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

Once a month or so, we try to make something interesting and new using our slow cooker. Often, we try to make modifications of ordinary dishes to see if they’ll work in the slow cooker.

Sometimes this works well and you end up with a good replication of the original dish. Sometimes it’s awful and you wind up with something barely edible.

Then there’s that third case, where you expect a duplicate (or something close) of an original dish, but the crock pot version ends up being good on its own, but very distinct from the original.

We like to make vegetable-heavy enchiladas. We’ll pack all kinds of vegetables into the tortillas, wrap them up, and bake them in the oven. In fact, I wrote about these enchiladas (in a slightly different form) a few months ago.

What happens when we try to translate that dish into a crock pot version so we can just start it in the morning, walk away, and eat in the evening (perfect for a busy day)?

What You Need
What you need, more than anything else, is a pile of vegetables. Here’s what we used. Many of these items came straight from our garden.

2 cups cooked black beans, or one drained can
1 bell pepper, chopped
2 cups corn kernels, fresh or frozen
4 garlic cloves, chopped
1 cup black olives, sliced
1 medium onion, chopped
2 cups cooked pinto beans, or one drained can
4 tomatoes, crushed or loosely diced
2 cups tomato sauce
2 whole zucchini, diced

You may also wish to add meat. If so, try out 1 1/2 lbs cooked chicken, shredded.

For spicing, you’ll want 2 tablespoons chili powder, 2 tablespoons ground cumin, 1 tablespoon basil, and 1 tablespoon oregano.

You’ll also need 10-12 tortillas, corn or flour.

The Night Before (or Early That Day)
Chop all of the vegetables. You can put all of the chopped vegetables right into the same large bowl if you’d like.

Preparing the Meal
Mix everything but the tortillas together in a large bowl. Stir until roughly consistent, like so:

Put roughly 1/4 of the contents of the bowl in the bottom of the crock pot.

On top of that, put a layer of tortillas, enough so that the below layer is covered.

On top of that, keep layering. Add 1/3 of the remaining mix on top of the tortillas, put another layer of tortillas on top of that, then put 1/2 of the remaining mix on top of those tortillas, put another layer of tortillas on top of that, then put the rest of the mix on top.

Cover the crock pot and cook it on low for six to ten hours. You’ll end up with something looking like this.

We like to serve dishes like this with simple rice. We cooked ordinary rice in vegetable stock, then added some salsa near the end of the cooking.

That’s dinner! Everyone seemed to enjoy it.

Optional Ingredients
Obviously, there’s some strong flexibility with the vegetables you add. You’ll want to keep it around 12 cups of total vegetables, but feel free to eliminate a vegetable you don’t like or add one that you do like that makes sense (like tomatillos or something).

You can also try different proteins, such as chicken or shredded beef or ground beef. Cook these before adding them to the initial mix.

A few weeks ago, I put out a call on Twitter and on Facebook for detailed posts that people would like to see. I got enough great responses that I’m going to fill the entire month of July – one post per day – addressing these ideas.

On Facebook, Patsy asked about “Online Banking… Paperless statements etc… Good idea? Cons: hackers, spouse doesn’t use computer much, so what happens when the other spouse dies?”

Patsy is really asking two separate questions here: how to protect your identity when using online banking and how to plan for account access if the partner using the account heavily dies.

Online Banking and Personal Security
People don’t like to hear it, but it’s true. You alone are the key to avoiding identity theft. In an online world where sophisticated criminals can get a lot of value out of your personal data, you have to protect it. You are aided by the fact that banks do as much as they can to keep you secure, but they’re not infallible. You have to do your part, too. Here are some essential steps.

Use strong passwords – and don’t repeat them. If a site allows you to use a password, use one that is long, does not include common words or names, and does include a variety of letters and numbers. Your best bet is to use a random password generator like this one. Use a strong password like this for all of your vital accounts – and use a different one for each vital account. Take action and change your passwords on your vital accounts right now.

Use antivirus and anti-spyware software on your computer. Good software like this is a great investment. I’m a big fan of AVG, but do your own research and find a great antivirus and anti-spyware package that meets your needs. Take action and get a strong antivirus and anti-spyware package on your computer.

Don’t store your passwords in an easily-accessible place. If you keep your passwords written on a sticky note on your monitor or under your keyboard, your identity is only as secure as the location where your computer is. Don’t leave such information in such an easy-to-access place. Take action and use software like a KeePass to keep all of your passwords secure.

If your bank mails out sensitive information by email, stop getting electronic updates. Most banks have enough sense to keep truly sensitive information (like account numbers and so on) private, but some banks will email out statements with such information on it. If you get such documents in your email, your identity is only as secure as your email (which isn’t really very secure). Take action and if your bank sends out such information, request that they stop sending it to you.

These four steps will go a long way toward making your online banking more secure.

Online Banking and Future Planning
At the same time, what do you do if you use an online bank and your spouse knows nothing about it? Most online banks do have procedures that helps survivors out in the event of an account holder’s passing, but you need to do your part in avoiding this process or at least making sure it goes off without trouble.

Keep basic information, such as a list of your accounts, in a safe and secure place. Simply make a list of your financial accounts, with account numbers, account holder information, and PINs, and keep that list in a very secure place. A safe deposit box at a bank is a good place to keep it, for example. This document will help those you leave behind to go through your accounts and take care of them as needed. Take action and create such a document today, then immediately store it in a secure place.

Update such basic information lists regularly. Account lists and other such information can grow stale over time, so you’ll need to update the list regularly. If you choose to keep an electronic copy of this type of document so you can update it regularly, keep that document on an external storage device that you can also save in a secure place. Never keep it on your main hard drive. Take action and find a secure place for electronic versions of your lists, and update it regularly.

Make sure the executor of your will at least knows where such information is. You may want to include a mention of it along with your will, just so that in the event of your passing (or in the event of both you and your partner passing), the information can easily be found by parties who will need it. Take action and amend your will appropriately.

These steps will make sure that your account can be managed upon your passing.

A few weeks ago, I put out a call on Twitter and on Facebook for detailed posts that people would like to see. I got enough great responses that I’m going to fill the entire month of July – one post per day – addressing these ideas.

On Twitter, Robert asked “How about “Family outings that dont cost and arm and a leg” ?”

This is obviously a major goal for our family, too. We have three young children that have a need to explore the world, but many excursions outside of the house are expensive, particularly with five people in tow. Even a simple trip to a movie theater can easily set a family of five back $60 to $100. That’s painful!

Because of that, my wife and I have strived to come up with family outings that won’t cause our budget to explode. Here are some of our most-loved ideas.

State parks
There’s an abundance of state parks within a fifty mile radius of our home. Even within a twenty-five mile radius, there are several such parks. We make an effort to visit all of them, often once a year. We’ll pack a picnic lunch, drive to the park, and explore what’s on offer there. Different state parks offer vastly different things: lakes, forests, prairie land, fishing, hiking, canoeing… they’re all on offer at different state parks. The best part is that most state parks are free for day trips.

Bicycle rides
When we have an hour or two to kill, we’ll go on a bike ride near our house. When we have several hours to kill, we’ll load up our bikes and take them to a bike trail elsewhere. We’ll park in one place, ride the trail a bit in one direction, then ride back. Usually, we’ll stop for a while at this point and have a picnic lunch, then we’ll ride in the other direction for a while, then ride back. The rides are leisurely and there’s a lot of nature observation involved in the process. We don’t ride like we’re Lance Armstrong, just a family leisurely enjoying the day together.

Volunteer experiences
This is something that’s limited due to the youth of our children, but we still find ways to do it. We’ll spend a day or a part of a day involved in a volunteer activity of some sort. Not too long ago, we helped package canvas bags full of food that were to be delivered to shut-ins, then went around and delivered them to those shut-ins. Not only is it a very inexpensive way to spend a day, it also gives our children a chance to see how our actions can positively affect other people.

City passes
This is probably the most expensive option on our list, but it’s a good one. Many cities offer “city passes” which provide entrance to a number of cultural spots around the city over a period of time (a month to a year, usually). This is a great one-time pickup for your family, as it gives you a chance to fill quite a few outings with stops at such places. For a birthday gift, for example, my wife received two adult “city passes” to Seattle for the next time we visit there, since we’ll be visiting family there and will have several days to explore.

Community festivals and fairs
We tend to hit a lot of these on weekends during the summer. They can be expensive if you don’t go to them with a little bit of advance planning. First, we try to hit them during the day so we can see the free activities, demonstrations, and parades that are going on. To avoid the overpriced fair food, we usually pack our own lunch and snacks. These moves turn such an excursion into a fairly low-cost affair for the whole family.

Outdoor games
All you need for this is a park with some open space and maybe a bit of simple equipment, such as a frisbee. Just take over some space and play some games with your family, like simply tossing a frisbee around, playing ultimate frisbee, playing touch football, or anything else that you can think up. We spend a lot of afternoons and evenings doing this, usually accompanied (again) by a picnic meal.

Potlucks and round-robins
If you have other parents in the area that you’re friends with, engage in some meal exchanges with them, either one-on-one or as a larger group. You can either have one family “host” and provide the meal and the location each week, or do it “potluck” so that each family brings something each week. If you plan this with families that have children your age, not only do you get some time to socialize with people with overlapping life experiences (being a parent in that area), but the children have a chance to play with their peers, too.

Cultural events
Always check the community calendar in your area for free cultural events, many of which are happening without your notice. We try to enjoy a diversity of such events, from going to a free classical concert in the park to watching a chess tournament. There are all kinds of things happening in your community if you just take the time to look for them, and almost all of them are perfect for a rich, new experience for you and your children.

Between all of these things, our calendar is as packed as we allow it to be. Simply put, there are more opportunities to do low-cost things than there is time to do them in.

What’s inside? Here are the questions answered in today’s reader mailbag, boiled down to five word summaries. Click on the number to jump straight down to the question.
1. Handling a massive pay cut
2. Balance transfer concerns
3. Saving for down payment
4. Moving or staying put?
5. What about TSP?
6. 403(b) rollover to Roth IRA
7. Checking account sign-up bonuses
8. Student loan versus down payment
9. What is an ESOP?
10. Disguising questions

Over the last few weeks, I’ve been using stevia as a sweetener in some foods as a replacement for sugar. A teaspoon of stevia in a quart of iced tea. A bit of stevia in a cookie recipe. You get the idea.

At first, I didn’t like it. It didn’t taste like sugar to me. What I found, though, was that the more I used it, the more “normal” it seemed. The “different” taste didn’t bother me any more and I appreciated what it added to the food.

This is true of almost any change you try to make. We’re so routine oriented that the change seems bad at first, but quite often, when we give ourselves a chance to become acclimated to the change, everything turns out fine.

Q1: Handling a massive pay cut
I’m in my early 30s and I’ve not yet begun saving for retirement. There are several reasons for this. I’m not originally from here so I don’t know where I plan to settle down. Also, I’ve taken a massive pay cut. I used to earn $37,740 but I’m not even scraping the $20,000 mark now. My partner pays the rent, so I can manage with smaller expenses. I plan to go back to graduate school soon (which will be paid for so no student loans). I have about 4 months worth of emergency savings and no significant credit card debt. I take good care of my 2003 car so I plan to keep it for another few years. My pay rate should increase starting next month, taking me to about $28,000 per year. Should I worry or just continue putting whatever money I can in to savings account for emergencies? Other than spending far less than I earn, I’m a novice when it comes to financial matters.
- Thomas

I think your emergency fund is more than adequate for your life situation. You have an adequately large emergency fund and if you’re going back to school on scholarship, that’s another positive.

My concern would be living expenses while you’re in school again. If I were you, I’d start saving up so that when you return to school, you’ll have plenty of money to cover your life expenses so that you can focus on studying and building relationships with other graduate students.

So, yes, I would keep shoving money into savings, but I wouldn’t think of anything beyond a few months of living expenses as an emergency fund. Think of it instead as a “life during graduate school” fund.

Q2: Balance transfer concerns
I have a credit card with a balance of $3200. (Not exact, I rounded up). I am paying about $54 in interest monthly, my interest is 18%. I pay $500 a month on this, but a good chunk is vanishing in interest.

I have an offer of 0% interest for 21 months on another card. I am considering doing a balance transfer, and I would save a good chunk in interest and pay the balance sooner. (The new card would never otherwise be used).

But I like the card I have (amazon rewards). If I do a balance transfer, will I have to close the card I have, or can I keep it and continue to use it?
- Tori

Typically, you don’t have to close the card you already have to do a balance transfer to a new card. Often, the new card will just issue a check or an electronic payment on your behalf to the old card, eliminating the balance, then creating that same balance on the new card at 0%.

The end result is that your old card has a $0 balance, while your new card now has the balance of the old card.

Be careful with this, though. Knowing that a card you often use has a $0 balance can be a temptation to use it more on things you don’t need and quickly rack up an additional balance. Don’t bury your future in debt.

Q3: Saving for down payment
My husband and I (both around 30 years old) spent the last 1.5 years aggressively chipping away at our student loans, and all of those loans are now paid off. We’re now trying to figure out what makes the most sense to do with our money (our combined annual income is over $160,000, and so we have a fair amount that we can put away each month). We have the following constraints/goals:

-In about 12 months, we will very likely be moving to a new region (with relocation $) and hope to buy a home within a year of moving
-We’ll also likely want or possibly need to either replace our current car or purchase a new-to-us car in addition to our current car
-Right now, we currently rent a home; we have at least 3 months of emergency funds ($10,000) in a savings account; another $5,000 in our checking account; no debt (credit card or otherwise); about $6,500 in a Roth IRA (which we may eventually use toward a down payment), and about $20,000 in a 403b.

Now that our student loans are paid off, I will return to putting as much money into a 403b as I can get matched by my employer (for the time being, my husband cannot receive matching through his employer). Our top priority is saving up for a down payment (we may have some sort of assistance on this from a future employer when we move, but cannot be sure), and we plan to save the $$ that we had been using to pay off student loans for this purpose. But we’re unsure where it makes sense to keep the money that we’re saving for a down payment. We could keep it in a savings account, but aren’t really sure what our other options are (we would like to be able to take out the money we save as early as 12 months from now).
- Kristina

If you’re looking at a timeframe as short as a year (and without a clear resolution date), a savings account probably is your best option. It’s very liquid (meaning you can get your money out easy), extremely stable (you won’t lose money in it), and does earn a return, albeit a small one. It’s a great place for short term saving when you can’t afford to lose any of the saved money.

If I were you, I would not bank on any sort of assistance for moving from a future employer. Never, ever manage your finances assuming something that may or may not ever happen. Assume no help and then, if you do get assistance, consider it a windfall, because that’s what it amounts to.

Just keep dropping money into your savings account as rapidly as you can and see what the near-term future holds for you.

Q4: Moving or staying put?
My wife and I are selling our house (at this moment we are waiting to hear on a counter-offer) and we are struggling with a decision. We have decided on two locations where we would like to live. The first one, Henrietta, is where we live now and I work. The second, Victor, is about 25 minutes away. Victor is where we grew up and have friends and family back that way. We are struggling because Victor is more expensive. We would have to pay 20-40K more for a comparable house. That county’s taxes are a little lower (typically 500-800 dollars).

So we know that staying here in Henrietta is much more practical. I have no commute, we could get the same type of house for much less and we like if not love the school district for our daughter. Conversely, Victor holds emotional appeal. We WANT to be there, know that we received great educations and would love for our daughter to graduate from there. A short term benefit is that they have full day kindergarten instead of 1/2 day for next year.

Quick financial snapshot is that we carry little debt (only mortgage and student loan), have 20% to put down on houses in our price range, and our frugal in every day life. We know we can afford the higher prices in Victor, but it just goes against our frugal nature.

I know you can not make this decision for us, but I thought you might be able to talk about whether an emotional appeal can ever overshadow a practical decision and how you and your wife would work through a situation like this. We have done T charts, pros and cons and bascially ran around in circles mentally.
- Brad

It’s not a decision I can make for you. You have to decide which factors are more important for you personally.

Given that the two locations are less than a half an hour apart, I would probably live in the more cost-conscious area. Several of my closest friends live about half an hour away from me, yet I manage to see them several times a month. We take turns going to each other’s homes and also doing things at midway points (like state parks and the like).

If I were you, I’d ask yourself what you’d actually gain by having a 25 minute daily commute to work versus a 25 minute drive on the weekends to spend the day with friends and family. I’d rather have a weekend drive than a daily one, when it comes right down to it.

Q5: What about TSP?
I know you recently reviewed IRA’s and 401k’s, but I was wondering if you could take a moment to review TSP (https://www.tsp.gov/index.shtml). It’s meant for Federal employees, but I’d love to hear how you rate it in comparison to the other options out there.

I’m an active duty military service member who donates 5% of every paycheck into my TSP account. I’m set up for the 2040 Lifecycle fund (https://www.tsp.gov/investmentfunds/lfundsheet/fundPerformance_L.shtml). I am currently 24 years old…and my plan for the moment is to serve 20 years, retire from the military, then take up a second job for another 20 years or so and get double retirement. Do you think that I should continue to put 5% into my TSP (which I believe does not get taxed right now like a Traditional IRA), or should I stop that and focus on putting the 5% into a ROTH IRA?
- Steve

TSP is essentially comparable to a 401(k) for U.S. government employees. This means that taxes are deferred, much like a Traditional IRA. The investment choices in TSP are pretty solid.

If you’re getting any form of matching from the government in your position, I would use the TSP and get every drop of matching I could. The value of the matching blows away any other factor.

If you’re not getting any form of matching, I would probably focus instead on the Roth IRA, because it provides post-tax income later on that will balance with the pre-tax income you have.

Q6: 403(b) rollover to Roth IRA
I am a 36 year old teacher and have been contributing to a retirement plan (403b) for 4 years with full employer match. I am fully vested in my 403b, meaning I am entitled to a small pension when I reach retirement age. I am now leaving the profession, but am at a loss as to what to do with that money. I have my own Roth IRA, and I thought of rolling over my 403(b) funds into my Roth IRA, but the catch is this: I would only be able to rollover my contributions, which are about 10,000 (essentially losing all of the past employer match) which would be taxed before going into my IRA. So my question is: should I rollover my 403(b) into my Roth IRA and lose the employer match or should I just let it sit for the next 30 years and receive a small pension check every month?
- Rhonda

You may already know this, but if you roll over your 403(b) into your Roth IRA, you’re going to take an immediate tax hit, as you’re moving pre-tax money into a post-tax account. You’ll have to pay income taxes on the money you move out of the 403(b), which could be a few thousand dollars, and you’ll have to cover it out of pocket.

While having the money in the Roth IRA is probably better long term (because you won’t have to face those tax bills later, which you’ll eventually have to do with a 403(b)), the tax hit is often painful for people, particularly on a low salary.

If you can easily handle the $3,000 (or so) tax bill, I’d roll it over. Otherwise, I’d just leave it sit.

Q7: Checking account sign-up bonuses
There are lots of offers out there to open checking or savings accounts at banks that offer you a sign up bonus for opening an account and establishing direct deposit. I was wondering if there was any actual downside to opening these accounts, making a few direct deposits, collecting the bonus, then transferring the money to my normal account and closing the account. My work makes it very easy for me to take part of my paycheck and allocate it towards direct deposit, so this is not an issue. I’m also aware that these bonuses would be considered as taxable interest income in most cases. I am more concerned about whether or not there are any hidden fees surrounding this, and then of course the moral implications of tricking the banks. Have you ever done this? Do you know if there really are any actual down sides legally or financially? As far as moral implications go, I suppose that is up to the individual if there aren’t any laws or regulations that are being broken.
- Dan

Most banks are wise to this “strategy” and put some caveats on the offer, such as maintaining a minimum balance for some period of time. Usually, the penalty for violating the terms of the offer is worse than the “bonus” you get for signing up.

If you can find a plan that doesn’t offer such caveats, then take advantage of it, by all means. The odds are, though, that you won’t find one.

Very rarely are the bonuses on an account worth the hassle, at least from my view. They’re worthwhile if you’re actually switching banks, but if you’re jumping through the hoops just to get a small bonus, it really doesn’t add up with the time investment and the risk of messing up the terms of the agreement.

Q8: Student loan versus down payment
I have a question and want to get your opinion on it. I am 28 years old and I still live at home. I want to move out but my mom says that I should hold off a little longer and save to buy my own place. She said that if I go rent I will be trapped and never have the chance to save for my own place. I live in the DC area and rent is extremely high here. It would cost me about $1000.00 a month to share an apartment.

I got finished paying my car off a little while ago ($250.00 a month). I have about 25K in student loans. To help pay these down quicker, I have been paying an extra $100.00 on them a month and saving the $150.00 for a new car.

The extra $100.00 a month goes to the smaller of the two student loans. It is about 5K. I have been paying on it for about 2 years now ($61.11 for ten years). I calculated that by putting this extra $100.00 amonth that I can have this loan paid off in three years verses eight more years! That would increase my cash flow by $161.11 a month after the three years.

I know that paying my student loans quicker does not save me any interest but it gives me peace of mind. So, my question is what would you do? Would you put that extra $100.00 on the loan or put it away to save for my own place.
- Lisa

Why wouldn’t paying your loans quicker save you any interest? Unless you have a loan arrangement that specifies this in some fashion (which none of my loans nor my wife’s loans had, nor did the loans of any of my close friends), early payments should reduce your loan’s balance, which would then reduce the subsequent amount of interest charged to your account. Even if you have a set monthly payment, it’s likely that extra payments are reducing your balance and thus your interest.

If I were you, I would try to get rid of that loan as fast as possible in my current situation. If the loan is gone and you’re still able to live with such low costs, I’d start saving as fast as possible for a down payment.

Similarly, I’d keep my eye out for work outside of the DC area where the cost of housing isn’t so back-breaking.

Q9: What is an ESOP?
The company that I worker has a 401(k) plan. I make contributions of 8% of my salary to my 401(K) plan. The company does not make a matching contribution to the 401(K) but instead makes contributions to an ESOP account (i.e. safe harbor contributions of 3% in which I am fully vested). I would like to know long-term if the ESOP would be as beneficial to me, than if the employer otherwise made contributions directly to the 401(K) account. What benefit does the company have in maintaining an ESOP plan? What exactly does an ESOP do?
- Charlie

An ESOP is an Employee Share Option Plan. Essentially, instead of contributing to your 401(k), your company is giving you shares in themselves at some rate (3% of your salary, apparently). When you leave the company, you receive the shares and the company usually buys them back from you immediately (this is probably specified in the paperwork with the ESOP).

I would not view this as a retirement plan. Instead, I’d view it more as a severance bonus for when you eventually leave the company. This may be at retirement or it may be earlier (if you find another job).

The danger with an ESOP – and a big reason why I encourage people to not bank their futures on it – is that it’s not diversified. If your company suddenly starts struggling and collapses (like Enron, Worldcom, Lehman Brothers, Bear Stearns, etc.), your ESOP will have almost no value. If your company’s stock drops through the floor and then you’re let go, you’re going to get pennies on the dollar. That’s an enormous risk, and not one I’d ever bank my future on.

View this as a perk and plan your retirement as though it has no value. You’ll be a lot safer that way. Who knows? You might wind up with a very nice severance bonus some day because of your ESOP.

Q10: Disguising questions
I’m often stunned at the personal information that people share in the questions they ask you. I certainly hope that you (and they) protect their privacy.
- Adam

I often change personal information and other specifics in reader questions, from names to personal details. Often, when you hear a question discussing something that seems a bit vague, I’ve eliminated a specific element from the question.

Sometimes, readers ask me to change stuff after it’s published and I do that to the best of my ability, though it often changes the answer I give to their question. This has gotten me into trouble more than once, because I place a higher priority on protecting identity information for readers than on my own “need” to look perfect.

When I’m really unsure, I often don’t publish the question at all.

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 weeks ago, I put out a call on Twitter and on Facebook for detailed posts that people would like to see. I got enough great responses that I’m going to fill the entire month of July – one post per day – addressing these ideas.

On Facebook, Tyler wanted to know, “Should I stop my retirement contributions while i pay back my college loans? I am 23 and my employer will match up to 5% of my contribution. Should i continue? or hold off until my loans are paid?”

The challenge with any question like this is that it relies so much on future events. What will the stock market do over the next thirty or forty years? That’s unknown. What path will Tyler’s life take over the next ten years or so? That’s unknown as well. Both of these factor enormously into answering the question above.

The best thing we can do is follow some reasonable approximations and rules of thumb for future investment growth while also striving to give Tyler as much freedom as possible in the coming years.

The Ghost of Investing Future
In order to get an estimate of how much someone should be investing for retirement, you have to come up with a few basic assumptions.

When will the person retire? This lets us know how many years of investing we’ll be able to account for. I’ll asume that Tyler will retire at 75, giving us 52 (!) years to work with.

How much of an annual raise can we assume? I usually just match this at the same rate as inflation. Speaking of inflation…

How much inflation should we assume? I usually peg this at 3%, which is pretty sound based on the economy of the last twenty five years.

How much of an annual return on stocks can we assume? Warren Buffett projects a 7% annual return over the long haul in the American stock market, so I’ll use that number.

Do you see how tenuous all of these calculations are? When you estimate retirement savings, you’re making a lot of guesses for the future.

What you’re going to shoot for is an amount high enough so that the person’s annual expenses equal 4% of the total savings at the time of retirement.

I ran the numbers, assuming that Tyler is able to live on about 75% of his salary each year. My calculations showed that Tyler should be saving somewhere between 9% and 10% of his annual income for retirement, so we’ll use 10%.

10% is an excellent thumbnail to use. In this case, Tyler has the advantage of a long period until retirement, but I’m also using some pretty conservative returns on his investments for my calculations.

Tyler’s Choice Today
In order to make it to a healthy retirement, Tyler needs to be saving 10% of his annual income starting today. He can choose to delay it a few years, but then he’ll be locking down 11% or 12% or more to make it to his goals. He’s a lot better off locking things down at 10% starting today.

Tyler’s employer will match up to 5% of his contribution, so if Tyler contributes just 5% of his salary today, he’ll be on pace for what he needs for retirement. This is exactly what I would recommend that Tyler does.

Once that’s taken care of, he should throw every dime that he can at his debts. It is far easier to live a little lean now when you’re single and aren’t weighted down with responsibilities than to live lean later on when you’re burdened with career and personal requirements.

Should Debts Ever Delay Retirement Contributions?
This is a tricky one to answer. Quite often, people eschew retirement savings in order to pay off debts because they don’t want to make lifestyle changes. This is a giant mistake. If you find that you’re in a situation where you can’t make your minimum debt payments, a small retirement contribution, and live your current lifestyle all at once, changes need to be made with regards to your lifestyle first and foremost.

If you are in a situation where further lifestyle changes genuinely are not possible – meaning you have no cable or satellite bill, no cell phone, no new or nearly-new car, no living quarters larger than you need, etc. – then you should take care of your high-interest debts before renewing your retirement savings. Of course, this does need to be coupled with an emergency fund and a commitment to avoid debt in the future, because without that, this is all a moot point.

Personal finance almost always comes back to impulse control, and this is no different. If you can’t control your impulses and desires when it comes to spending money, financial success will almost always be elusive in your life. You won’t get ahead if you can’t control yourself.

Lately, I’ve been reading biographies by the pound. I’m particularly interested in biographies of people who were involved in creating the modern world: Woodrow Wilson, Theodore Roosevelt, Thomas Edison, and the like.

I have this endless fascination for the first half of the twentieth century and the people who lived in that time.

How to Remember a Person’s Name (and What to Do When You Can’t) This is a valuable set of tactics to have when you’re active in a community. There can be a lot of names you need to remember. (@ art of manliness)

The Biggest Myth — It’s Selfish To Try to Be Happier. “One of the best ways to make yourself happy is to make other people happy; One of the best ways to make other people happy is to be happy yourself.” I find that if I don’t feel happy, if I consistently act happy, my mood eventually elevates. The people around me seem happier, too, so there’s a self-reinforcing thing going on. (@ happiness project)

Breaking Free from Consumerist Chains It’s so easy to fall into a routine of buying things that you don’t really need. Breaking free of that routine is hard, but it’s quite doable. (@ zen habits)

How to Sell Yourself on Lifestyle Change Changing your life is very hard. You have to create a situation where the balance is weighted on the side of change, and our normal routine is a very heavy weight against change. Part of that process is simply selling yourself on change. (@ stepcase lifehack)

Becoming a Millionaire – A Real-Life Example All you have to do is invest a small amount regularly and be patient. Riches will come. The thing many people don’t have is patience. (@ free money finance)

When I first started The Simple Dollar in late 2006, it was pretty easy to find a savings account that offered a 4% annual return on your deposits. Some banks, such as HSBC Direct, were offering introductory rates as high as 6% annually.

In other words, if you deposited $1,000 into an account at HSBC Direct at that time, it paid you $5 a month.

Rates like these were competitive with the long term returns one might expect from the stock market. It actually made good sense from a long-term investment standpoint to have at least some of your money in savings. Savings accounts are incredibly liquid, virtually risk free, and they were getting 4-6% annual returns? That’s a pretty good investment choice right there.

Today, you’re extremely hard-pressed to find a savings account that offers better than 1.5%. Some banks offer higher rates, but they’re tied to specific savings requirements, minimum balances, usage requirements, and other factors.

What happened? Why did savings accounts go from having very nice returns to having tiny returns? And will those higher rates ever return?

How Banks Set Savings Account Rates
To understand this story, you have to understand why banks offer savings accounts to begin with and how they decide what rates to offer.

For the most part, a bank can offer whatever rate they want on a savings account. If one bank decided to suddenly start offering a 5% return on savings accounts, they certainly could do so.

The only problem is that it would be a really bad business idea. Banks want some deposits in their savings accounts, but unless they can lend out money at a higher rate than they are offering on savings accounts, they’re not going to make money. They’re going to lose money.

For example, let’s take a look at home mortgages. Right now, you can pretty easily get a home mortgage at 4 to 5% interest. In order to lend you that money, banks have to have that money (technically, they have to have a portion of that money because they can count the mortage payments they’re going to receive… but that’s a whole different issue) in their vaults. In order to have that money, they have to have people depositing their money into that bank, and in order to get that, they have to offer some return on that deposit. At the same time, they have to offer less of a return on that deposit than they’re able to make from mortgages. So, the rate they offer has to be somewhere above 0%, but somewhere well below the 3-4% they get on mortgages.

Thus, we have interest rates on savings accounts hovering around 1%.

Five years ago, we lived in a different situation. Fixed rate home mortgages were much higher then – 7 to 8% interest rates were typical. At the same time, banks were making a lot of home loans. Remember that housing bubble of the late 2000s? Yeah, that’s what we’re talking about.

In order to be able to make those loans, banks legally needed at least some of that money in their vaults, so they cranked up the returns they offered on savings accounts to get some money into their vaults. Thus, you often saw interest rates on savings accounts inching up into the 4% range.

The Federal Reserve’s Role
Now, these rates aren’t set entirely by magic. Our old friend the Federal Reserve plays a role in all of this. The Federal Reserve bank has the ability to loan money to banks at a certain rate, known as the Federal Discount Rate. They also control another rate, called the Federal Funds Rate, which is the rate at which banks can lend money to each other. The Federal Funds Rate is usually a little lower than the Federal Discount Rate because, ideally, banks will loan money to each other. When you hear about the Federal Reserve “printing money,” it basically means that they’re making new money available to banks because they won’t (or can’t) lend to each other.

The way the economy usually works is that when the economy slows down, the Federal Reserve lowers these two interest rates so that it’s very easy for banks to lend money to each other and borrow from the government and thus easy for banks to offer low interest loans to businesses that want to get started. This causes the economy to pick back up.

At the same time, when the economy is roaring along, the Federal Reserve usually raises those rates over time to control inflation. If they kept the rates constantly low, banks would continually request new money from the Federal Reserve, and adding new money to the economy means that every existing dollar is worth a little less. In other words, it’s the dreaded inflation.

So, right now, the economy is weak. The Federal Reserve has the rates about as low as they can go so that, once companies start spending and borrowing again, it’s as easy as possible for the banks to lend them money at a very inexpensive rate.

It’s because of these low Federal Reserve rates that mortgages are so low right now. Banks can get money from the Federal Reserve to cover mortgages at 0.75% and they essentially sell them at around 4%, keeping the difference as their profit.

It makes no sense, when they can get money from the Fed at 0.75%, to offer much more than that on a savings account. They’d be absolutely silly to offer anything close to what the mortgage rates are, too. The only reason they might offer a little bit more than they could get from the Federal Reserve is because they’re required to keep some money in their vaults if they want to lend out money.

As a result, you’re seeing interest rates on savings accounts at around 1% or so.

Will This Ever Change?
Unless you’re an extreme economic pessimist, the answer is yes. We will eventually see the Federal Reserve raise their rates again as the economy gets rolling again.

When that happens, mortgage rates will go up. You’ll also see some people tempted to take their money out of savings accounts because the economy is doing well again. They’ll want to buy stuff (because consumer confidence is high) or invest it in stocks (because the stock market will have been doing very well at that point).

To keep the money in their vaults, banks will want to raise interest rates. They won’t raise them as high as mortgage rates, but they’ll compete a bit with each other because the more they have in their vaults, the more they can lend, and the banks want to lend. It’s how they make money.

What Should I Do With My Savings Account Money?
If you have money in a savings account and are reading this article, you’re probably disappointed in the 1% (or so) return you’re getting lately. Surely you can do better than that?

Your best option is probably to simply pay off debts if you have any. Almost all of your debts should have an interest rate much higher than 1%, which means you’ll get a much better return on your dollar by making an early debt payment. The only catch is that you won’t actually see that dollar again until the loan is paid off. Paying off debt essentially locks up your dollars and you don’t see the returns until your debt disappears early.

Other options that allow you to still be able to access your money have other problems. If they’re stable investments, they’re usually pegged in some way to those Federal Reserve rates above, meaning you’re not going to get a great return. If they’re risky investments – well, you’re taking on a risk that you’re going to lose some of your balance.

In my eyes, paying off debt is the best choice as long as you keep a healthy emergency fund in a stable, easy-to-access savings account. If you don’t have any debt, start exploring other investments at your own discretion, but still keep an emergency fund.

Good luck!

A few weeks ago, I put out a call on Twitter and on Facebook for detailed posts that people would like to see. I got enough great responses that I’m going to fill the entire month of July – one post per day – addressing these ideas.

Via a private message, Colleen said “I have been thinking about donating to [Charity X]. How do I know if they’re legitimate or not and if they put the money to good use?”

Obviously, I edited out the specific charity that Colleen mentioned, as it’s not particularly a charity I wish to promote publicly (as I discussed with Colleen, the specific charity she mentioned does some work that I don’t agree with). Instead, I’ll discuss how to research a charity from a more neutral standpoint.

What You Need to Know
There are several key questions you should have the answer to before donating a significant amount to any charity.

What is the charity’s stated mission? Why do they claim to exist? This is a fundamental point. If they claim to exist for a reason you don’t wholly and deeply agree with, you should focus your money and energy on other charities.

Is this organization actually a charity? You need to know if the organization is a certified 501(c)(3) nonprofit organization. This means that they’re held to certain legal standards, including some restrictions on how they spend their money and how much information about their inner workings they have to share, as well as their tax status (which affects whether you can deduct any donations you make from your own income taxes).

Who runs the organization? Is there a president? A board of directors? A chairman? Who are these people? Are they legitimate folks or people of dubious background?

Do they disclose their financial information? The more open a charity is about their internal finances, the more legitimate it tends to be. An annual report (with independent auditors) is a must and it should include things such as a highly detailed budget and explanation of where all of the money goes. Ideally, they also should make available some of their IRS filings, such as Form 990.

What does your donated dollar translate into? If you give them a dollar, how many cents of that dollar go to various uses? How much goes to the actual cause? How much goes for adminstrative costs, promotional costs, and so on? Obviously, some of your money will need to go to keep the doors open, but most of your money should be going to the cause itself. It’s also worth noting how exactly the money used for the cause is used. Who are the actual beneficiaries? Where are the actual beneficiaries?

How to Find It
You can find most of this information from the comfort of your web browser.

For starters, visit the web site of the charity. There, you should be able to find such information as the mission of the charity, the most recent annual report from the charity, and information about the management of the charity (who’s in charge, in other words).

Next, study that annual report. It should include a very detailed budget explaining where every dime of their money goes and what proportion of it goes into the cause itself. Again, you shouldn’t expect 100% of the money to go to the cause, but a high percentage is expected. You’ll also want to make sure that the budget is audited (check for information about the auditor).

After that, check up on the people involved. At the very least, do a few Google searches on the chairman of the organization and the board members just to see what you turn up. If they have a Wikipedia entry, be sure to read it over. Also, Google the stated auditor of the charity, and you may even want to contact the auditor to make sure that they actually did audit the organization’s books.

Finally, stop by Charity Navigator. Charity Navigator is a wonderful tool that provides a wealth of information about many charities, particularly larger ones. They analyze charities in comparison to other charities of the same type and offer ratings that show how these charities use their money and resources compared to similar charities. Don’t sweat it if the charity you’re looking for isn’t there, as many smaller charities are not listed. However, most large charities are listed. Some charities have glowing reports, while others give off dire warnings.

Together, these tactics and tools should give you a pretty clear picture of the charity you’re considering donating to.