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Saturday, January 6, 2018

Inspiration from Luvvie Ajayi, James Baldwin, Kronos Quartet, 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. J.R.R. Tolkien on a better world

“If more of us valued food and cheer and song above hoarded gold, it would be a merrier world.” ― J.R.R. Tolkien

Contentment. Friendship. Experiences. Love. Simple joys. Simple pleasures. Those are the spices of life. They’re the things that make day to day life worth living.

No matter how much money you have, you can’t ever buy those things. You don’t find contentment or friendship in your bank account balance. You don’t find love or the simple pleasure of soft grass under your feet from wealth. Those things are not found there.

The only use for wealth is to ensure that all of those things that really matter and make life worth living are safeguarded. It ensures that your basic needs are covered so that you can actually enjoy all of those things without stress and uncertainty hanging over your heads.

Beyond that, hoarded gold is just a pile of rocks.

2. A life audit

This is an absolutely amazing article by Ximena Vengoechea that outlines a really nice process for auditing your life. The idea is to simply assess where you’re at now in terms of your dreams for your future, your time use, and your relationships, and think about where they should be going forward.

To start, take 100 post-it notes and, on each one, write one wish you have for the future. No filter, just write them down. Another way is to use unlimited post-its but give yourself an hour. When you write one, stick it on a big open space like a table or a wall. When I did this, I just wrote on post-its for an hour and put them randomly on the kitchen table.

Next, organize and group them in some fashion. You’ll find that they group together reasonably well. Move them around as you see fit. You’ll notice that just a few groupings eat up most of the post-it notes, and those are areas you should prioritize. I wound up with about eight groups, with three of them taking up the majority of the notes.

Next, organize each group into things you can do right now, things that are daily habits or can be achieved by daily habits, or ones that are long term aspirations. Make a giant to-do list of the things you can do right now and use that as a guide. Similarly, make a big list of the daily habits and make a block of time in your life each day to just run through those habits. This actually ends up feeling a lot like a “brain dump,” to tell the truth. Still, the lists I came up with made me feel excited and empowered.

Next, make a ballpark picture of how you spend your time. Draw a circle and slice it into a pie of how you spend your time on an average day or during an average week. Sleep? Work? Watching TV? Browsing the internet? What do you actually do? (Time tracking can help with this). After that, make an ideal picture of how you think you should spend your time, notice the differences between the two, and strive to implement changes in your life that bring about that shift. The biggest thing I wanted to cut out was idle time, to be honest, and I mostly wanted to replace it with focused leisure time.

Finally, look at who you spend time with currently, and then also at the people you most want to spend time with – the people that inspire you but are also available to you. Try to transition to spending more time with the inspiring/available people. For me, I realized I simply need more enriching relationships in my life, which kind of looped back to my big brainstorming on the post-it notes.

It’s a wonderful process. Please, read the article and give it a shot.

3. James Baldwin on negative emotions

“I imagine one of the reasons people cling to their hates so stubbornly is because they sense, once hate is gone, they will be forced to deal with pain.” – James Baldwin

If you find someone else to blame for your mistakes and for the random misfortune of the world, it becomes very easy to not look at yourself and see what you can do better.

Think about who you hate and stereotype and think of as less than yourself. What good does it do you? How does it propel you to better things in life?

Think about all of the anger you feel about how things are unfair. What good does it do you? How does it propel you to better things in life?

Now, look at yourself. What are you doing wrong? Fix that, and I guarantee it will propel you to better things in life.

4. Mariano Sigman and Dan Ariely on how groups can make good decisions

From the description:

We all know that when we make decisions in groups, they don’t always go right — and sometimes they go very wrong. How can groups make good decisions? With his colleague Dan Ariely, neuroscientist Mariano Sigman has been inquiring into how we interact to reach decisions by performing experiments with live crowds around the world. In this fun, fact-filled explainer, he shares some intriguing results — as well as some implications for how it might impact our political system. In a time when people seem to be more polarized than ever, Sigman says, better understanding how groups interact and reach conclusions might spark interesting new ways to construct a healthier democracy.

All right, confession time: right now, my family is going through a few decision making processes together (don’t worry, Sarah and I have a really strong marriage – we’re not getting divorced or anything and our family is strong; these choices are related to other areas of life). One big one that we’re discussing the possibility of moving (for a number of reasons) and Sarah and I decided from the get-go to involve the children in the discussion and, at least in part, in the decision making process.

The decision making process has been rather chaotic and I have been looking for guidance on how to improve it, not just as a teachable moment but in terms of how Sarah and I can make decisions better, too.

This video is great as the ideas apply well to families and to larger groups, but it’s also a fun watch. Give it a shot.

The most helpful thing for us was for each of us to decide what we wanted on our own, and then to pair off and talk about the desires of each of us in the pair without just overrunning the other person. What are the things we really agree on? The consensus things from each pair (10 total pairs) ended up forming the backbone of a really great decision we all felt like we were a part of.

I want to use this technique again and again.

5. Winston Churchill on the work of the world

“Most of the world’s work is done by people who don’t feel very well.” – Winston Churchill

I didn’t want to get out of bed all week. It was too cold, I kept telling myself. I’d rather be under the warm blankets.

Each day this week, I got up anyway. I was the first one in my house awake each day, and I enjoyed multiple hours of quiet in which I got many things done.

I didn’t feel like getting up. My life is better off because I did.

Most of the world’s work is done by people who don’t feel like it.

6. SiteBlock

SiteBlock is a Chrome plugin that allows you to block distracting websites. You just make a list of sites that you want to block (or, even better, a list of sites that you DON’T want to block and it will block everything else) and set the number of minutes you want to allow Chrome to not block those sites each day (say, 30 minutes a day that you’re allowed to visit other sites).

This helps so much with distraction. I have a handful of sites that can just suck away time and this tool helps me to avoid spending too much time on them. It’s helped me to keep on track with my work instead of just idling off to some website when I’m uncertain of the next word or phrase when I’m writing.

It does require you to be using Chrome as your main web browser, though.

7. Luvvie Ajayi on getting comfortable with being uncomfortable

From the description:

Luvvie Ajayi isn’t afraid to speak her mind or to be the one dissenting voice in a crowd, and neither should you. “Your silence serves no one,” says the writer, activist and self-proclaimed professional troublemaker. In this bright, uplifting talk, Ajayi shares three questions to ask yourself if you’re teetering on the edge of speaking up or quieting down — and encourages all of us to get a little more comfortable with being uncomfortable.

A lot of the best things we do in life make us feel uncomfortable. I think of the first time Sarah and I agreed to go on a date – it was uncomfortable, but it was one of the best things we ever did.

Being the first is really uncomfortable as there is always a risk of being left alone and becoming the outcast. That’s the wrong way to think about it. The world doesn’t change if you don’t do or say things that make you uncomfortable. If you want a better world, you have to be uncomfortable sometimes.

The key thing is to ask yourself about the best outcome and the worst outcome and recognize that the worst outcome is probably not that bad or it’s extremely unlikely, but the best outcome is amazing. Stop thinking only of the bad outcome.

Plus, Luvvie is hilarious. Well worth watching.

8. Timothy Leary on responding to others

“If you want to change the way people respond to you, change the way you respond to people.” – Timothy Leary

If you don’t treat others in a good way, why would you expect them to treat you in a good way?

If you don’t like how others treat you, think carefully about how you act towards others. Do you pour out a lot of negativity? Are you quick to anger? Do you listen?

Why would you expect anyone to not do the same to you? Why would you expect anyone to not feel the same way about you?

If you act negatively toward others, expect the same in return. If you speak negatively about others, expect the same in return. If you talk negatively about others when they’re not around, expect the same in return.

9. Deliberate experimentation

I keep coming back to the idea of deliberate experimentation in my life, which is something that Michael Simmons spells out in this great article.

Deliberate experiments are simply things that you do on a trial basis to see whether or not they work well for you and have a nice benefit. Doing something for thirty days, for example, is a great deliberate experiment. If you find that the thing you’re doing has a net benefit, you can and should keep it around; if it doesn’t, then you should drop it and try something else.

Think of it as prototyping your life or your work.

I’ve been doing this with frugality and other money habits since the dawn of The Simple Dollar and lately I’m expanding it into other areas in my life. The process of deliberate experiments almost always results in improvement, but you have to give it time and effort to see the dividends.

10. Viktor E. Frankl on living

“Live as if you were living a second time, and as though you had acted wrongly the first time.” — Viktor E. Frankl

This quote sums up why I constantly reflect on recent choices in my life and recent interactions, and why I visualize ones that are coming up.

Recent events and interactions get replayed in my mind, and I try to imagine how I could have handled them better and what value I can pull out of them. What did I do right? What did I do wrong? What can I learn from all of this to do better going forward?

More importantly, visualizations let me picture various ways to handle an upcoming situation and try to come up with the best avenue for doing so. This almost always leads to a better result.

I can take what I learned from visualizing and replaying past events and use them as a model to avoid missteps in the future. In essence, in my mind, when I do something of any importance, I’ve often already done it a time or two in my mind and seen how it can go awry, so I’m equipped to do it better this time.

11. Kronos Quartet’s performance at the 10th Anniversary NPR Music concert

From the description:

Collaboration. It’s at the heart of many of NPR Music’s finest moments. And it’s in the DNA of the intrepid Kronos Quartet, which some 40 years ago began working with composers around the globe to spotlight new music.

Opening our 10th anniversary concert at the 9:30 Club in Washington, D.C., Kronos, true to form, gave an appreciative audience both a world premiere and an extraordinary surprise collaboration.

There’s more to the description, but I absolutely do not want to spoil this for you. This is an absolutely amazing musical performance that blends familiarity and surprise and skill and artistry. I can’t tell you how many times I’ve listened to this in the last week or two.

If you like string quartets, and especially if you like both Americana and string quartets, this must be listened to.

12. Carl Jung on fate

“Until you make the unconscious conscious, it will direct your life and you will call it fate.” – Carl Jung

We are all driven by instinct and impulses. Most of what we do in a day isn’t thought about consciously.

Until we step back and rethink those unconscious choices, we can’t build a consistently better life. Instead, we’re stuck on our course.

Step back sometimes. Think about your instincts and unconscious choices that you make all the time. How could they be better?

Then, put work to make them better. Think often about how you could do better than before and you’ll find yourself putting that thought into action. It’s the changed action that’s the key.

The goal is to retrain your unconscious mind so that it guides you in better directions. The only way to do that is to think consciously about your decisions and forcibly shape a new path for those decisions to follow.

The post Inspiration from Luvvie Ajayi, James Baldwin, Kronos Quartet, and More appeared first on The Simple Dollar.

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Friday, January 5, 2018

Doing Something Is Always Better Than Doing Nothing

“I don’t have enough money to save for anything! I can barely keep my bills paid now!”

“Being frugal is just too much work!”

“There’s no way I can ever possibly save that much for retirement! Why bother?”

If you visit virtually any message board or open comment thread or Facebook thread in response to a personal finance article of any kind, you’ll almost always find a pile of comments like the one above.

Although the words and the tone and the original article might be different, the core idea from those comments is the same: improving my personal finances is too hard and so it’s better to do nothing at all.

There are a number of reasons for that feeling.

For starters, a lot of personal finance topics are discussed in terms that are outside the bounds of what people can afford. When you start talking about saving $3 million for retirement, a person earning $23,000 a year is going to immediately feel as though the article is coming from fantasyland. It’s just not realistic.

Another key issue is that some of the strategies provided for achieving change are not realistic for the particular lifestyle of the reader. You’d be surprised how often the responses to a list of frugality tips includes people pointing out the two or three out of fifty that are “impossible,” which means that the other forty eight tips must also be irrelevant and that any change is simply out of reach.

The biggest reason, though, is that change of any kind is never easy. There is always resistance to change on some level, and if you’re coming into the situation without being open to trying new things, it’s probably not going to work out well for you.

Whenever I think of situations like this, where people are resistant to change, I think of something my father told me when I was a kid. We had just watched some show about people doing ultra marathons – 100 miles or more in a single run. I had made some comment about how I thought such a thing was impossible. He just looked at me sideways and said, “If you run around the garden and back and do it a couple times a day for a year, you’ll have run 100 miles. If you just stand there and say it can’t be done, you’ll have run zero miles.”

Sitting there and doing nothing will achieve just that. On the other hand, doing something, even if it is the absolute smallest step you can conceive of, will achieve some kind of positive result, and then you have something to start with, a seed to build from.

For example, you can build a pretty nice emergency fund on a dollar a day. Put aside one dollar each day in a jar under your bed and at the end of the year, you have $365. That’s going to be enough to handle a pretty significant emergency. That’s going to fix a broken washing machine or even buy a simple new one. That’s going to replace the worn out tires on your car.

Upgrade to a coffee can and keep going and after five years you’ll have about $1,825. That’s enough to buy an older car to get you back and forth to work. That’s enough to pay rent for a month or two or more, depending on where you live. That’s enough to put a lot of food into quite a few bellies.

How hard is it to save a dollar each day? You can probably find that much in change if you look around for it. Just choose not to buy a soda today out of the vending machine, or when you go to the grocery store, choose to buy a few store brand items. Perhaps you can skip one stop at McDonalds – you’ll probably cover a week of it that way.

Want it to be even easier? Just set up an automatic transfer at your bank. Have them transfer $7 a week out of your checking into your savings account – this is something your bank can probably do. That’s literally the equivalent of finding some change on the ground each day or buying a few store brand items at your next grocery store visit. It takes almost no effort to save a dollar a day, and then you don’t even have to go through the effort of actually putting that money aside – it’s done for you.

That’s not the end of it, either. Let’s say that $365 you just saved on a washing machine means you don’t have to buy that replacement on a credit card. If you had to put it on the card, that’s another $60 a year in interest if you can’t pay it off quickly.

All of that is achieved through the most minimal of efforts.

What about that big list of silly frugal tips? If you can find just one out of fifty that you can easily do – just one – then you’re going to save some money.

Maybe you decide to start buying store brand ketchup. You buy a bottle of ketchup every three months. The store brand is basically identical in taste and costs $1 less. That’s $4 saved with basically no change in your life. Repeat that with other store brand items. You’re saving a few bucks a year with each shift – or maybe more. Store brand sandwich bags. Store brand flour. Store brand cheese. Store brand frozen broccoli. You save. And save. And save.

Maybe, instead, you decide to take on a one time project, something you just do once that keeps saving money for you over the long haul. You decide to borrow a caulking gun and a putty knife from your neighbor and use a bit of his caulk to seal up a few of your windows. You go around, strip the old caulk off of the window edges with a putty knife, squirt the new caulk out like toothpaste, spread it out with a rounded corner on the putty knife, and repeat for your other windows. You’re done in an hour, but suddenly your house holds hot air in the winter and cool air in the summer much better than before. Your energy bill drops by 10% permanently. That’s $100 a year, or maybe more.

Doing something is better than doing nothing.

What about retirement savings? Many people feel completely overwhelmed by not being able to afford to save for retirement. They just can’t save nearly enough to have a “good” retirement, so they save nothing.

How about saving just 1% of your paycheck?

Let’s say you save just 1% of your income for 20 years at a typical 7% average annual return. At the end of those twenty years, you’ll have most of a year’s worth of living expenses built up. If you supplement that with Social Security, it’ll last for several years of supplementing what you have and making life a whole lot better. There’s a pretty nice quality of life jump when you leap from Social Security benefits to benefits plus 25%.

If you’re saving just 1% for retirement while working a $50,000 a year job, you’re literally saving less than $10 a week. It’s barely more than a dollar a day. As I pointed out above, a buck a day isn’t hard at all. Sign up for that, let the money slowly roll in, and you’ll have $30K or so saved up after twenty years.

$30,000 at retirement is far better than $0. $30,000 means you can withdraw $1,000 a year without breaking a sweat and that money will last and last and last, and an extra $1,000 a year on top of your Social Security is going to give you a nice lifestyle bump for the rest of your life. All because you decided to save a buck a day – pocket change, really – for the last 20 years of your working life.

Doing something – even if it seems small and inconsequential – is better than doing nothing, especially if you stick with it. Something as silly and small as buying store brand sugar every time or caulking your windows once or making a double batch of spaghetti and eating a spaghetti casserole in a few days instead of dining out makes a big difference.

It’s just one little step, and it makes a difference.

The best part? One successful little step gives you the courage to take another, and that one makes a difference, too.

Doing something is always better than doing nothing.

What are you going to do today?

The post Doing Something Is Always Better Than Doing Nothing appeared first on The Simple Dollar.

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Thursday, January 4, 2018

Ben Franklin’s Thirteen Virtues: Using One Week to Change Your Life

Benjamin Franklin was born in 1706 into a family of very modest means. Today, they’d probably be called lower middle class at best. His parents had just enough money to send him to school for a couple of years out of hopes that he could eventually join the clergy, but by the age of ten, he was done with school and was a print shop apprentice by the age of twelve, climbing around on printing presses, sorting letters, mixing ink, and all of the other tasks needed to keep a printing press running.

From that humble background, Franklin became a highly successful printer, a well known writer, a scientist, a politician, and a diplomat, among many other hats. During those efforts, he accumulated enough wealth to effectively retire independently wealthy in his forties, and he largely devoted the rest of his life to public service (and his individual interests). He was such a towering figure in the American Revolution that he was deservedly called the “first American,” and his light shines brightly even today.

Even to this day, Franklin’s Autobiography is a splendid read. You can get a nice pocket edition of it for just a few dollars, check it out at your library for free, or download it and read it electronically for free. No matter how you read it, I highly recommend you do so, as it’s an insightful book about an amazing person.

One of the things that has really stood out to me each time I’ve read his autobiography is the fact that he attributed most of his success (beyond that of luck) to practicing thirteen core life virtues, to the best of his ability. He believed that by living those virtues, he had done everything he could to put himself in a position to be on the good side of the unexpected events of life.

He actually had an incredible system for working on those virtues, which I want to talk about today.

Ben Franklin’s “Virtue Cards”

For a large portion of Franklin’s life, he carried around a card in his pocket that depicted a simple table with seven columns and thirteen rows on it.

Each column on this card represented a day of the week – Monday through Sunday. Each row on this card represented one of thirteen virtues that he wanted to work on.

During the day, he might glance at these virtues a time or two to keep them fresh in his mind. At the end of each day, however, he’d pull out a pen and go through those virtues, asking himself if he’d actually practiced them during the day and marking the box if he had done so. His goal was to fill in as many boxes as possible, and each week, he would start anew with a fresh blank chart.

That wasn’t all. Not all of the charts were identical. In fact, he had thirteen variations of the charts, which he cycled through every thirteen weeks. On the top of each variation of the card was listed one virtue, which was the main one he wanted to practice that week, along with a brief description of that virtue.

For example, one week, he might really focus on frugality, while the next week might particularly focus on temperance. He’d reflect on and record his success with all thirteen virtues each day, but he would intentionally focus on just one virtue each week.

You can download a generic duplicate of his virtue card (without the specific focus for the week) here.

A final key part of his practice is that he’d review the cards as a whole at the end of each week, evaluating which virtues were successful that week, which ones were not, and which areas really needed focus and improvement in his life. He’d also review them as a set, and thus with thirteen cards to review, that roughly covers three months of living. A larger review like this – a “quarterly review” if you will – can point you to some larger patterns along your path to becoming a better person.

Over time, these virtues became more and more ingrained in his character. He found himself naturally practicing them more than he once did, which made him into a more well-rounded and successful person and a better participant in society, which he attributed to being a healthy part of the success that he found in almost every attribute of life.

So what were these thirteen virtues?

Benjamin Franklin’s Thirteen Virtues

Here are the virtues that Franklin tracked and reflected upon each day. His goal was to improve himself with regard to each virtue so that over time he was a better person in that regard, and by being a better overall person, he was more open to life’s opportunities.

Temperance
Eat not to dullness; drink not to elevation.
This one’s pretty simple. Eat until you’re not hungry any more rather than stuffing yourself, don’t eat just for entertainment’s sake or for boredom’s sake, and stop drinking when it begins to impair your judgment and sensibilities. It’s about self-regulating what you put into your body and making the conscious choice to put in only enough for good living.

Silence
Speak not but what may benefit others or yourself; avoid trifling conversation.
If you don’t have anything of value to add to a conversation, don’t do so. Instead, just listen to what’s being said – and actually listen. Try to seek out meaningful conversations and avoid meaningless chatter. This doesn’t mean that you avoid getting to know other people and small talk, but that you recognize that there is a distinct purpose to such conversations and you keep a focus on that purpose. Idle chatter for no purpose is the problem, as is speaking just to fill space in the conversation.

Order
Let all your things have their places; let each part of your business have its time.
Keep your physical possessions organized so that you can always find what you need. Do the same with your time, so that you always have time for the things that are important to you; if that’s a struggle, adopt some form of time management or a smarter approach to one’s possessions. If you have too many things that it becomes very difficult to keep them all straight, then this is a call to start downsizing the less important things.

Resolution
Resolve to perform what you ought; perform without fail what you resolve.
If you decide to do something, carry through with it. Don’t commit to things that you can’t follow through on or aren’t actually intending to follow through on. Say “no” if you’re asked to do something that you can’t actually follow through on. In fact, if you’re unsure, say “no” just so you’re not left with someone else holding the bag due to your failure of resolution. If you say “yes,” follow through on that yes.

Frugality
Make no expense but to do good to others or yourself; i.e., waste nothing.
My favorite virtue, perhaps. Don’t be wasteful with your money. Whenever you spend a dollar or use something, have it be genuinely purposeful. You want to get maximum value for the dollars that you have when you choose to spend them. If you’re not choosing to spend them, put them to work for you in some aspect of your life, either by paying down debt or building an emergency fund or saving for a big goal like retirement.

Industry
Lose no time; be always employ’d in something useful; cut off all unnecessary actions.
Don’t spend your time idling. Try to spend your time doing something productive, and if you lack the energy or focus to do the task at hand, find something else that fits where you’re at. If you don’t have anything on hand to do, spend that time improving yourself. If you’re too tired to do anything, sleep, and if that tiredness is consistent, engage in purposeful leisure or talk to a doctor.

Sincerity
Use no hurtful deceit; think innocently and justly, and, if you speak, speak accordingly.
Be honest in your words, but also kind in terms of the impact that they can have on others. Don’t be hurtful with what you say, but strive to lift up the other person. Don’t lie and don’t mislead, but don’t be cruel with your words, either. If you must criticize, find ways to criticize without being “brutally honest,” which is insincere in its intention.

Justice
Wrong none by doing injuries, or omitting the benefits that are your duty.
Don’t bring harm to others for your own benefit. Try to find ways so that everyone involved in your interactions finds some genuine benefit. Seek out solutions so that everyone wins. If you agreed to an arrangement, stick by that arrangement, or renegotiate it if it’s now untenable.

Moderation
Avoid extremes; forbear resenting injuries so much as you think they deserve.
Choosing extreme positions or acting toward others in extreme ways often ends up with negative consequences for you without any real benefit. Avoid taking positions or behaving in ways that bring harm towards others unless you intentionally are bringing harm, in which case be careful in the amount of harm you bring.

Cleanliness
Tolerate no uncleanliness in body, cloaths, or habitation.
Practice hygiene. Keep your clothes clean. Keep your home clean. Keep your office clean. Keep your teeth clean. This is not only for your own health, but also for how you present yourself to the world.

Tranquillity
Be not disturbed at trifles, or at accidents common or unavoidable.
Don’t be upset by the unexpected events that life throws at you. They’re going to happen – being upset does not help resolve them. If you recognize your emotions swelling, consciously keep them in check. Learn how to recognize your own emotions inside and understand them without reacting to them or acting upon them. Use them as information instead in order to make better decisions.

Chastity
Rarely use venery but for health or offspring, never to dullness, weakness, or the injury of your own or another’s peace or reputation.
Don’t let physical passions become a distraction or a main focus in your life. Don’t allow it to cause you to betray or harm others. Again, if you find yourself in a position where things are untenable, seek outside help and don’t simply toss the virtue to the side.

Humility
Imitate Jesus and Socrates.
Undersell and overdeliver in everything that you do. Don’t talk about how great you are; instead, be great and give abundant credit to others.

A person who is a true master of these thirteen virtues would be a great person, indeed, and would likely find that great success nearly falls on their lap.

Make Your Own Virtues

While I believe that these are all worthwhile virtues to practice, one might want to choose other virtues – or even personal skills – that they want to improve and substitute them into Franklin’s plan. One could easily remove some virtues and substitute other ones, or even start from scratch with one’s own virtues.

For example, let’s say that someone wanted to use this practice to strictly improve their finances. They would likely retain frugality and temperance, but they might want to add other virtues and skills to the mix, such as mastering food preparation, using deliberate practice in one’s career path, building social skills, and so on.

Let’s say that you wanted to master becoming a calmer person. You might include things like meditation, stoicism, and prayer in your list of virtues.

It all depends on what you want to achieve. However, I will say that Franklin’s list of thirteen virtues really will go a long way toward improving your overall character and life situation no matter where you’re at in life.

The goal with all of this is to come up with a set of very specific virtues or skills that you can apply every single day to become a better person, the person you want to be, and then review your progress with those virtues and skills each day. Over time, those skills and virtues would become natural to you, shaping you into the person you desire to become.

Make It a Practice

The key to this, of course, is to make it a daily practice.

Once you’ve defined a set of virtues or specific skills that you want to work on in your life and integrate into your normal behaviors, take it a step further and copy Franklin’s entire system, using your desired virtues and skills as the basis for your practice.

You can start by making a set of cards for the virtues you want to practice. It’s pretty simple to design a small table, with rows for each thing you want to improve and columns for each day of the week, in your preferred word processing program. Just design a size that prints easily on a blank 4″ by 6″ index card and print them yourself. If you prefer, you can also design them by hand using a ruler and a pen.

On each card, simply write the days of the week at the top of each column and an abbreviation of the skill or virtue you want to practice to the left of each row.

Consider designing a set of these cards, one with each virtue or skill you want to practice at the top with a brief description, so that you have a particular virtue or skill to focus on that week. Print off (or make) the entire set at once, cycle through all of them, and then make a new set and start from scratch.

You can also implement this practice electronically. Just use a note program on your smartphone that contains a list of the virtues that you can use to review each morning and each night. A simple program like Evernote can handle the job quite well.

At the end of the week, review your overall progress. Which virtues are you particularly weak on right now? What can you do to strengthen those virtues going forward? Use the data you recorded – both the marked virtues and skills you succeeded with and the ones you missed – as a source of insight on how to continue to improve.

The key thing to always remember with a process like this is that it takes time. People always want immediate results that appear like magic. Improving yourself takes time, and then it takes even more time for the effects of that improvement to propagate out into your life. The key thing with this is to remember that you are getting better, little by little. If you strive to be a little better than the day before, you’re always heading in the right direction, and given enough time, that change will ripple out into the world.

This really is a simple yet brilliant system for genuine self-improvement. It can help you change your character as a whole or help you bring about true lasting improvement in specific areas of your life. The key is to trust the process – keep doing this over a long period of time and you’ll find yourself in a better place.

Good luck.

The post Ben Franklin’s Thirteen Virtues: Using One Week to Change Your Life appeared first on The Simple Dollar.

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Wednesday, January 3, 2018

Who Are You Doing This For?

The path to financial independence is not an easy one. It requires you to repeatedly avoid the path of least resistance in everyday life. You have to choose the harder path, over and over again, until it becomes natural.

Any time you’re trying to follow a path that isn’t the easiest one before you, you have to have at least some degree of motivation to make it work. Why are you making these changes? Who are you doing this for?

For me, I can think of four distinct stakeholders in my own path to financial independence.

I’m doing this for my community. People in my community give a lot of themselves to make it a better place. I live in an area with friendly neighbors, nearly nonexistent crime, nice parks, low housing costs, and lots of community events and activities happening. Those things don’t happen if you don’t have an involved community around you. It takes both a time commitment and a financial commitment from a lot of people to have a great community to live in.

Over the years, I have taken so much from the community around me. I have attended wonderful community events. I have enjoyed well maintained parks and recreation areas, far beyond what funding can cover. I have formed many friendships and acquaintances thanks to the multitude of efforts and organizations and events in the community.

To put it simply, I want to give back. I want to maintain those things that have given so much to me over the years, and perhaps even grow them. I can’t do that without good financial stability and life stability. Stewardship of the good things in life doesn’t come from skating through life living paycheck to paycheck.

I’m doing this for my children. My wife and I made the choice to bring three defenseless infants into this world, taking on the commitment to raising them into adulthood as responsible citizens of the world.

It is our job to care for their basic needs and bring them into adulthood with sound principles and values, good life skills, and a strong sense of self. While those things are certainly possible without financial stability, having a strong money foundation makes them much easier. A firm financial foundation means not having to worry about providing nutritious foods or warm clothing or adequate shelter. It means providing access to enriching activities. It means the ability to expose them to countless growth opportunities.

Sarah and I took on that commitment. I intend to see it through, to the best of my ability. They deserve nothing less from me.

I’m doing this for my wife. I want Sarah to be able to follow her dreams and passions in this world, wherever they may lead her. If she wants to push herself in a new direction, I don’t want her to be restricted in that choice by a financial tightrope. I want her to be able to take a leap of faith in a new direction without worrying that everything will fall apart if she does so.

At the same time, I want to spend my later years with her, when our children are grown and the household returns to just the two of us. There is no one else in the world that I’d rather spend time with, and I want that time to be glorious, with minimal worries and pressures.

I took on a lifelong commitment the day I chose to marry Sarah, and I intend to live out that commitment. I want to lift her up as high as I possibly can.

Most importantly, I’m doing this for myself. I don’t want to live a stressful life. I don’t want to be afraid of the future. I want a future of abundant possibility. Financial stability and independence is the route to get there.

When I think of the future that I want, the path to get there is one that is walked on a firm financial foundation. If that foundation is soft, I’m going to get stuck in the mud along the way. I’m not going to achieve the things I want out of life. Is it really worth it to sacrifice that firm financial foundation just so that I can have a few more forgettable treats or that I can buy a package with a name brand on it instead of a store brand? It’s not a tradeoff I’m happy with.

I’m on this path for my community. I’m on this path for my children. I’m on this path for my wife. Most of all, I’m on this path for myself.

It’s this mix of external and internal motivation that really helps keep me on a strong financial path.

In the moments when my internal motivation is weak and I feel more like splurging now rather than building financial security, I’m able to think of my family and my community and draw upon those motivations to sometimes help me make better choices.

At the same time, I often find that the moments when my external commitments are faltering, my internal resolve is pretty strong. I’m sometimes simply motivated to do this for myself, to have the financial future that I want and to head toward the big things that I want.

It’s the ability to draw on different kinds of motivations that keeps me going consistently. I have very different connections to these different stakeholders and they tug on me in very different ways. Because of those different stakeholders, I find myself readily equipped with motivation in almost every situation.

Who are you doing this for? Think about the question deeply.

First and foremost, you need to be a stakeholder in this. Without that internal commitment, without that desire to build a better life for you, nothing will ever hold up. In the end, it always comes back to you. External factors may change, but the internal remains.

At the same time, however, other people can really help carry you when you are weak. There are times when internal motivation fails you, and it’s in those moments that having some kind of motivation from someone else can really help.

I like to think of the analogy of someone going for a run each morning. It takes internal motivation – a desire to improve yourself – to push yourself out of bed each morning. What about those mornings when you really, really, really don’t want to get out of bed, though? Sometimes, knowing that someone else expects you to be there to run or someone needs you to run is enough to get you to swing your feet out of bed and plant them on the floor. In tandem, external and internal motivators are quite powerful.

Spend some time reflecting on your internal motivations, but also on your external ones. Who else are you making these changes for? How does it benefit their life?

A final thing to remember: a rising tide in your life lifts all boats, so you almost always indirectly improve your own life when you improve the life of someone around you. Making a better life for Sarah will, in the long run, make a better life for me. Making a better life for my children will do the same; even community commitments will do the same. The simple act of not disappointing someone almost always lifts us up.

Reflect on that idea. Think about not only why you’re motivated for financial change, but all of the people you’re doing this for besides yourself. Think of how you can become a rising tide in all of their lives, lifting everyone. Think about that rising tide often.

There will be moments when it’s all about you. There will also be moments when it’s all about them. Be ready for both.

Good luck.

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Major Military Retirement Changes Coming for U.S. Service Members

Hundreds of thousands of U.S. armed forces personnel will soon experience big changes to the way their retirement benefits are earned and distributed. The crux of these military retirement changes is a shift away from all-or-nothing pension-style plans toward a more portable 401(k)-style plan for new service members.

A provision of the national defense budget signed into law in 2016 will end the present all-or-nothing retirement system as of Jan. 1, noted Michael Meese, a retired brigadier general who serves as executive vice president and secretary of the American Armed Forces Mutual Aid Association.

Currently, military retirees are paid 50% of their base pay after 20 years of service. If they remain in the service for 35 years, they can receive 87.5% of their pay in retirement.

Those are very generous retirement benefits you don’t see too often now that pensions have grown less commonplace. But they do nothing for the four out of five service members who don’t make it to the 20-year mark in the military.

The new system “provides retirement savings for virtually everyone who joins the military, not just the less than 20% who stay to a 20-year retirement,” said Meese. “Right now it’s all or nothing. If you don’t stay 20 years, you have nothing for retirement pay.”

Under the updated retirement program, people who serve in the military for as few as two years will receive retirement benefits through 401(k)-type investments in government Thrift Savings Plan accounts. The defined-contribution plan provides an automatic account contribution equal to 1% of annual pay, but Meese noted that the military will match individual contributions of up to 5% of one’s salary.

Meese calls the new system a blended retirement plan, since it combines components of a pension with savings and investment components. The government’s Thrift Savings Plan — originally for civilian employees only — provides the same type of savings and tax benefits that many private businesses offer their workers.

At least 85% of those serving in coming years will leave the military with retirement benefits, compared with less than 19% under the old system, reported Time Magazine. And the changes will help service members who serve honorably but wouldn’t qualify for a pension under the old program, said John Cooney, a financial planner based in Maine.

Military retirement changes – and choices

Longtime military service members may be worried about losing those valuable pension benefits. The good news is, the new system will preserve the retirement plans of current active duty troops and retirees, said Meese.

Current military members with more than 12 years of service automatically will remain a part of the old pension-style system as well, while people who join the military after Jan. 1, 2018, will automatically be placed into the new plan.

Service personnel with less than 12 years in the military as of Jan. 1, meanwhile, have a choice to make: They will have a year to decide between remaining in the old pension-style system or moving into the new one.

Preserving that choice for these individuals is important, because the old retirement program provides more generous benefits than what’s envisioned under the new system — if only to those who make it to the 20- or 35-year mark.

By electing to move into the new system, service members guarantee that they can leave the service with some benefits, even if they aren’t able to serve for the full two decades required for pension pay.

If they decide to stay in the old system, they would reap more benefits if they make it to full retirement — but risk being left empty handed if unforeseen circumstances force them to leave the military before they reach the 20-year mark.

Saving money for Uncle Sam

Although the new system will extend benefits to more people, it’s expected to save the government about $2 billion annually, Meese added. That’s because the pensions for people who stay in the military for 20 years or longer will be smaller under the new system.

Traditional pension plans provide income for life, and recipients don’t need to worry about how their funds are invested. Under the new blended retirement plan, service members must take on greater responsibility for saving a percentage of their salaries and making sound investment choices – much like private-sector employees contributing to and managing their 401(k).

Meese holds that this is a positive development. The new system will empower service members to take charge of their financial futures, he said. “There will be increased awareness of economic conditions.”

One of the best things about the new retirement system is that it yields a retirement benefit that is portable. According to The Hill, when service members retire from the military, they’ll be able to roll over their government benefits into civilian retirement plans. This is expected to help with armed forces recruitment, since not everyone who enlists wants to have a long military career.

Making a decision

Military personnel who have the choice of remaining in the current system or shifting to the new one should review their options carefully before making a decision, said Cooney.

If they decide to go with the new savings and investment program, “they should opt-in earlier rather than later, so that they can start to immediately begin receiving the government contributions,” he said.

Related Articles:

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Tuesday, January 2, 2018

Fifteen Ways I Plan To Save Money This Year

A few days ago, I posted a list of fifteen things I did in the past year to save money. While this provided a great reflection of many of the positive moves I’ve made in recent times that actually had a positive effect on our finances, it’s perhaps just as important to turn one’s gaze forward and ask what a person might do in the near future to save money.

With that in mind, here’s a parallel list of fifteen items, except these are things I plan to do in the coming year in order to cut our expenses.

I plan to cut the cord and drop cable television entirely. As soon as our current contract expires, we plan to cut out our satellite bill entirely. In fact, I already have the date marked on my calendar. On that day, I’m placing a call and having the service disconnected.

This is a large bill – larger than I’d like – for a service that we scarcely use. We don’t watch a whole lot of television to begin with – far below the national average – and when we do watch, it’s often a selected show from Netflix or Amazon Prime. We simply do not spend much time at all watching cable television.

Our motivation to keep it in the past has been to watch sporting events and live news, but we honestly find other ways to view those things. I typically go to a party or a friend’s house to watch big sporting events and I don’t watch any at home. We catch national and international news via the internet, and we catch the local news via over the air signal. There just isn’t much of a use case any more for cable television, so we’re dropping it.

I plan to reduce the size of my board game collection by 50%, rather than expanding it further. My goal by the end of the year is to reduce the size of my board game collection by 50% through a mixture of game trading and selling online. While that doesn’t mean that a few new games won’t appear in my home, it does mean that the overall number needs to drop.

This isn’t because I don’t like my game collection. I will undoubtedly be getting rid of some games that I do not want to get rid of. Rather, I’m doing this because I simply have more games than it is possible to reasonably play in a reasonable amount of time, and I want to trim it down to the ones that I am most excited to play and feel as though I will actually be able to get to the table regularly.

There will definitely be some proceeds from this selloff, which means that my hobby spending in the coming year will be much less than the previous year and, hopefully, approach neutral ground.

I plan to have at least two “meal prep days” per month. A “meal prep day” simply means that I spend a large portion of a day preparing meals to be frozen and used at a later date. For example, on a meal prep day, a person might make a huge vat of soup and then store it in smaller family meal sized containers for freezing so that, at a later and busier time, that bag can be thawed to provide a very quick family meal.

We’ve done this several times in the last few years, but I want to make it even more regular in the coming year. Having those meals in the freezer has been a godsend at times and I’d like to reach a point where they can just be completely banked on a night or two a week (at least) instead of just filling in a gap here or there. Sadly, our meal preps weren’t always enough to cover our needs for quick meals and we ended up utilizing local restaurants a few times, something I want to change. To make that happen, I need a more regular commitment to meal prep days.

My first one is coming up very soon. Much as I noted above, I’m going to make a giant vat of soup (actually, a chili recipe) and then put it in gallon freezer bags in sufficient quantity to feed the family and make enough leftovers to cover lunch for Sarah and myself the subsequent day.

I plan to store most of our extra garden produce rather than giving most of it away. In the past few years, we’ve been so flooded with produce that we ended up having to give some of it away. We didn’t really plan ahead very well for huge piles of cucumbers and tomatoes, so we didn’t end up utilizing them very well.

That’s changing this year. As soon as the plants look anywhere near their harvest, we’re coming up with a concrete plan to process and store all of it – or as much as possible. I have plans for making salsa, pasta sauce, and pickles in copious quantities, and I’ll be penciling in a weekend to do it as soon as our harvest dates become more clear in the spring and summer.

This isn’t because I mind giving some produce away – I don’t – but we gave away so much that I’m sure at least some of it quietly went to waste on the tables of our friends. That’s a mistake that I don’t want to repeat.

I plan to go through a very deliberate process to replace our SUV and pay for it in cash. As proud as I am of the fact that we managed to get ten years of driving out of the SUV that we bought used off of Craigslist, it really is reaching the point where it needs to be replaced. We have a brilliant mechanic who has done a great job of keeping things going, but the list of repairs that are coming up around the bend is large – new shocks and struts, a new flywheel, a new transmission, a new starter, a new circuit board for the instrument panel, a new radio, and several kid-related cosmetic issues – and the vehicle is now over the 200,000 mile mark. It’s time to replace it.

I am very glad that Sarah and I have been saving for this situation (and for the replacement of her commuting car in a year or two). We have the freedom to shop slowly for what we want, on our own terms, and buy accordingly.

Later this month, we’re going to sit down together, figure out exactly what vehicles and features we are targeting, and simply tell several local dealerships exactly what we want. We have no interest in shopping around for anything less. The one that comes in with the lowest price within a few weeks will get our business.

I plan to integrate even more low cost staples into our meals. In the past couple of months, I have really come to appreciate our rice cooker. I think I finally reached a level of proficiency with it where the rice comes out pretty much exactly how I want every single time and I can prepare lots of variations to boot.

Because of that, we’ve been eating more rice in our diet as of late, and that’s great because rice is really inexpensive and reasonably healthy.

In the coming year, I want to expand on that. I want to really master the art of cooking all kinds of beans – not just the black beans and pinto beans and lentils that I’m good at preparing, but other kinds of beans as well. I want to get really efficient at it so that it doesn’t become an obstacle.

I want to dabble into ways of making really high quality versions of other low cost staples, too. For example, I want to get back into making sizable batches of homemade pasta, which is dirt cheap and delicious but time-consuming unless you attain a high level of proficiency.

You might call these things a “hobby,” but they produce some amazing meals at an incredibly low price.

I plan to make large quantities of vegetable stock with our leftover vegetable scraps instead of just disposing of them. We often end up with a lot of vegetable scraps – a few spoonfuls of unused steamed broccoli or part of an onion or a few bits of green pepper. In the past, I was in the habit of throwing them into a gallon Ziploc bag in the freezer and then eventually making stock out of them, but somehow I fell out of that habit.

In the coming year, that’s a habit I hope to reclaim. I want to avoid wasting even a single usable scrap from our home, so what I’m going to do is just put all of it in a fresh new gallon bag and, when it’s full, dump it in the slow cooker in the morning, turn it on low, add some salt and pepper, and let it simmer all day. In the evening, I just strain it and put it in another container to freeze until we need it. It’s as simple as that.

Why do this? Vegetable stock is an amazing flavoring for all kinds of things. You can use it instead of water to make mind-blowing rice. You can use it as the basis for soups. You can use it to deglaze pans while you’re cooking to add even more flavor. You can use it in almost any dish that calls for a little water to add a spike of flavor. It’s so versatile and makes cooking at home so much tastier!

I plan to redo the caulk around several windows. During this current cold snap, I’ve noticed that the caulking in a few of our windows is weak, so I’m going to fix that, probably by the time you read this. This is my money “resolution” that will likely see the first action of the year.

Taking care of a little air leak around a window is easy. You just need a tube of caulk, a putty knife with a rounded corner, and a caulking gun. All you do is strip off any caulk in place with the putty knife, put fresh caulk there to replace it with the gun – it’s like spreading toothpaste on a toothbrush – and then smooth it out and let it dry. That’s it.

The caulk then blocks cold air from coming through the window, which keeps your house warmer in the winter, cooler in the summer, and ensures that your heating and cooling doesn’t run nearly as much, which saves a ton of energy.

I plan to price book the multitude of new grocers that have opened near our home in recent months. In the last few months, a bunch of groceries have opened up within fifteen minutes or so of our home. While I definitely rely on the old standby of the discount grocer that’s really close to our home, I want to make sure that we’re really getting the best prices on the things that we buy and eat.

How do I do that? I use a simple price book. I have a list of 25 or 30 things that we routinely buy – things like dry beans, pasta, certain fruits and vegetables, milk, and so on. I just go to each of the stores and check the regular prices on each of those items. How do they compare? Then, I add up how much we’d spend on those items over the course of a month. If one store is clearly ahead, that one becomes our default store.

With the number of new grocery stores around, particularly given that two of them are heavily promoting their low prices, I feel it’s time to do this type of price comparison and see if I can find a more cost-effective place to shop. My guess is that I won’t, but one can never be sure.

I plan to use items on hand to build a standing desk for free rather than buying one. I’ve been considering a standing desk for a long time, but nice standing desks can be pricy. They need to be very stable, for one, so you typically can’t go to your local low-end store and pick one up that’ll work well.

Instead, I’ve decided to just place a very stable desk we already have on a raised platform to function as a standing desk. This saves us the cost of having to purchase one.

Why a standing desk? The simple reason is that I need to move around more for my own health and the shifts and movements one makes while at a standing desk serve that purpose. I am considering eventually making it a treadmill desk.

I plan on not buying any new books for a year. The only books I will buy in the coming year will be from gift cards or other forms of store credit.

Why am I doing this, given that I am such an avid reader? It’s simple. I have a big pile of unread books at home, plus the library is an infinite source of additional books to read for free, plus I am on the dock to borrow several books from friends and family members.

Simply put, I have a ton of reading to do in the coming months without buying a single book… so why buy more books?

I’m sure that throughout the year I am going to find books that I am passionate about reading. Those books will go on a wish list or onto my library reserve queue.

I plan on adopting a diet even more heavily based on plants. This is a simple change. I just want fruits and vegetables to take up a higher percentage of my plate this year as compared to previous years. I can do this by being more conscious in the meals I’m preparing.

How does that save money, though? Well, for starters, countless studies have shown that plant-heavy diets have a huge benefit in terms of long term health, which reduces long term health care costs. At the same time, the costs of fruits and vegetables and grains is quite low compared to the costs of things like meats. Go to the store and compare the cost of a steak to what you can get from the same price in the produce section or even the frozen or canned vegetables area.

This is a dietary shift that’s already been a part of my life but one that I hope to push even farther in the coming year.

I plan on vacationing with another family to split expenses. We’re planning a road trip vacation this summer, which wouldn’t be all that expensive on its own, but to make it even less expensive, we’re planning on doing it with others and sharing a lot of the costs along the way

We’re using one very large vehicle for all of us rather than using multiple vehicles. We’re combining our lodging, too. Along the way, we’re all cooperating on meals and plan on using the kitchens at the places we’re staying more than eating out, which saves even more.

This is going to be an interesting and exciting and relatively low cost summer vacation, and I can’t wait.

I plan to get a November Project started near me. A “November Project” is simply a regular day, time, and place for people to get together and run a 5K. My plan is to try to get one started in the spring in our town park, where people meet up regularly in the early morning to run a 5K around town.

My hope is to get the Parks and Recreation department on board – which shouldn’t be too hard, as there’s no cost – and then use their resources to promote it. The goal would be to schedule one early in the morning so that people are done before work and school and to schedule it a couple times a week to accommodate varying schedules.

I’m not exactly a good runner, but the idea of building a community of people towards a positive health goal with no cost sounds quite appealing to me. I hope to write a really successful article about this in several months.

I plan on having a giant yard sale in the late spring. Our town has a community-wide yard sale each year in the spring and this year I hope to participate in it with a large family yard sale, perhaps in cooperation with an interested neighbor.

We have a lot of accumulated possessions from the past decade, particularly toys and clothes that our children have outgrown, that need to either be sold off or donated, as well as collections of DVDs and lots of other random items. I’m in the process of downsizing some of my possessions for personal reasons as well (besides just the aforementioned games).

A yard sale in the spring gives me (and everyone else in our home) something of a timeline to work toward in terms of processing our possessions and doing some conscious downsizing. Plus, it can produce some revenue for us along the way.

These tactics – and many other little ones that I’ll find and use along the way – give me great optimism that the coming year will be a wonderful one in terms of securing our financial future and enjoying many of the other life benefits that come from doing so, such as healthier lives and a better sense of control over our possessions. I hope you’ll stick around on this journey with me.

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Hard Inquiries and Soft Pulls on Your Credit Report: What’s the Difference?

Sometimes, having your credit reports pulled can lower your credit scores. Other times, a credit inquiry won’t affect your credit scores at all.

The question is, do you know how to tell the difference? The answer comes down to the difference between hard and soft credit inquiries.

Soft and Hard Credit Inquiries: The Basics

The term “inquiry” describes the event that occurs whenever some party is granted access to one or more of your credit reports.

If you’ve taken the time to review your credit reports lately, you may have noticed a list of credit inquiries on those reports. On some credit report formats, the inquiry section is called “Companies that accessed your credit report,” or some reasonable variation. Your credit reports will display the name of any company that has pulled your credit profile, as well as the date of the access.

These inquiries can sometimes lower your credit scores. Yet, there are other times when credit inquiries won’t impact your credit scores at all.

There are two different categories when it comes to credit inquiries: hard and soft. Here are some examples of each…

Hard Inquiries Soft Inquiries
Credit card applications Checking your own credit report
Mortgage applications Pre-approved credit offers
Personal loan applications Employment screening credit checks
Auto loan applications Account maintenance credit checks by current creditors
Collection agency skip tracing Credit checks by insurance companies

Hard inquiry: May lower your credit score

Hard inquiries are those that do have the potential to lower your credit scores. You may have noticed a pattern in the above table that hard inquiries generally occur whenever you take the action of applying for new credit.

On the surface, it may seem unfair that merely allowing someone to check your credit might somehow lower your credit scores. However, credit score developers like FICO and VantageScore can clearly show a correlation between how frequently someone applies for new credit and the level of credit risk they pose going forward. That’s the answer to the question, “Why can inquiries lower my credit scores?”

How long do hard inquiries stay on your credit report and impact your score?

As a rule, you’ll want to avoid having your credit reports pulled unnecessarily. But it’s also helpful to remember that while hard inquiries typically will remain on your credit reports for two years, credit scoring models will only consider them for their first 12 months.

Also remember that, of all the factors that contribute to your credit score – including your bill payment history and outstanding balances – credit inquiries have the lowest impact. So if you have a few of them already, don’t freak out.

Soft inquiry: Will not lower your credit scores

Soft credit inquiries, on the other hand, will not impact your credit scores in any way.

As you can see from the table above, checking your own credit report falls into the soft inquiry category. This means you should never be afraid of damaging your credit scores by checking your own credit reports, despite myths to the contrary.

In fact, not only will soft pulls never hurt your credit scores, these inquiries will only show up when you’re checking your own credit reports. If a lender pulls your credit report, the soft inquiries will not even be visible. You’re the only one who can see them.

Don’t Make This Mistake

After 26 years in the credit industry, I’d like to believe I’ve heard it all… including the following mistake: If you have a friend who works at a car dealership or as a mortgage broker, don’t ever ask them to pull your credit for you.

Their credit report terminals are hard-coded so that every single credit report they pull results in a hard inquiry from either their car dealership or mortgage broker. To the outside world, it looks like you just applied for auto financing or a mortgage loan, and your credit score may temporarily suffer for it.

What’s more, unless you actually applied for a car loan or a mortgage, then your “friend” just caused his or her employer to violate the Fair Credit Reporting Act’s Permissible Purpose provision, which says that credit reports can only be accessed for legitimate purposes. Having a buddy pull your credit reports, outlaw style, is not a legitimate purpose. Just sayin’.

Related Articles:

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Monday, January 1, 2018

Questions About HELOCs, Gift Planning, Pocket Notebooks, Basic Income, and More!

What’s inside? Here are the questions answered in today’s reader mailbag, boiled down to summaries of five or fewer words. Click on the number to jump straight down to the question.
1. Money conversations before engagement
2. HELOCs and taxes
3. IRAs that accept rollovers
4. Gift advice (for next year)
5. Forever stamps
6. Long lasting headphones for exercise
7. Scared to spend
8. Buying glasses online
9. Praying for financial success
10. Thoughts on basic income
11. Best sturdy pocket notebook?
12. Running for office?

Like many Americans, the turn of the calendar year brings with it resolutions and plans. There’s simply something about a fresh, empty calendar that fills people with possibility for a better future.

For me, the biggest commitment I have for 2018 centers around fitness and exercise. My flexibility is poor and I’m unhappy with my cardio – I get out of breath easier than I’d like. I want to be able to play soccer with my kids as they grow older and not just in relatively short bursts.

Another big commitment I have for 2018 is a commitment to more meaningful reading with a focus on nonfiction and personal development. I hope that some of these books have a direct positive impact on my writing here at The Simple Dollar.

A final initiative that I have planned for 2018 is to improve my daily routines, particularly in the morning. I find that when I stick with a daily routine, almost everything moves more efficiently and I allowed my daily routines to fall apart in 2017 for a number of reasons. That will change this year.

How am I doing these things? I’m basically relying on my handy to-do list. I have items related to each of these areas that I’ve added as recurring tasks to my to-do list so that I think about and do them each day. In fact, I’m actually trying a new method for many of the changes… which I’ll talk about in a post later this week.

Q1: Money conversations before engagement

I am a 37 year old scientist. My boyfriend is a 36 year old nurse. We’ve dated for year and just learned our finances are quite different. He has about 12,000 in a retirement account and 4,000 in a savings account. He was a professional athlete and engineer and went back to school to be a nurse. He has 85,000 in debt and is considering grad school to earn a masters degree in nursing. I’m worried about his financial situation. I’ve saved more for retirement, I have savings in investments. What are your thoughts? Marriage material? Important discussions to have?
– Dana

I wouldn’t be as concerned about his debt load as I would be about his actual daily practices. Does he live a lean, frugal life? Does he live in a simple apartment? Does he spend a lot less than he earns? If that’s how he lives his day to day life, I wouldn’t be worried about the debt. The truth is that a significant pile of debt is part of the startup cost of many career paths today.

What would concern me is if he’s not just racking up student loan debt but consumer debt, too. Does he have an expensive apartment? Expensive tastes in things? Does he simply spend too much money?

For me, daily spending habits are far more of an indicator of someone’s long term financial health than any amount of debt they’ve accumulated over the years. They can be fixed, but it requires a lot of internal commitment from the spender. Ideally, they already have good spending practices in place.

Q2: HELOCs and taxes

I have a question about HELOCs. Will they still be tax deductible?
– Maxwell

You’re fine for 2017 taxes, but 2018 taxes, under the new tax bill, won’t allow HELOC interest to be tax deductible. That’s a pretty painful change.

Prior to that change, HELOCs used to be a pretty effective way to borrow money at a low interest rate and have that money be tax deductible. The only risk, of course, is the use of your home as collateral.

Now, with this change, the tax deductibility is gone, which means that the tax benefits of a HELOC vanish as well. It just becomes a lower-interest credit card with your home as collateral, which isn’t nearly as good of a deal.

Of course, things change in Washington. This may be patched up in future revisions to tax law.

Q3: IRAs that accept rollovers

I have had an IRA with chase but they no longer accept rollover from a 401k. I am looking for a plan that I can pick the riskiness I’m looking for and my account will stay within stocks that match or I am given options to match the riskiness I am looking for. I don’t plan on trading much.
– Lindsay

I looked around at my two preferred investment houses, Vanguard and Fidelity. Both seem to offer this service.

Here’s a link to Vanguard’s 401(k) rollover policy and here’s a link to Fidelity’s rollover policy.

I recommend both of those investment firms. Both have done right by me in the past and I agree strongly with their individual investment philosophies. If you have a decent amount to invest ($3,000 or more) and are committed to an index fund based investment philosophy, I’d point to Vanguard; otherwise, Fidelity is a great choice.

Q4: Gift advice (for next year)

Those considering giving gifts at holiday time should proceed if they know the tastes of their receiver well, and if they are prepared to think hard about what to get. Otherwise, it’s best to go with cash (or perhaps gift cards, which are less efficient than cash but which may be more acceptably gift-like).

http://www.economist.com/flaws-economists-grinchy-approach
– Jim

Cash and gift cards are solid gifts if you don’t know the recipient well but are actually interested in the recipient having the best outcome from the gift.

However, if you do know someone well, cash can feel pretty impersonal. It can give the impression that you just tossed some cash in an envelope at the last minute because you didn’t bother to put any thought into the gift. I think a gift card that’s carefully considered and centered around that person’s personal tastes is actually a better gift idea, as it opens the window to them buying something they’ll actually like while still indicating thought and care.

My solution is that I often pair gift cards with a thoughtful gift. One thing I love to do for someone who is a avid reader, for example, is that I’ll pair a book with a small gift card to a local independent bookstore. I’ll pick out a book I think they’ll like, buy a small gift card to fill out my budget for them, and slip that card inside the cover. That way, the gift is thoughtful – I thought about their interests and considered a book that I thought they’d like – and also flexible – the gift card lets them get what they want.

Q5: Forever stamps

The price of Forever Stamps are going to increase a penny to $0.50 on January 21, 2018. While this isn’t a huge increase, it still makes sense to buy stamps now vs. having to buy in, say, February. Also, something that a lot of people don’t know is that the USPS has been legally limited to only raising stamp prices to match inflation: they had to get special permission to increase rates higher than inflation. HOWEVER, the USPS has recently gotten permission to raise stamp prices inflation + 2%. While the upcoming rate increase is already set, I anticipate future increases will often be inflation + 2% (as it is, the USPS would like to have no restrictions on raising stamp prices).
– Jeff

Historically, even without such federal restrictions, the postal service hasn’t really beaten inflation for stamp price adjustments. In fact, over the history of the service, the price of a stamp has tracked carefully with inflation.

My feeling is that if they ever go away from that by too much, another service will jump in and replace them. If there is profitability in mail delivery, then UPS or FedEx will start offering the service. They’re primed to do so.

In other words, I think the threat of competition will keep stamp prices from going too much above inflation.

Having said that, buying a “forever stamp” just before the price goes up is an “investment” that beats inflation, at least by a little. If you use stamps regularly, stocking up this week is probably a smart idea.

Q6: Long lasting headphones for exercise

I want to buy some long lasting headphones for exercising. I do NOT want earbuds! I want headphones outside of the ear. The last set I bought was a Sony MDR 7506 which still works great but the ear pads seem to melt in sweat and they were gone after about a month.
– Richard

My honest recommendation is to get a pair of
Amazon Basics headphones
. They’re really inexpensive and have surprisingly good sound quality for what you pay – far above what I expected for just a few bucks.

The thing is, if you use these for exercise and they disintegrate over the course of several months or a year, then it’s not that big of a deal. You got nice value out of those headphones.

I would absolutely avoid ear pads that aren’t protected in some fashion when exercising unless they’re attached to very inexpensive headphones. You want either hard plastic or something that’s protected against sweat. Sweat is salty and moderately acidic, which is just destructive over time to the kind of foam that you find in headphones.

Q7: Scared to spend

At the start of 2017 I made a big commitment to curb my spending and turn my financial life around and I did it! I paid off about $13,000 in student loans and wiped out my credit card debt and built up a $2,000 emergency fund. Way better shape a year later!

The problem is that now I’m almost scared to spend. When it came time to buy holiday gifts, I felt really anxious about buying things for my nieces and nephews (I am single and childless but I adore them). I don’t want to be an old spinster aunt who gives weird cheap gifts. I want to give them meaningful stuff they will like. But the thought of spending all that money put a knot in my gut.

Do you have advice for this? How do you get over feeling really guilty about spending money on nonessentials that are still really important to you?
– Angelica

If I were you, I’d step back and look at your annual budget for gift giving. What do you spend on birthdays and on Christmas/Hanukkah/winter holiday, ideally? Who all do you buy gifts for, and how much do you intend to spend on those gifts?

When you figure out that total, start putting aside a few dollars a week so that you match that annual total after a year.

Let’s say, for example, that the only people you buy gifts for are your eight nieces and nephews.

If you want to buy a birthday gift and then a holiday gift for one of them and want to spend $25 on each gift, then that adds up to $50 over the course of a year. If you put aside $1 a week, then you’re covering that gift.

If you have eight such kids, then put aside $8 a week and the gift is covered.

Think of it entirely in terms of the $8 you’re putting aside each week, not the $200 you would actually spend during the holiday season buying $25 gifts for each of them. Once you put aside that $8, it’s gone. It’s invested toward those gifts. Actually “spending” that money during November or December is just the culminating act of that gradual process.

Q8: Buying glasses online

My mother in law gave me a “new pair of glasses” for Christmas. Literally, it was an envelope that had it on the inside. She is going to pay for an optometrist visit to get a good prescription and then pay for a pair online.

I have never done this before and am very apprehensive about buying them online. I’m a bit price conscious but my MIL is well off and is pretty serious about me not worrying about it. Mostly worried about them actually working.
– Stephen

The first thing I would do in your situation is sit down and talk to my mother-in-law about those concerns. Tell her that you’re concerned that you’ll end up with glasses that won’t work.

I’m almost 100% sure that she’ll say that she’ll help out until you get glasses that really work for you, even if that involves returning a pair and incurring a few extra fees along the way.

This is especially true if you involve her in each step of the process along the way. Be very open and clear about the steps you’re taking to get those new glasses. Let her know when you’re going to the optometrist. You might even want to actually order the glasses when she’s around – just take your laptop there along with your prescription.

If you want some help, Consumer Reports offers a great guide to buying glasses online.

Q9: Praying for financial success

Do you think praying for money success works?
– Anna

In my experience, prayer helps with the internal world, not with the external world. Prayer helps you find internal resolve and strength, but doesn’t cause significant change in the outer world. That outer world change occurs as a result of your stronger internal resolve and strength.

Rather than praying for money to rain from the sky, pray to improve yourself in the ways needed to improve your financial state. Pray for strength and wisdom. Pray for focus.

I often think of the words of the well-known Serenity Prayer, a beautiful short prayer written by theologian Reinhold Niebuhr:

God, grant me the serenity to accept the things I cannot change,
Courage to change the things I can,
And wisdom to know the difference.

In my eyes, that’s a powerful prayer, one that’s likely to bring about the kinds of change that the person desires.

You can’t change the world if you can’t change yourself.

Q10: Thoughts on basic income

In December, my book club read Basic Income: A Radical Proposal for a Free Society and a Sane Economy. We try to read books on controversial ideas and discuss them and this one was a doozy.

Have you read the book? Do you have any thoughts on basic income?
– Ash

I haven’t read the book, but it is actually on my 2018 “to be read” list. However, I am familiar with the idea of a basic income and have read several articles on it.

Wikipedia summarizes basic income as follows: “A basic income is typically a form of social security or welfare regime, in which all citizens (or permanent residents) of a country receive a regular, liveable and unconditional sum of money, from the government. The payments are thus without strings attached, i.e. no work requirements or requirements to look for work, and also independent of any other income.”

The idea of basic income is to solve widespread unemployment problems and enable people to not starve if they’re facing a career downturn or taking a career risk. It also cuts down on the administrative costs of welfare programs because there’s no need to “check up” on people as everyone receives the payment.

The main concern, obviously, is that people simply will choose not to work if they have basic income. I don’t think that’s true, for a few reasons.

One, a sensible basic income would be low enough to cover just the most basic needs for a person – staple foods and a tiny shared living space. It shouldn’t provide enough for any kind of affluence, just enough to avoid starving.

The big factor, however, is that it eliminates the welfare disincentive to work. The biggest problem with the current welfare system is that benefits disappear at a certain income level, so if your income is close to that level, you are actually disincentivized to work. If you work harder to earn more money, you lose benefits and end up gaining nothing – or actually losing ground financially – by working more.

A basic income eliminates that trap. It doesn’t matter what you make – you won’t lose that basic income. So, if you want more money, you go to work. You don’t have to worry about whether or not you’ll break through some “limit” and lose your benefits. You work, you have more money.

I actually doubt that very few people will just be “lazy” with basic income. Rather, I think it’ll greatly help low income people, far more than the current system does, and it gives a small safety net to everyone.

Furthermore, during periods of high unemployment, a basic income will help keep people from being disruptive to society. There will be no bread strikes or anything like that. There will be no bonus army. People won’t starve. Instead, they’ll figure out what’s next for them.

AI and robotics are on the verge of seriously disrupting a lot of industries and drastically changing employment options. It’s going to happen quickly in the coming years, when industries like the trucking industry and the taxi industry and the train industry melt away rapidly due to self-driving vehicles, for example. Letting those people starve while they struggle to figure out what’s next is a horrible idea for society.

On the whole, I am in favor of basic income. It will undoubtedly be costly, but the benefits for everyone up and down the economic ladder are tremendous. I look forward to reading more about it.

Q11: Best sturdy pocket notebook?

I have read that you carry a pocket notebook around with you all the time. What do you use? I tried using a Mead notebook but they fall apart within a few days.
– Jerry

I used the Mead ones a long time ago, too. They’re just not worth it. They fall apart and get ruined so easily that you end up using just a few pages of each one – at least, that’s my experience. Plus, the spiral would bend, making it hard to flip through pages, and the ends of the wire would often snag on my clothing.

A better option: Field Notes are great, and they’re my preferred pocket notebook. They seem expensive but if you actually fill one up you’ve gotten your money’s worth out of it.

If you find that you’re often in situations where the notebook would get wet, I would check out Rite in the Rain pocket notebooks. They’re very water resistant – the pages are made out of some form of plastic that can be written on.

Q12: Running for office?

Have you ever considered running for office?
– Andrew

No, at least not beyond the local level. I have zero interest in running for a statewide or nationwide office, ever. I don’t want to deal with what it would do to my family, more than anything. My kids and my wife don’t deserve the attacks that seem to hit family members of candidates. Even in our congressional races, I have seen some ridiculously nasty attacks leveled at the spouses and children of people running for those offices.

If I were single, I’d consider it, but there’s another big issue: I think of myself as a moderate, and moderates don’t seem to last long in today’s political climate. I don’t fully agree with the platform of either major party – in fact, I’m not really close to either one of them.

I think I’ll just stick to local things. I’ve been on a few local boards and may wind up on a city council at some point. That’s enough for me. I like seeing positive change on the local level.

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

The post Questions About HELOCs, Gift Planning, Pocket Notebooks, Basic Income, and More! appeared first on The Simple Dollar.

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Three Reasons Everyone Should Consider Buying Flood Insurance

The hurricane season of 2017 will long be remembered for the chaos and damage it caused. Caribbean islands including Puerto Rico, Barbuda, St. Maarten, and Dominica were irreparably harmed by hurricane-force winds and rain, causing tens of thousands of residents to become homeless overnight. Texas and Florida also received their share of damage, much of which was caused by the excessive rainfall and infiltration of storm waters.

While much of the stateside damage will be fixed after homeowners insurance kicks in, some homeowners in Texas specifically are now facing the startling reality that damage caused by flood waters is likely not covered by their policies.

That’s because most homeowners insurance policies don’t cover damage from flooding or any other source of ground water unless the cause of the intrusion is covered, notes insurance insider Todd Erkis, author of What the Insurance Companies Don’t Want You to Know: An Insider Shows You How to Win at Insurance

While U.S. homeowners who live in a “special flood hazard area” – as determined by the Federal Emergency Management Agency (FEMA) — are required to buy flood insurance through the National Flood Insurance Program (NFIP) for as long as they have a mortgage, most homeowners aren’t required to carry special flood coverage.

According to CoreLogic, Houston was left in a particularly tough spot after the floods because more than 50% of properties in the city at high or moderate risk of flooding are not in designated flood plains. Since these homeowners weren’t required to purchase special flood coverage, many didn’t. Some studies are saying that as many as 80% of Harvey victims didn’t have flood insurance at all.

Three Reasons to Buy Flood Insurance (Even If It’s Not Required)

While your mortgage lender will require you to purchase flood insurance if your home is in a FEMA-designated special flood hazard area, that doesn’t mean you can’t – or shouldn’t – buy flood insurance voluntarily.

If you’re on the fence about flood insurance or feeling vulnerable after hearing about the flood damage in Houston, here are some reasons to consider purchasing this important coverage.

#1: Flood insurance outside flood-prone areas can be very affordable.

Katie Foley, a licensed insurance agent in Massachusetts with 15 years of experience providing homeowners with insurance and risk management advice, recommends nearly all homeowners buy flood insurance whether they’re required to or not. If you’re purchasing a traditional homeowners insurance policy already, your firm may be able to add flood coverage at a reasonable cost, she says.

Foley also says some eligible property owners can buy flood insurance though the NFIP at a cost that “tends to reflect the lower hazard.”

But, how much can you expect to pay? Mark Welstead, who is the President of restoration firm Rainbow International, says the average cost of flood insurance is around $660 per year. However, rates will vary depending on your home’s value and your proximity to a flood plain.

#2: Living outside a designated flood zone doesn’t mean your property is safe.

While the government does its best to estimate where flooding will occur, their models can become quickly outdated and may not reflect today’s risk for flooding.

“Flood zones are determined by past conditions but cannot predict future conditions or climates,” says Foley. “It’s impossible to draw a line and determine exactly where the water is going to stop.”

Because of this, Foley says many floods occur outside these designated special flood hazard areas. This includes recent flooding in Houston, but also elsewhere around the country – specifically near the nation’s coasts and in low-lying inland areas near rivers and lakes. FEMA says more than 20% of flood insurance claims fall outside flood zones each year.

James Howard, an insurance agent from Fidella Insurance Agency in New Jersey, says one way to assess your home’s vulnerability if you’re worried is to check the dates on the flood maps in your area. Older maps will not account for recent developments, he says, and those changes can alter the risks of water getting close to your home.

“Take the town I grew up in, Hamilton, Ohio,” says Howard. “Residents complained when new flood maps placed them at risk saying it had never flooded before. Literally a month later, those same residents were under four feet of water. What changed is a huge amount of development had increased runoff surrounding the community, leaving the water one place to go.” The same pavement principle probably exacerbated flooding in fast-growing Houston.

#3: Flood damage tends to be catastrophic.

Floods are the most common and costly natural disaster in America, according to FEMA, causing billions of dollars in damage every year. On average, floods cost Americans $8.2 billion in damages annually.

And, the flooding doesn’t have to be extensive, either. As FEMA estimates, recovering from just an inch of water inside your building can cost about $27,000. Without flood insurance, you’d be left to cover the costs of those renovations entirely on your own.

Buying Flood Insurance

If you’re thinking of buying flood insurance, it’s important to speak with your insurance agent to figure out how much coverage to buy, what exactly it covers, and how long your waiting period is. Welstead says that you typically need to pay for your flood insurance policy for 30 days before your coverage is in force; you can’t just pick up a policy at the first sign of a big storm system in the forecast.

And if your current insurer doesn’t offer flood insurance, you can buy a separate flood insurance policy without switching agents. Welstead suggests going to floodsmart.gov to find an agent in your area.

Before you buy coverage, some of the questions you should ask include:

  • Do I have enough coverage? Welstead says that, if you haven’t reviewed your policy limits in a few years, you may be underinsured. Make sure to document improvements to your property along with large purchases you’ve made, then keep the information somewhere safe where it won’t be damaged by water or fire. And if your policy isn’t beefy enough to cover your property and possessions, ask your agent about the prospect of raising your policy limits.
  • Should I reconsider my deductible amount? “Discuss with your agent the benefits and drawbacks of raising or lowering your deductible,” says Welstead. If adding flood insurance to your policy pushes your price up beyond what you can bear, raising your deductible might bring costs back down.
  • Does my policy cover full replacement cost? “Most policies do not cover true replacement costs and involve a cap on your home’s structure and contents,” notes Welstead. As a result, you may want to consider paying extra for “guaranteed replacement cost” in your policy. If you don’t, Welstead says you may only get a few hundred dollars for aged electronics and other items that would cost you thousands to replace. Drywall and other construction materials tend to spike in price after a disaster as well, he notes. “Some policies will pay up to 125% of a home’s insured value to compensate for this – make sure your home is one of them.”

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

Related Articles:

Do you have flood insurance? Why or why not?

The post Three Reasons Everyone Should Consider Buying Flood Insurance appeared first on The Simple Dollar.

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