A Deeper Look at 30 Day and 90 Day Challenges

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

For those unaware, a 30 day challenge is simply a challenge to oneself to adopt some sort of lifestyle change for thirty days. It might be something very discrete, like “meditate for 15 minutes each day for 30 days.” It might be something like “eat only 1800 calories a day for 30 days.” It could be something like “don’t speak negatively about coworkers for 30 days.” I wrote about financial applications for 30 day challenges in the past, and suggested ten such challenges:

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

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

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

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

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

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

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

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

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

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

That’s where a 90 day challenge comes in.

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

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

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

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

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

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

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

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

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

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

Enter Marshall Goldsmith

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

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

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

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

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

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

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

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

A Concrete Example: Default Home Meal Preparation

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Final Thoughts

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

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

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

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

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

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

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

The post A Deeper Look at 30 Day and 90 Day Challenges appeared first on The Simple Dollar.

Struggling with money anxiety and finding balance

sourced from: https://www.getrichslowly.org/finding-balance/

On Saturday evening, I had a chance to chat with my friends Wally and Jodie. You might remember them from a reader case study from last August. They’re the couple that wants to get their finances in order but they’re worried because they’re starting with less than zero.

When we chatted in August, Wally and Jodie had over $35,000 in debt. They had variable incomes, but somehow seemed to spend exactly what they earned — about $3000 per month after taxes. Worst of all, they were behind on some payments.

Now, eight months later, their situation has improved.

Over smoked German sausage and beer, Wally and Jodie told me about their progress. (My dog, Tahlequah, was eager to take part in the conversation. Or maybe it was the sausage she wanted?)

Jodie, Tally, and Wally

Taking Baby Steps

“Based on your advice, we’ve worked hard to increase our incomes,” Jodie told me. “We’ve both been picking up extra shifts whenever possible. And I started a second job that pays pretty well.”

“So, you’ve been able to get a gap between your income and your spending?” I asked.

“You bet,” said Wally. “By working more, we don’t have time to spend much money. In August, we didn’t have any gap between our earning and spending. Our gap was zero. Now our gap is almost $2000! And we’ve been using the debt snowball method to get out of debt. We’ve already paid off a bunch of smaller stuff and now have $438 extra per month for debt payoffs. Plus, we have an emergency fund.”

“This all sounds amazing,” I said. “Great work!”

“It is amazing,” Wally said. “This is the best shape I’ve ever been in financially. But we’re struggling to figure out what to do next.”

“What do you mean?” I asked.

“Well,” said Jodie. “We’re getting married in September. We don’t know how much to budget for that. Meanwhile, we still have a lot of debt. We owe about $10,000 on Wally’s car. We had to replace my Mini Cooper last winter, and that brought us another $10,000 of debt. Plus, I still owe on my school loans.”

I did some mental math. While the couple’s cash flow has improved, I was a little nervous that they hadn’t actually decreased their debt since the last time we talked about money. That said, I know Jodie’s old car had been a thorn in their side. And they have paid down nearly $10,000 in miscellaneous debts.

“The real issue is that we can’t seem to find balance,” Wally said. “We’re burned out. We’ve been working so much that we never have time for ourselves. Or each other. It’s affecting our moods and our attitudes.”

“Yeah,” I said. “That’s tough.”

Wally nodded. “Now I have a friend who wants us to fly out to his wedding,” he said. “We’ve done the math, and we can’t afford it. He’s offered to pay for the trip, but we don’t know how we feel about that. We want to go, but even if we do accept his help, it’ll cost us a few hundred bucks — plus whatever income we lose while we’re gone.”

“What should we do?” Jodie asked. “We thought saving more would reduce the stress, but we’re just as anxious as ever. Well, maybe not anxious in the same way, I guess, but still. We’re worried about money — even with a $2000 gap each month.”

“Trust me,” I said. “The money worry never goes away. Everybody has money anxiety, no matter how much they earn, no matter how much they have saved.”

Worrying About Money

“Do you worry about money?” Wally asked.

“Yes, of course,” I said. “I’m basically financially independent, but I still have money anxiety. In fact, I’m so worried about it that this year I’m tracking every penny I earn and spend. And, just like you, there always seems to be something that comes up for me to spend on. There’s my heart-attack scare, which now looks like it’ll cost me $7500. I just paid a huge tax bill. And there’s all of this travel I’ve committed to this year. It’s always something.”

“Should we fly to my friend’s wedding?” Wally asked. “I haven’t seen him in a long time. I can tell it’s important to him for us to be there.”

“That’s a tough call,” I said. “And it’s an example of how personal finance isn’t just about the numbers. There are relationships and emotions to consider too.”

“From a financial perspective, I don’t think you should go. But it’d be hypocritical of me to tell you that. My cousin Duane is still fighting cancer, but he wants to make another trip to Europe next month. At first, I was reluctant to join him. Like I said, I’m trying to cut expenses this year because I feel like I’m spending too much. But you know what? I’m going. So, you see, my advice and my actions are at odds here.”

I didn’t know how to tell Wally and Jodie, but my biggest concern with their situation is that it seems like they’re getting ready to stop the race when they’ve barely begun. They’re not out of debt yet. They’ve made some excellent progress, but there’s still a long way to go.

They’ve spent eight months on this project. From the looks of it, they have another eighteen months to go — but that’s if they use the gap they’ve created to accelerate their debt payments. If they don’t choose this route, it’s going to take them even longer.

At the same time, I get where they’re coming from about feeling cramped. Sure, there’s a finite amount of time until they get the debt paid off, then they can loosen up. But when you’re in the thick of it, eighteen months can feel like eighteen years.

Finding Balance

The key, of course, is to find balance. And I think that’s what Wally and Jodie are trying to do.

They’re not trying to quit the race early. They don’t want to get behind on payments like they used to be. They don’t want to spend their emergency fund or to stop their debt snowball. What they want is to find a balance between today and tomorrow.

I didn’t mention it to them at the time, but I think they should look at the balanced money formula from Elizabeth Warren and Amelia Tyagi’s excellent All Your Worth.

The Balanced Money Formula

Warren and Tyagi argue that in order to achieve financial balance, your after-tax spending should be allocated like this:

  • At least 20% should go to Saving (which includes debt reduction).
  • No more than 50% should be allocated to Needs (which includes housing, utilities, healthcare, basic food, and basic clothing).
  • The rest — around 30% — should go to Wants (which is everything else).

Warren and Tyagi are adamant that less than half your budget should go to Needs. If you pour too much toward necessities, you don’t have room in your budget for fun or the future.

The authors are just as insistent that you should build room into your budget for Wants. “You should ask yourself,” they write, “are you making enough room for fun?”

Wally and Jodie aren’t spending much on Needs at the moment, but they’re not spending much on Wants either. They’ve been pumping most of their money into Saving (in the form of debt reduction). This is a Good Thing. But maybe it’s too much of a good thing?

Making a Plan

On Sunday morning, Wally sent me an email. After meeting with me, he and Jodie formulated a plan:

  • Until their wedding in September, they’ll keep their debt snowball where it is today: minimum payments plus the $438 they’ve freed from satisfied debts.
  • They’ll use an envelope-like budget for entertainment, travel, gifts, dates, and personal items.
  • With the rest of their monthly gap, they’ll create a dedicated savings account for their wedding. After the wedding, they’ll throw this money at debt.

This seems like a good, purposeful plan to me. It balances today and tomorrow. And you can be sure that I’ll follow up with them in the fall to make sure they’ve stuck to the plan — that they’ve remembered to prioritize their debt snowball again.

In the meantime, I sent Wally this Reddit post in which a young guy realized that by pushing for a 65% saving rate, he was miserable. He writes:

I’m currently shooting for a 55% saving rate and I cannot tell you how much more I enjoy life. I went from feeling like I couldn’t spend a dollar that wasn’t strictly budgeted, to travelling with friends, going to concerts, and enjoying the pleasures of life. That 10% made all the difference in the world

As for me, I still feel anxious. I’ve done a good job of controlling my small, everyday expenses this year, but the big stuff is still stressing me out. I need to heed my own advice and find better balance. That will come, I think, as I consciously make better decisions about future large expenses — and as I work to increase my own income.

The post Struggling with money anxiety and finding balance appeared first on Get Rich Slowly.

How to budget: A pain-free guide to building a budget that works

sourced from: https://www.getrichslowly.org/how-to-budget/

“A budget is telling your money where to go instead of wondering where it went.” — John C. Maxwell

I’ve had more one-on-one money coaching meetings during the past year than my previous twelve years writing about money combined. I used to claim that I’d never do money coaching. Apparently, I was wrong.

As I meet with folks, certain common themes stand out.

For one, most folks have no idea how much they’re actually earning and spending. Their finances are like a black box. They get paid, put the money in the bank, then spend it until it’s gone. Almost nobody actively tracks what they earn and spend. “Do I have money in my checking account? I can buy something!”

Because people don’t track what they spend, it’s tough for them to plan what they spend. Frequently, I suggest that the people I meet with make a budget. Because budgets have been demonized for so long, there’s a lot of resistance to this idea. That’s too bad. Budgets don’t have to be a bother. When used correctly, they’re an excellent way to take control of your money.

If you pick a budget that fits the way you live, it can help you meet your goals more quickly. The key? Don’t think of a budget as a constraint. Real Life is a constraint; a budget helps you break free so that you can spend on what’s important to you, on the things that bring you joy.

Why Budgets Fail

A lot of people get frustrated with budgeting because it never seems to work. They never reach their spending targets. Or emergencies break the budget. Or it seems like so much work for so little reward. I hear you. I’ve been there. But if you follow a few rules (or maybe “guidelines”, if you prefer), budgeting can be less stressful and more useful.

Based on my own experience — and based on comments of GRS readers like you — I believe there are a handful of reasons most budgets fail. You may encounter trouble with your budget if:

  • It’s too complicated. People have a tendency to make budgets more complex than they need to be. A simple budget is usually more useful.
  • It doesn’t reflect your values. A budget should help you achieve your goals, so make it personal. If you try to use somebody else’s budget, you’re going to have a tough time.
  • It doesn’t reflect reality. When you build a budget, base it on your actual income and behavior — not on some imaginary ideal you.
  • It seems like a chore. Don’t let your system bog you down. Your goal is to have a budget that works, so keep looking until you find one that works for you.

To summarize: To minimize the risk of failure, a budget should be simple and easy to use while reflecting both current realities and your future goals.

That’s all rather esoteric, though. What does a simple, easy budget look like? There are a lot of approaches that work. While some people do manage to make detailed budgets work, I’ve found that “budget frameworks” are more effective for me and the people I coach.

Today, we’re going to take a deep dive into the world of budgeting. Based on my thirteen years of reading and writing about money, here are my thoughts on how to budget effectively.

How to Build a Budget

A lot of times when a person decides to get their financial house in order, the struggle to figure out how to build a budget that works. It’s common to build an elaborate budget that confuses even the person who created it. Successful budgets are usually simple.

The Only Investment Guide You'll Ever NeedIn The Only Investment Guide You’ll Ever Need, Andrew Tobias offers the following simple yet effective budget:

  1. Destroy all your credit cards.
  2. Invest 20% of all that you earn. Never touch it.
  3. Live on the remaining 80%, no matter what.

Although Tobias is being glib, this is actually an excellent system. If you can develop the discipline to follow just these three steps, you can become rich.

That said, this budget framework is too loose for most people. (I mean, come on, it only has two categories: saving and everything else.)

The 60% Solution

A decade ago at MSN Money, editor-in-chief Richard Jenkins proposed a budget that he dubbed the 60% Solution. (That link leads to a Web Archive summary of his framework. The original is article is no longer available because MSN thinks it’s smart to throw away awesome old content.)

After twenty years of budgeting, Jenkins decided that a detailed budget was too much work for too little information. He developed a simpler framework. With this framework, his goal was to keep Committed Expenses manageable. (Jenkins says that Committed Expenses are Wants or Needs that you can’t or won’t compromise on. You’re committed to them.)

The 60% Solution

The 60% Solution suggests allocating your monthly gross (pre-tax) income like this:

  • 60% to Committed Expenses such as taxes, clothing, basic living expenses, insurance, charity (including tithing), and regular bills (including things like your cell phone).
  • 10% to Retirement.
  • 10% to Irregular Expenses such as vacations, major repair bills, new appliances, etc.
  • 10% to Long-Term Savings/Debt — money set aside for car purchases, home renovations, or to pay down substantial debt loads.
  • 10% for Fun Money to be used for dining out, hobbies, indulgences, etc.

Jenkins believes that the best way to relieve money pressure is to reduce Committed Expenses. When your Committed Expenses rise, so does your stress level. If you can keep these costs under 60% of your income, you’ll have more money to spend on other things — like retirement tomorrow or fun stuff today.

The 60% Solution looks simplistic but it’s powerful. In fact, I Will Teach You to Be Rich author Ramit Sethi (who famously hates budgets) uses this as the basis for his “Conscious Spending Plan” (which, sorry Ramit, is just a budget). If Ramit likes a budget, you know it’s good.

The Balanced Money Formula

My favorite budget framework — the one I teach in workshops and encourage friends to use — is the Balanced Money Formula from All Your Worth: The Ultimate Lifetime Money Plan by Elizabeth Warren and Amelia Tyagi. (Yes, that Elizabeth Warren. I’m endorsing her budget framework, not her Presidential bid.)

The Balanced Money Formula (which sometimes gets billed as the “50/30/20 budget” by bloggers too lazy to do research) is meant to help people save and pay off debt while simultaneously leaving room for financial electives like going out to dinner and cable television.

The Balanced Money Formula

Warren and Tyagi argue that in order to succeed financially, you must keep three broad areas of your finances “in balance”. They divide your net (after-tax) income as follows:

  • Allocate no more than 50% to Needs (which the authors call Must-Haves). Needs include housing, transportation, groceries, insurance, and clothes you really need.
  • Set aside at least 20% for Savings, which includes both debt repayment and retirement contributions.
  • Spend the remaining (roughly) 30% on Wants. Wants include cable television, clothing beyond the basics, restaurant meals, concert tickets, comic books, knitting supplies, etc.

Warren and Tyagi insist that to maintain financial balance and to be happy, you cannot spend more than 50% of your income on Needs. (Spending less is even better.) From Warren’s experience with bankruptcy law, she’s seen that too many Americans dig a deep hole for themselves by taking on huge mortgages and car loans. If you want to keep a balanced budget (and eventually build a wealth snowball), it’s vital that you spend less on the Big Stuff — especially housing.

Note that the Balanced Money Formula considers debt reduction to be a part of Saving. I like this. I like it so much, in fact, that it’s now part of my personal “financial platform”.

Note: One shortcoming to all three of these budget frameworks is that they target twenty percent (at most) for debt reduction and saving. Twenty percent is great. It’s more than financial advisers generally recommend, and far more than most people save. But I consider twenty percent a starting point, not an end point. Ultimately, I think most folks are best-served by aiming to save half of their income.

Automating Your Budget

Budget frameworks let you wrap your head around the Big Picture, but the framework by itself isn’t very helpful. To build a budget that works, you need a system. You need a way to work with framework.

I have clear memories of my parents trying (and failing) to budget in the 1970s. Mom and Dad would get frustrated with how broke they were, so they’d sit down at the kitchen table to make a plan. After much heated debate, they’d draw up a budget in a spiral notebook. Over the next few weeks, Mom would track their spending and compare it to their projections.

The budgets never worked. It took too much effort. (There were other relationship reasons the budgets failed, but sheer labor involved played a major role.) After a couple of weeks of frustration, Mom and Dad would give up. No wonder they were always broke.

Nowadays, things are easier.

If other bloggers are too be believed, many folks use Personal Capital to track their spending. While expense tracking isn’t the same as budgeting, it’s absolutely part of the process. If you don’t track how much you spend, there’s no way to know if you’re sticking to your budget.

From chatting with Get Rich Slowly readers, I suspect that You Need a Budget (YNAB) is a better choice than Personal Capital when it comes to automating your budget. This shouldn’t be surprising, I guess. After all, YNAB is a tool specifically designed for budgeting! (Here’s my review of the YNAB software.)

Apps like these do have downsides. Personal Capital is a great free tool, but it’s also designed as a lead generator for a wealth-management firm. They’re hoping that if you use their software, you’ll eventually become a client. YNAB has no nefarious motives — in fact, the company is awesome — but the tool comes with a small monthly fee. For most folks who need to budget, however, this fee is worth it.

Still, you have other options. It’s possible, for instance, to buy stand-alone desktop software that lets you both budget and track your expenses. It’s no secret that I manage my money with a copy of Quicken 2007. (I’ll eventually move to a new version of Quicken. For now, the old version works just fine.)

My buddy Jim at Wallet Hacks is a proponent of building personalized budget spreadsheets. In fact, he recently wrote that budgeting with spreadsheets beats automated tools every time. But Jim is a ginormous nerd who loves noodling with numbers. If you’re less of a nerd, Personal Capital and/or YNAB might be a better fit.

Ultimately, it doesn’t matter which tool you choose. There’s no single right answer. Try several and figure out which works best for you and your budget. What matters most is that it’s something you’ll use, and that it’s something that will help you reach your goals.

Envelope Budgeting

Automated budgeting tools are great for most people. Some, however, might need to take a different approach.

When I met with my friends Wally and Jodie recently, I got a sense that while they’re making progress with their debt, they’re still struggling with organization. I think part of the problem is that their budget is abstract. It’s not a real, tangible thing but something that exists only on paper or in their heads.

“Have you heard of envelope budgeting?” I asked.

“No,” Wally said. “What’s that?” I gave a brief explanation.

The envelope budgeting system is a simple method that you can use with any sort of budget to help you manage your spending. You can use it with the 60% Solution, with the Balanced Money Formula, or for more complex budget systems.

The basic idea is this: When you get paid, you divide cash into various envelopes designated for specific budget categories. Here’s how it works:

  1. Choose budget categories. Use one envelope for each category you plan to track. Write the category’s name on each envelope. Wally and Jodie, for instance, might have an envelope for their upcoming wedding, an envelope for travel, an envelope for groceries, and envelope for utilities, and so on.
  2. Set money aside. After your paycheck gets deposited, withdraw cash for each budgeted category. If Wally and Jodie have budgeted $200 for two weeks of groceries, they’d put $200 in their grocery envelope and note this amount on the back.
  3. Spend normally. Throughout the month, take cash from the appropriate envelopes as you make purchases. When you take money out of an envelope, note the amount on the back. Also note how much remains in the envelope. After you buy something, put the receipt and change back in the envelope.
  4. When an envelope is empty, you’re done. If you run out of money in an envelope, you have two options. Hardcore budgeters argue that if your “Dining Out” envelope is empty, you need to suck it up until your next paycheck. Once you’ve spent your restaurant budget, that’s it. Others say that it’s okay to take from one envelope to fund another. Which route is right for you is a personal call. But please, don’t resort to credit to compensate for an empty envelope.
  5. Decide what to do with surplus cash. At the end of the pay period, you’re likely to have money left in certain envelopes. You should have a system to handle this. Maybe you want to leave the surplus there, effectively giving you a larger budget in the next pay period. (If you have $87 left in your grocery envelope and add $200 more, then you have $287 for the next pay period!) A smarter move might be to take the surplus cash at the end of a pay period and put it toward a long-term goal. (Wally and Jodie could take extra grocery money, for example, and put it in their wedding envelope.)
  6. Do it again. Repeat this process each pay period. If you discover that you consistently have a deficit (or surplus) in certain categories, make adjustments.

Here’s a terrific step-by-step envelope budget tutorial from YouTube:

The beauty of envelope budgeting is that it’s system agnostic. It doesn’t care what kind of budget you use. You can use it for all of your budget categories or just a few. (I think most people would use it for variable expenses, not fixed expenses like mortgages and phone bills.) Plus, it’s physical. The money is real and you’re forced to actually handle it and experience the “pain of paying”.

I should note that some people want to use the envelope system but don’t want to hassle with actual envelopes. For these folks, a budget spreadsheet is a good way to simulate the system. (Or, you might try to replicate it with the You Need a Budget software.)

In 2013 here at Get Rich Slowly, Kristin Wong shared her adventures in returning to the envelope system.

How to Build a Better Budget

That’s a lot of information about budgeting, I know. It might be overwhelming. But before we wrap things up, I’d like to offer a few final tips. Let’s start with what I consider the four cardinal rules of budgeting.

  • The first rule of budgeting: Don’t worry about perfection. A budget is a target. Your spending won’t be perfect the first month. Or the second. Or the third. If you can’t get your money into perfect balance, get as close as you can. Learn to make adjustments, and don’t give up.
  • The second rule of budgeting: The big stuff makes more difference than the small stuff. Yes, you should clip coupons and shop at thrift stores. But you can save thousands of dollars at once by being smart when you buy a house or a car. Decrease your major expenses — like housing and transportation — and you’ll have a lot more room in your budget for the fun stuff.
  • The third rule of budgeting: Make plans based on your real life, not how you wish life would be. Don’t budget for possible salary increases and ideal spending habits. If you spend money on coffee every day, make that part of your budget. If you haven’t received a raise at work, don’t count that in your income. Budget for reality, not wishful thinking.
  • The fourth rule of budgeting: Keep it simple. If using your budget is a chore, you’ll never follow through. Include only as much detail as you need. Find a way to track your spending that works the way you do.

Lastly, if you struggle with keeping a budget, it may be because you’re trying to predict your spending in time chunks that are just too small. A 2008 study published in the Journal of Consumer Research found that people who made annual budgets were better able to predict their spending than those who made monthly budgets.

From the original press release:

[Researchers] found that, contrary to popular advice, people were more accurate when constructing an annual rather than a monthly budget, even when they were logging their expenses weekly.

“Consumers’ default tendency is to underestimate their budgets, for both next month and next year frames,” write the authors. “However budgets for the next year are closer to recorded expenses because consumers feel less confident when estimating these budgets, and therefore, adjust them upward.”

One reason yearly budgets are more accurate is that consumers consider a greater number of expense categories when they construct them. If you construct your monthly budget in April, will you remember to include a category for Christmas gifts?

If you’ve followed my own spending adventures this year, you know I’ve encountered some of this. “Oops! I forgot I’d have a huge tax liability in April. Oh wow, I forgot that we booked a September 2019 vacation in April 2018. Now the balance is due.” And so on.

Yearly budgets aren’t very useful, however, for planning your day-to-day spending. The obvious solution is to take the best of both worlds:

  • Since people generally do a better job of estimating yearly expenses rather than monthly expenses, create an annual budget.
  • Once you’ve arrived at your annual budget, divide your estimated expenses in each category by twelve. This will give you a monthly number to work with.

The results of this study reiterate that over-confidence is an enormous drag on the average person’s finances. We believe we’re immune to advertising, that we can handle credit responsibly, that we can pick winning stocks. Yet study after study demonstrates that this just is not the case. In fact, those who lack confidence often make the best financial decisions.

This is also true with budgeting. In this study, subjects who were told that budgeting was difficult made more accurate estimates regarding their expenses than those who were told that budgeting was easy.

Budgeting Sets You Free

For many folks, “budget” is a four-letter word. Not for money bosses. A money boss views a budget as a useful tool with which she can help build the life she wants. At the same time, she knows that a budget isn’t fixed in stone. It’s always a work in progress.

When you use a budget, even one as simple as the Balanced Money Formula, you need to make constant adjustments. But once you get the most important expenses figured out (your Committed Expenses or Needs), you usually don’t have to worry about them much. Your housing payment doesn’t fluctuate from month to month, for instance. Your insurance premiums stay pretty constant. The same is true for your Savings. Once you get used to saving a certain amount, that becomes a habit.

Your goal, then, is to trim your Needs and boost your Savings until they’re both at respectable, sustainable levels. If you can keep these two broad categories where they should be, you can spend everything else on Wants.

Spending on fun stuff is less stressful when you know you can afford it. Budgeting isn’t a straitjacket. Budgeting sets you free.

Want more help building a budget? Try these tools:

Remember: If one budget doesn’t work, try another. Don’t just blindly use a budget from somebody else — even Dave Ramsey or Suze Orman. Use their ideas as a starting point, but tailor them so that your budget fits your life.

That’s what I did, and it worked.

Note: This is a substantial re-write of an article originally published 02 May 2011. In fact, I’d go so far as to call it a new article. I’ve moved forward many of the comments on the old article and, as usual, have placed a marker so you can tell where old comments end and new comments begin.

The post How to budget: A pain-free guide to building a budget that works appeared first on Get Rich Slowly.

Capital One Auto Loans Review

sourced from: http://feedproxy.google.com/~r/thesimpledollar/~3/bcWJf3_VIx4/

Capital One is a Fortune 500 company and one of the 10 largest financial institutions in the United States based on deposit amounts. The bank services over 45 million customers across their banking and credit card verticals, and they’re well known for popular financial products like their Capital One 360 checking account.

While Capital One’s banking products and rewards credit cards probably come to mind first, the company also boasts a robust selection of auto loans for consumers who want to purchase a vehicle or refinance a car loan they already have. Capital One even lets you get pre-qualified for an auto loan without an impact to your credit score, and you can use your new auto loan at over 12,000 dealerships around the U.S.

Capital One Auto Loans: Key Takeaways

  • Interest rates start at 3.79% for new car loans.
  • Refinance your current auto loan with a new rate between 4.33% and 24.99%.
  • New car loans start at $4,000, and you can qualify for a refinance loan between $7,500 and $50,000.
  • Repay your auto loan with a repayment term of your choosing between 36 and 72 months.
  • Auto Navigator loan program lets you get pre-qualified and shop at participating dealerships.

Capital One Auto Finance: Affordable Loans for New and Used Cars

Capital One offers affordable auto loans for consumers with nearly all tiers of credit, although there are some restrictions.

For starters, the Capital One Auto Navigator loan for car purchases is only good at about 12,000 participating dealers nationwide — as in, you cannot use this loan to purchase a car from an individual. Once you’re pre-qualified with Capital One, you can shop around for a car on their website or look up participating dealers and shop for a new or used car in person. Pre-qualification doesn’t guarantee you’ll receive financing or any specific terms; it is only meant to provide you with an idea of whether you can qualify, the amount you can qualify for, and the interest rate you may end up with.

When it comes to the type of cars these loans work for, Capital One only offers new or used car financing on autos up to 12 years old depending on the state. Maximum vehicle mileage is also set at 120,000 miles, and purchase loan amounts start at $4,000.

You can also refinance an auto loan you already have with Capital One — a move they say could save you up to $50 per month compared to your current payment.

To qualify for a refinance, the vehicle must be seven years old or newer and you must be up to date on payments. You can borrow between $7,500 and $50,000 with a refinance, and you can only use these loans for new and used cars, light trucks, SUVs, and minivans for personal use.

What to Watch Out For

The main downside of Capital One auto loans is the fact you can only use their purchase loans at participating dealers. They let you get pre-qualified for an auto loan without a hard inquiry on your credit report, but you’re limited in terms of where you can use your loan proceeds. If you want to buy a truck off a friend or happen to find a car you want to buy at a small boutique dealership that doesn’t partner with Capital One, you can’t use this loan.

Their loans are also limiting in other ways, including the fact Capital One doesn’t finance vehicles in Alaska or Hawaii. Also note that, while Capital One offers interest rates starting at 3.79% for purchase loans, the best rates and terms only go to consumers with very good credit, which is usually considered anyone with a FICO score of 740 or higher. Customers may qualify for the best rates with slightly lower scores, but those with “average” credit or “poor” credit will wind up paying considerably higher interest rates for the same loan.

Finally, Capital One does require a minimum income of $1,500 to $1,800 a month for their auto loans, and that requirement can surge based on the amount you want to borrow.

Who Capital One Auto Loans are Best for:

  • Anyone with great credit who can qualify for their lowest rates and best terms.
  • Consumers who want to get pre-qualified to see how much they can borrow without a hard inquiry on their credit report.
  • People who don’t mind using their loan at a participating dealership.
  • Refinancing customers with great credit who need to get into a new auto loan with a lower interest rate and better terms.

How We Rate Capital One Auto Financing

At The Simple Dollar, we aim to provide a general overview of a lender’s products and services through a standard rating process. After a thorough research and discovery period, here’s how Capital One stacks up:

Capital One Auto Loans at a Glance
Overall Rating
Affordability (interest rates, fees, and terms) 🌕🌕🌕🌕🌑
Availability (credit requirements, geographic reach) 🌕🌕🌕🌕🌑
Ease of Use 🌕🌕🌕🌑🌑
Transparency 🌕🌕🌕🌕🌑

How to Apply for an Auto Loan from Capital One

Whether you are ready to apply for an auto loan, Capital One keeps the process simple by letting you apply online. With their Auto Navigator program, you can get pre-qualified for a car loan using the application on the Capital One website. Information you’ll need to provide to get pre-qualified includes:

  • Your name
  • Email address
  • Social Security number
  • Phone number
  • Home address
  • Length at residence
  • Employment information
  • Gross annual income

With your pre-qualification letter in hand, you can shop for a car at any participating dealer. When you find the car you want, you’ll complete the full loan application with Capital One and the dealership will help you apply the loan funds to your auto purchase. In summary, applying for an auto loan from Capital One isn’t that different from using dealer financing other than the fact they let you get pre-qualified for your loan online before you shop.

The Bottom Line

If you’re ready to buy a new or used car but you prefer to get financing from a bank you know and trust, Capital One auto loans are worth checking out. Interest rates can be low for consumers with excellent credit, and you can use your loan to purchase a vehicle from more than 12,000 dealerships nationwide. You can even refinance an auto loan you already have to get a lower rate — either to save money on interest, pay your car off faster, or both.

On the flip side, you may want to consider another loan if you need more flexibility in how the funds are used. And if you want the option to buy from any dealership or purchase a car from an individual, you’ll need to look for a different auto loan altogether.


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An introduction to square-foot gardening

sourced from: https://www.getrichslowly.org/an-introduction-to-square-foot-gardening/

I grew up in the country. My family always had a vegetable garden. For us, gardening meant a large plot, plowed and raked, then planted with long, widely-space rows of vegetables. It also meant weeding and hoeing, weeding and hoeing. Lots and lots of weeding and hoeing.

Gardening was a chore.

When my ex-wife and I bought our first home, we both wanted a vegetable garden, but we didn’t want the drudgery that came with it. Besides, we didn’t have a big space in the country — we had an average city lot. Fortunately, we discovered Mel Bartholomew’s Square-Foot Gardening.

Bartholomew’s method allowed us to enjoy reasonable crop production in a small space. With his technique, almost any homeowner can grow her own food.

How Square-Foot Gardening Works

The square-foot gardening concept is simple: Build a raised bed. Divide the space into sections of one square-foot each. Lastly, plant vegetables (and/or flowers) in just the amount of space they need.

The advantages of this system include reduced workload, less watering, easy weeding (and not much of it), and easy access to your crops. This is a great way to learn to grow some of your own food.

Back in the 1990s, Kris and I had raised beds similar to these (from Flickr user johnyaya).

raised beds

We built our square-foot garden one Saturday in mid-April. I spent the morning constructing three raised beds out of two-by-sixes. Each bed was twelve feet long, four feet wide, and twelve inches tall. At the time, I most certainly was not a handyman, yet I was able to build these in just a few hours. It was fun.

Digging was less fun.

I spent the afternoon double-digging three patches in our lawn. We maneuvered the frames into place, leveled them, and then filled them with rich soil (purchased from a nearby nursery-supply center). Finally, we created a grid over each bed using tacks and twine. When we were finished, our raised beds looked like orderly grids.

After we built the raised beds and outlined the growing space, we followed the guidelines in Bartholomew’s book.

The ten basic tenets of square-foot gardening are:

  1. Layout. Arrange your garden in squares, not rows. Lay it out in roughly 48 inches (125cm) x 48 inches (125cm) planting areas.
  2. Boxes. Build boxes to hold a new soil mix above ground.
  3. Aisles. Space boxes 36 inches (100cm) apart to form walking aisles.
  4. Soil. Fill boxes with Bartholomew’s special soil mix: 1/3 blended compost, 1/3 peat moss, and 1/3 coarse vermiculite.
  5. Grid. Make a permanent square foot grid for the top of each box. (The book and website insist that this is a must. I think a temporary grid works fine.)
  6. Care. Never walk on your growing soil. Tend your garden from the aisles.
  7. Select. Plant a different flower, vegetable, or herb crop in each square foot, using one, four, nine, or sixteen plants per square foot.
  8. Plant. Conserve seeds. Plant only a pinch (two or three seeds) per hole. Place transplants in a slight saucer-shaped depression.
  9. Water. Water by hand from a bucket of sun-warmed water.
  10. Harvest. When you finish harvesting a square foot, add compost and replant it with a new and different crop.

You might, for example, plant a single tomato in a square, but you’d plant sixteen carrots in another. Using this system, you can cram a lot of garden into a small space and still get excellent yields.

The official square-foot gardening website includes several handy planting chart cheat sheets to help with planning and planting.

Square-Foot Gardening Cheat Sheet

My Square-Foot Garden

I haven’t had much of a garden since Kris and I got divorced seven years ago. When Kim and I bought our country acre in 2017, it came with three ramshackle raised beds. We’ve made the most of these — well, Kim has, anyhow — but not in any sort of systematic way.

This year, we took down a gangly cedar tree that dominated one corner of our yard. In its place, we planted three fruit trees, four blueberry bushes, and four grape vines. Last weekend, in a mad fit of productivity, I decided to add two new raised beds.

Using scavenged lumber (we have a stack of good stuff after replacing our carport and back deck), I build two solid boxes. I filled them with the dirt I’d removed when we put in the orchard in March. (Although it’s not the “official” square-foot gardening mixture, I topped the beds with bagged soil purchased from a local nursery.)

Because it’s far too late for me to start most plants from seed this year, I opted to purchase starts from the same nursery.

In the smaller raised bed, I started an herb garden.

Square-Foot Gardening (Herbs)

In the larger raised bed, I planted both flowers and some cool-climate veggies (such as carrots, lettuce, and peas).

Square-Foot Gardening (Flowers)

As you can see, I applied the square-foot methodology but I didn’t actually use a grid. (And because I don’t own a copy of the book anymore, I guessed at spacing.)

Within hours, the herb garden was infested with pests. (Probably because I planted some “pestnip”.)

Square-Foot Gardening (Animals)

In retrospect, I ought not to have planted catnip next to my other herbs. Avery has destroyed both catnip plants already, and he took out the winter savory in the process. (Plus, he damaged the cilantro and the parsley.)

Further Reading

I’m very excited to have a garden again. It’s been a l-o-n-g time since I’ve been serious about growing my own food. Plus, Kim is into it too. She’s been growing seedlings this spring, and she planted them out yesterday. Once the weather warms a bit more, she’ll plant some tomato and pepper and basil starts. By the end of the summer, we should have some good eating!

If you’d like to experiment with square-foot gardening, Mel Bartholomew’s book is excellent. But you can also find info online at the square-foot gardening forum and this terrific tutorial from Journey to Forever.

If you don’t have the time or space to construct raised beds, consider starting a container garden. Apartment-dwellers can get good results from plants grown in large self-watering pots on a patio or balcony. (Here’s a review of The Bountiful Container written by my ex-wife in 2008.)

In any event, now’s the time to get your garden space ready in many parts of the U.S. The danger of frost has passed for most of us. Garden fairs and plant sales have begun to pop up like weeds. Get out there and grow some food!

This is an updated version of an article originally published here on 21 April 2007. The info is the post is current, but some of the comments might be outdated.

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Food waste and food consumption in the United States

sourced from: https://www.getrichslowly.org/food-waste/

I’ve been thinking a lot lately about how much food I consume (and waste). I’m not happy with how I shop and eat, and it’s not just because I’m fat right now. I don’t like what I’m eating and I don’t like how much food I’m throwing out.

Food waste is a huge problem in the United States. Most studies find that Americans waste about one-third of all food that enters the supply chain. This is insane. And when you consider that food spending is the third-largest component of the average American budget, this is a great place for most folks to boost their budget.

According to the 2017 Consumer Expenditure Report, the average household spends $7,729 per year ($644.08 per month) on food. If, as the USDA reports, 31% of the average family’s food goes to waste, that’s the equivalent of burning $2395.99 per year ($199.67 per month).

For most families, $200 per month is a big deal. That can be the difference between deficit spending and earning a “profit”. That $200 per month could be enough to purchase a new car or to afford better health insurance.

Today, I want to think out loud about food consumption and food waste in my own life.

Our actual fridge at this very moment

This article is unusual in that I’m not going to try to offer any solutions. Instead, I’m simply going to share some observations, and I’m going to divide these observations into bite-sized chunks.

If you have solutions to food waste, however, I’d love to hear them.

Fun with Friends

Kim and I spent this past weekend in central Oregon with some of my best friends from high school. Every year, this group of twelve rents a big house for three or four nights so that we can sit around, reminisce, and enjoy a few days without kids.

As is typical with gatherings like this, each couple is in charge of one meal. For instance, Kim and I were responsible for Saturday morning’s breakfast.

As is also typical for gatherings like this, there’s always a ton of food left over. It’s tough to estimate how much a group is going to eat. So, even though we did our best to not have leftovers, there were plenty of eggs and ham and biscuits remaining after Kim and I cooked our meal. Every other couple struggled with the same thing. We always do.

Yesterday as we were packing to come home, our group marveled at how much food was still in the fridge. Honestly, we could have hosted another long weekend for twelve without having to buy groceries. (Okay, we needed more coffee. We ran out of coffee yesterday morning. Mennonites drink a lot of coffee.)

I was pleased to see that our group made a deliberate effort to not waste any of our leftovers. Kristin sent Kim home with the leftover rhubarb sauce. (Kim loves rhubarb!) We sent Kristin home with the leftover ham and the hambone. Kara grabbed the unopened beer. And so on. I’ve spent time with some groups that would have simply thrown this food out. We didn’t do that.

Food Storage in the Motorhome

During our fifteen months exploring the U.S. by RV, Kim and I had limited space for food storage. We had one (very) small refrigerator and one (very) small set of cabinets for dry goods. We learned quickly that we had to be intentional about the food we bought to keep on hand.

The fridge always contained milk and beer, plus whatever meat and salad fixings we needed for the next few days. The cupboard contained rice, pasta, and a few pre-packaged meals.

We learned to keep a mental (and written) inventory of what “stock” items were depleted. If I ate a can of bean with bacon soup, I knew I had to replace it. When we got down to two days worth of rice, we made a point to buy more.

At first, this limited storage space was frustrating. It didn’t take long, however, to learn that rather than being a problem, this limited storage was freeing. We had less food to worry about. We had fewer choices to make. We always knew what food we had on hand and when we intended to use it.

When we returned home to Portland, the fridge in the condo seemed ginormous. Who needed that much cold storage? Not us!

For a few weeks, we did a terrific job of maintaining the habits we’d learned on the road. Each afternoon, I’d walk to the store to buy whatever we needed for that evening’s meal. We didn’t stock up on staples. We simply bought what we needed for the immediate future.

Slowly, though, we reverted to our old habits. The fridge became filled with meat and greens and leftovers. After our first trip to Costco — no need to ever go to Costco when you’re on the road in an RV — our cupboards were stocked with beans and rice and cereal and coffee and pre-packaged meals.

Two years ago, we moved from that condo (a place with ample storage space) to this much-smaller country cottage. Here, our kitchen storage is limited. In fact, it’s so limited that we couldn’t store all of the food we had at the condo. We had to give some away — and put the rest in the trash.

Now, we walk a fine line. We try not to have a lot of “staples” on hand, but at the same time we like to save money by buying our favorite items in bulk. Most days, I eat a can of Nalley’s chili for lunch, for instance. At Safeway, this typically goes for $2.39 per can. If I buy a case of twelve at Costco, I can get it for less than $1.00 per can. (Don’t quote me on that price. My memory may be off. It’s low, though.)

Our pantry shelf with lots of chili

All the same, we waste too much food. Every week, we find something that’s gone bad. Maybe it’s a package of salami that got buried under something else. Maybe it’s some vegetables that never got used for their intended recipe. Maybe it’s a jar of salsa that’s managed to mold.

Kim and I hate wasting food. Yet we do it. And it’s largely because we have too much on hand at any given time. We forget what we have. Or we have so much that we can’t possibly eat it all. It’s a problem. But I know it’s not a problem that’s unique to us.

A Tiny Fridge

Twenty years ago, I knew a young couple that lived in an apartment with a small dorm-sized refrigerator. I thought it was funny at the time. “You don’t have space to store anything!” I said when I first saw it.

“We like it,” the told me. “It forces us to make decisions about what we’re going to buy. We can’t just stock up on everything. We have to be deliberate.”

I didn’t get it.

Similarly, my friend Sparky never kept much food on hand. I thought it was weird. When I’d visit him, his fridge would contain maybe a carton of eggs, a head of lettuce, and a carton of milk. His cupboards would be bare except for a loaf of bread and a box of cereal.

“Where’s your food?” I asked him once. Sparky shrugged.

“I only buy what I need,” he said. “I hate that I have to buy a dozen eggs. I’d rather buy only two. I wish I could buy just two slices of bread at a time. I don’t want a fully-stocked pantry. For one, it feels oppressive. It’s too much Stuff. Plus, I think it leads to food waste.”

A Colossal Waste

Eight years ago, my mother’s mental health problems reached a crisis point. She was in a state of constant disorientation and confusion. (Actually, she’s still in this state.) After she drove her car through the back of her garage, my brothers and I moved her into an assisted-living facility.

As we cleaned her house during the next few weeks, we were shocked by how much food she had. This single 63-year-old woman had enough on hand to feed a family of five for weeks. Or months. But the sad part was that so much of the food was expired or spoiled. The biggest surprise was a collection of spices from the 1970s.

She had eight-year-old mayonnaise in the fridge. She had multiple opened jars of salsa. The pantry — which my grandfather had built to store my grandmother’s copious canning — was stocked with cans and cans of Costco tuna fish.

We salvaged as much of the food as we could, taking it home for ourselves. Most of it had to be thrown out.

Eating Like Europeans

This Saturday, I’m flying to Europe to travel again with my cousin Duane. Thankfully, he’s still with us — and he’s feeling healthy enough to explore France for a couple of weeks.

Duane and I both love how Europeans buy food. (Or, how we believe they buy food. Our perception may not match reality, and we know that.)

There are supermarkets in Europe, but they’re not the megastores we see here in the U.S. And when people shop, they don’t buy for weeks at a time. They buy for days at a time. Or one day. They buy what they need for the immediate future. Here in the U.S., we tend to have personal larders designed to satisfy any possible want at any possible moment.

Plus, Europe has many more small, single-purpose shops. Duane and I had a ton of fun in December talking with this gal in Strasbourg who ran a cheese shop. She loved cheese, and she loved sharing it with us:

Strasbourg cheese market

Want some meat? Stop by the butcher to pick some up. Want a few tomatoes? Stop by the produce stand. Need bread? Head across the street to the bakery. And so on. Stores like this do exist in many parts of the U.S., but they’re almost always gourmet specialty shops targeting a high-end clientele. Plus, they’re few and far between. You have to drive from the butcher to the bakery to the produce stand.

From what I’ve seen of Europe, you can find these shops almost anywhere — big cities and small. And they’re meant for everyone, not just the wealthy.

Again, my perception might be tainted. I might be viewing things through rose-tinted tourist glasses. But I’m willing to wager that European food waste is much less than that of the United States.

Too Much Dessert

“Crap,” Kim said as she rushed out the door this morning. It’s her first day back to work after five weeks off for knee surgery. “We still have those beignets. They’re going to go to waste.”

Last Saturday night, our group of friends went out to eat at a fancy restaurant. Kim and I ordered beignets for dessert. We thought that for $8, we’d get a modest-sized portion that she and I could split. Instead, we got five large pastries. We couldn’t finish them. We took them back to the rental house with the intention of eating them later. But we haven’t eaten them. And now, as Kim said, they’re probably going to end up in the trash.

Looking Forward

What does all of this mean for me? If I think I buy and waste too much food, how can I change? Is there a way I can change my food consumption to improve both my waistline and my wallet?

Relating these anecdotes has helped me to understand that yes, I can (and should) change how I’m buying and storing food. Doing so would help me eat better. Plus, it’d help us feel less cramped in our kitchen.

Last autumn, I wrote about re-writing my financial blueprint so that I’m buying things based on actual needs rather than potential wants. At the time, I was thinking about books and garden tools. But the same principle applies to food.

The fundamental problem in our lives is that we buy food based on potential wants. not immediate needs. We might want to have pasta next week, so we buy noodles and tomato sauce and meat. We might want to have a big salad this weekend, so we stock up on vegetables and greens. We often prep a charcuterie board for dinner — we did so last night! — so we try to keep a variety of cheese and salami on hand. But what happens when we go weeks without doing this? Well, the meat and cheese goes to waste.

Lack of waste was one of the huge advantages to my recent HelloFresh experiment. When you open a recipe bag, you know you’re going to get only what you need to make this meal — and no more. You won’t end up with a bag of carrots that turns rubbery because they got buried in the produce crisper. They give you the one carrot you need to make your salad.

Vienna vegetable market

I’m not ready to go back to HelloFresh, but I think there are other changes I can make to improve my consumption and waste habits.

I’d be well-served by returning to how I was prepping meals after we returned from our RV trip. Instead of keeping a ton of stuff on hand, I ought to be making daily decisions about what to eat. Except for my canned chili — which I probably eat three to five times per week — I shouldn’t be stocking up on anything at Costco.

This change won’t be as easy here in the Stafford hills as it would be in urban Portland. At the condo, I could walk to buy groceries. It was quick. It was simple. Here, the nearest stores is more than a mile away. And we live in a very hilly area. It takes 20+ miles to walk there.

Still, even this is an opportunity.

I’m fat right now. If I were to walk to Safeway at three every afternoon, I could be home by four with whatever groceries I needed for dinner. I’d burn about 250 calories in the process and I’d get time to decompress. Now that the sunny weather is here (and will remain until October), I don’t really have any excuse.

Maybe I can’t live in my idealized European fashion, but I could certainly try to integrate some aspects of that lifestyle into my own. All it’d take is a little bit of willpower.

The post Food waste and food consumption in the United States appeared first on Get Rich Slowly.

The Real Benefit of Being Rich

sourced from: http://feedproxy.google.com/~r/MrMoneyMustache/~3/LTBI0t2uoYE/

There have been a lot of big bills coming across my kitchen table recently. Property taxes, car registrations, income taxes, things for the school orchestra in which little MM plays the standup bass. Plus the usual credit card bills for all my spending on groceries and not-all-that-rare luxury indulgences. There’s nothing bad or unexpected in this pile of bills, but I still see it adding up to a tidy sum.

But this morning as I was looking at the latest one – a bill from the City of Longmont for all the various utilities, I noticed that the same familiar feeling crept across my chest that I had felt for all of these other expenses: a feeling of warmth and reassurance.

The utility bill had a little note on it that said “DON’T PAY – account is being paid by credit card.”

So I can be reassured that whenever the due date comes up, the right amount of money will be sucked out of my credit card account to pay for the electricity and gas and water and trash service. And then whenever that credit card bill is due, another automatic payment will suck the right amount of money out of my checking account, and I’ll remain debt free.

Isn’t this remarkable? I get to frolic around in this super comfortable house of mine, keeping it warm in winter and flipping on lights and stereos and pulling cold beers out of the fridge and hopping into a hot shower whenever I like. Hosting guests and sharing the fresh food and hot showers and cold beers with them too.

Music and movies stream in over the fiber optic internet connection, and my fleet of crisp and well maintained bikes flow in and out of the garage doors in the back without a second thought about how the bills will be paid. In fact, I don’t even know when a single one of my due dates hits during the month, and I also don’t keep track of when my dividends or payments come in from stock investments or my little one-owner business.

Everything is worry free, because I know there’s enough, and the very feeling of knowing that I have enough warms my heart and soul every single day. It is a feeling of liberation and freedom and a glider that keeps me soaring high above the bullshit of worry or having to sell out my free time for activities that aren’t really helping anyone. To me, this feeling is the very core of being a Rich Person.

But now that I’ve got you imagining a glossy and pampered douchebag, barking orders at my live-in assistant and personal stylists before I climb into a white-leather Lexus to roll down to the marina, I should mention a few additional details.

All this incredible luxury occurs within my small house on the train tracks, tucked into a less-than-gentrified neighborhood at the corner of a less-than-world-class city. When I sit at that kitchen table, I gaze out at a shitty pergola structure that really needs the first available appointment with my fire pit, which covers a sadly undersized side patio, which is currently the only outdoor living space on my postage stamp sized lot.

When I ride those wonderful bikes out of that tidy garage, I pedal past my 21-year-old Honda Odyssey, and I’m usually en route to Sam’s Club to pick up another backpack load of discount groceries, or to perform another few hours of dirty manual labor at my always-under-construction coworking space downtown. My flannel shirt may have holes in its sleeves from welding sparks and my jeans may have a ripped seam or two from performing squats without proper workout gear.

The two stories above are two different takes on the exact same life. As a high income professional, you might have shuddered at the second one. Riding a bike during Colorado’s unpredictable snowstorms or searing desert heat, eating at restaurants less than once a month, cutting your own hair, or standing atop a 32 foot ladder to reach the last patch of your house with a paintbrush are surely just the desperate acts of an extremely frugal man, who does them to save money because he needed to escape the corporate world, right?

But unfortunately for my uneasy high income critics, this is just not true. Because of my advancing age, natural growth of the stock market, and ongoing love for work including writing this blog, I can afford to not do any of these things. In fact, depending on how you measure it, last year I spent only about 5% of my income on myself. I could spend twenty times more and still not even have to go back and get a real job!

At the same time, I have a few acquaintances – perfectly wonderful and thoughtful people – who do spend twenty times more and are still struggling to pay the bills and work one last year to get ahead of the treadmill. And they compare themselves to their other CEO peers, noting with relief that at least they spend far less than those crazy spenders and thus are living sensible lives.

Who is the reasonable one here, and who is off with their heads in the clouds? Mr. Money Mustache, or Corporate Chief Christine?

The answer of course is that we are both floating in space. My lifestyle is less expensive, but it’s still way more than almost anyone gets to experience, even in the richest country in the world. A single man in a three bedroom house worth over $350,000, with a seven passenger racing sofa parked out back that can tow 1.5 tons of construction materials in his cargo trailer, both of which he only needs once or twice per month. Plane tickets and parties, nice clothes and Amazon deliveries. It is all stuff that my teenaged self could have never even imagined.

So I could spend more, but I could also spend less, and I could be just as happy at any of those levels. My spending level today is just the result of my own imperfect efforts to build the happiest life I can manage while wasting as little as I can without being overly inconvenienced. And hopefully so is yours.

The trick is in realizing you can always go further while also ending up happier in the process. In not being afraid to add challenge to your life, because the right kind of challenge is a win/win rather than a tradeoff. And to not worry about what experiences you might be missing, but being mindful of the beauty of whatever you are doing right now.

At almost every moment in time, there is always something you could be doing that costs absolutely nothing, but which also makes you absolutely happy.

Your lifetime wealth surplus depends on how often you choose to find these joyful moments.

And only when you go far enough so that your spending is only a small portion of your income, do you become rich. It is at this point that your incoming bills feel like a joy rather than a burden, and your children’s future educations feel like a playground rather than a minefield. Even lurking medical expenses or aging parents who may need your help or the inevitable blow-ups in the economy just become things you are prepared for, but not worried about.

Right now, if you have any sort of income at all, it is probably enough to make you feel rich. The only question is, what changes do you need to make to your life over the next few months to unlock this joyful feeling?

How to write a perfect follow-up email after an interview (including 3 word-for-word scripts)

sourced from: https://www.iwillteachyoutoberich.com/blog/perfect-interview-follow-up-email/

The best thing you can do to improve your chances of landing the job: Sending an interview follow-up email.

If you’re in a hurry, here is a quick example of a perfect follow-up email:

emailtemplate1Not only does it show you’re courteous, but also that you’re willing to take action for your job.

There’s a bit more to it though: I want to show you a three-step system for following up that goes beyond a single email. When you do this right, it will instantly make you the clear favorite for any job you’re after.

Let’s get started.

Step 1: Collect contact information before you need it

After the interview and before you even consider rushing home to draft that perfect follow-up email, make sure you do one thing: Grab the business cards or contact information of everyone you spoke to.

And I. Mean. EVERYONE.

Was there someone who screened you on the phone before you got the interview? Get their email.

Was there a panel of interviewers? Get all of their contact info.

Did a receptionist escort you to a waiting area and grab you a glass of water before your interview? Grab her business card too.

I can’t think of a single employer who wouldn’t LOVE it if their receptionist told them about the awesome interviewee who emailed them to thank them for helping them that day. They could also be your future coworker, so it’s an easy way to start building a great relationship.

The little details go a long way when it comes to the follow-up.

Step 2: Craft the perfect follow-up (with scripts)

There are two ways you can approach your follow-up email and the pros and cons of each:

  1. Send the hiring manager a physical card or letterPros:

    Receiving a physical message is incredibly novel in this day and age — and this could set you apart even more from the rest of the applicants.Cons: It’s not as fast as sending an email — and you’re going to want to send the follow-up as soon as possible after the interview. If they are moving fast, your note may arrive too late.

  2. Write an email to themPros:

    It’s quick, easy, and allows you to send to multiple people with one message (pro-tip: write one really great follow-up, then copy and edit it for each person you spoke to).Cons: It’s more impersonal and there’s also the chance that your message is lost in their inbox or spam folder. Sending the exact same letter to everyone could backfire.

In the end though, it doesn’t matter which method you choose as long as you do it.

When you do, here’s that first script from earlier that you can use to follow up with the interview manager:

The initial follow-up email (send ASAP):

emailtemplate1Here’s the email written out so you can copy and paste the template:

Hi [NAME],

Thanks for taking the time to chat today. I especially enjoyed talking about [XYZ].

I really think this is a great fit for both of us. Hope to hear from you soon.



This example is for an email — but you can easily use it for a physical card too.

Notice three key things about this email:

  1. It’s a short, simple message. Your follow-up message doesn’t need to be fancy or complicated. In fact, making it too long will either bore the hiring manager or make them think you’re desperate.
  2. It’s specific. Be sure to get specific about the details. Bring up something that you actually enjoyed talking about in the interview. These details will trigger the hiring manager’s memory and help make a great, lasting impression.
  3. It should be sent as quickly as possible. Aim to send your email within two hours of your interview. This will show your enthusiasm, and it’ll be easier for you to remember all the details you should include.

Advanced tip: The best people in every field automate as many areas of their lives as possible. You can actually automate your interview follow-up email, if you want to save some time and ensure it gets sent. You can do this by creating a draft of your follow-up email before you even go to the interview. That way after it’s done, you can simply open the draft, fill in the missing details, and hit “send.” Boom. You’re done and can spend more time focusing on the Big Wins in your life.

Step 3: Follow up

Don’t sweat it and be patient. It may take the hiring manager several days or weeks to interview the other applicants and make a decision.

If you have not heard a response after a few days, you can send another follow-up email to check in.

Use this gentle email template to nudge them along:

The nudge email (after a few days):

emailtemplate2Here’s the email written out so you can copy and paste the template:

Hi [NAME],

I just wanted to follow up on the [XYZ] position we chatted about on [DAY OF WEEK]. 

You mentioned getting in touch about potential next steps. Is there anything I can do to help speed this process along?



Notice how this email is short and gets right to the point. It uses a light touch, but still lets them know you’re interested in the job.

It’s also important that this email doesn’t make the recipient feel guilty for not replying sooner. If you make them feel that way, a follow-up will actually backfire on you and you could lose the opportunity altogether.

The most likely thing is that they’re just busy or your first message got lost in the inbox. This email will grab their attention and bring your interview back to the top of their mind.

After that, wait one more week before sending your next, and final, response.

Advanced tip: Be sure to download a tracking app, such as HubSpot’s email tracking tool, that lets you know exactly when your interviewer opens your follow-up message. The tool notifies you the moment they see your email, so you’ll be able to follow up right then while you’re fresh on their minds. Doing this is key because it’s not disruptive, since they’re already reading your email and saves both you and the interviewer time.

When to call it quits on following up

If you still haven’t heard back a week later, reply to your previous interview follow-up email, saying this:

The bump email (After a week of no-response):

emailtemplate3Here’s the email written out so you can copy and paste the template:

Hi [NAME],

I hope you’re doing well. I just wanted to float this email to the top of your inbox — in case you missed it.



If they’re interested, they’ll get back to you. If they still don’t reply, it’s probably safe to assume they’ve chosen someone else for the role.

If that’s the case, don’t beat yourself up. It happens to everyone at some point. Go back to the job search — and prepare even better next time.

BONUS: The Closing the Loop Technique

As an extra for you, I want to show you a fantastic system to help you:

  • Stay in touch with VIPs
  • Transform one-time meetings into long-term relationships
  • Showcase your value to anyone

This goes beyond your typical follow-up “thanks for your time” email — and answers the question, “How do I make the person I just met want to help me?”

Introducing the Closing the Loop Technique.

This is a series of three emails you send to the person you just met with that’ll almost ensure they’ll want to keep in touch with you.

Here are the emails complete with my breakdown of why they work.

Email #1: Thank you (same day)

Hi Amy,

Just wanted to thank you again for meeting with me earlier. I’m definitely going to get in touch with Susan like you recommended. I’ll keep you in the loop, and of course, please let me know if there’s anything I can do to repay the favor!


A few things to note: First, the thank you is simple. No need to spill more ink than you need to.

It also references a specific action item you’re going to follow up on. This shows the person you’re emailing that you were paying attention during the interview.

The email ends with a solid offer from you to help in any way you can — while asking nothing of the recipient.

Email #2: Add value (1 – 2 weeks later)

Hey Amy,

Saw this article in the Wall Street Journal and it reminded me of what you said about productivity tests! No response needed, just thought you might find it interesting.


Now we start to shake things up. The person you’re emailing likely wasn’t expecting to ever hear back from you again. They especially weren’t expecting you to send something of value to them.

This can be anything — a blog post, email newsletter, YouTube video — as long as you know they will find it interesting.

How do you know this? Because during your meeting, you listened to what they said and noted the things that piqued their interest.

Pay close attention to the phrase used in the last sentence: “No response needed.” This is music to a busy person’s ears. Think about it: I get 600+ emails / day, and do you know what most of them want? They want something from me. When you can say “No response needed,” and send me something I find fascinating, you’re adding value to my life.

Email #3: Close the loop (2 – 3 weeks later)

Hi Amy,

Wanted to give you an update: I did end up talking to Susan, and you were right — Acme is definitely a fit for me. I’m reaching out to a friend there to learn all I can about Acme before I apply. If there’s anyone else you think I should speak to, please let me know.

Thanks again! I’ll let you know how it goes.


Now is when you separate yourself from 99.999% of people by showing the person you’re emailing that you actually took action on what they suggested.

If you give specific names of people and companies, that’ll show you were listening. It’ll also show the person you’re emailing that they were right — which is a major psychological boost for them.

Just like my Briefcase Technique, this system seems simple and obvious — until you use it. Then its true power is revealed.

And it’s incredibly effective. Check out this email I got from a reader who used the Closing the Loop Technique to help him get a job.

Hey Ramit,

One more testimonial to the Closing The Loop technique that you taught last night. I reached out to a prior boss I haven’t seen in 4 to 5 years about a position I heard about at that company. All I had asked for was if I could still use him as a reference and his up-to-date contact info. He responded in less than a half hour. By following up and offering to keep him in the loop, he then responded with an offer for a letter of recommendation and an offer to send a personal email to the hiring manager on my behalf. Holy Crap! It really works…

-Greg H.

For more on this, be sure to check out my five-minute video where I break down this technique.

Why sending a follow-up email is a critical step

It doesn’t matter how good your interview was — you STILL need to send a follow-up email for five reasons:

  1. It leaves a good impression. And impressions are everything when it comes to getting a job.
  2. The hiring manager will remember you. You were likely one of several interviews conducted by the company. Don’t get lost in the fray. There’s no better way to keep you on the hiring manager’s brain than by sending a follow-up email.
  3. You show that you have initiative. When you go out of the way to send an after-interview email, it shows that you’re willing to go above and beyond to make a lasting impression.
  4. The company will see that you’re genuinely interested. The follow-up email is a good way to separate you from the other interviewees who most likely didn’t even think to loop back with them.
  5. Interview follow-up emails work. Your chances of getting the job go way up if you send a follow-up email. Especially if you are neck-and-neck with another candidate.

Imagine you’re in the process of hiring and you have two potential candidates. Both are equally qualified for the role and interviewed well — but only ONE of them sent you a follow-up message thanking you for your time and calling back to some points you made that really made an impact on them.

Who do you think you’re going to pick for the job?


It’s important to also keep in mind that your interviewer’s reputation is on the line.

This is key, so I’m going to say it again.

Your interviewer’s reputation is on the line.Based on the few minutes they interact with you, your interviewer has to make a lot of important assessments. Do you have the right skills? Will you fit with the company culture? Are you reliable and trustworthy? etc.

It’s like speed-dating on steroids — with one major exception. If they judge you incorrectly, they don’t just risk an awkward second date. They risk their boss questioning their judgment for the rest of their career. And if it doesn’t work out, they have wasted months of time and thousands of dollars. They need to get this right. Not just for YOU but for THEM.

It’s important to keep this in mind when you go into an interview.

Your success is in their best interest. And when you follow up correctly after an interview, you make their job easier by proving you’re a Top Performer who deserves the job.

Interview better than 99% of people

If you REALLY want to dominate your job search even more, I can help you with that.

I recorded a video on mastering the art of interviewing. In it, you’ll learn the mindset and tactics to be a world-class interviewee in just a few hours.

Yours for free, my gift to you. Just sign up below.

How to write a perfect follow-up email after an interview (including 3 word-for-word scripts) is a post from: I Will Teach You To Be Rich.

The Five Things You Need to Achieve Your Financial Goals

sourced from: http://feedproxy.google.com/~r/thesimpledollar/~3/CeO-jaALkpg/

Given the enormous differences in the financial situations of different people, it’s easy to buy into the idea that those different stories have very little in common. After all, what exactly does a well-funded investor making his first millions have in common with a single parent with three kids trying to keep the rent paid?

While those differences might be important, when I hear those stories, what I look for are the similarities. Their external situations might be really different, but the things that drive those people internally are actually quite similar.

In fact, I would argue that there are really only five things that you need to have to achieve your financial goals, regardless of your financial state. They are things that everyone has access to, should they choose to do so. These five elements are present in virtually every financial success story, whether it’s someone making minimum wage and trying to pay off a student loan or someone trying to make their first million.

Here are the five key ingredients I feel everyone needs to succeed at their financial goals. Of course, these ingredients largely hold true for almost every type of goal.


This is the starting point for setting and achieving any kind of goal. You have to look at yourself and ask two absolutely vital questions: what do I have and what do I want.

What do I have? To set any sort of realistic financial goal, you need to start with a realistic picture of where you are at.

What are your assets? What things do you possess that have any value? What are your various account balances?

What are your debts? What responsibilities and obligations do you have? Do you have a spouse or children or others that rely on you?

What skills do you have? How can you apply those skills to make money? How much spare time do you have? What is your health like? Do you have the energy or capacity to work harder?

At the same time, you have to have a firm grip on what you want. What is your goal? When do you want to achieve that goal? Is that goal challenging but still within the realm of reality (for example, I might have some sort of career in basketball, but I’m never going to be an NBA player)? Is that goal deeply meaningful to you, or is it something someone else wants for you?

You can’t run a race if you don’t know what your starting point is. You can’t win a race if you don’t know where the finish line is. So often, people take off running without even knowing where the starting line is or the finish line is and they wonder why they can’t finish the race.

While you might be able to come up with quick, trite answers to all of these questions, the truth is that all of these questions deserve some serious self-reflection, and those questions will lead to more questions. You need to really understand yourself, what you have, and what you want in order to be able to establish a worthwhile challenging goal for yourself, and that’s going to take some self-reflection.

There are a lot of different methods that people can use for self-reflection. I find journaling to be very powerful. I constantly turn over questions like these when I’m journaling and they consistently move me toward better goals and better understanding of who I am, what I want, what I need, and what I should be doing with my time and energy.

Whatever method you choose, I encourage you to set aside some time each day to really think through these questions. What do you have? What does your life situation really look like? What do you want out of life? How does all of that translate into some powerful goals that you can actually achieve that will equate to a better life?


Planning takes the output of a bunch of self-reflection and turns it into actionable steps that can take you from what you currently have to what you want to have. In other words, planning addresses the question of how do I get from what I have to what I want.

Let’s say you did some serious self-evaluation of where you’re at and what you want and you’ve decided that a big healthy financial goal for yourself is to achieve debt freedom in three years.

The first question you should ask yourself is what can I do this year that will help me achieve that big goal? Maybe it’s something as straightforward as paying off a quarter of your debt balance, because if you do that in a year, you’re going to find it easier and easier to go faster and faster because interest isn’t accumulating. This might include some other big step like getting a new job or moving to a less expensive apartment.

Okay, then ask yourself what can I do this quarter that will help me achieve those end of the year goals? You might come up with a list of things here. They might be things oriented toward cutting back on your spending, like cutting your cable subscription. You might set a three month goal of getting your resume up to speed and applying to ten jobs that match you well. Maybe a three month goal is to find a cheaper apartment and move, or to find a roommate. You’ll probably have a few – you should have at least one for every goal you have for the year.

Then, what can I do this month that will help me achieve those quarterly goals? Maybe you’ll simply make a great resume and get it uploaded in a bunch of places. Maybe you’ll cut your cable. Maybe you’ll do a serious search for a roommate. Maybe you’ll clean out your closet and sell off some of that stuff. Maybe you’ll give yourself a strong thirty day challenge, like cooking all of your meals at home, that will both directly save you money and help you build a skill going forward that will keep saving you money.

Great, so what can you do this week to make those big goals for the month a reality? You might look for alternate ways to watch the two or three shows that you’re keeping cable around for. Maybe you can ask a friend to look at your current resume and suggest improvements. Maybe you can ask five friends whether they’d be interested in being roommates. Maybe you can make a real meal plan for the week, get all of the ingredients in one shopping trip, and make all of your meals.

That leaves us with one final question: what can you do today to make those week-long goals a reality? Just pick two or three things. Make a meal plan and a grocery list and head to the grocery store. Find your resume and send it to a good friend asking for advice on updating it. Call up a friend and see if they’d be interested in being a roommate.

Each day, ask yourself to come up with two or three things that you can do today to make those week-long goals a reality. Then, do them. Make them a priority. Get them done before you flop on the couch to watch Netflix or look at your phone.

Each week, do a bigger review. Make sure you finished up (or made good progress on) your plans and goals for the week, and set new ones for the next week. If it’s the start of the month, do it for the monthly goals. If it’s the start of a quarter, do it for the quarterly goals. If it’s the start of a year, do it for the yearly goals. (I do this on Sunday morning, usually.)

That’s what planning is all about. You’e got your goal, so what does that break down to? Keep breaking it down until it’s some short tasks on your to-do list for the day, and then keep coming back to the goal asking yourself what’s next.

There will come a time with a lot of financial goals where there isn’t something active to do, and that’s fine, as long as you’re not actually letting down your big goals by not doing anything. That’s when some of the other elements below come into play more than ever.


You have to be able to stop yourself from fulfilling desires, because desires are endless. You will always want something. There will always be a treat that you desire or that you think you deserve.

This isn’t easy. Our own internal voice makes it difficult. The pressures of society make it difficult. The nudging of our social circle can make it difficult.

Yet it can be overcome.

I think there are different answers to these problems for everyone, and so I can’t always comment on what might work for you when it comes to figuring out self-control over the things you desire. All I can really point to is what worked best for me.

First of all, I started evaluating literally everything I spent money on. Did I really need this thing? Was there a lower cost version that would have met that need, if there was a real need involved? If it was just fulfilling a desire, did I really get anything lasting out of that purchase?

For many months, I went through every single credit card statement and every single bank statement and every single receipt and asked myself those questions about every single purchase. Every time I ever feel even a little out of whack financially, I go back to this and walk through those statements, asking myself those questions.

“But these things are so small!” I would often think this very thought about a little splurge. Surely a dollar here and a dollar there can’t make a difference, right? It’s so tiny! Well, a pebble is tiny, too, but you can’t expect to walk a marathon with a pebble in your shoe. With every step, the pebble will rub against your feet and eventually you aren’t making any progress any more.

The next thing I did is that I started strongly questioning every desire. Every time I wanted to buy something, I would ask myself why I wanted to buy it. Why? What purpose did it serve? Would I get any lasting enjoyment out of this? Couldn’t I get a similar pleasure out of other things I had available? Was this just something I was buying to make myself feel better about something else in my life – i.e., retail therapy – and wouldn’t I be better off just addressing that something directly?

What I found is that an awful lot of my desires were justified by the weakest and silliest and flimsiest of reasons, reasons that would fall apart very quickly if I allowed myself to question my reasoning. (That’s important, and I’ll come back to it soon enough.) So, if I got into a routine of always questioning the reasoning for a purchase and I was willing to allow myself to recognize the silliness of some of my impulses, the number of non-essential purchases would just drop through the floor.

If you’re familiar with Buddhism, you’ll probably recognize this as having a lot in common with the “eightfold path”. They’re both driving at the same thing: desires are often the source of a lot of misery in our lives, whether we fulfill them or not. Figuring out that most of our desires are pretty useless nips them in the bud and eventually kills them off entirely.

Self-control is a challenging thing and sometimes you’re going to fail. What happens then?


Grit is the fourth essential ingredient you need to achieve financial goals. It’s a willingness to recognize your mistakes and learn from them. It’s a willingness to pick yourself up when life knocks you down. It’s getting back on board with a plan when something knocks you off of it.

The reality is that at some point during your progress toward your financial goal, something is going to happen that knocks you off your gameplan. It can be something completely out of left field, it might be something you should have planned for, it could even be your own foolishness.

Whatever it happens to be, it either strongly tempts you or it knocks you completely off your game. You’re no longer cruising right toward your destination. You might feel like that destination is in doubt. You probably feel frustrated. You might feel ashamed.

It’s awful. Trust me, I’ve been there. Many of us have been there.

The question is whether or not you’re willing to pick yourself up and keep moving forward toward that goal.

If you’re not willing to do that, then you don’t have grit. You’re not going to achieve major goals in life if you’re not willing to stand back up when things don’t go perfectly.

According to the wonderful book Grit by Angela Duckworth, there are four key elements to grit:

Step one: Identify a burning passion.
Step two: Practice it with commitment.
Step three: Find inner purpose in your work.
Step four: Persevere when things get hard.

If you have a deeply meaningful goal, you have that burning passion and inner purpose. If you have a plan that you’re reviewing and working toward daily, you have that commitment. What about perseverance when things are hard?

I’ve found a couple things that help here.

First, automate as much of your plan as you can during the early stages. That way, when things go awry later on, much of your plan will just keep on trucking when your focus is elsewhere. Set up automatic savings plans and automatic contributions to retirement.

Second, have an emergency fund that you can tap when things go sideways. My preferred method for this is to set up a weekly automatic transfer from your checking account to your savings account – $10 or $20 or whatever you can afford. Then, just let it roll. When an emergency strikes, tap that emergency fund first. You’ll find that a lot of emergencies just melt away and don’t actually hurt your progress.

Finally, think about what went wrong and incorporate what you learn into some revisions to your plan. Why did things get out of whack? That takes you right back to the self-reflection part of the equation. Reflect deeply on what went wrong and what needs to change to ensure that you don’t make that mistake again. You’ll likely alter your plans, at least a little, and that’s a good thing.

There’s just one final ingredient.


Most personal finance goals are marathons rather than sprints. The goal you’re aiming for is years and years down the road and there are times when it seems impossibly far in the distance.

Patience is the key to success in those situations. You have to be able to accept that the big success you want won’t happen tomorrow or the day after. Rather, it only happens after a long sequence of little successes, many of which will basically be invisible to you in terms of your day to day life.

This is very hard for humans. We’re genetically predispositioned to not think in the long term. Rather, we’re short-term thinkers. We think about the day ahead and the week ahead and perhaps the month ahead, but beyond that, it gets kind of nebulous. It becomes this vague sense of “the future.” Sure, we’ll do things that we know we need to do now because they are necessary for future endeavors, but unless it’s a really clear direct payoff, most of us will procrastinate or not worry about it. The urgent almost always trumps the important.

So, how can you help yourself be patient when it comes to a long-term goal?

One good method is to look at the little successes that you’re achieving due to marking off those short-term daily and weekly goals. How many days this month did you eat at home? How many of your weekly goals did you knock out? Those are the metrics you should be looking at. Focus on those things and the big goal will become an inevitability.

Another strategy is, as suggested earlier, to automate as much of your financial plan as you can. That way, during the long stretches where your patience is being tested, much of your plan is on autopilot and doesn’t require any active decision making.

A final technique, one that works particularly well for me, is to constantly refresh that long-term vision. On a very regular basis – often weekly – I think about my long-term goals and what my life will be like when I achieve them. I intentionally dive deep into my goals and try to visualize what some aspect of my life will be like at that point. I’ll imagine Sarah and I, slightly older, camping in the Shenandoah National Forest. I’ll imagine myself writing a novel somewhere. I’ll imagine myself feeding a grandchild a spoonful of baby food. For me, it’s those details – often unique ones – that keep the overall goal alive and help me maintain my patience.

Final Thoughts

Self-evaluation. Planning. Self-control. Grit. Patience. Those are the elements of success no matter what your financial situation might be and no matter what your financial goals might be. If you bring all five of those elements to bear in order to improve your financial state, you’ll find that your goals move from being impossible pipe dreams to being achievable (though still challenging) ambitions.

Good luck!

Read more by Trent Hamm:

The post The Five Things You Need to Achieve Your Financial Goals appeared first on The Simple Dollar.

Hacking Hedonic Adaptation to Get Way More For Your Money

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After three years, wall-mounted toilet paper has become the latest thrill.

When I built our current house, I decided to do as much of the work as practical myself, because I learned years ago that this is the most satisfying way I can possibly live.

I love sitting back late at night, especially during cold winter nights or intense summer rainstorms, and looking up at the high ceilings and the ornately framed windows and thinking about all that structure holding itself together and protecting us so nicely inside. Satisfaction.

Sure, practicality also required some compromises – I hired out the big, repetitive task of drywall, and hired friends to work with me on the heavy parts like framing the roof.

But as soon as the house was even remotely habitable, with plywood kitchen countertops and no bathroom sink, we moved in. This allowed me to keep working on the place without being away from the family, and also to move out and stage the previous house nicely so we could put it on the market.

That was in early 2014, and true to my nature I’ve never really stopped working on the house since then. The first things were urgent, like quality countertops and sinks and faucets, appliances and light fixtures and functioning closets, so I did these things quickly. Then I installed a really nice woodstove before that first winter came, then built the second bathroom, and moved on to renovate our son’s room in the old wing of the house that had not been part of the fully rebuilt section. Then more closets, trims, cabinetry, little features here and there as the need arose, and even the rather major feature of the detached Rock’n’roll Studio.

There have been a hundred little upgrades, always arriving with random timing, as time permitted.  And the interesting thing about them has been this:

Each little upgrade – whether big or small – has brought a similar amount of short-lived but genuine happiness.

When I upgraded the countertops from plywood to stone, we were all thrilled at the new, smooth and easily cleanable nature of the kitchen. Then after a week or two, this thrill became the new normal, and it was gone.

But then, I added shelves to a closet, and fighting with piles of clothes in laundry baskets became a joyful flip through a row of hanging shirts and nicely folded pants on smooth wooden shelves. Another thrill! For another couple of weeks.

On and on these small upgrades went, each one accomplished by my own two hands, so that I got the satisfaction of a job well done, and also lived in a house that was constantly getting just a bit better every week.

Looking back, this has been so much better than just moving into a pre-made, perfect, fancy house that somebody else built for me, and doing it this way has also saved me hundreds of thousands of dollars at the same time. And even if you’re not a carpenter yourself, you can get the same benefits by understanding the human pychology at work here.

Hacking Hedonic Adaptation.

You may recall me cautioning you in this long-ago MMM Classic, to avoid buying yourself fancy shit, because the thrill of every new life upgrade – whether it is a nicer dishwasher or a faster Mercedes – always wears off, and your overall life happiness returns to exactly where it was. It’s quite an un-intuitive result, but if you watch yourself over time, you will notice it is uncannily accurate.

For example, I started this blog seven years ago in 2011, and distinctly remember being very happy with life, even way back then. Sure, I had problems just like everyone else, but on balance it was still a great life, because I was already pressing most or all of the actual buttons for human happiness

Some of the recipe for happiness (a slide from my WDS talk)

Since then, I have stumbled into a few upgrades:

  • A nicer house
  • A nicer bike (several, actually)
  • A nicer car
  • A nicer dishwasher
  • Internet fame
  • Several times more money than I had before
  • A really fun new business (the MMM-HQ coworking space)
  • And many, many other nicer things (clothes, electronic gadgets, interesting trips, and so on)

And yet, I’m still not really any happier than before, sitting here right at this moment. My life looks more prestigious and luxurious on paper, but since I was already extremely fucking happy with life before, there was not much to improve.

This brings up a strange paradox. Because I also remember feeling quite giddy and thrilled with each of these upgrades as I made them. Those happy feelings were genuine. What Gives?

The Happiness Bump

The phenomenon at work was the temporary thrill of a new life upgrade. If we were to sketch it out on paper, it would look like this:

The Short-term Happiness Bump from lifestyle upgrades

As you can see, you make the upgrade, and you do get some genuine thrills for a short time.

The key thing to know about your happiness is that you have a ‘baseline’ level. Some of it is genetically inherited, but you can also have a strong affect on it yourself, by pressing the genuine happiness buttons in the diagram above.

Most lifestyle upgrades (cars, dishwashers, or even my new toilet paper holder) do not press these buttons, unless they truly address a shortfall in your previous life.

In the best possible outcome, you might make a life change that helps you gain new skills, increase your health, or improve your life’s core relationships. This could stretch out the shaded “Actual Benefit” part of the graph to be much longer, in the extreme cases for your whole life.

But in the typical outcome, most of us make changes that produce only a short bump, and then may even come back to haunt us with a payback time (which I labeled the “debt hangover” in the picture. Anything that puts you into debt, makes you less healthy or otherwise compromises your ability to live a happy life fits into this category.

Putting it into Practice

Your job as a wise, badass Human is to understand your strengths and weaknesses, and then arrange your life to make the best of things. The temptation to pursue  shiny but useless upgrades is one of our biggest weaknesses.  So try the following hacks:

  • Consider each potential change (whether it is a purchase, a trip, or a lunch out at a restaurant) from the perspective of one year in the future. How much better will your life be in one year, if you make this decision right now?
  • Delay everything and space it out as much as possible. The anticipation of a treat often provides at least as much joy as the consummation. Simply doubling your waiting period will cut your spending on this stuff in half. 
  • By cutting your upgrades into smaller pieces (as I did with the piecemeal home construction), you get to experience the thrill more often.
  • Put your priority on upgrades that remove a strong daily negative or a barrier to happiness. For example, upgrading from a 2009 to a 2018 BMW will very likely not make you happier, but upgrading a barely-functional bike or shitty kitchen faucet to a to a good one you use daily can make a real difference.
  • Find ways to modify each potential upgrade so that it presses more of your happiness buttons. Make it more challenging, do things that require you to learn or accomplish something first, choose things that allow you to create or strengthen friendships, and choose the healthier options out of any alternatives you are given.
  • Use your temptation to buy or consume new things as a habit trigger: catch yourself in the moment of weakness (because this happens automatically and frequently), and use this to do something good for you instead. For example, every time I walk by my fridge and gaze longingly at the handle, thinking of pulling out a cold beer, I am reminded to go out to my back patio and do 100 pushups instead. In really disciplined times (like the last few months for me), I back this up by also not keeping any beer in the house. But even if the end result is a bubbly reward, I have improved the reward bump by packaging in a permanent benefit (fitness) with the otherwise very short term reward of a drink.
  • And finally, keep a list of your top life priorities on your fridge door, or your work computer monitor, or somewhere else that you see it many times per day.  Stuff like better friendships, better parenting, health, financial independence, happiness, personal growth. Looking at this list before you decide to do anything – whether it’s planning a lunch or moving to a new house, can serve as a surprisingly powerful anchor to help you fine tune your happiness bumps – stretching out the good parts and eliminating the hangovers.

Happy Hacking!

In the comments: which life upgrades have you made that ended up producing neutral results or even regret, and which ones have provided more lasting happiness?