6 Ways to Salvage your New Years Resolutions

fireworks

fireworks

We’re less than a full month into the new year. Did you make any resolutions? If so, how’re they doing?

If you’ve already broken your New Year’s resolution, don’t be too hard on yourself. It turns out that the odds were stacked against you. A study in 2007 by Richard Wisemen from the University of Bristol showed that 88% of people who make New Year resolutions fail to keep them.

Those are pretty dismal numbers when you consider it. A lot of people break their resolutions and feel depressed. But as the Japanese proverb says “Fall 7 times, stand up 8”. So, how can you salvage your new year’s resolutions?

  1. Remember why you made the resolution: It came from somewhere. So take a moment and try to reconnect with the original impulse. Life distracts us, so try to focus past the distractions and find what you had desired.
  2. Discard the resolutions that don’t come from you: Too often we resolve to do the things we think we should do, rather than the things we want to do. When you have no personal attachment to your resolutions, it’s a lot easier to break them.
  3. Reschedule your New Year: January is actually a bad time to start many resolutions. If we take weight loss as our example: gyms are more crowded than ever before, and the weather isn’t always friendly towards going outside and exercising. If any of these things are impacting your resolutions, why not wait until the spring? Good resolutions are a challenge, but there’s no reason that you shouldn’t stack the odds in your favor.
  4. Redefine your resolution: Try taking your goal and breaking it into smaller increments. For example, if you want to lose 36 pounds in the year, instead set yourself a more achievable goal of 3 pounds per month. This gives you a number of smaller goals that you can achieve and celebrate, helping you build momentum and retain your focus, even as you move towards achieving your larger overall resolution.
  5. Make use of your support network: We live in a world more connected than ever before. This means that supportive friends are as close as the smart phone in your pocket or the nearest computer. By sharing your resolutions with your support network, you gain people to help you when you’re struggling and who can celebrate with you while you succeed.
  6. If at first you don’t succeed…: We get too focused on failure. If you could change your behaviour without any problems then you wouldn’t need to make resolutions in the first place. If we learn from our mistakes, then we give ourselves a far better toolkit for long-term success than we would if we had succeeded without any problems or challenges.

Guest post by Alex Conde of Searching for Happy, a blog about the simple search for happiness we all face. His series of Happiness Experiments study some of the popular theories on finding happiness.

Photo Some rights reserved by Koshyk

a bird in hand, or two in the bush…

bird in hand

bird in hand

OK, think fast: two jobs. One pays $50,000 this year; it will have a steady raise keeping pace with inflation (more or less) for the next 20 years, but there will be no spectacular bumps up. The other job pays $15,000 this year. In 10 years it might give you the experience to make $100,000 per year - or, if you haven’t done that well, it might pay you $15,000.

What do you do?

I would argue this is at the core of your personality for many reasons. If I told you that I would give you $5 straight out, or we could flip a coin and heads you’d get $10 or tails you’d get $0, what would you choose? Investing works the same way: conventional thinking tells us that index fund investing is the way to go. You can’t beat the market! Hang in there - there has never been a 15 year period where the market didn’t go up! Be average - hope for the swelling tide to lift you along with the rest of humanity! Bet on the sure thing - take the $5!

So what does that tell you? Do you want to make money now or make money later? Would you take a job for free today with the promise of making more tomorrow? Or do you want cash in hand, thank you very much? Honestly, both are legitimate arguments. I’ve turned down two jobs in investment banking because they were bonus-based compensation and I knew that even though they might be worth 150% of what I was making from contracting, they also might be worth 70% of what I was making. You know what? That’s weak thinking.

Risk taking is fundamental for wealth building. I’m sure Warren Buffet would argue that he doesn’t take any risks: he studies exhaustively and then invests without concern because he’s done his homework. My grandfather did awfully well (until 2000) in the stock market, too, although he certainly didn’t have access to the type of research that WB does. It’s possible to take some measured risks and achieve success as long as your definition of success doesn’t mean being the wealthiest man (or woman) in the world.

I want to make money in the future. I’ve set up my lifestyle to make money in the future. I claim to want money in the present so I can retire now, but I spend a lot of time talking about making it now and coasting along on a decent contracting income without building my investments aggressively or a business or even my own knowledge (which deteriorates every day).

Here is the question: what’s the main thing you need to do? Invest better? Build a business? Or just continue to slowly build income and plow your increasing income - through maintaining your standard of living and putting the excess into savings - into slowly building wealth? One of my favorite reads is was Get Rich Slowly (I don’t feel it’s worth reading anymore), but do I want to get rich slowly? Depends on how slowly you mean…

Photo Some rights reserved by “G” jewels g is for grandma

Control Your Financial Destiny - Be Your Own Boss

handshake

handshake

Most people are concerned about money. If you aren’t a millionaire, you are most likely part of this group. Money - we never seem to have enough of it and are always looking at ways to spend less of it.

For the average person, the concept of taking control of their financial destiny consists of little more than having a 401(k) at a job they most likely don’t care too much for. Few people take true control of their financial destiny.

One way to have greater control over how much money you have is to be an entrepreneur. While not the right option for many (if not most) people, being your own boss has been the key to financial security for a large group of people. If you are looking for a way out of the grind of your 9-to-5, you might consider being your own boss. While the risks involved are many, the potential payout is exponentially greater than anything most people will ever see working for the man.

Below are some pros and cons of being an entrepreneur:

Pros to Being Your Own Boss

  • It is easier to get a raise when you are in control versus being an employee.
  • Your entrepreneurial success is generally tied to how hard you work. When working as an employee, most times your hard work is not recognized. Employees that work hard are rewarded the same as those that do the bare minimum to get by.
  • There is no greater freedom from being your own boss, having the ability to do what you want, when you want, without someone telling you what to do.
  • The upside has a huge potential. If you are a successful entrepreneur, you can have huge financial gains that are beyond the imagination of the typical employee.

Cons to Being Your Own Boss

  • No certainty that you will succeed. As a matter of fact, most small businesses fail in the first 5 years.
  • Uncertain income can lead to a great deal of stress.
  • Most likely, you will have to put in a lot of time and effort before you see any results. A successful outcome is never guaranteed, even if you put in the time and effort.
  • You deal with everything, good and bad, which is something most employees don’t have to worry about.
  • You never really get away from your business. Even when you are on vacation, you are the person in charge.

 

Never As Easy As It Seems

Being a successful business owner is a lot of hard work. Period. Don’t believe anybody who tells you otherwise. There is no such a thing as getting rich overnight as your own boss.

Most people are not cut out to work for themselves. Most people should be employees, working for someone else. But, for the fortunate few that take the risks and become a successful entrepreneur, the potential payoffs are worth the pain it took to get there.

Take Control of Your Financial Destiny

While you are clipping your coupons and shopping for the best deal to try to stretch your dollars, just keep in mind that there may be another answer for you. Maybe you should take some time and consider if being an entrepreneur might be something that would be a good fit for you. Fortunately, you can explore your options while you keep your day job. You can even get your feet wet while you continue to work for the man, though doing so will be equivalent to working two full-time jobs, at the very least.

Entrepreneurs control their financial destiny. They don’t spend their time clipping coupons or shopping for a deal. They spend their time building a business that will give them the financial freedom they yearn for and deserve.

You have the choice if you want to be an employee or if you want to be the boss. Choose wisely, as the decision you make will greatly impact your financial future.

About the Author:

Guest post by Marshall Davis of Business Service Reviews, a website that reviews products and services that help entrepreneurs start, grow and maintain successful small businesses. His new interview series, Talking Small Biz, will shed some light on how different entrepreneurs are finding success in their chosen field.

Photo Some rights reserved by buddawiggi

the itch that never ends


Imagine your wrist is itching right now. It’s the kind of itch that just has to be scratched - it doesn’t matter what you are doing, because the urge to scratch rises up and blocks your ability to concentrate on almost anything else. I am sure you know this feeling - the sudden intensity of the itch narrows your vision to a tunnel. You stop, you scratch, you resume whatever it was you were doing.

Now imagine that keeps happening. Again and again. You itch at random all over. Your nose itches, you stop and scratch and take ten steps before your knee itches. The aggravation becomes unbearable - every few minutes another urge to scratch, another pulsating itch.

But after a while, a funny thing happens - you are so consumed with scratching and itching that you realize that you can ignore some of the milder itches. Your mind blocks them out, because otherwise you’re just in a haze, waiting for the next tickle on your shoulder or your ear. You realize, hey, I can block these itches out.

Before long, you are blocking out more and more of these urges to itch. After a while, you can ignore almost all of them. Your mind learns how to block bigger and bigger urges, until only the most pressing itches needs scratching. One day, you realize that although you still itch all over, you don’t need to scratch anymore. You have conquered the urge and no longer have a knee-jerk reaction when it strikes.

This is more or less the way you need to approach spending if you’re in debt, or eating if you’re trying to lose weight, or getting over a bad habit of any kind. It may seem like an oversimplification but that’s what it is. Your mind is an amazing tool (but also a dangerous one) but you are its master.

Creative Commons License photo credit: Sugar Pond

Budget Challenged Heal Thy Self

George Washington Eyes

George Washington Eyes

The following is a guest post from Neal Frankle. He is a Certified Financial Planner in Los Angeles and owner of Wealth Pilgrim, one of my all-time favorite personal finance blogs.

You may not have grown up with good financial habits being modeled all around you. Most people I know didn’t. I know I didin’t.

To make matters worse, financial advisors, for the most part, aren’t going to help you in this arena either. Even though your budgeting is the foundation of your financial security, there is no money in it for advisors to help you here so very few do.

The good news is, you can be the master of your budget without much education or training. And you don’t even need sophisticated software to do a good job. Here are the basics of budget coaching that you can do for yourself.

1. Intel

The first thing you need is information. You need to know how much it costs you to live. Or, let me put it another way. You need to know how much money you spend, on average, each month.

One way to do this is by writing everything down. When I was a young financial advisor, that’s what I asked clients to do. The weird thing is…nobody did it. After about 5 years of being disappointed by non-compliance I came up with another suggestion.

Look at your bank statements. This idea, if I must say so myself, is genius. If you pay all your bills from one checking account (and if you aren’t doing this, why not?) you can simply look at the total monthly distributions. Every checking account monthly statement summarizes those distributions so that, in effect, is what you spend.

Of course, if your credit card bills (or other debts) rise or fall, that will mean you either spend more or less. But for most of us, the total withdrawals from our checking accounts tells us what we spend on average each month. Go get your bank account statements from each of the last 24 months and tally up your average monthly spending. It’s a powerful number to know. I encourage everyone to use this method (in addition to the method below) because it gives you a big picture view. You will know very quickly if you are spending too much compared to your income. It’s staring you right in the face.

The third method is to use a budget tracking software package program. If you go this route, you can download your transactions right into your software without doing much work yourself. This will give you the details you’ll need to make the decisions about what to cut and by how much.

2. Values and Goals.

The next step is to evaluate whether or not your spending is in line with what you value most. For example, if your dream is to travel to a third-world country and help cure disease, it would be appropriate to budget in an aggressive saving plan for travel. But if that’s your goal and you spend your savings on trips to Vegas every other month, it won’t be difficult to see which financial behaviors need to change.

Likewise, if your goals are to create financial security for your family, it will be important for you to be clear on that and keep that goal in mind when you examine your spending. If you spend more than you earn, clearly your behaviors are out of synch with your goals and values.

3. Pow Wow

The third step towards financial health is to get total commitment from everyone in your family. The way I figure it, everyone is involved in spending so they have to buy in to the new approach. Talk about what’s changing and why. Explain the benefits of making these changes and talk about the changes the family (collectively and individually) are considering. Don’t make it an edict. Get everyone’s input and commitment.

Finally, have monthly meetings to discuss progress. Don’t expect perfection because it doesn’t exist. Make allowances for people going over budget. Just gather the family together every month and discuss what went right and what could have gone better. Get input from everyone to determine how they see things.

Using these 3 steps, you’ll be able to transform your financial situation dramatically and rather quickly. At least that’s been my experience.

What about you? Have you ever had to make big changes in your spending? How did you handle the situation?

Photo Some rights reserved by peasap

the movement of content

fly on book

 

One of the problems I have with writing here at brip blap tends to be the question of “what to write?” I’ve never made this a blog that covers the subjects that many personal finance blogs cover: what credit card should I get? Should I invest in an IRA or a Roth IRA? I don’t think anyone who reads this blog is looking for the answer to this type of question. You’ve probably already formed your own opinions on that and there’s no need for me to add to that internal discussion. There are many other, better blogs looking at the details of picking the best high yield savings account. I wish I was one of them - those are lucrative subjects - but it’s not to my interest and I don’t really want to write about those topics. Not that there’s anything wrong with writing on those subjects - there’s a place in this world for writing for money, just like there is a place for working for money. People who can write well AND write for money are blessed (I’m looking at you, Stephen King and John Grisham).

So when I think of what to write, I think “what should I write that (a) entertains me and (b) entertains others and (c) might be profitable.” C is a distant consideration. I leave C to guest writers and sponsored posts. B is much more important. I do like it when people enjoy my writing and comment on it. I wouldn’t be human if I didn’t, I think. So I do write to that. But I’ve realized over the last year that A is the most important by far, especially in combination with B. Why? Because of Facebook and various other social media.

Many bloggers like the “sense of community” and “feedback” they get while writing, but I felt this sense and this feed much more back in 2007 before Facebook and Twitter took hold. I don’t feel it much today. Today real conversation doesn’t take place on blogs, or on websites - it takes place on Facebook or Twitter or a few other key social media sites. I used to share links heavily on this blog, but whereas a few years ago this was the first place I’d share them, now I’m more likely to share those links on Facebook or Twitter or LinkedIn or other networks. I’m more likely to engage with commentators on Facebook than I am even on my own site, because of course I spend time on Facebook, not here on brip blap. I participate in forums rather than on individual blogs. I’d argue that even the huge blogs - the Lifehackers, the Consumerists, etc. - aren’t really able to hold onto “regulars” anymore. I read many blogs, but I seldom comment on them. I might share links from them, and comment on them - but it’s going to be on a social network.

So the movement of content has created a question: where should content live? I like having brip blap as its own independent website. But is that the future of sites like mine? Or will they eventually move to Facebook, or some other social platform, where most of the readers and “likers” are already engaged and focused? I think they will. My blog exists in Facebook already, for example. You can read it in Facebook, comment on it in Facebook and never leave Facebook. That’s fine. If I integrate my personal account with my brip blap page at some point, you’ll see a wild flood of extra content - my “brain dump,” so to speak - appear. A lot of my content has moved to social networking. I’m posting my thoughts bit by bit rather than in long drawn-out posts like this one. It’s probably the future. There will be long-form writers forever, of course, but many people are transitioning to a short-form style of reading that won’t want to read 700+ word articles.

I’ve shifted my reading over the past 5 years. I still read books - but on a Kindle, that promotes “disposable reading” (I give up on books rapidly if I don’t like them). I don’t read blogs as much as I used to (my RSS reader accumulates them for search if necessary). I don’t write as much here because I spend a lot of time writing elsewhere - emails, Facebook, Twitter, forums, etc. Content is constantly being produced by people like me and you, but it’s shifting and changing. After a brief “golden age” of people scattering across the web looking for content we’re again reconsolidating. It’s neither good nor bad - it just is. Content is moving to where the readers are.

Photo Some rights reserved by MR photography.

restoring America

tattered flag


I have a lot of tools. I have more than a normal person should, I think. My collection of tools is based on one part frugality (I can save money by (thinking) I can fix it myself), one part wastefulness (I NEED a specialty picture-hanging hook that looks JUST so) and one part optimism (I am going to be Mr. Family-Man-Fixer-Upper) Nonetheless, most of my tools have one unifying characteristic - they were made cheaply overseas.

Go to the store sometime (particularly if you have a KMart/Wal-Mart/Target nearby) and look at where stuff is made. It’s all made somewhere else. Same thing goes for a Home Depot or a Lowe’s - half of my tools are made in Malaysia or China. Maybe more than half. Almost all, to be honest.

But I have a few tools that are different. My grandparents moved from their house into an apartment years ago when it became difficult for my grandfather to deal with basic maintenance of the yard and exterior. He kept a few basic tools, but for the most part he gave away the tools he had accumulated over his life, many of them to me. I have a huge pile of them, and they are amazing:

  • A hammer that feels like it was owned by John Henry
  • Screwdrivers that are old and dark with age but still have unblemished heads that easily turn the worst, worn-down screws
  • A Yankee drill that after decades of heavy use still punches through metal with nothing more than manual force - no electricity or batteries.
  • A saw that cuts cleanly and straight despite being older than I am.
  • And on and on.

All of these tools have words stamped on them which look almost alien. “Made in New Hampshire.” “Made inOhio.” “American-made.” I even have one that says “Made in New York.” Imagine - tools made in New York state. Seeing a tool that was made of American steel, cast in an American plant and assembled without a touch of plastic seems otherworldly. I can always tell these tools because they have the feel of weight, certainty and permanence.

I compare that of course to the cheap plastic junk you can buy today. I had a cheap hammer (I NEEDED a special small hammer) whose head flew off while I was hammering. I have gone through dozens of inexpensive small screwdrivers, always returning to the solid, heavy old ones when the new ones have stripped another screw’s head. The difference is clear, and I am sure that when I am too old to do work around the house I will also pass down those tools to my children and keep a few inexpensive “modern” screwdrivers around my old-age home to fix a loose screw once in a while.

The easy path is to berate cheap junk from China or bemoan the death of American industriousness or sneer at unions. China is guiltless, in this case. Americans have demonstrated for a generation now that they would rather buy a new hammer for $9.99 every few years than buy one that would last a lifetime for $29.99. China simply meets that need. American industry has died for the same reason. Unions didn’t drive American manufacturing out of business - Chinese forced labor and near-poverty-level wages did. Blaming unions is foolish, as is imagining that Americans won’t work hard. America’s still in the top 10 countries in the world in terms of productivity and working hours.

But given today’s economic situation, “Buy American” is no longer a convenient political slogan or a union-driven message. It doesn’t have to mean “Hate overseas manufacturers” or “Save American jobs” or even “Union Yes.” But what it does have to mean is that soon “Buy American” will be a necessity if you don’t want to live in a totally dependent nation. You can read every day about the exciting new jobs that we will soon have - high-tech jobs in green technology, for example. But those jobs don’t provide a true basis for our society. Think about it this way: forty years ago, give or take a few years, this statement would not have made most people blink:

“A man who works at a skilled job in a manufacturing facility can provide a decent living for his family. His wife can stay home if she wishes while the children are small. The husband will be able to send his children to college without incurring massive student debt. He will be able to buy a home. He and his wife will have enough saved to retire at the end of his career at the facility, and still be able to pass some on to their children.”

Making that statement in 2011 seems ludicrous. Maybe this is where Occupy Wall Street has arisen. When did it all change? When “Buy American” faded into memory. Trade barriers and sloganeering won’t ever bring us back to where we were, but Americans have to face an ugly fact: Wal-Mart and the federal government are our two biggest employers and our future is that of a service economy - service workers serving other service workers, with a few “elite” knowledge workers. “Knowledge” jobs can be exported even more easily than manufacturing jobs, whose export was (and still is) at least fought by what remains of America’s unions. No protestors will march outside the gates when Megacorp outsources the billing department to Armenia. No union will fight sending Tommy Accountant’s job to India. If you work at a job where most of your day is spent around a computer, you have to realize this: you have no skill - none - that cannot be duplicated and performed over the internet by someone without the protection of minimum wage, health and safety regulations and other protections. I can be replaced, and as companies get smarter, I will be. Everything I do could be done far more cheaply by someone else over the Internet. And I can’t blame companies under short-term pressure to deliver profits to shareholders if departments are outsourced - and I don’t blame India or China or the Phillipines for being there to pick up the work.

And as for financial services, our last great “industry”: I see no reason not to expect Dubai, or Shanghai, or even some yet-up-and-coming place like Yerevan or Almaty to become the next great financial center. Why should New York be special in the financial world? Lunch, mostly. People still like to go out for a New York-y lunch. But almost every person I knew in New York works at a knowledge job. I could work remotely on a project overseas (and have) and I have done NOTHING in the last ten years that I could not have done if I were living in Kansas City, or Houston, or Vancouver. In the last five, I have done nothing I could not have done if I were living in Moscow, Russia, or Moscow, Tennessee.

I pick up those old tools, then, and wonder if the men (and women) who made them would recognize America today, an America that looks a little bit too much like the passengers in “Wall-E” for comfort. I know we had problems a couple of generations ago - women and minorities did not have the opportunities they do today - but a hammer made in New Hampshire meant jobs for our communities and a good tool that lasted for generations. Those people work at Wal-Mart today, most likely. Maybe that’s OK - maybe America is the first real “post-work” society, content to work at Wal-Mart so they can go buy cheap stuff at Wal-Mart on the weekends. I hope not. I hope people will get angry when Citigroup or AIG or Morgan Stanley outsource another department overseas using taxpayer money to do it. I hope people will get angry when banks are bailed out and car companies are left to die. Whether or not you feel the car companies need to be saved, they certainly deserve to be bailed out as much as the banks did. It may be almost too late to buy American, but it’s important to remember that this economic avalanche will not be stopped through anything other than action at the personal level, and that action has to start with making a choice every time you buy something… it’s something to think about during 2012.

photo Some rights reserved by Beverly & Pack

Merry Christmas 2011, and links

christmas village

Merry Christmas, Happy Hanukkah and fill-in-the-blank greetings. It’s a nice season, whether you’re celebrating one of the major religious holidays or just enjoying time with family and friends for the sake of, well, spending time with family and friends. I was not planning on posting a Christmas post, but then I came across a video that I felt like sharing. And on a personal level, I’ll offer this: if you walk past one of the bell-ringing Salvation Army workers on the way into a store, give them a little bit. They do good things. I’ve seen them in action, and they’re worth it. They have some good people there.

Happy Holidays! Watch the video, via The Simple Dollar:

And here are a few other holiday reads. I thought the first one was especially worth reading (“Cold Weather Retirement Cities”) as my Floridian family suffers through a harsh Virginia winter visit. It’s funny how quickly I’ve forgotten 15 years in the Northeast and reverted to my Southern “50 is COLD” mentality….my Germanic ancestors are cringing.

Photo Some rights reserved by kevin dooley

being healthy

One of the things I come back to again and again in my conversations with family, friends and colleagues is that there is no way to waste money on good health. Organic food can be pricey. A gym membership can be expensive compared to working out at home. Vitamins or medications can be burdensome. But if you can spend your money on one thing in this life, don’t let it be education, or your family, or your belongings. Spend it on health.

Warren Buffet is 78 and the second richest man on this blue dot. Do you think he’d be getting the accolades for wealth and investing acumen if he had died at 42? Maybe. Many rich people have died young. Many poor people have died old (and unlamented). Wealth and health have long been completely unrelated. I’m sure every one of us knows old poor people and young rich people, and the opposite, and many variations. But age has long been seen as a virtue, at least as valuable as wealth.

But the key question is: would you rather be old and moderately well to do, or die fabulously wealthy at a young age? I doubt many of us would wish to live a highroller lifestyle and die at 40 versus living a moderate middle-class lifestyle and dying at 80. Health is, in a sense, the ultimate prize.

If you consider a long life a valuable thing to pursue, it’s doubly amazing that so many people don’t bother. I pursued my career at the expense of my health for the best part of my twenties. I wasn’t thinking about life in my sixties - it was my money and I wanted it now. How many times have you told yourself that you’re just too busy at work to take some time to exercise?

I don’t exercise as much as I should. Five years ago I was running competitively, lifting weights 3-4 times per week and eating a 90% vegetarian diet - I was in the best shape of my life. But work, kids and life got in the way and I slid waaaaay back on the health scale. It’s easy to do, and if you’ve ever gotten in shape you know how simple it is to slide back. But that’s no excuse. Your health is the only thing - other than your mind - that you can control in this life.

Don’t neglect your health. I lost 100 pounds (actually a bit more) and it’s possible for anyone (although I’ve regained a good chunk of that and need to work harder on keeping it down). Remember that your health is worth more than all the money in the world. Just ask someone who’s not healthy, and you’ll get a straight answer.

Photo by ~ggvic~

fear of making money

hallway

If I was going to search deep within my (financial) soul I’d admit that most of my money decisions are based on fear. Fear’s a negative word, and I don’t think that in this case my decision making is always a negative process. I am often quite happy with the result. A great example has been my investing philosophy. About five years ago I got nervous about the direction the market was headed. I took about a third of my retirement accounts’ total out of the market and put it into cash. Good fear, right? That chunk of my retirement savings would have been wiped out.

But after five years, I’ve only redeployed about a quarter of that third. You could make the argument - and I do, to myself - that holding onto cash is a defensive position. Nothing about the current propped-up-through-stimulus-and-bailout money situation of the US economy should encourage a reasonable investor to get back in…should it? The market’s up, isn’t it? It can’t go down again, can it? Yet again and again we’ve seen these market drops come back. So some of my reluctance is fear-based.

I’ve written about the reasons why I don’t talk about real estate investing, and it reasonably extends to other forms of investing I know nothing about. I said I don’t like “investing” in a primary residence, I don’t know much about real estate or the business of real estate, and that the New York market - where I lived until a couple of years ago - was too competitive. I should have added that it usually seems like BIG chunks of money are needed for real estate investing. Fear of investing in big chunks keeps me diversified in the stock market (index funds, right?) and keeps me afraid of real estate. Now that I’m in Florida, real estate investing is tempting - but so far I’m not sure the bottom’s been found, and investing in real estate seems like a beat on something that might be worthless… or worse.

Fear of wasting money is good, certainly - but at least as far as investing goes, some fear and uncertainty are necessary to have any sort of reward. I’ve always dreaded a doomsday that seems unlikely to come - a final day with money and then a penniless dawn. It could happen, of course - but with the ability to make more money (which I have) and good health (which I hope to continue to have) and a supportive family, it seems that I won’t face that doomsday. So the fear is something more than trivial but also less than a doomsday event.

Does Warren Buffet fear loss? Probably not at this point - he’s old enough and seemingly content enough to be free of financial fear. Did Bernie Madoff? I guess now he will face his own doomsday now, and learn whether that fear should have been stronger. How do you control fear of money? Here are the things I try to do:

  1. Remember that money is infinite. YOU may not have infinite amounts of money, but there is a lot of it out there, if you can just figure out how to get it.
  2. You cannot anticipate every disaster, but you only need to anticipate one success. If you invest in a property, a billion things can go wrong - title problems, a fire, a sewage plant groundbreaking the day after you close, etc. etc. You can’t prepare for everything. Try to aim for success, not dodge failure.
  3. Fear comes from you. Fear is not an externally-caused reaction. Sure, we all get a jolt of adrenaline when we’re jumped by a cave bear, but you can control fear. It’s not like being poked with a stick, where you have a reaction determined by nerves and muscle reflexes. Fear is neurons firing off in your brain, and you can control your thoughts - they are the only thing in the world you CAN control.
  4. Doomsday may come, true… but let fear of that day go. I do sometimes worry about all of my index funds and various other investments going to zero… but as I’ve often told my friends and family, if my retirement portfolio, invested in index funds that span the US market, goes to nil we’ve got bigger problems than worrying about retirement. We’ll be reverting to a currency based on canned foods and shotgun shells. Worry about your 401(k)’s fees, or your consumer debt with 21% interest rates - things you can do something about. Don’t worry about the end of the world. If the aliens come, you’re not prepared anyway.

Fear of money - worrying about its scarcity, or its disappearance - can cripple you from making more and even more importantly from enjoying life.

Photo by DownTown Pictures

how to be productive, and links

occupy-protests

 

I’m sure like many people, I feel fairly overwhelmed day-to-day with all the things that need to be done. I had attempted to manage this (twice) by implementing Getting Things Done by David Allen, with initial success but little long-term progress. I’ve recently plateaued out on my second implementation and I’m again searching for something that’s actually sustainable. I think to be a productive person, you’ve got to - if nothing else - maintain a list of the things you need to do and actually do them. They can range from small and inconsequential to massive and critical. But you need to capture them all. I’ve tried method after method and always found myself reverting to Post-It Notes and ink on my hand (“remember to get cereal”).

What are the best ways to stay productive? I’m not sure I know, yet. I’ll have to keep looking, I guess.

I’ve missed the roundup for a few weeks, but I’m back on track. For a day.

10 Free Ways To Market & Promote Your Website

Festive (and Frugal) Holiday Decorating

9 Christmas Gift Ideas for Kids to Learn About Money

Do You Eat When You’re Upset?

Celebrating 5 Years of Million Dollar Journey!

Musings about Kids and College

Win a $50 Amex Gift Card from GoBankingRates.com

A Fruitful Search for a Frugal Computer | Frugal Dad

Best Finance Stuff in 2011

New London skyscrapers

How Do You Handle Being a Stay at Home Dad in a SAHM World?

What Are Consumer Driven Health Plans and How do They Work for You?

The Importance of Small Decisions

The Money Diaries: The 29-year-old workaholic who’s counting down the days until he goes into debt

3 Hidden Energy Vampires That Kill Productivity

Photo from Monevator

thoughts on early retirement

horses on beach

My family has been gone for a few days, visiting family in New York, while I stayed here to work. It’s been an interesting experience, being alone, because I haven’t had this much time to myself in quite a while. I’ve attempted to spend my time doing productive things, although today, many of the productive things have involved doing something where I can watch football while I do them. One of the activities today was baking bread from scratch. This was an interesting experience. I had watched Lara make a number of variations on bread – items such as pizza crusts, pastries, and assorted cakes and muffins. But I myself never actually attempted to make bread. It’s strange, because my son has been baking bread at his Waldorf preschool for years, and it doesn’t really seem like that difficult. Be that as it may, I have never actually attempted to make bread. So today I thought, why not?

So I baked some bread. Today, following instructions I found on the Internet, natch. It worked fairly well. I was able to make a decent loaf of bread, with a nice hint of garlic and onion, because I like that kind of bread… salty and flavorful, not hearty and/or sweet. You may wonder what the point of this is. I am not a big do-it-yourselfer. I generally think that when you spend a large amount of time trying to do something like this that you could expend a small amount of money on, you probably are not spending your time in an optimal way. But then again this weekend, my thoughts have been turned toward the idea of minimalism, frugality, environmentalism, simplicity, and lifestyle design. Why, you may ask? Because of something I read on early retirement extreme this weekend.

I know I have mentioned early retirement extreme, a blog about retiring at an extremely young age, several times in the course of my own blogging “life.” It is, to the best of my knowledge, one of the best blogs about this lifestyle. It is not the only one of course, there are several others: brave new life and Mr. Money Mustache leap to mind (both are excellent and you should be reading them). All of these blogs, of course, have
Your Money or Your Life a book written back in the 80s although revised recently, as an inspiration. But early retirement extreme is probably the best-known of the current financial independence blogs. The author of the blog, Jacob, announced this weekend that he was leaving his early retirement to go into a new job as a quant trader. I won’t go into the details of what a quant trader is, although I have friends in that industry. Google it (or quant/quantitative analyst).

To me, any job in the financial services sector is the exact antithesis of an early retirement. The hours are long, the office politics are brutal, the pressure to perform is immense, the positive impact to society is (in my opinion) minimal at best and negative at worst. Your ability to pursue what you want will be limited by the firm’s immense demands on your time and expertise. But be that as it may, it is an immensely challenging field and I understand why someone like Jacob, with a PhD in physics, would be entertained at the thought of engaging in the challenge of trying to conquer this field.

I myself am not engaged in an early retirement lifestyle. I have not made the choices which would enable me to retire at an extremely early age. Until the mid-90s, I was engaged in a career quite typical of most American corporate mid-level management. I chose in the mid-90s to disengage from this lifestyle as much as I could (mentally) and became a contract consultant, which allowed me to design a much simpler lifestyle, which involved much less travel, much less involvement in corporate politics and less concern over the need to constantly deal with bosses and subordinates. But I do aspire to some of the ideals of the early retirement movement. I drive a 10-year-old car, which I am not fond of, but I intend to continue to drive. Why? Simply because I don’t believe there’s any compelling need for me to buy a new car. I do not like to buy things. I have attempted to live in a “simple-ish” home. We attempt to eat simply, mostly vegetarian and organic and locally grown. I don’t have cable TV. I don’t play video games. We read a lot in my household. We have a garden that Bubelah takes good care of. But after all of that back patting of myself, I realize that I have a long ways to go before I meet any of the ideals of an early retirement ideology.

So it is jarring to me to see that one of the proponents of the early retirement lifestyle has abruptly left this lifestyle after achieving it so efficiently. But I understand. I have spent most of my blogging life reading heavily about hedonic adaptation. I’ve written about it several times, although I have never made it a main focus of my blog. But be that as it may, hedonic adaptation is probably one of the key measures for understanding yourself . No matter how miserable you are – or how happy you are – your current state is what determines your happiness. If you are miserable today and things go a little bit better tomorrow, you will be happy. If you are happy today and things go a little bit wrong tomorrow, you will be miserable. This is just human nature. If you buy a toy today, hedonic adaptation teaches us that you will be less satisfied with it as each day goes by. This is fine. People are like this. I am like this.

But I have realized, after reading a lot of the comments on early retirement extreme.com about Jacob’s decision to leave the ERE lifestyle, that I do need to concentrate more fully on a singular goal, and that singular goal has to be finding a point at which financial independence allows me freedom of choice over my actions on a daily basis. This is critical. I enjoy many parts of my job. I had an extremely busy week this past week, but it was also very satisfying: I was able to set up a system for my client that exactly met their needs and made them quite happy. I had a great feeling of accomplishment from that. Now, but that in balance with this idea: I enjoyed making my client happy, but how can I weigh that against the fact that I was working late most evenings and was not able to spend much time with my children. Granted I spend more time with my children than I would if I was traveling heavily, but it was an uneven solution to the question “what is your ideal lifestyle design?” I’d like to make money, do interesting work and work with people I like….and have lots of spare time for my family (and, frankly, myself). And the only way this will happen is if I achieve financial independence.

Unless you are familiar with the early retirement general philosophy, much of this may pass over your head. But I think you get the idea. There was a guy who espoused retiring early and showed how to do it, who then found that in retirement he needed to go back to work. It seems a little hypocritical when I first read it. But it’s not…. the idea is that you would like to put yourself in a position where you can do exactly what you want when you want to, even if that means you want to return to full-time work in a new field. I certainly can’t do that right now. I would submit that probably 99% of Americans cannot do this now. So if you have access to a blogger who has been able to do this, and he’s written a detailed guideline on how to achieve that same level of success, that’s a good guide map regardless of what he’s doing now. I’m going to pay more attention to my plans to retire early, personally. And when I say retire early, I don’t mean to quit working. I simply mean to be able to work when I want to, in a way I want to, with people I want to, with companies I want to and how I want to.

I think that’s sufficiently heavy for Monday. Get out there and do what you do with pride, and with a focus on doing it so well that someday you won’t HAVE to do it, you’ll WANT to do it because people love what you do so much that they will throw money at you. Nice daydream, huh?

Photo Some rights reserved by mikebaird

PS I composed this post with Dragon Naturally Speaking (which I reviewed before, here). It took about 5 minutes of editing, mostly for punctuation, but by and large it got my speech. The geek in me appreciates the lack of typing.

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