Many convenience stores use drop safes to prevent burglaries. A drop safe allows money to easily be deposited, but not easily withdrawn. A cashier might deposit a set amount of cash into the drop safe once the register hits a certain limit. Doing so keeps the unprotected amount (in the register) small while allowing the protected amount (in the drop safe) to grow. Applying the concept of a drop safe to your financial plan can help you to save.

The idea of a drop safe is useful, but as we rarely want our savings to be sitting in cash, a “virtual” drop safe is more appropriate. Just like it’s real world counterpart, we want it to be easy to put money into and hard to get it out of. As in the convenience store case, the reason to use a drop safe is to protect your money from being stolen. In the case of your personal finances, you are trying to protect your money from yourself

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There’s no doubt that social lending is gaining in popularity and growing in numbers every day. More and more you hear of P2P lending being described as an investment because of the sizable returns that are often possible. Opinions vary about whether or not it is a good investment, but I’d like to consider whether it’s a socially responsible investment.

For anyone who hasn’t heard of socially responsible investing, here’s an excerpt from a post I wrote on the subject:

“The practice involves trying to maximize financial return while investing in companies that are deemed socially good. Such companies tend to favor policies of environmental friendliness, workplace diversity, fair treatment of workers, etc. Many socially responsible investors also avoid companies involved with alcohol, tobacco, and gambling as well as big oil or military contractors.”

The difficulty in determining whether social lending is socially responsible is the fact

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In the past, I have advocated building a cash emergency fund. By “cash” I mean a liquid form of money which could be actual currency, but preferably would be savings in a high yield direct bank account. There has been some insightful commentary recently that has caused me to re-evaluate my position and add some justification to it. Of the many posts on the subject, two were my inspiration for this post. In the first one, Mike from four pillars discussed why a HELOC can be used instead of an emergency fund. In the second one, the money gardener explains why he doesn’t need an emergency fund.

In most cases, an emergency fund is really just a method to avoid debt. If a true emergency arose, which exhausted our cash reserves, most of us would just use credit cards, a home equity loan, or a P2P loan. All of those methods are nearly as liquid as cash and easily obtained, with a cost association in the form of interest.

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The Carnival of Everything Finance 15 was released today. My post, Financial Rules of Thumb Stink, was included in this event.

My favorites from the other entries were as follows:

Is “cheap” the new “green”? posted at Early Retirement Extreme
Living frugally doesn’t mean we should buy junk. I’ve noticed a lot of good material coming out of Early Retirement Extreme. The site is definitely worth a look.

6 Reasons to Live and Work in Rural America posted at Cubicle Dropout
I was glad to see telecommuting on this list

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A recent statement by US Treasury Secretary Henry Paulson has renewed the debate about the existence of the penny. In an interview, he said that the penny is worth less than any other currency and that he’d like to get rid of it. So today I’ll discuss the pros and cons of keeping the penny.

Supporters of the penny suggest that getting rid of it would mean higher prices, as retailers round up to the nearest nickel. Since it’s common for items to be sold for prices ending in .99, rounding to the nearest nickel would cause prices to go up (to the nearest dollar). This argument is countered with arguments that sales tax and multiple item purchases would reduce this effect. This only holds true if totals are rounded, not individual prices. The reason why retailers use .99 pricing is

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I got a humorous email today that reminded me to keep personal finance and investing in perspective. It seems appropriate to pass this information along to my readers for St. Patrick’s Day…enjoy!

RETIREMENT PLANNING FOR 2008

The 401-Keg Plan

If you had purchased $1000.00 of Nortel stock one year ago

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More on this topic (What's this?)

How to increase your dividend income with these four stocks (Dividend Growth Investor, 6/9/10)

10 Timeless Investing Rules From Wall Street Legend Bob Farrell (The Contrary Investing Report, 7/1/10)

Read more on Original, Retirement, How To Invest at Wikinvest

Everyone loves a good rule of thumb. Knowing that the number of cricket chirps in 15 seconds plus 37 is the approximate temperature _[1] is great . I usually do the old 100 plus my age comparison when I get my blood pressure checked as well. These ballpark estimates are easy to remember and give a close enough approximation for many things in life. Unfortunately, there are often way too many variables for a rule of thumb to be of any real value for personal finances.

There are some financial rules that are valuable, but they tend to be the ones that are math based. An example would be “Double your hourly rate and add three zeros to get approximate yearly salary.” Of course, even such a rule makes the assumption that you work 40 hours per week. These “rules of thumb” are what I generally file under Quick Calculations. They are more mathematical approximations

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As part of his Motivation Monday series, David at MoneyNing spoke out against consistently taking sick days on Mondays and Fridays. His point was that using sick time to create an extended weekend won’t fool anyone, is irresponsible, and may even lead to losing your job.

I usually agree with a lot of the commentary at MoneyNing, but this is one area where we totally disagree. Taking full advantage of all of your time off is a subject that I’ve covered in the past. I wrote a 2 post series on this subject for the Lending Club blog. Here are those posts: Raising Your Hourly Wage and Lack of Vacation

As I said in my Raising Your Hourly Wage post, “I’m not suggesting that you exploit your sick and personal time but rather take full advantage of it when the need arises.” Being sick (or even just tired) is highly subjective. If the weekends wear you out and you need time on Monday to recover or if you

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The third Money Hacks blog carnival is now live on My Dollar Plan. My recent post Is Prepaying Your Mortgage a Mistake is part of the event.

Value cost averaging is yet another way to invest your money on a periodic basis. The strategy is similar to dollar cost averaging in that you make regular investments regardless of the current price of a stock. Instead of investing the same amount of money each time, like dollar cost averaging, you add a fixed value to your investment each time. So if you chose a value of $1000, then you would purchase $1000 worth of stock initially. You would use your second investment to bring the value of that holding to $2000. The third would bring it to $3000, and so on.

As the price of your chosen stock ebbs and flows, you would be investing different amount of money and purchasing different amounts of stock with each investment. So if you bought 100 shares at $10 each in the first round, you’d need to see what that was worth before your second purchase. Let’s say that the stock was worth $10.50 at your next investment,

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