Saturday, April 14, 2018

Financial Success Versus Working Too Hard

Erica writes in:

Loved your recent article about living life true to oneself, made me really think. I wonder if you could address another of those “regrets of the dying,” wishing I hadn’t worked so hard. I feel like I am losing my whole life to constant work. I have a family I don’t see enough and no hobbies to speak of. Feel like I am constantly working, and for what? I have an okay retirement savings but I won’t have friends or hobbies when I do retire. My life is my job and I am starting to regret it.

This is a great question, one that, as many good reader mailbag questions do, goes far beyond what could be answered in a short mailbag answer and requires a full article.

So, in my article about avoiding life regrets, I focused almost entirely on the top regret, which was living a life true to oneself. I didn’t move on to address the other four regrets.

The second regret, which is the one that Erica is interested in, is also very straightforward:

I wish I hadn’t worked so hard.

Bronnie Ware, the palliative care nurse who wrote about the regrets of the dying, described it in a bit more detail: “This came from every male patient that I nursed. They missed their children’s youth and their partner’s companionship. Women also spoke of this regret, but as most were from an older generation, many of the female patients had not been breadwinners. All of the men I nursed deeply regretted spending so much of their lives on the treadmill of a work existence.”

That’s a feeling that I think a lot of us can identify with.

Right now, I feel like I am in a pretty healthy place with regard to keeping my professional life in balance with other aspects of my life, but that was not an easy balance to achieve. I spent most of my first decade of professional life feeling like I was spending far too much of my life on professional goals and tasks and too little of it in other areas, particularly my family. I know almost exactly how Erica feels, in other words, because I was there, too.

The biggest challenge in changing things is that there’s a strong sense that if you rock the boat too much in terms of your career, or if you say “no” too much, you’re going to find yourself without a job or even without a career at all. You’ve spent many years training and likely at least some years establishing yourself in your career and in your current job. It pays reasonably well. You don’t want to lose what you’ve built. So, when you’re asked to put more and more on your plate, you just say “yes” because there’s an underlying feeling that saying “no” means you will lose what you have, which will cause a major professional crisis that will spill over into personal and financial consequences as well.

The first and most important thing to recognize in all of this is this simple fact: if you feel like your life is out of balance, you’re probably not performing well to begin with. As a wise friend of mine once said, “If you’re juggling six chainsaws, you’re probably not cutting down any trees.”

There comes a point in one’s professional life when there is so much on your plate that things simply start falling through the cracks. You can’t give quality work to everything, and you’re likely just failing to complete some things that just fall through the cracks. There is a limit to how much you can actually do, and when you reach that limit or go beyond it, it goes from cutting down trees to juggling chainsaws. Rather than doing things well, you’re just trying not to drop any balls, and that isn’t helpful for you or for whoever you’re working for.

I found myself in this exact position a few times in my career. I was juggling more than I could sustain in my professional life and it left me feeling torn away from my family, my friends, my health, and my other interests. The thing was, once I was able to step back from that, I realized that I wasn’t doing any of my tasks very well. I had transitioned to doing a bunch of things in a mediocre fashion, both because I had too many tasks on my plate and because I wasn’t left with much time or energy for anything else. I was heading down a path of pure regret, in other words.

So, how can you fix that without damaging your career or your income? Here’s what I was able to figure out while moving through those situations.

Build a life that doesn’t require your current salary – a “light at the end of the tunnel.” This is the absolute number one most important thing that you should be doing.

One important aspect of personal finance that I love to hammer on is the idea of “golden handcuffs”. “Golden handcuffs” simply means that your life is set up in such a way that you are reliant on the benefits and salary of your current job and your life would undergo some serious stress if you were to lose that job for even a very short period of time.

Being in “golden handcuffs” means that you do have some nice lifestyle perks that come from having a good income, but you are stuck at that job, period. You can’t take any career risks. If you’re considering jumping to a new job, you have to be very careful not to put your current job at risk. You can’t have frank conversations with your boss or ask for any real changes at work. You can’t rock the boat at all. You just have to swallow what you’re handed.

It’s miserable. But at least you have a lot of money to spend, right?

The thing is, money isn’t everything. Study after study has shown that having money and income beyond the basic level needed to meet your needs and to indulge in a few minor wants doesn’t bring you any additional happiness whatsoever. In fact, if you’re making choices that make you unhappy in order to simply have more disposable income that you then immediately spend on things that don’t actually contribute to your lasting happiness… you’re not really gaining anything, are you?

The most powerful solution I’ve found for this dilemma is to dial back your spending and start using that money to make yourself ready for a possible professional transition. (There are many, many ways to do this – stick around The Simple Dollar for a few weeks and you’ll find a ton of tips and tactics for how to do this in various areas of your life. Here’s a starter kit.) This isn’t to say that you’re going to make such a professional transition, but simply that one becomes easily possible. The first effect will be that if you get fired, it’s not apocalypse. Sticking with it, you’ll begin to see that other job options with lower salary but lower intensity and other perks are not only possible, but completely feasible options.

This transition mostly revolves around spending less than before, which has two key benefits. First, it means that you need less salary to continue to function. You can live your “ordinary life” with less income than before. Second, it also means that you have some financial reserves that can help you through a bumpy transition.

Together, these things create a very interesting effect at work. As you break those “golden handcuffs,” you no longer feel nearly as “forced” into unpleasant job choices as you once were. Your boss has a lot less leverage over you and you don’t feel as though you have to accept the short end of the stick professionally all of the time. You have options. It’s not the end of the world if this job goes away or this career path closes up or changes.

So, what’s the first step here? I generally encourage people to follow something close to Dave Ramsey’s debt snowball, which he prescribes in his book The Total Money Makeover.

First, build a $2,000 emergency fund. Dave’s original advice was to aim for $1,000, but that’s a number from several years ago. Aim a little higher – shoot for $2,000. I suggest doing this by setting up an automatic weekly transfer from your checking account to your savings account for a small amount – say, $50 – and leaving that on permanently, then contributing more than that manually until your savings is at $2,000. Don’t turn off the automatic contribution – that way, when you do need that cash in a pinch, the account isn’t depleted and will continue to refill itself automatically.

Next, start tackling your high interest debts. This includes basically every debt you have with an interest rate over 5% or so. Order them by interest rate or balance size, whichever you prefer (there are reasons for both – I lean toward interest rate, but there are nice psychological benefits for doing it the other way). Then, make minimum payments each month on every debt on the list, but make a big extra payment on the debt on top of that list. When that top debt is paid off, erase it and keep moving down the list. As you eliminate debts, the total of your monthly required bills is going to get smaller and smaller, which is going to make debt payoff faster and faster and give you more and more breathing room. You’re breaking the golden handcuffs!

Just keep moving from there. At this point, as those debts are starting to disappear, you’re going to start feeling like there is light at the end of the tunnel, and that’s an amazing feeling. It sets the stage for being a little more assertive at work in terms of having a balance between work and other aspects of life that you’re happier with.

Now, we’re going to move onto some tactics that might seem impossible if you’re tied up with the golden handcuffs, but become a lot more plausible when you have some light at the end of the tunnel.

Block off time for relaxation, period. Simply create a few blocks of time each week that are dedicated solely to relaxation and leisure. Put them in your planner. Make them absolutely sacrosanct. During those times, turn off your electronic devices and do something that makes you feel whole.

I actually do this pretty often. I meditate each day for about 15 minutes – it’s sacrosanct. I read for about an hour each day – it’s uninterrupted, with the phone off. I have two social evenings each week – again, uninterrupted. I usually spend about an hour with my kids uninterrupted each day. I also usually box off one weekend afternoon a week for a family event of some kind.

During those times, my phone is off. I don’t get interrupted no matter what it is. My focus is on the thing I’m doing right now, and the rest of the world really doesn’t matter.

If you think you don’t have the time for this, make time. Maybe that means you don’t do household routines quite as often as you once did. Maybe that means you have to back off on a few minor unimportant tasks at work. Maybe it just means you have a few less time wasters in your life. Whatever you need to do, make room for uninterrupted leisure and social time in your life. Pencil them into your calendar, turn off your digital devices when that time comes around, and don’t think about anything else when they’re happening.

It is very important that you block this time off and dedicate it to the things you care about. If you don’t, it’ll be lost in the form of minor tasks and idle time. Block off a few hours for a hobby on the weekend or a dinner party on Thursday and you’ll find that the things that are actually important still get done. The only thing you lose is idle time staring at the television or your phone or time spent doing minor and unimportant tasks.

Evaluate your job and figure out what’s working and what isn’t. If you feel as though your job is pulling too much out of you, you absolutely owe it to yourself to figure out what aspects of your job are really worthwhile and which ones are not. What you’re truly looking for is what parts of your job are ones where your particular skills are producing a lot of value for the company and which ones are not.

Most people tend to enjoy the aspects of their job where they feel they’re applying genuine skill and producing good results. It’s the other aspects – the ones where you’re not applying skill and you’re not producing any results – that leave a person feeling as though they’re just dumping hours of their life away into nothing while the other aspects of their life die on the vine.

I like to point at the 80/20 principle here. The 80/20 principle, as I described in an earlier post, simply says that 80% of the value you produce comes from 20% of your time and effort. In other words, most of what you do at work that really produces value comes from a small portion of the time and energy you devote there.

What you need to seek are ways to cut back on the tasks that fill the 80% of your time but only produce 20% of your results.

Now, every job is different. It’s hard for me to have any idea as to what aspects of your job are the 20% that are really productive and the 80% that aren’t. However, I can say that the value you have for your organization mostly comes from that 20%.

You need to amplify that 20%, not drown it with the 80% that’s clogging up your professional life (and other aspects of your life, too).

So, sit down with that question in mind and really look at your job. What things do you do that really produce value for your organization? Set those things aside – they’re probably the things about your job that you enjoy the most, anyway.

What you need to address is everything else – the low value stuff. Start figuring out how to deal with it.

Actively eliminate as many of those negative factors as possible. All of those other aspects – the 80% of your work that produces only 20% of the value – needs to be chopped down or tossed out as efficiently as possible.

Again, there are lots of ways of doing this. You can perhaps automate some of them. Maybe you can come up with a much more efficient workflow to get those drudgery tasks out of the way faster (or ask for help in coming up with that workflow). Maybe there are tasks that make more sense if they’re given to someone else with more appropriate skills. Maybe there are meetings you go to where your input really isn’t needed and those meetings can be cut.

Whatever the case may be, start chopping down that 80%. Your goal with that chopping is to get to a place where you can easily find room in your life to block off plenty of time for leisure, for social events, for other aspects of your life. If you’re deleting or downsizing useless tasks, you’re freeing up time at work that you can use to take care of things you might have previously taken home with you. If you’re getting that stuff done at work, then you’re freeing up time outside of work, time you can devote to things you care about.

Yes, there are probably some aspects of this that you’ll have to talk over with your supervisor. Just simply state that these X tasks are ones where you don’t think you’re providing much value to the company and they’re interfering with these other Y tasks where you are providing a lot of value to the company and look for solutions together. Your boss might push back on whether some tasks are really ones where you don’t produce much value, but it’s likely that some of them are tasks you’ll agree on, and then you’ll have an ally in making them go away in some fashion.

I went through all of these processes during a stretch in time where I felt completely overwhelmed with work and life. I went through a period where I felt completely lost in my career and felt as though everything was badly out of balance and wouldn’t ever change.

For me, the shift away from that started with a genuine commitment to turning around my finances so that I felt like there was some hope for the future and some leverage in my workplace. As I began to find financial leverage in life, I began to make some major career changes, only to find that after a few years, I was right back in that same tight “all work in no play makes Trent a dull boy” corner. At that point, I really just assessed what things I was doing that really produced value and which didn’t, and then made it my goal to cut out as much as I could that didn’t produce value.

Today, I feel like I’m in a very healthy place. My work is mostly joyful. I do not feel that I will regret overworking when I reach the end of my life. The foundation of that is strong finances, with some realization that my income is earned by the things I do well and not by my busywork.

Good luck!

The post Financial Success Versus Working Too Hard appeared first on The Simple Dollar.

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Friday, April 13, 2018

The Big Spending List

Since the very beginning of The Simple Dollar, I’ve talked about what I consider be the fundamental rule of personal finance: spend less than you earn and do something financially sensible with the difference. If you can do that over every pay period, every month, and every year of your life, no financial hurdle will be too difficult to cross.

How do you do that, though? It’s easy to say, but much harder to implement, especially when you’re turning your attention to personal finance for the first time.

One of my favorite eye opening and useful strategies for migrating to a natural pattern of spending less than you earn is to keep track of every dollar you spend and review the spending regularly.

Why do this? There are three big reasons for it.

First of all, many people lose track of how much they spend on little expenses throughout their days. They wonder where “all of the money went,” and the truth is that it usually goes away to a flood of little forgotten expenses or inflated grocery or department store trips. Most of those things are just completely forgotten within a week or so (or sometimes even faster), leaving people wondering where the cash went.

Second, most people have no idea how much money they spend on a particular type of item, and seeing that is usually a shock to the system. A person who gets a morning coffee at a drive-thru each morning might just think of it as a “few” $5 stops, but when they step back and look at it over the course of a month, they’ve spent hundreds of dollars on that morning coffee. I’ve done that very thing myself with other expenses, such as Kindle books. I thought I was keeping track of them and I thought I was spending less per month than I was, so reviewing the actual total was a pretty big shock.

Third, those realizations often lead to some real financial changes. When people go through the process of really reviewing their spending and then deal with the surprises that the review reveals to them, they’re usually ready to make some common-sense financial changes in their life, ones that simply cut away a healthy amount of excess spending and change a few simple routines without making life “miserable” in the least.

So, how do you embark on this little journey?

The first thing you need to do is to get out all of your bank statements, credit card statements, and receipts for the last couple of months, everything you can find. The bank and credit card statements are the most important ones, but grocery and department store receipts are pretty useful, too.

I find it’s also a good idea to have a bunch of different colored pens or highlighters, as this helps a lot with the review process.

Now, start going through those statements and receipts, and for each and every item, ask yourself these questions:

Was this a good decision? Looking back, was this really a good use of your money? It’s really okay to say “no” here. In fact, the absolute best policy is complete honesty with yourself. If a purchase wasn’t good but you’re ashamed of the choice, don’t falsely say that it was a good choice just to “save face.” Be honest with yourself.

Did I get real lasting value from spending that money? In other words, whatever you spent that money on, did you get any real lasting value from it? Is it something that’s still resonating as a positive thing in your life right now? Or was it a momentary thing that faded almost immediately after buying it? Things that fade away quickly and have no impact on your life just a few weeks later are things that probably aren’t worth your money. It is worth noting here that there are items that are worthwhile purchases if you go for the most basic version, but when you buy a premium version, you’re not getting any extra lasting value out of the extra expense.

Could I get the same value by spending less or spending nothing? In other words, could I buy a lesser version of this and still be happy? Could I skip this purchase entirely and still be happy? Could I borrow this item instead of buying it and still be happy?

Is there a way I could reduce or eliminate this expense without reducing any real quality of living? The questions from the previous step will often lead you to some action you could take that will reduce your spending on that particular item going forward without an equivalent loss in life quality. Make a list of all of those changes. Write down every single one. This is going to become a to-do list of specific financial changes you can make that are geared to your life.

Your “to do” list from this project is invaluable. Make it a key part of your routine going forward to take care of as many things on that “to do list” as possible. Some of them will be specific actions, like one time things you can do to cut your energy bill. Others will be behavior changes, like making your own coffee each morning instead of hitting the coffee shop. Make that to do list a big priority in your life.

As you’re going through this, I highly recommend highlighting each different type of expense, particularly the repeated ones. If you find yourself seeing the same type of expense popping up again and again – things like coffee shop visits, Amazon purchases, and so on – highlight them with a specific color and then make a monthly total of all of those purchases. That monthly total is often shocking, particularly when it covers a type of small repeated purchase that you often forget about. That total itself can often trigger a new addition to your to-do list.

As I said, at the end of all of this, you should have generated a nice little list of things to do and changes to make based on what you discovered. Spend some time taking action on this list. Try to adopt some of the habit changes you identified, and make sure to take care of some of the distinct actions you identified. Maybe you need to change your routine of eating out for lunch every day. Maybe you need to switch your light bulbs at home to more energy efficient models. Maybe you need to call your cell phone company and negotiate a little. Maybe you need to start buying store brands at the grocery store.

That list is a personalized frugality checklist, made just for you, that’s a perfect reflection of how you spend money, which means that it should be incredibly effective.

Here’s the thing: you probably won’t be able to pull off everything on that list. There will be some things that are just miserable to do, like changing a pattern you really care about. There will be some things that you just put off until you never do them.

And that’s okay.

What matters is that you do some of them, that you pick the low hanging fruit on your frugality tree. Take care of the things that are easy and you’re going to get a huge return for the small amount of time, energy, and discomfort you put into it.

If you do that, take the money you’re saving and do something smart with it. Don’t give yourself the chance to spend it foolishly elsewhere. Start making a retirement contribution with it, or use it to start paying down debt, or use it to build an emergency fund.

This is such an easy first step on the path to improving your financial state. Just get out your bank and credit card statements and receipts and start going through the items on there, one by one. Figure out how to fix anything that looks like a pattern or a problem, and make a list of those fixes. Do as many of them as you can – don’t sweat the ones that are overly difficult or miserable, and stick with the changes that don’t have a big negative impact on your life. That’s it – that’s the start of the path to real, lasting financial change.

It all starts with a big list of your spending, and ends with doing something meaningful about it.

Good luck!

The post The Big Spending List appeared first on The Simple Dollar.

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Thursday, April 12, 2018

How I Shop: Specific Tricks for Your Next Trip to the Grocery Store

Jenny writes in:

How do you shop for groceries? I mean, I tried following your general plan of making a grocery list first but I’m still spending $300 a week on groceries for me and my husband and two kids. You’ve said you can get by on $400 a month for 5 people. How? What do you do at the store that’s so different?

I like questions like these. They come in every once in a while from people who aren’t afraid of frugality but just don’t know how to approach situations from a frugal mindset.

Jenny’s question came in a month ago and since then I’ve been actually taking careful notes on as many details as I could about my grocery store trips. In particular, I’ve been trying to focus on the little details of my practice.

So, let’s go deep into my grocery shopping routine.

Before I Go to the Store

First of all, I intentionally shop for groceries when I’m alone. I want to spend the absolute minimum amount of time as I can in the store and going with my wife or my kids just adds time in the store. The longer I’m in the store, the more likely I am to fall for impulse buys. The more people I’m with, the more likely I am to use their input to make unplanned and unnecessary purchases. When I hit that grocery store, I want to get in and out as fast as I can while still making rational decisions.

Second, I go grocery shopping early in the day, if at all possible. I often go grocery shopping before anyone else in the family is awake, or right after the kids go to school. The reason for this is decision fatigue. In a given day, you have the mental willpower to make a certain number of really good decisions; after that, your mind starts getting tired and sluggish and you make worse and worse decisions. It’s like any muscle – if you work it too much, you get tired. So, I try to get to the grocery store nice and early, while my “decision making muscle” is still fresh from a night of sleep and not worn out after a day of parenting and/or work. I do everything I can to avoid shopping any later than the early afternoon; my grocery shopping after work is disastrous.

Third, I shop by default at a local discount grocer. Fareway gets almost all of my grocery business. It’s a small chain existing mostly in Iowa with a few stores in surrounding states. Their prices on almost everything are very, very solid, and given their relative closeness to my home (the only discount grocer within at least 10 miles), they’re my default choice. I strongly recommend figuring out which discount grocery store is most convenient to you and use that as your primary store. You can figure that out by visiting several stores that are convenient to you and tracking prices on the 20-25 staples you buy the most often. Stick with the store that has the lowest average price. Aldi is the only store I’ve found that can slip a little under Fareway in price around here, but there isn’t a super-convenient Aldi for me, so Fareway is my choice of stores. This keeps my prices low by default.

Finally, I don’t go to the grocery store on an empty stomach. I often hit the grocery store right after eating a meal – usually breakfast, as I often go in the morning. If I’m hungry in the grocery store, my decisions are going to swing toward picking up food that looks tasty and I’m going to think less about what we need and what the prices are. If I’m full, I’m much much more likely to stick with the grocery list.

Speaking of that grocery list…

I make a grocery list at home before I go. These days, I usually do it at home the night before my grocery store trip. To clarify, I go to the grocery store roughly once every seven to ten days, though I will make a very brief trip solely for a few fresh items if the gap is a long one.

The process of making a grocery list takes several steps. I usually start by laying out the next week on a whiteboard that hangs on a wall next to our kitchen. On that whiteboard, I write down our family’s schedule for the upcoming week and then identify what we’re having for meals. On weekdays, I account for family breakfast and dinner and lunch for the adults, with Sarah and I usually eating leftovers. On weekends, I account for all three meals.

Once I have a good grip on what the schedule for the next week to ten days looks like, I look up the grocery store flyer for my preferred grocery store I just visit the website and check out the flyer. What I’m looking for are super-cheap sale items that I can build a few meals around. For example, this week in the flyer, I noticed that green beans and potatoes were at very low prices, along with a few different meat items. So, I centered my meal plan around those items, making sure to come up with simple recipes that used them. One example: we’re grilling one night and simply grilling sliced potatoes in aluminum foil with just a pat of butter in there. On another night, a big part of our meal is green beans and cubed potatoes cooked together. We aim for simple things using whatever’s on sale.

Once I have a meal plan for the week, I make a list from that meal plan. Naturally, this means my grocery list is going to have items on it that are on sale at the store, because I made that meal plan by looking at the flyer. I’ll check and make sure that we have some of the other ingredients we need; if we’re low on or out of that item, it goes on the list.

I’ll also check on common household supplies. Usually, I buy these in bulk at warehouse clubs because the price there is even lower than Fareway most of the time, but, again, there isn’t a warehouse club that’s super convenient for where we live. I’ll usually plan to buy a bunch of staples on an irregular trip to Sam’s Club, but if we just need a few rolls of toilet paper or something to get through, I’ll grab them at my local grocer, so they’ll go on my list. I actually keep a running “warehouse club” list going on my phone, to which I add anything that we need to pick up in big bulk and then I use that list when there’s opportunity and need to stop at a club.

Since I know the layout of the store I frequent, I’ll usually organize the list roughly by aisle. I know I’ll go through the produce section first, then down an aisle with things like canned vegetables and beans and rice, and then… you get the idea. I know the rough layout of the store, so I can organize the list to be in the approximate order in which I’ll find things in the store. This serves the purpose of again minimizing my time in the store, which gives me even less time to talk myself into impulse buys.

I don’t bother with coupons unless they’ve been dumped right in front of my face. Sometimes my mom will give me a coupon she found in the paper and clipped for me and it’ll be useful, but most of the time it’s just not worth the time invested to find coupons. Coupons are almost always for items I wouldn’t buy anyway. If they do happen to be for items that I would buy, they’re coupons for the name-brand version of that item when I’d usually buy the store brand, so the coupon savings – if there is any – is minimal. It also takes a fair amount of time to do it. It just doesn’t add up to enough value for me, so I don’t bother.

This entire process takes maybe twenty minutes, and I usually do it the evening before I go to the store. I go to bed with a list having already been prepared for me, so that I can get up with a fresh, clear, non-fatigued mind and do the shopping when I’m making good decisions, as mentioned above.

So, let’s go to the store! I usually take a beverage with me to drink on the way so I’m not hungry or thirsty when I go in the door. This pretty much eliminates the temptation to stop by a coffee kiosk that one will often find at the entrance of the store. If I’m not thirsty and generally feel sated in terms of food, getting a big cup of rich “coffee drink” is pretty unappealing, so I keep the cash in my pocket.

At the Store

When I get to the store, I’m all business, focusing intensely on my list and little else. My goal isn’t to wander and look around, it’s to go through that grocery list as fast as possible while making smart decisions about each item on the list. I have that list in hand and I’m constantly looking at it as I go.

Since my list is organized in an order matching the layout of the store, my goal is to do zero backtracking. I want to be able to go up and down each aisle starting from the entrance and going across the store until I’m at the checkout with no backtracking if at all possible. I don’t want to backtrack unless I absolutely have to, because that adds to the time in the store.

I don’t waste my time looking for “in-store sales” or clearance items or anything like that. Yes, I might see one and take advantage of it, but I’m not looking around at all for sale prices on items I’m not intending to buy. I just don’t care. The value I get from discovering a worthwhile sale on an item that I might actually want is devoured by the impulse buys I’m likely to see if I’m constantly looking around the store at all of the displays and thinking about all of that stuff I don’t need. I ignore all of that and stick to my list.

When I’m making a product selection, I favor the store brand virtually every single time. Unless I know from personal experience that the store brand won’t fulfill my needs, I grab the store brand and move on from there unless I happen to notice a sale on another item. I do sometimes quickly compare the store brand to a few other items, but virtually every time the store brand is notably cheaper, so most of the time I don’t even really compare it at all. I just grab the store brand and keep moving.

If it’s a non-perishable item, I choose the largest store brand version of that item. I’ll usually do a quick mental check to make sure that the big package really is the least expensive per unit. If there’s a sale, that formula changes a bit…

If I spot a sale, I compare the store brand and the sale item in terms of price per unit and go with the cheaper one. Let’s say there’s a store brand 16 ounce box of pasta for $1.99 and there’s also a jumbo 32 ounce box of name brand pasta that’s usually $4.99 but is on sale for $3.49. Ordinarily, the store brand pasta wins, but due to the sale, I’ll stop and figure out the price of each of them per ounce, and I find that the name brand is cheaper. In that case, the name brand goes in my cart! In the event that the store brand is still cheaper, the store brand goes in my cart! It’s that easy.

In other words, when I’m buying nonperishable items or things that can last for a long while, unless a particular brand has shown me that it’s not good, I go with whatever has the lowest price; if a brand has shown me that it’s going to fail me, I just avoid that brand and get whatever’s the least expensive besides that brand. Easy enough, right? I can make that decision in just a few seconds.

I absolutely positively avoid impulse buying. If it’s not on my list, I don’t buy it. But what about spontaneity, Trent? If I’m going to buy a “treat” or a “surprise” or something like that, I’ll have it on my list with vague terminology, like “after school snack” or something like that. In that case, I will actually slow down and look at the options for that specific item. I try to minimize that kind of serendipity on my grocery list, though.

The thing is, though, if I’ve made a meal plan to begin with, I already know what I actually need at the store and buying extra food is kind of wasteful. If I buy extra food, I’m probably disrupting that meal plan. If I buy extra snacks, I’m probably just tossing extra calories into my body that I don’t need – I usually plan for pretty healthy snacks, like fruit or something. Buying impulsive food usually ends up with something going stale or something going to waste or something getting mindlessly eaten at home, and none of those things are a good use of my money or a healthy choice, either. There’s nothing wrong with a treat every once in a while, but if you’re eating a lot of food that you haven’t planned on at all, you’re not only spending a bunch of money, you’re likely heading down an unhealthy path, and if you’re buying food only to throw it away, you’re throwing money in the trash. Basically, impulse food buys at the grocery store lead either to wasted food or excessive eating, neither of which brings value into my life.

Part of the reason I grocery shop in the morning when my decision “muscle” is strong is so that I can constantly stick with that decision against impulse food buys throughout my shopping trip. When I’m suffering from serious decision fatigue, I’m much more likely to forget my decision to not buy impulse foods and be persuaded by hunger or temptation in the moment.

So, I zip through the aisles, focusing on my list and buying lots of store brand items. I get to the checkout. Now what?

Well, if I’m waiting or I’m putting items on the conveyor belt, I review what’s in my cart. I do this instead of standing there idly and looking at all of the impulse buys at the checkout, which keeps me from making impulse buys, but it also helps me to make sure that I actually got everything on my list. It also gives me a chance to give a second thought to any impulse items I did pick up, even though I usually strive to make impulse buys as minimal as possible in the grocery store.

If I find an impulse buy in my cart at the end of that trip, I give it the old “ten second rule.” I think about that item for ten seconds and consider reasons not to buy it. It’s unhealthy (usually). It’s probably going to replace something else in my meal planning and possibly result in something going bad or going to waste, which is just a waste of money. I have a lot of other food to eat. There are a lot of other things I could be doing with that $3 or $5 or whatever – this item has an opportunity cost, in other words. Is it really all that good anyway?

Most of the time, those thoughts usually convince me that I don’t need the item, so I’ll hand it to the cashier and simply tell him or her that I changed my mind about that item.

Sometimes, I’ll find that I missed something on my list, so this is a great time to go back and get it so that I don’t check out and walk out and drive away only to realize I’m missing something that I needed when I’m putting things away at home.

After this, I just pay for the items I bought and head home to unpack those groceries!

Final Thoughts

My grocery store routine is made up of a lot of little tricks that combine to keep me from spending money unnecessarily at the store.

My main enemy at the grocery store is impulse buys; it’s so easy to talk yourself into tossing an item or two into the cart because they look “yummy” at the moment, but those costs add up really fast. I try to avoid them as much as I possibly can, which is why I try to shop on a full stomach early in the day with a well-planned grocery list in hand.

I also try to avoid name brands as much as possible because they’re virtually always more expensive than the store brand version of that item. Usually, they’re functionally identical; you just paid more for the familiar logo on the package. I’m not down with paying good money for a logo on a package.

It’s also worth noting that the backbone of all of this is basic cooking skills. I feel reasonably adept in my home kitchen and can prepare a lot of different meals with minimal fuss. I didn’t magically acquire cooking skills, though; I went through a lot of meals where it seemed hard and it seemed like a ton of work and it seemed like a ton of cleanup. Now? I can have a lot of different meals on the table for my family in twenty minutes or less with everything cleaned up and in the dishwasher. I also have a huge repertoire of slow cooker meals and make-ahead meals that offload the work to other times entirely. To keep your grocery costs low, you have to know how to cook effectively and not be reliant on packaged meals or convenience foods. There’s simply no way around it. However, when you get to that point and have some cooking skills under your belt, it gets a lot easier.

If you combine all of those elements together, you find that it’s pretty easy to escape the grocery store with a week’s worth of groceries for a family of five for less than $100. I do it fairly regularly. While there are some weeks that bubble over $100 – especially when we have a dinner party or are making some creative meals or are making some meals in advance – there are other weeks where we spend $50 or less for a full week of groceries.

It just requires having a plan and sticking to it!

Good luck!

The post How I Shop: Specific Tricks for Your Next Trip to the Grocery Store appeared first on The Simple Dollar.

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Wednesday, April 11, 2018

Defeating the Most Common Life Regret

A few years ago, Bronnie Ware, after spending several years working as a palliative nurse who helped people who were dying to enjoy their final days in minimal pain and discomfort, wrote a really powerful book called The Top Five Regrets of the Dying. In it, she collected together the biggest regrets that she heard people consistently share. Here they are, in summary:

1. I wish I’d had the courage to live a life true to myself, not the life others expected of me.
2. I wish I hadn’t worked so hard.
3. I wish I’d had the courage to express my feelings.
4. I wish I had stayed in touch with my friends.
5. I wish that I had let myself be happier.

There are a lot of financial threads running through these regrets, but today I want to really focus on that first one, about which Ware said the following: “This was the most common regret of all. When people realise that their life is almost over and look back clearly on it, it is easy to see how many dreams have gone unfulfilled. Most people had not honoured even a half of their dreams and had to die knowing that it was due to choices they had made, or not made. Health brings a freedom very few realise, until they no longer have it.”

So, let’s look at that chief regret and the financial implications of it.

I wish I’d had the courage to live a life true to myself, not the life others expected of me.

When I read that sentence and reflect on my own life, what I see is all of the things I’ve done and the things I’ve bought that have been done with the primary intent of impressing other people or fulfilling what they expected of me, rather than truly pleasing myself and fulfilling what I expected of myself.

I think of times in my life where I’ve bought things primarily to impress others – the latest gadget, nice clothes, a nice car, a nice house, an impressive career, and so on.

What will people think of how I’m dressed? What will my parents think of my house? What will people think of me if I spring for drinks? What will my coworkers think if I whip out this brand new phone?

First of all, considerations of what other people think of you in terms of financial and personal choices are almost entirely useless unless you can directly tie them to career success. Obviously, there are situations where there is a professional dress code, and there are situations where you need to “dress for success” to influence clients. However, in normal day to day life, most people don’t think about you enough to draw a real judgment about you until your words or actions directly impact them.

Your neighbors barely think about your house, nor do your friends or family. If they do, they’re not making much of a judgment about you, but evaluating whether they want those things in their own life. The same is true for your gadgets or your car or your clothing or anything else.

We mistakenly overinflate how much people think about us, and we do it constantly. This is known as the spotlight effect and it has been established over and over and over again. Most people simply don’t notice you as much as you think they do, particularly when your words or actions aren’t directed toward them or involve them.

So, what can you do to have a good social presence? My strategy is to follow the golden rule in terms of everything I do with other people – do unto others as you would have them do unto you. I don’t care what house people live in or what clothes they wear or what car they drive. I’ll hang out with someone who lives in a trailer or in a mansion if I like the person. I do care that they’re clean and practice good hygiene because that does actually affect me. I want people to be friendly, so I try to be friendly. I don’t want people to backstab me, so I don’t backstab people. I basically act with other people how I would like them to act with me.

The people I enjoy and respect the most in the world often dress in sweatshirts and flannel shirts, blue jeans and beat-up tennis shoes. They drive older cars. They live in modest houses decorated in ways that reflect their own interests, often with things like art done by family members on the walls.

If you carry that philosophy through to your spending and realize that the opinions of others means almost nothing in terms of how you spend your money, then a lot of purchases become far less important. If you’re not worried about impressing others at all (beyond the basics that you would expect from others, like basic cleanliness and politeness), then you’ve eliminated a big reason for spending money.

One of my mentors used to constantly ask the question, “What would you do if you were completely invisible to the rest of the world except for your family?” His philosophy was that if you do those things as much as possible, you’ll have a pretty good life. You could do things that help others, of course, but no one noticed you at all and you knew it. What would you do with your time, once you got bored with the obvious unwinding that most people would do?

How would you spend your days? What would you work on? What would you think about? What is it that you keep inside that you would no longer keep inside? What potential interests do you think of as “dorky” that you’d dabble in if no one saw you or cared about it? How would you dress? What would you use to get around from place to place?

What if you didn’t have to impress people any more, or live up to what you believe to be their standards?

Fill your life with those things and treat others as you would like to be treated and you’ll find that you actually have a pretty happy life, one that doesn’t have many regrets.

You’ll find that the more you commit to that, you begin to realize that there’s actually much less negative consequence from it than you expected, and the pressure to act and spend money to impress others and live up to what you think their standards are goes away. People are very much focused on themselves and their part of their interactions with you, so being who you feel most natural being and doing things you feel natural doing (provided they don’t get in the way of career success) is almost always going to be the best path to personal and financial success.

When I committed to making a financial turnaround in my own life, I was worried that there would be a lot of negative pushback from my social circle at the time. They were very much committed to going out for drinks, one-upping each other with spending, and so on.

What ended up happening? In truth, I got almost no negative pushback from any of them. We didn’t do as much together any more because most of their social choices were really expensive, but there wasn’t any animosity or blowback. A few friends from that group stuck with me; I’d still count a couple of them among my friends even today. Instead, I gradually began to find some new friends and I naturally gravitated toward doing things with them. I started being more true to who I actually was, and there wasn’t a bunch of negative response. Instead, I just strengthened my friendship with those who were friends with me because of me and the others who were merely acquaintances moved on pretty quickly. While some of those people were fun to hang around with, my life became better because I was around people who were more in line with the person I actually am. There was less need to worry about things that weren’t important to me.

Be the person you want to be, not the person you think everyone else expects you to be. As you do that, you’ll come to realize you were spending a lot of money and effort and thought on keeping up that appearance, and as you let that go away, not only are you happier with yourself, most of the people whose perspectives you worried about won’t even care in the least.

Don’t live your life in accordance with the expectations of others. Stop worrying about what other people think, especially since they don’t think about you nearly as much as you think they do. You’ll be in a better place with a lot more money in your pocket to boot.

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Can a Travel Agent Get You a Better Deal Than Booking Online?

Direct vacation booking and online travel agencies haven’t killed the old-school travel agent… yet.

When my wife and I planned our honeymoon roughly seven years ago, we went to a travel agent in Newton, Mass., to help us along. We wanted to travel to Paris, Nice, and Barcelona over a 14-day span, wanted to stay in hotels in each location, and wanted to travel by train between cities. The travel agent we used was able to give us hotel recommendations, but couldn’t book a Eurail pass for that time of year (without telling us why), could not find us flights on the dates we wanted, and basically couldn’t put together a package for us.

We left his office, and began searching travel sites for hotel recommendations and airfare comparison sites for flights. We also ended up booking first-class rail travel from Paris to Nice to Barcelona. We didn’t have a price to compare it to, since the travel agent couldn’t even put together a quote — but the convenience made direct hotel and airfare booking staples of our vacation planning from that point on.

But did we sell travel agents short? Is there ever an upside to using a travel agent over an online source?

Naturally, the travel agents think so. The American Society of Travel Agents released a study two years ago noting that nearly half of consumers (47%) booked their travel directly through supplier websites. Another 25% used online travel agency websites including Expedia, Priceline, and others. While the 23% who used travel agents was the highest share in the past three years, it was also less than a quarter of all travel bookings.

“At this point, consumers have tried it all, said ASTA president and CEO Zane Kirby. “They’ve booked online, they’ve gone direct, and they’ve used a travel agent.”

However, Kirby went further by saying the study found that online booking didn’t provide a better deal or save time. According to the ASTA study, almost two-thirds of travel-agent users said using one makes the overall trip experience better. It also asserts that consumers who used a travel agent saved an average of $452 and four hours of work.

Travel agent backers like Host Agency Reviews argue that the hours travelers put into research and booking should be charged at the Bureau of Labor Statistics’ average hourly rate of $26.75. At 22 hours of preparation, they argue, that’s $588 saved by using a travel agent. They also argue that online travel agents’ inventory is limited (though our real-life travel agent said the same about his), that they steered certain clients to higher prices, that their reported prices didn’t include fees, and that travel agents can get better group deals.

Yet the number of travel agents dwindled from 124,000 in 2000 to 74,000 by 2014. According to BLS projections, those numbers are going to shrink another 9% by 2026. And in 2015, Business Insider found that the prices quoted by four out of five travel agents were higher than what they found on their own online.

However, they described travel agents who were the exact opposite of the one my wife and I consulted — attentive agents who put together personal recommendations for cafes and restaurants and bounced different hotel, tour, museum, and ticket prices off of them. These agents even walked them through Eurail and multi-flight combinations for connecting flights. Also, as Business Insider noted, while travel agents will charge fees for specific services like airline booking (ASTA quotes an average rate of $36), they generally don’t charge for the work they’re doing and can serve as a liaison for travelers should something go wrong.

And while traditional travel agents may still have exclusive access to certain discounts, events, and attractions, online bookings are closing that gap. As hotel technology company SoftInn points out, hotel chains including Hilton and Marriott now offer benefits to customers who book directly, including lower prices, free Wi-Fi, and loyalty program points. A Piper Jaffray study reported by Skift notes that 13% of hotel bookings (not including loyalty member rates) were offered at a lower price to those who booked directly, while 21% were cheaper when booked through an online travel agent, and 66% were the same price when booked by either.

“In the end, there remains a strong argument in favor of checking both the hotel sites and the OTA sites, at least for travelers who are not loyalty-program participants,” says Tim Winship, travel industry expert at TripAdvisor-owned travel site SmarterTravel. “For those who are loyalty-program members, when the points and discounted rates are factored in, the case for OTA booking is much weaker.”

Rick Seaney, founder and CEO of travel site FareCompare, has advised that booking packages that combine a hotel stay with airfare and a rental car can typically bring down prices — even during the holidays — simply because it’s easier to squeeze a deal out of hotel or rental car pricing than it is to get a discount on airfare. While online travel agents offer these kinds of packages, companies that lend their services to other travel agents have become adept at this as well.

Only after we booked our honeymoon did we come across Monograms, an offshoot of Swiss travel company Globus. Monograms cobbles together travel packages that include airfare, hotels, certain meals, tours, transport, local guides, and VIP access to attractions. Granted, the prices fluctuate with airfare depending on your departure city, but it gives you at least some idea of what you’ll be paying for the entire experience and leaves flights and other details to either you or a travel agent.

This isn’t exactly a new concept, as my grandparents in New Jersey used Perillo Tours and the ill-fated Club ABC Tours for years. But looking back on some of the trips my wife and I have taken, both the price and perks offered in packages to Ireland, the Benelux countries, and elsewhere were awfully close to what we were looking for.

In conclusion, taking planning out of the equation, we’ve found that direct booking tends to be the cheapest option more often than not. While online travel agents do a fine job of sifting through airfare and hotel options, other cost-cutting measures like vacation rentals and Airbnb are still a rarity on most booking sites. (Though Airbnb listings do come up in Hipmunk‘s hotel search, allowing to compare vacation rentals and hotel rooms side by side.)

However, if you want a hands-off experience that largely requires you to pay and show up, a travel agent or connected tour service can be a great and even cost-efficient option. Just do your homework and shop around before contacting an agent or walking into an office. Also, take the same precautions with any tour company they may suggest. While you don’t have to book online, it still pays to research ratings and complaints there.

Related Articles:

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Tuesday, April 10, 2018

Finding Happiness on the Road to Financial Success

This is a great question from Melissa:

The struggle I have with all personal finance advice is that it is always predicated on depriving yourself. You have to spend less money, or else you have to give away more of your time and energy to earn more money. I am happy with my life as it is right now with the exception of my finances. If I make a change so that I am happy with my finances, I am unhappy with something else.

This is such a great question, and I love how Melissa stated it. She really hits the nail on the head when it comes to the idea of financial success and sacrifice.

Let’s dig right into this, shall we?

Is Life a Zero Sum Game?

When I read Melissa’s question – or similar questions I’ve received from other readers or from other websites – I hone in on one key section that just draws my attention:

I am happy with my life as it is right now with the exception of my finances. If I make a change so that I am happy with my finances, I am unhappy with something else.

The idea being expressed here is that in order to gain happiness with one area of your life, you have to lose happiness with another area in life. You can’t gain without losing something.

This is known in game theory as a zero sum game. In a zero sum game, “each participant’s gain or loss of utility is exactly balanced by the losses or gains of the utility of the other participants. If the total gains of the participants are added up and the total losses are subtracted, they will sum to zero.”

In other words, Melissa’s question relies on the assumption that there exists only enough time, money, and energy to be content with most areas of life, but not all areas, and if you shift time, money, and energy to another area of life to shore up contentment there, you’re losing contentment in another area and will become unhappy with it.

(Notice, please, that I’m shifting from the idea of “happiness” to the idea of “contentment,” because I don’t actually believe a person can “buy” happiness with money, time, or energy, but can only fertilize one’s life for the potential of happiness. I refer to that fertile ground as “contentment.” It’s a subtle difference, but it reflects the idea that I don’t believe money or time can actually “buy” happiness for anyone, but it can create situations where happiness can grow. This is why wealthy people can be very unhappy and impoverished people can find happiness and why idle people can be very unhappy and super-busy people can find happiness.)

In a nutshell, I don’t agree with that “zero sum” assumption about life and the possibility of happiness at all. In fact, I believe that virtually everyone can make shifts in their life and their use of money, time, and energy that increase their likelihood of finding sustained happiness.

A lot of this happens, I think, because over time our perspectives on what actually brings us contentment and joy becomes skewed, and here are some reasons for that.

We Aren’t Good at Assessing What’s Truly Important in Our Life

To put it another way, we often overvalue how important some things are to our happiness and contentment and undervalue how important other things are to our happiness and contentment.

There are a number of reasons for this. We often overvalue things that are urgent, convenient, and provide short term pleasure. We often undervalue things that aren’t immediately in front of us and won’t have a quick payoff. We are wired to be like this by default.

Because of that perspective, we tend to fall into mindsets where spending a found $20 on a treat is a far better choice than putting that $20 toward paying off a debt or toward saving for retirement. That treat is far more urgent, far more convenient, and far more likely to provide short term pleasure than doing something responsible with it, which is why the vast majority of the time the vast majority of people will find some “fun” way to spend that extra $20.

If you look at things from that perspective, it’s easy to see why 78% of Americans live paycheck to paycheck, which includes a lot of people making far more than $100,000 a year. How can that happen? It happens when the short term constantly trumps the long term and people consistently make mistakes in evaluating how much things really matter in their life.

How do we improve our self-assessment? A lot of this comes down to spending time considering and appreciating the relative amount of happiness that various things bring us in our life outside of those urgent moments when we really want something.

One great way to do this is to spend some time going through each credit card statement and bank statement and evaluating how much personal value you really got out of each purchase. Just go through them one at a time and ask yourself seriously whether that purchase brought you any real lasting value in your life. Do you even remember what you bought? If you can’t, then it’s probably a sign that it wasn’t a good use of money. If you can but it doesn’t set off any particular bells of excitement, it probably wasn’t a good use of money.

When I go back through my statements and I see purchases that I can barely remember and don’t fill me with any excitement, I realize that those really were pretty dumb purchases, driven solely by the heat of the moment and nothing of any sort of lasting value. Often, people translate that into some sort of opposition to spontaneity, but I tend to believe that good spontaneity is remembered, and you’re training yourself on how to avoid bad spontaneity. Bad spontaneity is forgotten spontaneity, something that brought you so little lasting pleasure that you can barely remember it even just a few weeks later.

My goal in life is to basically eliminate as much “bad spontaneity” as I possibly can while leaving all of the “good spontaneity” in place. I want to spend my money on stuff that’s meaningful and memorable and stop spending any money on stuff that’s quickly forgotten. One way I train myself to do this is to go through those bank and credit card statements.

Another good strategy is to think about recent spending experiences when the moment is over. Think about something you bought several days ago or a week ago. Run it through your mind and ask whether it was really something that gave you real significant value. Is it just another forgotten treat in a long line of forgotten treats? Or was it really worthwhile?

I do these types of reflections during a daily journaling practice. Each day, I spend a little while in the morning writing in a journal, and one thing I write about each day is an “after action review” of something I’ve done recently – maybe a shopping experience or a social interaction or how I spent a couple hours of my time. I think through whether it was really a good use of my time or whether I could have done things better, and I find that process, doing it each day over a long period, has a gradual positive impact on my choices in the moment. It’s like there’s an undercurrent of understanding what really ends up being best for me in the long run.

We Often Skip Over the Pleasure of the Current Moment

This might seem like a strange counterbalance of the above, but I’m actually talking about something very different. I’m talking about how often we don’t really think about what we’re doing in the moment, particularly when we don’t view it as obviously pleasurable, and we let our minds move on to other things. Thus, we lose a lot of potential joy in what we’re doing.

This might seem like a very “zen” thing to talk about on a personal finance site, and the application might not be clear at first. However, I will say this: as I have come to focus more and more on the pleasures and detail of whatever I’m doing right now in this moment, the more content I’ve felt with my life as a whole and the less impulse I feel to spend money to bring myself more pleasure. I’m simply not reflecting that much on fun things that might come that I might spend my money and time on and instead seeking it in the moment by focusing on whatever it is that I’m doing right now.

In other words, most of my daydreaming and mind wandering is actually escapism because I’m not even bothering to look at what’s good in the current moment. When I start to look for that good, my mind spends less and less time thinking about “what ifs” – things like what I might buy or what I might desire.

This is surprisingly hard to do in the course of an ordinary day, but I find that the more I do it, the easier it becomes, the more valuable it is to me, and the less desire I have for other things.

For example, let’s say you’re eating a meal with your family. Rather than thinking about what needs to be done after the meal or what desire you might have or whatever your mind is wandering off to, try instead to focus on the meal itself. What does the food taste like? Smell like? Look like? How does it feel in your mouth? What if you rinse out your palate with a bit of water and taste a bite anew? Are you still hungry, or are you starting to feel sated? What is the conversation about? What is that other person actually saying (this is not just waiting until your turn in the conversation to say something on your mind)? Are the people you’re dining with happy? Sad? Angry? Calm? Frustrated? Why? Think less about how you feel in response to those things, but instead about the nature of the people and things around you.

I find that the more I switch into that mindset, the better daily life feels. It is stuffed full of all kinds of things to appreciate, and I begin to feel like I need less and less stuff, particularly new stuff, to find joy. I feel happier with the people around me because I appreciate them as distinct rather than just as an extension of me. I just simply feel happier with what I have, and that makes it much easier for desires to just vanish without feeling unhappy about it.

How do we improve the pleasure of the current moment? Obviously, the first thing is to recognize that it’s a good thing and try to do it. When you’re doing something today, particularly something mundane, start to look for the details in it. If you notice your mind drifting away from the moment, bring it back to the moment and focus on the details of where you are, what you’re doing, and what’s good in it. Right now, for instance, I’m seated in a comfortable chair and my bare feet feel nice as they graze the floor under me. My belly feels content but not over full as I ate a meal recently. I’m enjoying thinking about the next thing I want to write. This is the moment I am in, right now, and there is a lot to like about it.

If you find that staying in the moment is really hard – and it is – you can consciously practice it through mindful meditation, which is something I do every day for fifteen minutes or so. I find that repeating this practice over time has helped me to feel a lot calmer and more in control over my emotions and impulses and much more able to stay in the moment and appreciate it in my everyday life.

The practice is easy. Just sit somewhere comfortable, close your eyes, and focus on the in and out of your breathing for just a few minutes. You basically want to pick a period of time where it begins to get really hard to keep it up for that period of time; believe it or not, just two minutes is a good place to start. Just focus on your breathing – breathe in, breathe out, breathe in, breathe out. Focus on nothing else, and if you find your mind wandering, bring it back to the breathing (but don’t feel bad about it, that’s just how our mind works). I view this as being like “gym reps” for my focus, which I view as being like a muscle.

The better I can focus on the moment, the more joy I find in that moment and, from there, the less desire I have for wanting other things. It makes it much easier to be content and happy with whatever I have and whatever I happen to be doing in the moment and less desirous of wanting more and more and more.

We Rely Far Too Heavily on Our Future Selves

From a very early age, we become accustomed to a particular type of procrastination in which we indefinitely postpone a lot of important but not urgent tasks under the assumption that our future selves will take care of it.

Calling Grandma? Our future self will do it. Saving for retirement? Our future self will do it. Getting in shape? Our future self will do it. Doing a money-saving home improvement task like installing weather strips? Our future self will do it.

It’s a very easy way to free up time and money and energy in our life for things that aren’t as important but are more seemingly urgent, like the desire to veg out on the couch or go shopping, something we perceive as immediately pleasureful.

The catch, of course, is that we often never get around to doing those important things, and those undone important things pile up in our lives, making things worse. For most of us, our current lives are shaped by piles of important things left undone by our past self.

We didn’t call Grandma as much as we should have, and now we miss her and would give anything to talk to her again.

We didn’t save for retirement and now it’s just a few years down the road… or, in truth, it’s going to come far later than we ever wanted, and now we have to work several more years in a body that’s starting to break down a little.

We didn’t get in shape and now our body feels prematurely old. We can’t get around as well as we used to. Some of us seem to be becoming big customers of the pharmaceutical companies.

We didn’t bother to do those little tasks we should have done and now thousands upon thousands of dollars have slipped needlessly through our fingers, money we certainly could have used now.

All of those important but not urgent things left undone in the past now pile up on our doorstep today, shaping our life and burdening us when we’re older and less able to handle all of it than we once were.

How do we fix overreliance on our future selves? The thing is, no matter where you’re at in life, you can start reversing that trend.

Do important things right away, even if they’re not urgent. Call Grandma if you haven’t called her recently. Put some money away for retirement. Install that weather strip. Get some exercise. Fill your life with authentic, important, meaningful things that will mean a better tomorrow.

When you start dropping things that really aren’t important and replacing them with things that actually are important to you, you start feeling like each day is more worthwhile. You did something good today, something meaningful, something that will last. You feel better about things when you go to bed at night.

Furthermore, you’ll gradually notice that your day-to-day life feels less overburdened with things left undone. It’s a subtle change, but it’s a change that slowly melts away a certain level of underlying stress in your life, which itself eats away at your basic level of contentment and joy. We’ll get back to this in just a moment.

If you’re not sure what important things are left undone, give it some careful thought. Ask yourself what things you should be doing to reduce the burden you’re going to face in the future. What things can you do to cover your future bills? What things can you do to reduce your future expenses? What things can you do to build the foundation of long-term relationships? Those are the kinds of “important but not urgent” things we constantly overlook.

We Consider a Rather Large Amount of Stress to be Completely Normal

As I just mentioned, most of us simply live with a pretty substantial amount of underlying stress in our lives. It’s a stress that we consciously try to ignore as much as possible, but it sits there like a potent acid, slowly eating away at us. It makes us quicker to anger and sadness and less capable of appreciating everyday joy. It distracts us, it eats away at our physical and mental health, and it leaves us feeling exhausted much of the time.

Finding ways to reduce that underlying mountain of stress is one of the most powerful things we can do as modern people, and the journey along the path of financial success goes a long way toward melting away that stress. You’ll also find that stress reduction is a two way street – once you start enjoying a lower stress level, you’ll want to continue doing things that keep your stress level low.

How do we reduce our stress levels? There are many, many things that help with stress management. For starters, simply getting a grip on your finances helps a lot. Digging out of the worst of your debt and starting to save for the big things like retirement can have a tremendous positive impact on one’s stress level. Taking action to shore up your career instead of being paranoid and worrying about every twist and turn at your job is another thing you can do.

I’ve found over the years that different techniques seem to help different people with their stress. For me, things that really seem to help include getting plenty of sleep, walling off dedicated time for hobbies and leisure, eating a healthy diet, getting adequate exercise, reducing my debt load, and many of the other strategies mentioned in this article such as meditation.

It’s worth noting that many of these activities simultaneously reduce stress and contribute to a sense of feeling good on a day to day basis, which is another core part of feeling content with what you have.

We Confuse Leisure, Idleness, and Rest

Let’s distinguish what I mean by these things.

Leisure time is waking time that’s spent on things that are purposeful but also relaxing. For me, things like exercise or reading a book fall into this category.

Rest time is time that’s spent on things that are purely relaxing and not purposeful beyond that. In general, if I want rest, I go take a quick nap or go to sleep or I meditate (which feels very restful to me).

Idle time is waking time spent on things that are neither purposeful nor relaxing. They often seem to be relaxing or restful, but it’s actually just time spent without any genuine purpose or restfulness. Things like idle web surfing or channel surfing fall into this category.

In day to day practice, the lines between these areas sometimes blur. For example, I might want to spend some time with my wife in the evening, which seems purposeful, but we end up watching a television show in a half-awake state and it ends up being neither relaxing nor purposeful. We would have been better off going to bed and cuddling up as we drifted off to sleep.

I find that the less time I spend on idleness (according to this definition) and the more time I spend on leisure or rest or even productive activities, the better off I am. I think that a lot of things I consider “restful” are things that other people might consider “idle” because they’re not productive, but they are purposeful. There’s a reason for what I’m doing, even if it’s just brainstorming.

How can we distinguish leisure, idleness, and rest? There are a few things I do to try to remove “idleness” (as described earlier) from my life.

First of all, if I feel tired, I go take a nap or go to sleep. I don’t force myself to stay up for silly reasons like “it’s too early to go to bed.” If I’m tired, the time I continue to spend awake won’t be very productive or purposeful, so I simply get genuine rest.

Second, I literally block off significant time each day for hobbies. I have blocks of time on my personal calendar for things like “reading” and “game night” and other specific hobby activities, and those things are sacrosanct. Yes, that means sometimes there are things left undone, but if I’m actually productive during other parts of my life, there’s nothing too important that’s left undone.

Third, during productive times, I obsessively follow my to-do list and try my best to avoid idling. I try to jam as much productivity into the productive times on my schedule as possible. That way, I don’t “feel bad” when I choose leisure or sleep.

Finally, if I do notice myself idling, I don’t beat myself up over it. Instead, I just try to switch to being productive or genuinely restful as immediately as possible. It happens sometimes, but it’s okay.

We Convince Ourselves That the Grass Is Greener

A final problem that I often observe when finding happiness and contentment while keeping spending low is that our minds often seem to want to convince us that the grass is greener on the other side of the fence. In other words, we talk ourselves into believing that our life will be better if only we had a certain thing or were doing a certain thing.

My life would be better if I had this other job. My life would be better if I had this particular item. My life would be better if I went on this trip. It goes on and on.

The problem, of course, is that we’re generally only looking at the upside of the change we’re considering, while we’re looking at both the positives and negatives of the things we have now. When you compare the full picture of one thing to the mere upside of another thing, the other thing always looks magnificent, and when that becomes our dominant train of thought, it leads straight to dissatisfaction and unhappiness with the current state of affairs.

How can we improve our contentment with our current state? My first and most important strategy here is to consider the negatives of a change. If I want something or want to make some big change in my life, what are the downsides of that change? I consciously think about the problems it would entail and bring them intentionally to the forefront.

What this does is it creates a situation where only the truly worthwhile types of change stick around. The idle “I wish I had…” or “I wish I could…” thoughts tend to evaporate very quickly when you start considering the true consequences of it, and when that happens, you actually begin to really appreciate where you’re at.

What about purchases? The thing I’ve found is that if I really consider the drawbacks of the purchase, starting with “that money is gone and can’t be used for anything else,” an awful lot of purchases quickly seem quite silly and useless. (This type of consideration of a purchase is embodied in the “ten second rule” and “thirty day rule” which I’ve mentioned before on The Simple Dollar.

The other aspect of this is that when a change truly does seem to be a strict improvement, I try my hardest to implement it. I commit to a change and I commit to it hard, trying to turn it into the new normal in my life. This is exactly what I did with my financial turnaround, and then a bit later, it’s exactly what I did with my career change.

Final Thoughts

As I was working on this post, I described it to Sarah and she laughingly described it as “a guide to thinking frugal.” I don’t think that’s actually a bad description at all.

Most of the strategies on this list are centered around changing the focus of your thinking from the things you want but don’t have to the things in front of you, and if you start doing this while living your ordinary everyday life, the desire to have more and more things becomes less and less.

For me, a heightened appreciation of what I do have and a reduced desire for what I don’t have led directly toward a much easier march down the road to financial success, because I started to realize that I am actually pretty happy with the life I have when I’m spending a lot less than I earn. I hope it’ll work much the same for you.

The post Finding Happiness on the Road to Financial Success appeared first on The Simple Dollar.

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Self Lender Review: Build Credit and Savings at the Same Time

There are myriad reasons a good credit score is important, and having the ability to qualify for a car loan or credit card is just the tip of the iceberg. Without good credit, it can be harder to rent your own apartment without a co-signer. If you plan on becoming a homeowner in the future, you’ll also need excellent credit to qualify for the best interest rates and terms on a mortgage – and at least decent credit to qualify at all.

Finally, bad credit can cost you in too many ways to count. Not only can poor credit mean being denied financing or paying higher interest rates on car loans and other debts, but it can lead to higher insurance rates, too. If you apply for a job and your employer exercises their right to ask for a modified version of your credit report, poor credit could also cause you to miss out on a job you really want.

And, if you have no credit, well, the story is similar. It can be difficult to qualify for any type of loan until you have some sort of credit history — which, in a Catch-22, is hard to do when you can’t get approved in the first place.

Save Up and Build Credit at the Same Time with Self Lender

Fortunately, there’s a fairly new way to help your credit, whether you want to rebuild poor credit or start building a good credit history from scratch. With a business called Self Lender, you can apply for a credit builder loan that helps you build credit while saving money.

Loans through Self Lender don’t work like traditional loans: You make a fixed payment each month, and get the money in a lump sum at the end, not upfront. But the credit outcome is the same, since the payments you make are reported to the three credit reporting agencies – Experian, Equifax, and TransUnion. If your credit needs repairing due to poor decisions you made in the past, or you need to build credit from scratch, here’s how Self Lender works:

How Self Lender Works in Six Steps:

  • Apply for a Self Lender loan with no credit check required. Because this type of “loan” is secured by your own payments, you don’t need to pass a credit check to qualify. Self Lender loans are available to individuals with poor credit or no credit, making them a viable option if you’re starting from scratch.
  • Choose the ideal credit builder loan for your needs. Credit builder loans are available in 12- and 24-month increments in amounts up to $2,200. Once you decide to apply, you can choose among one of the available loan options.
  • Make monthly payments for the duration of the loan. Once you apply for a loan, you’ll start making the monthly payments you’ve agreed upon.
  • Your money is saved in a certificate of deposit (CD) that earns interest. The payments you make are saved for you in a CD that earns 0.10% APY. That’s nowhere near the best CD rates out there, but it’s something.
  • Your monthly payments are reported to the credit reporting agencies. Here, of course, is the key to the whole concept: As you repay (or prepay, as it were) your loan, the monthly payments you make are reported to the three credit reporting agencies — Experian, Equifax, and TransUnion. In that sense, a credit builder loan can help your credit profile just as much as using a credit card or personal loan would.
  • Once you complete the terms of your loan, you get your money back in a lump sum. Once you make all the monthly payments you’ve agreed to, you’ll get a payout of all the cash saved in the CD on your behalf.

How Much Does Self Lender Cost?

While Self Lender isn’t free, it’s not very expensive to use, either. First off, you will need to pay a $12 upfront account activation fee. On top of the activation fee, you’ll also pay interest on your “loan,” with an APR of “up to 15.65%.”

While that may sound like a lot — especially when you’re the one lending them money — it’s a fairly small price to build credit in this way. And, since loan amounts are small, even if you’re charged the top interest rate, it wouldn’t add up to much.

Self Lender offers the following example on their website. Imagine you took out a $1,000 credit builder loan for 12 months. In that case, you’d pay $12 upfront plus $89 per month for one year.

That would make the total cost of your “loan” $1,080. Once the loan process is complete, you’d get the $1,000 loan amount back plus the very small amount of interest you earned on the CD (less than a dollar).

How Does Self Lender Compare to a Secured Credit Card?

When you’re trying to rebuild poor credit or build up your credit from scratch, another solid option to consider is a secured credit card. With a secured credit card, you pay a cash deposit as collateral and get a small credit limit in exchange. If you put down $500 as collateral, for example, the credit limit on your new secured card is typically in the $500 range.

From there, you use your secured credit card like a traditional credit card, making monthly payments on time as you should. As you make payments and prove you can use credit responsibly, the reporting made to the credit bureaus should increase your credit score over time.

The main similarity between secured cards and credit builder loans through Self Lender is the fact that almost anyone can qualify. Since both options require collateral — presenting little if any risk to the lender — they’re available even if you have bad credit or no credit at all.

Other than that, these two options work very differently. A Self Lender loan isn’t a credit card, and you don’t receive access to a line of credit you can spend. You can also get started without a lump sum of money upfront for a deposit. Instead, you make payments that are saved on your behalf and get your money back in the end.

Either option can be a good one if you have poor credit and can’t qualify for an unsecured credit card, however. So make sure to do some research before you decide whether a credit builder loan or secured credit card is a better fit for your needs.

The Benefits of Using Self Lender

The benefits of Self Lender are clear if you’ve tried to qualify for a loan or credit card but received a denial in the past. Since credit builder loans are secured with your own payments, there’s no credit check required. In addition to easy approvals, here are some of the other benefits you can look forward to:

  • Your monthly payments will help build your credit history: Your monthly payments are reported to the three credit reporting agencies, which will help you build credit over time.
  • Your money is safe: Your funds are FDIC insured, meaning the money you pay in can’t just disappear.
  • Early closure options: You have the option to pay off or close your account early.
  • Build savings: You get the cash you pay in at the end of your loan, which means you’re forced into saving money. For a lot of people who struggle to sock away an emergency fund, forced savings is a good thing.
  • Free perks: Self Lender offers some additional free benefits such as credit monitoring and score-tracking.

Downsides of Using Self Lender

While building an emergency fund while you rebuild credit is a good thing, there are some downsides to using a credit builder loan — namely the fees involved. Potential disadvantages to consider include:

  • High interest rates: The interest rate may be high since Self Lender says they offer rates up to 15.65%. You also have to pay a $12 administration fee to get started.
  • Fees for closing your account early: If you want to close your account early, you need to pay the amount of your loan in full or make at least one loan payment then close the account and use the savings in your CD to pay off the remaining balance. Either way, you will need to pay an early withdrawal fee to close your CD. This fee is equal to 90 days of CD interest.
  • Late fees: You’ll need to pay late fees equal to 5% of the scheduled monthly payment if you make a payment after your 15-day grace period.
  • You could hurt your credit: If you fail to make payments or make payments late, you could actually hurt your credit. Since your payments are reported to the three credit reporting agencies, irresponsible credit use can leave you worse off than when you started the process.

Should You Try Self Lender?

If you’ve made poor decisions with your credit in the past and want another chance to set things right, Self Lender may be the answer you’re looking for. And, if you don’t have any credit to speak of yet, a credit builder loan may be one of the only ways to start building the credit you need (unless someone you know is willing to add you as an authorized user on their credit card account).

Fortunately, there are plenty of benefits that come with using this type of loan. Small loan amounts mean the monthly payments may fit well within your budget, and you get to build credit while you build up a savings account. Whether you want to save up for next year’s holiday gifts or start an emergency fund, if you’re someone who needs to build up some savings and build credit at the same time, a credit builder loan from Self Lender could be a dream come true.

On the flip side, you may also want to consider a secured credit card if you prefer to have a line of credit you can borrow against. Keep in mind, however, that you’ll need an upfront deposit of several hundred dollars to open a secured card. Both options can be good ones, but you should weigh the pros and cons of each and consider your unique needs before you decide.

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

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The post Self Lender Review: Build Credit and Savings at the Same Time appeared first on The Simple Dollar.

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