Over Easter weekend, Sarah and the kids and I drove four hours to visit my parents. I always enjoy these visits because, well, I like my parents, not only because I respect and value how they raised me, but for the people that they are.

One thing I couldn’t help but notice, though, is how my dad is starting to age. He spent most of the afternoon doing his annual spring trimming of the bushes along the edge of my parents’ driveway. In years’ past, this would have taken him between an hour and an hour and a half of nonstop work. This year, though, he spent most of the afternoon going at it, stopping for breaks about every fifteen minutes or so.

My father is one of the most active people I’ve ever met and he’s slowing down.

This realization – and the realization of the impact that his decline and eventual passing will have on my mother – has made me spend the last few days thinking deeply about how to handle this situation. It’s a situation that many people face as they reach their thirties and forties and fifties: how do I take care of mom and dad after they spent twenty years of their life taking care of me?

Here are some of the things I’ve been thinking about.

Part of me would like to live near them so I can help. One advantage of having a “work at home” career like I have is that I can live pretty much anywhere I want. If we so chose, we could easily move to the area where they live. If that happened, I would love to be able to stop in each day, see what help they needed, take care of some errands for them, and so on. An additional advantage is that it would let our children get to know their grandparents well before they pass on.

Another part of me doesn’t want to because of the culture. At the same time, I don’t want to move back there. The cultural opportunities and beliefs are, in some ways, very different than the values and beliefs I want my own children to have. Perhaps worst of all would be the general cultural rejection there of reading, learning, and growing as a person. My parents (and Sarah’s) are really exceptions to this rule, but the culture of the school district and community was such that I spent most of my school years firmly believing that I was going nowhere in life. I want my children to feel the opposite of that. I want them to feel that the world is enormous and filled with opportunity and that they can take ahold of those opportunities, and the culture outside of our home there would not encourage that, I’m afraid.

Their estate planning is vague (at best) and they resist efforts to get it in good shape. After our child is born (at this point, my wife is not up for further traveling until after the baby arrives), I’m going to plan a weekend with my parents where we get all of their estate planning in shape. This will probably involve my siblings and anyone else who needs to have a voice in the process. Doing this will certainly alleviate my own worries (and probably theirs, too, if they actually face the process).

What will they do when one of them passes? I’m not merely talking about the divesting of their assets, I’m talking instead about how much they rely on each other. They have the most symbiotic marriage I have ever witnessed, with each person carrying certain tasks so well that the other person simply has never had to function in that capacity. While this is great in some ways, it will be very difficult when one of them passes on.

This results in a “to-do” list of sorts.

First, I’d like to increase the frequency with which we visit my parents in the next few years. We usually visit them once every two months or so (on average). I’d like to increase that frequency as best I can.

Second, I need to help them organize their estate planning this summer. This is perhaps the most direct action I need to take. I’ve already got a notebook started with notes and thoughts about how to carry this off, along with some potential dates picked out.

Finally, I need to have some heartfelt conversations with each of them about what to do if the other one passes. What type of support will they really need in that situation? Will they be able to survive on what income is still coming in? Will they need additional support? I know that if they do, I’ll probably be the child that provides it, so I’d like to be able to hash this out now so I can prepare a bit for it.

To put it simply, helping one’s parents as they get older involves a lot of challenging issues, and it’s important to work through the issues and deal with them now while you still easily can.

I talk to a newspaper, radio, or television reporter on the phone once a day on average. The topics vary all over the place, but they’re usually seeking a quote from the “author of 365 Ways to Live Cheap” for their article or report.

Usually, my response has to do with some financial discipline. I often talk about the many ways my wife and I have cut our spending. I usually mention the fact that our daily routine doesn’t involve much spending – we eat at home, I work at home, our children play outdoors a lot, and so on. I also often include the fact that we don’t indulge in luxury items that much, particularly new ones.

These revelations usually cause the reporter to ask some variation on the big question.

Are you happy living like that?

Absolutely. Here’s why.

I realized that the best way to spend your money is to spend it on time, not on stuff.

For starters, that means trimming your spending on material items. We just don’t buy as much stuff as we used to. Our entertainment budget is about 20% of what it used to be. We don’t buy gadgets very often any more. I wear my socks until they’re actually worn out. We buy many items in bulk and try to get every possible use out of them. The end result of that is that our normal routine of life is a lot less expensive than it used to be.

Many people, in that situation, would channel that extra money into more stuff. We choose to channel it into more time.

Because of these spending choices, I get to spend tons of time with my kids. I was able to switch to a job with a much more flexible schedule (writing) because we didn’t require the nice income from my previous job. Now, we go to the park, the Science Center, out in the yard, and do countless projects all of the time. These are things I simply didn’t have much time for until we took control ove our life.

Because of these spending choices, my wife will take a sabbatical from her job for a while to be a stay-at-home mother. She loves her job and wants to go back to it, but like me, she wants to spend a lot of time with our children, especially when they’re young. This would have been impossible a few years ago – we “needed” the money too much.

Because of these spending choices, I have the time to learn new things. I’m learning to play the piano. I’m steadily improving as a fiction writer. I’ve become very adept in the kitchen. I’ve been able to tackle some extremely challenging books and really stretch my mind. Back in the day, I would have never had time for all of these things.

My life is more rich not because I can afford more stuff, but because I have more time. I’m able to have that time because I applied some financial discipline to my spending.

To put it simply, I stopped trading my time for more stuff that I didn’t have time to adequately enjoy. The first step in this journey, of course, is financial discipline, and it can be hard. But when you reach a point where your debts are taken care of and you’re spending far less than you earn, you begin to see a huge world of opportunities before you. You can move into work that matches what you want in terms of professional challenge and time flexibility instead of whatever work pays the best.

That might not be the result that everyone wants – or even that most people want. I certainly know people who seem very happy with the material items that they have.

I just know that because I took control of my spending and installed some financial discipline, I was able to find a lot more of the one thing I wanted most – time. And I couldn’t be happier with it.

Wendy writes in with an email I considered using in today’s mailbag, but my response kind of grew into a full post:

When well-meaning relatives give gifts to your children, do you always allow your children to keep those gifts? My mother-in-law (who lives 20 hours away and only sees us a few times a year) not only gives gifts that are not age-appropriate or do not meet our standards for marketed characters or quality of play, but she gives so many at birthdays, holidays, and throughout the year that I feel like the boys would drown in toys, even before the other family members add to it. My mom has happily adjusted by providing ‘experience’ gifts for the grandkids- swimming lessons, zoo pass, etc., but my MIL really likes new things and does her absolute best to instill the love of something ‘new’ in our kids.

My sister in law thinks we are excessively prohibitive when it comes to toys and sweets. Rather than talk to us about what kind of toys or gifts we would like our kids to have, she gets mad when she finds out we get rid of some of the gifts after a couple of days. She also ignores what tips I’ve tried to provide in the past. I know they both love our kids dearly, and I know they are frustrated by the different priorities and values my husband and I are trying to instill in our kids.

The worst part of this is that they both seem quite willing to do what they think is appropriate even when it is at odds with what we’ve told them we allow or don’t allow. Neither of them have taken the kids on her own because I can’t even trust them to follow our guidelines when we are present. I feel like my SIL is just itching to sit my son in front of a DVD to show me that he really does like it; i know he probably would, but that doesn’t mean there aren’t better things he would like as much or more.

Right now, our kids are young enough that they aren’t attached to most ‘things’ they encounter. We openly or quietly give the excess away to friends and sell or donate what our friends don’t want. I know this will become more difficult as they get older.

How do you deal with gifts for your kids that don’t fit in with your lifestyle?

This is actually an issue in our own life, something we’ve puzzled over quite a lot.

Our two (very soon to be three) children have a lot of relatives who adore them. They have four grandparents, a great grandparent, four aunts, two uncles, and a small army of cousins who just adore our kids. Many of them give them gifts at a seemingly constant rate.

Here’s the thing, though. These gifts are given out of love. People give our kids gifts because they love them so much and it’s their way of expressing it. For me, telling them not to do so is akin to saying, “Please don’t express your love and caring for our children.”

I’m just simply not going to do that. I might not particularly like the method they use to express their love for our kids, but it’s not a harmful way of doing it.

Instead, I focus on passing my values on to my kids. My children both choose what they most enjoy playing with and play with that, but part of that equation also involves what toys they’re likely to see Mom and Dad playing with and approving of, too. I often play ball games in the yard with the kids. I also will get involved in a lot of the more open-ended toys, like Legos and craft/art projects.

Unsurprisingly, over a long period of time, my kids prefer these toys. My son loves nothing more than playing with a football out in the yard, throwing it around. My daughter – at two years of age, no less – will literally spend periods of an hour or more playing with her Magna-Tiles.

Why? We encourage our kids, more than anything, to play with open-ended stuff that encourages their creativity and their engineering skills or gets them physically active. That’s what we value and thus we focus on it ourselves.

Hand in hand with that, we explain to everyone who gives them gifts that we often off-load the toys that wind up in the bottom of the toy box. If my daughter keeps choosing the Magna-Tiles, then other toys are going to slowly wind up at the bottom of the toy box – and will eventually head to Goodwill or to a charity that will accept them. When they come to visit, let them witness what stuff is on the top of the toybox and what is on the bottom.

With regards to sweets, we follow the same philosophy. If a grandparent gives them a sweet treat, they can eat a bit – no problem. However, we don’t give them such sweets on any sort of regular basis. We have a “candy tub” that gets filled with candies from such events (like Easter and Halloween) and we allow them one piece a night if they remember and if they behaved well and ate adequately at supper. The result? We still have candy from Halloween.

From there, we carry it forward. We talk to the grandparents and other relatives about what our kids are obviously enjoying.

“Our son’s favorite food is black olives.”
“Does he eat candy?”
“Not really. You like bananas, don’t you, Joe?”

“Kate really, really likes her Magna-Tiles.”
“What are those?”
“They’re kind of a building block toy. She just gravitates to those kinds of things.”

“What did you do this weekend?”
“We let the kids choose and they wanted to go to the Science Center and the zoo. They just love going out and experiencing stuff instead of playing at home all of the time or just watching videos.”

“Don’t they like watching movies?”
“On rainy days, maybe sometimes. But if the weather is nice, we’d rather be out in the yard. Even on indoor days, we usually wind up making pictures and building stuff.”

Repeated over and over, attentive grandparents and relatives start to get the hint. We value open-ended toys. We don’t value sweets beyond moderation. Experience-oriented things are really loved around here, while passive toys aren’t valued as much.

This accomplishes a lot of things at once. It includes the people who care about your kids in their life. I know that both sets of grandparents – as well as the aunts – constantly want to know more about what our kids are up to, so we tell them. It also reveals in a pretty strong way what the kids enjoy – and what they don’t enjoy.

Perhaps most worthwhile (in relation to The Simple Dollar, anyway), it saves everyone money. The relatives know what kinds of toys our kids like and value, so they get them things in line with that. Thus, they aren’t spending their money on toys that won’t get played with much (and thus get quickly sent to Goodwill).

I have no objection with (almost) any of our relatives watching our kids, even if I know they won’t necessarily encourage the optimal activities I might want. Why? I know my kids. When they go there, they’re going to gravitate towards the stuff that they like – playing in the yard, playing with building-oriented toys, and so on. They might be encouraged to do other stuff and they might go along, but I’ve seen my daughter gravitate to the building toys many, many times and I’ve seen my son ask for paper to draw on and crayons many, many times.

There’s also another key lesson here that will help you in other areas of life: talk positively about what you value without talking negatively about what you don’t value. You can actually have a civil discussion about politics or money or religion or parenting if you never go negative and just don’t respond to negativity. The same is true with this discussion. Talk about what you value in a positive light without painting other viewpoints in a negative light and other people will be engaged. It works, I think, partially because people so rarely do it.

Instead of criticizing the gifts that your family gives, thank them for the gifts. At other opportunities, though, use positive comments to talk about the types of gifts that are in line with what you value. You’ll be surprised how much positivity can help any situation like this – or in any situation.

In the last week, I’ve received about ten emails from readers and marketers simply assuming that I’ve already purchased an iPad.

While I can see how it might be useful for reading documents and things while I’m out and about, I certainly don’t feel like it’s worth hundreds and hundreds of dollars, at least for the types of uses I would have for it. I might someday buy a tablet, but it’s much more likely to be a Microsoft Courier or something similar, which hits a lot more of my needs (particularly in terms of notetaking, with an integrated stylus and a deeply integrated “journaling” function).

If someone were to spring and buy me one as a gift, I’d certainly use it and play around with it a lot, but buying it for myself? I’ll take a pass. I’m just not a member of the cult of the new any more.

I am a single mom, and have been for about 18 months. I have a professional job, and all compensation totals about $80,000. (I’m currently looking at a job with more opportunity that may boost my income to $90,000 or even $95,000.) I live in Tampa, Florida, but in 2005 bought a house in Shaker Heights, Ohio (when I was married and living there). I am the sole owner of the house. It was purchased for $250,000 and I now owe $201,000 on the mortgage. My payments were just increased to $2330 a month. Homes in the area are selling for around $200-210,000.

I want to meet my obligations on this mortgage. My question for you is how low should I let my savings go in this instance, before potentially stopping payments? And fyi, the new homeowner support programs do not include rental properties.
- Emilie

First of all, it sounds like this is all a fairly short-term situation that will be resolved when you sell the house in Ohio. With that in mind, what I would do is set a “target date” by which you intend to have the house sold and paid for and keep that date front and center in all that you do. It makes it easier to make very hard cuts when you see that date all the time – it gives you a very clear finish line and a big psychological boost.

As for depleting your savings, it really depends on how much you have in savings. I would be very wary of allowing the balance to go below a month’s worth of your personal living expenses. I think that this situation does qualify as an emergency, but emergencies can sometimes come in bunches.

The biggest reason I can see selling this house short is the costs associated with the sale. Given that you don’t live locally (thus, you’re likely having a local realtor sell it for you), you’re probably going to be paying some fees on the sale, up to about 6% or so. For perspective’s sake, 6% of $200K is $12K. From my perspective, that’s what you’d be avoiding by selling short and, depending on your situation, it might be worth it, because otherwise you wouldn’t really be holding on for any financial gain unless you extended the timeframe by quite a bit.

In other words, I think you’re handling things correctly right now and I would stick to that gameplan.

I’m very interested in reading more about your advice via your blog. However, in the meantime and to get help quickly, my husband I would like to meet with a budget counselor locally to help us work on our budgeting. We have a bit of credit card debt, and a car loan. Our problem is partially debt payoff, but we’d also like to have someone work with us on establishing, and sticking to, a realistic budget. Are there services providers like that who don’t want to sell you financial products? Our main concern is establishing and working with a monthly family budget. We are 49 and 50 and have 3 kids so we have had time to work on this on our own, but we fail every time. We need help from a counselor that is not interested in selling us financial products as their main goal.
- Susan

A financial planner will certainly help you with creating a budget that works for you, though usually their primary service revolves around investing advice.

The first thing you need to do is start contacting financial planners in your area. The first question you should ask is whether the advisor is fee-based or commission based. If the person is commission based, move on immediately.

Once you’ve whittled down the pool, it wouldn’t hurt to meet with a few of them and see which one seems to “click” with you. Quite often, success with things like this comes down to the personalities of the people involved – if you rub each other the wrong way, it won’t work.

Don’t settle for one that you don’t fully believe in, though, because in your situation, you’re going to need someone that understands you well. Without that, you won’t follow through.

I would like to do a better job of investing my 401K money. Can you recommend a book or website that can give me some basic investing information to start with? I am truly a novice and in the past have relied on others to advise me, but I would like to learn for myself and make these decisions independently.
- Kay

My favorite book on investing is The Bogleheads’ Guide to Investing (click through for my review of it). It’s information-rich, but it also doesn’t make any assumptions about the reader at all.

That’s really the best book I’ve found in terms of a one-volume all-around investment book. I would visit your local library and check out a copy – most libraries have a copy of the book.

If you’re looking very specifically at 401(k) saving and don’t really care about anything else, The Bogleheads’ Guide to Retirement Planning might be a better fit. It’s not as well-rounded as the other books, but it does offer a ton of good information geared towards 401(k) plans.

I’m recently married. I was laid off in January and have been getting unemployment benefits, $1276 a month. My husband works and makes $1914 a month. Much of his salary has been eaten away by his student loan wage garnishment, 401k loan, and other deductions. Our take home pay is about $38,000 annual. We have about $5000 in our emergency fund. We haven’t had to dip into it since my layoff, but we also have not been putting anything in it since then. We have a $8300 car loan, at a 40 month, 4.8% interest. My husband has a $5000 student loan at 4%; we have been paying $50 a month since I lost my job. Then, he has a bigger student loan at $26,000, 2.5% interest. My husband’s wage garnishment goes towards that last loan, and $280 a month goes towards that. Additionally, he owes $2000 to two good friends of his, and I am really pressuring him to consider paying them back quickly, for the sake of their relationships. What kind of game plan can you suggest? I want to keep building our emergency fund (especially in this down economy), but it makes me sick every time I think about the interest we are paying on the principal each year.
- Fran

The first question I’d ask is whether you’re actively seeking work. I’m going to assume that you are and that finding some sort of job is just around the bend.

The big question is how much money you guys actually spend each month. How much goes out of your coffers each month? Is it $3,000? $5,000? The reason this is important is that you should have at least two months’ worth of living expenses (the amount going out) in your emergency fund.

Once you have that, start hammering the debts. I absolutely agree that the first thing you should pay off is the debts to your friends. Debts and friendships simply don’t mix very well and you need to eliminate that as fast as you can.

After that, I would spend the time to make up a real debt repayment plan. Get your debts in order and knock them down.

My parents are in a situation where they want to pay off the mortgage as soon as possible. Reasoning aside, I’d like to lend them a substantial amount (and have been asked). It’s my duty to the people who raised me and who would never hesitate to help me if I really needed it; it’s mostly because of support and opportunity from them that I even have the cash now to spare. However, the amount is over the gift tax exemption. I am personally fine with a verbal agreement (to avoid formal paperwork and interest income) but don’t want to trip any legal wires. I see how, if $X goes into their account on one day (from me) and $X leaves the next day (mortgage payment), those are high dollar, questionable-looking transaction records, but what if I paid the mortgage lender directly so that it never hits their account? What if they repaid within the year so that it’s basically balanced by tax time?

Most articles I’ve found on the internet talk about being willing to risk default. It may sound like famous last words, but I’m really not concerned. If we’re counting dollars, technically I still owe them for funding a few early years’ worth of Roth IRAs when I needed the income for living expenses. They also covered college tuition minus scholarships, and even though repayment was never an expectation, I wouldn’t object if they needed some of it back. It might delay my nebulous plans to buy a condo/house “in a few years”, but having a ton of actual student loans would have as well.
- Amy

If you’re not concerned about your parents defaulting on the loan, then set up a simple loan agreement with them. Write it up in as much detail as possible (you can ask a lawyer for help if you’d like, or use a template online), then have both of you sign it in the presence of a notary.

However, according to IRS Publication 550, you have to charge a fair market rate of interest on the loan. If you do not, you still have to pay taxes as though you did charge a fair market interest rate on the loan. If you don’t do that, the tax man will hit you.

Yes, Uncle Sam doesn’t really like people giving money to each other. He wants his share of the pie, too.

One of the things I have been doing is using coupons matched up with sales to stock up on products and food. At this point, I probably have enough food and other products in my house to last for a month without going shopping (except for a few perishibles). Sometimes, I’m good about skipping a week, but it seems that the lure of the “good deal” is hard to beat.

Also, I wonder at what point this behavior turns from being a savvy shopper to being a hoarder? I live by myself, and at times when I look up and see 10 boxes of cereal on top of my fridge or go in my bathroom and see 5 things of toothpaste, I wonder.
- Claudia

I don’t think there’s any problem with having five tubes of toothpaste in the closet if you bought a “six pack” of toothpaste as a bulk buy.

What borders on compulsive buying is if you have five tubes of toothpaste in the closet, but can’t resist buying another six pack because it’s such a good deal.

Our philosophy usually is to take inventory of our supplies of things like toothpaste once a month. If we’re down to our last tube or only have one tube in the closet, we add the item to our grocery list. Otherwise, we don’t buy it – we don’t even look.

In other words, we give our grocery list a lot of power. If it’s not on the list, we probably shouldn’t be buying it, either because we already have plenty or because we actually don’t need the item.

I am a teacher who does not work during the summer months. I am on a 10-month salary. Every summer without my paycheck has always hurt us. The intent this year was to put away a certain amount every month so money wouldn’t be so tight next summer. Unfortunately, things came up as they always do and the money was never put away. I was wondering if you had any advice on what we can do now to prepare for the loss of my income in July and August? We really don’t want to have to put expenses on a credit card as we have had to do in the past. We were thinking of getting rid of cable as one option, although the kids would be really angry.

The other question I have is do you have any advice on how to avoid this situation next year?
- Wendy

My wife is a teacher and I have a highly uneven income, so I’m pretty familiar with this problem.

The real key to making this work is to make the withdrawals automatic. Let’s say, for example, that your paychecks get deposited automatically on the 1st and the 16th of each month. You should have two monthly automatic transfers set up, one on the 3rd and one on the 18th (or so) of each month. Those transfers should move an amount equal to about 15% of your take-home check into your savings account.

Once that’s in place, saving for the lean months is easy. Just don’t touch the savings account and live out of the checking account until July.

As for cutting back and making the kids angry, it’s April. The weather is beautiful outside. Turn off the television, disconnect the cable, and go out in the yard. Hit the park and throw the football around until the sun’s about to go down, then go home and collapse in a heap of good exhaustion from the fresh air and exercise.

I’m trying to live minimally, paying off a little less than $3000 in debt and have enough to live off of. I’m actually a little shocked by how much money I have left over, I thought I had more. I used to buy and cook for people all the time and was a little extravagant on my own spending, but I’ve pared down and am now looking to see if this budget I’ve set up looks reasonable. My take home pay is $1800 without overtime, and right now we’re on an overtime freeze. I do have a personal trainer that I know is a little needless to most people, but I had a gastric bypass less than six months ago, so it’s essential for me as he keeps me in line and has been a great asset to my weight loss (or is high on my priority list). The following is my monthly expenditures. My credit card balances are less than $1000 together, and I also owe about $2000 from taxes when I was young and stupid in 2004.

Do you have any comments or words of wisdom, or does this look like I’m on track?
- Stephanie

It looks like you’re on track, for the most part. I can pretty safely assume from this that keeping in shape is pretty much your primary value in your life for the moment, so I think the $22 gym expense and the $200 trainer expense, while pretty large, is reasonable.

Aside from that, your budget looks really good to me. I don’t know what else you could really change. If you find that you’re having trouble keeping within the discretionary money, don’t be afraid to adjust it a bit and make the monthly discretionary $100 and cut the savings accordingly.

After all, one of the biggest reasons people get frustrated and stop budgeting is that the budget is too constraining. They turn the perfect into the enemy of the good and just fall back to bad habits.

My husband and I share an account with an internet bank in Germany. His salary goes into this account every month. We get a credit card and a debit card directly linked to this account. This means when we pay using the debit card (DC) it gets directly withdrawn from our account and when we pay using the credit card (CC) it gets withdrawn from the account once a month.

What do you think? Thanks for your help in advance if you do decide to answer my question!
- Zhenlin

My first reaction is that your bank is doing something dodgy. You should be able to see your individual transactions when you log on to your online bank. If you have no way at all of getting transaction statements from the bank, how do you know they’re not up to chicanery with your account?

If you truly cannot get such statements from them, I would change banks. That sort of behavior is the poorest kind of customer service.

I would start this by contacting their customer service and finding out about getting proper statements that detail each transaction into our out of the account.

I have a 1993 Toyota Corolla which is coming up on 190K miles. It is getting to the point where the car is costing me more to keep than it is worth (both financially and time wise). In Nov 2009 I spent $800 on repairs, in Jan 2010, $400, and today I spent another $400. I am currently saving $200/month for a new car and putting $200/month in an “emergency” savings account. The problem is, every time the car breaks down, the money spent to fix it comes from the emergency fund. After today my emergency fund will be at about $300 (I just graduated from school and started a FT job, this is why it was so low in the first place).

Just to give you some background on my current financial picture, I just started a FT job in Jan making $45K a year. I have three credit cards. The only one I use is a Chase BP which I pay in full every month. I have a Chase card which has a balance of $4500 and a 23% interest rate. I pay $250/month on this card and it should be completely paid off in about 32 months. I have another CC, which is a Bank of America card that has a balance of $8800 and an interest rate of 3%. I pay the minimum balance on that and plan to roll over the money I use on the Chase card once that is paid off. I also have $37K of student loan debt and those payments ($250/month) will begin in July.
- Andre

If your car is that unreliable and causing that many unexpected expenses, then you need to be moving on to a different car sooner rather than later.

Your solution is easy: get another used car that’s newer than that 1993 Corolla. Shoot for something that’s more of a late model used – an ’05 or an ’06 for example. Then drive that one for several years until it begins to give you problems, but during those years, keep saving $100/200 a month for the next car.

What’ll happen is you’ll have a stable, decent car for the next few years. Then, in 2015 or so, when that car begins to give you problems, you’ll have the cash on hand to write a check for your next one. Trust me, doing that feels so good that you’ll never want to do anything else again when dealing with cars.

Got any questions? Email them to me or leave them in the comments and I’ll attempt to answer them in a future mailbag. However, I do receive hundreds of questions per week, so I may not necessarily be able to answer yours.

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

J.D. from Get Rich Slowly finally has a book out. It’s entitled Your Money: The Missing Manual and it’s part of O’Reilly’s “Missing Manual” series of books, which seek to essentially provide a “manual” for areas of life (usually technical topics) that certainly could use one.

I was a bit apprehensive when I heard that J.D. had a book coming out from O’Reilly. During my many years in the research world, I was involved in several large programming projects to facilitate data management and I had become intimately familiar with the books that O’Reilly produces. They’re great technical manuals, but they’re (almost) universally dry documents.

And there are an awful lot of dry personal finance books out there.

J.D.’s writing works because it’s not dry. The reason people read the better personal finance blogs isn’t because of the information alone – they can get that from any number of sources. They get read because the advice is relatable and realistic and rich with personal allusions and perspectives.

Would this go away in an O’Reilly book? I was unsure as I cracked the cover…

1 | It’s More Important to be Happy Than Rich
The book opens with the point that we’re seeking happiness, not riches. Money is merely a tool to get us to where we want to be. I like the analogy that money is like a very sharp knife – if used correctly, it can do amazing things, but if used incorrectly, it can make you bleed to death.

2 | The Road to Wealth Is Paved with Goals
How do you get to where you want to be in life? The key is goals. State exactly what you want. Write it down and make it very specific and concrete. Develop a step-by-step plan for getting there. Then, execute that plan. Without goals (and plans for reaching them), it’s very easy to simply walk in circles without getting anywhere.

3 | “Budget” Is Not a Four Letter Word
This chapter provides a short review of budgeting, including a brief look at some common budgeting techniques (like envelope budgeting). Given that budgeting is one of those things that works well for some people (and not very well at all for others – like myself), I think that this chapter’s focus on why we budget and the different pieces and techniques that can be tried is very good.

4 | Defeating Debt
Yes, debt. It’s often the enemy of personal finance success. When people finally realize how bad their debt situation is and decide to make a change in life, they’re often in very deep, with only a long, painful path leading them out. This chapter covers the basics of developing a debt repayment plan and getting your net worth headed in the right direction.

5 | The Magic of Thinking Small
Here, J.D. discusses frugality and the value of finding effective ways to trim your budget, both large and small. It’s a nice collection of frugality tips and, best of all, I’m quoted at length on page 91 of the book, discussing how trimming your expenses doesn’t have to be “un-fun” at all.

6 | How to Make More Money
Ask for a raise. Go for a second job. Start a small side business. All of these are great techniques for improving the “earn” part of “spend less than you earn,” and they’re all covered here. I personally think some of these, like the yard sale idea, are things that people should do quickly after figuring out their financial situation, because a quick boost of income can certainly get you started on the right foot when it comes to financial recovery.

7 | Banking for Fun and Profit
Your bank is a tool that can really help you get your finances in shape, but it can also be a chain around your neck. This chapter serves as a guide for finding a new bank and maximizing the value you get out of the services offered by a good bank today, from online banking to automatic transfers and competitive interest rates.

8 | Using Credit Wisely
The key to good credit is not to overuse it, and that theme runs straight through this chapter. Keeping your credit use under control keeps your credit rating high, your interest rates low, and your monthly cash flow in better shape.

9 | Sweating the Big Stuff
Obviously, when the time comes for major financial moves, you can save a lot of money by making those moves right. This chapter focuses on two major purchases (travel and automobiles) and largely concludes that you can do very well by thinking outside the box a little bit when it comes to those purchases.

10 | House and Home
Rent or buy? It’s a personal finance debate that seems to never end in personal finance writings. I think J.D. comes down in a good place here, focusing on the fact that buying a primary home is not an investment for most people, a mistake that many people make. I take it a step further and don’t even count the value of my home towards my net worth.

11 | Death and Taxes
This chapter covers a hodgepodge of topics, from insurance shopping to income taxes and life insurance. It doesn’t really seem to fit the flow of the rest of the book, but it does provide a lot of useful information for those who are picking up this book as a general personal finance reference.

12 | An Intro to Personal Investing
Here, J.D. focuses on the basics of investing – in other words, what do you do with your money when you’re consistently spending less than you earn? It’s all about goals, really. What do you want in the long term? Your investments are, in the end, merely tools to reach the goals you have in life.

13 | Retirement: the Final Frontier
For many people, retirement seems like a far-off thing that doesn’t need to be worried about right now. However, even saving a little bit right now will grow into a huge difference in your life later on because of the power of compound interest and the fact that saving a little bit all the way along simply adds up because of the scale of it.

14 | Friends and Family
The book closes with another “collection of topics” chapter, where things like loaning money to friends, dealing with marital issues, dealing with children, and charity are each covered in just a few pages. These sections each provide just enough food for thought to get you thinking.

Is Your Money: The Missing Manual Worth Reading?
The actual material covered in Your Money: The Missing Manual is pretty standard personal finance fare. Your Money: The Missing Manual really serves well as a single-volume personal finance primer, as it covers a broad range of information in one book. But, as I’ve mentioned many times, that’s a very crowded field of books. What makes Your Money: The Missing Manual stand out?

To put it simply, it’s the voice. J.D.’s voice comes through loud and clear in this book, much more than I expected it to given that it’s an O’Reilly title (which sometimes means a very technical voice). It’s that approachable, real tone that has made Get Rich Slowly a top personal finance blog, and it also works to make it seem like the advice in the book is actually real and that you can actually do it, too. This is something that’s missing in an awful lot of personal finance books, and it makes all the difference.

The voice sets this book apart, not the content. If you’ve read personal finance advice and never found it very approachable or relatable, Your Money: The Missing Manual is a great solution to that problem.

I have a quick four question quiz for you to run through in your head. Just give your snap response to these – don’t think about each one too much.

What is a wedding supposed to cost?
What is an automobile supposed to cost?
What is a home supposed to cost?
What is a three week vacation for a family of four supposed to cost?

For each of these questions, you came up with a number of some sort. That number is based on your own life experience coupled with what you’ve observed others doing and also the influence that media has had on you. That number, in other words, is your “mental anchor” for what that item should cost – and it’s often the basis of judging whether something is reasonable in price or not.

Of course, anyone who has read The Simple Dollar for long probably recognizes one thing immediately: that anchor price is nothing more than a sticker on the box. It doesn’t represent what you’d ever actually need to or have to pay.

I’ll show you what I mean.

According to CostofWedding.com, the average American couple spends $20,398 on their wedding, and that’s not too far from the mental anchor of the cost of a wedding averaged across all economic levels.

The problem, of course, appears when people begin to truly use the $20,000 figure as a mental anchor for their wedding. “We have to spend that much in order to have even an ‘average’ wedding?” people ask themselves. Then, in order to have their day be ‘special’ or ‘exceptional,’ they spend an amount that’s far over the top, putting them into debt for quite a while.

I’ve witnessed at least two couples do this with their wedding – they invent a mental anchor of what it should cost, chase that mental anchor, and wind up with a gratuitously expensive wedding that ceases to actually make either the bride or groom all that happy in the end.

That same experience repeats itself with cars. After all, there are an awful lot of people out there buying new luxury cars, aren’t there? They have an anchor in their head of what the average is and they must beat that average.

Here’s a novel idea. Forget what your mind is telling you about what things should cost.

Instead, figure out what you actually need (or want) and then strive to minimize the price on that.

So, for example, if you’re thinking of getting married, simply sit down and make a list describing what your wedding will be like. Revise it a bit and make sure both of you are happy with the list. From there, find the best deals you can on each item on the list.

Voila! You’ve created a wedding you’re both happy with and you’re not comparing it to the idea of what a wedding (or wedding cost) should be. Why? Because it doesn’t matter what a wedding “should” cost. It only matters what your wedding costs, and you should strive to maximize the value of your dollar while having the wedding you both want.

The value of something isn’t expressed in dollars. Everything has a cost, but that doesn’t represent the value at all. The value is what you get out of it. Does it make you happy? Does it meet your needs? Those are the things that matter, not matching what someone else is doing.

If you spend all of your time comparing the major things in your life to others based on their cost or their perceived value, you’re saying that what others want is more important to you than what you want. Never let any important choice in your life be governed by what others want.

This is your life. Live it the way you want. Ignore what everyone else says you must have and says you must spend on it. This is about you, not them.

Easter weekend is one of my favorite times of the year with my children. The weather is finally getting nice after a long winter, so we’re starting to go outside regularly. We usually conduct some kind of Easter egg hunt for them as well, giving them a great chance to explore outdoors and work on their observation skills. They usually get a fair amount of candy during the weekend, too.

It’s a lot of fun and it’s a perfect example of the joys of childhood. Joe and Katie’s primary concern right now is hunting those Easter eggs – and coloring some, too. They don’t worry about bills or getting their book edits finished or anything like that – their biggest financial concern is saving their allowance so they can get a cooler toy.

What I realized is that this is basically the same way I operated until several years into my professional life.

I worked hard at my job, but I essentially just focused on the parts that were fun for me and avoided the parts that weren’t fun for me.

I didn’t sweat bills too much, either – I didn’t plan in advance at all for them and just paid them as best as I could whenever they came in.

Whenever I wanted something, I pretty much bought it. I didn’t really worry about the consequences of it, either.

All of these phenomena have something big in common: I just assumed that my mythical “future self” would take care of it, much in the same way I always assumed my parents would take care of it when I was a child.

In other words, my “future self” became my protector, allowing me to continue living life essentially as a child.

The only problem with relying on a protector like that is that when the protection fails, you’re usually in a very deep hole.

When I went away to college, my parents receded as my protectors. If I had been more self-aware, I would have realized that it was now up to me to protect myself. Instead, I invented a new “parent,” my “future self.” You know, the guy that would be earning a truckload of money in a few years and would solve all of my problems.

In April 2006, my protection failed. My “future self” didn’t save me. I found myself in a very, very deep financial hole and my “future self” wasn’t going to dig me out.

It was up to me and me alone.

If I had realized that whole thing a few years earler before I got into deep debt, I would have been a lot better off. I wouldn’t have missed out on anything of real value, while at the same time I wouldn’t have been in nearly as much debt or financial trouble. I wouldn’t have tossed thousands upon thousands upon thousands of dollars away in needless interest payments. I wouldn’t have to repeatedly robbed Peter to pay Paul. I wouldn’t have had a house full of stuff that just gathered dust. I would have had the home of my dreams right now.

If you convince yourself to buy stuff and do things under the belief that your “future self” will take care of it, it’s time to grow up. Your future self is completely unreliable and serves only as a crutch, an excuse to allow you to continue to behave as a child would.

My children love hunting Easter eggs, but my time for hunting Easter eggs is over. My future self isn’t a magical Easter bunny that will take care of everything. It’s up to me – right now – to make the future that I want.

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 (March 28 – April 3, 2009)
Eight Thoughts for New Parents Having a child doesn’t have to be a financial train wreck (though it can be). Approach it with caution and some sensibility – trust me, your baby doesn’t need a lot of stuff, he needs a lot of time and love.

You Can’t Get Better Results Without Changing Anything If you want better results in your life, you’re going to have to make a change. Doing the same old thing is going to get you the same old results.

Theodore Roosevelt on Careers and Financial Success Theodore Roosevelt has long been one of my personal heroes. His writings are full of insight.

Synergy in Life and Money The choices you make in your life that seem non-financial quite often synergize deeply with the success (or failure) of your finances. It’s all tied together, really.

A Reasonable Marriage Here are some pointers for how to have a loving and meaningful marriage that can result in success for both of you.

Two Years Ago (March 28 – April 3, 2008)
Does It Make Financial (and Social) Sense to Consider Moving? Sometimes it does, sometimes it doesn’t. There are some core things to consider, though, if you’re even considering it at all.

The Connections Between Mental, Physical, and Financial Clutter Clutter fills up your life, eating away at your energy, your living space, and your money.

The First Money Talk: The When and How of a Conversation Every Couple Needs to Have I get more questions that are precisely answered by this article than anything else I’ve ever written. So many people realize they need to sit down with their spouse and talk about money, but it seem so scary.

Daycare: Personal, Family, and Financial Responsibilities in Balance Daycare is an interesting thing to talk about because many people have very intimate feelings about it and about how it reflects on the relationship they have with their child.

Is Investing in Individual Stocks Merely Gambling – Or Something More? There is something more to it, but it requires a lot of focus, study, and discipline to do well at it. Many professional investors don’t have that.

Three Years Ago (March 28 – April 3, 2007)
What The 1960s Taught Our Parents About Money – And Why We Should Filter Their Financial Advice My parents grew up (or went through early adulthood) in the 1960s and, compared to what young adulthood is like today, they have vastly different ideas about things. For example, a newly married couple in their early twenties can’t easily just go buy a house – it doesn’t work like that any more.

When Your Friends Don’t Care About Personal Finance – And You Do This can be a sure sign of conflict – or it can be something easily resolvable. It all depends on how you address it.

Nine Social Skills To Practice – Even For The Socially Unskilled Like Myself I still use these when I’m facing social encounters. I’m just naturally an introvert.

What Being A Cubs Fan Taught Me About Personal Finance Is it too early to start shouting “wait until next year”?

Forget The Ads, Magazines Try To Sell You Stuff In The Content So does radio. So does television. Even some books do it. Being aware of the tactics helps.

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!