If you have ever heard a couple say things like, “well, you bought a new dvd player, so I can go buy a new dress” or “you spent $300 at the mall, so I decided to go buy a new television.” You know what I’m talking about.  If the members of a marriage feel like they are in competition with each other for spending, they are off to a bad start.  Here are some simple tips to avoid this type of competition.

• Regularly discuss financial goals — If you are both headed toward the same goal, financially, it is much easier to work together.  This can be saving for a vacation, saving for retirement or getting ready to start a business on your own.
• Give each person a fun budget – Some couples find it is beneficial to give each person a budget for fun stuff each month.  As long as each of them stay within their budget, neither feels like the other is getting an  unfair use of their combined money.
• Try to give instead of take – The ideal situation is when both parties are doing their best to help meet the needs and desires of the other.  This works much better than when both parties are doing their best to give as much as possible.  Of course this needs to come from both sides to work.  If one person (often the woman) is giving all the time and the other person (often the man) is taking all the time, it can breed a lot of resentment.

The biggest key here is to have open communication about finances with your spouse.  A good way to start is to set some small financial goals that you can meet together.  Even setting a small goal of trying to save up a $2,000 emergency fund can be a great exercise in working together financially.

Do  you have any suggestions or tips that have helped you work well, financially, with your spouse? Please share in the comments.
Originally published March 5, 2008.

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• There is less competition for workers right now so you can get good help for a reasonable cost.
• If you have a business idea that you can run on the side, it makes sense to start before you quit your day job.
• Technology has drastically reduced the cost of running a business. You can get a web store up for $20 to $40 per month (sometimes even less).
• If you want to work from home, but can’t with your current job, starting a business that you can manage during the evenings may be a great first step.
• A side business provides great insurance against job loss.  (See Don’t Depend on Your Job.)

If you are looking at starting a business on the side, I’d recommend reading The Leap and Go It Alone. The Leap will come out mid September, but the review copy I was sent looks very good, and it really makes you question all of your preconceived notions about why you can’t start your own business. Go It Alone is a bit dated, but it offers some great suggestions about the mindset of starting a small business without trying to hire a bunch of employees. (You can also read it for free online.)

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Part of this view is rooted in what people see as the purpose of taxes. I see the government as providing a very valuable service to me. They keep the infrastructure running and create the rules and environment that allow me to live happily and run a profitable business. I am happy to pay taxes to support the police and military to keep me safe, pave roads to drive on, help prevent the outbreak of horrible diseases, notify me if a tornado is on the way and make a reasonable attempt at creating productive economic citizens out of those who have made poor choices or undergone extreme hardship.

I do not feel that taxes should be used to redistribute money. Insuring that people do not starve while they look for a new job or try to learn a new skill is one thing. Mailing checks to people they can be used on everything from cable television to soda pop is something entirely different.

I know a lot of people are upset because they think that rich people have access to loopholes that aren’t available to the middle class. This is completely true. There are a number of things that the government wants to encourage that rich people can take advantage of. This includes things like starting businesses, creating jobs, using land for certain purposes, making capital investments, and a variety of other things that are generally good for the economy.

What is often overlooked is the fact that the middle and lower class have access to many tax breaks that are not available or useful to the upper class. For example, lets say Joe makes $40,000 per year and he puts $4,000 per year into an IRA. That $4,000 reduces his taxable income by 10% and that savings reduces the amount he has to pay at his highest tax rate. Now lets say John makes $1 million per year and puts $4,000 in an IRA. That would only reduce John’s taxable income by .4%. Hardly enough to make any type of tax savings. (I think there also may be some phase-out regulations that prevent rich people from using an IRA at all.) If you start looking at a Roth IRA for a young middle class citizen the effect is even more pronounced.

Here is another example. In 2009 and 2010, the government will give you a 30% tax credit on the first $6000 you spend on high efficiency upgrades for your home. This includes installing high efficiency heat pumps, high-efficiency windows, better insulation, efficient water heaters, roofs designed to reflect the heat of the sun, etc. Obviously these credits are designed to most benefit people in moderate sized houses. $6000 goes a long ways toward replacing old windows in a 1500 ft.² house. It does very little toward replacing windows in a 20,000 ft.² house.

Another example: If you are a first time homeowner in 2009, you can get up to $8,000 back from the government when you buy your home. (You get back 10% of what you spend up to $8,000).  If you buy a $80,000 house, that lowers the price by 10%.  If you are buying a $8,000,000 house, the tax break does practically nothing. (There may be some phaseouts for people in high income brackets.)  Even then, the credit is designed to help people who have never owned a house–this probably doesn’t describe very many wealthy people. (Oh, and the credit is “refundable” which means you get it even if you didn’t pay $8,000 in taxes–the government will either lower your tax bill by $8,000 or just cut you a check.)

So why isn’t everyone clamoring about the middle class having too many tax breaks? Simple. The middle class doesn’t take advantage of the tax breaks that are available.

To take advantage of tax breaks, you have to live below your means. This means buying a much smaller house than what you can afford. It may mean driving an older vehicle. It may mean cutting out extra expenses like cable television. These aren’t the types of things that the middle class is particularly good at doing, but they are the things that give you the flexibility to take advantage of tax breaks just like a rich person.

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We need to be able to manage our finances from anywhere in the world. Rich online banking services are much more important than a physical location. Since I have been doing all of my banking online with quite a few different online banks as I looked for the best solution, I’ve had a chance to really experiment with what works and what doesn’t work for us.

Here is a checklist of things to look for in an online bank. Some items you may be familiar with. Others might be new to you if it isn’t something your current bank offers.

1. Bill Pay Service - One of the biggest reasons for going with an online bank is to get really good bill payment services. Different banks handle bill payment different ways. Here are some things to think about:
   1. How many bills are you allowed to pay per month?
   2. What are the fees for going over the limit?
   3. Can the bill payment send physical checks to merchants who aren’t set up to take electronic payments?
   4. Do checks come from your account or from a third party service? For privacy reasons, it might be better to be able to pay someone without giving them your bank account number on the check. On the other hand, if the checks actually come from your account, the money doesn’t get taken out until the check is cashed.
   5. Can you set up reoccurring payments?
2. Electronic Bill Notification – With electronic bills, your merchant (credit card company, gas company, electric company, etc.) sends an electronic bill to your bank. You can set it up to pay automatically or notify you for approval. This can be particularly good for people who are on the road because it reduces the amount of physical mail you have to somehow get read or forwarded to you.
3. Online Check Images – Most banks will show you an image of the check, which makes it really easy to balance your account if you can’t remember what a particular payment was for. (Ideally, you should minimize the number of physical checks you write to reduce fraud.)
4. Online Deposit Slip Images – Most banks just record the total with no image. It will let you see an image of each deposit slip. Having the images available can be very helpful if you ever have to prove something for tax purposes or need to remember where that $2581 deposit came from.
5. Ease of Opening New Accounts – Once you have an account at the bank, you should be able to open additional accounts entirely online and just transfer money into it. For example, I set up a traditional IRA last year and it took me about 3 minutes to set up, deposit my money from checking and invest it in an index fund.
6. Reporting Tools – Most banks offer basic reporting tools that will let you see how much you have spent in each category you’ve created. This may not be an issue if you use desktop money management software, but it still can be handy if you are traveling and want to see how much you’ve paid on your mortgage over the past 12 months.
7. Linked Accounts – Can you link your bank account with a brokerage account? Can you add your minor children as custodial accounts and manage them all centrally? If you and your spouse both set them up IRAs, is it easy to view them both along side the rest of your finances, or do you have to have a separate login for each IRA to keep them on separate SSNs? These are small things that many banks don’t support, but it starts getting really complicated when you have to manage a bunch of accounts instead of having a single place to manage all of your money.
8. Convenient Deposit Methods - Since you may not be anywhere near the physical location of your bank, make sure you understand how to deposit money. Payroll can be set up on direct deposit, but there will be times when you need to deposit checks. Does the bank provide postage paid envelopes and deposit slips? Some banks work with FedEx or UPS stores to allow you to send in a deposit overnight for free.
9. Low ATM Fees and Convenient Locations – If you need to get cash, will the bank refund the ATM fees? Are there only certain ATMs that are free, and if so, are they located near places you normally go? Are the ATMs available nation wide so you can use them on vacation? What are the fees for using the ATM internationally and how is the exchange rate handled?
10. Integration with Desktop Software – If you use Microsoft Money, Quicken or something similar, you’ll want to make sure your bank supports it. Make sure you understand if downloading transactions require you to login and manually download a file, or if your money management software can directly connect and download new transactions. If you are using Quicken on a Mac, make sure the bank is paying Quicken’s extortion fee so the files will work with Mac users.
11. Many Account Types – Some banks only offer basic checking and savings accounts. Ideally you want a bank that makes it easy to open money market accounts, IRAs, health savings accounts, etc. If you have to go to another institution to open a different type of account, it is more difficult to manage–especially if you are on the road. You want to be able to easily open a CD to take advantage of a higher interest rate, easily open an IRA to help reduce your tax liability, etc.
12. Free Money Transfers – Be sure to consider how easy it is to move money in and out of the account. You should be able to set up links with your accounts from other institutions to transfer money back and forth as necessary. Make sure you understand what type of fees are associated with these transfers. Good banks should allow a certain number of transfers per month with no fee.
13. Security Balanced with Convenience - Some banks spend so much effort trying to keep things secure that you’ll find yourself automatically logged out of their website while you try to balance your account. You want security but you don’t want it to get in the way of you doing your banking. Also check into what type of additional security features are available. For example, some banks will offer you an RSA keychain with a number that changes every 60 seconds. In addition to your password, you will need the number from that key in order to get access to your account.
14. Ease of Use – This is something that most banks seem to struggle with. Right now I have my personal account with one online bank and my business accounts with another. I dread using the business accounts and I absolutely love using my personal account. At first I thought I was just more familiar with the bank where my personal accounts are, but I finally realize that it comes down to the ease of use. One is ok and the other is superb, but it makes a big difference.

Originally published June 11, 2007.

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1. Dress light – Make sure you are wearing cool clothing in your home.  Wearing long sleeves and warm pants is going to force you to keep the temperature colder to stay comfortable.  If dressing in cooler clothes lets you turn the thermostat up even just a single degree, it can still result in significant savings.
2. Take off your shoes – This is related to dressing light, but if your feet are cool, it is much easier to feel cool all over.  A cheap pair of sandals to wear inside can pay for themselves very quickly if they help you feel cooler.
3. Use fans - Most homes don’t distribute air particularly well.  A few well-placed fans can put a big dent in how much your air conditioner has to run.  Pay attention to how the air flows through your house.  We use a cheap little fan with a built in thermostat so it turns itself off once it has moved enough air to bring the temperature in line with the rest of the house.
4. Cold water – Keeping cool drinks easily available can do a lot to keep you cool.  We use a water purifier jug and keep it in the refrigerator.  The water is already cold.  If I start to feel hot, a trip to the refrigerator for a glass of cool water is usually more effective than adjusting the thermostat downward.
5. No leaks – Make sure you don’t have any gaping holes around your windows or under your doors that are leaking in heat.  You can quickly fix any problems with foam, tape or other materials.
6. Garage oven – Depending on how your home is constructed, your garage may be acting as an oven.  Leaving your garage door slightly open or even setting up a fan to help push out some of the heated air can make a big difference in the temperature in your home–especially if you have a room above the garage.  Consider where the sun hits to keep things as cool as possible.
7. Plant a tree – obviously this is a very long term solution, but a well placed tree can do more for keeping your house cool than just about anything else. If you plan carefully, you can place it where it will keep the summer sun off your house, but still allow plenty of winter sun rays when you want the extra heat.
8. Green house glass - If your windows are made from standard glass, they may be acting as a green house.  Anything you can do to help keep the heat outside will help your energy efficiency.  This can be as simple as closing the curtains or as complicated as installing screens that help block the light.  Tin foil to block out the windows is also effective, but might not look particularly nice.
9. Dryers, Ovens and Appliances – Your appliances can be a big source of heat in your home.  If you really want to keep the heat out, consider hanging your clothes outside to dry.  Even if you still use your dryer, consider starting it before you go to bed so it won’t be running during the heat of the day.  The same thing goes for your dishwasher.  Planning meals that require less cooking on extremely hot days can also help.  Consider turning down your hot water heater a few degrees to help lower the amount of heat it is generating in your home.

Originally published August 16, 2007.

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I’m not saying you shouldn’t be proud of your work or enjoy your job, but I am saying that you shouldn’t let yourself get blinded to all these economic realities. No matter how good you think you are, you can be replaced. This is true now more than ever. In fact, if you are an extremely high performer and are being paid commensurate with your capabilities, your salary may be viewed as a large expense and make you an even more likely candidate for downsizing.

Although it didn’t hurt them financially, Steve Jobs was once fired from Apple — a company he founded. If you ever start feeling like your position is secure, think about Steve.

Here are some suggestions for keeping your identity separate from your work:

1. Diversify your friends. Make sure you have close friends outside of work. You don’t want your entire social life to crumble if you get fired from your job. Also, having friends at other companies increases your chances of finding another job through an acquaintance.
2. Volunteer. Volunteering your services for good causes can help you develop relationships outside of work. It also gives other people a chance to experience working with you. These interactions can be very beneficial in a job search.
3. Social groups. Getting involved in community groups, church groups and even the local bowling league are great ways to expand your world beyond what you experience 9 to 5.
4. Keep in contact. Make sure you take the time to invest in relationships with people you’ve known from the past. Former coworkers and fellow students are good examples. Make a purposeful effort to keep your interactions from only converging on a small set of people centered around your job.

Here are some suggestions for keeping a bit of financial independence from your job:

1. Have 6 to 12 months of savings. If you get laid off, you want to know it won’t financially devastate you while you look for another job.
2. Max out your health accounts. If you have any type of tax deferred health savings accounts offered at your employer, try to max those out.  That gives you some flexibility for healthcare if your work dries up.
3. Stay in demand. Volunteer for assignments that will give you experience with new technology or business methods. You don’t want to become stagnant where your skills are only relevant to your current employer. Keep up with what’s going on in your area of work even if it’s not happening at your company.
4. Live below your means. Don’t stretch yourself to your financial limit. Buy a house less expensive than what you can afford. If you need a new car, make sure you consider low mileage used options.
5. Educate yourself. Take full advantage of any educational programs for your company offers. Get a copy of the employee handbook and find out what type of educational reimbursement is available. Many companies have some type of educational reimbursement policy that isn’t common knowledge because so few people take advantage of it. Staying educated is a great way to make sure you have skills that are marketable. If your company pays for it, so much the better.

We are always going to be dependent on our employment to a certain extent, but a conscious effort today can help minimize the fallout from an unexpected job loss in the future.

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Maintenance costs

Computers are like cars. They have a finite life and at some point it is very likely that they will both need repair. The older they are, the more likely it is they will need repair. When people buy computers, they often focus on the sticker price and not the total lifetime cost. The one year warranty that comes with a computer automatically may be a lot cheaper than the three-year coverage, but how long do you expect to have that computer? If you expect to have it for three years, it usually makes sense to buy the three year warranty up front.

I’m not suggesting that you just blindly purchase the longest warranty possible. Read the fine print. You need to know how long the warranty lasts, what it covers and how long it takes to get repaired. The best warranties I’ve had on laptops would send a repair man the next day with a replacement part and fix it on site. “On Site” meant everywhere from my hotel to my business to my kitchen table.

Even if the cost of the repairs doesn’t greatly exceed what you paid for the warranty, getting problems fixed quickly with a minimal amount of downtime can be invaluable. In fact, one of my biggest complaints about Apple computers is the amount of time it takes to get something repaired. They aren’t necessarily slow, but a three or four day turnaround time without your computer throws a significant wrench into your productivity compared with having someone show up at your door the next day.

Conversion costs

Another cost that most people overlook is the amount of time it takes to switch from one computer to the next. This has gotten significantly faster particularly with Macs,  but most people (particularly those who are technology experts) still have to invest a significant amount of time in changing computer systems. You have to copy your data, reinstall software, reconfigure your e-mail accounts and tweak all your preferences. Even if you know what you’re doing, this can easily take 4 to 8 hours.

I generally take the approach that I want to switch computers systems as infrequently as possible. Eight hours spent setting up my computer is a lot of lost productive time. Because of this I usually buy a top-of-the-line computer with a plan to replace it in 3 1/2 to 4 years. Buying a mid-range computer and replacing every 2 to 3 years might be less expensive in terms of up front cost, but more expensive in terms of setup time.

Last time I tried the Macintosh migration assistant, I was pleasantly surprised. If it always works that well, I may need to rethink my strategy and possibly start purchasing less expensive computers more frequently. The point is that you need to pay attention to the parts of computer ownership that consume your time.

Obviously my plan may not be what’s best for you. Make sure you consider the hidden costs of a new computer and creating a plan to maximize your return on investment in technology.

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1. Are you using direct deposit for your paychecks? — If you are still manually carrying a check to the bank or putting it in the mail, stop! Direct deposit will get your money to the bank faster so you start earning interest as soon as possible. Even if it only saves you 5 minutes every two weeks, that is an extra 2 hours each year you can spend on something more important.
2. Is your money in the bank earning at least 4% interest? — If not, look for a different account. There are many banks out there with savings accounts earning at least 4%. (Note: Interest rates have dropped considerably since this was originally written.  The point is that you should check your interest rate and make sure you can’t get something significantly better with a different account.)
3. Does your checking account earn interest? — If not, consider if you should switch to a different type of account. Sometimes combining your checking and savings into a single account will get you over certain minimums and allow you to earn more interest than either account could earn separately.
4. Are you paying any unnecessary fees to your bank? – Watch out for fees. Your bank should be paying you for the privilege of keeping your money, not the other way around.
5. Have you maxed out your employer contribution to retirement? — Many employers offer some type of matched retirement savings plans. If you put in 3% of your income, they will match it. (The best retirement plan I had matched 7%.) If your work offers this and you aren’t taking advantage of it, you are basically throwing money away. Sometimes companies don’t publicize this information very well, so be sure to check the employee handbook and any information on retirement benefits.
6. Do you have any old credit cards that should be canceled? — You might be surprised how many credit cards you have–especially if you tend to sign up for those promotions where you get 25% off your purchase if you sign up for a credit card at Target or JCPennys. If you have cards you aren’t using, you should cancel them so they don’t show up on your credit report and to reduce your chances of having to deal with fraud.
7. Are you using bill payment? – This is a time saving feature just like direct deposits. In my opinion, if your bank doesn’t offer this, you should switch banks to one that does. Many places offer free bill payment services. If they can directly wire money to the vendor, they will. If not, they will manually cut a check and send it. Bill payment saves you postage and makes it easier to manage your bills directly on your bank’s website.
8. Is your banking password secure? — If you read the fine print, most banks aren’t liable if someone breaks into your account because you didn’t have a secure password or had some type of spyware on your computer. Make sure your bank password is something secure. If they offer one of those security keychains with the changing number, consider getting one of those.
9. If you were to die, could your spouse easily find a list of all your accounts? — This is preparing for the worst case scenario, but if you handle most of the finances and you were to die, a very small amount of planning now will make things easier on your spouse. A list of bank accounts and insurance policies could make things much easier when you are gone.
10. Are you taking advantage of FLEX and HSA plans? — Some employers and insurance plans offer these types of accounts as a way of setting aside pretax money to use for health care. The rules are fairly liberal and you can use these accounts for a variety of things including contact solution and aspirin. If you know you will have some medical expenses, these can be good ways to plan ahead to lower your tax burden.
11. Are you taking advantage of preventative healthcare? — Insurance companies realize that it is much cheaper to treat problems when they are small. Many plans include routine checkups and office visits to encourage you to have things checked out early on. Some offer other wellness plans to encourage you to take care of yourself. Taking advantage of these plans can help keep you healthy and let you fully utilize the services that have already been paid for as part of your insurance policy.

Can you think of some key items that should be on this checklist? If so please contribute them to the comments.

Originally published March 12, 2008.

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When it comes to our personal performance, capital is an important concept.  True, we don’t usually call it capital, but if you think in terms of that which gives you options, it functions in the same way.  You have to build up a reserve of capital in order to accomplish anything significant.  As individuals, our capital may be skill, intelligence, our network of contacts, education, or relationships.

The options from which we can choose are very much dependent on the amount of capital we have acquired. For example, I do not have enough skill capital to sail around the world.  I do have enough to sail across a small lake with the wind at my back.

Your personal capital is something you have to intentionally develop.  You can increase your skill and intelligence by reading, studying, taking courses, etc. You can increase your relationships by investing time in them.  You can increase your network of contacts by reaching out to people and staying in contact with past acquaintances.

All of these activities are things that will increase the capital you have available to yourself.  The more capital you have available the more opportunities you will have to choose from.

Originally published February 18, 2007.

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I finally settled on two institutions; one for retirement type accounts and one for my non-retirement savings, checking and investments.  I contacted both institutions and gave them a list of what I wanted to move over.  On the retirement side of things, the transition went very smoothly.  They filled out all the paperwork, sent it to me for my signature and I FedExed it back to them.  The non-retirement side of things took a bit more work–probably because I was dealing with a smaller amount of money, so they made me do it on my own.

In the end, it has made things much easier for me to manage.  If you have worked several different places over the last decade or so and have retirement accounts in various areas, you might consider combining them.

One advantage I found was that with my combined balance, some of the fees I was paying are now waved on the retirement side of things.  On the non-retirement side of things, I have access to savings accounts and CD with a higher interest rate because I’m over a certain threshold.

On the negative side of things, I suppose there is a little more risk that someone could get into one account and take my money than getting into multiple accounts.  This is probably offset by the fact that, with my combined account on the retirement side, I have an account manager paying much more attention now because of the larger balance.

What are your thoughts?  Do you think it is better to combine to one or two institutions or keep things spread out with 5 or 6 different places?

Originally published March 19, 2008.

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He simply kicked the door in, got his keys and then went and purchased an identical door, which I helped him install.

Later on that day, I was talking with some other neighbors who are both police officers. They were staring at the mangled door next to the curb and wondering what happened. They commented that the doors and locks on our houses don’t really keep our possessions safe. For the most part, we rely on the good parts of human nature to protect our stuff. As my other neighbor illustrated, it isn’t hard to get into someone’s house without a key.

Here are several suggestions for keeping your house secure:

1. When you are going to be gone, let your neighbors know what to expect. If you are going to have someone house sitting, describe what the house sitter looks like. Better yet, introduce them. (I’ve got it pretty good where I live. There are three cops living within paper airplane throwing distance of our front door.)
2. Don’t leave a key under the mat. I know a family who came home to meet the plumber and discovered he had already found their hidden key and let himself into their house. He said “I thought you left it there for me to get in.” If the plumber can find it, so can anyone else.
3. Keep Off site Backups. If your computer is stolen, it can be replaced. However, 10 years of family photos on the hard drive and backed up to an external drive cannot be replaced. I try to put backups of important pictures and files in a safety deposit box two or three times per year.
4. Get a Safety Deposit Box. Where I live, you can get a mid sized safety deposit box for about $16 per year. This is the ideal place to keep car titles, social security cards, computer backups, jewelry and other valuable items. At that price, it is some of the cheapest insurance you can buy.
5. Don’t Advertise What You Have. If you can avoid it, don’t put a huge television or computer setup right in front of a window facing a street. If someone is looking to rob someone, they want an easy target. Don’t advertise your valuables.
6. Bolt Your Safe to the Floor. Safety deposit boxes are generally a much better option than a safe in your house. But if you do have a safe, make sure that a thief can’t just run off with it to open at their leisure. Even if you only keep documents in it to protect against fire, a thief won’t know that and it will look pretty valuable.
7. Make It Look Like Someone is Home. If you are gone overnight or late in the evening, putting a light on a timer and leaving your second car in view will help make it look like someone is home. A running radio will also provide some sound that has the potential to make it sound as if someone is home.
8. Security System. The most valuable part of a security system is the sign saying that there is a security system. If you want to save money, just buy the signs to put on the windows.
9. Dogs. Some insurance companies will give you a lower price on home owner’s insurance if you have a dog. Statistically, burglars are less likely to rob a house with a dog at home. Like the security system, you might be able to get by with just a beware of dog sign.
10. Information.  Sophisticated criminals realize that the information in the house may be much more valuable than the possessions.  If they can get your birthdate, mother’s maiden name, and your SSN, it won’t take much for them to get some credit cards (or even a mortgage) in your name.  While you may not be liable for the debt they incur, it can be a big hassle to get it taken off your credit report.

So, let’s say that you have some important papers or money that you need to keep at your house. Here are some ideas of places to hide valuables that a thief is likely to overlook. (A safety deposit box is still a much better option.)

1. Taped Under Furniture. An envelope taped under your dining room table is probably going to be overlooked. At the very least, they will check your desk drawers before looking under the table. Taped to the bottom of a trash can (outside the bag) or the bottom of the lowest shelf on a bookshelf are some other ideas.
2. In Books. You can easily hide bills in a book if you don’t have too many of them. You can also create a “book safe” by taking an old book and cutting a compartment in the middle of the pages. You can secure the pages with glue or nails. Just make sure the book doesn’t seem out of place with the rest of your home library.
3. Cold Air Return — Many cold air returns are great hiding places because they are fairly easy to get to, but an unlikely place for a thief to look.
4. Back of the Toilet – You’ll need a water proof container, but hiding something under the water in the back of the toilet can be a fairly safe place. Update: This is a bad idea if the thief is looking for drugs.
5. Refrigerator — You can easily hide an envelope in the back of the freezer under the frozen pizzas. Update: Also a bad idea if they are looking for drugs.
6. Furnace Air Filter — The furnace air filter is a good hiding spot, just make sure you don’t put in anything that could be sucked into the blower. It is better to put something on the cold air return side of things.
7. Suit or Coat Pocket — The pockets on clothes in the back of a closet can provide a good hiding place for valuables.
8. Behind Picture Frames — This works as long as the thief doesn’t try to steal the picture or take it down to look for a wall safe. Putting something between the picture and the frame backing is less likely to be noticed and a family picture is less likely to look valuable than something that looks like it might be a piece of expensive art.

Obviously, anywhere you leave valuables in your house can be found. You are probably best off coming up with your own unique place to hide things. Just make sure you don’t hide valuables in something that is likely to be stolen. For example, hiding an envelope inside of your desktop computer might sound like a great idea until you consider that the computer, itself, is a likely target.

Update: An ex-burglar says that hiding something anywhere in the bathroom or refrigerator is a bad idea. Evidently these are common places to hide drugs so they often get extra attention.

Originally published July 15, 2007.

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Food

• Try not to eat out. Food prepared at home is often better for your health, anyway.
• Turn leftover food into new dishes everyone will like. Lots of things can be made into soups or stews.
• Learn to make your own coffee/lattes instead of having to pay $4.
• Try drinking water instead of other beverages. It is much cheaper and can help prevent some health problems, helping you save on future medical bills.
• Angel Food Ministries is a great way to stock up on staples at a discount price. Some churches and other organizations sponsor this for those that are socioeconomically disadvantaged, but it is open to everyone that wishes to participate.

Finance

• Try to put aside gift money or unexpected bonuses for retirement savings or an emergency fund in case things fall through, financially.
• Give budgeting a try, or perhaps just try to cut one expensive, unnecessary expense out of your regular spending. This article from the Simple Dollar has some good advice for creating a budget.
• Pay off as much debt as you can now, if you have any.
• Planning ahead by creating a “Miscellaneous” fund for unexpected, smaller expenses can be a big help when this type of thing comes up.
• Consider getting rid of all of you credit cards except for one. Then hide this one at home so that you won’t be tempted to use it. For emergencies, you could stash a bit of cash in an envelope in your car or hide it elsewhere. Credit card debt can be especially debilitating when money is scarce.
• The general rule of thumb for emergency savings is to have at least 3-6 months of living expenses put away. However, now advisers are saying that a year’s worth of living expenses saved up would be a better goal.

Entertainment

• Entertainment can become a big expense. Instead, try looking at the library for books and movies.
• Instead of going to the movies, take a hike with a friend or find something else to do outdoors, like frisbee golf.
• If you don’t mind getting rid of the TV, this can save large amounts of money. There are several services, such as Apple’s iTunes, that allow you to buy films or rent them online.
• Also, you might consider getting rid of any magazine subscriptions that you don’t use at the moment. Check through the ones that just end up in the trash without being read and either cancel or don’t renew the subscription. One good alternative is using magazines’ web sites for some of the same information.

Fitness

• Instead of buying a costly gym membership, consider exercising at home. There are many things such as running, calisthenics and some weight training that can be done without access to lots of exercise equipment.
• Exercising can also help eliminate potential health risks, thus decreasing future medical bills.

Technology

• If you do a lot of printing at home, see if you can find refill kits for your cartridges. This is often much less expensive than replacing the whole cartridge.
• If you don’t absolutely need a laptop, you can save a sizable amount by purchasing a desktop, instead, when your old computer dies. Otherwise, perhaps you could consider a refurbished laptop.

Home and Work

• Try new ways to save electricity. One is using CFL bulbs that last longer and use a fraction of the electricity traditional incandescent bulbs do.
• Research before buying any electronic, appliance or vehicle. A bit of time spent now could save thousands of dollars later.
• See if you can find someone to carpool with on the way to and from work. This not only saves money, but also lowers mileage put on your car and gives you some company while driving.
• When clothes shopping, look for pieces that will match with much of what you already have. It is surprising what you can do with a few shirts in solid colors and other garments in basic black, white and khaki.
• In the summer, try gradually increasing the temperature inside your home. That way, when you go back outside, the hot weather won’t seem so bad, and it will save you money on the electric bill. In the winter, try putting on a warm sweater and socks instead of turning up the heat. It’s not good to take either of these to extremes, though. Neither frozen pipes nor heat stroke is very pleasant.
• Try to plan and batch errands so that you can save on gas. Doing things all at once saves time and hassle, too.
• There is absolutely no need to drive a new car. Used, reliable, gas-efficient vehicles can be found in many places. Just make sure the seller is just as reliable as the car you are purchasing.

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1. Avoiding Fraud

Debit cards and checks are some of the worst ways to pay for anything. Sticking with credit cards or cash can save you a lot of money.

Pretty much anything you do involves risk. When you carry around $50 in your pocket, there is a risk that you might lose it or get robbed. When you give a credit card to a waitress, there is a risk that she might steal the number. When you write a check at the grocery store, there is a risk that someone might take your personal information and use it to steal your identity. When you carry your ATM card with you, there is the chance that you it might get stolen, lost, someone might watch you type in your pin and then steal it, etc.

No matter what you do, there is an element of risk. What you want to do is minimize your financial exposure. Unfortunately, the two money vehicles (debit cards and checks)that are usually most touted to help keep people out of debt are also the ones that give you the least protection from fraud. Here is why.

Let’s say someone steals your check book or uses the account number to withdraw money from your account. You notice the problem on your next statement and call the bank. You now have to prove to the bank that they need to refund your money and put it back into your account. The money is already gone, you have to try to get it back. In the mean time, your mortgage and car payment are due, but you can’t pay them until you can convince the bank that fraud was committed.

Now assume that your credit card number is stolen. You notice a bunch of fraudulent charges on your statement and you call the credit card company. Normally, they will mark the charges as disputed and work with the merchants to obtain proof that you indeed made the purchases. You will pay the amount of undisputed charges.

Notice the difference? With checks and debit cards, you have to get your money back if it was taken by fraud. With a credit card, the credit card company acts as a buffer. The money doesn’t come out of your account until you pay the bill.

In addition, the information provided on a check gives away a lot of personal information that isn’t present on a credit card. Sometimes checks even have your SSN or drivers license number. These are excellent starting points to get access to your credit or other accounts.

Using a credit card helps minimize your exposure to fraud. There are some very ingenious crooks out there. The more you can do to reduce your risk, the better.

2. Keeping Records

Credit cards are one of the easiest ways to track your spending. When coupled with a program like Microsoft Money or Quicken, you can easily see where your money is going and keep track of how your spending is changing from month to month. Some companies are adding management features into their accounts so you can categorize charges online and view the totals for each category even without downloading them to your computer.

3. Cash Back and Rewards Points

Most credit cards have some type of rewards program. Generally these will give you 1% of the total of your purchases back in cash, points toward airline tickets, gift certificates for stores, etc. When looking for a credit card, compare these reward programs. Some only give you the equivalent of .05% back.

4. Other Benefits

Most cards have a bunch of other benefits that are buried in the fine print and people generally don’t take advantage of. For example, most VISAs have an extended warranty plan. If you buy something with a 1 year warranty and it fails 18 months after the purchase, the credit card company will replace or repair the device for you–even though the original warranty has expired.

Some cards offer a service where they will keep track of all of the warranties on all of your appliances and home electronics. A number of cards give you theft protection if you have an item (that was purchased on the card) stolen within a certain period of time.

Other cards give you travel insurance in case you die or are dismembered (the term they actually use) on a flight paid for with your credit card. Many have insurance that can be used in lieu of the additional insurance car rental companies try to sell you when you rent a vehicle.

Some cards (particularly American Express) offer roadside assistance, travel planning, international travel emergency assistance and even personal concierge services.

Take the time to look through the fine print that came with your credit cards. You’ll probably find a bunch of features that aren’t useful to you, but you may find one or two that are actually valuable and could save you some money.

Originally published June 15, 2007.

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Okay, back on track.  When you do work, you are providing value to someone.  Actually, you are providing value to several people.  You are providing value to yourself (assuming you get paid for your work). You are providing value to the end customer and you are providing value to your employer.  If you work for the same employer for years, you will have built a great deal of value that goes beyond just the work you were paid for.  Your work is contributing to making the business, itself, more valuable.  Eventually, the owners of the business can cash out.  They can take the value that has accumulated and sell the business to someone else.

The problem (from your standpoint) is that a good portion of the value you help create is never going to benefit you.  Someone else is taking the risk of running the business and so they are getting the reward.

Now, assuming you are someone who puts a lot of effort into being highly productive, this means the value that you are producing is much greater than the value you receive.  The discrepancy is caused by the fact that someone else (the business owner) is being paid to take the risk of being in business.  Part of the value you produce is going to paying for your job security.  So basically, you make a little less in order to have a secure job.  Sounds reasonable right?

Well, not really.

Just how secure is your job?  Companies merge, fold, downsize, and do all kinds of things that end up laying off employees.  The idea that your job is secure is probably more of a fantasy than reality.  So, what ends up happening to the value of what you produce that is in excess of what you are paid?

Several years ago, much of it went to support work systems.  The cost of running your own business was so great that you had to work for someone who hired enough people to justify the cost of a computer system, network, telephone system, advertising, payroll system, etc.

This is not as much the case today.  Many of the systems that were very expensive 5 years ago are now handled by simple subscription based services.  For example, I pay $50 per month to have a company run my payroll and handle direct deposit for my company.  I pay another $30 per month for a dedicated webserver when a T1 line alone would have cost $1,200 just a few years back. For a few hundred dollars each month you can even get an ERP CRM system that rivals the systems many Fortune 500 companies put in for millions of dollars.

My point is that the benefits of working for a large company are shrinking.  If you are someone who really concentrates on doing work that is above average, you should probably be considering a plan to go into business for yourself.  It isn’t easier to work for yourself, but if you are willing to work hard, you can build your own business in a way that captures as much of the value of your work as possible instead of basically paying someone else for a false sense of security.

Originally published May 3, 2007.

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Our evening entertainment usually consists of going for walks down the brick-paved streets. The town is small, so you can cover a significant portion in a few 3 mile walks.

One thing we’ve noticed is that the average number of dogs per house on the less affluent side of the tracks is much higher than on the wealthy side of the tracks. On the East side, it is common to see 3 or 4 dogs staked out together in a small yard. On the West side of the tracks, people still have dogs, but it is rare to see more than one per house.

In my experience, being “poor” has less to do with how much money you make and more to do with whether or not you are financially disciplined. On our walks, there seems to be a high correlation between people who need to fix their roof and people who have 5 or 6 dogs. The same trait that causes people to not keep up their house seems to prevent them from making rational decisions when it comes to a cute puppy (that will grow into a 70 pound dog).

The point I’m trying to make is that people spend too much time focusing on how much money they make and not enough focusing on how to be wise with what they have.

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