Because your money should work for you

I’m trying out a new theme on Free From Money. I welcome any feedback!

In case you’ve been in a cave, today is the last day to file your tax return. Unfortunately for me this is the first year that I have owed taxes, but it was a planned decision.

Last year my wife and I received a pretty hefty refund, so I decided to increase my withholding to 2. Most of my friends advise claiming zero, which causes the most taxes to be taken out, but pretty much guarantees you will receive a refund at the end of the year. Doing this, however, is like giving the government a free loan through the loan since you don’t earn interest on the money they keep. Knowing that we were going to owe taxes this year, I saved the extra money every paycheck so that it would be available when the bill came due. In the meantime that money was sitting in an account earning interest.

It wasn’t much, but we earned about $20 in interest on the money we had saved. When we finished our taxes I was a little sad to move the money out of our savings account, but I am still happy that we made the decision we did.

There is one catch to doing this, and one I was not aware of until working on our taxes this year. If you underpay your taxes too much, you can get hit with a penalty for underpayment. Funny isn’t it? If you give the government too much during the year they don’t pay you for holding your money. But if you try to keep the money you worked for they hit you with a penalty.

Overall tax time has made me bitter towards the way our government spends money. I don’t mind paying for education and health care (as long as it’s done right). But I hate that our government gives money to poorly run companies and spends money on wars in other countries. But of course that’s a topic for another post.

Just curious about others, did you owe this year or did you get a refund? Leave a comment!

For the few readers I might have had on this site, you’ve probably noticed I haven’t posted in a few months. This is due to a few reasons, most of which is me brushing up on my programing and business skills for my full time job. The other reason, as you may have guessed from the title, is that I am getting a little tired of writing about personal finance all of the time. I am tired of thinking of little “hacks” to save money. I hate the idea of pinching pennies. To me personal finance isn’t something that you should fret about every day. Personal finance has become something that you just do.

I hate feeling bad about spending money, especially on quality things such as organic food or electronics such as my camera. Reading other personal finance blogs made me feel like I was never doing enough to be frugal or to save more money, and I began feeling burnt out on writing about personal finance.

I have not gone to the dark side of spending money though. Au contraire, I have increased my 401k savings to 20% of my pretax pay, and my wife has budgeted enough to max out her Roth IRA by the end of the year. We still have some debt left, but we have paid off over $26,000 in debt over the past two years, and we are slowly paying off the rest. We are still driving one car, we still don’t have cable. We don’t have iPhones, and we don’t get Starbucks regularly. But we do spend our money on things like organic vegetables and grass fed beef, and I am not going to feel bad about shopping at Whole Foods just because other personal finance authors think Walmart is the best place to buy your food.

The truth, for me anyways, is that if you are doing the right things like saving a decent portion of your income, planning for variable expenses like car repairs, paying down your debt without putting on new debt, and making smart investments, who cares what you do with the rest of your money? If buying a latte every day makes you happy, then why not do it? Because a personal finance author tells you that you shouldn’t?

Should I tell my wife that we shouldn’t save for a vacation because the economy is bad? Nope. As the popular saying goes, life is a journey, not a destination. I want to enjoy my time here as much as possible, and I don’t want to wait until I’m retired to do it. Most personal authors are always saving for some other time. That’s great. But I get 4 weeks of vacation a year, so shouldn’t I use it while I can?

I don’t want this to come off as a rant against saving money. I think more people need to get the basics of saving and investing down and then put those basics into practice. But really, do we need more than the basics? Once you’re saving 15-20% of your income, should you really worry about how much more you can save? Why should I save every cent I can just so I can spend it at some other point in time? Personal finance is all about balance unlimited wants with limited resources, and trying to maximize your happiness.

I will try to write more often here, but no promises. Until then, save and spend wisely!

After writing last week’s post on rethinking priorities in life I started to look more at my own life, and I started thinking a lot more on how I spend my time. I’ve decided to slow it down a lot with the blog, and I’m considering a twice a week posting schedule to see how that goes. One post will be a review of a book that I read, the other will be from the usual suspects of personal finance, investing, and productivity.

Instead of taking one or two hours out of my day to work on the blog I plan on spending more time with working on my photography hobby and learning more for my ‘real’ job. I still enjoy writing for the blog, but I’m starting to realize that posting everyday lessens the quality of what I write. It also makes writing feel more like a job, and not like the fun hobby that I originally wanted it to be. It’s also been tough for me to find time to workout, and I’m starting to feel like the person I see in the mirror is not me.

So if you’ve been coming by and reading expect to see fewer posts going forward. As always I am open to suggestions on posts, and if anyone has finance questions they want answered please send them my way and I will help as much as I can.

Rich

Every Friday Free From Money reviews a book you might find useful for your personal or professional life

Over the period of a long career, we are constantly transitioning from one place to another. Over time, we can develop habits that hold us back. The irony is that many of these traits are the ones that can help someone succeed in the short term.

The problem stems from cognitive dissonance, which causes us to overestimate our contributions to the team and underestimate the things we do wrong or the problems we create.

The author argues that our success can actually make us delusional, and that superstition can prevent us from taking the proper action towards change. After all, if it worked before, won’t it work in the future? The problem is that as you get higher in the company food chain, the way you behave and the things you say can have a drastically different meaning to others in the organization.

Consider something mundane, like preparing slides for a presentation. If one of your peers suggests that the background color should be blue instead of black, you would think about it, and maybe discuss it. If your boss were to make the same suggestion though, you would probably change the color to blue without hesitation.

Traits that might make one person look assertive can make a boss look pushy. Someone who’s detail orientated might be considered a micro manager once they’re in charge of others. Overall there are 21 habits the author lists that you should be on the lookout for.

Here are the twenty one habits that can hold you back in the workplace:

1. Winning too much

2. Adding too much value

3. Passing judgement

4. Making destructive comments

5. Starting with “no,” “but,” or “however”

6. Telling the world how smart we are

7. Speaking when angry

8. Negativity

9. Withholding information

10. Failing to give proper recognition

11. Claiming credit we don’t deserve

12. Making Excuses

13. Clinging to the past

14. Playing favorites

15. Refusing to express regret

16. Not listening

17. Failing to express gratitude

18. Punishing the messenger

19. Passing the buck

20. An excessive need to be ‘me’

21. Goal obsession

The keys to overcoming these obstacles is to determine which ones affect you through feedback from others, make the changes, and then continue to follow up over the following months, both to let others know that you are making progress as well as to let yourself see that you are making progress.

The author lays out how to get feedback, how to apologize, and how to be gracious for the gift of information. He also discusses the power of listening, a subject covered extensively in the book How to Win Friends and Influence People. Listening provides two benefits. First, the key to being a good conversationalist is to make the other person feel like they are the most important person in the room. Second, the majority of learning comes from listening. So the only way you can get better is to listen to what others have to say.

Recommendation:

I really enjoyed this book, and I think it’s a good read for anyone working on a team, not just managers. Many of these traits, like not listening, passing the buck, or withholding information, can be a huge detriment to a team, no matter what your role is. Beyond that, recognizing areas that you can improve is the key to becoming a strong leader.

The company I work for has a leadership coursework that solicits anonymous feedback from subordinates, peers, and managers. Everyone that has gone to the class has appreciated the learning experience, and I wouldn’t be surprised if the course was based on the lessons from this book. Learning from others is usually the fastest way for us to grow as people, and this book will help you to learn from others.

What Got You Here Won’t Get You There is a part of the Personal MBA reading list under Management and Leadership

Every Friday Free From Money reviews a book you might find useful for your personal or professional life

“One of the most anxiety-inducing side effect of the information era is a feeling that you have to know it all.”

- Richard Saul Wurman

In today’s modern age, free information can easily overwhelm the biggest of tech geeks. Bit Literacy attempts to create a system for users to master their digital realm by learning more about their computers as well as becoming more efficient with the computer.

Let’s take a brief walk through Bit Literacy:

Ch. 1 - Bits

Before the advent of computers, media had a physical weight to it. If you had too much reading material you would know it by the size of the paper stack next to your desk. Music didn’t have a digital format. News was delivered to you in the morning paper, or you watched it at a specific time of the day.

Now information lives in the form of ‘bits’ on your computer. The cost to send them is near zero, so it’s easy to become overloaded with too much.

Ch. 2 - Users

Modern knowledge workers need a way to manage their information. There are many companies trying to sell you products to help you take more in. They tell you that the load is easy to bear if only you had the right tools. What we really need is a new mindset on how to handle information, which is what Bit Literacy is all about.

Ch. 3 - The Solution

When information is free most of us tend to gather and hoard it, scattered across our hard drives, feed readers, and email. The solution, as the author puts it, is to “let the bits go.” Bit Literacy means engaging the information staring you in the face and moving it to its proper place. The problem isn’t technology. Nothing you buy will ever read a book for you or follow up on your emails. The solution is to become more efficient with what we have and work to lighten your information overload.

Ch. 4 - Managing Incoming E-mail

Knowledge workers need an efficient means to take their email and move it to the correct place. Part of the problem, according to the author, is that we use our inbox for things it wasn’t meant to do like keeping passwords, addresses and phone numbers, or as a to do list. I am guilty of many of these things, and now that I have been called out I plan on changing how I handle incoming emails.

Ch. 5 - Managing To-Dos

Managing your to do list is where work really begins. The problem with using email as a to do list is that not everything comes through email. The problem with a paper based to do system is the lack of scalability. As your task list grows a paper based system can become unwieldy. So the author addresses his requirements for a Bit Literate to do system. The one thing I really didn’t like about this chapter is the author’s peddling of his own company’s to do list software.   

Ch. 6 - The Media Diet

This was by far my favorite chapter in the book, and the chapter the quote above comes from. Like any diet, media needs to be taken in moderation. I am an information junkie, and many times I can feel overwhelmed by the amount of information I try to consume through websites, magazines, books, RSS feeds, email newsletters, movies, and TV shows.

The problem, again, is that there is no technology that can process all of this information for you. It’s simply a matter of getting through it. Over time of course you might build up more than you could ever hope to get through, so it becomes necessary to filter what information you spend time on, and also to constantly prune what you get day to day. Some magazines go downhill. Dump them. Many RSS feeds from blogs are not worth the time to read. Delete them out of your reader. Same goes for everything. If you don’t get value out of it, let it go.

Ch. 7, Ch. 9, Ch. 10, Ch. 11

These four chapters give tips on managing photos, file formats, naming files, and storing files. I didn’t get much value out of these chapters since I consider myself to be well versed in file formats, organization, and naming. I also pursue photography as a hobby, so the photo organization tips were not useful for me. You may feel different.

Ch. 8 - Creating Bits

This chapter is probably where the “Elements of Style for the Digital Age” quote comes from, and was the other useful section of the book for me.

Other chapters discuss how you can become overloaded with information. This chapter is about keeping you from overloading others with too much information. When you display pictures, only show the best ones. There’s no need for duplicates. When creating a website the purpose should be clear immediately. When writing an email it should be easy for the recipient to quickly figure out what you are trying to say.

The author provides guidelines for creating a bit literate message, whether it is an email or an entire presentation. I imagine the structure could even be applied to websites or other forms of visual communication.

Overall this chapter is quite good, and should be required reading in some form or another for anyone using email at work.

Ch. 12 - Other Essentials

This chapter outlines other ways the knowledge workers can become more productive, and this is where geekiness really begins to shine. The author recommends learning to type quickly to improve efficiency, and gives some ideas on how to increase your writing speed using text expanders (which he annoyingly calls bit levers, as if trying to be clever) as well as switching over to a non-standard keyboard.

He also has a few other tips on computer productivity. For most computer savvy users this stuff will be old news, but for someone still trying to learn how to effectively use a computer it would probably be handy. These tips include learning to use macros, understanding how to take a screen shot, learning keyboard commands, and setting up your f-keys for one click launching of applications.

Ch. 13 - The Future of Bit Literacy

This chapter boils down to two things. First, the bit literate user should avoid DRM (Digital Rights Management). If you pay for data, such as music, you should own it with no restrictions. Second, the author recommends staying away from proprietary file formats, such as Microsoft Word files, as much as possible. These are two very good tips, and I completely agree with both of them.

Recommendation:

I like the basic premise of Bit Literacy, but for me most of the book was either common sense or knowledge that I already had. I am well versed in different file formats, to a point where I think the author’s breakdown of the different formats was far too simplistic. For lossless audio he mentions uncompressed .wav and .aiff formats, but does not mention the lossless compression formats like WMA, FLAC, or Apple Lossless. In the photos section he makes no mention of RAW, which is quickly becoming a standard for shooters with dSLR cameras. Granted, these shooters are probably more computer literate than most, but its still there.

This is a good book, but I read the entire thing in a few hours. Check it out from the library, take some good notes, and then reference those. Unlike other productivity books, such as Getting Things Done, you will probably not feel the need to go back and reread this one.

Bit Literacy is a part of the Personal MBA reading list

This post is part of the New Year’s Resolutions series running for the first week of January

One of the most common New Year’s Resolutions is to save more money. So far this week we have covered productivity and your career. Building a solid income stream is the first step, the second step is to keep as much as possible.

If you’re going to save more money, you need to know where your money is going. This doesn’t necessarily mean you need to create a budget, but it does require you to get a solid grasp of where your money goes every single month, and tracking to make sure you stay within your predicted spending. Okay, that does sound a lot like budgeting, but it’s not that bad, I promise.

The very first step to creating a spending plan is to determine what goals you would like to meet this year. Do this before doing anything else, including figuring out your fixed costs. Think about every money goal you have. Do you want to save for retirement, maybe even maxing out your retirement accounts? Maybe you want to save a down payment for a house, or save for a new car. Maybe saving for a vacation is in the works, or even saving for a new plasma television. Whatever it is, I won’t judge. What matters is that these are your goals that you want to reach.

Once you’ve figured out how much you want to save, you need to break it up into a monthly amount. Maxing out an IRA for example, would require you to save $416.67 a month to reach $5000 in one year. Saving $5000 for a car would require you to save another $416.67 a month. It can be daunting to see how much money it takes to save these amounts, but we need to be realists, and if you want to reach your goals you need to break it down into steps and take each step one at a time.

Once you’ve determined how much of your income needs to go towards your goals, look at your fixed costs next. These include things like your rent/mortgage and utilities. The last thing to consider is your variable expenses. These are the food and gas bills. Add all of these expenses up, and hopefully you came out close to your monthly income. If you did, awesome. If you didn’t, it’s time to go back and take a look at everything and see what needs to be trimmed.

There are, of course, three main areas that you can cut back. First is your variable expenses. You can try to eat less, or eat cheaper. An especially easy way to cut back is to eat at home more and eat out less. Eat at home exclusively for one full month and I guarantee your bank account will be fuller at the end of the month.

The next area to look at cutting back is your fixed expenses. You could downsize to a smaller home to save money. This has the added benefit of lowering your utility bills since you now have a smaller area to heat or cool. Moving to a smaller home might also force you to sell off some of your stuff, which can give you money to put towards those goals your wrote down in step 1.

The last area you can consider cutting is your goals and dreams. But if your ambitions are reasonable, and I think trying to max out your retirement savings, or saving for your next car, is a completely reasonable thing to do. So I would recommend thinking long and hard before cutting back on these things. It’s easy to tell yourself that you can save later.

But if not now, when?

Every year you don’t save for your retirement is a year wasted, especially considering the magic of compound interest. The younger you are when you start saving the better off you will be in the end. And what about saving for a car? If you are driving a car now, eventually you are going to need a new one. And if you don’t save enough to pay for it outright, you’re going to need to finance it, at which point it will become a fixed expense for you anyways. So why not make it a fixed expense now and let that compound interest work for you again?

The point of doing this is to realize that life is about trade-offs. If you want to actually reach your goals, you are probably going to have to make sacrifices here and there. Creating a spending and savings plan gives you the opportunity to sit down and really thing about what will make you happy in life. Would you be willing to give up eating out 3 times a week if it meant being able to take a vacation once a year? Would you drive Honda Civic instead of a BMW 7 series if you knew it meant you could retire free from money sooner?

These choices are up to you. Like I said, I will not judge someone who decides that they would rather give up part of their lives working to pay for things. I like gadgets, and I definitely spend money on things (you can check out my flickr stream if you want to see my current expensive hobby), money that I should be saving. But doing the exercise above has shown me that I can meet 80% of my major goals, like saving for retirement or funding a fun trip with my wife, while still buying fun toys like digital cameras. It has meant that I have given up eating out once a week as well as giving up cable, but I am fine with that.

For part 1 of being more productive I wanted you to consider the things that are most important to you. This is an extension of that. Sit down and think about what is most important to you, and figure out if the way you spend your money reflects that. If it doesn’t it’s time to make some changes, and that’s what the New Year is all about.

This post is part of the New Year’s Resolutions series running for the first week of January

Before you start reading this, I’m going to make an assumption. I’m guessing that you’re not rich, that your parents didn’t hand you a bunch of money as an inheritance, and that you have to work to make a living. Does that describe you? Yes? Okay, then read on.

Eventually we would all love to be free from money, that point where we make enough money from our savings and investment that we don’t have to work anymore. But if you didn’t fall into the rich category above you are going to have to work for your money like the rest of us. It’s also very likely that your career is the biggest source of your income whether you work for someone else or you are self employed.

Even if you make your money from investments in the stock market or in real estate that you actively take care of, there is always something you could learn to make your income generation more effective. Building your career knowledge is all about income generation. If you can go to work and earn $30 an hour, or you can go to work and make minimum wage, which would you rather do? With a little bit of effort in your spare time you can make every hour at work that much more productive.

The key to a successful and growing career is learning. The best never stop learning. Warren Buffet is always completing analysis on new companies, Steve Jobs continuously comes up with new ideas for Apple. The top athletes all work to hone their skills and are always learning new ways to push themselves to a higher level.

So what’s the key to gaining more knowledge that you can put to work?

Read more

Picking up a book to read is probably the easiest and cheapest way to get started on improving your career, or getting you started in a new career. Think about this: if you read a book and get one good idea that translates to making more money from your career or from an investment, was it worth reading? If you picked up that book for free from the library, you have just made an infinite return on your investment.

There are many sources you can use to find a good book to read, but here are a few of my favorites.   

Amazon

First is Amazon.com. Once you’ve found a book that you’ve found useful, Amazon can help you find other books to read a few different ways. Suppose you really enjoyed a book that I reviewed, like The Richest Man in Babylon, and you wanted to find books that are similar. Once you are at the Amazon product page, scroll down to the bottom to look for the listmania and So You’d Like to guides. These are lists of similar books that others have put together which can get you going in different directions, depending on the writer’s goals. Another way to find another book you might enjoy is to look for the “What Do Customers Ultimately Buy After Viewing This Item?” section on the page. This will give you some ideas on what other books people are looking at, and will probably give you a close match.

One thing about Amazon reviews, I try to look for books with at least 4 star reviews or higher. The larger the number of reviews, the more accurate the review should be (thanks to the law of large numbers). I have found the star rating system to be fairly accurate, so be careful between spending time and money on something below 4 stars.

Personal MBA

A site that I found that has a great list of business books is the Personal MBA website. Reading the books on that list could easily keep you busy for the next year or longer, and after completing any section of the reading list you will be much more knowledgeable in that area. There is also a healthy community revolving around the personal MBA at LinkedIn, so that could be an additional way to make contacts and increase your learning.

MIT Open Course Ware

One other good source for learning material is the MIT Open Course Ware site. MIT is considered one of the best learning institutions in the world, and now you can get access to the class materials and reading lists used by the best.

The cool thing about this site is that in addition to reading lists you can also download lecture notes, assignments, and other useful tools for learning the material.

So there are three great ways to find a good book to read. I highly recommend using the library to get your books. It’s free, and if you decide you really like the book you can purchase it later. So what have you got to lose? Start reading today!

This is a follow up to last week’s post on 5 Reasons You Should Use Lossless File Formats. There are many good reasons to use lossless compression to store your digital media, but there are also many good reasons why you shouldn’t bother. Here are a few of the main points:

1. Hard Drive Space is Expensive

Although hard drive space is fairly cheap, there is also the cost of maintaining backups in case your main drive fails. A backup can be contained both onsite and offsite, which increases the cost even more. Furthermore, if you’re listening to audio on a portable player you may not even be able to find one with a hard drive large enough to fit your collection.

If you’re using a digital camera, using RAW mode can take up a significantly larger chunk of memory, which means more memory cards to juggle.

2. You Probably Won’t Notice a Difference in Quality

If your main source of listening to music is a $5000 stereo, you should look into the best lossless formats. If you’re listening to your music on an iPod with the standard iPod earbuds, you’re probably not going to notice a difference between .mp3 files stored at a high bit rate over a lossless file. And if you can’t tell a difference, then what’s the point of taking up more space?

For picture files you will probably edit the files once, and then never worry about them again. You will lose some quality when editing .jpg files, but will you notice it?

3. You Probably Don’t Care If It Lasts Forever, Either

Photos can be stored as jpeg files fairly easily, which takes up relatively little space compared to giant .tiff, .psd, or RAW files. Once you’ve done an initial editing of them, it’s unlikely you will revisit them again, so why not store them in a smaller format so they can be backed up offsite easily.

As for your digital music collection, if you were to lose your Duran Duran CD collection to a fire or theft, would you really care that much? Most likely insurance would cover the loss, and then you could just buy new copies of the CDs anyway.

4. It Can Waste Your Time

When you transfer media to and from your computer, the larger a file is the longer it takes to transfer. So when you’re uploading large RAW files from your camera to your computer, you have to wait longer. When your computer pulls them up to look at or to edit, it takes longer.

When you are backing up your media files to another disk, the more data you have to copy the longer your backup can take. This is especially true if you are doing offsite backups online. Copying over a few gigabytes of data could take a very long time.

5. Many Tools Are Not Compatible With Lossless

When I first switched to lossless audio files I started by encoding everything in FLAC files. That was fine for playing them on my computer, but I also use a Macbook laptop, and iTunes is not compatible with FLAC. So I had to re-encode everything into Apple Lossless, which took a few days. FLAC files are also not compatible with my Microsoft XBox 360, so I had to maintain one copy of lossless WMA files on my PC for streaming, as well as a copy of Apple Lossless files to use with my laptop when I am home.

If I had just used .mp3 files though, I could have easily shared a copy of every file across all of the platforms I have at home. This also goes back to #4, since it took a bit of time to re-encode over 100GB of music twice (once to WMA and once to Apple Lossless).

Conclusion

So there are 5 reasons you should store your files using lossless compression ratios, and 5 reasons you shouldn’t. Personally I store most of my files using lossless, but I don’t have so much that it is difficult to back it up on and offsite. Hopefully these ideas will give you a better idea of how you want to maintain your own digital library.

This post is part of the New Year’s Resolutions series running through January.

If we’re going to make 2009 the best year ever, we need to make sure that everything gets done that needs to get done. That may include any of your other goals, whether it’s losing weight, saving money, paying down debt, making time for family, or any of the other numerous things that are important to you.

Organizing your time to emphasize the important is the foundation of achieving your goals, and this series of productivity posts is aimed at giving you some ideas for getting things in order.

Put First Things First

In his book The 7 Habits of Highly Effective People, author Stephen Covey argues that there are four quadrants in our lives. Activities can be broken down into urgent and non-urgent, as well as important and unimportant. For us to create a fulfilling life for the long term, we need to put an emphasis on the non-urgent, but important activities.

The breakdown of the four quadrants are below:

Quadrant I emphasizes the urgent deadline orientated activities that are both important and urgent. Quadrant II are the prevention and relationship building activities that are important, but usually not urgent. Quadrant III is where to group the annoying office tasks like going to routine meetings or answering general phone calls. And last is the Quadrant IV activities that include the busy work, television watching, or other time wasting activities.

Quadrant II

It’s important to ask yourself what activities, if done on a regular basis, would bring a positive change in your life? Exercising more can make you feel better about yourself as well as improving your appearance and physical well being.   Saving and investing your money provides you with a peace of mind, and can take you from someone who works for money to someone who has their money work for them. Spending time with family and friends creates an intangible feeling that only interpersonal connections can provide.

These are the quadrant II activities, and quadrant II is where success in life comes from.

The funny thing about quadrant II activities is that they are the easiest to neglect. These are activities like exercising, spending time with family, cooking at home and eating well, keeping your home clean and organized, or saving money and investing. Doing any of these once is usually not enough for you to see a positive difference, and in some cases, like exercising, the first time you do it is painful.

But doing any (or all) of these over time can transform our lives for the positive. I doubt many people reach the end of their lives wishing they had exercised less, saved less, or spent less time with their families. I also doubt many of them wish they had watched more television or spent more time in the office.

Thinking 80/20

The Pareto principle, covered in depth in the book The 80/20 Principle, tells us that a minimum amount of effort is needed to achieve a majority of the results. After accounting for sleep and work, that only leaves about 8 hours a day for personal time, and even more of this time is taken up for eating, commuting, and hygiene. So it’s important to use that time the best way that you can. 20% of 8 hours is about 1.6 hours a day, or about 96 minutes of solid time needed to make positive changes in your life.

The best thing about many of the changes you can make this year like saving money, is that it can be automated. Spending a few minutes to set up automatic deductions and bill pay can save you an enormous amount of time later on. That time can then be used for exercising, reading, or any other activities you think could be valuable.

Thinking 80/20 means digging into your quadrant IV time and spending it on quadrant II activities. The best part is that is the small amount of time you spend a day in quadrant II can have an enormous impact on your life if you stick with it. 20% of your time spent on those life building activities will affect 80% of your life. Not a bad trade off, right?

For more ideas on how you can use that time, check out my previous post on 120 Minutes to Success.

Get Started

So for this first week of January, start thinking about not only what you would like to work on in 2009, but also why. It’s not enough to tell yourself that you are going to make time to workout or make time with your family. You need to realize why it needs to be a priority in your life if you’re going to take the time out of your day to do it.

Also think about where you can find 1-2 hours a day to exercise, read, and spend time with loved ones. This will be the foundation for the rest of the year, and if you do it right, the rest of your life.