made me think were 7 Ways to Grow the Action Habit and George Orwell’s Five Rules for Effective Writing (all of which I strive to use).

Productivity501
http://www.productivity501.com/
Productivity501 focuses squarely on how to be more productive with your time – and time is money, after all. Mark does a consistently great job of digging through ordinary tasks and finding ways to reduce our time investment on those tasks, resulting in more time to spend on other things of greater personal value (like spending time with my kids, for example). Here are two excellent tastes: Components of a Paperless Office (this is something I strive towards, and the article is my guide for doing it) and Getting the Most Out of Magazines (which basically describes how I tackle personal finance magazines).

Queercents
http://www.queercents.com/
Queercents is actually a collective blog, including writings from a large number of writers that are all members of the LGBT community. As with many group blogs, the presence of many writers creates a great diversity of opinion and perspectives – and often you find a writer or two that you really click with (I like Nina, for example) while being exposed to a lot of ideas and angles that you would have never considered before. Two great articles: Answering The Question: Should I Go To Graduate School? and Build A Business While Keeping Your Day Job (something I had to do when The Simple Dollar was first getting started).

Red Tape Chronicles
http://redtape.msnbc.com/
Red Tape Chronicles (from MSNBC) focuses on consumer issues – mostly, how to deal with customer service headaches, identity theft, and other painful elements of modern financial life. Bob Sullivan provides great fact-based coverage of consumer fraud, writing really strong material that often leads me to investigating similar experiences in my own life. Two great examples of the material you’ll find there are How to Save Money on: Bank Accounts and Win Customer Service Phone Battles.

Smart Spending
http://blogs.moneycentral.msn.com/SmartSpending/
Smart Spending is something of a “meta-blog” of personal finance blogs. Karen Datko and Donna Freedman do a great job of scouring a wide range of personal finance blogs, finding a wide variety of commentary on personal finance issues while adding their own unique views. Smart Spending is a great resource for seeing what lots of different voices are saying on personal finance topics. A couple of great examples: Is Bankruptcy Her Best Choice? and ‘Gifting Club’ Pyramid Schemes Flourish on Web.

The Digerati Life
http://www.thedigeratilife.com/blog/
I often look at The Digerati Life as something of an urban parallel to The Simple Dollar. The author lives in the Bay Area and often has a more urban perspective than I do, but we regularly come to the same conclusions. What keeps me coming back? A warm tone and a lot of excellent advice. Two samples: Force Yourself To Save! 15 Painless Ways To Pay Yourself First and Borrow, Barter, Buy Used: Espousing The Frugal Lifestyle.

The Wallet
http://blogs.wsj.com/wallet/
The Wallet is a personal finance blog from the Wall Street Journal. It can be dry at times, but if you want a flood of thought-provoking reading on personal finance, this is a great source. It’s a mix of link collections to interesting articles from all over and short pieces from WSJ staff writers, all adding together to create a compelling mix of money material. Standouts (to me) include Be Aware of Who’s Behind Advice on Cell-Phone Plans (this is part of the reason why I tend to trust bloggers whose material I’ve read over a long period of time) and Extreme Finance: Cutting Out 401(k) Contributions.

Unclutterer
http://unclutterer.com/
Unclutterer is a fascinating blog with a very specific topic: reducing clutter. In Erin’s eyes, clutter stands in the way of personal productivity, personal happiness, and good personal finance, too. Her soft, witty tone and her consistently thoughtful ideas on reducing the clutter in one’s life keep me constantly coming back for more. Two great examples: Retail tricks that get you to buy more and If you have a job you hate, prioritize what is important to you and align your career accordingly.

Wise Bread
http://www.wisebread.com/
Wise Bread is a group blog that looks at a huge array of personal finance issues, providing a wide range of voices and insights on money matters. The wide variety of voices (in particular, the always-excellent Philip Brewer) and wide variety of issues make this one a great blog for getting your juices flowing when it comes to money management. Two great examples include Baby Carrots – The Frugal Idea That Isn’t and Like DIY? Avoid These Ten Costly Mistakes.

Zen Habits
http://zenhabits.net/
Last but not least is Zen Habits, a site focused on simplicity in life, money, work, and love. Leo’s goal with Zen Habits is pretty clear – if you reduce the complexities in your life, you have much more life to enjoy, a philosophy I wholeheartedly agree with. Leo’s posts vary widely, but they all strike the common theme of finding a simpler way in life. Two great examples: Handbook for Life: 52 Tips for Happiness and Productivity and The Cheapskate Guide: 50 Tips for Frugal Living.

Got a favorite blog along these lines? What’s great about it? Let us know in the comments.

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. Several people have asked questions about my childhood lately and how those earliest lessons have applied to my life. I’ve written about this extensively in the past – here are three of my favorites.
Remembering A Painful Childhood Experience – And Trying To Apply What It Means
The Road To Financial Armageddon #1: The Earliest Mistakes
Lessons From My Grandfather In The Garden

And now, some great reader questions!

I’m starting to think about life insurance. Where do I start looking and how much do I need? Is now a good time to buy some with the economy how it is? what is required to get it medical exams?
- Katie

Life insurance is a pretty intense subject, with lots of material out there. Here are some things you should think about (that address your questions).

First, figure out how much coverage you need. If you’re single, you don’t need much – you’re not leaving behind people who are dependent on you. If you’re married, you’ll need more. If you’ve got children, you need a lot more – maybe five times your annual salary (or even more than that). Also, stick with term insurance. Keep your investments and your insurance separate – hybrid plans like whole life insurance aren’t a great deal, particularly if you’re not starting the plan in early childhood.

You can shop around by getting quotes from various insurance companies. You should also investigate those companies by checking out their ratings with independent rating companies like Standard and Poors – don’t even bother with a company if it doesn’t have a good rating. IntelliQuote (http://www.intelliquote.com) is a great place to start gathering quotes.

Most policies will require you to have a physical – policies that don’t require one are prohibitively expensive. Also, life insurance rates are largely unaffected by the current state of the economy.

I want to start investing in some Vanguard Index funds – however I’m unsure whether to go with several individual funds (Shares, Bonds, Property, Cash), or the single diversified ‘LifeStrategy’ fund?

What would you suggest?
- Matt

It depends entirely on whether you’re investing in a tax-free or tax-deferred account (like a Roth IRA) or just investing in a taxable account for other goals.

If you’re using a tax-free or tax-deferred account, put your money in the LifeStrategy fund, contribute to that regularly, then diversify if you want by emptying out that fund and moving it into other funds. Since there’s no tax penalty for doing this, you can move things around as you wish.

If you’re going the taxable route, you need to be a bit more careful so you don’t incur unnecessary tax bills. You want your gains to be long term gains (meaning the money sat there for more than a year) so you can pay a lower tax rate on your earnings. So, you need to decide up front whether you want to go for a diversified portfolio or just want to go with the LifeStrategy fund for good. If you want to go diversified, just buy into each fund you want with the minimum needed to get in, then keep contributing to a savings account and buying into more funds until you have the diversity you want. After that, don’t rebalance – just contribute more to individual funds until you have the allocation you want.

For now, I’m just investing in Vanguard Total Stock Market and Vanguard Total International, keeping them at a 50/50 split. At some point, I will likely diversify this somewhat, but I’ll do it all at once when both have very nice balances and most of the taxes I would pay would be long term taxes.

A new question: Do you recommend using a dealer for car maintenance and repairs or a garage you trust? I have a 2005 Honda Pilot and because it is a “certified” used car, I’ve been using a dealer but I feel like I’m throwing money out the window and possibly getting taken for a ride. Same deal with the last dealer I used (last car).
- Sara

I tend to agree with the Car Talk guys – the best route is finding a good independent shop to work with. Dealers do solid work, but they have very high labor rates and insist on OEM parts. On the other hand, independent garages can be of varying quality.

So how do you find a good garage? Your best bet is to ask your friends and family and coworkers. What garage(s) do they use? Are they happy with the work? Have they heard of any good garages?

Almost always, one’s social network is the best source for good answers on questions like this.

I am starting a new business and will soon be having some income from it, hopefully. I want to find a good (preferably free or inexpensive) program to track my income and expenses, but don’t know what to look for. I don’t anticipate I’ll need anything very complicated, at least not right away. Do you have any tips?
- Dave

It depends on your business and your personal experience. If you know how to use spreadsheets, I would probably just use OpenOffice – the spreadsheets in the package will do the job and provide some solid templates for you to start with.

If I didn’t know anything about spreadsheets, though, I’d probably start with QuickBooks Simple Start Free Edition. It’s a very basic entry-level accounting software, intended for very small businesses that are just getting started. For what you seem to be describing, this might be perfect for you.

Personally, I use spreadsheets to track all my stuff, but I’ve spent more than a decade using spreadsheets in various capacities (starting with Excel 4.0 on a Windows 3.1 machine).

My current company doesn’t offer a 401(k) plan, matching or otherwise. We’re currently maxing out our Roth IRAs, but are there other ways to build tax-deferred retirement funds like a 401(k) would?
- Tim

I see several options for you (beyond petitioning your employer to get a 401(k) plan going):

One, start a simple side business and contribute all of the income from it to an Individual 401(k) or other retirement plan for self-employed people. This, of course, requires you to actually start and build a side business.

Two, buy a variable annuity or another investment-type product. The drawback here is that the fees are usually crushing.

Three, don’t worry about the taxes and invest in a taxable account. Quite honestly, this is what I would do.

Four, invest in other areas that have tax benefits, like making your home more energy efficient.

Any updates on the podcast?
- Jim

My problem is perfectionism, I think. I keep thinking up and recording episodes, then I listen to them a few days later and I’m just really unhappy with them.

What’s wrong with them? I find some of them boring. In other ones, I don’t like the way my voice sounds – I’m focusing on lowering my voice so that it’s a more pleasing “radio” voice. In still other ones, I feel like the idea I have goes off the rails.

My goal is to record several good episodes before launching it, so that I’m not in a situation where deadlines are requiring me to post poor podcasts.

When I hit upon a formula that really works, I’ll be the first to let you know.

You mention you keep an electronic journal or diary. What software do you use to do that?
- Lily

I just use a simple text editor, to tell the truth.

I save the entries in a folder hierarchy by date. I have year folders, then month folders. Within the month folders, I have text files named 1.txt, 2.txt, and so on. I have them archived in a pretty hidden place, and I add an entry almost every day.

I have thought about posting them somewhere anonymously in a blog-like format, simply to make searching them a bit easier. The problem with this is I would have to change some names and other elements, and it always felt like more work than it would be worth.

You always talk about never giving up your dreams, but everyone has to give up dreams sometime. I’m sure you dreamed of some things that were never going to come true.
- Max

Of course I have.

When I was a child, I really wanted to be an astronaut. I dreamed of it for years, until I realized that my vision was too poor to ever allow me to be an astronaut. My vision (and subpar athletic skills) also killed my dreams of being a baseball player and a basketball player.

All throughout my life, I’ve fallen into various passions and thought that this is what I should be doing with my life. Inevitably, though, the glow of that interest would fade and I’d find myself moving on to something else.

Writing is the one thing that has been a constant for a long time. The glow never really faded from it – I would find myself coming back to it time and time again, only taking breaks to let my mind recharge a bit. That was the difference – it was a passion that never really faded.

What movies are you looking forward to seeing this summer?
- Sarah

Five 2009 films really stand out to me: Up, Where the Wild Things Are, The Imaginarium of Doctor Parnassus, A Serious Man, and Inglourious Basterds. I think only three of them actually qualify as “summer movies,” but those are the ones I’m looking forward to this year.

Most likely, something I’m not expecting at all will come along and really interest me, but it’s hard to tell what that will be.

I showed a friend this list and he said, “You like kids’ movies and weird movies.” That’s actually pretty apt, I think.

Do you intentionally write things to be controversial sometimes?
- Rachel

I don’t intentionally write things for the sake of controversy. That being said, I do look for topics that I’m confident will generate a lot of discussion.

To me, a great post is one that gets people talking and shows that people can have a lot of takes on the same idea. If I look at something and can quickly see two or three or four different angles on it, that says to me that it’s worth talking about.

What’s often seen as “controversial” is that I’ll take just one or two sides on the issue when there are many more angles to look at – I usually stick with the elements that interest me the most. This usually gets people quite whipped up, as they point out my “error” or staunchly defend some different angle on the issue.

Along the way, we all learn something. That’s what it’s about.

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

Every other Sunday, The Simple Dollar reviews a personal finance book.

One of the real root causes of money troubles is irrational behavior. When money is involved, people act in ways that undermine their best interest. They buy when the market is high, sell when the market is low, lie to the people they care about the most, equate their personal worth with the balance of their bank account, and take jobs that make themselves miserable. Put these behaviors in any other context and you’d believe that the person committing such behaviors was crazy.

The Cure for Money Madness by Spencer Sherman argues that the reason we engage in these poor behaviors is that many of us are indoctrinated with some very poor personal finance “rules” at an early age – and we stubbornly stick with these rules and ideas throughout our lives. What “rules”? Things like “it takes money to make money” and “paying rent is throwing money down the drain” and “don’t talk about money” and “the rich get richer while the poor get poorer.”

To put it bluntly, most of those “rules” are complete falsehoods and, if you abide blindly by those rules, you’ll often do quite a bit of damage to both your money and your life.

Sherman’s book moves through many of these rules and looks at the real story behind them, discovering what you should actually be doing instead of following those ideas. Most of the time, doing things in a more sensible manner saves time, reduces stress, adds to one’s personal sense of honor, and often puts more money in the bank as well.

Intriguing, indeed. Let’s dig in.

Spencer starts off the book listing “Seven Simple Rules for Achieving Money Wisdom,” which I thought were pretty spot on:

1. Pause, take a breath, discuss, and look hard at the numbers before making any financial decision.
2. Spend less than you earn now, not as much as you might earn in the future.
3. Spend mindfully, not mindlessly, and periodically leave the credit cards at home and pay cash instead.
4. Save something – regularly. Give something – regularly.
5. Diversify your investments into many different asset classes.
6. Buy low and sell high. Get aggressive when an asset class is down and act warily when an asset class is up.
7. Realize that your actual net worth far exceeds your bank balance. It includes your talents, your lifetime of future earnings, your family and friends, and your health.

Pretty spot on, I must say.

1 – Money Madness: What It Does and How It Works
Money causes us to act irrationally. Sherman opens the book with piles of little examples of this, some of which I can see in my own life even now (like a somewhat irrational desire to provide “the best” for my kids). What’s really interesting is that, almost always, we know that this behavior is irrational except for when we’re doing it. Think about impulse buying, for example – sitting there, as you read this, it’s pretty clear that impulse buys are irrational. Yet, almost everyone has made an impulsive purchase from time to time. Why do we do these irrational things? Sherman’s stance is that it’s an emotional response – we give into that irrational behavior because our emotions point strongly that way, strong enough to overwhelm our rationality.

2 – Contracting the Condition: How We Get Money Madness
But where do these emotional responses come from? Sherman points the finger decisively at one’s childhood, where most of our sense of right and wrong is developed. From our parents and others around us, we build up a sense of rights and wrongs about many things, money being just one of them. Most of these ideas aren’t given in the form of words, but in actions and physical responses – an angry glare when money is discussed, an impulse buy in the checkout aisle, anger and frustration over bills. These all create a false picture of how money works – and results in irrational behavior in adulthood.

3 – Money Madness in Action: How the Money Monster Operates in Your Life
For the most part, this chapter serves to illustrate Sherman’s points from the first two chapters. He offers a long list of specific situations where childhood messages can overrun rational behavior – and gives some specific things to look for (like big emotional swings in response to certain things). He also makes the point that one little choice can have a big snowball effect later in life – one $10,000 mistake drastically changed his life in various ways, and that $10,000 mistake occurred because of his “money madness.”

4 – Free Your Life from Money Madness: Tame the Monster
Take a ten second breath. Inhale … 1, 2, 3 … hold it … 4 … exhale … 5, 6, 7, 8, 9, 10. That’s what you should do each time you consider spending money for any reason. Just stop, breathe deeply, and think about what you’re doing. It’s a great tactic, one I use myself on a very regular basis. Sherman offers several other interesting tactics for digging into the psychological basis of your irrational money decisions as well, though I think the ol’ ten second rule works quite well.

5 – Financial Intimacy: Getting Naked Around Money
Sherman makes another good point here: if you’re in a committed relationship (marriage or otherwise), you should be completely open with your money. You should talk through every debt, every asset, every income stream – everything. Nothing should be hidden. Plans should be made together, after serious discussion. Sherman offers some great advice here for how to make these discussions happen, perfect for a starting point if you’re in a relationship. If you want more, Financial Infidelity is a great book on the topic, as is Smart Couples Finish Rich.

6 – The Rainbow Portfolio: Madness-Free Investing
The “Rainbow Portfolio” idea is simple. Just invest in a diversity of index funds, contribute regularly (automatically), and forget about them, except for a regular rebalancing (changing your contributions a bit so that you’re contributing more to the investments that are down and contributing less to the ones that are up). He offers a pretty complex portfolio that does seem to beat the market by a bit over a very long period (I’ve looked up the Vanguard index fund for each piece of the portfolio):

25% bonds (VBMFX)
12% U.S. large cap stocks (VFINX)
12% U.S. large value stocks (VUVLX)
6% U.S. small cap stocks (NAESX)
6% U.S. small value stocks (VISVX)
7% international large value stocks (VTRIX)
3.5% international small cap stocks (VINEX)
3.5% international value stocks (VWIGX)
2% emerging markets large cap stocks (VEIEX)
2% emerging markets small cap stocks (VEIEX)
2% emerging markets value stocks (VEIEX)
11.5% U.S. real estate (VGSIX)
3% international real estate (VHGEX)
4.5% commodities (VAW)

7 – Getting Money: Madness-Free Strategies
Sherman argues that the best thing you can possibly do, no matter what your career is, is learn how to be a salesman. Why? All throughout your career, you’re selling something – yourself, your good work, the reasons you deserve a raise, and so on. A resume is a sales job. An interview is a sales job. Learn what good salesmen do, and work on those techniques in your own life until they become natural. Doing this will make everything work better – more opportunities for you, more income, and better relationships.

8 – Madness-Free Spending
Here, Sherman digs into the basics of budgeting. It’s familiar stuff for anyone who reads much personal finance material, except that Sherman offers one big idea: ranges instead of actual numbers.

How does that work? For each item in your budget, set a spending range. The low end of your range should be a “perfect” month – the goal you’re shooting for. The high end of that range should be a poor month – in other words, if you hit all of the high ends, you’d spend everything you earned. Then, in each area, you have a goal to strive for, as well as a fallback “safe” number if you can’t make it. Interesting concept.

9 – Philanthropy and Money Madness
Look at charity as an investment of another kind. You invest your money, but the rewards of that investment aren’t paid in dollars. They’re paid in goodwill, in benefits to the community, and in a sense of doing the right thing.

10 – Enough: Finding Your Sufficiency
Sherman digs into the idea of “enough” here. What is enough for you? Some people dream only of being rich – owning a mansion and a Lamborghini. That’s not for me. My dreams are much simpler – I want a modest home in the country and a healthy and happy family. That’s enough for me. Sherman’s basic argument here is that figuring out what’s truly “enough” for you is vital in getting a good grip on your financial health.

11 – Make It Happen
So, how can you make it happen? Most of the actions people need to take to get their money straight can be done with a series of short-term goals. Sherman advocates making a list of these tasks – and devoting serious time in the short term to knocking those tasks down. Build a budget. Start a savings plan. Build a debt repayment plan. These can all be done in the very near future – so get started!

Is The Cure for Money Madness Worth Reading?
The Cure for Money Madness has a lot of good ideas (and a few outstanding ones) and is written in a friendly and open tone. It’s a great selection to read if you’ve never dug into a personal finance book before – it covers the basics in a very clear fashion and is actually fun to read while also teaching you things.

However, if you’ve already read a well-rounded personal finance book, The Cure for Money Madness is a good choice to browse. Chapters four through eight have a lot of good information stuffed into them, little gems surrounded by a lot of what I would call “typical” personal finance information.