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Last autumn, I shared a list of essential personal-finance e-books. These books covered a variety of topics, and many of them were free. Today I want to draw your attention to two new e-books that you may want to consider.

Consumer Action Handbook
First up is the 2010 edition of the Consumer Action Handbook. I’ve mentioned this book before, and I’ll mention it in the future. This book is from the Federal Citizen Information Center, that small department of the U.S. government in Pueblo, Colorado, which distributes free and low-cost consumer publications.

The 2010 Consumer Action Handbook is a 172-page guide to becoming a savvy consumer, and includes information on buying a car, purchasing a home, preventing identity theft, shopping from home, creating a will, and handling unsatisfactory transactions. And much, much more.

This book would be a good buy at $10 or $15, but it’s freely available from the U.S. government. (Technically you’ve already paid for it with your tax dollars, of course.)

• You can order your copy here.
• A Spanish-language version is also available.
• You can also view the handbook in PDF format. You can view the entire handbook at once [11.9mb], or simply browse individual sections.
• Nearly all of the book’s content is available via the Consumer Action web site.

This book is a great resource, and I encourage you to order a copy, download the PDF, or bookmark the web site. Though the 2010 Consumer Action Handbook doesn’t go into great depth on any subject, it provides excellent informative overviews, and it usually points to further resources. It’s perfectly at home on the shelf with all of my other personal finance books. (And was, in fact, an excellent source while writing Your Money: The Missing Manual.)

Unautomate Your Finances
Elsewhere, our very own Adam Baker has just released his first e-book, Unautomate Your Finances, which lays out his personal financial philosophy. This e-book is not free. It costs $17, but comes with Baker’s “as long as I have a pulse” guarantee. (If you’re not satisfied, send him an e-mail and he’ll refund your money as long as he’s still alive.)

Baker believes that the more you simplify your financial life, the easier it is to control it. He’s not necessarily opposed to all automation, but believes that for many of us, automation breeds more complexity than simplicity. He argues that in most cases, automating our financial lives magnifies existing problems, and we’d be better off un-automating things: spending consciously, making sustainable choices, and focusing on our goals.

Along the way, Baker shares solid personal-finance advice on saving for emergencies, coping with credit, and creating a realistic budget. Is Unautomate Your Finances right for you? I don’t know. But since it comes with a money-back guarantee, it’s certainly worth a look!

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Related Articles at Get Rich Slowly:

• 2008 Consumer Action Handbook
• Understanding Money
• Essential Personal Finance E-Books
• The 13 Commandments of Savvy Consumers
• 66 Ways to Save Money

This post is from new staff writer Sierra Black. Sierra writes about frugality, sustainable living, and getting her kids to eat kale at Childwild.com. Last week, J.D. wrote about Stuff; today, Sierra shares her thoughts on the costs of clutter.

Do you have piles of papers lurking on your desk? Mountains of laundry looming beside your bed? Shelves double-stacked with knick-knacks? I have a bit of a clutter problem myself. The other day, I spent an hour looking for the vacuum cleaner, which eventually turned up buried under a pile of laundry almost as tall as I am.

All that clutter isn’t just annoying. It’s expensive. That’s right: Excess Stuff can keep costing you money even after it’s been bought and paid for.

How expensive is your Stuff? Professional organizer Jen Hunter of Find Your Floor in Boston says clutter can cost us real money in a lot of ways:

• Buying replacement Stuff: Somewhere in your closet is that pair of running shoes you bought last year. Probably next to the ones you bought the spring before that. Clutter costs us dollars and time when we have to buy duplicates of stuff we know we own but just can’t find.
• Damage to your Stuff: When you have more Stuff than space, storage can become a problem. Things can get stepped on, stored improperly and broken, water-damaged or just so buried they can’t be retrieved when needed.
• Missing deadlines: When your Stuff is disorganized, you wind up paying hundreds of dollars a year in bank fees, late charges, library fines, overdue fees and tax penalties. Trust me on this one. I speak from years of painful experience.
• Renting storage space: Almost 10% of U.S. families rent storage space for belongings that don’t fit in their homes. That’s a lot of dollars going to serve your Stuff instead of your life. Even those that don’t rent space may choose larger homes than they need so that they can store more Stuff.
• Health costs: Out of control clutter can pose health risks from falling, and encourage the growth of allergens like dust and mold. Treatments for those can get expensive. Clutter can also affect your mental health. Writer Ariel Gore saw a therapist until she realized that what she really wanted was a clean home. So she hired a housekeeper for less than she paid the therapist and lived happily ever after.

To Hunter, the biggest cost is an intangible. “It’s the impediment that it presents to people’s lives,” she says.

Stacy J. Kaplan of Clutter Away in San Diego agrees. “You can’t function at your optimum level if you’re disorganized,” Kaplan says. “You wouldn’t run a business without a business plan. If you’re not organized your business will fail. A house is a small business in a way. It’s the operating structure behind what your family is doing.”

Clutter stops us from working as effectively as we otherwise might. At its most basic level, time spent looking for your car keys is time you’re not spending working, playing or relaxing.

It also costs us time because all that Stuff demands attention. While clutter might be a sign of neglect, it requires us to spend time working around it to accomplish basic household tasks like paying bills or preparing a meal. Those extra hours of housework are a drain on time and energy that could go into creative side projects, education or any number of other productive pursuits.

We can become prisoners of our Stuff. J.D. has written a lot here about how Stuff ties up our money. We can inadvertently tie up a lot of our earnings in rarely used sports equipment, video games, and other pricey toys. Selling that unused Stuff frees up not only your cash but your energy. When there’s too much Stuff around you, you’re like a plant in a too-small pot. It’s hard to grow or thrive when hemmed in by clutter.

Of course, the answer isn’t to move to a bigger place. There are families who live happily in 100-square-foot apartments. They just have less Stuff than we do.

The solution is to put your space on a diet. Some basic steps to get started:

• Consider adopting The Compact, an agreement to buy nothing new for one year. This should cut the flow of Stuff coming in down to a trickle.
• To deal with the Stuff you have, go through one small area at a time. Don’t try to do the whole house at once. Choose a room, a closet, a desk, or even just a kitchen drawer.
• A good rule of thumb: Get rid of anything you don’t use or love.

A habit of clutter can be hard to give up. If you’re used to having a lot of Stuff around you, a pared-down space can feel too spare and empty. Before you rush to fill that void, try sitting with it for awhile and really setting an intention for you want to replace your clutter with. It might be original art, new bookcases, workshop space or just more breathing room.

Whatever you choose to do with your space, you can use the same techniques you used to clear it to keep it clean. Don’t keep Stuff you don’t use or need. Don’t buy Stuff you don’t want or need. Spend a little time each day keeping your space organized.

Here are the top three clutter-busting tips from GRS Twitter followers:

• “Throw clutter in bags, put them in the attic. As you need something, take it from the bag. After 6mo, donate bags.” — @jacobmlee
• “For clutter: I’m using @gretchenrubin’s rules: Make your bed and the 1-min rule: if you can do it in 1 min, do it now!” — @jc_losangeles
• “My fave declutter advice: Spend 15 Mins a day!” — @BudgetsAreSexy

I know we just talked about Stuff last week, but how do you combat clutter? What tips and tricks can you share with readers?

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Related Articles at Get Rich Slowly:

• Clutter’s Last Stand: The Cost of Buying Things You Will Not Use
• Simplify Your Life with a Stuff Replacement Fund
• Daily Links: Frugal Tips Edition
• Guarding Against the Invasion of Stuff
• The Official GRS Referral Swapping Thread

I did it! After months of struggling and hours upon hours of typing, I’ve finally reached that mythical state of Inbox Zero. My inbox is empty — or nearly so. (I still have a handful of messages about stuff I’m actually working on at this moment, such as publicity for the book.)

I do have a stack of 74 guest-post submissions (including many reader stories), but I’m not including those in this tally. I’ll process those gradually, sending replies as quickly as I can. (If you’ve submitted a guest post, please be patient. I have dozens of them to get through, and can’t answer you all at once.)

While sorting through the last 200 e-mail messages today, I found lots of great stuff you folks had submitted. Here are some of the best bits sent to me over the past few months:

Carmen sent me this article from CNN/Money about living on a cash-only diet. The piece profiles five families that have given up their credit cards and are only using cash. Each family has a different motive and a different story. (Some of this covers ground we explored last month in our discussion about saying “no” to credit cards.)

Jill forwarded an article from (never home)maker in which the author shares five critical reasons you must read your bills. Her mortgage company made a $4,070 mistake. If she hadn’t been paying attention, she would have paid way way too much. Yet another example of how nobody cares more about your money than you do, so stay on top of things!

The folks at Your Money Bus wanted me to mention their work. The “buck-mobile” (my name, not theirs) is traveling around the country, providing a place where financial planners can meet with people and offer free advice. Here’s a list of scheduled stops.

Sam over at Getting Finances Done has begun his 12 weeks to fiscal fitness program. If you’re getting started with personal finance, check this out.

Meanwhile, the people at What Would John Templeton Say? are having a contest for bloggers: Write about some of Templeton’s advice, and you might win $500. (Templeton was a famous investor, and is the Templeton in Franklin Templeton mutual funds.)

Finally, Chris asked me if I could tell you about his project, Be Debt Free America. Apparently this is a tool that helps you create a “debt snowball payoff report”, although the site isn’t transparent enough for my tastes. I’d like to see more screenshots and know more about how this works. Why would I choose this over a free spreadsheet?

Okay, back to work. I have to be sure that nobody has tried to send me e-mail in the past fifteen minutes. Must defend Inbox Zero!

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Related Articles at Get Rich Slowly:

• Backlog of Reader Submissions
• Return of the Daily Links
• Daily Links: A Fool and His Money Edition
• Daily Links: Compound Interest, Web Income, and Happiness
• Daily Roundup: Bringing Home the Bacon Edition

February was National Parent Leadership Month, which highlighted the role parents play in shaping the lives of their children. As a sort of tie-in, the most recent poll in the Get Rich Slowly sidebar asked: “Did your parents prepare you well for financial independence?”

Over 1000 GRS readers responded; the results surprised me:

• 17% of you said, “Yes, they did a great job in preparing me.”
• 17% said, “They did well — I learned the basics.”
• 18% said, “It was okay, but they missed some key areas.”
• 48% said, “What preparation for Financial Independence?”

I, too, fall in that last group, but I guess I didn’t expect it to be so large. It’s great that a third of you folks felt well-prepared to tackle your finances, but it’s incredible that half of us feel like we had little or no preparation at all.

What did your parents teach you about money?
I wanted to know a little more detail, so last week I polled my Twitter followers (both at the site’s @grsblog and my personal @jdroth account). I asked: “What did your parents teach you about money? Anything? Did it work?”

A lot of folks responded to say that their parents were poor examples:

• @MoneyMateKate wrote: My parents didn’t teach me — I taught them! I was paying my own dental bills (no insurance) from age 12 onwards with babysitting dollars.
• @RevancheGS wrote: My parents just taught me that you have to work hard to earn money, and how to write checks. I was on my own for the rest of it.
• @liberryteacher wrote: My parents never had any money, and life was hard. So they taught me by example that that was not a good way to live.
• @mike_strock wrote: My parents gave me money whenever I asked. Needless to say, that wasn’t helpful later in life. I’m learning!
• tcita wrote: My parents taught me absolutely nothing: no chores, allowance, budgeting, spending money, savings — nothing. Though I guess that taught me value of work.
• Via Facebook, Tamara wrote: What did I learn about money from my parents? “Don’t do any of things we did.”

But not all parents fail at training their children about money. Plenty of folks picked up good habits (like searching for a high interest savings account) from the Bank of Mom and Dad. Here are some of my favorite anecdotes and tips:

• Pam from The Turtle Path (a running blog) told me: In junior high, my parents gave me $400 at the beginning of the year (instead of a weekly allowance). They told me I could do whatever I wanted with it, but they weren’t giving me any more money the rest of the year, so don’t ask.
• @betsyatoreilly (who is on the PR team for my book!) wrote: My sister and I got $50/month to buy clothes, etc. I had a lockbox for cash and receipts, and a book to enter items. It worked great. I’m a great saver.
• @Elle_CM wrote: My mom (and grandma) emphasized always saving a chunk of any income you receive. We used to make Saturday deposits at the bank.
• Via Facebook, Cynthia wrote: As kids, if we were at the store and saw something we wanted, my dad would say, “Did you bring your money?” I think this is awesome! (And, in fact, I heard my friend Steve ask one of his kids this very thing last night.)
• On a related note, Courtney told me that she and her husband have an interesting approach when their kids beg for things at the store. They simply say, “It’s not in the budget.”
• @mattwakefield wrote: My dad taught me about the stock market by using a 1/100 scale model of the market (MSFT would be $.28 right now). Got hooked early!
• @OregonCPAs_PR wrote: My Dad has always been adamant about avoiding monthly payments. They seem small, but add up quickly.
• @EverydayFinance wrote: My father insisted on no credit-card debt and said, “Everything in moderation.” It worked like a charm.
• @kingkool68 wrote: My parents printed family checks for my allowance. I could write checks to my parents in first grade! They also gave me monthly statements. I love this idea!
• @studentfinances wrote: My parents taught me that hard work is required to be successful. Laziness is not an option. Time will tell if it worked…

That last comment is perceptive: “Time will tell if it worked.” Even if your parents did try to teach you about money, how can they be sure the lessons were right for you, or that they’ll stick?

Training for tomorrow
I’m curious: How did your parents prepare you for financial independence? What specific things did they do that helped you develop money skills you could use as an adult? Do you plan to do these same things with your own children?

And for those of you whose parents didn’t give you enough training: What do you wish they’d done differently? (For my own part, I wish my mother and father had included me in the household finances once I was old enough to understand. I know they struggled to make ends meet, but they never showed me exactly what the challenges were. They never showed me their income compared to their expenses. Also, I wish they’d given me a consistent allowance and required me to budget my fun with that.)

What was your story growing up? How did it affect how you handle money today?

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Related Articles at Get Rich Slowly:

• Financial Education: Are Schools Doing Enough?
• Ads I Hate: Good Parents Buy
• The Money Savvy Pig: A Piggy Bank for the 21st Century
• The Problem with the Bank of Mom and Dad
• How One College Student Handles Credit Cards

This guest post from Andrea is part of the new “reader stories” feature here at Get Rich Slowly. Some reader stories contain general “how I did X” advice, and others will be examples of how a GRS reader achieved financial success — or failure.

I am a graduate student, working towards a PhD, and I hope to graduate in 2012. Prior to starting my PhD program I acquired a significant amount of student loan debt while working on a Master’s degree. I also had a small amount of debt left over from my undergraduate degree. In total I had accumulated around $70,000 in student loans.

Some people might say that isn’t too bad considering that I already had completed my Master’s degree, and would not be acquiring any new loans while pursuing my PhD. But I had lived paycheck to paycheck for the two years I worked between college and graduate school, and I didn’t want to live that way anymore. I didn’t want that much debt hanging over me, potentially impacting my future career decisions, so I decided to start paying back the loans while still in school.

A rude awakening
While I wouldn’t say that I regret taking out so much in loans for a Master’s degree, and I’m not sure that I would do anything differently if I had the chance, it is different looking at that dollar amount from the other side. I think this is a potential trap that all students can fall into, both undergraduate and graduate, when deciding where to go to school: The financial implications of having to pay back those loans are so far outside your perspective when you sign a promissory note; it’s not until you graduate and have to figure out how you’re going to pay hundreds of dollars every month for the next decade or two that the weight of your decision finally hits you!

It was with the realization that I’d be paying $800 a month for 20 years according to the “standard repayment plan,” and would end up paying as much in interest as the original loan amount, that I decided to embark on a much more aggressive repayment plan. I am very lucky because I have a husband who works full time and is able to help support me while I am in school. I also was lucky to obtain a training grant that is paying both my tuition and a stipend for my PhD program. Not all graduate students are so lucky.

However, I also work very hard to find other sources of income, and for the past year or so I have budgeted my income very carefully to start paying back some of my debt. While my stipend is enough to live on, it would not provide much extra for paying off loans. So to earn extra money I work part time doing research for a professor in my department.

At times it has been difficult balancing work and school, but in addition to providing extra money it also teaches me time management, and gives me extra experience to put on my resume, which will hopefully help me get a better job when I graduate.

I also take advantage of opportunities to be a Teaching Assistant, which pays $1500 (pre-tax) for each 8-week course. Through the combination of my stipend, working part time, and being a teaching assistant, I was able to take home around $36,000 in 2009.

While this isn’t a huge amount of money, it is a pretty decent income for a graduate student. However, what was more important for me wasn’t how much I was making each month, but how I was budgeting that money. I used an Excel spreadsheet to carefully budget my money each month, allocating money for utilities, groceries, car insurance, my Roth IRA (which I max out each year, since it is the only retirement account I can have as a graduate student), and discretionary spending.

Destroying debt
I set a goal of allotting at least $1000 every month to go towards student loans. My budget was not super strict — my husband and I are careful with our spending, but we do go out to eat and to the movies, and we buy things when we really want them. We pay off our credit cards in full each
month, own just one car, and pack lunches.

By following this reasonable budget I was able to pay off $18,246.45 between May 2008 and September 2009. Here’s the break down of how I did it:

Payment Date Payment Amount Loan type 5/27/08 $2,500.00 Grad, private 12/10/08 $1,078.77 Undergrad, subsidized 2/9/09 $3,000.00 Grad, private 4/1/09 $1,500.00 Grad, private 4/17/09 $2,253.85 Grad, private 6/2/09 $2,000.00 Undergrad, subsidized 7/3/09 $2,000.00 Undergrad, subsidized 8/18/09 $3,000.00 Undergrad, subsidized 9/30/09 $913.83 Undergrad, subsidized   $18,246.45  

I used a combination of the debt snowball approach and paying off the highest interest loan first. I also chose to make payments in large chunks rather than a set amount on the same day each month. I knew I wanted to pay off the private loan early because it was accruing interest, but I also tackled one of my undergrad loans early on, because I could pay it off in one payment (the December 2008 payment). My final payment in September 2009 paid off the last of my undergraduate loans, just in time for my five-year reunion.

Back on track
For the last few months, I’ve taken a break from this aggressive loan paying, in part because the point I’m at in my degree program didn’t allow me to work as much recently. But I’m ready to tighten my budget again, and plan to devote at least $500 a month to my graduate student loans, comprised mostly of a Federal Direct loan now totaling just over $50,000 because about half of the amount is not subsidized and is accruing interest at 6.8% (a fixed rate — thanks a lot Uncle Sam!). In addition to putting money towards this loan I plan to save money in different “buckets” in my ING account for things like future travels and home improvements.

I wanted to share my story because I am an avid reader of Get Rich Slowly, and I hope I can inspire other young people out there struggling with student loan debt. You don’t have to stick to the “standard repayment plan” — most student loans have no prepayment penalties. Even if you don’t make a lot of money, it is possible to find extra money in your budget to pay down student loans early.

Reminder: This is a story from one of your fellow readers. Please be nice. After nearly a decade of blogging, I have a thick skin, but it can be scary to put your story out in public for the first time. Remember that this guest author isn’t a professional writer, and is just learning about money like you are.

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Related Articles at Get Rich Slowly:

• Ask the Readers: So Much Debt, So Little Time?
• Reader Story: Tackling Debt Through Volunteer Work
• How One College Student Handles Credit Cards
• Federal Student Loan Consolidation Primer
• Ask the Readers: Can College Students Save Money?

This post is from GRS staff writer April Dykman.

I’ve been thinking a lot lately about a quote from J.D.’s review of The Total Money Makeover:

Printed on the bottom of every page…is the book’s motto: “If you will live like no one else, later you can live like no one else.”

My husband and I recently made an unusual decision, and I’m in need of a motto that I can repeat to myself every time I question our choice, which I probably will at some point.

A loan story
I’ve mentioned in previous GRS posts that my husband and I are building a house. As we started on the final construction documents, we began working with a lender to sort through the construction loan. It’s not a fun process, let me tell you. Half of what the lender said went right over my head, despite my short-lived foray into the real-estate industry.

The first issue that arose was that we’d have to have a two-time closing. This means there’s one closing at the start of construction and a second closing after the home has been built to refinance into a permanent mortgage. Apparently one-time closings, which are loans with a single close for both the construction term and the mortgage, are a thing of the past.

The problem is that my husband and I couldn’t have a change in employment until the house was finished and the second closing was complete. But he’s planning to start his own business. Also, if one of us happened to lose our jobs, we’d be at the mercy of the bank. Even if we could easily make our payments from my freelance income, the bank wouldn’t recognize that income source until I had two years of tax returns on the business. It was a concern, but we decided to move forward.

Charges, interest, and fees
The lender sent the estimates for interim and permanent loans. As I sorted through the initial fees worksheets, I saw the standard stuff:

• Origination fee
• Appraisal fee
• Processing
• Underwriting
• Closing
• Document prep
• Title insurance
• Recording fees
• Survey costs

And on and on and on…

It’s not that I didn’t expect these fees, but they were sure adding up quickly. Also, we could expect a good interest rate on our mortgage, but the interest we’d pay for a 30-year loan would double the total cost of our home. Again, not unexpected, but still disconcerting when I was plugging in our numbers.

Closing delays
Another issue was that we’d need $15,000 to close the interim loan. With an interim loan, the bank requires 20% of the total value of the land plus improvements (i.e., the house). We have a lot of equity in the land, but not enough to cover 20% of land and house value. Since we were unwilling to tap our savings, we’d have to wait until autumn to start building.

I was getting a sinking feeling in my stomach, like we were going to be trapped. My husband couldn’t start his business. If one of us lost our jobs, it would be the bank’s decision whether to work with us, on their terms, or not.

Finally, the relationship with our architect, who also was to be our builder of record (another lender requirement), was deteriorating, causing us to reconsider the arrangement.

Assessing our situation
My husband and I are in a unique situation. My parents own land in the country, and we live next door to them, rent-free. This has allowed us to build a lot of equity in the land we purchased, which is five minutes away. My dad also is in construction, and he’s able to do the majority of the work to build what he can for us and subcontract the rest.

It might sound crazy not to take advantage of our situation, but there’s something to be said for having your home finished with all of the amenities you want, such as a dishwasher, carport, bigger kitchen, laundry room, and more space to host guests. I have this dream of what our home will look like, of what it will feel like to wake up in it every day, and it’s hard to be patient.

Number crunch
I started to run numbers on how long it might take to build our home if we paid in cash; assuming no change in income, it looks to be five years — six if I’m being super conservative. I assumed a completion date of April 2015. If we went with the loan, we’d probably complete the home in September 2011. By waiting about four years longer, we’d own our home and land outright, as opposed to paying on it for 30 years. Even if it takes longer than expected, it’s still a good deal. Owning our home sooner would give us so many options:

• We could scale back on work hours.
• We could travel more.
• We could put more into savings.

The point is that we’d have those choices. Our decision came down to having the home now, or having more freedom later. Again I thought of Dave Ramsey’s quote:

“If you will live like no one else, later you can live like no one else.”

You can probably figure out what we decided to do. We’re going to pay in cash, building as we can. Impatience is not worth the headaches, fear of losing a job or the house, and the interest we’d pay if we continued with the construction loan.

Patience and resolve
I realize we’re in a fortunate position. If our circumstances were different, this might not be an option, however, I believe our choice and Ramsey’s delayed gratification advice is relevant to everyone.

Every time I’ve put my impatience aside, the outcome has been positive. This was the case when we put off buying a second vehicle and when we moved out to the country, originally thinking we’d buy a house in the city as soon as possible.

Besides patience, delayed gratification also requires resolve. When you make choices outside of the norm, friends and family members might think you’re nuts. They mean well, and they’re only thinking of you, but some of them will definitely think you’ve lost your mind. One car for two people?! You’re just asking for a divorce! It can be hard when you’re already questioning yourself. The trick to not letting these comments derail you is to remember the reasons why you made your decision, and maybe find an affirmation, which is why I’m going to print Ramsey’s motto and read it often.

Delayed gratification isn’t easy, but it usually brings the most rewards.

How has delayed gratification benefited you? How have you exercised patience and resolve? Share your tips — I’m probably going to need them!

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Related Articles at Get Rich Slowly:

• Cost-of-Living Comparison Calculator
• Ask the Readers: How to Live Debt-Free?
• Possum Living: How to Live Well Without a Job
• Ask the Readers: Help for a Broke New Yorker?
• Reader Survey: How Do You Cope with a Limited Income?

This article is by staff writer Adam Baker, whose own blog featured the hit post 42 Ways to Radically Simplify Your Financial Life.

When I was 14 years old, I opened my very first checking account at Bank One. That’s where my Dad banked and so that’s where he drove me when I asked to open an account. Over the years, I continued to give them my business.

By 16, I had opened another checking account (don’t ask me why) and a new savings account, too. At 20, I started my journey into credit cards with… yep, a brand new Chase credit card. (Note: Chase ate Bank One in 2004.)

At 21, I opened my first Chase business checking account and, at 22, I funded $1000 into my new Chase investment account. When my wife and I married the following year, we canceled her National City account to combine our finances with… Chase.

You get the point. While this may not seem too out of the ordinary, there’s only one problem: Neither of us really likes Chase Bank.

In fact, I’ve never really liked them that much. I’ve wanted to switch to a local credit union for years, but just haven’t done it. I’ve been eyeballing USAA ever since they opened their checking and savings accounts up to civilians. Mentally, I want to change…but physically I’m still a Chase customer.

What does it take to make you switch banks?
There are plenty of reasons why someone might switch banks. A couple factors that come to mind:

• Higher rates. This not only applies to rate chasing to find the highest interest rates, but any form of benefits offered. Maybe there’s a 0.5% better savings rate at the bank across the street. Maybe another is offering a free $100 when you open a new account. These are all situations where the bottom line may be the primary influence.

• Customer service. I love great customer service and I’m willing to pay more for it. In banking, this now includes both in-person and online customer service features. While I abhor having to call Chase (try it someday, it’s terrible),I love a couple of the people at my local branch. I know the branch manager and business banker well, and they always greet me by name. In addition, I have specific online banking features set-up that I’ve been using for years. Their online services aren’t perfect, but they’re above average.

• Length of history. As I outlined above, I’ve had a Chase account for over a decade now (and I’m only 25). In this day and age, customers will longer histories at a single bank are more rare. Anytime I have an issue on the phone, I immediately have them look up my history. While I’m not a big fish to them in terms of money, my account history tab shows dozens of accounts over nearly a dozen years!

• Principle. The longer I’m involved in personal finance, the more I prioritize this category. I’m not a huge fan of big banking. I’m not a conspiracy theorist and I won’t be picketing in Washington, but I like the idea of giving my business to a local bank. “Principle” is a major reason Courtney and I reject credit cards, and many people point to this reason giving their business to credit unions.

• Accessibility. Years ago, the only factor I cared about was how close my bank was to my house. Here in the Midwest, no one does that better than Chase. It’s almost as bad as McDonald’s (almost…)! With the rise of online banks, the walls of this one are coming down. For some, however, it remains a huge factor in choosing a bank.

So, will I walk the walk? I’m not sure whether Courtney and I will switch our bank. We want to, but we aren’t compelled to…at least not yet.

I’d enjoy supporting a local credit union or a testing out a bank with a reputation like USAA. I’m not much of a rate chaser and accessibility isn’t a huge priority. I much would prefer a bank I feel good about supporting and that offers me fantastic customer service.

At this point, Chase seems to be just doing enough to keep us around. But after writing this, we’ll see how long that lasts!

Have you recently switched banks? What was your motivation? Any suggestions for me?

J.D.’s note: I stuck with a lousy bank for a l-o-n-g time. Ultimately, I moved my accounts to a local credit union, and I love it. I’ve since added an online bank to the mix (ING Direct). Neither of these banks is perfect, but they both provide excellent customer service and above-average deals, so I’m pleased to stay with them.

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My pal Chris Guillebeau has a great interview up over at his blog, The Art of Non-Conformity. He recently profiled artist Tsilli Pines (who also happens to be a loyal GRS reader and a customer of my family’s box factory). The interview discusses Tsilli’s development as an artist, her initial steps toward starting her own business, and her decision to make the leap to full-time entrepreneur. Here’s an excerpt from the conversation:

Chris
What is your advice to someone who wants to “escape” from traditional work and start something like this?

Tsilli
Find what you love to do, and then do it, even if it doesn’t bring in money at first. Experiment on the side, experiment on the cheap. It’s the single most important concept to grasp if you are looking to build something from scratch.

Chris
What worries you?

Tsilli
Everything! I’m a chronic worrier. But there’s a bad way to worry, and a good way.

The bad way of worrying paralyzes you. You worry you won’t make the money side work, and it seems so overwhelming that you decide not to even try. I used to worry in this way, and did nothing.

The good way of worrying keeps you competitive, keeps you striving. For example, I still worry about making the money side work (especially now that I’ve thrown my weight into my own business completely). I still think, “What if all the work dries up? What if a competitor comes into the market that takes away my market share?” But I worry about it differently now. I worry about it by thinking ahead of the curve, recognizing what my strengths are and what I can do to mitigate that risk.

I think this is fascinating. I’ve always admired artists for their passion, but wondered how they could make a living. It’s great to see somebody making a go of it. (Doubly so since Tsilli is a GRS reader!)

You can see some Tsilli’s art at her website; her business is called New Ketubah.

Note: Mr. Guillebeau makes his living producing e-books. One of these is The Unconventional Guide to Art and Money, which teaches artists how to thrive without selling out. From the site: “Here’s a shocking idea: artists are not destined to be poor. If you’re an artist, you can actually make money from your art, feel good about it, and build up a following to support your independent career. Seriously.” I haven’t read this guide, but I’ve heard good things about it.

By the way, I recently did something I’ve always wanted to do: I commissioned an artist to do a painting for me.

Chris’s wife Jolie does whimsical paintings of children’s toys. When my wife’s sister loaned Jolie a stuffed Kermit the Frog to paint, I loved the result, and I knew I had to commission a painting of my very own. Here is a very very J.D. painting, which I plan to display in my Man Room:

“It’s Not Easy Being a Man” by Jolie Guillebeau

I love Kermit holding his pipe, his glass of Scotch at his side, and sitting on a copy of Your Money or Your Life. The only thing that could make this better would be if he had a stack of comic books by his side.

Speaking of art and entrepreneurship, Jolie is conducting an interesting experiment right now. In order to challenge herself (and perhaps make a little money), she’s creating 100 paintings in 100 days. And she’s selling each of them. For the first painting, she charged $1. For the second, she charged $2. And so on. The 100th painting will go for $100.

Though the money Jolie earns from this will be modest ($5,000 before expenses), it’s a great way for her to get her name out there. It’s a marketing ploy and a money-making project all in one.

Artists are entrepreneurs, too! It’s fun for me to get a small glimpse into their world.

[The Art of Non-Conformity: The Eight-Year Escape Plan: Interview with Tsilli Pines]

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This is a guest post from Robert Brokamp of The Motley Fool. Robert is a Certified Financial Planner and the advisor for The Motley Fool’s Rule Your Retirement service. He contributes one new article to Get Rich Slowly every two weeks.

I find predictions, and the people who make them, fascinating for a few reasons. First, I — like everyone — would love to get a hint of what’s coming up.

But successful forecasting is pretty difficult. Which brings us to the second reason why I like predictions: It’s entertaining to see how different the world turned out from how people expected. Here are several memorable predictions of yore:

• “Radio has no future. Heavier-than-air flying machines are impossible. X-rays will prove to be a hoax.” William Thomson, Lord Kelvin, British scientist, 1899
• “Television won’t last because people will soon get tired of staring at a plywood box every night.” Darryl Zanuck of 20th Century Fox, 1946
• “They couldn’t hit an elephant at that distance.” Final words of Union General John Sedgwick, 1864
• “Atomic energy might be as good as our present-day explosives, but it is unlikely to produce anything very much more dangerous.” Winston Churchill, 1939
• “Who the hell wants to hear actors talk?” H. M. Warner, Warner Brothers, 1927
• “It will be years — not in my time — before a woman will become Prime Minister.” Margaret Thatcher, 1969
• “We don’t like their sound, and guitar music is on the way out.” Decca Records, when rejecting the Beatles in 1962
• “The abdomen, the chest, and the brain will forever be shut from the intrusion of the wise and humane surgeon.” British surgeon Sir John Eric Ericksen, 1873
• “I think there is a world market for maybe five computers.” Thomas Watson, president of IBM, 1943
• “This ‘telephone’ has too many shortcomings to be seriously considered as a means of communication. The device is inherently of no value to us.” Western Union internal memo, 1876
• “I’m just glad it’ll be Clark Gable who’s falling on his face and not Gary Cooper.” Gary Cooper, on turning down the lead role in Gone With the Wind

Good stuff.

The blind leading the blind
But we don’t have to go back decades to find instances of people (some of them pretty smart) being wrong about the future. Let’s flip through the cyber-pages of the Dec. 20, 2007, issue of BusinessWeek, which featured one of those year-end, “where the Dow will be a year from now” types of articles.

So where did six Wall Street experts think the Dow would be at the end of 2008? Dumb roll, please…

• William Greiner, UMB Financial: 14,400
• Tobias Levkovich, Citigroup: 15,100
• Bernie Schaeffer, Schaeffer’s Investment Research: 15,300
• Leo Grohowski, BNY Mellon Wealth Management: 14,800
• Thomas McManus, Banc of America Securities: 14,700
• David Bianco, UBS Investment Research: 15,250

You may recall that the Dow was quite a bit lower than each of those predictions on Dec. 31, 2008 — approximately 40% lower, in fact, at 8,776.

Okay, so those people aren’t really dumb. In fact, they’re likely in possession of above-average intelligence, and work with teams of analysts who also have above-average brains. And they also likely have access to the most data, the fastest computers, and the best software.

And they still were very, very wrong.

Boy, it would be great if we could consistently predict which investments would be the winners and which would be the losers. But it’s very difficult; in the short term, it’s impossible.

Dr. Doom
Want more proof? By now, you likely have heard and seen Dr. Nouriel Roubini, the NYU professor known as “Dr. Doom” for his pessimistic outlook. He gained a lot of fame for predicting the housing crash and resultant deep recession. Good for him.

In December 2008, Fortune magazine asked Roubini for his predictions for 2009. Here’s what he wrote:

For the next 12 months I would stay away from risky assets. I would stay away from the stock market. I would stay away from commodities. I would stay away from credit, both high-yield and high-grade. I would stay in cash or cash-like instruments such as short-term or longer-term government bonds. It’s better to stay in things with low returns rather than to lose 50% of your wealth.

Well, you know how good that advice was. The assets that Roubini warned against posted huge double-digit returns in 2009. As for the investments he recommended, the Vanguard Short-Term Treasury Fund (VFISX) returned just 1.4%, and the Vanguard Long-Term Treasury Fund (VUSTX) lost 12.1%.

As Yogi Berra once said, “It’s tough to make predictions, especially about the future.”

On my CAPS blog, I occasionally summarize predictions I’ve run across from the previous week or two. I always break them up into two groups: Those who predict good things for the economy or stocks, and those predict ill. Invariably, the people I quote are all smart, thorough, well-educated people. And they look into their crystal balls and see vastly different things.

J.D.’s note: CAPS is the free Motley Fool website where you can try your hand at picking individual stocks, track your performance, compare your performance to other CAPS players, and see what investments the best CAPS players are picking. GRS first mentioned it about two years ago. I’m no longer one for picking stocks, but if you are, CAPS is worth checking out.

But isn’t picking stocks the same thing as making predictions? If the future is so hard to forecast, why even try?

Ay, there’s the rub. If you’re putting money in an IRA or 401(k), you have to choose which investments to buy with that money. And investing, by its nature, is a predictions game; you put your money into the things that you think will be worth more in the future than they are worth today.

So what to do?

The power of diversification
As I’ve written before, having a well-diversified portfolio is the way to go for most people, because there’s no crystal ball required. You own lots and lots of investments, so that something will do well in just about any scenario. You own domestic and international investments; large, mid, and small stocks; index and actively managed funds; and if you own fixed-income investments, then diversify across corporate bonds, Treasuries, and inflation-adjusted bonds.

If you’re investing in individual stocks, keep yourself honest by tracking your results. If, after all the time you spend researching and monitoring your stocks, you underperform the market, then perhaps you’d be better off in a mutual fund of some kind. Motley Fool CAPS is a great way to see if you have what it takes to be a stock-picker before you commit too much of your nest egg.

In summary, my fellow Americans (and the Canadians who are reading — darn you and your gold-winning hockey team! — though you put on a great Olympics), unless you put all your money under your mattress, you have to make some guesses about what the future will bring. But do so with great humility and honesty. And beware of any “expert” who is very confident about what will happen. Chances are, if you examine his record, you’ll find plenty of reasons he shouldn’t be so confident.

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