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Don’t Screw Future-You

Finance, Life

A conversation between me and my temporally displaced self.

Future Me: Excuse me, Jason?

Me: Yes?

FMe: <Slap!>

Me: May I ask what that was for?

FMe: Of course.

Me: What was that for, jerk?

FMe: That was payback for all of the hell you have put me through.

Me: What?!? I’ve never even met you, before.

FMe: Of course you have. I am future-you, and I’m sick of getting screwed by past-me, that is, you.

Me: Huh?

FMe: Listen close. You’re not the sharpest brick in the box and I don’t want to explain this twice.

Me: ???

FMe: A long time ago, when you first met our wife, you were dumb.

Me: I don’t appreciate….

FMe: Shut up. I was dumb then, too. Remember? You…err…we bought a new truck, built an addition on our…err…your…err…whomever’s house, got married in the same year. On top of many other expensive decisions. Do your recall?

Me: Yes, I do. So what?

FMe: If that wasn’t enough, you and your smoking-hot bride are still shopping like you’re rich. You drive a new car. Your kids wear new clothes. You’ve got a house full of new furniture. How did you pay for all of that?

Me: Naturally, I charged it. Zero payments, zero interest for a year! Pretty smart, huh?

FMe: What happens in a year?

Me: I don’t know. I’ve got a full year to figure that out.

FMe: <Slap!> I’ll tell you what happens! Future-you, that’s me, gets screwed! Your raise didn’t come through. You had a baby. The truck broke down. Your wife took maternity leave. A roommate moved out. You took a loss in the stock market. You didn’t plan! You had no savings to cover any of those problems because you were too busy servicing debt to pay for your current life.

Me: How was I to know?

FMe: <Slap!> Life happens! You never know what is coming next. You need to plan and save for what might happen. Otherwise, you’ll just accumulate more debt to be serviced by yours-truly. That is not acceptable.

Me: So? What are you going to do about it?

FMe: <Slap!>

Me: Really? Again?

FMe: <Slap!> I’m struggling to pay your debt. Your son starts college next year, but you’ve left me completely unable to help. Your daughter wants to get married in a couple of years, but the Father-of-the-Bride can’t afford a tux. My wife, your beatiful bride, wants a vacation that I can’t afford. You’ve screwed me, dude.

Me: I’m sorry. What can I do to fix it?

FMe: Buy me dinner, first.

Me: Huh?!?!?

FMe: Stop the excess spending. Spend less than you make, for a change. No credit.

Me: None?

FMe: None. Nada. Zip. Zilch. Only spend what you can afford. Budget. Pay off those nasty bills. Don’t leave me hanging.

Me: So, what you’re saying is that, if I don’t have the money, I shouldn’t buy it?

FMe: Exactly. That’s the path to wealth, freedom, and financial independence. Live in the real world.

Me: Gee, thanks, Future-Me! Now I know.

FMe: And knowing is half the battle.

What would your future-you have to say to you?

Money Problems – Day 1: Setting Goals

Finance

Today, I am starting a series, Money Problems: 30 Days to Perfect Finances. The series will consist of 30 things you can do in one setting to perfect your finances. It’s not a system to magically make your debt disappear. Instead, it is a path to understanding where you are, where you want to be, and–most importantly–how to bridge the gap.

I’m not going to run the series in 30 consecutive days. That’s not my schedule. Also, I think that talking about the same thing for 30 days straight will bore both of us. Instead, it will run roughly once a week. To make sure you don’t miss a post, please take a moment to subscribe, either by email or rss.

In this, the first installment, we’re going to talk about goals.

First, we’re going to ask 3 questions.

What is your financial goal?
Why?
How can you get there?

The first question is “What is your goal?” Of course, in this series, on this site, we’re only going to be addressing your financial goals. Losing 300 pounds, growing wings, and flying to the moon may be an admirable goal, but it’s considerably outside of the scope of this project.

So, what is your financial goal? Do you want to retire a millionaire, or become financially independent? Do you want to pay off your debt, or save enough money to see the world? Do you want to learn how to retire by 40?

Your goal does not matter…to anyone but you. To you, though, it is terribly important. Without a goal, how can you measure you progress and see what you have accomplished? It’s easy to get frustrated and give up when you can’t look back and see what successes you have actually accumulated.

Whatever your goal, you have to do two things:

Don’t let anyone tell you it is stupid or impossible. There is a quote that I can’t find attribution for, other than as an old Chinese proverb: “Those that say it can’t be done should get out of the way of those doing it.”
Write it down and hang it up. This lets you see your goal every day. It will be impossible to forget and difficult to ignore. I have Dave Ramsey‘s Baby Steps hanging on my refrigerator where I see it a dozen times per day.

The second major question to ask yourself is “Why?” Why is this goal important to you? Why do you care?

If you can’t answer that, it’s time to sit back and think about it for a while. Without a solid reason to succeed, you’ll lose motivation and fail. Are you getting out of debt to give yourself a secure retirement? Do you want to save to travel the world because you’ve been dreaming about it since you were in diapers? Do you simply want to provide a secure future for your family? Whatever your reason, it is–and should be–uniquely yours.

The third and final question is “How can you make it happen?” That question has an extremely simple answer: read the rest of the series.

3 Habits Every Soon-to-be-Successful Debtor Needs to Cultivate

Finance

Getting out of debt is primarily a matter of changing your habits. We’ve all heard people swear by skipping your morning cup of coffee to get rich, but that’s just a small habit. Much more important are the big habits, the lifestyle habits. Here are 5 habits to cultivate for financial success.

Frugality

“Beware of little expenses; a small leak will sink a great ship”– Benjamin Franklin

As Chris Farrel wrote in “The New Frugality“, being frugal is not about being cheap, but finding the best value for your money. When my wife and I had our second baby, we couldn’t justify spending $170 on a breast pump, so we bought the $30 model. It was quite a bit slower than the expensive model, and was only a “single action”, but for $140 of savings, it seemed worth the trade. Six weeks later, it burned out so we bought a new one, still afraid to justify $170 on quality. This thing took at least 45 minutes to do its job. When it burned out 6 weeks later, we decided to go with the high-end model. This beauty had dual pumps, “baby-mouth simulation” and it was fast. The time was cut from a minimum of 45 minutes to a maximum of 15. That’s 3 hours of life reclaimed each day fro $140. Six months of breastfeeding for each of two kids means my wife regained 45 days of her life in exchange for that small amount of money. At the rate of 6 weeks per burnout, we would have gone through 8 cheap pumps, costing $240. The high-end unit was still going strong when we weaned baby #3. Buying quality saved us both time and money. I wish we would have gone with the good one from the start. Sometimes, the expensive option is also the cheap option.

Maturity

Image via Wikipedia

“Maturity is achieved when a person postpones immediate pleasures for long-term values.” -Joshua Loth Liebman

Being a mature, rational adult is hard. It means accepting delayed gratification over the more enjoyable instant variety. We save for retirement instead of charging a vacation. It takes a lot of restraint to put off buying the latest toys, clothes, gadgets, cars or whatever else is currently turning your crank until you actually have the money to actually afford it. It means planning your future instead of looking like a surprised bunny caught in a spotlight every time your property taxes come due. (Who knew that the year changed every year? Do they really expect annual payments annually? Geez! There’s so much to learn!) It means thinking about your purchases and buying what you actually need, actually want, and will actually use instead of resorting to retail therapy whenever you feel like a sad panda. The only benefit to mature, rational management of your finances is that, given time, you will have the security of knowing that, no matter what happens, you will be okay. That’s a huge benefit.

Pleasure

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“Do not bite at the bait of pleasure, till you know there is no hook beneath it.” – Thomas Jefferson

If it hurts, you won’t do it. You have to learn to take pleasure from from things that won’t make you broke and you have to learn not to hate putting off the things you can’t afford. Take pleasure in the little things. Enjoy the time with your family. Presence means so much more than presents. So many people never learn how to enjoy themselves. Take the time to experience life and enjoy doing it.

Update: This post has been included in the Carnival of Debt Reduction.

5 Ways to Change Your Spending Habits

Finance

Sexy smoker — Image by BBQ Junkie via Flickr

If you keep doing what you’ve always done, you’re going to keep getting what you you’ve always gotten. One of the hardest things about getting out of debt is changing your habits. You need to break your habits if you’re going to get yourself to a new place, financially.

How can you do that? Habits aren’t easy to break. Ask any smoker, junkie, or overeater what it takes. There are a lot of systems to break or establish habits, but they don’t all work for everyone.

Here are my suggestions:

Commit to just 30 days. I’m a big fan of doing new things for 30 days. If you can do it for a month, you can do it forever, no matter what “it” is. For just one month, don’t buy anything. I don’t mean avoid buying groceries or toiletries and I certainly don’t mean to stock up on new crap the day before your 30 day spending fast or rush out for a shopping spree on day 31. Just don’t buy anything for a month, no exceptions but the things necessary to stay alive and healthy. No movies, no games, no cars, no toys, and no expensive meals. Just 1 month.
Switch methods. If you pay for everything with a credit card, restrict yourself to just cash. If you pay cash for everything, switch to a credit card. Breaking your long-established habits is a way to get used to spending consciously: taking the time to think about what you are doing, instead of just spending mindlessly.
Identify your spending triggers. I can’t go into a book store and come out empty handed. So, I avoid bookstores. My wife has problems with clothing stores. A friend can’t walk out of a music store without some body piercing equipment. What are your triggers? What makes you spend money without thinking? Figure out what those things are and then avoid them like the plague…or the clap.
Quit buying things for pleasure. Buying things makes us feel good. It sends a rush of endorphins through our bodies. The more we get that rush, the more we crave that rush, so the more we do to get it. You need to stop that. Before you buy something, ask yourself if it’s something you actually need, or if you just want a pick-me-up.
Avoid shopping online. E-commerce sites make it far too easy to buy things at a moment’s notice. You don’t have to think about what you are doing or if you actually need whatever you are buying. You just buy. The best way too avoid them is to delete your credit card information from any site that save the information and delete the sites from your bookmarks. Whatever you can do to slow down the buying process will make it easier to avoid buying things, which can soon be stretched into NOT buying things at all.

Habits—especially bad habits—are hard to break. There is an entire self-help niche dedicated to breaking habits. Hypnotists, shrinks, and others base their careers on helping others get out of the grip of their bad habits, or conning them into thinking it is easy to do with some magic system. How do you avoid or break bad habits?

Sunday Roundup: Father’s Day

Finance

Father's Day Cake 2009 — Image by Jim, the Photographer via Flickr

On Father’s Day, 3 years ago, my third and final kid was born. My kids are all horrible brats and I love them dearly.

I wouldn’t give up fatherhood for anything. Watching my kids grow and learn, steering their development, and teaching them how to navigate life is the most fulfilling thing I’ve ever been a part of. Also the most frustrating. I can’t imagine being anywhere else, not being with my kids. I have no respect for deadbeat parents.

I am incredibly grateful that I had a proper model for manhood and fatherhood. My dad taught me the concepts of honor, integrity, and responsibility. I couldn’t be the man I am now, if he wasn’t the man he is. Thanks, Dad.

Best Posts

Sometimes, the coolest things in the world are the things most likely to kill you. Call me crazy, but I’d happily strap a 1200 cc propeller to my crotch and find out what 10,000 feet looks like.

Via Budgeting In The Fun Stuff, Super Frugalette reminds us that, when there’s a significant amount of money involved, spending a few hundred dollars on an attorney isn’t wasteful.

Fivecentnickel discuss multi-level marketing. It doesn’t matter which company you are in, if your downline is more important that your product, it’s a bad business model.

Keith Ferrazzi shows us how to improve our body language when it really matters.

When I started driving, I tossed my car in a ditch going way too fast. Naturally, it was my parents’ fault for giving me the curfew I was trying to beat. They never would have bought it if I would have told them I was driving like my grandma and it jumped into the trees by itself. Why does the FBI think that’s believable? Corruption, maybe?

Financial Samurai talks about living a life without regrets, which is a personal goal of mine.

Food storage will become critical when the zombies come.

Beer is good. Even the cave-men thought so.

Carnivals I’ve Rocked and Guest Posts I’ve Rolled

3 Ways to Keep Your Finances Organized was an Editor’s Pick in this week’s Festival of Frugality. Thanks!

5 Reasons Your Wealth Isn’t Growing was included in this week’s Carnival of Personal Finance.

Money Problems: Insurance was included in the Totally Money Blog Carnival.

Unlicense Health Insurance was included in last week’s Carnival of Personal Finance.

Thank you! If I missed anyone, please let me know.

Yakezie Blog Swap

Last week, the Yakezie shared what they would do with a single financial do-over.

– Melissa from Mom’s Plans shares her biggest financial mistake at Barbara Friedberg Personal Finance: Opening an eBay Store and Using Credit. It is a great story about how not to grow your business and how competing priorities can pose a real challenge.

– Budgeting in the Fun Stuff shares her biggest financial mistake and potential do-over at Super Frugalette: Investing in a Friend’s Business. Its a good, but costly lesson learned about small business.

– Eric from Narrow Bridge Finance shares how He Wouldn’t Have Paid Down His Student Loans So Fast at The Saved Quarter. This may seem counter-intuitive, but he has some good points. Check it out.

– Mr. S from Broke Professionals shares how He Wouldn’t Have Bought a New Car at My Personal Finance Journey. This has some great analysis, especially considering the new car was a hybrid!

– The College Investor posted at Wealth Informatics: What you should know when you are investing?

– Wealth Informatics posted here: If you had one financial do-over, what would it be and why?

– Barbara Friedberg shares how She Was Scammed at Mom’s Plans. You have to watch out for the hard sell!

– Joe at Retireby40 tells us about How He Invested his 401(k) in Company Stock right before the dot com crash, at Financially Consumed. A financial adviser may have helped avoid this one!

– Financially Consumed shares his Car Purchase Do-Over And Over at Retireby40. Car addicts have it tough!

– LaTisha from FSYA shares her do-over story in It’s Never Too Late at Little House in the Valley. Sometimes the do-over is quicker and more painless than most.

– Little House yell’s Do-Over! Do-Over! at FSYA Online. It looks at the road to saving more, starting on an elementary school playground!

– The Single Saver asks, What Are The Long Term Consequences of Small Purchases at Totally Money. A cool post on how past purchases cost future returns!

– Miss Moneypenniless from Totally Money shares her story of Vacationing to the Brink of Bankruptcy. Sometimes a vacation can be fun, but the bills afterward may be daunting.

– Super Frugalette shares How a Lawyer Could Have Saved Her $24,700 at Budgeting in the Fun Stuff. Maybe lawyers are worth it sometimes?

– Jason from Live Real, Now shares how he Amassed $90,000 of Debt at Debt Eye. A good lesson in living a little more frugally.

– Kevin from Debteye shares his do-over: Not Buying a House Right Out of College at Live Real, Now. I have said it before that buying a house can be challenging right out of college.

– Penny from The Saved Quarter shares how She Would Have Finished College Before Having Kids at Narrow Bridge Finance. An awesome story that has will soon have a happy ending!

– Jacob from My Personal Finance Journey shares how he was Scammed on eBay at Broke Professionals. An important lesson for anyone selling or buying online.

– Marissa from Thirty-Six Months shares how she Accumulated a Ton of Student Loan Debt at So Over Debt. If you are going to live the life, you’re going to pay the price!

– Andrea from So Over Debt shares How She Would Have Started Saving for Retirementat Thirty-Six Months. I would love to read a post on each of the stories you mentioned getting to where you are now!

– Below Your Means shares his story about A Missed Investment Opportunity. There are so many times I wish I could have gone back and bought a stock!

Get More Out of Live Real, Now

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Have a great week!

Money Problems – Day 5: Boosting Your Income

Finance

Pizza Delivery Bike — Image by Kevin H. via Flickr

Today, I am continuing the series, Money Problems: 30 Days to Perfect Finances. The series will consist of 30 things you can do in one setting to perfect your finances. It’s not a system to magically make your debt disappear. Instead, it is a path to understanding where you are, where you want to be, and–most importantly–how to bridge the gap.

I’m not running the series in 30 consecutive days. That’s not my schedule. Also, I think that talking about the same thing for 30 days straight will bore both of us. Instead, it will run roughly once a week. To make sure you don’t miss a post, please take a moment to subscribe, either by email or rss.

Today we’re going to look at ways to boost your income.

People spend a lot of time talking about ways to reduce your expenses, but there is a better way to make ends meet. If you make more money, you will—naturally—have more money to work with, which will make it easier to balance your expenses. I’ve found it to be far less painful to make more money than to cut expenses I enjoy.

I can hear what you’re thinking. It’s easy to tell people to make more money, but what about telling them how? Guess what? I’m going to tell you how to make money because I rock.

By far, the simplest way to make more money is to convince whoever is paying you to pay you more for what you are already doing. In other words, get a raise. I know that’s easy to say. Money’s tight for a lot of companies and layoffs are common. None of that matters. Your company knows that hiring someone new will involve a lot of downtime during training. If you’ve been visibly doing your job, and the company isn’t on the brink of failure, it should be possible to get a bit of the budget tossed your way.

The first thing you need to do is get visible. If you habitually come in 15 minutes late, make it 15 minutes early. If you are working an alternative schedule, consider switching to the standard schedule, so everyone who matters can see you are at work. Start sending status updates to your boss, including copying him on emails to other people you work with, if those emails signify important milestones in a project.
Next, log your work. Keep track o what you do, what you’ve accomplished, and—most important—how much money you have made or saved for the company.
Third, do your research. Hit the salary survey sites to find out what other people in your field are making. Don’t worry if you are on the high side. There is always someone making more than you. If you are the exception to that rule, try using a similar variation of your job description and title. What’s the concrete difference between a software engineer I and and a software engineer II? About $15000.
Finally, schedule a meeting with your boss and ask. Lay out the things you’ve done, the amount you make for the company and what other companies are paying. Chances are, your boss will have a hard time refusing your request.

Another simple idea is to get a second job. Personally, I hate this idea, but it works wonders for some people. Gas stations and pizza stores offer flexible schedules and they are always hiring. If they aren’t willing to work with your schedule, or it doesn’t work out, you can always quit. This isn’t your main income, after all.

My favorite option is to create a new income stream. What can you do?

Take a piece of paper and a close friend and brainstorm how you can make some money. Write down every type of activity you have ever done or ever wanted to do. Then write down everything you can think of that other people who do those activities need or want. Remember, during a brainstorming session, there are no stupid ideas. Take those two lists and see if there is any product or service you can provide.

You can start a blog—although don’t expect to generate much money early—or try writing for some revenue-sharing article web sites, like hubpages or squidoo. Other options include affiliate marketing, garage sale arbitrage(buying “junk” at garage sales, fixing it up and selling it), or even doing yard work for other people.

One interesting business I’ve seen lately is a traveling poop-scooper. These people travel around and scoop poop out of ddog-owners’ yards. Business booms in the spring when the snow melts, but it can be an ongoing income, since dogs don’t stop pooping.

Raising your income can make it easier to pay your bills, pay off your debt, or even taking nice vacations. How have you made some extra cash?