Category — Personal Growth

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 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.

Everyday I find myself on the train for an hour and a half, which equates to a whole lot of reading time. So I have decided to undertake a significant challenge this year and read 52 books in 52 weeks. I will also review these books, which you will see on the site as well as on Amazon.

The majority of books I plan to read come from the Personal MBA reading list. I will also throw in a bunch of personal finance and investment books since those are major topics of discussion here.

Overall I hope that reading will start to generate more posting ideas, as well as enhance my own knowledge for both my personal and professional life. At the end of the year I will create a list of my favorites, and give some recommendations for anyone with certain goals.

Wish me luck!

Book author and speaker Seth Godin has a great article up on his blog asking if Effort is a myth. So many of us look at people who are successful and think they got there through luck or by having special talent. It is rare that we think about the effort that many people put in to get to the top. We are a society of the quick fix. We would rather believe that we can throw money at a problem to fix it instead of putting in the time and effort that is needed to solve the problem.

Think about it. Instead of taking time every day to get out an exercise we spend money on weight loss gimmicks and diets that don’t work. Instead of spending less than we earn and saving money for the future we hope that someone will come along and help us like the lottery or the government. And on a grand scale many believe that the solution for energy independence is spending money to drill in Alaska, rather than taking a few minutes a month to stop by a gas station to put air in our tires.

Seth Godin sums it up in a simple statement:

While luck may be more appealing than effort, you don’t get to choose luck. Effort, on the other hand, is totally available, all the time.

To help make your own success he recommends the following:

1. Delete 120 minutes a day of ’spare time’ from your life. This can include TV, reading the newspaper, commuting, wasting time in social networks and meetings. Up to you.

2. Spend the 120 minutes doing this instead:
-Exercise for thirty minutes.
-Read relevant non-fiction (trade magazines, journals, business books, blogs, etc.)
-Send three thank you notes.
-Learn new digital techniques (spreadsheet macros, Firefox shortcuts, productivity tools, graphic design, html coding)
-Volunteer.
-Blog for five minutes about something you learned.
-Give a speech once a month about something you don’t currently know a lot about.

3. Spend at least one weekend day doing absolutely nothing but being with people you love.

4. Only spend money, for one year, on things you absolutely need to get by. Save the rest, relentlessly.

Imagine if you started following these steps regularly.

First, where could you get 120 minutes from? For most folks giving up television is the obvious choice, and an easy way to get some time back in your day. Some people take public transportation and either sleep on the train or space out and do nothing. Why not bring a work related book or paper along and do some reading on the way? I plan on doing this when I start riding BART, which should get me 30-40 minutes of reading time.

Now what could you do with that extra time each day?

First, taking some time to exercise is a great idea. Studies have shown that regular exercise improves brain functioning as well as improving health and appearance. So get out there!

I also like the idea of reading books, magazines, and blogs that are relevant to what you do, or are relevant to what you would like to do. At my last performance review my boss praised me for having strong industry knowledge versus my peers, as well as being an outside of the box thinker. I think my knowledge comes from the time I take to read and learn new things on a regular basis.

I really do think this comes down to how much you enjoy your job and your industry. If you enjoy computers and work in IT, keeping up with the latest technology will be fun to you and is something that will just happen. If you can’t stand your job it’s likely you won’t want to think about it after you leave. If this is the case I highly recommend you reconsider your career, and spend your time preparing for a new career.

Speaking of preparing for a new career, learning techniques such as MS Excel macros (or advanced Excel in general), keyboard shortcuts, or any other productivity shortcuts can benefit you no matter what job you take (assuming you’re on office worker I guess). And if you hate your career why not start reading up on something that does interest you, and figure out how you can transition into another career?

The last two steps seem like they are a little different in direction at first glance, but they are absolutely essential for success.

If you’re in debt it’s tough to concentrate on work and being productive if you’re worried about how you’re going to pay your bills. Second, if you’re saving everything for a year, you will have a great base to start compounding on for the rest of your life.

Last, it’s always important to spend time with your friends and family. Think of all the movies you’ve seen that had an overworked executive who didn’t spend enough time with his or her kids. You don’t want to be that person do you?

For everyone reading this, I challenge you to look at your time and take advantage of it. For most people, myself included, our careers are our number one asset. It makes sense to work towards a higher salary. Follow these for a year, and see if you don’t end up somewhere better.

Like I said, I think this is a great article, and well worth the read. A big thank you to The Simple Dollar for pointing me to this great article.

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!

Ron 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.

“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.

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