Month: May 2019

The Truth About Being an Entrepreneur

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Being an entrepreneur is rewarding.

But it is not for everyone.

You work harder than you’ve ever worked for anyone else.

There will be setbacks, strained relationships and stress.

No wonder many “wannabe entrepreneurs” give up!

But of course, there are the REWARDS…

Make a success of entrepreneurship and you are set for life!

Derek Halpern sums up being an entrepreneur rather perfectly…

The Truth About Being an Entrepreneur

According to the Small Business Administration (SBA) 30% of new businesses fail during the first two years of being open, 50% during the first five years and 66% during the first 10.

Of course, enormous success is also possible and there are advantages to being an entrepreneur.

But as Napoleon Hill stated…

Before success comes in any man’s life, he is sure to meet with much temporary defeat, and, perhaps, some failure.

Being an Entrepreneur

21 Things They Don’t Tell You About Being an Entrepreneur

(+ 15 Ways To Handle Setbacks as An Entrepreneur)

How many of these things have you experienced?

1)  People want you to fail.

It is remarkable how many people will put you down when you explain you plan on being an Entrepreneur.

I mean, how dare you want to make something of your life!

This includes your nearest and dearest.

My first business venture was in MLM – multi-level marketing. I “failed”.

For a number of years afterwards so called friends would ask me about it – in a sneering way.

They are no longer in my life. I have moved on and built several successful businesses. They on the other hand…?

I say “failed” because you see I didn’t really fail.

I learned so much from that experience and had my first exposure to personal development.

Things that I learned at that time enriched my life in ways I could never have imagined at the time!

2) If your idea is anyway unique and shows success competitors will quickly copy you.

I started my first online business back in 1998 (yes, that long ago). By 2001 one of the leading players in the industry I was involved in, literally copied and pasted my content onto their website. I had to take legal action to defend my Intellectual Property.

However, there can also be positives to ‘copycats’ in that it keeps us on our toes and pushes us to innovate. Yes it is annoying and if it is a direct rip off of your intellectual property, you must take action, but if it is just someone else entering the same market place or niche that you discovered, then that is CAPITALISM. Get over it! 

It should also be remembered that most of us have ‘copied ideas’ or been expired by another entrepreneurs business success.

3) People you employ will leave your business and set up in competition with you.

These people could even be people you consider “friends”.

Additionally in a start-up people often employ friends – this puts strains on a friendship – especially if you have to FIRE them because they aren’t a “good fit”.

4) Customers don’t pay.

Or if you have an online business, especially any type of information product, they download the content and then ask for a refund.

5) In entrepreneurship there is no concept of weekends, you work 24/7.

You go from 9-5 to 24/7!

Start-up entrepreneurs tend to work more hours than the average full time employee in order to get their company off the ground.

Additionally, work-life balance is difficult.

When your office is not that place you go to – but instead is your bedroom or living room it is not easy to separate business and personal.

6) No one cares about your business as much as you do.

Employees will work the hours you pay them to work and only that.

You will wear many hats, especially in the beginning…

CEO, accountant, secretary, website designer, head of sales and janitor!

7) Some customers and competitors will bad mouth you in public.

Some will make up lies about you and your service and publish them on review websites.

Being an Entrepreneur

8) People will let you down.

You will pay outside people to do work for you – web developers, virtual assistants etc – and discover they have not done the work you paid them to do.

9) You will spend money on advertising that does not work.

“Half the money I spend on advertising is wasted; the trouble is I don‘t know which half.”

~ John Wanamaker (1838-1922)

10) There will be legal disputes with customers, employees, suppliers.

Don’t make the mistake of thinking this won’t happen to you.

Abraham Lincoln had a good strategy…

Being an Entrepreneur

Discourage litigation. Persuade your neighbors to compromise whenever you can. Point out to them how the nominal winner is often a real loser – in fees, expenses, and waste of time. As a peacemaker the lawyer has a superior opportunity of being a good man. There will still be business enough.

11) Software and websites will not function as promised!

This happens even after you paid good money and thought you had hired the best.

12) People over promise and under deliver.

Wise entrepreneurs prefer to under promise and over deliver.

13) People waste your time.

e.g. Potential JV partners and Customers

14) Professionals will let you down.

This includes Accountants, Lawyers, Consultants etc

15) You will pay more than once to get a job done.

This has happened to me numerous times, especially when when developing software or websites.

16) Everything takes longer than you budgeted for.

This includes making a profit, launching a new website and raising funding.

17) People will let you down on their promises.

People fail to deliver on their promises and you will feel frustrated that your business is not taking off as you had hoped.

18) Being an Entrepreneur is lonely

Entrepreneurship can be a lonely journey. You will experience rejection.

You will be cash-strapped and your social life will take a hit!

As an Entrepreneur you will be working while all others are out partying.

19) You pay yourself last!

It should not be this way, but unfortunately, for many entrepreneurs this is the case.

But it does not have to be this way…

Recommended Read: Profit First: Transform Your Business from a Cash-Eating Monster to a Money-Making Machine

20) That BIG Order you have been promised will fail to materialize

Or if it does materialize, it cancels.

21) The above things do not happen in isolation.

Many times a number of issues will all happen at the same time.

You will experience failure after failure, after failure.

This is normal.

15 Ways To Handle Setbacks as An Entrepreneur

Great entrepreneurs take challenges in their stride, they don’t get angry.

Every day as an entrepreneur is an opportunity to learn and develop as a human.

You must carry on regardless of the current circumstances.

#1 Observe what you tell yourself.

Self-talk is real. Thoughts can be positive and encouraging or they can be dangerous.

Believe in you and your abilities to overcome. Do not entertain a negative thought, even for a second.

“The next time life punches you in the face, stop for a moment and ask yourself this simple question: What’s the counter-punch? No matter how bad the situation, no matter how hopeless it seems, there is always an opportunity to turn it to your advantage. You just have to discipline yourself to spot the opening, and then find the courage to use it.”

– Jon Morrow

#2 Take Care Of Your Body

To succeed as an entrepreneur, you need to take care of your body and health. When you experience a set-back in business, you need all your strength and fitness. With a fit and healthy body you are better prepared for handling challenges.

Unfortunately for me, it took me far too long and two brushes with death to realise that I needed to take better care of my body. In that respect, don’t be like how I was!

You don’t want to be the richest person in the graveyard!

One of the biggest benefits of exercise, apart from improving your fitness is that it increases your creativity and concentration.

That for me is the greatest reward of exercising and my favorite form of exercise is long walks in the woods. The ideas and inspiration, flow and flow!

Recommended read: Fitness Routine for Busy Entrepreneurs

#3 Raise your Adversity Quotient

To succeed as an entrepreneur you need to raise your Adversity Quotient.

An adversity quotient (AQ) is a score that measures the ability of a person to deal with adversities in his or her life.

You have to be able to handle adversity and the suck factor!


We don't grow when things are easy, we grow when we face challenges

If you can’t handle the emotional roller coaster, don’t be an entrepreneur.

Hardy individuals don’t see the world as threatening or see themselves as powerless against large events; on the contrary, they think change is normal, the world is fascinating, they can influence events, and it’s all an opportunity for personal growth.

– Geoff Colvin

#4 Ask for help

A lot of entrepreneurs are loners and find it a challenge to ask for help.

It is almost like they have failed in asking for help!

This is your silly ego speaking (remember what we said earlier about observing what you tell yourself).

A fresh pair of eyes often brings a new perspective and viewpoint. Perhaps it is just a simple tweak you need to make in your sales copy that will make all the difference. Or maybe you need someone to tell you something you already know, but which you have not yet wanted to hear?

Remember that you are not alone in business?, ?there will be other people who have gone through the exact same thing as you and are willing to help. If you are fortunate enough to be part of a Mastermind Group, this will be a good place to start asking for help.

One other tip here – based on personal experience, sometimes the biggest breakthrough from asking for help is to ask someone outside your immediate business circle – in a different industry or even someone not in business at all.

The Truth About Being an Entrepreneur

#5 Recognize that failure as a part of life

If you are afraid of failure, don’t be an entrepreneur!

Successful entrepreneurs take ownership of personal mistakes – they don’t blame others.

Blaming solves nothing – look for solutions. Think positive.

If the size of your failures isn’t growing, you’re not going to be inventing at a size that can actually move the needle.

– Jeff Bezos

#6 Reduce Stress In Your Life

Stress comes from being overwhelmed by negative emotions such as anger, fear, anxiety, or guilt.

Exercise and mediation will help but there are other practical things you can do.

Practical things such as creating a To-Do list eliminates the worry that you forget to do something.

Not only that, it allows to break down what needs to be done into ‘chunks’ and priorities and create a plan.

As Larry Winget said…

“Nobody ever wrote down a plan to be broke, fat, lazy, or stupid. Those things are what happen when you don’t have a plan.”

Recommended Reading: Leo Babauta – 20 Ways to Eliminate Stress From Your Life

#7 What you are going through is not a reflection of your abilities.

Believe in you, don’t worry – don’t beat yourself up.

If a friend experienced a set back what you would you tell them? My bet is you would encourage them and tell them things are not so bad and that they will overcome. You deserve to tell yourself at least the same when bad things happen to you.

Never be a prisoner of your past, it was just a lesson, not a life sentence, life goes on…

#8 Be willing to be uncomfortable.

Be comfortable being uncomfortable. It may get tough, but it’s a small price to pay for living a dream ~ Peter McWilliams

Again and again, the impossible problem is solved when we see that the problem is only a tough decision waiting to be made. ~ Robert H. Schuller

Saying NO makes a lot of people feel uncomfortable – but this is one thing you must master if you plan to be a successful entrepreneur…

You especially need to say NO to energy sapping acquaintances…

Most entrepreneurs, especially in friendships, hate to offend.

But the truth is that true friends understand and respect your position and priorities.

being an entrepreneur takes courage

#9 Sometimes you have to go backwards, to go forward

“When one door closes, another opens; but we often look so long and so regretfully upon the closed door that we do not see the one which has opened for us.” ~ Alexander Graham Bell

#10 Learn from Your Mistakes

Many times what we perceive as an error or failure is actually a gift. And eventually we find that lessons learned from that discouraging experience prove to be of great worth.
~ Richelle E. Goodrich

Too many entrepreneurs are obsessed with perfection in their Start Up – Start now get perfect later!

#11 Remain Focused

What you focus on is what you get!

Experiencing problems and set-backs comes with the territory. If you loose focus of your main objective you will not reach it and your business will fail.

Whenever you want to achieve something, keep your eyes open, concentrate and make sure you know exactly what it is you want. No one can hit their target with their eyes closed.
~ Paulo Coelho

Successful people maintain a positive focus in life no matter what is going on around them. They stay focused on their past successes rather than their past failures, and on the next action steps they need to take to get them closer to the fulfillment of their goals rather than all the other distractions that life presents to them.
~ Jack Canfield

#12 Every Challenge is an Opportunity

Be thankful for each new challenge because it will build your strength and character.

When you face difficult times, know that challenges are not sent to destroy you. They’re sent to promote, increase and strengthen you. ~ Anonymous

The bigger the challenge, the bigger the opportunity for growth.

#13 Don’t be realistic

Successful entrepreneurs are rarely realistic. They don’t accept NO for an answer.

A “realistic” attitude is often a thinly disguised pessimistic attitude.

Every moment is a fresh beginning. – T.S Eliot

Die with memories, not dreams. – Unknown

#14 Meditation helps you to think more clearly and positively.

This is another thing I wish I had discovered the benefits of sooner,

Meditation improves your productivity. If you are completely relaxed and stress-free, then your mind will work more effectively. The right side of our brain, which is responsible for creating new ideas, will work actively when you do meditation regularly.

Meditation, helps you deal with the stuff going on in your heart and your head…

You can eat the kale… Drink the alkaline water…. Take the supplements… Do the yoga… Hit the gym. …but if you don’t deal with the stuff going on in your heart and your head, you’re still just as unhealthy.

~ Daniel Rengering

#15 Make More Sales Calls

Sometimes when things go wrong in business, we neglect the most obvious strategy…

Make more sales calls!

This applies, no matter if your business is offline or online.

Have a Sale!

Make an Irresistible Offer.

Create a Killer Offer That Converts Like Crazy!

If want to get cash into your company fast and you sell a physical product (eg home improvements) go back to all those people who said no – make them a new offer.


=> Top 10 Traits Of Successful Entrepreneurs

=> 6 Traits All Entrepreneurs have in Common 

Author Bio:
“BarryBarry Dunlop is a lifelong Entrepreneur, Angel Investor, Mastermind Facilitator and Business Coach who launched his first Internet Business in 1998.

The post The Truth About Being an Entrepreneur appeared first on How To Make Money Online.

Outsourcing my life: Why I pay others to do tasks I could do myself

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When people talk about saving money, DIY is one of the first things that comes to mind.

Do all of this (and more) and you could save hundreds of dollars a year.

And that’s great. I know lots of folks that enjoy growing a lush garden resulting in delicious produce (that can be canned or frozen) in due season. There are people in my life that find doing laundry calming, and others that will happily take on any domestic project that comes their way. Personally, I enjoy doing the dishes.

While I’m happy spending time on the things that I like, there are certain things that I hate doing — and that I will happily outsource to others.

Am I perfectly capable of cleaning my home and mowing the lawn? Sure. But why should I spend the time doing these things when I can pay someone else to do them? Here are some reasons I spend money to outsource parts of my life.

Why I Outsource Tasks I Could Do Myself

I Can Make More Money

The number-one reasons I outsource tasks I could do myself is that by doing so, I make more money. Wait, what?

When I talk about spending $200 a month on lawn care or $20 an hour on house cleaning services, many people are surprised to find that I make money by outsourcing these mundane chores.

I’m a freelance writer, so any time I free up can be used to write an article, interview a source, or work on edits. Rather than spending two hours cleaning the house, I can pay someone $40 to do it instead — and make $500. That’s a net gain of $460 each week, or about $1,840 per month.

There have been times that I take my laptop with me to get the oil changed. Jiffy Lube takes care of it for $65 and I can do work amounting to about $200 in the time I’m sitting there. That’s a net gain of $135.

In the past, I’ve used services like Blue Apron and HelloFresh to plan my meals and deliver the ingredients. That saves me the time and hassle of meal planning and grocery shopping, and allowed me to focus on other things. However, with my travel schedule, these types of services haven’t been meeting my needs.

Instead, with Instacart now available in my area, I’ve switched to getting someone else to do the shopping, while I use a service like $5 Meal Plan to plan my meals and provide me with an ingredient list.

No matter how I do it, though, the cost of these services is much less than what I can make doing a little extra work. Whether you want more time to work on a side gig, or take action to grow your business, the investment you make in outsourcing can yield dividends later.

I Have More Time with My Son

I’ll be honest. I don’t spend every minute I save by outsourcing on work or business activities. I also use the time I save on things that matter to me.

In the past, my son and I spent a portion of each Saturday cleaning the house. That’s not a super fun way to make memories with your teenager. Now, instead of spending time on chores, we can go to the museum, take a hike, or ride our bikes. It’s possible to spend the whole afternoon playing board games if we want.

J.D.’s note: I once played Exploding Kittens with Miranda. When she saw that I liked the game, she simply gave me her personal copy. Wow. How cool is that?

Miranda and JD playing board games

Plus, now that my son is doing more with his friends and has the independence of a car, being able to spend time when we can is especially important. We can go out to lunch, and he can still have time to go to the movies with his friends later. Sometimes we work on our small herb garden together in the morning, and he plays video games with his friends in the afternoon.

When my son wants to talk, I don’t have to cut him off because errands are weighing on me. Instead, I can focus on my son, knowing that I’ve outsourced tasks like grocery shopping and cleaning to others.

I Have More Time (and Money) for Self-Care

Freeing up time also means I can make more money while having more time for me.

Let’s use my above example of cleaning the house. If I used all the cleaning time to work, that would get me an extra $1,840 per month. However, I don’t use all that time to work. I probably use about half the time to work. That’s still an extra $920 per month — and an extra four hours.

I can do what I like with those four hours. Maybe I get two manicures in that month. That’s two hours gone, and $100. I don’t have to worry about it, though, because I used half the extra time already to make extra money.

Miranda's manicure

Sometimes all I really want to do is just lay in bed for an extra hour and read. Or go to a movie by myself. Or, instead of work in the evening, binge-watch Netflix. Because I outsource mundane tasks that would otherwise fill my time, I can use half that saved time to make more money, and the rest of the time to do more of what I want, whether it’s baking cookies with my son, going out to lunch with a friend, or spending a Wednesday volunteering with a local service organization.

Outsourcing gives me more freedom and flexibility in my hours and in my spending. In fact, I recently discovered that the time I save (and the money I make) by having someone else handle the grocery shopping is just enough to cover personal training sessions each month. So now outsourcing has freed up the chance for me to improve my health.

Investing Extra Time and Money

I see outsourcing as a way to buy more time. And that makes it valuable. After all, time is a nonrenewable resource. That makes time more valuable than money. Purchasing that time allows me to make more choices and make the most of my time. Rather than spending time mowing the lawn or cleaning the house, I can make more money in a fraction of the time.

Take the lawn care, for example. It takes me about two hours a week to mow the lawn, trim the edges, and manage the weeds. That’s about eight hours a month from May through September, or five months. That’s 40 hours. I pay $200 per month, so $1,000 total. If I work half those hours, I can make about $5,000 extra dollars — and still have 20 hours left over to spread across those five months.

Because I outsource, I have extra time and extra money. I can use the extra time to invest in relationships with my loved ones, and to take extra time for myself. Those things pay dividends in goodwill with people I enjoy being with, as well as mental and physical health dividends for me.

The extra money can be invested as well. I might spend some of it on a trip to the spa, or to buy new camping gear, but a lot of it goes into my investment portfolio. Now that money is earning money, without the need for me to do more work for it. Or, I could take some of the money and invest it into my business, growing it so that it offers better returns down the road.

The benefits outsourcing has brought into my life by allowing me to buy more time — and use it in ways that are more profitable — have increased my quality of life, as well as improved my overall financial health.

Outsourcing in My Business

I’ve also found outsourcing helpful in my business. Over time, I’ve gradually outsourced social media posting, scheduling, podcast editing, tax preparation, and other tasks. Some of these tasks are outsourced to people, while others, like scheduling, are outsourced to free or low-cost software tools.

Just the time I save in posting on social media alone provides me with the ability to earn enough money to pay my social media manager and still have time and money left over for investment in other activities.

When outsourcing business tasks, it makes sense to identify your weaknesses. Rather than trying to turn your weaknesses into strengths, outsource your weaknesses and leverage your strengths into better profitably and improved outcomes.

J.D.’s note: This is precisely what’s been going on behind the scenes at Get Rich Slowly for the past six months. My strength is writing. That’s what I like to do, and that’s what I’m good at. The rest of modern blogging isn’t my forté. So, I brought on Tom to take care of marketing and monetization. We’re working with other folks to handle social media, etc. I’m focusing on my strengths and outsourcing the rest. Speaking of Tom, he interviewed Miranda about this very topic on his MapleMoney Show podcast.

How to Start Outsourcing

I didn’t start by outsourcing everything all at once. I couldn’t afford it.

Instead, I chose one thing to outsource — one thing I could afford. At first, it was house cleaning every other week, while my son and I continued doing the weekly cleaning in between. However, after a few months of making extra money with the freed-up time, I was able to expand to the weekly house cleaning service.

Review the time you spend on various tasks. What could you be doing instead? Could you use the time more profitably? If so, consider outsourcing the task and using your newly-freed time to make extra money. Pretty soon, you could discover that the extra money allows you to outsource the next time-consuming and mundane task.

However, if there are things you like doing, even if they take up time, there’s nothing wrong with continuing to do them. Do what makes you happy. And outsource the mundane tasks that hold you back from a better quality of life.

The post Outsourcing my life: Why I pay others to do tasks I could do myself appeared first on Get Rich Slowly.

Is a Gap Year Better Financially Than Going Straight to College?

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Nathan writes in:

I am entering my senior year in high school next fall. My parents want me to go to college in the fall right after graduation. They have some savings for me but I will have to add some student loans. I want to take a gap year or two and work full time. I would put that money aside for college and figure out what I want to do because I don’t know what I want to study. Is it better to graduate a year later with no student loans or go straight to college after high school with student loans and go straight to a job with better pay?

This is a really great question from a well-spoken high school student. I have a feeling that Nathan, with his ability to think through situations and his ability to present them this well, will do just fine in whatever he chooses to do.

The question you’re asking, in essence, is whether or not the relatively low earnings you might bring in during a “gap year” right after high school, when applied to college tuition, is more financially valuable than starting in your career path a year early.

That question is loaded with a ton of assumptions. You have to assume how much you’d earn during that year off and what portion of that you’d actually save. You have to assume how much you’d earn after graduating and what portion of that you would immediately be able to apply to student loans. There’s also the issue of a changed career trajectory – would the “gap year” change your overall career trajectory in a positive direction, improving your post-graduation annual salary?

Let’s look at the easy question: does a gap year help you with your career trajectory? If a gap year can actually improve your career path, then it should be a no-brainer, right?

According to the clearest data I could find, a “gap year” can help if you use it in a way that genuinely improves your college results by helping you get into a better school, clarifying what you want to do in school, and helping you build a better work ethic. However, the benefits of a gap year seem to be heavily tied to how you spend that year. The best outcomes seem to come not from working at a job in your hometown for a year, but engaging in a program like Americorps for a year.

I’m not going to get into the nuances of a gap year, but it seems that the most benefits from a gap year aren’t correlated with maximizing income during that gap year but rather maximizing rewarding experiences and personal insight during that year. In other words, a gap year offers the best career outcomes when the primary goal is rewarding experience and helping you figure out your goals rather than just maximizing income. It is unclear whether a gap year of this type is a net positive financially, but it does seem to be a pretty strong net positive in terms of college performance and happiness with one’s career choices. Sarah and I are open to the idea of our own children taking a gap year for this very purpose – life experience and figuring things out, not earning income.

Let’s get down to the dollars and cents of it, though. Let’s say, for example, that you took a year and worked 50 weeks full time at a job paying $10 an hour while living at home. You’d earn $20,000 – let’s assume after taxes and some minimal expenses, you were able to bank $12,000 of it.

That $12,000 would theoretically cut out $12,000 in student loans. Student loan rates seem to be somewhere around 5% right now, and most loans are on a ten year repayment schedule. That ends up totaling $15,367 in student loan repayment over the lifetime of that loan.

That’s what a gap year focused on income saves you, but what does it cost you? In terms of your career, it essentially costs you a year in retirement, assuming you would have the same length of career as you would otherwise. However, if you were to assume that you stick that $127 a month for the first ten years that would have been your student loan payments into a retirement account that returns an average of 7% year, you wind up with an extra $200,000 in your retirement coffers, which actually lets you retire a year or two earlier than if you didn’t take that gap year as you’ll hit your target retirement number at a younger age.

The issue with these kinds of calculations, however, is that it assumes perfect financial behavior on your part. It assumes that you’ll work a full time job for 50 weeks during that gap year. It assumes that you’d contribute that now-nonexistent student loan payment to your retirement account rather than spending it. It assumes your lifelong financial path will be smooth.

In my eyes, this exercise reveals two things.

One, the decision of whether or not to take a “gap year” is less important in the end than the commitment to lifelong smart financial choices. If you commit to spending less than you earn every year of your life and doing something smart with the difference and if you commit to using windfalls and extra sources of money for wise things like debt elimination and retirement savings, you’ll blow away the financial difference between a gap year of working for money and going straight to college after school.

I think this is a really key lesson that applies to almost everyone. Making wise financial choices day in and day out trumps almost any life choice you might make. If you consistently spend less than you earn, eliminate debts and avoid high interest consumer debt, and get into a situation where you’re not relying on loans for cars or eventually a home, your good financial choices will trump most of the life and career choices you might make.

I really like the old Charles Dickens quote from David Copperfield:

Annual income twenty pounds, annual expenditure nineteen six, result happiness. Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery.

It’s as true then as it is now: consistent smart financial choices, starting with spending less than you earn, is incredibly important for a stable life and trumps most life and career choices.

Two, in terms of maximizing the benefit of a gap year in terms of your career and quality of life, the focus of your gap year should be quality experiences and personal growth, not the wages of a 40 hour a week job. A gap year that focuses on quality experiences, figuring yourself out, maturing, and getting a grip on what you actually want to do with your life seems to strongly correlate with better academic performance in college.

In the end, it comes down to your own personality and situation. Do you know what you want to do with your life? Do you have good personal habits when it comes to being self-motivated? The more sure you are about your future and your own habits, the more sense it makes to go straight to college. However, if I were making a recommendation to my own children when they were unsure about what to do next after high school, I would probably encourage them, if they were reasonably mature, to consider taking a gap year and figure out their plans going forward while getting quality experiences through a program like Americorps.

Good luck, Nathan, but I think you’ll be fine either way.

The post Is a Gap Year Better Financially Than Going Straight to College? appeared first on The Simple Dollar.

Our Shared Ongoing Battle To Not Buy A Tesla

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Like you, I am pretty much resigned to the fact that I’m going to have to buy a Tesla at some point.

I can tell because I have read every last scrap of Tesla news and inadvertently memorized every last technical detail about the company and their cars and energy storage systems that has ever been printed or YouTubed. Since about 2012. When this happens to me for any product, whether it’s a new laptop or a different vehicle  or a house in a certain neighborhood, I usually end up buying it.

The purchase tends to happen when the list of justifications builds up to a tipping point where it starts to seem sensible. For the Tesla, these justifications are things like:

  • “I strongly support the company and its mission. Unlike almost any other big company on Earth, Tesla exists primarily to help out the human race. Surely worth a few of my spare bucks, right?”
  • “I can afford to buy it in cash without having to go back to work or anything extreme like that.”
  • “It’s the best car AND the best piece of technology in the world, and at least ten years ahead of the next best. Shouldn’t a lifelong tech expert like myself be taking a peek at the future?”
  • “It would be a lower-pollution way to replace some of my air travel, as the only car that can drive itself most of the time on long highway trips. PLUS, imagine the road trips I could take with my son! Mammoth Caves National Park! Lifetime Memories just like I have with my own Dad!”
  • “They are reasonably priced these days at “only” about $45k for a new Model 3 and even lower for a used Model S.”

In the past, my mind has made up similar justifications for other purchases like, “this lovely camera will help you create more engaging pictures for the blog.”, “this drywall hoist will save you a lot of time”, “you will make a profit by owning this high-end new laptop because it will encourage you to write more.”

And it’s not just me. As I’ve talked to more and more people about this, I find that most of us have some sort of Purchase Justification Machine running in the background of our minds. The PJM’s effects can range from very useful, like a carpenter buying a nailgun which will be used every day to make money, to completely disastrous, like the office worker who buys a $40,000 8-passenger Honda Pilot for his 12,000 annual miles of mostly empty driving on smooth roads, because “I need to make sure I can get to work in the winter, too.”

I like to fancy my own PJM as being at least a bit better than average, after all I have always maintained a slightly-less-ridiculous level of spending than the average middle class worker. Most of the things it has talked me into buying have indeed been things like nailguns or reasonably good quality clothing that just happens to be from Costco or the thrift shop.

Yes, there was once a brand-new $13,000* Honda VFR800 sport motorbike which destroys a lot of my credibility, but that was in 2001 long before Mr. Money Mustache was born.

But I can TELL that it is really grasping at straws when it tries to justify that Tesla. And that’s why I thankfully still don’t have a Tesla.

The PJM has done its work well, but I try to stay ahead of it by tossing in my own list of objections, like throwing gnarly stumps into a wood chipping machine to slow it down.

  • “You don’t even have anywhere to drive that Tesla, dude! If you had a mandatory 20-mile commute and absolutely could not move closer to your six-figure job, that would be one thing. But you’re retired and you bike everywhere, so a car is only for camping and hiking trips. Wait until you are further along in the child-raising project and have more free time to take off for month-long road trips.”
  • “You can’t just leave a $40,000 car out in the searing Colorado sun to bake and fade and collect birdshit, but you also don’t want to sacrifice an entire bay of your tidy workshop garage for a car. So you need to at least wait until you build that master bedroom deck which doubles as a carport, right? So you’d better get out the post-hole digger before you sign into the Tesla Design Studio.”
  • “No matter how much you use that car, it will always cost more per mile than cross country air travel even with full carbon offsets. So don’t get lured in by the nearly-free nature of electric car charging.”
  • “Make sure you try it before you buy it. Rent a Tesla from Turo or from a friend and try your first road trip. If you still crave one after that first thrill wears off, then we can talk.”

See what’s happening here? In order to keep ahead of the relentless efficiency of my Purchase Justification Machine, I just need to throw up nice, rational roadblocks to slow it down.

But the reason this is so effective is that I’m not just flat-out denying myself that Tesla. It’s pretty hard to tell yourself that NO, you can never have what you want. Instead, I’m just telling myself what things need to happen first, before clicking “buy” on the Tesla website.

And if these things are healthy, happy things (raising my son, getting other labor-intensive projects done with my own hands, and planning a great future series of camping and roadtrips), I divert my attention into living a good life right now, instead of doing the easy thing which is just buying myself another treat.

And the further I can delay this or any purchase, the longer my money can remain productively invested in stocks, and the more it prevents my PJM from locking its greedy crosshairs onto the next little lifestyle “upgrade” that it will find.

But this trick is not just for jaw-dropping electric sports cars. You can use it almost anywhere in your own life.

Kicking the Kitchen Down the Road

A friend of mine loves to cook, and has been pining for a kitchen upgrade for many years to make this activity more enjoyable. And I can’t blame him – his kitchen is indeed dated, as is the rest of the house. But he’s also in debt and not climbing out very quickly. And too busy to do the kitchen upgrade work himself, because work and kids suck up all his time. Should he allow himself to upgrade this kitchen?


BUT only after meeting a carefully considered list of conditions:

  • Quit Cable TV, Netflix, Hulu, Facebook, Twitter, video games, and other time drains. Because getting three hours of life back each day will give you more time to address other shortages in life.
  • Make sure you’re getting in at least an hour of outdoor walking and/or cycling every day. Plus, regular weight training. The joy of a new kitchen is nothing compared to the benefits of getting your heart, muscles and mind in better shape.
  • Use another hour of each day for cleaning, organizing and optimizing the house you already have. Is every drawer in the kitchen well-organized? Could you get more space by hanging up the pots and pans? Adding one of those large but simple heavy duty rolling islands with butcherblock top from Costco? What about just a super nice faucet for 80 bucks and a couple of nice track lights?**
  • How about the rest of the house? Are  the closets well-organized with optimal shelving? Is the garage spotless? Carpets DIY steam cleaned and rooms patched and painted nicely? Gardens and lawn tidy and peaceful?
  • How about the finances? Have you checked around for lower mortgage rates, home and car insurance, mobile phone plans, and canceled any unused subscriptions? Ask your friends what rates they are paying for all these things, switch to the best option, and you cut your bills by $500 per month, which will add up to pay for a kitchen pretty quickly.

See, instead of being constantly depressed because it will be years until you can afford that kitchen, you use it as a trigger to get busy and improve your entire life right now. Which gives you the feelings of happiness and control that were making you crave that kitchen in the first place. Or that Tesla.

And on that note, I am going to get out there and start measuring the post locations for my new deck.


The very day after I published this, I went down to visit a friend in Broomfield to chat and borrow some of his spare video gear (to help me delay purchasing my own, of course!)

But what should I find in his driveway, but a BRAND NEW Tesla model 3, long range all wheel drive in the same glowing red color shown above, which he had just picked up the day before.

I gave him the whole interview on why he bought it, because I know he doesn’t commute to work and has no need for a fancy car either.

They were the same reasons that I had listed above – he’s mostly curious about the future of technology, wanted to support it, and knows that Tesla is it. If it weren’t for Tesla’s existence, he would be perfectly content with a 15-year-old Honda. This company is really pulling out a unique set of buyers that no other car company could ever entice.

So we took it for a test drive. My diagnosis: very similar to the Nissan Leaf in interior size and tight, silent driving feel for standard urban driving – except much more artistic inside and out, and so fast that you literally start to lose consciousness and get dizzy under full acceleration. Kinda silly, but the very existence of cars is silly so you might as well embrace it.

Oh! And unlike the Leaf, when you fold down the rear seats and climb inside, it is plenty big and flat to sleep two people, which makes it a passable road trip mini-camper, even without a proper hatchback.

In the Comments: what is YOUR Purchase Justification Machine trying to make you buy? Have you already bought the Model 3 or are you still milking the 2010 Prius for all it’s worth? How long are you going to push your current smartphone until you allow yourself to replace it? Sharing your battles will give others the strength to keep their own procrastination game strong.


* I forked over $10,000 of my hard-earned cash as a 26-year-old kid in the year 2001, which is about $14,000 if you adjust it for inflation to 2019. But motor vehicles prices have risen slower than general inflation over recent decades, so I split the difference a bit here. But any way you slice it, this was a foolish purchase on my part!

** I linked to those because I have been using that particular track light everywhere in recent years – headquarters, home, and other projects. Way nicer quality/style than the options at Home Depot despite lower price. These LED bulbs are great for it as well.

Some Thoughts on the Cost of Eating Out

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A few weeks ago, I found myself in a situation where I was really hungry but there weren’t many food options around. I decided to keep my costs as low as possible, so I went into the only restaurant I could find, a nice little diner. I want to be clear during this article that I am not picking on this diner. It was a nice place to eat, the service was good, the food was good, and I was happy with it.

At the diner, I ordered an extremely simple breakfast. I had a cup of coffee, some scrambled eggs, some fried potatoes, and two pieces of toast. The total bill was about $10 – really, not that bad – and then I left a $2 tip, so the cost was $12.

During the meal, though, I couldn’t help but calculate the costs in the back of my head. I was served roughly three scrambled eggs with a little bit of cheese on them, probably a single potato’s worth of fried potatoes, two cups of coffee, and two pieces of toast with maybe a teaspoon of butter between them.

So, let’s look at the ingredient list of that meal:
+ three eggs
+ 1/4 cup shredded cheese
+ 1/2 potato
+ a small amount of onion in with the potatoes
+ two slices of bread
+ roughly a tablespoon of butter
+ two cups of black coffee
+ a negligible amount of salt and pepper

I could assemble those ingredients into a breakfast at home in about the same time it took them to get breakfast out to me at that restaurant, and then I’d have a few items that would go in the dishwasher afterwards.

So, what would the ingredients have cost me?

+ I can get a dozen eggs for $1.99, so three eggs cost $0.50.
+ I can get eight cups of shredded cheese at the local grocery store for $5, so 1/4 cup of shredded cheese would cost $0.16.
+ A typical potato weighs about 12 ounces and I’d estimate that I had half of a potato on my plate, and a pound of potatoes these days comes in around $1, so the potatoes cost about $0.38.
+ The small amount of onion was probably $0.05.
+ I can get a loaf of 20 slices of bread for about $2.50, so two slices cost $0.25.
+ I can get a stick of butter for about $0.75 and that contains 8 tablespoons, so a tablespoon of butter costs about $0.09.
+ I can make two cups of coffee at home for about $0.70 using my usual coffee making technique.
+ We’ll add on another $0.10 for seasonings like salt and pepper.

The total cost of those ingredients is $2.23. Even if you might quibble with the cost of each item and think that it would be more than I stated, you’d be hard pressed to get this over $3 unless you went very high end with each item.

As I noted earlier, I think my time investment would have been similar if I prepared and ate this meal at home, though I would have been busy in the kitchen for 15 minutes instead of reading the menu, ordering, and staring at my phone for 15 minutes waiting on the food. However, that effort would have saved me about $10.

The meal quality probably would have been pretty similar, but I’m pretty sure I would have at least liked my coffee at home better. I’m kind of picky about coffee and I really like my home brew recipe.

This experience reminded me of a few key principles of food frugality (and taught me a few things as well).

Eating out consistently is a very expensive endeavor. When you compare a meal prepared at home and a meal eaten out of similar quality, the meal eaten out will always be more expensive. When you eat out, you’re not only paying someone to prepare it for you and someone to serve it to you and often someone to clean up for you and someone to manage those folks, you’re also paying for the facilities to make and serve the food, the taxes, and some profit for the person who invested all the money to pay for all of these things.

Sure, you can sometimes find a decent meal at a restaurant that’s less expensive than a great meal at home, or a low quality meal at a restaurant that’s less expensive than a good meal at home, but you’re taking a serious cut in quality, and if you apply any sort of frugal planning and use low cost food staples at home, a restaurant is never going to consistently beat – or even come close to – the low cost of preparing food at home.

I was really paying for convenience, not the food. When I went to that restaurant, my focus was on getting a decent meal relatively quickly. It seemed to be the fastest option available to me at the moment, and thus I was really paying for convenience rather than the food itself.

That’s often a big consideration when people eat out. They do so because they’re hungry and they’re not near any options for preparing food themselves or to acquire low cost and quick to eat items. There are many places in America where the only convenient options for food are convenience stores and fast food restaurants, even in places where you might not expect this to be true.

Situations where you need to spend for the sake of convenience are often prevented by better preparation. Whenever you find yourself in a situation where you’re turning to a restaurant or a convenience store not because you want a nice meal on a special occasion, but because you need to do so out of convenience, it’s usually because either you didn’t plan ahead at all or you’re in a crisis moment.

An emergency is understandable, but many meals that people eat out do so solely because they didn’t plan ahead when they knew that there was a good chance that they might need to eat a quick meal or a hearty snack in a convenient way.

There are a lot of ways to prepare for those kinds of situations, where you need a quick, convenient meal. You can make a lot of meals at home in advance so that you have items that can be popped in the microwave or oven at your convenience. You can use a slow cooker for a lot of meals. You can mostly prepare meals in advance, leaving only final assembly for busy evenings. You can prepare sack lunches to take with you.

Or you can do this:

I could have prepared better by keeping more food items in my bag. My favorite technique for keeping hunger at bay when I’m out and about is to have a few food items in my backpack, which is pretty much always with me when I leave the house for more than a few minutes. It’s because I didn’t do this that I wound up in that “I’m hungry, there’s no other food options, time to go to a restaurant” situation.

My routine should be that if I know I’m going out and about soon, I make sure that my bag has some food items in it, just in case. Toss in an apple, some granola bars, a water bottle, a bag of nuts, maybe some crackers or something. The key is to just have something that’s low cost and easy to eat in my bag.

In fact, I usually have several granola bars and/or protein bars in my bag all the time for situations just like this one, but I’d consumed them all over the previous few weeks and there was nothing in my bag.

Eating out should be an experience you can’t recreate at home. The meal I ate was perfectly fine, but it was one that I ate solely for convenience. It wasn’t a special experience or a memorable experience. In fact, I probably would have forgotten about it had I not planned on writing this post. It would have become a forgotten $10 expense, the kind of “lost” $10 that ends up paving the road to financial struggles.

The best financial approach to food that I’ve found is to eat meals mostly prepared at home and mostly made out of low-cost staples and only eat out (or have treats) on genuinely special occasions. It’s easy to learn how to cook a ton of great meals with low cost staples, especially if you have a reasonably well stocked pantry.

On the other hand, special occasions are usually best when they’re really meaningful – you’re eating with someone special or it’s a truly special occasion – and when they’re planned in advance so you can anticipate it. I have far more financial concern about a $15 meal from a restaurant three or four times a week than a $75 meal at a restaurant once every month or two.

If that’s the financial path you’re on, it’s time to rethink the costs of eating out.

The post Some Thoughts on the Cost of Eating Out appeared first on The Simple Dollar.

Think. Wait. Fast.

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“Everyone can perform magic, everyone can reach his goals, if he is able to think, if he is able to wait, if he is able to fast.”Siddhartha, Hermann Hesse

My high school English teacher passed away several years ago. Before he passed, I had the chance to tell him that he had a profound impact on my life. After all, I write for a living, and it was his teaching more than anything else that enabled me to write reasonably good material fairly quickly, which led me to where I’m at now.

Another thing that he did for me that I don’t think he ever realized was that he opened my eyes to a much wider world of reading and the impact it can have on me. He introduced me to Henry David Thoreau, whose writing has had a profound impact on my life (see here and here and also a ton of my inspiration articles). He introduced me to Herman Melville, a writer I didn’t appreciate as a sixteen year old but whose works I devoured when I was in my thirties.

He also introduced me to Hermann Hesse, whose quote starts off this article. I remember diving into Hesse’s books during my last semester of high school, particularly a copy of Siddhartha with a bright blue cover, but also several others that I checked out from the library. I read every single Hesse book that my local library had (and could get) during the summer between high school and college and my dog-eared copy of Siddhartha went with me to college that fall.

A few years ago, I went through a period where I decided to re-read a fairly long list of books that I could recall having a major impact on my life. I made a long list of them and started snagging them from the library or downloading them for free from Project Gutenberg if they were old enough to be in the public domain.

Some of those books were still very impactful for me, while others were less so. Siddhartha, and several other Hesse books I re-read, were on the “impactful” side of the equation.

As I was reading through those books again, I copied down a lot of quotes that I wanted to think about, of which that quote at the beginning was one. I actually stuck the quote in a note to someday write about on The Simple Dollar, but it ended up getting buried in a pile of several hundred (yes, hundred) other ideas I have for articles, most of them half-baked.

A few days ago, I stumbled across it again, simply because I was searching through my notes for references to something else entirely. I found that note, opened it up, and the quote just rang out to me like a church bell on a quiet Sunday morning.

Think. Wait. Fast. That’s really all you need to do to achieve almost any financial goal, and almost any goal in life.


The thinking part of a goal is the process by which you turn a vague daydream into something concrete that you can actually achieve in life.

An idle daydream about being debt free or being able to live off of your savings or retiring early or paying for your child’s college education is pleasant, but it’s just an idle daydream, one that slides into your head and then drifts away just as easily. It’s pleasant, but it doesn’t really do anything.

Turning that daydream into a goal requires thought and planning.

What exactly is it that you want to achieve? “Paying for my child’s college education” sounds great, but how much will that actually cost? “Saving for retirement” sounds great, but how much do I need to save? “Losing weight” sounds great, but what’s the best way to actually do that? A good goal requires some research.

What is my target? What exactly is it that you want to do? This works best when it’s something that’s clearly a “yes” or a “no” when you’re checking to see if you’ve achieved it. Using a number is often useful, but you can also have a specific condition. For example, if you want to save for your child’s college education, what is the dollar amount you’re aiming for? If you know what tuition costs at a good university, maybe you’ll aim for four semesters of that tuition amount in their 529. Again, this builds off of the initial thought about the goal and

When is my target? Another key element is the end date for your goal. When do you want to achieve this goal by? Sometimes, it’s obvious – you want to achieve that college savings goal by the time that person starts college, or you want to achieve your retirement savings goal by the time you retire. Sometimes, it’s not so obvious – when is it that you want to be debt free? You can choose that for yourself.

Is this all realistic? If you know what you want to do and when you want to do it, you should check and make sure that the goal is realistic. You want the goal to be a bit challenging, but you don’t want it to be literally impossible. A good way to do a reality check on your goal is to break the dollar amount down into a weekly or monthly amount and see whether that makes sense. For example, if you’re aiming to pay off $10,000 in debt in two years, you’re aiming to pay off $100 in debt every week. Is that feasible?

What are your daily steps? A final major element in your thought process about goals is what that big goal translates into in terms of daily steps. I like to use a series of questions to help me figure it out if it’s not obvious:

+ What can I do this year to bring me closer to my big goal?
+ What can I do this quarter to bring me closer to what I need to do this year?
+ What can I do this month to bring me closer to what I need to do this quarter?
+ What can I do this week to bring me closer to what I need to do this month?
+ What can I do today to bring me closer to what I need to do this week?

The entire focus in terms of action, then, is that thing you need to do today. The entire plan hinges on that thing for today and nothing else. Then, each week, reassess all of those questions.

All of this requires a lot of thought. The idea is simply to bring that goal into focus so that you can actually see what effort you need to put forth today and how it relates to that goal as well as to discard half-baked ideas so you don’t throw your efforts away down an aimless path.


Big goals require a lot of patience. Almost every big goal out there has a timeline that stretches far beyond what feels “real” in our everyday life.

After all, if you could achieve a big goal in your life in just a few days, well, then you’d obviously do it. The reason that many people don’t achieve big goals is because of the wait.

For me, a key part of the wait is the part of the thought process above where I break things down into what I need to do today in order to achieve my goal, and then I make today’s element paramount. I try to avoid making the piece for today too big – it has to fit into my life, after all – but I do try to make it urgent and important. Doing that not only keeps me moving forward toward the goal, but it makes the goal feel real and tangible in my everyday life rather than something huge and outside the scope of my normal life.

I use a lot of different tricks to make today’s step toward a goal relevant, but the biggest part is that I remind myself of today’s step in the morning. One thing I do each day, early in the day, is to review my ongoing goals and make sure that there’s something in my day related to that goal. Sometimes it’s an addition to my to-do list; other times, it’s another step in a 90 day challenge.

For example, if I’m working on paying off my debts, today’s goal might be to “find one thing I can change to spend less money and execute it and put the saved money aside for an extra debt payment.”

If I’m working on saving for retirement, I might have a similar task, but with the goal of working toward a place where I can bump up my 401(k) contribution at the end of the month (meaning I need to be making a permanent or easily repeatable change).

Those kinds of things go on my to-do list. Other things are just reminders, like reminding myself to be more conscious about what I’m eating or to listen attentively when having conversations with people.

However, the most important ingredient over the long haul is patience. You have to be able to give it time, because most big goals simply can’t happen overnight.

There are a number of things you can do in your life to cultivate patience, beyond the techniques above:

+ Review your day during moments of downtime. How have things gone? What do you need to do the rest of today?
+ Intentionally do things with minimal distraction (a great step here is to start using “do not disturb” mode on your phone as often as possible, or even leaving it behind when doing things).
+ Take on “micro-challenges,” where you push yourself to do something pretty challenging for your goal today – a particularly hard daily step.
+ Ask three questions before making a statement when talking to someone. Whenever you’re conversing, make it a point to ask questions and listen rather than impatiently diving in with your initial idea.
+ Postpone impulsive splurges; if you want to splurge, put it off for another day rather than just saying “no.” You can even schedule it if you want, but don’t do it right away.
+ Plan ahead for big indulgences and enjoy the anticipation.
+ Chart your progress over time as you move from your starting point to your goal. This is really useful if you have a number to track, like your net worth or your weight or your planking time or whatever.
+ Focus on how far you’ve come, not on how far you have to go. You’ll generally buzz right through a honeymoon period with your goal, and then it’ll get tough. Rather than focusing on the distance ahead, look back at how far you’ve come and tie it to your efforts today. “I paid off $2K in debt in the last few months because I did something useful every day toward that goal; I can definitely keep that up!”
+ Take on a few long-term commitments. If you can commit to something that other people rely on that also nudges you toward your goal, that will help you keep moving forward and usually make it much easier to generate something to do today.
+ Pause before you take action and ask yourself if this really makes sense. Does this choice really help me out in terms of what I want out of life?
+ Remind yourself that mild discomfort is tolerable and doesn’t have to be immediately fixed. Your life doesn’t have to be constant comfort. (We’ll get back to this in a minute.)
+ Automate as much of your plan as you can so that impulsiveness doesn’t wreck your progress.
+ Find free hobbies to capture your attention so that you’re not tempted to always spend money.


Fasting simply means choosing to go without something in the short term in order to achieve some long term benefit. It usually applies to choosing not to consume food, but it applies to almost everything we buy or consume, from television to the internet, from hobby items to special treats.

Some people fast for spiritual or social understanding, as going without something important like food or drink can teach you a lot about the experiences of others and about yourself.

However, fasting in some form is often a key part of a long term goal. You’re usually giving up something that you consume, whether it’s money or food or time. Many 30 day and 90 day challenges are forms of fasting, where you’re agreeing to go without something that you regularly consume.

For example, let’s say that one element of fasting that you decide to take on is that you’re going to buy store brand items for everything from now on unless the product reveals itself to be problematic. At first, you’ll have to consciously remind yourself to buy store brand ketchup and store brand hand soap and store brand pasta, but as time goes on, that will begin to feel like the natural choice.

Fasting is often a dietary choice useful for weight loss. For example, many people choose to practice intermittent fasting as a weight loss strategy, in that they choose to only eat one meal a day or only eat during a six hour window each day.

Over a long period, fasting towards a goal should elicit some permanent changes in behavior. For example, I know several people who consciously practiced intermittent fasting and now feel most comfortable eating just one meal a day, along with perhaps one small snack.

Here’s the thing, though: fasting is hard. Going without something that you want, particularly when the want is incredibly strong and the thing you want is easy and harmless to acquire, is an intense personal challenge. This is often the piece that causes people to fail in their quests for financial improvement and other aspects of personal improvement. Think of the person that tries to be frugal for a while and then bounces right back to spending, or the person who diets carefully and then goes right back to eating a ton.

My advice is simple: if you’re fasting in order to help bring about a permanent change in your life or to achieve a big long term goal, choose principles of fasting that you can continue permanently. For example, if you’re trying to use fasting to diet, rather than looking for something that gives you some quick results that you can’t possibly sustain over the long haul, look for something less intense that you can sustain over the long haul that will still give results but a little less quickly. The same is true for spending changes: stick with realistic changes you can sustain rather than hyper-aggressive ones that you can’t pull off.

Not sure whether something is sustainable? That’s what a 30 day challenge is for. Stick to the change for 30 days, then assess whether it’s permanent or not.

Final Thoughts

Think. Wait. Fast. That’s really all you need to do to elicit real change in your life. Three words.

It seems simple and it is, but it’s incredibly hard to do. People constantly try and fail to achieve the changes they want out of life, not because they’re failures, but because change is hard. If it was easy, everyone would be millionaires with a perfect body and inner peace.

So what’s the trick? I think if there’s one trick to making think, wait, and fast work, it’s breaking things down into smaller pieces, trying them out, and then making sure the smaller pieces are realistically sustainable. That requires thinking, waiting, and fasting, but it leads to the strong possibility of permanent change and achieving the big goals you want.

Think. Wait. Fast.

You can do this.

The post Think. Wait. Fast. appeared first on The Simple Dollar.

A Deeper Look at 30-Day and 90-Day Challenges

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One of my favorite self-improvement tools, whether it’s for financial improvement or fitness or diet or moral improvement or whatever, is the 30-day challenge. It’s a tool I’ve used for years to nudge myself in a better direction and establish better habits in my life.

For those unaware, a 30-day challenge is simply a challenge to oneself to adopt some sort of lifestyle change for 30 days. It might be something very discrete, like “meditate for 15 minutes each day for 30 days.” It might be something like “eat only 1,800 calories a day for 30 days.” It could be something like “don’t speak negatively about coworkers for 30 days.” I wrote about financial applications for 30-day challenges in the past, and suggested 10 such challenges:

  • Challenge #1: For 30 days, make all of your meals at home.
  • Challenge #2: For 30 days, buy no name-brand items.
  • Challenge #3: For 30 days, don’t use a credit card for any purchases.
  • Challenge #4: For 30 days, don’t turn on the television.
  • Challenge #5: For 30 days, sell or get rid of one item from your closet each day.
  • Challenge #6: For 30 days, keep your thermostat five degrees cooler (or warmer) than normal.
  • Challenge #7: For 30 days, make your morning coffee at home and take it with you in a travel mug.
  • Challenge #8: For 30 days, don’t purchase any unnecessary possessions.
  • Challenge #9: For 30 days, brainstorm 10 gift ideas each day for a different person in your life.
  • Challenge #10: For 30 days, track every single dime you spend.

(If you want to know why some of these are financially helpful or want more details, I really encourage you to read the original article, The Power of the 30-Day Challenge.)

Most months, I do one or two different 30-day challenges. For example, this month, my challenge has been to eat vegan for breakfast and lunch each day for 30 days and to brainstorm 10 interesting short story ideas each day for 30 days. Sometimes my challenges are finance related, sometimes they’re diet related, sometimes they’re fitness related, sometimes they’re morally related, sometimes they’re hobby related… it could be anything.

However, what I’ve discovered over the years is that a 30-day challenge is virtually never long enough to actually set a permanent habit in my life. At the end of a 30-day challenge, I will invariably revert back to my previous habits and routines. At the end of this month (unless something changes), I’ll go back to a non-vegan breakfast and lunch, and I’ll go back to not brainstorming short story ideas.

The reason for this is that it takes much longer than 30 days to truly establish a permanent habit in your life. Depending on the study or the specific habit, it can take anywhere from 40 to 120 days to really make a habit permanent, and sometimes it can even take longer than that.

Sometimes, reversion to old habits is fine. There are many 30-day challenges that, once they wrap up, they’re done. For example, downsizing a wardrobe can’t go on forever because eventually you run out of clothes. There are other routines that you might want to do for a while and then drop, like generating short story ideas.

Sometimes, however, I really don’t want to revert back because I see the benefits of the new habit, but without a more persistent nudge, I revert back to old habits anyway. For example, a good exercise routine is a great 30-day challenge, but a person probably doesn’t want to revert back to being sedentary after the 30 days are over.

The reason is that many 30-day challenges are really just trial runs for new permanent behaviors. The idea of such a challenge isn’t necessarily to permanently set the hook of a lifestyle change (though that would be nice), but to figure out if such a change is really something you want in your life.

For example, do I want to eat a vegan diet for breakfast and lunch going forward? Is it really a net positive for me? Is buying all store brand items a net positive? Is turning off the television for good a net positive? That’s really what a 30-day challenge is about – answering that question.

So, what happens when that question is answered? What happens when you’re at the end of a 30-day challenge and you think this is a good change in your life, but you still need structure before it becomes a permanent habit?

That’s where a 90-day challenge comes in.

A 90-Day Challenge Isn’t Quite the Same as a 30-Day Challenge

It might be easy to just think of a 90-day challenge as being the same thing as a 30-day challenge, except three times as long. I’ve discovered over the last year or two that they’re actually very different animals.

First of all, a 30-day challenge exists to help you figure out whether a new habit is right for you, while a 90-day challenge intends to convert a very promising habit into a permanent way of life. The goal of a 90-day challenge is very different than a 30-day challenge. A 30-day challenge is about discovery or, in some cases, about completing a task. A 90-day challenge is about change – ideally permanent change.

Second, a 30-day challenge operates almost entirely within a “honeymoon” period, whereas a 90-day challenge goes far past that period. A “honeymoon” period is a period of time in which a new activity is quite fun because you’re discovering the nuances and enjoying the details. For many things, it fades after a few weeks, but a 30-day challenge is usually mostly or entirely within that honeymoon period.

A 90-day challenge goes far longer than that. Even more so, it’s often something you take on after a 30-day challenge, so you don’t have a “honeymoon” period at all.

A 30-day challenge has a short-term focus, while a 90-day challenge has a long-term focus. With a 30-day challenge, you’re evaluating the change you’re wanting to make. Is this working out for me? Is this something that’s a net positive in my life? How can I make each day better. A 90-day challenge is an attempt to make a positive change, probably one you figured out during a 30-day challenge, permanent. You’re trying hard to establish a new normal.

In my experience, a 30-day challenge is usually fun, while a 90-day challenge, especially the first 60 days or so, can be surprisingly hard. There’s no “honeymoon” to rely on and you’re trying to change your well-established daily habits, so you’re going to resist the change with surprising intensity. It’s not going to feel fun, though you might start seeing results that you like.

For me, however, sometime between day 60 and day 90, the resistance just fades away for most 90-day challenges and I just feel like it’s the natural thing to do. This assumes, of course, that such a challenge has been on an unbroken streak for that long. When that happens, the change is pretty much permanent. Your day will feel wrong if the new habit isn’t a part of it.

I started migrating slowly to 90-day challenges over the last year and a half, trying different approaches, and I feel like my challenges during the first quarter of this year were quite successful.

So, how exactly do I pull off a 90-day challenge? I need to start by talking a little about triggers.

Enter Marshall Goldsmith

The real key for understanding a 90-day challenge for me was reading the book Triggers by Marshall Goldsmith. I’ve already shared an in-depth review of Triggers, as well as a discussion of the key question asked by the book.

To summarize, Triggers focuses on how exactly people establish new habits. Goldsmith’s approach is that the key element in establish a new habit is genuine, honest intent and effort. His core idea is that if you genuinely try to do your best each day to establish a habit, even if you weren’t perfect at it due to the vagaries of the day, that habit will eventually become your new normal behavior.

The method that Goldsmith recommends for doing this is to adopt a daily routine of evaluating your habits. In the evening, you simply ask yourself, “Did I do my best today to execute this habit?” For example, you might ask yourself, “Did I do my best today to eat vegan before dinner?” or “Did I do my best today to avoid name brand products?” or “Did I do my best today to be positive in the workplace?” or “Did I do my best today to meditate deeply?” or “Did I do my best today to avoid using my cell phone except for necessities?” or… well, anything you want.

Goldsmith’s suggestion is to actually score yourself on a scale of 1 to 10 on whether you really did your best to execute that habit within the context of your day. In other words, what he cares most about is intent and effort, not perfect results.

Why is intent and effort more important than results? Let’s say you’re asking yourself whether you did your best today to eat a low calorie diet. Most days, it might not take a ton of effort to pull that off if you’re preparing your own meals. However, a couple of friends invite you out to dinner at a fancy (read: calorie-rich) restaurant. Did you go there and throw caution to the wind and dig into a pile of foie gras chased by several after-dinner drinks? Or did you eat really lightly before the dinner, choose relatively low calorie options, and keep your drinking to a minimum? In the latter situation, you really did do your best to keep your calories low and you can still give yourself a really good score for the day, even if you maybe went a bit higher than you might have otherwise intended.

Intent and effort is central because it overcomes the varieties in your days. Some days will be perfectly set up for you to knock your habit out of the park, while others might make it tricky. The more you intend to do things well and actually follow through on that intent, even if the results aren’t always equal, the more you are teaching yourself to apply this new behavior of yours in a variety of situations that come up in your life. You’re learning and locking in how to do this no matter what life throws at you.

For me, it’s that continuous effort and intent that really sets a habit. By nudging myself to constantly keep applying intent and effort to a particular behavior, it becomes pretty constant in my life regardless of how my day-in-day-out life is going. So far, most of the time, 90 days has been enough to really set a new behavior really strongly in my life.

So, what does this actually look like in my life?

A Concrete Example: Default Home Meal Preparation

While Sarah and I have long prepared most of our meals at home, I often felt like there were times where we ate outside the home because of convenience, and that was mostly due to poor planning. I basically wanted to eliminate that from my life, both for expense and health reasons.

So, I decided to adopt a new habit: I’m no longer going to eat meals I didn’t prepare at home unless it involves overnight travel, a social event or celebration, or a genuine emergency. If it doesn’t fall into that category, I’m eating at home. I wanted to feel like the absolute normal default mode for all food preparation is my own kitchen.

This actually involved a number of changes. Most importantly, it involved some more careful meal planning and thinking. What were the times when I would eat out for convenience? Why did that happen? What could I do otherwise?

I started off with a 30-day challenge for this last year, to see if I could go an entire month preparing every single meal at home except for the rare exceptions noted above. It worked out pretty well and I was happy with the results, both financially and nutritionally. So, I decided I wanted to make it into a permanent habit.

The first thing I did is that I printed off a single sheet, three-month wall calendar, like this one but of my own design with a large space for each day to write in.

Each morning, as part of my morning routine, I thought about my new habit. Today, I’m going to do my best to prepare all of my meals at home. After doing that, I put a little X in the corner of the day on that calendar.

As I moved through the day, I try to be a little bit aware of what my intention is; the morning reminder helps with that. If I think today might be tricky, I’ll put a reminder or two on my phone to nudge me at an appropriate time. The goal is to make things like preparing a picnic dinner or making myself a lunch to go feel completely normal.

At the end of each day, I simply asked myself did I do my best to prepare all of my meals at home? I’d grade myself on a scale of 1 to 10 on how I felt I did that day in terms of effort. Did I genuinely try to prepare all meals at home? If I felt I gave it true effort, regardless of the results, I’d give myself a good score; if I didn’t, I’d give myself a bad score.

Ideally, I wanted to have a chain of days where I honestly gave myself a score of at least an 8, and when a good chain was going, I wanted to keep it going. I’d see it in the morning when thinking about my goal and I’d realize that this was a good thing to keep moving forward.

However, the key to this was honest scoring. If I couldn’t honestly give myself a good score for effort, then I wouldn’t give myself a good score.

As the process wore on, day after day like this, a few things emerged.

For starters, if I was really committed to this change, I would rack up a lot of good scores for effort. That was always a good sign. On the other hand, if I was consistently unable to give myself a good score, it meant that I probably wasn’t as committed to this change as I thought and it deserved to be re-thought. Usually, a 30-day challenge beforehand weeds out the behavioral changes I’m not really committed to and exposes the ones I really want, but in at least one case, I found that I didn’t realize that I wasn’t really committed until well into the 90-day challenge.

Second, having a bad day here and a bad day there wasn’t a sign of failure. It didn’t mean that the goal was falling apart. Rather, it meant that I was learning how to deal with an unusual day; it was part of making that kind of effort normal no matter what life threw at me. Usually, a one-off bad day was almost always followed by a few very good days.

Finally, somewhere around day 70 or so, it started to feel incredibly automatic, like I was reminding myself to do something normal, like going to the bathroom. I kept doing it through day 90, but there was a point in there where the “normal” switch flipped in my head and this new behavior became the new normal.

That’s really the sign of success, I think. It’s the point where I can take the training wheels off and stick to this new behavior for quite a while.

This doesn’t mean that the behavioral change is permanent, just that it’s my new “default” life pattern. Things may get altered as my life changes over time, but for now, that new behavior is part of the path of least resistance in my life.

Final Thoughts

If you think a behavior change in your life is something you need to do going forward to put yourself in a better direction, start off with a 30-day challenge. Commit to that change for 30 days. You don’t need to have that much structure for just 30 days, as you’ll be going through a “honeymoon” period where you’re enjoying figuring out the changes and, besides, there’s an end date to all of this.

After the 30 days, evaluate whether this change worked for you. Did you get some of the results you wanted? Was it a net positive in your life? Do you feel like things will continue to improve if you stick with it and made it the new normal?

It’s okay if you conclude that the change isn’t the right fit for you. In those situations, I usually assume that there’s something that I do want to change in my life that’s similar to this – or else I wouldn’t have wanted to do the challenge – but not exactly this, and that means I need to give it some more thought.

If it feels like something you want to have permanently in your life, I strongly recommend doing a 90-day challenge, as described above, using some of the strategies from Marshall Goldsmith’s book.

I’ve done this exact thing – or a close variation of this – for several different habits and it’s been incredibly effective at bringing about change, better than anything I’ve ever tried. You can certainly do simultaneous 90-day challenges as well if you’re willing to dislodge a lot of your normal habits and routines at once; I can confirm that at least two can work well at the same time.

The system as I described above really works, at least for me. I intend to keep it up with a new habit or two on a quarterly basis for a while, and I have a couple of pretty intense ones in mind for the third and fourth quarters of the year.

Good luck! (And, yes, I expect to revisit this topic again near the end of the year when discussing financial and other New Year resolutions.)

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Questions About Extra 529 Money, Online Banks, Hoarding, Auto Insurance, and More!

sourced from:

What’s inside? Here are the questions answered in today’s reader mailbag, boiled down to summaries of five or fewer words. Click on the number to jump straight down to the question.
1. Trusting online banks
2. What are capital gains?
3. Evaluating a hoarder’s shed
4. Auto liability insurance help
5. 401(k) or 403(b)?
6. Turning weekends into vacations
7. Vegetarian and saving money
8. Extra 529 money
9. Frustration at slow debt repay
10. 90 day challenge question
11. Emergency fund with credit card?
12. College graduate and independence

Over the last few years, I’ve become aware of something that many parents face as their children grow up, something I like to call “May overload.”

Basically, every end of year event for anything your children have been involved with is scheduled at some point during the month of May, often on multiple days.

We’ve had end of the year band concerts, end of the year banquets, end of the year choir concerts, presentations, special dinners, and all kinds of things like this. With three kids in upper elementary and middle school, the last few weeks have been a tangle of scheduling and we don’t really feel like our kids are oversubscribed, something we’ve tried to avoid. Most of the activities they do are in-school things.

It feels like a genuine shift from when I was in school. It seemed like, although there were end of year activities, they generally didn’t involve the parents very much at all, and it didn’t really start until I was in high school.

I fully applaud the idea of parents showing support for their children’s endeavors, but it feels nearly overwhelming at times if you have kids involved in even a few activities. The idea of a “family dinner” basically disappears and you simply prepare slow cooker meals where people eat when they can, often in shifts, because the logistics of the evening activity calendar are so crazy.

Anyway, on with the questions.

Q1: Trusting online banks

I don’t understand how a person can trust an online bank with their money.
– Amy

For me, a bank is a bank. No matter what the bank is, I’m trusting it with my money. Nothing is stopping the brick and mortar bank in my community from just going out of business tomorrow and disappearing with my money except FDIC insurance, and the same is true with an online bank.

The way I look at it, the only difference between an online bank and a brick and mortar bank in my town, provided they’re both FDIC insured, is that one is paying for a building in my town and one isn’t. There are some advantages to having a building that I can just walk into, but for me that doesn’t cause any extra faith in their stability or long term trustworthiness.

My trust in that bank is in the FDIC, which is the insurance on my deposits. As long as I can verify their FDIC insurance, then I feel pretty confident about the safety of my deposits, and that’s true whether it’s an online bank or not. Really, at that point, the only difference is whether the bank owns or is leasing a building in my town.

Q2: What are capital gains?

What are capital gains? I don’t understand?
– Harry

A capital gain occurs when you buy something, it increases in value, and then you sell it. The amount that it increased is your capital gain on that investment.

Let’s say you buy a house for $100,000. You take good care of it and housing prices in your area are going up. A few years later, you sell it for $140,000. With that sale, you have $40,000 in capital gains.

You do have to pay taxes on your capital gains, but the reason capital gains are interesting is that they’re taxed differently than normal income. If you owned the item for just a short amount of time – less than a year – it is considered a short term capital gain and is taxed like normal income. However, if you owned the item for more than a year, it is considered a long term capital gain and is taxed at a significantly lower rate than other income – currently 0%, 10%, or 15%, depending on the level of your other income.

That’s often how wealthy people avoid paying a lot of taxes. Much of their income is often in the form of long term capital gains rather than normal income, so they pay a 15% tax rate on all of it. Compare that to someone earning a healthy normal income – they’re paying an income tax rate between 30% and 40% for much of their income.

Q3: Evaluating a hoarder’s shed

My father was a hoarder. He had an old storage building out behind his house that is just full of stuff, like 40-50 year runs of several magazines, tons of old toys, tons of tools, and all kinds of stuff. It’s all in crates and boxes and tubs. There’s a comprehensible order to it, but there’s just so much stuff here that I have no idea where to even begin and so I haven’t. It’s just kind of sat there while I’ve been renovating the house.

Part of me wants to just throw a match in it, but I think there’s a lot of value in that building. What would you do? My brother thinks I should hire a picker.
– Mark

If you don’t know how to assess the value of all of that stuff yourself and the task is going to be huge, you probably are better off hiring someone to help. However, it is very likely that anyone you hire will be seeking to find valuable items at a bargain price, so they’re at least somewhat likely to lowball you in terms of their estimate of what items are worth. That’s their business model – they’re doing a lot of legwork to find a little value.

So, you have a choice here.

You can start going through all of that stuff yourself, figuring out the actual values of all of the stuff and selling it to the best of your ability. That is going to be a large investment of time, but it will get you the best return on your money and you’ll reap the rewards of any really valuable items you find in there.

You can just trash all of it. That will require the least time investment for you but won’t return you anything. If you hire someone to do it, it will be relatively cheap.

Alternately, you can hire someone to go through all of it, whether it’s a picker who will likely go in there for free (in the sense that you won’t have to pay that person) but they’ll lowball you on the value or actually hiring someone to evaluate all of the stuff for you but you’ll likely have to pay them for the service and you may not break even there if there’s not a lot of value.

My choice would be to either start dealing with it myself or to just hire an antique picker and take what I could get with the understanding that I may be lowballed. If you go with a picker, I’d spend some time looking around for a picker with a good reputation – do your homework here.

Q4: Auto liability insurance help

I carry only liability insurance on my car. On Friday someone smashed into the rear end while it was parked. The car is still drivable but it needs a lot of work that I can’t afford. What can I do?
– David

If you didn’t already do this, I would take a ton of pictures of the damage and then try to find other recent pictures of your car prior to the damage. I would also contact the business that utilizes that parking area and/or the city and see if there is any video of that area during that timeframe so maybe you can see who hit your car. Do that immediately. You should also call the police and explain what happened.

Your only hope here is figuring out who hit you and also being able to demonstrate that you weren’t doing anything wrong and that there was damage done to your car. The best moment to do that would have been right after the accident – you should always start snapping pictures immediately in that situation and then contact nearby businesses and the city immediately after that. A police report will also help.

If you are unable to figure out who hit you, you’re just going to have to make do with what you have and consider this a learning experience. This is a great example of why an emergency fund is a wonderful thing to have.

Q5: 401(k) or 403(b)?

My new job offers a 403(b) but it sounds exactly like a 401(k). What’s the difference? Read some articles but it’s not clear.
– Brianna

The only difference that really matters at all to a worker who has a retirement account is that a 401(k) is offered by a business while a 403(b) is offered by a nonprofit institution. In terms of how they function for the employee, they’re basically identical.

In the past, there used to be some restrictions on the investments offered within a 403(b), but that restriction was lifted many years ago.

The only other difference I know of that matters to the individual is that in some 403(b) plans, there is a provision that allows older workers with more than 15 years of service to have a higher contribution limit, adding $3,000 per year to the limit until you’ve contributed an extra $15,000 under that extra limit, but 401(k) plans don’t allow such a window. This is only meaningful if (a) you have a 403(b), (b) you have more than 15 years of service, (c) you’re contributing enough to be hitting up against the contribution limit (which is $16,500 a year), and (d) your plan allows for it. In other words, it very rarely applies.

So, for your purposes, there is no difference. Treat your new 403(b) at your new workplace just like you treated your old 401(k) at your previous workplace.

Q6: Turning weekends into vacations

I was reading this article and thought that this seemed unrealistic for busy people but then I thought of you and how you “block off” time on weekends for uninterrupted leisure. Do weekends with big blocks of leisure time make Mondays better?
– Andrew

Absolutely. The only time Mondays are miserable is when the weekends are full of chores and obligations. When I intentionally make a weekend into a mini-“vacation” or at least get as many obligations as I can taken care of during the week so that I can have some big blocks of weekend leisure time, Mondays aren’t bad at all. It’s the weekends that are chock full of unwanted tasks and such that are miserable.

My preference is to fill every second I can during the week with something intentional. I don’t sit down and idle during the week, no time spent playing a smartphone game or watching TV unless there’s some other strong reason for doing so. Instead, I do something, whether it’s a household task or a work task or a parenting task or whatever. If I feel too “tired” to do it, then I go take a nap or go to bed so that I can wake up refreshed.

Does that sometimes make the weeks feel really long? Sure, it does, sometimes. However, I go to bed feeling like I got a lot done, and I also feel anticipation for that entire Saturday coming up where I can devote the day to something fun I’m looking forward to.

Q7: Vegetarian and saving money

I understand that if you eat mostly at home and are vegetarian it can be cheaper because buying burgers and steaks at the store is expensive compared to veggies and rice and stuff, but when I eat out it seems at least as expensive to be vegetarian as not and usually more so since there are usually only a few vegetarian items on the menu. You either eat like a side salad or fries or one of two way overpriced entrees.
– Brian

I largely agree with all of that, except that the restaurant situation is changing. This was even more true ten or fifteen years ago.

There’s also the issue that a lot of it has to do with where you choose to eat. For example, if you’re in a situation where fast food is your only option, most “Mexican” fast food places (like Taco Bell) actually cater extremely well to vegetarians, and quite cheaply, too. The last time I ate at Taco Bell, I ate the cheapest of the four people I was with.

If you’re eating at a typical dine-in restaurant, it really depends on where you’re eating. I fully agree that most restaurants in America are meat-focused when it comes to their entree selection, but, again, that seems to be slowly changing, not in that they’re abandoning meat-based meals, but that they’re adding more vegetarian-focused options. Some restaurants and chains are definitely better than others, though; in terms of chains, places like PF Chang’s and the Cheesecake Factory are really good in terms of vegetarian foods.

Still, I agree that it’s cheaper to do it from home, but that’s true for every kind of diet. The only time eating out seems on par with eating at home is when you’re comparing, say, a dollar menu fast food burger to a homemade burger, and that’s not even a fair comparison because the quality of the homemade burger blows away the fast food burger.

Q8: Extra 529 money

What’s the best thing to do with extra 529 money? I am graduating in December and will have about $6,000 left in my 529 when I do. I got several scholarships and finish in under 3 years.
– Mark

I would suggest either spending it on something you can continue to use after college or to hold onto it in case graduate school enters your picture.

If you don’t have a current computer and can see yourself using one in the future, this might be a good time to buy a solid computer that will last you for several years. You can use it for your final semesters in college and then continue to use it after graduation as needed.

If you think there’s any chance of going back to school after graduation, you can hang onto that money for that potential future. Graduate school? Going back for a different degree? 529 money is there for both.

You can also simply sit on it until you have children of your own, then change the beneficiary to your child. This will incur a gift tax situation, but the gift tax exclusion limit is currently $14,000 and will likely go up, so it’s very likely that with $6,000 in the account, the transfer will fall under the gift tax exclusion and not be a problem.

Q9: Frustration at slow debt repay

At the start of the year, I decided to get rid of credit card debt. I had about $9K spread across three cards. I did all of the usual stuff, like moving balances around to get lower interest rates, but it’s now mid May and I live like a hermit and I still have $7.5K in debt. Getting old.
– Violet

Here’s the thing: you’ve already done the hardest portion of the repayment. You’ve covered the first 1/6th of the debt, which may not seem like much, but it’s bigger than you think.

Let’s say your debt, on average, is at a 20% interest rate. Your monthly minimum payment on that debt is going to be about $158, by my back of the envelope math. If you’ve made 5 payments and the balance has dropped to $7.5K, that means you’re making roughly double payments – about $300 a payment.

If you were making normal payments, it would take you fifteen years to pay off that $9K in debt. Because you’ve made double payments and will, in theory, keep making them, your debt will be paid off in about twenty seven months total, or about 21 months from now.

Yes, it seems like a long time, but you’ve cut 15 years of debt payments ahead of you down to less than two years ahead of you. Even if you switched back to just paying the $158 minimum each month right now, the whole thing would be gone in less than 8 years instead of the 15 it would have been if you were making normal payments. That’s how big your impact has been already.

Keep it up. That debt will be gone before you know it.

Q10: 90 day challenge question

Do you line up 90 day challenges with yearly quarters? Also how do you handle vacations or other exceptional situations?
– Anne

So far, that’s exactly what I’ve done. I start 90 day challenges at the start of a calendar quarter, meaning at the start of January, April, July, or October. The first quarter is exactly 90 days in non-leap years, and the other quarters are 91 or 92 days, so they fit really well.

As I discussed in the 90 day challenge article, my focus with a 90 day challenge is intent and effort above all else. If I want, say, healthy eating to become a lifetime habit, that means I need to practice how I’m going to eat healthy while traveling. If keeping my spending low is a lifetime habit, then I need to practice how to do that when travel is involved. This is true for any unusual situation – they’re not “breathers” to let me “cheat.” Rather, they’re opportunities to really master how a permanent lifestyle change is going to work in this situation.

In fact, I find that when my routine is mixed up and I have to really rely on good intent rather than routine, it seems to “set the hook” of the new habit really well for some reason. If I really hammer home that a particular habit is important when life is mixed up, it’s more likely to stick with me, it seems.

Q11: Emergency fund with credit card?

Don’t understand why you would encourage people to have money in a savings account at 1% when they have credit card debt at 18%.
– Mark

Simple: because those credit cards are unreliable in a genuine emergency. In an emergency, cash is king.

Let’s say you have a real disaster in your life and your credit card is suffering identity theft. What happens then? You need cash.

Let’s say that your mother is gravely ill in another state and your credit card is maxed out. What happens then? You need cash.

Let’s say that your credit card is cancelled because the bank decided to purge troubled accounts. What happens then? You need cash.

Cash is king. Cash solves real life problems.

In a bubble where emergencies didn’t happen, I would fully agree with you. In a perfect world where you always have spare breathing room on a credit card and identity theft never occurs, I would fully agree with you. However, that’s not the world we live in.

Q12: College graduate and independence

We have three children – oldest just graduated college, middle in college, youngest finishing up sophomore year in high school. We told the oldest that he could move back home until he finds a job provided he’s consistently looking for one and after that we’d talk about it. He already has a bunch of interviews in the next two months in various places, some nearby and some in other cities. My husband and We are trying to figure out what to do when he gets a job if it’s local. He has about $40K in student debt and is interviewing entry level positions that will pay $50-60K. He should be able to afford rent on his own. I am in favor of allowing him to live here for a while with cheap rent but my husband is strongly in favor of nudging him out the door. Thoughts?
– Mary

I think this is more of a parenting question than a personal finance question. In situations like this, I think the best solution is conversation. I’d just sit down with your son and ask him what he envisions for the future. Ask him what he thinks he’ll be doing in a year. Where will he live? Where does he hope to be working?

There’s a good chance that he intends to move out as soon as he’s settled in a job, in which case this is kind of a non-issue. If he doesn’t intend to move out for a while, that’s when you and your husband need to have some conversations. Are you going to force him to move out? Are you going to charge him rent?

My feeling would be that if you have a good, trusting relationship and he wants to live there for a while as he’s getting used to professional life, you can consider charging him rent and letting him stay for a while. You can also consider putting the money aside when he pays you and then giving it all back to him when he does move out, or you can actually use it for household expenses. It’s really your call.

The much more difficult challenge for you is what you should do if he doesn’t get a job. I would assume you’re planning on letting him stay there until he secures a job and then for a little while after that at least, but what if he doesn’t get a job for months or years?

Sarah and I have already discussed this and our plan is that our children can live here rent free after college provided they’re actively searching for work. If they’re not looking for work in their career path, then they need to find a service job and start paying rent. Our intent is to hold onto it and give it back to them in a lump sum when they move out, as the rent is really just a tool to get them to start making choices. However, this does assume a healthy and trusting relationship will exist with them at that point.

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

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How to Pick Your First Homeowners Insurance Policy

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Purchasing your first home can be an overwhelming process, one fraught with emotion and a seemingly endless stream of paperwork and documentation.

For many people, a home is the most significant purchase of a lifetime, making it even more critical to protect this investment with a thoughtfully chosen homeowners insurance policy.

While homeowners insurance isn’t mandated by law the way car insurance often is, most mortgage lenders require that a policy be in place before closing on the home.

But how is one to weed through the myriad options available, obtain a reasonable price, and find a reliable company? We asked industry experts to weigh in.

Shop around, and start early.

First and foremost, it’s important to shop around. And start doing so early in the home buying process, not at the last minute.

“A lot of buyers wait until the end of the loan approval, appraisal, and inspection process to start looking and then they’re in a bind and need something fast,” said Missouri-based agent Justin Strong. “When this happens they usually end up going with something cheap that might not be the best fit for what they actually need.”

Doing your research ahead of time, on the other hand, allows you to develop a sense of what the going rates are as well as the various coverage options.

To compare costs, you can call individual insurance carriers one by one and obtain quotes, work with an independent insurance agent who can do that legwork for you, or use one of the many online price comparison platforms, suggests Fabio Faschi, property and casualty team lead at Policygenius. The latter two options will save you time — and time is valuable as you’re getting ready to close on a new home, noted Faschi.

Understand the various policy types.

As you’re shopping around, it’s also important to have a grasp of the types of homeowner policies available.

The options have names such as HO-1; HO-2; HO-3; all the way up to HO-8, explained Katie Tu, an insurance specialist at QuoteWizard. HO-1, for instance, is a basic policy, while HO-8 is designed for older homes.

“Homeowners insurance is not one-size-fits-all and each form has different coverages included with it,” Tu explained, adding that HO-3 is a common choice among first-time homebuyers, as it covers more perils than the very basic HO-2.

A less comprehensive option, often referred to as a “named perils” plan, HO-2 covers a specific list of problems including such things as fire or lightning, smoke, theft, vandalism, windstorms and hail, damage caused by vehicles or aircraft, and more.

Those who want protection that extends beyond the specific problems outlined in HO-2 policies may want to consider HO-3, which typically covers all risks except those specifically excluded.

It’s a good idea to discuss the options with an agent who can help decide which is the best fit for you, said Tu.

Know what determines your rate.

A variety of factors will impact your ultimate policy premium. They include such things as your home’s value, location, the coverage level you choose, and even your credit score, says Tu.

Still other items that play a role in the policy’s cost include the building materials used to construct the home and the age of the property.

“Brick homes could receive lower premiums compared to a wood-sided home because of the reduced risk of a fire hazard, collision damage, or structural collapse,” Tu explained. “When your home was built could determine if the wiring and plumbing has been updated to general building code. Aging components are prone to wear and tear, thus presenting an increased risk. Older homes are also prone to asbestos or lead paint. Overall, if a home is viewed to be riskier to insure, the premiums are likely to be higher.”

The key takeaway is that there are many items beyond your control that impact your home insurance cost — and there are also variables you can control when selecting a policy.

To bundle or not to bundle?

Bundling is one of the choices you can make to lower your home insurance premiums. Most insurance companies offer multi-policy discounts, making it a good idea as you’re shopping around to check in with the company where you may currently have car insurance or other types of coverage.

Bundling your home insurance with your auto or life insurance may lower your rate up to 25%, says Tu.

However, just because you have an existing auto or life insurance policy with a particular company doesn’t mean it’s the best company to provide your home insurance. It’s still important to ask questions and consider other providers as part of your research process.

“The company that you’re using for life and auto insurance may not be able to offer a better price on your home insurance even with the bundle discount, or they may not be able to insure your home like it needs to be insured based off of the type of home it is,” explained Strong.

“Not all companies can write every type of home,” he added. “Some companies don’t write mobile homes or maybe they don’t write homes that are built prior to 1970 or they don’t write homes that have roofs that are over 10 years old.”

Settle on a deductible.

The deductible is another area that can impact your policy’s final cost. For the uninitiated, a deductible is the amount of money you will be responsible for paying out of pocket if you have a loss. For example, a $1,000 deductible means you’ll pay the first $1,000 toward repairing a covered loss, and the insurance company will pick up the rest.

In general, opting for a lower deductible typically increases the overall cost of the policy, while higher deductibles will often reduce the cost of your policy.

It’s also important to note that some policies will list deductibles as a percentage. In addition, some may have multiple deductibles. If you live in a hurricane-prone area for instance, your coverage may have a separate hurricane deductible, said Seth Miller, a licensed insurance agent and sales director at InsuraMatch.

The bottom line?

“Pick a deductible you would be comfortable paying in the event of a loss,” said Miller. “If paying $1,000 out of pocket would be a significant hardship, then it makes sense to opt for a lower deductible. The caveat there is that the premium will be higher.”

Understand the difference between market value and replacement value.

When determining just how much coverage you want to pay for, it’s critical to know the difference between your home’s market value and its replacement value, and why that even matters.

“First and foremost, be educated. Understand that a bank appraisal will not determine the amount of coverage you actually need,” explains Mildred Ayala, first vice president of private client services at HUB International Northeast, a personal insurance practice.

Market value is typically the amount that you can sell your home for, and that price takes into consideration such factors as the size of the property, the school district, and more, said Ayala.
Replacement value, meanwhile, is purely the cost to rebuild your home back to what’s known as “pre-loss condition,” using materials of like kind and quality. If your home is destroyed by fire, you’ll need to rebuild – but that doesn’t mean you need to repurchase the land it sits on.

“When you insure your home to value, which is required by most insurance carriers, the policy will provide guaranteed replacement in the event of a loss,” said Ayala. “In other words, if there is a total loss, the company will pay the full amount to rebuild the home.”

Know what the policy does not include.

Keep in mind there are certain risks and events that homeowners insurance doesn’t cover, notes Tu, of QuoteWizard. For example, standard policies typically do not cover floods or earthquakes.

“If you’re in an area that may be prone to such disasters, you’ll have to consider getting separate insurance for that,” she explained.

Many policies include some coverage for items like computers, firearms, and jewelry, but it’s a good idea to review and confirm the limits your policy includes for these additional items, said Kimberlee Leonard, insurance analyst for Fit Small Business.

“If the policy’s jewelry limit is $5,000, but your engagement ring is valued at $15,000, you will need a different policy to protect the ring from loss, called a Personal Articles Policy,” said Leonard.

If you’re working with an independent insurance agent, have the agent explain what you’re purchasing. The goal is to make sure you’re getting a good policy that will cover your needs in the event of a claim.

“Not all policies cover everything that can happen to a home, so make sure to ask many questions about what is covered and what isn’t,” said Strong.

Research the financial strength of the insurer.

It’s also a good idea to review an insurance provider’s financial strength. In other words, can you be confident that the company will be able to meet its financial obligations?

There are various organizations that analyze a company’s financial solvency and issue an associated rating, explained Strong.

AM Best is a common organization that will issue financial reports for insurance companies,” said Strong. “There are also other companies that will issue reports depending on the size of company. For instance, Standard & Poor’s issues reports for companies that are larger in size.”

Smaller single state or regional insurance companies may not be included in such rating criteria. But Demotech issues reports on companies that are smaller in size, said Strong.

Find the right balance between price and protection.

Ultimately, when shopping for home insurance, the goal is to work toward the right balance of price and coverage, as the lowest price often doesn’t equate to best purchase, says Tom Schwarz, executive director for Military United Insurance.

“Understand what you’re buying and make sure it’s appropriate for your situation,” said Schwarz.

What’s more, you can always change your selection as you continue to shop around, says Leonard.

“Just because you send the [mortgage] lender a quote from one insurance agency doesn’t mean you can’t shop for a better rate while the [closing] deal is still being done,” said Leonard. “Keep the process moving with a quote, and update it if you find a better deal.”

Mia Taylor is an award-winning journalist with more than two decades of experience. She has worked for some of the nation’s best-known news organizations, including the Atlanta Journal-Constitution and the San Diego Union-Tribune. 

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The pink tax: The hidden cost of being female

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Women working to achieve financial independence face an extra hurdle: the hidden cost of being female.

Though it’s cheekily referred to as the “pink tax”, the additional cost women incur for personal-care products, toys, clothing, dry cleaning, health care, mortgages, and vehicle maintenance is no joking matter. It inflates our budgets, limits our ability to save, and sometimes hinders our ability to access affordable and safe sources of credit.

Based on that semi-intense description of the pink tax, you may think it’s already been made illegal to charge someone more on the basis of their gender. But that’s not true. There’s no federal law prohibiting companies from charging different prices for products that are identical (or very similar), but which are marketed by gender. At least not currently.

Only one U.S. municipality — Miami-Dade County — has banned this practice. California enacted a similar restriction in 1995, but it applies only to the pricing of services. New York City followed in 1998.

On top of the pink tax, women still earn less than their male counterparts. The average woman is paid 82 cents for every $1 her male colleagues earn; the discrepancy is much worse for women of color.

When you’re paying more for basic goods and services from birth until death — just because you’re female — it’s easy to understand why so many women are pushing to “Ax the Pink Tax”.

The Pink Tax: The Hidden Cost of Being Female

What Is the Pink Tax?

Twenty-five years ago, in 1994, the State of California studied the issue of gender-based pricing. They found women pay about $1300 more each year for the same services as men. Accounting for inflation, that figure is now closer to $2135 per year.

If that figure doesn’t shock you, maybe this will: By the time a woman turns 29 (like me), she’ll have spent an estimated $39,203 on the pink tax alone! Can you imagine how much money I could have right now if I’d put the money I spent on the pink tax in a savings account? Especially one with compounded interest!?

In 2015, the New York City Department of Consumer Affairs (DCA) published a report on the pink tax entitled “From Cradle to Cane: The Cost of Being a Female Consumer”. The report found that women’s products cost more than men’s products 42 percent of the time. 42 percent! By comparison, men’s products cost more than the female version 18 percent of the time.

According to the DCA report, products for female consumers were likely to cost more across industries:

  • Girls’ toys cost more 55 percent of the time, while boys’ toys cost more 8 percent of the time.
  • Girls’ clothing cost more 26 percent of the time, while boys’ clothing cost more 7 percent of the time.
  • Women’s clothing cost more 40 percent of the time, while men’s clothing cost more 32 percent of the time.
  • Women’s personal-care products (shampoo, conditioner, razors, lotion, deodorant, body wash, and shaving cream) cost more 56 percent of the time, while men’s products cost more 13 percent of the time.
  • Senior home health-care products (supports and braces, canes, compression socks, adult incontinence products, and digestive health products) cost more for women 45 percent of the time and cost more for men 13 percent of the time.

Nowhere is the pink tax more evident than when it comes to personal-care products. Personal-care products geared toward women cost approximately 13 percent more than similar products marketed toward men.

Similarly, women are financially penalized for having their menstrual cycle. The U.S. government has deemed menstrual products a “luxury item” despite the fact that menstrual cycles are a monthly reality for all women, not a “luxury”.

For comparison: Prescription and non-prescription drugs and medical supplies are exempt from sales tax. This includes aspirin, DayQuil, ChapStick, gauze, Viagra, and condoms.

But all hell breaks loose if an end to the tampon tax is proposed – even though a study published by the American College of Obstetricians and Gynecologists found that two out of three low-income women in the U.S. couldn’t afford menstrual products at least once each year. The study also found that tax breaks on tampons are extremely beneficial for low-income women.

Despite this growing body of research that it costs way more to live as a woman than a man, proposals to eliminate tampon taxes or other pink taxes don’t get very far.

In New York, where a tax on menstrual products was eliminated, the state has recorded a $14 million loss in tax revenue as a result. In California, former Gov. Jerry Brown vetoed a bill in 2016 that would have eliminated the state’s tampon tax for fear that the state would lose $20 million in annual taxes.

The Pink Tax in Action

What does the pink tax look like in action?

At Target, a red Radio Flyer “My 1st Scooter” marketed at boys retailed for $24.99. The “My 1st Scooter Sparkle”, the same Radio Flyer but painted pink with glitter, retailed for $49.99.

Pink Tax - Radio Flyer

Until, that is, the DCA study came out.

When questioned about the price difference between the two Radio Flyer scooters, Target referred to the extra $25 cost of the pink scooter as a “system error”. The retailer now sells both scooters for $29.99.

Even children’s short-sleeved uniform t-shirts showed a gender price difference, with boys’ tops retailing for $10.95, while girls’ tops retailed for $12.95. Anyone have a clue why the girl version costs $2 extra?

Pink Tax - Uniform Shirt

The gender-based price difference is even more blatant when it comes to adult clothing.

Women’s clothing costs more than men’s clothing in six of seven categories! The only category where men pay more than women is underwear – men typically pay $2.44 more for underwear than women. However, women are paying more than a $2.44 difference when it comes to dress pants, dress shirts, sweaters, jeans, shirts, and socks.

Pink Tax - Abercrombie and Fitch

It’s not just retailers though that pass along costs onto female consumers, for really no other reason than to boost their own bottom line. It’s also service providers like dry cleaners and car repair shops that are guilty of charging women more than men.

Suzanne McGee knows all too well the additional cost that’s incurred when a female goes to the dry cleaners. “I’ve been hit with the pink tax again,” she wrote in a column for The Guardian. “I knew it was coming; I should have been prepared with better arguments. But I couldn’t avoid it…I ended up getting charged $7 for cleaning my ‘female’ shirt and not the $3.25 a man would have been charged.”

To prove her theory, McGee had a male friend return to the dry cleaner with an identical shirt to see how much he would be charged to have the same plain, cotton, long-sleeved shirt dry cleaned. McGee’s male friend was charged just $3.25, while McGee had been charged $7 to dry-clean the same top.

Mortgages, Cars, and Loans

While it’s illegal for your gender to play a role in determining your mortgage rate, there’s a slew of studies showing women pay higher mortgage rates than men in relation to their risk of defaulting.

According to a report in the Los Angeles Times, because income was once a determining factor in one’s ability to obtain credit, women were often denied as a result of earning less than men.

A similar trend was found in the small loans market. Studies found that women were rejected more than men when applying for loans. When women were approved, they were given smaller loans, but because so many women feared being rejected, most didn’t apply for loans in the first place, the Times reported.

A similar occurrence happens in the auto industry.

It sounds cliché, but a study from Northwestern found that women who acted uninformed when asking about having a radiator replaced were charged more. Women were quoted at $406 for a service that should cost around $365. Men who acted unfamiliar with the repair, just as the women had done, were quoted $383 for the same service, the study found.

No Evidence of Discrimination?

In 2015, New York officials concluded that because the pink tax is largely unavoidable, it’s a “greater financial burden for female consumers than for male consumer”.

Consumers don’t control the textiles or ingredients used in the products marketed to them, the DCA report noted. Additionally, consumers can only make purchasing decisions based on what’s available in the marketplace.

However, a report from the Government Accountability Office (GAO) concluded differently.

Because there isn’t a law preventing companies from charging different prices for men and women’s versions of products, and companies have a legal right and responsibility to maximize profits, the GAO couldn’t conclude the gender price disparity was unfair.

The GAO even argued that “it’s up to consumers to understand any price differences”.

I may have been able to let that ill-informed conclusion slide if they hadn’t added this part: Concerns about gender discrimination were not studied due to “very few complaints”.

Stop Paying the Pink Tax!

Until the gender pay gap and gender tax are eliminated, is there anything we can do to try to level the playing field economically?

To start, you can choose to purchase the men’s version of many personal-care products in order to save money. Or, if you’re like me and prefer to stick to feminine versions, many female-centric online retailers now offer pink tax-free personal-care products via subscription services. This way you can save money and still enjoy a pink razor.

The other thing we can do is use our voices on social media especially to speak up.

When you’re shopping, check to see if there’s a price difference between the women’s and men’s versions. If there is, look to see if the size and ingredients are comparable. If they’re the same, take a picture of both products and use the hashtag #AxThePinkTax.

Some companies who’ve become aware of the price discrepancies of their own products have made changes to level the economic playing field.

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