Every other Sunday, The Simple Dollar reviews a book of interest.

Over the last few years, I’ve come to believe that the biggest key to personal finance success is controlling your own psychology and impulses.

Our entire lives are filled with quick decisions we must constantly make – and, for the most part, we’re good at it. We commute to work without getting in an accident. We make constant little decisions at work – and at home, too. We’re able to effectively take several pieces of information, combine them together, and make a pretty good choice based on the result – and we do it over and over again.

Unfortunately, that same ability often doesn’t serve us well at all when it comes to personal finance. The ultra-quick decision making process that leads us to making great little choices in everyday life often leads us to making disastrous financial decisions. Very rarely do snap decisions work out well in the financial world.

This concept is the central focus of Snap Judgment by David Adler. He makes a two-fold argument. First, such snap decisions fail us financially and, if we’re able to get control over them, we’re much more likely to find financial success. Second, understanding how people make such snap decisions can help us to predict and prepare for the choices that other people will make, pushing us to further success.

Sound interesting? Let’s dig in.

I: The Psychology of Financial Decisions
The basic rule of thumb for success in any financial arena is “buy low and sell high.” It rings true in everything from stock investing to grocery shopping. The problem is that most of our normal financial cues tell us to do virtually anything but that. For example, we often believe there must be value to be found if everyone else is buying something, but quite often that means that it’s the opposite of a bargain – the price is overinflated.

Similarly, we are often wired to overlook what we view to be small amounts of risk – if we didn’t, we’d never leave our house in the morning. However, when we apply the same philosophy to investing, we overlook those seemingly small risks and chase what looks like the biggest returns – and then we get bitten by those risks. That’s why so many people got caught losing big chunks of their retirement in 2008?

II: The Track, the Stock Market, and Other Types of Gambling
Our brains are wired to see patterns in our lives, from traffic to grocery shopping to financial markets. Most of the time, when we act based on how we think things will go based on those patterns, we guess right.

The problem is that the stock market and most forms of gambling present false patterns to us, ones that have nothing to do with what happens next. People stare at charts and sit at slot machines because our minds are convinced there’s a pattern in the chaos and that a big winner is about to emerge. Quite often, though, it’s not coming down the pipe.

III: Personal Decisions, Personal Safety, Personal Finance, and Health Choices
Another method in which people falsely assess risk is in our own health and mortality. Many, many people don’t have life insurance because they simply see the risk of their own death as being too minute to really concern themselves with, whether in a conscious or subconscious way. For the same reason, many people don’t bother with annual checkups at the doctor.

In each case, the concern isn’t the chance of the risk, but the severity of the event when risk comes to call. We assess the chances themselves quite well, but we’re poor at assessing the consequences of the bad event actually occuring and whether or not a small cost now is worth covering that big bill later on.

The latter three sections of the book are much shorter and focus on very narrow issues, mostly ones that have really popped up as a result of the 2008 financial crisis.

IV: CEO Behavior
CEOs rise to the top of the corporate ladder by taking risks and having those risks pay off. That’s how a future CEO stands out from the pack – they stick their neck out and succeed. When they get to the top, they often have huge confidence in their abilities, whether it’s warranted (Jack Welch) or not (Bob Nardelli). Often, one sign that a company is either going to succeed wildly or utterly fail is in the behavior of the CEO: are they full of their own hubris? Do they hold onto stock options too long? Good signs include a laserlike focus on their company. Bad signs include self-promotion, like writing books and going on book tours.

V: Psychology and the Credit Crisis
Investment bubbles happen for the reasons outlined above: people see others rushing in and making good money and decide to rush in themselves. Inevitably, though, any market eventually runs out of buyers, at which point the bubble pops and people lose big. The opposite is also true – think of someone shouting “fire” in a theater or a bank run. Quite often, that kind of trampling panic can cause far more damage than is warranted in the situation.

VI: Debiasing
How can you avoid all of this stuff? First of all, slow down. Very few financial decisions have to be made in a “snap” context. Second, communicate. Talk it over with others. Have a “money buddy” or even a group of people to talk decisions through with. Third, cover your risks. Don’t invest in stocks unless you can afford the losses and have insurance unless you’ll be fine without it.

Is Snap Judgment Worth Reading?
Snap Judgment is a thorough and interesting review of how psychology affects investment and financial choices. It’s written approachably and thoughtfully and does a good job of covering the 2008 crisis in the latter sections of the book.

The only real drawback with the book is that the topic area has been covered by a lot of other books, many of which are very, very similar.

If you’ve read a book on financial psychology, Snap Judgment probably isn’t a necessary read, but if you’ve never read one, you ought to, and Snap Judgment is a pretty fine place to start.

Samuel writes in:

Much like you with your piano resolution, I decided to finally bite the bullet and begin a career path towards becoming a professional chef this year. I have a substantial amount of money saved up, so the costs of this choice aren’t a problem.

My problem is this: it’s a lot more of a slog than I ever dreamed it would be. I am attending culinary school in the fall, but for now I went to a few of the best restaurants in my city and asked if I could apprentice for free in their kitchen. I found a position that blew my mind at first, but for the last three weeks all I have done is chop vegetables. It’s incredibly boring and it’s actually making me enjoy this less and less. I’m afraid that by the time I actually get to culinary school, I’m going to hate this entire idea.

Do you have any advice or thoughts?

Two words: deliberate practice.

The advantage of spending hours and hours chopping vegetables now is that later on, when you’re preparing complex dishes, the act of chopping the vegetables is so efficient and effortless for you that you can chop the vegetables perfectly while focusing mentally on other tasks that need to be done.

I actually think this is a brilliant way to train for an aspiring chef. This training is grinding a particular skill into you to the point that it becomes truly second nature. That particular skill is one that you will use virtually every day as a chef, either in the home or in a restaurant.

It’s the concept of deliberate practice at work. Deliberate practice is practice that is specific and technique-oriented, is highly repetitive, and is paired with immediate feeback – in other words, the exact kind of practice you’re getting in that kitchen right now.

Why is deliberate practice so good? For one, it forces you to master a very specific skill in an intimate way. Often, that specific skill is an element of the larger skill you want to learn. For two, the mastery of that very specific skill often prepares you well to learn other specific skills – slicing meat, for instance. For three, that highly trained skill will make the broader tasks that much easier, meaning that excelling at one narrow thing can often improve your overall skill level, much like a tent pole with a tent.

Think of The Karate Kid, where Daniel is washing and waxing cars and painting walls. It was boring and it seemed completely un-fun to Daniel, but when he actually attempted basic karate, those skills he had deliberately practiced came to the surface, making him much, much better than he would have ever been without them.

I’m actually using deliberate practice in my own piano learning. Rather than continually pushing myself to play harder and harder material, I’m instead playing some simple songs with a few key techniques over and over and over again. I’ll play the same line in repetition for an hour. Yes, at times it can be boring, but when I do try something more complex, I see that specific learned skill shining through when I do things like switch chords or jump an octave.

If you want to learn to do something well, deliberate practice should absolutely be a part of your practicing repertoire. Sure, it might be really boring at times, but when you attempt the broader task and feel the training of deliberate practice come through for you, it’s an exciting and empowering thing.

Samuel, go home tonight and throw yourself together a vegetable stir fry, just like you might have done before the start of the year. Notice how it just all comes together that much easier than before. That’s what you’re learning – instead of focusing on the mechanics of vegetable chopping, instead you’re focusing on the meal itself. That focus is at a higher level because you have a lot of practice at the lower level skill – and the end result is a much better meal that seems to come together easier.

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 (January 24 – January 30, 2009)
The Frugal Magic of the “Five Ingredient Crock Pot Meal” Add five ingredients to a crock pot before you leave for work. Turn it on low. Come home, turn it off, and serve a delicious home-cooked meal. Sounds like a plan to me.

Treasures in the Cupboard: Eight Tactics We Use to Maximize the Value of Our Pantry Our pantry remains overstuffed, but we actually go through the items on a pretty regular basis. It’s my baking hobby that results in us having nine different kinds of flour, after all.

The Iceland Scenario: What Can You Do? In 2008, Iceland was the sixth wealthiest nation on earth. They then suffered an economic meltdown of disastrous proportions, affecting everyone in the country. What would you do if it happened here?

Finding Your Way Home I find myself more and more doing things the way my parents did when I was growing up.

Making the Hard Choice Do you choose the path that leads to mediocrity – the easy path – or the path that leads to success? It’s an interesting way to look at pretty much every decision in your life.

Two Years Ago (January 24 – January 30, 2008)
How to Find One’s Credit Report and Credit Score Inexpensively and Safely Hint: don’t use freecreditreport.com.

Emotional Fulfillment and Financial Success It’s very difficult to find lasting financial success if you’re unhappy with your life and the direction it’s going in.

Wallet Hacking: Six Tactics for Modifying Your Wallet to Minimize Your Spending and Maximize Your Time The wallet is often the centerpiece of bad spending habits. Here’s how to physically modify your wallet to help break those habits.

Twelve Invaluable Life and Money Hacks: Little Daily Steps for Finding the Money and Time to Get Things Done It’s little steps like these that help you find the time and space for the things that you want to do instead of being overloaded all of the time.

Robert Kiyosaki and Learning From Another Perspective I’m not a fan of Robert Kiyosaki, but I still have gained value from reading his books. Here’s why (and how).

Three Years Ago (January 24 – January 30, 2007)
The Life Map: Connecting Your Daily Activities And Spending To Your Lifelong Goals And Dreams I just tried this activity again and found it really insightful in terms of figuring out where I want to go and what it’ll take to get there.

Reader Question: College Student Crushed By Credit Cards Many college students find themselves buried in credit card debt. Here’s some advice on digging out.

Setting Daily Metrics For Personal Finance Success (And Success In Other Areas, Too!) I find that this works very well for keeping me on task. I literally have a daily checklist that, if I’m not through it, I keep working on in well into the evening, and I don’t let myself do other things until those things are done.

Ten Signs Of Questionable Financial Writing Whenever I see these elements in a financial story, my warning bells go off.

Five Sources For Great, Inexpensive (Often Free) Entertainment In Your Neighborhood Your community is loaded with entertainment options – they’re just not as heavily advertised as the latest showing of Avatar. Here’s how to find some of those options.

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!

Bob writes in:

I’m in my mid twenties, worked doing tech support all through college, and worked out of college as the IT director for a political campaign of 120 staffers. I now have left to a job that fits my interests a little bit better, but clearly still have a lot of IT skills.

I haven’t been doing any IT work on the side, but the friend of a coworker of mine needs some computer help. I’m perfectly happy to help her. What I really want is money, but I feel awkward asking for it. I’m not in debt, I’m pretty healthy financially, but money is preferred just because I want to spend it on what I want, rather than just asking for a general category of gift (bottle of scotch, etc). Any advice on how best to explain that I charge a certain rate and not feel bad about it? (Her fix is pretty easy for someone with my background, hence the guilt)

The best approach in this situation is to decide what you want in advance, then be up front and clear about it. Communication never fails to be a winner in any situation and the earlier you communicate your needs, the better. You should communicate what you want at the earliest possible juncture in this so that there’s never any chance of there being a misunderstanding of the arrangement.

The secondary question, of course, is whether or not you should feel guilty about doing this.

There’s one big thing to keep in mind whenever you provide this kind of service or any kind of service: people are paying you to provide a service they can’t – or are unwilling to – do for themselves. You are providing some sort of expertise or trait that they’re not bringing to the table, whether it’s knowledge of leverage for moving a piano, arm strength for digging a lily pool, or IT skills for solving a computer problem.

To them, the skill you have has value. Quite often, it has significant value.

What value? It doesn’t matter what you think that skill is worth. It matters what they think the skill is worth. That amount is what the person receiving that service is willing to play. In other words, it’s set by the marketplace – if there are fifty plumbers in a city, they all charge similar rates, for example.

Another factor to remember is that you are selling your spare time. That time has significant value – you have a limited quantity of it and it’s often the only time you have for leisure and recreation. When you fill that time with tasks that you don’t want to be doing, you deserve some sort of compensation for it.

Thus, I would check around in the community and find out what the going rate for the type of service you’re going to provide is, then provide the service at that rate or a slightly lower one. After all, that is the price they would pay for that service in the broader marketplace.

You may decide that a lower rate for family and friends is appropriate and, if that’s the case, reduce the rate you charge to benefit that person. Should you provide that kind of rate reduction? That’s up to you, but if you are providing that rate, make it clear up front and on any receipts or invoices you provide just to keep matters clear for the future.

On the other hand, there is some value in providing the service pro bono, particularly if the service isn’t too stressful for you. This can have an enormous social benefit – it often opens the door to a long exchange of value on both sides of the coin, from work opportunities to assistance with tasks and advice. There is a great deal of value in following this path and, quite honestly, it’s probably the path I would follow in this case.

Good luck in whatever you choose.

Jill writes in:

I don’t earn much and am consequently unable to save much and what little I save is often wiped out by breakdowns (e.g. household stuff), minor illnesses and other emergencies. I am actually quite a frugal person, it’s just that my income is not much and tends to be irregular.

I am very troubled because I wish to save for a big purchase (about USD $3500) that would serve as a basis for a career change but I’m not sure if I have the ability/willpower to do it. I’ll calculated that I’ll take at least a year to do it and in the meantime I would have to be very,very careful with my money and not sink any $$ into my usual hobbies so life will be very dull. My hobbies all cost money e.g. ballet class

How do I deal with this tough waiting period of deprivation and no enjoyment? I do have some weaknessness eg kitchen equipment.I cook most of my meals and I can’t help think how life would be easier if I had a pressure cooker and so on so that I can cook things quickly after work.

Right now, I am considering putting my money in fixed deposits regularly with shorter and shorter maturation periods as I save to prevent myself from touching the money. Do you have any advice?

The problem right now isn’t that Jill doesn’t have enough money to achieve a goal. The problem is that Jill is chasing a lot of goals at once simultaneously and stretching herself too thin in the process.

In this email alone, Jill directly references three different significant life objectives: ballet class, upgrading kitchen equipment, and a career change. Jill also alludes that there are more beyond this in a couple of different places, and notes that each of these goals costs money.

The real issue is priorities. In Jill’s day to day life, she’s telling herself that she has a certain thing as a priority (saving for the career change item, which I’m guessing is a musical instrument), but in her actions, other things are priorities (ballet class, kitchen equipment upgrades, and so on).

If there’s one thing I’ve learned about life over the last three years, it’s this: the more things you try to set as a major priority in your life, the less successful you’ll be at any of these priorities.

For me, my only major priority is my family. Everything else is secondary to that, period. I recognize that in my day to day life, and filter most of my actions and choices through that lens. Is this something that benefits or improves my family or my relationship with members of my family in a direct way?

My other passions – reading, writing, cooking, playing games – take a back seat to this. Obviously, I’m quite happy when they overlap – cooking a dinner in the kitchen while my son and daughter are helping or playing yet another game of Sorry Sliders with my son – and I sometimes devote time to the interests on their own, but if there is any sort of conflict at all, I know exactly where my priority is.

I need to do this because my life – and your lives – deal with several things of which there is a limited quantity. There is only so much money that can easily be spent. There is only so much quality time. There is only so much personal energy. While we can possibly adjust these rules in the short term, in the long term they will balance out.

Jill, what’s your priority?

From this email, I can’t really tell what’s on top. Your mind seems to be leading with an intention to improve your career, but your heart is into the ballet classes and the kitchen improvements (and the other things you don’t mention).

The first thing you need to do is sit down and figure out what’s really important to you. What goal do you most want to fulfill? Is it that career change? Is it becoming a ballerina? Is it becoming a great at-home chef? Is it something else entirely?

There’s no right or wrong answer to this. We all have different talents, different skills, different desires, different resources, and different dreams.

Once you’ve figured out one or two central priorities for your life, focus on those and let the other ones fall back a bit. Let’s say you choose to focus on that career change idea and on ballet and let the other interests slide. That doesn’t mean you can’t cook at home – it just means that your extra time and energy and money shouldn’t be poured into it. You can still look for a pressure cooker, but look on Craigslist instead of Williams-Sonoma. Instead, spend your time and energy figuring out how to make that career change work and how to be the best you can be at ballet.

Here’s a tip: if the thought of focusing so heavily on something seems boring or unexciting to you, it might not be the right thing for you to be focusing on.

Once you figure out the central focus of your time and money and energy, frugal tactics are the fuel that will get you there. Cut everything else – all of those things that don’t really matter to you – to the bone. Snowflake – in other words, when you serendipitously come into money, channel that money towards your big goal.

Before you know it, you’ll find that your goals that you’ve focused on are suddenly coming well within reach – and that’s a happy place to be.

Recently, I had a conversation with a friend of mine about some of the things I write about here on The Simple Dollar. Even though she’s struggling with some serious debt issues, she told me flatly that she didn’t want to take most of the advice given on The Simple Dollar. When I asked her why, she breathed in deep and told me the following (paraphrased):

I don’t want to be a “frugal” person. I don’t want to be the person who is no fun because I’m always chasing every dime and I’m always vetoing the fun things to do. I don’t want to be the person that leaves out cheap toilet paper for guests. I don’t want to just sit at home every night cackling as I count my pennies. I want to have a life.

First of all, it’s clear from these statements that my friend puts a great deal of value on how she appears to others. She desires an active and vibrant social life, to the point where it would seem that it’s one of the central values in her life. She wants to spend a lot of time with her friends and family – the people she cares the most about.

Hand in hand with that central desire is a desire to not alienate them through penny pinching. She aims to keep the people in her social circle happy and she wants to be involved in whatever things come along.

Both of those things are completely fine – in fact, they’re a healthy part of an extroverted personality (in moderation, of course). The problem here is that having a social life and being frugal are far from contradictory, as my friend likes to believe.

Let’s look at each of the comments.

I don’t want to be the person who is no fun because I’m always chasing every dime.
The statement here implies that she thinks she won’t be enjoyable for others to hang out around if she chases every dime. In response to that, I would simply say that most of the benefits of frugality come from choices made when no one else is around. Buying light bulbs isn’t a social event, nor is setting up an emergency fund. Grocery and household supply shopping isn’t a social event, either. Yet those are the times when many of the money-saving choices are made.

If your social experience is a key value for you, don’t cut back on it. Instead, focus on the multitude of things going on in your life that aren’t subject to social constraints.

I don’t want to be the person who is no fun because I’m always vetoing the fun things to do.
Simple. Don’t veto the fun things to do.

In fact, why not be the one who suggests fun things to do? In your spare time, think of some things that would be genuinely fun for the people in your social circle and then do some research on how to do them inexpensively. Then, when it comes time to plan a social event, pipe up with your idea. Not only will it be cheaper than throwing yourself into something without any forethought, but if you put your mind to it at other times, you’re likely to come up with some brilliant ideas to boot. You actually won’t be the downer – instead, you’ll be the person who comes up with the good ideas.

I don’t want to be the person that leaves out cheap toilet paper for guests.
Then don’t leave out cheap toilet paper for guests.

If you have multiple bathrooms in your home, designate one as the bathroom that guests use and stock it with the finest toiletries. Then, use the other bathroom yourself and use generics in there. It’s a room that’s just yours – no one else will ever use it. Since the guest bathroom will likely be used less than the one you regularly use, you’ll buy a lot more of the inexpensive stuff than the expensive stuff, trimming your budget quite easily.

Again, it’s all about what’s a personal value to you, and being a good hostess is an important value to her.

I don’t want to just sit at home every night cackling as I count my pennies.
Then don’t sit at home every night cackling as you count your pennies.

There are countless things to do all over the place that don’t require a major outlay of money. Take a serious look around your community. Look at the community calendar. Find out about the many things your city’s parks and recreation department has to offer.

Frugality is not about sitting at home and counting your pennies. It’s all about figuring out what exactly you want out of life, then doing exactly that while minimizing the cost of it. The pieces of your life that aren’t part of that picture of exactly what you want out of life are the parts you can trim.

If you value your social life, then focus on your social life. The rest of your life are the areas where you can cut. If you have a calendar that’s full of social activities every night, do you really need cable or a land telephone line? If you thrive on your friends and family, why not think ahead and come up with things that are a blast and save all of you a few bucks over the regular price of admission? And on those rare occasions when you are home, you don’t really need a flat panel television and thousands of dollars’ worth of decorations when the core value of your life is outside the home. Decorate tastefully and take your time with it to find bargains on things you actually want.

Being social is not the opposite of being frugal. They often go hand in hand.

Tim writes in:

We are working on our emergency fund. We put almost all of our extra income into the fund. The problem that I am wrestling with is that it is hard to watch opportunities go by while we work on this fund. It will take a year or two to fully fund our emergency fund (3 to 6 months). Example, I really wanted to buy some Ford stock when it was at $4 / share. I was pretty sure that over the next year it would do well, but it is a risk and at the time we were starting our fund. It has hit $12 per share in about a year. I know there will be other opportunities like this, but is hard to watch a missed opportunity.

Do you think the emergency fund should be fully funded before buying opportunities?

I’ve received several emails like Tim’s over the last year and they all point to the same thing. They all feel that putting their money into emergency funds equates to losing opportunities in other avenues of life. In Tim’s case, for example, the money he put into his emergency fund would have done much better for him had he put that money into Ford stock.

There are several points worth making here.

First, hindsight is 20/20. I can’t tell you the number of times I’ve lamented the fact that I didn’t buy any Google stock near the IPO. I told everyone I knew that it would be a big winner. I knew with every core of my being that it would be huge. And it was. I now look back with a sense of missed opportunity. Why didn’t I throw every dime I had into it?

Here’s the thing, though. It only feels like a missed opportunity because I now know what exactly happened to GOOG. Back in the day, I didn’t have such knowledge. I had no way of knowing whether or not Google would shortly be supplanted as the 800 pound gorilla of online search, just like they had replaced Yahoo! and Yahoo! had replaced Altavista, all within about a six year stretch.

Just because I now know it was a winner doesn’t mean that it wasn’t an enormous gamble at the time, one that, if I really step back and look at it honestly, I’m glad I didn’t take because the total risk wasn’t worth it.

Looking back at “what-ifs” as a justification to push your finances is always a bad idea, because it distorts the real picture of your investing skills. You remember the guesses you made correctly and tend to gloss over the ones you missed.

Second, emergency funds are about as unglamorous as can be. CNBC doesn’t breathlessly talk about how people are putting 5% of their paychecks into cash emergency funds. Instead, they’re glamorizing the stock picks of the week. Jim Cramer doesn’t throw chairs and yell about an automatic savings plan, after all.

CNBC (and most of the money press) promotes and sells and glamorizes a certain flavor of entertainment and lifestyle – the “big investor” lifestyle, as I like to call it. Why do you think there are tons of commercials for Escalades and the like on there? It’s because the “big investor” lifestyle is sold as being glamorous – and the marketing to people who are into that also goes heavy on the glamour.

Thus, when we think about investing, we don’t think of savings accounts as fun and exciting, but quite often that association is made with stock investing. A big part of that is the fact that there’s a lot of money to be made from people investing in stocks in the form of fees and commissions, while the same isn’t as true of savings accounts. The marketing dollars go toward glamorizing stock investing.

Third, the financial benefits of an emergency fund aren’t as easy to see as the benefits of other investments. All you have to do is glance at a stock ticker to see the benefits of a stock investment and, during a bull market like this one, the proof seems to come up all the time. “Look at all the money people are making,” people tell themselves, and that’s why people often invest near the top of a bull market.

On the other hand, the real benefit of an emergency fund is unseen in our day to day lives. We can’t see the unexpected. Our emergency fund doesn’t help us at all on a normal day, but a glance at that stock ticker tells us that we might have made a bit of money if only we had invested in stocks.

It’s on the abnormal days when our emergency fund helps us. It saves us from going into debt to cover a car repair – a debt that will come with a hefty interest rate. It saves us from racking up big credit card bills. It protects us from a job loss.

But our minds work in an interesting way. Once we make our way through those unfortunate events, we tend to forget about them and gloss over them, putting them into the past and not thinking about them any more. Most of the time, we move on from those rough events. It’s how we’re able to deal with our day to day lives. (I covered this idea in detail before.)

As a result, we think our lives are more even than they really are. We gloss over those big bumps in the road and see our path as being much smoother than it actually was. Thus, we don’t see the real need for an emergency fund anywhere near as clearly as we ought to, and compared to other opportunities that run up and slap us on the face, it can be hard to keep focus on the emergency fund.

Emergency funds often come off feeling like something we’re supposed to do, but it doesn’t feel like we’re really getting ahead when we do it. Opportunities, on the other hand, are something that we often passionately want to jump on board with because of the marketing and prevalence of information.

My suggestion for Tim is simple. Set up an automatic savings plan that contributes a reasonable amount to your emergency fund each week, something you’ll estimate yourself depending on your income and your budget. Once that’s in place, forget about it. Let it grow quietly like a mushroom in the cellar and don’t even think about it until a legitimate emergency comes along.

If you want to take advantage of opportunities that come along, use the remainder of your income for those – and go for it.

Eventually, you may find that you have a large surplus in your emergency fund due to years of (luckily) steady life. If you find yourself there, don’t hesitate to take some of that money and use it for another investment opportunity.

Aside from that, though, just set up the automatic savings, sit back, and don’t think about it. Don’t even consider the money you’re putting away to be on the table for any other spending. Pay yourself first.

Whenever people ask me how to save money on vacations, I always encourage them to consider camping instead of staying in a hotel. We do it often – in fact, I have some very fond memories of camping in Olympia National Forest and on Mount Rainier during our Seattle vacation in ‘04 and camping near Gooseberry Falls, MN during another vacation in ‘06 (perhaps my favorite camping stops ever, which is why I’m mentioing them).

Some people take this advice and run with it. Camping saves a truckload of money over a long trip and it can provide a unique story, too. Yet some people look at camping and see nothing more than the loss of comforts of a hotel, never mind the savings and the incomparable perks of camping.

This tip column is for that latter group. Here are some ways to make camping much more enjoyable without breaking the bank in any way.

Bathrooms, bathrooms, bathrooms Toilet, sink, and shower service are often the thing that separates a good camping trip from a bad one for people who want to use camping as a substitute for hotel visits. A campsite with inadequate areas for personal hygiene will often get a big thumbs down, as it makes it impossible for people to start off their day with the normal hygiene routine, which is key for many (if not most) people.

So how do you solve it? My first recommendation is to start with – and focus heavily on – state and national parks. You can find tons of them at dto.com (short for discover the outdoors). Focus on parks that have a shower house near the destinations you’re visiting. You can also reserve sites with electricity – perfect if you have devices you wish to plug in (like an alarm clock, for example).

Camping after flying What if you’re flying to your destination? My suggestion is to take the tent with you on the flight. Repackage it in a large box along with sleeping bags, pillows, and other essential items for camping – these all compress surprisingly well. For the return flight, you might find that it’s less expensive to shop the tent and camping materials home via UPS or another shipping service.

When you arrive, purchase a small short-term use styrofoam cooler and pack the food items you wish to keep cold in that, as it’s less expensive than shipping a cooler (unless you can find a great way to pack it in your large box). In other words, one of your first stops will be at a grocery store.

Speaking of eating…

Tactics for eating well while camping Most meals can be cooked really well over a campfire by simply putting the ingredients in aluminum foil, tossing them straight on the coals, then retrieving them later with a stick. Thus, all you will need for dining utensils while camping are some paper plates (which can be reused for kindling the next day) and silverware.

Here’s an example. For breakfast, I will often pull out a sheet of aluminum foil, make a bowl out of it, then crack three eggs in it. Then, I’ll add some beans to it and perhaps some chopped-up vegetables, too, and maybe a sprinkling of cheese. I then fold this up tightly in the foil, wrap it again, then toss it straight on hot campfire coals for ten to fifteen minutes. When I’m done, I have scrambled eggs, perfectly hot. You can make toast in a very similar way, though I often use a pair of sticks to hold a few pieces of toast over flame.

You can make all sorts of different meals using the same exact logic. Use your imagination.

Sleeping comfortably This seems to be one of the biggest complaints about camping – it’s hard to sleep comfortably. I have back concerns myself and, quite honestly, they seem to crop up more from hotel beds for me than from camping, so I confess to not fully understanding this complaint. Instead, I’ll share with you my routine for sleeping in a tent.

First, I often gather leaves and sprinkle them in a pretty thick layer in the spot where we’re going to pitch the tent. In the summer, this often means retrieving them from low-hanging branches. This, of course, works well in some parks but not in others.

Second, I’m picky about my sleeping bags. One lesson I learned from my grandmother is that the place you sleep is a place where you don’t skimp, because it forms the successful basis for the rest of your day. Study them carefully and get a well-padded one that works.

Third, I usually use a sleeping bag pad. This is a very small, thin air mattress that rests under the sleeping bag directly on the floor of the tent.

Finally, and this is probably the biggest thing, I sleep with the windows open when camping. The clean night air makes me sleep very deeply and I almost always wake up feeling refreshed, even if getting to sleep took me a little bit. I tend to sleep better when camping than I do any other night.

Finally, camping’s savings really pop up when you’re on a longer trip rather than a shorter one. If you’re just staying for a single night, the time investment of setting up camp probably undoes the savings from camping. However, if the trip is a long one, the time cost per day is reduced and the cash savings per day is increased, making camping progressively more worthwhile. If your trip is short, it might actually be more cost effective to just stay in a reasonably-priced hotel, but over a long trip, few things beat the savings of camping.

One final note about camping when traveling: the aesthetic beauty of our nation’s state and national parks is an enormous perk when camping. There simply is no hotel on earth that can take your breath away like stepping out of your tent in the morning in the middle of a national park.

Good luck.