After my recent article about personal finance and happiness, I received the following email from a reader named “Constance”:

I’ve always been pretty responsible with my money and lived a frugal life, especially over the last few years with my husband in school full-time. But what would you say to someone like me who doesn’t find joy when saving money, but rather, I feel like I can never save enough? Mone y is still a constant source of worry.

We only have about a month’s worth of expenses in an emergency fund, and it’s been hard to keep it up. We have a house to maintain, tuition, books, etc. When things like the brakes go, I tend to put it on the credit card because I’m afraid a real emergency will come and we’ll need the meager emergency fund.

I feel like we have cut back on everything possible - trying to get the most of our cars, no cable TV, very limited eating out, clipping coupons, shopping at multiple stores to get the best deals, walking instead of driving where possible, only getting each other token gifts at Christmas and birthdays — you get the idea.

Money is always on my mind, probably to the point of obsession and it’s frustrating to know we’re doing everything in our power and it’s not enough. I feel like we’re just barely keeping our heads above water. While I’ve tried keeping our credit card debt to a minimum, it still hovers around $1500 with the unforeseen expenses like new brakes.

Any advice or insight you can provide would be greatly appreciated.

First of all, it’s easy to tell by this story that the financial difficulty is a relatively short term thing. Your husband is in school right now full time, which means that rather than being an income provider, he is currently being an income drag in order to put himself in a position to earn much more later (or to at least be much more fulfilled at work). This situation will pass and in a few years, you’ll look back at right now and realize the sacrifices were worth it.

The problem is getting through the now, though, and here’s my advice.

First of all, be creative. For example, you mention “only getting each other token gifts at Christmas and birthdays.” If this weren’t important to you, I would suspect you would cut this out as well, but why not get each other a gift like a ten pack of CFLs? My wife and I have given each other similar gifts over the last year - it gives us a chance to open gifts, and we both understand the sentiment of both love (we’re in this boat together) and true utility behind it. Most people wouldn’t think of CFLs as a nice gift, but in your situation (and in our recently-escaped situation), gifts like these that truly speak to your situation and the boat you both share can be truly romantic.

Second, produce your own food. You mention having your own home - start a vegetable garden in the back. Even if you just grow three tomato plants (which are pretty easy to care for), you’ll have an absolute flood of tomatoes each year. Learn how to freeze whole tomatoes and also to make tomato sauce and you’ve just given yourself a pile of free food for the next year. It reduces the cost of making a delicious pasta dinner to a few cups of flour and a few eggs.

Third, treat your emergency fund like an actual emergency fund. The brakes going out on your car was an emergency - you should have tapped your fund for that, then focused on rebuilding the fund after the brakes were repaired. If you’re not spending an emergency fund out of fear of another emergency, it’s not actually being used as a tool, but as an emotional crutch. If you have more than a thousand in your emergency fund right now, use the excess to get rid of the credit card debt immediately and focus on paying it down instead of building more emergency fund. If you don’t do that, the debt will continue to weigh on you, both emotionally and financially.

Last, find ways to give yourself hope. One major undertone of what you wrote is a sense of hopelessness, that nothing’s ever going to get better than it is right now. Your mind should realize that it will, but that often doesn’t help the heart. For me, what worked was finding constant motivation in the form of my son. Every time I looked at him as he’s grown from a baby to a toddler, I’ve realized that the future holds a lot of possibility if I make good choices now, because his life is all about that future. Perhaps you can draw the same from what your husband is studying - apparently, he’s making a career shift right now, so he must be moving into something he’s more passionate about. Draw from that passion - use it to realize that you are making great choices every day that enables this career shift. If you need to visualize a goal, imagine his graduation or the job he will get after that.

Good luck.

This is a really interesting story that I thought I would share with all of you. I do have a few comments below, but I thought I would let Kelly tell her story (I edited this email a bit to eliminate some privacy concerns and polish a few tiny grammar issues):

I wanted to write to you and tell you that your site convinced me to quit my job and make some other big changes in my life. I have been trying to get ahead for a while now but I didn’t know what to do. Your site helped me a lot and thank you.

I am twenty years old. I did not go to college after high school mostly because none of my friends did. I stayed in my home town and got a job about thirty miles away making $12 an hour as a factory worker. It didn’t have any health insurance or anything so there were no real benefits other than $12 an hour for someone out of high school. I thought about taking some classes at a college but every night I came home really tired and so I never did anything.

It took me about forty five minutes to drive there every day and I used a gallon of gas each way plus I paid about a dollar in toll each way. That means $8 each day plus my car insurance and all the extra miles on my car.

When I read your site about figuring what your time is worth (note: I’m guessing this article) I spent some time thinking about it and with the cost of my car and the insurance and the gas and the time to go to work I realized I was wasting a lot of time and money. In fact I figured out that my real hourly wage at work was about $7 an hour for a job I hated.

So I started looking around town and I found a job as a waitress at a restaurant that paid $4 an hour plus all tips. I trained there on Saturdays and Sundays and found I could make $10 an hour easy working there and way more on busy shifts. Plus I could walk there since it was only four blocks away and get there in ten minutes.

I quit my job at the factory and now I’m working four weeknights and a weekend night at the restaurant. Even though it pays less on paper than my old job I have more money in my pocket because I don’t spend money on the car and I don’t buy my lunch in the cafeteria because it’s free at work. I sold my car too and I signed up to take some classes at the college during the week days using the car money. I can take the city bus to classes and back home, then walk to work.

Before I read your site I thought I was doing the right thing working at the factory but I felt like I could not do anything to help myself. You got me to think about what else I could be doing and that the best paying job isn’t always the one that will give you the most money. I am taking English classes now and I can already write better than before. I want to try to become a technical writer.

This email was one of the best things I’ve read since starting this site - I feel like something I’ve written went out there into the darkness, touched someone, and profoundly changed them. Some thoughts:

She traded her car for an education To me, this spoke highly of the maturity of this twenty year old. When I was twenty, I can’t say that I would have made such a choice - it takes some serious bravery to go without a car in those heady youthful times. The truth is, though, that it was the right choice - with her job and her classes available by foot and by public transport, she doesn’t have a major day-to-day need for a car right now, and the ongoing cost of the car (insurance and any payments she might be making) would just drag her down. Plus, that car money opened the door to education.

She likely also came up with health coverage Depending on the college (I got the impression that it was a smaller liberal arts college, not a community college, but I may be wrong), she might have access to health coverage via her student fees at the school - at the very least, access to a student health center. If that’s the case, then she is in substantially better shape than before having no health coverage at all.

She’s investing her energy in herself instead of giving it away to a factory During the daytime hours during the week when her energy and focus are peaking, she’s attending classes to better herself. Her job, in terms of when her concentration is peaking, is secondary, as it should be when you have a job to afford to live, not trying to build a career.

She quit her job to take a lower paying one - and it was probably the best personal finance move of her life.

About three weeks ago, I made the mistake of loaning a small amount of money to a friend against my better judgement. This friend promised to pay me back in small installments each week over a period of time and we even wrote it down on paper and both signed it. He missed the first payment and the second and has now not returned my phone calls for a week, even though I haven’t mentioned the loan at all on any messages I’ve left for him. I can only assume it’s because of the new issues that this loan has introduced into a friendship that I valued quite highly.

Sadly, this isn’t the first time that this has happened to me, and it was because of this previous negative history of loaning money to friends that led to my reluctance in the first place. After these experiences, I’ve decided to never again loan money to friends, and here’s my reasoning behind that decision.

A continuing fiscal relationship adds a new dynamic to any relationship - a dynamic that is rarely healthy. Prior to the loan, your relationship was one of equals - you would spend time together because you enjoyed each other’s company. After the loan, the relationship changes: now you’re little different than a loan officer from a bank and your friend is a client. Do you really want to hang out with your loan officer? I don’t know many people that do.

A friend’s financial need may impact your own financial situation as well. Let’s say you loan your friend $500 and then the next morning your car breaks down. For many people, they’re going to suddenly be in a bad financial place just like their friend and almost always you’ll come to resent the friend because of the additional efforts and cost. Never, ever loan money unless you’re absolutely sure that you’ll have no need for it.

If you actually feel the need to help your friend out with money, make it a gift, not a loan. Although this still introduces a bit of the “lender-borrower” dynamic, by removing the strings of repayment you make it possible to continue the friendship. If you wish, you can leave it as a “repay me whenever you feel like it” nature, but even then you’ll be introducing a bit of a new dynamic that may be uncomfortable. Instead…

An offer to help with the situation in a non-financial fashion is often more valuable than financial assistance. Let’s say your friend loses their job. You could spend your time helping them to find a new one instead of tossing them some cash so they can “make it.” If they lose their home, you could offer space in your own home for them. Seek ways to help them out of their bind without offering money or items - this way, it is clearly seen as an act of friendship, not as a material connection.

Moral and emotional support is the best support you can provide. Almost always, convincing a person to really spill out what they’re feeling and empty the pressure that’s building up in their emotional well is the best assistance you can provide as a friend. Try to encourage them to talk about the problem that brought them to the point of needing a loan, and listen to what they really have to say.

If they won’t accept that you won’t loan them money, what was the friendship really about to begin with? Think about it: what kind of friend would shun you because you wouldn’t fork money over to them when they demanded it? In my eyes, if a friendship would dissolve because of that, the friendship wasn’t a strong one anyway.

Remember, a friendship whose value you can express in monetary terms isn’t really a friendship at all, so don’t try to inject a financial relationship in there. Just don’t do it.

I received a very interesting note from a reader who really deserves a vacation:

I’m in the Army National Guard, currently serving in Iraq. I am scheduled to get home around mid-July, and my wife and I want to take a nice vacation. We’re planning on going to Ireland next year, so we’re not looking to do anything absolutely huge. But, after a year in Iraq, I want to do something very relaxing. Have you ever used a travel agent? We’re considering that route as a possibility, since neither of us have used one, and it would be nice to have someone plan a vacation for us. We’re also considering a road trip to Missouri or Ohio (we live in Indiana), but we have no family to visit, so some of your road trip suggestions don’t really work for us. We’re willing to spend about $1,000, up to $1,500 if necessary, for a nice vacation…

For a small domestic trip like this one, I would not use a travel agent. They’re useful for planning big trips (I used one when planning our honeymoon in the UK) but for smaller trips like this one, it’s not worth the money. Instead, I would do the following:

Have your wife and yourself separately write a list of twenty (or so) places in the United States that you’d love to see. Do this separately, and try to be honest and also creative. My wife and I did this for our 2005 summer vacation (we actually wrote a top 50 list because we really got into it) and we both found that the more honest we were about what we would like to see, the better the trip became. Include visiting relatives and friends on this list.

Once you’re together again, figure out where all of these places are on a US map. Mark them all with thumbtacks so that it’s clear where they all are. This will give you a visual indication of where everything is. We literally used a bulletin board and used two different colors of thumbtacks, one for me and one for her.

Go to the area where the largest grouping of thumbtacks can be found. For us, this turned out to be southern Nevada/western Arizona, because we wanted to visit Las Vegas, Hoover Dam, the Arizona desert, and the Grand Canyon. This area had four tacks pretty close together and they were an equal balance of our colors.

Research that area online and find out the cheapest way to get there and the cheapest place to stay there. For us, we stayed in Las Vegas because we went during the week when the hotels were cheap and the flight there was very cheap. There are lots of sites online for doing such research - Priceline, Expedia, Hotdeals, and so on. Don’t hesitate to look into camping, too, because that can be a very economical option.

Don’t spend more than half your budget getting there, sleeping, and getting back. That means try to keep the travel and lodging under $750 at all costs, leaving you $750 to do things you’ll actually remember. One of our best memories was an amazing breakfast that my wife and I had on that vacation; it was ridiculously expensive, but somehow wonderful. The parts we didn’t remember were when we were sleeping or traveling (other than my wife forgetting stuff at the hotel when we arrived at the airport).

Our Nevada/Arizona trip was by far the cheapest vacation we’ve ever taken, but it was almost our most memorable one, too (behind our honeymoon). Good luck planning your own trip.

Like any person who runs a popular website, I keep statistics on how many people visit The Simple Dollar (I get about 75,000 visitors on an average week). These statistics me the sometimes interesting (and sometimes strange) things people search Google with that lead them to The Simple Dollar. On occasion, they inspire me to write posts; other times, these search strings will just make me laugh.

I thought it would be fun to go through the searches for a day and extract every clearly discernible question that a reader asked that isn’t already answered somewhere clearly on The Simple Dollar. I do this by taking all of the search terms, pulling out only the ones with a question mark at the end, and checking them all on Google to see what they pull up. If I don’t already answer their question, then I’ll answer it here.

Here are the five questions that people asked the Google oracle and came across my site as a result on Thursday:

How can i build passive income?
Passive income (money that comes in with little or no maintenance effort from yourself) requires extensive capital up front in the form of money, intellectual property, or effort. Sources of passive income include fully-managed properties, web sites, and so on. So how can you build it? You need to invest something of your own into it, whether it be money or ideas or work. Buy a managed property. Start a blog. Write a book. Record some music. Then sell what you’ve got. Over the long haul, money will trickle into your coffers once you’ve put forth that initial capital.

Why are saving accounts a basic part of most people financial planning?
Savings accounts are wonderful places to keep money that is very liquid (meaning you can get it if you need it) and earns a small rate of return with very little risk. Because of these factors (liquid, low risk, some return), they are great places to store emergency funds, which is a fundamental part of any personal finance strategy. An emergency fund is a buffer to prevent budgetary disaster in the event of a personal crisis.

How much would it cost to feed a baby for one year?
It depends entirely on what you feed the baby. According to the San Diego County Breastfeeding Coalition in 2001, breastfeeding costs about $300 a year (the cost of 500 calories a day for a year), while powdered formula costs about $1,200 a year if purchased in 1 lb. cans. With our son, we used a mixed strategy and bought powdered formula in bulk, bringing our feeding cost to roughly $550 for our son’s first year.

When should I start investing in treasury inflation protected securities?
Treasury inflation protected securities (or TIPS) are investments guaranteed by the United States government to provide a rate of return that beats inflation, but barely. At times when inflation is low (the last several years), these aren’t good investments, but if you anticipate an upturn in inflation, then they become much stronger investments. Since I expect the dollar to rebound after the 2008 election, I think that that would be about the best time to buy some TIPS - this is just my opinion and should not be construed as investment advice.

Can you sell your home while still oweing on a HELOC?
You can, but a title search will reveal a HELOC (as a lien should have been placed on the home) and you’ll be required to pay it off for the home sale to go through.

If you liked this “open question” article, let me know in the comments and I might make it into a regular feature.

I write about a huge variety of topics on this blog and I’m quite sure that not all of them are interesting to every reader. Some of you love the frugality material, others like the investment advice, still others are big fans of personal development tips, and so on.

As much as I write, though, there are a few fundamental principles that flow through everything that really sum up the things that I talk about on this site. These aren’t individual investment tips or nice ways to save a few dollars, but some fundamental principles that you can tie to any situation.

Like many of my ideas, this one came about from a conversation I had with a graduating high school senior who doesn’t really know where he’s going in life. I told him what I knew about things, and these are basically the seven points I told him.

Know how much your time is worth. If something is only going to save you a dollar, you’re only doing it because it saves a dollar, and it burns an hour of time, don’t waste your time doing it. Figure out a rough estimate of what your time is worth, and before you set into a task, decide whether or not it’s worth that time investment. Time is money, but not knowing how much money can really hurt you.

Over any period longer than a month, bring in more than you put out. This should be the gospel truth for any normal month. On occasion, there may be exceptions - I expect there to be exceptions in the coming few months for me as we move into a house - but if an average month shows you spending more than you’re bringing in, you’re going to be in very deep trouble before long.

Do things that you enjoy - money will follow. This is advice that I give to every young person that I meet. Follow what you really enjoy and keep doing it and exploring it. Money will follow you if you do that, no matter what, because passion and effort attract money.

There is no free lunch. Everything that makes money requires some sort of time and effort investment from you. If it seems that you’re getting something absolutely free, you’re not - don’t ever fool yourself. Even public services aren’t free - you pay taxes, don’t you?

The simpler the investment, the better it is. If there’s a ton of maintenance or research work involved in an investment, or there are tons of caveats and rules and fees, for most people the investment simply isn’t worth the effort unless the gains are huge. You’re far better off putting money in an index fund or even into a high-interest savings account most of the time.

Don’t buy what you can get for free. Look around you and see what things you’ve already paid for - or are available without a financial cost. Quite often, just a bit of footwork and thinking can provide tons fo free things. For example, if you enjoy reading, use the library - you’re already paying for it with your taxes, right?

Putting effort into learning new skills and organizing yourself usually pays huge dividends. Without learning how to organize my time and my stuff better, I could have never started this website. Personal productivity and personal development do eventually lead to cash in your pocket.

At one point in my life, I was on a biweekly pay period schedule that occasionally caused me to be paid three times in a month. Of course, at that time in my life, I was an utter fool and I would spend the money on a big splurge, like, say, a weekend trip to Chicago with four friends in which we stayed in a huge suite and also had box seats at Wrigley Field.

At the time, I thought that I was having a great time and making memories for a lifetime, but when I look back on things like that, I just shake my head and wish I had it to do over again. The best part of the experience was spending time with friends, not dropping almost a thousand a night on a hotel room and watching a paycheck that could have been building my future flutter away into the night. That third paycheck in the month could have been something to build a foundation with - instead, I used it extremely poorly, something that I began to regret even before my financial meltdown.

Along thise lines, a reader sent in this interesting question recently:

Like many others who are on a bi-weekly pay period, I have three pay periods coming up in June. Any suggestions on a strategy for best utilizing this occurrence?

Here are the options I would recommend, starting with the best choice.

Pay off debts This is really only effective if it comes with a commitment to eliminate debt, but if you truly are committed to eliminating debt, using the third paycheck solely as a debt elimination tool is the best option. This is especially true for high-interest consumer debt. Use the check to pay off the higest interest debts you have and make a commitment to avoid credit card debt and other consumer debt.

Create an emergency fund An emergency fund is a wonderful thing to have because it protects you against the unexpected: a car breakdown, a washing machine replacement, a job loss, and so on. In essence, just take the check, toss it into a high-interest savings account, and wait for a rainy day to use it - it can transform a disaster into a mild discomfort.

Invest it This is a great option if you have a long term goal. Put the money into an index fund and just forget about it until you need it. It will ride the market until you need it in ten or fifteen or twenty years, whenever you’re ready to spend it.

Save it On the other hand, if you have a clearly defined medium term goal (like buying a car), it would be worthwhile to save it for that purpose. Put it into a savings account and wait until you’re ready to make the move.

Spend it on capital improvements This means investing it on some sort of home improvement project, something that holds value. Repaint a room, have some new siding installed, or something that improves the value of something that you own. This won’t help much in the now, but it will help in the long run.

There’s also the option of donating it to charity, but this option is highly dependent on your own personal values.

The worst option, from a personal finance standpoint, is simply spending it on something fun and immediate, but there are other perspectives to consider and money spent on fun stuff if you have your financial bases covered can be well worth it.

In short, what you should do with that check depends on what your financial state is like. Spend some time considering what to do with it - just don’t spend it on something that will fall through your fingers like sand.

I recently received the following email from a reader, who I will call Annie:

I’ve been reading your site for a while now, and while I do enjoy much of your advice, I must admit there is one thing that really frustrates me. You talk a lot about saving and investing, but what if you’re living paycheck to paycheck? What if you have just gotten out of college, have over 100k in student loan debt, dislike your current job, work long hours, but make only enough money to cover rent? Are there ways to get out of a job you hate and even a career you regret majoring in when you’re smothered in debt? Is it safe to do? If you could maybe write something on handling student debt I would appreciate it. I’ve always been a saver, and it frustrates me to no end that I have to choose between saving 5 dollars in the bank or buying food for the day.

So, how can we come up with a plan to help Annie out? First of all, let’s make a list of the problems:

Significant debt Annie has more than $100,000 in student loan debt, a pretty significant amount.

A low level of income From this email, it seems as though Annie is only making enough to cover rent, her utilities, and her student debt payments.

Career dissatisfaction She also seems very unhappy with her career to this point, particularly in the sense that the hours are longer than she is comfortable with.

However, Annie has some major advantages, too:

Youth She’s pretty freshly out of school, which would generally indicate youth.

No dependents She’s apparently not married, and also apparently has no children.

Some degree of intelligence She managed to complete some level of college, which is better than the majority of Americans.

What follows is my personal advice to Annie. I am not a professional planner in any way; these are merely personal suggestions on what I would do in Annie’s shoes.

First of all, I would get out of the job. If a job is bad enough to make you question every choice you have made since leaving high school, then there’s a problem. Start searching for anything besides this job, even if it’s not in your field. If the pay is truly low as you describe, there may even be jobs like working at Home Depot that are appropriate (Home Depot pays well - I have family members that work there that make surprisingly good incomes).

Why quit the job before anything else if the finances are in dire straits? The job is pretty clearly creating some significant stress and a rather negative mindset about the world for Annie. If a job is such that it is making your whole world view negative, it’s probably also causing you to miss out on a lot of other opportunities that might be going on in your life.

Second, spend some time figuring out what you really want to do. It may be that the job has just poisoned your taste for what you majored in, or it may be that your life has a different calling. You need some time away from the situation to figure that out, which is another advantage of getting a job in a completely different career path. It may also be worth your while to move to another part of the country, to a place where the cost of living is lower than where you’re at right now.

Third, learn to live frugally. Many people who are stuck in a routine of working long hours for low pay often don’t eat well or prepare their own food. Give it a try. Also, look at the things in your life that are monthly, regular bills and ask yourself which ones you could remove. Are you paying for cable? Toss that out for a while and enjoy some books instead. Do you have an expensive cell phone plan? Get the cheapest plan you can - or ditch the cell phone entirely. Do you have subscriptions to other entertainment services, like Netflix, etc. Cancel ‘em. Sell stuff you have that you don’t need, especially anything that has sat unused for a few months.

Fourth, look for community support. I’m not talking about food stamps. Look for community organizations, even churches, that offer things that might be useful to you. Maybe a community group has a freewill supper on Wednesday evenings - stop by there, enjoy a meal on the cheap, and meet some people. Perhaps you can pay a visit to a pastor in the area who might have ideas of things you can do.

Finally, know your debts. Find out if your current student loan debts have any extra benefits if you pay a certain number of payments on time, or if you direct deposit your payments. Also, look into consolidating your loans, especially if you can find ones that make you eligible for such benefits. With $100K in student loan debt, even shaving off a quarter of a percent can make a big difference in the monthly payments. If you have no idea where to start, contact the financial aid office at the college you attended and ask for help.

Good luck, Annie.