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. Bank errors and credit cards
2. DirecTV contract
3. Pay taxes or shore up?
4. Next steps
5. Rental income as retirement strategy?
6. Iowa weather
7. High rate checking account
8. Sweating the small stuff
9. Missing old lifestyle
10. IRA question

Several people have asked me if I look at things like Amazon’s Lightning Deals and Deals of the Day. I do, actually, but I usually do it only if I’m looking for a specific item.

I usually have a list of items around our house that are still functional, but eventually need replacement. Our blender is a good example of this – the lid is missing, there’s a crack in the jar, and the blades are awful.

So what I do is I automatically search those things for “blender” just to see what pops up. I use this method to make it automatic.

If a great blender shows up, it’s likely I’ll go ahead and pick it up.

Q1: Bank errors and credit cards
I bought a house in 2009 and recently got married and am expecting our 4th child (he has two, I have one and we’ll have another one at the end of summer.) I have the house listed and it’s in a pretty popular price range in our little town. I am hoping to sell it by the end of summer and if not, I will rent it out.

Back in November, my mortgage holder sent me a statement that said I had over-paid into my escrow account and that they’d adjusted my payment. It was lowered $60. I paid it, on time, like usual. Then I thought about it. I had paid no taxes in 2009 because the previous owner was under the homestead act and didn’t have to. When I bought it in September of that year I wouldn’t owe any for the year either. But I would for 2010. So I called the bank and explained why I thought it was wrong and we agreed it was fine to make up the $60 into escrow over the next two months.

The next three statements were way out of whack. One said I owed double my payment (as if I hadn’t made the previous month’s.) The next month showed about the same. I called each time and confirmed they’d gotten it and Teresa, the gal at the bank in charge of my account said some how the statements were wrong and we’d get it fixed that I was current on my account. I was in contact with her several times. Two months ago I noticed there was a late fee on there, resulting from the “late” $60. I called, talked to someone other than Teresa who took it off and said everything was cleared up. I have never been late and have the bank statements to prove it. However, I have a “ding” on my credit report for a “possible negative action” and it lists the bank as the insitution that reported it. I also got a notice from my 2nd oldest credit card (that had a $7 balance) that lowered my limit from $2,000 to $500 due to the change on my credit report.

Is the bank wrong, or am I? I paid what they asked me to each time and I have never been late other than their mistake, which we agreed upon and was only caught thanks to myself thinking ahead. How do I fix this? Is it okay to cancel the credit card? That is the ONLY negative (or possible negative) action on my report and it’s only on one of the three reports. My husband and I will probably look at building a new house in the next couple of years and I don’t want to jeapordize our plans.
- Erin

I don’t think the “ding” will have a huge negative impact on your credit report. Still, I would be very suspicious of the behavior of the bank in this situation. Based on what you’ve said, it does not sound like the bank is handling the situation well.

The only impact of cancelling that credit card is that it would alter your debt-to-credit ratio a little, but if you have multiple credit cards and you’re cancelling one with just a $500 limit, it’s not going to have a big impact. If it makes you feel better, cancel it, but it won’t erase the “ding” on your credit report.

Your best approach would be to demand the bank get that removed from your credit report. Don’t be afraid to keep escalating the issue until it gets fixed. If you have documentation showing that you’ve made every payment as you should, they should not be “dinging” your credit report.

Q2: DirecTV contract
Trent, long time reader, first time needing your help! Wanting to simplify, not watch so much tv, and cut expenses, I’ve notified Direct tv of our intent to cancel. We signed up almost three years ago, so no contract. I thought. In March, 2010, we obtained a dvr through a third party, our locally owned private telephone company. Small town, we know these people, so it was very informal. I have verified with them that I never signed anything. Yesterday, DTV said I would owe them about $250. for the remainder of our “contract”. I’m taking this through the channels; first speaking to a woman in the retention dept. Following her instructions, I emailed DTV, and just received a response, with a copy of the contract, that supposedly I was presented. Of course, it’s just a form and has no signature. After a search, I’ve noticed it’s apparently quite difficult to get DTV to actually cancel this penalty fee. Your thoughts would be much appreciated. Is it a concern that I notice at the bottom of your page, that they are one of your sponsors? I don’t want to cause a “rift”.
- Peggy

My suspicion is that you’re being charged for terminating the lease on the equipment. I would highly recommend that you read what you signed to get DirecTV service very carefully. You may not have signed a contract, but you had to have signed some sort of agreement in order to get the service at all.

Services like DirecTV that involve both programming contracts and equipment leases can be very challenging to get yourself out of. Unless you can hold up a copy of all documentation you signed and demonstrate that there is no lease arrangement with DirecTV, you’re likely fighting a losing battle. They make it difficult to get out of such arrangements on purpose, as people will often just continue the service to avoid the conflict. It’s a good business model, though not a customer-friendly one.

DirecTV buys ad space on The Simple Dollar, but I have no “sponsors.” No one alters a word that I say, and if they try, they’re quickly told to get lost.

Q3: Pay taxes or shore up?
My fiance and I currently moved back to the US after living abroad in England (myself for only 5 months, him: off and on for about 2 1/2 years). We’ve been back in the States since early October, and since then we’ve re-established a household and are rebuilding our savings. We currently have about $5200 in an emergency fund, and another $500 or so in various accounts for things like vet expenses and car maintenance. We own our car (share) and have a reasonable rent ($920/month) I believe strongly in saving as much as reasonably possible and have so far been able to put aside about half of all my income. I currently work full time as a teller for $12/hour. And, at 24, am starting to plan for (our) retirement. Both my finance and I don’t have any debt to our names.

My boyfriend works in the music industry, which generally yields a good windfall every few weeks that covers our rent and utilities. It’s sporadic work, so he sometimes moonlights as a graphic designer, bringing in a decent amount of freelance work. The problem is this: as he was back and forth so frequently between the US and England for 2 1/2 years, with modest pay, he hasn’t filed his taxes in 3 years. When I took a look at his tax situation a few days ago, I realized he would end up owing between $5000 and $6500 in taxes.

My question is this: aside from the moral implications (I believe in paying taxes), would it be more fiscally prudent to risk another year not filing? I feel like another year will help us recoup from moving half a world away and also allow us time to bring in more income and reach our savings goals ($15,000 in emergency fund, start on both retirement funds). I feel like we’re currently crawling at a snail’s pace financially and I just don’t feel secure clearing out our savings accounts. We also both have low credit scores due to a lack of credit history and medical collection accounts, so I fear any loan we qualify for would come with a high interest rate.
- Lindsay

Playing games like this with the IRS is like playing Russian roulette.

Typically, when you earn money, it’s reported to the IRS. They keep track of what income should be reported for people. Their agents usually deal with the bigger fish and the easy-to-catch fish first, as the time invested for the reward makes more sense, but they do often eventually go after the small fish (which is what you guys are).

Should you not file? It’s a gamble. It’s not one I’d personally take. If I were you, I’d file and get the issue out of the way now when it’s relatively small.

Q4: Next steps
I feel like I’m at a crossroads in my financial planning and I’m not really sure what my next steps should be. For starters, I’m graduating next month with a Masters Degree in Counseling Psychology. I earned my masters at a costly private college because it was the only program in my area that would allow me to keep my current job and combined with undergrad, I have about 72K in student loans ( I only burrowed to cover tuition); all of which are currently in deferment. In the past year, I’ve finally become disciplined and managed to save $11,000 into my ING account. However, I’m not sure what to do next. Should I take a large chunk of this money (like half) and put it towards my student loan debt? I have no credit card debt or car loan debt and neither does my husband. Some people have also suggested investing a small amount ~1500 in gold and/or silver and putting the rest into a money market fund. Or would it be best to leave the bulk of this money alone as emergency money? I’m also planning a vacation to London for next year to visit family and would love to attend the opening ceremony at the summer Olympics while I’m there. This is something I’ve always dreamt of doing, but it would cost me approximately $654 for the tickets, which would be a complete splurge, but a lasting memory. My current salary is 55k. In my mind I feel that making a smart choice at this point would make a big difference for me in the future. What would you do?

A Few More specs about me: Married, 31, w/one preschool age child. Combined HH income is about 94K, but we live in the SF Bay Area so that’s not much for this area. My employment is relatively steady (I work as a counselor in public college) strong future prospects with my new degree but unfortunately bad timing – I anticipate being able to find a full time tenured position as a college counselor in the next 1-3 years, my husband works in the hospitality industry and his income sometimes fluctuates. We are currently renting and do not plan on purchasing a house for a long time since we want to be able to put at least 20% down and a moderate house in this area is in the very high 300′s or low 400′s. We also want to have the student loans completely paid off before purchasing a home.
- Yancey

First of all, I wouldn’t take money from your emergency fund to pay down your student loan. Usually, student loans are not high interest debts. If yours are, you should look into some form of loan consolidation.

I would not buy rare or precious metals unless they were part of a larger investment strategy. Having a significant portion of your finances in an extremely volatile investment is rarely a good idea, and silver and gold are both very volatile.

I don’t think the London trip is a bad idea. However, I would start saving for it now by putting aside a small amount each month – or even each week – for the trip. $25 a week, starting right now, would pay for that whole trip and then some.

Q5: Rental income as retirement strategy?
Two of my mom’s co-workers recently bought second homes in a desert community and, within a month, both found renters for $1600 per month. My mom is excited and wants to do the same. Her situation: she and my father are 8-10 years from retirement. My father racked up a huge amount of business debt, so they will have to sell their suburban home eventually to pay it off before retirement.

Houses out in the desert have fallen to the low $100Ks. My mom calculates she can pay in cash if she borrows about $30K from her 401k. She says she can pay it back within 2-3 years. Meanwhile, the rental would generate income until my parents sell their suburban home to pay off debt. Then they can move there and live almost rent-free in retirement. They would have about $200K cash leftover from the sale of their home, plus their 401k, IRA, and social security benefits for a modest but comfortable retirement.

My mom sees no downside to this strategy. She calculates that she can afford to make the payments even if she doesn’t find renters for a year and/or loses her job. Job loss is a distinct possibility within the next 6 months, but she assures me that she could still make the payments on unemployment benefits.

My opinion is that she is rushing into this decision, and I strongly advised her to wait until 1) her job situation was clear, and 2) she could buy the property without borrowing from her 401k. She thinks that by waiting, she is forfeiting $1200-$1400 per month in potential rental income. Plus, she already calculated that she could survive in the job loss + no renters. She plans to start making offers on properties this week.

Is this as foolhardy as I think it is, or am I worrying too much?
- Charlie

I agree with you. I don’t think this is a decision to rush into. Investing in rental properties can be fraught with headaches.

For starters, there is no guarantee of a renter. Even if you get one, there’s no guarantee, no matter how much you check them out, that they’ll be honest people who will take care of the property. There are also many regular expenses involved in owning a rental (maintenance costs being a big one), and it can be a time investment.

Rentals can work, but they usually work best with people who are devoted to the process of being landlords. Does she want to be a landlord? Does she relish dealing with tenants and maintenance requests? Is she willing to accept some significant financial risk? These aren’t easy questions and they shouldn’t be rushed into.

Q6: Iowa weather
I hope you and your family are safe after the nasty weather in Iowa.
- Donna

Most of the frightening weather earlier this month was far to the west of us. Generally, the only poor weather that affects us is in central Iowa.

If you hear reports of poor weather in northern Iowa or western Iowa or southern Iowa, we’re generally going to be safe. It’s bad weather near Des Moines that would affect us.

I’ve lived in the Midwest my whole life, though. I know about tornadoes. I’ve seen a few, and I certainly know what to do if I do see one.

Q7: High rate checking account
I have been toying with the idea of a separate savings account to encourage regular saving (i.e. automatic deposit to where I don’t see it). However, I cannot justify moving any money from our checking account. From the research I’ve done, much of it through your site, I cannot find any place that will give me the 2.5% APY that I get from the checking. Any hints about how to still save even though I can always see it in the checking account?
- Rachel

If you’re getting that kind of rate on a checking account, stick with it. You’re right: it’s better than pretty much any savings you’ll find right now.

Usually, such checking accounts come with some sort of catch: a certain number of transactions per month, a certain minimum balance, and so on. If you’re able to meet those demands without any additional effort, you should take advantage of it.

If you’re trying to find such an account, be careful. Many such accounts have fairly stiff requirements to get the rate – and if you fail to meet those requirements, you usually wind up with next to nothing.

Q8: Sweating the small stuff
I have gotten to a stage where I can’t cut much fat anymore. I have mastered all the low hanging fruits. Now I really have to look into things like making my own laundry detergent, tracking every single cent etc.

I have talked to many people about personal finance and they have told me not to sweat the small stuff. They said as long as you spend less than you earn and invest the difference over a long-term you’ll be fine. They said saving ~$x every few months by making your own detergent is not going to have a huge impact on your PF and that PF is terribly simple and no need to make things overly complicated.

Would you agree?
- Chris

Generally, the people who say “don’t sweat the small stuff” are at a very financially secure point. They have enough income that they really don’t have an imperative to sweat the small stuff because they’re not in a case of financial need.

Personal finance is simple if you have a large, steady income that is substantially higher than your expenses. If you’re lucky enough to be in that group, it’s very simple.

That’s not the reality that a lot of people face, though. A lot of people live paycheck to paycheck. Their income doesn’t exceed their expenses for whatever reason and they don’t live a lifestyle where there are big things to cut.

Quite often, people see the problems in their own lives and believe that they’re the same problems everyone else faces. I’m certainly guilty of that myself at times.

Q9: Missing old lifestyle
Growing up, I was not pretty spoiled, materially speaking, and was never taught to manage money. This led to bad spending habits in adulthood, and a divorce caused me to have to settle with my credit card companies because my debt was huge. I have always been one of those people that will buy something on impulse, and shopping has always cheered me up when I am down.

Recently, my fiance lost his job, and I am a grad student whose only income is as a teaching assistant, so we are really in a horrible place where it’s not possible to even pay our necessities, let alone “splurge” at all. We are both looking for full time jobs now, but are not having much luck.

I am so miserable right now. I miss being able to eat out, or buy something for myself now and then. I don’t know how to be happy like this, and I’m not sure how I can really work on accepting it. I also don’t want to live irresponsibly anymore either, because I know the importance of saving and being debt free now… so I really don’t want to return to that way of life even when I’m able to. Do you have any tips on accepting (and enjoying) this type of lifestyle?
- Ashley

For me, the biggest switch in getting away from materialism was to start focusing on what I had rather than what I didn’t have.

For example, I used to really lament not being able to eat out all the time with Sarah. After a while, though, I began to realize that the good part of that was that I got to eat with Sarah. Eating out was a treat, but it wasn’t the part of the equation I really valued.

I have a roof over my head. I have a wonderful wife and a wonderful family. I can keep food on the table. I have the things that are really important to me.

You can either look at your life as a cup half full or a cup half empty.

Q10: IRA question
I just realized I have made a mistake on my IRA contributions and I’m not sure how to clear it up.

Because of a change over to a new position at my job which included enrollment in a retirement plan and salary bump, I priced myself out of being able to deduct contributions to my ira from my income.

So I made $5000 worth of contributions this year to my traditional ira, which should instead have gone into a roth ira (higher income limit).

Do you know how I can recharacterize the contributions I made to the traditional ira as contributions to your roth ira? Is it a matter of simply transferring the money from one account to the other. I use vanguard.
- Stan

You typically don’t get “takebacks” on retirement plan contributions. If you contributed to a traditional IRA, it’s in the plan. You don’t get to take it back without facing tax penalties.

Your best bet is to live with this contribution and then convert your Traditional IRA into a Roth IRA. Obviously, you’ll have to pay taxes on the amount you convert, but then your money will be in a better place for the long haul.

You can always contact your brokerage and ask if there are any additional loopholes I don’t see, but this seems to be the best plan.

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.

A few days ago, a friend of mine told me that she runs a dehumidifier in her laundry room because it gets fairly steamy in there at times when the washer and dryer are both running. She takes the tray from the dehumidifier and adds it to the washing machine in order to save money on her water bill.

Right off the bat, this tip struck me as being a bit out of balance. How much water does a dehumidifier really extract? How much energy does it take to continually run a dehumidifier?

I was on the case.

First of all, I wanted to know how much water a dehumidifier would extract from the air. I checked out the Energy Star site on basic dehumidifiers and found that if we assume the room is very damp and is 500 square feet in size (which is substantially larger than the laundry room likely is), the dehumidifier will extract 12 pints of water from the air every 24 hours. In reality, I’d assume that the water extraction is less than that, but I’m going to give her argument the benefit of the doubt.

How much energy does a dehumidifier use? The Otter Trail Power Company suggests that a typical dehumidifier uses 350 watts. In other words, over a 24 hour period, a dehumidifier would swallow down 8.4 kilowatt hours of electricity.

Now, how much do these things actually cost? Tap water, for example, is typically sold by the acre-foot, which is 325,851.429 gallons of water. You can get lots of different estimates on the cost of that amount of water, but we’ll use $700 as a rough average. This gives a per-gallon cost of water from your tap as $0.002 per gallon. In other words, five gallons of tap water costs about a penny. Since the dehumidifier extracts 12 pints from the air every 24 hours, it’s extracting roughly 3/10 of a cent worth of water every day.

On the other hand, a kilowatt hour costs roughly 11 cents to purchase. Over that same 24 hour period, the dehumidifier is eating up 92.4 cents.

In other words, if she’s running the dehumidifier solely to save money on her water bill, this is an enormous loss. (That’s not to say that she’s not running the dehumidifier for other purposes. If she is, and the washing machine is the most convenient place to put the wasted water, then it’s probably a good choice.)

The point of this article isn’t to say that dehumidifiers are a waste of money. They often do a valuable job of keeping a moist room dry and mold-free, something that can add up to a lot of damage over time. The point is to simply say that tips that seem smartly frugal on the surface can actually be big losers in reality.

Trust me: over a given year, I hear a lot of frugality tips. Some of them are excellent. Some of them are mediocre. Some of them are just flat-out wrong. Here are some general principles I’ve found that help me quickly assess whether the tip is worthwhile.

Be wary of any tips that require very regular action. If you have to do something every single day in order to save money, it should be a large savings or else the hassle won’t be worth it.

Be wary of water conservation tips. Water conservation tips are generally only worthwhile if they involve something you’re already doing and also involve only a one-time change, like installing a new shower head, setting up a rain barrel for yard watering, or putting a full water bottle in your toilet tank. Most other water conservation tips just don’t work – or aren’t worth the time invested – simply because water is so inexpensive. That’s not to say there isn’t an environmental reason to do them.

Be wary of any tips that don’t match how you live. A great example of this is a programmable thermostat. If you don’t leave the house regularly every day, it probably won’t be worth it. If you’re the type that’s constantly adjusting the thermostat up and down a few degrees, it won’t be worth it. Programmable thermostats work when you’re happy within a broad temperature range and tend to leave the house a lot.

Be wary of any tips that introduce new costs. For example, if you need to buy something to save money, run the math. If you need to use more energy to save money, do the math first. Savings usually come from reduction, not from addition.

What you’ll often find is that any long set of frugality tips will cause at least one of these “red flags” to pop up for you. For each person, though, different tips will cause different red flags. That’s to be expected, because we all live different lives. The key, as always, is to find the tips that work for you.

Sometimes, companies and media organizations will hire me to write articles for them. I had a long stint writing at OPEN Forum, for example, and I’ve had shorter stints writing for HP and so on.

When I’m hired to do such things, they’re hiring me to write about what I usually write about: simplifying personal finance, entrepreneurship, and so on, often by describing examples from my own life. If they want me to write about something else, I usually just turn them down. I basically look at it as “somebody wants to pay me directly for writing an extra Simple Dollar post this week,” since I’m usually paid indirectly for the stuff I write here.

Anyway, one of the things that I was indecisive about with my previous articles was whether or not to include them on The Simple Dollar. I would link to them during roundups, but sometimes I’d find that a piece I’d written for HP or for OPEN Forum was particularly good and I’d love to have shared it with all of you guys.

After some thinking (and another great writing side-gig popping up), I’ve decided to do just that. If I write a good article for another site, I’m just going to cross-post it here on The Simple Dollar, along with a note indicating who “bought” the post. I’d like to, if at all possible, have them pop up here first, but we’ll see.

Sometimes, people don’t want me to cross-post my “side gig” writings here (which makes complete sense, since they want the traffic at their own site). If that’s the case, I’ll just link to them in my roundups.

Creating an Action Plan for the Future of Children with Special Needs We have several personal connections to children with special needs, so I felt like this was a particularly valuable article, one that I hope several people I personally know who read The Simple Dollar will click through and read. (@ pt money)

Disordered environments promote stereotypes and discrimination It also promotes antisocial behavior. In other words, if your home or office is a mess, it’s probably connecting more deeply to other elements of your life than you might expect. It’s strange, but it might just be that one valuable step to improving your social skills is to simply clean up your home or office. (@ discover via unclutterer)

24 Quick Actions You Can Do Today That Can Change Your Financial Life Forever This is a very thorough compilation of ideas. Almost everyone can find something worthwhile to try from this list. (@ man vs. debt)

15 Things Our Grandparents Lived Without (and We Probably Could, Too) Mostly, this article made me think about the quality of life that my grandparents had. They did just fine without so many of the things I have today. Do I really need them? (@ frugal dad)

How to Fail Failure isn’t a bad thing. (@ seth godin)

As I’ve mentioned several times recently on The Simple Dollar, one of my biggest areas of thinking in terms of personal finance right now is how to create a secure future for myself and my family. Right now, except for our mortgage (which has a pretty low interest rate), we’re debt free. We own both of our cars and they won’t need replacing soon. Our bills are relatively low. We have a very healthy cash emergency fund. After all that, we still spend substantially less than we earn.

Our question then becomes what can we do with that difference to secure our financial life in the future?

We have several avenues, of course. For one, we could simply accumulate cash in savings accounts and CDs. For another, we could buy highly secure investments that would return a bit more than savings accounts. We could also seek to simply maximize returns by investing in stocks that would give us a large return over the long haul.

However, after a lot of discussion, our biggest interest is in turning that money into a passive income stream while also using that money to support companies we believe in. We’d take our money and put it into a handful of companies we believe in – or at least ones that aren’t involved in businesses we find unethical or problematic – and then use the dividends paid by those stocks as an income stream. Our goal would be to avoid selling those stocks for a very long time, if ever, as the purpose would be to have a steady stream of income via the dividends.

Personal finance 101 here: dividends are small payments given to the holder of each and every share of a company on a regular basis. Many companies do this as a method of encouraging investment in that company and returning value to the people who own the company (the shareholders).

So, how would this work?

Let’s take a look at, say, Coca-Cola (stock symbol: KO). Coca-Cola’s stock pays approximately a 3% yield each year, which means that if the stock is valued at 100 steadily over the course of a year, you would receive $3 over the course of that year in dividend payments. So, if I bought one share of Coca-Cola today (at 67.40) and it held that value, I could reasonably expect to receive $2 over the coming year.

Let’s say, right now, we bought $20,000 in Coca-Cola stock. That would net us about 297 shares of KO, which we would then sit on for the time being. Each quarter, we’d earn a dividend payment of around $0.45 per share or so, based on the historical data, and that amount will likely inch upward over time. That’s a payment, each quarter, of $133.65.

$133.65 every three months? That’s not much, it seems. However, there are a few important things to remember. First, those payments will go out as long as the Coca-Cola Corporation exists and continues to pay dividends. Second, if I want my initial investment back, I can get some significant component of it back by simply selling the stock. If the stock is up, I could make some money just from selling the stock. If it’s down, I still made money from the dividend payments.

There’s also the question about future savings. If I were to continue to invest future savings in other dividend-paying stocks, I could eventually reach a point where the dividend payments are producing a significant portion of my personal income. This is exactly how many older and retired businessmen live – they earn income from the dividends on their stocks, and if you have enough, you can easily live off of them.

Let’s say, for example, we bought $2 million worth of Coca-Cola stock – 100 times as much. That would give us a dividend payment every three months of $13,365.00. That would be a very nice income stream, indeed, especially considering we would just sit back and collect the checks.

Now, what about the future? There are two factors to look at here.

First of all, will the actual stock value of Coca-Cola go up or down? Over the last ten years, the stock has held fairly steady. Even during the stock bubble bursts of 2000 and 2008, the value of KO didn’t drop as much as the overall market, and it’s up about 30% over the last decade. If you go back even further, it’s held steady value for a very long time. Why? People like to drink Coke. It’s reasonable to think that it will continue to hold value. Even more important, the company has been in good financial health for a very long time, with little debt and lots of revenue. It’s stable and steady for the long haul.

Second of all, will the dividend for Coca-Cola go up or down? This is much harder to tell, but one of the big shareholders of Coca-Cola, Warren Buffett, predicts that the yield for KO will go up about 7% per year over the next decade. In other words, Buffett believes that the yield will gradually slide upward from about 3% (where it is now) to about 4%. There’s also the fact that Coca-Cola’s dividend history is very long and very steady.

A final question for Sarah and myself would be whether we would want to invest in Coca-Cola. Are they in a business that ethically bothers us? Do they have business practices we support? That’s still an open question, but it’s a key part of the thought process we would have about any company we would invest in. We want to find dividend-bearing companies that aren’t engaged in businesses that ethically bother us and, preferably, do at least some things that we ethically support.

Is this an avenue we’re going to take? It’s certainly an avenue that’s a part of our discussions right now, along with eliminating our mortgage and focusing on maximizing our savings to buy a home in a different location. All of these have various appeals and, as with most things in our life since we’ve turned our financial situation around, we’re looking at each one before making a big leap.

Since we simply don’t live a lifestyle that involves spending all the money we take in – nor do we have an interest in that – we’re left with the great problem of deciding what to do with the remnants. This is the reward of living frugally and within your means. This is the reward for not buying stuff just because you happen to lightly desire it today.

Someone calling you on the phone is urgent, but is it important?

Giving your mom a long phone call is important, but is it urgent?

Finding that “perfect” pair of pants in your closet is urgent, but is it important?

Spending quality time with your daughter is important, but is it urgent?

If you really look at that list above and ask yourself which things genuinely matter in your life, you’ll quickly realize that the important things universally trump the urgent things. However, when we’re stuck in a key moment, we often give the urgent thing priority.

When we’re sitting at a candelit dinner with our partner, our cell phone buzzes and we check the (most likely unimportant) text just because it’s urgent.

When we’re already running late for our daughter’s dance recital, we’re still stuck in the closet looking for that perfect shirt to wear.

When we’re coming up with a debt repayment plan for our $300,000 in debt, we’re panicking and making angry phone calls about a $5 late fee.

When we’re trying to focus on a major project at work, we switch screens excitedly each time that email “ding” happens.

It’s easy to see how the urgent (and relatively unimportant) keeps us from hitting a home run on the important things in our lives. Here are five simple things I do to keep my eye on the important things.

I shut down distractions. When I have something I need to focus on, I turn off as many distractions as I can. My cell phone is off. My email program is off. Twitter is off. I’m focused on whatever that important thing at hand is.

When making my to-do list, I largely ignore urgency. If I have a vital project due in a week and an unimportant thing that needs to be done today, I’ll often just ignore the thing that needs to be done today. Seriously. I’ll take care of it when the actual important thing is done. If I nail the big thing, it won’t matter that I’m late on the little thing.

I fill in the cracks and let my brain “breathe” with the “urgent” stuff. Often, the “urgent” tasks don’t require a great deal of thought, so I’ll let my brain “breathe” and focus on other things. I’ll check my texts, check Twitter, check my phone messages, read my email, take care of housekeeping tasks, and so on – “urgent but not important” tasks.

If I’m panicked about something, I’ll ask myself if it really matters. For me, a sense of mild panic is usually a sure sign that I’m putting too much importance on the “urgent but not really important” thing at hand. This often happens when dealing with my children, when we’re having difficulty finding a child’s shoe or something along those lines. The important thing isn’t finding this specific shoe, it’s making sure that they’re ready for the day. Looking at things this way helps me to step back and reflect on what I’m doing.

I try to minimize the time I spend on “urgent but unimportant” tasks. I don’t mind hanging up on telemarketers. I chuck the junk mail as soon as I see it. I try to handle pieces of paper only once.

What about things that are important and urgent, such as taxes for people who haven’t filed yet? When I focus on the important things, I do take into consideration when they’re due. The key isn’t to just worry about due dates on everything, but to worry about whether the due date really matters at all.

For example, many people hear a phone ring, give that phone ringing an “immediate” due date, and then reprioritize by due date. They pick up the phone.

For me, if I hear the phone ring, I’ll only answer it if I’m not working on anything important at the moment. If I am, then the ringing phone has a lower priority and I ignore it. I know my voice mail will pick it up. On some occasions, I’ll screen calls, only answering incoming ones from my children’s preschool, for example.

Another example: I’ve spent a bunch of time coming up with a budget and a debt repayment plan. Everything’s going well, but suddenly a friend wants me to go shopping, then encourages me to spend a bunch of money to take advantage of a “sale” on items I don’t really need. The sale ends in a few days. It’s urgent, but is it important?

I’ve found that every time I’ve let urgency trump importance, I’ve regretted it. The urgency of an immediate want trumping the importance of a savings plan results in regret. The urgency of changing clothes and thus missing my son’s first soccer goal is a regret. An unimportant phone call interrupting my train of thought is a regret.

Learning to separate urgency from importance is one of the best skills you can learn for financial, personal, and professional success.

The title of this article is my favorite single thing that Dave Ramsey has ever written.

The idea here is pretty simple: if you live in a challenging way right now, you’ll be able to enjoy incredible opportunities and advantages later. Almost every person who has accomplished something great in their life went through some very challenging period (or periods) to get there: executing obsessive hours of practice, living in poverty or near-poverty, spending countless late nights building up a project, and so on.

Often, we don’t see the hard work behind success.

We see the financially successful person and are envious of their money, overlooking what got them there. We see Bill Gates’ billions, but we forget that he spent his teen years, college years, and early adulthood glued to a computer.

We see the people who are incredibly skilled in a certain area and are astonished at their talent. What we forget is that, usually, it took obsessive amounts of boring and difficult practice to hone that skill – it’s rarely God-given talent.

We see people who are famous and grumble about how on earth that person could possibly have fame and wealth. Often, we forget that the person we see is often working very hard to get to that point, then to put on a good show for us, both in their actual performance and in how they “present” themselves to the public. (Yes, this usually does include the reality star du jour.)

We see the person down the street who has signs of material wealth and feel some pangs of jealousy in our gut. We usually forget that they’ve either sacrificed their past to get there (by working a lot of hours, studying very hard, or living very lean) or sacrificed their future to get there (via debt).

Almost always, when we see something exceptional that someone else has done, they have made a tremendous sacrifice of some kind to get there.

It’s because that kind of sacrifice is unusual that we find such success to be unusual. Most people don’t live as cheaply as they could. Most people don’t spend every evening and weekend for years launching a side business. Most people don’t practice their musical instrument for six hours a day for years. Most people don’t pull consistent all-nighters to nail some key projects, putting them in place for a big promotion. Most people don’t make their own laundry detergent.

And, unsurprisingly, most people don’t find exceptional success.

Each day, we have a choice. We can choose to continue to be in the same situation we’re in. Or, we can choose to start a very long journey with a single step. That journey will take a long time, but when we get to the other end, we’ll find ourselves in a completely different place than we’re at right now. Along the way, we’ll walk some roads that are completely different than the ones we’re used to.

The question is where you want to be and what you’re willing to do to get there.

When I look at some of the goals I’ve set for this year – improving my piano playing skills, reading challenging books, and getting into better shape – I see this very issue popping up. Am I willing to live in a different way, filling my free time with these types of tasks, or am I happy just being complacent and wondering why other people are successful at their goals while I’m not?

It’s up to me to be different.

Are you happy just continuing things the way they are right now? Or are you ready to live like no one else so that you can live like no one else?

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. Overinvesting or saving?
2. Home exercise equipment
3. Little change, big impact
4. Emergency fund or lower expenses?
5. Non-FDIC insured CDs
6. 401(k)s and job concerns
7. Basic home buying finances
8. Obsessing over finances
9. Learning board games
10. Book for younger beginner

Where do I want to be in ten years?

I want to have a novel published. I want to be living in the country rather than on the edge of a town (my back door view looks like the country somewhat, but my front door looks practically like suburbia). I want to have three happy and curious children who enjoy reading and asking questions that challenge them.

These statements pretty much set the stage for the next ten years of my life. Most of what I do moves me toward these things.

Q1: Overinvesting or saving?
How do we know if we’re investing more than we should compared to saving for a big purchase (a house)?

We’re a newly married couple. The stats: He’s 35, makes a salary of $70K and contributes 9% to a 401(k) and gets a 50% match up to 6% of his salary. He’s also one of those really lucky people who works for a place that has a fantastic pension that will be there when he retires (railroad retirement). She’s 31, makes $93K/year and contributes 4% to 401(k), which is matched dollar-for-dollar.

We contribute $10K/year to Roth IRAs. Hers is new and is kind of earmarked to be used for a home purchase if needed/desired.
Monthly expenses: $3500 (not including long term savings or investments, just day-to-day expenses plus vacation and car replacement). On top of this, we tithe 10% of our salaries.
Debts: $83K on a rental house (bought before marriage by her). $24K equity in the house. It generates about $100/month profit on top of paying the mortgage. Not huge, but not nothing either. Could sell it to roll it into our next house or might keep it a rental for as long as it is easy to do so. No loans or credit card debt of any other kind.
Savings: $40K cash (in addition we have a 10 month emergency fund of expenses)

Situation:
We’re hoping to buy a house as debt free as possible in a year when our apartment lease is up. Amount of the house will be around $120K. Also hoping to have a child at about that time, in which case her salary will either be cut in 1/2 (if employer agrees to part time work) or go away completely to be a full time mom.

Our questions:
1) Are we investing too much, given our short term goal of buying a house with as little mortgage as possible? We know that a lot of experts recommend to dedicate 15% of your salary to retirement, but is that based upon his salary or our salary – with the knowledge that her salary will probably go away in a year or so. Currently, we’re saving $2953/month (21% of our income) and investing $1943/mo for retirement.

2) If we are investing too much, what should go away (temporarily)? The easy one is the extra 3% of his 401(k) contribution that isn’t getting matched, but that’s not significant if that’s the only change we make.
- Rhonda

I don’t think you’re doing anything wrong. The problem is that your goal is so big compared to your income.

This is really about realistic goals. You’re making $160K a year, yes, but right off the bat, 20-25% of that goes to taxes, another 10% goes to retirement savings, and another 10% goes to tithing. Immediately, you’re down in the $90K range. You have $3,500 in monthly expenses, quickly dropping your money down to the $50K per year range.

No matter how you slice it, you’re not going to be able to turn that $50K into $80K. There’s no one big piece that will give you back that $30K. If you trim his retirement savings, that’s really only giving you back about 1% overall, and that’s not enough.

My suggestion is to extend your timeline to something more realistic. Push your plans back a year, at which point you’ll be in much better shape to make this happen.

Q2: Home exercise equipment
I’ve started going through a few home exercise routines at your suggestion and I’m loving it. I’m considering buying equipment, but I’m wondering if I really need any at all or, if I do, what I should get for a beginner.
- Jeff

First of all, I’d visit a secondhand sports equipment shop if I were going to buy anything. Items like dumbbells, kettle bells, treadmills, and so on can almost always be found for much less at secondhand shops.

Now, do you need any of this? The one low-cost purchase I’d urge you to consider are resistance bands. A set of these is inexpensive and does a very good job of helping you with basic weight training. I myself have a set from Boston Scally Cap Guy that work really, really well.

Other items I would look at are a small set of kettlebells (my preferred weights), a chin-up bar, and a jump rope. All of these are inexpensive (except for a big set of kettlebells).

If you can possibly run outside, I would not buy a treadmill.

Q3: Little change, big impact
LOOK at this – I was working on my budget – I am paying off business debt in 3 years and working on a plan for paying off the house early and then really saving so I can have the option to retire in 15 years (will probably work longer but you have to have a plan!).

AND I calculated how much sooner the house would be paid off if I saved $50 per week – that is what I used to pay a housekeeper and now I clean myself.

Anyway – what a crazy thing – if you pay an additional $50 per week you don’t notice that – it replaces the housekeeper – and the house is paid off 8 years earlier for a savings of $66,000 – that is crazy! It is not hard to clean a little every day and a smaller house makes this easy!

We just downsized our house and we moved to a better part of the country so we can drive to vacations and we are happier – it cut our budget in half. I paid off all personal debt and have 3 years left on business debt. I am saving some now and at the time the business debt is paid off I will really start to sock money away and can retire in 15 years although I can keep working if I want. It is my business!! I really love your column!!
- Judy

This is exactly the kind of change that people should constantly be seeking in their life.

Here’s the thing: our values change over time. Things that were deeply important to you five years ago might not mean as much now. Your time constraints two years ago aren’t your time constraints now.

Good personal finance is about a constant evaluation of your life, determining what your needs and desires are right now rather than what they used to be, and putting that money aside for uses that are more important to you.

Q4: Emergency fund or lower expenses?
When you know that you’re going to have a large unusual expense in the upcoming month, such as new tires, 6 months of car insurance or whatever (something around $500-1000) how do you handle it? Do you purposely adjust your spending for the month (skip dining out all together for a month, use the pantry freezer for food, purposely drive the least amount possible) so that you can take none or very little out of savings or do you just keep your regular spending the same, use your savings and then just replenish over the next few months?
- Julie

Right now, I don’t have too much obvious fat to cut from my monthly budget, but I do things like this pretty regularly. I’ll really skimp on things one month to be able to afford something bigger in a later month so that I don’t have to tap into savings.

For example, my family really views eating out as a big splurge rather than a routine thing to cut back on.

On the other hand, I’m saving for a big travel expense this summer, so during the months leading up to summer, I’m trimming back very hard on my incidental spending in order to be able to afford it without dipping into anything.

Q5: Non-FDIC insured CDs
I was thinking about purchasing a CD through my local credit union as they tend to offer a little higher rate. However, I was surprised to find that although they are insured, it is not through the FDIC, which is what the “regular bank” CD’s are insured / backed by. I forget what institution “backs” credit union CD’s, but it is not the FDIC. Is my money just as safe in a CD with a credit union as it would be with a “regular” bank?
- Kelly

CDs and accounts offered by credit unions are typically insured by the NCUA, not the FDIC.

In terms of consumers, NCUA insurance is basically the same as FDIC insurance. Both protect deposits up to $250,000 in the face of institutional failure.

I would consider NCUA insurance on an CD to be sufficiently safe to feel confident to buy that CD.

Q6: 401(k)s and job concerns
I’m not really sure how to go about this. I’m 23, and I just started a “real” full-time job making about 28k a year. Not the greatest pay, but I like what I do and have opportunities to move up in the company. Prior to this, I just worked retail. I have about $4k left in credit card debt that I’m aggressively paying off, and then I have about $70k in student loans to work on.

Also, I have two 401ks from previous jobs that I don’t know what to do with. One has maybe $400 and the other maybe $600. Both are fully vested. Should I close these and roll them over? Or should I close one, and keep one open to contribute to while I can’t contribute to my current employer’s retirement plan? All the documents I read talk about what to do when you have a lot of money in your 401k… but I don’t.
- Jen

You should absolutely open an IRA in the interim while you wait. I would recommend opening a Roth IRA, which you contribute to with post-tax money (straight from your checking account). This has several advantages, the biggest of which is the fact that when you’re retired and withdraw that money, you won’t have to pay any taxes on your withdrawals.

I would talk to the 401(k) plan manager at your current employer to discuss rolling over the old 401(k)s.

Given the small amounts involved, the convenience of simply having all of the 401(k) money in a single amount is worth the possibility that one of the old 401(k)s is a slightly better investment product than your current 401(k) plan.

Q7: Basic home buying finances
My husband and I are a young and married within the last year (we’re 25). We’ve been renting in an area outside a major city for the last 3 years. I worked for a while, but recently went back to graduate school. My wonderful husband has been employed the whole time we’ve lived together. We’ve done what I consider is quite well for ourselves – we have a minor car loan (at 0% interest), and student loans (more on that later). We have no credit card debt, 5-6 months emergency fund, and have both made healthy contributions to our respective retirement funds. We estimate having about $120,000 in student loans, both from undergrad and grad school, when I graduate law school in 2013. We’ve done everything we could to minimize students loans – state school, aren’t taking out cost of living loans, and when I was working I payed down a huge chunk of my undergrad loans.

Are there any circumstances under which buying a house without a 20% down payment is financially wise? We don’t want to purchase a “starter home” and “upgrade” and that doesn’t make a lot of sense for us anyway because what we want is really pretty modest (2 or 3 bedroom, not too fancy, no lawn at all because that’s how the city works).
- Robin

Robin, your story is exactly why I often state that young people today have a harder time getting a foothold in the world than people did thirty or forty years ago. You’re dealing both with a housing market with costs that have grown faster than inflation, education costs that have grown faster than inflation, and real wages that have not grown as fast as inflation. Simply put, you’re trying to pull off something – getting an education, getting a job, and getting into a house – that’s much more difficult today than it once was.

Now, as to your question. Buying a home with less than 20% down usually means that you’re going to be saddled with a higher interest rate (either on the amount over 80% or on the whole amount) and also with PMI. Simply put, it’s going to be far more expensive per month than it would be if you simply waited until you have the 20% down payment. Your impatience will cost you – a lot.

If I were you, I wouldn’t do it, particularly considering the large amount of student loans you’ll also have. It is generally a bad idea to get into debt that adds up to more than twice your household income, and if you finance an entire $400,000 house on top of $120,000 in student loans, you’re going to have to be making a mint to make that viable. If you were to lose a job, your house of cards would collapse very quickly.

Q8: Obsessing over finances
I’ve been working on resolving my financial issues for several months now. I’ve suffered a few setbacks in my employment, with some contracts ending prematurely, and was forced temporarily to return to menial labour to pay the bills until I could find a new job. I’m finally back on track with a decently paying job and I’ve formulated a plan for getting on top of my finances. My primary goals are to be debt-free within 1 year and to have saved enough for a house within 5 years.

At what point do you sit back and just let things run their course, confident that you’ve made the right decisions ? How do you avoid that niggle of self-doubt that makes you question your plan and feel the need to refine and perfect it ? How do you get comfortable in the long wait between starting on your path and seeing visible progress ?
- Tim

I think this is more of a psychological issue than anything.

There was a time when I did the same thing. I was neurotic about every dime. I was constantly looking at spreadsheets and evaluating plans.

Eventually, over a long period of time, I stopped doing that so much. What changed? I think I finally grew confident that I was making good choices for the first time in my adult life.

I don’t think anything you’ve described is necessarily bad. It mostly sounds like someone who is trying to make sure he’s on the right path. The longer you walk that path, the easier it’ll get.

Q9: Learning board games
I am trying to adopt board games hobby for my free time as you suggest. I bought Pandemic and couldn’t understand how to play it. In one of your post, you stated that you can go for game store for demo. Which store are you referring to? In NYC, we have ToyRus and I have never seen demo for board game. Or any web site? Thanks and hope to hear from you soon.
- Fred

Shops like Toys R’ Us and Target don’t do board game demos. If you want to learn how to play this type of game, you need to go to a hobby store.

I’m not familiar with board game shops in New York City, but I gave Googling “board game shops New York City” a shot and found a lot of results. The Compleat Strategist seems to be a highly regarded choice.

I would try stopping in there (or at another shop on that list) and asking about how to play Pandemic. You might find, for example, that Forbidden Island is a similar game that might fit you better. You might also find that Pandemic isn’t as complex as you thought.

Q10: Book for younger beginner
My son is turning 18 and is now interested in investing and personal finance as our school district skips these important subjects.

Do you have any book recommendations for the beginner? I’m looking for a very good personal finance book, then a good investing book.
- Bud

My favorite book for someone in that situation is Please Send Money by Dara Duguay (see my review). It does a good job of addressing personal finance in terms relatable to a high school senior or college freshman.

Depending on the person, though, a more thoughtful book like Your Money or Your Life might be appropriate. This works really well for very self-aware late teenagers and twentysomethings. It certainly woke me up.

Both of these would make great graduation presents!

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.

About a year ago, I reviewed the wonderful book Outliers by Malcolm Gladwell. That book discussed the nature of outliers – the exceptional people that dominate their fields, like The Beatles or Wayne Gretzky – and looked for things they have in common. One of the biggest conclusions from the book is that such outliers stand out because of obsessive amounts of practice. Gladwell estimated that practice time as being on the order of 10,000 hours.

Interested in this topic, I’ve slowly begun assembling a reading list of books that focus on the nature of talent. What makes people become very good at, say, the piano? Or academic research? Or anything else along those lines? The first book I came across in this search – one that I was referred to time and time again – is this one, Talent Is Overrated by Geoff Colvin, senior editor at large for Fortune magazine.

Colvin focuses in on a topic I’ve discussed on The Simple Dollar before: deliberate practice. Colvin’s main argument is that it’s not just practice that gives people talent, it’s deliberate practice in abundance. Let’s dig into his argument in detail.

The Mystery
All of us are at least aware of people that seem to have exceptional abilities in one area or another. Michael Jordan is one example. Bill Gates is another. What exactly gets them to that stage? Often, our initial guess is that they’re essentially born with it, that they have some sort of God-given ability that far exceeds our own. The truth is that it comes with a lot of practice. The reason these people who obsessively practice to the point of truly honing a talent become rich is because people will always pay for exceptional performance, now more than ever.

Talent Is Overrated
If you go back to the starting point, exceptional performers are often impossible to pick out of the group of beginners. Demetrius Walker was considered the greatest fifth grade basketball player in the world several years ago. Today, he’s a marginal Division I basketball player. Michael Jordan, on the other hand, was cut from his eighth grade basketball team. The best musician I’ve ever personally known sounded tone deaf for the first year she practiced with her instrument of choice. What separated these people wasn’t talent. It was practice.

How Smart Do You Have to Be?
High-performing businesspeople tend to have incredible memories and seemingly prodigous intellects. Were these natural talents? Usually, they’re not. For most of them, the key to reaching that level was a lot of hard work. They focused on training their memories to easily retain information and they mastered techniques for synthesizing the information they learned. These techniques, when practiced over and over again, amount to essentially the same type of deliberate practice that exceptional people execute in almost every other avenue of life.

A Better Idea
This chapter focuses on Jerry Rice, perhaps the greatest wide receiver ever to play in the NFL. That must have taken a lot of football playing to get that good, right? Wrong. One of the secrets to Rice’s success is that he played very little football. Almost none of the time he invested in preparing for games involved actually playing football. Instead, his prep work often focused on things that weren’t fun at all – exhausting and repetitive drills, particularly those that focused on his specific weaknesses, and a willingness to work on his own far beyond what others were willing to do.

What Deliberate Practice Is and Isn’t
Deliberate practice is designed specifically to improve performance. It can be repeated a lot. Feedback on results is continually available. It’s highly demanding mentally. It’s not fun. If this sounds painful, you’re right – it is. Remember, though, the people who do this are the people whose talent eventually stands out.

How Deliberate Practice Works
People who engage in deliberate practice eventually find themselves at a point where the specific mechanics of what they’re doing become completely second nature to them. Instead, they can focus much more of their mind on the bigger picture. For example, if someone is not very good at basketball, they may spend a lot of their time during a game thinking about their footwork and their grip on the ball when they possess it. People with exceptional deliberate practice no longer have to worry about this and can instead think about the bigger picture of the game – think of Magic Johnson or Larry Bird knowing perfectly where everyone is on the court, where the ball is about to go, and how to be in position to maximize that. This phenomenon exists in almost every field and it’s the result of deliberate practice.

Applying the Principles in Our Lives
Obviously, most of us can’t invest 10,000 hours to become the top person in our field. However, every little bit of deliberate practice helps in improving our skill set. You can use deliberate practice to improve the fundamentals of whatever it is you do at work, whether it’s memory improvement, typing speed improvement, analytical improvement, or anything else. For example, if you’re in a field that relies heavily on fact retention, time spent at home simply practicing your ability to recall facts after they’re told to you can have an enormous positive impact on your career.

Applying the Principles in Our Organizations
Many of the ideas presented here describe the work environment at companies like Netflix and Google, where much time and attention is given to the individual development and projects of employees. The more you cultivate individuals to excel at the things they do best, the greater your organization on the whole becomes.

Performing Great at Innovation
What about the great innovators? How do they maximize performance? For one, they recognize that innovation is rarely a “eureka!” moment. It’s almost always a slow evolution of ideas. Persistence at those ideas almost always pays off. In other words, they approach new ideas with what’s very akin to deliberate practice. They work slowly at the fundamentals of an idea, poring over what’s known, until new ideas begin to slowly emerge.

Great Performance in Youth and Age
Prodigies are often people who started deliberate practice at an earlier age than we expect it. Most people don’t start deliberate practice on their child at the age of two, but when parents do this, they often produce prodigies. On the flip side, people can often be late bloomers at many fields, simply through deliberate practice. One’s never too old to pick up a paintbrush, for example.

Where Does the Passion Come From?
It takes passion to put the time and effort into deliberate practice. Where does that passion come from? There’s no strict answer to this, but it often comes from surrounding yourself with people that encourage you to excel and discourage complacency.

Is Talent Is Overrated Worth Reading?
This book is simply loaded with thought-provoking insights on the nature of exceptional performance. Even if it’s not what you’re striving for in your own life, Talent Is Overrated can really sharpen your appreciation for what it takes for anyone to excel in a field.

For me, Talent Is Overrated was inspirational. It gave me many ideas about applying deliberate practice in my own life and inspired me to get to work. This one’s highly recommended, folks.

Check out additional reviews and notes of Talent Is Overrated on Amazon.com.