This is the first of twelve parts of a “book club” reading and discussion of Dave Ramsey’s The Total Money Makeover, where this book on debt reduction is teased apart and looked at in detail. This first entry covers the preface and the first two chapters, finishing on page 16. The next entry, covering the third chapter, will appear on Saturday.

Let’s get this straight right off the bat. I like what Dave Ramsey has to say when it comes to personal finance. I find much of his material makes a lot of sense and he does a great job of balancing a “coaching” attitude without going too over the top a la Larry Winget.

That being said, I don’t care much at all about his political commentary. I know that his relationship with Fox News pretty much requires a conservative bent, but his political perspectives feel very much out in right field to me with only a tenuous connection at best to his personal finance talk.

Given that, I’m going to completely ignore his politics for this discussion. If it’s not inside The Total Money Makeover, which is an excellent book on debt reduction and focus, I’m not going to talk about it.

Ahem.

So what exactly is The Total Money Makeover all about? It’s just a very straightforward plan for getting in control of your finances, particularly in terms of overcoming a heavy load of debt. Many people have “turned the corner” - meaning they’ve realized that debt is dangerous and are actually committed to spending less - but the mountain of debt they’ve incurred makes it almost impossible to move forward. That’s exactly who the book is written for.

‘80% Behavior, 20% Head Knowledge’
Right off the bat, on the first page of the introduction, the basic idea is made clear:

I am positive that personal finance is 80 percent behavior and 20 percent head knowledge. Our concentration on behavior - realizing that most folks have a good idea of what to do with money but not how to do it - has led us to a different view of personal finance. Most financial people make the mistake of trying to show you the number, thinking that you just don’t get the math. I am sure that the problem with my money is the guy in the mirror.

I wholeheartedly agree with this. All of us know that it’s important to save and can see the numbers on how useful it really is. The trick is actually doing it - and that’s all psychology.

If you don’t truly make up your mind to achieve financial success, you’ll hold back. You won’t save - or you won’t save much. You’ll keep telling yourself that “later” is the right time to do it.

And then you’ll find yourself in ten years having not made any progress on your big goals in life.

The choice to start spending less than you earn is a hard one, but it’s the most important one. That choice has nothing to do with math, with running the numbers, or anything else. It’s inside your head.

If You Will Live Like No One Else, Later You Can Live Like No One Else
That phrase is found at the bottom of virtually every page in the book - it’s basically the book’s mantra. Dave’s take on it is clear: live hard now and you’ll live easy later. My take is a little bit different.

I agree with him largely on the first part: it’s incredibly important to tighten up that spending and get rid of the debt. Doing that requires learning how to spend less - and also not allowing yourself to use that extra money for anything but getting rid of debt and building a future. That requires living “different” in a way - your goals shift from the shiny new car and the shiny vacation to the removal of all of your debt.

On my block, I can certainly say I see a lot of shiny cars - my truck is the oldest vehicle on the block, by far. In the end, though, my truck works - and that’s all I can really ask of it. It gets the kids to daycare and gets me to the library, which is really all I need. As long as it keeps running, we’ll keep it. And that’s living quite different when we’re surrounded by vehicles more than ten years newer than my truck.

It’s the other part that’s tricky. I don’t view the “later you can live like no one else” as meaning I can afford that shiny new car. Instead, I take a perspective closer to Your Money or Your Life - the “live like no one else” in the future for me is complete financial independence, meaning I don’t have to work for money.

That, to me, is “living like no one else.” I won’t have to factor in money at all when it comes to choosing how to spend my time, and that’s my real dream.

A 12% Rate of Return?
One big flashing question mark comes on page xv in the preface:

Sadly, many intelligent but ignorant people seem to think that making a 12 percent rate of return on your money in a long term investment is impossible. And that if I state that there is a 12 percent rate of return available, then I have lied to you or misled you. [...] The S&P 500 is the 500 largest companies traded on the New York Stock Exchange, sometimes called “The Big Board.” So it is widely accepted to be the best average of the market. The S&P 500 has averaged 11.3 percent per year for the last seventy-plus years, as of this writing.

So, I immediately flip to the front and discover that this revision was published in 2007. Something tells me that 2008 hurt those numbers quite a bit.

Here’s the point, though: The Total Money Makeover tends towards the optimistic when it comes to investment returns. While there are certainly long-term stretches (more than ten years) where the market as a whole - or certain pieces of the market - have returned more than 12% annually, the truth is that there is no guarantee that any 10 year, 20 year, 30 year, or any year period will return any percent. Surely, 2008 taught us all that, loud and clear.

Instead of relying on that extremely optimistic forecast, I’ve come to use Warren Buffett’s more realistic (perhaps even a bit pessimistic) forecast that in the future we should expect 7% returns on average. This might be slightly on the pessimistic side, but when you’re making calculations for your future and banking on them, you’re better off being pessimistic (and having more money than you need when the day comes) than optimistic (and having to work for the rest of your life).

Calculating with 12% returns gets people really excited - and it might happen. But my perspective is that using such hugely optimistic numbers puts your future at risk. Better to finish with more than you expect than with less.

Tapes and Books Aren’t the Solution
On page 4, a certain quote really caught my eye:

So my Total Money Makeover begins with a challenge. The challenge is you. You are the problem with your money. The financial channel and some tape sets aren’t your answer; you are.

All the blogs, all the books, all the “tape sets,” all the financial products in the world won’t help if you’re not committed to sucking it up and making it work.

If you’re not willing to look at your behaviors, step up to the plate, and make some changes in your life, nothing is going to change.

This kind of talk generates three kinds of reactions. It makes some people angry - they want to believe that they can suddenly get rich without changing a thing, even though it hasn’t happened yet. It makes some people stick their fingers in their ears and sing “lalalala” - they know it’s true, but they’d rather keep the sinking ship they’re on than try to change anything. And then others embrace it and work hard for something better.

I was in the “lalalala” group for years. I knew very well what I needed to do, I just didn’t want to hear it. I knew on some level that what I was doing wasn’t working, I just didn’t want to think about it.

My epiphany threw me on a new track - the “embrace change” track. I finally woke up and realized that if I didn’t take charge of my situation, I was going to keep sinking slowly. This one choice led to tons of things - I paid off four credit cards, two vehicles, three student debts, totaling $30,000 or so in debt; I bought a house; and, finally, I switched careers, earning less but doing what I love.

All of the moves I made were simply the aftermath of that one choice to really make a change. That choice is up to you - no blog or book or podcast can make that happen (well, except for MY blog or book or podcast … just kidding).

King of Denial
The second chapter of the book focuses on denial - simply ignoring that there are problems. Like I said, I did this myself for far too long. One quote from the chapter took my breath away, though:

For your own good, for the good of your family and your future, grow a backbone. When something is wrong, stand up and say it is wrong, and don’t back down.

Powerful stuff, and exactly right. If you’re not going to take charge of things, who is?

The Pain of Change
Another interesting piece comes in on page 15:

Change is painful. Few people have the courage to seek out change. Most people won’t change until the pain of where they are exceeds the pain of change.

I strongly believe that for many people in a routine of spending more than they own, there’s a “bottoming out” effect, not too different than a junkie. At some point, the problems that have been building for a long while explode - you can’t pay the bills any more (which happened to me), you’re forced into bankruptcy, your family splits apart.

For many people, that final point is painful enough that it tips the scales. Suddenly, in comparison, the big change doesn’t seem so painful any more.

I like to think of it like the Mississippi River flood of 1993, which destroyed my hometown. It kept raining and raining and raining throughout the months of June and July, like debt building up. The river kept rising, pushing against the levees, until that fateful day when the levee broke. Chaos ensued and new patterns were rapidly discovered in countless lives.

Soon, we found that the actual path of the river had changed - in many places, it had found a new channel to flow through. The new patterns of life began to settle in place and soon things began to return to normal - but with some big changes. Levees were rebuilt stronger than ever. People prepared their homes for future flooding.

In short, life took on a new, better, safer routine. When you’re recovering from a financial meltdown and discovering new ways to live, this happens - you begin to discover new, better, safer routines.

And you begin to live like no one else.

Do you have any other thoughts on the first two chapters of The Total Money Makeover? Please share them in the comments - and feel free to respond to any of my impressions as well. After all, a good book club is all about discussion!

On Saturday, we’ll tackle the third chapter - Debt Myths: Debt Is (Not) A Tool.

Every other Sunday, The Simple Dollar reviews a personal finance book.

Miserly Moms by Jonni McCoy wears its target audience right on its cover - stay-at-home moms (or at least moms who devote a significant amount of time to domestic management) that are trying to maximize every penny. It’s a good read with lots of specific, applicable tips for domestic spending, particularly in terms of food and household supplies. The book hones in on these issues like a laser beam - though the cover of the book clearly aims for the stay-at-home mom, the contents of the book really apply to anyone - we all shop for groceries and we all need to eat, after all.

In other words, if you’re looking to maximize every penny on household expenses - particularly if you have a large household - this book is packed with advice. If you want stock investing material… you might want to go somewhere else.

Since the book is actually divided into thirty two short chapters, I’ve just pulled out ten of the points and principles that I thought were really thought-provoking.

Don’t Confuse Frugality With Depriving Yourself
Many people hear frugality and they have visions of eating a steady diet of ramen noodles and wearing fifteen year old clothes and never leaving the house while living in a hovel and driving a rusted-out 1978 AMC Gremlin. The truth is that frugality merely means being mindful of finding the best value in your own life and not just settling for the easy, thoughtless solution. As Jonni says on page 33:

If any money-saving activity makes you feel cheap or tight, you will eventually abandon your efforts. This is not the price we need to pay to reach our goals. I don’t need to feel tight and cheap in order to stay home with my kids. There are ways to save money and keep my dignity.

Well said, indeed. If you’re unhappy with a spending cut in your life, then don’t make it. The big trick with frugality is that many people never even think about it. They never ask themselves if they really are getting value out of that expense, or if a less-expensive option will do for them. Quite often, you can make a more frugal choice and never notice the difference (except for the gradually heavier wallet - don’t go frugal if you don’t want extra cash in your pocket).

Don’t Buy Everything at the Same Store
Jonni advocates finding the stores that have the cheapest prices on the various items that you buy, and I fully agree with that strategy. However, I think it’s possible to take that advice too far. I essentially use two stores for almost all of my grocery and household supply shopping - Fareway and Sam’s Club - with occasional stops at Walgreen’s if there are a number of exceptional bargains there.

The trick is simply being objective and finding the store or two that really does have the lowest prices on the items you buy regularly. Don’t obsess over grocery store flyers from every different store, because you eventually reach a point of real diminishing returns, where you dig through flyers for an hour to save $3.

Instead, just stick to the basics. Find a grocery store with low prices. Plan your meals carefully (and use the flyer as a tool). Make a grocery list from that meal plan. Then, go shopping and stick to that list. If you’re not doing these things already, switch to them and your food bill will drop dramatically - I wouldn’t be surprised to see a 50% drop.

Buy in Bulk Whenever Reasonable
Sure, buying whichever version of the item has the lowest cost-per-ounce is usually the best deal. But not always.

For one, if you don’t have adequate storage space, such excess items can easily get in the way. For another, if you’re not going to use the entire amount before it expires, then you’re wasting money buying the bulk version.

Another key point: storage containers. If you’re not reusing the containers you use to store items, you’re likely throwing money away. In other words, you’re better off over the long run putting sandwiches in small reusable containers than in Ziploc bags - even buying them in bulk doesn’t add up. This is a principle I remember my parents using when I was a kid - my father’s lunch was always packed with resealable small containers instead of with baggies.

Cut Back on Prepackaged “Convenience” Foods
The argument in favor of convenience foods is pretty clear - you’re paying a little extra to save time. However, that “little extra” is substantially more than you think at first glance.

Why? It’s a health thing. Prepackaged convenience foods are often loaded with preservatives and unhealthy ingredients like corn syrup and artificial sweeteners. Over the long haul, these things add up to additional weight, a lower quality of living, and additional health care costs. Instead of subscribing to a pattern of unhealthy convenience foods that cost more and contribute to poor health just to shave a few minutes, learn how to prepare your own healthy simple foods instead. For example, I can make an egg-white omelet sandwich with whole wheat toast in about four minutes for less than $1 (and put all dishes straight in the dishwasher) or I can buy an unhealthy breakfast to go for about the same time cost, a lot less health, and likely a higher cost, too.

Why do this? Cut back on the prepackaged foods!

Don’t Assume Something Saves Money
Jonni tells an interesting anecdote about her freezer on page 241:

The first thing I did to conserve energy in my kitchen was to get rid of the extra freezer I had. It wasn’t actually in my kitchen (it was in the garage), but I considered it an extension of my kitchen, as it held all my extra food. When the energy audit revealed that it was responsible for 15 to 20 percent of my utility bill, I questioned its cost effectiveness. I figured it was costing twenty dollars a month to run. At that time, that was 20 percent of our utility bill. I was buying in bulk and storing food in there, but the savings on bulk foods was being spent on the appliance to store them in.

It’s worth noting that many modern freezers are more energy efficient than this. We actually ran similar calculations on our own freezer and found that it was cost-effective for us, but it was closer than we expected. We also found that we were better off filling it to the brim, so we started filling up the extra space with ice - empty gallon milk jugs, rinsed and filled with water, then frozen.

Cut Back on Meats
I’ll admit it - I am currently thisclose to switching to being an ovo-lacto vegetarian. For example, today so far I’ve had a bean and salsa omelet for breakfast and a bowl of leftover vegetable soup for lunch, and I anticipate a vegetarian dinner.

Why am I doing this? As I try cooking with these restrictions, I’m finding more and more recipes that are quite tasty - and I’m finding more and more that meat is the most expensive part of the diet.

Take beans, for example. They’re very healthy, they provide lots of protein, and they’re incredibly cheap. You can take a lot of meat recipes - especially those with ground beef - and just substitute beans, and the resulting recipe is quite tasty.

I never would have believed that I would find myself cutting back on meat so much, but there are lots of great, tasty, filling recipes out there that don’t use meat - and they’re almost always much cheaper than similar dishes that contain meat.

Have a Regular Soup-and-Bread Night
Pencil in one dinner a week for just soup and bread, nothing else. A big bowl of vegetable soup is incredibly easy to make (just boil up whatever leftover vegetables you have with a bunch of spices) and a bit of bread to soak up some of the juices and make the meal more filling is a great side.

Not only that, you pretty much can’t get a cheaper meal. Just take the vegetables you cook during the week and save the leftovers in a closed container in the freezer. If you’re like us, a nearly free and quite healthy meal once a week - especially one that can really be jazzed up with spices and peppers - is a spectacular deal.

Cook Several Meals at Once
A while back, I wrote an article providing an example of preparing several meals at once. The central principle is absolutely true - preparing several meals at once and freezing the extras saves both money and time. The money savings comes in because you can buy ingredients in bulk - the time savings comes in because you have to do very little prep work for each meal once the extras are frozen, since you just pull them out and cook them.

Jonni offers a ton of examples on how to do this. My favorite is one that we’ve started using - just cook tons of chicken breasts at once. We cook several pounds of chicken breasts in the crock pot at one time. Then, we put two chicken breasts into a freezable container, pop several such containers in the freezer, then just pull them out when we need cooked chicken as an ingredient - salads, soups, and the like. Easy as pie.

Warehouse Club Wariness
This is one area of the book where my perspective differs from Jonni’s a bit. With regards to warehouse clubs (Costco, Sam’s Club, and the like), Jonni is extremely wary, arguing that on many items, the prices aren’t better than what you can find in other stores. I agree with her in this regard - as with any store, you have to have a good grasp on what you’re buying. In my own experience, however, I’ve found that many items are substantially cheaper there.

From there, though, Jonni makes several claims about warehouse clubs that oppose my own experience. She argues that they sell only store brand items and usually only sell one type of many items (dishwashing detergent, etc.). In my experience, there are usually several brands available for these types of items. Similarly, her shopping list of items that are good deals at warehouse clubs are a little confusing as well, since I’ve found that different warehouse chains tend to have different items with exceptionally low prices.

Your best bet? Figure out what’s really worthwhile at your local warehouse store. If it’s worthwhile for you, join up - it probably will be. Remember, the key is to get the items you want at the best possible value for you - and you may find that a warehouse club does that very, very well.

Make Your Own Gift Baskets
When it comes to gift-giving occasions, many people sweat it out and end up spending way too much on gifts. Jonni offers a different avenue: a themed gift basket pointed at an interest or life event of the recipient. This requires some planning, but since the basket is made up of little items (many of which are consumable)

This is a great encouragement to make batches of homemade items for weekend projects. We make homemade beer, homemade soap, homemade pasta, and homemade wine. Later this summer, we intend to make a few giant batches of salsa. All of these items will be used in part to make gift baskets - we’ll just package these items nicely, collect them together, and given them as gifts to family and friends, with different assortments depending on the person.

Is Miserly Moms Worth Reading?
If you feel a need to cut domestic spending in your life, Miserly Moms is undoubtedly a worthwhile read. Aside from The Tightwad Gazette, this is probably the best collection of tips I’ve ever read on trimming domestic spending - and it’s certainly quite concise and focused.

If most of the advice above seemed very old hat to you, though, you may not get too much out of the book. Having said that, though, for most people, the advice above is not old hat.

For me, I pulled out a few useful tips, but this book was not a world-changer for me. However, I can certainly see it being very valuable for some people I know, and I’ve already passed along my copy to a friend that’s also a stay-at-home mom. For her, Miserly Moms could very well be an invaluable read.

Every other week, The Simple Dollar reviews a personal development, personal productivity, or entrepreneurship book of interest.

At first glance, Mindset by Dr. Carol Dweck seemed to be one of those pop psychology books that I usually avoid - another The Secret or The Power of Positive Thinking. Books along those lines just repeat the same ideas that are as old as the hills (or Napoleon Hill, at least) - if you think positively and visualize good outcomes, they’re more likely to happen. Great - but it’s a principle that doesn’t work without action and has been around since the dawn of time.

As I said, I originally lumped Mindset into that group of books, writing it off as more of the same on positive thinking. Then something interesting happened - two different people that I respect quite a bit recommended the book to me within a week of each other. One was a personal friend who said it really changed how he looked at his career and at his relationship with his girlfriend - which surprised me, since he’s not a person I would imagine would typically follow pop psychology talk. Perhaps even more surprising, Jonathan Fields, a blogger and writer I’ve exchanged a lot of emails with over the years, wrote a brilliant article entitled Is Gifted and Talented a Life Sentence? that really shook how I thought about parenting issues with my own kids. Interestingly, Jonathan also pointed strongly towards Mindset as a powerful source of inspiration.

When two people I respect suggest the same book completely independently within a week of each other, it’s likely a book I should make an effort to read. And I’m glad I did.

The basic idea behind Mindset is that people either have a “fixed” mentality - a self-definition that is static and doesn’t or can’t change - or a “growth” mentality, meaning that with work and effort, they can change who they are. Dweck argues strongly that people who are successful in life have the “growth” mentality and offers a ton of ideas on how to get yourself - and those around you - from the “fixed” mindset to the “growth” mindset.

This is something I’ve come to believe in my own life, even before reading this book. The people that always seem to succeed are the people that are willing to really push themselves to the limit. Often, the person with the most natural talent doesn’t win the race - and for a long time, I didn’t understand why. This book (and the surprisingly similar Outliers by Malcolm Gladwell) explains it quite well. Let’s dig in.

1. The Mindsets
How do you feel when you fail?

Some people hate it, as they view it as a clear sign to the world and to themselves that they are, in fact, a failure.

Others love it. They see a failure as an opportunity to grow, to learn about the areas where they need to work, and to become a better, stronger person.

The first attitude points to what Dweck calls the “fixed” mindset. In other words, they believe that the person they are is already defined and the outcomes produced by that person are indicative of the person they are. They can’t change - all they can do is bluff and try to make who they are appear as good as possible.

The second attitude is the “growth” mindset. People who revel in failure recognize that a failure isn’t necessarily a poor reflection on them. Rather, it’s an opportunity to see where exactly they fall short and what exactly they need to work on. It’s a reminder not of where they cannot go, but an insight as to what they need to do to get there.

Here’s another way of looking at it: can you change who you are? People with a “fixed” mindset believe they can’t change. People with a “growth” mindset believe that they can change.

2. Inside the Mindsets
The difference in mindsets is interesting, but how does that really appear in terms of how people behave?

People with the “fixed” mindset often back away from challenges. They want to avoid hard things and prefer to thrive on easy things, things they know they can achieve. They also typically don’t like to read or learn, and they certainly don’t enjoy hard or deliberate practice.

People with the “growth” mindset seek out the challenges. They seek out the hard things in life and prefer to tackle things that push them and make them work hard, even if they fail at them. They usually love to read and learn, and they love practicing and improving at specific skills.

In an email exchange with a friend about this book, he stated it very well: “People with fixed mindsets get bored a lot. People with growth mindsets would give anything for a few more hours in the day.”

3. The Truth about Ability and Accomplishment
Here, the message of Mindset overlaps heavily with Malcolm Gladwell’s Outliers: the biggest key to success isn’t talent, but focus and practice.

To put it simply, the people that rise to the top of their fields do so because they keep working at it, keep growing, roll through the failures, and practice intensely and often. Kobe Bryant and LeBron James aren’t the two best players in the NBA because of their talent - they rose to the top because of their obsessive work ethics and focus on thriving even through adversity.

Although Dweck doesn’t mention it, I keep coming back to Gladwell’s example of The Beatles. If you listen to their earliest recordings - 1960 and before - they frankly weren’t very good at all (I probably sound better than some of their 1958 “Quarrymen” recordings). By 1963, they were amazing. By 1966, they were arguably the best songwriting and performing collective in the world. What happened? They played almost nonstop for years. They’d play for hours and hours each day in Hamburg nightclubs, then they’d play on their own when they weren’t on stage. They’d mess up songs, laugh it off, and try again - over and over and over and over. Eventually, they went from being the unknown Quarrymen (sounding like a bunch of kids beating on instruments - which they were) to recording albums like Revolver.

To put it simply, effort, not talent, puts people over the top.

Even more dangerous, labels such as talented and smart and skilled give people the opposite message. Hearing things like that tells people they already have the ability and that they don’t need to grow and work for it. The best positive feedback you can give - or receive - is one that complements you on your ethic or work effort, as it nurtures a growth mentality.

4. Sports: The Mindset of a Champion
Yes, we’ve all heard the story: Michael Jordan was cut from his eighth grade basketball team. He then practiced obsessively, made it to North Carolina on scholarship, and the rest is legend.

Michael’s early signals on basketball were that he wasn’t very good at it. If he had a fixed mindset, he would have simply quit after getting cut. Instead, he took getting cut as a giant motivator - he took that lesson and his own work ethic and made hay with them.

It isn’t just an ability to practice obsessively, either. When you reach the top, it takes character to stay there, and character only happens if you subscribe to a growth mindset. You’re not perfect - no one is. What sets the winners apart is that they recognize when they mess up, they accept that they messed up, and they work to make sure it doesn’t happen again.

5. Business: Mindset and Leadership
How do the mindsets work in a modern workplace? It’s pretty simple, actually.

A growth mentality in a workplace focuses on making everyone succeed by having the project succeed. A person with a growth mentality will take on any task that needs to be done to bring on success - often, the hardest tasks are the ones that the growth mentality relishes. A boss with a growth mentality will seek to do everything he or she can to make you better, because the better you are, the better the team is.

A fixed mentality in the workplace features individuals seeking to make themselves look better at the expense of others. Gossip is a great sign of this. Projects where no one steps up to the hard tasks is another sign. A dominating boss who takes credit for everything is yet another sign. A workplace without people pushing themselves and helping others is a workplace that can’t produce amazing things.

6. Relationships: Mindsets in Love (or Not)
Ever been dumped? Some people take it well: they’re hurt, but they recognize that there were problems and that it’s time to move on. Others don’t take it as well: they slip into depression, get angry, and won’t let go of the relationship.

This same dichotomy pops up again and again in interpersonal relationships: some relationships are healthy and mutually beneficial (like a good marriage), while others are not (like bullying or a stalker). What’s the difference? In a healthy relationship, you grow while in the relationship and you grow when the relationship ends - but it takes work to maintain. An unhealthy relationship doesn’t take that effort, but it doesn’t build positive feelings and often results in negative ones.

Every interaction is a chance for growth - or a chance to merely maintain some form of the status quo. Interactions that help people grow result in good relationships over time.

7. Parents, Teachers, and Coaches: Where Do Mindsets Come From?
When you are charged with helping someone else improve or grow, you have the ability to help them have a fixed mindset (likely not successful) or a growth mindset (potential for success). Teachers, parents, and coaches all have these opportunities.

What can such a person really do, though? Dweck compares the approaches of Bobby Knight (who demanded perfection at all times, yelled a lot, and led his players to a fixed mindset where they had to act as perfect as they could whether or not that’s what was really inside of them) and John Wooden (who never raised his voice, focused almost entirely on fundamentals and character growth, didn’t worry about perfection, and strove to produce great people). Both saw great success in college basketball, but Wooden produced more people that went on to do great things in the world - the true product of a coach.

Praise your children and students for their work ethic and their hard effort. Don’t praise them for their talents or the “greatness” of their end product. If they make mistakes, don’t tell them they’re worthless - instead, guide them into what they can learn from the mistake and encourage them to try again.

8. Changing Mindsets
What if you’re in a fixed mindset, but desire to have a growth mindset instead? The first step is to ask for help from those around you and listen to what they have to say. They’re going to criticize you - and that’s where your real decision happens. Are you going to listen to what they have to say and try to grow from that? Or are you just going to discredit or pooh pooh it?

Another key tactic: realize that the world doesn’t owe you anything. You may be naturally talented. So what? The spoils don’t just fall to the people with natural talent. They fall to the people who can do the job well, on time, and with reliability. You might be the best jazz flautist in the world, but if you don’t practice your pieces and ignore what’s going on around you, no ensemble will want you around.

Dweck offers quite a few similar tactics throughout this chapter, but these two really stood out to me.

Is Mindset Worth Reading?
I actually felt that Mindset covered much the same ground that Outliers did. They both stress something I’ve found to be an absolute truth in a life that’s successful in any dimension: talent is useful, but hard work and perseverance and learning from mistakes win the day.

Here’s the real lesson that Mindset hammers home very well, with lots of little ideas and tips to help along the way: you’re going to fail at some point. How you deal with that failure is what will make you either a success or a failure in life. If you meet that failure head on, accept the failure, don’t give up, and attempt to learn from it, you’ll succeed. If you avoid the failure and try to find excuses for it, you’ll likely never succeed.

The choice is yours. And if you find that distinction to be an exciting and interesting and useful one, Mindset is an excellent read.

Every other week, The Simple Dollar reviews a personal finance book.

Greg Karp is the author of the “Spending Smart” column which appears in a number of newspapers nationwide - it’s typically a pretty good read, though Greg didn’t fall on my radar screen until I read his first book, Living Rich by Spending Smart.

Almost a year ago, I wrote a sparklingly positive review of Living Rich by Spending Smart. Given the quality, as soon as I heard that Greg had written a second book, I was quite eager to give it a read.

The 1-2-3 Money Plan, per its subtitle, claims to discuss the three most important steps to saving and spending smart. The book clearly focuses on the applicable, with several interesting suggestions and conclusions. Let’s dig in and take a look.

1 - Spending Smart Redux
One big theme that you notice right off is that this book is heavily invested in the idea of the “rule of three” - that a three-step plan makes the plan easy to follow and that knocking a complex idea down to three discrete points makes it easier to understand (hence the title, I suppose). Three-step plans pop up all over the place in this book.

This opening chapter of The 1-2-3 Money Plan really has one key idea: the best way to get a leash on your money is to get your spending in check. My favorite piece of advice was how to spend your discretionary income: focus entirely on things you deeply care about, experiences, and things that appreciate in value.

2 - First Things First
What comes first in getting your financial state in order? Karp offers five distinct areas: taking stock of your current financial state, basic estate planning, preventing identity theft, getting with a good bank (and automating your finances), and paying your bills (again, some automatically).

Sure, these steps seem simple, but they really are the basis for getting your financial house in order. I actually believe getting a good grip on your money is a powerful first step, because it then becomes much easier to see the impact of your individual decisions on your pocketbook.

3 - Get FIT (Food, Insurance, Telecommunications)
Karp identifies three big areas where almost everyone can cut some spending: food, insurance, and telecommunications.

With food, Karp piles on the recommendations: make a price list, match coupons to flyers, make meals in advance, build a meal plan, use a grocery list, and go shopping less often (once a week at most).

On insurance, avoid extended warranties, refinance your life insurance (meaning shop around now for a better policy, then ditch your old one), and raise your deductibles, particularly on your house and automobile insurance.

For telecommunications, cancel your landline service (good advice if you’re not in a highly rural area with occasionally dodgy coverage), downgrade your wireless plan to one that matches your needs (or perhaps even ditch it and get a pay-as-you-go phone), and actually evaluate how much you really use your television and internet service (and potentially downgrade those as well).

4 - How to Buy Stuff
The basic procedure Karp advocates is pretty straightforward: don’t make a major purchase without first reading plenty of reviews, asking for recommendations, and doing both online and offline price comparisons. This should be mantra for anyone making any sort of major purchase.

One interesting part of this chapter was Karp’s advice on allowances: give your kids an allowance, but don’t tie it directly to chores. When my son turns 4, we’re going to start an allowance for him, and this is the way we’re leaning - using non-monetary methods to encourage him to do basic chores.

5 - Green Means Green
Most of the techniques a person uses to reduce their environmental footprint also reduces their spending footprint. Use rechargeable batteries. Replace your five most used light bulbs with CFLs. Drive sensibly (don’t speed and don’t punch the accelerator). Avoid bottled water.

One point where I disagree with Karp - he suggests always avoiding big-ticket energy efficiency upgrades because the break-even date may be a decade or more into the future. What he’s not considering is that such fixes often greatly increase the resale value of your home. For instance, if I replaced our roof tiles with solar tiles, it might be very expensive, but the energy bill would immediately go down plus the value of our home would go up (since the next tenants would have lower energy bills). That makes the break-even point quite a bit earlier.

6 - Credit When Credit’s Due
Karp offers great advice on the basics of credit here. First, check your credit report (and don’t use freecreditreport.com) and make sure there are no errors on it - that’s the most important thing, if you haven’t done it.

How do you start digging out of debt, though? First of all, stop using credit. Then develop a debt repayment plan and stick to it. If you’re having trouble, it’s vital to remember that cutting your spending is a key counterpart to a debt repayment plan.

My favorite point from the chapter was the discussion of how to use a credit card effectively: get a good rewards program, stop carrying a balance (paying it off in full every month), and use your leverage - don’t be afraid to call them and threaten to switch credit cards if they raise your rates or anything you don’t like.

7 - How to Save Money
The biggest key is to automate. You should start by automatically transferring money to separate savings accounts - one for your car and one for an emergency fund. From there, grow to funding a Roth IRA using automatic funding. If you have kids, fund a 529 college savings plan automatically, too. If you have to think about it, you’re opening yourself up to forgetting about it or talking yourself out of it - so don’t give yourself that chance.

The most interesting idea I found here was the idea of a savings account for seasonal expenses. For example, in Iowa, one’s energy bill is often much higher in the winter, plus there’s the cost of snow tires, etc. If you put some money automatically into a seasonal account, particularly in the spring, summer, and fall, you’ll have that extra money in the winter. This works well for any seasonal expense.

Is The 1-2-3 Money Plan Worth Reading?
Most of the advice in The 1-2-3 Money Plan is advice you’ve possibly heard elsewhere. Karp covers most of the truly familiar areas of personal finance writing with this one.

So what makes it stand out? At the start of this review, I mentioned the reason - Karp sticks strongly by the “rule of three.” In other words, almost every point in this book is followed by three very direct and blunt action tips, which make it easy for the reader to actually take direct action on that idea.

So, The 1-2-3 Money Plan is a great book if you have a hard time transforming specific personal finance ideas into direct action. Karp hits a home run in that department. However, if you’ve already got your money in order, this book might not have too much to offer you.

Scott writes in:

How can you read and review a personal finance book every week? I’ve read three or four of them and they seem all the same to me. Don’t you get tired of the reviews?

I get some version of this question quite often - and it’s a good one. I’ve been reviewing one or two personal finance or personal development books a week for about two and a half years. In fact, here’s a list of all of the book reviews I’ve done - 192 reviews and counting, as of this writing.

That’s a lot of books, no matter how you slice it. Why on earth would I read so many - and so regularly? I can think of nine reasons…

Reading personal finance books helps me keep my eyes on the prize. Reading a book every week makes me think once again about the need for keeping my money in order and the tactics I use to do it. It’s similar to the reason that a lot of people read The Simple Dollar - regular reminders keep the message fresh and keep our eyes on the prize.

Reading more personal finance books helps me make better book recommendations to others. Every month or two, I’ll read an exceptional book - one that really helps break down personal finance issues in a spectacular way for a specific audience. For example, Please Send Money by Dara Duguay does a great job of addressing the needs of college students, while You’re So Money by Farnoosh Torabi really hits the financial needs of young single female professionals. I also stumble upon great books on specific topics, like Financial Infidelity by Bonnie Eaker Weil, which brilliantly addresses the problems of money and marriage, particularly when one spouse is “hiding” money issues.

Reading personal finance books written for different audiences helps me to see the different needs that different people have. Reading books intended for different audiences is very insightful. For example, I quite enjoyed You’re So Money even though I’m not in the demographic for the book at all - it challenged my thinking in a lot of ways and helped me to see how twentysomething professional women might have different perspectives on money issues than I do. Understanding this enables me to write better articles for The Simple Dollar.

Each personal finance book I read exposes me to a new idea or angle or two. I learn something new from almost every personal finance book I read. Those new ideas get filed away for future reference and combination with other ideas I’ve already learned, and quite often, it’s the meeting of two ideas that becomes the impetus for a post for The Simple Dollar.

I still love hearing stories of financial turnarounds and financial success. I know it can be done from my own life, but I still love hearing stories of people overcoming their adversity. It’s a great thing - people come across challenges, they work hard and commit to real changes in their life, and they do it! They make it!

Once in a while, I’ll discover a really great book that twists how I think about things. Not all books can match Your Money or Your Life. However, once every few months, I will read a book that shocks my system a little bit and makes me really think about issues in my own life. It’ll float around in my mind for weeks, sowing ideas wherever it goes. A recent one I’ve reviewed in that vein is Who’s Got Your Back by Keith Ferrazzi.

Seeing the same idea written in many different ways gives me food for thought on how to present personal finance ideas. Even the repetitive aspects inspire me. After seeing the same idea described in thirty different ways, I grow as a writer. I begin to see how the same idea can be tackled in lots of different ways, and I work through how I want to present them and think about them.

Seeing where personal finance tactics contradict each other - and there are a lot of places - gives me a lot of food for thought. Some books advocate an index fund-based strategy for investing. Other books offer completely different advice. Those conflicts excite me. They make me think hard about what’s really going on, and sometimes, they make me come to completely unexpected conclusions.

Reading lots of books of any type exposes me to different writing styles, improving my own writing. Beyond what I review on The Simple Dollar, I also read two or three additional books a week (those who follow me on Twitter know all about them, because I mention them there). Reading so much not only exposes me to a lot of ideas, it also provides tons of insight on how to write in general. I find myself trying subtly different approaches on The Simple Dollar all the time.

To put it simply, if you blog on a particular subject, there are few things you can do that are more useful than becoming well read on the subject and then sharing what you learn and the ideas all that reading causes to grow in your head.

Every other Sunday, The Simple Dollar reviews a personal development, personal productivity, or entrepreneurship book.

It’s no secret to long-time readers of The Simple Dollar that I loved Keith Ferrazzi’s first book Never Eat Alone. I thought it was a brilliant discussion of how to network ethically in the modern world by building real, valuable relationships with people centered on giving of yourself to others. Even though I’m an introvert, I’ve taken many of the principles in Never Eat Alone to heart in my own real-world experiences - and online as well.

While Never Eat Alone does a great job of outlining how to build relationships with a large group of people, it’s fairly self-evident that there’s a lot of value in building particularly strong relationships with a small group of people. These are people you trust and who trust you, wise and insightful and willing to spend significant time with you because you make each other better. Mentors, advisors, friends - all of those titles apply. Most people are lucky if they find a handful of such people in their lives.

Finding and cultivating this inner circle is what Who’s Got Your Back focuses on. How do you find these core people? What traits do you have that will click well with others, and how do you find the traits that will click well with you? How do you maintain relationships with them over the very long haul?

I’m a huge believer in the power of mentors, and I’ve discussed techniques for finding a good mentor in the past. Let’s dig in and see what Ferrazzi has to say on the subject.

One: Who’s Got Your Back
Ferrazzi argues that the need for an inner circle of mentors, advisors, and friends that you trust and respect is something that almost everyone in the modern world strives for - if that wasn’t true, why would things like “life coaching” be such a huge multi-billion dollar industry? Even more disturbing, according to a 2006 study in American Sociological Review, the average person has only two confidants, and 25% of people have none at all. In a ever more complex world, confidants and advisors are more important than ever before - yet people have fewer of them.

Ferrazzi then makes the case for how valuable “lifeline” relationships are, focusing on four ways that such relationships are critical:

1. To help us identify what success truly means for us, including our long-term career plans.
2. To help us figure out the most robust plan possible to get there, through short-term goals and strategies that would tie us in knots if we tried to go it alone.
3. To help us identify what we need to stop doing to move forward in our lives. I’m referring to the things we all do that hold us back from achieving the success we deserve.
4. To have people around us committed to ensuring that we sustain change so that we can transform our lives from good to great.

I know that in my own life, my chief “lifeline” relationship is with my wife, and I constantly talk to her about the things above. It helps more than you can ever know and often guides me towards difficult decisions that I might “chicken out” on if I did them alone.

Two: The Four Mind-Sets
Ferrazzi identifies four “mindsets” - more like traits, actually - that, when cultivated, provide the foundation for building such lasting “lifeline” relationships.

Generosity You have to be willing to give sincerely of yourself without expecting a thing in return. Generosity is the foundation of trust, and trust is what makes such relationships work.

Vulnerability You have to be willing to be vulnerable. Can you move outside your safety zone? Can you accept criticism from others?

Candor You have to be willing to be totally honest with others. If something’s on your mind, you shouldn’t hold it back. It might be valuable.

Accountability You have to be willing to follow through on the promises you make to others.

These four traits are vital for building lifeline relationships - ones where you can bounce ideas freely, receive criticism, and truly grow as a person as well as in your ideas and goals. Others that you build such relationships with must have such traits as well - without them, the relationship is not going to succeed over the long haul.

Three: Building Your Dream Team
So how exactly do you build this team? Ferrazzi identifies a nine step plan for finding these people, cultivating the relationships, and maximizing their value in your life.

Step One: Articulate Your Vision This means soul searching. What do you really want in life? What are your big goals and dreams? What are your interests and passions? What do you really value? For me, my values center around my family and my writing, so if I were looking for people for my own inner circle, I’d want someone that valued family and had some insight into creative careers.

Step Two: Find Your Lifeline Relationships Look throughout your life - your work, your extracurricular activities, your personal life - and identify people who match up at least somewhat with what you want in life. Get to know that person a little and find out if they actually exhibit those valuable traits. Are they committed? Do they have some know-how - knowledge of what they’re talking about? Do you get along well with them? Are they curious by nature? If you see a lot of these factors, you’ve got someone very promising.

Step Three: Practice the Art of the Long Slow Dinner Gradually get to know a potential lifeline quite well. Have a lot of meetings with them - lunches, dinners, coffee. Talk about anything and everything. Feel them out. If it’s right, you’ll know it - if it’s not, don’t be afraid to move on and try again.

Step Four: Broaden Your Goal-Setting Strategy The first real way to get your lifeline friends involved is to talk about the goals you have - and the goals they have. Offer candid input on their goals, and invite (and accept) their candid comments on your own goals. Develop new goals together - and talk about how you can get there.

Step Five: Create Your Personal Success Wheel The “personal success wheel” is a wordy way of describing the key areas in your life that you want to succeed in. Financial success, spirituality, giving back, physical wellness, intellectual stimulation, deep relationships, and professional growth are areas that Ferrazzi mentions that are common to most people. Ask yourself what you’re doing in each of those areas - and bounce your thoughts off of those people in your lifeline. Similarly, encourage them to do the same - think of their core areas, ask themselves what they’re doing in each, and bounce their thoughts off of you.

Step Six: Learn to Fight! In other words, you have to be able to (and be willing to) diasgree with people in your inner circle. More importantly, you have to be able to debate ideas without making it personal - Ferrazzi calls this “sparring.” The key is realizing right off the bat that you’re just comparing and analyzing ideas, not attacking each other, and you can both grow from this process.

Step Seven: Diagnose your Weaknesses Introspection is a key part of all of this. You have to be able to not only figure out your weaknesses (and Ferrazzi gives a lot of tips for this), but be able to reveal and discuss those weaknesses with others, along with strategies for overcoming that weakness (or turning that weakness into a strength).

Step Eight: Commit to Improvement Steps four through seven are going to give you constant ideas on how to improve your life (and, along the way, give the others in those relationships with you tons of ideas as well). In order to actually get something out of it, though, you have to be willing to commit to improving yourself. You need to take at least some of those ideas and actually implement them, making yourself better, or else you come off as very insincere. Doing is much more valuable than talking.

Step Nine: Fake It Till You Make It - Then Make It Stick Ferrazzi’s big point here is that practice and repetition are vital. All of the steps above are ones that you should be constantly repeating. All of the ideas generated should constantly be worked on. They should just become a part of your life - and they easily can. Why? Because those “lifeline” friends will eventually become your closest friends - the foundation of your life.

Four: Make It Your Life
The final portion of Who’s Got Your Back picks up where the final point leaves off. The ideas in the book aren’t just a one time process, but elements of a successful life. Ferrazzi offers several worthwhile points to cap off those ideas - here are three.

A group of like-minded people is a great place to start. If you don’t know where to start, look for an already-existing group of like-minded people that share your interests. If you’re an entrepreneur, check out local small business associations. If you’re a parent, look for PTA meetings. Find people that share your passions and you’ll have a great group to start with.

Forming an actual group can be quite scary. Ferrazzi suggests several approaches, but the real foundation is the people. Your best bet to make a group work is to try to cultivate the relationships between people you have lifeline relationships with. If you can get, say, four people where every person has a one-on-one relationship of this kind, that group will be invaluable to all of you.

Suggestions are invaluable. If you have an out-of-the-blue idea that really fits a person you have a lifeline relationship with, write it down and treat it with the weight you would treat a great idea for yourself. If you’re doing this for each other, it’s like having two or three or four minds out there trying to come up with great ideas to push you farther.

Is Who’s Got Your Back Worth Reading?
To put it simply, I loved this book, too. The material in here applies well to virtually everyone, particularly people who are somewhat introverted who may need that extra push to build strong life relationships (I’d put myself in that group). What appeals to me, as with Never Eat Alone, is that everything is underlined with giving of yourself. Paying it forward is a strategy that has never, ever failed me in life.

This one is already on my re-read pile. I plan to let the contents of it sink in for a while, then give it another read-through in a few months.

My only criticism is similar to the criticism I had with Never Eat Alone, but it’s one that I understand. Ferrazzi has a tendency to name-drop in places. My interpretation of it is that Ferrazzi is actually much like myself - he’s an introvert who has to work on being an extrovert, and being able to drop those names makes it easier. I do a similar thing, to be quite honest - I tend to talk in big bursts when I don’t know someone well. I’ll be quiet for half an hour, then drop a two minute wall of words. It’s something that comes up as a result of my natural introversion - and it’s something I’m aware of and try to work on.

Put this on your Amazon wish list or your library list. This one’s really good.

Every other Sunday, The Simple Dollar reviews a personal finance book.

The second I picked up Oblivious Investing by Mike Piper, I was immediately reminded of Michael Mihalik’s excellent Debt Is Slavery.

The two books have much in common. They’re written by people who aren’t personal finance gurus - instead, they just bring a lot of very specific passion about a very specific topic to the table. The books are short and very tight, drilling right in on their points. Their ideas are realistic and sensible - and the concepts are repeatedly backed up by both life experience and with the more lofty and scholarly writings of others.

While Mihalik drilled in on the dangers of debt, Piper’s focus is simple: investing can and should be simple and it shouldn’t require all your focus. Worrying about market fluctuations is bad. Picking stocks is a nerve-wracking gamble. Moving your money around all the time requires too much attention. Instead, Piper argues that we should be largely oblivious to our investments - and the idea is backed up with a lot of sound principles.

Piper’s book has two interconnected parts.

Part One: The Plan
Piper’s plan is very simple, but in those few pages he incorporates quite a lot of the ideas that have been written about for years by hundreds of investing experts - Burton Malkiel, John Bogle, and so on.

Here’s the idea. It’s possible to pick the best stocks if you have all of the information. However, there is so much information that it’s actually impossible for people - even people who devote their lives to the study - to absorb enough information to make those picks consistently.

What we can do is step back and look at some bigger patterns. Over the short term, the stock market fluctuates a lot - one only has to look at 2007 and 2008 to see that. Over the long term - ten to fifteen years or more - the stock market shows positive returns. Over even longer terms - twenty years or more - it shows very nice positive returns.

So, the first step is to figure out your goals. What are you saving for? How far off is that goal? If it’s not very far off, avoid the stock market - it’s too volatile. If it’s very far off (more than ten years), invest in the stock market - but invest in the whole stock market and do it as cheap as you can.

How do you do that? Buy index funds. Extremely broad index funds (like, for example, the Vanguard Total Stock Market Index) let you own every stock in the stock market all at once, and the costs are very small.

So, your investment plan is this: if your goal is short term, invest a certain amount each week/month into bonds or CDs or something else very stable and with positive low returns. If your goal is long term, invest a certain amount each week/month into a broad based index fund. Then, forget about it until you get close to your goal.

Part Two: The Noise
Once you’ve made the decision to invest, the real trick is to filter out the noise.

First, train yourself to ignore what’s going on today, this week, this month, and this year. The stock market is volatile - live with it. The trick is to remember that you’re investing for the long term. Volatility doesn’t equal long-term risk. Another thing to remember is that short term stock market volatility is entirely unpredictable. So just ignore it.

Second, don’t bother chasing the “best” funds. Instead, just put your money in an index fund that matches the market for cheap. Why? A fund that’s the “best” one year is quite likely to not be the best in subsequent years - the market changes, investors herd into the fund and flood it with too much money so that the strategy doesn’t work any more, and there’s a lot of cost in jumping from fund to fund. Just pick a steady, average fund and leave it there - ignore the “fund of the minute” and the talking heads on CNBC.

Third, ignore specific stock tips. The ones in the media are often placed there by analysts who are set to profit from people following that tip. The one from your uncle might be useful or it might not be - but don’t bet your future on it. Ignore all the specific investment tips.

If you’re filtering out all of that, you’re left with just one thing: your plan. Keep investing, steady and surely, and don’t sweat the little swings or the panicked talking heads.

Is Oblivious Investing Worth Reading?
Oblivious Investing does a fantastic job of laying out the “buy and hold” strategy in layman’s terms that anyone can understand. For a person who simply wants to begin investing their money for the long term but doesn’t want to spend every day praying at the altar of CNBC, Oblivious Investing is a great read.

If you want detailed advice on portfolio management, this isn’t your book. If you want comparisons of individual investment strategies, this isn’t your book. Piper makes one big point throughout this book - he makes it thoroughly and clearly, but Oblivious Investing doesn’t try to be a Swiss Army investment book. If you want that, read The Bogleheads’ Guide to Investing.

I should say, though, that I subscribe to the investing strategy in Oblivious Investing. It works well for me and this is the best layman’s description of it that I’ve yet read.

Every other Sunday, The Simple Dollar reviews a personal productivity, personal development, or entrepreneurship book.

Discover your passions and make a living from it.

It’s an idea I talk about quite often on The Simple Dollar - and it often gets pooh-poohed by people who believe strongly in work-life separation, that you should do a job that maximizes your income for your effort. My belief is that you can reach that same point and enjoy yourself along the way by following your passions.

Others argue that their passion isn’t possibly something they could earn an income from. For those, there’s Craft Inc. by Meg Mateo Ilasco.

The idea behind Craft Inc. is simple: you like making something, but you have very little understanding of how you can translate it into a business. Although the book focuses specifically on crafts (with a layout that reinforces that idea), it’s actually a great side business starter book no matter what you want to sell.

So what’s inside the covers? Let’s dig in and discover something interesting.

1 - Your Creative Mind
Many people have the spark of a great creative idea within them, but they bury it behind myths that aren’t really true. “I’m too old” is a myth. “I’m not an ‘arty’ type” is a myth. “I’m waiting for the right time” is a myth. “I need to do this full time before I start” is a myth. Don’t let myths hold you back.

The best way to get started is to simply do it. Spend some time every day practicing your craft. Keep track of interesting ideas. Find a place to work that makes you feel creative and energetic. Most of all, share your dreams with others - tell them what your wildest dreams are related to your craft.

2 - Your Business Mind
The first step in translating the craft you enjoy into a business that can make money is developing a business plan. Craft Inc. offers a great framework for doing this, identifying all of the key elements you need and discussing some in detail. More importantly, it outlines why you need to do this - more than anything, it’s a powerful way to get all of your ideas in order and make sure all of your bases are covered.

Do you need to file for trademarks? Maybe, depending on what you’re doing - and the book provides a brief guide. Do you need to file paperwork to start a company? If it’s just you and just a side business, probably not - a sole proprietorship will work at first. Where should the seed money come from? Your best bet is likely living frugal and saving up that initial investment yourself.

3 - Your Personal Style and Your Products
A boring product doesn’t sell. How can you be sure that whatever you’re making will leave a lasting and positive impression?

First, don’t try to please anyone - instead, focus on pleasing yourself. Create things that you like. Package them in a way that you like. If it’s not appealing to you, don’t do it - look for a different approach.

Attend trade shows and craft shows for ideas. That doesn’t mean you should copy the ideas you find, but having lots of input will help you figure out elements that work for you - and elements you should leave behind.

Keep a notepad with you at all times to jot down ideas and things that you observe that you like. Record those ideas as soon as they come to mind so you don’t have the chance to forget them.

Set clear goals. Figure out what exactly you’re working towards and what your next step is, then focus in on that next step. Don’t sweat the mountain before you - focus on getting the next step right.

If you need help with specific elements, ask for it. Ask people who are already doing these things (or similar things) how they handle that area. Don’t be afraid of the fact that you can’t do everything yourself.

4 - Production and Pricing Plans
Scaling up a hobby that you enjoy is tricky. Initially, you’ll try to price an item based on the work put in and raw materials invested in a single item, but often that price is too high to sell. So you have to lower it. Plus, you’ll start seeking supplies in bulk (reducing your cost per item) and rethinking everything about what you do.

The biggest step for most nascent businesses is to rethink the production of the items. You might have a great procedure down for making one quilt, for example, but there might be a much better strategy if you’re attempting to make twenty quilts.

In my own experience with The Simple Dollar and my other writing endeavors, I had to make the same transformation. It wasn’t simply enough to just write when I felt like it or to write one piece at a time. I had to organize ideas, schedule my writing, and plan ahead instead of just doing things as they came along. That change made my writing vastly more productive.

5 - Marketing and Publicity Strategies
Once you’ve got the manufacturing part in line, you have to start finding customers (and hopefully lots of them). Craft Inc. advises you to be your own publicist, especially at first. Start a website for your business (and spring for a good design and your own domain name). Start a blog and update it regularly, just writing off the cuff stuff - don’t worry about hard-selling the product.

One big key: take good photographs of your products. Try lots of things and take plenty of shots until you find ones that really make the product sparkle. The photograph of the product is often the first impression that people get - and a good first impression can often clinch the sale.

6 - Making Sales and Order Fulfillment
So, how do you actually make the sale? Craft Inc. makes the sensible recommendation that you should start in situations where others handle at least some of the mechanisms of salesmanship for you.

First, sell online. Sites like etsy are great places to start if you’re making handmade items. Another strong tactic is to try consignment - putting your items in a shop, but you retain ownership while the actual shop either gets a flat fee or a cut of each sale. The best way to get started on that is to simply start talking with appropriate shops.

The next step usually revolves around craft fairs, which is a great platform once your business is taking off. Craft fairs help you make connections with shop owners, directly sell to customers, and network with others doing similar things.

7 - Ups, Downs, and Next Steps
Craft Inc. closes with an “odds and ends” chapter, covering several topics in brief. How does one deal with knockoffs? How does one deal with burnout? When is it time to quit? How should you be reviewing your business? When is it time to expand, particularly when you need to outgrow the spare space in your home?

I was particularly intrigued by the discussion on burnout. The big key for avoiding burnout is to focus on the areas that made the hobby interesting in the first place. That may mean delegating some of the activities - quite often, burnout is a sign that you either need an employee to handle the drudgery or you need to rethink the whole business plan (change prices, find new suppliers, etc.).

Is Craft Inc. Worth Reading?
If you’ve ever had a hobby and thought about whether or not you could turn it into a business, Craft Inc. is a wonderful handbook to help you get started on that path. It offers a ton of great advice on transitioning something that’s just a hobby you’re passionate about into a side business - or even more. I’m a big believer in following this path, guiding your passions into a channel through which you can earn a living.

Having said that, I think you need to bring some significant passion in the door to make the ideas in this book work. If you don’t have a hobby you’re passionate about, Craft Inc. won’t help you get there - instead, it helps you translate a passion into a side business.

Craft Inc. is a very worthwhile read if you’re interested in following that path, even if your passion isn’t directly related to crafting. Most of the advice in this book applies well to any passion that you might want to translate into a business.