Get Rich Slowly

Today I am reviewing new books written by two colleagues: Trent from The Simple Dollar and Leo from Zen Habits. As you read these reviews, please remember that I am friends with both authors.

Zen Habits is one of my favorite weblogs. For the past two years, Leo Babauta’s exploration of productivity and simple living has helped me make the most of my time. (Plus sometimes, like yesterday, he just hits it out of the park.)

Babauta recently published his first book, The Power of Less, which seeks to help readers become more efficient — and more relaxed at the same time — by limiting themselves only to the essential.

Six lessons
The Power of Less is divided into two sections. In the first, Babauta explores the six guiding principles of his philosophy, “the ideas that will help you to maximize your productivity while simplifying your life”:

1. Set limitations. By setting limitations, we must chose the essential. So in everything you do, learn to set limitations.
2. Choose the essential. By choosing the essential, we create great impact with minimal resources. Always choose the essential to maximize your time and energy.
3. Simplify. Eliminate the nonessential.
4. Focus is your most important tool in becoming more effective.
5. Create new habits to make long-lasting improvements.
6. Start small. Start new habits in small increments to ensure success.

The second section of the book offers practical tips for applying these six principles in various parts of your life: goals and projects, time management, e-mail, filing, daily routine, etc.

The power of less
The first section of this book disappointed me. Babauta’s six principles are good, but the chapters describing them are too long and the examples vague.

Babauta writes, “These days we consume information, food, and media at a breakneck pace that was unimagined two hundred years ago.” Maybe so (that’s my impression too), but I want a bit of research to back it up. This sort of book lends itself to facts and figures. There’s no research cited in The Power of Less, and that frustrated me.

But I thought the second section of the book was great. It’s filled with ideas that I can use in my own life. As one who is completely overwhelmed by his work, the idea of doing more by working less appeals to me. As I read, I jotted down some techniques I can use to improve my own life today:

• Have only three active projects at a time, with all others waiting “on deck”. Finish all three projects, and then move three more projects to the active list.
• Every evening, create a list of three Most Important Tasks for the following day. Try to complete these as soon as possible, before you get distracted.
• Limit e-mail. Check only twice per day. (Babauta recommends 10am and 4pm.)
• If you’re leaving e-mail in your inbox because you need to do something, move the task to an external list. Get the task out of your inbox.
• Limit the length of your replies. Kris has been trying to convince me of this for months. When I reply to reader e-mail, I often want to write long, personal replies. This takes time. Although I’d like to write more, I’m going to try to limit myself to 3-4 sentences.
• Create a simple filing system. Get rid of stacks on your desk. I’m a “stacks” kind of guy, and often feel overwhelmed by them. I bought an accordion folder, and have been working to move my stacks to this.
• Learn to say “no”. This is a difficult one for me. For the past two years, I’ve been a proponent of the power of yes. I’ve achieved a lot by accepting the offers that have come my way. But now I’m finding I don’t have time to say “yes” to everything.

More or less?
As you might expect, The Power of Less is very much like a refined and extended version of Babauta’s blog, Zen Habits. This alone may tell you whether you’ll enjoy the book. I liked it, but do have some reservations.

For one, the book is tech-centric. The examples are great if you’re an office worker, but much less relevant if you have a blue-collar job or are a stay-at-home parent.

Also, at times the book feels like a group of unrelated parts instead of unified whole. For example, in one chapter Babauta encourages readers to focus on only one goal at a time. But in the next (and in the rest of the book), he writes of having multiple goals. Which is it? One goal or many?

Quibbles aside, I’m glad to have read The Power of Less. I’ve reached a point in my life where I’m questioning my priorities. Do I really want to spend 60 hours a week writing? How important is money relative to fitness and relationships? How can I find balance?

When I read The Power of Less on Christmas Day, it had quite an impact. Over the past two weeks, I’ve used its lessons to help me re-structure how I organize my time. I’m pleased with the changes. I have embraced the power of less — and so far it seems to be working.

Learn more about this book at the Power of Less website.

Several GRS readers have written lately with the same credit card problem — but not the one you’d expect. Perhaps in an effort to cut costs, credit card companies are beginning to close their customers’ unused accounts. Nicole shared a typical experience:

I’m 26 and have a solid 8-year credit history. Despite really wanting to get rid of some of my old credit cards that I never use, I’ve held on to the accounts since they help my credit history.

I just got some bad news about my oldest credit card. Because I haven’t charged anything on the account in 13 months, the account has been suspended and closed. I called and was told by several people that there is nothing I can do about it. It’s as if the years I’ve had the account for and the fact that I’ve always paid what I owe means nothing. And for my past loyalty they’re willing to potentially make me take a major hit on my credit score.

I feel like I’m being penalized for doing the right thing. Other than writing a strongly worded letter to Capital One and asking my other credit card companies to increase my limits, is there anything you can think of that might help me to minimize the hit on my credit score?

Other readers have reported similar problems. The irony of this situation is that it only affects people who are using credit cards responsibly. It’s important to note that although closing a credit card — whether you do it or the bank does it — will affect your credit score, the damage is generally minor, and your score should recover quickly. Still, if you’re planning to apply for a loan in the near future, this could be a nasty surprise.

If this has happens to you, absolutely ask the credit card company if there’s anyway to reverse the closure. Be firm but polite. Ask to speak with supervisors. It’s unlikely that they’ll change their minds, but it never hurts to ask.

You might also ask the issuer to grant you a new card with similar terms. You’ll still suffer a ding to the “length of credit history” portion of your credit score, but you’ve lost that already. By obtaining a new card, you’ll at least recover the “credit utilization” portion of your credit score.

If this hasn’t happened to you, there’s an easy way to prevent it from occurring. If you have an unused credit card account that you maintain simply too boost your credit score, make a charge or two every couple of months. Pay off the charges immediately, as normal. By using the card once in a while, the issuer will consider it active, and you won’t be at risk for taking a hit to your credit score.

And, of course, if you’re carrying balances on your cards, this isn’t an issue. You folks should continue to pay down your debt as quickly as possible while not using your cards for new purchases.

For more on this topic, check out this anatomy of a credit score.

I recently participated in a conference call with Suze Orman, who is working to promote Best Life Week. This series runs on The Oprah Winfrey Show all this week, and is intended to help viewers “jumpstart 2009 and make it the best year ever!”

Hyperbole aside, it was great to have a chance to speak with Suze Orman, who will be sharing money tips with Oprah viewers this Thursday. I tried to ask her about maintaining motivation and sticking to goals. She answered with how to avoid credit cards. Not exactly what I was after, but the information was still good.

J.D. Roth
Having once been over $35,000 in debt myself, I know that it’s one thing to say you’re ready to get out of debt and to stop using credit cards, but it’s another thing to actually maintain the dedication for the days and the years that are needed to pay that debt off. I’m wondering if you have any favorite behavioral tips or tools for maintaining motivation with new goals for a New Year’s resolution.

Suze Orman
You know, J.D., what’s very fascinating is that the desire to want to use the drug known as credit cards is a very, very strong pull on people. It’s almost as strong — I’m very serious about this when I say this — as a narcotic, as tobacco, as well as alcohol.

And in the same way that if you happen to be a drug addict or you happen to be an alcoholic, that normally what keeps you on the road of the straight and narrow is that you don’t hang out with people who drink. You don’t go into bars. You don’t keep alcohol around your house. You make it so that it’s easy for you to not get yourself in trouble because it’s right there.

Saying “no” to credit
The same, I have to say, is true when it comes to credit cards. You have to, even though you don’t want to close down your credit cards because that will hurt your FICO score, that doesn’t mean that you can’t rip them up. Doesn’t mean that you can’t cut them up as soon as you’re out of credit card debt where you just don’t see them.

So my advice to people who were once in credit card debt and now they’ve gotten themselves out of credit card debt is I would literally cut up all of my credit cards. I would not be carrying them, I would not even have them in the refrigerator. Some people say they put them in the freezer — oh, give me a break. Anything can come out of a freezer. I would cut them up 100%.

And if, in fact, I knew that I might seriously be tempted to call the credit card company and say, you know what, send it to me again — I would not care about my FICO score and I would literally call up the credit card company, close down the account and not give me any temptation whatsoever to get myself into credit card trouble. As soon as I got offers in the mail, they would immediately go into the trash.

Keeping good company
The key is keeping good company, and when it comes to your money, you usually are keeping good company with other people who aren’t in credit card debt, other people who don’t entice you to spend money, other people who don’t say, “Let’s go on this vacation. Oh, just put it on your credit card debt.” Other people that say, “Oh, please, let’s just go out to dinner.”

Good company are people that say:

• “I understand that you have credit card debt and you don’t have the money.”
• “Let’s go to your house and I’ll bring food.”
• “We don’t need to go on a vacation, let’s just go for a walk on the beach.”

Again, when you leave your house, leave your house without any credit cards. You can go to the mall, you can go window-shop, you can enjoy the mall just like everybody else, but do not take your credit cards with you whenever you go out.

If you see something that you want and you don’t have the credit cards, fine — you can’t buy it. If you’re still thinking about it one month later, maybe you really wanted it. Who knew? But that keeps people in check. So:

• Don’t leave your house with credit cards.
• Cut up your credit cards once they’re paid off.
• If you need to go further than that, close them down and who cares about your FICO score.
• And keep good company.

That would be my advice.

You can read more of Orman’s responses at participating personal finance blogs. Jeremy from Gen-X Finance asked about the current economy, and Will from Wise Bread asked about the easiest things people can do to improve their financial situation.

2008 was a miserable year for money. The stock market tumbled, unemployment soared, the housing market continued to crumble, and retirement savings shriveled away. Whew! Here’s hoping 2009 will be better!

But hope can only do so much. Hope cannot bring change. Action brings change.

If one of your goals for 2009 is to take control of your money (instead of letting it keep control of you), this crash course in financial basics can help guide the way. Here are nine simple but effective actions you can take to build a better financial future.

Method #1: Track every penny you spend
The authors of Your Money or Your Life admonish readers to “keep track of every cent that comes into or goes out of your life.”

[This is] the best way to become conscious of how money actually comes and goes in your life as opposed to how you think it comes and goes…This is the step that somehow makes the biggest impact.

It doesn’t matter how you track your spending — the most important thing is to do it.

• You can use a cash notebook.
• You can use an online tool like Wesabe, Mint, or Quicken Online.
• You can use a piece of software like Quicken or Microsoft Money.

Whichever method you choose, stick with it. Make it a habit. Don’t fudge the numbers. Record your transactions as soon as possible. Most of all, don’t judge yourself. Tracking your spending is an exercise in data collection; it’s not the appropriate time to change your habits.

Method #2: Develop a budget
After you’ve tracked your spending for a few weeks (or months), use the data you’ve collected to develop a budget. According to The Millionaire Next Door, budgeting is one thing that sets the wealthy apart from the rest of us — 55% of millionaires keep a budget.

Many people — myself included — fail to budget for a variety of reasons: it’s boring, we don’t think we need it, or we don’t know how. But this simple act can provide a roadmap for your money.

There are a variety of budgeting methods you can choose, from Andrew Tobias’ three-step budget to the 60% budget. My recent favorite (and a favorite of GRS readers) is Elizabeth Warren’s balanced money formula: 50% to Needs, 20% to Savings, and everything else to Wants. Simple but effective.

Crave more budgeting tips? Check out this article highlighting 13 tools for building a better budget. Hate the idea of budgeting? Consider the spending plan, a budgeting method for non-budgeters.

Method #3: Optimize your accounts
For eighteen years, I was an account holder at a large national bank. I paid an $8 “service charge” every month, as well as many other fees. I received terrible service and earned no interest. Over the last couple of years, I’ve finally begun to optimize my accounts. If you haven’t already done so, consider the following:

• Open an online high-yield savings account. Even in this era of low interest rates, it’s still possible to earn about 3% on your savings. Internet favorite ING Direct currently offers a 2.50% APY and FNBO Direct offers a 2.80% APY. These rates are about as low as they can go, and should increase in the months and years ahead.
• Choose a rewards checking account. Believe it or not, it’s possible to find checking accounts that pay interest. Online checking accounts generally pay between 1% and 3%, depending on your balance. But you can usually find an even better deal through your local bank or credit union. Check out this huge list of rewards checking accounts by state for rates as high as 6%!
• Use a rewards credit card. If you have trouble with credit, it’s best to avoid plastic altogether. If you can use credit responsibly, be sure to choose a credit card that pays you. Avoid cards that carry an annual fee. Find a rewards program that matches your lifestyle. But don’t choose a card just because it offers a signup bonus or because it gives you a discount at your favorite store. Remember: your goal is to find a useful tool. Look for a long-term relationship you can live with.

It’s important to choose accounts and systems that work for you. I signed up for a rewards checking account at a local credit union, but the nearest branch is fifteen minutes out of my way. I never use it. I had to compromise by opening on online checking account instead. I earn a lower rate, but it’s an account I’ll actually use.

Method #4: Start an emergency fund
For years I lived paycheck-to-paycheck. I spent everything I earned. This worked well until something went wrong. Suddenly I’d find myself without money to pay for a car repair, or facing an expensive doctor’s bill. I financed emergencies with credit cards. I finally paid off all of this debt at the end of 2007.

After you’ve optimized your accounts, make it a priority to save for emergencies. In The Total Money Makeover, Dave Ramsey explains why he believes an emergency fund should come before anything else:

Since I hate debt so much, people often ask why we don’t start with the debt. I used to do that when I first started teaching and counseling, but I discovered that people would stop their whole Total Money Makeover because of an emergency — they felt guilty that they had to stop debt-reducing to survive.

After you’ve saved $1000, then you can attack your debt. Open an online high-yield savings account and add $20 or $50 to your account ever time you get paid. Two years ago, I opened an account at ING Direct, where it’s simple to schedule automatic deposits.

See also: Learning to love the emergency fund.

Method #5: Get out of debt
Are you struggling under a heavy debt load from credit cards or student loans? Make it a priority to unload some of this this burden in 2009. At the end of 2007, I said good-bye to 20 years of debt — it feels fantastic to have that weight off my shoulders.

If you have the mental discipline, you’ll save money by paying down your high-interest debt first. But if you’ve tried that method before and failed, consider using a debt snowball. Pay your debts starting with the smallest balance first. Here’s how:

1. Order your debts from lowest balance to highest balance.
2. Designate a certain amount of money to pay toward debts each month.
3. Pay the minimum payment on all debts except the one with the lowest balance.
4. Throw every other penny at the debt with the lowest balance.
5. When that debt is gone, do not alter the monthly amount used to pay debts, but throw all you can at the debt with the next-lowest balance.

The debt snowball can give you awesome psychological payoffs, keeping you motivated to stay in the game. It’s not mathematically ideal, but it worked for me (and for many others besides). However you choose to get out of debt, stick with it. Don’t give up.

Method #6: Fund your retirement
The current economy gives a lot of people the jitters. But if history is any indication, now is a great time to be buying stocks for your retirement. Take advantage of any employer-matched opportunities, such as a 401(k). Also consider starting a Roth IRA.

If you’re young, you probably don’t think you need to start a retirement account. You’re wrong. No matter how old you are, now is the time to begin saving for retirement. The extraordinary power of compound interest favors the young — and in a big way! In The Automatic Millionaire, David Bach writes:

The single biggest investment mistake you can make [is] not using your [retirement] plan and not maxing it out.

After reading The Automatic Millionaire a couple years ago, I opened a Roth IRA at Sharebuilder. It was easier than opening a checking account. I managed to make the maximum contribution in 2006 and 2007. In 2008, I maxed out my 401(k).

Don’t understand retirement accounts? No problem. Last year I explained what a Roth IRA is and why you should care. For more ideas, check out Wesabe’s simple investing group.

Method #7: Automate your finances
For the past eighteen months, I’ve been moving toward a system of paperless personal finance. Along the way, I’m learning the value of automating routine transactions. When you make things automatic, you remove the human element, making it more difficult for you to mess things up.

The classic example is overdraft protection. By tying your checking account to your savings account, you have a safety net if you bounce a check. But there are other ways this can work for you. For example, I’ve set up automatic payments with the gas company, the cable company, and my auto insurance company. I also make automatic deposits to my online savings account.

One terrific advantage to automation: when pay your bills and do your saving and investing automatically, it’s easy to tell how much you have left over to spend at the end of each month!

Method #8: Earn extra money
You can meet a lot of your financial goals by reducing your spending and using the right tools. But nothing supercharges your progress like a boost in income. How can you earn extra money?

• Ask for a raise. Several readers have written to tell me how they’ve given themselves a raise through ambition and ingenuity. Here’s one example.
• Switch employers. Not every employer is able or willing to offer raises, even when they’re merited. If you’re in a position where a raise isn’t possible, consider finding a new employer.
• Take a second job. Many people find that the best way to get out of a financial hole is to temporarily take a second job. Nobody wants to work more than 40 hours per week, but sometimes that’s what is needed to get out of debt or to save for a house. Just remind yourself that you’re doing this for a short time.
• Use your hobbies. Yes, it’s possible to have money-making hobbies. You’re not going to get rich playing World of Warcraft, but many people use productive hobbies to earn a little extra income.
• Volunteer for medical research. Last summer, I earned $120 for a couple of hours spent participating in medical research. My colleague Donna Freedman has earned extra cash by giving blood and watching porn (though not at the same time).
• Sell things. When I decided to get out of debt, one of my first steps was to sell a bunch of the stuff I’d bought with that $35,000. I used eBay, Craigslist, garage sales, and the Amazon Marketplace to sell the things I no longer needed or wanted. The money I earned jump-started my debt reduction.

Another effective way to increase your income is to pursue entrepreneurship. While working to defeat my debt, I started a small computer consulting business. It didn’t generate a lot of income, but it did provide $2,000 a year that I wouldn’t have had otherwise!

Method #9: Educate yourself
Knowledge is power. Personal finance doesn’t have to be a mystery. Subscribe to this site. Read other personal finance blogs. I recommend:

• The Simple Dollar
• I Will Teach You to Be Rich
• The members of the Money Scribes network
• The members of the LifeRemix network

Visit your public library. Borrow money books and self-development manuals. Here are four of my favorites:

• If you’re in debt and can’t seem to find a way out: How to Get Out of Debt and Live Prosperously
• If you’d like to know more about investing: The Random Walk Guide to Investing
• If things are tight and you need to find creative ways to make ends meet: The Complete Tightwad Gazette
• If you want a motivational manual to prompt you to pursue your goals: The Magic of Thinking Big

You don’t have to agree with everything in a book to get something out of it. I read a lot of personal finance books — some are good, but many are not. Even the worst books usually have one or two things I can pull from them. Learn how to read a personal finance book so that you can pick and choose those pieces appropriate for your life.

Final thoughts
Taking control of your finances can be intimidating — there’s so much to do! — but it doesn’t have to be that way. One effective solution is to take a vacation day from work: designate one specific date as your personal “Money Day”. Use this day to finally set up Quicken on your computer, to open a retirement account, and to call around for a better deal on your insurance.

The good news is that you can get out of debt. You can save for retirement. If I can do it, so can you. Best wishes for a prosperous new year!

Note: This is a new version of an article I share every January. I update it annually, incorporating new tools and techniques. Photo credits: Checkbook register by Lemon Jenny, car accident by Incase Designs, gears by Ralph Bijker.

My three-week vacation is officially over. I had a relaxing time, though I didn’t even start on my primary goal (writing my book proposal). Instead, I rested and recharged my batteries, which was probably the best choice. I’m back full of energy and ideas.

First up, however, a look at a few articles that have caught my eye recently, all of them somehow related to college finances:

It’s the new year, and many folks are thinking about resolutions and goals. But Studenomics — a blog offering financial advice for current students and recent graduates — writes that the best New Year’s resolution is “to live a life where you do not need to wait for a new year to change something”. This is an excellent philosophy. Don’t wait, the article says, but challenge yourself constantly.

This morning, Trent at The Simple Dollar detailed seven huge financial mistakes he made during his college career. Trent and I have similar backgrounds, philosophies, and approaches. No surprise then that his list of regrets reads like mine. When I think of the scholarships I squandered, it makes me wan to cry. (On the other hand, without all the dumb decisions, I wouldn’t be where I am today, so it’s not all bad, right?)

GRS-reader Terry from Your Scholarships wrote to tell me about his site. “The goal is to have a scholarship listing service that doesn’t bog you down with a bunch of ads and emails, and let’s you see all of our scholarships without a lengthy profile to fill out,” he says. He’s nearly done with the site, but before he goes live (there are still some features missing), he’d like to have some beta-testers take it for a spin. If you’re interested, he has a special page where 20 or so GRS readers can register for a free one-year subscription to the Your Scholarships. Try it out and give him feedback! Terry extended this offer to 200 GRS readers, but has had to close the free registration. Thanks to everyone who signed up!

Finally, Free Money Finance wonders if students are wising up. He notes a new stat that 57% of students are considering less prestigious colleges for affordability reasons, a trend he likes. I tend to agree with FMF on this. I think that most of the time (but not all of the time), the quality of the education is more dependent upon the student and her efforts than it is upon the institution.

Joe S. sent me a recent New York Times editorial from Ben Stein, who describes being approached by representatives from Bernard Madoff. Madoff ran a Wall Street hedge fund which reportedly “never lost money”. Stein thought it sounded fishy, and he didn’t take the bait.

“I have never heard of an entity that could make money in all kinds of markets consistently, year in and year out,” Stein writes. “I have never heard of a financial manager who promised to be able to defeat the markets anytime he chose and who, in fact, was able to do so.” He points out that even Warren Buffett lost 32% in 2008.

Turns out Stein’s gut instinct was correct. Madoff, it was recently revealed, had essentially been running a giant Ponzi scheme, a stock-market pyramid scheme. He was bilking investors out of money. As is always the case, there’s no real way to get rich quickly. The true path to wealth requires slow and steady effort.

Stein ponders the myth of easy money, and why it’s so appealing. He concludes his essay with a lovely meditation on what I think of as True Wealth. He writes:

We are more than our investments. We are more than the year-to-year or day-by-day changes in our net worth. We are what we do for charity. We are how we treat our family and friends. We are how we treat our dogs and cats. We are what we do for our community and our nation. If you had $100 million or $100,000 a year ago and now you have a lot less, you are still the same person. You are not a balance sheet, at least not one denominated in money, as was explained to me recently.

Losing and making money are not moral issues so long as you are being honest. You may have a lot less money as this year ends than you did two years ago. But you are just as good or bad a person as you were then. It is a myth that money determines who you are, and if you have gotten over that myth by now, then 2008 will have been a very good year.

Amen, Ben.

Over the past few months, many people have asked me how I can remain so calm during the economic crisis. There are several reasons, actually:

1. Worrying does no good. I can’t control the national economy. I can only control my personal economy. To that end, I continue to watch my spending, to save, and to invest for retirement. If I’m doing what I believe is right, that’s all that matters.
2. The more I read, the more I think that market crashes are simply part of the process. I expect the economy (and the stock market) to recover. I don’t have much invested right now, so this is more an opportunity for me than a disaster.
3. I understand that I am not my money. I grew up poor. I lived most of my adult life deep in debt. Now I’m actually building wealth. But through it all, I am the same person I’ve always been.

As we head into 2009, I encourage you to set financial goals, and to pursue them with vigor. I think it’s a good thing to want to improve your financial fortune. But at the same time, don’t lose sight of what’s important. Remember: you are not your money.

This is a guest post from my wife.

Our gardening for the year came to a close around Halloween. Although we’ll harvest herbs all winter — I’ve started an indoor herb garden with clearance-sale seeds! — the cold and wet Willamette Valley winter makes outdoor work miserable. And this year we’ve even had snow and ice:

The garden in winter

The garden in summer

But the gardening cycle will begin anew with a seed order later this month. Before then, I’ve decided to make a few notes on our 2008 efforts to see what we can learn from the Get Rich Slowly garden project.

What we choose to grow in our garden is determined by our space, our tastes, and our attempts to minimize highly labor-intensive crops. Keeping track of the value of our harvest helped reinforce what I already knew: tomatoes, berries and fruit trees are winners for us. If we weren’t growing them ourselves, I would be spending grocery money to purchase these types of seasonal produce.

Our bumper crops allowed me to put up food we’ll eat all winter, keeping our food costs lower. Other crops were less dependable, or had a smaller output. By evaluating the successes and failures of 2008, I can better plan for 2009.

Berries are winners
Despite J.D.’s disastrous pruning of the raspberry canes last spring, we had wonderful fresh berries from our caneberry trellis from July through September, preceded by June’s strawberry crop and overlapping with blueberries, currants, gooseberries and elderberries.

Other than time picking the crop, berries demand little from us. We fertilize one or two times a year, do heavy cutting back on the caneberries and light pruning on the others, and hand-pull some weeds. The blueberries, currants and elderberry bushes could serve as ornamental shrubs in a limited space; our strawberries creep between the roses.

Tomatoes are winners too
I think I’ve finally hit on a Roma-type tomato that works for me! By trying different varieties through the years, I’ve found favorites in other varieties:

• Cherry — Sungold
• Green — Aunt Ruby’s German Green
• Yellow beefsteak — Dr. Wyche’s Yellow
• Red beefsteak — Oregon Star

Some specialty heirloom tomatoes aren’t very productive, so I need a dependable Roma-type that really loads on the crop if I’m to get my canning done! This year I tried a new one (Martino’s) and it was amazingly prolific. And I have plenty of seeds left in the packet for 2009!

Even though we got off to a slow start, I was satisfied with my season’s crop overall. I put a lot of time into starting and coddling the seeds and seedlings. Once they were transplanted outside, I fertilized weekly, kept the plants orderly so they grew up their cages, and generally acted like an over-protective parent.

Totally worth it when I had that first tomato salad. And worth it again as we have salsa all winter.

Fruit tree fiesta
When we moved into this home four years ago, we planted two apples, a grafted pear, and an Italian prune plum tree. This year, we got sizable crops from both apple trees and the plum — and we seem to have licked the apple maggot and codling fly problems without resorting to spraying! The pear crop gets bigger each year (1, 3, 8, 20).

Our dwarf fruit trees currently require nothing more than a light pruning in late winter and the hanging of pest traps periodically throughout the summer. As they mature, pruning will be more time-consuming and require a ladder, but the resulting crop will be larger. When blooming in spring, each is a thing of such beauty that it takes my breath away.

If you have a bit of room, do some research and plant a dwarf fruit tree (fall is the best time in our climate). I’m determined to add an Asian Pear tree or two to our home orchard. (And maybe even a cherry.)

Small successes
We had some other minor successes, too.

We planted two acorn squash, which required practically no work and produced nine squash. Once picked, these were left on the porch a week to dry, then moved to the basement stairs for storage. I’ll enjoy them throughout the winter. I’d plant more, but JD won’t eat them.

In June we had a bumper crop of snow peas. Over the summer, I learned of a variety I like even better, so we’ll be planting two types this Spring. When Oregon is desperately trying to break free of gloom’s grip, picking a pea pod reassures us that the sun is on its way. Peas require minimal effort.

Losers!
We had some successes, but we also had some failures. Every gardener has things she can’t grow. For example, J.D. and I can’t seem to grow lettuce or carrots. This year we struggled with some other plants too:

• Corn. Due to poor weather, our corn crop was less than impressive. Also, to pollinate well, one needs to plant a sizable patch of corn. This year, J.D. and I finally accepted it: we don’t want to use that much space just for corn. The ear-to-square-foot ratio is too low. Even at this year’s higher prices, local corn on the cob was still two for a dollar. It’s not worth our investment of time, money, or space. But truthfully, I might plant it again anyway. Call me an optimist.
• Asparagus. I planted a short row of asparagus in 2005. This year, I got my first measley harvest. Asparagus crowns take several years to mature, and can produce for as long as twenty years, so I don’t know if I’m being impatient or have truly failed to give this crop what it needs. So far, we’ve invested four bags of steer manure, about $12 in asparagus crowns, room in the garden and three years of wishing in exchange for six stalks of asparagus.
• Potatoes. Okay, okay, I just like planting potatoes. Not a good investment of space, though, unless you would normally pay the exorbitant store prices for specialty types. A 10-pound bag of russet potatoes only costs $2! I’ll try to resist this year.
• Gooseberries. I got a nice crop of gooseberries in 2008. I even made a gooseberry pie. Then one day I noticed something was eating the leaves of one gooseberry bush. Because we have relatively few destructive garden pests around here, I didn’t do anything. Less than two weeks later, both bushes were entirely stripped of leaves. Stripped! The culprit is the gooseberry sawfly. Strike one against gooseberries. They’re incredible thorny — strike two. And the gooseberry pie wasn’t that great (strike three). Maybe I’ll replace them with more currants!
• Cucumbers. Our cucumbers never recovered from the slug onslaught. Lesson learned. This year I will be vigilant with the protection from day one. They also suffered from sporadic watering, since I stupidly planted them among my tomatoes, which I do not water once they are established (unless drooping). Better garden layout next year!
• Flowers. We don’t talk about it at GRS much, but there are 60 rosebushes, 23 camellias, and scads of perennial and annual flower beds at Rosings Park (as we call our half acre). I neglected these a little last year. This year I’ll strive to pay more attention to them.

Gardening is an adventure for us. For me it’s a relaxing hobby, a great way to spent my summer evenings and weekends connecting with my piece of the planet. For J.D., it’s a good way to get sweet treats for cheap. It’s a fun way to spend time together while also saving a little money.

Yesterday a GRS reader named “P” pointed me to a New York Times article from Alex Williams, who writes that change isn’t easy. Williams notes that about 80% of those who make resolutions on New Year’s Day fall off the wagon by the middle of February.

The article isn’t as depressing as that opening might lead you to believe. It offers glimpses of why people fail to keep resolutions — and offers tips for how they can succeed.

How to make your resolutions stick
One of Williams’ interview subjects realizes that she’ll always want to engage in bad habits, but that in order to change, she needs to want the good habits more.

I agree.

I will always want to buy comic books, for example, but the key is to realize that other things are more important. I want the freedom to spend my time as I please. I don’t want to work at a job I hate just because I need to earn money for the latest comics. (Or videogames. Or books. Or clothes.) My time and my freedom are more important than having the latest issue of X-Men. By looking at things this way, I’m able to see that I control my money — money doesn’t control me.

Williams interviewed several experts for the article. One suggested four strategies “more likely to bring positive results” when trying to change:

1. Think big. “Start with big changes, not small ones” in order to generate more immediate results.
2. Fake it ’til you make it. Think and act like the person you want to be. This is a powerful technique. I’ve used it myself to deal with a lot of my fears.
3. Reframe the situation. Think of it in a different way. For example, don’t say that you’re giving up shopping — say that you’re getting a divorce from debt. Then you “can look back at [your] old life as a romantic adventure, rather than a sinkhole of regret”.
4. Get help. Don’t go it alone. If you want to make change, then find others who can support you, such as your family or friends — or the other readers at Get Rich Slowly.

The ultimate conclusion of the article, though, is to just do it. Another expert put it this way: “The only thing that convinces the brain that it is okay to change is to see it change.”

My goals for 2009
That being said, I’m still not making resolutions this year. I’m setting goals. This is my strategy for coping with the problem of change. When I set a goal, I don’t feel like I’m trying to convince myself to become somebody new. I’m just trying to achieve something that the current J.D. wants.

And I’m not going overboard, either. In his new book, The Power of Less, Leo Babauta writes: “Taking on many goals at once spreads out your available energy and motivation, so that you often run out of steam.” This is the reason that I’m limiting myself to three primary goals again in 2009:

1. To save $5,000 for a new car. “About time,” many of you are saying. For nearly two years you’ve listened to me whine about my Ford Focus while pining for a Mini Cooper. Now that my consumer debt is gone and I’ve saved $10,000 for emergencies, I’ll take some time to save for the car. (I’d set this goal higher, but I want to be sure my other financial priorities are met too.)
2. To ride in Cycle Oregon. This goal actually encompasses many sub-goals such as: lose 20 pounds, research and purchase an indoor bike trainer, get a professional bike fitting, etc. (Oh — and ride the damn bike!)
3. To make better use of my time.

I know that third goal sounds nebulous. It’s not. I have a concrete plan inspired by The Power of Less and by a recent conversation with a friend. I’m dividing my time into Focus Days, Free Days, and Buffer Days. On each day, I’m pursuing Most Important Tasks. I’m making a few other little tweaks, too. Basically, I’m trying to design a time-management system that works the way I do.

I also plan to pursue several secondary objectives. I intend to:

• Teach myself about investing and about small-business accounting.
• Fully fund my retirement accounts.
• Finish my book proposal and sell my book.
• Optimize our insurance coverage.
• Repair the exterior of our home (siding, paint, gutters).

Believe it or not, some of those secondary goals seem more daunting than my primary goals! But the primary goals are the ones I feel most passionate about. They’re the ones that will keep me motivated.

Now it’s your turn. What are your goals (or resolutions) for 2009? What strategies will you use to make your resolutions stick?

Photo by Woodley Wonderworks.

Last year, I didn’t make any New Year’s resolutions. Instead, I set goals. “I don’t like long lists of resolutions,” I wrote. “You need focus to achieve a goal. If you set too many goals, it’s difficult to keep them all in mind. When you lose sight of a goal, you begin to drift.”

At the start of 2008 I shared three goals for the year:

1. To save a $10,000 emergency fund.
2. To lose 40 pounds.
3. To write a book about personal finance.

How’d I do? I had mixed success. Still, I’m pleased with the results. I pursued each goal the entire year (instead of giving up, as I often have in the past with resolutions), and I made progress on each.

Saving $10,000
Last February, I wrote about the power of positive cash flow. When I started to take control of my finances in 2004, I had a negative cash flow. I was spending more than I earned.

By reducing my expenses and increasing my income, I managed to generate a positive cash flow, which I used to pay off my debt. At first, this positive cash flow was small: about $50 per month. But I continued to cut expenses and to find ways to earn more money, so that by the time I eliminated the last of my consumer debt, I had generated a positive cash flow of over $1,000 a month — a figure that still boggles my mind. (What if I’d done this ten years ago!?)

Once my debt was gone, I turned this positive cash flow (which increased during 2008) toward saving. I funneled the money into an online high-yield savings account, and by the end of the summer I’d met my $10,000 goal! (Since then, I’ve been setting the cash aside for a new car.)

Losing 40 pounds
On 01 January 2008, I weighed 207 pounds. My body fat was 33%. Today, I weigh 197 pounds. My body fat is 31%. Looking strictly at the numbers, you might count this as a severe failure. I think of it as a modest success. I’m comfortable with that progress.

During the middle of the summer, I actually managed to weigh in at 187 and 26% body fat for about a week. I was training to run a marathon. I was eating well. I felt great. I was getting fit!

But I was pushing myself too hard. The changes I’d made weren’t sustainable. I refused to admit that at the time (despite advice from readers at Get Fit Slowly, my fitness blog), but in retrospect it’s clear. From couch potato to marathon runner in six months was a little too ambitious, and ignored the “slowly” part of my mantra. I hurt myself, then experienced some family trauma, and my unsustainable fitness program was swept out the door.

Writing a book
My final goal was to write a book about personal finance. That didn’t happen either. Again, I’m not disappointed.

I started the year by interviewing several published authors (Ramit Sethi, Penelope Trunk, Liz Pulliam Weston), looking for advice. I also spoke to a handful of literary agents. After careful consideration, I decided that this wasn’t a goal I wanted to pursue at the time.

Throughout the year, I spoke with several more authors (Scott Burns, Timothy Ferriss, Leo Babauta) and picked their brains about the process. Finally, just before Thanksgiving, I decided that maybe I do have a book in me. I’m now in the process of crafting an outline so that I can write a book proposal.

Other goals
Though I had only three primary goals for the year, I also set several secondary goals:

• Fully fund my retirement account. Mission accomplished!
• Begin accelerating our mortgage payments. Kris and I began prepaying our mortgage in February. Ironically, it’s the best investment we made all year.
• Perfect my paperless personal finance system. This isn’t perfected yet, but I’m working on it.
• Document my progress toward fitness at Get Fit Slowly. I did well at this for most of the year, but for the last three months, I haven’t done as much as I’d like. GRS is my top priority.
• Read Proust. Alas, I didn’t make time to read Proust in 2008. I read many other great books, but the mammoth Lost Time wasn’t one of them.

Again, that’s not a bad record. I do need to make more time for leisure reading, but I’m pleased with the other things I accomplished.

No more resolutions
In previous years, my New Year’s resolutions have been abandoned almost from the start. I’d go to the gym for a few days, but then miss a day or two, and feel like a failure. By instead setting goals in 2008, I was able to stay focused, even when I lost my way. Better yet, I was able to actually accomplish something, even if I didn’t always reach the goals I’d set for myself.

How did you do on your goals (or resolutions) for 2008? What did you accomplish? Are you pleased with your progress? What could you have done better? What lessons did you learn that can be applied for 2009?

Please don’t share your goals for 2009 just yet. We’ll talk about them on Friday.

The past ten months have been amazing: I quit my job at the family box factory at the beginning of March to become a full-time writer. Since then, I’ve worked harder than I ever have in my life. I’ve had a lot of fun, but I’ve also learned a lot about myself, and about running a business.

Today I’d like to share some of the best articles from the past twelve months. I looked at the top 25 most-visited stories that I wrote for Get Rich Slowly in 2008. From these, I picked my ten favorite, which I’ve listed below in no particular order. These offer a great representation of my philosophy and my approach to personal finance:

• The psychology of happiness: 13 steps to a better life: “We think we know what will make us happy, but we don’t. Many of us believe that money will make us happy, but it won’t. Except for the very poor, money cannot buy happiness. Instead of dreaming of vast wealth, we should dream of close friends and healthy bodies and meaningful work.”
• The power of positive cash flow: “The greater the gap between earning and spending, the faster you lose (or accumulate) wealth. There are only two things you can do to increase your cash flow: spend less or earn more. (Or both!) This seems obvious, I know, but smart personal finance really is this simple.”
• The extraordinary power of compound interest: “If you do not spend less than you earn, and if you do not save the difference, you cannot build the wealth you desire. The rich are not rich because they earn a lot of money; the rich are rich because they save a lot of money.”
• My paperless personal finance system: “Most of my bills are set to be paid automatically. I’m wary of my credit card company, however, so I process that by hand every month. I simply log in to the bank’s web site, verify the totals, and then initiate a payment.”
• Mortgage prepayment made easy: Own your home in half the time: “Without a mortgage, my fixed expenses would be about $600/month. My total expenses would be about $950/month. This would provide tremendous freedom, granting me an opportunity to try things that I might not otherwise be able to do.”
• Easy and cheap home-made bread: “There are few things better in life than a hunk of warm, crusty bread slathered with honey or jam. (Perhaps with a hunk of sharp cheddar cheese on the side.) So when Brad insisted I try Mark Bittman’s minimalist “no-knead” bread recipe, I took the plunge into home baking.”
• Marvelous magazine ads from 1904: “Advertising has been a pervasive part of American culture for more than a century. I recently picked up some 100-year-old magazines for cheap at a garage sale. While it’s fun to read the articles, it’s even more fun to look at the ads. They provide a fascinating glimpse of the rise of U.S. consumerism.”
• How and when to cancel a credit card: “Closing a credit card account is easy, but if you decide to do it, you should do it correctly.”
• Embracing the thrift-store ethic: 18 top tips for buying used clothes: “For many people, thrift stores offer an easy way to delve into frugal fashion. But most shops carry more than just clothes. If your budget is pinched, they’re an excellent place to find furniture, to pick up kitchenware, and even to find inexpensive entertainment.”
• A do-it-yourself Christmas: 34 great gifts you can make yourself: “I drew on our own experience, pulled some of your best tips from the past, and scoured the web for new ideas, in order to produce the following mammoth list of do-it-yourself Christmas gifts.”

Though I enjoy sharing my experiences with money, I also love being able to bring you the voices of other writers. I learn a lot from the guest authors at Get Rich Slowly, and I hope you do, too. Here are the five most popular guest posts from 2008. Each is a gem.

1. How my net worth went from -$40,000 to $285,000 in five years (by FrugalTrader from Million Dollar Journey): “We didn’t strike it rich in real estate, we didn’t luck into some crazy stock tip, and we don’t even have extremely high paying jobs. Instead, we systematically controlled our spending so that our expenses were well below our income.  We then took the savings and aggressively paid down our debts while at the same time investing for our retirement.”
2. How to inoculate your children against advertising (by Lisa Tiffin): “Eventually, the lessons of trusting your own judgment, testing the claims of others, and discovering true value began to have an effect on our kids’ everyday lives. Instead of whining for toys they saw in a magazine, Andy and Matt would show me the ad and ask if I thought the toy lived up to its claims.”
3. How to save hundreds by playing the Drugstore Game (by Cathy from Chief Family Officer): “The Drugstore Game involves combining manufacturer and store coupons, and taking advantage of a store’s best deals. When played at the highest level, the Drugstore Game requires only a couple of dollars out of pocket each week to keep you and your family stocked on necessities like toiletries, paper goods and even groceries.”
4. 10 essential steps to take before you’re laid off (by Kevin Merritt of blist): “Nobody knows how long the current economic crisis will last or how bad it will get. But it’s already proving to be a much tougher job climate than the past few years, and the next year looks bleaker still. Start preparing today for the possibility of being laid off sometime next year. The earlier you start, the better off you’ll be.”
5. How to automate your personal finances (by Paul Lussier): “I’ve applied this understanding to put my finances on auto-pilot. I use the automated computer systems at my bank to move money around between different accounts, pay bills, earn interest, credit-card points, etc.  Though the following system may seem complex, it’s really fairly simple once it’s set up.”

If you’re looking for more money-saving goodness, check out the greatest hits from the first two years of this site:

• The best of Get Rich Slowly (2006)
• The best of Get Rich Slowly (2007)

Which are your favorite Get Rich Slowly stories from the past year? (Or of all time?) Your feedback will help me improve this site.

Happy new year, everybody!