Saturday, November 4, 2017

Inspiration from Massimo Pigliucci, Chris Stapleton, Rhiannon Giddens, and More

Inspiration from ,,, and More

Once a month (or so), I share a dozen things that have inspired me to greater personal, professional, and financial success in my life. I hope they bring similar success to your life.

1. Yogi Bhajan on how others behave toward you

“If you are willing to look at another person’s behavior toward you as a reflection of the state of their relationship with themselves rather than a statement about your value as a person, then you will, over a period of time, cease to react at all.” – Yogi Bhajan

This quote has been hugely influential on my thinking over the last month or so.

For most of my life, I have taken criticism very hard and I’ve also allowed compliments to really buoy my emotions. That’s because I often bought into the idea that the spotlight of their comments was fully on me – if someone’s criticizing me or complimenting me, then it must be fully about me, right?

I’ve come to realize, after reflection on my own behavior and on this quote, that that’s not true at all. Many compliments and criticisms are self-serving and often have very little to do with the person being complimented or criticized (not always, but quite often).

The truth is that most compliments and most criticism is mostly just a reflection of the person issuing it. It has far more to do with their emotional state at the moment and what things are on their mind. Yes, you might be an element of that, but you’re often a small element.

Now, there are compliments and criticisms that are worth paying attention to, but those tend to come from people who actually have a stake in your life and are being thoughtful and careful to point out both positive and negative things. The vast majority of criticism and compliments that you get don’t fall into that category, and it’s easy to figure out when they’re serious.

Serious compliments and criticisms are usually detailed, with words chosen carefully as to make their meaning clear and not unduly critical, and they’re rarely self-referential to the person giving the compliment or criticism.

The thing is, the vast majority of compliments and criticisms that you hear don’t fall into that category, and thus they’re really not worth paying any attention to or giving any weight to.

Reflect on that regularly and you’ll find that a lot of offhanded compliments and criticisms quickly cease to mean anything to you.

2. Adam Carroll on when money isn’t real

From the description:

Adam Carroll talks about his $10,000 Monopoly game with his kids and how to teach finance management in a cashless society.

This video demonstrates a simple truth: the closer people are to actual money, the more likely they are to take it seriously and behave in a sensible and smart way with it.

That’s why credit cards are pushed so heavily by financial institutions. Credit cards abstract your money. They take it from cash in hand into a form that’s easy to spend because it doesn’t really seem like money – it seems like just swiping this magic plastic card, after which people give you stuff!

If you carry that thought forward a little bit, it makes a lot of sense to switch to cash-only living if you find yourself struggling to make ends meet and to keep your credit card spending in check. If you switch to a cash-only lifestyle for a while, your financial choices suddenly become much more tangible. You’re actually spending your hard-earned cash for this thing you want in the moment, and that really changes things.

3. Massimo Pigliucci on friendship (via Aristotle)

Aristotle’s opinion was that friends hold a mirror up to each other; through that mirror they can see each other in ways that would not otherwise be accessible to them, and it is this (reciprocal) mirroring that helps them improve themselves as persons. Friends, then, share a similar concept of eudaimonia [Greek for “having a good demon,” often translated as “happiness”] and help each other achieve it. So it is not just that friends are instrumentally good because they enrich our lives, but that they are an integral part of what it means to live the good life, according to Aristotle and other ancient Greek philosophers (like Epicurus). Of course, another reason to value the idea of friendship is its social dimension. In the words of philosopher Elizabeth Telfer, friendship provides “a degree and kind of consideration for others’ welfare which cannot exist outside.”
– Massimo Pigliucci, Answers for Aristotle

I originally wanted to include a quote from Aristotle on friendship here, going directly to the source, but Aristotle’s source quotes were wordy and no single one really summed up what I wanted to say. Pigliucci’s summary here really ties it up.

A friendship worth having is one in which both people involved are made better because of it. Honestly, I’ve come to the point where I judge friendships from that light. If we’re not making each other better, what is the point?

That doesn’t mean you drop a friend when they’re at a low point, but that you should drop a friend when they’re not there when you are at a low point. Be there for your friends when they are low, but remember those who were there for you when you were low.

4. The daily walk

A nice walk has been a part of my day for many years. I usually try to go on a three mile or so walk each day, wandering either through the town in which I live or the countryside near the town, as we live on the outskirts.

In the past, I would listen to a podcast on my walk, or an audiobook, to give my brain something to chew on while walking, but what I’ve been doing lately is listening to nothing at all. Instead, I spend about five minutes before my walk going over something that merits more thought in my life, then heading out with nothing to distract me – no phone at all, just my pocket notebook and a pen in case I want to jot something down.

On the walk, I just let my mind wander without any sort of interrupted distraction. I look at the natural beauty around me. I let that initial problem float around in my mind, but I don’t intentionally focus on it. I’ll think about whatever book I’m reading, or some parenting issue, or what I might want to fix for supper.

The thing is, when I come home, I feel incredibly primed to do something creative – usually writing, but sometimes it’s other things.

I’m permanently switching to leaving my phone at home on my walk, or else stowing it on silent in my back pocket if I’m tracking distance. The benefits of an uninterrupted walk have been amazing.

5. Muhammad Ali on the pebble in your shoe

“It isn’t the mountains ahead to climb that wear you out, it’s the pebble in your shoe.” – Muhammad Ali

It’s funny how your biggest goals are often upended by the littlest things.

My exercise regimen is often interrupted not by laziness, but by my own tendency to fall into a “zone state” when working, where I completely lose track of time and snap back to reality by the noise of my children coming in the door at the end of a school day.

My dieting regimen is often slowed greatly not by hunger or temptation, but by dinner parties at the homes of friends and family, where I try to eat a polite amount of food but inevitably blow away my daily calorie goals.

The problems that I expect to have at the start of taking on a big journey often end up not being the challenging ones. The ones that actually tend to derail me are ones that I never even think of at all before I start.

I don’t find this despairing. I find this inspiring. It makes me step back and look at my goals and my plans again in a new way. It makes me stop and shake that pebble out of my shoe rather than just deciding that the goal is unreachable.

6. Chris Stapleton – Tiny Desk Concert

From the description:

As a songwriter in Nashville, Chris Stapleton has written hits for Kenny Chesney, George Strait and Darius Rucker. As a singer, he once led the bluegrass band The SteelDrivers, and more recently stepped into the solo spotlight with Traveller, his debut album. It’s the kind of country record that gets better the more you wear it in: When NPR Music named it one of our favorite albums of the first half of 2015, critic Ann Powers compared it to a “soft denim jacket … pulled out time after time, lending comfort, suiting every occasion, with treasure stuffed in every pocket.”

It’s easy to understand why other singers took to his songs — Stapleton writes lyrics that sound classic but never dated — but his softly creaking voice gives them the home they deserve. And even though those songs stand plenty well on their own, it’s nice to have a little support. When Stapleton stepped behind the Tiny Desk to play selections from Traveller, he was joined by his wife Morgane on harmony vocals. Between patient, detailed songs of devotion to love, Los Angeles and liquor, they paused for banter about the summer heat in D.C. and the large number of guitars Chris owns (“Not supposed to tell that part,” he said to Morgane).

Watch him hide behind a large hat, a beard and a battered vintage guitar; watch her smile at him during “More Of You” with a combination of admiration and affection. Like the songs themselves, their performance is full of private moments worth sharing widely.

It’s no secret to those of you who have followed these “pieces of inspiration” articles over the years that I enjoy bluegrass and folk music, but I rarely post what would be called “country” music. The reason being is that music works for me when it can strike an emotional chord with me, and the country genre rarely does that, particularly in its current very pop-oriented “bro-country” flavor. It just doesn’t… mean anything.

To me, great music gins up emotion in your heart, even when you’re not feeling it. It pulls you along for the ride. It draws forth joy, fear, pain, relief – all kinds of emotions. It takes a gift to do that through music. I certainly don’t have it, and I know many very skilled musicians who don’t, either.

Chris Stapleton excels at this, with just his voice and a beat-up guitar. He knows how to use every string and every hint of his voice to basically pull a feeling out of my gut, whether I know it’s there or not. That’s a gift.

7. Longfellow on the secret history of our enemies

“If we could read the secret history of our enemies, we should find in each man’s life sorrow and suffering enough to disarm all hostility.” – Henry Wadsworth Longfellow

It is so easy to put everyone else’s behavior in the context of us. Is that person doing right by us? Is that person exhibiting behavior that makes sense by my standards?

The thing is, we don’t know that other person’s story. Is that glance at us a mean glare, or is that just the person’s face and they’re not even thinking about us? Is that grouchy person on the bus really hateful to us or are they just having a bad day?

The other day, I had someone literally bump into me roughly on the sidewalk and they seemed to apologize halfheartedly without even looking at me. Was the person rude? Did they dislike me? Actually, it turns out the guy was almost completely blind.

When you stop for a moment and consider what the other person’s life is like, it makes it a lot easier to just overlook quirkiness or perceived impoliteness. Maybe that person is having a bad day, or a bad week, or a bad life. Maybe that person was raised in a different culture than you, where your expectation isn’t theirs. Maybe that “bad driver” learned how to drive in a place where the customs of the road are a bit different.

Not everything has to bend to your expectation. A little bit of empathy and consideration goes a long way.

8. David Lee on why jobs of the future won’t feel like work

From the description:

We’ve all heard that robots are going to take our jobs — but what can we do about it? Innovation expert David Lee says that we should start designing jobs that unlock our hidden talents and passions — the things we spend our weekends doing — to keep us relevant in the age of robotics. “Start asking people what problems they’re inspired to solve and what talents they want to bring to work,” Lee says. “When you invite people to be more, they can amaze us with how much more they can be.”

Ask yourself this: what element of human work will be the most difficult for robots and computers to overcome? It doesn’t take a philosopher to know that it’s passionate creative work – work driven by creative minds applying their knowledge in unexpected ways to problems they care about.

The thing is, you’re basically describing hobby time here. You’re basically describing play – people applying their imaginations and creativity and domain knowledge to something they really care about.

I know that, personally, some of my most enjoyable experiences come from either learning new things or trying to solve problems that don’t have obvious solutions. In the future, I think that’s what all humans will be left with for work, because the other tasks will be handled by machines.

It’s an interesting future to think about, with a lot of implications.

9. Steve Maraboli on yesterday

“One day I just woke up and realized that I can’t touch yesterday. So why the heck was I letting it touch me?” – Steve Maraboli

Your past doesn’t define you. It never should. The only use for a person’s past is to provide lessons for the present and guidance toward the future.

I often look back at my own financial mistakes and, yes, I regret them. However, those mistakes don’t define me. Instead, I try to mine the mistake I made back then to improve what I’m doing right now.

Don’t let your past define you. You’ll constantly regret it.

10. Rhiannon Giddens – Come Love Come

From the description:

Rhiannon Giddens performs her song “Come Love Come” from her 2017 album, Freedom Highway. Filmed at the Breaux Bridge, LA, studio of multi-instrumentalist Dirk Powell, with whom she co-produced the album.

I mentioned Rhiannon a couple of years ago in an inspiration column, but her music has been something I’ve listened to a great deal since then and with the recent news that she’s a MacArthur Fellow, I wanted to share her music once again.

It’s well worth your time to dig into Rhiannon’s music, as well as the music of the band she’s a member of when she’s not doing her solo thing, the Carolina Chocolate Drops.

11. Elena Ferrante – My Brilliant Friend

This is a wonderful novel about two girls growing up in Naples, Italy in the 1950s and serves as the first in a series of four novels about their intertwined lives.

Why did I love this book? It’s the way that the author manages to balance the beautiful and plain. One might expect that a novel about two girls growing up in Naples is going to be glamorous, somehow, but it isn’t. It’s awkward and tough; you can feel the issues of class coming through almost on every page.

But in that, it manages to be beautiful. People are often more than their circumstances, even if they’re unable to escape them.

Wonderful book. Well worth your time.

12. Heraclitus on wisdom

“For to be wise is only one thing — to fix our attention on our intelligence, which guides all things everywhere.” – Heraclitus

This is one of those quotes that’s twisted around in my brain quite a lot over the years. I think part of what’s confusing about it is the impreciseness of translating it from the original language, but I think there’s a deep meaning there.

Heraclitus, I believe, is trying to make the point that wisdom comes from deliberately improving your “intelligence” in a broad sense. This doesn’t just mean an accumulation of knowledge, but a synthesis of that knowledge and understanding with one’s life experience.

What does that mean? It means a life committed to learning, but also to new experiences. On top of that, it also means a life committed to reflection on that learning and those experiences. What does it all mean? Where do things inform each other?

Do that enough, and you begin to form a pretty solid net of understanding of the world and of your own behavior. That net is wisdom.

The journey to wisdom is long, but it is well worth it.

The post Inspiration from Massimo Pigliucci, Chris Stapleton, Rhiannon Giddens, and More appeared first on The Simple Dollar.

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Friday, November 3, 2017

The Real Rewards of Frugality and Financial Independence

Whenever I meet someone face to face and they ask what I do, I tell them I’m a writer and that I mostly write about money from the perspective of the average person, looking at how normal people make ends meet and can get ahead in the world, maybe even achieving a nice retirement or even early retirement.

Most peoples’ eyes glaze over at that point (not necessarily out of boredom, but because it’s not a conversation you typically have in polite company), but some people follow up with a number of additional questions.

Inevitably, when that happens, they start digging into the “why.” Why would you give up the pleasures of life to just have some money when you’re old? What’s the point of all of that?

Here are my rewards for being frugal and having a mindset of pushing myself toward financial independence, as I see them.

When the weather is nice, I want to be able to have the freedom to just walk out the door, get on my bike, and go for a long bike ride. I want to be able to ride all the way over to Ledges, wander around on the trails all day, and bike back home, without a constant worry about skipping work or missing deadlines falling on my head.

I want to go to a restaurant and have it feel like a genuinely special occasion, not just the ordinary way I get food. When I go to a restaurant all the time for meals, it begins to seem ordinary, and in order for it to feel like a special occasion, I have to keep chasing more and more and more expensive experiences.

When I decide to shop for something expensive, I don’t want to feel artificially hemmed in by the prices. While I’m price-conscious, I want to be able to make my purchasing decision based on the true value of the car and how long it will last and how much value it will provide for me, not whether or not I can afford that car payment right now.

I want to not be worried about money. I want to not be scared that my credit card will be declined if I go out with a friend. I want to feel like I have money I can spend if I want, within reason, and not worry about it in the least.

I want to never, ever again have a fight with my wife about money issues.

I want to be able to throw myself wholeheartedly into an interesting opportunity when it comes along, not in the margins of my life where I’m just robbing time from proper rest, but in the prime hours of my day.

I want to have adequate time to read deeply from books and long, well written essays each and every day, not when windows of opportunity allow it.

I want to be able to give my kids meaningful opportunities right now, at this stage in their life, but I understand that meaningful opportunities don’t just mean throwing money at expensive experiences. It means spending time with them.

I want to be able to take my children to a park and spend hours playing soccer with them and helping them get better, as long as the experience is enjoyable. I want to practice taekwondo forms together in the back yard. I want to have meaningful conversations with them about what it means to grow up and become a responsible, independent adult who puts more into the world than he or she takes out of it – and do that by example, not just by telling them that’s what they should do.

I want to do all those things without being worried about work, about money, about getting a phone call, about anything other than being focused on the moment with them.

I want to never be an absent father, not even for a moment. I don’t want to be an absent father while they progress through childhood. I don’t want to be an absent father while they progress through their difficult teen years. I don’t want to be an absent father when they’re an adult, either.

I want to never, ever be a financial burden to my kids when I’m old and they’re in the sandwich generation.

I want to never, ever feel like the demands for money in my life are so strong that I’m forced to give up basic self-care for them. If I make the poor choice to not exercise or to not eat perfectly healthy, it’s a choice I make for reasons other than a need to please a boss or a need for money in the moment.

I want to do things like that now, without having to “make up for it” later or putting my family at risk.

I already have some of these things. I want to shore those up, and I want the rest of them, too.

To achieve all of those things, and many more, I have to spend less than I earn – and often significantly less than I earn. That’s a tradeoff that I’ve learned that I’m more than willing to make.

It means that we only have one television in our house, one with a pretty noticeable flaw on the screen.

It means that I primarily drive a sixteen year old SUV with a bit of rust on it, one that will have to be replaced at some point, but not quite yet.

It means that I don’t stop at a coffee shop each and every day, even though it’d probably be tasty. I get my coffee fix by making cold brew.

It means that I buy mostly store brand items when I go to the grocery store, and I even make some items like homemade laundry soap.

It means that I think about little details sometimes, things like what sock purchase will keep my feet warm for the next five years for the lowest price because it might save me $50 gradually over that timeframe.

It means that we don’t have a Nintendo Switch, even though several of my friends do and my children are clamoring for one, and we’re not getting one for Christmas, either. It’s not as if we’re lacking for sources of entertainment at home.

It means that I visit the library all the time for new books to read, rather than visiting the bookstore.

Every single one of those sacrifices is a tiny one. It’s something that I barely notice in the big scheme of things.

None of them prevent me from kissing my wife or holding her close.

None of them prevent me from telling a joke at the dinner table and watching everyone pause for five seconds before they get the punch line.

None of them prevent me from enjoying a slice of homemade toast with a little butter on it and a cup of coffee for breakfast.

None of those sacrifices kill any of the real pleasures and joys in my life, big or small.

What those little sacrifices add up to, though, is something enormous. Something life changing. Something I never again want to do without.

It adds up to a ton of freedom. It adds up to internal peace and low stress and great relationships and a future that doesn’t involve working until my body or mind break down.

The greatest mistake I’ve ever made in my life was not making that tradeoff from the very first day I went to work after college at my first “real” job, because even though I started late, the choice to sacrifice a little to gain a lot is, quite simply, the smartest move I’ve ever made outside of marrying my wife and having these three great children.

That’s why I’m frugal. That’s why I push toward financial independence. And that’s why I hope that you do, too. Good luck, my friends.

The post The Real Rewards of Frugality and Financial Independence appeared first on The Simple Dollar.

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Thursday, November 2, 2017

Are Jean Chatzky’s Retirement Savings Benchmarks Realistic?

“Today Show” financial editor Jean Chatzky tweeted on Wednesday what appeared to be a simple bit of retirement planning advice. “By the time you’re 30, aim to have 1x your annual income set aside for retirement,” she tweeted. “At 40, 3x; at 50, 6x; at 60, 8x; and by retirement, 10x.”

However, Twitter clawed back with snark, sarcasm, and outright disbelief.

“Are you aware how irrelevant this advice is for actual 30-year-olds up to their ears in student debt?” tweeted Jillian C. York.

“Please post the access codes for the portal to this reality of yours,” quipped Owen Southwood.

“To be fair, at 30 I’ve saved my annual salary from when I was 20 so that’s great,” joked Todd Gregory — who added that, at 20, he was a sophomore in college working part-time and racking up student loan debt.

Chatzky later acknowledged that those savings benchmarks – which were actually developed and recommended by retirement giant Fidelity – might seem high, or even unattainable, to most Americans, but that the whole point was to aim for them.

“Seeing your many reactions to the benchmarks,” she tweeted. “I get it. They’re outrageous in an era when many can’t save at all. The point is to aim. And to start saving something — whatever you can — as soon as you can.”

So, are those benchmarks unreasonable? Let’s take a look.

The average salary for Americans age 25 to 34 is roughly $39,000, so let’s use that as the “Age 30” savings benchmark. If someone saved 10% of a $35,000 salary for eight years starting at age 22, they’d have $38,824 saved up by age 30, assuming an average 7% growth (using Bankrate’s compound savings calculator).

That’s pretty darned close to the benchmark.

The trouble, of course, is that 10% can be really, really tough to come by in your 20s. Student loan payments might be siphoning hundreds of dollars a month from your bank account, and the cost of housing — particularly in big, booming cities, where you may need to locate yourself to take advantage of job opportunities in your fledgling career — commands an ever more unhealthy share of people’s incomes.

How about reaching three times your salary by age 40? The average salary for Americans age 35 to 44 is about $49,400; three times that is roughly $148,000. (Yikes. I’m 41 and, even after a raging stock market the past few years, I definitely don’t have $148,000 laying around. I guess I’m more of a 30-year-old at heart?)

If our example worker above started their 30s with $38,824 in their 401(k), and kept contributing 10% of their income to retirement — let’s say they averaged $45,000 a year throughout their 30s, socking away an average of $4,500 a year — would they hit the benchmark?

Just about — they’d be up to $145,417. Still, that’s someone who’s done literally everything right and dodged many misfortunes. They’ve worked 18 straight years without ever getting laid off or laid up with a disability, and they’re still a few thousand short of Chatzky’s Age 40 benchmark.

And what about someone who spent their 20s struggling to get their career off the ground, or paying down student loans — or simply having too much fun to think about the future?

Starting from $0 at age 30, that same worker would need to save $9,900 per year to reach $148,000 by age 40 — or roughly 20% of their salary.

The Catch 22 is this: Your 20s and 30s are perhaps the most important, powerful years for your retirement savings strategy. Every dollar you save then has decades longer to grow and create more long-term wealth for you. But it’s also the time in our lives when retirement seems the most abstract, a far-off impossibility, and often when we can least afford to put money aside.

Still, don’t freak out if your savings are nowhere near those numbers. Fidelity developed these benchmarks as a very basic rule of thumb — that won’t apply to everyone — making these assumptions: “You start saving a total of 15% of your income every year starting at age 25, invest more than 50% of your savings in stocks on average over your lifetime, retire at age 67, and plan to maintain your preretirement lifestyle.”

The benchmarks are to be considered “milestones along the way,” said Adheesh Sharma, director of financial solutions for Fidelity Strategic Advisers. “And don’t worry if you are not always on track. The later milestones are the most important, and there are things you can do along the way to catch up. Of course, the earlier you take action the better.”

The later milestones may be more important, but they’re also even harder to hit. People tend to earn more in their 40s and 50s, as they climb the career ladder, so having saved six times your salary at age 50 is more than many of us may ever imagine.

Responding to a Twitter user who was pushing 50 and saw no possibility of hitting the milestone, Chatzky offered equal parts solace and motivation: “I know. But at 50, you’ve still got 15ish good working years to save. If you’re way off consider big changes – not latte, but lifestyle.”

By age 50, she’s saying, simply cutting back on your morning coffee shop run may not cut it anymore, and more drastic lifestyle changes might be in order — like downsizing your home, getting rid of a car, and cutting cable, among other big behavioral shifts.

Pour Some Ketchup on Your Retirement Savings

If you don’t feel like you’re on track with your retirement savings goals, here are some ways to play catch up:

Max your match: Make sure you’re getting every cent of any employer match available to you. This is free money your company is offering, and it can help you bump up your savings rate — from, say, 6% to 9% — almost painlessly. And yet, 30% of workers under 30 continue to leave at least some of this money on the table, missing out on billions of dollars each year.

Automate your retirement savings: Don’t just save “what’s leftover” at the end of the month, because most of us will find a way to spend money sitting in our bank accounts. Pay yourself first — your retired self, that is — by deciding what you should be contributing to retirement and having it automatically deducted from your paycheck or bank account before you even see the money.

Learn to live on less: Saving more of your salary is an obvious way to accelerate your retirement savings, and both IRAs and 401(k) plans allow you to contribute more after age 50. But it carries another benefit: Learning to live on less of your income can lower the savings benchmark you need to hit, as it prepares you to live a leaner life in retirement. If you can save 30% of your income in your 50s and 60s and still get by, then you’ll only need to replace 70% of your salary in retirement to maintain the same lifestyle you’re accustomed to.

Everyone’s Retirement Is Different

The fact of the matter is, it’s simply impossible to distill useful retirement advice into 140 characters on Twitter. Everyone has different expectations for retirement, different savings capabilities, and different career paths, family obligations, and priorities along the way. And many retirees simply do what humans do best: adapt to new conditions and make it work, regardless of how much they’ve saved.

Yet it’s clear that too many Americans are under-prepared for retirement, and your nest egg isn’t going to build itself. So start with what you can, as soon as you can, and work up from there.

Related Reading: 

So what do you think: Are Jean Chatzky’s benchmarks attainable? No matter what your retirement savings goal is, do you think it’s helpful to have milestones to aim for along the way? 

The post Are Jean Chatzky’s Retirement Savings Benchmarks Realistic? appeared first on The Simple Dollar.

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The Danger in Comparing Your Financial Progress to Others (and What to Do Instead)

Sometimes, I’ll get a message or an email from a reader that starts off like this…

Hi Trent! Love your site! I have a financial problem that I hope you can help me with. I’m 33, my wife is 30. We have a combined income of $300K. We own a home worth $700K and have about $1.5M in stocks and cash.

Right off the bat, I can’t help but compare myself to that story. Sarah and I are both a bit older than that. Our combined income is substantially lower than that, and we don’t have that level of net worth, either.

Are we failures by comparison?

Don’t get me wrong, I relish getting messages from everyone, regardless of their financial state. Everyone has financial struggles, regardless of their income level or how diligently they save. We’re all trying to improve our own situation. I know that I do so when I’m thinking about and writing an article for the site. I’m sure that you’re thinking about the same when you’re reading an article on the site – if not, why are you here?

That doesn’t change the fact that, sometimes, I have my own personal reactions to the stories I hear. Quite often, they make me reflect on my own life. What would I do if I were in that situation? What can I learn from that situation about my own life?

And, yes, sometimes, I can’t help but compare my own situation to theirs.

When I read a story in which the person sharing it has seen a great deal of success, even if they happen to be struggling in the moment, I still can’t help but wonder whether I’m doing things right.

The thing is, we all make those kinds of comparisons sometimes. We look at the lives of the people around us and compare ourselves in certain ways. Is our house as beautiful as our friend’s house on Drury Lane? Are our kids as polite and well-mannered as the children of other people seem to be?

It gets even worse when we go online and can read the stories that others share of their own lives. If you see a tale of someone who earns three times as much as you do in a given year and has ten times the net worth, it’s pretty easy to fall into a pit of self-doubt.

Am I a failure by comparison?

Now, sometimes, comparisons like this can drive us to improve ourselves and improve our outcomes, and that can be a very good thing. However, just as often, such comparisons lead us into areas of very negative personal reflection, often pushing us to simply give up on our progress or make poor emotionally-based decisions in the heat of the moment.

For example, if I’m feeling outpaced by a neighbor, I might buy something just to make myself feel “equal” for a moment, even if, in truth, that might put me even further behind.

If you ever find yourself feeling jealous or envious, I find that there are two really useful strategies to nip those feelings in the bud.

First, remember that true costs and sacrifices are hidden. While you might see a person’s financial success, you don’t see the endless years of studying and preparation. You don’t see the late nights of work. You don’t see the strain on personal relationships. You don’t see the debt load that’s being carried. You don’t see any of that.

Instead, all you see is the expensive house that they’re living in, and you transpose that onto your own life, where perhaps you’re not facing most of those burdens.

Take us, for example. We don’t have a huge debt load hanging over our heads. We have a solid marriage. We have careers that offer great flexibility, even if they don’t offer world-breaking pay.

So, when we see someone with a home like we’ve always dreamed of, we still tend to transpose that home into our own lives. Why can’t we have that home? Maybe we can have that home… (which, of course, leads to a path of bad financial choices).

Another factor worth nothing is that people don’t always tell the full truth, especially when anonymous and online. People tell false stories about themselves and their financial state all the time online. I’m fairly confident that at least a few mailbag questions over the years have come from readers mis-stating their own financial situation. If you go on various personal finance message boards and sites, you’ll see a lot of borderline unbelievable stories (and some that are outright unbelievable). That’s because a lot of them are completely fake.

If you buy into those stories as real and use them for any kind of personal comparison, you’re making a rather big mistake. You’re comparing your own life to a work of fiction, to something that may not even exist. Such a comparison is a huge mistake.

You should not be comparing your actual financial state to mine, or to anyone else, online or off. It’s not a healthy or fair comparison.

Still, many people desire some sort of comparison, just to know if they’re doing well or if they’re keeping up with a reasonable pace. What can you use to compare your own financial progress? Here are some suggestions along those lines.

Use Your Past as the First Point of Comparison

The most valuable point of comparison you have is yourself. Comparing your current financial state to your financial state in the past – a year ago, five years ago, and so on – is the single best way to make sure that you’re on a strong financial path.

The simple question of whether you’re better off than you were a year ago or five years ago cuts through almost all of the challenges described above. It eliminates the issue of lying and other forms of falsehood. It eliminates the issue of hidden elements that you don’t see. It eliminates almost all of the differences between you and what you’re comparing yourself to, with the only difference being your life changes over the last year or two.

Having said that, it can be pretty difficult to accurately estimate your financial state even a year ago, let alone five years ago, if you haven’t been keeping track of it.

So, my immediate suggestion is to make your best estimate of your state from a year ago. Estimate your debt balances and the value of your assets and your checking and savings and credit card balances. Add up the value of all of your assets – your checking and savings and investments and the value of your major possessions – and subtract the value of all of your debts. That’s your approximate net worth from a year ago. Then, use real numbers to do the same thing for today, getting your net worth now. Compare the two. Ideally, your net worth is higher today than it was a year ago, which is proof positive that you’re moving in a good financial direction.

Of course, now that you have a real number, you should save it for future comparisons. Stow it away for a comparison you’ll want to make three months from now or a year from now or five years from now.

Personally, I find value in this type of net worth comparison, but I do it in a different way. I’m not so much interested in the fact that my net worth is going up, but that the rate at which it’s going up is also increasing.

For example, let’s say my net worth is at $100,000 in 2015 and then $120,000 in 2016. That means it increased by $20,000 in a year. Since I want the rate of change to be increasing, that means I am looking for a net worth above $140,000 by the end of 2017, because that means the rate of change is above $20,000, which is more than the change between 2015 and 2016. In other words, I believe that with more experience, increases in wages, and more money invested, my net worth performance should accelerate.

In truth, I trust my own past as a financial benchmark more than anything else. It encapsulates my own reality. No other measuring stick actually accounts for the ins and outs of my own situation, so I use it as a clear litmus test as to whether I’m really putting in the effort to keep my financial progress moving forward. The numbers don’t lie.

Use Standard Benchmarks Rather Than Stories

What if you want more than just your own history as a benchmark? Another approach is to find a standard formula or benchmark that will quickly indicate to you whether or not you’re keeping financial pace.

One very popular financial benchmark is the wealth accumulation benchmark from The Millionaire Next Door. That book offers up a formula for what your net worth should be based on your age and your annual pre-tax income:

Target Net Worth = Age * Annual Pre-Tax Income / 10

So, let’s say I’m 40 years old and make $100,000 a year. My target net worth with this formula would be 40 * $100,000 / 10, or $400,000.

I actually don’t like this formula very well, as I think it’s unfair to younger folks. Let’s say you’re 22 years old, fresh out of college with student loans, but making $80,000 a year at your brand new engineering job. That formula says that your net worth should be 22 * $80,000 / 10, or $176,000. I’m sorry, but that number’s not realistic. So, I proposed a modified form of that equation that accounts for that post-college deficit:

Target Net Worth = (Age – 27) X Annual Pre-Tax Income / 5

With that equation, our 22 year old friend above would have an estimated net worth of -$80,000, which sounds about right for someone exiting school with a healthy debt load. On the other hand, our 40 year old example above would be expected to have a net worth of $260,000.

There are countless “retirement calculators” out there that will essentially interview you, asking things like your age, your income, and so on, and estimate where you should be in terms of net worth and saving for retirement. All of these are based on a standard model of where people should be with regards to their goals. In general, I don’t put a whole lot of stock into the calculators from financial firms which almost always indicate that you should have more saved than most people realistically can or even should at their age (because the calculator is trying to encourage you to start saving more because that’s how investment firms make money), but some of the more impartial ones can be worthwhile. Of the ones I’ve tested, I found the Fidelity calculator to be the best.

Use Online Stories and Stories in Your Community As Fuel for Improved Behavior, Not Comparisons

Rather than using the financial stories you read online as a tool for comparison (and, often, as a tool to feel frustrated and unprepared), instead use those stories as inspiration and motivation. If some other person who is posting on that website is doing that well, then you can do it, too!

In general, don’t sweat trying to compete with others in terms of income, but instead focus on trying to match their investment efficiency. In other words, if someone is making $200,000 a year and has a $400,000 net worth, you should be inspired to try to get to a net worth that’s equal to double your income. If someone is making $100,000 a year and socking away $20,000 in retirement, don’t try to hit $20,000 a year – instead, try to focus on saving 20% of your income.

Remember, it’s the ratios that really matter in terms of building long term wealth. If you’re going to take a story at its word, focus on the ratios. (What if you find the ratios completely impossible to achieve? Remember, online stories sometimes aren’t fully true.)

The good thing about focusing on a ratio is that it moves the entire question of how to achieve that ratio to you and your behavior and your situation. What can you do, in your situation, to achieve a 20% savings rate? A 30% savings rate? It no longer has anything to do with the dollars and cents of that other person. It’s about a ratio, and that ratio can become very personal.

When something becomes truly personal, then it becomes about your behavior and your choices going forward, which is where the real power in motivating yourself comes from. Motivation should push you to make personal change, not to feel jealous of what others have.

Focus on Being Thankful for the Things You Do Have

A final key element of the puzzle is to simply be thankful for what you do have in life. Almost all of us have some good things in life and some bad things in life. We have some things that have helped us to have joyful moments and achieve success, and we’ve had things that hold us back.

Rather than focusing on those things that have held us back and rather than feeling envious of the advantages that others have, bring the focus to the good things that you have in life, whatever they might specifically be.

I don’t have a giant income, but what I do have is a very flexible working schedule that enables me to be with my family any time I need to be (and pretty much any time I want to be). That’s something I’m thankful for.

I might not have the house I have always dreamed of having, but we have no debts and we don’t have a whole lot of stress in our lives. That’s something I’m thankful for.

All the people I care about most are at least reasonably healthy. Any long term health issues are well under control. They aren’t interfering in our day to day lives.

So, do I waste my time looking at the things I don’t have? I don’t have that huge income or that nice house. I could dwell on that. I could constantly feel jealous of those that do have those things.

Or, I could simply focus on what I do have – a great family, a career I love, a nice circle of trusted friends. I’m part of several groups and communities that value me. Those things are where the value in my life is right now.

There are always going to be things that you want and don’t have. If you spend your time dwelling on them, it’s going to be discouraging. You’re going to find negative feelings, those negative feelings are going to fester, and they’re likely to drive you toward emotion-based poor choices.

Instead, consciously focus on the positive things in your life. What do you have that not everyone else has? What have you built in your life? What gifts do you have in your life?

Look around. Be creative. Virtually everyone has a lot of advantages and blessings in their lives.

Find them. Consider them. Write them down, and do it regularly. Keep them in mind. Knowing the advantages and blessings you have – and being grateful for them – gets rid of much of the emotional negativity that comes from comparing yourself to others.

Final Thoughts

We all make comparisons with others. Sometimes, they can be useful, like when they give us positive ideas for ourselves or motivate us toward self-improvement. Sometimes, however, those comparisons can be destructive, especially when they lead us toward feeling bad about ourselves and hopeless regarding our future path.

The key to keeping comparisons to others in a healthy place is to focus not so much at their pure results, but at the transformation they made in themselves, while also understanding that you’re never seeing the full picture. A person with a great house may have sacrificed a lot to have that house, or may have received help invisible to you.

In other words, focusing on another person’s raw results usually gives you bad information. Instead, focus your gaze on the fact that people do improve their situation, no matter where they started, and then watch your own improvements over time while looking at the many things you have to be grateful for in your own life.

In the end, it’s your progress that really matters, not theirs.

Good luck!

The post The Danger in Comparing Your Financial Progress to Others (and What to Do Instead) appeared first on The Simple Dollar.

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4 Free Credit Card Perks You May Not Realize You Have

These cards go beyond points and miles, offering you cool freebies.

Credit cards are a great way to build credit and establish your financial independence. They can also be a way to earn rewards or cash back. While the best rewards credit cards revolve around using the card and earning points or miles, some cards offer free — yes, free! — perks.

Here are four free credit card perks you may not realize you have…

1. Free museum entry

As a Bank of America cardholder, you can enjoy free museum entry to 175 of the most popular cultural institutions within the U.S. once a month thanks to their Museums on Us program. Check the list of participating museums and plan a visit for the first full weekend of the month. Simply show your Bank of America® or Merrill Lynch® credit or debit card and a photo ID to receive one free general admission.

2. Free Uber ride

New Uber users can receive a free Uber ride (up to $30) when they connect their eligible American Express® Card. To take advantage of this offer, download the Uber app and add your Amex card as the payment method under the “Payment” menu. Next, enter promo code UBERAMEX and request a ride or save it for future use. Keep in mind you’ll have to enter the promo code before you request your first ride.

3. Free TSA Global Entry

If you’re a frequent flyer, you’re probably already using a travel rewards credit card to earn miles and discounted flights. But did you know you may also be able to use your card to cover the $100 one-time fee for TSA Global Entry for free? TSA Global Entry gives you expedited security screening when departing and entering the U.S. Several participating cards, such as , , and the Citi Prestige® Card, provide a statement credit toward the application fee when you pay with your card.

4. Free two-day shipping

American Express® cardmembers, as well as World Mastercard® and World Elite Mastercard® cardholders, can receive complimentary ShopRunner membership when they enroll with an eligible card number. As a member, you’ll receive free two-day shipping and free return shipping when you buy eligible items with your card from participating online stores. ShopRunner partners with thousands of brands at more than 140 stores.

It pays to read the fine print, because you never know what free credit card perks might be hiding right under your nose. As they say: The best things in life are free.

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Under the Covers: Nine Money Books to Curl Up With This Fall

Now that it’s getting colder outside, you’re probably looking for some frugal ways to fill your time indoors. One of my favorite ways to kill an afternoon while learning something new is curling up on the couch with a good book.

New or old? An easy fiction read or a thick, detail-packed self-help book? Straightforward nonfiction or an entertaining plot? It almost doesn’t matter. The type of book you choose for fall and winter reading can and should depend on your mood and what you hope to gain.

Personally, I love financial books — but also thrillers (I recently read The Couple Next Door) and celebrity tell-alls. But almost any book can help you learn new things or stay entertained — frugally, of course.

New, Old, and Awesome Money Books to Check Out This Fall

If you’re looking for some good money books to dive into once the cold weather hits, we’ve got you covered. Here are some new financial books along with some tried and true favorites:

#1: Live, Save, Spend, Repeat: The Life You Want with the Money You Have

Tired of working full-time and still feeling like you’ll never get ahead? Kim Anderson, the blogger behind Thrifty Little Mom, offers an answer: Create the life you desire with the money you have rather than what you wish you had.

Live, Save, Spend, Repeat offers stories along with a simple-to-implement plan that helps you align your goals with the money you already earn. Not only does Anderson dive into the budgeting process, but she offers insight on why you might be falling behind – and how you can change your money mindset.

#2: The Kickass Single Mom: Be Financially Independent, Discover Your Sexiest Self, and Raise Fabulous, Happy Children

Most personal finance books talk about how to save when you have a family, but what if you’re a single mom? Fabulous Emma Johnson, the financial expert behind Wealthy Single Mommy, tackles money topics and more from the angle of single motherhood. How does she know so much about single parenting? Because she’s been a single mom and money expert making it on her own for years.

The Kickass Single Mom is for single moms who are in almost any stage of their financial journey. Johnson will show you how to build a thriving career, achieve financial security, and to reignite your romantic life—all while being a present and positive influence on your children.

#3: You Can Retire Early: Everything You Need to Achieve Financial Independence When You Want It

Financial expert Deacon Hayes doesn’t just want you to retire early; he wants you to enjoy your life until you get there. Retiring early isn’t just for lottery winners and the super rich, he notes. With proper planning, it can be for anyone. But how?

Through storytelling and actionable advice, Hayes lays out the step-by-step process anyone can take to retire early enough to enjoy it. By the end of the You Can Retire Early, you should know how to develop a personalized retirement plan, maximize your income, understand opportunity cost, and select the right investment vehicles for your needs.

#4: The Automatic Millionaire: A Powerful One-Step Plan to Live and Finish Rich

Recently, I saw David Bach speak at the financial blogger’s conference known as FinCon. His speech served as a powerful reminder that anyone can become rich – even on an average income – if they set up their lives with success in mind. By making their savings and investing automatic, he argues, average people can leverage the power of compound interest and time to build wealth.

His book The Automatic Millionaire is far from new, but it includes many important lessons that never go out of style. With Bach’s process, you don’t need a budget and you don’t need to earn a ton of money to get rich; you just need to make the right decisions over and over again, and to make them automatic.

#5: The $100 Start-Up: Reinvent the Way You Make a Living, Do What You Love, and Create a New Future

While there are dozens of entrepreneurship books that tell you how to leave your job and do something new, entrepreneur and author Chris Guillebeau offers a different approach in The $100 Start-Up. Instead of helping you quit your job, he suggests starting a full-fledged side hustle that can help you boost your income in your spare time.

Through profiling and interviews, Guillebeau shares stories of people who started unlikely side hustles that lead to real income – a guy who earned thousands of dollars reviewing fish tanks, someone who sold chicken saddles, and a gal who started a business selling personalized heart candies, for example.

The key to success is figuring out what you’re good at and filling a need. And you can do this without quitting your job, he says.

#6: The Ultimate Guide to Coupons: How to Save More Money in Less Time and Get the Best Deals

Is using coupons so last year? Savings website Living On the Cheap doesn’t think so. If you think coupons are too time-consuming and complicated to benefit from, you’re wrong, they say. You just need a better strategy, and to know which coupons are worth pursuing.

Written by Laura Daily and Teresa Mears, The Ultimate Guide to Coupons offers a primer on all things couponing along with actionable advice you can apply to your everyday life.

#7: Think and Grow Rich

Journalist Napoleon Hill digs deep to find out the secrets to success for many millionaires in Think and Grow Rich. If you’ve ever wondered how the fortunes of Andrew Carnegie, Thomas Edison, Henry Ford, and other millionaires were made, this book tells their stories in a compelling way that has stood the test of time.

The publisher of Think and Grow Rich warns that, when you expose yourself to the influence of Hill’s philosophy, you may experience a changed life. Prepare yourself for a brighter, richer future after drawing on the money lessons from this historic book.

#8: Tools of Titans: The Tactics, Routines, and Habits of Billionaires, Icons, and World-Class Performers

Have you ever wondered what most rich people do for the first hour of their morning? Have you ever thought about their work-out routines, which books they love to read, or what they do to stay mentally sharp? Also, why does this matter? Through interviews and research, author Tim Ferriss answers these questions and others in Tools of Titans.

According to Ferriss, this book contains the tools, tactics, and insider information you won’t find anywhere else. Included are not only stories, but actionable details you can apply to your own life.

#9: The Power of Broke: How Empty Pockets, a Tight Budget, and Hunger for Success Can Become Your Greatest Competitive Advantage

Daymond John, who you might know as an investor from the TV show Shark Tank, started a multi-million dollar clothing brand with a budget of just $40. Because he was desperate to make his business idea work, but severely limited in terms of capital, he was forced to think smart and come up with outside-the-box ways to promote his products. He now says that desperation gave him a competitive advantage – one that helped him turn $40 into a $6 billion clothing empire.

In The Power of Broke, John explains how a limited budget can force you to get creative – and how that creativity can help you get ahead. If you’re thinking of starting a business but strapped for cash or even dead broke, this book can help you learn how to hustle for wealth and use your limitations to your advantage.

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:

Are you reading any money books right now? Please share in the comments below!

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Wednesday, November 1, 2017

A Deeper Look at My ‘Wishlist Strategy’ for Curbing Spending

In the past, I’ve mentioned the strategy of using a wishlist to curb my spontaneous spending impulses. It turns out that the simple act of adding something I want to a wishlist is an incredibly effective way to cut through momentary desires, keeping me from spending money on something I might want in the moment but that I’ll end up forgetting and/or regretting over the long term.

It’s a really simple strategy that takes advantage of a psychological tic that I have and, from what I’ve seen, many other people have as well.

Here’s how it works.

On my phone, I have the Evernote app for jotting down notes. For this to work, you really need some sort of note-taking app available to you most of the time, and I use Evernote. You might prefer to use some other app for taking notes, or even using a pocket notebook. Although I use a pocket notebook for a lot of things, I find Evernote works far better for this particular task, the reason for which I’ll explain in a bit.

Whenever I find myself wanting something bad enough that I’m considering buying it, instead of actually going to the checkout or clicking through the shopping cart on the website, I simply add the item to a “Wishlist” note in Evernote. I simply keep a note going named Wishlist. When I want an item, I go into that note and, at the bottom of the note, I add a quick description of the item in just a few words along with a link to that item from some website.

Here’s the interesting part – the addition of that new item to the wishlist feels like I have “taken action” on that item and it causes the immediate desire to at least somewhat go away. Virtually every time, the simple act of putting that item on my wishlist takes the edge off of that desire to make an impulsive purchase, at least enough so that it’s easy to move on and not actually make that purchase right now. That keeps my money in my pocket where it belongs and ensures that I don’t spend it on something I might not truly want all that much.

But what if I’ve stumbled across something really cool that I do actually end up wanting? Here’s the neat trick. Once a month, I review the wishlist. I usually do this around the first of each month (which is actually why I’m writing this today, as I’m writing this right after having reviewed my wishlist).

I start by going to the bottom of the list and adding the name of the month and the year, followed by a dashed line. All new items after that point are added below that line. Then, I scroll back up, find the line from two months ago (so, if I’m doing this on November 1, I look for the September line), and delete that line. This leaves just an October line and a November line.

At that point, I go through everything above the top line, one at a time, and ask myself if I really want that item. Do I really want this game I added to my list? Do I really need that cool notebook? Does it really make sense to buy this thing or that thing?

What I almost always find is that my desire for that item has faded significantly since I added it. Most of the time, my desire has completely disappeared. If I find that I don’t really want that item much any more, I simply delete it from the list. It’s gone, and I never spent the money on it. This is the end result of 90% of the stuff I add to the wishlist.

What about that remaining 10%? I usually give each of those remaining items some additional thought. Is this something I really, truly want? Or is it just an appealing thought? Maybe this item is touching on a desire that can be addressed in some other way.

Often, the items that make it to this point end up eventually turning into purchases, but these are planned purchases. I’ve turned off the “urgency” for these purchases, so I’m okay investing the time and effort necessary to research those purchases and find how to meet those desires in a cost-effective and reasonable way.

So, let me show you in a very practical way how this works.

This morning, I went through my wishlist, as I do at the start of each month. The task is one that I have scheduled as a recurring task at the start of each month, so this is a natural time to do it.

I started by adding a line at the bottom that said “November” with a bunch of dashes after it. That way, in the future, when I add more items, they’ll just go below that line.

Then, I scrolled back up and found the line that said “September” and deleted that line.

Now, there were a few items above that line that were still there from previous months. They were items that I decided that I still wanted, but I hadn’t actually bothered in the last month to buy them.

To me, that’s a clear indication that I should just delete those things. If they sat there for a month after review and I still didn’t feel like taking action, they should probably just go. That’s not always true, however – sometimes items stick around for an extra month or two because I didn’t have enough money in my budget to afford that particular item.

So, very quickly, I deleted all but one of those items that was above the “September line.” The one item that remained was one that I suspected I could find for just a dollar or two if I kept searching, so I left it there. I poked around online for that item for a few minutes, but still haven’t found it for a price that low yet (it’s an item that was overproduced and I expect it to eventually hit the bargain bin).

Anyway, this leaves me with the 11 items I added during September that I haven’t looked at since I added them.

I walk through each of these fairly quickly, asking myself whether I still want this item. Is this something I still am interested in spending my hard-earned money on? Is this something I actually want? Might I just want something similar to this?

Believe it or not, most of these items end up leaving me with a sense that, no, I don’t want that item any more. There were such items as a sous vide cooking tool, three different books, a pocket chess set, and some fountain pen ink in that group.

I deleted all of them.

This left me with four items that I was actually still interested in – two books, one board game, and one “gadget,” for lack of a better term. The books all ranged in price from about $8 to about $16. The board game appears to be commonly on sale for about $40. The “gadget” runs about $110.

Those are all items that I’m interested in, and that interest has sustained over more than a month. In other words, those are items that I am actually considering buying.

What happens now?

First of all, I work out my hobby spending budget for the month. All of those items would come out of my personal hobby spending. Can I afford them this month? I figured out that, given other things I planned to use that money for, I could afford either one book and the game, or both books. The others would have to wait.

The next step was to start bargain hunting for those items. I started digging around for the lowest price I could find on those books and on that board game. The books are a bit harder to bargain hunt for, especially since one is already in paperback – the hardcover book (the more expensive one) could be one that I could wait on until the paperback comes out.

The board game, however, can net some serious savings if I do some shopping around for it – and I manage to find it at about 60% off of MSRP surprisingly quickly. So, I allot about $20 of my hobby budget and pick up that game.

For the other unpurchased items, I added the books to my Amazon wishlist (which a few people use for gift-giving purposes in my family) and deleted them, leaving me with just two items to look at next month (the gadget and the “overstocked” item). I have a sense that the gadget will end up just being deleted next month.

So, what happened here?

I had 11 items that I really really wanted and almost bought impulsively in September. But, rather than giving into that temptation, I just added those items to my wishlist instead.

When I finally reviewed that wishlist on November 1, I simply deleted seven of those things because I realized I didn’t really want them any more. That eliminated the vast majority of what I might have spent impulsively. It would have been wasteful spending, because I would have just bought things I wanted on the spur of the moment, things not connected to any lasting desire.

I ended up putting two of them on a gift giving wish list, eliminating them as well. Again, that’s money I didn’t spend, and it also gives some of my relatives who insist on giving gifts from Amazon wishlists something that I’ll actually like as an idea.

I found one item at a 60% discount. If I had bought it on the spur of the moment, it would have cost me $40. Because I was patient, I gave myself time to shop around (and time for it to wind up on sale), so it only cost me $16.

I was able to realize that the one remaining item doesn’t quite fit into my budget and that it could wait a bit longer. That’s okay, because I understand why I’m passing up on it.

So, to put it all in a nutshell, I went from spending hundreds on impulsive desires to spending only $16 on one of the few items I actually wanted beyond a momentary impulse. It’s all because of the “wishlist” strategy.

I strongly encourage you to consider using a wishlist yourself. It’s a very, very effective way to handle impulsive spending desires. It turns postponement into an “action” that feels like you’ve actually done something toward the purchase, which often pops that balloon of desire quite effectively.

Good luck!

Related Articles: 

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What I Miss Most About Overspending (and What I Don’t)

It almost seems like, overnight, I transformed from a fun 20-something to a middle-aged mom pushing 40 years old. I’m not sure I’m any more mature than I was, but I sure do have a lot more responsibility.

As my kids have grown, I’ve come to the realize they’re not just my babies; they’re actual people. Everything I do now – and don’t do – could very well shape the lives they get to live. The behavior I model every day is potentially behavior they’ll mirror when they become adults themselves.

So, I try to do the responsible thing at all times – or, at least when my kids are watching. Sure, I drink a bunch of beer and get into shenanigans with my husband and our friends from time to time, but I make a lot of responsible decisions that prove I’m a full-fledged adult.

We pay all of our bills on time, for example, and we avoid debt like the plague. We save a large percentage of our income and even stash away money for college. I pay for my kids to take gymnastics and piano lessons, and we help them with their homework and read to them every night. From a distance, I look like I have my life together. And, for the most part, I do.

Five Things I Miss from My Days of Spending Too Much

Still, I think all of us have that little voice inside that wishes we didn’t have to try so hard. As privileged as I am, I still wake up some days wishing I would just win the lottery already.

I’m at the point in my life where I don’t want to cook, clean, do dishes, or put away laundry at all. I still do it all every day (with my husband helping), but I don’t want to.

And sometimes, I still wish I didn’t have to care so much about money. Most of our financial goals (such as retirement and our kids going to college) are so far off it’s hard to get overly excited about achieving them.

Part of me also misses my carefree 20s – a time in my life where I mostly spent whatever I wanted with the idea that I’d worry about it later. It wasn’t very smart, but it was fun.

But, what do I miss most? Here are five major lifestyle factors I occasionally wish I could enjoy again:

#1: The Joys of Dining Out

While we still dine out when we travel, we almost never go out to eat when we’re at home. We gave up that habit a long time ago when we first started tracking our spending and using a zero-sum budget.

I still remember when, a decade ago, we found out we were spending nearly $1,000 on food some months – mostly due to our penchant for dining out for convenience. By cutting out our restaurant dining, we were immediately able to save hundreds of dollars per month and divert those funds toward debt repayment and other financial goals.

I don’t miss wasting that much money, but boy, I do miss not having to cook dinner all the time. I miss heading out to a restaurant and not worrying over whether I have the right ingredients for our evening meal, or dealing with dishes once we’re done eating. I also miss everyone getting to order whatever they want without having a 20-minute conversation to figure out a dinner I can cook that everyone will eat.

#2: Having a Newer Car

Sometimes I miss having a nicer car, or at least I wish I had one to drive. I’m mostly reminded of this fact when we go on vacation and rent a car to drive around. The last few times we’ve rented, we’ve had a really nice Mitsubishi SUV, a Mercedes Benz that we got through an accidental upgrade on Expedia, and a giant Ford truck.

It’s not that I care what it looks like when we drive, but I really like the newer amenities some cars have. For example, I love having a USB port to charge my phone (something our 2009 Prius doesn’t have), and I truly enjoy having more space and a much larger trunk. The new car smell – and the fact that rental cars are usually pretty clean and nice – doesn’t hurt, either.

But while I miss being able to trade in our cars whenever we wanted, I don’t miss having to pay for the privilege. Keep in mind that the average new car payment is over $500 right now, and most new cars are financed for almost six years.

While I miss having a nicer car, hearing those stats brings me back to reality rather quickly. New cars are nice, but they are not even close to worth it in a financial sense.

#3: Constant Home Upgrades

My husband and I live in our forever home. It’s more than 30 years old and worth around $240,000. We paid approximately $187,500 for it four years ago and have done some nice upgrades since then. But now, we’re pretty much tapped out in terms of upgrading our home. We could spend more for nicer bathrooms or new windows, but it wouldn’t necessarily improve our property value.

If money didn’t matter, I would pave our driveway and add on a covered porch in the back. I would upgrade both of our upstairs bathrooms and add in new floors and granite countertops. I would maybe even remodel my kitchen and get new cabinets, potentially spending tens of thousands of dollars.

But alas, I no longer spend on home upgrades because I’m fairly certain our home’s value is close to as high as it could go. And really, I’m too cheap to spend the thousands of dollars it would take to get everything up to snuff anyway.

#4: Buying Nice Clothes

When I worked in a professional job, I enjoyed dressing up every day. I bought gorgeous suits, adorable blouses and dress slacks, and accessories that tied each outfit together.

Now that I’m much more frugal – and I work at home – it’s hard to see why I would bother. I mostly wear pajamas and workout clothes, and I hardly leave the house other than to go to the grocery store.

But sometimes, I miss having nice clothes. I miss feeling good about what I’m wearing and having the newest styles and colors all the time.

I don’t miss wasting all that money, but I do miss how new clothes made me feel.

#5: Going Out and Having Fun

My husband and I do quite a bit of travel these days – with and without our kids. But, when we’re home, we are home – as in, we rarely go out and do anything.

This is a pretty big departure from our old lives, when we were in our mid- and late-20s. Back in those days, we used to go out all the time.

I used to love going to our local casino (before we had kids) and playing poker, and we used to go out to bars with our friends nearly every weekend. We went to movies and out to fancy dinners with other couples. We went out to concerts and shows, and for pub crawls and nearly any other grown-up get-together you can think of.

These days, my husband literally will not go out and buy a beer at a bar. When we drink, which isn’t really that often, he would rather buy beer at the store and drink it at home. And now that we’re older, we’d rather avoid dealing with the traffic, hassle, and discomfort of being in bars and at shows. We’re boring now, so we mostly get together with friends and play cards or watch a movie.

Do I miss our old, more active lifestyle? Absolutely. Then again, I also know that a lot of the money we spent “going out” was an absolute waste. It was fun while it lasted, but all good things must come to an end.

And now, the hundreds of dollars we don’t spend going out every month gets diverted to things like our retirement accounts, college savings, or our travel fund.

I May Miss Those Things, But Not Enough to Sacrifice the Future

Getting older and becoming more frugal has definitely made me focus on what is important in life. And now that I’m approaching 40, I’m firm in my belief that a lot of the things we spent money on in our 20s were a total waste.

But, I still miss the days when I didn’t have to try so hard or think so seriously about the future. I miss the days where I could spend whatever I wanted while knowing I had decades to save money and get my financial life on track.

Now, some of those decades have actually passed – and the time to get serious about money is here. New cars and fancy clothes are nice, but they’re not going to help any of us achieve our goals.

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.


Do you miss a time in your life when you weren’t so frugal? What do you miss spending money on?

The post What I Miss Most About Overspending (and What I Don’t) appeared first on The Simple Dollar.

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Tuesday, October 31, 2017

Personal Finance Success and the Road to Happiness

When I first started really turning my financial life around, I was of the genuine belief that doing so was going to bring about incredible positive change in my life. I envisioned this glowing future where all of the things I was worried about in life had melted away.

We were going to live in a beautiful house. I was going to have a low-stress job. My marriage was going to be great. My children were going to be great. Everything was just going to be great in this future where I no longer had financial worry hanging over my head.

One of the realities I figured out over the ensuing five years or so is that even though I was making incredible strides when it came to improving my financial state, it really wasn’t making me happier.

Don’t get me wrong – I felt far better about our financial state, and we were undoubtedly in a more stable financial situation with a lot less financial stress hanging over our lives.

But was I happier? Was everything just like that beautiful picture that I envisioned?

Sadly, no, it wasn’t.

Things were better, unquestionably. I didn’t have that financial worry hanging over my head. I had a really flexible job that provided me with wonderful opportunities. I had a great marriage and three wonderful young children at home.

Yet, I still wasn’t really happy. I still didn’t have that “Instagram life” that I wanted so badly.

I had all of the pieces that I thought I could ever want, but I wasn’t happy.

So, I made another series of changes. I sold The Simple Dollar, for one. I dove into some other passions for a while. I tried seeking out new social circles.

The end result of those changes? No change.

I still never had this happiness that I thought personal finance success would bring me. I never found the endless joy that I thought all of this would bring into my life.

What was missing?

If my underlying goal in seeking personal finance success was to achieve personal happiness, was all of that a failure? Was the elimination of debt and everything else just a waste of my time?

Over the last year or two, this has really been at the forefront of my thinking about finances. What have I really gained from paying off all of our debts and saving at a high rate? Am I really better off as a person because of it? Am I a happier person because of it?

Lately, I’ve finally figured out a few things that come close to answering those questions, something that I’ve been hinting at in a lot of posts recently.

First and foremost, personal finance success alone is not a key to personal happiness, but it is a very useful tool for nurturing it. Do I feel happier because I made a ton of personal finance improvements in my life? Not in any direct way. However, have the things that I gained from personal finance improvements put my life in a better place? Absolutely.

Let me spell out what I mean, as clearly as possible.

Finding Sustained Happiness… or Not

I don’t think that sustained happiness – a true day-in-and-day-out sense of existential joy – is something that many of us ever truly find in our lives. My heart simply does not flip over and over again all day long, bathed in a pool of constant joy, and I don’t believe a life situation exists where that can ever be the case.

For a long time, I tried to chase that sense of sustained joy. I believed that a lot of different things would help me find it – my personal finance changes being a big part of it, and things like having a “perfect” marriage or a “perfect” parenthood also were parts of it – but the truth is that sustained joy will never arrive.

It seems like a pretty big disappointment, doesn’t it? After most of an adult life seeking some elevated form of lasting happiness, I’ve come to the conclusion that it just doesn’t exist.

It’s important here to note what I’m actually saying, though.

I’m not saying that my personal finance journey was fruitless. Not in the least.

I’m not saying that life is devoid of joy. Not in the least.

I’m simply saying that I was too busy rushing through a journey with a mirage at the end and, because of that, I missed the real answer along the way.

The real answer is simple: the best life you can build is a fertile field upon which joy can bloom regularly, but it takes work to cultivate that field.

Let me repeat that: the best life you can build is a fertile field upon which joy can bloom regularly, but it takes work to cultivate that field.

Make Your Garden Grow

I’ve come to really think of life as being a lot more like a garden, much like our humble vegetable garden out behind our house. The most joyful moments in the garden are when you stroll out there and find some fresh produce, which turns out to be a delicious result of quite a bit of work.

To enjoy that fresh tomato, one had to turn over the soil. One had to fertilize the soil as well, with compost made over a period of time. One had to start a tomato plant in the house under a grow light, then plant the little plant out in the garden on a warm spring day. You have to weed around it and then, eventually, cover the ground near it with straw and newspaper. You might have to put up a fence around it to keep animals out, and you might have to spray a little bit of soapy water on the leaves to keep certain pests and diseases at bay.

Eventually, though, that work pays off. You find yourself with a bunch of tomato plants, producing a bounty of delicious tomatoes.

Life is like that, in a lot of ways. Most of life is about cultivating a situation so that true joy can spontaneously arise with some frequency from your efforts.

For example, you might cultivate strong personal finances so that you’re not burdened by money stresses and so that, when an opportunity comes around, you can jump on board that opportunity.

You might cultivate a lot of great relationships by giving freely of yourself, so that you always have friends around and so that when you need a helping hand, at least a few hands will be extended your way.

You might cultivate personal health through diet and exercise, so that your body remains strong and you’re able to enjoy a much wider range of activities for a much longer period of your life.

The important thing to note here is that none of these paths lead to a life of sustained happiness and joy on their own. Instead, they lead to a life where there are more opportunities for moments of true joy.

The journey of a lifetime isn’t a direct path to happiness, because life doesn’t provide that. Instead, life’s path, if given proper cultivation, leads to a place where happiness naturally grows and bubbles up frequently.

This is a huge realization that I missed out on for many years. I kept looking for some kind of ideal life, when what I actually had is a life that was slowly producing more and more joy bubbling up naturally from the work I had put in. I was looking for some kind of perfection, and that was causing me to miss out on countless good things.

Here’s another great realization: there is a lot of inner joy that comes from the process of cultivating, if you look for it. If you look around during the actual journey, you’ll find a great deal of joy along the way. It’s not that different than the feeling of peace that many people get when weeding their garden. You don’t need to directly have that sweet fruit in your hand to know that you’re bringing your garden to a better place, and the process itself is kind of meditative and calming.

All of this thinking has led me toward a few big conclusions about the road to happiness and the role that personal finances play on it.

Building the Road to Happiness, One Brick at a Time

As I said earlier, I don’t think there is a state of perfect, unbridled happiness in life. Instead, we find happiness in individual moments which come about as the result of the effort we’ve put in to build a good life, and finding contentment in that process makes life quite good.

How do you do that, though? What’s the recipe for the road to happiness if that’s true?

I don’t know if the “bricks” in the road are the same for everyone, but I can certainly comment on many of the elements in my own life that are a part of building that fertile ground for happiness and help me to find contentment during the journey.

Choose to spend less than you earn and do wise things with the remainder. I want to start off by mentioning personal finance here. It is a key element for many reasons – it provides foundational resources, it melts away stress – but I’m going to come back to it in detail later on in this article, I promise.

Actively choose to be positive about things and actively choose to look at the glass half full. Most things that happen in life have good things about them and bad things about them. Rather than dwelling on the negatives, deal with them only enough to handle the damage caused and to ensure they don’t happen again. Focus instead on the positives – look at the good things brought into your life.

I make a conscious effort to separate wants from needs and intentionally downplay the wants in both thought and practice. Rather than having a life that’s steered by trying to acquire things that I don’t have, I try to focus instead on using the bounty of things that I do have. If I find myself wanting something new, I reflect instead on the access I have to many, many other things to enjoy, and I ask myself whether I really want that thing and why I want it. I also delay wants by adding those desires to a “wish list.” Those tactics tend to melt away most wants, which in the end mostly just create negative feelings.

Try to nudge my work towards things you care about, so that your work is as meaningful as you can make it. My entire decision-making process regarding The Simple Dollar was to nudge it along a path where I could focus on the things I really do care about – writing articles that were full of meaningful content to help people with personal finance and life decisions and perhaps lead them to reflect on their own lives with a positive outcome – and away from things that I do not, like managing ads and keeping servers running. This can be done in almost any career path by intentionally choosing jobs and projects that are interesting and meaningful to you compared to the other options, while trying to avoid both idleness and overwork. Evaluate things through that lens as often as possible.

Try to cultivate lots of relationships, understanding that not all of them will become deep social connections. Having an abundance of relationships in your life means that you’ll have a constant stream of relationships that are in bloom, relationships that offer up social engagements and opportunities and help when you need it. Relish the fact that you can give those things to your friends as well.

Actively work on maintaining those relationships. Building a lot of relationships is fine. Maintaining them is a different story. It is very easy to allow relationships to wither on the vine, not because of any sort of malice, but because more urgent things pop up in your life. Yet, time and time again, I find that it’s the relationships that I put effort into maintaining that end up bearing wonderful fruit in the long run.

Try to look at most situations through the eyes of other people who are involved in it. Rather than focus on how someone may or may not have slighted me, I try to consider the situation through their eyes. Honestly, most of the time, it quickly becomes obvious that they did not even notice any sort of perceived slight. It’s easy to forget that human beings have a spotlight of focus in their lives and, quite often, you’re not in that spotlight. They aren’t slighting you – you just don’t even enter into their conscious thought. Applying that kind of “put yourself in their shoes” thinking as often as possible is very valuable.

I keep a gratitude journal. Each day, I write down five things I’m grateful for that I noticed or that happened to me that day. Some days, I’ll write even more. Why do this? It’s a day-in day-out reminder of how many good things my life already has for me. It really breeds appreciation of the goodness of my daily life.

Make a consistent effort to show gratitude toward others. This can take the form of simply saying thanks for the things that people do for you during the day, but it can also take the form of writing thank you notes for bigger favors and just for being a good influence in your life. It can also extend back to doing those things for people in your past who mentored and helped you.

Choose positive things to say in conversation, almost all of the time. Rather than dwelling on negative thoughts and perspectives about things, look for positive things to say. Jump in when the conversation is a positive one, or avoid saying much (or find an easy way to redirect) if the conversation has a negative tone.

Carve out time for the things that interest me. In my case, I literally block out times for my hobbies and passions and interests. On my daily and weekly schedules, I devote a little time each day to hobbies and a significant chunk of at least one day a week to them.

Try to take care of your body. A healthy body you can rely on is invaluable. Be more thoughtful about what you put into your body, and spend some time and energy exercising as well, in whatever way works best for you.

Try to take care of your mind, too. You can achieve this by getting adequate sleep. Another invaluable technique is to practice focused meditation, which is like doing bicep curls for your mind. Just simply focus on your breath for a couple of minutes – breathe in, breathe out – and bring your mind back to your breath when you notice it wandering. Do this a few times each day. It really is like bicep curls for your mind.

Try to find positives in each of those things, even when it’s hard. Sometimes, it’s hard to find positives when you’re doing something that isn’t really fun or when the outcome isn’t what you hoped for. It’s very easy to get lost in a sea of negative feelings. Don’t let that happen. Look for the positives in your most difficult outcomes. You might be sore, but that’s your body getting stronger. A friend might not be communicative, but you have a lot of other friends and that might just be that one friend’s style. Look for the positives, above all.

The Key Role of Personal Finance

The thing to remember in all of this is that personal finance might not be the absolute key to happiness, but it is a really powerful foundational layer. Having your finances in order is like putting an extremely rich batch of compost into your garden of life.

Having strong finances dissolves stress, which helps your mind and body. A lot of modern stress revolves around money concerns. How will you pay your bills? How will you afford this or that? If you take a better approach with your money by trimming down the unnecessary and asking yourself what you really want or need and putting money away for the future, that stress melts away. Low stress encourages positive health outcomes (both mental and physical), helps build relationships, makes it easier to rest, and makes it much easier to focus and to see the positives in life.

Having strong finances creates opportunities. It enables you to take on challenging career moves (like, say, walking away from a career in research to be able to write from home so you can spend more time with your family and write things that feel meaningful… not that I know anything about that). It enables you to actually reach out and touch big dreams, like taking your family on a truly amazing vacation. It enables you to take advantage of things that pop up, like buying a $10,000 collection from someone selling them at a fire sale price of $2,000 because they need cash.

Having strong finances creates a positive “snowball effect” of financial health. When your finances are strong, you can do things like buying a car with cash so that you don’t have to pay interest on the loan. You can pay off your credit card in full each month because you’re spending less than you earn, so you’re never accruing interest on there. It becomes easier and easier to save for the future because you’re not losing money to interest, to late fees, and so on.

In other words, being strong in the personal finance department doesn’t create happiness itself, but it is a huge part of a strong foundation upon which happiness can grow. You just can’t expect to be happy simply because you have money in the bank.

The Road Forward

It takes a lot of time to do the things listed in this article. Quite often, you’ll find yourself investing a lot of time and energy into things that don’t seem to be bringing any immediate joy. I have two suggestions there.

First, think about both your progress to date and the positives of where you want to go. In the middle of getting in better shape, for example, consider where you started and how you look and feel now, then think about what things will be like if you stay on this path. Things are better now, and they’ll be even better then.

Second, seek out joy – or at least contentment – on the path itself. Find exercise that you enjoy. Find products that you enjoy. Find low calorie foods that you enjoy. Find joy even in the hard work, because it is a joyful thing to create things you can be proud of. Don’t worry so much about outcomes – think instead about the moment and what you can do that’s good right now that happens to also be good going forward.

Good luck!

The post Personal Finance Success and the Road to Happiness appeared first on The Simple Dollar.

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