Saturday, January 21, 2017

A Financially Sensible Plan for Handling Career Burnout

I faced what I consider to be “career burnout” at three points in my life.

In 2004, I was getting burned out on uncertainty. My job for the few years prior to that was based on a series of short-term contracts and I was just getting fed up with not having any sort of stability. Sarah and I had been talking seriously about children and it just didn’t feel like stability was coming.

In 2007, I was getting burned out on bureaucracy. It felt like almost all of my job centered around maintenance, bureaucracy, and travel, none of which I really wanted to do. I felt like I was constantly putting out fires and that work was taking me away from my family, but that I wasn’t doing anything of any importance to anyone any more.

In 2011, I was getting burned out by overwork. I was working eighty hours a week or more keeping The Simple Dollar running, with three young kids at home, a marriage to maintain, a home to care for. I was getting sick regularly and I was almost constantly stressed out.

In each of those situations, I felt frustrated and unhappy with my professional life. I didn’t want to continue doing what I was doing and I was genuinely unhappy with my work.

I was burnt out.

However, in each of those situations, I recovered using a number of strategies.

In 2004, I had a heart-to-heart with my supervisor and took some time off. My supervisor then went the extra mile and found a solution that enabled me to sign a much longer-term contract than before.

In 2007, I started building a number of side businesses, one of which was The Simple Dollar. By 2008, I had enough income from other sources that I was able to walk away from that situation.

In 2011, I found additional help to take some of the burden off of my shoulders, drastically cutting down on my work responsibilities and time.

Some of those situations involved wage cuts. Others involved having difficult conversations. Some involved a bit of career risk.

All of them were worth it.

Why? Having a career that makes you feel miserable every day can make your whole life feel miserable. You can quickly find yourself in a place where you genuinely feel distraught about your entire life due to the fact that work eats up such a sizable portion of one’s working hours. It can create a strong cycle of negativity that’s hard to escape from. You often feel like your only other option is financial ruin.

The truth is that you don’t have to feel distraught. You don’t have to be chained to negativity. You don’t have to feel like you’re playing with financial ruin.

Other people might simply find themselves in a career situation where they simply feel bored, as though they’re clocking in and out without any sort of challenge on their plate. Many people thrive on challenge and can feel very empty when it’s not there.

Here are ten strategies that you can apply to help you step back from the edge if you’re feeling burned out in your career, whether it’s simply just a sense of boredom or a deeper sense of unhappiness. Not all strategies work with every situation; choose the ones that fit your situation and apply them.

Remember That You Work to Live, Not Live to Work

When your job takes up a lot of your time as well as a lot of your physical and mental energy, it can feel as though your entire life is centered around your job. You can feel defined by it, and when you feel defined by something, that thing goes a long way toward indicating whether you are happy in your life as a whole. Thus, when you are defined by your job and your job isn’t going well, you can feel as though your life isn’t going well, whether that’s true or not.

The truth is that you work to live, not live to work. Your job is not the meaning of your life; it supports the meaning of your life, whatever that might be. It provides the income that you need to do whatever it is that you most value doing – your true higher purpose. Yes, in some cases, aspects of your job might apply to that higher purpose, and that’s great when it happens, but it’s not a requirement. Many people work at a job that has nothing to do with their main life values.

If you’re finding that your job is completely in control of your emotional state and that it is defining whether or not you’re happy in your life, step back for a moment and remember that you are working to support a life you want to live. The main focus here is the quality of your life, not your job.

It’s worth noting here that it’s very common, especially for younger people, to not have a central meaning in their life or a central set of values or a big goal that you’re working toward. In that situation, it’s often easy to fall into a mindset where your work provides that goal and focus for you. It becomes your center, and when your job turns negative, it can become devastating.

Don’t let that happen. Define what you want out of life independent of your job and then view your job as simply a way to make the money you need to support those things you truly want.

Take me, for example. My family is the center of my life. My professional work is important to me, but the thing that matters the most is that it helps provide the financial resources needed to make sure that my family has a good life. Aside from my family, my personal interests and hobbies rank quite high – they are central in the time I have remaining when I’m not tending to my family or my job.

By having that mindset, bad moments at work don’t become overwhelmingly bad. It becomes no different than dealing with, say, laundry. Sure, it’s inconvenient, but it’s not life-altering. Save your true concerns for the things that you’re working for.

Strangely, I’ve found that this mindset makes me more productive at work, not less. I tend to seek out tasks that I enjoy and do them with relish and the bad moments don’t cause me to fall into despair.

Talk to Your Supervisor Frankly

If you’re feeling burnt out at work, don’t let your performance fall off. Instead, talk to your supervisor and be clear about your concerns.

Unless there is extreme dysfunction in your workplace, your supervisor will try to find a way to meet in the middle regarding your concerns and the needs of the business. It is far better to put forth a bit of effort to retain a solid employee than it is to hire and train a new one.

Of course, this does rely on your own performance at work. Bringing up concerns to your supervisor when you’re already on thin ice and struggling to meet basic job requirements (like showing up, for example) will generally backfire on you unless you have other strong aspects of your job performance that you can point to. If you do your job and do it reasonably well in a non-dysfunctional workplace, talking to your supervisor is a great idea for alleviating specific concerns related to burnout.

Take a Vacation

One effective strategy for reducing burnout is to simply take a vacation where you completely disconnect from your workplace for a while. No checking emails, no social media, nothing. You’re on vacation from your job for your own mental well-being.

Take that vacation time to engage in things that are genuinely meaningful to you and can genuinely lift your mood. Don’t spend it burning time channel surfing or looking at websites. Spend it doing things that you genuinely enjoy that you don’t normally have time or energy for. Go outside and explore nature a little. Get in touch with all aspects of your life.

As you’re doing this, spend some time really reflecting on what you’re doing. Think about the idea of working to live rather than living to work, and whether or not you’ve allowed your job to take on an excess level of importance in your life.

Some jobs may frown upon taking personal vacation time. Here’s the thing, though: burning out is going to be far more damaging to the bottom line of both you and the business as compared to taking vacation time and refreshing your mind. Don’t be afraid to make the case to your boss that you need a week or two completely disconnected to recharge and be a better and more effective employee.

If Your Employer Won’t Allow a Vacation, Switch Jobs with Downtime Between Them

In general, if your supervisor discourages vacation time and the culture of your workplace discourages leave of any kind, it’s probably not a healthy place to continue working. Rather than demanding and forcing a vacation, you’re probably better off working toward switching employers and using a period of downtime between jobs as a vacation.

Sharpen your resume, focus on working on things that will bolster your resume, and quietly begin seeking other jobs in your field. When you find one, negotiate a starting date that will give you some downtime between jobs; ideally, see if you can negotiate a start date that gives you no downtime in your insurance benefits between your old job and your new one.

The purpose of this is to get yourself away from an employer that isn’t respectful of the mental and physical well-being of their employees, which is exactly what’s happening at an employer that actively discourages vacation time. That’s not a healthy state for employees and it’s not a place you want to remain at long term.

If You Are in a Big Organization, Look Into Switching Teams

One aspect of professional life that can burn people out isn’t their overall career, but the specific project that they’re working on or the specific team they’re working with. They’re stuck in the midst of a team or a project that isn’t fulfilling or is bringing negativity into their life, elements that wouldn’t be there if they were involved with a different project or a different team.

In those situations, simply looking for an opportunity to move to a different team or to a different project can make all of the difference in the world.

Some of my family members experience this in their workplace. I have several family members who work for the same employer and they often move from team to team, from shift to shift, and from specific task to specific task if they’re feeling unfulfilled in their current position. In fact, their employer even encourages this, as people will often eventually become bored and unhappy with the same task and the same team over and over and over for years.

Explore Alternative Working Arrangements, Like Working from Home or a 9/80 Schedule

Another avenue that might help rekindle your fire with your current job is an alternative working arrangement. Are there days when you can work from home at your current job and it really wouldn’t make a difference in the office? See whether or not you can move to a schedule where you work from home a day or two a week. Could it make sense for you to switch to nine hour days while taking every other Friday off? See if that type of schedule is available for you. Perhaps there’s an opportunity to switch to a different shift as well.

Sometimes, simply rearranging the balance between your work time and your personal time can make a great difference. I know that, in the past, when my work schedule has kept me away from things that were important to me, it didn’t take long for me to start resenting that job, but it was often just a simple working arrangement switch that took care of the problem.

Talk to your boss simply to see what’s possible before writing off the idea, particularly if there are large advantages for you personally in adopting a change in your work arrangement.

Intentionally Step Back from Job Aspects You Don’t Like While Leaning Into Other Areas

If you work in a job where you’re fine with much of the work but find that some specific areas are frustrating, intentionally minimize those areas and redirect your energy to the other aspects of your job. You’ll often find that if you perform very well in some aspects of your job, it’s perfectly fine to give less energy to other aspects.

For example, I used to work at a job where regular meetings were simply part of the job. I was required to attend these meetings, but they were almost completely irrelevant to my work. So, I simply started bringing my laptop with me, sitting near the back, and getting actual work done during the meetings.

No one noticed. No one really cared. All I had to do was be there for the roll call and sit in that meeting room for an hour and a half. I was able to get more of my real tasks done and during the once-every-six-months event where I was actually useful in a meeting, I was right there ready to answer the single relevant question that came my way.

Naturally, this doesn’t work at every job, but it does work well at many jobs where you have some leeway in terms of what you’re doing minute to minute.

Start a Side Gig

Another route is to simply start a side gig. A side gig is merely a small business that you start in your free time that’s usually oriented around something that you’re more passionate about, like a Youtube channel focused on a particular passion or a small woodworking business, or a skill that you have, like selling insurance or real estate.

Side gigs allow you to not only dabble in another “career,” but also to potentially develop a new income stream. What’s the advantage of having another stream of income? It makes the process of jumping to a new job much easier because you’ll still have income coming in during the jump, plus if the side gig really takes off, it can become your primary income stream.

The best part? It provides a completely different environment to explore your passions and test your skills, turning some of your professional focus away from the elements of your primary job that are burning you out.

Build a Plan for a Different Career – and Start Executing It

On the other hand, you may feel that switching to an entirely different career is the smart option. If you’re feeling burnt out on every aspect of your current career, it may simply be that it’s not the career path for you.

If that sounds like your situation, consider a career reboot. The best first step you can take is to sit down and write a career plan for that career switch, working through what you’ll actually need to make it happen as well as many of the pitfalls that can keep you from achieving that new career.

It can be a very scary leap, don’t get me wrong, but giving the option some careful consideration and planning can often show you that many of the giant potholes that you envision in that path really aren’t as big as you might think. That’s the advantage of a career plan – it can help you figure out the best path to where you want to go.

Avoid Financial Handcuffs

One final strategy that everyone should follow if they’ve even got a hint of professional burnout is to simply avoid running the risk of having “golden handcuffs.” In other words, do everything you can to minimize how much you’re financially beholden to your current job.

If you’re in a situation where the loss of your job would mean financial apocalypse for you and your family, then you’re basically in a position where you’re forced to keep working, and when you’re in that sort of situation, any small irritation can quickly grow into intense misery and pain. You’re left feeling like you’re walking a tightrope constantly at work because the cost of losing your job, in terms of your personal life, is immense.

Break out of that situation. Get a grip on your financial life. The best way to do that is to dial down your spending on non-essential things. Cut out the most frivolous elements of your spending and get ahold of your financial impulses.

The cycle that many people fall into is buying things and experiences to temporarily “get away” from the stresses of professional life. However, all that does is make the stresses worse. You’re chained more than ever before to your job.

Stop that cycle. Stop spending your money on frivolous things. Use your money to get rid of your debts rapidly and get control over your financial state. Soon, the bills won’t be breathing down your neck and you won’t feel pushed up against the wall by your job any more, and often all it takes is that change in mindset about your job to make a sense of burnout simply vanish.

Final Thoughts

Being burned out by your job isn’t a unique experience. I’ve felt it, as have millions of other Americans and billions of people around the globe. Everyone gets frustrated with the specifics of their employment at times.

The question is whether you just accept it and curl into a ball of misery or whether you take action and do something in your life to take care of the problem.

The choice is up to you.

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Friday, January 20, 2017

The Key to Financial Success Is Being Accountable to Yourself

Over the years, I’ve written about literally thousands of tactics for spending less money, earning more money, and putting that extra money to work to eliminate debt, build an emergency fund, save for retirement, or succeed at other goals.

At a glance, most of those tactics seem really, well, simple. It’s not really rocket science to realize that making coffee at home is going to cost less than buying it at Starbucks, or that grocery shopping with a grocery list is going to cost less than just wandering into a grocery store with a vague idea that you need to cover several meals. Sure, you might not have thought of the idea, but when you hear it, it usually feels like common sense.

Yet, time and time again, people don’t do those things, or at the very least, they don’t put the pieces together very well.

One person might dive deeply into frugality and make a lot of smart moves to spend less at the grocery store and cut down on an electricity bill… but then that same person will blow $800 on a new television without skipping a beat.

Another person might work their tail off to get a small raise at work and then celebrate by spending all of the extra money they’ll make from that raise for the next two years in a weekend of partying and shopping.

Yet another person might get a big tax refund check in the mail, think about using it to pay off a debt, make one slightly bigger than usual payment, and then use the rest to refill their liquor cabinet and go out on a date.

Then, all three of those people think about their financial decisions and wonder why exactly they’re not seeing any sort of lasting success. “I’m being so diligent with frugality… why can’t I get ahead?” “Even with this raise my credit card bill still seems insurmountable.” “Even with that giant tax return check, my debt mountain is still huge.”

The thing that’s missing in all of those stories – and countless other personal finance stories, including my own at times – is personal accountability.

If you make a good financial move that leaves more money in your checking account, that’s great, but if you don’t follow through with that move and actually use that money for something positive, it’s basically just cutting one area of overspending to fund a different area of overspending. It’s robbing Peter to pay Paul, as my father used to like to say.

Even worse, people often find things to blame. They’ll blame their parent’s generation for “robbing the economy blind.” They’ll blame their boss for not paying a salary that they feel they deserve. They’ll blame the government because the government’s convenient to blame for everything. They’ll blame their spouse, their child, anything other than their own personal mis-steps.

Here’s the truth, and it’s painful. The biggest part of the reason that you’re in a financial situation that you’re unhappy with is you. If you can’t accept that, then you’re not going to be able to make financial change happen in your life.

Your financial problems are the result of your missteps. Laziness (in many forms). Overspending. Misplaced trust.

It’s okay to have those character traits. We’re human. I have them, too. I’m lazy sometimes. I definitely overspend sometimes, particularly on my hobbies. I’ve misplaced trust more times than I can count.

The key to any measure of success I’ve found in my life is that I stepped back, looked at myself, recognized that I was messing up, and genuinely tried to fix it. This wasn’t just a one-time thing, either. I do this a lot.

I look hard at my life all the time, and not in a back-patting way. I’m looking for the ways that I’m messing up, and I try to think of how exactly I can fix those things.

The purpose of this self-reflection isn’t to beat myself up. That’s not the goal. The purpose is to make sure that I’m on a steady path to being a better person than I was in the past. The purpose is to make sure I’m a better person in 2017 than I was in 2016, and a better person in 2018 than I was in 2017, and a better person in 2019 than I was in 2018, and so on. That doesn’t mean I was bad in the past, just an acknowledgement that I am not perfect and I can be better.

The truth of the matter is that if my life isn’t what I want it to be, it’s because of my own choices and my own mindset. If I let other people down, it’s because of my own choices and my own mindset. When I don’t have the opportunities that I want, it’s because of my own choices and my own mindset.

I can fix those choices and that mindset, but it’s not easy. It takes work and self-reflection. I have to be able to look at myself in the morning and in the evening and know that I did my best to succeed at the challenges in my life and the dreams I have for myself. Without that, what am I? Without self-reflection, how can I ever hope to improve?

Here are three of my most valuable tools for self-reflection being accountable to myself.

I journal every day, with a goal of evaluating my mistakes with full honesty. My journal entries often seem like they’re pretty hard on myself, and they are, but the purpose isn’t to just list my many faults. The purpose is to dig into those faults, figure out why they’re happening, and figure out what I can do to fix that flaw and improve upon that area of my life.

Let’s say, for example, that I spent my entire hobby budget in the first week of the month. This leaves me with three weeks without any hobby spending – I way overspent, in other words. Why did that happen? I can start digging into the reasons.

Let’s say I overreacted to a mess that one of my children made, or I didn’t talk to my wife very well after she had a rough day at work, or that I bought too much unplanned stuff at the grocery store. Why did those things happen? I can start digging into the reasons.

I find that doing this in my own handwriting, in a paper journal with a pen, is the best way to do this, even though it does take longer. Taking the time to actually write words on paper forces me to think more deeply about what I’m writing, which is the whole point of this exercise.

I start every day off with a stark, strong reminder of the things I’m trying to improve in my life, and I try to keep them in mind throughout the day. One of the very first things I do each day is to sit down and look at my goals for the day. I spend a few minutes thinking and focusing on those goals and I try to embed them in my mind so they’ll stick with me throughout the day.

Right now, for example, my focus is on eating smaller and smarter meals. The food choices I make are pretty good; my problem is quantity. Each day, I get up and think about this. “Just don’t put so much on your plate,” is what I’ll tell myself. At the end of each day, I think about whether or not I pulled that off when I’m writing in my journal and, if I failed, what exactly I could do better.

When I do make a mistake, I think not of myself, but of the stakeholders I’m letting down. My wife. My children. My dog. My parents. Yes, I let myself down, but I let down many of the most important people in my life.

I’m very intentional in terms of not falling into a “I messed up, I’m worthless” mindset of beating up on myself. That doesn’t help. Instead, I think of those stakeholders as a reason to do better in the future. “I have to do better because of my wife and my two sons and my daughter.” I’m accountable to myself, but I’m also accountable to them. For all they add to my life, the least I can give them in return is a concerted effort to be the best that I can be.

The key thing to take home from this post is that you’re human. You make mistakes. You’re not perfect. However, you can be better tomorrow than you are today, and the path to getting there involves reflecting on your mistakes and asking how you can fix them. When you mess up, it’s on you; the question then becomes how you can reduce the impact of your mistakes and avoid repeating them in the future.

Good luck.

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Thursday, January 19, 2017

31 Days to Financial Independence (Day 23): Investing for Retirement

“31 Days to Financial Independence” is an ongoing series that appears every Thursday on The Simple Dollar. You might want to start this series from the beginning!

Last time, we put a capstone on our discussions of how to spend less money and how to earn more money by looking at how they come together to form a “gap” between your income and your spending.

That “gap” is a very powerful tool. You can use that gap to pay off debt, something we discussed earlier in this series, and you can also use it to build toward your future by investing.

One of the most common goals that Americans have with their investing dollars is to secure a healthy retirement, one in which they can maintain something close to their standard of living and survive increases in health care costs while receiving good care. No one wants to live a hand-to-mouth existence in their final years and retirement planning is an incredibly powerful way to avoid that. Social Security alone won’t be enough.

On top of that, the options for Americans to save for retirement are pretty unclear to the vast majority of citizens. The easy route, for those who have it available, is to simply contribute to a 401(k) plan in your workplace, but those often have fees and expenses that eat up a significant portion of the money you earn in the account. If your 401(k) earns an average of 5% a year and it’s slurping away 1.5% in fees, you’re barely beating inflation.

What do you do, then? What’s the game plan for turning a person’s financial “gap” into adequate retirement savings?

Exercise #23 – Building an Investing Road Map to Retirement

Here are several steps you can follow that will give you the best chance of having a good retirement. These are time-tested ideas, drawn from a wide array of personal finance, investing, and retirement books; the single most useful volume I’ve found on retirement savings is The Bogleheads’ Guide to Retirement Planning by Taylor Larimore, Mel Lindauer, Richard A. Ferri, and Laura F. Dogu, which I recommend as follow-up reading.

Understand the uncertainties that come with retirement savings. Many investment and personal finance websites will talk as though saving and investing for retirement is a magical solution that will simply take care of you if you throw enough money at it. As painful as it is to say it, that’s simply not true.

The future is uncertain. If investments and government policies continue along as they have in the past, then there are definitely clear steps you can take to have a secure retirement, but it doesn’t take a visionary person to see that we’re in an era of great change. The institutions we relied upon on the past aren’t necessarily going to continue in exactly the same way in the future.

For starters, we don’t know the future of the American economy or any economy. It seems pretty certain that innovation and worker efficiency will continue, but will that translate into financial security for investors and citizens? I expect it will over the long run, but I also expect the ride to be bumpy.

Another factor is that we don’t know what government policies will look like going forward. Will taxes go up? Will taxes go down? What will be the cutoff between tax brackets? What will inflation be like, and how will the government respond to it? Will changes in trade policies change the prices we pay in stores?

No one can predict the answers to these questions with any certainty even over the short term, let alone the long term.

So what can you do? The best strategy available for people who can’t or don’t wish to devote most of their life to studying investments is to simply hedge your bets by diversifying. Don’t put all of your eggs in one basket. Instead, assume that some things will go up in value and others will go down and by having a little bit of money in a lot of things, it will balance out and go upwards at a gentle rate over time with little effort.

Know what accounts and options are available to you. So, we know we need to save for retirement, and we know that those savings need to be split up among lots of different things. How do we do that? There are a number of options available for people who wish to save for retirement.

For many people, the most obvious method for saving for retirement is through the retirement plan offered through their workplace. There are many such plans, but they generally fall into three main categories.

Some plans are pension plans, like FERS – the Federal Employee Retirement System. These are plans that essentially offer a guaranteed benefit in retirement depending on the years of service to the employer. These used to be common offerings from businesses, but are now largely nonexistent; they’re mostly just offered by local, state, and federal government these days. If you have one of these, that’s great! It’s one of the best perks of being a government employee!

Other plans are pre-tax savings plans, like a 401(k), 403(b), or TSP. These plans allow you to contribute money directly from your paycheck before taxes are taken out; in effect, it reduces the amount of income you’ll be taxed on, which means that you’ll pay less in taxes this year. However, when you make withdrawals from that account when you’re retired, you’ll have to pay taxes on those withdrawals as the money comes out. There are usually tight restrictions on non-retirement uses of the money, ones that come with stiff tax penalties if you violate them.

In still another group are post-tax savings plans, which are usually prefaced with the word “Roth.” This includes Roth IRAs, Roth TSP, and Roth 401(k)s. In these accounts, you make contributions out of your take-home pay – there’s no reduction in your taxable income. However, when you do eventually retire, you can take withdrawals from those accounts tax free, including the investment gains you earn over the years. Plus, in general, it’s much easier to access funds in a post-tax plan than a pre-tax plan if you need it for other uses.

Retirement savings strategy usually involves mixing contributions among post-tax and pre-tax savings plans unless there are additional factors involved.

Focus on maximizing contributions today rather than focusing on seemingly insurmountable long term goals. Many people get stuck in the trap of worrying about the huge mountain of money that they feel that they must have when they retire. “How will I ever save up $1.6 million?” is a common refrain, because those are the kinds of numbers offered up by retirement calculators.

My philosophy is that you shouldn’t worry about those big numbers. Instead, worry about your contributions right now. If you contribute plenty right now, you will make it to where you want to go.

So, how much is “enough” to contribute? No matter your age, you should be striving to put away at least 10% of your income into retirement. If you’re 40 or over and haven’t contributed before, you need to be contributing even more. There is no magic threshold that defines “enough” for the reasons stated earlier – the future is too hard to predict. However, the more you contribute, the more likely you are to have a comfortable retirement or even a cushy one. The less you contribute? The more likely you are to have a very uncomfortable retirement or to find yourself working until a very old age.

Make sure, as your first step, that you’re getting every dime of employer matching into your retirement savings. The absolute first thing to consider when thinking about where to put your retirement savings is whether or not your employer offers a retirement savings plan and, if so, whether or not they match your contributions at any level.

If your employer matches your contributions, that’s where you should be putting your retirement savings almost every time. There is almost no move you can make that will surpass the value of your employer matching your contributions.

Thus, the first move you should make in saving for retirement is to contribute to your employee retirement plan up to the level that’s required to get every dime of matching contributions from your employer.

If your employer does not offer matching funds, then, naturally, skip this step.

Fund a Roth IRA for you and your spouse as your next step, if eligible. The next option to consider is a Roth IRA, which should be your target for any additional savings you want to make beyond what’s described in the above step.

A Roth IRA account is quite easy to set up with almost any investment house. I personally recommend Vanguard, simply because that’s what I use myself for my own Roth IRA and other investments. Setting up a Roth IRA there – and with the other investment firms I’ve looked into, such as Fidelity – has been almost as easy as setting up an online bank account. You just fill out a few forms online, click a few times, and you’re done.

Most Americans are eligible for a Roth IRA, which allows an individual to contribute up to $5,500 per year in post-tax money (meaning money that’s actually arrived in your checking account after getting paid and having your taxes taken out). The exception is that you can’t contribute more than you earn, meaning you earn less than $5,500, and that you can’t contribute if you earn more than the income limit. For individuals, that limit is $117,000; for married couples, it’s $184,000. That level of income puts you in the top tier of American earners; the vast majority of Americans are well within the contribution limits.

As I stated earlier, your goal should be to contribute at least 10% of your salary to retirement (and ideally more), so you may find yourself contributing a small portion to a Roth IRA or you may find yourself fully funding it.

Return to a pre-tax plan if you want to still save more. If you want to contribute even more to retirement and you’re already getting every dime of matching money from your employer and fully funding both your Roth IRA as well as your spouse’s Roth IRA, turn back to your employer’s pre-tax plan. It might not be perfect, but the tax benefits it offers are likely to be more beneficial to you than simply putting your money in a savings account or any other non-retirement account.

If that option isn’t available to you, you do still have quite a few additional options. You can use a traditional IRA, which is a great option if you aren’t eligible for a Roth IRA due to too much income but don’t have an employer-based retirement plan. You can use a normal taxable account to stow additional retirement savings in; you’ll have to pay long term capital gains tax when you finally tap that account in retirement and there aren’t any other tax benefits, but you’re free to do whatever you wish with it without any additional tax penalties. You can also consider a Solo 401(k) if you’re self-employed.

Know what to look for in investment options. Once you’ve figured out which account or accounts that you’re going to be contributing money to, the question then becomes centered around investment options. Almost all retirement accounts that you contribute to offer a number of options with regards to where to invest your money inside that account, but those can be overwhelming.

Obviously, analyzing investments can quickly turn into a rabbit hole of time and energy. You can dig deeper and deeper and deeper and become more and more and more indecisive and never make a decision. In fact, it’s that very indecisiveness that keeps people from saving sometimes.

My advice to most retirement savers is to keep things as simple as possible. Focus on just four things: the amount of time the fund has existed, the average annual rate of return, how volatile the fund is, and the expense ratio. You don’t want to invest in a fund with a short history, nor do you want to invest in one with a high expense ratio. If you’re close to retirement, you’ll want a low volatility, but if you’re decades away, volatility doesn’t matter. After that, you can mostly compare the average annual rate of return. This is a good way to compare several investments at once, but you’ll want to make sure your money is split at least somewhat among several different investment types.

When in doubt, choose balance in the form of a target retirement fund. This is usually the easiest way to balance all of the concerns in the previous paragraph. Just look for a target retirement fund that comes as close as possible to the date you’re planning on retiring and contribute everything to that fund. The fund automatically splits your investment among various types and automatically lowers your volatility as you get closer to retirement.

Target retirement funds aren’t perfect and many people might do something slightly different if they spent extensive time studying their investment situation. However, it will be reasonably close to what most people would pick.

Focus on today! If I can offer one piece of retirement advice for anyone, it’s this. Focus on today. Focus on what actions you can take right now to put a little bit of money away for retirement. Set up automatic contributions to a retirement plan and stick with them. Don’t give into the temptation to cash in your retirement savings and find other ways to solve your financial problems. When you get a raise, focus on ratcheting up your savings rather than ratcheting up your lifestyle.

You don’t have to sacrifice a great life today for a great retirement tomorrow. You just need to keep your future self in mind when you make decisions and be willing to give up the unimportant little things for the more important big things sometimes.

While there’s no guarantee of a perfect retirement for anyone, following those steps will go a very long way toward securing the best possible retirement you can have.

Next time, we’ll take a look at specific strategies for investing for education.

The post 31 Days to Financial Independence (Day 23): Investing for Retirement appeared first on The Simple Dollar.

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Three Paths to Quit Your Job This Year

Dream jobs don’t just fall into your lap; you have to go out and grab them. Sometimes, that means making bold moves, like quitting your job without knowing exactly where you’re going next, or starting your own business. But bold doesn’t mean foolhardy. To make a big change and see positive results, you need to prepare before you take the leap.

As you might’ve guessed, the first step is financial.

“The larger the emergency fund you can build up, the lower the possibility that you’ll have to make drastic changes to your lifestyle before you start your next job,” says Michelle Herd, a Certified Financial Planner and senior client advisor at TFC Financial Management, an investment advisory firm in Boston.

Herd says that they recommend keeping an emergency fund with six months of expenses, even when you’re employed. The number goes up when you’re planning on changing jobs.

“The gap between jobs can be unpredictable and you may incur additional expenses in your search for a new job,” Herd says. “To avoid having to drastically alter your lifestyle between jobs, you should try and set aside as much in your emergency fund for the immediate term as you can.”

Path No. 1: Save Up as Much as You Can… and Then Quit

Maybe you meant to travel after graduation, but never pulled it together. Maybe you want to train for something new, but you don’t think you can handle coding boot camp or a certificate program and your present job at the same time. Or maybe you just need to get out of your current gig before you start pelting your boss with office supplies.

Regardless of why you want to quit, if you’re not going straight to another job, you’ll need to build up that emergency fund – and budget for the fact that you won’t have another job lined up the moment you decide to go back to work.

How do you do that? In part, by being extremely frugal.

“In the months leading up to a potential job transition, it’s advisable to keep a particularly close eye on your expenses and cut out or delay as many unnecessary items as possible,” says Herd. “You’ll need to continue to pay your routine expenses like rent or mortgage payments and utility bills, but delay large purchases and avoid taking on additional liabilities that you’ll have to add to your expenses.”

If there’s not a lot of wiggle room in your budget – and let’s face it, that’s the case for most of us – you’ll need to make more radical changes. Get a roommate. Become a single-car family. Take on a part-time job. Do whatever you can to cut expenses and add income.

Path No. 2: Make Yourself Into a Super-Candidate… and Then Fly Away

It’s almost always easier to get hired when you have a job. Why? Because many hiring managers still have a bias against candidates who are unemployed. It’s not fair, but it’s reality.

Liz Ryan, founder and CEO of Human Workplace, writes that she’s talked to many HR folks who claim not to like the practice, but still hold onto it as a “fast way to screen people out.”

“If employers are looking for fast, arbitrary ways to screen out applicants, I can think of 20 ways that are just as effective as screening out job-seekers who aren’t working,” she writes at LinkedIn. “They could interview only the candidates whose last names start with K, or screen out everyone whose application arrives on Monday or Wednesday.”

Of course, the downside to looking for a job when you have a job is that it’s also harder to get motivated to find the time to job search when you’re employed. If you’re in that spot, give yourself a deadline.

Start by thinking about what’s stopping you from getting hired for your dream job right now. If it’s a matter of skills, you can acquire those. If it’s a matter of opportunity, you can build the connections that will put you on the fast track to hearing about job openings before they’re advertised.

Give yourself six months to close any personal skills gaps or make connections in your industry. Then use the second half of the year to start applying for jobs. (Your new connections should be helpful here!)

Path No. 3: Start a Side Hustle… and Then Turn It Into a Full-Time Career

Everyone could use some extra money, and a side gig is a great way to make it happen. Pick the right side hustle, and you could eventually turn your quest for extra cash into a brand-new career.

The key is choosing a side business, and to set a deadline for making it your full-time job. Start pondering possibilities today, and then get serious about making your dreams into reality. (This step-by-step plan is a good place to start building your blueprint.)

Again, deadlines are important. Make your calendar, and let that be the day on which you assess your accomplishments and decide whether to make the leap… or stay put.

Related Articles: 

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Wednesday, January 18, 2017

How (and Why) to Write a Career Plan

Last Friday, I published an article entitled Does Spending Pennies to Make Dollars Really Make Sense? In it, I made the case that spending money for convenience to save time really only makes sense if you use it effectively to make more money in your career or your entrepreneurial plans.

One particular paragraph stood out to a couple of readers, though:

The same thing is true if you’re trying to launch a strong career. Often, the early stages of a career require tons of time, tons of learning, tons of work, and tons of networking. Write a plan for that, too. How will you build connections to people in your field? What education and skills and resume lines do you need to advance to the next rung on your career ladder? How will you get them? How can you build a name for yourself in your field? Think about those questions. Come up with answers for those questions.

A career plan? Seriously? Many people have heard of and written a business plan, but a career plan seems to be a much less common idea.

Two different readers wrote in asking for more information about what a career plan would look like and what the purpose would be, so I thought I’d write a guide to a career plan here.

The idea for my career plan came about late in my college career when I sat down with one of my mentors, a wonderful college professor who looked a bit like Anthony Hopkins, and he asked me a simple question.

“What exactly do you want to be doing when you’re my age?”

I didn’t really know how to answer him, so I fidgeted a bit and he kind of chuckled. He then said, point blank, that most people don’t really get anywhere in life because they don’t figure out their destination until they’re almost out the door to retirement.

His solution? Figure out where you want to be when you’re 50 or 60 or so, and write a plan to get there.

So I sat down and did just that. At the time, my dream was to be holed up in a country house somewhere, writing books, and then occasionally talking about them. I was really into the natural world and conservation and the life sciences at the time (and I still am), so my vision was that I would be writing books on conservation topics for a mainstream audience and writing some fiction as well that had some conservation themes to it. Think of books like A Sand County Almanac by Aldo Leopold or Walden by Henry David Thoreau or A Walk in the Woods by Bill Bryson or Desert Solitaire by Edward Abbey or Animal Vegetable Miracle by Barbara Kingsolver.

I wrote about four pages of material on how I would go from the college student that I was to the older man writing conservation books in his study. My mentor took one look at the plan and ripped it to shreds.

The problem wasn’t with my goal, but with the plan I created to get there. It was full of flights of fancy, with a vision of everything going perfectly without any real insight or research or consideration of potential failures.

You see, the purpose of a career plan isn’t to guarantee career success, but to increase the odds of it as much as is possible within the realm of your personal control. If I was guaranteed to eventually transform into that fatherly writer of conservation books, my plan would have been just fine, but nothing like that is guaranteed in life.

When I rewrote it, I used the approach of a business plan. I basically followed a business plan guide for writing it and it didn’t take long for me to see some gaping holes in my original plan. In fact, my original plan wasn’t much of a plan at all.

In the end, I came up with a 40-page document, one that I followed almost to a tee for most of a decade and one that, in some regards, I’m still following. After all, I’m a writer now and I spend an awful lot of time exploring and going on hikes and observing nature. That plan guided me directly toward some great career moves, particularly during the first several years of my career, and they were moves that, without that plan, I would have never made and thus I would have likely never wound up in the happy place that I’m at right now.

Much of what I have professionally – the income, the flexibility, and so on – is due to a well-considered career plan that I wrote many years ago and followed strongly for many years.

In fact, I wrote a new one just a few years go, except it was more of a plan to guide me into an early retirement where I could actually write some books without worrying too much about a profit incentive… and one of those planned books is definitely on a conservation topic.

So, what exactly is a career plan? A career plan is a detailed, written plan that explains exactly how you will achieve the following sentence: “In X years, I will be doing Y in my professional life.” How you choose to fill in X and Y is up to you, but that’s the first step in the plan, and it takes some soul searching.

Perhaps in 10 years, you’ll be working to make custom wood furniture for people.

Perhaps in 15 years, you’ll be a regional manager of several banks.

Perhaps in 10 years, you’ll be lead developer on a AAA video game title.

That exact goal and timeline is going to vary from person to person, but that’s the core of it. What exactly do you want to be doing professionally (with the realm of reality, of course) in five or 10 or 15 or 20 or 25 years? What’s your big dream or ambition?

Spend some time thinking about that big ambition. Make sure it’s something you really want, something that floats perfectly around in your thoughts about the future, because the entire purpose of a plan like this is to make sure that whatever you come up with has the maximum possible chance of happening.

Got it? The next step is the plan.

A career plan follows almost exactly the same model as a business plan (you can read about a business plan here). The idea is to create a roadmap of career success, one that’s more detailed in the actions you’ll take in the near future while providing more of a framework for when you’re approaching your goal. A career plan is a living document, one you revisit somewhat regularly to evaluate where you are now and what the road looks like going forward. You might find that your goals change, for example.

Much like a business plan, there are a few key sections to include.

First of all, you’re going to want to have a background research section. For this, you simply want to find out how other people were able to make it to the destination you desire. Find people who have done what you hope to do and ask them if they’d be willing to have lunch with you for some basic career advice. Simply ask them how they got from where they started to where they are now, and also for any potholes they managed to dodge along the way. What advice do they have for someone starting out? Take lots of notes and talk to lots of people in this way. You’ll want to take the common threads of their stories and see how they fit in your life, and you’ll also want to keep track of their potholes.

You’ll also want to do some homework on the job itself, independent of individual stories. What traits and education and other factors would be needed to get there and to succeed when you arrive?

These elements should be providing you with a long list of ingredients that you need along with some things that you should avoid.

The next question is structure; how do you turn all of that into a plan? Try to figure out which steps come first and which ones come later. What things can you really start working on right now? What do you need to put in place to grab ahold of and succeed with the first rung in that ladder? What follows after that?

Try to create something of a timeline, not of the success you expect to have, but of the things you need to do in order to get there. What classes do you need to take? What skills do you need to build? What kinds of people do you need to meet? What personal traits do you need to cultivate? What kinds of relationships do you need to build? What kind of reputation or personal brand do you need to create?

Make everything actionable, to the best of your ability. Always ask yourself what you should be doing to progress to the next step based on the homework you did earlier.

Another very valuable aspect to consider is your “uniqueness.” What can you bring into this that isn’t just duplicated by another guy or gal in your field? Can you speak a particular language? Do you have some special insight that might be valuable? Do you have some strong transferable skills, like the ability to present material well? Maybe you have extensive knowledge on something that’s relevant to people in the field somehow.

Think about what you can cultivate in yourself that makes you unique. What can you bring – or what can you build up within yourself to bring – that will make you stand out and help you bring extra value to the table?

I would strongly encourage almost everyone with a career plan to think about marketing and networking – in other words, building good professional relationships with lots and lots and lots of people in your field and in related fields. Go to meetings. Be a great guy in your office without any “backstabbing” in your reputation. Build as many relationships as you can by helping people out. Look for opportunities to present your work. Build a strong social media presence and stick with it. (When will you have time? Use any and all work downtime for those things rather than online window shopping or sports news or whatever you check frequently.)

If some of these steps require money, think strongly about a section on personal finances. What steps are you going to have to take in terms of your spending to make those career options happen? I didn’t really have a section on this, but I now wish I had, as it would have made me think about career choices and life choices very differently. Are you going to need to get a degree of some kind? Certifications? Will you have to pay for some conference travel or admission? What will you have to invest in yourself, and how will you pay for that?

If your head is whirring with all of this, good. You’re starting to think about what needs to be in your career plan.

What now? Go through each of those bolded items above and write down a section outlining what you’ve learned and what you’ve thought about regarding each of them. What background research have you done on your potential career destination? What can you bring to the table that’s special? What steps will you take to get there? How will you build relationships and make your name known? How will you personally pay for some of these plans, not just in terms of money but also time, too?

Write it all down. Save it as a document somewhere. Revisit it in a week or two and edit it like crazy, because a week or two will give you time to see lots of giant holes in it. Do it again, revisiting it in a week or two. When you can open it and you’re reasonably happy with what you see, then pass it on to a few trusted friends and mentors for their comments and take those comments seriously. If they’re negative or suggest improvements, don’t brush them off as “jealousy” or “not getting you.” They’re probably seeing angles that you’re not seeing. Ask some non-accusatory questions for clarification and don’t feel hurt by their responses.

When you feel good about the plan and a few trusted friends and mentors do as well, start putting it into action. Start nailing those things you identified as things to take care of immediately and do your best to achieve them. Focus on things you can control and don’t worry about things outside of your control; just make yourself the best possible solution for the problems that you’re wanting to solve in your career.

Once a year, revisit your career plan. Revise it if you need to. If you do a major revision, talk to some mentors and friends again. This should be a living document.

All I have to say is this: A document just like this took me from being an awkward college kid about to graduate and without a job through a series of progressively more challenging jobs until I found myself in a position where I got to meet tons of interesting people with lots of insights and thoughts and build lots of relationships. I was clearly on the right path at that time to reach my dreams, and it was only due to dreams changing somewhat that anything changed.

Yes, there will be things you can’t control in life. Sometimes people just won’t like you. Sometimes unfortunate events will happen. The goal of a career plan – and the reason to follow one – isn’t so that you have a perfect path, but that you have a path that maximizes your chance of making it to wherever it is you want to go.

Good luck!

Related Articles: 

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A Frugal Wedding Adventure: The Planning Phase

I recently got engaged. I managed to stay frugal throughout the entire process. My ring did not set me back three months’ salary. I got a reasonably priced ring made from a small operation in Chicago that uses reclaimed wood to make beautiful jewelry. It confused my family, who was baffled by its lack of diamonds, but it delighted my fiancee. I proposed to her on a hike, not at a five-star restaurant. All in all, the proposal process fit our style, and it did the bare minimum of damage to my checking account.

But now we face the real challenge: the wedding. Not only are weddings expensive… they are stressful. According to the Holmes-Rahe Stress Inventory, marriage is the seventh most stressful event that we experience in our lives. Further complicating matters is the fact that one of the biggest sources of stress among engaged couples is the financial strain weddings cause.

Here’s how we’re tackling the problem of throwing a fun, low-stress wedding – while keeping our spending under control.

Setting a Wedding Budget

The average cost of a wedding in America is more than $32,000, according to wedding website The Knot.

My fiancee was a wedding planner at one point in her career, so she knew all about how expensive weddings tend to be. I, on the other hand, was stunned. I knew they were expensive — but not that expensive.

We decided the best plan of action was to set a small budget right off the bat. And I’m taking actually small, not small as determined by the wedding industry, which would probably be anything that didn’t feature a bespoke candy bar and a live band.

We settled on $2,500 dollars for our budget. Here are the different areas where we aim to drastically cut our spending in comparison to the national average:


If you want a truly cheap wedding, the most feasible way to do it is to throw a party at your home, a free public park (and they’re not all free), or the home of a friend or family member. Luckily, my fiancee’s family is going to let us use their backyard, free of charge.

While throwing a backyard wedding at a simple, middle-class home might seem crazy to a lot of people I grew up with, we’re happy with our decision. It reminds me of the Bar Mitzvah craze that sweeps through affluent Jewish communities in certain parts of the U.S. When I was 13, I went to many Bar Mitzvah parties (a celebration for reaching adulthood) that were like mini-weddings. These parties sometimes included fancy food, poker tables with real card dealers, and upwards of 10 hired dancers in charge of dragging awkward teenagers out of their huddled circles and onto the dance floor.

I thought all of this was quite normal at the time. Then, I spent some time living in Israel, and I realized we’re just a bunch of crazy, over-the-top Americans. Bar Mitzvahs out there are much simpler, family-oriented affairs.

Likewise, if you explore wedding traditions in different parts of the world, you’d find a similar trend, especially in lower-income countries and communities. Family is more important than fancy.

Cost: Free


One of the strategies my fiancee and I use to lower our stress levels is to constantly remind each other that this is our day. We don’t have to impress anyone. We aren’t the kind of people who go out to fancy meals — so why do we need to provide fancy food at a wedding?

We thought about cooking the food ourselves — as that’s what we do for 95% of our meals — but scuttled that idea after thinking about the scale. If we had a slow cooker that could serve 100+ people, this would be a more realistic option. (Get on it, Crock Pot!)

We are, though, planning to include local restaurants that are meaningful to us. My fiancee worked at an amazing steakhouse near her home throughout high school and college, and we go to that same restaurant to eat every time we’re in town. We’ll work with her old boss to get what we can from them, and she’ll give us a deal on all of it.

For everything else, we’ll run around town to pull it all together. My fiancee has a big family, and you can be sure that they’ll be helping with errands and deliveries. Family friends and neighbors will be able to provide equipment to keep everything warm, so we won’t need to spend money on catering supplies. Although it’s not as environmentally friendly as we’d like, we’ll get disposable dinnerware and glassware to save on cleanup time and rental costs.

As for dessert, neither of us are big cake people, and we’re certainly not going to spend hundreds of dollars for a cake with tiny plastic figures on top of it. Tubs of ice cream with a selection of locally made pastries is more our style.

Cost: $1,000


There will be no bands, no DJ, and no photo booths. However, we do love to boogie down, so we’ll collaborate on a playlist of songs we love, and those tunes will blast the whole night. We’re budgeting $100 for speaker equipment rental.

We’re also quite fond of board games and lawn games, so we’ll set those up in the garage and on the lawn. There will be volleyball, croquet, and Frisbee games, all of which will be crowdsourced – borrowed from neighbors and friends.

Since we realize most people don’t expect to run around outside at a wedding, we’ll be extra diligent to point out the casual dress code on the invitations.

Cost: $100


This is a wedding cost that sneaks up on people. Invitations end up costing about $445 for your average wedding, according to The Knot.

Thankfully for us, this was the easiest decision of the whole planning process. We will send out an email. Simple as that.

I’ve never met a person who talked fondly about the process of creating and sending out invitations. In fact, the conversations I’ve had usually revolve around what a painstaking, expensive, time-consuming process it is.

As much as I’d like to brush up on my cursive handwriting and pound out some classy invitations, it’s simply not enough of a priority for me to take the time.

Cost: Free


There will be many people from Wisconsin at this party, and they love to drink.

Because we’re spending basically nothing on the venue, entertainment, and decorations, we’re fully prepared to pony up to make sure there are adequate adult beverages.

For light beer, we want to get kegs, because we’re confident there won’t be much leftover after the party. My fiancee says she’s mostly interested in kegs for cost savings, but I think she’s secretly excited to relive her college days and throw a “kegger.”

We ran the numbers and found that a keg of Spotted Cow (a very popular beer only sold in Wisconsin) will cost $140 and give us 165 12-ounce servings. Since we have to account for cups (50 Solo cups are $9, so we’d would need to add $27 to total), this will run us $167 per keg, or about $1 per 12-ounce serving.

If we were to provide the same amount of beer in bottles, it would cost us $1.42 per 12-ounce beer. And you can’t do keg stands with a bottle!

We’ll also be providing wine, which will most likely be Bota Boxes, a brand of boxed wine we enjoy. Not only are they cost efficient, but my fiancee’s brother will drink them — and he’s a wine buyer at one of San Francisco’s best restaurants. Good enough for me!

As for hard alcohol, we’re still deciding whether we’ll provide it. We’re thinking about inviting people to BYOB if they prefer hard alcohol to wine or beer. But if we do decide to provide it, you can be sure we’ll be buying it at Costco.

Cost: $700


Everyone has a smartphone these days, and everyone loves to take pictures at a wedding. Why not just fully crowdsource our photography? If we send an email message to all of our friends and family after the wedding asking for them to upload their favorite images into a designated Dropbox folder, we’re sure to come away with plenty of fantastic pictures.

Cost: Free

Summing Up

My fiancee and I see our wedding as a way for people to get to know us better as a couple, as well as an opportunity for our friends and family from across the country to meet and have a good time together. This takes away some of the pressure to do traditional (and expensive) things.

If it’s not something Drew and Ashley value, it’s not going to be a big part of the wedding. This mindset allows us to make quick decisions with confidence. We’re also bolstered by the fact that couples who spend the most money on their weddings actually face a higher risk of divorce.

We understand that some people in attendance might find that things are different than what they’re used to, but we hope that serves as a way for them to understand a little bit more about who we are and how we want to live our life together. And if it’s intolerable, our guests can take solace in the fact that there will be plenty of adult beverages.

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Tuesday, January 17, 2017

Using Mini-Games for Financial and Personal Improvement

Let me tell you three little stories about myself from the last few months.

* * *

I was invited to a party with about 25 other people in attendance, all of them roughly my age. I knew about four of them prior to this party; the other 20 or so were strangers. After being greeted by the host, I was largely left to my own means, so I did what introverts usually do in that situation: I tried to sink into the woodwork. I grabbed a beverage, found a spot that was somewhat out of the way, and sipped my beverage without saying anything.

Somewhere, a voice in the back of my head spoke up. What was the point of coming to this if I’m just going to stand here and sip a drink? I eventually decided that I was going to talk to some people, but how? How could I do that?

What I eventually did is invent a little game for myself. I simply decided that my goal was to introduce myself and get the names of every single person in the room, along with three interesting or noteworthy things about each of them. That was my goal, plain and simple.

This goal worked very well with my introverted state because it allowed me to just ask questions. I know quite well that it’s far easier for me to dip into a conversation if there’s a question being asked, so I just used that as a starting point.

I started walking up to people. “Hi, I’m Trent, what’s your name?” And then I’d ask, “So, what do you do?” And, “How do you know Jeff?” (Jeff was the host.) I would then mine the last two questions for some follow-up questions.

Almost every time, I learned quite a bit about the person I was talking to. I usually learned that person’s name, their job (or how they filled their time), whether they were married and had kids, their connection to Jeff, and, quite often, much more than that, including some of their hobbies and even, in a few cases, their political beliefs and religious values. I learned that one guy was a board game designer. I even managed to learn something that two people had in common and actually introduced them to each other, as they didn’t know each other.

From that night alone, four different people added me on social media and I’ve had follow-up conversations with three of them, and I’ve done things with two of them. I also ran into two other people I met there at a grocery store, where we learned that our sons were actually decent friends in school and we made some tentative plans for the future.

All of that came from a simple game I made up for myself at a party to convince myself not to be an introverted weirdo standing in the corner.

* * *

Not too long ago, I started carefully counting calories in an effort to lose weight. I’m using My Fitness Pal to record calories; most items are either obviously listed or can be scanned in with a UPC to make it really easy to count calories.

Each day, I have a calorie goal. My objective is to fit a lot of foods I like into that goal each day without feeling hungry at the end of the day.

It ends up being a game of sorts. You end up figuring out which items are really efficient in terms of calories and feeling full and having a lot of nutritional value, and then you start thinking about which of those that you really like to eat.

For example, I figured out that having an orange and two poached eggs for breakfast really hits the spot and leaves me feeling full until lunch time, as does a small bowl of oatmeal with a banana chopped up in it as an alternate choice. There’s roughly the same number of calories in both, give or take a little.

It’s fun to figure out how everything actually fits, but it’s also kind of fascinating to really notice my body’s response to various foods and calorie levels.

* * *

I decided about two months ago to save up and purchase a nice fountain pen – a Lamy 2000, to be specific. I use fountain pens with some beautiful inks every once in a while when writing nice note cards or other items. I mostly just use a TWSBI 580 fountain pen that I received as a gift years ago, but I want to have another piston-filling fountain pen and the Lamy 2000 is beautiful and very well constructed.

I started shopping around for one. I found a reasonable price. Then I found a better price. And a little bit better price. And I’ve kept shopping and shopping, trying to find the absolute best price I could on a Lamy 2000.

It’s turned into a game, really. How low can I go? I’ve found what I think is the lowest regular price I can possibly find for one… but will one go on sale somewhere soon? Where do I watch for a sale price on one? Can I find one on an auction site?

The “magic number” I’m looking at now is way lower than what I had budgeted for and saved for originally. The thing is, it really has turned into a game. Can I possibly find that low price?

* * *

These three stories all have one big common thread running through them. In each case, I took something about myself that I was unhappy with – being quiet at parties, eating too much, spending too much on frivolous things – and transformed overcoming those things into a personal game.

I went all introverted at a party – and I overcame it by making up a question game for myself and played it.

I ate too much during (and before) the holidays – and I overcame it by inventing a calorie counting game for myself.

I decided to spend a lot on a non-essential item – and I overcame it by playing a game where I sought a lower and lower price.

These games are actually similar in a lot of ways.

They all involve a goal or a high score…

  • The socializing game’s goal was to learn something about everyone at the party.
  • The calorie counting game’s goal is to keep my caloric intake below a certain number without feeling hungry.
  • The cheap pen hunting game’s goal is to find a particular item below a particular dollar amount.

They all involve little tiny steps toward success, like taking turns in a game…

  • The socializing game breaks down to nothing more than a brief conversation with a person.
  • The calorie game breaks down to nothing more than using a smartphone tool to see how many calories are in a meal.
  • The cheap pen game breaks down to doing a handful of web searches.

They all lead to a “win” that’s not only a victory at the game, but has results I’m happy with in my life…

  • The socializing game involves meeting and getting to know a bit about everyone in the room, which results in a few new friends and more people I know in my broader social circle and community.
  • The calorie game results in weight loss and better health outcomes, which provides me with more energy, a better body image, and less money spent on food and on health care.
  • The cheap pen game finds me the item I want at a very low price, which leaves me more money to spend on other hobbies.

* * *

The idea of changing something about yourself that you don’t like into a “game” of sorts is called gamification, and it’s a pretty hot area of study in psychology and related fields. In short, gamification seeks to transform difficult elements of self-improvement into some kind of structure that feels like a game and provides those same little bursts of pleasure that you get from completing a level in Candy Crush Saga or winning a round of a board game or finishing a level in Super Mario Brothers.

I find that, time and time again, gamification works well for me, but only when it’s on my terms. There are lots of different tools out there that try to turn new habits and other initiatives into a formal game of some kind, like Habitica or SuperBetter or into a tool like Streaks, but while those apps are fun, they can feel a lot like trying to fit a framework onto my life that doesn’t perfectly fit.

For me, gamification works best when I devise my own games and only use apps to track the results. There isn’t an “app” that encourages me to socialize in a game form; that’s something I invent myself and think about each time I go to a party. The same thing is true for other little games, like the “grocery store game” (which I’ll talk about in a bit) or other games I mention above.

In the same vein, gamification also works well when I choose really tiny steps to accomplish. When the next step is going to take a lot of effort or a big block of time, it’s very easy to say “nope” and give up. But look at the above examples. They’re pretty simple. Eat only two pieces of pizza instead of four – it’s easy. Walk up to somebody and ask them a couple of friendly questions – easy. Do whatever you want today, just don’t spend any money – easy. These aren’t insanely difficult things, but doing them consistently really adds up.

In other words, a good “game” needs specific clear rules, real time feedback, and clear constraints. In other words, what do I need to do, how am I doing, and when/where can I do it? Those questions need to be able to be easily answered at any point during the “game” to make it useful and repeatable and successful.

What about rewards? Rewards can help with motivation for some, but I usually am much happier with the results of my efforts rather than any rewards I’ve tied to it. If the results of the effort aren’t enough to motivate me and I need an additional reward, it’s very likely that the effort isn’t meaningful enough for me to stick with it. At best, I view it as a nice perk. There are a few specific exceptions to this, but they’re usually just a result of the output of the game rather than a separate reward.

With that being said, here are 12 more “games” I’ve successfully used for my own personal improvement over the last few years, separated into finance-themed games and other games.

Money-Themed ‘Games’

The “grocery store” game is a game I play at the store to keep myself from putting unnecessary items in my cart. I go into the store with a grocery list and I let myself put $20 of items that aren’t on the list in my cart. A kicker: If I don’t use up that full $20, I can add the remainder to my hobby budget for the month. This turns shopping into a game; if I see an item not on my list that I want to add, do I want to do that? Or would I rather have something else? Or an extra $20 in my budget?

The “money free” game is a simple game that’s really easy to play during a long stretch of “ordinary” days. Just see how many days you can string together without spending any money, excepting paying bills before their due date. No groceries – just eat what you have on hand. No entertainment expenses. No new hobby items. Nothing. How long can you do it? My record is 15 days, done during a summer stretch where we had a lot of fresh produce coming in from the garden.

The “net worth” game boils down to trying to continually set a new high score from your net worth (your net worth is simply the total value of everything you own and the value of your various accounts minus the total of all of your debts). Recalculate your net worth each month, then strive to set a new high score the following month. Better yet…

The “net worth change” game is the same as the “net worth” game above, except that your goal is to maximize the change in your net worth. You calculate your net worth in January, then again in February, and your actual score in February is the February net worth minus the January net worth. The higher you can get that number in a month, the better.

The “drugstore” game revolves around using a combination of manufacturer coupons, store coupons, flyer sales, and frequent shopper cards at drugstore chains like Walgreens or CVS to get items for free (or close to it). Can you find a perfect combination of two coupons and a sale to get the cost of a tube of Crest toothpaste down to a quarter at CVS? You can if you plan, and that’s the fun of it.

The “pantry” game is where I attempt to make as many meals as possible using solely the items in our pantry, supplemented only with some fresh produce as needed from the store. This game forces me to be creative with the items that we already have in our cupboards, using them up to make delicious new meals. This cuts down on our food costs, allows us to more freely buy in bulk, and makes sure that we use items before we go bad. I love doing this once every couple of months for an entire week’s worth of meals, so that the grocery trip during those weeks consists of just a stop in the produce section and perhaps $20 or $30 at the checkout.

Other Self-Improvement ‘Games’

The “socializing” game is a powerful one for introverts such as myself. It’s easy – all you have to do is have a conversation with a new person each day. It can be at the bus stop, the store, anywhere else. All you have to do in this conversation is learn the person’s first name and three things about that person. For me, it’s a game to see whether or not I can actually “click” with someone, which means I have to work on being social and overcoming my nervousness, and regular success at that game improves my social skills and potentially my social circle.

The “one more exercise” game involves choosing a particular exercise that you enjoy and then increasing the size of your set by one each day so that it’s more difficult than before. For example, if you do squats, start off one day by doing 10, then move to 11 the next day, then 12, and so on. Eventually, switch to a harder form and start over. You can do it with burpees or pushups or whatever. You can do it with time, too, by measuring the length of a wall sit or This is basically progression exercise, but it’s a great way to start off with an exercise routine that feels easy and not overwhelming and gradually builds as you get stronger, plus you get a great sense of accomplishment over the long haul.

Geocaching literally is a game that you can play that turns moderate exercise and exploring one’s environment into something you can keep score with. My goal in 2017 is to discover 20% more geocaches than I did in 2016, for example. Geocaching is basically a real-world treasure hunt, where you use GPS coordinates to find a treasure box that someone has stowed in the real world somewhere (usually in a park). Finding new ones usually means going further from home, going on hikes, and so forth, so not only does it encourage exercise, it also encourages exploration of the environment around you and finding out about new places and locales.

The “meditation or prayer” game is what I like to call a “chain” game. The goal of the game is to make a chain of days in which I do one simple thing every day. I find that meditation or prayer (things I consider very similar, in that the only difference between them is the focus of the activity) is a very powerful technique for helping with my focus and sense of calmness, so I try to do it every day and extend that chain. Because this is something I can literally do anywhere whenever I have ten or fifteen free minutes, it’s easy to make a very long chain.

The “learning” game is simply taking a step to learn something new every day. A great example of this comes from Duolingo, which makes learning a new language into a game. You “win” the game when you achieve some level of mastery, like completing a full language track in Duolingo or you complete all of the sessions in an online course or you finish reading a complex book.

The “journaling” game is simply filling up an entire notebook with journal entries. I’ve found that whenever I take the time to write out a journal entry, particularly when I’m wrestling with a problem in my life, I tend to feel better about the challenges I’m facing and I often have a plan and a brighter attitude about things. I usually strive to write an entry every day that includes a few things I’m grateful for, along with some extensive thoughts on the thing that’s troubling me the most at that moment. I delve into why it’s troubling me by using the “five whys” method (asking “why?” at every response, as if I were a curious five-year-old, and doing it at least five times in a row) until I come to a really sharp truth. Then I deal with that truth. I used to try to make “streaks” of this, but I actually find journaling to be more valuable when things are weighing on my mind or I want to think through something memorable or important rather than an every day routine, so instead I tend to value filling up entire notebooks. I keep them with pride, as I have quite a few of them full, and I get a lot of positive value out of reflecting on my life changes over the course of a journal. The “game” comes from sticking with it and using it as a regular tool, and the “reward” comes from a better life and a collection of journals that I love to leaf through.

Final Thoughts

All of these “games” are strategies that I use to improve almost every aspect of my life – financial, spiritual, intellectual, physical, and so on. Whenever I can couch things in terms of a personal challenge and then make the steps of that challenge small ones that I can tackle constantly, I get that little burst of pleasure from each step, like completing a stage in a game, and I sometimes get that big blast of victory that one gets from finishing a game.

The advantage here is that the game exists in real life and the process of completing the game makes my life better, personally, financially, spiritually, and otherwise.

Add some games to your life. You might just find it makes things better.

The post Using Mini-Games for Financial and Personal Improvement appeared first on The Simple Dollar.

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A 12-Month Plan to Raise Your Credit Score in 2017

Are you ready to finally gain control of your credit scores in the new year? Working to improve your credit is an admirable resolution, and a very wise use of your time and energy. And it’s more than simply scoring points in some kind of game. There are real financial benefits to boosting your credit score from, say, 670 to 800. So, let’s get started: Here’s a 12-month game plan to lift your credit score this year.

January – March

Check Your Credit Reports and Create Your Plan

The first months of your credit improvement year should be spent preparing your plan. Step one in any effective credit renovation plan is to gain a clear understanding of where you’re beginning from. In other words, you need to check all three of your credit reports, reviewing each one from top to bottom with a fine-toothed comb. You can claim free copies of your credit reports at AnnualCreditReport.com.

Once you’ve checked your credit reports, make a list of any errors or questionable information you discover. This is going to take some time, because you may not immediately recognize all of the accounts on your reports, especially if you have an extensive credit history. These are the items you’ll want to address as part of your strategy.

Dispute Any Errors

If you discover any errors or suspicious information on your credit reports, the Fair Credit Reporting Act (FCRA) gives you the right to dispute any such items with the three credit reporting bureaus (Equifax, TransUnion, and Experian). There’s no charge to dispute questionable credit report items on your own. However, some consumers prefer to hire and pay a reputable credit repair company to handle disputes on their behalf.

Either way, credit reporting errors should not be ignored, because they can be unnecessarily damaging to your credit scores. Any communication method you choose is fine, whether it’s online, via the mail, or over the phone.

Consider Automating Some Bills

The number one factor influencing your credit scores is how consistently you pay your bills –and whether you pay them on time, every time. Missed or late payments are a credit-score killer.

To that end, it may be worth setting up automatic minimum payments for some or all of your monthly obligations, so you never let a bill slip through the cracks. Just make sure you’re not putting yourself in a position where you risk overdrafting your checking account.

Cut Spending and Tackle Credit Card Debt

One of the most effective ways to improve your credit scores — and quickly — is to reduce your credit card balances. Look for areas to cut your monthly expenses, and use those savings to pay down your balances more aggressively.

You can use the ‘Debt Snowball’ method to pay down your credit card debt: List your credit card balances from highest to lowest and begin by aggressively paying down the card with the lowest balance first, while making the minimum payment on your other accounts to keep them current.

Once you pay off a card completely, you can climb the list to the next account and repeat the process. This method produces tangible, motivating results more quickly than tackling larger debts that will take much longer to eliminate.

April – June

Check Your Progress

As you’re working hard to achieve better credit, keep an eye on your progress by checking your credit reports from time to time. The above referenced website can only be used once every 12 months, but there are numerous websites which currently offer free credit reports.

You can tell if you’re getting legitimately free credit reports by choosing the sites that do NOT require you to give them a method of payment. If they’re asking for a credit card, then you’re not getting free credit reports.

Consider Establishing New Credit

Depending on your credit situation, it can sometimes be beneficial to establish new, positive credit accounts as you work toward improving your credit. If you have little to no current credit, this step may be especially worth considering.

Even with credit problems, you may be able to qualify for a secured credit card or a credit builder loan from your local credit union. Additionally, if a loved one is willing to help you out then you could be added as an authorized user to an existing, positive credit card account as well. You can’t have too much good credit on your credit reports.

July – September

Check Your Progress

During the third quarter of your credit improvement plan, it’s a good idea to check all three of your credit reports again (if you’re not already reviewing them monthly). You can also take a peek at your latest credit scores to see if your efforts at paying down your credit card debt and/or establishing new, positive accounts have paid off in the form of a higher score.

Consider Settling Defaulted Debts

Paying off or settling derogatory accounts such as collections, tax liens, or judgments may or may not improve your credit scores, because many credit scoring models are more concerned with the fact that negative items occurred at all rather than the actual balances on such accounts. However, ignoring those negative items could be a mistake.

If you ignore unpaid collections, for example, you could be faced with some very unpleasant consequences, such as being sued or even wage garnishment. Additionally, it can often be difficult to qualify for a loan with outstanding defaulted balances.

October – December

Check Your Progress – and Celebrate Your Success

In the final stretch of your credit improvement year, it’s still important to review your progress by re-checking your three credit reports and credit scores. Routinely checking your credit is a good habit you should carry with you into the future as well.

Continue to follow through on your plans to eliminate credit card debt and establish positive credit management habits on all of your current accounts. Great credit takes time, and there is no silver bullet — but each baby step will bring you a little closer to your goals of better credit scores.

Remember, even if you fall short of your overall credit goal in 2017, that doesn’t mean you failed. Any improvement in your credit scores is a good deal for you and will likely pay financial dividends.

Now the goal is to lather, rinse and repeat. Time generally heals credit wounds, and paying your bills on time and continuing to pay down credit card debt will always lead to higher credit scores.

Related Articles:

John Ulzheimer is an expert on credit reporting, credit scoring, and identity theft. He has written four books on the topic and has been interviewed and quoted thousands of times over the past 10 years. With time spent at Equifax and FICO, Ulzheimer is the only credit expert who actually comes from the credit industry. He has been an expert witness in over 230 credit related lawsuits and has been qualified to testify in both federal and state courts on the topic of consumer credit.

The post A 12-Month Plan to Raise Your Credit Score in 2017 appeared first on The Simple Dollar.

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