Based on the title of this post, you might think that I’m delving into politics or the federal budget, but I’m not. Instead, I’ll start off with three little stories about Sarah and our family.

1. When Sarah and I were shopping for a house in 2007, we looked at a lot of them. We went to open houses, we scheduled visits to practically every house for sale within anything close to our price range in the area, and we even looked at houses somewhat outside of the area we wanted to live in.

Anyway, we found this perfect house. We both loved it. We were planning on having three kids and it had these wonderful bedrooms for three children. The master bedroom was just perfect in size and had a shower tall enough for me (I’m six foot five and a half). The basement was unfinished and completely open, as well as having a ceiling plenty tall for me to stand up in. The kitchen was wonderful and had an island and plenty of cupboard space for cooking supplies. It was in an area that wasn’t heavily populated, but we observed a couple houses nearby that had young children living there.

In other words, it was pretty close to exactly our dream house.

The drawback? It was a significant amount more than we were planning to spend – about $60,000 more. Another factor is that the square footage, if we finished the basement, would have been around 4,000 square feet.

My wife had spent time cleaning houses for others and she knew quite well that the time and cost invested in maintaining a home is almost directly proportional to the square footage of it. We also knew that property taxes were also highly related to the livable square footage of the house in that area, thanks to the assessor’s website.

In other words, we’d be spending many hours a week just on household maintenance and cleaning for this house, and our property taxes would end up being pretty high, too. We would be continually paying, with our time and energy and our money, for every square foot that we bought.

With that in mind, we began to re-evaluate the purchase. Did we need these three roomy bedrooms for our children, when at the time we only had one (and another on the way)? Did we really need all of this space in the basement? Could we really afford those property taxes? More importantly, did we want to constantly invest that much time into cleaning and maintaining a house of that size?

We went with a different house, one with less than half the square footage. We may someday own a larger house than this one, but that house was too much house for our lives at the time. Maintenance has a cost.

2. A friend of ours recently installed a home security system. Naturally, the first few weeks with it have been interesting, with forgotten passwords and at least one accidental trigger.

When I asked my friend why he went through with the expense and the annoyance, the reason mostly revolved around all of the expensive stuff they had in their home. They had to protect the beautiful couch, the 60″ flat panel television, the state-of-the-art Alienware laptop, the multiple Macs in the house, and so on.

After hearing that, I quickly realized I wouldn’t want enough valuable stuff that I had to pay for such a security system. If someone breaks into our house thinking they’re going to make off with a jackpot, they’re going to be sorely disappointed by the old computers and so on. They do their job, though, and they keep our life nice and simple.

3. A few weeks ago, I had a conversation with an older fellow who had retired. He asked me how I was saving for retirement and I mentioned my Roth IRA and my older 403(b) account. He then told me that he had saved for retirement without those accounts and that today he lived off the interest.

“In fact, I give most of the interest away. It’s more than I can live on,” he told me.

I told him that such a move was pretty impressive. “Not really,” he said. “If I kept building up money, I’d eventually have a lot in the bank. People would start bugging me all the time for money and I’d have to give more and more to Uncle Sam. I’d probably have to hire an accountant or something. Instead, I can just give money to groups around here that need it and keep myself from having all of those problems.”

He had a pretty good point.

A big challenge of money and time management are the ideas of defense and maintenance. If you own a lot of stuff, you have to invest a lot of your time and at least some of your money into defending it (having a big house, having security for that house, having insurance, paying property taxes, handling people who want some of your money or things, etc.) and into maintenance (taking care of the items, taking care of the place where you keep those items, etc.).

In other words, simple accumulation creates its own problems. The more you have, the more of your time and money and energy goes into protecting and maintaining what you have.

There are a few very easy solutions to this problem.

First, live simply. Don’t accumulate things unless you actually have a real use for them. The more stuff you have, the more you have to work to maintain and protect it and the more you demonstrate to other people that you have money, meaning that they’ll look to you as a potential source for that money.

Second, be giving. You take nothing with you when you leave this world. It’s powerful to save for future goals, but eventually those goals arrive and that means it’s time to spend that money. If you find yourself continuing to accumulate without a goal, look around you at the many people who are in situations where they’re unable to even reach such a point, whether due to physical constraints, intense poverty, or other causes.

Finally, do it yourself. Don’t hand over the management of what you have to someone else. Handle as much of it as you can by yourself without help. The more self-sufficiency you have, the less expense you have and the less time you have to spend managing the people who are supposed to be helping you.

Cut the costs of maintenance and defense. Live simply. Be giving. Do it yourself.

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.

Greg writes in: I was thinking of changing my light bulbs to the new energy efficient CFL bulbs. I counted quantity 14 60watt bulbs in my house. For $25 to buy an 18 pack of 60watt equivalent, each bulb uses 13watts. If I estimate that roughly everyday 4 bulbs are turned on for 5 hours. Saving me 188 Watts of power per hour, giving me 940 watts saving a day. Is it worth it?

It absolutely is.

Let’s do a price comparison of normal incandescent bulbs, CFL bulbs, and the new LED bulbs that are starting to emerge onto the scene, using Greg’s scenario.

Greg can buy a 24 pack of 60 watt incandescent bulbs for $11.87, or $0.49 a bulb. He would have to buy twelve bulbs to replace the ones in his home, costing him $5.94 in bulbs. These bulbs have an average lifetime of 1,000 hours, so to cover 10,000 hours of use, it will cost him $54.90 to use incandescent bulbs.

Greg can also buy an 8 pack of 13 watt CFL bulbs for $8.75 (which replace 60 watt incandescents), or $1.09 a bulb. He would have to buy twelve bulbs to replace the ones in his home, costing him $13.08 for a round of bulbs. These bulbs have a stated average lifetime of 8,000 hours, but my experience with CFLs has shown me that you should roughly halve that, so to cover 10,000 hours of use, it will cost him $32.70.

Yes, even without the energy savings, CFLs are cheaper due to the longer lifespan.

Greg could also buy a single 7 watt warm white LED bulb for $14.99 (this replaces a 60 watt incandescent). I’ve used these and they actually do a really good job of matching incandescent light. He would have to buy twelve bulbs to replace the ones in his home, costing him $179.88. These bulbs have a stated average lifetime of 25,000 hours, so to cover 10,000 hours of use, it will cost him $71.95.

So, for 10,000 hours of light out of twelve light sockets, you’ll have to pay $54.90 for 60 watt incandescent bulbs, $32.70 for equivalent CFLs, and $71.95 for equivalent LEDs.

Now, what about energy use?

Over 120,000 hours of use (10,000 hours per socket), a 60 watt incandescent will use 7,200 kWh of energy. At an average price per kilowatt hour nationwide of about $0.12 per kWh, it would cost him $864 over that span.

Over that same timeframe, a 13 watt CFL will use 1,560 kWh of energy. At a price of $0.12 per kWh, it would cost him $187.20 over that span.

Over that timeframe, a 7 watt CFL will use 840 kWh of energy. At a price of $0.12 per kWh, it would cost him $100.80 over that span.

So, what’s the total cost?

For 12 light sockets over 10,000 hours of use per socket, the total cost of using 60 watt incandescent bulbs is $918.90.

For 12 light sockets over 10,000 hours of use per socket, the total cost of using 13 watt CFLs (which produce light similar to the 60 watt incandescents) is $219.90.

For 12 light sockets over 10,000 hours of use per socket, the total cost of using 7 watt LEDs (which produce light similar to the 60 watt incandescents) is $172.75.

Yes, LEDs are the cheapest option now. The startup cost for such bulbs is very high, but their long lifespans and incredibly low energy use end up making up the difference and more.

On the other hand, even though they’re the cheapest initially, the short lifespan and high energy cost of incandescent bulbs make them incredibly expensive over the long haul.

My suggestion? Try a CFL and a good LED like the one I linked to above. Make sure the lighting is up to the standard you want. If it is, you should absolutely jump ship to the one that provides the light you want, even if the bulb costs more. You’ll save dollars, not pennies, over the long run.

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. Friendship and money
2. Home sale and mortgage question
3. Multiple savings accounts
4. Used car question
5. Refinancing conundrum
6. Fast elimination of student loans
7. House cleaning system
8. Affordable car payment question
9. Roth IRA for young children
10. Save now or later?

Since most of you will be enjoying family time this Thursday (as will I), there won’t be a Thursday mailbag this week. Instead, the mailbag will return next Monday at its regularly scheduled time.

Q1: Friendship and money
My roommate is a dentist and the exact opposite way with money. She takes care of the cable/Internet bill (while I do the electricity and gas), but never tells me the amount. When she buys something for me (expensive hair gel for instance), she won’t tell me how much it is, but when I pester her, she asks me to “look it up and transfer the money to her bank account.” I don’t want to take advantage of her, so I do that. Would it be too patronizing to start a “retirement fund” for her with the money I owe her? I’m not sure exactly how it would work – likely just open a checking account and then when we stop living together transfer everything to her and beg her to either put it towards her student loans or open a Roth IRA. Or should I just continue to transfer the money each month to her and watch her waste it?
- Jenna

If your roommate is doing things in a way that’s comfortable for her, respond by doing things in a way that’s comfortable to you. Which route feels better to you?

In your case, based on what you’ve said, I’d probably put all that money into an account and quietly hold onto it until the right moment, like when your friend needs a financial boost for something big in their life or something like that.

Clearly, your friend does not think of this as any sort of big deal, so don’t treat it as such. Do your own thing quietly and if an opportunity comes around for payback, jump on board then.

Q2: Home sale and mortgage question
I am currently in the process of selling my home (about $150k left on the mortgage) and am planning on renting for a few years. I have no debt, emergency and car fund and an additional $40k in a high interest savings account. I do not plan on using this savings until after I sell my home and can get a plan together for the equity in the home and $40k savings. In the meantime, what benefit would I have in using the entire $40k to pay down my mortgage (effectively giving me a 4.5% return) until I sell my house? Are there downfalls to this plan?
- Lawrence

If you already have an emergency fund and a car fund, then this is a pretty good method for getting you a short-term 4.5% annual return on your money.

There aren’t really any significant drawbacks to it. It’s basically a way to lock in a better return in the short term for that money than you’re getting in a savings account.

The only problem I can see is that it makes that money pretty illiquid for a short period, but if you still have an emergency fund, that’s not really a significant problem. I’d go for it.

Q3: Multiple savings accounts
First, some background: I’m 26, I have one full-time job, and one part-time job working as an organist for a little church. I’ve made a bit of a mess of my finances to the tune of $6000 of credit card debt, $29,000 in student loans, and $3000 of a car loan. Right now I’m in the process of reading/going through Dave Ramsey’s Total Money Makeover. Currently, I’m on the first step, which is working on saving up an emergency fund. I’ve budgeted for November and December, and I will have it saved by Jan. 1. I understand I’m supposed to put this ‘rainy day fund’ in its own account and not look at it, which is where my question starts.

My savings currently fall into three categories: saving for taxes (because my organist job doesn’t withold anything), my $1000 emergency fund, and saving for various sundry expenses (just $25/week until I have my debt paid off, but I want to have something set aside for car repairs and other expenses that doesn’t come up frequently enough to justify a monthly budget line item). Should I have different savings accounts for these three categories? Right now I’m keeping an Excel spreadsheet of what money I have saved for what purpose all in one savings account, which is a bit of a pain, but I’m not sure if it’d be easier or just ridiculous to have three savings accounts. Should I put my rainy day money in a CD or money market account? Will that make it too difficult to take out cash in case an emergency actually happens? I would greatly appreciate any advice you could give.
- Shawn

There’s really no problem with having three savings accounts. In fact, some banks (like ING Direct, the bank I use) make it quite easy to do so.

A money market account mostly functions like a savings account. They traditionally have had a pretty solid rate of interest, but they’re just as depressed as savings accounts are right now, so you’re not getting a big advantage from using them.

I would not lock your money down in a CD, as this would make your money inaccessible without giving you much of a boost, either.

Q4: Used car question
I have a question regarding automobile purchasing. I was recently involved in an auto accident and my car – originally bought brand new and maintained like a gem by my father – was totaled. I just got back from working overseas and have about 7K in savings. I don’t have a full-time job yet but I have two part-time jobs which I expect will pull in about $1,600/month if I’m lucky (it’s hard to say because one depends on tips) and I have college loans at about $300 a month and some other small bills. I will be getting about $3,500 from the insurance company to replace my car, which was a 1998 Nissan.

My dilemma now is this: I definitely know I can’t afford to lease a new car with a semi-unstable job situation, and I don’t want a new one anyway since there’s always going to be this possibility of some idiot running a stop sign again and ruining it. I can either buy an older make used for around what I’m getting from the insurance company, or I can dip into my savings and get something slightly newer, like a 2003.

What would you suggest? Do I shell out the extra money for a slightly better car and make the dive into my savings, or do I just go with what I have and get an older one? I also have the option of financing a newer one, but as I said, am not sure if I could make the payments every month without feeling squeezed (not to mention that’s extra for interest).
- Rhonda

Your last sentence tells the story. You can’t afford an expensive car right now, so get the best car you can afford with the cash you’ve got.

The key thing to remember is that you’re not going to be in this situation permanently (at least not if you’re willing to work hard for something better). This car you’re buying is to get you through to the point where you’re in a better state, at which point you can move to a more reliable car.

Never buy a car that’s beyond your means once you’ve reached a basic level of reliability with what you’re looking at.

Q5: Refinancing conundrum
My husband and I purchased a house in March 2008 for 200,000 (30 year mortgage, 5.875% interest rate). We currently owe $170,000 on it. We would like to refinance right now, but we need your advice whether this is the best thing for us to do financially right now. We shopped around for rates and the best deal we found is going through a mortgage broker in our town. He is quoting us 3.875% based on high credit scores, which we both have (closing costs would run around $1500). We had 3 different realtors run comparables on our house, and using this as an estimate, the broker believes our house will only appraise for $189,000 (max) right now because of the housing situation in our area. WE are currently paying private mortgage insurance (PMI) since we did not have the 20% down payment when we initially purchased the house. If we refinanced right now, using the 189k appraisal as an example, we’d only have 10% equity in our house, meaning we’d still have to pay for PMI again. Is this worth it? Or should we pay extra on our mortgage each month to effectively give us a lower interest rate?
- Lilith

It depends entirely on how much longer you’d be living in the house.

Let’s run the numbers. Your current payment is about $1,189.08 per month. If you refinanced, your payment would be about $799.40. To make back the closing costs, you’d have to make payments for about four months. Of course, you’ve also tacked on about four extra years of payments onto your mortgage, but if you continued making payments at your original $1,189.08 rate, you’d eliminate all of those extra payments in about eighteen months.

In other words, if you’re going to live in the house for more than two years beyond the refinancing, it’s worthwhile. The PMI is a moot point, of course, but you’re likely to get below that PMI level faster if you refinance and continue making payments of the size of the original mortgage payments.

Q6: Fast elimination of student loans
After three years of temping and waitressing, I just got my first full time job out of graduate school. During those first three years my student loans were in deferment (on account of not being employed full time and the employment I did have was sporadic), but now I’m ready to get rid of them as soon as possible.

Here’s the deal: The total is $43,000. The website where I make my payment shows all my individual loans (amounts ranging from $4,000 to $12,000) and I can chose to pay as much as I like over the minimum payment on each one. Each loan is a Stafford loan at a fixed rate of 6.8% and I have not consolidated. I’m of the mind that I should throw as much money as possible to the smaller loans to get those out of the way, because they will be the easiest to pay off and then I’ll focus on the bigger ones. But, by not paying off the larger balances faster I know I’m racking up interest.

Is there a better way to approach things or some ideas I haven’t thought of? I’ve read some nightmare stories about consolidating and interest that piles on and just won’t quit.
- Betty

If they all have the same fixed rate, it doesn’t matter which order you pay them off in in terms of the overall amount you owe.

Paying off the small ones first does make your minimum monthly payment smaller, which can free your money for other purposes if needed. It gives you flexibility. However, that flexibility can also mean that you end up not contributing as much each month to your debts as you might otherwise be doing, stretching out your loans and causing you to actually owe more than before (because you’re not making extra payments).

Your best bet is to simply say “I’m going to pay $X per month towards my student loans,” where X is some amount greater than the total minimum payments. Always make the extra payment toward the one with the lowest balance. Ignore any changes in minimum payments because of loan payoffs until they’re all gone.

You may also want to investigate refinancing options, as that can potentially help with the interest rates.

Q7: House cleaning system
I would like to know about your system for regular house cleaning (cleaning kitchen countertops, stove, sink, microwave; cleaning bathroom sink, tub/shower, toilet; vacuuming or mopping floors; dusting; changing bedsheets and bathroom towels). How often do you do each of these chores? Do you do them all in one block of time or spread them out over the week? How do you divide them up with your wife (and kids)? How do you keep track of what has been done or needs to be done? Do you ever choose to hire a professional cleaner, and if so, when and why?

I realize that these things will vary from family to family, but I would like to know how you do it as a starting point and because I appreciate your value system.
- Carly

We tend to clean by triage, honestly. Cleaning up in the wake of a six year old, a four year old, and a one year old is a real challenge.

We tend to do most of our cleaning in one block once a week, split across Friday evening and Saturday morning. Aside from that, we just use a triage method for handling disasters.

We’ve considered hiring a professional cleaner, but we’ve honestly never been able to justify the cost to ourselves.

Q8: Affordable car payment question
I’m a first year doctoral student who has already spent a decent number of years living the grad school lifestyle. I have a rather large amount of debt hanging over me right now; my credit card debt is at about $4,000 and my student loans are at about $35,000 (although I won’t have to “worry” about that one until I leave school in 2016). The biggest worry currently, however, is paying for a car with my meager monthly stipend.

I make about $1150 per month from my work as a graduate assistant. My rent is $387 and my utilities usually run that up to about $450. I do qualify for EBT/food stamps and utilize the $200 per month I receive from that. My biggest “non-essential” payment, however, is the $240 I pay for my 2011 Kia Soul. (Add about $60 per month for insurance; thankfully, I do not have to pay for my own gas–yet.)

I’ve made some bad decisions with cars. I was gifted a new car in 2004 but sold it in 2008 when I got a job; I desperately wanted the newest and fastest Ford had to offer, and I paid for that ($275/month, to be exact). I traded this in in 2010 for a Honda lease because I wanted the lower monthly payment and wasn’t too worried about the lack of equity. Because I now live rather far from my parents’ home, however, I had to trade the lease in for my current car in May ’11. I refinanced Kia’s 3.99 rate (60 months) through USAA for 3.65. I added gap coverage for $600 then but just had it refunded when I realized how much that truly was.

Essentially, I’m looking at a payment that is over 25% of my monthly income until just after I graduate. I don’t know if there are other options, especially when decent used cars are still pretty expensive today. I have pursued additional work, but the extra income won’t appear until the spring and will still be few and far between–and about an additional $1k per month (teaching college courses). Any suggestions?
- Ernie

It is almost impossible to turn around a new car. As soon as you drive it off the lot, you’re underwater on that loan unless you had a sizeable down payment. At this point, base don what you described, it sounds like you owe substantially more than it’s worth.

If that’s the case, you’re basically stuck with the car unless you literally just go to the dealership, toss them the keys, and then take a devastating hit on your credit report. You’ve already explored refinancing, so that’s not a further option. You’re really not going to find a much lower rate than you’ve got.

Your best bet? Just sit tight, make it through this, and then drive the car for a long time. Don’t replace it because of the siren song of a new car. You’ve got to resist such temptations or they will haunt your entire life.

Q9: Roth IRA for young children
My wife and I are expecting our first children this year (twins) and I was considering starting a Roth IRA for each child now while they are very young. I was thinking I could contribute something like $10 a paycheck.

Is this legal? Does it make sense? Do more parents do this? Any reasons not to?
- Eric

Roth IRA contributions are limited by the income you earn from working. Thus, unless your children are out there earning a wage, they can’t have a Roth IRA.

If you want to save $10 a check for them, your best approach is to open a 529 college savings plan for them. This type of investment has strong tax benefits for education for them as they grow older. Even if they don’t go to college right after school, the odds are very high that they’ll take on some type of postsecondary education, and the account will be there for them if they do so.

Don’t sweat the exact investment too much. It’s far more important that you start saving now and worry about the investment specifics later. One missed payment can do more damage than an imperfect investment selection.

Q10: Save now or later?
I am currently in my second year in college and I have been saving money from my part-time job at McDonald’s ever since I graduate high school in 2010. I am currently trying to save as much money as I can so when I graduate from college I will have good amount of money to pay off that debt and also help my parent to pay for my little brother’s college tuition. So far, with one and half year of effort, I managed to save up to about $6,000. I took the Federal Subsidized-Loan so I know how much money they will lend to me through-out my four years in school, which will be about $20,000 total.

I will have better chance to get a job right after college if I have some internship experience during my college years (especially with my major, Industrial Design). So right now I am trying hard to get ready to find an internship and hopefully I will find one by next summer. However, my problem is that if I do find an internship, I will have to quit my job. And if I quit my job, I won’t be able to save money anymore and I will not able to make close to $20,000 after I graduate. I would say my internship experience will be much important to me rather than keeping my current job so I know once I found it I will quit my job. Therefore, I am thinking I should start doing some investment with my current money to earn some interest right now. I want to ask you what kind of investment should I look into that is best fit for my age (I am currently 20). My parent told me I should put into CD account and let it roll but with our current economy, I don’t think that is the best option. Also I would like start saving for retirement like you said, but I really don’t know how right now. Could you please give me some suggestion or advices on what’s the best action I should take with my current situation?
- Millie

A CD has traditionally been a great choice for investing in this situation, but we live in strange economic times where CD rates are just terrible. You can barely earn more in a CD today than you can in a savings account, so there’s little motivation to lock up your money in a CD.

If you want to start saving for retirement, your best method is to sign up for a Roth IRA account. I have one, through Vanguard (just type it into Google). You can set it up so that a small amount goes into that account from your checking account automatically each month.

The advantage of a Roth IRA is that if a desperate situation sets in, you can withdraw the amount you contributed to the Roth without penalty.

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.

A week or two ago, I was scanning the radio dial while on a road trip, looking for something interesting to listen to, when I stumbled upon a guy talking rather excitedly about investing. It was Adam Bold, and he was hosting a program called The Mutual Fund Show.

While I didn’t necessarily agree with his show on every point, I did agree with him on most things, and I did appreciate the enthusiasm he was bringing to investing. He made it seem incredibly approachable and even fun, while also keeping in mind the fact that it was quite important to your future.

After listening until the station faded out, I decided to see if Adam Bold had a book available to read, and he does. The Bold Truth About Investing is a thin little volume where Bold lays down his ten commandments for building personal wealth.

It is worth keeping in mind as you’re reading that Bold got his start by founding a financial advising firm, The Mutual Fund Store. While encouraging advising is naturally going to be part of his perspective (more so than mind), most of the advice in the book is quite good.

Know Yourself
Some people are aggressive in how they like to invest. Others are conservative. Some people tend to spend what they have. Others can barely stand the thought of their investments not growing. We all have different personalities. The trick is being able to put the elements of our personalities that limit us aside when making investment choices. You have to be able to follow sensible principles when you invest, some of which may override your personality’s default.

Know When to Invest
Bold suggests holding off any investing until you’ve achieved two things: pay off “bad” debt (meaning those with high or variable interest rates) and build a “rainy day”/emergency fund. I completely agree with this perspective. If you’re on a sinking ship right now – which is where you’re at if you have “bad” debt or don’t have an emergency fund – putting money into investments won’t right that ship. Investments help with the future, but they can’t help if things aren’t right today.

Know Your Advisor
This chapter provides some good basic advice for finding a financial advisor. Bold talks about fee-based and commission-based advisors (I’d pretty much insist on a fee-based one if I were ever choosing one) and covers some basic questions to ask advisors. I treaded pretty lightly on this chapter because of the fact that Adam runs his own financial advising shop, so there was at least a little promotion of The Mutual Fund Store here.

Have a Plan
A plan starts with a goal. What do you want to do with your money? Do you want to have a very secure retirement? Do you want to build a house in ten years? Do you want your children to be able to go to college in fifteen years? A goal helps to establish a timeline and also helps to establish how much risk you should take on – without a goal, you’re flying blind. From a goal comes a plan – risk, diversification, updating your investments regularly, and so on.

Be in the Best Funds Possible
By “best funds possible,” Bold does not mean the ones that had huge returns the last few years. He means funds that have a long history of having solid and reliable returns. For me, this usually means index funds, but Bold doesn’t really look at those too much. Instead, he encourages looking at all funds and find ones with a mix of risk level that all have consistency in their returns over the long haul.

Avoid Any Hidden Costs
Here’s where I agree with Bold wholeheartedly. When you buy an investment, know every single fee involved before you buy. What’s the mutual fund’s expense ratio? More importantly, is the fund carrying a load – and if it is, avoid it like the plague. Bold does come out a bit against index funds in this chapter, arguing that although they cost more they tend to have a better return over the long haul. That might be true in some funds, but their year-over-year variability makes them more volatile. I’ll stick with my low cost index funds.

Don’t Buy What You Don’t Understand
If you don’t know what exactly an investment is, don’t invest in it. That’s simple enough. How deep does the knowledge have to go, though? Bold basically encourages people to be wary. If you can’t explain how the investment works in a sentence or two and can’t easily find out what the investment is made of, then you shouldn’t put your money in there. A black box managed by someone else is not something to trust your future to.

Be Proactive About Managing Your Retirement Investments
If you’re not investing for your retirement yet, start now. Start immediately. You need to be on the ball with your retirement, and the earlier you start, the less you’ll have to save (yes, seriously – if you start now, you won’t have to save as much as you would if you started in a few years). If you’re not sure what to do, just use your company’s 401(k) and choose a target retirement fund – you can always change it a bit later on. If you don’t have a 401(k), start a Roth IRA. The key is to start saving now.

Stick to Your Plan
You can’t react emotionally to what the stock market is doing. If you do that, you’re going to make investment mistakes. Markets are going to go up and down. That’s just what they do. When you invest in stocks, part of that investment means enjoying the years when the market is up 15 or 20%, but holding on for dear life during years like 2008 where the market is down 40%. If you jump off when things are flying downwards, all you’re doing is locking in your losses, because when you move to something more conservative, you’re giving up the “bounce” that stocks get when they hit bottom and rebound.

Live Well, For You Cannot Take It With You
When you’ve reached your investing goal, that means it’s time to start spending it. A 401(k) or a Roth IRA is meant to be used when you reach retirement age. It can be scary to see that total start to go down, but if you don’t start spending it, all you’ve done is create a very valuable asset to hand down to your kids.

Is The Bold Truth About Investing Worth Reading?
This is a short book, one that’s clearly written for people who are thinking that they ought to invest but are very nervous and unsure about the prospect. Bold uses very clear and straightforward language when talking about these things. I can easily see this book being exactly what a person might need to get over their nervousness about jumping into investing.

While I don’t agree with Bold on every point – for example, I think most people can manage their investments themselves using online tools and I think that index funds are the best way to go for investing – I agree with him on the vast majority of the principles outlined in this book. This is a great book to read for anyone who is trying to make up their mind about getting started with investing.

Check out additional reviews and notes of The Bold Truth About Investing on Amazon.com.

Like a lot of you, for me the upcoming week is filled with meals shared with family and friends. Over a seven day stretch, we’re eating at least five planned meals with people we don’t get to see too often.

In all that bustle is a reminder of the people we were, the people we are, and the people we might someday become. It’s just a way of reminding us of all of the things we have to be thankful for this year.

This Sunday before Thanksgiving seemed like a good time to share a few of the things I’m thankful for. I hope that as you read this, you recognize some of the things that you’re thankful for in your own life, and you use it as a reminder this week (and always) of the many wonderful things we have in our lives.

I’m thankful for my family. That’s an easy thing to say, of course, but it’s so true.
I’m thankful for my oldest son’s burgeoning wit.
I’m thankful for my daughter’s smile and artistic capabilities.
I’m thankful for my youngest child’s bubbly personality.
I’m thankful for my wife’s constant support and positive attitude.
I’m thankful for my mother’s frankness and surprising wit.
I’m thankful for my father’s ability to put people at ease at the drop of a hat.
I’m thankful for all of these things and so much more.

I’m thankful that I was born in a society where most of my basic needs are met and with enough health that I can enjoy a productive life.

I’m thankful for the wonderful world we have to share, with its amazing beauty and depth. It’s a gift that we all have to share, regardless of what we each choose to believe. I’m thankful for whatever made this world, though the nature of that entity is beyond my understanding.

I’m thankful that I have people in my life who I can sit down with and bounce any crazy idea off of them that I might have, and we’ll just talk it through without judgments. I have friends like this who rest at every end of the political, religious, and social spectrum. Thank you, John, Ron, Melissa, Heidi, Heather, Rachel, Erin, Vicky, Brit, and many others.

I’m thankful for the people who take the time to read The Simple Dollar, and I hope that they get something of value out of it when they do.

It really is a great life. Thank you.

The other day, a friend of mine put up a Facebook update stating that she was incredibly bored. I wrote back and suggested that she come visit me, as I have more than enough things to do.

I’ve come to believe that boredom is the enemy of a vibrant, enjoyable, and values-based life. As the saying goes, the devil finds work for idle hands to do.

Let’s start out by defining exactly what boredom is. According to Merriam-Webster, boredom is “the state of being weary and restless through lack of interest.”

Lack of interest.

If you don’t have anything interesting around you to do, you’re going to be itching to find something interesting. That’s often a very expensive state to be in.

Often, because that wandering is unchanneled (if it wasn’t, you’d not be bored to begin with), you’ll wind up doing something that’s not a good use of your time. That’s also an expensive state to be in because of the lost opportunity.

Boredom has led me to the bookstore more times than I can count, as well as to electronic stores. It’s also led me to idle away whole afternoons on pointless activities that never really led to anything at all.

I’ve made an effort to completely eliminate boredom from my life – and I’ve mostly succeeded.

That doesn’t mean I don’t have leisure time. I certainly do engage in lots of things that are mostly for my own enjoyment. It also doesn’t mean I don’t have unstructured time. I just always have projects to fill that time.

Here’s what I’ve done to specifically combat boredom in my life.

First, if I ever conceive of a project that I might want to work on, I add it to my “project book.” This book is simply loaded with things that I’d love to work on if I have the time, from painting some of the unpainted pieces in a few of the board games I own to writing a novel I have in my head to building an add-on laundry room off of our kitchen to reading a challenging book I’ve never tried… the list goes on and on and on.

Then, if I ever find myself even approaching boredom, I look at that list immediately. There are so many things on it that I want to do that I always find something that gets me excited in that moment, and off to the races I go.

If nothing on that list excites me, then I assume I need sleep and I go take a nap or go to bed after drinking a big glass of water. Rehydration and adequate sleep are my first responses to getting things back on track if I ever feel out of whack.

Boredom is my enemy. When I see it cropping up, I aim to defeat it quickly. If I let it grow, bad things tend to happen.

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. Emerson on the core of things
If you’ve been reading these inspiration columns for a while, you know that I hold the writings of Ralph Waldo Emerson in high esteem. There is so much in what he’s written that’s inspired me to become a better, more self-reliant person. This is just another example:

“What lies behind us and what lies before us are small matters compared to what lies within us.” – Ralph Waldo Emerson

The more you work to improve yourself, the better your life will naturally be. This doesn’t just mean working for work’s sake, but actually striving to become something better.

2. Sign Up Genius’s Pot Luck Manager
A while back, I was planning a potluck dinner. I was trying to organize what everyone would bring and I couldn’t help but think that there had to be a better way to do this online.

Unsurprisingly, there is. This tool simply does it. You designate what you want people to bring (appetizers, desserts, side dishes, etc.), put in a list of names and emails, and the tool does everything else. People just visit the form, state what they’re going to bring, and you can see it all on one page. The tool even sends out reminders as the date approaches.

I love tools that just directly solve a problem like this.

3. Meditation by HaPe Gera
This picture simultaneously made me feel relaxed and also made me want to be in that place.

It reminds me so much of early mornings fishing with my father when I was in high school. Those moments were so peaceful.

4. Dreams by Langston Hughes
Without a dream to hold onto, without a goal to move towards, what is there?

Hold fast to dreams
For if dreams die
Life is a broken-winged bird
That cannot fly.
Hold fast to dreams
For when dreams go
Life is a barren field
Frozen with snow.

Part of the beauty of life is to want something yet unclaimed.

5. Vincent van Gogh on things great and small
Whenever something seems overwhelmingly big, it’s worth keeping in mind that even the greatest things are made up of lots of little pieces.

“Great things are done by a series of small things brought together.” – Vincent Van Gogh

It’s the willingness to keep focused and keep bringing all of those little manageable things together that makes great things.

6. Benjamin Wallace on whether happiness has a price tag
Expensive versions of things are often not even comparable to the everyday versions of things. For example, if you try authentic Kobe beef, it’s so rich that it’s more comparable to something like foie gras than actual beef. Chasing something expensive, that “holy grail” that you think will be so great, often turns out to be nothing like you expected.

There’s a pretty fascinating story about wine embedded in there, too.

7. Nolan Bushnell on doing something
Nolan Bushnell founded Atari and played a huge role in jump-starting the video game industry in the United States.

“The critical ingredient is getting off your butt and doing something. It’s as simple as that. A lot of people have ideas, but there are few who decide to do something about them now. Not tomorrow. Not next week. But today. The true entrepreneur is a doer, not a dreamer.” – Nolan Bushnell

We all have dreams. The person that succeeds is the person that actually does something towards those dreams.

8. Claude Monet’s Morning at Antibes (1888)
At the place where my father and I often fished in the early mornings, one could see a city across the river. When I saw this painting, it reminded me so clearly of those mornings.

The sun is freshly up, that city is stirring, but you’re far enough away to enjoy your own seclusion. Beautiful.

9. Jeff Bezos on reputation
Reputation isn’t about impressing others.

“A brand for a company is like a reputation for a person. You earn reputation by trying to do hard things well.” – Jeff Bezos

All you have to do is take on challenges and do your best at them. Do that often enough, and not only do you build your own skills, you build a pretty powerful reputation for yourself, too.

10. The Talking Heads’ Once in a Lifetime
I listened to this song so many times throughout my life that I can’t possibly even give a guess, but I know that the words have struck me in different ways when I was six, when I was fourteen, when I was twenty-two, and now.

How did I get here?

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.

Our garden is producing a few last-minute things – well, mostly onions at this point. Along with that, we have our ongoing crusade to use up all of the things in our pantry and freezer, including such items as cans of diced tomatoes and premade pizza crust (as I mentioned before, I’d rather make my own crust, but Sarah found an amazing sale on several cans of it and picked them up).

What to do… what to do… how about we mix all of these things together and make something of a ratatouille casserole? Sounds like a plan to me.

What You Need
The nice thing about ratatouille is that you can pretty much use whatever flavorful vegetables you have on hand. In our case, we had a can of tomatoes and an eggplant, as well as some onions and a pepper from the garden. All you need is eight or so cups of your favorite vegetables.

In addition, you’ll need three teaspoons of olive oil, 2 teaspoons of minced garlic, a taspoon of dried basil, a teaspoon of red pepper flakes, a dash of salt, 2 teaspoons of balsamic vinegar, a package of refrigerated pizza dough (or a small batch of homemade dough, which is my own personal preference), and two cups of shredded cheese, preferably mozzarella or a mix with at least some mozzarella in it.

The Night Before (or Early That Day)
Chop up your vegetables! This is always a good thing to do the night before you prepare a homemade meal. Just chop them into small pieces and store them in the refrigerator until you’re ready to use them.

Preparing the Meal
Since this recipe is so quick to put together, the first thing you should do is get your oven preheating to 425 F. After that, put the oil into a large skillet and start adding your vegetables.

Can’t you just smell the onions cooking?

You’ll want to add vegetables in order of firmness, so you’ll add things like onions and pepper first, let them cook for five or so minutes over medium high heat while stirring, then add some softer vegetables like eggplant and garlic, cook for five more minutes while stirring, then add the very soft vegetables like tomatoes and cook for five more minutes. Add your spices with the softest vegetables, so toss in the basil, red pepper flakes, and salt at this point.

Right as you pull the mixture out of the pan, add half of the cheese and mix it thoroughly into the vegetable mix. Then, put the mixture into a 9″ by 13″ casserole.

Sprinkle the remaining cheese on top of the mix, then put the pizza crust on top of the casserole. Cut a few slices in the dough so that the steam has a place to escape, then put it in the oven for 15 minutes.

You end up with a beautiful and tasty casserole. We served it with some fresh applesauce and a few remaining green beans from our garden.

Optional Ingredients
As I mentioned above, you can use pretty much any vegetable in this. Corn, spinach, potatoes, broccoli, cauliflower, Brussels sprouts – you name it and it’ll probably work in this. You can also vary the cheese, using other types in a mix with the mozzarella or on their own. No matter what you do, this pot pie will turn out well.