As time goes on, the value of having multiple income streams becomes more and more apparent to me. The more income streams you have, the less trouble your life will have if one of those income streams goes defunct or experiences a downturn. Thus, I’ve been thinking a great deal about developing more income streams for myself.

So, let’s back up. An income stream just refers to any source of regular financial income in your life. Your job is one. Your pension is another. Rent from an apartment building you own is yet another.

Of course, I don’t have the regular time to invest in another job or another high-content website at this time, so, for me, the best route to look for new income streams is to evaluate passive income streams.

What’s a passive income stream? A passive income stream is one where, once you’ve done the initial investment, there’s little or no upkeep to that investment required to maintain the income stream. Writing a book is a passive income stream, for example – once that book is complete and on its way to the publisher, you just sit back and wait for the proceeds.

Most passive income streams require some sort of significant investment up front. Generally, that investment breaks down into two distinct groups: an investment of money or an investment of time.

I’m going to stick with discussing the types of passive income streams that I’m interested in developing.

Investing Time
Most time investment usually pairs with an investment of ideas and energy as well. Generally, you’re turning spare time into some sort of item that will provide a steady stream of income over time.

Books, electronic and otherwise I’ve already written two books – 365 Ways to Live Cheap and The Simple Dollar. Both are working for me as passive income streams, but the stream from each book is quite small. Unless you’re J.K. Rowling or John Grisham, the passive income stream from writing books is not going to sustain you. The solution, of course, is to write several books so that the streams add up to something significant.

Another factor when it comes to writing books is that the options for self-publishing just get better and better. Self-publishing is a double-edged sword. When you self-publish, you tend to retain a much greater percentage of the proceeds for yourself, but your distribution tends to become more of a problem, as it’s hard to get your book on the shelf at Barnes and Noble. The growth of great self-publishing platforms and the rise of e-readers like the Kindle have mitigated these worries somewhat. If I write another book, I will most likely self-publish it.

Static websites Another approach is to simply develop a static website that provides information on a specific topic, then add some sort of revenue-generating mechanism to it – affiliate links to Amazon, a portal to buy a product of some kind, direct advertisements, or something else. Once that’s in place, spend some time developing links to it so that Google can find it. After that, you’ll keep generating a steady trickle of advertisement and referral revenue.

At some point, this is the route that The Simple Dollar will take if I ever choose not to keep writing it. I’ll turn off comments, make the site static, and go on with my life. It’ll still earn some revenue for a very long time.

Investing Money
On the other hand, one can simply invest money with the purpose of generating a passive income stream. This, of course, requires a chunk of money up front and an expectation that each year will only return a small portion of that initial investment. Usually, though, some significant portion of that initial investment can be recouped through selling the investment or waiting for it to fully mature.

Dividend-bearing stocks If you bought $10,000 worth of Coca-Cola stock one year ago, you would have bought in at roughly 53.60 a share, which means you would have purchased 186.5 shares of KO. You would have received four dividend payments of $0.44 per share during that period, so each dividend payment would have been $82.09, for a total of $328.36 over that year. It’s a 3.28% return, plus you still have the 186.5 shares of KO stock.

If you choose a very stable company that pays out a very steady dividend, this type of approach can earn a very reliable income for you. On the other hand, you are invested in a single stock, so you would probably want (over time) to invest in a variety of dividend-bearing stocks. You might also want to invest in an index fund that spreads out your investment over a lot of stocks (less risk), but also waters down your dividend (less return).

Treasury inflation-protected securities TIPS are bonds that you can purchase from the government that return at a fairly low rate, but their face value adjusts according to the rate of interest, so that when the TIPS matures, you will be able to sell it for more than the initial purchase price.

TIPS return at a very low rate, of course, but they have the advantage of being rock-solid investments that will match inflation growth when you sell them.

Savings accounts and CDs This is a similar rock-solid investment that is also very liquid (meaning you can pull out the money whenever you need it), but the interest rates (right now) are very poor. There are times when a savings account or CD is very solid. This is not one of these times.

Annuities Annuities are investments you can purchase, typically from an insurance company, that will pay you a certain amount each year for the rest of your life. The younger you are, the smaller that amount is, of course.

Let’s say, for example, that you purchase a $10,000 annuity, one that the insurance house quotes at 4%. That would mean you would receive $400 each year for the rest of your life from that company.

The risk here, of course, is that the insurance company may eventually become insolvent, leaving you with nothing at all. If I were to purchase this, I would seek out an insurance company with a long history of stability and a great bond rating, and even then, I’d diversify across multiple insurance houses.

What approaches am I considering? I’m still investigating several of these approaches, but I can say that I am moving in a direction where more passive income is a part of my life. As I actually begin to make moves in these directions, I’ll post about the moves on The Simple Dollar.

A few days ago, Sarah and I went out to dinner with another couple that we’ve been friends with for a long time – we’ve actually known the female in the couple for almost two decades. They live several hours away from us and we don’t get to see them terribly often, but we make it a point to see them at least a few times a year.

At that dinner, the couple asked Sarah and I if they could name us as guardians for their children in their will. We told them that we would have to give the decision some serious thought and discussion, and unsurprisingly it’s been a significant topic of discussion between Sarah and myself over the past few days.

Because this is an issue that other families are sometimes faced with, I thought I’d share some of our thought process with you with regards to this decision. I should point out that we haven’t made a final decision yet.

As is usually the case, we’ve made a list of reasons why we should do this, along with a list of reasons why we shouldn’t do this.

Why We Should Do It
The biggest reason is that their children will really need us if they lose their parents. We may be the best option they have for a stable life that offers some degree of continuity with their life with their parents. To me, this is the biggest reason for us to do this.

There’s also the consideration that it would take a weight off of the minds of our friends right now. As their family has grown, their concerns about child guardianship has grown as well. The simple knowledge that their children would be in a stable home if they were to pass would take some stress off of their shoulders.

We also would not have significant financial concerns, as they have strong life insurance policies and would change them to have us as secondary beneficiaries. According to my math, the amount received would actually exceed the amount needed to continue raising their children in their stead. If we properly used the money received from the insurance, we would be able to provide for the new children fairly well.

Why We Shouldn’t Do It
The big reason against doing this is that we’re unsure of our capacity to raise that many children. This would suddenly add several children on top of the three we already have, and frankly Sarah and I are unsure that we would be able to do this and still give each of those children the love and support they would need.

This really breaks down into three main “sub-concerns.”

First, would we be able to continue to be great parents for our own children? Our time would be spread more thinly and we would have less time for one-on-one interaction with our own children if more were suddenly introduced.

Second, would we be able to also be great parents for the new children? This is similar to the above concern, of course, but it’s also an issue when we compare ourselves to other potential outcomes for these children. With that many children under one roof, are we really the best option for them?

Finally, would we be able to have a functional and satisfying marriage with that many children? There are times where three children puts our marriage under stress. What would we do with several more children?

Clearly, we would have to adjust some significant portions of our life if this occurred. Sarah may return to a stay-at-home mom status, for example, and I may have to find some assistance with maintaining The Simple Dollar.

This is one of those moments in life where there is no clear “right” choice. There are two choices, each with good and bad elements to them, and each with serious consequences. Such decisions should never be taken lightly.

I’ll let you know when we make up our mind.

I get asked this question all the time, and I think it’s one that’s got enough cultural pressure behind it that it’s worth discussing. From a purely financial standpoint, why should a man get married? Let’s look at the reasons behind this question first.

The argument against marriage for men is pretty straightforward. The most common reason given for men not to get married is that the financial outcome of divorce proceedings is seen to be unfair. As the argument goes, the average male salary in the United States is higher than the average female salary, yet when couples are divorced, the splits are often 50/50 – or, in some cases, skewed towards the partner with greater financial need.

Usually, along with this, issues and concerns about children are brought up as well, along with other concerns about losing the freedom to make life choices and so on. Generally, these issues fall much more into the realm of the emotional than the financial and vary so much on a case-by-case basis that they’re difficult to reasonably discuss.

Instead, I’m going to stick with the financial side of the equation.

Along with that, I’m also going to make a fairly bold statement for the anti-marriage folks out there: it’s financially beneficial for both men and women to get married. There are a lot of reasons for this.

Almost always, you’re both going to be bringing in an income. There will simply be more money coming in than before. Often, it’s a lot more money, approaching a doubling of income for both of you. That’s a lot more money to live on, day to day. There’s also the fact that you’ll have two sets of benefits to choose between. If one of you has better insurance, then you both have better insurance, for example.

You both benefit from economies of scale, meaning your expenses won’t rise as much as your income will. If you’re living in a one-bedroom apartment, it’s often very easy to get married and stay in the same place. Rent doesn’t go up, and the utilities will barely budge. Even if you do need to upgrade, your housing costs likely won’t double (like your income did). You’ll also be sharing electricity, phone service, internet service, and so on – one bill for each of these things instead of two. While food and household items will jump a fair amount, having both of you at home means that bulk buying makes more sense. Buy a gallon of milk instead of a container and you’ll be spending less per glass of milk, for example.

You have greater earnings stability. If you lost your job while single, there’s suddenly no income coming in. Panic time, in other words. If you’re married, you have a partner that will still be bringing in income, a partner that has a real stake in your survival and continued success. While it’s an urgent situation, it’s not a panic situation.

You have greater earnings potential, too. With a partner at home handling some of the household needs and providing emotional support, people can often use that as a springboard to achieve even greater success. This is often particularly true for males with children.

You have the “stable home” factor. Married couples often find greater success with things such as applying for mortgages and so on, particularly if they’re manually underwritten, because such family units are usually more stable than single folks.

But what about the pain of divorce? Most of the fears that men have about getting married are actually fears about divorce. The truth is that you can alleviate most of those fears by simply taking a few steps right now.

First, don’t get married until you’re absolutely sure. If you’re not sure, don’t sit on that reason, either. Don’t be afraid to talk about your concerns and make it clear to your partner why you don’t want to get married. If you can’t have that kind of open conversation about marriage, either you’re not emotionally ready for marriage or your partnership isn’t ready for it.

Second, if you have assets you want to protect, get a prenupital agreement. Part of a good prenupital agreement is a base understanding that you’re both going to financially benefit from this marriage for many of the reasons stated above. An agreement that says that one of the partners takes nothing away from the marriage in case of divorce isn’t a healthy agreement for either party to sign. One approach is to use your current individual net worths as part of the equation, perhaps setting aside the assets you entered the marriage with before dividing up the rest in some fair fashion. Remember, if you’re coming into this marriage with no net worth but big dreams of getting rich, a big part of you getting rich is the support of your partner, who has earned that stake because of the support provided.

Finally, look at your behavior and your partner’s behavior honestly. Are you engaging (or seriously considering engaging) in activities that would lead to divorce when you’re engaged? Is your partner? If you find it easy to engage in patterns that would lead to divorce while you’re seriously considering marriage, then your relationship has problems deep enough that you shouldn’t get married. In short, don’t ever put yourself in a situation where divorce looks likely.

What about children? The decision to have children is a complicated one and, in my opinion, is a very distinct one from the marriage question. Many of the concerns that men express about marriage tend to actually be concerns about becoming a father, and I think that becoming a father is a decision guys should never enter into lightly.

My opinion is that many people fear marriage for emotional reasons, but often find financial ones easier to state. Modern marriages usually are financially beneficial to both people involved.

I’ll certainly say that, in our case, marriage has been an enormous financial benefit. It was because of my wife’s stable job that I was able to make the leap to turning The Simple Dollar into a sustainable business, and it was because of that sustainable business that my wife was able to leave work for most of a year to be a stay-at-home mother. After all that, the only debt we have is our home mortgage. None of this would have happened without our marriage and the stability it has given us.

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. Handling a windfall
2. Underwater on mortgage
3. The best next step
4. More for the mortgage?
5. Saving up for payments
6. Package price increase
7. Maximize investments or pay mortgage?
8. Exercising at home
9. Buy cheap or reliable?
10. Inherited jewelry

For those of you who have read The Simple Dollar for a while, I am a big fan of men’s college basketball, particularly the season-ending tournament to determine the champion. The excitement of the upsets of the early rounds gives way to the intense matchups of the late rounds. It’s a mix that I can barely resist.

Most years, I give some sort of prediction as to who I think the national champion will be. My pick this year? I predict Kansas wins. (Of course, the can’t-miss games for me are the BYU games because of the crazy three point shooting.)

Q1: Handling a windfall
I am receiving in my divorce settlement $80,000 from my X2B’s 401(k). I know I can roll it directly into something else to avoid paying taxes on the gain right now, but what’s the best plan to roll it into? I have a small 401(k) at my job (only been here 2 yrs – I don’t know the amount off the top of my head but I think it’s with Vanguard) and a tiny (about $3-4K) 403(b) (or whatever the non-profit plan is) from a previous job (which I cannot add to unless I go back to work there). I need some guidance on (1) where to put the $80,000 I’m about to receive, and (2) how to do it.
- Kym

You have several options, assuming that you have a Qualified Domestic Relations Order. If you don’t know what that is, give your divorce lawyer a call.

First, you can just leave it as a 401(k). It will stay at whatever company your husband’s 401(k) is at, but it will be considered your 401(k) and proceeds will grow for you.

Second, you can roll it over into a traditional IRA (no taxes now, but you’ll be taxed when you actually use it in the future).

Third, you can just pocket the money. Again, it’ll be treated as normal income and you’ll have to pay taxes on it, just like the traditional IRA.

I would probably choose the IRA option. It gives you the most control over the money and doesn’t result in a major tax concern. For help in making that happen, choose an investment house and directly request assistance from them. I use Vanguard for my current retirement savings.

Q2: Underwater on mortgage
I live in Baltimore, MD and have the issue that unfortunately way too many other people in this country have in that my house is worth MUCH less than what the mortgage is for. I was able to buy the house on my own in June of 2006 and live in the heart of the city. At the time, buying a completely rehabbed place (downtown Baltimore and it’s surrounding neighborhoods are all rowhouses) for under $300K was a great deal and that’s exactly what I did. I was 24 and was given a mortgage without having to put much down at all. While I know now that this wasn’t the best move, at the time, I easily thought I would be able to sell the house in a few years for a profit or even rent it out for something at least close to the mortgage. Neither are true now.

The other night I was on Zillow and it had it worth $180K! While I still believe I would be able to get a bit more than this should I sell, it’s obviously no where near the $285K that I paid for it. Since I bought the house, I have gotten married and we both luckily have stable and good jobs. While nothing is 100% certain, we are both confident that our jobs won’t be going anywhere anytime soon. We do have some credit card debt as I just finished my MBA and had to pay via cards but those balances are being worked down fairly quickly. We have never missed a payment on any of our bills, including our mortgage and honestly we are financially OK paying these amounts while still contributing to our 401K, 403B, Roth IRA’s, savings, and regular trading accounts. I won’t go into our full financial situation since I don’t think it’s all that relevant to my question, but how does one go about talking to mortgage companies about a house that is probably worth $80-100K less than what the mortgage is for but at the same time, the owners are stable financially? Is there any sort of angle I can play with the mortgage company? I don’t want to start intentionally missing payments and messing my credit up when I’m able to pay the full amounts. Just because I’m lucky enough to pay the full amount, does that mean they won’t even talk to me about any possible options? I’m in a fixed rate (re-fied at 5% the end of 2009) loan with Wells Fargo but certainly wouldn’t complain if there was anything to be done about my monthly payment or the mortgage balance overall. I certainly don’t expect them to just “forget” about the difference in value, but I don’t want to threat not paying, foreclosing, or short selling when honestly I don’t need to. We are able to make the payments, but it kills me that we are paying so much more for something that is worth so much less now. I’m fine calling them but wouldn’t even know what to say or any sort of “buzz” words to actually have them work with me knowing that I’m financially OK. Any suggestions?!
- Phil

The only angle you have on the mortgage company is the threat that they’ll have to take a devalued property. You owe them $250K or so and they’re not about to swap that for a $180K property without a very good reason (meaning the loss of the $180K property is lower than the risk of actually getting the $250K from you).

The sad part is that the current housing situation does nothing at all for the people who are far underwater on their homes but have been keeping up the payments. They usually can’t refinance, their lender doesn’t view them as a priority, and walking away destroys their credit for a long while.

What you need to decide is whether staying in that home (with the bad mortgage) is better than walking away and destroying your credit for a few years. I can’t really answer that question for you. It’s the same ethical dilemma that a lot of folks in your situation face.

Q3: The best next step
I just found and started reading your blog regularly – I love it! I actually found it because I realized I needed a swift kick in the tush to get my finances in order and did some searching online. My first step in the tush-kicking process was to pay off my credit card debt (it’s completely gone – yay!). With that being said, I have a quick question for you about what I should do next.

Originally, my plan was to double up payments and tackle the car loan. Once that was complete, I was going to add the money I was spending there to my student loans to get those knocked out. Once the car payment and student loans were gone, everything would go to savings. In the meantime, I would concentrate on saving at least 25% of my monthly pay and putting it directly into my savings account. In addition, I have a second job (I work a shift or two a week in retail) where I make about $30-$50 a week. I’m viewing this money as pretty much “untouchable” and just adding it to my savings.
- Carrie

I would focus on paying off whichever loan has a higher interest rate first. If they’re roughly equal, then I would focus on the car loan first, because that has collateral.

Splitting up the payments as you describe has little or no benefit – you’re far better off focusing on one of the debts. Splitting up payments delays the payoff date for both loans while also giving the higher interest loan more time to grow.

So, assuming your car loan is the high interest rate loan, I’d go for the first option.

Q4: More for the mortgage?
We are in a good financial situation with 12 months emergency, funding retirement and college accounts and our mortgage as our only debt. We bought our condo 4 years ago and moved for work about 10 months after closing. We rent it out to great tenants and are happy with the situation for now. We plan on staying in our current city at least 2 more years but even if we do move don’t plan on moving back to our place. We would consider selling it especially if the current tenants want to move out. Our neighborhood has continued to appreciate. We put 50% down and have a 30 year fixed at 6.25%.

Should I put more towards the mortgage? If not, where should I put the additional savings we have each month?
- Wendy

Regardless of whether you pay off the mortgage early or not, you’re going to have the same capital gains tax issue. You paid $X for the house several years ago (financed with a mortgage) and hope to sell it for $Y in a few years. The taxable amount on the capital gains is still $Y-X, no matter whether the financing still exists or not.

So, the real question is whether or not it makes more sense to pay down a mortgage at 6.25% or to use it elsewhere. Paying down the mortgage has the benefit of providing a guaranteed 6.25% “return” on your payment (every dollar you pay on the mortgage eliminates interest in subsequent years). It also has the benefit of improving your monthly cash flow.

Since there is no investment out there that will return you a guaranteed 6.25%, I’d pay down the mortgage.

Q5: Saving up for payments
I’m trying to payoff my car loan ASAP (@ 6 years 9.8% interest… ugh). I am currently contributing about an extra $150 a month to help pay it off sooner ($500 total); but at that rate it will take forever it feels like (Current Balance: $20,282.xx)

Instead of contributing that extra $150 to the loan, what if I put it in my savings along with the “extra savings” ( I now plan on using the $774 a month as a car payment now that I am comfortable with my savings balance) and let it earn interest (very little yes) and build it up + the minimum payments I will be making now and pay it all off in one transaction after about 18 months? Is it wise to do this? One advantage I think is that I will be maximizing my savings but this assumes nothing goes wrong for the next 18 months……..
- Dan

That’s a really bad idea. Here’s why.

Let’s say you make a $200 payment on your loan right now. That payment will eliminate $19.60 in accrued interest this year, about $20 in accrued interest the year after that, and even more the year after that. Your $200 turns into about $260 (or so) if you have your loan paid off in three years, because you’ll be paying $60 less in interest over the lifetime of the loan if you make that $200 extra payment right now.

On the other hand, if you put that $200 in a 1% savings account, it’ll earn about $2 a year. Your $200 turns into only $206 in three years.

Although it feels painful, the best choice by far is to keep plugging away at that car loan as hard as you can.

Q6: Package price increase
I signed up for a Dish Network contract last year (don’t ask me why – this was before i started reading your blog) – the price was supposed to 39.99/month for 2 years. First year they would give me a credit of $15/month bringing down the price to 24.99/month.

Is this legal even?
- Ron

It depends on the contract you signed, but it’s most likely legal. Most contracts allow the company to adjust the price of such packages in almost any way they wish.

The reason that they don’t jack the price way up is that they’d have many more problems. Lots of customers would stop paying, and even those that could pay would be looking to jump ship at the end of the contract.

Still, if you’ve signed a contract with them, you’re going to be living with their price hikes, unfortunately.

Q7: Maximize investments or pay mortgage?
I am a 53 year old single mom in southern California who returned to the work force five years ago. I am fortunate enough to own a home and to receive $79,000/year from my job, plus another $14,400/year from a divorce settlement pension. I have only about $4,000 in liquid savings.

So my question is, in this instance, would it be better to pay $1,000/month toward the pre-tax investment, or split it 50-50 with extra mortgage & HELOC payments and pay off the mortgage within 12 or 13 years?
- Joyce

You should not plan on retiring at age 66 if this is your financial situation. Retirement at that age would mean some extremely lean living regardless of what path you choose right now. The numbers simply don’t add up to a healthy retirement in thirteen years, no matter what.

The first step I would take is talking to my lenders about refinancing both the fixed rate mortgage and the adjustable rate HELOC into a single fixed rate loan. Interest rates are going to rebound and when they do, you’ll be in an even worse position. Lock those two in as low as you possibly can. If you can’t refinance (which might happen, depending on your financial institution and your payment history), focus solely on paying things down until you can refinance. I would focus on whichever of the two has the higher interest rate at the moment and keep your eye on lowering that amount to whatever numbers are needed for you to refinance. Don’t worry about the tax writeoff of your mortgage interest – it is a small perk, nothing more, nothing less.

Once you’ve done that, I would just make the minimum mortgage payment and save every dime that I could for retirement. Once you’re in that situation, your monthly mortgage payment will be lower than your mortgage payment is right now, let alone your HELOC, so your monthly cash flow will be better.

The key then is to keep working and saving until you reach a point where you can safely finance your life with your pensions and retirement savings. I would be surprised if that happens by age 66, unfortunately.

Q8: Exercising at home
I know you may have addressed this before, but I am really interested in a frugal but smart way to exercise at home. So many at-home options seem cheesy and cheaply made. Going to the gym is not an option with my work schedule and kids. As well, I live in a tiny town and would have to drive 12 miles to the nearest YMCA.

Currently I am using resistance tubing ($5 Walmart, 2 bands, but they will need replacing in a few months) and one 12-pound set of dumbells. Do you have a post that talks about this?
- Sheila

Deciding where to exercise is more about goals and about where you’re at in terms of shape than anything else.

If you’ve never exercised before, your best bet is to simply start a walking routine to get yourself up to a solid level of cardiovascular fitness. By walking, I don’t mean trudging for a little while, I mean walking at a reasonably fast pace to get your wind up a little. Since spring is dawning, now is the perfect time to start doing that outdoors.

If this is already easy for you and you’re looking for more intense training, I would probably point you towards a gym situation. The next step for most people is weight training, and focusing too much on a single muscle group is actually somewhat dangerous. The equipment needed to push lots of different muscle groups in turn would be expensive, and a gym membership is cheaper than the equipment, especially if you’re unsure if this is just a fad for you.

Again, if you’re not exercising now, start by walking. If that’s a routine you can’t establish on your own, then a gym membership would most likely be a waste of money.

Q9: Buy cheap or reliable?
I’m in my 20s, snowballing my (currently) $80K in student loan debt, and I’m getting closer to moving out of my parents house. I’m going to be in debt for a long time and will need to buy house-things soon. There are the expensive-frugal options (a $250 vacuum that reliably lasts for 10 years) and the cheap-frugal options (a $50 vacuum that sometimes lasts 3 years, but has a big risk of “lemons”). Sometimes the most frugal choice, the expensive-frugal, is just too expensive. Sometimes it is be do-able, but at the expense of putting that money toward debt. How do I choose between expensive-fugal and cheap-frugal purchases? In the absence of a compelling reason to choose one over the other (expensive vacuum would substantially alleviate asthma or cheap vacuum is good enough because I only vacuum twice a year anyway), I find this to be an especially difficult decision. Even making these choices strictly mathematically is difficult because I can’t really know how long anything will last.
- Jessica

My suggestion for people in your situation is to buy everything you need at first as cheaply as you can, utilizing Goodwill and the like. Do not go into debt furnishing your house for the first time.

Over time, start replacing things. The things you use frequently will be the things you break first, so those should be the ones that you replace with high-quality items. In other words, you’ll be able to tell what things you use a lot by what things break quickly because you’ve used them a lot.

With your vacuum analogy, I’m not sure if vacuuming only twice a year is a good choice if you have asthma. My understanding is that frequent vacuuming is a much better choice, as it keeps allergens from building up and makes people with asthma less dependent on rescue medications.

Q10: Inherited jewelry
I inherited a fair amount of jewelry from my mother; it’s all 14 and 18k gold, and a lot of it has precious stones as well. None of it is anything I would ever wear – too big and gaudy – so I am wondering if I should sell it while gold is high and bank the proceeds, or hold onto it as a hedge against some future dollar devaluation. (Sometimes my common sense goes on vacation and I fall prey to the apocalyptic predictions swirling around and envisage myself someday having to barter a ring for food or something.) Any advice? What would YOU do?
- Lisa

The first thing I would do is get it appraised by a jeweler that I trusted, probably by more than one. Make sure you have what you think you have, and ask them for what they would do if they were looking to sell it.

Often, jewelers buy such items directly, and you’ll get more out of jewelry that way than by selling them for scrap gold. Even if they’re not interested in buying it, they’ll have good suggestions for what you should do with it locally.

A close friend of mine inherited what he believed to be a ruby ring, but when he had it appraised, the ruby turned out to be fake. This is actually something of a regular problem with inherited jewelry, at least in my understanding of it.

Got any questions? Email them to me or leave them in the comments and I’ll attempt to answer them in a future mailbag (which, by way of full disclosure, may also get re-posted on other websites that pick up my blog). 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 or other book of interest. Also available is a complete list of the hundreds of book reviews that have appeared on The Simple Dollar over the years.

Evil Plans, by Hugh “Gaping Void” MacLeod, focuses on the desire that everyone has to do something that they love that actually matters to the world and how to move from wherever you’re at to that new position.

Take me, for example. I spent most of my early life dreaming of being able to write something that mattered to a wide audience, something that might convince at least a few of them to make some sort of positive change in their life. I spent a good decade of my life trying to achieve it, but building the skills I needed and finding the right situation were all part of what I needed to do to get there. I didn’t give up, and once the glimmer of an opportunity presented itself, I jumped on board with gusto.

I didn’t follow the ideal path to get here. In fact, I followed a pretty poor path. What got me here was never abandoning my goal and continually working towards what I wanted.

An “evil plan” is MacLeod’s tongue-in-cheek way of describing that path. It’s the path that leads you from wherever you’re at right now to doing something that you love that really matters.

The book is divided up into a few dozen very short chapters, so it’s difficult to give this book a chapter-by-chapter review. Instead, I just picked out a half-dozen of the chapters that really had an impact on me as I was reading it, to give you some of the flavor of what’s found in the book.

Join the Overextended Class
Not overextended in terms of money, of course. Overextended in terms of time.

If you really want to make your “evil plan” work, you’re going to have to commit a lot of your energy, thought, and time to making it happen. Even before The Simple Dollar launched, for example, I was still writing quite a lot almost every day, either by writing short stories, novels, essays, posts for other blogs, or other things like that. This time was spent in addition to my normal workday, my social commitments, time with my family and my wife, and so on. I didn’t just go home and sit and watch Everybody Loves Raymond. When I launched The Simple Dollar, it got even worse.

I was overextended in terms of my time – and I still am. Not a day goes by where I don’t have to choose between multiple things I would love to be working on. You should see my list of “someday/maybe” projects.

I love it, though. Why? Because I’m choosing among things I’d be happy doing. I’d be thrilled to write another book, launch another website, start a newspaper column, and countless other things that I could be doing. The idea that I get to get up in the morning and choose among a lot of things is wonderful, and I’m overextended mostly because there’s so many I want to be doing, not because there’s too much shoveled on my plate by someone else.

Make Art Every Day
By art, MacLeod doesn’t mean paintings or music. He means whatever it is that is most meaningful and powerful for you.

I know a guy who goes home each day, watches basketball games on mute, and does the play-by-play himself, just sitting there on his couch. He records them, then listens to the play-by-play and figures out what’s wrong with it (and what’s right), then uses that for the next go-round.

Why is he doing this? He’s going to eventually start releasing some of his calls to the internet (once he feels his skills are good enough) and then attempt to get work doing what he loves to do – describing basketball.

Do you do what you love every day?

Create “Social”
If you want your dream to succeed, it has to be easy to share with others. The internet actually makes this easy. If you’re passionate about what you’re doing, just write a blog about it. Tell stories about why you’re enjoying it. Mention your business/charity/whatever on the sidebar.

MacLeod shares several great examples of how this very thing works for almost any kind of enterprise. The key isn’t great writing skills or anything like that – it’s passion about the topic and a willingness to share and explain.

If you do that well, you’re going to be entertaining by default. If you’re entertaining, people will want to share what you’ve written, and it’s pretty easy to share a blog post. The more people know about what you’re doing, the more likely it is you’re going to get the support you need to continue doing what you’re doing.

I have a close friend who works for a charity where she has interesting experiences every day. She tweets about them. I think she’d create a wonderful thing if she turned that into a blog that simply said where she worked and how to donate to help them out.

Avoid Dinosaurspeak
“The Simple Dollar is a great website to get your daily fix of all things personal finance! It’s filled to the brim with heartwarming (and often hilarious) anecdotes from Trent’s life as well as insightful commentary on the world of money management. Every day, countless people visit the site as part of their daily routine so they can get better connected with their money. Want that connection, too? Visit thesimpledollar.com or add The Simple Dollar to your RSS feed today!”

Yes, I can make The Simple Dollar sound absolutely awful. Yet, every day, I read many, many blurbs that come off a lot like that. They try so hard to be “user-friendly” that they fail to convey any real meaning at all and end up being a turn-off.

Avoid it like the plague. Don’t try to be someone else. Be yourself. Trust me, being yourself is more than good enough, because you’re interesting. Dinosaur-speak is not.

What Entrepreneurs Can Learn from Artists, and Vice Versa
Entrepreneurs are artists, and artists are entrepreneurs. They’re both trying to create things that touch people’s hearts, and they both need to sell something of what they create in order to keep food on the table.

Most of the artists you’ve heard of in the last fifty years are excellent entrepreneurs. Most of the great entrepreneurs have also been artists.

Continuity Is Key
Your big dreams only come true if you work towards them every single day. It is on this very step that so many people fail.

The catch is that for an awful lot of the days, especially at first, you’ll see very little progress if any. Most days, you’ll see failure. You’ll not see a bump in traffic. You’ll not see any noticeable increase in skills or fitness. You’ll feel like it’s never going to happen.

The people that do make their dreams come true are the people that keep doing it anyway, day after day. They write every day. They paint every day. They do whatever it is they love to do every day, regardless of reward or sense of success or anything. They just keep at it.

Is Evil Plans Worth Reading?
Evil Plans pretty much does what it claims to: it covers the ins and outs of chasing after what you really want to be doing with your life. It’s not an easy road – most of the sections in this book actually address specific difficulties with following the path – but the path itself is immensely rewarding (let alone the destination).

If that sort of path for your life sounds appealing, Evil Plans is a very worthwhile read. If that’s not the path you’re on, this book will be largely useless to you.

Check out additional reviews and notes of Evil Plans on Amazon.com.

I have several friends who have made something of a hobby of simply trawling the web, looking for sites that are offering giveaways, entering them, and then looking for the next one. After finally spending a couple of afternoons doing this at the behest of a couple of them, I find some good things – and some bad things – about doing this.

It is an inexpensive hobby. In the end, you’re just filling out web forms and clicking submit. There’s no cost involved with these giveaways (aside from the time, which I’ll touch on later), the minimal electicity used, and the internet access used (which is already paid for). Activities with little or no out-of-pocket expense that bring enjoyment are superior to the ones that require a steady influx of money.

Personal information sharing is a concern. As I’m filling out all of these forms, I can’t help but notice that lots of companies and organizations now have access to my personal information. Most commonly, it’s just my name and address, but I’m still not sure how I feel about sharing that information widely.

What about email addresses? One of the first things you need to do before you participate in drawings is to use an address that’s just for those drawings. That way, the spam lists that you’re inevitably signed up for by participating send their emails to just the “drawings” address, not your real one.

Of course, that doesn’t mean you should never check your “drawings” address. You have to, to see if you’ve won anything.

Do I really want the item? Some of my friends simply enter every drawing they come across, regardless of whether they want the product. I guess I’m wired a little differently – I can’t see the point of entering a drawing for a fairly low-cost item that I have no interest in owning.

Take cosmetics, for example. I don’t wear any. Sarah only wears cosmetics on rare occasions. What do we need with a big bundle of cosmetics? Simply put, we don’t need them. So why enter?

At least with items that have significant value on their own, we could easily re-sell the item and make some pocket money. With small-value items, it’s very difficult to re-sell them, either individually or a bundle.

Is there something more valuable I could be doing with my time? As I was filling out the forms, I couldn’t help but ask myself if there wasn’t something more useful I could be doing with my time. The drawings I entered were almost entirely for things that I wouldn’t mind having, but there were very few drawings that were for things I actually wanted to any significant degree.

To me, that’s just the accumulation of stuff. Again, if I stuck with just entering drawings for items I could re-sell easily, I’d still be in good shape, as I would earn pocket money from the sale. Many of the items, though, could only be re-sold for $5-$10 on an internet auction site, a gain that, for me, isn’t worth the effort as an individual item. By the time I fill out the form to win the item, claim it, get it home, package it for auction, deal with the eBay or Craigslist hassles, and then deliver the item, I’ve put in more than $5 worth of effort.

It burns time, but it doesn’t pass my “pastime” test. As I mentioned above, it’s a nearly cost-free hobby, but it’s really repetitive. I just fill out forms with my name (and/or address) and email over and over again. Sometimes, I have to look through their website to answer questions of some kind, but then I’m usually just learning about a product I don’t really want via marketing materials.

In short, I don’t really feel like this is a worthwhile “pastime.” It’s not personally fulfilling to me, not in the way that reading a book is or playing with my kids is or playing a board game with close friends is. It feels like something I could fill fifteen minutes of downtime with, but spending an afternoon doing it feels … empty.

If this is a hobby that you get personal enjoyment from, by all means, go for it. My only suggestion is that you avoid sharing your main email address when filling out these forms. Open a new Gmail account to collect the inevitable spam emails you’ll get.

For me, though, I may occasionally enter drawings for high-value items (like an iPad) or items I particularly want (like a game), but entering drawings for the sake of entering drawings doesn’t feel like a high-value proposition for me.

Like many self-employed folks, for me April 15 means a day to write a check to the government. Even if I do manage to get a refund, I’m still writing a check on that day to pay my first batch of estimated taxes for 2011. It wasn’t all that long ago, though, when April 15 usually meant that I would be receiving a tax refund check.

Back in those days, my tax refund check was a wonder. It usually meant some sort of giant splurge. I remember using it to purchase a new television and a PlayStation 2 in one day using my refund check in 2002 or so. In 2003, I used that refund check to buy two plane tickets from Chicago-O’Hare to London-Heathrow for a honeymoon for Sarah and myself.

Later on, especially in 2005 and 2006, our refund check usually went straight towards debt repayments. I’d deposit the check, then immediately go home and write some checks to various creditors to cover things I’d already purchased.

At this point, our tax refund wasn’t a help – it merely helped sustain an unsustainable lifestyle for another month or two. It made our awful decisions seem a little less awful and made it seem reasonable to continue making them (although, by the time the 2006 refund rolled around, we had enough sense to keep our spending under control and used the money for positive financial change).

In 2007, though, we used our tax refund to contribute to the down payment on our home. This was, of course, a positive use for our tax refund as it went toward a tangible asset. (Since then, of course, tax day has meant paying in more than we receive.)

Simply put, your tax refund check presents you with a choice.

Are you going to use it to put yourself in a better financial position? Are you going to pay off a debt – and not immediately run up a credit card? Are you going to put it towards a house down payment? Are you going to use it to save for a replacement car? Maybe you’ll use it for more education, or perhaps you can invest it in a small business. Maybe you can even drop the money into a local charity, which improves your community. All of these choices will pay you dividends for years to come.

On the flip side, you could buy a new television or take a trip with that money. Of course, as soon as that television is bought or that trip is over, you’re back in the same position you were in before.

Which side of that coin do you want to be on?

A final thought: not having a refund check has been a very positive thing in my own life. It’s forced me to be more careful about my day to day finances knowing that at the end of each quarter, I would be paying the IRS, and that at the end of the year, I wouldn’t be getting a check. Yes, the money was all equal in the end, but instead of having the government “save” my refund for me, I was doing it myself. I had to make the right choices, and I was able to reap the rewards of those choices.

Having that “bailout” check at the end of the year was a crutch that kept me from financially walking on my own two feet. Putting it aside made me stronger.

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. A brother learning, a brother teaching
My two sons have been amazing this past week.

Our ten month old (the baby) has been trying very hard to learn how to crawl and to pull himself up on things for the past few weeks. His older brother has pretty much been his coach, constantly demonstrating how to do it. He’ll lay on the floor with his baby brother and slowly show him how to get into a crawling position, then take off. Or, he’ll slowly pull himself up to standing using the coffee table or the couch edge.

His younger brother is learning from him. Over the last week, he’s started pulling himself up onto things and just barely started to crawl.

The looks they give each other are just amazing. It’s the look of two people who love each other and who want to learn and to teach.

Last night, the younger one was crying. It was nearly his bedtime and it was just the type of crying that a tired baby does. Our oldest went over to him and gave the baby a Spider-Man toy, one that’s solid and without any moving parts that the baby couldn’t choke on or break any pieces off of. The baby stopped crying and had a death grip on the Spider-Man toy. He held it as he went to sleep and for the entire time he slept.

2. Lady Gaga acoustic
I’ve largely written off most pop performers for the last decade or so as being pretty faces paired with gifted songwriters and a healthy dose of Autotune. When a friend of mine sent me a video of Lady Gaga performing a song acoustically, I expected a train wreck.

Instead, I was quite impressed.

She puts piano play and vocals together incredibly well here, something I wish I could do. I’d far rather listen to this than to the over-electronicized version of this song that was actually released.

3. Robert Allen on maturity
“Maturity begins on the day we accepts responsibility for our own actions.” – Robert Allen

It is so easy to blame someone else or something else for the mistakes we make in life. It’s the boss’s fault we got fired. It’s the government’s fault that I can’t find a job. It’s my mother’s fault for instilling me with a poor work ethic. And so on.

Guess what? Each and every second, you’re the one deciding what to do with your time. When you fluff off at work and eventually get fired, it’s not the boss’s fault. It’s your fault, for consistently choosing to fluff off.

Your own actions are largely responsible for the outcome of your situation, good or bad. Take responsibility for that.

4. Mondrian cake
Most of us are familiar with the artwork of Piet Mondrian. His famous paintings are gridlike and very orderly, with only a smattering of color breaking up the black and white.

I loved this reinterpretation of his artwork in the form of a cake.

Many thanks to mc barnicle for the picture.

5. Dante on teaching
“If you give people light, they will find their own way.” – Dante

Over the last week, I have become increasingly frustrated at the ongoing war on teachers. I’m married to a teacher, and I see every day the amount of dedication and hard work it takes to be an effective teacher. You don’t just go in and punch the clock. Any teacher worth a pinch of salt is staying after almost every day to help students or to coach an activity. They take piles of papers home to grade on the weekends. They’re stopping at stores to pick up supplies to help with education, often buying them out of pocket.

“Yeah, but they get the summers off.” In most states, they don’t. Many states have summer school teaching programs. Other states require teachers to spend their summers getting further education just to maintain their teaching license. If you want to advance in the profession (to teach AP classes and the like), you have to obtain additional degrees, again during the summer. These expenses are almost always out of pocket.

I was inspired by a great many teachers in my life. Some of the biggest inspirations were my second grade teacher, Mrs. Ferguson; my high school English teacher, Mr. Byrn; and my college biology professor and advisor, Dr. Dolphin. Those three are at the head of the line, but I could name many teachers that had a profound positive impact on my life. They stayed after school to help with extracurricular activities or to be there for students who needed more help. They sponsored clubs and coached teams outside the school day, often for no compensation. Their office doors were always open if I needed help – or if anyone else needed help.

Teachers are underpaid, not overpaid, and there’s not nearly enough of them. If we as a society continue to put a crunch on teachers, making it so that they can’t afford to be in the classroom any more, the ones with ability will leave. So much for training the next generation.

I am extremely happy with every tax dollar of mine that goes into the public school system, and I wish a larger percentage of my tax dollars went there. Cutting back on and insulting teachers is an incredibly unhealthy precedent for the future of America.

6. David Foster Wallace on learning how to think
Choose what you think about and you’ll think more effectively.

“‘Learning how to think’ really means learning how to exercise some control over how and what you think. It means being conscious and aware enough to choose what you pay attention to and to choose how you construct meaning from experience. Because if you cannot exercise this kind of choice in adult life, you will be totally hosed.” – David Foster Wallace

In other words, if you find your mind wandering to thoughts of Charlie Sheen’s “tiger blood,” catch yourself and put some effort into thinking about something else more worthwhile and valuable for your time.

(Yes, I’m pretty sure the word choice of “totally hosed” was intentional and not convenient slang.)

7. Stevie Ray Vaughan playing “Pride and Joy” acoustic
I love acoustic performances. They really show the musicianship of the player. Stevie Ray Vaughan is one of the best guitarists of all time, and this performance shows it.

To me, it sounds like there are several guitarists playing at once. I’m also impressed how he can get the crowd back into it at various points without dropping the melody. The amount of hard work and dedication that this level of skill requires is mind-blowing and a real testament to the power of practice.

8. Videos of soldiers returning home to see children
These five videos got me.

Regardless of how I feel about military conflicts, I have immense respect for the sacrifice that members of the military make, particularly ones with children. The people in these videos obviously are deeply loved by their children. They’re good people, doing a tremendously difficult job, and they’ve earned my respect.

9. I Have A Dream, broken down
One of the most valuable lessons anyone ever gave me was when one of my mentors told me to watch the famous Martin Luther King “I Have a Dream” speech. Here it is again:

He told me not to watch it for what was being said (though that is powerful). He told me to watch how King delivers the speech. How he takes pauses in between the key points. How he constrains his emotions and only lets them fly at very key moments in the speech. How he speaks slower than people often do in conversation.

Everything you really need to know about speaking in public and having an impact is right here.

10. Bill Moyers on reading and television
To me, this sums up why I often turn off the screen and turn on the printed page.

“Television can stir emotions, but it doesn’t invite reflection as much as the printed page.” – Bill Moyers

Television programs are great for making me laugh or cry, but it rarely makes me think or reconsider the world around me. Mostly, it just reinforces what I already think.

If I want to grow and succeed in the world, I need to reflect on new ideas and expand my mind. A book does that far more effectively.

Turn off the television sometime soon and open up a book.