Archive for the 'Personal Growth' Category

Midterms are awesome

Published on May 8, 2008 in Personal Growth. 0 Comments

So I am back in school and Thursday night is the first midterm. I am dutifully putting off studying until the last possible moment.

Instead of writing a full post, I thought I might just link to a few relevant back to school posts from around the web.

First up, Blueprint for Financial Prosperity wants you to consider your income path. One of the big reasons I am going back to school is to eventually move into a higher paying career. The advice is spot on, annual increases will not get you to where you need to be. Worse yet, you will likely be making less money every year thanks to inflation. If you’re unhappy with your current income it’s time to start thinking about what you can do to change that.

Of course if you’re going to start a new goal it’s important to be organized. Lucky for you 43 Folders has a list of links for the chronically disorganized. I think I can finally say I’m not in that group anymore.

And finally a few tips to help you get stuff done. David Allen’s book ‘Getting Things Done’ has been a huge help in getting myself organized and thinking about the way I handle tasks. It has also been great for stopping procrastination (except for right now of course). On the other hand, instead of sitting around I’m actually being somewhat productive by writing here.

I hope everyone enjoys the links. I hope by next week I can find some time to write up something original, I know Tuesday’s post was a little lame too. Eventually I will finish up part 3 of the retirement series, which will cover rolling over your 401(k)s between jobs. But first I need to rollover my own 401(k) so I can make sure the process I’m describing works!

Now it’s time for me to get back to work!

Friday Linkfest: Lessons on Life Edition

Published on February 1, 2008 in Personal Growth. 1 Comment

Dsc02530 2 2Ron at The Wisdom Journal outlines 12 things he learned by 42 that he wish he knew at 22. I’m past 22, but I think these tips are outstanding for anyone at any age.

Many of these ideas seem like common sense, but they are not common. Investing early is a good example. Many young people starting their career ignore their 401k accounts, putting off retirement for another time. But the longer you wait the less time you have to accumulate wealth, and the less time compound interest has to work its magic.

His money advice is spot on. There is no shortcut for to becoming rich, establish a budget, and realize that there’s more to life than money.

He also advises not buying the first house you look at, but instead waiting to get into an area you love. My wife and I have often discussed buying a house, and we both agree that we would rather rent in an area we love than move farther away to buy a cheaper house. With the recent housing bubble, many people bought houses with the sole intention of upgrading to something better later. But with prices going down, many of those folks are stuck in the houses they really didn’t like to begin with. So heed this advice, hold out for something you like instead of jumping at the first house you can afford.

An interesting companion to this comes from Consumerism Commentary with suggestions for reaching a million from the age of 25. These are a few of the steadfast rules of personal finance, including starting an emergency fund and paying off debt.

Dealing with burnout

JD at Get Rich Slowly has advice for dealing with frugality burnout. For anyone working towards living below their means, burnout is sure to set in at some point. When you are used to living at one level of income (even if you can’t afford that level of income), moving to a lifestyle of less can get you down. But these tips should help you stick with it and work towards your goals.

Buying the things you want

The Digerati Life has some suggestions for affording big ticket items. If you’re trying to live within your means, it’s not likely that you’ll have a few hundred dollars (or more!) lying around for you to buy expensive items. So it’s important to learn how to make these purchases a reality without using credit.

Death by a thousand cuts. How did we get so far into debt?

Published on January 12, 2008 in Debt, Goals and Personal Growth. 0 Comments

“Those who cannot learn from history are doomed to repeat it”

Before we can really begin to plan where we’re going, I think it’s important to reflect on where we came from.  I have been working on this post for about a week now, and while I would love to tell you a long elaborate story about how my wife and I got into so much debt, the truth is neither of us really knows exactly where the money went.  I think most people who are in debt feel the same way.  Except for a few expensive things that we’ve bought like a plasma TV and an expensive mattress, it’s the nickel and dimes of life that are thrown on the credit card that add up over time.  It’s those nickels and dimes that turn into thousands of dollars when only the minimum payments  are made on the balance every month. 

So instead of a giving you a long, drawn out story to read, which probably wouldn’t be that interesting anyways, I thought I would list a few of the pivotal points in the past few years that got us into the debt we’re in now. 

 The beginning

My wife and I haven’t always been in debt.  After high school I spent four years in the Marine Corps, and was pretty conservative with money, mostly because I never had any.  At the time I only had a single credit card with a low $1,000 limit, and I almost never carried a balance.  My wife went through school with a small shopping addiction, but nothing too crazy.  She graduated school with one fairly low student loan. 

Going back to college is when my own debt really started to build up.  I received money from the GI Bill every month, but that was just enough to pay rent and buy food.  This was also around the time my wife and I started dating, so of course going out on dates was a regular thing then too.  Dating and fixed income don’t really mix too well, and I still spent money like I was receiving a monthly salary.  

Buying a new car

About a year after my wife started her first job, her 1990 Honda Civic called it quits.  But not in a cheap fashion, instead it would randomly die on the freeway, and then start up again as she tried to coast to the side of the road, giving everyone in the car a good scare.  The mechanics couldn’t determine what caused the problem, so our only choice was to pay a few hundred dollars at a time to try and fix what may or may not have been the problem.  Instead she decided it was best to buy a new car.  But not just any car, a car that cost about 100% of her annual salary (the car we’re currently working to pay off).  She financed it for 6 years, which reduced the payments, but meant she would end up paying more in interest over the loan’s life.  Being able to afford such an expensive car meant paying everyday expenses with the credit cards, always with the good intention to pay them off at the end of the month.  This is when my wife’s debt really began to add up.  

Hitting the tipping point

I would guess that near the peak of our debt, my wife and I had over $40,000 in debt, which included credit cards, an auto loan, and student loans.  The sad part is that other than a few big luxury items we shouldn’t have bought, we really don’t have much to show for all of that spending.   We used our credit cards the way you would use a debit card for every day purchases.  It was the little things that really added up - $60 to eat out one night, $60 on groceries another.  We bought nice clothes to look good for work, after all if you want to get promoted you should dress the part. We didn’t live an extravagant life, but we didn’t live cheaply either.  Shopping was a popular past time for both of us.  She frequented the malls, while I regularly went to the bookstores and electronics stores.

The tipping point for us was our wedding this past June.  We didn’t have a choice about starting our new married life together in debt or not, but we did have the choice about which direction we were going to go.  We have decided to take the road to freedom from our debt.  And so now, a few months after the wedding, is where you enter the story and we begin our journey together. 

Small Victories

Even though our current debt situation is less than ideal, we like to look back at the good choices we made in the past, choices that would have qualified as extremely dumb moves in this story. 

The biggest decision we’re glad we made was to not buy a condo in San Diego, where both of us went to school.  For one it would have been a terrible financial decision.  We would have bought near the peak and surely would have been upside down now that the housing market has begun to plummet.  Making the monthly payments would have been tough, and it’s likely we would have continued to put living expenses like groceries on our credit cards.  Add to that the interest adjustment we would have been facing, and our financial picture could have been looking very different right now.

Buying the condo would also have prevented us from moving to the Bay Area this past year, a move that has brought an enormous amount of happiness to our lives.  Both of our families live up here, as well as many of our long time friends.  We both agreed that we feel more at home here than we ever did living in San Diego. 

Another good decision was not buying another new car this year.  I totaled my car almost 12 months ago, and almost bought a new Honda Pilot.  That choice would have put our debt levels up another $30,000.  It also would have reduced the extra money we have available monthly to pay down existing debt.  Factoring in gas, insurance, and maintenance, and we would probably still be making minimum payments on all of our debt, if we could have made them at all. 

Where we’re at now

After the wedding we worked hard to pay off our joint credit card.  This card had both the lowest balance and the highest interest rate.  We paid that off at the end of November, and next up is the car.  We will continue to use the debt snowball method to pay off our credit cards and student loans until we are completely debt free.  It’s going to take a few years, but our long-term goal is to be debt free by 2010. 

 You can take a look at a past post I wrote about fulfilling the requirements to get out of debt to get a better idea of what we’re doing to work towards our goals.  

I hope if you’ve read this far you’ll stick around until then to see if the dream of becoming debt free becomes a reality.  You can subscribe to the FreeFromMoney.net feed, found at the top right corner of the page, either through RSS or email.

Book Review: Now Discover Your Strengths

Published on January 7, 2008 in Books, Personal Growth and Reviews. 0 Comments

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Now, Discover Your Strengths is a book based on the premise that the traditional model of becoming better by fixing your weaknesses is incorrect. Instead you would be better off finding out your greatest strengths and developing those to improve your performance. And lucky you, the authors provide an online quiz meant to help you discover your personal strengths.

The book begins discussing successful individuals and what they have in common. Generally people who make it to the top enjoy what they do, and they work in roles that emphasis their strengths rather than their weaknesses. One example is Warren Buffet, who thrives on investing in simple, boring companies. When tech companies were the top performers, he chose not to join in, since the complex products and aggressive accounting techniques were not his forte.

The authors introduce three requirements to develop strengths, which are covered through the book:
• Distinguishing natural talent from knowledge and skills. Knowledge comes in two flavors, factual and experimental, which can both be learned. Skill is what organizes experimental knowledge, allowing you to make use of it. Natural talent is what drives performance, but cannot be learned. The main focus of the book is to discover and define your talents.
• Identify your dominant talents. What activities do you pick up quickly? What do you enjoy doing, and do you excel at? The book continuously promotes the strengths finder profile, an online test that narrows down your five dominant talents.
• Find the proper language to describe your talents. Language is focused on the negatives, rather than positives. The book provides some excellent examples of how language leans to the negative. People who are meticulous and orderly are called anal; people who can’t wait to act are impatient or impulsive. The strength finder profile turns this around by naming each strength, defining it, and giving an example of someone that exhibits it.

Later chapters go on to discuss how to use the results of the strength finder, covering both individuals who would like to develop themselves, and managers who would like to use the results to build a better team. Techniques for creating a strengths-based organization include finding ways to reward employees while keeping them in the roles that they excel in, as well as focusing on the results of a goal rather than the means used to get there. Employees should be encouraged to use their talents to achieve goals, rather than forcing them to follow rigid routines.

While I enjoyed the book and felt that the premise was interesting, there is one problem that I feel overcomes the positives. The only way to access the profile test is to use a code present in the book. I borrowed the book from a friend, so the code had already been used. Without taking the strengths finder profile online, I was unable to accurately narrow down my strengths, making the later parts of the book less interesting. If I really wanted to take the test I would have to purchase my own copy of the book. I don’t know if this was an oversight by the authors, or a scheme to sell more books.

Furthermore, there is an entire chapter covering strengths based management, which assumes every employee takes the strengths finder profile. This of course would require every single one of them to buy the book.

Recommendation:

If you don’t know your strengths, and would like to find out more about yourself, this is an excellent place to start. This would also be a good book for managers. Even without requiring employees to take the profile test, there are enough suggestions for improving effectiveness and increasing morale that it could be a useful tool for some, although some of the topics are broad and very generalized.

For non-managers who are already familiar with their strengths it may be less useful. I feel like there is something missing, like examples on how to actually build on your strengths. It might be that this information is covered in other books in the series, and eventually I would like to look into those too.
Now, Discover Your Strengths is available for purchase from Amazon.com