This is part of an ongoing series about how to trim the budget of the average American. As this series focuses on such broad-based tips, some will work for you and some will not. You’re invited to mention in the comments the tips that you found to be the most useful for inclusion in a comprehensive budget trimming guide at the conclusion of this series.

Housing – utilities, fuels, public services – $3,477

The average American family spends almost $3,500 a year just keeping the energy going in their home. Between heating, cooling, and running the multitude of electronic devices in our homes, we’re paying an average of $300 a month to the energy companies.

Fortunately, there are tons of actions you can take to reduce your energy bill each month. Yes, I’ve mentioned many of these before, but that’s because they work. They really do trim your home energy spending and are well worth doing if you’ve not done them before.

Install a programmable thermostat. A programmable thermostat is a device that allows you to set up a daily schedule of what you want the temperature to be in your home. This allows you to have the temperature go way up (in summer, keeping the AC from unning) or way down (in winter, keeping the furnace from running) during times when no one is at home or no one is awake – automatically. Even though I work from home, we still have found substantial energy savings from our programmable thermostat simply because of the temperature alterations at night. They’re easy to install – it takes about half an hour, a screwdriver, and a lack of fear about flipping a breaker.

Air seal your home. Air sealing your home involves detecting where cold or hot air from the outside is coming into your home, causing the cooling or heating in your home to effectively “leak.” Air sealing is a weekend-long project that can drastically reduce the leakage from your home, causing your energy bills to drop significantly. Here’s a great guide for energy sealing from EnergyStar.

Install new windows if your home is older. Properly installed EnergyStar windows can drastically reduce the energy lost directly through the windows in your home. Do the windows in your home collect frost in the winter? Is there noticeably warmer or cooler air near your windows? If that’s the case, it’s likely that your windows are adding significantly to your heating and cooling costs and there’s a substantial savings in your future if you replace your windows with energy efficient ones.

Use natural gas. In almost all areas, natural gas is more efficient and vastly less expensive per month of use. If natural gas is available in your area, consider moving major appliances to natural gas when it comes time to replace them.

Use natural ventilation whenever possible. If the temperature is between 60 and 85 F (or perhaps even more of a range than that), turn off the ventilation system entirely and throw open the windows. Our windows are open almost constantly during the spring and early fall months to take advantage of the wonderful weather outside.

Take advantage of incentives for energy improvements. Many energy companies (and federal and state governments) offer direct financial incentives for making energy-related improvements to your home. Quite often, these incentives will pay for a significant portion of the improvement, allowing you to simply collect the rewards from a lower energy bill. Take a look at the Database of State Incentives for Renewables and Efficiency to get started.

Use fans. In the summer, ceiling fans do an effective job of utilizing breeze to make a room seem cooler than it actually is. Thus, you can easily afford to raise your thermostat a few degrees, trimming your energy bill substantially. In the winter, you can actually get away with lowering your thermostat a degree or two if you have ceiling fans. Adjust your ceiling fan to run counterclocklise in the summer and clockwise in the winter (see this ceiling fan guide for more details) to cause warm air to move up in the summer and move down in the winter.

Turn off lights and ceiling fans when you leave a room. It’s a simple habit – but a powerful one. If you leave four 75 watt light bulbs and a ceiling fan on in a room for even a couple of hours, you’ve lost a dime. Do it over and over again and you’re losing a lot of money. Get into the routine of just flipping the switch when you walk out of a room.

Move toward LED lighting. Yes, swapping out your lighting is a tried and true tactic for saving on energy, but CFLs are just a stopgap. LEDs are the ultimate best replacement for the bulbs in your home, as they have a very, very long life and use even less energy than CFLs. Use a mix of LEDs and incandescents in your home (incandescents still work best for natural lighting and reading lights, but LEDs are great for closets and hall lighting). Also, decorative lights are perfect for LED use.

Buy energy-efficient appliances. Study the energy efficiency numbers when you go appliance shopping and recognize that an appliance rated at 1,000 watts will consume about a dime’s worth of energy during every hour of use – and 100 watts will consume a penny of energy an hour. Use that for your calculations over a long lifetime – say, fifteen years – and you’ll often see that the energy efficient choice, though it’s a bit more now, is a huge saver over the long run. Add in the fact that there may be incentives (see above) for buying the efficient model and this becomes a no-brainer.

Get your major appliances – your furnace and central air conditioner – serviced regularly. Simply getting your ducts flushed and having your unit checked over and tweaked can make a big difference in your energy bill. Plus, quite often, at least part of the cost of this will be refurnded by your energy company if you turn in a receipt.

Heat (and cool) less space. If you have unused rooms – or infrequently used rooms – turn off the vents in that room, turn off all energy-using devices in the room, shut the door, and use a towel to block any air flow under the door. This will help with energy bills in both the winter and the summer.

Keep your shades drawn unless you actually need the light. By default, the most energy-efficient position for your curtains and shades is to keep them drawn. That doesn’t mean you should never open them – by all means, let the sunshine in! Just make it a choice to open them – keep them closed by default. The only exception to this rule is in the winter, when it’s worthwhile to open up the curtains or blinds on the side of the house that’s receiving direct sunlight.

There are countless little steps you can take to improve your energy usage – these are just among the most effective I’ve found.

I want your help! In the comments, please let me know which of the tips you find most useful for trimming these costs. I’ll include the top choices in a comprehensive budget trimming guide at the conclusion of the series.

Yesterday, I had a conversation with a Simple Dollar reader named Kip, who brought up the classic novel Silas Marner by George Eliot (if you’d like to read it, here’s the entire text, or if you’d just like a summary, here are the Sparknotes). I was so inspired by the conversation that I dug my copy of Silas Marner out and re-read most of the novel in a single sitting.

Silas Marner is a tale of the ups and downs of the life of the titular character, Silas, over the course of his adult life.

The middle part of the book is the part that consistently sticks in my head. After being falsely accused of theft and basically run out of his town, Silas becomes a miser, hoarding every dime that he earns. He keeps the money under his bed and counts it every night and, because he has become a social outcast by a mix of fortune and choice, the money is the center of his life.

One night, the money is stolen – all fifteen years’ worth of it. Silas is completely shaken by this, as you can well imagine. He doesn’t deal with it well and eventually becomes completely hysterical, having a breakdown in his home. As he is passed out from this episode, a woman and her small child are walking in the snow near his home. The woman takes a draught of opium, passes out, and dies in the snow. The child, looking for warmth, finds her way into Silas’s cottage and falls asleep near the fire, almost exactly in the spot where Silas last left his money before it was stolen.

Silas awakens to find that his gold has been replaced by a golden haired child. Eventually, he adopts her and takes on the role of her father, which gives him an entirely new lease on life.

On the surface, Silas, in his miser years, is following good financial practice. He’s completely financially independent, he saves his money, he is an independent businessman (he’s a weaver), and he spends much less than he earns. This is often the very goal that many of us strive for.

Yet his life is so single-focused that one unfortunate event sent his entire life off of the rails, resulting in him having a breakdown in his home. In his pursuit of money, he failed to pursue a well-rounded life. It took the replacement of his money with the child for him to rediscover the beauty of life.

Never let the single-minded pursuit of wealth stand in the way of your life. The pursuit of wealth for wealth’s sake is an empty pursuit, one that will leave you without the things you most need when the time comes.

Instead, seek wealth with a purpose. Why are you making the choice to succeed financially? Are you seeking to provide a stable home for your family? Perhaps you have a passion that you’d like to chase that doesn’t earn a large income. Perhaps you’ve got a philanthropic bent.

Whatever that purpose is in your life, that purpose should be in the lead, not the money. Money is merely a tool to help you do the things you want to do.

What do you want to do today?

This is part of an ongoing series about how to trim the budget of the average American. As this series focuses on such broad-based tips, some will work for you and some will not. You’re invited to mention in the comments the tips that you found to be the most useful for inclusion in a comprehensive budget trimming guide at the conclusion of this series.

Pensions, Social Security – $5,027

For the most part, there’s not much the average American can do to alter the amount of money they pay for Social Security and for pensions. For most of us, this is merely a paycheck deduction, something we never see in our take-home pay.

Yet there are several things we can do to increase the value of that money or to secure it. Here are some options that you might want to consider.

Insure your pension. Many corporations have played games with the pensions long-promised to their employees. If this is a concern to you, you can insure your pension so that you’re not at risk of losing it. The Pension Benefit Guaranty Corporation (http://www.pbgc.gov/) can help you get started in this regard.

Know what Social Security benefits you’re entitled to. The Social Security Administration mails this information to most citizens annually. Study this information and know what you’re due to receive so you can plan accordingly. If you don’t have access to this information, check www.socialsecurity.gov.

Know how much money you’ll actually need in retirement. Spend some time utilizing retirement planning tools (I like this tool at MSN Money) so that you know exactly how much money you’ll need in retirement. Use this number to see if you’ll be meeting your needs or not. If not, now’s the time to start socking away more (which we’ll address in another section of this series).

Minimize your requirements. If you’re finding that you’re far short of what you need, you may want to consider minimizing your financial requirements for the future. A big move in another area – like downsizing your home, particularly if it’s overly big now that the kids have moved out – can often create the breathing space you need.

At the same time, improve your self-sustainability. If you have money for it now, invest in things that will make your retirement years much more self-sustaining. Instead of buying a new car, invest in geothermal heating. Instead of redoing the kitchen, look into a small wind turbine. Learn how to garden and to cook. Such assets and skills can drastically reduce your spending.

Develop a “second career.” If you’re still intending to take advantage of your pension as early as you can, consider developing a “second career” that will provide some income while allowing you to engage in something you’re passionate about. There are many jobs and entrepreneurial activities – from tour guide to caterer – that can match exactly what you enjoy while still bringing in some extra income.

Share resources and ideas. Don’t be afraid to talk about your money with people in the same boat as you are. Share ideas with your friends and other people nearing retirement age. Don’t take on your concerns and worries about retirement in isolation – quite often, the people you care about most are facing similar concerns of their own, even if you don’t see it from the outside.

I want your help! In the comments, please let me know which of the tips you find most useful for trimming these costs. I’ll include the top choices in a comprehensive budget trimming guide at the conclusion of the series.

Quite a few readers expressed interest in having meetups of some sort at any conventions or conferences I attend this year – if not at the conference itself, in the town where the conference is held. So here’s an update.

It’s looking like I won’t be attending SXSW this year (but I’m hoping for next year). It’s far too close to my wife’s due date for my comfort, and given that it’s our third child, we expect the baby to both arrive a bit on the early side and to be a fairly fast delivery, both of which bode against a trip to Texas right before the due date. This is a disappointment for me, but sometimes life trumps what we want to do.

On the flip side, it looks quite promising that I will be in Indianapolis in early August for GenCon. My wife and I came to an agreement regarding this summer – we each have one four day weekend to do something on our own that the other one has little interest in, and that’s my choice. I may host some sort of meetup in the Indianapolis area that weekend if there is interest.

Anyway, on to some articles.

5 Reasons Not to Apply for a Loan Modification in the Home Affordable Modification Program (HAMP) I’m not much of a fan of refinancing mortgages. In my experience, such choices (particularly now) rarely save money in the long run, particularly when you figure inflation into the equation. This is just another argument against such programs. (@ wisebread)

Invest in Your Most Important Income-Producing Asset These are some great self-evaluation questions that everyone should ask themselves about their career. (@ get rich slowly)

The Lonely Novelist’s Five-Point Productivity Plan These tips are pretty spot-on – and pretty adaptable to any large-scale project you might want to tackle in life. (@ soul shelter)

Why Is It Hard to Know What You Find Fun? I think the biggest problem in finding what you truly enjoy (which is a big key to getting your spending under control, because you can minimize spending on everything else) is that we constantly get signals about enjoying other things and that some things are “socially acceptable” and some are not. (@ happiness project)

Alternatives to High-Yield Savings Accounts This article is a great start, but it could go even further. For some people (particularly those with a lot of cash), an index fund is probably a great place to stack money, and with a plethora of options there with all sorts of different levels of risk and reward, there are countless options. (@ consumerism commentary)

This is part of an ongoing series about how to trim the budget of the average American. As this series focuses on such broad-based tips, some will work for you and some will not. You’re invited to mention in the comments the tips that you found to be the most useful for inclusion in a comprehensive budget trimming guide at the conclusion of this series.

Housing – shelter – $10,023

Keeping a roof over your head is the single biggest part of the budget of the average American, consuming over $10,000 per family per year – more than 20% of their take-home pay. Yet, quite often, shelter isn’t seen as a target for trimming spending. Many families simply view rent or the mortgage as requirements without stepping back and looking at the big picture.

Here are several ways – both easy and challenging – to reduce the money you spend each year on your housing bill.

Downgrading
Downgrading is perhaps the most effective way to save money on shelter, as it immediately and directly reduces your bill. However, for many, this can seem like an impossible choice, especially if they’re established in a residence.

Move from a larger home to a smaller home. Quite often, people who live in homes have more space than they actually need. In fact, I’d argue that our current family – two adults and (soon to be) three children – has arguably more space than we need in our current home. Ask yourself if there are rooms that you rarely utilize in your home or rooms that could easily be combined to cause unused rooms. If this is the case, you’re probably appropriate for downgrading your home, which will reduce (and perhaps eliminate) your mortgage payment.

Move from a home to an apartment or other rental property. This is a worthwhile choice for people who are finding that the financial burden of owning a home is too much for them. In truth, homeownership has a lot of additional costs that you don’t see right off the bat, which can take new homeowners by surprise and stretch their money much tighter than expected. If you find yourself in this boat, look seriously into selling your home and moving into a rental, which is much easier in terms of managing costs on a limited budget.

Move from a larger apartment to a smaller one. This often works well in cities with many apartment options. If you’re finding that your apartment is stretching what you can afford, start hitting Craigslist and rental sites to see if you can’t downgrade into something smaller that still meets your needs. Quite often, singles and couples without children in city environments don’t spend significant amounts of time at home – and when they do, it’s often doing sedentary activities. Thus, you can often downgrade with much less discomfort than you expect.

Sharing
An alternative option to downgrading is to simply share your housing with someone. Finding a roommate is a surprisingly effective way to reduce costs without giving up the place where you life, no matter what your situation. Here are some options to look at.

Get a roommate for your apartment. This often works best if you’re single, but can work well with married couples in apartments, too – I know of several married couples who have shared two bedroom apartments over the years. If you’re having a hard time meeting costs on your own and have a spare bedroom (or some spare space that can be so utilized), look into getting a roommate. One good place to start is via your own social network.

Rent out a portion of your home. If you live in a home and have rooms that are unused (perhaps the children have moved out), you can consider renting part of your room out to singles, couples, or families who are looking for low-cost housing over the short term. This works best if you have a floor of your home that you can rent.

Look into cohabitation arrangements for your home. Perhaps a family member of yours is in a unique situation after graduating from college or going through another life change. If this is your situation, look into cohabitating with them. Invite them to share your home with you for some portion of the monthly mortgage payment (perhaps have them pay half of the mortgage while you cover the full energy bill – after all, you’re the one whose name is on the mortgage, so you’ll gain asset value by their presence). Alternately, you may be the person that takes advantage of such a situation. My wife and I have actually discussed this option in the past.

Preparation
Given the costs of home ownership (and even the monthly cost of a big, fat rent check), some preparation before you make a big leap can really help.

Rent instead of buying. In most (not all) situations, renting is more cost-effective than owning a home if you’re conservative with the difference in money. This is particularly true if you’re not confident you’ll be living in the same area in five years. Look at apartments and homes that meet your needs both on the rental and the ownership side of the coin and also consider the extra costs of owning a home – insurance, repairs, maintenance, and so on.

Save until you have 20% of a down payment – at minimum – before you even consider buying a home. If you rent with less than 20% down, you’ll either have to take out PMI (insurance against your lack of a down payment) or take out a secondary loan, often with a higher interest rate. Be patient and avoid those extra costs – keep saving until you have that 20% down payment.

Choose a place to buy/rent that’s smaller than you originally wanted. It’s easy, when you’re looking at apartments and homes, to fall in love with a living space that far exceeds the space you need. Be realistic and don’t push your money just so you can have more space to store all of your stuff. Speaking of all of your stuff…

Sell off all of the stuff you don’t use. Before you even consider moving, go through the items you own and get rid of the stuff you don’t actually want or use. Turn a critical eye to everything. Not only will this earn you a bit of cash, it might shock you when you realize that you really don’t need as much space as you initially thought you did.

I want your help! In the comments, please let me know which of the tips you find most useful for trimming these costs. I’ll include the top choices in a comprehensive budget trimming guide at the conclusion of the series.

We all did it at the beginning of our financial lives. We grew up. We moved out. We opened accounts at a bank on our own, quite often a different bank than the one used by our parents.

And we had to figure it out. How should we pick a bank? How do we move the money over? What should we put in our checking account? Our savings account? What are these CD things?

Michael writes in:

I’m a student, just trying to firm up my financial situation after having read your blog. For the last several years, I’ve used Washington Mutual largely because my parents had an account there but since being taken over by Chase, customer service has gone downhill, and the interest rate on my savings account is ridiculously low.

I’m looking at having an interest-bearing checking account and a savings account at different banks, to maximize my savings. However, how easy is it to transfer money from an account at one bank to one at another? Also, I’ve seen money market accounts, savings accounts, and no penalty CDs? What’s the difference, and how would you allocate money between them?

My first comment would be that I would value customer service strongly at the bank where I held my checking account, but view it as more of a secondary factor at the bank where I held my savings account. The bank with the checking account will handle the vast majority of your transactions for you, while the savings account bank will just handle a small number. So, when you evaluate your checking account bank, ask around and Google for information on their customer service.

Transferring Money Between Accounts
How does transferring money between accounts at different banks work? If a bank features online banking, it’s usually just as easy as logging on and requesting such a transfer. Most likely, if you’re seeking a high-interest savings account, you’ll be getting an account that’s managed primarily online, as most of the best interest rates are offered by online banks such as ING Direct, HSBC Direct, and so on.

In those cases, the online account is often “linked” to your checking account. That means you record the information about your checking account (the account number and the bank’s routing number, which you can get from them upon request or often simply from their website or from Google. Once that’s set up, you will be able to initiate transactions either way – both from checking to savings and from savings to checking – with just a few mouse clicks.

Such transactions are done electronically and usually take around two business days to complete.

Choices for Savings
Michael also wondered about several different options for saving his money. Let’s look at them.

Savings accounts are the default choice. Savings accounts allow you to deposit money as you please and withdraw money up to six times a month. Savings accounts usually have a fixed rate of return that doesn’t change all that often. Usually, high interest savings accounts change their rates whenever the Federal Reserve changes rates, so if you hear about Ben Bernanke on the news, pay attention to your rates.

Money market accounts sometimes offer a higher rate of return than straight savings accounts, but the rate of return on a money market account is variable and is quite often not as high as the online offerings. It changes based on the state of the money market – to put it simply, the money you put into that account is invested by the bank in highly secure government investments. Those investments change rates regularly (based on what the government is offering at a given time, which is usually related to the demand of the market) and thus the rates you get in the account go up and down. On (extremely) rare occasions, money markets will return nothing at all or just a tiny, tiny fraction of a percent – at other times, they’ll blow savings accounts away. Most of the positive legacy of money market accounts comes from the early 1980s, when they returned money hand over fist because treasuries had absurdly high rates of return.

CDs are much like savings accounts, except they have a higher rate of return. The big difference is that you can’t actually touch the money you’re saving during the life of the CD. So, if you picked up a one year CD with a sweet interest rate that’s much higher than your savings or money market options, you wouldn’t be able to touch that money for a year without a stiff penalty. The “no fee” part you mention is something that’s offered by a lot of banks today – the days of charging fees to buy a CD are rolling into the past.

Splitting Up the Money
So what should Michael do?

In my experience, money market accounts and online savings accounts are usually very comparable. If anything, I’ve consistently seen online savings accounts offer a slightly larger return over the years I’ve been following them, but money market accounts at your local bank will likely trounce their savings account rates.

When compared rates between maoney market accounts and online savings accounts are close (say, within half a percent or so), I generally stick with banks that have a good customer service reputation, but I don’t view it as being as important as it is with my primary bank that holds my checking account and handles most of my transactions. Rate-hopping (or rate arbitrage, as some call it) isn’t worth the effort, in my opinion, unless you’re moving around high five-figure or six-figure amounts, in which case I wouldn’t have a large portion of that in a savings account.

What about CDs? CDs can be a really great way to tack on a bit more return for your savings, but it’s often easy to get caught up in CDs and put more of your savings into it than you should. I would make sure that I had a healthy emergency fund in my cash savings (a savings account or a money market account). If you’re single, this would probably be about two months’ worth of living expenses. The ability to just grab cash when you need it to deal with an emergency is vital.

The big question I’d ask myself is why I would want to put money in CDs. This goes beyond just earning a higher rate of return – if you just want that, put the money in a CD that will mature within a year and keep recycling it (unless you have a year or more worth of living expenses in your savings account, then you can shoot for longer ones). Are you saving for a particular goal? When do you expect that goal to come to fruition? If you have a goal in mind, buy the highest rate CD that matures before that goal.

Of course, if you’re finding that you want to get more aggressive with saving for goals, you can begin to look into index funds… but that’s another story entirely.

Good luck, Michael.

Several times in 2009, I came across this thoroughly interesting infographic, originally from VisualEconomics.com:

You can click on the image to see a larger version of it over at Visual Economics.

The picture depicts how the average American family spends their income based on Department of Labor data. For those without the visuals, I’ll break the info on the chart down into a list for you.

Housing – shelter – $10,023
Pensions, Social Security – $5,027
Housing – utilities, fuels, public services – $3,477
Food – food at home – $3,465
Transportation – vehicle purchases – $3,244
Transportation – other expenses and transportation – $3,130
Healthcare – $2,853
Entertainment – $2,698
Food – food away from home – $2,668
Transportation – gasoline, motor oil – $2,384
Apparel and Services – $1,881
Cash Contributions (optional retirement and cash savings) – $1,821
Housing – household furnishings, equipment – $1,797
Education – $945
Housing – household operations – $984
Miscellaneous – $808
Housing – housekeeping supplies – $639
Alcoholic Beverages – $457
Personal Care – $588
Life, other personal insurance – $309
Reading – $118

For many people, this describes some form of their annual budget. Yes, some numbers are higher for some of us and other numbers are lower, but this really is a rough approximation of how we all spend our money.

How Is This Useful?
If we step back for a moment and look at this “budget,” it’s clear that there are ways in each category to reduce our spending.

This list is composed of twenty one entries, so each day for the next three weeks, I’ll tackle a single entry on this list, looking at both small and big ways to reduce spending in that area. For each one, I have at least ten ways to trim spending in that area – some big, some small, but all capable of improving your financial state.

Some of the tips will be useful to you – some of them won’t be and will apply better to someone else. The key to making your story successful is to look for the tips within each category that work for you and apply them in your own life and not worry about the rest.

In the comments of each one, I’m charging you with picking one or two of the tips that you think are the most useful for the average American. Once the series is finished, I’ll pick the three most popular tips in each category and make one “mega-post” detailing all of the popular items. It’ll be something of an ultimate “trim your budget” guide.

Tune in tomorrow for the first entry in this series, focusing on shelter costs!

Each Monday, The Simple Dollar opens up the reader mailbags and answers ten to twenty simple questions offered up by the readers on personal finance topics and many other things. Got a question? Ask it in the comments. You might also enjoy the archive of earlier reader mailbags.

I recently found out that I am pregnant with my first child. I looked up your past articles on caring for infants inexpensively. You said that you invested in a safe crib and never regretted it. I was wondering what kind of crib that was and what your impressions are of different cribs. For example, my sister just uses a Graco pack’n’play and a friend of mine recently bought a mini crib. These aren’t as solid as the more expensive sold wood cribs though. Is a larger, more solid wood crib worth the mark up?
- Gwen

When our first child – our son, Joe – was born, we spent a lot on various things for him. We spared no expense on countless things from bottle warmers and wipe warmers to educational videos and several pounds of blankets.

The sturdy wooden crib is one of the few things I don’t regret in the least. We purchased a handmade wooden crib with a detachable front side that allows us to easily convert it to a daybed.

Right now, our two year old daughter is using it (after our son used it for years, he upgraded to a “big boy” bed when his little sister was ready for a crib). She jumps on it. She climbs on it. She’s bitten it. She’s shaken it. I’ve never worried in the least about the crib supporting her and keeping her as safe as possible. We intend to keep handing it down as well, with our next child taking it in the near future.

Get a good, stable crib. You’ll never worry about it collapsing – and it never will. It’ll last through every child you have and will likely have significant resale value when you’re done with it. You might want to start by checking Craigslist for options.

One question I’m looking into right now is home warranty insurance. What do you know about these services/companies?
- Beth

Home warranty insurance is offered by a plethora of companies. We had a policy ourselves when we first moved into our house, as the previous owners had purchased a year’s worth of coverage as bait to sell the home. We used it once, on our washing machine.

What we discovered is that, based on the prices they wanted for a single year of coverage and the deductibles of our policy, we were far better off simply putting that money into an emergency fund. On our one repair, we ended up footing most of the bill ourselves because of the deductible. Even taking into account every single repair that would have counted under such a warranty since it expired, it would have saved us roughly 10% of what it would have cost us.

Yes, it wouldn’t be bad to have if there were several major home crises at once – and I mean major. However, events that would cause such disasters often fall under a homeowners policy rather than any such home warranty insurance policies.

I’d skip it and get a big, fat emergency fund instead.

At the beginning of October I made the commitment to myself to get control of my finances and improve my health. I’ve made a lot of progress so far, but I’ve got a long way to go.
One of the ways I’ve made significant changes for both financial and health reasons is that I’ve stopped eating most of my meals at restaurants. I’ve committed to teaching myself to cook healthy food and to eat at home for nearly all meals. I’ve gotten several good ideas and recipes from your site, but I do have to questions:
1. What spices would you recommend to a novice cook to keep on hand as “basic spices”?
2. Where would you recommend that novice cook purchase those spices?
- Cormac

I actually wrote an article a long time ago about ten spices that make cooking at home much more pleasant for a beginner.

As for a supplier, the selection at the local grocery store will work to begin with. If you want to grow past that, I would recommend attempting to grow the herbs you want yourself. We grow several of our most frequently used herbs in our own garden and dry them ourselves for winter use.

If money is really no object, you could probably work out a relationship with a local greenhouse and just buy from them regularly. This would easily be the most expensive option available to you, but it’d perhaps be the least hassle while also providing you with ultra-fresh herbs.

Do you typically think up a post idea and then just publish it right away or do you let it marinate for a while and then maybe schedule out the post to publish at a predetermined time?
- Credit Card Chaser

I rarely just come up with a post idea, write it, then post it immediately.

My usual posting routine works like this. I maintain a big idea list and add ideas to it all the time (and also cut ideas that I didn’t like). When it’s time to do research, I grab a big pile of those ideas and hit the library, seeking out any answers I might need and collecting information.

When I write posts, I’m usually writing about a week in advance (on average). Thus, the posts I’m writing today often won’t appear for a week – with some variation on that, both ways. This gives me some breathing room against personal emergencies – I don’t like my personal concerns to affect a steady diet of articles for my readers.

On rare occasions, when something really strikes me or something is particularly topical, I’ll substitute a freshly-written article into the queue and move the article that was supposed to appear to the end of the queue – about a week away.

I am a graduate student earning my Masters degree in library science and I wonder if you have some tips for all of us. (Many of my grad student friends read you, which is how I heard about your blog in the first place.)

Is graduate school a time where the rules change and I don’t need to be as concerned with my “debt snowball” repayments or other expenses I’m racking up (like tuition)?
- Leslie

I think graduate school is a time to live as inexpensively as possible, keep your student loans in forebearance, avoid consumer debt like the plague, and prepare yourself as thoroughly as possible for your coming career.

One of the biggest mistakes that people often make during their educational careers is that they utterly believe they will have a good paying job when they graduate and they act accordingly now. During my years as a student and in the research world, the one constant I saw time and time again is that you can never rely on your future to go the way you intend it to. I’ve seen incredibly bright minds go jobless for years. I’ve seen people go through more than a decade of schooling, only to do a 180 and wind up in a completely different area.

If I were you, I wouldn’t worry about those loans as long as they’re in forebearance. Of course, I’d also pair that move with a concerted effort to live as cheaply as possible. From my perspective, going out to eat regularly and carrying significant credit card debt as a graduate student is more of a concern than student loans in a holding pattern.

At some point (maybe it was on Twitter?) you said that you set annual reading goals for yourself, like the number of books you intend to read this year. What’s your annual goal for 2010?
- Bill

This year, my goal is simply to devote an average of two hours a day devoted to personal reading – in other words, reading things not directly related to The Simple Dollar. Along the way, I’m going to alternate between fiction and non-fiction.

One big reason for doing this is that I view extensive reading to be a vital part of the personal growth of anyone who writes for a living. I also strive to read regularly in front of my children so they can observe that reading is part of a normal adult’s life. Beyond that, I simply enjoy to read.

I’ve actually penciled in a one hour reading session each weekday in the middle of the day, which should bring the goal within trivial reach.

I’ve made many goals like that in the past, and one of my problems always seems to be keeping track of how I’m doing with them.

Yesterday I sat down and wrote a small website to help me with that, and I thought that you might find it useful as well:
http://resolution-tracker.appspot.com/
- Eric

That’s an awesome tool – incredibly simple to use without needing any sort of login or anything like that. I’ve actually bookmarked three of them to keep track of some of my 2010 goals.

Is anyone else using this? If you are, mention how you’re using it in the comments.

Do you have a good recipee using the crockpot to go from dried beans to cooked beans? mine ended up overcooked and mushy?
- Marie

Cooking beans in a crockpot is really simple if you actually just convert the typical way of cooking dried beans to the crock pot. Based on your statement, my guess is that you didn’t pre-soak the beans. Here’s how I cook beans in a crock pot.

First, dump the beans you want to cook in the pot in the evening before you wish to cook them. Add enough water to cover the beans by three inches, then leave them to sit overnight.

In the morning, dump off all of the water and strain the beans – a colander works well for this. Then, put the soaked beans back in the crock pot and again cover them with water with about two extra inches of water on top. Then just cook it on low for eight hours. This will get most beans to a nice level of tenderness.

If you’re finding the beans too mushy after following these steps, you might be cooking a particular type of bean too long. Reduce the cooking time until you find the right amount for what you’re cooking. Alternately, you may want to extend the time for some beans that might still be overly firm after eight hours of slow cooking.

My boyfriend and I will be getting married in the next two years, so we have plenty of time to plan. The issue is this: his family will expect a traditional wedding, while I want a nature-oriented (definitely near water) and very simple wedding. In addition, my family and friends live across the country, so while his very large family would all be planning to attend, I would have five people from back home that we’d be flying in (and that would be a big chunk of our budget).

I know his family will flip, and even offer to pay for a more expensive wedding, but I do not want that. How do I best cope with their reactions?
- Monica

What I don’t see in this entire statement is perhaps the most important question of all: what does he want?

It’s clear what you want from your wedding – you want a simple ceremony, and you’re apparently willing to fight his family over this. But by doing this, you’re putting him in a difficult position of having to choose between what you want and what they want without any regard at all for what he might want.

Your first step in solving this situation is to sit down with your husband-to-be and figure out exactly what he wants from the wedding without injecting what you want over the top. Remember, it’s his day as much as it is your day.

If you are in agreement about what you both want for the wedding, then you’re in alignment. Talk to the family together – or even let him lead on it.

If you’re not in agreement, you have to settle that issue first. Talk through it and figure out a solution that works for both of you, then stand up for that solution.

It’s your – you and your husband’s – day. You’re inviting others to participate in that day. Keep that in mind and don’t bow to what others want. The only other person that really matters is your husband-to-be, so focus on that.

My husband and I are thinking of starting a CD ladder this year. We don’t have a whole lot to start with and so are looking at CD’s without a minimum startup amount. I have been looking around at rates and for the 1 year ING seems to be the best for for the 2-5 year CD’s Ally is the best. My question is, would you recommend having the one year at ING and the others at Ally? Or just going ahead with all of them at Ally even though it isn’t the best for the one year?
- Shawn

There are several issues floating around here.

First of all, you need to figure out exactly what your goals are with this ladder. Are you saving for a particular goal, are you supplementing an emergency fund, or are you merely investing in cash? These goals would change how you invest in the CD ladder. A particular goal will have a particular timeframe and you’ll need to orient the length of your ladder toward that goal.

The real issue at work here is whether or not the extra effort that will go into transferring the money between institutions (from ING to Ally, in this case, when the one year matures) will actually earn you enough to make it worthwhile. Given the fairly small difference between the ING and Ally offerings in one year CDs (as I write this) and the fact that you’re investing a small amount, I don’t believe it’s worth the effort at all.

Let’s say you’re buying a $1,000 one year CD. If you invest at ING and make an extra 0.2%, you’re only earning an extra $2 on your investment. If that extra $2 causes you to spend significant extra time cashing out the CD, transferring funds to another bank, then initiating a new CD ladder there, plus dealing with yet another source of interest income when you file your income taxes the following year, it’s not worth it, at least in my eyes.

Got any questions? Ask them in the comments and I’ll try to include them in a future reader mailbag.