hi. in the attached image number 1 is the ground to the arduino. 2 is just linking the card reader to the breadboard ground. its the same wire as the one you see behind it. just to connect the ground lead of the rfid card reader to a ground.
but when i disconnect the ground (1) leading to the arduino, the led's still light up. are they grounding on wire 2, through the rfid card reader, and back to the board on some other random wire? i assume i'm doing this wrong. thank you
It's really difficult to follow another persons project by worded description even given a photo such as you have posted.
So I don't know if this is your problem but it is a situation you should be aware of.
Arduinos will get power through an input if the input is driven from some source.
For instance say your arduino is powered by 5V. And you have 3.3v on A0 with the intention to measure the 3.3v value.
If you remove 5V power from the arduino, the 3.3V will conduct throught the input protection diodes and "power' the arduino at something like 2.8V, enought to see the LEDs on the board.
THIS IS NOT A DESIRED CONDITION ! But one all of us have seen at one time or other (not on purpose).
Perhaps your situation has something to do with this condition. Try sketching the circuit and seeing what connections could cause you issue if you remove the ground.
birddseedd:
but when I disconnect the ground (1) leading to the Arduino, the LEDs still light up. are they grounding on wire 2, through the RFID card reader, and back to the board on some other random wire?
Yep. It's called "Phantom powering" or some other names. 
birddseedd:
I assume I'm doing this wrong.
Dead right there!
The rule is - make sure the different grounds are always connected together. Without fail.
(Unless of course, they are not supposed to be.)
When connecting up a circuit for the first time, these steps will be a useful guide to reducing
mistakes (expensive or otherwise).
Wire everything up, colour-coding the ground and supply wiring consistently (red for positive, black
for ground is very commonplace)
Check all the connections a second time, methodically. If its a PCB or soldered prototype board
this is the chance for a close visual inspection of every solder joint too.
Use a multimeter in continuity mode to check the each supply rail is connected to
the supply pins of all the ICs and devices it needs to be connected to
Use a multimeter in continuity mode to check that no supply rail is shorted to any other
supply rail. (remember ground is just another supply rail)
Power up (using a current limited supply if at all possible), checking for excessive current draw or
overheating components (IR camera is really handy here, failing that power up briefly and finger-test
components for heat). You can also add a series resistor as a current limit, especially if the
circuit quiescent current draw is supposed to be small - a few 100 ohms or so is often appropriate here -
it may sacrifice itself to save the rest of the circuit. It will also protect your multimeter in mA mode
(avoid it blowing its fuse).
Being over-keen to power things up without checking will lead to expensive and frustrating
blown components sufficiently often to be very boring and annoying...
By the same token when buying components wherever possible order a few spares (if not hugely
expensive!) so that if the worst happens you don't have to wait for a re-order...