An interesting question comes from Jonas:

Do you read a personal finance book a week? Seriously? Are you really learning something new each week?

First of all, I don’t read a personal finance book each week to find some overarching theory that will “explain” something to me. I read them for two reasons. One, I look for little ideas that I haven’t heard before so that I can toss them into the stew of personal finance ideas in my mind, a stew from which new posts are often born. Two, I read them to “filter” books for my readers so that they can decide for themselves whether a book is worth reading, much as any book reviewer does.

That being said, there are certainly people who do such things. They’ll constantly read new personal finance books or weight loss books or self-help books, hoping to find some answer that they’re always seeking that they never quite find the answer to. They’ll pay for seminars and programs and presentations, seeking out that “holy grail” of answers that will make them rich or make them thin or turn them into a “better” person, whatever that might mean to them.

I receive emails from them. They’ll offer me long rundowns of different seminars that they’ve attended or different programs that they’ve tried, pointing out the gaping flaws in each one. They’ll ask me for suggestions on what they should try next.

I usually tell them to stop looking for outside solutions.

Here’s the truth: no weight loss plan, no personal finance plan, no investment strategy, no path to self-growth can work without internal commitment from yourself. If you’re not willing to commit to going through the painful process of change – and it is often painful – then there is no book, no seminar, no coach that can help you to change.

Furthermore, if you’ve already familiarized yourself with several plans, you will simply get diminishing returns from reading further plans. You might read three different personal finance books and get three different money approaches, but by the sixth or seventh one, you can’t help but see repeated ideas. The same is true for seminars and speeches, and the pattern repeats itself in other areas such as weight loss, investments, and personal growth. You might find new specific tips, but it’s not the specific tips that will make the difference. It’s commitment to change in your life.

If you find yourself unable to change and also find yourself constantly searching for an answer from some new source, here are a few suggestions.

First, take stock of the core principles you see coming up time and time again. With personal finance, you’d be looking at things like spending less than you earn, being mindful of your spending, and saving for the future. With weight loss, you might see things like burning more calories than you ingest.

Then, take a serious look at what you’re currently doing. Are you actually taking actions that are in line with those repeated core principles? Simply put, if you’re not making personal choices that match up with those core principles you hear over and over again, nothing will change in your life.

I’m a big believer in positive reinforcement, but positive reinforcement is still a reinforcement. It comes coupled with actually taking personal action on the basic principles of whatever change you’re trying to find in your life.

If you want change, you have to act. The things you’ll need to do to bring change into your life aren’t easy. They’re never easy. They usually require you to change some element of your behavior, and human beings are creatures of routine. We don’t like to change our behavior.

Without changing the way you act today, you can never change the life you’ll have tomorrow. Reading another book or attending another seminar won’t change that simple fact, and no new little “tip” you learn will allow you to get around this hard work. It’s up to you and your internal fortitude to make it happen. There is no magic answer around the corner.

Over the last week, the tulips we planted in front of our house went into true bloom. The pink and red colors look absolutely fantastic, particularly when coupled with the yellow daffodils that are in bloom as well.

Spring is here and our front step shouts it out to the world.

The Seven Stages of Failing at Self Improvement Self-improvement isn’t just a matter of waking up one morning and deciding that some major change in your life is going to happen. You’ll almost always fail at least a little. The trick is to always keep going. (@ pick the brain)

How Money Makes Us Stupid If we’re spending our money, we often look for the 800 pound gorilla solution – the big, hefty, expensive one – rather than the simplest solution to the problem. This often complicates our lives and costs us money, too. I couldn’t help but think of a sixteen piece pot and pan set when I read this. (@ jonathan fields)

To Automate or Not To Automate? There are certainly some things worth automating, but if you’re in a situation where you’re not in firm control of your account balances or you find yourself regularly dipping toward zero, you should be careful about automating things. (@ get rich slowly)

How to Set Smart Daily Goals Daily goals are usually best achieved with periods of sustained focus. Can you bring that to the table? (@ the 99 percent)

How Long Is Your Long Run? There’s really no right or wrong answer to this, though I often make the assumption that a person’s long run is pretty long. The lower the risk level in your life, the longer the long run probably is. (@ seth godin)

Amy writes in:

I’ve been a paralegal with the same law firm for four years. I love the job and the work that I do. I feel like I’m genuinely helping people.

In October, my boyfriend and I sat down and looked at our finances as you suggested. We came to the conclusion that we needed more income, so I took on a second job in the evenings at a local Home Depot.

Since then, the extra income has been very useful, but now I just come home at night exhausted and I have to practically drag myself out of bed in the mornings. I don’t have any energy with my paralegal work and my boss has started to notice. We had a one-on-one meeting about it. He asked whether I was committed to the job. I told him that I didn’t have enough money to make ends meet and had to take on a second job.

I don’t know what to do. I’m afraid of losing the paralegal job, but I’m also afraid of losing the income we really need to get out of our financial hole.

Amy hits upon a major concern for anyone working multiple jobs. You only have so many hours in a day.

I’ll show you what my own schedule looked like when I was launching The Simple Dollar as a side business. This was a normal weekday.

4:30 AM – Wake up
4:30 AM – 5:00 AM – Shower, hygiene, breakfast
5:00 AM – 6:30 AM – Writing
6:30 AM – 8:00 AM – Get kids up and ready for child care, take them there, commute to work
8:00 AM – 4:30 PM – Work
4:30 PM – 6:00 PM – Commute home, prepare supper
6:00 PM – 10:30 PM – Writing
11:00 PM – Sleep

Simply put, I was burning the candle at both ends and this caused several problems.

I had limited time for leisure activities and activities of self-improvement. There was no time for anything other than work and minimal family time.

My performance at both my regular job and my early writing suffered. It was difficult to write good articles. It was also difficult to take on challenging tasks at work. I could muddle through, but I’d have to be blind to not see that the situation was having a negative impact on my work.

I was exhausted and I got sick quite often. I used to fall ill almost every other week, making it even harder to catch up. Today, I haven’t had any sort of real illness in almost a year.

How did I resolve all of this? It was really a three-step plan.

First, I set a clear deadline for myself a few months down the road where I would choose one job or the other. When I realized that something had to give – as Amy has – I set a deadline for that final decision. For me, it was almost exactly three months down the road.

Why wait so long? This gave me time to reflect on my situation and make the correct decision. It also gave me time to get my financial house as ready as I could for losing a significant income stream.

Second, I lived incredibly lean during the period leading up to that deadline. I cooked everything at home. I made sack lunches. I didn’t do much of anything outside the apartment (of course, it’s not as if I had a lot of time for it anyway).

During that period, I beefed up my emergency fund with all of the money I saved through living lean. Thus, when I was ready to choose, I knew that I had some support against the loss of the income stream.

I would highly recommend that Amy follow this same path. Eventually, she will lose one job or the other, so she should take the choice into her own hands. She should set a deadline, live as lean as she can until then, and then make the choice.

Finally, when I did make my choice (which was writing), I redoubled my commitment to it. In Amy’s case, if she chooses the paralegal work, she should start off by meeting with her boss and simply stating the facts of it. She made a difficult financial choice to stick with this job. She should also look for a plan to maximize her chances to increase her income at the job that she chose.

Which job should one choose? For my situation, I chose the one that I felt would give me the best opportunity to spend time with my family. Both paths seemed to afford me the basic income I would need and both provided work that I found enjoyable. The difference really came down to how my family was affected.

For many people, however, and this includes Amy, the decision should come down to which job offers the best income potential if you commit yourself to that career path, unless that choice is deeply untenable for some other reason (an uncomfortable workplace, unethical work, etc.).

Working exceptional hours over a long period is untenable and negatively impacts your performance. Set a deadline for the hard choice you’ll have to make. Conserve your resources as you lead up to that deadline. Then, make the leap into whichever situation is the best for you.

Even if that path doesn’t lead you exactly where you hoped, you’ll at least be able to tackle that path with energy and a clear mind, which are the greatest tools you can bring to the table when it comes to your career.

It’s simple.

We opened our windows in all seasons. Yep, even the winter.

For the past year, every time the temperature outside is between 50 F and 85 F, we simply just open up the windows and turn off both the internal heating and cooling. A sampling of year-over-year comparisons across all seasons shows that this policy saves us an average of 30% all year round (about 10% in winter, about 20% in summer, and about 40% in spring and fall).

Not only that, our house smells fresh, simply because fresh air is regularly blowing through every room in the house. Air freshener is a product you buy? Really?

I’ll address a few of the specific points that I’m sure you’ll have.

You opened up windows in the winter? Not all winter, of course, but during several different spells, we opened up windows in our home on the brief warmer spells that would come a few times a month. We left our windows open all day for several periods in January, for example.

Yes, this often cooled our house down a bit, but the house never got as cool as it was outside. It was comfortable in our house all day long if you wore a light long-sleeved shirt. The savings from not running the heat at any point during those days far more than made up for the heat loss.

Not only that, when the temperature would begin to drop outside and it became noticeably cooler inside, we just set the thermostat to a few degrees warmer than it currently was, since, after all, we were quite comfortable with that temperature. Our indoor temperature usually hovered around 62 to 64 F in the winter.

This ended up saving us about 10% off of the bills during the winter.

Why only 40% during the spring and fall? We largely just opened the windows and turned off the heating and cooling during the days in the spring and fall. However, we would still close the windows at night if we expected the temperatures to drop too much, as we have young children at home who tend to kick their covers off and get very cold.

If we expected the temperature to drop below 48 to 50 F at night, we would close the windows and turn on the heat at a low level during the night to keep the family warm.

And the summer? We opened the windows all the time, even at night, unless the temperature started to reach the upper 80s, in which case we’d close the windows and start the cooling. Again, we’d often keep the temperature at the upper level of what we were comfortable with, usually the upper 70s.

This sounds uncomfortable… What I’ve found is that the more time you spend outside, the wider the range of comfortable temperatures becomes for you. For example, if I spend a lot of the winter inside (which I typically do), the early spring can often leave me feeling uncomfortable with temperatures much outside a narrow range.

However, the more time I spend outside, the more that range widens. I get used to the variety of temperatures that being outside gives me, with the varying temperatures between shade and sunlight and the changes in temperature throughout the day.

This is advantageous in another way. Many outdoor activities are inexpensive or free. Going on walks. Going to the park with my children. Coaching youth soccer. Planting our garden. Playing games in the yard with the children.

So, not only are outdoor activities a great way for me to spend time frugally, they also help me enjoy a greater variety of indoor temperatures, which reduces my use of the furnace and the air conditioner, which reduces my energy bill and extends the life of those devices.

The end result? We’re saving about $50 per month (on average) on reduced energy bills simply because we’re spending more time outside and leaving the windows open much more often. That, my friends, is frugality at work.

Three and a half years ago (has it really been that long?), I wrote a post on the three money questions that will transform your life. It was part of a lengthy discussion of the book Your Money or Your Life, from where those questions derived.

As I look back on the financial lessons I’ve learned over the past half of a decade, I think these three questions strike very close to the core of all of it. I’ve used them time and time again, not only to evaluate the money decisions I’m making, but to evaluate the life decisions I’m making.

Let’s walk through these three questions again so that you’ll have some idea of what I’m talking about.

Did I receive fulfillment, satisfaction, and value in proportion to life energy spent?
One of the big ideas in Your Money or Your Life is that every dollar you earn is a representation of some portion of your life’s energy and time. If you make $8 an hour, you’re swapping a portion of your day’s energy and a portion of your day’s time for that $8 (in truth, you’re swapping that hour for less than $8, because there’s the unpaid time it takes to get there, the cost for your work clothes, taxes, and so on).

If you take that perspective, is spending, say, $5 on a magazine at the grocery store really worth it? Do you get an hour’s worth of time and an hour’s worth of energy out of that issue of Cosmopolitan? Is that hour of time and energy invested equal to drinking a few beers while watching a sports game on television by yourself?

I use this filter all the time in my own life. I constantly talk myself out of purchases by asking myself if I’ll really get enough enjoyment out of this item to be worth the time and energy I had to invest to actually earn enough take-home money to pay for the item. This tends to move me quickly toward focusing on low-cost items. It’s why I’ll start my clothes shopping at a thrift store, because if I can find a shirt that meets my needs for $2 instead of $30, that’s a much better exchange of my time and energy for a shirt. It’s why I’d far rather play a board game that I already have in my closet than go out for some expensive activity (actually, I’d do that even if money weren’t an issue).

“Well, what else would you spend that time and energy on?” you might ask. Well, if you consistently make those types of decisions to conserve the money you earn for your hard work, you’ll find that you can eventually spend your time without having to exchange it for money.

Let’s say you work for 40 years for 50 weeks per year and 50 hours per week. That’s 100,000 hours of work during your life, and hopefully it’ll add up to enough to fund your retirement.

If you can consistently find ways to take the proceeds from those hours of work early on and instead invest them in retiremet – an hour’s worth here, an hour’s worth there – you can trim those hours of work. If you can drop it to 90,000, you’re retiring four years early. Drop it to 70,000 and you’re retiring at age 53 than at age 65.

Is this expenditure of life energy in alignment with my values and life purpose?
What do I want to accomplish with my life? What things are truly important to me? How do I handle daily choices with those things in mind?

It takes some self-analysis and reflection to really piece these things out. What are your goals in life? What are your values? Quite often, people simply parrot the values and goals of others without really reflecting on what they want out of life for themselves.

It took me a long time to realize that if I have my family and friends, some books to read, and a few games to play, I’m pretty happy with my life. Everything else is secondary, really, to those things. I don’t need expensive clothes. I don’t need a brand new car. I don’t need the newest gadgets. I don’t need an expensive adventure every weekend. I don’t need to constantly eat out.

The things that really fulfill me don’t revolve around those things, so why would I sacrifice my time and life energy so that I can have more of things I don’t really value?

This is why it’s incredibly useful to spend time reflecting on your goals and what you value in life. What do you want out of life? What goals do you have for the future? What things are truly important to you – and what things are unimportant in the big scheme of things? The more you reflect on these things, the easier it is to use them as a filter for the choices you make in life.

How might this expenditure change if I didn’t have to work for a living?
Your employment situation isn’t just purely a moneymaking operation. It’s an expense, too. You have to pay for the commute. You have to pay for things like work clothes. You sometimes have to pay for socializing with coworkers and out-of-town clients and guests.

These things each have costs, both in terms of money and in terms of extra time and energy. Very rarely are these things reimbursed to you.

What you’ll often find is that, once you subtract out all of these expenses, the actual income you make from your work is far lower than you thought, particularly on a per-hour basis.

I had a friend, for example, who put herself in better financial shape by leaving an administrative assistant position and working instead as a convenience store clerk down the block from her home. She no longer had commuting costs. She no longer had “professional” clothing costs. She no longer had entertaining costs or socializing costs.

Better yet, she had more time and energy for the other things she wanted to focus on in life – her music. She’s now gradually launching a business providing music lessons to children and adults in her free time, something that she deeply enjoys and something that didn’t work before when she was at her “good” job.

If you couple this idea with the other two questions presented here, you may find yourself starting to come to conclusions that lead to a different path in your life. That path leads to happiness and freedom.

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. Cross country move
2. Building credit without cards
3. Quick repayment and credit scores
4. Income generation in retirement
5. 401(k) manipulation
6. What’s your day like?
7. Fix it up or not?
8. Emergency fund vs. financial aid
9. Handling proceeds from sale
10. Epic board games, not D&D

I have had consistent dreams lately in which we have a fourth child, a little girl with strawberry blonde hair. She keeps showing up in dreams of all kinds as if she’s naturally part of our family. I’m not sure what to even make of it.

Q1: Cross country move
You may have covered this before. I am about to embark on a cross country move with three small children. My husband is going for a job where he will make significantly more money. We will have the opportunity to pay off our very high student loans in a few short years and save for the future. I am not too excited about the place we are going and I love my life here – job, career, friends, etc.

I am struggling with what to take. I grew up with borderline hoarders so I have a skewed perspective on what is trash, clutter and useless. Once we paid money for things, we used them way past their life expectancy and tended to keep them forever. I still feel guilty throwing away things that may be useful one day or that I spent money on.

I have spent a good deal of time over the past two years decluttering and I feel that this move will help a lot to finish up getting rid of things that are not useful or not treasured. I also have the mindset that I want to be frugal and not have to repurchase things once we arrive. The salary my husband will earn will allow us to afford the option of getting new things, but I am not sure that is the best option. I am concerned that I will miss items from this life that I love where I am now. Perhaps they will help me adjust to my new life – or perhaps new items will help me.

Here are some general items that I am conflicted about.

Linens – sheets, towels, kitchen towels, etc – do we take with or purchase new?
Dishes and other kitchen items from our wedding 15 years ago? Have I used them long enough to justify getting new ones?
Kids toys – how do I decide what to bring?
- Elizabeth

With each item, ask yourself a few questions.

First, will we really use this item after we move? Is it something we’ll actually use a lot upon our arrival? If the answer is no, leave it behind.

Second, will it cost more to ship the item there than to replace it when there?

Third, does the item itself have sentimental value or does the sentiment reside mostly in your mind?

Finally, does this have any resale value right now?

You’ll find that those questions, as a whole, will really filter your items. The ones that make it through this type of thought process will be the ones you want to take with you.

Q2: Building credit without cards
My question: how to get non-bankcard credit when I don’t need anything?

My credit scores now average 760 and yet can’t manage to get a second non-secured credit card to help me build additional credit.

I did have bad credit up to several years ago but that has all been wiped off my report for at least 3 years. I currently have one Mastercard (about 3-4 years, started out as secured and is not unsecured at $4500 credit – the limits went up incrementally from $500 over the years). When I applied for a second card (twice) I was refused not only for short credit history but for lack accounts that were NOT bankcards. So now I have a secured Visa for $900. (I don’t actually need the credit, I just bill my Netflix through it and pay it off each month; it’s purely to help me build a credit history with various accounts and a higher credit limit.) Also, the Visa doesn’t seem to want to let me know when they plan to transition me from a secured card to unsecured. My Mastercard was much better about this. But my Visa seems to be a little – amateur in their online systems and communications? I don’t plan to keep the card if they plan to keep it as secured because I pay $10/month for it (horrible deal, but it was all I could get, strangely.)

Re diversifying my credits: The thing is – I don’t want a mortgage, I don’t need a car lease or insurance (NYC!), my apt can’t have a washer/dryer. I don’t need expensive furniture. The only thing I could see using is upgrading my 8 year old tv to a much larger and better one on a payment plan but I’m afraid that that will just be considered bank credit if the electronics store card is filtered through a bank?

I’m really at a loss as to what non-bankcard credit IS and if I don’t need a mortgage/car/lease/washer/dryer — how am I going to get it?!

Please let me know if you or your readers can shed some light as to how the classification of these things work (is a bank loan different than a bankcard?). And what kind of credit I should be aiming for? Non-bankcard credit ideas?
- Jesse

Something seems strange to me. If you have a credit score of 760, you should not be having trouble getting an unsecured credit card with a low credit limit.

If I were you, I’d check my credit report as soon as possible and make sure there’s nothing incorrect or out of order on it. Use the Federal Trade Commission’s site to do this.

If your credit is in order, apply for a different unsecured card quickly. You shouldn’t be paying $10 a month for the “service” of a secured credit card if you have a 760 credit score.

Q3: Quick repayment and credit scores
I am 24 years old, making 60k a year plus bonuses with usually equally around 15k a year. I have no debt in the form of student loans nor do I have any credit card debt. My only debt is on a new car that I recently purchased when I moved to a city where a car was necessary. The loan is for approximately 21k and the interest rate is 5.99% and the term is 5 years. I have $7,000 in an emergency fund which covers about 3 months expenses. My question is that I am about to receive my spring bonus which will be around 9k after taxes. My thought is that I should just put all of this toward the car so that I am paying less in interest over the next couple years and just continue to pay off the car as soon as possible. This seems to make sense to me as the most financially prudent decision but I just wanted to get your take. The only consideration is that having taken out zero loans and generally avoiding credit cards my whole life, I have very little credit. That is one reason that I was keen to take out a car loan. But if I pay it back quickly does that have any negative effect on my credit score. I’d obviously rather pay down the car so I’m not paying as much in interest but I just want to know how that will affect my credit.
- Daniel

It won’t have an immediate negative effect on your credit score, but as time passes without any outstanding lines of credit, your credit will gradually go from “good” to “neutral.”

Given the number of things that businesses use your credit score for, such as determining trustworthiness when applying for a job, determining your insurance rates, and so on, it’s worthwhile to keep your credit score up.

My usual recommendation for people is to get a good rewards credit card that’s tied to some specific purchase they do routinely, such as a credit card for their gas station, then use that card for that routine purchase and nothing else and pay the card off each month. This keeps your credit high, doesn’t give you time to start incurring interest, and often gives you a few perks via the rewards program (such as gas rebates).

Q4: Income generation in retirement
I’ve been working with my dad to help him figure out his finances as he approaches retirement. My mom is recently deceased and he’s about 5 years away from retirement. He’s making good money and has plenty in the bank, but I’m struggling with what he should do to actually create the income that he needs to pay for retirement. He currently holds about 75% of his assets in equities (it was over 90% until recently) that don’t kick off dividends or anything to create an income stream. I’m wondering what else you’d suggest. I think he needs about $3k (after Social Security) in 2011 dollars. My concern with an annuity or a long term muni bond is that they’ll create a revenue stream but they won’t protect against inflation. He recently sold his house to free up about 1/2 his total net worth and is now a renter, so he does have to deal with inflating rents over a couple of decades or more (potentially). Dad is currently 65 and self-employed (but does not expect to make much if anything on the sale of the business, which is service-driven.

Also, his greatest concern is that he’ll outlive his assets, given the lifespans of his parents, etc. He’s heard about “longevity insurance,” which I think might be just a form of a variable annuity. Do you know anything about that?
- Robin

By “$3k,” I’m assuming you mean $3,000 in additional income per month beyond Social Security.

It’s hard to offer up a real answer here without some real numbers. Certainly, inflation is a concern. However, inflation is a manageable concern unless you’re worried about things like hyperinflation, which seems to be an underlying thread here. If you’re worried about possible economic calamities at an advanced age and aren’t a millionaire many times over, there’s not much you really can do.

My honest suggestion is that your father spends his time now doing what things he enjoys doing that have some potential of earning him future income. For many self-employed people, that often revolves around whatever they’re self-employed to do, because self-employment requires a lot of initiative, desire, and focus.

If he’s not able to do it any more, has he considered hiring someone to do the grunt work for the business while he handles other aspects of it?

Q5: 401(k) manipulation
I lost my job on Friday. It’s unfortunate, but I’m viewing it as an opportunity to leave behind a job I wasn’t enjoying and find something that may make me feel excited to get out of bed. Thankfully I have a strong support group, and I received a bit of severence to help me look without having to be desperate.

I had a 401K at my previous job that I certainly want to make sure I retain its maximum value as I move on (although it isn’t much as I’m still young and hadn’t been contributing [tsk tsk, I know]). Additionally, my wife has a 401k that we never did anything with when she left her employer two years ago. I assume whatever we do with mine we could also do with hers, although I suppose the situation may be difference since it’s been so long since she left the employer. I understand these are questions for a financial planner, but given the situation (I was the primary earner) I’m not sure if I can justify paying someone to answer these questions unless it’s really warranted.

Do you know anything about any ‘gotchas’ I should avoid in this process? Is possible to combine her 401k and my 401K into a single IRA (be it Roth or Traditional), or is that not a good idea? Finally, do you have any recommendations for someone who would be able to help us figure this out, or a financial institution that makes the transition very easy?
- Jon

IRAs are tied to individuals. You can roll your 401(k) over to your IRA and your wife can roll her 401(k) over to her own IRA, but you can’t directly merge them.

One solution for “merging” them would be to name each other as secondary beneficiaries on your IRAs. If you have a large net worth, you may want to start moving your assets to a trust of some sort, so you may want to name the trust as the secondary beneficiary.

Typically, you roll a 401(k) into a Traditional IRA (since they’re both pre-tax money), then you look for opportunities to convert a Traditional IRA into a Roth IRA (pre-tax to post-tax, which means you’ll have to pay taxes on it now but save yourself tax bills later on).

Q6: What’s your day like?
Do you find that your new lifestyle allows you enough time to do the things that bring you joy? Are you rested in the morning, and satisfied with your day at night? Do you feel less rushed than you did when you worked outside the home, or is your day just as crazy now, but in a different way?

I would be curious to know what a typical day is like for you….How you basically structure your day. And your wife too, since she works out of the home, what is her day like? After all the changes you have made, do you both feel you have reached your optimal work/life balance, and what do you do when you find yourself leaning too far one way or the other?
- Micki

There is no “normal day,” really. My two oldest children go to preschool most days of the week, but they’re on different schedules. The youngest child is often with a babysitter when the other two are in preschool (but not always). My role is usually the “emergency” handler. If one of them is sick, I almost always take care of that child. If there’s a doctor visit to be had, I take the child to the doctor.

When I’m at home without the children, I try to fill my time with as much productive work as I can, hence my need to eliminate distractions and focus on the work. These work periods can happen at any time, though, and they do. Sometimes, I’ll be working early in the morning. At other times, I’m working in the mid-afternoon. At other times, it’s in the late evening (which is actually when I’m writing this).

I wouldn’t trade it for anything. Because I’m doing this, I am always there for my children – and for my wife – when they need me.

Q7: Fix-it-up or not?
Our family has our house listed for sale so that we can relocate from the suburb where we live into urban St. Paul where we work and send our kids to school. It’s a great family home (we have 6 kids) with a walk-out basement, 5 bedrooms, 2.5 baths, 2 fireplaces, a three season porch and a deck that looks out over the park. It was built in the 1960s so it has nice hardwood floors and is a basic quality home. However, during the 8 years we’ve lived in the house it has aged. The windows are old, the siding is nicked up, the driveway is getting holes, the kitchen is old school…. From what I’ve read, it’s better to try and fix all the worn and broken things when selling rather than to sell as is and take a lower price. The problem with that is that we can’t afford to put in new windows or replace the siding. Our fourth child is now in college and the only way we could do any of those fix-ups would be to borrow the money. At this time our asking price is below what we paid in 2002. If it sells, we will most likely have to rent our next home since we won’t get a significant amount of money out of this one. What do you think about the common wisdom that it’s better to fix the house up even though you won’t recoup your expenses? I don’t think of our home as a “fixer-upper”. It’s absolutely livable as is – just a little worn around the edges.
- Laura

For me, I think the value of a “fixer-upper” depends heavily on the personality of the people doing the fixing. Are these types of projects something you relish? Or are they something you dread?

Everyone is wired differently. Some people love painting and putting up drywall and replacing roof tiles. Others loathe it.

If you’re a lover of this type of work, a fixer-upper is a great choice. You can bury yourself in these projects and usually find yourself turning a profit when you sell.

If you don’t enjoy them, you’re setting yourself up for years of unhappiness. It’s not worth it.

Q8: Emergency fund vs. financial aid
I’m a single mom with two young teenagers, both of whom I am lucky enough to send to private school. One child is in the school where I work, and the other is in a school for kids with learning disabilities (he’s dyslexic). Neither school would be possible for me without generous financial aid.

Financially, I’m in a pretty good place. We live fairly frugally, I have no consumer debt, the mortage will be paid off in 8 years, and a small rental property, while not making money, is almost break-even (I bought it as a long term investment rather than current income). I’m putting about 10% in TIAA-CREF and have been for 20 or so years. I would like to try build a substantial “emergency fund” in case I lose my job or other disaster happens (I am my children’s only parent), but I worry that having that much liquidity (should I ever get to $25/30K!) will negatively affect how I qualify for financial aid, both for high school and college: if I have that much cash on hand, schools will consider it available for tuition, not “rainy day” money. I don’t have any college savings (other than the option to sell the rental house) — the kids know that college will be a mix of working, scholarship aid, community college maybe, or living at home.

Do you have any thoughts on how to handle this dilemma?
- Anna

If you have a few months of living expenses in savings, it won’t dramatically affect your financial aid situation, simply because it’s not that big of a number in the big scheme of things.

The big numbers – the ones that will impact things – are your salary and your other assets. Those things are often able to be tapped into for educational needs.

An emergency fund with several thousand dollars in it is a minor issue compared to the equity in your home or your retirement fund or your annual salary.

Q9: Handling proceeds from sale
In the past my finances were a disaster. Since I’ve been with my girlfriend, 8 years, she’s assisted me with cleaning up my debt and setting goals. She’s the “banker” and does our budgeting cutting out things we really don’t need to focus on our future security. She’s 50, not working right now but earned $18,000 last year and has been paying off her loan from the wreckage of the past. Her loan balance is $5300 and will be paid off by 10/2012 without making extra payments. Her payment is $148.30 bi-weekly and she’s been paying it herself along with contributing ½ to the food budget, paying for her gasoline, etc. She should hear from unemployment this week and is continuing to look for work.

My situation: I have a current mortgage of $136,000 at 5.62% with 23 years left to repay, an equity loan of $36,000 at 5.99% with 12 years left to repay. The plan is to pay $3800 toward the principal of the equity loan at the end of this year. The bi-weekly payment is $177.10 and I’d like to get this paid off early. I have no credit card debt. I recently purchased a used 2003 Honda Civic DX with 78,000 miles on it. The monthly payment is $156 for 3 years. I have $4000 in savings. The house is worth about $200,000, I own a 2006 Mazda 3 (paid off), and a 2005 Harley FLHT motorcycle (paid off). My girlfriend drives the Mazda.

I’m 55 and have worked for the post office for 27 years as a letter carrier. I’m in the Thrift Saving Plan and I upped my contributions to my 401K this year to 12% of my yearly income. My yearly contribution is now $6663.60. The current balance in my account is $125,000. I plan on retiring at 64 with a pension, SSI, and a 4% draw from my 401K.

So here’s my question: I’m thinking of selling my motorcycle which is worth $9000. Where should I put this money? My thought was to place it in savings, up my yearly contribution to the 401K, and use this money from the savings to cover my mortgage/equity loan. My girlfriend says to put the $9000 onto the equity loan balance owed.

I agree with my girlfriend to get the mortgage paid down, pay off the equity loan early and continue with the 12% contribution for now. She says I should focus on paying off the equity loan over the next 3-4 years then use the money I was paying for the equity loan and split it between my 1st mortgage and 401K.

What do you think?
- Ellen

Assuming your retirement date is inflexible, the best thing you can do for your retirement is to maximize your monthly cash flow when that day arrives. This means focusing on what debts you can eliminate between now and then. You’re nine years from retirement. What can you eliminate between now and then? That will have more impact on your ability to retire than having a few thousand dollars more in your 401(k) balance.

In other words, if you’re flat-out retiring at age 64, focus as hard as you can on getting your debts out of the way. Your timeframe between now and retirement is short enough that investments in high-risk high-return investments have a solid chance of backfiring. You’re better off getting rid of debts and maximizing your cash flow with a shorter timeframe.

If your retirement date is a bit flexible, then the 401(k) becomes more noteworthy. Let’s say you’re not retiring until age 68, at which case you don’t need to make accelerated payments at all on that equity loan to get rid of it. This allows you to bank more into your 401(k) along the way and give you a more secure retirement at that time (a higher income level with the same debts eliminated). It’s also important to note that the longer time frame you have for 401(k) investments, the more likely it is that you’ll see good returns on stock investments within that 401(k).

Q10: Epic board games, not D&D
You’ve mentioned many times that you enjoy board games, and you’ve also mentioned that you enjoy reading fantasy novels. I don’t think it’s much of a leap to assume you’ve probably played D&D or some other role playing game as a teenager.

I miss playing games like those. I love the epic adventurous feel that they have. I just don’t have the time to play them as an adult. I do still play D&D on occasion with some old friends who are in the area, but we have a hard time committing several hours a week to it.

Do you know of any board games that capture that feeling but can be played in shorter sessions?
- Eric

There are a lot of games that can fulfill this “itch” for you.

For example, if you want to get the D&D experience in about an hour, you can try something like Castle Ravenloft, which is exactly that – D&D, playable in an hour.

There are other games along these lines that are great to pull out if you find yourself with a longer stretch, but at irregular times. The best of these is Descent: Journeys in the Dark.

Both of these games provide the fantasy-oriented rich themes you’re looking for in a much less time-intensive fashion than D&D. They’re also a lot cheaper, considering you don’t need to constantly buy books to update your play experience.

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.

I’ve mentioned more than a few times on The Simple Dollar how one of my few heroes in life is John Wooden, the basketball coach at UCLA during the 1950s, 1960s, and early 1970s. For example: What John Wooden Taught Me About Personal Finance, Make Each Day Your Masterpiece, and Making Today Your Masterpiece.

Why do I give such respect to Coach Wooden? It’s not his record as a sports figure or anything like that. I respect him because of the positive impact he’s had on countless people. If you do a Google search for John Wooden stories, you’ll find an overflowing abundance of people telling about the positive impact that Wooden had on their life, helping them down the track to being a better – and often a more successful – person.

One of the first things you’ll find out about Wooden if you research him is his “seven point creed.” It’s a series of seven principles to live by that his father, Joshua, gave to him upon his graduation from grammar school, and one that he directly passed on to many other people. Ever since the first time I came into contact with that creed (via one of my own early mentors), I’ve tried to live by it, for better or worse, and I’ve found that my life is rewarded every time I came close to living up to that standard.

I’ve long looked for a book that really explained this “seven point creed” while tying in a biography of Wooden’s life. I read several books by various people on Wooden’s life and none of them really clicked in that way. Until this one.

Coach Wooden by Pat Williams and James Denney is probably the best single volume I’ve come across on Wooden and the princples he shared with others throughout his life.

A Common Man, a Leader’s Leader
You might expect this chapter to be biographical, and it is. It’s just not biographical concerning John Wooden. Instead, the opening chapter focuses on John’s father, Joshua Wooden, who gave John that seven point creed. It provides a bridge between the modern world and a much different time and really reflects on how some basic tenets about life remain the same.

Be True to Yourself
In the end, you can only be yourself. You can’t make yourself be someone genuinely different, and pretending often ends up being a trap of unhappiness. Being yourself soemtimes means that people won’t understand you and they’ll look at you strangely, but the same thing will happen no matter what you do. You can never please everyone all of the time. Focus instead on being who you naturally are and good things will flow from that. You’ll be naturally at ease in most situations. You’ll almost always choose to do the right thing in a situation. In the end, you’ll be the person you always hoped you’ll be, simply by being yourself and not who others want you to be.

Help Others
There is no one in the world who does not occasionally need a helping hand. If you observe someone needing that hand, offer it. Offer it every time and you’ll find that when the day comes and you need a hand, you’ll find one waiting for you. You’ll also experience the pleasure of seeing others find success and the joy in sometimes building the foundation of great relationships with others.

Make Each Day Your Masterpiece
This principle really hit home for me, and it’s something I’ve tried to do again and again in my own life. Every single day, you have countless opportunities to do the right thing in life. Every day gives you the chance to fill it with a taste of something great. Do you make that choice? Or do you squander it with frivolity? Every day can be a great day.

Drink Deeply from Good Books, Especially the Bible
Read each day. Read things that challenge you. Read things that help explain the world and the culture we live in. Read things that move your spirit. Read things that move your mind. Wooden explicitly mentions the Bible here because it can do all of these things – and, even if your beliefs are completely outside the realm of Christianity, it can still challenge you and help shed some light on culture.

Make Friendship a Fine Art
Every friendship you have rests on a series of interactions, and it’s how you handle those interactions that builds a strong friendship. Much like a fine art, a friendship is the sum of a lot of little things, like notes or brushstrokes. Make it your goal to paint those little strokes well so that they build together into something profound that will last for the rest of your life.

Build a Shelter against a Rainy Day by the Life You Live
Obviously, a cash emergency fund falls under this umbrella, but so do the things you know, the relationships you’ve built, and the skills you’ve acquired. All of these things are part of what will buoy you when a rainy day comes in your life – and it inevitably will. Build them today when you have the opportunity.

Pray for Guidance and Counsel, and Give Thanks for Your Blessings Each Day
If you’re reading this, you have a better life than most of the people in this world. Keep that in mind as you go through your day. No matter how hard it is, you’ve got many advantages that others in this world do not have. As for prayer for guidance and counsel, it’s a valuable tool. If you don’t believe in a higher power, meditate, as it’ll provide many of the same benefits.

Is Coach Wooden Worth Reading?
If you’ve ever been curious about the life of John Wooden, this is well worth reading. If you’ve ever wanted to read a book that covers valuable life principles, this is well worth reading.

I plan on giving my own version of these principles to my own children when they’re of age. This book gave me an opportunity to reflect deeply on them.

Check out additional reviews and notes of Coach Wooden on Amazon.com.

We’re all familiar with the golden rule. “Do unto others as you would have them do unto you.” “Treat others as you would like to be treated.” It’s a key concept in human morality and a foundation rule in most of the world’s significant religions.

For a lot of people, the golden rule comes at least somewhat naturally in human behavior. We’re pleasant to others most of the time, for example. Without the golden rule, traffic flow simply wouldn’t work at all.

Quite often, personal finance success means following the opposite of common sense. “Buy low, sell high,” for example, means doing the exact opposite of what would feel natural to us.

Yet, underneath that, the golden rule pops up in money matters more often than you think. Here are a few examples of sticky money situations where applying the golden rule can lead to a great solution.

Loaning Money to Friends or Family
A friend or a family member is hitting you up for a loan. You don’t want to loan that person money, but on some level you feel obligated to. What do you do?

You really have to apply the golden rule here. Do you wish to never have friends or family members lend you significant amounts of money? If you do, then you can honestly tell that person that you do not want to mix lending and friendship/family.

Even more importantly, you can tell your friends and family that you don’t ever want a loan to come between you, so you’ll never ask them for a loan if they’ll never ask you for one. Do it pre-emptively on a place like Facebook.

What if you’ve loaned/borrowed money from friends and family in the past? If you’ve changed your mind on the issue, then the experience from that lending must have taught you that it’s often not a good idea to mix money and family/friends. Be open about that. Make it clear that you don’t want to mix the two because mixing them in the past has led to frayed relationships, something you don’t want to repeat.

Getting Ahead at Work
When I worked for an employer, I saw many examples of people grabbing credit for themselves and ignoring the contributions of others. Because of that, I saw a lot of hurt feelings and mistrust and I witnessed a lot of relationships broken. I also saw career promotions happen sometimes because of that omission, but I also saw some serious career setbacks because someone didn’t play fair with credit.

What I never saw, however, is someone being set back for giving abundant credit to those who helped them. If you work in a professional environment for very long, it’s clear that you’re never actually doing the big project yourself. You’re always relying on others for something, even if it’s just the opportunity to work on the project.

Give abundant credit. When in doubt, bring up other names anyway and thank them publicly at every chance. You would want the same done for you, and it rarely is a career setback to publicly show that you’re a team player.

Marriage and Spending Money
I’ve seen countless marriages run into difficulty because one partner has a different idea about personal spending money than the other partner. I’ve seen hidden credit card bills. I’ve seen little white lies. I’ve seen people explode when the truth of their partner’s spending is revealed.

Think about it this way: would you like it if your partner deceived you about how much they were spending? Would you be hurt both by the deception and by the worse financial situation than you expected?

The golden rule points to the answer: be open about your spending. If you’re spending more than your partner likes, talk about it anyway. Look for some sort of balance or compromise that works for both of you. The important thing is to talk about your spending, even if you know your partner won’t necessarily approve of it.

After all, you would like to be treated the same way, right?