One common request from new GRS readers is some sort of central location where they can find a list of introductory articles to guide their progress. This is a great idea, and I’m working on it. Some of the GRS elves are working on a “Guide to Money” that will provide some of this info, but I envision a single page that collects all of the relevant articles for folks starting out.

In the meantime, folks like Ashley are hoping they can get some help now. Ashley writes:

I’m a new reader to the blog and just wanted to say thanks for presenting often overwhelming information in a digestible manner. As someone whose former financial philosophy was “ignorance is bliss”, GRS has played an integral part in my transformation from 30 year old faux-dult to real, live adult, at least in the personal finance category.

My question is this: What does a generally healthy personal financial portfolio look like? What are some must-haves for everyone and in what order should I work on getting them? It seems like a simple question, I know, but I’m picking myself up from living paycheck to paycheck and struggling with debt and I want to set some goals: savings, debt, retirement, investments (gulp). I realize it’s hard to generalize, but what do a good adult’s finances look like?

Ashley’s right: It is hard to generalize. Everyone is different, with different strengths, different weaknesses, and different goals. Still, it’s possible to make a few recommendations. There’s a core group of financial structures that I believe are important to everyone. And there are many ways to customize a “personal financial portfolio” (as Ashley calls it) in order address you own personal aims.

Building a Base
When I talk with people about how they should set up their finances, I generally recommend the following:

• Carry no debt — except maybe a mortgage. Though there are a handful of exceptions to this rule, I believe that most of us shouldn’t carry non-mortgage debt. We should avoid credit cards, car loans, and other consumer debt. Sure, that means we have to wait and save. It may mean that we drive used cars. (I drive an eight-year-old Mini Cooper!) But avoiding debt allows us to reach big goals while others are barely getting started with the small stuff.
• Build adequate emergency savings. What is “adequate” savings? That’s tough to say. When you’re just starting out — especially if you’re carrying debt — adequate savings might mean simply that you have $100 in the bank. But as time goes on, you’ll want to build a buffer in the bank. It’s an amazing feeling to know that were your job to vanish, you can still get by for six months before falling into debt.
• Fund your retirement. When you begin saving for retirement, you won’t have much. Plus, retirement will seem as if it’s decades away. Because it is. But just because you have 45 years before you’ll be eligible for retirement benefits, that doesn’t mean you shouldn’t start. The biggest factor in retirement savings is how much you contribute. The second biggest factor is time. If you start socking money away in a Roth IRA or a 401(k) when you’re just 20 years old, you’ll be light years ahead of your peers. (And that’s when you’re 35, not even when you’re 65!)
• Be insured. Some people think they’re above the law of averages, above forces of nature, and they choose not to carry adequate insurance on the important things in their lives — such as their car and their home and their body. But as most of us here can testify, bad things happen. And when they do, costs add up. You can mitigate the expenses by carrying adequate insurance, by which I mean the right insurance (and the right amount of insurance) for your circumstance. What type of insurance (and how much) is that? The answer’s different for everyone, but it’s not difficult to learn.
• Develop a budget — even if it’s just a loose guideline. When you have a budget, you’re telling your money where to go. You’re in control. Without a budget, it’s easy to lose track of what you’re spending where. A proper budget doesn’t have to be super detailed (thought it can be if that works for you). Instead, it simply has to guide your spending in a way that keeps you from losing control.
• Boost your income. There are two camps when it comes to increasing income: Those who think it’s irrelevant (or impossible) for their situation, and those who know it’s difficult but do it anyhow. I’m convinced that those who work to make more money, despite the obstacles in their lives, have more financial success.

These are some of the basics, though not all of them. These core skills and habits can help almost anyone get started on the path to prosperity.

Customizing Your Course
Once you’ve become accustomed to the basics, it’s important to customize your financial habits and structures to reflect your personal skills, goals, and psychology.

For instance, some folks are opposed to debt in all forms. These people avoid credit cards, certainly, and often try to avoid mortgage debt as well. Other GRS readers love credit cards. They never abuse them, never carry a balance, never pay any sorts of fees. And some are eager to carry a low-rate, long-term mortgage because they figure they can put that money to work elsewhere to earn a better return.

Another example is automation. For most people, automation is liberating. By creating a system whereby you make automatic contributions to saving, to your retirement plan, and to your bills, you take the weakest link — you — out of the chain. But for a few people, automation actually creates problems. For these folks, it’s important to do things manually.

So, you see, once you have a solid financial base, you begin to build a customized financial framework based on your personal needs. And these needs are determined by your goals.

Until you have personal financial goals, you can’t really know what’s “healthy” for you. Emergency funds are a great example. Some folks — such as Trent at The Simple Dollar — don’t feel comfortable unless they have sizable emergency fund, such as a year (or more) of monthly income. I, on the other hand, am okay with six months worth of expenses in savings. Based on my psychological make-up and my personal goals, this is plenty.

Reader Response
My own financial profile? Let’s see if I can summarize it quickly:

• I carry no debt, but I do use credit cards. I repay the balance every month and pocket the 1% cash-back rewards.
• I have six months of expenses in emergency savings.
• I fully-fund my retirement plans every year, meaning I fund them to the maximum that the law will allow.
• I invest in low-cost index funds instead of trying to beat the market through guesswork.
• I carry adequate insurance, but employ high deductibles to reduce my costs.
• I use targeted savings to pursue other goals, such as travel. By using multiple savings accounts, I’m able to save for the things I want without losing track of my larger goals.
• I use the balanced money formula to keep my spending on track. This isn’t a strict budget, but it’s a lose framework to guide my financial decisions. I like it.

There’s more to it than this, of course. That’s where you come in. Until I’ve had a chance to compile a beginner’s guide to personal financial mastery, Ashley’s best bet is to listen to the advice of GRS readers.

What do you think? What advice do you have for Ashley? Is there such thing as a one-size-fits-all starter financial portfolio? If so, what does it look like? How does it change with time? If not, then what do you think different people should do (and have) at different stages in life?

Like a hibernating bear, I feel like I’m waking from a long winter’s nap. For the past few months, I’ve been dormant, not just at Get Rich Slowly but at my other sites as well. I’ve had so much happening in my personal life that it’s been tough to find the mental energy to write about money (or anything else). Now I’m ready to get back to work.

As part of that, it’s time to call for another round of reader submissions. I’ve always said that it’s your contributions that make this site great. Get Rich Slowly isn’t about me — it’s about the community, about helping to solve each other’s problems. I’m just the guide.

If you have a reader story or an “ask the readers” topic, please send it in. April and I have been working together (along with the GRS technical elves) to streamline the process. As part of that, there are now dedicated submission pages and email boxes for collecting your contributions.

If you’d like to submit something to Get Rich Slowly, visit one of these pages:

• Submit a reader question
• Submit a reader story
• Submit a guest post

I look forward to reading the latest round of articles!

Also as part of my escape from hibernation, I’ve begun to read other personal finance blogs again. It’s about time! Here, then, are some recent articles I’ve liked from around the web:

First up, here’s a belated goal-setting tool for the new year. Many folks I chat with tell me they have trouble setting goals. They don’t know what they want to do with their lives. Well, Scott at Living Your Legend has created a free goal-setting guide that you can download and print. If you’re having trouble finding direction, this tool may help.

Via Jim at Bargaineering, here’s an article at Wired that seeks to answer the question, “Are name-brand batteries worth the cost?” The short answer? Yes, they are.

In a similar vein, Ed at Five Cent Nickel wonders is travel insurance worth the cost? He, too, concludes that the price is worth it. I’ve always been wary of travel insurance, but was forced to buy it for my trip to Peru. I searched and searched until I discovered a company called World Nomads, which seems to have great rates for reasonable coverage. Kris and I are paying a combined $280 for our upcoming trip to South America, for instance.

Let’s go for the trifecta. Rebecca at Money Crashers has yet another “is it worth it” article. She wonders are discount grocery stores worth the savings? She says that for careful shoppers, they are.

Finally, over at Saving Advice Amy Roseveare, an “image consultant”, shared a great list of how to save money on clothing. As she notes — and as I’ve learned first-hand — losing weight can be costly. (But that doesn’t mean you shouldn’t do it.) My favorite piece of advice? Spend more on the things you wear the most. It took me a long time to learn this, but I’m glad I did. I buy most of my clothing at thrift stores, but I’m happy to pay a premium for nice boots and a nice rain jacket. (I do live in Oregon, after all.)

This is a guest post from Robert Brokamp of The Motley Fool. Robert is a Certified Financial Planner and the adviser for The Motley Fool’s Rule Your Retirement service. Robert contributes one new article to Get Rich Slowly every two weeks, and photocopies his face and other body parts.

I don’t know you personally (yet), but my guess is that you own an IRA or employer-sponsored retirement account such as a 401(k) or 403(b). Such accounts are where the majority of Americans hold their longterm savings. However, like anything governed by the Congress and the IRS, there are plenty of rules, exceptions, and quirks. Here are some lesser-known facts about retirement accounts.

1. The deadline for 2011 IRA contributions is April 17, 2012.
It’s too late to make a 2011 contribution to your 401(k), but you have until the tax-filing deadline to contribute to an IRA. That’s usually April 15, but it’s been extended to April 17 this year since April 15 falls on a Sunday, and April 16 is Emancipation Day in the District of Columbia (as well as the birthday of Peter Billingsley, who played Ralphie in A Christmas Story, but I don’t think the IRS cares about that as much).

2. Contribution limits are up for 401(k)s, not for IRAs.
The most you can contribute to an IRA in 2012 is the same as the limits for 2011: $5,000, with an additional $1,000 for those age 50 or older. However, the amount you can contribute to a 401(k) has been increased to $17,000, with an extra $5,500 for the 50-and-older crowd. So if you maxed out your 401(k) in 2011 and want to contribute the max this year, you’ll need to increase your paycheck withholding.

3. If you have a job, or are married to someone who does, you can contribute to an IRA.
There are lots of rules about who can contribute to which kind of IRA, how much can be contributed, and the tax treatment of those contributions. Spelling that out would take a whole other post. But here’s the crucial starting point: You must have earned income — i.e., get paid to do a job — to be able to contribute to an IRA. The only exception is a spouse who is married to someone with a job, who would then be eligible for the so-called “spousal IRA.” This also means that a kid who is earning money can contribute to an IRA (though it’s a bit more complicated, since it might take more work to document something like babysitting income).

However, some people think that if they’re not eligible for a Roth IRA of deductible traditional IRA, then they can’t contribute to an IRA at all. Not true. You can still contribute to a non-deductible traditional IRA, which will grow tax-deferred — i.e., you don’t pay taxes on any investment earnings until you make withdrawals. Just make sure to document how much you contributed because that money will come out tax-free.

(For those who want more information about income and eligibility numbers for IRAs, here are some of the IRA guidelines for 2011, and here are some of the guidelines for 2012.)

4. Improve your investment choices.
The typical employer-sponsored retirement account offers so-so investment choices and charges too much for the privilege. Fortunately, you may not be stuck with those lousy and overpriced investments. Here are some options:

• If you no longer work at the company, transfer the money to a low-cost IRA.
• Many retirement plans offer a brokerage window, which allows employees to buy individual stocks, exchange-traded funds, and other mutual funds.
• Some plans allow for in-service distributions, which allow employees to transfer money to an IRA while still working for the company.

Also, your company may have a benefits committee, or at least a group of folks who occasionally think about the retirement plan (typically, the human resources folks and perhaps the CFO). You can agitate for better investment options, a brokerage option, or even a completely different plan. We went through this process a few years ago at The Motley Fool, and believe me, it’s worth it.

5. You can pay annual IRA fees with non-IRA money.
Many IRA providers charge an annual account fee, which is automatically taken from your account assets. But you can instead send a check to the custodian and leave more money in the IRA to grow through the years. (Contact your provider for details.) Unfortunately, you can’t use non-IRA money to pay other costs, such as commissions and mutual fund expenses.

6. Get the money before age 59 1/2.
Because Uncle Sam wants us to save for retirement, IRAs and employer-sponsored accounts come with several tax advantages. To encourage us to actually use this money for retirement, Uncle Sam will make you pay a 10% penalty if you tap the account before age 59 ½. While leaving the money alone until you retire is definitely the smartest strategy, the truth is that sometimes people need the money before they reach their 60s. Here are several exceptions to the 10% penalty (though, in many cases, the withdrawals will still be taxed).

• Contributions to a Roth IRA (not earnings) can be withdrawn any time, tax- and penalty-free. However, early distributions from a Roth 401(k) are a proportional mix of contributions and earnings, so some of the withdrawal may be taxed and penalized.
• You may be able to make penalty-free withdrawals from your last employer’s plan if you retire at age 55 or older.
• Under rule 72(t), you can make substantially equal periodic payments (SEPPs) at any age by agreeing to take out a certain amount each year until you turn 59 1/2 or for five years, whichever is longer.
• IRA assets used to pay for qualified higher-education expenses — such as tuition, fees, books, and room and board — are exempt from the 10% penalty. Note that this applies to IRAs only, and not employer-sponsored accounts such as 401(k)s and 403(b)s. Also, these distributions are counted as income on the tax return, which could affect financial aid eligibility in the subsequent year.
• You can use your IRA to help put a roof over your head, as long as you’re considered a first-time buyer, which, according to the IRS, includes anyone who hasn’t owned a home in the past two years. There is a $10,000 lifetime limit on what can be withdrawn penalty-free, but that limit is applied per person, so married couples can withdraw up to $20,000.

You also might be able to escape the 10% penalty if withdrawals are used for un-reimbursed medical expenses; health insurance if you’re unemployed; or living expenses if you’re disabled. The rules around these exemptions are more complex, though, so do plenty of research first.

7. You can invest in “alternative investments,” but tread carefully.
Retirement accounts are not limited to stocks, bonds, and mutual funds. You may be able to use your retirement savings to invest in options, real estate, small businesses, and collectibles; I’ve even met someone who works for a 401(k) provider who claims they have a client who has invested in Babe Ruth memorabilia. The trick is to find a custodian that will allow such investments. You’ll have to go beyond the usual brokerages and mutual fund companies and find a company (often a bank) that specializes in such arrangements, which are often referred to as “self-directed IRAs.” That said, many promoters of these arrangements turn out to be frauds. Using your retirement-account money for such arrangements is much more complicated, and risky. Caveat emptor and all that.

8. Use the Roth as an estate-planning tool.
Let’s say you’re still working, but you’ve already saved enough for retirement and would like to help your kids, grandkids, or favorite Get Rich Slowly contributor. One option is to contribute to a Roth IRA and name your relative(s) as beneficiaries. When you retire from this world to the next, your heirs will receive that money income tax-free (although it may be subject to estate taxes).

There are a few reasons a Roth IRA is better than a traditional IRA for this purpose. You can’t contribute to a traditional IRA past age 70, even if you’re still working. In fact, at that point, you must begin taking money out, which is known as a required minimum distribution (RMD). The scenario is a bit different with a Roth; there’s no age limit and no RMDs. Plus, heirs must pay income taxes on inherited traditional IRAs.

9. Protect assets with retirement accounts.
The money in your employer-sponsored retirement account most likely can’t be lost to bankruptcies or lawsuits. In most cases, the same goes for IRAs, up to $1 million.

10. Inherited retirement accounts can get very complicated.
This is another one of those topics that would take several hundred words to explain, and you’d never make it to the end because you’d pass out from boredom and ennui (if you haven’t already). But there are lots of quirks about inherited retirement accounts. Just one example: If you inherit an IRA — even a Roth IRA — you may be required to take annual minimum distributions, even if you’re seven years old (and good for you for reading this post at such a young age).

If you inherit a retirement account, it might be smart to see a qualified professional to get guidance — perhaps from an accountant or financial planner who works by the hour (such as the folks at the Garrett Planning Network). You can also find good information at IRAHelp.com and Fairmark.com.

11. Have Uncle Sam fund your IRA.
Getting a tax refund? You can instruct the IRS to send it directly to your IRA.

This post is by staff writer Tim Sullivan.

It’s Friday night. A few friends and I are debating whether or not to go to the college bars down the street to get a drink when my friend Steve chimes in that his apartment is just up the way, and says, with his chest slightly puffed, “I have a fully stocked liquor cabinet — something for everyone.”

Steve obviously likes to keep his apartment ready for impromptu entertaining. There’s ample seating, surround sound, and yes, a bar separate from the kitchen that’s almost equal in size. Behind the bar he keeps bottles upon bottles of spirits, all lit from underneath. He puts on some Miles Davis and takes his spot behind the bar.

“What are you having?” he asks me.

“What kinds of whiskey do you have?”

“Makers Mark.”

“What else?” I ask, expecting somewhere in the umpteen bottles to be a second choice.

“Nope. That’s the one. That’s my whiskey.”

Steve takes the strategy of stocking his home bar with one of absolutely everything in hopes to appeal to every taste. Just looking over the bottles on the shelf, I don’t doubt that his liquor cabinet (which is less of a cabinet and more of a display rack) must have neared the $1,000 range. I wondered if there wasn’t a more cost-effective way to stock a home liquor cabinet.

Economize and personalize
Jeremy Coffey, sommelier at Sofia Wine Bar in New York City and home mixologist (his fiancée gave him that second title, even though he rarely goes much more intricate than a gin martini, an olive if you’re lucky) says the key is to economize and personalize. “No one likes to be a home mixologist, not even mixologists,” he says. “It’s just too much work.” Jeremy says that your liquor cabinet should be a reflection of your taste — quite simply, what you drink. When company comes over for a cocktail, let them try one of your favorite drinks.

To give you an idea of what I’m talking about, we’ll use Jeremy’s liquor cabinet. He lives with his fiancée and neither of them like vodka drinks, so why have vodka in the house? He divides his purchasing needs into whiskeys and clear spirits. He’ll have a whiskey on hand, a gin, and his fiancée’s favorite tequila. He usually keeps a rye, especially during the winter months and substitutes that out for a more summery liquor when the temperature shifts. He makes his own bitters and likes to sink a drop of port into mixed drinks instead of vermouth. Let’s look at the cost:

• Whiskeys: $48
• Scotch or bourbon : $28. Jeremy recommends Pig’s Nose, which he describes as “very soft and not at all grainy.” For a slightly cheaper option, try the Elijah Craig 12-year, which costs around $24 a bottle.
• Rye: $20. He’s a fan of Rittenhouse 100. Why keep a rye on hand? Manhattans and hot toddies. Rye is a winter crop, and it’s sure to warm you head to toe.
• Clear spirits: $37
• Gin: $22. Jeremy’s gin-of-choice is Bombay Sapphire: — lemony, crisp and many of layers of taste.
• Tequila: $15. Try Sauza 100 Anos Reposado Tequila — 100% agave, organic, delicious, and cheap!

Jeremy gets a cheap bottle of port for around $10 and makes his own bitters. Going from an empty cabinet to fully stocked costs Jeremy about $180. He doesn’t consider the what-ifs or impromptu hellos essential considerations for his liquor purchases.

What about planned events? Instead of putting out a couple of bottles of wine and hoping that people bring more, what can you make for a small gathering without your guests drinking away your last paycheck?

Have them sip on one of the following:

French 79

• 1/3 Canton Ginger Liquor — $26
  1/3 Gin — I have a friend who swears by Gordon’s London Dry Gin, which you can pick up for around $12 a bottle.
• 1/3 Simple syrup — Simple (and basically free) to make yourself
• Champagne topper — Let’s use a cheap bottle of cava instead for around $10.

With that, 10–15 people would be happily in drink for under $50. Have it be your cocktail of the night; let them supply the wine.

Rye Manhattan. Try it with a tawny port. This one is a winter favorite of Jeremy’s and has quickly found its way into my calmer Friday nights.

• 2 parts rye whiskey
• 1 part port
• Dash of homemade bitters

Garnish it with an orange twist, and warm yourself from the inside. After one of these, I can save money by turning the heat off.

Jeremy also recommends any good old-fashioned party drink. He says that not many people complain with a splash of rum in their punch or a decent, well-made sweet and sour mix for margaritas. You can get the store-bought stuff for cheap, but if you have any inclination, a little bit of time and just slightly more cash can yield a better drink. Here’s the punch I had a recent party (and consumed enough vitamin C to keep me scurvy-free for decades):

Homemade fruit punch

• 4 cups frozen strawberries
• 2 fresh peaches, sliced
• 1 cup fresh pineapple chunks
• 1 cup fresh mango, sliced
• 32 ounces 100% juice. (You can pick your poison here. I really like the R.W. Knudsen juices.)
• 4 liters club soda
• Agave syrup to taste
• A pour of rum (or whatever suits your fancy)

As Jeremy advises, remember to stock your liquor cabinet not for breadth of options but for individuality. Try not to fall victim to the thought that you need to please all tastes and get over the marketing that tries to make us think we need to buy the top shelf liquor to shake up a decent cocktail.

What are some of your favorite party drinks either from hosting or attending? How do you economize when it comes to entertaining?