I received the following question from a reader today, and I’d like to follow in Darren Rowse’s footsteps from Problogger and open up the question to readers and other bloggers to answer, especially because I don’t think there’s only one “right” answer:

I like to setup my finances on a “purpose” basis. I create a separate account for each specific saving target. I have 401ks or IRAs devoted to long-term savings. A checking account (and a small savings account at the same bank) to handle day-to-day expenses. Some CDs as a safety net in case I lose my job. A separate savings account for spur-of-the-moment spending.

This keeps things tidy and reduces the tempation for my spur-of-the-moment spending to hamper something important (like next weeks groceries).

This works great for short-term or long-term savings. But not so well for mid-term savings. Things that are maybe 3-7 years out. (Like buying a new car or saving for home remodelling.) I can’t figure out what the best vehicle is for carrying this out. I can take more risk (and want better return) than savings accounts and CDs, but it’s not so long that I want too much stock exposure.

It just doesn’t seem like there’s a good way to create a single account to handle this sort of time-horizon.

Maybe the answer is on your site somwhere and I haven’t been able to find it. Any suggestions?

Here’s how the group writing project will work. If you’re interested in participating, just do the following:

1. Write a post on your own site that addresses the reader’s question below
2. Send me the link (URL of the post) and the title of the post
3. I’ll create a separate post showing the original question and an up-to-date list below the question that links to all other bloggers’ responses.
4. Let’s set the cutoff for posts at Friday, July 7th at midnight (Pacific Coast Time), so that I can send a quick summary at the end of the week.

This is a great way for newcomers to build links and grow some traffic (just keep in mind that my site’s averaging a little less than 100 visitors a day, though it’s growing). I benefited quite a bit from Darren’s group writing projects, so I’m trying to pay it forward, though in a (necessarily) smaller way!

Sound good? This is my first time attempting this, so let me know any feedback you have!

It’s almost the end of the week, World Cup play starts up again tomorrow. Just for fun, let’s keep those neurons running with a riddle:

The rich want it
The poor have it
It’s greater than God
It’s more evil than the Devil
And if you eat it, you’ll die.

What is it?

This riddle’s been around for several years, so you can find the answer fairly easily online with the right keyword search. If you can’t find it there, the answer is the first word in the second-to-last sentence of the second paragraph in the “About & Contact” section of this site.

Here’s a spate of new sites and services to keep an eye on (or use, if you’re lucky enough to live in one of the cities they serve):

A few friends are beginning their preparations to take the GMAT, the required entrance exam for most business schools. The GMAT differs most standardized tests out there in a few important ways:

1. It’s entirely computer-based
2. There are no set dates: You can schedule a time to take the GMAT at any local test center at any time
3. The test is adaptive, meaning there’s an algorithm that will give you increasingly harder questions if you answer them correctly, or easier ones if you make errors

As if that weren’t enough, many of my close friends are already very uncomfortable with standardized tests because they think they were always bad at math, because they’re already intimidated before the test even starts, or because they approach the test the wrong way, as something that truly tests their knowledge.

I always recommend the same thing to all of them: use the Princeton Review books. Their approach toward test-taking is irreverent but effective, almost like a game. And it works. For the GMAT, I highly recommend Princeton Review’s Cracking the GMAT. The 2007 edition was just published a couple of days ago.

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My final commentary on posts from the carnivals I’ve participated in this week is one from yesterday’s Festival of Frugality. Rebecca explains how watching fashion trends is frugal and shares some great tips on how to get the biggest bang for buck. Like many posts from that Festival, her advice is worth reading, and here are some more thoughts I have on the subject:

If you want to look truly fashionable, ignore US media. We’re a good 3-4 years behind the rest of the world. In fact, if you’ve ever checked out Vogue on the newsstands, you’ll notice that the British version differs from the Italian version, all of which are much different from the US version. Can’t find these imported magazines? Don’t worry, save the $10 and go online. My favorite fashion site to visit is Vogue España. (I’m strongly biased toward fashion from Spain and Italy.) You don’t have to read Spanish, but you can browse through the “Moda” section to see all the new styles and trends. “Tendencias” (trends), “Top 10”, and “Mode en la Calle” (snapshots of real people walking down the street that Vogue considers fashionable) are also great to browse through.

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