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 often read business books on the side – you know, books that are mostly about succeeding within a business structure, often written by successful corporate presidents and vice-presidents to talk about how they were successful at being a corporate president or vice-president.

Sometimes, though, I’ll read a business book that transcends being a business book and spills over into great thought-provoking advice in other areas: careers, time management, money management, and so on. I’m often really inspired by such books and want to share them. This is one of those times.

Rework by Jason Fried and David Hansson (founders of the software development firm 37 Signals) has a very simple premise about success in business (as well as most other areas of life): simply do something. Stop worrying so much about the perfect plan and just go do something. Achieving something, even if it’s a failure, pushes you much further in the direction of success than planning and re-planning for something.

The book is made up of a large collection of short essays that focus explicitly on that point. I pulled out a few of them that I found particularly worth mentioning.

Learning from mistakes is overrated
Many people laud failure as a setup for eventual success because you learn from your mistakes. Instead, a much better path to success is to look for the areas where you succeeded and just repeat those. Pull forward your successes and leave your mistakes behind. If you’re trying to reboot your spending, keep doing the things that were already frugal, for example, and just replace your other behaviors.

Workaholism
When you work too much, you can easily destroy your ability to judge what’s important and what isn’t. Judgment calls like that require time away from work, where you interact with the world (which is what your product interacts with). Time away from work brings the clarity needed to distinguish between the worthwhile things at work and the trivial things. When you know how to discard the trivial, you don’t need to be a workaholic.

Meetings are toxic
Most meetings do not involve most of the people in the room. They’re essentially interactions between a small handful of people, while everyone else just wonders why they’re there and completely loses their flow on whatever projects you’re working on. Do meetings electronically or only meet with people when you’re sure everyone in the room actually needs to be there. Don’t waste the time of anyone else.

Long lists don’t get done
A long checklist of items feels overwhelming and leaves you with a sense that you can’t possibly get all of this finished. It forces you to choose from a lot of items and adds to your decision making time. Instead, make short lists of only three or so items and don’t go back to the well for more until those items are done. This reduces your decision time significantly and lets you focus on the real work.

Underdo your competition
Most people feel like they need to be the jack of all trades in order to succeed. They need to be everything to everybody, even though they’re never actually good at everything. A much better approach is to simply know what specific things you’re good at, do them as well as you possibly can, and delegate the other tasks. If you do this, you become a central part of the team; otherwise, you’re just another replaceable spinning cog.

Send people home at 5
Go home at five. If you’re a manager, send people home at 5. This keeps them from becoming workaholics and, surprisingly, doesn’t reduce the quality of the work. Remember that one good output is better than three mediocre ones, and a workaholic is the one that will produce the three mediocre ones.

Don’t be a hero
A hero is a person that usually overlooked the value of the people around him. In that process of overlooking, the hero had a great chance of utterly failing and letting everyone down. If you’re facing a challenge, look for what assets people around you have that can help meet that challenge, and don’t be afraid to share in the success of solving the challenge. When someone helps you, give them credit, and they’re likely to give you credit when you help them.

Decisions are temporary
Quite often, when I tell people to save for their goal in a savings account, I do so because decisions are often temporary. Their goals a year from now might be completely different than their goals now, and saving in a savings account keeps their savings liquid and preserves the balance. This is true in many aspects of life. Decisions are often very temporary and the best thing you can do is preserve your own flexibility.

Is Rework Worth Reading?
Rework gets my thumbs up simply because it is such a good read, regardless of whether it’s really applicable to personal finance directly or not. It’s well-written, incredibly easy to pick up, and chock full of good ideas.

As always with books like this, if you approach it with some flexibility, you’ll almost always find multiple ideas that really click with your personal and professional situation, putting it in a new context. That’s the sign of a winning book in any genre.

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

In the near future, I have to give a pair of presentations on similar topics, mostly related to online writing, mostly focused on methods for earning money at it and building an audience. As with any presentation that I give, I want this to be an excellent presentation, and I’m willing to put in the time and effort to make it so.

Given that, I thought it might be worthwhile to walk through the steps that I use to develop a presentation. No, this isn’t going to be some kind of PowerPoint tutorial. Instead, my focus is simply on gathering your thoughts and turning them into something cohesive and presentable.

Step 1: Brainstorming
The first step is to simply get all of the disjointed ideas you have about the presentation out of your head.

Use index cards For each discrete idea you have, put it on its own card. I give each card a number identifier, which I write in the lower right corner and circle. So, I might write something like “Audience is THE key” and write 1 in the lower right corner and circle it. If I have an idea of how to group earlier ideas together, I note numbers of those ideas on the new card so I can match them up later on. If an idea is complex at all, break it down and spread the pieces across multiple cards.

List everything without worrying about repeats Just write them down as they come to you. Don’t worry about repeating the same idea or even stating the same idea again in different words. If it’s in your head, dump it out and move on to the next idea. I often go through a package of index cards when doing this, and sometimes even two or three packages.

The key here is to just get it all out of your head and onto a format where you can shuffle things around to your heart’s desire.

Step 2: Grouping
Once you are sure that your mind is devoid of ideas (which I usually am after three or four brainstorming sessions), it’s time to start doing some very basic organizing of the ideas.

Use groups that make sense to you Start grouping the cards together into groups that make sense to you. I usually use stacks of cards attached together with paper clips, with the “biggest” idea in the stack on top so I know what that stack represents. Often, that kind of “biggest” idea is one where I wrote a single word or two and followed it with a bunch of numbers representing other index cards, so those index cards will go into that stack.

Allow small groups to entirely be part of larger groups if needed Sometimes, I find that a small group goes within a large group. That’s completely fine! I’ll just put the small group (paperclipped together still) within the larger group and keep moving.

Step 3: Reducing
Once you have everything grouped, you need to start reducing the size of the groups.

Delete redundant or repeated ideas You’ll find a lot of these. Go through each of your groupings and toss every duplicate that you can. If two ideas are similar, toss one of them. If an idea turns out to be redundant, meaning the point doesn’t matter much at all in a crowd with the other points, toss it. If a card has two ideas on it that are represented on two other cards, toss the card with two ideas on it. What you want are cards with unique ideas on them that are in sensible groups together.

Reduce each idea to the minimum number of words Once that’s done, I start revising the cards. I try to state the core idea on the card in the least number of words possible while still making it comprehensible. Ideally, I can reduce it to one or two words. What about the details? The details are what you’re going to be talking about when presenting. The slides are just an outline and each slide is just a visual accessory.

At this point, the cards are basically your slides. Each card is a slide. Each grouping is a logical part of your talk. Likely, the groupings have some sort of coherent order or, at the very least, tie together in a way that you can explain in a few words on a single slide.

Step 4: Visualizing
Now comes the time to think visually.

Think of a single visual representation of the idea you’re stating What sort of image will really convey the idea you’re talking about to the crowd you’re speaking to? Try to imagine one image that would really knock your idea out of the park.

Note all of the visual ideas before looking for a single image Describe the image on each card, then search for the images you need. I often use Flickr’s Creative Commons libraries for images that I can freely use with attribution.

Step 5: Preparing
Most of these ideas should be very clear from the previous steps, but keep them in mind as you’re actually preparing for the event.

Use absolute minimal word count on each slide The fewer words per slide, the better. You want the audience listening to you, not trying to make out the 200 words on your slide.

Have one point per slide – no more, no less Do not overcrowd the audience with ideas all at once. Have one idea on your slide. Talk about that idea. Move on to the next slide and the next idea.

Having lots of slides you move quickly through is better than a few slides you drone on and on about The visual refreshment is much more likely to engage an audience over the length of your talk than a small number of slides held up there for a long time.

Practice. Edit. Practice some more. You know you’ve practiced enough when it feels natural to you. You can click through the slides and not even have to think about what’s on the screen. You can just keep eye contact on the crowd, focus on speaking slowly and making your points clear, and be confident knowing that those slides behind you are just accentuating you and the strength of your ideas.

Good luck.

One of my favorite statements about personal finance is that it all boils down to five simple words.

Spend less than you earn.

Often, I’ll break this down into two methods you can use to earn more money. You can either increase your earnings (through a better job, better investments, and so on) or you can decrease your spending (through frugality).

The other day, I was having a discussion with an old friend who reads The Simple Dollar. He mentioned that I often repeated that statement and he suggested that I was actually just talking about two different kinds of success and that what differentiated the two types of success was how accessible the action was.

He said something that really left me thinking. “Anyone can get rich,” he said, “but the ability of a lot of people to multiply their earnings is extremely limited. Simply saying ‘earn more’ doesn’t mean a whole lot to an awful lot of people. What you’re telling many of your readers is just to ‘spend less.’ That’s a success, of course, but that’s not very clear from your statement.”

In other words, personal finance success boils down to two main avenues.

Success in the Margins
Simply put, finding financial success in the margins means that you’re finding financial success through ordinary actions. Frugality is, of course, one of these, as are most methods of passive investing (putting money in savings accounts, putting money into 401(k)s, and so on).

These methods bring one to riches, but they require a continuous input of small successes. However, these small successes are available to everyone and aren’t that hard to achieve by themselves. The biggest components needed here are willpower and a good work ethic.

Frugality, as mentioned above, is a key component of this. Seeking out ways to reduce your spending is vital in this process, as it is that reduction in spending that provides the extra money that you’ll use to build your wealth.

Steady income, ideally with a steady increase over time, is another essential part of success in the margins. You have to have enough income coming in that you can cover your bills with a bit left over. Ideally, frugality will serve mostly to increase the size of that “bit left over.” A typical career falls into this category and getting steady raises over a period of time certainly falls into this category.

A savings plan That “bit left over” needs to be saved for the future. You have to have the willpower to save it and the willpower to leave it alone once you do start saving it.

Patience is a necessary component. Because the components here are so straightforward and available to everyone, they don’t magically work overnight.

Anyone can follow this path to financial success. The reason many people decry it as impossible is that they don’t have the patience to plan for the long term and they don’t have the willpower to overcome short-term temptations.

Success in the Mainstream
On the other hand, finding financial success in the mainstream means that you’re finding financial success through extraordinary actions. Think of Bill Gates or Mark Zuckerberg when you think of these things.

Success in the mainstream means that you’re able to build wealth through enormous leaps in income. Through some mechanism or another, you’re able to earn a significant amount of money quickly. Often, some components of success in the margins (like living frugally and continuing to earn a steady income) are essential at the early stages of success in the mainstream.

There are several methods and components for mainstream financial success.

Entrepreneurship is certainly one path to this type of success. Controlling the entirety of a business so that the profits from that business flow to you is a path many people have followed to wealth, but the vast majority of businesses fail within the first few years of existence. It’s risky and it’s incredibly challenging.

Exceptional talent, usually built through a lot of uncompensated or lightly-compensated practice and sometimes mixed in with natural physical or mental gifts, can also earn a person exceptional wealth. Whenever you think of a top athlete in a mainstream professional sport, you’re usually looking at this category. They usually have some physical gifts that they’ve immaculately refined through a ton of work.

Blind luck also plays a role. People win lotteries (though this is a pretty poor strategy). People get windfalls and are included in estates. People find themselves in the right place at the right time. This is a completely unreliable path to financial success, almost completely devoid of planning or effort.

Anyone can try to follow this path to financial success. However, it is far from a guarantee, and the road is littered with people who fail along this path. It also often sacrifices success in the margin along the way.

What’s Your Success?
As mentioned above, anyone can find financial success in the margins. All it really takes is willpower and patience, traits that virtually everyone has or can cultivate within themselves.

At the same time, success in the mainstream is available for anyone to try, but is much more difficult to succeed in. Anyone can be an entrepreneur. It takes exceptional work, more than a bit of luck, and some skill to make it in an entrepreneurial path. Anyone can also be lucky, but there’s little you can do for that. Exceptional talent requires a lot of work to refine (work without compensation) and often also requires some physical gifts that not everyone has.

In other words, success in the mainstream is not a guarantee. However, many of the avenues in it provide a challenge and a pathway for those who wish to take it on.

Good luck, whichever route to success you choose to take.

Each week, I highlight ten things each week that inspired me to greater financial, personal, and professional success. Hopefully, they will inspire you as well.

1. Madeleine (1892) by Ramon Cassas
The face of the woman in this painting has stuck in my mind all week. I kept wondering what her expression meant. Is she afraid? Worried? Anticipating something? What is she looking at? Is she about to run away?

It is little mysteries that capture my imagination in art. Almost every painting I consider great has some mystery in it, some little glimpse of life seen through someone else’s eyes that I’ll never quite understand.

2. Nietzsche on the hows and whys of life
This is the first – and only – time where I thought Friedrich Nietzsche sounded like Dave Ramsey.

“He who has a why to live can bear almost any how.” – Friedrich Nietzsche

Or, live like no one else so you can live like no one else. If you have a reason and a goal and you believe in them, you can suffer almost any path.

3. Cashback
This is a short film about what goes on inside of a supermarket during the night.

Everything has a hidden life. What you see is only one face of the complete picture.

4. 100 Skills Every Person Should Know
This isn’t sarcastic, it’s realistic. These are useful skills for handling many of the small crises of modern life. The more of these you can do, the more likely it is that you’ll be able to handle a small crisis without panic and without calling for help immediately.

I can proudly do somwehere around 70 of these without help, which, in a certain way, made me feel very good this week. It made me want to work on the other thirty.

5. Jim Carrey on being rich and famous
Yes, the comedian.

“I think everybody should get rich and famous and do everything they ever dreamed of so they can see that it’s not the answer.” – Jim Carrey

I can certainly recognize what he’s saying. Every time I’ve acquired something material, it felt great for a fleeting moment. Every time I’ve done something myself that I’ve always wanted to do, that same fleeting feeling happened. The things that last are the people I can share it with and the small handful of things that make my soul sing inside.

6. The Banjo Lesson (1893) by Henry Ossawa Tanner
I’m drawn in here, not by the lesson itself, but by the obvious closeness between the boy and the old man teaching him.

My immediate instinct is that the old man is his grandfather because of their closeness, but is that necessarily true? Either way, there is an emotional warmth in this painting that’s hard to deny.

7. Robert Louis Stevenson on a good day
A good day doesn’t show great results. Instead, it plants the seeds for great results down the road.

“Don’t judge each day by the harvest you reap, but by the seeds you plant.” – Robert Louis Stevenson

My garden is a literal example of this. My children are more of a figurative example. In both cases, I can easily invest a day with nothing to directly show for it. However, the growing plants in the garden and the growth of my children both show the results of this philosophy.

8. Thoreau on establishing patterns
For something to become natural, we have to repeat it. It’s just like making a trail in the woods.

As a single footstep will not make a path on the earth, so a single thought will not make a pathway in the mind. To make a deep physical path, we walk again and again. To make a deep mental path, we must think over and over the kind of thoughts we wish to dominate our lives. – Henry David Thoreau

The only way to make something a natural part of your thought process is to think about it over and over again. The only way to make something a natural part of your day is to do it every single day without fail.

9. The Khan Academy
If you’ve ever wanted to bone up on a subject but tend to learn more from visual experience than anything else, this is the site for you.

It’s a giant collection of professionally-made videos that focus on instruction in specific areas ranging from biology to organic chemistry to economics to linear algebra. It’s fantastic for supplementing your knowledge, particular in areas of mathematics and science.

My favorite video, perhaps, is how they handle a side-by-side comparison of evolution and intelligent design, something that people on both sides of the issue should watch.

10. Lao Tzu on enough
I’m coming around to a pretty simple definition of the word “rich.”

“If you realize that you have enough, you are truly rich.” – Lao Tzu

You’re rich if you feel like you have enough. If you don’t, you’re not rich.

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.

One challenge my wife and I take on (and something that I post about in this series roughly once a month) is the challenge of converting unusual recipes into something that’s delicious straight out of the crock pot.

Many people look at a crock pot as a device for cooking roasts and stews, nothing more, nothing less. That’s simply not true. You can prepare all kinds of meals in it, setting them up in the morning and enjoying them when you walk in the door in the evening. They’re perfect for busy families who love home-cooked meals but often are severely time-challenged.

This time around, we’re preparing a couscous dish right in the crock pot.

What You Need
Here’s what you’ll need:

1/4 cup onion, minced (or 2 tablespoons dried onion flakes)
2 carrots, chopped
1 large tomato, diced or 1 (15 oz.) can diced tomatoes
1 cup cooked chickpeas or 1 (15 oz.) can garbanzo beans, cooked
1/4 cup vegetable stock or 1 vegetable boullion cube
1 tablespoon garlic, minced or 1 teaspoon garlic powder
1/4 teaspoon nutmeg
1/4 teaspoon cinnamon
1 teaspoon cumin
1/2 teaspoon turmeric
1/3 cup raisins

The couscous is actually prepared separately. You’ll need 1 cup dry couscous and 2 cups water to prepare it.

The Night Before (or Early That Day)
Most of the work for a dish like this is done in the morning. You’ll need to do any vegetable preparation you need to do, first of all.

Next, use nonstick cooking spray on the inside of the crock pot (or thoroughly rub the insides of the crock pot with vegetable oil). Add all of the ingredients except for the couscous and water to the crock pot and turn it on low for six to eight hours.

Preparing the Meal
When you’re ready to eat, get a saucepan out and boil 2 cups of water in it. While the heat is raising, stir the ingredients in the crock pot, then turn it off and let it sit.

When the water is boiling, add the couscous to the water, put the lid on, and let it boil for five minutes. The couscous should absorb the water. After the cooking, you can optionally add a teaspoon of butter or margarine to the couscous, mixing it in with a fork.

Mix the couscous with the other ingredients in the crock pot, then serve! We served it with a very simple salad and it was quite delicious (I had seconds).

Optional Ingredients
Unlike many of the recipes I post, I wouldn’t modify this recipe very much at all. This dish relies a lot on the flavor balance between the ingredients, so if you’re interested in this recipe, I’d stick to the ingredients as closely as possible.

This was originally one exceptionally long post. I chose to split it into five pieces for readability purposes. I’ll post a segment each day this week.

As mentioned previously, I was recently leafing through a book at the library discussing Japanese martial arts (I believe it was Budo Secrets) when I came upon a sidebar that listed the ten evils that prevent people from improving themselves.

As I read through the list, I couldn’t help but see how each of these evils – or character flaws, as I would perhaps describe them – have held me back in my finances, my career, and my life in different ways.

While thinking about these ten terms, I consulted a dictionary and spent some time reflecting on how each of these has held me back – and can hold you back, too.

(I decided to highlight these evils with some wonderful Creative Commons photographs that illustrate each of these traps.)

Here are the final two evils from that list. You can check out the first pair of evils, the second pair of evils, the third pair of evils, and the fourth pair of evils as well.

Red Light Camera Fine $324: Welcome to the Police State, by Alex Proimos

Contempt
The feeling or attitude of regarding someone or something as inferior, base, or worthless.

An alarming portion of society today seems to run on a concept of contempt for anything that’s different than themselves. Politics is filled with Republicans full of contempt for Democrats and vice versa. Visit the comment section of any popular site and you see tons of contempt for the writer of the article, the subject at hand, and often other commenters in that particularly useless combination of contempt mixed with anonymity.

Of course, there’s a reason that these cultural elements known so much for their contempt-filled behavior are seen with disdain by so many. Contempt is a deep and negative character flaw that drives people away. It only attracts the small sliver of people who happen to agree with you.

Even worse, contempt tends to drive further contempt. Once you consider it acceptable to view one person or group or item with contempt, it becomes ever easier to view another person or group or item or idea with contempt. And so it continues.

Contempt blinds you to the worth in the people, things, places, and ideas you have contempt for. Nothing is perfect, but if a flaw in one trait brings along contempt for the entire package, then you are only limiting yourself by discarding something (or a set of things) that has great value.

In opposition to contempt is respect. Respect does not mean belief that something is perfect. It merely means that you believe that something has value, flaws and all. Respect means holding back your negativity when it serves no real purpose. Respect means building relationships where both people have value rather than one person having contempt for the other.

You can build a respectful nature by holding back on your negative statements, even when they’re protected by a cloud of anonymity. Every negative statement you make breaks down the wall between the emotions in your head and the words and actions you take in the presence of others, even if anonymous. It fuels further negative emotions and makes it even easier to view others as contemptible and treat them in that fashion.

Instead, look for the positive value in everything you see. Snarkiness has almost no value. Neither does disrespect. They both seek solely to de-value things. Take the opposite approach and look for the value in things. How can this thing make your life better? How can it improve the lives of others that I know – or even others that I don’t know?

Go even further and relate the positive value in the things that you see. When people are talking about something, point out the positives, not the negatives. There are plenty of people out there that relish in the negatives and delight in seeing them. Look at things differently and find value in them.

Someday I’ll have a named chair in the Humanities division,by Quinn Dombrowski

Conceit
Overly high self-esteem; vain pride.

Conceited people aren’t enjoyable to be around. Their high opinion of themselves makes it difficult to converse and to interact in any sort of equal way. They wear their achievements as a badge and often stretch those achievements to an incomprehensible level. You know how good they are because they tell you how good they are.

Not only that, conceited folk often have a miscalculated view of their own abilities. They’ll lead people into a situation while being underprepared for it, as their conceit tells them that they’re ready. They’ll turn down genuine offers of help that could put them in a better place because their vain pride makes them turn it away.

Conceit makes people who are without work not go to the food pantry. Conceit makes CEOs make incredibly poor decisions against the advice of the people around them. Conceit makes people in the office believe they can pretty much engage in whatever behavior they so choose.

In each case, conceit eventually makes those you rely on turn against you and can also make your overall life situation far worse. Being proud beyond reason eventually results in a crash – and it’s one that is often painful and difficult to recover from.

The opposite of conceit is humility. Humility means that, regardless of your internal sense of self-worth, you interact with the world with a sense of modesty and respect for the value of others. When others tell you things, you listen to what they say and try to incorporate it into what you know rather than finding ways to blow them off and prove them wrong. When you interact with others, they come first, not you.

Humility can be practiced quite easily. If you achieve something, don’t bring it up to everyone you know. If it’s worthwhile enough, they’ll hear about it from other sources. It’s fine to discuss your achievements if others bring them up, but if they don’t, keep quiet. Eventually, your reputation will precede you, which is far better than your mouth preceding your reputation.

Along those same lines, minimize your achievements when you discuss them. Don’t try to make them seem large. Instead, try to make them seem small with your words. Other people will draw their own conclusions about the merit of your achievements without you having to tell them about it.

Never forget that people are far more impressed by your actions than by your words describing those actions. Speak softly and carry a big stick. Let your actions define who you are, not your re-telling or bragging about those actions.

This was originally one exceptionally long post. I chose to split it into five pieces for readability purposes. I’ll post a segment each day this week.

As mentioned previously, I was recently leafing through a book at the library discussing Japanese martial arts (I believe it was Budo Secrets) when I came upon a sidebar that listed the ten evils that prevent people from improving themselves.

As I read through the list, I couldn’t help but see how each of these evils – or character flaws, as I would perhaps describe them – have held me back in my finances, my career, and my life in different ways.

While thinking about these ten terms, I consulted a dictionary and spent some time reflecting on how each of these has held me back – and can hold you back, too.

(I decided to highlight these evils with some wonderful Creative Commons photographs that illustrate each of these traps.)

Here are the seventh and eighth evils from that list. You can check out the first pair of evils, the second pair of evils, and the third pair of evils as well.

Distrust, by Ashiful Haque

Distrust
To have no assurance about the reliability of someone or something.

Distrust is poison.

Distrust is poison to one’s own skills. You doubt that you can accomplish things, so the set of things you can actually accomplish grows smaller. Your skill set shrinks and you become a less valuable part of your workplace and of society in general.

Distrust is poison to one’s ability to complete any sufficiently complex task. If you are filled with distrust for those around you, you doubt their ability to carry through with their part, thus you invest your own time and energy into shoring up the part of others, which reduces the quality of your performance and the project as a whole.

Distrust is poison to one’s ability to build relationships. If you continually doubt the reliability of your friends and partners, you make it impossible to build a truly close relationship with these people.

Distrust ruins everything.

In opposition to distrust, obviously, is trust. Trust in your own skills. Trust in the reliability of your coworkers and partners. Trust in your friends and loved ones.

Trust is not always a guarantee of success, as we’ve all had people around us that were unreliable. Trust doesn’t mean acting without care. It means believing in the reliability of those who have shown reliability to those in the past. It means focusing on your part in a project to make it the best it can be rather than making a mediocre mess of everyone’s parts.

Trusting is easy. Start by believing in the best of others. Believe that they’ll come through for you, and both tell them so and show them that you think so through your actions. Good people – and the vast majority of people are good people – thrive on the trust of others.

You should also trust in yourself. Take on the challenging tasks and don’t back down. Believe that you can pull off a great result in any area if you invest the time and effort. Don’t assume that you’re unreliable when you’re doing something challenging like defeating an addiction. Instead, move through life making wise choices and believing in your own willpower.

Trusting in yourself and trusting in others is the surest way to accomplish great things and bring about strong relationships.

Hesitant, by Mac (ammgramm)

Hesitation
A suspension of opinion or action.

One major part of saving for retirement is deciding which investments one is going to choose to put their retirement money into. Often, there’s a multitude of options just within one’s 401(k) plans, let alone when considering outside investments.

This abundance of investment often causes hesitation among potential investors. They want to start saving for retirement, but when they start seeing the multitude of investments, they stop. They put it off. They give up and don’t save.

This is a crucial mistate, one caused by hesitation. Once you’ve made the decision to save for retirement, you’re far better off starting now and choosing an investment completely at random (and then moving money around later if you so choose) than you are in hesitating. Decisiveness wins the day here, because the longer you save, the more you’ll save and the more time you’ll have for growth no matter what investment you choose.

In other words, the imperative to start retirement savings should trump hesitation about the actual investment type.

Hesitation always has costs, and often those costs are tremendous. Spending a day dithering about whether to help a friend can ruin a friendship. Whether the answer is yes or no, you’re far better off gathering the information you need and giving an answer quickly. The same phenomenon is immensely true in the workplace. Once you gather just a bit of information in the now, a quick decision is far more valuable than hesitation.

The opposite of hesitation is decisiveness. Decisiveness is not recklessness. Decisiveness means the ability to make a firm decision once there’s adequate information to make it. Recklessness is making the decision without adequate information.

Sometimes being decisive means not having perfect information. Yes, sometimes being decisive does mean making an imperfect choice. However, the rewards of decisiveness are great, as are the costs of hesitation.

One great tactic I’ve found to avoid unnecessary hesitation is to simply live by the rule that if I can’t state exactly why I’m not making a decision, I make a decision. It is fine to delay a decision if you have a clear reason for doing so, but if there is no clear reason, hesitation is eroding the current situation and making your options worse, not better.

Another key factor is asking yourself if the reason you’re hesitating really has any bearing on the situation at hand. The retirement issue is a great example of this. The decision as to what retirement investment you choose doesn’t have any bearing on the decision to save for retirement or not. You can put every dime of your retirement savings into your account as cash and then sit on the cash until you’re ready to decide. The key thing is that you’re saving, which is a separate decision than the precise investment choice.

Decisiveness singles you out as a doer, which means that you always have added value, whether it be to yourself or to others.

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. Why pay down 0% debt?
2. Retirement planning for highly compensated
3. Strategic foreclosure question
4. Fearing change
5. Heating and cooling
6. Investing without broker help
7. Small games for camping
8. Preparing for self-employment leap
9. Investing leftover money
10. Childhood toys

Since I live in central Iowa, regularly get involved with campaigns both locally and nationally, and sometimes switch my party affiliation based on which poltiical field I’m most passionate about, it’s not surprising that I’m being flooded with mail and phone calls from candidates who want me to participate in the Republican Straw Poll next weekend.

The Straw Poll, for those who are unaware, is an event hosted by the Iowa Republican Party where presidential candidates come and attempt to whip up support with an informal vote that’s supposed to give some sense as to what the field of candidates looks like. Mostly, it’s an afternoon of entertainment.

I really consider myself an independent, so I often change party affiliation based on which candidates I’m most interested in influencing the standing of. Since the 2012 election doesn’t have much going on with the Democrats… I’m a Republican, for now.

(I don’t know who I will vote for. That’s half the fun of going, though, isn’t it?)

Q1: Why pay down 0% debt?
Why would you ever make an extra payment on a 0% debt? Shouldn’t you always just put it into some sort of investment?
- Randall

The reason for making extra payments on a 0% debt is to free up your cash flow.

Even though the interest rate on a debt is 0%, making the minimum payment on that debt is still a monthly requirement. Month in and month out, you still have to make that payment. Paying it off eliminates that requirement.

Why not just invest it? For one, many people don’t have the self-control unless they have a goal that they’re saving for. If the money’s there without a purpose, why not spend it? For another, there are many situations where it’s better to not have savings, such as if you’re getting ready to apply for financial aid.

Q2: Retirement planning for highly compensated
I am 36, single, no kids, own my home and have two roommates who pay me rent. I earn $110K a year, and I max my 401(k) and Roth IRA. I have no debt except the mortgage (5.5%, 250K on it, last refinanced in 2004). My home is worth about $500K and I’ve owned it since 2001. I plan to stay indefinitely, both in the home and in the area, as my parents are nearby. My 401K has about $230K in it, and my Roth IRA has $29K. My take home pay is around $4300/monthly. I put $500 into my emergency fund monthly, and it has about 6 months of take home pay (around $24K). My job is quite stable. I also have a “new car fund” that I am putting $300 into monthly. My car, a 2007 Honda, is paid off, and I anticipate I will have enough to pay cash for the next car in about 6-8 years. I also tithe 10% to my church and other ministries.

I just received a letter from my employer saying that I am designated as a “highly compensated employee” (HCE) because my income was just over $110K in 2010. Because I am an HCE, I am now only allowed to contribute 10% of my gross income (about $11K), to my 401K, due to IRS regulations. I am livid! I have done some reading and understand these are the rules, but I think they are awful. I believe there are many others at my company who are in the same boat — $100K is probably the average for most at my company. I am a pretty small fish there and there are lots of folks that are above me. The company has about 20K employees.

What do I do? I am worried that I am not saving enough for retirement. I do receive a 10% employer match on my 401K, regardless of how much I put into it, and I know that’s quite good compared to other plans, and I am quite grateful for it. However, I would really like to be able to save the max of $16,500. Is $11K (my contribution) plus $11K (employer contribution) plus $5K (Roth IRA) enough? Am I worrying needlessly? Should I just not worry about it and take the $5K I would have put into my 401K and put it toward principal on the mortgage or home improvements? Or should I put it in a taxable index mutual fund, or something else? I realize I tend toward the hyper-saver mentality, so perhaps I am over thinking this, but I’d like your take. Thanks.
- Joanna

If you’re earning $110K and you’re contributing $11K (10%) yourself, plus your employer is matching $11K (another 10%), and you’re putting $5K into a Roth IRA (5%), that means you’re putting aside roughly 25% of your salary for retirement. That’s a lot, perhaps even bordering on excessive. You will have a bountiful retirement and should be able to walk out the door at the first possible date.

That being said, there is one alarm bell that’s going off here and that’s with your Roth IRA. If you’re earning $110K per year, you’re over the income cap for a Roth IRA. That means you can’t contribute the full amount to the account (you can, but you run into some messy IRS issues).

If you’re single and your income hits six digits, you should start contributing to a Traditional IRA instead. For single folks, you must be earning less than $105,000 to qualify for a full contribution and between $105,000 and $120,000 to be eligible for a partial contribution to your Roth IRA.

Q3: Strategic foreclosure question
I’m trying figure out what to do regarding my townhome (which is rented month-to-month) and my home. I’m frustrated that they are both so far under water and keep hearing about people that do a strategic foreclosure / short sale. I purchased my townhome in 2004 for $143,000, refinanced in 2007 for $184,000, now it is worth $150,000, and to break even on selling would need a purchase price of about $200,000. With the money from the refi and other savings we bought our home in late 2007 for $380,000, refinanced in 2009 to lower the rate only, currently owe about $295,000, now it is worth about $260,000, and would need to sell for $325,000 to break even.

My wife and I gross about $140,000 annually, have about $150,000 in retirement IRAs, and have $40,000 in an emergency fund. We’re in our mid-30’s. We don’t consider our current home our forever home and would gladly move if we could (we rushed into it and don’t like the location now). Also, our townhome rules only allow us to rent it for 3 years and that time is up in April. They could give us an extension or they could force the issue. We’ve been getting more and more frugal over the past 2 years. Currently we save about 20% of our income and the rental loses $500 per month. Other than the two mortgages, we only owe a $5,000 sewage assessment for our home which is at 0%.

How would a strategic foreclosure / short sale affect us? How bad and for how long would our credit be affected (we’re at about 780 – 800 right now)? Could the banks take our savings via a judgement or garner our wages? Are the rules any different for the townhome since money was taken out in a refi (even though it all went towards the next house)? If we cancelled our 20% savings, we could make both payments but that doesn’t seem like a good idea.

The other pertinent information is that we’re trying to have a child so our savings rate would go down in order to pay for those expenses when it happens. I don’t like the idea of a voluntary foreclosure / short sale at all, but I also don’t like being $500 in the hole each month on the rental and having over $100,000 negative equity. Today’s reality is much different than the original plan of renting the townhome for 3 years and then selling for a profit.
- Shane

The bank certainly could get that type of judgment if they decided to take you to court over it. However, that would require that the bank actually bother to take you to court over it and that they find a judge that’s sympathetic to their claims.

In many cases over the past few years, banks haven’t bothered to take the borrower to court because the costs of pursuing that action exceed their expected return on that action. Given that many courts are sympathetic to the mortgage holder, some of these suits end up returning virtually nothing to the banks.

Your biggest risk is probably to your credit, which will be hit hard by this. It appears as default on a very big loan, which does not have a good impact on your credit. However, this does go away over time. You are also running some risk of legal response from the mortgage holder, and there’s also the moral issue of walking away from an agreement both parties made in good faith.

Q4: Fearing change
I like my life. The only thing I don’t like about it is the financial hole I’ve dug for myself. I’m afraid that if I make changes to improve my finances, I won’t like my life any more. So I sit still and my finances get worse. How do I get out of this cycle?
- Amy

Start making changes and figure out how you feel about those changes on the whole. Try different things that are frugal and see if you actually enjoy them. Spend an afternoon or two doing something that reduces your cost of living, like air sealing your home or having a yard sale.

Some of them you’ll like. Some of them you won’t. If you don’t like it, skip it for now. The key is to get to a point where you’re spending less than you earn, and that doesn’t require doing every frugal thing that’s ever been invented.

What you’ll find is that it feels really good when that debt starts moving in the other direction. When that starts to happen, you’ll want to start trying more and more things to make that debt start moving faster and faster. That’s how it worked for me, anyway.

Q5: Heating and cooling
We live in a tri-level house and keep the temperature as low as possible in the winter and as high as possible in the summer. My husband has a home office in the lower level and it is quite a bit colder down there than it is in the middle and especially the upper level. Cost-wise, do you think it would make more sense to turn the heat up for the whole house, or keep the temp. about the same (or even lower) and use a space heater in the lower level, where he works during the day? During the day, we keep the temperature at about 65; at night it goes down to 58. I just don’t know how much more it would cost to run a space heater.
- Nancy

The best approach is always to run your central air conditioning and your furnace as little as possible. If you can take action so that you have to run those units less, you’re going to save money.

The scenario you describe is a cold-weather scenario. Using a space heater is a great technique for keeping a particular room warm while not running the central furnace for your home, which saves money on the whole. It’s a great move.

In the summer, I sometimes find it more cost-efficient to just work at the library or somewhere else on particularly hot days and let the air conditioner not run at all.

Q6: Investing without broker help
My husband is deploying this month and it looks like he will have quite a bit of downtime while overseas. He has set some goals for while he is gone – get in better shape physically, read a few books, and learn how to invest in the stock market. We are in great financial shape – no debt, maxing out retirement, 529 and IRAs set up, etc. He wants to take some money and start doing his own investing without help from a broker. So far he has been reading Stock Investing for Dummies, what other resources can you recommend? Especially blogs or online sources that he could use since he doesn’t want to haul a lot of books with him. Thanks!
- Abigail

There aren’t a lot of robust online sources for the type of information he’s seeking. Most online sources that discuss stock investing either use it as one sliver of a broader topic (like The Simple Dollar) or discuss it from a very deep perspective (like a stock investing blog). Neither one really matches what you’re looking for.

One good online learning resource is Investopedia’s Stock Basics site, which does a great job of laying out the basics of stock investing.

From there, I would honestly move to Wikipedia. Unlike the state it was in in 2003, most of Wikipedia’s articles are well-sourced and very reliable. Start with a particular area that interests you and move from article to article as you learn more about the topics you want to know.

Q7: Small games for camping
Do you take games along with you for camping trips? It seems to me that games with a small footprint would be great for camping. What do you think? Do you have any such games?
- Erik

I often pack small games for camping trips, just in case the weather is bad and we wind up sitting in a tent together.

A deck of ordinary playing cards is a must-have, simply because of the wide variety of games you can play with it. Other games I regularly take along while camping include a pocket chess set, Hive, Icehouse, No Thanks, and The Battle for Hill 218.

These have all been played on the floor of a tent on a rainy day, and a few have been played at a picnic table late in the evening, by lantern light.

Q8: Preparing for self-employment leap
I’m preparing for a significant life transition and am worried about being financial responsible during the process – I have plans to quit my full time job in August of this year and move from NYC to SC. I’ve been dating the same guy for 6 years and he joined the navy, and will be in training in SC for the next 2 years. He’s asked me to go with him. Since it’s been a long term goal of mine to eventually go freelance full time (I’m a writer/editor at a small magazine right now), and since he has volunteered to help cover costs while I get myself on my feet, these seemed like the perfect opportunity to do that.

Most of the advice out there says to have 3-6 months of expenses saved when you go freelance – but my expenses now are significantly more than they will be in SC (for example, my portion of my rent right now is 800 — that’s what it costs to rent an entire house in SC, and Stephen and I will likely be splitting that). The biggest expense I expect to have is my student loans; payment on those is about $500/mo. (that’s after consolidating my federal loans).

At least one writer whose blog I read suggested saving a significant amount and then inputting all freelance earnings into that account, then to “pay” yourself the same amount every month. That way you smooth out the ups and downs of freelancing–some months you make more than your “pay check amount” sometimes you make less, this way the months you make more pay for the months you make less.

I’d like to set up that type of system.

Since you have been in that place, where you’re leaving full time employment to work for yourself I thought I’d ask if you have any advice, financially, to make the transition a smooth one.
- Marcia

I agree wholeheartedly with having a large emergency fund before you make the leap into freelancing. You often have little idea how things will go after your first batch of clients and you may be facing some very lean months.

As for “paying yourself out of an account,” that works well if you’re paying yourself very small paychecks. The tricky part of freelance work is the income taxes, which you’re now completely responsible for. If you don’t have enough left over to pay the IRS, they won’t be happy.

The approach I use is to take every drop of income I have and split it in half. I put half in my personal account and half in a “tax” account. I then pay all of my income tax and other taxes from the “tax” account. When I need to pay a tax bill, the money comes out of my tax account. At the end of the year, after all taxes are paid, I move any and all leftovers from that year back into my main account (a end-of-year bonus, if you will). This helps me make sure I don’t miss a single tax bill.

Q9: Investing leftover money
Twelve years ago, I was working 3 different part-time jobs just to keep my head above water, a roof over our heads and food on the table. Today, I am living proof that you can come back from such a situation and am in a much more stable position, thank the Lord! Having been an avid reader of your blog for a couple of years now and having taken the Financial Peace class you would think that I know the answer to this question already, but I find myself wishing someone would confirm this decision. Here’s my pleasant situation: I have a 4 months emergency fund built up, plus an equal amount saved up for a new vehicle when that time comes (probably another 4 years or so) and I plan to contribute the full amount allowed to a Roth IRA this year again. The question is what is the best investment for any remaining “extra” funds I have this year – investing in mutual funds, cds, etc. or simply paying extra principal on my mortgage? The interest rate on the mortgage is just over 4%, but it doesn’t seem that anything else has even that much value right now
- Pam

I’d dump it into the mortgage, to be honest. I wouldn’t invest it in the stock market unless you have a specific long-term goal that’s more than ten years out – it’s too volatile otherwise. No other investments offer even a remotely reliable average annual return that beats your mortgage right now.

Putting it into your mortgage locks in a return of just over 4% per year for you with a balance that’s paid out when your mortgage is paid off early. That’s one of the better investments available to you, plus when you pay it off, you drastically improve your monthly cash flow.

This is the way I would go.

Q10: Childhood toys
When you moved out from your parents’ home, what did you do with your childhood toys? Did you keep them? Did they ever get thrown out?
- Ed

My parents kept some of my childhood toys and got rid of some of the other ones. Many of my old toys remain in tubs in the upstairs of their home, and now my children play with them when they visit Grandma and Grandpa.

I don’t think there’s any best way to handle this situation. My parents wanted me to deal with the toys at various points, but I usually just suggested that they toss them save a small number for future grandchildren to play with. I’m pretty sure they eliminated some of them over the years.

It worked for us, though some day I will have to deal with them.

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.