Most of the time, when I talk about the implications of various debt repayment options on The Simple Dollar, I utterly ignore tax deductions.

This is not an oversight. Usually, it just makes a situation needlessly more complicated and takes the “simple” out of The Simple Dollar.

As is often the case, astute readers email me about this. John, for instance:

Your advice about ordering debts is really way out of line. You should pay off your home mortgage last so you can take advantage of the tax deduction.

Yes, tax deductions can be useful in some situations. Most of the time, though, they’re not much of a help and if you overvalue them, they’ll end up costing you in the long run.

First of all, most people don’t do deductions at all. 70% of tax filers simply use 1040EZ or 1040A for their tax returns, which means that they’re simply taking the standard deduction on their taxes.

If you’re doing that – and 70% of you are – then you’re not claiming a tax deduction for your mortgage or for a lot of other things. The tax implications of whether to pay your mortgage off first or another debt off first means nothing at all.

Beyond that, some of the 30% who do file the full 1040 do so for self-employment reasons and still claim the standard deduction, putting them in that group that is unaffected by deductions.

In a nutshell, if you take the standard deduction, you’re not counting your home mortgage as a deduction, and most Americans are taking the standard deduction.

Second, even if you do claim the deduction, it’s not as enormous as it’s often made out to be. Let’s look at the projected income tax brackets for 2010 and also assume that we’re talking about the average American family, bringing in $66,000 this year with two adults and two children in the household.

This income level puts that family in the 15% tax bracket. This means that if the family were to file long form and itemize their deductions, they would only deduct 15% of their annual mortgage interest from their taxes. In other words, the effective interest rate on their mortgage drops by only 15% when you take this into consideration. A 6% mortgage effectively becomes a 5.1% mortgage, in other words.

But it’s even worse than that.

To actually get that full 15%, you have to actually have other itemized claims that add up to more than the standard deduction for your family. The standard deduction for that family is $11,400. So, to get the full value of that 15%, a family filing with itemized deductions has to top $11,400 in deductions before including their home mortgage at all.

Let me show you what I mean. A couple filing jointly has a standard deduction of $11,400. They have $3,000 in various deductions and $10,000 in mortgage interest, so they’re going to file long form and itemize.

In the end, though, they’re only deducting $1,600 more than they would have with the standard deduction ($13,000 vs. $11,400). Even if you’re generous and say all of that money came from the mortgage, that’s still only a small deduction. If they’re in the 15% tax bracket mentioned above, they’re only saving $240 by filing long form. That’s the equivalent of dropping their 6% mortgage rate down to only 5.856%.

Here’s the truth. For almost all families, cash flow is much more of a day-to-day concern than tax deductions. It’s much more important that you have a low monthly debt load than it is to maximize your tax saving. With a high monthly debt load, you run the risk of going into more debt because of emergencies, and even a little bit of consumer debt taken on to handle those emergencies can quickly devour your “savings” from your deductions (and a lot more).

So, unless you’re very well off and have a strong monthly income, worrying about tax deductions and their impact on your day-to-day life is a bit of a moot point. It doesn’t save you all that much even if you do everything perfectly, and if doing everything “perfectly” means having a lot of monthly debt payments, you’re introducing a lot of risk into your life for relatively little reward.

Of course, credit card and mortgage marketers prefer that you’re in the latter situation. The more debt you’re in that you can handle and keep making the payments, the better off those big banks are because they’re just sitting back and collecting the interest off of you. Thus, they’ll talk up the tax advantages of various debts as much as they can, trying to make them sound like the greatest thing in the world.

You’re far better off having a small debt load and perhaps missing a deduction or two than having a high debt load and getting those deductions. The latter situation puts your whole financial house at risk because if an emergency occurs, you’ll have a very hard time meeting the monthly bills.

If you have a strong income, and are in a situation where you’re claiming lots of deductions anyway, it does become a factor, but if you’re in that situation, you’re in a very lucky and rather small minority of the American public.

One of the most common questions I get is whether or not a person should cosign on someone else’s loan – a car loan, a student loan, or so on.

I have a single response that I always give to this type of question:

You should only co-sign a loan that you’re perfectly happy paying off yourself.

If you would be unhappy with being forced to pay for the loan yourself, then you should not be cosigning that loan.

Here’s why.

First, the reason a lender wants a cosigner on a loan is because they believe that the person they’re lending to has a high likelihood of not paying back the loan. Usually, a person that needs a co-signer is a person with poor credit or, in some cases, a person with no credit history at all. This means that either they’ve never dealt with the ins and outs of paying a loan back before or they’ve attempted it and failed to pay back their obligations.

Second, if that person who the bank has deemed untrustworthy proves the bank to be correct, you’re left holding the bag. Co-signing isn’t just a way to help a friend. It essentially means that you’re hung with the debt if the primary signer decides not to go through with actually repaying the debt.

Third, when you turn a personal relationship into a financial one, you introduce a lot of strain in the personal relationship. If they default on this loan, what will that do to your relationship? It will be very, very hard for the two of you to be as close as you once were.

These three things together make for a dangerous mix. They put your finances at significant risk without any direct benefit to you. You’re betting that someone is reliable when someone else who is not involved has looked at the evidence without emotions clouding their judgment and came to the opposite conclusion.

To put it simply, you’re saying, “Sure, I’ll take on more risk than the bank.” You know, those paragons of financial stability who were quite willing to hand out adjustable rate mortgages like candy and almost tanked the United States economy.

“But I really want to help!” This is often the reason that people use to talk themselves into such large amounts of risk. The person asking for their help is someone who they genuinely want to help and so they let their emotions cloud their judgment and sign away.

Here’s the thing: you can usually help quite a lot without signing on the dotted line.

Offer resources that you can give them. If you want to financially help someone, don’t do it in a way that puts you at risk and don’t enter into a financial arrangement with them that could damage your relationship. Instead, make it a gift. Give them some cash to buy a beater to get back and forth to work or to put a deposit on an apartment. Let them live in your spare room for a few months. If they want to pay you back, let them, but make it clear that you don’t expect repayment.

Offer intangibles. Invest your time in them by driving them to job interviews or taking them around to buy a car. Invest your contacts in them by calling someone you know who can help them get a job. Listen to what they’re talking about and going through and offer your advice and whatever else you can offer.

In other words, offer all the help you can without introducing unnecessary risk into your life. Don’t co-sign, but offer help in every other way you can.

From my perspective, there is one exception to this. I think that the intangibles related to a parent co-signing on a student loan for their freshly graduated child likely add up to more than the risk of signing such loans. In that case, a parent is often a fairly good judge of the situation and if they view the risk of co-signing in this situation as acceptable, it seems to me to simply be an extension of the risks of parenthood.

Shaun writes in:

You need to be telling your readers to invest in gold because the dollar is about to become worthless.

I wrote about this idea a year and a half ago. I discussed why there are so many ads on the radio and the internet for buying gold and why it’s just old-fashioned salesmanship – creating a demand for a product so you can sell plenty of it.

Yet, two or three times a week, I get an email from a well-meaning person like Shaun who is very concerned about the future, believes that gold is protection against that future, and wants me to warn my readers about it.

First of all, I don’t buy into fearing the future. As I said over and over again during the 2008 and 2009 financial crisis, the only thing we have to fear is fear itself. The sky is not falling. As I said then, “Even in the darkest heart of the Great Depression, 75% of Americans had a steady job with a steady paycheck, which they steadily used to buy the things they needed. Those years also produced the Greatest Generation and an economic steamroller that ran through the last half of the Twentieth Century like a tidal wave.” The Depression was far worse than anything we’ve seen over the last decade.

But let’s say they’re right. What would happen if the dollar would become worthless?

The best thing we can look at is history, where reasonably modern economies have collapsed and their currency becomes worthless. The period I’m most familiar with is the Weimar Repubilc in Germany in 1922 and 1923.

What caused it to happen? Most of the workers in the entire nation went on strike for several months, causing the nation to produce nothing. The result was hyperinflation. In one year, the price of a loaf of bread went from 163 marks to 200,000,000,000 marks.

Sounds scary. What happend, though? Did everyone turn to gold as a means of exchange?

Of course not.

The economy went back to the bartering system in 1923 and 1924. People traded services with each other and traded services for goods. Instead of working for money, people worked for food and other goods.

Egon Larsen describes it:

Bartering became more and more widespread . . . A haircut cost a couple of eggs

Willy Derkow:

You very often bought things you did not need. But with those things you could start to barter. You went round and exchanged a pair of shoes for a shirt, or a pair of socks for a sack of potatoes; some cutlery or crockery, for instance, for tea or coffee or butter. And this process was repeated until you eventually ended up with the thing you actually wanted.

To put it simply, people didn’t switch to gold as a means of exchange when things got bad. Instead, they switched to bartering for the stuff people actually needed: food, clothing, shelter, cutlery, and so on.

Gold wasn’t used as a means of exchange because gold is not something people need on a day to day basis. Food is. Potable water is. Clothing is. Shelter is. Repair skills are. Gold is not.

If you want to “hedge” against some sort of imagined financial apocalypse based on a very negative view of the future, don’t use gold as that hedge. Instead, spend your time building skills. Store up some dry food in your basement. Set up a generator. Become as self-sufficient as you can. These things will help you whether “financial apocalypse” happens or not.

If you want to buy gold as a small part of your investments, that’s great. My wife and I have considered buying a few gold coins to keep in our safe for that very purpose.

But if you’re buying gold out of fear of hyperinflation or financial apocalypse, you’re buying into marketing that isn’t borne out by the facts of history. Invest your money elsewhere, preferably in things that make you more self-sufficient.

Did you know that ten hours of road travel with a four year old, a two year old, and a newborn is a really bad idea?

I have just signed a loan modification for my (large) mortgage. They fortunately gave me a starting payment at 2% for the first 5 years. I have been able to pay up ALL of my bills (no credit cards or outstanding debt) and have $2000.00 in savings. I would like to make my payment each month and add $1000.00 more against the principal as the mortgage is a large one. I would also open a Vanguard 500 with a $1000.00 per month savings goal and let this accrue towards paying off more of the principal in 5 – 6 years. Which of these – payning against the 2% interest rate and/or compounding of the money with Vanguard benefits my goal of keeping my finances safe while I own this house? Can you recommend a type of financial advisor who I could seek a session with for further info? I love your column and appreciate any help that you can send my way.
- Jill

It depends on what happens at the end of the period with the 2% interest. This sounds like some form of adjustable rate mortgage, so what happens at the end when you come to your first adjustment? If it adjusts to a very high percentage rate, then you’re going to be facing the costs of refinancing or dealing with a much higher rate.

If it does adjust to a very high rate, I would put aside some very liquid cash (in a savings account) to help pay for the refinancing you’ll have to do. If it doesn’t readjust too much, I’d just make the minimum payments on it.

If you have a five year savings goal, the Vanguard 500 is not a great place to put your money. The stock market is a good place to put your money if you’re looking at a very long term horizon (more than ten years), but if you do a short period, you have a good likelihood of not gaining a dime or even losing money. Short term mutual fund investing is akin to gambling. I would put it in savings instead if your horizon is five years. Buy some CDs at the highest rates you can get.

As for the need to hire a financial advisor, with the amounts you’re discussing here, you’re better off misfiring quite a bit with your investments and handling them yourself than paying high fees and commissions to have an advisor do the same thing. You can sign up for the accounts you need on your home computer in just half an hour.

We bought a 2010 Hyundai Elantra GLS (we get 26 mpg city/34 mpg highway just like the book says), and it came with 3 free months of XM radio. I love XM radio, but not enough to pay the normal (I think) price of $14/month or even the $10/month discounted price. However, a friend who bought a new car also got 3 free months of XM, and when he called to cancel after 3 months, he was offered the price of $5/month and took it. I think $5 a month is worth it; my husband does not. What are your thoughts? We have Netflix and think it’s worth it, but he’s the movie and TV freak; I’m the book freak and could go without TV or movies. I drive the car to and from work, and I’m currently listening to R&B and jazz stations I cannot get in our area. He loves country music (as do I), which you can get almost anywhere for free on the radio.
- Karen

$5 a month is a small amount and well within most people’s entertainment budget for the month. If you get significant entertainment value out of it, why not?

Do you have a good grip on how much you spend (and your husband spends) on entertainment expenses each month? Ideally, you should be spending roughly equal amounts on the things that you value. I would reasonably think that if he values what he gets from Netflix much more than you do and you value XM much more than he does, the costs of the two would roughly balance out.

In short, if you get lots of personal value from it and use it frequently, I think $5 a month is perfectly fine.

I’m not sure you’ve talked about this, but it’s about health. We spend a lot on high quality supplements and feel it’s worth it. I’m in my early 50s and she’s in her mid 60s, and we feel great (no prescription drugs). But how much is too much? I’ve started buying from vitacost.com (great flat shipping rate), but I’m not sure how much to budget for our health (outside of our insurance premiums). Now our strider elliptical exerciser is on its last legs, and I’m wondering what we should get to replace it.
- Timothy

This is more of a health-related question than a personal finance one. I’m under the belief that a daily multivitamin is fine (and perhaps a vitamin D supplement) and this idea is backed up by Harvard, but I think the most important things are eating a well-balanced diet, getting at least some exercise, getting adequate sleep, keeping your mind engaged, interacting with positive people, and keeping a positive frame of mind.

Once you get much beyond those things, the evidence starts becoming vague and you hear lots of claims and counter-claims about “megavitamins” and “super foods” and high intensity exercise and the like.

I think the real question is whether or not you genuinely use this stuff and whether you truly believe it improves your quality of life (whether it actually does or it’s a placebo effect doesn’t really matter). You could always do a trial run without them, sticking to a well-rounded diet and a simple multi-vitamin.

We are nearing retirement (8 years) and moved to our current home 1.5 years ago because of my husband’s job. It’s not where we’d like to live when we retire, however. We found a condo in the area we love, with a view of water. It needs cosmetic work, but we could do that over 8 years. We’d rent it to our son’s girlfriend, but she can only afford enough rent to meet our principal and interest payment now–probably more when she gets out of grad school next year. Our goal is to have the loan paid off in 8 years, which is doable. However, renting to her has its good points (she’d help with painting and the work, we’d remodel when she went away, we’d be helping a person we love like a daughter), but we’d be out about $5,000 every year while she’s living there. If we wait until retiring to buy a place in this area, I’m fairly sure we couldn’t afford to buy one outright even if we save the $5,000 each year, and I don’t want a mortgage when we retire. I also don’t want to have to buy a condo and fix it up after we retire (a turnkey condo in this area would definitely be beyond what I want to pay). We don’t know what makes sense financially. What do you think?
- Sheila

As much as you like the place, it sounds as though it’s financially out of your reach right now.

That’s just part of life. Not too long ago, I saw a notice in the newspaper about a large tract of mostly wooded land for sale about fifteen miles from where we lived. I drove out to look at it and it was perfect for what we want to do. We could (right now) swing enough of a down payment to buy the land and then also afford the payments on it.

But then we’d be walking a very scary financial tightrope and the domino effect if we fell off that tightrope would be awful. Plus, it would be very difficult for us to come up with the resources we would need to build there because we would be responsible for all of it, starting with just bare land with few services running out there.

So we passed, even though it was exactly what we wanted.

Part of financial success is knowing what you really can afford and what you really can’t and (more importantly) having the maturity and bearing to walk on by those things that don’t fit.

I stumbled upon one of your posts about a list of the top songs you’ve been listening to lately. You mentioned iTunes. I find it hard for me to break down and flat out purchase some singles or even the whole album as the costs and sharing ability on iPods are not really appealing to me. With that said, I do not regularly buy music from iTunes and I fear if I start with the one click shopping for songs, I will rack up an immense bill!

What is your stance of downloading illegally but is in most senses, free? How do you control your iTunes spending? Are there any deals, coupons, incentives or even benefits when purchasing songs from iTunes?
- Angie

Given the multitude of ways to listen to the music you want online for free (like Pandora, for example), I think that the need to pirate music files is pretty unnecessary. If you want the convenience of being able to listen to a particular song anywhere, then cough up the 99 cents for it.

If you’re happy to do without some of the convenience, then you can listen for free using services like Pandora.

If you just take it, the people who wrote the music get nothing for their efforts. The people who performed it get nothing for their efforts. The people who engineered it get nothing for their efforts. The people who found the music and delivered it get nothing for their efforts. At least with Pandora, they get some royalties out of it.

Sometimes, artists choose to give it away anyway. But that’s not a good reason to take what you like.

Yesterday, I received an e-mail offer from AT&T/Citi Bank. They say that I can transfer balances from other credit card accounts to my AT&T credit card account. I would not have to pay interest on the transferred money for approximately 18 months. The cost to me appears to be just 3% of the amount transferred.

It seems to be too good to be true. Do you know of any traps regarding deals like this?
- Bob

Such “zero balance transfer” offers are fairly common. They’re just an enticement to acquire a new customer.

The only “catch” is that, usually, if you haven’t paid off your balance transfer by the end of the period, you’re charged all of the interest on the entire amount for the entire period.

Read the fine print on the deal and don’t transfer more than you think you can pay off by the end of the deal.

I am a 37 year old man who owns 2 homes and lives essentially paycheck to paycheck even though I make around $210,000 per year. The problems began when the housing market went down the toilet and my wife became pregnant. We own a small 3 bedroom house and were living quite nicely even though the value of the house we were living in was falling rapidly. Once the baby came along my wife stopped working and we realized that our small 3 bedroom was not really big enough for us, but we could not sell it because it was over 100k upside down. We had some savings so we decided to buy another house and try to rent our smaller house until it could be sold at a later date. Of course, the rental market has also suffered and we are losing about $800 a month by renting our old house and now have a new mortgage which costs about $2700 a month. The bottom line is that even though we have severely cut back our expenses, we are living dangerously close to the edge right now. We have drained our savings accounts and we have about 20k in credit card debt, 2 newer cars with car payments, etc. Are there no options for people who make more than average but who are still saddled with a mortgage that is so upside down? In retrospect I see a lot of mistakes that we have made, but I’m kind of stuck with them and need to find a way out. Do you have any advice for a poor rich guy?
- Justin

Sell one of the houses. That’s pretty much your only option here. Two big mortgages are untenable (it looks like each of your mortgages are bigger than my single one!).

Decide which house you’re going to stick with and live in yourself. Then contact the mortgage holder on the other house and suggest short selling it to them. They may or may not budge (depending on how they view your local market right now).

If you can’t short sell, you can either try to string things along until you’re to the “break even” point on the house you want to sell or simply walk away, allow the foreclosure, and deal with awful credit and higher insurance rates for the next several years.

Do you have a basic rule of thumb regarding how much to pay towards loans vs. a an investment portfolio and/or retirement accounts? I could probably beat my 6% loan interest rate in the stock market so, if I have the extra money, should I make double/triple payments on my student loan debt or put the extra towards my portfolio? Assume I’ve already make a risk assessment in favor of investing and that I will maximally fund my IRA and 401k. Would I be better off clearing the debt and then investing full bore or do you think I would make more (on balance) if I started investing all my extra money now (with a longer term for growth) and just making minimum payments on my loans?
- Jeremy

“I could probably beat my 6% loan interest rate in the stock market” is a questionable statement. It’s basically gambling.

Over the last ten years, the S&P 500 has dropped an average of 0.71% per year. Yes, that includes two bear markets and only one bull market. But no one has a crystal ball to say which is which.

If you put $100,000 into the stock market ten years ago, you’d have $93,122.60 today. If you put $100,000 into paying down that mortgage ten years ago, you’d have $179,084.80 in saved interest and equity today.

Now, of course, you can also find ten year periods that beat that 6% annual return, but they’re far from a guarantee.

The problem is that the future can’t be predicted. Personally, right now, I’d take a guaranteed 6% any day of the week over a stock market investment.

I’ve been an avid reader for several years but have not seen any information about WHEN to start thinking about a replacement vehicle.

How did you make the decision to start looking?
- Chad

For us, a big part of the decision rested on how vital that vehicle was to our daily lives.

My wife needed a car for commuting, period. I had some need for a vehicle on weekdays, but the need was much lower.

Thus, we were quick to replace her car when it started having several minor issues. We took it to a local mechanic that we trusted and he more or less suggested we’d be better off getting rid of it than repairing it, so we did just that. She needed a vehicle to commute in, after all.

With my truck, we were in a similar situation, but we kept the truck for two more years after that point. I didn’t need it on a daily basis (though it was very useful). In fact, we kept driving it until, over the course of the last year we owned it, it only ran about 60% of the time thanks to several different issues.

It all comes down to how vital that vehicle is in your day-to-day life. What would happen if that car blew up? If it is a major crisis, then you need to replace it a bit sooner. If you could get around it, then it’s less of a crisis.

Anyway I’m writing because as I was in the shower this morning, I had an idea (most ideas happen in the shower, right?). I had read your article on how to make your own laundry detergent, and I intend to start doing this myself once I run out of my current bottle. But the thought occurred to me: Shouldn’t making one’s own body wash be a similar process? Wouldn’t that, too, be cheaper?

Anyway if you could provide any insight into whether it is cheaper and realistic to make one’s own body wash, I’d appreciate it – I’m sure other readers might too!
- Melissa

Body wash is something that I’ve tried in various homemade versions, but I’ve yet to find a version I’m happy with that I think matches the stuff that we buy in bulk.

The only recipes I’ve found that work well at all start off with a liquid soap base anyway, so you don’t wind up saving very much at all. The other recipes that don’t cost much to make just don’t work very well.

If I come across something that works, I’ll unquestionably share it on The Simple Dollar.

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.

Better Groceries for Less Cash by Randall Putala has a subtitle that pretty clearly describes what you’ll find inside the covers: 101 Tested and Proven Ways to Save on Food. While organized into chapters, this fairly short book’s main purpose is to simply relate a lot of methods for saving money on food purchases.

My wife and I already do a lot of things to reduce our grocery bill, from using grocery lists to making meal plans and clipping (some) coupons. Yet we still look for ways to trim our food costs even more, so this book was a welcome read.

While Better Groceries for Less Cash is organized into chapters, the focus of each chapter is simply to deliver a few specific tips on how to save money on some aspect of grocery shopping. So, rather than giving my usual chapter-by-chapter review, I picked out ten interesting tips to share and discuss.

Start your own cookbook The key to saving money on food preparation while still getting delicious meals is simply knowing how to cook. Randall suggests simply making up your own cookbook where you jot down notes on what works for you for every new thing you try. Just list the steps you take in a way that you can understand later. If it doesn’t quite work, note that and make a change to your steps (changing cooking time from seven minutes to eight, for example). Then try doubling the quantity (six eggs scrambled instead of three) and seeing how that works. It’s all about learning how to do it so you feel confident with raw foods.

Ignore lying signs Just because there’s a big sign advertising a great deal doesn’t mean that it’s really a great deal. Often, it’s the same old bad deal you’d get otherwise – they just put up a sign to make it look good. Stick to your list and ignore the “sales” you find inside the store unless you’re absolutely sure that they’re great buys.

Clip for products, not for brands If you need toothpaste, clip every toothpaste coupon you can find. Then, when you go to the store to buy the toothpaste, you can match the coupon to the toothpaste brand with the best price (possibly one on sale in the store). This often results in items that have an extremely low price, sometimes even free.

Ignore the picture The picture on a coupon is there for advertising purposes, to try to instill knowledge of that brand in your mind. It may or may not even be the item that the coupon is good for. Instead, read the coupon and know what the coupon itself is good for – it might be for a different flavor, a different size, or something else entirely.

Generics are often exactly the same as store brands Yes, sometimes you have to do a little bit of testing, but many store brands are identical to the name brands. The best way to find out is to compare ingredients and try it yourself. If the ingredient list is identical, then the item is probably identical. If it doesn’t have an ingredient list on the store brand (like toilet paper, for example), try the store brand (or at least research it online).

Sign up for frequent shopper programs at every store They’re often effortless (you just swipe a card and coupons are applied to your bill automatically) and send a signal to store management that you’re seeking low prices. If you’re concerned about privacy, then sign up for a post office box or a work address.

Use leftover ingredients If you prepare a meal and find some ingredients are left behind, actively seek out a way to use the items in something else. Throw some leftover chicken into a salad to make it more filling. Put leftover scrambled eggs in a tortilla with some salsa tomorrow morning. Use those vegetables in a stir fry. It simply stretches out the number of meals you can get out of the items on hand, meaning more time between grocery store trips and less spent per month.

Raw foods simply are cheaper Food manufacturers don’t sell food kits because they’re a bargain. They sell them because they make a healthy profit. The only difference is that they’re just sticking their fingers in the pie between you and the actual food producer. Instead of buying prepackaged meals, buy the same raw ingredients and make it yourself. It’s usually not much harder, it’s often cheaper, and it’s usually healthier and tastier (thanks to a lack of preservatives).

Focus on core ingredients If you know how to make a lot of meals with a few core ingredients (like tomatoes, for example, or flour), then you can always buy those and always turn them into something delicious. You can also cross-match them with whatever’s on sale to make unique meals for the week. For us, core ingredients include chicken, broccoli, cheese, rice, tomatoes, apples, and spinach.

Cheapest is often best when it comes to produce Why? Because the cheap items are the ones that lots of people buy. Thus, the stock of that item has to rotate more frequently, which means you’re likely to get the freshest produce by buying the cheapest stuff. Sweet corn in August comes to mind here, as it gets heavily rotated and it’s very cheap around here.

Is Better Groceries for Less Cash Worth Reading?
If you’ve reached a point where you recognize that your food spending is a financial black hole and you actually are willing to invest a little time in cutting that spending drastically (netting as much as $100 in savings an hour for your efforts), Better Groceries for Less Cash is a worthwhile read.

Of course, the more grocery savings you already do, the less effective Better Groceries for Less Cash is. Many of the tactics were things that we already do, though there were a few good ideas sprinkled in there.

This book is perfect for someone new to the art of cutting spending in their lives because if you shop for groceries like the typical American, there is a lot of spending you can cut.

It would be easy for me to write some nice platitudes today about my wife (the mother of my children) or my own mother. I could go on for a long time about how wonderful these two women are, the most important two women in my life.

But I really don’t need to.

We don’t need a special day to celebrate the genuinely important things in our lives.

If something is truly important in your life, then it deserves value and care and love and attention every day. It should be the centerpiece and the focus of your life.

That focus is represented not in money but in time.

If you find yourself feeling guilty about things left undone and want to use material gifts bought on Mother’s Day or Father’s Day or Christmas, then you have a choice – and it requires some honesty with yourself.

Is this relationship really important to you or do you just feel like it’s supposed to be important to you?

If it’s truly important to you, then every day is Mother’s Day (or Father’s Day or so on). The gift that really matters – the gift of time – is something that you can constantly share throughout the year. Calling your mother on Mother’s Day is great, but if the relationship is really important to you, what about the other 51 Sundays out of the year? And what about the other days, too?

If it’s not truly important to you yet you feel the need to keep up some sort of appearance, then you’ve got a weight on your life, a relationship with uneven obligations and feelings that need to be dealt with so that you can lead a more focused life. Something is missing in that relationship and if it causes guilt, then you need to spend the time and the energy it takes to fix it, for better or for worse. It’s not only hugely beneficial for you, but it’s also good for the other person you care about.

When your life revolves around what’s truly important to you, financial decisions become easier. Time management choices become easier. Emotional decisions become easier. Goal setting becomes easier. Problem resolution becomes easier.

Why? Because it’s very clear to you what actually is important and what’s not.

Remember, the truest way to invest in the things that are really important to you is time, not money. If your mother is genuinely important to you, give her a call today. But give her a call regularly as well. Visit her. Drop by and do an errand for her. If you do that, then finding some “perfect” gift for Mother’s Day becomes a whole lot less important. The same principle is true for anything else that’s truly important to you, from your career to your money and your hobbies.

It’s all about the time and energy, consistently spent.

Most of the time, our lives function along a path of least resistance.

We give into social cues because it’s the easiest path, causing us to buy stuff we don’t need and lust after “premium” items.

We don’t rock the boat at work because that’s the easiest path, causing us to run in place with our career.

We put our kids in the same activities everyone else puts their kids into, because it’s easier than figuring out what’s best for our specific child and finding activities that match that.

At the end of the day, we just flip on the television or the internet browser, because it’s easier than the other options.

Over and over again, we just follow the path of least resistance in our lives. But, as you can see, the path of least resistance usually doesn’t lead to success. We spend what we make. We don’t push ourselves to grow.

If you want to incorporate a positive change in your life, you need to alter your path of least resistance. Here are eight suggestions on how to do that.

Having trouble saving? Have your bank set up an automatic savings plan where a small amount is transferred from your checking account to your savings account each week or each month. That way, you don’t have to put forth any further effort to save.

Having trouble cutting your energy bill? Install a programmable thermostat and set it so that the air conditioning / furnace automatically turn off at night when you’re asleep and during the day when you’re at work.

Having trouble eating healthy? Go through your cupboards, get rid of the junk food, and give it to a food pantry. Replace it with healthier stuff. This way, when you get the urge to munch, unhealthy food won’t be at hand.

Having trouble finding spare time? Take your television and throw it in the trash can. That’ll free up some time – after all, the average American spends 151 hours a month watching television.

Having trouble focusing on computer tasks? Block distracting websites so you can’t go there even if you’re tempted to. I do this myself during the work day, as I set up a collection of scripts to block several distracting sites.

Having trouble eating at home? Make lots of meals in advance so that you can come home to prepared or mostly-prepared meals. Make casseroles on the weekends and freeze them. Put them in the oven in the morning and set the timer so the meal will be done at 6:30. Get a slow cooker and do much the same thing. That way, when you’re on your way home and you think about eating out, you’ll remember you have a meal ready to eat at home.

Having trouble keeping grocery spending under control? Make a meal plan before you go to the store. From that plan, make a grocery list. Having a grocery list in hand makes it much easier to buy sensibly at the grocery store.

Having trouble getting together consistently with friends? Set up a regular “meal night” with a circle of friends so that they know that every (say) Wednesday night, they’re invited to dinner at your house – or someone’s house in the circle. Once this gets going, it’s automatic and effortless and a great way to keep your social circle going.

If you put up a little bit of work now so that the path of least resistance later on leads to better behavior, you’ll win.

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 (May 2 – May 8, 2009)
The Logic of Up-Front Spending If you can spend a little more now to lower your long-term costs, it’s usually a good choice. This is the logic by which I usually encourage people to buy reliable automobiles and programmable thermostats.

My 25 Favorite Personal Finance, Career, and Personal Development Blogs I’ll be updating this list before too long, but it really won’t change too much from this list – perhaps five blogs rotating in and five rotating out or so.

Charting Personal Finance Progress, Internally and Externally For me, it’s the “internal” charting that really makes it work. I need to know inside of me that the personal finance choices I’m making are actually building a better long-term future for me.

A Step-By-Step Guide to Creating a Deal-Finding Homepage If you’re scavenging for a great price on something in particular, this is a great way to make a single page that helps you automatically find them. It’s pretty easy – Google does most of the footwork for you.

Rounding Up Debt Payments: Does It Really Help? It actually helps quite a bit. Even rounding up your payments to the nearest $10 can make a substantial difference over the lifetime of a large loan (like a mortgage, for example).

Two Years Ago (May 2 – May 8, 2008)
Making and Maintaining a Master Information Document Preparing this type of document can be incredibly useful for your loved ones in the event of your passing.

Taking a Deeper Look at Wants Versus Needs One of the biggest challenges of modern life is digging through the nonstop cues that we need certain things when, in fact, they’re merely wants.

Who Do You Work For? You don’t work for your boss. You work for yourself. You exchange your time for money and during that time, you do your best to satisfy your boss’s needs and your company’s needs, but also during that time, you should be building your own reputation and status.

Rinse and Repeat Most personal finance tactics work best if they simply become a normal part of your normal routine.

Is There an Overemphasis on College Savings When Discussing Children’s Education and Personal Finance? I absolutely think there is. Postsecondary success is built while children are young and simply herding them through it isn’t going to make a great success (unless they already have it in them).

Three Years Ago (May 2 – May 8, 2007)
Setting and Reaching Short Term Personal Finance Goals Short term goals are the most powerful ones for me. I often set goals to be completed in two weeks or a month just to save some serious money and to learn more about what works in my own life.

Not Quite There Yet: How To Deal With Not Meeting Your Goals And Set Yourself Up For Success The Next Time Sometimes you set a goal – and then you fail. Knowing how to deal with it is half the battle.

Seven Inexpensive Ways To Celebrate Mother’s Day Need some last-minute ideas? Here are several of them. (We’re using at least one of them tomorrow, possibly two or three).

26 Personal Finance Books – Ranked From Best To Worst This is a list of all of the books I reviewed during the first six months of The Simple Dollar, ranked in the order of their value (in my eyes). At this point, with hundreds of reviews, I’m not sure I could really fairly do this at this point.

Five Ways To Break A Shopping Addiction – And Five Ways To Help Someone Else With Their Addiction I believe that the constant “need” to purchase new stuff you don’t really need is a psychological addiction, one that can be broken with some care and perhaps some help.

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!