Charity – in fact, giving of any kind – is often hard to explain in a general sense. Many people fail to see the purpose of giving. “What does it gain for me?” they’ll ask, and it’s difficult to point to how charity brings you a discrete, specific, calculable return.

Instead, giving is a reflection of what truly matters to you in the world. It’s your opportunity to actually make a tangible difference in an area that matters to you. Seeing that your effort has created change in someone’s life – or created slight change in a lot of lives – is incredibly powerful.

This comes back to your central values. What’s important to you with regards to the outside world? Perhaps you’re impassioned about the environment and wish to take action to reduce carbon emissions. Perhaps you want to protect animal habitats. Perhaps you’re fueled by a desire to help people in famine situations – or in natural disasters. Perhaps you’re committed to childhood education. Or maybe you just want to help out disadvantaged people in your own community. There are countless other causes that different people find valuable – yours may or may not be on this list.

Sometimes it can feel overwhelming – there are so many things out there that deserve a gift that it’s easier to fall into “analysis paralysis.” You can’t decide, so you choose to do nothing at all.

Just because a reason to give is worthwhile doesn’t mean that it’s the one you have to give to. Spend some time figuring out what matters the most to you. Is it the environment? Is it education? Is it famine and world food distribution? Is it poverty in your community? It could be any of these – or something else.

Once you’ve figured out what matters most to you, look only at ways to give in that area. For example, if I’m concerned about poverty in my community, I might dig into Habitat for Humanity and the local food pantry. If I’m concerned about education, I can get involved with the local school district.

People often argue that the small amount that they can contribute won’t make a difference. If you’re in that situation, look for ways where you can see that your small gift can make a change.

Give $10 worth of food to the local food pantry, then volunteer there. See for yourself that the food you purchased is going to a family that really needs it. Your gift directly put food on the table for those children.

Take $30 and use it to plant a tree in a park somewhere (obviously, after getting permission). Water it yourself and watch it grow. That tree will help clean the air and will provide shade and natural beauty for the people in the park, and you can see with your own eyes how it benefits others.

Keep a $20 bill in your pocket and wait until you see someone who’s really in a pinch, then just put that $20 in their hand. Watch what happens next – their emotional reaction, the story they tell you. You made a difference.

Give your time, too. Spend an afternoon building a Habitat for Humanity house in your community. Spend two hours volunteering at the food pantry in your community. Spend a Thanksgiving afternoon at a homeless shelter.

Giving has a profound secret: when you give to something that truly matters to you, you feel incredibly good. That good feeling radiates throughout your life. People pick up on your good feelings and they respond better to you.

Your gift also contributes to the happiness of others. Children and families enjoy that tree you planted. A family makes a dinner out of your donation to that food pantry. A family is able to finally have a home of their own thanks to your labor on the Habitat for Humanity project. A family is able to sustainably eat because you gave them chickens via Heifer International.

Someone’s life becomes better. Their outlook moves just a bit higher. They make a few better choices in their life: the family decides that a family afternoon in the park is pretty nice because of the cool shade and decide to do it again. This family bonds a bit more and, later on, their child will make a difficult, positive choice because of that closer bond.

Life is full of these little chaotic effects. Our actions cause many, many things to happen, many of which we don’t see. Giving of ourselves freely in a positive way sends out ripples of good events, and over time, those ripples come back to you and to everyone you care about. You might not see the direct effect, but those indirect effects echo throughout your life.

Give what you can, without regrets. The positive benefits echo throughout your life, the lives of everyone you care about, and lives you’ve never crossed. Walk away knowing that the work of your life has gone to truly make the world a better place.

Throughout my life, I’ve found that there are two kinds of people. One group seems to be constantly bored, idling away their days and waiting for life to come to them. The other group does the opposite – they’re constantly busy, feel like there aren’t enough hours in the day, and are out there chasing life.

I’m in that opposite group. I feel annoyed with myself when I see myself wasting time. I don’t avoid relaxing and enjoying life by any means, but if I’m mentally and physically rested, I’d rather be doing something than just twiddling my thumbs. I’d rather be writing or researching something or reading for enrichment or doing something engaging with my wife or doing household chores or doing something engaging with my children.

And when those avenues are full, I look for other ways to improve myself.

Why? Why not just kick back when things are finished up?

It’s simple. The time I spend improving myself now always pays bigger dividends later. Self-improvement is an investment of time and energy instead of an investment of money, but both pay excellent returns. It can improve your health, your emotions, your career, and your financial state.

Here are five big areas (and there are many more) anyone can work on in their spare time – and notes on exactly how to make it happen.

Improve your health. Just walking thirty minutes a day for twelve years adds, on average, 1.3 healthy years to your life. That’s 49 days of walking in exchange for 1.3 years of additional life – a brilliant trade. Doing more vigorous exercise can add even more – 3.7 years of life on average.

If you want to break it down, on average, a thirty minute walk will add almost five hours to your life. Go on a thirty minute walk each night after work and a single week’s worth, on average, will add a day to your life. That’s a profound argument for improving your health, even by taking simple steps.

This doesn’t mean that you have to abandon more leisurely pursuits. One of my closest friends does sit-ups while watching television. Another friend has a treadmill that he walks on while reading magazines. They’re not abandoning the things they like to do to mentally unwind, but they realize that mental unwinding doesn’t mean you have to physically unwind, either. I like to jog while listening to podcasts or audiobooks. While out there running, my mind is engaged – but that doesn’t mean that I can’t improve my body as well.

Improve your knowledge. Ideas are incredibly valuable and grow more valuable every day as society moves in a direction where creativity is rewarded. Knowledge is the base upon which creativity is built. Exposure to new ideas and new angles in a mix with the unique set of ideas and life experiences you already have make it more and more likely that you’ll be able to produce unique ideas – and those unique ideas can be incredibly valuable.

One powerful way to do this is to read (which, I suppose, is what you’re doing if you’re here). Take on a book that challenges you and pushes the way you think. I like to read books that advocate positions I don’t agree with – books that advocate neoconservative thought and books that discuss atheism, for example. These books force me to understand other perspectives and, at the same time, re-evaluate and strengthen and perhaps change my own.

Another effective way to get there is through conversation with a person willing to engage ideas. Share your thoughts, listen to what they share, and debate their relative merits. Accept that criticism of an idea that you presented is not criticism of you, but of the idea itself.

Improve your transferable skills. I’ve written about transferable skills before, but the core of the matter is still true: transferable skills – the types of skills that fit well in almost any career path – are always worthwhile to build. Communication skills. Time management skills. Creativity. Leadership.

How can you do these things? Well, you might try implementing a new time management system in your life. Invest some time in figuring out GTD. Or you might volunteer to take a leadership position in a community group. Play a brainstorming game with friends, like Apples to Apples, or a strategic game like Ticket to Ride (they help you with communication skills, creativity, and logical thought).

Look at the things you choose to do in your “down time” and ask yourself if they’re also helping you build transferable skills in a subtle way. Then, choose activities that you really enjoy that do build these skills. You’ll grow a lot more playing Apples to Apples with creative people than you will watching a sitcom by yourself.

Improve your personal nature. Knowing who you are – your strengths, your weaknesses, your joys, your sadnesses – makes it a lot easier to navigate the minefield of life. It’s well worth your time to figure out who you are and what you truly value.

Spend some time being introspective. Ask yourself how you honestly feel about the elements in your life. Are these things bringing you joy or sadness? Why? What elements, you ask? Look at everything: your health, your relationships, your activities, your possessions, and so on.

This type of introspection can be very difficult. Often, we want to feel certain ways about certain things and, on some level, we convince ourselves that we do. Digging through that, figuring out our true feelings, and acting on them results in nothing but life improvement.

Improve your relationships. Most relationships need some amount of care and feeding, but in the busy nature of modern life, it’s easy to overlook the care and feeding that some of our most important relationships require.

Take some time and just talk to your spouse about how life is going. Give your mother a long phone call. Get in touch with your siblings. Look up some of your close friends that you’ve drifted away from over time. Listen to what they’re saying – don’t just look at it as an excuse to list what you’re up to.

Those relationships are invaluable, and any time spent maintaining them will pay off in surprising ways over time.

Here’s the real message: the difference between the successful and the non-successful appears in how they “waste” their time. People who succeed spend almost all of their time doing something that in some way improves themselves, their relationships, or their career situation. That’s not accomplished by idling.

Many people argue that the fundamental unit of value in the modern world is the dollar. I disagree – I think the fundamental unit of value in the modern world is the relationship, and income derives from those relationships.

Think about it for a moment. What happens if your relationship with your boss and your coworkers sours? You lose your job – your income goes down. What happens if you build stronger relationships with your boss and your coworkers? Your income goes up – you get raises and promotions and bigger projects.

You can easily carry this over into your personal life, too. Let’s say you’re about to move. If you have a lot of real friends, a few phone calls will get you all the help you need. If you don’t have these relationships, you’ll be shelling out cash for a moving service (a big cost) or doing it yourself (a huge time sink).

This phenomenon pops up in pretty much every aspect of our lives. Food? If you have lots of relationships, you get a lot of dinner invites. Household supplies? If you have a lot of friends, at least one will have a warehouse club membership and will likely split some bulk purchases with you. A leaky roof? If you have a good friend that’s a carpenter and several other friends willing to hammer nails, you can likely get that roof fixed on the cheap. Entertainment? Swap piles of DVDs with your friends.

The list goes on and on.

From this, it’s easy to see that building up a lot of real relationships with people is valuable. What do I mean by a real relationship? I’m referring to one where something of positive value is exchanged on a regular basis – useful advice, a helping hand, loaning of items, an ear to truly listen, and so on. Any relationship worth its salt has a healthy dose of positive exchanges of value with a minimum of negative exchanges (insults, backstabbing, gossip, incorrect advice, being an obstacle).

I confess that for a long time, I didn’t know how to do this well at all. It wasn’t that I thought other people should give me value in exchange for nothing – I just simply didn’t understand the value of such exchanges. I was naturally quiet and it felt to me as though the effort expended in making myself reach out was much more than any value there was in what I might have to offer. In other words, introversion and a lack of self-confidence left me in a state where I didn’t build many relationships.

So how do you build a lot of value-based relationships? Most of the ideas I found on this topic came from Dale Carnegie’s How to Win Friends and Influence People (see my notes on it) and Keith Ferrazzi and Tahl Raz’s Never Eat Alone (see my notes on it). The former helped me with the mechanics of actually communicating with people and helped me to build the courage to talk. The latter helped me figure out how to use those mechanics to build lots of value-based relationships.

Here are seven things to do.

1. Open up a little. If you’re an introvert and prefer to be quiet, the best thing you can do for your life is to work on overcoming that nature. Talk to people. If you find this hard, bone up on techniques for basic conversation. Work on tactics that make you appear more confident, even if you aren’t.

2. Surround yourself with people. Go to where people are and open up. Attend conferences and conventions and meetings. If you hear someone talk who seems interesting, follow up directly with that person. Volunteer to present – it’ll give lots of others a chance to hear you.

3. Host parties. Start having dinner parties and backyard barbecues on a regular basis. Don’t just invite the same old people, either – rotate the people you invite. Try to mix it up, too – don’t just invite the same circles. Mix the circles. This gives you the powerful opportunity to introduce people who may not know each other but may actually have a lot in common. If you don’t know where to start, start with your neighbors and your current friends.

4. Keep in touch. Make a regular habit of keeping in direct contact with people. My technique is simple: I keep a big list of people I want to maintain relationships with and I strive to contact people on that list on a regular basis. I let them know what I’m up to directly and ask what they’re doing.

5. Give of yourself freely. If someone needs help, help. Don’t worry about “payback.” Don’t worry about what you might get out of it. Just help them. If you contact someone and find out they’re stuck on a project, need a job, or need a helping hand in some other way, either provide that help yourself (if you can) or find someone who can provide that help and make the connection.

6. Ask for advice – and share what you get. One thing I’ve found very useful is to treat my circle of friends like something of a help group. When I’m stuck on a big purchase or something like that, I ask a large group of friends for help and suggestions. I then compile all of that, figure out what’s best for me, then take the best of the information and send it back to all of my friends, letting them know what I found out. This is almost universally valuable – people love participating to help a friend, they love getting that info back, and when I mention them, they sometimes make new connections themselves.

7. Show appreciation for help that you get. At some point, you’ll need some direct help from the people you’ve built relationships with (you’d be surprised how often they provide indirect help). When you do ask for that help, be thankful. Thank them for showing up, thank them for whatever help they provide, and do what you can to make their contribution easier – plenty of beverages, food, or anything else you can provide.

Doing these things over and over again will cause you to build a lot of stable, value-based relationships over time. Time and time again, those relationships will come through for you when you need them in your career and in your personal life.

I’ve watched it over and over again: the people that succeed in a particular career path are the people who are able to tap into their natural passions and aim that fire hose into their professional life. They know what they love and they find ways to translate that into a way to make a living. Sometimes they make a nice income – and that’s awesome. At other times, they earn just enough to get by – and that’s awesome, too.

What matters is that, in both cases, it’s a joy to get out of bed in the morning and get started on your day. Your work itself fills you with joy and excitement. When you reach that point, the line between work and play disappears – you’re happy doing whatever your day throws at you. That has a value that can’t be measured in dollars and cents. It transforms your life.

I hear from many people who claim this is impossible. It’s not. Every single day, I get out of bed, excited to write. If anything, I write more each day than I did when my passion for writing was still new. I know others who feel the same way about what they do. It makes them want to get out of bed in the morning and get started. When you feel that passion surging through you, it makes a lot of the little difficulties of life not matter too much.

If this seems completely alien to you, you simply haven’t discovered your passion yet. I discussed this a while ago, but here are seven ways to figure out your passions:

1. Maximize your health. Eat well. Get some exercise. Get away from any and all situations that are emotionally holding you back. Get plenty of sleep. Without these pieces in place, it will be hard for you to open up to new opportunities and directions.

2. Ask lots of questions. If you come across something of interest to you, ask. Follow up with more questions until you’re satisfied – at least for the moment. Research interesting topics online. Do things like a “Wikipedia stumble” – start at a general topic you’re thinking about, then click on whatever article in Wikipedia that’s most interesting to you – and keep reading and following links.

3. Ignore what’s “cool.” Remember the idea that you should stop trying to impress other people? It comes through big time here. If you enjoy it, it doesn’t matter what others think. Don’t be afraid to dive into something that seems exciting to you over a fear that others might find it “dorky.” Their label says more about them than it does about the activity.

4. Dabble in everything. If something seems interesting, try it. You might not find it enjoyable or you might find it fascinating. It’s often hard to tell the difference until you dive in. For example, having a garden might seem interesting, but until you try it, it’s hard to tell whether it’s just conceptually interesting to you (but not necessarily in practice) or something that you truly enjoy.

5. When something piques your interest, dig in. You try it. You like it. So try it again. And again. There are many things that seem quite fun on the first shot, but grow boring quickly as you hit “the dip” (where the newness wears off but you’re not very good at it). If you’re passionate about something, you won’t mind that dip.

6. Associate with others that share this growing passion of yours. Look for events in your area where people might be involved with this interest. Look for groups online where people are talking about this activity. Join in, share your thoughts, and ask questions. Nothing’s better for fostering a growing interest than a group of like-minded people.

7. If it dries up, don’t push it. True passions are sustaining – you’ll keep coming back to them because you want to. If you no longer want to engage in it, don’t make yourself. Just back away and find another path. You may find yourself returning in the future, or you may find yourself on a completely different path.

You’ll know your passion when you find it. It’ll ring inside of you like a hammer hitting a church bell. It’ll consume your thoughts and your activities, even if you’re not very good at it yet. You’ll get up each morning excited to do more. This is how I feel about writing, for one.

What do you do if you discover your passion, but there doesn’t seem to be any way to translate that into income? After all, you have to pay the bills, and even though you’ve found something you love so much you’d be happy to do it every day, it doesn’t put food on the table.

There are countless avenues for channeling that passion into income. However, almost all of these paths require you to start doing it on a part-time basis. Give up the frivolous things you were spending your evenings on and devote some of that time to a new path. Here are ten suggestions for transforming that passion into cash.

Blog Start a blog on the topic you’re passionate about. Share something new every day on there. Put a few ads on the site to earn a bit of revenue.

Teach / tutor If you have patience, hang out your shingle and volunteer to teach your passion to others. This is a great avenue for a passionate musician.

Provide services Maybe you’ve found that you’re passionate about a particular task that others find to be drudgery – scooping snow or repairing computers. Sell these services directly to others.

Create videos If you want to teach how to do the things you love, consider making videos and sharing them online. Put them on YouTube and make a simple blog to share the videos. If you start gathering followers, sign up for their rewards program and you can translate this into solid income.

Sell at farmers markets If you make things, from soap to bread to wicker baskets, you can likely do well selling the items at farmers markets. It’s a great way to make some sales and meet people interested in what you’re doing.

Write freelance articles / books If you simply enjoy writing, practice and attempt to sell some of your best work as a freelancer. Expect plenty of rejections, but also expect feedback and suggestions, especially as you improve.

Develop projects through work Take what you’re passionate about and see how it can connect to your workplace. If you’re into catering, volunteer to spend some work time getting catering set up for a work event. If you’re into art, look for ways to incorporate your art into work projects.

Take classes Work towards a degree in the area of your passion. It’s a great way to get yourself into the marketplace and to connect with lots of like-minded folks.

Volunteer / apprentice Don’t be afraid to spend your spare time volunteering to share your passion with others. Time and time again, people who share their talents freely and build their skills find themselves in other opportunities to earn an income from it.

Sell by consignment If you have a product to sell, talk to local sellers and see if they sell by consignment. They provide the space and the sales work for a cut of the revenue, while you get to focus on what you love.

Finding your passion is a life-changing event. It pushes you in new directions that fulfill you in ways you’d never expect. If you’ve never found your passion, you’re missing out on life by not seeking it out.

Whenever some people see statements like the one above, they roll their eyes. “Your life must be borrring if you have to plan ahead every time you spend” is a typical refrain.

The big problem with that thinking is that it makes an incredibly false substitution. Planning ahead does not mean the elimination of spontaneity in life; in fact, once you get into the routine, it can often feel more spontaneous because unplanned chaotic spontaneity is no longer the norm.

And it’s that unplanned chaotic spontaneity that gets people in deep spending trouble.

It’s easy to apply the principle of planning ahead every time you spend for the big purchases. For most of us, saving and planning for houses and cars and vacations is completely normal and reasonable behavior. We don’t want to go on a vacation that costs thousands of dollars without some planning, after all, and we certainly see the logic in planning for such purchases.

Where this begins to break down for many people is when the purchases get smaller. A cell phone plan might get some research from some, or it might be completely impulsive, even though fifteen minutes of online research can save you hundreds a year. Christmas gifts are often bought in minimal time, even though you can often find better gifts for the same price or better deals on the gifts you bought with just a bit of footwork and planning. These things add up – the ten minutes spent planning for such a purchase might net you $50 in savings, which is well worth it for many people.

For purchases more than $100 or so (over their lifetime), just spend five minutes making sure you’re getting a good deal and that you can adequately and easily afford the item. If you’re convinced, use the thirty day rule. Put that purchase on hold for thirty days. If you still want it after thirty days and you can afford it, go for it.

Where the idea of planning ahead really breaks down, though, is with the small impulse buys. Dinner at a local restaurant. A movie. A new DVD at the store. A new shirt. A new pair of pants. A ticket to a baseball game.

Quite often, these items are bought quickly with almost no forethought. Sure, it can be fun to do something spontaneously, but that spontaneity can drown you.

Let’s say you go shopping with a friend. On a whim, you buy a new dress, then the two of you go out to dinner together and head out to a movie. For many people, this is a nice, fun evening.

The worrisome side of it comes later. You go home, look through your credit card statements, and realize that the $50 you spent tonight – previously unaccounted for – has now completely tapped you out. You haven’t got enough money to cover the electric bill. So you pay it late – and there’s a late fee on next month’s bill. But by then you’ve moved on to another completely unplanned expense.

Wariety and spontaneity are two of the spices of life, but it’s foolish to let those spices cost you more than they should.

Instead, plan ahead a little for those spontaneous moments. Each month, put $100 in cash in your wallet and let that be your “spontaneous” money for the month. You can do whatever you want with it and it’s fine because you planned for that amount. An impromptu moment doesn’t mean that you’re going to be late on a bill at all.

When that $100 is gone, it’s gone. But it’s no big deal – just wait until the calendar turns and you can refuel.

Obviously, you can adjust that amount to whatever you’d like – more in some situations, less in others. The reason for doing it is simple: it allows you to be spontaneous without being destructively chaotic with your finances.

Some people might wisely see this as the rudiments of a budget – and they’re right. This is simple budgeting at its finest. By putting that cash in your wallet, you’re assigning an amount to your spontaneous spending. The amount that remains in your checking account is handled differently – you pay your bills and your savings with it.

One big danger when people follow this idea: they put their $100 in their wallet and then find it’s gone by the ninth of the month. Then they spend twenty one days miserable, thinking that this plan is stupid or talking themselves into getting more out of their checking account.

Don’t. Live out the month. Then, sit down at the end of the month and take a serious look at the month as a whole. Did you give up anything vital during those twenty one days? Did you do anything during those nine days that didn’t really add any value to your life?

You might find that by taking a real look at your spontaneous spending that you’re doing things that you don’t really find valuable. The next month, that money might hold out until the twenty seventh of the month, simply because you’re a bit more selective in what you do with your mad money – and there’s no adverse effect on your happiness at all.

After a few months, you might find an adjustment is in order – either up or down. Such an adjustment is fine as long as you’re paying all your bills and either actively reducing your debt or increasing your personal savings.

The real key is this: every action you take is worthy of a bit of thought, either beforehand, in the moment, or afterwards. A bit of reflection often tells you whether that choice was right or wrong for you – whether it actually adds value to your life.

Then, taking the conscious steps to reduce those things that don’t add much value becomes easy – you just eliminate the negative and by default the positive in your life is accentuated.

Yes, for some people, a simple budget can be incredibly useful. But for many others, just a bit of planning ahead can make the big difference that they need.

A couple times this spring, I watched a TruGreen van park at the house next to mine. The person inside got out, loaded up a push cart with lawn fertilizer, and pushed it around the lawn. He then loaded up the cart and drove away. It took maybe twenty minutes each time.

I do basically the same thing, except on my own. I’ll get some quality seed and feed from the local gardening store, load up my little cart, and push it around the yard during the spring. Again, it takes me about twenty minutes and costs me maybe $15 in supplies.

I was intrigued that my neighbor used this service, so I asked him how much it costs. He quoted a price of about $80 for a “spring treatment” – which was apparently the two sessions I observed.

I kept it in mind and watched our lawns throughout the spring. For a while, there was a difference, but it was mostly due to shade differences in the spring and different times of application. Now, in mid summer, I can’t tell the difference between the two yards.

By spending twenty minutes doing it myself, I saved $60. That sounds like a deal to me.

One big caveat, right off the bat: I’m not claiming that you should do everything yourself. There are certainly situations where paying others to do things for you is beneficial, and those opportunities become more prevalent as your income rises.

However, the more things you do for yourself, the less money you spend on overpriced services.

This spreads across more avenues of life than you might initially think. “I don’t pay for a lawn service,” you might think, “and I’ll never hire a maid or a cook.” It goes far beyond that.

When you go out to eat, you pay for someone to serve you. Much of your cost of the meal isn’t in the food – it’s in the cost of the cook to prepare it and the waiter to bring it to your table. Instead, cook the same meal at home. Almost always, it will be significantly less expensive – and often healthier. Even more surprising, it often won’t take you as long as your trip to the restaurant took.

When you buy produce at the grocery store, you pay for people to serve you. Most of your cost comes from people picking the vegetables and people transporting them to you. Instead, why not have a small vegetable garden in the back? It can be a bit of a time sink (but less than you might think if you don’t garden), but the costs can be extremely low, particularly for the quantity of vegetables you can get from a good garden.

When you shell out for snow removal, you’re backing away from a great opportunity for winter exercise – and losing some cash along the way as well.

When you go get an oil change, you’re paying for someone to unscrew a couple caps and dump liquid out of a jug. Why not buy your own oil, get a pan, and do it yourself? It doesn’t take long and you won’t be given a sales pitch along the way.

When you call up the plumber or the electrician, you’re likely paying someone to handle something that could be figured out from a YouTube video. If nothing else, it’s worth a few minutes to check YouTube for a how-to video to see if your problem can be easily fixed.

In each case, the same theme is clear: you pay a high price for someone else to do something for you.

One common counterargument to this is the idea that a person’s time is more valuable than that. “My time is worth more than the cost of just paying someone else to do it.”

Here’s the catch, though – what are you replacing that time with? Are you doing something really productive with it? Or are you recouping that time with an extra episode of a sitcom?

Often, the argument that one’s time is more valuable is a front for laziness. It’s simply easier to throw cash at a problem. While that may be true on one level, step back for a minute and look at it from a distance. Do the people who succeed in life succeed by taking the lazy route? Rarely.

That’s not to say that there isn’t value in relaxation time. Unquestionably, there is. However, there is an enormous gulf between relaxation and laziness. Relaxation refreshes you and makes you ready to succeed in other aspects of life. Laziness passes time and merely reinforces laziness. Sitting down to relax and enjoy a television program that really fulfills you is relaxation. Flipping on the cable box to see what’s on? Not so much.

If you’re truly replacing a drudgery task with something that fulfills you deeply or earns a much better income than the cost of the service, then by all means, consider it. Just keep the bigger picture in mind and make sure you’re not paying a lot of money so that you can idle away the time.

It goes further. Doing things for yourself has a big psychological benefit. It shows you that you actually can do these things for yourself and improves your self-worth. It increases your skill set. It often gets you moving and applying your mind and your body together in a task. These are all enormous benefits that aren’t derived from simply throwing cash at a problem.

In the end, the personal and financial benefits of doing things yourself add up to an enormous benefit for the time you invest in it. The next time you have something that you could do yourself that you’re about to pay someone else to take care of, step back and ask yourself if this is really the best move for you.

Whenever I’m in a financially destitute area, I start seeing many of the same things.

I see homes that are creaky, often with paint falling off. I see front yards and back yards full of items left out in the rain to fall apart. I see cars in poor shape, a mixture of rust and lots of hard miles on them. I see overgrown and patchy lawns. I see air conditioning units that sound like they’re about ready to explode, covered in dust and cobwebs.

In short, I see a lot of items that people own that simply have no care given to them at all. Unsurprisingly, these items will have to be replaced sooner than they would with even a little bit of TLC – or else they’re items that were bought completely frivolously, were barely used, and will never be replaced.

A poorly-maintained air conditioner? It sucks down more energy than one that’s well maintained – adding to your energy bill – and it fails quicker – adding to your repair and replacement bills.

A house with paint falling off? It needs repainted and treated or else you open yourself up to additional weathering from the environment, reducing the lifespan and resale value of the house itself.

Items left out in the yard? The sun bleaches them, the rain wears away at them, and they live a very short life. You’ll be buying a new basketball before you know it.

I’m not picking on people who make these lifestyle choices. Instead, I’m drawing a connection between their financial state and the way they treat their stuff. With every item that sits out there and dilapidates, some of their financial resources are simply blowing away. Taken together, those resources provide the opportunity to have the things you dream of.

Take the air conditioner, as just an obvious example. An average air conditioner has a lifespan of fifteen years. If you maintain it well, you can likely stretch that a few more years – let’s say eighteen years. If you do nothing with it, the lifespan will be shorter – say, twelve years.

An average central air unit uses 161 kilowatt hours during an average summer month. A well maintained conditioner, with clear vents, might shave 5% off of that, while an unmaintained unit might add 5% more to that.

Replacing such a unit will cost about $4,000.

So, what’s the total cost over a thirty year period? If you maintain your unit well, you will have replaced it once and be two-thirds of the way towards replacing a second unit – a total unit cost of $6,667. Over thirty summers, you will have used 13,765 kilowatt-hours of energy – at a price of ten cents per kilowatt hour, that’s $1,376.50. Your total cost? $8,043.50.

What about a poorly-maintained unit? You will have replaced your unit twice and be halfway towards a third replacement – a unit cost of $10,000. Over thirty summers, you will have used 15,215 kilowatt-hours of energy – at a price of ten cents per kilowatt hour, that’s $1,512.50. Your total cost $11,512.50.

Spending a few minutes each spring and a few minutes each fall making sure the air conditioning unit is clean and in proper working order saves a family $3,469 over a period of thirty years.

Start carrying that across other expenditures. Your house – the wood, roof, and foundation. Your equipment. Your clothing and shoes. Your vehicles. All of these things have significant savings that come around when you put even a small amount of care into maintenance. Over a decade, you can easily save tens of thousands of dollars by properly maintaining your belongings.

All earned by spending a minute or two here or there taking care of your stuff.

It’s pretty easy to do, actually. You can get started by using a home and auto maintenance checklist and running through it on a regular basis. Most of the home maintenance tasks you do are pretty simple ones – they’re just somewhat numerous and are easy to forget at times.

What you’ll find when you do this is that things run just a bit better. Your air conditioner doesn’t kick on quite as often. Your dryer runs efficiently. Your appliances rarely seem to have problems. Your refrigerator doesn’t run constantly.

All of those little things add up to a bit of energy savings now – and a lot of savings later, when you’re not replacing these expensive items.

You can carry this through to more items in your home as well. Take your shoes, for example. Making sure they’re clean, treating expensive shoes well, and storing them in places where they won’t continually take bumps is a good step towards extending their life. Or your lawnmower – taking the time to occasionally sharpen the blades and check the oil reduces the wear and tear on the engine greatly, saving you money on gas and also on replacing your mower. Or your roof – keep those gutters clean and your roof will take less wear and tear.

It doesn’t take much time to do these things, either. Compare the two minutes here or there spent doing maintenance to the time you’d have to invest buying a new unit early – research, shopping around, and so on – and the time begins to balance out, too.

You can easily expand this philosophy beyond the material. Take care of your relationships. Take care of your work contacts. Take care of your career. Take care of your body.

There are other positive effects, as well. Take the environment, for example. The fewer items you replace, the fewer things that wind up in landfills. The less energy you use, the fewer fossil fuels you burn.

There’s also the positive psychological benefits of taking care of your things. In many ways, it’s akin to taking care of yourself psychologically. You’re doing positive things with your time which fills you with positive feelings all around. You’re improving your things that you value, which by extension improves you.

Adding together all of these benefits, I find it to be essential to take the time to maintain the things you have.

One of the first things I did when I started turning my financial situation around is to start keeping track of my net worth over time. Each week (and later each month), I calculated the value of all of my assets, all of my debts, and the difference between the two (my net worth).

Later, when I began to try to improve my physical shape, I started keeping careful track of several metrics: my weight, my resting heartbeat, and the number of miles I was walking and jogging. Even more powerful, I started sharing my walking and running data via the Nike+ website, allowing me to compare my progress with others.

I like to call it the “keeping score” effect. Almost always, it becomes more fun to work towards a difficult goal if you have some sort of method of comparing your progress to the progress of others, or comparing your current state with your state in the past. You can see the improvement clearly – when you look and see that your net worth is up $10,000 compared to last year or you see your average mile is more than a minute faster than it was a couple months ago, it feels enormous. It’s a giant rush.

The entire point here is to keep yourself motivated towards your goals. Keeping score keeps your big goals front and center in your mind. Combining that with a visual reminder of your goal can be particularly powerful, as it keeps your goal front and center in your mind and also demonstrate your progress clearly.

There are countless tools out there to help you keep track of your personal finance progress. I tend to lean towards tools like Wesabe or Open Office or Quicken, which allow you to preserve the security of your account information but require a bit more work. On the other hand, you have tools like Mint, which gathers the information for you but requires you to share all of your account information with one site (which really concerns me from a personal security standpoint, regardless of what Mint’s privacy policy says).

I find it worthwhile to carefully track my progress in four areas:

Track your assets. For me, I only include the assessed value of my home plus the balances of any investment accounts and savings accounts I have. In a normal month, I expect this amount to move up slowly over the previous month, meaning I’m actually saving money. Some months see a precipitous drop, though – for example, if I buy a car, that’s usually a pretty big money hit, since I don’t include my car as part of my assets since they depreciate so much.

Track your debts. This is key if you’re trying to plow your way through a a debt repayment plan. Each month, you record the balance of each debt, then add them up. If you’re actually pushing well on that debt repayment plan, the total balance of your debts should significantly drop each month. If you don’t see your debt dropping, you need to take a serious look at what’s going on.

Track your net worth. This one’s simple – just add up your assets and subtract all of your debts from the total. Obviously, each month, you want your net worth to be higher than the previous month. I like to make a note of the difference from month to month and I strive to increase this difference each month.

Track your spending. Whenever you spend, jot it down. Keep track of all of it and, at the end of the month, add it up. Even more important, divide that spending into categories – utilities, necessary food, eating out, entertainment, books – and total up each category. This technique is powerful because it shows you the areas where your spending is out of control and you need to tighten up.

As I mentioned earlier, when you keep track of your progress in this way, it becomes a huge aid for setting goals. Here are three ways I have used the above data to set short term goals for myself, pushing me to new heights:

I want my net worth growth to be better this month than last. Let’s say my net worth goes up $1,000 from June to July. I then want my net worth growth from July to August to be $1,001 or more. Obviously, I can’t control the growth of the stock market, but I can control my spending impulses.

I want to cut my spending in this specific category by 50% next month. If I notice that I spent more than I thought in a certain area last month – like books, for example, or on eating out – I set a goal for the next month to reduce my spending in that category by a decisive amount without jacking up my spending elsewhere.

I want my debt to drop more this month than last month. Doing this works hand in hand with my net worth goal, but in a slightly more specific way. I’ll push hard to find a few extra dollars that month to roll into a debt payment.

I’ve also found that the social aspect of such tracking and goal setting is powerful. If you like to do this online, Wesabe is an incredibly interesting and powerful tool for sharing your information and comparing it to the progress of others. You can offer encouragement to others, let them encourage you, and push towards goals together.

I’m highly partial to doing this offline, though. Find a personal finance buddy and meet together regularly to encourage each other, share your progress and your challenges, and offer useful tips to each other. For me, the reality of meeting someone face to face makes such progress tracking more real – and it also adds a stronger edge of competitiveness to the mix.

In the end, keeping track of your personal finance progress is key. It shows you quite clearly where you’ve been, how far you’ve come, and where you need to go. It helps you see the areas where you’re successful – and points out the areas where you need more work. It constantly pushes you forward to bigger and better things.

In the end, watching your steps helps you follow that trail straight to your dreams, whether it’s a financial dream or a dream in any aspect of your life.

The book Your Money or Your Life by Joe Dominguez and Vicki Robin (read my detailed notes on the book) had a profound impact on me when I was figuring out my personal finances. One major theme of the book was the idea that you need to sit down and figure out the small handful of key values that are central in your life. Once you have figured out what those are, the rest is secondary – and that means you should seriously trim back your spending in those areas.

Not surprisingly, a major chunk of the book is devoted to ways to cut your spending. Right at the start of the list – the single most important tactic they suggest for cutting your spending – is summed up in six easy words.

Stop trying to impress other people.

If you buy a car that’s flashy rather than focusing on one that gets the job done as efficiently as you can find, you’re spending money to impress other people. If you go clothes shopping by the store sack full, you’re spending money to impress other people. If you always have the latest gadget, you’re spending money to impress other people. If you always must be seen at the coolest new place, you’re spending money to impress other people.

Stop worrying about it.

I found it was really powerful for me to take people and split them into two groups: people whose opinions I cared about, and people whose opinions I didn’t care about one way or another.

It was easy to stop caring about impressing people whose opinions I didn’t care about. Who cares what they think? As long as I’m not doing something truly offensive or heinous – something that might potentially create a negative reputation for me – it doesn’t matter what they think.

The trickier part was worrying about impressing other people whose opinions I do care about. People I want to meet. Customers. Friends. Family. Shouldn’t I want to impress them?

Again, I go back to the basics. As long as I’m not offensive – meaning I’m clean, I’m presentable, and I behave myself – I don’t need to impress these people with expensive, shiny things. The relationship I’ve built with them – or I’m going to build with them – is based on me, not on the material items. They’ll either like me for me or they won’t – no amount of shiny will change that.

So, to put it simply, take care of the basics. Have good hygiene. Keep yourself clean. Keep your weight under control. Wear reasonable clothing. Work on your communication skills. If you have them covered, you don’t need to invest time and money into impressing other people. You will naturally connect with the people you will connect with, and you won’t connect with those you wouldn’t connect with anyway.

Coming to this realization is incredibly valuable. It drops your clothing budget. It drops your automobile budget. It drops your electronics budget. It drops your housing budget. You don’t need a McMansion, a shiny car, an iPhone, or a $50 haircut.

(Yes, you may actually still want one or two of these things, but the impetus comes from what your personal core values are, not what other people around you seem to value or what marketing messages you receive.)

For some people, it seems impossible. Their social cues come from advertising-laden media and from friends who also get their cues from advertising-laden media. They believe they need a slick cell phone and $100 casual clothes. Their self-worth revolves around that little burst they get from impressing others.

Here are six ways to break through that situation.

1. Take the lead. Be a trendsetter within your group. Back away from the expenses and activities that revolve mostly around impressing other people. Make suggestions for activities that don’t revolve around showing off.

2. Try new activities. You can do this either with your circle of friends or on your own, but try out new things that you might never have considered before. Think of things that seemed fun to you but you never got involved with because others around you decried them – and you were trying hard to impress them by agreeing.

3. Guide the conversation. If the conversation turns to bland compliments of each other and insults of people outside your group, steer the conversation away from it. Focus on being positive towards everyone, particularly in non-material areas. Pick areas you’re passionate about (don’t be a one trick pony – figure out several) and guide the conversation there instead.

4. Use your compliments wisely. Offer compliments on jobs well done, but don’t bother with big compliments on new gadgets or new clothing or a shiny new car. It’ll become clear that what you value are people who take charge of their life, not people who fritter away their money trying to impress others.

5. Share personal growth oriented thoughts. Instead of talking about popular culture and “stuff” all the time, instead mix in some thoughts on personal growth. Talk about ways you’re trimming your spending in positive ways. Talk about your big aspirations and dreams. Encourage others to share theirs as well. It also helps to read good materials in these areas so that you have more food for your own thought and more ideas to share.

6. Explore new relationships. If your circle of friends is still focused too heavily on impressing others and on material gains, spend some time exploring new relationships. Call up people you’ve thought of as interesting but simply wouldn’t fit in your old group and see what they’re up to. Connect with people at the new activities you’re trying. (I’ll touch on this a little bit more with a later rule.)

In short, don’t play socially by the tired old rules that revolve around needing to impress people. Instead, spend your time on things that bring real value to you – and give real value to others.

It’s late April 2006. I’ve finally realized how bad our financial situation really is. Finally, after weeks of stewing, I’ve decided to talk to my wife about it. I’m sitting at the kitchen table with some papers, about to tell her about the situation and that we need to make some changes. I’m scared to death.

She calls. She’s on her way home from work and has just picked up our son. I’m thinking of ways to avoid this talk. So I do. I stack up the papers and work on supper, deciding to talk about it after our son is down for the night.

We have a strangely tense dinner. I’m tense. My wife is wondering what’s going on (for good reason). She puts our son to bed and I sweat it again, not wanting to talk to her.

But I finally bite the bullet.

And it’s easy. Much easier than I thought. It was calm and rational and we came to a lot of agreements by the end of the evening. Sure, we were up until after midnight that night and up pretty late a few other nights shortly thereafter, but we started to put some pieces in place to turn our lives around.

I was afraid to talk about money – and it cost me. I avoided talking about money for years and instead watched our financial situation spiral downwards. When I realized I had to talk about it, I still kept putting it off.

And for what?

Another example: my parents are getting older. I keep seeing little signs of it, time and time again. There’s a half step that’s missing. There’s a parent getting tired surprisingly quickly. There’s a wrinkle or a gray hair I hadn’t noticed before.

I don’t want to talk to them about their finances and their estate planning. It scares me to ever think that they might pass away. So I put it off – it’s easier, right?

But one day that event will come. Maybe that event will take both of them at once, or it’ll leave one of them behind, unable to handle what comes in the aftermath. The thought of that moment, as it comes quietly closer, is beginning to worry me more and more.

So I finally did it. I called up my parents and suggested that sometime soon, I spend a weekend with them figuring out everything in their estate and walking through it.

Breaking through that social and personal barrier of talking about money is incredibly difficult, but it’s vital. Without doing it, you open yourself up to paying the penalty of countless mistakes and facing some deeply painful situations that could have easily been avoided had you just spent a bit of time talking about it.

Here are six important things to think about.

What’s Unresolved?
Look around your life, particularly your closest family and friends. In each of those relationships, there are likely things that are left unresolved, things that, in your perfect world, they would be resolved. Here are some examples.

Your partner. Are you sharing the same dreams for the future? Do you have any debts that you’re hiding? Are you in better – or worse – financial shape than your partner might believe? Are you in agreement about how to handle your respective property in the event of the other’s passing? Is your relationship fulfilling you, making you happy?

Your parents. Do they have an estate plan in place? A will, at least? Are they prepared for the financial costs of retirement? What are they expecting from you when they retire?

Your children. Are they expecting you to pay for college? Are you expecting to? Are they expecting you to help with a wedding? Are you expecting to? Do they understand your estate planning?

Other relatives. Do they owe you money? Do you owe them money? Are there other problems, such as caring for older family members? Who’s responsible for what?

Your close friends. Are they constantly engaging you in activities that cost more than you are comfortable spending? Do they owe you money? Do you owe them money?

This is just a start. Even in my own life, after lots of talking about money with the people around me, I still don’t feel as though the door is shut on all of these issues.

I will say this, though: every time I made an effort to actually talk through these issues with someone important to me, I found that I had put it off for too long and worried about it too much, because it went easier than I expected and there was much relief afterwards.

Is Everyone Involved That Should Be?
Whenever you address a complex issue, the ramifications often affect all sorts of people, and it’s usually a very poor idea to start making big changes without seeking their input.

So, before you even start discussing these things, get everyone involved that should be. If you’re talking about a person’s estate, make sure anyone who has a significant stake is involved in the discussion – or is at least carefully considered to be a part of the discussion.

Quite often, this seems painful. I immediately think of some of the estate planning situations I’ve witnessed and been involved with. It was obvious at times that things – and people – were being cut out in order to preserve the comfort of now while postponing the painful part until later.

Each time, it ended in disaster. Siblings not speaking to each other for the rest of their lives. Friendships ended because of “backstabbing.” Lawsuits.

You’re better off swallowing your pride and getting everyone relevant to sit down and talk about things. If someone won’t participate, that’s their decision, but the door needs to be very open to them – and it needs to be clear that the door is open to them.

Getting the Necessary Information
Data is the enemy of lies, lies are the enemies of trusting relationships, and the maintenance of trusting relationships is why you’re doing this in the first place.

Yes, people are defensive. Yes, it hurts to tell the whole truth sometimes. So make it easier on everyone – bring as much real data to the table as possible. Get out those statements. Figure out how much is there.

People are going to be uncomfortable with this. The best thing you can do to quell that is to step up to the plate yourself. Bring your information and offer to show it if they will. Your openness and honesty creates a standard that others will feel some strong desire to live up to, lest they look as though they are being dishonest or are hiding something.

What about feelings? Again, honesty is the best policy and, again, your best bet is to lead by example. Behave in exactly the way you’d like others involved to behave. Share every drop of your relevant information. State your opinions and feelings openly, honestly, and calmly.

Real information and real honesty are powerful tools for cutting through the layers of personal feelings and getting directly to the heart of the matter.

Getting It Done
You know what you want to talk about. You’re prepared to bring honesty to the table. You know who needs to be involved. Now, you just need to do it.

Plan to talk about it in a place that’s as safe as possible for all of the participants – a comfortable place. A person’s home is usually the best choice unless it inherently causes some discomfort.

It should also be a place where, if numbers are going to have to be analyzed, all of that data is easily available. Thus, if you’re going to walk through some estate planning, you may want to do it at the home of the person whose estate is being planned.

You should schedule a very clear time when this is going to be discussed and make that time and date known to everyone who might be involved. Give plenty of time for this, so that you can schedule around any conflicts. Don’t just decide one Saturday morning that everyone is going to meet that afternoon.

Another key factor: if it’s really involved, plan things around another activity. Make dinner during the discussion so you can dine together afterwards – or dine as a break.

A final key factor: make sure that the meeting ends with some very clear actions for some or all of the people to take. What needs to be done to make these plans a reality? Without specific actions, nothing will actually happen as a result of the talk.

Dealing with Anger or Hurt Feelings
Because money has such a huge emotional factor, you can pretty much expect that if a discussion is intense enough, people are going to get angry or upset or have some sort of emotional response. So, plan ahead for it.

First, make a very clear rule that raising your voice or being obviously angry isn’t allowed. If someone gets angry, just call a time out and let everyone chill out. Nothing good comes from allowing a discussion to continue if participants are angry or upset because the emotion will just rapidly escalate. Then follow that rule. If someone gets upset, just take a break until everyone is calm again.

Second, make it clear to everyone what the end goal here is. Make sure you all agree on this. If it’s about estate planning, for example, make it clear that the goal is to help your parents develop a plan that reflects their wishes – and that their wishes are final because it’s their estate.

Finally, don’t let hard feelings run after the event. If you’re sure that emotions are going to run high, plan a family dinner or other special event immediately afterwards to work on healing those stressed bonds. Feelings like these should not be allowed to fester.

Following Up
After the conversation, you’ll likely find yourself with a list of actions and probably some bruised feelings. Both elements deserve some follow-up.

Talk to the people involved afterwards and see what you can do to alleviate any hurt feelings. Pull back to the general purpose of the meeting and remind them that the big goal actually happened, even if it hurt. Listen to their concerns and don’t talk them down – agree with them, at least to the extent to let them know that their feelings are at least understood, even if you don’t agree.

You should also follow up on any decided actions. Make sure that the people who agreed to do things actually do them. This might even involve some follow-up meetings to ensure that these actions happened or that further input is received.

This sounds like a lot of work but the benefits are tremendous: stronger relationships, an assurance that the important things are taken care of, and potential crises averted. Talking about money honestly is a huge positive once you get past one’s fear of it.

This rule is about as subtle as a sledgehammer, of course. Many of you started visiting The Simple Dollar because you came to this realization on your own – high interest debt is a terrible idea, and even low interest debts are a terrible idea. Let’s count the ways.

The higher the interest rate, the more money you lose with nothing in return. Leave a $1,000 debt on a credit card with an 5.5% APR for a year and you lose $55 – not good. But if you bump that amount up to a level that’s typical for credit cards – say, 19.9% – and you’re up to $199 a year. Gone. Poof. Vanished.

The higher the debt level, the more money you lose with nothing in return. So, you have $1,000 debt on a credit card with a 19.9% APR and you lose $199 a year. Bump that up to $5,000 and you’re losing $998 a year. Gone. Nothing in return.

You’re open to late payment fees, over-limit fees, annual fees, ATM fees, cash advance fees, and countless other drains on your money. If there’s a way to ding you, credit card companies will figure out how to do it. A fee here, a fee there, and you’re suddenly watching even more money evaporate for nothing in return.

A required debt payment each month reduces your freedom. With that $5,000 debt above, you’re paying about $100 every single month as a minimum payment. That’s $100 you could be saving for a down payment. That’s $100 you could be saving to start a business. That’s $100 you could be saving for a car. That’s $100 you could be saving towards retiring early. That’s $100 you could be saving towards a great vacation. Your freedom is gone, eaten by the debt monster.

The mere presence of high interest debt often brings other debt into your life. You make a big commitment to getting rid of all of this debt, then start really bearing down on it. You get half of the debt gone, then all of a sudden disaster strikes. You lose your job. Your car breaks down. Your hot water heater leaks water all over the basement. Suddenly, you’re busting out the plastic again to take care of the problem – and you’re right back deep into debt. It’s like escaping from quicksand – if all of your strokes are perfect, you can pull yourself out slowly, but if even one little thing goes wrong, you’re slurped right back in.

In other words, it costs you money, costs you freedom, and puts you into a vicious cycle of even more debt.

There are really two prongs to getting out of this trap. Whether you’re avoiding it entirely or you’re trying to escape from the pit of despair, there’s one big first step you must take.

Build a Small Emergency Fund
The first step is not paying off debt. Paying off debt first is like kicking to get out of quicksand without getting your arms around something safe first – you might be able to kick out, but if anything goes wrong, you’ll just be sucked in deeper.

So, no matter what state you’re in, give yourself that rock – a cash emergency fund, sitting in a savings account. It doesn’t need to be too big – $1,000 should be your big target, but just start by putting $20 a week into savings – or more if you can swing it. Instruct your bank to do this automatically. Do it right now – call up your bank and ask them to do it.

You won’t miss that $20 a week. Your life will quickly find little ways to save – you’ll eat a few less expensive meals, start carpooling with a friend, or skip a few coffee shop visits and you’re there. What happens is that over the course of three months, your savings account reaches $250. After just shy of a year, your savings account will have $1,000 in it.

If you’re already making extra payments on your debts and you don’t have an emergency fund, stop those overpayments for a while and deposit that extra amount into your savings each month until you reach that $1,000.

Leave this money alone except for an emergency. You might be tempted to spend it on something fun or to pay off a big slug of debt with it. Don’t. That money is your rock – it’ll be there for you if your car breaks down or you lose your job. You won’t be sucked back into debt by these unfortunate events – your savings will save you.

What do you do when you reach that $1,000 level? Many people keep saving. Then, once a month, they sweep anything over $1,000 back into their checking and use it to make an extra debt payment, knocking down their debt without touching their $1,000 emergency fund.

Here’s the big key: if you do face that emergency, like having your car break down or losing your job, and you tap that emergency fund, replenish the fund after the emergency. Go back to minimum payments on your debts and rebuild that fund. It’s your rock.

I’ve written a detailed guide to building your first emergency fund if you want to know more.

Make a Debt Repayment Plan
When you have that emergency fund in place, it’s time to start tackling your debts in an intelligent fashion. Make a big list of all of your debts; then, attempt to get the rate on each of those debts reduced. Give your credit card companies a call and negotiate your rate down. Contact your local credit union and see if there are any opportunities to consolidate your debt at a lower rate.

Once you’ve done these things, list all of your remaining debts in order of interest rate, with the highest rate first. Then throw everything you can at the highest interest rate debt. Your only extra payment should be towards this top debt, and it should be the biggest overpayment you can muster without tapping your emergency fund. Live lean. Sell off stuff you don’t use. Find ways to earn a few extra bucks to throw at it.

Once that first debt is gone, throw everything at the next one, then the next one, then the next one. Your extra payments will grow larger because you’ve got fewer minimum payments to make, and soon you’ll find yourself free.

I’ve written a detailed guide to building a debt repayment plan, too.

Avoiding High Interest Debt
I’m not a “no debt” absolutist. I think that home mortgages are often worthwhile for most people, and I think credit cards can be a useful tool if used carefully.

Having said that, many people do not use credit cards carefully. Instead of carefully using them as a tool during very regular purchases (like gas) and then setting the cash aside to pay the bill in full each month, they use credit cards mindlessly to buy whatever they throw in their shopping cart, not worrying too much about prices because, hey, the credit card will cover it!

Bad idea. If you have any inclination in that direction, cut up your credit cards, seriously. It’s the equivalent of swinging a chainsaw around with your eyes closed after knocking back three shots – you might luck out and wind up safe, but it’s more likely to wind up bloody and painful.

Instead, adopt a different approach. Leave your card at home most of the time. When you do use it, use it for specific purposes, like using a BP credit card and use it only at BP gas stations so you can get a nice kick back, or use the Target Visa only at Target to get 10% off your entire purchase regularly, and pay off the balance in full every time. Otherwise, leave it at home and use a debit card (one that features a Visa or MasterCard logo) for your purchases because then you’re actually accountable for every dime you spend while still enjoying the convenience of card use.

There are two big reasons for using this approach instead of going entirely down the cash road. First, it builds a positive credit rating, and a good credit rating improves your insurance rates and helps your employment opportunities. Second, using cards only in a very targeted fashion – as shown above – and paying off the bills in full each time results in some sweet cash kickbacks – 3% at least.

You’ve just got to respect the tool – and not start swinging it around like a toddler with an axe.

I cover time management quite a lot on The Simple Dollar. I write about Getting Things Done and other time management books. I talk about how I manage my own time and some of the techniques I use in my own life.

Almost always, I’ll receive an email or a comment or two about how this has nothing to do with money. On the surface, that might be true – I’m not mentioning the almighty dollar anywhere. If you dig even a little, though, it becomes clear: time management is the same thing as money management, because time is money.

Step back for a minute and think about it.

Each person is blessed with the same allotment of time – 168 hours per week. Bill Gates has 168 hours per week. I have 168 hours per week. You have 168 hours per week. Each of us sleep during some of those hours, leaving us with perhaps 120 waking hours during a given week.

Out of those 120 waking hours, many of us sell the majority of those hours to someone else in exchange for money. We go to work, we work for a while, we go home, and often, some work comes home with us. Add in the hours we burn thinking about work and our time for ourselves grows ever smaller.

Household chores eat up more of that time, as does personal hygiene. Soon, we find that we’re left with just a small pile of hours in a given week to do with what we please.

Those hours are precious. They’re the ones in which we relax. They’re the ones where we interact with friends and family. They’re the ones where we catch up on personally fulfilling hobbies.

But we pay a hefty price for those hours. We invest so much time in work, hygiene, and household chores so that those remaining hours bring us some semblance of joy. Most of our financial choices are intended to either make those free hours more enjoyable or to make them safer.

Whenever we find ourselves wasting time, we take directly away from those precious hours. We get behind at work, reducing our ability to earn more and thus taking away from the enjoyment of that time or the safety of it. We waste idle time at home and then when something truly worthwhile comes along, we can’t participate – we have too many other things we’re behind on.

To put it simply, wasting time takes away from those valuable hours that we work so hard for. It strips away their quality and it strips away their safety. Time management simply seeks to give us more of those hours – or to make the other hours produce more money.

Here’s an example. Some days, when I sit down to work, I make the decision to dive right in. I’ve got some big idea on my mind and I can’t wait to research it or plan out how I might use it. So I’ll rip through most of an article in thirty minutes or so – and then find myself at a dead end. Where am I going with this? I idle for a bit, then eventually delete the article. I’ve wasted forty minutes.

On another day, I’ll start off by making a list of all of the things I need to accomplish for the day. I’ll decide what posts I’m going to write and list the main idea of each one. Then I’ll take each of those ideas and spend a bit of time fleshing them out – is this even worth a post? Is it perhaps more than one post? What research do I need to do to make it work?

That process might take twenty minutes, but I’ve usually discarded three or four ideas along the way and fleshed out three or four more to the point that I know what I’m going to write. From there, I never find myself “lost” at work – I know what tasks I need to do, I execute them, and I keep on rolling to the next one.

I might have spent the first twenty minutes of my day not moving forward at all on any projects, which seems bad. But the time invested in time management pays off – I don’t have to worry about such details as the day goes on, allowing myself to focus on just getting things done. Thus, by the six hour mark, I’m usually far ahead in terms of my work if I’ve done that planning. The big part? I’ve drastically reduced my wasted time.

The end result? If I’m a couple hours ahead, I now have hours I can add to my personal life. Or, perhaps I can use them to work ahead, giving those personal hours more of a cushion in case something happens. Maybe I can spend an hour getting in touch with others, building relationships that will really pay off over time. Maybe I can work on another project that might lead to more earnings or more readers, both of which shore up the valuable parts of my life.

Time is money, and when you manage your time well, you manage your money well, too.

How do you do that? Here are the four most valuable little techniques I’ve found for managing my time.

1. Start your day off with some planning. Make a list of what you need to get done today – usually four or so things. Don’t just make a 1, 2, 3, 4 list, though – investigate each one for a few minutes and make sure you have the information, ideas, and materials you need to actually execute each item. That might mean spending five or ten minutes on the basic framework of a task, but doing that now means you won’t burn an hour chasing snipe later on. Also, that list of things to do will keep you from burning time in the middle of the day wondering what’s best to do next.

2. Alternate between multi-tasking and single-tasking sessions. Multi-tasking works well for some tasks – phone calls, emails, filing, and so forth. Those are tasks that usually aren’t mentally taxing at all, and thus can be done two or more at a time. However, the meat and potatoes of your work usually does require your focus – and doing that with interruptions makes it take longer and reduces the quality of your work. Take a few periods during your day, turn off your communication routes (turn off your phone, close your email program, etc.) for an hour or so and bear down on a task that needs to be done. When it’s finished, go back into multitasking mode and get caught up on your messages and information.

3. Meditate. This sounds counterintuitive, but it really works. It’s easy, later in the day, to “zone out” – you’re mentally (and perhaps physically) worn out. Many people keep pushing, but they find themselves losing three minutes here and three minutes there because they space off – and this will often spread into the evening’s personal time. Instead, try meditating for fifteen or twenty minutes near the end of your work day. Just sit in a chair and relax – here are several great basic techniques to try. I almost always find myself refreshed and alert after doing this.

4. Write down the things on your mind. Keep a notebook and pen near you at all times. Whenever something pops into your head that you need to do later or think about later, jot it down immediately. Then, a few times a day, leaf through the notebook and take care of the things jotted down there. Throw down anything and everything – a word you want to look up, a personal task you need to take care of, a person you want to get in touch with. Getting these things out of your head and onto paper means you can spend far less mental energy trying to remember it – and use that energy instead focusing on your current task and getting that done as well as you can.

Another important tactic is to find ways to spend your free time that simultaneously help you grow as a person and bring you enjoyment. Reading literature that really pushes your mind is one example. Going for a jog is another example. Almost any social activity falls into this group, too – learning how to interact with more people is invaluable. Such activities bleed back into the rest of your day – they increase your energy at work, improve your mental acuity, and raise the bar on your ability to interact with others and network. Putting forth a little effort to find enjoyable ways to spend your spare time that also help you to grow pays off over and over again.

Remember, time is money – so stop wasting it.

I picked up a copy of Money recently and counted the number of mutual fund ads in the issue. My count? 18.

Each one claimed to offer some sort of security for you. Each one claimed to offer superior service and/or superior results.

Then I turned to the content. I saw a huge list of mutual funds, all of which seemed to be described as spectacular. I saw multiple articles discussing how to make saving for retirement or saving for college as complicated and scary as possible.

By the time I sat the issue down, I was almost overwhelmed. With that many investment options and choices out there, how can I possibly ever pick the right one?

The truth? Don’t worry about it.

You’re twenty five. You want to retire at age sixty, so you’ve got thirty five years to go. You decide that $750,000 is a good target. So you start looking into investments.

You do a week’s worth of research, pick an investment that seems pretty good and stable over the long haul, and you decide to dive in and start saving right then and there.

You start socking away $5,000 a year, and that investment only has to earn 7% a year to get you to your goal. You don’t have to have sleepless nights worrying about your investment – 7% is a pretty reasonable goal.

Now, let’s say you look at them – and you’re overwhelmed. You decide to wait a year – and that year becomes five.

You start socking away $5,000 a year now, but the outlook is decidedly worse. You now have to earn 9% a year in order to make that $750,000 goal. Instead of being able to sock that money away and not worry about it, you’ll now have to micromanage it – and even then, you likely still won’t make it.

What’s the moral of the story? You’re better off starting your savings now rather than waiting until you find the “perfect” investment. The perfect is always the enemy of the good. Sure, you can keep your eye out for a better investment, but you don’t have to have world-beating Peter Lynch-like returns in order to make your goals.

So what’s a “good” investment? For starters, an index fund: they’re easy and don’t require much time investment, they’re very cost efficient, and they outperform virtually all managed mutual funds. Burton J. Malkiel, in his seminal The Random Walk Guide to Investing, makes a brilliant case for them:

[Index fund investing] has outperformed all but a tiny handful of the thousands of equity mutual funds that are sold to the public. Let’s list all the advantages of an index fund strategy:
– Index funds simplify investing. You don’t have to choose among the thousands of individual stocks and mutual funds available to the public.
– Index funds are cost-efficient. [Many] have no sales charges and have miniscule expense charges. Moreover, index funds do a minimal amount of trading. Thus, they avoid the very heavy transactions costs of actively managed funds, which tend to turn over their entire portfolio about once a year.
– Index funds regularly produce higher returns for investors than do actively managed funds.
– Index funds are predictable. You know beyond doubt that you will earn the rate of return provided by the stock market. Yes, you will lose money when the market declines, but you will never own the fund that performs several times worse than the market.
– Index funds are tax-efficient. If you do own stocks in taxable accounts (that is, outside your IRA or retirement plan), then you need to invest in index funds that don’t trade from security to security and therefor don’t tend to generate taxable gains.

Another great summary can be found in the excellent article The Best Investment Advice You’ll Never Get at San Francisco Online.

But what about stock market downturns? Obviously, putting all your money into a stock index fund puts you completely at the whim of the stock market – and as many people discovered in 2008, that’s not a good thing at all.

Whenever I think of the downturn of 2008, I think of my mother- and father-in-law. Their retirement plans hit such a serious roadblock that they went from hinting vaguely at retirement (and the requisite travel and spending time with grandchildren that would come with it) to joking about working until they fall down dead on the job.

How do you protect yourself against that, huh? The trick is diversification, especially as you get closer to retirement. When you’re a long way out – thirty years or more from retirement – it doesn’t hurt to bet quite a bit on the big return – but with that big bet comes big risk. If you have everything in stocks and the stocks drop, then everything you have saved drops.

So, as retirement gets closer, you’re well-served to gradually move things out of stocks and into bonds, real estate, cash, or other investments. You’re no longer trying to hit home runs – you’re happy just to not strike out when your retirement comes close. So diversify.

Again, many investments make that easy. Most plans offer some version of a “target retirement” plan that will do just that for you. As you approach your retirement age, the plan will gradually – automatically – shift money from a heavy stock investment (great when you’re young and can afford to swing for the fences and risk a strikeout or two) to a very diverse investment (best when you’re older and you can’t afford to strike out).

That’s all there is to it. Start saving now, preferably in a target retirement plan made up of index funds. You can watch for better investments if you want to, but the sheer advantage of saving now in a low-cost plan that automatically diversifies for you as you get older will be hard to beat.

Roth IRA? 401(k)? I don’t know what to do! Here’s the truth: they’re both pretty good. In either one, you’re not hit with tax penalties for diversifying your retirement savings. Given that we don’t know what the tax rates will be in thirty years, it’s impossible to say which one is better, and people will argue until they’re blue in the face without being able to come up with a real answer.

A general good rule of thumb is to contribute to your 401(k) up to the maximum amount that your employee matches (because employee matching is basically free money). If you want to save more, start a Roth IRA (because you have more investing choices).

However, the importance of actually saving blows away the differences between the two. You’re light years better off simply throwing everything you can into savings than sweating about which investment option is the best. Again, the perfect is the enemy of the good.

What about college savings? Virtually the same exact principles apply to college savings as apply to retirement savings. Saving now is the most important thing, and diversifying as you get close to the big day is vital, too. Just pick a good 529 savings account – preferably one like Iowa’s that has a “target graduation” investment option – and start socking away the money now.

That’s really all you need to know about investing, for all practical purposes. The earlier you invest, the better. If you can, use a plan that enables you to invest with tax protections (Roth IRAs, 401(k)s, 529s). The farther away you are from the event you’re saving for, the more heavily you should invest in stocks (high risk, high reward). The closer you get to your big event, the more you should diversify (lower risk, lower reward).

I use Vanguard for pretty much all of my investments – they make all of this so easy that once you’ve set it up, you barely have to think about it again. I know that if the stock market dips again, I don’t have to panic – my short-term stuff is safely out of stocks and my long-term stuff has plenty of time to recover. I know I’m investing now rather than later, giving compound interest plenty of time to work in my favor.

It all just works – and for all of the complexity that publications like Money try to throw into the mix, that simplicity is what we all strive for.

Remember: don’t overthink things. The perfect is the enemy of the good, and if you get obsessed with the perfect, you’ll lose the good along the way.

If there is a single rule that underlies everything I’ve written about on The Simple Dollar, it’s this simple sentence:

Spend less than you earn.

It sounds so simple, doesn’t it? Yet there are many people out there burying themselves in debt (spending more than they earn) or living purely paycheck to paycheck (spending exactly what they earn).

Simply spending less than you earn has a cascade of positive effects.

First, you begin eliminating your debts. Spending less than you earn frees up the money you need to make larger payments on your debts. Over time, they begin to disappear, reducing your monthly bills and giving you even more breathing room.

Second, you begin to save. First, you build up some cash savings in your savings account, enabling you to roll through emergencies (like a car breakdown or a job loss). You’ll also have the breathing room to start saving for retirement, paving yourself a great future for your golden years.

Third, your stress level falls. Knowing that you have fewer debts, your emergencies are covered, and your retirement is being planned for reduces your stress level. You sleep better, your overall health improves, and you feel happier about life.

Finally, you are now able to explore possibilities closed to you before. When your debts are gone and you are spending far less than you’re bringing in, you suddenly have many more career possibilities. You don’t have to stick with your high-stress job – you have the financial freedom to move on and chase your dreams. You can live where – and how – you want to live.

All of that comes back to one basic principle – spend less than you earn.

That statement actually has two parts, though.

Spend less refers to the fact that you do need to cut your spending. The first step doesn’t need to be anything drastic – nor should it be. Many of the more extreme money-saving tips come from people who have already tried out the basic tips and love them, so they seek out more intense strategies to further cut their spending. I do this myself – I’m always trying out new money-saving strategies, discarding the ones that don’t work for me and keeping the ones that do.

Here are five big ways to get started.

First, go through every monthly required bill. Ask yourself if you really need that service at all. Do you really use Netflix enough, or could you just rent a movie once in a while from Redbox? Do you really use your cell phone much at all, or could you just replace it with a pay-as-you-go phone? Then, go through each bill and see if there are any optional services you can eliminate. Do you really need premium cable? Do you really need unlimited text messages?

Second, keep diligent track of your spending. Keep a notebook in your pocket and write down every expense you have. The simple process of doing this will make you think twice about unnecessary expenses. When you do have a month’s worth of expenses written down, take a careful look at them. Ask yourself whether or not each of these expenses actually contributed to the value and joy of your life. That process will offer a lot of insight for you as to where your spending is going to waste.

Third, look carefully at your routines. Watch what you do every day (or most days). Are there things you do each day that cost money? Those things are the most powerful ones to adjust, as trimming just $1 from your daily spending saves you $365 a year. Do you stop at a coffee shop each day? Why not cut down your daily order a bit, or switch to a different shop, or start making your coffee at home? Do you eat out every day? Perhaps you can start brown bagging it a few days a week. Look at every regular expense you have.

Fourth, get a better bank. The vast majority of Americans are with banks that don’t treat them very well. No interest at all on their checking accounts. Tons of fees for ATM use. Draconian overdraft policies. A tiny interest rate on savings accounts. Monthly usage fees of all kinds. All of these things are a waste of money. Switch your accounts to a bank that respects you. From my own personal experience, I use ING Direct for both savings and checking. I get great customer service, interest on my checking account, a solid interest rate on my savings account, and I’ve never had a fee of any sort.

Finally, do some one-time energy improvements around your home. Replace some of your light bulbs with CFLs and LEDs. Install a programmable thermostat. Air seal your home. Blanket your water heater. Install some SmartStrips to cut down on electricity use. These tactics will cut down your energy bill significantly, directly reducing your bills.

Want some more tips? Dig into my list of 100 great money saving tips for people just getting started, as well as 100 free things to do during a money-free weekend.

The rest of the phrase, than you earn, though, points to the other part of the equation: increasing your earnings. Increasing your earnings gives you more money with which to get rid of your debts, save for your big dreams, and build a foundation for whatever future moves you may want to make.

There are countless ways to earn more money, but there are several tactics almost anyone can apply in their life. Here are five key ways to get started increasing your income.

First, don’t waste time at work. The time you spend sitting idle, browsing the web, or chatting on IM or Twitter with your buddies is time you’ve effectively lost. Instead, invest that time in something devoted to your career, even if it’s not directly on a work project. There are lots of things you can always be working on – see the other things below, for example.

Second, work on your transferable skills. I’m a big believer in transferable skills – skills that one can utilize in almost any career path. Work on mastering such skills. Jump on any and all opportunities to speak in public. Hammer out an effective time management scheme for you. Get into a routine of organizing and filing your paperwork. Brainstorm ideas for things going on in your office. Write clear documentation for the standard procedures of your work. Step up to the plate, take charge of a work project, and get the ball moving forward. All of these things push you towards developing skills that are genuinely useful no matter where you’re heading in life.

Third, build strong relationships with as many people as you can in your field. Join services like Twitter or LinkedIn and start conversations with people in your career. Send emails to people you’ve interacted with a lot in your career and keep up with what they’re doing. If you have an opportunity to connect people that can help each other, do it immediately, without hesitation. Share what you know and be valuable to others.

Fourth, start a side business. I don’t mean filling out surveys or other things you can use to burn a few minutes during the commercial breaks on Lost and earn a few pennies. I mean actually devote serious time and effort to turning a passion you have into a money-making enterprise. Don’t know what that could possibly be? Here are fifty ideas to get you started.

Finally, step up to the plate at work in little ways. There are lots of simple ways to stand out. Speak up at meetings. Show empathy for the problems that others have. Take on only projects you can handle, but do them well. Get to know the support staff – and treat them well. Don’t burn bridges when you move on – make an extra effort to maintain good relationships when you leave. These little things add up to a huge difference.

Keep that rule in mind: spend less than you earn. Each move you make to maximize the gap between what you earn and what you spend will put you in a better place in your life.