Recently, my mother celebrated her birthday in her usual quiet fashion. She likely never mentioned the day to anyone, remaining just happy to receive a few calls and a gift or two from the people who remembered on that day. That’s just her style.

When I was young, my mother was always the person in the house that managed the checkbook. She would pay the bills, determine whether or not there was any extra money to spend, and prioritize things. She did this pretty quietly - the bills would simply be paid, the allowances would simply appear, and we all had so much faith in her that no one asked questions.

During the hard times - and there were hard ones, when my father was laid off from his job, for example - she managed to somehow keep every bill paid, keep food on the table, and keep the stress of the situation far away from us kids. We weren’t completely naive - we were aware that money was tight. Through it all, though, she kept her composure and calmness, keeping a miserable financial situation from becoming a negative influence on the rest of the family.

When times were good - when our family’s “side hustles” were booming - she didn’t always plan for the future as well as she could have. Instead, she spent the money on us. We would go out to eat as a family at a nice restaurant. She’d quietly pick up a video game or a book that I had been wanting and would just drop it on my lap with a smile and a hug.

More than anything else, though, she taught me to think for myself in a culture that often encouraged groupthink. She would constantly encourage me to read more about a topic I didn’t fully understand. If there was an ethical dilemma, she would sit me down and make me work through it on my own, teaching me how futile and wasteful such things as racism and sexism were along the way.

Through all of this, she would never take credit for the amazing things she did - being a parent for one of her own children and two step-children, being what amounted to a foster parent for several other children that lived nearby in tough home situations, paying the bills, preparing all the meals, keeping the house tidy, working a part-time job, playing a huge role in keeping several “side hustles” going, and still finding time to sit down with anyone who needed a shoulder to cry on or an ear to listen to their problems. If you asked her then - or asked her now - how things were going, she would mostly just reflect on the accomplishments and activities of the people dearest to her, totally minimizing her own contributions to the effort.

Frugality. Humility. Compassion. Encouragement. Reasoning. Ethics. These were the tools that my mother gave to me that built me into the person I became.

With those tools, one might wonder how I ever got into financial trouble at all. If I was raised so well, how could I have dug such a big debt hole?

It’s quite simple. You might have all of the tools in the world, but it takes time and effort to learn how to use them. Consider a four year old with a hammer. He or she might have an understanding as to how the tool is used, but that won’t prevent them from swinging the hammer wildly and smashing their finger.

That’s the state I spent most of my early adulthood in. I was much like a young child with a hammer, swinging my credit cards and my checking account wildly around with only the vaguest ideas of how to use them as tools. Those wild swings hurt me quite a bit, putting me in a financial place that was hard to dig out of.

That’s when the final tool really came in handy: the ability to reflect on my mistakes and learn from them - and apply those lessons to further growth. The ability to recognize that I had messed up, to reflect on exactly how I messed up, and to apply those lessons to my future life was in fact the greatest gift.

I leave you with this one final thought: if you have found yourself in a sticky financial situation, don’t just thrash about for a quick-fix solution to the problem at hand. Instead, spend some time reflecting on how exactly you got into that situation in the first place and look for some larger changes in your life that you can make so that you never go back there. Out of all of the things my mother taught me, this was the most valuable lesson of all.

Thanks, Mom. Happy birthday.

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. Here are some articles that include tips for new homeowners, quite a few of whom have written to me recently with questions.
Reflections On Being A New Homeowner
18 Things a New Homeowner Should Do Immediately to Save Money
Six Maintenance Lessons I’ve Learned During My First Month As A Homeowner

And now for some reader questions!

My question is about savings bonds. Friends and family have purchased federal savings bonds for our little one. Once mature, is it better to “let them ride” and continue earning interest or is it better to cash them in and invest either in more bonds or elsewhere?
- Courtney

It depends really on how little your little ones are - and also depends on how conservatively you wish to invest for your child’s education. If you’re not expecting to spend the money for fifteen years or more, the stock market will quite likely provide you better growth than savings bonds will, and you can invest in stocks easily by cashing in those bonds and putting the cash into a 529 college savings plan (Google for more details on the 529 plan for your state).

The drawback with stock investments is that they’re inherently risky. Over longer periods, stocks are usually a positive investment and regularly have returns substantially better than savings bonds - but there’s no guarantee of that positive return. If the idea of putting that money at risk bothers you, then you should stick with the savings bonds.

For our children, we have the pedal to the floor - our one and three year old have their entire 529 savings in stocks.

How does someone learn more about politics?
- Nate

A big part of the answer revolves around what exactly you want to learn. Usually, people who ask such a question are trying to gain a greater understanding of how government really works and, at the same time, figure out for themselves where they stand on most of the issues of the day.

If you’re just generally lost when it comes to any aspect of politics (or any other topic), you should never be afraid to pick up a “Dummies” book on the topic to help you get a basic grounding. Politics for Dummies is a solid introduction to the topic from a heavily American perspective, for example.

If you’re trying to figure out where you stand on the issues, look for well-written arguments on both sides of the issue. There is no issue that is wholly one-sided - always be open to other perspectives and competing facts.

My favorite book on American politics, actually, is Hunter Thompson’s Fear and Loathing on the Campaign Trail ‘72. I’ve actually read that one several times.

I have recently started looking into couponing. My question is this. I have always shopped at discount stores (WalMart, Sams, etc.) and bought generic brands to save money. Do coupons really save that much money over doing that since you typically have to go to the more expensive stores to get the deals that are advertised (double coupons) and buy brand name things? Thanks!
- Tiffany

Couponing just for the sake of couponing rarely saves you that much when you’re comparing warehouse stores to other stores. Most coupons really don’t save you all that much unless it’s coupled with a truly effective shopping strategy - and that strategy varies from person to person.

What it really comes down to is whether or not it’s a cost-effective use of your time to use coupons. Can you earn minimum wage ($8 an hour in savings) during the time you spend hunting down coupons? If not, you might want to seek a different strategy.

What I’ve found that works best for me is simply sticking with leafing through the coupon sections during breakfast on Sunday mornings and clipping the ones that seem to pretty clearly be a good deal. There’s usually one or two in each flyer that stand out to me. The rest? I don’t worry about them. Given that it only takes a few minutes to do this, if I end up saving a dollar or two, it’s a cost-effective time investment for me.

When did you know that your wife was “the one”?
- Alvin

I knew pretty quickly after we started dating that I wanted her to be a part of my life for a very long time. I even told her this pretty early on.

Given that, though, I still was hesitant about things even up until a month or two before our wedding. I intended our marriage to last a lifetime, and I wanted to be sure about things before I made that commitment. I spent quite a lot of time soul searching in the months leading up to the event.

I made the right decision in the end, though.

Gas prices are so low right now but there is talk of them eventually going back up. Have you heard of any way to buy a large supply at today’s prices that you can use later after the price goes up? (Sort of a gasoline version of what we do at the grocery store when an item is on sale)
- Lois

There are no nationwide solutions for this that I’m aware of, though there are some startup companies that are attempting this, like MyGallons.

My feeling is that there’s a lot of room for success in this market if a company plans things correctly. I think MyGallons‘ model - treating it like a “membership club” with an annual fee - really can work, but I think it requires an organization that already has strong inroads at gas stations across the company. Voyager, are you listening?

Do you cut your hair differently in different seasons, or does it largely stay the same year round?
- Frannie

I keep it largely the same all year, with just a few little exceptions. I tend to let it get a bit longer during the winter to help keep my head warm, and I usually get a very short cut in late spring because my body’s adjusting to the substantially warmer temperatures that Iowa has in the summer as compared to the winter (an 80 to 100 degree shift).

I’ve used the same barber for more than a decade. Whenever I attempt to cut my own hair, I think it looks horrible and find myself returning to using him afterwards. I’m simply not very adept at cutting my own hair.

Hi! My son is 2.5 and we set up a 529 for him when he was born. I just had my second child and I want to know if I have to set up a second 529 for her, or can they share the same one?
- Shelly

You need to set up a second one for your second child, with that second child as the beneficiary. If you want to set one up before the child is born, set it up with you as the beneficiary, then change the beneficiary after the child is born. I did this with my second child and it was quite simple - it also allowed me to start contributing during the prenatal months.

If you simply put all contributions for both children into one 529, only one child will be named as the beneficiary and only that child will actually have any rights to the money.

You’re an RPG fan. What’s the best entry in the Final Fantasy series?
- “Sephiroth”

During my high school years, I played through Final Fantasy VI on the Super Nintendo roughly a dozen times, so I’d have to claim that one as my favorite.

Having said that, though, my favorite Square/Enix RPG is Chrono Trigger. It is everything I’ve ever wanted in a console RPG - great story, tons of replay value, a consistent challenge all the way along, deeply memorable characters - and it really stands out in terms of the uniqueness of the gameplay.

How much cash do you consider to be a reasonable amount to hold at home?
- Walter

I try to avoid keeping more than a few hundred dollars in cash in my home at any given time. The majority of that is spread about in a number of hiding places throughout my home.

Remember, any time you keep cash at home, not only is it not earning a return in some sort of investment vehicle (even a savings account), it’s also at risk from theft and house fire. Because of those risks, and because my local bank is literally within walking distance of my home, I don’t feel comfortable keeping a big wad of cash in my house.

Do you have any phobias?
- Sally

I have a few minor phobias that I can get past with some concentration (closing my eyes and counting works well for me). My worst phobia is flying, especially during takeoff - the first few moments of an airline flight are terrible for me.

However, I don’t have any severe phobias - nothing that would cause me to faint or anything like that.

Got any questions? Ask them in the comments and I’ll use them in future mailbags.

Every other Sunday, The Simple Dollar reviews a personal development, personal productivity, or entrepreneurship book.

As I’ve mentioned many times before, I’m a huge fan of David Allen’s book Getting Things Done. That one simple volume (which I identified as one of the ten books that changed my life) pretty much transformed how I organized my time, moving me from an unorganized slacker who had difficulty managing just a tiny apartment, a job, and a dating relationship into a person who managed a full time job, a house, two young children, and launched The Simple Dollar in his spare time. In short, Getting Things Done was a personal epiphany - and the very first book on time management I recommend to anyone (provided that they have the attention span to get through it - it is fairly dense).

Because of that, I was incredibly excited to receive David Allen’s latest book, Making It All Work, in the mail. Making It All Work is Allen’s true follow-up to Getting Things Done (his other book, Ready for Anything is something of a “Getting Things Done for Dummies” book), except this time around, Allen focuses primarily on some of the areas that GTD didn’t really touch upon - namely, control and perspective.

From my reading, I tend to think of the two books in the following way: Getting Things Done is the tool box, providing everything you need to get your life in order, but it’s lacking any sort of guidance on some of the larger things you can construct with it. How does it fit in the larger context of life? That’s where Making It All Work steps in - it’s much more of a context book.

In fact, when I put it down, my initial reaction was “Getting Things Done is stronger for engineers and left-brain types - Making It All Work fits better with right-brain types.”

While I’m a wholehearted “left-brain” type, I did find a ton of intriguing ideas and thoughts from Making It All Work. Let’s dig in and take a look.

A Walk Through Making It All Work

1. Introduction: From Getting Things Done to Making It All Work
Allen opens the book by essentially criticizing the limits of GTD - while it helps you become more effective at accomplishing individual tasks, it doesn’t go very far towards helping you put all of those tasks in perspective. What are you really building towards? What’s genuinely important to you and how does that take priority over other things? How do you make sure that your inbox doesn’t become too full, or that you don’t take on too many relatively minor responsibilities that begin to squeeze out your real priorities in life? These are the questions that Making It All Work intends to address.

2. The GTD Phenomenon
Why did GTD become so popular? Allen takes a rather egoless perspective here, arguing that it was mostly just a collection of appropriate long-existing principles packaged together that matched the needs of the time, that the principles were very easy to pick up, and that they could be folded together in different ways. I know that for me, I only use some of the bits and pieces I learned from reading Getting Things Done - writing down ideas as soon as they come into my head, processing those ideas once a day (at least), and doing a weekly review to make sure I haven’t overlooked anything. (Really, I mean it - if you haven’t read my review of Getting Things Done, you should - it’ll put a lot of these comments in context.)

3. Making It All Work - The Process
Many people like to think about the “work/life barrier” - the separation between their job and their personal life. Most people don’t like things that cross that barrier, and they get quite irritated when their job interferes with what they want to do with their personal time (and vice-versa, sometimes). Allen argues that this is really a trivial point. He believes that the real goal - whether you’re at home, at work, or anywhere else - is to get into “the zone” where you’re so engaged with whatever it is you’re doing that such barriers don’t matter. (I actually agree with him, by the way, but this will be a controversial point for some.) With all of the things being thrown at us all of the time, how can we actually get into “the zone” on a consistent basis.

4. The Fundamentals of Self-Management
The key to getting “in the zone” as often as possible is knowing how to manage your own mind, and Allen argues that the two keys to this are control and perspective. Control merely refers to the ability to choose between different options at any given moment - you don’t have to do any specific thing, but you have a lot of options at your disposal. Perspective refers to the ability to discern which of those options is the best one to choose at the moment. Obviously, these two are intertwined - Allen portrays them as a grid, actually. For example, a person with little control or perspective is a victim, a person with lots of control but little perspective is a micromanager, a person with lots of perspective but little control is a visionary “crazy maker,” and a person with lots of perspective and lots of control is a commander. Allen does point out that there are advantages and disadvantages of each state, but that it’s always better to seek to improve both control and perspective in your own life as it will make you more effective and more able to get in “the zone” of peak productivity. He also points out that these areas are in flux - there are some parts of our life where we are effectively victims, others where we are visionaries, and others where we are commanders - but that we tend to get in “the zone” and be most productive in areas where we are commanders.

5. Getting Control: Capturing
Allen identifies five distinct areas where we can get more control over our situation and lays each one out in a chapter, starting with capturing. Capturing basically means putting down on paper all of the things that are tugging at your mind: the tiny tasks you deal with all the time, the larger projects, the bits of information you’re trying to make yourself remember, the things you’re dreaming about, the things you wish you were working on, the things you’re planning for in the future, and so on. Sweep it all out of your mind onto paper. Don’t worry about how it’s organized yet. Just get out some paper and jot everything down that crosses your mind that has any importance to it - your next work task, the big project you’re considering, the Christmas gift idea you have for your Aunt Jenny, that idea you have for a short story - all of it. This clears your mind from the need to store and recall all of this material, which is important because that information is burning brain cycles. Allen also recommends keeping a journal where you jot down the events of each day, simply so you don’t have to waste time recalling when things happened and the details of such events - they’re in your journal.

6. Getting Control: Clarifying
So what do you do when you have this list of things dumped from your mind? You process it. Go through each item and ask yourself if it’s an action you can take right now. If it is, do it immediately (if it’s quick) or add it to your list of things to do today. If it’s not, add it to your date book, file it away for reference, throw it away, or start a folder for it (if it’s a potential future project). Do this with every item on your list. Then, whenever you have a new idea or something new comes in, add it to your list of things and just process that list every day (or twice a day). This way, you never need to waste your brain space on a to-do list or on remembering little facts or pieces of information - you can just dump it down and deal with it in due time. This enables you to stay in the zone and devote your brain power to the task at hand instead of wasting cycles on this stuff.

7. Getting Control: Organizing
As Allen puts it, “[b]eing organized simply means that where things are suits what they mean to you.” In other words, if you have a list of phone numbers, it makes sense to have them near your phone (or programmed into the phone). If you have books, put them on your bookshelf with the rest of your books. Organization doesn’t have to be the complicated routine that many people make it out to be - it’s simply making sure you can find things when you actually need them. Thus, for some people, their organization scheme can look anarchical to others - the key is that they know where the stuff is and it makes immediate and obvious sense to them. Figure out where your stuff goes intuitively for you - don’t worry about some great organizational scheme. Given that basic idea, however, Allen does spend quite a few pages laying out his own ideas about organizing information and things.

8. Getting Control: Reflecting
Allen argues that the previous three pieces of the puzzle won’t really work if you don’t review them on a consistent basis. He advocates spending an hour or two a week just making sure things haven’t fallen through the cracks, that you’re actually staying on track with your big projects, and that your organization of information hasn’t fallen apart, either. His argument for this is pretty simple - the time lost when your system isn’t working is far greater than the time spent making sure everything is still working fine.

9. Getting Control: Engaging
By engaging, Allen merely refers to the idea that you’re not doing all of this in a vacuum. The choices you make along the way - deciding which tasks to do and so on - always affect other people, and you should consider these effects when you reflect on the choices you’re making. A key part of this is really understanding the true core values of your life. Is your family really the center of your life, or do you value your career above all else? There is no easy and automatic answer to this question.

10. Getting Control: Applying This to Life and Work
So how do these five elements of getting control over a situation apply in the real world? Allen tackles that here with an extended anecdote about Gracie’s Gardens, a business left abandoned after the passing of the proprietor and how the person who is tasked with cleaning it up takes care of the situation - the assets, the correspondence, and so on. Although the situation is pretty simple, it makes the roles of the five elements of control quite clear.

11. Getting Perspective
Here, Allen begins to look at six different key elements of getting perspective over one’s situation. Allen’s basic argument here is that perspective helps you clearly distinguish the important from the unimportant and makes the elements of control you have over your time that much more effective.

12. Getting Perspective on the Runway: Next Actions
Allen starts off at the most basic place: what is your next action? In other words, if you’re sitting there ready to do something, what exactly are you going to do? Some of the time, this choice is very easy - you’ll merely engage whatever fire needs to be put out at the moment - but at other times, the choice is profound. Will you work on that PowerPoint presentation or play catch with your son in the yard? The choice becomes much less clear very quickly, and that’s why it pays to have a higher level of perspective.

13. Getting Perspective at Ten Thousand Feet: Projects
From the immediate action, Allen steps back a bit to look at projects, which he defines as collections of discrete actions that produce an outcome and can be completed within a year (although usually less). For example, my garden might be a project, or teaching my son how to write his letters. Usually, the projects you have on the table all have an immediate action to offer, but how important is that immediate action? It really depends on the relative importance of the project. Do I define it as more important to work on my son’s Qs or to get those tomatoes in the ground? Personally, I view the writing project as more important and would help my son before heading outside - however, perspective is important here, too. If my son wants to go outside and play in the yard, or if he’s taking a nap, that’s the perfect time for me to grab the trowel and head out back.

14. Getting Perspective at Twenty Thousand Feet: Areas of Focus and Responsibility
What aspects of my life need regular maintenance? That’s the question at this level - what are your areas of focus? More importantly, what areas take clear priority over the other ones - can you establish a hierarchy? I have several, with my writing and my family clearly on top of the pile. I also see the value of reflecting on this carefully, because if you truly understand the areas of responsibility in life and understand how they rank and relate to one another, it becomes much easier to just automatically prioritize smaller projects and tasks.

15. Getting Perspective at Thirty Thousand Feet: Goals and Objectives
Beyond your areas of responsibility are your wider goals. What do you want to achieve with your life, particularly in the next two to five years? What will you have accomplished? In many ways, I feel like I accomplished very little for the first twenty seven years of my life. I feel as though I began accomplishing things in the last three years - having children, launching The Simple Dollar, writing a book that’s already begun to turn up in unexpected places. What’s my eventual goal, the one that will probably cover the next few years of my life? I want to push some interesting changes in how people are able to access personal finance education for all ages (something you’ll be hearing about in the future but is already in the works). What Allen is driving at here is how exactly are you going to make your mark on the world? If you don’t know, it’s time to start thinking about it.

16. Getting Perspective at Forty Thousand Feet: Vision
So what’s beyond your life goals? Allen next moves onto what kind of life those goals, if successful, lead to. Let’s say I achieve every major goal I have set out for the next few years. Where will I be? What will come next? How much further can I reach? Do the goals I have in place for the next two to five years put me in a place that I actually want to be? If so, which of those goals are the most effective at putting me in a good place for the long haul?

17. Getting Perspective at Fifty Thousand Feet: Purpose and Principles
From there, we zoom out to your whole life. What principles do you live by? What is the purpose of your life? What do you hope to accomplish with your life, and are you actually setting long-term goals to get there? What do you want written as your epitaph?

What really stands out for me in this is that each level of perspective is something of a filter for the lower levels. More importantly, they each demand a lot of introspection, but once you figure things out, they form a very quick and very effective filter for pretty much every choice you have to make in life. Without this introspection - and it does take time - I might spend a lot of time puzzling over whether I should play with my kids or work on an article. That time spent deciding what to do - or making incorrect rash choices - is time in the present that’s lost. On the other hand, the more time I spend (when I have that spare time) truly reflecting on the higher levels of perspective in my life, the easier (and quicker) such minor choices become - and the easier it becomes to get things done. I think this is one of the biggest points of the book.

18. Getting Perspective: Gracie’s Garden Revisited
To show how the principles of control (from earlier in the book) intersect with the levels of perspective, Allen goes back and takes another look at the analogy from Chapter 10. Allen literally takes the priorities for the project from the level of purpose and basic principles all the way down to next actions and shows how they all link together and inform each other. Knowing each higher level makes it much easier to figure out what needs to be done at that level, all the way down to immediate next actions.

19. Making It All Work - In the Real World
Allen closes the book with a bunch of simple steps on how to get started: among them, start sweeping out all of that stuff that’s in your mind and get it down on paper, spend some time getting your stuff organized, and spend a lot of time reflecting on all of the levels of perspective and how they apply to your life - the latter of which you can do when you’re commuting or waiting at the doctor’s office, for example. When you get all of these pieces in place, it becomes quite easy to figure out what you need to do next, not have things fall through the cracks, and still have more free time than you ever thought possible.

Some Thoughts on Making It All Work
Here are three big thoughts I had while reading Making It All Work.

The “control” portion of the book is basically a rewrite of the mechanics of Getting Things Done. It’s just rewritten in a structurally different way, breaking things apart quite a bit differently than how it was broken down before. For me, the most liberating part of Getting Things Done was simply the idea of doing “head sweeps” - jotting down all of the little ideas in my head so I didn’t have to think about them. I was quite glad to see a chapter devoted to it.

The “perspective” part of the book was where Making It All Work really stood out. Although Allen did include this material in his first book, it took up all of a few pages and was largely glossed over. Here, it takes up the majority of the book - and it’s vital stuff.

The difference between the two books is the difference between engineering and philosophy. Getting Things Done is the “engineering” book - it does a better job than this one of logically laying out the pieces of how to organize all of your tasks. Making It All Work is the “philosophy” book - it doesn’t focus on the details of an organizing system much at all and instead focuses on why you would do it and the thinking you need to do before such a system would work. These two books, in the end, complement each other.

Is Making It All Work Worth Reading?
Making It All Work whether you’re a fan of Getting Things Done or not. The two books are quite different, but very complementary to one another.

If you tried reading Getting Things Done and didn’t like it at all, Making It All Work backs strongly away from the minutiae of organizing your time and instead focuses on why you’re organizing it. Instead of setting up a system, the real meat of this book comes from introspection - the actual “system” here is secondary. Thus, I tend to think this book has quite a bit of useful meat for people interested in time management even if they didn’t like Getting Things Done.

On the other hand, if you did like Getting Things Done, quite a bit of Making It All Work will seem repetitive. You’ll recognize most of the middle chunk of the book as a rewrite of Getting Things Done and, if you already know how to use the system, this part probably won’t contribute new thoughts into your head. Where this book begins to kick into gear for you is in Chapter 11 - the real value of this book for GTD fans is the chapters on perspective.

I thoroughly enjoyed Making It All Work. While it didn’t mechanically change anything I do for time management, it gave me a ton of food for thought about the choices I make each day, thinking that I can already tell is making it easier to make immediate choices about what to do next. Making It All Work is a terrific complement to Getting Things Done and well worth reading for anyone interested in the topic.

Over the last few weeks, I have been reflecting on how many members of my rather close extended family are either near high school graduation or are in college right now. They have so many great opportunities ahead of them in the next few years - and so many chances to botch things, too. Stephen, Brittany, Robert - these are some of the stupid things I did in college that I wound up regretting financially for years. In some ways, I’m still suffering the repercussions. Don’t do the same.

One of the first major articles I wrote on The Simple Dollar was a ten-part series that amounted to my personal financial biography - if you’re interested, it starts here. Reflecting back on a lifetime of financial mistakes, I always come back to the idea that my college years were when things really went off the rails for me. Those first years of financial independence, where I had no idea what I was doing with money and no sensible guidance to help me out, caused me to develop a lot of atrocious money habits. While I covered a few of them in the biography, I felt that I only really scratched the surface when it came to the mistakes that I made.

Here, then, are the seven biggest financial mis-steps of my college career. I sincerely hope that you don’t make the same ones.

1. Going in the door without a clue.
When I went to college, I not only had no idea what I wanted to study, but I had absolutely no idea what the experience would be like. The end result? I wasted a lot of time in classes that I didn’t really need. I spent time blindly involved in activities and social events that never really clicked with me. I built at least three distinctly different groups of friends during my college years - and watched them all dissolve in a blink. I failed to really get involved with anything interesting until very near the end of my college years.

What I should have done More than anything, I wish I had spent my junior and senior year in high school doing some real soul searching to figure out what I wanted to do with my life. I also wish I had asked everyone I knew that had attended college for advice on the experience just so I knew what things people consistently found valuable. I didn’t do either of these things.

2. Extending my stay for two extra years.
After four years, I had actually managed to complete a degree within the years covered by my scholarship. Sounds like a perfect time to start a second one, huh? I spent two more years in school - paying out of pocket via student loans - earning a second degree.

What I should have done Again, if I had properly explored my interests early on, I would have had a much better idea as to what I should have studied in college. Similarly, I should have ignored any and all advice relating to what major you should or shouldn’t have if you want to earn a good income. Earning a good income relies much more on building diverse and marketable skills, not what you majored in - what’s actually important is that you completed a degree and learned some generally useful skills along the way.

3. Failing to take advantage of all of the non-classroom opportunities.
I spent much of my extracurricular time in college wasting time. I played piles of video games, hung out with a lot of people that I barely saw again after college, watched piles of awful movies, and thoroughly explored the outer boundaries of wasting time. While “downtime” is a healthy thing in reasonable amounts, I certainly burned through more than my fair share of it.

What I should have done I don’t entirely regret all of the time I spent involved in such frivolous activities - some total leisure time is good for everyone’s mind. However, I should have spent at least some of that time involved in activities that were simultaneously fun and also enriching in some fashion, such as seeking out interesting organizations to participate in or getting involved with volunteer projects or actually building some connections and friendships with people on some version of my own career path. I didn’t do any of that, and it was a profound misuse of my time and also of my financial investment in school.

4. Signing up for a credit card - then using it with reckless abandon.
During my second year of college, I signed up for a credit card at one of those little booths that credit card companies like to stick up on college campuses. I don’t remember exactly why I signed up - it probably seemed like a good idea at the moment and I likely got a free t-shirt out of the deal. The real problem came later - I decided to start using it a little. And, rather quickly, a little turned into a lot. By the time I left school, I had thousands in built-up credit card debt.

What I should have done Signing up for the card wouldn’t have been a huge mistake if I had a plan in place for using it. I should have simply used the card to pay for textbooks each semester, then lived off of my stipend and the money I made from a part-time job. That way, I could have built up my credit in a positive fashion and not left college with a bunch of needless consumer debt that required me to keep writing fat payment checks for years.

5. Not taking my classes with enough seriousness.
For the first few years of my college career - actually, for all the years except for my last one - I believed I could coast through things using the awful study habits I had built up during my high school years. In other words, I believed that I didn’t have to study for tests and that I could handle assignments by doing them the night before. Both assumptions were absolutely ridiculous - and my GPA suffered greatly for it. My final year’s GPA was almost a full point higher than my cumulative one - and my final year was the only one that I used healthy study and assignment habits. That GPA turned out to be a barrier against getting into graduate school in my area of interest - and it also didn’t help with my initial job hunt.

What I should have done I knew from the start that my study habits were awful, but I was able to squeak by with those habits. Instead of just squeaking by, I should have put serious effort into picking up solid habits from the start - and there were certainly opportunities for it. Simply using better classroom and study habits would have substantially raised my GPA - and likely substantially raised my short term post-college earnings and opportunities.

6. Not figuring out how to manage my money right off the bat.
For my first four years in college, I used a check cashing service to cash my paychecks from my part-time job, and I used money orders to pay bills. Seriously. I would dock myself 4% for the check cashing fee, then I’d dock myself almost another dollar for each “check” I would write. Even when I finally got a free checking account at a local bank (with free checks!), I didn’t even try to keep the account balanced at all. Instead, I mostly just relied on memory and whatever balance the ATM told me I had in the account. The end result? Lots of ATM fees and more than a few overdraft fees during those heady college days.

What I should have done I should have signed up for that free checking account on the first day of school. If I were doing things all over again, I’d sign up for something like ING’s Electric Orange so I could do most of my checking account business purely online and have any paychecks directly deposited there. That way, I would avoid almost all of the stupid fees I paid, have access to all of the information about my account all at once, and also earn some interest on that balance.

7. Living large off of my stipend and student loans.
During my first four years of school, I actually had a surplus of scholarships that enabled me to receive a small living stipend while I attended school. Yet I managed to spend all of that, all of the money I earned from my part-time work, and built up some credit card debt as well. During my final two years, I took out the largest student loans I could so that I could continue to have that “stipend” money and keep living that lifestyle.

What I should have done I should have actually attempted to live the cheap college student lifestyle. There was always tons of free entertainment available around campus, and plenty of free food if you attended group meetings. I didn’t really need all of the electronics I bought, either - most of them were scarcely used at all. Instead, my focus should have been on trying to build up some savings my first four years so that my student loans would have been lower my final two years - or, even better, that saved money could have been a good start on my post-graduation life had I been able to actually graduate in four years.

What did these mistakes add up to? When I left college, I had over $30,000 in student loan debt (unnecessary), two degrees (one of which I didn’t really use at all), several thousand in credit card debt (totally unnecessary), a subpar GPA (easily avoidable), and only a few good connections and friendships that lasted into post-college life (although the few I had turned out to be very good ones). In many ways, I’m still paying for those mistakes, many years after graduation.

Don’t let it happen to you.

After writing this, I’m pretty sure that this article will stir up some potentially intense comments. I encourage disagreement with my take on this situation - just keep it polite towards me and especially other commenters.

For those of you who haven’t heard the news yet, on February 10, 2009, the Consumer Product Safety Improvement Act comes into effect. One of the major changes that this program will bring into play is a mandate that everything sold for children 12 and younger will have to be tested for lead and phthalates, and anything that isn’t tested (or that fails) will be considered hazardous and cannot be sold. Read more about the CPSIA at the L.A. Times and some interesting blog commentary from the fashion industry.

For new products, this isn’t an issue at all and is in fact a good thing. Many products are already being screened with such tests, and those that are not will be required to begin such testing shortly or will be pulled from the market. In terms of safety for my children, I’m quite happy with the effects of this law on new products.

Where things get interesting is with used products. Consider your local resale and thrift shop. Currently, all of their secondhand children’s clothes will have to be tested for lead and phthalates. Given that many such stores aren’t high-income operations - many are nonprofits - these shops simply cannot afford to do the testing on the children’s clothes on their shelves.

So what happens? Most thrift shops are currently not accepting any children’s clothing at all. Sometime in the next month or so, all thrift shops will have to clear all of their children’s clothing from the shelves … and send them to the landfill. (It’s worth noting that the Consumer Product Safety Commission is considering a reprieve for products made from natural materials, which would exempt some clothes, but not nearly all clothes.)

What are the effects of this?

Used children’s clothing stores, like Kid to Kid, are basically going to be forced out of business. With no way to easily distinguish between “safe” and “unsafe” clothes without testing every item that comes in for lead and phthalates (which is fairly expensive), these stores can’t stay in business. Either their business model will have to change or they’re done.

Children’s clothing at secondhand shops will vanish. They simply won’t carry such products because of the liability risk, so they won’t carry such clothes for at least a few years.

Landfills are going to fill up. The inventories at these stores will no longer be able to be sold (though they may be able to be given away). Thus, these stores are going to have to either toss their inventory or simply give it away to charities.

The big question here is are these effects worth the benefit of eliminating children’s clothes that have some chance of being tainted with lead or phthalates? This is a question that could be debated for years.

Obviously, from the singular perspective of children’s health, it’s far better to have all of their items lead and phthalate free. Even if the chance for exposure from an individual item is slight, having that chance reduced is better for the health of children. It’s worth noting that most articles of clothing that children wear are made largely out of cotton or other natural materials and are not treated with anything. Areas of concern for lead and phthalates would be clothes that were treated to be flame-retardant, clothes made out of artificial fibers, and potentially clothes that have plastic printing on them.

On the flip side of that coin is the fact that this will increase the cost of children’s clothing. Without any changes to the law, used clothing stores will no longer sell low-cost slightly used children’s clothes, a resource that many frugal and low-income families take advantage of.

Are there any useful potential compromises? One simple thing that could be done is to simply exclude used products from this law. This would require Congressional action, but would allow Goodwill (and other such secondhand stores) to continue selling low-cost children’s clothes - the availability of which is very important to families with low incomes. Similarly, the law could be amended to apply only to items made after February 10. In both cases, though, Congress would have to act on the matter, so if you feel this is important, contact your congressperson and ask that they amend the Consumer Product Safety Improvement Act in a satisfactory fashion.

So, what should a frugal parent do?

First, you need to consider the question right now whether you are personally concerned with this issue and your children’s clothing. To be quite frank, it’s a reasonable decision to decide that you aren’t really concerned with this, considering your children are likely already exposed to substantially more lead and phthalates from other products besides their clothes - it may be much like worrying about a molehill when there’s a mountain nearby.

If you are concerned about this issue, you should halt your purchasing of both new and used children’s clothes until after February 10, then purchase only new clothing.

If you are not concerned about this issue, now is the time to stock up on such clothes. Hit used clothing stores hard in the next month, as many such stores will begin seriously cutting their prices on used children’s clothing as the cutoff date approaches.

If you have clothes that you’re no longer going to use, you may want to consider handing them down directly, as you’ll likely no longer be able to donate them. Look for people who could use the clothes and offer to just give them everything you can’t use - or sell them at a low bulk price.

Now, two questions for discussion about all of this.

First, are issues like this even worth worrying about at all? It’s a reasonable perspective to look at situations like this and simply shrug them off - there are so many safety issues out there that obsessing over a small chance of lead or phthalates in children’s clothing or toys isn’t worth your while unless you’ve been alerted to a very clear and onerous situation. At the other end of the spectrum comes a parenting philosophy where one buys only all-natural toys and such to avoid such chemicals in the home. I fall somewhere in the middle - I like to be aware of such things and I’m sure to keep an eye out for product recalls on children’s toys in our house, but this news story is not about to make me start chucking out my kid’s clothes.

Second, is a law like this fair? Again, I see both sides on this one. My personal feeling is that used items should be exempted from the law for at least a year - and that items sold post-testing should have a symbol on them somewhere for easy identification. I tend to think that the law does make a lot of sense for new products, but it’s very aggressive on the used items.

I’m really interested in your thoughts on this issue (and similar consumer issues).

This Christmas, I received a 32 GB iPod Touch as a gift - yes, it was the main gift I received this year. Unsurprisingly, after receiving such a cool gadget, I spent much of the last week playing with it - I can now Twitter with it, check my email on it, have a feed reader set up so I can read blog posts anywhere, and tons of other things.

One of the more intriguing features of the iPod Touch (and also the iPhone) is the availability of an “App Store” with just one bump of the finger. With the App Store, you can just push your finger on the screen a few times and download new applications for the device - things like games, productivity tools, and so on. Many of these items are free, but some of them cost a few dollars. Even more tempting - with just a finger push, you can download music from the iTunes Music Store - $0.99 a song.

At first glance, you might think this is really convenient - and it often is. I don’t need to be near my computer to listen to a particular song or download a game - just a couple of finger flicks and it’s downloaded. Sounds nice, right?

The problem with that is it becomes very easy to get very used to the convenience - and download more than you think. I know I certainly ran into this over the last week. Without thinking too much about it, I downloaded two albums and five different paid apps - and the bill totaled $36. Wow.

Thankfully, I received a $25 iTunes gift card that paid for most of these expenses, but it’s actually another sign of how convenient the downloads are - I didn’t actually believe I had already spent the whole gift card until I sat down and actually added up the numbers myself.

Here’s the thing: this is bound to become a more and more prevalent problem as technology advances. I know that my wife feels a similar temptation with the Kindle she’s had for more than a year now. Instead of having to go to the library or to the bookstore, she can just click a few times on her Kindle and download virtually any book she might want to read - but for most books, it costs her a bit. Many cell phones have downloadable applications that provide a similar temptation, too.

Given that I already see myself using my new device on a daily basis, how exactly can I overcome the ultra-convenience of such purchases? Here are the tactics I’ve put in place.

Make it inconvenient to download, period. I did my best to hide the “App Store” and the music store on my iPod Touch. I actually have to put in some effort to find them now, which means that by default I tend to focus on the things that I already have. And that, my friends, saves money.

Don’t browse aimlessly. If I’m playing around with my gadget, there are plenty of things to do besides simply wandering around the shop. Sure, it’s there to be used if you’re searching for something specific, but if you really don’t have anything in mind, don’t use it at all.

Do purchase research in advance. If you’re thinking about downloading something, do your research first. Make sure you’ve figured out exactly what item you want. Listen to album samples on Amazon or somewhere else where it’s far less convenient to purchase. Read reviews of the applications online. Only when you’re sure you know what item you want should you hit the store to download it.

Use the ten second rule. The “ten second rule” has saved me from making impulsive purchases many, many times. It’s simple - each time you go to make a purchase, spend ten seconds asking yourself why you’re making this purchase. Does it actually fulfill a real need? Couldn’t you find this same item somewhere else for less money? Do you really even want it, or is it just impulsive? Why do you want it? After ten seconds of such reflection, it becomes pretty easy to not purchase that album or that silly game.

Budget for anything unnecessary. All of us have different fun things that we enjoy, but when such enjoyments become very convenient, it’s easy to spend more than we think. The best way to combat this is to create a very careful “entertainment” budget for yourself. Allot a certain amount that you’re allowed to spend each month on entertainment purchases and keep careful track of your spending. I often use an Excel spreadsheet for this when I’m keeping tabs on a specific spending area. This way, when you make an impulse purchase, it’s not going to create a major money issue as long as you keep track of it.

Appreciate the freebies. Interestingly enough, most of the best things I’ve downloaded for my iPod touch were absolutely free: Twitterific, The Weather Channel, Stanza (a book reader), Pandora, and Remote were all free and I use them all a ton. This actually applies to other aspects of life - I usually go to Sam’s Club once a week for grocery shopping and I appreciate all the free food samples that are there as they usually make up my Saturday lunch, for one, and for another, one of our favorite activities when the snow isn’t on the ground is going to the park a few blocks from our home where there’s a ton of playground equipment and an excellent free disc golf course.

Good luck with your impulsive spending!

Note: I am aware that the image above is actually of an iPhone instead of an iPod touch. However, they look very similar and I simply elected to re-use one of my favorite images.

This is the thirteenth in a weekly series of articles providing a chapter-by-chapter in-depth “book club” reading of Benjamin Graham’s investing classic The Intelligent Investor. Warren Buffett describes this book: “I read the first edition of this book early in 1950, when I was nineteen. I thought then that it was by far the best book about investing ever written. I still think it is.” I’m reading from the 2003 HarperBusiness Essentials paperback edition. This entry covers the twelfth chapter, which is on pages 310 to 321, and the Jason Zweig commentary, on pages 322 to 329.

This version of The Intelligent Investor was written by Ben Graham in 1972, yet time and time again I am practically convinced that Ben is actually writing about today’s stock market.

It’s not so much that Graham is some sort of prophet. You can tell from some of the specific examples that he’s clearly writing from the perspective of thirty five years ago. He vastly overestimates the value of bonds, at least in terms of how people today would invest. His specific examples of dominant companies are rather laughable in today’s market - some are completely out of business, while others are shells of their former selves.

What’s amazing about Graham’s writing is that he really understands the basic principles that underline all of this stuff - and those principles are largely still true. Then, as now, greedy businesspeople will try to cook the books. Then, as now, investors have something of a herd mentality and will overlook some serious values if that’s not where the herd is. Then, as now, salesmen and charlatans pose as legitimate investment advisors, peddling dubious advice and collecting kickbacks all along the way.

It’s because of Graham’s deep understanding of this that The Intelligent Investor is still such a valuable book. Gloss over the specifics and look at the principles. You’ll find that they’re incredibly accurate.

If a thirty-five year old book can be so prescient, one can’t help but wonder what value all of the modern information flood has when it comes to investing.

Chapter 12 - Things to Consider About Per-Share Earnings
This is actually a pretty short chapter. Graham really only has two major points to discuss about per-share earnings - the amount of money a company earns on paper for every single share of their stock.

First, don’t take a single year’s earnings seriously. There are many, many reasons why a company’s single-year earnings can be completely out of whack with the true reality of the health of a company. For example, many of the companies affected by the subprime lending crisis had extremely anomalous single years for 2008 in terms of earnings because they wrote down those losses all at once. Similarly, a company can have very nice returns in a single year thanks to a short-term effect - a big fad or something like that.

What should you do instead? You should look at earnings over as many years as you possibly can and attempt to get a real bead on the direction the company is going over the long term. A single year is not enough to accurately judge the direction of the company.

That leads directly into Graham’s second principle, if you do pay attention to short term earnings, look out for booby traps in the per-share figures. In other words, if a number looks too good to be true, it probably is.

What can you do here? If you use that short-term number for anything important, you need to do some serious research into the stock. Read the annual report. Read the SEC filings. Dig into the details of what is actually included in the earnings number being used here. What’s being included in it? Are there “one time charges” all over the place? What are those charges, and how would the number change without those charges?

What’s the real lesson that Graham is teaching? There is no single number that you can use to really evaluate a stock or a company. There are so many tricks that a company can use to manipulate their numbers, both legitimately and otherwise, that relying on a single number to judge a company is a fool’s game. You’re begging for a company to trick you if you rely on minimal information.

Commentary on Chapter 12
Zweig spends his commentary arguing that Graham’s principles on per-share earnings are actually more true today than ever before, and he uses the chicanery of the past decade to make his case. Enron. Adelphia. WorldCom. Global Crossing. These companies looked great on paper if you took an extremely superficial view, but if you started digging into the data, it started to look a little more shaky. And, of course, we know what happened over the long run.

Zweig offers a few general principles for today’s world.

First, read financial reports in reverse. Often, the nastiest stuff a company has to report is hidden in the back in footnotes. When you want to know how a company is doing, start digging in there to get the real story.

Next, read all notes. If you see a number in a financial report followed by a comment like “see Note 1″ … immediately read Note 1. It’s usually an indication that the number you see there has been cooked in some fashion.

Finally, read more. If you’re actually going to get into individual investing to the point that you’re devouring financial reports, know how to read them. Get geared up on basic accounting principles. Read books on financial statement analysis (Zweig recommends Financial Statement Analysis by Fridson and Alvarez).

All around, it’s good advice. Never trust a single number, and never trust that the company is going to make the skeletons in their closet immediately clear to you.

Next Friday, we’ll take a look at Chapter 13: A Comparison of Four Listed Companies.

A few weeks ago, I had a conversation with an old friend of mine that I respect quite a lot. He’s one of those people that seems to know how to do everything - he can fix computers (and write code), handle almost any home repair, play the guitar, beat almost everyone I know at chess, discuss literature extensively, and so on.

We were simply talking to each other about our reflections on the past year - both personal milestones and otherwise. I reflected on the true birth of my writing career and the growth of my children (especially the change of my daughter from a newborn to a walking, talking toddler), while he related some of his own personal successes.

Then he asked me an interesting question. What will you learn this year?

I didn’t really know what he meant by that, so I asked him to elaborate a bit. He told me that each year, he chooses a particular skill that he wants to learn and devotes an hour a day minimum to learning it at an adequate level, with a goal of devoting at least 500 hours to the skill over the course of a year.

One year, for example, he wanted to learn how to play the piano at least reasonably well from ear, while another year, he wanted to become a strong chess player.

During that year, he’d spend an hour or an hour and a half each day doing deliberate practice. Deliberate practice, as I discussed before, refers to practicing by simply mastering individual techniques within a larger skill instead of practicing the skill as a whole. For example, he might spend an entire day doing nothing but playing one basic piano lesson over and over and over again until he could do it blindfolded, or he’d spend one day doing nothing more than working on a single chess problem until he found the best solution for it. Afterwards, if he had some spare time, he might play around with his growing skill a bit, but most days the deliberate practice itself would suffice.

Thus, at the end of each year, my friend had (reasonably) mastered a new skill to add to his repertoire. Even better, most of those skills he has learned are much like riding a bicycle - you can pick them up at a later date and shake off the rust pretty quickly.

Upon hearing the idea, my wheels immediately began to turn. What skill could I learn in 2009 by applying an hour of daily practice?

I decided to give it a shot with a few simple caveats, since this is my “trial balloon” year to see how it works for me.

First, I wanted to completely master a fairly trivial skill rather than becoming merely adept at something more complex. No matter what I choose, I’ll likely show some improvement over the year, but I’d like to be able to move from almost completely unable to do something to being able to do that thing at a very high level in a year with an hour of practice a day. Doing it this way would allow me to clearly demonstrate to myself (and to others) how effective a policy of an hour of practice a day for a year really is. This means focusing on a fairly narrow skill.

Second, I wanted to focus on something fairly novel that I could use as a parlor trick of sorts. In other words, I wanted something I could very easily show to others, either as a conversation starter or as an inspiration that anyone could do this. What sort of narrow skill could I build? I ran through a long list of ideas, from the incredibly esoteric (shuffling a deck of cards with one hand) to the rather useful (improving my vegetable chopping speed).

Finally, I wanted something I could easily practice almost anywhere. This eliminated several of the options. I was left mostly with things like shuffling a deck of cards with one hand (as it would only require me to have a deck in my pocket) and other such tricks.

So, what did I finally decide on? What sort of skill am I planning on learning in 2009 by devoting an hour a day to it? Don’t laugh…

I’ve decided to master the Rubik’s Cube, with the goal of being able to solve it in three minutes or so from any position.

Why choose that skill? First of all, it’s something I can do anywhere. The only piece of equipment I actually need is the Cube itself, particularly once I get the hang of solving it. Second, it’s something that’s easy to demonstrate as a skill to others. Third, solving the Cube promotes logical thinking skills as you’re doing it. And, finally, it’s something I’m not good at at all … I can currently solve a side with about five minutes’ work, but after that, I’m stuck.

So, each day, I’m going to spend an hour attempting to master solving the Cube. I’m going to take a three minute video each month to show my progress as well, starting with a video showing me fumbling about with the Cube. At the end of the year, if all goes well, I’ll make a post showing all of the videos (or a selection of them) to show how an hour’s worth of practice can make your skill progress.

Now, how about you? Could you devote an hour a day this year to learning a new skill? Spend some time thinking about it… and come up with a plan.