Money Tips Network

A few years ago, when my oldest had freshly turned ten years old, he began to ask a lot of questions about our family’s financial state. He wanted to know if we saved money, how much we saved, and where we saved it. He wanted to know how we spent our money and where it went and how we kept track of that.

For a two or three month period, he kept asking these questions until, I guess, his curiosity was sated and he moved onto something else.

Unsurprisingly, those conversations gave rise to a lot of articles on The Simple Dollar. I’d start talking about something with him and realize before long that there was something in this conversation that could easily grow into an article for the site. Many articles that I wrote two to three years ago were outgrowths of those conversations.

Gary writes in:

What exactly do you mean when you talk about financial independence? Can you break it down a little?

In simplest terms, when I talk about financial independence, I’m referring to a situation in which your living expenses are fully covered by your investments for the rest of your life. In other words, you no longer have to work for a living because you have enough in the bank to allow you to live your current lifestyle year in and year out for forever (or close to it).

Depending on which financial advice you read, that means you need to have somewhere between 25 times and 35 times your annual income in investments. That number changes depending on the aggressiveness of the investments and how many years of financial independence are being assumed. In general, I aim for the middle of that of that range and usually use a 30x multiplier (about a 3.3% withdrawal rate).

I fail all the time.

I spend money on things I shouldn’t. I’ll see something at Target or on Amazon and buy it without giving it any sort of reflection. I’ll forget my grocery list, go to the store anyway, manage to get most of what was on the list, but buy a bunch of unintended stuff, too.

I’m not as organized as I’d like to be. I have lots of bins and boxes with random things in them. I can usually find something that I need when I need it, but it looks chaotic and no one else can make heads or tails of it.

I don’t exercise as much as I aim to. I actually don’t mind exercise when I get going, but I often fail to motivate myself to get started.

I don’t eat perfectly. I can resist sweets, but not savory snacks. I often eat more than I should when I like the taste of a meal.

I don’t stick to my goals. I usually set too many of them and find myself falling short of a lot of them.

It might not feel like it in some areas of the country, but we summer has started! Most families will want to have sunscreen, hats, beach towels, swimwear, and other summer gear on hand, but they definitely won't want to spend a fortune on these necessities.

How do you save on summer gear?

Most of the strategies I write about on The Simple Dollar are quite simple for most adults to understand. They’re not complex ideas. They’re not difficult to understand. They’re not challenging to visualize. They are things that almost all of us can do – some might require us to have a little bit of money in hand first and use that to grow more, but most don’t. Most of the techniques are just refinements of things people do all the time in ordinary life.

Personal finance success is not rocket science – it’s the furthest thing from it.

Spend less than you earn. Do something smart with the difference, like contributing to your 401(k) or paying off debts. That’s pretty much the core of it. Everything else is just details, like getting better at anticipating upcoming expenses.

It’s simple… but it’s not easy.

One of the most valuable tools for keeping your financial life as stable as possible is to improve your ability to anticipate your future expenses and financial needs. This enables you to take some steps to prepare now for those expenses and thus reduce their impact in the future.

For people who aren’t naturally familiar with planning ahead, this can feel like a major shift in thinking. Many people simply buy groceries as needed by visiting the grocery store and wandering through the aisles to grab items needed for their next few days worth of meals. Many people respond with chagrin when they find an unexpected bill in the mail.

Joel writes in:

First, what is your car camping set-up. I’m thinking of getting a canopy tent for hanging out — something like a 10×10 foot bug protection for placing over the picnic table. Wondered if you had recommendations or even use one then thought I’d just ask about the set-up in general.

Before I dig into our own camping history and how we camp today, I want to talk a bit about why camping is a great idea.

For the past seven years, the vast majority of my income has come from freelance work.

While I enjoy the entrepreneurial aspect of my career and the notion that through hard work I can significantly increase my income in a way a standard salaried job would not necessarily allow me to do, there are still drawbacks to this lifestyle. Most significantly, I never really know how much I will make from month to month.

And worse, while some months I bring in an adequate amount of money, there are plenty of months when my income drops sharply.

These fluctuations are challenging at best (particularly as a single mother, which means I’m a single income household.)

I’m not alone in experiencing this sort of volatility. Countless Americans experience income fluctuation.

One of my favorite articles from the early days of The Simple Dollar was The Snowball Effect. In it, I took up a little nugget of an idea that I read in a back issue of the old “Tightwad Gazette” newsletter and expanded it outwards, showing how a small series of moves can transform a very small amount of money into surprisingly large financial change.

While the idea was nice, the article mostly just centered around an example that might not be all that applicable to everyone’s life, so I wanted to step back from that example and look at the idea of a frugal snowball in a more general sense, with a few examples to show how it could work in a variety of situations.