I have received emails and comments in response to the first posting of the Savvy Frugality Economic Meltdown Survival guide, and I thought I would continue the conversation. Some wondered how I could be so positive when all of the finance experts on TV and on the radio have been so negative. I received this question:

"What is in store for those who have no emergency fund?"

A lot of people are in this situation. They live paycheck-to-paycheck and they haven't been able to save anything extra. Not long ago, this is how I managed my finances. Unfortunately, for those without an emergency fund, ANY unexpected expense becomes an "emergency", even if it really isn't. I can't address everyone's individual situation, but I can tell you how I built my emergency fund.

1. The first thing I did: I got rid of a lot of stuff in my house. I sold it on eBay or Craig's List. I don't mean I just got rid of stuff I didn't want any longer. I sold everything that wasn't nailed down. The stuff that didn't sell got donated to Goodwill.

2. If I got unexpected money, such as for gifts or a bonus at work, I didn't spend it. It went straight into my emergency fund.

3. I decided that my household was going to start living on ten percent less than the amount of my paycheck. I still budgeted for things like "miscellaneous" and "entertainment", but each payday ten percent of my check went into my emergency fund.

It took me a few months, but I eventually saved $600. Some people recommend having at least $1,000 to start an emergency fund, but if that seems too daunting, start with $500. Don't spend it on anything other than an emergency. If I spend any money from my emergency fund (which I did today, actually), I immediately begin replacing it starting with the very next paycheck.

The other thing I have noticed recently, especially this morning, is how TV commentators and others have been throwing around the term "Great Depression". Without the $700 billion government bailout plan, they say, the U.S. could be headed for another "Great Depression". "Mad Money" host Jim Cramer and "Today Show" host Meredith Vieira discussed this a bit this morning, along with Cramer's own "economic meltdown survival plan". Hmmm, sounds familiar.

No doubt about it...times are tough right now, but it's nowhere near "Great Depression" status. For those who weren't around in the 1930's, this is what is was like living during the Great Depression:

1. Banks closed down, but not because of bad mortgage deals. "Bank runs" were common. People wanted to make sure they had plenty of money, so they would storm their banks to withdraw all of their cash. FDR imposed "bank holidays" and closed the banks to stop the bank runs.

2. Nearly one in every four Americans was unemployed. Nearly half of all African Americans were out of work. This led to the formation of "soup kitchens", which were the sole means of food for some Americans.

3. In the first two years of the Great Depression, the cash supply and the GNP fell by a third. Yes, that is very bad.

So, while our current economic situation is grim, it could definitely get a lot worse, and we aren't there yet. There is one thing that today's economy has in common with the days of The Great Depression, and that is what caused our economic woes. From the Wikipedia entry about "The Great Depression in the U.S.":

"Although the causes of the Great Depression are still uncertain, the basic cause was a sudden loss of confidence in the economic future. The traditional explanation is a combination of high consumer and business debt, ill-regulated markets that permitted malfeasance by banks and investors, growing wealth inequality, and natural disasters such as the Dust Bowl and 1926 Miami Hurricane creating a downward economic spiral of reduced spending and production. "

Today, we are in the current mess we are in because, to put it simply, a lot of people made a lot of bad financial decisions. Bad adjustable rate mortgages were handed out like candy, people who a few years before wouldn't have qualified for a home loan were being handed ARM loans for $300,000. Investors purchased homes to flip, and when the market soured, they were stuck with a home they never intended to live in.

A couple of years ago, I was actually offered an ARM loan. As much as I wanted to purchase a home at the time, I saw it as a bad deal. If the interest rate adjusted beyond my ability to pay, where would I be? Today, many people are asking themselves that same question.

So, how do we cope with our current situation? To sum up:

1. Avoid debt. Pay cash for everything.
2. Save, save, save.
3. If you do invest, pick "safe" investments: good stocks which have been around a long time, high-yield bank savings accounts insured by the FDIC, CDs and bonds.
4. Don't panic. That's when bad decisions are made.

Banks are closing or being taken over by the U.S. government, brokerages are getting massive multi-billion loans, insurers are going belly-up and the Dow Jones has been on quite a roller coaster ride lately. Images of soup kitchens, massive unemployment and doom and gloom come to mind as some wonder aloud if the U.S. is headed for another Great Depression. Yes, I've actually heard economists on TV use those words. Well, I don't think the U.S. is headed for another Great Depression. The conditions which plunged the U.S. headlong into the Great Depression in 1929 simply don't exist today. That's not to say the economy hasn't tanked in the U.S. It sure has. It was exactly a year ago that I expressed my opinion that the U.S. might be headed for recession...many economists just aren't willing to label it as such.

Even so, some people aren't worried. They aren't even nervous. I happen to be one of those people. If you took steps a year ago, or even six months ago, to get your financial house in order, you'll weather the storm just fine. You could even start sorting out your finances now, and you'll still be fine. It just takes calm, cool reasoning...and a game plan. With that in mind, I present The Savvy Frugality Economic Meltown Survival Guide:

1. As always, establish your emergency fund. Start with $500 and then work your way up to $1,000. After you eliminate the majority of your debt you can concern yourself with saving three to six months worth of living expenses.

2. Check your savings and checking accounts and make sure they are FDIC insured. If your bank does go under, your funds are covered as long as your accounts don't exceed $100,000. If you have your funds in an account not FDIC insured, you'll want to shift some funds to an insured account ASAP.

3. Review the Savvy Frugality Recession Survival Guide. I wrote this 9 months ago, and it still holds up today. The only thing I would change in the post today is I think now is a good time to snatch up stocks at low prices, which I have been doing.

4. If you have your emergency fund and have more than enough to pay your monthly bills, start eliminating your debt. Really hack away at those expenses that are dragging down your finances. There is nothing worse for your personal finances than bad debt, and almost all debt is bad (exeptions: debt that will make you money down the road, i.e. your home, education, investing in a business). Some people say you should start with your smallest bill first and work your way up. I prefer to eliminate the highest-interest debts first, such as high-rate credit cards, and get rid of those ASAP. You don't want the clock ticking on your high interest rate debts. Get rid of them. The people who are riding out the current situation just fine are those who are debt free.

5. Avoid debt. Right now probably isn't the time you want to be taking out any large loans. If you have a sterling credit rating, can get a decent interest rate on a house and you're in the market, then you could probably swing it. If you're scratching and scrimping and squirreling away every spare dollar with hopes of buying a house, a car or some other big-ticket expense, you're probably better off hoarding that money in your emergency fund. Just keep it in an account that you can access easily, and again...make sure it's FDIC insured.

6. Fine-tune your resume. Nobody likes to think about losing their job, but it can happen. If it does, you'll be ready. Also, take this time to keep in touch with people in your network...you know, people that might be able to steer you toward a new gig if your job disappears.

7. Don't panic. It's when people panic and start doing silly things like closing their bank accounts or cashing in their 401k that they get into trouble. TV news programs are doing a great job at scaring the heck out of people lately, but if you have planned ahead, or are currently working your game plan to keep your finances solid, you'll have less reason to be worried.

I often see items on those "As Seen on TV" ads that I can't resist trying for myself, for two reasons:

A. I can report about it here.
B. I might actually find a product I can use to save either time, money or both.

Such was the case with Kaboom!, a spray-on tub and tile cleaner pitched on TV by bearded pitchman Billy Mays, the guy who yells a lot and makes everything look like you just can't live without it. Kaboom! was initially sold for about $10 (or the low price of TWO bottles for $15!, according to Billy Mays). I bought my bottle for $3.98 at Wal-Mart.

As it turns out, I had a shower at home covered in soap scum, and the bottle of my usual homemade cleaner of vinegar and lemon juice was empty, so on a whim I purchased Kaboom!

I brought the purple bottle home and read the instructions. It says you are supposed to apply with a damp sponge, wait 1-3 minutes and then rinse. I sprayed Kaboom! on my filthy shower, spread it out with a damp sponge, and waited all of a minute. Yes, I was being impatient. For a brief moment I wondered if I should be handling such a powerful cleaner without the benefit of rubber gloves, but Billy Mays doesn't use gloves on the commercial. If it's safe enough for Billy, I should be just fine, I reasoned.

I then wiped off the product with a soaking wet sponge, and then used a squeegee to remove the excess liquid from the clear glass walls of my shower. I stood back and looked at the results. It was crystal clear and clean, with virtually no effort. No scrubbing, no elbow grease.

So, does Kaboom! work? Yes, it does.

Disclaimer: This review was not endorsed or paid for by Kaboom! or Billy Mays. I don't even know those people. However, if they want to send me some more Kaboom!, I won't turn it down!

With the price of gasoline hovering around the $4 per gallon mark, more people are thinking about affordable transportation which is more efficient on fuel. It's a basic rule of economics. There isn't more supply to bring the prices down, so consumers find a way of conserving and cutting costs, thereby reducing demand for gasoline. Automobile manufacturers are beginning to respond, among them: the Ford Motor Company.

Ford has produced the 2009 ECOnetic Fiesta. It's a subcompact which seats five and gets a whopping 65 miles per hour. So why aren't Americans flocking to their dealerships to buy this fuel sipper. Simple. They can't.

The ECOnetic is only offered in Europe. Why? Because this car doesn't burn gasoline. It's powered by diesel, a fuel choice generally not favored by Americans, even though technology breakthroughs have made diesel automobiles a cleaner, more powerful mode of transportation.

Diesel automobiles have actually become the cars of choice in Europe, where gasoline prices range from $6 to $12 per gallon. Volkswagon and Mercedes-Benz have been producing so-called clean-burning diesel cars for years. According to Business Week, only three percent of the cars on the road in the U.S. use diesel fuel, mainly because diesel costs 40 cents to a dollar a gallon more than gasoline due to taxes aimed at commercial truck fleets.

If Americans truly want automobiles which burn cleaner and get more miles-per-gallon, they will have to vote with their pocketbooks. The technology doesn't yet exist to have efficient electric or hydrogen-powered cars. The infrastructure doesn't exist to easily refuel natural gas burning cars. Diesel is widely available now. Hybrids are an option, but they still burn gasoline. If more Americans purchased diesel powered cars and lobbied their senators and congressmen to reduce the obscene taxes on diesel fuel, we too could have access to automobiles which are easy to refuel and get very high fuel economy.

I'm not only a blog writer, but I'm also an avid blog and web site reader. Here are some of my recent favorites. You may want to spend some time reading them, too. They aren't necessarily related to personal finance, but I enjoy them.

Is your home overflowing with clutter? The FlyLady can help! No, she won't come clean your house, but she has some great tips on how to make it less of a chore.

The 99-Cent Chef
This is a blog written by a guy who makes gourmet dishes from the stuff he buys at the dollar store. Brilliant!

How to Master PhotoShop in One Week
Have you always wanted to learn PhotoShop but didn't want to spend the big bucks to learn how? Learn for free at this blog!

Have you ever wanted to learn how to build your own electric motorcycle, laser flashlight, or chocolate mouse? Strange, cool and practical do-it-yourself projects on this site can transform a boring Saturday afternoon!

While you are reading these cool sites (including Savvy Frugality) listen to some free music online (by major recording artists).

It's nice when other blogs think enough of your posts that they refer to them in their own blogs. I always try to impart information that I think will help others, and it's great when other blogs help spread the word.

This week, Savvy Frugality's post on saving money on textbooks was mentioned on MSN's MoneyBlog. Thanks to Karen Datko for the plug, and for reading Savvy Frugality!

The same post was featured in this week's Festival of Frugality over at Living Almost Large. Other posts I enjoyed in this week's festival:

Ben gives us suggestions to saving money on a wedding reception in How to Save Money On Your Wedding Reception posted at Money Smart Life.

Kris gives us healthy recipes using eggplant and zucchini Cheap, Healthy Zucchini and Eggplant: 134 Recipes posted at Cheap Healthy Good

Amy gives us ideas for frugal meal planning in To Buy In Bulk: Long-Term Meal Planning posted at My Daily Dollars.

Nickel decides to discuss when cheaper is good in Sometimes Cheaper is Better posted at fivecentnickel.com.

MoneyNing experiments on how little he can live on in Living on $34.01 a Week posted at Personal Finance Blog by Money Ning.

It has been a rough week for Wall Street. The government bailed out insurance company AIG and brokerage Lehman Brothers went belly-up and needed an $87 billion loan to keep operating. The Dow Jones responded by plunging 500 points in one day. The stock market hasn't taken that kind of a hit since 9/11. So...why am I so enthusiastic?

One reason: sales! That's right, just about every prime stock you can think of is currently on sale...meaning their prices have dipped and it's a great time to pick up some bargains. If there was ever a time to "buy low and sell high", this is it.

I opened my own ING Sharebuilder account today, and I purchased just two stocks: the risky SiriusXM and the tried-and-true Johnson & Johnson. Each payday, money will be automatically withdrawn from my checking account and plunked into my Sharebuilder account, which will be used to purchase these two holdings.

I'm thinking long-term with these stocks, and I will add others to my portfolio as I go along, of course. These are stocks I am applying to my retirement portfolio, but of course you can purchase stocks in companies that you really like. Many stocks have gone down in value in recent weeks, but I'm betting (literally) on the turnaround that I think is coming over the next several years.

SiriusXM is of course the satellite radio company which recently resulted from the merger of Sirius and XM. It is essentially a monopoly. There are no other satellite radio companies. This stock has recently taken a beating. It's worth about 90 cents a share right now, and the company is deep in debt. It could pull a turnaround and pay off well down the road, or it could crash and burn. I'm betting the former will happen.

Johnson & Johnson, best known for their baby powder, is a great long-term holding. They pay dividends each year and their stock has good value, in my opinion. This is a stock that I could hold until the day I retire.

These stocks and others may drop even further, but that just means better sales on stocks. I didn't hold a lot of stock before this most recent plunge in the Dow, which means I haven't lost any money (yet). For those who are just now dipping their toes into stock investing, there are bargains to be had. Smart investors who have large holdings in the market right now know it is wrong to react and sell off what they have. They are in it for the long term and look 10 to 20 years down the road, not at what they see on the news today.

Savvy Frugality tip: Bad news for the stock market usually means an opportunity to buy stocks on the cheap.

Cheap Textbook Tip

Posted by T | 11:32 AM | | 3 comments »

For the past week, I have been shopping for textbooks for my new online courses in English Composition II, Ethics and Communications. I scored some great deals for three of the books I needed. I purchased them on Half.com for about five dollars each, saving about $60 per textbook.

Another textbook I needed for my English Composition II course proved to be a little more difficult. It's a newer book, and even the used books on Half.com ranged in price from $75 to $120 or more. I thought I would be stuck ponying up the full retail price, or perhaps renting the textbooks from on of the online rental services. Then, I remembered the International Edition.

Believe it or not, students in foreign countries pay much less for textbooks than students here in the U.S. Textbook publishers in the U.S. print a higher-priced, hardcover edition of the textbooks for students where in the states, and they also print a cheaper, paperback edition with a different cover and perhaps fewer pictures for students overseas. It's the same textbook...just a different cover.

I checked out Amazon.co.uk in the United Kingdom and found the ISBN for the international edition of the textbook I need. Sure enough, the textbook was cheaper...about $23 British Pounds, or approximately $41 U.S. Dollars. With air mail shipping to the U.S., my textbook cost $55...still $20 cheaper than any price I could find in the U.S.

On the one hand, I'm glad I found a great deal on my textbook, even if I had to search across the Atlantic for it. On the other hand, why must U.S. students pay such a higher price for textbooks? Shame on the textbook publishers for gouging students in their own backyard. If they can print cheaper textbooks for students in Great Britain (where the currency is stonger), then why can't they do the same for U.S. students?

Savvy Frugality tip: The International Editions of textbooks are usually cheaper than the U.S. version. While international editions can't be sold in the U.S., there is nothing preventing students from purchasing international editions from foreign companies. Other good options are eBay, Half.com or renting textbooks from a service such as Chegg.com.

As I have mentioned before, I am studying marketing and business via distance learning. So far, I have taken courses in marketing, management and financial accounting. What struck me the most as I have worked my way through these courses is how so many people may be stellar at balancing the books at their job, but so lousy at managing their personal finances at home. There are many lessons that people can take from the job to the kitchen table when it comes to operating their own household in the black.

Avoid "Bad" Debt - Bad debt is generally regarded as something that will cost you money, but won't give you any money in return. Good debt is considered to be an expenditure which will pay off at a future time. An investment in your education, for example, would be considered "good" debt. Eventually, it will pay off in the form of a better job and a higher salary. Expenses placed on a credit card would be considered "bad" debt. Try to operate a cash business at home, and avoid bad debt.

Balance the books - Many people avoid balancing their books....their checkbooks, that is. Knowing where you stand financially at any given time...how much debt you have, where your money is going...is critical to maintaining a healthy household business.

Operate in the Black - This is simple. The amount of money coming into the household must be greater than the amount of money being spent by the household. If you are balancing your books on a regular basis, you will know exactly if your household is operating in the black.

Don't be Afraid to Fire - Sometimes, it is necessary to fire someone at work. Usually, it is because the employee is not performing the way the business wants them to. The same principal can be applied at home. Is your car insurance too high? Has your cell phone service provider jacked up their rates? Fire them, and find someone who can do the job better. After all, it's your money they're taking.

Have a system of Checks and Balances - Don't dump all of the responsibility of managing the household finances on one person. First, it isn't fair. Second, the other spouse or significant other is left out of the loop...they have no idea where the household stands financially. Just like with a publicly-owned company, there must be full disclosure. Have a "board meeting" at home on a regular basis and go over the household finances. Discuss short-term and long-term goals. No business is successful unless all of its team members are on the same page, and family finances are no different.

Once you start managing your family's personal business...its home, education, monthly expenses and retirement needs...like a successful company, it will reap the benefits and you will feel like a Fortune 500 family!

I finally got around to clearing out all of the old books that have been collecting dust and that I don't read anymore. I loaded up three boxes worth of novels and non-fiction books (I particularly like business and history books) and put them in the back of my van. Sure, I could have tried to sell these books on a site like Amazon or Half.com, but I chose to take them to a couple of the local used bookstores instead.

The first store took only a few copies, and they offered me either cash or store credit. Since you don't get much cash if you choose to sell the books outright, I chose store credit. I racked up about $16.00 in store credit at the first store, which I can use to purchase other books. Most of the books at the first store were romance novels, so I will let my wife make use of the store credit.

I had much better luck at the second store. They accepted almost all of my books, and I had over $200 worth of store credit. If I had sold the books I might have received about $50 for them. I searched the store and quickly snatched up some volumes I had my eye on: "Your Money or Your Life", "An Underground Education", "The Millionaire Next Door", "The Complete Idiot's Guide to Dynamic Selling", "Six Sigma Demystified" (in a plastic wrapper, no less!), and "If You're Not Out Selling, You're Being Outsold" (yes, I sell during my day job). If I had purchased these books with cash, I would have spent about $50.00, but it cost me nothing but the time it took me to bring in my old books and search the shelves for the "new" ones. I still have more than $150 in store credit left.

Sure, I could have gotten these same books for free at the library, but I can read these at my own pace, and I get to keep them, or trade them in later.

Savvy Frugality Tip: Make use of your local used bookstore, particularly if they trade books or pay cash for used books. It's no-cost entertainment and a way of shopping and getting "new" books!

I don't usually pay much attention to infomercials or those "too good to be true" ads on TV, but lately there is one that has captured my attention...no, the attention of a nation. Not since Billy Mayes pitched Oxy Clean have we become so entranced with a TV commercial. Yes, I am talking about Vince, the ShamWow Guy.

If you haven't seen the commercial, and the only way you could have missed it is if you don't own a TV, Vince is the headset-wearing pitchman who is pitching what amounts to a rag (OK, it's a chamois). Not only that, but he's charging you $19.99 for it!

"You're spending 20 dollars a month on paper towels, so you're already throwing your money away," reasons Vince. Somehow I get the feeling I would be doing the same with ShamWow. Besides, who spends $20 a month on paper towels? How many spills can you have on one month?

Vince reminds me of the guys who were always getting me in trouble in high school, or in the Navy. He has that "c'mon, what's the worst that could happen?" vibe. Well, I could spend 20 bucks for a few flimsy towels, for starters.

Now, to be fair...I haven't actually tried the ShamWow. It could be an amazing product, but...I don't know. I already use something at home called rags. They were free, because they are actually old bath towels that I don't use for bathing anymore. Like the ShamWow, they are washable. But still, Vince makes a convincing case, and his commericial is quite smooth.

"This is in real time" says Vince, as he soaks up another spill. "Are you getting this, camera guy?" he adds, apparently unconcerned that he's not making any friends with the studio crew. I'm both mezmerized and terribly annoyed with Vince at this point.

Vince is destined to join the ranks of those TV pitchmen you just can't get out of your head, like Billy Mayes, Ron Popeil, and the British guy who was selling Chinese woks a few years ago.

The only "As Seen on TV" item I have purchased is the Debbie Myer's Green Bags, and I have been quite happy with them, although it is time to replace them. I did not buy them by calling a toll-free number and handing over my credit card number, however. I purchased them at the "As Seen on TV" store at the mall. I bought them because I saw them as a way of actually saving some money by avoiding spoiled produce, and they honestly do work. I don't see how Shamwow would do the same thing, but I guess I could be wrong. Has anyone purchased ShamWow? Does it work?

Come to think of it, I still haven't thought of a compelling reason to purchase Mighty Putty, either.

Savvy Frugality Recommended Reading: Vince The Shamwow Guy is Back!

There is one common trait that many millionaires in the United States share: they are frugal to a fault.

According to this article on MSN Money, millionaires are no less cheap, er...frugal than the rest of us. In fact, they may be more so. For example:

1. They don't think they are rich. A million dollars doesn't go as far as they used to. Millionaires worry about expenses, just like the rest of us.

2. They shop at Wal-mart. Hey, a bargain is a bargain.

3. Most run their own business. There is a lesson to be learned here.

4. They may not have a butler, but they have the modern day equivalent: a concierge.

5. Millionaires didn't get that way by playing nice in business. Yes, they can be very mean.

6. They take advantage of tax shelters.

7. Millionaires are more likely to have gone to a state university. Their grades aren't all that great, either.

8. Millionaires are more likely to rent than buy luxuries like expensive cars.

9. Millionaires tend to be happier than the rest of us. Hmmm....I wonder why?

10. Millionaires are always looking to make more money.

Can we learn anything from these common threads which connect most millionaires today? Perhaps. It's all a matter of how you approach life, take advantage of the opportunities that come your way, and live within your means.

How about you? Do you have a "millionaire mindset"?

As I have mentioned before, I am working on completing my undergraduate degree, which I put on hold a number of years ago so I could go to work and support my family. For me, it's more a matter of pride than advancing in the workforce, but I'm sure that will also be a benefit of completing my degree. I had been studying with Penn Foster College, which is a bargain at about $54 per credit hour, or roughly $900 per semester. That's a pretty difficult price to beat when it comes to distance learning schools. Until now.

Andrew Jackson University in Birmingham, Alabama has rolled out a "zero tuition" deal in which students only pay semester fees, which total about $400-$500 per semester. Students only need to sign up for one of the sponsor offers available through their web site, and the tuition is covered. The sponsor offers are free.

AJU, like Penn Foster College, is nationally accredited by the Distance Education and Training Council, an accrediting agency recognized by the U.S. Department of Education. Most state colleges and universities are regionally accredited. Credits earned at a nationally accredited college will transfer to some, but not all, regionally accredited schools, so you have to make sure a nationally accredited college will meet your current and future needs. For me, a nationally accredited degree will work just fine, and the schools I am eying for my masters degree will accept an undergrad from a nationally accredited college. ITT Technical Institute is an example of a nationally accredited college.

For the price, it's a deal I just couldn't pass up. I enrolled in the BA in Communication program, and I will start my semester at the end of the month. I should complete my bachelor degree in about a year. All of my credits from Penn Foster College will transfer into the AJU program.

Unlike PFC, the text books are not included in the AJU courses, but I have been purchasing my text books for my first few courses through places like Amazon and Half.com. For the texts I cannot find cheaply on those sites, I have been renting textbooks through Chegg.com, which saves at least 50 percent over the cost of purchasing a new textbook.

All told, it should cost me about $2,000 to complete my bachelor degree through AJU, a significant cost savings over attending a local brick-and-mortar college. AJU also accepts monthly payments, so cost no longer needs to be a barrier to obtaining an education and a degree.

My 13-year-old son is actually pretty shrewd when it comes to money. He likes to save it, he doesn't like to part with it, and he's great at saving his birthday and allowance money to purchase the little luxuries he enjoys, such as his video games. I guess that's why I shouldn't have been too surprised when he told me he wanted to renegotiate his allowance.

"I want more money," he said, "and I want to invest it."

At the time, I was paying him about $20 every two weeks, depending upon how good of a job he did with his chores around the house. I thought about it for a day or two, and then sat down with him for a talk about his financial future.

"You're going to graduate high school in about five years," I told him. "You'll need money to go to college, and for other things if you decide to move away from home. Investing is a great idea."

The deal I made with him was this: Each month, instead of the $20 I had been paying him every two weeks, I would put $50 into an ING Sharebuilder account instead. He could pick his own stocks, but he had to have a good reason for picking them, and if he wanted help with his investments I would assist him. I would still give him some "pocket money" that he can spend on "junk", but the investment cannot be withdrawn or touched until he is 18 years old. He agreed.

He picked just two stocks for his Sharebuilder account (so much for diversification): Wal-Mart, where he loves to shop, and Devon Energy. OK, I helped him pick the Devon Energy stock. There were a few reasons we went with Devon. They are a local company to us here in Oklahoma, they have experienced tremendous growth the past few years and have big plans to expand even further. Devon is even planning to build a new skyscraper in Oklahoma City. My son went along with this pick.

We'll check our picks every once in awhile just to make sure our money isn't evaporating, but we have a five year window, so for my son this is a "long term" investment. He'll continue to receive a total of $600 a year to invest in his automatic Sharebuilder account. When he starts working when he gets older he can add even more money to his investments.

I'll keep you updated on how my 13-year-old son's investments are doing. I sure wish I had his forsight when I was his age. I could have gotten a great deal on Apple 30 years ago.

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