Saturday, February 10, 2018

Using the Concept of Ikigai to Find Financial, Personal, and Professional Fulfillment

I recently had the pleasure to read a great article by Thomas Oppong entitled Ikigai: The Japanese Secret to a Long and Happy Life Might Just Help You Live a More Fulfilling Life. The article outlined the concept of ikigai, a Japanese word meaning “a reason for being,” and made some interesting connections between it and modern life.

Over the last few weeks, I’ve been turning the ideas in the article over in my head and I’ve come to realize that they actually line up incredibly well with healthy financial, professional, and personal decisions.

Today, I want to dig deeply into this idea, but to do so, I think it’s best to start with some key foundations.

Four Elements of Time

At the core of ikigai (as presented by Oppong) is the idea that there are four fundamental ways in which people choose to spend their time (outside of things like basic personal care).

People spend some time doing what they love. People choose to do things because they really enjoy the process. Many personal hobbies fall into this category.

People spend time doing what they’re good at. If you’re really skilled at something, it’s often enjoyable to do that, and your skill is often appreciated by others.

People spend time doing what they can be paid for. In other words, people spend time doing their jobs, where they perform tasks and receive pay for completing those tasks.

People also spend time doing what the world needs. Charitable work often falls into this category, as does public service, as well as simply helping friends.

Most of us spend most of our waking hours doing things that fall into at least one of those four categories, but, as I’m sure you noticed, there are a lot of things that we do that fall into multiple categories.

We fulfill our passion when we do something that we love and that we’re good at.

We fulfill our mission when we do what we love that is also what the world needs.

We fulfill our profession when we do what we’re good at that also happens to be what we’re paid for.

We fulfill our vocation when we do what we’re paid for that also happens to be what the world needs.

When we manage to combine three elements, things get even better!

When we combine our passion and our mission, we often find utter delight and fulfillment at work, but it’s hard to accumulate wealth. Think of a really committed teacher or charitable worker or a “starving artist.”

When we combine our mission and our vocation, we find excitement in our work and a nice sense of security, but we’re uncertain because we don’t feel particularly skilled in what we’re doing. Think of someone who has been over promoted at work and is trying really hard to do a good job but might not be quite up to the task.

When we combine our vocation and our profession, we find a lot of financial security and we’re good at our job, but it just doesn’t feel fulfilling or meaningful. Think of someone who has a good high paying job but is mostly completely bored and unhappy at work.

When we combine our passion and our profession, we find a lot of personal satisfaction, but it just doesn’t feel like it really matters in the big scheme of things. Think of a lab technician working on an obscure research area that they’re having difficulty connecting to real world problems.

Ikigai is an overlap of all four areas – what you love, what you’re good at, what you can be paid for, and what the world needs. If you can find that, then you’ve found something fulfilling and sustainable.

The problem is, it’s not easy to find, and finding it requires not only exploring your options, but exploring yourself, too.

My Path to Ikigai

When I was in school, I felt like I was really solid in three of the four areas. I was good at learning and mastering the subjects before me. I was really excited about what I was learning. I felt like I was preparing to change the world. The big part that was missing was financial security – no one was paying me to do this. I was paying for it, in fact.

My first job after college solved that money issue quite directly. For the first few years, it was pretty much the embodiment of ikigai, and I was usually happiest when I was at work. I was using my skills to solve interesting problems that I could connect to the real world, and I was being paid to do it! It was great!

Over time, however, my connection to what the world needs began to fade as my work slowly changed. I began to spend more time in bureaucratic matters and I began to see less and less impact in the actual work I was doing. My connection to what the world needed faded away, and then, on its tails, my sense of doing what I love faded, too.

A job and career path that was once loaded with ikigai faded to merely being a profession, and I was largely unhappy with it.

So, I changed careers. I started trying lots of side gigs until I found that writing about financial challenges was attracting an audience and I eventually started doing it full time. This job lands squarely in the “ikigai” area for me. I love learning about personal finance and self-improvement (what I love). I have the ability to write a lot of fairly good content quickly (what you’re good at). It helps a lot of people (what the world needs). Someone’s willing to pay me for it (what you can be paid for). I’ve been writing The Simple Dollar (and other similar things) for more than a decade now and I’m still excited to learn new things and try to rearrange and reposition what I know in a way that will reach and help someone new.

Finding Your Own Path

Most of the advice that people give in terms of personal finance, careers, and personal happiness boils down to starting with one or two elements of ikigai and trying to find the other ones. Many people know their profession or their passion, but they struggle to put together all four elements, so they find themselves struggling to put food on the table or they have a great paying job that feels pointless and unhelpful.

Most people have at least two of those four elements already in their life, manifested as passion, profession, vocation, or mission, but the difficulty comes from finding the other elements from that starting position.

Here are eight different ways you can move from that starting point to something closer to ikigai in your life.

Finding what you love to do within your profession Sit down and look at what you do on a weekly basis at your job. Which tasks are the ones that you enjoy the most? Now, how can you shape your job so that you do those tasks – or tasks similar to it – more often? Can you talk to your boss? Can you volunteer for those tasks? This might involve sticking your neck out there a little bit, but if it gets you closer to tasks that you love, then it’s a net positive.

Another approach is to view your profession solely as something you do to fund your passion or mission in life. You work and do a good job solely so that you can spend your time outside of work doing things that you love to do. In that context, you can begin to see your job, no matter what it is, as a fundamental component of your passion or mission.

Figuring out how your profession helps the world Who is it that your company or organization is serving, in the end? Don’t think about who you are directly helping, but what the overall mission of your organization is. Keep that in mind at all times, and remember that every organization needs a janitor. Often, our jobs aren’t glamorous, but if we understand that we take care of a fundamental need that enables others to really bring about profound change, then you’re part of a team that’s really making a difference.

Sometimes, though, it’s hard to truly pierce the veil of bureaucracy. If you’re struggling to figure out what you’re doing that isn’t just shuffling papers, I highly recommend talking to other people in your workplace that are perhaps a bit closer to the direct purpose of your organization. Talk to them, and try to understand how the things you’re doing actually help the big picture. The truth is, if you’re not helping the big picture, you probably don’t have a job. You’re helping in some way, even if it’s just a matter of taking out the trash so other people can focus all of their energies on tasks that they’re more skilled and prepared to handle.

Applying what you’re good at to your vocation Sometimes, we wind up in situations where we’re paid well to do something that’s clearly useful to the world, but we’re not sure if we’re actually doing it well at all. Often, this is a result of not being entirely sure of what your key skills really are. What are you good at?

In situations like this, it’s a good idea to do some self-assessment and identify what natural skills and talents you have. Try something like a Jung typology test and see what traits you naturally have, then filter what you do at work through those results. Make an effort to include more of the types of tasks you’re naturally good at and fewer of the tasks that you’re not so good at.

Finding things you love to do within your vocation The advice here is similar to finding what you love to do within your profession. Sit down and look at what you do on a weekly basis at your job. Which tasks are the ones that you enjoy the most? Now, how can you shape your job so that you do those tasks – or tasks similar to it – more often? Can you talk to your boss? Can you volunteer for those tasks? This might involve sticking your neck out there a little bit, but if it gets you closer to tasks that you love, then it’s a net positive.

In positions that are vocationally oriented, meaning ones where you see a strong connection to how it benefits the world but a lesser connection to what your skills are like, you can often use the things you love as a supplement, a way to connect with people. Let people know about the things you love to do. Don’t be shy about your hobbies. You might find that they sync up in more ways than you expect if the people around you are aware of them.

Finding a way to make money with your passion If you know what you’re passionate about but you can’t seem to find a good job with it, get creative with it. It might be that simply finding a direct employer is not the way to turn your passion into money. Often, the path for that is through entrepreneurship – simply putting out the results of your passion and making it easy for others to find it and support it financially. Start an instructional or informational or entertaining Youtube channel on the area of your passion. Start making whatever it is you love to make in your spare time and selling it or trading it. Don’t look at it solely within the confines of a traditional job.

Figuring out how your passion helps the world The best way to do this is to teach. Take your passion out there in the world and show others how to do it, too. Another approach: if your passion involves making things, make those things for charitable use so that the item itself or the proceeds from that item go to directly helping people. This is why you see musicians really enjoying charity concerts and the like – it’s a way to turn what they love and what they’re good at into something that also helps the world.

Figuring out how to make a living with your mission A person with a mission is usually someone who simultaneously loves what they’re doing and understands how it helps the world, so they’re often afire with that mission. The problem is… how does that translate to making money? Usually, the route to making money while still achieving your mission involves finding a supportive or ancillary route. What can you do to facilitate people who share your mission? What can you do to promote that mission? What needs do organizations have that cater to the fulfillment of your mission? Often, making a living with your mission is like being the person pushing the merry-go-round, not the person riding it (necessarily).

Figuring out how to apply what you’re good at to your mission As noted above when discussing vocation, one of the best things a person with a mission can do when figuring out how they can best support that mission is to do some serious self-assessment and identify what natural skills and talents you have. Again, try something like a Jung typology test and see what traits you naturally have, then filter through those results with an eye toward your mission. What does your mission need that you can provide?

Ikigai and Financial Independence

One very interesting area to consider – and one that actually led me to writing this post – is the overlap of ikigai and financial independence. There’s a nice balance between the two concepts that’s well worth exploring.

First of all, financial independence completely erases the “what you can be paid for” factor in this equation. At that point, you’re effectively being “paid” by your investments no matter what you do, so you’re left only with fulfilling your passion and your mission to achieve ikigai. It doesn’t matter whether or not you get paid for those things.

This is why many people, when they’re freed from the need to work for money, tend to choose a completely different path in life, one lined up with their passion and their mission. They choose to paint or to write a novel or to work for a charity or to try some crazy small business idea that probably would be far too risky without that financial security in the bank. For me, at the point where I’m financially independent, I would probably start a more general personal improvement site with no advertisements at all, supported solely by Patreon, with articles coming out at a slower pace.

Of course, the reverse is true: the worse your financial state, the more you must prioritize what you can be paid for, so you have to put profession and vocation first. This likely means any job you can get at first, but eventually leads to a job that pays well that you simply don’t love. You’re doing your job because it pays well, but you don’t enjoy it and you don’t really see the point of it. That’s incredibly draining and unfulfilling, which is why many people often hit a career crisis point.

One of the main benefits of working toward financial stability and financial independence in your life is that in terms of your life’s work you move away from having to emphasize what you can be paid for and toward what fulfills you and is meaningful for you.

When my first career after college slowly became a “profession” above all else – something I just did because it paid reasonably well and I was good at it – I became really unhappy with my life for a while, but I was somewhat shackled to that job. I couldn’t afford to make any changes because of my financial choices.

It was only when I started making better financial choices that new opportunities opened up for me that enabled me to do things that I love and things that change the lives of others – in other words, much more fulfilling work.

I’m still not quite where I ideally want to be on that spectrum, but achieving financial stability and moving a long way down the road to financial independence helped me greatly in terms of finding ikigai.

Final Thoughts

So, there are a few main takeaways that you should take home from this post.

Ikigai is a pretty attractive concept for life fulfillment as it touches on financial, personal, and professional fulfillment. It’s simply the area where the things you love to do, the things you’re good at, the things that help the world, and the things you’re paid for overlap.

Financial instability forces you to prioritize “the things you’re paid for” and that often causes you to leave other factors behind. Many people wind up where I was, in the “profession” area (where the things you’re good at overlap the things you’re paid for) and missing out on things that you love and things that are changing the world, and that’s often a recipe for unhappiness.

Financial stability de-emphasizes “the things you’re paid for” and financial independence removes that factor entirely. This lets you focus more and more on the things you love, the things you’re good at, and the things that change the world, which all provide a meaning and value in your life that’s far beyond what money can provide.

In other words, if you view ikigai as a great place to be, then it’s a call to get your finances in order. The better your finances are, the easier it is to find a life situation where you can achieve that kind of deep fulfillment in whatever it is you choose to do.

Good luck!

The post Using the Concept of Ikigai to Find Financial, Personal, and Professional Fulfillment appeared first on The Simple Dollar.

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Thursday, February 8, 2018

Your Money Missteps Don’t Define You. Your Value Is Far More Than Just Your Finances.

One of my most vivid recollections of my entire financial turnaround is how I felt during the night when I first really realized that my finances needed to change. Our first child – our only child at the time – was just six months old and he didn’t want to go to sleep that night because he was teething. I couldn’t sleep – money worries were flooding my every thought, so I just sat in the rocking chair in his room almost the entire night, rocking him back and forth.

During that moment, I felt like a giant failure at life. My mind was loaded with all of the financial missteps I’d made and what those mistakes were costing us. I had spent so much money in so many foolish ways and because of those choices we were in a bad place.

We had a ton of debt. We had nothing saved for buying a house. We had bills that we couldn’t even pay.

I felt like a complete loser.

Looking back, though, I see a lot of other things in that picture. I see a man who loved his child and his wife deeply. I see a man who worked incredibly hard to get a good job and to hold down that job. I see a man who was willing to re-evaluate his life and accept that he could, in fact, make better choices. I see a man who accepted responsibility for his mistakes.

I don’t see hopelessness. I see a lot of hope.

I was lost in the consequences of my money missteps at that moment, but the truth is that those money missteps don’t define me. My value was – and still is – far more than just my finances.

The Dandelion

I like to look at my life as being much like a dandelion in the summer, after it has aged and the top has turned white.

There’s a long green stem that’s straight and unchangeable – that’s the past.

There’s a little head upon which a bunch of the petals or florets are attached. That’s the present.

Then there are the florets. They are many, pointed in all directions, and they can go almost anywhere. They’re all attached to that little head. Those florets represent the future.

The past is that unchanging stem. You can’t do anything about it. It’s just there.

The present is that little head. It can hold onto some of the florets and let other ones go. That’s the choice you have all the time – you can increase the likelihood of some futures and let go of others.

The future is one of those little florets. Which one depends on what you do with the present.

The destination of those florets has almost nothing whatsoever to do with the stem. It has much more to do with the present, and which florets you hold onto, and the changing winds of life.

The Stem – The Past

During my twenties, I made more financial mistakes than I can ever count. I went out to eat all the time. I bought mountains of unread books. I bought tons of unplayed video games. I bought many, many unwatched DVDs. I had an enormous professional wardrobe. I went on a ton of expensive trips. I “bought” a really expensive vehicle with a fat loan. I “bought” a bunch of furniture with loans. I made minimum payments on all of my debts. I went out constantly for drinks and dinner and golfing with a circle of young professionals.

The thing was, virtually none of those things brought me any lasting value, or brought me significant value over what a much lower cost version of the same item would have brought me. If we’re looking at the real value I got out of those things, there is literally nothing on that list that I couldn’t have had for free or for a much, much lower cost.

Those mistakes – and many others – undeniably held me back from achieving a lot of things that I would love to have achieved in my twenties. I came close to the end of my twenties with a big pile of debt, a frustrating career, and not many assets in the bank.

I feel a lot of regret about those mistakes, too. If I had just been a little smarter with my money, I could have done this and that and the other thing and my life would be so much better now!

In the end, though, those mistakes don’t define me. I am not a “financial failure” for life because I made some missteps along the way.

Your past mistakes are just that – in the past. They do not define what you choose in the present. They do not define what you can choose in the future.

Your money mistakes – or your mistakes in other aspects of life – do not mean that you are an eternally flawed person, either. You always have the capacity to improve your decision making game. Always.

Your money mistakes don’t define you. Your value is far more than your finances.

The Head – The Present

When you are focused on finances, it is easy to get caught up in the idea that you’re somehow a failure because you made a lot of financial mistakes in the past. Often, it’s so disheartening that it pushes you to give up on future financial progress.

You look back at the road you’ve been down and you see how many times you took the wrong turn. You think about where you could be if you had made better turns, and it just feels hopeless.

Trust me, I’ve been there. On that night holding my son that I talked about at the start of this article, I sat there all night feeling regret and shame and a sense that I could never really fix this, that I was somehow a failure.

The thing is, I wasn’t a failure. My past might have involved some wrong turns, but my past is not my present. There are many, many junctions available to me right now, and there will be many, many, many more to come. Right now, I can start choosing the better route a little more often than I once did, because even a few better choices, if done regularly, can make a ton of difference.

Five simple things kept me going and convinced me that my past did not define my present or my future.

One, I had a lot of good things in my life. They had to come from somewhere. I had an absolutely wonderful wife who has been a part of my life since childhood and has been at my side all the way along, first as a friend, then as a lover, then as a spouse and life partner. I had a wonderful little child who was calmed just by being around me. I had a few really good friendships with people I could rely on when the chips are down and celebrate with when things are going well.

I had a lot of simple things in life that I really valued, like the warmth of the summer sun on my arms and the feeling of contentment of being lost in a good book. I had a really good education that I earned with a lot of hard work, and a really good job that banked on that education.

I also had a pretty good character in many aspects of life. I was very self-motivated. I was a devoted lifetime learner. I could solve certain types of problems really, really well. I had a good sense of humor and knew how to use it to put people at ease and make them feel comfortable.

If you sit down and take serious stock of your life and start listing all of the good things that you have even after your financial mistakes, you begin to see that it’s not a train wreck after all, that things really aren’t that bad, and that you have a lot of things to build upon.

Two, the actual path to turn things around was actually really simple, and my past didn’t matter regarding that plan. There’s no denying that I wasn’t in a good place financially, but the actual tools that a person can use to turn around their personal finances can be used no matter what their situation at the moment happens to be.

You start with spending less than you earn. Virtually anyone can do this in any situation. You do that every week, every month, every year like clockwork, and you use the money that you earn but aren’t spending to pay off your debts, build an emergency fund, and invest for the future. That’s really the core of it.

Each step in that journey has a pile of tactics you can put to work.

The first step, obviously, is spending less. Frugality is all about getting maximum value out of every dollar that you spend. It is not about misery. It’s about recognizing that a lot of the things you spend money on really aren’t bringing you much value, thus cutting back on that spending is going to bring you a lot more value for your dollar. For example, try buying store brand versions of all of the ordinary nonperishable foods and household items you buy instead of name brands. Try making some meals at home instead of eating out. Instead of buying something, just see if there’s somewhere you can borrow it. Instead of buying something impulsively, stick it on a wish list somewhere and see if you still want it in a month, and if you do, buy it then. See if you can cut down any of your monthly bills. I can list hundreds and hundreds of little tactics for frugality – in fact, I have.

The next step is summed up in the word earn. How can you increase the income coming into your life? This usually takes longer to find success than frugality, but it can have an even bigger impact. Figure out what you need to do at work to get more hours or to get a raise or a promotion. Start building some strong professional connections, ideally ones that can help you get ready for and make the leap to whatever’s next. Figure out what your next career step is and start doing everything you can during every down moment at work to build a path to that next step. Keep on top of your field. Do things at work (and in life) that’ll fit well on a resume.

The next part is to rinse and repeat. Spend less than you earn each week, each month, and each year. Learn how to handle irregular bills so that you’re not surprised by them.

After that, start figuring out smart ways to use the leftovers. There are a lot of specific plans for this, but they usually boil down to building a small emergency fund (say, $1,000 in a savings account somewhere), then paying down high interest debt (anything with a double digit interest rate), then contributing to retirement savings, then building a bigger emergency fund, then saving for upcoming major expenses like a car replacement, then paying down low interest debt. That’s the order I generally recommend.

Those tools are available to you whether you’re working a minimum wage job with a lot of debt or you’re trying to make ends meet while making $150,000 a year.

All of those steps are incredibly simple, and most of them can be embarked on right now regardless of your financial situation.

Three, every little branch on that path offers me the capacity to go in a better direction than I otherwise would. Life offers you tons and tons of opportunities to choose a financially responsible path, and your past doesn’t matter regarding those choices.

I’m willing to bet that you have several purchasing decisions today where you can make a better financial choice, and if not today, sometime in the next few days. I’m willing to bet that you have several professional opportunities this week where you can either idle and waste time or start building professional opportunities for yourself.

Each one of those branches is an opportunity. You have a choice between a better financial direction and a worse one. Yes, there are always going to be other factors at play – a little bit of pleasure in the moment, for example, or a little bit of free time, or something else.

Just keep asking yourself if it’s really worth it to keep making those same mistakes and whether or not there’s something better down the other path.

Four, if you make a financial mistake, it’s not the end of the world and it’s not evidence that you’re a failure. A money mistake is a human mistake, and it’s also merely evidence that the plan I made wasn’t perfect, and nothing is perfect. It just means I have to rethink my plans and strategies a little. It’s like a recipe that needs just a little more salt or a little more cilantro.

A money mis-step does not mean the end of all progress. It does not mean that I’m a failure. It does not mean that everything I’ve been working on is crashing down like a house of cards. It just means, in this moment, I didn’t choose the best path.

Finally, every day offers new choices and opportunities. In a little while – maybe later today, maybe tomorrow, maybe the day after – another choice will come along, and in that new choice, I’ll have an opportunity to do it the right way, the better way, the way that leads to the tomorrow that I truly want.

It has happened virtually every day of my adult life. Sometimes, it happens many, many times a day. I’m offered a choice. Do I buy this expensive thing I suddenly want, or do I wait? Do I buy the store brand version or the seemingly-identical expensive name brand version? Do I sit here and look at Facebook during half an hour of downtime at work, or do I do something that improves my career?

Right in front of me is this choice, and if I take the right one, it’s going to open up a new path for me, one that’s just ever so slightly better than the one before. It might not be the most fun option in this moment, but that’s okay because it’s leading to a much better place.

The Florets – The Future

Our lives up to this point are a mix of good choices and bad ones, and together those choices have ended up (along with the things outside of our control) determining exactly where we are right now in our financial life and in every other aspect of our life. It’s left us at a junction where we have certain options on the table in front of us. Those options could be better, and they could be worse.

Every time you make a financially smart choice, you slightly improve the options that are on the table for you tomorrow. Often, the change is so slight that you don’t see it, but it’s there. Make the smart choice tomorrow and the choices continue to improve, little by little.

Your past has nothing to do with those choices. Your mistakes have nothing to do with what you choose today. They might have played a role in shaping what options are available to you, but they have nothing to do with the option you choose, and that option you choose will also help shape how good the options are tomorrow, and the day after, and the day after.

You can’t magically change the road you’ve been on. Nothing can do that. You can’t wish for better options on the table. All you can do is look at the choices in front of you and choose the one that will give you the best options tomorrow while still being reasonable today.

So, choose that store brand. Choose to spend some time on documentation rather than reading Facebook. Choose to make a great meal at home instead of just ordering delivery.

You have the power to make that choice, right here, right now. That’s because you are more than the mistakes of your past. You have the capacity, right here and right now, to choose a better path. You are not defined by the mistakes you once made. Your options might be shaped a little by your past, but your capacity to choose the best option, right here and right now, and your capacity to shape tomorrow’s options to be just a little better? That’s all about you, today and going forward.

You are not defined by your missteps. If you were, you’d keep making the same mistakes over and over again. You are so much more than those mistakes. Right now, you have options before you on the table, and you have it well within yourself to choose the best one for your future, and then to make those choices each day going forward.

That’s your value. Not your mistakes, not your missteps, but in your capacity to make a better choice and make a better future. You are more than your past.

Good luck.

The post Your Money Missteps Don’t Define You. Your Value Is Far More Than Just Your Finances. appeared first on The Simple Dollar.

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The Science of Good Timing

They say timing is everything — and research actually seems to back that up, to some degree. But we still fumble with decisions about when to do things both basic and big, from when to go to the gym to when to quit a job or buy a house. While external factors place a lot of life’s “whens” outside our control, there are adjustments we can make to our daily routines to better take advantage of good timing.

That’s why Daniel H. Pink, New York Times bestselling author of Drive: The Surprising Truth of What Motivates Us, works according to his peak cognitive functioning times for different tasks, and schedules two breaks an afternoon into his calendar. He also makes sure to plan for a lunch break and, when he doesn’t sleep well, a coffee-then-20-minute-nap combo he calls the “nappuccino.”

But he hasn’t always done so.

“I was making all kinds of ‘when’ decisions in my own life and work, everything from, ‘When in the day should I do certain kinds of work?’ to, ‘When should I start a project? When should I abandon a project?’ and I was making them in a pretty haphazard way,” he confesses. “I figured there was a better way to make them and started looking around for some help; there wasn’t much help out there.”

The lack of ready resources pushed Pink to dig deeper—and he was blown away by the amount of research he found. Two years and 700 studies later, he’s written a new book, When: The Scientific Secrets of Perfect Timing, in which he takes all that research and offers up a lot of practical advice based in science.

Three of the categories Pink focuses on in his book are beginnings, midpoints, and endings. We spoke with Pink about how these areas in particular impact personal finance, jobs and careers, and productivity.


Pink says one of the most startling pieces of research he found, based around the work of economist Lisa Kahn at Yale, was that the labor market conditions when people graduate from college have a huge effect on their wages — even two decades later.

“In particular, what she showed is that if you take two people who are fairly similar—you know, similar major, similar ability—and you have one person who graduates in a recession and one person who graduates in a boom, that the person graduating in the boom is going to be earning more money 20 years later. I find this quite alarming, and I’m surprised that hasn’t gotten more attention because I think it’s a big, big, big issue,” Pink says.

Of course, there’s nothing an individual can do about the labor market conditions when she graduates except be aware, he adds — so what it means is that there needs to be a solution that’s broader than one person. Mechanisms to mitigate the effect could include a student-loan-payback program or federal funds assistance for new-graduate career counseling when the unemployment rate hits a certain level.

“In terms of individual advice for people beginning their careers, I think that people have to be just conscious that the initial economic conditions are going to have a role in their earnings over the long haul,” Pink says. “And if they start out in a down economy, I do think that they’re going to have to work a little harder and hustle a little more than they would if they were in a more buoyant economy.”

But, he adds, don’t be too alarmed.

“We’re talking about big trends and it doesn’t mean that every individual who graduates in a down economy is going to suffer and every individual who graduates in an up economy is going to flourish. But what I was trying to do with that, by talking about that research, is shine a light on just how important some of these beginnings are, and how much some of these beginnings are well beyond our individual control and need to be looked at more systemically.”


“If anything — a project, or a savings plan, or a debt repayment — if anything has a beginning and it has an end, by its very nature it has a midpoint, and to simply be conscious of that is a really important step,” Pink says.

When it comes to reaching personal or professional goals—paying off debts, for instance—midpoints can have two general effects, Pink adds. Sometimes they make us slump and lose motivation, and other times they can actually enhance our motivation.

As with beginnings, what’s already past is beyond your control – but awareness, and how you respond to the situation, is not.

After you’ve recognized the midpoint, you can use it to trigger what Pink calls the “uh-oh effect,” which is looking at the midpoint and saying, “Oh, my God, this is halfway done. I’m not where I need it to be. I better get going.”

“If you think about something like debt repayment, I mean, if you’re really, really far behind on paying back a debt at the midpoint of the term… that can be demoralizing. But if you’re just a little bit behind, that can get you maybe to tighten your belt a little bit, to motivate yourself a little bit more to get going.”


Some endings are out of our control, but some are not: One of the “endings” Pink writes about in Drive is when to change jobs. The research shows that there’s a sweet spot if you want to up your pay.

“One of the things that surprised me in looking at some of this research is how moving jobs, especially early in the career, can actually increase your salary. And there seems to be a sweet spot between three and five years,” he says.

“So, if you’ve been at a job for three years, between that third year and your fifth year, that seems to be the ideal time, according to some data, to switch jobs and maximize your chance of getting a significant salary increase,” Pink explains.

“If you do it before three years, your skills might not have fully ripened,” he says. But after five years, prospective employers might see you as too deeply entrenched or committed to your current organization to be an intriguing hire.

Improving Your Day-to-Day Timing

Pink admits that the research has had a big impact on his day-to-day life, and if he could recommend two basic things for people to consider about the “whens” of their lives, the first would involve re-architecting their days based on individual patterns of circadian rhythms.

Some of us are what Pink calls “larks” (morning people), some of us are “owls” who thrive in the evenings, and some of us are the “third birds,” or the in-betweeners. This holds the key to how you should schedule your work day.

For most people, Pink says, performance and mood follow a common pattern: a peak, a trough, and a recovery. He suggests doing analytic work — your most important tasks, or those that require sharpness, vigilance, clear thinking, and focus — during your peak period. Insight work, meanwhile — those less-taxing but still important tasks that may even benefit from a wandering mind, such as brainstorming or creative work — are better done during your recovery period.

“Move your analytic, head-down work to your peak time,” Pink says. “So, if you’re a lark or in between, do it in the morning. If you’re an owl, do it in the evening. Move your analytic work to the peak and then your other work, your insight work, to your recovery period.”

The troughs in your day aren’t much good for any kind of work, so that’s when you want to try and eat lunch, take a nap, get outside for a walk, go grocery shopping, and so on.

As an example, most students in school will be more successful taking standardized tests and having classes like math in the morning, while art and creative writing classes are better suited to afternoons. And lunch and recess are crucial trough activities to rest and reinvigorate the body and the mind.

Beyond that, Pink recommends that we all simply take time, timing, and questions of “when” more seriously.

“We are very intentional about what we do and how we do it, who we do it with, particularly in a work setting. We’re very intentional about those kinds of things, and yet, when it comes to when we do stuff, we just don’t take it seriously,” he says. “We treat it very cavalierly. We think, ‘Oh, it doesn’t really matter when I do certain kinds of work, as long as I do it. It can’t matter when we have a meeting, just that we have a meeting.’ And that’s just wrong!”

We can’t control some good or bad timing, like whether we graduate into a recession. But often we can control how break up our day — whether we dive into the day’s analytic tasks over morning coffee or wait until after lunch — and whether we’re working with or against our own natural productivity cycles.

“Questions of ‘when,’ I’m not saying they’re more important than ‘what’ or ‘how’ or ‘who,’ but they’re as important and they need to be taken seriously and treated strategically.”

Related Articles: 

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Wednesday, February 7, 2018

How to Find Out if you Already Have a Pre-Approved Credit Card Offer

Using a credit card responsibly is one of the best ways to improve your credit score over time. However, anyone who’s been working to push that three-digit number closer to 700 knows that applying for a new credit card can sometimes hurt your score.

One way to find a new credit card without affecting your credit score is to use Credit One Bank’s new pre-approved offer tool that allows you to check if Credit One Bank already has a pre-approved offer for you. Simply input your first and last name as well as the last four digits of your Social Security number, which will be automatically encrypted. It’s safe, secure and just that easy!

Another way is to see if you pre-qualify for a credit card. Not all companies offer a pre-qualification process, but the ones that do, like Credit One Bank, let you know the chances of getting approved for a card without the impact on your credit report.

What does ‘pre-approved’ mean?

Being pre-approved for a credit card means the card issuer has determined that you meet the minimum criteria for the card and will most likely be approved when you apply. These offers sometimes come in the mail, or you may need to fill out a short form online. The card issuers verify this by doing a soft credit inquiry vs. a hard credit inquiry.

What is a soft inquiry vs. a hard inquiry?

A soft inquiry refers to any credit check that occurs as part of a background check, such as getting pre-approved for a credit card or insurance, checking your credit score through a service, or as part of a background check for employment. These soft inquiries don’t affect your credit score, and in some cases may not even be recorded on your credit report.

On the other hand, a hard inquiry occurs any time you formally apply for some form of credit, such as apartment rentals, auto loans, credit cards, mortgages, as well as personal or student loans. These hard pulls are recorded on your credit report and may impact your score. In most cases, having one or two hard inquiries won’t hurt you by more than a few points. However, having too many within a year can dock your score.

How long does an inquiry stay on your credit report?

Most hard inquiries will impact your credit score for only six to 12 months; however, they can stay on your report for up to two years. If you find an inquiry on your report that you did not authorize, you can call or write to the creditor asking them to remove it.

What are some credit card best practices?

More than two-thirds of your FICO® Score is determined by your payment history and the amounts owed. This means that the best things you can do to maintain and improve your score over time are to make payments in full and own time each month. Missing payments or making payments late could dock your score, just as carrying too high of balance could also bring it down.

The post How to Find Out if you Already Have a Pre-Approved Credit Card Offer appeared first on The Simple Dollar.

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Finding and Addressing the “Money Sinks” in Your Life

Budgeting has something of a bad reputation. It’s not because budgeting doesn’t work, but because many budgets are created out of thin air and are then impossible to follow, creating a sense that personal budgets are simply a bunch of work for little benefit.

One big reason that hastily-assembled budgets often fail is because of “money sinks.” Money sinks are simply costs that aren’t accounted for in the budgeting process. Usually, they’re completely reasonable expenses – they just happen to eat up a lot more money than was expected for a number of reasons.

A really robust budgeting process usually seeks to find those money sinks and incorporates them into the budget, but that can take a very long time, something that many people aren’t quite willing to do.

There’s another shortcut, of course. By simply being mindful of many typical money sinks, people can incorporate them into their spending plans and find that they’re spending money much more sensibly than they realize.

If you’re trying to tally up and keep track of your spending, whether it’s via a budget, a spending plan of some kind, or just some back-of-the-envelope math, here are some sneaky “money sinks” that you should think about.

Non-essential bills Do you have a subscription to Netflix? How about an account at a different service, like DailyBurn? Maybe you subscribe to an online game, or perhaps you contribute to a content creator on Patreon? Those kinds of bills roll in quietly each month and are often paid for automatically via PayPal or credit card. They’re so subtle that you often completely forget about them, but if you have several such non-essential bills, they can add up to quite a lot.

One good way to consider all of your non-essential bills is to just sit down and run through your bank, credit card, and PayPal statements to see which regularly occurring bills you find on there. A lot of American households will come across a few little monthly bills that they don’t even think about, ones that are small enough on their own to be forgotten but big enough that a few of them lumped together add up to some real money that you need to account for in your budget.

In our monthly budget, I have a couple of line items specifically for these, where I just lump them all together. I reconsider them on a regular basis, but in terms of just glancing at our budget, there’s no need to give a bunch of small expenses their own line item.

Irregular bills Another “money sink” that’s often a budget destroyer is the good ol’ irregular bill. Think of things like property taxes or quarterly insurance payments. Those are very important things to take care of, but it’s easy to forget about them in terms of your monthly budgeting.

Take a few moments and make a big list of those important bills that don’t come in every month but do come in on a pretty regular basis. Property taxes. Insurance premiums. Vehicle registrations. Auto maintenance. Veterinary bills. Magazine subscriptions. Haircuts. Lawn care services. You get the picture.

The best approach I’ve found for handling these expenses is to figure out the total annual cost for each of them, divide that by twelve, and include it in my monthly budget. So, if property taxes are $3,000 for the year, I’d divide that by 12 and have a $250 line item in my monthly budget. For some of the smaller ones, I just lump them into an “irregular bills” category.

With those line items, I generally just leave the money in my checking account and then I know I can easily pay those bills when they come in, because I’ve already accounted for them.

Repeated tiny expenses Another big money sink – the poster child for money sinks for many people – are repeated tiny expenses, ones that add up to a lot over the course of a month or especially a year.

Let’s say I get a soda and a granola bar out of the vending machine each day at work in the early afternoon. The soda costs $1, as does the granola bar. $2. Who cares, right? If I do that for 20 days – 4 weeks, 5 days a week – that’s $40. That’s a noticeable dent in the monthly spending.

At my previous job, I had a coworker who strolled in each day with a bagel and a cup of coffee. If you assume the coffee cost $4 and the bagel cost $2 – a reasonable estimate – that’s $6 each day. $6 times 20 – 4 weeks, 5 days a week – is $120. That’s going to show up in your accounting.

How do you find these regular expenses? Again, it’s all about pulling out your bank statements and your credit card statements and your PayPal statements and looking for expenses that recur. What expenses pop up several times each month? Those are your repeated tiny expenses, and figuring out what they average each month (and adding a little bit to that just to be on the safe side) and adding that to your budget is a key part of getting a grip on a key money sink.

Now, I’m not saying that such expenses are a bad thing, but that they really should be accounted for when getting a big picture of your spending. They’re money sinks, regardless of whether they’re “good” money sinks or “bad” money sinks. My coffee and bagel friend should be accounting for $120 a month spent on coffee and bagels. That’s not a judgment on the “good” or “bad” of a daily coffee and bagel, just a recognition of the fact that the money is going to those things.

The goal here, with all kinds of money sinks, is to obtain a really clear, solid picture of how you spend your money. The closer you can make your monthly budget or spending plan to your actual spending, the more useful that document becomes in terms of helping you figure out what financial moves to make next.

For example, do you need to cut back on coffee and bagels? It’s really hard to tell unless you’re actually counting that expense. If you’re not even counting it, then $120 per month is just vanishing in smoke and it’s hard to get any rhyme or reason regarding where your money is going. If you are counting it, then you not only have a more accurate picture of where your money is going, you can potentially look at that line and think, “You know, I could just drink coffee at work except on Mondays when I really need that good coffee,” and trim that right down to $24 a month.

Do you need to trim that DailyBurn subscription? Again, it’s hard to tell if you’re not even actually counting it in your budget because that means your budget is inaccurate to begin with. If you add it in, your budget gets closer to accuracy and you can also make a more informed choice about that item.

In the end, money sinks aren’t just places where we lose money, they’re also places where we lose information. We lose sight of where our money is going and that leads directly to a false understanding and a confusion about our whole financial picture.

The first step is finding the money leaks, using the tools described above. The second step is to address them and figure out for yourself if that particular expense is a smart one to continue in the big scheme of things. That second step becomes a lot more sensible and valuable if you take care of the first.

Good luck!

The post Finding and Addressing the “Money Sinks” in Your Life appeared first on The Simple Dollar.

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Can Grocery Delivery Services Actually Save You Money?

Have you ever wondered what it would be like to order groceries through a service like Peapod, Instacart, or Amazon Fresh? Whether you saved money or not, getting food delivered to your door without making a trip to the grocery store probably sounds like a dream come true.

After all, ordering your groceries online would allow you to avoid walking through each aisle of the store, putting everything you want in your cart, waiting in line to pay, loading up the conveyor belt, then lugging everything out to your car before bringing it all home to put away. How amazing would it be to snap your fingers and have all the groceries you want and need show up within a few hours or the next day?

These are the thoughts that went through my head last year when I started researching grocery delivery services. Although I work out of my home, I work full-time and then some (often 50+ hours per week) and also take care of my kids and my house. I was becoming increasingly tired of trying to figure out how and when to get to the grocery store without cutting into my work day or exercise time, or without running so late I didn’t have time to make dinner.

And, you know what? I was also just tired of going to the store. I’m not going to lie. Grocery shopping has long been on my list of dreaded chores, so the mere thought of skipping it (even occasionally) sounded pretty darn awesome.

The problem is, I didn’t want to wind up paying more for groceries. While my husband and I have become more flexible with our spending than we have been in the past, I’ve worked very hard to get our grocery spending under $600 per month. I mostly save money by cooking all our meals from scratch and planning meals around what’s on sale, so I was not thrilled about the prospect of overpaying for the staples I use to make our meals.

But then, I had a crazy day where I needed to go to the store but didn’t have time. I wound up finding an online coupon to try Instacart, and I decided to give it a try. From that point forward, I was hooked.

My Initial Experience with Instacart

In the Indianapolis suburb where I live, we can choose to use Instacart to get grocery delivery from Meijer or my local Kroger store. While I like both stores, I chose to shop at Kroger via Instacart because I really like some of their store brands.

My first experience with Instacart was pretty annoying because, yes, some of their prices are a lot higher than what you find in the grocery store.

For example, avocadoes are $2.29 each via Instacart, even though they’re usually only $1 or $1.50 at the store. SO Delicious Coconut Milk yogurt alternative, which I eat all the time, costs $2.29 each through Instacart although it’s only $1.79 at the store.

Almond milk that I usually buy for $2.99 is $3.49 via Instacart, and our favorite brand of potato chips is $1 more. You get the point.

Basically, many of the foods you buy through Instacart will be marked up to a certain extent. The Instacart website says they “work with retailers to bring you the same prices as found in the physical store,” but adds that “some prices” you see will be higher through the Instacart app. In my experience (and in my area), prices seem to be 10% to 20% higher for some food items, and the exact same as in the store for others.

Instacart also charges a $5.99 delivery fee, although you can be charged a higher delivery fee during “busy hours” if the app is experiencing huge demand. You can also get Instacart Express service with no delivery fees if you pay an annual fee of $149 or $14.99 per month for membership. On top of that, they also charge a 10% “service fee.” However, you can change this amount to zero if you want (I always do). On top of that, you are expected to tip Instacart delivery people. I typically tip 15%, but I have tipped more at times.

In short, my first order with Instacart freaked me out because I ordered around $135 in groceries but wound up paying more like $160. In addition to the grocery total (all food, so no taxes), I tipped $20 and paid a $5.99 delivery fee. Ouch.

But, you know what? When the Instacart delivery guy showed up with all my groceries neatly bagged, I no longer cared about the additional $25 I spent. He brought them to the door and I instantly knew I would be using this service (or another like it) whenever I was in a bind with time — which is almost always.

Three Ways Grocery Delivery Can Save You Money

If I spend an extra $25 each time I get food delivered, and I typically go to the grocery store once per week, I should theoretically be spending an extra $100 on food every month, right? Well, for a few reasons I’m about to get into, I can honestly say that hasn’t been the case.

While grocery delivery services that bring the supermarket to your door do come with added costs, there are several ways they can lower your costs, too. The potential for savings comes in the following ways:

It’s easier to avoid making impulse purchases.

One aspect of online grocery shopping I really like is the fact I can sit down to create a list then add everything to my cart before I submit. Since I typically create a meal plan for breakfasts, lunches, and four or five homemade dinners per week, having it all in front of me helps me stay on track.

This stands in stark contrast to my trips to the store where I’m much more prone to buy extra items we don’t really need. If my kids are grocery shopping with me especially, it’s hard to say “no” to every treat or snack they want. However, using an online grocery shopping service pretty much takes impulse purchases out of the equation, since you’re not perusing all the aisles or seeing all the goodies you could be buying.

Sam Schulz, co-founder of the HoneyFi budgeting app for couples, told me this is one of the reasons he uses both Instacart and Amazon Fresh for his personal groceries. Not only does it make it easier to avoid buying more than you need, but it makes it easier to avoid buying too many snacks or ingredients that seem good but may not get used.

“Shopping online helps us avoid making impulse purchases since we don’t get the instant gratification of buying that expensive chocolate-covered snack on the way out,” he says. “That alone probably saves us $10 every trip.”

You can take inventory of what you already have while you shop.

Another advantage of grocery delivery and ordering online is that it gives you the chance to take stock of what you have already. I don’t know about you, but I’m extremely prone to buying something I already have at home because, once at the store, I can’t remember if we’ve run out or not.

Schulz seems to agree. “If we aren’t sure whether we need something or don’t know how much we need, we quickly double check the fridge and pantry to confirm,” he says.

Since you’re shopping from home instead of the store, it’s a lot easier to use items you already have for meals and buy only the ingredients you need.

You can spend more time making money.

On the days I used to head to the grocery store in the past, I tried to cut my work day short. I did this so that I would have time to go to the store and still have time to make dinner, but I also did it so I could avoid afternoon rush hour traffic.

For me, cutting a work day short always means making less money that day. No big deal, right? Wrong. While taking a small pay cut once per week may not seem like a big deal, those lost work hours definitely add up over the course of a year.

Kevin Mahoney, CEO of fee-only financial advisory firm Illumint, says this is one of the biggest reasons many of his clients opt to pay more for grocery delivery. Since he works mainly with clients in the Washington, D.C., area, he sees many people – including lawyers and other professionals – who bill their clients on an hourly basis.

“For these people, removing a trip to the grocery store from their schedules can directly make them more money,” says Mahoney.

However, the same logic would apply to anyone working on an hourly basis or in the gig economy. If going to the grocery store requires you to work less each week, you may be better off paying for grocery delivery and working longer instead. Of course, your hourly rate needs to be high enough to justify the added expense.

The Bottom Line

If you’re worried about the added costs of having groceries delivered, you should be! It’s easy to justify spending an extra $25 here and an extra $100 there until, all of a sudden, you’ve blown your budget completely for the month.

Then again, some conveniences are absolutely worth paying for, especially if you can use them to make more money or improve your qualify of life. If you’re suffering from a lack of time or just tired out from going to the store week after week, consider giving a grocery delivery service a try. Just be prepared to become addicted… and fast. Once you get a taste of having groceries delivered to your doorstep, it’s tough going back!

Related Articles:

Have you ever tried a grocery delivery service? Was it worth it?

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Tuesday, February 6, 2018

Homemade Bread: Cheap, Delicious, Healthy, and Easier Than You Think

Over the last year, I’ve learned to make a lot more meals and staple foods at home. I have focused on this specific area of self-improvement for a few reasons. Not only does homemade food taste better, but it reduces my family’s intake of preservatives, it’s more nutritious, and it’s often substantially cheaper than what you find in the store. It does take time to make most meals from scratch, but most people get faster with experience. Once you get used to cooking from scrach, most food preparation doesn’t take much more time than going to the store, buying it, taking it home, popping it out of the package, and following the directions.

Breadmaking is a prime example of this phenomenon. Homemade bread is substantially tastier than store-purchased bread, it isn’t laden with preservatives, it is very inexpensive to make, and it doesn’t take all that much time, either.

For these reasons, I wanted to share some of my favorite recipes for homemade breads your family will love.

The Problems With Industrial Bread

Most people in the United States view the bread purchased at the supermarket as what bread should be. However, the reality is that the bread you can buy at the store looks and feels the way it does so it can be made on an industrial scale and last a long time without going bad.

There are two big explanations for this. The industrial scale process is designed to maximize profit while still producing an edible loaf of bread you can serve at dinner. This is done by using an excessive amount of yeast in order to create lots of air bubbles in the bread, hence the “light” texture of store-purchased bread. It also allows for the use of lower-quality grains because of this yeast abundance, which means the bread is far from nutrient-rich. In the United States, most recipes are trade secrets, but in the United Kingdom, the “standard recipe” known as the Chorleywood Bread Process is widely known. The goal of this process is to make a loaf of bread as cheaply as possible, foregoing flavor, nutrition, and texture along the way.

The other bothersome part of industrial breadmaking is the appearance of a healthy dose of preservatives. These preservatives are there for the sole reason of extending the shelf life of the bread, again reducing costs for the manufacturer. Every time you eat a piece of store-purchased bread, you’re getting a healthy dose of preservatives with each bite.

Take a look at the ingredient list from a loaf of Home Pride butter top honey wheat bread, which is a fairly standard store-purchased loaf in my area. I put some of the ingredients in bold font for the full effect.

Enriched wheat flour (flour, barley malt, ferrous sulfate (iron), “B” vitamins (niacin, thaimine mononitrate (B1), riboflavin (B2), folic acid)), water, sweetener (high fructose corn syrup or sugar), yeast, wheat bran, whole wheat flour, wheat gluten, molasses. Contains 2% or less of: soybean oil, salt, sweet dairy whey, butter (cream, salt, enzymes), maltodextrin, honey, corn syrup, calcium sulfate, soy flur, dough conditioners (may contain: dicalcium phosphate, calcium dioxide, sodium stearoyl lactylate, ethoxylated mono and diglycerides, mono and diglycerides, and/or datem), yeast nutrients (may contain: ammonium sulfate, ammonium chloride, calcium carbonate, monocalcium phosphate, and/or ammonium phosphate), cornstarch, wheat starch, vinegar, natural flavor, beta carotene (color), enzymes, calcium propionate (to retain freshness), soy lecithin.

This doesn’t sound like a wholesome food we should be serving our families, does it? This sounds like a chemical-laden substance we wouldn’t serve our worst enemies. Yet, this is exactly what store-bought bread is made from.

How to Make Your Own Tasty Homemade Bread, Easily and Cheaply

While making your own bread is easy, over time I’ve found that many people are simply intimidated by the seemingly complex and work-intensive process of making bread. If you’ve never made your own before, it may seem difficult and loaded with steps and significant work.

However, this couldn’t be further from the truth. The reality is, bread is quite easy to make at home, and you only need a few staple ingredients to make a simple loaf. Here’s exactly how to make a delicious loaf at home from scratch.

Breadmaking #1: Ingredients

What you see in the picture above is every ingredient and piece of equipment that you need to make a loaf of bread (except the oven). Nothing here is complicated at all; these are very basic ingredients and tools you can get very inexpensively at your local grocery store. In fact, the ingredients on that table (except for the yeast) are enough to make several loaves of bread.

Here’s the equipment you need…

  • One large mixing bowl A second one is useful, but optional – you can get by with one if you’re willing to wash it in the middle of the process.
  • One spoon You need a spoon to stir the dough.
  • One measuring cup A 1/4 or 1/2 cup measuring cup will do the job.
  • One measuring spoon A one-teaspoon measurer will be just perfect.
  • One bread pan Obviously, to bake the bread in.
  • One hand towel This is just to cover the bread dough as it rises so it doesn’t get drafts or dust or anything on it.

That’s all you need, and it’s all stuff that’s pretty common in most kitchens.

Now, for the food ingredients…

  • 1/4 cup milk
  • 5 teaspoons sugar (or 1 1/2 tablespoons)
  • 1 teaspoons salt
  • 5 teaspoons butter (or 1 1/2 tablespoons)
  • 1 package active dry yeast (you can get yeast near the flour at your local grocery store)
  • 2 1/2 to 3 1/2 cups flour (get unbleached white for your first attempt)
  • Corn starch or nonstick cooking spray (just to prevent the bread from sticking to the bowl or pan)

That’s all you need for homemade bread, period. These items are pretty basic, so check your grocery store circular and look for online coupons (we update our coupon finder daily) to see if you can find these items on sale or discounted bulk. There are some neat things you can do with added ingredients, which I’ll talk about later, but all you need is the stuff listed above and nothing more.

Breadmaking #2: KitchenAid Stand Mixer

When I bake bread, I normally mix the dough with my KitchenAid stand mixer. However, making bread is easy enough that this is just a convenience and not a requirement by any means. Basically, instead of doing the kneading and stirring described below, I just flip a switch and this machine does it for me.

Breadmaking #3: Water & Yeast

OK, let’s get started. First, you should warm up the bowl – the best way to do that is to just fill it with hot water, then dump out the hot water, leaving the bowl rather warm. Then, mix up the yeast according to the directions on the packet. Usually, it will say something along the lines of “add a cup of warm water to the yeast and stir.” What you’ll end up with is some tan-colored water with some bubbles in it, as shown above. You should stir this until there are no lumps in the yeast.

Breadmaking #4: Other Ingredients

Melt the butter in the microwave, then add it, the milk, the sugar, and the salt to the yeast liquid and stir it up until everything looks the same (a very light tan liquid). Then add two cups of flour to the mix – don’t add the rest yet. Your bowl should look something like what’s shown above, where I have the spoon on board ready to stir.

Breadmaking #5: The Dough

Start stirring, and then add the flour about 1/4 cup at a time every minute or so. It will stick to the spoon big time at first – don’t worry about it. Keep stirring and adding flour until the dough is still slightly sticky, but it doesn’t stick to your hands in any significant way. Also, it should largely clean the sides of the bowl, leaving just a thin layer of floury stuff. It’ll look something like the above.

Breadmaking #6: Kneading

Now comes the fun part: kneading. Take a bit of flour between your hands and then rub them together over the top of an area on the table where you’re going to knead the dough. Do this a few times until there’s an area on the table lightly covered in flour. Then grab the dough ball out of the bowl, slap it down on the table, and start beating on it. Do this for ten minutes. Just take the dough, punch it flat, then fold it back up into a ball again, and repeat several times. I also like to take it in my hands and squeeze and twist it.

Breadmaking #7: Dough Ball

When the ten minutes are up, shape it into a ball (like shown above), then either clean up the bowl you were using before or get out another bowl. Either coat the inside lightly with corn starch or nonstick cooking spray, depending on your preference, then put the ball of dough inside the bowl.

Breadmaking #8: Cover!

Put a cloth over the bowl and sit it somewhere fairly warm for an hour. If you have a warming area on your stove top, that’s a great place to put it – set the warming area on as low as it will go, as I’m doing in the picture above. This is a good time to clean everything else and put the stuff away, but leave the flour out and the floured area on your table untouched.

Here’s what the dough looks like before rising…

Breadmaking #9: Before Rising

… and then an hour later after rising, still in the bowl…

Breadmaking #10: After Rising

It should be roughly double the size that it was before, but don’t sweat it too much if it’s larger or smaller than that, as long as it rose at least some amount. Punch the dough down (three or four good whacks will cause it to shrink back down to normal), then lay the dough out on the floured area and spread it out in a rectangle shape, with one side being roughly the length of the bread pan and the other side being about a bread pan and a half long.

Breadmaking #11: Flattening

You may need to put a bit more flour on it and on the table to prevent sticking. Then, roll it up! The roll should be roughly the same size as the bread pan, as shown below.

Breadmaking #12: Roll Up

Tuck the ends of the roll underneath, with the “under” side being where the seam is. Then spray the bread pan down with nonstick cooking spray (or coat it with cornmeal) and put the loaf inside of the pan.

Breadmaking #13: In Breadpan

Cover that loaf up with the towel, put it back where it was before, and wait another hour. This is a good time to clean everything up, then go do something else fun. The loaf should raise some more:

Breadmaking #14: After One Hour

Put that loaf in the oven at 400 degrees Fahrenheit (200 degrees Celsius) for thirty minutes. When it’s done, pull it out and immediately remove it from the pan to cool. It’ll look something like this, hopefully.

Breadmaking #15: Finished!

Breadmaking #16: Finished!

Let it cool down completely before slicing.

This bread will make mind-blowing toast. Seriously, pop a slice in the toaster, get it golden brown, and spread a bit of butter or margarine on it. Truly, truly sublime.

Tips for Creating Something Beyond the Basic White Loaf

If you get into making your own bread (and why not? It’s inexpensive, tasty, and healthy), you’ll eventually want to start experimenting. Here are some tips I’ve learned over the last year or so.

Bread-making Tips I’ve Learned

  • Different flours work differently. If you try making a rye bread or a whole wheat bread, you’ll discover the flour has different properties. Just stick with adding it slowly to the bowl until it’s just barely not sticking to your hands, and you’ll be fine. Whole wheat flour, for instance, generally requires about half a cup less flour than white flour to reach the right point.
  • For a delicious Italian bread, replace the salt with garlic salt and before you start stirring, add in some Italian seasonings, like oregano and rosemary – or an Italian seasoning mix.
  • You can easily double this recipe and make two loaves at once. The time investment is virtually the same and you get twice the bread.
  • Eventually, you’ll start really experimenting. Making pizza dough from scratch is similarly easy, as are cinnamon rolls. I’ve reached the point where I feel confident making most bread recipes in the oven (except for sourdough loaves, which always seem to turn out wrong).
  • What’s the take home? Baking homemade bread is a very worthwhile thing to try. It’s inexpensive, healthy, and teaches you a lot about how to cook at home. Best of all (for me, anyway), it makes amazingly good toast – I love to start off my day with a slice of toast made from homemade bread and a cup of tea.

The Bottom Line

So, there you have it. Baking your own bread isn’t nearly as hard as people make it out to be, and I hope I proved that with the step-by-step instructions I shared above. I hope you’ll try this recipe for your own family before you buy another loaf of bread from the store. Once you start making your own bread, you’ll be hooked.

Related Articles: 

The post Homemade Bread: Cheap, Delicious, Healthy, and Easier Than You Think appeared first on The Simple Dollar.

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Why We Don’t Accept Certain Credit Cards

In today’s technology-driven world, there are more options than ever to make a payment, especially for small businesses. For instance, with Square, businesses can allow customers to swipe a card on an iPad or scan their Mobile Wallet on their phone — all for about $50 in equipment!

With these advances, many more people are choosing credit over cash. In fact, there were 33.8 billion credit card payments in the United States worth $3.16 trillion in 2015 — an increase of $6.9 billion since 2012, according to The Federal Reserve Payments Study 2016. On the whole, the study found that credit card payments grew at an annual rate of 8% by number from 2012 to 2015.

However, while credit cards as a whole may be more widely accepted by businesses large and small, not all credit cards are accepted everywhere. Cards like American Express, Discover, and MasterCard may have some limitations.

Why is that, and what can you do as a consumer?

Understanding the credit card networks

There are four major credit card networks within the United States — American Express, Discover, MasterCard, and Visa. Out of the four, Visa is by far the largest, both in the U.S. and globally. Around the world, Visa has 44 million merchant locations (as of Sept. 30, 2016) and 3.1 billion Visa cards issued (as of Dec. 31, 2016), according to their most recent Facts & Figures Report.

worldwide credit card circulation visa mastercard american express

In addition to these networks, there are 10 major credit card issuers in the U.S. — American Express, Bank of America, Barclays, Capital One, Citigroup, Discover, JPMorgan, Synchrony, U.S. Bancorp, and Wells Fargo. As of 2014, four of the 10 — Citigroup, JPMorgan, Bank of America, and Capital One — had more than half (57%) of the market share.

global credit card purchase transactions visa mastercard american express disocver
us payment credit cards purchase visa american express mastercard discover

Understanding the merchant fees

As we can see above, there are literally billions of credit cards available from all four of the major credit card networks. So, if the top 10 banks control 87.5% of the credit card circulation (as of 2014), why aren’t they accepted everywhere?

The answer: Merchant fees.

What are merchant fees?

Merchant fees is the catch-all term for all of the fees associated with setting up a merchant account so you can accept credit cards, as well as the fees to process those transactions. In general, businesses will face a group of fees to set up and maintain their account as well as pay a fee with each credit card transaction. Some of these costs include a one-time setup fee, monthly account fees, annual account fees, transactional fees, interchange fees, monthly minimum fees, statement fees, network fees, and more.

For most businesses, the setup and maintenance fees are a worthwhile investment — once you create your merchant account, you’re able to accept any form of credit cards. The reason businesses might not accept all credit cards is the transactional fees associated with each card.

How do merchant fees work?

To process a credit card payment, the merchant must pay a fee to three different “middlemen” — the credit card network (Visa, Discover, MasterCard, or American Express), the credit card’s issuing bank (Capital One, JPMorgan, Bank of America, etc.) and the acquiring bank (your banking institution). These fees can range from 1-3%, but for some cards, like American Express, they’re as high as 3.5% per transaction.

As you can see, these fees could start to add up. For instance, let’s say a small business does $100,000 in credit card sales a month:

  • If their sales only come from Visa cards that have 1.15% transactional fee, the business will pay $1,150 a month in credit card fees.
  • If 50% of their sales come from 1.15% Visa cards and 50% from 3.5% American Express cards, the business will pay $2,325 a month in credit card fees.

That’s a difference of $14,100 a year in credit card fees alone!

Who pays the merchant fees?

Retailers pay all fees associated with setting up their accounts and processing the transactions. However, in 2012, a court settlement made it possible for retailers to pass along transaction fees to consumers in the form of a credit card surcharge. This was repealed and thrown out in 2016, though, putting the fee burden back on the businesses.

Additionally, unlike debit cards, credit cards have no fee caps. As part of the Durbin Amendment included in the 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act, certain debit cards have their interchange fees capped at 21 cents plus 0.05% of the transaction value.

Because no similar sort of legislation exists for credit cards, the card networks and banks can set their own fee rates that retailers have to pay if they want to accept that credit card.

Why do some cards charge higher fees?

It comes down to their business model — do they want to generate most of their income from transactional fees or interest payments? In the case of American Express, their business model is based around generating income from swipe fees, not interest. Many of their most notable cards, such as , charge no interest whatsoever. Because it’s a charge card rather than a credit card, customers must pay their balance off in full each month or face late fees. The card also charges a $550 annual fee.

Alternatives to not-widely-accepted credit cards

Credit cards that aren’t widely accepted, like American Express and Discover, can still be used to make purchases at hundreds of thousands of retailers around the world. However, if you prefer to stick with your Amex or Discover card, you’ll need to have a backup plan in place for when it isn’t accepted.

1. Ask if there’s a spend minimum.

As mentioned above, once a retailer sets up their merchant account, they’re able to accept any of the credit cards. In order to accept a card with high transactional fees, though, they may require you to spend a minimum amount to help offset those costs. If you’d really prefer to use a certain card that isn’t widely accepted, don’t hesitate to ask about the spend minimum first.

2. Carry a backup card, just in case.

Keeping a backup credit card in your wallet is a good idea for those “just in case” moments where your primary card isn’t accepted. For a backup card, it’s a good idea to make it a Visa credit card since they’re accepted at the most locations worldwide.

Additionally, why not make it one of the best rewards credit cards so you can earn points, miles, cash back, and other perks as well? The Chase Sapphire Preferred® Card earns 2x points on travel and restaurants worldwide and 1X points on other purchases. If you want an option without an annual fee, the Chase Freedom® earns 5% cash back on bonus categories (up to $1,500 in combined purchases), and unlimited 1% cash back on other purchases.

3. Keep a debit card handy.

If you’ll recall the Durbin Amendment mentioned above, debit cards have caps on the amount that can be charged on transactional fees. This means that merchants are more likely to accept debit cards over credit cards. As with certain credit cards, though, there may be a spend minimum for debit purchases since there are some small fees.

4. Pay in cold, hard cash.

While we may be using plastic more often, cash is still king when it comes to making payments. If you’d prefer not to carry extra cards, make sure you have cash on hand at all times if your primary credit card is one that isn’t widely accepted.

The bottom line

There’s a lot more that goes into accepting payment for a purchase than just saying “Cash or credit?” Because of varying merchant fees, retailers may choose to accept or not accept certain cards, which means you may not be able to use your preferred method of payment at every business. If your preferred credit card is one that’s not widely accepted, like American Express or Discover, make sure to have a backup plan in place.

The post Why We Don’t Accept Certain Credit Cards appeared first on The Simple Dollar.

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Trust the Process

I’m going to start off in a strange place for an article on The Simple Dollar. I’m going to talk about professional basketball. Please, bear with me; there’s a very key point to where I’m going with this. (Also, if you’re an NBA fan, be aware that I’m simplifying a few aspects of this story to keep it from turning into many, many pages of text.)

In 2013, the Philadelphia 76ers, an NBA team, hired Sam Hinkie to be their general manager. A general manager’s job is to decide what players are going to play on the team. They decide what trades to make, what players coming out of college to add to the team, what players to sign to contracts, and so on.

Theoretically, the goal of a general manager is to use those moves to put the best team on the floor this year or, maybe, try to get players that will be good in a year or two. They want fans to come to the arena and have fun watching their team win, and they want to sell some jerseys of their best players.

Hinkie and the 76ers decided to take a very different approach, one that was informally dubbed “the process.” Hinkie believed that you needed to have a very good foundation in order to win a championship, and if you weren’t close to winning a championship, you should have a laser focus on building that foundation at all costs.

For Hinkie, a very good foundation consisted of a roster full of very solid young players from which one or two true superstars would emerge, surrounded by a bunch of skilled supporting players (I’m summarizing a number of principles all together in one sentence here, but that’s essentially “the process” in a nutshell.) He took the idea that “a bird in the hand is worth two in the bush” to an extreme level in terms of getting those young players. He realized that many teams would rather have a decent player now than the rights to pick a potentially great player out of college two or three years from now.

So, he proceeded to trade away everything he possibly could for those “two years from now” or “three years from now” assets.

What this meant in practice was that in 2013 and 2014 and 2015, the Philadelphia 76ers were historically bad. They stunk up the place. In Hinkie’s third season, they won only 10 out of 82 games, which was very close to the worst record in NBA history. They had traded away almost every decent player they possibly could for more and more “two years from now” and “three years from now” assets and, for the time being, made their team up of extremely marginal players.

Halfway through that third season, the owners gave up patience. What kind of general manager spends three years “building” a team that could only win ten games? The owners brought in someone to “oversee” Hinkie, and at the end of the season, he was basically pushed out the door. He resigned, but it was pretty clearly no longer his team to run.

But a funny thing happened along the way. All of those “two years from now” and “three years from now” assets started to pay off in bunches. Right now, the Philadelphia 76ers are an incredibly young and incredibly exciting team. They have a team absolutely loaded to the brim with young, intriguing players, all of which were Hinkie’s “two years from now” or “three years from now” assets.

As I write this, the team has won half of their games on the back of a roster that’s almost entirely made up of incredibly talented first year and second year players that are just learning how to play the NBA style game. If the playoffs started today, they’d make it. A year or two from now, barring a big rash of catastrophic injuries or inept trades, this team will be an absolute monster.

The entire focus of the team in 2013 and 2014 and 2015 was to build the best team for 2018 and 2019 and 2020 and beyond. I can’t say if it worked yet or not, but the 2018 team is absurdly talented, young, exciting, and very fun to watch.

When you watch a 76ers game right now, you’ll hear the crowd sometimes break out in a chant of “trust the Process” – here’s an example. The poster child of “the Process,” an extremely talented player named Joel Embiid (don’t worry, if you haven’t heard of him, you will unless he gets hurt), sometimes leads the crowd in the chant, waving at them and encouraging the chants.

Trust. The. Process

Right now, the 76ers can legitimately look at themselves as contenders. They’re probably not going to win a championship this year, but they will definitely be a team that no one wants to face in the playoffs because of their giant flashes of brilliance. They are good enough to beat anybody right now and, with some experience, they’ll know how to turn it on to win a lot of games. I would not bet against an NBA championship coming to Philadelphia in the next three years or so.

But what would that team look like without “the Process”? In all honesty, they’d probably be a mediocre, average team, one without a big hope for the future. They would have been far better in 2013 and 2014 and 2015, but today? I think almost anyone would choose “the Process” 76ers today and for the next decade or so.

So let’s bring this back home to me and you.

When I hit my financial rock bottom several years ago, I looked around my life and I saw two choices.

I could either keep bubbling along as I was, barely keeping my head above water, slowly paying down debt, having a life with a lot of little treats in it but never making those big life steps that I wanted to make. It would have been a pleasant life, year in and year out, but it wasn’t the life I wanted. It was a life without any of the big dreams, a life that was always tinged with stress about money, a life where I feared the prospect of a job loss.

My other option, the one I took, was one where I said, “All right, I’m spending a lot of money on stuff that doesn’t really mean anything to me. It doesn’t build the life I want. It just makes today a little more pleasant in a forgettable way.”

I took that second option. My wife and I dove hard into frugality. We started cooking exclusively at our apartment. We started buying everything store brand. We started intentionally seeking out free activities and entertainment. We started using the library for movies and books. We cut out a lot of bills and negotiated a lot of other ones. I could go on and on here.

In the short term, our lives lost a lot of immediate pleasures. We simply didn’t have as many daily “treats” in our life, and many of the ones that stayed around changed a little.

I like to think of this as being almost exactly like “the process” of the 76ers. Those first few lean years during our financial turnaround was a lot like 2013 and 2014 and 2015 for the 76ers. We decided to focus entirely on the future and, for a little while, we chose a pretty mediocre life.

Not only did we still have the stress of living paycheck to paycheck and facing a lot of debt, we also didn’t have the treats that we were using to make life comfortable. It wasn’t very fun – or, more accurately, it was about as fun as going to a 2014 Philadelphia 76ers game.

The thing is, we trusted the process. We knew that as time went on, our daily stress about money would fade as we paid down debt. We knew that as time went on, we’d discover lots of fulfilling things that didn’t cost an arm and a leg. We knew that as time went on, we’d start having the financial assets in place to handle the big things we wanted, like three children and a family home, a goal we both desired.

We trusted the process.

Flash forward to today and we have a fully paid for family home, zero debt, strong retirement savings, a very healthy emergency fund, and money put aside to buy our next cycle of vehicles and for our children’s college educations, too. We have enough budget flexibility to do a lot of things that we enjoy doing without sacrificing an inch of that security or undoing any of that progress toward a fairly early and nicely secure retirement for us and college for our kids.

We are the 76ers right now. We have a ton of great pieces for the future. We don’t have to worry about each day, as we don’t have any debt and lots of good things in our life. We might not be championship caliber yet, but we’re heading for something like it via early retirement and a nice step forward into the future for our kids.

“The process” translates beautifully to personal finance, in other words.

All you have to do is stop for a moment, examine what you’re doing on a daily basis, and ask yourself what the payoff is for each of those moves.

Is it something that’s going to help you to have a great day today but have a cost further down the road? Then you should think very carefully about whether you should be doing it. If you’re spending money on a splurge, is it really, really worth it?

Or, is it something that’s not going to make today any better (or maybe even make it a bit tougher) but will really pay off down the road? In that case, you should strongly consider the idea that this is the best option. Are you contributing money to your retirement savings? Are you paying down debt?

Start looking at all of your actions that way. Is this something that makes today better at the cost of tomorrow? Or is this something that makes tomorrow better at the cost of today?

“The process” is about choosing that second option most of the time, far more than you’re probably doing right now.

The thing is, for a while under “the process,” your day-to-day life might not be incredibly fun. You were used to going to an average NBA game, but now you’re going to a 2014 Philadelphia 76ers game – a much less fun experience.

Sure, it’s an okay life, but it’s not up to the standards of the recent past. You’re still watching an NBA team, but now it’s a team capable of winning only 10 games rather than 35.

The thing is, your choices are based on the process, and you trust the process. You can go to bed each and every night trusting the process and knowing that your life is headed on a better trajectory than it would have been had you just kept doing the same old thing.

If you go to bed each night with that idea in your head and you get up each morning with that idea in your heart, you find that it’s actually pretty refreshing and inspiring. You’re driven to find value in things like preparing your own meals and learning how to cook. You start really looking in earnest into things like what’s available at the library.

I found myself excited to take on tasks like renegotiating bills because I knew that it was building to something.

The key thing, though, is that you have to give the process time to work. You can’t expect to commit to that kind of forward thinking and then assume that everything will be peachy tomorrow.

If you’re evaluating your choices through the lens of what’s going to be better three years or five years from now, you can’t be frustrated about the lack of results a month from now. You have to truly trust the process. You have to wait for the results.

The 76ers started going down this road in 2013, and it wasn’t until 2017 that you could really see dividends from it.

It took about two years for really clear benefits from our own process start to emerge. I started to feel less worried about money at the six month mark or so, and then at the two year mark it was clear that we were now basically debt free and bringing in far more than we earned.

However, it took about five years in total for it to really, really pay off. We paid off our house in full a little over five years after we started “the process” living in a tiny apartment. In that time, we went from tons of consumer debt, no home, and very little retirement savings to a very, very healthy financial foundation.

All along the way, we trusted the process, and that’s what you’ve got to do, too. A healthy financial foundation isn’t built in a month or two.

Furthermore, you need to seek out financial routines that cut a lot of spending, but they need to be sustainable. If you’re feeling miserable, then you’ve made a cut too far and you need to restore it, or else you’ll make a rash move and kill the process before it can ever pay off.

The process isn’t about tomorrow, or next week, or next month, or even next year. It’s about the rest of your life, and it starts today.

It starts with a willingness to understand that an average day isn’t filled with perks and treats. An average day is a very low cost day. Perks and treats should wait for special occasions, with a little bit of anticipation to heighten the pleasure.

It continues with an understanding that there is a lot of contentment, pleasure, and joy to be mined from those ordinary days. There are a lot of things in your life that you find yourself overlooking if you steadily commit to a nonstop flow of treats and perks. Eating nothing but takeout denies you the pleasure of a simple meal you made for yourself on your own time and your own terms. Having 500 channels and feeling like there’s nothing on denies you the pleasure of finding a single show on DVD at the library and watching it from beginning to end.

It also continues with understanding that a lot of moves just don’t pay off today. Time you invest in building your professional skills won’t pay off today or tomorrow, but in a year or two, they’ll pay off with a good chance at a better job and a higher salary. The same is true for time and effort invested in building a strong professional and personal network. It’s also present when you’re looking at paying off debt, or putting money aside in an emergency fund – those things aren’t likely to change your life today or tomorrow or next week, but there will come a day when they’re life changing.

That’s the process.

Inspiration is a funny thing. I’ve watched basketball for many years – it’s a sport I enjoy watching occasionally because it flows so well when it’s played at a high level – but I never really found inspiration in it for how to live my life.

Now, when I watch a 76ers game and I see Joel Embiid on the court waving his hands in the air and getting the crowd to chant “TRUST THE PROCESS,” I do feel inspired. I’ve seen The Process work with the 76ers, and I’ve seen a similar process work in my own life. I know very well it can work in your life, too.

All you have to do is trust the process.

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