Saturday, April 7, 2018

Inspiration from Seneca, Austin Kleon, Emily Dickinson, 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. Austin Kleon on how to keep going

Summary, from https://medium.com/@austinkleon/how-to-keep-going-c185496fd295: “Whether you’re burned out, starting out, starting over, or even if you’ve had success beyond your wildest dreams, that question always remains: How to keep going? This is a list of 10 things that have worked for me.

1. Every day is Groundhog Day
2. Build a bliss station
3. Forget the noun, do the verb
4. Make gifts
5. The ordinary + extra attention = the extraordinary
6. Art is for life (not the other way around)
7. You are allowed to change your mind
8. When in doubt, tidy up
9. Demons hate fresh air
10. Spend time on something that will outlast them”

Few things click with me and inspire me more is finding advice from someone whose life experience overlaps mine in a number of ways, they share what they’ve learned, and I find a mix of things that click perfectly with my own experiences along with some ideas I’ve never even considered.

So, for example, I have a “bliss station” (my office), and a big part of my writing is recognizing that “demons hate fresh air” (I constantly look at my bad traits), but I struggle greatly (or don’t even consider) the other things that Kleon discusses here.

That alone gives me some food for thought. Why do I not do X, Y, and Z? Would adopting them be valuable? What would my own list of ten things to get through a struggle be like? If that isn’t inspiration, I don’t know what is.

2. Marcus Aurelius on love and opinions

“It never ceases to amaze me: we all love ourselves more than other people, but care more about their opinion than our own.” – Marcus Aurelius

For too long in my life, I worried a ton about what other people thought about me. Did they like me? Did they think highly of me? Eventually, I came to realize that there was honestly not very much I could do to really change the opinion others held of me. They often built that opinion based on moments where I wasn’t “on” and wasn’t trying to put my best foot forward.

What I learned instead is that, if I constantly applied the maxim of treating others as I would like to be treated, I generally got that kind of treatment in return. What do I want from others? Basic hygiene and clean clothes are nice. Kindness to others is nice. Treating others like people with dignity is important. A willingness to listen is nice. A helping hand when I need it is nice. So I try to do those things as much as I can.

Things that don’t matter to me: small talk, false niceties, unkept promises. I don’t bother with those things. If I don’t think I can really do something, I don’t say that I will. I don’t make small talk very well and often jump straight to more meaningful conversation. That’s just who I am and it’s how I wish others would act toward me.

It’s a hard transition, but it’s a really worthwhile one.

3. Plane Miraculously Flies To Safety After Sudden Engine Failure

From the description:

This incredibly lucky pilot missed a potentially fatal crash, after the engine of his biplane cut out during a routine maneuver, sending the aircraft plummeting down to the ground head first, before turning it back on in the nick of time.

Practicing a series of spins and loops above the ground in Coral Springs, Florida, pilot Chad Barber quickly finds himself in a spin for a different reason, as a steep incline during an attempted ‘pull, push, humpty’ suddenly results in the deafening sound of a dead engine.

The 26-year-old aviation enthusiast – who was attempting to thrust the plane into a vertical line – was left in a state of disbelief when he saw the propeller had stopped spinning, as the aircraft began plummeting towards the ground nose first.

Admitting the engine of his ‘Pitts Plane’ has never cut out for him before, Chad begins to level the vessel in an attempt to buy some time and begin a process of troubleshooting to re-engage the engine.

This is an incredibly exciting video to watch, simply because you can feel the tension growing as the plane’s engine stays off and it gets closer and closer and closer to the ground.

Upon watching it a few times and sharing it with my kids, I came to realize that another reason this video clicked so well with me is that it shows a person keeping cool under very intense pressure. That guy’s life is on the line and the G-forces from the quick drop of the plane are affecting him, yet he keeps his cool and tries the strategies he knows to get the plane started again.

Keep cool under pressure. It’s always a good strategy.

4. Cicero on gardens and libraries

“If you have a garden and a library, you have everything you need.” – Cicero

A garden provides food to nourish the body and an outdoor environment in which to relax. A library provides knowledge and ideas to nourish the mind and soul. A lot of contentment can be found in just those two places.

I know that I get a ton of personal value from time spent in nature. I love going on hikes and working in the garden. I feel peaceful and relaxed, even if I’m exercising my body, and it sometimes feels like a mental “reset” of sorts.

Similarly, I absolutely love to read. I literally block off two hours a day for reading, nothing else. Few things make me more excited and engaged than digging into a good book and feeling a new idea click into place in my head.

Yeah, a life that has a garden and a library in it is a pretty good life, Cicero.

5. The Broccoli Tree: A Parable

From the description: Some thoughts on what can be lost, and what can’t be, when we share what we love. This was a video produced, edited, and inspired by Seth Radley.

When you keep something beautiful and positive and amazing for yourself and don’t share it with the world, you not only reduce the amount of joy in the world, you also keep the figurative bird in its cage, not allowing it to flap its wings and be all it can be.

Not only is this insightful in terms of sharing the beautiful things you discover with others, it’s also insightful in terms of parenting. There is often a desire in me to be overprotective of my children, to shield them from the world and keep their childhood preserved in a secret garden. A much better approach, as I’ve come to realize in recent years, is to prepare them with the tools they need to become excellent citizens in the world and then send them out there on the winds to make the world better and share their beauty.

Keeping something beautiful for yourself limits the value and joy it can give to the world.

6. Francis Bacon on superstition

“The root of all superstition is that men observe when a thing hits, but not when it misses.” – Francis Bacon

We are constantly looking for patterns in life, things that we can use to understand things better and make good choices. Our desire to find patterns is often a good thing and results in us making great connections and then making great choices in a variety of places.

The problem comes when we think we see a pattern when one doesn’t exist. We think someone doesn’t like us because we met that person when they were tired. We think a particular idea is cruel because our first interaction with it was from the mouth of an awful person, or because we saw that idea used to its worst end rather than its best.

I’ve found that it’s a good idea in my life to not make major decisions based on a small number of things, and to look for more evidence before making a negative conclusion.

7. Ryan Holiday’s notecard system

This article describes how author Ryan Holiday organizes ideas. Basically, he’ll read a book or an article and fill out some number of index cards, each of which depicts a key idea or quote from that source. He then organizes these cards by topic for future reference.

This is a nice system and it’s really useful when laying out ideas on a table, but I actually use Evernote for the exact same thing. With Evernote, all of the idea cards don’t take up any space and I can apply multiple “tags” to each idea so I can effectively file them in different groups.

I usually take notes by hand when I’m reading a book, then when I’m done, I’ll wait a few weeks and then go back through the notes, extracting anything and everything that rings true or rings powerful to me, turning those ideas into individual notes. As time goes on, this set of notes has become quite large, and it’s become a very useful resource for almost everything, whether it’s personal areas like parenting or professional topics. I turn to it all the time.

8. Poetry in America

Poetry in America, “created and directed by Harvard professor Elisa New, is a new public television series and multi-platform digital initiative that brings poetry into classrooms and living rooms around the world.”

Why am I interested? The public television series, which starts this Sunday and already has the first episode publicly available, is one of the best programs I’ve ever seen on the value of and interpretation of poetry. Here’s that first episode, focused on the poem I cannot dance opon my toes by Emily Dickinson:

It’s just amazing stuff, and the trailers for upcoming episodes show amazing promise, too. You can watch a trailer for the full series or previews for each upcoming episode. The first one was great – I can’t wait for more.

9. Seneca on long walks

“It does good also to take walks out of doors, that our spirits may be raised and refreshed by the open air and fresh breeze.” – Seneca, On Peace of Mind

Spring is slow in coming here in Iowa. Most days have a high merely in the 30s or 40s Fahrenheit, with nighttime temperatures still dropping into the teens. The ground still looks cold and barren and I don’t want to go outside without bundling up.

I am literally counting the days, though, until I can burst from my front door and go on a long walk in any direction I choose. I can’t wait until I can sneak off on a Friday afternoon and go for a hike in a nearby state park, or block off a Sunday to do the same with my wife and my children.

Few things recharge me more than time spent walking outside, preferably in nature. I love every single aspect of it – the noises of nature, the feeling of my body exerting itself, the smell of the environment, the flood of natural colors and natural light. It’s incredible. It’s one of the biggest simple pleasures in my life.

10. Secretariat winning the 1973 Belmont Stakes

From Wikipedia:

The 1973 Belmont Stakes was the 105th running of the Belmont Stakes at Belmont Park in Elmont, New York held on June 9, 1973. Facing a field of five horses, Secretariat won by 31 lengths, the largest margin of victory in Belmont history, in front of a crowd of 69,138 spectators. His winning time of 2 minutes and 24 seconds was an American record for a mile and a half on dirt and has not been broken.

For the first half of the video, this looks like a close horse race, but for the second half, Secretariat just pulls away, length after length after length. You think that the lead can’t get any bigger… and then it does… and then it does again… and then again. By the end of the video, the camera literally can’t keep Secretariat and the second place horse in the same frame, so the camera operator just gives up.

I get goosebumps whenever I watch this performance. It’s one of those rare moments in history where you can see a truly exceptional performer be perfect at just the right moment to give a truly exceptional performance. No matter whether you love horse racing or don’t really care that much, you can’t help but be blown away by this.

The thing is, each length that separates Secretariat from the horse behind him isn’t all that much. With each pace, he’s only gaining just a little bit. But he keeps going and going and going and going, gaining a little and a little and a little until it’s a lot, an almost unbelievable lead.

There’s a lot to learn from that. It’s not about a huge difference. It’s about being just a little bit better at the little things and then repeating them over and over and over.

11. Ayesha Siqqidi on who you should be

“Be the person you needed when you were younger.” – Ayesha Siqqidi

This, along with the more general goals to treat others as I would like to be treated, is a central principle in my life. In as many lives as I can, I want to be the person I needed at various points in my life, even up to now, and be the person I think I will need later on.

Again and again, I find that acting this way is the best thing that I can be doing with my time and energy. It rarely costs me anything to act in that way, but it almost always provides a huge multiplication in value for others. If they pay forward even a fraction of that value, or even a fraction of the people I have tried to help pay me back even a fraction of what I’ve given them, not only will I be supported when I need something, I will have made the community around me a far better place.

Yes, some people are always going to take and take and not give back. My experience is that those people are never happy, because nothing is never enough for them. Rather than being angry about it, I usually feel … sad, I suppose. The world has far more abundance than I can ever possibly use, and it would terrify me to feel like there wasn’t enough of the things that actually matter to go around.

12. Johan van Hulst

I did not know the story of Johan van Hulst until recently, upon reading his obituary in the New York Times. His story is one of those that makes you realize the kind of deep goodness that’s possible in people.

In 1943, he ran an operation in Amsterdam that involved pairing young children who had been marked to be sent to concentration camps with families that had children of similar physical description, then smuggled the children to those families. The families would then claim the children as their own, which worked because van Hulst aided with any necessary papers. He orchestrated some very clever smuggling tactics to get the children from the main clearing site for Jewish children out into the Amsterdam community and into the arms of host families in the countryside, and then he would work subtly with a couple of partners to edit records, removing the names of the smuggled children. Pretty much every child rescued in this way put van Hulst’s life at risk. Through this process, which he was able to continue until late 1943, he was able to rescue between 600 and 1,000 children from being executed.

As his tactics were being uncovered in late 1943, he personally escaped into the countryside, taking a dozen children with him personally.

What were his reflections on what he was able to do? He doesn’t view himself as a hero. From the NYT article:

“I was at the center of a particular activity,” he told the Dutch newspaper Het Parool two years ago. “It’s not about me. I don’t want to put myself in the foreground or play Resistance hero. All I really think about is the things I couldn’t do — the few thousand children I wasn’t able to save.”

May we all do something even a fraction as heroic as van Hulst at some point in our lives.

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Friday, April 6, 2018

Six Simple and Healthy Breakfasts Under $1 Apiece

Part of my daily routine throughout the fall, winter, and spring is to get up with my children and either make breakfast for them or aid them in making breakfast for themselves. Sarah is usually getting ready for her own workday and often leaves 30 to 45 minutes before the children do (and she doesn’t eat breakfast most mornings anyway), so I manage most of their morning routine once they’re out of bed. Most mornings, I eat breakfast with them and we talk about our game plan for the day.

My goals in doing this are very straightforward.

First of all, I want us to have a healthy, filling breakfast, one that will keep them satiated until lunchtime and able to focus on their schoolwork. I want the same thing for me – a breakfast that keeps me satiated all morning and able to focus on my work until midday. I want to serve healthy foods, meaning I try to avoid processed junk foods as much as I can.

Second of all, I want meals that are quick and easy to prepare., as the window of opportunity for meal prep in the morning is fairly short. I’m willing to get up a little early for meal prep, but there are often small emergencies in the mornings that end up having to be handled, so very quick breakfasts are the best option.

Third, I want meals that are inexpensive. Ideally, I want breakfasts that cost $1 or less per meal.

Finally, I want breakfasts that all of us will enjoy. A meal that two or three of us really won’t like is a meal that isn’t a success. I try to keep to breakfasts that I know at least three out of the four of us will enjoy.

Here are six breakfasts that I use on a rotating basis that hit all of these marks.

Tasty Flavored Steel Cut Oats

I make steel cut oats in the slow cooker, starting them the night before in a small slow cooker on the counter. My usual recipe is 2 cups of steel cut oats, 6 cups of water, 2 cups of milk, two tablespoons of butter, and a small amount of butter. I’ll rub the butter on the inside of the slow cooker crock, then I leave the remaining butter in there and add the other ingredients. I then mix all of that together thoroughly and let it cook on low in the slow cooker overnight, about eight hours.

In the morning, as soon as I get up, I’ll add something to it for flavor. Maybe I’ll add a couple of diced apples, or three sliced bananas. Maybe I’ll add a quarter of a cup of brown sugar. Maybe I’ll add a quarter of a cup of peanut butter. Maybe I’ll add some raisins or other dried fruits. Maybe I’ll add some maple syrup. Maybe I’ll add some dice peaches, or some diced pears. I add different things in different combinations for variety. Often, what I add is based on whatever was on sale in the grocery flyer in the last week or so.

This is usually more than enough for all four of us, with some leftovers that I often eat for lunch that day. The cost, depending on the add-ins, is about $3 for all five meals combined, or about $0.60.

Fruit Smoothies

I often bust these out on days when the weather is warm, as they’re not the best when it’s cold. Still, they’re super simple and very tasty.

I just pull out the blender and add two bananas, two cups of frozen berries, one cup of plain yogurt, and two cups of milk. I blend all of that together by pulsing it several times and then I pour it into several glasses. If you want it sweeter, you can add a bit of honey or sugar, too, but this is sweet enough for me and the kids seem to like it, too.

Sometimes, I’ll vary it a bit by adding things like a couple of teaspoons of cocoa powder or peanut butter.

Since we usually buy large containers of yogurt all at once and buy large bulk bags of frozen fruit, the cost of the ingredients for enough smoothie for all four of us usually comes out to around $3.

Egg on Toast

This one’s real easy. I just toast a slice of bread, put a bit of butter on it, then top it with a poached or fried egg. I usually make two of these per child and they’re gone.

This one does take a bit longer to prepare than the other items on this list, but it’s a very well-loved breakfast. I find that if I approach it assembly-style with a large skillet and use a child as an assistant to make the toast and butter it, I can just focus on cooking the eggs in the skillet, turning them over, and topping the toast with them. I can usually go from pulling out the ingredients to eating with my kids in about twelve minutes.

To prepare two “egg on toasts” (as we call them) for each of the four of us, you just need eight slices of bread, a bit of butter, and eight eggs. The cost of a dozen eggs is $2 to $3 and a loaf of bread is less than that, so this makes for a very cheap breakfast. I usually supplement it with a banana or an apple or some other easy-to-grab fruit. The cost is still far under $1.

Breakfast Burritos

This is a breakfast that I’ll usually assemble the night before, often when I have items on hand that are leftovers that work well for fillings. I just scramble several eggs together in a skillet, then fill two small burrito shells per person that’s going to be eating with the eggs, a bit of cheese, a very small bit of picante sauce, and whatever else happens to be on hand.

Sometimes some ham or crumbled bacon will wind up in there. Sometimes it’ll be black beans. Sometimes it’ll be sautéed vegetables. Sometimes it’ll be leftover potato slices chopped into little bits.

Whatever it is, I just strive to minimize the liquid inside of the burrito by scrambling the eggs, chilling them down completely, then assembling the burritos with cold ingredients and minimal liquid. They tend to heat up well without making the shell soggy this way.

Thus, in the morning, all I have to do is grab some burritos from the fridge and microwave them. It’s that easy.

Making a lot of these can be a lot of work, so sometimes I’ll wait until a weekend afternoon and make a giant batch, but I can make a good handful (eight or so) pretty easily on a school night in 15 minutes or so. The total cost for eight such burritos is a package of small tortillas (about $1.50), 12 eggs or so (about $2), and whatever leftover ingredients I have on hand (another $0.50 to $1), so the burritos cost about $0.50 each. Since each person usually eats two of them (I don’t make them that big), it’s about $1 per breakfast.

Yogurt Parfait

This is another item that I like to make the night before and allow to sit in the fridge overnight. It’s really simple – the biggest reason why I sit them in there overnight is to allow the frozen berries to thaw.

All I do is take a cup and make alternating layers of frozen berries and other fruits, yogurt, and granola. I usually make a layer of fruit, a layer of yogurt, a layer of fruit, a layer of granola, a layer of yogurt, a layer of fruit, a layer of yogurt, and a layer of granola on top. A cup is a breakfast for someone, and they’re usually big enough that the person is very full from eating one.

I just use whatever frozen fruit is on sale at the store (bought in the last several weeks and kept frozen) and I’ll usually buy a big bag of healthy granola when it’s on sale, too – I watch for it, then just keep it in the pantry. I generally make these a couple of times shortly after a sale on large containers of yogurt, because it’s cheaper that way. The cost varies a lot, but it’s usually well under $1.

When Time Is Super Short, Hard Boiled Eggs and Fruit

Sometimes, mornings can be a disaster and the best laid plans fall apart. We’re trying to find clean pants for our youngest child, our middle child needs a permission form filled out, and our oldest is sleeping in a teenager’s coma and won’t stir. The clock ticks later and later and there’s basically zero time for breakfast prep and our youngest can’t find his left shoe and our middle child has been in the bathroom for 10 minutes and our oldest child is out back trying to get mud off of his soccer cleats.

Ideally, on mornings like this, I can leverage a breakfast I made the night before, but that doesn’t always work out. In that case, there’s no time for breakfast – or is there?

On these crazy days, I’m glad that I always have several hard-boiled eggs in the fridge. I like to boil a dozen each week and eat them one at a time as a tasty snack. I just keep them in a large container in the fridge, already peeled.

If a no-good-very-bad day like this arrives, I hand each of them a couple of hard boiled eggs and a piece of fruit and wish them a good day. Yes, it’s a super simple breakfast, but it’s one that they can eat at the bus stop and I know that they’re at least getting some healthy protein and some fresh fruit in their belly to start the day. The cost per meal here is trivial, on the order of $0.30 to $0.40.

Final Thoughts

This is a repertoire of breakfast options that allows us to go for more than a week without having the same breakfast twice, and the amount of variation possible in each one, particularly the oats and the fruit smoothies and the burritos, manages to make the meals seem different virtually every day.

All of these meals are based almost entirely on simple foods, with only a slice of toast or a tortilla being processed. It’s all about fruits, eggs, yogurt, peanut butter, and other simple things that combine together into simple, delicious, easy, and super cheap meals.

Sure, we have a box of cereal in the cupboard and that works well on occasion, but these recipes form the backbone of our busy mornings, and they can work well for you whether you have children or not.

Good luck!

Related Articles: 

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Thursday, April 5, 2018

The Five Enemies of Your Financial Success

The path to financial success is actually surprisingly simple.

Spend less than you earn. Do something sensible with the difference.

That’s it. If you do that each month, each year, each decade, you’ll have quite a lot of financial success. Debt will melt away. Retirement savings will go up, up, and away.

If it’s that simple, then why doesn’t everyone do it? If it’s that simple, then why are 78% of Americans living paycheck to paycheck?

The reason is simple: although the path is incredibly straightforward, there are many enemies along the way that will knock you off of that path. They pop up constantly, in different forms and in different numbers, and if you’re not ready to handle them, you will fall right off the path to financial success.

These enemies come in many, many different flavors, but they can mostly be boiled down to five groups, with different tactics for handling each one.

Enemy #1 – Bad Habits

In other words, you have bad day-to-day routines in your life, ones that add up to a bunch of unnecessary expense. Those bad routines by themselves won’t entirely disrupt your progress, but they will slow you down and they will make it easier for other enemies to knock you off the path.

These bad habits and bad routines wear many faces. They take the form of your monthly bills – some are overinflated (like your energy bill), while others are unnecessary (like your cable bill). They take the form of ordinary expenses that you incur multiple times a month without really thinking about it, like eating out for lunch or hitting the coffee shop or buying convenience foods at the grocery store or skipping over the store brands that you’ve never tried in order to use the more expensive name brands.

People are creatures of habit. Once you firmly establish a routine, you’ll probably stick with it for a very long time, usually until something disrupts that habit. Disrupting a habit without some big life change (like moving) is hard.

Here are a few tactics for defeating this enemy.

Keep track of where every dollar goes. At the end of each month, sit down and go through your bank statements and credit card statements and identify what exactly each and every purchase was for. Was it a sensible purchase? Did it add real value to your life? Can you even remember what it was for (hint: if you can’t remember, it was probably a bad purchase)? Look for patterns in what you’re observing, especially in the less worthwhile expenses. Are the bad expenses popping up regularly in certain locations? On certain websites? Those are bad habits that you should be breaking.

Reconsider every single regular expense; if it repeats, particularly once a month (like a monthly bill) or more, carefully re-evaluate it. If a specific expense is repeating in your life, like a monthly bill or a thrice-weekly stop at a coffee shop or a once-weekly stop at a hobby shop, ask yourself seriously whether that expense needs to continue and, if so, whether or not it can be cut in some fashion.

Cut down most of those expenses to the bare minimum, then build them back up as needed. Once you’ve identified a bunch of regular expenses, it’s a good idea to trim them to the bare minimum and then, if you find that this isn’t working for you, restore just the expenses you’re missing. Try switching all of your regular purchases to store brands, for example, and then only switch back if the store brand doesn’t work. Try making cold brew coffee at home in the fridge (it’s easy and cheap) and then switch back to the coffee shop if you’ve tried it a bunch of times and can’t make good coffee (I really doubt this will happen).

Enemy #2 – Bad Advice (from Everywhere)

When people think of “advice,” they tend to think of themselves asking for help or looking for help on something that troubles them in life and then finding someone they trust to give them an answer. Typically, that’s good advice… but that’s not what we’re talking about here.

We’re talking about bad advice. We’re talking about advice or suggestions that have no real consideration of your actual life, your actual wants and desires and goals. We’re talking about suggestions shared in the media for products you “need” (but don’t actually need). We’re talking about lifestyle suggestions that have nothing to do with your actual wants or desires or life. We’re talking about marketing ideas that are far more about selling a product than about improving your life.

Bad advice is everywhere. It’s on television. It’s on the internet. It’s on social media. It can come from the mouth of your best friend or from an overheard conversation on the street.

How can you defeat the enemy of bad advice?

Cut down on your media diet. Spend less time watching television. Spend less time online. Spend less time on social media. Replace that with actually doing things. Go on a hike. Make a great meal. Read a book. Learn a new skill. Have a party. Start a garden. Do something – anything – just cut down on your media intake.

Find ways to spend time with friends that doesn’t involve spending money. If you’re going to do something social, make sure that it’s not something oriented toward spending money or talking about products or things you want. Avoid retail therapy. Do things at each other’s homes or at a free public location like a park.

Look for multiple sources of advice, including experts, before you make a financial move. Whenever you’re considering making a financial move or looking for strategies for improving your situation, look for a number of different sources before making a major move. Don’t just trust the word of the salesperson or agent, and don’t just trust the word of a single article in a major publication. Look around for several sources of advice and go with what they suggest as a whole. One single point of advice might be wrong; a bunch of different points of advice, mostly in alignment with each other, are much more likely to be right.

Enemy #3 – Temptation

We’re all tempted in our daily lives. We’re tempted to be lazy. We’re tempted by treats and perks and pleasures. We’re tempted by the good thing we can have right now.

The catch, of course, is that temptations are distracting. They grab our focus and pull us away from the big picture. They demand fulfillment right now without any real concern about what might come later.

Spontaneity can sometimes be fun, sure, but when spontaneity drains away lots of resources and cuts off future plans, it becomes a problem. When giving into temptations means giving up on big plans and goals and dreams, it’s usually a bad choice, even if it seems really really desirable in the here and now.

How can you tackle temptation?

Practice the ten second rule. The ten second rule is a wonderful little trick you can practice any time you’re about to make a purchase of any kind or about to put something in your shopping cart. All you have to do is pause for ten seconds, and during those ten seconds consider reasons why you shouldn’t buy this item. Don’t think about why you should buy it, but why you shouldn’t. Do you really need it? Could you get it cheaper elsewhere? Is there a better option for your needs? Couldn’t this wait until later? Most of the time, non-essential purchases will go right back on the shelf.

Practice the thirty day rule, too. This is a nice supplement to the ten second rule above, and it pertains very nicely to nonessential purchases of any significant magnitude (for me, the minimum level is the price of a book, about $10). If you have the desire to buy a nonessential item, simply give it thirty days to rest. In thirty days, consider the item again – do you still want it? If so, then start bargain hunting for it, and you can do it patiently because you’ve already observed you don’t need it right away. If not, then just forget about it. I find that about 90% of my wants just go away if I apply this thirty day rule to it.

Delete your credit card number from online accounts, and don’t keep your account login information saved. One very easy way to give into temptation before having a chance to think about it is to simply order things with just a click or two online without having to enter payment information. There’s nothing wrong with buying online, but when you can go from “impulse” to “ordered item” in just a few seconds, it’s really easy to just let temptation run the show. For example, I often run into this with Kindle books – I know very well that I order more than I should, and this depletes my monthly hobby spending more quickly than I’d like. The simple step of removing credit card and account information in as many places as I can keeps me from a lot of little impulsive purchases.

Enemy #4 – Bad Perspective

Human beings have a few psychological quirks that served us very well in life up until roughly the industrial revolution, but don’t serve us particularly well today.

One of those quirks serves as a giant enemy on the road to financial success, and that’s our natural tendency to focus strongly on the short term perspective rather than the long term perspective. We put far more weight on today and this week than we do on next year and the rest of our lives.

Sure, we’re able to think about and consciously plan for our future, but it’s often very nebulous thinking and planning. Most of the time, we play it by ear, and even when we have the best of intentions, short term objectives and desires will trump long term objectives and desires unless we’re very diligent about focusing on the long term perspective with our thinking.

How is that bad? If we focus on the short term as a top priority rather than the long term, it becomes so much harder to save for future goals like retirement. The benefits of saving for retirement are incredibly obvious and important, but because it’s a long term goal, the average person doesn’t do it very well. A large portion of Americans have nothing saved for retirement, and among those who do, many just have a trivial amount that’s often just what their employers automatically put aside for them.

We’re bad at long term thinking in the moment. How can we change that?

Consider your spending choices from a five year perspective. If you’re about to spend money, ask yourself whether, five years from now, you would consider that expenditure to be a worthwhile one. Will your future self think that this purchase was really worthwhile at all? If your future self would think of this purchase as not a very good use of money, then you should strongly consider leaning against it. What I’ve found is that this line of thinking tends to push me toward minimal spending on myself, though it does encourage social spending and self-improvement spending. I often pair this thinking with time use, something which I’ll get back to in a few paragraphs.

Consider what a series of unfortunate events does to your life, and come up with a realistic plan for handling most of that impact. What exactly happens to you if you lose your job and your car breaks down on the same day? How do you handle that? What if you’re suddenly diagnosed with a serious illness at the same time that your oldest child moves back in with you? How do you handle those kinds of extreme events? If you don’t have an answer that will help you handle a large portion of the impact, then you need to be planning ahead for that impact. Start a big, healthy emergency fund, for starters, and start taking steps to strongly reinforce your career. You should automate those plans by, for example, setting up automatic transfers from your checking to your savings account (for an emergency fund) and scheduling and blocking off time for career improvement. Make it as easy as you possibly can to keep moving forward with those plans.

Consider how you spend your time in a given week and ask yourself if there’s not a more personally fulfilling and worthwhile way to spend that time. How much of your time is just wasted in a way that you can’t even really identify? How much of it is wasted on things that provide no long term value and little short term value (like aimless social media or web surfing or watching unplanned television)? That time is just lost, with no purpose. Start finding ways to cut that lost time, and start using that time for things that will provide value to you now and over the long term of your life. Learn things. Exercise. Get in better shape. Take on tasks that will save you time later, like preparing meals in advance.

Enemy #5 – Lack of Knowledge

One final obstacle that stands in the way of financial success is simple lack of knowledge. You might be able to identify that there’s a financial problem in your life, but you really don’t know how to fix it or how to ensure that it doesn’t happen again.

Usually, financial solutions are pretty simple, but if you’ve never been exposed to the solution to your problem, solving the problem can feel like a tremendous obstacle. This is the value of education – it can take an unanswered question that seems incredibly difficult and complex and break it down into something simple that you can understand and handle and put into action.

Here’s how to do just that.

Read personal finance books and independent personal finance sites. If you’re struggling with personal finance as a whole or don’t understand broad topics such as investing or debt repayment, the best approach is to grab a personal finance book from the library and dig in. If you thrive on seeing those solutions through the filter of a person’s real life, then an independent personal finance blog (like this one) is a great additional tool. Both can teach you what you need to know – the books provide the core knowledge and the blogs provide the examples and relatability.

If you hear about a financial topic that you don’t understand, take the time to understand it and integrate it into what you already know. So often, people will start learning about a personal finance topic, understand 75% of it, and then get lost on the other 25%. Rather than stopping right there and fixing that deficit, they nod and move on. Don’t do that. Whenever you come across a point or a subtopic that you don’t understand, stop and learn more about it. Don’t come back to the bigger topic unless you understand the specific point that’s being made. Why? It’s often the case that later points build upon and rely upon earlier ones, so if you don’t understand the earlier ones, you almost never understand the later ones. Plus, it’s much easier to stop and learn about a point when you first encounter it, because learning about that single point when you first find it is likely to be quite easy in comparison to trying to figure out where you went wrong later on.

Don’t inherently trust the words of an advisor; do the research and figure things out on your own. You should never, ever make major financial decisions based on the advice or ideas of a single person, whether it’s a book or a blog or a financial advisor. Don’t take one person’s word for it if it’s a major decision that will have big ramifications in your life. Before making a choice, consult other sources. Verify what a website is saying by looking at other websites and at books. Verify what an advisor is saying by looking at websites and books. Verify what you’ve learned from books with other sources of information. Don’t just rely on one source (and, yes, that includes The Simple Dollar).

Final Thoughts – Fighting the Battle

The real challenge of personal finance success in the modern world isn’t following the path to success, which is easy, but in fighting the many different enemies that block your path and force you off of it. It is those who overcome those enemies and keep on the path that find financial security and, eventually, financial independence.

You won’t be successful in every battle – no one is. However, if you manage to turn a few losses into wins, you’ll find yourself moving faster and faster down the path, with more confidence and momentum than ever before, and that alone will go a long way toward bringing you the success you desire.

This is your journey. There are many who stand in your way. Are you ready to take them on?

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How Often Should You Change Jobs?

Employees once stayed with the same jobs for decades, but today it’s more common for workers to switch jobs every few years, as they search for promotions and higher salaries.

This practice has advantages but it also has a downside. The good thing about changing jobs frequently is it gives you a chance to build your professional credentials and make more money. The problem is that you risk creating a work history that doesn’t reflect an ability to make a commitment to a single company.

“Changing jobs too often can give you the reputation of being a job-hopper,” said Steve Pritchard, human resources manager for Cuuver. “This can count against you because employers may look at your resume, see that you haven’t stayed in any job for longer than a couple of years, and decide that you won’t commit to the role you’ve applied for.”

Tiffani Murray, a career consultant, blames online technology for the current job-switching culture.

“We’re always seeking something better, easier, higher paying, or more convenient,” she said. “It’s easier to find job options than it was 20 years ago with job boards, online sites, and mobile applications. If you’re just a click away from a raise and work-from-home options, why not toss your hat in the ring? That’s the mentality of today’s workforce.”

Employers likely will have to get used to the trend. According to the Bureau of Labor Statistics, jumping from job to job has become the norm. The bureau in 2016 reported that the average time on the job for Americans was 4.2 years, down from 4.6 years in 2014.

Millennials — those born roughly between 1980 and 1996 — are especially prone to changing jobs quickly, according to a 2016 report by the Gallup polling organization. One in five millennials it surveyed (21%) said they’d changed jobs within the past year. That was more than three times the number of non-millennials who reported the same behavior.

Darla Hornbjork, a recruiting consultant for Gray Scalable, says today’s workers are likely to have “several jobs over the course of their career and some have several careers over the course of their lives.”

“People change companies and change roles more aggressively because they can,” she added. “If career growth is a motivator and an employee doesn’t see a path in their current company, then they will move to one where there is opportunity for growth.”

Is loyalty rewarded?

Jeff Magnuson, a marketing and brand consultant, sees little loyalty between employers and their workers today.

“Employees have caught on to the fact that they’re an expense on a company’s balance sheet and when times get tough and cuts need to be made, their job could very likely be the one that gets cut,” Magnuson said. “While this may seem cold, companies are trying to turn profits and don’t exist to simply provide jobs to people.”

Twenty years ago, employers were more willing to invest in their workers, offering pensions and other benefits that gave them good reason to remain with a company, he added. Today pensions are much less common. Companies are more willing to hire outside consultants and freelancers who receive no company benefits.

Not offering pensions “sends a clear signal to employees that companies are indifferent toward their long-term affiliation with a company,” he explained. In the end, he said, today’s employers generally make the decisions that are best for their business.

It’s up to workers to decide when their loyalty to a company will be rewarded – and when they would be better off moving on, said Prichard. They also need to understand that businesses tend to make decisions that are in their own best interests.

Raises and bonuses “should be based on the quality of work they have produced during their time working there, whether that has been one year or 10,” he said.

Looking out for yourself

In today’s workplace environment, workers need to watch out for themselves. Magnuson says it’s a mistake to grow too comfortable in any job. He advises his clients to update their resumes every six months, in case the need to change jobs arises.

Career coach Sherri Edwards doesn’t expect the current pattern of workers changing jobs frequently to change.

“People change companies and change roles more aggressively because they can,” she said. “If career growth is a motivator and an employee doesn’t see a path in their current company, then they will move to one where there is opportunity for growth.”

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Wednesday, April 4, 2018

The Connoisseur Problem

A few days ago, I shared a meal with someone who truly loves wine. She brought a bottle to the meal with her, one that she described as “mid-priced” but “excellent,” and shared a small glass with everyone at the table.

I tasted it. It was good and accompanied the food well. I could recognize that it was “better” wine than the sub-$10 stuff I usually drink at the dinner table, but it didn’t really click with me as any sort of exceptional experience. I mean, I would probably choose it in a blind taste test against our usual white table wine, but I wouldn’t be running out to pay more than $10 for it.

Yet, as we sat there, she compared the wine to a bunch of different wines, expensive and otherwise, and pointed out a bunch of different details.

Being a polite conversationalist, I asked a few follow-up questions, as I usually do when I see someone’s enthusiasm. I actually love hearing people talk about something they’re enthusiastic about and they usually take me along for an interesting ride. By the end of it, she was practically wishing she had several different bottles of wine so I could try them and notice these huge differences between them.

As I noted above, my wine palate is an unsophisticated one. Sarah and I have a small number of sub-$10 wines that we like and we’re often willing to try others in that price range, but we rarely spend more than that for a bottle. I have a glass of wine with dinner perhaps once or twice a week, and that’s the sum total of my wine consumption.

Thus, my personal wine palate is basically on the spectrum of sub-$10 wines. My idea of a perfectly good wine is going to be far different than my guest’s idea of a perfectly good wine simply because I am a limited wine connoisseur. I simply don’t have the broad experience of drinking wine that my guest has.

What does that mean, though? For one, it means that there are some subtle differences between wines that I’m basically unaware of. I don’t have the capacity to really appreciate the quality difference between a $20 wine and a $75 wine; I can taste some differences, but the differences are subtle enough that they’re not deeply meaningful to me.

I call this the “connoisseur problem” or the “90% problem.” For someone who is a wine connoisseur, the difference between a “middle of the pack” wine and a top tier wine is a huge one. They’re seeking out subtle quality experiences when they drink wine.

For me, the thing that matters is, “does it taste good and pair well with my meal?” If the answer is yes, I’m perfectly content. I don’t feel the need to chase the subtle differences between good wines. A wine that I identify as “good” is good enough for my purposes, which is a glass to be consumed as a nice pairing with a meal.

The thing is, I am fully aware that I am missing out on appreciating some of the nuance and subtleties of fine wine. I am making a conscious choice to appreciate wine as a simple meal pairing rather than look deeper for subtle differences in quality.

There’s nothing inherently wrong with being a wine connoisseur. It’s just that attempting to be a connoisseur of anything that comes with a price tag is a very expensive proposition, and that expensive proposition better be returning a lot of value to me personally.

For me, the difference between the best under-$10 wines out there and the best wines of that type regardless of price is definitely there, but it’s small enough that it doesn’t make a world-breaking difference to me, certainly not a $20 or a $50 difference per bottle to me. A sub-$10 wine that’s 80% as “good” as a $50 wine is perfectly fine at my table.

There are a few catches here. First of all, if you approach things with this perspective, it is really hard to appreciate someone who shares something of the highest quality with you. If I went to a very fancy dinner party and someone poured a wine of a truly excellent vintage, I would honestly have no idea how it really compared to other wines. I’d enjoy it and probably recognize that it is an expensive wine, but I would miss out on the amazing subtleties of it.

So, what do I do in that situation? I ask the person who is a connoisseur to tell me about it! The person to whom the difference is important will likely have quite a bit of knowledge about wines, and people who are passionate about a subject are almost always excited to share that knowledge and joyful that someone expresses an interest as well, and as a listener and friend (or at least acquaintance), I love seeing and hearing the passion of others.

At home, however, I’m going to stick with my sub-$10 wines on the table.

But what about the fear of missing out? There is definitely a sense that I’m probably missing out on a higher quality wine experience and an extensive body of knowledge that others hold, but the question becomes how much is that “higher quality wine experience” really worth to me? How much am I gaining beyond the enjoyment I get of a glass of inexpensive wine shared with my wife and paired with a simple meal? And whatever that gain might be, is it worth an expensive price per bottle of wine consumed just to get there?

For me, for most things in life, it’s just not worth that cost. I’ll save my connoisseurship for a small handful of things that are really meaningful to me, and for the other things, I’ll just go along for the ride with passionate friends and acquaintances. I’ll listen and let them tell me about the things they’re most passionate about and save my own passion (and expense) for the things I care about most.

The thing to remember here is that wine can be pretty much anything in this story. It could be cars or cheeses or board games or clothing. It could be anything that someone is deeply passionate about and invests a lot of time and money becoming a connoisseur. In the end, it’s not worth investing that time or money unless it is something you deeply care about on your own. Doing it just to impress others or just because that’s what “classy” people do isn’t a good reason to buy the expensive wine or the expensive car or anything else.

For most things, enjoy the simplest pleasures or even do without them entirely. Save your connoisseurship for the one or two things that really matter to you and that you think about when you’re alone, and avoid the desire to be a connoisseur of something that you merely enjoy with friends every once in a while and scarcely think about when you’re alone.

Besides, if you try to be a connoisseur of everything, not only will it be an expensive journey, you’ll never really be able to dig deep and really appreciate any one thing. Strive to be a connoisseur of everything, and you wind up being a connoisseur of nothing.

Strive to be selective in your connoisseurship. Dig deep into just a thing or two you’re passionate about, and be okay with not being a connoisseur of anything else. Instead, just appreciate the connoisseurship of your friends and acquaintances and let their passion take the lead when that subject comes up. Ask questions and be appreciative and learn a little, but keep your wallet firmly in your pocket. Your friends will appreciate it, and you’ll save your time and money and thought for the things you most care about.

Good luck!

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Five Car Maintenance Tasks You Can Do Yourself to Save Money

By Richard Reina

It’s no secret that the cost of owning a vehicle can come at a steep price. According to the American Automobile Association, in 2017 the total cost of owning and operating a new car averaged about $8,469 a year, with maintenance and repairs costing drivers almost $1,200 annually. Our vehicles are important investments that should be maintained, but there are ways to save both valuable time and money doing some that work on your own.

While the jobs mentioned below are all easy to moderate in terms of difficulty, be sure to take extra precautions, watch demonstration videos beforehand, and consider working with a friend or family member for added support.

Changing your battery

The average car battery lasts about four to six years, but this lifespan depends on a variety of factors, including where you live (cold climates can be harsh on your vehicle), how often you start the car, and whether you typically are going on short or long drives.

When it comes to your battery, preventative maintenance is key. If you wait until it dies to replace it, you might be left stranded and forced to pay whatever price is given to you for parts, labor, and the service call. Drivers have the option of paying a nominal fee to have their battery tested once a year, but it’s just as easy (and cheaper) to be proactive and do the job yourself every four to five years.

When you’re ready to tackle this task, consider purchasing your new battery at a local discount store such as a Costco or Sam’s Club to save some extra cash. Once you have your replacement battery, grab a wrench kit and be sure to remove the black negative cable first when taking out the old battery, and replace the negative cable last once you’ve installed the new battery. Be careful when switching cables as a mistake could lead to a short circuit. Clean cable terminals with baking soda and water, and coat them with petroleum jelly (more savings).

  • Average dealer price: $200
  • DIY price: $80
  • Total savings: $120

Mastering an oil change

For many years, the standard response to when to change your oil was every 3,000 miles, depending on who you asked. Some mechanics and dealerships may still advise an oil change this frequently, but changing the oil that often isn’t necessary as today’s oil is higher quality than it was even a decade ago. Many modern cars only need oil changes every 5,000 to 10,000 miles, but this of course depends on your vehicle. Consult your owner’s manual to find your vehicle manufacturer’s recommendations, and pay attention to any maintenance alerts on your dashboard.

Changing your car’s oil is quick and simple, but when doing this at home you must ensure the car is raised and stable before you get under it. Never get under a car supported only by a jack; use jack stands. Performing this maintenance task yourself not only saves money but ensures that you’re using the correct viscosity (thickness) oil. Again, check the owner’s manual for that information.

If your car is cold, run it for a few minutes to warm the oil, and if it is hot from recently being driven be sure to wait at least 30 minutes to avoid potentially getting burned. Be sure to have all of the items you need in one place, including appropriate wrenches, a drain pan, and a new filter. First, remove the drain plug and drain the old oil; reinstall the plug (a new washer is best); remove the old filter; install the new filter after coating its gasket with fresh oil; add the new oil and check the dipstick to ensure the level is correct.

  • Average dealer price: $60
  • DIY price: $25
  • Total savings: $35

Swapping out your headlight/tail light bulbs

While this may seem like an obvious suggestion, one of the best things a car owner can do is regularly check that all outside bulbs are working. You’ll know when your headlights are out, but you most likely won’t know about the other bulbs unless you walk around your car while it’s running. To check your brake lights, you’ll need two people: one to step on the brake and the other behind the car checking the bulb.

The average repair shop today charges $100/hour, so a 15-minute bulb replacement will cost you about $25 in labor. However, changing your own bulbs is very easy. Before you go to the store, make sure to pull out the old bulb and bring it with you to ensure that you’re getting the correct bulb size. For headlight bulbs, never touch bulb glass with your bare hands. The grease from your fingers can cause the bulb to burn out early.

  • Average dealer cost: $35 per bulb
  • DIY cost: $5 per bulb
  • Total savings: $30 per bulb

Checking and changing brake pads

It’s recommended to check your brake pad thickness every 10,000 miles, but be sure to look out for excess wear and tear that will depend on external factors such as frequent use and driving style. Preventative maintenance is important as your pads should never drop below 2mm to 3mm in thickness. If they wear further (“metal to metal”) you could damage your rotors and double your repair costs.

DIY brake pad maintenance isn’t difficult, but does require care. You need a wheel lug wrench, some basic wrenches, pliers, a jack, and a set of jack stands. Start by raising your car up as you did with the oil change and remove the wheel.

Next, unbolt the caliper (do NOT disconnect the brake line), and swing it out of the way. This gives you access to the pads. Remove the old ones and install the new pads (best practice: use special brake paste on the pad edges and caliper pins). Before reinstalling the caliper, push the piston back with a C-clamp. Reinstall the caliper, then the tire. Before driving, start the car and pump the brake pedal to restore pressure.

While you can save a significant amount of money changing your brake pads yourself, brakes are a big safety item, so approach this job with caution and make sure you’re especially vigilant each step of the way. (E.g., don’t put the pads on backwards – it happens!)

  • Average dealer price: $250 per axle
  • DIY cost: $40 per axle
  • Total savings: $210

Basic tune-up: Change air filter

The traditional timeline of one tune-up per year isn’t necessary with today’s vehicles. Modern materials and advanced electronics have made the old-school tune-up a thing of the past.

First, always consult your manufacturer’s recommendations for replacement intervals. Some repair shops unnecessarily suggest more frequent service, which should be a red flag. If you do choose to get a ‘full tune-up’ at the shop, be sure to ask what exactly they’re doing to your vehicle.

Instead of focusing on a yearly tune-up, base this schedule on mileage and your manufacturer’s suggestions. For example, modern spark plugs should last about 100,000 miles on average.

A tune-up today consists of changing your oil, fuel filter, air filter, and spark plugs. To address just one of these items, replacing your air filter is probably the easiest maintenance job on your car. Why pay a big markup for someone else to do it? It’s recommended to replace your filter every 15,000 to 30,000 miles. Ignoring that can cause your fuel economy to suffer (more money down the drain), and can even lead to expensive engine repair.

A shop may charge up to $100 in labor and $50 in parts for an air filter job. In most cases, you simply open the hood, remove the top of the air filter housing (held in place with screws or clips), replace the filter, and reinstall the housing. All you’ll need is a screwdriver and a new filter, and you’re good to go.

  • Average dealer cost: $150
  • DIY cost: $25
  • Total savings: $125

Of course, when thinking of approaching a DIY job, comfort is key. If you’ve never looked under the hood of a car before, don’t push yourself to do a job that might be more complex than just pulling out a new bulb and replacing it. As you gain confidence you can try more involved jobs, but be sure to always focus on your own safety first.

Richard Reina is the product training director at CARiD.com and has been an auto enthusiast since the age of two, when his dad taught him the difference between a Chevy and a Ford. Since then, it’s been cars all the time. He enjoys restoring and driving old cars, with a special love for anything Italian – he currently owns a 1967 Alfa Romeo.

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Tuesday, April 3, 2018

Should a Person Pay Attention to Financial News?

This started off as a reader mailbag question, but as many of them do, the answer ended up with so much detail that it grew into an article of its own. Lori wrote in to ask this:

What financial news do you pay attention to? FBN? CNBC? Do you read WSJ?

My initial answer was straightforward: I don’t really pay any attention to financial news at all. I don’t watch Fox Business Network. I don’t watch CNBC. I don’t read the Wall Street Journal.

Why not? The reason is really simple. I read things for three reasons: I’m learning about a topic, I’m shaping my opinion on an issue, or I’m preparing to take action on something in my life. The vast majority of “news” out there doesn’t do any of those things.

First of all, fast news reporting is often factually incorrect. Accurate facts often take a little while to become clear – the initial reporting right after a major event is usually at least a little inaccurate. Thus, I usually don’t feel the need to know more about an extremely recent event other than the one sentence summary, because the details are usually a mix of right and wrong. I don’t want to know those details until the truth has been figured out, and that takes time.

Second, I put little value in “quick” opinions, the kind that are typically shared on cable news. There are some newspapers with good editorial and opinion pages, but for the most part, “quick” opinions and “hot takes” aren’t useful, either. They’re usually snap judgments based on the hurried reporting mentioned earlier.

Finally, I’m never going to take action based on things that are hurriedly reported, nor am I going to take action based on someone’s “hot take.” I’m not going to change what I’m doing based on anything I see on CNBC or FBN. It’s just not happening.

So, if I’m not really learning anything, I don’t trust the opinions, and I’m not going to take action, there’s no real reason to pay attention at all, so I don’t.

To me, it’s a form of entertainment, but there are much better forms of entertainment out there. I’m going to laugh a lot more watching a well-written comedy or be compelled by a well-written drama.

Furthermore, I generally feel like it is a really poor idea to take significant financial action on anything without being factually well informed and having a strong understanding of why you’re taking that action. Since I don’t fully trust “breaking news” reporting or “hot takes,” I’m definitely not taking action on it.

So, how do I keep up with things, then, if I don’t watch cable news and don’t really read current reporting on events?

I browse a lot of independent personal finance blogs. The exact ones I follow change constantly, mostly because interesting ones constantly pop up and then disappear just as quickly because the people involved discover it’s a lot of work to keep them updated with decent, thoughtful content, and when people burn out they often let the site die on the vine. If I gave you a “top ten” list of my favorite ones I’ve ever read, virtually all of them would be defunct now (I remember sites that I really enjoyed that stopped publishing in 2007 and 2008). I usually find new sites because readers send me articles from them to read, and if the articles are interesting, I stick around for a while.

I tend to enjoy these sites because they’re steeped in personal experience and the opinions are unvarnished. It takes a lot of work to start your own site and write thoughtful long-form content, and when people do it about their finances, it usually comes from the heart. I love reading how different people see different angles in the core principles of personal finance. I love reading about people coming from different backgrounds and how they approach financial improvement. It not only gives me insight into my own practices, but it often gives me food for thought into areas I haven’t explored before.

Aside from specific frugality tactics, such blogs don’t really lead me to action. They mostly just make me think and entertain me while also giving me insight into topics that others are thinking about.

I completely ignore all short term changes in my investments. I truly don’t care what the stock market did today. I don’t want to know, because all that knowledge could possibly do is cause me to make a move that goes against the plans that I’ve researched and considered carefully over the years.

I don’t look for what the Dow Jones Industrial Average did today. I don’t look at what the S&P 500 did this week. I don’t want to know because that knowledge would just disrupt my plans. I don’t care because my investing plans are all long term and short term volatility has zero impact on what action I’m going to take. I don’t believe day-to-day changes are any sort of useful economic indicator, either. I just don’t see any value in it, so I don’t even bother to look. I don’t even look at the balance of my own investments very often.

I research specific things that come up in my own life. When I find myself bumping up against a specific problem in life, I tend to study that specific problem with a high intensity, grabbing books and articles that deal very specifically with that narrow issue I’m having.

For example, Sarah and I are considering adding an addition to our home (for a number of reasons) and we’re interested in how to do it in a way that minimizes our cost and adds to the value of our home, even if that means doing much of the work ourselves. While I have done a lot of small DIY projects, this is on a scale far beyond what I have done before, so I’m reading a lot about what would need to be done to do this properly, how much of it we can actually do ourselves, how we could serve as our own general contractors, and so on. (With topics like this, I tend to like to write at the junction of my own experience and what I’ve learned, so as we actually move into handling this project ourselves, I’ll likely be writing about it on here.)

Basically, when I find myself curious about an area in my life or want to take on a specific project or handle a particular problem, I seek out books and articles from well-regarded publications on that topic and rely on them to fill out my understanding.

I read financial magazines, but I usually get frustrated. Once a week or so, I spend several hours at the local library doing research for articles for The Simple Dollar or for other writing projects and for my own improvement as well. This usually means that I grab the latest issues of all of their publications that are even remotely related to financial topics, like Money Magazine and Kiplinger’s Personal Finance.

When I read those publications, I tend to skim more than anything. Many of the articles are on topics I find frustrating, as they often point people toward investing principles that I don’t fully agree with such as managing mutual funds and so on. The writing in those articles is often geared toward people who are successful in non-financial career paths and the writing tends to be very much in line with what appears in the advertisements of investment firms (to the point where I sometimes wonder if the articles are advertorials).

Mostly, what I’m looking for is a general sense of the kinds of topics that people are reading about and thinking about in general financial publications and I want to hit upon those topics. I generally don’t read financial publications like this for my own personal finance enrichment, as they tend to address financial problems and offer solutions that I’m not fully on board with, such as using a financial advisor or investing in managed mutual funds. They tend to also focus on issues that really only affect people that are very well off, with annual incomes in the high six figures or the low seven figures. I don’t have much interest in writing about having a third vacation home, and I don’t think you have much interest in reading about it, either.

Sometimes, there are really good articles in personal finance publications and I devour them, but more often than not the articles tend to address topics that are either not of interest to the vast majority of Americans or cover financial strategies that don’t match very well with my principles (which I’ll talk about below). So, I tend to browse and then move on.

I read long-form feature reporting on events, the kind that usually doesn’t pop up for a while after the event. I read magazines like The Economist, The New Yorker, The Atlantic, Science, Nature, and a bunch of others. About once a week, I go to the library, gather up a bunch of issues of different magazines (see above), and go through them, reading a bunch of the most interesting articles and taking notes as I read them. If I can find the articles online, I bookmark them using Pocket and read them later.

Online, I often visit Longreads.org for the same reason – long-form detailed reporting on a particular topic – and I do the same thing, bookmarking the interesting ones to read later on in Pocket.

When I have some spare time at home, I’ll pull up Pocket and read one of those articles, usually taking notes in Evernote if there’s something important or interesting that I want to remember or that I want to follow up on later. Sometimes, if something is really giving me a lot of food for thought, I’ll take some notes by hand, as I firmly believe that handwritten notes in my own words stick in my brain far better than anything else.

I read books. Lots of books. My main tool for learning about financial topics is books from the library. I tend to have several books checked out at any given time and I use two different local libraries on a regular basis.

Most of the time, I find myself intrigued by a particular topic, then I’ll seek out a few well-regarded books on that specific topic. Recently, I’ve been reading a ton about meditation; before that, I was reading a lot about cryptocurrencies; before that, I devoured several books on fermentation. I’m still devouring a lot of books on philosophy, too.

I tend to do my homework on the books that I choose to read (at least the nonfiction ones). Is the author well-regarded? Is there a bibliography in the back of the book (if it’s not a memoir)? Are the reviews of the book positive, especially from people in that field? A few minutes of Google searching usually tells me these things rather quickly. I tend to prefer books that have positive reviews even from people who don’t fully agree with the author’s take on the subject matter, or books that have won awards within a particular field.

I also tend to read anything and everything that’s reputable in the area of personal finance that comes in at the library. By “reputable,” I mean that I tend to avoid books with outsized promises on the cover (like promising that you can be a millionaire in a very brief period of time) and books from authors that have a reputation that I don’t trust.

What I try to find from most books are the core principles of the idea and the reasoning behind those principles. For example, if I’m reading a book on investing, I try to figure out what the author’s core investment principles and strategies are as well as why he or she finds those strategies worth following.

I find that books do an amazing job of digging into a specific topic with a depth and clarity that you really can’t find anywhere online. Nothing matches the depth and breadth of a well-written book on a particular topic.

When reading a nonfiction book, I tend to take a ton of notes, then reread those notes a few weeks later after finishing the book. This ends up locking a lot of the ideas from the book in my head, even if it does mean that the reading is slower.

In summary, I read
– independent personal finance blogs, because I enjoy personal stories and individual angles on principles;
– opinion pieces from sources I trust;
– financial publications, because I like to understand what people are reading when they often first seek financial advice;
– long-form journalism on financial topics, like cryptocurrency and the housing market;
– and books that cover specific topics of interest or new angles on financial principles.

I don’t read or watch
– current news reporting, because I don’t trust its accuracy;
– current opinions, because they’re usually based on current news reporting;
– nor financial indicators, because they don’t provide value into my investment practices.

I focus entirely on things from which I can learn because I trust the information being presented, things from which I can shape my opinions and views in a rigorous way, and things based upon those that lead directly to action. But how does that work in practice?

In general, I start with something I’m curious about. Maybe it’s a comment from a friend, or maybe it’s something I read about in a book on a different topic, or maybe I found an article on it in a publication that I read, or maybe it’s just something I noticed in the world or in my own life. How does cryptocurrency work? What does it take to become a history professor? How should I be saving for retirement as a risk-averse thirtysomething?

Once a topic is on my radar (and I usually have several topics that are on my mind at any given time), I read Wikipedia to get a general background and then I look for long-form articles about that topic. Usually, I have one main topic that I’m really focused on and I’m usually engrossed in a book on that specific topic until I feel like I have sufficient general understanding of it, then I move onto something else, usually one of the other topics I have an interest in at the moment.

In that process, I simply don’t pay attention to day-to-day news because, as I mentioned earlier, it’s often inaccurate (through no fault of the reporters – that’s just the nature of breaking news) and I’m not going to take any real action on it anyway. I’ll sometimes skim headlines just to have a sense of what people might talk about at a social event or on social media, but that’s about it.

So, in the end, I don’t feel a person has to pay any attention to financial news at all to be successful at mastering their finances; in fact, I consider a lot of it to be distracting noise. Read some personal finance books, figure out their core principles, stick to those principles, and look for very specific help on specific topics as they come up in your life. If you want inspiration and new angles on your principles, seek it in independent personal finance blogs with a human touch or memoirs related to financial topics.

Good luck!

The post Should a Person Pay Attention to Financial News? appeared first on The Simple Dollar.

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What Is a Mixed Credit File, and How Do You Fix It?

Believe it or not, the credit reporting agencies (CRAs) actually make quite the effort to maintain accurate data and to post only correct information on your credit reports. They do this because credit reporting mistakes can be costly — and bad for their image, too. And, mistakes can lead to lower consumer credit scores and difficulties in getting approved for credit.

Credit reporting mistakes can also potentially lead to lawsuits and regulatory problems, both issues the CRAs would rather avoid. Throw in the fact that each CRA wants to be able to advertise to their customers (lenders, insurance companies, and the like) that their data is the most accurate available, and you can see why each CRA is highly motivated to maintain accurate information on consumer credit reports.

Despite their best efforts, credit reporting errors do occur. The Federal Trade Commission estimates there to be some 40 million mistakes present on the credit reports of U.S. consumers. From a credit scoring perspective, some of these mistakes are minor, and some are major. Some credit reporting mistakes are easy to fix, and others can be challenging.

Perhaps the most difficult credit reporting error for a consumer to have corrected is the so-called mixed credit file.

What Is a Mixed Credit File?

A mixed credit file occurs whenever a CRA inadvertently commingles the credit histories of two different individuals into a single report. The result is a credit report that contains information belonging to two different consumers, bundled together as if those two people were the same person.

Thankfully, mixed credit files are rather rare. When they do occur the problem is usually experienced by people with common names (think John Doe, Joe Smith, or David Jones) or to family members with similar names and past or present addresses (think John Doe Jr., Joe Smith III).

Why Are Mixed Credit Files Difficult to Correct?

A mixed credit file is a problem because it can potentially cause complications whenever you’re trying to qualify for financing. Even if the incorrect information showing up on your credit report is positive, the extra indebtedness and extra accounts with balances can cause debt-to-income (DTI) problems or may harm your credit scores.

And if the incorrect accounts on your credit reports are negative, then the results can be even more problematic, because your credit scores could be lower than they otherwise would be.

Most credit reporting errors occur because a data furnisher (e.g., a lender or collection agency) is sending incorrect information to a CRA. In the case of a mixed file, however, the credit reporting errors are actually being caused by the commingling of information, not by any data furnisher. The data furnisher is (likely) sending correct account information to the CRA, but the CRA is putting that correct information on the wrong person’s credit report.

Fixing the Problem

Mixed files can indeed be fixed. In order to fix a mixed file, the CRA needs to remove and suppress from your credit report the accounts that don’t belong to you. The removal fixes the issue immediately. The suppression prevents the incorrect information from accidentally being added back to your credit reports in the future.

If you think you have a mixed credit report, submit a dispute with the corresponding credit bureau, notifying them of the mistake and identifying any information that doesn’t belong to you. If you think you know who that incorrect information does belongs to, such as a family member with a similar name, let them know — Equifax says that can help the process go faster.

The National Consumer Assistance Plan (NCAP) aimed to solve the issue of mixed credit files. In September 2015, thanks to new NCAP procedures, the CRAs implemented reforms with regard to the handling of “special disputes.” These special disputes include, you guessed it, mixed files.

As part of the NCAP changes, the credit reporting agencies will now escalate special disputes to employees with the training and authority to correct the errors. And, the CRAs will share information with each other when a mixed file has occurred – that should reduce by two-thirds the work consumers need to do to have their credit report fixed.

Related Articles:

John Ulzheimer is an expert on credit reporting, credit scoring, and identity theft. He has written four books on the topic and has been interviewed and quoted thousands of times over the past 10 years. With time spent at Equifax and FICO, Ulzheimer is the only credit expert who actually comes from the credit industry. He has been an expert witness in over 230 credit related lawsuits and has been qualified to testify in both federal and state courts on the topic of consumer credit.

The post What Is a Mixed Credit File, and How Do You Fix It? appeared first on The Simple Dollar.

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Monday, April 2, 2018

Questions About Unit Pricing, Social Security, Cloth Napkins, 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. Unit pricing
2. Waiting for Social Security
3. Handling leftovers
4. Relocating as a contractor
5. Sudden credit score decline
6. Relocating as a contractor
7. Second jobs for additional income
8. Digging out of tax problem
9. Vanguard and conflict of interest
10. Cryptocurrency question
11. Lifestyle inflation
12. Cloth napkins versus paper

As many of you know, I relish the warm weather of spring and summer. I spend all winter looking forward to the warm days of spring, where I can go on hikes in the woods looking for morels and exploring trails.

Sometimes, however, Iowa likes to hold onto winter, stretching it out well into April. Yesterday, on the first, my family drove through a snowstorm after visiting people for the Easter weekend. The extended forecast rarely shows temperatures breaking 40 F and shows many patches of snow.

Some years, I’ve already hiked for many hours in the beautiful spring weather at this point. Other years… not so much. This is one of those very late springs, and I’m counting the weeks, days, hours, and minutes until warm weather arrives.

Q1: Unit pricing

As I was walking through the grocery store last night I was looking at unit pricing on a few items and thought to my self I am surprised I have never seen Trent do an article on Unit Pricing. Just thought it might be a money saver for some people who some of which likely don’t even know what it is.
– Jim

I haven’t written about it in a while (the last time I really covered it well was in this article a couple of years ago) but it’s a good topic to touch on regularly.

Unit pricing is a simple way to compare very similar products in the store – for example, the four roll package of toilet paper and the nine roll package of the same kind of toilet paper. To do that, you break the item down into individual “units” – in this case, individual rolls. What’s the cost per “unit” of the four roll package? Well, the cost per roll is the price of that package divided by four. What’s the cost per “unit” of the nine roll package? It’s the price of that package divided by nine. Buying the one with the lowest cost per roll is the best bargain.

The actual “unit” to be compared varies a lot. You might compare the cost per ounce or the cost per bag or the cost per tablet, for example. You should also consider whether there’s any chance of it going bad before you’d use it up.

Using unit pricing to decide which particular package to buy at the store is a good way to minimize cost provided you have the storage space for bulk items. However, it isn’t always the bulk items that have the best unit price (though it often is) – it’s worth your time to calculate it.

Q2: Waiting for Social Security

My question is about Social Security benefits. We are both waiting until 70 1/2 because we are doing fine, even saving. When we start getting SS, what is the best way to save it? We both have some investments, I have a nice deferred compensation account from my job. We have no debts, own our home, live frugally. We might take one major travel adventure in the near future.
– Anna

I would delay getting Social Security benefits for as long as possible. The longer you wait, the larger the monthly benefit will be.

Once you do start receiving them, I would make absolutely sure that you’re fully funding your Roth IRA each year. As you’re over 50, your annual contribution limit is $6,500, so I’d hit that cap. With money beyond that, I would shore up your expenses by putting money aside for your next vehicle replacement, an emergency fund, and any upcoming major home repairs. All of that can (and probably should) be done in an ordinary savings account.

Without a full picture of your retirement, I can’t really give you more specific advice than that, but that plan will serve almost everyone who nears retirement.

Q3: Handling leftovers

I just read the answer below about how to be sure that leftovers are safe to eat. The system I have used for many years is to simply put the leftovers in a sealed container, put a small piece of Scotch tape on the lid of that container, and use a Sharpie black pen to write the current date on the piece of tape. My husband and family use this system too, and know that anything not eaten within one week should be composed or thrown away. When the container is washed, the tape is removed and the process begins again. This system minimizes food waste and maximizes food safety.
– Monique

I received a bunch of emails about leftovers over the last few days; this was one of the most clear ones.

Over the course of my life, I’ve lived in several distinctly different climates. For example, I grew up living in a very warm and humid climate. We didn’t have air conditioning and lived very close to a very large body of water. Food would go bad at the drop of a hat, sometimes within an hour or two, and it would even go bad in the fridge in a couple of days depending on what it was.

Today, I live in a much drier place – it’s simply never very humid outside – and it’s colder, too, as I moved quite a bit northward. Here, things seem to last for ages without going bad. I can leave food in the refrigerator for insanely long periods without any problem, things that would go bad in a few days back where I grew up.

If you add on top of that the fact that some foods just go bad faster than others depending on salt content, acid content, and so on… it is just really hard to come up with hard and fast “leftover rules” that would work for everyone.

My sincere best advice for anyone, especially anyone that moves around much and/or eats a widely varied diet, is to simply know how to identify when food goes bad. You should be able to look at food, smell food, touch food, and know whether it’s safe to eat with a very high rate of success. Using actual day counts might work in your specific area, but they’re going to not work for other areas and they’re not always going to work from dish to dish.

Q4: Thoughts on Fundrise

What do you think about Fundrise as a way to diversify investments? Appears to be low cost and beat Vanguard’s REIT, at least in its short history. Although the yearly account management fees are small, it appears that a larger percent of money is taken out on distributions?
– Kara

I think you’ve got the right take on Fundrise.

Fundrise is basically a somewhat diversified way to invest in real estate. Essentially, they offer a selection of real estate that you can invest in at your choice (or let them choose for you using certain criteria). You’re investing in these with lots of other investors and you’re effectively co-owners of this property. Naturally, Fundrise charges some fees for this, which appear to be low by some measurements, but it’s unclear in other areas because this is a privately-held investment and isn’t subject to some of the disclosure that other investments must provide per SEC regulations.

Their returns look great, but the properties on offer through Fundrise are ones that are what I would describe as big winners when the real estate market is good and fairly shaky when the real estate market isn’t as good. Real estate has in general been pretty good since 2008.

I would categorize investing with Fundrise as being relatively risky, with the potential for high returns but some significant chance of bad returns and losses if the real estate market goes bad. I wouldn’t invest everything you have there regardless, but nothing strikes me as inherently flawed, either – it’s just a fairly high risk and (potential) high return investment opportunity with fees that are really hard to clearly identify (they may be pretty high and are being disguised by great returns at the moment).

Q5: Relocating as a contractor

I am considering relocating to another state (I presently reside in MA). In MA, I benefit from legislation which requires that employers make 401K plans and health insurance available to any employee, even if contracted to a client but paid via W2 through an agency. I am having difficulty discovering what will be available to me should I relocate to a different state where the employer/contractor distinction is very different, and I am treated more like a 1099 worker.
– Anna

It’s very likely that you’re signed to a contract that spells out your benefits that you’re receiving, as well as a termination date and other such information. As long as you have that contract in place, your employer and you will follow the terms of it.

When you move, your employer may choose to enact their termination clause in the contract and offer you a different one in line with the laws in your new state. There’s not much you can do about that. Likely, they’ll just stick with the current contract and offer you something different the next time around.

You need to look up laws for contracted employees in the state you’re considering moving to. Google really is your friend here. Then, you need to figure out if offers that follow those laws are something you can live with.

Q6: Sudden credit score decline

My credit score has been above 610 for long time. On March 21 it tanked to 525. Signed up today with credit repair service to fix score. dont know why score tanked as there have been no changes for a while. looking for possible loan of up to 1000 to repair van, get it tagged, buy washer and dryer. Just got approved for rental property but it doesnt come with any appliances. Need frig, stove, washer, dryer, dishwasher. can you offer any suggestions thank you gail sayre husband is a disabled vet. I just retired from nsg. and can no longer work.
– Ron

The first thing I’d do is head over to the Federal Trade Commission’s credit report site, where they allow you to get one credit report from each credit bureau each year. Get your credit report, go through it, and see if there’s anything on there you don’t know about. I’d do this first because my instinct is telling me that someone may be using your identity illegally.

If everything checks out there, make sure you’re not behind on any bills or carrying a large balance on any of your credit cards, as both of those things can ding your credit score.

If none of those things are true… I’m really not sure why your credit score would have fallen so much without more details. I’d say it’s extremely likely that one of the above things explains it.

Q7: Second jobs for additional income

I was wondering what your opinion is on second jobs for additional income. I’m thinking of getting a second gig to build up my savings faster. My pretax salary a year is around 75k. I put 175.00 per pay period (biweekly) into a 457 account pretax. I also use flex spending which comes out to 720.00 a year pretax. I work for city government so I have IPERS for a retirement in addition to my 457. I’m 42 years old, divorced, and no children. I have my mortgage and truck payment for debt. I save about 25% of my take home pay. I guess my question is if I get a second gig to save more, should I be concerned with making more and therefore paying income taxes next year?
– Will

I started The Simple Dollar as a “second job” and built it up while working a full time salaried job with a significant amount of travel.

Yes, if you earn more, you will be paying more in income tax next year, but the increase in taxes will be far, far less than your increase in income. The first $15K or so that you earn at your second job will be taxed at 25%; everything beyond that that you earn at your second job will be taxed at 28%. Nothing about your current job will change in terms of taxes.

Getting into a higher tax bracket doesn’t change anything about the taxation of your current income. It just means that any additional income will be taxed at a slightly higher rate, and the highest federal rate right now is 39.6%, which people don’t hit unless they’re making over $400,000 a year. Even then, their first $10K (approximately) in income is taxed at only 10%, and so on.

Q8: Digging out of tax problem

I think I’ve gotten myself into a very bad tax situation and I’m wondering what is the least costly way to proceed.

Several years back I was gifted a share of a limited partnership which holds some small businesses and commercial rentals- each year I receive a K-1 and a distribution that usually covers the extra taxes and a tiny bit more. The partnership is starting to wind down its investments and I just received my 2017 K-1: the partnership sold some assets which added an extra $100K of capital gains to my 1040 and also triggered AMT and investment surcharge so my tax liability went up quite a lot – my 2017 income taxes are $46,639 federal plus $12,778 state. I’d paid estimated taxes based on 2016 partnership income so while I don’t owe penalties I do owe an extra $25K.

I’ve been informed that the partnership will distribute around $35K in the next few weeks, and also to expect significantly higher capital gains next year as the sale closes on a larger real estate parcel. The remaining gains from the 2017 sale will be put into site-work for another parcel which may sell in 2018 or 2019. Note that I can’t sell my shares nor do I have any voting rights over how the partnership is run. My problem is 2018 estimated taxes. Given that I expect a higher tax liability in 2018 I need to pay the safe harbor rate 110% of 2017 taxes in order to avoid penalties. This comes to a total of $65,359 between federal and state. Looking at my payroll numbers so far this year and using tax withholding calculators, given that I’m contributing to my 401k the maximum $18K, my take-home pay after withholding the necessary taxes would be $242 per semi-monthly paycheck. I will also owe my usual property and car taxes, a yearly total of $4012, which necessitates saving $167 per paycheck. This leaves me with $75 per paycheck after taxes and retirement savings. I can’t live and work on $150 per month- my mortgage is $1260, my condo fee is $430, my utilities are $160 (electric, gas, and minimal internet and cell which are required for work), my gas for commuting to work is $80 and car insurance is $83… I live in an expensive real estate market – my current home is designated as “market-rate affordable housing” so I don’t expect I could find a better deal by moving; also we are in the midst of roofing and foundation work which make the place rather unappealing to buyers.

I do have ~$25K cash savings and ~$10K left from the 2017 distribution, but it seems too risky to spend down all of my savings in expectation of a large lump-sum distribution over which I have no control. I could stop 401k contributions for 2018 to free up an extra $18K but this seems like a terrible move given that my marginal tax rate will be at its max in 2018 compared to future years. I don’t think I could commit to a second job given that my main job in cybersecurity has long unpredictable hours and I don’t have any valuable assets to sell other than my condo, car, and a lot of retirement savings. I really don’t know what to do to pay my 2018 estimated tax liability. Furthermore, I’m concerned that the situation will repeat in 2019 given that another parcel is still for sale and the 2018 capital gains are projected to be significantly higher than the 2017 sale.

Something seems off about the situation to me – I shouldn’t be in such dire financial straits with a 110K salary and no debt except a reasonable mortgage (compared to rentals in the area it is a great deal), but as far as I can tell these are the numbers.
– Cal

I would take this whole situation to a tax specialist, because either (a) something is wrong with your numbers or (b) this partnership is being managed with an incredible level of incompetence that’s negatively affecting everyone involved with it.

If you find that the tax bill really is this onerous, you can talk to the IRS about a payment plan. I speak from experience when I say that the best route for dealing with the IRS when you are worried about your ability to pay taxes is to talk to them directly. They will help you figure out a way to pay it without putting yourself in dire straits and without stiff penalties.

If this really is bad management of your partnership (if that’s what your tax specialist concludes), I’d try to get ahold of some of the other partners and see if anything can be done about it. If a partnership is throwing out huge tax burdens to the partners like this, then it’s not benefiting anyone.

Q9: Vanguard and conflict of interest

I was reading on another messageboard about how Vanguard is better than other investment houses because it protects people from conflict of interest. I tried to figure out this statement but I don’t understand what it means. Help?
– Alan

Unlike most other investment houses, Vanguard is actually a collective of a bunch of smaller companies that essentially share a lot of business features (like marketing and account management and administration). Each fund is operated as an independent business with pretty thick walls between each fund.

What that means is that you don’t have situations where someone is involved with a whole bunch of funds and has personal reasons for favoring one fund over another one. This can happen at other investment houses, though it’s pretty rare today.

While this is an interesting feature of Vanguard, it’s not the reason to use it as your primary investment house. I use Vanguard, but that’s mostly because I agree with their philosophy of intense focus on using index funds.

Q10: Cryptocurrency question

I don’t understand why you are negative on crypto. High risk = high reward has a place in everyone’s portfolio.
– Daniel

High risk / high reward investments make sense as a part of a portfolio in an established and regulated market. Crypto is not an established or regulated market. It’s the Wild West out there, with hundreds and hundreds of different cryptocurrencies and many of them amounting to little more than pyramid schemes or pump-and-dump schemes.

The blockchain idea behind Bitcoin is brilliant. There are people, especially early adopters, who have become very wealthy because of it. That doesn’t mean it’s a sound investment, especially now that the “early adopter” period is over.

Most new cryptocurrencies being started right now are very questionable in terms of their support, their reputation, and their organization. That’s not to say that people won’t make money, but it’s pure speculation. It’s not something I’m ever going to recommend to someone as an investment.

Now, if you have some cash and are enamored with crypto and can afford to gamble, go for it. I’m not going to question what people do with money that they can afford to lose without disrupting their future.

Q11: Lifestyle inflation

Why do so many personal finance books and websites tell people to not spend any more when they get a raise or to not spend inheritance or lotto winnings? What is the point?
– Alex

The point is that if you’re living a content life right now, there’s no real reason to start spending more money. Instead, you should use that money to secure the life you have now against things that will inevitably come in the future.

No matter what, your car is going to wear out. No matter what, you’re going to get older and eventually want to retire. No matter what, you’re going to face some life emergencies and have to figure out how to handle them.

If your life is pretty good and you get a raise or a windfall, why not use that extra cash to preserve the life you have now and protect it against those kinds of things that you know are coming up? If you just spend that windfall or inflate your spending to gobble up that raise, you’re just going to get walloped by those events down the road, knocking your life down to worse than where it was.

If you have a good life, ensure you keep that good life. Don’t chase a very slightly better life for a short while before you stumble down into something worse.

Q12: Cloth napkins versus paper

Can cloth napkins ever pay off against paper ones? Decent ones cost so much that I don’t think you could ever use them enough.
– Drew

So, let’s start with the napkins. My preferred cloth napkins in terms of bang for the buck are these, which are simple and elegant and stand up to a lot of rewashings and bleach to remove stains. They cost $1.25 apiece.

What’s comparable with paper? These are supposedly good for the price (I don’t use many paper towels, so I’m not sure). You’re buying 12 rolls of 158 sheets each for $24.25, and you’d probably use 2 sheets as a napkin substitute. That’s almost exactly two and a half cents per napkin replacement. (This is an approximation, of course, depending on whether a folded paper towel is okay or you want an actual paper napkin.) So, in this case, you’d need to use a cloth napkin 50 times to replace a paper napkin. A good cloth napkin will last a lot longer than that.

Now, with cloth napkins, you’ve also got to wash them and replace them, but the cost to wash a cloth napkin in a big batch of whites is negligible.

So, if you’re going to use napkins a lot, then cloth napkins are worth it. If they’re rarely used, then don’t bother.

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 Unit Pricing, Social Security, Cloth Napkins, and More! appeared first on The Simple Dollar.

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