For the first time in quite a while, I was watching a live program on television, meaning I couldn’t just skip the commercial breaks if I so chose. As I sat there watching the advertisements, I began to realize something interesting.

Almost all of them painted a picture of some sort of idealized lifestyle.

I watched a minivan commercial that laid out some sort of idealized version of parenting.

I watched a body spray (I think that’s what the product was) commercial that laid out some sort of early twentysomething clubbing fantasy.

I watched a travel commercial that seemed to lay out some sort of “girls out on the town” dream.

There were similar beverage commercials and other product commercials that did exactly the same thing: they simply painted a quick sketch of some sort of “better than reality” version of someone’s lifestyle or significant aspect of their lifestyle.

Sure, some people might jump on these commercials and immediately rush out to buy the product, but I don’t think that’s the real problem with them. Most people have enough sense to realize that these are just marketing pitches.

The problem comes from the sheer repetition of them and the image they spell out of an unattainable lifestyle.

The parenting-themed ads have seemingly well-rested parents, cute and well-maintained children, and an affluent lifestyle. I haven’t been that well-rested since 2005.

The young adult ads show highly attractive people in a club scene. The last few times I was at a club, it was probably a good thing that it was so dark.

The last time I had a “boy’s night out,” we wound up sitting around a table playing cards and shooting the breeze. I don’t think I’ve ever been inside of a limousine.

Here’s the thing, though. I don’t really care about these lifestyles. For the last few years, I’ve been genuinely happy with my own life.

Several years ago, I wasn’t that happy with my life. Unsurprisingly, it also coincided with a period where I spent far too much money on things.

In the end, I spent those years aspiring to some sort of different lifestyle. I knew that where I was at now didn’t make me happy, so I spent a lot of time and money seeking something that would bring me more happiness.

Lo and behold, these advertisements are serving that desire on a silver platter!

In fact, it’s not even so much the products that are being sold in these specific ads that convinces people to buy more than they should. It’s the notion that, yes, your particular lifestyle can be better than it is now.

When you have that notion in your head – that your current lifestyle isn’t good enough in some way – one of the easiest ways to attempt to fix it is to buy more stuff.

Think about this whole picture for a second and you come around to some interesting truths.

First, if you’re unhappy with your life, buying stuff won’t change that. Replacing the stuff around you with “better” versions of the same stuff doesn’t change your life (outside of a short term thrill). It just continues the same old life.

Instead, if you’re unhappy with your life, only a change in what you do can really fix it. This may involve changing your circle of friends. It may involve how you spend an ordinary day. It may involve switching jobs. It may involve radical changes of your spending habits. It may involve a visit with your doctor. Buying more stuff won’t be the fix.

For me, I realized at some point that most of my actions were simply causing short bursts of happiness that quickly gave way to an unhappy life underneath. Buying something new caused a burst of happiness that vanished quickly, as did many of my social activities. It wasn’t until I started focusing on why I was unhappy underneath (and a lot of that had to do with a sense that I was somehow inadequate) that I started turning that ship around. I spent far less money and felt far more happy – and I still do.

Thanks to many of you who wrote to me expressing well wishes for our infant son. He’s doing much better today. On Monday, he was very lethargic and didn’t want to do anything but cuddle with me. On Tuesday, he acted normal when he wasn’t sleeping, but he slept a lot. Today, he’s acting pretty much normal, except very hungry. He had eaten twice before 7:30 AM.

Here are some personal finance articles of interest from around the ‘net.

My Ketchup Taste-Test: Upset! Guess Which Brand Topped Heinz. The interesting thing is that if you compare most ketchups in the store, ingredient for ingredient, they’re identical. If there’s any variation, it’s in a slight alteration of the proportion of the ingredients. (@ len penzo)

This is a great argument for “time in lieu” instead of overtime pay. (@ money cactus)

Caring for Aging Parents This is a category I’m slowly inching towards. I feel financially prepared for it. I do not feel emotionally prepared for it. (@ get rich slowly)

The Most Critical Hour of Your Day: How to Set Yourself Up for Success I’ve been working hard on optimizing this part of my day, but so far it’s been hard to do it due to lots of interruptions and other events outside my control. (@ pick the brain)

How to Make Powerful Connections Through Social Media The power of social media isn’t just in keeping tabs with the people you know. It’s getting to know the people you want to know. (@ dumb little man)

As I’ve mentioned many times on The Simple Dollar, one of our most frequently-used methods for saving money on food is to simply create a meal plan each week based on the sales found in grocery flyers. I then take that meal plan and prepare a grocery list based on it, which naturally includes many of the sale items found in the flyers.

For me, this approach to meal planning was vastly different than the way I once did it and, to be frank, it took some getting used to. I tend to learn such things through repetition and example, seeing what others have done and simply trying it myself until it becomes natural and normal.

With that in mind, this week, as I was working on my family’s meal plan, I decided to simply make a post outlining the entire process, from meal plan to grocery list, so you can see clearly how the entire process works and perhaps imitate it yourself for food preparation in your own home.

Getting the Flyers
Many grocery store chains carry digital copies of their flyers on their websites. If your preferred grocery store does not, you can often find a copy of that week’s grocery store flyer inside a copy of the Sunday newspaper in your area.

I tend to use digital flyers for the grocery stores I most often visit. I tend to split my grocery shopping between Fareway and Hy-Vee – the former has the best prices on many goods, but the latter often has a better selection for specific items I might need. Since I often do the bulk of my grocery shopping at Fareway with just a quick stop at Hy-Vee at the end of the trip to pick up what I couldn’t find at Fareway, I check the websites of both stores for flyers (hyvee.com and fareway.com).

Identifying Interesting Items
As I browse through the flyers for each store, I try to look for items that are either on sale low enough that they stand out to me or ones that stand out for flavor reasons, inspiring me to get into the kitchen and cook. I tend to particularly focus on produce deals.

In the current flyer at fareway.com, I found these sales worth noting:
Navel oranges, ten cents each
Fresh broccoli, $1.49 lb.
Baby portabellas, $1.29 lb.
Red potatoes, $1.99 for 5 lb. bag

In the current flyer at hyvee.com, I found these sales worth noting:
Asparagus, $2.97 lb. (expensive out of season, but sounds delicious)
Mild yellow onions, $1.39 for 3 lb. bag
Baby red potatoes, $0.69 lb.

Finding and Choosing Recipes
I know that I need to plan for five dinners in the coming week, as well as making sure that we have things on hand for breakfasts (like plenty of oatmeal, for example) and a few items for backup lunches in case we don’t have enough leftovers to cover our lunches.

I usually use a recipe search engine like allrecipes, putting in the interesting ingredients I found above to search for simple recipes I can make that the family would like (with an eye toward my own dietary needs, too). I often also go through our cookbooks and recipe box to see if we have anything interesting that matches well.

I wound up with several recipes worth using, including a portabella penne, an asparagus ratatouille that lets me use the leftover tomatoes from some cooking last week, and a recipe that I’ll be using in my Friday meal post.

Building a Meal Plan and a Master Ingredient List
I usually come up with an actual meal plan at this point, slotting in the various meals for various nights. The biggest reason for doing this is so that I can be sure to use the fresher ingredients as quickly as possible, to plan ahead in terms of tasks that need to be done (like soaking beans overnight), and to make sure I can roll over elements easily from one meal to the next, like having both meals with onions close enough together that any extra chopped onion doesn’t go bad in the fridge.

I also prepare what I call a “master ingredient list.” This is basically a list of all of the ingredients in this week’s recipes sorted by the place where I’d find it in our kitchen – refrigerator, freezer, top pantry shelf, etc.

I do all of this on the computer, usually using Google Docs. It’s much easier to just type all of this stuff out than it is to actually write it down.

Turning the Ingredient List into a Grocery List
When I have a “master ingredient list,” I take it around the house to each of the places I’ve grouped things by on the list, then I cross off the things we already have. This also makes me check up on the quantity of stuff we use frequently, like milk, and encourages me to add such things to the list.

Once I’m done hitting the spots in our kitchen, the grocery list is ready to go. Conveniently, it’s already pretty well organized, as I marked the sale items on the list so I know what store to buy it in, and all of the refrigerator and freezer stuff is already grouped together for me.

I simply hit the grocery store, unpack everything, and then just follow that meal plan throughout the busy week.

Yep, under the kitchen sink.

Like a lot of people, the cupboard under our kitchen sink is chock full of all sorts of household items. A few days ago, I was searching for a replacement water filter, as we have an under-the-sink water filtration system and the filter was due to be replaced. While I was digging around under there, I kept pulling out all sorts of different things and, when I finally found the filter (and replaced it), I looked around to see that I had covered a significant piece of the kitchen floor with stuff.

As I started packing away these items back under the sink, I realized that virtually all of them had something to do with saving money. The items under there were all either bargain purchases, reused items, or something else that showed off a particular money-saving tactic. Thus, I thought I’d share what you might find under the sink.

Used bags from the store Yes, we’re canvas bag collectors, but at times, we still accumulate paper and plastic bags from various stores. Rather than just tossing these into the trash, we keep them under the sink. Then, when we need a small bag for some purpose (like emptying the trash in the bathroom or in the office), we just grab one of these instead of using a full trash bag that we actually paid for.

Aluminum cans and bottles Under the sink, we keep a small trash can that stores our empty aluminum cans and plastic bottles. We live in an area that doesn’t have a recycling program; instead, the state has a five cent deposit on such cans and bottles, which you can get back if you return them to a grocery store or a recycling center. We typically donate ours, often to the community festival fundraisers in our area.

An old wire shelving unit We picked this up at a yard sale for a dime several years ago. It’s simply a wire shelf, coated in plastic, that works perfectly as a shelving unit near the back to increase the capacity for storing things like cleaning supplies (yes, we have a childproof latch on this cabinet).

Ancient, hole-filled dish rags and dish towels I have these in a small container in a key spot – right at the bottom of the bend of our sink drain. This way, if we ever have a sink leak, the water will at first drip onto the rags and it won’t run all over the place (at least not at first). Each time I’m under there, I just stick a finger onto the small bundle of rags to see if they’re moist and, if they are, I know I have some plumbing work ahead of me. Having this little bundle of rags that would otherwise be thrown out is a great simple prevention against leaks destroying our wood cabinets and the stuff we store inside.

Old mismatched plastic cups We have a few of these under there as well, repurposed as instrument holders. For example, one cup holds a pair of rubber gloves, which turns something difficult to store into something easy to store. Another example: one of them has a …

Couple of old toothbrushes, which we use for cleaning grout and hard-to-reach spots. When a toothbrush is getting too worn out for oral use, we just clean it really well and toss it in a cup for later use for cleaning.

Water filters … in bulk Rather than buying individual filters for our water filtration system, I bought a dozen of them in bulk straight from the manufacturer, saving about 75% per filter. The filters are good for ten years and we replace a filter every six months, so this bulk purchase basically adds up to buying three filters at the price I would get them locally, then getting nine free. Bulk buys on things like this are almost always a good idea, as you can often find tremendous deals if you’re willing to buy lots of the item at once.

Once you start thinking frugally, you can find opportunities for reuse and savings in even the most mundane places.

This past weekend, our infant son fell quite ill. He got a very high fever that kept spiking up to a worryingly high number, then falling a bit, then spiking again. He was completely lethargic. He seemed most content simply resting with his eyes open while being held, which is as far away from his usual chattering and clapping and noisy and boisterous self as can be.

At the same time, we found out that an old friend of ours (“Walt,” from an old post) was in hospice care. We have had difficulty staying in touch with him since our move because he was fairly reclusive. While juggling our child’s illness, we tried to find out where he was staying so that we could visit him, but shortly after we found out, we learned that he had passed away from liver cancer.

Did I spend enough time with Walt? My wife spent more time with him than I did over the past few years, checking in on him to make sure he was doing all right.

Is my son going to be okay? The warmth from his cheeks often felt so hot against me.

All of the bustle in the world just stops sometimes. I have so many ongoing concerns, yet all of those seemingly important concerns just melt away when things like these happen.

What’s really important, then?

Is it more important to buy another computer game off of Steam, or to spend an hour visiting an old person whose week you’ll make just by visiting them?

Is it more important to hold your healthy child for a moment and tell them that you love them, or to pay no attention to their childish games while you’re busy watching the big game?

So often, when you start cutting things down to what’s really important, you begin to realize that most of the stuff you spend your money and time on really doesn’t matter all that much. There are so many other worthwhile and genuinely valuable things to do with your time, and often that leaves your money there in your checking account to make it much easier to take care of yourself.

Goodbye, Walt. Thanks for a final lesson that I’ll remember deeply.

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. Fee-free prepaid debit cards
2. Peer-to-peer lending
3. 401(k)s and dividends
4. Favorite board games
5. Borrowing money and cultural conflicts
6. Preparing for a home purchase
7. Making financial learning fun
8. Super Bowl predictions
9. Dietary changes
10. Target Retirement fund? Or not?

After keeping an electronic journal for about twelve years, I decided, at the start of 2011, to switch back to using a paper one. Why? For conciseness.

Whenever I would make a journal entry electronically, I was able to go on and on and on… and on… and on. Because many of the entries were so long and rambling, I had a hard time really grasping what I was deeply concerned about or what was really going on in my life at that point when I would look back at these entries.

I’ve been using a pocket Moleskine diary which lets me get about 125 words in per entry, in handwritten form. This does two things. First, it keeps the daily entries short, meaning that they’re distilled down to something readable and manageable. Second, the art of handwriting makes me think much more carefully about my word choice.

The entries so far have been so much better (in terms of re-readability) than the long wandering diatribes of the last several years.

Q1: Fee-free prepaid debit cards
I’ll be moving out of state soon and want to manage expenses related to the move. I’d like to get a prepaid debit card, load it once with the amount I’ve dedicated to the move, and then cancel it easily after I’ve used all the money on it. Are there any cards out there that don’t have fees associated with them and are easy to cancel? I plan to use all the money on the card within the next 3 months so I don’t want to pay any fee associated with holding the card longer than 30 days, or any transaction fees etc. I also need to be able to cancel it easily and I know some of them are extremely difficult to cancel.
- Maria

I think you have to choose one or the other.

You can easily get prepaid debit cards that aren’t tied to your identity at all and carry the Visa logo on them for a roughly 5% service fee up front. You can just use them pretty much anywhere on the planet until the balance runs out, so after you take care of moving expenses, you could use them for groceries or gas. Of course, the problem is the 5% upfront fee.

You can get a much lower fee than that, but you have to tie it to your identity and, as you noted, it can be difficult to cancel such cards.

Honestly, why not just put the cash in an online checking account like ING Direct Electric Orange, get the debit card issued for that account, transfer whatever money you wish to that ING Direct account, and just use that for this purpose? That’s what I’d do if I wanted to keep money separate like this.

Q2: Peer-to-peer lending
I was searching your site today for your opinion of P2P lending sites such as lendingclub.com and prosper.com but could not find anything. It’s definitely a riskier investment but I thought this may be another way to diversify my investment portfolio. What do you think?
- James

Quite honestly, if I were going to invest my nickels and dimes into peer-to-peer lending, I’d probably do it with Kiva and not worry that much about a return.

From what I’ve seen, on such peer-to-peer sites, the returns on the few good loans they offer are really low, while the failure rate on the higher risk loans are so high that you’re going to have a challenge making a good return through all that noise. From my eyes, it becomes akin to gambling at that point, since you really have limited information on who or what you’re investing in.

If you like the idea socially and conceptually, go ahead and use them, but view it as a very speculative part of your portfolio.

Q3: 401(k)s and dividends
Why don’t 401k plans pay dividends, in the same manner as funds held at other institutions?

My husband and I are in our 30′s and have each had several jobs at various corporations throughout our careers. I have worked for a teeeny tiny mom & pop, and am currently working for one of the largest corporations in the world. At no point have any of our 401k plans ever paid out a dividend. The individual share prices rise and fall with the markets, but that’s it. So the only way to increase our balances is to add more funds.
- Tanya

Many investments within many 401(k) plans do pay dividends. The exact mechanism varies a lot, however.

What you’re probably seeing is that you’re invested in funds that reinvest the dividends within the fund automatically, which raises the value of the investment. The value of your dividends is reflected in an increase in the sticker price of the shares you hold rather than in a dividend payment.

You’ll want to look much more closely at the statements and documentation provided to you by your 401(k) investment house.

Q4: Favorite board games
You obviously play a lot of board games, and you regularly offer recommendations for “starter” board games to others. What are your favorites, though?
- El

7 Wonders, my favorite short game, is a game of competing civilizations. Each player controls one civilization of the ancient world and your goal is to essentially create the most culturally, militarily, and scientifically adept civilization. It’s all card driven and the game takes between fifteen and thirty minutes.

Modern Art, my favorite medium-length game, is a game in which players are speculative art brokers. Throughout the game, the players take turn auctioning off paintings to the other players, collecting the proceeds from the auctions and then spending those proceeds in other auctions. Painters who have more paintings sold will have more valuable paintings at the end of the game, but you don’t know (for sure) what paintings will be sold throughout the game because everyone has a hidden hand of paintings that they will sell (sold paintings stay face-up on the table). It takes about an hour and fifteen minutes to play and is heavily an exercise in reading other people and convincing them to pay more than they should for the painting you’re selling.

Le Havre, my favorite longer game, is a game that basically simulates the growth of a port city in France. You’re an investor who invests in buildings and ships in order to take best advantage of this growth. Unlike Monopoly, this game has a fixed number of turns, so the only variation in the length of a game is the slow or fast play of the players. It plays very well as a solo game (taking about 60 minutes) and works with up to five people (which takes about three and a half hours).

Of course, ask me again in six months and you might have a completely different list.

Q5: Borrowing money and cultural conflicts
My boyfriend and I own a home together. We are waiting to have the cash for our dream wedding. However we plan to go to City Hall and get a marriage license before I start my second graduate degree in August.

Our families have developed great relationships with each other. My boyfriend’s mom has been wonderful to me, and I would like to keep things good like they are now.
- Lorrie

To me, the answer to this whole problem would come down to whether or not your boyfriend’s parents can easily afford this expense. If it is not going to significantly burden them, then take advantage of the opportunity.

On the other hand, if it is going to significantly burden them, then you may be opening the door to some significant challenges down the road and may want to look at student loans instead.

I usually encourage people to not borrow money from family members, but I think if there is an exception to that rule, it’s a wealthy older relative loaning money to a young relative who is a student to pay for tuition. If you’re actually getting married to this fellow, then his mother is family.

Q6: Preparing for a home purchase
My fiance and I are buying a house in August or September (our lease is up August 31). We live in metro Boston so our budget is probably going to be about $350K. In liquid assets right now we have about $36K for a down payment, or just over 10% (this includes me wiping out my new car and rainy day money). He’s admitted to me that he’s not good at managing money, since, in his own words, “I’ve been overpaid since I started working”. (He was making more at at his graduate internship than I do now.) We’ve compared numbers and have been talking about ways to make this work (PMI, automated savings, etc.) but he wanted me to advise him on a course of action for the next six to eight months, money-wise. He overpays his car loan (only $325/month) when he thinks of it, and throws the occasional $500 or so into savings when he thinks of it, but I’m not sure what to tell him besides “stop buying lunch at work!” What advice do you have for me to pass on?

If it helps, he makes about $70K as a software developer for a huge info security company, and I make just over $38K as an admin assistant for a consulting firm. I also have part-time retail income that goes directly to my emergency fund. We both have good credit scores: mine is in the 760s and his is probably closer to 800. I’m 24 and he’ll be 26 next month.
- Jessica

A person has to be open to learning about personal finance before any such material is of any use at all. I’m not sure he’s open to learning. I think he just wants you to tell him what to do so you’ll get off his back about this whole personal finance thing.

What that means is that on a fundamental level, his behavior won’t really change that much. He’ll make some specific actions to please you and follow what you suggest, but when he’s faced with the choice of going out to lunch with the boys, he’ll likely do just that.

Personal finance success has to come from within. If he doesn’t care about it, you’re not going to be able to make him care. My suggestion? Get control of as much of the family finances as you can and keep the reins.

You can preprogram his car radio to the Dave Ramsey station, but there’s nothing stopping him from just flipping the channel.

Q7: Making financial learning fun
I currently have a major impediment to my financial health, namely my boyfriend! We live together and split our bills, but as a result of some long-term unemployment (although he’s currently employed), he has many bills in collections. He has several bad financial habits, such as overdrafting his bank account on a regular basis, that threaten his ability to provide his half of the bills — and thus threatens my financial health! In the past, he never took care of his own finances and is now attempting to learn how to do it on his own. I’ve tried to help, but I think he’s both embarrassed about his situation and wants to finally learn how to do it himself. We have had many talks about financial matters and we agree that we have the same goals and are committed to spending less than we bring in, but he has problems following through with those ideas.

I think it would really help him to learn more about personal finance and to become interested in it, like I did. I’ve tried to forward him some interesting articles from your site, but he hasn’t taken to it. Similarly, he’s not a big reader so I’m hesitant to drop a Dave Ramsey book in his lap. I was hoping you would have an idea for a fun, maybe interactive, website or other learning tool that he could explore that would get him interested in personal finance. Basically I think he needs something to both educate him on personal finance and show him that it’s not all scary!
- Ardy

In your case, it seems that your boyfriend is starting to become aware of his personal finance situation and actively wants to change it.

If I were you, I’d stop at the library and check out an audio copy of a strong basic personal finance book, like Dave Ramsey’s Total Money Makeover – or, even better, the audio version of my own book, The Simple Dollar.

Ask him to listen to them in his car during his commute instead of whatever he listens to. I think you might be pleased with the results.

Q8: Super Bowl predictions
Who’s going to be in the Super Bowl? Who’s going to win it?
- Charlie

The two teams in the Super Bowl will be the Green Bay Packers and the New York Jets.

The game will be close until the fourth quarter, where New York pulls away to win 28-14.

The real winners of the Super Bowl will be, as always, the television networks and the advertisers.

Q9: Dietary changes
I was curious if you’d felt significantly different since the last time you had a dedicated post about your dietary change.

My father (68) has been having recent health problems, which I’m convinced are related to diet, but every doctor he goes to just prescribes meds for him to take (blood pressure, cholesterol, diabetes), and they don’t seem to care about him making lifestyle changes — I’ve been vegan for 15+ years and he refuses to listen to me re: dietary choices and health. I’m hoping to send him blogs, stories, etc. of people who have recently changed their dietary habits and noticed changes in their health.
- Paul

I’ve noticed several positive changes since changing my diet to a mostly vegan diet (vegan with the exception of occasional fish, maybe once a week) in October.

First, I have more energy. I didn’t notice a change for the first two weeks or so, but it definitely jumped after that, up to a new normal.

Second, I’m slowly losing weight without additional exercise effort. I’d estimate that I’m losing about a pound a week on average.

Third, I’m no longer having night sweats. For several years, I had night sweats terribly and they’ve absolutely vanished.

Finally, my cholesterol is down about 40%.

The only thing I’ve changed in my life is simply excluding meat and animal products (with the exception of weekly fish). Nothing else is different. I don’t get paranoid about it, either. It’s pushed me to try new foods, and it’s had some very nice medical benefits.

Q10: Target Retirement fund? Or not?
I just opened a Roth IRA last year to start saving for retirement, as my company (a start-up) doesn’t offer a 401K. I started to contribute towards the end of the summer of 2010, so although I’m not sure I’ll max out the 5,000 for 2010 before April 15th, I fully plan on doing so going forward, having the payments taken automatically out of my checking account after each paycheck. I’ve been doing some reading on the best investment strategies, and since I’m far from a seasoned investor (basically a newbie), target retirement funds seemed like they were right up my alley.

However, I’ve also read some information that seems to imply that if you go with a target retirement fund (such as one of Vanguards), that this is basically what all your IRA funds should be in. I’d love to invest in these funds as I increase my knowledge of investing, but I’d then like to start looking into investing in individual stocks, bonds, index funds, etc within the Roth IRA. Is this a bad idea – should I just stick with one fund for my retirement, and leave the other investing to a separate brokerage fund? Or can I have, say 50% of my allocation in a target retirement fund, and then spread the other 50% out as I see fit? For context, I am 26 so I have some time to take some risks.
- Matt

A target retirement fund is basically made up of several different funds at once. For example, a target retirement fund might be 50% in domestic stocks, 20% in international stocks, 20% in bonds, and 10% in cash. Those four components are likely shares of other funds sold by the same company, so the 50% in such a fund at Vanguard would be the Vanguard Total Stock Market Index.

Over time, a target retirement fund gradually becomes more conservative if you just leave your money there and your retirement date approaches.

For most people who don’t want to try to balance their own retirement portfolio, a target retirement fund is a great choice. The only reason not to use it is if you don’t like the balance that it provides and you want to do the balancing yourself. For example, if you decide you want more risk and more aggressive investments, you might have 50% of your portfolio in a target retirement fund and another 50% in international stocks. A conservative investor might have that second 50% in bonds.

You can balance and mix however you’d like. Target retirement funds really are just a convenience that matches what most investors should be doing with their retirement funds anyway.

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.

I’ve reviewed a pile of David Bach’s books over the years (Smart Couples Finish Rich, The Automatic Millionaire, and several others). Why bother reading and reviewing yet another one?

The title alone fairly well explains it. Rather than focusing on becoming rich (a la Smart Couples Finish Rich and The Automatic Millionaire), the focus here is clearly on the simple aim of debt freedom. Is it a philosophical shift away from the “latte factor” of his previous books or just a repackaging of the same old ideas for a new economic era?

1 – Who Put America Into Debt – and How You Can Get Yourself Out
The lenders made it easy, but it was still the individuals who put their name on the documents and signed themselves up for a lifetime of debt. However, just as individuals made the choice to get themselves into debt, they can also make the choice to get themselves out of debt. Debt freedom is something pretty much everyone can do for themselves as long as they choose to do it and choose to set aside elements of an overinflated lifestyle to accomplish it. Our grandparents did it, so why can’t we?

2 – Debt Math: How Lenders Keep You Broke
The biggest trick that lenders use on unsuspecting borrowers is the low low low monthly payment. If a lender has a monthly payment that just barely exceeds the accumulated interest for the month, then you’re not really reducing your debt much at all (maybe a dollar or two) by making that minimum payment. Instead, you’re going to be making that minimum payment for many, many months, paying interest to the company the whole way. When you’re just handing money to a company in the form of interest payments, it’s leaving your pocket with nothing in return except your own impatience.

3 – The Debt Free for Life Mindset
Why are you in debt? Why do you want to not be in debt? What’s the difference between these two answers? To put it simply, you have to fully understand what’s different between your life now and a life path that leads you to debt freedom. You need to know what needs to change before you can change it.

4 – If You’re in a Hole, Stop Digging
The first step in that change is to staunch the outflow of money, and the most effective and immediate way to do that is to cut back on your spending – hard. You can’t become debt free if you keep adding more debt. The way to stop adding more debt is to simply stop buying what you don’t need, then add things back in at a later time once you’ve realized that the purchases really do add enormous value to your life.

5 – The DOLP Method: How to Pay Down Your Debt in Record Time
Ramsey calls his debt repayment plan DOLP (Done on Last Payment), but it’s exactly the same as Dave Ramsey’s debt repayment plan. Just list all of your debts in order of their balance size, then focus all of your efforts in paying off the smallest debt first while making miminum payments on the rest. Coupled with some spending changes in your life, this should be doable. If it’s not, you may need a coach.

6 – Get Out of Debt Automatically with Debt Wise
This chapter greatly annoyed me. It’s essentially an ad for a service called Debt Wise which will help you manage such a debt repayment plan – for a monthly fee, of course. This seems highly out of place in a book where a big part of the plan is to cut your spending, not sign up for new services.

7 – Negotiate Your Debt Down: How to Lower the Interest Rates on Your Credit Cards
Here, Bach offers some advice on negotiating down your debts, particularly your interest rates. Mostly, it boils down to contacting the company, making it clear to them that you’re having difficulty making the payments, and requesting a rate change. Generally, it’s in their interest to cooperate with you, because that type of resolution is far better than having to deal with a defaulting customer.

8 – Your Credit Report and Score: What It Is and How to Fix It Fast
This is mostly just a summary of what a credit report is (a document detailing your history for paying back loans) and some basic methods for fixing it (get current on all of your debts, for starters). The big key is to simply be aware of what’s appearing on your credit report and, if it’s not yours, start contacting people until you can get the problem fixed.

9 – Mortgage Debt: How to Protect Your Home and Pay Off Your Mortgage Debt Early
Bach’s suggestions mostly boil down to making sure you have a thirty year fixed rate mortgage (if not a shorter term, like a twenty or a fifteen year), getting on a biweekly payment plan (paying half of your monthly balance every two weeks), and doing something about your mortgage if you simply can’t make the bills, such as using the government’s resources for mortgage relief.

10 – The Student Loan Diet: Nine Great Ways to Crush Your Student Debt and Sleep Well at Night
Much as with the previous chapter, this is just a collection of strong basic ideas for dealing with student debt: consolidating government-backed loans, focusing on paying off private loans first, looking into loan forgiveness programs that may be available to you, and understanding the specific payment options for each loan you have and choosing the one that works best with your life.

11 – Erase Your Debt with Three Simple Words: “Time-Barred Debt”
Most states have a statute of limitations on unpaid debts and, if your debt is past that time limit, you no longer have to pay it. In fact, paying it would simply harm your situation, as it would appear as a fresh entry on your credit report. If you have any debts that are far past due, find out when the statute of limitations is on that debt and, if you’ve already passed it, tell the debt collectors to take a hike.

12 – How to Get Non-Profit Credit Counseling – and a Professional to Guide You Out of Debt
Here, Bach points people towards credit counseling, which is a good solution mostly if you’ve tried to get your debt repayment under control and you’ve failed miserably at it. I genuinely believe that the best first step people should take before turning to a counselor is to try managing their debt themselves. This way, if they fail, they can at least have a chance of understanding why they failed, which can give a big clue as to the type of coaching and help that person needs.

13 – Debt Settlement: Solution or Scam?
Bach spends most of this chapter making a strong case that you should never try out debt settlement programs, and I think I agree with that assessment, even if Bach does hedge his bets a bit by the end of the chapter.

14 – How Bankruptcy Works, When to Use It, How Long It Will Take You to Recover
Mostly, this chapter offers general advice on bankruptcy (use Chapter 7 if you’re eligible, for example). One very big key that Bach mentions here is that you should never raid retirement accounts to pay off debt. If you’re in a situation where it seems that doing so is your only hope, contact a lawyer first. Often, bankruptcy proceedings will allow you to protect your retirement savings.

15 – Make It Automatic! The Automatic Millionaire 2.0
Bach begins winding down the book here, making a case for automating as much of your personal finances as you can, particularly in terms of saving for the future and investing. Direct deposit your paycheck, then have automated savings plans move some of that money out of your checking and into your savings or into your investment plan of choice.

16 – Find the Money! 7 Ways to Find Hundreds of Dollars (Maybe Thousands) in Less Than an Hour
What are these tactics? They essentially boil down to checking online resources to make sure you don’t have any unclaimed money sitting around out there. Sites mentioned here include unclaimed.org, missingmoney.com, fdic.gov, pbgc.gov, and ssa.gov, which are worthwhile visiting just to make sure you don’t have any unclaimed benefits floating around out there.

Is Debt Free for Life Worth Reading?
If you’ve never read a book by David Bach, this is the one to read and I’d recommend that you do. He offers a very solid perspective on personal finance, particularly from an angle of extracting yourself from debt and getting yourself on a good path towards retirement and the future stages of your life. Debt Free for Life is perhaps the best all-around packaging of his ideas, aside from the annoying sixth chapter.

However, if you’ve already read a book or two by David Bach, you’re not going to get too much from his book that isn’t found by supplementing what you’ve already learned from him with a bunch of personal finance blog reading. The backbone of his ideas are still the same: get your spending under control, utilize what you save from that spending to get your financial situation in a better place, and you’ll have far more resources than you had before in a few years.

The biggest difference between Debt Free for Life and Bach’s other books is in the specifics. The core idea is the same, and if you’ve already grasped that concept thoroughly, there’s nothing drastically new here other than some good specific ideas.

So much of life boils down to the simple idea of risk. Every choice we make has some chance of a negative result, and being able to assess the chances of that negative result helps us figure out which choice to make.

In day to day life, we make tons of quick risk assessments all the time. Jumping down from this ledge is too risky. Speeding a little is worth the risk, but speeding a lot is not worth that added risk. Is it worth the risk to our friendship to tell my friend what I really think?

However, the more complicated the situation, the worse we tend to get at such quick risk assessments, but we still rely on them far too often.

Is the risk of this car loan worth it in order to get that shiny new car?

What about the risks associated with buying this not-really-necessary item and raising our credit card balance?

Should we put our money into stocks or leave it in a savings account?

So often, the reader mailbag questions I get boil down to a simple question of risk assessment. A person is having a hard time determining which path in their life is more risky and they’re asking for my input.

In the end, what I usually do is put myself in their shoes and use the same simple rule for risk assessment that I use for myself when I’m unsure of a situation.

Here’s that rule. Whenever you’re thinking of taking some significant risk, ask yourself this simple question: is the worst (reasonable) case scenario tolerable for me? If it isn’t, find a more conservative option. If it is tolerable, then that risk is acceptable.

Of course, actually knowing what that worst case scenario is and how likely it is requires some research in most cases.

For example, if you’re trying to make a decision about an investment of some kind, it’s good to know the history of such an investment and the history of such similar investments. This way, you can understand what the worst historical scenario is, and I usually assume that the worst case scenario for me is about 10% worse than the worst historical period of the same length.

Another example: if you’re trying to make a decision about life insurance, imagine that you pass away two days after getting the insurance. What happens to your family in that case? Is the money you’re leaving behind via the insurance and your estate enough to cover their needs with some room to breathe?

I’ll give you a third example from my own life. My wife and I have been struggling with various health care options as she returns to work, since she has something of an open enrollment period now. One of my assessments of the options – perhaps the most important assessment – was a scenario in which one of the members of our family had a very long illness, such as cancer, that required extensive care. What would happen to us under each health care plan? Would we be able to survive? We eventually chose a plan that offered a high deductible for individual treatments, but great coverage for such long-term illnesses, as that plan offered a benefits package that matched what we could do for ourselves financially.

The worst case scenario is a spectacular guide for every major financial decision you need to make in your life. What happens to you in that worst case scenario? Is it something you can financially live with or not?