Last Sunday, I posted a detailed review of Mark Forster’s excellent time management book Do It Tomorrow. During the review, I mentioned that I had actually started using several of the ideas from that book, mixed them together with ideas from Getting Things Done, and started using my own task and idea management system based on TaDaList. I’ve been using this system for a few months now and it works really well for helping me keep track of my ideas, moving forward on larger projects, and also keeping focus on what I need to be doing each day.

Quite a few people wrote in and asked me to walk through what I’m doing. It’s actually pretty simple, but hopefully it’ll make sense to you and you can find something useful from what I’m doing.

What’s TaDaList?
TaDaList is a free checklist manager without many bells and whistles at all. Instead, it just strives to be as clean and as simple as possible. Over the last year, I’ve migrated to using it for my checklists from my old favorite, Remember the Milk, which was suffering from a bit of feature creep and unnecessary clutter (though, lately, it seems that they’ve gone in a more simplified direction, so I may move back to using Remember the Milk because there are some bells and whistles there I like).

Basically, both TaDaList and Remember the Milk (you can do everything I describe here using either one, and they’re both good) allow you to easily create checklists, add items to checklists, reorder those items, and check them off as you go along. Given that they’re both web-based and both have good mobile support, you can easily use either one from pretty much any device that has net access.

A Daily To-Do List
One thing I do each evening, as my last work task of the day, is prepare my to-do list for the next day. Here’s a peek at my to-do list for October 2 (a screenshot from TaDaList).

As you can see, my big focus for October 2 is getting four posts written, which I consider to be a good (but not necessarily great) day for article writing.

Rocks and Sand
Another thing worth noticing is the ordering of the tasks. Let’s look at that list again.

You’ll noticed I’ve highlighted two different groups of tasks. The first grouping, noted in red, are what I like to call “rocks.” They’re items that require me to close my email program, get rid of distractions, and focus intensely for an hour or two. These tasks are the big things I want to get done today.

What about the other tasks, the ones marked in green? Those tasks are “sand.” They can be done without intense focused concentration. They can be done in five minutes, or done with regular interruption. They are the things I do in between the “rock” tasks. Many days, I have other tasks like “Call Mom” or “Send niece an email” and so on.

I learned about the whole “rocks” and “sand” distinction from Stephen Covey’s First Things First, which I consider to be by far his best work.

So, during a normal day, I alternate between the tasks at the top of the list (where I buckle down and focus) and the tasks at the bottom (which I can do with great flexibility and interruption).

The advantage of doing things this way is that I can deal with any urgent task within a couple of hours no matter what’s going on, plus I get the focus and concentration I need to write good, detailed posts that actually contain useful and worthwhile thoughts and information.

A Focus on an Ongoing Project
You’ll also notice the first item on that list, “One hour on book marketing project,” is also a bit different. My “book marketing project,” something I’m working on to support the release of my book in December, is something that is a good-sized project, not really one I can complete in a single day.

I have a lot of these projects that I want to work on - things from a proposal for a second book to a video experiment. But each of these projects are much bigger than I can get done in a single day, and I have tasks that I need to get done each day - writing articles and so forth.

So I devote an hour each day - usually the first hour of the day - to one of my ongoing projects. In Do It Tomorrow, Forster refers to this idea as the “current initiative” - and it’s helped me get through several very big projects recently.

I also usually start a separate checklist for whatever my “current initiative” is, especially if it has lots of short sub-steps along the way. Then, I just spend an hour each day working through this checklist.

Random Thoughts, Ideas, and Appointments
When I’m out and about, I tend to record my random thoughts and ideas in my pocket notebook, but when I’m at the computer, I tend to simply use a separate checklist for recording random thoughts and tasks. I usually open up a new browser window with an empty checklist that I call “GTD Inbox” and whenever I have a thought of some sort, I just type it quickly there, adding a new item to the list, and then get back to the task I’m focused on. Then, later, I process everything in that “inbox” list, dealing with it right then or adding it to a later to-do list.

I also “schedule” appointments with to-do lists. I start lists up to a month or two in advance and add items to it that need to be handled on that day, like making certain phone calls or sending invoices. If it’s at a certain time, I put the time right at the start of the item - like “9 AM - Take daughter to doctor’s appointment.” Since I look at the list quite often during the day, I’m continually reminded of that appointment. It doesn’t entirely replace my calender, but it’s certainly a powerful complement.

Good Luck!
This is exactly how I deal with my blocks of work time during my days. I’ve been using this pattern for about two months and even though several personal matters have distracted me during this period, sapping away my work time, I’ve felt very productive since adopting it. It keeps me on appropriate tasks throughout the day and also lets me deal effectively with my random thoughts, too.

I hope it points you towards something useful, too.

Over the last several days, many readers have asked for my take on the economic crisis. I’m not an economist - my opinion is just that of an average person who has read a number of economics books and talked to a lot of people from all walks of life. Here’s my humble take on the situation.

From Franklin Roosevelt’s first inaugural address, March 4, 1933 (please, listen in):

I am certain that my fellow Americans expect that on my induction into the Presidency I will address them with a candor and a decision which the present situation of our Nation impels. This is preeminently the time to speak the truth, the whole truth, frankly and boldly. Nor need we shrink from honestly facing conditions in our country today. This great Nation will endure as it has endured, will revive and will prosper. So, first of all, let me assert my firm belief that the only thing we have to fear is fear itself — nameless, unreasoning, unjustified terror which paralyzes needed efforts to convert retreat into advance. In every dark hour of our national life a leadership of frankness and vigor has met with that understanding and support of the people themselves which is essential to victory. I am convinced that you will again give that support to leadership in these critical days.

Over the last two weeks, I’ve read countless articles and heard countless podcasts talking about financial apocalypse, spreading fear around like mayonnaise on a turkey sandwich. Most of the suggestions are maddening - I’ve heard previously rational people talking about pulling all of their money out of FDIC-insured bank accounts and putting them under their mattresses.

All of this is based on fear, not fact. Over the last few months, several financial institutions have failed, but in each case, the resources of those institutions were immediately absorbed by other companies or, in a few cases, by governmental buyouts. No one has lost a dime in a bank account. No one has lost a single cent of insurance coverage. Many large banks - like Bank of America - have already taken their losses from the subprime mortgages and rolled right through them, and they’re strong enough that they see this as a buying opportunity.

We all know the general storyline by now - these failures were the result of investing too much in bad mortgages. The truth is that no one knows how serious the actual problem is. No one. The ludicrous plan that Paulson proposed last week served one purpose alone - it gave him tons of cash to make sure that the banks run by his cronies wouldn’t outright fail. The truth is that he doesn’t know how bad it actually is. Neither does Bernanke. Neither do you, and neither do I.

The panicked talk, the whispered statements about apocalypse - they’re fear. Nothing more, nothing less.

I don’t claim to know what the “best” plan for resolving the situation is. My level of information about the true nature of the economic situation is extremely limited - and so is yours.

I’ll tell you what I do see, though.

I look out my window here in Iowa and I see the ongoing harvest of one of the largest soybean and corn crops ever - not the cropless Dust Bowl of the 1930s.

I don’t see a single person with a bank account that has lost their deposits, like my grandfather’s family did circa 1932.

I see people going to work, working hard and producing value for their wage, coming home, and buying the things that they need to keep their family going, which puts money directly into the economy.

I see unemployment barely over six percent, not the 25% rate at the time of FDR’s address.

I see industrial production still rising - in 1932, it had fallen by more than half in just three years.

I see a dollar that’s actually strengthening, not weakening, while the price of oil is down sharply from its highs earlier this year.

In short, I see a lot of things that make me optimistic about our ecnomic situation, a pretty stark contrast from the fear being peddled by some. I’m actually much more reminded of 1987, when banks were failing thanks to the Savings and Loan crisis and Black Monday, when the Dow dropped 22% of its value in a single day. We haven’t yet seen anything as worrisome as that, in my opinion - and that was just a drop in the bucket compared to the 1930s.

To put it simply, I’m still not worried a bit, and when I see the fear being bandied about, I’m reminded of FDR’s words.

So what have I been doing with my money as of late?

First, I haven’t taken a dime out of any bank. I haven’t seen any FDIC-insured bank account fail, and none have in the history of the FDIC.

Second, I actually maxed out my Roth IRA contributions earlier this month. Almost all of that money went into broad based index funds - namely, Vanguard’s Target Retirement 2045 fund.

Third, I haven’t made a single change in any plans I’ve had for investing other than the early Roth IRA buy. I’m still following my own game plan.

Now, ask yourself this. If you make any irrational moves, like pulling all of your money out of stocks, does someone profit from it? Of course they do. Your brokerage will make a fee from the sale, and a happy buyer out there will be glad to buy that stock from you at a nice discount. Fear is the best salesman, after all.

My sole piece of advice to you is this: don’t panic. Don’t make any hasty decisions. Sit back and get informed - and don’t just rely on one source for information, either. Get a bunch of different angles on what’s happening, from liberals and conservatives and moderates alike. If you’re worried about your money, do your own research and find out reasonable things to do with it. Take a serious look at what people who really know what they’re doing are doing with their money - in the last two weeks, Warren Buffett has invested $3 billion in General Electric stock and $5 billion in Goldman Sachs stock (an investment bank … weren’t we supposed to be afraid of those?) - he sees this current situation as an opportunity to buy, not sell.

And one more thing. Even in the darkest heart of the Great Depression, 75% of Americans had a steady job with a steady paycheck, which they steadily used to buy the things they needed. Those years also produced the Greatest Generation and an economic steamroller that ran through the last half of the Twentieth Century like a tidal wave.

It was true 75 years ago. It’s true now.

The only thing we have to fear is fear itself.

Many workers in the United States receive their paychecks every two weeks - many federal and state employees are in this group. At the same time, most bills and payments that people make are paid on a monthly basis.

This creates an interesting situation. Over the course of a year, there will be two months where an individual will receive three paychecks - occasionally, when the calendar lines up, there will be three months in a given year where this happens. During every other month, a person receives two paychecks.

I was once in these shoes. My last job paid me every two weeks, and I know quite well some of the traps people can fall into…

Treating that “extra check” as a reward. Like many people who live on biweekly checks, I usually thought about things in a monthly pattern, since that’s when the bills came in. This meant that most months, I paid the bills with two paychecks. Then, when I would have a month where I would get paid, say, on the 2nd, 15th, and 29th, I would treat that third check as some kind of “bonus” - giving me free reign to blow it on frivolous stuff. This “extra” check is where many of my big unnecessary purchases came from - that would often be the source of a new video game console or an iPod. I wouldn’t use it for things like paying down debts because, well, I was “paying” those bills with my normal checks and I had convinced myself that this third check really was a bonus.

Failing to develop a regular bill-paying schedule. Another challenge of the conflict between the biweekly checks and the monthly bills is that it was quite difficult to have a regular bill paying schedule. Usually, I’d pay bills whenever my latest check came in, and this worked fine most of the time. But when irregular bills hit, or a bill came in the day after I paid bills, I’d run into trouble and sometimes rack up some late fees simply because my checking account balance would be waiting for that next infusion of cash in two weeks.

Running “dry” between checks. This leads into my third problem. Quite often, I’d get my check, pay my bills, and find that my checking account balance was really low. That meant that the expenses I needed to pay for for the rest of the period would go on the ol’ plastic and stay there - groceries, gas, and so on would wind up being fodder for pushing my credit card balances to the moon.

How can one get past these problems? Here are four great tactics to use if you’re paid biweekly but struggle to make things work on a monthly schedule. They worked well for me, anyway.

Strongly adopt a two week schedule
Ignore the fact that your regular bills come in on a monthly basis. Instead, adopt a strict two week schedule for paying the bills. When you’re paid, pay whatever bills are outstanding immediately. Do this with every single paycheck.

I adopted a routine of paying the bills every other Monday like clockwork. I’d collect all the bills in a consistent spot as they came in, then I’d sit down on bill paying day and go through them, knocking all of them out. If I had more bills than cash, then I tapped my emergency fund a bit, but with the further tactics below, it wasn’t long before that wasn’t a problem.

Create a healthy emergency fund and fund it every paycheck
One of your regular bills that should come out of every paycheck is a strong allotment to a savings account somewhere - your emergency fund. Your emergency fund is there to handle large irregular bills and to handle true emergencies, like your car breaking down.

Don’t know how much to contribute? Start by contributing 10% of your paycheck to your savings account right off the top each time you get paid. If your paycheck is $1,000, immediately put away $100 for emergencies. You may find later that this isn’t enough, but you’ll almost never find that it’s too much.

Build a sizable buffer in your checking account
Once the bills are paid, it can be awfully tempting to see what’s left as free spending money. The bills are paid, time to go party, right? It sounds good on paper, but if you do that each time, you’ll eventually find that there are two week periods where you don’t have the cash to even cover your ordinary bills. What about those weeks when your mortgage, your car payment, your electric bill, and your cable bill all stack up? That’s more than your paycheck right there.

“Isn’t that what an emergency fund is for?” Normal bills are not an emergency. Normal bills are normal - things you should easily be able to cover with your normal pay. If you’re having difficulty with this, particularly when it’s paired with spending binges, then something has to change.

What you should effectively do is decide that the absolute minimum balance in your checking account at any time should be equal to a paycheck. If you look at your account balance and it’s less than a paycheck’s worth, you don’t have spare money to spend needlessly. That way, even when the bills stack up, you can pay them all with ease, without worrying a bit about it. It also ensures that you won’t be overdrafting.

Budget in a small amount of free spending each paycheck
Many people will think that building up such a buffer will add up to no fun at all. “I’m not going to give up my fun!” is something I hear quite often.

You don’t have to. You just need to put some constraints on it, like putting a bridle on a horse. You can still go for a nice, fast gallop, but you’re not in danger of things going completely out of control.

Just set yourself a free spending budget each paycheck - your allowance, if you will. I suggest withdrawing it into cash. Then, when you’ve spent it, you’re done - no hitting the ATM for more. If you want something big, save up that money over a few pay periods and buy it. Use this budget for all of your unnecessary expenses - eating out, buying gadgets and extra clothes, golfing, and so on.

The danger comes when you don’t set any limits and drain your account thanks to frivolous spending. Putting yourself on an allowance keeps this in check but allows you to still enjoy life.

One book I’ve had sitting on my shelf for more than a year, intending to eventually review it, is Benjamin Graham’s The Intelligent Investor.

This is perhaps the most important investing book in the past hundred years, and its importance is made clear in this quote from Warren Buffett from the preface: “I read the first edition of this book early in 1950, when I was nineteen. I thought then that it was by far the best book about investing ever written. I still think it is.”

The problem is that this book has so much meat worth discussing that every time I tried to start writing a review of it, it simply got out of hand. I’d want to write several paragraphs about each chapter in the book, which would result in an incredibly long post, one that would probably be so long as to not be worth reading.

So what’s the solution? I’ve decided to review/discuss the book in a serial format, a chapter at a time. Each Friday morning, starting next Friday, October 10, I’m going to initiate a discussion of a chapter of The Intelligent Investor, with the goal of making it interesting to everyone.

I’m going to be using the HarperBusiness Essentials revised edition with commentary from Jason Zweig that can be found in libraries and bookstores everywhere. You can read along if you’d like, or just stick around for the commentaries.

Next Friday, I’ll start with the introduction - pages 1 through 17.

I hope this will be a lot of fun.

Now, for some personal finance articles.

29 Steps I Took to Leave the Workforce at Age 29 Interestingly, I also left the “workforce” at age 29 and am doing my own thing now. It’s the best thing I ever did. (@ my dollar plan)

Behind the ‘We Deserve It Dividend’ Hoopla I’ve received this absurd email forward from a few people and considered writing a debunking of it. Thankfully, Karen Datko over at Smart Spending already did it quite well. (@ smart spending)

Could Tithing Lead Some Americans to Lose Their Homes? I think when many people think about tithing, they think only of money. One can (and should) tithe their time as well - or give their time in lieu of their money if they are in a serious pinch. (@ get rich slowly)

Unclog Your Commute Carpooling saves money, period. Here’s a clever way to get it done. (@ unclutterer)

Six Ways to Get Intense About Your Money and Finances I have to agree with #1 (read personal finance blogs). Not only are there a lot of interesting ideas out there floating around, but the repetition of the fundamentals helps, too. (@ prime time money)

Looking for a Reason to Hide Feeling really scared about the current economic situation? This pretty much describes how I feel about it. (@ seth’s blog)

One of my friends bought a 2008 Cadillac CTS about a month ago. In order to pay for the $32,000 in debt he incurred, he needed to take out a sizable loan.

The credit union he worked with gave him several options - a 36 month loan at 6.75%, a 48 month loan at 6.875%, a 60 month loan at 7%, and a 72 month loan at 7.125%.

He took the 72 month loan.

Afterwards, he bragged to me about his deal. “I’m only paying $549 a month for that ride,” he told me, believing that I’d be impressed at how cheap he got a very nice brand new Cadillac.

I went home later, though, and ran the numbers. If he had taken that three year loan, he would have paid $988.11 a month. Ouch.

But here’s the kicker. Here’s what he would have paid total on each of those loans.

The 36 month loan would have cost him a total of $35,568.
The 48 month loan would have cost him a total of $36,833.
The 60 month loan would have cost him a total of $38,160.
The 72 month loan, the one he took, will cost him a total of $39,562.

His “sweet deal” is going to cost him an extra $4,004.

Ouch.

Here’s the problem. He led with the wrong question. He focused heavily on the monthly payments without even considering the bigger picture, and for that focus, he’s being rewarded with an extra $4,000 in payments.

Here’s a better plan.

First, don’t buy something that you can only afford with a suboptimal payment plan. Because my friend wanted more car than his wallet should be able to really handle, he’s paying a $4,000 surcharge for the option. If he had waited and saved up a bigger down payment or simply settled for a bit less of a car than a Cadillac CTS, he wouldn’t be watching $4,000 walk directly out of his pocket for nothing in return.

Second, always calculate the total cost of your purchase. That’s the number you should be working with, not the monthly payment. The lowest total cost is the deal that will keep the most money in your pocket.

Third, if you can’t get what you want for that lowest total price, keep shopping. You don’t have to buy today. If you need wheels for the short term, buy a low-end used car that can just serve to get you from point A to point B and wait on the long-term purchase until you have an appropriate down payment so that you can swing the best total payment plan.

Or, best of all, save, save, save and buy with cash. With the 36 month loan, his payments would have been $988. But if he started saving $850 a month right now (yes, $138 less than his payment) and saved that each month for 36 months in a 3% savings account, he’d have enough to pay cash for the car he wanted. That plan would cost him only $30,600 - a savings of $4,968 over even the best payment plan.

What’s the take home message? Looking at just the monthly payment when you go to take out a car loan - or any kind of installment loan, including mortgages - will almost always hurt you in the end. Instead, look at how much you’ll pay in total - that’s the number you want to be low. If you can’t afford those monthly payments, then you’re buying something more expensive than you can really afford, anyway.

Almost a year ago, in an article entitled Building a Foundation: Ten Things To Do First If You’re Looking At Starting Your Own Business, I described the value of finding a business mentor and offered a few minor tips for finding one.

The truth, though, is that a mentor is incredibly valuable no matter what you’re doing.

What Is A Mentor?
So, what exactly is a mentor? It’s a term often bandied around in business books, but it’s often not looked at outside of this context.

A mentor is any person who can help guide you to the goals you desire through example and discussion. You can have a parenting mentor just as easily as you can have a business mentor. You can have a blogging mentor, a golfing mentor, or a chess mentor. Whatever it is you want to succeed at, you can likely find a mentor who will help you get there.

What can a mentor provide? The key thing that a mentor provides is advice. They’re a person that can provide suggestions, based on their own experience, that will point you towards the success that you want. They can also provide help through example - you can learn from them how to act, what to know, and so on.

7 Tactics for Finding a Mentor

Meet people in your workplace. If you’re seeking a mentor within the organization you work with, your best bet is to simply build as many relationships within your organization as you can. Not only will you have a better chance of discovering good potential mentors, you’ll also build up valuable relationships for your own ends. Plus, you’re much more likely to have a person or two in common with the person you want to be your mentor.

Meet people in your community. Similarly, if you’re looking for mentors in non-professional areas, look around your community. Get involved in interest groups related to what you’re engaged in and volunteer within those organizations. Go to general community meetings. Meet your neighbors. Keep your ears open for the type of people you’re looking for. Another tactic is to simply find people who write for niche publications in your area of interest, as well as people who blog on that topic - you can at least be sure of their passion in the area.

Meet people in your industry. If you’re simply looking to excel within a particular industry, attend conferences. There are few better places to meet people within your industry than a trade conference. You should also make an effort to follow trade publications within your field and contact interesting authors.

Identify the people who have achieved what you want to achieve. As you meet more and more people and get more involved, you’ll probably start to realize what levels of success you want to achieve, particularly in the shorter term. Look for the people who have already achieved that level for potential mentors.

Don’t go over your head. If you’re a newly minted MBA, don’t go try to swing Jack Welch as your mentor - you’re wasting your time. Instead, look for people who are a few levels up the chain. If/when you reach that level and you decide you want further success, you can always seek a new mentor - or you may find that your previous mentor is still climbing the ladder. Don’t burn your time trying to get a mentor too far up the chain - work your way up there.

Watch potential mentors, and listen to what they have to say in public (and in private). Once you’ve identified some people who might serve as a good mentor for you, watch them. Listen to what they have to say. Read the things they write. Get a good feel for how they think and operate from the outside.

Don’t choose a mentor who makes statements or decisions you find ethically questionable. If someone is doing something you find ethically wrong, move on. Don’t get drawn into a person who is using questionable methods to find success, because people who do that usually get swatted down at some point. The tactics you should seek to learn are the ones that bring success with ethical standards.

8 Tactics for Utilizing a Mentor

Do something generous to get their attention. Step up to the plate in a way that positively affects the person you want to be your mentor. Be patient and wait for the right opportunity. It may come in the form of assistance with a project, a key presentation, sharing of important information, or just a well-capitalized chance meeting. Be polished and be generous with what you can share.

Don’t expect the person to become your mentor. Many people get their hopes centered around a person becoming their mentor, then find that it didn’t work out for whatever reason. Don’t let that get you down. People who make good mentors often have a lot on their plate and are unable to devote time to helping you. Also, personality conflicts can create a situation that just doesn’t work through no fault of either one of you.

Schedule a meeting. If you’ve got their attention, try to schedule a meeting. A lunch is a good way to do this, but even a short office meeting will work. Strike while the iron is hot and you’re on their mind in a positive sense and you’re likely to get that meeting. Do it out of the blue with no pretense and you’ll probably find a fat rejection.

Be prepared, but not from notes. Know not only the things they’re interested in at the moment, but also know what you want. Read up on their current interests and be familiar with them, plus make a list of the questions you’d like to ask that person. Also, when you meet, be straightforward - tell the person that you’d like for them to mentor you a bit.

Ask every question you can, but don’t forget the most important one! Don’t be afraid to ask away when the opportunity comes, but there’s one question you should always ask, no matter what the situation: what would you do if you were in my shoes and had it to do all over again? That advice is always useful - a person who found success probably tried several things before hitting upon success.

Follow up. A relationship between your mentor and you should be a conversation, and that means following up. Don’t be afraid to use email or phone calls to touch base somewhat regularly (but don’t be a nuisance, either). Ask more questions as they come up and follow up by letting your mentor know how things are going for you. Your mentor will probably toss some things your way - do them well.

Make the relationship go both ways. Your mentor will be giving you valuable time, valuable advice, and probably valuable opportunities. Take advantage of these, but if there’s anything you can do to help out your mentor, do it. Talk positively of your mentor to others and give your mentor key information when you can.

When you make it, don’t forget who helped you. If you work hard and are diligent, you may achieve the success that you want. When you get there, you may have the opportunity to lend your mentor a real helping hand. Always do it. Your mentor will help you in so many ways as you begin to rise to the level of success that you want, and helping out your mentor will help them do quiet things that you never even notice. Reciprocate that help.

It wasn’t all that long ago that I simply didn’t care about my money. It wasn’t something to think about or plan with - it was simply grease for the skids, enabling me to live out a lot of whims. Other than that, it was something largely to avoid - I would just pay the bills and try hard to forget about it.

I hear the same thing over and over again from others. There are a lot of people that I talk to on a regular basis that, when I mention I write a blog that focuses mostly on money issues, their eyes immediately glaze over. Could there possibly be anything less interesting?

And I agree, to a certain extent. For many people, personal finance is just a bunch of boring writing about creating budgets, living cheap, minutiae of investing, and so on. And by themselves, this stuff is boring.

If you find yourself in this group that finds money issues to be extremely boring, I invite you to spend a bit of time thinking about these two things.

Where Do You Want To Be?
Where exactly do you want to be in five years? Just stop for a second and think about where you want to be in five years. What would you like for your life to be like?

As you think about this, be realistic, but don’t worry about whether you can afford the stuff, either. Don’t envision yachts, but don’t sweat whether you can afford the details.

Here are a few things to think about.

Will you be married?
Will you have children? How many? How old?
Will you own a house?
What will your job be like? Or will you own a small business?
Where will you live?
How will you transport yourself around?
What’s the best-case scenario you can imagine about your debt? Your savings?

You can add in as many details to this as you like - actually, the more details you add, the better.

Here, I’ll do the same thing.

In five years, I’ll be married. I’ll have four children - a seven year old, a six year old, a three year old, and a one year old. We’ll still be living in our current home. I will still be a writer, but my wife will have switched to a more local job, enabling us to become a one-car household. This auto, however, will have seating capacity for all six of us - not either of the two cars we currently own. We’ll only owe money on our mortgage and we’ll be heavily into saving for our next home.

Obviously, some of what you envision won’t actually happen. You can’t foresee the unforeseen. However, that’s how I’d predict my own life to be five years from now.

Taste Freedom
The next time you pay your monthly bills, just add up how much you’re paying in debt. What’s the sum total of all of your credit card bills, your mortgage payment, your car payment(s), personal loans, and so on - everything that is a debt to another entity.

How would your life change if you didn’t have to pay that debt? In our case, we pay about $1,500 a month in debt payments - our home mortgage plus my remaining student loan. That’s $18,000 a year.

An extra $18,000 a year would be transformative in our life. It’d only take a decade or so for us to be able to build the house we’ve dreamed about. Or we could do the traveling we’ve always talked about, taking our children on long trips to rural areas of other countries. We could even make some risky career choices to leave us more fulfilled.

What’s the Connection?
The mechanics of personal finance - the budgeting and such - can be quite boring to many, but it’s vital to remember that they’re merely tools to help you live out those dreams.

You don’t do a budget because a budget is fun - you do a budget so you can get rid of that debt that’s keeping you from doing the things you want.

You don’t choose the cheap route because it’s the most enjoyable route (though, surprisingly, it often is) - you choose the cheap because the money you save builds up to the big things you dream about.

Let me put it another way: you probably know a person or two who chooses not to spend much money on any sort of regular basis. You might see them as boring, or you might regularly encourage them to live a little. You probably also wonder why they would choose to live that way when they could live “better.”

The truth is that those people often are looking ahead to a few years down the road. They’d rather forego going out with the boys every weekend to not have any debt in a year or two. They’ll skip the big screen television paid for on the credit card in exchange for a down payment for an amazing house.

Right now, you’ll find them boring. In five years, though, they’ll be the ones living their dreams while you’re still battling debt and wondering how to get ahead.

The day I realized that idea, that my day-to-day extravagances were fun but they were keeping me from the bigger things I wanted out of life, I realized I needed to get down to work and fix the problem. And to fix that problem, I had to pull out the toolbox - things like budgets and frugality and so on. The tools themselves might seem boring, but as I work on fixing the problem, I have a bounce in my step because I know that when I’m done, I’ll have the big things in life I dream of - and I’ll have left those naysayers who say “you only live once” in the dust.

Each Monday, The Simple Dollar opens up the reader mailbags and answers ten to twenty simple questions offered up by the readers on personal finance topics and many other things. Got a question? Ask it in the comments. You might also enjoy the archive of earlier reader mailbags.

As usual, we’ll start things off with a few links to older articles that directly answer questions I’ve heard recently.
A great discussion about whether you should report sexual harassment
How I manage my ideas
Should you help people who won’t help themselves?
And now for some great reader questions!

I recently changed jobs and will become elgible for the 401(k) plan soon. While I have invested heavily in the 401(k) plan at my prior company I wondering if it would be a smarter idea to take the money I would be investing to continue paying off my debt over the next 6 months, after which I will have eliminated my credit card debt and half of my student loan debt just leaving the morgtage on my primary home, rental propery, and a car note.
- Marc

Ignore the tax implications and penalties of cashing in your 401(k) early for a moment and ask yourself this simple question. If you cash in that 401(k), are you still on a reasonable pace to save up for retirement? For example, if you’re 30 years old, you should have roughly 1.2 times your annual salary in a retirement vehicle. If you’re significantly below that - or would be below that if you cashed it in - then don’t.

However, if you’re in a position where you saved really hard for retirement and cashing in that 401(k) would still leave you in a healthy retirement position, and you know that getting rid of those debts now would put you in a good place in your current life, then cash it in. Just make sure you’re committed to not racking up more debt once this batch of debt is gone, or else you’re just running in circles.

The real key is making sure you have enough for retirement. Don’t even consider cashing in a 401(k) if it’s going to jeopardize that.

You talk about how you keep a list of ideas for potential writing ideas. Do you somehow organize these, or just keep them in a jumble? I tend to be a collector of ideas as well (my dream house, hairstyles I might want to try, recipes for someday), but it’s hard to figure out a system to make things “findable” again. Any suggestions?
- Mary

I basically just keep them in a jumble. I usually devote a page in my pocket notebook or an individual text file to each significant idea or project that I have, but I don’t organize them much at all.

Instead, I just make an effort to go through each of them on a regular basis and see if there’s anything I can do to move that idea forward. Maybe I can jot down a few more ideas for a great future post. Or maybe I might be able to take a baby step forward on this idea by calling up a friend.

It’s really two pieces: one is writing down my ideas as they come to me and not forgetting them, the other is following up on those ideas and making sure the good ones actually happen. Remembering your good ideas and making sure they don’t die on the vine is the key to creative success.

I just turned twenty and am hoping to open a Roth IRA, or at least a retirement savings account soon.

The dilemma is, I don’t know if I should take time to research where to put my IRA, or start investing now to start earning interest. Should i wait and figure out a good place to start investing, or don’t waste a second and stuff my funds in a place where it can earn interest until i retire?
- Mischa

You’re better off saving now rather than later, even if the savings isn’t optimal. My suggestion is to open up an account with an investment house that you’re sure is good and picking some very broad index funds for investment - in other words, invest in everything. Then, when you feel more confident, you can make changes later on.

More specifically, if I were you, I’d open a Roth IRA at Vanguard and put half my money into their Total Stock Market Index and half into their Total International Index. In other words, your money would be invested in basically every stock in the world - as broadly based as you can be. You rise with the tide of the market.

Then, later on, if you get into investing, you can change things around to whatever you like. The key is to start saving now so that compound interest is on your side.

Trent, what is “personally challenging reading”?
- James

Personally challenging reading is any reading that forces you to think and forces you to re-examine your core beliefs and ideas. I believe that personally challenging reading is truly key for any person who wants to be successful in life. Here are some examples.

An atheist might find personally challenging reading in Mere Christianity by C.S. Lewis or The Reason for God by Timothy Keller.

A Christian might find personally challenging reading in The End of Faith by Sam Harris or Why I Am Not a Christian by Bertrand Russell.

Incidentally, I’ve read all four.

Challenging beliefs just scratches the surface, though. Personally challenging reading also includes digging deeper into topics that you know little about. Don’t know much about art? Philosophy? Computer science? Find a key text on that topic and dig in.

The key to personally challenging reading is to stretch what you know and believe - in other words, to exercise your mind. It’s good for everyone to do.

I recently started a new job. The lower level employees have a “sunshine club” where five dollars is collected from everyone monthly. These funds are used (to my knowledge) to purchase beravement gifts or other similar items. I was wondering what your thoughts on this are.
- Jolie

On the surface, it’s just an office cultural norm. It basically prorates the cost for everyone of giving flowers and such to those who are bereaved.

However, in doing this and taking it to that level of formality, the actual true sentiment and meaning of the expression of care is lost. It’s just another bunch of flowers paid for out of the fund, not a symbol of individual caring.

If I worked there, I’d just contribute to the fund, but I’d also send my own note or flowers to people I really cared about.

What were the last ten albums you listened to in iTunes?
- Phil

To make this list more interesting, I eliminated artist duplicates - if I didn’t do that, the three artists at the top of the list would have had all ten of my most recently listened albums.

Migrations by The Duhks (Americana)
New Magnetic Wonder by Apples in Stereo (really upbeat pop)
You Are Free by Cat Power (folk)
Four Thieves Gone by The Avett Brothers (Americana/alt-country)
Not the Tremblin’ Kind by Laura Cantrell (Americana)
Extraordinary Machine by Fiona Apple (pop?)
One Cell in the Sea by A Fine Frenzy (pop?)
How We Operate by Gomez (pop/rock)
Fox Confessor Brings the Flood by Neko Case (Americana?)
Gimme Fiction by Spoon (rock)

Really random mix, and not what I would have actually guessed. Interesting. I actually like it when bloggers I like post such lists, as it often leads me to discover interesting new music. Also, eight of these ten albums are available on emusic for pretty cheap (all but A Fine Frenzy and Fiona Apple).

I heard something the other day that said most lottery winners lose their moeny within the first 18 months of winning a state lottery. I am just curious, what would you do with the lottery if you played and won the jackpot?
- Bobbi

I’d go somewhere where it would be difficult to find me, and possibly change my name. A “rube” who just won $100 million is a target for almost every scamster out there, and they’ll come looking. If I could, I would keep my identity secret, or perhaps go along with having a “false face” put out there so that I wouldn’t be known.

Given that, I’d buy a patch of land in the country, build the house I’ve always dreamed of having, keep enough for myself so that I never had to worry about anything, then dole the rest out to charity. I don’t really want to have more money than I know what to do with, especially when there are people out there who could use the money.

I’d be perfectly happy administering scholarships and charities for the rest of my years, to tell the truth.

Where do you see yourself in ten years?
- Pauline

I see myself writing, though whether it’s about personal finance, I don’t know. I see myself also heavily involved in local politics.

I will likely still be living in Iowa. I will also likely still be living in the house I currently live in, though I think I’ll have it paid off by then.

I predict I will have four children.

Other than that, I don’t know what to predict. If I had predicted where I would be at now ten years ago, I would have had a few things right but most things terribly wrong.

I am legally eligible for a scholarship because of my ancestry. I meet the minimum requirements for it, even though I know nothing at all of that portion of my ancestry. Is it ethical to apply for that scholarship? Last year, there were more scholarships than applicants, so it’s a virtual lock that I’ll receive one of the scholarships.
- Alex

If you’re eligible for the scholarship, apply for it. When a scholarship is offered, usually much thought has gone into who can qualify for that scholarship, so this ethical decision is actually already out of your hands. I’d say apply away.

I didn’t always feel that way. When I was in high school, I was in almost the exact same situation as Alex. I am 1/8 Cherokee, and that enabled me to apply for some scholarships because of that heritage. However, I have almost no connection at all to my tribe of heritage - no cultural or personal connections that I can think of other than some old family heirlooms. Because of that, I chose not to apply.

Later on, I realized I was silly for not applying for it. I met the qualifications they stated and it would be up to the scholarship board to determine if I would get that scholarship or not.

Alex, apply away. It’s not your ethical decision here.

If you were offered the chance to host a show like Suze Orman’s, would you do it? I’d love to watch it!
- Jenny B.

I actually would be willing to host a personal finance-themed show on television if the opportunity came along, though I think the format of Suze’s show would not be right for me. The type of show I think I’d thrive with would be something more like A&E’s Big Spender, where I actually interact with people out in society instead of behind a desk.

Got any questions? Ask them in the comments and I’ll use them in future mailbags.