I hope you've enjoyed reading the "How to change your life" series as much as I've enjoyed writing it. If you can think of anyone that might benefit from it, use the ShareThis widget at the bottom of each post. If we can touch one person, or help them through a tough spot, it'll be amazing.
Birthdays are something nearly everyone celebrates. Sure, another year of life is important. As cool as it is though, I think we should be celebrating another year of learning, experience, and understanding of how the world works.
If our guardians succeeded across those many birthdays, we have a pretty good idea of how things work, how to manage money, and how to get along with others. We should have a good base of nutritional knowledge, and a fantastic understanding of right from wrong.
This is where todays discussion begins. We all know what needs to be done (budgeting, health and nutrition, etc.), and of course we know right from wrong. So why do many choose for one reason or another to set these things aside? Maybe it's philosophical, maybe it's money, heck it could be anything. But is the excuse good enough?
Navigating life is complicated at times, but it's important that we make decisions that promote a lifestyle of integrity, health, and prosperity. Think about it. Every decision you make affects your life either directly today, or will affect it in the future.
An example might be that your go-to meal at the burger joint is a double cheeseburger with fries and a coke. The better decision, and the one we all know is the better one at a burger joint, is to make it a single with a side salad and a non-soda drink. Why don't more people do that?
Another example is that you're sitting down to find something to watch. You stroll through Netflix and Hulu, but come up "empty." So instead of hopping on Bittorrent to grab a copy of the latest Hollywood blockbuster, why not pick a movie from the DVD case? Or hop on over to Amazon, VUDU, or iTunes to rent one? There's even Red Box. That's the right decision, but why don't people do it?
I believe that a high quality life is built on a foundation of good decisions, integrity, and leadership. From now on, make every decision as if your life depends on it. Because in the long run, its quality does.
If you found value here, please share it with others. Together we can make a difference. :)
This is a great question sent from a friend on Facebook. I thought it was important enough to share here.
"I am curious as to how you think a community can be encouraged to live frugally without forfeiting a sense of grace and abundance. Your thoughts are appreciated."
The answer is a matter of perspective, in my opinion. The law of attraction and the abundance theory are really beliefs. Attraction is to bring the things you want into your life by providing them persistent, positive focus ("Think and Grow Rich," "The Secret," etc.). Abundance, at its core is simply the opposite of scarcity, both of which are perceptions.
Look at it this way: everyone should want to "attract" a strong sense of calm and abundance with your finances. Budgeting and frugality are not contradictory with that desire. Instead of approaching them from the perspective of scarcity, approach them from the perspective of abundance.
Don't focus on squeezing every penny out of the "little money" you have. Instead, focus on telling the wealth you're building specifically where you want it to go. The problem with most people's finances is that they have no idea how or where their money is being spent. Be a good shepherd.
Other people's perceptions of our actions cause us to do, or not do silly things in life. We buy new cars because it makes us look wealthy. We buy new houses with payments far beyond reasonable so we look wealthy and affluent. I'm here to tell you that your perception of your actions is what matters most. Grace is in your heart. If you know deep within that you're doing the right thing for you (and your family) then that will become apparent to those around you.
I hope that helps. :)
If you found value here, please share it with others. Together we can make a difference.
As many of you know, I'm an avid podcast listener. If you've met me in person, you probably noticed the bluetooth stereo headphones around my neck - they're there solely for podcasts. I listen to 15 to 20 shows per day - covering a variety of subjects - innovation, technology, startups, marketing, and personal finances to name a few.
Without a doubt, podcasts have been a major influence in who I am as a person, and have played a key role in shaping in my life. From keeping up to date on the latest geek news, to learning how to manage money and win financially. There's content for every interest.
I hear from people all of the time that they can't listen to podcasts because podcasts require "too much focus." They can't work and listen - they find themselves focusing on the podcast content rather than their work: "It's too distracting." Podcasts are often relegated to those times when they can focus on the content - running, in the car, on trips, on the bus, etc. Those are certainly great times, but I think they're missing out on some wonderful content.
My secret, and the reason I'm able to listen to so many shows per day? I've taken the Brad Feld approach to reading and have applied it to listening to podcasts: "Be willing to skim."
Put another way, I have choices for ambient background noise. I can ignore the random noises and conversations going on around me, I can choose to listen to music to cover them up, or I can intentionally choose put amazing/educational/inspirational content there.
It works really, really well. I find that subconsciously, when something crosses my ears of particular interest, I naturally tilt the focus more toward the podcast. If it's really good, then I'll note it and listen to it in the car - when I can give it more focus. If it's video, then at home on the big screen is more logical.
I believe so much in this listening behavior, that Callisto.fm was born. With it, you choose a channel of content (technology, food, marketing, whatever), and click play. Callisto.fm then plays podcasts related to the channel one after another, much like talk radio. You can even search for a phrase like "iPad News" and play the results.
It has always been the mission of Callisto.fm to help other people experiment with podcasts, to find great content, and to introduce others to my way of listening.
If you're ready to give it a shot - if you're ready to paint the ambient noise canvas with useful, entertaining, and educational content - start today. Start with Callisto.fm's channel browser and let me know what you think.
Can you listen to podcasts if you give yourself permission to focus on work, and allow podcasts to fill your ambient background?
Here's an insightful question: Do you tell your money where to go, or do you wonder where it went?
Inspired by a recent conversation with a dear friend of mine, I thought I'd share my thoughts on "normal," money, and a budget.
My wife and looked at each other a few years ago and decided that we made too much money to be living paycheck to paycheck (which is normal). We made some serious decisions (I unloaded my prized 2003 Nissan Murano (and its $800/mo total expense!)) to accomplish our goals.
First, further insight on normal:
- A car payment (or two averaging $400/mo each)
- $10,000 in credit card debt
- $60,000 in student loans
- An annual household income of $48,000
- Living paycheck to paycheck.
- No budget what-so-ever.
I must be missing something, but when I see "normal" it looks frightening, and completely overwhelming.
Here's a bit of wisdom I wish I'd received in my twenties: budgeting isn't about scrimping/conserving and the concept of scarcity. It's quite the opposite really. A good budget of the next two weeks - everything coming in, and everything going out, will help you master your personal finances. It'll also give you the necessary view - that of abundance.
The bi-weekly budget is simple: one column with money coming in, and another with money going out. Total to two, and if you have a surplus, apply that toward your smallest debt. If you don't have a surplus, clearly the budget needs work. It's ok, it's this insight that you need.
One of the common mistakes we make when budgeting is trying to plan for the perfect month. When was the last time you had a normal month? Do you really spend $75 on auto maintenance every month? You won't spend $100 on clothing every month, but you may in the next two weeks. Likewise, rent or your mortgage payment happen at the end of the month (I pay on the last day of the month, before it's due), so you don't need to account for it at the beginning.
Try it, it's very, very simple and provides an amazing amount of insight into your personal finances.
If you have questions, I'll be happy to help.
Today's Plan A is: a spiraling national debt, armed forces that power the planet's peace, a political system built on maintaining the status quo, and an increasingly polarized populace - unwilling to entertain opposing ideas. We've arrived here, not by strategic planning or by any long term direction, but by default.
We live in the greatest country in the world, second to none, with no second choice near. But our collective global blindness is frightening. We were once the inspiration the world needed, a shining democracy, and the world's destination for creativity, innovation, and education.
Every single one of us, no matter our political affiliation, is responsible for Plan A. No matter your religious beliefs, skin color, sex, or education level, you've played a part in our arrival at this precise point in time. It's never too late to fix it, but it'll require one heck of a change in our entire societal fabric.
The problem starts with the career politicians that drive the "democratic" process. They're mostly former attorneys with deep insight into how the "System" works. The've spent decades building the process, whether in school, or in practice. And most of all, these people know how to stay in office once elected. They've built their careers, sometimes from humble beginnings, and have along the way lost touch with not only themselves, but those that brought them to power.
Any system that encourages camaraderie with power is predisposed to corruption and subsequent failure. Weak personal constitutions, a lack of integrity, and the proliferation of American excess within our "leadership" have led us here. It's said that money and power amplify your inner being - politicians are no different.
It'll be an incredibly long road, but if we're to fix the broken machine (the corruption, lobbying, foreign policy, our national debt, etc.) it has to start at home, with our children. It starts by teaching our children a modern set of core values - from truth and reason, to financial responsibility, to understanding that all things are possible with curiosity, and an education. Work and play with your kids - encourage them to dream and create. Encourage them to try. Let them fail, even if the result is blood.
We must lead by example, as parents, friends, and citizens. Live every day with integrity, kindness, passion, and financial precision. Live a healthy life, free of gluttony, debt, credit, leases, and the excess that was "The American Dream" - as for most, its quest has been anything but.
Reach within, and bring forward the absolute best in your life, and be believe enough in yourself to leave the rest behind. You can only influence the future - embrace that fact, and stop building your future on the past.
Associate only with people that provide a positive influence, and provide guidance to those in need. Sometimes it's a conversation, though likely it's by example.
If you take nothing else from this post, just remember this: you have the power to change everything in your lives, every minute, of every day, and that my friends is truly "The American Dream." Plan B is you.
Inspired by We've Only Got America A, by Thomas L. Friedman, of the New York Times.
There are very few people that spend as much time in a Starbucks as I do - somewhere between 20 and 40 hours a week. There are lots of reasons I choose to spend that much time in a Starbucks, and I'll cover those in another post. This post is about saving money while there.
The Gold Card
Last year, Starbucks started a preferred customer program called the Gold Card. It's a simple proposition: buy the Gold Card for $25 per year, and get 10% off of every purchase. The math is easy... if you spend $250 per year at Starbucks, you'll at least break even. For me, this would be a simple decision, I spend that in no time at all. (Truth be told, I was invited in to the program, so my Gold Card was free. ;-)
The Gift Card
Starbucks also started a rewards program with the standard Starbucks cards last year. If you register your gift card online, you get several benefits. The important ones for this post are 1) free refills and add-ins, and 2) Two hours of free WIFI per day as long as there's activity on the card. Oddly the Gold Card doesn't offer free refills, so you need both to really gain.
Starbucks, by policy refills americanos with drip coffee only. If you make friends with the baristas, you can often have them "refill" an americano because it's easier.
Here's the trick
I use the gold card to make the initial purchase to save the 10%, and the Starbucks card for free refills. I have my gold card set to refill when a minimum balance is reached, and use it to pay for everything. That includes my initial coffee, and any food items I buy. This also makes tracking my coffee/Starbucks purchases really easy.
My preferred drink is a decaf americano, but this works for drip coffee too. I used to get a venti (the largest size), roughly twice a day. That's $5.54 per day, and the drip refills are free. Since refills are free, I decided to drop down to the smallest size, the "tall" size, which is $2ish before the 10% discount ($1.80 after). That means I'm saving $1.94 or 35% on my coffee drinks total per day all told.
Of course my savings are larger since I usually buy a food item in the morning. (FYI, the lowest calorie decent item on the menu is the Oatmeal, and it's $1.65)
Decaf refills in the afternoon
Starbucks recently changed to decaf drip on-demand in the afternoons. This sounds like a pain as you would have to wait for drip coffee to brew for your refill. In fact, it's a good thing, since making an americano is easier on the barista than getting a fresh pot of decaf going. Nine times out of 10, I'll get the refilled americano if I just ask for it.
The rule with a registered Starbucks gift card is that you get two hours of free wifi. The funny thing is that the limits aren't enforced as far as I can tell. So, for $5 one time on a gift card, and as long as you use the card (free refills count!) you get wifi at Starbucks.
AT&T WIFI service
Unlimited monthly service on the AT&T wifi network is $20/mo. That is a GREAT price if you spend anywhere as much time as I do in a Starbucks. Generally speaking, the reliability of the internet at a Starbucks on the AT&T network is incredible, and fast. This is the main reason I go to Starbucks so often... my business is the web, so it needs to be reliable. Indie shops, as much as I love them, come nowhere close.
I recently found a service called Boingo. It gives you access to all of the same locations as the $20/mo AT&T plan, for $9.95/mo. Why wouldn't you spend $10/mo for unlimited access at 75,000 locations? You would, go do that now.
Starbucks is in business to make money, I understand that, and these tips will not break them. There are plenty of people buying $5 drinks to more than make up for it.
If you have any other tips or suggestions for saving money at Starbucks, I'd LOVE to hear them. Leave a comment below!
One of the most positive changes in my life is that besides our mortgage, Heather and I are totally debt free. We don't have payments to on credit cards*, cars, or loans of any kind. It is remarkable, so remarkable in fact that I'm going to help you get there. I'm going to put my money where my mouth is, as they say.
The first step to becoming debt free is having a plan. It takes a certain amount of discipline too of course, but having a game plan and a reference is immensely helpful. Heather and I read a book by Dave Ramsey called The Total Money Makeover: A Proven Plan for Financial Fitness and used that as our plan. In short, Dave suggests seven "baby steps" to becoming debt free and taking control of your money. They work, very, very well but you have to follow them.
I believe in this concept so much (and in Dave's plan in general) that I bought 10 copies of Dave Ramsey's "Total Money Makeover" to give away to my readers. I have five physical books, and five audio CDs to give away.
All you have to do is post a comment below explaining why you want to get out of debt (you don't have to include amounts of course) and how it would affect your life. From the comments, I'll pick 10 of you to send the book to. That simple. In your post, indicate which format you'd like and as supplies last I'll send you what you'd like.
If you have no interest in the book or being debt free, but know someone that might, please share this post with them. If you really want to get the word out there, retweet my Twitter post or post it in Facebook as your status.
You have nothing to lose and everything to gain. Why do you want to be debt free?
P.S. Dave Ramsey also has a podcast on iTunes. It is an hour long, and really got me fired up about being debt free. Listen for yourself.
* We have a credit card, but I pay it off literally every 4 days. Chase doesn't like us because we don't carry a balance (they make no interest), and we earn $1 for every hundred we spend. They literally pay us to have that card. There is a certain amount of risk we're taking by doing this. I'd recommend that you do away with all credit cards, no matter the circumstance, then once you're totally debt free maybe do something like this. It is literally playing with snakes and takes a lot of discipline. Start simple, really.
I believe there is a direct correlation between success at home and our success as a country. If Americans are successful as both individuals and a families, and are left to focus on our personal growth, financial success, and a rewarding future, then the citizens of America can once again provide inspiration to their peers, and to people across the globe.
As America's financial condition deteriorates, our fellow citizens continue to look to others for answers. They've looked to the heads of the the failed companies to place blame - and to the leadership in our government for help - when in fact many should look no further than their mirror. While the failed companies aren't innocent, it is the people of this country that have driven it to the brink.
It is normal in the American culture to want things we cannot afford, and buy them anyway. It is the task of creatives everywhere to ensure we're bombarded with messages telling us how cool we would be if we'd drive their $40,000 car, or how sexy we can be, if only we'd buy their products. It is also normal in this country to fail financially because we lack the ability to believe in one simple, two letter word. "No."
As a society we simply cannot say "No." No to the "90 days same as cash." No to the "No interest until 2011!" No to the new cars - any new car. No to the oversized home. No to the sub-prime mortgages that allow us to buy the dream home - whose mortgages will eventually adjust, forcing foreclosure - wrecking dreams and putting an unfair burden on the family. No to 500 calorie, $5 dessert drinks.
If only you'd said that one simple word. "No."
There are a few that understand the power of the word "no." It is these people, the weird ones, the ones that drive the neighborhood beater, the ones that buy below their means... it is these people that are my inspiration. It is these people that understand that happiness has nothing to do with how many zeros are in your bank account, or how big your house and TV are. It is these people that understand what success is, and how it relates to overall happiness.
To me, success is being able to wake up, morning after morning, knowing that your family has the means necessary to live a safe and comfortable life. Success is knowing that my son will never want for anything, and will know how to handle himself financially once he leaves the house. Success is seeing smiling faces, everywhere. Success is not worrying about money, or the economy, or making your payments. It doesn't take money to be successful, it just takes desire and discipline.
I believe that the our most precious resource is within. I believe that in the best way to positively affect your neighbor, to help your neighbor, is to set an example. Set an example so easy to follow that your neighbors will in turn pass it on. Live a simple, honest life. Fill it with people that bring you inspiration, and fill it with only the things you need. Over time, they can become nicer things, but for now simplify.
Imagine what we'd be capable of as a country if we'd stop the incessant berating of each other's beliefs (religious, political, and sexual). Imagine if we'd just turn off traditional media and agree to focus on our own lives for a change. Focus on the things closest to us, the things that need our attention - to change the things we can.
Think about what you can do as an individual to make your life better. Make your life the life of dreams, and that will improve your outlook, relationships, and family. And your neighbors', and theirs. Then one day, we might just come together as a country. A unified country filled with inspiration, creativity, and a true desire to make the world a better place.
Be weird. Say "No!" today. Sell your car. Pay off your debts. Eat responsibly. But most of all, inspire someone. Inspire yourself, and fix your mess.
Because our President, no matter who it is, cannot fix your mess. Only you can fix your mess.
It all started one summer, passing through New Mexico while driving from Colorado back to Texas. This whacked out but curiously logical guy was on the radio telling listeners how to get out of debt. I made a mental note that I'd like to be debt free, and intended to find him again. He was crazy, a crazy I liked, and besides - who doesn't want to be debt free?
A year and a half later (October, 2006) a friend of mine asked if I'd heard of a guy named Dave Ramsey. My "debt free" mental note was nowhere in the archives, so of course I said "No." He suggested that I download the Dave Ramsey podcast and give him a listen. That I did, then it hit me like a ton of bricks, "This is *that* guy!" We bought his book The Total Money Makeover along the way - the advice was simple and worked well in our minds.
Here are the numbers we were dealing with: a $23k personal loan, $24k in two cars, and a few thousand on credit cards ($50k for for the math deficient). We hated opening Quicken to see the red "net worth" number, but at least we knew where we were - good or bad.
Before I get too far in to this, I want to just stop for a second and get something off of my chest. There will be a number people that think that budgeting is something poor people do to squeeze every penny out of the bank account. That if you budget, you must not make enough money to survive, or that if you budget you're somehow telling "the universe" that you're poor. That is a load of crap. You budget so that you know exactly where your money is going, no matter how much money you have. If you don't know where every penny is going, you don't know how much you have to invest. Or how much to use to pay off debt. There, I said it, budgets rock!
The plan? Live on less than you make (a lot less if you can), and use the rest to pay off debt. Once you're out of debt, build wealth. Duh. Living on less than you make is pretty easy if you make a budget every pay period. Not every month, because there is no magical month that a budget will always apply to. Expenses change, and your budget needs to reflect that.
Make a written budget every pay period. Make sure you know where every single penny goes from that check, so you don't wonder where all of those pennies went. It may take a couple of months to get this right.
We weren't exactly living paycheck to paycheck back then, but at the end of the month we had practically nothing left. We had no real savings, and no backup plan other than credit cards in case something big happened.
I made a vow to myself to eat lunch on $10 or less every day, eating decent food too, not just fast food crap. Surprisingly this is a really easy thing to do. I have friends that try to eat lunch on $5 per day now. I dropped my coffee expenditures to around $100/mo too. I work in coffee shops every day, not for the coffee shops, but because I'm a cafe warrior. I run a small software company and use coffee shops as my office (that is another story all together).
Those two things alone reduced the budget by couple of hundred dollars. Eat at home for breakfast and dinner. Buying groceries is alway cheaper than eating out, and you can actually eat better. If you're in a relationship, cooking for your partner is always a grand slam. Make an event out of it and use it to expand your palette.
So we formulated a plan based on Dave Ramsey's "Baby Steps."
1. The $1,000 Emergency Fund - we put ours in a savings account that was tied to the checking account as overdraft protection. That helped us get over using the credit cards as a buffer. We found that we never had an expense so large that we needed more than $1,000.
2. Pay off all debt using the Debt Snowball - pay off the debts, smallest to largest, using the payment from the last one on the next. Eventually, everything is paid off and the fun starts. Interest isn't relevant in the conversation because the excitement and the feeling of progress by paying off debts is extremely valuable. Don't get out the calculator, it doesn't matter. Pay them off, smallest to largest, and you'll see how fun getting out of debt can be.
We started with the smallest card, then the other. Closing credit cards is fun. In the meantime I made the incredibly difficult decision to rid myself of my car and the $800/mo it was costing us. Man I loved that car, but $580 for the payment, another $100 for insurance, and $120 or so in gas per month? Didn't love that. My car took two months to sell, but once it did we were able to apply that money to the other car (it was next in line).
With the second car paid off ($300/mo), my car sold ($800/mo), and the credit cards gone ($180/mo), the personal loan was up next. The friend that loaned us the money was getting a little impatient with us given how much debt we were paying off, but he was pretty excited to see the progress come so quickly when it was his turn. We were paying that debt off quickly. Very quickly.
It is said that once you start doing smart things with money, money finds you. Whether or not I believe that in a metaphysical sense is a matter of debate, we did see a nice tax return (the largest in years) and had an investment pay decently that spring. We didn't get raises during that period, and still haven't, but the investment keeps making returns and by getting out of debt, we've found a lot more money in our salaries.
We wrote the last check on September 18, 2007 - we were debt free in less than a year.
3. 3 to 6 months of expenses in savings - we chose a high interest savings account... and decided on 3 months of expenses because two of us were working. By extension, that means 6 months as long as we don't both lose our jobs. We've completed this step. Reaching this goal while debt free was relatively painless - we were already trained by the budget.
4. Invest 15% of household income into Roth IRAs and pre-tax retirement. In 2007 - for the first time ever - we fully funded our IRAs. We snuck it in just under the wire, but we did it.
So now we're working on 5 through 7:
5. College funding for children - We plan on having Z go to a state university and will have set the ball in motion closer to that time. He already understands the concept of being paid (we give him a quarter to clean up before bed) and will understand how to manage money from a very, very early age.
6. Pay off your house early - we don't own yet, but we're saving for it. Every now and then we wonder if buying is even for us given that we've moved ever few years since we've been together. We'll see how this goes. If nothing else, we can always do the 100% down thing later if we wait long enough.
7. Build wealth and GIVE! - This excites me the most. I already have a desire to give back to the world, but I think that is more about maturity and growth. Once I have the funds to help with it, all will be well.
The advice is very simple if you follow it and I hope you've had enough of debt to make it so. Imagine waking up one day to find that interest is paying you instead because you have no debt.
One last thing. Get rid of the expensive car debt and buy a beater. I bought a 1989 Montero for $1,700 cash. If you can let go of what people think of you, getting out of debt will be easy.