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Saturday, July 21, 2018

As NEA starts earning profit, staff lobby for bonus

Kathmandu, July 22

Staff of Nepal Electricity Authority, the state-owned electricity producer, manager and distributor, have demanded that they be provided with a hefty bonus as the entity began earning profit after a long time.

The official trade union of the Authority has recently submitted a letter to the Authority’s Managing Director Kul Man Ghising demanding that all the staff be provided with the bonus, equal to their one month pay, on the occasion of its 33rd anniversary being celebrated after few days.

The letter signed by the trade union’s Chairman Janardan Bhattarai argues that the staff’s role in ending the load shedding and ensuring the profit of the corporation is significant; therefore the bonus should be provided so as to keep their willpower and motivation intact.

It also reminds the management that the staff never put forth such demands when the Authority was struggling with finances; hence the demand at this time is genuine.

If the Authority decided to meet the trade union’s expectation, it has to spend around Rs 430 million. There are around 10,000 staff at the Authority now.

Meanwhile, some staff of the Authority have revealed that they are already enjoying better pays and other facilities than those of civil servants; hinting such bonus may not be necessary.

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Pandit Bajeko Lauri movie review: When good story meets natural actors

There have been enough examples to show that comedy and romantic movies do well in Nepal. When these movies are on, producers feel that a return on their investment is guaranteed. But when it comes to making a movie that does not fit into the two genera, the risk of failure at the box office multiplies.

There are some who are brave enough to take that risk and make movies that aren’t the ‘mainstream.’ These movies try to tackle issues that are begging for attention. Pandit Bajeko Lauri is a film that shows the audience a glimpse of life in Nepal’s villages.

The movie revolves around the life of Sitaram (Praween Khatiwada) who is a respected pandit in the village and his lauri (a stick which he uses when performing rituals). The story takes a turn when Chaite (Pramod Agrahari) comes to the village to end the badi practice which is still prevalent in the village. For that, he has to take on the popular pandit ji and change the way people look at lower caste women in the village.

The first half of the film is quite enjoyable with the director showing how respected pandits are in Nepal. The movie shows how people look at pandits and also touches a bit on the badi practice. The film shows the audience how men use their wives to earn a living and how casteism still exists in society. The first half ends on a cliff-hanger which makes the second part even more interesting as it revolves around Sitaram, Chyante, and Mandira (Sandhya KC)– all of them facing a life-changing situation. Though the movie does tend to drift away a bit in the second half, it still makes for a good watch.

The best thing about the movie is the story. It flows at a good pace as it takes us on a journey. Unlike other films, the story of this flick is quite original and as gives all actors the chance to show their talent. Writer Mahesh Dawadi has penned a great story which highlights the backwardness of people living in the villages of Nepal. But that said, the writer could have gone deeper into the issue and that would have given the audience more insight.

The actors seem to have put in an extra effort to do justice to the unique story. Khatiwada is good in his role as pandit as he keeps the audience hooked with his light humour and his mature acting. Apart from his fighting scenes and dancing, he’s done a good job.

Sandhya KC also stands out in the movie where she has delivered a powerful performance. Her acting is natural as her dialogue delivery is as good as any in the film. Her show of emotions also stands out as she plays the role of a woman who is being forced to sleep with other men by her husband.

Bijay Baral is funny as badi kancha and has played a role which is different to the ones he’s played before. Apart from some of his emotional scenes, he too has done a decent job.

Supporting actors Bholaraj Sapkota, Mariska Pokharel, Anupama Bhandari, Lokendra Lekhak have done an okay job in their respective roles. They could have been better. Pokharel plays the role of a mute girl and has done a decent job. Sapkota, though, could have done better in his role as Sitaram’s half-brother along with his aides who are not as natural actors as others.

The cinematography is as good. The songs are quite bland and this is one of the two flaws in the film, along with the action sequences. The fight scenes are so bad that they will make you laugh. Another area that Nepali filmmakers need to look at is the level of audio in the dialogues. The audio levels are too high which makes one cringe.

Overall, the movie is a good watch. It is one of few Nepali movies which do not revolve around a boy or a girl or money or all three. This movie has tried to address an issue that isn’t talked about much and this makes this movie different.


Run Time: 120 minutes

Genre: Social Drama

Director: Dipak Oli

Cast: Pramod Agrahari, Bijay Baral, Sandhya KC, Praween Khatiwada

Screening in cinemas near you.

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How to Stop Worrying About What Other People Think

The single most powerful book on personal finance I’ve ever read is Your Money or Your Life by Joe Dominguez and Vicki Robin. I read it at my lowest point financially and it altered my perspective on personal finance more than any other book. I’ve written a great deal about this book’s impact on my life and the lessons it has taught me.

One of the major themes of the book is that it’s imperative that people sit down and figure out the small handful of values and things that are truly central to your life. Once you’ve figured out the handful of things that really matter to you, then cut back hard on everything else.

The book goes into detail on how to do this, offering a bunch of strategies on how to cut back your spending. What’s the book’s number one strategy?

Stop trying to impress other people.

For many of us, an astonishing amount of time and money and energy is spent living up to a notion that we must impress other people, that what they think of us is incredibly important.

The truth is that people draw their opinions of us from things that we don’t really control. Often, that element upon which their opinion is based is heavily dependent on that person’s mood at the time or their pre-existing ideas or prejudices, over which you have almost no control.

Furthermore, most people don’t notice us nearly as much as we think they do. Most people on the street don’t consciously notice us at all and those that do are only barely aware of us or will forget about us entirely as soon as the interaction is done. We drastically overinflate how much other people think about us. This is called the “spotlight effect,” something I’ve discussed many times before on The Simple Dollar.

Even in those interactions where the other person is actually paying attention to us (and not just glossing over us or applying their own prejudices), they’re likely to draw conclusions about us based on aspects of us that are far away from the things we throw money at. Virtually no one decides whether they like a person based on the car they drive or the gadget in their pocket or the clothes they’re wearing (though, admittedly, details like that can help in specific settings – they’re just very rare settings for most people).

Furthermore, in the vast majority of human interactions that we have, impressing the other person is going to have literally zero impact on your life, one way or another. Yes, there are always a few exceptions, such as when you’re dating someone or if you’re in sales, but almost all of the time, there’s nothing whatsoever to be gained in impressing other people.

Yet, in the end, we still worry endlessly about what other people think, and it’s reflected in the clothes we buy or the car we drive or the house we live in or many other things, and that becomes a giant vacuum of time and money and energy that we simply don’t need to spend.

Let’s dig into the implications of that.

The Golden Rule

“Doesn’t ‘stop trying to impress other people’ just mean it’s okay to be rude?” No, it doesn’t mean you should try to make others think negatively of you. It just means you shouldn’t invest extra effort or energy or money into making others think positively of you. What they actually think of you is irrelevant.

Instead, your guideline for how to act around others should be centered more around what you’d like to see in others. It means you should simply treat others the way you’d like to be treated and not worry about impressing them. That’s it.

Do you care at all how a random person on the street is dressed? Do you care at all what they do in their spare time? No. You probably care that they’re clean and practice basic hygiene and aren’t rude or cruel to you. That’s probably the extent to which you care about 99% of the people you are around each day. So, do the same. Wear clean clothes. Don’t smell. Practice basic hygiene. Don’t be rude or cruel. There, you’ve covered everything you need to cover for 99% of the interactions you’ll have with other people.

The golden rule should be the fundamental underlying principle of how you behave. How do you want others to behave toward you as you move through everyday life? For most people, the things above cover it in full – be clean, be nice. Do those things yourself.

Two Kinds of People

If you’re beginning to rethink how much emphasis you put on what other people think, consider that there are really two kinds of people in your life. There are people whose opinions you do care about, and people whose opinions you don’t care about.

When you start looking at people in that type of strict divide and really ask yourself whether or not you care about specific people’s opinions of you, you’ll realize that you just don’t care about the opinions of a lot of people that you might have otherwise been subtly considering with your choices.

In all honesty, I care about the opinions of my wife, my children, my parents, and a very small handful of close friends. Everyone else? It really doesn’t matter to me too much. I follow the golden rule in interacting with them and, if one of them happens to click, maybe I attempt to cultivate a deep friendship.

The thing is, though, I want those people to value me for who I am, not for some image I create. That way, I don’t have to invest money or time or energy into keeping up that image. My close friends value me for who I am; people who don’t do not wind up being my friend.

It is worth noting again that I don’t wish people who don’t necessarily value me for who I am become my enemy, either. This is where the “golden rule” comes in – treat others as you would like to be treated. How would I like people I don’t know well to treat me? That’s how I act towards others. It’s a very simple guideline that works well, one that also doesn’t require an outlay of money or energy.

This leads to another principle…

Be the Person You Want More of in the World

So, who do I want to be around the people whose opinions matter to me? Honestly, I try to be the person I want more of in the world.

If the world was an ideal place for me to live, what kind of person would populate it? I would want kind and empathetic people who are perfectly happy with people different than themselves, concerned about resources they share with other people, and highly passionate about the things they care most about. I would want people who were virtuous, who weren’t cruel behind the backs of others, who were honest in their dealings with others, and who were helpful to others. I would want people with a good sense of humor who weren’t afraid to try new things.

That’s exactly how I try to behave around people whose opinions I care about. I don’t worry about impressing them with my clothes or my gadgets or my house or my car or my appearance. Instead, I try to impress them just by the nature of who I am and my character.

In the end, it’s the relationships forged by the person you are that are the ones that last. No one forges a lifelong friendship because of their clothes or because of their car. Rather, what impresses other people is who you are and how you treat others. Those are the things that are the basis of truly lasting friendships and relationships.

I try to be the person that I would ideally want in my inner circle. That may not be who everyone wants in their life, and that’s okay, but when I find people who match up well, we tend to click, and I don’t alienate others (much, I suppose, which leads right to another interesting point…).

You Can’t Decide If People Like You or Not

You cannot make people like you. You can make almost anyone dislike you, but you can’t make anyone like you. People make that decision within their own minds, and that decision has more to do with them than with you.

Why? People have different values. People hear different things. People see you at moments that you don’t always expect. People have different understandings of words. People have different backgrounds and personal histories.

Those all add up to conclusions about you that you don’t always expect or like.

Clothing and gadgets and a nice car and a nice house and name brand stuff on your shelves isn’t going to help with those conclusions, either. You might be able to nudge it a little bit one way or another for a little while, but it doesn’t take long for their view of you to be much more centered around who you are meshed with their own values.

You can’t control that meshing aside from the character you present to the world. You can nudge it a little in the short term (something we’ll get back to in a bit), but you can’t make people think of you the way you want them to think of you. All you can do is offer up good character (the “golden rule” and being the person you want more of in the world) and know that that’s good enough for most people.

One Relationship That Matters Is Better Than 100 That Don’t

When you intentionally shave off the distinct interesting things about you in order to try to “win friends and influence people,” what you’re actually doing is cutting off potentially deep and meaningful relationships. You’re not going to gain a bunch of friendships by being milquetoast.

You’re much better off about being open about your interests and what you’re thinking about and what you actually care about. Why? Those things will connect you deeply to people with whom you can build meaningful relationships that actually matter in your life.

Being as “normal” as possible in who you are will probably mean people won’t dislike you, but it also means that it will be very hard to form deep and meaningful relationships with people at the same time, because you’re not offering up anything distinct for people to connect to.

You’re far better off building one deep, solid relationship based on mutual interests than having 100 people merely think you’re pleasant. Don’t even worry about those 100 other people aside from practicing the golden rule and being the person you want more of in the world.

It’s Completely Okay If Someone Mildly Dislikes You

“But what if they don’t like me?” It is completely fine for some people to mildly dislike you as long as you’re not mistreating them. The kind of mild dislike that comes in the form of “that person is alright but we don’t have much in common” is utterly innocuous. No one takes action on those kinds of feelings.

People take action on feelings of intense “dislike” or moderate to intense levels of “like.” As I mentioned earlier, you really can’t do too much about whether people like you or not, but you’re much more likely to find a deep connection with someone that you have a lot in common with if you’re open about who you are. This might cause a bit of that kind of very mild dislike in some people, but that kind of mild dislike is basically meaningless. It’s the kind of dislike they might form if they don’t like the kind of coffee in your kitchen or something else that’s essentially random and out of your control.

Don’t worry about it. Don’t worry at all about potential mild dislike. Instead, be that person that you’d love to form a close friendship with. That’s the surest way to make sure that you attract people that you’d want to be around and those are the people you’ll find it easy to build deep relationships with.

The Self Confidence Angle

“But what if I lack self confidence?” Many people spend money to cover up a lack of self confidence. A car or expensive makeup or nice clothes or a nice house, they feel, will make up for that lack of self confidence and make people talk to them.

Trust me when I say this: it doesn’t really work. I used to buy nice clothes and nice gadgets and drove a nice vehicle under the belief that I would feel much more confident with those things, but when I got into social situations, I was still just me. None of that stuff made any difference.

At best, they served as conversation starters a few times, but quite honestly, anything could serve as a conversation starter. There are lots of ways to start a conversation.

The best thing I ever did for creating the appearance of self confidence was reading How to Win Friends and Influence People by Dale Carnegie and Never Eat Alone by Keith Ferrazzi and Tahl Raz, and applying the principles I learned from those books. Doing that went much, much farther toward helping me navigate social situations with confidence than any boost I’ve ever received from something I bought in order to feel more confident.

I’ve found that using lots of little things in social situations, like more active listening and asking questions and only speaking when it’s meaningful or humorous, have gone a very long way toward making me feel more confident in social situations. At first, I followed these steps quite mechanically, but as I witnessed the tips working, I found myself doing them more and more until they became more or less natural. I now seem far more social than I really am (according to my wife).

Those simple techniques have a ton of impact for very little cost. On the other hand, buying a house or expensive clothes or a new gadget to impress people has a ton of cost for very little impact. One of those two options makes financial sense.

The Short Term Connection?

“But how do I get my foot in the door?” For many people, that first impression is vital and they want to nail it with every bit of positive feeling they can muster in the other person.

This is fine for a person working in sales, particularly those on commission, where their livelihood is centered around making a positive short term impression and using that as influence to convince people to buy. So, in a professional setting oriented toward sales, I don’t begrudge people buying nice clothes and a sleek smartphone, if the customer sees it, a nice car. They’re trying to cultivate every drop of short term positivity that they can to close the sale, and often it just takes a little bit to tip the scale enough to get that sale.

The problem is that such things fade out pretty quickly over the course of a relationship. The clothes or the car or the gadget might wow someone initially, but their take on you will fairly rapidly end up dependent on who you are rather than your car or your clothes or your gadgets or anything else.

If the short term is all that matters – such as wanting to net a sale or wanting a one-night hookup at a club or something – then those are reasonable choices. If you want anything long term, like a lasting friendship or a lasting professional relationship or a lasting romantic relationship, then it’s other things that matter much more, such as living by the golden rule and being the person you want more of in the world and being more open with the core of who you are and cultivating yourself as a better person.

Final Thoughts

In short, The Beatles had it right all along. You can’t buy love. You can’t buy your way into friendships or professional relationships or love. Those things are cultivated by who you are, not by what you wear or where you live or the things you have on your shelf.

The best thing you can do improve how others respond to you is to improve who you are and stop worrying about what others think of you. Not only will that save you a ton of money, it’ll end up with better long term results.

This shift won’t happen overnight, but if you start practicing the suggestions in this article, you’ll find yourself slowly worrying less about what others think of you and spending less money as a result of that change.

Good luck!

The post How to Stop Worrying About What Other People Think appeared first on The Simple Dollar.

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Friday, July 20, 2018

Handling Guilt After a Big Purchase

In this past Monday’s reader mailbag, I gave a brief answer to a question about an expensive watch purchase; you can go back and read my original answer here. That question, asked by a reader named Gerald, has stuck with me all week. Here’s his question again:

For the past several years, I have been saving up for a really nice watch like the one my grandfather wears and about a month ago I finally purchased a Longines Master Collection Chronograph. It is so beautiful and it is like a modern pairing to my grandfather’s watch. He was with me when I bought it and he is getting quite old so it might be one of the last things we get to do together because he lives 2,500 miles away.

The thing is beautiful to me and full of meaning but yet I can’t bring myself to wear it without feeling tremendously guilty about the $7000 I poured into it. I could have knocked off the rest of one of my student loans with that kind of money and instead I’m still making payments and paying interest. I should have been out of student loan debt at least before buying it and now when I look at it I think of my foolishness.

I can’t sell it and recoup the full value of what I paid for it but I can recoup most of it.

My initial response to Gerald was mostly oriented toward encouraging him to stick with the purchase, because it had intense sentimental value for him and he had planned carefully for it.

However, what stuck with me about Gerald’s question was the underlying guilt.

It doesn’t take much reading of Gerald’s message to clearly understand that he felt guilty for buying the watch. He’s a clear headed individual who could see what other things he could have done with that money, and the opportunity cost of that watch was getting to him.

Let’s be clear on what I mean by “opportunity cost.” Opportunity cost is an investment concept that refers to the loss of potential gain from other alternatives when one alternative is chosen. We deal with opportunity cost all the time, albeit in a transparent way. For example, we face opportunity cost any time we choose to buy a non-essential item, because we could have done something else with that money. If I choose to buy a book, for example, the money invested in that book could have been used to buy a different book or something else entirely.

It is natural for a frugally minded person to think about opportunity cost, perhaps without even realizing it, when thinking about a purchase. It comes out when you ask questions like “Is this a good use of my money?” or “Do I really want this?” You’re simply wondering whether or not the thing you’re intending to spend money on is really a smart choice.

The thing is, consideration of opportunity cost often leads straight to a sense of guilt because you see other purposes for that money, ones that are tied to your long term goals, and those purposes seem really important. When you then cast a critical eye toward that non-essential expensive item that you’re considering, it’s really easy to feel as though you’re putting your money in the wrong place, and when you feel as though you’ve done that with a healthy amount of money, you feel guilt.

How do you address that guilt, then? If this is a normal thought process of a price-conscious frugal person, how does a frugal person ever not feel guilty about a big non-essential purchase?

Here are four strategies that work well for me.

First of all, I budget for all non-essentials. If I’m making an expensive purchase of some kind, it’s because I budgeted carefully for it and the actual execution of that purchase is not going to disrupt any of my long term financial goals.

In Gerald’s case, he seems to have planned and budgeted for this purchase. He put aside money regularly for it and waited patiently until that money that had been put aside was enough to buy the watch he was eyeing.

This strategy takes away the argument that an expensive non-essential purchase is somehow disrupting my financial future. It’s not. My financial future is still fully on track.

Second, I understand that occasional splurges or extravagances are not inherently a bad thing. I am not doing something wrong by splurging on occasion. An occasional splurge opens our lives to a wider variety of human experience, both in terms of the splurge itself (which is outside of the norm of our life) but also in terms of the anticipation and the aftermath of the experience.

In Gerald’s case, this splurge has particular meaning because of the association with his grandfather. It is an item that is definitely outside of the norm of his life and is also imbued with a great deal of personal meaning.

By focusing on the benefits of the occasional extravagance, this strategy takes away the argument that the purpose you’ve chosen for the money is somehow wasteful. An occasional splurge that offers a unique divergence from the norm, one that’s buffered by planning and anticipation and appreciation, is a worthwhile part of human experience and not a bad thing in and of themselves.

Third, I very carefully consider big purchases before diving in. Is this really a good item that matches exactly what I want rather than something I’m nudged into by marketing? Have I thoroughly researched the exact item and know exactly what I want? Is this a good price for the item? Asking and then answering these questions helps me to be sure that the purchase I’m considering is actually a sensible purchase and that I’m not wasting money on something I don’t truly want.

In Gerald’s case, he clearly researched his watch purchase extensively. He knew exactly what he wanted and (I assume) he looked around for a good price for that item, likely in concert with his grandpa. It’s what he wanted, he was confident in the quality of it, and he found a good price on it (I assume).

This strategy goes a surprisingly long way toward scratching my sense of frugality. If I know that this is a well considered purchase, then my sense of making a mistake declines drastically.

Finally, I evaluate the reality of how much I’ll use this item or how much this experience will impact me. This is a surprisingly important part of the equation. If I am not sure that I will use an item a lot, then I do not buy the expensive version of that item. I go for the cheap version, see how much I use it, and then upgrade as I see a reason to once I become more experienced with its use. For experiences, this is a bit trickier, but my strategy here is to simply maintain an ongoing “bucket list” of experiences that I want to have and aim for splurges from that list, because those experiences are usually ones that I’ve considered and know that they will have some real impact on me.

For Gerald, he’s buying an item that he has experience with and that he’s confident that he’s going to actually use and appreciate. He appears to be a bit of a watch aficionado and he is considering a watch that will last a very, very long time, thus it is something that he will use for a very long time. It will not only tell time for him, but it will remind him of his grandfather, a person Gerald seems to cherish. It passes the test of whether he’ll use it or not.

This strategy really cuts into the sense that this is a frivolous use of my money. If I truly understand that this splurge is something that I’ll use, that will have a meaningful resonance in my life, then it begins to feel more worthwhile in the big scheme of things.

These four strategies work in concert. If I understand that this was budgeted for and that I can afford it, that it really is okay to splurge on occasion, that this is a well-researched purchase, and that it will have a positive and lasting impact on my life, I usually feel good about an occasional extravagance. It’s when one or more of those factors fall away that I begin to feel like I’m making a mistake, and it’s that sense of a mistake that begins to produce guilt.

My advice to Gerald is to carefully walk through each of those four strategies on his own and consider each of them. It is my strong impression that he’s living up to all four of those strategies and I believe that, if he considers all of them together, he’ll feel much better about making that purchase without a sense of guilt.

My advice to you, if you’re struggling with guilt over a major purchase, is to follow this same framework. Budget for it, do some homework, make sure it’s something that will really have impact, and then do it with the understanding that an occasional splurge is fine.

Good luck!

The post Handling Guilt After a Big Purchase appeared first on The Simple Dollar.

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Thursday, July 19, 2018

20 per cent decrease in number of Nepalis flying for foreign employment

Kathmandu, July 20

The Department of Foreign Employment says the number of Nepalis obtaining permits for foreign employment has decreased in recently concluded fiscal year 2017/18 by nearly 20 per cent.

Increasing political stability in the country, economic problems faced by the Arab world and rise in fraudulent activities in the sector are said to be major reasons behind the decrease.

In the fiscal year 2017/18, 612,685 persons obtained labour permits for foreign employment. The number was 759,230 in the previous year. These numbers also include those applying for and obtaining re-entry permissions.

Meanwhile, Malaysia has been the most attractive destination for Nepali foreign employment aspirants in the year. However, not a single Nepali flew to Malaysia in the last month of the fiscal year as the government has stopped issuing permits for the country owing to involvement of some ‘deceiving’ company in the process.

Now, the government is preparing to sign a labour agreement with the Kuala Lumpur government to resume the migration.

Qatar, United Arab Emirates and Saudi Arabia follow Malaysia.

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Gautam Buddha International Airport: Construction by 2019 June, first flight in Sept

Butwal, July 20

Thanks to improvements made by the contractor company, the Gautam Buddha International Airport Construction Project says it will be able to complete the construction works by 2019 June.

The construction works had begun in 2015 with an objective of completing the work in two years. The project, however, was delayed due to various problems including the negligence of contractor company, disputes over compensation distribution, political protests and shortage of construction materials.

But, by now, around 50 per cent of construction works have been over and it will be complete within next 11 months, according to the Project Chief Om Sharma.

“Most difficult tasks have been completed one after another,” he says, “Now, all the tasks for the airport’s upgrading as an international airport will be over by 2019 June.”

If everything goes as planned, the airport will conduct first international flight on September 27, 2019, on the occasion of World Tourism Day, according to officials.

Earlier, Asian Development Bank, which has provided grant and loan support to the project, had stopped the support as the Chinese contractor company, Northwest Civil Aviation, could not perform satisfactorily from January this year; and it had pushed the project into uncertainty. However, the dispute has ended now and the ADB has continued investment, informs Sharma.

It is expected that the airport will serve 15,000 to 25,000 passengers every day.

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The Wisdom of Frugality – The Pros and Cons of Extravagance

wisdom of frugalityThis is the fourth entry in an eight part weekly series that provides a detailed look at the book The Wisdom of Frugality by Emrys Westacott. If you’re new to the series, feel free to hop back to the first entry.

What is extravagance? Westacott boils down the term to three distinct meanings.

First, extravagance can refer to living beyond one’s means. If you make $30,000 a year but spend $35,000, you’re living an extravagant lifestyle simply because you’re spending more than you earn.

Second, extravagance can refer to being wasteful or careless of costs. Someone going into a store and tossing items they want into their cart without any concept of the price of those items is being extravagant.

Third, extravagance can refer to any form of living expensively, in which you pay out large sums to satisfy personal desires and impress others. This is extravagance in the sense of mansions and private islands and diamond-encrusted brooches.

Modern society has a strange relationship with extravagance. Sometimes, it’s criticized and looked upon negatively; at other times, it’s lauded and looked upon positively. What creates that dual sense about extravagance? That’s the focus of this chapter, which starts by looking at extravagance as the opposite of prudence.

Extravagance as Imprudence

Extravagance in the sense of living beyond one’s means is mostly only seen as a negative when it’s avoidable. People with little income and struggling to keep food on the table who are forced (or nearly forced) to live beyond their means are usually not viewed in a negative light. Rather, living beyond your means when you’re earning a healthy income is generally seen as negative, because it’s seen as irresponsible.

Yet, at the same time, pop culture lauds extravagant lifestyles. You can barely turn on the television without seeing someone living a lifestyle that’s beyond the means of the average American, and many people who can’t actually afford that lifestyle still try to attain it by living beyond their means.

The modern American economy encourages people to spend and spend and spend. It’s sometimes even tied to patriotism – after 9/11, the government strongly encouraged a sense that buying consumer goods was a person’s patriotic duty.

Much of the business press and the mainstream press lauds entrepreneurs who go into heavy debt in order to build a business. They either gloss over that debt leveraging entirely or make it seem like a good thing.

Similarly, enormous college debts are seen as okay as long as they lead to a potential career path with a high income, though there’s often a more negative perspective on going into extensive debt for a less lucrative educational and career path.

In summary, our culture has a really strange relationship with spending beyond our means and going into debt for it. Sometimes, that kind of overspending is criticized; at other times, it’s lauded. This is a result of a mix of values in our society that sometimes contradict themselves and aren’t always fully clear.

Affordable Extravagance

People are often disgusted by the huge extravagance of the mega-rich. Stories about having a pilot fly across the country to bring a meal to them or buying a private island is often seen in a very negative light. Is it envy, though?

A good clue comes from the tabloids, which report on the disastrous personal lives of the super-rich. This lends some credence to the “envy” argument, because the popularity of such tabloid stories provides a negative balance to the envy people feel toward the extravagant lifestyle those people live.

This is because when we see extravagance, we often prescribe negative traits to the person that practices such extravagance (even if we envy the extravagant experience). We see those people as greedy, untrustworthy, self indulgent, and self promoting, and thus those tabloid stories make natural intuitive sense to us. That extravagant person must be a bad person inside, so it’s not surprising that they have a disastrous personal life, goes the thinking.

Philosophers often tie this phenomenon to a sense of “inauthenticity” or ignorance and avoidance of the tenets of a good life. The movie Citizen Kane is a perfect example of this; as Charles Foster Kane grew wealthy, his negative character traits emerged while, at the same time, he became more and more extravagant in his life, building the ridiculous Xanadu estate for himself to live on.

Another interesting argument against extravagance is the “aesthetic argument,” in that expensive high end items are wasted on those who do not have the ability to appreciate them. Why would someone pay an exorbitant amount of money on a Steinway piano for a mediocre piano player? A Steinway can be magic in the hands of a really skilled player, but in the hands of an average player or a beginner, it’s not going to sound much different than an inexpensive piano. A Steinway in the home of a mediocre piano player. I like to think of this argument in terms of items we have in our kitchen – do I really need a high end chef’s knife? Not really. I’m a decent home chef at best.

This brings us around to the question of harm. Does extravagant behavior by the rich cause anyone harm? There are two arguments that it does. First, the “knock-on effect” – it can encourage others to extravagant behavior through emulation, which can cause them financial disaster. Second, money used for extravagance could be used in a more effective way for society’s benefit.

This second argument is an interesting one. Do wealthy people have an obligation to use their wealth to society’s benefit, in a manner like Andrew Carnegie or Bill Gates? How much extravagance should they do without if doing so? It ends up being an uncomfortable argument.

One side of that argument is the type of utilitarianism advocated by Peter Singer. He argues that every single human has an obligation to promote happiness and alleviate misery where we can. From that perspective, extravagance is a strong moral wrong as it completely goes against alleviating misery (and somewhat against promoting happiness). Under this sense of utilitarianism, people should use all of their disposable income to help others.

While this has appeal on the surface, very few people live this way, for two key reasons. First, it assumes that we have equal obligations to everyone in the world – yourself, immediate family, close friends, extended family, strangers. People are naturally drawn to be more generous and helpful to people they’re closer to – I’m going to be more helpful and generous to my child than to a random stranger on the street. Second, spending money on luxury isn’t equivalent to causing people to die. A person’s spending choices isn’t causing someone else’s misery or death. In the end, utilitarianism in this sense might be morally justifiable, but it ignores human characteristics.

Of course, there’s the “supply side” argument, that extravagance by the wealthy helps society as a whole because of the trickle down effect. This argument, of course, ignores the reality that the vast majority of wealth in society is invested in finite assets, like real estate and precious metals, which drives up the price on those assets and makes it even harder for the rest of the populace to buy those things.

My take on all of this is that whenever one does something with money and takes it to an extreme, whether it’s miserliness or extravagance, it’s generally seen as a bad thing. Most cultures tend to come down on the side of moderation in most things, and this is no exception.

Arguments in Favor of Affordable Extravagance

Westacott seems to eventually come down in a middle ground of affordable extravagance, in that it’s at least acceptable to be extravagant in some areas of life as long as you remain within your means. For example, if I can afford that expensive chef’s knife, then it’s an acceptable purchase, but if I go on to spend thousands on kitchenware on a regular basis, I’m being overly extravagant. At the same time, complete self-denial isn’t desirable either. Westacott offers four arguments in favor of that kind of affordable extravagance.

First of all, extravagance fuels economic growth. This is a weak form of the supply side argument, as it argues that actual extravagant behavior – not the idea that concentration of wealth will produce extravagant behavior – can fuel economic growth. Spending on extravagance provides income for businesses and individuals that results in higher employment rates, and it also provides tax revenue as many luxuries are heavily taxed. It’s only when extravagance becomes excessive and pushes people beyond their means that problems tend to crop up, like the housing bubble in which housing loans were given out to people who really couldn’t afford them.

Second, extravagance fuels culture. Great cultural works or “wonders” are extravagant uses of resources. Building the Great Pyramid of Giza or the Colossus at Rhodes are incredibly expensive, but they provide a wonderful cultural benefit in the form of happiness and civic pride that’s hard to put into dollars and cents. This is why nations will often fund great cultural works because they make the citizens happy and fuel civic pride.

Third, extravagance adds interest and excitement to life. There’s often a sense that frugality is “boring,” and thus the opposite is sensibly seen as “exciting.” Excitement is often seen as good and desirable in modern culture and it’s often tied to extravagance, like someone winning an extravagant prize on a game show. Modern culture constantly lauds extravagant items and experiences because it excites and attracts people. People who are instead careful with their money are often painted in a negative light, a la Ebenezer Scrooge. They’re seen as boring and often painted with other moral defects.

Here, Westacott digs into an interesting side discussion about how experiences tend to provide more happiness than stuff and how experiential spending (i.e., traveling abroad) is seen as more “sophisticated” than buying things. However, experiential spending can be incredibly expensive, too, as anyone who has ever planned a trip to Europe can attest to.

Finally, extravagance enhances our understanding and appreciation of things. If you just buy the cheapest wine and the store brand version of everything, you deny yourself the opportunity to appreciate the variety and quality of experiences and options available to you. Extravagance battles back against that, as it is a window into experiences and options that one might not normally have, which enhances one’s palate. I think this is a reasonable idea to a small extent; the challenge is to make sure that what once was an extravagant rarity doesn’t become a new norm.

Can Extravagance Be a Duty?

Are there reasons outside of the extravagant experience that might justify extravagant spending or behavior? Westacott spends the latter portion of the chapter focusing on some of those ideas.

First of all, extravagance can be a source of national pride or, at the very least, avoidance of national ridicule. This is why many nations bid and fight to host the Olympics and the World Cup – it’s an extravagant event that is virtually never profitable, but it does pay dividends in a sense of national pride and a feeling that your city or country is important on the global stage.

Most local economies rely somewhat on moderately extravagant behavior by people in the area. Services such as restaurants and clubs and other forms of entertainment only exist when people are spending their money extravagantly, and those businesses employ a lot of people in the area.

Some cultures have a gift-giving practice that nods towards extravagant gifts as a social convention. Thus, buying and giving extravagant items is considered a social norm and to not do so is something of a social mistake.

This shows up to a certain extent in American culture. Think of things like wedding gifts and graduation gifts and bar mitzvahs in America: it’s generally seen as a bad idea to go “cheap” on such gifts. It’s considered a social obligation to give at least a decent gift at a major social event like those.

As with everything, there’s a balance to be found here. It’s a bad idea to go into debt for a wedding, but many people do not want to go “cheap” on their wedding for a number of social and cultural reasons, namely the prevalent cultural belief (which I don’t buy into, but one cannot deny it’s there) that a cheap wedding cheapens the occasion.

Final Thoughts

The key argument in this chapter is that there are a lot of reasons and benefits for occasional extravagance, but that repeated or intense extravagance that goes beyond your means is a bad thing both for yourself and for others.

This goes in line with my own perspective on frugality, which does not exclude the occasional splurge or extravagance, but gives it plenty of breathing room so that it feels special and you get to enjoy the anticipation while, at the same time, not becoming frequent enough that it becomes routine and boring and no longer special.

Next week, we’ll take a look at the philosophy of frugality in a modern economy.

The post The Wisdom of Frugality – The Pros and Cons of Extravagance appeared first on The Simple Dollar.

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Do Student Loans Help or Hurt Your Credit Scores?

Preparing for college is hard work. You study diligently for the SAT or ACT. You earn the best grades possible so you look good on college applications. You tour campuses, decide where you want to go, and once all of those decisions are made, you agonize over how you’re going to pay for it all.

If you are like the 40+ million other borrowers, chances are that you chose to use student loans as a means to finance your education. Yet in the middle of all of your research and decisions, you may have never taken the time to consider how those student loans are going to affect your credit scores after graduation. Don’t worry about it too much, because you’re certainly not alone.

How Student Loans Help Your Credit Score

The good news is that your student loans actually do have the ability to help you build positive credit — as long as they’re always paid on time. In fact, the most influential factor considered whenever your credit scores are calculated is the presence or lack of negative information. This holds true for both FICO and VantageScore credit scores.

Earning and maintaining good credit is going to be very important after graduation — whether you’re trying to rent or purchase a home, open a new utility account, purchase a vehicle, get a job, and many other circumstances. Keeping your student loans paid on time can be a great step towards earning the good credit you need to thrive financially in adulthood.

How Student Loans Can Hurt Your Credit Score

Unfortunately, if not handled properly, those same student loans have the ability to send your credit scores in the wrong direction. A late payment on a student loan can hurt your credit scores just like it would on any other account.

The catch, however, is that late payments on student loans may be an even bigger issue than you realize.

Most graduates don’t understand that they likely have multiple student loans appearing on their credit reports representing a separate loan for every disbursement of funds. It is not unusual for graduates to have six or more separate student loans on their credit reports. Although you may send in only one payment to your student loan servicer each month, that payment is distributed across a number of different accounts. As a result, if you fail to make the payment to your student loan servicer on time, you may actually have late payments reported on multiple accounts that appear on your credit reports.

It goes without saying that multiple late payments showing up on your credit reports at once could have a much more damaging impact than a single late payment on a single account. One account with a late payment is bad. Six accounts with late payments is a disaster.

To add insult to injury, the credit reporting of defaulted student loans are not regulated by the Fair Credit Reporting Act, which is the federal law that requires most of the negative information on your credit reports to be removed after seven to 10 years. Defaulted student loans are not required to be removed from credit reports, ever. This means that a negative, unpaid student loan can continue to haunt your credit reports and damage your credit scores indefinitely.

The Bottom Line

To the extent you never miss a payment on your student loans, chances are they’ll always be helpful to your credit scores. Student loans are installment loans, meaning you make the same payment for a fixed number of months, like a car loan or a mortgage. Installment loan debt is not problematic for your credit scores, as long as it’s paid on time.

So, don’t get bogged down by your burdensome balance when considering your credit scores. Focus on at least making the minimum payment due, every month.

Related Articles:

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Paudel says communist govt only thinks about ‘mafia’

 

Makwanpur, July 19

Nepali Congress senior leader Ramchandra Paudel has said that the KP Oli government is only worried about the welfare of the ‘mafia’ and not the people.

Paudel, who was speaking at a programme in Makwanpur, said that the government does not care about the people. “The medical education bill that the government has presented in Parliament is a glaring example this,” said Paudel.

The former minister added that the demands raised by medical educaiton reform activist Dr Govinda KC should be addressed. He also ordered the party rank and file to join Dr KC’s cause.

“The communist government is not interested in socialism. It wants to create a group of elites who exploit the people,” he added. Paudel said the Nepali Congress was always committed to the welfare of the poor.

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Oli in Pokhara: 25 detained in Pokhara for trying to show flag

Pokhara, July 19

Twenty-five people have been detained in Pokhara as they tried to show Prime Minister KP Sharma Oli black flags.

Oli, who landed in Pokhare on Thursday afternoon, is due to attend the 15th general assembly of Pokhara Universtiy and address the Gandaki Province legislature in the afternoon.

Those detained are learnt to be supporters of the Nepali Congress-aligned Nepal Students’ Union and the Baburam Bhattarai-led Naya Shakti. The incident comes as the main opposition, the Nepali Congress, intensified protests against the NCP government calling it autocratic.

The Nepali Congress has said it will obstruct the proceedings of the assembly if Oli tries to address the House.

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Police use excessive force against KC supporters in Jumla

Jumla, July 19

Police personnel, ordered to bring medical education reform activist Dr Govinda KC to Kathmandu, have used excessive force against his supporters.

Police entered the premises of the Karnali Institute of Health Sciences, where Dr KC was on hunger strike, and baton charged his supporters.

A Nepali Army chopper was sent to Jumla to ferry Dr KC to Kathmandu as doctors in Jumla said the striking doctor’s health has deteriorated and they can no longer treat him. Karnali Province Chief Minister Mahendra bahadur Shai and Home Minister Naresh Bhandari also accompanied police personnel.

Police started using force after KC’s supporters did not let them get to Dr KC. According to witnesses, police baton-charged the KC supporters indiscriminately. The kin of patients receiving treatment at the hospital have also been injured in the police action. The injured are being treated at the hospital. Around 30-40 people have been reported injured.

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Complete Pokhara International Airport on time: Prime Minister Oli directs officials

Pokhara, July 19

Prime Minister KP Sharma Oli has directed officials from the Pokhara International Airport Project to complete the construction work on time.

Oli, who landed in Pokhara on Thursday, reminded officials that test flights from the new airport need to be carried out before July 2021. “The airport is an international one and everything should be of international standard,” the Prime Minister said. He told local officials to procure more land for the project if it was required.

Spokesperson for the Prime Minister’s Office Binod Bahadur Kunwar informed that the PM will now visit projects of national importance and pride. “The ministries and departments concerned have been monitoring the projects for a long time. Despite this, there are complaints that the quality of work is compromised. That is why the Prime Minister himself will monitor progress made in important projects,” Kunwar said.

According to the project, 15 per cent of the construction work has been completed so far.

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Govt won’t withdraw medical education bill: Minister Pokhrel

Kathmandu, July 19

The government says it will not withdraw the controversial medical education bill, but it is ready to amend it if necessary.

Education Minister Giriraj Mani Pokhrel, who was talking to mediapersons in Kathmandu on Thursday, said that it was impossible for him to withdraw the bill as it has already been registered with Parliament. “The bill will not be withdrawn, However, we are ready to amend through the parliamentary process,” said Pokhrel.

The minister’s statement comes as medical education reform activist Dr Govinda KC is being airlifted to Kathmandu from Jumla, where he has been on hunger strike for the last 20 days. Dr KC has been demanding that the bill be withdrawn and amended as per the recommendations made by the government-formed Mathema Committee.

While the Mathema Committee and Dr KC have been saying that the government needs to place a ban on establishment of new medical colleges in Kathmandu, the government is reluctant to do so.

Pokhrel said that it was the government’s duty to protect Dr KC and he was being brought to Kathmandu as it was not possible to treat him in Jumla. “The medical education ordinance issued by the Nepali Congress government cannot be copy-pasted onto the new act,” explained the minister.

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Wednesday, July 18, 2018

The Quantified Spender: How Keeping Careful Track of Your Spending Behavior Is Valuable

Recently, I attended a community lecture about the idea of the “quantified self,” something I’ve vaguely touched on before here on The Simple Dollar.

The “quantified self” simply means that you keep track of information related to yourself in as many ways as possible, ideally in passive ways, and then you use that accumulated data to make decisions about what you’re going to do going forward.

Here’s a prime example of this, if you’re familiar with The Simple Dollar: recording every dime you spend and then categorizing it all once a month.

It’s simple. Just use a pocket notebook (or a smartphone app like Evernote) and jot down every dime that you spend for a month. If you spend any money at all, write it down in that notebook. Keep every single receipt that you get, too.

At the end of the month, pull out your bank and credit card statements and your receipts and that record of your expenditures and try to figure out where every single dime went. Split all of those expenses into categories – basic food, luxury food, eating out, pet care, entertainment, books, and so on – just define categories that are meaningful for you and put every expense into one of those categories. You might have to go through longer receipts – like your grocery receipt or a receipt from Target – one item at a time.

When you’re done, total up those categories.

You might be shocked as to where your money is going – or you might be expecting it. In either case, you have real data upon which to make decisions about how to get better with your spending going forward. Maybe you really do need to cut back on eating out. Maybe you’re spending way more on gas than you thought, so what can you do about that?

That’s an example of the “quantified life” with a very finance-oriented application.

Naturally, you can apply this idea to other areas of your life. Use a calorie counting app to record every single calorie you ingest for a month. Use a Fitbit to track every step that you take. Use a GPS app on your phone to keep track of your running habits. You get the idea.

There are a number of benefits to keeping track of information in the areas of your life that you’re concerned about.

First, the idea that you’re tracking said information is often enough to nudge you to better behavior. During the periods when I’ve been serious about tracking my expenses, I did not want to write down silly expenses in that notebook that I would just regret at the end of the month. It was much easier to be frivolous with my money if I wasn’t really thinking about it. If I have to stop and think for long enough to write down the expense, I’m less likely to actually engage in frivolous spending.

Second, the data you’ve produced enables you to make better decisions about how you should be changing your behavior and how to move forward. Having a clear picture of exactly how you spend your money makes it much easier to identify exactly where you should be cutting back. Having a clear picture of your exercise patterns helps you figure out when and where and what kind of exercise is most effective for you. Basically, data reveals what the most effective strategies are for your specific situation.

Third, data over time lets you see that you’re actually changing things, even if it’s not showing up like you expected. Data lets you set goals that are oriented around the process rather than the results, and that’s important because results don’t always show up right when you expect them, especially in the short term. There are almost always factors involved that you didn’t consider that can alter the results. What really matters is that you have a process for getting those results and are sticking to that process, and that’s what keeping track of your behavioral data can show you.

Finally, data is more reliable than hunches. You might have a gut feeling abut what changes you need to make to be truly effective, but actually looking at the real numbers will show you the reality of what’s actually happening. Sometimes your hunches will like up with the data and that’s great, but when they’re not in alignment, you can realize that perhaps your gut instinct isn’t guiding you in the right direction, or perhaps that the data and your gut feelings are both telling you something important.

How can you start applying quantification easily in your financial life? As I noted earlier, writing down every expense as you go along is a very effective way of accumulating data on your spending. It’s something that I do for short periods – I’ll do a “30 day challenge” at least once a year to track that information.

But it’s not the only way.

There are a number of apps that take care of much of the bookkeeping for you. I want to highlight the three that I consider to be the best in the pack.

Mint is an obvious starting point. It’s a smartphone app that aggregates financial data from your bank accounts and credit cards to give you a realistic picture of your spending without having to lift a finger. However, it lacks in two areas. First, it doesn’t provide that “pushback” against bad choices that manual recording of your spending can provide, as noted earlier. Second, it doesn’t do a good job of breaking down purchases from retailers into appropriate categories – you have to identify what kind of purchase you’re actually making at Amazon, for example. Mint has a lot of nice features and it’s free, but the software is subsidized by ad support and some degree of sponsored content, which I find frustrating. In terms of features per dollar, though, it’s the best option out there.

You Need a Budget is another great smartphone option that nicely integrates your spending habits into a clear picture of your monthly budget. It’s focused around making sure that every dollar that goes through your life has a purpose and really hammers that message home. I consider it a more effective tool than Mint; however, it has the drawback of being subscription based software, whereas Mint is free. It still somewhat lacks in terms of actually tracking your expenses, as noted with Mint, but I find that YNAB does a better job of nudging you toward good behavior anyway. This is the best option, in my opinion, but I do not like the subscription model.

That’s when we turn to the third option, PocketGuard. PocketGuard is a simpler view of your financial state than the other three, but it’s also free and it doesn’t bug you with “offers.” It just does its job without a ton of extra bells and whistles, and thus overall it’s my favorite choice of the three.

In summary, YNAB is the best of the three but it’s the most expensive by far, Mint has the most bang for the buck but has a lot of seemingly sponsored content mixed in, and PocketGuard is more basic in terms of features but shows you what you need to know.

For me, though, there are two benefits to simply jotting down expenses in a notebook that keep me sticking with that. One, the fact that I’m mindful of each expense as I’m writing it down helps me make better choices. Two, I’m not sharing my financial data with anyone but myself, as it’s all in my pocket notebook in my own weird shorthand. Yes, figuring out what it all means can take some time at the end of the month, but I usually learn a lot from that process.

In the end, the message is simple: finding some way to track your spending in detail and then looking at what that data means in terms of you making better choices going forward is a valuable thing to be doing. There are tools that automate a lot of this, but I personally find value in keeping track of each expense myself.

Give it a try. I encourage you to spend August doing a 30 day challenge where you track every single dime you spend in whatever way you’re comfortable with, then sitting down with that data and looking at the patterns. How much did you spend eating out? How much did you spend on your hobbies? Then, ask yourself whether you’re happy with those numbers or whether it’s a sign that you need to make some changes.

Good luck!

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Strategies for Fighting Frugality Fatigue

While there is no such thing as a “magic formula” for building wealth, living below your means is by far the closest thing. When you spend less than you earn and save the rest, you will build wealth — and savings — by default. And, if you just so happen to invest that money and avoid debt in the process, you can even grow rich over time.

But, there is definitely a balance to be achieved when it comes to spending less than you earn. You definitely want to hit your savings goals, but you have to live, too. And sometimes, finding a happy medium can be extremely hard — especially if you’re living frugally in order to save for a home or pay off soul-sucking credit card debt.

Seven Ways to Beat Frugality Fatigue

The reality is, too many people who embrace frugality to improve their finances take on too much too soon and end up burning out. They approach frugality as if it were an “all or nothing” scenario, and they forget there are different shades to frugal living and a lot of levels in between extreme frugality and negligent overspending.

Ideally, you should strive to build a frugal lifestyle that is restrictive enough to help you reach big financial goals while also allowing for some fun.

If you’re struggling from frugality fatigue or just trying to find a balance, here are some tips that can help:

#1: Set up targeted savings accounts for specific goals.

If you’re living frugally so you can save a larger percentage of your income, saving without a tangible plan can get extremely old. This is especially true if you’re saving for a goal that could be a decade or more away — like retirement. Saving month after month without any reward can be boring when you don’t get to enjoy the fruits of your labor for a long time.

To help ward off this type of frugality and saving fatigue, it can help to set up targeted savings accounts for different goals. Maybe you want to retire early and travel, but you also plan to remodel your kitchen once your kids leave the nest. In that case, setting up a few targeted savings accounts for your home remodeling project and future travel lifestyle could add enough substance to your savings plan to keep you on track.

#2: Create a slush fund.

Maybe your savings goals are totally reasonable, but you’re just tired of the frugality grind. You’ve been bringing lunch to work, making coffee at home, and avoiding the mall like the plague, and you’re desperate to have some fun.

Even if you’re trying to pay down debt or save up for a big goal, it can make sense to have a slush fund you can spend however you want. If you reward yourself with the occasional “want” and still hit your goals, you may be able to keep up with your frugal lifestyle for a longer stretch of time — and maybe even forever.

#3: Embrace a new style of budgeting.

There are several different budgeting methods to consider, and each one has their pros and cons. If you’re on a bare bones budget that doesn’t allow for any extras, for example, it may be time to switch to a new strategy that leaves you with some wiggle room each month.

One type of budget we advocate for here is the zero-sum budget. This type of budget can be extremely effective because it forces you to “give every dollar you earn a job.” However, zero-sum budgeting can also be extremely flexible since it lets you create any budget categories you want. So, if you wanted some freedom to spend on fun each month, you could just add a “miscellaneous” or “fun money” category to your zero-sum budget.

Another budgeting method that’s fairly flexible is the 50-30-20 budget, also called “proportional budgeting.” With this strategy, you would spend 50 percent of your income on needs, 30 percent on “wants,” and 20 percent on savings. This type of budget gets you away from restrictive spending categories and still helps you save 20 percent of your earnings.

You may not reach your goals quite as fast if you embrace a looser style of budgeting or start setting aside some money for fun, but you will have more freedom in how you spend each month. If you want to live frugally for the long haul, it needs to be sustainable, and having some freedom can make all the difference.

#4: Loosen the reins for a while.

Taking a break for a while can also make sense — but only if you know you can get back on track. If you’ve been living on a bare bones budget long enough that you’re starting to reach some of your goals, taking a weekend or week off to live how you want won’t be the end of the world.

Maybe you want to plan a quick family getaway, or perhaps you just want a week where you can go out to eat and not cook from scratch at home. Maybe your kids have gone without long enough that you just want to treat everyone to dinner and a movie. Whatever it is you or your family needs, there’s nothing wrong with loosening the reins to a certain extent. Just make sure you don’t go overboard and that you’re prepared to get right back on the wagon, and you should be fine.

#5: Reward yourself or your family.

You can also consider setting up a one-time or ongoing system of rewards that will kick in each time you hit a savings goal or pay down a certain amount of debt. These rewards will help you stay motivated and, as long as they’re not overly expensive, shouldn’t keep you from reaching your financial goals over the long haul.

Let’s say the impetus of your frugal lifestyle if the desire to retire early. If you were to set aside some amount of money for a weekend away each time you saved $5,000 toward your retirement goal, you could motivate yourself to save at a faster rate and have some fun along the way.

The same strategy could work if you’re living frugally to pay down debt. If you rewarded your family with something everyone wants each time you pay off $1,000 or $5,000, you could keep everyone motivated and on track toward your ultimate goal – debt freedom.

#6: Remember why you’re frugal in the first place.

Sometimes all it takes is a look back at where you came from to remember why you became so passionate about where you’re going now. Maybe you began on the path toward a frugal lifestyle because you didn’t want to work until you were 70. Or perhaps you were sick and tired of forking over all your expendable cash toward credit card bills every month.

Look back to where you were and why you wanted to change so much. Try to remember exactly what it felt like to struggle — or to wish your finances were different than they are today.

Reading about frugality can also do the trick if you’re struggling to remember why you got started. Head to your library to read time-honored favorites like Your Money or Your Life or The Automatic Millionaire, and you may just find yourself energized again.

#7: Look for ways to earn more money.

Finally, don’t forget that there’s another path that can help you save more money without living on less. By earning more money, you can free up more cash to use towards goals like debt repayment, saving up to buy a home, and retirement.

There are all kinds of ways to boost your income in your spare time, including part-time or seasonal work. Some side hustles in the gig economy are extremely easy to start as well; for example, all you need to drive for Uber or Uber EATS is a newer car, insurance, and a clean driving record.

Whatever you decide to do to earn cash in your spare time, make sure you put that cash to work. Use it toward your savings or debt repayment goals — or use it for fun so you can continue using your regular income to get where you want to be without feeling deprived. Earning more money will always leave you better off provided you put your extra funds to use.

The Bottom Line

Even inherently frugal people can grow tired of their lifestyle sometimes, and that’s totally understandable. It takes a lot of self-discipline and fortitude to go against the grain and save money in a world where most people are doing the exact opposite with their money.

Sometimes setting yourself up for success means knowing you can’t be perfect every minute of every day. If you’re suffering from frugality fatigue, a little break may be all you need.

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

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Three killed in Rukum East jeep accident

Rukum, July 18

At least three persons died when a jeep carrying passengers met with an accident in Dharapani, Sisne Rural Municipality-5 of Rukum East district of Province 5, on Wednesday afternoon.

The District Police Office says the four wheeler (Lu 1 Ja 2573) met with the accident at around 2:30 pm today.

The Office says police have been sent to the incident site for the rescue operation and the death toll may rise.

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Nepali Congress to obstruct Parliament till Dr KC’s demands are met

Kathmandu, July 18

The main opposition Nepali Congress says it will obstruct meetings of Parliament till the government meets demands raised by medical education reform activist Dr Govinda KC, who has been staging a fast-unto-death in Jumla of Karnali for last 19 days.

A meeting of the party’s office bearers decided to bar the government from tabling the Medical Education Bill for discussion without addressing Dr KC’s concerns.

Just yesterday, the party announced street protest programmes against the government. Now, the party’s decision to obstruct House meetings will pile more pressure to the government and ruling parties.

“Parliament will continue its business if the government reaches any agreement with Dr KC, and if the bill follows sentiments of the Medical Education Ordinance and the report of Kedar Bhakta Mathema-led panel,” informs the party spokesperson Bishwa Prakash Sharma.

Meanwhile, the Congress also decided to extend support to the protest launched by Nepal Medical Association in solidarity with Dr KC.

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Tuesday, July 17, 2018

One killed in Parbat as landslide buries house

Parbat, July 18

A person died when a landslide triggered by incessant rainfall buried his house in Lasti Berneta of Jaljala Rural Municipality-8 of Parbat district on Wednesday.

Bikas Pariyar (16) died as his single storey house was buried by the landslip, according to Chief District Officer Guru Datta Dhakal.

Meanwhile, five persons were initially missing in the incident; but they have come to contact now.

Total 16 houses have been affected due to the landslide, Dhakal says, adding efforts are underway to shift them to a safer location and provide relief.

In another landslide case, three persons sustained injuries in Dhairing Baskota, Jaljala-7. They are undergoing treatment at Dhawalagiri Zonal Hospital.

The District Police Office says a police team has been sent to the site for rescue and relief operations.

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The ‘Butterfly Effect’ of Our Financial Decisions

The “butterfly effect” refers to the metaphorical idea that a butterfly flapping its wings on one side of the world can, through a series of chain reactions, cause a hurricane thousands of miles away.

I recently learned that the metaphor has its roots in chaos theory, which is an area of study that tries to work out how complex systems work. In that context, the butterfly effect refers to the way that “a small change in one state of a deterministic nonlinear system can result in large differences in a later state.” In other words, seemingly small decisions can end up having huge impacts down the line.

I’ve been thinking about how the Butterfly Effect is applicable to financial decision making. We can all look back and identify little choices that, only in hindsight, could be identified as having tremendous importance.

I’ve identified three inflection points in my life when small choices I made had a dramatic impact on my financial future. Curiously, two of the three decisions are ones that I regretted at the time. But, because I was able to learn from my errors, the ultimate ripple effect was still a positive one.

Discovering the Bogleheads

When I got my first paycheck post-college, I had no idea what to do with it. Ditto for the second and third. One day, bored, I started to search the internet to see if I should be doing anything besides building up my online savings account.

I stumbled across a site with a curious name: Bogleheads.org. They’re a community dedicated to discussing the investing advice of John Bogle, founder of the investing firm Vanguard. Their mission statement emphasizes “starting early, living below one’s means, regular saving, broad diversification, simplicity, and sticking to one’s investment plan regardless of market conditions.”

The whole ethos clicked with me, and I became interested in optimizing my finances. I wasn’t taught anything about money management or investing in school, so being a part of that community was eye-opening.

I learned that the stock market wasn’t just a nebulous thing that rich people used.

I learned that even someone like me, who thought a “yield curve” was a road sign you’d see on the highway, could manage his own investments without professional help.

I learned that fees really matter.

I could go on and on. In the alternate universe where I didn’t start Googling about investment strategies when I was bored that one time, I might still be convinced that the best investment was always a CD, since, hey, my grandma recommended them.

The effects have been long-lasting and demonstrably positive. Now, almost 10 years later, I’m still guided by the Boglehead maxims, which were so novel to me at the time.

My First Panicked Stock Sell-Off

It was all fun and games investing in the stock market until it got choppy. As the famous Mike Tyson saying goes, “Everyone has a plan until they get punched in the face.”

In 2012, about three years into my investing journey, people started to fear that Greece would default on its debt. The global equity markets reacted poorly to this news, and I began to lose sleep watching my money dwindle. I eventually sold a lot of my stocks at a steep loss, but I felt relieved to at least be recouping some of my capital.

A couple months later, the market righted itself and started an upward march. I sat on the sidelines, fearful. It wasn’t until years later that I got back in.

I once started to calculate how much money I missed out on by sitting out the huge bull run from 2012 to 2015, but then I got depressed and stopped. Let’s just say I learned my lesson: If you’re going to invest in equities, you need to take the long-term view.

Thankfully, in the grand scheme of things, my mistake wasn’t that costly. If I were to sell during the next drop, the consequences would be even worse because I have a lot more to lose.

Learning a harsh lesson in the real world has helped me ride out subsequent stock market volatility with much more equanimity. Whenever I see the financial press start squawking about how the sky is falling, I remember my experience in 2012. I expect the ripple effects of that ill-timed sale will ultimately do me a lot of good.

Cashing Out My Roth IRA to Pay Down a Portion of My Student Loans

In 2013, I finally got serious about paying down my student loan debt. I started using a portion of every paycheck to chip away at the mountain, but it didn’t feel like enough.

That’s when the money I had been diligently socking away in my Roth IRA started to feel like it was taunting me. Here was this decently-sized chunk of money that I couldn’t fully access for at least another 30 years. But, like an impatient child in a toy store, I wanted it now!

So I pulled it all out and put it toward my debt. While this felt good at the time, I realized about a year later that my decision was shortsighted. For one thing, I learned that there are tax implications that come with early withdrawals that I hadn’t bothered to look up. I was allowed to withdraw the money I had contributed tax-free at any time, but any interest or investing gains was taxable income until retirement. The whole point of using retirement accounts is so you can optimize your taxes, and I threw that advantage out the window. It’s important to do your research before messing around with retirement account withdrawals.

Also, my Roth IRA was invested in index funds, and the market has risen a lot since 2013. I lost out on more tax-free growth than I care to dwell on. You can’t go back in time to contribute to your Roth IRA: there are annual contribution limits. Once you sell, the opportunity to add funds for that year is gone forever.

To make matters worse, the market has grown at a much higher rate than the interest rate on my loan. I would have been much better off staying put, and I’m still paying the price for that.

One final negative was that I could have set a very bad precedent for all my future behaviors. Rather than thinking things through from all angles, I could have gone down a road of wanting things done quickly, regardless of whether it was the right long-term move.

Thankfully, in a similar fashion to my stock-selling foibles, I was able to make the initial negative into a positive. I still wish I hadn’t emptied out my Roth, but in realizing my mistake, I became highly motivated to learn a lot more about interest rates, tax optimization, and the power of being patient. In turn, I have become more cognizant about what the best financial moves are for my 60-year-old self, not just for me in the present day.

After that experience, I would never consider touching the money I have saved in my retirement accounts unless I had a true emergency. While paying down debt is a huge part of gaining financial independence, you can’t let it cloud all your judgments.

Summing Up

I find the idea of the butterfly effect strangely comforting. I think it’s because, barring truly catastrophic choices, we can turn almost any bad decision into one that has long-term positive effects. All it takes is the desire to learn from it.

Rather than fretting about having to make the perfect decision all the time, you can change how you react to the decisions you do make. If you do your best to learn the relevant lesson, even silly things like panic selling can be a positive in the end.

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The Risks of Everyday Life

My oldest son’s best friend very suddenly came down with a serious illness a couple of weeks ago. He has been in the hospital ever since, dealing with a surgery and then a number of post-surgery complications. I don’t even want to speculate as to what their medical bills will look like, even with good insurance.

At the same exact time, another friend of mine abruptly lost his job. It was a good paying job and one that seemed about as secure as a job could be, but his company abruptly ran out of money and closed their doors. He suspects that the company may have been in trouble for a while, but there was honestly little sign of it. Luckily, my friend is single, so there isn’t a spouse or children or other dependents to worry about, and he did have some savings built up for him to live on while he finds a new job.

Now, combine those two pictures together. In the first picture, if one of the parents had abruptly lost their job (and the other parent didn’t have insurance) before their child became ill, their entire financial situation would have fallen like a house of cards.

That picture has been heavy on my mind as of late, and it’s made me carefully consider some of the financial risks that we face in our lives and that many families face to an even more stark degree.

The truth of the matter is that a lot of us are walking a financial tightrope in our daily lives, whether we see it or not. Many of us are just one unexpected bad event away from catastrophe; a lot of us would buckle at two simultaneous bad events like the one above. A lot of American families don’t have rich relatives or extended family who could rescue them in a pinch – the reality is that many families that would be beset by a series of unfortunate events would find themselves in a pretty intense place.

Poverty. Homelessness. Those things can seem unlikely or even impossible when your day to day life has been going well for a while and things are comfortable, but what happens to your life if you’re outright fired tomorrow? What if you get a life-threatening illness that’s going to take a very long time to recover from? What if your wife does, or your child? What if a part fails in your car and you’re in a deadly auto accident and wind up getting sued, and your insurance does nothing to protect you?

Most of us live our lives as though these things simply aren’t going to happen, and that means that, by default, we’re accepting some level of risk, every single day.

Mostly, we ignore that risk. To live a life in fear of that risk would be paralyzing.

But we never forget it. Those fears show up when we’re lying alone at night reflecting on our life. Those fears show up when there’s a close call. Those risks are always in the background, always contributing just a little bit to our stress level, especially when we have people depending on us in our lives – a spouse, children, dependent relatives, and so on.

As a parent and as a husband, I recognize that those risks exist. I want to do everything I can to minimize those risks, for a number of reasons.

I want to minimize the chance of a major disruption in my children’s lives and in my own life. I want them to grow up safely and securely, enjoying their childhood and learning lessons as they mature, not having fear and worry abjectly thrown on them when they’re already struggling with the complications of growing up.

I want to keep that background stress in my life as low as possible. I want my little worries to be safely filed away as “extremely, extremely unlikely” rather than “well, that could happen, it just happened to my friend, gotta hope that doesn’t happen.”

Most of all, I want the downside of things that I’m not even thinking about to be as small as possible. There are difficult situations and unfortunate events that I’m not even considering when I reflect on my own life. Things can happen that I’m not even considering, and I don’t want to be waylaid by them if at all possible.

Those principles occupy a major place among my financial and personal goals. They drive a lot of the actionable goals I set for myself and steer many of my decisions.

Isn’t that a life lived out of fear, though? Not really. In fact, I see the opposite. To me, a life lived out of fear is one where you cover up your worries with more spending, when you go on fabulous trips and buy expensive things while not having a dime in your savings account. To me, a life lived in fear is one where you do nothing to address the things that worry you. A life without fear is one where you do your best to stomp your fears into oblivion and make that background stress and those nighttime worries dissipate. A life without fear isn’t one where you avoid airplanes; it’s one where you go ahead and face that fear head on and handle it and eliminate it.

Here are some of my best strategies for eliminating and minimizing those risks of everyday life.

Build a “perpetual” emergency fund.

The number one thing that anyone can do to minimize the risks of everyday life is to simply take a small portion of their income and set it aside for the future so that when bad things happen, you have a pool of cash with which to handle it. This is generally called an “emergency fund.” Most people do it by moving a bit of cash from their checking account to their savings account on a somewhat regular basis, though some like to keep a small amount of cash stowed away in their home.

My preferred approach for an emergency fund is what I call a “perpetual” emergency fund. You simply set up a weekly automatic transfer from your checking account to your savings account – say, $20 or $50 or whatever you can afford – and just let it sit forever. There will be times when your emergency fund gets nice and fat, and then there will be other times when you deplete it all the way down to nothing. Regardless of the situation, you just keep letting that money trickle in, weekly drip by weekly drop. You never have to lift a finger again to fill or refill your emergency fund.

To me, there is no “maximum” or “minimum” size that an emergency fund should be, provided you are automatically filling it. There will always be an emergency or an unexpected event, thus it always makes sense to keep refilling that emergency fund, even if it gets quite big.

Keep your spending significantly below your income.

This is just an all-around good rule of personal finance. In fact, I usually think of it as the rule of personal finance: spend less than you earn and do something smart with the remainder.

Ensuring that you spend significantly less than you earn has a bunch of benefits.

First, it ensures that you always have money with which to save for the future. If you’re spending less than you earn, that means that there’s money left over to prepare for the future. Retirement investing? Saving for your next vehicle? Saving for a house down payment? All of those are viable options depending on your life situation.

Second, it ensures that a reduction in pay due to a job loss won’t rattle your life nearly as much. If you’re making $60K a year and living as if you were making $40K, then a new job that earns only $40K isn’t going to impact your life too much. On the other hand, if you were spending every dime of that $60K income and had a pile of debts, that drop to $40K is disastrous.

Third, it gives you career flexibility, in that switching to a job with lower pay but other benefits is on the radar and a complete career change isn’t financially disastrous. Again, simply knowing how to live somewhat below one’s means makes career and job switching much less painful than before and makes the range of careers and jobs you can switch to much larger. You don’t have to continue to toil under the thumb of a cruel boss because of limited options if you live well below your means.

Finally, living below your means for an extended period virtually guarantees that you have cash reserves somewhere, so you’re much more prepared if a major crisis hits. If a major life crisis occurs and you’ve been living below your means for a while, you’re going to be much better prepared to handle it, both in terms of having cash on hand and in terms of having less financial need than you otherwise would.

Don’t inflate your spending. Keep it low. Budget carefully and consider your spending very carefully. It’s one of the best things you’ll ever do for yourself.

Avoid all debts, even extremely low interest ones.

I’m a big proponent of complete debt freedom on the personal level. It’s fine to have some debt within a business structure – that’s what many people do when they invest in real estate is that they form a business and invest within that business – but in terms of my personal life, I want as little debt as humanly possible.

Why? Carrying debt is a risk. It means that you have a monthly payment that you have to deal with which gobbles up some portion of your income and thus restricts your cash flow. Simply put, you have to be earning more than you otherwise would just to keep making the payments.

Then, what happens if you can’t make those payments? At first, your credit is seriously damaged, which has an impact on all sorts of things in your life. After that, you may face repossession, eviction, and/or legal action.

The easiest route for an individual walking that tightrope of life is to simply avoid debt whenever possible. Sure, you might need to take out a student loan to go to college, or you might need a car loan to get to work, or you might need a mortgage to buy a home, but you should avoid carrying credit card debt at all costs and you should be rapidly paying off any and all debts that occur.

As I noted earlier, some of these tactics don’t apply as strongly if you have a strong safety net in life. For example, if you have wealthy parents that can support you if things fall apart, then there are situations where taking on debt in order to earn a much bigger return might make sense, but for most Americans who walk a financial tightrope, it is a much riskier move.

Maintain and improve your physical and mental health.

Health care costs are tremendous, especially as you age. Even with great insurance, the costs will hit and they’ll hit hard.

The thing is, you can keep those expenses somewhat at bay simply by keeping your body and mind in good health. Simply eating a plant-based diet, eating until you’re not hungry rather than eating until you’re full, and exercising a little each day in a way that you enjoy will make a tremendous difference in terms of your long term health outcomes.

You control those choices. Every time you eat something, you have a choice as to what you’re eating and how much you’re eating. Every time you have some spare time, you can choose to do something that’s physically active or mentally active.

Making the choice to eat healthier and be physically and mentally active is a choice that reduces your long term health care costs. You’ll feel better, too. It’s as simple as that.

Maintain insurance for things you cannot cover.

This doesn’t mean ensure every single exceedingly rare outcome, but it does mean that you should have adequate insurance to cover things that would be disastrous and have at least some significant likelihood of happening.

For example, if you have dependents, you should have a term life insurance policy that covers you through a time when you no longer have dependents. If you have kids, you should be insured until they’re going to be well out of the house. If you have a financially dependent spouse, you should be insured until that spouse is no longer financially dependent on your income. The earlier you get this policy, the less expensive it will be.

Your homeowners or renters insurance policy should cover against disasters that happen in your area: flood, tornado, earthquake, hurricane, fire, and so on. Make sure that things that are known to happen where you live are things that your possessions are covered against.

If you can’t afford to replace your car out of pocket, then you should be carrying appropriate comprehensive insurance on your car.

While those insurance packages will eat into your monthly budget, they’ll also help protect you from a number of major risks of modern life.

Take a few simple steps against identity theft.

Here’s the simple truth: most identity theft occurs because of low-hanging fruit. A person uses a simple password on their account that’s easily guessed by a hacker (and if it’s a word in a common language, it’s easily guessable). A person clicks on a link in an email and then promptly fills in personal information. A person uses their debit card and the number gets skimmed.

There are a few things you can do to minimize your risk of identity theft.

First, never, ever give out personal information to solicitors. If you decide to do business with someone, you contact them and look up their contact information on your own.

Second, don’t use the same password on your most important accounts, and don’t use simple passwords. There are a lot of ways to make a more complex password – one way is to simply alternate the digits of your birthdate with the name of the website you’re visiting, like 0a3m1a1z8o2n for example.

Third, make it a regular routine to check your credit report for anything that might be incorrect. The FTC allows American citizens to check their credit report for free once a year at annualcreditreport.com, so take advantage of that.

Fourth, don’t carry any more identification or financial cards than necessary. Never carry all of your identification or all of your debit/credit cards with you. Losing your wallet or getting robbed becomes disastrous in those situations.

Finally, don’t use your credit card as an emergency fund. If your card is stolen or the communication network breaks down or your bank cancels your card, you can find yourself without cash when you need it most. Don’t rely on it. Instead, have a cash emergency fund, as described above.

Final Thoughts

There are two key purposes in reducing the risk of everyday life.

One, it minimizes the background stress in your life caused by things you can’t control. There are always going to be things you can’t control. What matters is that you’re prepared to handle them, and that’s what all of these steps are about. You’re minimizing the odds of some unexpected events and preparing yourself to handle others.

Two, it gives you some breathing room to take on risks of your choosing. When you already have a lot of background risk in your life, taking on another risk seems daunting, even if that risk holds great opportunity. On the other hand, if you have that personal background risk under control, taking a risk in your personal or professional life suddenly seems to have a lot less downside, making it worth considering. Leaps of love, leaps of faith, leaps of professional advancement – they all become more reasonable if you have the other risks in your life under control.

The strategies in this article enable you to take advantage of both of those benefits. When you lower your risk, you feel less stress and you feel safer taking on additional risks of your choosing. That’s the route to a pretty good life, indeed.

The post The Risks of Everyday Life appeared first on The Simple Dollar.

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