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. Save or pay off debt?
2. Friends burdened by my frugality
3. Motorcycle questions
4. Basic tax questions
5. What’s next after debt payments?
6. Writer’s block
7. Tax moves
8. Credit card cancelling maneuver
9. Impact of credit card change
10. YouTube channels

Over the weekend, I posted a presentation video that several people wanted to see, but their browsers or email readers don’t support embedded YouTube videos.

To remedy that, here’s a link to that video.

Q1: Save or pay off debt?
We have a four month emergency fund. I know the rule of thumb is generally six months. We also have some debt but thankfully none of it is credit card debt. We have:

Student loan: 22K @ 3%

HELOC (fixed): 38K @ 3%

Mortgage (fixed): 169K @ 5.625%

My questions is this: We have about $1,000-$2,000 to spare at the end of each month. What should I do with this money? My wife and I both have employer matched 401K’s that we contribute to monthly. I have an IRA already. My wife does not.

I was thinking of aggressively attacking our debt and just dumping every spare penny we can into the student loan to start. What do you think? Or should I save up six months worth of emergency fund money? Or maybe get an IRA going for my wife? Or 529K’s for my two daughters? Or maybe just blow it on a shopping spree???? (just kidding)
- Tony

At this stage, it’s really more about personal goals than anything else. None of the routes you named are particularly bad, nor are any of them clearly financially superior to the others. The route that should be on top is the route that best matches what you hope to do in the future.

If I were you, I’d spend some time thinking about your goals. Don’t just devote a few minutes to it. Return to the idea regularly and talk to your wife about it. Figure out what you want to be doing in the future. What’s more important to you? Do you have dreams of a small business? Do you want to retire early? Would one of you like to try a completely different career path?

While deciding that, I would simply sock the excess cash away in a savings account and sit on it.

Q2: Friends burdened by my frugality
In the spirit of a lot of the challenges I read about on a lot of personal finance blogs, I decided to create a challenge for me and my live-in girlfriend. Just seven months ago, we were spending nearly $1000 a month on food (eating out and at home). Since then, we have cut dramaticaly and are down to $300 a month. Starting Feb 10th, we challenged ourselves to eat for $100 a month. We weren’t looking to post it online or make it impossible, so we didnt put crazy stipulations on the challenge. We had access to a full pantry, a freezer stocked with hundreds of pounds of free-range beef, plus any giftcards we had to restaurants. Its been going fantastic and we are on track to beat our $100 goal. We are going to continue the challenge for another month or so.

The problem from all of this is that our friends and family members have started footing the bill so that we will go out with them. Im torn because I dont want to become anti-social and unfortunately a large part of our socialization has traditionally been food related. I have tried making suggestions like a pot luck or cookout, but they are stubbornly sticking with restaurants. Shoud we just let them pay for us and thank them, or should we refuse? Im not sure making personal finance headway at the expense of others really “counts” (not that anyone is keeping score).
- Jason

The solution here is to sit down and have a chat with these people about it. Clearly, you enjoy each other’s company – they’re willing to pay for you to go out with them. You shouldn’t let go of a social bond like that.

My suggestion is that you talk to the people you’re currently spending time with and suggest some sort of rotation of hosting. When they host, you could go out to eat and they would pay for you. When you host, you could prepare a meal at home for them. Each of you would have the option of doing whatever you wanted when you host, including the choice of menu, restaurant, and so on.

If you’re talking about a group of three or four couples, you might talk to all of them about this arrangement. This way, there’s no more quibbling over bills or anything like that. The host just grabs the bill for everyone at the end of the meal.

I actually did this with some friends in college for a while, where we mixed up serving meals at our apartments and eating out at various ethnic restaurants. If the person was energetic and confident in the kitchen, we’d eat at their place; otherwise, we’d eat out.

Q3: Motorcycle questions
I had a question regarding mopeds vs motorcycles as a means of frugality. My husbands commute has changed significantly since he had purchased a truck several years ago — now that he is nearing payoff, we are looking to make efficient use of our vehicles. We will be ‘trading’ where he can drive my 2-door car and I will use the truck for my commute (1/4 the drive) to save on gas. His truck is about double the cost of my car to fill. Initially, we talked about the two of us simply trading and/or getting another small used car but now, especially with gas prices and summer approaching, we were contemplating a moped or motorcycle for me to drive when the weather is nice. We can pay cash for a reasonably priced moped or motorcycle.

I ultimately have wanted my motorcycle license for a while but a 49cc moped does not require additional licensing or registration. We live in a rural area that has (mostly) adequate bike lanes for a moped but I have a few reservations. Does it make sense to get the moped that’s immediately cheaper and resign myself to 35mph on the side of a few stretches of posted 55 rural road? Or do I look at used motorcycles that would allow me to ride in the regular flow of traffic but will require additional costs (safety course, license, etc) and more upkeep?

Do you have any resources for selecting the right moped or motorcycle?

Lastly, do you have any insight on how to choose either option in regards to how it may (or will?) alter my professional image? I want to be economical and do what makes personal financial sense but I work in an office with a few direct reports. I dont want to lose credibility. Not many people in this area have mopeds (I’ve seen 3).
- Sarah

I don’t think your questions can be answered with just the information you provided.

For starters, how long is your regular commute? The longer it is, the more a motorcycle makes sense because it allows you to keep pace with traffic. If your commute is ten minutes and a moped turns it into fifteen, it’s not a big deal and I’d go for the moped. If your commute is an hour and a moped would turn it into an hour and thirty minutes, it is a big deal.

As for your professional appearance, it depends on what your profession is. Are you going to be transporting people around town? If so, a moped probably won’t cut it. For an awful lot of professions, though, the vehicle you have in the parking lot has little impact on your impression inside the walls of the business.

Q4: Basic tax questions
I landed in USA in May 2010 for work. I worked in San Francisco for 2 months (May to June 2010) and in Chicago for 4 months (July to Oct 2010) for a total of about 6 months – exactly 180 days.

Lot of tax was deducted as I got my SSN after nearly 1 month, and California taxes were high compared to Chicago taxes.

I returned back to India in Oct 2010 and I want to file my taxes. I got my W2 form from my employer. Should I file taxes in Chicago and California seperately ?

Also can you help me with the some Tax agencies who can help me in filing taxes.
- Naveen

If I understand your situation, you would file California state taxes for the period worked in San Francisco and Illinois taxes for the period worked in Chicago. You would file federal taxes for all of it.

This is, of course, assuming that you worked for two distinct businesses in this period. If you were working for one business and were “on location” part of the time at the other site, you’d be filing state taxes only for where you were actually employed.

Most of the major tax filing businesses in the United States can easily handle this. I have worked with H&R Block in the past with success.

Q5: What’s next after debt payments?
I am currently able to save 45% of my after-tax income (45% = $1,480). All of this money – except for $99 – goes toward paying off my student loans. (The $99 is my contribution to my 401(K) at work, as my employer matches this contribution dollar for dollar up to that amount.)

In a few months, I will have paid off all of my debt (!). I’m wondering: how do I start saving that money? My long-term goal is to be able to afford a piece of land to build a home. With that savings goal in mind, how do I determine what percentage to save for retirement, what percentage to save for the land, and what percentage to invest? Do you have any recommendations?
- Rebekah

My back-of-the-envelope math says you’re saving – even with your employer’s contributions – somewhere around 5% of your salary for retirement. I would add to the 401(k) until that amount is around 10% of your total annual salary. Since I don’t have all of your numbers, I can’t say how much that would be.

The rest of your money should be used for whatever future goals you have, which appears to focus heavily on purchasing land and then building a home on it. I would make sure that I had an emergency fund first, one large enough to carry you through at least a few months of unemployment.

Once those things are taken care of, start saving in earnest for your land. Figure out how long, at your current savings rate, it will take to get the amount you need, then invest appropriately. If the timeline is less than ten years, keep it in cash. If it’s more than ten years, put some of it – say, 50% – into an index fund using a major brokerage.

Q6: Writer’s block
What do you do when you get writer’s block?
- Tanya

For starters, I try to have articles in the bank so that if I do have writer’s block, I don’t miss an article here on The Simple Dollar. Sometimes, you’ll read an article and it’s something I’ve written shortly before it’s posted. Other times, it might be something that’s been in the bank for a month or two.

When I have writer’s block, I usually read. I’ll sit down with several books that I know have material inside of them that gets my mind spinning on topics related to personal finance and personal growth and I’ll just re-read them with an open notebook and a pen near me. Sometimes, I’ll engage in activities that produce similar thoughts, like grocery shopping or cleaning out the pantry. Whenever I have the first semblance of an idea, I jot it down. I just keep doing that until I have a good page or two filled with ideas.

I then sit down with each of those ideas and brainstorm and research. Again, I’m not trying to write – just trying to collect ideas. Some of them are non-starters, so I toss them. Others, I grow a bit.

By that point, the juices are flowing enough that I can usually start writing an article. Of course, all of the ideas are out there in front of me already.

Q7: Tax moves
Myself: Earning $83K per year, not currently contributing to 401K because I’m paying off $40K of credit card debt
Husband: Earning $56K per year, also not contributing to 401K because of his student loan

My husband just found this job in July of 2010. Prior to that, he was working part-time making under $20K per year. We have always received a refund during tax time. However, this year, I found out that I have to pay taxes because not enough money was being withheld from my paycheck even though I claimed the same exemptions/deductions (1) on our W-4s as in previous years and even have additional money withheld. I’m trying to understand how this happened: is it because of my husband’s new job, so now we’re in a higher tax bracket? I was playing around with a W-4 calculator and if I completed the questionnaire correctly, it says to claim 0 (which I was planning on doing this year anyway) and have an additional $325 withheld every paycheck! I was stunned. I am now not motivated to make more money because I feel Uncle Sam is taking it all away from us.

We were planning on opening an IRA account – will this help with our tax liability?
- Sally

I’m almost certain it’s because of your husband’s new job pushing you into a higher tax bracket. Is your husband having anything deducted from his check for taxes? I’d also double-check the tax math just to make sure.

I think the questionaire you filled out is assuming that your husband is not deducting a dime from his paycheck in the coming year and that you’re shouldering the full tax burden for both of you.

An IRA will help just as much as 401(k)s would. In fact, just using your 401(k)s at work will probably be more helpful if your employers offer any sort of matching.

Q8: Credit card cancelling maneuver
I was wondering if signing up for a credit card, getting the reward, and then canceling it will effect my credit score. Right now I have one credit card, which I pay off every month, but I want to sign up for a couple credit cards with good airline miles rewards.

There are some where the annual fee is waved for the first year. Will it effect my score if I just use them enough to get the rewards, then cancel them before the year is up? I’ve never had a late fee and I always pay off my balance, but as I will be looking for a job in a tough economy next year, I wouldn’t want to have a lowered credit score just to get a few thousand miles.
- Nikki

It’ll negatively affect your credit score in the short term, but the impact will be quite small and within a year you’ll be back to normal.

I would read the offer very carefully before I did this, though, to make sure that you are allowed to cancel in this manner. Many introductory offers like this have subtle strings attached, requiring certain uses before cancellation.

Companies aren’t out there to just hand out rewards, after all.

Q9: Impact of credit card change
Last year my US Bank College Rewards VISA was “upgraded” to a US Bank VISA without a rewards program but with an annual fee ($95).

I’ve had the credit card for about 6 years and because the card no longer has a rewards program but does include an annual fee I would like to switch credit cards. Rather than keeping the US Bank VISA I would like to cancel it and open a Delta Skymiles Credit Card.

Can you give me idea of how this change will affect my credit? If I’m looking to make a big purchase soon (car, or home) would it be best to postpone this change?
- Cassie

Do you have any other credit cards? If you do not, then this move will have a mild negative impact on your credit that will last for a few years.

Why? It’s all about the length of your credit history. If that credit card is the oldest form of credit you’ve obtained, cancelling it will reduce the length of your credit history, and the shorter your credit history is, the lower your credit score.

If I were you, I’d get the new card, keep it for a few years while paying the fee on the old card, and cancel the old card in a while.

Q10: YouTube channels
What YouTube channels do you subscribe to?
- Benny

I subscribe to several, but none of them are strictly money-related. Personal finance doesn’t translate really well to video, as far as I can tell. The ones I do subscribe to generally fall into two categories: food and gaming.

Food channels I subscribe to include Foodwishes, Yellow Saffron, Cooking Light, Show Me the Curry, and HungryNation.

Gaming channels I subscribe to include The Dice Tower and Drakkenstrike.

Mostly, I use YouTube for live musical performances, to tell the truth.

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.

One of the biggest perks (for me) of writing The Simple Dollar is that sometimes, when I’m interested in reading an upcoming book that’s potentially connected to The Simple Dollar’s topics, I can write to the publisher and request a review copy – and sometimes, they’ll send me one. This, of course, leads me to regularly browsing the “coming soon” sections on Amazon for books to request from publishers or to reserve at the library if I don’t hear a response.

I don’t always review everything that I request, though. Some of them turn out to be pretty awful – they don’t say anything new or don’t present the information in an interesting way that might click with someone, for example. Other times, the book turns out to be too far away from what I write about on The Simple Dollar.

This book, Enchantment by Guy Kawasaki, seemed to fall into the latter group at first. The book’s focus is on “the art of changing hearts, minds, and actions,” so I was mostly interested in reading it for ways to improve my own writing here in order to make some of my arguments and ideas more compelling to you, the reader.

What I found, though, is that the ideas in the book spread much further than that. The ideas here work on everything from retail transactions to job interviews to building new friendships at a community meeting. It’s about convincing people in a positive way.

Since I regularly talk about negotiation and bartering on The Simple Dollar, it turns out there actually is a lot of worthwhile ideas in Enchantment.

1. Why Enchantment?
Kawasaki loads up the first chapter with several examples of enchantment, but mostly they come down to treating people in a positive fashion, often in such a way that it takes them off their game. Your goal isn’t to get people to do what you want, but to make them happy – and perhaps you will be rewarded for that happiness.

2. How to Achieve Likability
The first piece in the puzzle is to be likable. If the other person does not like you, they cannot be enchanted by what you have to show them. Smile genuinely (by thinking pleasant thoughts). Dress appropriately and cleanly (not overdressed, not underdressed). Don’t impose your values. Find shared passions. This is basic “How to Win Friends and Influence People” stuff, but it works.

3. How to Achieve Trustworthiness
If they like you, how can they trust you? That’s the next step. The easiest way to do that is to simply be the best possible person you can be – honest in all of your dealings and always putting your best foot forward. Doing that all the time eventually builds a strong positive reputation, one that will often precede you in your dealings with others. If you meet someone that knows of you based on the positive words of others, you’re already most of the way to trustworthiness.

4. How to Prepare
Enchanting others takes preparation. The easiest way to do that, of course, is to create something great that basically does the hard work for you, but we’re often not in that position. In that case, Kawasaki offers a lot of tactics. Perhaps the most effective (in my experience) is to do a pre-mortem, where you think about how you want the exchange to go and try hard to visualize some of the problems you may encounter so you can be ready to easily handle them if they come about. What will you do if someone says no? If you don’t have an answer, you’re going to have a hard time enchanting someone.

5. How to Launch
The key to this for me is always to tell a story, preferably one that the person can relate to. Within that story, I try to make sure to plant lots of “seeds,” which are basically connections to the situation at hand so I can tie that story right to whatever I’m wanting to achieve. If the story is entertaining and compelling enough, I’ve usually hooked the person right then and there, which makes making a deal that much easier.

6. How to Overcome Resistance
Not everyone is going to be immediately bowled over by your great idea. Kawasaki offers a ton of ideas for handling that in this chapter. For me, the key one is finding a label. A label? In essence, it’s a way to put you and the other person in the same boat through a common label. One thing I’ve actually done several times recently is to point to something very local that will strike a chord with them and make them smile, labeling us both as Iowans. It’s something very effective that we inadvertently do all the time, but at the right moment it can make all the difference.

7. How to Make Enchantment Endure
How do you keep people hooked once they’re in? For me, the keys are to make things consistent and make things easy to spread. This is the reason that successful blogs tend to work. They’re consistent – they post on a pretty regular schedule and you can reliably find new stuff when you visit that’s reasonably in line with what you expect. On top of that, they’re easy to spread – you can easily share links with your friends or on Twitter.

8. How to Use Push Technology
This chapter and the next talk about how to enchant people online. Kawasaki does this by separating online technologies into two separate groups – “push” technologies, like Twitter, and “pull” technologies, like blogs. “Push” technologies are ones where you “push” some element into the stream someone’s already looking at, like Twitter. How do you do that? First, you have to get them to follow you, and that’s done by putting your best foot forward, conversing with people, and having interesting things to say. From there, you have to continually present compelling things so that they’re interested in you.

9. How to Use Pull Technology
On the flip side, “pull” technologies require people to leave the normal things they look at – like Twitter and Facebook – and come to you (things you’ve done elsewhere, like your blog). You can do this in a lot of ways, the most obvious being linking to your “pull” things in your “push” feeds (like linking to your site on Twitter). The challenge can be balancing that with being interesting, because if you do it too much, you become merely a self-promoter.

10. How to Enchant Your Employees
What if you’re an employer? How do you enchant your employees? One big step is to never ask them to do what you yourself wouldn’t do – and it doesn’t hurt to show that sometimes. The best boss I ever worked for once told a janitor to go home a half an hour early because he was worried about his mother. That boss then picked up the broom and finished the janitor’s daily sweeping for him. How could you not want to work hard for a leader like that? It only took him half an hour, but the word of it built up so much rapport that it was worth weeks of effort for him.

11. How to Enchant Your Boss
The key for enchanting your boss, in my experience, seems to be underpromising and overdelivering. If you promise a dry two page report and deliver five slick pages with pictures and compelling writing, you’ll enchant your boss. Another great tactic that Kawasaki mentions is to deliver any bad news you have as soon as you’re aware of it rather than later on when it can constitute a major crisis. Don’t be afraid to be the bearer of bad news as long as you do it as quickly as possible.

12. How to Resist Enchantment
This chapter, to me, was the cincher that convinced me to review this book here on The Simple Dollar. We constantly have these types of enchantment techniques worked on us. How do we resist? The best tactic is to set a goal before interacting with the people and things between us and that goal. Keep that goal in mind and head for that goal above all else. Do your research beforehand so that you know facts, not what the others are presenting to you.

Is Enchantment Worth Reading?
In this review, I only scratched the surface of what’s discussed in each chapter. Suffice it to say, the core idea of the book is very strong and the presentation of ideas to make it work is equally strong. If you’re in a position where you find it difficult to communicate with people or persuade them of what you want, then this is going to be a valuable read.

For some people, the stuff in this book will seem elementary. That’s generally because they have a great skillset for negotiation and communication for others. For the rest of us, there are lots of ideas in this book that can help. I actually used a few of them as I was reading, stopping my reading just to take care of a little tactic.

Check out additional reviews and notes of Enchantment on Amazon.com.

The other day, I was chatting with someone and I told them that I was a personal finance writer. That person’s eyes got big and they said, “You mean like Dave Ramsey?”

I told them that I supposed so. She then proceeded to tell me all about how a great plan for debt repayment had really turned her life around and that everyone should be doing this. I nodded, because I agreed with what she was saying.

At that point, I asked her how much debt she’d paid off. She said, “Oh, not much. We just started.”

The balloon deflated. How can she tell me how great that plan is if she’s not actually done it?

On The Simple Dollar, I try extremely hard to stick with stuff I know about through my own experience.

I write about debt repayment because we have paid off every single debt my wife or I owed at our financial bottom. The only debt we have right now is our mortgage, which we chose to get into well after our financial recovery was in full swing.

I write about side businesses and entrepreneurship because I’ve been earning a living off of what started as a “side business” since 2008. I started a side business in my spare time (you’re reading one significant component of it) and eventually built it into something I could work full time on.

I’ve held multiple 401(k)/403(b)/TSP style retirement plans. I currently have a Roth IRA. I’ve had investing accounts with several investment houses. I’ve had checking and savings accounts with multiple banks.

I’ve faced spending addiction, temptations, and self-doubt. I’ve struggled (and largely succeeded) with getting my life and information and time organized. I’ve set lots of goals, succeeded at some, and failed at others.

Almost everything I write about on The Simple Dollar comes straight from my own life. I’ve done most of this myself, and I’ve seen what actually works for me first hand.

One big thing I’ve learned along the way is this: in terms of day-to-day life, what you have experienced is far more valuable than what you haven’t. The things you’re actually doing mean far more than the things you’re thinking about doing.

Your actual experiences, as mundane as they might seem, are far more worthwhile than the things you want to be doing – or the things you think others should be doing.

Over and over again, I’m impacted when people tell me about the things they’ve actually done and how they achieved them. I’m usually turned away by people who tell me about things they haven’t done – or, even worse, expect me to do what they suggest, even though they’ve never done anything like it or are actually doing the opposite.

I’ll use smoking as an example. I grew up in a household with smokers. A health teacher standing up at the front of a classroom telling me how bad smoking was did not convince me to not smoke. What worked? Watching older people I care about gasping for air and using oxygen tubes did the trick for me. Why? It was their personal experience that made the difference.

Religion is another example. Give me someone who has spent a lot of time studying various religions, quietly goes about conducting themselves in a positive manner in society, and can talk from personal experience if asked about why they found themselves where they are and how it underlined their moral code and I’ll listen to what that person has to say. Give me someone who just reiterates what they heard in church or on the radio the other day and is telling me how to live my life and I’ll quickly ignore them. What led me to my personal set of religious and moral beliefs? It wasn’t the pontificating of a religious or an atheist leader. Rather, it was talking about where our beliefs came from with a lot of different people from a lot of different backgrounds. I found that there were a lot of things in common and a lot of diverse and rational explanations for those things.

If you want influence in society and with others, walk the walk before you talk the talk about anything. I’m not talking about chatting with your friends here. I’m referring to when you discuss things of importance with people.

You are always far better off sharing your own experience and talking from that than you are telling people what to do with no backing behind it.

Let me make it simple.

I do not like mixing financial relationships with friendships.

I do not want to be friends with the person that is selling me a product. I do not want to be friends with my banker. At the same time, I don’t want my friends to be selling me products or asking me for loans. Please, do not put me in a position where I feel obligated to lend money from you or buy something from you because of our friendship, because that question alone adds some poison to that relationship.

Let’s look at it from another angle.

When I go to the bank, I’m not looking for a friend. I’m looking for a business relationship. I’m probably depositing some money or making a withdrawal. I might be taking out a loan. In any case, I’m only in the bank as a necessary step in getting to where I want to be. I don’t want to have to pay them interest and I would love to be able to earn more interest on my savings. If I have an opportunity to jump ship to a better situation, I’ll probably do that. It’s not friendship, it’s business.

When I go to buy something and a salesman approaches me, I know that the person is going to try to sell me a product. That person might be a source of some useful information, but I also know that they’re earning money for the sole purpose of extracting cash from my pocket. Again, it’s not friendship, it’s business.

On the other hand, when I hang out with friends, I’m not looking for a business transaction. I’m looking to spend time with people I trust and value who I can talk to freely about my situation without worrying whether they’re going to sell me something or they’re going to want something from me. Here, it’s not business, it’s friendship.

Every time that line is crossed and I have a friend who wants to sell me a product or wants to borrow some money from me, the dynamic of our relationship changes.

There is an expectation that money will change hands in the future. A salesman expects that you’ll buy a product from them and pay for it. A borrower knows that he or she will have to repay you in the future. A lender knows that you’ll have to repay him in the future.

You can no longer easily talk about things you’ve purchased or other money moves around this person because they’ll wonder, “Why didn’t you buy from me?” or “Why didn’t you pay me back?” or “Why didn’t you lend me as much as I asked for?”

You (and/or the other person) will suddenly feel obligated to make a financial commitment to that other person, one that might not be easy for you to do in the state of your own life. That’s not a situation that results in positive feelings.

Even worse: what if you can’t come through on your end of the arrangement? Are you going to tell your friend, “Well, I’m not going to buy from you like I said I would” or “Guess what? I’m defaulting on that $100 you owed me”?

Because of all of these factors, I make it clear to my friends that I won’t borrow money from them, won’t lend money to them, won’t sell to them, and won’t buy stuff from them. Mixing a financial relationship and a friendship is simply something I do not want to do.

If you feel the same way I do, don’t be afraid. Go out there right now to Facebook or Twitter (or whatever you use to talk to your immediate social circle) and simply add the title of this article as a status update.

I don’t want to be your client. I don’t want to be your lender. I want to be your friend.

If they want to know more, refer them to this article. Or, better yet, spell out the ideas above in your own words.

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. Winston Churchill on environment
“You shape your houses and then they shape you.” – Winston Churchill

You choose your friends, but then their continued presence influences you and alters your direction. The same is true for almost every major element of your life: your job, your hobbies, your home, your spouse.

Choosing such things should be done very carefully, because they will shape you in more ways than you realize.

2. A box of crayons

About once a week, I’ll sit down at the kitchen table with my kids and a giant box of crayons. We’ll each take a sheet of blank paper or two and just draw something, whatever we want.

The results of these projects are both insightful and inspirational. My oldest child, for instance, always draws his family. He draws me, Sarah, himself, and his two younger siblings. My pictures usually involve trees. My daughter almost always draws pictures of girls in dresses (she’s three – you can actually see her artistic improvement on a week-by-week basis).

Every once in a while, one of these pictures will capture something really interesting or inspirational. A few days ago, my son drew a picture of himself with a very serious look on his face, while everyone else was smiling. I asked him why, and he said, “I want to be better than I am right now.” “At what?” “Everything.”

3. Michael Jordan on failure
As I’ve mentioned on The Simple Dollar before, I enjoy watching baseball and basketball (but not football, interestingly). Basketball is probably my favorite sport to watch from a pure artistry standpoint, and Michael Jordan is likely the best to ever play the game. Why?

“I’ve missed more than 9,000 shots in my career. I’ve lost almost 300 games. 26 times, I’ve been trusted to take the game winning shot and missed. I’ve failed over and over and over again in my life. And that is why I succeed.” – Michael Jordan

When you fail, you have two choices. You can either keep laying on the ground, giving up. Or you can get up, dust yourself off, and keep trying. The first option doesn’t lead to success.

4. Clair de Lune from Scratch
This is a long series of YouTube videos that walks someone who knows nothing about the piano through learning Clair de Lune by Claude Debussy.

While I’m past some of the basics in this series, the straightforward guidance in this series is a great stopgap when I’m ready to tackle something new between my normal lessons.

5. Benjamin Franklin on want
The more you have, the more you want.

“Money never made a man happy yet, nor will it. The more a man has, the more he wants. Instead of filling a vacuum, it makes one.” – Benjamin Franklin

Studies have shown that once you reach a minimum income level to cover your basic needs well, people actually become less happy with more income. The peak is somewhere around $45,000 per year.

More money won’t solve the problems you have in life. The solutions to those problems need to come from somewhere else.

6. Presentation advice
On occasion, I speak publicly. Because of that, I’m often out there looking for advice on how to present more effectively. In that search, I found this video.

This is probably the best short collection of tips (presented while also being entertaining) that I’ve ever seen. If you can handle these things, your presentation will improve quite a lot. It made me want to get up on stage, which in itself is an impressive feat.

7. Charlie Munger on learning
“This is really crucial: Warren [Buffett] is one of the best learning machines on this earth. The turtles who outrun the hares are learning machines. If you stop learning in this world, the world rushes right by you.” – Charlie Munger

Simply put, if you want to succeed at life and earn more money, you need to learn as much as you can about not only your subject area of expertise, but about every topic you can. The more you learn, the bigger the advantage you have in making connections that others do not see, and that’s really the route to earning money in this world.

8. Water Lilies (detail, 1914) by Claude Monet
Spring is in the air.

Monet’s paintings remind me of spring and make me want to sit by a lily pond somewhere.

9. Toodledo
About a month ago, a friend suggested I try out Toodledo for my list-making needs. I make a LOT of to-do lists and have used Remember the Milk for years.

I used it. I liked it. This week, I migrated my lists to Toodledo. It just does everything I need in a somewhat less cumbersome way, which is really all I can ask for.

10. “Hey There Delilah” by Plain White T’s
First, a bit of backstory. My kids like watching Sesame Street. A few times over the past year, they’ve used a segment on there about the letter T, which you can see here.

For some reason, that song stuck with my kids. They would sing it all the time around the house and try to get me to sing it as a bedtime song.

Since I didn’t know the words, I wound up eventually searching online for it, and I learned that the “T” song was actually a parody of a song I’d never heard before, one that embedded itself quickly in my head.

This morning, I played both versions for my two kids and they actually liked the original better. They both sat still as I played it several times, rocking back and forth in a chair.

So, anyway, here’s the song.

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

Artichoke hearts are one of my favorite foods on earth. Whenever I see fresh artichokes on sale at the grocery store, I buy several, then look for ways to use artichoke hearts in every dish I can think of.

What I usually do is take the artichokes home, remove the hearts, braise them, then save them and use them in dishes over the next day or two. I usually make a simple dish (like this one) when I’m actually braising the hearts, then use the rest in a more complicated dish the next day.

Here’s the simple dish, fried rice with artichoke hearts and garlic.

Next week, I’ll show you the somewhat more complicated dish, which is my favorite dish I’ve eaten in the last six months.

What You Need
Making enough fried rice with artichoke hearts and garlic for my whole family cost about $5, given the sale price of the artichokes. The artichokes were definitely the most expensive part.

What you’ll need is about a cup of rice per adult (and half a cup per child), a few artichokes, three or four cloves of minced garlic, some olive oil, some additional vegetable oil (preferably peanut oil), a bit of lemon juice, and some salt and pepper. This will get you everything you need to make this meal, plus have some artichoke hearts left over.

The Night Before (or Early That Day)
This recipe roughly splits into two parts: braising the artichoke hearts and preparing the fried rice. The artichokes can be done a bit ahead of time, so we’ll discuss that first.

If you have whole artichokes, your first step will be to properly cut them up. This wonderful video shows how easy that process really is:

Don’t stress out too much over removing the “choke” – the fuzzy part in the middle of the artichoke. You want to remove it, but it’s not harmful if you don’t get every bit. It’s not poisonous or bad for you, it just isn’t that great to eat, like a pumpkin rind.

Before you get started cutting up your artichokes, get a bowl with about 1 cup of water in it and add half a cup of lemon juice to it. As you cut up the artichokes and remove the hearts, you’re going to want to get them in this lemon water as quickly as you can, because if you do not, the artichoke hearts will discolor and turn brown. That makes them look less appealing.

For example:

This is an artichoke heart that I’ve just finished cutting. In the minute it took me to get my camera, it had already discolored a bit.

What I usually do is I take a heart as depicted above, slice it into fourths, then slice each of those quarters into three or four slices. I then add those to the lemon water.

Once your artichoke hearts are ready, take two teaspoons of olive oil and put the oil in a pot over medium-high heat. Wait until the oil is shimmering, then add a minced garlic clove to the oil, then add the artichoke hearts.

Stir the oil, artichoke, and garlic around a bit, then let it cook over medium heat for about five minutes. Lower the heat down to medium-low, add the remaining lemon water, then cover the pot and let this all cook together for fifteen to twenty minutes – until the hearts are tender and have a lemon-garlic taste to them.

You’re done! Remove the artichoke hearts and store them in the refrigerator for later use.

Preparing the Meal
Cook your rice according to the directions – it’ll vary some based on the type of rice you’re using.

When the rice is finished, add two teaspoons of peanut oil (or other vegetable oil) to a pot over medium heat. Wait until the oil begins to shimmer, then add the rice. Stir regularly and cook for twelve minutes, adding the artichoke hearts for the last two minutes. You can also add additional garlic with the artichoke hearts.

That’s it – you’re done. Remove from the heat and serve (preferably with soy sauce)!

Optional Ingredients
The base of this meal is fried rice. You can pretty much add anything to fried rice – chicken, shrimp, beef, water chestnuts, peppers, onions, whatever you like. Be sure to cook the meat thoroughly – don’t cook it in with the rice, although there’s nothing wrong with cooking the meat in a pot, then putting the rice in that same pot for the frying.

It’s simple, tasty, and pretty cheap. Those are all things I like in a meal.

In April 2010, my wife made the choice to step away from her job for the rest of the year in order to be a stay-at-home mom. She chose that period because she knew that she loved her job and that she would be itching to return after nine months.

Her employer made it possible for her to return to her previous position when her leave period ended, which was very gracious of them. Of course, that left us with a period of eight months without health insurance coverage if we did not pay out of pocket.

During that period, my income and our savings paid for our health insurance out of pocket. My wife was able to enjoy a period of staying at home with the children – and it was quite enjoyable for all of us. Our oldest child attended morning preschool and our three year old attended thrice-a-week morning preschool, but aside from that, the five of us were at home. My wife spent time with the kids and I split my time as best I could between work and spending time with all of them.

At the end of that period, my wife chose to return to work, not because we needed her income or her health insurance coverage, but because she missed the joy that she gets from her work.

During that period, the health insurance was a serious expense. If it were not for our living expenses being as low as reasonably possible and having a very healthy emergency fund, we would have really struggled to make this work. As it turned out, the reality of that period showed us that we could have done it for a few years, but my wife wanted to return to work at that point, making the question moot.

I often write about downgrading your job. Here’s the reality of making that choice with regards to health insurance.

1. Plan ahead for your health care needs. Where are you going to get health insurance from if you make a major career change? This needs to be one of the first things you think about, and it becomes more urgent the older you are.

2. A married couple only needs one person with insurance. Self-employment is much more difficult if you’re single because you don’t have a spouse’s insurance to rely on. It’s perhaps not fair (I don’t believe it is, but I don’t have a better idea that doesn’t involve a great deal of government interference), but it’s simply the fact of the situation. If you’re single, self-employment means that you have to come up with your own insurance. If you’re married, you can rely on your partner’s insurance (assuming they have them).

3. Never, ever burn bridges. When you make that leap, you may find that you wish to return to your previous career path if the new path doesn’t work out. Never, ever burn your bridges on the way out the door. Do everything you can to make the transition as smooth as possible and leave with good relationships with everyone. While this won’t mean you’ll get your old job back if things don’t work out, it does mean it’ll be easier for you to return to that career path if you need to. That’s a great hedge if you find out that health insurance isn’t working out.

4. COBRA can really be your friend. COBRA isn’t just G.I. Joe’s nemesis. It’s a federal law that, if you worked for an employer with more than 20 employees, ensures that if you quit your job, you can continue your current health insurance plan for up to eighteen months if you pay the premiums out of pocket. That can be incredibly valuable for a potential entrepreneur.

5. A healthy savings account is absolutely vital. Of course, the key is that you will have to pay premiums out of pocket under COBRA. That can be quite expensive, so the best route to take is to make sure you have enough money saved to cover that insurance for you and your family if you do downgrade your job. Know how much your total premiums actually are and plan for paying for that amount out of pocket.

Obviously, you can shop around for your own insurance and you may be able to find a better package than what you’re able to get through COBRA, but in either case, your savings is vital. It can make the difference between having health care insurance and not having it, and that can make the difference between success and failure.

6. SCHIP and Medicaid are also potentially vital. Both of these plans offer health insurance for low income folks, particularly children. I won’t get into the details of these programs, but if you see a major downward change in your employment coming in the future, you’ll want to know more about these plans.

The key, as always, is to be proactive. Such programs won’t magically appear on your doorstep. You have to be proactive and seek out such solutions. It might take a lot of phone calls, a lot of emails, and a lot of time to find out the details about such programs, but it’s far better to invest that time and effort now and ensure your coverage than to go without.

A final note on the future As I write this, the future of national health insurance in the United States is up in the air. While I am unsure about the specific provisions of the Patient Protection and Affordable Care Act (often termed “Obamacare”), I do think that some form of universal access to health care rather than the piecemeal system we have now would be very beneficial to everyone involved. It would allow entrepreneurs to jump into business plans that they might have otherwise avoided. It would also allow manufacturers to be competitive with overseas manufacturers who do not have to shoulder health care for their employees. While I’m not a politician who has to balance the beliefs and voices of a very wide political spectrum (and I’m glad of that), I do think that everyone – rich and poor – benefits if we work on finding a good solution to the health care problem rather than bickering and fighting and name-calling.

If you want to jump into self-employment or downgrade your job, let your congressperson know that you’re a potential entrepreneur in his/her district that would find starting a small business much easier if there was a palatable solution for health care that makes entrepreneurship easier and more accessible to everyone. There’s money to be made there for everyone involved – the entrepreneur and the health care provider.

Whenever I consider whether or not I should be doing something, I ask myself a very simple question.

Is this moving me towards my goals?

The outcome of that question casts a strong light on the activity at hand. Sometimes, it’s a positive light and it encourages me to move forward. At other times, it’s a negative light, and it makes me back off a bit.

It’s a very simple and very effective litmus test for everything that I do. Let’s break it down a little bit.

First, you’ve got to have goals
For this question to work, you need to have goals for the future. Almost always, I have a bunch of goals going on at once. Some of them are very short term, to be accomplished within a week. Others approach a lifelong journey.

Here’s a snapshot of a few of my goals, just to show you what I mean.

By March 16, I want to have the house prepared for a nearly weeklong visit from my sister-in-law and her soon-to-be spouse.

By the end of June, I want to have about three weeks of articles banked for The Simple Dollar so that I don’t have to worry about content production when I visit Seattle for the aforementioned wedding (and give myself a little bit of breathing room on either side).

By the end of 2011, I want to have “Project X” completed. What is Project X? I’ll tell you about it in the future, but it’s intended to be a fully passive revenue stream.

By the end of 2013, I want to have our home’s mortgage completely paid off.

Four goals. Four different timeframes. Four different sets of influences on me.

So, when I’m looking at what I’m going to do right now, I keep those goals in mind.

An example: I was out running errands earlier. I was near the local gaming shop, so I stopped in. There was a game there that I knew that Sarah and I would enjoy playing. Should I buy it?

Well, Sarah and I play a lot of games together – it’s one way we spend time together in the evenings (a positive towards the goal of being a good husband). On the flip side, we have several games on our shelves already that we’re itching to play (negative toward being more diligent about using stuff we already have), plus the game would cost $40 (negative toward every spending goal). I could also definitely afford to go home and research the game a bit more and perhaps buy it online at a later time, saving some cash.

So I move on, knowing that such a choice is not really taking away anything I might enjoy, but also knowing that it is yet another step towards goals that I have.

Does a bad answer always mean no?
Now, it would be easy to perceive this as being a reason to never indulge in anything that doesn’t take me toward a goal. Abandon fun, all ye who enter here? Not so much.

Yes, if something is a negative towards every goal that I have, I won’t choose to do it. Drug use? It’s not going to happen, because it’s a negative towards many of my goals (savings goals, being a good parent, etc.) and a positive towards none of them.

On the other hand, when a friend calls me up and invites Sarah and I over to do something fun, I’m almost always going to say yes. Sure, that time spent might be a negative towards some of my goals – I certainly could spend my time getting prepped for my sister-in-law’s visit or working on “Project X” – but it’s also a positive towards other goals, such as building key friendships and enjoying non-idle leisure (my friends don’t just sit there watching whatever’s on television).

Sometimes, I’ll even go ahead with things that are contradictory to more goals than are benefited by the choice. For example, I might decide to buy a new boardgame out of my personal spending allowance for the month. Yes, I could save that money for another goal and yes, there probably are games on my shelf that could be played instead.

But I recognize that such a choice really is a rare splurge. It is not something I do every day – or every week. Occasionally doing such a thing not only maximizes the fun of doing something so frivolous, it also reminds me that doing this every day would not be nearly as fun.

Doing something like that is a fun occasional splurge, but it’s not nearly as fulfilling over the long term as making consistent choices that take me towards my goals.

The big win
Of course, the best options are ones that simultaneously bring me deep enjoyment and move me towards a number of goals.

A period of writing where the pressure is off is a great example of this. I thoroughly enjoy writing when I’m not under some sort of time crunch, plus such writing almost always carries me towards lots of personal goals.

Planting the garden is another great example. It’s often a goal in and of itself, but beyond that, it’s a very frugal activity that gets me outside and gets some exercise (using the hoe, etc.). I enjoy every second of it, too.

Going to thrift stores with my wife often hits several things at once, as I’ll sometimes find things we’re looking for at a huge discount, plus I’m bonding with my wife without spending much money at all.

Playing with my kids, reading a challenging book, preparing dinner at home – these all fall under that umbrella.

When those things happen, when I hit a bunch of goals and do something deeply enjoyable, then I truly feel like my life is headed in the right direction.