At first glance, one might think we were going through some sort of economic crisis. After all, this is the exact same kind of cutting back that I regularly suggest to people who are finding themselves in a financial pinch.

We actually made these decisions based on time, not money.

With each one of those spending cuts we made, we realized that we simply weren’t getting our money’s worth out of the item.

With GameFly, I recognized that my time playing electronic games was actually pretty small, and most of that time was actually spent at my computer. We would get a game in the mail, it would get played an hour or two on the day it arrived, then it would usually sit for a long time and eventually get mailed back.

With Netflix, we had a very similar problem. The disks we’d get in the mail would sit for a month or so until we could find a great evening to watch that film.

With the magazines, we realized that some of our magazines were consistently going unread. We’d end up with a pile of unread magazines, then one day we’d just flip through them, tear out a piece or two that we wanted to read, and toss a pile of magazines.

With the other items around our home, we just got rid of items that we didn’t use.

In each case, we cut our spending on an item that we didn’t use enough to justify the cost.

Over and over again, though, I see people having a challenging time making that justification or, in many cases, never bothering to make that justification at all.

My own original experience with Netflix is a perfect example of this.

About eight years ago, I opened a Netflix account. Sarah and I used it like crazy for several months, then the usage dropped off. It reached a point where we would have a couple of Netflix envelopes on our DVD player for weeks, almost gathering dust. Why didn’t we cancel? We liked the convenience of having the movies available if we did decide to watch them. We ended up keeping the account until our 2006 financial meltdown, and only resubscribed a few years later due to the availability of streaming and a large backlog of children’s movies that our kids wanted to watch.

The natural counterargument that many people have when they hear about such changes is that we’re losing some degree of convenience or joy by making these changes. In fact, we actually have great alternatives to each of these if we were to use that service.

For example, the reason we had GameFly is so that I could try out new video games if I wished. However, at the rate of one per month, it’s actually less expensive to just keep trading games at the local used game store. If I end up keeping a game for two or three months (as would happen), I’m far ahead simply trading games.

With Netflix, if we decide that we want to watch a particular movie that’s not on streaming, we have lots of options to rent that movie, from Redbox to Amazon Instant Video. Considering that we’re looking at most one rental a month, it’s far cheaper to just rent them individually.

The same concept is true for the magazines. If I just bought a weekly magazine at the newsstand once a month when something interested me, it’s still far cheaper than the cost of the subscription.

A subscription can save you money if you use it consistently, but if you’re not using it consistently, you’re better off just buying or renting individual items when the opportunity comes up.

In the end, it’s all about time. If your interests are such that you’re actually devoting a lot of your time to a particular hobby, a subscription service might make it worthwhile for you. If you’re doing it mostly for the convenience of the one time every month or two you actually end up using it, drop the subscription and find another option. Your wallet (and your clutter) will thank you.

These are wonderful dreams. I enjoy taking little steps toward them because, honestly, I usually enjoy the process.

Yet, when I step back and look at the broader scope of my life, that’s not what’s really important to me.

First and foremost, my family (and I consider my closest friends a part of that) is the single most important thing in my life. Bar none. Secondary to that is learning new things and, hand in hand with that, sharing what I’ve learned.

Almost every other interest and passion I have in my life is secondary to those things.

I’ll give you some examples to illustrate what I mean. Anyone who has read the site for very long knows that one of my favorite pastimes is playing board games and card games. I love playing games with other people across the table from me.

Yet, when I dig deep into it, it’s not really about the games. I do enjoy them, don’t get me wrong, but what I love about them is that it gets people I care about around a table engaging in a shared experience.

If you asked me what my favorite memories of board gaming are, they revolve around people. I think of playing Old Maid with my children. I think of playing Risk Legacy with my wife and three of my closest friends in the world. I think of sitting in my friend John’s living room, playing Descent with him and another of my closest friends.

Another great example comes from reading. If a friend or family member really enjoys a book, I’ll almost always give it a read. Why? Beyond merely being a good book, it becomes a shared experience with that person.

So let’s bring this home: what does this have to do with personal finance?

Personal finance is all about goals. If you’re not selecting a goal – whether it be freedom from debt, saving for an abundant retirement at age 70, or something else entirely – you’re either already incredibly rich (and you probably got there due to goals) or you’re spinning your wheels. Progressing toward a better and more secure financial state is something that pretty much every reader of The Simple Dollar shares.

However, goals are useless if you don’t feel completely motivated to move forward with them. You might desire a change in your life, but unless you’ve reached a point where that change feels vital to your future existence, it’s not going to happen. If you’re not getting out of bed with the feeling that today you’re going to move toward that goal, you’re probably not going to move toward that goal.

So, what is it that’s truly important to you? There is no right or wrong answer. It’s a matter of simply figuring out what’s truly important to you.

Here’s an example. I have a friend who dreams of being a sports announcer. He talks about it a fair amount. However, he also has a wife and a child at home. Recently, he told me that he thinks his sports announcing dreams are going to go on hold for a while. I asked him why, and he told me that chasing that dream requires a level of time and commitment that he can’t give to it right now. He had realized that his family was more important to him and he was sticking with the things that motivated him deeply every single day.

Does that mean that he’s abandoning the dream? Not entirely. Instead, he’s finding new ways to channel that passion that’s more in line with the rest of his family. He’s gotten involved with youth sports, assisting with the production of videos and other materials for other parents. This allows him to follow his passion while also being involved with his children. In fact, he’s starting a small video production company as a side business, where he creates professional videos highlighting a team and sells them for a reasonable fee. Several youth sports leagues are going to partner with him, so all he has to do is hire a few people to film the games, then edit them at home. He can film his own child’s games himself and involve the family in the production process at home.

Spending time with his family is the most important thing to him. Because of this activity, he’s spending time with them, earning some money on the side, and showing his children an entrepreneurial spirit along the way.

I can tell a very similar story about The Simple Dollar. My motivation to change my financial habits came from my oldest son. My motivation to write about it was many-fold: I enjoyed writing (value #2), I wanted to share some ideas with my friends and family (value #1), and I hoped to earn some money on the side to make our financial journey better (value #1), plus I would be able to involve my wife and my children in the process (value #1).

My dreams of making a living from writing didn’t start happening until I oriented them around what truly mattered to me. The same thing is true of my sports announcing friend.

So, what’s important to you? I think the easiest way to identify those core things that are important to you is to evaluate what you actually do over a long period of time. I’d focus on activities outside of the workplace, because we all need to earn a living, unless you’re already doing a job that’s key to what you value.

What do you spend your spare time on? I spend mine with my family and close friends as much as I can, and when I’m alone, I read and learn things. I bridge the two by finding ways to express what I’ve learned. This is what I enjoy doing.

My personal finance success came entirely from those things. My family inspired me to make changes with my money. My desire to read and learn educated me on how to do it. My desire to share what I learned launched The Simple Dollar.

You can follow a similar path with what you value the most. The key thing is to always remember that, no matter what your goals are, a solid personal finance foundation makes it all much, much easier to achieve.

Image courtesy of PhotoSteve.

As many of you know, I’m spending a lot of my spare time lately working on a pair of novels. It’s been a challenging experience – but an enjoyable one.

For me, one of the biggest parts of writing fiction is understanding who the characters are. In order to write something interesting about a character, I need to know to at least some level of depth who these people are.

One thing that I’ve come to realize is that it’s very difficult to write a truly evil character or a truly good character. Characters tend to operate based on the morals and values they themselves hold and the idea of “good” and “evil” has far more to do with the reader than it does with the characters themselves.

In the same way, the characters I create – and this holds true for every person I’ve met, too – has an “ideal” of how they would like to act in a given situation and a “reality” for how they usually act. The “ideal” path is usually what they see as the best way to act, whereas the “reality” is how they would normally act in that situation.

For example, a person might see it as an ideal to give food to the homeless people that they meet, because they believe in the idea that everyone deserves to have some sustenance in their belly. However, the reality of doing that is a lot harder when you’re trying to make your way to work and pass twenty homeless people. Can you bring them all food? Sure, you can, but it eventually becomes an obstacle to the other things that the person needs to do in life.

Reality eventually (and often) trumps the ideal, in other words.

Yet, the people we respect and remember are the people who managed to achieve their ideal with some regularity. When I think back to some of the people in my life that really made an impact on me, they’re people that went above and beyond the call of duty to help me. I remember an uncle who would always make an effort to make me laugh. I remember an academic advisor who made lots of phone calls to help me find a summer internship. I remember a friend who pretty much helped me through every step of my early career.

In each case, the “regular” thing would have been easy. I’m sure my uncle was sometimes in a down mood, but he found ways to tell me a joke and make me laugh even when he was in a hospital bed. I’m sure my academic advisor had an army of students to help, but he spent a lot of time helping me find great opportunities. I’m sure my friend could have simply not given the job notices and other opportunities a second thought, but he made the effort to bring them to my attention.

It is their consistent ability to go beyond what was “regular” and strive for something more that set them apart.

Over the years, I’ve interacted with lots and lots of people. I don’t remember the vast majority of those interactions. The ones that stick are the ones where someone did something exceptional.

That distinction between the “regular” and the “ideal” is what makes for the memorable people in my life and it makes for interesting characters in my writing.

It also makes for a powerful guideline for my own life.

Most of the things we do in our lives are going to be of the “regular” variety. Think of the example of the person whose ideal is feeding the homeless – if they stuck to that ideal, they’d never make it to work. We’re going to do the “regular” thing most of the time.

The question is when do we choose to go for something better than the regular thing? When do we go from living our ordinary lives to doing something more?

Here’s another way to think of it. When your life is over and someone describes you by saying “that person was a really good…”, what is the word that’s going to come next in that sentence?

Whatever it is, that should be your ideal and that should be the thing where you try to avoid taking the regular route. Cut corners elsewhere. Do this one thing in an exceptional fashion.

When I’m writing a story, I don’t really want to focus on the boring parts of a person’s life. I want to write about the “ideals” that the person achieved. What happened when that person did something that went beyond what their ordinary life called for? It might be something as simple as giving away a meal each day to a person in need. It might be being the person that just says, “Don’t worry about it; I’ll take care of it.” It might be leading a group. It might be turning on all of your teaching skills to really reach a group of students.

Quite often, though, you’ll find that doing that one thing really well requires resources and money. That’s where personal finance comes in. Good personal finance skills are often one of the underpinings of achieving that “ideal.” Doing the right thing with your money is often just as important an “ideal” as other things you might be doing because it makes those other ideals possible. Other skills often help, too, such as strong communication skills and organization skills and self-control.

Going for the ideal means taking control of what you’re doing. It means doing something powerful and positive that you know, in your gut, that you’re capable of. It means changing the world, sometimes in a big way, but often in a small one – but, in the end, is there really any difference between the two?

It’s your story. Make it a good one.

Thanks to Adria Richards for the picture

Over the years, Sarah and I have relied on Cascade Complete to get our dishes clean. We’d tried a lot of different dishwashing detergents, particularly when we were first living in apartments where a dishwasher was available, and we just found that Cascade Complete got our dishes cleaner. We didn’t have to re-run loads. We didn’t have to pre-wash dishes. We didn’t have to worry about overloading. It just got the job done consistently – something we couldn’t say about other dishwashing detergents.

Because of this, we just adopted a routine of buying Cascade Complete whenever we needed dishwashing detergent. We’d recognize the logo on the store shelf, find the best bargain on it we could, stack a coupon on top of that (usually), and head to the checkout.

Some time in 2010 – I think it may have been in the spring – I noticed that our dishes weren’t getting very clean. They looked sort of dingy and they often would still have caked-on food or smudges on the glasses (with little kids, smudged glasses are a very common phenomenon).

After doing a bit of studying, I learned that Cascade Complete had removed the phosphates from their dishwashing detergent, making it much less effective and putting it almost exactly on par with other phosphate-free dishwashing detergents that cost substantially less to buy.

Simply put, we haven’t used Cascade Complete in a year and a half. We either use a generic brand or a homemade mix. The brand on the bottle means little, after all – it’s what’s inside that washes your dishes.

* * *

Companies work very hard to associate brands with certain things in our minds. Apple. Nike. Sony. Olive Garden. Each of those things – and countless others – causes us to picture certain things in our minds and often causes us to have certain assumptions about the products that carry those brand names on them.

For us, Cascade Complete was synonymous with “clean dishes,” but that eventually proved not to be the case. Not because they changed the brand, but because they changed what was inside the box.

The label on the outside of the box doesn’t mean you’re going to always get the same thing inside the box.

What does that mean for us? Don’t become attached to brands. The particular item that is on top of the heap right now might not necessarily be on top of the heap next year if a particular item changes its contents or a competitor produces a better product.

The product you once started buying because it was the best bang for the buck quite likely isn’t the best bang for the buck any more.

I can easily recall a similar experience with a Sony Walkman during my childhood. When I was about eight, I had a secondhand one that was industrial strength. I used it for about six years until it was dropped into a lake. I wouldn’t be surprised if someone were to dive into that lake and find a fully-functioning Sony Walkman.

I bought a replacement, expecting a similar durable product. It worked for about three months, then it started eating and shredding tapes. I attempted to turn it in under the warranty and just wound up battling Sony’s customer service until it wasn’t worth it any more.

The Sony name and the Walkman name meant very little. The product inside is what mattered.

* * *

My solution to all of this is to just completely abandon any meaning when it comes to brand names. All they’re useful for is making it easy to identify a certain item on the store shelf.

What I do instead is constantly watch for product reviews. I read publications like Consumer Reports and The Consumerist pretty faithfully and I simply watch for what their comparative studies suggest is the current best “bang for the buck.” I stick with that for a while until an updated comparison comes out.

When I’m about to buy a more expensive product, I research it thoroughly, but the brand name doesn’t mean a whole lot. If it’s an electronic item, for instance, it’s likely that it was made out of many of the same components in the same Chinese factory no matter what name is on the box. If it’s a dishwashing detergent, the vast majority of the materials in the box are exactly the same. The small differences between the items have little to do with the name on the outside of the box.

All I care about are features and price. Those things matter far more than the name on the package.

I’m striving to apply the same philosophy to everything I see. Does it matter what car someone else bought? Not really. They just decided that it had the right set of features for them. I might not value those same features, but then again, I’m not the person spending the money. If I see someone driving a Jaguar, for example, all I can really conclude is that they have a different set of features that they care about in a car than I do.

I’m not defined by the brands that I buy, nor is anyone else. They’re just stickers on the outside of an item that will ideally make my life a bit easier or more enjoyable. Nothing more, nothing less.

“Whenever a man makes haste, God too hastens with him.” – Aeschylus

A few days ago, I had a long conversation with an old friend, who I’ll call “Randall.” Randall is in a deep financial, personal, and professional crisis. Instead of tackling the challenge head-on, Randall seems to be in something of a holding pattern. He’s just drawing his unemployment, putting off some personal responsibilities, and spending a lot of his time goofing off on the internet.

I asked him why he’s not searching for a job or addressing some of his other concerns and he told me, “God will provide. I just have to be patient.”

Personal faith in God can be a powerful thing. I’ve witnessed how such a faith has helped guide people to some incredible positive changes in their lives. I’ve seen how a community of people guided by their faith can keep a food pantry running. I’ve seen people of faith making sure that children have a wonderful meal and a nice gift at Christmastime, and I’ve witnessed countless other positive results from personal faith.

One key factor that unites all of these good things, however, is taking action. The tools may have been provided by a higher power, but without a person standing up and saying, “I’m going to keep this food pantry open” or “I’m going to make sure that Johnny and Jenny have a nice Christmas this year,” none of these things would have happened.

Were they called by a higher power to do these things? Was it their own conscience? In the end, it doesn’t really matter. We can’t know what caused them to do it, but what we can see is that they did these things. Because of someone’s actions, the food pantry is open and Johnny has presents under the Christmas tree this year.

This translates directly into one’s own life. At any given point in your life, you can choose to wait for opportunity to come along or you can make opportunity come to you. You can sit back, draw an unemployment check, and wait for a great job to fall on your lap. On the other hand, you could spend your time trying to build a side business, training yourself for a new job, or actively pounding the pavement for new work.

If you’re struggling with debt, you can just keep spending like you always are and believe that money will fall into your lap, or you can make the active decision to cut your spending, get things into better shape, and lead a life with opportunities that are free of the pressure of debt.

If you’re waiting for God to provide the tools you need to change something in your life, you should know that those tools have likely already been provided to you. You have free will. You have the power to choose how to spend your time and energy. You have a community around you that’s willing to help you. You have a creative and thoughtful mind, one that’s capable of processing information and translating it to your own life (if that weren’t true, you wouldn’t be reading this).

God has blessed me with a lot of gifts in my life. I’m incredibly lucky to have what I have. In fact, I’m incredibly lucky to be able to get up in the morning and breathe a breath of fresh air. I don’t expect God to also drop a pile of cash or an undeserved contract for some great opportunity right onto my lap. It’s up to me to take all of the gifts that I have and get to work if I want something better for my life or for the world around me.

By “gifts,” I don’t mean money. I don’t mean the right to a steady income. I mean things like relationships with people who care about me, the ability to write quickly, the ability to absorb ideas relatively quickly, and the opportunity to live in a place where it’s possible to build a strong future for yourself and your family. Those are gifts, too, and they’re powerful ones.

On our currency, I see the phrase, “In God We Trust.” I suppose one can take that to mean a lot of things. My take on it has been that it doesn’t say “In the government we trust” or “In America we trust.” Instead, it speaks to something more personal and individual.

If we want to live the American dream of financial independence, we shouldn’t expect that others will simply hand it to us. Instead, we should look around us for the gifts we’ve been provided – whether those gifts are equal to the gifts of others or not – and the opportunities that others have provided for all to use, then focus on using those gifts to achieve what we want from life and what we choose to share with others. Money itself is nothing more than a way to exchange those gifts.

Keep that in mind the next time you read the phrase “In God we trust” on your currency.

The universe is change; our life is what our thoughts make it. – Marcus Aurelius Antoninus

When I was younger, I spent a lot of time visiting my aunt and uncle, who lived within walking distance of our house. My aunt was always a barrel of fun. She would play endless games of Trivial Pursuit and Monopoly with me, always had some sort of curiosity to show me when I would visit, and would lend me her encyclopedias when I was curious about a topic.

One project I fondly remember working on her with was the “blueprints” for my dream home. It covered eight sheets of paper, with each sheet representing a floor. Yes, the house was seven stories tall. It featured an elevator to help take people from floor to floor, as I wanted it to be handicap-accessible.

It featured somewhere around sixteen bedrooms, a library that would have been somewhere around 2,000 square feet in size, and countless other features. It had a six lane bowling alley in the basement. All told, the house would have measured around 28,000 square feet of floor space, as each floor would have taken up about 3,500 square feet and there were eight floors.

This was my dream house. It had everything I could imagine that I would ever want in it. Who could want anything else?

* * *

Over the past few years, Sarah and I have been sketching out our actual dream home. It’s actually surprisingly small, maybe only a few hundred square feet bigger than our current home. The bedrooms are slightly larger, and there’s an additional bedroom so each of our children can have their own room. There’s a small office for writing. The kitchen is perhaps slightly bigger. There’s one less bathroom and the family room and living room are essentially merged into one.

We’ve discussed a few other optional things, such as a game room/library, but every time we think about an addition, we find ourselves thinking about the time we’d have to spend maintaining that extra space and the time we’d have to work paying for the extra heating and cooling, and we find ourselves realizing that we’ve already designed the house we want.

What’s far more important to us is location. We want to live in a rural area surrounded by trees, but with enough open space for our children (and eventual grandchildren) to have space to play in. We’d like to have a small barn or a large shed for storage of garden implements, a snowblower, and other such items. We want to live relatively near our family and closest friends.

* * *

Dreams change. Goals change. People change. The ideas we hold onto in our childhood transform into the dreams of our teenage years. Those blossom, too, into the ideals of early adulthood, and again shift as we approach middle age. I fully expect my dreams to shift again as my life continues forward.

How do you plan for these ever-shifting dreams? If the big elements of our lives are so open to change and transition, how can we ever really plan for anything?

One major step a person can take is to keep their plans and preparations for their goals as multi-purpose as possible, particularly in the early stages. If you’ve started moving toward a goal only to find out that, as you grow older, that goal no longer has appeal, it’s useful to find that your preparation actually has use in other areas.

How do you make that happen? Minimizing your financial obligations is one part of that. A solid financial foundation makes almost any goal easier to achieve. If you don’t have any debts, your monthly bills are going to be much lower than those of a person with debts. Lower monthly bills means that you need less income in order to survive, which means you’re going to be more able to jump on board the opportunities that come along.

Hand in hand with minimizing obligations comes maximizing cash on hand. This means saving up your nickels and dimes, whether in a savings account or in other forms of investing. As always, the more resources you have to draw on, the easier it is to achieve your goal, whatever it might happen to be at the time.

You should also stock yourself up with a wide variety of transferable skills. Transferable skills are ones that people find themselves using over and over in life, no matter what the situation. They range from things like public speaking and written and verbal communication skills to abilities like plumbing and carpentry. The more skills you have like these, the easier it will be to achieve anything in life.

Another key asset is a large and diverse social network that you keep in contact with. By “in contact,” I don’t mean just friending on Facebook and then ignoring. I mean actually connecting with them on a regular basis by asking them how they’re doing and what they’re up to. Even better, when you have an opportunity to help someone out, just do it. That kind of goodwill is invaluable when you’re working towards a goal – and you might just find that the unexpected people are the ones with the keys to the kingdom when you refine your goals later in life.

* * *

The dreams you had as a child have changed as you’ve grown into adulthood (at least, they have for almost all of us). Those dreams are likely going to change again as you move through your life.

Just because your dreams change doesn’t mean that dreams are unreachable targets or that it’s a waste of time to prepare for them. It simply means that you should spend your time building a firm and solid foundation of finances, relationships, and skills so that when the right chance comes along, you’re able to jump on board and live out your dreams.

What do I mean by that? Well, if I tried to write a personal finance article that would reach out to everyone who read it, it would be completely devoid of content. There’s no personal finance information that’s applicable to everyone in the entire world who might be reading this article.

On the other hand, if I write a personal finance article that’s just about my specific situation in incredible detail, it’s incredibly useful – but only to me. The more I dig into my own specific situation, the less applicable the entire thing becomes to anyone but me.

Instead, what I try to do is find a happy medium. I try to base the article on a few assumptions that I think a significant portion of my readers have and give advice based on those assumptions. Obviously, I can’t match every reader with every article – that’s an impossibility. What I can do is focus on areas that I know from my own life – like personal finance planning for parents, time management, building a career, escaping from debt, handling money issues and relationships, and so on – that match up with the information that others need.

So, how is that idea useful to you?

First of all, in order to find useful personal finance advice – here or anywhere else – you’ve got to discard some of what you read. Some of it is simply not going to be applicable to you because of the assumptions made by the person giving the advice. If you’re a retiree looking for frugality tips and you come across an article outlining ways to save money on a college campus, you’re probably not going to find too much that’s useful in that article. At the same time, for frugal college students, that article is very useful.

So, what can you do? Don’t be afraid to skip an article that doesn’t apply to you. Don’t be afraid to skip specific tips that don’t apply to you, either. Skip them, or better yet, pass them on to someone who might actually find value in that information.

Second, know how to identify what’s useful to you. Read the article – particularly the first paragraph – and ask yourself who exactly the article is being written for. If you’re still unsure, you can get clues from the rest of the website as well as the previous writings of the author of that article.

Also, use more than one source for your information. No writer is going to know everything – and that, most definitely, includes me. Writers are writing from different perspectives, have different sources for their own facts, and have different ideas about what’s important and what isn’t. Sometimes, writers are also flat-out wrong – and that certainly includes me, too.

There is no excuse for not getting multiple sources of input on any topic that you plan on investing your time and money into. Don’t base your retirement planning solely on The Simple Dollar or anything else. Major personal finance choices need to have some time spent understanding those options, and the best way to do that is to read multiple sources of advice on those topics.

Where do you go for this advice? Obviously, I hope that The Simple Dollar is one source, but I also hope that it’s far from the only source. Read other websites. Even better, read some books. Your local library is a giant treasure trove of great personal finance information.

There’s one final tactic, and it’s a big one. Always ask yourself if the person giving you the advice has a conflict of interest. I am very hesitant, for example, to trust advice given to me by a mutual fund company when it comes to buying mutual funds because they have a conflict of interest there. They make money by selling me mutual funds, not necessarily by giving good advice. I’m similarly hesitant to get my information about insurance from an insurance salesman.

You can’t always know whether someone has a conflict of interest when giving you information, but you can protect against it by eliminating the obvious ones and also by using multiple sources of information, as suggested above.

If you follow these tactics, you’re bound to find the information you need for your situation, validated by multiple sources. That’s the kind of rock-solid information upon which you can make personal finance decisions, career decisions, and other life decisions.

Good luck.

I splurged with it – and with the next check, too. I felt like I was celebrating actually becoming an adult with a real job and a real career path.

Before long, though, I had established a pattern of normalcy that involved spending quite a bit of money. The ramen noodles I had eaten in college were no longer good enough for me. Eating the $3 special at the Chinese restaurant near where I lived no longer satisfied my desires. Used video games from three years ago were quickly replaced by the newest releases. My old shirts, accumulated over the years of college, quickly vanished and were replaced by crisp new clothes.

I was making good money. I had to live like it, right?

I established a pattern of spending enough so that I was living paycheck to paycheck. I was buying far more stuff than I actually needed, but it was all necessary for the standard of living that I had adopted.

Then my student loans went off of forbearance.

Then I needed to buy a vehicle and car payments began.

Then my wife and I had a first child and the costs of diapers, formula, and child care began.

The problem was that my lifestyle had inflated beyond what my paycheck left me with after these expenses, and it led us almost into disaster.

It was a long and difficult path to recovery from this situation, but I know now that it would have been far better off had I never allowed my lifestyle to inflate in the first place.

Over the past several years, we trimmed our lifestyle down so much that there has often been temptation to enjoy some degree of lifestyle inflation once again. For the most part, we’ve avoided that temptation. Here’s how we’ve done it.

We’re conscious of lifestyle inflation. It’s a phenomenon we’re aware of and one that we talk about regularly. We watch for examples of where our regular spending has gone up and we talk those examples to death, usually finding that we’re better off keeping our spending low.

We stick with the things we enjoy. If we have fun going on a family walk in the park, why do we need to suddenly be taking our kids to FunLand and drop $20 or buy them a bunch of stuff to play with at home? If we enjoy our home-cooked meals around the dinner table made with simple and tasty ingredients, why do we need to start going out all the time and dropping $50 per meal? If we love playing an old familiar board game with our friends after a potluck dinner, why do we need to add expensive options to our social schedule? If the eight year old car we bought off of Craigslist serves our needs quite well, why buy a new one?

We splurge with enjoyable activities, not things. I mean this with all seriousness: my biggest splurge nowadays is a free uninterrupted hour or two of reading or playing a game. If I find that my daily tasks are done and I have an hour to crack open a novel or play a game of League of Legends or something, I really feel like it’s a splurge. Time is truly the valuable commodity in my life.

Beyond that, when we do open up our wallets, it’s usually for a special activity, usually our summer vacation. I enjoy going to Gencon each summer, my wife often visits her family in Seattle, and we usually take a family trip, too. Those are our biggest annual splurges.

We keep a lot of options on the table. One thing I’ve found is that once you start inflating your lifestyle, you stop really looking at certain options. Usually, free and inexpensive things are immediately off the table because, after all, you’re above that, right?

When we’re looking for something to do, we don’t start with movie listings or expensive events. We look at things like our local community calendar or the parks and recreation schedule. We look around our house at the multitude of things to do at home, from board games and art projects to books and home improvement tasks. There are more cheap and free things to do than we ever have time to get done, so why spend a lot of money on expensive things?

We maintain friendships with people who have similar values. Our closest friends have (more or less) the same values on lifestyle inflation that we do. All of us make a solid income, but our social events together are usually potluck dinners with board games afterward.

Most of the rest of our social circle consists of people that we’ve come to know thanks to free activities through our local parks and recreation department, mostly parents of children of similar age as our own.

We also live in a neighborhood where most of the people seem to have roughly the same standard of living that we do. Yeah, a few people have nice cars, but of the families nearest us, I can quickly see a pair of used vans and an ancient compact car. None of the houses are particularly nicer than ours, either.

Simply put, we don’t have the social pressure to engage in lifestyle inflation, and we’re happy to keep it that way.

A lot of our income is automatically transferred away before it reaches our hands. We pay almost all of our bills automatically. Beyond that, we also transfer away money for each child’s college savings plan, savings accounts for many of our future goals, and accounts for irregular bills like property taxes. We simply don’t leave behind enough for us to inflate our lifestyles very much.

Avoid lifestyle inflation. You’ll be happy you did.

In other words, when I look at things like how I spend my money, how I spend my time, who I choose to interact with, and so on, I’m often not thinking as much about immediate pleasure but how my choices will impact my life in, say, five years.

Let me give you a few examples of what I’m talking about.

Most mornings, my children wake me up and I’m pretty groggy at first. After a minute or two of swimming up out of a sleep state and into a basic comprehension of the world around me, I’m faced with a choice. I could either shamble along in a half-awake state, mumbling incoherently at my children, or I can will myself to be energetic and help them get ready in the morning. The former is far more pleasing in the short term, but I often find myself jumping up and down several times and splashing my face with cold water so I can get going immediately and get right on the task of making sure the kids are dressed, talking to them about their day, and making sure they have a great breakfast on the table. That little bit of discomfort each morning will lead to more well-balanced children in several years.

I stop by a local boardgaming night and try out a new game that I really enjoy. The store has it on sale for $40. I’m faced with a choice. If I buy it, I’ll probably play it a few times with my friends. If I don’t buy it, it won’t prevent me from spending an evening playing games with my friends. So, the upside of buying this isn’t a new social event. It’s just more stuff on my shelf. On the other hand, another $40 in my bank account means an easier road to financial freedom.

Buying a cup of coffee from Starbucks in the morning might give me a quick jolt of energy. Of course, if I do that, then I become just a bit more used to having that jolt in the morning, making me more reliant on coffee instead of a glass of water in the morning. A consistent diet of Starbucks isn’t really a good thing for my long term health, either. Not drinking that cup of Starbucks leads to a trend of less spending on morning coffee and better health. I’ll leave it as a rare treat.

This is a hard switch to make. Our immediate wants and desires scream with urgency next to longer-term concerns, and it is incredibly easy to just let the short-term thinking rule the day. I used several tactics to start making the transition (and I’ll be the first to admit that I’m not 100% at thinknig this way).

I spent time thinking about my common decisions away from the moment where I made those decisions. Thinking about things in the heat of the moment often leads a person to make the short-term beneficial decision rather than the long-term beneficial decision.

Thus, I started spending some time each day thinking about the decisions I made that day, particularly ones I would often see myself repeating. Outside of the moment, I’d look at the short term benefits of my options as well as the long term benefits and I’d decide independently what the best long-term choice was.

I spent time figuring out exactly what I wanted from my future. I often mention drawing a five year sketch of your life and a ten year sketch and maybe even a twenty year sketch. What I mean by that is simply laying out what things you’d like to have in your life at that point. Obviously, those things won’t perfectly come to pass, as life often hands us unexpected things.

The reason for doing this is to figure out what things you can control to make those dreams come true. I can control the money I spend. I can control the food I eat. I can control the time I spend. I can control what I read and what I learn. What choices can I make in those contexts that lead to the five year sketch of the life I want?

I spent less time with people who would tempt me to make short-term decisions. People who constantly encourage you to buy things you don’t need are ones that will cause you to constantly sacrifice your future for your present. I spent a lot of years hanging out with people who did just that and it led me almost into the poorhouse.

My current circle of friends are almost all rather frugal. We have potluck dinners for our social engagements and usually wind up playing board games. We trade a lot of tips on saving money and sometimes clip coupons for each other and send each other deals. We take pride in our good financial moves – buying land is far valued over buying a new car, for example. These are friends that will encourage you to think for the long term.

I set up situations where the beneficial short term choice and the beneficial long term choice were the same choice. An easy example of this is throwing out all of the unhealthy snacks in your house so that you can only choose among healthy ones, but you can do the same thing with lots of different aspects of your life.

For example, you can choose a commute that doesn’t take you by temptations to spend money or eat unhealthily. You can delete distracting computer games from your computer. You can unplug the internet router for a while, making it much more difficult to get online (and instead easier to get other things done). If you make the path of least resistance one that helps your long term future, you’re setting up a great life.

I accepted some short-term choices as splurges. Splurges turned from just spending money into making choices for the short term. So, for example, playing a computer game is often a splurge for me. It’s fun in the short term, but has virtually no positive impact in the long term.

The key is that I recognize that it’s a splurge. It’s something that I know isn’t the best choice, but it’s okay to do every once in a while. It’s part of the spice of life, and I savor those splurges.

Good luck!

It was pretty obvious after just a few minutes of watching that the point of the show was to make frugality look ridiculous by choosing to profile tactics that violate other social customs and norms. In some cases, the people were aware of it, but in others, they seemed completely oblivious that they were doing things that others would see as … well, “extreme.”

While watching it, I received a couple emails from readers who were also watching it. One in particular stood out at me:

Is this really the kind of thing you do at home? Some of this stuff is just sick. Some things are worth a dollar or two more.

Simply put, the outcome of this show was to paint a socially uncomfortable face on the idea of frugality. By highlighting people who take frugality to an extreme, they manage to cast a negative glow over anyone who proudly practices frugality.

Here’s the thing, though. This type of negative highlighting happens all the time with all kinds of things.

Focusing on the practices of the Hutaree and the Christian patriot movement casts a false negative light onto Christians, most of whom are wonderful people who try to live their day-to-day life in a positive fashion.

Focusing on the practices of a few large banks that received TARP money and also have consumer unfriendly practices casts a false negative light on all banks and credit unions, most of which do really great work for people.

Focusing on groups like al Qaeda casts a false negative light on Muslims, most of whom are wonderful people who also try to live their day-to-day life in a positive fashion.

The list goes on and on. When you define a large group by the actions of a small, extreme element of that group, you’re almost always making a mistake.

This brings us back to frugality and Extreme Cheapskates. Frugality is not the extreme actions represented on this show.

What you’re actually seeing when you watch Extreme Cheapskates are people who have a overall value set that’s significantly different than yours. It’s the same thing you see in the extreme cases mentioned above.

It does not mean that the larger group these people claim to represent shares their values.

I consider myself frugal. I even consider myself a cheapskate in terms of things that just affect me. I make my own laundry detergent. We make a lot of the Christmas gifts we give away. I drive a used car I bought off of Craigslist. We save leftover vegetable scraps to make vegetable stock, then compost the leftover scraps from that.

At the same time, I don’t do things that are rude to others or unhygenic or dangerous to my health.

Frugality isn’t about squeezing every penny out of everything. It’s about maximizing the value of the things you’re doing, and “value” doesn’t always strictly mean money. Money often plays a significant part in it, but so does time and so does health and so does the relationships you have with the people you care about.

Frugality simply means that you take the time to figure out those relative values for yourself. Have you actually thought about the relative value proposition of buying generic laundry detergent versus making your own versus buying Tide? If you have and you’ve come to a conclusion on the issue, you’re probably frugal. You’ve thought about what you value – money, time, hygiene, relationships. You’ve obtained information on the issue. You’ve come up with a conclusion based on the information that balances what you specifically value.

That’s actually what these “extreme cheapskates” are also doing, but their values likely differ significantly from yours. That doesn’t mean that being frugal or being a cheapskate is weird. It just means that the “extreme cheapskate” puts an extremely high value on the “money” part of the value equation (or an uncomfortably low value on the “hygiene” part or some other part of the equation).

It also means that when you see a list of frugal tactics, you’re seeing tips that represent different levels of value on things like hygiene and time and food quality (and so on), and that you need to filter those lists based on how you value things like hygiene and time and food quality.

Be frugal and smart and live by the things that hold value in your life. Do that and you’ll always win.

Every single time I engage in some form of community service, I feel extremely happy about what I’ve done. I feel like I’ve caused some sort of positive change in my community and made someone else’s life better.

The problem is that it’s incredibly easy for me to put aside some of the things I could do related to community service and instead do other things. I could head over to the food pantry… or I could make chop all of the vegetables for a great ratatouille. I could pack up the children and help remove snow for elderly people… or I could go inside, make some hot chocolate, and watch The Incredibles with my kids.

Although the “right” choice here is very fulfilling, it’s often hard to do in the face of temptation.

This year, I’m simply striving to make the “right” choice more of a routine.

What areas am I focusing on?

I hope to spend some time helping a couple local food pantries with odds and ends that need done, such as restocking shelves and preparing bags.

In the winter, I’m going to pack up a shovel and do some volunteer snow removal where it’s needed.

In the spring and summer and fall, I’m going to do some volunteer work for the local parks and recreation department.

There are also a couple local charity groups that have some computer needs that I can help fulfill, so that their normal workflow can go much more smoothly.

What I’m essentially committing to is about four hours per week – on average – of such volunteer work, with a couple weeks for travel and the like.

I’ll be keeping track of this time in a spreadsheet, just so that I know I’m keeping pace with this goal. If our winter turns snowy, it’s likely that I’ll get significantly ahead earlier in the year. This does provide some breathing room for periods in the summer when there are reduced opportunities and different time constraints.

Why do this? Volunteer work makes a better community, and a better community makes a better life for those who live in it. It also leaves me feeling better about myself every time I do it. That’s reason enough for me.

I have a friend that I’ve known since I was very young. He’s got two children, a wife, and a felony on his record for a mistake he committed over a decade ago when he was young and stupid. He’s quiet and unassuming and can be an incredibly hard worker when you get him focused on a task – he can work me under the table.

Recently, he lost his job. He had worked for several years at a pretty good factory job, but he lost it when an uncontrolled event caused him to miss his alarm and show up late at a key time.

His family lives in a modest apartment that they should be able to keep, but they’re also facing some debt.

Right now, he just seems kind of lost. I think he’s just content to draw his unemployment insurance and let the next few months just go by.

From my perspective, this is an opportunity for him. Why not get the foundation in place for a lawn care business or something similar in the area? Why not simply look for any service that the community needs and start fulfilling it? I have many friends that have simply done that – they’ve just started fulfilling a need that they’ve heard about. Why not go out there and throw an application at any job available?

The ingredient that’s missing is the motivation to improve his situation.

I’m honest enough to recognize that he’s simply lacking that key ingredient. He’s got the basic things that he wants out of life – a roof over his head and enough food to keep his belly full – and he doesn’t have the fire to do what it takes to build more than that.

You can’t start a fire without a spark.

On the flip side of that coin is someone I’m going to talk about in detail on The Simple Dollar in a week or two. She’s a young woman who has come from a background pretty similar to mine – a small town and a family that didn’t earn a whole lot of money as she was growing up.

Right now, she’s a full time college student, working a part-time job to minimize her college bills, and trying to jump-start a small business at the same time. Sometimes I wonder when she sleeps.

She wants to build something big for her life – or at least something more than what she has now. She has passions and dreams and plans and is willing to chase them.

She has the spark. Will the fire follow it? The possibility is there, at least.

That spark is the difference between these two stories. It comes from within. It comes from a desire to change yourself. It comes form having dreams and actually putting forth action to chase those dreams.

The spark is pretty obvious if you spend much time around a person. It’s egither there or it’s not. Are they setting goals for themselves? Are they actively taking on real challenges in their life? Or are they just walking through life with whatever is handed to them?

When you see a spark, nourish it. Offer all the advice in the world. Offer any assistance you can give. I don’t encourage giving friends or family loans, but I do encourage gifts and grants.

If you don’t see a spark, there’s not much you can do. The support you give won’t bring about change. It will merely continue the behavior you already see. Give love and care, but recognize that pressure for change won’t bring it about and support for change won’t change a thing unless they’re making the change already by themselves.

You can’t create that spark. They either have it or they don’t, and it’s usually pretty clear from watching how they act. The best thing you can do for both yourself and for them is to react to the path they choose.

It might be tempting to throw it all away, but there’s a lot of value in those leftover items. Here are some of the things I’ve done with leftover Christmas items.

Wrapping Paper
1. I shred it and use it as packing material when I ship things or when I give gifts in the future.

2. I shred it and mix those shreds with paraffin to make some fantastic firestarters. The easiest way to do it is to take an old egg carton, put a few shreds of wrapping paper in each slot, and pour some heated paraffin on top. Then, tear the egg carton into individual egg-shaped slots (with the egg carton still attached to the paraffin) and you have yourself a dozen fantastic firestarters. This is a great use for camping.

3. I take large pieces of untorn used paper and turn them into a collage, which I then use for future gifts. A collage pattern on a gift looks really distinctive and interesting.

4. I take pieces of untorn used paper and cut shapes out of them, which I then attach to brown paper for future gift wrappings.

5. I take pieces of untorn paper and use it to teach my children basic origami, like a fortune teller or a dove or a jumping frog.

6. I shred it and use it for paper maiche projects. For example, we made a paper maiche Great Saiyaman helmet for our oldest son that he wears all the time (and which provided a centerpiece of his Halloween costume this year).

7. I take small pieces of it and use it to cut out snowflakes. Often, I’ll just fold them up so that they’re ready to cut, then store those folded pieces until next November for the following year’s Christmas decorations.

Empty Boxes
8. I reuse cardboard boxes over and over and over again. I just break them down so that they store flat in our garage, then use them whenever I have the need.

9. I convert leftover cardboard boxes into a dollhouse for my daughter. This gives her full ability to decorate the thing as she sees fit.

10. I cut cardboard boxes into strips and save them for campfire starters. This is particularly good for boxes that have been mangled enough that they’re not good for other uses.

11. I cut the cardboard into rectangles and use it for backing on framed photographs. Some frames come with the cardboard, but for those who do not, cardboard can be essential in preventing photos from slipping.

12. I convert larger boxes into “pet houses.” This can be a perfect way to enclose a dog’s sleeping area or give a cat a place to hide and play. Again, you can decorate them to your heart’s content.

13. I cut cardboard into tiny pieces and use it for garden mulch. It does a great job of minimizing weeds and then slowly decomposing into the soil.

14. I cut cardboard boxes into flats and use them for organizing smaller items in my closet, like CDs and DVDs. This makes it easy to see the exact contents without the items spilling everywhere. Just trim the box down to the height of the items you want to store.

15. If you still have leftover paper and cardboard, get creative with the reuse. I’d contact a daycare center or orphanage or even an elementary school in your area and see if they have any need for it, for craft projects and the like. Contact an animal shelter and see if they have any need for it as liners or bedding material. These options are far better than simply recycling them in your recycling bin.

Leftover Food
16. I just freeze as many of the basic ingredients as I can. Items like leftover turkey meat, leftover vegetables, and so on are perfect components for soups and stews and casseroles when you pull them out of the freezer.

17. I convert them into alternative dishes in the next few days. Leftover ham, for example, might become a ham-and-bean soup. Leftover sweet potatoes might become sweet potato pancakes.

18. I package it up and give it to holiday party guests to take home with them as something of a final gift. I’ll get a bunch of inexpensive containers that I don’t need back and allow them to have a meal at home.

19. I’ll prepare meals for shut-ins that I know and take the food to them. Several years ago, we lived near an elderly shut-in that we often took meals to and it was a very rewarding experience.

20. I use leftover vegetables and vegetable scraps to make vegetable stock and leftover meats and meat scraps to make meat stock. All you do is put the materials you want to make stock out of into a crock pot, fill it with water until there’s about three or four inches above the top of the food, then turn it on low and let it sit all day. Strain the liquid and save it – it’s a great starter for all kinds of dishes.

Don’t let holiday waste fill up your bins. Put that stuff to better use and save yourself a few dimes, too.

How do you find anything good at Goodwill? Whenever I go into one, all I find is a lot of junk. I can’t believe you find anything good there.

There are a few basic tactics that you should use if you’re shopping at Goodwill.

First, visit Goodwills that are located in upscale areas. Don’t visit the Goodwill in the poor part of town or even the medium income part of town. Look for the Goodwill stores and secondhand shops that are located as close as possible to the rich part of town.

What happens is that people in the rich part of town often have more money than sense, so they’ll often get rid of very nice clothes having only worn them a time or two – and they do the same thing with other items. I’ve been in Goodwill stores in the peripheries of rich neighborhoods that have had far higher quality stuff than almost anywhere I shop at. I’ve filled up my book collections, my video game libraries, and, yes, my wardrobe thanks to such visits.

I’ll give you an example. Once, I stopped into the Goodwill store at Washington and Racine in Chicago and walked out with about fifteen video games and about ten new shirts. The store was nicer than many Wal-Marts and Targets I’ve been in and the quality of the merchandise and prices were fantastic.

Second, be picky. If you go into a Goodwill that seems to mostly be full of junk, you don’t have to buy that junk. Walk out and put that one on your “avoid in the future” list.

However, having said that, there are a lot of gems to be found, particularly in areas of income disparity. A college town is a perfect example of this. A college town often has a wide variety of incomes and perceptions of money, which means that their Goodwill stores tend to include a lot of cheap stuff and a fair amount of good stuff.

You often have to dig for those gems, though. What I often do is look for examples of high-quality things, even if I’m not particularly interested in buying them. If I see some high-quality items, even if they’re not perfect for me, I know that there are some diamonds hidden in the piles here.

So, how does that really work? I’m often willing to try a Goodwill that’s in a decent neighborhood that I’ve never been to before.

The first thing I do when I go in the door is look for items that I know really well. I’ll look at their men’s shirts or their smaller youth clothes or their books.

I look for items that fit me or that will fit my children, of course, but I also simply look for quality items of any kind. If I can find good items with some consistency while looking around, then I know the store is worthwhile even if I don’t specifically find items that match my needs.

So, with men’s shirts, I’ll look for items that look like they’re reasonably close to new, not faded, and are well constructed. I don’t necessarily expect to find a treasure trove in my size (like I did at that Chicago Goodwill several years ago), but I’m much more likely to stick with it if I’m finding some indication of quality items.

If I don’t find anything that seems of reasonable quality, or if I only find maybe one item in forty or fifty that looks worthwhile, I leave the store and often don’t look back.

The trick is to investigate lots of Goodwill stores, consignment shops, and secondhand stores in your area with these tactics. You should fully expect that some of them are going to be of poor quality and not worth visiting again.

However, if you’re like me, you’ll eventually find a series of stores that you’re happy to visit time and time again because the prices are excellent and you often find incredible discounts on nearly-new stuff. Such discoveries are well worth the time invested in finding them.

A Minnesota farmer gave most of his estate to his hometown, totaling about $3 million.

A person in Ohio paid off $8,800 in WalMart layway accounts anonymously.

Another “Secret Santa” in North Carolina made a similar move, paying off layway accounts there.

These types of things are great. When someone does this, they take something they have in abundance and use it to give a fresh opportunity to someone else.

As I’m sure most of you do, I’d like to think that many of the people who have been given this opportunity are going to take advantage of it. Instead of struggling to pay off that layaway bill, they can start hammering away at a credit card or maybe put some money away to pay for a future car repair. However, the reality is that some of the recipients of such serendipitous gifts will simply look for another way to get themselves into financial trouble.

This brings us back to the heart of the story.

Let’s say you were the recipient of such a boon. Thinking about it from a distance, you’re probably quite sure you would use that benefit for something worthwhile, like eliminating a little bit of debt or buffing up an emergency fund.

But would you do that? Would you be tempted to use that serendipity for something fun instead? Think about the little boons that life hands you all the time.

If you find a five dollar bill at the gas station (which I actually did a few days ago), what do you do with it? Do you pocket it and use it when you’re buying essential groceries, or do you take it inside and get yourself a Big Gulp and a slice of pizza?

If you find several dollars in change spread across your dirty jeans (which I did several days ago), do you do something fun with it or do you sock it away for something big?

I used to be very bad at this. I would spend “serendipity money” quite easily on whatever trivial thing I wanted at the moment.

Eventually, though, I began to realize that those little trivial things of the moment didn’t really make my life one little bit better.

So, instead, I started a “serendipity jar.” Whenever I find some money like that, whether it’s a quarter on the street, a $5 bill at the gas station, or $3.79 in change in my dirty jeans, it all goes in that jar.

When that jar is full, I take it to the bank and deposit it into my checking account, then go on with life as normal, except that my checking account has a couple hundred more dollars in it.

That extra hundred or two feels pretty good. It feels like freedom, and it often makes some problem in my life go away. It buys a new tire when one blows out or pays for a child’s costume for a dance recital without having to tap my actual emergency fund at all.

That, to me, is what serendipity is all about. Rather than providing a perk that’s forgotten in fifteen minutes, it smooths out what could be a worrisome bump in the road of life.

When serendipity finds you, don’t think of fulfilling whatever immediate desire you have. Instead, think of making your life better. Do something useful with it.

The reaction that many people ask when they hear this is aren’t you just wearing shabby, worn out clothing? The general perception is that most of the clothes that you find at such places are well worn and won’t look good on a person.

To an extent, that perception is correct. There are a lot of clothes at such stores that I wouldn’t want to wear and that I wouldn’t want my children or wife to wear.

I shop there for two reasons.

One, sometimes I find a gem in the rough. I found the single most beautiful dress my daughter has ever had at a consignment shop for less than $3. I found a pretty-much-new sportjacket for myself at a Goodwill that fits almost like a glove for $5.

Two, these are the perfect places to get “weekend” clothes. These are clothes that you’re happy to wear when you’re out in the garden, mowing the yard, doing housework, or spending a lazy day around the house reading. Old t-shirts, old jeans, whatever – as long as it fits, it works.

These two scenarios make up most of the clothes in my wardrobe. I do, of course, have a selection of nice clothes that I wear outside the home.

Of course, this brings up a second question: why bother at all with nice clothes?

I don’t ever try to be the best-dressed person in the room. That’s a rat race that you never win, and there’s negligible reward for winning that race even some of the time.

On the other hand, I think there’s significant value in not being the worst-dressed person in the room. I won’t wear my old torn-up Chicago Cubs t-shirt when I’m meeting a professional acquaintance, for example.

I usually strive to hit the average – or just below the average – of the level of dress of people I’m with. This is a level that achieves every goal I want in a social situation: it makes the other person feel comfortable, but doesn’t make them feel uncomfortable because I’m way overdressed or underdressed compared to them. If I achieve that, I’m happy.

The thing is, that’s pretty easy to achieve on a low clothing budget. I don’t need very many items of “nice” clothing to pull this off, and most of my other clothes are just comfortable ones for workdays at home. Even when I worked in an office environment, it wasn’t particularly expensive to maintain a level of appropriate dress. I just needed a small number of nice shirts and a variety of pants that worked well with all of the shirts, and mixed and matched them.

So, would I rather spend a certain amount of money on a bunch of cheap shirts or one good one? I don’t think either answer is correct. The cheap shirts are perfect for wearing around the house or doing dirty work in. The one good one won’t be worn very often, but it will last for a very long time.

As with everything, it’s all about maximizing value. You get a lot of value out of an old well-worn shirt at home, but you get more value out of dressing appropriately when in public. Careful shopping can minimize your costs in both regards and not leave you wearing an expensive shirt in the garden or wearing beat-up clothing when you’re out and about.

Yesterday, a friend of mine sent me a link to a short YouTube film, Change for a Dollar. Here’s the video. Please, take the time to watch this.

For me and for a lot of us, December is filled with spending money on things for others. We try so hard to make a wonderful holiday for those we care about.

The thing is, after all of the money is spent and the gifts are opened, the things you’ll remember will be the little things that have almost nothing to do with the gifts.

When I think back to every one of my favorite memories of my life, none of them have anything to do with gifts. They have to do with little things.

I remember the last Christmas I spent with my great grandmother. She was still living independently, but she wasn’t doing so well, so we brought her a whole bunch of easy-to-prepare foods and cooked a meal for her.

I remember sitting around a table a few days after Christmas playing Risk with my dad and some of his friends, the first time I played an “adult” game with the adults.

I remember when my father was unemployed during the winter when I was about six. My mother found a $20 bill in a parking lot at a grocery store, mostly buried in the snow.

The little things matter. They matter more than the big gifts or anything else.

Spend this season – and perhaps 2012 as well – making the little things right. It might alter the big things more than you think.

Eventually, my father stopped doing this. Part of the reason was that the ceiling in our basement was pretty low and he had to stoop constantly when he was down there working and I think it began to bother his back.

The other reason, though, is that he began to really wonder if it was worth doing it compared to just buying vegetables at the store in the winter.

Lately (particularly as winter has descended upon Iowa), I’ve found myself thinking about those grow lights in the basement and wondering if I couldn’t clear out a spot in our basement for a small winter garden.

The question, of course, is whether this would be worth it. Would I actually be saving money growing my own vegetables in this way?

Grow lights This is where the real cost of the system comes in. Let’s say I decide to grow about 80-100 square feet of vegetables in my basement. This could be covered by an array of small grow lights or a single large grow light. After looking at a lot of options, it seems that the best choice is a single industrial-strength grow light like this one. The problem is that such a light costs around $300 depending on where you buy it. There are lower-cost alternatives, of course, but those have their own problems.

This single light would allow me to convert an 80 square foot room in our basement into a greenhouse, more or less.

Energy use of grow lights The grow light described above uses 1,000 watts of energy. If you ran the grow light 12 hours a day for three months, that’s 1,080 hours of use. The energy cost of this would be about $120 for a season of vegetables.

Pots We’d also need a collection of pots to grow the vegetables in. Thankfully, these can be found pretty cheaply and would be a one-time investment of about $100 or so.

Soil I’m lucky to have access to adequate soil and compost, so the cost here is negligible for me. However, if you’re made to use potting soil, the cost would be rather high for 80 square feet of vegetables.

Seeds The seeds for this project would be relatively inexpensive on the whole, totaling perhaps $3 per growing session (assuming that you’re not using heirlooms, in which case this would be a one-time cost of $4 or $5).

Water The cost of the water would be negligible. We’ll figure a dollar’s worth of water per season.

So, let’s figure up the costs here for ten “seasons” of growing.

One grow light, costing $300.
Ten seasons of electricity, costing $1,200.
Pots, costing $100.
Seeds, costing $30.
Water, costing $10.
(You’ll also need soil if you don’t have access to it.)

The total cost of all of these elements is $1,640, or $164 per season.

There’s also the housing cost of having 80 square feet to devote to such a project, plus the cost of heating and cooling the room (I’d just keep it at our house temperature plus the grow light), which would add some additional cost to the equation.

Using this as a guide for vegetable square footage, I could plant a lot of vegetables in 80 square feet.

Without getting into the complexities of a diverse collection of vegetables, let’s just say I could plant a single tomato plant per square foot and that tomato plant would provide ten pounds of tomatoes. This would mean I would get 800 pounds of tomatoes out of this room every growing season, assuming that because it is indoors, I’ll minimize or eliminate pest or disease problems.

This would give me a cost per pound of tomatoes of about $0.20. Compared to the cost of tomatoes at the store this time of year (about $2.99 a pound), that’s quite a deal.

The problem is that pulling this off is a tremendous amount of work and planning. I would be installing grow lights, hauling tubs of dirt into my basement, planting lots and lots of seeds, and performing all sorts of regular maintenance. I would easily estimate that I would spend 100 hours per growing season cultivating these plants.

There’s also the issue of dealing with that much fresh food coming in at once. Much of it would have to be canned or frozen, adding to the cost and time, or given away to friends, increasing the cost per pound of production but also providing a gift to friends, or perhaps even sold in small amounts if an arrangement could be found.

In the end, this type of gardening can save you some money, but it’s going to be a labor of love along the way. If gardening is something you’re passionate about, you will save money with this effort. I would estimate that you could even approach minimum wage with it for the time invested if you canned all of the excess vegetables along the way.

Still, the question really is whether you find personal value in doing this. If you do, this can certainly be a great project for an extra room in your home.

Monica writes in:

Last year, I took the advice of my older brother and made several charitable donations during December to help out my taxes for the year. When I filed them, I did get a return, but it wasn’t nearly as big as I expected. Are charitable donations really a big deal or did I do something wrong?

Charitable donations do provide a reduction in your taxes, but it’s not the huge reduction that many people often think they are or expect that they are.

To understand the benefit that charitable donations give to your taxes, first you have to understand how income taxes work. This is something that many people surprisingly misunderstand.

When you earn ordinary income from working at a job, you have to pay income taxes on it. We all know that, of course. What many people don’t quite understand is how the amount you pay is calculated.

Let’s say you are a single person earning $50,000 this year (we’re not going to worry about issues like personal exemptions and other tax issues that would further complicate the issue – we’ll just look at $50,000 in taxable income after such things). To figure out how much taxes you have to pay, you have to look at the income tax rate table. For 2011, it looks like this for single people (there’s a different table for married couples):

For income between $0 and $8,500, you pay 10% in taxes.
For income between $8,500 and $34,500, you pay 15% in taxes.
For income between $34,500 and $83,600, you pay 25% in taxes.
For income between $83,600 and $174,400, you pay 28% in taxes.
For income between $174,400 and $379,150, you pay 33% in taxes.
For income over $379,150, you pay 35% in taxes.

So, as I mentioned, we’re looking at a single person who makes $50,000 a year.

For the first $8,500 of that (the $0 to $8,500 bracket), that person has to pay 10% of the income in taxes. That’s $850 for this bracket (that’s 10% of $8,500).
For the next $26,000 of that (the $8,500 to $34,500 bracket), that person has to pay 15% of the income in taxes. That’s $3,900 for this bracket (15% of $26,000).
For the rest of his pay ($15,500), that person is in the $34,500 to $83,600 bracket, which means that person has to pay 25% of that portion of his income in taxes. That’s $3,875 for this bracket (25% of $15,500).
To figure up the person’s total tax bill, they simply add together those pieces, which totals $8,625. This person will owe $8,625 on their taxes this year.

Now, how can a person lower that amount? The most common way is through deductions. The government gives out standard deductions each year on a person’s taxes. For 2011, that amount is $5,800 for a single person. How that works is that you simply subtract that deduction from the total amount of income the person earned for the year. So, this person’s income for tax purposes is actually $44,200.

So, let’s look at this person’s actual taxes after their standard deduction.

For the first $8,500 of that (the $0 to $8,500 bracket), that person has to pay 10% of the income in taxes. That’s $850 for this bracket (that’s 10% of $8,500).
For the next $26,000 of that (the $8,500 to $34,500 bracket), that person has to pay 15% of the income in taxes. That’s $3,900 for this bracket (15% of $26,000).
For the rest of his pay ($9,700), that person is in the $34,500 to $83,600 bracket, which means that person has to pay 25% of that portion of his income in taxes. That’s $2,425 for this bracket (25% of $9,700).
To figure up the person’s total tax bill, they simply add together those pieces, which totals $7,175. This person will owe $7,175 on their taxes this year.

So, that person’s standard deduction on their taxes actually saved him $1,450. The standard deduction may be $5,800, but it only saved the guy $1,450 because the deduction just reduces his total income for the year in terms of taxes.

Charitable giving works exactly the same way. Every dollar you donate to a registered charity becomes a deduction on your taxes, just like a standard deduction.

Let’s say the person above donates $5,000 to his church (a 10% tithe) and $2,000 to Doctors Without Borders and another $2,000 to L’arche Tahoma Hope. That’s a total of $9,000 in charitable donations.

So, this person makes $50,000 a year. From that, he can either subtract his standard deduction ($5,800) or he can subtract his charitable donations ($9,000). This means that his taxable income – the amount he pays on his federal income taxes – would likely be $41,000. Let’s look at his taxes now.

For the first $8,500 of that (the $0 to $8,500 bracket), that person has to pay 10% of the income in taxes. That’s $850 for this bracket (that’s 10% of $8,500).
For the next $26,000 of that (the $8,500 to $34,500 bracket), that person has to pay 15% of the income in taxes. That’s $3,900 for this bracket (15% of $26,000).
For the rest of his pay ($3,700), that person is in the $34,500 to $83,600 bracket, which means that person has to pay 25% of that portion of his income in taxes. That’s $1,625 for this bracket (25% of $6,500).
To figure up the person’s total tax bill, they simply add together those pieces, which totals $6,375. This person will owe $6,375 on their taxes this year.

In other words, this person’s $9,000 charitable contribution saved them $2,250 on their taxes. That’s because the person was in the 25% tax bracket before the donation and in the 25% tax bracket after the donation, which means that they essentially saved 25% of their donation on their taxes. (Sometimes, a donation will drop you to a lower tax bracket, which is fine.)

However (and this is where the readers pointed out my mistake in the original version of this post), the standard deduction would save the person $1,450. The actual savings – compared to the standard deduction – for this charitable giving is $800. Charitable giving works best as a tax deduction if it’s coupled with other deductions, such as home mortgage interest.

So, charitable donations are a great thing and they do offer some tax savings, but you don’t save $1 for every dollar you donate. Instead, you often reduce your tax bill roughly a quarter or so for every dollar you donate. That’s still a great little bonus.

Hopefully that clears things up for you!

I try to create optimistic (but not unrealistically optimistic) pictures of the future. I don’t paint pictures of myself as a rich person or as some sort of perfect citizen. Instead, I focus on where I’d actually like things to be based on where things are now and where they’re heading.

A five year picture, for example, sees three intellectually curious and healthy children. It sees me having written a handful of novels. It sees us living in a more rural area than we live right now. It sees me in a bit better physical shape.

That picture is filled with a lot of details, and it’s in those details that I see what’s actually really important to me. This is the life that I want to lead.

Yet, what I notice when I paint these pictures of the future is that they involve very few things that actually involve spending money.

Intellectually curious and healthy children are in large part a result of invested time, as are the novels and the improved fitness. Moving into the country probably won’t cost us much money on the whole.

Simply put, the things I want out of my life don’t involve spending money. The things I genuinely label as important in my life moving forward aren’t related to spending money.

What they do involve, however, is time (and energy). Time is really the magic ingredient in making these things happen. My children need time. My spouse needs time. My health needs time.

The more money I spend, the more time I have to spend working. I have to have the income to cover what I’m spending, so if I’m spending a lot, I’m going to be spending more and more of my time earning money.

The more time and energy I spend working, the less time and energy I have to spend making that picture come true. The elements of the life I want are realistic and achievable, but only if I have time and energy to devote to them.

So, how do I minimize the time and energy I devote to work? The answer is simple: frugality.

If I simply don’t spend my money on unimportant things, I can afford to take on less demanding work that gives me more space to work on my other life goals. I don’t have that pressurized job at the office – in fact, I left that in 2008.

Spend some time thinking about what your goals are. Create that detailed picture of what you want your life to look like in five years. Ask yourself what you really need to achieve those goals. I’m willing to bet that time and energy are more vital ingredients than money is.

Then, each time you consider spending money on something important, ask yourself if it’s holding you in a place where you don’t have time or energy to pursue your goals in life.

Money isn’t everything.