Yesterday morning, I wrote a fairly controversial article where I described individual stock investing as akin to gambling for the average investor.

The impetus for that article was Jim Cramer’s appearances on CNN just before the Bear Stearns collapse, shouting loudly that Bear Stearns was in great shape. Check it out if you want to get a taste of Cramer’s demeanor and “advice” that turned out to be almost the complete opposite of reality:

Here’s the scoop in a nutshell for those of you who don’t follow such things. Jim Cramer is probably the most vocal and best known advocate of individual stock investing in the United States. Following a very successful stint as a hedge fund manager, Cramer began hosting what became the top-rated show on CNBC, entitled Mad Money, where he basically acts hyperactive, yelling and running around the set voicing his opinions on various individual stocks.

On March 11, 2008, Cramer loudly said on his show that the large investment bank Bear Stearns was in fine shape and that no one should pull their money out of the stock. Within a week, Bear Stearns was being bought out by J.P. Morgan and the stock value had dropped 90%.

When this all unfolded, my reaction was that this was evidence that individual stock picking was basically gambling. If Cramer didn’t know what was coming due to a lack of information, how would anyone else? Even more so, Cramer was adding bad information to the pool – people strictly taking Cramer’s advice would have completely tanked. As I said yesterday morning, individual stock picking is all about information and knowing how to find the right pieces to look at, and if someone who is supposedly a true authority at stock picking couldn’t see something that huge and devastating coming down the pike, an average individual investor has no chance at all.

After some more thinking, I turned the whole situation around again: what if the problem is Cramer himself?

The Cramer Effect
In stock trading, the “Cramer Effect” (or Cramer Bounce) is the positive bounce that most stocks get as soon as they’re mentioned on Cramer’s television show. Because Cramer has such a large audience, there are a lot of people who simply go out and buy a stock based on his recommendation.

However, when I look at the “Cramer Effect,” I think of it more widely. To me, Cramer’s real important effect is that he has built up a substantial interest among a casual crowd in individual stock investing. His show is exciting, loud, and colorful, and thus has attracted an audience that might have otherwise been watching SportsCenter or something like that. Instead, they’re watching Cramer, learning about individual stock investing, hearing about specific instances of incredible returns, and then getting involved themselves.

Is this a financially healthy thing for those people? I think it depends on what they take out of Cramer’s message. Let’s look at both sides of the coin.

Why The Cramer Effect Is Bad
On Mad Money, Cramer has a segment called the Lightning Round, where viewers call in, name a stock, and Cramer gives a buy, hold, or sell recommendation within a second. He does this by simply drawing a very fast conclusion about the sector that stock is in and whether that stock is the best stock in the sector. It’s not based on any sort of thorough research, yet people buy and sell in the real world based on what he says. That’s pretty scary – because someone on television mentions buying or selling a stock based on one second of off the cuff thought, people change their financial position.

The most obvious indication that this phenomenon really does exist is that “Cramer Bounce” I mentioned above – it’s observable and real. A lot of people out there are buying based on what Cramer recommends on his show, and as I said above, that’s pretty scary. Even worse, it teaches really, really poor investment discipline – someone on TV thinks about a stock for one second, makes an off-the-cuff guess, and you’re changing your investment approach? That’s not sound investing at all.

The Beauty Is In The Details
Yet I’m not quite ready to toss Cramer into the trash can. If you actually take the time to sit back and read his books – particularly Real Money, which is by far his best one – you’ll find that the message he talks about is about as far from the Lightning Round as can possibly be.

The big message that you get out of actually reading Real Money is homework, homework, homework. He flat-out says you should not own a stock if you’re not willing to do an hour a week of research on that stock: reading annual reports, listening to conference calls, watching what stock moves the insiders do, reading the news, and so on.

That’s something I can agree with and stand by. You should not own an individual stock unless you have a specific and compelling reason to own that stock. Furthermore, you need to invest the time to make sure your specific and compelling reason hasn’t gone away, which would mean it’s time to sell the stock. If you can’t invest that time, then you might as well go toss your cash on the roulette wheel.

Why Irrational Is “Cool”
So why isn’t that sensible message talked about on television? It is, on occasion – Cramer talks regularly about doing the homework. But that’s not the part of his show that seems exciting. It’s when he shouts, does something crazy, screams “Boo yah!” and such that grabs the attention, and that’s the stuff that’s directly associated with stock picks.

Just a few weeks ago, I talked in detail about Dan Ariely’s book Predictably Irrational, which focuses in on why people make irrational decisions – like, for example, basing your investment strategy on an off-the-cuff remark from a television personality.

Ariely reveals two reasons why Cramer’s seeming irrationality is followed by many people. First is the idea of relativity – they feel a need to be on the cutting edge of stock investing ideas. This is similar to why we feel some sense of jealousy and drive when our neighbors have a nice new car. This is largely the reason why people would watch CNBC and read specific stock investing advice. They feel a need to have “insider knowledge” as relative to others in their cohort – in other words, other individual stock investors, thus they follow stock tips.

The second idea is that of passion. Cramer brings more passion, energy, fire, and drive to the table than about anything else on television. It oozes out of the man – he plainly loves stock investing and that love comes out quite clearly on his show. It rubs off, and that’s how he’s attracted an audience – people like to see others with passion and they tend to believe others that show passion (think of televangelists, for instance).

Combine these two factors, plus the fact that his show has a very action-oriented sensibility, and it’s fairly easy to see why people would follow the quick pick advice and not necessarily follow the “do an hour of research per stock per week” advice.

Some Final Thoughts
Cramer’s got some good things to say if you know where to look and where to listen. The problem is that this isn’t the stuff that excites people and gets high ratings – the stuff he says that’s valuable is the boring stuff. Thus, it’s very easy to just see Cramer’s advice for the excitement, where he runs around on stage like a maniac yelling “BUY BEAR STEARNS!” even though he’s not done the research.

If you really want to get into individual stock investing, read Cramer’s books and do a lot of homework. Don’t jump on an individual stock pick just because you heard about it somewhere – do it for a compelling reason and keep your eye on it carefully to make sure that reason still exists.

And listen to Cramer, too. Listen to the part where he gives advice on how to do the homework, not the part where he yells, tosses a chair, hits a buzzer, and screams “BOO YAH!” That won’t get you very far down the road of financial success.

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

As usual, we’ll start things off with a few links to older articles that directly answer questions I’ve heard recently.
Why television breaks your wallet (my family watches very little television – the only program I’ve seen in the last two and a half weeks was a single episode of Lost – no movies, either)
Ten tips for talking money with your spouse
A simple explanation of how tax brackets actually work
Some inexpensive wine recommendations

And now, a nice healthy batch of reader questions, starting off with a doozy.

Can you succinctly (maybe you already have) explain HOW you are making money through blogging? I know it’s ads, but do people just have to click on the ads, or do they have to follow through with purchases? How many blogs do you have going? Thanks!
- Susannah

I make money via blogging because of the ads, of course. Each time a page loads at The Simple Dollar, on your computer or anyone else’s, I make a fraction of a cent on average. I’m paid mostly based on the ad itself merely being displayed – some of the ads only pay me due to clicks, but they’re mixed in and on the rare side. If you’re a reader who just wants to support me, please don’t click on ads under the idea that a click will pay me – just click on any that actually interest you. I also make some money via the Downloadables on the right hand menu bar – they’re only $2 a pop, but they do add up for me.

The thing is that almost all blogs out there on the internet – the kind where people talk about their pet cat and such, or ones that are very unfocused about the topics they write about, or are written in very poor grammar – don’t get a lot of traffic. Even the most popular personal blogs don’t get above about 1,000 page views a day. Let’s say an average blog – mine or anyone else’s – makes a hypothetical half a cent for each page view (I don’t know for sure what I actually make, so I’m pulling an estimated number out of my hat here). A blog that gets 1,000 page views a day would thus earn $5 a day from their blog because of the displayed ads. Not bad for pocket money.

Now, take a peek at the traffic The Simple Dollar gets. When I peeked at this link just now, it estimated I was getting 25,000 page views a day on average over the last week. At a half cent per page view, that adds up to about $125 on an average day. (Again, note I pulled the “half cent per page view” out of thin air).

Each individual reader doesn’t contribute that much to that amount – if someone looks at three pages in a day, they’re adding a cent and a half. The power is in the volume. I have a large audience, and it’s the volume of that audience that makes it work. Honestly, there aren’t many blogs in the world that ramp up to that level of traffic – the only one I know of that has comparable traffic in the personal finance genre is Get Rich Slowly, and we’re roughly on par with each other.

So, how does one get a blog to that level of traffic? There’s really only one way: write stuff people want to read and then try to make it possible for people to find it and share it with others. The only way to do that is to find a topic you’re passionate about, write about it all the time, and try to hone your writing skills and find your voice along the way.

I’ve come to view a blog as being something like a carnival. There are people all over the place shouting for the attention of people. If you’re not saying something valuable and compelling, well, there are thousands of other booths to see.

It’s not easy. I wrote like a madman over the first year of The Simple Dollar and my audience was small – it grew to this level gradually, not overnight. No success would have happened without the support of a lot of readers who share what I’ve written with others.

If you want to support an independent blog, here’s the single best thing you can do. When you find an article you like at that blog, send the URL for that article to people you know who might enjoy reading it. Also, if one gets a book published or has something downloadable that you can buy, pick it up if it interests you. Another way is that if they’re talking about a book and offer a link to Amazon for that book, use their link to buy it – Amazon usually throws a few pennies back to the blogger for those kinds of purchases. Only click on ads on their site if they are truly interesting to you.

As for other blogs, I currently just write The Simple Dollar. I am tentatively planning a food-oriented blog that will launch on May 1.

How do you handle something you’d rather not do? There is always that one task that makes one’s brain try to ruin the whole process before it will submit to doing it.
- Michael

When I have something I’d rather not do on my list of “stuff I need to do today,” I do it first. It’s the first thing in the day that I tackle.

Why? Most of the things I have to do in a day right now are things I enjoy doing. Thus, I use those things I enjoy as a carrot, a way to lure myself through the slog of stuff I don’t want to do. For example, today I really needed to clean the bathroom and also do some laundry, both tasks I loathe doing. Instead of putting them off and diving into writing – something I love to do – I did those tasks first thing in the morning just as fast as I could. Along the way, I was mostly thinking about the enjoyable things I was going to be doing later on in the day and it gave me a carrot to chase.

Now I’m sitting here writing, doing something I enjoy, while the laundry is running downstairs. The tasks I didn’t want to do are done, I feel a sense of accomplishment, and it’s only 8:30 in the morning. Even better, the rest of the day is filled with stuff I want to be doing.

If you were standing in front of a grocery store, had a five dollar bill in your hand, and had to spend it on one meal for yourself (not your family)…what would you walk out of the grocery store with?
- MS

Frugal grocery shopping, eh? My answer would probably surprise you – I’d go to the deli section, get a half pound of sun dried tomato turkey breast (about $3.50) and a loaf of whole wheat bread ($1.50 or so – although I’d probably prefer to make my own bread). Then I’d have turkey sandwiches. Seriously – I love deli-style sandwiches.

Another option: a bag of dried black beans, a package of tortillas, a fresh tomato, and whatever cheese I could afford. Bean burritos – that actually sounds really good right now.

I have a gift card (American Express) for $100.00 that I’m thinking about how to spend it. It’s quite a bit a money for me – DH and I are on a low fixed income. I “need” so many things. Do I get personal (new sandals for summer, I don’t have any), household linens (my bottom sheet is torn, my bathroom rugs are really old), small kitchen electrics (could use a slow cooker, and/or a rice cooker). Is there some way I can turn it into cash and put it in our (again small) savings account? So many choices. Right now I’m leaning toward either 1) new shoes or 2) convert to cash if I can and put in savings.
- Karen

It depends on how the gift was given. If it was very much in a “spend it however you want” perspective, I’d probably use it on groceries, then pull $100 out of my checking and put it into savings.

However, most gift cards I’ve ever received usually were with a push to spend it on something fun. If that were the case, I’d definitely go personal with it – in fact, I’d probably head directly to Williams-Sonoma, which is where I usually go if I’m ever gifted a small amount of “fun money.”

I’m such a foodie.

Let’s get controversial!

1. What’s your stance on gay marriage?
2. What’s your stance on abortion?
2. Are you a Republican or Democrat and who are you supporting in the upcoming elections?
3. Would you give up your right to vote for a million dollars?
- Money Blue Book

1. My personal feelings aside, the government should have minimal interference with how people should live their lives Thus, this one’s a no-brainer for me. I actually think government shouldn’t recognize marriages, period, but that the government should instead recognize any civil union between two adult people. Marriage is a social and religious construct, not a governmental one.

2. I would never recommend an abortion to any woman – I find the procedure abhorrent. However, I’m not a medical professional nor a psychological one, and thus it’s not fair for me to make a judgement about what’s medically or psychologically the best decision for a woman to make during an unwanted pregnancy. I am a male who isn’t trained in medicine nor in psychology – what right do I have to make a statement about this issue? The government shouldn’t, either. The only authorities I’d ever look towards for guidance on abortion issues are the American Medical Association and the American Psychological Association – these groups are intimately involved in the nuance of such issues. My wife says that makes me pro choice – I think such black-and-white labeling is ridiculous.

3. I have, at various times, been registered both Republican and Democrat and also “affiliated” Libertarian (as you can’t register with that party in Iowa). Of the candidates that appear to have a good chance to be on my Presidential ballot (meaning Obama, Clinton, and McCain), I support Barack Obama because his stances on the issues most important to me (government transparency, protection of civil liberties, a much less interventionist foreign policy) are far closer to my own than Clinton or McCain.

4. My presidential vote, sure. Not my local vote, though, as the local people are the ones that actually shape your day to day life in tons of ways.

Do you think financial bloggers post their honest and unbiased opinion on personal finance ? Are they following the same advise that they post for readers?
- Anand

This is a question that expands to all financial writers – some do, some don’t.

The simple fact of the matter is that even if you know the right thing to do when it comes to money, it’s still very easy to do the wrong thing. I mess up all the time – I buy stuff I don’t really need, like my computer setup.

Are any financial writers flagrantly dishonest? I imagine some are, but most of the ones I know well are pretty honest. Take me, for example – I often “blur” personal details about my life simply for privacy’s sake (things like exact numbers, personal relationships, and such), but I don’t change the story – if I did, there’d be no value in it.

Do I follow my own advice? I wouldn’t be able to switch to writing full time if I didn’t – I’d be buying stupid stuff and probably still living in that old shoebox apartment while still working a nine to five job.

what kind of music do you listen to?
- Nina

I mostly like well-constructed pop songs (stuff like Aimee Mann and Jeff Buckley) and get-me-up-out-of-my-seat rock music (like early AC/DC or Van Halen). I’m often amused by people who are confused when I listen to something subtle and mellow like Hallelujah and follow it with Let There Be Rock.

If I were stuck on a desert island and had only one album to listen to for the rest of my life, it would be Bachelor No. 2 by Aimee Mann.

my boyfriend and i are planning on moving in together after 6 years of dating (4 of which was long distance). he is relocating to where i live to be with me. we are both frugal in different ways however i have some $ saved while he doesn’t since he’s just graduated. what advice can you give people moving in together to start their lives?
- j

My first reaction would be to be very sure that this relationship will last long term before merging your finances. If you merge them immediately then break up in a few months, you’ll wind up feeling like it was a giant mistake, as you’ll be rushing around trying to remove names from accounts, dividing up assets, and so forth. Be careful – I’ve seen it be very nasty before.

When you’re confident about a long term commitment to each other, there are a lot of things to talk about. The first question is whether or not you should combine your finances at all – and it’s not the automatic answer you might think it is. If you combine your finances and you’re not on the same page, it will be a constant source of irritation and can build into a devastating end to the relationship.

After that, there are lots of things to talk about, but my suggestion is focusing in on goals that you share. What do you want to be doing in five years? In twenty years? Once these are in alignment, look into how you can reach those goals and what you both need to do to get there.

If you want to read more, Smart Couples Finish Rich is a good place to start.

How do you manage your writing process? Do you sit down and write the whole post, or do you have a bunch of in-progress articles which you start with outlines, etc. and finish up later? With your post frequency and the fact that you have said you write well in advance, it seems like it would get complicated. What do write your posts with-Word, text editor, etc. Do you keep them all in separate files or write them in wordpress?
- RC

I keep an “idea notebook” with me at all times, as I’ll often have post ideas at the oddest moments (for some reason, lately I’ve had a ton of ideas while grocery shopping). In that idea notebook, I’ll list ideas for posts and sometimes even sketch out the points I want to cover.

When I’m in a writing session, I use a basic text editor – Notepad for Windows or SimpleText for Mac. I usually start with a list of the points I want to cover, then I go through and flesh each of them out. Then I read the entire post again, make some grammatical fixes, and usually post it pretty quickly after that. I save a copy locally, too. I very rarely do any editing within WordPress at all.

I maintain a calendar listing the posts I have scheduled for specific days so that when I write a post, I can pencil it in for a certain day and, if I come up with an urgent one I want to post right now, I can move stuff around on the calendar and then change dates within WordPress.

That’s pretty much it. My actual writing area is pretty sparse – just a big monitor with a keyboard and a mouse and that’s about it in my visual range.

Financial Armageddon? First, let me say that I’ve enjoyed reading your blog off and on for the last few months; however, one question has nagged at me – that is if the “financial armageddon” you claimed to have faced was ever really as dire as you portrayed. It seems to me you turned around your situation with minimal effort and, as often and excessively noted through your posts, now have a huge emergency fund, plenty of money for debt payments, a diversified portfolio, additional savings, and the financial freedom or flexibility to quit your job. Thus, you’ve never really had to manage and cope with debt and finances as many of your readers may have, because your debt (in relation to your income) has never very great to begin with (which I applaud, btw). Another commenter phrased it another way, and asked if finance bloggers actually follow their own advice. I guess my question is more specific – have you ever really needed -truthfully- to follow the advice on debt management and frugality you’ve espoused?
- Greyscott

That’s more a matter for you to judge, not me. I made about $50K a year when I hit the wall. I had $17K in credit card debts, about $40K in student loans, and about $7K or so on a truck loan. My checking account was empty and I had a big handful of bills (both debt repayments and utilities/rent) due before my next paycheck. That’s a pretty bad situation – obviously, it could have been worse, but it was bad enough that it really scared me for the first time in my life. That to me is what a financial armageddon is – it’s when you realize in your inner core that something is genuinely wrong and is damaging your entire life.

I wrote about what I did in the immediate aftermath of that situation. More importantly, though, I scared myself on a deep enough level that I began to rethink my life in a much broader sense, and right at that time when my mind was asking some deep fundamental questions, I read Your Money or Your Life, which pretty much did change my life.

Did I need to go as hardcore as I did? Probably not. Am I glad I did? You bet I am. It changed my life in ways that I couldn’t imagine two years ago when I was holding my son and finally realizing how badly I’d been messing up. As a result, I feel really strongly that taking a radical look at your life and thinking about some of your basic choices is a vital thing, and a healthy dose of frugality and debt reduction is good for everyone.

Put up a picture, Trent! I can’t take an author seriously unless I can imagine what he looks like, how he might speak the information, etc.
- Ethan

It’s been here all along on the about page, but here it is for everyone to see. I’ve got to wonder if anyone out there reading is going to see the picture and have it suddenly click in their mind, “Oh my, I know him!”

Got a question or an article idea? Ask it in the comments.

Most Sundays, The Simple Dollar reviews a personal productivity or personal development book.

A reader wrote to me a while back happily extolling the virtues of Find More Time. I get about ten book recommendations a day (about half of which seem to come straight from publishers), so naturally I was a bit ho-hum about the enthusiasm until I read one key phrase. “It’s basically like GTD for the non-work parts of your life.”

For those of you who aren’t quite into the GTD cult, GTD refers to Getting Things Done, a methodology developed by David Allen for organizing your work tasks mostly by minimizing the “gap time” – the time in the middle you would use to think about what to do next. I’ve been an avid user of GTD for a long time and without it I never would have been able to launch The Simple Dollar.

Naturally, I was intrigued, so I checked Find More Time out from the library. With two kids that I love spending time with and a burgeoning writing career to manage, insights on how to better manage the time I devote to household chores and other drudgery are quite welcome, indeed. Lo and behold, the subtitle right on the cover is How to Get Things Done at Home, Organize Your Life, and Feel Great About It.

Let’s dig in and see what Find More Time can teach us.

A Deeper Look At Find More Time

One aspect of Find More Time that I liked right off the bat was the fact that although it was a lengthy 320 pages that are packed with information, the book itself actually boils down to a checklist of eighty very direct suggestions to follow. The suggestions themselves are each immediate – meaning you can pick them up and do them right away – but also lead to some significant change over time. To me, that is a big part of the value of a book like this: mixing immediacy with lasting change, and mixing bullet-point actions with meaty details. I hope to someday really hit on this kind of a mix in a book of my own.

With each of the sections below, Laura Stack (the author) focuses in on ten specific ideas, describing each of them over several pages. Although I found most of the ideas throughout the book insightful, I’m going to really focus in on two of these ideas per section.

Mastering the First Pillar – Plans
The opening portion of the book focuses in on defining goals and making plans for how to achieve those goals. I’m often amazed when I find that people simply don’t do this – they rarely define large-scale goals for themselves and even fewer actually invest the time to break these goals down into actionable steps.

Maintain a list of my life’s goals and dreams, and make plans for their accomplishments
This is something I sat down and did a while back, defining thirteen goals for my entire life and then defining steps I needed to take to reach each one of them. I even went so far as to discuss in detail my five short term (less than three years) goals. I’ll even share my whole list of thirteen goals with you all, right now.

1. Build up my fitness so that I can do at least rung 30 of the lifetime fitness ladder on a daily basis.
2. Eliminate all of our family’s debt besides our mortgage and build up a $50,000 investment portfolio in three years.
3. Read a significantly challenging book every week.
4. Write a journal of thoughts and memories for my son and for my daughter.
5. Make my writing a full time endeavor. (This one’s done! Hooray!)
6. Write and publish at least five books, one of them fiction.
7. Give each of my children at least one hour of undivided attention each day.
8. Buy a plot of land in the country with significant forestation on it and build a house for my wife and I to grow old in.
9. Go on family vacations to at least four continents before my children graduate high school.
10. Ensure that my children have the means to follow any path they choose when they leave home.
11. Go back to school and get my Master’s degree (at a minimum).
12. Tell my wife and my children that I love each one of them every day.
13. Run for a significant local political office.

If I can do these twelve things, I will have a very complete and content life in every sense I can concieve of. Can you write a similar list for your own life? What’s the first step for each one?

Plan for chaotic transition periods during the day.
Around here, there’s a chaotic period early in the morning when everyone’s getting up and ready for their day. My son is in the bathroom brushing his teeth and shouting about something, my daughter is drooling on the bedsheets while I pull her onesie on over her head, my wife’s stepping out of the shower, and I’m sitting there with my hair disheveled trying to remember everything that needs to be packed away in the diaper bag today.

Stack suggests simply making a checklist of all of the things to be done each morning. Our son needs to get up, brush his teeth, go to the bathroom, get a training pants inspection, pick out clothes, get those clothes on, get his shoes on, and (if he’s going to daycare) gather anything he needs for the day. Our daughter needs to get up, get dressed, get a diaper change, and if she’s going to daycare, get bottles prepared and food stowed away for the day. And that’s just the two kids!

Making a checklist of all of the tasks that need to be done – even if they’re individually no-brainers – makes it easier to just run through the things that need to be done and not waste time thinking about them. In other words, we just make a big list of all of these things and just start running through the list without thinking about them, wringing precious extra seconds and minutes from our morning rush. This really does work quite well, but I’ll admit that I felt silly looking at a checklist with stuff like “Change her diaper” and “Help him with his shoes.” The key was that I didn’t have to think about what to do next – I just glanced at the list and grabbed the next item in line.

Mastering the Second Pillar – Priorities
Even with all of the plans in the world, there are still tons of things to do during a day. How can one choose among them in a way that makes sense both in the short run and in the long run?

Spend enough time with the people that are dear to me.
This is something that most people let slip over time because they view these people as being constants. “I can put off giving Mom a long phone call – she’ll be there tomorrow, after all.” Or, even worse, the Cats in the Cradle scenario: “I’ll spend time with little Timmy later – right now, the big game’s on.” Then the time comes when Mom passes away or the child moves out and you’re left with regret – regret in terms of time not spent with that person that you love.

There really is no better time than right now to spend some time with someone important to you. Give your parents a call. Cancel some plans, take your kid to the park, and play catch with them. Call up an estranged friend of yours and patch things over. The more you put these things off, the more you’ll deeply regret the postponement later.

Make my health a number-one priority.
This is a challenge for me – and for the majority of Americans. 60% of Americans get no exercise at all and a significant portion of those remain get insufficient exercise.

My diet is in pretty good shape – I basically prepare all of my meals at home, my typical breakfast is oatmeal, and my typical lunch is a cold cut turkey sandwich on whole wheat bread. I drink about a gallon of water a day. My problem is really centered on exercise – I literally have to schedule it in each day and make myself do it.

It’s worth it, though. The more I exercise, the better I feel, both mentally and physically. I do a nice exercise session, follow it with a shower, and I feel alive and ready to tackle the mental challenges of the rest of my day.

Mastering the Third Pillar – Personality
This section is mostly about harnessing our individual quirks and turning them towards more productivity rather than less.

Refuse requests when appropriate.
Refusing requests is something that I genuinely need to work on. I often take on extra tasks and responsibilities that I don’t really need to, and it’s usually because I stick my neck out for them. Later on, I find I have far too much on my plate and I regret taking these things on.

The biggest problem is that I tend to seek out problems and want to solve them, even if solving the problem is more than I can chew. Stack’s solution is pretty simple: I just need to regularly remind myself that I can’t solve all of the problems all of the time. Instead, I need to just focus on solving a few of the problems, and solving them well.

Know and honor my energy levels throughout the day.
One of the biggest steps forward I’ve ever taken in terms of productivity is to realize that if I spend all day writing or working at a desk job, I go through a big lull from about 1:30 to 2:30 or so, and then after 4:00, I’m mush. I figured this out by spending a few weeks writing down my perceived energy and concentration level every fifteen minutes throughout the day.

So I changed my routine. Now, I eat lunch at about 11:30 and when I feel that 1:30 lull coming on, I go exercise. I run through my daily exercise routine and, if there’s no children around that I need to watch, I go for a walk. If there are children around, I load them in the stroller and walk. Either way, I spend about forty minutes getting my exercise and follow it up shortly with a shower (again, as soon as I’m free to do that). This leaves me feeling very energetic and mentally engaged and it thus eliminates that downturn at 4:00. On a day focused on writing, my day now ends when I plan for it to end, often when I need to start preparing dinner. Even better, I’m still mentally engaged and energetic when my family arrives home.

Pay attention to your natural energy cycle and respond to it appropriately. It lets you not only maximize your most productive moments, but lets you consider ways to maximize your least productive moments, too.

Mastering the Fourth Pillar – Pests
“Pest” is a general term that Stack uses to refer to the little things that interrupt your day, from emails to phone calls to people just stopping in.

Keep interruptions from wasting my time.
At my previous job, I was largely expected to have my email open at all times, checking the server for new messages every ten minutes, and responding to incoming requests as soon as possible. This was difficult, and often a distraction from getting larger tasks accomplished. Near the end of my tenure, I took to closing my email program for long periods, such as an hour and a half in length, then opening the program and answering all of the built-up emails. It enabled me to focus on some bigger tasks and I found it very refreshing.

Now that I’m effectively on my own, I check email twice a day, period. Between those sessions, I don’t even open up my email program. I also turn my telephone completely off when I want to focus on something, whether it’s writing or spending time with my family. In a nutshell, I don’t need the interruption in my life. If it’s truly urgent, they will call back.

Turn off the technology when with my loved ones.
Of course, that flows right into this point, which I wholeheartedly agree with. If you’re spending quality time with your family, don’t open up the laptop and please, for the love of God, turn that cell phone off. I’ve had dozens of family events over the last few years taken down by people hastily answering their cell phones, sending text messages, browsing on their laptop, or something to that effect.

If you’ve got something urgent going on, great, but don’t let that urgency interrupt quality time with your family. Either turn off the cell phone or turn off the quality time – if you try to juggle both, you’ll just undermine both.

Mastering the Fifth Pillar – Possessions
Here, Laura Stack tackles clutter and “pack ratting,” something that my wife has a strong tendency for. Most of my solutions to that battle involve getting rid of stuff when she’s not paying attention, but maybe Stack has some better solutions.

Set up an effective office space in my home.
In our home, there are three bedrooms on the upper level and one in the basement. We transformed one of the upper-level bedrooms into an office – it has a desk big enough to house a computer workstation and room to write and sort papers (for GTD), plus a big comfortable rocking chair to sit in to read (and occasionally rock children to sleep). In other words, it’s perfect.

But does it help with keeping the house organized. Undoubtedly. All materials related to my writing are in this room – and stay in this room. They don’t leave it unless I’m taking a book with me to read in the family room after the kids go to bed and my wife is doing some take-home work. Within that office, I’m pretty picky about organization, so my workstation space is nearly devoid of anything else. This keeps me on focus and more productive with my writing time – and keeps my professional stuff from trailing all over the house.

Keep my house up neat and tidy up daily.
Before my career switch, we would often do minimal housework during the week and really kick things into high gear on Saturday morning, cleaning the whole house vigorously for a good chunk of the day. Over time, though, I’ve found that by just spending fifteen minutes or so just before bed (when I’m nice and tired) getting some basic household cleaning done, it cuts even more than fifteen minutes out of our weekend chores.

The end result is that we can now fit most of our cleaning into Saturday naptime, leaving us most of the rest of the day to just relax and enjoy a weekend together – and that’s really what I want out of a weekend, not a rushed cleaning that leaves everyone feeling exhausted.

Mastering the Sixth Pillar – Paper
One major challenge I have is with paperwork building up. I currently have a massive pile of stuff that either (a) needs to be filed or (b) needs to be shredded. What kinds of tips does Stack have for these issues?

Create and maintain a filing system that allows me to find papers easily.
I have something of an electronic filing system for these documents that worked very well for a short period – that is, until my scanner decided to give up the ghost. In reality, the problem is in the “maintain” part of the filing system – I’m not maintaining it. Not because I don’t have a scanner, but because I don’t have the initiative to replace the scanner.

That’s about to change. Reading this book really called me on what I was doing to undermine my own plans and I’m going to fix the scanner situation today.

Follow a daily processing system for staying on top of the mail and paperwork.
Aside from the accumulation of stuff that needs to be filed, the basic GTD workflow works well for me. I just dump my mail each day into my pile of “stuff that needs to be dealt with urgently” pile, where all new things go, and then I go through each piece, either discarding it, dealing with it immediately, or putting it in a pile of stuff that’s less urgent.

This works quite well for keeping on top of the mail, as long as I don’t let documents that need to be stored in some fashion accumulate over time.

Mastering the Seventh Pillar – Post
“Post,” in Stack’s parlance, refers to the set of tasks you’re responsible for in the home. I’m responsible for the majority of non-child related tasks like grocery shopping and cooking meals and dishes, largely because my wife is incredibly good at handling upset children – when a child bumps their chin, they come running to her and she’s very good at attending to them and fixing the problem – a certain type of nurturing gene that I don’t express as strongly as she does. The advice in this chapter is pretty solid stuff, helpful for keeping me on the ball.

Hire out simple chores to helpers.
This is something that often meets with debate at our house, but it’s one I find a lot of merit in. Let’s say I’ve figured out in the past that I value my productive time at roughly $30 an hour. Thus, it makes complete sense to me to hire someone to complete menial tasks for rates lower than that. Take, for example, a local woman who cleans houses. She’ll basically houseclean at a rate of about $14 an hour. Now, if I can translate that hour into $30 worth of income, it makes sense to hire that individual to clean – it’s a $16 profit for that hour. A similar thought process applies to a lot of tasks: mowing the lawn, etc.

My wife’s counterargument is that it’s only acceptable if the cost of hiring a person is substantially less than half of the value you put on your time. For example, with the housecleaner, I could easily do the housecleaning myself and figure my time is worth $14 an hour doing it. On the other hand, if I spent that time writing, I’d bring home $16 an hour more, but out of that extra, I’d have to pay taxes and expenses, dragging the actual profit down to just a couple dollars an hour. Thus, it’s more profitable to do the housecleaning myself. It’s an interesting debate, but neither of us really question the idea that hiring someone for menial tasks is a great time saver, freeing us up for other things.

Have goods delivered to avoid unnecessary time at the store.
When I read this, I immediately thought of Amazon Grocery. We use Amazon Grocery for pretty much every dry good in our home, especially everything bulky – diaper boxes, paper towels, toilet paper, dishwashing detergent, laundry detergent, etc. We get all of this material delivered via Amazon. With free shipping, the prices wind up being roughly comparable to our local grocery store, but by ordering it online, the costs of driving to the store and driving home are minimized – instead, we’ve basically moved towards going to the grocery store only for produce and fresh foods.

This winds up being a tremendous timesaver. We can now do the majority of our grocery shopping while standing at the pantry, clicking on the items we need. I keep a page listing all of our most common items, and I just click on the links of those that we’re short on and add them to the cart – it’s much faster than trudging through a store. Even better, they just appear on the front step in a few days – no driving around to the store, driving home, and unloading. To me, it’s an incredible timesaver and one that doesn’t cost much at all, if anything.

Mastering the Eighth Pillar – Play
The last portion of the book focuses on setting aside time for yourself for pure enjoyment of life. It’s this pillar that I found weakest in my own life over the last few years and part of my career change choice leans on strengthening this pillar.

Go on a long vacation each year.
This summer, we’re planning an eight day vacation – yes, with two children in tow. The vacation involves a wide mix of things – camping in a national park, a few days in Chicago (and likely a baseball game), and several other child-oriented activities (including two stellar children’s museums). How will this go? I don’t know, but I’m genuinely looking forward to it.

Make time for a favorite hobby.
My favorite hobby is reading, so I’ve penciled in an hour a day for reading challenging books that make me think. As I’ve stated above, I intend to read one a week for the next three years. Better get crackin’.

Buy or Don’t Buy?

Find More Time is loaded with concrete, specific, and applicable advice for organizing your personal life in order to maximize the free time you have available for the things you want to do. Sure, some of the advice is obvious, but much of it is creative and all of it pushes you in directions that make you carefully consider the personal choices you make.

If you’ve gone through books like Getting Things Done and are still having difficulty finding free time in your life, Find More Time is a very worthwhile read. It’s easily the best book I’ve ever read on personal time managemet, as it recognizes that the one thing that I want more than anything else are blocks of uninterrupted time to spend with my family and on my own interests.

Be aware, Find More Time is fairly long for a book of this type, measuring in at 322 pages of actual text, but the book still comes off as feeling dense – each page is loaded with ideas. After reading it and looking at my notes and ideas, then implementing some of them, I feel much the same way that I did after discovering Getting Things Done – I’ve kicked things up to a new level of productivity. That’s why I actually went ahead and purchased this book for my own bookshelf – it’s that good, and I can see myself returning to it as a reference.

I have a lot of fun following individual stocks in my spare time. I keep tabs on a small handful of companies that I have a personal interest in – Apple, Nintendo, Herman Miller, and Ford, namely. I watch for news articles on the company, read their annual and quarterly reports, and stay up to date on pretty much everything about the organizations.

For a short while, I owned individual shares in Apple and Herman Miller in mid-2007. I bought into Apple in late July, purchasing about 40 shares when the stock was at 140. Over the following three weeks, I watched Apple drop like a stone to below 120, then I sat there through late August and early September as it rose back up to 140. I sold immediately. Over the same rough period, I bought 50 shares of Herman Miller at 32, watched them sink and struggle to rebound, and sold the shares in late September at 29.

In the end, I didn’t lose too much money. What I did lose is a lot of sleep. The second I owned those stocks, I became obsessive over those two companies. I read every single morsel of information that came out about them, read reports, studied numbers, sweated, didn’t sleep at night, and a few times I even queued up panic sales of these stocks.

The second I finally sold all of them, I felt much better, and I walked away with a bitter taste in my mouth. Individual stocks are basically gambling pretty much sums up the way I felt and since then, I’ve barely written or even thought about individual stock investing.

But is that the right lesson to take away from the experience? Let’s dig into the idea a bit.

Information Games

Most forms of gambling that aren’t merely chance, such as blackjack and poker, are games of partial information. You know some of the information out there – the cards you hold, perhaps some of the cards the dealer holds, any revealed cards, and the “tells” that the other players have shown you. At the same time, key pieces of information are hidden – what the others are actually holding.

The same statement is true of stock investing, except the story is a bit different. Most of the information you’d really need to know – in fact, virtually all of it – is right out there for you to see. The only problem is that it’s like trying to find a water droplet at Niagara Falls – there’s so much information out there that processing it all is impossible.

As a result, stock investors often choose specific pieces to focus on. Perhaps they look at the P/E ratio for a company, or maybe they look at the backgrounds of the company leaders. I’ve read tons of books about different strategies, but most of them boil down to isolating a few key pieces of information about companies and using them as a judge about when to buy and when to sell.

The problem is that no individual metric is perfect. One can’t ever boil down the complexity of Apple’s entire business into just one factor. What would happen to Apple’s stock if tomorrow morning Steve Jobs dropped dead of a massive heart attack? Do you have any idea? Obviously, it would go down, but how far would it go down? Would Apple weather that storm? Those are both huge unknowns, but investing in Apple stock means you’re making some sort of prediction on those questions. You’re using one view of the information to make a judgement about a whole company.

The Investor Mindset

Some people respond to this glut of information and the inherent risks quite well. They focus in on specific things and just blot out everything else. They do the homework they need to do and walk away from it. Are these people gamblers?

What about others, like myself? When I was invested, I was almost driven crazy by the desire for more information. I knew that there was more to know about where my money was sitting, and I needed to know it. Am I an information addict?

Personally, the risk itself didn’t bother me so much – I was merely overwhelmed by the actual level of information in that information game. But what about a person who knows why he’s investing, but is ready to throw up after a 1% drop? I have a close friend like that – he basically can’t invest in anything that isn’t fully guaranteed. Is that person far too conservative?

It all comes down to personal makeup and psychology. Some people are predisposed to play this information-rich game; others simply aren’t. I put myself into the “not predisposed” category – I could invest if I had money that was truly “play” money, but not if anything of any importance relied on that money. It would move from being a dalliance to being an obsessive information hunt – and that’s the result of my psychological makeup, not the game itself.

Mister Market

So far, all I’ve really done is convince myself that stock investing really is gambling, but there’s one big factor that draws me back from making that leap. It’s the fact that the stock market as a whole grows in a positive direction, not a negative one.

In a typical gambling situation, the house “rakes” – meaning that the house takes some small fraction of the winnings. In stock investing, the “house” (in other words, the stock market as a whole or, for that matter, capitalism as a whole) adds to the pot over time.

How does that happen? Over time, innovations make it possible for companies to produce more and more with the same amount of resources. Think computers, for example – they’ve radically changed almost every industry. Innovation has a lot of different effects, but one of the big ones is that it constantly adds more value to the company itself in the form of increased productivity. The result is that all companies gradually become more valuable over time, simply because they can produce more with what they have – or produce the same amount they always have with less resources.

Think about a patch of farmland. Two hundred years ago, a farmer grew whatever corn he could lay his hands on, tilled a few acres with a horse drawn plow, tossed the seeds into the ground, and hoped for ten bushels of corn production per acre. Fast forward to today: tractors, fertilizer, and hybrid corn now make it possible for that same patch to produce 150 bushels of corn per acre. That means the entire farm is more valuable – and thus shares in that farm are more valuable now as well.

Over time, value is constantly added to the stock market (assuming everything else stays the same – when the market goes down, something else is changing). This addition of value is the one real difference between stock investing and traditional gambling.

My Conclusion

Individual stock investing is something like playing blackjack at a casino where, on every hand, the dealer is wagering just a little tiny bit more than you, but there are thousands of people around you shouting out suggestions. If you can concentrate enough and take the time to sift through the information overload correctly, you can potentially go on a very nice winning streak – and the odds are slightly in your favor. At the same time, though, as with any game where you don’t have all the information, you can very easily go on a losing streak.

My solution to all of this – and the solution that leaves me sleeping well at night – is to buy index funds. That’s kind of like going to that casino and playing 5,000 hands at once with earmuffs on. Because of the huge number of hands, the luck of any individual hand is negated and eventually you end up with a small overall win without the stress, time, and focus needed to win at an individual hand.

I think investing in individual stocks is a fine diversion and a potential way to earn a lot, but far from a guarantee and the work needed to get those earnings is tremendous. For the casual investor who hasn’t invested the time to really learn the game and the investment and learned how to fight through the information noise, individual stock investing might as well be gambling.

My recent career change means that I now have the freedom to write from wherever I happen to be. Similarly, my wife can pretty easily find work in any sufficiently-sized town – her skill set and resume would make her an attractive candidate pretty much anywhere.

Given that we currently live in one of the most expensive parts of the state of Iowa, does it make sense for us to consider moving in the future? Here are the reasons we’ve come up with for moving in the near future, moving later on down the line, and never moving at all.

Reasons for Moving Soon

Children Right now, both of our children are young enough that a move to a different area wouldn’t be highly traumatic for them. When we moved into our current home, it took about two weeks for my son (who was about one and a half years old) to adjust to the new house, and now he doesn’t even remember our old apartment. There are very few social ties for them as well.

Family. Our move would be designed to take us closer to our parents, who are getting older. They also live quite far from their grandchildren and there’s not nearly the interaction there that any of us would like. Moving closer allows a lot of deeper bonds to grow.

We’re not entrenched, either Although we’ve lived in this school district for several years, we’re far from entrenched in the neighborhood on our street. We’ve become somewhat friendly with two of the families living near us, but we’ve not yet reached the point where we feel that we are a deep part of a community yet. More on that in a bit.

Reduced house payments We could buy an equivalent house to the one we’re living in pretty much anywhere else in the state of Iowa for about 40% less than what we paid for this one. Assuming we could re-sell this house for the price we paid for it (which is reasonable – the housing market is solid here), we could easily take that cash, pay off the full mortgage, and have enough left over for a very large down payment on the next house.

Reasons for Moving Eventually

Time to find the exact place we want. We’d like to move closer to our extended families, likely somewhere on the eastern side of Iowa. If we took our time, we could carefully investigate the whole region of the state and find the right place for us to move.

The opportunity to have the home we’ve always wanted. What we want isn’t extravagant – it’s basically our current house, except on two floors and with slightly larger bedrooms and a slightly larger master bath, in the country. We can likely build that for less than $200,000, and in several years, we’ll have the resources to make it so.

Increased financial resources. Waiting for a few years means we’ll have more financial resources with which to buy or build exactly what we want.

Our current home is in an obvious growth area. Holding onto it for the next several years will see a price increase. We live in an area where the population growth is tremendous – it’s the only “hot” area in the entire state and there’s little startup companies and all sorts of things going on. If we sit and wait, our home will do nothing but increase in value.

Reasons for Never Moving

We’re entrenched in the community. While we may not have settled on our current block yet, we are entrenched in our local community. I serve on one important civic council and have been strongly encouraged to run for another council position. I know literally hundreds of people in this area – some of them quite well. I have a burgeoning professional relationship with at least a few people.

We like the area and resources. The area we currently live in gives us pretty quick access to the greater Des Moines area for cultural events and at least seven grocery stores within fifteen minutes of driving. If we move to the area we’re thinking about, we’d be largely far away from such assets.

Our Conclusion

Taking into account all of these factors and how they overlap, we’ve decided to not move in the short term. Not only would moving right now be a very questionable financial decision, we don’t have a strong plan in place for where we would move and how we would transition my wife’s employment (luckily, being a “transient worker,” I can move much easier).

The one regret we have in this decision is family. All of us – my wife, my two children, and myself – would benefit from being closer to our extended families, both in terms of increased familial bonds, but also in terms of having some additional support for parenting. My mother is so anxious to build bonds with her grandchildren and also to babysit them that she’s traveling up here for a weekend in May and basically ordering us out of the house to spend a weekend together while she watches the children. That says something significant about the family bond.

Tentatively, we’re looking at moving in seven to twelve years, depending on our financial state. If things go very well with my writing, we could move earlier than that. The later we move, though, the less likely we will be to move because of the social changes that would be foisted on our children – I have no real desire to yank a twelve year old and a ten year old away from their friends for reasons that aren’t truly pressing.

This post is a guest post by Erin Doland. Erin is the chief editor and writer of one of my favorite blogs, Unclutterer, and a twice-weekly columnist for Real Simple. Take it away, Erin!

One of the changes I noticed in my life when I decided to become an unclutterer was that I stopped worrying so much about the past and the future. I cleared clutter from my life, which immediately eliminated distractions. I had properly archived my photographs and other valuable mementos, so I no longer stewed on these memories. I set up functional systems for things like online bill payments, next action lists, and Google Calendar, so I stopped having anxieties about the future. My home became a sanctuary and a place of relaxation, and my office transformed into a place conducive to work and productivity. Ultimately, my uncluttering efforts left me able to focus more on the present and be mindful in the moment.

Being mindful in the present means to be aware of this specific moment in time. You can fully see, hear, touch, understand, and experience your surroundings and your life. You can appreciate the people and things you come into contact with in every moment. Being mindful in the present is something that seems so obvious and ideal, but isn’t as simple of a task as one might imagine.

Take the next 30 seconds and give it a try. Don’t think about errands or things you need to do, clear your thoughts of memories of past times, and just focus on this moment. What surrounds you? What can you hear? Are the muscles in your jaw tense? Are your ideas focused? How is your breathing — is it short and shallow or long and robust?

Now that your 30-second experiment is finished, how did you do? Was it easier or harder than you expected? Were you able to keep your thoughts focused on the present or was your mind swirling? Could you even sit still for 30 seconds?

Are you wondering what all of this has to do with finances? It actually speaks volumes on this subject.

If you can be mindful in the present, you will stop making impulse purchases because you can consciously evaluate a product and ask yourself if you really need it. You don’t operate on automatic pilot. You can easily foil retail marketing efforts. You don’t approach shopping with a “some day I might need this” attitude. You can better evaluate products because you’re aware of their components and inspect their quality. You are a mindful consumer, which is beneficial to your wallet and your commitment to simple living.

Since you are mindful in the present, you have exactly the amount of time you need to make decisions. You can evaluate things, objects, and stuff by asking yourself: Do I need this? What will I get rid of to bring this into my home? How many hours will I have to work to pay for this? Where will this object live in my house? Does this item help me to develop the remarkable life that I want to lead? Can I fully consume this item before it expires? What will I do with this item if I don’t value it or consume it? Is this the best item to meet my needs?

Mindful consumption doesn’t mean that you completely stop consuming — you do need to eat, after all. Mindful consumption means that you stop buying clutter and things that don’t match your life. You are aware that your things don’t own you, but that you own your things.

It can require a lot of practice to stay present in the moment. It’s much simpler for me now that I’ve cleared clutter from my life to be more mindful, but I’m far from perfect. I’ll interrupt others when they’re talking because I’m thinking about where I want the conversation to go instead of what the other person is saying. I’ll walk down a city block but then have to look up at the street sign on the corner because I’ve lost track of where I am. I’ll accidentally drive to the grocery store instead of the post office. I’m finding, however, that these moments of lost focus are becoming more rare than they used to be when I was surrounded by clutter.

Clear the clutter from your life and practice being mindful in the present. Ultimately, you’ll be a more mindful consumer because of it. If you want to learnmore about being mindful in the present, you can read more about it in this well-researched study (thanks to Gretchen at The Happiness Project for bringing it to my attention).

Each Friday, The Simple Dollar reviews a personal finance book.

Blunt. That one word sums up this entire book – in fact, it sums up pretty much everything I’ve ever read by Larry Winget. He cuts right to the chase with his message and doesn’t pull any punches to be “nice.” Some people view that as bullying – others view it as helpful.

From just that little blurb, you probably have enough information to make up your mind about whether You’re Broke Because You Want To Be would be a worthwhile read for you. Some people respond really well to cutting to the chase and not pulling any punches – others are driven away by it. Make no mistake, this book falls firmly into the take-no-prisoners camp.

Personally, that approach doesn’t bother me in the least. I know very well that there are some things in life that are best served by a very direct and forceful personality. For example, athletics – a coach that doesn’t demand a lot and push his players will wind up with a weak team. Does personal finance advice merit this same kind of approach? Let’s dig in and see what Larry has to say.

A Walk Through You’re Broke Because You Want To Be

Introduction
Normally, I skip right over the introductions and head directly to the meat of the book, but in the introduction Larry tackles an issue that has been bothering me as of late: the distinction between poor and broke. Larry really nails it here, so I just want to quote a small piece of the introduction here for posterity.

Please don’t say, “But what about the poor people, Larry? They don’t want to be broke.”

Great point. You’re right. I’m not talking about being poor.

Poor is a condition I find very sad. Sad, yet inevitable. Jesus said, “The poor will be with you always.” And they will. There are people who live in soicieties and countries where there are no opportunities for advancement and it takes all their effort just to survieve. They are not going to have enough to eat well or live well or take care of themselves.

So let’s get this straight from the outset so you can get off your high horse and understand what I am really saying. I didn’t write this book for the poor people of the world. I know it is going to take a lot more than a book to help truly poor people. To think otherwise would be insulting.

I am talking about broke. Broke is not a condition like being poor. Broke is a situation you find yourself in because you are either underearning or overspending.

Larry pretty much hits the nail on the head here. Almost every popular personal finance blog will see a comment or two where a reader will go off on poverty issues. Poverty is not something that I have the capability of addressing – that takes grand societal change. What I can address, however, is the issue of broke, because that’s something an individual can grab ahold of and change.

Chapter One: Money Matters
Since the premise of the book itself is that you make the active choices that cause you to be broke, the first chapter deals with the excuses that people use to deny that idea. There are a lot of them, and I’ve been guilty of most of them at various points in my life.

My favorite one is the “parent” excuse: “it takes all I’ve got just to come home, fix dinner for the family, entertain the kids for a while, put them in bed, take a bath, and fall asleep myself.” I have an infant and a toddler at home, so I know that there is some merit to this argument – but it’s also flawed. First, it’s not a good reason for choosing not to curb your spending. Second, you can find time to improve yourself or find success in other areas – I started The Simple Dollar with an infant at home and kept it running while he grew into a toddler and a second infant arrived on the scene.

Winget’s philosophy is that we choose our destiny via the small choices we make all the time, and we deserve the outcome of those little choices. If you’re constantly choosing to spend more than you should be spending, then you’re broke because you want to be. Until you make up your mind that you truly want something different, you’ll remain broke by your own choice.

Chapter Two: Your Real Problem
Right off the bat, Larry writes, “Your biggest problem is not in your wallet or your bank account. Your biggest problem is between your ears.” That sentence alone sums up the gist of this chapter, which is really about goals and values.

Goals and values? The things that you truly value in life are the things that you end up spending your money on, not the things you claim that you value. If you talk about how you really value your children’s future, then buy a Lexus while their 529 sits empty, you don’t really value your kid’s future – you value your ride much more.

Think about the things that you really value. Make a list of three or so of them – the things that you value most in life. Then compare that list to how you actually spend your money. Are they in alignment? If they’re not, that’s a sure sign of financial trouble.

Chapter Three: Know Where You Are
The first step, of course, is to figure out where you actually are. Spend a month tallying up every dime that you spend – every bill, every splurge, everything. Then compare that to what you’re actually bringing in. The first number needs to be smaller than the second one, period – if it’s not, you’re headed for complete disaster.

The next step is to formulate a plan: figure out what you actually want, then figure out how to get from where you’re at to where you’re going. Larry suggests writing this all down and making it something concrete and tangible – and I totally agree with that idea. It gives you something to hold in your hand, and it gives you something to hang on the refrigerator and see time after time as you move forward.

Chapter Four: How to Get Out of Debt
This chapter consists of a large pile of specific tips for debt reduction and removal. Most of these are fairly mundane – call your creditors, pay ahead on your highest interest debt, cut up your credit cards, stop spending – but two jumped out at me.

Make a spending journal. Basically, every time you spend money on anything, write it down. This is really a psychological trick more than anything, but it forces you to realize how you’re draining your wallet drop by drop.

Make micropayments. This one works well with online bill pay. Basically, whenever you see that you’re a bit ahead with your money, spend it immediately… by making an extra payment on your most painful debt. If you have an extra $20, don’t spend it on something frivolous – instead, immediately make that extra payment so you aren’t tempted to spend it.

Chapter Five: How to Cut Your Expenses and Increase Your Income
Much like the previous chapter, this one is full of a bunch of short ideas on … cutting expenses and increasing income.

Larry really gets to the root of the matter with the idea of cutting expenses. Basically, he suggests making a list of the stuff that you’re willing to give up in your life right now, and to push that a little bit. Could you give up cable? Could you give up television entirely? Could you give up your cell phone? How about your internet access? How about your morning latte at Starbucks? Similarly, he suggests looking for stuff you own that’s unnecessary and excessive, like a monstrous DVD collection.

As for earning more, it’s mostly about busting your butt. You’ve got two choices: either start improving yourself in a very serious fashion to earn more money at your current job, or start work on a second job (or developing your own business). Those are really the only two roads available to most people for increasing their earnings.

The key, though, is that when you reduce your expenses or you increase your income, you don’t then expand your spending to fill that difference. Instead, roll that extra cash into debt repayment, an emergency fund, or if you already have those, into investments and savings for your big dreams.

Chapter Six: The Stuff Most People Overlook
This is a third chapter of quick, short pieces on basic money matters and, again, much of this comes across as familiar. These are more detail-oriented things, such as using a shopping list and getting a good checking account.

One area stood out to me, though, and it’s something that I rarely see tackled in personal finance books. Larry suggests taking up reading books. He offers up a few examples of things to read (a mixed bag of stuff), but the simple fact that he broaches the topic of reading as a way of getting ahead financially is admirable. This is something I’m a big believer in – I’m a regular at my local public library, as it’s a giant building full of free books and most of them have knowledge inside their covers that will either enlighten me or motivate me to make some changes.

Please, read a book and think deeply about what you’re reading. The more you do that, the better off you’ll be, both personally and financially.

Chapter Seven: Now It’s Time for Your New Budget!
The book starts winding down rapidly at this point, as this chapter basically says to recalculate what you’re spending and what you’re earning after making these changes. What you’ll find is that the difference between what you earn and what you spend will be in a much healthier place if you’re genuine about making some real change in your life.

Buy or Don’t Buy?

You’re Broke Because You Want To Be is a personal finance motivation book, straight out of the Dave Ramsey mold. Winget comes off with almost a drill sergeant persona – he’s blunt, to the point, and doesn’t pull any punches with anything.

If you know someone who uses a lot of excuses to avoid taking control of their financial life, this is probably a worthwhile read for that person. That person might be you or someone else you know, but in either case, this is the exact person that You’re Broke Because You Want To Be is written for. The personal finance advice inside isn’t complex or anything exceptional and new, but it is presented with a very strong coach-like tone, and for a person who can be driven by a good motivator or coach, this could be the right book.

Be aware, though, that some people can easily see this sort of tone and attitude as being bully-ish. I don’t see it that way, but I am aware that there can be some severe backlash against Winget’s perspective. If you think you might be in that category, pick up the book on the shelf at your local bookstore and read several pages before jumping in.

I enjoyed You’re Broke Because You Want To Be quite a bit. That’s largely because I enjoy straightforward talk, and that’s just what Winget serves up here.

I’ve become convinced lately that the most cost-efficient food in our kitchen is beans, and it’s a food that people often overlook. Beans are loaded with protein and are quite flavorful, particularly as a substitute for meats in a vegetarian diet.

How Cheap Is It?
Here’s a real world example of how inexpensive they can be. My family quite enjoys bean soup with a wide variety of beans in it. Let’s say, hypothetically, that we were to order this soup from Amazon Grocery. You can get four 29 ounce bags of 13 bean soup there for $18.96 and free shipping. Now, when I prepare a pot of soup beans for my family, I use about a pound of beans, so each of those bags would in effect be eight meal preparations. Even more amazing – each batch of soup I make will feed my family of three (since my daughter isn’t quite old enough to eat such things yet) plus make at least enough to freeze two bags of completed soup, each of which will provide another meal for all three of us.

So, I get eight batches out of this $18.96 order, and each of those batches provides three family meals of bean soup, and each of those family meals feeds three of us. That’s 72 meals, meaning the cost of beans per meal is about a quarter. Even if I spent that much just on spicing it up with leftover ham, pepper, salt, and such things, that still means I’m paying $0.50 a meal. That’s ridiculously cheap.

Even better, you can easily just buy several one pound bags of various bean types and mix them yourself in a large Tupperware container. This substantially pushes down the price of the beans – you can reduce the total cost by 40% or more beyond this just by doing some frugal shopping and mixing them yourself.

Beans can be used in countless dishes – burritos, casseroles, side salads, soups, and even breakfast. It’s also very easy to accent their flavor: pepper, salt, leftover ham, and most savory seasonings work very well with beans. There’s also a substantial variety in bean flavor and texture, so it only has to be repetitive if you let it get repetitive.

Here are five of my favorite bean-oriented recipes that you can make at home very inexpensively. Pick up a bag of dried beans (or even a can of them, though it’s not as frugal) at your local grocery store and give these a shot.

General Dry Bean Preparation Tips
Dry beans are by far the cheapest way to purchase beans – and much tastier and full-flavored than canned beans, in my opinion. The only drawback is that there’s some preparation work involved – but don’t worry, you can get it started before you go to work and finish pretty quickly when you get home.

It’s easy. Before you go to work, get the biggest pot you have and add a pound of beans to it (roughly two cups). On top of that, put six cups of cold water and let it sit on the counter top all day.

When you get home, pour off the water they’ve been soaking in and pick out any bean skins that might have soaked off of the bean. Put two tablespoons of oil in there (this keeps it from boiling over), then pour on six cups of fresh water, add a half a teaspoon of salt, and put the pot on the stove to boil. Get it at a gentle boil and then just let it boil there for an hour and a half or so – once you get it right, you can easily walk away from it if need be, as the oil will prevent boiling over.

In the end, you basically have bean soup. You can drain off the liquid if you want to use the beans for other purposes, or you can just eat the soup as is. However, note that most soups taste better if you add all of the other soup ingredients early in the boil. Also note that after you’ve boiled the beans, you can just drop them in a container for storage in the fridge – they’ll be fine for a day or two.

Beans and Eggs
Easy as pie. Just crack four eggs, add half a teaspoon of milk and some pepper, and beat them rapidly until they’re consistent in texture. Pour the egg mixture into a skillet and add half a cup of cooked black beans (or a bean mix, if you prefer). Scramble the eggs by repeatedly moving the eggs around in the skillet as it cooks until it’s nice and fluffy and full of beans. Put some cheese and salsa on top and you have one of my favorite breakfasts in the world – plus it’s an ovo-vegetarian dish.

Balsamic Vinaigrette Bean Salad
Take two pounds of cooked beans, any variety you’d like, and add in a diced medium red onion. To this, add two tablespoons of balsamic vinegar, four finely chopped garlic cloves, a quarter of a cup of extra virgin olive oil, and mix everything together. Add some ground black pepper to taste. This makes a very big batch of the salad, which is a great thing to take to a potluck dinner – for home use, you should probably halve the entire recipe (one pound of beans, a small diced onion, one tablespoon of vinegar, two garlic cloves, and an eighth of a cup of olive oil).

Beef and Bean Burritos
Cook a pound of ground beef. As the meat is cooking, add half a cup of chopped onion and a minced garlic clove. Stir the meat often to break it up, then when it’s well cooked, drain it, and add to it two teaspoons of chili powder, one teaspoon of oregano, half a teaspoon of cumin, half a teaspoon of salt, and half a teaspoon of brown pepper. Mix it all together and you have the beef part of the recipe. Just fill a large tortilla with this meat, some lettuce, and whatever beans you like – I prefer black beans or pinto beans or even refried beans.

Sixteen Bean Soup
Just follow the cooking directions above with your favorite multi-bean mix, except add half a pound of leftover meat to the soup as it’s cooking. I like to add cubed ham myself, but you can add other meats. Also, add a small minced onion to the soup, too, just as it begins to boil, and also add salt and pepper to taste.

Bean, Ham, and Tomato Casserole
Basically, take the soup you made with the sixteen bean soup recipe and drain off all but a cup of the liquid. Mix into the soup two diced tomatoes, put a bit more pepper on top, and (optionally) put a thin layer of finely ground Cheddar cheese on top (the cheese is highly optional). Bake it at 350 F (160 C) for about ten minutes and it turns out surprisingly well and often very distinct in flavor from the sixteen bean soup.