Month: May 2019

Big pleasure from small things

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Hello, friends. I have returned from France and recovered from jetlag. (I’m not good with jetlag.) Later this week, I’ll publish an article about how much my cousin Duane and I spent during our ten-day drive across Normandy and Brittany, but today I want to share one small epiphany I had on the trip.

J.D. geeking it up with Proust stuff

I am a Proust nerd so was happy to stumble upon Combray

Midway through our excursion, we heeded a recommendation from a GRS reader and stayed the night at the Royal Abbey of Our Lady of Fontevraud, a former monastery founded in 1101. Although many old buildings remain (and guests are free to explore them), the site is no longer an abbey. It’s a fancy upscale hotel and a Michelin-star restaurant.

Duane and I typically prefer to stay in simple rooms when we travel. We don’t need fancy. For us, a hotel is a place to sleep, not a place to be pampered. Our aim is to spend less than €100 per night (or €50 per person). We do make exceptions, though. (On this trip, we also paid extra to stay the night on Mont Saint Michel.)

In this case, we thought the hotel was nice and modern, but at $193.57 for the one night, we wouldn’t do it again. That’s way too expensive for us. And the restaurant was even more expensive.

Duane would have been perfectly happy eating crepes or galettes (which are savory crepes) at a regular restaurant in the nearby village, but I’ve always wanted to eat in a Michelin-star restaurant, and this seemed like a perfect opportunity. I mean: It was right there in the same building as our hotel.

“I’ll pay tonight,” I told him. “Ignore the prices. I’m making a deliberate decision to do this. You just enjoy the meal. Don’t worry about the cost.”

We did enjoy the meal. It was a fixed menu at a fixed price, although we could add options. (Duane added mushrooms and I added a cheese plate.) The food was fun and fancy. Here for instance, is the pea soup with “bread”:

Fancy soup at a Michelin-star restaurant

Pea soup with “bread” as a first course

In the end, I spent $267.41 for our meal. That’s the most I’ve ever paid for a meal in my life. But was it the best meal of my life? No. It was good — don’t get me wrong — and I loved experiencing how a superstar kitchen combines flavors, but this wasn’t even in the top twenty meals I’ve ever eaten. There are several restaurants here in Portland that I’d prefer to dine at, and they cost much less.

But I don’t mean to grouse about how little enjoyment we got for the money we spent. Just the opposite, in fact.

When we reached our hotel room after a long day of driving, I needed to freshen up before dinner. I went to the bathroom to wash my face. “Wow,” I thought as I scrubbed down, “this soap smells amazing. I love it.” This is a strange thing for me to think. I’ve never had positive feelings for soap before in my fifty years on this Earth.

When I’d finished, Duane took his turn in the bathroom. “Did you smell that soap?” he asked when he was done. “It smells like wood and smoke and spice. It’s fantastic.”

“I thought same thing!” I said. “I’d buy some. Maybe we can find it when we get to Paris.”

“We sound like a couple of gay men,” Duane said and we both laughed. (He can get away with jokes like that because he is a gay man.) We forgot about the soap and went to dinner.

In the morning, as we were checking out, we noticed that the soap was for sale in the hotel lobby. On a hunch, I googled the manufacturer. Sure enough: The soap was produced by a small company only three kilometers away.

“Let’s go buy some soap,” I said. We hopped in our rented Peugot 208 and made the short jaunt to the soap factory, Martin de Candre.

Sidenote: We knew nothing about the Peugot 208 before we picked it up at the rental company. Turns out, it’s an awesome little car. France is filled with awesome little cars. Unfortunately, none of them are available in the U.S. because the car manufacturers don’t think they’ll sell well. Americans like big trucks and SUVs. This makes me sad. I’d gladly purchase a Peugot 208 as my next vehicle.

We spent about half an hour looking at (and smelling) the different soaps. A friendly French woman answered our questions and taught us how to better get a sense of each soap’s scent. (“You need to step out of the shop,” she said, “and let the soap get warm in the sun. Then you’ll know how it really smells.”)

In the end, Duane spent €20 on soap. I spent €40. We both believe it’s money well spent.

Fancy soap in rural France

Fancy soaps for sale in rural France

“I can’t believe I just made a side trip to buy soap,” I said as we resumed our journey toward Amboise. “But I feel like this is a small thing that will improve my quality of life. Kim and I currently use watered-down liquid soap from a dispenser. I don’t like it. Now when I come in from working in the yard, I’ll actually enjoy washing my hands. It sounds stupid, I know, but it’s real. Plus, it’ll remind me of France and this trip with you.”

“It doesn’t sound stupid,” Duane said. “There are lots of small things that make life better. I don’t think we pay enough attention to them. Sometimes you can get big pleasure rom small things. More pleasure than from big things, in fact.”

“Do you really think so?” I asked.

“Sure,” he said. “Think of your brother Jeff. He likes gourmet coffee. I’m happy with a cup of coffee from McDonald’s but he’s not. Every morning, he gets a lot of joy from a fancy cup of coffee. For me, I enjoy having a clean car or a clean house — especially since I don’t clean either one very often. I’ll bet you can think of all sorts of similar examples.”

As we drove, I thought more about the pleasure we get from small things. Duane is right. There are certain tiny actions and objects that make my life better. Here are some simple examples:

  • I like using everyday items I’ve purchased while traveling: band-aids, jackets, t-shirts, underwear, etc. I like being reminded of my trips.
  • I wear two cheap turtle necklaces. I bought one for ten bucks in Hawaii. I bought the other for two or three bucks in Ecuador. I love them.
  • Like many people, I have a favorite mug. I also have a favorite whisky glass. Each probably cost less than ten bucks, but they make me happy whenever I use them.
  • Kim and I own several pieces of art produced by family and friends. None of these was expensive. (Some were given to us free.) We enjoy having the constant reminder of their creativity.
  • One of the reasons I enjoy gardening is that every year these inexpensive plants bring my pleasure in a variety of ways: pretty flowers, tasty fruit, vegetables for meals I prepare.
  • Most of all, I love to walk. It costs me nothing but gives me so much. I like being outside. I like exercising. I like the time for meditation.

It occurred to me that these are examples of conscious spending in action. When we identify small, inexpensive items and behaviors that make us disproportionately happy, spending on them allows us to get more bang for our buck. This also what Marie Kondo means when she talks about only keeping possessions that “spark joy”.

I’m unlikely to ever again in my life be so enthusiastic about soap. But I’m glad that Duane and I allowed ourselves to make a small side trip to buy this stuff. Now that I’m home and have the soap in the bathroom, it really is a small thing that gives me big pleasure. (Fortunately, Kim likes the smell of the woodsy soap too.)

The post Big pleasure from small things appeared first on Get Rich Slowly.

Tips for Getting a Mortgage

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Obtaining a mortgage can be one of the most stressful and exhausting parts of the homebuying process.

Since the subprime housing crisis and the market crash that kicked off in 2007, mortgage applications and reviews have been more detailed and rigorous than ever, requiring seemingly endless paperwork and extensive income verification.

There are also many variables to consider when shopping for a mortgage that can impact the success of the entire process and ultimately how much you spend — not only to obtain the mortgage, but on your home over the long run.

To help first-time homebuyers navigate all of these hurdles successfully, we asked mortgage industry experts to share their top tips for obtaining a mortgage.

1. Gather your documentation.

First things first: Given all the documentation requirements associated with the mortgage process, do yourself a favor by getting your financial paperwork in order at the outset, says Chase home lending advisor Michele Hammond.

Key items to pull together include recent pay stubs, tax returns, W-2s from your employer, and bank statements from all savings and checking accounts, as well as from any investment or retirement accounts.

You’ll also need to provide a Form 4506-T, which is an Internal Revenue Service (IRS) document used by lenders to retrieve past tax transcripts that are on file with the IRS, said Hammond.

Self-employed applicants will need to provide two years of tax returns and their most recent profit and loss statement showing revenues, costs, and expenses during a fiscal year.

2. Get your financial house in order.

In addition to merely gathering paperwork, it’s a good idea at this stage to get yourself in top financial shape so that lenders view your application more favorably, adds Hammond.

Improving your financial profile involves a variety of elements. For starters, avoid carrying excessive debt.

“Your debt-to-income ratio is an important factor that lenders consider when looking at your fitness for a loan,” Hammond explained. “Reducing debt can make your finances look more attractive.”

To assist with minimizing debt, eliminate any unnecessary monthly expenses beyond housing, Hammond continued. Use the freed-up money to pay down debt or increase your down payment for the home, both of which could put you in better shape when it’s time to apply for a loan.

Reviewing your credit score and history is another key effort. If your credit score needs improvement, try making multiple or frequent payments on a credit card during the course of a month, suggests Hammond.

“If you pay on time and consistently, your score should reflect that,” she said.

One additional suggestion from Hammond on this front: If possible, avoid changing jobs while applying for a mortgage.

“Lenders look for job stability when they evaluate your ability to repay a loan,” Hammond explained. “If you must switch jobs while applying for a mortgage, be sure your new base salary qualifies you for the same loan amount. And keep in mind that only your base earnings count toward your income until you can produce at least, two years bonus history.”

3. Shop around. And then shop some more.

Reviewing multiple lenders, or mortgage shopping, is a critical step — and it’s one that many first-time home buyers often neglect, instead taking the first lender recommendation they receive or mortgage quote obtained.

“You never want to settle on the first lender you talk with,” said Andy Harris, president of CRMS, Vantage Mortgage Group and Association of Independent Mortgage Experts. “Buyers don’t realize how different the terms are that vary from company to company – even if the loan type is a commodity, pricing is not.”

When talking with different lenders and mortgage brokers, it’s important to get quotes on the same day for an accurate comparison, Harris added.

While daily market rate changes will impact all lenders uniformly, the actual rates they offer borrowers will vary based on other factors as well.

“This is relating to their own overhead costs or other items that impact their overall pricing that they offer,” Harris continued. “So, for example, if you’re comparing two companies on the same conventional 30-year fixed loan on the same day, one might quote a fee of $2,000 at a specific rate. While at that same rate, another is offering a credit of $2,000. That would be a $4,000 direct difference in cost for the same conventional 30-year fixed loan.”

When shopping around, be sure to include a local, truly independent mortgage broker in your search, someone who’s experienced and accountable, added Harris, as such an individual can shop wholesale lenders on your behalf and work directly for you.

Matt Hackett, an operations manager of Equity Now, a direct mortgage lender, suggests applying with a minimum of three lenders, which will give buyers a true sense of the market.

“Compare them to see where you can get the best deal,” said Hackett.

4. Get preapproved, and do it early.

First-time home buyers often get caught up in the more appealing parts of the process — shopping for their dream home — and neglect to get preapproved for a home loan. But doing so early on can prevent disappointment later.

“It’s more than heartbreaking when you find the perfect home, then find out it’s outside your budget. Getting fully preapproved supports your successful experience,” said Nicole Rueth of Fairway Independent Mortgage Corporation.

“Work with a lender who will help you differentiate between your maximum qualification, determined by your income and your debts, and optimal budget. A common regret for first-time homebuyers is that they maxed out their qualification and now have a mortgage payment that limits other opportunities.”

It’s also important to keep in mind that there are various levels of pre-screening for a mortgage, noted Ryan Richardson, a licensed mortgage loan officer for Pennsylvania-based Movement Mortgage. Simply getting prequalified is the most basic step, but it’s only designed to give you a loose idea of what you can afford.

“This is a buyer verbally telling a loan officer what their income, assets, and liabilities are and oftentimes no documentation is collected to verify any of it,” explained Richardson, who says this limited review doesn’t do anyone any service.
“It sends someone shopping for a home based on good guesses,” said Richardson.

Getting preapproved, on the other hand, takes the review a step further, typically requiring the home buyer to submit pay stubs, W-2s, and bank statements. A letter of preapproval from a lender also shows sellers that you’re a serious buyer with financing in place.

“The loan officer has more solid information to determine what you can afford,” Richardson explained. “I would recommend this as a bare minimum before shopping, this avoids heartbreak further down the line when you have a more solid idea of what you can and can’t do.”

5. Rate locks: What are they, and should you get one?

As part of the mortgage shopping process, you’ll likely be getting interest rate quotes. However, keep in mind that an interest rate is not guaranteed until it’s locked in. And typically, you can only lock in or guarantee an interest rate once you’ve a signed agreement of sale that includes an agreed upon settlement date, explained Richardson.

A mortgage rate lock, however, is an agreement between a borrower and a lender that allows the borrower to lock in an interest rate for a mortgage over a specified period of time. In other words, the rate will stay consistent, even if the market changes. Lock periods range from 15 days to 45 or even 60 days, and lenders may charge a lock fee.

“Rule of thumb is the longer the mortgage company locks, or guarantees your rate, the more expensive it is going to be,” said Richardson. “For instance, a 60-day lock is going to be more expensive than a 30-day lock, because the mortgage company is guaranteeing something for a longer period of time.”

There is a downside to locks to keep in mind. If the market changes and rates decrease after you’ve locked in, you generally won’t be able to take advantage of the lower rates.

6. Know your mortgage, and your loan officer.

A home is one of the biggest purchases most people will ever make, so it’s important understand what you’re getting into.

Having a basic grasp of mortgages and all of their variables will save you money and heartache, said Jennifer Beeston, of Guaranteed Rate Mortgage.

“Read and watch videos online about the mortgage process and options. Know the difference between a fixed rate and an adjustable-rate mortgage, and what points are. All this info is online and it is free,” she said.

And one last step – research your individual loan officer.

“The actual person doing your loan is critical. Just because a company has a good name or does a lot of loans does not mean the person doing your loan is good,” said Beeston. “Look for third-party reviews of the person who is your loan officer.”

Read more: 

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. 

The post Tips for Getting a Mortgage appeared first on The Simple Dollar.

The best online savings accounts of 2019: How to find the best high yield online savings account

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Finding the right savings account can get you an extra $200 for free this year.

Depending on your balance, it could make you a lot more money.

Let’s say you have $10,000 to put into an online savings account.

How much would that turn into at a big bank savings account? Most big banks have an APY (annual percentage yield) of 0.15% or less. After a year, your account would be worth $10,015. Not much of a gain there.

I love getting money for nothing, but even I have a hard time getting excited over an extra $15.

Now let’s say you take that same $10,000 and put it into an online high-yield savings account with an APY of 2.25%.

After a year, you’ll have $10,225.

That’s $225 for doing absolutely nothing. Everyone needs some extra cash on hand for an emergency fund anyway. Why not get as much as you can while it sits there? All it takes is opening the right savings account.

The best online savings accounts

We’re going to do a deep dive into what to look for, which accounts are best, how to get the highest APY, and tricks for optimizing your savings accounts.

If you want to skip all that and open an account right now, all of these savings accounts are among the best:

You’ll be happy with any of them. My personal favorite is Ally.

What matters when picking an online savings account

Here’s how we evaluate the best savings accounts.

User experience

Good online and mobile apps make a huge difference these days.

While I do appreciate a great user experience, I do have to say that it doesn’t matter as much with a savings account.

It needs to be good enough but not great.


Because we rarely log into savings accounts. Savings accounts usually have limits of being able to withdraw from them up to 6 times per month. By definition, they’re not meant to be used regularly.

With one of my accounts — my emergency fund that I never touch — I log into it maybe once a year during tax season to grab the annual tax form. Otherwise, I never log in at all.

So the user experience should be good enough that it’s not infuriating, but it doesn’t need to be cutting edge. That adds a lot more value for checking accounts, which we do access all the time.


For online savings accounts, it’s absolutely essential that you get an account without any maintenance fees. Monthly maintenance fees used to be common. Thankfully, just about all the online savings accounts have done away with them.

On any good savings account, you’ll rarely run into fees during normal usage. But even on the best accounts, it is possible to trigger fees for certain events:

  • Returned deposit items
  • Overdraft items paid or returns
  • Excessive transaction fee (like going over 6 withdrawals per month)
  • Expedited delivery
  • Outgoing domestic wires
  • Account research fees

We’ve made sure not to include any banks in our list that have maintenance fees. But you should be aware of some of these other fee items that do exist on every account.


What we consider to be “convenient” with savings accounts falls into two buckets depending on where you are in your own personal finance journey.

When you’re building savings for the first time, it’s essential to get a savings account with no minimum balance. A $5 required balance or something like that is fine, you just don’t want to have to worry about a higher one.

Don’t put up with any account that requires a sizable minimum balance. There are so many options that don’t have any balance requirements at all. This is the last thing you should be worried about in the early days, especially if an emergency comes up and you need to withdraw cash.

Later on, what you consider to be convenient typically changes.

Once you’ve built enough of a cash buffer for yourself, you’ll care a lot less about minimum balances. Instead, your accounts, cards, and banks have all gotten complicated enough that simplicity matters a lot more than it used to. At this stage, some folks will opt for a lower APY in order to consolidate their accounts and make everything more manageable.

Is this the optimum strategy to get every ounce of growth from your cash? No, it isn’t. But the extra piece of mind can be well worth the cost. If this sounds appealing to you, check to see if the savings account at your main bank has a good enough APY without any maintenance fees. If it does, it could be your best option.

FDIC insured

Don’t ever consider an online savings account that’s not FDIC insured. This means that the account is guaranteed by the federal government up to $250,000 per depositor. If something horrible should happen to the bank, the federal government guarantees you’ll still get access to your balance, up to $250,000. This is per depositor, so the $250,000 includes the combined balance of all your savings accounts at the same bank.

Just about every savings account is FDIC insured. It’s been a standard practice for a long time. But keep a close eye on this any time you’re considering an innovative or unique approach to storing your cash.

For example, some folks will store their cash in a money market account, which operates a lot like a savings account. Money market accounts are usually FDIC insured. But money market funds, which you place cash into from a brokerage account, are not FDIC insured. A subtle yet critical difference during tenuous times.

Another example: Robinhood attempted to roll out a checking account that promised a 3% APY. That’s a checking account paying higher interest than any savings account that was available at the time, by almost 1%. Sounds amazing right?

It came with a number of catches, one of which was that it wasn’t FDIC insured. Without the FDIC insurance, we don’t consider the higher APY worth the risk.

Our stance is that every dollar of our savings should be covered by the FDIC, even if the balance is high enough that we have to split it up between multiple savings accounts.

All of the savings accounts that we review below are FDIC insured. Just keep an eye out for this if you’re exploring an atypical approach to storing your cash.

APY rates

APY rates — the annual percentage yield — are the main difference between savings accounts. The higher your APY rate, the more money that you get automatically every month.

APY rates across saving accounts generally fall into 3 tiers.

Big bank savings account APYs

For the vast majority of big bank savings accounts, the APY is terrible. Big banks assume that you want a savings account along with your checking account, so they don’t do anything to entice you for the savings account itself. Even when plenty of online high-yield savings accounts are offering an APY of 2%, big banks might only offer a 0.15% APY. On a savings balance of $10,000, that’s a difference between making $200 a year versus $20 a year.

This doesn’t apply to ALL big banks, but most of them do fall into this category. So keep an eye out for these. Unless you really want to maximize convenience by consolidating accounts and taking a lower APY, it’s worth finding a savings account with a higher APY.

High yield savings account APYs

Over the last few years, high yield savings accounts have become extremely popular. These are usually banks that don’t have branches and specialize in online banking. Since their overhead is a lot lower, they pass the savings onto you with a higher APY.

There are a few banks that have become strong contenders in this category, like Ally and American Express.

You can also expect the APY to stay updated over time. Back during the financial crisis, the Federal Reserve dropped interest rates to 0%, and most high yield savings accounts had APYs of about 0.5-0.7%. As the Federal Reserve increased interest rates, these same accounts also increased their APY regularly. Many of them are now above 2%. Whenever interest rates increase, you’ll get those increases automatically from these accounts. No need to constantly switch between accounts and chase the best rate.

Cutting edge APYs

At any given moment, there are a few banks that are pushing the APYs higher than anyone else. They’re doing this as a promotional strategy to attract more customers. Some of these banks keep pace with changing interest rates, some of them don’t.

While we don’t consider it worth the effort to chase an extra 0.1% on our APY, these banks are an option if you’re looking to maximize the APY on your savings.

Online savings account reviews

Here’s the lowdown on the most popular online savings accounts.

Axos savings account

  • FDIC insured: Yes
  • Minimum balance: None
  • Maintenance fees: None
  • APY: 1.30%

The APY is much lower than other high-yield savings accounts — it’s average at best. There’s no reason to open an Axos account unless you’ve already maxed the FDIC limits on every other high-yield savings account and have to get a lower APY to horde all your cash.

I recommend picking one of the other accounts from this list.

Discover online savings account

  • FDIC insured: Yes
  • Minimum balance: None
  • Maintenance fees: None
  • APY: 2.10%

Discover’s APY is pretty strong. Not quite the top, but it’s really close.

And if you happen to have a Discover card or checking account, keeping your accounts in one place makes everything a lot simpler.

If you have another Discover account, definitely get a Discover savings account.


HSBC has a few different savings accounts.

HSBC Premier Savings

  • FDIC insured: Yes
  • Minimum balance: $100,000 across your deposit accounts and investment balances. If you go below this balance, there’s a $50 monthly fee.
  • Maintenance fees: None
  • APY: 0.15%

The HSBC Premier accounts are for clients who have large deposits at HSBC. Unfortunately, the APY is awful. An APY that low with a minimum balance of $100,000 is kind of insulting.

This is a good example of a classic big bank savings account. A bunch of constraints with a terrible APY. Skip these accounts entirely.

HSBC Direct Savings

  • FDIC insured: Yes
  • Minimum balance: $1
  • Maintenance fees: None
  • APY: 2.30%

HSBC does have a high-yield savings account with a competitive APY. Normally, I’d recommend this account as a main contender.

But HSBC is just a terrible bank. Every interaction with them is more difficult than it has to be. The only reason I’d ever consider opening an HSBC account if I needed a giant, international bank for some reason.

Even though this account looks great on paper, you’ll regret it if your experience is anything like ours.

Ally savings account

  • FDIC insured: Yes
  • Minimum balance: None
  • Maintenance fees: None
  • APY: 2.20%

We’re huge fans of Ally. They’ve become one of the leading high-yield savings accounts.

Yes, Ally doesn’t technically have the highest APY, but it’s darn close. And they update their APY often. So if interest rates continue to rise, you’ll get a higher APY without having to do anything.

Their account UI is pretty slick too, and it’s always improving.

I have an Ally account myself.

Feel free to stop reading here and open an Ally account right now. You won’t regret it.

Capital One 360 Savings

  • FDIC insured: Yes
  • Minimum balance: None
  • Maintenance fees: None
  • APY: 1%

I do love Capital One 360’s sub-savings account, which let you save for specific items like a down payment on a house or annual vacation in a separate account.

However, that 1% APY is pretty weak. It makes the Capital One 360 Savings a poor choice compared to the other high-yield savings accounts in this list.

Skip the 360 Savings account entirely. The APY is too low.

You can boost the APY to 2% by opening a Capital One 360 Money Market account. It’s basically a savings account, but it does have a $10,000 minimum balance. And if your balance drops to less than $10,000, the APY is only 0.85%, which isn’t worth it.

The 360 Money Market account could be worth it. First, the $10,000 minimum balance should be a trivial concern for you. Second, you could get a lot of convenience if you already happen to have other Capital One cards or accounts. If that’s the case, a slightly lower APY at 2% compared to some of these other accounts could be well worth the simplicity of having all your accounts in one place.

If you don’t have any Capital One accounts already, choose one of the other accounts from this list.

Marcus by Goldman Sachs

  • FDIC insured: Yes
  • Minimum balance: None, but there is a deposit limit of $1,000,000 for all your savings account and CDs
  • Maintenance fees: None
  • APY: 2.25%

Goldman Sachs jumped into the high-yield savings account space with one of the highest APYs.

They do limit deposits to a total of $1,000,000, but that’s not a major concern. You’ll want to split up your cash balances across multiple banks to get it all FDIC insured anyway.

If you’re looking for your first high-yield savings account, this is a fantastic option.

American Express savings account

  • FDIC insured: Yes
  • Minimum balance: None
  • Maintenance fees: None
  • APY: 2.10%

American Express was one of the first to introduce a high-yield savings account, and it’s been around for awhile now.

These days, the APY is slightly lower than some of the competitors. While American Express does update their yields frequently, they’re always 0.10-0.20% off the highest rates. While it’s still a great option, I’d choose one of the other accounts for this reason alone.

One other caveat: the American Express savings account isn’t integrated into the same login account as the American Express credit cards. Even if you have both, it feels like having two different banks. There’s no extra simplicity from trying to consolidate.

Barclays savings account

  • FDIC insured: Yes
  • Minimum balance: None
  • Maintenance fees: None
  • APY: 2.20%

Another great option. Great APY, no maintenance fees or minimum balances — you can’t go wrong with a Barclays online savings account.

Synchrony savings account

  • FDIC insured: Yes
  • Minimum balance: None
  • Maintenance fees: None
  • APY: 2.25%

Synchrony is also a great option. The APY is one of the highest and has no minimums or maintenance fees.

The 4-step process to picking the best online savings account

  1. Check the banks that you currently have accounts with and see if they have a competitive savings account. If the APY is comparable to the accounts we listed above, stick with your current bank.
  2. Otherwise, pick an account from this list:
    1. Discover Online Savings Account
    2. Ally savings account
    3. Marcus by Goldman Sachs
    4. American Express savings account
    5. Barclays savings account
    6. Synchrony savings account
  3. Try to pick an account from a bank that you foresee doing other business with. For example, Ally has car loans and Discover has their credit cards.
  4. If you’re still not sure, go with Ally.

What about sub-savings accounts?

One of our favorite savings account tricks is to open “sub-accounts.” This allows us to easily budget for bigger purchases by saving a little bit each month. We can also track everything by separating all the accounts.

For example, I have these categories in my own savings account:

  • Emergency fund
  • House downpayment
  • Mini-retirement
  • Christmas gifts
  • Annual vacation

Each month, money goes into each of these separate accounts with the automatic transfers that I set up. And I can easily see how much I’ve saved towards my goals.

Ramit’s savings accounts used to look like this back before ING Direct was bought by Capital One:

ING direct

Here’s a more current example in Ally:


Some savings accounts will call these “sub-accounts,” and everything will be part of the same savings account. This is a rare feature to find though.

For everyone else, simply open up multiple savings account under the same bank login. You can easily have 5-10 savings accounts at the same bank. Then treat each account for whatever saving category that you like.

This means you can get “sub-accounts” at any bank, even if they don’t have a “sub-account” feature.

Don’t chase yields

Look, there’s always a bank that has a slightly higher APY. Banks use it as a promotion strategy to get more accounts, so it’s always changing.

Regularly researching new APY rates, looking for that extra 0.05% APY, opening accounts, and transferring money all over the place wastes more time than it’s worth.

Don’t be a rate chaser.

Remember IWT’s philosophy of big wins. Focus on the major wins that really move the needle and forget about the small stuff. Chasing higher APYs on savings accounts definitely falls into the “small stuff” category.

Pick a savings account that has a competitive APY from a bank that you trust for the long term. Then stick to that decision and work on improving other areas of your life.

Money market accounts vs savings accounts

The difference between money market accounts and savings accounts can be pretty confusing.

That’s because there’s no practical difference.

Here are the similarities:

  • The APY tends to be the same between both types of accounts.
  • You can withdraw up to 6 times per month.
  • Some have ATM cards, some don’t.
  • Some have minimums, some don’t.
  • Both are FDIC insured.

Basically they’re the same account. If your bank happens to offer a money market account with no maintenance fees, no minimum, and a competitive APY, feel free to use it.

Now for the confusing part: money market funds are completely different. They’re part of brokerage accounts and allow you to place cash while you wait to invest it. Since money market funds are not FDIC insured, so it’s not a good habit to store lots of cash in them.

When to get savings accounts from multiple banks

If you ask high net worth folks which savings accounts they have, sometimes they’ll list off half a dozen different banks.

At first, this makes no sense. Why all the extra complexity and different accounts?

There’s one reason: FDIC insurance limits.

Most people are limited to $250,000 worth of insurance at any given bank. Joint accounts and accounts across different categories (like retirement accounts) can increase this limit, but that only goes so far. If you have a substantial amount of cash, the only way to keep it insured is to open up savings accounts across several banks.

That’s why folks will start opening up savings accounts across multiple banks.

If you have multiple savings accounts to manage, Max will automatically move balances around your accounts to optimize for the highest APY while keeping all your cash insured. They do charge a 0.08% annual fee for the service.

As for which accounts to open, we recommend starting with these:

Any combination of accounts that have strong APYs will work.

The best online savings accounts of 2019: How to find the best high yield online savings account is a post from: I Will Teach You To Be Rich.

Hobbies and Hustles

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I recently read this great little article by Molly Conway entitled The Trap of Turning Hobbies Into Hustles. In it, she makes the astute point that when you attempt to start earning money from something that’s a hobby, it ceases to be a hobby any more – rather, it starts to seem like work:

I have a friend who is living her dream. She makes and sells leather pocket belts, holsters and ruffle tops for the steampunk/Renaissance Faire/Burning Man crowd. Her designs are worn and enjoyed by thousands of people; she’s created more jobs for Bay Area artists; she’s her own boss — and she hasn’t taken a real day off in roughly eight years. Because that’s what it takes to do what she loves. I admire […] her, but every time I’m tempted to listen to someone who says I should open a restaurant just because I throw a good dinner party, I think of her, and remember that admiration is not the same as envy.

That’s not to say there isn’t joy to be found in turning something you love into your life’s work — it’s just to say that it’s okay to love a hobby the same way you’d love a pet; for its ability to enrich your life without any expectation that it will help you pay the rent.

This hit home for me.

One of the cornerstone elements of our financial turnaround was that I was able to find a side gig that I was eventually able to turn into full time work – and you’re reading it. The Simple Dollar started out as a pet project I did in the evenings in our tiny apartment as I wrote through some of the ideas I was discovering and working through in order to turn our financial life around. It became reasonably popular and, while it never earned enough to make us wealthy, it did earn enough that switching to writing it full time was a real option because it also reduced our child care burden (since I was at home and had a super flexible schedule).

Writing has always been a hobby of mine, and while I was in the “honeymoon period” of my financial turnaround where everything was new and exciting and I was trying all kinds of new (to me) things, it was purely fun to write about those experiences. As time went on, though, I found that what Molly describes above as purely accurate. Suddenly, something that was a hobby to me was making money – which was great – but now it was burdened with deadlines and responsibilities and expectations – which wasn’t good.

Yet, here I am, still writing about personal finance. How did I make that work? How can I still keep writing about personal finance and earning an income at something that was my hobby without being miserable?

I think that what I learned from that transition serves as some powerful advice for anyone looking to turn a hobby into a side gig.

First of all, I had to accept that writing was no longer a hobby, but a profession. Prior to that point, writing was something I purely did for personal fulfillment. I have always loved taking my ideas and putting them down on paper, much like how other people love and are fulfilled by woodworking or crafting or fishing or cooking or whatever. However, it was never something I had to do in order to produce an income for my family. I did it when I had the time and when I had burning ideas inside of me and I did it solely because it fulfilled me.

When you choose to do something for money, particularly when it becomes a source of money that you or your family relies on, that relationship changes. You can no longer do those things when you feel like them. You have to keep at it, regardless of how you might feel at the moment.

Leisure activities are enjoyable because they’re things you want to do and you can do them at whatever level feels right for you. When you have to do those things for a living, that choice of what to do and when to do it goes away. It’s no longer your choice. Even the most successful writers out there, like Stephen King, sign contracts and have obligations for their craft. They can’t simply choose when to write and not do it if they don’t feel like it.

That’s the difference between a hobby and a profession. With a hobby, you want to do it and, if you happen to not want to do it today, that’s okay. With a profession, you have to do it, regardless of whether you want to do it today.

There are days when I wake up and the last thing I want to do is write. I have all kinds of other things I’d love to fill my days with. However, I have an obligation to write, a freelance agreement that I signed that provides income for my family (good) but has stiff consequences if I don’t write (bad).

That change from wanting to do something to having to do something is a serious change and requires a far different approach. It means that it’s no longer your hobby, but your profession, and you have to approach it professionally. You have a set schedule and requirements and it’s no longer the free thing that you used to do.

In the early days, when I did The Simple Dollar for fun, I wrote about whatever I wanted pretty much whenever I wanted. If I didn’t feel like writing, it was fine. Today, I spend several hours a day most weekdays doing some sort of personal finance writing-related activity. There are times when it’s purely fun, but there are a lot of times when I have to do it even though I don’t want to.

So, how do you make that change?

The first thing I figured out was that on the days when I’m feeling in the groove, I need to get as much work done as I possibly can. If there’s a day when the writing comes easy and feels good, I do everything I can to stick with it all day long and all night long, if need be. Once every few weeks, I’ll just tell Sarah that I’m in a groove and I need to ride that groove for as long as it lasts. I often talk about “flow state” on The Simple Dollar, and that’s exactly what I’m talking about here – if I have days where I can get deeply into a flow state and just keep writing and writing and writing, I do it.

What this does is that it gives me breathing room for the days when it’s not working quite so well, when I’m dreading writing or when I can’t get anything to come out. On those days, I can walk away and professionally recharge.

Without that ebb and flow, this whole thing wouldn’t work. If I simply stopped on those good days when I had two or three things completed, I wouldn’t be able to do this. On those days when I really feel motivated and engaged and excited, I have to get as much value out of them as possible.

Why? Nothing makes a hobby-turned-side-gig miserable faster than the days when you’re not engaged at all with your gig but you still have to produce work. You’re going to be miserable and you’re going to not be very productive at all. You are far better off those days simply walking away and recharging or finding other aspects of your work to do. In fact, if you keep doing this, if you keep grinding when the passion is zero, it’s going to become miserable and your quality is going to fall off a cliff and you’re going to lose the whole thing anyway. Trust me – I’ve been there.

if you try to turn a hobby into a hustle, be aware that you’re going to lose a hobby. When you start doing something for money, there starts to be expectations involved with it and you can’t simply pick it up when it feels fun and let it sit when it doesn’t. You have to pick it up every time, and that’s work, not leisure.

There’s nothing whatsoever wrong with that, and work can most definitely bring you joy, but there are times when you have to do it even when you don’t want to. That’s the difference between a hustle and a hobby – a hobby can be put down, while a hustle can’t.

Make absolutely sure that this is something you want to give up as a hobby. If it’s something you genuinely value as a way to escape, as something you can pick up when you want and leave alone when you’re not feeling it, you should think very carefully about whether you want to convert it into a hustle.

Thus, if you do go down this path, you have to find a new hobby. Your old hobby is no longer a hobby. It fills more of your time than you would ever like. That doesn’t mean it no longer brings joy, but what it means is that it no longer serves as a hobby, as something that provides leisure and escape from the routines of your life.

Ten or fifteen years ago, my main hobby was writing. When that went from hobby to side hustle, it no longer fulfilled and refreshed me. It was the thing that sometimes made me need to feel fulfilled and refreshed. I discovered cooking. I discovered hiking. I (re)discovered tabletop gaming. I (re)discovered reading. Those are my hobbies.

Writing, although I still love it, is my work. It is not a hobby. It is not an escape. It is not something I can pick up when I’m excited about it and put down when something else is more compelling at the moment.

I’m lucky in that most days I’m excited about it, but there are most definitely days when I have writing commitments and it’s the last thing in the world I want to do. That’s what makes it work and not leisure.

Finally, turning a hobby into a side hustle generally only works well if you’re utilizing skills and talents you have. If you love to knit, for example, but you’re a mediocre knitter who can turn out good stuff but slowly or bad stuff quickly, it’s probably not a good choice to try to turn knitting into a side hustle. It’s a great hobby, but not a great source of income.

Writing happened to work well for me because I can write reasonably good material (I don’t claim my writing to be great in any way, but I do think I can lay out points and tell a decent story) in large quantity and fairly quickly. That’s a skill, one that I utilize every day.

It’s my belief that turning a hobby into a hustle works best if you have several hobbies, you see a clear path to income with one of them, and you can apply strong skills you already have to that path. That way, you’re not turning your main passion into work and you’re able to do something of value that others will want and appreciate, thus ensuring at least some chance of success.

Good luck!

The post Hobbies and Hustles appeared first on The Simple Dollar.

Money and Confidence are Interchangeable

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So, I’m assuming you are here reading this because you want to get yourself some more money.

And since this is Mr. Money Mustache and not a standard financial publication, you’re willing to think about the bigger picture:

Not necessarily “Maximum money at all costs so I can have a nice, spendy retirement!”

More like “A good, fun amount of money so I can walk outa this cubicle with confidence and never look back.”

Making that mental leap is a huge one. It takes you from a life of permanent pursuit of the unattainable, to one where you get to the “Enough” stage pretty quickly. This alone will change the course of your life for the better.

But what if there were an even bigger mental leap that we were leaving out? One that starts with the hard-nosed math of living off of your investments, but then puts it on a more flexible scale that allows you take shortcuts and attain the freedom you want, much sooner?

Well, there is such a shortcut of course, and there is even a story right from my own life that illustrates it.

The Unnecessary Fears of Teenager MMM

Since I was a kid, I’ve always had confidence issues. I was afraid to attend the birthday parties of other kids, if there were too many strangers around. I was afraid to try new foods or join any teams. It took me a long time to become outgoing enough to start meeting girls in high school.

I compensated for these things by trying to be really good at everything, in an attempt to alleviate feelings of worry. Insisting on A+ grades even on the most pointless of assignments, just because I felt that “winning” was a safe defense against bullshit workloads.

I engaged in slightly compulsive weight training and with some of my fellow status-seeking schoolmates until we were all well-dressed two hundred pound muscleheads, safe from the risk of bullying and gleefully (but needily) soaking up the status rewards of having more prestigious outer appearances. We would have all claimed it was for fun reasons or health reasons, but there was plenty of teenage insecurity driving up those barbell plates at 5:30am as well.

Even as a young adult, my desire to build up a massive financial surplus was probably at least partly driven by a desire to protect myself from things that could go wrong – like unemployment or being stuck in a job that I no longer enjoyed.

I’m not ashamed to admit all of this, because you need to see your opponent clearly in order to beat it. I went through this journey of insecurity and came out on top – in the safety of a well-designed life with lots of advantages. But since then, as I have spent the subsequent thirteen years learning more about that life, and meeting new people with entirely different successful lives, I have come to realize something I wish I could have known earlier:

I had nothing to worry about in the first place.

It turns out I didn’t need all that money, because my needs and wants will never be more than I earn from my natural desire to do useful work. You don’t need to be a musclehead in order to have friends or meet attractive people or deter bullies – normal fitness is just fine and being friendly and open is much more attractive – whether your goal is finding love or running a powerful enterprise.

You don’t have to OVERACHIEVE at everything you do – you can be strategically great at things you truly enjoy, carve the rest of the unnecessary crap out of your life, and spend your days in a much healthier balance of work and play.

Many of us are focusing our energy on building up the wall of protective money and insurance policies around us to ever-greater heights, working one last year and funding one last insurance policy against an obscure risk, when really our deficit is not in money. It’s in confidence.

And thus, it turns out that Money and Confidence are Interchangeable.

Figure 1: With no confidence, you need a shit-ton of money to feel comfortable. Find a smarter balance.


Think about it: It took me seventeen years of school and ten years of work to become an expert software engineer, making a growing six-figure salary and with a million dollars* of investments by about age thirty.

But then, years after retirement I started a carpentry business just for fun, and within just a few weeks of spreading the word, I had enough business to easily pay the bills with very part time work. It was a lot of fun. So, would a sufficiently confident carpenter really need to do the engineering career and save that million, in order to live a satisfying life?

In 2011, I started this website to write about money. Even without the lottery-like success it has lucked into, I would have still ended up with a writing career in a popular subject that was loads of fun and could again have easily paid the bills through things like consulting, advising, speaking, or connecting with new friends for business opportunities. And I’ve enjoyed writing since I was ten years old – with enough confidence, I could have started writing about money decades earlier.

In 2017, I bought a small commercial building alongside some friends and converted half of it into a coworking space, and it easily filled up with members. Despite charging only a third of standard rates, the income from this business would also be plenty to fund a happy family’s lifestyle. If I had the confidence earlier in life, I could have shortcut the intervening work and achieved almost exactly my current lifestyle decades ago: no war chest of investments required.

More important than these examples from my life, are examples from yours.

Every day, I get emails from people describing their plentiful savings and unpleasant jobs, and then a description of the golden handcuffs or fearful assumptions that keep them working in their jobs.

They wonder when, if ever, they’ll be able to quit. When really, the problem is not the money, it’s the confidence. With confidence, they could quit right now.

Confidence allows you to change your current life entirely and instantly, without the need to change anything – because you’re just rearranging the feelings in your mind.

Imagine for a moment that you’re Jill CTO or Joe Attorney, locked into a prestigious firm and a two point six million dollar Washington DC dream townhouse. You’ve got an entire department reporting to you, your ex-spouse to manage, two kids in private schools, a standardized and rigorous vacation plan to address both sets of inlaws,  and a comfortable, safe 2016 Lexus Hybrid SUV that you use several times per day because although you agree with Mr. Money Mustache that more people should be riding bikes, it just doesn’t work with your lifestyle right now.

You’re a high achiever, no doubt about it. But what is all this achievement buying you in life happiness today? Are you selling off your current years of youth to The Firm, and putting off your happiness because in just another decade or so, once the kids are grown and things settle out, then you’ll give yourself permission to be happy?

If so, you may have confidence issues, just like the rest of us.

What if we could take all that complexity and ass-covering and self-protection in your current life, set it aside, and consider the following ideas.

In fact, let’s repeat all of this together in the first person so it sinks in for real:

A Recipe For Badass Confidence

  • I will always be able to get a job if I need one.
  • Billions of people are living far less expensive lives than mine, and yet many millions of these people are surely happier than me. What is their secret?
  • While I don’t control the entire world, I am in control of my response to everything I experience. And my response is the part that determines my happiness.
  • I am in control of my cost of living. Everything I do is a decision, and it’s made by me, not the world around me.
  • I can always learn new things. With proper dedication, I can gain any skill that I want or need. This means when I depend on other people, it’s just a positive choice we are both making. When others depend on me, they are acknowledging my strength and I will choose to pass some of it on to them.
  • My kids will be just fine. Just by giving them my love and support and being honest with them. They don’t need prestige and they don’t need the support of multimillionaire parents to prosper in life. Nobody does.
  • Exotic Travel (just like any other luxury) is not a necessity for a happy life. At a moment’s notice, I could choose to spend the rest of my life within driving distance of this spot, and still lead a completely blissful existence forever.
  • But on the other side of that same coin, I can always move. My current location is a mixture of chance and choice, but people move all the time and their lives are usually better for it.
  • I can always make friends. No matter where you drop me in the world, I could build up a loving support network of warm and caring relationships. Because people are the same everywhere – we all just want to be valued and given some warm attention.
  • I know that my real goal in life is happiness, and I will always have the right tools available to me to maximize my happiness. They’re everywhere, and they are free.
  • Millions of others have achieved this before me, with fewer advantages and in harder times. I have more than enough personal power to get this shit done, in spades.


That collection of points above, is my personal version of what Confidence means. But you’re welcome to use it, adapt it, even turn it into a t-shirt or tattoo for yourself. Confidence is the opposite of fear, and fear is the enemy that stands between most people and greater happiness.

And because it’s interchangeable with the need for money, that dozen or so bullet points can easily be worth millions of dollars.

The biggest bonus about this multimillion dollar recipe? If you haven’t followed it before, your initial results will come strikingly fast and fuel your desire to get yourself even more of it. Confidence is addictive, joyful, and self-reinforcing.

What To Do With This Amazing Power

You now have two complementary tools in your belt: Money, and Confidence. Both of them are useful. But it would be foolish to develop one exclusively, while completely ignoring the other.

Most people work too much on the money and use it to compensate for a lack of confidence. To get to the next stage in life, you will need to stop doing that.

The Freedom to live happily is your goal. Confidence is part of the price of admission.


*based on 2005 retirement date inflation adjusted to 2018 dollars


Beyond wealth: What happens AFTER you achieve financial independence?

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In their classic Your Money or Your Life, Joe Dominguez and Vicki Robin argue that the relationship between spending and happiness is non-linear.

More spending brings more fulfillment — up to a point. But spending too much can actually have a negative impact on your quality of life. The authors suggest that personal fulfillment — that is, contentment — can be graphed on a curve that looks like this:

[The Fulfillment Curve]

Beyond the peak, Stuff starts to take control of your life. Buying a sofa made you happy, so you buy recliners to match. Your DVD collection grows from 20 titles to 200, and you drink expensive hot chocolate made from Peruvian cocoa beans. Soon your house is so full of Stuff that you have to buy a bigger home — and rent a storage unit. But none of this makes you any happier. In fact, all of your things become a burden. Rather than adding to your fulfillment, buying new Stuff actually detracts from it.

The sweet spot on the Fulfillment Curve is in the Luxuries section, where money gives you the most happiness: You’ve provided for your survival needs, you have some creature comforts, and you even have a few luxuries. Life is grand. Your spending and your happiness are perfectly balanced. You have Enough.

According to Dominguez and Robin, your goal should be to achieve Financial Independence, the condition of having Enough for the rest of your life. “Financial Independence has nothing to do with rich,” they write. “Financial Independence is the experience of having enough — and then some.” This is achieved when your savings has reached a level that will sustain you at the peak of the Fulfillment Curve indefinitely.

As many Get Rich Slowly readers have discovered over the years, the exercises and advice in Your Money or Your Life can transform your relationship with money, helping to break your dependency on Stuff. It’s a great book for learning how to align your spending with your values. It provides a roadmap to Financial Independence.

Where Your Money or Your Life is less good, however, is providing advice for what to do after you’ve reached this goal. What happens when you achieve Financial Independence? What happens when you have enough — and then some? Many people reach this place only to find themselves wondering, “What next?” It’s an important question, one that’s often tough to answer.

The Power of Purpose

When you’re building your wealth snowball, your goals and mission keep you focused on the future. They guide you toward the things you ought to do while helping you avoid temptation and peril. Without a clear purpose, it’s difficult to stay on course during the long march to financial freedom.

Purpose is also important after you’ve obtained the wealth you desire.

In his book You Can Retire Sooner Than You Think, financial planner Wes Moss shares five “secrets” of a happy retirement. After surveying 1350 retirees across 46 states, Moss found that the number-one predictor of contentment is a sense of purpose.

“[Happy retirees] have a well-defined understanding of their purpose in life,” he writes. According to his research:

  • 91% of happy retirees are clear and comfortable with their sense of purpose.
  • In contrast, 89% of unhappy retirees report that they’re uncomfortable (or only “slightly” comfortable) with their sense of purpose.

The bottom line: “Happy retirees know what their retirement money is for.

To that end, Moss encourages his clients (and readers) to foster a handful of “core pursuits” — activities that excite them and bring them joy. By developing these core pursuits before reaching retirement or Financial Independence, you’re better prepared for what comes next.

Similarly, in Choose Your Retirement, Emily Guy Birken writes that “a retirement based on values will be a fulfilling and contented experience”. Birken dubs this a “values-driven retirement”.

A values-driven retirement sounds great. But how do you discover your values? How do you pick your core pursuits? How do you decide what you want out of life? How do you answer the question, “What next?” I believe the answer goes back to creating (an adhering to) a personal mission statement.

With a mission statement, you have a roadmap to meaning. Without one, you run the risk of finding yourself lost in the woods where even your wealth won’t help you find the way home.

Note: At the end of this article, I’ll share a powerful exercise to help you discover purpose.

Money Without a Mission

A lot of people believe that if only they were wealthy, if only they had a million dollars, then all of their problems would be solved. Unfortunately, it doesn’t work like that.

There’s no doubt that money can buy food and clothes and shelter. Wealth grants access to better health care. It provides peace of mind so that you don’t fall into a panic when the car breaks down. But money is only a tool. It’s not a magic wand that will miraculously make you smart, fit, and kind. It’s up to you put the tool to constructive use.

Beyond Wealth: What Happens After You Achieve Financial Independence?

What happens if you achieve financial freedom without direction, if you don’t use money to build a better life?

At best, you drift aimlessly from day to day, never quite sure what you ought to be doing next. Maybe you aren’t destructive (to yourself or others), but you’re certainly don’t add anything of value to the world. I’ve met a couple of folks who, because they’re financially secure, shut themselves away all day playing videogames. That’s a shame. They have the freedom to do whatever they want…and they choose to do nothing.

At worst, reaching financial freedom without a plan plunges a person into decadence and despair. Think of all the horror stories you’ve heard about pro athletes, movie stars, and lottery winners who squander their riches on speed boats and strip clubs. (Here, for example, is the poignant tale of Jack Whittaker, a West Virginia man who won a $315 million Powerball jackpot in 2002. Without a plan, instant riches brought devastation rather than delight.)

Money can buy freedom, no question. But you have to seize the freedom or it all goes to naught. You may win a billion dollars in the lottery, but that won’t make a difference to your health and wealth if you elect to survive on a diet of donuts and vodka while lounging watching Friends re-runs on Hulu.

“Money is important but it’s far from most important,” says Jim Wang from Wallet Hacks. “This becomes clearer when you reach Financial Independence, when you no longer need to work as hard to sustain yourself. You risk losing your sense of purpose if it was deeply tied to working for an income. This is why many retirees have trouble in retirement!”

Money is important but a mission matters more.

Once you have plenty of money, it’s your responsibility to make what you want out of life. (Truthfully, it always has been your responsibility.)

Fix Yourself First

For many people — including myself — I think the best answer to the question “what next?”, the best way to discover meaning and purpose, is to fix what’s broken in your life. After you achieve Financial Independence, you no longer have excuses not to become the best version of yourself, whatever that means to you. As an example, here’s my own story.

When I was younger, I was deep in debt. I was also fifty pounds overweight. I had time-management issues. My relationships were built on a false projection of myself. I used to think that if I could win the lottery or otherwise luck into a windfall, all my worries would go away. But when I eventually achieved complete Financial Independence, my problems didn’t disappear. Quite the opposite.

It turned out that J.D. with money was the same as J.D. without money. He remained a fat, lazy procrastinator who was unhappy with his situation.

[Me in a Hammock in Belize]

I had fixed my finances by becoming the CFO of my own life, by running my personal finances like a business. Slowly, it dawned on me. In order to fix everything else that was broken, I’d have to take responsibility for all of it.

  • If I wanted to be fit instead of fat, I had to eat right and exercise.
  • If I wanted to be comfortable meeting new people, I had to overcome my introversion.
  • If I wanted to travel, learn Spanish, live in a walkable neighborhood, have healthy romantic relationships, write a book, become better at public speaking – if I wanted to be a better man, I had to do the work required to become a better man.

Money wouldn’t magically make things better. Nobody else was going to do the work for me. If I wanted to repair what was broken, I had to do it myself. Furthermore, I realized that — like the hero of a fantasy or science-fiction novel — the power to fix my problems had always rested in my hands.

I began to make changes instead of excuses.

I lost weight, got fit, learned Spanish, traveled to Europe and Africa and South America, and began to build better relationships. I moved to a neighborhood where I could walk for 90% of my errands. I learned to ride a motorcycle and shoot a gun. I wrote a book (two, really) and became better at public speaking. I forced myself to set aside my introversion and relish the company of others, even strangers.

When I accepted responsibility for everything in my life, things got better. Lots better.

Note: My life isn’t perfect, and I don’t want to pretend that it is. Truthfully, I can sometimes go months forgetting that I must be my own hero. I grow complacent and slowly slide back into bad habits. I eat poorly. I play too many videogames. I drink too much wine. I don’t spend enough energy maintaining friendships. Over the past year, for instance, I’ve packed on twenty pounds. But I know now how I ought to live — and when I live that way things are great!

Supplied with what seemed like limitless time and money, I realized that I was the only one who could fix the things that were wrong in my world. I realized that it had been up to me all along. It was a harsh epiphany.

My story isn’t unique. Turns out it’s rather commonplace.

For instance, Todd Tresidder (the Financial Mentor) says that after he achieved financial independence at age 35, he had a similar insight. He felt lost, directionless. It wasn’t until he realized that only he could give himself direction that he found his way again.

This I believe: If you’re not sure what your purpose is, fix yourself first — then move on to other goals.

Make the World a Better Place

After you’ve fixed yourself, you can turn your attention to making the world at large a better place. (Some folks might be tempted to focus on improving the world first. I think this is a huge mistake. You’ll be much more effective if you take care of yourself first before moving on to help others.)

Here, for instance, is the story of Jason Brown, a former professional football player who gave up millions of dollars to do something more meaningful for himself…and the world. I love this story:

In 2009, after four years as a pro, Brown signed a five-year $37.5 million contract with the St. Louis Rams, which made him the highest-paid center in NFL history. He was financially independent. He could do anything he wanted, and he did not want to play football. Three years later (at age 29), Brown quit his career to become a farmer — even though he’d never farmed a single day in his life. (He learned how to grow crops from YouTube!)

But Brown isn’t growing the food for himself. His First Fruits Farm raises sweet potatoes to donate to local food pantries. “When I think about a life of greatness, I think a life of service,” says Brown. He’s found meaning through helping others.

Sidenote: In 2014, Brown delivered his own child after his wife went into labor on the farm and their midwife couldn’t reach them in time!

Or there’s Warrick Dunn, another former football player. During his first year in the NFL, when he was only 22 years old, he established Homes for the Holidays, a program to help struggling first-time homebuyers with the process.

Contrary to other reports around the web, Dunn’s charity does not give homes to single mothers. Instead, in conjunction with Habitat for Humanity, Homes for the Holidays provides down-payment assistance and complete home furnishings to single-parent families that are purchasing their first home. (Not the same as giving away houses but still awesome!)

What’s more — and I especially like this part of the program — Homes for the Holidays also provides financial literacy workshops.

You don’t have to be a professional athlete to do good deeds once you’ve reached financial freedom.

After he became financially independent, Harlan founded The Plutus Foundation, a non-profit that aims to provide financial literacy and “improve financial empowerment”. And my friend Jen feels called to support Manos Unidas, a Peruvian school for disabled children.

Fixing yourself and improving the world are both excellent ways to find meaning and purpose once you’ve reached Financial Independence. But you know what? Another option, one that surprises many people, is continued work.

Work After Wealth

For many people who achieve Financial Independence, “what next?” is a new career. Or maybe even the same career.

After I sold Get Rich Slowly, for instance, and obtained financial freedom, I slowly reduced the amount of work I was doing until I was doing none at all. For a while, it was fun to have no commitments. I browsed the internet, read comic books, met friends for lunch. Kim I left for our grand roadtrip across the United States. But even before leaving Portland last March, she and I had both begun to recognize that I lacked a sense of purpose. I was aimless and adrift.

“When we get home,” Kim said, “I think you should get a job, even if it’s just a few hours a day at Starbucks.” I agreed that seemed like an excellent idea. Instead, I started Money Boss while on the road. That gave me work and purpose again — the same work and purpose that gave my life meaning before. (Now, of course, Money Boss has been folded into Get Rich Slowly. In fact, this article originally appeared on Money Boss more than three years ago!)

Or there’s Jacob from Early Retirement Extreme. After reaching Financial Independence at age 33, he spent four years pursuing hobbies like sailing, bicycle repair, and writing. Then, at age 37, Jacob un-retired for a few years.

“Financial independence allows you to do what you want whether that’s travel, raising children, saving the world, or playing golf. That’s what’s important,” Jacob writes. “What I like to do is solving impossible problems.” When he received a job offer that involved solving impossible problems, he took it. It gave him meaning and purpose. It was the right choice for Jacob and his circumstances.

Note: Some folks claim that if you’re working you cannot possibly be retired. I think most of us recognize this as a bullshit semantic argument. (Mr. Money Mustache famously mocks what he calls the Internet Retirement Police.) To avoid debate, I prefer to talk about Financial Independence instead of retirement, but I believe they’re essentially the same thing.

Finally, there’s Jim from Wallet Hacks again. Jim is a serial entrepreneur. He’s always starting businesses, even though he doesn’t need the money. His work gives him meaning:

After I sold my last company, I felt a sense of emptiness when I woke up in the morning. I used to get up, excited to start the day because I had all these ideas in my head for what I wanted to try, projects I was working on, and people I needed to talk to. My sense of purpose, which was tied to my work, was taken away.

I started thinking about what I wanted to do next. I thought about what was important to me, what I really enjoyed about working outside of the paycheck, and realized that I work because I enjoy a feeling of accomplishment, I enjoy learning a new thing, and I enjoy overcoming challenges. So I set out to build a new work life for myself that touched on those…any income was an added bonus.

In his excellent book Work Less, Live More, author Bob Clyatt calls the lifestyle that Jacob and Jim and I have chosen “semi-retirement”. We’re financially independent but opt to keep working. “Semi-retirees learn that a reasonable amount of work, even unpaid work, keeps them energized, contributing, and sharp,” writes Clyatt.

(Clyatt says that semi-retirement is also a great option for those who haven’t yet achieved FI but are getting close. It’s a way to scale back your career, to make a gradual transition from full-time employment to something more casual.)

What Next?

When you’re Financially Independent, you should make decisions based purely on your personal values,” Mr. Money Mustache once told me. “You should make your decisions as if money didn’t matter. You should ask yourself: If you could live anywhere, where would you live? You should choose to do work that you’d do even if you weren’t getting paid. And you should make buying decisions as if everything were free.”

But how do know your personal values? Most people have a vague understanding of what’s important to them, but lack clear goals and purpose. That’s why I like the following exercise, which is designed to help you discover meaning in your life.

To complete this assignment — based on the work of Alan Lakein — you’ll need about an hour of uninterrupted time. You’ll also need a pen, some paper, and some sort of stopwatch. When you’re ready, do the following:

  1. At the top of a blank page, write this question: What are my lifetime goals? For five minutes, list whatever comes to mind. Imagine you don’t have to worry about money, now or in the future. What would you do with the rest of your life? Don’t filter yourself. Fill the entire page, if you can. When you’re finished, spend an additional five minutes reviewing these goals. Make any changes or additions you see fit. Before moving on, note the three goals that seem most important to you.
  2. On a new piece of paper, write: How would I like to spend the next five years? Spend five minutes answering this question. Be honest. Don’t list what you will do or should do, but what you’d like to do. Suspend judgment. When your time is up, again spend five minutes reviewing and editing your answers. As before, highlight the three goals that most appeal to you.
  3. Start a page with the question: How would I live if I knew I’d be dead in six months? Imagine that your doctor says you’ve contracted a new disease that won’t compromise your health now, but which will suddenly strike you dead in exactly six months. There is no cure. How would you spend the time you have left? What would you regret not having done? You know the drill: Take five minutes to brainstorm as many answers as possible, then five minutes to go back through and consider your responses. When you’re ready, indicate the three things that matter most to you.
  4. At the top of a fourth piece of paper, write: My Most Important Goals. Below that, copy over the goals you marked as most important from answering each of the three questions. (If any answers are similar, combine them into one. For instance, if “write a novel” was one of your top answers to the first question and “writing fiction” was a top answer to the second, you’d merge these into a single goal.)
  5. The final step requires a bit of creativity. Label a fifth piece of paper My Mission. Look through your list of most important goals. Does one stand out from the others? Can you see a common thread that connects some (or all) of the goals? Using your list as a starting point, draft a Mission Statement. Your Mission Statement should be short — but not too short. It might be anywhere from a few words to a few sentences. Take as much time as you need to make this the best, most compelling paragraph you can write.

When you’ve finished, set aside your Mission Statement and walk away. Go about the rest of your life for a few days. Don’t forget about your mission, but keep it in the back of your mind.

After you’ve had time to stew on things, sit down and review what you’ve written. How does your Mission Statement make you feel? Can you improve upon it? You want a vision to give you a sense of purpose that drives you day-in and day-out, through good times and bad.

Note: To make things easier, I’ve created a free PDF version of this project for you to download and print: Your Personal Mission Statement.

Final Thoughts

Over the past couple of years, I’ve thought a lot about people who set (and achieve) big goals but then lose their way. This happens all of the time.

Many people spend years digging out of debt only to fall back into the pit. Or there are folks like me who manage to lose fifty pounds but then gain it all back. (I’ve done that twice before. I’m in the middle of a gain right now — but I’m trying to put the brakes on.)

I think the big problem is that people forget to ask themselves, “What next?” They have a plan to get out of debt or to lose weight, but they don’t have a plan for what follows. I think another issue is that people pick the wrong goals.

  • Your aim shouldn’t be to get out of debt. Your aim should be to boost your personal profit; debt reduction then becomes an inevitable side effect.
  • Similarly, your target shouldn’t be a specific weight. Your goals should be to eat right and to exercise thirty or sixty minutes each day. If you do this, fitness will follow.

A similar issue faces folks who have set the goal of achieving Financial Independence. They’ve set themselves target, which has no real meaning in Real Life, and once they succeed at reaching it, they’re lost. They come to the realization that their goal was arbitrary, that it ought to have been a side effect not a primary aim. (It’s curious to see so many FIRE bloggers lately move to “un-retire” and return to work precisely because they were floundering to find direction.)

Whether you’re digging out of debt, building your debt snowball, are wondering what to do now that you’ve achieved Financial Independence, your happiness and well-being can be improved by having a sense of purpose. What’s yours?

The post Beyond wealth: What happens AFTER you achieve financial independence? appeared first on Get Rich Slowly.

Book Review: I Will Teach You to Be Rich (2019 Edition)

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When I started Get Rich Slowly in 2006, I had no idea other money blogs existed. I’d been blogging about cats, computers, and comic books since 1997 — before blog was even a word! — and I thought my new venture might be the first blog about personal finance.

I was wrong.

I learned quickly that there were already dozens (dozens!) of people blogging about money on the interwebs. For instance:

  • Harlan Landes was writing at Consumerism Commentary. He now runs the Plutus Foundation, a financial literacy non-profit.
  • Jim Wang — a ginormous money nerd then, a ginormous money nerd now — was writing at Blueprint for Financial Prosperity. He now runs Wallet Hacks.
  • John was writing at Free Money Finance (a front for selling Moose Tracks ice cream!). He now runs ESI Money.
  • Ramit Sethi was writing at I Will Teach You to Be Rich. He still runs the site, but his focus has shifted from personal finance to entrepreneurship and marketing.

I Will Teach You to Be RichAll four of these folks built and grew successful sites because they produced quality content. But Ramit might be the most successful of all. Nowadays, he produces helpful courses on a variety of personal development subjects. He hosts conferences. He wrote a best-selling book. And he never sold his website.

Instead, I Will Teach You to Be Rich has evolved as he’s evolved. In recent years, Ramit has distanced himself from the world of personal finance. Nowadays, he’s focused on the many different ways his readers can build a Rich Life.

In fact, “how to live a Rich Life” is the core theme of the brand-new second edition of I Will Teach You to Be Rich, the book. In 2009, Ramit wrote, “I Will Teach You to Be Rich is about sensible, banking, budgeting, saving, and investing.” In the 2019 edition, that’s been changed to, “I Will Teach You to Be Rich is about using money to design your Rich Life.” I think you’ll agree that this is a much more compelling theme.

If you’ve read my other book reviews, you’ll note that I sometimes shy away from giving an overall evaluation, opting instead to talk about some aspect of the book I liked (or didn’t). When this happens, it’s usually because I don’t think the book is that great.

I won’t be coy today. I Will Teach You to Be Rich is one of the best personal-finance books on the market. It’s great.

Let’s take a closer look at why I like it so much.

Why Do You Want to Be Rich?

“Your goal probably isn’t to become a financial expert,” Ramit writes at the start of I Will Teach You to Be Rich. “It’s to live your life and let your money serve you.” His book aims to show you how to make that happen.

To start, he urges readers to not get hung up on minutiae. He warns them not to give in to modern “victim culture”. Instead, he wants people to put the excuses aside and agree to take an active role in building their financial future.

Crafting that future starts by asking a simple question: Why do you want to be rich? “When you picture your ideal life,” he asks, “what are you doing in it?” Similarly, I ask new GRS readers to take the time to write a personal mission statement. Ramit doesn’t go that far, but he does urge his audience to do some self-reflection.

The bulk of the book is devoted to a “six-week action plan” designed to create a solid financial infrastructure.

  • Week one focuses on optimizing credit cards and improving your credit history.
  • Week two explains how to find great bank accounts, and how to negotiate away fees.
  • During week three, Ramit helps readers to open a 401(k) and/or a Roth IRA.
  • In week four, Ramit leads readers through he process of drafting a “conscious spending plan” so that they can make conscious choices about where their money goes.
  • Week five is all about connecting your new financial infrastructure, and automating it so that it hums along without intervention from you.
  • And the final week is an introduction to investing — how to use diversification and asset allocation to meet your investment goals.

This six-week action plan gives I Will Teach You to Be Rich a clear, logical structure. Having written one print money manual and two ebooks, I know how difficult this can be. (Of my books, only the Money Boss Manifesto has a structure I like.) Ramit gets this right, and it makes a huge difference.

The last few chapters cover miscellaneous subjects that couldn’t be shoe-horned into this six-week program. Ramit discusses pre-nups, for instance, using his own recent marriage as an example. He explores student loans, taxes, and financial independence.

Plus, he includes an excellent eight-page section on salary negotiation. This is something for which he has a $588 for-profit course, yet he doesn’t ever mention that course in the book. I appreciate that.

For more about Ramit’s opinions of the early retirement movement, check out his appearance on the Mad Fientist podcast.

J.D. and the Mad Fientist

The Mad Fientist and me, working together in Edinburgh yesterday

Action Not Words

For me, the primary strength of I Will Teach You to Be Rich is (and always has been) that it’s packed with actionable advice. Too many money books talk about terms and cover general concepts but never give readers specific steps they can take to implement this info in their lives.

Ramit, on the other hand, is all about action.

In I Will Teach You to Be Rich, he says which credit cards, apps, and bank accounts he uses (and he tells you why). He shares several word-for-word scripts that you can use to dispute charges, get fees waived, and more.

He urges readers to focus on Big Wins, not on small (but painless) actions that have little real impact on their financial future. (What’s the point of clipping coupons when your mortgage debt is crushing you? You need a new house, not cheaper toilet paper!)

He explains why it’s okay to spend deliberately on the things you love as long as you’re careful to cut out the stuff that doesn’t matter.

Does all of this sound familiar? Does it sound like the stuff I say all of the time here at Get Rich Slowly? That’s because it is. My financial philosophy is closely aligned with Ramit’s. And, in fact, key parts of it actually come from from Ramit. (He’s where I learned about conscious spending, for instance, and about building barriers.)

In short, Ramit focuses on the choices that will create the greatest improvements in his readers lives. He doesn’t pretend to cover everything. He’s only interested in the 20% of actions that will help folks achieve 80% of results. He ignores the rest.

Living a Rich Life

Ramit has made significant changes to the new edition of I Will Teach You to Be Rich. He’s corrected errors. He’s added new material. And he’s changed the overall theme.

In this new version, he’s deliberately emphasized and expanded on his Rich Life concept, which was little more than an afterthought in the first edition. During the intervening ten years, “living a Rich Life” has become the focus of Ramit’s financial philosophy.

He’s also taken this opportunity to fix problems with the original. “Ten years ago, I made three mistakes when writing the first edition of this book,” Ramit says. Those mistakes?

  1. “I didn’t cover the emotions around money…If you don’t tackle your invisible money scripts, none of it matters.” Amen! Ramit calls them “invisible money scripts”. I call them money blueprints. We both agree they have a profound influence on your attitudes and actions with money.
  2. “The second mistake I made was being too overbearing. The truth is, you can choose what your Rich Life is and how you get there.” In other words: Do what works for you — our philosophy here at GRS since day one. Note that this also signals a softening of Ramit’s famously abrasive delivery style. He still doesn’t hesitate to say what he thinks, but he’s no longer so pushy about it.
  3. Ramit says that his third mistake was quoting actual rates and numbers. The world of personal finance is in constant flux. A decade ago, you could find 5% interest rates on savings accounts. Not anymore. A decade ago, the annual Roth IRA contribution was $5000. Not anymore. So, in the second edition of his book, Ramit tries to steer clear of quoting numbers that might be outdated next year. Or next week.

In 2009, many GRS readers complained about the book’s tone. They found Ramit’s “in your face” style annoying. While the book’s voice is still breezy, the irreverence and silliness are much more subdued. You won’t find many lines like this anymore: “Why does just about everything written about personal finance make me want to paint myself with honey and jump into a nest of fire ants?”

Here’s a final (but vital) change: The book’s numbers and examples have been altered to appeal to a broader audience. The original edition was clearly aimed at young adults. The book’s examples featured folks aged 25 to 35. The new edition deliberately includes examples for an older audience.

A Rose By Any Other Name

I had only two real complaints about the first edition of I Will Teach You to Be Rich. Like a lot of people, I didn’t care for the tone. But I also didn’t like the way Ramit sometimes plays word games.

The tone of the new edition is much improved, as I’ve mentioned, but the word games remain.

Ramit pretends to hate budgets, for instance, writing: “I hate budgeting. ‘Budgeting’ is the worst word in the history of the world…Because we know that budgets don’t work, I’m going to show you a better way.”

First, budgets do work. According to The Millionaire Next Door, a majority of millionaires have a budget. (Of those who don’t, many others create “an artificial economic environment of scarcity” that mimics a budget.)

Bad budgets don’t work. Good ones do. (We looked at how to budget effectively last week.)

Second, Ramit’s alternative to budgeting is…budgeting. He calls his budget a “conscious spending plan” but…it’s a budget. It’s a good budget explicitly based on the 60% Solution. But it’s still a budget. (What’s more, he advocates You Need a Budget and the envelope system!)

I don’t like this sort of semantic gymnastics. It’s pointless.

Really, though, this is a trivial complaint, something that’d only bother a money nerd like me. If calling his budget a “conscious spending plan” will help his readers improve their personal finances, great. Go for it. Play those silly word games.

I Will Teach You to Be Rich

This new edition of I Will Teach You to Be Rich is bigger and better than the first in almost every way (and that’s saying a lot!).

In my review of the first edition, I wrote:

Ramit’s book is great, but it’s not for everyone. First of all, it’s targeted almost exclusively at young adults. If you’re under 25 and single, and if you make a decent living, this book is perfect. But if you’re 45 and married with two children, and if you struggle to make ends meet, this book is less useful.

The second edition of I Will Teach You to Be Rich is different. This time around, I think the book would be useful for somebody who’s 45 and married with two children. There’s no doubt that the tone and content still skew young, but not in a way that’s off-putting for old fogies like me.

Over the past decade, I’ve recommended (and handed out) I Will Teach You to Be Rich to many young adults. In the decade to come, I’m confident that I’ll be recommending (and handing out) copies of the new edition to people of all ages.

Why? Because there’s no bullshit in this book. There’s no hedging, no obfuscation, no fluff. This book is smart, bold, and practical. It’s filled with tips that actually work.

Personally, I’m sad that Ramit isn’t as involved in the personal-finance space as he used to be. There are few people with original things to say about money. He’s one one of them. Whereas most people parrot tropes without thinking, Ramit is unafraid to challenge conventional assumptions. His voice is valuable. I wish we heard more of it.

The post Book Review: I Will Teach You to Be Rich (2019 Edition) appeared first on Get Rich Slowly.

The psychology of passive barriers

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A surprising thing happens to people in their forties. After working hard, buying a house, and starting a family, they suddenly realize that they’d better start being responsible with their money. They begin reading financial books and trying to learn how to set up a nest egg for themselves and their families. It’s a natural part of growing older.

If you ask these people in their forties what their biggest life worry, the answer often is, quite simply, “money”. They want to learn to manage their money better, and they’ll tell you how important financial stability is to them.

Yet the evidence shows something very different.

In the table below, researchers followed employees at companies that offered financial-education seminars. Despite the obvious need to learn about their finances, only 17% of company employees attended. This is a common phenomenon.

401k compliance rates

As Laura Levine of the Jump$tart Coalition told me — and I paraphrase — “Bob doesn’t want to attend his 401(k) seminar because he’s afraid he’ll see his neighbor there…and that would be equivalent to admitting he didn’t know about money for all those years.”

They also don’t like to attend personal-finance events because they don’t like to feel bad about themselves. But of those who did attend the employer event, something even more surprising happens.

Of the people who did not have a 401(k), 100% planned to enroll in their company’s 401(k) offering after the seminar. Yet only 14% actually did.

Of those who already had a 401(k), 28% planned to increase their participation rate. 47% planned to change their fund selection (most likely because they learned they had picked the default money-market plan, which was earning them virtually nothing). But less than half of people actually made the change.

This is the kind of data that drives economists and engineers crazy, because it clearly shows that people are not rational. Yes, we should max out our 401(k) employer match, but billions of dollars are left on the table each year because we don’t. Yes, we should start eating healthy and exercising more, but we don’t.

Why not? Why wouldn’t we do something that’s objectively good for us?

Barriers are one of the implicit reasons you can’t achieve your goals. These barriers can be psychological or profoundly physical, like something as simple as not having a pen when you need to fill out a form. But the underlying factor is that they are breathtakingly simple — and if I pointed them out to you about someone else, you would be sickened by how seemingly obvious they are to overcome.

It’s easy to dismiss these barriers are trivial, and say, “Oh, that’s so dumb!” when you realize that not having an envelope nearby could cost someone over $3,000. But it’s true. And by the end of this article, you’ll be able to identify at least three barriers in your own life — whether you want to or not.

The Psychology of Passive Barriers

Why People Don’t Participate in Their 401(k)s

If you’re like me, whenever you hear that one of your co-workers doesn’t participate in their 401(k) — especially if there’s an employer match — you scratch your head in confusion.

Even though this is free money, many people still don’t participate. Journalists will cite intangibles like laziness and personal responsibility, suggesting that people are getting less responsible with their money over time. Hardly.

It turns out that getting people to enroll in their 401(k) is just plain hard. Using simple psychological techniques, however, we can dramatically increase the number of people who participate in their company’s retirement plan. One technique, automatic enrollment, automatically establishes a retirement plan and contribution. You can opt out at any time, but you’re enrolled by default.

Here’s how it affects 401(k) enrollment. (“AE” = automatic enrollment.)

401k automatic enrollment

From 40% participation to nearly 100% in one example. Astonishing.

Today, J.D. has given me the opportunity to talk about one of the ways to drive behavioral change when it comes to your money. I call them barriers.

While I do this, I’m going to ask you for a favor. You’ll see examples of people who lost thousands of dollars because they wouldn’t spend one hour reading a form. It’s easy to call these people “lazy” — and there’s certainly an element of that — but disdainfully calling someone lazy doesn’t explain the whole story. Getting people to change their behavior is extraordinarily hard — even if it will save them thousands of dollars or save their lives.

If it were easy, you would have a perfect financial situation: You’d have no debt, your asset allocation would be ideal and rebalanced annually, and you’d have a long-term outlook without worrying about the current economic crisis. You’d be at your college weight, with washboard abs and tight legs. You’d have a clean garage.

But you don’t.

None of us are perfect. That’s why understanding barriers is so important to changing your own behavior.

“Just Spend Less Than You Earn!”

There’s something especially annoying about comments on personal-finance blogs. On nearly every major blog post I ever made, someone left a comment that goes like this: “Ugh, not another money tip. All you need to know is: spend less than you earn.”

Actually, it’s not that simple. If that were the case, as I pointed out above, nobody would be in debt, overweight, or have relationship problems of any kind. Simply knowing a high-level fact doesn’t make it useful. I studied persuasion and social influence in college and grad school, for example, but I still get persuaded all of the time.

These commenters make the common mistake of assuming that people are rational actors, meaning they behave as a computer model would predict. We know this is simply untrue: Books like Freakonomics and Judgment in Managerial Decision Making are great places to get an overview of our cognitive biases and psychological motivations.

For example, we say we want to be in shape, but we don’t really want to go to the gym. (J.D. is a prime example of this, and he’ll be the first to admit it.) We believe we’re not affected by advertising, but we’re driving a Mercedes or using Tupperware or wearing Calvin Klein jeans.

There are dramatic differences in what we say versus what we do. Often, the reason is so simple that we can’t believe it would affect us. I call these barriers, and I’ve written about them before:

Last weekend, I went home to visit my family. While I was there, I asked my mom if she would make me some food, so like any Indian mom would, she cooked me two weeks’ worth. I came back home skipping like a little girl.

Now here’s where it gets interesting. When I got back to my place, I took the food out of the brown grocery bag and put the clear plastic bags on the counter. I was about to put the bags in the fridge but I realized something astonishing:

Food from Ramit's mom

…if I got hungry, I’d probably go to the fridge, see the plastic bags, and realize that I’d have to (1) open them up and then I’d have to (2) open the Tupperware to (3) finally get to the food. And the truth was, I just wouldn’t do it. The clear plastic bags were enough of a barrier to ignore the fresh-cooked Indian food for some crackers!!

Obviously, once I realized this, I tore the bags apart like a voracious wolf and have provided myself delicious sustenance for the past week.

I think the source of 95%+ of barriers to success is…ourselves. It’s not our lack of resources (money, education, etc). It’s not our competition. It’s usually just what’s in our own heads. Barriers are more than just excuses — they’re the things that make us not get anything done. And not only do we allow them to exist around us, we encourage them. There are active barriers and passive barriers, but the result is still the same: We don’t achieve what we want to.

I believe there are two kinds of barriers.

  • Active barriers are physical things like the plastic wrap on my food, or someone telling me that it’ll never work, etc. These are hard to identify, but easy to fix. I usually just make them go away.
  • Passive barriers are things that don’t exist, so they make your job harder. A trivial example is not having a stapler at your desk; imagine how many times a day that gets frustrating. For me, these are harder to identify and also harder to fix. I might rearrange my room to be more productive, or get myself a better pen to write with.

Today, I want to focus on passive barriers: what they are and how to overcome them.

How to Destroy Passive Barriers

Psychologists have been studying college students for decades to understand how to reduce unprotected sex. Among the most interesting findings, they pointed out that it would be rational for women to carry condoms with them, since often the sexual experiences they had were unplanned and these women can control the use of contraceptives.

Except for one thing.

When they asked college women why they didn’t carry condoms with them, one young woman typified the responses: “I couldn’t do that…I’d seem slutty.” As a result, she and others often ended up having unprotected sex because of the lack of a condom. Yes, technically they should carry condoms, just as both partners should stop, calmly go to the corner liquor store, and get protection. But often they don’t.

In this case, the condom was the passive barrier: Because they didn’t have it nearby and conveniently available, they violated their own rule to have safe sex.

Passive barriers exist everywhere. Let’s look at some examples.

Passive Barriers in E-mail

I get emails like this all the time:

“Hey Ramit, what do you think of that article I sent last week? Any suggested changes?”

My reaction? “Ugh, what is he talking about? Oh yeah, that article on savings accounts…I have to dig that up and reply to him. Where is that? I’ll search for it later. Marks email as unread

Note: You can yell at me for not just taking the 30 seconds to find his email right then, but that’s exactly the point: By not including the article in this followup email, he triggered a passive barrier of me needing to think about what he was talking about, search for it, and then decide what to reply to. The lack of the attached article is the passive barrier, and our most common response to barriers is to do nothing.

Passive Barriers on Your Desk

A friend of mine lost over $3000 because he didn’t cash a check from his workplace, which went bankrupt a few months later. When I asked him why he didn’t cash the check immediately, he looked at me and said, “I didn’t have an envelope handy.” What other things do you delay because it’s not convenient?

Passive Barriers to Exercise

I think back to when I’ve failed to hit my workout goals, and it’s often the simplest of reasons. One of the most obvious barriers was my workout clothes. I had one pair of running pants, and after each workout, I would throw it in my laundry basket. When I woke up the next morning, the first thing I would think is: “Oh god, I have to get up, claw through my dirty clothes, and wear those sweaty pants again.”

Once I identified this, I bought a second pair of workout clothes and left them by my door each day. When I woke up, I knew I could walk out of my room, find the fully prepared workout bag and clothes, and get going.

Passive Barriers to Healthy Eating

Too many people create passive barriers to healthy eating. You’re sitting at your desk at work and you get hungry. Rather than reach for a healthy snack (because you don’t have one with you — a passive barrier), you go to the vending machine for a bag of Cheetos.

Here’s a real-life example of passive barriers preventing J.D. from eating healthy. We were in Denver together in 2013 for a conference. During a long day with no breaks, he didn’t have a healthy snack with him. But he did have Hostess Sno-Balls. Bad J.D. That’s not even food.

Ramit scolding me about my snack choices

J.D. needs to remove passive barriers to healthy eating

If you find yourself snacking on Cheetos (or Sno-Balls) all day at work, try this: Don’t take any spare change in your pockets for the vending machine. Even if you leave quarters in your car, that walk to the parking lot is barrier enough not to do it. Give yourself an alternative. Carry a healthy snack with you, like apple slices. Remove the passive barrier to eating healthy.

Applying Passive Barrier Theory to Your Own Life

As we’ve seen, the lack of having something nearby can have profound influences on your behavior. Imagine seeing a complicated mortgage form with interest rates and calculations on over 100 pages. Sure, you should calculate all of it, but if you don’t have a calculator handy, the chances of your actually doing it go down dramatically.

Now, we’re going to dig into areas where passive barriers are preventing you from making behavioral change — sometimes without you even knowing it.

Fundamentally, there are two ways to address a passive barrier.

  • You’re missing something, so you add it to achieve your goals. For example, cutting up your fruit as soon as you bring it home from the grocery store, packing your lunches all at once, or re-adding the attachment to a followup email so the recipient doesn’t have to look for it again.
  • Causing an intentional passive barrier by deliberately removing something. You put your credit card in a block of ice in the freezer to prevent overspending. (That’s not addressing the cause, but it’s immediately stopping the symptom.) Or you put your unhealthiest food on the other side of the house, so you have to walk to them. Or you install software like Freedom to force yourself not to browse Reddit three hours a day.

Personally, here are a few passive barriers I’ve identified (and removed) for myself: I keep my checkbook by my desk, because for the few bills I receive in the mail, I tend to never mail them in. I keep a gym bag of clothes ready to work out. And I cut up my fruit when I bring it home from the store, because I know I’ll get lazy later.

Now let’s see how this can work for you. Here’s an exercise I’d like you to do:

  1. Get a piece of paper and a pen — or open the note-taking app on your phone.
  2. Identify ten things you would do if you were perfect. Don’t censor. Just write what comes to mind. And focus on actions, not outcomes. Examples: “I’d work out four times per week, clean my garage by this Sunday, play with my daughter for 30 minutes each day, and check my spending once per week.”
  3. Now, play the “Five Whys” game: Why aren’t you doing each of these things?

Let’s play out the last step with the example of exercising regularly. Let’s assume I say that I want to exercise three times per week, but I only go twice per month. Let’s do the Five Whys:

  • Why do I excercise only twice per month? Because I’m tired when I get home from work.
  • Why? Because I get home from work at 6 p.m.
  • Why? Because I leave late for work, so I have to put in eight hours.
  • Why? Because I don’t wake up in time for my alarm clock.
  • Why? Hmm…Because when I get in bed, I watch Netflix for a couple of hours.

Here’s a possible solution: Put the computer in the kitchen before you go to sleep → sleep earlier → come home from work at an earlier time → feel more rested → work out regularly.

That’s a gross oversimplification, but you see what I mean.

Homework: Pick ten areas of your life that you want to improve. Force yourself to understand why you haven’t done so already. Don’t let yourself cop out: “I just don’t want to” isn’t the real reason. And once you find out the real reasons you haven’t been able to check your spending, or cook dinner, or call your mom, you might be embarrassed at how simple it really was. Don’t let that stop you. Passive barriers are valued in their usefulness, not in how difficult they are to identify.

The Bottom Line

Passive barriers are subtle factors that prevent you from changing your behavior. Unlike “active” barriers, passive barriers describe the lack of something, making them more challenging to identify. But once you do, you can immediately take action to change your behavior.

You can apply barriers to prevent yourself from spending money, cook and eat healthier, exercise more, stay in touch with your friends and family, and virtually any other behavior. You can do this with small changes or big ones. The important factor is to take action today.

A caveat: Sometimes people take this advice to mean, “The reason I haven’t been sticking to my workout regimen is that I don’t have the best running shoes. I should really go buy those $150 shoes I’ve been eyeing…that will help me change my behavior.”

Resolving passive barriers is not a silver bullet: Although they help, you’ll be ultimately responsible for changing your own behavior. Instead of buying better shoes immediately, I’d recommend setting a concrete goal — “Once I run consistently for 20 days in a row, I’ll buy those shoes for myself” — before spending on barriers. Most changes can be done with a minimum of expense.

J.D.’s note: This is one of my favorite guest articles in the history of Get Rich Slowly. It had a profound effect on me, my life, and my work. This piece was originally published on 17 March 2009. I’m reprinting it today to celebrate the newly-published second edition of Ramit’s book, I Will Teach You to Be Rich [my review].

The post The psychology of passive barriers appeared first on Get Rich Slowly.

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.

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