What does this have to do with your personal finance practices? More than you think. Do wealthy people really have it that easy financially? In a word: No.

The lesson here: No amount of money will out pace your own financial stupidity.

During his 2005 trial, it was stated, by a forensic accountant, that Jackson had a net worth of negative $285 million based on assets of $130 million and liabilities of $415 million. On the bright side, those assets do not include his two most valuable - his own back catalog and the Sony-ATV catalog containing the rights to over 200 Beatles songs. Those are valued at anywhere from $1-5 billion. On the down side, those music catalogs were used as collateral for a line of credit with Bank of America. That debt stood at $278 million as of 2003. What, no one would give him a HELOC? Kidding, kidding. In all seriousness, the expert witness testified that even if Jackson sold his remaining interest in the Sony catalog, he would look to net around $40 million after taxes and paying back Sony for cash advances and investment costs. Eeek!

He has made some smart moves. He purchased that Sony catalog at auction for about $47 million in 1986. He then sold half to Sony for $90 million in 1995 - thus implying it had quadrupled in value over 9 years. By 2007 it was estimated to be worth $1.6 billion?! What an investment! But yet he is unable to live on less than he makes. In 1999, he had a reported income of $11.5m, but with expenditures of $20m. You just can't sustain that kind of stupidity. Not even with his incredible earning power.

Not qualifying for traditional mortgages didn't slow people down. Because, real estate always goes up in value, right? "And if I don't buy now, then I'll never be able to afford a house" in this crazy, overpriced bubble market. "And I can finance it this way for now, then refinance it in a year after the value goes up again, or at least thats what the 'mortgage specialist' down at the bank said." Back then I was still trying to convince people that traditional, 15-year, fixed rate financing with a big down payment was the way to go. Boy was I silly.

That was not what people wanted to hear. "Wait? Wait?!? I can't wait to buy until I save up 10 or 20%! That'll take forever!" Another favorite: "hahahaha. While you were saving your pennies, hoping to buy a house in 10 years, my home's value went up by $200,000 in two years!" Oh, really! My question to those folks: Are you still in that house?

If yes, then what is it worth now? These over inflated home values gave buyers and owners a terribly false sense of security in the foolishness they were partaking in. A home, like anything else, is only worth what someone is willing to pay for it. A lot of people in those bubble markets are now facing foreclosure since they couldn't refi their way out of their mistake or their market is so over-saturated with homes on the market that they have little to no hope of selling it, even at a drastically reduced price. And so foreclosures continue to rise. If only they would have waited.

If only they would have gaged the situation with their hearts instead of their heads. You head is where you do math, your heart is where you measure risk. Why do you think they make you pay PMI if you put less that 20% down on a house? It's one way they try to mitigate that risk for the bank. Unfortunately, it just makes the payments higher and thus harder to pay when things get tight.

So the spiral continues - mortgage defaults are up, credit card defaults are up, car loans next? The government has passed their 'economic stimulus' package and magically avoided that recession that was or was not imminent. And the credit markets are shaky. But now inflation could get out of control.... All because we just can't wait.

Tom Petty knew what the heck he was talking about when he said, "...the waaaaaaaaaaaaaiting is the hardest part". All kidding aside, he's right. It's pretty darn easy to get credit cards - unemployed? terrible credit? under the age of 10? No Problem! Auto financiers are notorious for putting people in way more car then they can afford, and it takes very little to get it done. Its not even that tough to get a mortgage. That is, compared with waiting. Waiting is the hardest part. Waiting to save up cash for a TV or a car. Waiting to buy a house, until you can really afford it. Doing whatever it takes to make and save that money is easy when compared with just being patient and w-a-i-t-i-n-g.

Lets say Jane is going to save for four years to pay cash for a car. For no other reason than knowing it is the right thing to do. At any point during those four years, the 'All New' Toyota Whosits could come out and now Jane 'must. have. now.' Jane could go out, put some cash down, finance the rest and be off the lot in no time at all - her 'must-have-now gland' fully engorged and spasming. That would be easy.

One definition of maturity is learning to delay pleasure. Had Jane stayed on plan and waited the full four years, not only could she have gotten a better deal on that Whosits on the lightly-used market, but she would have felt a sense of accomplishment and control. Or she could have instant gratification and that wonder of off-gassing plastics known as new-car-smell.

How long did it take you to learn to wait?

How have your finances been impacted by the need for instant gratification?

Getting ready to buy a house? How much are you putting down?

Just when I was feeling good about my previous post on frugality, my wife informs me of all the things I left off of the first list. Fail. Oh, well. It wasn't meant to be comprehensive! Here are more ways to be frugal each and every day.

• Line drying clothes - When the weather is fit, the clothes dryer gets a break. Most items dry in a reasonable amount of time, and they smell great. Now you have to watch this as some neighborhoods have covenances against this. Some townships may have ordinances against it. Fools, I say. They can keep the local utilities fat, not me.
• Only full loads - Reds don't get washed very often in our house. We wash only full loads of laundry to maximize efficiency of the machine and the user. I'd much rather do 6 full loads per week, than 12 half loads. If we had a dishwasher (and trust me, its on the list), the same would go for it.
• 1 glass per day - Speaking of dish washing, our days of excessive dirty cups and glasses are gone. Unless we previously drank milk, we try to use just one drinking cup throughout the day. This reduces the amount of dishes to be washed. Less water, less soap, less work.... you get the idea.
• 1 TV, no cable, no dish - I feel like Letterman when he gave up caffeine - boy that was a mistake. Sometimes the lack of programming seems akin to the "disgusting brown water" (decaf coffee) that Dave would make fun of as he sipped. Clearly this one has been harder on me than my wife. Its probably for the best. It's been kinda nice not shelling out $60 per month on a programming service. The real point is time. More time together, talking, playing with the kids, blogging, working on projects. Less time parked in front of the TV watching whatever.
• No A/C - We get some looks over this one. This American staple has no place in our house. Yes, you can do this, even south of the Mason-Dixon line. You have to be smart about this and be safe - I am not advocating that people just switch it off and tough it out. There are alternatives to this energy-hogging miracle of thermodynamics. Even if you have one, try doing without it more. Fans and dehumidifiers can do a lot. Proper home design to capture prevailing winds and block out direct sun in the heat of the day can do a lot more. Trees, wondrous trees, shading you, your lawn and your house can take you to paradise. I've been in houses, in the deep south, during the full heat of the summer (no picnic, for sure). No A/C on. Not even the ceiling fans running. Windows open capturing the breeze, direct sun blocked by elongated overhangs and well placed shade trees. There were 50+ people in the house, and not a bead of sweat in sight. The architect was quite pleased.
• Grow your own - With our current house, we are blessed with a very large yard paired with a very large garden. We are still working on our vegetable strategy, but with a little bit of effort, we can have fresh vegetables all summer and put up as much as we like for the winter months. There is no guess work about the chemicals used (none) or the underpaid and abused workers who picked them (we're quite pleased with the pay). Easy with 3600 square feet of garden, right? We used to have a rather small yard, with the garden in the back landscaping. We didn't put much up, back then, but you can still have fresh veggies and herbs (OMG, fresh herbs rule!) without feeling like you live on a farm. Not that there is anything wrong with that.
• Buy local - What you don't or can't grow, may be available from your local grower who doesn't mind feeling like they live on a farm. Farmer's markets are great, and roadside stands are even better. Do a little research, you'll find more going on in this industry than you expected. Co-ops are becoming more popular. Orchards and vineyards are everywhere. Despite all of these efforts, it's tough to not need certain items from the grocery stores. That's ok. But why not put more of your food budget straight into the hands of the grower, as opposed to funding all these middle-men? You'll pay less when you shop this way too.
  
• Canning and freezing - This is already well known for its cost efficiency, but when you do things like buying seconds for applesauce apples, it becomes even more so. this can be fun as well as rewarding. Kids will always remember canning day. Have a get together with family or friends and make a day of it. Then split the bills and divide the jars. Many hands makes for light work.
  
• Library books - Our daughter's room already resembles a library. Grandparents still enjoy constantly buying books, we however, do not. Public libraries, besides being book repositories, often will loan out movies and music as well as having kids programs and adult groups. Lots of value for little investment.
  
• Low power, no power - With 1+ acres associated with our personal residence, yard work can be a bear. We do have a riding lawn mower (thank you!), and a snow blower (double thanks), but we try to limit our power equipment to those. No leaf blowers, no hedge trimmers... We do borrow a garden tiller once or twice a year, but we try to rely more on hand power than horsepower.
  

Frugal people lead a dull and boring life. Evenings spent clipping coupons. Saturdays spent scouring garage sales and flea markets. More likely to be seen at triple-coupon Thursday than Friday happy hour. Often settling for leftovers alone than lunch out with co-workers, driving instead of flying, hand-made over store bought, and another used car every six years as opposed to a new one every two. Yes, the frugal live a drab life of mediocrity. Or do they?

True, frugal folk do love a good garage sale and thrive on leftovers. Maybe it is an outwardly drab life to those of the happy hour crowd. Matthew 6:21 says, "for where your treasure is, there your heart will be also." So where is your heart? What is important to you? Here is where our hearts are and how our frugality enables them.

Financial Stability - Budget, budget, budget. I meet lots of people who make plenty of money, but live month to month because they have no budget. The budget is how we find that extra money to fund the emergency fund, to pay off debt, and handle whatever comes our way. When we were getting out of debt, we squeezed that budget until it screamed. We bought generic, we made do with what we had, we lived like no-one else. And now, we have that stability, and that's tough to put a price on.

We may spend much less on food per month, but I guarantee that we eat better. While 'under-employed' and mid-way through our debt-snowball, I learned to make Crème Brûlée, empanadas, tapas.... the list goes on and on. Frugal cuisine that would have made Jeff Smith proud. This sacrifice, this intensity pays off not just now, but in the long run as well. We have college funds for the kids, and plan to pay their way. We have retirement accounts and plan to retire early. And as income permits, we'll pay the house off early. Think about that - no mortgage payment. Who's livin' large then?

Giving - This is important for everyone - Christian or not. Giving is good for your soul and makes you less selfish. Frugal folk, for the most part, are not these greedy, hording people that leach off of everyone else. They aren't. Actually, truly frugal people give as much as they get, sometimes more.

This is why the concept of freecycle.org has been so successful. There were plenty of times that we re-freecycled items after we were done with them. When you've payed nothing for it, then where is the attachment? Once it has served its purpose and outlived its usefulness, why keep it? The key is to spread this attitude to any of your possessions, and be prepared to give to those who truly are in need.

As Christians, we give to the church. Tithing is not only Biblically mandated, but also improves your spirit. Even in debt, scraping by on one income, we gave. It may not have been a full tithe, but we gave what we could. And we gave for the right reason - not because we expected anything in return, and not because God needs our money. We gave to be givers. As our favorite Priest always said, "As a church, we'll never have a money problem, only a faith problem."

Stewardship - Beyond giving, we work to be good stewards of all that has been entrusted to us.

We buy all natural and organic. We buy local. We reduce. We reuse. We recycle. We are all blessed with this planet and that is something worth putting some treasure towards. We support Environmental Defense in spirit and donations, as their ideals align with ours. Not spending our money frivolous, fleeting things allows us to truly put our treasure where our heart is.

We also give our time to worthy causes. It can be as simple as chaperoning a school field trip or as specialized as serving your community through public office or church committee. Being efficient in how our time is spent (shopping, commuting, socializing) allows us to to do this without a second thought. Through the rigors of the debt-snowball, we found time to teach Financial Peace University at our local church. The lives we touched there were many. Families payed off thousands in debt, learned to budget, save and invest, and maybe most importantly to do it together as a couple. How many marriages were saved at happy hour last week?

To wrap this up - our treasure is where our heart is, and our joy comes from there. Frugal =/= drab. Quite the contrary. We live life like none other. A cross-country conference for work can make for a pretty nice family vacation on the cheap. The feeling of seeing your actions and guidance change people's lives for the better is beyond compare. And you haven't lived until you've picked asparagus fresh from the garden, prepped it, wrapped it in all natural prosciutto and broiled it. No restaurant can touch that flavor and feeling. Now that is living extravagantly frugal.


**UPDATE** Welcome new readers! To find out more about us click here. Also be sure to check out our other popular posts.

FOF #113 is up and includes our How To on Getting Stuff For Free. We are also featured in this week's CoPF (#140) for our Bad Jobs article. Big thanks to Mighty Bargain Hunter and The Financial Blogger, respectively, for hosting this week.

For those new to NtJS, welcome! You can find out more about us here. Bookmark us and check back often. We try to crank out a few posts per week, and welcome your thoughts and discussion in the comments. We hope you enjoy your stay. Some posts of interest:

• High-Yield Savings Accounts
• Health Insurance
• Ways you can be Frugal Everyday
  
• Free Money!
• Not-so-Free Money

Ok, we're definitely getting into some of the secret sauce here. Some of these may be obvious, others may not. Below are my 5 most successful ways of getting stuff for free. As usual, if you have experience with these methods, or have others to share, please hit us up in the comments.

• Freecycle - You may have heard of freecycle.org before. It's gotten a lot of press in the past couple years, and has grown by leaps and bounds. Activity varies by area, and we've seen both sides of that coin. We used to be a part of one of the most active groups in th nation. It was great. When I was out of work, and my young daughter's wardrobe was turning over every 3-6 months (She was 2 years old), we were able to completely outfit her in some very nice clothes - All for free. We also gave a lot of stuff away, and were able to bless many people in need with items that had become clutter to us.
• Ask - "Are you going to eat that?" Ok, that's not what I'm talking about here. Dave Ramsey always teaches people to ask for a deal when shopping. The same applies to when you want some thing for nothing. I acquired a rather nice laptop that way. Was only missing the HDD, so the whole deal cost me some $80. See something attractive collecting dust in the storage room at work? Ask the boss. See a useful piece of equipment being replaced? Ask where the old one is going. You might be surprised what will happen. They may just give it to you so that they don't have to deal with it.
  
• Contests / Competitions - Ok, this may sound lame, but some contests are legit. Further more, some on-line contests are legit. True, they may require a bit of time and energy, but what have you got to lose? Just be cautious about who the contest or 'CONtest' is with and what information they are asking for. We've entered several contests and competitions over the years with some success. And sure, it's nice to win, but the process can be a lot of fun too. We're working on a few right now - sewing, DIY projects. Its a good bonding experience and an opportunity to flex some creative muscle. Plus, sometimes, you get some free stuff.
  
• Research - Market research is going on all over the country. Big corporations pay big bucks to find out what you think and how you shop. The key here is to find these companies in your area (the ones conducting the research and thus locating participants) and get in their database. They are always looking for people, and are usually quite friendly and easy to work with. These studies or surveys usually take little time, can work around your schedule, and usually pay quite well.
  
• Trash day - I can't resist. Trash day rolls around and some ol' boy pushes a heap out to the curb. What is that? A shelf? Part of a playhouse? One man's trash truly is another man's treasure. To the detriment of the environment, some people are still oblivious to things like recycling and reselling unwanted but functional items. This is, however, to your benefit. Be smart - it is not a good idea to physically get into a dumpster. A truck bed will give you a good view. Be discrete - there is still a stigma attached to taking items from the neighbors trash, so its probably best if people don't see you. Scout during the day, go back at dusk. Mid-morning or mid afternoon is also good as most people are at work. The real key is to walk up like you are doing exactly what you are supposed to be doing and make off with your loot the same way. So long as you don't make a mess or do any harm, no one is likely to care.
  

• Health - Stress in the workplace translates to stress at home, stress on the commute, and then more stress at work. And we all know how good high stress levels are for a person. This can lead to - among other things - loss of sleep, and let me tell you, thats not a pretty picture. Once you get into the cycle, its hard to get out. The longer you stay in this situation, the more of a toll this will take on your health, and it will start to show in your work, appearance, and attitude. Do it for your health - physical, emotional, and mental.
• Family - You may think that your work issues are just that - yours. If you are married, think back to when the preacher talked about mine is yours, yours is mine, and all that 1+1=1 stuff. Yeah, your spouse is going to feel this too. If you let this go on for too long, then you'll start to see it in the kids too. If you're single, well, do you really need to complicate your relationships further? Do you find it too easy to meet someone new? Yeah, I didn't think so. How cordial and attractive do you think you'll be if you are spending 8+ hours per day in work hell? Do it for the sake of your family.
• Spirit - You don't have to be religious to appreciate this one. Some employers and managers are working overtime to break your spirit, to crush your hope. Maybe they don't want you to leave, but they just want you to fall in line. No one should feel hopeless or trapped at work. For those who are Christians, how do you think this will affect you walk with Christ? How will this affect you ability to be a good steward of your time, talent and treasure? Ponder those for a bit and consider the spiritual side of choosing to stay in this position. Would the Lord want to see you like this? Do it for your spirit.
• Career - After getting out of what will hopefully be the worst job of my career, I can remember thinking, "what a waste". And it really was a waste of my time and skills. They didn't deserve or appreciate any of the good I had done, or any of the business they had because of me and my skills. I'm not being boastful. I have unique skill sets they despite their best efforts, they were unable to replicate in other employees. And clients valued those skills. I know they lost business, as it was a former client who I eventually went to work for. How much of my life, skills, energy and passion did I waste on those ingrates? It's probably not worth pondering beyond that. In the end, what was important was that I was out, and I could finally think about advancing my career, improving my skills and being appreciated. Otherwise, my career was going nowhere. Do it for your career.
• Time - What is your time worth to you? Sometimes it's just spending too much time in a commute. Some employers respect your time outside of work, while others choose to piss all over it - they own you, or so they think. I once worked as a temp at a job that required employees to work 54 hours per week - a full work week with 14 hours of mandatory overtime. We were compensated for it appropriately. I can recall discussing this with my father, and how they wanted me to sign on as a full employee. I'll never forget his advice. "There are jobs where you don't have to do that". He was dead right. If fact, most don't require that. The pay was good, heck, for my age and experience, it was great pay, but the time was killing me. Up at ten after four every morning, home after five, and back in bed around 8pm. Those three hours were all mine.... Ug. Do it to get your time back.
  
• Financial - Money isn't everything. Staying in a bad job, because the pay or benefits are good, is no excuse. Benefits change, and the pay may be good now. What about when the bonuses dry up and the raises are less than inflation. Besides, is it worth it? Is it worth doing something you hate, working for someone you detest, or taking their abuse just to have a few more coins in your pocket? Your job was good, but when the company reorganizes and decides that you are going to be traveling 3 weeks out of every month as opposed to 3 weeks out of every year, then what? Are you going to stay out of loyalty? Because of the money and the promise that "this is temporary" and "we'll take care of you" or "we'll make this right". Yeah, right. You can lose years this way. Years of financial uncertainty because you are waiting on them to get their act together, and "take care of you". Get your act together. Do it to retake control of your finances.
  

• Family - First, talk to you spouse about this. You've likely expressed your displeasure before, but let him/her know that it's time - You're ready to jump ship. Make sure that you both understand what this will mean for you both and what your plans are going forward. As with any family or money decision, the two of you need to be on the same page about this. Maybe you're overreacting. Maybe not. Talk to your spouse.
• Plans - Have a plan! If you are jumping ship, what are you jumping to? Another ship? Your own ship? Enough with the analogy, what are you going to do? Time to get after those job leads and start pressing the flesh. Don't overlook the freelance/self-employment option, but know what you are getting into. Also, there is nothing wrong with not working outside the home. Stay-at-home moms and dads provide a valuable service to their families and should not be looked down upon - do you know what it would cost to pay someone to do what they do? Maybe a break from the ol' rat race is just what you need. The point is - have a plan.
  
• Money - You'll still need some of this, so you can't both be stay-at-home parents, as great as that sounds. Take an evening or two and rework your budget based on your impending income changes. Can you make it on one income? Can you make it on less than you are making now? Keep in mind that a reduced income will likely mean a reduced out-go. Meaning what? You'll likely have to cut your lifestyle. Maybe you already live well enough below your means to absorb this, but you would be a minority in America. If you don't have a budget, then there is no better time or reason to start one. I will always credit our family budget as the reason why we didn't fall into financial ruin during my employment woes.

Wrap your mind around this one: According to 60-Minutes and the U.S. Mint, it costs our nation $134 million to make $80 million - if we make it out of pennies. Nickels? Even worse - $124 million to make $60 million. 10.33 cents to make a 5-cent nickel. 1.675 cents to make a 1-cent piece. And we wonder why our nation is in such a horrible financial mess. We are literally flushing money down the drain every single day - in the process of physically making the money! Yet all we ever hear about are redesigns of our paper currency (five dollar bills will be purple!). Commemorative Louis and Clark nickels! Why aren't we redesigning the penny and the nickel? There must be a cheaper material, a more cost efficient process... maybe both! Yet we trudge along, clinging to this relic, this archaic coinage.

Why would you not stop this hemmoraging?

Lazy Man and Money is hosting this weeks FoF (#112), and it looks like our Everyday Frugal post made the cut. Looks like lots of other great articles.

For those new to NtJS, welcome! You can find out more about us here. Bookmark us and check back often. We try to crank out a few posts per week, and welcome your thoughts and discussion in the comments.

We hope you enjoy your stay.

Some posts of interest:

• High-Yield Savings Accounts
  
• Presidential Politics
• Health Insurance
• Free Money!
  
• How to handle Irregular Income
  

Blogging about one's everyday activities does some interesting things. For one, it causes you to really think about what you are doing and have done. We've always felt that we were frugal people. Recently I thought, "What's so frugal about me?". After doing this stuff for so long, it becomes second nature and you start to forget about the other way you used to live (the way most people live). This post is a testament to all those little things we do daily that make us the frugal people that we are.

• Cloth napkins - about 8 months ago, we realized just how wasteful paper napkins were. We estimated that we were going through 8-10 per day. Not economically or ecologically sound for a family of our size. With some scrap fabric, my wife very quickly turned out a few dozen cloth napkins. Nothing fancy, but they get the job done. They wash easily and cost us next to nothing.


• Cloth diapering - Now there is a bigger, more detailed article coming here, but there are big economic and ecologic savings to be had here. Especially if you start with your first child and continue with others.


• Consolidating errands - Do I even need to talk about how high gas prices are? It was not that many years ago that we would head out to the store for one or two items a few times a week. With a bit of planning, we are able to make one (maybe two)major shopping trip(s) per week. Other errands are run while we are already out - to and from work, to and from school. Rarely do we get in the car with a singular task in mind.


• Reducing unneeded stuff - Out-grown toys? Sell, freecycle. Outdated clothes? Sell, donate. Household goods that have sat for a whole year unused or unloved? Out-the-door. Garage sales, ebay, bartering online, donating, freecycling.... if its not being used then what good is it? Why keep things around that just take up space?


• Reusing creatively - Before tossing something in the trash, or even in the recycling bin, take a good look at it and think, "Could I use that elsewhere? Is there something else I could do with that?" Recently, while cleaning out a communal storage room at work, I was able to rescue several perfectly good items from the trash bin for use in another life. Once again, there's a whole other article on that one alone. Paper packaging from our cross-county move becomes weed-block in the garden and landscaping. Lawn clippings, instead of setting them out with the trash, are used as mulch. A large shipping box, instead of recycling, was turned into a 'ginger bread' house for a preschool Christmas party. Wood shipping palates were used to make a series of large compost bins. Speaking of which....


• Composting - Rather than buying chemical fertilizer, why not use what you are already producing. Leaves, lawn clippings, fruit and veggie scraps, egg shells, presents from the dog, even some disposable plates and bowls can easily be composted. That compost, in turn, can then be used in the garden, on the lawn, in the landscaping. The affect that good compost will have on your plants is astounding. And what does it cost you? A bin to store it in?


• Recycling everything - Our area not only has a great curb-side recycling program that will take nearly anything, but our state is one of the few with a rebate program for aluminum cans. Tossing them in the recycling bin is actually throwing money away. Very few cans escape our grasp.


• Using less - Less prepackaged food. Less products with unrecyclable, or too much packaging. Less products. Less McDonald's toys. Less. Less. Less.


• Doing without - Do I really need another Coke, or will ice water suffice? No, I don't really want ice water, but I don't really need a Coke. I don't really need a drink while waiting in line at the grocery store. I don't really need a bag of Sour Patch Kids. I don't really need a new bike. I don't really need a haircut. Ok, that I do need. We do treat ourselves from time to time, but time to time is not every single day.


• Buying used - Hardly a new topic around the PF bloggosphere, but still relevant. Maybe there is something I actually need. Are there any used ones on craigslist? ebay? Even for a want, the why can't the primary path be the secondary market? This has become a standard for us.

Frugal? Undeniably. Ecologically sound? Definitely. Economically beneficial? Easily. But there is something else here for us Christians. It's stewardship. If that word brings church fund raisers to mind, then you need to take another look. A "steward" is defined as a manager. Not an owner. Psalm 24:1 says, "The earth is the LORD's, and the fullness thereof; the world, and they that dwell therein." It's His. It's all His. We are simply called to be managers of what He has entrusted to us. We need to be good stewards of the earth. We need to be good stewards of our time, talents, and treasure. This list is just some of the things we do to be a good steward.

How are you frugal on a daily basis?

Welcome, Carnival of Personal Finance readers! Carnival #138 is upon us and includes my 'How To' on Irregular Income. The Irregular Income Spending Plan is near and dear to me as I know how difficult and unpredictable some jobs can be. Please take a few minutes to check out our site as we have several new articles not on the Carnival.

I haven't had a chance to paruse many of the articles myself, but as always, approach the carnies guardedly, but give them the benefit of the doubt.

Cheers!

I'll start this out with a quick primer:

There are 3 and only 3 things you can do with money.

1. GIVE
2. SAVE
3. SPEND

Anything you do with money is going to fall into one of those 3 categories. Everything. Under the SAVE category, there is short-term savings (0-5 years), and long-term savings (5-10+ years).

• Short-term usually takes the form of a savings account, CD, or money-market account and is commonly referred to as 'Savings'. These need not be big earners, since with higher returns come higher risk. This is money that has an earmark, has a purpose and you are planning to spend in one way or another. This money needs to be there. Your emergency fund would reside in 'Savings'. The whole point of an emergency fund is a hedge against the everyday risks of life. You don't want to look up one day and find half of it gone because a couple of your stocks tanked - they have a tendency to do that the week before you get laid-off. Savings is not a big earner, but its nice if it keeps up with taxes and inflation (commonly ~4%).


• Long-term usually takes the form of mutual funds, stocks, bonds, real estate, 401k's, 403b's, IRAs.... and is commonly referred to as 'Investing'. A CD or on-line savings account are poor excuses for investing. If your investment is not turning out 10-12%+ long-term, then it's not much of an investment. When picking mutual funds, they'll typically show you the 1-yr, 5-yr, and 10-yr averages. Some, if applicable, will show average returns since inception(I have some great ones that are ~40 years old). Buying a fund less than 10-years old makes me nervous and here's why: the year 2000, and the dot-com bust. If your fund of choice survived that and even turned out a profit then you may have found a good one. You'll want a fund that can weather a storm and provide solid growth in the long-term.

Now here is what makes me sick. These jokers who think they are 'financially sophisticated' because they spend their time shopping interest rates for on-line, high-yield savings accounts. They typically go about this process after the Fed cuts the interest rate and some hype comes out about "ING Cuts Interest Rate for On-line Savings From 4.1% to 3.40%!!!". Doom and gloom! Who would have thought that savings accounts were tied to the Federal Funds interest rate?!? "Oooohhh! HSBC is paying 5.05%! Must. Move. Money!" Then two days later comes the, "HSBC cut their rate too! And just after I moved all of my money to them." sob story. This also happens when rates go up and everybody scrambles for that new great rate. This is crazy behavior. Here's why.

Lets say, for example, you have a $6000 emergency fund in a high-yield, on-line savings account paying 4.10%. Yea, rah. Over the course of 1 year, assuming no change in balance other than the monthly interest, your $6k would have turned into $6250.68. Now what if the Fed had cut the interest rate at the beginning of that year and your account of choice were paying 3.40%. Your $6k would have turned into $6207.21. A difference* of $43.47 over the course of one year with all the same assumptions. We should all be so lucky to have no emergencies in a year. Anyways, $43 difference* to jump through all the hoops of setting up a new account and transferring everything from the old one?

From a personal standpoint: Its probably not worth your time. Go spend time with your family and get away from the computer. Do something productive. Not good enough? Read on.

From a financial standpoint, lets look at the math, since so many think its all about math (BTW: Its not all about math, but I'll do it anyways):

Lets assume the gains of the 4.10% example as $250.68. The reason for the asterisks above is because those numbers are not adjusted for taxes and inflation. Important stuff. Average inflation for 2007 came out as 2.85% - a three year low! Still, once adjusted for inflation, your $6250.68 now looks more like $6,072.54 - A difference of $178.14! But the government doesn't care. All they see are the gains of $250.68. Assuming a 25% tax bracket, Uncle Sam is going to lighten your pockets by $62.67. That brings the damage of taxes and inflation to $240.81, giving you an effective net gain of $9.86, meaning that taxes and inflation hit most of us at 3.84% for 2007. And you laughed at my 4% estimate! (C'mon admit it.)

So I don't care what your "high-yield", fancy-pants, on-line savings account yields. So long as its near 4%, its not worth getting excited about. Am I down on these accounts? No way. We have one and we're very pleased with it. Its much better to get the tax and inflation hedge of these accounts rather than effectively losing money in a traditional savings account (what are they paying these days? 0.25%? 0.35%?). Do we move it to higher paying accounts as often as Mitt Romney changes his campaign slogan? No way. How about as often as he changes his stance on major political issues? Still no. In fact, since the inception of the account, we've moved our cash for the purpose of getting higher returns exactly zero times. We've taken money out, and put money in, but never moved it to a competitor. There is just no reason to do this- personally or financially. This is similar to buying technology - do your homework, pick the one that works for you, and go on down the road. There is no point to stewing and fretting about this minutia. We're talking about fractions of a percent here! Unless you have big big buck in one of these, the difference won't amount to a hill of beans.

Some talking points: Have you ever done this savings account shuffling? Is there some advantage that I'm missing? Were you already discounting your returns for taxes and inflation? Think my math is wrong? Hit us up in the comments.

Full Disclosure: We have part of our emergency fund in an on-line account (just so that we are losing less to taxes and inflation) and part in a local, brick-and-mortar savings account (just for easy access).

I may be slow on the uptake sometimes. This little tidbit helps answer two questions:

1. Who's campaign was Huckabee referring to as being financed with debt?
2. Why was Mittens so defensive about how much of his own money he had spent on his campaign?

The answers are:

1. Mitt Romney. He has been loaning his own money to his campaign. ~$35 million to date.
2. Because 18 of the $27 million Mitt 'raised' in the fourth quarter of '07 came from his own bank account. Meaning he actually raised $9 million, and borrowed $18 million from himself. Could this guy get any creepier?

So Mitt's messege is: If you can't afford the lifestyle you desire, then finance it? Oh, yeah, you're real strong on economic issues. And how does his campaign go about paying Mitt back? Or is he taking advantage of a loophole in the laws of campaign finance, and doesn't expect to be payed back?

Like many Americans, we've been through some health insurance woes. And for every bad experience we've had, we've probably heard another 10 horror stories from friends and family. Its a mess. I've never claimed to be an insurance expert. But who is? I always thought that having insurance meant that they'd pay for your claims, or at least a portion. I don't know why I thought that. Doesn't other insurance work that way?

Who's Really Footing the Bill?
Think the insurance company picks up the tab for your health care claims? Think again.
You and XYZ Corp pay directly for your healthcare. Both your premiums and XYZ Corp's contributions pay for XYZ Corp's claim expenses. Our healthcare plan partners provide discounted provider networks and process our claims.
That means you can positively impact your pocketbook and the company's financial strength simply by carefully watching how you spend your healthcare dollars.So when you need healthcare services, think before you spend. Buy only what you really need. Make decisions like it's your money. After all, it really is!