One of my jobs at The Motley Fool is to serve as the internal financial planner for Fool employees. Lately, however, I’ve been answering more questions my colleagues have about their parents — and it’s more likely about their mothers or mothers-in-law. The truth is, women face a more difficult task when it comes to retirement planning, for several reasons:

Women earn, and have, less. According to the Census Bureau, women earn just 77% of what men make. They are also more likely to interrupt their careers to raise children or take care of older relatives. According to the Social Security Administration, the typical woman spends 12 years out of the workforce. This results in lower retirement benefits and smaller portfolios. On average, a female’s 401(k) is 40% less than a male’s.

Women live longer. Generally, retirement begins when a person leaves the workplace and ends when life leaves the person. The longer someone lives, the longer retirement lasts — and the more assets will be needed. On average, gals live five years longer than guys, which means they tend to be retired longer. Add to this the fact that, with most couples, the wife is a few years younger than the husband, and you can see why most women should plan on spending their last few years on their own. Which leads us to…

Women are more likely to spend part of their lives single. Though my wife may not believe it, marriage enhances retirement security. According to a National Bureau of Economic Research study by Susann Rohwedder and Michael Hurd, 80% of married couples in the 66-69 age group are adequately prepared for retirement, whereas just 55% of single persons have enough resources. Unfortunately, more than twice as many older women are single than older men. According to the Census Bureau, 19% of men over the age of 65 live alone, compared to 40% of women in the same age group. More than two-thirds of 85-year-olds are women.

Women tend to retire earlier. According to the Center for Retirement Research at Boston College, the average retirement age for men is 64, whereas the typical woman retires at age 62. This is often because a wife will retire at the same time as her husband. It’s just another reason why women can be expected to fund a longer retirement than men.

Women often leave financial planning to their husbands. According to a survey from ING Direct and Dailyworth.com, 40% of married women leave retirement planning to their partners, and almost 30% say they don’t know what their main source of future retirement income will be. This leaves widows and divorcees vulnerable when they find themselves single again, and could contribute to a general lower knowledge about money matters. According to studies by Dr. Annamaria Lusardi, director of the Financial Literacy Center, women score 12 percentage points lower than men on tests about concepts such as inflation and diversification, as well as other measures of financial literacy.

What’s a Woman to Do?
While all those statistics can be discouraging, the good news is that there are plenty of solutions. Here are the steps all women (and the men who love them) can take.

Become a money master. Regardless of whether you’re single, married, or living in a hippie commune where no one bathes but someone has to pay the bills, make sure you keep learning about financial planning and have a hand in the household finances. According to a study from Hartford Financial Service and the MIT AgeLab, couples who share the financial housework are more prepared than couples that rely on just one member to do all the financial lifting; the former group is more likely to have saved more and developed a plan for what will happen when one spouse passes away. This doesn’t mean that each spouse must do everything together, but it does mean that each spouse should know enough about what’s going on, and how to manage the family finances in the case the other spouse becomes ill or passes away.

Manage the couple’s benefits with the survivor in mind. The timing of when one spouse begins receiving Social Security and pension benefits (if any) can affect the financial security of the other spouse. The questions to ask are: 1) Will the primary beneficiary receive a larger benefit for delaying, and 2) how much of the benefit will go to a surviving spouse? In the case of Social Security, the benefit does increase for each year of delaying, which can be very important source of income for a retiree whose lifetime earnings record is not as high as her or his spouse’s, because that higher benefit will continue to the lower-earning spouse when the higher-earning spouse passes away.

Be ready to be on your own. The last time I covered this topic in a GRS post, a reader linked to a New York Times article, written by a woman who had once been an advocate for stay-at-home motherhood:

So I was predictably stunned and devastated when, on our 40th wedding anniversary, my husband presented me with a divorce. I knew our first anniversary would be paper, but never expected the 40th would be papers, 16 of them meticulously detailing my faults and flaws, the reason our marriage, according to him, was over….

The judge had awarded me alimony that was less than I was used to getting for household expenses, and now I had to use that money to pay bills I’d never seen before: mortgage, taxes, insurance and car payments. And that princely sum was awarded for only four years, the judge suggesting that I go for job training when I turned 67. Not only was I unprepared for divorce itself, I was utterly lacking in skills to deal with the brutal aftermath.

I hate to be so cynical as to suggest every person should be ready to become single at any moment, but I do think everyone should have a Plan B at the ready.

Delay retirement until everyone is ready. The decision to retire should not be based solely on whether both spouses have enough money to cover expenses, but also on whether a surviving spouse would be secure should the other spouse pass away. According to the Hartford study, the typical widow sees her income drop 50% when the husband passes away, yet expenses drop just 20%. To make sure they have enough in their later years, people should continue to work — and save — until they have enough to survive on their own, and not retire just because their spouse does.

Everyone should know the team. If you use any financial-services professionals — accountants, advisors, attorneys — both spouses should know at least enough to know what they do for you, and how to contact them. If you don’t use pros because one spouse does the work, you may want to begin assembling a team in your later years to smooth the transition in case that one spouse is no longer able to do the job. You can start with a fee-only financial planner, such as those who belong to the Garrett Planning Network or the National Association of Personal Financial Advisors.

The Times, They Are A-changin’
These kinds of posts can be tricky, since they’re based on generalizations that obviously don’t apply to every woman or couple, and can come off as sexist. To be sure, I know plenty of couples in which the wife is in charge of the household finances. These folks tend to be younger, which is why I think the difference in retirement prospects for women and men is partially a generational issue. It’s certainly my experience that women in their 70s — like my mother, who found herself divorced and re-entering the workforce in her 50s — are more comfortable leaving all the financial housekeeping to their husbands, and also less comfortable talking about money. Maybe that’s just my personal experience. But I do hope, as the income gap between men and women shrinks, and more men share in the child-raising responsibilities (for example, The Motley Fool offers paternity leave to new dads), that a post like this will be largely unnecessary several years from now.

Your friends may be marketing to you.

I know: I’m taking the internet-shocking tactic I hate seeing elsewhere, but if I didn’t have evidence in my very inbox from (as I’m writing this post) three minutes ago, not to mention The New York Times and other well-regarded media, I would still have all the stuff that’s not headline material. You probably know it as “keeping up with the Joneses” or “being cool”; it’s the reason I carried a screen-printed canvas Esprit tote bag in high school even though I had extremely limited disposable income and the tote bag was a really uncomfortable way to lug my books, and the reason I used those over-sized butterfly clips in junior high even though they made me look more “insane human-alien love child” than “supercool Valley Girl.”

The word-of-mouth feel-good cycle
Often your friends are marketing to you by word-of-mouth marketing, every small business owner’s or corporate marketer’s wildest dream. “This Dove makes my skin so soft!” is what the corporate folks are hoping to coach you to say. “The service at Open Space Coffee is amazing!” is what the local folks are prompting you to say with their kind ways.

And the thing is that this is kind of an ethical trap. Great service notwithstanding (I stand firm in my endorsement for the coffee shop, they really are super nice), we’re getting a high when we tell our friends about a product’s positive characteristics. We’re saying through our glowing reviews of a skincare product or a diaper or a brand of energy bar, “I’m informed about this topic and I am someone whose opinion people seek out and I’m willing to share my opinion with you.” We’re saying when we listen to a friend or buy on a friend’s recommendation, “I have smart friends and I care about their opinions and I am going to be more like the people I admire when I spend money like they do.”

The reason this is an ethical trap is that we are both buying into the belief that our consumption habits are integral to our personhood and that imitating consumption habits will transform us to someone else (even if that transformation is slight).

Marketing is about selling a new you
This is now obvious to most of us but still a pretty big deal, in my opinion: what marketing is selling is not a product but a new you the product will make out of the existing you. You know the one. It’s the you whose skin is not perfectly soft and smelling of “botanicals,” whose hair does not always bounce and glow and shine, whose kids do not clap their hands gleefully every time you serve them a snack in the back seat of your clean, comfortable, dual-DVD-equipped minivan.

(Side note: A few years back, J.D. posted this guest post about “Personal Marketing”, using advertising tools to convince yourself to save. What a great way to create the new you that you really want!)

The thing is that, more and more often, the you that you want to be is not an actress on a commercial but a friend of yours — either a real-life friend, or a “friend” whose blog you read and you’ve come to think of as a friend. (As a long-time blogger, I have blurred the line between these two categories; I actually have lots of real-life friends who started out as people-whose-blog-I-read, so for me this is, as they say, a “meta” phenomenon.)

The new you is the author of a blog
As The New York Times pointed out last weekend and I’ve certainly observed myself over the past few years, corporations have really keyed in to the fact that the blogger (especially women bloggers, and especially women bloggers who are moms) is the new influencer. The mom blogger is the new you you want to be — if you’re a mom, of course, and often if you’re a young woman who hopes to be a mom one day. She’s very seductive, as she’s able to create a world populated by the best bits of her life with her kids (most of us don’t take photos of the kids refusing to eat kale chips or the mess in our minivan’s back seat).

And the reason even the men among the readership should take note is that this does not, by any means, occur just among females; it’s just in sharpest relief with mom bloggers, who are first making their blogs into mini-businesses (or not-so-mini) and then second being recognized for their role as a highly critical and powerful market force. Even in the age of two-income families and the at-home dad revolution, it’s still women who make more purchase decisions for their household.

Here’s how McDonald’s thinks of you and your mom blogger icons
“Bloggers, and specifically mom bloggers, talk a lot about McDonald’s,” says Rick Wion, director of social media for McDonald’s USA, told The New York Times. “They’re customers. They’re going to restaurants… We identified them and said, ‘These are our key customers. These are our influencers for our brand.’ We need to make sure we’re working with them.”

They’re working “with” them by working through them. It’s a savvy ploy, and I’ve been watching this for years, thanks to my aforementioned real-life blogging buddies/buddies who are bloggers. McDonald’s, or another company — I just got a persuasive email from Pampers; a few months ago I went to a fancy blogger shindig for Whole Foods — does not necessarily pay bloggers to write blog posts about them. That can be illegal and it can also create bad “buzz.”

What the corporations do is to butter up the bloggers by inviting them (I feel special!) to fancy events and one-on-one chats with high-up managers and celebrities (I feel listened to!) and then send them links and offer resources “in case” they want to write about their experiences, with a request that they send links after the posts go up (I think I might even get a new audience!). As that New York Times story said of the McDonald’s headquarters boondoggle, “The posts that followed — each accompanied by a disclaimer noting their sponsorship by McDonald’s — were overwhelmingly positive.”

Why would the mom bloggers — and your friends — talk pretty about big brands?
The reason mom bloggers and the people you meet at an investment club meeting or coffee shop talk up the big brands is for a lot of reasons, but I think there are three main psychological cues at work here:

1. After having a personal experience with a company, we don’t want to let anyone down. I’ve been in this very situation and can say that I worry about what the marketing rep or PR agent or social media outreach person will think of me if I accept an invite or a free product and don’t write positively about it. I also worry about their feelings.
2. If we get something good, we subconsciously react in a way that will ensure we keep on getting that good stuff. Whether that “good stuff” is freebies, or fancy trips to corporate headquarters, or lunch invitations, or very positive feedback, we’re going to want it to happen again and we’re going to act in a way we think will keep it coming.
3. We want to be associated with the thing we admire. Even if we started out with a somewhat critical opinion — say of McDonald’s marketing to kids, or the high expense of a brand of soap — once we meet an admirable executive connected to the company or are persuaded that the soap makes our skin so soft and fragrant, we want to be thought of as possessing these admirable qualities. Presto: we talk nice about the brand, subconsciously thinking that the admirable qualities will automatically rub off on us.

Hidden Valley Ranch and Knorr and how I said to myself, “no.”
I have an MBA and just am interested in product marketing, so I am automatically skeptical about such things. I am not shy about expressing delight in things I love, with or without freebies (I’m still hoping, though, that Theo Chocolates or Icebreaker will see my gushing over them and send me some promotional goodies), but I do try to hold myself back if I am indeed still critical after a brand’s full-court-press.

Two examples of packaged food (salad dressing and chicken stock, in this case) blogger outreach are, I think, a perfect case in point. At BlogHer’s 2011 conference in August, I was invited to cook with a celebrity chef. We made asparagus risotto, coached by Marco Pierre White, and were sent home with coupons and cookbooks. In another occasion, several friends of mine were invited to a very fancy several-course dinner utilizing Hidden Valley ingredients. One afternoon I sat in a coffee shop (ironically, the shop is connected to the farmer-direct food buying club of which I’m a loyal member) watching two of my friends tweet and Instagram the beautifully-presented concoctions some California chef had whipped up with this rather non-gourmet ingredient.

The fact is that, in both cases, I didn’t think the prepared ingredients were any better (and certainly not cheaper) than my own homemade variety. And in both cases, I said to myself, “this is just not good.” And I did not “like” the photos — even though they were gorgeous! — and I decided not to blog a word about Knorr’s cooking class.

Observe and abstain
The best way to deal with this, when your friends get caught up in marketing — going on a “Twitter tour” for some brand or bringing home freebies to share or having a giveaway for something you wouldn’t ever buy, is to first observe. “This is clearly an effort to influence me,” you can say to yourself, and think about where it started, probably the Midwestern office complex of some huge corporation in a conference room filled with my business school classmates. And how your friend is the unwitting passer-on and buyer-into this quest to make a new him or her.

And just say (in your own brain), “no.” I suggest not getting angry or trying to convert your friend or writing a blog post about how insidious this brand is. I suggest not taking photos of the package or using the hashtag the brand asks you to. I suggest not commenting on the blog posts or entering the contest. Just say, “no,” to yourself, and go on spending your time in a way you value. Learn a language. Study up for your investment club. Make chicken stock. Earn $20 selling your old CD collection on eBay.

Just observe, and abstain.

Have you been marketed to by your friends, either aggressively or with every well meaning in the world? How have you responded?

My tutor shook her head. “Por la plata baila el mono,” she told me: The monkey dances for money. She didn’t have to explain what she meant. It was obvious. Money makes us do things we wouldn’t do otherwise; it turns us into puppets.

Although my tutor had a point, it’s not as simple as that. Yes, we sometimes do things we don’t want to do in order to earn money. But sometimes doing these things allows us to get money so that we can pursue our passions later.

“I write a monthly column for a magazine,” I said (in Spanish, of course). “The amount I earn from that column each month is exactly the same as what I pay you each month. Every month, I tell myself that I’m writing the column so that I can learn Spanish. That keeps me motivated to do it.”

Personal Currencies
This conversation reminded me of personal currencies, which I first mentioned four years ago. At the time, I wrote:

Money is an abstract concept. It really represents time and labor, and those are hard to visualize. By finding something concrete to use as a measure of value instead, it’s easier to visualize how much something is really worth to you.

For example, my wife sometimes measures things in lattés. If she sees something in a store, she’ll stop and consider: “That vase is three lattés” or “Those shoes are ten lattés” or “That book is two lattés”. By looking at things in this way, she’s able to figure out how much they’re actually worth.

Our friend Marla measures things in Saturns. She loves her car (a Saturn, naturally), and so whenever somebody mentions something expensive, she’s able to compute its value to her. A fancy plasma TV might be one-fifth of a Saturn, for example. A house might be ten or twenty Saturns.

Last night at dinner, I mentioned this notion to our friends Mike and Rhonda. “Oh, we used to do that all the time,” Rhonda said. “When we were first married, we lived near a sushi place. We loved their rainbow rolls, but they were kind of expensive. Whenever we got paid, we’d convert the dollars to rainbow rolls.”

Obviously these sort of personal currencies aren’t sophisticated financial tools. They are, however, quick and easy ways for each of us to measure the relative value of the things we buy.

This notion of personal currencies — and my mental equation in which writing a magazine column pays for Spanish lessons — is another way to look at life energy, which many of you will know from the classic Your Money or Your Life.

Trading Time for Money
In Your Money or Your Life, the central point that Joe Dominguez and Vicki Robin try to convey to readers is this: Money is something we choose to trade our time for. (Except that the authors don’t call it “time”, they call it “life energy”.) They write:

Our life energy is our allotment of time here on earth, the hours of precious life available to us. When we go to our jobs we are trading our life energy for money. This truth, while simple, is profound.

[...]

Our life energy is more real in our actual experience than money. You could even say money equals our life energy. So, while money has no intrinsic value, our life energy does — at least to us. It’s tangible, and it’s finite. Life energy is all we have. It is precious because it is limited and irretrievable and because our choices about how we use it express the meaning and purpose of our time here on earth.

[...]

Ultimately you are the one who determines what money is worth to you. It is your life energy. You “pay” for money with your time. You choose how to spend it.

In a very real way, time is money. For most of us to be happy, we have to find a balance between trading our time for money. And, at times, trading money for time. We need both. Over the past few months, I’ve found that balance. I’ve achieved it. I’ve been reluctant to mess with it, yet now I’m tempted.

Or am I?

Finding Enough
Over the past week, as I’ve debated whether I should take on the additional workload to earn more money, I actually turned to my own book for advice. In Your Money: The Missing Manual, I briefly explore the concept of Enough (something that’s also covered in Your Money or Your Life). In my book, I write:

Knowing that you have Enough can be better than having billions of dollars. If you’re obscenely rich but aren’t happy, what good is your money? [...] If you don’t know why you’re earning and spending money, then you can’t say when you have Enough. So take time to really think about what Enough means to you. [...] If you don’t have an end in sight, you’re at greater risk of getting stuck in the rat race.

Or, to use the words of my Spanish tutor, you’re at greater risk of being a monkey that dances for money.

And so I have to ask myself why? Why do I want to take on this extra work? It’s not for the money, so what is it? Do I really think I’m going to improve my life by writing two extra columns per week? Where will I even find the time to do that? And what is it that I really want to be doing?

I don’t know the answers to all of these questions just yet, but I do know the answers to some. And, in fact, those answers may hint at the direction my life could take in the future. For now, one thing is sure: This monkey has decided he won’t be dancing for money — at least not this time.

I’m writing this post as a follow up to my first post about why I drove a 13-year-old car. In that article, I set some goals for myself and came up with a plan to help me achieve those goals. Today I’m going to share where I succeeded — and where I failed.

My original goals were to:

• Drive my 1995 Geo Prizm for four more years in order to save a large down payment for a newer car.
• Put away $300 a month into a savings account for the down payment.
• Spend $1000 or less per year in maintenance for the Geo.
• Have $10,400 for a down payment on a new-to-me car.

How did I do? Let’s find out.

Goal #1: Keep My Car Another Four Years
At the time I wrote my last post, I’d already driven the Geo for 13 years. I had a choice to make:

• Take out a loan for the value of a new car minus any money I could get by selling the Geo
• Or, keep the car for a while longer while saving up more money to put down on the new car.

I came up with a plan to try to keep the Geo as long as it remained a reliable and safe car. I wanted to resist the temptation to purchase a new car and jump back into payments before I had to. All of my friends had purchased new cars and I was feeling a little pressure to keep up with them. I knew this was financially a bad move. I did not want to “keep up with the Joneses.” I wanted to buck the norm and not give into consumerism. I knew the longer I kept the car and remained payment free the better off I would be when I did purchase a new car.

So, did I keep the car for four more years? No, I kept the car for three instead of four years. Why?

My needs changed in the three years since I set that goal. My family grew and no longer fit in the car. When I originally set this goal, my children were smaller. They grew older, taller, and it was now uncomfortable for them to sit in the small back seat. When the car no longer met my needs, I knew it was time to change my plan. My needs changed and my goals needed to change with them.

Goal #2: Pay Less Than $1000 a Year on Maintenance
There was not a year of the three that I spent even close to the $1,000 I budgeted for maintenance.

This number was a worst-case-scenario number. If I was going over that number, I would have called it quits and gave up on the Geo. I averaged $400 a year on maintenance.

I consistently hear people say they need to get rid of their car because it is going to nickel-and-dime them to death. They get a new car out of fear, not because they truly have a need. The fear is the car would need a repair that would cost so much that it is better to sell it now and get a new car. I chose to ignore that fear and let the numbers dictate if I should keep the car or not.

Looking at the math, $400 a year and no payment works out to $33.34 a month that came out of my pocket to drive this car. I was okay with that. Other people might have chosen to sell the car. If I were to purchase another newer car, I feel the maintenance would be about the same. It might even be more because I would want to take better care of a newer car I was going to try to keep for a decade or so. I knew this car was going to be out of my life soon, so I had less to lose by not checking into every little squeak I heard.

People rarely take into account that the new car they buy might have problems as well. I have read many posts on the car forums about someone purchasing a brand new car and having nothing but trouble with it. Even though the repairs are covered under warranty, there’s a huge feeling of anger that they paid for a new car and it isn’t reliable. Most people end up selling the new car and take a huge loss just to be free of the troubled car.

Goal #3: Put $300 a Month into a Savings Account for a Newer Car
I set up a sub-account at ING Direct and had the money automatically withdrawn every month. I paid myself first to make sure the money was there before any other money was taken out to pay bills. This was easy to do; it only took a few clicks. The money being gone right away made it easier to meet this goal every month. When the money is not there to spend it made it easier for me to put off purchases until next week’s paycheck.

Goal #4: Save $10,400 for a Down Payment on Another Car
I missed this goal for two reasons. The first reason I brought on myself and the second was an unexpected life event.

The first reason I missed my goal was I sold the Geo one year early and missed out on that twelve months of savings. That’s $3600 that I gave up. Even though I was under budget with the maintenance costs, it wasn’t enough to offset the loss of those twelve months.

The second reason I didn’t meet this goal is we had a tough choice to make. One of my family members had a series of health problems that were getting worse and they lived very far away. We felt the need to take a trip to visit this person. The trip was something I needed to do; not going wasn’t an option.

We looked into all the alternatives. Credit card debt? I didn’t want to be paying for the trip on a card charging us 13% interest. 401(k) loan? I wasn’t willing to pull money out of my 401(k), pay the loan fee, and miss out on the potential returns the stock market could give us. ING account? The ING account was the only choice that made sense. After all, the ING account was only paying 0.8% interest at the time. But it would put me behind saving for a new car. That was a difficult thing for me to do.

We pulled the money out and went on the trip. We enjoyed spending time with family, saw things we would never have seen if we hadn’t taken the trip, and built lifelong memories. This is a choice I don’t regret at all. Money isn’t everything in life. I cherish my family and felt this was the right thing to do.

The Bottom Line
Three years ago, I set some goals for myself. I did my best to make a plan to help me meet those goals. As time went by my needs changed (needed a bigger car) and unexpected expenses came up (trip to see family). I feel good about how I did. I set some goals and stuck to them as much as made sense.

Over the 16 years I owned the Geo, twelve of those years were payment-free. My original payments were $250 a month. That extra $250 a month I that I didn’t have to spend on a car payment added up to $36,000 over the 12 years. If I subtract the overall maintenance I spent on this car over the full 16 years ($3400), it still leaves me with $32000. This number represents the amount of money I would have spent if I continued to have a car payment. I know many people who always have a car payment. I consider this a huge amount of money. This is the reason I chose to drive the car for so long.

In the end, I found a used car I wanted, put an ad on craigslist, and sold the Geo. After 16 years with this car, our family had outgrown it and was ready for another. Will I keep the new car for as long as I did the last one? That’s a question I can’t answer at this time. That depends on if this new car is as good as the last.

Life throws you curves; you have to bend with those curves. You have to take everything day by day and month by month. Your financial future is not set in stone. It is more like clay. Every decision you make and every curve life throws at you molds that clay. You need to re-evaluate your needs, wants, and limits every so often to make sure that clay is looking the way you want it to.

Am I the only one that decided to change the plans that I made in January of 2009? If you read J.D.’s note at the bottom of the original post he writes about his Ford Focus. He had a plan for that Focus, to drive it into the ground. Not long after that, J.D. bought a Mini-Cooper. His plans changed, and so did mine. I feel like I am in good company.

Wouldn’t it be nice if you could go back and give your younger self some words of wisdom? Since time travel doesn’t exist, the best thing you can do is try to help other young people. That’s what Shannon wants to do, and she wants your help. Shannon writes:

Like many of your readers, I made some bone-headed financial moves when I was younger. Luckily for me, none were really all that bad; rather than spending more than I earned, they were more on the lines of spending all that I earned as opposed to saving.

Now, I’m lucky to be in a good place financially. Even better, I also have a job that I love: I’m a college professor. I’ve just learned that this fall I’ll have the opportunity to teach some incoming college students about money management. While this is a great opportunity, I (unfortunately) only have one hour to do this as it’s part of a “learning about college” course, and we have a lot of other content to cover.

Right now I’m a bit overwhelmed when thinking about what is absolutely essential for students to learn during that hour. Could you ask your readers to let me know what they wish someone had taught them about personal finance way back when?

For a couple of years, I would travel to Western Oregon University in the spring to speak to graduating seniors. I told a bit of my story and talked about things I might have done differently. As part of that, I shared my one-page guide to personal finance and tried to stress the following points:

• Develop a basic budget. It doesn’t have to be fancy. Whatever you choose to do, make it a goal to set aside 20% for saving and investing. This sounds like a lot, but if you can start the habit young, it’ll be easier. (And will yield greater returns in the long run.)
• Avoid lifestyle inflation. As your income increases, it’s tempting to increase your spending in proportion. The more you can resist this urge, the more successful you will be with money.
• Do what you love. A low-paying job that leads to future prospects in a career you like is better than a high-paying job in a career that doesn’t move you in the right direction. Never stick with a shitty job. It’s easier to change jobs now than it will be in five or ten years.
• The less you spend, the more flexibility you have. When I graduated, I bought a new car and developed credit card debt. I had to take any job I could find because I was tied to monthly payments. When my friend Sparky graduated, he had a lot of freedom. His debts were minimal. He traveled the U.S., taking whatever job struck his fancy. He spent time in Mexico. He spent five months traveling southeast Asia. He was able to do these things because he didn’t have expensive obligations.

But really? If I could just pick one thing I wish somebody had taught me about personal finance? It’d be that everything boils down to one simple equation: Spend less than you earn.

What about you? Can you give Shannon some help? What do you wish you’d learned about personal finance when you were younger? If you could give your teenage self one piece of advice about money, what would it be?

We all have our ways of destressing after a long day. One of my weirdest and most beloved post-work, take-a-load-off strategies has always been cruising the aisles of gourmet grocery stores just to look at packaging. Give me an aisle of fancily bottled extra virgin olive oil, and I’ll need at least an hour. Nothing is more calming to me than fancy fonts on fancy jars of fancy imported foods.

I don’t even need to buy anything. Often I just stroll around, try a sample of pickled figs, and continue my stroll home. Sometimes though, I’ll splurge on a $3 glass bottle of spring water from some promised fountain-of-youth in Italy. This, to me, is the quintessential quandary of wants vs. needs: I need to drink water, but I don’t need it to come from a hydro-spa in Lurisia.

What’s a want? What’s a need?
There were a lot of comments in my last article about spontaneous spending as to how to determine wants and needs when budgeting according to the Balanced Money Formula in Warren and Tyagi’s All Your Worth. Whether you use their formula or not, figuring out the essentials of your budget is important. For those of you just tuning in, the balanced money formula says that 50% of your income should go toward needs, 30% to wants, and 20% into savings. I think this comment exemplifies some of the confusion:

The discussion went on to include a lot of grey areas:

• Car payments. If you bought a new car, how much of the purchase was the need of a car as opposed to the want of buying new?
• Rent. Is paying higher rent to live closer to work a want or a need?
• What about student loans? We need to pay those off but we didn’t need to go to a fancy private school.

I took to the Balanced Money Formula because it gave me a way to not have to worry about the particulars each month. I was just so tired of not knowing where my money had gone at the end of the month, or trying to keep track of how much I was spending in a given week. If you know where your money is going, you don’t have to worry so much about it. First though, I had to iron out some of these grey areas.

Two Carts of Groceries
I wasn’t about to through the grocery store with two carts of groceries, one with dried beans and broccoli and one filled with ice cream and Perrier, so where to draw the line? Warren and Tyagi recommend using the USDA monthly allotment for food, which averages to around $250 a month depending on age and gender. Anything over and above that comes out of wants. I’ve heard of a few different systems for allocating this money. One is to use cash, about $65 a week, and put that in your wallet with your weekly wants cash. All food just comes out of that stack o’ bills.

Another idea is to have a debit card that debits directly from an allocated account. Personally, I use my phone to keep track of it all. The important part seems to be to find a system that doesn’t seem overly complicated to you and to stick to it. When the cash dries up, I’m brown bagging it the rest of the week to work.

Rent, Car, Loans…Netflix, Gym, Phone?
My needs category was way over 50% when I first looked at it. The stuff I had to pay each month was more nearing 70%. Outside of my monthly need of calories, what else went into my needs categories? For most, rent, car payments, student loans. Okay. What else are we contractually obligated to? Netflix memberships, gym dues, data plan? Uh oh, the grey areas seem to be growing.

Well, not exactly. What were my hardcore commitments? A lot of my monthly auto-payments started going away as I clicked “unsubscribe.” Since my monthly payments were above 50% of my income, I started eliminating the things that I could get for free, whether it be using the library for movies or just taking my jogs in the great outdoors. If I wasn’t willing to cut them completely, they transferred to wants. Fine. My digital subscription to The New York Times is a want. Ugh. You start to cut where you can barely feel it.

I should add that both in the book and here at Get Rich Slowly you can find great strategies for reducing your student loans (Whether or not your liberal arts degree was a need is no longer the question — paying for it now is.), finding more appropriate health insurance, and renegotiating your rent. All these things take work and research, but their reduction in monthly cost won’t hurt your current lifestyle and can help you reduce costs.

I still wasn’t under 50%. I had to look where it hurt a little more. The book recommends selling or downgrading your car, getting a roommate, trimming your health insurance bill, returning any rentals like furniture, and re-shopping childcare. For me, I have no car, no kids, I barely have health insurance and my apartment is a major part of my business. I just couldn’t. Well, I could, but it would require the next step, which would be what the book calls “radical surgery” such as selling your home for something cheaper, moving apartments, or changing jobs.

Also listed under “radical surgery” is taking in additional income. For me, it didn’t feel very radical or surgical at all so that’s what I did, far less painful than moving apartments at the end of my lease. I added five hours a week by taking on an extra gig, which takes away a few hours of my nighttime routine of drinking fancy bottled water and listening to Pandora One, but the extra income takes my needs under 50%.

But it hurtsssss! Why do this to yourself?!
I do it because I sleep better. The Balanced Money Formula has a lot of variables, and I had to finesse what went where, but after I figured it all out, it was a deep breath. 50% is a sustainable number that allows me to live well and have fun. I had to give stuff up and take on some additional income. I had to figure out what went where and set up the system how I kept track of everything. I had to wait a while for some contracts to expire, like downgrading my phone, but ultimately, for me, it really works.

No one has all the answers for you and often, there isn’t an easy solution. It isn’t about being perfect, it’s about being empowered and doing the math to trust that your finances in balance, fudging it where you need, so you can sleep easy.

So how about it? What seems impossible to categorize? How can you bring more balance to your budget?

On my way to the 2011 Financial Blogger Conference last year I encountered three young men who’d made a non-traditional career choice: mugging tired-looking, middle-aged women pulling suitcases.

They got me as I headed for the train to the airport, taking a little over $80 and other wallet contents. (Also my peace of mind.)

Afterward I did a mental inventory of what I’d lost. It wasn’t easy, given that I hyperventilating on adrenaline and rage. For days I had  “Oh, crap” moments as I realized what else had been taken: debit and credit cards, bank deposit slip, loyalty cards, library card, Mensa card and a check from my brand-new business account. (I’d planned to reimburse my roommate, who’d already paid for the hotel.)

This isn’t an article about avoiding street crime but rather about reducing its impact, from minor aggravation (hello, friendly folks at the Division of Motor Vehicles!) to the potential for credit-card and identity fraud. I’d like for you to learn from what I did right and especially from what I did wrong.

What’s in your wallet?
Quick! Name everything in your billfold. No peeking.

Nope, I couldn’t do it either. (See “Oh, crap,” above.) Among other things, I was carrying a gift card and a loyalty card to a local burger joint, my Seattle library card, and bread-outlet and teriyaki-joint punch cards. The wallet also held a card for a department store I rarely enter. Why? Inertia. I left it in there after using it once.

Why was I carrying that stuff to a business weekend in Chicago? My only excuse is that I was up to my hairline in deadline, working right up until 10 minutes before I headed for the light rail. Thus I skipped my usual pre-travel routine, i.e., paring down my wallet and putting my driver’s license in a pants pocket for easy airport security access.

Right now, before you put it off for another six months, make a list of what’s in your wallet. Should you meet your own trio of thieving knuckleheads, you’ll know which calls you need to make.

List only the 800 number for each card, obviously, rather than the card number itself. The customer service rep can verify your identity through security questions.

Some options for storing your oh-crap list: with a service like Wallet Garden, on a thumb drive, as a Google doc, e-mailed to yourself, or on your phone, tablet or laptop.

As noted, paranoiacs like me do paper versions, on the theory that muggers might find a smartphone or tablet awfully attractive.

Just don’t keep the list in your wallet.

Set up a perimeter
Use that list immediately. Don’t wait until the next morning or the next business day. Less than 15 minutes after the wallet left my possession those punks were using my credit card to buy sandwiches.

Within an hour of the mugging I’d canceled several credit and debit cards and  frozen four bank accounts (personal and business). Upon returning to Seattle I closed the bank accounts on the off-chance the thieves were organized enough to print fake checks.

Here’s an example of the aggravation factor mentioned earlier: Closing those accounts meant I had to re-do automated transactions. Those included PayPal, utility bills, automated savings at an online bank, a monthly charitable contribution, and payments for health and life insurance.

Corollary aggravation: I neglected to re-establish every account promptly. It’s downright irritating when a cell-phone company not only gives you the electronic stink-eye, but is justified in doing so – after all, the payment didn’t clear because you forgot to give the new credit card number.

Please remove anything with bank routing numbers from your wallet, bag or briefcase. If you have automatic payments, list which entities are connected to which account. After a couple of years you might forget you even have life insurance, let alone which credit card covers the monthly tariff.

What’s NOT in your wallet
As noted, there was no reason to carry that department-store credit card. Lesson learned: The replacement plastic is stored in a locked cabinet.

When I’m home, my wallet holds one credit card and very little cash, and I keep my debit card in a coat pocket. While traveling I carry some cash in my wallet but most of it gets divided between a front pants pocket and a coat pocket. I also put a second credit card in another coat pocket.

My theory/fondest hope is that a thief would be satisfied with the cash and card in my wallet. If he asked me to turn out my pants pockets, he’d get only some of my money. He’s less likely to have me empty all four coat pockets, too. (And one of my jackets has a fifth, hidden pocket.)

Guard your ID
As noted, my driver’s license usually isn’t in my wallet when I travel. Not this time, dammit. Fortunately, I was able to order a new one by mail.

I recently learned that a relative stored his Social Security card in his wallet. I suggested he take it out. He’s lucky that he never got robbed, since that card is gold to an identity thief.

However, the SS number is part of his Medicare card ID. Here’s a solution: Photocopy the card, then black-Sharpie-out the last four digits. Carry this in your wallet, bringing the actual card out only for medical appointments.

If you get hit by a bus, the hospital will at least know you have Medicare. The billing office can get the last four digits when you wake up.

An ordinary health insurance card is potentially damaging, too, due to the possibility of medical identify theft. (Liz Weston wrote an interesting and scary article about this for MSN Money.) If someone uses your insurance card to get emergency-room care, his medical conditions become yours. Suppose you’re turned down for life insurance on the grounds that you’re riddled with hepatitis?

Consider doctoring (so to speak) your health-care card a la the Medicare Sharpie maneuver. In my case, I arranged with the HMO to require photo identification; I don’t carry the card in my billfold any longer, either.

Be careful what you carry in yours. Getting robbed is bad enough. Frantically trying to remember what you’ve lost just adds to the trauma. Please take a few minutes now to do a wallet audit. Make that list, too — and believe me when I say I hope you never need it.

In March I attended the SXSW Interactive Conference in Austin, Texas, and I had a chance to meet a few online personalities face-to-face, like former GRS staff writer Adam Baker of the Man vs. Debt blog.

I also attended a session called The $100 Startup, a book reading led by Chris Guillebeau of The Art of Non-Conformity.

Long-time readers know that J.D. and Chris are good friends, which is why J.D.’s not reviewing this book. I, however, hadn’t met Chris until attending his SXSW session. I’d like to think this would make me an unbiased book reviewer, but the truth is that the guy is just instantly likeable. His session that day felt much like it did to read his book: a personal conversation with a friend who sincerely wants to help you out.

So there’s my disclaimer — nicest guy ever. Luckily for me, his book is a must-read for anyone who’s harboring a desire to start a small business (’cause how awful would it be to have to write a scathing review of a book by the nicest guy ever?).

The book’s beginnings
Chris has traveled to almost every country in the world and says he’s met two kinds of people, those like himself who have the time and income to live the lifestyle they want, and those who feel trapped. So he set out to extract knowledge from the first group and boil it down into specific tactics and examples.

To say he did some serious research is an understatement. More than 1,500 entrepreneurs were considered for inclusion in the book. They had to meet the following qualifications:

1. Make at least $50,000 per year from their business.
2. Started the business on a very low budget. (The average cost of initial investment for entrepreneurs included in the book is $610, with a median cost of $125.)
3. Willing to cough up financial data and demographics.

Chris interviewed more than a hundred people, pored over more than 4,000 pages of surveys, and made hundreds of phone calls to compile the most critical lessons into a blueprint. In other words, this is not The Secret. This is an actionable guide that you can customize.

Here’s an excerpt from the introduction, in which Chris describes his goal for the book:

“What if you could achieve your own life of freedom by bypassing everything you thought was a prerequisite? Instead of borrowing money, you just start — right now — without a lot of money. Instead of hiring employees, you begin a project by yourself, based on your specific personal combination of passion and skill. Instead of going to business school (which doesn’t actually train people to operate a small business), you save $60,000 in tuition and learn as you go.”

I know more than a few smart, capable, would-be entrepreneurs who never take the leap because of invisible barriers. “I don’t have an MBA,” or “I need $50,000 from the bank.” Maybe you do need those things for some kinds of businesses, but throughout the book Chris shows example after example of people who started businesses they love without either of those things.

The blueprint
The book is broken up into three major parts:

1. Unexpected Entrepreneurs. This section covers how to connect your skills and interests with what other people want.
2. Taking it to the Streets. In this section, the book digs into the details with a one-page business plan, guide for creating a “killer offer,” and how to raise funds, launch, and hustle for customers.
3. Leverage and Next Steps. Here’s where you learn about how to test pricing and positioning, create a franchise, grow in line with your goals, and push past failure.

Along the way Chris uses examples and stories from the real-life entrepreneurs he interviewed to illustrate each tactic. But let’s talk specifics.

Here are my favorite takeaways from the dog-eared pages of my copy of The $100 Startup:

• Action wins. “In the battle between planning and action, action wins,” writes Chris. He’s not saying to leap without looking, he’s saying that you could spend years tweaking a plan and never get your business off the ground. Then he gives you seven steps for market testing so you can stop dragging your heels and launch already.
• Master the art of the non-sleazy hustle. Before I struck out on my own, the idea of selling myself was terrifying. It still is, but I’ve found a few ways to cope. Chris not only walks you through how to locate and segment your customers, he even gives you a script for a low-key sales pitch that you can customize. If I’d feel comfortable using it, I think anyone would.
• Connect with people on a regular basis. It’d be easy for me to hole up and write for days on end, but creating is only half the equation. If you want to be successful, you have to devote time to connecting with others, too. “If you’re not sure where to spend your business development time, spend 50% on creating and 50% on connecting,” writes Chris.
• Profit is more important than tweeting. “On any given day, there are all kinds of things you can do that have nothing to do with making money,” he writes. In other words, forget tweaking your website or designing the perfect business card and go find some paying customers!
• Experiment with pricing. Chris tells the story of one entrepreneur who made $35,040 more the year he tested his pricing. He found that the higher of two prices resulted in five fewer sales per 1,000 customers, but $355 more in revenue because of the higher price. “Experimenting with pricing is one of the easiest ways to create higher profits (and sustainability) in a business,” he writes.

Finally, one of my favorite parts of the book is the appendix in the back of 25 businesses, their offering, and the benefit. Everyone thinks they can identify features and benefits, but most people are bad at it. I’m not great at it myself. Instead of telling you “sell the benefits!” like so many business books do, Chris shows you how it’s done. One example he gives is Paleo Plan, which offers a weekly diet and recipe guide. But what do customers really want? A plan? No, Paleo Plan customers want to take control of their health by eating naturally, while leaving the details to someone else. Chris says instead of teaching your customer to fish, just give them the fish! Give them what they actually want.

The bottom line
If you have zero desire to start a business or if your goal is to be the founder of a big Internet startup, this book isn’t for you. But if you’re interested in starting a small business doing something you’re passionate about, I highly recommend it.

Reading The $100 Startup feels like having a coffee with a friend — a friend who gently tells you to drop your lame excuses (like needing a bank loan or a 30-page business plan), then gives you homework. It’s the book I wish I had when I was trying to find my own path to self-employment.

One big chore is approaching: We’re going to hold a joint garage sale to purge our lives of some of the Stuff that has accumulated over the years. A few other friends are going to join us (in the hope that we can attract more customers).

After lunch together last Sunday, Kris and I returned to the house for a “garden tour”. As always, her flower garden is flourishing; she put in her vegetable garden yesterday, and that’ll be flourishing soon too. While we were looking at the berries and bushes and tulips, our friend Amy Jo stopped by to unload Stuff for the garage sale.

Simply Clutter
“What’s that?” I asked Amy Jo, pointing at a ceramic pot she was unloading.

“It’s a pickle crock,” she said.

“It’s nice,” Kris said.

“Do you want it?” asked Amy Jo. “No, really. We don’t need to sell it. I’d rather see it go to somebody who would enjoy it. It used to belong to my grandmother. I mean, we like the idea of the pickle crock, but we don’t ever use it, so it’s simply clutter around the house.”

This “just clutter around the house” is what I call Stuff, the collection of odds and ends that build up over the years, the things that become not just a physical burden but a mental one too. Not all of us experience this, but most of us do. Some people loathe Stuff so much that they embrace lives of voluntary simplicity and live in tiny houses. Others are comforted by Stuff and have an unhealthy attachment to it; these people are hoarders. Most of us fall somewhere between the two extremes. And, every once in a while, we get the urge to have less stuff. That’s what garage sales are all about.

Paul and Amy Jo, for instance, are about to move to a smaller house. As they prepare to move, they’re discovering they have a lot of Stuff. “Paul’s sorting through things that have been in storage since we moved back to Portland eight years ago,” she told us last Sunday. “It’s amazing how much crap we’ve accumulated. Paul has four sanders, for instance. Who needs four sanders?”

Kris, too, is purging Stuff. “What are you selling?” I asked her.

“It’s just Stuff I don’t use,” she told me. “I had to rearrange the house to fill in the gaps when you left. I’m selling the things I don’t use anymore.”

I too have a pile of Stuff to sell. The workshop at the house is filled with my things, and it’s my hope it will be empty of my things (and ready for Kris to use productively) at the end of the month.

Do you remember my one-year wardrobe project? For a year, I monitored which clothes I wore and which I didn’t. At the end of the year, I purged everything I hadn’t worn. Well, in a way, that’s what I’ve unintentionally done since I moved into a smaller space. I left lots of things behind. Over the past few months, I’ve found myself driving to the house to pick something up now and then — but not often. It’s like my one-year wardrobe project, but for everything I own.

Missing Things
Still, as much as I hate Stuff, there are now times I find myself missing things. Twice recently I’ve made dinner for guests. And both times I discovered I was missing something I wanted or needed. A blender, for instance, or a strainer. Or I made mashed potatoes a couple of weeks ago, and discovered I didn’t have a ricer or masher. I had to get creative because the potatoes were boiling and weren’t going to wait for me to run to the store. I used my wooden spoon.

Meanwhile, I’m facing a dilemma of sorts. I’m proud that I’ve managed to fit most of my world into my apartment. That shows some restraint. (Some restraint — but not a lot.)

However — and you knew there was a however, right? — not everything fits in my apartment. In the months since I moved out of the house, I’ve been storing some stuff at my now-unused office space. All of my personal finance books live there, as do my boxes of comic books. The sad thing is: I haven’t missed either of these things.

Now, though, the lease on my office space is about to expire, and I’m not going to renew it. That brings up a question: What do I do with all the Stuff I’ve crammed into that tiny room? Do I sell it? Give it away? Something else?

Unfortunately, I think my solution is going to be to store the Stuff. For $25 per month, I can rent a storage space in my apartment building. It’s big enough to hold the boxes of comics for sure, and maybe the boxes of personal finance books, too. I don’t know.

The trouble with this is that it’s simply a stop-gap measure. I’m not actually solving the problem, which is that this Stuff is a burden on my brain. I need to get rid of it somehow. And that, my friends, is sure to lead to a future article about what it’s like to sell collectibles.

Get Rich Slowly has covered ways to avoid student loans in the past, but I wanted to share how I also avoided loans…without a loan from friends or family, without lots of scholarships, and without having huge savings.

Brief Background
My parents had this philosophy about college and their children: If you want to go to college, we will support your decision, but we can’t help you financially. That didn’t bother me. Our family was long on kids and short on money. If they paid for me, what about the other six kids? That’s a lot of cash.

In high school, I was a solid, mostly-A student, but didn’t really shine in any subject; I was a bench-warming two-year basketball player, didn’t belong to any clubs and had no civic interests. In short, I was a good student, but not good enough.

The one thing I did do well in high school was work. I worked in the cafeteria over lunch and earned free food and a modest stipend. I took advantage of my high school’s work co-op program and worked at a bank during the morning (this was supposed to have a purpose, but besides earning money, the only thing I learned was the banking industry was not for me) and attended classes in the afternoon. In the evenings, I worked at a local grocery store.

These jobs enabled me to save around $3,000 by the time I graduated from high school. I also purchased my own car ($700!) and paid all my bills (health insurance, car insurance, gas, eating out, etc.).

In a nutshell, I:

• Was completely responsible for myself when I graduated.
• Hated debt with a passion.
• Didn’t think about student loans as a college-funding option.
• Wanted to work a full-time job as soon as possible.

I was off to a good start.

My Career Choice
Many allied health programs are two-year programs, and I found one that would send me off to work full-time in the field in 24 months. The school was an independent program, though it was sponsored by two local hospitals. This was about 15 years ago, but many of these programs still exist. Often, they’re amazingly inexpensive due to hospitals footing part of the bill.

How inexpensive? The tuition, fees, uniforms, and books for the whole two years? $3,000.

As I said, I wasn’t a standout student. However, I found $3,000 in scholarships that were specifically targeted to our school, to healthcare, or to our local area. To stay out of debt, I worked like crazy and added a little bit to my savings. From my high school savings, I was also able to replace my first car by paying cash for a second ($2200). And again, I supported myself completely. I graduated with very little savings and no debt.

Without doing any research (just assuming that there would always be jobs in healthcare), I had accidentally picked a field in which, at that time, a huge shortage existed. When I graduated, tons of jobs were available, many of them offering sign-on bonuses. I ended up choosing a specialty area that was slightly different and paid more per hour. I was trained on-the-job for my additional responsibilities at no additional cost. I may have been nearly broke when I started working three days after I graduated, but I was twenty-years-old, making $40,000 per year with no student loans.

I made some stupid mistakes along the way, of course. But they didn’t hurt me as much as they would have hurt someone with thousands of dollars of student loan debt.

One day, a few years later, my old instructor approached me. “Lisa,” she said. “I’m probably going to retire in the next 3-5 years. Would you be interested in taking my job?” I had never considered teaching, but the more I thought about it, the more I liked it.

“I might be interested in that,” I replied.

“If you are, you’ll need to get your Bachelor’s degree. I want you to start working with me next year. Then after a couple of years, I will retire, and you can take over.”

So, with the help of the tuition reimbursement program through work, I enrolled in classes for my Bachelor’s degree.

Many academic programs cater to healthcare workers such as myself, and I was able to finish my Bachelor’s degree in less than two years, at a pace and method that worked with my life. But it wasn’t easy.

I had to pay for one semester myself. This was the only time in my life I considered student loans. But, through some sacrifices, I was able to pay for my last semester ($1250) with savings and creative juggling of credit card due dates.

Part of the way through my Bachelor’s degree program, I began teaching part-time. My instructor (now boss) was still grooming me to take her position. “You know,” she said, “if you still want my job, you need to get your Master’s degree.”

I spent six months thinking it over. Did I really want her job? Teaching was good, but it was a lot harder than I thought it was going to be. And commit to two more years of school? Educators in my healthcare field are rare; ones prepared with master’s degrees are even more so. She knew they might have a difficult time finding her replacement when she retired. She felt it would be to the school’s advantage to have someone waiting in the wings when she retired, so she went to the Board of Directors and asked to have the costs of my entire master’s degree program put into the budget. That was an opportunity I couldn’t turn down.

I did have to pay $750 when I took slightly longer than expected to complete the program. With a combination of hard work, luck, savings, and my employers, I paid $2000 total for my postsecondary education.

Today, I am still teaching, now at a community college. I have a great schedule, good income, great benefits and find my job incredibly fulfilling. In addition, I have been able to find related work on the side that adds a big chunk to our yearly income.

The Advantages of No Student Loans
Before I started reading personal finance blogs, I didn’t think about the benefits of having no student loans. I realize that student loans can be overwhelming, so I wanted to share my experience in hopes that it may help someone else. No student loans allowed me to:

• Save for one year and pay cash for a gently used car
• Take vacations
• Buy furniture
• Contribute to my 401 (k), beginning at 21-years-old (10% with a 3% match)
• Donate money to worthy causes or friends in need
• Pay off my husband’s student loans
• Purchase our dream house with more than 20% down

Maybe something like this would work for you, or maybe it wouldn’t. But I am so thankful for how it’s affected my life and the life of my family.

Andrew thinks this sort of problem is frustrating, too, and he recently wrote to ask for advice on handling situations like this. What do you do when one expense leads to another? How do you put a stop to it? How do you predict problems like this so they don’t happen in the future? (Or so that you can mitigate them?)

Here’s his question:

Where do you stop when one purchase leads to another, and then another, and do on?

I recently decided to buy a new bed, as I was tired of the platform bed I’d been using for years. I also upgraded from a full to a queen size, which meant I had to buy new bedding as well. However, I wasn’t anticipating that the bed would be too high for my dog to jump up on, so rather than put up with the pacing and pleading eyes, I went out and bought a sturdy set of dog steps.

I was considering buying a deep freezer, so that I could take advantage of economies of scale with meats, vegetables etc. But then the thought hit me: what if the power goes out and I lose all that good? Should I also buy a generator?

I’d like to ask the readers for examples of how one well-intentioned purchase spirals out of control!

I think this is a great question. In my life, I’ve had tons of expenses that kept leading to more expenses. (In a way, this is like shopping momentum, the psychological trap that occurs when you buy one thing, which increases the likelihood you’ll buy others.)

Buying a house, I think, is the classic example of this situation. Nearly every homeowner has experienced that shocking spiral of spending that happens when you move in. There’s a reason for the common rule of thumb: Budget one percent of your home’s value for repairs every year. But it goes beyond simple home maintenance. When you move into a new place, it seems like there’s a host of new things you need: power tools, window treatments, household goods, and more. Even if you already owned a house, the new house demands specific stuff, you know? And it’s expensive!

But there are other examples, too.

It used to be when I bought a computer, for instance, I had to buy all sorts of accessories to go with it. When I bought my Nintendo Wii, I had to buy extra games and controllers and so on. (Obviously, I didn’t have to buy these things, but I chose to do so. One expense led to another.) When I buy a car, I have to buy floormats and jumper cables and an ice scraper and so on. And although I carry a naked cell phone, when most people I know buy a new one, they buy a host of gadgets to go with it.

So, where do you stop when one purchase leads to another?

First, I think it’s important to be realistic about the things you buy. For instance, when Andrew bought a new bed of a different size, he should have realized he’d need to buy new bedding. If I buy a new bicycle, I need to understand that I’m going to want gadgets and gear to go with it. When you buy something, think carefully about whether that purchase is going to lead to others as well.

But some expenses can’t be predicted, of course. That’s often the case when buying a new home or car. For cases like this, when you can’t predict or prevent the expenses, I think it’s still possible to budget for the unexpected. This is where it’s useful to have some sort of slush fund in a savings account. This isn’t necessarily an emergency fund, but something similar — a fund for coping with surprise costs that aren’t actually emergencies. (You’re not going to die if your new car doesn’t have floormats, right?)

What about you? Do you have any examples of when one expense led to another, snowballing out of control? How did you decide when to stop spending? Do you have a plan for dealing with the unexpected in the future?

A few years ago I had a regular administrative 9-to-5 job working for one of the three credit bureaus. It was an okay job with an annual pay of around $33,000 a year. In 1998 that was more than enough to pay for a tiny studio apartment, take care of monthly bills, and pay for my shopping sprees at Forever 21 (I still shop there, actually).

However, everything changed when I bought my first computer and started fiddling around the Internet. Somehow I ended up clicking a “Webmasters Click Here” link on a website and figured out that it was possible to make money online. After I received my first $20 commission check I was pretty much hooked.

It took a lot if trial and error but by 2006 I was pulling in around $10,000 a month from promoting affiliate programs online. I had high-traffic websites and would generally earn $30 or $35 every time a web surfer made a purchase through my affiliate link. In a great month I would make around $13,000 or $14,000 and in a “bad” month maybe $8,000. At one point I had more than $80,000 in the bank!

But I made a lot of mistakes that cost me everything. Eventually, my income dwindled so much due to the recession and industry changes that I was forced to look for a job again. Here are my hard-learned lessons that might save you a lot of grief if you’re running your own business (or think about starting one):

1. Pay your quarterly taxes on time
When you are self-employed you generally receive 1099s from the companies that you work for, and it’s your responsibility to file your taxes quarterly. I used to file mine yearly; I was making a lot of money so financial penalties (even in the thousands!) didn’t bother me.

One year I really overspent and I was wiped out once I paid taxes at the end of the year and never was able to recover from it financially. My income continued to plummet every year, but I was still responsible for income taxes for previous years. Paying your quarterly taxes in a timely manner ensures that you won’t get caught behind, because once you do it can be nearly impossible to catch up.

2. Find a good accountant
Having a qualified CPA in your corner is crucial if you want your business to survive. I never incorporated so I was responsible for self-employment taxes. I never found a solid accountant that I could trust. One CPA charged me $650 an hour and didn’t do anything for me that I couldn’t have done for myself. I was told that it wasn’t worth the extra paperwork for me to incorporate because my earnings weren’t high enough.

3. Don’t tie up a large chunk of your money in a car
When I was making a lot of money I bought a used Mercedes. It was certified pre-owned car, and I paid around $43,000 for it, in cash. Was it the smartest decision ever? No. But do I truly regret it? I would honestly have to say no (even though I know most people will disagree).

I like to enjoy life, and I’m not going to lose sleep over a purchase I made a long time ago. However, if your goal is to really get rich slowly, you will probably want to buy a used car instead.

4. Nothing lasts forever
When I was making six figures a year I was convinced that it would last until retirement and that I was financially set for life. Call it naivete or “sticking my head in the sand”, but I never thought that the money would run out. The truth is that nothing lasts forever, so enjoy it while you can.

Hindsight is 20/20
What else would I have done differently? I would have worked harder and smarter. I would have rented office space and ran things more like a real business. I would have hired employees to do the grunt work. I also would have expanded my business and not concentrated solely on doing the same thing over and over. My goal at the time wasn’t to get rich slowly, but to enjoy life, and that I did.

I do have a few regrets, but I still had a great run while it lasted!

Early Bird Prize
First up, this year we offered a special prize that was available only to those who entered the contest in the first two weeks. The winner of the Early Bird Award is Cori Rubio for his polished video in which he urges viewers: don’t gamble away your life savings:

Success Stories
This year’s winner in the Success Story category goes to Dixie Prosser, who told us how her nine-year-old saved for an iPad. I shared this a few weeks ago and heard a lot of great feedback for the clip. It’s a charming story of teaching kids how to do the right things with money.

The five runners-up used a variety of techniques to tell their stories. For instance, Pequatch used simple text to tell the tale of the girl and the magic pot of money. Meanwhile, Travis Settineri (aka S.E.T.) used a professionally-produced video to share the power of pursuing his dreams.

Megan got personal as she shared her story of getting to ground zero. Donna Butler’s story is full of passion, and that may be because she hasn’t reached the end of her journey yet. Her story is a work in progress Finally, Kim’s financial success story contains tons of great tips that anyone can use.

Personal Finance Tips
This year, my favorite personal finance tip video came from Justin at Cube Sapien who shared how to put your emergency fund on ice. I’m not sure why, but the idea of freezing cash to have on hand really appeals to me. I know a lot of people keep stashes of cash around the house, and this just seems like a smart way to do it.

The five runners-up in this category are:

• The Rice family, who know the value of home haircuts.
• Maria, who has 8 tips for an affordable home.
• Jenna, who discovered the power of a no-spend month
• Mandy, who turns her junk mail into scrap paper.
• Jeff, who learned that he can spend five minutes to save $400/year on life insurance.

Website Award
Every year, one entry wins the Website Award, which is a prize for a contest entrant who also has a website. This year’s prize goes to Jaime Tardy from Eventual Millionaire.

Two years ago, in the first GRS video contest, Jaime shared her story of how she paid off over $70,000 in debt.

Since then, she’s changed her mindset, and has been working hard to learn what makes wealthy people tick. As part of that, she’s interviewed over 50 millionaires to learn the secrets of their success.

On the strength of these two videos, and because her site is intriguing, Jaime wins this year’s Website Award.

Also Worth Viewing
Chip from Chip’s Money Tips wasn’t eligible to win anything (he won a Grand Prize last year), but he shared two great videos again this year including this one about making the most of credit cards.

As always, the Get Rich Slowly video contest is a fun way for me to see what you, the members of the community are up to. Plus, I think it’s a great way for people to share their tips and success stories with other readers. Because that’s the strength of this site, after all: We’re all in this together, and we’re all learning from each other as we attempt to get rich slowly.

You know what I like to do on a beautiful fall day? Sit on a couch and watch other people exercise! Furthermore, I cheer for a bunch of people I’ll never meet, representing a team based in a city they didn’t grow up in. Heck, I myself haven’t lived in that city for many years.

Yep, I’m talking about watching professional football — in my case, cheering for the Tampa Bay Buccaneers, since I grew up in nearby Clearwater, Florida. However, at this point, I’ve spent most of my life living outside of the Tampa Bay area. But that doesn’t change the emotional connection I have to a team I watched as a kid, taking the bus from Clearwater Mall to Tampa Stadium to watch Lee Roy Selmon, Doug Williams, Jimmie Giles, and those ‘70s-inspired creamsicle uniforms.

But I don’t watch football as much as I used to. I certainly don’t get the NFL Sunday Ticket like I used to, which allowed me to watch every and any game I wanted (at a cost of $299.95). With a bunch of kids, I just don’t have the time. And, frankly, I feel more and more like it’s kind of ridiculous.

I had this thought again as I read about the recent bankruptcy filing of Warren Sapp, the former Tampa Bay defensive tackle and likely future hall of famer. Despite earning (in his estimation) $60 million while playing, and despite current monthly income of $115,881, Sapp has filed for Chapter 7 bankruptcy due to owing $6.7 million, which includes unpaid child support and alimony. Listed among his assets in the bankruptcy filing: a 58-inch high-definition TV, a boxing glove signed by Muhammad Ali, $560 worth of new Xbox games, and 240 pairs of Nike Air shoes. He once owned an 18,000-square-foot mansion, but not anymore. He also doesn’t own the Super Bowl ring he earned with the Bucs, or his University of Miami championship ring. He says he lost them.

For some reason, most people enjoy reading about the financial downfalls of the once-rich and famous. But this one has garnered extra attention in the Tampa Bay area, not only because of Sapp’s legacy as a player, but also his legacy as a jerk. He was notoriously rude to fans. As an example, here’s what happened to high school coach of the week Mike DePue, who had been invited by the Bucs to watch one of their practices (as reported by the Tampa Tribune in 2003):

According to DePue, he and two of his assistants, Rob Burns and Vaughn Volpi, were at One Buc Place viewing practice from the sideline when Sapp walked to an area near them and “threw a tantrum,” apparently for DePue making eye contact with Sapp.

“I was just looking around in practice and he [Sapp] said to me in a confrontational tone, ‘Do you see what you’re looking for?’” DePue said. And as Sapp walked back toward practice, DePue said Sapp used foul language and said he would “give me more [verbal] grief if I looked at him again.”

Bankruptcy couldn’t have happened to a nicer guy.

Are pro sports worth the cost?
How can a guy like Warren Sapp get paid so much? Because professional football makes so much. According to Forbes, the average NFL team made $261 million during the 2010 season, which is a total of $8.4 billion for the 32 teams. Of course, that money doesn’t just grow on turf; we sports fans are footballing the bill, through the jerseys we buy, the games we attend (and $5 hot dogs we eat), the cable fees we pay, and the hours upon hours of beer and car commercials we endure. Yet here are five reasons why devoting so much time and money to professional sports may not be worth the investment.

1. We should be exercising instead of sitting on our butts and watching other people sweat.
Many writers would now trot out all the statistics about how we’re getting larger and lazier, except that trotting would exhaust them. Plus, you already know about the couch-potato crisis. As for me, I’ve managed to get more in shape, and the health and psychological benefits are far more rewarding than spending three hours in front of a TV to watch just 11 minutes of actual playing (which, according to the Wall Street Journal, is the amount of time that isn’t spent on commercials and players standing in a huddle).

2. Many professional athletes are horrible with money.
Warren Sapp isn’t the only athlete who blew through millions. According to Sports Illustrated, 78% of NFL players and 60% of NBA players are bankrupt within two years of leaving the game. I can’t help but feel that spending money on professional sports is a misallocation of capital.

3. Sports can bring out the worst in people.
Sports participants and spectators can get pretty ugly. In February, 79 people died during a soccer riot in Egypt. It generally doesn’t get that bad here in the U.S., but fans can still get pretty ugly. A few years ago, the Bucs were in town to play the Washington Redskins (I now live in the D.C. area), and I took my then-12-year-old daughter to the game. She was all excited, painting her face and everything. But as the game progressed, and the fans drank more, they became more and more obnoxious to those of us who were rooting for the other team. One guy yelled to my daughter, “Hey, little girl — come over here and I’ll paint your face.” That was $200 well spent.

4. It’s silly to care so much.
Back in the day, a poor performance by the Bucs could ruin my Sunday evening (and if you know the history of the Bucs, you know that was a lot of Sundays). Then, a few years back, they blew a huge lead and lost in overtime. I couldn’t sleep. My wife turned to me at 3 a.m. and said, “You need to emotionally disassociate yourself from football.” It was the wisdom I needed to hear.

5. Is one season really that different from last season?
I’m not much of a basketball fan, and when the folks in my office gather around a TV during March Madness, I’ll walk up and say, “Look, a guy threw a ball through a hoop! Oh, look — it happened again! Wow, there it is again!” But football isn’t really that different. The truly unique plays could be summarized in a five-minute highlight video at the end of the season.

Football, I wish I knew how to quit you
Despite all the reasons why it doesn’t quite make sense to expend resources on professional sports, I can’t help but spend an hour or two each week watching football. Even in the offseason, I’ll occasionally flip to the NFL Network. I watched football growing up, and I played it growing up (as evidenced the by the accompanying black-and-white picture — back when I played football, colors had not yet been invented). I guess it’s an addiction, or something. Right now at my desk, I have an autographed picture of Lee Roy Selmon and several old football cards. (Who remembers that Vinny Testaverde began his career in Tampa?) But slowly, I’m recovering from my addiction, and not devoting so much time and money to it. Warren Sapp will have to find someone else to pay for his shoes.

Cheesy self-interested (sorta) addendum: Want to support the young, creative innovators of tomorrow? Today’s your lucky day! My son’s fifth-grade Odyssey of the Mind team has made it to the World Finals, where they’ll compete against kids from more than 25 countries. The team is in the process of raising $9,000 for the trip. If you’d like to contribute, send a check, made out to Stratford Landing PTA (with OM noted on the check), to Stratford Landing PTA, attn: Terri Bell (OM), 8484 Riverside Road, Alexandria, VA 22308. All donations are tax-deductible! And if you know of great places to visit as we drive from Virginia to Iowa, please let me know!

“You need 75 more cents!” the woman at our favorite burger joint, Little Big Burger, said brightly after I sent my 9-year-old to order another serving of truffle oil fries with all the change I could find in my bag. Thankfully, I knew I’d sent enough money: I’d stashed a dollar coin in my bag, saving the Abraham Lincoln because, well, Lincoln. These fries were just good enough to let Lincoln go.

Dollar coins are not that popular
I’m used to this. I love the dollar coins and always have; they’re so close in size and, if you leave them in your bag long enough, color to the quarters, all but the most discerning cashier will count them as 25 cents’ worth. And you rarely see them, as the dollar coins have not exactly flown out of bank coffers. They’re just not that popular.

Over the past few years, there has been something of a kerfuffle (in the small world of economics and coin geeks) over the politics of the dollar coin. A well-meaning bill passed by Congress several years ago has meant the U.S. Mint has been legally forced to make dollar coins by the hundreds of millions — more than a billion in coins is stuck in a vault somewhere in Baltimore. They’ve been piling up and, though the Treasury Department made steps to reduce production considerably after the news broke, there’s still the problem of the coins just… sitting there. Gathering dust and no interest and lots of expense to guard them.

Dollar coins are sturdy: We’ll give them that
The background is that dollar coins last a lot longer than bills, for obvious reasons: a coin can stay in circulation for 30 years or more (remember my story about coins older than me?), whereas a dollar bill lasts only a few years.

U.S. bills are sturdy too, with their high-tech design and exclusive cotton-linen blend paper. U.S. one-dollar bills last 22 months, a little longer than five-dollar and 10-dollar bills (16 and 18 months, respectively) and far longer than Euros or other note currencies. Douglas Crane of Crane & Co., the company responsible for making the paper that backs greenbacks, told NPR, “U.S. currency: It’s some of the most durable banknotes on the planet.” Other currencies, like the Canadian dollar when it was replaced in 1987, will fall apart or need to be taken out of circulation in as little as three months.

Supporters of coins (and promoters of copper mines) say it’s about tax dollars, and saving them
It’s totally a coincidence, right? That the promoters of the bill to replace dollar bills with the coins — Tom Harkin, a Democrat from Iowa, and John McCain, a Republican from Arizona — also happen to be from states where coins are big business? Arizona is lush with copper mines, and Iowa is home to a producer of the metal plates the U.S. Mint uses to make coins.

OK, obviously: these politicians are quite probably interested in the issue because it’s good for their big business constituents. But at first look the deal seems like a good one. It’s a small amount of difference, but it’s a difference indeed: the variable cost of dollar bills is 2.7 cents and the variable cost of coins is 15 cents. When you amortize the cost of bills vs. coins over the General Accounting Office’s assumed lifespan (40 months vs. 34 years), coins come out cheaper. Simple, right?

And then there’s the seigniorage!
If it wasn’t awesome enough saving all those tax dollars, then there’s the seigniorage. That’s the interest the government makes on bonds that it sells in exchange for new currency. You see, when you replace bills with coins, people do this: take them home and set them on the dresser. Fish them out of their pockets and put them in a jar. Toss them in a receptacle in the car. Fail to carry them around. Don’t spend them.

ERRRRTTTT. (That’s the sound of something screeching to a halt.)
What looks like a mild amount of savings to the people like me who are always rooting around in the bottom of a bag or back of a drawer for a few quarters for truffle oil fries or a thermos of coffee looks like an extra tax to other people. That’s right: you’re paying the government for the privilege of issuing you super durable coins that you don’t really want to begin with.

The GAO decided that it would be better to switch to coins, but not because of production costs — for the seigniorage benefits alone. And an update to the report in February 2012 pointed out that, thanks to the long-lasting U.S. dollar (which just keeps on aging better as new technology and better paper is developed), and because so many assumptions were made, it’s altogether possible that the result could be quite different.

It’s not so good for you and me
The net result might be good for the government. (Or it might not. There is definitely much disagreement here — there’s a whole keep-the-bill movement that is supported by, among others, most vending machine companies, bars, taxi companies, Crane & Co., and coin-operated laundries, all of which would theoretically have expenses associated with the switch. And then there is the tip situation — presumably, when we tossed our coins out of our pocket we’d only be left with fivers, which we’d be too stingy to use as tips.) But everyone can agree that it’s not good for us.

Switching to dollar coins effectively taxes us. And it taxes us because of our stubborn, trenchant, unavoidable dislike for the jingling.

Planet Money’s in-depth report on the subject — which inspired me to think more deeply about this — came to the conclusion that bills are better. “It’s effectively a tax on people who hold coins in jars at home,” said David Kestenbaum. The professor they consulted, Robert Whaples of Wake Forest University, said skeptically, “the government can make profits in all sorts of bad ways. People are going to be putting them on top of their bureaus instead of spending them for transactions and that seems like a big waste of resources to me. This does not seem like a good way to raise money.”

Got coins? At least be thoughtful about it.
Maybe you’re weird like me and you just think the dollar coins rock. (I think it’s the Portland-native in me: hell-bent on being different, setting a trend even if no one will ever follow.) Maybe you’re the sort who runs out of money from time to time, like me, and you like that bottom-of-the-bag cushion. And maybe you’re not going to get to choose: McCain and Harkin and their metallurgical constituents might win out in Congress and the dollar coin will become the law of the land.

When it comes, though, think about it: don’t let them pile up. Use them. Put them back in the bank to earn interest. Don’t let the government get its taxes in these silly, quite literally nickle-ing and dime-ing ways. Or look at them in a jar on your dresser and, at the very least, recognize them for what they are: a little, tiny, tax.

How about you? Do you like or avoid the dollar coins? What do you think the government should do?

Note: I edited the post to reflect that Canadian currency was not replaced “recently.” — Sarah

Normally, I don’t go to the doctor. My family has a funny thing about doctors, and usually prefer to let an illness run its course rather than to pay a doctor to tell us to “let the illness run its course”. Last Tuesday, though, I decided that sometimes discretion is the better part of valor. After four days with a high fever, and after sensing that something wasn’t quite right with my lungs, I drove myself to urgent care.

“You have the flu,” the nurse practitioner told me. “And it’d be even worse if you hadn’t had your flu shot. As it is, you may have pneumonia. It’s been going around.”

She prescribed an inhaler, steroids, and an antibiotic, but she seemed skeptical that they’d help. “Make sure you call us if things don’t improve,” she said. “In the meantime, you need to spend 72 hours in quarantine. You don’t want to give this to anyone else, and you don’t want to catch anything else that might be going around.”

So, for three days last week, I confined myself to my apartment.

Hunting for Health Insurance
But this article isn’t about how sick I’ve been. This article is about my quest for health insurance. Earlier this year, I promised to share my experience as I looked for an individual policy.

As background, I’ve always had insurance through Kris. Because we were married, my insurance was covered by the policy she had through her employer. And before that — long before that — I was on my parents’ health insurance. For 43 years, health insurance has been a non-issue for me.

That changed, though, when I asked for a divorce last autumn. I knew that I’d have to find my own coverage. In fact, Kris wouldn’t allow the papers to be filed until I could demonstrate I had replacement coverage.

“No problem,” I thought. “How hard can it be to find health insurance? I’m the healthiest I’ve been in my life!” Haha. Turns out, it’s not as easy as it sounds.

A Wild Goose Chase
My first stop was eHealthInsurance.com. Many people (including several GRS readers) had recommended this site as a great way to compare health insurance and to apply online without much hassle. It sounded perfect. Before Kris and I left for our trip to South America in February, I filled out an application. It seemed simple, and I had no doubt I’d be approved.

I wasn’t.

Some of my options at eHealthInsurance

While we were in Argentina, I got an e-mail that said my application for health insurance had been rejected, but didn’t offer any explanation. When I got home, there was a letter waiting for me in the mail that gave more detail. Turns out, I had a pre-existing condition that caused my application to be rejected. Five years ago, when I was fifty pounds heavier, I suffered from sleep apnea. Sleep apnea is a risk factor for other diseases, and insurers don’t like it. Never mind that I no longer have sleep apnea, that I’m fifty pounds lighter than when I had it, and that my health has never been better. There’s no way to convey that info on an application. Instead, I was turned down for health insurance.

Fine.

I went back to eHealthInsurance.com to apply for a different policy, but there’s a question on every application: “Has any other carrier turned you down for health insurance during the past 90 days?” It turns out that once one carrier turns you down, all carriers will turn you down. (This isn’t strictly true, but it’s mostly true.)

Fine.

I decided that my best bet was to just just continue receiving coverage through my same carrier. My logic was impeccable: I’d been with them for years already and they knew my medical history, so surely it would be a piece of cake to carry things forward. Again, this didn’t turn out to be true.

I called my carrier to ask about porting my policy from Kris’ work account to individual insurance. “We can’t do that,” they told me. “You have to call the employer that has the policy.” So I did. But Kris’ employer told me they couldn’t port it forward either. “Your only option is COBRA,” they told me. (COBRA is ongoing medical insurance available when your existing policy ends. It’s expensive.)

I’m telling this story in a calm, even-handed fashion, but I wasn’t feeling calm and even-handed during the process. I was feeling frustrated. I couldn’t figure out where to turn.

Finally, I started talking about my health insurance dilemma with everyone I met. I asked my self-employed friends what they do for health insurance. (Shocking but true answer: Most of them don’t have health insurance. No joke.) When I met other folks who’ve been through a divorce, I asked how they handled the health insurance question.

In the end, it was my colleague Mark Silver from Heart of Business who provided the answer. “I used an insurance broker to find health insurance,” he told me. “Here. I’ll give you his contact info.”

Taking Matters Into My Own Hands
Because I hate e-mail conversations and because I hate getting the run-around by phone, I tend to prefer face-to-face business transactions. Yes, they take more time, but I find them easier. It’s possible to discuss shades of grey and to explore multiple possibilities in person. For this reason, I drove across Portland to visit Ron Tate at Tate Insurance Services. I explained my situation.

“I need health insurance,” I said. “But I only want catastrophic insurance. I’m willing to self-insure almost everything.” Because I have substantial savings, I’m willing to pay more for routine coverage if that means my monthly insurance premiums are low. In the long-term, this should save me tons of money.

“No problem,” Mr. Tate told me. “We have several options.” He walked me through them. I chose the option that seemed to offer the best balance of cost and coverage, filled out the application. And waited. And waited. And waited.

After a week of waiting, I got word that my application had been rejected. Again. And again because of sleep apnea. “We have a couple of options,” Mr. Tate told me. “Because you’ve been rejected, you qualify for the Oregon Medical Insurance Pool, which is for high-risk customers like you. It’s nto cheap though. Or you can apply elsewhere. Or we can ask for an exclusion for the sleep apnea. That means you won’t have coverage for that condition, but everything else will be normal.”

“To be honest,” I said, “I just want to get this finished. I feel like I’ve been working on this for weeks, and I’m tired of it. It shouldn’t be this hard to get health insurance.”

My plan options at my insurance provider

In fact, I was so frustrated that I went home from Mr. Tate’s office and took matters into my own hands. I did what I should have done from the start. I went to the website for my current carrier and filled out an application for personal health insurance. I chose the cheapest policy (which still costs $128 a month!) and indicated I was a current customer. And then I waited. Within a couple of days, I’d heard back that my application was approved.

An Unhealthy System
That’s a long, boring story, I know, but I’m certain it’s typical of what everyone goes through when attempting to find health insurance on their own. It’s not easy. In fact, it seems a little crazy that it takes that much work to get coverage.

During the process, I spoke with dozens of people about their own experience getting insurance, or about their experience with family members who’ve had to use health insurance lately. I’ll be honest: I came away jaded. I’m far from being a socialist, but there’s no question in my mind that the current health insurance system in the U.S. is broken. It’s tough to find coverage, that coverage is expensive, and once you have it, it’s like a game for the insurance companies to get out of paying. This is dumb. I’d be happy to try some sort of socialized medicine as an alternative, and so would every single person I spoke to during this process. (But, of course, I live in Portland where even moderates like me would be considered liberal in other parts of the country.)

And, of course, the conclusion of this story is that I had to put my insurance to use last week. I have no idea how much my doctor’s appointment, x-ray, and prescriptions would have cost without insurance (and neither do the doctors, actually), but I do know that my total out-of-pocket cost was $29.26. (This may go up after the insurance company decides whether I owe more, but that’s the current total.)

I’m still not healthy. There’s still gunk in my lungs. I’m still running a mild fever. I still feel like sleeping all day. But it’s good to know that if I do need medical help, I have the insurance situation sorted out.

My family was weird.

When you’re young, it’s hard to know how a normal family should look and behave. I do know that from very early on, I sensed that something was awry. Although my father had a respectable and reasonably well-paid job and my mother (a housewife) seemed like a frugal household manager, we were always broke. Things that other kids didn’t think twice about — like school shoes, stationery, excursions, new clothes, dental treatment, and extra-curricular activities — were all out of reach for my family.

As a nerdy and bookish child I was already a target for bullies; going through school wearing ill-fitting hand-me-downs and being left behind when others went on excursions meant I might as well have had ‘beat me up’ written on my forehead!

It was easier to pretend my parents were strict and didn’t allow outings or fashionable clothes, than to admit we were too poor to afford them.

An Unhealthy Relationship with Money
Why were we poor?

There was a lot of secrecy in our household (I don’t think my mother ever knew how much my father earned), but it gradually dawned on me that my dad was a compulsive gambler. For his entire adult life, he gambled most of his income, and both parents used consumer credit — mountains of consumer credit — to survive day-to-day life. They had no savings, nothing put aside for a rainy day. Occasionally there would be a gambling ‘windfall’, and they would use the money to purchase unnecessary items (like ostentatious items of furniture, or sports gear they soon tired of) rather than paying down debt or buying sorely needed school shoes.

Neither of my parents had completed high school, and they saw no value in educating my sister and me beyond the minimum. This didn’t bother my sister as she wasn’t very academic, but it mattered to me. Despite having no educated role models — I was far too shy to confide in my teachers, for example — I somehow knew that education would be my ticket out of poverty. Unfortunately, my parents had no intention of allowing me to complete high school or supporting me for a moment longer than they had to, so in 1984 (at the age of 16) I left school to take up a full time office job.

My marks at school had been excellent, and I managed to sign up for part-time correspondence studies at a university. Looking back, I must have been incredibly motivated and driven, as the full-time work and part-time studies meant there was very little time left over for leisure — or to enjoy being a teenager.

My parents’ unhealthy relationship with money flowed down to me. When I started working I had no work clothes, and no money to pay for my university course or textbooks. Rather than helping out, my parents signed me up for a credit account. In no time, I was in debt to the limit, and when I turned 18 and became eligible for a Visa card I really went to town.

For the next few years I was constantly, deeply in debt. I would pay the minimum amount required by each month’s statement, and must have paid exorbitant amounts of interest over that time. My parents required me to pay board, and I moved out of home as soon as I could. Life felt more sane out of their orbit.

Escaping Poverty
At the age of 22, I bought a one way ticket to a much larger city, thousands of miles from where I grew up. Best decision ever. It was incredibly challenging to build a new life, and yet it was exactly what I needed. I arrived with almost no money, and accepted the first job I could find. Not ideal, but beggars can’t be choosers!

The first year was really hard. I lived from payday to payday, and again leaned too heavily on consumer credit. Several special things happened in my second year there though.

• Firstly, after seven years of full-time work and part-time study, I completed my bachelors degree. That may not seem like a big deal to most people, but given my family background it was a huge achievement for me.
• Secondly, I resolved to get out of debt. I cut up my credit card, slowly but surely paid it off, and taught myself to save up for things I wanted. My first purchase was a $400 CD player — it took months to save for, but I was so proud to have persevered.
• Thirdly, that was the year I met my partner. He comes from a totally different world to me, one where education is encouraged, achievements celebrated, and budgets adhered to. Meeting him gave me added impetus to live an examined life, to make conscious decisions with an eye to the future rather than just concentrating on the here and now. (We’ve never married, but are still happy together more than twenty years later.)

The rest, as they say, is history. After about five years together we bought a tiny apartment (with a 20% deposit) which we paid off in less than four years by living very, very frugally. (No vacations, no restaurants, no new clothes.) Ten years ago we moved to a smaller city and sold the apartment, which left us with enough money to buy a modest but nice house with no debt.

I’m currently completing my fourth postgraduate qualification — I’m a perpetual student, and not afraid to admit it — and we have a good life: jobs we enjoy, worthwhile volunteer roles, and good friends. Frugal habits die hard, and I’ve never gone back to my spendthrift ways. We’ve struck a happy balance, where we live frugally and modestly for about 90% of the year, and take luxurious vacations for the other 10%!

An Exception to the Rule
I wanted to share my story as I suspect it’s quite unusual. A lot of poverty is inter-generational, and it is also odd for someone from such an uneducated family to obtain a university degree, let alone several.

Gambling is a secret shame for many, and could have ruined my life too if I had allowed it. The rest of my family still live in our crime-ridden home town. They’re still uneducated, still living hand to mouth, still mired in debt. On the surface they appear more affluent than my partner and me, with big houses, multiple cars, and the latest household gadgets. But I’ve made a choice. I could have those things if I wanted to (and could probably afford to pay cash for them) but prefer not to. There’s something wonderfully liberating about knowing when you have enough.

In the past year, we’ve looked at the following spending categories:

• How much do you spend on food?
• How much do you spend on clothes?
• How much do you spend on gifts?
• How much do you spend on health insurance?
• How much do you spend on housing?
• How much do you spend on kids?

I’m not sure why this series of questions has been so popular. I guess there’s something deep in each of us that wants to compare our spending with others, to see if the amounts and the ways we spend are normal.

One way to answer questions like this, of course, is to compare your spending to a broader average. I do that by looking at government data. My favorite benchmark is the U.S. Bureau of Labor Statistics’ Consumer Expenditure Survey, which offers a ton of info about how Americans actually spend their dollars. Another source of info is the U.S. Bureau of Labor Statistics’ Consumer Price Index (which is generally used for tracking inflation).

Earlier this month, the Planet Money blog from National Public Radio used the Consumer Price Index to put together a couple of graphics representing what America buys. The results are interesting for a money geek like me.

For instance, did you know that Americans spend about one percent of their income on pets? And they spend another one percent on alcohol? (I’m not sure what that says about us, that our spending on pets and alcohol is roughly the same.) We spend 8.6% of our income on groceries, and we spend another 5.7% of our income on dining out.

For me, the funnest part of the Planet Money visualizations was the comparison between current spending and past spending. NPR’s Lam Thuy Vo whipped up this visual comparison of how our spending habits have changed over the past 62 years:

Data from BLS, chart from NPR.

Last month, The Atlantic also took a look at how Americans earn and spend money. Like NPR, and like me, The Atlantic couldn’t help but note that food costs have plummeted over the past sixty years — despite the fact that Americans spend nearly half their food budgets on dining out! And look how much cheaper clothing has become too!

Unfortunately (or perhaps fortunately, depending on your point of view), we don’t seem to have banked the savings we’ve gained on food and apparel. Instead, we’re plowing more money than ever into housing. According to the U.S. Census Bureau, the average new home was 2349 square feet in 2004, up from 1695 square feet in 1974 — and just under 1000 square feet in 1950.

Anyhow, I don’t have any real takeaways for you this morning. I just find it fascinating to see how the average person spends. To that end, you can be sure that there are more “how much do you spend on X?” questions coming in the future!

Do you like to compare your spending to a broader average? What are your favorite sources for comparing numbers? Do you worry when your spending on, say, housing is far greater than the norm? Or do you just figure different people have different priorities? (For myself, as long as I’m falling within the Balanced Money Formula, I’m happy.)

[NPR: What Americans Buy]

Here are the basics of Mesquita’s method:

So let me lay out how to buy a car. It’s very easy. Decide exactly what car you want to buy, make, color if it matters to you, options and so forth. Then do not go to a dealership. Let your fingers do the walking. Telephone all of the dealers who sell the vehicle you’re interested in who are, say, within a 50 mile radius, a 25 mile radius, 75, however far you’re willing to go.

To each of them make the same statement: “Hi, my name is so and so. I plan to buy such and such a car today at 5pm. I’m going to buy it from the dealer who gives me the best price. What is your best price?”

This technique will probably sound familiar to some of you. I’ve mentioned it here at Get Rich Slowly several times before. Five years ago, for instance, I shared this video about how to buy a new car without getting screwed. The idea is the same as Mesquita’s.

I’ve seen this method work first-hand. In 1995, Kris and I used this technique to purchase a new Honda Civic (but we faxed dealerships instead of phoning them). We sent out a letter that looked something like this:

My name is John Roth. I would like to purchase a white Honda Civic with option A, option B, and option C. What is the best price you can offer me on an in-stock Civic that matches this description? I am faxing this letter to every Honda dealer in the Portland/Salem area. This weekend I will purchase the vehicle from the firm that offers the best deal.

Some dealerships refused to participate, but a few responded with competitive pricing. The one we chose offered a smooth, hassle-free transaction. It was awesome! And Kris is still driving that car today, seventeen years later.

[Big Think: How to buy a car using game theory]

When I’m planning a vacation, I usually pick up a copy of a “cheap and free” guidebook that lists inexpensive attractions and secret-gem restaurants. A couple of weeks ago, I was visiting my friend Frank, who is a recent transplant to the East coast, and he saw my guidebook. “I need something like that so I know what inexpensive stuff there is to do in my own town.”

Which made me think, so do I!

When I’m visiting some other city, I usually have a list of free attractions or inexpensive, Zagat-approved restaurants, but I can’t really name places like that that are in my hometown. That’s not because I’m a big spender when I’m at home, it’s because my husband and I love to cook, so we rarely eat at restaurants, and we live in the country, so it’s just easier to stream a Netflix movie than to drive to the theater. Nevertheless, sometimes we have company over and want to show them around or we feel like getting out of the house, and it’d be nice to have a budget-friendly guide to our town.

But we don’t live in New York City. We don’t even live in a mid-sized city — we live 30 minutes outside of one. So until Frommer’s gets around to writing a book about our little town (which will be never), finding inexpensive entertainment isn’t as easy as buying a guidebook.

Undeterred, I started a list of resources where I could learn more about free and cheap attractions, things to do, and restaurants in any town, large or small. Here’s what I found:

• Google “Free things to do in [your city]“. Yes, it’s obvious, but someone has already made a list of ideas for your city, even if it’s a blink-and-you’ll miss kind of town. Your luck here will vary, though. The first list that popped up on my search had some lame ones — why is a pediatric center in a neighboring city on a list of fun things to do in my town? But it also had some good ideas, like visiting an 80,000-year-old living cave.
• Check out travel sites. Here’s another one where your results will vary, but it’s worth a search. I was surprised to find attractions and restaurants listed for my town on TripAdvisor, but there wasn’t much, and the search results didn’t turn up anything new or particularly exciting. If you live in a mid-sized or large city, travel sites will probably yield better results for you.
• Research at the library. The library is always a good place to begin a search for things that are free! Everyone knows you can checkout books and DVDs, but hunt for the “events calendar” either online or in person. Most of the activities I found at my library were for kids, like book clubs, art classes, story time, and Bow Wow Reading Dogs, a reading program that uses dog therapy to help below-grade-level readers improve their skills. For adults, there was a GED class, computer classes, a knitting group, and a program called Travel Talks that’s all about traveling — from planning a trip and getting a passport to what to take and when to go.
• Search for a local parks and recreation site. One of the goals of of my town’s parks and recreation program is to “enhance the quality of life” for its citizens. I discovered a list of upcoming events on the website, such as movies in the park, a kite festival, free Zumba classes, and a very active senior citizens group that plans events like wine tasting and picnics. The department even has its own Facebook page (sometimes I underestimate our town!), which is another way to keep up with upcoming events.
• Go to your state’s parks and wildlife website. Most state sites provide a map of parks with a list of sites and recreational activities to help you plan your visit. Whether you want to rent kayaks or go fishing, you can probably find a nearby park that will accommodate.
• Subscribe to local ‘zines. We have a local paper called Impact News that’s a great resource for new restaurants and events in our area. (You can search for local blogs if you don’t have a paper that specifically covers your community.) For example, in the last issue there was a story about new bakery in my area that offers daily lunch specials (and included a coupon for a free coffee when you buy a pastry). There’s also an event calendar in the paper and online, with free or cheap activities like fun runs and special open-air markets.
• Browse The Historical Marker Database. My little town isn’t in the history books, but that doesn’t mean nothing ever happened here! One interesting site I read about in the database was the spot where 30 people were massacred by a band of Comanche Indians. There’s also a historical site nearby where the a skeleton of a prehistoric woman was found, the earliest intact burial uncovered in the United States. Try searching for your town’s historical markers — there might be a site or two worth a visit.
• Seek out the arts (but enjoy high-culture for less). Our own Donna Freedman covered this topic thoroughly, so if you missed it, take a look. My town might not have museums or a ballet company, but the city nearby does, and there are a lot of ways to enjoy these activities on a budget.

It’s natural to get excited about traveling somewhere new, but obviously there’s a lot I haven’t explored in my own backyard, or my neighboring backyards! And just like the destination cities I’ve visited, there’s plenty for a “budget traveler” to do right here. In fact, after browsing the Texas State Park and Wildlife site, I’m feeling the urge to kayak some unexplored (by me) waters.

How much do you know about budget-friendly attractions in your own town? Do you have other places you go to learn about new, inexpensive activities and restaurants?

These days, getting sick can be a costly business, especially for those who can’t afford medical insurance. Not only does a person have to worry about paying the consultation bill from the doctor, but the cost of prescriptions seems to skyrocket each time you need to have them filled.

The good news is that there are many ways to save money on your prescriptions. Although they may require some effort on your part, the savings will be well worth it.

Why you should try to save money on your prescriptions
There is no doubt that the economy is in a very tight spot at this time. Because of this, it is important for a person to try and save as much money as possible on disposable purchases, especially where prescription medications are concerned. Money saved on prescriptions can definitely be put to better use elsewhere in our already overstretched budgets. By researching and finding ways to cut down on prescription expenses, it is possible to reduce their cost substantially. The good news is that there are many ways in which a patient can reduce the cost of their prescriptions.

The following are my top 10 tips to save money on prescription drugs:

1. Always inquire about generic options which may be available. Many brand-name medications have generic substitutes which are required by law to contain exactly the same ingredients as the brand name medicines. Whenever you receive a prescription from your doctor for medication,make sure to ask about the possibility of generic alternatives available. The end result could be as much as an 80% savings on the cost of your prescription.
2. Find out if you qualify for Patient Assistance Programs (PAPs). Certain pharmaceutical companies have put PAPs in place for those who earn below a certain wage or who simply can’t afford any form of medical insurance. PAPs may include assistance in the form of savings cards, assistance with co-pays or levies, and coupons which can be redeemed against the price of certain medications.
3. When possible, fill all of your prescriptions at one pharmacy. By having all of your prescriptions filled at one pharmacy, you will not only save time (and gas), but your pharmacist will get to know your particular prescriptions. This will come in very handy should you develop any allergies or unpleasant side effects from any of your medication.
4. Consider the possibility of splitting higher-dose pills. It is a known fact that there is often very little difference in price when it comes to different dosages of pills. A 50mg pill will often cost almost the same price as the same pill in a 25mg dosage. Find out from your pharmacist if the medication you are using comes in different doses and if it is safe to split the larger-dose pills or not. It is important to note that some pills are not safe to split, but your pharmacist will be able to give you reliable advice in this regard.
5. Communicate with your doctor. When you receive a prescription from your doctor, it’s always important to speak up if you can’t afford any of the medications that have been prescribed. Often your doctor will be able to prescribe alternative medications which may be more affordable for you.
6. Help reduce co-payments by checking your formulary. Many medical insurance companies will only cover the cost of specific medications for some conditions, as stipulated in their formulary. If your doctor prescribes medication which is not listed on this formulary, it can result in you having to pay a higher co-payment. Check your prescription against the formulary, and if it’s not listed, ask your doctor to prescribe an alternative medication that is on the list.
7. Shop around. These days it is possible to purchase medication from some supermarkets, via mail order, and at various retail pharmacies. By shopping around, you may be pleasantly surprised to find that prices differ from one source to another. If you find that a particular source has all but one of your listed medications at a cheaper price, ask them if it’s possible to get a discount on that particular item.
8. Ask your doctor for samples. Thousands of people have allergic reactions to medications every year. Before paying for a full month’s supply or course of a particular medicine, ask your doctor if there are any free samples available. This will enable you to try it before buying a full course of it. If possible, find out if your doctor is able to give you a 7- to 10-day supply of the drug so that you can assess it thoroughly.
9. Search for coupons. Magazines, newspapers, and certain websites offer prescription-related coupons on various medicines and treatments. Two websites that are known for offering medicine coupons are InternetDrugCoupons.com and NeedyMeds.org. You also can ask your doctor’s office if they know of any available coupons for your particular prescription drugs. Certain manufacturers even offer free, 30-day trial packs of their medicines.
10. Maintain a healthy weight and lifestyle. By keeping fit and healthy, you will be able to minimize your risk of getting sick and requiring medication. Maintaining a healthy weight is also very important, because there are many diseases which can be linked to obesity, including diabetes and high blood pressure. Once diagnosed, both of these diseases often require a lifelong commitment to using prescription medication to manage them.

There are many ways for a patient to save money on prescription medications. In most cases though, prevention is definitely better than cure, so it is always important to consult with a doctor or other healthcare professional as soon as you realize that there is something wrong. That step alone will save a lot of time, effort, and money where prescription medications are concerned.

This past Friday, I got an e-mail from my uncle letting me know the Sox were here in Seattle. Since leaving Chicago, it’s rare that I get to see my hometown sluggers, and it’s not an opportunity I would want to miss. But by the time I caught wind of the windy city being in town, the cheap seats were sold out, which meant that tickets for my girlfriend and me were around $50. Yes, I should have checked the schedule ahead of time and planned accordingly, but I didn’t. I took the cost in stride, along with the $6 Seattle dogs (cream cheese and grilled onions — so good), because I had money set aside for this very reason. Awhile back, I started contributing a small amount each month to what I call my spontaneity fund.

The Spontaneity Fund
We often hear that the first step of our personal finance expeditions should be to set up an emergency fund. A spontaneity fund isn’t the second step, or even the third or fourth, but I wanted a way to follow a whim or two and not feel guilty about it after. Whether it’s a concert I just found out my favorite band is playing down the street, or an impromptu evening out because my best friend had a terrible week at work, I want to be able to be there without breaking my budget completely. At my income level, without money set aside, there’s no way I would’ve been able to see my beloved White Sox at the ballpark the way I used to as a kid. This is exactly what I had set up a spontaneity fund for; it’s like an emergency fund for total non-emergencies. That said, where does the money come from?

The tweaked Balance Money Formula
Ever since coming across All Your Worth: The Ultimate Lifetime Money Plan by Elizabeth Warren and Amelia Warren Tyagi, I’ve been using something quite similar to their balanced money formula, with a few tweaks to match my lifestyle. The authors say that out of each paycheck, 50% of your income after taxes should go toward needs, 30% to wants, and 20% to savings.

Check it out:

What drew me to this formula was its utter simplicity. I can pay my bills, have fun, and still be stashing money away for my future goals without making things complicated. The authors say that one of the greatest advantages of having your budget balanced in this way is that managing your money becomes automatic, so you can stop worrying about it. Awesome. Great.

Except that I didn’t stop worrying about it. I found that my wants category ended up being more like 15% of my paycheck, and not 30%. I couldn’t let myself relax and enjoy. I could afford to do things like go out for dinner, sure, but I’d worry about the long-term damage it would do and just end up staying at home. If I planned for a dinner, like a birthday or holiday, then great, but a Friday night dinner just because wasn’t something I’d allow myself. For some reason, my wants category meant planned wants that could be justified and not frivolous, why-the-heck-not wants.

I’m not saying that I should be less conscious with my disposable income, but in my case, I needed to loosen up. Being smart about money shouldn’t mean worrying about it all time. So I sliced a little bit off, just a tiny 5% to put into my spontaneity fund. It allows me money to just let loose every once in a while. This month, it went toward a baseball game, some bigger-than-my-head hot dogs, and overpriced stadium beer. I didn’t skip a beat when it came to paying for them, and I got to watch the game and enjoy one of the sunniest days us Seattleites have seen all year. Next month, who knows? Maybe it’ll go toward dance classes or a case of Snapple for my girlfriend.

Other ways to spend a spontaneity fund
I’ve also found a couple of websites and clubs out there that are worth my spontaneous funds. Here are two of my favorites:

• Fill A Seat. This site started in Las Vegas and has made its way to most major cities. How it works is that you pay for a yearly membership (usually around $80) and when venues have empty seats for shows, concerts, and sporting events, the seats are offered to members at no cost. It requires utter spontaneity, as often, you don’t know you’re going to a concert until the day of, but you can see some great live music at no cost to your monthly budget!

• Groupon Now. I’m sure most of us have had our successes and failures with Groupon and quickly realized that spending money never equals saving money, no matter what percentage you’re saving. That said, when an impromptu lunch or dinner arrives, I often find myself on Groupon Now, which is similar to Groupon, just on an hour-by-hour basis. You are only able to redeem Groupon Now coupons the same day and only during a given time period. Last week, I got a delicious $5 Ethiopian brunch while meeting a prospective client.

Although my spontaneity fund is for frivolity, that doesn’t mean I like to see it go away quickly. I still use it as wisely as possible to keep it healthy for the next month.

Finding the balance between being smart about money and worrying about money is hard. But I find the more I can clearly define my own limits, the less I worry about having a little unplanned fun in my life. Warren and Tyagi suggest that at the point that you continue to trim fun spending down to the quick, you “might be missing the point of money.”

Are you frugal to a fault? How have you given yourself permission to loosen up a little without guilt?

When I was younger, not having financial goals absolutely caused problems. Because I didn’t have anything specific I wanted to spend my money on, it didn’t matter to me how I spent it. Because I had no goals, one choice seemed as good as another. As a result, I spent my cash on comic books and computer gadgets and lots of Stuff that simply had no meaning or purpose.

As I developed financial discipline, however, I learned the joys of targeted savings. Using an online high-yield savings account, I split my money into several different subaccounts, each of which I designated for a specific goal.

My first targeted account (which was actually held at a local credit union) was used to purchase a Nintendo Wii. This was a huge deal for me since it represented the first time I’d actually intentionally waited and saved to buy something I wanted. (In the past, I would have simply bought it on impulse.)

Eventually I learned to use targeted savings for all of my big expenses. For instance:

• I saved for my Mini Cooper with a designated account at ING Direct. (ING Direct is my online bank of choice; there are lots of other good options though.) For the past few years, I’ve been gradually building savings in the same account so that I can afford a replacement car when this one dies.
• As I’ve traveled over the past few years, I’ve used targeted accounts to save for my trips.
• I’ve used targeted savings to save for other miscellaneous large expenses since 2007, including new furniture, season tickets to the Portland Timbers, and more.

Targeted saving is great, and I recommend it to save for your goals. So what’s the problem? Well, I’ve reached a point where I don’t have any specific goals.

This isn’t because of aimlessness or lack of focus; it’s because I’m (mostly) content with what I own and do, and I no longer have any big expenses I’m wanting to save for. Yes, I still have my emergency fund, my car fund, and my travel fund, but they’re each full at the moment. That means there’s room to put some of cash money into something else. But what?

Would it be silly of me to start a catch-all account for the cash I’d normally be using to target something specific? To start some sort of “dream fund”?

Obviously, this is a nice problem to have. This is the sort of problem that I could only dream about when I was still trying to get out of debt. But I suspect many people find themselves in a similar situation once they’ve established good habits and taken care of their basic needs — they have money to save, but nothing specific to save for.

So I guess for once, I’m coming to ask you for your advice (instead of offering advice of my own). What would you do in my situation? Is it okay to not have financial goals if you’re taking care of your responsibilities? What then should you do with your extra income, the income that could be saved for specific goals? Is this a pretty clear-cut case of where I should be donating money to charity? I’m curious to hear what other people do (or think) in this situation.

When I was younger, I’d always planned to be a professor in the social sciences field. I studied hard through college and was accepted into a top graduate program in my chosen discipline. But after spending three years in my program, I realized (much to my dismay) that it wasn’t a good fit for me. I ended up switching programs and completed a different degree altogether.

When I graduated at the age of 26, I immediately moved across the country and then had to decide on a new career path. Although I’d worked at summer jobs and part-time jobs since the age of 16, I’d never actually had a real grown-up job. I interviewed for a few positions, but didn’t find anything that spoke to me. So, I decided to start my own business instead.

Minding My Own Business
The prevailing wisdom on starting a business is to do what you know. The thing that I knew how to do was standardized test preparation (for tests like the SAT and ACT). I got involved with test preparation after studying countless hours for the GRE for graduate school admission. I decided that I should use that knowledge for something, so I went to work for one of the major test preparation companies. I worked there on the side during graduate school and then later worked for a private company.

After several months of extensive reading and a meeting or two with the people at SCORE, I was ready to get started. At the time, I was single and without any consistent source of income. I’d also just moved, so I had no social connections and had to start everything completely from scratch. I had a small cushion of savings that I had built up during graduate school, though, which allowed me some flexibility.

My business started very slowly as I experimented with gaining clients. I got a few clients from Craigslist and two from a very pricey magazine advertising experiment.

During my first year, my fledgling company brought in about $20,000.

The next year revenues doubled, and then they doubled again. In year three (which was smack in the middle of the economic meltdown), revenue crossed over into the six-figure territory and has continued to increase every year since.

Barriers to Success
Starting a new business is always challenging, but I faced some extra challenges as a single person.

Most obviously, I didn’t have another source of income to fall back upon if my business didn’t succeed. This was actually a positive in many ways, in that I quickly realized that if I didn’t work, I didn’t eat. It was also pretty empowering in those early days to be able to support myself on something that I had literally created from nothing.

Health insurance was another major factor, and one that almost kept me from starting my business. My graduate school insurance lasted a few months after I graduated, so I used that time to start looking for an individual plan through EhealthInsurance.com. As a fit, healthy, non-smoker, I didn’t anticipate having much of a problem finding a policy. However, individual health insurers can reject applications for the smallest of reasons, and my application got rejected by at least five companies. Luckily, I finally found one company that would insure me. It’s expensive, but I will never, ever drop the coverage since I’m not likely to ever find coverage again.

Buying a house was also tricky as a single, self-employed person. Well, that’s not true. Buying my place was disturbingly easy. I bought a small condo in 2006 (the height of the housing bubble), shortly after I moved. Although I didn’t have an actual job, or a history of steady employment, I was given a 7.0% stated income mortgage (a.k.a., liar’s loan).

However, when the rates started dropping a few years later, I wanted to re-finance to a shorter term and that’s where I started running into trouble. Although I had plenty of income at that time to support the mortgage, the mortgage company kept requiring more and more documentation because I was self-employed. One refinance fell through altogether, but I was eventually able to refinance twice in the past two years (lowering the term each time).

One unhappy surprise that comes along with being a single, small business owner is taxes. Self-employment tax (having to pay both the employer and employee portion of Social Security and Medicare) is already shocking in itself. But since I’m single and don’t have children, I have virtually no deductions that I can take other than those related to my house.

One of the only tax-reducing mechanisms available to me is a retirement account. I have a Solo 401k, which allows for contributions for up to $49,000, depending on business income. I have been maxing out my account for the past few years, and this has saved me a bundle on taxes.

The Single Advantage
There were a few factors that made it much easier for me to start a business as a single person:

• I had an immaculate credit score. My parents taught me how to use checking accounts, savings accounts and credit cards from a pretty early age, and I took those lessons to heart. I’m pretty sure the only reason I was able to get my house was because of my credit score.
• I was able to get through graduate school with no consumer debt or student loans. Based on my GRE scores (which, ironically, eventually led to the creation of my business), I received a fellowship that paid tuition and a small living stipend. I had a tiny undergraduate loan, but the payment was very small. Had I had large debt, I would have had to get a “real” job to service the payments.
• I always had my eyes open for extra ways to make more money. Both during graduate school and the early years of my business, I took on all kinds of side-hustles. Among other things, I mystery-shopped, took internet surveys when they were still lucrative, started a text-book selling business, taught classes for other businesses, did freelance editing, found temporary jobs on Craiglist, and worked at a summer camp. Each little bit helped while my company was still getting off the ground.

As a recent GRS commenter pointed out, there aren’t a whole lot of stories out there about single, successful entrepreneurs. Not having a partner to fall back on can make starting a business a lot more difficult, but it is quite satisfying to build something awesome all on your own.

My fiancé and I are both very responsible with money — neither of us has any credit card debt or late fees on our records — but we have very different philosophies about money. I’ve always been a saver, and he’s always been a spender.

I make around $25,000 a year, he makes about three times that. I always knew my chosen career field was not a profitable one, and have always saved with that in mind. He doesn’t enjoy his job as much as I do, and gets most of his joy in life from spending the money he makes on things he really wants. His purchases aren’t frivolous — he researches what he’s getting, waits until they are on sale to buy them, and uses them extensively once he’s bought them — but he does spend most of what he makes every month.

He has shown willingness to compromise. At my insistence, he’s started an emergency fund and is contributing towards his retirement account, but he still feels that he makes money so he can spend it on things he wants.

With that in mind: What suggestions do readers have for a responsible, soon-to-be-married couple with a very different philosophy on money and a significant income disparity? Has anyone encountered this and found a good way of merging finances?

Elaine’s in a tough situation, and she needs to be careful about how she proceeds. In every relationship, the partners will have certain goals that don’t align with each other. But it’s important to make sure your common goals are met before pursuing personal passions. The tough part is determining exactly what those common goals are.

Here are a few ways to be sure that both partners are on the same page and that nobody feels singled out as the bad guy:

• Regularly review accounts. Schedule regular times to go over the household finances. Some couples do this weekly; others do it once or twice a month. Be sure to review upcoming income and expenses, and to deal with any unexpected budget items.
• Don’t be controlling. Take “you” and “I” out of your budget conversations; replace them with “we” and us”. Each partner needs to feel as if they’re involved in the household finances. If you unilaterally tell you husband he can’t spend money on his hobbies, he’s going to be resentful. Work together to find common ground.
• Be supportive. Find ways to encourage each other toward your shared and separate goals. If your wife asks you to call her out on bad behavior, do it. If she wants advice, give it. Don’t lecture and don’t act superior, but help your partner improve.
• Play to your strengths. Some people hate looking at the Big Picture — they don’t care about retirement savings, interest rates, or the Dow Jones Industrial Average. Others don’t like nitty-gritty stuff like clipping coupons or looking for sales. Let each partner be in charge of the stuff they’re good at.

It’s rare that partners agree completely on how to handle their money. They key is to find as much common ground as possible, and then to compromise on the rest.

We’ve talked a lot in the past about whether couples should keep joint or separate finances. I don’t believe there’s any one right answer. It depends on the couple. In the case of Elaine and her husband, I think there are three good options:

• Joint finances with an adult allowance system. Elaine and her partner would pool their money in shared accounts, and then withdraw a fixed amount into personal accounts each month. (He would probably withdraw more since he contributes more.)
• Proportional finances. Elaine and her fiancé would contribute money to their joint accounts based on the proportion of their income. Since he makes three times what she does, he would contribute three times as much as she does to the joint finances. After funding the joint accounts, both partners could do whatever they wanted with their leftover money.
• Separate finances. A final option is for Elaine and her husband-to-be to keep completely separate finances, dividing the household bills in some way they find equitable. That’s what Kris and I did, and it worked for 23 years. We never fought about money.

So, what do you think? Based on the info Elaine provided (and based on your own experience), how should she and her partner work together to cope with their different income levels and their different financial philosophies?

I was cleaning the kitchen and listening to NPR (my default state) when A.J. Jacobs came on, discussing the various diets he’d committed to for Drop Dead Healthy, his latest stunt journalism book — this guy practically invented the genre. Naturally, most of the diets were a bust, but he did conclude that exercise was always a smart way to keep slim. “I literally run errands! So, I’ll run to the drugstore, buy toothpaste and then run home,” he told Scott Simon.

I shouted at him, something like, “You stole my line!” But he couldn’t hear me.

I, too, run my errands. With three young children at home and a husband in the military — he’s been away more than he’s been home in the past three years — I have to combine everything. So I run to the bank and I run to the bookstore and I run to buy coffee beans and I run to drop off film at the photo lab. Whenever my parents drop by or a friend tells me he’ll watch the boys for a bit, or now that my oldest is responsible enough to watch his brothers for 25 or 30 minutes while I run somewhere, I’m off, putting as many different to-dos into one small bit of time. I’d just be proud of myself for saving time and multi-tasking, but as I’ve learned, it saves money, too.

It’s a restriction I impose on myself
Running somewhere with a specific need in mind — take Sunday, when I ran to get cash and coffee beans — really limits my extraneous shopping. Cash fits in any pocket and I can carry one small-but-bulky item in my running vest pocket. So when I happened to stop by the bookstore to check out the 30% off local presses sale they were having, I found a great deal on a book I want. But run 1.75 miles with a book and a bag of coffee beans? Awkward and I couldn’t really afford it. I left the book on the shelf.

I’m one of those people who needs a lot of reminders not to overspend, and because I know I’m like that, I appreciate the self-imposed restrictions.

You can get this restriction a number of ways, of course — many of our readers carry only cash that they have budgeted for the shopping trip, day, or spending category. But I particularly like the run-your-errands strategy, because it includes some side benefits that may also lower my expenses too (now and in the future): I don’t have to pay for a gym, and we all know that exercise can decrease potential future health issues.

Avoiding associated spending
Another thing running my errands does for me is keeps me from what I call “associated spending.” You probably know what this is even if I made up the term: for me, it’s stopping when I’m out for a cappuccino or a quick lunch. I do it often when I’m with one of my children, especially if we’re bundling errands together. We’re in the bookstore, and there’s the coffee shop next door! We’re hungry already and we didn’t bring snacks. Oh, and let’s buy a little toy because it’s so adorable and I really don’t want to get in this argument right now. Mom! Did you realize the grocery store is only two blocks away from the used game store?

If I’m running and hurrying back to my kids — either because I don’t want to leave the oldest in charge for all that long, or because my friends and family only have so much patience — there’s no way I’ll stop for a cappuccino or give in to the now-nonexistent wheedling.

If you’re not up for running your errands, you could achieve this by setting yourself a time limit or going on your lunch break, when you have to be back at a specific time and won’t be able to dawdle.

The blessing of paying for child care
With my husband away, I have to pay if I want to leave the house at night. (I’ve learned after too many very bad choices made by my well-meaning relatives that free babysitting is never free. I’ll be paying in counseling and nighttime terrors for that R-rated movie Aunt E. let my kid watch for years.) I’ve figured it out down to the minute: for most of my fantastic and well-worth-it babysitters, it’s $1 for every five minutes.

This means my nights out on the town are few and far between. I go to a writer’s group once a week, and bring chocolate ($5) and very occasionally a bottle of wine ($8-10). As my babysitting is so expensive and I don’t like to leave my kids too frequently, I rarely go out for dinner or drinks with friends — maybe once a month or less. While I’d of course love to have the going out experience more often, the practicality is too dear and I see this as a blessing: it’s so easy to spend $50 or more without thinking much of it at a nice restaurant or wine bar. Instead, I meet friends with kids at parks or coffee shops or at each others’ houses, where it’s a lot harder to realize that you’ve ordered $30 in drinks and you still have to leave a tip.

For couples, this can represent itself as enjoying “nights in” rather than going out for date nights; putting the kids to bed early if they’re young, or letting them stay up late watching a (parent-approved!) movie if they’re older, and having alone time in another part of the house without having to leave a tip. There’s something about that psychological jolt of having to hand a teenager $40 or $50 that can help keep us from swiping the credit card at at brew pub.

Restrict yourself — it’s freeing!
While my methods may not work for everyone (and lots of you probably don’t have kids which impose their owns sorts of limits), if you need some psychological barriers to spending, there are plenty of ways you can join in the fun. And when I say “family,” below, I mean childless couples and empty nesters, too! Here are a few:

• Ride a bike or take the bus, or use the smallest family vehicle, for errands. I have a cargo bike that can load so this wouldn’t work much for me. But if you can’t carry a lot home, you’ll buy less. It’s a pretty simple and elegant restriction. Try it next time you go to IKEA!
• Commit to only going out to restaurants in your local entertainment book. The “Chinook Book” is a local entertainment-style book that is in several Western U.S. cities now; and I feel confident the restaurants with coupons in the book are good choices. But keeping myself to those restaurants (and those with coupons I haven’t used) would be a great way to limit my spending.
• Make a family “in” night tradition. We have an absolutely sacred Friday Family Movie (and Pizza) Night. My kids have been asking for other traditions, too, like game night. As long as you’re not ordering expensive to-go food (we only order pizza once a month or so, making it from scratch or doing the frozen Trader Joe’s variety other weeks), it’s a great way to be together and to enjoy yourselves without contributing to the family credit card balance.
• Set family goals. If you have kids, they may not get excited about financial goals — or maybe they will — but either way, you can exploit it for savings. Maybe you’ll work to identify two dozen bird varieties in your local parks (you’d be amazed at how easy that is!). Maybe you’ll try to run a 5k together, and spend your free time training. Maybe you can learn a language together (enough to go on a family vacation with all the money you save). Maybe you just want to save up enough for a big birthday party. Creating a family goal is a good way to share your restrictions and have something to fill your time in a positive way so you won’t spend money.

Do you need restrictions like these to save money, or are you a spending Jedi able to control yourself with no effort at all? Have you tried any of the tips above or others I haven’t mentioned?

Retirement planning is ultimately a math equation: Input several variables, and estimate whether what you’ll have will pay for what you need. The challenge is that many of these variables are future values that are unknowable today. However, that doesn’t mean we can’t make some educated guesses. So let’s glance into our murky crystal ball and examine the “what you’ll need” part of the equation – how much the retired life will cost you each year.

The standard rule of thumb is that retirees need 70% to 80% of their pre-retirement income. To see if this has any basis in reality, let’s investigate how spending changes as we age by looking at the Consumer Expenditure Survey, produced every year by the U.S. Bureau of Labor Statistics. (Motto: “You’re More Than a Number, Though Not to Us.”) The following table highlights average income and expenditures of households led by people in different age groups. (I selectively chose particular categories; however, the full survey has many more items.)

As you can see, expenditures peak somewhere between ages 45 and 54, and then gradually decline. Here are some of the reasons.

• Fewer people under the roof. Eventually, the kids leave the house and become adults, and you don’t have to spend so much money on food, utilities, education, and Febreze. Also — and this is the sad part — a spouse will pass away. When a two-person household goes down to a one-person household, expenses drop by approximately 30%.
• We eat less as we age. As our metabolisms slow down, so does our need for calories. Unfortunately, another reason some older people eat less is increased difficulty with shopping and cooking.
• The mortgage eventually gets paid off. Fifty-five percent of households in the 45-54 age group have a mortgage, whereas just 13% of the 75-and-older group still have that monthly payment.
• We just slow down. As we age, we spend less on entertainment, clothes, travel, and other semi-discretionary expenses. As a writer and former English teacher who is married to a writer, I was heartened to see that expenditures on “Reading” generally increase as we age, with just a slight dip after age 75.
• We don’t save for retirement forever. Once you retire, you’ll stop paying the 7.65% FICA tax that pays for Social Security and Medicare (15.3% if you’re self-employed) and you’ll stop contributing to your 401(k)s, IRAs, and other savings vehicles. This alone could shave 15% to 25% off your pre-retirement expenses.
• Uncle Sam likes older people. Senior citizens pay much less in taxes, for several reasons: They receive a higher standard deduction, most Social Security is not taxed, and other sources of income — such as qualified dividends, municipal bond interest, and long-term capital gains — are taxed at lower rates than ordinary income. Plus, as you can see from the first row in the table above, income declines as we age, which puts most older people in the bottom two tax brackets.

Not every expense decreases as we age — notably, health care costs increase. Also, there’s a legitimate question about whether senior spending declines out of choice or necessity — i.e., retirees would spend more if they had more. However, for many of the categories, the spending declines are the logical result of getting older and not working anymore. Thus, on the whole, the evidence indicates that the old rule of thumb — “you’ll need 70% to 80% of your pre-retirement income in retirement” — has its foundation in reality.

But you’re not a thumb
However, while the average retiree spends less than the average 50-year-old, this is not the case for every retiree. Many spend quite a bit more, especially in the first few years of retirement, as they fill their newfound free time with travel, hobbies, classes, and other forms of recreation. Others see their income needs drop to half of their pre-retirement income. So when it comes to your own financial planning, especially once you’re within a decade of retirement, it’s important to actually look at your budget and estimate how much you’ll actually need after you kiss the boss good-bye.

Growing up, I remember watching shows like “Lassie” and movies like “Old Yeller” and “Where the Red Fern Grows”. These were old movies when I was a kid, but they were free to rent from the library, so we watched more than our fair share of old movies.

Because of those shows, I always thought it would have been nice to have a dog. The closest thing we had to a family pet was a turtle that my grandfather and I caught on a fishing trip. I had to keep it outside in a small tub, and after a week or two he ended up missing. Fast forward to adulthood. After buying our house in the fall of 2008, we soon decided to get a dog.

After researching different breeds online, we decided to adopt a retired racing greyhound. He’s been a great dog, and we have no regrets about getting him. He’s well-trained and gets along great with our baby boy. The adoption fee was something like $250, and that included neutering, three months of heart-worm pills, a leash, and a collar. I thought this was very reasonable. We knew there would be some upfront costs, such as a bed, crate, and some toys. And we knew he would need food and vet checkups.

I “knew” that we would have all these expenses. But we were so excited about getting a dog and didn’t really think too much about the long-term costs. I think a lot of people tend to follow that same thought process about getting a pet. It seems like a really good idea, and the upfront costs aren’t too bad. But for a lot people the recurring costs of pet ownership are enough to stretch their monthly budget over the limit of what they can really afford.

The true costs
I just reviewed the final figures for our 2011 expenses (I’m an accountant; I just can’t help myself), and the line item for pets is pretty steep indeed. We spent just over $1,300 on our dog, or around $110 a month. Here is the breakdown:

• Food: $912/year ($76/month)
• Medication (heart-worm and flea preventative): $176/year ($15/month)
• Toys and treats: $100/year ($8/month)
• Vet bills: $120/year ($10/month)

Our annual expense runs a little higher than the national average. According to the American Society for the Prevention of Cruelty to Animals, the average annual cost for a large dog is around $900. What drives our cost higher is food. Our dog has some kidney issues and is on special food to help process the nutrients in his food. Needless to say, this food is substantially more expensive than the Purina we used to buy him. The point is that you never know when something like this will come about and drive up your monthly expenses. Another example? In 2010 we found our dog had a small lump growing on his belly that cost $400 to remove. Thankfully that was only a one-time thing, but again you never know what’s going to happen.

The benefits
While the costs are certainly significant, there are also great benefits to having a dog. We love our dog and would no sooner give him up than we would our son. He’s a great companion and greets me at the door with his tail wagging every evening. When it’s nice outside, he forces us to exercise by taking him out for a walk in the evenings. He even provides some security as he can look pretty intimidating (though he wouldn’t hurt a thing). As our son gets older, it’s nice to know that he’ll have a dog to keep him company. They can play together out in the yard, chase each other through the house, and all those other things little boys do with their dogs. I remember going to my friend’s house and playing with his dogs and what fun it was.

Even going beyond the intangible benefits of pet ownership, there are actual physical benefits as well. A number of studies have shown that pet owners are less stressed, have lower cholesterol, and can even live longer. See this article at WebMD for 27 such benefits. Our dog greatly enriches our lives. To us the benefits definitely outweigh the costs.

The bottom line
This is not to say that everyone should or shouldn’t get a pet, but before you actually go and get one you need to seriously look into the future costs and make sure there is room in your monthly budget to handle it. The last thing anyone wants is to bond with a pet for a year or two, then realize that it’s just too difficult to make ends meet from month to month.

How much do you spend on your pets each month? Do you budget for regular pet expenses and unexpected bills?

One bond that Castle and I share is a desire to improve our lives. Just as I’ve lost fifty pounds over the past couple of years, she’s in the middle of a weight-loss journey. But it’s more than that. I’m constantly trying to become a better person, and so is she.

Last week on our walk, she shared the secret to her recent success.

Just One Thing
“For me,” she said, “the key is to continually try new things. Have I told you about my Just One Thing project?”

“No,” I said. “What is it?”

“Well,” she said, “it works like this. Nearly every day — not every day, but most days — I try to do one new thing, or I try to do one thing differently. It doesn’t matter what it is. It can big or it can be small. But the key is, I’m trying to do something different.”

“Like what?” I asked. “What sorts of things are you’re trying?”

“Well, take eye contact, for instance. I realized a few weeks ago that I wasn’t maintaining eye contact with people. It’s because I’m shy, but it might come across as if I don’t care about people. So, I decided one day to practice keeping eye contact.”

“How’d it work?” I asked.

“It was amazing,” Castle said. “People responded much more positively to me. Of course, some guys see the eye contact as flirting, but mostly this is a change I want to keep. See, I don’t keep all of the changes I make. The goal is just to try something new for one day. If I don’t like it, I don’t need to continue. But it doesn’t hurt me to try anything for just one day, right?”

“You know, I kind of like this idea,” I said. “What else have you done?”

“Well, some days I try a new exercise at the gym. Some days I try a new food. Some days I try something new with my art. But often it’s something simple, something that might even seem silly. Like I decided to wear lip gloss again. Don’t laugh. I used to wear lip gloss all the time, but I stopped for some reason. It’s a small thing, but I find it makes me feel more put together. I tried it for one day, and now it’s back to being part of my daily routine.”

“So, not all of the things you try need to be life changing?” I asked.

“Not at all!” said Castle. “In fact, most of them are silly little things that don’t make a huge difference, things like wearing lip gloss or making eye contact. But the thing is, even if no one change is earth-shattering, taken together these small changes make me feel better about myself. These little changes make life fun. They make it interesting.”

One Thing at a Time
Though Castle is using the Just One Thing approach to make small daily changes, I think the idea can be applied to larger parts of life.

For instance, what if instead of making one small change each day, you made one large change every month? What would that be like? Sure, it’s more difficult to commit to a change for thirty days, but that’s still a short enough time that most people could commit to make most changes. But it’s a long enough time that if the change is successful, it will have become a habit.

What sorts of changes could you try for just one month? How about taking your lunch to work instead of buying it? What about biking or taking public transportation instead of driving? You might try going to bed early and getting up early. Or committing to exercise for 30 minutes every day. Or not spending any money on impulse.

The beauty of doing Just One Thing for a day (or thirty days) is that you can focus your attention on that thing — and ignore everything else. You may recall that I’m a recent convert to the one-goal-at-a-time method of change. I used to try many things at once, but I found that doing so made me distracted. I couldn’t put my full attention into any one thing. Now when I want to change, I focus on just one thing — sort of the way Castle tries just one thing at a time. My success rate is much higher at making changes this way.

Self-improvement isn’t easy. Because it’s so easy to remain complacent, change can be tough. But sometimes there are ways to make change more effective. I think Castle’s Just One Thing method is one of them.

When you decide to make changes to your life, how do you go about it? Have you tried something like Castle’s method before? Do you find that it’s more effective focus on just one thing? Or do you have better luck when you attack multiple changes at once? What methods do you use to make sure changes stick?

In the Beginning…
In April 2006, I was still deep in debt. I’d begun to turn things around, but I still felt overwhelmed by how much I owed. I was also still selling custom boxes for my family’s box factory, doing half-ass work at a job I hated. My personal blog had a modest audience (mostly friends and family who didn’t mind reading about my obsessions with cats, computers, and comics), and I figured it’d be fun to start another blog: a blog about money.

Now, six years later, my life has changed completely.

• In December 2007, I paid off the last of my consumer debt. After 20 years, the burden was gone.
• In March 2008, I quit my day job. For the past four years, I’ve been writing full time.
• In April 2009, I sold Get Rich Slowly, a move that allowed me to focus more on the writing and editing while off-loading the business stuff on somebody else. For more than half its life, GRS has been owned by somebody other than me.
• At first, I wrote solely for Get Rich Slowly. Gradually, though, I’ve branched out. I wrote Your Money: The Missing Manual. I have a monthly column in Entrepreneur magazine (and had a weekly column at the Time magazine website until the workload became too great). And I’ve contributed to NPR, CNN, CNBC, and many other books and magazines.
• Now, Get Rich Slowly is a multi-author blog. To avoid burn-out, I’ve brought in other great writers to share what they know about personal finance. This gives me time to pursue other projects, such as learning Spanish and writing other blogs.

Most of all, I’ve learned the power of targeted saving and conscious spending. By choosing how I want to use my money, I’m able to do the things I want most. Why did it take me forty years to learn this?

The Get Rich Slowly Philosophy
When I started this blog, I didn’t have a coherent financial philosophy. I was making things up as I went. I read books and blogs and magazine articles — basically, I read everything about money I could find. In time, I developed a set of personal financial guidelines.

Based on my research — and my experience with what does and doesn’t work — I’ve compiled a list of fifteen tenets that form the basis of everything I write. Some of these rules draw on age-old wisdom: “Saving must be a priority” is just the ancient truth that you’ve got to “pay yourself first”, for example. But other rules — such as “do what works for you” — I came up with on my own.

The Get Rich Slowly philosophy currently comprises these fifteen tenets:

1. Money is more about mind than it is about math. That is, financial success is more about mastering the mental game of money than about understanding the numbers. The math of personal finance is simple — spend less than you earn — it’s controlling your habits and emotions that’s difficult.
2. The road to wealth is paved with goals. Without financial goals, you have no direction. If you have no direction, it’s easy to spend money on things you’ll regret later. But if you’re saving for a house, your daughter’s college education, or a trip to Europe, your goal will keep you focused, making it easier to spend on what’s important and ignore the things that aren’t.
3. To build wealth, you must spend less than you earn. Basic math, yes, but it’s important. Successful personal finance is all about building positive cash flow. By decreasing your spending while increasing your income, you can get out of debt and build wealth.
4. Saving must be a priority. Before you pay your bills, before you buy groceries, before you do anything else, you should set aside some part of your income. If you have to start small, start small. Even $25 a month is good. As you earn more and develop better habits, save as much as possible. (My wife saves nearly a third of her paycheck!)
5. Small amounts matter. Your everyday habits have a huge impact on your financial success. Frugality and thrift help build good habits, and make a real difference over time. Plus, there are tons of opportunities to flex your frugal muscles.
6. Large amounts matter, too. It’s good to clip coupons and to save money on groceries, but it’s even better to save on the big stuff like buying a car or a house. By making smart choices on big-ticket items, you can save thousands of dollars at once.
7. Slow and steady wins the race. The most successful folks are those who work longest and hardest at things they love to do. So try to find ways to make frugality fun, and recognize that you’re in this for the long haul. You’re making a lifestyle change, not looking for a quick fix.
8. The perfect is the enemy of the good. Too many people never get started putting their finances in order because they don’t know that the “best” first step is. Don’t worry about getting things exactly right — just choose a good option and do something to get started.
9. Failure is okay. Everyone makes mistakes — even billionaires like Warren Buffett. Don’t let one slip-up drag you down. One key difference between those who succeed and those who don’t is the ability to recover from a setback and keep marching toward a goal. Use failures to learn what not to do next time.
10. Do what works for you. Each of us is different. We have different goals, personalities, and experiences. We each need to find the tools and techniques that are effective for our own situations. There’s no one right way to save, invest, pay off debt, or buy a house — and don’t believe anyone who tells you there is. Experiment until you find methods that are effective for you.
11. You can have anything you want — but you can’t have everything you want. Being smart with money isn’t about giving up your plasma TV or your daily latte. It’s about setting priorities and managing expectations, about choosing to spend only on the things that matter to you, while cutting costs on the things that don’t.
12. Financial balance lets you enjoy tomorrow and today. You don’t have to choose between spending today and saving for tomorrow. You can do both. Strive for moderation in all things: Pursue your goals, but don’t forget frugality; be frugal, but don’t forget your goals.
13. Action beats inaction. It’s easy to put things off, but the sooner you start moving toward your goals, the easier they’ll be to reach. It’s better to start with small steps today than to wait for that someday when you’ll be able to make great strides. Get moving.
14. Nobody cares more about your money than you do. The advice that others give you is almost always in their best interest, which may or may not be the same as your best interest. Don’t do what others tell you just because they hold a position of authority or seem to have a persuasive argument. Do your own research, get advice from a variety of sources, and in the end, make your own decisions based on your own goals and values.
15. It’s more important to be happy than it is to be rich. Don’t be obsessed with money — it won’t buy you happiness. Sure, money will give you more options in life, but true wealth is about something more. True wealth is about relationships, good health, and ongoing self-improvement.

In the past, I thought “do what works for you” was the most important tenet in this list. It was this site’s unofficial motto. Recently, though, the site’s theme has changed. Now the core value here is “nobody cares more about your money than you do”. Smart money management is all about taking an active role in your financial future, about becoming your own financial guru.

Now, as we do every year, let’s take a trip through the GRS time-machine.

Get Rich Slowly: Year One
When I started Get Rich Slowly, I made several posts per day, most of which were short summaries of things I’d read elsewhere or glimpses at interesting personal-finance products and tools. It was several months before I found the pattern that lasted for the next several years: two posts per day, with the early post being a longer entry.

Most of these early articles were about my personal history, and about the tools and techniques I was using to get out of debt. Here are some of my favorite from that first year:

• The Entrepreneurial Spirit, a Tribute to My Father — My father was an entrepreneur. He was always starting businesses. He was always selling things.
• The Worst Job I Ever Had — I made some poor choices at the end of my college career; as a result, I graduated without a prospect for work. No matter — I lived off my credit cards for a few months, basking in the glow of adulthood. Eventually I realized that I needed to find a job.
• Money Blueprints: What Our Parents Taught Us About Money — I had dinner with two friends from high school last night. We shared good wine, good food, and, especially, good conversation. We talked about how we perceived money when we were younger.
• Which Online High-Yield Savings Account is Best? — The most-commented post ever on this site, and one folks refer to again and again. It’s not story-oriented, but is simply a resource for finding a good online bank.

Get Rich Slowly: Year Two
The second year of this site saw a creative explosion. As the GRS community grew, it fed me new ideas. And as I defeated debt after debt, I found inspiration all around me. Success with personal finance led to success in other areas of my life. By the end of 2007, I’d managed to pay off the last of my consumer debt; a few months later, I quit the day job to blog full time.

Some of the best stories from this site’s second year include:

• The Power of Yes: A Simple Way to Get More Out of Life — For much of my adult life I’ve been shackled by fear. I’ve been afraid to try new things, afraid to meet new people, afraid of doing anything that might lead to failure. This fear confined me to a narrow comfort zone. Recently, however, I made a single small change that has helped me to overcome my fear, and allowed me to get more out of life.
• You Are Your Own Worst Enemy — My friend Gillian called the other day — she’s been having money trouble and was looking for help. “I’m not really a financial advisor,” I told her. “I write about money, and I try to help people at my web site, but I’m not qualified to coach you one-on-one.” Still, she’s a friend, so I resolved to at least give her some advice.
• Free at Last! Saying Good-Bye to 20 Years of Debt — It took a lot of time and effort, but these actions have finally paid off. Today I wrote a check for the last of my consumer debt. I’m now debt-free, except for my mortgage. I’ve been walking around in a happy little haze all day long.
• Luck is No Accident: 10 Ways to Get More Out of Work and Life — Dale Carnegie once said, “Happiness doesn’t depend on ay external conditions — it is governed by your mental attitude.” Some people might dismiss this as bunk, but research bears it out. Don’t worry about circumstances beyond your control. Learn to control the things you can, including your reaction to the world around you. How you respond to an unfortunate event is often more important than the event itself.

Get Rich Slowly: Year Three
The third year of Get Rich Slowly was turbulent, though most of this occurred behind the scenes. The blog grew rapidly, and I realized it had turned from a hobby to a business. This was both a blessing and a curse. I felt like there was way too much for one man to take care of, so I began to cast around for solutions.

Meanwhile, I found it difficult to find financial balance. I’d been pinching pennies for a long time in order to pay off my debt, and it was tough for me to loosen up. With your help, I eventually realized it was okay to use money to have a little fun. To add to this year’s ups and downs, my best friend died. This had a profound impact on my life and on this blog.

Here are some of the top stories from Get Rich Slowly year three:

• A Real Millionaire Next Door — Kris and I love our neighbors. One of our favorite neighbors is the old guy next door. Let’s call him John. He’s a man who has lived the philosophy I’ve adopted for myself, who has lived the philosophy I espouse on this web site. He’s lived this life and has been successful. He’s a man who is happy and fulfilled. He’s a real-life millionaire next door.
• You Can’t Always Get What You Want — It’s okay to have something in your life that you hate. And it’s okay to have something you want. It’s natural. The problem is that once you get that thing, you’re just going to hate something else, you’re just going to want something more. It’s not want that’s the problem, but the habit of constantly satisfying wants.
• The Razor’s Edge: Lessons in True Wealth — My friend Sparky made what I thought were odd choices. He lived like a monk while at home so that he could spend his money on travel and other things that were important to him. This article describes the lessons he taught me.
• How to Build Confidence and Destroy Fear — Without self-confidence, we have a tendency to make poor decisions. We make choices based on fear instead of what’s best for us. If you lack confidence, you might fill your life with self-destructive behavior. You might work at a job you hate. You may allow yourself to get deep in debt. You may find yourself moving from one bad relationship to another. Without confidence, you don’t allow yourself to pursue your dreams. Here are a few courage-building techniques I’ve picked up over the years.

Get Rich Slowly: Year Four
My fourth year at Get Rich Slowly was one of great personal fulfillment — and great personal struggle. As a result of my best friend’s death, I made some big behind-the-scenes changes so that I could free some time to pursue other life goals. First, though, I wrote Your Money: The Missing Manual, which consumed six months of my life (and led me to gain twenty pounds).

One of the most notable changes this year was the addition of staff writers. This helped take the load off my shoulders, and introduced some new voices around here. The blog also moved to a “one long article a day” format, which most people seem to prefer.

Great articles from year four include:

• How to Negotiate Your Salary — I don’t think people spend enough time looking for ways to boost their income. Learning how to negotiate your salary is one of the best ways to improve your financial well-being.
• Understanding the Federal Budget and The Truth About Taxes — We cannot have informed discussions about taxes and government spending if we don’t have the baseline information. Because my own education on this subject is weak, and because I want GRS readers to be informed, I spent twelve hours last week researching a variety of tax topics. These two articles record my attempts to discover that baseline information.
• The Paradox of Choice and the Dangers of Perfection — While it’s true that some choice is a good thing, too much is not. It’s easy to pick the best option from a pool of three, but it’s difficult to find the perfect choice in a pool of thirty. “Perfect” is a moving target. It’s better to make a solid decision today than a perfect decision next week.
• Spend Based on Who You Are, Not Who You Want to Be — Buy things as rewards, not because you expect merely having them will change who you are. Or, another way to think of it: Buy things as you need them instead of buying them with the expectation that you’ll use them.

Get Rich Slowly: Year Five
In its fifth year, I finally admitted the truth: Get Rich Slowly was no longer about me. Get Rich Slowly is a group blog. Mine is the strongest voice, and I provide the editorial vision, but the multi-author format is here to stay.

This format allows me to incorporate more reader voices. I’ve said all along that you folks are what make Get Rich Slowly great. It’s not me. It’s not the other writers. It’s the community that has grown around this site. I love how freely everyone shares their tips, stories, and experiences. It’s fantastic. Over the past couple of years, I’ve worked to make your voice more prominent on this site, incorporating features like Reader Stories and regular Ask the Readers questions. Lately, I’ve made a couple of other small changes, such as introducing follow-ups to past discussions and making a conscious effort to weave continuity from post-to-post.

Here are some of my favorite stories from year five of GRS:

• The Rewards of Frugality and Thrift (or Why We Scrimp and Save) — I write about thrift and frugality a lot, but it’s only because I recognize their value in helping me obtain my goals.
• Action Not Words: The Difference Between Talkers and Doers — If there’s something you want to be or do, the best way to become that thing is to actually take steps toward it, to move in that direction. Don’t just talk about it, but do something. It doesn’t have to be a big thing. Just take a small step in the right direction every single day.
• From the Rich to the Poor (or What I Learned in Africa) — My trip to Africa changed me. I want to do more with myself. I want to help others, if I can. I have some ideas on how to do this, but time will tell just where this experience will lead me.
• Earning, Spending, and Saving: The Building Blocks of Personal Finance — This article shares a subtle re-structuring in the way I view personal finance. Subtle, but important.

Get Rich Slowly: Year Six
The past year around here has been one characterized by change, especially in my personal life. This personal change has bled into the blog itself, and not always in good ways. As I’m growing, so is Get Rich Slowly. These growing pains are exciting and scary, both at once. During the last year, I’ve written less at this site, but many of my articles have been more intensely personal than ever before.

Here are some of my favorite stories from the past year:

• Drama in Real Life: A Place for Mom — My mother has struggled with mental health problems for over a decade. After a few years of increasingly erratic behavior, my family finally had to take action, we had to help her find a new place to live where she could receive constant supervision.
• America’s Love-Hate Relationship with Wealth — While writing about money here at Get Rich Slowly for the past six years, I’ve noticed that people in general (and Americans in particular) have a complex love-hate relationship with wealth. People want to be rich — but they’re suspicious of those who already are.
• A Place of My Own — The toughest blog post I’ve ever had to write: After months of hinting at things, I reveal that my wife and I are getting a divorce, and that I’ve moved into an apartment of my own. This post explores some of the implications of that decision. (For the record: Kris and I continue to work to maintain the friendship.)
• How and Why I Sold Get Rich Slowly — After years of ignoring offers to buy this site, a close friend’s death (and a fear of burn out) prompted me to sell the blog. This post explains how and why I did so.
• This I Believe: 43 Lessons from 43 Years — My favorite post of the past year: I share the lessons I’ve accumulated in the hopes that I can help you lead a happier, more productive life.

Get Rich Slowly: The Next Generation
What does the future hold for Get Rich Slowly? I’m not sure. For the foreseeable future, things will continue as they are. I’m in the process of finding a good rhythm for the site. I want for my voice to be more prominent here again, and to that end I’m trying to add more short articles throughout the week. I’ve only been partially successful with this so far, but it’s my goal.

Mostly, I want to find a balance between my voice, the voices of the other writers, and your voices, as well. The blog seems to be helping people achieve their financial goals, and that’s what matters most.

Thank you for six great years! I’m happy to have helped so many people, and I appreciate how much you have helped me. I look forward to continuing this journey together.

Birthday cake photo by Aih.