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

I’ve been a big fan of Liz Weston’s writing, particularly her columns over at MSN Money. I’ve also communicated with her many times in the past. So, when I saw that she had a new book out, it was an immediate addition to my reading list.

This book, The 10 Commandments of Money, features a subtitle, Survive and Thrive in the New Economy, that left me wondering about the purpose of the book. It seemed a bit out of Weston’s wheelhouse to write a “buy gold and land” type of book – a particular subtype of personal finance I avoid.

Rather, this book is more about positioning yourself for success down the road as the economy rebounds from the downturn and opportunities come your way. That’s a solid perspective for anyone who is planning for a brighter future to have.

Unsurprisingly for a book of this nature, it’s divided into a series of chapters that each focus on one of the ten commandments, so let’s walk through them.

I: Create a Budget That Works in the Real World
What does Weston mean by a “budget that works in the real world”? Weston subscribes to the 50-30-20 model of budgeting. 50% of your take-home income should be spent on stuff you need, such as your bills. If your actual bills take up less than 50%, good job, but many people are over that 50% mark. If you’re over the 50% mark, the remainder comes out of the 30% slice – the money spent on stuff you want, such as entertainment and the like. The other 20% goes to savings of various kinds, like an emergency fund or retirement, depending on your needs.

II: Create a Survival Plan with Cash and Credit
Although the commandment somewhat implies it, Weston isn’t suggesting using credit as part of an emergency fund. Instead, the idea here is that having a strong credit rating and access to a significant line of credit is a useful complement to your emergency fund. An emergency fund should be cash, first and foremost, and Weston interestingly goes beyond that, arguing that another aspect of emergency funds that people overlook is the idea of multiple income streams. In other words, it’s always good to have some sort of side business or side job in place to provide income in the event that your main one fails. Consider it a different type of emergency fund.

III: Pay Off Debt the Smart Way
Weston’s plan for debt management is an interesting mix of elements. She distinguishes between “toxic” debt and nontoxic debt (toxic debt usually has very high interest rates and agreements that put you at the mercy of the lender, and lots of fees – think credit cards) and advises people to pay off toxic debts first, even if some of the toxic debts happen to have a lower interest rate (for the moment) than a secure debt (like a home mortgage). How do you prioritize? Focus on debts that have the potential to cause you even more heartache if you don’t deal with them as soon as possible – like a credit card very close to the balance. If nothing is in panic mode, let interest rates be your guide.

IV: Don’t Avoid Risk … Embrace It, but Sensibly
The best way to invest is to diversify as widely as possible. Don’t have all of your eggs in one basket. Own some cash, some bonds, some real estate, some domestic stocks, some international stocks, some treasury notes, maybe even some commodities or precious metals. This way, if one market tanks, you don’t lose everything. By diversifying like this, you’re essentially betting your future on the productivity of humankind – and if history has shown anything, we’re busy little bees.

V: Your House Is Not a Piggy Bank – Preserve It’s Equity
Weston really recommends not using home equity loans to buy the things you want. Why? When you take out a home equity loan, you increase the amount of risk on your home. If you lose your job or have other difficulties, a home equity loan simply means that you have a higher monthly threshold to leap over just to keep your home, and if you’ve got doubts that you could ever lose your job or face an economic hardship, 2008 should have alleviated those concerns. Similarly, if you’re in the market to buy, buy something smaller than you think you can afford, because the smaller it is, the more likely you are to be able to actually keep it in a downturn.

VI: Saving for Retirement Must Come First
For many people, the 50/30/20 budgeting mentioned in the first part of the book seems a bit much. Saving 20% of their take-home seems beyond the pale. It’s important to remember, though, that some of that 20% refers to saving for retirement. If you’re putting 10% of your paycheck into your 401(k) plan, you’re already halfway to that 20%. Weston strongly encourages everyone to do this, whether you’re three years from retirement or just starting out. Put as much as you can into retirement starting now and don’t let up. The specifics matter much less than the intense focus on saving.

VII: Get a College Education You Can Afford
Studies have shown that an expensive college education has minimal impact on your actual income over the long term as compared to the cost of an education at your local state university. If you get a full ride scholarship to Harvard, great, but don’t mortgage your future under the belief that an Ivy League degree means an instant mountain of cash as compared to the local schools. Stick to your in-state public universities for starters, and supplement even them with community college credits and CLEP credits, which are even cheaper.

VIII: Reserve Insurance for the Big Losses
If you have a healthy emergency fund, insurance should really only exist to cover the biggest losses. Raise your deductibles and lower your premiums, and then compensate for this by having a larger emergency fund. Remember that this is a calculated risk: yes, you’re taking on a bit more risk by doing this, but there’s also significant reward, and if you have a healthy-sized emergency fund, you’re protected against this risk.

IX: Treat Your Marriage Like a Business
The title seems cold, but the idea is good. A marriage is a partnership, and both partners need to agree on goals and how to achieve them. It makes sense for one person in a marriage to be responsible for the day-to-day work of paying bills, checking the mail, and so forth, but the bigger tasks such as evaluating major purchases, setting long term goals, setting budgets, and choosing among different priorities should be decided together and openly discussed. If you feel uncomfortable discussing matters like this, work through that difficulty. You need to be able to work through financial concerns together.

X: Defend Yourself in the War on Consumers
This chapter is a bit political, as it calls for more consumer protection laws and regulations (which some may disagree with). Weston’s idea here is that as an individual consumer, you should always be vigilant about making sure you get a square deal whenever you buy a product or make another personal economic move, but without adequate laws, you’re at the mercy of large businesses that are often in collusion with one another.

Is The 10 Commandments of Money Worth Reading?
I have a handful of books that I recommend to people who are having a money meltdown – The Total Money Makeover and Your Money or Your Life being chief among them. These books force you to take a serious re-evaluation of your entire relationship with money and start from scratch.

The 10 Commandments of Money takes a different approach. Clearly, the audience here isn’t someone who is in an apocalyptic money state, but someone who is simply cautious and concerned about the current economic situation. They’re not convinced that the end of the world is coming, but they’re gun shy enough to want to hedge their bets.

If that describes you, The 10 Commandments of Money is going to be a perfect read as a personal finance primer. Weston’s solid and occasionally humorous writing shines through as always, and it is her strength writing about these topics that takes this book from being yet another personal finance book to being an enjoyable read that I would recommend to someone in that group described above – cautious, but not desperate.

Please take a moment and watch this YouTube video before we get started. I’d embed it here, but the person who uploaded it has disallowed embedding of the video. If you’re unable to watch, the video is a series of clips from the movie Transformers, showing the absurd amount of product placement within the film itself.

What do I mean by that? Characters are often very deliberate about using certain products, like the repeated iPod use throughout the film. The camera angles are chosen to show the logos on various products, like the Hewlett-Packard logos all over the place. Many scenes use giant corporate logos as backdrops, like key discussions that take place in front of a giant Burger King logo.

Quite often, these product placements occur in scenes that highlight a particular emotion.

An intense, exciting scene might highlight a particular product that the maker wants you to associate excitement with, like the individual getting revved up while listening to his iPod.

A sentimental scene might highlight another product that a marketer wants you to feel sentimental about, like the family using an HP computer (ridiculously marked with the HP logo on the monitor) to teleconference with a member that’s far away.

One scene might highlight attractive people (like Megan Fox) eating and include an enormous Burger King logo in the background. If we’re even slightly hungry, our hunger might be triggered and we also see someone being satisfied with food… and there’s a big logo there to remind us who made it happen!

Here’s the truth: it’s not the direct advertisements that infest television and movie watching. It’s the indirect stuff, like this, that is incorporated directly into the program I’m viewing. The emotional tint of a well-crafted movie scene ends with me staring directly at a corporate logo with an emotion created by that movie running through my head and coursing through my veins. Even if it’s not on a conscious level, I make some association of that emotion – excitement, sentiment, humor, joy – with the product or product logo I’m being shown.

That association pops up when I’m making a purchasing decision. Should I buy this item right now? If I’m hungry and I see the Burger King logo, did my hunger not take a little bit more of a bounce?

I don’t mind the use of real-world products in movies or television. The problem comes in when the movies and television programs hit certain emotional chords with the viewer, then proceed to match that emotion with logos and products. Remind me again – am I watching a television program or an advertisement? I’m also not stating that people should never watch television or movies, either.

Instead, I offer the following suggestions.

Be conscious of product placement. If you notice them doing this, then it becomes at least somewhat less effective. You’ll laugh at the product placement and they won’t get the effect that they want from it.

Don’t spend idle time watching television. If you’re sitting around with some time to burn, do something else. Read a book. Do a sudoku puzzle. Get a little bit of exercise. Practice a musical instrument. Meditate. Take a nap. Put on some music and dance. There’s nothing wrong with watching a movie or a television program if you’ve been planning on watching it, but if you’re just idly web surfing, you’re not really thinking about what you’re watching, and that’s a perfect time for product placement to strike.

Use conscious buying techniques. Before you buy anything, wait ten seconds and think about why you’re buying that item. If it’s an item that costs more than $20, give yourself thirty days to think it over (unless it’s an emergency).

Understand why you like a particular brand. “I just do” doesn’t cut it, nor does “All my friends do.” If you can’t articulate why you like a particular brand or product, then there’s likely no reason for it other than marketing.

In the end, the best solution for being successful in the modern world is to be thoughtful about what you’re doing. The more thought and consideration you put into your actions, the more likely you are to find success.

I get some variation on the above email all the time. In fact, I could probably include some variation on this question in every single reader mailbag (yes, I filter the questions a bit as to not get too repetitive).

The story is usually the same. A person went to college, often majoring in a field that doesn’t have enormous job possibilities after earning one’s first degree. Usually, they racked up a significant amount of student loans. They finished and left college in 2009 or 2010. They discovered that the job market was atrocious. They’re jobless, out of college, and trying to figure out what comes next.

My advice to people in this situation varies a bit depending on their specifics, but I usually end up offering a very similar set of suggestions to each of them.

First, if you don’t have a job, get one, even if it’s beneath you. Check the ego at the door. Here in the post-college real world, we don’t spend seven years holding out for management positions. Yes, this means that you and your college degree might be working at Burger King or at the gas station. That’s fine. Just turn your thinking off when you get to work and save your mental energy for later. For a lot of employers, a willingness to work anywhere shows that you have some initiative, which is always a net positive.

Second, if you can’t find employment, make sure your student loans are being deferred. Most student loan programs will defer your payments if you’re under economic hardship, which you are if you’re fresh out of college and jobless. Take advantage of this option.

Third, if you’re living on your own, move back in with Mom and Dad if at all possible. This purely minimizes expenses; it keeps you from going into further debt just to keep the lights on while you struggle to find work. Don’t go it alone. If you can’t move back in with your parents, find someone you can cohabitate with. The key is to get your living expenses as low as possible until you’re on your feet.

Fourth, engage with the professional community in your area or online. Look for someone – anyone – who is involved with your field near where you live. Reach out to them. Get involved with any organizations that might have anything to do with your career path. Participate on Twitter and LinkedIn with regards to discussions about your chosen profession. The more you get your name out there in regards to your field, the more likely it is you’ll make that connection that you need to find a job.

Fifth, live as lean as you can. If you go out, go out to free activities. Hang out at other people’s houses, doing things that don’t require much additional cost. However, don’t spend your time goofing off…

Sixth, spend your spare time working on professionally-related projects. Whatever it is that you’re doing, there’s likely some way you can be honing your skills in your spare time. Build an interesting web app. Write some short stories. Do some volunteer work. Find things you can do even without employment to bolster your resume and your skill set.

Seven, spend additional spare time working on transferable skills. Get involved with public speaking opportunities. Take on seemingly menial tasks for civic organizations that help you build skills you can always use, like filing paperwork or managing a calendar or managing a website. If you find any sort of leadership position, jump on board. Again, even if these aren’t skills that you’ll directly use in your career path, they’re still noteworthy and bolster your resume and skill set.

Eight, look seriously into continuing your education. In some careers, there’s a benefit to earning a masters. In others, it mostly just boils down to prolonging the college years. If there is real benefit in continuing your education, you’re probably in the best possible position to do just that.

Nine, don’t just rely on headhunting sites for job searches. So many people come to me saying that they searched for jobs on a few headhunting sites (like Monster) and gave up when nothing just fell into their lap. A good job search involves such sites as only one small component of a much bigger picture. Tap every social network you’re involved in to see if you can find any leads. Directly ask people you know in that professional community if they know of any entry-level positions.

Finally, keep your nose clean. Don’t spend your time doing anything that will cause you to lose the eventual opportunity when it comes along. Don’t waste your time using substances that will make you have a poor first impression on potential employers. Don’t engage in behaviors that will even have a slight chance of causing you to have a criminal record. It’s not worth the risk. It’s pretty easy to just not hire someone because they have a criminal record or because they smell like some drug or they come off as being drunk or stoned. That’s not a sign of a reliable potential employee.

These steps will make the path from where you’re at now to a healthy career and financial future as smooth as possible. Good luck.

Each week, I highlight ten things each week that inspired me to greater financial, personal, and professional success. Hopefully, they will inspire you as well.

1. My daughter’s enthusiasm for ballet
My three year old daughter started with a community ballet program a few weeks ago. Her passion for music and dancing already seems to run quite deep, but I was stunned at her focus, as young as she is.

At her first practice, all of the children were asked to do somersaults. She couldn’t do one. She tried over and over and over again and just couldn’t get the tumble right.

Over the next week, she voluntarily kept at it in our living room. I noticed her practicing and would compliment her, not on the relative success she was having, but on the fact that she was practicing.

On Thursday, she excitedly wanted to show me something, and she proceeded to execute two perfect somersaults right in a row in our living room.

Bravo. She certainly inspires me to keep focus on the things I want to achieve, both big and small.

2. John D. Rockefeller on perseverence
Sometimes, the things we have to do in life are simply a slog. They’re not fun. They’re repetitive. We’d rather be doing anything else. Rockefeller’s words from 1901 put me in my place this week.

“I do not think that there is any other quality so essential to success of any kind as the quality of perseverance. It overcomes almost everything, even nature.”

Stick with it. You’ll eventually wear it down, and you’ll find success when you do.

3. Charlie Munger on happiness
At the 2010 Berkshire Hathaway annual meeting, Charlie Munger had this to say:

“The secret to happiness is to lower your expectations.”

If you only allow yourself to be happy when things are exquisite, you’ll never be happy. There will always be some flaw. Look lower and you’ll find much in the world to love and cherish and enjoy.

4. The Gettysburg Address
In a lot of ways, this inspired me this week.

Four score and seven years ago our fathers brought forth on this continent a new nation, conceived in liberty, and dedicated to the proposition that all men are created equal.

Now we are engaged in a great civil war, testing whether that nation, or any nation, so conceived and so dedicated, can long endure. We are met on a great battle-field of that war. We have come to dedicate a portion of that field, as a final resting place for those who here gave their lives that that nation might live. It is altogether fitting and proper that we should do this.

But, in a larger sense, we can not dedicate, we can not consecrate, we can not hallow this ground. The brave men, living and dead, who struggled here, have consecrated it, far above our poor power to add or detract. The world will little note, nor long remember what we say here, but it can never forget what they did here. It is for us the living, rather, to be dedicated here to the unfinished work which they who fought here have thus far so nobly advanced. It is rather for us to be here dedicated to the great task remaining before us—that from these honored dead we take increased devotion to that cause for which they gave the last full measure of devotion—that we here highly resolve that these dead shall not have died in vain—that this nation, under God, shall have a new birth of freedom—and that government of the people, by the people, for the people, shall not perish from the earth.

That was the entirety of Abraham Lincoln’s speech after the Battle of Gettysburg in 1863. Brief, powerful, and eloquent. No speech has ever had more impact on me, both from the perspective of how well-crafted the speech is and from the perspective of the message being conveyed on that grave day.

5. The incredible shrinking mortgage balance
Recently, I did a simple comparison of my mortgage balance from January of last year to January of this year. It’s down about 8%, mostly thanks to consistent extra payments. At this pace – and it’s a pace I hope to accelerate – our home mortage will vanish by about 2018.

Watching the debt numbers slide downward always makes me want to jump up and push forward with even more strength.

6. Cezanne, “Arbres et maisons”
I want to live here.

This was painted by Paul Cezanne roughly in 1885.

Many thanks to E and J’s film crew for sharing their photo of this wonderful painting, taken at Musee de l’Orangerie in Paris.

7. “In the Hall of the Mountain King” piano solo
This is what I’ve been working on at the piano as of late.

Seeing good players play these songs inspires me to work harder and better at it.

8. Gordon Pirie’s Running Fast and Injury Free
The link above is to a book I discovered recently, written by Gordon Pirie, which is perhaps the most helpful document I’ve ever read about running. Pirie was a long distance runner from England who won a silver medal in the 5,000 meters at the 1956 Olympics.

This book focused more sensibly and comprehensibly on the mechanics of jogging and running than anything I have ever read. It’s helped me to figure out several mechanical problems with my pace and, as a result, I’ve actually been doing some barefoot jogging in order to adopt a more natural pace.

Pirie had written a first draft of the book and was involved in editing it just before he died, and for now it appears to be in the public domain (or in at least in some state where a late draft of it can be read for free). You can also snag a PDF of the book here.

9. Dog Days Are Over by Florence + The Machine
I have been unable to get this bouncy song out of my head all week. May it keep your head and spirit bouncing, too.

10. Maya Angelou
She puts it very simply.

“Nothing will work unless you do.”

Each week, I’ll present a low-cost meal (or a meal that demonstrates a lot of options for cutting costs) that my family eats for dinner and enjoys. Many of the recipes will be vegan or vegetarian, with options to add other ingredients for non-vegetarians.

Earlier this week, I discussed using grocery flyers to plan meals and mentioned that I’d be using some of the items I discovered there to make this week’s meal.

It turned out that my craving for asparagus was just too strong and I wound up using it as the foundation for a stir fry dish. This one turned out really well and I can virtually guarantee I’ll be making it again when our fresh asparagus starts appearing in April.

One key thing you’ll notice about the above dish is that it uses small cubed tofu as the protein source. Don’t sweat the tofu if you’re not into that kind of thing – instead, ignore that part and skip down to the optional ingredients at the bottom.

What You Need
I actually made a double batch in these pictures (as our family loves stir fry and will eat it for days), but I’ll just list the ingredients that would go into a single batch.

The key to any good stir fry is the vegetables and the flavorings you add. Here, I used one onion, four or five cloves of garlic, three cups of asparagus (with the stems cut about every two inches), a medium bell pepper, and a bit of fresh ginger (it’s optional, but tasty). For the flavoring, I used a couple tablespoons of vegetable stock, a tablespoon or so of soy sauce, and two tablespoons of rice vinegar (if you don’t have rice vinegar, substitute a tablespoon of lemon juice – seriously, it works as a decent substitute, though the flavor of the dish changes a bit). I also used sesame seeds as a topping. You’ll also want to flavor this with salt and pepper and perhaps a bit more soy sauce.

In addition, I suggest making about five cups (cooked) of rice of your choosing. Instant rice works fine.

For the protein in the dish, I use about four ounces of tofu, cut into tiny cubes aboout half an inch in size. If you’re not into the tofu, see the optional ingredients at the bottom.

The total cost of the ingredients in my double batch was an estimated $12.50, since I prorated the cost of many of the ingredients (if you only use a bit out of a big bottle, the cost of that bottle is spread out). That makes the above recipe cost $6.25 in ingredients.

The Night Before (or Early That Day)
Simple – chop up all of the vegetables.

Chop the onion in half and slice each half about ten times.

Mince the garlic cloves.

Mince the ginger – you really don’t need much of this.

Cut the asparagus stalks as a bundle. Even out the tops, then cut every two inches down the stem until you have around three cups of asparagus pieces.

Cut the bell pepper in half, then cut each half into thin strips.

Once you’re done, you can store each of these vegetables individually in the fridge if you’re doing this part in advance.

If you’re using something besides tofu for the protein in the dish (like chicken or beef), chop the meat up into tiny pieces in advance, too.

Preparing the Meal
Actually preparing the stir fry only takes about fifteen minutes if you’re using tofu. If you’re using meat, it’ll take a bit longer, as you’ll cook the meat first and then start doing the rest of the preparation right in the same skillet as the meat pieces.

So, you’ve either got a large empty skillet or a skillet with already-cooked meat in it. In either case, add the vegetable stock and turn the heat up to medium-high until the stock is just starting to boil, then add the onions and saute them for about three minutes, stirring all the time.

Add all of the other vegetables (garlic, ginger, asparagus, bell peppers) and keep stir frying them for another three minutes or so.

At this point, if you’re using tofu, add it. You should also add your soy sauce and rice vinegar (or lemon juice). Stir it again, then drop the heat down to low and cover the dish for about two minutes or so.

You’re done! Take off the lid and add some salt and pepper to your taste. I also like to sprinkle sesame seeds on top, as shown here.

Serve it with rice and some additional soy sauce.

Optional Ingredients
The big thing you can change with this dish is to substitute the tofu for meat. Both chicken and steak would work well for substitution here. In both cases, I would cube the raw meat in advance of the meal, then cook the meat right in the skillet at the start, letting the later liquids deglaze the pan and add to the flavor of the dish.

With stir fry, you really can edit the vegetables however you’d like. Other vegetables that might work well in this stir fry include green onions, spinach, kale, chard, or carrots. Use whatever’s on sale or whatever sounds particularly good to you.

I want to run for mayor of a large city.

I want to publish a series of fantasy novels that appear in every bookstore in the country.

I want to pay off the $300,000 in debt that I owe.

I want to start a restaurant chain.

I want to visit 100 countries by the time I’m 40.

I’m a fan of overly audacious goals. Setting a huge goal for yourself can shock you into action and sometimes make you go beyond what you believe you’re capable of.

In 2002 and 2003, I worked on a software development project that was far, far over my head. During the course of that project, the technical advisor (the one helping me figure out the actual specs of the software) essentially quit, leaving me to not only write all the code, but also design the interface of it based on what the customers would want.

Waiting around for additional hires was not an option. I either had to move forward or the project went under and I would be looking for another job.

Add on top of that the fact that I was writing all of this in a language that I was largely unfamiliar with (as I was under the impression I would have plenty of room to learn on the job).

When I realized the scope of what I had to do, it was almost overwhelming.

Not only did a two man team manage to pull it off (myself and a database expert), the project is still in existence (albeit in very modified form) to this day, using largely the same code I wrote in 2002 and 2003.

How did this happen? There were three real factors involved here, in my opinion.

First, a big part of this project was the personal challenge. I wanted to show myself that I could do this and, in the end, I was really the person that I was accountable to. If I failed without really trying, that sense of failure would hang over me for a long time. If I failed with a sincere effort – or better yet, succeeded – that would stick with me as well.

Second, a spectacular failure was worth far more than no action at all. I realized pretty quickly that if I gave this project my all, I would still get something out of it even if it failed. I would learn a great deal of domain knowledge. I would learn some significant skills. I would have an entry on my resume and a good story to tell. I would also learn some lessons from failure.

Finally, I had supportive people in my corner. The people up the food chain from my project were pretty supportive of what we were working on. They wanted us to succeed. They cheered us on when we needed it. They took care of peripheral things that would have just distracted us. They gave us carte blanche to use our own judgment, but were willing to provide input when we asked.

To be sure, not every big, audacious goal works. Any enormous goal you set for yourself needs to have a few key elements.

It must not seriously damage your life if you fail. No goal is worth risking the key things you need to have in your life. No goal is worth sacrificing your childrens’ needs or the well being of your marriage or your closest friendships or your career. If the worst case scenario of a goal is apocalyptic, it is never worth it. If you’re setting a big goal, spend some time teasing out the worst case scenario and make sure that you can roll through it. Often, this means that you need some advance planning before you leap into your big goal.

Ideally, you gain some degree of benefit if you only partially succeed – or even if you largely fail. For example, if you want to travel to 100 countries by the time you’re 40, but you only make it to 80 of them, you’ve still succeeded big time and you have a huge warehouse full of stories and memories for the rest of your life. If you want to pay off $300,000 in debt in seven years but only get rid of $240,000 of it – you got rid of $240,000 in debt. That’s not a bad thing.

It must be met with the support of key people. If you’re married, this always includes your spouse. It can also involve your coworkers, other family members, and close friends. The people you rely on most need to be in your corner when you approach something audacious.

The real fire has to come from within you. You’ve got to want it so bad you can taste it. If you don’t have the fire to make something happen, it won’t happen. Think of those moments in your life when you’ve most wanted something. That’s what this goal needs to feel like within you, because without that fire, you won’t go beyond what you think you’re capable of to reach that goal.

Set a big goal for yourself, something you’ve always wanted for your life. Throw yourself into it. You might be surprised at what you find along the way and on the other side.

In today’s reader mailbag, a reader asked me if the questions I get for the mailbag make me depressed because, frankly, many of the stories I hear from readers represent a grim financial story. I told him, quite honestly, that most of the questions actually make me happy. They fill me with hope. I think that answer may have surprised some readers, so I thought I’d elaborate on that idea a bit.

I tend to think there are five fundamental ingredients for personal finance success. And, no, having a lot of money in your pocket is not one of those ingredients.

My idea behind these three ingredients comes not only from my own experience, but from reading the success stories of a lot of Simple Dollar readers over the years. Some of them were rich and some of them were poor. Some of them had great jobs, while others were unemployed. Some of them were old and some of them were still in school. Some of them were highly educated, while others didn’t have even a GED.

All of them had a few key things in common.

A willingness to not blame others Rather than blaming society, blaming their employer, blaming their mother, or blaming their spouse, successful people look to themselves for answers. Yes, quite often other factors in their life were brutally unfair to them: a cheating spouse, a thief in the night, a cruel employer, an illness, an injury, a deceased partner, or countless other things. Yes, they realize that others sometimes get the breaks. However, they didn’t waste their energy blaming that unfairness for their problems. Instead, they looked at themselves and asked themselves, “All right, this is the situation, so what do I do to make the most of it?”

A willingness to learn Successful people know that they don’t have all the answers, so they seek help from others. They read books. They ask questions. They get lots of answers and put things together for themselves. The sheer act of writing in to the reader mailbag shows that they have a willingness to learn (at least, most of the time).

A willingness to work Successful people also know that when you want something, it’s not just handed to you. You have to work for it. You can’t just wake up one morning and have the job of your dreams. You can’t just turn over one day and find that all of your financial and personal problems are solved. You have to work for these things – and often, you have to work for a long time for these things and see failures along the way. That’s part of the equation.

A willingness to change People are creatures of habit, and changing those habits is something that we naturally resist, at least a little. If you want to be successful, though, you have to be willing to upset the apple cart. You have to be willing to walk away from personal demons and hurtful relationships. You have to be willing to completely alter your daily routines. You have to be willing to adopt new routines, even if they’re painful ones.

A goal This is the last of the five key ingredients, and it somewhat rests on the shoulders of the others. A goal means that you’ve clearly defined where you want to go. You’ve written it down, worked it out again and again in your mind, and developed a plan for reaching that goal.

No matter where you are at financially or personally, the path to where you want to be rests on top of these five things.

So why am I hopeful when I work on the Reader Mailbag? Most of the readers who write in are doing at least some of these things. They’re taking command of their own situation, learning more, and determining where they want to go. Some of them don’t have all of these pieces in place, but they usually have enough elements of this picture that I feel optimistic about where they’re heading.

What’s inside? Here are the questions answered in today’s reader mailbag, boiled down to five word summaries. Click on the number to jump straight down to the question.
1. Infant car seats
2. Roth and 403(b) questions
3. Paying off mortgage early
4. Managing a pay increase
5. Bonds owned by the deceased
6. Using bonuses
7. Depression and the reader mailbag
8. Paying off credit cards efficiently
9. Paying for nursing care
10. Handling a small debt load

I’m currently fleshing out my travel plans for the year and making needed arrangements. I have a trip to Seattle and a trip to Indianapolis on the docket this summer, possibly with a stop in Chicago as well early in the summer.

The trip to Seattle is going to be the most interesting of the lot, I think. We’re currently planning on flying out of Minneapolis, taking our three young children on their first plane flight. I can’t think of anything more fun than corralling a five year old, a three year old, and a one year old through airport security!

Q1: Infant car seats
How did you decide which infant car seat to buy? Did you use the same one for all 3 kids?
- Amanda

In 2005, we purchased a Graco SnugRide, a rear-facing seat that worked very well for us. We have used this seat for all three children, but will be retiring it after our youngest outgrows it regardless of future child choices, as the environmental wear on the plastic makes such seats less safe after five to six years of use.

However, we have heard – and some reviews reflect this – that Graco made some changes to their SnugRide seat in 2008 (or so) and the seat is not as highly regarded. If we were to have another child, I would research the seat all over again.

Our original seat research was based heavily on Consumer Reports comparative testing, which is what I would do again. The complaints a couple years ago about Consumer Reports baby seat testing mostly came down to their tests being too rigorous, which, when it comes down to the safety of a baby, I’m fine with.

Q2: Roth and 403(b) questions
I have question regarding Roths. Lets’s talk about roth IRA first. I always get confused by what you can withdraw. I think you can withdraw your contributions anytime- is that right or you need to wait 5-yrs before you can withdraw the contributions? If the 5-yr timeline is true- how does it work? Let’s say I opened a roth IRA in 2006 and was contributing to the max till 2010. So in 2011 can I withdraw all of 5×5 =$25,000 contribution if I want or would it be only the 2006 contribution which is $5000.

The second component concerns the roth 403b. My employer recently started offering roth 403b option. I know I can convert my vanilla 403b to the roth flavor by paying taxes from outside the retirement funds. But then can I withdraw the contributions in 5-yrs if I want since I have already paid the taxes or that provision is for roth IRAs only?
- William

You can withdraw your contributions to a Roth IRA at any time. The five year restriction means that you cannot withdraw gains within five years of opening a Roth IRA without paying a tax penalty, a restriction in addition to the age restriction of being 59 1/2 years old.

The rules (in terms of withdrawing contributions) are the same for a Roth 403(b). You’ll want to contact your investment company that holds the 403(b) for specifics on how your employer’s contributions will work, though.

My concern with this is that you’re looking at a Roth as a savings account of some kind rather than as a retirement vehicle. Remember that once you withdraw contributions, you cannot put them back. You can only make new contributions up to the annual limit. This can seriously dent your retirement plans.

Q3: Paying off mortgage early
My husband died in Oct. and my monthly income has been reduced substantially. I have $421,000+ in IRA’s and $119,000+ in a savings account. My monthly income is $2176. I’m not sure what my tax bracket is based on the annual income of $26,112. I have no debts other than my house but the utilities, insurances, utilities eat up most of this money

My question is, Does it make financial sense to pay off the mortgage using a combination of funds from the two sources? I know I will pay taxes on the monies from the IRAs (in 2 1/2 yrs I will need to take the distribution) but saving over $1,000 a month is very appealing. I don’t know what the tax bite will be but I don’t think there are any funds that will return $12,000 annually. I am only getting 1 1/2% on the savings acct. so it would seem to make more sense to take the bulk of the repayment from that acct., leaving myself an emergency fund.
- Ellen

It sounds to me like your largest concerns are monthly cash flow and being sure that your money will last through the end of your life. Given those two concerns, I would pay off your house now rather than later.

In terms of cash flow, it’s a no-brainer. If you pay off your mortgage, your pile of monthly bills will be much smaller than before.

In terms of long-term finances, it’s a mixed bag that depends heavily on what happens to you in the future. Obviously, paying it off now puts a significant dent into your retirement money, but after that, the monthly impact on your savings will be much less. At some point (in about twelve years), you’ll have saved an amount equal to the total balance of your mortgage by paying it off now and, after that, you’ll be in better shape because of the early payoff.

I’d pay it off now, given all of the concerns together.

Q4: Managing a pay increase
I recently just got a new job that has increased my income significantly.

With my new increase in income do you recommend restarting my contributions to my 403b?
- Justin

If you’re following Ramsey’s methods, you would keep that retirement level at 0% until you pay off all high-interest debt, and most likely all of that credit card debt would be high interest debt.

I think that’s a reasonable plan if you’re committed to remaining debt free. If you look to a future without debt, then getting rid of that debt as soon as possible is probably the best long term financial move.

If any of your debt is below a 10% interest rate, though, I would pay that debt off last and restore retirement savings before tackling it. The reason is that once you drop down to interest rates that low, you’re not really beating your potential retirement returns by much and you’re better off, over the long term, having money in the bank.

Q5: Bonds owned by the deceased
About a year ago my wife’s Aunt gave her some US bonds that she and her husband had. These bonds where in her husband’s name with her name on them as co-owner. The husband past about 17 years ago and the Aunt passed last year. What does my wife have to do to either cash them or put them in her Name. These bonds are before 1976 and there is 10 of them in $1000 dollar denominations.
- Evelyn

You need to have the bonds reissued for them to be in your wife’s name. The government makes this easy – here are the forms to do just that.

Depending on the bond type, it’s going to be well worth your while to get the paperwork filled out so you can cash those bonds in. They should be matured by now, meaning that as soon as you get the paperwork in, you’ll have the cash!

Q6: Using bonuses
I am by no means a financial guru, but pride myself in reading finance books when the opportunity presents itself. I carry no debt, I religiously abid by the 7-10% of my credit limit rule since I was first issued a credit card, and have multiple months of living expenses available in a savings account in case of emergency. My question for you, however, has nothing really to do with me. This past holiday season as I was visiting with my parents, my father informed me that he received a $31k bonus from work this year. He works in medicine, and this bonus is roughly equivalent to a third of his annual salary. When asked what he was going to do with this money, he informed me he was putting it towards investments for my parent’s future. Although I didn’t say anything out loud, I couldn’t help but wonder if the money would be better put towards paying off the remaining $100k of their mortgage. After taxes, his bonus could pay off nearly 1/5th of their remaining debt. Every book I’ve read, including your website, has always pressed illuminating debt- especially large sum debt. In this post-holiday time for employed people, is it better to use bonuses for investments towards futures, petty cash, or paying off substantial debt such as a mortgage?
- Marc

When you get right down to it, this is really a matter of “six in one hand, half dozen in the other.” As long as you’re not spending the money frivolously, both debt repayment and investing are very positive personal finance moves. It’s like chiding someone for eating carrots instead of broccoli when they used to be gorging on hamdogs.

That being said, if you’re trying to choose between these options, there are a lot of things to look at. What are the interest rates on the debts? What are the rates of return on the investments (over a long history)? Is the investing going into a tax-deferred retirement account? A Roth IRA?

I think your father is making a good move here. Whether it’s the best move is hard to tell, but it is a good move. If you want to plant the idea of debt freedom in his head, drop a copy of The Total Money Makeover on him.

Q7: Depression and the reader mailbag
How do you not get depressed from the stories people write to you? Sometimes I get miserable just reading them, and of course you get many many more than you put in a reader mailbag. How do you deal with hearing about so much hardship?
- Colleen

Usually, reader mailbag emails make me feel good. While the people may be in a bad situation, they’re actively involved in them and seeking a solution to them. They’re actively involved in their finances and working for a better life. That’s awesome.

What makes me depressed is negativity. When people bash themselves, it’s bad. When people bash others, it’s worse. When people manipulate others for their own ends, it’s even worse.

I see plenty of that, and I try my best to avoid giving it breathing room. Still, there are times where I simply turn away from my computer when the negativity gets overwhelming for me. I go play with my kids or something like that.

Q8: Paying off credit cards efficiently
I am currently 24 years old and earn about $50,000 per year. I am currently about $15,000 in credit card debt and $15,000 in student loans. I have 3 credit cards, one with about $10,000 with a high interest rate that I am trying to pay off. The second card has about $4,000 and the last one has about $1,000. I try to pay $800 per month to the first card and about $200 to the second and $100 to the first. After taxes, I make about $2,800 per month and after these credit card payments, I pay $950 for rent and about $200 in student loan payments, which total up to $2,300. The rest of the $500 that is left, I use for groceries, transit and miscellanous spending. I am trying to pay off my credit cards as fast as possible. Is there a more efficient way to be doing this?
- Sarah

In terms of getting rid of your debt mountain as fast as you can, you’re using the right approach for the long term. However, it’s going to feel like you’re not making any real progress for a very long time if you’re focusing on the highest balance debt first, even if it’s the highest interest debt.

Another common method for paying down debt is to pay the smallest debt off first. The reason for this is so that you can feel the success of eliminating a debt much more quickly, though it usually puts you just a bit behind the overall pace of tackling your high interest debt first.

In terms of the math, you’re doing the right thing. However, if you feel defeated by it, there’s nothing wrong with spending a couple months throwing the extra payments at the smallest debt so that you have the thrill of seeing a debt vanish.

Q9: Paying for nursing care
The issue I really want your advice about is paying for nursing home care if it comes to that. I have told my father that I won’t consume my savings for that purpose, and that they’ll have to liquidate their assets and depend on Medicaid if they need nursing home placement, even though that will stop the income right when they need it the most. I feel guilty about that, but I’m 8 years away from retirement age myself and not in the place I should be even if I didn’t have this unexpected burden. I don’t want to get to the end of my life and run out of money because of his bad decisions. I’m hoping you’ll reassure me that protecting myself is a justified decision.
- Amy

I don’t think you’re necessarily wrong in doing this.

A big part of decisions like this have to do with the relationship you have with your parents, your own moral values (often based on what you learned from your parents), and the culture you grew up in. There is no inherent right or wrong in such a choice.

My only comment is that if you feel guilty about your choice, then you should probably do some more soul-searching within yourself about your issue. I cannot absolve your guilt.

Q10: Handling a small debt load
I’m 48 years old, married and one teenage son and have found myself in $12,000 of debt (car, veterinary bills, etc.). My simple question (ok…maybe it’s not that simple) is: is it smarter to work at building up my emergency fund or paying off my debt faster than I currently am (it used to be $18,000 so am making some progress, albeit slow)?

Just curious on your thoughts.
- Kelly

My usual recommendation is to first have a small emergency fund – typically $1,000. Once you have that, focus on paying off your debts. If you have an emergency, pay for it out of the emergency fund, then focus your next few months on building that emergency fund back up.

The idea is that it’s very important to break your routine of using debt to pay for everything in your life, particularly emergencies. It’s a crutch that just keeps burdening down your future. An emergency fund helps to break that crutch.

I think you’re making good progress, even if that debt reduction took a while. With each step you take, it’ll become an easier journey.

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.