Scared of money? (Why & how to overcome your fear today)

sourced from: https://www.iwillteachyoutoberich.com/blog/scared-of-money-why-how-to-overcome-your-fear-today/

The more I see people talk about money, the more I see how SCARED we are of it.

How we let others poison our views of money.

And how easily we use negative words to describe it.

Here’s an email I got from someone who read my book, I Will Teach You To Be Rich. What do you notice?

“Frick it, I guess I’ll write the email…

Money stresses me out. My parents didn’t teach me anything about it and I’m very dependent right now. I did a year of nonprofit and made about 10k after taxes and it was miserable, so I figured if I can pull that off for one year then I can make it work. And I did! But I don’t know if I’ll hit it this year (it’s a bit depressing and a big source of anxiety). I think time is the name of the game though, the career is moving forward, hopefully, game sales will kick in passive income.

For the “rich life” I’m a simple person. I want enough money to be able to travel. I want to own a dog. I want a kitchen with an island. I want to have a nice desktop and a nice coffee table. My partner doesn’t want to own a house but I kind of do. Since I don’t have a full-time job outside of my freelancing which is currently in a drought period, I don’t have really ANY money, averaging about $250 a week.”

My response:

“Good stuff. Great to meet you

Now I want you to look at your email and count the number of times you use negative words to describe your life/money. How many do you count?”

His response (notice the skepticism):

“Ha, I can’t tell if this was an automated message or not but you got me there!

Depending on your definition, about 6-10.”

6-10 IN A SHORT-ASS EMAIL. (Well, compared to the kinds I write…like the one you’re reading. LOL.) Finally, my response:

It’s not automated.

Good!

Now, can you rewrite that entire email to be POSITIVE instead of negative? Send it over my way.

This guy didn’t even notice his reflexive negativity with money. It’s become like a dull toothache, something he gets used to. And since negativity is his worldview — the “lens” through which he views everything — I guarantee it’s an invisible “drag” on his entire life.

I asked him to rewrite his email to be POSITIVE instead of negative because sometimes, it takes someone pointing out your pattern to shake you out of it.

When I talk to people about money, here are the most common words they use to describe it:

“Anxious”

“Stressed”

“Is it too late”

(What words come to mind for you?)

But it’s even more revealing when you listen to the ways they talk about money.

What they say: “What’s my Rich Life? Well, I just want to go on vacation with my kids a couple times a year, nothing fancy…”
What they really mean: Notice those last two words — “nothing fancy.” When people talk about their Rich Lives, they almost always minimize their own dreams. When you’ve spent your entire life worrying about what can go wrong with money, it’s almost impossible to dream.

What they say: “How do I KNOW your programs will work?” OR “Will this book work for me if I live in Bolivia and I have a lazy left eye and I only eat mussels on Mondays?”

What they really mean: “I have a finite amount of money. If I spend it here, I need to know it will absolutely work, otherwise, I will have wasted my money…and there’s no way for me to ever earn more”

Are you about to say what I think you’re about to say?

What they say: “Even if I made $250,000/year, I wouldn’t eat out at a nice restaurant like that. What a waste!”

What they really mean: “I have never eaten at a place like that and I don’t want to be the kind of person who “has” to go there to enjoy food. I’m simple.” (One level deeper: “I’m nervous that if I ate there, I might actually like it. I don’t trust myself to avoid going there every single week and spending all of my money”)

What they say: “I shouldn’t get a credit card.”

What they actually mean: “I don’t trust myself to control my spending, therefore I need to restrict myself”

What they say: “I went to [ANY FOREIGN COUNTRY] and they tried to rip me off because I was an American”

What they really mean: “Well, yeah, I could have afforded an extra $5 for those postcards…but I HATE BEING RIPPED OFF. If someone else is winning and I am losing, I HATE IT”

So many of us make day-to-day money decisions, never understanding the “invisible scripts” that actually guide these decisions. And in America, money is driven by FEAR.

FEAR that we’ll never have enough.

FEAR that we can’t make more of it.

And FEAR that someone will judge us for our spending — or even what we want to spend on.

I hate this. That’s why I show you how to identify your Money Dials, the things you LOVE spending on, then I show you how to spend MORE on it.

Talking to a small group about money psychology. On book tour, I hosted private events in NYC event at Thompson Square Studios (NYC) and our Hills Penthouse (West Hollywood). As a reader of IWT, you can get your first month free at either of these locations. Please reach out directly to chelsea@thompsonhousegroup.com

I also show you how to get psychologically comfortable with the idea of changing your identity. People say “Money changes people,” in disgust, as if it’s a bad thing. Money should change you! It should let you dream bigger, it should let you live an easier or more adventurous life, and it should let you bring others with you (learn about the psychology of the wealthy).

But you can’t do that if you’re stuck thinking about money as a source of anxiety and fear.

An interviewer recently asked me what I would change from my 20s. I said, “I would have more FUN. I was too rigid. But the times where I had the most fun and I was the most successful was I just loosened up and tried a bunch of new things”

With money, try these different approaches.

Know that you can trust yourself. Know that you can eat at a really nice restaurant once for the experience — and truly enjoy it — but trust that I’m not going to trip and fall and end up going there every single week. You can also use credit cards without overspending (follow the systems in my book). You can pay off your debt and stay out of debt. You can become Rich and do good. Trust yourself.

Know that you can create more money. You can negotiate your salary — or find an entirely new job. You can start a business, even if you don’t have an idea. You can build your network to sidestep people with 10 years’ more experience than you — and get perks you’ve never dreamed of. All of those things can dramatically increase your income. Above all, your money is not a fixed pie that you have to exhaustively guard and protect. You can also expand the size of your pie.

Stop being afraid of waste. In puritanical America, one of the biggest no-nos is WASTE. Oh no! Ramit, if I start spending more on the things I love, I might “waste” some of my money!

How do I “KNOW” that your book will solve my exact, highly specific problem that I worry about every fucking day of my life? If it doesn’t, I’ve wasted $10!!!! Scammer!!!

Oh no! Ramit, what if I hire someone and they don’t handle my SEO, my WordPress uploads, design all my graphics, triple my conversion rates, write my entire email funnel, and create a new webinar system? I might have WaSTed the $13/hour I tried to pay them!!

Oh no, there’s so much government waste! We should ONLY focus on cutting government waste. Especially that one thing I really hate. What? It only represents 0.03% of total spend? No, that can’t be right. Anyway, we need to handle WaSTe. Also, don’t talk about raising my historically low taxes, you socialist.

If you spend your entire life worrying about waste, you miss a simple fact of life: In any system of sufficient complexity, there will always be waste. Yes, you should take measures to control it, but you should also accept that there will be a certain amount of waste — and move on!

I know that I’m going to buy courses and attend conferences that won’t be perfect for me. I know I’m going to eat at a restaurant that’s unmemorable. I know I’m going to make bad hires.

SO WHAT?

I’d rather try new experiences and learn with each one…than to sit back and let the bogeyman of “waste” scare me from doing anything at all.

So much of personal finance advice take your latent fears and heightens them.

NO! Don’t use a credit card, you might overspend a little!

NO! Don’t eat out at that restaurant, what a waste!

NO! Don’t try to negotiate your salary, you should just be happy you have a job!

If you spent the last ten years worrying about your waste and all the bad things you might do, you’ve accepted the message that you should be SCARED. That you’re an organism that simply reacts to whatever’s around you — that you have no agency or control.

Meanwhile, the people who have gone on offense have taken control of their own finances, their own psychology, started to earn more, and happily spend on the things they love. No anxiety. Just confidence and the systems to back it up.

You listen to these fears and end up frightened and anxious, sitting around worrying about all the things that can go wrong with money.

Or you can go on offense. You can take control of your money.

You can build a plan to spend extravagantly on the things you love.

You can EMBRACE making mistakes, knowing you’ll waste a little money, but it’s fine, because over the long term, those mistakes are minor, and you can create more wealth for yourselves.

You choose.

In my book, I wrote this:

Play offense, not defense. Too many of us play defense with our finances. We wait until the end of the month, then look at our spending and shrug: “I guess I spent that much.” We accept onerous fees. We don’t question complicated advice because it’s given to us in a language we don’t understand. In this book, I’ll teach you to go on offense with your credit cards, your banks, your investments, and even your own money psychology. My goal is for you to craft your own Rich Life by the end of Chapter 9. Get aggressive! No one’s going to do it for you.

My dream is for you to remove the shackles of negativity around money. To decide what you LOVE spending on, and spend more on it, so money goes from a source of anxiety and doubts to a source of joy and possibility and purpose.

Get my book here

And comment here if this resonates with you. I want to hear from you.

Scared of money? (Why & how to overcome your fear today) is a post from: I Will Teach You To Be Rich.

Pizza Delivery is for Millionaires

sourced from: http://feedproxy.google.com/~r/MrMoneyMustache/~3/36Ez5FpmHMk/

My son and I are having a beautiful Saturday night here at home. The sun is setting over the mountains outside my bedroom window and I’ve just finished baking a pizza which I am about to serve up for his dinner.

Although our day has been very simple, there has been an underlying magic within it that triggered an epiphany that I just had to write to you about. Because within this simple moment seems to be the secret to pretty much everything.

We woke up to a cloudless blue sky and were treated to summer-like warmth even though it’s November. I served up a French toast breakfast and then we ate together as we made plans for our day. We decided the first stage would be some computer work for him, while I went out to do some yard work and a bit of maintenance and cleanup on my construction van, to get it ready to lend to a friend.

Stage Two was our big walk downtown. Little MM wanted to get some shots of old buildings as part of an assignment for photography class, and I wanted to fix a minor leak in the roof of the MMM HQ Coworking building, so we decided to combine the errands. The walk was long and adventurous and we even stopped for some exorbitant ice cream cones on the way, courtesy of a gift card I received for helping someone last month.

We got it all done – Little MM got his 24 required shots, I fixed the roof and also ran into my co-owners Mr. and Mrs. 1500 who were setting up the building for a group breakfast tomorrow. So my boy and I strolled the 1.5 miles home through the sunny leafy autumn streets of Longmont and settled in for the night.

I popped one of my homemade pizzas into the oven. Because it was a big one, it was going to take at least 25 minutes to cook so I figured I’d use that time to shower off the day’s dust and sunscreen. But then I noticed my hair was starting to get a bit out of control so I gave myself a quick haircut before the shower.

And as I stepped out of my room, dressed in clean clothes and feeling sharp and healthy and arriving in the fancy kitchen I built last month just as the oven beeped to indicate the pizza was finished, I realized that this is the secret to wealth. Days like today. Monetary wealth for sure, but also every other kind of wealth.

We had just enjoyed an almost perfect day almost effortlessly, just by having the right habits in place.

We had a shitload of fun, socialized and exercised and advanced the projects that are important to us. But simultaneously, we spent very close to zero dollars, and left the world mostly unscathed as we finished our day.

The beeping of that oven full of homemade pizza was what really set off the epiphany in my head.

“Damn”, I realized, “even with all this excess money building up over the years, it didn’t even occur to me to order a pizza. It’s just automatic, and thus faster and cheaper and healthier, to make my own.”

Plus by avoiding the delivery I am saving my neighbors from one gas-powered car bringing an unnecessary extra serving of danger and pollution onto our street. It’s a three-way win with no losing involved.

Ordering a decent extra-large pizza including tax, tip and delivery: $20
Dad’s Homemade pizza: about $4
Difference: 500%

Sure, the difference here is only sixteen bucks, but I wanted to highlight the percentage difference instead. Because if you apply this philosophy of efficient, automatic habits all through your life, it really does tend to cut your costs so that your life becomes 2, 3, 4, or even 5 times less expensive.

So I thought to myself “WHY does anyone who is not even a millionaire yet, or even worse who has a mortgage or credit card debt, still do something as frivolous and easily avoided as ordering a pizza?*”

With that example drawn out in detail, let’s look at some of the other details of this day:

New kitchen in my latest frugal fixer-upper house in progress. Even the toaster is fancy!

My new kitchen which made that pizza cooking so enjoyable was built on a total budget of about $6000 including changing the floorplan, electrical, plumbing, cabinets, countertops and all the appliances.

This is less than half of what custom-ordered cabinets alone would have cost, and a full kitchen remodel of this type usually tops $25,000. But by getting assemble-it-myself cabinets from Ikea and my appliances from Craigslist and doing all of the work myself, I cut the cost by about 75%, while earning plenty of great physical exertion and satisfaction at the same time. Savings: about $20,000 or 80%

My son is in the public middle school rather than in the private school across town, which is where some of the other multimillionaire parents send their kids. If the private school were better for his needs, of course we could afford to send him there too. But we gave the local option a chance and it has turned out to be an incredible place for him. Savings: about $20,000 per year or roughly 100%

We chose walking as our means of transportation, and if we were in a rush we would have ridden our bikes. This habit of not driving doesn’t just save me gas and maintenance money, it also allows me to keep an older vehicle. I have a 1999 Honda van that is still in sparkling new condition.

She just reached drinking age, all cleaned up for her first can of Coors Light!

It stays new because I barely use it, because I have designed my life to be within an entirely muscle-powered radius. But this brand-new van is worth less than two grand and insurance is about twenty bucks a month. Maintenance is less than $10, registration is $5. Savings versus owning an “average” $35,000 American car and driving an average amount: about $600 per month or 90%.

We didn’t go “shopping” (100% savings), watched a movie at home instead of the theatre (100%), I cut my own hair for the something-hundredth time (100%), we advanced our health rather than chipping away at it (100%), and built this warm caring relationship with each other as well as with our friends (priceless).

And there were all sorts of other less tangible things working in the background too. I bought a commercial building and started this coworking space as a way to pass the time and spend time with old and new friends – the same reasons that someone might buy a vacation home in the mountains or at the beach.

But instead of costing me a few thousand dollars per month and requiring 100 miles of driving every time I visit, this building is just a pleasant walk from home and it generates thousands per month in cashflow and appreciation. It is great for the mental and physical health of all of our 75 members and growing, and we all save money by being a part of this community.

Mr. 1500 and I hosting a party at MMM-HQ for the first screening of the Playing with FIRE documentary, April 2019

The funny part of all this is that today was a completely normal day for us – most of my days are very similar to this one. The only unusual part was that I happened to take a step back and actually notice it. And that is really the point of this whole article:

We get used to our daily routine, and think of it as “normal”, even if it is completely ridiculous.

In recent months, I have just had my eyes re-opened as I have had more contact with people who are living more typical American lives than me. Their normal is different than mine, so when I visit I happen to notice the differences – more car trips and impulse purchases and pizza deliveries.

These people are not living lifestyles that appear exorbitant at all, and their houses aren’t packed with expensive things. But these little 5-to-1 differences just silently happen, quietly and consistently and add up to perhaps $100 per day, when compared with a more streamlined lifestyle.

And $100 every day becomes $36,500 every year, and if you invest that conservatively it will compound into about $520,000 every decade.

$520,000 per decade.
Just from the tiny mindset switch between
“hey lets order a pizza”
versus
“Hey, let’s throw a pizza into the oven.”

I really think this is important, and as this whole “FIRE Movement” thing grows, some people are getting soft and complaining that Mr. Money Mustache is “too extreme”, and so we should take a gentler and easy path and let our spending get sloppy if that is what’s right for us.

The thing is, this is usually just wrong. It’s laziness rather than practicality. Because Mr. Money Mustache is already plenty spendy, and plenty sloppy – well beyond the level required to live a happy life.

I can afford to live this way, because I’m old and wealthy now. If you are still young and poor, you should be spending less than me, not more.

So, pizza delivery is for millionaires, and it’s also time to put away those car-clown keys and get back on your bike. We’ve still got work to do.


* Of course, this is a perfect-world generalization. Real life has room for joyful exceptions and imperfections. But you have to know the reality of what you should be doing, before you can safely start making exceptions like ordering your pampered ass a pizza.

Scared of money? (Why & how to overcome your fear today)

sourced from: https://www.iwillteachyoutoberich.com/blog/scared-of-money-why-how-to-overcome-your-fear-today/

The more I see people talk about money, the more I see how SCARED we are of it.

How we let others poison our views of money.

And how easily we use negative words to describe it.

Here’s an email I got from someone who read my book, I Will Teach You To Be Rich. What do you notice?

“Frick it, I guess I’ll write the email…

Money stresses me out. My parents didn’t teach me anything about it and I’m very dependent right now. I did a year of nonprofit and made about 10k after taxes and it was miserable, so I figured if I can pull that off for one year then I can make it work. And I did! But I don’t know if I’ll hit it this year (it’s a bit depressing and a big source of anxiety). I think time is the name of the game though, the career is moving forward, hopefully, game sales will kick in passive income.

For the “rich life” I’m a simple person. I want enough money to be able to travel. I want to own a dog. I want a kitchen with an island. I want to have a nice desktop and a nice coffee table. My partner doesn’t want to own a house but I kind of do. Since I don’t have a full-time job outside of my freelancing which is currently in a drought period, I don’t have really ANY money, averaging about $250 a week.”

My response:

“Good stuff. Great to meet you

Now I want you to look at your email and count the number of times you use negative words to describe your life/money. How many do you count?”

His response (notice the skepticism):

“Ha, I can’t tell if this was an automated message or not but you got me there!

Depending on your definition, about 6-10.”

6-10 IN A SHORT-ASS EMAIL. (Well, compared to the kinds I write…like the one you’re reading. LOL.) Finally, my response:

It’s not automated.

Good!

Now, can you rewrite that entire email to be POSITIVE instead of negative? Send it over my way.

This guy didn’t even notice his reflexive negativity with money. It’s become like a dull toothache, something he gets used to. And since negativity is his worldview — the “lens” through which he views everything — I guarantee it’s an invisible “drag” on his entire life.

I asked him to rewrite his email to be POSITIVE instead of negative because sometimes, it takes someone pointing out your pattern to shake you out of it.

When I talk to people about money, here are the most common words they use to describe it:

“Anxious”

“Stressed”

“Is it too late”

(What words come to mind for you?)

But it’s even more revealing when you listen to the ways they talk about money.

What they say: “What’s my Rich Life? Well, I just want to go on vacation with my kids a couple times a year, nothing fancy…”
What they really mean: Notice those last two words — “nothing fancy.” When people talk about their Rich Lives, they almost always minimize their own dreams. When you’ve spent your entire life worrying about what can go wrong with money, it’s almost impossible to dream.

What they say: “How do I KNOW your programs will work?” OR “Will this book work for me if I live in Bolivia and I have a lazy left eye and I only eat mussels on Mondays?”

What they really mean: “I have a finite amount of money. If I spend it here, I need to know it will absolutely work, otherwise, I will have wasted my money…and there’s no way for me to ever earn more”

Are you about to say what I think you’re about to say?

What they say: “Even if I made $250,000/year, I wouldn’t eat out at a nice restaurant like that. What a waste!”

What they really mean: “I have never eaten at a place like that and I don’t want to be the kind of person who “has” to go there to enjoy food. I’m simple.” (One level deeper: “I’m nervous that if I ate there, I might actually like it. I don’t trust myself to avoid going there every single week and spending all of my money”)

What they say: “I shouldn’t get a credit card.”

What they actually mean: “I don’t trust myself to control my spending, therefore I need to restrict myself”

What they say: “I went to [ANY FOREIGN COUNTRY] and they tried to rip me off because I was an American”

What they really mean: “Well, yeah, I could have afforded an extra $5 for those postcards…but I HATE BEING RIPPED OFF. If someone else is winning and I am losing, I HATE IT”

So many of us make day-to-day money decisions, never understanding the “invisible scripts” that actually guide these decisions. And in America, money is driven by FEAR.

FEAR that we’ll never have enough.

FEAR that we can’t make more of it.

And FEAR that someone will judge us for our spending — or even what we want to spend on.

I hate this. That’s why I show you how to identify your Money Dials, the things you LOVE spending on, then I show you how to spend MORE on it.

Talking to a small group about money psychology. On book tour, I hosted private events in NYC event at Thompson Square Studios (NYC) and our Hills Penthouse (West Hollywood). As a reader of IWT, you can get your first month free at either of these locations. Please reach out directly to chelsea@thompsonhousegroup.com

I also show you how to get psychologically comfortable with the idea of changing your identity. People say “Money changes people,” in disgust, as if it’s a bad thing. Money should change you! It should let you dream bigger, it should let you live an easier or more adventurous life, and it should let you bring others with you (learn about the psychology of the wealthy).

But you can’t do that if you’re stuck thinking about money as a source of anxiety and fear.

An interviewer recently asked me what I would change from my 20s. I said, “I would have more FUN. I was too rigid. But the times where I had the most fun and I was the most successful was I just loosened up and tried a bunch of new things”

With money, try these different approaches.

Know that you can trust yourself. Know that you can eat at a really nice restaurant once for the experience — and truly enjoy it — but trust that I’m not going to trip and fall and end up going there every single week. You can also use credit cards without overspending (follow the systems in my book). You can pay off your debt and stay out of debt. You can become Rich and do good. Trust yourself.

Know that you can create more money. You can negotiate your salary — or find an entirely new job. You can start a business, even if you don’t have an idea. You can build your network to sidestep people with 10 years’ more experience than you — and get perks you’ve never dreamed of. All of those things can dramatically increase your income. Above all, your money is not a fixed pie that you have to exhaustively guard and protect. You can also expand the size of your pie.

Stop being afraid of waste. In puritanical America, one of the biggest no-nos is WASTE. Oh no! Ramit, if I start spending more on the things I love, I might “waste” some of my money!

How do I “KNOW” that your book will solve my exact, highly specific problem that I worry about every fucking day of my life? If it doesn’t, I’ve wasted $10!!!! Scammer!!!

Oh no! Ramit, what if I hire someone and they don’t handle my SEO, my WordPress uploads, design all my graphics, triple my conversion rates, write my entire email funnel, and create a new webinar system? I might have WaSTed the $13/hour I tried to pay them!!

Oh no, there’s so much government waste! We should ONLY focus on cutting government waste. Especially that one thing I really hate. What? It only represents 0.03% of total spend? No, that can’t be right. Anyway, we need to handle WaSTe. Also, don’t talk about raising my historically low taxes, you socialist.

If you spend your entire life worrying about waste, you miss a simple fact of life: In any system of sufficient complexity, there will always be waste. Yes, you should take measures to control it, but you should also accept that there will be a certain amount of waste — and move on!

I know that I’m going to buy courses and attend conferences that won’t be perfect for me. I know I’m going to eat at a restaurant that’s unmemorable. I know I’m going to make bad hires.

SO WHAT?

I’d rather try new experiences and learn with each one…than to sit back and let the bogeyman of “waste” scare me from doing anything at all.

So much of personal finance advice take your latent fears and heightens them.

NO! Don’t use a credit card, you might overspend a little!

NO! Don’t eat out at that restaurant, what a waste!

NO! Don’t try to negotiate your salary, you should just be happy you have a job!

If you spent the last ten years worrying about your waste and all the bad things you might do, you’ve accepted the message that you should be SCARED. That you’re an organism that simply reacts to whatever’s around you — that you have no agency or control.

Meanwhile, the people who have gone on offense have taken control of their own finances, their own psychology, started to earn more, and happily spend on the things they love. No anxiety. Just confidence and the systems to back it up.

You listen to these fears and end up frightened and anxious, sitting around worrying about all the things that can go wrong with money.

Or you can go on offense. You can take control of your money.

You can build a plan to spend extravagantly on the things you love.

You can EMBRACE making mistakes, knowing you’ll waste a little money, but it’s fine, because over the long term, those mistakes are minor, and you can create more wealth for yourselves.

You choose.

In my book, I wrote this:

Play offense, not defense. Too many of us play defense with our finances. We wait until the end of the month, then look at our spending and shrug: “I guess I spent that much.” We accept onerous fees. We don’t question complicated advice because it’s given to us in a language we don’t understand. In this book, I’ll teach you to go on offense with your credit cards, your banks, your investments, and even your own money psychology. My goal is for you to craft your own Rich Life by the end of Chapter 9. Get aggressive! No one’s going to do it for you.

My dream is for you to remove the shackles of negativity around money. To decide what you LOVE spending on, and spend more on it, so money goes from a source of anxiety and doubts to a source of joy and possibility and purpose.

Get my book here

And comment here if this resonates with you. I want to hear from you.

Scared of money? (Why & how to overcome your fear today) is a post from: I Will Teach You To Be Rich.

“Playing with FIRE”, the documentary about financial independence and early retirement

sourced from: https://www.getrichslowly.org/playing-with-fire/

In early October 2016, I flew to New York City to attend Ramit Sethi’s Forefront event, a weekend conference about entrepreneurship and excellence. As I always do when travling, I agreed to meet with a few readers and colleagues while I was in town.

One sunny morning in Madison Square Park, for instance, I sat on a bench and chatted with Travis Shakespeare. “I’m a film and television producer,” Travis told me. “But I’m also into the FIRE movement. I just got back from the chautauqua in Ecuador.”

The FIRE movement, of course, is all about financial independence and early retirement. And the chautauquas are annual gatherings for FIRE folks who want to dive deep into the subject. (I’ve now attended four of these myself.)

“I’m toying with the idea of creating a film about FIRE,” Travis said. We spent an hour or so talking about his vision and plans. When we parted, I never expected that we’d see each other again. I was wrong.

During the past three years, I’ve connected with Travis several times. (I’ve come to really respect and admire the man. He’s a Good Guy.) And that idea he was toying with? The film about FIRE? Well, that project has come to fruition.

“Playing with FIRE” finished production earlier this year. Since June, it’s been screened in theaters around the country — and the world. Today, at long last, “Playing with FIRE” is available for purchase (and rental) on various digital platforms.

  • iTunes ($9.99 to buy, $4.99 to rent), where the Rotten Tomatoes score is linked to the wrong film
  • Amazon ($9.99 to buy, $4.99 to rent)
  • Google ($8.99 to buy, $3.99 to rent)
  • Vimeo ($9.99 to buy)

To mark this occasion, I wanted to share some background on the film from my perspective. Here are a few of my thoughts on “Playing with FIRE”.

Behind the Scenes

Soon after I met Travis, he found Scott Rieckens, a San Diego film-maker with a similar idea. Scott too wanted to make a film about FIRE. They decided to collaborate. By October 2017, a year after our conversation in Madison Square Park, Travis and Scott had begun production on their project.

My first exposure to “Playing with FIRE” came in late October 2017. I was in Dallas for Fincon, the annual conference for financial media. “We’re going to film a roundtable conversation about financial independence,” Scott told me by email. “I hope you can join us.”

Truthfully, I almost didn’t attend the roundtable interview. Fincon is pure chaos for me, and this just seemed like more chaos. In the end, I decided to participate. I’m glad I did. I joined friends like Carl (from 1500 Days), Tanja (from Our Next Life), and Brandon (from Mad Fientist) for a couple of hours of talk about money.

Filming the roundtable discussion in Dallas

True story: Despite all of the time and energy devoted to this roundtable, only a minute or so of footage from the night made it into the final film. That’s too bad. It was a great discussion. I was particularly impressed with Liz from Frugalwoods, whose contributions were deep and insightful. As ambivalent as I am about her book, I am not ambivalent about Liz as a person. She’s awesome.

My next exposure to “Playing with FIRE” came in February 2018. On a cold, rainy Sunday morning, the film crew visited our home here in Portland. We spent a couple of hours recording in our living room and in my writing studio, where the conversation centered on money and meaning. (Trivia: In the final version of the movie, every scene in which I appear was filmed in my writing shed.)

J.D. with Your Money: The Missing Manual

Over the past eighteen months, “Playing with FIRE” has been a constant part of the background of my life. I exchange email with Travis and Scott. (Kim is a fan of “Life Below Zero”, the Alaska-based reality show for which Travis is best known.) I’ve read the book. I’ve attended screenings. And last year at Get Rich Slowly, Scott shared his own experiences with making the film.

Playing with FIRE

Here’s how Scott described the impetus for this project on Reddit last week:

I was a content creator for marketing/advertising firms for nearly a decade, so making content that focused on FIRE was natural for me. I was scratching an itch with this project.

I was so inspired by the folks that had shared their wealth of knowledge on finance and investing. And I remember seeing the Minimalism documentary and thinking…if the minimalism movement has a documentary, then surely FIRE would too. But to my dismay, I was mistaken. So, after some serious deliberation and reaching out to a few mentors and even a few FIRE writers and podcast hosts, I decided to dedicate myself to the idea.

Then, after an appearance on the ChooseFI podcast, my world exploded and I was able to raise money, connected with a fellow FIRE fan and director from the BBC (Travis Shakespeare), ended up with a book deal and shit got super real, really quickly.

[…]

I decided that leaning into this momentum made sense. Because the framework of FI, while painfully simple, has not been introduced to the masses and is far too important not to share.

Naturally, Reddit doesn’t like the film. Or, more precisely, /r/financialindependence doesn’t like the idea of the film. Those who have seen it do like it. Most redditors have not seen it…yet are happy to pass judgment anyhow.

This is Reddit in a nutshell: A bunch of people who are quick to have opinions and make judgments without having all of the information — or any of the information, actually. It’s not just the FIRE forum. It’s the whole site. Users are quick to assume the motives of others.

When I talk to people who have seen “Playing with FIRE”, their reaction is generally positive. It’s not a film targeted at folks who are deep in the FIRE movement, folks who talk daily about saving rates and the four-percent rule. This film is targeted at people who are FI-curious, people who know that what they’re doing doesn’t work, but who haven’t yet been exposed to the ideas of the financial independence community.

This movie is meant to introduce people to the world of FIRE. It wasn’t made for the people who are already in that world.

Playing with FIRE screening

Money and Happiness

I’ve seen the film four times already this year, and I’ll watch it again later today. I may force my family to watch it during the holidays. While I don’t think “Playing with FIRE” is perfect, there are many things I like about the film.

I like, for instance, that it ultimately isn’t about Scott’s journey of discovery; instead, the story is about his wife’s journey of discovery. It’s about Taylor wrestling with these ideas and how they apply to her life.

And I like that, really, the film isn’t about money. Scott and Taylor don’t embrace this movement to become millionaires. They don’t “play with FIRE” in order to become rich. They explore this lifestyle in an attempt to increase their happiness, to create more meaningful lives.

There’s a scene early in the film in which Scott and Taylor, who are trying to decide what to do with their future, sit down in a San Diego park to talk about what’s important to them. Taylor shares the top ten things that make her happy on a weekly basis. These are things like wine, chocolate, exercise, and (especially) spending time with family.

“Any surprises?” Taylor asks Scott.

“Well, first off,” he says, “I didn’t hear the beach. The beach isn’t on the list? When was the last time you were on the beach?”

“Everything on that list is stuff we can do pretty much anywhere,” Scott says. He’s implying that there’s no reason they should be paying to live in such an expensive city when they’re not deriving value from that city.

“What’s going to make us happy?” Scott asks. “Because we can’t lose if we keep happiness in the forefront. I really think we should [change our lives]. I think it’s going to be the best thing for us…moving forward into the future.”

This is, of course, the stuff I preach day-in and day-out. This is why people ask me to fly to Portugal to speak, why they ask me to be on their podcasts, why they ask me to write for them, why they meet me for lunch. They want to me to talk about the relationship between money and purpose.

Playing with Fire tackles this subject head-on and in a real, honest way. The film isn’t sensational. It isn’t fake. It’s simple, authentic, and open-ended. It doesn’t offer pat answers. While this is in some ways unsatisfying (we want projects like this to provide answers, not create questions), it’s also genuine. I like that.

Final Thoughts

Projects like “Playing with FIRE” are important. As Scott said in an email yesterday: “Each copy rented or sold is a vote for improving financial literacy and eliminating conspicuous consumption.” It’s a good thing to increase awareness about smart money habits.

That’s why I’ve embarked on a similar project of my own. I don’t want to make a movie (ha!), but I am creating a ten-part, five-hour audio course to introduce people to the world of FIRE. In fact, that’s where much of my time and attention will be devoted this autumn and winter. It’s an exciting assignment, one that I hope will reach a lot of new people.

For now, though, “Playing with FIRE” is really the only thing of its kind, the only mainstream introduction to the ideas of financial independence and early retirement that’s targeted toward a general audience (as opposed to targeted toward money nerds).

As I mentioned earlier, you can buy or rent the film from the following sources:

  • iTunes ($9.99 to buy, $4.99 to rent), where the Rotten Tomatoes score is linked to the wrong film
  • Amazon ($9.99 to buy, $4.99 to rent)
  • Google ($8.99 to buy, $3.99 to rent)
  • Vimeo ($9.99 to buy)

If you have family and friends who might be receptive to the message of this movie, you might consider sharing it with them. I intend to!

The post “Playing with FIRE”, the documentary about financial independence and early retirement appeared first on Get Rich Slowly.

Why We Stopped Using Our Instant Pot

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Over the last year, a few people have written in with a mailbag question along the lines of this one from Jenny:

You have an Instant Pot, right? Why don’t you mention it when you mention slow cookers?

The truth is easy: we don’t use it much at all anymore.

There are a whole bunch of reasons for this, but I want to start off by saying that Instant Pots do the job they’re designed for quite well, but that job that it does well turns out to be a job that’s not very useful in our lifestyle. It is absolutely perfect for very small pressure cooker tasks and for very long preparation meals. The truth is that we very rarely have a need for either.

So, let’s dig in.

It actually does reduce cooking time significantly on things that take a while to cook. A great example of this is a pot roast. If a pot roast would normally take you three or four hours on the stovetop or in the oven, the Instant Pot will almost always shave at least an hour off of that cooking time. That can make a real difference when it comes to planning meals.

The actual cooking time for an Instant Pot really is a lot shorter for a lot of recipes, and it is definitely more and more noticeable the longer the cooking time of the recipe actually is. But there’s a catch, and it’s a big one.

The time invested in getting the pot up to pressure and then releasing that pressure often eats up most of that saved time unless the recipe has a really long cook time. If you get down to recipes that are less than two hours of cooking time, the time invested in getting the pot up to pressure (which takes quite a while in my experience) and then the time needed to release that pressure (which, again, takes quite a while) ends up devouring much of that saved time. On recipes under an hour or so, it usually takes longer to cook it in the Instant Pot than it does to cook it traditionally. It’s only on recipes with a cook time over two hours where the Instant Pot begins to shine.

In reality, we simply don’t cook that many things in our home that have a cook time long enough to really expose the Instant Pot as a time saver. Most of the things we prepare are cooked rather quickly, usually in under an hour. The full cycle of the Instant Pot, including getting up to pressure and then releasing that pressure, takes up a lot of time.

There’s another time issue, too.

It takes a long time to clean when you use it in pressure cooker mode. If you’re using your Instant Pot to pressure cook items, it takes quite a while to clean it thoroughly. The pressure cooking lid isn’t dishwasher safe. You have to wash it by hand, which, again, takes a little while.

These extra steps — getting the Pot up to pressure, releasing the pressure and washing the lid — don’t add a lot of time individually, but collectively they add quite a bit of time to anything you cook in the Instant Pot.

What about using it in slow cooker mode?

If you use it as a slow cooker, it’s not very good as a slow cooker for a few reasons. You do have the option with an Instant Pot to buy a separate lid and use it as a slow cooker, which gives it more flexibility. The only thing is that, as a pure slow cooker, it’s mediocre.

The first issue we ran into was that “low” seemed to barely warm up food. It turned out that “low” is pretty much useless for slow cooking aside from perhaps as a “keep warm” mode. “Medium” is equivalent to “low” on a slow cooker. Still, not a big deal.

The problem we noticed is that it didn’t heat evenly. Near the bottom, it was as hot or hotter than we would expect, but about halfway up, it was cooler than we expected and near the top, it was almost cold. That’s not what you want from a meal cooked in a slow cooker. This works fine for pressure cooking, but it’s not fine for slow cooker meals.

You can, of course, “pressure cook” pretty much any meal that would slow cook, but the reason I like using a slow cooker is so that I can start it in the morning and it’s done in the evening, which I can’t do with the “pressure cooking” modes on an Instant Pot.

For small batch boiling water canning, it works well, but we usually want to do enough such that it would take a bunch of batches in the Instant Pot. To put it bluntly, the Instant Pot is not really made for any sort of large-batch canning, and unless you have an Instant Pot Max, you can’t do any kind of pressure canning at all. We did do a little bit of small-batch boiling water canning in it, but you’re doing just a couple of jars at a time, which can take forever.

If you’re really interested in canning and want to do significant batches at once, this is not the device you want. Go out and buy a dedicated large pressure cooker instead, one that’s designed and built for pressure canning.

In the end, when there’s a task where we might want to use an Instant Pot, we’re much more likely to turn to either a slow cooker, a traditional pot, or a large dedicated pressure cooker. If I want to cook a meal for my family, I found myself turning to the slow cooker in the morning or a traditional pot in the evening. If I wanted to do some boiling water canning, I’d use a large pot. If I wanted to do any pressure canning, I’d turn to a traditional pressure cooker. I never really had situations where I just wanted to pressure cook dinner because it didn’t save enough time to make it worth the extra steps.

There are certainly situations where an Instant Pot might be right for your family. I think it’s perfect if you usually have an hour or two before dinner and want to consistently make things like pot roasts. It’s absolutely perfect for those kinds of uses.

What it’s not useful for are the uses we have. We mostly either cook slow cooker meals that slowly cook throughout the day or meals that can be prepared quickly when Sarah or I are home. We want to occasionally can items, but when we do it, we do it in large batches so that we’re efficient as possible with it.

For us, the Instant Pot is mostly just a mediocre slow cooker with extremely rare additional uses that we can honestly replicate with other tools. It’s a good fit for other households, I think, but not for ours.

If you’re not doing small batch pressure cooking with any frequency and you’re not regularly preparing three-hour meals at home that you want to shorten to two-hour affairs, you’re better off with a slow cooker, in my opinion. If you’re really getting into the idea of pressure cooking, you’re better off buying a quality dedicated pressure cooker instead.

The Instant Pot occupies a middle ground, where it absolutely nails small batch pressure cooking of food and does small batch boiling water canning, but it doesn’t slow cook well and doesn’t do pressure canning unless you have an expensive model. If that matches your needs, the Instant Pot is a good choice. If not, pass on it. It’s a good device that just didn’t match our family’s kitchen needs.

For reference sake, we have the 6 quart Instant Pot Duo. Our slow cooker of choice is the 6 quart Crock Pot, and our pressure cooker of choice is the Presto 23 quart. Both the Crock Pot and the Presto pressure cooker were each less expensive than the Instant Pot.

The post Why We Stopped Using Our Instant Pot appeared first on The Simple Dollar.

Using First-Order Thinking to Visualize Spending Decisions

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One of my favorite strategies for getting down to the core of something is to use a trick I call the “five why’s.”

Basically, I use this technique whenever I identify a problem of some kind in my life, or when I’m trying to dig into the core of an idea. I’ll take that problem or that idea I’m trying to understand and I’ll ask “why?” Then, I’ll take that answer and ask “why?” again. I’ll keep asking why until something interesting or valuable emerges; it usually takes five “why’s.”

Let me share my favorite example from the old article:

We often wind up with a large backup of laundry, then find ourselves doing several loads on a single weekend day.

Why? Our laundry routine doesn’t work.

Why? One big problem is that our laundry room is literally as far as possible in our home from our bedrooms, plus the laundry room is back in the corner near the guest bedroom. Out of sight, out of mind. As a result, we often don’t even think about the laundry until the evening, when we’re just about ready for bed. Then, in the morning rush, we walk right by it.

Why? It’s more convenient to just ignore it in the morning and we’re too tired to deal with it in the evening.

A solution presents itself. Fill up a laundry basket in our bedroom in the evening and place it right in front of the door so that we’ll trip over it in the morning if we don’t deal with it. Then, when we go downstairs in the morning, we carry the basket down and we’re pretty much ready to drop in a load of laundry on our way out the door. I’ve started doing this and it actually really works.

The five why’s — in this case, it was just three, but you get the idea — actually led me toward figuring out a more efficient pattern for doing laundry, one that’s more in line with the energy I have throughout the day. I will often come downstairs in the morning with a laundry basket of dirty clothes in hand which goes straight into the washer.

What I want to talk about today is another similar tool that I use in situations that are almost the opposite of this situation, where I have a core idea and I’m trying to figure out the impact of that idea. Imagine that I’ve actually got the answer to the five why’s, but I want to move in reverse back up to the problems and benefits it might cause in my daily life.

I simply ask “and then what?” over and over again, usually about five times.

Let’s look at a clear example of “and then what?”

Let’s say I’m considering a major life change of some kind, like moving to a new house.

So, I start off with the idea of a new house. What are some really obvious things that will result if I buy a new house like what I want?

We’ll have a bigger kitchen.
We’ll have at least one guest bedroom.
We’ll have space out back to build a small exercise shed.
We’ll have a bigger yard.
We’ll have higher property taxes and insurance.
We’ll be a little closer to where Sarah works.

Some of those are positives and some of them are negatives.

For each of those, though, I’m going to ask “and then what?” Let’s start with having a bigger kitchen. Okay, I have a bigger kitchen, then what?

I’ll likely cook more meals at home.
We’ll probably refresh a lot of the items that are in the kitchen.
It’ll take more time to keep it clean.

For each of those, I’ll ask something like:

“Okay, we’ll likely cook more meals at home, then what?”

The kitchen will be messy more often.
We’ll probably spend less on food.
We’ll probably make more interesting meals.

Again, I can ask the “and then what?” question about some of these.

What I’m actually digging for are specific things that actually matter to me. What spending changes will this new house cause? What time use changes will this new house cause? How will our daily routines and activities be changed? What will be the actual quality of life improvements? What are the actual quality of life drawbacks?

The more answers I have to those questions, the more clear the positives and negatives of having a new house become. I can start assessing a lot of the conclusions and then make a much better decision regarding a big choice like that. For me, it usually becomes clear after a while whether the answers add up to a positive or a negative.

So, for us, although we used to dream of having a big house in the country, the “and then what?” exercise actually led us to realize that it would have more drawbacks than benefits, so, for now, we’re not really considering that move anymore.

I do this exact same exercise when evaluating a new major goal that I’m thinking about. I do this to try to weed out some of the potential pitfalls of a goal in advance so I can decide if I really want to jump on board with that goal or if there are problems with the goal that I can fix in the planning stages to increase my chances of success.

For example, my biggest personal goal that I’m looking at right now is achieving a black belt in taekwondo. Figuring out how I can get there, to be fit and flexible enough to be able to excel at tests and to know enough techniques, means that I developed a daily training plan to get there, and repeatedly asking “and then what?” helped me to revise that daily training plan to the point where it made a lot more sense in terms of something I can stick with.

The “and then what?” question is just a model for first order and second order thinking — and beyond.

The real secret behind the “and then what?” question is that it nudges you to go beyond first order thinking when making a decision or a plan.

Okay, so what’s first order thinking? I like the words of Noah Pepper when describing this:

First order thinking is the process of considering the intended and perhaps obvious implications of a business decision or policy change.

Since first order thinking expands to all decisions and changes a person might make, I’d reword it like this for our purposes:

First order thinking is the process of considering the intended and perhaps obvious implications of a personal decision or plan.

Great, so what’s second order thinking? Again, in Noah Pepper’s words:

Second order thinking is the process of tracing down and unraveling the implications of those first order impacts.

And, thus, third order thinking is the process of tracing down and unraveling the implications of those second order impacts, and fourth order does the same to third order, and so on.

So, in the above example with our consideration of building a new house, the initial observations like having a bigger kitchen and having a guest bedroom were examples of first order thinking, and then when we delved into the bigger kitchen, we were engaging in second order thinking, and when we delved into the ramifications of more meals at home, we were engaging in third order thinking. You can keep going from there as deep as you want.

For me, I find that I stop when it’s clear that the firm conclusions I’m reaching are pointing me toward a particular plan or a particular decision. If I’m still unsure, I keep digging deeper with more “and then what?” questions.

The decisions are like a giant tree.

One thing a person can’t help but notice here is that you’re creating a giant tree of thought. If you list out the first order thoughts about a particular decision or plan, you’re looking at the big thick branches coming off the trunk of a tree. However, the second order thoughts are like thinner branches coming off of those thick branches, and the third order thoughts are like even thinner branches, and the fourth order thoughts are like twigs. It’s a giant tree!

If you have ten first order thoughts, and each first order thought gives you five second order thoughts to think about, and each second order thought gives you three third order thoughts to think about, and each third order thought gives you three fourth order thoughts… right there, you have 450 things to consider. That’s… overwhelming.

So what value does this really have? I’d point toward three key things.

First, almost always, this process makes my decision or plan better. It will nudge me toward the increasingly obvious best decision when making a choice or it will help me continually refine a plan such that it’s more likely to succeed.

Second, I usually only delve that deep on major decisions or plans. I delve down to fourth and fifth level stuff only with really big decisions. Should we move? Should I switch careers? What about this big multi-year goal I’m considering adopting? I usually do this on paper and write all of this down, page after page after page, just to make sure I’m committing to something worth committing to and something that’s optimized for the best chance of success.

Third, I will sometimes delve this deep on smaller decisions and plans, but usually when it’s something that will come up again with some regularity. For example, I’ll go this deep with things like weekly routines. There are a lot of regular tasks in my life for which I have checklists, and I’ll definitely go this deep when writing such a checklist, because I want that checklist to be correct. I’ll sometimes go fairly deep on small decisions that seem off to me.

Outside of that, I don’t go that deep with decisions, except for giving some depth to decisions that cost money and particularly repeatable ones. Most decisions for me are instantaneous, but they often rest on having gone a little deeper at some point in the past. For example, I’ll give some real thought, going two or three levels deep, about something like which kind of milk to buy at the store, but then I can just draw on that thinking to make a reliably good snap decision next time, and it’s worth it because it’s a decision I’ll be making over and over again.

In other words, the tree of the decision is only as big as you want it to be. When a clearly good choice becomes apparent, it’s time to go with it rather than endlessly going down tinier and tinier branches. Only do that with the biggest decisions in your life, and even in those cases, I stop with just five levels.

Applying “and then what?” to real financial decisions is easier than it seems.

Let’s look at “and then what?” questioning as applied to a real financial decision.

You have a 401(k) plan at work. When you first started, you contributed a tiny amount — say, 2%. After a year or two, you started reading more about personal finance and now you’re thinking you should bump that up to 5%, as your employer matches your first 5% of contributions dollar for dollar.

So, you might initially think of the following benefits and drawbacks:

  • You’ll have a lot more money for retirement
  • You’ll have a little smaller paycheck

Let’s apply the “and then what?” question.

You’ll have a lot more money for retirement, and then what?

  • Retirement will be a lot more comfortable when you get there
  • You’ll worry less about retirement as you approach it
  • You could potentially use that money for other things in a real emergency.

You’ll have a little smaller paycheck, and then what?

  • You might have to cut down on some of your treats
  • You might feel a little less financial flexibility

Those are the second order issues. Let’s go through the third order ones, too.

Retirement might be a lot more comfortable when you get there, and then what?

  • You can actually do some things in retirement that you’ve always dreamed of doing
  • You will have a much easier time visiting and spending time with any children and grandchildren you may have
  • You won’t have to live a life of poverty in retirement

You’ll worry less about retirement as you approach it, and then what?

  • You won’t have to make huge last minute contributions to retirement to try to catch up
  • Your life during your 50s and 60s will be less stressful
  • You can use the resources you might have had to throw into last minute contributions for other things that are important to you

You could potentially use that saved money in your 401(k) in an emergency, and then what?

  • You’d survive that emergency a lot more efficiently.
  • However, you’d then be back to having less in retirement than desired, so you’d be making catch-up payments
  • Having that option available, however, reduces worries about the future even a little more

You might have to cut down on some of your treats in the short term, and then what?

  • You’ll probably end up missing some of the things you cut and not some of the others
  • You’ll likely end up adjusting a little
  • This might make you feel unhappy for a while

You might have a little less financial flexibility, and then what?

  • You may have to learn how to be more frugal in some areas of life
  • Some of those things might be almost invisible, while others will be frustrating
  • You might feel unhappy for a while as you figure it out

So, let’s tie all of this together.

Some of the downsides of contributing more to retirement would include cutting out a few of your treats, some of which you might miss a little (but others you won’t). You also may have to try being more frugal in some areas of life, like maybe cutting your cable or eating at home a little more. These changes might make you feel unhappy for a little while as you adjust to minor lifestyle deflation.

On the other hand, contributing more now means that you’ll avoid a lot of stress later in your career because you won’t have to make big last-minute contributions to retirement. You’ll give yourself financial flexibility then, and even more flexibility when you are retired. You’ll be able to have the flexibility to take on new adventures without financial worry and not have to face restricted options due to poverty.

Digging into third order (and deeper) elements helps a person see what the real consequences are for their choices, and when you look at it from this lens, bumping up your retirement a little so that you’re still comfortable in your current life while bringing all of those benefits into your future seems like an obvious choice.

If you don’t look deeper, it’s easier to get caught up on that slightly smaller paycheck, but while it looks like a big issue with first order thinking, it looks a lot smaller when you dig in a few layers. The reverse is true with retirement savings — you begin to see that having money in the bank will benefit you much sooner because you’ll avoid stress later in your career thanks to those savings now.

Of course, if you’re already saving a ton, you might do this same experiment and conclude that more savings won’t really bring many benefits, but it will add significantly to today’s hardships.

“And then what?” is helpful throughout your life, at any level

The more you apply “and then what?” to the important decisions in your life, the better your decisions will be and the stronger your plans will be. The key, however, is to avoid going too deep with it, because “and then what?” can lead you to analysis paralysis where you keep evaluating.

Stop regularly and look at what you’ve figured out. You may just realize that what you’ve learned is strongly pointing you toward a decision, and when that’s clear after digging through a few layers of this, you’re virtually always looking at the right answer, so just go with it.

Ask “and then what?” Ask it again. Listen to the answers. They’ll usually tell you what you should be doing.

Good luck!

The post Using First-Order Thinking to Visualize Spending Decisions appeared first on The Simple Dollar.

Twenty Winter Hacks That Let You Keep Your House a Little Cooler

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Here in north-central Iowa where I live, we recently enjoyed a severe and unseasonal November cold snap which drove the temperatures down below zero (Fahrenheit) for a couple of days. While such temperatures aren’t out of the ordinary for January and February, they were a bit of a shock to the system for November.

Thus, a big part of the last week was rediscovering how exactly to keep our home temperature as low as possible while still being comfortable at home. I keep it lower during the day when I’m alone working and low at night when we’re all sleeping, but a little higher when all of us are at home.

The reason for keeping it on the cool side is obvious – lower energy bills. Even dropping our thermostat by a degree on a cold day means that the furnace and fan kick on less frequently, and if lowering it by a degree means that it goes through one fewer heating cycle every two hours, that adds up to a surprising amount of energy savings over the course of a winter month.

Of course, you also want to be comfortable in your own home. I don’t want to sit around freezing all the time, and neither do you. The trick is to find the exact point where your house is cool but not uncomfortably so, and that exact point is different for each person. I’ve learned, for example, that my parents like to have their house much hotter in the winter than we do, and our house is certainly cooler today than the house was when I was a kid living with my parents.

My usual tactic for figuring out that temperature is to keep nudging the thermostat a little lower and a little lower until it reaches a point where I don’t quite feel comfortable, then I raise it by a degree or two. What I’ve learned over the years is that I can make that temperature dive go quite a bit lower if I take some proactive steps around the house to encourage those lower temperatures.

Here are twenty things I do at home all throughout the winter to enable things to be a few degrees cooler while still being comfortable, which translates into huge energy bill savings.

I dress warmly around the house, often in layers. As I write this, I’m wearing a pair of sweatpants and a t-shirt underneath a hooded sweatshirt and jeans, with some thick comfy socks on. I feel really comfortable and also quite warm, even though the house temperature is pretty cool.

If I start to feel overly warm, I can always just strip off the sweatshirt or knock the temperature down another degree, but while I’m working, I feel pretty good. If I were to just take off the sweatshirt or the jeans, I’d probably be fine for a while and then gradually start feeling cold, which would make me want to nudge up the temperature.

Just wear comfortable clothes in layers around the house. You can adjust situationally as needed, and it allows you to keep things just a bit cooler.

We keep the ceiling fans running on “low” in “winter mode.” By “winter mode,” I mean that the blades are running in a clockwise direction so that you don’t actually feel it blowing down on you if you’re standing right underneath it. Rather, the air is pushing upwards against the ceiling, which causes the warm air that collects at the top of the room is pushed down along the walls and mixes with the cooler air on the floor to warm the room.

You don’t need to run it on “high”; in fact, it’s less efficient that way. Just run it on “low” with the air pushing upwards. You can set the direction of the blades with a little switch on most ceiling fans.

I drink a lot of warm beverages throughout the day, particularly tea. There are two reasons for this. The obvious one is that, well, I’m ingesting warm stuff, which will make me feel warmer. A cup of hot tea on a cold day is a great way to warm yourself up.

There’s a second reason, too: it helps me stay hydrated, and when you’re hydrated, you retain water much better than when you’re dehydrated. Water retains heat fairly well, so when you drink that hot water, you’re going to stay warm for longer.

We keep blankets near every chair or couch where people might sit, so they can drape them over their legs if they want. Every room in our house has a pile of blankets available in the winter for people to cover up. We have a variety of thicknesses, a variety of sizes, a variety of cloth types – there’s something for everyone! (I’m partial to the biggest ones, because I’m tall and I like to keep my toes covered up.)

If someone happens to feel cold while others don’t, they can just grab a blanket and drape it over their laps or completely cover up with it. We’ll often do this in the evenings if we’re watching a movie as a family or playing a board game or working on a puzzle or something, because we tend to feel most cold when we’re sedentary.

We cuddle and share blankets. I really love getting huge blankets that can cover multiple people. Not only do they make it easy to wrap yourself up in a blanket on the couch like a mummy, it also makes it very easy for two people to cuddle together under a blanket, which is a fantastic way to feel warm on a cold winter night.

There are few things that will make you feel warm under a blanket faster than the warmth of another person, so if you have someone you don’t mind cuddling with, keep a big blanket around and cuddle with that person often. It’s one of the most enjoyable money savers around.

We layer blankets on the beds. In the winter, every bed in our home has several blankets on it. This enables people to easily add and remove blankets as their needs change throughout the night. Several blankets can also create a mild “weighted blanket” feel, which some people like.

These layered blankets can keep you very warm at night, which is perfect if you drop the temperature in your home a few degrees on winter nights so that the furnace isn’t running constantly.

I make a lot of hot meals at home (and bake a lot, too). During the winter, I make a lot of hot meals in our kitchen. I love making casseroles and soups and stews. I love baking things – bread and cookies and crusts and pies. It’s wonderful to do this, but particularly during the winter.

Why? When I’m cooking something in the kitchen, the excess heat is flooding out into the kitchen, keeping the temperature higher in the house without the furnace kicking on. Now, our oven isn’t nearly as efficient as the furnace for heating the house, but it’s a far better proposition than cooking in the summer, when a hot kitchen works against the air conditioning. Rather, the excess heat helps you a little bit, so it’s even more cost effective to cook at home during the winter than during the summer.

There’s also the additional effect of eating warm foods. If you eat something warm, you’re going to feel warmer and for good reason – your body temperature is going to go up a little bit. That helps you feel nice and toasty even when the house is cool.

We cook lots of things in the slow cooker. I particularly like using the slow cooker during the winter, for a few reasons. As noted above, it heats up the house, and eating warm foods makes you feel warm.

However, a slow cooker adds a wonderful additional effect that isn’t a guarantee with other methods of cooking: it’s going to add moisture to the house.

Most recipes that you make in a slow cooker have a significant water content. In fact, we often cook soups and stews in the slow cooker, which means a lot of liquid. Cooking things with a lot of liquid in them adds humidity to the air, and during the winter when the furnace or when radiators are running, it’s easy for the air to get very dry. A bit of humidity helps the air hold heat a little better and gradually adding a little moisture to the air throughout the day raises that humidity.

Let’s talk a little bit more about humidity…

I leave water sitting out for a few hours, particularly if it’s hot water. If I heat up water for any reason, I won’t just dump it down the drain. Rather, I leave it sitting out for a few hours, letting the warmth from that water migrate out into our house and letting the water evaporate a little, adding moisture to the house, too.

If I make pasta, I’ll save the water when I drain it. If I make tea and have some extra water, I let it sit out in a bowl. If I cook something via sous vide, I let the basin of hot water sit out for several hours, spreading the heat and evaporating. If I draw a hot bath, I’ll let the water sit in the tub for a few hours until it’s down to room temperature. If I have a sink full of hot water for dishes, I let it sit until it’s at room temperature. Let that heat go into our house rather than down the drain!

Sometimes, I’ll even just put normal containers of water near the hot air vents. One great additional trick if you have some extra water is to sit it in a bowl or something near a hot air vent in your home. This won’t directly heat your home, but what it will do is encourage evaporation as the air coming out of your vent will be quite dry, and having sitting water there will cause it to evaporate at a relatively high rate, adding moisture to the air. Again, water holds heat well, so adding a bit of moisture to the dry air in your home is a great way to make the air in your home hold heat better.

I’ll usually do this with a glass bowl. I’ll just sit it near a vent for a while, let some of it evaporate, and eventually dump the rest. Sometimes our dogs will drink from the bowl rather than their dog dish, so this will convince me to dump it a little sooner.

I shower with the bathroom door open and a fan outside the door running. This is another heat and humidity trick. During other seasons, I just run the vent fan in our bathroom when I’m taking a shower as I want that heat and humidity out of the house. In the winter, though, I want to keep that heat and humidity in the house, but I don’t want it concentrated in the bathroom where it can eventually damage the paint.

My solution? I usually shower with the bathroom door open and run a fan in our bedroom (the bathroom where I shower is attached to our bedroom) while not running the vent fan. That way, the hot, moist air spreads out into other areas of the house rather than just blowing out of the vent.

Also, the last few minutes of my shower are as cold as I can stand it. This is a trick I learned that actually helps me keep warm, even though it seems really counterintuitive.

During a shower, I’ll wash myself with nice warm water, but when I’m rinsing all the soap and shampoo off, I turn the temperature down as cold as I can stand it, for perhaps the last three minutes of the shower.

Why? Believe it or not, cold water actually causes your core temperature to rise while your outer surface cools off. After the shower and a bit of warming up as you get dressed, this elevated core temperature will actually leave you feeling quite a bit warmer about 15-30 minutes after the shower than taking a warm shower will leave you. Don’t believe me? Give it a try!

(The reverse is true – in the summer, you should take a warm shower if you want to feel cool after your shower. Start off with cold water to cool off, but then switch to warm water during the rest of the shower.)

I heat up “rice bags” and throw them under the sheets and blankets a few minutes before I go to bed. These are just small cloth bags of dry rice sewn shut, nothing special. I’ll put these in the microwave for about 3 minutes before I go upstairs to bed, toss them under the blankets, and then go about my pre-bedtime routine, which takes about ten minutes. When I climb into bed, it’s already really warm under the blanket, as the heat has spread but hasn’t escaped.

In the morning, when I make the bed, I grab the little rice bags and put them downstairs near the microwave, so they can be easily microwaved again.

This makes it much nicer to get into a cozy warm bed at night, and it doesn’t risk spillage as a hot water bottle might do.

I heat up my clothing with those same little “rice bags.” I also use those exact same rice bags in the pockets of my clothes, particularly when I’m about to go outside, but occasionally on a really chilly day around the house. I’ll just microwave one for a couple of minutes (not as long as the ones for bedtime, as I actually want to be able to touch these) and slip them in a coat pocket or in the pocket of a hooded sweatshirt.

This not only heats up the item I’m wearing, but also gives me something warm to put my hands on when I’m out and about. It doesn’t last forever, but it lasts for a surprisingly long time.

We keep windows uncovered when sun is shining through them, but cover them the rest of the time. When direct sunlight is shining on the windows in our home, we’ll open up the curtains or blinds and let that sunlight stream in through the windows, naturally heating the interior of our home. The heat of the sunshine exceeds the loss of insulation from keeping the window coverings closed. I particularly like sitting for a while in the sunshine on days when it shines in the window, as it makes me feel warm.

When direct sunlight isn’t shining on the windows, we do the opposite and keep them closed because the insulation effect of the window coverings exceeds the nonexistent warmth of sunlight.

I keep some warm house slippers around and keep them on my feet if it’s chilly. I’m normally barefoot around my house in the spring, summer, and fall, but in the winter, having bare feet can make me feel really cold. My first line of defense against this is a nice pair of slippers – I currently wear these and love them.

These do a great job of keeping my feet nice and toasty during the day while I’m working. But I also do something else…

I also wear socks on really cold days, sometimes even in layers. If I still feel cold on a really cold day with my slippers, I’ll go put on at least one pair of socks. Again, I don’t normally wear them around the house except for when it’s cold, but when it’s really chilly, they help a ton.

I tend to like wearing wool socks. On cold days, I’ll wear wool socks on top of athletic socks, as two layers of wool socks or athletic socks on top of wool socks feel really tight on my feet.

I go on a lot of walks, even when it’s really cold. A nice long brisk walk makes me feel a lot warmer, and that warmth seems to continue for a surprising amount of time after I get home. Walking elevates my core temperature and the temperature stays elevated for a while, leaving me feeling warm all over.

Thus, once or twice a day, even on really cold days, I’ll bundle up and go on a fast walk. My goal is to feel slightly sweaty on my innermost layer, such that I feel like changing clothes or even taking a shower when I get back to the house. If I do this along with the shower technique described above, I’ll feel warmer all day long.

I keep a towel to stuff along the bottom of all exterior doors, even those with weatherstripping. Like it or not, cold air does seep in a little around the edges of doors, especially when the wind blows against them. Although our doors are pretty well lined, it’s still beneficial to add a bit of extra protection on the coldest and windiest days.

Stuffing a towel along the bottom of an exterior door reduces a lot of that cold airflow. This is particularly important because the cold drafts it blocks flow in along the floor, where your feet are, and this can make you feel doubly cold.

We burn candles. We’re not big candle people, but we sometimes receive them as gifts. Candles are universally saved for the winter, where we’ll often burn them in the evenings. Candles contribute a surprising amount of warmth to a room, often enough to make a room feel noticeably more comfortable.

Dig out your candles and light them in the room where you are, ideally fairly close to a thermostat so that the thermostat continues to register the current temperature of the room you’re in and the furnace doesn’t needlessly kick on.

You don’t need to keep your furnace on full blast all winter long. Drop the temperature a few degrees and use these strategies instead to save yourself quite a lot of money.

Good luck!

The post Twenty Winter Hacks That Let You Keep Your House a Little Cooler appeared first on The Simple Dollar.

The subtle clues that you’re living a Rich Life

sourced from: https://www.iwillteachyoutoberich.com/blog/the-subtle-clues-that-youre-living-a-rich-life/

The first time I gave a talk at Google, they put me in the hallway — literally, there were people walking by on their way to lunch. 

The second time was more official. I had a stage, even though it’s hard to see me on the video they shot.

But for the third time — my latest Talk at Google — they pulled out all the stops. A real A/V crew, serious prep, and a completely sold-out room with standing room only. My coordinator told me he’s never seen the room so full. That’s a huge sign of the IWT community we’ve built here.

Sometimes you get a HUGE clue that you’re succeeding at the things you love. With the Google talk, it was obvious: 12 years ago — hallway. Today — big room, sold-out crowd.

But sometimes the clues are more subtle.

Years ago, my trainer used to ask me a question when I’d go in to work out: 

He’d ask: “Did you get in?”

What he meant was, “Did you work out on your own since the last time we saw each other?”

Sometimes my answer was yes (more often, it was some excuse why I didn’t get in). But after a while — when I started taking fitness more seriously — my answers started being Yes, Yes, and Yes.

Finally, he stopped asking me.

BAM. That’s a clue. A few months later, I finally noticed he didn’t have to ask me about training on my own anymore. It had become a habit, something I did on my own, for myself.

How about this subtle clue?

It’s the tagline from this TV show — do you know it?

“Sometimes you want to go…where everybody knows your name 

We ALL want to go where everybody knows our name. Walking into our homes, to be greeted by a smiling partner, and maybe a dog wagging its tail (for me — no dogs).

In just a single moment, it shows so much: That you’re a “regular”…that your friends are welcoming you…and that you’re home.

What are the other subtle clues that you’re living a Rich Life?

Share them in the comments below. I’ll share some of the best ones on my Instagram feed.

And Google just posted my entire talk, which you can watch here. Check out some new stories you haven’t heard here…plus some amazing responses from the crowd.

Ramit speaks at Google

The subtle clues that you’re living a Rich Life is a post from: I Will Teach You To Be Rich.

Recalibration

sourced from: http://feedproxy.google.com/~r/thesimpledollar/~3/LVwc41pQI2w/

Let’s say you’re lucky enough to be born into a wealthy family. They take care of all of your needs and fulfill an awful lot of your wants. You were always the person with the nice clothes, the latest devices, the expensive games, the nice car, all paid for by mom and dad. You go to college, paid for by mom and dad. Then, suddenly, you’re out on your own. You’re making a decent living, but it’s hard. All of the nice stuff in your life before now is out of reach and everything is painfully expensive.

Let’s say you got a great job coming out of college and you nailed it for several years. You made a very good salary and you became accustomed to spending accordingly. Then, suddenly, things went in a new direction. Maybe you fell out of that career for some reason. Maybe you began to question whether you wanted to keep doing this or not. Maybe you had a major personal life change. Now, suddenly, your income is a lot lower. You’re making a decent living, but it’s hard. All of the nice stuff in your life before now is out of reach and everything is painfully expensive.

Let’s say you simply realized that your current financial life is unsustainable. You spent your 20s and maybe your 30s spending lavishly and enjoying a lot of travel and luxury goods and suddenly you’re realizing you don’t really have anything saved and actually have a lot of debt. You have to cut back and make some changes. You’re making a decent living, but it’s hard. All of the nice stuff in your life before now is out of reach and everything is painfully expensive.

These stories all in the same place: people are recalibrating. They’re learning how to survive on less spending money than they used to.

Recalibration can happen to anyone. It can happen to the kids of millionaires who are suddenly cut off from the bank of mom and dad. It can happen to people with a great job who suddenly find themselves jobless. It can occur when someone decides to leave a well-paying job to become a stay at home parent. It can happen much like it happened to me, with a realization that one’s financial life is unsustainable. Sometimes, recalibration happens by choice; at other times, it’s forced upon you.

No matter what, it’s not fun.

It can be easy for people to say “That’s not really a problem,” but no matter what your original spending level, a significant cut in your spending levels creates life difficulties. It is not easy for anyone to recalibrate. We’re creatures of habit. That’s why things like losing weight are so difficult for so many of us. Even among the most spontaneous of us, we’re still creatures of habit and many of those routines are very hard to change.

Here is my best advice for anyone currently recalibrating, or who might see recalibration coming in their near future.

Take a “Glass Half Full” Approach

It is very easy when you’re recalibrating to find yourself focusing on the downgrades and obsessing over what’s missing in life. After all, what’s changed in your life is the recalibration – you’re spending less than you used to and you can’t help but focus on it, right?

Rather than focusing on how the glass is half empty, focus instead on how the glass is half full.

Whenever you catch yourself feeling miserable about recalibrating, consciously recognize what you’re doing and how it doesn’t help, and then consciously start thinking about all of the things you do have and all of the things you could do.

You might find yourself dwelling on the fact that you can’t eat out like you used to, yet there’s nothing stopping you from making some of your favorite foods at home a lot cheaper than before.

You might be upset that you can’t just go shopping at the drop of a hat, but aren’t your closets and shelves full of stuff that you love that’s just gathering dust? You have infinite things already in your possession that don’t get the attention they deserve.

You might feel like your social life is suffering because you can’t go out all the time any more, but there’s no reason you can’t call someone up and invite them to do something that doesn’t involve shelling out cash. A good friend is one you don’t have to spend money in order to spend time with them.

You have a home to live in. You have tons of possessions. You have people in your life that love you. You have your health and your energy and your life. You have access to more entertainment options and more knowledge than anyone who has ever lived. You have so much.

Focus on that, not on the little inconveniences that come from recalibrating.

Dive Deep into Low Cost Passions

One of the things that really saved me during my own recalibration was that I really loved to read. It was a passion that had been somewhat derailed into more of a desire to just collect books and stuff my shelves with them.

I made a concerted effort to spend less time shopping for books – effectively reducing that to zero for a while – and more time actually reading. If I didn’t want to read any of the abundant books already on my shelf, I just went to the library to find other ones.

What things do you enjoy that doesn’t require a big additional expense?

Perhaps you love to go hiking. Rather than obsessing over the latest hiking gear, just get out there and start making a list of trails you’ve explored.

Perhaps you love clothes. Rather than spending hundreds on new clothes, start trawling secondhand shops for things that are huge bargains that look good on you, or figure out how to modify some of the stuff you already have for new looks.

Perhaps you love good food. Rather than going to tons of restaurants, start learning how to actually make things you love in your home kitchen.

There are essentially infinite free and low cost things to dive into out there. Spend some time thinking about things you actually really love doing in your life, figure out which ones don’t involve big outlays of money (or can be done in a way that doesn’t involve a lot of money), and dive into them.

The purpose is to find ways to fill your life with joy and pleasure without exchanging a ton of money for it. One of the things that forces people to recalibrate is that they found themselves in a routine where they were constantly exchanging money for enjoyment and pleasure, and that’s a key cycle to break. You don’t have to spend money to have joy and pleasure.

Cut Back Hard on Things That Are Relatively Unimportant – Learn to Love the Store Brands

Here’s a strategy to try: the next time you buy any household product, buy the store brand version instead. Do it for everything.

Then, over the next month or two, see if you notice anything actually lacking in terms of what you use them for. Does the store brand laundry detergent get your clothes clean? (Hint: it does.) Does the store brand dishwashing detergent get your dishes clean? (Hint: it does.) Does the store brand ketchup taste basically the same as other ketchups? (Hint: it does.) Do the store brand trash bags convey your trash out to the curb? (Hint: they do.)

What you’ll find is that you’ll notice and be bothered by maybe 5% to 10% of the changes, but the other 90% to 95% of the store brands just work perfectly for your needs.

You can do the same with all kinds of stuff. Cancel all of your cable and streaming services except for the one you actually use the most. If you find you’re really missing one, bring it back (or find a suitable replacement, like Sling). Trim back your cellular plan to match what your actual usage has been over the last year and see if that works for you.

The best strategy for recalibrating a lot of your spending is simply to cut back hard, then restore only the things you actually really miss – and you’ll find that you don’t miss a lot of it. This strategy works because you know it’s okay to restore things that you genuinely miss, and the things you don’t become a source of savings.

Volunteer

This is a great compliment to the “glass half full” strategy. Volunteer work can really remind you of the abundance you have in your life and leave you appreciating what you have much more; furthermore, it’s an activity with minimal personal cost.

Simply sign up to volunteer for some cause that you care about, ideally on a local level so you can really see who you’re impacting. Sign up for the food pantry or the clothing pantry or a soup kitchen or a Habitat for Humanity house. You don’t have to do it forever; just take it on as a 90 day personal challenge.

As you’re there, be aware of the difficulties and challenges that the people you’re helping out are facing in their lives. Those challenges are often tremendous, and the people struggling often have few resources with which to handle those challenges.

The experience of volunteering at the local level left me with an incredibly powerful sense that my life was actually really abundant, even at moments where I felt the bite of recalibration. It was a firm reminder of how much I have.

Find People Who Don’t Need to Spend Money for Fun

Look for people in your life who find enjoyable things to do without spending money and actively start spending more time with them. Hang out with the people that like to have movie nights at home or have lots of dinner parties and potlucks and game nights rather than the people who have to go out to have fun.

If you don’t have people in your life like that, seek them out. Go to lots of community events – they tend to draw people who don’t want to spend, spend, spend to maintain their social network. Check out Meetup and go to things that seem interesting. Do the same with your library’s website and your city’s website and things in your community Facebook groups. Actually go to things and participate in them, especially if they’re free, and make an effort to talk to and get to know people there.

Yeah, you won’t click with everyone. That’s fine. The goal is to meet a few interesting people and then, over time and repeated participation, build those relationships up. You’ll find that socializing and friendships don’t have to come with a price tag.

Consciously Dig Into Your Media Collections

Give yourself a simple challenge along these lines.

“I’m not subscribing to a new streaming service until I’ve watched everything on my watchlist / saved list on this service.”

“I’m not buying a new book until I’ve read everything on my shelf or traded away / sold everything I’m not going to read.”

“I’m not buying a new board game until I’ve played all of the ones in my closet at least once, or traded them away if I have no interest in playing them again.”

You get the idea. Whatever form of media that you collect, stop collecting more of it until you’ve gone through what you have now and curated and enjoyed it. By curating, I simply mean getting rid of things you have no intent of reading or watching or listening to or playing with in the future.

This is my challenge in 2020 with my collection of board games, for example. I’m not spending money on a new game until I’ve played everything on my shelves at least once or, if I’m not willing to play it, trading it off for something else that I will play.

This is a great way of recalibrating the balance in your life between collecting more and more stuff that you won’t get around to actually enjoying versus actually digging into your collection to figure out what it is you actually enjoy and refining your collection to match it.

Center on a Inexpensive Self-Improvement Goal

One surprisingly effective tool for recalibrating your spending is to dedicate yourself to a particular self-improvement goal that doesn’t require a ton of additional spending.

For example, you might focus on adopting a healthier diet centered around making food at home. You might focus on getting stronger by building up your core strength through calisthenics. You might focus on learning a new programming language using online resources. You might focus on learning a new spoken language using Duolingo or other free resources.

The point is to give yourself a clear self-improvement goal that’s centered around daily activity. “For the next 180 days, I’m going to spend 30 minutes a day doing bodyweight exercises to strengthen my core and tighten my gut.” “For the next 180 days, I’m going to prepare and eat one vegan meal at home each day.” “For the next 180 days, I’m going to spend 45 minutes learning French.” 180 days is a good target for a goal like this because it will often begin to be a habit, one you stick with even after the 180 days is over.

A low-cost self improvement goal gives you something to focus on that’s distinct from spending and gives you something to take pride in that’s not related to spending, either. You’ll take pride in the effort you’ve put forth, not in something you merely bought, and that’s a big difference. Plus, you’ll be filling up time and mind space with something that’s not related to spending money.

Think of something else you want to improve about yourself and commit to a goal of 180 days where you take daily activity toward that improvement.

Consider a Big Downgrade

Most of the above suggestions are ways to help you deal with lots of little changes in your life, but sometimes it can be bigger just to execute one or two really big changes.

Have you thought about moving to somewhere less expensive? Have you thought about selling off your car and relying on either one fewer car or on mass transit?

Those two moves, right there, can make a gigantic financial difference when you’re recalibrating, but they often don’t pop up on people’s radars. They don’t seriously think about selling the house – instead, they stick with it until it’s about to be foreclosed on. They don’t seriously think about selling the car until the repo man takes it. They don’t consider how selling those things off now can not only alleviate some headaches but also put some money in their pocket.

Consider it. Would it be a good move to move to an apartment, clean out your house, and sell it, paying off the mortgage in full and giving you enough cash to pay off a lot of other debts? Would it be a good move to move to a smaller apartment, maybe one closer to work that allows you to use mass transit? Would it be a good move to sell off your car and just use mass transit for everything (or get a Lyft in a pinch)?

A single big move like that can change everything for the better. Give it some serious thought.

Final Thoughts

Recalibration is hard. It’s hard whether you’re rich or poor or somewhere in between. It means giving up things you once enjoyed. It means facing some hard facts about your life.

In the end, however, recalibration can lead you to a more sustainable life going forward, one that you can be happy with over the long run.

The trick? Next time around, don’t let your lifestyle inflate with your income growth. Instead, keep your lifestyle the way it is and use that money to build long term stability so you don’t have to painfully recalibrate when things don’t go the way you expect.

Good luck!

The post Recalibration appeared first on The Simple Dollar.

How to manage money for financial success in the U.S. military

sourced from: https://www.getrichslowly.org/military-money/

Howdy! I’m Spencer, an active-duty Air Force officer investing for financial independence by age 40. Since 2016, my wife and I have saved half of my active-duty paycheck into our financial independence accounts. I started writing in 2012 about achieving FI in the military on my website Military Money Manual.

Because J.D. has no experience with the military, for Veterans Day he asked me to share the lessons I think every servicemember needs to know about getting rich slowly. These are the concepts I wish someone had explained to me as a newly-commissioned officer in 2010. (These lessons are just as applicable to the enlisted side of the house.)

I’ve split this article into two sections.

First, I’ll cover some basic lessons for beginners: taking care of yourself, emergency funds, military friendly banks, tracking your money, and TSP investing.

Next, I’ll cover some advanced topics: investing for financial independence, military deployment, travel, and military credit-card perks.

Let’s start with the basics.

Managing money in the U.S. military

Educate Yourself

One of the harshest life lessons you must learn early in your military career is this: “No one is looking out for you except you.”

You must take responsibility to educate yourself about saving, investing, spending, and achieving financial independence. If you have a really good supervisor or commander in the military, they may explain the Thrift Savings Plan (TSP) to you, but that’s probably it.

If you want to achieve financial independence in the military, you need to learn how to do it yourself. There are many resources available to learn about money, including:

I believe it’s important to always be learning, to always be asking questions. If you have questions about your military pay, benefits, or personal finance, type them into Google. Ask your supervisor. Ask your buddies (but don’t always take their advice haha).

Never be afraid to ask questions. Keep yourself educated about money.

Find a Military-Friendly Bank

While you can certainly use a regular bank to manage your money (and Get Rich Slowly maintains a list of online savings accounts), I recommend finding a military-friendly bank. Certain banks and credit unions are dedicated to helping military servicemembers. They understand the difficulties unique to our situation. For instance, USAA has never shut down my ATM card despite withdrawals in over 40 countries.

Some of the largest and most recognized military-friendly banks include USAA, Pentagon Federal Credit Union (PenFed), and Navy Federal Credit Union (NFCU).

Look for a military-friendly bank that offers ATM fee reimbursement and that doesn’t charge fees on your accounts no matter what your balances are. Many military-friendly banks will deposit your military pay one business day earlier than your actual payday. This is a nice feature to get access to your money a little earlier each payday.

Build an Emergency Fund

Unlike your civilian counterparts, you’re unlikely to be suddenly fired from the military. Because it’s a government job, you would at least get a few months notice if you were involuntarily separated.

You also don’t have to worry too much about surprise medical bills. Tricare is one of the best healthcare insurance networks in the U.S., and the military medical system is one of the most affordable. You will rarely, if ever, have a co-pay to see a doctor or pick up a prescription.

So, if you don’t have to worry about medical expenses or getting fired, why worry about saving an emergency fund in the military? Because things always go wrong.: cars break, payment of travel vouchers is delayed, the government shuts down, and so on.

Plus, you know how unpredictable military service can be. You may be called away suddenly for a contingency operation in Africa when the car breaks down at home, preventing your husband from getting to work.

Many times when you receive PCS (permanent change of station) or go TDY (temporary duty assignment), your expenses won’t be immediately reimbursed. If you have an incompetent finance office, it may be weeks or months before you finally get paid for that trip.

When you have an emergency fund, you can cover these expenses and not sweat it while finance gets their act together.

When the government shut down in early 2019, members of the Coast Guard went unpaid for an entire pay period. This was an extremely stressful time for many folks. You can insure yourself against political theatrics like this by having an emergency fund.

How big should your emergency fund be? I recommend starting with $1000 and then saving up so that you have enough to cover six months of expenses.

Personally, as an eight-year captain, I have $10,000 in my emergency fund. This isn’t six months of expenses, I admit, but it will cover two plane tickets to fly me and my wife home in case we need to be with family in an emergency. And $10,000 will cover all but the most serious car repairs. It’s the amount that lets me sleep easy at night.

Know Where Your Money Goes

Trust me, I hate budgeting. But if you want to achieve financial success — in the military or otherwise — it’s important to understand where your money is going. This helps you determine if you have optimized your spending to make you happy.

Here’s an example: Let’s say you notice you’re spending $100/week on Buffalo Wild Wings. But you don’t even like wings and beer that much. And you’re trying to lose weight. Well, it looks like you found a great expenditure to eliminate! Most of us can find spending like this to trim from our budgets.

To make tracking easier, I recommend apps like You Need a Budget (YNAB), Personal Capital, or Mint. Or, if you like computers, track your money in a simple spreadsheet.

The key is to make sure that your spending aligns with your goals, that you’re happy with what you’re spending money on.

As for me, I hate budgeting, as I said. After I trimmed the obvious fat from my spending, I adopted what I call an “anti-budget”. I save half of my income into my investment accounts (TSP, IRA, taxable brokerage, and cash accounts). I spend the rest of my money and don’t worry about it. This system is simple. For me, simple is best.

I don’t enjoy analyzing my budget, so I make sure the big three expenses — housing, transportation, and food — are correct, then I live my life. If you get these three right, you can take care of 80% of your savings for only 20% of the effort.

Get Your Full TSP Match

The military’s version of a 401(k) is called the Thrift Savings Plan, or TSP. It’s a boring name that doesn’t really sell the fact that it’s one of the best retirement plans available in the world.

The TSP offers five funds, which together make up most of the investable assets in the world. These funds are:

  • C Fund: contains the S&P 500 companies, the largest 500 companies in America
  • S Fund: contains the 3529 publicly-traded companies in America that aren’t in the S&P 500
  • I Fund: an international stock fund covering 21 nations outside the U.S.
  • F Fund: a fixed-income fund that invests in corporate bonds
  • G Fund: the government bond fund

In addition to these five funds, you can also invest in TSP Lifecycle funds. These are target-date retirement funds that automatically adjust their mix of stocks and bonds over time. In theory, they deliver higher returns with more volatility early in your career, then they become more bond heavy as you age.

The TSP expense ratios are famously low, usually around 0.04% annually. That means for every $1000 you invest in the TSP, you pay $0.40 per year in management fees. That’s it! (And that’s amazing.)

Even on a $1,000,000 portfolio you’d pay only $400 per year. These fees are some of the lowest available in any retirement plan.

You can contribute up to $19,000 into the TSP in 2019. If you deploy to a combat zone, you can contribute up to $56,000.

The TSP is an employer-sponsored retirement plan, so it’s completely separate from your IRAs, or Individual Retirement Accounts. That means you can put $19,000 into your Roth TSP and $6000 in your Roth IRA — $25,000 total for a year!

If you could contribute $25,000 to your IRA and TSP for a full 20-year military service, you’d have $1,100,000 after 20 years, assuming a 7% return. If you entered military service at age 20, retired at 40, and left the $1,100,000 to grow until age 60 at 7%, you’d have $4.2 million. That’s the power of compounding and paying yourself first!

If you joined the military after 2017, you’re automatically in the Blended Retirement System (BRS). In order to maximize your retirement savings, you must contribute at least 5% of your base pay every month.

The government automatically contributes 1% of your base pay to your Traditional TSP account on your behalf. They will contribute up to another 4% if you contribute 5%. This 5% can be worth thousands of dollars annually.

When you retire, that 5% match could have grown to tens of thousands (or hundreds of thousands) of dollars.

One of my biggest financial regrets it not contributing to my Thrift Savings Plan earlier. Especially now that you can receive a match on your contributions, you need to at least contribute 5% monthly to your TSP as soon as you commission or graduate basic training.

Okay, now that we’ve covered some basic military money topics, let’s move on to some more advanced material.

Use Credit Wisely

There are a lot of folks who believe credit cards are evil. And if you’re not careful, you can end up deep in debt. Many military members do so. But if you understand how to use credit cards wisely, they can be an excellent tool to help you achieve financial success.

Servicemembers have two laws working in their favor: the Military Lending Act (MLA) and the Servicemembers Civil Relief Act (SCRA).

These laws have been generously interpreted by most of the major credit-card companies, including American Express and Chase. Both companies are waiving annual fees for servicemembers for cards opened after entering active duty status.

The American Express SCRA policy goes beyond the legal requirements. AMEX waives all annual fees for active-duty servicemembers, Title 10 Reservists, and Title 32 National Guard. This includes their civilian spouses, usually as long as the servicemember is added as an authorized user to the account.

The AMEX SCRA policy applies to both personal and business cards. For instance, my wife and I currently have 13 AMEX cards with $4665 of annual fees waived. The annual recurring benefits of these free cards include:

  • Three free nights at Marriott with Gold Elite status
  • $600 Marriott expenses credit
  • One free night at Hilton with Diamond Status
  • $250 Hilton Resort credit
  • $1150 in airline fee credits reimbursed
  • $800 of Uber or Uber Eats credit
  • Companion pass in Delta first class

These benefits add up quickly: airport lounge access, upgrades to business class, free hotel stays, and free food really goes a long way to making travel free or very cheap.

Since 20 Sep 2017, the Chase MLA policy waives all annual fees on their personal (not business) credit cards for military servicemembers and their spouses. This includes active duty, Title 10 reservists, and Title 32 Guard.

This includes their Chase Sapphire Reserve card, which comes with an annual $300 travel credit good towards airfare, hotels, taxis, trains, Uber, rental cars, parking, and anything else travel related. Chase waives the $450 annual fee on this card for both military servicemembers and their spouses.

These are just some of the credit card benefits extended exclusively to US military personnel. I keep a page updated with the best credit cards for military troops.

But again: Credit cards are only useful and valuable if you don’t carry a balance. If they’re going to lead you into debt, you should avoid them. The bonuses and perks aren’t worth the cost of debt.

Deal with Deployment

Believe it or not, deployment is a golden opportunity to put yourself way ahead – smash debt, save a ton, spend nothing, and figure out what you want to do with your life.

The biggest financial advantages to a military deployment are:

  • Tax-free combat zone income (CZTE)
  • Tax-free contributions to your Roth TSP and Roth IRA
  • Savings Deposit Program (SDP)

Combat zone tax exclusions, or CZTE, are available when you are in a Presidential-declared and IRS-recognized designated combat zone for at least one day of any month. So even if you just fly in, land, and take off again two hours later, you’re eligible for CZTE pay that month.

Your pay during any CZTE month will not be subject to federal income tax. It is subject to FICA tax, so you’ll see Social Security and Medicare tax deducted from your paycheck.

Because your income is tax free any month you’re in a combat zone, you have a unique opportunity to get tax-free money into your Roth IRA and Roth TSP. The money goes in untaxed, grows untaxed, and can come out untaxed, subject to the rules of Roth accounts!

This triple no-tax win is an amazing investment opportunity almost no one else in America can access.

Another program available to you on deployment is the Savings Deposit Program or SDP. The SDP offers a guaranteed 10% return on your investment on up to $10,000 invested.

For example, if you’re on a one-year deployment and invest $10,000 from the beginning of the deployment, you could earn $1000 by the time you head home.
While you’re deployed, your expenses can drop to nearly zero, depending on how much family you’re supporting back home. All the essentials — like food, housing, a gym, and transportation — are covered. You just need to work, work out, eat, and sleep.

Your income will also increase due to the CZTE pay, hardship duty pay, family separation pay, hazardous duty pay, hostile fire pay, and many other special payments you can receive while deployed.

The combination of low expenses and high income means you can really set yourself up for financial success. On my first deployment, I paid off my USAA cadet loan. After my third deployment, I finished paying off my student loans.

If you don’t have any debt, use a deployment to max out your retirement accounts, max out the SDP, and save some money for whatever your future goals are. Set an outrageous goal for yourself, like saving $50,000 in six months. I’ll bet you’ll surprise yourself with how much you can save on a deployment!

Don’t forget to set aside a little money to enjoy life when you get back to the real world. Military deployments aren’t vacations and they’re not stress free. Make sure you take some of your deployment savings to visit your loved ones or take your family skiing.

Travel for Free (or Cheap)

Going TDY (temporary duty) can be a great way to travel and make extra money while you serve. When you’re sent away from your permanent duty station (PDS) on official business, you’ll receive per diem to offset your increased expenses.

Lodging expenses are reimbursed at the rate they were paid. If your authorized lodging amount was $200 and your hotel was $150 per night, you are reimbursed $150. You do not keep the difference.

On the other hand, your meals and incidental expenses (or M&IE) are paid regardless of expenses incurred. If you’re authorized $100 per day and you grab breakfast at the hotel, lunch at Chick-Fil-A for $10, and dinner at Chipotle for $15, you get to keep the remaining $75 per day.

Per diem can add up quickly, especially if you’re on a long training TDY. It can also disappear quickly — usually on drinks out with your coworkers. Be smart about it.

Leave in conjunction with official travel (LICWO) and circuitous travel during PCS are excellent ways to travel to new destinations and get reimbursed for your travel. Essentially, you can take the scenic route to get to your next duty station or temporary assignment.

The government will reimburse you up to what they would have paid for a ticket. Since the government almost always buys full fare, full flexible economy tickets, you can usually get much cheaper flights and get some free travel in during your leave. Here are more details and nuances of LICWO and circuitous travel.

Space Available (Space-A) travel is a tremendous benefit available to servicemembers. Usually if there is an empty seat on a military flight, the passenger terminal will open it up to servicemembers and dependents. Free travel around the world!

There are a lot of caveats to Space-A, and it’s not a very reliable or seamless process all of the time. I recommend that you check out SpaceA.net and their Facebook group for the best information on travelling Space-A.

Invest for Financial Independence

Most servicemembers don’t make it to 20 years of service. The figures vary by service and officer vs. enlisted, but only about 20% of servicemembers who serve earn any kind of military pension, whether it’s active duty, guard, or reserve.

But even without a pension, military service can set you on the path to financial independence (FI). The military can teach you discipline, goal setting, and perseverance. All of these traits are useful if you want to complete a multi-year project like investing for financial independence or early retirement.

Military servicemembers have unique investment opportunities available to them that civilians do not. (We’ve already covered some of these, such as the TSP, SDP, and tax-free income.) However, the principles of FI apply to military servicemembers the same as civilians.

Achieving financial freedom in the military is simple, but not easy:

  • Save and invest enough of your money until you have 25x your annual expenses invested in low-cost, total stock and bond market index funds.
  • Now you can safely withdraw 4% of your invested assets annually to pay for your living expenses.
  • Voila, you don’t need to work anymore!

As I say, the concept is simple — but it’s not easy to achieve. How quickly you can achieve 25x of your expenses depends primarily on your saving rate.

  • Save 10% a year and you’ll achieve financial freedom in 51 years.
  • Save 25% and you cut it down to 32 years.
  • Save 50% and you are looking at only 17 years of investing to achieve financial independence.

Seventeen years is less time than it takes to earn a military retirement pension! Combine a military pension with FI and you’re looking at a fat retirement.

Or, if you don’t make it to 20 years (like 80% of your brothers and sisters in arms), you can still achieve FI by combining your military savings with whatever your post-military plans are.

Conclusion

I hope this was a valuable introduction to military finances. Armed with these lessons, I believe that every single servicemember can achieve financial success during and after their military career.

And remember: Most advice that applies to civilians applies just the same to military folks. It ultimately comes down to: “spend less than you earn and invest the difference”. That’s all it takes to eventually become financially independent. How long that takes is up to you!

The post How to manage money for financial success in the U.S. military appeared first on Get Rich Slowly.