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Saturday, September 9, 2017

A Beginner’s Guide to Lifelong Learning at a Minimal Cost

This is part of an informal series of posts where I outline how I’ve applied money-saving strategies to many of my hobbies without sacrificing what I enjoy most about them.

I’ve been insatiably curious about almost everything for as long as I can remember. I have vivid memories of reading encyclopedia entries as a fairly young child simply because I wanted a basic understanding of what something was all about (I vividly remember reading about aardvarks, and I also vividly remember reading a bunch of entries pertaining to the Middle East). Unsurprisingly, in many ways, I consider college to have been the best years of my life, as I was utterly surrounded by learning opportunities. (In fact, they were so intense that I often went off on deep side tracks and failed to actually keep up with classes I was enrolled in.)

That passion has persisted into full adulthood. A day isn’t complete unless I’ve delved into some topic that’s new to me in some significant way.

Unsurprisingly, lifelong learning is a passion that can be incredibly expensive. A big part of me would love to buy endless books. A big part of me would love to throw thousands at the local university and take a bunch of different classes. A big part of me wants to constantly go on educational trips.

What follows is a discussion of what I do to actually engage in lifelong learning without breaking the bank, but first, let’s back up and look at the basics.

What Exactly Is “Lifelong Learning”?

I really like Wikipedia’s definition:

“Lifelong learning is the ‘ongoing, voluntary, and self-motivated’ pursuit of knowledge for either personal or professional reasons.”

And the benefits?

“Therefore, it not only enhances social inclusion, active citizenship, and personal development, but also self-sustainability, as well as competitiveness and employability.”

Basically, the idea is that life isn’t divided into a period where you acquire knowledge (schooling) and a period when you apply that acquired knowledge (the workplace). Instead, that period of acquiring knowledge continues beyond formal schooling, through the period where you’re working, and beyond.

Typically, lifelong learning is a component of one’s free time when they’re not devoting energy directly to one’s career path or to one’s personal life. For most, it’s a hobby for personal fulfillment, but it can also be a practice meant to further one’s career.

Why It’s a Hobby/Passion of Mine

As I mentioned at the start, I am an incredibly curious person. I enjoy learning new things; furthermore, I enjoy delving deep into those topics so that I innately understand them. As I often tell my wife, I love digging into specific topics until it becomes clear to me how much I don’t know, which means that I’ve got a whole new universe of things to explore.

Sometimes that motivation for lifelong learning is directed at things that can directly improve my life or my career, like studying a personal development topic or learning how to program in Python. At other times, it’s for pure curiosity’s sake, such as my almost year-long dive into organic chemistry and a period where I became fascinated with differential equations or the time I read about twenty volumes on the Civil War.

Really, when it comes down to it, I just love the process of learning something new and integrating it into what I already know. There are fewer feelings in life that I enjoy more than finally understanding a topic that wasn’t clear to me beforehand. It feels like a genuine revelation, something that brings me deep joy that lasts for a surprisingly long time.

So, how exactly do I go about this without throwing thousands of dollars into college classes or educational materials? Here’s exactly what I do.

Basic Equipment

In truth, you don’t actually need anything to be able to be a lifelong learner. All you really need is your own self and a willingness to observe, think, and learn.

However, I’ve come to find that taking notes by hand is an incredibly valuable technique when it comes to lifelong learning. The process of taking a new idea that just entered your head, twisting it around into your own words, and then writing down that fresh idea along with how it connects to things you already understand is an incredibly powerful way to actually integrate that idea into your own thinking. There’s a lot of research that backs up the idea that taking notes by hand is one of the most efficient and effective ways to learn – here’s a good starting point.

So, start with a writing utensil and some paper. But which ones? The truth is that any cheap notebook and a pretty cheap pen will do.

Just find an inexpensive college-ruled notebook or composition book that you can get at pretty much any department store, office supply store, or dollar store. Pretty much anything will work; I usually suggest a composition book because I think the binding holds together better over time, but a spiral notebook works, too. Just get whatever’s cheap.

As for a writing utensil, I suggest a pen because it won’t smudge on the page nearly as much as a pencil will. Don’t get the cheapest pen in the world because it’ll leak regularly and it will sometimes fail to write when you want to; instead, spend a little more and get a reliable thin-lined pen. I prefer the Pilot G2 ultra fine or the Uniball 207 ultra micro. Both are very reliable, write smoothly on a page with little resistance from any angle, and basically never leak.

Basically, with a quick trip to a department store, you can pick up a cheap notebook and a decent pen or two for $2 or $3 and be ready to go with this hobby. That’s really all you need as a foundation.

The next step is figuring out what you want to learn about. That’s not always the easiest thing to answer, but I suggest giving it a bit of thought. What subject do you always wish you understood better than you do now?

One key thing is to not go into it with preconceptions. Don’t believe that the subject is too easy for you (almost every subject ends up going so deep that you’ll be in over your head if you want to go there), and don’t believe the subject is too hard, either (almost everything can be learned if you start with the basics). If you find something is too hard, back off to a more foundational level; if you find something is complete common sense, move on to something deeper and more challenging. The right place to be is at the place where you’re consistently learning new things and occasionally have to stop and process things and look up a few words, but you’re not completely lost and overwhelmed.

Another preconception that often stands in the way of learning is coming in with a judgment for or against a topic. This often happens when you’re trying to understand various political stances or philosophies. It is really easy to allow one’s own personal beliefs to prevent us from actually understanding something. Don’t. Try to understand the material first, then decide what you feel about it.

Seven Excellent Free Sources

You have the materials you need – a notebook and a good pen. You have something you want to learn about, and you’re approaching it with an open mindset. Now what?

Here are seven places to start. Every single one of them is completely free. Each one is going to have a few advantages and disadvantages. Choose the one that seems to match what you want to do the best.

#1 – Wikipedia
Let’s start off by discussing what Wikipedia is and what it is not.

Wikipedia is a publicly edited encyclopedia. It provides a basic description of almost anything one might want to learn about, and it’s surprisingly accurate because most entries have a number of editors that strive for accuracy. However, it’s not perfectly accurate in all cases and should never be relied upon as absolute truth.

What Wikipedia is good for is providing a fairly reliable introduction to a topic that you want to know more about. It has become my preferred starting place for learning about a topic and it usually helps me figure out whether I want to go deeper than what Wikipedia provides, into a more trusted and focused source.

My suggestion is that your first step for any journey of lifelong learning is the Wikipedia entry for that topic. Read through it slowly, take notes (where you rephrase any new ideas you pick up and add your additional thoughts), and if you find yourself struggling with things like the meaning of a word or some larger concepts, back up into those more basic concepts.

If you’re reading an entry on calculus, for example, and you hit upon a term that you do not understand, look up that term (usually, all you have to do is just follow the link) and make sure you know what it means before continuing. (Of course, this often means that it takes quite a while to traverse an entry on a topic that’s new to you.) Take notes along the way – write down new ideas in your own words and note your follow-up thoughts as well.

Yes, this is a slow process, but every step you take is incorporated into your thinking, making it easier to understand even more of the world. That’s the beauty of it.

One valuable thing that Wikipedia can provide is pointers to further reading, which takes us to our second tool…

#2 – The library
The library provides an endless array of books and audiobooks, free for the borrowing, on almost any topic you can imagine. If you learn by reading, just simply head down to the local library, look for the section of books related to the topic you want to learn more about, and dig in.

How do you figure out what book to read? My approach, when I am still trying to figure out a general topic, is to simply pick up a book that serves as an “overview” of that topic. I might find that some of the book is simplistic for what I’m looking for, but I can usually figure out from there what I want to dig into in a deeper way.

Let’s say, for example, that you have an interest in philosophy in general, but don’t really know where that will lead. The best thing you can do is pick up a book that’s a survey of philosophy, like The History of Western Philosophy by Bertrand Russell, and read that one. Some of the material might seem easy, but what you’ll be left with when you finish is a good overview of philosophy (at least in the west) and a good idea of where you want to go next. Maybe you want to dig into a specific area, or maybe you want to look at Eastern philosophy.

If you’re still not sure how to get started at the library, skip down to item #5 on this list.

#3 – Public meetings and lectures
Another valuable asset that your local library offers – and is also offered by any local colleges and universities nearby – is public meetings and lectures on various topics. Many libraries and universities will bring in knowledgable people in specific areas to speak on a specific topic of interest, and those events are almost always open to the public. Just go in, sit down with your notebook and pen, pay attention, and jot down notes highlighting the key points and any questions you have that come up during the presentation. Often, there’s a Q&A session where you can even directly ask one or two of your key questions.

Many libraries and universities also sponsor regular meetings of groups focused on specific topics, where people meet to exchange ideas and, typically, one member gives a presentation on something specific related to the overall topic. These can be similarly valuable avenues for learning, particularly for people who don’t learn particularly well from a book.

#4 – Classroom sit-ins
Many people learn best in a classroom environment, where they can listen to an instructor lay out the ins and outs of a topic. However, actually enrolling in a college or university might be prohibitively expensive. What can an intellectually curious person do?

One option is to simply sit in on a class. This option isn’t always available – it is completely at the discretion of the professor – but many professors are quite happy to allow interested people to sit in on lectures. While you won’t earn credit or actually take the exams and you may not be able to access some supplemental materials, you can sit in on all of the lectures of a class and absorb all of the material taught by the instructor.

If you live near a university, browse through a course catalog and look for some general courses in areas you’re interested in that work for you, then contact the professor and ask whether or not you can sit in on the classes. If the professor agrees, start attending. Bring your notebook, listen, take notes, and ask questions after class (giving priority to the paying students, of course).

It’s worth noting that this avenue isn’t permitted at some universities, and even some professors at permissive universities won’t allow people to sit in. However, if you find this option available to you, it can be a great way to learn about a topic that’s of genuine interest to you.

#5 – Highly focused internet forums
Sometimes, as you’re learning a topic, you come to realize that you’re just not comprehending a topic or some specific aspect of the topic and you simply need some clarity that you’re unable to find elsewhere. In those situations, I turn to very specific internet forums, ones that are dialed in to the exact topic I’m interested in.

There are two reasons I do this. One, such forums almost always have a FAQ document that lists essential books and other materials to read on the topic. I can usually take that list with me when I go to the library and check out those books. Two, I can usually join the forum and ask my question and reliably get a clear answer. The key to this is asking with politeness and humility. Admit that you’re new to the topic and explain what you’ve done to figure it out before asking (which would include searching through the site’s archives for similar questions).

There are a lot of places to find these types of narrow topic forums. One place to look is reddit; another is StackExchange. You can use Google to find even more.

#6 – Online classes
Another option for learning about a topic is through online classes and online course materials. Some online classes provide all of the lectures in video and audio format. Some provide handouts that you can view or print. Still others provide discussion forums for the class. If you find classroom-style learning to be a good fit for you but your schedule makes actually sitting in on classes impossible, this is a great option.

There are many sources for free online course materials. Some of the ones I’ve used happily in the past include MIT OpenCourseWare, Open Yale Courses, Coursera, and EdX, and that just scratches the surface. While it’s not quite a complete “course,” I think this is the best place to mention Duolingo, which is a brilliant app and website for free language learning. (I wrote a full article on language learning with minimal expense not too long ago, if that’s your area of interest).

#7 – Meetups
A final tool worth suggesting, particularly if you find that hands-on learning and interacting with peers is a powerful way to learn, is Meetup. Meetup is a website where you can find specific groups in your community that “meet up” to discuss or participate in different activities. You might find political groups, hobby groups, volunteer groups… it really depends on your area and what groups use the site.

Not all meetups will provide the same thing. Some meet ups are very hands-on, where you actually find yourself doing things related to the focus of the group. Others involve meetings where topics are openly discussed. Still others are more like a classroom, where people give presentations and there are question-and-answer sessions. Read the description of interesting meet ups and figure out which ones are of interest to you. If a particular meetup doesn’t click, then find another avenue for learning about that particular topic!

Some Suggestions for Actual Practice

There are a few general strategies I’ve found incredibly useful when it comes to lifelong learning, and these will help greatly if you’re also a lifelong learner.

First of all, you’ll get far more value out of lifelong learning if you do it while focusing on the topic at hand. I wrote just yesterday about strategies for getting focused, and I use them whenever I’m trying to learn something. I treat a session with a book or a class sit-in or a meetup as though it’s a task on my to-do list that I need to focus on and I prepare accordingly. I kill distractions, make sure I have my materials ready, and go there with the full intent to focus on what I’m trying to learn. Treating it with some degree of seriousness opens your mind to absorbing far more knowledge and making far more connections than you’d make if you’re just goofing around.

Second, take notes by hand. Yes, I know I touched on this earlier, and I know that taking notes by hand isn’t something that’s seen as fun by some people, but for me, it is the absolute key to making this work. Whether I’m reading a book or watching a lecture or even reviewing handouts, I have a notebook and a pen with me and I take notes.

My system is simple. Whenever I encounter a new idea or an idea that perhaps I don’t understand very well, I stop and give it a little thought. I try to rephrase it in my head. I might re-read that section or re-watch that section again. Then, when I feel I’ve got it, I write it down in my own terms, usually just a small variation on what was otherwise said. Then, if I have follow-up questions or thoughts, I add them directly below, with an indent and with a ! or a ? in front of them. That way, when I look at my notes later on, I can follow up on anything that has such a designation in front of it. Was my earlier assumption correct? Did I get that question answered?

Similarly, if I run across a word that I don’t know, I stop, write it down, then look it up, and then I write down the definition of that word. This builds my vocabulary and makes it easier to continue to read or listen to material within that field.

If there are problems given for me to solve, I stop and try to solve them right in the midst of the notes.

You’d be shocked how many notebooks are filled up in this way. I can easily fill up a full composition notebook in a week or two. Usually, what I do with old notebooks is that I take pictures of the pages, store them in Evernote, and then discard them. That way, I have a digital archive of all of my notebooks.

Finally, set learning goals, but don’t let it become boring. For me, my main learning goal is that I set aside one hour for “deep reading” a day, where I sit down with a book and a notebook and go through it slowly, writing down new ideas as they come to me and making notes on new connections and questions I have. Once every few days, I spend one of those sessions going back through my notes and making sure I’ve addressed any questions that have come up along the way.

I tend not to set learning goals that are associated with particular topics. If I find that I’m becoming less interested in a topic, I don’t hesitate to switch to something different, even in the midst of a class or a book. It just means that my curiosity in that one particular direction is sated.

Still, it is valuable to me to have a lifetime learning goal, and that goal for me is 365 hours per year directly devoted to it – one hour per day. That can be a bit of a challenge, but it’s one that I relish and it’s one that keeps learning alive quite strongly in my life.

Those three tips have made a tremendous difference in lifelong learning for me.

Final Thoughts

Lifelong learning has been a core part of my life for as long as I can remember. I do it for pleasure, but it has opened countless doors in my life. My personal curiosity caused me to completely switch directions in college and find shelter under the mentorship of a few amazing people. My lifelong learning practices were the core of how The Simple Dollar got started – the earliest posts were effectively my notes on and internal connections from the tons of personal finance material I was reading. Lifelong learning has helped me to improve myself as a person, has provided foundational material for countless conversations with people from all walks of life, and has helped me form friendships that will last forever.

In the end, though, it’s still just fun for me. I relish the feeling I get from understanding something that I didn’t understand before. I love the sense of understanding a topic a little more deeply. I actually love the rush that I get from realizing that there’s this whole cavern of unexplored understanding and knowledge that I just uncovered. I genuinely feel like I understand substantially less about the world as a whole than I did when I was younger because I understand how much deeper things go.

It’s a wonderful, wonderful hobby that has given me so much in my life, and the amazing part is that it can be so inexpensive. In the end, all you really need is a notebook, a pen, a book, and a bit of free time, and the world can be yours.

Good luck.

The post A Beginner’s Guide to Lifelong Learning at a Minimal Cost appeared first on The Simple Dollar.

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Friday, September 8, 2017

I Think My Data Was Hacked in the Equifax Breach: Now What?

The last 24 hours have seen quite the whirlwind of credit-related activity. Equifax announced on September 7th that they were the victims of a massive data breach into one of their systems. No big deal, right? I mean data breaches happen all the time. Target, Home Depot, Gmail, pretty much every college and university in the country… everyone’s been breached at some point.

But this Equifax breach is significant for two reasons.

The first is the size. An incredible 143 million consumers living in the U.S. have potentially had their information exposed to people with bad intentions.

The second is the value of the information. If your information was exposed, then it likely included your name, address, Social Security number, and date of birth. Those are the crown jewels of information for credit fraudsters because it’s everything you need in order to apply for credit.

The information exposed has what I call “perpetual value.” That means it’ll still be valuable to a fraudster in five years, because it’s not going to change. You’ll still have the same name, SSN, and date of birth. And you’ll likely be living at the same address. Point being, I’d much rather have someone steal all of my credit cards than steal my personal information.

What Should You Do?

The minute you get done reading this, you should go to this page on the Equifax website.

Here you’ll be able to see whether you’ve been impacted, or not. If you have been impacted, then I would highly suggest you place fraud alerts on all three of your credit reports. You can do that at any of these three credit bureau websites:

The good news is that you only need to do this with one of the credit bureaus, and they are obligated under Federal law to notify the other two. The fraud alert will ensure that ANY lender that pulls your credit reports calls you and verifies verbally that you actually submitted a valid application for credit. For most of us, this will be good enough.

If, however, you want to ramp up your defenses a bit, you can “freeze” all three of your credit reports. The practical impact of a freeze is that your three credit reports will be taken out of circulation. That means no new lender (a lender that you don’t have a relationship with) can access your reports, period. You can learn more about how to place freezes on ALL of your credit reports at these credit bureau websites:

Security freezes are not free unless you’ve been a confirmed victim of fraud, but they are very inexpensive. For example, I live in Georgia, and it’s $3 to freeze my credit report. That means I can freeze all three for $9, and that’s a one-time cost, not monthly. It’s the best $9 I’ll ever spend.

Should I Sign Up for the Equifax Fraud Service?

The service Equifax is giving away to basically anyone and everyone who wants it is called TrustedID. It’s a good service, nothing wrong with it at all. Having said that, here are some things to consider.

You’re only going to get it free for one year. That assumes the value of your personal information diminishes after a year, which it does not. If I were one of the fraudsters I’d disappear for a few years and let the heat die down, and then resurface to monetize your personal information.

It only applies to Equifax. The credit report lock aspect of the service only applies to your Equifax credit report, and not your credit reports at Experian and TransUnion. That’s like locking one of the three doors to your house.

You will waive some of your rights by enrolling in the service. I’m not a lawyer and I don’t know what that means exactly, but this has been brought up in tweets and Facebook posts numerous times already, so clearly this is something that’s troublesome to people. You can read more about your rights here.

Related Articles:

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

The post I Think My Data Was Hacked in the Equifax Breach: Now What? appeared first on The Simple Dollar.

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How I Get Focused for Great Professional and Personal Performance

During the school year, I typically have a roughly seven and a half hour window in which the house is empty and quiet and I can focus on my writing and other work tasks. While I definitely do work outside of that block, the reality is that I want to get as much value out of my work time as possible, because if I’ve got time blocked out to work, it’s better for me professionally and personally if I make the most of that time.

That’s true of almost any job. The more productive you are when you’re at work, the better off you are in the long run. You become more valuable at work. It becomes easier to convince your boss that you deserve a raise. Your skill set becomes sharper. You’re likely involved in more resume-worthy projects. It becomes easier to get a new job as well, likely one with better pay.

The same thing is true with personal projects as well. If you can get more value out of that time, you can spend less time on the things you don’t really enjoy but have to do and spend more time on the aspects of life that really provide value for you.

The key factor is focus. Ideally, if I’m focused on a task, I drop into what’s known as a “flow state,” in which I lose track of time because my attention is so focused on the task at hand. During those periods, I get a ton accomplished.

Over the last couple of years, I have experimented with a lot of factors to figure out how to efficiently get myself to focus on a task really well, even when it’s not something I’m naturally excited to do. I’ve found a process that works really well almost all of the time, and when I actually stick to it and use it, I’m incredibly productive.

Here’s what I do.

Start of the Day

A big part of being able to successfully focus on tasks during the day is starting off the day well. Here are six things I do each morning, usually in the thirty to forty-five minutes I have before other household members start waking up, that really set the stage for being able to focus on things later in the day.

I drink a lot of water. I do this right when I wake up. It’s the single most effective thing I’ve found at making me feel more awake quickly in the morning. If I start with coffee, or if I drink nothing at all, I’ll drag on in a sludgy morning state for a good hour or so, which isn’t helpful for me or anyone else. I just go downstairs, pour myself about 32 ounces of water, and drink it over the next five minutes, usually while flipping through a magazine or reading something on my phone.

I stretch and do a bit of moderate exercise, to get the blood flowing. After I drink water, I do the second most effective thing I’ve found for waking me up: a bit of mild stretching and exercise. I touch my toes and hold it for ten seconds. I spread my legs apart for a bit and touch the opposite foot with each hand for ten seconds. I bend back as far as I can for ten seconds. I’ll put each foot up on the counter, one at a time, and bend over to touch my toes for ten seconds. I’ll then do a little bit of exercise, whatever I feel like. Sometimes I’ll do planks. Sometimes I’ll do pushups. Sometimes I’ll put on shoes and jog around the block. I just do something to get the blood flowing, and I feel really good afterwards.

I take a shower. Sometimes I’m a bit sweaty after exercise, so I’ll usually stop at this point and brush my teeth and take a shower. Again, it’s a “feeling good” thing (along with the basic hygiene).

I meditate on my breathing for ten minutes. After I shower and get dressed for the day, I’ll sit down for ten minutes in a comfortable chair, close my eyes, and focus on my breathing for ten minutes. I’ve come to view this as a mental counterpart to the stretching and mild exercise; it’s basically the equivalent of stretching and flexing for my mind, getting it in better shape for focusing. The benefits of this tend to build on themselves – one session isn’t transformative, but making it a daily habit definitely creates improvement.

I review my to-do list for the day. At this point, I just go through the things I need to do today. I usually prioritize it a little bit and, if you’ve been reading other articles on here lately, you know that I also ask myself about the long-term consequences of each of those actions. Usually, I try to figure out what I’m going to do in the morning, because I usually block off a solid segment of time for work between breakfast and lunch.

I eat a protein-rich breakfast. My only real requirement for breakfast is that it has plenty of protein in it. That usually means some eggs or egg whites or some yogurt for me. Protein is the key ingredient here, as it seems to really help in terms of focus for the rest of the day.

Just Before a Task

Now, let’s roll forward a little bit and look at what I do when I’m settling in for a task and I want to focus well throughout it.

I turn off my cell phone. My cell phone is the number one source of distraction in my life. I went through a period where it constantly stayed on, with the little chirps of notifications constantly distracting me and stealing my train of thought. No more. It’s extremely rare that the distraction of a notification is worth breaking my focus when I’m trying to get something done. It can wait. I turn my cell phone off entirely when I’m bearing down on a task.

I close browser windows and turn off wifi. My work involves writing, and the best environment for me as a writer is one where I can’t just click instantly over into a web browser and get distracted and where the computer isn’t giving me notifications and chirps like my phone does. The easiest way to do that is to just turn off wifi and keep my browser window closed. The only program I keep open is the program I use for writing. If I do need to look something up, I launch a browser, connect to wifi, look up that item, turn off wifi, and leave my browser open while I use that information, then close it.

I put on some ambient noise, like this. I have several long audio files of ambient noise that I use as background noise when I’m writing. I find I write far better with some gentle random background noise than in complete silence. The random gentle background noise keeps me from getting distracted by the occasional random noise from outside; without the gentle background noise, outside noises can be really distracting. I focus far better when there’s gentle random background noise like that.

I have a cup of coffee and a cup of green tea on hand and drink from both. If I drink coffee alone, I feel a bit agitated – I focus, but it’s a jittery focus that I can startle right out of. If I drink tea alone, I feel very mellow and not anxious at all, but I can’t focus well. Drinking both gives me the best of both worlds – I can focus really well without the jitteriness. I usually sit down with a cup of coffee (straight black) and a cup of green tea and drink them both.

During a Task

What about when I’m actually working on something?

I force myself to stay on task for a little while, even when it feels hard. The first portion is the hard portion for me, because it’s the time when I’m not really “in the flow” yet so I can really feel the effort it takes to stay focused. I just make myself push through this part because I know that if I do it, eventually I’ll get engaged and lose track of time and get deep into the task. I just have to make myself push through that first part, and I can only do that with minimal distraction.

If I suddenly drop out of a “flow state,” I take a break for a little while and then restart. When I drop out of that “flow state,” I know that it’s going to be tricky to jump right back into it, so I usually take a break. I use the bathroom. I move around a little. Maybe I’ll go on a short walk. I’ll usually stretch a little and refill my coffee and tea.

End of the Day

How I end the day is important, too. There are two key things I try to do each day that will help with focusing the following day.

I prep my to do list for the next day. I write down the big three things I want to accomplish, along with a bunch of littler things to do as time allows. This sets the stage for the next day. My intent is to use most of my focusing efforts on those “big three” tasks.

I go to bed early so that I get adequate sleep. Sleep is perhaps the most important aspect of all in terms of quality focusing, so I try to get plenty of sleep. Ideally, I prefer to wake up without an alarm, which means that I need to go to sleep fairly early to be up an hour or so before the rest of the family. I usually try to be in bed by 9:30 and read for half an hour before falling asleep.

How Does This Make Money?

So, what does focusing have to do with money? I alluded to it a bit at the start, but the real benefit is productivity – the amount of work I can produce in a given amount of time.

When I really focus, I can fall into a “flow state” in which my productivity is at a maximum. Words flow from my fingers. Ideas click together. I fix things and solve problems and take care of tasks.

If I’m in that flow state a lot during a given day, that means I suddenly have more free time. I’m able to get done in, say, five hours what would normally take me eight or nine hours – sometimes, I’m even more efficient than that.

That gives me free time that I didn’t have before. I can use that free time for additional money making projects (I’ve had one on the back burner for a while). I can use it to take care of frugality projects that I might otherwise skip or just pay someone else to do. Sometimes, I just use that extra time to enjoy myself – on a week of really good focusing, for example, I’ve been known to play a solitaire board game on the dining room table on a Friday afternoon, which helps a lot with stress and feeling happy about life.

I sometimes use the same focusing techniques on personal tasks, too. I use it when engaging in lifelong learning for personal growth or when I’m about to exercise, for example. Doing so greatly increases the value I get from such activities.

In short, having some tools in my personal toolbox to help me focus makes me more effective professionally and personally, and being more effective helps me to produce higher quality work at a faster pace, which either gives me more free time or greater opportunity to take on more money making projects.

I hope that some of these tools help you in the same way.

Good luck!

The post How I Get Focused for Great Professional and Personal Performance appeared first on The Simple Dollar.

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Thursday, September 7, 2017

The Five Year Question

For the last few months, I’ve been taking a new approach to almost everything that I do. With every dollar that I spend, with every hour that I invest, I’m asking myself one simple question.

Will I be glad I spent this time or this money in this way five years from now?

I’m going to go at length into how I actually apply this question and some of the specific uses, but I want to start with what really matters.

How the Five Year Question Has Helped Me

In a nutshell, the five year question has resulted one big difference in my life that I can easily describe.

When I’m actually sticking tightly to using the five year question, my life begins to take on this feeling of positive momentum, a sense that I am building something better for myself and my family. It doesn’t happen immediately, but after several days of really adhering to that question, I begin to feel it in the pit of my stomach and I begin to see glimpses of it in my day to day life. My life is simply getting better. It’s a really optimistic and contented feeling and it’s one that I love having. (I’ll get more into this, and some of the tangible results, later on.)

On the other hand, when I don’t stick as tightly to that question and I let myself act much more in the moment, I begin to feel as though my life is cycling in place. While I might have more momentary “joy,” the truth is that a lot of that momentary joy is completely forgettable, and before very long, I begin to have a sense that there really isn’t any positive forward momentum going on, that my life is just staying in one place and isn’t getting any better at all.

This phenomenon is true in all different aspects of my life: financial, personal, physical, mental, and so on. When I’m regularly asking that one big question, things begin to feel better and they feel like they’re snowballing, and that feels good. When I’m not asking that question, things begin to feel like they’re just holding in place and I’m not getting any better.

In other words, the five year question is definitely a longer term thing. It’s not something that you switch on and find yourself instantly with an improved life. Instead, it’s more of a gradual sense of change, where you begin to just feel better about things and you slowly begin to notice results popping up here and there.

The longer you stick with it, though, the stronger the momentum becomes, the more optimistic and content and fulfilled you begin to feel, and the more tangible results start to pop up.

So, let’s dig in.

Using the Five Year Question in a Practical Way

There are three specific ways I’ve been applying this five year question to my own life. These three specific applications have a lot of cross-pollination and synergy between them, as I often see benefits from one bleeding into the other.

First, I ask myself this question each time I consider spending money. Will I be glad I spent this money in this way five years from now? Not only does this question inform me as to whether I should spend this money at all, it often helps me decide whether there are better options for my money use.

For example, let’s say I’m about to buy a Kindle book, so I’ll ask myself whether this is a purchase I’ll be happy with five years from now. Maybe I should just get this book from the library instead, and then if I discover it’s a great work that I’m going to want to reread multiple times in the future, then it might make sense to buy it. I am very happy, for example, that I own all of the books in a couple of my favorite fantasy series, but I wonder what I was ever thinking with some of the other novels on my shelf. There are a handful of personal development books that I’m glad that I own and can turn to whenever I want, but there are others that mystify me as to why I bought them. This question, on the cusp of a purchase, keeps me from buying books unless I’m pretty sure they’re going to be in the “glad to own them” category.

The consequences of that question? Right now, I have a small stack of books checked out from the library. I’m spending less money on books, too. Five years from now, because I asked this question a lot, I’m going to have a smaller personal library of books, but that library will be much more meaningful and valuable. I’ll also have more money.

Another example: let’s say I’m planning out meals for the week and writing a grocery list. I’ll literally ask myself whether I’ll be happy with this meal five years from now. For me to feel happy about it in the future, it’s either got to be something special or it’s got to be pretty healthy for my body and, ideally, inexpensive. This is steering me strongly toward either making low-cost healthy meals or making carefully prepared special meals or food items.

The consequences of this question? I’m consuming fewer calories and I’m losing weight (when we’re not traveling, something I’m still trying to figure out). I’m also spending less money on food. On the flip side, I’ve also had a few very memorable meals recently and I’ve got a lot of homemade food items in storage, things I enjoy making and consuming and sharing.

The next principle is that I ask myself this question when I’m assembling my to-do list for a given day. I go through that list and ask myself whether or not I’m really going to care about this task in five years and, if not, what can I change about it so that it does matter?

This has resulted in a few really positive changes. The biggest one is that I find that the items on my to-do list are much more meaningful and I feel more engaged to do them knowing that not only are they relevant now, but they’re also relevant long term. They still feel like tasks, but I now understand them as building blocks for a better life.

For example, I’ll look at a work task, such as brainstorming article ideas, and recognize that not only is it generating the ideas that I’ll write about in the next week or so, but it’s also likely to lead to trains of thought that will produce ideas for a long time, and some of the best ideas will likely become truly great articles that I’ll link back to and highlight over the years. I still link back to my best posts and post series from five years ago, even today, because I know they add value to people who read them. I feel more motivated to brainstorm because of that realization, that good ideas today mean richer and more valuable writing tomorrow, even as far as five years down the line.

I’ll look at other tasks, like checking email (which I do roughly once a day), and realize that the vast majority of it really won’t matter in five years, so I’ll intentionally cut down on the time I devote to email. In essence, I’ve changed the task to “quickly filter email for important things and delete the rest” because almost all of the email I get is only urgent, not important. It can be tossed away. I focus instead on the emails that might be important enough to care about five years from now – communications with loved ones, communications with the new site owners, and communication with readers with good questions, and I try to filter and find those as quickly as possible. Email has moved from “check everything” to “filter out important stuff super quickly and address only important stuff.”

I usually do this once a day as I build my to-do list. I consider each and every item through the lens of whether I’ll care about this task five years from now. If I won’t really care, is there a way to pivot it so that it will have a positive impact? If not, is there a way I can minimize the time and energy I spend on it so I have more time for things that I will care about in five years?

Part of what has helped with this is that I’ve thought deeply about what I will care about in five years. I’ll care about my family and the relationships I have with them. I’ll care about having created great content for The Simple Dollar and finding new ways to reach readers. I’ll care about my leisure time, but mostly in terms of bigger projects I completed – I’ll care about batches of home-brew that I made, but not time spent leafing through magazines, for example. Tasks that clearly further those things while also fulfilling today’s needs are ones that I highly prioritize – and the interesting part is that I want to do them. The simple act of having considered their long term impact makes those that have a positive long term impact more appealing to me. Knowing that doing this is going to make my life better down the road pushes me to work harder on it.

Finally, I reflect on that question at the start of each task. What am I doing here that I will be glad to have done five years from now? That simple question provides a great focus on the task at hand, one that’s really helped me to give my best at different tasks.

That question usually cuts in two different ways. If I realize that this is just something that needs to be done and isn’t going to really matter in five years (say, doing laundry), I do it as efficiently as I can. If I realize that treating this with seriousness will have good long term impact, but not treating it seriously will have little impact, I bring some real focus to the table (say, a taekwondo practice).

The Benefits

I spoke in general terms about the benefits above, particularly in terms of the general sense that I was making positive progress in my life and truly building it into something better when I was actively involved with asking questions.

However, I wanted to talk a bit more at length about what has changed for me specifically when I’ve adopted those questions, and what has happened when I’ve slacked off.

When I actively asked myself the money question, I spent a lot less. That question constantly pushed me to spend very little money on incidental stuff without some careful planning. Instead, I usually just found things I already had to achieve what I wanted to do, or I found free or super-cheap alternatives.

I found myself being more mindful about leisure time and working on more meaningful things. I found myself reading more challenging books and reading them more slowly. I gravitated back to taking notes, especially with nonfiction, and I’ve found that very satisfying. Most of my leisure time is spent with some bigger aim in mind – I’m getting better at something, for example, or I’m making something, or I’m adding to a list of things I want to complete.

I found myself more engaged with work. As I noted above, I started trying to approach work through the lens of five years, and when I started doing that, I started approaching things very differently. I began to recognize that some things I write are simply “in the moment” that capture some momentary essence, and others are meaningful resources that I’ll return to again and again, and I started to approach them differently. The “momentary” things are more from the heart and are written more quickly and honestly than before, while the “resources” are actually written more slowly and with more research. In other words, that question changed how I work in a significant way.

I’ve found myself de-emphasizing some things in my life. I really don’t put much time into things that won’t matter in two weeks. I do them, but I try to do them as efficiently and quickly as possible to get them out of the way. I try to blitz through household chores with an intensity I didn’t use to have because I now see that such momentary things aren’t big obstacles. They’re just things to be done and pushed aside efficiently so that I have room for better things.

I turn off my cell phone more and focus on the moment. I want to be mentally present when spending time with the people I care about or doing things that have long-term meaning in my life, and my cell phone takes me away from that. I’ve been turning it off a lot lately, and I’ve never regretted it. This is a change that’s stuck with me even when I slack off on the questions.

I feel more calm and optimistic overall. I don’t know what the specific key to this feeling is, but I suspect it’s just a lot of little factors combining together, all of which were triggered by constantly asking those questions.

So, why did I ever stop doing this?

The biggest reason is that it’s easy to stop thinking about the big picture when you’re stressed out and overburdened. When I feel this way, I fall into something of a “survival mode,” where I’m simply trying to keep juggling a lot of balls at once. I don’t apply the same critical thought to my decisions – instead, I just instinctively do things because if I don’t make decisions quickly, the available pool of options shrinks rapidly. I don’t really have a lot of time to think when I have one thing I need to do at 3:30, another thing in another town at 4:30, another thing in another town at 5:30, and have to collect kids for something else at 6:30, while squeezing in dinner somewhere in there for myself and some number of my children.

The reality is that these types of questions work best when you’ve done them so often that they become instinct, and if you haven’t done them enough and fall back into a “panic mode,” it’s like forgetting how to ride a bike just as you’re learning how to do so. I’ll find a lot of success asking those kinds of questions for a week or two, but it’s just not enough to really make it my default way of thinking. That kind of switch takes longer to establish. Then, if I’m interrupted by life’s chaos, I fall back and I fail to really establish the habit. I have to pick up the reins later.

What’s the solution? I haven’t really figured it out yet, aside from being diligent about picking up the reins when life’s challenges trick me or force me into dropping them.

Some Personal Finance Ramifications

Let’s specifically take a deeper look at what the “five year question” means in terms of your finances.

It means less impulse spending and wasteful, forgettable spending. Note that this is not less fun spending. This type of thinking doesn’t stop you from spending money on things that bring meaningful and lasting joy.

What it does do is that it stops you from spending money on things that are easily forgotten and have no real lasting impact on your life. It cuts out things like convenience store purchases or pointless little “treats” for yourself when you’re alone. Those types of things won’t matter in five days, let alone five years.

It also means more thoughtful purchases. If you apply this philosophy consistently, when you do make purchases, those purchases are going to be meaningful. You’ll be buying things that last. You’ll be buying consumables that provide a lasting benefit for your life – healthier foods, for starters. You’ll pay for experiences, but only when they really add value to your life. In other words, you’ll still spend, but that spending will have lasting purpose.

Those two things leads to less spending overall. That’s simply the reality of it. A lot of our “incidental” purchases are things that we scarcely remember, and if we’re diligent about applying the five year question, those purchases will simply go away. Sure, we might end up spending a little bit more on things that are fulfilling over the long term, but the net result, in my experience, is that there’s a notable net drop in spending.

If you’re spending less, applying the five year question to what’s left results in pretty smart financial choices. You’ll apply that money to things like early debt repayment, retirement savings, emergency funds, and other things that you’ll genuinely appreciate in five years. You’ll find it much easier than before to do the financially responsible thing, and you’ll find that the five year question provides further encouragement to do so.

Take It Home: Applying the Five Year Question in Your Own Life

How do you actually do this, though? Here are three very concrete ways that I apply this question in my own life, and how you can do it in your life.

First, I keep a daily to-do list and I apply this question to everything that I add to it. Will I care about this task in five years? If not, how can I change it so that I will care about it in five years? If I can’t change it, how can I make this task efficient and have little or no negative impact on my life five years down the road (meaning that I don’t just throw money at the problem)?

Make this part of your to-do list building routine. You’ll find that some of the tasks remain the same but become more meaningful, while other tasks change and either grow in efficiency or grow in meaning.

Second, build the habit of evaluating purchases this way by considering them both before and after purchasing. Try to establish the practice of asking yourself the five year question before you spend any money, but also do it after the purchase. Think about past purchases through the five year question when you’re idle, or spend some time going through past credit card statements with the five year question in mind.

The purpose of reflection isn’t to beat yourself up over past mistakes. The purpose is to open your eyes to the things you consider routine and reflect on whether or not they make sense. You’re trying to hone an instinct, in other words, so that in the future, your buying decisions are naturally filtered through the five year question without even consciously thinking about it. When that happens, you’re making better gut decisions when spending your hard-earned money, and it’s going to improve the whole of your life.

Finally, think often about the life you want in the future. This is a form of motivation to stick with asking the five year question regularly. Visualize the life you’ll have in five years if you continue to improve in the areas you want to improve. What is your life like if you get in better shape? What is your life like if you push through those classes? What is your life like if you start putting in more effort at work and eventually earn a promotion? What is your life like if you work on making your relationships deeper and more full of trust and love? Picture that life that you want. Picture it in detail. That’s your goal, and that’s what your reward will be if you simply stick with the five year question.

Final Thoughts

The five year question really is a sorter of priorities. It forces you to look at your day-to-day actions through the lens of the long term and the results are sometimes surprising, but they’re always useful. That perspective often puts you on a different path in life, one that might seem a little harder in the moment, but one that over time begins to reveal benefits in countless little ways, from a debt being paid off faster than expected to a friendly greeting in the park when you didn’t plan on it, from a bit more contentment about what you have to a better role at work.

Put the five year question to work in your life for a bit and see where it leads. I bet you’ll be happy with the results.

The post The Five Year Question appeared first on The Simple Dollar.

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What Would You Do to Retire Early? Three Ways to Help Make It Happen

Most of us who read money blogs like the Simple Dollar do so because we have real-life financial goals. If you’re like me, your goals are fairly simple – you want to enjoy relative financial freedom, take care of your home and your family, and have a little fun along the way.

My husband and I are also extremely interested in retiring earlyreal early. While we’re not dedicated enough to belong to the extreme frugality movement espoused by FIRE (Financial Independence/Retire Early) gurus like Mr. Money Mustache and Jacob from Early Retirement Extreme, we don’t want to work until we’re 60 – or even 55, really. Ideally, we’ll spend enough to enjoy ourselves while socking the rest away until we stop working in our late 40s.

Right now, we’re on the right path to make our early retirement dreams come true. Not only are we maxing out our Solo 401(k) contributions every year, but we’ve purchased a few rental properties (one is paid off already), have our primary home almost paid off (nine more payments to go), and have managed to avoid many of the consumer trappings that hurt most people’s ability to save. We’re both 38 years old, so we have a decade more to go.

Will we make it happen and retire by 50? Since we’re self-employed with a variable income, it’s hard to say. And, of course, nobody knows what the economy will bring, including the type of returns we’ll see in our investment accounts. But I do know one thing: We should succeed if we stick with our plan without fail.

Worst case scenario, we’ll work a few years longer than we planned, but give ourselves more options than we would have otherwise.

If you’re angling for early retirement or wishing you could make it happen, try to remember that the process isn’t rocket science; it’s simple math. The more you can save and invest now, the more you’ll have later.

And, because of the power of compound interest, you’ll have a better chance at early retirement if you start preparing your finances now. Likewise, waiting to save for retirement or putting off financial goals will only make them harder to achieve.

Here are three steps that can help you move toward your goal of early financial independence:

#1: Pay Off Your Mortgage Early

The debate on whether to prepay your mortgage will always wage on, and there’s really no “right” or “wrong” answer that works for everyone. Many experts argue you’ll earn a lot more money if you invest extra money instead of putting it toward your mortgage, and that may definitely be true.

Then, there’s the cost of real estate to consider. If you live in a high cost area like Los Angeles or Boston or New York City, for example, it may not even be feasible to own a home. Obviously, you should take all of these exceptions into account as you consider this advice; in some cases, prepaying a mortgage could be a costly mistake.

But, if you’re in your forever home and you can afford it, paying your home off can absolutely help you retire early. Not only will you save money on interest over the long haul, but you can reduce your living expenses, too.

With lower living expenses, you’ll need fewer assets to retire early. And with your mortgage out of the way, you’ll have a “free” place to live for life. Just don’t forget to account for the cost of taxes, insurance, and upkeep, as you’ll still need to pay for those expenses once you retire.

In our case, we took out a 15-year fixed mortgage at 3.75% APR around four years ago. Our monthly payment is around $1,400 including property taxes and insurance. By the time we pay off our home next year, we’ll have paid around $15,000 in interest on the loan — but we’ll save around $25,000 in further interest by paying it off early.

Our home is worth around $250,000. Because the stock market is at an all-time high and we already max out our retirement contributions, this has been an easy decision for us. Once our home is paid off, we’ll need to pay around $3,000 per year in property taxes and homeowner’s insurance plus maintenance and repairs. Keeping our housing costs low is just one strategy we’ll use to reach retirement sooner.

#2: Boost Your Retirement Savings

While paying off your mortgage can make sense in certain situations, saving more for retirement is plainly one of the best ways to ensure you’ll have enough assets to retire early. Especially if you get an employer match with your 401(k) plan, you should go out of your way to contribute as much as you can, provided you like your investment options and the fees aren’t too excessive.

Thanks to the power of compound interest, the difference that even a small boost in contributions can make can be absolutely amazing. Imagine you’re 30 years old and earn $75,000 per year. If you contributed 10% of your income (inclusive of an employer match) for 20 years until age 50 and earned a 7% return, you’d have $328,988 in your retirement account. (Ideally you’d get raises along the way, of course, which would in turn increase your contributions — but we’ll keep the income flat for simplicity’s sake.)

If you boosted your retirement savings to 15% (including your employer match) and achieved the same return, you would have $493,483 after 20 years. But, if you maxed out retirement at the current 401(k) maximum contribution of $18,000, you’d have $789,573 in your account. Add another five years of work for 25 total years of savings and you’d have $1,217,176 – that’s an enormous difference.

Since my husband and I are self-employed and each have a Solo 401(k), we’re able to stash away a little more than average – $18,000 each, plus 25% of our annual profits, up to a grand total of $54,000 each. While we may not be able to maximize this benefit for our entire working years, we’re doing so for as long as we can.

#3: Avoid Debt

When it comes to retiring early, too many people underestimate the compounding effects of avoiding debt – all debt. This includes more than credit card debt and extends to car loans, personal loans, and other debts as well.

Keep in mind that the average indebted household owes $16,883 on their credit cards. If they maintain a similar balance in perpetuity and have an average APR of 15%, they could pay as much as $211 per month – or $2,532 per year – just in interest. Over the course of 20 to 25 years in the working world, avoiding this debt could save you $50,640 to $63,300 in interest payments alone. And that doesn’t even include the investment gains you could be making on that money if you weren’t handing it over to creditors.

The same idea applies to car loans, too, except the savings are slightly harder to quantify — because most Americans do need a car, whereas nobody needs credit card interest payments. However, you don’t need a particularly nice car — a used one will still get you to work and back just fine. The average new car payment was $509 per month in early 2017, according to credit bureau Experian. That’s $6,108 in car payments per year and, if you’re on a perpetual trade-in cycle, $61,080 over 10 years, and an astounding $152,700 over 25 years.

If you trade in your car every few years and pay a “new car payment” for your entire working life, this is how much you can expect to fork over – and that doesn’t even include additional costs of buying new, such as more expensive license plates or pricier insurance.

If you could save even half of that by driving your cars longer or buying used instead of new, you could be a lot closer to early retirement in less time than you think.

And obviously, the less debt you have as you approach retirement, the easier it will be to reach your magic “retirement number” – the amount you need saved to cover your post-retirement living expenses.

This is yet another way my family is staying on track toward early retirement. We only have a single, paid-off vehicle for now, but we’ll pay cash if we buy another car down the line. And, while we use credit cards for rewards, we never carry a balance or pay interest. Over time, this has allowed us to pay down our mortgage faster, save more money for retirement, and spend money on family vacations and other splurges without sacrificing our goals.

The Bottom Line

If you have you eye on early retirement, the formula to achieve your goal isn’t as complicated as you might think. You mainly need to spend less, avoid debt, and invest as much as you can. If you complete these three steps regularly for years, your efforts will eventually snowball on themselves.

There are a ton of different ways to work toward early retirement, but the long, consistent approach is the one that usually wins. Like any other goal, however, you can’t retire early if you never start planning.

You don’t need to be perfect, but you do need to start.

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:

Do you plan to retire early? Why or why not?

The post What Would You Do to Retire Early? Three Ways to Help Make It Happen appeared first on The Simple Dollar.

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Wednesday, September 6, 2017

You Can Now Book Marriott and SPG Hotels on Slack

Marriott International is considered the largest hotel chain in the world, and PCMagazine recently named Slack as one of its top online collaboration programs of 2017. It was only a matter of time before they started working together.

You can now compare and book Marriott and Starwood rooms directly through Slack. Just add the Marriott Rewards app to Slack. Type the Slack command /Marriottrewards in any channel, along with your desired city and check in and check out dates. Whoever’s in the channel will be able to see all the available rooms and rates.

You can organize choices by price, and the entire group can vote on where they’d like to stay. And if you don’t like any of the available choices, you can simply hit “view more hotels” and try again.

The new Slack integration is the ultimate convenience for cardholders. Thanks to Marriott and Starwood Hotel and Resorts’ merger in 2016, cardholders can also benefit from Marriott’s new app. (Both cards are featured on our list of the Best Hotel Credit Cards for 2017!)

Hotel card comparison

Card Rewards summary Signup bonus Annual fee
Unlimited 5X points per dollar at participating Marriott Rewards®, The Ritz-Carlton® and Starwood Preferred Guest® properties. Free night every account anniversary. Earn 80,000 bonus points after you spend $3,000 on purchases in the first 3 months from account opening. $85
2X Starpoints® per dollar at participating SPG® and Marriott Rewards® hotels. Starpoints® are redeemable through SPG flights at 150 airlines with no blackout dates. Earn 25,000 bonus Starpoints® after you use your new Card to make $3,000 in purchases within the first 3 months. $95 (waived first year)

SPG® members can transfer Starpoints® to Marriott Rewards at a rate of 1:3, while Marriott Rewards members can still earn 5X points per dollar spent at participating Marriott, Ritz-Carlton®, and Starwood properties. Both programs are expected to fully integrate in 2018, but until then members of both programs have access to all of Marriott and Starwood’s 4,700+ locations at their fingertips, and it’s never been easier to earn rewards.

If you have a Slack account, don’t hesitate. Install the Marriott Rewards app for Slack now, and combine it with the loyalty program of your choice. You’ll be able to earn and redeem rewards, and book the room of your choice, in no time at all.

The post You Can Now Book Marriott and SPG Hotels on Slack appeared first on The Simple Dollar.

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Windfalls Aren’t Unlimited Money

A few days ago, I had a really interesting conversation with an old friend of mine from my childhood. I had gone back to my hometown to visit my parents and attend a community festival and I bumped into several people that I used to go to school with.

I wound up having a fairly long conversation with one of them about life in general and what we’d each been doing since high school. Back then, he was an incredibly diligent worker and a very nice guy, but he struggled greatly within the constraints of school, so I was glad to hear that he had found a good job and career path that paid quite well for the area. He had a home and a nice family and some things he was passionate about – a really good life, in other words, and I’m glad that he does.

One comment from our conversation stuck in my head, however. He was telling me about someone that we both knew from those days that had won a little over $200,000 in a settlement, apparently after all taxation. He spoke about that amount of money in near awe and said, “If I had that kind of money in my hand, I’d retire tomorrow.”

Let’s stop right here for a second. $200,000 is a nice amount of money, but it’s not “retirement money” for almost anyone. By my quick back-of-the-envelope math, my old friend brings home enough so that they’d eat through that money in less than a decade without some significant spending cuts in their life – and that assumes his wife continues to work.

I rolled this idea over in my head for a while, and then I remembered an old episode of The Office, entitled The Lotto. A quick synopsis of the start of the episode from Wikipedia:

The six warehouse workers win $950,000 in a lottery pool, and quit in a celebratory fashion of running through the office, making a mess and mooning the staff.

Let’s do the math here real quick. Let’s assume that a third of the winnings would be devoured in taxes, and then the rest is split six ways. That leaves each winner with about $100,000 after taxes, and their response was to immediately quit their jobs. Probably not the wisest move.

Yet, on some deep level, I understand why my friend made that comment and why the workers quit their jobs on The Office.

The reason is that within each of us, there’s some amount of money that we really can’t grasp any more in terms of our day to day lives and thus it begins to seem infinite. If you’re used to living on about $2,000 or $3,000 a month and suddenly you have hundreds of thousands of dollars, it’s hard to put that amount in context of your daily life.

We are humans. We are naturally short term thinkers. Thinking long term is something we have to work at, and it’s a big theme of The Simple Dollar.

When people see an amount of money on their plate that covers their expenses for at least the next year or two, it ceases to become a real number to many people. It means that many of the rules of normal behavior that they were constrained to no longer apply.

For some, that might mean quitting their job. For others, it might mean silly expenses like buying an expensive car or going on an expensive trip or buying a new house.

My response? If you ever find yourself with a windfall that’s more money than you’ve ever had at once in your life, don’t do anything immediately. Stop. Chill out. Catch your breath.

Don’t quit your job. Don’t buy a car. Don’t buy a house. Don’t go on a trip. Give yourself at least a month to process what’s going on – I’d suggest even longer than that. Keep it quiet and don’t spread the word around, either.

Here’s the reason: Short-term thinking comes easy, but long term thinking is hard. It takes time and reflection and advice. If you make one short term move with a windfall, it should be to wait and give yourself enough time to let some long-term thinking kick in.

The sole step that I recommend in this situation is to find an accountant and a tax lawyer that you can trust who can tell you how to keep this money safe for a while. You shouldn’t be touching it for at least a few months, not until you’ve got your head on straight again. If the amount is less than $250,000, you probably don’t even need those fellows. Just put the money in an FDIC-insured savings account at a local bank for now and just sit on it for a while.

In the interim, lock it down. Ignore the ideas that pop up in your head. If anyone asks you for money, turn them down. You can always give them money later on, on your own terms. Keep living life as you always have, and breathe.

The first thing you’re going to want to do with that money is to build a moat to protect the things you already have. That means doing things like paying off your debts and having a big emergency fund in case things go wrong.

A “moat”? It’s just a simple term to refer to the concept that your life is somewhat protected from the unexpected, much like a moat around a medieval castle somewhat protects it from invaders. It means rather than radically rebooting your life, you’ve simply done quite a lot to protect and secure what you already have, giving you peace of mind and the ability to survive some unexpected events without a major financial crisis.

If that windfall can eliminate your car loans and your mortgage and all of your credit card debt and give you enough cash in savings to live off of for a year, then you spent that money incredibly wisely and you made a substantially better life for yourself. You have far less stress, far more freedom, and far less worry about a cruel boss tossing a pink slip at you.

If you still have a small amount of money left over, use it to replace items that are on the verge of breaking down. It might be time to replace an old beat-up car with a late model used car, for example, or replace a washing machine that’s making ominous noises. Making these moves keeps you from a sudden expensive burden in the near future.

Building a moat should be your number one priority with any windfall. Simply eliminating debts, building an emergency fund, and taking care of any obvious severe upcoming expenses will do quite a lot to secure your life, eliminate stress, and give you a foundation upon which to build great things.

The thing is, in the case of my friend’s acquaintance and likely in the case of the workers on The Office, their windfall would have been consumed by building a moat. They would have still had their old jobs and most of the structure of their ordinary life, but it would have come with a lot less stress and a lot more protection against the unknown. Things like an odd clunk in your car’s transmission no longer set you into a panic when you have a moat. Thoughts about trying a new career no longer seem impossible when you have a moat.

What about the big dreams, like quitting your job and retiring early? Those things should only enter the picture if you build a moat around your life (as described above) and you still have a lot of money left over – and by a “lot,” I mean an amount that would pay your living expenses for the rest of your life. If you spend $30,000 a year to live, you probably shouldn’t retire unless you have somewhere around $1 million left over, because if you have less than that, you’re going to run that money dry before you get old. A good rule of thumb is this – divide the amount left over (along with any retirement savings you might have) after you’ve built your moat by 30. Is that resulting number enough for you to live on comfortably with a little bit of breathing room? If the answer is no, then you shouldn’t walk away yet.

In any case, if you’ve built a moat for yourself and still have substantial money left over, that’s the time to talk to a financial advisor. Seek out a fee-based advisor with a good reputation and, before you go, spend some time seriously thinking about your goals. Figure out just two or three things you want to achieve with your money and let the rest of your ideas become water under the bridge.

If there’s one thing to remember about a windfall, it’s this: Windfalls aren’t unlimited money, even if the amount seems really, really big. Almost always, that amount turns out to be smaller than you realize, and if you just start making short term decisions with it, you’ll end up right back where you started. Use a windfall to build a genuinely better life; don’t use it to splurge and give away for a few months only to wind up right back where you started (likely with some extra bitterness to boot).

Good luck.

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Hurricane Harvey: How to Donate Safely and Avoid Charity Scams

As Hurricane Harvey pummeled Texas and Louisiana with deadly downpours, thousands of generous Americans responded with an outpouring of financial support. Unfortunately, times of crisis can bring out the worst in a few people even as it brings out the best in many.

Government officials and consumer advocates have issued warnings about scams posing as legitimate relief efforts. Here’s some advice on how consumers can donate safely and help the victims of Hurricane Harvey without becoming victims themselves.

Investigate before you donate

Longtime charities such as American Red Cross and Samaritan’s Purse are familiar names in disaster relief, but what about groups recently organized in response to Harvey? Several monitoring agencies and websites can help you check their credentials:

You may encounter requests for donations in any number of ways — on TV, through social media, by phone, etc. Why the need for caution? Charity scams use a lot of underhanded tactics, right down to choosing bogus titles that mimic the names of reputable charities.

If you run across something that seems suspicious, you can file a complaint online with the Federal Trade Commission, or contact the National Center for Disaster Fraud by email (disaster@leo.gov) or by phone at (866) 720-5721.

Be on your guard online

Fake internet charities are one of the regrettable side effects of the Information Age. In the case of bogus disaster relief efforts, some online scammers start planning for hurricane season months in advance.

A common scheme involves registering domains that incorporate the names of storms listed in the National Weather Service forecast each spring. Before Hurricane Harvey even started to take shape, there may well have been fraudulent charity websites with “Harvey” in their domain names waiting to be launched.

Safety tips for online charitable donations include:

  • Look for https:// and the padlock. Don’t provide any personal information (name, credit card number, etc.) to a website that doesn’t use security protocols. Whether by design or unintentionally, an unsecured website could expose your information to identity thieves. On a secure website, the address will begin with https:// instead of http:// (“s” stands for secure). You should also see a padlock icon and the word “Secure” in the upper left corner of your browser window.
  • secure website padlock symbol

  • Be wary of links. An unsolicited email that asks you to click a link is a red flag under any circumstances, even if the email came from someone you know. Their account may have been hijacked by criminals who are now trying to ensnare you.
  • Go right to the source. If you have questions about a GoFundMe campaign, for example, GoFundMe administrators recommend contacting the organizer directly (or clicking the Report Campaign Button).

Concerned about cash? You can donate points

If you have general security concerns about donating money directly, don’t worry. Your credit card’s rewards program may have a way to help you be cautious and generous at the same time.

Many rewards programs let you give rewards points or miles to charity, which the card issuer converts to a cash donation. In some cases, credit card issuers have set up specific webpages for Hurricane Harvey donations.

Credit card companies with charitable donation programs include:

Remember, you won’t have to visit an unfamiliar website to make a donation. Just log in to your account and follow your credit card issuer’s instructions for donating points.
Check with your rewards program for rules and requirements. (For example, your card issuer may require a minimum number of points/miles for charitable donations.)

The post Hurricane Harvey: How to Donate Safely and Avoid Charity Scams appeared first on The Simple Dollar.

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Tech Is Disrupting Insurance: Should You Get on Board?

By now, you’ve probably heard the term “fintech,” referring to the apps and companies — such as SoFi, Qapital, Acorns, Prosper, Betterment, Wealthfront, RobinhoodPersonal Capital, Digit, and others — that are using technology to shake up the financial industry. These services are focused on attracting younger people who use their smartphones to get things done.

What you might not know is that traditional insurance companies are feeling the heat as well. “Insurtech” (doesn’t quite roll off the tongue like fintech) companies have been popping up all over the place. They run the gamut, from health and life insurance startups to pet insurance. Heck, there’s even a startup specifically for delivery drivers who only need insurance when they’re working a shift. That’s specialization!

All these companies are betting that they can upend a stodgy industry notorious for high prices and poor customer service. By looking at the pros and cons of a few of the leading insurtech players, we can get a better grasp on whether or not it makes sense to give one of them a shot.

Auto Insurance

MetroMile is an insurtech company built around an idea that just makes sense: Charge a very low base rate for car insurance, and then charge a flat per-mile rate rate on top of that. Essentially, with MetroMile, you pay for what you use. This is in contrast to the traditional car insurance model of charging a high flat rate and largely disregarding the miles driven (up to a certain point, of course).

Back when I owned a car, I would have been thrilled to try out a service like this. I get to experience it vicariously through a friend of mine, Tim, who lives in California. I reached out to him to see how he liked the service, as he was the one who originally told me about MetroMile.

He loves it, saying that it has saved him over $500 in the year since he made the switch. He’s also totally on board with their mission. “I don’t pay a monthly bill to Trader Joe’s and take as much food from them as I want, so I don’t see why car insurance would be any different,” he told me.

He makes a good point, but it should also be noted that he’s never had to file a claim, so he couldn’t speak to their level of service. I’ve heard many a tale about how low-cost auto insurance providers are the best thing in the world until you actually have to collect money from them. It feels a bit like riding an old roller coaster at a state fair. It looks really fun, but do you trust the owners of “The Vomitizer 3000” to take care of you should something go wrong?

That being said, MetroMile is on solid financial footing, according to ratings agency A.M. Best, earning a financial strength rating of “excellent.” It’s also accredited (with an A+ rating) by the Better Business Bureau.

Homeowners Insurance

Hippo is a home insurance company that launched in California in April after raising over $15 million from a group of top-notch Silicon Valley venture capital firms. Much like the other players on this scene, Hippo is positioning itself as a home insurance solution for tech-savvy millennials. They have a slick, colorful website, and they promise to get you a quote in 60 seconds or less.

Hippo makes a point to insure stuff that millennials care about but traditional policies overlook, such as electronics, and focuses on proactive disaster prevention through smart home technology. They also make some bold claims about pricing, advertising that they can save the average consumer up to 25% while making sure you’re not underinsured. They do this by reducing fees and cutting out the commissioned agents who traditionally sell these services.

Hippo asks homeowners some basic questions and then uses its technology to search partner insurance providers for a policy that makes sense for your specific situation. They only partner with insurance companies that hold an A.M. Best rating of “excellent” or higher, and they hold a high rating on ConsumersAdvocate.org.

I can’t lie, it all sounds great on paper. If startups are good at anything, it’s making things simpler by cutting out middlemen. One just has to look at the travel industry, where once pricey travel agents have been replaced by online services such as Expedia and Kayak. But insuring your home is a different beast altogether than planning a vacation.

Renters Insurance

Lemonade has raised over $60 million from premium venture capital firms. Their tagline is, “Forget everything you know about insurance,” which feels like they’re laying it on a bit thick — but I guess that’s what it takes to try and win over the younger, urban crowd.

To their credit, they do seem to be on the right path. They seem transparent, as they mention that they take a flat 20% fee to run everything. They also have the most colorful, fun, intuitive, easy-to-understand website of all the companies I researched. That’s saying something, as it seems like insurtech companies must spend as much on graphic designers as they do paying out premiums.

Also, they’re supposedly able to use artificial intelligence to pay claims with lightning speed. If you trust their marketing, they hold the world record for fastest insurance claim paid, when a customer was repaid $729 for a stolen coat. The whole process, using the Lemonade app, took less than three seconds.

Keep in mind that filing a claim for tens of thousands of dollars after a hurricane hits will surely take more than three seconds, but the prospect of such quick service is pretty cool nonetheless. I personally love depositing checks into my bank accounts via an app on my phone, rather than going to a brick and mortar bank. Filing claims and having them paid out all on through my phone doesn’t seem out of the question.

Lemonade has yet to be rated by A.M. Best, but rival Demotech gives Lemonade an A rating for financial strength.

Life Insurance

Fabric is a brand new insurance company with backing from elite venture capital firms. It has a fancy website, a slick app, and life insurance plans starting at $6 per month. It’s positioning itself as a fun, simple, friendly way to get life insurance. It’s especially proud of its ability to get quickly get people covered. They say you can get an accidental death policy in two minutes. Whoa!

While I’m all for simplicity, I don’t think what’s holding people back from getting life insurance is the time it takes to get covered. This is a decision I’d want to put a little more thought into. The “speed over all else” vibe reminds me a bit of Rocket Mortgage, who advertises the speed with which they can get millennials approved for home loans. As we learned in the last housing crisis, a speedy and easy application doesn’t always mean the buyer is going to get the best terms.

Ratings firm A.M. Best says that Vantis Life Insurance Company, which issues Fabric’s policies, has excellent financial strength, indicating they can be trusted to make good on their claims.

Health Insurance

Oscar, the original insurtech darling, exploded onto the scene in 2012 and quickly grew into a company with a billion-dollar valuation. They hang their hat on being easy-to-use, easy to set up, and having excellent customer service. Long story short, they are trying to simplify and spruce up a notoriously complex and frustrating industry.

Unfortunately for the folks at Oscar, who surely have their hearts in the right place, they have become the poster child for what can go wrong in insurtech. For the last two years, they have been floundering.

Oscar’s entire premise was built around being able to sign up individuals who were dropped from employee health care plans, but this happened at much lower rates than they were expecting. Recently, they had to inform all of their customers in New Jersey that they were closing up shop. They’ve been slashing services and hiking premiums in other areas as well.

What If a Financial Startup Goes Belly Up?

Unlike with banks, there’s no federally backed program that protects your money in case your insurance company runs out of funds and can’t pay out on its policies. Fortunately, each state has its own insurance guaranty system in place to protect consumers, and they act much like the FDIC insurance that protects your checking account. You can see a full list of what’s covered here.

This should reduce some of the hesitation you might feel in trying out a new insurtech company. If something bad were to happen, your money should be protected. But, keep in mind that these policies, on average, are meant to mitigate the losses of policyholders, not necessarily to make them whole. As with investing, it’s wise to be prudent. If you choose to use the services of an unproven company, you are taking on a little bit more risk.

It’s all fun and games and slick mobile apps until the… stuff hits the fan.

Summing Up

Insurtech is only in its infancy, and the name sure doesn’t roll off the tongue like “fintech,” but it’s a major force that won’t be going away anytime soon. Personally, I’m excited. Insurance is expensive, and the companies can be a pain to deal with. If we can start to drive down prices with increased competition from companies that are easy to deal with, I’m all for it. Of course, breaking into these industries is easier said than done. Only time will tell which insurtech companies will have legs for the long haul.

Whether we’re talking about insurance providers, cell phone providers, or cable providers, remember that it always pays to shop around. With a little bit of effort, you should be able to find the cheapest plans that make sense for your unique situation.

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