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Saturday, August 12, 2017

Six Fresh Ways to Think About Retirement Savings

Most of the ways in which people talk about retirement these days follows along a few narrow lines.

Put away 10% of your salary into a Target Retirement Fund starting at age 25 and you’ll be fine at age 65. Scoop up every bit of matching money from your employer, as that’ll help you reach your target. Your “number” – the amount you actually need to retire and maintain your current lifestyle – is enormous.

The vast majority of financial writing about retirement essentially just studies the lines of that basic story. They might look at a few different investment options. They might look at a few different account options. They might evaluate how much Social Security will help.

What they don’t do is offer different ways of looking at the situation. Often, it’s a fresh way of looking at a situation that can cause you to see it in a new light.

What follows are six different and perhaps unexpected ways to look at your retirement savings that I’ve picked up or developed over the years. Consider each of them and see what they tell you about your own retirement plans.

Remember, these ideas are merely new ways for you to wrap your mind around the challenge of retirement. They’re meant to help you consider the problem in a fresh way so that perhaps you can approach it with new insight or with different tactics.

A Few Caveats

Many of the ways described below to rethink your retirement savings rely on a few underlying principles. Rather than repeating them endlessly, here’s a summary of some of those principles. Use these as assumptions when you continue reading.

Social Security and Medicare are likely to be helpful, but it’s really hard to assess how helpful. It’s impossible to predict what kinds of benefits those programs will be offering to people in ten or twenty or thirty years. It’s probably reasonably safe to say that they will offer some positive benefit, but how much positive benefit is unclear.

Taxes are hard to predict, too. In order to use some of these tools, you should assume that you’ve taken responsibility for taxes elsewhere. This can be done by making use of tax-advantaged accounts like a Roth IRA, which has no tax burden whatsoever when used in retirement, or by accounting for taxes in your other withdrawals. Unless you’re

4% is a fairly safe withdrawal rate. It’s widely accepted that a diversely-invested retirement account / investment portfolio will pay out 4% per year to the account holder for at least 30 years. In other words, provided you don’t have all of your eggs in one basket and at least some of that money is invested aggressively, you should be able to withdraw 4% of your account balance on the day you retire each year for at least 30 years (and probably more). So, if you retired with $1 million in various accounts, you could withdraw $40,000 per year and your savings would last for at least thirty years at that withdrawal rate.

3% is a very safe withdrawal rate. Similarly, a diversely-invested set of investments should be able to pay out 3% essentially forever. So, again, with the above example, if you have $1 million in various accounts, you could withdraw $30,000 per year and your savings would last for the rest of your life at that rate, no matter how long you live.

7% is a reasonable number to use when calculating the average annual return of a long term investment. I use this number because it’s the one Warren Buffett suggests as a healthy long-term number for such calculations. It’s not perfect – obviously, the stock market and other such investments are volatile, meaning they’ll earn 15% one year, 20% the next, and -15% the next – but over the long term, that volatility averages out, leaving you right around 7%.

The $300K Standard

So, let’s take those withdrawal rates and play with them a little bit. If you have $300,000 and are planning on withdrawing at a rate of 4% per year, you’ll withdraw $12,000 a year. Another way to think about that is that it’s actually $1,000 per month for the next thirty years.

In other words, for every $300,000 you have socked away, you can start withdrawing from those accounts at a rate of $1,000 per month and it should last at least thirty years.

If you have $600,000, that’s $2,000 a month. If you have $900,000, that’s $3,000 a month. You get the idea.

If you feel better operating with a 3% withdrawal rate so that you can theoretically withdraw forever, for every $400,000 you have saved up, you can withdraw $1,000 per month and it should last forever.

Similarly, if you have $800,000, you can withdraw $2,000 a month and the account should last forever. If you have $1.2 million in there, you can withdraw $3,000 a month and the account should last forever.

So, if you want a quick analysis of where your retirement savings is sitting right now, just count the number of $300,000 levels in there. For every $300,000 you have, you can likely safely withdraw $1,000 per month in retirement. If you want to be safer, you can use the $400,000 number instead.

What’s the key idea here? You can use this perspective to look at your retirement easily through the eyes of the amount of money you need each month to live. You can use your monthly living expenses as something of a filter to help you figure out how much you need to save.

The Poverty Line Standard

Another, similar way to look at things is to consider how much you’d have to save for retirement in order to meet the federal poverty standard on your own, without any help from Social Security. Obviously, this doesn’t really give you the most affluent of lives, but it does ensure that you’ll be able to keep food on the table and a basic roof over your head. Money above this level is mostly going to raise quality of life, but once you meet this threshold, your basic needs will be met.

The current federal poverty level is $12,060 a year for a single person, $16,240 for a family of two, $20,420 for a family of three, and so on. You can check the full listing for larger family sizes.

So, what do you need to save for retirement to meet that level?

In the case of a 4% withdrawal rate, you’d simply take the target annual number and divide it by 0.04, giving you $301,500 for a single person, $406,000 for a couple, $510,500 for a family of three, and so on. In other words, it assumes you need about $200,000 as a baseline, plus another $105,000 for each person dependent on you, give or take a little.

In the case of a lower 3% withdrawal rate – one that should last forever – you’d divide by 0.03 instead, giving you $402,000 for a single person, $541,333 for a couple, $680,666 for a family of three, and so on. In other words, it assumes you need about $260,000 for a baseline, plus another $141,000 or so for each person dependent on you (including yourself), give or take a little.

So, what’s the take home message? You can use these numbers as a baseline to figure out what you should be shooting for as a bare minimum in order to keep food on the table and a roof over your head in retirement. Yes, as noted above, Social Security and Medicare will supplement this, but it’s hard to really know how much it will be supplemented, so it’s useful to think of things without those benefits.

Living Anywhere

You might have a strong sense of what your monthly expenses are in your current area, but when you retire, you’re not going to be tied to your current area. You have the freedom to move where you wish, including areas with much lower costs of living.

For example, let’s say you currently live in Boston. When you retire, you could consider moving to, say, Des Moines, where the cost of living is about 38% less. In fact, the standard of living on a $50,000 salary in Boston is about equivalent to the standard of living on a $31,000 retirement “salary” in Des Moines.

You can figure this out by plugging your current city and lots of potential “destination” cities into this domestic cost of living calculator, which will take your current cost of living (or salary) in your current city and show you how you how much an equivalent lifestyle costs in your target city.

You can do the same thing with international cities. Take that fellow living in Boston. If that person were to move to Bangkok, Thailand, that person would be able to live a similar lifestyle 45% cheaper. That means that someone living on a $50,000 salary in Boston would be able to have a similar lifestyle on $27,500 a year in Bangkok.

You can figure out such comparisons for international cities using international cost of living comparison tool.

So, what’s the take home message here? You don’t have to live in your current location in retirement; in fact, you’re probably better off moving. There are many locations around the world and likely even around the country with a substantially lower cost of living while still maintaining most of the cultural and other features that you’ve come to rely on.

The Missing $100

Let’s say, hypothetically, you’re able to save $100 a month more for retirement starting at age 25. If you do that, by age 65, you’ll have just shy of $250,000 in your retirement accounts (assuming a 7% annual return, as noted above).

For many people, coming up with that $100 a month is a hassle. How do you squeeze $100 a month out of your spending?

Rather than looking at $100 as a lump sum, try a different approach. Pull out all of your credit card statements and bank statements for a month and walk through them, step by step. Look for any and all expenditures that seem completely silly in retrospect. Why did you spend $8 at a gas station on the 24th? Do you even remember why you withdrew that $40 from an ATM? You went to Starbucks nine times? And spent at least $6 each time? (This actually reminds me of a friend of mine who recently found himself in a cycle of buying two energy drinks every morning. I pointed out to him that the routine was costing him about $150 a month and he laughed at me and called me a joker. Except he was doing it every day, buying them from a gas station, and paying $5 a day for them. $5 times 30 is $150. Little things add up.)

Anyway, just pile up all of those little unknown expenses and unnecessary expenses. Make a big list of them. Then, once you’ve done that, total up all of those unnecessary expenses.

For many Americans, the total of those unnecessary and forgotten expenses, those ones that feel utterly silly and unnecessary in retrospect, add up to well over $100 a month. Doubt it? Try it for yourself and find out.

What’s the key idea? You probably already have the money you need for baseline retirement savings, or enough to boost your retirement savings up to respectability. You’re spending it on absolutely forgettable and frivolous things, things that add no lasting value whatsoever to your life. What those things are costing you, though, is a secure life when you’re old.

Gigging in Retirement

This strategy is worth telling a couple of stories about.

At the local bicycle shop that I use when I need repairs or parts, there’s a guy in his sixties that seems to be the “chief bicycle repairman.” There are three or four people who repair bikes, but he does most of the work, it seems, and handles a lot of the customer conversation. One day, I happened to mention that I write about finances for a living and he simply laughed and said, “This is my retirement!” It turns out that he’d been passionate about bicycles all of his life, found himself near retirement age, and just retired so he could work part time in a bike shop, make enough money to supplement his retirement income and Social Security, and spend all day doing what he enjoys, talking about bicycling and repairing bicycles. The guy couldn’t be happier.

Similarly, when I first moved to my current town, there was an elderly fellow that ran a small trading card shop in a small strip mall in our town. He didn’t have a lot of customers and didn’t make a whole lot of money, but I did notice that most of the time, when I stopped in there, there were always either a few people in there chatting with him or else he was sorting and organizing cards. When he passed away, the shop closed, and I happened to be there when his son was closing out the shop. It turns out that this was the older guy’s retirement gig – he’d enjoyed sports cards all of his life, so he just took his collection as a foundation and opened a shop to trade and sell the cards, organize and appreciate them, and talk to others passionate about it. He didn’t make enough from the shop to live on, but he made enough to supplement his retirement savings and Social Security.

You can probably see the parallels in these two stories. These two people had spent most of their adult lives engaged in a hobby they loved, acquiring so much domain knowledge about the hobby that when it was time to retire, they could easily use that domain knowledge to get a gig of some kind using that knowledge and passion. It didn’t have to be a lot of money or a full time gig, but just enough to keep a bit of cash flowing in while they engaged in the things that they’d always been passionate about.

What does that look like for you? What do you spend your free time on when you have it? Would you have fun working in a shop related to that passion on a part time basis some day, just to be able to revel in the hobby?

Make that part of your retirement plan. If you spent, say, 20 hours a week engaged in exploring your hobby in this way, passing along knowledge and simply enjoying a passion of yours, how would that change your retirement outlook? Would a part-time job fulfill that desire?

It might be as simple as doing something like working as a secretary at your church, or fulfilling some odd job at a nonprofit you care about. You might go into business on your own, writing ebooks or magazine articles or making nature videos on Youtube.

The point is to translate a passion you have into a low-key way of making money in retirement, banking on years of knowledge accumulated from many years with that hobby or passion. You don’t have to turn it into a high-pressure business because the purpose here is to be supplemental – this is a side gig, meant to supplement your retirement income with a few dollars.

Remember, a 20 hour a week job making $10 an hour earns you $200 a week. $200 a week over the course of a year is about $10,000. That’s a very nice supplement. As pointed out above, that’s the equivalent of $300,000 in retirement savings. Not only that, it’s 20 hours spent something you’d do anyway, as part of a hobby.

What can you do to prepare? Give yourself breathing room in your daily life to enjoy a passion. Build your knowledge of that passion along the way and look for a way, someday, that you could make a little money doing more or less what it is that you enjoy.

No “Death Wish”

One of the most popular arguments against saving for retirement is the idea that it would somehow be a “waste” to have saved a lot of money and then to die before you could ever spend it. If you saved a million for retirement and then dropped dead on retirement day, what good was all of that effort?

Well, let’s turn that around a little bit.

First of all, the average American will live until they’re 79. Women live even longer than that, on average, in part due to men being more likely to take on risky occupations when they’re younger. If you plan to retire at age 65, it’s worth noting that you have only a 17% chance of dying before then, and that percent goes down every single day you live. In other words, if you’re shooting to retire at age 65, there’s an 83% chance you’re going to start drawing down your retirement savings at that point.

Why would you plan your life around something that has a 17% chance of happening and ignore something that has an 83% chance of happening?

Even then, let’s look at that 17%. Let’s say you do die early and don’t get to spend what you saved. That means that you probably died unexpectedly and left some family members in a pickle – a spouse, or perhaps some children. That savings will ensure that they have a good life. Remember, 55% of American adults are married and around 53% of people have children – and those aren’t the same groups, though there’s overlap.

So, there’s less than a 10% chance that you’ll die before age 65 with no survivors.

But let’s look even further at that tiny group. Let’s say you’re in that 7% or 8% of people who will die before age 65 with no survivors. Your retirement savings can do great things in the world. You can leave it to your preferred charity. Donating $500,000 to a charity that you really care about, like, say, Habitat for Humanity, can make an enormous difference in a lot of lives. Perhaps you could leave it to a relative who could really use a boost in life – that money could transform their life.

The key thing to remember is that there’s more than a 90% chance that you’ll either live past 65 or have children or a spouse when you pass away. That alone is more than enough of an argument for some retirement savings. But even if you’re not in that group, your retirement savings still has tremendous positive power in the world.

Saving for the future is almost always a net benefit.

Some Final Thoughts

Hopefully, one (or more) of these different perspectives on saving for retirement clicked with you and helped to shape your thinking about your financial goals and your financial plans going forward. While these ideas aren’t hard plans themselves, what they each can do is provide the reasoning for and the motivation for retirement savings for you.

Sometimes, it’s just a matter of finding the right angle that makes sense to you.

Good luck!

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Friday, August 11, 2017

A Daily Commitment to Excellence

When I woke up this morning, I sat up in bed and told myself, “I’m not going to spend any money today at all. I’m going to fill my day with fulfilling things that don’t involve spending a dime!”

I put a reminder in my phone to remind me of this commitment to excellence. It’ll go off four or five times today, reminding me of what I’m shooting for.

Today, I’ll be going to a bookstore and a food co-op and walking around a downtown area of a nice Midwestern town with some real spending temptations. Having that commitment to financial excellence is going to be a real challenge.

Can I do it?

I’ve been using this daily commitment to excellence strategy a lot lately. It usually involves setting some sort of daily goal for myself that pushes me well beyond my normal boundaries.

One day, I woke up and my commitment was to walk or jog at least 25,000 steps. That’s about half of a marathon with my stride length.

Another day, I woke up and my commitment was to spend three hours in distraction-free study of a topic I’m trying to master.

On another day, I woke up and committed myself to getting our financial papers completely in order and negotiating a few bills.

Another day, my commitment was to have great face-to-face conversations with at least 25 people, which is pretty tough for me as I have a pretty strong introverted streak.

On another day, I committed to planning out and making two weeks of meals in advance for my family, with each meal in duplicate. In effect, I was making a month’s worth of dinners at once.

On yet another day, my personal challenge was to spend several hours truly cleaning a part of our house that I had neglected and was dreading.

A final excellence commitment challenge: one day recently, I woke up committed to writing 10,000 words and editing an equivalent amount.

I’ve learned some really valuable things from these kinds of personal daily commitments to excellence.

First, an audacious but not quite impossible challenge really pushes you to tackle it with relish. The best challenges are the ones where it feels like you can barely pull it off in a day, but you can do it if you really focus on it and put your mind to it.

Second, you feel absolutely great at the end of a day where you stick to that commitment to excellence. When you make a strong commitment to excellence at the start of the day and actually pull it off during the day, the feeling at the end of the day when you reflect on it is pure gold. You feel successful because you are successful. You took on a challenge and you nailed it.

Third, focus on your goal is absolutely essential – you have to get rid of distractions to pull off a good goal. A cell phone is a distraction most of the time. A tablet is a distraction most of the time. A web browser is definitely a distraction. A telephone is a distraction. Cut out things that distract you and focus on the thing you want to excel at.

Fourth, doing these things with excellence – in other words, doing them the “right” way without taking shortcuts – is virtually always the best approach. I could get to 10,000 words quite easily by writing “blah blah blah” over and over again, but that would be the opposite of a quality result. I could get to 25,000 steps on my Fitbit by sitting it on the washing machine while it was running. I could prepare a bunch of minimal effort meals that no one would really enjoy. In each of those cases, I met the “letter” of my commitment but didn’t achieve the spirit of the commitment. Shoot for the spirit of the commitment, every time.

Finally, consistent reminders throughout the day is vital for commitments that aren’t “active.” Many commitments to excellence revolve around sustaining a particular behavior throughout the day rather than just completing a project. Constant reminders are the key to success for this. I use the “Reminders” app on my cell phone to send me reminders throughout the day of the commitment to excellence I’ve made that day. “Remember to keep your spending under control!” “Remember to keep your calorie count low!” “Are you talking to people? You can do it!” My phone delivers notifications like that throughout the day, to keep me focused.

Making Your Own Daily Commitment to Excellence

This idea has really been a game changer for me as of late. Simply focusing on one area of excellence in a given day has really helped me to buckle down and achieve some things that I’ve let slide in recent years, and it’s been incredibly gratifying.

So, how do you apply this idea in your own life?

The first step is to come up with areas you want to improve in your life. What are you wanting to improve? We’re not talking about specific tasks, just areas of life where you’re not satisfied. Perhaps you’re unhappy with your finances. Maybe you’re unhappy with your health. Maybe you’re unhappy with your career. Perhaps you’re unhappy with your social life, or your spirituality.

Figure out what big areas of your life is really bothering you and holding you back. Try to stick to just two or three areas; the more you dilute your focus, the less success you’ll see.

For example, my main areas of focus these days are on learning and skill-building, personal health, and good daily financial habits.

Once you’ve identified areas where you wish to see improvement, come up with a handful of specific things you can do within each area to improve. For example, some of the things I came up with when considering my financial habits is a stronger mastery over impulse purchases, renegotiation of my bills, and better organization of my financial documents. Those are areas where I feel weakest right now and I would really like to see improvement. I have similar lists in the other areas I’ve noted.

Each night, before bed, select one of those specific ideas where you would like to see excellence in your life. Your commitment tomorrow will be to really hit a home run with that specific task.

For example, my commitment for tomorrow happens to involve reading and taking notes on several chapters of a very challenging book related to an area of personal finance that I don’t understand well but wish to cover in the future on this site. I might commit, as I did a few days ago, to having a no-spending day when I might be tempted to spend, or to have a day where I organize a huge box of financial documents and scan and shred them. The key is to have a challenging task related to that area of interest that I can complete in one day if I really push myself and commit to excellence and focus.

The next morning, upon waking, immediately reflect on that commitment. Think about what you’re going to achieve today and tell yourself that you can do this. Visualize yourself carrying off that challenge, what you’ll be doing today when you’re really nailing that goal, and how you’ll feel at the end of the day when you succeed.

Set your phone to remind you of the commitment regularly throughout the day. As noted above, this is especially true with commitments that don’t involve an active project but instead focus on consistent behavioral change throughout the day, but it works well with any commitment you make. The goal is to keep your mind on that commitment to excellence that you’ve made in that area of your life.

As you take on the commitment, do it with excellence – commit yourself wholly to making the best results you can for your commitment. Don’t just take the easy route through today’s goal. Instead, approach it with strength and courage and a commitment to excellence. You are going to do this – and you are going to do this well. No shortcuts.

Life will sometimes intervene and you won’t live up to a day’s commitment. The key for those days is to give it all you can regardless of life’s interference. Go to bed knowing that you truly gave it your best shot regardless of the obstacles, then wake up tomorrow with a new commitment.

Some Final Thoughts

When you start off the day by committing to excellence in some specific area of your life, a lot of good things happen.

Often, you really do achieve excellence in that particular area, for starters.

For another, you start to take the first steps of building a pattern of consistent excellence in that area.

You’re also beginning to establish an overall standard of excellence for yourself in all areas. If you actually pull off a daily commitment to excellence many times, you begin to expect that of yourself, and that expectation benefits you in almost every avenue of life.

What will you commit to today?

The post A Daily Commitment to Excellence appeared first on The Simple Dollar.

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Thursday, August 10, 2017

How to Be More Likeable – And How That’s Financially Valuable

One of the parents of another player on my oldest child’s soccer team is one of those people that lots of people seem to like. At first glance, you’d think he was just the most ordinary nondescript person in the world, but he’s extremely good at coming up to people, getting to know them, and making everyone feel at ease. He makes people laugh without being cruel and walks away from almost every interaction with people having left them with a very positive feeling about him.

Not too long ago, he sent me an email out of the blue. He tracked down my email address from the team email list and just wanted to know if I had any feedback about an organization he’s involved with – some of the work they’re doing and how they present themselves. The thing is, I probably would not have taken the time to actually look very deeply for most people, but I had natural positive thoughts about this guy, so I spent some time actually reviewing their material and sending him some thoughtful feedback. He was incredibly thankful for the effort and actually sent me a thank you note because of it, reinforcing my positive thoughts about him.

I had a conversation with a close friend recently who also knows this guy and we both concluded that he seems like a great person to have in the community, even if we’re not close friends with him, and we’d both help him out if he needed help. I know that if I ever knew that he or his family needed help, I’d be glad to give them a hand in any way that I reasonably could.

For him, that’s a valuable asset, whether he sees it or not. By being a very likable person, he unconsciously (or perhaps consciously, who knows) adds a great deal of value to his life, in ways he might directly see and in ways he might not see.

The Benefits

Here are some of the benefits to be gained from being more likable.

Being more likable opens you up for more promotions. If you’re more likable at work, your boss is going to see you in a much more positive light, with your other positive traits shining brightly and your negative traits being pushed more into the shadows. Likability is a trait that is seen as valuable in positions where you may have to manage others and interact with clients and vendors, so the benefits in terms of promotion go beyond just what your boss thinks of you.

Being more likable makes it much easier to build a professional network. If you’re likable, it’s easy to build connections with people in your field, which can help you when it comes time to find a new job or move up in your field or go in a new direction. Knowing lots of people in your field and having friendly faces in many different organizations also makes it easy to build collaborations when needed, which are a vital part of many different career paths. Having a big network of people who may refer clients to you or be able to share advice and feedback is invaluable, and that kind of network is built on being likable.

Being more likable makes it much easier to find help when you need it. When you’re struggling with a project, being able to tap an existing personal and professional network for advice and direct assistance is incredibly useful, and being likable makes it much easier to build this kind of network. A likable person is likely to have far more people to ask when they need help with something, and they’re far more likely to get positive answers when they do ask. (My story above, with the likable guy from soccer, is a great example.)

Being more likable opens you up to lots of unexpected opportunities. If people have things to share and opportunities to give, they’re more likely to hand them out to people that they like. Thus, people who are likable are far more likely to have unexpected opportunities drop their way. I’ve experienced this myself, with people sometimes gifting us things out of the blue because they “like our family.”

Being more likable makes it much easier to build a broad social network. This might seem like a minor thing, but simply having a broad social network in your community can be an enormous advantage at times. It makes community events far more enjoyable when you know many of the people who will attend them. It also opens up many, many opportunities for leadership in communities, which can end up reflecting very well on your career.

Eleven Tactics for Likability

The question, one might ask, is how to be likable. For some, it comes naturally – they’re gifted with charisma and natural social skills. For others (like me) who were “gifted” with a streak of introversion and social awkwardness, it can be very hard to have a sense of what to do in social situations.

Here are eleven tactics you can use in social situations to be more likable. I suggest choosing one or two of these and practicing them until they become natural, then moving on to others on the list. A good way to do this is to give yourself a few daily reminders of the trait you’re working on developing so that you keep it in mind throughout your day, and stick with consciously building that trait for a few months with those daily reminders before moving on.

Ask questions. People love to talk about themselves and their ideas, and they tend to think well of others who express an interest in them and their ideas. This adds up to an easy recipe for likability – just ask questions, listen to the answers, and ask follow-up questions. This makes carrying on a conversation quite easy, and those conversations (as long as the questions don’t become antagonistic) tend to result in the other person seeing you in a very positive light.

When the conversation lulls, speak up. Dead spaces in the conversation tend to reduce the likability of everyone involved. People often feel uncomfortable in silence (unless everyone involved knows each other well and appreciates some silence). The best approach when a conversation lulls is to have a conversation starter ready to go. What’s a good conversation starter? A meaningful question. It’s a good idea to have a number of such “conversation starter” questions in your head and ready to go. If you’re struggling, look around you and use the situation you’re in together as the source for a question (“What brought you to this event?” for example).

Seek out the joy in every interaction. Look for joy above all else. Think of the things that the other person is saying or doing that are pleasing to you and drop the things that aren’t. Try to think of things from their perspective and consider what would bring them joy. The goal of most conversations is to bring about some sort of positive sentiment among the participants, so look for that and strive to feel it in your own heart. This will make you feel more joyful. Many people who offer likability practices tell people to simply smile more, but my approach is to simply look for the good things and smiles will come naturally, and natural smiles are far and away the best ones because they’re genuine.

Give of yourself without any expectation of return. When someone needs help and you can reasonably give that help, do so without any expectation of anything in return. Not only does this make you feel good internally (the joy in every interaction, as noted above), it often makes the other person feel great, as you’ve surprised them in a good way and helped to relieve a burden. It’s a net positive for everyone involved, and regardless of where that net positive leads, you’re going to be a part of it. You’re going to feel good about yourself and others are going to feel good about you.

Genuinely care about others. If your goal at the end of an interaction with another person is to genuinely lift up their life, you’re going to be likable. To do that, you have to care about them. You have to genuinely want their life to be better in some small way. If you approach every interaction with another person as an opportunity to make their life better (or the lives of third parties better), you’re going to be liked by almost everyone.

Remember things about others and follow up. The simple act of remembering a person’s name upon meeting them again is a great way to appear likable, and you can amp up that likability by remembering a few things about them to use as conversation starters. The simple step of recalling a project they were working on and asking how that is going is going to make you more likable, for example. Remembering an interest that they have, or the name of their child, or some accomplishment of theirs – all of those things will improve your likability in their eyes.

Listen when others are talking and actually absorb what they’re saying. The time when others are speaking is not the time where you stand there formulating your next talking point while ignoring what they’re saying. Instead, it’s the time to listen attentively and make an effort to understand what they’re saying and see things from their perspective. A great way to indicate this is through a follow-up question, as that indicates you were actually listening and valuing their thoughts. Again, notice how asking questions continues to pop up.

Admit to knowledge gaps and allow others to fill them in. Many people overcompensate for knowledge gaps in order to make themselves appear more skilled and knowledgable, but, quite often, it’s the admission of knowledge gaps and the asking of questions that makes a person appear likable. Minor flaws – such as not having full knowledge of a subject – are generally likable, and pairing that flaw with worthwhile questions that others can answer (again, notice how questions pop up!) can add to that likability.

Don’t take yourself seriously. Don’t be afraid to look for the lighthearted side of a situation, or for the lighter side of yourself. Seriousness has a place, but most of the time, taking yourself less seriously and being open to gentle teasing (or even teasing yourself through self-deprecation) is far more likable. Save the “serious” for truly serious and somber moments. At other times, go with a lighter touch.

Admit to flaws (but don’t brag about flaws). It is never a mistake to note a flaw about yourself. Often, your flaws will eventually be noticed by others, but the edge is taken out of those flaws if you notice them about yourself first. There’s no need to introduce them or make a central conversation topic about them, but a gentle self-jab about some personal foible when it is appropriate in the conversation is almost always likable.

Go for the (positive) laugh, even at your own expense. A bit of humor in non-serious situations is almost always a net benefit. Laughter makes people feel good, and if you cause that, they will feel good toward you. Having said that, you’re generally not going to score in the likability department if your humor is cruel, particularly toward other people or animals. Keep it lighthearted. My uncle used to live by the practice of having a good joke or two in his pocket that he refreshed at least twice a week, in order to make people laugh, and he was one of the most well-liked people I’ve ever known.

Don’t have stringent tastes – go with the flow, but offer good suggestions when asked. You’re far better off being the person that offers suggestions rather than being the person that vetoes suggestions. Rather than being the “picky” person, when a situation comes up where people are brainstorming ideas, focus on offering up a lot of ideas that are palatable to you. When someone wants to go out to eat, say something like, “I’m in the mood for Mexican or Italian food… and sandwiches would be good, too. Are you in for any of those?” This lets people feel relieved of having to choose and gives them options so they don’t have to veto. You’re seen as more likable and flexible because of that.

This Is Not An Equation – Don’t Treat It As Such

Many people treat strategies like these as equations, under the idea that “if you do X, you will immediately be likable.” That’s not how this works. Simply doing something a little different doesn’t instantly make you likable. Likability is a matter of degrees. These tactics will each make you slightly more likable, but their real effects aren’t felt instantly. Instead, they build over time.

In fact, I would suggest that you will see little positive benefit from these changes in the short run. Most of the time, you’ll be interacting with people who have already formed an opinion of you, and it takes a lot of interactions to change that opinion. It won’t change overnight, no matter what you do. You’ll likely see some better results from interacting with people you don’t know well, but that will also take time, as you won’t establish a great relationship with every single person you meet no matter how likable you are.

Instead, the benefits will appear over time. The people in your life, on the whole, will perceive you as more likable than before in gradual steps, and when that happens, some of the positive results you see above will begin to slowly emerge. If you back up likability with good character and other traits and skills that others value, you’ll gradually begin to build a positive reputation in the communities that you are a part of (or your reputation will improve from where it’s at).

This takes time, and it’s not an exact tit for tat. I like to think of it as being like putting drops of food coloring in a lake. Each step you take to be more likable is like putting a drop of food coloring into a big body of water. It takes a lot of drops before the color changes noticeably at all. However, a point will come when you look at the lake and you realize the color has changed. That’s what improving your likability and character is like. It’s not an immediate change, but a gradual and subtle one, one that you won’t really notice until a later time when the slow sea change is suddenly obvious to you.

The benefits of being likable are many, and taking steps to become more likable are incredibly valuable. It is a long journey, however, and the positive repercussions aren’t very immediate or obvious at first glance. It’s a long journey, just like a personal finance journey, but on the other side, there are innumerable benefits for your career, your finances, and your life as a whole.

Good luck!

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Book Review: ‘The Millennial Money Fix’

I am proud to say that I’m a millennial who fixed his finances. I went from deep in debt and financially illiterate to debt-free and thriving over the last eight years. Thus, I was intrigued when I came across the book “The Millennial Money Fix,” by the husband and wife writing duo of Douglas and Heather Boneparth.

What wisdom did it contain? If I had read this before college, could I have avoided taking on so much debt? Since it was written by millennials and for millennials, could I see it engaging my 21-year-old sister, a fierce critic who rolls her eyes at everything finance related I try to get her to read?

I decided to dive in and find out.

The Premise

Douglas Boneparth, the co-author who takes the reins and speaks in the first person, sees a problem: Financial illiteracy among his fellow millennials. The first chapter is spent making the case that we millennials are ill-equipped to navigate a complicated financial landscape.

He places much of the blame on our K-12 education system. It was pretty shocking to learn that “only 20 states require high school students to take an economics course, and only 17 require a course in personal finance.”

If that wasn’t bad enough, Boneparth argues that our parents can’t help, because they’re as clueless about handling money as we are. Also, we’re staring down the barrel of a $1.3 trillion student loan bubble, manufacturing jobs are disappearing, we graduated college into the Great Recession, and the landscape of the labor market is constantly shifting beneath our feet.

It’s very fire and brimstone, and it doesn’t sugar coat any of the problems. Thankfully, the rest of the book is spent giving advice on how to deal with these issues.

The Solutions

The first step on the path to fixing our collective finances is to set savings goals. The Boneparths recommend sitting down and figuring out what you’re saving for, and why. Once you’ve done that, you should set concrete monthly savings goals for big-ticket items such as a house or a wedding. Simply take the total you’re willing to spend, divide it by the number of months you have to save, and put aside that amount every month.

The book then transitions from a focus on goal-setting to defining some basic financial terms. They want to get the average millennial from a place of complete ignorance to at least being able to understand bedrock concepts: Compound interest, investments, payroll taxes, employer benefits, and estate planning are all discussed.

After laying that groundwork, they get into the meat and potatoes of the book: how they think you should approach, and pay for, college.

This discussion spans two chapters and 50 pages, but it can be condensed into a couple of main points. The first is that higher education is very expensive. Because of this, millennials are taking out student loans at an extraordinarily high rate. Over-borrowing is especially pernicious when it comes to grad school loans, and the problem shows no signs of slowing down. If you attend an expensive school without a concrete idea of how you’re going to pay for it, and without studying for a job in a growing field, you will get burned.

They spend a bit of time specifically mocking those who go to Harvard and take classes such as “Folklore and Mythology.” They consider that wasteful and imprudent. As someone who attended Harvard and actually took a Folklore and Mythology course, I just have to say that I can’t believe they would say something so… absolutely right. Spend your time in college wisely, folks! I haven’t had a chance to use my knowledge of ancient Celtic symbolism yet, and I’m starting to doubt I ever will.

Their advice throughout these two chapters is of the sort you see on The Simple Dollar repeatedly – keep costs down, choose a practical major, consider community college, and don’t worry about attending a highly-ranked yet expensive school. They wrap up their college discussion by advising that every student understand what they’re getting into when they sign their loans, and they break down what each type of loan entails.

The book winds down by covering a few more basic financial topics, such as how to fill out a W-2, what to look for in a retirement plan, and how to choose an appropriate investment strategy based on things like risk tolerance, time frame, and the fees being charged by the financial institution. As you’d expect, the advice here is pedestrian and straightforward: Don’t invest until you have an emergency fund, don’t invest money you’re not willing to lose, and try to minimize fees if you use index funds.

Is ‘The Millennial Money Fix’ worth reading?

At its core, “The Millennial Money Fix” provides rock solid advice. If you live within your means, work hard, and set concrete goals, you will set yourself up for success. The book fulfills one of its promises in that if you are financially illiterate, it will give you a broad understanding of basic financial concepts.

But, it’s hard to shake the feeling that if you want very basic terms defined for you, the answers are just an internet search away. The authors themselves recommend checking out Investopedia.com, and I second that. Much of the book is devoted to simple questions such as “What is a Mutual Fund?” or breaking down concepts at a staggeringly basic level — for example, “Income is money coming in. Expenses are money going out.”

That wouldn’t be so bad if the book was marketed as a compendium of handy definitions and encouraging tips. Unfortunately, it promises a lot more. It’s supposed to give us millennials a “fix,” after all.

Upon finishing, I was still wondering what that fix was. The book did a good job of making me think twice about ever taking out a grad school loan, but all the advice was generic, and could be applied just as easily to a baby boomer or a member of Generation Z. The authors were making it seem like they had some secret sauce that would change the way I look at the world, and I was left wanting.

Finally, I would be remiss if I didn’t mention what I feel to be the glaring flaw of the book: At times it feels like a piece of marketing material for the author’s wealth management firm, which is geared toward millennial investors.

The chapter on investment strategies veers from basic overview to heaping praise on financial advisors faster than you can say “shameless plug.”

I think it’s worth sharing the author’s thoughts on this matter in full, from the end of the chapter titled, “Wealth is Earned, Not Acquired”:

“In my experience, I can tell you that most of my clients are too busy working toward their goals to do as good of a job as my firm can do for them. Their time is too valuable and too precious to be spent perfecting an asset allocation model or mulling through the tens of thousands of funds that exist to create the optimal investment portfolio. They find value in working with a professional to help them make the best decisions, because they can reinvest that time into work or their personal lives. What it comes down to is, what is your time worth to you?”

There are times when it makes sense to hire a financial advisor, so I don’t fault the authors for mentioning it as a possibility. But if your goal is to help the average millennial find their financial footing, it seems disingenuous to advise them to do anything other than open a brokerage account or IRA and invest in low-cost index funds.

Also, it’s a little ridiculous for the author to imply that he has the ability to find “perfect” funds and create “optimal portfolios.” Investing professionals such as Boneparth often don’t even beat the market once their fees are factored in, which is why market-weighted index funds have become so popular.

I checked out the author’s website, and learned that annual financial plans with his firm start at $1,950 per year. I’d steer my friends clear of any advisor charging that much when there’s so much they can do on their own.

Summing Up

This book does its best to come across as a labor of love, a project started by Heather Boneparth based on a lifelong passion for educating millennials. And that may be true.

Unfortunately, it reads more like a dry encyclopedia of terms sprinkled with some personal anecdotes and icky-feeling mentions of the author’s wealth management services. When a financial advisor writes a book and plugs his own services, especially when marketing to a crowd that he knows is already deeply in debt, it can leave a bad taste in the reader’s mouth.

If you’re looking for a classic book on money management to give a millennial, I believe there are better options. There’s still nothing that would captivate my skeptical and easily-distracted sister, but you can’t go wrong with classics like “Your Money or Your Life” or the “The Boglehead’s Guide to Investing.”

Related Articles:

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Wednesday, August 9, 2017

Frugal? Cheap? Financially Independent? Minimalist? What’s the Difference?

During a recent interview I did for an article at CBS MoneyWatch, the reporter took the conversation in an interesting and unexpected direction. She wanted to hear how I defined some terms that are often used in my writing and in the personal finance writing of others.

The terms she fired off included frugal, cheap, minimalist, and financial freedom, and she particularly wanted to know what I felt the differences between the terms were.

It was a good question, one that left me pausing several times and giving slow answers as I tried to quickly piece together my thoughts. I’ve talked about “frugal” versus “cheap” in the past, but putting them in context with the other terms presented a new challenge, one that I felt offered some insight into how different people look at the challenge of spending less than they earn.

So, let’s break it down.

Frugal A person who is frugal is a person who is committed to making choices that result in spending less money, but the other consequences of those choices don’t have a significant negative effect on other aspects of their life. A frugal person tends to recognize that there are other resources in life – time, energy, friendship, love, health, contentedness – and that many money-saving tactics tend to draw so heavily on those other resources that they end up being a net negative overall.

A frugal person strives for solutions that have the best possible impact on all of life’s resources, with a strong but not complete focus on money. A frugal person, for example, might haggle for a lower insurance bill, but wouldn’t serve dried out bread to a friend. A frugal person might reuse a takeout container, but won’t invest the time to wash a flimsy sandwich bag. A frugal person is usually willing to make small sacrifices of their own resources – time, energy, and so on – to save money, but they generally won’t impinge on others to do so, nor will they sacrifice large quantities of their own resources to save money.

Cheap A cheap person is a person who is committed to the value of saving money to the extent that they accept some pretty strong negative ramifications in other aspects of their life. They’re quite willing to invest undue time or expend a ton of energy to save a dollar; they’re willing to give themselves a negative social stigma or to impinge on friendships in order to keep a few dollars in their checking account.

A cheap person strives for solutions that have the best possible impact on one’s dollars and cents, disregarding the impact on life’s other resources. A cheap person will serve stale bread to a friend because the stale bread is free. A cheap person will demand to do the least expensive thing when in a social situation, regardless of what anyone else in the group thinks. A cheap person will spend an afternoon repairing a $2 piece of equipment. To me, cheap has a negative connotation, as it refers to a person who often doesn’t consider the value of their time, their energy, or the friendship and goodwill of others.

Minimalist A minimalist person, on the other hand, strives to minimize one’s physical possessions and, typically, personal commitments, in order to live a more flexible life. Such a practice enables a person to live in smaller quarters if he or she chooses, to easily travel and move at a moment’s notice, to spend less time on housework and possession upkeep, and to thus have more free time and less stress brought on by managing possessions and commitments.

Often, minimalism overlaps with frugality, because minimalism often results in spending substantially less money on possessions. In general, minimalists tend to have a smaller number of possessions, but the ones they do have are well made and long lasting.

A minimalist strives for solutions that result in less time and energy spent on upkeep. A minimalist tends toward having fewer possessions and spends little money on acquiring new ones, though when a minimalist does acquire a new possession, it’s usually well researched and well made and can often be expensive. A minimalist applies the same approach to things such as financial accounts, friendships, business relationships, and so on – they tend to prefer a smaller number of higher quality elements in their life and strive to spend very little time on the rest. A minimalist tends to spend very little on housing compared to the average person and relies on public spaces for most interactions with other people. A minimalist philosophy tends to be drawn from other places besides personal finance, but the results of such a philosophy tend to have a great positive impact on one’s finances.

Financially Independent A person striving for financial independence (or financial freedom) has a primary goal of reaching a point where the income from their investments pays for their living expenses, and arriving at that “crossover point” as quickly as possible. That person is likely to draw a lot of tactics from frugal people and perhaps some from minimalists, but also tends to have a strong career focus as their drive to financial independence is pushed along by having a healthy income.

A person striving for financial independence is focused on achieving the widest gap possible between their spending and their income and prefers solutions that maximize that gap. People focused on financial independence are something of a subgroup of frugal people and of cheap people, depending on how much they value financial independence compared to social status and relationships. However, rather than simply having an aim of conserving resources, financial independence people are also focused on strongly propping up their salaries, because they’re truly interested in the gap between income and spending, not just lowering spending.

Here’s how I look at the four groups.

The other three groups borrow tactics from the frugal person. The frugal person here is kind of the baseline person that everyone else borrows ideas from. I basically view the frugal person as being the “overlap” of the other three perspectives, as the frugal person can swap ideas with all of them. A person committed to just frugality won’t use some ideas that the other three people might share, but most of the ideas that a frugal person has can be used by the other three.

However, the four groups are close enough in philosophy that they can likely share a lot of ideas with one another. All of them are, in the end, interested in conserving resources, of which money is a particularly notable one. The frugalista has things to learn from the minimalist, and vice versa. The financial independence person can learn a lot from the cheapskate, and vice versa. The trick is that each person has a “filter” in place to toss out the incompatible tactics from the other person.

Only the “cheap” person really has a negative social impact. The other three tend to put significant value on maintaining friendships and avoiding social negatives, for various reasons. The frugal person tends to account for the impact on things such as relationships when deciding if a tactic is worthwhile. The minimalist rarely makes decisions with negative social impact. The financial independence person usually sees relationships as a source of positive value that can be used to increase the gap between income and spending, so they’ll cultivate relationships rather than alienating them. It is only the cheapskate, valuing money above all else, who makes spending choices that can alienate others socially.

I identify myself as frugal leaning toward financial independence. I think that, at a different stage in my life, I would have committed hard to minimalism, and I still borrow some tactics from there, but I would not call myself a minimalist. I am not interested in being “cheap,” at least not as I define it above.

Because of that, I match well with frugal readers and financial independence readers, while other readers who may be cheapskates or minimalists will find some significant value but may have to filter ideas. That’s because we’re all built differently! We don’t have exactly the same values or goals, and some tactics work well for some but don’t work as well for others. A career-oriented person might find a lot of value in career tactics, for example, while a retired frugal person might not find much value at all.

The key is to find people you trust and know how to filter what they’re saying into what works for you. A person who subscribes strongly to minimalism is going to be able to find some real value talking to a person into financial independence, but not everything the financial independence person offers will be of value. The key is to know how to filter and also to know that the other person is trustworthy and offering genuine thoughts and ideas. You don’t have to do everything that the other person does; just borrow what works for you!

Whether you’re a frugal person or a cheapskate or a minimalist or a person seeking financial independence, you likely have plenty of overlap with the other folks and, with a bit of intuition, you can figure out what strategies work best for you and which ones can be skipped over. It’s through talking to people looking at the same problems from a different viewpoint that we can sometimes find the best solutions for ourselves that we didn’t see before.

Good luck!

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Life Lessons Anyone Can Learn from a Lousy Job

If you’ve ever worked in a job that feels unrewarding, you already know how draining and soul-sucking it feels to spend hours wishing you were somewhere else. Perhaps you’ve stared out the window, wishing you could walk out the door just to feel the sunshine. Maybe you’ve hid in a break room and cried, or been cussed out a time or two.

You’ve probably asked yourself, “How did I get here?” at least once, while pondering your choices in life. The thing is, it’s quite possible you did nothing wrong to wind up in a job that steals your soul. Actually, I would even argue that challenging jobs are a part of life – a part of our transition into who we were meant to be.

Heck, it’s possible you even like your job for the most part. Maybe you just want some time away from home, and find that a simple retail job lets you earn extra cash without too much hassle or stress. Or maybe you need to work nights and find that waiting tables is the most lucrative option available. Maybe you’re just happy to have any job at all, so you approach your job from a place of gratitude instead of contempt.

I feel like I’ve experienced all of those feelings at one time or another. I’ve worked in unrewarding jobs that were actually fun, along with terrible jobs I couldn’t wait to escape. I’ve also worked in plenty of jobs I hated, but which I had to drag myself to, because I desperately needed the money.

In the 20 years since I entered the working world, I have cleaned houses, cleaned hotel rooms, worked as a telemarketer, waited tables, taken care of adults with disabilities, worked in fast food, worked in professional jobs that were overwhelming and unrewarding, and become self-employed.

Fortunately, I can look back now and see the value in each of these jobs. While I hated cleaning houses sometimes, it was a great way to earn $25+ per hour during my spare time. And while I didn’t enjoy waiting tables every moment, waitressing was a flexible job I could do while in school.

Five Lessons Anyone Can Learn From an Unrewarding Job

Once you have some runway behind you, it’s a lot easier to stop being angry and start seeing your worst job experiences as miniature learning opportunities. Here are a few lessons anyone can learn from a job they don’t love:

Lesson #1: You control how you treat other people.

Some of the worst jobs require you to work with people you’d rather not be around. If you actually liked everyone you worked with, it might not be so bad. But, alas, it seems like all the cool people must be working somewhere else.

Fortunately, co-workers we can’t stand tend to impart some of the most important lessons – like how we should treat other people.

Awful co-workers are memorable like that — just not in a good way.

When I worked at a Subway restaurant during high school, my “boss” was the worst. I was only 16 years old, yet I distinctly remember her trying to extort $30 from each Subway employee to replace a stolen food scale.

I didn’t steal it, so I wasn’t giving her a dime. That pissed her off big time, and she took it out on me by berating me every chance she had.

Even though I was only a teenager, I knew it was wrong to ask a kid to pay $30 to replace equipment. I was making less than $5 per hour, after all (this was in 1996)!

It’s been more than 20 years since this happened, but I still remember the resentment I felt at a time when I was working hard to earn spending money. And I vowed that I would never treat someone else that way.

Lesson #2: You learn to set boundaries for how other people treat you.

Crappy co-workers + service job = negative work experiences. When you hate your job and everyone you work with feels the same, pretty much everyone is crabby and ready to snap.

While you might have to endure bullying and a less-than-stellar work environment when you’re barely scraping by, you can learn a lot about yourself in the process.

An intentionally hateful boss can teach you what you’re unwilling to put up with at your next gig. That co-worker who constantly makes fun of your hair or clothes? They’ll make you want to stick up for yourself so bad that, next time, you’re prepared.

But you can even learn how to let other people treat you in a good way.

Case in point: One experience that has stuck with me is the time I was cussed out while waiting tables at Outback Steakhouse. I accidentally screwed up two people’s orders, and they both received their different steaks (prime rib and filet) cooked the opposite way they wanted. The husband and wife tore into me, making a scene big enough to attract my manager over.

I still remember my manager’s words. “Get out,” he told them. “We don’t serve people who treat our employees this way. Leave and never come back.”

The surrounding tables of guests, who were overwhelmingly appalled by the couple’s outbursts, started clapping.

I learned a few valuable lessons from the ordeal. For starters, I would never let anyone yell at me the way the couple did again, no matter the circumstances. Second, I didn’t deserve to be treated that way, as evidenced by my manager’s stellar response. And third, voicing support for a fellow coworker or employee can go a long way.

Lesson #3: Learn how to hustle.

It can vary from job to job, but some extra hustle in certain jobs can absolutely pay off. If you work in food service and wait tables, for example, you can boost your income by upping your game. The faster and better your service – and the more tables you can turn over – the more money you’ll (usually) make.

But, even if there’s no financial incentive to work hard, many jobs still require you do anyway. Bad jobs are usually grueling or uncomfortable in some way, right?

The good news is, working harder can make the time pass faster, which can help you get the hell out of there that much sooner. And if you work hard enough for long enough, you can improve your work ethic so much that there’s no going back: You’ll be a hustler for life.

So, when you move up into a better position, you’ll really be able to shine.

Lesson #4: Hard work + education = options.

Working a mind-numbing job can be fun enough when you’re young, but it gets o-l-d when you get into your 20s and 30s and realize nothing will change unless you do. There’s nothing like hating your job and realizing you have at least 30 more years of it ahead of you before you can quit.

The good news is, most terrible jobs are short-term positions – the kind you take when you’re young, inexperienced, and need to learn how to survive in a traditional work environment. You schlep in every day, learn all you can, then try tirelessly to find something that will leave you happier and more fulfilled.

If you work hard, apply yourself, and improve your career skills, your time spent in a job you hate should soon be in the past. The more valuable you can make yourself to an employer, the less likely you’ll have to work in a job that makes you absolutely miserable.

Stuck in a crappy job? Keep working hard and absolutely keep your head up. With enough time and some luck, you should be able to graduate to something better soon.

Lesson #5: You can make a difference.

A recent article in the Harvard Business Review by Emily Esfahani Smith, author of The Power of Meaning: Crafting a Life That Matters, shared details on how virtually any job a person can hold can have meaning if they want it to. As Esfahani Smith notes, the four most common jobs in the U.S. are salesperson, cashier, food preparer/waiter, and office clerk – all jobs that many would deem trivial.

The thing is, any one of these positions can absolutely carry meaning if the person who holds it approaches their work in a thoughtful way. Why? As Esfahani Smith notes, these jobs – and many like them – exist to serve others.

Esfahani Smith says one of the best ways to find meaning in any job is to connect with customers on a deeply personal level. For example, as a waiter, consider that you may be helping a couple celebrate their anniversary.

Another tip is to constantly remind yourself of your company’s mission and the role you play within that greater purpose, however ancillary it may be:

“There’s a great story about a janitor that John F. Kennedy ran into at NASA in 1962. When the president asked him what he was doing, the man said, ‘I’m helping put a man on the moon.'”

Adopting a service mindset that fosters positive feelings can also help you enjoy your work more, no matter the job. “Not everyone finds their one true calling. But that doesn’t mean we’re doomed to work meaningless jobs,” writes Esfahani Smith. “If we reframe our tasks as opportunities to help others, any occupation can feel more significant.”

The Bottom Line

Soul-sucking jobs don’t have to last forever, nor should they. If you’re not happy with where you’re at, the best thing you can do is invest in yourself and learn new skills so you can try something new, take a chance, or just have more options altogether. But you can improve your outcome in the short-term, too, if you learn to look at your work in a different way.

While some jobs can feel awful at the time, they can still teach us a lot about ourselves – but only if and when we’re willing to pay attention.

Holly Johnson is an award-winning personal finance writer and the author of Zero Down Your Debt. Johnson shares her obsession with frugality, budgeting, and travel at ClubThrifty.com.

Related Articles:

What lessons have you learned from a crappy job? What would you add to this list?

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Tuesday, August 8, 2017

22 Frugal Things I Did Today

A couple of days ago, I decided to simply go through my day and make a list of everything that I did that was “frugal.” By “frugal,” I simply mean that it’s a more inexpensive version of something that I used to do. Whenever I noticed myself doing something “frugal,” I wrote it down in my pocket notebook. I’m sure that I missed lots of little things.

By the end of the day, I counted twenty two distinct “frugal” choices that I made. I thought I’d share that list with you so you can get an idea of how a typical person uses frugality to lower the cost of ordinary life while still enjoying a very nice lifestyle, and perhaps get some money-saving “everyday living” strategies along the way.

Let’s dig in!

I made scrambled eggs and toast for breakfast for my family of five. I did this early in the morning. I simply cracked a dozen eggs together into a bowl, added a bit of salt, beat them thoroughly, and let them sit for fifteen minutes while I went out back and cut some chives to mince into the eggs. I heated a skillet, added just a bit of butter and melted it, then added the eggs and scrambled them. I cooked a few pieces of toast along with it and everyone had an easy breakfast together. The total cost was about 50 cents per person, as we went through about six pieces of toast, a little bit of butter, and a dozen eggs. That’s a pretty cheap breakfast, and a pretty tasty one, too. Make simple, tasty meals at home from basic ingredients.

I turned the leftover eggs and a tortilla into a breakfast burrito for the next morning, stored in a container in the fridge. There were about two heaping tablespoons of eggs left over from the scrambled eggs, so rather than tossing them, I looked in the cupboard and found a tortilla. I tossed in a bit of shredded cheese, spooned the eggs onto the tortilla, and wrapped it up. That tortilla will make for a quick breakfast for someone in the next day or two. Save leftovers, and find ways to remix them.

I watched our neighbor’s children for an hour or so; later that day, my own children went to the neighbors for an hour while I ran errands. Our neighbor needed to run some errands, so she sent her children over to our house for a couple of hours while she did her thing. Our children played together in the basement while I took care of a few tasks around the house. Later in the day, I’ll send our children over there so I can take care of a few errands. The total cost of all of that child care is nothing. Share child care duties with friends so that you all save money.

I turned off the air conditioning and opened the windows when I learned that the forecasted high was just below 80 F. The weather outside was within fifteen degrees of our ideal indoor temperature, so the energy saving solution here is to simply turn off the indoor climate control and open the windows to allow our home to adjust to the natural climate. We typically do this when the outdoor temperature is between about 55 and 85 or so, give or take a few degrees due to variations in humidity and our activity levels. Within that outdoor temperature range, there’s really no reason to spend the money running the air conditioning or furnace, especially at daytime costs. Don’t run the air conditioning or the furnace on a nice day.

I cleaned up a pretty big spill in the kitchen with several reusable cloths. Most of a gallon of milk spilled across the dinner table. I was on it like a flash, but not with paper towels; instead, I grabbed some cheap microfiber rags from our rag drawer to mop all of it up. I wrung these out in the sink and tossed them into the laundry to reuse later. It doesn’t take many washings for the cost of such a rag to get lower than the cost of a few paper towels. Don’t use paper towels when rags will do the trick just fine.

I listened to several podcasts while doing housework. Podcasts have become my preferred form of audio entertainment. I subscribe to a couple dozen podcasts and I listen to them when I’m doing things like housework tasks or driving to and from errands. It took me a long time to find a healthy roster of shows that I enjoy; many of them are actually just rebroadcasts of NPR and American Public Media programs such as On Being with Krista Tippett. Here’s my earlier introduction to podcasts, for those interested. Find quality free entertainment so you can be more selective in terms of what you actually pay for.

I made a lunch entirely of leftovers from the previous day’s meals. When lunchtime came around, I simply looked in the fridge for leftovers before doing anything else and I found enough leftovers to cover everyone in the family for lunch. We had leftover pizza slices, leftover grilled potato slices, and leftover bean burritos. Everyone simply made a plate from the offerings that I sat out on the counter. It was incredibly easy and incredibly cheap. Leftovers make for a practically free meal.

While doing laundry, I used a spoonful of homemade laundry soap. I use a really simple mix for my own homemade laundry soap. I simply have a big sealed container in the laundry room with equal amounts borax, washing soda, and soap flakes in there. When it runs low, I just add a cup of each to the container and shake it. When I need to do a load of laundry, I add a tablespoon of the mix to the washer – I just leave the spoon right in the container. It takes about thirty seconds to add to a batch of soap and I only need to do it every fifty loads or so. The best part is that this powdered laundry soap is about 10% of the cost of Tide or other name brands – it costs me between two and three cents per load, whereas they cost twenty to thirty cents per load. Over the course of a year, that adds up to a lot. Homemade laundry soap is simple to make and incredibly cheap to use.

I hung up most of a load of laundry to dry in our laundry room. Rather than running the dryer for a small load, I simply hung up most of the items on a line stretching across the laundry room. If I don’t need the items very soon, allowing them to dry on a line will save a dryer load, which not only reduces electricity usage directly, but also doesn’t add any heat to the house on a summer day. Hang up some of your laundry so you can give your dryer a break and save on electricity and cooling, too.

I read a library book. In the early afternoon, I spent an hour or so reading a book I checked out from the library. The direct cost of that book for me was nothing at all, yet it provided an hour of thoughtful entertainment (paired with several hours on earlier days and a few more hours on later days). Libraries have an abundance of free resources for people to borrow, from books of all kinds to audiobooks, DVDs, CDs, magazines, and sometimes many other offerings depending on the programs of the local library. It’s worth your while to check out your local library. Library books are a spectacular free form of entertainment.

I took a nap. I felt a little tired and I knew that I’d be going to the store later, so I took a nap for an hour or so. The reason is simple: a rested mind is better able to make good buying decisions. If you go shopping when you’re tired (or hungry), you’re more likely to buy things you don’t need. Taking a nap before you’re going to make spending decisions is almost always a good choice. A rested mind makes better financial decisions.

I made a meal plan that tapped a bunch of items we already had in the cupboard. After I woke up, I wrote up a meal plan for the coming week. While doing so, I looked extensively at the items we had on hand already, as well as the grocery store flyer. My goal was to use lots of items already on hand, so the meal plan ended up being largely based on what was already in the pantry along with a few fresh items from our garden and from the produce section at the grocery store. Using up items you have on hand means they won’t go bad and it means that your grocery bill will be lower this week.

I made a grocery list from that meal plan. Once the meal plan was set, I wrote down a grocery list consisting of all of the additional items we needed to pull off that meal plan. Mostly, it revolved around fresh vegetables and a few fruits, so the list happened to be pretty short. Making the list straight from the meal plan ensured that I was only writing down things we needed for our planned meals and not a lot of extra stuff. Having the actual list in the store gives me something to focus on so that I’m not buying extra things that aren’t on the list. My list is efficient, and I’m efficient in the store – both save me money. Making and using a grocery list keeps you from buying unnecessary items at the grocery store.

I rode my bicycle to the grocery store and to the post office for errands. After I had my grocery list in hand, I grabbed my backpack and hopped on my bicycle for a two mile ride that took me to the post office to mail a package and to the grocery store to pick up the items on the list (which easily fit in my backpack). Doing this provided some nice exercise while also getting the errands completed without firing up our car, using gas, and putting miles on it. Riding your bike for nearby errands saves gas and wear on your car while also providing free exercise.

I traded for a board game rather than buying it. One of the packages I mailed was a board game, which cost just a few dollars to mail. This was done to fulfill a trade by mail with another board game player. He had a game I wanted and I had a game he wanted that I didn’t think I would play again, so we organized a trade. This effectively brought a new game I was excited to play into my possession for just a few dollars while also getting rid of a game I was doubtful I would play again. Bartering and trading is a great way to refresh your hobby collection at a very low price. Trade and barter items rather than buying them.

I poured the remaining ounce or two of a bottle of liquid soap into the new bottle. Whenever I finish a bottle of soap, I turn it upside down and leave it in the bathroom closet for several days while the new one is being used. Once the new bottle has been emptied a little (and I happen to notice it), I’ll pour the contents of the old bottle into the new one (since it’s been upside down for several days, I can usually get a surprising amount out of it). This helps to stretch out the use of liquid soap and it takes only a few seconds to do it – you just take the lid off of both containers and pour the remnants of the mostly empty one into the other one. Easy as can be! Don’t throw away the last little bit in a container; pass it forward instead.

I made an amazing potato salad using preserved lemons I made myself, six leftover potatoes, and a bit of mayonnaise and mustard and salt. About a month ago, I made a batch of preserved lemons when lemons were on sale at the store. It was easy – I just coated several quartered lemons in salt, let them sit in the fridge overnight, then pushed them tightly into a jar. Now, when I want to add a great flavor to a marinade or to a potato salad, I just take a couple of preserved lemon quarters, chop them finely, and mix them right in. By using those lemons, chives from our garden, a few potatoes on hand, and some condiments, I made a killer potato salad for very little cost that served as a side dish for dinner and will serve as a side for meals going forward. Making simple foodstuffs and even ingredients can save money and vastly increase your meal variety.

I grilled hamburgers and veggie burgers purchased on sale and frozen until ready to use. The main course of our dinner was cooked on the grill and it consisted of hamburgers and veggie burgers made earlier and frozen, pulled from the freezer for a final grilling. The beef and beans were purchased at the store when they were on sale; the patties were stored in freezer bags and separated by wax paper for easy separation. Thus, the burgers were very inexpensive because they were originally heavily discounted and saved by us until we were ready to eat. Stock up on sale items that you’re sure to use later.

I played checkers with my son using an old checkers set. After dinner, my son and I played a game of checkers using an old inexpensive checkers set picked up for a few bucks at some point in the past. We played a few games, so it provided most of an hour of entertainment and thinking and conversation for the two of us. Games are a great way to pass the time and use some parts of your brain that you might not always exercise. Find entertainment in what you have on hand already.

I made a small campfire using broken wood pieces from another project. We have a fire pit in our back yard. Whenever I find some scrap wood from almost anything that isn’t pre-treated wood, I’ll save it with the intent of using it in our fire pit for a backyard campfire on a nice summer or fall evening. This night was no different – the fire mostly consisted of extra broken boards from our children’s taekwondo classes along with some discarded wood I found several days earlier. Don’t throw away items that have a clear use later on.

I used junk mail to get that campfire going. Rather than using purchased fire starters or even my own homemade ones, I actually just used some junk mail to get the fire going. We had some junk mail that had accumulated over several days which I separated out when sorting the mail and held onto because I knew we would have a campfire that evening. Junk mail – especially newspapers and flyers – catches fire easily and burns hot enough to get small pieces of wood burning, which is all you really need for a backyard fire pit. Junk mail is great for kindling.

I turned off a bunch of lights and electronic devices before bed during a final walkthrough of the house. Just before bed, I walked through the house and turned off any electronic devices and lights that I found still running. The family computer was turned off. A handheld video game console was turned off. At least a dozen lights were turned off. All of those moves save us on electricity usage during the nighttime hours, which cuts down on our energy bill. Turning off unused energy eaters saves money on your energy bill.

What’s the point of this story? The point is that frugality isn’t something “special” that you do; instead, it integrates naturally into your life so that you spend less money in the course of doing the normal things you’d normally do. Frugality isn’t about devoting hours to scrubbing Ziploc bags for a second use or diving into dumpsters for moldy bread. It’s about finding more cost-efficient ways of doing the things you’re already doing and integrating them into your normal day-to-day life so that you have more money left over at the end of the month. If trying to be “frugal” is causing you frustration and angst, you’re going about it the wrong way – let go of the things that are causing negative feelings and instead find new ways to just do the things you normally do, except with less spending.

Good luck!

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The Painful Truth About Your Emergency Fund

Let me make this clear: I am a frugal person. I save vegetable scraps to make broth, and soap scraps to turn into lumpy new Frankencleanser bars. Of 1,095 annual meals, probably 1,085 are made at home, from scratch. I can (and do!) go several years without purchasing any clothing except an annual new-to-me pair of jeans from the thrift store.

Why, then, did I drop $40 on Powerade and overpriced over-the-counter medications at a hotel gift shop? Because sometimes it’s worth it to pay more—but that doesn’t mean it was easy.

Backstory: I was speaking at a conference in San Diego, having driven in from Phoenix with my daughter, fellow personal finance writer Abigail Perry. She started feeling sick almost as soon as we arrived. That first day I drove to a drugstore for juice and OTC meds, getting lost (and ragey) in San Diego rush-hour traffic.

But as Abby grew sicker, I couldn’t leave her for long. So down to the hotel gift shop I ran—and ran, and ran—hoping to find the One True Med that might help. My frugal alarm blared each time I shopped: Seriously? Three bucks for a Tums roll shorter than a preschooler’s fingers?

To stay calm, I would chant this mantra: You have an emergency fund. This is an emergency. QED.

I would have done anything to make my daughter feel better. Yet I have to say that paying inflated prices rankled.

That’s the painful truth about your emergency fund: While you should be glad you have the money, you’re not.

That’s because the need to tap your EF means something bad (or really upsetting) just happened: Maybe you’re in shock due to job loss, or infuriated that some nimrod sideswiped your parked car and kept going. Watching your cash cushion deflate just adds insult to injury.

Saving that fund took time, patience, and, yeah, sacrifice. Now it was all leaking away, one $7.39 box (a really small box) of Gas-X at a time.

Emergencies: We’re not ready

Maybe that’s why some people avoid saving for emergencies in the first place. Nixing a couple of lattes or a movie ticket each week means they might have to consider the unpleasant stuff that could happen to them. Much more fun to think “YOLO” instead of “uh-oh.”

Who wants to consider that some day—maybe as soon as tomorrow—you could find yourself in deep financial poop? Especially since those painstakingly saved dollars could vanish faster than you can say “deductible.”

Emergencies happen, and as a nation we’re not saving for them—which I consider an emergency, too. According to the Federal Reserve, 47% of U.S. residents would be unable to cover an unexpected $400 expense without borrowing money or selling something.

It took me quite a while to set aside my rainy day fund. Now here I was, paying for Powerade that cost 10 times more than gasoline ($23.92 per gallon—I did the math in the elevator) and having to anticipate an indefinite stay in a strange city.

Did any of that really matter? Not once my daughter was hospitalized with a terrifying diagnosis: Sepsis, which can be fatal. All I wanted was for her to get well—and having that financial cushion meant I could be by her bedside with (relative) peace of mind, instead of saying, “Gotta go. Hope you feel better!”

That’s what it’s there for

Those pricier-than-petrol Powerades looked pretty cheap compared to what I shelled out for four extra days in San Diego, costs including but not limited to lodging, rental car, hospital parking, and my rebooked flight. All told, I spent about $1,000 more than I’d planned on the trip even though I did what I could to minimize costs. (Did I mention shopping for sandwich makings at a nearby supermarket? Or finding and booking a 67%-cheaper hotel room through the Mr. Rebates cash-back shopping site and earning a $6.57 refund in the process?)

Sometimes you just have to suck it up and pay it out. I’m a freelance writer, so that extra grand did hurt. But it would have hurt a lot more had Abby’s illness popped up when I was cash-cushionless.

An emergency fund isn’t meant to be adored like a golden calf. It exists to take care of things when your normal income can’t.

Had unexpected expenses of your own? Sorry for your troubles. Now: Start stuffing whatever money you have into that cushion. Even if your budget is tight, a little creativity could help you shave off a few dollars here and there to be banked against future areyoukiddingme? moments.

Even a small emergency fund will make a difference. While it may not cover every unexpected expense, even a modest emergency fund at least cuts down on the amount you’ll have to borrow or finance.

Then, be prepared: After a crisis, the sacrifices you have to make to rebuild that fund might feel painful. But having the money will feel like a blessing the next time life plants a surprise in your path.

That said, when you travel you should probably bring your own Tums.

Veteran personal finance writer Donna Freedman is the author of “Your Playbook for Tough Times: Living Large on Small Change, for the Short Term or the Long Haul” and “Your Playbook for Tough Times, Vol. 2: Needs AND Wants Edition.”

The post The Painful Truth About Your Emergency Fund appeared first on The Simple Dollar.

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Monday, August 7, 2017

Questions About Fees, Market Timing, Motivation, Goal Setting, and More!

What’s inside? Here are the questions answered in today’s reader mailbag, boiled down to summaries of five or fewer words. Click on the number to jump straight down to the question.
1. Retirement plan fees
2. Career in expensive city
3. Market timing issues
4. Supplies for college
5. Net worth and home value
6. Best single tip for success
7. Lacking motivation for financial independence
8. Best free stuff to do
9. Balancing care for elderly parent
10. Little Free Library questions
11. Process for reading challenging books
12. Daily goal setting advice

One of my favorite things about parenthood is the conversations I have with my children. I love just tossing a question out on the dinner table and seeing how they answer it, and then using further questions to tease apart their thinking and perhaps get them to follow their own thinking to new conclusions.

For example, one recent debate in our family has been over whether or not to buy a new television. A while back, some roughhousing occurred in our family room which caused our home’s single television to have a noticeably faded stripe in the middle of it. You can still watch programs on it, but there is simply a vertical stripe in the middle of the screen that has a strong white tint to it, obscuring about a quarter of the screen.

Our children have thought that we should unquestionably be replacing this television – and soon. So, recently, we took apart this thinking at the dinner table. Was the television non-functional? No. Was there anything that we want to do with it that we cannot do? No.

If we bought a new television, what are we actually gaining? Is it worth paying hundreds of dollars just to eliminate a white tint stripe?

Obviously, the answer was no, but we learned through the conversation that the children’s intent was not to just replace the television, but to move the old one into the boys’ bedroom in our house. (That’s a non-starter, by the way; we don’t allow televisions in any bedrooms as they distract from good sleep.)

This then turned into a conversation about why we don’t have televisions in bedrooms, the value of sleep, and other topics. By the time the conversation wound up, we had been at the family dinner table for an hour and a half and were looking at diagrams of optic nerves when we had started off with a discussion about the television in the basement.

That, to me, is one of the best parts of parenting – the free-ranging conversations that provoke thinking and association of ideas. I relish those conversations.

Q1: Retirement plan fees

I keep reading that I should contribute to my 401k enough to get my employer match, then max out my IRA then return to my 401k and contribute what I can. Currently, I am contributing 18% to my Fidelity 401k, to keep things simple I opened an IRA with Fidelity as well. I keep most of my money in their Fidelity 500 Index Fund, it seems to have the same fee’s on both the IRA and the 401k from what I can tell. So while I have access to other funds now I am not sure I really understand why I opened the IRA and didn’t just continue to throw everything at my 401k. Side note: I am 40 years old and making 95k annually, I don’t expect to make much more then that so I opened a traditional IRA instead of a Roth.
– Andrew

The traditional advice to alternate a 401(k) and a Roth IRA is in part intended to balance out a number of things. By putting some money in a 401(k) and some money in a Roth, you’re balancing pre-tax and post-tax savings, which means that you’re getting some of the tax benefit now and some of it later on (when tax rates are uncertain at best).

Another advantage of using a different company for one’s Roth IRA is that you can choose a company with low investment fees. Many 401(k) plans are operated by investment firms that have only very high cost investment options within their 401(k) offerings.

Neither of those really apply to you too much. You’ve decided that you prefer pre-tax savings exclusively, so the Roth has no benefit. You’ve also decided to put all of your chips in with Fidelity, which is a solid choice because they’re very good in terms of keeping their fees low.

As long as you understand why you’re diverging from typical strategies, then it’s okay to diverge from them. You seem to largely understand the why, so you’re fine.

Q2: Career in expensive city

I’m currently interning at a law firm. The office I’m at right now is not in New York, though our headquarters are in New York and NYC does have a certain amount of prestige. The city I’m currently in has a much lower cost of living than NYC. However, even though I’m not in NYC, I’m making NYC salary (since salary is standard in every city). I’m also living at home during my internship, since the office is close to where I live. I am looking for advice on whether I should return here after law school, or make the leap to an expensive city like New York. I want to keep my career options broad, which is the appeal of NYC (although I really dislike the thought of living there.) I do not have student debt, but still, want to maximize my savings as much as possible and that’s really difficult to do in NYC, even with $180K (which is not a lot after taxes and NYC living expenses).

Texas is also an option for me since I did undergrad there. Texas doesn’t have an income tax, which is obviously helpful, but I don’t know if that’s worth it to go there. Texas has a really small market for NYC-based law firms and have a niche focus on oil & gas, and I’m not totally sold on pigeon-holing myself this early into a niche field like that.
– Alex

If you’re looking strictly at finances, you should choose to live in the area that has the highest salary adjusted for cost of living. Look at your salary options, then use a cost of living calculator to adjust those salaries based on the relative cost of living in the area. The best option is the one you should take, strictly in terms of dollars and cents. You’ll have the most financial breathing room in that area.

Now, that doesn’t take into account career options, which usually point in different directions. It sounds like your career path gives the most options to those who work in New York. At some point, you have to make the decision how much career flexibility is really worth to you. What is your career ambition? What are you willing to sacrifice for that ambition?

In other words, do you want to be a big fish in a small pond or a small fish in a much bigger pond? That’s much more of a question of personal ambition.

Now, how do you balance the two desires if the purely financial option is pushing you one way and the career ambition is pushing you in another direction? That I can’t answer for you. What I can say is that there is no dollar amount that makes a miserable daily life worthwhile. If you’re choosing a life that’s going to be miserable day in and day out without any end to the tunnel in sight, there is no wage that is worth it. If you’re going to choose a life you don’t like, make it a short term plan and make sure there’s a clear light at the end of the tunnel.

Q3: Market timing issues

So I was one of the jerks that thought the market might drop or be volatile after Trump’s election. So the bit of money I received from my ex’s retirement accounts to even us out after 20 years sat lying in wait. Of course now I’m really upset because it’s making nothing. (The money In my name alone is invested in index funds and reaping the benefits.)

I keep saying I can’t invest this new money now; it will drop as soon as I do. What should I do?

This brings up my second question. I don’t own any real estate. I don’t have any money invested in bonds or annuities because I don’t understand them. Heaven knows CDs have no return and haven’t for so long I’ve written them off forever.

Quite literally, I’m relying on the stock market almost exclusively. Should I put this money somewhere else? Is that even possible given that it needs to stay in a retirement account?
– Nina

To put it bluntly, market timing does not work for individual investors. It can work to a small extent with very large scale investors with billions to play with, but for small investors, there’s just not enough information available to make it work.

Your investment strategy should solely be centered around your personal goals, not where the stock market happens to be at the moment. If your goals are long term – longer than ten years or so – you should probably be invested in things with some volatility that have higher long term returns, like stocks. If your goals are shorter term – less than ten years – then you shouldn’t be invested in volatile things as there’s a decent chance you’ll lose money over that term, and that chance grows as the goal grows closer.

So, your first step is to figure out your goal. When do you intend to start drawing that money? When do you intend to tap the last drop of that money? Use those timelines to figure out where to put your money, and then just sit on it and wait patiently.

Q4: Supplies for college

My daughter set aside $100 of her graduation money for college class supplies and we’re struggling to spend it. We went to Staples and to Target and there is such a huge variety of stuff. In the past we just followed a list from school that was pretty specific. Should we just buy the cheapest stuff and stretch the money over several semesters? Are expensive Five Star notebooks and pens worth it?
– Dana

It depends on how heavily the pens and notebooks are going to be used, which directly relates to the student herself.

Is your student the type that takes a lot of notes naturally? Did she fill up many pages with notes in high school? Or did she use notebooks minimally, mostly for quizzes and the like?

If she uses notebooks or seriously plans to use them in college, then the better ones are worth the extra money. They hold together better over lots of openings and closings and generally have better paper that holds up to lots of front-and-back writing.

Her major will give you a strong indication of this. Some majors, such as science and mathematics and English and philosophy and history, involve a lot of note taking. Other majors involve a lot of practical learning and less note taking.

In the end, it comes down to use. Are these notebooks going to be heavily used? If the answer is truthfully yes, then the better notebooks are worthwhile.

Q5: Net worth and home value

When calculating net worth, how do you figure the value of your home? Do you use property tax assessments? Or some real estate site like Zillow?
– David

Honestly, I just look up the sale price of recently sold homes (in the last three years or so) of similar quality in my area and use an average of those prices. Many areas have a property database online that you can examine.

I don’t make a big deal out of keeping the price perfectly current or accurate in my net worth calculations. Instead, I simply trust that the number is approximate and move on from there.

The thing to remember with a net worth calculation is that it’s meant mostly to be a financial motivator for yourself. Perfect accuracy for the value of your assets isn’t too important until you’re trying to sell that asset.

Q6: Best single tip for success

What is your one best tip for career success? Like your equivalent of “spend less than you earn”? I love those super simple statements that just kind of sum it all up and give you something to live by.
– Cara

My one biggest strategy for professional and personal success is show up. If you want something, actually go to the events and the meetings related to it. If you want to meet people, don’t sit at home and twiddle your thumbs – go on Meetup, find some interesting things to do, and then actually show up. If you want to build a professional network, find professional events, and then actually show up to them.

When you get there, show up again. Don’t stand in the corner on your cell phone. Don’t sit at the back table, say nothing, and then leave as soon as possible. Be present in the moment. Turn off your devices. Talk to people that are there. If you don’t know what to say, ask questions about them or about the subject at hand. Be involved with whatever the activity is.

Make yourself go to the events. Be in the moment. Talk to people. Put yourself out there a little. That’s 90% of professional and personal success.

Q7: Lacking motivation for financial independence

My problem is this: I feel some motivation to save money when I am thinking about my finances, but when I’m actually living my life, that motivation seems tiny compared to the desire to go out with friends or buy a new tablet or something. I can feel my motivation to save but it’s like a candle next to a bonfire.

How does one switch the two without becoming some kind of antisocial hermit weirdo? If I cared that much about saving money I would have to reject my friends and live like off the grid or something.
– Kevin

I have a pretty large social network, and I spend almost no money on social events. We have potluck dinner parties. I go to lots of community events. I have a couple of dozen local friends that I’d happily invite to an event at my house almost any night in any combination, and a substantially larger roster of remote friends and family. I don’t feel like I’m lacking socially just because I spend almost no money socially.

As for buying stuff, I tend to translate that question into what I would actually do with that stuff that I can’t do now. For example, I, too, am tempted by the idea of buying a new iPad Pro. I would certainly use it as a replacement for my old Mini, but what would I actually use it for that isn’t met right now? The truth is that the uses for a new iPad that aren’t already met are pretty limited. In truth, I’m just paying for those new uses, so if I think instead about just those new uses versus all of the uses of an iPad (most of which I already have met in my life), I realize that I’m not really getting much for my dollar.

I tend to think of most purchases in that regard. What will this thing do that I can’t already do? If the list isn’t obviously worth the dollar amount, I’m not buying it.

Q8: Best free stuff to do

What is the best free stuff to do?
– Dana

I get a surprising amount of reader mailbag questions like this, questions that are effectively impossible to answer. The truth is that there are so many free things available to do that there is no easy answer here, because the best free things to do really depends on the interests of the person.

For me, I enjoy going on hikes in state and city parks near me. I love reading library books, especially ones that really push me to think about the world in a different way, but I also love page-turners, too. I’ve come to really enjoy riding my bicycle around town as of late, and sometimes on the long trails that connect adjacent towns around here. I enjoy working on my novel. I enjoy making homemade food items, like sauerkraut and preserved lemons and beer. I enjoy going to community game nights. To me, those are the best things – I tried them, liked them, and do them again and again.

Those are not necessarily going to be the best things for you. My suggestion for you is to try a lot of free things and see what you enjoy. Go to some community activities. Go to the library and see what’s free there. Check out what’s available at nearby parks or through local parks and recreation departments. I can’t tell you what’s going to click for you, but if you try lots of things, at least one or two things will probably click. Those are the best things for you.

Q9: Balancing care for elderly parent

I am 51 years old, my husband is 50. My mother is 75 and in slowly declining health. She lives by herself after my father passed away two years ago. I can’t motivate her to take care of herself very well. She keeps her house reasonably clean but doesn’t seem to do much but watch old movies on TV and talk about how things used to be and go to the doctor.

My husband says that he is fine inviting her to come and live with us and staying in the guest bedroom. She would be a super reliable babysitter and would probably prepare some meals for us, but there would be strains, too. My husband is being very kind in saying this, but I know that it would be a big stress for him.

On the other hand, my mother has given me a lot in life. She has always been there for me and I feel really selfish not being there for her when she needs me now.

I am not worried about the financial cost so much as the time and energy and relationship cost. If anything, her presence will probably be a financial help, at least for a while.

What I am worried about are hidden stresses that I’m not seeing yet that could cause problems down the road. I have written to several websites that I read asking for input from different angles. Hoping you will offer financial thoughts and life wisdom!
– Nora

I think that the number one worry of having a parent move in with you is the relationship stresses that it may cause. Every family is different, but many families would feel some stress from that change. However, such a change would relieve other stresses – as you mention, it probably would resolve some child care stresses.

My suggestion to you is to sit down with your husband and talk through some scenarios with him. What would life be like if she moved in? What stresses would it cause? What would really bother each of us? What can we do together to minimize those concerns?

Then, if you do decide to go through with it, have lots of open conversations about it. Understand that it is going to be stressful and there are going to be things that might seem minor to one of you that’s really stressful to your partner, and work together to deal with them.

Q10: Little Free Library questions

Our new neighborhood has a bunch of Little Free Libraries. I have read their website but I have some more questions that I thought you could answer.

Is the cost of building one for ourselves tax deductible? It looks like donating books is but not sure about building one.

How much time does it take to manage one?

What are the upkeep costs like?

We are considering building one but want to have the facts straight first!
– Danielle

My wife and I have talked about building a Little Free Library for years, but have never actually done so. During our process of figuring out whether to install one, we asked many of the same questions that you are.

First of all, as far as we can tell, building a LFL is not tax deductible. I’m sure you could claim it as a deduction, but if you were to be audited, it would almost assuredly be tossed off. There are ways around this, such as launching a separate charitable organization to manage the library and then donating to that, but it would be a lot of paperwork.

I asked a friend of mine about upkeep on their LFL and he says he probably checks the books in there a few times a week and there’s a minor issue with it maybe once a month (something that takes maybe a minute or two to fix) and a major issue about once a year (something that takes an hour or so to fix). He says that the upkeep costs are maybe $10 or $20 a year on average. I assume it’s for things like fixing minor vandal or bird damage.

The costs were reasonable, at least in our eyes. The thing that’s kept us from building it was the initial build time. We just never found a window of time when our passion for the project was high.

Q11: Process for reading challenging books

Would you mind sharing your process for reading difficult books? I have tried reading philosophy and I usually end up getting lost surprisingly quickly.
– David

I actually love reading books that are right at the limit of my understanding. It pushes me to think differently and to learn new things.

My process is to read such books very slowly and to take notes on them when I read. I’ll often just read one or two pages a day when tackling such books, and I don’t mind as long as I’m getting worthwhile thoughts out of those pages.

I take notes when I read like this – yep, just like I was in school. I try to write down new ideas in my own words as I go and I also write down questions I want to think about.

Whenever I hit a word I don’t know the meaning of or a concept I’m not fully understanding (at least well enough to keep going), I stop right there and figure out what the word or the concept means. I write down that definition or that concept in my own words before continuing.

Yes, this process is slow, but I’m okay with that. When I’m done reading a book like this, I genuinely feel like my understanding of the world has expanded and I feel ready to tackle new challenging subjects.

Q12: Daily goal setting advice

How do you go about establishing and keeping daily goals in your life? For example, right now I am trying to get a better grip on my unplanned spending so my daily goal is to either spend nothing that wasn’t planned or to keep unplanned spending under a certain cap (on weekends). What sort of process do you use to review daily goals like this?
– Madeline

I use an app called Strides for this. In Strides, I set up every habit that I’m currently working on. Each day, early in the morning, I review all of those habits and then visualize myself absolutely nailing them with excellence that day – this takes a few minutes. I often review them again during the day, and mark those habits as complete when I finish them.

Yes, some of them aren’t really a strict “do this and then you’re finished” kind of thing, and I review all of those at the end of the day, just before bed when I’m plugging in my phone, and I mark down any habits that I feel I executed successfully.

The key parts, I think, are the morning review and visualization and also the quick reviews during the day. This keeps the habits I’m working on right now front and center in my mind.

Got any questions? The best way to ask is to follow me on Facebook and ask questions directly there. I’ll attempt to answer them in a future mailbag (which, by way of full disclosure, may also get re-posted on other websites that pick up my blog). However, I do receive many, many questions per week, so I may not necessarily be able to answer yours.

The post Questions About Fees, Market Timing, Motivation, Goal Setting, and More! appeared first on The Simple Dollar.

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