Only very rarely do I pass along a guest post, but a reader sent me such a spectacular energy saving do-it-yourself idea (and wonderful writeup about it) that I just had to pass it along. The only change I’ve made to this article is highlighting a few key pieces. This article comes from Allie, a long time reader of The Simple Dollar who likes frugal hacks at least as much as I do.

I don’t post much but I really wanted to share this energy hack with you. I think it would be a help to many readers.

I live in Central Florida. Our very old farmhouse faces west, and there’s no longer any trees to shade it. So on any given day from March to September, during the afternoon, the west side of the house (where the ancient windows are) is HOT. Hot as in you can barely touch the glass. I don’t want to use the “fry an egg” cliche but my mom thaws food on the windowsill in record time. A credit card placed there will be floppy in a couple of hours.

The a/c (necessary for me, an asthmatic, and my elderly mom, to breath in wet-wool-blanket heat) pounds away, sucking money out of my pockets to where I can almost see it flying.

I investigated solar curtains, solar shades, and they all were priced out of my reach. However, after studying them for a while, I came up with this hack:

For every window, buy an emergency solar blanket, sold at Walmart and other stores for about $1.99. They come in a box the size of a deck of cards in the camping section. Buy a couple extra for emergencies: they make a great emergency poncho, tent or clean place to lay an injured person. They vary in size, but are about the size of a twin sheet. They are thin and tough, like tissue foil. Gather up some tension curtain rods (I got mine at yard sales but the Dollar Stores carry them and you can buy the small diameter, the foil material weighs nothing) to fit your windows, and some of those inexpensive jaw clips women wear in their hair. Any family with females will have an abundance of these.

Fit the tension rod inside the window.

Lay the blanket, which comes compactly folded, over the rod, and unfold until it is the right width to completely cover the glass. I even up the front and back ends for double insulation

Secure with the clips over the rod – two does it for a 36 inch window. Tweak it until it covers all the glass – I use a bit of tape or small thumbtacks to anchor it.

Re-arrange your normal window covering over it. You’re done.

The house will be somewhat darker (although if you use just one layer, it is like window tinting and does let some light through) and the temperature will drop. In my case, I was able to raise the a/c to 76 and maintain an ambient temperature of 73 in the house, which is poorly insulated due to its age, during 90 degree days at 1700-1800 hours, the time when the sun is fiercest. The west side of the house was maybe 75 in front of the large windows and with numerous ceiling and floor fans, quiet pleasant. If you put your hand between the foil and the window, you can feel the intense heat that’s being blocked. The foil remains fairly cool.

Trent, I did 6 36-in square windows for less than $20.00 total. It might have been a little more if I had had to buy the rods new. Time – less than an hour. But that’s still a bargain. I also stapled neatly cut sheets over our glass window insets… anywhere that afternoon sun blazed in.

Our bill (scandalously high) showed a $75 reduction during this record heat and best, you no longer feel that you are walking by the Gates of Mordor when you pass a west-facing window.

In the winter, they are quickly removed and put away – I’ve folded them and used them over and over. I’m not going to say they add a lot of curb appeal, but function bests form here. People in well-insulated houses may be able to get away with a single panel, thus saving more money on the purchase of the blankets.

I have plans to insulate, of course, replace awnings, plant trees, but survival is taking priority. I will say that we do utilize this intense heat in green ways: the Magic Windowsill Thawer, the world’s fastest and best sun tea, clothes that dry almost instantly on the line, and even with conventional plumbing I can take a warm shower using the cold water tap if I’m fast. The resources are all around us, we just need the tools and thoughts to use them. I look forward to the day when my heat pump and solar panels are installed and the power barons buy energy back from me – that’s my goal.

Anyway, Trent, if you can present this idea – I didn’t intend an article, I just wanted to pass the idea on – I truly think it would benefit our frugal friends. Sometimes when something works, you just want to share it. Feel free to use this idea as you like. My small gift to you after so many large gifts given to me here at The Simple Dollar.

A final note: What’s happening here is that the blankets essentially reflect the light that comes into your home. This will work spectacularly well for unused rooms. The best part is that it’s incredibly easy to put up and take down as you wish (even if you just want to use it during some summer daytime hours, for example).

I’ve officially decided to start clippering my hair very short – and doing it at home. I used to do this in college, but since then I’ve had my hair somewhat longer. Does anyone out there have a recommendation as to hair clippers for home use that are economical and foolproof?

11 Creative Ways to Avoid Becoming a Workaholic For me, the best two things you can do is to have a clear wall between work and personal life and to have a healthy emergency fund so your job isn’t a matter of life and death. (@ zen habits)

The Rewards of Frugality and Thrift (or, Why We Scrimp and Save) I agree completely. It’s not about not spending. It’s about figuring out what’s actually important to you and focusing your spending only on that. That way, you can have the best of what’s actually important to you. You don’t need everything. (@ get rich slowly)

The Cure for Creative Blocks? Leave Your Desk. Most of my worthwhile ideas come to me when I’m doing something far away from my desk. The key, of course, is jotting down that idea so that I can pick it up and run with it when I’m actually at my desk. (@ the 99 percent)

What I Learned from the Prosperity Game Whenever I participate in games like this, I usually discover that the one thing I wish I had more of is time. (@ eventual millionaire)

DINKs: Smart or Selfish? FYI, a “DINK” refers to a person in a “dual income no kids” relationship. Is that “smart or selfish”? I don’t think it’s particularly either one. I don’t think everyone ought to have children or be required or pressured into doing so. Similarly, I don’t think having kids is a bad choice, either. Different strokes for different folks. (@ dinks finance)

To DINK or Not to DINK I agree to an extent with this article (that follows up on the one above) that sometimes people make up their minds both for and against children based on false preconceptions. For example, I don’t necessarily agree that you’ll have much more money by not having kids because your spending choices and priorities change drastically when you do have kids. (@ budgets are sexy)

This is the ninth entry in a fourteen part series discussing the time management classic Getting Things Done by David Allen. New entries in this series will appear on Tuesday afternoons and Friday mornings through July 16.

Over the last four articles, we’ve reviewed four of the five major components of getting things done:
1. Collecting all of the stuff you need to do
2. Processing that stuff down
3. Organizing that stuff into appropriate places
4. Reviewing to make sure you’re keeping things going

Today, we’re going to focus on the fifth step: actually doing stuff.

Allen offers up three models for determining how to decide what to do next.

The Four-Criteria Model
On page 192, Allen spells out this concept:

Remember that you make your action choices based on the following four criteria, in order:

1 | Context
2 | Time available
3 | Energy available
4 | Priority

You have your day’s to-do list. On that list are some errands, some things to do at your desk, some things to do in the kitchen, and so on. When you look at that list and decide what to do next, you’ll naturally want to do most of the desk things in a group, the errands in a group, and so on. That’s context.

Within each context, though, you might be boxed in by time. It’s noon, you have an appointment at 2, and you have three hours’ worth of stuff to do in the kitchen. Which tasks get done and which ones do not? That’s time available.

It’s 8 in the evening and you’re starting to run out of steam. One task involves carrying a bunch of heavy boxes. The other one just involves sitting on a chair as you clean out the fridge. Which one gets done? That’s energy available.

You’re at your desk. You have plenty of time and all of your tasks require about the same amount of energy. Which of your desk tasks do you do next? That’s all about the priority.

My method for handling these things usually comes at the start of the day when I assemble my to-do list. As I mentioned before, I maintain a Word document that contains my to-do list, adding to it every time I process my inbox. At the start of each day, I go through that list and organize it by context – errands, work tasks, personal tasks, and household tasks are usually the big four groups. Within each group, I usually list the things I need to do by priority. I then print off that list and, as I accomplish the items throughout the day, I cross them off.

Whenever I’m in a particular context, I usually just scan the things that need done, recognizing that they’re listed by priority but not necessarily following that priority with any strictness. For example, if I’m running errands, I’ll usually run them based on what things are near each other rather than by how important they all are.

I just cross things off as the day goes on and at the end of the day, I revise my Word document by deleting all of the completed tasks (and usually adding more that have built up throughout the day, to be done tomorrow).

The Threefold Model
Allen lays out this model for work on page 196:

As I explained earlier, during the course of the workday, at any point in time, you’ll be engaged in one of three types of activities:

- Doing predefined work
- Doing work as it shows up
- Defining your work

Sometimes, during the day, I follow my to-do list. Sometimes, I’m taking care of impromptu stuff, like unscheduled phone calls and other little emergencies. At other times, I’m reviewing my to-do list or processing my inbox or something like that.

I find that when I put these three elements into very separate boxes with as little overlap as possible, I find the most success. I unplug the phone to prevent “work as it shows up.” I turn off my email program. I put away my to-do list and ignore my inbox.

This allows me, along with knowing that all of the stuff I need to remember is safely recorded in my system, to quickly get into a “flow state” at my desk, which is incredibly productive time.

The Six Level Review Model
On page 200, Allen touches on the six levels of review:

The six levels of work as we saw in chapter 2 (pages 51-53) may be thought of in terms of altitude:

50,000+ feet: Life
40,000 feet: Three- to five-year visions
30,000 feet: One- to two-year goals
20,000 feet: Areas of responsibility
10,000 feet: Current projects
Runway: Current actions

Obviously, each of these levels should be in line with and enhance the levels above it. The current things you’re doing should fulfill current projects. Your current projects should be in line with your areas of responsibility. Your areas of responsibility should build toward your one- to two-year goals. Your goals should be the building blocks of, well, your life as a whole.

In other words, every action you take should ideally have some impact on the larger vision of your life. Even if you don’t see it directly, it should become clear if you sit back and think about it in terms of these levels of work.

For me, thinking about my work in this way, particularly during my weekly review, helps me minimize the unnecessary work and maximize the valuable work. The time I spend thinking about each of these levels really helps me figure out what’s actually important in my life and what I can be doing with regards to that.

I’ll use an example to show how a simple action echoes through every level of my life, connecting my current action to my overall life goals.

One of my major overall life goals is to be a good father. To me, that means teaching my children how to have self-control and how to be self-reliant (five year visions). This involves teaching them things like how to go to the bathroom themselves, how to be patient and not cry when they want things, how to behave in an appropriate way around others, and so on (two year goals). I’m responsible for encouraging their good behavior in these areas and discouraging their bad behavior (areas of responsibility). One of my current projects is to teach my daughter to listen to instructions instead of just ignoring them when she’s doing something else (current project). When she doesn’t listen, I focus on getting her attention and if she refuses, I penalize her in some simple fashion, such as putting her in the “time out” chair, getting down at her eye level, and talking to her seriously about it (current action).

So, my immediate action leads (slowly) to an improved ability to follow directions, which helps her grow as a socially functional young person. This is part of self-control and self-reliance, lessons which I view as an essential part of being a good father.

What I generally find is that the more direct the connection between my current action and a major life goal, the more powerful and genuinely important that action is. The above connection is very straightforward, but sometimes they’re not all that straightforward – or at least not all that impactful. This is how I often prioritize my tasks. Not by urgency – if something is urgent but unimportant, I’ll often blow it off – but by genuine importance to what’s central in my life.

This is all very much a thought exercise. However, it is this kind of thinking – hand in hand with a trusted system that records all of the stuff you need to do – that creates an efficient and very fulfilling life, both professionally and personally.

On Thursday, we’ll talk about applying these ideas to getting project planning under control.

In the past on The Simple Dollar, I’ve talked about how to lodge a complaint against a company if you’re truly dissatisfied with a product. I’ve always wanted to do a case study of such a complaint, but I’ve never had an experience severe enough to cause me to get involved.

Until now.

Pictured above on the right is a bottle of Spring Grove Lemon Sour soda, made by the Spring Grove Soda Pop Inc. of Spring Grove, MN. It is a small company which only sells their beverages within a 100 mile radius of Spring Grove, MN.

Spring Grove Lemon Sour is, without a doubt, my single favorite soda in the world. It has a sublime fizzy taste that mixes the sour of a ripe lemon with just a hint of sweetness. It is the only kind of soda I drink with any consistency. Every three months or so, when we visit family within the Spring Grove Soda distribution area, we stock up, buying several packs to take home with us.

Over the past weekend, we were driving home from a wedding in Wisconsin when we stopped at an IGA in La Crescent, MN for diaper changes and bathroom breaks. While there, we decided to stock up on the Lemon Sour, but when we found it, the Lemon Sour had drastically changed.

Let’s see that photo again.

On the right is a bottle of the Lemon Sour I’ve known and loved for years. Notice the white color. On the left is what we purchased in La Crescent, MN a few days ago. Notice the yellow color.

It wasn’t the color change that was the problem, though. The flavor of the one soda in the world I really enjoyed had completely changed. It went from a sublime fizzy lemony sour flavor with just a hint of sweetness to something that tasted like watered-down Mountain Dew.

Needless to say, I was extremely unhappy with my purchase. I gave bottles of the “new” Lemon Sour to a few people in the area who had yet to try it and the reaction was universally negative. What happened to a wonderfully distinct local brand?

I decided this was the perfect opportunity to put everything I had learned about registering consumer complaints to the test.

Call The Company
I placed a phone call to their customer support line at (507) 498-3424 (found on the contact us page of their website). I simply stated that I was unhappy with the change in formulation. The kind lady I talked to said I was not the first person to call about this and that they were fully aware of some unhappy customers, which bodes well for some type of resolution.

Why do this? It’s a direct and immediate way to let the company know what you think of the product. It only takes a few minutes and can be done from virtually anywhere.

Mail (and/or Fax) a Letter
I wrote a letter to Spring Grove Soda Pop Inc. Here is the text of that letter.

Dear sir or madam,

I have been a long time fan of your Lemon Sour soda beverage. It is the only soda that I happily drink with any regularity and it is a constant part of my pantry. Although I do not live in your distribution area, I visit several times a year and each time pick up multiple cases of Lemon Sour.

On June 26, 2010, I visited an IGA in La Crescent, MN to purchase an allotment of Lemon Sour to take home with me. I discovered that Lemon Sour had been reformulated. It now had a yellowish color (compared to the original white color). When I tasted it, I was very disappointed. I discovered that the wonderful fizzy sour (with a touch of sweet) flavor I had come to love over the years had been replaced with an overly sweet imitation of Mountain Dew.

I do understand why you may be selling the new beverage as its sweetness may be more attractive to some soda drinkers. However, I implore you to bring back the original flavor of Lemon Sour. I will not be buying the new formulation. I also have many friends and family members within your distribution area who are also disappointed with the change.

Perhaps you can continue making the new flavor and distribute it as well under a new name while bringing back the original Lemon Sour flavor and formulation.

Thank you for your time and consideration.

If you’d also like to write a letter, their mailing address is:
Spring Grove Soda Pop, Inc.
215 2nd Ave NW
PO Box 337
Spring Grove, MN 55974

and their fax number is (507) 498-3424.

I used some basic style points for writing this letter.

1. I kept my letter short and concise. There’s no reason to be excessively long. A short letter is much more likely to be read.

2. I made the facts clear and straightforward. I stated when and where I purchased the new formulation so that if it was merely a test run, that would be clear to the letter recipient.

3. I suggested a simple resolution. They could continue making the new beverage under a different name (a la New Coke becoming Coke II) and restore the original flavor.

4. I started out extremely positively, noting how much I’ve enjoyed their product in the past. I am a long time customer and I’ve always been happy with their Lemon Sour flavor.

5. I remained diplomatic and courteous and left out the sarcasm. They made a business decision that I’m unhappy with. There’s no reason to not be diplomatic about it.

Why do this? A handwritten letter can provide clear documentation for the company as to the desires of their customer base. Quite often, diplomatic handwritten letters from people who have never written before can get the serious attention of the company in question.

Start a Facebook Fan Page
I started a Facebook fan page entitled Bring Back the Original Spring Grove Lemon Sour! and encouraged people I know from that area on Facebook to join the group. I posted basic information about the change and will let people know anything I find out about reverting back to the original formula using that group. If the group picks up a lot of fans, I’ll send a link to the group to the folks at Spring Grove Soda as encouragement for reverting to the old formula.

One key is to use this type of platform to share methods of contacting the company, such as providing their phone number and their mailing address, to people who might also register a complaint.

Why do this? It allows a person to collect a list and a count of people who agree with the sentiment as well as distributing methods of giving the company feedback. If this page (with a number of fans attached to it) is sent to the marketing director of a company, raw numbers like this can make a convincing case that a lot of customers care about the product and want to see changes.

Write About It Publicly
Well, frankly, you’re reading it. I don’t have access to a much more public place than The Simple Dollar, with hundreds of thousands of readers. I’m almost positive that at least some readers out there have tried Spring Grove Lemon Sour in the past and, hopefully, are also disappointed in the change or are at least aware of it. Such information may encourage them to take action as well.

Why do this? It spreads the word in an extremely public fashion. While I am lucky enough to have a very public platform to use, almost everyone has access to at least some sort of platform to write publicly about it. Start a blog or write a guest entry for a blog like Consumerist. Use fan messageboards. You can start a Facebook fan page, as I did above, if you have no other platform available to you.

Will This Really Work?
My plan is to give it a month or so and see what happens with my various methods of lodging a complaint about this change. Let’s consider this a test case in how to lodge a consumer complaint. In a month, I’ll report back to you with notes on the success and failure of the various tactics tried.

If you’re upset by the change to Spring Grove Soda, please feel free to use any of the information above to contact Spring Grove Soda and express your unhappiness with this formula alteration. You can copy and paste anything from above, but I encourage you to alter it enough so that it can appear distinctive and reflect your own feelings on the matter.

Connie writes in:

You write a lot about how there’s a deep connection between less clutter and financial success.  I don’t get it at all.  I think the opposite is true because when you clear out a bunch of stuff you would just have the space for a lot more.

This is an issue I’ve discussed to a certain extent in both of my books.  I think there’s a deep connection between personal finance success and clutter, and there’s no better time than now to break it down.

What Is Clutter?
You’ll see many definitions of clutter out there, but the one I typically use is pretty straightforward. Clutter is anything in your life that you have inadequate time to enjoy or inadequate space to store.. 

When you’re juggling so many relationships that the truly important ones are withering on the vine, you’re experiencing clutter.

When you jam all of your papers somewhere because you don’t have time or the space to store them, you have clutter.

When you’re embarrassed to let someone see some part of your home because of the piles of stuff you have jammed in there, that’s clutter.

When you burn fifteen minutes digging through junk drawers looking for the one thing in there you actually have any need for, that’s clutter.

When you have shelves jammed full of videos or DVDs or CDs or books or video games or old magazines that you’ve barely touched in months but you keep telling yourself you’ll get around to someday, that’s clutter.

What Clutter Eats
Clutter eats time.. The more things you have, the more time you spend maintaining them.  Stuff.  Commitments.  Relationships.  That means less time to enjoy the things that are genuinely important to you.

Clutter eats space.. The more stuff you have, the more space you need to store it.  That means a bigger apartment or a bigger home or a storage locker.  Those things mean more rent or a bigger mortgage and more time lost to cleaning and maintenance.

Clutter eats money.. Most stuff has a financial cost.  The more stuff you have, the more hard-earned money you’ve dumped into it (and the less time you have to enjoy each item).

The Solution
The solution, of course, is to pare down.  That’s harder than it sounds, because people often have a deep attachment to their stuff.  Here are five tactics that work.

Use rental services.  If you’re a film buff and accumulate DVDs, join Netflix.  If you do the same with books, join a library.  Video games?  Gamefly.  Music?  Napster.  This allows you to enjoy a library of what you most enjoy for about the cost of one purchase every two months without accumulating stuff.  

Empty your clutter attractors.. The junk drawers.  The closets.  The garage.  Pull out everything and keep only what you might actually use again.

Realize that you are not your stuff.. Many people self-define by the stuff they have.  You are not your car.  You are not your house.  You are not your gadgets.  Normal people who like you do so regardless of the stuff you’ve accumulated.

Move to a “one in, one out” philosophy.. Whenever you acquire a new item, an old one has to go.  This allows you to focus on quality upgrading than accumulating tons of mediocre stuff.

Date it.. If you don’t touch a non-decorative and non-sentimental item in a year, why are you keeping it?  Once, I started over with our DVD collection, putting them all in a box.  We dated the box one year in the future.  Whenever we wanted to watch a movie from that box, we pulled it out, watched it, and put it on our rack.  After a year, why not just sell the contents of the box?

The best part of decluttering is that you usually earn some money back from doing it via garage sales or secondhand shops.  Sometimes, decluttering can even open the door to less expensive housing.

There are many great decluttering tactics.  I highly recommend the Unclutterer blog for countless great ideas for decluttering.

What’s inside? Here are five word summaries of the questions answered inside this mailbag. Click on the number to skip straight to that question.

1. Co-signing with bad credit father
2. How many people read TSD?
3. Removing stains from cloth diapers
4. Percentage for emergency fund
5. Personal loan for adoption
6. Gloom, doom, and e-funds
7. Difficult job search
8. Frugality, clutter, and hoarding
9. Regular IRA versus Roth IRA
10. Which debt to pay first?

This weekend, we went to a wedding of an old friend in the middle of Wisconsin. On the way back, Sarah says, impromptu, that we should stop for the night and visit family. My work plans involved us going home, of course, so I’m writing this mailbag on the road between wireless hot spots, sitting in the front seat of a cramped Prius.

My Father is a retired teacher who started in real estate about a year before the current economic crash. He had three houses that he owned and was renting out to tenants. Once the real estate market crashed, he was unable to make a living in real estate and tried to get back into teaching, but hasn’t been able to get much more than temp sub positions.

Recently he asked me if I’d be wiling to co-sign a new mortgage with him. He wants to leave his area (southern California) and move to an area where the housing market is better and prices are cheaper (Arizona). Since his credit is completely obliterated by the foreclosures, he would never be able to buy any time soon. He’s looking for a small, cheap house that he can live the rest of his life in. He would make the downpayment and all mortgage payments, I would simply assume the risk. I’d love to help my dad out, but how would having two mortgages affect my credit? Would co-signing with someone who has lousy credit affect my credit? Is it even necessary to co-sign, would it be better for me to put the mortgage in my name and treat it like my dad is renting from me? If, god forbid, he were to pass away, which would it be better to have the house totally in my name, or be a co-owner? I know you’re not a real-estate expert, but I’m sure you’ve done some research on this, so any advice would be greatly appreciated!
- Matt

If you cosign, the impact on your credit will be relatively low unless your father stops paying the bills. Then, if you do not, your credit will be in the hurt locker.

If he passes away, the same is true – if you’ve signed the mortgage, then it’s now your mortgage. Better keep up the payments! Of course, if you’re not specified as an owner of the house, the only thing you lose by not paying at that point is your credit.

I am generally extremely hesitant to encourage people to cosign on any loan with family members outside of a parent cosigning a college loan for their children. So often, such arrangements end in fights and broken relationships. It’s just not worth it.

I believe you mentioned it in the past, but out of curiosity, about how many people follow your site or subscribe to it?
- Brandon

I have about 82,000 subscribers. About 28,000 of those get The Simple Dollar by email – the rest get it by their RSS reader (like Google Reader).

The site gets about 700,000 visitors per month, though that varies a fair amount from month to month.

In addition to that, I have a lot of additional readers that are hard to quantify because my site’s content is syndicated elsewhere. For example, I get a lot of readers because my site’s content is syndicated at the Christian Science Monitor, as you can see here. Those numbers are extremely difficult to quantify in any reasonable way.

As a fellow laundry soap maker and cloth diaper user, I’m wondering how you deal with the stains in newborn diapers. I’m wondering if there is an easy method that I hadn’t thought of yet.
- Christina

I turned to Sarah, the resident expert on this:

“It depends on the cloth diaper, but I have the best luck just using a mix of washing soda and Simple Green. I rarely have any trouble with stains when I use the two of them as a mix.

I use about two teaspoons of Simple Green to 1/4 cup washing soda. Usually, I put the Simple Green in a spray bottle and spray it about 12-14 times right into the washing machine when it’s filled with water, then spread the washing soda evenly on the water surface.

I usually don’t have any stains at all when I’m done. If I do, I just repeat the Simple Green and washing soda.”

So there you have it, from our resident cloth diaper washing expert.

I graduated from college last May (i.e. ’09), and am lucky enough to have a job, but I still have considerable student loans and am trying to establish a nice emergency fund. In general, I have pretty good control over my finances, but I have a question I would like your advice on. I just received a bonus at work, and recently had a birthday, so I have a little extra cash than I usually do, and am trying to distribute it effectively. About what percentage should I put towards loans and about what percentage should I put towards my emergency fund? When a person has a little extra cash like this, what percent do you recommend on a little splurge? Although I know it must be done, after getting this money, it can be a little depressing putting it all towards debt retirement and a savings account, as I have done in the past.
- Tim

If you have no emergency fund, it should probably all go towards your emergency fund. I usually recommend that a person have about two months’ worth of living expenses in their emergency fund if they’re single.

If you already have that, then I’d focus more on the debts, starting with the highest interest one.

With splurging, I don’t think it matters too much as long as you’ve thought it out and stick to a consistent policy. My wife and I don’t splurge, per se, but we do often decide on “splurges” together and save towards them and windfalls usually are used to boost that savings to some degree.

My husband and I racked up some major credit card debt several years back (about 34k). We haven’t used credit cards for nearly 2 years now, and 6 months ago we enrolled in a debt management plan through CCCS to simplify and lower our payments; it’s been tight, but we’re doing it and are determined to follow through and not accumulate any more consumer debt. My husband recently got a better-paying and secure job (I’m employed too & we make about $70k total), and our car will be paid off in about 9 months, so we are on track to improve our situation, save some money, and hopefully pay off our DMP early. We pay a very modest rent, have no cable, use prepaid cell phones and free VOIP home phone, no video games, etc. etc. etc. to keep expenses low.

I understand the major ramifications of both options (waiting & saving vs. accepting a loan); but it would be very helpful to hear your perspective. Subjectively, it feels like not being able to afford an adoption for several more years–after trying to get pregnant for 5 1/2 years already–is our punishment for making stupid financial decisions in the past. Objectively, I feel strongly that debt and finances should be treated as a practical rather than a moral matter; but the issue of having children is such an emotional one that it is very hard for me to be objective here.

- Lynn

I agree with you about the friendship thing, actually. If the friendship you have with these people is valuable at all, I wouldn’t borrow money from them.

If it’s an ongoing concern with them, you should sit down with them and simply tell them that you really, truly appreciate their offer to loan you the money, but that you’re declining it because you know the negative impact that loans can have on friendships. One only needs to read The Simple Dollar for a while to know how badly it can end, even when people have the best of intentions.

Wait. Use your adoption dream as a focus point to encourage your diligent savings. Work together to reach your dreams without disrupting friendships.

With all the gloom and doom about the poor economy and how another recession is just around the corner, do you think I should beef up my liquid savings? Possibly pulling back a bit on the retirement investments? I just don’t know what I should be doing these days money wise, other than just saving as much as I can. Sometimes I feel like a hoarder.
- Laura

First of all, I think the “doom and gloom” is usually overwrought by “newscasters” and commenters who make a very tidy profit by predicting doom and gloom. People pay attention to negative news and commentary – the ratings prove it time and time again. Rest assured, if it can be spun negatively, someone will be making a buck doing just that.

If you feel uncomfortable with your emergency fund, add to it. Don’t worry about it, either. It’s essentially a very secure investment with a low annual return – no risk, but no huge reward, either.

As for reducing retirement savings, I’d use a retirement calculator and see whether or not I was on pace for the retirement I wanted.

I’m 25 and have been living in the city I live in for 1 year, and the state I live in for about 3 years. I enjoy living in the area and have learned a lot about myself and others while living here. My only problem is that I work in a different city (and state) than I live in, and would like to change this sometime in the future — Its a lot of driving, but it does not really get to me all that much right now. I’ve been trying to apply for as many local jobs as I can, but around here the job market is pretty tight and we dont have much of an employment base outside of government money of various sorts (federal, state). While this has helped the area weather the storm, it is extremely difficult for others like myself to find a job. I’ve been thinking that the best thing I can do to find employment in my area is to get to know as many people in fields that I am interested in as possible. This is difficult, however because I have only lived here a year and am focused on paying down my debt, so I dont really go out that much, and I dont really spent that much time in the city because my commute is long and my job is out of state. I would like to get more involved in the things that are going on in my community, but I just dont know where to start. It seems like you are quite involved in your community (you’ve mentioned it briefly a few times) and I was wondering what all you do in the community, and where you think I should start. I know that a common suggestion is to head to my church and help out around there and network as much as possible, but I’m not really a religious person, so it makes me less inclined to attend church themed gatherings because I feel like they are trying to convince me to do something for them (attend their services) that I’m not positive I want to do. Do you have any suggestions for other quality networking opportunities that will also allow me to help out my city in some way? I’m interested almost everything, and I dont have a problem doing manual labor (such as clean ups) but I usually dont hear about things like that until after the fact.
- Jeff

The first person I would talk to is with a pastor at one of the local churches. Simply explain what your situation is and see if they can help. Quite often, pastors aren’t out to “recruit” you – they’re actually out there doing what Jesus says, which is to help the poor and needy. My pastor is one of the best people I’ve ever been around and she’s constantly helping random people in our community, whether they’re church members or not.

Being involved in the community is great, but it takes a very long time to build up a lot of connections in the community that can help you in such a situation. If you don’t have them built already, it’s pretty hard to just show up at community events and immediately ask for help.

Your best bet, if you want to start on that route now, is to spend your extra hours doing community volunteer work. Start with your city’s parks and recreation department – they usually have tons of things going on that could be aided by volunteer work. Use that time to start connecting with others around you.

Lately, I’ve reading quite a lot about getting rid of clutter (in blogs such as Unclutter.com), and I’ve cleaned my room pretty good, throwing away everything I considered useless. And that felt great. My room is much cleaner and much more organized than ever before.
Now here are my questions:
a. Do you like to keep your room/house/garage clean and tidy? (I mean, we all love clean, but do you actually do it?)
b. How could frugality, bulk buying, etc. live in harmony with a clean and uncluttered house?
- Matthew

It really goes in phases with us. We have three little kids and the only constant with having three children that age is that something will happen to disrupt your best laid personal plans. It’s pretty much a given. So, there are times when the house looks beautiful and everything is wonderfully organized and there are other times where it looks like a hurricane hit the house.

Our biggest drawback, really, is laundry. We do a lot of it but we still often fall behind and have to have “laundry days” to catch up.

Most of our bulk buying is with household goods like toilet paper and diapers. We store the excess in the garage on the shelves, so it’s kind of out of the way. I think if you have a good place to put your bulk purchases, it’s not hard to be organized and be a bulk buyer.

First, I’ve basically been teaching abroad for several years, which means I don’t get any extra help on saving for retirement. I started an IRA during that time under some misguided information, now at around 17k. I now know that I should have started a Roth IRA because I can’t possibly be making less than I do now. My question now is: should I roll over my IRA into a Roth IRA and incur the $1,200 in taxes (estimated by my IRA holder) for the rollover, or just open a Roth account and quit adding to the IRA? At this time, I do have about 14k in savings at the moment with 20k in student loan debt, so paying out of pocket for the rollover is doable.
- Ken

You really should take advantage of the opportunity to roll it over and just pay the taxes.

When you have a low income, you’re far better off having money in a Roth IRA than a traditional IRA because of the tax advantages. If you save adequately for retirement and anything approaching economic normalcy happens over the next few decades, you’ll pay a higher tax rate in retirement than you do now.

That means a Roth IRA wins big time. I’d roll it over.

I just graduated with my Master’s degree, and I have been offered a position with a company in Cambridge, Massachusetts. I have approximately $10,000 in my savings account, and I will be making 44,000/yr plus excellent benefits with my new position. However, I have a few budgeting questions since I will need to begin paying my loans back in November. First, what percentage of my income can I expect as take-home pay?

My final question is about consolidating the loans in my name. I know if I consolidate during the grace period, I can get a .6% rate reduction, so I plan on consolidating soon. However, since I have loans with fixed interest rates, the May treasury bill will not affect my rates, correct? I just want to make sure there is no difference between consolidating before or after July 1st for me. Do you know how I can determine if rates are going to increase or decrease in case it could affect the loans in my father’s name?
- Cara

The first thing you need is an emergency fund equal to about two months’ worth of living expenses. Make minimum payments on your debts until you have that in the bank.

The next thing you need to do is sit down and have a serious adult conversation with your father about what the expectations are about the loans. Don’t guess about it. Ask him honestly what he expects in terms of repayment. He might never expect anything. He might expect immediate payment. It’s really hard to tell.

Your conversation there should tell you what the priority is. If you need to pay him quickly, pay him first. Don’t sink that relationship. If he’s fine with delaying it, focus on the high interest loans.

Yes, if you have loans with a fixed rate, your loans won’t be affected by the May treasury rates or anything else. Only variable rate loans are affected in this way. It may be that the offered consolidation rate may change, but that’s more of a business decision by whoever’s offering the consolidation. Rates are really low right now, so it’s a good time to consolidate.

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.

For many of us (myself included), one of the biggest motivations for getting our personal finances in shape is to give us more control over our lives. A big part of financial recovery is simply being mindful of your choices: your spending choices, your choice of possessions, your choice of how you spend your time.

For me (and for a lot of you, too, based on reader emails and comments), some of the motivation for this kind of mindfulness about life choices goes beyond the merely financial. We’re concerned about continued use of fossil fuels, both as an environmental concern and as a national security concern, so the choice to drive less is doubly or triply motivated when we consider the financial savings, too. The expense of a huge house, both in terms of the financial cost and the materials involved, when many of those rooms will go unused seems silly, so we choose to live in a smaller home both for financial and for more global reasons.

An awful lot of frugal living is tied to these kinds of global concerns for people. We’re all conserving our money and resources so we can direct them in ways that are more meaningful to us.

That’s the basic idea behind Voluntary Simplicity by Duane Elgin, a book I’ve mentioned several times on here but never reviewed (until now).

Why did I choose now to review it? Honestly, I’ve received a lot of emails from people living along the Gulf Coast who are extremely upset with the ongoing environmental disaster there. So many people are simply saying that something needs to change in the world and my response is always that change starts with you.

I think this book sums up that idea better than any book I’ve ever read. By consciously choosing a simpler life that contains the type of richness that you hold most dear, you can go a long way towards not only preserving your financial resources, but you’re also living a life in line with what’s most important to you and also blazing a trail for others to follow.

Voluntary Simplicity by Duane Elgin is a book that’s a little off the beaten path of what I usually talk about on The Simple Dollar, but it has had a profound impact on my thinking over the last few years.

One | Cool Lifestyle for a Hot Planet
Simplicity does not mean poverty. It does not mean rural living. It does not mean ugly living. It does not mean economic stagnation. Those are images created by marketers who want desperately to create the perspective that in order to live well, you have to have mountains of stuff.

The idea behind this book, in Elgin’s words, is “a conscious simplicity that represents a deep, graceful, and sophisticated transformation in our ways of living – the work we do, the transportation we use, the homes and neighborhoods in which we live, the food we eat, the clothes we wear, and much more.” In other words, it’s all about reflecting upon every choice we make in life, asking ourselves whether that’s honestly what we want from ourselves and for the world around us, and working to make stronger choices in each of those areas. Often, that comes hand in hand with spending less money and, often, with earning less money to do more fulfilling work, too.

For me, the biggest benefit to simplicity is time. The less stuff you have, the less time you have to spend cleaning it and maintaining it and feeling obligated to use it. The fewer time commitments you have, the more time you spend applying yourself to things actually important to you.

Two | Pioneers of Green Living
“The character of a society is the cumulative result of the countless small actions taken day in and day out, by millions of persons,” says Elgin on page 26. That’s also true on a much smaller scale. Your character is the cumulative result of all of the small actions you take in a given day or over your lifetime. What, exactly, is your character?

Most of this chapter is filled with individual anecdotes from people attempting to adopt a simpler lifestyle, mostly in an effort to have their time and their efforts and their purchasing decisions fall in line with their personal values (whatever they may be, because they certainly do vary a lot). Take me, for example: I could buy a Brooks Brothers suit, but my most recent clothes came from Goodwill. Why? Well, why not? They’re perfectly good clothes. My son is rocking next to me right now and he’s wearing clothes from a consignment shop. Why? They’re perfectly good clothes.

Three | Living Voluntarily
The most interesting part of this chapter (for me) was the difference between involuntary and voluntary simplicity. Take two people riding a bike to work. One person could afford a car and is riding the bike voluntarily – he’s happy with his choice. The other is forced to ride a bike because of economic reality – he loathes his choice. Outwardly, they appear the same, but inwardly they’re in very different places.

Elgin’s argument is that by voluntarily riding a bike and conserving his economic resources, the voluntary rider is causing a ripple effect that will eventually benefit everyone in some small way. The money he saves in the bank might be invested in a startup business or donated to a charity. In either case, a boost is given to people who really need it and that boost has a positive impact on their lives and, by association, the lives of everyone associated with them. It pays forward and eventually improves the world, often in indirect ways that we never see.

It takes practice to think this way about every action we take, but the more we do it, the more natural such thinking becomes.

Four | Living Simply
The simplest way to think of living simply is to ask yourself whether a choice promotes activity, self-reliance, and involvement or whether that choice promotes passivity and dependence.

You’re at the store. You can either buy a box of au gratin potatoes costing $2 or you can buy a handful of potatoes and an ounce or two of cheese for $1. Which is the better choice for promoting activity, self-reliance, and involvement and avoiding passivity and dependence? The potatoes and cheese cost less, promoting financial self-reliance. They also promote self-reliance because you’re preparing a dish from scratch instead of opening a box. The boxed food promotes dependence because you’re not learning how to prepare a dish, you’re learning how to follow directions provided by a corporation.

Our life abounds with choices like this, from our work choices and our social choices to our activity choices and our shopping choices.

Five | The World at the Tipping Point
There are a lot of global problems. Poverty. Environmental destruction (one only needs to think of the Gulf oil spill). Peak oil. Overpopulation. Human conflict. What impact can we have?

The amazing thing is that many seemingly enormous events are often unbalanced by small acts. You and your friends stop buying soda and start to get into better shape. This has an impact on local soda sales, affecting the bottom line of the large soda companies. Others see that you’re avoiding soda and decide themselves to do the same. It shows up as an alarming blip in their sales data, so they start to think of alternative beverages and business models for their sales. They miss quarterly earnings estimates by a cent or two and their stock drops a bit. And so on. And so on.

When things are at a tipping point, your actions have a much larger impact than you think they do at first glance. Not only do they greatly affect your life directly, but they ripple out throughout the world in many different ways and often have indirect effects on you.

Six | Deep Simplicity and the Human Journey
Another powerful aspect of choosing voluntary simplicity is how it affects the human journey of your life. Elgin delves into spirituality here, touching on how voluntary simplicity is prescribed in the Bible as well as other religious works.

My favorite one was this, from Matthew 6:25: “Therefore I tell you, do not be anxious about your life, what you shall eat or what you shall drink, nor about your body, what you shall put on. Is not life more than food, and the body more than clothing?”

That sums it up right there. Is life about what we wear, what car we drive, what house we live in, what restaurants we eat at, and what stuff we accumulate? No. It’s about experiences and pleasures. It’s about friendship and relationships and human interaction. It’s about finding those things we’re good at and applying them to the world.

Seven | Living in a Green World
What if the unthinkable happens? What if a nuclear bomb exchange occurs? What if we have another few oil disasters like the one in the Gulf, decimating world seafood populations and causing water shortages? What if there’s a disease epidemic killing millions (remember the swine flu? We were lucky, it could have been like a worse version of the Spanish Influenza of 1918 that killed my great-great-aunt.)?

If you’re engaged in a dependent lifestyle that’s focused entirely on material posssessions, the adjustments in your life will be brutal and you may have difficulty making it through such changes. If you’re already focused on a lifestyle of self-reliance and voluntary simplicity, the road to dramatic change won’t be that painful.

Is Voluntary Simplicity Worth Reading?
The natural response to a lot of the content of this book is that it’s all about environmentalism and the like. In fact, a few years ago, I encouraged a reader to pick this up and he wrote back to me a few weeks later ranting about how he was never going to tie himself to a tree like the “hippie” that wrote this book.

If that’s what you got out of the book, you’re missing the point. The entire point of the book is that you don’t have to overconsume in areas that aren’t important to your life. If you don’t watch television, don’t buy a television or have a cable box. If it’s nice outside, don’t run your air conditioner. If you’re not into clothing, wear clothing until it’s actually worn out – and then even consider mending it. In other words, if it’s not all that important to you, don’t consume.

For me, this was one of the most thought-provoking books I’ve read in the past five years or so. It made me think deeply about a lot of the assumptions I’ve had in my own life and made me question many of my personal choices. It actually helped me move forward in my personal finance progress because I started to question things at a deeper level than I had before. Why am I actually earning this money anyway? What impact does this choice have on others, and how does it echo back to me? Something as simple as buying a gallon of gas has an impact on many levels, an impact that bounces back in many different ways (not just environmentally, but economically and politically and socially). The same goes for buying a disposable diaper and tossing it in the trash when it’s used up.

If you’re struggling at all with these kinds of issues, Voluntary Simplicity is an absolute must-read.

As I mentioned a bit last week, we’re currently debt free except for our mortgage and a student loan with such low interest that it would be financially reckless to pay it back early. The CD in which we were keeping the money to pay for our Prius matured (it was earning a higher percentage return in a CD than we could get on a car loan, so cracking the CD early and paying a penalty just to pay cash seemed like a poor move), so we paid off the full balance of that loan and own both of our vehicles now free and clear (we paid cash for our 2004 Pilot a few months ago).

Right now, we’re sitting at a decision point. Should we start prepaying significant amounts on our mortgage or should we invest that money elsewhere? I think we’ve come to a decision, but I also thought walking through our decision-making process.

Our home mortgage sits at about 5.5%. We are looking into refinancing it at 4.75%, but we haven’t yet fully run the numbers to determine if it would actually save us any money or not because of the cost of the refinancing and because of our intent to pay it off quite early. We’re already making payments that amount to about 50% more than what we owe each month.

Our question currently is simple: should we raise those overpayments to 100% or more or should we be investing that extra money into stocks or something else?

If we increased our payments to 100% of what we currently owe each month, we would pay off our mortgage in about seven years. If we exceeded that amount, we would be paying for even fewer years than that.

We view money put into the mortgage as being an investment with a guaranteed return of 5.5%, because that’s the amount of annual interest we’ll save by knocking off some principal. If we pay $1,000 early, it’ll save us $55 in interest this year and about $57 in interest next year and so on.

On the other hand, we could invest that extra mortgage payment each month into something else. We could put it into a savings account that would earn us 1.5% or 2% or so, but it would be very liquid.

We could also invest it in the stock market. It would be very liquid there and it would also have the potential to greatly beat the 5.5% we’re making on our home loan.

Of course, “potential to greatly beat” reveals the hard truth. Stock market investing, particularly in the short term, implies quite a bit of risk. 2008 was incredibly painful, for example, as were 2000 and 2001.

The truth is that stocks only pay off as an investment over a long timeframe unless you’re banking on some luck.

So, what’s our timeframe here? Our plan after our mortgage is paid off is to buy a piece of land in the country and build a house on it (and likely a small barn as well).

If we put the money into our home, we would be completely debt free in five years, buying land a year or two after that, and building a year or two after that. Let’s figure five to ten years is our time frame.

Is that “long term” in terms of the stock market? Sadly, it’s not. As Warren Buffett so eloquently put it, “Only buy something that you’d be perfectly happy to hold if the market shut down for 10 years.” The simple fact is that over a period of time less than ten years, the stock market is notoriously volatile.

This becomes even more true when you consider that we won’t be investing all of it now and just waiting. Instead, we’d be investing small amounts regularly over the next several years. Large chunks of our investment would be in stocks for only a year or two.

That’s not the kind of fragile foundation we want for our next home. We’d far rather own our current house free and clear. It’s in a good location, rurally placed with great access to the Des Moines metro area, and similar houses have held their value or even gone up over the last several years. We feel, based on the evidence, that we’ll get out of it at least as much as we put into it when we sell it.

Thus, our extra money is going into our mortgage for the time being. I altered our automatic monthly mortgage payment to be 125% more than our normal monthly payment and may yet alter it again (I want to watch our monthly cash flow for a while). This leads us to paying off our house in just a few years and pushing us right towards the country home we’ve dreamed of.