Saturday, February 11, 2017

Inspiration from Confucius, Benjamin Franklin, Blaise Pascal, and More

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

1. An icebreaker in the Arctic Ocean

From the description:

10 hours video of Arctic ambience with frozen ocean, ice cracking, snow falling, icebreaker idling and distant howling wind sound. Natural white noise sounds generated by the wind and snow falling, combined with deep low frequencies with delta waves from the powerful icebreaker idling engines, recorded at 96 kHz – 24 bit and designed for relaxation, meditation, study and sleep.

Please adjust the audio volume to your taste.

I came across this video the other day and decided to play it in the background while I worked. I ended up having one of the most productive, clearest thinking days I’ve had in a very long time.

I don’t know whether it was the audio alone, or whether the audio was one of many factors that came together to make things click. All I know is that things clicked hard and this audio was running in the background the whole time.

I’ve been playing this video in the background quite a lot ever since then, when writing or reading something or studying. It’s been wonderfully conducive to my ability to focus on the task at hand and come up with great ideas and learn new things.

Give it a try. When you need to get some work done or you really need to focus on something, like a book or something you need to study, turn on this video and turn the volume down to a level where you hear it but it’s not distracting you, and get to work. See if it helps.

This video is just one in a series of similar videos from the same channel, which you can see here. I think these are going to become a regular part of my workday.

2. Ta-Nehisi Coates on libraries and classrooms

“The classroom was a jail of other people’s interests. The library was open, unending, free.” – Ta-Nehisi Coates

This quote comes from Coates’ wonderful book Between the World and Me, a book where I expected to see differences and instead I saw similarities. I saw a scared kid trying hard to not fall into the traps all around him while growing up. I saw a maturing young man whose mind is suddenly opening to ten thousand new ideas at once and feeling completely topsy-turvy in the flood of new ideas but still wanting to soak up everything. I saw a father uncertain about what to teach his child in an uncertain age.

The world needs more books like this, more portraits of how we are all similar and how we are all different at the same time, and it’s when we tie ourselves together with those similarities and learn from those differences that we all become better people.

This quote really stuck out above everything else because it so beautifully expresses how I feel in a big library. There are so many ideas to explore that I feel like a starfish being swept around in a tidal wave. There’s more to explore than I’ll ever have the time to dig into, but that doesn’t mean I don’t dream of it.

3. Laura Vanderkam on gaining control of your free time

From the description:

There are 168 hours in each week. How do we find time for what matters most? Time management expert Laura Vanderkam studies how busy people spend their lives, and she’s discovered that many of us drastically overestimate our commitments each week, while underestimating the time we have to ourselves. She offers a few practical strategies to help find more time for what matters to us, so we can “build the lives we want in the time we’ve got.”

The most powerful strategy I’ve ever found in terms of finding time for the things that matter and building the life that I want is that I just drop the things that don’t resonate with me. If it doesn’t have personal meaning to me, I don’t do it. If it’s a responsibility, I try very hard to find meaning in it.

So, what does that actually mean? Well, for example, I really don’t get much out of watching television. I do enjoy occasional television series and I’ll watch them in a “binge” with my wife, but in terms of watching television every day, I just don’t do it. It’s usually just one episode of something on Netflix late in the evening with my wife until we finish a season, then I don’t do it again for a few weeks or a month. I don’t get value out of a lot of what’s on television, so I just don’t give it my time or energy. (That doesn’t mean you can’t get value out of what’s on television, just that I personally do not.)

I don’t get value out of having a perfectly neat house, so I do housework that has value for me and don’t worry about the things that don’t have value. I’ll straighten up, but I won’t scrub the floor until it bothers me.

Don’t give your time and energy to things you don’t really care about. Instead, do your absolute best to give it to things that you do care about. You’ll never regret it.

4. Confucius on questions

“The man who asks a question is a fool for a minute, the man who does not ask is a fool for life.” ― Confucius

Sometimes, it’s hard to swallow our pride a little and ask a question. I know that I often feel dumb when I’m asking a question out of genuine ignorance.

The thing is, that sense of feeling “dumb” passes pretty quickly. Almost always, the person that knows the answer is thrilled to answer your question and then suddenly you know the answer as well. You now have another piece in the wall of your knowledge and you’re better off for it.

If you give into that urge to be prideful and not ask the question, you’re just begging to be lost regarding everything that follows. You got to hold onto your pride in that one single moment, a moment that everyone will forget three minutes from now, but in exchange, you’re missing out on a piece of information that would help you understand life better.

Don’t go that route. Ask the question. Swallow a bit of pride. You’ll never regret it.

5. My Morning Routine

I’m unabashedly a morning person, and I find that having a strong routine in the morning makes a huge difference when it comes to having a really successful day. If I really nail it in the AM hours, the entire day ends up feeling really productive. I often feel like I need to “keep it up” and thus my sense of having a great day often rests on the back of having a great morning.

Because of that, I obsess a little (well, more than a little, if I’m honest) about my morning routine. I tweak it. I try different approaches. I add things (like mindful meditation) and remove things (like excessive caffeine) to figure out what works and what doesn’t.

I’m always on the lookout for new ideas and new things to plug in and try in my morning routine, and that’s exactly what My Morning Routine is. It’s simply a database of people’s morning routines. I love going there and just digging through a dozen (or two) routines, just to see if there’s a new angle or idea or approach I haven’t thought of that I can try.

My Morning Routine has pushed me to moderate my caffeine in the morning (some is good, a lot is bad) and counterbalance it with green tea to take some of the edge off. It’s helped me figure out better ways to order exercising and meditating and doing focused work. It helped me to discover the pure joy of drinking a bunch of water when I first wake up. Plus, the interviews are great.

The site has really inspired me to tinker with myself and improve myself.

6. Epictetus on the primary task of life

“The chief task in life is simply this: to identify and separate matters so that I can say clearly to myself which are externals not under my control, and which have to do with the choices I actually control. Where then do I look for good and evil? Not to uncontrollable externals, but within myself to the choices that are my own.” – Epictetus, Discourses, 2.5.4-5

The entirety of good and evil in your world resides within you. You can only control the decisions you make, so it’s up to you to choose good options or choose evil options. You can only control your own judgments, so it’s up to you to decide what’s good and what’s evil.

Nothing else is under your control. You can’t control what other people do. You can only control how you respond to it, and you can only control what you do.

Make sure that your own actions and your own thoughts and your own responses angle toward good, or else it doesn’t make any sense for you to yearn for a better world. If you aren’t willing to make a better world using the things you can control – your personal thoughts and actions – why should you expect the world to become a better place?

7. Marconi Union – Weightless

A friend of mine recently told me that he falls asleep to the same song in a loop every night. This is that song. It turns out that Weightless by Marconi Union is considered to be the most relaxing song ever produced, to the point where it’s suggested that you don’t listen to it while driving because it can induce sleep.

This song is undoubtedly relaxing, and it’s helped me feel quite relaxed in the evenings before when I need to wind down after an exciting day.

Just this past weekend, I put the kids to bed on Saturday night only to find that my wife had fallen asleep on the couch. I felt like I was wired up to ten and should do something, but I also knew I had to be awake and alert and ready to go in nine hours. So I sat in my chair, put on my headphones, closed my eyes – I was still feeling rather amped up, mind you – and I fell asleep before this song ended. I actually woke up in the chair two hours later and staggered off to bed.

Now, my intent was just to calm myself down, but the effect was a lot stronger than that. I’ve listened to it in bed twice now when I needed to go to sleep quickly and I wasn’t feeling sleepy and it helped every time.

Believe it or not, there exists a ten hour remix of this relaxing song. I wonder if my friend might play that loop all night long.

8. Benjamin Franklin on apologies and excuses

“Never ruin an apology with an excuse.” – Benjamin Franklin

If you make a mistake, apologize for it. Point to your own personal faults, because it is those faults that caused you to make that mistake. Don’t point to others. Don’t point to circumstance. You’re apologizing because you made a mistake. Own it.

If you’re not willing to authentically apologize for a mistake you made, then you’re effectively not admitting to the mistake at all. If you’re simply tossing blame to someone else or something else, then you’re not admitting to any sort of error, either. You’re just passing the buck.

If you want to earn respect in this world, don’t pass the buck. You’re going to mess up. Own it when you do. Work to fix your own mistakes and improve yourself so that the mistakes don’t repeat. You’ll earn a lot of respect for doing so and be far better off in the end.

9. Sisonke Msimang on taking action on a story that moves you

Anyone who pays attention to the world will eventually hear some stories that really touch their heart. Stories of survival, of endurance, of courage, of bravery, of love, of tragedy, of struggle. Different people are touched by different things.

The thing is, when a story resonates with you, that means it’s coming very close to some values that you hold extremely tightly. Those core values are what really, really matter for you. They’re an essential part of your life.

Pay attention when that happens. Think about what exactly in that story is resonating with you so strongly. Then, when you start to figure it out, take action. Let that core truth lead you to a new place in your life.

10. Blaise Pascal on the virtue of man

“The virtue of man ought to be measured, not by his extraordinary exertions, but by his everyday conduct.” – Blaise Pascal

Your true character isn’t based on what you do at the exceptional moments in your life. Most of us try to step up and be heroic at those exceptional key moments.

No, your true character comes from what you do on normal days. It’s not how you treat others in special moments, but in normal moments. It’s not how you step up under extraordinary circumstances, but the most ordinary of circumstances.

Your virtue is what you do on a typical Tuesday, not what you do when everything is on the line. Everyone steps up to exceptional behavior when everything is on the line. What matters is what you’re like on an average Wednesday.

11. Momentum

Momentum is a really amazing habit tracking tool that’s built entirely around the idea of “chaining” together days, an idea I’ve talked about on The Simple Dollar a lot of times.

The idea is that if you want to build a strong new habit in your life – to create a new “normal” – you need to do it for a lot of days in a row. Many days. Depending on the habit, it might take as many as 180 days to make it normal.

Furthermore, there are some career steps that require you to really stick with it and give daily effort to make it happen. For example, if you want to be a writer, writing every single day is essential.

That’s the whole idea behind Momentum. You simply define a particular task you want to do every day and then check it off in this app when you finish it. The app is about as unobtrusive as humanly possible for checking things off, though you can set it to pester you and remind you of the task.

After you start going with it, it starts to show you your lasting progress in the form of long rows of green boxes. It’s much like the whiteboard that I normally use in my office for this kind of tracking, in which I look at long rows of Xs. The only difference here is that with Momentum, I can take the whole thing with me.

I love it. It just clicks. It’s exactly the kind of daily habit tracking I’ve been looking for, with that kind of gentle momentum push that I want. The best part? It’s free.

12. Joel Zimmerman on popularity

“I was the least popular at my school. The less popular you are, the more time you have to do your own thing as opposed to trying to fit into everyone else’s thing.” – Joel Zimmerman

Joel Zimmerman is perhaps better known as the DJ and producer deadmau5, who is currently one of the highest paid electronic music producers in the world and has received six Grammy nominations for his work. His success didn’t come from trying to fit in with everyone else. His success came from doing his own thing.

I’ve read this quote to my own children. I’m far more interested in them doing their own thing and figuring out what they care about than trying to fit into everyone else’s thing. It’s only through doing your own thing that you find out what you’re truly good at and what you’re truly passionate about, and those are the true tickets to both joy and success in this world.

I wasn’t particularly popular either when I was in school. I spent a lot of my time reading and learning about the world. It took a while, but eventually I found a joyous life for myself, one that I would have never found if I spent my life trying to fit into everyone else’s thing.

You shouldn’t, either. Find your own thing. Then, once you find it, find other people who are into that thing. Start with yourself, though, and you’ll always find happiness.

The post Inspiration from Confucius, Benjamin Franklin, Blaise Pascal, and More appeared first on The Simple Dollar.

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Friday, February 10, 2017

Meal Prep Day! Simple Rice and Beans

I often talk about how I enjoy preparing meals in advance by making a bunch of duplicate meals at once, popping them in the freezer in a state that’s almost ready to eat, and then pulling them out when needed, merely reheating and then eating them.

For many people, the idea of preparing a bunch of meals at once sounds really challenging, so I thought I’d use the absolute simplest “meal prep” that I do in order to show you how easy it really is.

Behold, my simple rice and bean lunches.


My simple rice and bean lunches are about as simple as can possibly be. I just go to the store and buy two pounds of dry brown rice and two pounds of dry black beans as the core ingredient, along with whatever I want to add for flavoring. Two pounds of dry brown rice and two pounds of dry black beans is enough for sixteen very, very hearty and filling lunches.

I actually don’t like to excessively flavor my rice and beans, but some of the things you might want to add would include spices such as cumin, cayenne pepper, chili powder, or red pepper flakes; cooked onions and peppers; cheese; or salsa.

We’ll talk about some specifics later, but that’s really all you need. Here’s your shopping list:

2 pounds dry black beans (or whatever kind of bean you prefer)
2 pounds dry long grain brown rice
4 cups shredded cheese (this gives you 1/4 cup per meal) (optional)
2 cups salsa (this gives you 1/8 cup per meal) (optional)
1 bag flash-frozen seasoning mix (frozen onions and peppers) (optional)
Cumin, cayenne pepper, chili powder, or red pepper flakes (optional, but highly recommended)

You’ll also need sixteen individual containers for these lunches. I always use reusable containers for this purpose. I recommend these LIFT microwaveable and freezable meal prep containers, which cost about $1.50 a pop but can be reused a lot of times. They’re the ones I show in this video. For this specific recipe, two sets of them would be needed, along with two more bowls to put two of the meals in the fridge for eating in the next day or two.

What Do You Do?

The procedure is pretty simple. First, just dump the beans in a large pot and cover them with several inches of water, then let the beans soak overnight. If you’re doing this on a Saturday morning, for example, you could just put the beans to soak the night before, just before bed.

The next morning, the first thing you’ll need to do is cook the rice. I’m using our Instant Pot to pressure cook the rice, meaning that we can get all of the rice cooked in about 30 minutes. I used this exact method for cooking the rice; I did it in two equal batches because I didn’t want to overfill the Instant Pot and I also had other things to do while the rice is cooking.

Pardon my photography skills; this is my real kitchen and not a picture studio.

Obviously, you can use whatever method you prefer to cook up the rice. You can do it in advance if you prefer and store the rice in the fridge, too.

While the rice is cooking, you’ll want to strain the water off of the beans, then add water to the beans and boil them for a while. The beans won’t be cooked yet after soaking, but they’ll cook fairly quickly, in about 45 minutes or so. I suggest adding some salt while you cook them – for the amount here (two pounds dry), you can add several tablespoons.


Just put the soaked beans in a pot, add water until the beans are covered, bring it to a boil, and make sure it doesn’t boil over. Taste the beans every ten minutes or so until the beans are at the texture you prefer. For me, that was around the 45 minute mark. When they’re done, reserve about a cup of the liquid that the beans were boiling in and strain away the rest.

While the beans are boiling and the rice is cooking, you can also saute the seasoning mix in a skillet if you’d like. Just put a little bit of oil in a skillet, turn it on medium high, and add the seasoning mix (remember, it’s just chopped onions and peppers). While it’s cooking, you can add other seasonings if you’d like – pepper, cumin, and so on. Cook these until the onions are starting to turn a caramel color, stirring frequently. Remove it from the heat, then add the reserved bean liquid straight to the skillet! It’ll sizzle and smell wonderful.

Then, mix in all of the seasoned veggies right with either the beans or the rice. It really doesn’t matter which one you add it to. Mix the veggies together with either the beans or rice until consistent. Taste it and if it tastes bland, don’t be afraid to add salt or other seasonings. You want it to be very flavorful!

Then, lay out all of your containers and get to work.


Just add 3/4 cup of beans and 3/4 cup of rice to each bowl. It’s easy if you have a measuring cup. What you’ll find is that it comes out pretty close to perfect if you have sixteen containers to put it in. I used 14 resealable ones for the freezer and two ordinary bowls for meals heading to the fridge.

At this point, you can add other ingredients to the bowls. Add 1/4 cup of cheese to each, or 1/8 cup salsa. If you really want some meat in there, add a bit of chopped up cooked chicken breast or some chopped-up sausage. (I find that rice and beans alone is absurdly filling, but that’s me.)

Very important: add about two tablespoons of water to each of the bowls at this point. If you don’t, it’ll be quite dry when you’re done.

It’ll look something like this when you’re done.


Now, pull out some masking tape and make a label for each dish. Write what it is, any nutritional info you want to add (I calculated my lunches to be about 430 calories each), and the date you packed them. Put a lid on each one and they’re ready for the freezer!


All you have to do now is clean up, and almost everything can go straight in the dishwasher!


At my local Fareway, I was able to buy two pounds of dry black beans for $2.58, two pounds of dry long grain brown rice for $1.29, and a bag of flash-frozen onion and pepper mix for $1.29. I also used seasoning that I already had on hand. Thus, the core of the meal – black beans and rice with seasonings – cost about $5.20. That’s a cost of 32.5 cents per meal.

Cheese varies in price. I was able to get enough shredded cheese in a bulk purchase to cover adding 1/4 cup cheese to each recipe for $2.99, plus a jar of salsa for $1.99. This added another $4.98 to the meal. So, even with adding cheese and salsa to the meal, the total cost for the food was about $10.18, or a little less than 64 cents per meal.

Naturally, you have to include a few supplies. I used maybe 1/20th of a roll of masking tape, which might add a quarter to the cost. I did need the reusable containers, which can be used a lot of times, but still do add some initial cost.

Still, with all of that, it’s very reasonable to say that the cost of this is below $0.70 per meal for a very filling and pretty healthy lunch that you can just pop in the microwave for a few minutes.

Compare this meal to buying anything similar at the store and you’re probably paying somewhere around $3-4 for it. If you figure that it’s $3.50 and that your meal prep strategy is costing you only $0.70, that means you’re saving $2.80 per meal, times 16 meals, making a savings of $44.80.

Considering I was able to do all of the work, from buying the ingredients to cooking everything to preparing and labeling the meals to cleanup and putting everything away in about two hours, that means I “made” about $22 an hour tax free. On top of that, I now have a great deal of convenience – whenever I want a meal, I just walk to the freezer, grab one of these, and pop it in the microwave for about three minutes and I have a very, very filling lunch. It’s likely that I’ll recoup some of the time invested while I eat the meals, so the rate is actually even better than that.

Final Thoughts

This is a very simple example of a “meal prep” plan, but all such plans follow the same structure. You make a bunch of copies of the same meal and prepare them to the point that they can just be microwaved when you actually want to eat them. Because you’re duplicating most of the work all at once, the time per meal is surprisingly low (in the example above, I’m effectively spending about 7.5 minutes per lunch on prep work, and I could have been more efficient than that), and because it’s all ingredients you cook at home, the cost is surprisingly low, too.

You can prepare almost any meal you can imagine this way. You can make pasta lunches, burritos, stews, salads… almost anything you can think of. I’m just a “rice and beans” guy, so I really like these rice and bean lunches.

I’m a huge fan of these meals, not just from a cost-saving standpoint (though that’s huge), but from a convenience standpoint, too. Hopefully, this really simple example will help you try it out, and once you do it the first time, you’ll want to do it again and again and again.

The post Meal Prep Day! Simple Rice and Beans appeared first on The Simple Dollar.

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Thursday, February 9, 2017

31 Days to Financial Independence (Day 26): Considering Insurance

“31 Days to Financial Independence” is an ongoing series that appears every Thursday on The Simple Dollar. You might want to start this series from the beginning!

Last time, we finished up our examination of investing and saving for specific goals with a broader look at saving for smaller goals, such as a car or a house down payment. Today, we’re going to move on to look at insurance.

Insurance is a challenging issue. Many people often buy insurance policies, not because they need them, but because they think they’re supposed to or because it’s sold to them by an effective insurance salesman.

Here’s the number one thing to remember about insurance: The only purpose of insurance is to protect something you already have. That should be your sole goal in purchasing any insurance policy. It’s not very good as an investment tool. It’s not a wise use of your money if you’re protecting something you don’t have yet or if you’re protecting something that doesn’t really need protection.

Thus, the absolute first thing you should be asking yourself regarding insurance is what do I stand to financially lose if something really goes wrong in my life? (We’re not talking about emotional losses here.)

Let’s say your spouse died. Would you be able to financially survive without that person, especially over the next few years?

Let’s say you died. Are there people who are dependent on you that would struggle?

What if you got into an accident and totaled your car? Could you afford to get a car back on the road quickly without insurance?

What if you got sick? Could you pay your medical bills with your current health insurance package? (You almost assuredly do have health insurance because of current federal law; the question is what kind of insurance you have.)

What if your house burned down? What if your apartment was robbed? How do you handle these disastrous situations?

Some people might be in situations where they have little to protect. If someone robbed their apartment, the only thing worth taking might be an old television. If they totaled their car, it was a rust-bucket anyway.

Others may have enough money in the bank to handle certain emergencies. For example, although we do have policies, my family could probably survive at this point without life insurance policies if either Sarah or I passed away early.

Most of us, though, find ourselves in a situation where we do have things to protect but we don’t have enough other assets to easily handle a major disaster involving those things that we wish to protect. That’s where insurance comes in.

Insurance is basically protection. You pay a certain amount each month so that if one of those disastrous situations occurs, the insurance company will step in and help. It takes a large scale worry about the future and effectively makes it disappear.

To summarize: Don’t buy an insurance policy without a specific purpose, and that purpose should be to protect something you have against a threat you cannot handle. That is the reason for insurance, nothing more.

Also, here are a few quick terms you should know. A premium is the amount you pay regularly to the insurance company to keep the policy. A deductible is the portion of an expense that you might turn into the insurance company that you are responsible for before the insurance company begins to pay out. A beneficiary is the person who receives the benefits of a life insurance policy. Straightforward stuff, but I want to make sure we’re all on the same page!

Here are some specific tips about figuring out what insurance might be right for you.

Exercise #26 – Evaluating Insurance Options

This is not going to be a thorough coverage of every kind of insurance; that would take a book to cover. Instead, I’m simply going to provide an overview of several common types of insurance that cover the most common threats that people face, and start with a few general tips for all types of insurance.

General Tips

First of all, do your own homework. Don’t assume you need a policy because some salesman or some guy on the internet told you that you did. If you’re considering buying a policy of any kind, read up on it. Know what the policy is about and what it covers. Most of all, understand why you are buying it – and just saying that the salesperson told you that you needed it is not enough, nor is simply listing the reasons the salesperson gave you.

Shop around when you’re buying a policy. Don’t just buy whatever policy that the guy you know from church is selling or that you heard about on the radio. Figure out on your own whether you actually need such a policy and, if you do, get quotes from lots of different insurers.

In general, higher deductibles save you money over the long run, but only if you have enough money on hand to cover that deductible. High deductibles are a good money-saving tactic, but they’re only good if you have plenty of money in your emergency fund and you’re not making constant claims on your insurance (if you are, your premiums are going to go up anyway).

You should also make sure that your policy comes from a well-regarded insurance company. Do your homework on the company itself and make sure that it’s highly rated. The best place to check is with your state insurance regulators. Start by looking up your state’s department of insurance website and find the companies you’re considering. See how they compare to each other. You might also want to check out the insurance company comparison tools at insure.com.

Let’s move on to some policy-specific strategies. Some of these overlap with these general tips, but they’re re-emphasized because they apply especially well to that specific insurance type.

Life Insurance

The sole purpose of life insurance is to provide for people left behind after the insured person dies. This usually means spouses who might be relying on the deceased person’s income to keep the bills paid, dependent children, or other dependent individuals.

Given that, if you do not have people dependent on your income, you really don’t have much reason to get a life insurance policy. There are almost always going to be better uses for your money.

Life insurance really only becomes a factor when you’re in a situation where someone is truly dependent upon your continued income, at least in the short term future. In those situations, a policy that can effectively replace your income for a number of years is in order because it will allow those people who depend on you to have a stable life until they are ready to move on into their own personal life choices – i.e., your children grow up or your partner finds a better career or remarries.

The best route here is to seek out a term life insurance policy. It’s the least expensive option and solves the exact problem described above. Determining the benefit size of the policy isn’t an exact science, but ensuring that your children won’t struggle to grow up and that your spouse has at least a year or two to get back on his or her own feet are good benchmarks for figuring out how much to save.

There are many calculators out there for life insurance policies in terms of figuring out how large your policy will be, but they all tend to be authored by insurance companies or are based on insurance company models, so they end up recommending a larger benefit than is really necessary. Why? Life insurance companies don’t sell policies unless they believe that, on average, they’re going to make money, so if they’re selling you a policy, they want it to be a big one, because that will raise the premiums you pay each month.

What about things like whole life insurance or universal insurance? They’re generally not worth it. They’re far more expensive than term policies and the other financial benefits generally don’t have any significant value for many, many years. The truth is that when you’re older and have reached retirement age, the only insurance you’ll probably want is enough to cover your funeral expenses so you’re not a burden to your family, and if you’re wealthy, you may not even want that, so such a lifelong policy isn’t useful.

What about life insurance for children? Again, ask yourself what happens to your finances if that child passes on. Would you be able to pay for funeral expenses easily? If yes, then there’s little need for insurance.

A final note: don’t make life insurance choices for your kids. Many parents want to buy a whole life policy for their kids when they’re very young. The reality is that many children don’t end up taking over that policy at all and it just goes away when the parents stop paying it at some point. Let your child make their own life insurance decisions, especially since (in general) you won’t be financially affected by their passing. Consider only a term policy if you think you might be expected to pay for funeral expenses and couldn’t afford them, and keep it small.

Health Insurance

This is a subject that’s changing rapidly, so it’s hard to give specific advice on health insurance. Right now, there is a federal mandate that you have some form of health insurance. Will that still be true in a year? Maybe, maybe not. Right now, there is a state marketplace in which you can buy health insurance. Will that still be true in a year? Maybe, maybe not.

I will say this, however: You’ll save a ton of money on health insurance if you build up some personal savings and hold onto it. Think of that money as an extended emergency fund.

Why will that save you money? It’s simple – if you have a healthy amount of cash in the bank, you can get away with a policy with a higher deductible, which means a lower premium that you have to pay.

My fundamental advice when it comes to health insurance (and this will be repeated with other kinds of insurance) is to spend less than you earn, get rid of debts, and then start saving it. As you build up savings, you’ll be able to make choices like raising your deductible on many types of insurance that you hold, which will lower your monthly premiums, which makes the gap between your spending and saving even bigger.

If you’re struggling to come up with enough money to cover the deductible on a health care expense, that’s a sign you need to take a serious examination of your financial state and career path.

Homeowners Insurance

The biggest trick with homeowners insurance is that the default policy does not cover everything that you might think that it will. In many areas, you need special insurance to cover things like earthquakes, floods, tornadoes (in some areas), hurricanes (in some areas), war, nuclear hazards, and other things. You’ll want to know all of the exclusions on your policy and assess for yourself whether those exclusions make sense for you and, if not, add extra insurance to cover those exclusions.

Many people think they’re covered in the event of a major disaster, only to find out that they aren’t covered like they think they are. Don’t get caught in that trap. Be proactive and contact your insurance company and find out what their list of exclusions are on your policy and what you need to do to be covered.

Another thing to know is the difference between “actual cash value” and “replacement cost.” This refers to how much your homeowners insurance will pay you for your belongings in the event of a disaster. “Actual cash value” refers to the value of all of your stuff after depreciation. Remember, when you buy things and use them, they go down in value; “actual cash value” pays what you would get for them if you tried to sell them used. “Replacement cost,” on the other hand, is what it would cost to replace that item with a new version of the item.

Think of it in terms of your refrigerator. If you were to sell it in a yard sale or on Craigslist, you’d probably get only a fraction of what you paid for it – that fraction is the “actual cash value.” On the other hand, the price if you bought a new one is the “replacement cost.”

Unsurprisingly, “replacement cost” is going to cost you more in the policy than “actual cash value.” As noted above, the one you should choose depends a lot on your own personal savings. If you have enough money to replace a lot of the things in your home, then “actual cash value” is fine; without adequate savings, “replacement cost” is what you’re looking for.

Another thing worth noting: Most homeowners insurance policies have lower premiums if you take basic actions to improve the security and safety of your home. Taking steps like installing fire alarms and home security devices typically pay for themselves over the course of a few years due to the reductions in premiums. Talk to your insurance provider about steps you can take to reduce your premiums and then decide whether they’re cost-effective for you. Chances are that if you intend to live in the house for more than a year or two, they’ll be cost-effective.

Renters Insurance

Renters insurance is a policy that is often recommended for people who are renting their property. It simply covers the possessions inside of the rented property.

As with homeowners insurance, there tends to be a lot of variation in terms of what the policy covers, with more robust coverage costing more. For example, many policies require extra coverage to protect you against water backup that might damage your property. Some may require extra coverage to cover you in case of liability against the property you’re living in (say, for example, you do something unintentionally to damage the apartment or the apartment building).

With renters insurance, one thing to consider is whether the possessions in the apartment have enough value to be worth covering. In my first apartment, virtually everything in there was bought secondhand and was pretty beat up. In all honesty, I would have actually been happy if someone had taken that awful couch out of there, and the TV, too. If you have very little value, your insurance should either cost pennies or isn’t worth it at all.

The one element to consider is liability insurance, even if you don’t have many possessions. Read your lease carefully and see how it assigns liability in the case of accidental damage. If it’s unclear, ask the landlord about liability in the event of a fire or some other disaster. Most leases don’t mention such liability or assign it by default to the tenant. Apartment fire liability for the tenant is a very real danger, so if you’re liable, even if you don’t have many possessions, a small liability policy would make sense, as you likely can’t afford the cost of an apartment building fire.

Auto Insurance

As with many other types of insurance, there are often state laws which require minimal levels of auto insurance if you own a car. Usually, just liability insurance is required – it pays for the damage to other vehicles and property if you’re in an accident, but not your own. Comprehensive coverage offers protection for you against damage to your own car as well.

Also, as with other types of insurance, the type of policy you want centers around your situation. If you’re driving an old beater and you can afford to get another beater in the event of an accident, it doesn’t make any sense to carry anything more than liability insurance. On the other hand, if you’re driving a brand new car and can’t easily afford to pay off that car in a jiffy and get a new one, then you need comprehensive coverage (and it won’t be cheap).

Next time, we’re going to start wrapping up the series by looking at a few specific issues. We’ll start by looking at how to handle a crisis when you’re turning things around financially.

Related Articles:

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Five Things to Take Off Your Resume in 2017

If you’ve been out of school for a while, your resume has probably evolved along with your career. That’s as it should be, but while you’re adding experience and tweaking your resume to reflect your latest career focus, don’t forget to step back and look at your CV like a hiring manager.

What you see might surprise you. It’s easy to just keep tacking on new job titles, and hard to recognize when you’re creating a resume monster. Without some perspective, your job application materials might be telling prospective employers exactly the wrong story about you and your abilities.

Resume writing is as much about what you don’t include as what you do. To bring yours up to date, grab your red pen (or wireless mouse) and delete the following:

The Objective

Nothing says, “I began my career during the previous century” like an objective statement. (And I say this as someone who was alive and fully employed during the Y2K panic.)

There was nothing really wrong with objective statements – they told hiring managers what you could do and what you were looking for. But they’re out of vogue now, and they’ll make your resume seem dated. Plus, our attention spans are only getting shorter. To grab the reader’s attention, start your resume off with a branding statement. This brief description should tell employers what you bring to the role that others don’t.

‘References Available Upon Request’

Every employer knows that you’ll provide references when asked, so there’s no need to say so. Also, real estate is at a premium on a resume. While career experts disagree on whether one-page-only resumes are still a must, it’s a pretty safe rule. If nothing else, one-pagers are easier to hand out at networking events.

Jobs That Are More Than 10 Years Old

It’s illegal to discriminate against workers based on age (once you’re 40), but employers do it anyway, and often through sneaky means. Don’t assist them by including jobs that are more than 10 years old, unless you’re high up on the corporate ladder. Chances are, many of your older jobs are less-than-relevant by now anyway, especially if you’re in a fast-changing industry.

Anything Unrelated to the Job You’re Pursuing

Your resume isn’t your biography; it’s not cheating to pick and choose which jobs and projects to include. Ideally, you should tweak your CV for each job application, gearing it specifically toward the role and emphasizing the keywords that are most applicable. If you must use a template, develop a separate one for each type of job opening, and edit accordingly before you submit it online or pass it to a hiring manager.

Your Home Address

This one isn’t a deal-breaker, but it’s also no longer really necessary. The most important thing about you, as far as the employer is concerned, isn’t where you live in the real world but where you live online. Replace your home address with a URL for your online portfolio or professional social media accounts.

Just make sure that whatever you share reflects the best possible version of you. In fact, it’s safe to assume that any hiring manager worth their salary will Google you and find all of your various social networks – so clean them up accordingly beforehand.

Need another reason not to include your home address? Your commute might disqualify you.

“When you put your address on your resume, believe me, they do the math,” writes Donna Svei of Avid Careerist. “If your commute would be longer than what’s known to be tolerable long-term, your resume often finds its way into the ‘maybe’ or ‘no’ pile.”

Maybe you’re willing to travel an hour and a half during rush hour for the perfect gig, but they don’t know that. Don’t give them an excuse to overlook your application.

Related Articles:

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Wednesday, February 8, 2017

Supporting a Passion for Movies on a Reasonable Budget

Erica writes in with a question for the Mailbag that wound up with an answer that was just too long:

My husband and I are film buffs. We watch a movie almost every night together and sometimes have movie marathons on the weekends and our walls are covered in film posters. However we have a 1700+ DVD and Bluray collection and a home theater system that cost thousands and subscriptions to several services and we still spend $100+ on movie tickets per month. Do you have any strategies for cutting down these costs? Every time we think about cutting something we talk each other out of it so I’m hoping you can help!

I think the first way to examine this is to look at where the money is going.

First of all, you’ve got an extensive DVD and Bluray collection. If we assume you’ve been buying DVDs for 15 years at the same rate all the way along, you’re still buying somewhere around 10 DVDs or Blurays a month on average. Even at a bargain rate of $10 a pop, that’s $100 a month.

You have a home theater system that cost “thousands.” Let’s assume it cost $3,000 and will last five years. That’s a prorated cost of $50 a month for all of that equipment.

You have subscriptions to several services. I’m assuming you mean Netflix, Amazon Instant Video, and another service or two. Let’s assume that costs $10 a month per service and you have five services, adding up to $50 a month.

You’re also spending more than $100 a month on movie tickets. Let’s assume you’re spending at least a little on in-theater beverages and snacks, perhaps half the cost of your monthly tickets. Let’s make it $150 a month.

That’s $350 per month on your movie hobby. That’s a lot of money.

So, how can you reduce it? Here are the strategies I’d start with.

First, clean out that DVD/Bluray collection. Go through all of them and ask yourself the same serious question about each one: is there a significant chance you will want to watch this again in the next two years? If the answer is “no,” put it in a pile of discs to get rid of.

The thing to remember here is that a film that you enjoy isn’t represented by a physical object. It’s an experience. You can find the media you need to view most movies with relative ease if you need to do so (something we’ll touch on again in a minute), so there’s not much need to hold onto physical discs unless you intend to repeatedly watch that film. So, keep just the ones you’ll repeatedly watch and eliminate the ones you won’t.

When you have a big mountain of DVDs and Blurays that you recognize you won’t rewatch, sell them off. There are a number of ways to approach this, but with such a large collection, the most effective way to get a solid return on them is to use Fulfillment by Amazon, which allows you to ship all of the DVDs and Blurays at once to Amazon and sell them on their website. Amazon handles all fulfillment and shipping and takes a portion of the proceeds for that service. It’s a pretty easy way to get most of the value for each item without having to deal with shipping each one individually and handling hundreds of individual customer interactions.

You can then take that money to repay any credit card debt you have or to sustain your hobby going forward.

Instead of just buying every new release or buying older releases you’ve discovered, borrow movies from libraries or from friends. It’s likely that you have at least some friends that are passionate about films, so get into a habit of swapping films with them. Trade them a stack of ten discs in exchange for ten of their discs, burn through them in the next two weeks, then trade them back.

At the same time, libraries often have enormous media collections and can often request more via interlibrary loan. Spend some time going through the movies that they have on their shelves and watching everything of interest and, along the way, request some movies directly from their interlibrary loan service. Also, keep an eye on their DVD/Bluray new releases and jump on them when they’re available.

This doesn’t mean you should entirely stop buying DVDs and Blurays. It just means that, since you have access to almost any film you want to watch through other means, you should be a lot more selective with your purchases and only buy ones that you think you’ll watch several times. Your collection should represent your refined film tastes.

Another strategy worth adopting is to subscribe to subscription services on a rotating basis. Rather than constantly being subscribed to Netflix, Hulu, HBO Go, Amazon, and Cinema Now all at once, choose just one service and subscribe to that service alone for several months. Mine what that service has in terms of films you want to watch. Then, when it begins to feel like the cupboard is bare with that service, switch to a different service and start digging through all of their offerings.

Having five streaming services is similar to the situation you have with 1,700 DVDs/Blurays on your shelves. There simply isn’t enough time to watch all of this stuff, even if you watch a movie a day and several on the weekends. Instead of watching maybe one movie a week from each service, watch three or four from just one of the services until there’s nothing left of interest, then close that account for a while and open a different one.

Another advantage: By the time you rotate back to, say, Netflix, their set of offerings is likely going to be very different than before.

This isn’t necessarily good advice for people who watch films at a more average rate because the bigger services, like Amazon and Netflix, add more content each month than an average viewer can really keep up with. This strategy’s really only useful for high-volume watchers such as this person and people who binge-watch two or three series a week.

Be selective in terms of which movies you see at first-run theaters. While it might be tempting to go see every new release immediately, there’s a huge premium price to be paid for doing so. A theater ticket is quite expensive, and the reality is that you’re paying that cost just to watch the movie three or four months before you could borrow it for free from your local library.

Be very, very choosy when it comes to watching movies that are on their first week or two of theatrical release. It’s fine to go to some of them, but do you really need to pay that big premium to see a movie that you know will, at best, be merely “good”? It’s likely not worth it.

Save that premium price for the movies that you’re really anticipating or really expect greatness from. Don’t pay that premium price for movies that are perhaps more “middle of the road.” Watch them later via other avenues.

Catch some movies at second-run theaters. If you really like the theater experience, one way to do it on the cheap is to find second-run theaters in your area and catch movies that are perhaps a few weeks past their release date. Tickets at second run theaters often run only a dollar or two and that enables you to have the full theater experience without paying the premium price for seeing a brand new release.

Again, this is a great way to have a theater experience at a very reasonable price while also enjoying movies while they’re still in their theatrical run.

My final suggestion is a little different, but it might be a great way for you to channel your film passion without dumping lots of money into it while also meeting people with a similar passion. Start a film club.

Find a nearby library that has a good room for showing movies and talk to the librarian there about the possibility of starting a film club or a movie series. You’d work with them to promote it and be involved in leading the discussions (at first, anyway). Basically, each week you’d choose a film and show it in an appropriate room of the library that’s open to the public and then, afterwards, have a discussion about that film. What did it do well? What did it do poorly? How were the acting performances? The cinematography? Was the script problematic? Whatever strikes your fancy.

The library would promote it within their walls and on their website and social media channels, and you could carry it further and promote it elsewhere.

It’s an extremely low cost way (basically free, but there may be small costs depending on what you decide to do in terms of promotion and other things) to take your passion for film, expand it, and make it social.

So, what are we saving here? Let’s say you slow down your film purchase rate by 50%, which saves you $50 a month. You eliminate four subscription services, saving you about $40 a month. You halve your theater movie cost, which saves you about $50 a month. Not only that, you should have thousands set aside from selling portions of your collection of DVDs and Blurays, which is either eliminating a bunch of debt (adding further savings in the form of smaller interest payments each month) or financing your hobby for a few years.

The thing is, you lose very little in that exchange. All you’re cutting away is the stuff you’re not using. You’re selling off DVDs and Blurays that you won’t watch again for a very long time. You’re cancelling streaming services you’re not watching. The only theater visits you’re cancelling are to middling movies; you’re still going to the best ones and the ones you actually anticipate. You’re halving your hobby cost, putting thousands in your bank account, and giving up very little of the actual value.

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Valentine’s Day Date Ideas for $50 or Less

TSD’s Holly Johnson and Jon Gorey have, well, different perspectives on some things. Here, they share some ideas for a frugal Valentine’s Day date night.

Valentine’s Day may be nothing more than a Hallmark holiday, but that doesn’t mean you should ignore it. Whether or not you choose to acknowledge it, your sweetie may be secretly aching for a little bit of romance. And if you ignore that, you’re just asking for trouble.

Of course, Valentine’s Day gets tricky when money is an issue. Perhaps you’re working hard to pay down debt, saving for the down payment on a new home, or have agreed as a couple not to throw around more money than you need to.

If that’s the case, it’s smart to whip up a Valentine’s Day surprise on a budget. Yes, living on a budget can suck, but that doesn’t mean your Valentine’s date night needs to.

If you’re ready to show your man or lady you care without breaking the bank, here are some low-cost ways to celebrate this Valentine’s Day.

Holly: Cook a gourmet dinner at home.

Many people associate Valentine’s Day with a fancy dinner out. But a candlelit, gourmet dinner in your own home can be just as romantic and delicious – and your effort counts, too. Figure out what your partner loves to eat, then search Pinterest, Epicurious, the Food Network, or other sites for the most enticing recipes you can find.

If you’re not experienced in the kitchen and feel like you need some help, you can also order a box with prepackaged ingredients and step-by-step directions from a service like Blue Apron or Plated. While these services may not offer the world’s best value, they do make it easy to cook a quality meal regardless of your skill level.

Beyond the food, remember to set the mood: Bust out the tablecloth and the fancy wine glasses, and light a candle or two. You can even move the table so it’s next to a window and stream some music in the background.

Jon: Go all in on dessert.

What’s the most sensual part of any meal? Decadent dessert, of course. So instead of spending $100 or more on an entire dinner out at a nice restaurant, eat dinner at home — and save some room. Then go out to an upscale spot for dessert and coffee or an after-dinner drink.

Pair some pastries or cannolis with a robust latte in an Italian cafe, or splurge at that pricey restaurant with the gorgeous view. Even at the fanciest restaurant in town, a coffee and dessert won’t set you back more than $20 apiece, and you’ll get to linger in the elegant ambiance just the same.

Holly: Netflix and… relax.

Movie night can make for a great romantic date at home. Prepare some snacks like popcorn or candy, choose a movie your partner’s been aching to see, and get cozy.

The key to a Netflix date night is clearing your schedule of all other distractions. To make the night special, you need to focus all your attention on your significant other – not your work, your cell phone, the dishes, or the laundry.

Since you’re spending next to nothing, you can afford to order in your partner’s favorite take-out dish, too — all the while knowing you’re avoiding the huge Valentine’s Day dinner crowds.

Jon: Think films, not movies.

There’s just something inherently romantic about foreign-language and old black-and-white films… je ne sais quoi. You may not watch them all that often, or ever, and that’s the point — Valentine’s Day is supposed to be a special occasion, not your usual Saturday night routine.

If your city has an art house cinema or independent theater, see if they’re playing any romantic foreign language films or screening a classic movie for Valentine’s Day. In our area, for example, you can often find Casablanca or a French swooner like Amelie on the big screen this time of year, and they’re typically cheaper than seeing the latest Transformers sequel.

Holly: Enjoy the great outdoors with a picnic.

Okay, it’s February, so this date idea may not work if you live in the blistering cold — but it could be winner if your winter weather is mild. The only thing better than dinner out is dinner OUT — as in outside.

Start by picking the perfect spot for a romantic picnic – a local park, manicured museum grounds, a golf course, or even a beach if it’s mild enough. Head to the store to buy dinner ingredients you can assemble outdoors easily. Think salads, crackers and cheese, fruit, and sandwiches. Top it off with a cheap bottle of wine and you’re good to go — just don’t forget to pack a corkscrew.

Jon: Visit a new place nearby (ideally by train).

If you like the adventure of discovering a new place together, but don’t have the time or money for an exciting weekend getaway, try picking a random town less than an hour away that you’ve never been to before. Maybe you’ve heard of it, or even gone to a store there, but have you ever actually hung out and walked around?

Visit the town center and stroll around, exploring the downtown together for a couple of hours. New settings can spur new ideas and conversations – let your feet and your minds wander. Find a cute coffee shop to duck into for a warm treat and simply savor each other’s company in a different setting.

Even better? If you live in a fairly dense urban area like the Northeast, you may be able to take a train to such a place for just $10 to $15 – and what’s more romantic than a train ride? Pack sandwiches or a baguette and a bottle of wine, head somewhere you’ve never been, and ride home and watching the world whiz past in the window together.

Holly: Sing your heart out at karaoke night.

With most couples doing the standard sit-down dinner thing, you may have your favorite karaoke bar all to yourself — a perfect opportunity to belt out some Journey or Beyonce without the pressure of a big crowd, and to connect with your loved one, too. (You probably ought to dedicate at least one power ballad to your date.)

Save money by eating at home before you go, or picking up some cheap takeout on the way. A few drinks shouldn’t set you back too much. Besides, you’ll be too busy singing about streetlight people and all the single ladies, right?

Jon: Check college events calendars for free or cheap entertainment.

If you live in a city or a college town, there’s bound to be some student or amateur performances going on, usually cheap and often even for free. Check the calendars at local universities: Conservatories and music schools often offer free student recitals, student theater groups perform dramatic plays and musicals, and independent music venues host up-and-coming bands and songwriters virtually every night of the week in most big cities. A $5 or $10 cover charge still leaves you plenty of cash for a drink or two each.

Holly: Plan a spa night.

“Real” spas charge crazy prices for massages, facials, and pedicures. But you? You can plan a cheap, pampering spa night at home for a fraction of the price.

Pick up some $6 Biore strips, or a Bliss Facial In a Box for just $12, at your local drugstore. Heck, throw in a VO5 Hot Oil Treatment for her hair. Top things off with some nail polish and remover, then go to town. Pro tip: Shoulder rubs and back massages are free!

Finish the night off with some pizza from your favorite local joint. Delivery only, please. You’re busy beautifying.

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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How are you celebrating Valentine’s Day this year? Do you have a cheap date night lined up?

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Tuesday, February 7, 2017

Taking a Hard Look at Your Future Self

One of the most powerful concepts I’ve ever come across in my years of studying and thinking about personal finance issues is the concept of the “future self.”

“Future self” is pretty much exactly what you think it is: it’s you at some point in the future. It’s not an optimistic version of your future or a pessimistic version of where you’re headed, but instead it’s as realistic as you can possibly make it.

A Real Look at My Future Self

Right now, I’m in my late 30s. I have a wife and three school aged children. We’re in pretty good financial shape, but we could be better. I’m a little overweight. I have a flexible job that I like, but one that probably won’t last forever.

What does my future self look like?

In ten years, I’ll only have one child at home, and he’ll be gearing up to leave the nest the following year. I assume I’ll still be married, as our marriage seems pretty good.

Unless I change some things, though, I’ll likely still be overweight, and that’ll have some health impacts by then. If I keep on my current pace, I’ll be in better financial shape than I am right now, but I still won’t be where I want to be. I’ll still have a limited social circle and fairly limited standing in my community.

Furthermore, I’ll be ten years older. I’ll have ten fewer years of my life left to live. I’ll have ten less years with which to build up my finances and my relationships. I won’t have quite as much energy or vigor as I have right now.

Ideally, I’ll still largely have my health, but that isn’t a guarantee. Ideally, I’ll still have a good job, but that isn’t a guarantee, either.

One might look at this vision of the future as pessimistic, but the truth is that it’s realistic. If I keep doing things, day in and day out, the way I’m doing them, that is the life I’m going to have in ten years.

The Connection Between Today and My Future Self

The choices I make today shape the life of my future self.

My financial choices today determine the financial options my future self will have. If I spend money foolishly right now, it might be fun in the moment, but I’ll forget it in short order. On the other hand, if I’m selective about the nonessentials I spend my money on right now, I’m going to have a life later on that has an abundance of options.

My time choices today determine the life options my future self will have. If I spend a lot of time with my children, then we’ll have a strong relationship moving forward. If I don’t spend a lot of time with them and instead to do other things, like working or engaging in hobbies or even just futzing on my cell phone, my relationship with them will be weaker in their teen years and adult years.

My professional choices today determine the professional options my future self will have. If I choose to waste time instead of doing productive things, or even if I do nothing more than just completing my work tasks and never step beyond those immediate tasks, I’ll never build the skills and reputation I need to move my career to a good place. I’ll always be stuck right where I am right now.

My social and community choices today help determine my social and community opportunities tomorrow. If I want to build a stronger social network, then I can’t afford to stand in the corner by myself at social events (or, even worse, avoid them entirely). I need to socialize and build relationships. Friends don’t fall out of the sky. If I want to be a pillar of the community, I need to not talk myself out of going to community events and I need to not avoid volunteer tasks.

My health choices today help determine my overall health and energy tomorrow. What I put in my mouth today is the biggest factor, of course, but so does my level of exercise and moving around. The better I eat today and the more I exercise today, the healthier I’ll be and the better I’ll look down the road.

I could go on and on like this, but all of those examples are centered around a few key principles.

Three Key Principles of “Future Self” Thinking

If something you do today doesn’t have a long term benefit, then it’s probably not worthwhile to do it. If you can’t easily articulate how this action benefits you in the future – and by future, I mean months and years down the road – then it’s probably not an action worth taking.

When I sit down for a meal, my short-term brain is telling me to eat lots of whatever the most delicious thing is, but from a long-term perspective, that’s a terrible thing to do. That approach is not a good choice in terms of long-term benefit; in fact, it’s a long-term disaster. The better approach is to eat a variety of foods, but only eat until I’m not hungry any more and then stop. I can sure sample some of the tasty stuff, but there’s no reason to eat too much of it. Most of the pleasure comes from the first few bites, anyway, and when that feeling of hunger goes away, there’s no reason not to sit down the fork.

When I go into a bookstore, my short-term brain is telling me to buy several books – I’m an avid reader, after all, and books are wonderful things! From a long-term perspective, though, that’s not a very good choice. While I do gain long-term access to that book, I’m spending money for it and I’m also going to have to consider how to store it. Thus, it makes far more sense to instead choose to buy only books that I’ll read many times over or refer to regularly. How do I know whether I’ll read a book many times over or refer to it regularly? I check it out at the library first. That way, I don’t have to spend money on a book that isn’t necessarily near and dear to my heart.

When I’m thinking about how to spend my evening, my short-term brain is telling me to veg out and do some web surfing or check out social media. From a long term perspective, though, that’s going to have almost no benefit at all. I’m far better off spending that time with my wife and my children to build family relationships, or spending it going to a community event where I can build social relationships and community standing, or spending it taking an online class where I might learn something, or spending it reading a challenging book to stretch my mind, or spending it exercising and improving my long term health outcomes and physical appearance, or spending it doing household chores that will spare me time later on when I don’t have an evening to spare.

The second principle is similarly simple: doing something with an eye toward the long term does not mean being miserable today. It does mean, however, that you might have to dig a little deep and try things in a different fashion.

For example, making a shift in your spending choices might feel miserable at first, but the key is to just try lots of different strategies for spending less money and seeing what actually works for you. Does store brand hand soap work well for you? Do you actually even notice the difference? What about making cold brew coffee in your refrigerator and then heating it up in the morning instead of stopping at a coffee shop? There are lots of little things you can do. Some will work and some won’t. However, simply trying some of them has a nice long term benefit, because if you discover a more cost effective way of doing things or discover that you weren’t actually getting much value out of an expensive way of doing things, you’re winning in terms of the long term financial race.

Making a shift in terms of what you eat might seem miserable to some, but the true key to sustainably improving your eating is to try lots of different foods that are good for you and see what things you really like and really don’t like while still enjoying many of the foods you currently like. More than anything, it means slowing down and paying attention to your body, and putting the fork down when your body is no longer signaling “I’M HUNGRY!!”

Making a shift in terms of how you use your free time might seem miserable to some, but, again, the key is to find things that you enjoy and leave you fulfilled, whether it’s fulfillment in the moment or a true sense that you’re building something great for the future. If you do something in your spare time and you’re not fulfilled… what value does it have? Find something that leaves you feeling fulfilled and makes you feel like you’re building something bigger than the moment, especially when you can also find joy in that moment. You’ll almost never go wrong.

The third principle is also invaluable: constantly evaluate your choices and don’t be afraid to criticize yourself as long as it points you toward improvement. Absolutely no one on earth is perfect at this kind of thinking. We’re all wired to be short term creatures, dating back to our savannah days when we were under constant threat of attack from animals and rivals and the threat of starvation. We thought short term because we had to, and those that were wired for it were the ones that survived.

Today, we don’t have to think in those short term ways (in fact, we probably shouldn’t), but we default to them anyway because that’s how we’re wired. Sometimes we simply slip up and follow that short-term route.

The difference between success and failure isn’t that you always put your future self first, but that you step back and think about your moves, ask why you’re making them, and try to think of ways to make them better.

There are a number of strategies that work well for this.

One great strategy is to think about your day-to-day choices while commuting or doing other things that might not require all of your concentration. Just run through things you do all the time or have done recently and evaluate their impact on your future self. If you don’t like that impact or you can’t see any positive impact, then ask yourself whether there was a better way to use your time or energy or focus or money.

Another great strategy is to journal. Simply put aside several minutes each day to actually go through your day, think about your best moves as well as your worst mistakes, and then evaluate them a little bit. How can you make that “best move” into a pattern? How can you do better in terms of your “worst mistake” so that you don’t repeat it? The act of writing things down on actual paper is a great way to stir thought.

I find that any technique that can help improve your focus is a good thing. Cell phones are a constant focus destroyer, so I often turn my cell phone off completely and don’t carry it with me all the time. When I’m working on a task at my computer, I turn off as many potential distractions as possible. I also put aside time each day for mindful meditation, which is basically what I consider to be a “bicep curl” for my ability to focus on the moment and the task at hand.

Define Your “Future Self”

So, what does your future self look like?

This is actually a hard task to take on because many people have a naturally optimistic view of the future. People tend to think that things will turn out well overall. They tend to think that the good things in their life will continue and that at least some of the bad things will improve.

Taking a realistic look at your future self can be painful, and people generally don’t like to do so. No one wants to see a future for themselves that isn’t bright.

The goal of this isn’t to envision an apocalyptic scenario for yourself. The goal is to envision what exactly will happen to you if you continue with your current choices and routines.

Is your net worth building from year to year? How much did it grow or shrink last year? If you forecast that change forward for ten years, what does that look like? Don’t try to make “exceptions” for something “special” this year, because most years will have something “special.” This type of exercise is much more of a reflection on your day to day money choices.

How is your career doing? Are you actively moving forward on projects? Are you building skills that will help you get a promotion or a pay increase? Or are you just holding in place because you can? Is there any risk of your job being automated in the next ten years or twenty years? What are you doing about that? If you don’t change what you’re doing in terms of building your career, where will you probably be in ten years?

How are your core relationships doing? Do you have a core set of friends you’re happy with? If not, what are you doing to find those friends? If you’re not actively doing much, then you’re not going to build a social circle for yourself. Do you have a strong marriage? What do you do each day to keep it strong? Do you have children? How is your relationship with them? What do you do each day (or a little less frequently if they’re older) to keep that relationship strong?

How is your health doing? Are you gaining weight? Holding steady? Are you at a healthy weight? Do you move around enough? Remember, over the next ten years, almost all of your health factors are going to move a little bit in a bad direction, and if you’re not making positive health choices to counteract it, you will slowly decline.

You can evaluate your spiritual life, your mental health, and all other key areas of your life in the exact same way. If things are just holding steady in those areas, are you happy with steady? Is your life in ten years in a good place if you just hold steady in that area?

Almost always, what you’re going to find when you take a realistic look at your future self is that you don’t like some of the aspects of that picture. Maybe you’re unhappy with your health or with your career or with your relationships. Maybe you’re unhappy with a lot of things.

That’s good. You should be unhappy with something. That means you want a better life for yourself and that’s the surest way to start improving.

Improving Your Future Self

So, how exactly do you do that? How do you take this realistic view of your future self and use it to build something better?

It’s easy. You just take those areas that bother you most about your future self and focus on improving those areas by consistently making long-term choices in your daily life in those areas, as described earlier on.

If you’re concerned about the health of your future self, start making long term health choices each and every day. Choose to eat a better diet. Exercise a little more. You don’t have to make radical changes. Just make some changes that will last. Simply start thinking about your future self when you’re being sedentary or when you’re about to put food on your plate at supper. Remember, if you put yourself on pace to lose about a pound a month, which literally means just eating 100 calories less a day, you’ll drop quite a bit of weight over the next ten years, slowly but surely. That’s not a radical change at all.

If you’re concerned about the finances of your future self, start making spending choices that are more long-term oriented every day. Stop spending money on the most frivolous elements of your spending. Find some smart substitutes for your regular expenses. Look at buying some nonperishable things in bulk. Every time you’re about to spend money, give it a consideration with your eye toward the long term.

If you’re concerned about your long term career, start making choices at work with an eye toward the long term rather than just getting through the day. Look at what you can improve in terms of your job performance. Whenever you notice yourself sitting around doing nothing or checking out, see if there isn’t a way to use that time better to improve your long term job prospects. Consider whether education might not help you out here and then take on the challenge of getting that education.

Whatever area it is – financial, professional, social, physical, mental, spiritual, familial – look at the choices you make today and then ask yourself what the best long term version of that choice is.

What you’ll find is that, once you start doing this, it doesn’t really feel “miserable” any more. You start to see how your life is going to get better because of these choices, plus you begin to realize that you’re not really losing much in the short term either.

Final Thoughts

The final point I want to leave you with is this: the perfect is the enemy of the good. The goal of “future self” thinking isn’t to switch to some sort of perfect being that’s always focused on the optimal life. Not only will that never happen, it’s not particularly healthy, either. Sometimes, the short term choice really is the best choice overall.

The idea here is to just keep your future self in mind. Think about him or her regularly. I think about my future self several times each day. I want that future self’s life to be great, and that motivates me to make better choices in life. It motivates me to set ambitious goals, and it motivates me to stick with those goals or find out ways to make something similar work if the goal is difficult.

I don’t always make the perfect long term choice, but I don’t beat myself up about it. Instead, I just think about better choices when I’m driving home from dropping my kids off at soccer practice, or when I’m in the shower, or when I’m going to bed, or when I’m waiting at the doctor. I spend some time journaling a little bit each day and I usually think about my future self then, too. The goal is to make the better long term choice slowly become the normal one, the one I choose by default because it seems like the best choice.

I’ll never be perfect at it, but that’s not the goal. The goal is to be better at it, and all I have to do is get a little better at it to make a huge impact on the quality of the life of my future self. That’s a wonderful goal, indeed.

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Buying a Home This Year? Start Now to Get Your Credit in Shape

Are you planning to buy a new home this year? Unless you’ve recently won the lottery or can otherwise afford to pay in cash, it’s probably time to start thinking about how to prepare your credit for an upcoming mortgage application.

The condition of your credit reports and scores is never more important than when you’re preparing to apply for a new home loan. A mediocre credit score can cost you tens of thousands of dollars over the life of a loan. Even if your credit is already in decent shape, you could still potentially earn a better rate and save money each month by working to improve your credit before applying for a mortgage.

Don’t Go Blindly Into Your Application

First things first: You need to know what is currently appearing on all three of your credit reports prior to your loan application in order to avoid any unpleasant surprises. The good news is that checking your credit reports is easy and free. You can claim a free copy of your three credit reports once every 12 months online at AnnualCreditReport.com.

Once you’ve pulled your reports, it’s time to review them in careful detail. Errors on credit reports are not uncommon and it’s ultimately your responsibility to monitor your reports with all three credit bureaus (Equifax, TransUnion, and Experian) to ensure that they are indeed accurate. The only way to effectively monitor your credit reports for errors is to routinely check them.

If you do discover an item on your credit reports that doesn’t belong there, or if you find other incorrect information, you have the right to dispute those issues with the credit bureaus directly. You can submit disputes completely free of charge, or you can hire a reputable credit repair company to take care of the legwork for you (for a fee).

Which Balances You Should Pay Down?

Sometimes paying down the balances on your accounts can have a positive impact on your credit scores as well. However, all balances are not created equal when it comes to credit scoring. Credit card balance reduction is great, installment loan balance reduction isn’t so helpful.

Typically the most actionable way to improve your credit scores is to lower or, better yet, to completely pay off your credit card balances. A sizable one-third of your FICO and VantageScore credit score is largely based on your credit card utilization, also known as revolving utilization. The more of your credit limit you tap, the worse the impact will be on your credit scores. For this reason, paying down credit card balances is very likely to begin moving your credit scores upward, and quickly.

Paying down the balances on other types of accounts will not have the same positive credit score impact as paying down a credit card. For example, you could pay off a $5,000 balance on your auto loan or a similar balance on a maxed-out credit card, and you would almost certainly see a much larger score benefit from paying off the credit card account. In fact, paying off an auto loan might not help your scores at all.

If you have certain derogatory items present on your credit reports (collections, judgments, tax liens, etc.), your lender may also need these to be paid prior to closing. However, the benefit of paying off the balances on your derogatory items, while tangible, won’t be as profound as you may think.

Avoid These ‘Classic’ Credit Mistakes

Be careful not to unknowingly sabotage yourself with classic credit mistakes prior to a new mortgage application. The two most common mistakes consumers make prior to applying for a mortgage are a) increasing credit card debt, and b) applying for or opening new credit accounts during the underwriting period.

Not only do Fannie Mae and Freddie Mac’s underwriting standards frown upon opening new accounts during the underwriting process, credit scoring models are designed to pay attention to how often you apply for credit and the “age” of your credit reports.

When you apply for credit, regardless of whether you are approved, you run the risk of a credit score decrease. Additionally, if you do open a new account, you’ll likely lower the average age of the accounts on your credit reports, which can potentially have a negative score impact. Add to that the problems you’ll cause by taking on new debt during the underwriting process, and how it can throw your debt-to-income ratios out of whack, and you’ll be better off not making these mistakes.

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Monday, February 6, 2017

Questions About Furnaces, Focusing, Estate Planning, Watercooler Talk, and More!

What’s inside? Here are the questions answered in today’s reader mailbag, boiled down to summaries of five or fewer words. Click on the number to jump straight down to the question.
1. Buy it for life: jeans
2. Water bottle for life
3. Shopping around for a furnace
4. Getting “in the zone”
5. Thoughts on income property
6. Voluntary car repossession
7. Handling own estate planning
8. Figuring out financial focus
9. Large savings account balance
10. Figuring out benefits after move
11. Living trust payout questions
12. Handling political talk at work

I had this great conversation yesterday with a reader about how there are these moments in life when you somehow “get” yourself in a way that you previously hadn’t, and that moment signifies a sea change in your life. Something just clicks, you see the world and your life completely differently, and from there you move forward in a totally different direction.

This came up in the context of this reader’s financial turnaround, and I’m starting to realize, with some real reflection, that I’ve had about four of these in my adult life, with one of them happening just a few months ago. My reader had a similar epiphany during that same timeframe.

There are times when it feels like things are changing for you, but you still fall back into the same routines and habits, just in a different variation. I think for those habits to truly change, something has to switch inside of you, not outside.

Personal change comes from the inside. You can change where you live and what you own and what you’re doing for a living, but if you’re not changing as a person, you’re going to wind up in routines very similar to what you’ve always done with similar results.

The question is, how do you trigger that kind of change? Can you actually do anything to trigger it? I’m honestly not sure, but that’s the big question on my mind these days.

This week, we’re going to start off the mailbag with a few reader emails and Facebook comments regarding Saturday’s article on “buy it for life” items.

Q1: Buy it for life: jeans

I have a recommendation for the Jeans category. Rural King stores sell self branded jeans that are extremely durable for $10.00 a pair. The guys I know are rough on them. True outdoorsmen , who hunt camp, hike, fish etc. We all swear by them.
– Tom

I had several recommendations for simply buying jeans from the local farm supply store, of which Rural King is an example. Around here, the most common farm supply stores are Farm King, Thiessen’s, and Farm & Fleet. These stores tend to sell very inexpensive denim jeans that are cut in a very simple fashion, but the denim itself is minimally treated and rather thick, which means that they’ll last and last.

In other words, those jeans make for great outdoor work pants. When you’re often outdoors doing manual work, jeans from a farm supply store are a great choice if you’re looking for low cost durable jeans.

My experience is that they tend to be cut in a somewhat baggy way with the obvious intent to maximize function: they’re intended to cover your legs, give you good range of motion, and last a long time. They’re not intended to make you look shapely. That makes them an excellent “buy it for life” purchase for those purposes.

Q2: Water bottle for life

Take a look at Hydroflask for a good water bottle/thermos bottle. These are also guaranteed for life. Hot stays hot, cold stays cold. I have left mine in the hot car all day to find my water still cold. Dropped over and over, they keep the seal. Once I dropped a full bottle and chipped the lid. It was replaced quickly for free with no fuss.
– Marie

Neither I nor the people in my circle that I consulted for that article have any experience with Hydroflask as a water bottle or thermos, but two different readers recommended them (with Marie being the first).

Having said that, I looked into Hydroflask and it looks to me like many of the positive things that we stated about Nalgene and Klean Kanteen water bottles definitely apply to Hydroflasks, and they appear to be good hot water/soup bottles, too.

I’d likely put them in that same tier of “nearly indestructible water bottle / thermos” category with the ones listed in that article. At some point, I’ll probably pick one up.

Q3: Shopping around for a furnace

I’m saving up money for a new furnace… I’m assuming I will just have a few different companies come in and give me estimates. I want to get a good deal, but it’s also important to me to have something that will last a long time, and something that will be good, overall, for the environment. I’ve even thought about getting an estimate for geothermal heating? Are there other, similar options? How would you decide?
– Noelle

Honestly, I’d rely on this Consumer Reports article on gas furnace reliability and stick with options from the top few entries on the list. They tend to be very spot-on when it comes to identifying reliable brands.

As for a geothermal system, CR again covers the basics pretty well. They can definitely be worth it, but they almost always have a higher initial cost than other options. Initial cost, depending on your exact location, can run into the tens of thousands of dollars, which is a cost you won’t recoup for many, many years. It may increase the value of your home somewhat, but a geothermal system doesn’t have much curbside value when selling.

If I were you, I’d get quotes on a gas furnace and a geothermal system separately. Keep in mind that the geothermal system will cost more up front but will cost less each month after installation (usually around 25% less). Do the math and figure out which one is right for you. If you’re concerned about the environment, I’d put a little bit more focus on the geothermal side of the coin.

Q4: Getting “in the zone”

Those days where I can slip into the “zone” at work are so great and so productive. But do you have any tips and tricks for finding the zone? I can’t seem to get there consistently. I know you’ve written about it before, but I figured I’d ask again in case things have changed. I could use a productivity pick-me-up and this might help!
– Maxine

The best recipe I’ve found so far for getting “into the zone” with any consistency is to follow several principles all the time, because my best results come from using them in concert.

First, I practice mindful meditation a couple of times a day. Just close your eyes in a low-distraction place and focus on just your breathing for five or so minutes. If you feel your mind wandering, bring it back to your breathing. I tend to think of this as “bicep curls for my mental focusing ‘muscles.'” It really works.

Second, I get very hydrated and make sure I’m not hungry before I sit down to work. I drink a lot of water and eat a little something.

Third, I turn off every distraction that I possibly can, so that they don’t interrupt me. My cell phone is completely off, as are web browsers and other such things.

Fourth, I open up a notebook on the desk in front of me with a pen right there so that if a stray thought comes into my head that I should revisit, I jot it down and then let it drop from my mind and keep going.

Finally, I usually turn on some quiet instrumental music or ambient noise. I usually just look for ambient music on Youtube and listen to that.

That routine seems to produce the best results overall for me. I do find that drinking a cup of black coffee followed by a cup of green tea can boost my likelihood of getting into the zone, but I’m not sure if that’s a “placebo” effect or not. I’m pretty confident that the first five steps really help, but I’m not 100% sure on the coffee/tea combo.

Q5: Thoughts on income property

My partner and I are looking into buying a 3 bed/2 bath condo on a 15-year fixed mortgage in Richmond, VA. We are both 30 years old, unmarried (for now, that’ll change within a year or two). He’s a resident and I’m a program coordinator both at the same hospital. We will probably be in Richmond for another 4 years or so (my partner has to finish up residency and then fellowship) before we move to wherever he gets a job as an attending physician. Once he becomes an attending, we talked about buying a house and then using the condo as an income property whether we move or not. We would use a management agency instead of leasing the condo ourselves. Do you think it is wise for us to make that type of commitment? What is your feeling on income property?
– Kevin

It really depends on your financial state. If you’re in a position with secure high income and not a lot of other debts, it can be a reasonably good move. If you’re still going to be facing mountains of student loans, you don’t also want to be facing two mortgages at once, because you’re going to be walking a major tightrope that will cause the whole house of cards to fall apart if one thing goes wrong.

Income property often gets a much better rep than it deserves. When it works, it works well; when it backfires, it can backfire hard. If you end up owning an income property in an area where no one’s renting or will only rent if you put the rent price through the floor, you’re going to lose money on the deal. You’re going to be paying higher insurance rates on the property, property taxes, and management fees whether there’s a renter in place or not. Plus, if the renter doesn’t pay or damages the property or many other things, it’s going to cost you even more. You’ve got to be financially prepared to handle those challenges if they occur. If you find yourself in a situation where you can’t, you will be in a financial disaster.

To sum things up, income properties are a good idea if you have some money in the bank to back them up and aren’t loaded down with other debts. If you take on income properties when you’re already dealing with debt and don’t necessarily have a huge income, you’re begging for one bad event to wreck your whole situation.

Q6: Voluntary car repossession

My husband and I are working through austerity measures since he has been unemployed about 36 months since 2013. We purchased a truck during that time to try to expand a cleaning service however that income stream dried up. The truck is in excellent condition however the negative equity is probably around $10,000.

What is the best way to voluntarily surrender the car mitigating our losses? Also, we’d like to understand what steps we can take to recover from this experience.
– Clara

The best way is to go to the bank from which you got the car loan and talk to them directly about voluntary surrender. They may be able to work something out with you where it appears on your credit report as a “voluntary surrender” rather than as a “repossession” which will have a much better impact on your credit score.

However, given that you’re $10,000 underwater, the bank will probably expect you to make up that difference, and if you cannot, it will probably still be treated as a “repossession.”

Even then, you’re still going to be better off in terms of future business with that bank if you go in there and talk to them face to face about a voluntary surrender. It’s also less traumatic than a middle-of-the-night repossession of your truck!

Q7: Handling own estate planning

Say, you seem to be a DIY-KISS type of person, have you created a will? We have done a Nolo Will along with Power of Attorney, and Durable Power of Attorney for Healthcare and Advanced Directive in the past. We update them every decade. You can get the later forms at most hospitals.

How do you approach this topic?
– David

I usually encourage people to seek an attorney in their state to look over such documents and make sure they’re written and signed correctly. There are variations from state to state in terms of what’s expected.

A family lawyer can usually do this for you at a pretty cheap rate, especially if you’ve gone to the effort of figuring out the documents on your own and preparing a draft that presents your wishes. All a lawyer has to do in that case is to make sure you have all of the i’s dotted and t’s crossed for your state and that it’s all signed appropriately.

Using a service like LegalZoom is also an option, but I’ve found that their services tend to be comparable to the cost of a family lawyer. I’m not sold on how “cheap” they are.

Q8: Figuring out financial focus

I’ve been thinking about a lot of things since the new year:
My mortgage
My kids’ college funds
More life insurance
My student loans
My 403 b through work (maxing out this year)

Should I be putting money toward all of it?

We owe 780 k on a house no extra payments
We owe 350 k a rental house that is paying for itself
I have 56 k left in student loans putting an extra 250 a month to it payments 465/month
529s for my 2 kids 250/month (not sure how we’ll be able to afford 4 years of college for both now 6 and 2).
I want to get more life insurance no more than 20 dollars/month for. 500k x 20 years

My husband and I make over 200 k annually

Should I decrease my 403 contributions and knock down my student loans (rate of 2.875)?

I do live in Hawaii. Housing is expensive. The reason for the big mortgage is that it is in a nice area and it has an Ohana house (cottage for my in-laws) who are contributing 1700/mo for rent and utilities. It’s the main reason for me wanting to get additional life insurance. I currently only have a 500 k policy.

Any guidance you have would help.
– Kiara

With student loans below 3%, assuming they’re not adjustable rate loans, you should put them pretty low on the priority list. I would prioritize your own retirement over your children’s college funds, too, as your children can take out student loans if necessary but you can’t magically come up with retirement savings in 20 years.

Given the rather large debt load you carry and the fact that children are involved, I’d suggest that both you and your spouse have enough term life insurance to wipe out all of the debt should one of you pass away. Your income drops dramatically in that scenario, so not having those debt payments will be absolutely vital.

Given all of that, I’d probably put life insurance first, then retirement savings, then the mortgages, then college savings, then the student loans. Make sure you have each one completely in hand before moving on to the next one. The mortgages are the only piece that could move around easily on the list, because I don’t know what their interest rates are and whether those rates are adjustable.

Q9: Large savings account balance

I’ll be super honest about what I don’t know: I know nothing about investing. That said, I know I’m not doing as much as I could with my money. You write that you use Vanguard low-fee index funds. I had Vanguard for my 401k retirement savings at my last company. Can I just open a personal (non-retirement savings fund) with Vanguard? (Kind of lost in the details here of whether this should be mutual funds, ETFs, CDs/stocks/bonds – I don’t know the difference).

A little about my background: I’m 24.5 years old (turning 25 in July), and graduated college in May 2014. I had some side jobs on top of my day job, which I worked at for two years. I started law school in August of 2016. While I was working, I worked and saved pretty aggressively, and I still work a little bit now that I’m in school. My mom is paying for my law school cost of attendance (and she paid for my college cost of attendance too), which means I have my entire savings freed up from school costs.

I currently have $274,000 in my savings account (which barely earns any interest, like I get $2 per month in interest). I just moved that money into a money market account that’s giving me 1% in interest, but that’s a special offer and will go away in another couple months, I believe. I also have $41,000 in my Vanguard retirement savings. I randomly selected the Vanguard plan since I didn’t know which one to pick. It’s the “retire in 2055 plan” or something like that, and is defaulted at 90% stock and 10% bonds.

I want to move the full $274,000 to somewhere that earns more than $2 per month in interest but really am at such a loss as to where to start. I feel comfortable moving the full amount because I’m still working a little bit, and can always use any new income generated as needed. Also, my cost of attendance in school is covered. I really want to follow what you’ve done (because it seems like it’s worked out so well for you!). So, I plan on calling up Vanguard customer support to help me open the low-fee index funds. Is that all I need to tell them or do I need to have the mutual fund vs. ETF stuff mapped out? You wrote in another post to someone that he/she should get Voyager status. I don’t know what that is.

I tried calling them yesterday about moving my 401K to 100% stocks, but I didn’t know which plan to pick, so ultimately hung up having changed nothing about my plan.

I apologize because this question makes me look so ignorant. I keep putting this off because I’m so in the dark, but I used to keep my money in a checking account (earning no interest at all) and just moved it into a savings account recently, and the reason for that long delay is that I know nothing about investing or “growing money!” I would really appreciate your insight!
– Elaine

Having more than $250,000 in a savings account is a poor idea because it exceeds the amount insured by the FDIC. If your bank went belly up, you would just lose everything above $250,000.

I would not move the full $274,000 because you do need an emergency fund in case of a major unexpected event. I’d probably keep somewhere around $5,000 in savings and move the rest somewhere else.

So, what do you do with the $269,000? The best thing for you to do, honestly, is figure out what your goal is with that money. What do you want to do with it? Is it intended to help you retire early? Do you intend to use it to buy a home in five or ten years? The big thing you need to figure out is your timeline and how much risk you can tolerate with it. If you don’t have a goal with it, I wouldn’t put it in anything very volatile. A money market would be reasonable, and Vanguard offers a good money market if you want to just put it in there. You could put it into your Vanguard account and stick it into their Money Market Prime fund outside of retirement money and just sit on it for a while until you evaluate your goals a little.

Once you figure out what you want to do with the money, I’d suggest putting the money into stocks if the goal is ten or more years out. Otherwise, keep it in something less volatile like the money market or in highly rated bonds.

As for the money in Vanguard, if you want your Vanguard money to be in 100% stocks, your best bet is the Vanguard Total Stock Market Index, which basically includes all publicly traded stocks in the United States all wrapped up into one fund. Given your young age, having your retirement money in there is fine, but in ten years or so, you’ll probably want to shift it to a target retirement fund because you’ll want to slowly ratchet down the stock exposure, though you can make that decision when you get there.

Q10: Figuring out benefits after moving

I am currently on disability in the state of FL, my question is IF I move from FL to MI (or any other state for that matter) I am curious as to wether my benefits amount will change? The amount I relieve in my state is significantly below that which you show on your web site. I also have an Autistic/Bi-polar son on benefits and his is quite a bit (more than 50% less than that shown on your site).

I’m just curious, as we are thinking of relocating for his education/schooling and it’s quite a significant difference. Or would I be locked in at where I am now?
– Jana

It sounds like you are both on SSDI – Social Security Disability Insurance. Those benefits do not vary from state to state.

If you are on SSI – Supplemental Security Income – which I don’t think you are, those do vary a little from state to state. You’ll want to see what the difference is in your destination state.

When using online calculators, you have to be putting in fully accurate information and you have to make sure that the calculator you’re using is matched correctly with your situation. If you’re just accepting defaults or using the wrong kind of calculator, the results are often going to be wrong.

If you’re uncertain, I would contact the Social Security office by phone at 1-800-772-1213.

Q11: Living trust payout questions

At my father’s death, I received a payout from a living trust. I have not been able to get any information from the investment company and don’t know who his wife’s attorney may be. So, that leads me to you. Do I pay tax on this? Can I put it into 401(k)s or something to delay the taxes?

The details- the check is $34,000. My husband and I are in our late 50s. We owe $34,000 on our home. He is self employed and has NO retirement. I have a plan thru my job and a very small 401. Please give me some scenarios or ideas. We have never been in this position and while others have suggested a honeymoon or vacation that we’ve never taken in 38 years, that just doesn’t seem to be the best use of these resources.

Asking your thoughts as a totally uninterested party. My husband is concerned that an investment company would be driven to their best interests, not ours.

Hope this reaches you. I wasn’t able to find any contact info on your website or newsletter. Then again, computers are not my thing- we still have flip phones!
– Florence

I have a number of additional questions about your situation here before I could ever give you a good answer. My honest suggestion is to call a tax lawyer in your area and pay the small fee that the lawyer would charge you to make sure that you’re doing this correctly.

The penalties for doing this wrong would vastly exceed the cost of the lawyer, so you’re far better off putting up the money now and doing it right initially.

Q12: Handling political talk at work

I work with two gentlemen in their fifties who have worked at the company for decades. For the first few years I worked here, everything was fine and our office chitchat mostly revolved around movies and sports. In 2015, though, this all changed. One of them got really into the Donald Trump campaign and soon the other guy was on board too. Nowadays they talk about politics at every free second at the watercooler. They openly talk about how they think everyone who is liberal is basically pure evil and laud every single Trump statement and policy and they do it very loudly.

I’m a political moderate and I’m completely tired of it. I know a couple of people in our office are fairly liberal and there are times when they look like they’re about ready to snap or burst into tears. Two different people have left in the last six months, mostly due to the office talk from what they said to me on Facebook afterwards.

There have been informal complaints made, but the person who hears them seems to largely agree with their viewpoints and does nothing. Our immediate supervisor just does not seem to care either as he is of the perspective that you should just blow off comments you don’t agree with.

I don’t know how to handle this situation and I hope you’ll have some sage advice.
– Alex

First of all, politics should not be discussed in a workplace environment regardless of how confident you are that everyone else agrees with you. It doesn’t matter whether you’re politically liberal or conservative, it doesn’t belong in the workplace. You can be politically active as much as you’d like in your personal life, but in the office (or in professional meetings and such), political talk should be checked. This kind of talk isn’t professionally appropriate regardless of your political leanings. It’s unacceptable whether you’re conservative or liberal.

I think your best approach is to simply invite those two to a private meeting of some kind – perhaps going out to lunch together – and simply tell them that their political views are perfectly fine, but their abrasive political speech is alienating coworkers and damaging their professional relationships. Make it clear that a number of people in the office don’t agree with them but that they’re attempting to be professional about it. What you’re doing here is giving them the benefit of the doubt that they’re unaware of the impact they’re having on others and how they’re acting unprofessionally.

If they choose to continue, then you should look into other options. Such talk damages the bottom line of the company, so I would bring it up with someone whose financial interests are affected by this behavior, such as a company owner or a higher level management person. Bypass the ineffective people and talk to people further up the ladder. Just request a meeting and make it clear that you don’t care about the politics, but that you do care about having a happy workplace and that many people are disgruntled by the talk and are feeling unhappy and are shutting down in terms of their workplace interactions and discussions and how that’s affecting the bottom line of everyone’s work productivity.

That’s the exact approach I’d follow. I’d make my case first to the coworkers and if that fails, I’d go to someone whose financial interests are on the line.

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

The post Questions About Furnaces, Focusing, Estate Planning, Watercooler Talk, and More! appeared first on The Simple Dollar.

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