Almost immediately after yesterday’s post about frugality and personal value went up, a reader asked me a question via Twitter:

You wrote about “social capital” today. I’ve seen it a few times in other places but I don’t understand what it means.

Social capital is an interesting concept that at first glance may not have direct implications with personal finance, but time and time again, social capital can have an enormous positive (and negative) impact on our financial state. Let’s take a look.

Relationships
Relationships with other people form the backbone of a surprising amount of personal finance success, from the job you want to the career path you dream of to the great deals you want to find. The relationships in our lives help us get our foot in the door time and time again.

My first job in college was given to me by a professor that I befriended while taking his class. Shortly after that, I requested that he become my academic advisor as well. A year later, he introduced me to a person on staff at the college, who I built a very long friendship with (one that still survives today, more than a decade later). That staff support person introduced me to another professor, who later arranged for me to get a very nice job straight out of college. Because of that job, I was able to meet several additional people, which directly led to my second post-college job.

Don’t get me wrong, I was qualified for each of those jobs. My ability to get them, however, had a strong leg up because of my established relationship with the parties involved with each job. In each case, the person I knew was either hiring or had a very close relationship with the person hiring.

Relationships are key. The more positive relationships you have with people, the more likely doors will open for you.

Building Relationships
Relationships, at their core, are exchanges of value. Your friends and associates give you information, deals, items, entertainment, and so forth, and you return the same.

I have one friend, for example, that is the go-to guy for home improvement advice. I have another friend that will come and help me in almost any pinch, no questions asked. I have a couple more friends who are always up for coming over, hanging out all evening, and playing games until dawn.

In each of those cases, there’s an exchange of value between the people in the relationship. I give my humor, my knowledge, my time, my connections, my skills, my compassion, and so on to others. In exchange, they give those things back to me.

Social Capital
The idea of social capital is simple. Social capital is built whenever you give in a relationship without expecting anything directly in return.

Let’s say, for example, that one of the community groups I’m involved with wants to have a banquet, but no one is willing to step up and organize. I raise my hand and say, “I’ll do it,” then I coordinate everything on my own. This earns me a bit of social capital within the club.

Alternately, if a friend’s computer is fried and I spend a couple hours at his house disassembling it, replacing the motherboard, and getting things back up and running, I earn a bit of social capital with him.

If a friend of mine needs a job and I’m able to call someone up and help that person get a job, I earn a bit more social capital.

When you’re kind to people, listen to their problems, and are supportive, you earn a bit of social capital.

What good is it?

Social capital earns dividends. If you have a lot of social capital, people will recognize you on the street and greet you. They’ll tell others positive things about you when you’re not around. These (among many other things) are the dividends earned by a solid supply of social capital.

Social capital can be spent. If you’ve spent a lot of time helping others and then you need help, you can cash in some of that social capital and ask for help. Your efforts in building up that social capital will pay off when the support comes through.

Social capital can be reinvested. If someone calls you up and offers you something of use to you (because of the social capital you already have), you can take it (spending some of yours) and pass on that offer to someone else (building up some more).

Building Social Capital
The best way to build social capital is to help others without expecting anything in return. Help people you know. Volunteer for the tough tasks. Be there for your friends and family.

Do it consistently and you’ll begin to build up social capital. People will think – and talk – differently about you. You’ll slowly find more and more good things coming your way.

Yes, sometimes, people take and take and don’t seem to give in return. If you think you’re surrounded by people like that, it might be true – or it just might be that you never cash in the capital you have. Ask for some things.

If you find people who won’t help you after you’ve given them a lot of help, those are the people to avoid – and over the long run, they’ll be avoided by quite a lot of people.

Good luck!

Earlier this week, I offered up a post detailing how I wrap Christmas gifts, utilizing brown paper and yarn. The response was mixed – some people didn’t like the aesthetics of the packaging, while others did (obviously, I’m in the latter camp, as I love the aesthetics of brown packages and yarn).

Guess what? We’re both right.

For some people, there’s a lot of value in a certain gift aesthetic. Having a bundle of beautifully-wrapped presents under the tree adds value to their holiday season because of the visual appeal it brings to their home. That’s cool.

Others don’t really care that much about the wrapping and instead focus on the items inside. It doesn’t matter how they’re wrapped, just that there are presents people will be happy to receive under the tree. That’s cool, too.

Each of those groups will seek to maximize their value in a different way. The individuals who love beautifully wrapped gifts will spend more of their Christmas budget on wrapping paper, bows, ribbons, and other decorative elements. They’ll also spend more time wrapping gifts so that they look perfect and wonderfully appealing to the receiver. Others (myself included) will spend more time thinking carefully about the item the recipient will want and view wrapping as merely a way to disguise the item from the receiver. Their Christmas budget will minimize wrapping costs in favor of spending a little more on the gifts themselves.

And there’s nothing wrong with either perspective. Frugality is all about your personal value – maximizing the “bang for the buck” for the things you value. For me, it’s not the gift wrap on a present – for others, it’s all about beautiful gifts under the tree.

This pops up time and time again when you talk about frugality. Some people think it’s ludicrous to make your own laundry soap. I think it’s unnecessary to wash sandwich-size resealable baggies. Some people are simply disturbed that we’ve bought second-hand cloth diapers off of eBay to diaper our children with. I won’t dumpster dive or dig through items people set out by the curb for trash. Robert Pagliarini, in his CBS column, actually called me out for talking about brewing my own beer.

Frugality isn’t just about following a list – and then judging a list to be useless because some of the items don’t match your values. It’s about absorbing lots of ideas and utilizing the ones that fit your life. It’s about thinking about the things that work for you, not tossing aside everything because some ideas work better for others.

The next time you come across a tip for saving money, don’t discard it immediately because you don’t think that it applies to your life. Think about it in detail. Perhaps some aspect of it could be of use to you – wrapping small gifts in cut-up brown paper bags, using yarn as a decorative element, or so on, in the example of the gift-wrapping article. Or maybe none of it is – but someone else you know might find it useful, in which case you can pass it on and increase your own social capital a bit.

Frugality is about value and there’s value in almost everything – but that value is different to some people. Good luck.

Everyone’s done it. We start out with some fantastic goal in mind. I’m going to save up for a down payment in three years. I’m going to lose 50 pounds this year. I’m going to get all of my financial paperwork straight. I’m going to be frugal.

I’m quite guilty of this myself. I’ll often strive for some sort of financial perfection, but then I’ll find myself spending money on something unnecessary (for example, I think I overspent on Christmas this year) or I’ll forget some important financial task that needs to be done, even if it’s written on my calendar.

I’ll stop by the local game shop to see if anyone’s around for the local board gaming group – and wind up walking out of there with a new game to play myself.

I’ll misplace a bill and be late in paying it, even though I have far more than enough money to cover it.

I’ll put aside a rebate form I need to fill out – then find it three months later.

At those times, it’s really tempting to tell myself that I’m a failure, that all of my hard work is really for naught because I still succumb to making mistakes – and sometimes, those mistakes are pretty sizeable ones. I’ll beat myself up over a mistake, I’ll believe I’m a failure, and I’ll wonder why I even bother.

At those times, I need to just remember one key thing.

The perfect is the enemy of the good.

Mistakes are not failures. Mistakes are a step or two backward on a journey of a thousand miles, one in which you’ve already progressed a long way. Even after a mistake, you’ve still made a lot of progress from where you’ve started. More importantly, after a mistake, you’ve learned something about yourself and about the goal you’re trying to achieve. And perhaps most important of all, mistakes are part of life. Everyone makes them, whether you see them or not.

Perfection demands a lack of mistakes, and when you set yourself up expecting perfection, you’re doomed to fail from the start.

Success comes from recognizing that mistakes happen, that you can’t beat yourself up over them, and that you need to step back and learn from them.

When I stop by the game store now, I’ll be on guard against temptation, either by leaving my wallet behind or by judiciously applying the ten second rule.

When I get a bill or a rebate form, I pay it immediately or I place it front and center until I do pay it or fill it out.

I take steps backward all the time and I could use that as a reason to give up and to define myself as a failure. But when I look at where I was then and where I am now, I realize I’ve already come a long way on my journey and that my mistake is just a few steps backward after miles walking forward.

If I gave up after those few steps backward, that would be a real tragedy, wouldn’t it?

Philip Brewer is perhaps my favorite personal finance blogger. I thoroughly enjoy his writings and I’ve told him so in the past. A few months ago, I offered him a very rare guest post slot here at The Simple Dollar so I could share his writing more directly with you all. This is the article that Philip contributed. If you enjoyed it, feel free to read some of his other stuff.

People who come from wealthy families learn how to live off capital. The rules are taught along with all the other things they learn from their parents–how to dress, how to eat, how deal with bankers and trust officers. But even though most people don’t learn the rules, living off capital is just a skill, and it’s one that everybody should learn, because everybody lives off capital sometimes.

People usually think about living off capital in the context of retirement, but that’s just one (albeit important) example. Perfectly ordinary transitions, such as losing a job and having to find another, also amount to living off capital. There is also the broad swath in between: Living off capital for longer than just the length of time it takes you to run through your emergency fund, and doing so without the institutional support–social security, medicare, maybe even a pension–that comes along with retiring at an ordinary retirement age.

Income
If you’ve got a lot of capital–that is, if you’re wealthy–then living off capital is easy: You invest enough in treasury bonds that you can live off the interest.

It’s not trivially easy, of course. You have to allow for taxes. You have to allow for inflation. You have to have some sort of cushion or reserve in case your investment return falls. But, generally, living off your income is straightforward.

You allow for taxes by setting aside enough of your income to pay your taxes. This isn’t hard, even if you have to file quarterly estimated taxes, but you have to do it yourself; you don’t have an employer automatically taking care of it for you by deducting it from your pay. Screwing up is expensive–screwing up badly may even be criminal.

You allow for inflation by reinvesting enough of your income to preserve the value of your capital. If your money is in US dollars, TIPS (Treasury Inflation-Protected Securities) will do exactly that. The principle value of the bonds increases automatically to keep you even with inflation, and the interest is paid out on the inflation-adjusted principle, so your income rises with inflation as well. (The adjustment is based on the Consumer Price Index while what matters to you is your own cost of living, so you can’t entirely delegate the job of allowing for inflation, but TIPS will do most of the heavy lifting.)

You allow for reversals by having a cushion somewhere. Ideally, have two cushions: First, a reserve fund with enough money to cover any unexpected expenses. Second, some flexibility in your cost of living, so that a decline in income can be matched with a decline in spending.

Beyond just income
The wealthy have other concerns than just supporting themselves–they want to pass down an estate. Because of that, they teach their kids this rather conservative version of living off capital. If you only spend your income, and if you reinvest enough to keep even with inflation, then you’re preserving your capital intact. (If you reinvest more then the minimum, or if some of your capital is invested for growth, than you can be growing your capital at the same time you’re living off it.)

If leaving an estate is not a concern for you, then you can spend more than just your income.

There’s a common rule of thumb that (if you have a well-diversified growth portfolio), you can probably spend about 4% of your capital and still expect to have more capital the next year. That won’t be true every year (it was really, really not true in 2008, for example), but historically it’s been true on average.

Still, the wealthy know that spending capital is a bad idea. Anytime you spend more than your income, you’re in danger of entering a death spiral: Your reduced capital earns less money so you have to spend even more capital to support your standard of living; repeat until broke.

A lot of people have back-tested versions the 4% rule, looking at historical periods to see if following that rule ever led to a death spiral. From what I’ve seen, it looks pretty good, but the current circumstance is going to put it to a particularly harsh test–especially for people who started living off their capital in 2007.

If you can afford it, choosing to spend only income is a safer strategy. If you can’t, you probably ought to accept that at some point you’ll have to earn some more money–and if you’re going to do that, sooner is probably better than later (before you’ve depleted your capital). Happily, a pretty small amount of money can make a big difference, if you’re right on the edge of being able to live on capital. Every dollar you earn is a dollar of capital that can go unspent.

Investments
If you were really rich, the safest thing to do would be to invest enough in TIPS that the income would support you. Then you could invest the rest of your money however you liked. Most people aren’t that rich–at the moment you’d need close to $2.5 million invested in TIPS to earn an inflation-protected $50,000 a year. Treasurys without inflation protection are earning more than twice as much. (Of course, you have to reinvest a big chunk of that to keep even with inflation).

Dividend-paying stocks can earn still more money, and dividend growth can provide some amount of inflation protection (as can capital gains). in recent years it has been tough to invest for dividend yield, but even with the recent recovery in the stock market, there are plenty of companies paying a reasonable dividend now–there are more than 40 companies in the S&P 500 whose dividend yield exceeds the yield on a 30-year treasury. None of those will be as safe as treasurys, but at least there are some options now for someone looking for income.

If you have it in you to be a landlord, there’s also the option of earning rent on real estate investments.

Mechanics
You can arrange the mechanics several different ways. The simplest version is simply to have the income from your investments directed into your checking account and use it to pay your bills. A slightly more complicated version would direct your income into the savings account where you keep your reserve fund, and then transfer money from there into your checking account. That makes it easier to even out the month-to-month money flows, which tends to be necessary because stocks generally pay dividends quarterly and bonds generally pay interest semiannually.

(If a lot of your capital is tax-sheltered in an IRA, 401(k), or similar vehicle, the tax rules make it more complex to use that capital for spending, but there are rules for handling the case when you’re actually retiring early.)

The key step–the one that rich families make sure that their children know–is to evaluate your capital every year: Make a new budget with your projected expenses for the following year, and then reinvest enough of your surplus that its earnings will cover any increase in your cost of living.

If you don’t have enough of a surplus to do so, you were living beyond your means.

It’s easy to do this by mistake. Even most people with a budget don’t know their cost of living accurately enough to know if they’re properly accounting for things like those large-but-rare expenses like a new car or a new roof, and any particular category of expense can rise much faster than overall inflation. (Think health insurance, college tuition, and fuel.)

People who are accumulating capital (rather than living on it) can use each year’s new savings as a buffer–even a major un-budgeted expense can often be covered out of this year’s planned savings without needing to dip into capital. Someone already living off capital doesn’t have this option. They have to provide their own buffer out of their reserve.

Fluctuations in income
There’s a second reason that a reserve is essential: The income earned by capital fluctuates. Anyone living off capital right now knows this quite acutely–the rate paid on Treasury securities is at generational lows. Other investments (such as dividend-paying stocks) earn an income that doesn’t necessarily shift in lock-step with treasurys, but can still go down–particularly during a recession.

The children of rich families learn that the key technique for stabilizing your earnings from capital is diversification.

You should diversify across time by investing some of your money in long-term treasurys, which will pay a fixed rate for a long period (decades). That offers some stability, but has two downsides. First, it while it protects you from falling rates, it makes it harder to take advantage of rising rates. Second, if all your treasurys mature at once, you might have to reinvest the whole sum at a much lower return. Avoid that making sure that your long-term securities mature in a staggered fashion. (Arranging for a fraction of your long-term securities to mature at regular intervals is called setting up a ladder.)

You should also diversify across kinds of investments by investing in more than one kind of vehicle. As attractive as TIPS are for someone living off capital, you probably want to have some of your money invested in ordinary treasurys, in stocks, and maybe in real estate. Other options (such as owning a business) are worth considering as well. This reduces the chance that your income streams will all fluctuate in the downward direction at the same time.

Other kinds of diversity are good as well. Consider investing in foreign treasurys as well as US issues, and maybe in corporate or municipal bonds.. Your stock investments should include multiple companies in different industries, and should include foreign companies as well as domestic ones.

The other key for dealing with a fluctuating income is to have a flexible cost structure, so that you have the option to cut your expenses, if necessary, to match your diminished income.

Those are the basics:

Invest for income
Reinvest to preserve your capital
Diversify
Keep enough flexibility that you can adjust your expenses

Learn those skills and you’ll have as much ability to live off capital as someone who grew up in a wealthy family. Then you just need the wealth.

… you might make some general progress, but when you finally come close to the target, it will be very difficult for you to hit that shot.

Time and time again, people write to me and ask questions about how they should be investing their money. “I have $5,000 in savings – how should I invest it?” My response is always the same: “What’s your goal?”

Obviously, there’s no guide in the world that will tell you the perfect investment for what you intend to do, nor is there an easy tool that will help you spell out what your goal is. Over the last few years, though, I’ve learned enough about the basics of investing to recognize that there are a few simple rules of thumb that can help guide you to a rough idea of your goal – and a rough idea of how to get there.

First thing – envision the life you want in five years. Do the same for ten years and twenty years down the road. Flesh out each of these visions with as much detail as you can. What do you hope to accomplish? Are you married? Do you have children? What sort of job do you have? What sort of home do you have?

There is no right or wrong answer. The only answer that matters is what you want.

Once you’ve started fleshing out those pictures of the future, you’ll find that a few elements really excite you. Maybe it’s the job you want. Maybe it’s getting married. It might be children, or it might be a house. Maybe it’s the business or career you’ve launched.

Whatever those key things are that really get your motor running are the very things that you should set as your goals. Plus, since you’re envisioning time frames to begin with, you also have a good sense of roughly how long it should take to get there.

Now, how should you invest for that goal?

If the goal is five years or less down the road, stick with something low risk, like CDs or cash or bonds. Over this short of a timeframe, putting money in market-driven assets like stocks and real estate is basically gambling.

If the goal is ten years or more down the road, consider putting a large portion of it in some market-based assets, like stocks or real estate (or even gold, if that’s a personal philosophy of yours). Over a longer time, the short-term risks of such investments is reduced without losing the potential gains.

If your goal is in the middle, put most of your money somewhere safe and perhaps dabble a bit in a market-based investment, moving your money out after a few years.

As always, don’t overload your risk tolerance. If the thought of losing 40% of your money in a year – even if the general trend is upward over a long period – makes you sick to your stomach, don’t invest in stocks or other market-based investments. If such things make you nervous, you’re very likely to make an irrational move at the wrong time and lock in a lot of losses – something that would be disastrous for your goals.

What specific investments should you use? I have no specific recommendations, other than keeping your fees as low as possible. I have used Vanguard for many of my investments over the years and I invest in their index funds because they have low costs and usually just match the market, which is all I really want. My cash is mostly in ING Direct.

If you do one thing, do this – think about what your goals are, whether you have money to invest now or not. Knowing where you’re headed makes the journey infinitely easier.

One of the best bargains in your local grocery store is plain old white vinegar. You can get a 32 ounce jug of it (half a gallon) for about $1.50 and it has a multitude of uses beyond the edible ones (like pickles and salad dressings). Here are fifteen uses for white vinegar, most of which I use myself.

Toilet cleaner Got a toilet bowl that’s difficult to clean? Before you go to bed, dump a cup of vinegar in the bowl, then close the lid. I usually spread the vinegar around the bowl a bit with a brush to coat the sides. In the morning, the whole bowl will be really easy to brush. I can’t remember the last time I bought actual toilet bowl cleaner.

Refrigerator cleaner I take a gallon of warm water in a bowl, add about two cups of vinegar, bust out a rag, and use that solution to clean the inside of the refrigerator. It does a great job of cleaning things up without much effort at all. If something’s really bad, I’ll put a tablespoon or so of pure vinegar right on it, let it sit for a bit, then give it a scrub.

Sunburn Is your skin a bit sunburnt? Just rub some vinegar on the affected area and it’ll feel much better really quickly. If it’s bad, you can reapply the vinegar a few times.

Kitchen drain odors If your kitchen drain has an odd smell, pour a cup of white vinegar down the drain, then don’t run any water for at least an hour. When you do run water, run quite a bit of it to flush out the drain. This usually takes care of any odors – if any still linger, repeat this a time or two.

Fabric softener Instead of using fabric softener, use about half a cup of white vinegar. It has largely the same effect without coating your clothes in chemicals and costs a lot less.

Rusty tools Just soak anything that’s rusty in vinegar overnight, then clean it thoroughly with a brush. The rust will wipe away nearly as well as it does with any expensive rust remover I’ve ever tried.

Vinyl flooring If you have a vinyl floor that needs cleaned, mop using equal amounts of water and vinegar. This works really well for getting up stains, especially if you go over it twice. Don’t do this with wood or wood laminate, however, because vinegar can react with the wood.

Window cleaning Forget Windex. Just put some vinegar in a spray bottle and get to work on any glass surfaces. It works really well and doesn’t seem to streak much at all.

Eyeglass cleaner If you use eyeglass cleaner, just take an empty container and fill it with vinegar. It cuts through grease on your lenses really well, leaving them looking great!

Microwave cleaning Put a cup of vinegar in the microwave, then run the microwave on high for three minutes. Let it sit undisturbed for half an hour, then remove the cup. The gunk in your microwave will be very easy to wipe down.

Carpet odors Did your dog do something funky on the carpet (or your toddler, for that matter – yes, I have used this tip to clean up some early potty training accidents)? Pour half a cup of vinegar on the spot that smells and just let it dry. This will kill off the odor and it’ll also make it easier to clean any stains.

Garbage disposal odors If your garbage disposal smells a bit odd, vinegar alone usually won’t do the trick because it doesn’t get into all of the cracks and crevasses in there. Instead, fill up an ice cube tray with vinegar and put it in the freezer until you have vinegar ice cubes. Toss those cubes into the disposal and run the disposal for five seconds or so (with water). Then let it sit for an hour or two, then run it again. This always works for us.

Air freshener Got that spray bottle of vinegar from the window cleaning? Spritz it in the air a few times to kill general odors. It smells vaguely vinegary for the first minute, then it just smells clean.

Nasty air Got a room that really reeks of smoke or paint fumes? Put a bowl of vinegar in there and just let it sit. If the room’s really bad, put out two or three bowls. The odor in the room will drastically improve in a few hours.

Whitening clothes Put a cup of white vinegar in a load of whites along with a quarter of a cup of baking soda. This will whiten your whites as effectively as bleach without the harshness.

These uses just scratch the surface. Whenever there’s a cleaning mission in my home, I usually tackle it with vinegar and baking soda as the first line of defense.

Do you have any great uses for vinegar? Share ‘em in the comments!

Several readers have asked me whether or not my children believe in Santa Claus. The answer is simple: yes, they do, but without active encouragement from me.

When children are young, their imaginations are in hyperdrive. They believe things to be real that aren’t real. My son, for example, had two imaginary friends for a while that didn’t have names. Rather than telling him that they weren’t real, I basically helped him to name them, played with them, and over time, we made up a pretty large back story about them. At age four, he no longer believes they’re real or pretends to play with them, but we still make jokes about Ralph and Norman. In fact, two Christmas gifts under the tree this year are labeled as being from Ralph and Norman.

When I’m asked directly about Santa, I tell him the truth: Santa has lots and lots of helpers that help make Christmas a little bit magical, which I consider to be absolutely true. I don’t tell him that I might be one of those helpers – there’s no need to. His imagination runs wild with the possibilities anyway. I see no need at all to stomp a boot into his imagination.

To us, Santa is an embellishment of a real person, an embellishment that represents something very real and powerful – giving to your friends and loved ones as well as giving to charity. I don’t see any reason to quash my child’s imagination with regards to that. We just make sure that the children see that the best part of Christmas is the giving, not the receiving.

Anyway, on with some personal finance links.

What’s Your Trajectory? Taking action isn’t enough. Having a direction isn’t enough, either. Your actions need to have direction if you want to get anywhere when it comes to your dreams. (@ jonathan fields)

Teaching Children to Fight Clutter My perspective is that clutter goes hand-in-hand with the accumulation of too many material items, which is often linked to financial problems. As I watch my children slowly accumulate toys, I’m beginning to plan a big decluttering of their items soon – perhaps in the early summer when we have a yard sale. (@ unclutterer)

Don’t Try to Keep That Resolution I think she’s on to something when she says to not let the perfect be the enemy of the good. Quite often, our resolutions demand perfection – a perfection we can’t possibly achieve – and thus we fail, and feel bad about ourselves. (@ happiness project)

You Can Negotiate Anything You certainly can, but there are costs to this kind of behavior. I have ended budding relationships and walked away from businesses I once trusted because of people doing things like “playing dumb” or using hardball negotiating tactics. Treating others like pawns for your own manipulation and personal gain is not something I want in my life – and I think a lot of people feel the same way as I do. (@ get rich slowly)

Melanie writes in:

Between the wrapping paper, ribbons, bows, tags, and other things, I’ve often spent $20-25 on just wrapping the gifts at Christmastime. This seems silly. How do you wrap presents? I’m sure you’ve got a less expensive way.

To me, the purpose of wrapping paper is simply to disguise gifts from the receiver while at least looking moderately visually interesting – nothing more, nothing less. I don’t see the purpose in spending lots of money on the “perfect” wrapping paper or on elegant ribbons when they’re going to wind up being a big pile of trash on Christmas morning.

Instead, here’s my Christmas wrapping strategy. All told, I’ll spend about $4 on materials and those materials will provide more than enough for several Christmases.

In the picture above, I’m about to wrap a copy of the video game Nintendogs for my eight year old niece (her parents might read The Simple Dollar, but I’m pretty sure she does not). I’m going to wrap it in plain brown paper, the type you would use for packaging things to mail via the Postal Service or UPS.

You can get an enormous roll of such paper for just a couple dollars. Even better, you can get brown paper at the store by requesting paper bags and trimming off the bottoms of the bags. Starting in about September, I start requesting such bags at the store so that I can give the bags a second life.

Here it is, all wrapped up. A little secret: I took pictures of several presents being wrapped and this one turned out the best – I’m not exactly a gift-wrapping expert, even though I’ve done it many times.

This looks fine, but it is a bit drab. Surely, there’s something we can do to color it up a little…

Yarn is what I use. You can buy an enormous amount of it for a very low price (the depicted roll cost less than a dollar) and it adds a certain homespun flair that just isn’t captured with ribbons.

It’s very easy to use yarn to add flair to your package.

To measure the length of yarn, I wrap it around the gift about three and a half full loops, or about seven times the average length of the package. It might be a little long, but you can trim off excess. I prefer to go longer than I need than to go too short.

After I cut off an appropriate length, I spread out the yarn in a straight line on the table, then set the package face-down in the middle of the piece of yarn. I pick up the two ends and…

… loop them together like so. Then, I turn the package over, tie a simple bow on the front (one that can be opened with a good tug, basically the same knot as is used to tie shoes), and I’m finished with the wrapping.

I like the big, floppy bow look – you may not. If you want a shorter bow, just tug on the ends of the bow until the loops are as short as you like, then trim the long ends. You could also use very long ends to make a lot of loops for a more decorative bow, if you’d like.

I personally really like the aesthetics. It calls to mind the old Rodgers and Hammerstiein tune … little brown packages tied up with string / these are a few of my favorite things.

What about the name?

I simply write it on the package in black marker, no fuss, no muss. You may also choose to write it on the back so the front looks undisturbed by the ink – whatever you’d like.

If you use paper bags from the store, the cost of such wrapping is approaching free – you’re using a tiny fractional amount of a roll of tape and of the yarn bundle and that’s all. Even if you’re using a roll of packaging paper, the cost is still far below what one might spend on typical wrapping paper.

Other ideas to consider:

Have grandchildren decorate packages for grandparents. Give them some markers and have them decorate such a package to their heart’s content.

Use the comic pages from the Sunday newspaper for children’s presents. Just save them for a few weeks and you’ll have plenty.

Print your own designs on the brown paper. Measure off a size that your printer can handle and print a design right on the brown paper. This works really well for smaller gifts.

Good luck!