The seventeenth episode of The Simple Dollar podcast deals with stock investing. How do I invest in stocks (for retirement and otherwise) and why? Total time – 6:50.

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Episode Notes
Here are some additional notes that go alongside the comments in the podcast. Approximate times for the corresponding links and notes are listed.

0:00 – The theme song is a snippet of a Camper van Beethoven concert on October 25, 1986, shared via their very open taping policy. Listen to the concert in its entirety.
1:12 – I’m not a financial expert.
2:01 – It’s vital to remember that we’re talking about long term goals.
3:21 – A detailed explanation of why index funds rock.
3:52 – I’m not alone in this perspective, either.
4:48 – The Bogleheads’ Guide to Investing is essential reading on these topics.
6:01 – The organization I quickly mis-referred to as the “SIDC” here is actually the SIPC.

One thing I’d like to do in a future episode is have an audio reader’s mailbag. If you have a microphone on your computer and can record an MP3 of a simple, short question you might have on personal finance, careers, pop culture, or anything else you’d like me to answer, record it as an MP3 and send it to me. Keep the total recording under 15 seconds, please. Also, if you use Skype, feel free to ask your question that way – my username is trenttsd.

Comments and suggestions welcome.

Whenever I write a post and mention oil changes, I always encourage people to check the manual of their automobile to find out how often they should change their oil? Why? The frequency of oil changes varies greatly depending on the type of engine you have in your car, varying anywhere from every 3,000 miles to every 10,000 miles, with many different levels in between.

Quite often, when I mention this, a reader or two will say to ignore the manual and change the oil every 3,000 miles in order to truly protect the engine. Sure, some of these folks might be running a Jiffy Lube, but some of them simply are very cautious. They’d prefer to pay a little more now in extra maintenance costs to avoid a major crisis later.

To an extent, that’s how we all feel. If we didn’t feel that way, we wouldn’t bother changing our oil at all. Regular maintenance of the things in our lives saves us a lot of money over the long haul.

Yet, all I have to do is look at the Prius in our garage to realize that over-maintenance can be a real money sink.

Usually, my wife takes the car to the dealership for scheduled maintenance (they provide such maintenance at a very low cost if one buys from them). Unfortunately, we were recently on a road trip and realized that a “minor” maintenance milestone had been reached – just an oil change – so she just took it to a recommended local shop and had it changed while we were out and about on foot on our trip.

After that oil change, she observed that the shop had put a sticker on her windshield encouraging her to change her oil after another 3,000 miles, not the 5,000 miles recommended in the manual – and by the dealer.

The reason for this is obvious – many automobiles over the past few decades were made assuming oil changes every 3,000 miles and the number has seeped into general acceptance, plus the oil change shops make more if people bring in their car every 3,000 miles instead of every 5,000 (or more) miles.

Yet, just by following the maintenance schedule actually provided with the car, over the 150,000 miles we plan to have the car, we’ll save ourselves twenty (!) oil changes. That’s a lot less time and less money.

Sure, we could be extra cautious and get our oil changed more frequently. But to what benefit? The engine is designed for less frequent oil changes. Getting them done more frequently doesn’t particularly help the engine, but it does cost us time and money and produces more wasted oil. Over-maintenance has a real financial and time cost when it doesn’t reduce risk by any appreciable amount.

How can you avoid such over-maintenance costs? Here are the tactics I’ve found that have worked well for me.

First, get unbiased maintenance schedules for the equipment you have. Do not trust the word of people who will profit from more frequent maintenance, like auto repair shops or furnace filter manufacturers. Instead, look for sources of unbiased information – people who will be hurt only if they give you incorrect information. Consumer Reports can be one place to look, as can the manual for the product itself (and not the replacement or maintenance parts – look at your furnace manual, not the documentation that comes with a replacement filter).

Second, perform maintenance that has the lowest money and time costs per year, even if it costs more right now. For example, long-life furnace filters are often better choices, even though they cost significantly more, simply because you’re not replacing them as often. This also reduces the time and money costs of maintenance without adding risk to your equipment.

Finally, understand how the equipment actually works. This means going beyond just following step-by-step maintenance tasks. If you understand how the equipment works in more detail, you’re more likely to understand how to fix simple problems with the equipment yourself (like changing your own oil and spark plugs), as well as knowing some additional maintenance methods that can save you extra money (like how to quickly defrost an older freezer, which can be a huge money saver). The more you know, the less you have to spend on maintenance and repair.

Spending money and time to maintain your equipment (cars, appliances, etc.) is always a great idea, but it can sometimes include more time and money than necessary, particularly if you’re overcautious. Don’t be. Follow the instructions, find unbiased information, use long-term solutions, and take time to understand what you’re actually doing and you’ll find that maintenance isn’t as expensive or time consuming as you might think – but it does massively extend the life of your appliances and automobiles and home.

Perhaps the most well-known post in the history of The Simple Dollar is Everything You Ever Really Needed to Know About Personal Finance on the Back of Five Business Cards. That article was borne out of my attempt to summarize my views on personal finance down to five small illustrations – and it was a big hit.

Whenever I go to meetings, I tend to wind up with lots of business cards. Most of those business cards come from people that are just trying to hand cards to everyone – and I have no interest in contacting those people, ever. Instead of chucking them, though, I usually save them in a pocket in my laptop bag, and I’ll often pull them out when there’s an opportunity to doodle or an idea comes into my head. The backs of business cards make nice little spots for doodles and short notes, so I take advantage of it.

Sometimes, those doodles are really pointless – swirls and the like. Those cards end up in the trash.

At other times, I’ll jot down a phrase or an idea or a picture that succinctly nails some idea that’s floating around in my head. Those are the cards I hold on to. I stick them back into another pocket in my bag and go through them every once in a while. After years of doing this, I have a big pile of them.

The other day, I was searching through my bag for a computer memory stick when about half of these cards popped out all over a table. A friend of mine was standing there, picked up a few, and leafed through them with a smile on his face. He laughed at the last one, then scooped up a bunch more and browsed through them. I didn’t really mind too much.

After going through all of them, he said, “Some of these are great. You ought to pick out some of the best ones and share them with your readers. Seriously.”

So I’m following up on his suggestion and presenting ten of the business card doodles I particularly like. You’ll notice that some of these relate quite directly to earlier articles on The Simple Dollar – and some are completely out there on their own.

Enjoy. If this is a big hit, I may post another batch someday. If not – well, it was a noble experiment. Big props to Gapingvoid and xkcd, both of which inspire me with their similarly spartan drawings.

Oh, and feel free to print off any of these and do whatever you want with them. If you want, remix them, redraw them – whatever. If they inspire you, that’s all that matters.

Dearie

I Hate Work.

Don Draper on Nostalgia

Jay-Z

More or Less

Microsoft Card Flipside

Choices

I’ve Got a Plan

Lemon

Diversification

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.

I know that predicting the market is impossible, but different people are saying drastically different things about where they predict the stock market to go in the next year or so. What do you think will happen?
- Vern

First of all, what I’m about to say is solely my own opinion, founded on reading a lot of economics books over the years and reading publications like the Wall Street Journal and The Economist. This is my own opinion and not an expert one.

That being said, I think the economy is turning around, but I don’t think we’re going to return to the economic freight train of 2003 to 2007 any time soon. Instead, we’ll recover slowly. Unemployment will remain high for quite a while compared to 2003-2007, but low compared to other periods in history.

The biggest danger, as always, is finding a healthy balance. I don’t think spending money like it’s water is a good thing right now – but it’s never a good thing. Similarly, I don’t believe that buying bullets and guns and hiding in your basement is a great answer, either – but that’s never a great answer.

Balance, my friends, balance.

Trent, since part of you income is from ads on the site, it would seem that people that read the Simple Dollar via RSS or email would cause you to loose income, is that not the case?
- Bob

There are small ads on the RSS and email feeds, but they earn me less than 1% of my income.

Even given that, my belief is that sending out my writings via emails and RSS is well worth it. Why? It keeps readers interested. Many of those readers click through to the site to read the comments. Some of them open up only one email a month – but that one email might get them to visit the site.

To put it simply, having a reader is better than not having a reader, even if some readers earn me more revenue than other readers (even here, we’re talking about fractions of a cent per reader).

What do you consider a more valuable investment in your child’s future: a tutor now or a college education later?
- Jim

A tutor now, undoubtedly. The best thing I can give my child isn’t covering their tuition bill. It’s doing everything I can to ensure that they can actually learn and grow on their own and then ensure that I’m not a burden to them later on.

If a child has the skills to learn and the desire to push forward into self-learning, I’m not too worried about their college career, actually. A child that can push forward on their own will find a way to make it happen.

My responsibility as a parent is to teach them how to do this and instill that desire in them. Thus, my key period as a parent is right now, teaching them how to do this (and getting help if I need it), rather than writing a tuition check later on.

Do 401(k)’s really charge fees? I understood that funds charge fees, but I never realized that the vehicles themselves do. Could you clarify, Trent?
- The Frugal New Yorker

Most 401(k) plans charge rather high fees on the funds you can invest in within the 401(k). 401(k) program fees are usually covered by your employer.

The reason I tend to be wary of just using your company’s 401(k) is that often, a company will sign up for whatever 401(k) plan is cheapest for them. Since the company is out to make money, they’ll get you on the funds themselves by charging high fees there.

Not all companies do this, of course. You should always check the funds offered by your company’s 401(k) and see whether or not they charge high fees. Anything over 1% or so would start to set off warning bells in my head.

I have a question regarding the book Get A Financial Life, which you recently reviewed.

Should I take that 2% and open a Roth, or should I just leave it be? It seems like an insubstantial amount of money to go through the trouble of opening a separate account, but if the benefits are worth it I would have no problem doing it.
- Trey

Whether the effort is worthwhile really depends on how old you are. The younger you are, the more worthwhile it is to make the move.

Why? If you’re younger, you have more years between now and retirement – and that means more years for investment growth. Thus, the decisions you make early on have bigger tax implications at retirement than the decisions you make later in your career.

If you’re sixty, I wouldn’t worry about it too much. If you’re twenty five, I’d definitely get that Roth IRA opened up (I use Vanguard for mine) and start pumping money into it.

Why do you link to such awful articles in your roundup? Some of that stuff is completely in opposition to what you talk about on The Simple Dollar!
- Lily

I don’t link to stuff simply because I agree with it. If I did that, the roundup would be a chorus of echoes – quite boring.

Instead, I link to stuff because it forces me to think and re-evaluate my beliefs and ideas about personal finance, careers, personal growth, and so on.

Sure, I often link to articles I agree with. But almost as often, I link to articles I disagree with. My only criteria for linking is that it makes me think. If I find the ideas crossing my mind later in the day after reading the article, it’s likely I’m going to link to it.

Trent, to what extent does “knowing your audience” affect your blog posts? I mean, you’ve got a pretty niche market- most people I know would consider it some kind of punishment to read through a financial blog “for fun.” So do you pretend to write to the “average adult American” or do you recognize that your audience is typically more financially responsible than the average American, or at the very least, intending to be more financially responsible than the average American currently is.
- Tim

I don’t “pretend” to write for anyone.

I write for several audiences. I write some that are obviously for the longer-term readers, the ones who are pretty skilled in frugality and have their financial lives in pretty good shape.

I write for people who are in the midst of their turnaround and often have a religious fervor about debt repayment.

I also write for people who are suddenly realizing their precarious financial situation and are desperately Googling for help.

I don’t write for people who have no interest in reading The Simple Dollar. On the occasions when I write “devil’s advocate” posts, I’m mostly trying to reach the people who are in that last group, the ones who are rethinking their assumptions about their life and how they spend money.

I’ve got my money in order. I’ve got my cooking skills in order. The one thing in my life that is never in order is cleaning/organization. It’s something I constantly struggle with, the way others probably struggle with money. You seem to have it together in nearly every way … I’m curious what you to do conquer household cleaning and organization, if you care to share in the future.
- LDH

For one, I’m a big believer in “dirty floors and happy children.” Keeping a perfectly clean house comes in way behind spending time with my children. Sometimes, that means the house is a mess, with some dishes in the sink and some toys left out in the living room and a kitchen floor that needs to be swept while I’m out in the yard playing with the kids, but that’s a compromise I’m completely happy with.

I don’t really view it as a struggle. I make sure to keep ahead of the things that are really important, like clean laundry and such, but I honestly don’t sweat the details that much. I make an effort to keep the rooms where guests visit pretty clean so that I’m always happy to have guests over.

I think it comes down to a values thing. Step back, look at your life, and ask yourself how important a spotless house is in the big scheme of things. For me, it’s simply not that high on the importance list.

What type of life would you lead when you finally do retire many years down the road?
- Studenomist

I want to write novels and short stories at my own convenience, when the muse strikes me. The rest of the time, I want to be living on a patch of land out in the country with a big garden and a barn, with perhaps a bit of small-scale livestock (a couple cows, a goat, lots of chickens). I’d like to spend at least some of my time working for some charitable causes, and I’d like to be able to spend several weeks a year living in another country – not hitting the tourist spots, but living in an apartment out in an area far away from the tourists.

That’s the life I’d like to lead. It’s pretty much what I’ve always dreamed of.

It still seems really far away, but it doesn’t seem as far away as it once did. I’m taking steps toward that dream every single day.

I’ve been reading your blog entries for several years now. And this is the first time that I’ve had a question that I’m not sure I can answer on my own. I just graduated from grad school in May, and I’ll need to start repaying my student loans in a few months. The Dept of Eduction is offering a 0.25% rate reduction for enrolling in Checkmate II, their automatic payment program (i.e., they withdraw the monthly payments directly from your checking or savings account). Although the brochure indicates that it’s totally “safe” and “secure”, I’m a bit wary. With a credit card, I know that I can dispute any unauthorized charges. But if they empty my checking account inadvertently, I’m guessing that it’ll be very difficult to convince the bank to reverse the charge. Can you think of any other advantages or disadvantages to setting up automatic payment? Is the 0.25% rate discount worth the risk?
- Jennifer H.

I used this very program for several years with no problem.

It’s in the federal government’s best interest to be as accurate with this as they possibly can. Once an automatic payment has been set up – whether it’s with the federal government or any large business – the cost of them messing up such a payment simply isn’t worth it. It’s a lot more worthwhile for them to build careful, redundant systems that basically eliminate such erroneous billing.

Basically, I trust automatic payments, as long as they’re executed by a business or organization larger than a mom-and-pop shop. Those businesses and organizations execute lots of payments a month, and it’s simply not worth the risk for them to not do it as carefully as possible. It has lower risk, in my opinion, than me manually writing checks or manually doing online bill pay.

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 productivity, personal growth, career, or entrepreneurship book.

The brightly-colored cover of this book caught my attention on the “New Releases” shelf at the library. I picked it up and read a bit of the first chapter – a story about a girl left alone in a room and watched by her mother. The radio was on and the girl couldn’t help herself – she jumped up and danced to the music. It’s just what she was drawn to do – in her words, “she needed to move to think.”

It was an idea that really stuck with me. Quite often, I need to write to think. I need to be able to take ideas in my head and put them down in word form – if I don’t do that, I tend to spin my wheels in life. Writing is an outlet – it’s my passion and it’s simply a part of me. Without it, i would feel empty.

Virtually everyone has a deep passion or two like this – an activity without which we wouldn’t feel whole. The Element by Ken Robinson digs into those passions – finding them, bringing them to the forefront, and evaluating the enormous impact that passions can bring to our lives. Once found and given room to breathe and grow, passions can transform our day-to-day activities, our careers, and our whole lives.

The Element
What do you do when you’re alone and have no responsibilities to follow up on (assuming, of course, that any supplies you need are available to you)? I tend to do one of two things: read or write. I love expressing myself in the written word and receiving the ideas of others through that same medium.

Other people might do different things. One person I know immediately starts drawing elaborate landscapes – I’ve seen his notepads after meetings. Another person heads immediately to his workshop and starts working on small pieces of furniture – miniature display cases and end tables. One woman I know heads straight to the piano and starts playing whatever song appears in their head.

Take someone with the initial passion like that and feed that passion. What do you think happens next? That passion compels them to get better at their chosen craft.

Think Differently
Self-definition can be a dangerous opponent. Many people already have a strict definition of who they are – and who they’re not. “I’m a good accountant, but I’m not a painter,” says the naturally artistic individual whose life path somehow led her into accounting. Yet she doodles magnificently during long, boring meetings. “I’m a researcher, not a writer,” I once told myself, but I couldn’t help but spend my spare time writing essays and short stories and the like.

You aren’t defined by what you’re doing right now or what you believe your limits to be. Nor are the people around you. Margie from accounting might actually be a great artist. Trent from R&D might actually be a great writer. But until they discover it, they’ll stay stuck in place.

Beyond Imagining
Perhaps you know what you’re passionate about, but actually following it seems like a daydream. The competition is too fierce. I don’t have time for it. I love doing it, but I’m not actually good at it. To put it simply, they can’t imagine themselves actually succeeding.

Sustained passion can overcome all of these obstacles, as long as you’re willing to step back and look at the big picture. The people who succeeded before you – they’re human, too. The biggest difference between where you are and where they are is perspective.

In the Zone
One sure sign that you’ve stumbled across the right mix of passion and personal skill is the so-called “zone.” The “zone” refers to an intense level of focus, to the point where a person completely loses track of time and other events going on around them. When you’re in “the zone,” you’re utilizing all of your cognitive effort and talent towards one specific endeavor, often with amazing results.

When I’m in the zone, I lose all track of time and all track of the world around me. I don’t hear my wife talking to me. I don’t hear the telephone ringing. I’m just absorbed in what I’m doing. At some point, I’ll snap out of it, glance at the clock, and pretty much believe whatever it says, whether fifteen minutes have passed or nine hours have passed. I’ll believe either one. Almost without exception, all of my best work is done when I’m in “the zone.”

What things do you do that put you into this kind of “zone”? Whatever it is, it’s probably an indication of what you’ll excel at in life.

Finding Your Tribe
When you begin to follow your passion, you need a group of people around you to support you and help you grow that passion. They can be mentors, advisors, friends, and peers.

For many, though, the trick is finding them. The internet is making this easier, of course, but meeting people face-to-face can sometimes be a real challenge. Robinson offers a great deal of advice on how to find peers that share your interests. One big key that’s worked for me – visit shops in the area that sell items related to your passion and ask around there for groups and interested folks. If there are no groups, get involved in starting one and cooperate with that store to promote the group (they’re usually happy to do this).

What Will They Think?
Many people worry about what their friends might think of them if they start following a new passion. Will my friends laugh at me if I start spending a lot of my time painting?

Here’s the scoop: your real friends will support you. If you have “friends” that laugh at you because of an interest you’re following, are they really friends?

Along those same philosophical lines, you’re likely to find new friends that share your passion if you put effort into finding your tribe. When some friends – the unsupportive ones who really aren’t there for you as you grow – exit stage left, new ones – ones who do support you and share your passions – enter stage right.

Do You Feel Lucky?
Here, Robinson riffs on the idea that fortune favors the prepared. If you put yourself in situations where luck at least has a chance to happen, you have a much higher chance for success than avoiding such situations.

The simplest way to do this is to get involved in community projects or activities related to your interest. The nexus where your passion meets a lot of people is the best way to have opportunity come knocking at your door.

Somebody Help Me
Robinson digs deep into the idea of finding and cultivating a mentor here, suggesting that anyone embarking on a new life journey can really be served by finding someone to guide them.

For some passions and experiences, simply finding someone else who is experienced and passionate can be enough – you can probably locate these folks through community groups or online forums. For others, you may need to find people who are deeply engaged in careers that involve your passions. Don’t look for people who would be in direct competition with you – that would present a big conflict of interest – but look for people who are doing similar, parallel things. Ask them questions – and if they need any help you can provide, offer it!

Is It Too Late?
Obviously, no, it’s not.

Robinson tells several anecdotes, but the one I like to think about is my great grandmother, who passed away in 1999. During the last decade of her life – when she was in her eighties – she took up painting. She painted landscapes and a few still lifes and a few of them (painted in the year or two before her age started to catch up with her) have a certain something to them that’s indescribable. I have one hanging in our dining room that depicts a late winter evening, snow heavy on the ground. In the distance there’s a cabin with lights on. Whenever I look at it, I have this strong sense of “going home after being away for a long time” – a feeling evoked by this painting that my great grandmother’s frail hands painted. That’s exactly what she was trying to communicate with her frail hands and her paintbrush and the message came through loud and clear. That’s talent – and a bit of passion, too.

If a woman can take up painting in her eighties and produce things that can take my breath away, it’s not too late for you.

For Love or Money
Many people focus on the question of making money with their passion. Can they turn it into a profit-making venture? If not, why invest the time?

Robinson’s suggestion essentially boils down to do what you’re drawn to do. If it feels right to you – if it sucks you into that “zone” – do it. That’s the kind of experience that makes life worth living. Quite often, with a lot of practice of the mechanics of what you’re doing, the “zone” can produce truly amazing things and others will notice and value those things.

But there are no guarantees with anything in life.

Instead, follow the passion because you love to do it. If your reason for not following it revolves around

Making the Grade
The best part of following your passion is that you get to define what success is on your own. Perhaps success is just simply getting started each day, or maybe it’s an enormous lofty goal. Whatever it is, you define it – you get to figure out what success is.

It’s your baby, and it’s beautiful.

Is The Element Worth Reading?
The Element really codifies some of the ideas I’ve been developing over the last few years about following your passions – it’s really worth it, but you have to overcome your fears and you can’t just expect the world to come knocking because you’re now doing something interesting. It requires interaction, networking, practice, and footwork to channel your passion into something that can put a roof over your head. But it’s worth it.

Robinson does a great job bringing these ideas together into a very readable book, packed with approachable stories and ideas. If you’ve ever had an inkling of a passion in your life but have kept yourself from chasing it for one reason or another, Ken’s book might just be the antidote.

As with many books of this type, you get out of this book what you put into it, so if the concept seems alien or uninteresting to you, you likely won’t get too much out of The Element. However, if you’re struggling to find your passions and direction in life, this can potentially be a life-changer.

We have little kids. Kids are messy. Our daughter spills milk or juice on almost a nightly basis. Our son, who’s a bit older, doesn’t make messes as often, but when he does, they tend to be even more disastrous, such as a full jar of salsa knocked off the counter and shattered all over the floor.

For years, our solution to this problem has been a big roll of paper towels. It’s simply what we’re familiar with and, like many simple and familiar things in life, it was almost an automatic thing to have on hand. We simply had paper towels in the kitchen.

A few weeks ago, though, after we bought another batch of them at Sam’s Club, I began to really question that purchase. Sure, we had a lot of messes, but did we really need to be dropping $5 or more a month on paper that we wind up throwing into the landfill? Probably not.

One of my usual thought processes when looking for a more cost-efficient way of doing things is to ask myself, “What would my great grandmother do?” She lived through the Depression and always had tons of great ideas for doing little things like this. Her solution would have been obvious – she would have just handed me a cloth towel and given me a look that said, “Come on, Trent, you’re smarter than that!”

Cloth. It’s that simple. Sure, it’s easy to see why people would use paper towels – they don’t require rewashing after each use – but once you have a steady batch of rags to recycle, you never run out. Plus, you can just toss them into pretty much any load of laundry you do – they don’t take up much additional room – and refill your towels in a jiffy.

So, while we finish our (hopefully) last batch of paper towels, we’re giving cloth towels a thorough test run, evaluating the financial costs and time invested as we go through them. Here’s what we’ve learned.

You Gotta Have a Process
The first – and most obvious – question is where will we keep the rags/towels? We don’t have an enormous kitchen and the drawer space is fairly limited. Thankfully, I’ve been slowly paring down our kitchen equipment (since quite a lot of these tools are redundant) and we now have enough space to empty out a drawer that we can devote exclusively to kitchen rags/towels.

So, really, the first step is to have less stuff in your kitchen. If you have a peach de-fuzzer, perhaps it’s time to take it out to the ol’ yard sale and find room for something else.

Now that we have room for the towels, the process is easy. We just grab a towel, attack the mess… and then what? This is supposedly where the convenience factor of paper towels comes into place, since you just toss those into the trash. Our solution is actually pretty similar – we just toss them down the stairs into the basement! Then, the next time we go down there, we snag them and take them to the laundry room with us and toss them straight into the washer. Then, the next time someone does a load of laundry, the towel gets cleaned and eventually returned to the drawer. Usually, I don’t even bother to fold them much – just a quick once-over.

If you consider the fact that paper towels mean you’re taking out the trash more often, I’m not really convinced that cloth towels add much time to your routine. In fact, if you’re like some people that I’m friends with and have a washing machine near your kitchen, you might just be able to toss the cloths straight into the washer after using them, letting them sit until the next load.

Accumulating the Cloths
So, where do you acquire these cloths from? I’ve found several good sources for accumulating them.

The easiest method is to simply buy a big box of them. Sam’s Club, for example, sells a big box of mixed-size cloths for $13, which should be more than adequate for this kind of purpose. Although it’s an investment, it gets you started right.

From there, you can get into cheaper options by looking at bulk cloth (like flannel). It’s easy to cut these into large squares and – if you’re handy with a sewing machine – you can sew up the edges and they’ll last for a long time. At a fabric shop, you can get flannel for $1 per square yard – so if you cut them into six inch squares, there’s thirty six cloths.

You can also hit yard sales for this purpose. Quite often, if someone has re-done their decor, they’ll look to sell off old cloths – washcloths and the like. These can be perfect for a kitchen grab-bag of rags to wipe things up with and can be had for pennies.

Another option – old t-shirts. We often use these for garage rags – tasks like wiping off cars after washing them, washing our hands outside after working in the garden, and so on. However, they work quite well for kitchen cloths. As with bulk cloth, these will last longer if you cut them into big squares or rectangles and sew up the edges.

With cloth like this, staining isn’t really a worry. The big concern (for me) is absorbency. Flannel, terry cloth, and such cloths can absorb a lot of moisture, so they’re the type we prefer.

Does This Actually Save Money?
Previously, we would go through a jumbo pack of paper towels roughly every two months. Each jumbo pack costs about $17 – there are cheaper options for the same amount of paper towels, but we would go through them much faster because the towels were of much lower quality and required many more to clean up a mess.

With an all-cloth option, that cost effectively disappears once the cloth towels are in circulation. There’s no extra laundry – sure, there may be three or four of them already in the machine when I go to run a load of laundry, but it requires no change in the amount of homemade detergent I add to the mix.

The real kicker: does it add more time? In the kitchen itself, a good cloth rag actually cleans up a mess a bit faster than a few paper towels do. If it’s really wet, I have to wring the cloth out first before tossing it down the stairs. Then there’s perhaps an extra second or two spent picking up the cloths later and tossing them in the washer. Later, I do have to stop and put the clean cloths back in the kitchen rag drawer – maybe two or three seconds. Over the course of a month, it might add up to five extra minutes.

So, over the course of a year, I spend an hour dealing with the cloth rags instead of the paper towels – and I save $102 in the process and don’t toss six jumbo packs worth of paper towels in a landfill for my grandchildren to deal with.

Sounds like a deal to me.

Many newer readers of The Simple Dollar haven’t been exposed to the hundreds of great articles in the archives of the site, so this is a weekly series that highlights the five best posts from one year ago this week, as well as the five best posts from two years ago this week. I call it … the Time Machine.

One Year Ago (September 13-19, 2008)
The Psychological and Emotional Attachment to What We Have and What We Want “I want this and I won’t be talked out of it.” It’s perhaps not exactly how we think, but the basic idea is familiar to all of us. Overcoming that – and being rational about it – is a big key to personal finance success.

Using TreasuryDirect for Conservative Investing TreasuryDirect is a fantastic service run by the United States government for investing in U.S. treasuries. Here’s how to utilize that service for conservative investing success.

The Least Important Bill What’s your least important bill? Why are you still paying it?

What a Frugality Expert Is – And Why I’m Not One I often get pointed at as being a “frugality expert” or a “personal finance expert.” I’m not either – I’m just an ordinary guy talking openly about my money journey.

Eight Tactics for Handling Greeting Card Occasions I don’t like sending mass-produced greeting cards, but I do like to recognize others at key moments in their life. Here’s how I navigate that dichotomy.

Two Years Ago (September 13-19, 2007)
Seven Pieces Of Financial Advice For A High School Student High schoolers are often taking their first steps into the real world. Here are some great tips for them so they don’t take poor steps starting out.

Teaching Yourself To Cook At Home: Ten Tips From My Kitchen To Yours Cooking at home is a tremendous way to save money, teach yourself skills, and eat healthier, all at once. It just takes the courage to get started.

There Are Two Guaranteed Ways To Improve Your Financial Situation … But Which Is Better? Earn more and spend less. Both serve to increase the “gap” between your spending and your earnings, which is what you need for financial success. But which is better?

How I Practice Voluntary Simplicity Voluntary simplicity basically means choosing to live a simpler lifestyle with fewer things to maintain and be responsible for. It gives you more free time and saves you significant money, too.

What Should Your Net Worth Be? Why “The Millionaire Next Door” Equation Falls Short – And What A Better Thumbnail Calculation Might Look Like Many “thumbnails” for net worth overestimate one’s net worth when they’re young and sometimes underestimate it when they’re older. Here are my thoughts on it, along with a better thumbnail calculation.

If you’d like to browse through more of the archives, visit the chronology, where all posts are listed in chronological order.

Nine Ways to Get More out of The Simple Dollar
This is kind of a FAQ for new readers and is posted each week along with the Time Machine. Here are nine great ways for new readers to dig deeper into The Simple Dollar.

1. Subscribe by email or RSS. Visiting The Simple Dollar’s website is great, but for many people, it’s more convenient to receive the articles in another form. It’s easy to join 60,000 other subscribers and get The Simple Dollar’s content by email or in your RSS feeder (if you’re unfamiliar with RSS, check out Google Reader.

2. Comment. Each article on The Simple Dollar has lively discussion. Just click on the green square in the upper right of each article on the website and join in!

3. Read my story of financial meltdown and recovery. The Simple Dollar isn’t based on what I’ve read in books or learned in school. I’ve made a lifetime of financial mistakes – The Simple Dollar is a record of what works for me during the process of getting my life on a better track.

4. Download my free 49 page e-book. Everything You Ever Really Needed to Know About Personal Finance On Just One Page is completely free. It summarizes all of the key lessons I’ve learned along the way about personal finance in one tidy package – in fact, all of the main principles can be found right on the cover.

5. Follow me on Twitter – or other social networks. I post tons of interesting articles, quotes, follow-up material, commentary, and other material on Twitter. Follow me! If you’re unfamiliar with Twitter, it’s essentially an open discussion forum for people to share ideas and thoughts with other like-minded folks – you just choose the people you want to listen to and their ideas and thoughts are all delivered to you on a single page.

I also participate on several other social networks. Feel free to check me out on del.icio.us (it’s where I collect links, from which I select the ones that appear in my weekly roundups), wakoopa (what software I use), GoodReads (what books I’m reading), Facebook, and FriendFeed (which aggregates everything). I also have an irregularly-updated personal site, TrentHamm.com.

6. Dig through “31 Days to Fix Your Finances.” 31 Days to Fix Your Finances is an article series that outlines how you can get a grip on your finances over the course of a month.

7. Send me your questions and suggestions. Send me an email and let me know what you’re thinking, what you’d like to see, and any questions you might have. I try to respond to as many emails as possible and I read them all. I may even use your question in a future article!

8. Become a “Friend of The Simple Dollar.” If you find the stuff on The Simple Dollar valuable and are willing to spend five minutes or so a month to help me out with small things, please consider signing up to be a “Friend of The Simple Dollar”.

9. Email a great article you find to a friend. Find an article that you think your friend would love? At the bottom of each article, you’ll find a link that says “Email this” – just click on that, type in your friend’s address, and send it right along to them!

This is the sixth of sixteen parts of a “book club” reading and discussion of Keith Ferrazzi and Tahl Raz’s Never Eat Alone, where this book on building a lifelong community of colleagues, contacts, friends, and mentors is teased apart and looked at in detail. This entry covers the eleventh and twelfth chapters, “Never Eat Alone” and “Share Your Passions,” which appear on pages 94 through 104.

One interesting aspect of making connections for me is that my career is pretty solitary. I stay at home most days, working from my office, without meeting people face to face.

Thus, quite often, my “networking” occurs online. That’s a big reason why I’ve signed up for so many social networks, like FriendFeed and GoodReads and Twitter and even BoardGameGeek – they serve as my “virtual” watercooler during the day. I dig into topics of interest, seek out local people (particularly those interested in the same things I am), and just talk.

Have I met people face to face because of those services? Yes, quite a few. I’ve even built some long-term friendships thanks to them.

The end result is that I use online social networking in part to build and continue offline face-to-face relationships. For me, as a person in a career without a strong inherent social component, this is invaluable in helping me build an ever-bigger circle of friends and associates, locally and otherwise.

A Full Calendar
On page 94, Ferrazzi advocates for a really full social calendar:

The dynamics of a network are similar to those of a would-be celebrity in Hollywood: Invisibility is a fate far worse than failure. It means that you should always be reaching out to others, over breakfast, lunch, whatever. It means that if one meeting happens to go sour, you have six other engagements lined up just like it the rest of the week.

In building a network, remember: Above all, never, ever disappear.

The key, I think, is to “never, ever disappear.”

We all have different ways of connecting with people, interacting and sharing ideas and experiences. Ferrazzi’s call really is just to keep up with it – don’t let it slide.

This means keep in contact with people. Call people. Send messages to people. Do things with people. Do it consistently.

“Never, ever disappear” is a powerful reminder to use to keep yourself from letting friendships and other relationships slack off. In fact, reading it just now convinced me to place two phone calls and send several emails just to touch base with people important to me.

Always Invite People Along
On page 96, Ferrazzi talks about inviting people along on things you’re doing:

I’m constantly looking to include others in whatever I’m doing. It’s good for them, good for me, and good for everyone to broaden their circle of friends.

My basic philosophy is this: if it’s something I enjoy doing, then I’m going to be enthusiastic about it and it’s likely going to rub off on others, so I don’t hesitate to invite others along with me to do it if there’s such an opportunity.

Take board games, something I’m really passionate about. My passion is such that I can take out a simple-to-play board game – like, say, Ticket to Ride – and get pretty much anyone enthusiastic about playing and enjoying themselves while playing. Enthusiasm is infectious.

Thus, if you want to invite people to do something with you in order to build a friendship, choose things you know you enjoy – and things that you’re suspicious that they will enjoy. If you do that, right there, you’ve got the foundation of a good time, no matter what the activity is.

Who Should I Mix?
Later, on page 97, Ferrazzi talks about mixing people together. Obviously, one of the best ways to build lots of relationships is to have events with several people at them (i.e., a small party), but how can you know people will interact well?

When you try this sort of thing, pay special attention to the chemistry between people. Do you have a sense of who will get on well with each other? It doesn’t mean that everyone has to have the same background and sensibility. In fact, a nice mix of different professions and personalities can be the perfect recipe for a terrific gathering. Trust your instincts. One litmus test I often use is to ask myself if I think I’ll have fun. If the answer is yes, that is usually a good sign that the dynamic will work.

That rule of thumb is really useful, especially if you expand it out.

Try this. Imagine four people you know fairly well who don’t know each other well or at all. Now, imagine if you’d be comfortable with all of those people in the same room with you. Does it seem fun or painful?

If it seems fun, it’d probably be a great idea to invite all of them to do something together – a meal or some other social event. Not only is it a great opportunity for you to touch base with several people you know at once, it’s also a chance to introduce interesting people to each other, possibly forming the foundation for some interesting relationships.

My wife and I are slowly starting to do these kinds of things, looking for different groups that we can invite over for dinner. I’ll confess that having kids makes this more difficult, but it’s still quite possible – and quite fun. It’s also incredibly valuable for building great relationships with a lot of people, which, again, can really help later on in our lives.

Where Not to Find People
Where can you go to meet new people? Ferrazzi talks about what doesn’t work on page 99:

I have a confession to make. I’ve never been to a so-called “networking event” in my life.

If properly organized, these get-togethers in theory could work. Most, however, are for the desperate and uninformed. The average attendees are often unemployed and too quick to pass on their resumes to anyone with a free hand – usually the hand of someone else who is unemployed looking to pass on his resume. Imagine a congregation of people with nothing in common except joblessness. That’s not exactly a recipe for facilitating close bonds.

When it comes to meeting people, it’s not only whom you get to know but also how and where you get to know them.

In other words, you should be looking for positive things you have in common, not negative things. If you can’t come up with a good reason to meet people, then don’t go.

One example I always think of is when I see parents forcing their teenage children or spouses forcing their partners to go to things that they obviously don’t want to go to. How does it help anyone to stick someone in a place where they don’t want to be? It’s a waste of the person’s time (they don’t want to be there) and wastes the time of the people there (the entire mood of the event goes down).

In other words, instead of going to things you don’t want to go to, focus your energy on things you DO want to go to. If there are activities in your life that just drain you, drop them. They’re not helping you and they’re not helping the people you’re participating with.

Where to Find People
So where should you go? The place to start is with shared interests and demographics, as mentioned on page 100:

Shared interests are the basic building blocks of any relationship. Race, religion, gender, sexual orientation, ethnicity, or business, professional, and personal interests are relational glue. It makes sense, then, that events and activities where you’ll thrive are those built around interests that you’re most passionate about.

Friendship is created out of the quality of time spent between two people, not the quantity.

In other words, the most quality time you can spend building relationships with others are when you’re spending time doing things you’re passionate about.

This advice matches well with what I always suggest that people do when they feel that their life is aimless but overflowing with stuff to do: pare down. Cut out activities that aren’t doing much for you, even if the thought of it makes you feel guilty. Instead, focus on the activities that get your motor going.

One thing I notice people often doing is sticking with things far past their sell-by date. They’re no longer passionate about the thing they’re doing, but they feel “committed” to participating all the time, going to meetings and other things, even though their heart isn’t in it.

My advice? Cut it out. Then, replace that time with an activity that you’re passionate about. You’ll win in every way by doing this.

Then What?
On page 102, Ferrazzi offers some detailed advice on how to fill that found time:

Make a list of the things you’re passionate about. Use your passions as a guide to which activities and events you should be seeking out. Use them to engage new and old contacts. If you love baseball, for example, take potential and current clients to a ballgame. It doesn’t matter what you do, only that it’s something you love doing.

So what do you like to do? What do you identify with? From there, what sort of social structures are available along those lines?

For me, my passions are reading, writing, my family, games, technology, and my faith. That means I look for writer’s circles, book clubs, other parents (and parenting groups), gaming groups, Tweetups, and other such meetings. I also look around for general community meetings that allow me to meet others in my community.

That alone can really fill my social calendar, let alone inviting others over to do things. I actually have to be careful about what I choose to do, but I avoid things I don’t want to do. If I want to do it, I can be rest assured that other things will follow – building relationships and so forth.

On Wednesday, we’ll tackle the thirteenth and fourteenth chapters – “Follow Up or Fail” and “Be a Conference Commando.”