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One of the questions that often pop into my inbox is “When is it appropriate to spend my money?”  When people ask, they often want someone to give them a general answer that will solve their problem.  They want a step by step guide because they want to splurge but don’t want to jeopardize their retirement.  Sadly, there is no cookie-cutter answer since every situation is different, but what I can do is try to guide you to make the right decision in case you are wondering about this.

The Answer of When to Spend is Easy for Some

Two types of people don’t have any problems deciding when to spend money - those who spend every penny and those who never spend any money.

Natural Born Consumers
These people just seem to have more fun.  They are the ones with the new cars, nice house and their kids always seem to be wearing new clothes.  It doesn’t matter if they are earning $200,000 or $20,000 a year because they will still be living paycheck to paycheck.

When they see something of interest, they buy it.  In recent years, these people have gotten even less responsible because even if they don’t have the cash for it, they buy it on credit.  Eventually, debt catches up to them and they are unable to repay the monthly payments.  Their dream life is taken away from them and they need to spend years repaying the money that they have borrowed.

We Cannot Save the Earth but We Can Save for One
Some people never spend any money.  It’s almost like they were born without the temptation to spend.   Money in their saving accounts is like mail in the post office mail drop - there is only a way in and no way out.

These people can earn a pretty good living and be really wealthy without anyone knowing.  In fact, I suspect that some of them don’t even know themselves.  They save every dollar they earn and never seem to enjoy buying anything.

For the Rest of Us, It’s Not So Easy

Most of us are either more of a saver or spender but seldom the extremes.  We know the importance of saving but we also splurge every once in a while.  We like to buy new clothes for our kids but understand that we can’t do this every weekend.  We all want to know “When is it appropriate to spend?”

There really isn’t a magical answer but here are some things to consider when you have decide for yourself.

Have a Goal and Plan
At some point, we all retire because of physical limitations.  It is at this time in our lives where we start relying on our savings with some help from social security.  If we plan this right, we will have a very enjoyable retirement.  It will involve some mathematical formulas but one thing you will know is how much you should save each month.  Once you figure that out, you can spend the rest!

Learn from Others
You probably have friends that spend too much or friends that never spend enough.  Why not learn from them?  Instead of trying to always match everything that your “spender” friend buy, why not try to assess whether his purchase make sense or not?  Learning to think about situation will divert your temptation and help your urge to spend.

On the other hand, if your friend never spends any money and you often wonder how it is possible, why not try to ask for their advice?  These people often provide valuable insights into what money and materials really mean and you can probably learn a thing or two about spending and happiness.

What is Life Like Without Spending that Money
To determine whether the money is worth spending, I usually try to think of what life is like if I don’t spend that money.  Often times, I realize after some thought that I end up just as happy even if I don’t buy the thing I really wanted.  I really wanted the 3G iPhone when it came out a few weeks ago but I figured that life is actually the same with or without it, so I didn’t end up getting it even though I can afford it.

Know What Is and Isn’t Important to You
When I was thinking about moving to the new apartment, I know that it will make Emma and I much happier.  After realizing that, the decision to spend more money was simple.  6 months later, I can say that I’m extremely happy with my decision.

This is a guest post by The Shark Investor, who is out to help you become a remarkable investor.

The energy markets are like a slot machine. The bars go up and down, few lucky players collect the jackpot but at the end you always lose. Sure, the current oil prices may be a bit speculative, but they always rise long term and thrust deeper into our pockets. The energy expenses are already one of the main leaks in a household’s budget and that’s not going to improve in the future. It’s likely that this expense will keep increasing - directly and indirectly - in the prices of grocery and services.

What can you do about this? As a first step you can conserve as much energy as possible. Using less energy will cure not only your budget but also the planet.

However there is a lot more to do than just saving. Instead of looking at the energy prices as a problem, look for the opportunity they give you. By investing in your own energy sources you have a chance to achieve much better profits than by investing in stocks, mutual funds or real estate. Installing your own energy sources is not just a smart investment, but also gives you independence of the global economy factors - like of course the oil prices.

So what can you do and how much can you earn or save? Here are the most popular options:

Wind Turbines are one of the best options for single family homes. You can get 1 KW turbine for around $1,000 and use all the energy it produces during its entire life. Typically these energy sources pay off for 5-6 years and their life is 20 or more years. This means you can have completely free electricity for 15 years. This equals at least 7.5% compounded annual return on investment even if the electricity prices don’t change for 20 years, which you know will change for sure.

An additional advice: when looking for wind turbines, consider buying higher capacity ones. The energy that a 1 KW turbine generates is 4 times more than one 250 watt turbine, but the 1KW item is only around 3 times more expensive.

The residential Solar Panels are still less efficient, but if you live in a sunny place, they may work better than the wind turbines. The prices for 200 watts panel vary around $300 - $500. Such investment pays off for itself in 10 - 25 years depending on the number of sunny days in your area.

The best effect can be achieved if you combine turbines with solar panels. This way your system will be equally efficient in the summer when there is more sunlight and in the winter when usually there are stronger wings. An investment in such hybrid system pays off in 7-8 years given the current level of the energy prices.

The power of the Sun is better used for heating. Buying solar heating collectors can ensure you with hot water and even heating for the entire house. The prices of the solar collectors start from $400 - $500, the pay-off period can be just 3-4 years and their life is more than 20 years. This equals to 8% - 9% compounded yearly ROI even if the electricity and gas prices don’t change.

There are even more options you can consider. water turbines or biomass heating both can supply your household with very cheap energy for very long period of time.
Installing your own energy sources makes you greener, healthier and richer long term. Given all the horrible forecasts about the oil, gas and electricity prices it works both as a great investment and long term household insurance.

Once in a while in personal finance literature, we will come across an article about the advantages of saving money.  The phrase “a dollar saved is two dollars earned” or something similar often comes up since it’s so catchy.  After all, the savings are after taxes, and it’s always about how much you can keep and not about how much you earn right?

While many of those articles are true that savings is certainly very important, I feel that it underplays the importance of earning money.  People seem to forget that in order to save, we need to earn the money first.

Earning money is about giving us choices.  With money earned, we have freedom.  We could spend it if we really like, but if we care about our future, we should save it.  Saving a dollar is probably equivalent to earning two dollars, but if we don’t earn it, where is that dollar coming from?

We look for all the ways to save money.  We spend so much of our time to read about how to save money and actually doing those things to save a few dollars.   We, however, seldom read about how we can earn more money and spend even less time actually trying!

Let me tell you that spending a few hours a week extra to earn more money will give us so much.  It will enable us to choose between keeping the money and spending it.  It will give us freedom and confidence that we probably will do better at our primary jobs, snowballing this positive cycle to an even higher income.

Earnings and income are also cyclical in nature.  Once we spending the time to earn more dollars, it usually means we will periodically receive more.  For example, if we start a part time job and earn another $500 a month, we will get the same $500 extra each and every month.  Saving money on the other hand is a one-time event.  If we spend the time to save ourselves $500 dollars, we will need to spend more time to save another $500.  That’s why while a dollar saved is two dollars earned, two dollars earned is twenty dollars or more saved.

My colleague has been using Google Alerts for a long time to get company related news from around the web.  This neat little utility checks the web for any new articles that Google finds on search term she provides.  For example, she can put in a search term for Money Ning, and Google Alerts will send her an email everyday whenever someone mentions Money Ning.

A couple days ago, she started noticing that Google Alerts finds all the blogs and websites blog about coupons or deals and sends her the information as long as it matches the search terms that she puts in.  After checking out the link that she found which contained the coupon, I believe she’s struck gold because this would mean that instead of always looking for a coupon from a certain company, we can just setup Google Alerts to track that company and wait for them to Google to find a coupon.

By having the coupons pushed to me instead of me needing to go find it, I foresee myself being able to take advantage of coupons much more effectively! With gas prices so high (I actually filled up at a gas station that sells gas at $5.079 a gallon), I sure can appreciate as much savings as I can find!

What I plan to do is setup a Google Alert on a few search terms and report back in a week to see if I get any coupons or deals as well as thoughts on using the service!  I suggest you try this too and we can compare notes!

Once in a while, we will read an article that asks us to sell what we don’t need.  The benefits are obvious because we can get some cash for the items that is otherwise sitting in our house and taking up space.  While this is great advice, perhaps an even better advice is to stop buying anything that we don’t need!

Now, I know how hard this is as I’m a victim of impulse buying too.  We tell ourselves how much we really need it and eventually we end up taking it home.  Lately, I’ve started to do a combination of the following which seems to be helping.

Setup a Buy Period of the Month

When I really want something, I will tell myself over and over again why I want it and why it is so important for me.  I will go to a store and look at the actual merchandise, and I will end up really wanting to pull my credit card out.  Therefore, I’ve created a rule for myself where I’m only able to buy things over $75 on the first 7 days of the month.

I was amazed at how effective this was since once I let the decision sit for a few weeks, the urge to spend subsides.  What’s even more amazing is now that I know I can only buy in the first 7 days, I can usually get to the wait period even if I wanted something during the first 7 days to give myself more time to think about it.

Buy it on Sale/Coupons Only

Some items are on sale constantly while others can be bought at a store that always issues coupons.  Whenever I want to buy something that I know can be bought at a cheaper cost than what’s listed, I tell myself to wait until I see a coupon or sale from the store that carries it.  As with the beginning of the month rule, the idea is for me to wait.  Once I wait a few weeks, I usually don’t want to buy it anymore.  If I still end up making the purchase, it is much more likely that I will actually put it in good use.

As you can probably tell, both these tactics help because they require me to wait.  Once I can last a few weeks without the item I want to buy, the time I spent thinking about it lowers and my desire for buying it lessens.  This gives me much more time to determine whether it’s a real need or just a want, and it ends up saving me money.

All of us have many stories to tell but when do we ever spend time to read or listen to other people’s stories?  Well, here’s your chance with the 64th edition of Carnival of Money Stories!  As always, there are many great stories for us to learn from as long as we are willing to do so!

Editor Choice

• Terry Dean presents From a Sale to An Experience. What are you doing to turn a sale into an experience?
• Dorian Wales presents The Personal Financier: Actively Manage Your Career to Stay On Top of Your Game. Always move forward! Staying in the same spot is just another way of moving backwards!

Career and Business

• vh presents Amazing Grace! Annual Review Miracle. Some creativity and you could get a raise too!
• Michel Fortin presents Apply The Law of Contrast to Build Desire. Selling is a skill everyone should have and Michel is teaching a great technique over there!
• Silicon Valley Blogger presents Want Some Extra Income? Try Odd Jobs!. Work more jobs is the most direct way to earn more money!
• Jose DeJesus MD presents Creating Incentives and Recognizing Excellence in Your Employees. Very important!
• NtJS presents Some Advice To a Friend. Never put yourself at too much risk!
• praveen presents How Menards Builds Demand for Its Products.

Buying and Selling

• Realm of Prosperity presents Turned Hobby Into A Method To Make Money. What a great investment idea!
• John Crickett presents Is Now The Time To Buy A House?. That’s what everyone wants to know (including me) so check it out!

Save More Money, Spend Less Cash

• FMF presents Another Example of Saving by Asking for a Discount. Title says it all!
• Money presents Debt drains cash flow. We all know this but how many can keep ourselves from overspending?
• Weight Ladder / Rich Leverage presents What You Need to Know Before Going Into Debt.
• Jamy presents The art of creative home budgeting.
• The Happy Rock presents Buying Tires From Costco - Great Price + Good Service.
• Faron Benoit presents 15 Cheap Romantic Date Ideas. Always great to see these lists!

Personal

• GBlogger presents Looking Back — 10 Years And More Than $1,000,000 Ago. A story about.. hmm.. himself!
• Heather Allen presents Sucking Lemons. Opportunities are everywhere, even in bad times!
• Todd presents Insurance Audit At Work.
• Chief Family Officer presents Car insurance that works the way it’s supposed to
• Brooke presents Maid-Tipping. Tip everyone who deserves it!
• BeThisWay presents Fine Literature at a Great Price

Investments, Savings

• Vera Lang presents Little-known retirement income strategy creates guaranteed lifetime income while increasing long-term liquidity. I need to look into this!
• Fred presents High Interest Savings Accounts for Kids
• Raymond presents Dealing With A Car Breakdown and Paying Rip Off Repair Shop Prices.
• RC presents My Personal Finance Tipping Point or When I Decided to Change My Financial Future.
• Shana presents The Value of Being Friendly and Chatty! Even works with the dentist!

Others

• Nina presents Ten Money Questions for Annie Libby.
• Ellesse presents Free Career, Business & Trade Magazines for Your Career & Economic Goals.
• The Shark Investor presents The Five Essential Elements Of Automated Income Generators.
• SingleGuyMoney presents Sign of the Financial Times. A story that what not to do!
• Madison presents Create Your Own Dollar Plan: Step 6.
• Joe Manausa presents Loan Limits - Contact Your Senator Today!

While I was in Japan, I noticed that every car is just… smaller! This week’s video gives you a look at some of the cars that you see there. If you want to save gas, maybe you should ship one of those small cars from Japan here. I’m sure the mileage per gallon (MPG) is amazingly high!

See what I mean?

I’m honored to host this week’s festival of frugality! As someone who reads frugality posts, I trust that you are already being frugal. However, I’d like to challenge you to try a little harder this week. Do one more frugal activity than you normally would, change another habit that’s costing you money, cut down your expenses further and make sure you are only buying groceries with coupons! If you can do this, you will be well on your way to save more money!

Enjoy this week’s festival as there are tons of great articles!

Editor’s Choice

• Frugal Babe presents Back In The Saddle. Can you feel her frugality just by reading?
• Paula Wethington presents Coupons are not just for junk food. Coupons are extremely great ways to save money. Whoever said coupons are only for junk food are fools!!!
• Andrew Heath presents The Unlikely Way to Save Money. Does this give you some motivation?

Realization and Sharing
To be truly frugal, we first have to realize that we are our worst enemy. For almost everything we do, there is almost always an alternative, cheaper way to do it. If we can convince ourselves to use the equivalent, we are well on our way to be truly frugal.

Realize that we can, and that we will.

• Shamelle presents Money And Processions: Breaking Free From The Materialism Trap, telling us that we really need to separate our needs and wants!
• praveen presents Renting vs. Owning in Retirement. Avoid the temptation of home ownership is just as good as saving that extra dollar!
• Bryce presents Things to Do in Our Lifetime. Concentrate on what he wants to do at the end of the posts. All will give great satisfaction but which ones really need money to accomplish?
• ames presents Being Frugal and Bargain Hunting.
• Shannon Christman presents Why You Should Focus on Spending Less Over Earning More.
• Faron Benoit presents Compulsive Spending is the Biggest Behavioral Block Against Fugal Living.
• GBlogger presents Keeping Up With The Joneses Redux °X Real or Imagined.
• Lise presents Four Strategies That Are Frugal Only If Your Time Is Worth Nothing.

Activities
For every activity that will cost you lots of money, there is another one that is free. Best of all, these free activities are usually just as fun to do!

• story presents 20 frugal or free summer fun activities. Have fun and save money, what a treat!
• Aryn presents Frugal Cultural Events! Worth checking out or a fun and frugal night out!
• AndyS presents Frugal ways to get and stay in shape. Healthy for our body and healthy for our wallets!
• Financial Goal presents Free Bus Rides on “Dump the Pump” Day. Taking public transportation is always recommended even if gas is $1 per gallon!

Habits
Our habits determine how frugal we can be. Whether it’s the places we shop at or the things we are used to do, simple changes can go a long way in helping us save money!

• Sean presents What Will You Do If Gas Prices Go… Down. Don’t re-learn bad habits!
• jamy presents The Yin and Yan of wealth equation. Want some examples of budgeting? Check this out!
• Joy Harrison presents Should I use a home equity loan to finance my new car. Even thinking about this is not being frugal! Stop stop stop!
• Mike Leonard presents Are your vices keeping you in debt. Small things add up!
• Livingalmostlarge presents Building a stockpile. We all know buying in bulk saves us money but how many of us really do it?
• Brice Hogan presents Why Budget? Here’s why!
• Kimberly presents Preparing For A Shopping Trip. One of the best ways to save time and money.
• Raymond presents I Purposely Drive In Heavy Rain To Get A Free Car Wash. I do too!
• SingleGuyMoney presents Teaching A Teen To Save Money. Train those habits early!
• The Happy Rock presents Save Time, Gas, and Money By Training Your Grocery Store. You thought you couldn’t train the your grocery store.
• Kevin presents May is Over, We Can Turn the Air Conditioner Back On! You should try this too!
• Madison presents New Grads: 29 Money-Smart Tips.
• Kelly from My Small Cents presents Emergency Food Funds
• Gretchen presents Where to Buy Cheap Spices!

Cutting Down
It’s usually not fun but it definitely works. Trim some here and there and you will find that you’ve just saved yourself lots of money!

• Frugal Dad presents Six Painless Steps to Reduce Monthly Expenses by $130. Thanks Frugal Dad for the tips!
• Nui Loa presents The 5 Most Important Rules of Personal Finance. Last but not least, the 5th rule is control your spending!
• Margaret presents Dealing with Higher Gas Prices.
• Balanced Life Center presents 43 Things To Do When You Stop Watching Television. No more excuses for not cutting your cable TV!
• Dan presents Six Inexpensive Birthday Party Ideas for Kids Parties. Got kids? This one’s for you.
• Crystal Nichols presents Save time and money at the grocery store. Something for all of us!
• FMF presents Nine Ways to Save on Gas This Summer. Some more ways to save on gas!
• Niharika presents 101 Ways to Use Less Gas. With gas so high and for sure going past $5 per gallon soon, here’s many interesting ways to use less gas!
• Pete presents Save money on your hospital bills just by asking urging us that sometimes all we need to do is ask.
• David presents 29 Free Or Low Cost Ways To Save Energy & Money. Are you doing all of these yet?
• Heather Johnson presents Guest Post: 15 Little Ways to Save Money Throughout the Week.
• Krista presents Cheap, Quick & Easy Dinners.
• angie hopkins presents Tightwad Gazette Principles Revisited: Part 1: Buying Stuff. Can you be frugal when buying stuff?
• NCN presents Getting Rid Of Unnecessary Monthly Expenses. Track your budgets first so you can do what NCN did!

Reuse and Extend
Extending the life of everything is a true art. It is not only good for our wallets but also great for the environment. If there is a way to reuse, then by all means!

• Our Red House presents Leftovers Night: Creative Uses for Leftovers. Interesting stuff!
• Hilary Green presents When Is a Used Car Right For Me. New cars are nice but used cars can save you tons of money!
• NtJS presents How To: Buy A Used Car: Episode 1.
• Adam Berry presents How to Extend The Life of Garden Tools. Unique and useful!
• vh presents Frugal Driving = Stress Relief. The more reason the better!
• Luke presents Being Efficient and Frugal in your Kitchen. My wife loves these posts about kitchens!
• glblguy presents Freecycle rediscovered. A network to help reuse and extend the life of everything!
• Andrea presents Reducing Pet Costs: End of Life Care.
• Brooke presents Transportation - Week 1. Some great ways to save money on gas for those long trips!
• Penny Nickel presents Money and Values: Carpooling: earth and wallet-friendlier, and look who’ll pay you to try it!
• Todd presents Save Money On A Computer. Buy Used!
• RC presents Is it Cool to be Frugal? 10 Frugal Practices You’ve Always Done That Are Now “In” Again!

Do It Yourself (DIY)
There was a time when everything needed to be done by ourselves. As technology and humans evolved, so did our inability to do it ourselves. Learn to do a few things, and you will find that everything can be done at a fraction of the cost!

• nickel presents How to Get Rid of Ants Safely and Without an Exterminator. Do it yourself!
• Ryan Suenaga presents Do It Yourself Drain Unclogging. Learn do DIY everything saves so much money!
• Helen Anderson presents 5 Ways to Start Your Business With No Money! at Personal Finance Blog, Budgeting, Debt @ Bankaholic.
• Lisa Spinelli presents Eating Healthy Without Being Wealthy- Avocados. Healthy and Wealthy gets our attention doesn’t it?
• Mrs. Accountability presents Make Your Own Magnetic Business Signs!
• Silicon Valley Blogger presents The Low-Maintenance Yard: Save Money With These 7 Ideas For Your Yard.
• HowToMe presents How to Make Custom Containers.
• Jacob presents Learning to cook saves at least $5000 a year. It might be more than that and it’s much healthier!
• Ted presents Cooking in College or starve!
• Amanda Milne presents Frugal Small Vegetable Garden.
• Frugal Pursuit presents Repurposing items for the garden.

Offers and Coupons
Whether you end up taking these offers or not, you have to love free stuff!

• Cash Money Life presents Blockbuster Total Access - Free 30 Day Trial. In order for this to be a frugal move, remember to cancel before the one month free trial is over!
• jim presents Best Gasoline Cashback Credit Cards!
• Christine Talley presents Free 411. Just remember that standard cell phone charges still apply.

Other Interesting Ones
Awesome posts that just don’t fit anywhere else!

• Kaye presents 10 Awesome Father’s Day Ideas - Part 1 of 5. Great ideas for father’s day for you to pick the frugal ones!
• Steve Faber presents - What is The Highest Gas Mileage Car? - The Top 10 Real Cars for $4.00 a Gallon Gas. Those that are gas conscious definitely should look into this.
• Penelope Pince presents Frugality to the Extreme: Would You Eat Out of the Dumpster? Hmm… No.
• Dereck presents Want to be rich? Then shut up and listen. I’m listing…
• Dorian Wales presents The Perfect Home is a Financial Nightmare - Don’t Get Caught Up In the Costly Race.
• Mike presents Calculating the real cost of driving.
• Amy presents Daily Accounting: Pre-teen Shoppers.
• BillyOceansEleven presents The ultimate frugality: dumpster diving!

See? Didn’t I say there are many great articles about frugality? Read them. Read them again if you have to but if you don’t follow the advices, you are failing yourself.