On today’s episode of The Personal Finance Hour, I’ll join Jim from Bargaineering to discuss financial rules of thumb. Rules of thumb are no substitute for proper analysis, but they can be an excellent way to make general plans.

Today we’ll talk about things like:

• When should you repair an appliance and when should you buy new?
• When should you refinance your house?
• How much of your investments should be in stocks?

This show will air live at 3pm Pacific (6pm Eastern). It’s much more entertaining for everyone when you call in to participate. We’d love to hear your rules of thumb. When do you use them — and when don’t you? Call us at 1-347-327-9144 share (or join the rowdy crew in the chat room).

The Personal Finance Hour
There are a few ways you can catch The Personal Finance Hour. You can listen through an audio feed at the show page, or you can also listen through this widget:

We’re also on iTunes! You can subscribe to The Personal Finance Hour as a weekly podcast by following this link (which will open iTunes).

Jim and I do this most Mondays — and we hope you’ll join us. We think this is a fun way to connect with readers and to help everyone learn more about money management. You can catch The Personal Finance Hour live at 3pm Pacific (6pm Eastern) nearly every Monday.

This article is the sixth of a thirteen-part series that explores the core tenets of Get Rich Slowly.

Last winter, Kris and I re-financed our mortgage. In one fell swoop, we trimmed our monthly payments for principal and interest from $1386.60 to $1137.69, boosting our cash flow by $248.91 per month.

If we had consumer debt, that’s $248.91 per month we have could used for our debt snowball. It’s $248.91 per month we could stick in our retirement accounts, or to put into savings accounts for our trip to France next year — or to pursue other hobbies and interests. Really, it’s $248.91 we could use for anything we wanted. (As it happens, we chose to use that money to accelerate our mortgage payments.)

There’s no question that frugality is an important part of personal finance. It’s good to clip coupons and to mend broken furniture and to turn the thermostat down. But it’s even better to shop around for the best deal on a mortgage. Everyday frugality can save you a little money consistently, but by making smart choices on big ticket items, you can save thousands of dollars in one blow. Or you can boost your cash flow by hundreds of dollars per month.

Some people spend so much time sweating the small stuff that they don’t bother to do the same on the big stuff. They’re penny wise and pound foolish, negating their daily scrimping and saving by making poor financial decisions that burden them for years. Kris has a co-worker who once bought an SUV for $43,000. After a year, he decided to trade it in, but could only get $23,000 for it. Ouch!

Now obviously, you only get a few chances in your life to save big on a home or a car. You rarely make financial decisions involving tens (or hundreds) of thousands of dollars.

However, you probably do make other big decisions several times a year. You buy a camera or a television or a new piece of furniture. You book a cruise or fly home for Christmas or hire somebody to work on your house. These are prime opportunities to save money. Whenever you anticipate a big expense, you should look for ways to maximize the value you get for your dollar.

As I’ve shared before, here are the guidelines I use to steer my shopping for big-ticket items:

• Know what you want before you start. If you’re buying a vacuum cleaner, what are you going to use it for? What features do you need in a television? What features do you want? When I bought a small digital camera in 2007, I jotted a quick wishlist: wide-angle lens, large display, easy-to-use menu, good video quality. Some of these items (like wide-angle lens) were much more important than others.
• Set a budget. Ideally, you’d set a budget for your purchase before you started shopping. That’s not realistic. You can’t know how much a dishwasher costs until you actually look at a few. But once you have a sense of the landscape, decide how much you’re willing to spend. If you don’t set a budget to start, it’s easy to succumb to “desire inflation”. When shopping for my digital camera, I had a budget of $300.
• Research your options. Once you’ve created a features list and a budget, search for options that meet your requirements. In most cases, Consumer Reports is a great place to start. Your local public library probably has a copy of the annual Consumer Reports Buying Guide. But don’t discount the web. I often do product research through Amazon.
• Make a selection. Once you’ve done your research, you’ll probably find one or two items that seem most promising. (There’s rarely one perfect choice.) I tend to write down the manufacturer and model number of my top three choices before I move on to the next step. In 2007, I was able to narrow my choices down to two camera models, both of which were within my budget.
• Compare prices. Now that you have a shortlist, begin researching prices. Again, check Amazon. Check other online vendors. Check your local stores. Don’t forget to consider used or refurbished items.
• Make the purchase. Once you find the best source for the item you want, buy it. Be confident that you’ve researched price and features so that you know you’re getting a good deal.
• Protect your investment. The older I get, the better I am about saving warranty information and boxes. (If we had a smaller house, I’d only save boxes for a couple weeks. Because we have space above the garage, I save them forever.) A little foresight when you buy a product can save a lot of headache down the road.

But large amounts don’t just matter when you’re refinancing your house or shopping for a new plasma TV. One of the best ways to discover the power of large amounts is through boosting your income. Whether that’s through negotiating your salary, asking for a raise, or changing careers, a larger income can have a huge impact on your finances.

Remember: Saving money on the little things every day is great, but saving money on the big things can make an awesome difference to your budget.

This is the sixth of a thirteen-part series that explores my financial philosophy. These are the core tenets of Get Rich Slowly. Previous parts included:

• Tenet #1: Money is more about mind than it is about math
• Tenet #2: Goals are the gateway to financial success
• Tenet #3: Spend less than you earn
• Tenet #4: Pay yourself first
• Tenet #5: Small amounts matter
• Tenet #6: Large amounts matter,too

Look for a new installment in this series every Monday through the end of the year.

It’s been a strange October for me. At the first of the month, I began the transition to working full time on my book, Your Money: The Missing Manual. It’s a much different challenge than blogging, and it’s taking all my time. In theory, the book writing will be done in a few months, and then I’ll be able to devote more attention to GRS again! Thank you for your patience while I pursue this life-long goal.

Meanwhile, I was pleased with the stuff I did write here during October, and the contributions from staff writers Adam and April, and from the guest authors. And, of course, I always appreciate your contributions to the discussion.

Here are some of the best Get Rich Slowly articles from the month of October:

• October 1st: Happier
• October 6th: How to stop buying clothes you never wear (by April)
• October 10th: The guilt of wealth
• October 14th: 9 ways to knock the socks off your next landlord (by Baker)
• October 15th: Five steps to six figures in seven years (a guest post from FMF)
• October 17th: What if your high-paying job makes you miserable?
• October 22nd: The paradox of choice and the dangers of perfection

The blog isn’t the only part of this site. If you have burning questions about personal finance, one of the best places to get answers is the Get Rich Slowly discussion forum.

The forum is a great place to chat with your fellow readers. Have questions about emergency funds? Ask! Want to chat about cheap vacations? This is the place to do it. The forums have over 3500 registered users and over 41,500 posts.

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This weblog is a success because of you and your support. As always, I welcome reader contributions, either as ideas for stories, or as guest entries. If you have any comments or requests to improve this site, please feel free to pass them on.

Every month, my wife and I track how much time and money we spend growing food. This is the report for October 2009. (Here are the results for 2008.)

As those of you who follow me on Twitter already know, it’s been a l-o-n-g Saturday filled with all sorts of misadventures. Murphy’s Law has been in full effect this Halloween. I’d meant to post this month-end garden summary around noon, but now will have to do. In fact, there wouldn’t be a summary at all except that my wife sat down and wrote it for me. Here’s what Kris has to say about the month of October…

October arrived with the typical cold and damp, bringing Portland’s garden season to a close. During the fall and winter we’ll enjoy the hearty foods we’ve packed away from this year’s crops, until by early spring we’re ready to begin anew. We’ve been eating fresh fruit and vegetables from our garden patches since May’s first strawberries. Not bad!

The last of the tomatoes
We harvested the last of the garden produce this month. Rain and wind don’t mix well with ripening tomatoes, so I picked 15 pounds of semi-ripened tomatoes to take inside. Stored in a cool place between layers of newspaper, some of these will turn out to be fairly delicious. The rest will rot.

The cucumber plants coughed up enough for another month’s worth of salads, and the beets were ready for roasting. (In fact, I’m roasting some in the oven even as I write this.) In addition, I tore out the jalapeno plants and dried the peppers in slices in the dehydrator. Some went to our neighbor who loves spicy foods; the rest will go into winter cornbread and soups. 

Usually I collect the fallen English walnuts in our front yard, but the squirrels have been especially voracious this year! And my volunteer vine turned out to be a birdhouse gourd that gave me two mature gourds for fall decorating.

The fruits of autumn
I spent time in the mud ripping out cucumber and squash vines, then the beans and tomato plants, and tidying up the apple trees.  We also dug out the beleaguered gooseberry plants and three poorly-producing 25-year-old blueberries. We invested $84 in five new blueberry bushes of various types and sizes. (We’re trying to stagger the berry harvest so it lasts as long as possible.) As we rake leaves in our yard, we’ll spread them onto the garden bed to mulch the asparagus and keep down the weeds over the winter.

In the waning hours of sunshine, early October in our neighborhood smells of Concord grapes. We wait until the scent tells us they’re ready, then head over to the generous neighbor’s yard to pick all we can use. Our own young vines produced a good crop as well. This year, J.D. gathered about 30 gallons of mixed purple and green Concords. I made juice (22 quarts) and grape jelly. It’s a long day but so worth it every time we open a jar. We also made another batch of applesauce from twenty pounds of fruit brought back from an orchard by a friend and fellow canner.

This summer’s total for canned food: 140 quarts of assorted pickles, apple/pear sauce, juices, jams & jellies, salsa and fruit. My pantry is full to bursting! I love being able to eat this local bounty during our winter, rather than buying produce that’s been shipped from far away. 

In addition to the canned food, the freezer is stacked with berries and assorted sauces, and dried fruits and herbs are stored in a dark and dry place. All this “free food” keeps my grocery spending in check even when we’re not eating directly from the garden. (It’s like a savings account for food!)

Monthly totals
The fall is when I tally the herbs for the year. Our herb garden provides me with sprigs and snips all year. The annual herbs are finished (basil, stevia, cilantro) and others die back until spring (lemon balm, oregano, mint, lavender) but the perennials will keep going for our winter kitchen use (rosemary, chives, bay leaf, sage & thyme). Throughout the summer, I’ve dried lavender flowers, mint and lemon balm, stevia and raspberry leaves for making tea infusions.  Altogether, I estimate that the herb garden has produced at least $50 of harvest.

Here’s the tally for October’s harvest:

• 56 jalapeno peppers @ $0.29 = $16.24
• 18 cucumbers @ $1.29/pound (about 5 cukes)  = $4.64
• 5 bunches mixed beets @$2.99/bunch = $14.95
• ~9.64 pounds of tomatoes @$1.99/pound = $19.18
• 8 pounds grapes from our vines @$3/pound = $24.00
• Assorted herbs, all season $50.00
• Costs: 5 blueberry bushes ($84)

Yearly Totals

Here are this year’s totals through the end of October:

Final word
This garden project is not a formal experiment. Kris and I are long-time hobby gardeners, and we have set ways that we do things. This year, we’re trying to incorporate some new ideas from GRS readers, but most of the time we’ll do things the way we have for nearly 15 years.

We’re not trying to be 100% organic (though we are mostly organic through our normal practices). Nor are we trying to be 100% frugal. Instead, we’re trying to see just what our garden costs and produces based on our normal habits. We hope the results of this experiment will help us find new ways to economize and to improve our crops.

You can read about my goals for this series in The year-long GRS project: How much does a garden really save?

p.s. Happy Halloween!

This post is from GRS staff writer April Dykman.

When you have a need or a problem, there’s usually a solution that can be bought. Buying a solution is often the easiest and fastest way to solve a problem — but it also can be the most expensive.

When my husband and I were in debt-repayment mode and had our discretionary spending locked down, I began to see that there are alternative solutions to problems that I once thought could only be solved by buying something. Sometimes quality counts, but more often than not, I would choose a solution that required spending more than necessary, when some forethought might have yielded a solution that was less expensive (or even free). Or maybe if I had stopped to think about it, I’d have realized it wasn’t a critical problem, and I could just choose to do nothing about it.

We set a strict budget while we were paying off our debt, so it was necessary to think about alternatives before every purchase to meet our payment goals. The great thing is that it became ingrained in me, and it’s something I continue to try to do. Here are some of the techniques I use.

Repair what you can
Repair what you have instead of replacing it. You can do this with clothes, appliances, furniture, and cars. I know someone who used throw away a shirt when it was missing a button rather than paying to have it mended, or learning how to sew on a button himself.

But even if you’re not apt to go the do-it-yourself route, sometimes paying for a repair is worth it when it’s something that is expensive or difficult to replace. Last year I took my boots to a shoe doctor for the first time. I was ready to replace them, but I thought I’d try a repair shop first, and I was pleasantly surprised. The boots were re-heeled, the leather was conditioned, and they looked good-as-new. It would have been much more costly to replace them.

Delay spending
Put off the purchase. People do this if they lose their jobs or if they live paycheck-to-paycheck and run out of money at the end of the month. I do it as a game when the credit card closing date is coming up, just to keep the number as low as possible.

Simply shelf the issue for the time being. Give it a week or two. (Or 30 days.) You might even think of a better solution during that period.

You also can do this with regular services. See how long you can stretch out time in between haircuts, for example, especially if your cut is low-maintenance to start. Stretching it out just four more weeks in between appointments reduced what I spend in a year by one-third. And you know, so far my hair is just fine.

Rent, trade, borrow, or take
Can you borrow or trade for a solution? If you want a book or a DVD, try out a service like Book Mooch or Swaptree. Try renting tools if you won’t use them enough to warrant owning them. See if friends or family members will let you borrow a tool or appliance (just be sure to send a lovely thank-you note).

Also, don’t forget to check out sites like Freecycle for furniture, appliances, toys, and more. Items are given away for free; you just pay for the gas to pick up your stuff.

Plan ahead
Many times we overspend because we’re pressed for time. Maybe you have to get a last-minute Christmas gift for a picky relative. The mall is typically where we end up in that kind of situation, and it’s not likely that you’ll find the perfect gift at a killer price when you’re in a hurry.

Planning ahead gives you the time to find the perfect gift at a great price, or maybe even free if you’re really creative.

Planning ahead isn’t limited to gifts. You can plan ahead for travel, social events, house guests, and more. You can plan your expenditures for any situation that you know about ahead of time.

Find creative solutions to achieve your goal
There’s usually more than one way to solve a problem or reach a goal. Craving Chinese take-out? Try making stir-fry at home. Want to have a fun Saturday night with your friends? Throw a potluck or host a game night instead of meeting at a restaurant. Bored and feeling the urge to shop? Try reading a book, going for a walk, or doing something creative.

I’ve found the most inspiration from fellow bloggers:

• Instead of completely redecorating a room, try a bit of wallpaper and a fresh coat of paint.
• Rather than buying new furniture, consider how a few yards of fabric might breathe new life into the furniture you already own.
• Hate the fit of a dress, but love the fabric? Consider a refashion.
• Overwhelmed by the expense of baby gear? Find frugal ways to make it yourself.

A quick Google search usually provides new solutions I might not have thought of on my own.

Do nothing
Just ignore the need and try to do without. A lot of times if you simply do nothing, you find it’s not as bad as you thought. The best personal example of this was our decision to do nothing about replacing our second car. We also do this when we’re swept off our feet by fancy kitchen gear, and then realize that our cast iron Dutch oven may not be as gorgeous as a porcelain enamel Le Creuset, but it gets the job done.

Make a habit out of questioning your purchases, and try a quick Internet search to see if there’s a less expensive solution out there.

What about you? What have you done lately to improvise, get by with what you have, or find a cheap solution, instead of buying something new? Share your tips!

This is a guest post from Andy Jolls, founder of VideoCreditScore.com. Andy ran the myFICO.com business for a number of years and now educates consumers with free credit videos. You can follow him on Twitter at @vidcredit.

My wife and I were married a few years ago. I was working at myFICO at the time we got engaged, so I was already swimming in the world of credit, debt, and personal finance.

In fact, Suze Orman was a partner of myFICO, so I was exposed to a lot of her principles. For example, she believes that all couples should go through the prenuptial agreement process, which seems like heresy to most of her viewers. The “pre-nup” has negative connotations for most people, but Orman has a different spin on it — which I adopted.

Her concept is that a pre-nup doesn’t need to be focused on a negative outcome of divorce. Instead, it can be used as an exercise to really talk about money, and especially values around money. Her thinking is that if a couple can get through a pre-nup, they’ll be better equipped to handle financial issues down the road. Orman believes that every couple should have a pre-nup, and that it isn’t a tool just for wealthy people.

So, Molly and I decided to do a pre-nup. We told friends that we intended to do a pre-nup and the reactions were, perhaps, unsurprising. Most looked at me with disdain, as if it were something I was forcing her to do. But we held firm because we knew the data: 80% of all divorces are related to money issues. Over half of credit distress issues come from an estranged spouse.

Honestly, the process was awkward at times. But mostly, it was a healthy discussion about goals, fairness, and respect. It was a chance for each of us to show each our true character. I learned what was important to Molly, and she learned what was important to me.

To be frugal, we had a lawyer friend draft up the standard documents, and then we each hired an attorney to make sure we were covering all the bases.

To those of you who say, “I don’t need a pre-nup to have great communication with my spouse!”, I say this: There’s a value you can’t see until you go through it. You are forced to show more of who you really are, and it’s hard to force that in the courting stage.

In the end, the process was cathartic. Now our money discussions don’t involve communication issues. Don’t get me wrong: Like most couples, we have disagreements about how to spend money! But we feel great about the transparency the pre-nup provided, and the fact that it’s made us better communicators.

Do you have experience with a pre-nuptial agreement? How do you feel about the process? Would you recommend it to others?