Saving Pennies or Dollars is a new semi-regular series on The Simple Dollar, inspired by a great discussion on The Simple Dollar’s Facebook page concerning frugal tactics that might not really save that much money. I’m going to take some of the scenarios described by the readers there and try to break down the numbers to see if the savings is really worth the time invested.

Nick writes in: We rent a home and are responsible for all utilities. It came with a rather nice 8 person hot tub, currently, we will turn it on (warm it up) only when we plan on using it that evening. In the winter it takes about 8-10 hours to warm up. My question is this, should we leave it warm year-round, or only heat it up when we plan on using it. I think currently we use it 2-3 times a month, if we had it warm all the time, we would probably use it 1-2 times a week. Maybe more during the winter. During the summer it retains heat thanks to the cover and the temperature outside, and during the winter, it will retain the heat for maybe a day at most.

Without running the numbers at all, I can tell you that it’s cheaper to heat the water on occasion rather than keep it constantly hot. Hot water will constantly lose heat to the environment, and the greater the difference between the environment and your hot tub, the greater the heat loss at any given time.

Think about a hot cup of coffee. It’s initially very hot, but it doesn’t take too long for it to cool down to the point where it’s drinkable. However, after that, it doesn’t cool down at a very fast rate at all. It does eventually reach room temperature, but it stays at an acceptable heat for quite a while as you’re drinking it. That’s because the closer the liquid gets to room temperature, the slower the heat loss is.

Since the exact heating and cooling of water in a hot tub varies a great deal depending on the model, the insulation, and other factors, the best I can do is look strictly at the heating of the water.

A hot tub of the size you describe holds about 500 gallons of water. It takes about 8.34 BTUs to raise one gallon of water one degree Fahrenheit. So, if you’re raising that water from 40 F to 100 F (in the winter), you’re using about 250,000 BTUs, which is roughly 75 kWh of energy. A kWh costs about $0.12 from your electric company, so your energy cost for heating that much water in the winter is about $6.25 just to heat it for one use.

Now, your major issue with the hot water is your insulation. How much of it are you losing to the environment? For most hot tubs, the hot tub cover has a much lower R-value than the hot tub itself, so that’s how most of your heat is lost.

In your example, you mention that the heat in the tub is completely lost after a day or so if you’re not running the heating. Just using extreme back-of-the-envelope math, you’d essentially be heating the tub’s water each day during the winter, costing you $6.25 per day to keep it hot all the time. That’s going to add up quite fast.

My suspicion is that either it’s retaining at least some heat for longer than that day or your hot tub cover is a pretty thin one with a low R-value – or, most likely, both. I sent an email out to a friend who owns a hot tub in the southern part of the United States and who keeps a pretty close tab on his energy use and he estimates it costs him about $30 per month to keep his tub hot around the clock, but it would cost about $50 a month with a “typical” cover.

Compare that to $18 a month heating the tub for the three times you’d use it during that month.

You might want to stop by a hot tub dealership just to get an idea as to the R-value of the insulating cover on your tub. You can get a good ballpark estimate just by the feel of the covers they sell.

While the math isn’t exact (again, there are so many variables here and the math gets quite complicated quickly), you can compare the cover you do have with some of the others that they sell. If you see one with an R-value twice as much as the cover you do have, it’ll hold in the heat for roughly twice as long as your current cover.

Is a new cover an investment you want to make? If you really desire to leave your hot tub on all the time in the winter, it probably is at least worth looking into, as you’ll repay that cover’s cost eventually in the money you save.

However, the best approach is to simply turn on the tub in the morning if you plan to use it that evening. If you’re using the tub more than six or seven times a month, you may want to consider running it all the time and investing in a very high R-value cover for the hot tub, particularly if you’re going to live there for a long time or if your landlord will help with the cost of the cover (provided it stays with the house, I’m sure).

The savings for making the right choice here is going to be on the order of $20 a month, so it pays to think this one out.

Sarah and I take turns handling the bedtime routine of our three children. One of us will make sure the kids get their teeth brushed and take their vitamins, read them their bedtime stories, sing songs for them, then hang out near their bedroom to handle the inevitable post-bedtime requests.

The other parent essentially has free time. Sometimes, we just relax. Other times, we work on household tasks. Often, I write – in fact, I’m drafting this post while Sarah is handling the bedtime routine.

Finish What You Start I’m far more impressed by someone who does one thing and finishes it than the person who does ten things but never really finishes anything. (@ get rich slowly)

7 Mental Mistakes That Stop You From Living a Life of Freedom and Peace I think we all find ourselves slipping into these traps at some time or another. The key is minimizing, not eliminating. (@ dumb little man)

Shifting Expectations: How to Adapt to New Job Responsibilities My experience has been that the best way to handle shifting responsibilities is communication. If you’re not sure what you should be taking on and what should take priority, talk it over with your boss. Be open about it. (@ the 99 percent)

4 Things That Keep You From Your Goals For me, the biggest thing that holds me back is inertia – the pattern of established habits. If I can make myself break a routine and establish a new one, I usually find success. That’s the really hard part, though. (@ pick the brain)

One of the biggest challenges when it comes to personal finance is that most of the personal finance tasks a person might do are not urgent. It’s that lack of urgency that often convinces people to indulge in bad personal finance behavior.

Important and Urgent Tasks
What do I mean by not “urgent”? Every task you have before you in your life can be judged by one of two traits. Is it important? Is it urgent? I use these two questions as a constant guide to the things I need to do in my life, as I’ve mentioned before on The Simple Dollar.

For example, getting my children ready for school is both “important” and “urgent,” so it takes top priority at the start of the day. On the other hand, playing a computer game is neither “important” or “urgent,” so it tends to be pretty low on the queue.

The tricky ones are the other two areas. On the one hand, there are tasks that are “urgent” but not “important.” Things like answering the phone tend to fall into this area. Most of the phone calls I receive really aren’t important, but the ringing of the phone makes it urgent.

On the other hand, there are tasks that are “important” but not “urgent.” A lot of personal finance tasks, such as signing up for your 401(k) or starting a savings plan, fall into this category.

“Important but not urgent” tasks are more important to your life than the “urgent but not important” tasks, but the “urgent” ones often get the attention. They’re the squeaky wheels, and the squeaky wheels usually get the grease.

Even worse, we’ll often put aside “important but not urgent” tasks for “neither urgent nor important” tasks. Instead of working on those papers for the 401(k), we’ll go watch The Walking Dead or play a computer game. I’m guilty of this myself, often retreating into a page-turning novel instead of doing something I need to do.

Overcoming These Traps
I use several different techniques to keep myself from falling into these traps.

First, when I settle in for work, I eliminate paths in which “urgent but not important” tasks can interrupt me. Off goes Twitter. Off goes email. Off goes my phone. Off goes Skype. I do not allow these tasks to even have the chance to interrupt me.

Next, I keep a constant “to-do” list of “important but not urgent” things I need to get done. This list is usually fairly long. If the items on it are too big, I break those bigger things down into smaller pieces, record the “big” item elsewhere (I actually use Microsoft OneNote for my bigger projects), and only include the next step on my “to-do” list.

Whenever I have free time, I make sure to always look at that list first and try to find something I want to do. By looking at that list first, I find it much harder to get sucked into something that’s idle fun.

I also minimize the “path of least resistance” to important but not urgent tasks. When I’m consciously thinking about it, I’ll do some of the “prep work” for these things. I’ll get out the paperwork I need. I’ll print out the needed documents and put them in an easy-to-find spot. I’ll use a few minutes of downtime to do a bit of preparatory research.

This way, when I actually get around to that “important but not urgent” tasks, little preparatory things are already out of the way.

A final tactic I use is to set aside time specifically for these tasks – as well as time each week to review things. I try to set aside an hour each day just for these “important but not urgent” tasks, like filing things away, filling out paperwork, filing quarterly taxes, and so forth. In addition, once a week I spend some time reviewing my goals, the tasks I haven’t completed, and so on. This helps me get my plans in place for the following week.

If I nip procrastination in the bud, I don’t fall behind on the “important but not urgent” things that are so key to my future.

One of the best parts of this time of the year is the handful of days we spend decorating our house for Christmas. All of us are involved in the process, even our littlest one, who struggles with the hand-eye coordination needed to put ornaments on the tree.

My oldest child and I spend hours digging through the crawlspace for that one last box of items that has the tree-topper on it.

Sarah digs out the rolls of wrapping paper picked up just after Christmas the year before and digs into the process of getting items wrapped.

Our four year old dives deeply into making homemade snowflakes and Christmas trees to decorate the windows with.

We pop a bunch of popcorn and string them together for the tree, using a few dried cranberries in the middle to brighten it up with some color.

Our children try to learn the words of Christmas songs and we end up consulting Wikipedia to show them exactly what “wassail” is.

The warmth that makes this time so much fun isn’t that it’s Christmas. Christmas is just a motivator for what makes it so enjoyable.

The real joy of this season comes from the time spent together. It comes from projects that are done with the goal of bringing joy to others and to the whole family.

It’s not about spending money. It’s not about indulging in expensive things. It’s about people and time and memories.

Compared to this, the actual Christmas gift exchanges and presents are really an afterthought. I’d gladly swap anything I’ll receive this year for an afternoon or an evening spent with this kind of family bonding.

A lot of families know exactly what I’m talking about here. It’s part of the “Christmas magic.”

Here’s the really powerful thing, though. It does not have to just be “Christmas magic.”

There’s no reason not to do the same thing all throughout the year. You can do the same type of activities in January (winter decorations), February (valentines), March (springtime), April (Easter), May (gardening), June (summer), July (Independence Day), August (back to school), September (early fall), October (Halloween), and November (Thanksgiving). T

There is always a good reason to spend time together as a family, doing things like making homemade decorations, eating foods you make yourself, engaging in activities together.

It is so easy to fall into a routine of keeping the “special” family moments for the holidays and allowing so much of the rest of the year to focus on other things, things that are often expensive and focused away from the people who matter the most to you.

I say, why bother? There’s never a bad night to go home and make a homemade decoration for your home. There’s never a wrong time of the year to learn how to do something new. There’s always a great opportunity to go home and make a delicious homemade meal.

All you have to do is choose the life you want to live.

A few days ago, I was chatting with someone who was telling me how he only shopped for Black Friday sales online. He didn’t like to go out to the stores, and I completely agreed with him.

After that, the conversation switched to Cyber Monday, and he told me of the long checklist of websites that he checks on that day. He talked about how the guys in his office spent a lot of the day emailing those deals to each other.

When I heard about that, I grew quiet. It seemed to me that a lot of people were burning their day hunting down a deal or two. The people he had described were in an office, meaning they were at work, and they were emailing lots of deals to each other, meaning they were spending a lot of time online finding those deals and emailing them to each other.

I’m the last person to say that it’s bad and horrible to spend some of your time doing that. If you work in an office environment with an uneven work flow, you’re going to find yourself with pockets of time without anything immediate to do, and it’s up to you to decide how to use that time. A lot of people end up web surfing during that time.

Here’s the thing, though: people who figure out how to use that time more effectively at work are going to build up their career.

Think about it this way. Alan spends Cyber Monday at work surfing the web looking for deals. He finds a $20 bargain on something he was going to buy for his kids for Christmas and a couple $5 or $10 bargains for things for himself. A few work tasks back up, but nothing big. His office is a bit messy and some paperwork needs filed, but it can wait.

Bill spends Cyber Monday at work getting his filing done and handling emails from the long weekend. He gets the things in his inbox done. At the end of the day, he does have a few extra minutes to look for bargains, but he mostly just looks through the emails for the bargains coworkers have sent out. He does some Cyber Monday searching in the evening at home, too.

On Tuesday, a huge project comes down the pipe, one that, if done correctly and with quality, will catch the eye of the boss. Who’s going to be more prepared to just knock that project out of the park, Alan or Bill?

If you want to have job stability and earn raises and promotions, look at your actions from the perspective of your employer. Is the thing you’re doing right now creating a positive value for your employer? If it’s not, why should they continue to employ you?

Here’s the key thing to always remember: employers are always going to want to hang on to people who provide a positive value for their business. Most of the people who are “downsized” are either filling a position that isn’t providing that positive value or aren’t producing enough work in that position to be a positive value for the company.

If you want job stability and raises and promotions, you need to focus on making sure that the company is getting more value out of you than they’re paying you. If you’re not doing that, you might as well start spending your time building a side business or looking for a different job.

If you’re reading this late on Cyber Monday at work, as many of you will be, you have a fundamental choice to make.

You can spend the rest of the day surfing the web, hunting down deals on things you don’t really need, and providing little or no value at work.

On the other hand, you can spend the rest of the day taking care of some unfinished things, providing some real value to your employer.

One route might be more enjoyable, but the other one helps you build a more valuable and more secure long-term future.

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. RRSP question
2. Inadequate income for student loans
3. Emergency fund question
4. Taxes or other uses?
5. Sales over the weekend
6. Multiple student loan payments
7. Cars with leg room
8. Good items on credit report
9. Personal finance in the U.S.
10. Overspending family and holiday politeness

As December dawns, Sarah and I are looking over and checking a fairly long Christmas list as usual, filled with siblings and nieces and nephews.

Much like last year, we’re looking for homemade gift options for some of the people. Unlike last year, though, Sarah is back at work full time, limiting the time we have for making such gifts.

What are our solutions? One weekend, we’re planning on making some homemade foods, like salsa. These make great small gifts for siblings and others. We’re also going to assemble a few sentimental gifts for a few people.

Q1: RRSP question
We are a couple in our 50’s and hold $150.000 mortgage (we remortgaged to pay off a debt from our business that we no longer own) and hold no other debts. We have one cell phone, basic cable, 2 car insurances with regular house hold bills. My husband changed careers and we will not see the financial gains for awhile. I bring in $2000.00 a month and that barely covers our monthly bills.( 400.00 short per month) We have had to cash in some of our RRSP’s to exist. I am cashing 5000.00 now and when that runs out I’ll cash another 5000.00. My husband has started into the real-estate business. So the cash is unpredictable and at the beginning there are fees to pay out. My question to you is Should I continue to cash in RRsp’s and put them in different accounts like a tax-free account.
- Linda

For those unaware, RRSP stands for Registered Retirement Savings Plan, which is much like a Roth IRA for Canadians. Essentially, Linda and her husband are withdrawing $5,000 at a time from their RRSP in order to make ends meet.

As for your specific question, you seem to be in a situation that’s going to be financially unstable for a while. Often, when a person starts out in the real estate business, they don’t see a large income at first. It tends to grow as one’s reputation and contacts grow.

You’re essentially robbing your retirement savings to make a go of this business, and it’s really hard to tell if it will pay off in the way that you want it to. It has a lot to do with the state of the real estate market where you live, your husband’s ability to build contacts, and so on. Many real estate people in my area start off doing it part-time until they have a strong network of contacts enabling them to move into the business full time – and some of them are never able to make that transition.

Obviously, if it’s a choice between going under and using your retirement savings, you should use them, but your focus should be on cutting every possible expense for the time being. I’d even cut the basic cable and use over-the-air signals for a while, and spend that extra time you would have been watching television instead building your husband’s business. You have a lot of ways that you can contribute, such as writing notes to contacts and so on. Your future is tied to the success of this business, and it’s in these early days where the sacrifices are needed to build a foundation.

Q2: Inadequate income for student loans
My situation is this: I owe about $120,000 in federal and private (mostly private) loans. I make $44,000/year (but live in NYC with high costs of living, even though I do live in a much cheaper part of town and live *very* minimally). For the past 4 years after graduating I’ve only been paying interest on the private loans and the federal loans have been deferred. I don’t anticipate ever having a career that pays $100k a year etc. and imagine my salary cap as I grow in my job to be around $65,000. Even if I achieve that I do not feel like this is a debt that can ever be realistically re-paid due to things like compound interest etc.

So essentially should I just stop paying (the private loans – I would pay my federal ones as I know the penalties for not doing that are nasty)? I’m currently spending $400+ a month on them and that’s *interest only*. I know that these loans cannot be discharged in bankruptcy (although I do wonder if since I’m in such an extreme position I might be able to rid myself of some of them) – but I almost feel like if I defaulted and they garnished my wages based on the laws of the state I live in that would actually be less of a monthly commitment! I posited this thought to the loan officer who called me one month when I couldn’t make a payment and asked him what to do about it. His response was to try the lottery. Hopefully you have some better advice.
- Roger

That “try the lottery” advice is actually pretty insulting. If I ran such a company, I’d fire that loan officer because he’s doing nothing to help the bottom line of the business he’s working for and is actively damaging relationships with clients.

The first thing you should do is directly contact each of the organizations that hold your student loans and discuss your situation with them. Many student loan programs have need-based deferrments, reduced rates, and loan forgiveness programs for people who are in careers with lower earnings potential. I don’t know exactly what your career is, but I do know that it’s in a fairly low earning path, with means it’s at least reasoable that you’re eligible for something like this. You must make it clear when you contact them that your earnings potential is making you look at defaulting because you simply can’t pay the bills and feed yourself at the same time.

The next thing you should look at is loan consolidation. Do you have any options for consolidation that would reduce your monthly payment load? It sounds like you have multiple public and private loans, so it would stand to reason that you’re a candidate for some form of consolidation, and rates are certainly in your favor right now.

A final important thing to remember: you are far from alone here. Many people struggle with what seems like overwhelming student loans. The lenders have a vested interest in having plans for working with people in your situation.

Q3: Emergency fund question
You’re supposed to have 6 months living expenses in a emergency fund, which for me would be about $9,000. I currently have $1,800 saved with plans to save $100/month or more until I reach that amount. This seems like alot of money for me to just have sitting there ‘in case of emergency,’ even just the smaller amount I have now. I also save regularly for retirement, travel, a current goal (right now a digital SLR camera), etc. I have student loan debt and no other debt (including no mortgage/car payment). I rent and take the bus. I have no children and my husband works full time (ie, is not dependent on me for more than my share of the expenses). Do I really need $9,000 sitting in the bank? How do I decide? Can I invest the money? Where? I’d like to put it in stocks because of the higher returns, but that seems to defeat the purpose of an ‘emergency’ fund if I could lose my investment.
- Chloe

I usually encourage people to have two months of living expenses in the bank for each dependent they claim on their taxes. In your case, you and your husband should have four months of shared living expenses in the bank, which would be somewhere around $6,000, apparently.

The reason for that isn’t just for the small expenses you mention. It’s also to help with things like unexpected job losses, unexpected loss of income due to a major injury or illness, and things like that.

When you live paycheck-to-paycheck, things like a dehabilitating injury or an untimely pink slip can cause financial apocalypse. An emergency fund is protection against that, enabling you to keep living your life while you transition through those hard times. A fund with four months of living expenses means that you can be jobless for at least four months (probably much longer), which can be huge if you’re suddenly fired.

Q4: Taxes or other uses?
I earn about $50,000/yr through my work and a side gig and minimized my withholding last year in order to use the extra cash to get out of debt (I’ve paid off $8000 in credit cards so far) so I’ve paid very little on my 2011 income tax so far. I can contribute to a 403(b) at work, but no matching. I foresee an end of the year surplus of $5000, which I could either use to finish off my credit card debt ($5000 more) or make an extra payment on my mortgage (900) & student loan (300), and contribute to the 403(b) (3800, the rest of the $5000) or give to charity in order to reduce my taxes. Before April of 2012, I will have another $5000 surplus which I could contribute to an IRA for 2011, or save to pay my taxes, or again, finish off my credit card debt.

How would you handle this situation to make the most of my extra money to improve my finances?
- Linda

First and foremost, make absolutely sure that you’re going to be able to cover your tax bills in April. If you find yourself in a situation where you’re facing a big tax bill without the means to pay it, you can be in a world of IRS hurt.

Assuming, though, that you have taxes taken care of, I would put the extra money toward my high interest debt first and foremost, where high interest debt means anything above about 8% interest. In your case, this would be the credit card debt, most likely.

If you’re only giving to charity as a tax reduction, it’s not really a good return on investment. Most people only get about 25% of the amount they donate back in the form of a tax reduction, so if you donate $4,000, it would only cut your tax bill by $1,000. Charity is a great thing, but the tax benefits are really just a perk.

Q5: Sales over the weekend
Did you indulge in any Black Friday sales? Are you going to pick up anything on Cyber Monday?
- Lucy

Sarah and I did a little bit of Black Friday shopping, but only online. There were a few specific Christmas gifts that we looked specifically for at some of the big online sales. We found exactly two of the items we were looking for on discount, so we bought exactly two items. I also spent a total of about $7 on Steam on computer games.

I anticipate similar spending levels today. I’m not planning on buying anything that wasn’t already an intended Christmas gift. I have one item that I’m looking for as a gift for Sarah, but aside from that, we’ll probably just browse a few sites together this evening after the kids are in bed to see if we find anything matching our lists.

It’s not a surprise if you’ve been reading this site for a while that I’m not really into the sake of spending money for the sake of “sales” or “bargains.” If you can get an item you were already intending to buy at a steep discount, that’s great, but it’s a rare occurrence when the things I would already buy match up with Black Friday sales.

Q6: Multiple student loan payments
I’m a 23 year old grad relatively recently graduated out of college. I accumulated about $25,000 in total loans (all subsidized), and payment time has finally kicked in. The total monthly minimum I’m looking at is about $275, with my intention being to reach $400 per month whenever I can.

The thing that I find annoying is dealing with five separate payments coming out at varying times of the month. Do you think it would be prudent, and worth the credit score hit, to consolidate my loans for the sole sake of making one payment? I’d plan to pay the same $300-400 a month, but would just like to worry about making one transaction.

The only downside I see to is that because I use direct deposit from one of the lending house, they’re giving me a 2% interest rate reduction on the two loans I owe them ($11,000, 5.5% interest rate, $100 monthly minimum payment).

How would you advise I approach this?
- Mark

There’s no reason not to investigate what kind of rates you would get with consolidation. You can certainly call around and get some rate quotes before you make such a move.

I’m going to guess that with some shopping around, you can find a rate that’s lower than that 5.5% that might also reward you for direct deposit payments while also providing the easier depositing that you want.

One way to start shopping around is to check out the organizations you already have loans with and see what they offer for consolidation.

Q7: Cars with leg room
We are looking for a new car. My teenage son is almost 6′ 6″ and I was wondering if you know of a sedan or SUV (we are going to be looking for one with good gas mileage), that has a lot of leg room in the back seat. He has his own truck and drives back and forth to college but we still need room for him in our vehicle sometimes.
- Chris

I’ve got a lot of experience in jamming myself into cars that are smaller than my frame will allow. My height is “top-heavy,” which means that I can wear pretty ordinary length pants but my shirts pretty much must be tall shirts. This means that I do okay for leg room in most cars, but my head often bumps the ceiling.

This means that cars like my wife’s Toyota Prius actually works okay for me provided I ride in the passenger or driver seat, but there are many SUVs and vans that are pretty awful to ride in because of my head bumping the ceiling.

Given that body proportions vary so much, my honest suggestion would be to just go test out a lot of vehicles at a large dealership so that you have an idea what works well for him. Once you have some models you’re sure about, use that information to shop around before buying.

Q8: Good items on credit report
I’m 30 years old and just a few months into my first full-time 9-to-5 job (previously I have been doing freelance writing or photography to supplement part-time work while taking care of family responsibilities). I have a bit of a checkered financial history, mostly due to a couple of credit cards being charged off after my house was nearly destroyed in Hurricane Ivan in 2004 and I missed a couple of payments. I’ve worked with the collection agencies that purchased those debts and this month I will be debt-free. Even though I know that if I had ignored the debts, they would nearly all be off my credit report by now, I feel good about having repaid my legitimate debts.

Here’s the problem. My only “in good standing” item on my credit report is a store credit card that I never used, and that has been inactive since the store (Bombay Company) closed a few years ago. I found out today that this item will leave my credit report in June 2013. Because I have avoided opening any new lines of credit, once this is no longer reported I’m worried about how bleak my credit will be.

Now here’s my question. How can I add more “good” items to my credit report? I checked with Orchard Bank and the card I qualified for was a secured card. I’ve never really felt like secured credit cards were a good idea (since I don’t intend to use it) but is it worth opening one just to have another line of credit on my report? Can you suggest any alternatives?
- Bonnie

The only reason to get a secured credit card is to raise your credit score. I truly look at them as though you’re loaning money to a bank at 0% interest in order to raise your credit score. Very rarely will you find a secured card that makes sense for a person to use for actual purchases because the interest rates are usually really high on them and they rarely have any sort of good rewards programs.

Now, is that worth it? If your credit score without that secured card is really low, it probably is. A decent credit score helps with your insurance rates and also helps with the interest rates you’ll get on things like car loans and the like.

You may want to see if you’re eligible for an unsecured card of some form. If you do have a positive history with the one card on your report, it might not quite be as bad as you’re thinking. Use the secured card as a “last resort.”

Q9: Personal finance in the U.S.
I have been a follower of your site on and off for a few years, more of a casual reader than anything purely on the basis that many articles did not apply to me, being from the UK and having no debt to clear. Now however, I am reading every post you make as I am moving very shortly to live in the States. A lot of things are very different; by this I mean the basic way financial intuitions run, the way mortgages work, the way banks and investments work… the ‘basics’ on my financial education here in the UK will not apply. This will be very strange for me – here in the UK I’m very well financially educated, working as a personal tax accountant. So I feel I will not enjoy suddenly floundering! I was wondering if you had any general advice for me, and if there was a particular book or blog or any such that you could recommend to me… sort of an ‘American Finance for Dummies’ but for people who do want a little more than just passing knowledge?
- Delores

In terms of basic principles – pay off your debts, spend less than you earn, etc. – most economies work pretty much the same. In terms of your day-to-day actions, you’re not really going to be doing much differently in the U.S. than in the U.K. A standard Personal Finance for Dummies book written for a U.S. audience will actually answer surprisingly few of the questions you come across. They also tend to focus on the principles.

Honestly, the source I would use the most for this would be Wikipedia. I would start with entries related to the areas that concern you the most, such as income taxes. One good entry to start with would be “Banking in the United States.”

Another good tactic is to simply ask entry-level employees of institutions you intend to use. Bank tellers and the like are often good sources in terms of how things functionally work, which you can then supplement with ideas and theory from other sources.

Q10: Overspending family and holiday politeness
I’m writing for some advice on dealing with my financially irresponsible mother and grandmother. I am 25, living in NYC on my own. All of my school loans (~24K) and credit card debt (~5K) are in my name – I haven’t taken any money from my mom (who raised myself and my 2 brothers alone, with minimal financial help from my father) since I was about 17 years old. I saw what a struggle money caused in my house growing up – it was a main cause of my parents divorce – and I’ve always worked to be as independent and responsible as possible. That, of course, is not without incident so I’m actively paying down a bit of credit card debt that I accrued while in my early 20s and trying finding a job/figuring out the whole ‘financially responsible’ thing. I’ve since managed to make quite a dent in my debt despite my high cost of living. I contribute to a 401K with a 5% employer match and I also maintain a personal savings account.

I’m writing because my mother and grandmother are compulsive over spenders. They are both in a fair amount of credit card debt but they still shop compulsively (nearly every Saturday is spent at the local mall, Kohl’s, Target or flea market, etc.) My grandmother spends so much money that my 85 year old grandfather still works two jobs to make ends meet for the two of them. He also works to lend additional funds to my mother as she is also in debt and has no savings to speak of.

That in and of itself has serious implications for me as I am sure that I will be charged with caring for my mother in retirement as she has nothing. However, I’m wondering if you might be able to advise me on how to politely decline presents and shopping trips with my grandmother and mother. When I visit (usually about twice a year), all they want to do is shop. I’m not a big fan of shopping ingeneral however, when I do purchase things I do so with a “quality over quantity” mindset – I pick out one classic, high quality piece and I save up to buy it. My mother & grandmother just buy anything that is on sale, favoring low quality department stores – usually falling into the trap of “it was on sale, so i bought 3 of them!” My mother even took a part-time job at a local department store for the employee discount.

They don’t seem to have any interest in chatting with me and discussing my life, accomplishments, plans, etc. They want to go to the mall and buy things. This makes me feel incredibly uncomfortable as I know that they are not financially in a position to spend the kind of money that they do. Additionally, it hurts my feelings because I work my butt off to make my life what I want it to be – I’ve worked my way up the corporate ladder quickly and I have a budding romance that is quickly maturing in to something that could very well result in marriage, yet they make no effort to inquire or be a part of my life. I feel that their wanting to shop for me is more for themselves than for me. They push clothes and things on me that are not my style and then guilt trip me when I try to politely decline. They tell me that i have become a snob. I don’t try to deny that or defend myself because I don’t want them to know what I really think about their financial promiscuity – I just let them think that I’ve become a total snob.

With Christmas coming up, I’ve asked all my family members to get my gift cards to Target so I can purchase a television (I haven’t had one for 4 years to save money). My mother is now insisting that she can buy me a TV for Christmas [...] with her employee discount. When I tried to make up excuses why I didn’t want that, she acting like I had just refused her the chance to meet her new grandchild or something ridiculous like that. How do I politely approach this situation without hurting anyone’s feelings but also not accepting gifts that I’m not comfortable accepting?
- Margaret

My reaction would be to just accept the gift and move on with life.

You have to remember that you cannot change the behavior of others. People have to find within themselves cause for change. External forces rarely can do anything at all to cause someone to change, unless it’s to simply trigger something that’s already inside of them.

You’re growing and maturing and finding yourself on a different path than many of your family members. Your values are different at this point. The choice is really up to you: are you willing to set aside some of those values differences to maintain a relationship or not?

In some ways, I’m in the same boat as you. I know that many of my extended family members find our situation confounding. We’re both college educated and earn a good income, but we do things like make homemade Christmas gifts (when other family members just buy all kinds of random things) and buy our vehicles used off of Craigslist. There are values clashes.

At the end of the day, though, I’m okay with that. I know a gift from them is still a gift from the heart, even if it’s not a match for the things that I value. It’s a show of affection and an attempt to maintain a connection.

In your shoes, I would just suggest that you roll with it. Bond with your family where you can, and tread lightly in the areas where you can’t.

Got any questions? Email them to me or leave them in the comments and I’ll attempt to answer them in a future mailbag (which, by way of full disclosure, may also get re-posted on other websites that pick up my blog). However, I do receive hundreds of questions per week, so I may not necessarily be able to answer yours.

Every Sunday, The Simple Dollar reviews a personal finance or other book of interest. Also available is a complete list of the hundreds of book reviews that have appeared on The Simple Dollar over the years.

One of the first books I reviewed on The Simple Dollar was Dave Ramsey’s More Than Enough. I found it to be an interesting take on personal finance, as it ties together personal finance and character and personal growth into a single package. While I didn’t think that it was the first book you should read if you were in personal finance panic mode, I did recommend it as a worthwhile read.

A few weeks ago, a reader emailed me and suggested that I read what my reader described as a “companion” to More Than Enough, entitled How to Have More Than Enough. My reader suggested that it was a much better read than the first book.

Store Manager, to Aisle One, Please!
Many people feel unhappy with big aspects of their life, but they also find change to be stressful. The key thing to remember about any change that you take on in your life is that the end goal of it is to put you in a place where you are no longer unhappy with some aspect of your life. For example, choosing to live a life that involves less spending can be really stressful, but the end goal of it is actually a stress-reducer: freedom from debt and financial worry.

Foundation Failure
Why do people get into situations where they’re unhappy with some aspect of their life? Ramsey’s argument is that some basic foundation of their life has failed in some fashion. Ramsey argues that most lives are held up by a series of posts, and when one or more of those posts begin to rot and fall away, the entire structure of our lives begins to fall apart. Thus, the best thing we can do is to constantly shore up those things that we rely on. This chapter focuses a lot on values – the immediate things that we hold true and hold dear in our lives. What are we doing to reinforce those things? Most of the rest of the book focuses on nine more of these “poles” that hold up everyone’s life.

Vision – Binoculars Looking at Your Future
Vision refers to knowing where you want to go in life. This ranges from something as simple as what you want to accomplish this week to what you hope to accomplish over your entire life. If you focus on nothing but today, you’re going to walk in a rut in your life and never get to any of the places you’d like to go someday. The big key is to just start thinking about it and writing it down. What would you like to have people say about you at your funeral? What has your life meant? What can you do to get there?

Unity – A Tangled Rope Is Just Loops
Unity simply means doing things with respect to the people around you. So often, it’s easy to just do what we want and ignore what others need or want. However, if you focus on listening to the needs of others and incorporating those needs into your daily actions and choices, you’re going to find that your entire life flows much better. This goes from things like cleaning out the dishwasher to big things like how to spend a big windfall. The more you listen to the key people in your life and involve them in your major decisions, the easier your life will flow and the more they’ll involve you.

Hope – Fuel for the Explosion!
Is the future awash with possibilities or is it something to dread? If you look at the future as something to avoid and to fear, then you’ll find that your future is indeed a darker place. A much better approach is to look at one’s future as a place for hope and optimism, where the things you want in life are destined to happen. A key part of this equation is to look for the good “what-if”s and chart a path to them, and also look for paths away from the bad “what-if”s.

People Who Need People – Support and Accountability
You need other people in your life. For many people, though, it’s a surprise to learn that others need them in their lives. There are people out there who need you to be at your best. At the same time, those people are often the ones who can be there for you when you need help. It’s a two way street of support and accountability that can constantly push you on to better things if you let it happen.

Intensity – Move the Rock
Many people are willing to give up at the first obstacle. If you come at your goals with a low intensity, it’s going to be very easy to derail you, and any goal that’s worth achieving is going to have some obstacles along the path. Instead of letting those challenges derail you, you’ve got to focus hard on those challenges and overcome them. For example, if you’re watching your weight, instead of eating that delicious piece of pie, you’ve got to have the intensity and content of character to push it aside.

Diligence – That Dirty Little Secret
On the flip side of intensity is diligence – the ability to stick with something through thick and thin. It’s easy to ramp up the intensity in challenging moments, but it is diligence that will get you through the plateaus and the valleys where success seems far off. For example, intensity will get you through Thanksgiving dinner without gaining five pounds, but diligence will keep you from eating 500 calories a day more than you should and slowly gaining weight. It’s a focus for the long term.

Patience Is Power
Hand in hand with diligence is patience. Most goals don’t happen overnight. Many goals don’t happen in a year. In the society we live in today, it’s easy to have a mindset that you need results now and if they don’t immediately happen, something’s wrong. That mindset will keep you from achieving great things because it will cause you to abandon goals before you can possibly achieve them. Patience is an essential key for building a great life.

Contentment
It’s easy to fall into a mindset where you want what others have. It can be a very pernicious mindset to crawl out of, too. The key to success is to simply be happy with the things you have, even when you could have other things if you were willing to sacrifice some of your goals. Without goals, it’s easy to fall into a trap of keeping up with the Joneses and never being truly content with what you have.

Giving – The Great Misunderstanding
When we are scared or when we don’t feel confident about our lives, we tend to clench our fists and hold on to what we have. A big step towards being happy with our lives is a willingness to let go of that tight grip and give of ourselves to others, not just in the form of money, but in the form of time and talent and energy. By doing this, we can begin to see that the bounty of gifts we have is actually more than enough.

Is How to Have More Than Enough Worth Reading?
This book is actually very much like More Than Enough except with some additional workbook elements added in. I compared the two books side by side and found that there really wasn’t very much material at all cut from the original book. Instead, this version mostly just benefits from the direct addition of workbook materials.

If you’re just looking for a book that focuses on character and personal growth and how it relates to personal finance, either How to Have More Than Enough or More Than Enough will suffice. However, I think I would give this one the edge because, due to the workbook elements, it provides just a little bit more push for you to actually start evaluating your life and making positive changes and some more food for thought about living a values-oriented life.

Check out additional reviews and notes of How to Have More Than Enough on Amazon.com.

Every time you interact with a business, you’re trading something of value for something of lesser value from them. If that were not the case, then the business could not continue to operate. Businesses cannot make a profit if you’re getting equal or greater value from them.

So, every time you use a product or a service, it’s worthwhile to spend a moment or two asking yourself the simple question that titles this post: what’s in it for them?

Let’s take television, for example. Obviously, television stations make their money by selling ads during the program. Usually, those ads together sell for more than the program costs to air, so the business makes money.

Why do companies pay for ads? Again, they wouldn’t pay for the ads if they didn’t feel they got more value out of them than they’re putting in. They pay for those ads because they’ve shown time and time again that customers buy more of a product if it’s advertised. Advertising, on the whole, makes money for the business.

“Aha, but I don’t watch ads. I’m smart. I use a DVR to fast forward through commercials.” That might have been a good idea a few years back, but the television studios have become much smarter, too. They now insert products all over your television shows. Notice the big Apple logo on that person’s laptop. See how that person is using a smartphone with a huge shining Sprint logo at the bottom? That person is driving a Ford Explorer! These are all advertisements, right inside the program.

“But television doesn’t cost anything!” It does. You pay with your time and attention, and advertisers use that time and attention to increase your recognition of whatever they’re selling. For them, this is a net gain, as they make so much more in sales if they advertise that it makes up for their costs. If they’re advertising, people are buying.

This same type of thought process goes into almost everything that you do and virtually everything you spend money on. There truly is no such thing as a free lunch. I’ll use a few common examples.

With coupons, what’s in it for them? Even with that coupon, the company ends up still making a profit in the long run. Even if they don’t make a profit on that specific sale, they’ve put their logo into your home and it’s going to stick in your mind. If you’ve bought a product once, you’ve got a chance of becoming a repeat customer.

What if I stack that coupon with a store sale? The store is offering that sale to get you in the door so you’ll buy other things, and they’re particularly good at getting people to buy more than they come in the store intending to buy. They’ll do things like put the sale item on the far end of the store or make you have to walk past a lot of advertising displays to get to the item.

With free samples, what’s in it for them? They’re hoping that you’ll buy the item, of course. However, even if you do not, they’re also hoping that the positive feeling that you get from trying the item will associate with whatever it is you’re trying and that this might convince you to become a customer now.

It goes on and on and on.

But I’m a savvy consumer. I never fall for this stuff. For many people, when they’re actively thinking about a purchase, such tactics don’t work. If you’re focusing on what to buy, good with your math, and conscious of what constitutes a good buy, you’ll make a pretty good purchase for your needs.

Often, what they’re hoping is that you’ll be making decisions when you’re tired or not feeling 100% or you have a long list. In those cases, you rely on impulse, and impulse usually isn’t the best tool to use in a shopping situation.

So what can I do? There are several things you can do, actually.

First, avoid shopping when you’re not prepared for it. If you go into a store when you’re tired or hungry or feeling down, you’re much more likely to buy things that you shouldn’t. Our family shops less than once a week for groceries, for example, and we usually do it when we’re wide awake and have a relatively full belly.

Next, justify every single thing that you buy. This is the old “ten second rule.” If you’re going to buy something, ask yourself why you’re buying it. If you can’t come up with a coherent reason, then don’t buy it. It’s important to recognize when you’re buying things because of short-term urges, such as “That looks tasty” or “I’m hungry right now” or “I’m thirsty right now.” Those things often result in very expensive impulse buys.

Most importantly, never make a move without a concrete reason that’s not based on emotion. Advertising, politicians, and other entities trying to gain influence over us try to tap into our emotions. They use cute babies, attractive people, sentimental moments, unrealistically beautiful food – anything to make us have an emotional response. The more time you spend actually looking at real information instead of at advertisements and marketing images, the more likely you are to make good decisions. Learn about what you choose to eat and wear and entertain yourself with so that you’re always making better decisions.

We’re all going to fall prey to these tactics sometimes. The key is to reduce how often that it happens.