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.

Question re: online banks – How do you put paper money and checks INTO the account?
- Sara A.

It’s simple, Sara: ATMs.

You just go to the ATM and deposit your paper money and paper checks there using the envelopes provided. I actually do this quite often when trying to deposit money into my ING accounts.

The one disadvantage I’ve found with online banking (for my needs) is converting currency. Without a brick-and-mortar bank, it’s very difficult to convert $10 into quarters for my children’s allowance and so on. This is one of the reasons I’ve maintained a local bank.

I love baked enamel (Le Creuset – mmmh!) but don’t find much use for copper cookware. I think cooking with copper is more useful once you have truly mastered (and I do mean cordon blu mastered) cooking. If copper is your desire and you don’t mind the requirements to keep it shining then I would suggest starting slowly; perhaps with a copper lined bowl for whipping eggs or cream and a small sauce pan for sauces that require delicate temperature control. I have a copper sauce pan and haven’t use it in ages, prefering my favorite Calphalon.
- reulte

I actually have two different Le Creuset French ovens and I dearly love them. They’re enameled cast iron, which means that they heat evenly like cast iron but they’re a lot easier to clean. Le Creuset stuff is really expensive, but I’ve never seen it chip on mine or anyone else’s – it’s backed with a 101 year guarantee.

Copper works very well for certain things in the kitchen. I’ve found that copper works best when you’re cooking something slowly under really low heat because it conducts really well. If you don’t know what you’re doing and turn on the full heat, you’re going to have a burnt disaster. Copper requires you to relearn what you know about cooking because it gives you way more temperature control.

Where do you stand on the ‘local’ movement?

Wouldn’t it be more beneficial to your community to move your money to a lcoal credit union or bank?
- Nate

It depends on the bank.

Blindly saying that something is better because it’s local is foolish. You’ve got to stand back and look at the sum of what you receive as a customer of the bank.

Does the bank support community events or do they just pocket the money they earn? Do they have really good customer service or is it usually easier to just go use an ATM?

Most of the benefit of buying local comes from the fact that many local shops are involved with supporting the communities they serve. I’ve often bought games from our local gaming store becasue they serve the community so well. I buy milk from Picket Fence Creamery because I can go there and touch the cows.

If the local bank doesn’t provide any value for being local – meaning they just scoop away money out of the community – I don’t value them any higher than any other bank. It becomes just a pure rate comparison.

Not too long back, The Simple Dollar, Get Rich Slowly and Zen Habits all had around 40-50K readers. Now The Simple Dollar and Get Rich Slowly have approximately 70K readers whereas Zen Habits has close to 140K readers. What do you think explains the tremendous growth of Zen Habits as compared to your and JD’s blog?
- Shannon

The Simple Dollar and Get Rich Slowly inherently focus on money issues. Some people are very interested in financial issues – others would rather watch paint dry. Zen Habits rarely writes about money at all – the theme there, if there is one, is simplification.

Thus, the total potential audience of any personal finance site is smaller than the potential audience of Zen Habits. A lot of people simply don’t care about their money – or at least they’d prefer not to spend their web time reading about it. I know I certainly wouldn’t have a few years ago. I might have been a Zen Habits reader, but I wouldn’t have read Get Rich Slowly or The Simple Dollar.

It’s all about topic. I just chose a fairly narrow one.

Several friends and I are interested in converting to electronic bill paying and on-line banking, but we just don’t know where to start. Can you provide some first steps, tips and advice on how to set up my monthly bills on auto-pay?
- Cindy

Most of the time, online bill pay is offered as a service through your bank. You sign up for an online account with whatever bank you use and they provide an interface that allows you to pay your bills without writing a paper check.

Most online bill pay services allow you to enter the address of a bill you would send along with your account number there. Then, each month you would enter the amount you wish to pay, hit submit, and it’s done.

Many allow you to automatically pay bills that have a regular amount each month, like your rent or your mortgage. Some even automatically retrieve the balances of those bills.

It’s quite easy to get started, and once you do, you’ll never want to go back.

What is the effect on my credit rating if I contact credit card companies to negotiate different terms on my account? For example, does my credit score or credit report change if I negotiate for a lower interest rates? What about if I negotiate for a less-than-100% payoff amount? Thanks in advance!
- jgmillis

For the rate negotiation, it depends on whether they do a “hard pull” on your credit report in making their decision. If they don’t, it will have no impact at all. If they do, it will only have a slight short-term negative impact – about five points on your credit score which will disappear over the next year.

Compared to the benefit of getting one’s rate reduced, it’s a non-factor. Negotiate away.

As for the less-than-100% payoff amount, you’ll have to negotiate the effect on your credit yourself. The company may note that you negotiated the debt amount and paid a smaller amount, which can have a negative effect, or they can simply mark it paid. You’ll have to negotiate that part.

Since it has been a while since your first book came out, what effects (excluding monetary) has it had on your life? Do you ever go back and take a look at it? How do you feel about it now that you are taking on your second one? Hope all is going well with the second book, can’t wait to read it.
- Mol

The only real effect it has had is that it’s made it easier to arrange interviews and the like with mainstream media outlets, and I expect that my second book will help even more.

In terms of my day to day life, it’s not really had any impact at all. I don’t go around talking about “my book” to everyone – doing so would make me completely insufferable.

I do like the slow regularity of the royalty payments. At this point, it feels like free money since I’m not putting in any effort for it. When you’re writing a book, it feels somewhat like you’re writing it for the advance, but once the advance is covered, it feels like gravy.

I don’t feel any different, really.

I have a question about ING’s mortgages since I know you’re a big fan of ING, I thought you might have some insight. I looked into the three types of mortgages they offer and they seem to be similar to an ARM loan just because they don’t lock in a percentage rate for more than 5 or 7 years at a time. My question is this, would you, personally, consider an ING mortgage over a more conventional, home town bank where you can know exactly what your payment will be for 30 years? Currently I have been pre-approved for a 4.75% but the ING is around 3.9 or 4% but can go up by 6% over the course of 30 years (or it could go down or stay the same). Your thoughts?
- Missi

ING’s mortgages are basically ARMs. If you’re intending to live in your home for a period anywhere close to the period before the first ARM adjustment, I recommend avoiding ARMs.

Adjustable rate mortgages are great if you’re just going to live in the area for a few years and you know this in advance. It can basically make the interest on a home loan much cheaper than rent in the area and allow you to also build equity in a house that might build a little bit of value over the next few years.

However, if there’s any chance you will be in that house more than a few years, the ARM isn’t worth the risk. Never bet that you’ll be able to get a different mortgage down the road – it’s just not a safe bet.

I have a question regarding Christmas (holiday) gift giving…

My sister is already on board as her in laws already practice this on their side but we’re wondering how to approach it with the remainder of our family…particularly my husband’s side who a) we’re not particularly close to but b) we spend oodles of $ on every year and c) tend to read into our most innocent comments.
- Sara

If they read too much into innocent comments, I’d be very blunt about it. Don’t dance around the issue or else you encourage such people to ask and think things that aren’t true.

When everyone’s gathered together, just ask everyone at once. “What would you think about drawing names for a gift exchange next year instead of everyone buying for everyone?” That’s exactly how I would do it – in fact, I’m considering asking a similar question this year.

If you’re not particularly close to them, even better. Don’t worry about what they think. Do what makes sense to you.

What’s the most interesting thing you learned today
- Megan

An old friend asked me this over instant messenger just now and I thought it would be interesting to put in the reader mailbag.

The most interesting thing I learned today is that in nineteenth century England, mail was delivered six times a day to most of London, four times a day in most other large cities, and even twice a day in rural areas. It wasn’t uncommon for a letter to be written in the morning in Bath and be delivered in the evening in the outskirts of London.

That’s an impressive mail service. There would be times where I would be tempted to just throw off a note to someone and drop it in the mail even today if mail could be delivered at that kind of rate.

I actually came across references to this nugget three different times today, as I was doing some research into how money was borrowed and loaned in Victorian England.

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.

A couple years ago, I reviewed Stephen Pollan and Mark Levine’s earlier book Die Broke. I found it really interesting for the first half – which focuses on investing in yourself – and completely faulty in the second half, which talks about specific investment choices. The first half, though, was thought-provoking enough that I actually returned to some of the early chapters of it again in the future.

Recently, I had the opportunity to read Pollan and Levine’s latest book, Lifelines for Money Misfortunes and I found it quite enjoyable. It’s composed of a lot of short chapters that focus on how to deal with various money problems, from losing a job to not having enough money for college.

Because there are so many of these short chapters, I won’t review them in detail. Instead, I’m going to focus on the five central principles of the book, ones which Levine and Pollan apply to each of the problems.

Accept the Problem and Own the Solution
When something goes wrong in our lives, it’s easy to try to blame others. Here’s the thing, though: when something is wrong in your life, thinking about blame doesn’t help – at all. Instead, you need to accept that this problem exists in your life and focus your energies not on figuring out who to blame and getting “revenge,” but on actually fixing the problem.

At the same time, you also can’t just sit around and wait for someone to solve the problem for you. You need to step up to the plate yourself and solve the problem. If you don’t, you’re not only vastly increasing the odds of locking yourself in a downward spiral, you’re also denying yourself the chance of building a lot of personal fortitude and skills.

Unburden Yourself
Bottling things up inside – your frustrations, your pain, your anger – is never a good thing. It will either explode at an inopportune time or it’ll fester inside of you.

When you have a money misfortune, talk about it with the people important to you. Tell them about your frustrations, as well as what your plans are for overcoming them.

Not only will this provide a psychic release for you, it will also give your friends an opportunity to give you advice and help as well. You’ll often be surprised at how helpful and insightful the core people in your life can be.

Diagnose the Impact
How bad is it, really? Quite often, when a misfortune hits us, we either radically overestimate or radically underestimate the impact the event has upon us. Step back for a moment and figure out exactly what the impact of the event is in your life.

Does it change your ability to earn revenue in the future? Does it alter the income or revenue of people you care about? Are you losing something of value in your life – or in danger of losing it?

Work through the ramifications of what just happened to you and figure out how it affects the important areas of your life. Know the impact before you start flinging around “solutions.”

Take Your Financial Pulse
What’s your actual financial state right now? What resources do you have available to you to solve the crisis?

Quite often, people look at their situation from too narrow of a viewpoint. They don’t look at nearly all the assets available to them to solve the crisis. Many life misfortunes allow you to use retirement accounts and other assets without penalty, for example.

Look at what you have, then investigate whether those things can be used to fix your problem.

Start Pallative Measures
Pallative measures are things that reduce the immediate pain of your misfortune. What can you do in the ultra short term to minimize the pain?

Maybe you need to take some job – any job – to get some revenue moving in. Maybe you can sell some things. Maybe you can ask for a little bit of help from the people central in your life.

Figure out what can take the edge off the pain in the short term, but don’t make that your long-term solution. Pallative measures just help you to the point where long term plans can be put into place.

Launch Revenue Rehabilitation
Most financial misfortunes result in a serious revenue shortfall. To put it simply, there’s not enough money coming in to cover the money going out – and that can result in a serious downward spiral.

Don’t allow this to happen or the problem will be exacerbated. Do what you need to do to rehabilitate your income quickly. Start applying for jobs now – and while you’re job-hunting, get a night job. File for unemployment. Tap any funds you have to make up for the shortfall. Start living cheaper immediately.

No matter what, try to avoid going into debt because of the loss of revenue.

Cultivate Antibodies
What can you do to ensure you’re not smacked by such money disasters again? Launch antibodies, of course. “Antibodies” are things you can do to ensure that such disasters don’t blindside your life in the future.

Emergency funds are one type of antibody – they provide the funds you need in any kind of pinch. A greater array of personal skills are another type. Knowing how to live cheap – and practicing it – is yet aother type.

The more antibodies you have in your life, the less likely a money misfortune will strike you and take you down.

Is Lifelines for Money Misfortunes Worth Reading?
The advice in Lifelines for Money Misfortunes is accurate and straightforward. The book does a very good job of outlining a plan of attack for a lot of different personal finance situations.

However, most of these plans of attack are very similar. They all more or less follow the structure outlined above with just a few tweaks for each situation. If you’re flexible in your thinking, you really only need to read a few chapters in the book to get the idea.

If you have a specific money misfortune, the advice in this book can be a great guide to you. Once you’ve recovered, though, and reflected on the situation, using this advice in future situations might seem a bit repetitive. It can be a lifesaver once – after that, it might feel like the same old, same old.

One of the biggest things I encourage people to look for when they open a bank account is that the bank is FDIC insured. Most banks operating in the United States offer this insurance. In an era where people are more than a little worried about bank failures and the like, FDIC insurance is vital.

But what exactly is it?

Charlie writes in:

What exactly is FDIC insurance? How does it work? [A local bank] went under recently and seems to have been bought out by another bank and from what I understand the accounts are intact. Is that FDIC insurance at work?

(I edited out the bank in Charlie’s question for privacy reasons.)

What Is FDIC Insurance?
FDIC insurance refers to insurance policies created by the Federal Deposit Insurance Corporation, which is an organization wholly run by the government of the United States. The FDIC sells insurance policies to banks which insures the checking and savings accounts at those banks against the failure of those banks. Thus, when you open an account with a bank, that bank purchases insurance on that account for you from the FDIC.

FDIC insurance covers checking accounts, savings accounts, certificates of deposit, money market accounts, and cashier’s checks. It does not cover stocks, bonds, mutual funds, money market accounts, US treasuries, safe deposit box contents, or other such items.

Most banks that operate in the United States buy this insurance. When they do, they’re required to display the FDIC logo on signs in their business as well as on their websites.

FDIC insurance insures deposits up to $250,000 per depositor. This means that if your bank fails, the first $250,000 in your account is insured by the FDIC and will be returned to you in the event of a bank failure.

What Happens If My FDIC Insured Bank Goes Under?
If a bank that offers FDIC insurance becomes insolvent, the FDIC takes over that bank and all of the accounts held there. One of two things then happens.

In one type of takeover, called the “purchase and assumption” method, an already-existing bank takes over the accounts of that bank as well as some (or all) of the loans that bank has given out to customers. This purchase is usually done quickly. For you, the customer, this means that one morning, you’ll wake up and your bank account will be with a new bank. This is what happened when Wachovia failed and was taken over by Wells Fargo, for example.

In another type of takeover, called the “payout” method, the FDIC liquidates everything that’s left in the bank and then issues payouts for insured amounts to customers. So, if you have less than $250,000 in your accounts, you’d receive the full amount – if you had more, you’d just receive $250,000.

In either case, the process is really straightforward, usually involving minimal hassle from the customer. At most, you’ll simply need to open an account at a different bank (if your bank isn’t bought out or if you don’t like the new bank).

What If My Bank Doesn’t Have FDIC Insurance?
If your bank fails, you’re out of luck. You get nothing at all.

This is the reason why I encourage people to use banks that provide FDIC insurance. Luckily, almost all banks in the United States do offer it, but it’s worth checking just to make sure.

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, two years ago this week, and three years ago this week. I call it … the Time Machine.

One Year Ago (November 29 – December 5, 2008)
Internal and External Signals We are surrounded by all kinds of signals about what to buy and what not to buy. Money success often comes from being aware of those signals and in control of them.

The Balance of Happiness and Saving for the Future Life is a balance, and it’s often hard to figure out exactly how to get it in balance. I think there’s one key thing to look for…

Review: The Reader’s Digest Penny Pincher’s Almanac If you’re looking for a giant collection of money-saving tips, this book will really hit the spot.

Cutting Down on the “Hidden” Costs of After-School Activities Most after school activities do have lots of little “hidden” costs – transportation, meals, and so on. Here are some tactics for trimming those costs.

The Backup Checking Account My wife and I have a backup checking account that we use in our local community. It works very well for our needs.

Two Years Ago (November 29 – December 5, 2007)
Everything You Ever Really Needed to Know About Personal Finance on the Back of Five Business Cards This is one of my best posts, ever. I remember putting this one together like it was yesterday…

Simple Frugality By The Hourly Rate I often like to use the hourly rate of saving money as a rule of thumb as to whether or not a particular task is worthwhile. Some of the things you expect to be good savers are actually bad – and vice versa.

Chasing the “It” Toy At Christmastime This year, it appears to be an electronic hamster. No matter the year, chasing the “it” toy is a frustrating and costly endeavor.

Twelve Great Gifts Under $10 I’d Love To See Under My Tree Some of these still hold true. In fact, I should refresh this list for 2009, because I’ve found lots of other little things to add.

An Inheritance of Collectibles I’m likely to inherit a couple of different collections from older relatives when they pass on in the future, so this is something I’ve thought about.

Three Years Ago (November 29 – December 5, 2006)
Building a Better Blog This is the index of a thirty-one (!) part series about what it takes to create a successful blog. This was basically the culmination of every lesson I’d learned about blogging and it’s these very ideas I used to build The Simple Dollar.

Weighing the Positives and Negatives of ING Electric Orange Checking This is something of a proto bank review, but not nearly as detailed as I want to make it. Still, not long after writing this review, we adopted Electric Orange as our primary checking.

Cash That Just Gathers Dust: A Technique For Paring Down Your Media Collection I remember quite vividly doing this very thing with our DVD and CD collection. At first, I purged them of the obvious stuff I’d never watch again, but after that, I used this technique to do a surprisingly large second purge.

Review: Make Your Kid A Millionaire This was my pick for the best book about parenting and money. It was only recently superceded by the excellent Raising Financially Fit Kids, but both books are well worth reading.

Money as a Social Barrier Quite often, people associate with others from a similar socioeconomic class. I’ve found that every time I’ve tried to make friends outside of that class, it’s been incredibly fulfilling.

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!

A while back (has it been almost eighteen months already?), I wrote a very detailed article about coming up with a debt repayment plan. This plan works – it’s what I did when I realized that I was in serious financial trouble and needed to overcome it.

Yet it’s not the first step in the process. The absolute first step in getting out of a bad debt situation is to break your personal cycle of debt usage.

If you’re not willing to completely stop using debt and to spend less than you earn every single month, no debt repayment plan of any kind will help you.

This is often harder than it sounds. For many people who find themselves in a desperate debt situation, living above their means is simply a way of life. I know that it certainly was for me. I wouldn’t even think twice about spending small amounts of money and I usually found “good” reasons to spend larger amounts as well.

I firmly believed that I deserved lots of material items and the simple fact that I didn’t actually have the money to pay for them didn’t matter. I had credit, after all.

I had part of it right: I did deserve the good things in life. What I didn’t understand, though, is that the good things in life aren’t bought with a credit card.

The good things in life come from having less stress in your life. Stress is derived from a job that you can’t walk away from because you have so many bills to pay. Stress comes from facing a mountain of bills without much cash in your checking account. Stress comes from wondering whether or not you’re going to be able to make rent or make the mortgage payment next month. Stress comes from having more stuff than you can enjoy or possibly deal with. Spending less than you earn alleviates all of these stresses.

That reduced stress helps you across the board. It improves your health. It improves your energy level. It improves your attitude. When you improve in all of these areas, people notice.

When I was in debt, I had all the material trappings I could ever want – but that’s all I had. I stayed up at night worrying about my bills. I was stuck living in a tiny apartment – and even then I was sometimes struggling to pay the rent. I was scared to death to step out of line even one inch at work, which meant that I constantly played it safe, which meant that much of the enjoyment of the job evaporated since I was now doing work I didn’t really want to do. My wife and I got upset with each other quite regularly because of the money issues.

But, by golly, I had myself plenty of electronic gadgets and nice clothes!

Those material items were a prison. They kept me sequestered away from the life I really wanted to lead.

When I realized that those very things that I thought I truly wanted were the very things that were making me unhappy, it became easy to make some changes. I tossed the credit cards, sold off a lot of my gadgets to whack down my debts quickly, and started discovering new things to do.

Who would have ever thought it was more fun to go on a bike ride on a lazy afternoon than to buy yet another barely-played DVD or video game? Even better, when I got home, I wasn’t facing a stack of bills.

The first step towards getting out of debt is to recognize where the real problem lies. It comes from the things you choose to spend your money on – the very things you’ve convinced yourself that you need. Those splurge purchases that are the “spice” of your life are the very things that are causing you to be stressed out, stuck in place, and looking for a way out.

You don’t need that stuff.

I am a very lucky person.

I was lucky enough to be born in the United States with (reasonably) good health. I was also lucky enough to be born to parents who wanted me to be successful in life and constantly did things to push me to learn and to succeed.

I have a wonderful wife and two great children. I live in a nice house. I’m currently doing the work I’ve always dreamed of doing. I have a flexible enough schedule that I can do things when I want to do them. I have enough financial security that I’m not worried about making the bills next month.

The first two elements were genuinely lucky. We have no control over how we’re born and how we’re raised.

However, as adults, we are in control of our own destiny. Every day, we make a lot of choices that have a huge impact in determining what happens to us. We can work hard – or we can take it easy. We can be frugal with our money – or we can spend with reckless abandon. We can set big audacious goals and work hard to get there – or we can sit back and wait for whatever may come.

For most of my early professional life, I just sat back and waited for whatever might come along. I worked hard at my job, but I wasn’t conservative at all with my money – I just spent it on everything that came along.

By 2005, I was in trouble. I was moving away from the career I wanted. I was in debt. I was living in a tiny apartment and, with a child on the way, it was clear that space was becoming an issue.

So I wised up and made some changes. I reordered my life so that luck would have a place to grow. I stopped spending money recklessly and started saving instead. I came up with a professional goal (becoming a published writer) and worked hard to achieve it. In short, I changed my life so that more luck could find a way in and bad luck had a harder time opening the door.

Bad Luck
Everything was not just handed to me. I was born poor and have been called “white trash” and ignored more times than you can imagine simply because of how I grew up. I was also born with hypothyroidism – it was diagnosed when I was three days old. I’m also nearly blind in my right eye and completely deaf in my left ear.

Those things are obstacles in my path. It would have been easy for me at many different junctures in my life to stop and say, “You know, this is just too much.”

I didn’t.

One crucial element in receiving good luck in your life – and keeping bad luck at bay – is to simply not give up. If you fail, pick yourself up, figure out what went wrong, work on fixing that problem, then give it another try.

Trust me on this one. With my eyesight and subpar balance due to the one-ear deafness, the idea that I could ever play basketball was almost a joke. Yet I played enough throughout high school and into college that I was a key part of a very successful intramural team and even played in a few pickup games against players on the university team.

You can overcome the bad luck in your life. Just don’t give up and don’t waste your time complaining and blaming others.

Cut Down the Tightrope
Want to get started on improving your luck? The first place to look is the areas in your life where you’re walking a tightrope.

What areas in your life stress you out the most? What areas can afford the least amount of failure? Those are the areas that are the most likely to introduce some very bad luck into your life – plus they restrict you from making choices that will improve your luck.

Focus entirely on shoring up those areas. Perhaps that area for you is your job – if you lost your job, you would be in crisis mode. Maybe you’re living paycheck to paycheck and a major unexpected expense would drop the hammer on you.

Whatever that area of concern is, solve it. Start building an emergency fund – that’s a good buffer against almost every kind of bad luck. Secure your job by working harder – and working smarter. Look to improve your own skillset so that you have more career security.

When your life is secure, your stress level drops and you have more breathing room to try new things. That breathing room is often the source of good luck in life, as it gives you opportunities that were impossible when things were tighter.

Want more advice for cultivating day-to-day luck in your life? Here are a ton of ways to get started.

Good luck.

Marco writes in:

Most of your “money tips” are stupid. Why would I waste my time doing this stuff to save fifty cents? I want to learn how to make money not how to save a nickel.

Whether or not you take advantage of the huge benefits of frugality is all a matter of perspective. If you spend your time looking at just the short term, I’d agree that many frugal tips aren’t big savers. Quite often, a given tactic saves you just some pocket change or a dollar or two once.

That’s an incredibly shortsighted perspective to have.

Let me walk you through the math on three different frugal strategies we use in our home so that you can clearly see how these things can put a lot of money in your pocket. (I’m using Marco as a straw man below with his permission.)

Homemade Laundry Detergent
I’ve written about how we make our own laundry detergent in the past. Instead of going to the store and buying a jug of Tide, I’ll often make a bucket of homemade detergent instead.

Why Marco doesn’t like this strategy: It saves you eighteen cents per load versus Tide. Eighteen cents?
Why I love this strategy: It saves us about $60 per year – post-tax money that goes directly into our pocket – for a little over an hour’s worth of effort spread out throughout the year.

I can make a batch of homemade detergent in about ten to twelve minutes (with the help of my kids). This single batch contains enough detergent for about fifty five loads of laundry, according to my count. Thus, I need to make about seven batches a year – about an hour and fifteen minutes worth of work, annually, spread out over the entire year in ten to twelve minute increments.

On average, we do a load of laundry each day. Every time we use our homemade detergent instead of the homebrew, we save the eighteen cents that Marco doesn’t think is worthwhile. Yet, if you do that every single day for a year, it adds up to about $60.

Now, if I actually earned that $60, I’d have to pay taxes on it. There are also costs connected to earning it – transportantion, time spent working, child care for the time working, and so on. It’s easy to see that I’d have to bring home well over $100 to match what I get from the detergent over a given year.

Eating at Home
I love cooking at home, as I’ve mentioned many times before. It’s turned into something of a passion for me, but I got started on doing it when I realized that we could easily save a couple dollars a head eating at home versus eating out.

Why Marco doesn’t like this strategy: Making food at home is a lot of hassle to save two bucks.
Why I love this strategy: We save at least $100 a week – money that’s after taxes, of course, meaning it goes straight into our pocket – by eating almost exclusively at home. That’s over $5,000 a year.

When we eat out as a family, it costs us – at the bare minimum – $20 to eat a decent meal. Quite often, it’s more than that. But, if you were paying attention this summer, I posted eight (yes, one two three four five six seven eight) detailed meal plans – with lots of pictures – for family meals that cost less than $10 each. The series covered a wide variety of cuisines, healthiness levels, and ingredients in an effort to show that you don’t have to wed yourself to one certain kind of meal.

Thus, each time we eat at home, we’re saving a minimum of $2.50 a head over eating out – usually, our savings is more than that per person. Even if we just calculate one meal a day in this regard, that’s twenty eight meals a week – even at $2.50 a meal, that’s $70 a week. If you consider that the gap between eating at home and eating out is usually greater than that and that we often eat lots of leftovers, most weeks our savings is well over $100 a week.

“Yes, but what about the time?” Well, in order to eat out, we have to leave our home and go to a restaurant (15 minutes), go inside and get seated (another 5 minutes – hopefully), order and wait for our food (thirty minutes), eat (fifteen to thirty minutes), then leave the restaurant (five more minutes) and go home (fifteen more minutes). That’s an hour and forty minutes.

At home, I can usually get a meal prepped from scratch in forty five minutes – some meals take less time, some take more. If we spend a half an hour eating, we’re done in an hour and fifteen minutes.

Usually, it takes less time to prepare a meal from scratch and eat it at home than it does to eat out.

You can amplify both the financial savings and the time savings by using tactics like quadruple batch preparation as well.

Yes, there are some caveats. The savings isn’t nearly as great if you’re single. Also, if you live very close to a restaurant district, the time investment for eating out is less, too.

Installing a Programmable Thermostat
A programmable thermostat lets you set up a program that will automatically adjust the temperature in your home while you’re at work and while you’re asleep, allowing your energy bill to catch a breather.

Why Marco doesn’t like this strategy: You spend fifty bucks on a thermostat and it only saves you five bucks a month.
Why I love this strategy: You spend fifty bucks on a programmable thermostat then save sixty bucks a year for the next fifteen years with no additional effort – a total of $900 for a $50 investment with no work.

The idea that a programmable thermostat will save you $5 a month is a very low-end guess – in most cases, the savings will be much more than that each month. This is particularly true if your house stands empty during weekdays and also if you live in an area where the climate varies wildly between summer and winter. But we’ll assume $5 a month for argument’s sake here.

Let’s say you plunk down that $50 (or some similar amount) to buy the programmable thermostat of your choice. You spend an hour hooking it up and playing with the features. Yes, after the first month, it’s a big loss. After six months, it’s a loss. After a year, you’re just barely ahead.

The second year? Pure profit with no extra effort. The third year? The fourth? It’s all gas down the road – you use less energy without expending any effort to do so.

The Real Scoop
Most frugality tactics aren’t all that cost effective if you look solely at a single use. Frugality’s value kicks in when you alter something you do all the time, like eating a meal, heating your home, or doing the laundry. Shaving a few cents off of each of those uses adds up to a substantial chunk of change over the long run.

When you read frugality tips, ignore the ones that only apply to things you don’t do or things that you rarely do. They’re not really useful to you at all. Instead, look for the ideas that intersect well with your own life – the little tweaks you can make that don’t reduce your quality of life but save you just a little bit each time you engage in the activity. If you’re a meticulous cleaner, look for tips on cleaning supplies. If you use a lot of home electronics, look for energy-saving tips. If you’re a homeowner… the possibilities are endless.

It’s those “a few cents a day” tips that really add up. Do several of them and you’re saving “only” a few bucks a day. But those few bucks a day add up to a thousand dollars at year’s end – and that can make a huge difference, especially since they just fall right in line with your life.

Almost immediately after my article yesterday about the costs of preparing for additional children, Eileen wrote to me with a very worthwhile comment:

In that article you barely mentioned the value of family and friends who will give you lots of hand-me-downs and other items. Since you talk about the social value of things, I was surprised at this.

I agree wholeheartedly with Eileen that, if you have family and friends that have young children themselves, you might be in line for a lot of free used baby, toddler, and child items. For example, my mother’s best friend had a child about four years after I was born and my mother gave her best friend mountains of kid stuff to help out.

I like to call it “social supply-side economics.” To put it simply, you’re hoping that the things that others have might “trickle down” to you over time. This isn’t just about children’s items, it’s about everything from garden equipment to help putting a roof on your house. It’s about babysitting in a pinch and about giving you a ride when you have a flat tire.

The best way for you to make it happen in your own life is to maximize the chance for a trickle beforehand by beating down a path. You can do that by sharing things yourself. When you have items you no longer need (or are easily willing to share), share them. Each time you do, you prepare the path. When you have a free afternoon and a friend asks for help, offer that help. Each time you do, you prepare the path.

One problem with this avenue, though – and we faced it – is that it’s rarely a given that someone will have these items on hand and be ready to give them away when your child arrives. Among our friends and family, we had one sibling whose children were just a bit too much older than ours. They had decided to not have any more kids and had sold off most of their baby stuff before our first one arrived. We also had some other friends with children, but they were all expecting to have additional children down the line. Thus, we were pretty much on our own when it came to picking up the items we needed (and still need) for child care. Instead of waiting for hand-me-downs, we head out to thrift stores and other such places.

The lesson is simple: never rely on the social supply side. Plan assuming that you won’t get any help at all and then be grateful when something works out. Patience is really the key. There are few things in life that need to be done as quickly as we think they need to be done. Take your time with it, come up with plans on your own for accomplishing what you have in mind, then talk that plan over with friends. If someone has a better idea, great! If not,

Another problem with this is the “greed” factor. Don’t plan as though your friends and family will just hand over their stuff. They may be intending to keep it for their own future children. They may be intending to sell it to recoup some of their financial cost. They may have other people that they intend to give some of the items to. All of these are reasonable plans for the stuff they have – and you shouldn’t be insulted or offended (or have your plans destroyed) because they chose one of these alternate paths.

Again, the lesson is simple: don’t expect others to just hand over what they have. Greed never wins out.

The best way to get social supply-side economics working in your favor is to start out being the giver. Give your time to others. Give the things you don’t need to others. Give your contacts to others.

Yes, sometimes your generosity won’t be returned. On the other hand, not only will your generosity often be returned (sometimes with interest) by others, your reputation will do nothing but go up. People will see you in a more positive light because you give your time and talents to others without expecting anything in return. That positive reputation itself is a very powerful thing.

If you’re hoping for hand-me-downs later on, help out by babysitting now every once in a while – or find other ways to help out. Later on, when you have a child, your generosity will be returned in surprising ways.