One recurring theme of personal finance books is that it's easier to accumulate wealth by working for yourself than by working for others. Many have heard this maxim, but few have heeded it. Some want to, but don't know how to begin.

A century ago, Russell Conwell was famous for his traveling lecture in which he encouraged listeners to find the "acres of diamonds" in their own backyards. Conwell was born in Massachusetts in 1843. During the Civil War, he served as a captain in the Union army. He studied law, but ultimately became a Baptist minister and a popular public speaker. "Acres of Diamonds" was his most famous talk. (He delivered this lecture over 6000 times!) Conwell also founded Temple University.

Conwell was one of the original motivational speakers.

Kris and I received $2789 in tax refunds this year.

Already I can hear the sound of hundreds of heads thumping against hundreds of desks. Many of you are wailing, "Why?! Why?! Why?!" Of all the financial choices a person can make, getting a large refund is universally considered one of the dumbest. Magazines advise against it. Books advise against it. Blogs advise against it. Yet every year, millions of Americans like me use their tax refund as a sort of forced savings account.

Why do we do it?

You've heard that to take control of you finances you sould track every penny you spend. You'd like to try this, but it sounds like such a pain. There's so much paperwork involved. You lose receipts. You forget when bills are due. It's hard enough making sure the bare necessities are tackled — who has time to track every penny?

I've been there. My financial life used to be a mess. Whenever a bill was due, I had to play a game of hide-and-seek to find it. I often overdrew my checking account because I'd lost track of how much money I had. Eventually I learned that it's easier to track your finances if you keep them organized.

To stay on top of things, you need to have a system. You also need to reduce the amount of information coming in; you need to keep all of your information in one place; and you need to process your finances regularly. Continue reading...

I had dinner with two friends from high school last night. We shared good wine, good food, and, especially, good conversation. Much of our discussion focused on our shared history: the things we did twenty years ago (or 25!) that now seem as if they might have been done by a stranger. (Yet those strangers were us.) We talked about how we perceived money when we were younger.

Sparky and Stew grew up down the road from each other. I didn't meet either of them until junior high school. Stew's family was poor. They lived in a single-wide mobile home. His father built bar stools in the garage; his mother waited tables. "I remember your dad as an entrepreneur," Sparky said last night. "I remember him building those stools. I admired that."

"Yeah, he was a sort of entrepreneur," Stew said. "He tried, but he could never really make a go of it. We couldn't survive on the money he brought in making bar stools. In fact, he financed that operation on credit cards. We lived on the tips my mom brought home from waiting tables. It seemed like she was always working to get us money. She hoarded her money. She watched it. She had to make it last."

Advertising is powerful. Avoiding it — in print, on radio, on television — is one of the best ways to control your urge to spend. When you willingly expose yourself to commercial pitches, you risk spending more than you intend. I've posted two articles recently about how marketing manipulates us to buy things. Allow me to belabor this point one last time before I move on. It's important.

Corporations manipulate us in subtle ways. We know television commercials are designed to sell us things, but how many really understand that their power is felt primarily at a subconscious level, beneath awareness? It's not that a Taco Bell commercial makes you go buy a chalupa now; it's that weeks later you'll find yourself pulling into a drive-thru when you could have been home in a few minutes preparing a salad.

The other day I wrote that people who watch the Super Bowl just for the commercials may be sabotaging themselves. But it's not just television — marketers target us constantly. I could just as easily write about my own foolish choices. Every time Steve Jobs gives a keynote address, for example, I follow the live text updates. When the speech is over, I download the video. I willingly expose myself to these marketing machinations. And wouldn't you know it? My life is filled with Apple products. (My mind is working overtime trying to find a way to rationalize an iPhone.)

You can make money from your hobby.

Whether you knit, or write, or make photographs, or grow a vegetable garden, or tinker with cars, or build websites, or collect ancient coins — you can make money from your hobby.

I'm not saying it's possible to get rich by playing your violin at weddings, or by weaving baskets from pine needles, but earning money from a hobby is a nice way to get paid for doing something you would do anyhow. Continue reading...

In 1913, Wyoming ratified the 16th Amendment, providing the three-quarter majority of states necessary to amend the Constitution. The 16th Amendment gave Congress the authority to enact an income tax. That same year, the first Form 1040 appeared after Congress levied a 1 percent tax on net personal incomes above $3,000 with a 6 percent surtax on incomes of more than $500,000.

— A Brief History of the IRS

It's February. Tax season is in full swing. Employers, banks, and investment firms have mailed out W-2s and 1099s and other miscellaneous tax documents. These are beginning to pile up on kitchen tables across the country. Over the next few weeks people will sit down to puzzle out their tax situation. Continue reading...

Yesterday The Consumerist pointed to a couple of Curbly posts about how to buy stuff on Craigslist [one, two]. These articles have some good tips, but I think there's more to say.

My Craigslist Experience

Cragislist is one of the seven wonders of the internet. You can use it to find a job, buy a car, get a date for Saturday night, and sell that old couch. The site is free to use for almost everything. It's community-policed, which means spam is taken down as users flag it. Kris and I made extensive use of Craigslist when we bought our new house. Over the past three years we've purchased:

• 67" x 36" antique mirror with beveled edge: $45
• Another mirror, battered but okay: $20 and a long wait in traffic
• Solid cherry Dania shaker desk: $175 and buyer's remorse
• A housekeeper to perform a final, thorough cleaning when we moved out of our previous house: $75
• A futon bed/couch in excellent condition: $100
• "Cool, stout wooden chair" for my smoking porch: $25
• A 30 x 60 folding table: $30
• Two shelving units stolen from Borders by disgruntled employees: $20
• Free-standing metal cabinet that matches those in our kitchen, delivered: $75
• Newer double bed with metal frame: $50
• Doctor's balance scale: $30
• Box of 40+ wine glasses: $20
• An old rototiller: $50 (which I sold two years later for $30)

We've also swapped some stuff, too.

For 35 years, Bay Area finance revolutionaries have been pushing a personal investing strategy that brokers despise and hope you ignore. [This is] the story of a rebellion that's slowly but surely putting money into the pockets of millions of Americans, winning powerful converts, and making money managers from California Street to Wall Street squirm.

So writes Mark Dowie in a recent issue of San Francisco magazine. Dowie describes how Google prepared for its IPO in 2004. Aware that hundreds of young employees would soon be millionaires, the company brought in a series of financial experts to teach them to make smart investment choices.

You don't need to buy a side of beef to get cheap, great-tasting meat. Excellent inexpensive steaks and roasts are available at every supermarket. Here's a brief guide to common cuts. The information in this article is derived from two Cook's Illustrated pieces: "An Illustrated Guide to Beef Roasts" (Nov/Dec 2002) and "Tasting: Inexpensive Steaks" (Sep/Oct 2005).

Inexpensive Steaks

These steaks were priced $6.99/pound or less when Cook's Illustrated tested them in 2005.

Best Cuts for Pan-Searing

Boneless shell sirloin steak (a.k.a. top butt, butt steak, top sirloin butt, center-cut roast) — Very tender texture and beefy flavor. Look for a one-pound piece of uniform 1-1/4 inch thickness. Continue reading...