Saturday, December 2, 2017

Inspiration from Martin Ford, Bertrand Russell, Lake, 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. Andy Andrews on self-discipline

“Self-discipline is the ability to make yourself do something you don’t necessarily want to do, to get a result you would really like to have.” — Andy Andrews

If the things that people want in life were easy to get, most of us would be billionaires with incredibly healthy bodies and amazing intellects and deeply fulfilling careers and large thriving social networks. Suffice it to say, we’re not.

Sure, some people get those things without effort, but many more people work very, very hard to get even one of those things. You might know someone who treats their body poorly but still manages to remain largely healthy, but most people who have a healthy body work hard and make a lot of tough choices to maintain their physical health and appearance. The same is true for almost anything – a great career, a huge and supportive social network, and so on.

Those things take time and effort. They usually require you to spend a lot of time and energy doing things they don’t necessarily want to do in the moment in order to achieve a greater end.

Think of the most reliable people in your life, the ones that are always there for you, the ones that have a huge social network of people that think the world of them. They don’t always want to jump up whenever someone needs them, but they make the hard choice to do so, over and over again. They choose being there for others over Netflix. That’s self-discipline.

Think of the people who are insanely healthy and don’t get out of breath. They don’t always want to get up early to go work out. They’d often rather stay in bed, but they make the hard choice to get up anyway. That’s self-discipline.

Self-discipline is underneath almost every major success that people want in life.

2. Martin Ford on how we’ll earn money in a future without jobs

From the description:

Machines that can think, learn and adapt are coming — and that could mean that we humans will end up with significant unemployment. What should we do about it? In a straightforward talk about a controversial idea, futurist Martin Ford makes the case for separating income from traditional work and instituting a universal basic income.

What would you do if literally everyone had a home to live in, clean water to drink, and food to eat – for free? What would you do if that society also had no jobs where you just did busy work or manual labor in exchange for income – such jobs were just done by machines? What would everyone do?

What exactly do we do when we live in a society where there literally is no work to be done? A future in which all labor is done by robots and AIs manage the tasks and repair the robots without human help is not that terribly far down the road. What do humans do at that point?

This is a real challenge. For starters, there’s the old saying that “the devil finds work for idle hands to do.” What happens in a society where almost everyone is unemployed? Basic needs will likely be taken care of for all, but what then? What makes people feel useful and valued? What’s to stop people from falling into self-destructive and generally destructive behavior?

It’s a broad question that has me worried and has occupied a great deal of my thinking as of late. Martin Ford actually has some interesting answers to that question, in that if we remove the stigma of not working for financial return and instead begin to laud people who find work that’s meaningful for themselves first and others second, then we begin to move in the right direction where people work and make things for reasons other than meeting their basic needs.

His argument is that part of the reason that a “basic income” is so stigmatized right now is that, as a society, we dictate that people primarily work for income and people who receive income without work are somehow bad. If we’re heading toward a future where almost everything is done practically automatically for us without any human effort, the jobs to be done for income will all disappear, and if that stigma remains, society begins to fall apart.

We have to start to transition toward thinking about work in terms of self-fulfillment, because a world in which we do unpleasant tasks in exchange for income is about to disappear. The way past that is to begin to laud work that’s personally meaningful in the way that we laud work that’s merely productive today, because productivity will begin to cease to matter.

3. Bill Gates on success

“Success is a lousy teacher. It seduces smart people into thinking they can’t lose.” – Bill Gates

Part of the reason that I constantly try new things is so that I constantly remind myself that I’m not invincible, I’m not great at everything I do, and in fact I’m pretty bad at most things.

Why do that? Isn’t that a punch in the gut to one’s self confidence?

Actually, what it does is it shows me that (a) I need to make the most of what few talents I have and (b) hard work in a particular area really pays off.

Take taekwondo, for example. I’ve been taking taekwondo lessons for three months now and I can already see a great deal of difference between when I started and where I’m at now. The thing is, my sense of how good I am is actually lower now than when I started, but I can see that I’m substantially improved from where I started. In other words, when I started, I thought I was like a 6 out of 10, whereas now I feel like I’m maybe a 1.5 or 2 out of 10 whereas when I started I was a 1 or a 1.5 out of 10.

I am not good at everything. In fact, I’m not good at most things. What I can do is work hard and learn from my mistakes and over time, find success at some things – but that success doesn’t magically mean I’m great at something. It just means I managed to put in effort, have a little bit of skill, and strike at the right moment.

4. Progression exercises

Over the last few months, I’ve really fallen in love with progression exercises at home. It’s something I can do almost any time during the day, it takes just a few minutes, and it makes me feel a lot stronger and healthier.

All you have to do is choose a few exercises that match what you want to get out of exercising. Just want cardio? Jumping jacks are good. Want to build arm strength? Pushups are good. Core strength? Planks are good. Leg strength? Squats are good. Just poke around and look for a few exercises that work for you.

Now, for each one, look up progression. If you want core strength, planks are a good choice, so look up plank progression. What you’ll find are a bunch of lists of variations on a plank, ranked from easiest to hardest.

Next, choose a target number – usually, you’ll find a recommendation. For me, my target plank number is one minute. I want to be able to hold a plank for one minutes. For pushups, 20 is a frequently cited target number.

Now, try to hit your target number while doing the first item on that progression. So, for example, I’m using this plank progression, so the first thing I try to do is the “kneeling plank” for sixty seconds (which I can easily do).

Once you can hit your target number with a particular progression level, move to the next one the next time. So, if I can hit 60 seconds with a “kneeling plank,” I just move on to the “kneeling side plank” and try to be able to do that for 60 seconds (on each side).

Eventually, you’ll hit a rung where you fail. That’s the rung to practice. So, for example, let’s say you get down to the normal plank and can only do it for 20 seconds. You should try doing that same exercise at least once a day (and maybe a few times a day) until you can hold it for 60 seconds.

The thing is, over time, you will get better at that exercise. You’ll feel the progress, not only in the fact that you can now hold a plank for longer, but in how you feel.

I’ve been doing this for the last few months and I love it. If I decide I don’t like an exercise, I’ll drop it and move to another progression. If I decide I’m not getting the results I want, I look for a different progression.

My favorite thing, though, is going back to an earlier rung and seeing how easy it is now. Write down what you were able to do on your first day, keep doing a progression for three months, then after those 90 days, try doing that first day exercise again. It will feel incredibly easy and you will feel amazing about yourself. It’s really inspiring.

The best part? You can do all of this in your living room whenever you want.

5. Josh Shipp on better versus bitter

“You either get bitter or you get better. It’s that simple. You either take what has been dealt to you and allow it to make you a better person, or you allow it to tear you down. The choice does not belong to fate, it belongs to you.” – Josh Shipp

Earlier, when I quoted Bill Gates on how success is a bad teacher, I mentioned that I actually like to fail because it reminds me of my relatively limited talents and reminds me of how important consistent effort and work really is to achieve anything.

The key thing is to not allow failure to beat you down. Failing at something does not mean that you’re a failure. It does not mean you should give up. It simply means that something you’re doing is not working, so you should be asking yourself what you can change to find something that works.

What didn’t work in this experience? If you can answer that and then change that, you increase your chances of success next time.

If you waste your time getting bitter about failure, you never get to ask yourself that key question and you never get to apply the answer. If you get bitter, you always keep failing.

6. Brain dumps

Every few weeks I sit down and list out everything that’s on my mind that I feel like I’ve left undone or that I should give more attention to. I do this while going through emails saved for later, through snail mail, through our filing cabinet, and through our wall calendar.

Almost always, I find a good dozen things (or more) that slipped through the cracks, things that should be on my to-do list but somehow didn’t make it there.

When I put those items on my to-do list and then take care of them, I suddenly feel much more at ease and content. I’ve taken care of all of those things floating around in my head. That feeling is amazing. I feel like I can tackle anything.

Give it a try. Sit down and just dump out all of the stuff on your head that you need to remember to do or think you should be doing or need to take care of. Then, knock off a bunch of things on that list. You’ll be so glad you did. You’ll feel great!

7. Mark Kinney on a pro wrestler’s guide to confidence

From the description:

You are more than you think you are, says former pro wrestler Mike Kinney — you just have to find what makes you unique and use it to your advantage. For years Kinney “turned up” the parts of himself that made him special as he invented and perfected his wrestling persona, Cowboy Gator Magraw. In a talk equal parts funny and smart, he brings his wisdom from the ring to everyday life, sharing how we can all live more confidently and reach our full potential.

When I was a kid, pro wrestling was in its mid-to-late 1980s heyday and I watched it faithfully each Sunday with my older brothers. We knew it wasn’t strictly legitimate wrestling; instead, we viewed it in the way I think it was (and still is) meant to be seen – like a living comic book presented in an athletic and acrobatic way.

The thing that always struck me back then is how the best performers were like attention magnets. Somehow, you just noticed them – they popped out of the screen. Hulk Hogan. Ric Flair. Randy Savage.

They had this over-the-top mix of charisma and confidence and strength, something that had a great deal of appeal to an awkward school-aged kid. For many years, perhaps more than I cared to admit, I took a lot of inspiration from them. If a guy can stand up in his underwear in front of 90,000 people and perform like that, then I can stand here in front of 20 people and give this speech.

The best part? The techniques those guys used are still relevant, even in adult life. Sure, I’ll probably not go out dressed as Randy “Macho Man” Savage (except perhaps on Halloween), but I can certainly borrow a bit of his confidence when I need it.

8. Buddha on happiness

“Thousands of candles can be lighted from a single candle, and the life of the candle will not be shortened. Happiness never decreases by being shared.” ― Buddha

Most of the best things in life are truly infinite. Being happy around others doesn’t somehow cost you happiness. In fact, if anything, it becomes a bit stronger because now you have someone to share it with.

There are few things I’ve ever found in life that are better than working to bring others a little bit of happiness. I’m quite willing to make a fool of myself or to tell a self-deprecating joke or listen or play up my earnestness to bring others joy or a laugh or happiness or a sense of ease.

The truth is, it costs me almost nothing to do that, but it brings so much to others. I can remember the many, many times when someone has told a joke or done something to make me smile and lift me a bit during a rough moment. Being on the other side, I realize it’s one of those little moments in life that doesn’t cost you much of anything but brings incredible value to the other person.

When you’re happy, share it. Even when you’re not, fake it a bit and share it. The benefits are big for everyone.

9. Lake

Lake is a coloring book app for iOS, and it’s probably the best designed one I’ve ever seen. It offers up beautiful pictures to color and lets you do the rest with your figures, as you wish.

There’s something about this that I have found incredibly soothing lately. I have found myself in a few spare moments lately just coloring a picture in Lake and ever so gently falling into a flow state, where time just drifts away a little bit.

The best part is that when I snap back to reality – when the receptionist calls my name or when I reach the right bus stop – I somehow feel a little more peaceful.

Well done, Lake.

10. James on good works

“For as the body without the spirit is dead, so faith without works is dead also.” – James 2:26

I very rarely quote directly from religious texts in this column, but this particular one has been on my mind a great deal lately, not just because it applies to spirituality and morals, but because it applies so well to general life.

If there is something out there that you strongly believe in, but yet you don’t follow up on that belief or match that belief with action in your life, it’s a dead, useless belief. It doesn’t have any impact on the world as a whole.

It doesn’t matter what your values or morals are inside of you. No one can see them inside of you. What matters is that you bring those values out into the world via your actions. What do you choose to do with your time? How do you treat others?

If you truly want the world to be a kinder place, the only way to do that is to adopt that code for your own behavior. If you want kindness, act kindly.

If you want children to have food security and never have to go without, then get out there and volunteer for your local food pantry or volunteer for candidates that will help on a broader level. Believing it is nice, but it doesn’t do anything to help.

What if you just care about too many things? Decide which ones you really care about the most and do something. Faith without works is dead. Nice thoughts and beliefs without action behind them are dead.

11. Carolina Chocolate Drops – Country Girl

I’ve shared the music of Rhiannon Giddens before. She’s the primary vocalist of this group and her voice shines on this particular song.

I could listen to the Carolina Chocolate Drops all day long. I hope you’ll do the same, if just for a few moments. Their music is like a gentle breeze blowing in the window on a warm summer day.

12. Bertrand Russell on happiness

“I’ve made an odd discovery. Every time I talk to a savant I feel quite sure that happiness is no longer a possibility. Yet when I talk with my gardener, I’m convinced of the opposite.” – Bertrand Russell

Whenever I get caught up in reading the news of the day or read deeply about some particular topic, I generally feel more informed, but at the same time, I often feel a little less hopeful about the future.

For example, lately I’ve read several books about what true AI might mean for human society. While there are some potential good elements, there are also a lot of worrisome ones. I find it interesting to think about, but on the whole, does it make me happy beyond the general sense of feeling like I understand the world better?

The things that really bring joy to me are simpler things. I feel joy when I’m exercising. I feel joy when I get so absorbed into a task that I lose track of time. I feel joy when I’m doing something fun with my family. I feel joy when I’m deeply engaged in a hobby.

Understanding the world better rarely bring direct happiness, I’ve found. In fact, it often brings a bit of worry with it. What counterbalances that worry is enjoyment of simpler things and of an overall sense of understanding how things work, of knowing that there are reasons for almost everything around us, and of having the capacity to understand those reasons even if I don’t understand them in the moment.

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Friday, December 1, 2017

Moving from Impressing Others to Impressing Yourself

In the book Your Money or Your Life (which happens to be the single most important book I’ve read in terms of helping me launch my financial turnaround), the authors offer a lengthy chapter that covers a whole bunch of strategies to follow in order to cut one’s spending.

Their number one rule – the one that they put in huge bold letters and describe as standing above all others – is really simple.

Stop trying to impress other people.

That’s it. That’s their number one rule.

At first glance, that rule might seem obvious or easy, but step back for a moment and think about all of your purchases through the lens of how that purchase is intended to make you appear in the eyes of others.

Are you buying books to impress your friends? Do you buy clothes to look good to others beyond the basic dress code of your workplace? What about gadgets – have you ever bought a phone with the thought of how others will be impressed by it? Did you think about your home in terms of what others might think when they come to visit?

If you stop and reflect on the ways you spend money, you’ll find that some things really don’t have much to do with what others think… but, if you really dig in, a lot of your expenses do revolve around or are heavily influenced by what others think of you.

I’m going to suggest a radical twist on that mindset.

Imagine how you would spend a day where you did absolutely nothing to impress others in any way, but instead did things solely so that when you went to bed that night, you were genuinely proud and happy with regards to how the day went.

What would you do that day?

For me, such a day would involve a lot of exercise, because I genuinely feel better over the long run because of it. It would involve doing some housework beyond the basics. It would involve reading something really challenging that taxed my mind. It would involve some genuine undistracted quality time with my immediate family and some close friends, not because of what they think of me, but because their presence really brings value into my life. It would involve spending some time doing charitable work. It would involve writing or improving a truly meaningful article or two or writing a book chapter. It would involve a lot of activities that were meant to benefit my life in the long run, not so much the short run.

For me, that’s the kind of day that, when I go to sleep at night, adds up to a day that I’m really proud of.

Here’s the thing: if I do my absolute best to make that kind of day into my normal day, things change a lot in my life. When I consider all of the activities I throw to the side if I commit to days like that, almost all of those activities revolve around impressing other people unless there is a very specific purpose to do so (such as building a relationship with that person or intentionally furthering my career).

If I live my life in a way that makes me proud of how I spent my day, and I do that each and every day, and I do it in a way that isn’t really concerned with what others think of me unless it achieves a specific goal in my life, then my spending falls through the floor. A lot of spending ceases to have any purpose.

If I want a book, I go to the library. If I find that I’m going to return to a book quite often as reference, then I might consider buying it, as spending money on books for anything other than reference and regular re-reading takes away from other goals. I don’t need to have a bookshelf full of books to impress others.

If I want to dress for the day, I dress in comfortable functional clothes for whatever it is that I’m doing. I don’t need to have really nice clothes to impress others (unless there is a business reason to do so). I don’t need to have a closet full of clothes to impress others.

If I buy a house, I buy one that fulfills the functions I need from a home – shelter, a bit of space to live, a bit of space to work. I don’t need to have a McMansion to ooh and aah people I don’t know well; the people I would want to have visit because I truly value their company are ones who won’t care anyway. I don’t need to have a giant house to impress others.

If I buy a car, it serves the function of getting me from point A to point B. I don’t need to have an expensive piece of metal that causes people I don’t even know to ooh and aah (again, if this is part of a specific business plan, that might change things, but that applies to very few people in reality). I don’t need to have a beautiful new car to impress others.

See, the thing is, living a life where I am proud of the life that I live each and every night is a life that will impress others. In short, if I genuinely impress myself because of my behaviors, I will gradually begin to impress others just by reflection.

I don’t need to spend a dime to achieve that.

So, if you want to get control over your spending and you want to find financial and personal success, the first step is to stop spending any money or any time whatsoever impressing others unless it has a very specific professional purpose). Just stop.

Instead, devote your time and energy toward doing things that make you proud of yourself and the person you’re becoming. The thing is, the things that most people do to make themselves proud are almost always things that don’t involve spending much money at all.

Getting in shape? It doesn’t require much money. For some, a gym membership; for others, all you really need is a bit of space at home or somewhere to run. It also requires a bit of self-control around food.

Growing your knowledge and understanding of the world? You can get that by checking out books from the library, listening to worthwhile podcasts, reading well-written articles from good publications, and so on. All that takes is time, not money.

Getting in control of your emotions? Tactics like meditation and self-reflection and journaling help greatly there, and those tactics don’t take money, either, just time and focus.

Learning how to interact with people better? Getting in touch with your spiritual or religious side? Helping to improve your community? They don’t cost money, either.

The truth is, if you devote your time and energy to effective ways of impressing yourself and building a genuinely better life, you won’t have a lot of need to spend a lot of money. Most steps toward improving yourself and building a better life don’t cost a thing. They just require you to devote time and energy and to turn your thoughts away from what other people think of you.

That’s a tricky transition, I’ll admit, but one thing has really helped me in that process.

If I make myself into a genuinely better person, a genuinely good person, a person who fills their day with things that make me feel proud when I go to bed, then I really don’t have to worry about what other people think of me. I will have a positive reputation by default. If I become the kind of person that I want to be, I don’t need to buy cars or clothes or homes or gadgets to impress others. The person I’m trying to become – a healthy person who converses well, has emotional control, has interesting ideas, has a lot of strong friendships and relationships, is involved in the community and the neighborhood in a positive way, and is pleasant to be around – is enough. It’s more than enough, in fact.

Becoming that person makes me proud. If I can go to bed at the end of the day knowing that I worked toward becoming that person, I feel good. I feel proud of myself. It’s a good feeling that doesn’t come from impressing others – in fact, the normal actions of impressing others often takes away from that.

If you center every day around becoming the person you want to be rather than trying to pretend to be a person that you think other people will be impressed by, you won’t have to work to impress others any more. You won’t have to worry about it or think about it in the least, because a person that works to be the person they most want to be is naturally attractive to others. If you really truly work toward being the best person you can be in each area of your life, you go to sleep proud of yourself and you become a person that people want to have around, just by your normal actions.

So, the solution to a lot of financial problems (and problems in other areas of life) is to simply focus as much of your time and energy as you can on being the best person you can possibly be and stop spending time, money, and energy on things that are largely influenced by impressing others. If you devote your days toward becoming better, you go to bed happy with yourself, and if you do that over and over again, you become the kind of person everyone wants to have around without having to worry about what others think of you or having to invest a dime in it.

Stop trying to impress other people.

Start trying to impress yourself.

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Thursday, November 30, 2017

Gift Ideas for Frugal People (and from Frugal People)

It’s that time of the year again. People all across the world are trying to come up with holiday gift ideas for the frugal and practical people in their life, while the frugal people among us are trying to figure out how to give thoughtful gifts to the people in their life without going into bankruptcy.

Although I’ve written gift guides for people many times in the past (here are gifts to give to frugal/practical people, sub $10 gift ideas, inexpensive last-minute ideas, and a collection of homemade gift ideas), I’m always inundated with queries from interested readers this time of the year asking for new gift suggestions, both in terms of inexpensive gifts and in terms of gifts that their frugal/practical friend will like (I think I’m a proxy for many people when they think of their frugal/practical friends).

For starters, I strongly encourage you to check out those previous guides, as many of the ideas are still quite relevant now. What follows are some additional ideas that I’ve received, seen, discovered, or made in the last year or two (apologies in advance if there are any direct duplicates from the earlier posts).

I’ve divided this up into two sections, reflecting the two types of questions about gifts that I frequently hear this time of the year. First, a section on “gifts for frugal/practical people,” meaning gifts that might be somewhat expensive (or might not be) that frugal/practical people will genuinely appreciate. After that, a section on low-cost gifts with mass appeal, gifts that frugal people might consider for those on their gift list that they struggle to find the right gift for.

Ready? Let’s do this.

Gifts for Frugal/Practical People

Durable high-quality items that they’ll frequently use This is always my default gift suggestion if you’re looking for something for the frugal or practical person in your life. Look for something that you know that they use and get them a high quality and reliable version of that item. Here are some examples.

Socks Buy them a pair of merino wool socks with a lifetime guarantee, like the socks made by Darn Tough. They are rather pricy per pair, but they are extremely comfortable in all but the hottest of conditions, last for an extremely long time, and come with a great guarantee.

Other clothing You almost can’t go wrong with LL Bean or Land’s End in terms of solid quality clothes that will last and last. Both brands offer a lifetime guarantee on their products, so you can buy them knowing that if they ever do have a problem, your recipient can easily replace the item. (If you’re unsure of sizes, a gift card works well – I can’t imagine a frugal person not using a gift card to one of those places.)

Shaving If you’re giving a gift to a male friend or family member who stays clean shaven, consider getting him a safety razor and a supply of blades. A Merkur Classic safety razor along with 100 double-edged blades, a shaving brush (which basically ensures that you never over-apply shaving cream once you start using it – I use a tiny fraction of the quantity of cream I used to once I switched to a brush), and some high-quality shaving soap or shaving cream. It takes a little longer to shave this way, but the shave is so close that you don’t have to shave nearly as often (especially compared to electric) and the cost per shave is way lower because of the far less expensive blades.

Other items The best overall approach to take is to simply talk to the person and see if you can pick up on things they use that are wearing out and may need to be replaced soon, then research versions of that item that are reliable, durable, and high quality. That’s pretty much a guarantee of a great gift. For example, if someone loves to grill but is grumbling about a rusty grill, get that person a ceramic grill that’s pretty much impervious to rust. Just spend the time to specifically research that product type.

Consumable items that match their tastes Frugal people almost always love consumable items. It’s a treat that they often won’t buy for themselves but they can thoroughly enjoy, plus it won’t take up space in their home or end up sitting in their closet. In short, consumables are pretty practical as far as gifts go. Here are a few examples.

Coffee If the person you’re gifting loves coffee, consider getting them a bag or two from a very reputable coffee roaster like Stumptown or Chromatic or, better yet, a local roaster from your area. If you want them to have coffee the whole year around, consider a coffee subscription service like Driftaway or Beanbox.

Craft beer If the person you’re gifting loves craft beer, get a few bombers or a six pack from a local brewery, particularly if you happen to live near a well-regarded one. If you don’t, stop by a local craft beer store and ask for some recommendations. Craft beer enthusiasts tend to appreciate new and unusual ones.

Chocolate Again, as with the above options, it’s never a bad idea to find a local chocolatier for a small assortment. If that doesn’t work out, look for a list of the best chocolates from a reputable publication (a href=”http://www.foodandwine.com/slideshows/best-chocolate-us#1″>like this one from Food and Wine) and pick out an item or two from that list, like the truffle assortment from Vosges which is mind-blowing but rather expensive per piece.

The advantage here is that these are all consumable. They can be eaten as a treat, easily shared with friends if they so choose, and eventually take up no space at home as they’re all consumed. If you can choose an item in line with their tastes, a frugal person will appreciate it, particularly if it’s a well made item or a local item. If in doubt, go local. Frugal/practical people

Items that simplify or reduce the cost of making things yourself Most frugal and practical people enjoy simply making things for themselves. They like to make things at home not just because it saves money, but because the process is enjoyable and the results are pretty good. Gifts in line with that mindset are usually appreciated.

Having said that, items that only have a single use or don’t match up with something that they’ll frequently use are frowned upon. The best gifts for frugal and practical people are items that they’ll reuse frequently, often replacing something they already have or providing a clear alternative.

Here are a few examples.

Coffee drinkers might appreciate a cold brew coffee system, which does away with the need for electricity or paper filters and produces wonderful mellow coffee that’s easily stored in the fridge. This cold brew coffee maker comes very well regarded; you just add water and grounds to the top chamber and let it sit in the fridge. My wife and I use both a coffee maker and a cold brew maker at our house, so they work in parallel.

An enameled cast iron pot is almost always a great gift for anyone that cooks at home. Enameled cast iron pots, especially larger ones, are incredibly useful because you can use them almost like skillets on the stovetop, use them like soup pots, and also make casseroles in them and bake things in the oven. I’ve done everything in ours – made bread, made stews, sautéed vegetables. While Le Creuset makes the best ones, they’re very expensive; Lodge makes one almost as good for a fraction of the price.

A multi-port USB hub is a surprisingly good gift for someone who has several electronic devices. It replaces the need to carry around lots of plug-in USB adapters and instead just requires them to bring around the requisite charging cables. I pretty much don’t leave my house without this one; it has a permanent home in my “to go bag” and it always seems to be an item that, when people see it, they go “I should really start carrying one of those!” Not only is it a convenient item to carry in one’s work bag, it’s also a pretty nice social opener as you always have a couple of ports free to offer to others who may need a charge.

Inexpensive Gifts for Everyone

What if you’re on the flip side of that coin? You’re a frugal person who wants to really stretch a dollar, but you also want to give meaningful, thoughtful, quality gifts to people for the holidays? Here are some things that you can give that everyone will like.

A simple item and a promise Give a person a very simple inexpensive item that lends itself to a common task that they might take on, but pair that item with a promise to actually help them with the task or take it on yourself.

For example, you might buy someone a caulking gun and some caulk, which can be relatively inexpensive, but put with it a note that you will come over and actually air seal their windows for them or help teach them to do it.

You might buy someone a hedge trimmer and put a note with it that you promise to come over and trim their hedges nicely in the spring. This is a particularly good gift for someone who might not enjoy landscaping and yard work.

You might give an elderly relative a 9″ by 9″ Pyrex baking dish, and on the inside tape a promise to come over and make five dinners for them and eat with them.

Something you made yourself Homemade gifts are always a great choice, particularly if you can make something well or you know how to make something that’s time consuming.

For example, we often receive jars of homemade food items from one of our closest friends who knows that I love fermented foods, so he cans some crazy variation on sauerkraut or pickles and gives me a few jars as a gift. It’s very inexpensive for him, just costing a few jars and the cucumbers or cabbage from his own garden, but I absolutely cherish that gift.

I have another friend who is a photographer who makes handmade stationery cards similar to these using inexpensive prints and extremely cheap blank stationery. These items cost her perhaps $0.30 per card to assemble, but the time invested in taking the photographs, choosing the prints, getting all of the stuff, and actually making the cards is incredibly thoughtful.

We have another relative who loves making handmade soaps. She makes an enormous batch of them every few years and gives several bars to people for the holidays. She’s also made bath bombs.

We have yet another friend who likes to make hand copies of poems along with a wonderful little drawing and frame them with an inexpensive frame as a gift (she drew this wonderful picture of me and my son standing together in the woods with the text of The Road Not Taken by Robert Frost a few years ago that brings tears to my eyes whenever I see it, but it cost her a few hours, a trivial amount of art supplies, and an inexpensive frame).

Another good idea: turn vintage books, comic books, album covers, sports cards, candy wrappers, or other such items into wall art. Figure out what the person you’re giving the gift to really enjoys, then find flat items that represent that interest, arrange the items well, and put them in an inexpensive frame.

Make something you know how to make well and share it. Often, the end result is far more valuable than the ingredients you put into it.

Letters Write a dozen or so letters to a person you care deeply about, appropriate for different occasions, and package them all up together.

For example, you might sit down and write a letter to your mother for a time when she’s lonely, a time when she wants to talk to you, a time when she wishes you were a little kid again, a time when she’s worried about the future, and so on. Write a letter just for your mother concerning each of those topics, saying the things you would want to say to her when she’s feeling that way and touching upon your shared experiences in the past.

This will take some time, no doubt, but the financial cost is pennies and it is so deeply sentimental that it will be an unforgettable gift.

A shared experience One great option is to give an inexpensive gift to someone that will provide the foundation for a shared experience for the two of you.

For example, you might give that person a copy of your favorite book. Take the time to write a nice inscription on the inside of the front cover and promise to go out for coffee or for an inexpensive dinner to talk about the book once they’ve read it. You can do the same thing for your favorite movie by handing over a copy of it on DVD or Bluray, along with a note promising to watch it together or talk about it afterwards.

If you happen to score some low-priced tickets to an interesting event, give one of the tickets to a friend so that they can plan to go to the event with you, providing a great shared experience.

In both cases, you’re adding the extra value to the item by relating it back to a personal connection between the two of you.

Charity time This is a surprisingly thoughtful idea for someone who wants to give a meaningful gift and has lots of time but very little money. Simply give someone a gift of some significant number of hours of your volunteer time.

For example, you might say that you will work 20 hours or 40 hours of volunteer work in the coming year for a cause of the recipient’s choice. This might be work for a political campaign, work for a local charity, or something else. They pick the charity, you put in the hours for that charity.

This is a great way for the recipient to feel like they’re bringing about meaningful change on a local level for a cause that they care about and you’re able to give that gift without any financial burden whatsoever.

It’s a good idea that, if you give this gift, you’re giving it to someone you’re roughly in political and moral alignment with. It would not work out well if you gave this to someone who then asked you to phone bank for a candidate you intensely disliked.

Final Thoughts

Gift giving occasions are difficult ones for frugal and practical people. Many holiday gifts are items that frugal and practical people really don’t want in their home, as they tend to be very selective and fairly minimalist about the items that they do choose to own.

At the same time, frugal people are typically fairly careful with their money and want to give meaningful gifts without just throwing money at the problem.

The ideas here are meant to provide ideas that can solve both problems, making the holidays better for frugal and practical folks both on the giving and receiving end of the equation. Hopefully, the ideas presented here will make the holidays a more joyous occasion for all involved.

Good luck!

Related Articles: 

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Rewards for Recreation: Credit Cards That Match Your Hobbies

You might see the world of credit card rewards as two extremes — jet-setting on one end and penny-pinching on the other. The truth is, there’s a big world between glitzy travel rewards and no-nonsense cash back. Plenty of credit cards have rewards programs that can help you indulge your everyday interests while saving some money in the bargain.

Take a look at some of the ways that credit cards can match up with various hobbies and pastimes, from food to fitness.

Dining out

For some of us, the experience and ambience of going to a restaurant matter just as much as the actual eating. The menu of best credit cards for foodies includes:

  • — This card’s 5% cash back bonus categories often include restaurant purchases once a year. Make sure to check the Cashback Calendar and activate your bonus every quarter.
  • Uber Visa Card — Earns 4% cash back on purchases at restaurants and bars as well as UberEATS orders. (Plus, $0 annual fee.)
  • — Earns 3X points on dining and travel worldwide.
  • — Earns 2X points on dining and travel.

TV, movies and music

Earning credit card rewards for enjoying video and music, streaming subscriptions included, is a surefire hit. Cards that reward video and music purchases include:

  • Amazon Prime Rewards Visa Signature Card — This exclusive card for eligible Amazon Prime members earns 5% points back on Amazon.com purchases.
  • — Earns 5 Sony Rewards Points per $1 spent on digital music and video purchases, plus movie rentals, concerts and theater purchases.


  • U.S. Bank Cash+ Visa Signature Card — This card lets you choose your quarterly rewards categories to earn up to 5.5% cash back, and those categories include bookstores. (To maximize your rewards, you’ll need to concentrate your book purchases within that particular quarter.)
  • Remember the Amazon Prime Rewards Visa Signature Card listed above? If you buy books on Amazon.com, you can also get those 5% points back rewards.


  • — Getting 5X points on PlayStation™ Store purchases? Game on!


Using credit card rewards to get more value out of your fitness-related spending presents a special case. Many card issuers, such as Discover and Visa, have online shopping portals that include retailers offering sportswear and other types of fitness gear. If you apply rewards points to those purchases, you can turn your credit card into a workout machine.

Even if their rewards programs aren’t specifically geared toward fitness, cards may still offer special deals from time to time. One example is , which recently launched an offer for reduced rates on SoulCycle indoor cycling classes.

Homework first, hobby second

The right credit card rewards program can make your favorite hobby or pastime more enjoyable and more economical. Even if you don’t have a specialty card, you can still reap the benefits of credit cards that offer all-purpose cash back or points for general purchases.

Just make sure to research the offers and terms so that you fully understand how you’ll earn your points and cash back — work before play.

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Five Ways the Holidays Can Burn Your Budget (and How to Avoid It)

The holidays may be a wondrous and exciting time of the year, but that doesn’t mean they’re free from pitfalls. Not only do Americans tend to eat more (and pack on weight) over the holidays, but we all spend a lot more, too.

This holiday shopping season could be one for the record books. The National Retail Federation predicts 2017 holiday sales will increase 3.6% to 4% over last year, which was already its own record year. This means consumers could spend as much as $682 billion on holiday shopping this year, or up to $976 per person.

That’s quite a bit of cash to fork over for parties, decorations, and gifts that may or may not be necessary or even wanted. Unfortunately, a lot of the holiday hoopla (and associated spending) is often a waste, weighing heavily on our cash reserves and leaving us worse off by the time the new year rolls around.

Five Holiday Money Drains to Avoid

The holidays are a time to spend with family and celebrate your faith, but they can easily destroy your financial goals, too. If you want to make it to New Year’s without facing financial ruin, here are a few money drains you should try to avoid:

#1: Generic Gift Exchanges

Gift exchanges can actually be a good way to help everyone cut down their holiday shopping bill. Instead of buying for each person in your family, many groups have everyone pick a name from a hat (or use some other system) so that everyone is only buying for one other person.

Unfortunately, not all families or groups run their gift exchanges this way. Some decide to go with anonymous or generic gift exchanges that require everyone to bring a $20 (or any price) thingamabob that will end up in a random person’s hands.

Generic gift exchanges are the worst because, well, you have no guarantee your person will enjoy what you buy – and you may end up with something you don’t want, either. Sadly, I’ve experienced this misfortune firsthand. One time, my husband and I each purchased a $20 generic gift for an exchange only to bring home a new set of jumper cables and a ceramic elephant in return. I might as well have set $40 on fire instead.

The fix: If you’re able and willing to take the heat, try telling your family or work group you don’t want to participate in a generic gift exchange. Better yet, suggest a white elephant exchange where everyone brings a random, unwanted item from home instead. White elephant gift exchanges are a fun alternative, and you may actually end up with something you want — or at least a good laugh. Plus, there’s nothing to lose, since nobody has to spend money – you can just grab something funny lying around the house that you don’t really want, and wrap it up for the party.

#2: Secret Santa (or Sneaky Santa)

Secret Santa exchanges are another common gift-giving routine for workplaces and extended families. Everyone draws a random name – the person they’ll be buying a present for. But the “giver” is supposed to be a surprise until the end.

While Secret Santa groups with a firm price limit may be no big deal, these schemes are notorious for getting out of hand. A friend of mine recently told me that, in her office, her Sneaky Santa easily spent $100 or more on her because firm price limits weren’t set ahead of time.

The fix: If you’re going to join a Secret Santa group or jump into the one at work, make sure there are clear spending limits ahead of time. Spending $10 or $20 on a co-worker may not break the bank, but dropping significantly more than that could be a hardship – especially if you weren’t expecting to spend that much.

And, if you’re overly worried or just don’t want to spend the money, don’t feel bad opting out altogether.

#3: Stocking Up on ‘Stuff’ You Don’t Need

The holiday season is ripe with deals intended to get us to part with our hard-earned dollars. From Thanksgiving week to Black Friday, Cyber Monday, and basically the entire month of December, you can score stellar discounts on everything from household goods to clothing to electronics.

The good news is, the holidays are a great time to stock up on items you actually need. Sure, you’ll shop for holiday gifts, but why not save on items you need to buy anyway?

The bad news is, it’s far too easy to use these deals to justify purchases you shouldn’t really be making. We all know clever marketing ploys and flash sales get us to spend more, but the rush of holiday sales and “door buster” discounts only exacerbate the effect, whether you’re throwing in an extra pair of jeans just to hit the free shipping threshold or convincing yourself that it’s time for a new blender.

The fix: Before you shop over the holidays, make a list! There’s nothing wrong with treating yourself or getting a deal on the stuff you need, but you’ll spend less if you make a careful and thoughtful list of items you actually need ahead of time. It can also help to make a shopping list with spending limits for everyone you plan to buy for this year. Without a list or limits, you’re almost doomed to spend more than you intended.

#4: Not Paying Off Your Credit Card Balance

Unlike previous years, you’ve decided this is your year to earn cash back on Christmas presents. You signed up for the Chase Freedom® card early once you found out it offered 5% cash back at Walmart and department stores this quarter, and you’ve steadily used the card for all your holiday gifts so far.

But then, the bill actually comes… and you find out that you’ve spent more than you wanted, and more than you can pay back. So now, instead of benefiting from cash-back rewards, you’re stuck carrying a credit card balance and paying double-digit interest on your purchases instead.

Unfortunately, this scenario happens all the time. About two-thirds of Americans who took on holiday debt in 2016 weren’t planning on it, according to a survey by Magnify Money, and nearly half said they’d need four months or more to pay it all off.

The fix: The best way to ward off holiday debt is to shop with a list and a budget in mind. Buy only what you can afford, and only splurge on “extras” if you’re sure you have the cash to cover the bill this month. Not everyone benefits from credit card rewards — after all, somebody is paying the credit card interest that fuels these generous rewards programs. If you’re worried you may not be able to stick to a budget or plan, that somebody could be you – and you may be better off eschewing credit card rewards and sticking to cash or debit instead.

#5: Return Policy Mishaps

Another way to lose money this holiday season is to bungle your holiday gift return policies – or worse, throw away receipts. While lots of retail stores let you return items without receipts for store credit, you won’t always get the full value when you do (I’m looking at you, Kohl’s). Further, you might be stuck with items if you don’t understand a store’s return policies or know how long you have to get them back to the store. Hint: Check out our list of stores with the best return policies for details on retailers who are most generous in this regard.

The fix: It’s crucial to make sure you save receipts for all of your gifts and other holiday purchases. It might even help to keep a special folder or envelope for your receipts. If you’re doing a lot of online shopping, make sure to set up an email folder where you can store digital receipts as well.

Using a good rewards card that offers guaranteed returns is another way to avoid return policy mishaps. The Chase Freedom® card very generously offers guaranteed returns “if you are dissatisfied with a personal item that you purchased and the merchant will not accept the return.” You do have to use your card for the purchase for it to be eligible, however. Also, this protection is only offered on top of store guarantees or protections, or as a last resort. Fortunately, coverage is good for up to $250 per item with a limit of $1,000 per year.

The Bottom Line

The holidays are rife with situations where you’re expected to spend whether you want to or not. Between lavish holiday parties and pushy co-workers trying to rope you into who-knows-what, there are more opportunities to spend over the holidays than most people – or budgets – can handle.

Fortunately, you do have some control over your spending and the events you choose to participate in. And, like it or not, sometimes you just have to suck it up and say “no” to the people you love – and to yourself.

The holidays should really be about faith and family anyway, so don’t feel bad about setting limits. Your family and co-workers might raise an eyebrow if you buck the system, but your pocketbook will thank you.

Related Articles:

Which holiday money drains are you trying to avoid this year? Please share in the comments below.

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Wednesday, November 29, 2017

Six Essential Strategies for Negotiating a Raise at Work

Negotiating a raise at work is a powerful way to improve your financial situation with a single stroke. You suddenly have more income, which means that it immediately becomes easier to pay off debts, build up an emergency fund, save for future goals, and have some quality of life improvements to boot.

At the same time, a raise negotiation is something that many people dread. The simple act of negotiating something creates a challenging conversation of the type many people want to avoid, and some hold the fear that asking for a raise indicates disloyalty and will put the job they currently have in danger.

Remember, almost everyone on Earth wants better pay. It’s not surprising to your supervisor that you would want to have better pay – in fact, he or she probably assumes it. What matters is whether an employee has the courage to bring it up in conversation and whether or not that employee’s performance merits an increase in pay.

Furthermore, almost every strategy in this article works very well for other types of workplace perks. Let’s say that, rather than a raise, you want to be able to work just four days a week instead of five. Perhaps you want to be able to telecommute two days per week. Maybe you want to be able to start coming in an hour or two earlier and leave an hour or two earlier. Those types of changes can save you a lot of money in your day-to-day life and can also significantly improve one’s quality of life, too.

Here’s how to get started.

Use your performance reviews as a template. If you’re in an organization that gives regular performance reviews, your most recent performance reviews are the best place to start. Such reviews usually make it abundantly clear whether or not you are an effective employee (meaning you’re more likely to receive a raise if you ask). They also provide areas in which you can improve, and improving in those areas is often a clear path to be perceived as an exceptional employee.

So, grab those performance reviews. Are they strongly positive? If so, you already have a pretty good case for asking for a review. Are they mediocre, with lots of areas for improvement? If so, then you have a checklist of things to work on before asking for a review.

With just the simple step of looking back over your performance reviews, you instantly know whether or not you have a good case for asking for a raise and, if not, you also know what things you should be doing to build a good case for a raise.

Learn about comparable salaries and know what you want. This is another invaluable preparatory step: know what people in your field and in your area are getting paid. One great place to start is with Indeed.com’s salary database, which lets you see what people in your area are earning for the same job title as you.

Remember, use this as a baseline. If you’re an entry level employee, your salary should likely be a bit below the average, as the average includes people who are exceptionally talented and those with a lot of experience. However, if you are experienced or have a track record of exceptional performance reviews, then you should be expecting an appropriate salary.

Time your negotiation well. For example, it’s a bad idea to ask for a raise shortly after a poor performance review. It’s a bad idea to ask for a raise when the organization is having severe financial struggles. It’s a bad idea to ask for a raise when you’re on some form of probation.

It’s a good idea to ask for a raise after the successful completion of a project. It’s a good idea to ask for a raise after a glowing performance review. It’s a good idea to ask for a raise after you complete a major certification or earn a degree.

In other words, if you’ve just done something that demonstrates your strong value as an employee and the organization seems healthy, that’s a great time to strike. If you’ve not done anything to raise your profile or you have a less than stellar profile or the organization is struggling, then you shouldn’t be asking for more pay right now.

Be clear, but not emotional or demanding. When you decide to have that conversation, be clear and avoid emotion, particularly if you don’t get an immediate yes.

What you need to do is decide in advance what you’re specifically asking for and why you should get it – your performance and the salaries of people in similar positions as your own. Decide exactly what you’re asking for and give them reasons to say yes – do not give them reasons to say no.

So, for example, you might come in and request a 10% raise because you’ve had three excellent performance reviews in a row and you just played a key part in finishing up a particular project. You’re stating exactly what you want and why you deserve it.

If you are straightforward like this, without emotions and threats, and you’re clear about what you want, virtually all supervisors will respect that. As long as you don’t bring emotions into the situation or make empty threats or make “or else” demands, your supervisor is likely going to at least understand where you’re coming from. Everyone wants to be paid more, after all.

The same thing is true if the “raise” you want comes in the form of non-financial perks, like a more flexible working schedule or a day or two of telecommuting per week.

If you don’t get an immediate yes, don’t get upset. Don’t react emotionally. The story isn’t over yet. Be patient and calm.

Create a plan with your supervisor. If your supervisor declines your request for a raise, your immediate response should be “Okay, then, what do I need to do in order to receive such a raise?”

Work with your supervisor to come up with a plan that, if you complete it, will lead to the raise you want. It may be that your supervisor does not perceive your value in the same way that you do, so the goal here is to display your value in such a way that it’s abundantly clear to your supervisor in the terms that he or she cares most about.

Frame the conversation in terms of things you need to do to earn such a raise in the next six months. What do you need to do so that, when you have a follow up conversation in six months, the answer will be an easy “yes”? That’s your new checklist of things to do at work.

Document your efforts. If you have a plan that will lead you to a raise, keep track of it. Review it constantly, work toward the items listed there, and most importantly, document your efforts toward those goals.

Treat it like a work diary. Whenever you take steps toward any element of that plan, record it. Keep a saved document going that lists all of the things you’re doing to complete your part of that plan.

Then, when the timeline of the plan finishes up, you can draw upon those notes to make a detailed case for how you executed that plan and thus why you deserve that raise. You won’t have to include every detail, but you will have tons of source material to create a great summary that can be backed up with details if your supervisor digs into the rabbit hole.

One final suggestion: bulk your resume through these efforts. As you’re going through the steps to meet what your supervisor wants in order to earn a raise, don’t forget to think of those steps in terms of your resume. Most of the time, the steps in your plan also match up well with bolstering your resume so that, if your supervisor doesn’t follow through on his or her side of the plan, you are in a much better place in terms of seeking out a new job.

That’s the best part of this kind of process: not only does it increase your likelihood of getting a raise at work, it also sets you up for your next career step if you don’t receive that raise.

Remember, asking for a raise in a calm manner with a clear request and reasons for doing so won’t anger your boss in almost any rational situation. They’ll understand, even if they can’t immediately say yes. If you prepare for the conversation, it’s nothing to fear.

Also, remember that “no” isn’t the end of the road. It’s just the next step. Use it as an opportunity to build a plan for a “yes” down the road, and if that plan doesn’t get the results you want, use the results of that plan to improve your resume and find a better job.

Good luck!

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Went Overboard on Black Friday? Four Ways to Fix Things

An estimated 115 million people planned to snatch up bargains (real or imagined) on the day after Thanksgiving, according to the National Retail Federation. But that wasn’t the extent of the holiday buying. The NRF’s annual survey indicated that:

  • 32 million planned to shop on Thanksgiving Day.
  • 71 million would shop on Saturday (76% of whom said they would do so to support Small Business Saturday).
  • 35 million planned to shop on Sunday.
  • And 78 million would shop on Cyber Monday.

The Mad Men (and Mad Women) of Madison Avenue are very, very good at what they do. They know we want to make the holidays memorable for children, grandchildren, nieces and nephews, and significant others.

As a result, consumers may find themselves going into debt, or at least overbuying, to satisfy someone else’s idea of the perfect holiday.

And if that’s you? If despite your best intentions you went a little (or a lot) overboard with the spending?

Stop panicking and start fixing. The following tips will help you forestall debt or at least deal with it quickly rather than pay a ton of interest.

Fix No. 1: Return some (or all) of what you bought.

Obvious, right? Even if you have to pay a re-stock fee for an item, it sure beats wondering how you’re going to pay for the whole thing. Chalk up any fees to the Impetuous Tax and vow to do better next year.

This tactic works particularly well for people with children, since extended family members will likely provide gifts. So let Junior have one or two nice things from you, and fill in with the presents from grandparents and doting aunts and uncles.

(Pro tip: Consider observing the “four gift rule” — something you want, something you need, something to wear, something to read. Our children’s expectations should be shaped by us — their parents — rather than TV commercials.)

Suppose you went rogue with things like small appliances, accessories, tools, or electronics? Now is a good time to have The Talk with your significant other. (A better time would have been last year, but too late now.) During this chat, emphasize how much you want the holiday to be special, but that you blew it and overspent.

Suggest that the two of you set a reasonable spending limit in order to keep household finances on an even keel. Solvency is one terrific gift, especially when it’s given year after year. Then decide what to return, and have fun giving what’s left.

Note: Some deals truly can’t be beat. For example, personal finance blogger Lauren Greutman combined rebates, a store loyalty card, and a discount code with Black Friday sales prices and paid only 52 cents each for a slow cooker, coffeemaker, griddle, and waffle-maker.

If you got a deal that good, you should probably keep the items, because your coffeemaker (or whatever) will wear out eventually, or you could make some money selling them on a Facebook yard-sale page or on Craigslist. 

And if you plan to keep it all, no matter what, then move on to the next tactic…

Fix No. 2: Hold some items back.

Who’s gonna know? Your kid won’t magically sense that you originally bought him eight toys even though only four of them wound up under the tree. Your partner won’t know that he was going to get an iPad and a wallet and a bathrobe and new ski goggles.

Keep back some items to create a gift closet. Extra playthings will make great birthday gifts and, more to the point, will be on hand to give when your child gets invited to birthday parties in the coming year. Bonus: You paid rock-bottom prices for both the gifts you keep and the gifts you give away (#winning). 

The fleecy hat-and-glove set the store practically gave away on Black Friday could make a good Secret Santa gift at your workplace next year. If your kid brother will graduate from college in June, turn that 52-cent coffeemaker into a present for his first apartment. And so on.

However, deciding not to return any of the things you over-bought means you’re also deciding to accept a higher-than-usual credit card bill. To reduce the pain, get going on…

Fix No. 3: Make extra payments. Starting now.

But not from your emergency fund! Overspending on gifts is not a bona fide emergency.

Take a look at the budget and see how much wiggle room you’ve got. Suppose you’ve got a $150 cushion after paying the bills and allowing for the month’s gasoline and groceries. Send at least $75 to the credit card issuer right now. Got more than that? Send more than that.

Yes, before the bill arrives. The card issuer doesn’t care when you make payments. (Well, actually, it does care: These companies get rich because consumers carry balances.)

Make another payment when your next paycheck comes. Repeat the process until you’ve covered the cost of what you bought.

Understand: I’m not suggesting that you deplete your checking account, but rather that you man- or woman-up and accept the responsibility for your actions. Which brings us to the next tactic…

Fix No. 4: Get creative about the source of those extra payments.

This is a time of year when we spend more than usual. Not just on gifts, either, but on things like special foods, decorations, greeting cards, and non-gift items we buy for ourselves (e.g., that new television for the family room).

The challenge, then, is to find “extra” money in the budget right when you’re about to observe beloved traditions like an enormous Christmas dinner, massive holiday light displays, or the dozens of Swedish Creams and pepperkakor you bake every year.

Creativity is key. Here are a few options:

Cut back on small treats. Skip some coffees. Pack your lunch. Spend your Saturdays addressing holiday cards or playing games instead of hitting the movies. Make it a point to eat more (or all) your meals at home. If you usually hit happy hour at the end of the work week, either take a few Fridays off or sip a single beer and leave when it’s finished.

Do a “pantry challenge.” Make it your business to eat mostly or completely from the cupboards and freezer. If the only things you buy at the supermarket for the next few weeks are milk, bread, and produce, you can throw what you would have spent at the credit card bill. Bonus: You prevent food waste by clearing out some older stuff that wasn’t being eaten.

Look for a side gig. Put it out in the universe that you’re available for babysitting, dog-walking, helping hang holiday lights, or whatever it is you enjoy (or at least do well). Already got a side hustle? Push it a little harder: Take on more rideshare clients, say, or spend some evenings making more items for your Etsy store.

Ask your family for ideas. “Guys, we’re looking for ways to pay for a truly awesome holiday with cash. Who has ideas for places we can trim spending?” Your kids may have good tactics (“Do we really need holiday PJs?”) and they’ll get a sense of themselves as part of the family unit.

For more tips, here are some other ways to come up with extra cash quickly.

Festive Opportunity Cost

It really doesn’t have to be spelled “Chri$tma$” to be memorable. Considering the holiday’s humble origins, it shouldn’t be all about excess anyway.

Overspending may be due to nature (we want to make our loved ones happy) or to nurture (because you grew up with huge celebrations and think that’s the way everybody does it). Or it might just be that marketers really know how to whip us into an emotional frenzy during the last couple of months of the year.

Here’s how psychologist and author David Tolin puts it:

“(Merchants) have spent million of dollars in figuring out how to manipulate you psychologically into how to spend more money. Understand that most of us are powerless against that.”

There’s nothing wrong with giving gifts. But there’s a whole lot wrong with going into debt in order to obtain them. The success of a holiday celebration is not guaranteed by the amount of money spent.

Besides, the hundreds (or thousands) you drop each year translate to some pretty festive opportunity cost. How else might that money have been able to work for you? A retirement plan, the “down payment on a home” account, a long-delayed vacation, an emergency fund?

It’s not necessary to forgo the holiday if it’s always made you happy. Just make it more about love and togetherness than about conspicuous consumption. And yeah, pay the re-stock fee if you must.

Related Articles:

Veteran personal finance writer Donna Freedman is the author of “Your Playbook for Tough Times: Living Large on Small Change, for the Short Term or the Long Haul” and “Your Playbook for Tough Times, Vol. 2: Needs AND Wants Edition.”

The post Went Overboard on Black Friday? Four Ways to Fix Things appeared first on The Simple Dollar.

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Tuesday, November 28, 2017

The Incredibly Valuable Role of Frugality in Investing

My wife and I have no debts at all. We own our own house with no mortgage – we paid off the whole thing. We spend substantially less than we earn.

Taken those facts into account, people always ask why Sarah and I consistently make frugal choices. Why aren’t we going on great trips all the time? Why on earth am I driving a 14 year old SUV? Why do we buy store brand… everything at the store? Why do we only have one television, one that has a huge flaw on the screen? Why do I wear shirts that are more than ten years old? Why don’t we live in a McMansion?

The reason we do it is simple: It hastens and improves our retirement without sacrificing anything we really care about.

Our frugality is all about things of lesser importance to us. We actually prefer trips to national parks most of the time. I like driving my current car and hope to do so until it becomes unreliable. The store brand stuff fulfills our needs. Our television fulfills our needs. My shirts are still in fine shape. Our house fulfills our needs and is already plenty big enough. We don’t need to spend money on “better” versions of things if we’re perfectly happy with what we have.

At the same time, spending less enables us to save more for retirement. Our frugality plays a key role in our retirement planning – in fact, I’d say it’s the single most important element. Not our investment choices. Not anything else. Our frugal choices are the most important pieces of our retirement plan.

People often shrug off that statement as crazy talk. Trust me, I’ve seen it: I’ve talked about retirement planning in casual conversation with people and they simply seem to not believe me at all when I say that frugality is probably the most important ingredient. Their immediate assumption seems to be that there is some super secret investment trick to retirement, or else people are just making a lot more money than they are. While both are helpful, frugality is the secret sauce that makes retirement click for most ordinary Americans.

Let’s dig in and see how this works.

A Normal Non-Frugal Retirement Strategy

Let’s look at Bill’s retirement planning. Bill is 25 years old. He makes $50,000 a year and saves 5% of his income for retirement – $2,500 a year. He puts it entirely in a retirement account that earns a 7% annual rate of return – basically in something like the Vanguard Total Stock Market Index. He does exactly this for the next 40 years. At the end of those 40 years, he’ll have $516,555.85 in retirement savings.

That’s not too shabby. At a 4% annual withdrawal rate, which should last him through the rest of his life, he can take out $20,600 per year which is a great supplement to his Social Security benefits (which I estimate to be $16,800 a year using this calculator). That means that, for the rest of his years, Bill will have $37,400 in annual income at a very low tax rate.

Pretty solid, huh? Well, let’s change the picture a little bit.

Adding a Bit of Frugality

Let’s now say that Bill figured out how to spend just $5 less per week. Just $5 – that’s like a single stop at Starbucks or taking leftovers to work instead of going out once every other week or some mix of such options.

Over the course of a year (we’ll give Bill two weeks to spend money as he wishes), that frugality adds up to $250. So, let’s add that to Bill’s retirement contributions. He’s now saving $2,750 a year.

As before, Bill puts it entirely in a retirement account that earns a 7% annual rate of return – basically in something like the Vanguard Total Stock Market Index. He does exactly this for the next 40 years. At the end of those 40 years, he’ll have $568,211.44 in retirement savings. Because he chose to take leftovers to work once every few weeks and skip a morning latte every once in a while, Bill now has another $55,000 in retirement savings.

Bill didn’t use some secret ninja retirement strategy. Bill didn’t add a bunch of risk to his portfolio. Bill simply ate some leftovers a couple of times a month.

What did that change? Bill now can safely withdraw $22,700 per year rather than $20,600 – more than $2,000 a year more for the rest of his life. All because he skipped two morning coffees a month and drank whatever was in the office instead and brought in his lunch once a month instead of going to Applebee’s.

The Standard of Living Shift

Here’s another way of thinking about it. In the first example, where Bill isn’t doing anything frugal, Bill is living on $47,500 a year. When he retires in that case, his income will drop to $37,400 a year. (I’m not worrying about taxes in these examples as taxes will change significantly over the course of forty years.) His income will drop by $10,100 per year.

Now, if Bill takes just a couple simple frugal steps (as I mentioned above), he’s now living on $47,250 a year. However, when he retires, his income will now be $39,500 a year. His income will only drop by $7,750 a year.

In other words, because Bill made just a couple small frugality adjustments in his life, he’s suddenly in a position where retirement becomes much less of a shock and he doesn’t have to give up nearly as much of his quality of life as he otherwise would. In fact, once the cost of going to work is eliminated, Slightly Frugal Bill will probably have very little lifestyle change at all, whereas Not Frugal Bill will likely have to pinch some pennies and give up some real things.

Again, all because Bill found a way to spend $5 less per week. He literally just cut out the least important $5 of his spending each week and it made an enormous quality of life difference in the last thirty years of his life.

Kicking It Up a Notch

Let’s say that Bill is really excited by this. He goes through his spending habits and realizes that he’s spending about $40 a week in ways that are completely forgettable. He stops drinking so much soda. He switches to store brand dish soap and hand soap. He stops buying the expensive shampoo that his barber shop pushes and finds that, with his short hair, inexpensive shampoo and conditioner do a great job. Just little things that are almost completely forgotten in the big scheme of things.

So, rather than cutting his spending by $5 a week, Bill is cutting back by $40 a week. Over the course of a year, that adds up to $2,000 in additional retirement savings on top of the $2,500 he was already saving.

What does this change about Bill’s financial picture? After forty years of investing in the exact same way as in the story above, he’ll now have $929,800.53 in savings for retirement. That’s almost a million dollars.

If he takes the safe withdrawal rate of 4%, Bill will be able to take out $37,200 a year. Add that to his Social Security benefit of $16,800 a year and our friend Bill will have $54,000 a year in income. More Frugal Bill will actually be bringing in more money when he retires than when he was working.

In fact, if Bill just wanted to match his current income (after retirement savings) of $45,500 a year, he could retire at age 62 – three full years earlier – and take all of his living expenses out of his retirement savings for the first three years, then have a safe withdrawal rate for the next thirty years supplemented with retirement to “bring home” $45,500 a year. (He’d have lower taxes at this point, too.)

Our pal More Frugal Bill is retiring three years earlier than expected and will have no drop in income for living expenses for the last thirty years of his life, and all he has to do is take a few little steps like buying store brand dish soap and cutting back on his soda.

What About Other Steps To Improve Retirement Savings?

Investment books and articles tend to focus on two other strategies as the main way to improve retirement savings.

One is simply to invest smarter. Countless articles and books have been written about various retirement investment strategies. In the end, however, they usually require one of several things that most individual investors don’t have: access to a hedge fund, early access to information (by the time the book is written, the strategy is probably played out), tons of time to spend on research, or a great deal of luck.

I tend to subscribe instead to the “index fund” philosophy, which basically says that the best strategy is to shoot for exactly average with the fewest fees possible. In other words, you ride the stock market as a whole all at once and do it as cheaply as possible. This means that you won’t experience tremendous spikes in value, but you also won’t lose your shirt – instead, you’ll stick very closely to the overall average of the stock market. Many investment houses offer index funds that allow you to do this at a very low cost – they essentially just buy everything in roughly equal amounts and thus it doesn’t cost much to manage them. An example of this type of investment is the Vanguard Total Stock Market Index.

Another common strategy is to simply use a Target Retirement Fund, which essentially follows the same philosophy. Target Retirement Funds are typically invested very broadly in a wide array of things and with little hands-on management – it doesn’t take a whole lot of management to just “buy everything.” The difference here is that these shift over time, moving your money from more risky things like stocks into less risky things like bonds as you reach retirement and start withdrawing. An example of this is the Vanguard Target Retirement 2050 Fund.

In other words, “investing smarter” for most ordinary people involves investing in something very broad based and cheap and just sitting on it. You’re going to be hard pressed to consistently beat that strategy, let alone beating it by enough to do better than being even a little frugal and putting that savings aside.

The other avenue for saving more for retirement is earning more so that you can save more. This is a very solid approach, but it often requires a long time to build to a higher income. You can’t just magically flip a switch and be earning 20% more – if that were the case, we’d all be earning millions a year.

Working toward improving your income is absolutely a laudable goal, and success in that goal is incredibly valuable and useful for retirement goals. However, it’s not immediate. The advantage that frugality has in this case is that you can start being frugal immediately. There’s literally nothing stopping you other than your own behavior and your own desires in your head.

Remember, one of the best possible strategies for retirement savings is to start saving now, because the power of compound interest will never be as powerful as it is when you are young. Every month, every year that passes by, the less powerful compound interest becomes.

Frugality is the only strategy that can amp up your retirement savings immediately through your own actions and choices. There’s really nothing else like it.

Twenty Things You Can Do

The best part about frugality is that it’s an a la carte strategy. You can check out a huge list of frugality tips, ignore 90% of them, implement the other 10% that are easy and fit into your life, and save yourself $50 or $100 or more a month.

The key, however, is that you must actually do something productive with that savings. If you take on some frugality strategies that save you $100 a month, you should immediately go to your workplace and increase your 401(k) contributions, or immediately increase your Roth IRA contributions, or open a Roth IRA and contribute $100 a month to it. Don’t let the savings go unused or you’ll find yourself spending that money on other relatively unimportant things.

So, here’s what we’re going to do. I’m going to share twenty really good frugal strategies. Each of these will cut a person’s spending each month by a notable amount. I want you to skip 17 of them. That’s right – if they sound hard, skip them. Choose three of them that feel like they would have very little impact on the quality of your day to day life.

Make those three strategies a reality. Keep track of how much you save following those strategies in a month, then simply adjust your retirement contributions by that much. That’s it! That’s all you have to do!

Even if the change is just $10 or $20 a month, it’s going to end up making a profound change in your retirement savings over time provided you do it now. That’s the advantage of frugality – you can do it now. There are no excuses. You have the power.

Here are twenty straightforward frugality steps you can take.

#1 – Make a bunch of meals in advance, freeze them, and use them. Once a month, spend a Saturday afternoon making a quadruple batch of one of your favorite casseroles or soups. Put three of the batches in the freezer and eat them in the future on nights when you’d otherwise eat out – all you have to do is thaw them and finish warming them up, so it’s really easy. This eliminates three (or so) meals eaten out per month, so it adds up to significant savings.

#2 – Replace some of your routine household purchases with store brands. For most of your household supplies, like dish soap, dishwashing detergent, hand soap, shampoo, conditioner, shower soap, toilet paper, paper towels, and so on, try buying the store brand version instead of the name brand. You’ll save about $1 per item that you switch, on average. If you find that the store brand isn’t good enough, switch back next time, but for most of them, you won’t notice a difference.

#3 – Switch to all LED lighting at home. As you replace light bulbs around your house, buy LED bulbs instead of incandescent or CFL bulbs. LED bulbs last far longer and eat a lot less energy than incandescents, thus quickly recouping their higher initial cost. Compare your energy bill to a year ago and start socking away the difference.

#4 – Put a weather strip along the edge of any doors that leak air. If you have any doors that let in cold air in the winter or warm air in the summer along the edges, add a weather strip to block that air flow. It’s a simple DIY project that’ll take just a few minutes and it’ll significantly reduce your heating and cooling costs. Again, compare your energy bill to a year ago and sock away the difference.

#5 – Caulk the edges of any leaky windows. If you feel any cold air (in winter) or warm air (in summer) leaking in around the edges of windows, apply some caulk to the area where those leaks are occurring. Again, this is a simple project that takes just a few minutes and it can make a surprising difference on your energy bill. As before, comparing your bill to the bill from a year ago will show you the approximate savings.

#6 – Take leftovers to work. After supper, put together a simple meal in a reusable container such that you can just pop it in the microwave the next day, then sit that container in the fridge. The next day – or the day after – grab it on your way out the door to work, then eat it at work. You’re immediately saving several dollars versus going out to eat for lunch, having something delivered, or hitting a food stand or other convenient food option nearby.

#7 – Make coffee at home. There are tons of ways to make coffee at home in a convenient fashion that will drastically cut down the number of times you stop at a coffee shop to pick up coffee. Both a drip coffee pot and a cold brewing setup are incredibly convenient and make delicious coffee at home for a fraction of the cost of buying it at the coffee shop. If you can replace even one coffee shop stop per week with making a batch of cold brew at home, the savings are going to add up very quickly.

#8 – Drink filtered tap water instead of bottled water. We have good tap water here, so I almost never buy bottled water. Instead, I tend to fill up water bottles, keep them in the fridge, and grab them as needed. It’s cold and refreshing and costs just a penny or so. If you don’t have the best tap water and drink a lot of bottled water instead, you’ll save money very quickly by installing an under-the-sink water filter, which makes your tap water much better, or using a filtered water pitcher. The cost of replacing filters is far cheaper than the cost of buying endless bottles of water.

#9 – Use the library for “book shopping” or “movie shopping.” If you’re tempted to go shopping for a book or a movie or an audiobook, head to your local library instead and “shop” there. You can borrow anything on the shelves there for free, watch or read or listen to it, and then return it so it’s not taking up unnecessary space in your home once you’re done with it. It’s free, it saves space, and you’re still entertained!

#10 – Break a “vice” habit. If you smoke, stop. If you take drugs, stop. If you drink alcohol, stop. If you drink soda, stop. At the very least, trim your habit. Such consumable habits are the equivalent of burning your money – it just goes away, leaving you with nothing but worse health in very short order. It’s not worth it.

#11 – Write a meal plan and grocery list before you go grocery shopping. If you need food, spend the time to plan out your meals for the next several days on a sheet of paper or a whiteboard, then make a grocery list based on those meals. Use the grocery list at the grocery store and you’ll spend a lot less time at the store and buy far fewer incidentals and unnecessary items.

#12 – Stock up on holiday supplies right after a holiday instead of before. The best day to buy Christmas supplies like wrapping paper and so on is on December 26th. Everything’s on deep discount, so buy what you’ll need for the following year right then. The same is true for things like big bags of candy for Halloween on November 1 and so on.

#13 – Bulk buy nonperishable things that you use frequently. When buying items that you use frequently that don’t spoil – items like toilet paper or shampoo – buy it in large portions so that the cost per unit is the lowest possible. You can usually save quite a bit by buying 36 rolls of toilet paper at once or a jumbo jug of hand soap. Refill smaller containers out of the large containers of hand soap or shampoo so that you don’t overuse it.

#14 – Use the community calendar first when deciding on something to do. If you’re bored, don’t turn to expensive things like movie listings first. Instead, open up your local community calendar (usually found on your city’s website) and see what’s there. Check the calendar of any local universities as well. Quite often, you’ll find a number of free activities, and if even one of them is enticing, you’ve suddenly got free entertainment for the evening.

#15 – Cut the cable cord. Cancel your cable or satellite service and switch to a combination of Netflix, HBO Now, Amazon Prime, Hulu Plus, and free over the air HD television signals. A good strategy is to rotate those subscriptions and not have them all at once so that you can binge-watch all of their offerings, then move to another service, then eventually come back to one you’ve subscribed to before and catch up.

#16 – Switch banks. If you find that you’re not getting much of an interest rate on your checking or savings accounts, or, even worse, you’re getting dinged regularly for account maintenance fees or big ATM fees or other unnecessary fees, look into switching banks. See if there are any in your area that don’t have such fees associated with their account and then switch to that bank. Banks are in competition with each other – use that to your advantage.

#17 – Inflate your car tires to the maximum recommended amount once a month. This is such a simple free step that it’s well worth your time to take advantage of it. Keep a tire pressure gauge in your car, then once a mont, when you refill your gas, pull over to the free air pump at the gas station. Check the pressure in each tire and refill them all to the maximum recommended pressure (listed in your manual). Every single PSI you put into a single tire saves you 1/8% on your fuel efficiency, so if all of your tires are 8 PSI low (which is a common thing), you’re making your car 4% more fuel efficient for free.

#18 – Run your ceiling fans the right way. During the winter months, the blades of your ceiling fan should be running in a clockwise direction when viewed from the floor, while in the summer, they should be running counterclockwise. The direction is typically fixed with a little switch at the base of the fan. Having your fan running in the proper direction aids cooling in the summer and heating in the winter, making it feel more palatable even when the weather outside is extreme.

#19 – Lower your home temperature by a couple degrees in winter (and raise it by a couple in summer). Not sure about this? If you combine it with the previous tip and have the blades turning the right way on your ceiling fans, you’ll barely notice the difference in rooms where a ceiling fan is running. This simple change causes your furnace and AC to both run significantly less.

#20 – Master a handful of very simple “staple” meals. The temptation to order takeout becomes far less when you always have the supplies on hand for a simple meal or two that you love. For example, our family always has a jar of pasta sauce and a box of pasta on hand for a quick spaghetti meal, something we have a couple times a month. It’s a meal that either Sarah and I can assemble quickly, it’s very inexpensive (because we can always buy the items when they’re on sale and stock up), and it’s something our whole family likes. Find a few meals like that for you and your family and it becomes much easier to just make one of those instead of ordering food.

Final Thoughts

A frugal life provides the foundation for investing, no matter what your goal might be. Frugal choices enable you to start saving for your goals now rather than later because you control the action. You make the choice that gives you the money to invest with.

If you feel guilty because you’re not investing for retirement or for other goals, take a few frugal tactics, apply them to your life, figure out how much they’re saving you, and start investing that amount. You lose almost nothing from your quality of life, but at the same time you’re now working toward a powerful life goal and making real strides toward that grand destination.

Good luck!

The post The Incredibly Valuable Role of Frugality in Investing appeared first on The Simple Dollar.

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