Hi @NealWalters:
This is obviously more of an opinion question rather than a technical one but here’s my opinion.
My advice: use no more than 10 categories. Those <=10 categories when viewed together should define the essence of your blog. Don’t use subcategories. Then use lots of tags to define the topics you are talking about for each post. So if for example you are writing a blog post in your “Money” category, you might tag it with “401k” or “stocks” and so on.
Viewed another way:
Force yourself to
be very disciplined with categories
and allow yourself to be very liberal
with tags.
If you do it this way then your questions about your menu becomes easy; use a tag cloud on your main page for each category but filter the tag cloud to be specific to the category.