Being frugal is more than just giving up coffee, right? When someone is "being frugal," what exactly does that mean?

You'll be happy to know that you can be frugal without giving up coffee! I haven't given up my coffee yet, though I have given up trips to Starbucks.

My definition of being frugal is making the best use of your resources in accordance with your goals in life. Right now my goal is to get out of debt, so I try to cut my expenses, leaving more money available for debt repayment.

Other people may have different goals, but as long as they make the best use of their time, money, space, and other resources, they are being frugal.

You have a goal of getting out of debt by this summer – how close are you? What's your best single debt reduction tip?

Unfortunately I'm not even going to come close to getting out of debt by this summer. We've had one setback after another in the last year. My husband lost his job twice, we got some bad advice from an accountant and owe a large amount of taxes... and the list goes on.

Despite the setbacks, we've still managed to keep paying off debt. At this point it looks like we'll be out of credit card debt by September and hopefully the rest of our debt will be paid off by the end of 2009. That's the new goal.

My best debt reduction tip is never give up. Always keep your goal in mind. You will face setbacks. You might not come close to meeting your first goal. But if you are diligent, eventually you'll get there.

You just started Being Frugal last summer, and it's really taken off since then. What's your secret?

My secret is my great readers! They really keep me motivated, and I enjoy interacting with them. Beyond that, I'm just myself. What you see on my blog is exactly what you'd see if you were to meet me in person. I think readers like bloggers who are authentic and willing to admit making mistakes, and I've had to admit quite a few.

To tell you the truth, the growth of my blog blows me away! If I have a secret, I sure don't know what it is!

You don't seem to be a fan of debt at all (who really is?). What are the worst types of debt that should be avoided at all costs?

You're right. I'm not a fan of debt at all. But if I had to pick the worst kind of debt, it would be going into debt for something that decreases in value. It doesn't make sense to me to pay an inflated price (credit card interest) for something that isn't holding its value. I'm also not a fan of car loans, especially new car loans. I'd rather pay cash for a slightly older car than pay interest on a car that loses its value as soon as I drive it off the lot.

I'm on the fence about student loans. I realize it's difficult to get a college education without one these days, but I'm going to encourage my children to explore every other opportunity before taking out loans for college.

What are a few of your favorite posts? (I was a big fan of "7 Things Women Wish Men Knew About Money")

Thank you! I had a good time writing that post. And I have to thank Ron from the Wisdom Journal for suggesting I write 7 Things Women Wish Men Knew About Money.

Some of my other favorites are:
What Little House on the Prairie Taught Me About Debt
Things I’ve Learned About Money by Not Having a Lot of It
There’s No Shame in Renting

Peer-to-Peer Lending: good/bad/evil?

I'm not a big fan of peer-to-peer lending, because I'm not a big fan of debt. That being said, if I had to choose between dealing with peer-to-peer lending or dealing with a credit card company, I'd choose peer-to-peer lending. I really don't like credit card companies.

Being from Oregon, are you a Blazers fan?

I'm not a fan of basketball, so I can't say I'm a Blazers fan. Now if Oregon had a football team or a NASCAR track, we'd be talking!

Thanks for taking the time to interview me. I enjoy the Lending Club Blog, and it's been a privilege to participate in this interview!

Jim, I'm 24. You're in your 20's. What is wrong with our generation’s financial health? From my own mistakes, to what I hear my peers discussing, where did we get so off track? Is our generation doomed to be in debt forever?

I'm 27, going on 28, and I don't think it's our generation. I think it's the generation before us that has set us on this course. Consider the national debt; it isn't a collection of twenty-somethings, it's a collection of mostly forty, fifty, and sixty-somethings setting our national budgets. Then take a look at the mortgage crisis; sure there are plenty of twenty-somethings involved but it's mostly people older than us. A twenty year-old isn't going to be able to refinance himself into a bad decision. I think that the whole credit card debt issue, while bad, certainly doesn't doom our generation quite as much as the fiscal irresponsibility of our government, led by our parent's generation.

What inspired you to start Blueprint for Financial Prosperity, your finance blog?

I actually was trying to start a deals site, which is still alive but barely ticking, and then decided to start writing about money issues and personal finance to supplement it. As things went along I realized that writing about personal finance was more entertaining than searching for deals so I kept at it. Three years later, here we are.

What financial area are you most passionate about?

I'm afraid there isn't any particular area I'm more interested in. I suppose whatever is most appropriate for where I am in my life is what I'm most passionate about.

What topic really makes your blood boil?

I don't like it when people don't take accountability for their actions and I don't like it when people lament their own situations. If you're in $20k of credit card debt, deal with it. Yes it sucks, yes it's a lot of debt, but you weren't complaining when you were spending the $20k to begin with and you need to stop complaining and fix the problem.

If you could pick one superhero to be...who would you be, and why?

Superman, if only for the ability to fly. I hate sitting in traffic, it'd be bada$$ to just fly around anywhere. Plus I could turn back time just by flying around the world (I suppose I'd also need his ability to not have to breathe in space).

You recently got married. Congrats! How have you and your wife handled your separate finances? What advice would you give engaged couples?

Thanks! We combined our finances even before we got married. I think engaged couples should talk and do what's right for them; you can read magazines and blogs and everything for ideas but it comes down to how you two distinct individuals should handle it. There's no right answer for everyone and to shoehorn someone into combined or separate would be a mistake. I think that applies for everything in a relationship, be it marriage or otherwise.

Peer to Peer lending. Good idea, bad idea, or just plain crazy idea?

As a borrower, great, as a lender, jury's still out. I like it because it's a more efficient marketplace. If a lender is willing to lend to someone for 6%, why force the borrower to go to a bank at 8%? We may find out that the default numbers are too rosy or something else but for now it's a good idea overall, especially good for borrowers.

Who is going to win the NCCA tournament this year?

I went to a D3 school, Carnegie Mellon University, in Pittsburgh so I'm gonna say Pittsburgh, though I think UCLA or UNC's got a better shot at it.

Jim’s fantastic finance blog is Blueprint for Financial Prosperity

You are a spreadsheet master. Should the average person use spreadsheets to help manage their finances and investments?

Thanks! My wife and I ditched the commercial software programs like Money and Quicken because we didn’t like the lack of flexibility. So, we decided to set up an Excel spreadsheet to track our finances. I’m sure our method isn’t for everyone but we like it.

Your blog focuses on 401Ks and retirement planning, among other money topics. What are some creative tips you would give to a 25-year-old on retirement planning? A 35-year-old?

I consider a 25-year-old and a 35-year-old in the same boat as they are both at least a couple of decades from retiring. Therefore, my advice would be pretty much the same: Invest AS MUCH AS YOU CAN and invest the majority (80% or more) in equities. Finally, don’t let the downturns get you down.

You've made some custom financial calculators available on your blog. How do you use these? Which calculators are your favorites?

The calculators are really just a useable Excel spreadsheet. I created them for the fun of it. My favorite is probably the one about how much a person can save in their lifetime.

What do you enjoy most about writing on "All Financial Matters"? How did you get started as a finance blogger?

Investing is probably my favorite topic. I also try to cover controversial topics like the subprime bailout.

I got started blogging in October of 2004 as a way of writing a cheap newsletter. I had read an article in the Wall Street Journal about people setting up blogs for their families and I thought it would be cool to use one for personal finance.

What are you thoughts on P2P lending? Does it have a place in investors’ portfolios? (Be totally honest, LC is all about the honesty.)

To be honest, I haven’t given P2P lending much thought.

When you're not blogging...what do you do?

Sleep.

Jim Cramer or Suze Orman? (chuckle...heh, heh)

Neither.

Lightening Round first. Suze Orman or Dave Ramsey? Apple or PC? Pepsi or Coke? Soda or Pop?

Dave Ramsey, but I could live without either. Apple without question. Pepsi (sorry Mr. Buffett). Pop as a child; soda as an adult (I moved east). Funny story. I attended Brown University for a time. One day I approached a street vendor selling hot dogs and soda, and being from the mid-west, asked him what kind of pop he sold. He got a very nervous look on his face, started looking in all directions, and quietly told me he doesn't sell that kind of stuff. I ordered a Pepsi.

OK, now that we know you better...why and how did you get started as a finance blogger?

One year ago, I had never read a personal finance blog. I came across one (2million.com, I think) and started reading them. I manage our own investments, which have grown into a fairly good chuck of change. And I enjoy reading about personal finance and investing. Add in a desire to write, and in May of 2007 I started The Dough Roller. I truly knew absolutely nothing about blogging. I had never heard of WordPress, Digg, or StumbleUpon. I didn't know html, php, css or anything else about blogging. I learned a little each day, read a lot of books, and here I am. If you want to get a flavor of just how green I was, read 30 Things I Learned in My First 30 Days of Blogging.

You seem to cut a wide swath through financial topics. What two topics are your favorites to write about?

My two favorite topics are investing and what I'll call money & life. With investing, I enjoy studying how others invest and what the best investing approach is for me. That is one of the reasons I enjoy P2P lending and writing about it. With money & life, the key for me is that money itself is not the goal in life. But money can help us achieve our goals, whatever they are. Money can bring about good in the world; it can also bring out the worst in us.

How did your parents’ view and handling of finances affect you today? What do you teach your children about money?

I had a very interesting childhood, which reminds me of the Chinese curse--may you live in interesting times. My parents divorced and remarried before I can remember. I lived with my mom and step-dad, and both were not good with money. A failed business left us near bankruptcy and in fear of losing our home. There were times when we had little food and when the utilities were turned off, but we got by. My dad, on the other hand, owned a wholesale business that did really well. In the 1970s, he owned two homes, drove a Mercedes and a Rolls Royce, and was probably the most unhappy person I've ever known. He would pull up in the Rolls to pick me up for the weekend. I'd enjoy a rather wealthy lifestyle for two days, and then he'd return me to reality. He died when I was 12, in a car accident no less. So if anything, my parents taught me two very important things about money: (1) how not to manage it; and (2) that it can't buy happiness. I guess they were pretty good teachers after all.

You recently did a "smackdown" comparing Prosper and Lending Club. Does peer to peer lending have a role in investors’ portfolios?

I've written extensively about asset allocation. I believe that bonds definitely have a role in almost every portfolio, and P2P lending falls into the bond asset class. So yes, I think P2P lending can have a role in a portfolio. What investors need to keep in mind, however, is that P2P lending is different than any other type of investment that most folks have in their portfolio. Bond mutual funds invest in corporate and government bonds. P2P lending is consumer debt, which carries with it different kinds and levels of risk. The Smackdown piece that I wrote is really just the tip of the iceberg. But as long as investors understand the risks and take steps to mitigate those risks, I think P2P lending can be a great part of a well diversified portfolio. The one thing, in my opinion, that will really cause P2P lending to take off is the creation of a secondary market so that P2P lenders can sell their loans if they want. A secondary market, however, comes with numerous regulatory and investing issues that are too numerous to describe here. (Hmm, maybe that would make for a great blog article.)

If you could go back to your 24-year-old self and give him financial advice...what would it be?

Funny you should ask, because I wrote a post on this topic already--10 Things I Now Know at 40 That I Wish I Knew at 20. But if I could pick just one thing, I would have started investing earlier. Frankly, I would have started investing in high school. I began investing in my mid to late 20s, which has worked out fine. But I wish I had started much earlier.

What's a crazy thing you've done in your life you've never shared on your blog (not too crazy...Lending Club is a family friendly company!)?

I voluntarily took a pay cut of more than $100,000 per year. I'm a lawyer, although I no longer work in private practice. Out of law school I went to work for a very large law firm, worked countless hours, and after eight years, made partner. Two years later, I up and quit. I wanted to spend more time with my family, so I took a job at a company making much less than I did in private practice. Had I stayed at the firm, today I would be making more than twice what I make, but I don't regret the decision at all.

In this edition of "Catching up with....", our interview series, we have a chat with - CleverDude:

You originally had around 20K of credit card debt, right? How did get to 0? Any tips you could share with our readers?

I could talk for days about my credit card history, but obviously I can't right here so I'll give you the brief rundown. I graduated college with about $15,000 in CC debt, then accrued another $5k throughout the years while still paying some down. Technically, at one point I had a $25,000 total balance. I carried that balance for about 6 years after college, but almost never paid interest on it because I was able to keep transfering the balance to a 0% offer on another (often new) card every 6-12 months, at the cost of about $40-75 each time.

It wasn't until last year that I looked at that debt, then looked at our budget, and realized we could pay off the whole debt in about 10 months if we focused on it. I committed about $2000 per month (pretty much most of our discretionary income) to paying down the cards and eventually paid it all off last September, which was 2 months early. Overall, we paid down $41,000 in existing and new debt last year because we made a plan and committed ourselves to it.

You go by "cleverdude", yet often it seems you downplay your "cleverness" greatly. Maybe you should be "humbledude"! What do you think?

Well, the name Clever Dude was picked almost randomly by a domain name selector when I first decided to get my own domain. The name stuck, but like you said I downplay my cleverness. I don't consider myself humble, but I also never liked being boastful for one big reason: It has always seemed that whenever I patted myself on the back for doing something well or right, that something surely comes along to ruin the moment. I'm basically a pessimist, especially with myself, and I guess it comes through in my writing. Also, I don't like people who brag in general and I don't want to be seen as one of them. I like to be open to listening to any viewpoint and I see pride as an inhibitor to learning from others.

What are the biggest financial mistakes you see our generation (mid-late 20's) making?

Getting caught up in marketing. We seem to think we need the latest and greatest thing without sitting down, looking at what we already have and accepting it. I'm guilty of this too as you may have read about my problem buying a new car almost every year.

But this isn't just corporate marketing (of stuff), but also societal marketing. Society says we need to own a house instead of rent, that we need to have kids before we're 30, that we need a college education at the finest institution. However, I've often wished I still rented instead of owning our home. My wife and I are postponing plans for kids indefinitely because just don't think we're ready for them. And my public college education has landed me a very fine paying job.

(follow-up) How can we change that?

People just don't sit down and take the time to think about the big decisions in their lives. We need to be more patient and block out all the marketing hype from corporations, friends, family and traditions and just listen to our gut to see what's right for us.

What made you start your blog? How has blogging about financial issues helped your own finances?

I have Nick from Punny.org to thank for the idea of starting a blog. Before he came along, I didn't even know what a blog was, how to start one, or how to monetize one. I didn't really have a purpose for the site early on, which you'll notice from my archives, but eventually I began focusing on personal finance. I began having an audience and the idea that I could help others through my own experiences has been the biggest push and motivation for my site.

Blogging has kept me accountable for how I spend money, whether on stuff, debt, investments or donations. I'm honest in everything I write, and my conscience gets to me if I made a big purchase and didn't write about it. Those debt scales in my sidebar, well they're a big motivation. I want to see a big fat ZERO in each one soon.

What are your thoughts about Peer to Peer lending? (be honest. LC is all about the honesty) Do you think investors should be allocated a % of their portfolio in this new arena?
Ahh, I knew it would lead to this sooner or later. To be honest, I haven't ventured into P2P lending myself because I'm still trying to grasp concepts of basic investing. I do see P2P lending as having a place in people's portfolios, just like stocks, bonds, and other low or high risk investments, but I don't know what % should be allocated. I think only time will show how risky P2P lending is and thus its appropriate place in a portfolio. Personally, I don't plan on getting into P2P lending in the near-term until I get a better plan for my investment portfolio (no I don't have much of one right now).

What does the future look like for you and cleverdude.com?

Well, I never had a plan for the site from the beginning, and I don't see one coming anytime soon. I've found that work and school have taken a big toll on the time I can spend on the site, but I'm still posting daily. I've considered posted only 3-4 times per week, rather than 5-6, but I feel guilty when I don't post on a weekday. As for content, I'd like to begin doing more "basics" articles, and then move into intermediate topics, both to help my readers and to help me understand the concepts. I've also been slacking on linking out to other bloggers, so I'd like to add more of my own commentary on others' articles as well as current events. It all takes time though, and I just need to commit to a plan.

Any last words?

Willow, Xylophone, Yuca, Zebra