A Better You: Goals and Priorities

Are you happy with the person you are? Chances are that you’re not quite the person that you’d like to be; most people aren’t. I know that I’m not. I have goals, aspirations and things that I’d like to improve about myself, my life in general, and the world at large, but getting there takes work. Goals take planning, working the plan, motivation, drive, and follow-through. Each of these things come differently to different people. Some people are naturally gifted in some or many of these areas, some are not. I’d wager that the majority of people fall into the latter category.

For me, I recall being more driven in my younger days. I am trying to improve myself by becoming more of the person that I want to be. I am setting goals; I have some long-term, mid-term, and a few short-term goals. I find that beginning with bigger, more long-term goals is easier and can also be worked into the shorter-term goals.

For example, if I want to have $600k in investments by mid 2029 (for early retirement), many things need to happen. This is a good goal because it has a time frame associated and can be easily measured; I will hit it or not. I can use some simple math and basic assumptions to figure that I will need to invest an average of between $19.5k and $26.5k per year in order to make this goal (spreadsheets rock!). The very first thing that I have to do is to pay off any debt as quickly as possible. This is a good idea because it gets the debt out of the way and I can then concentrate on the building of my investments without much worry. I’m very close to finishing up doing this, but I’m not quite there yet (this is a mid-term goal; generally one to three years or so). After that, one necessity will be to invest in addition to my 401k (the current max allowed is $17.5k per year). Thus, I will need to open and contribute to an IRA (a short-term goal; I’ve done this). There are many possible goals that I can add to make this long-term goal more concrete and have additional medium-term and short-term goals associated with it.

Obviously, goal setting is very important to becoming a better you. Another thing that is very important is changing things that will keep you from achieving your goals. For my example, one possible thing that could keep me from reaching my goal would be that I end up spending money that I should otherwise be allocating to investments/savings. Currently I am nowhere near hitting $19.5k (or $26.5k) of savings for the year, but I do plan on increasing my contributions greatly until I am hitting and over that threshold (thus making it an average).

Another thing that helps to make a better you is setting priorities. In order to hit my aforementioned goal, I will need to keep my standard of living in check while, at the same time, working to increase my income. This is a good multi-pronged approach; concentrating on multiple complimentary ways to solve the ‘problem’ of hitting the goal.

One very real example that I have faced lately is spending vs. income generation. I need a new phone, so I decided to get the current latest, greatest thing (I don’t typically advise this). Since I am indulging in such a great luxury, I am working extra hard to ‘make up for it’ by selling some things on eBay and am also seeking additional ways to bring in a bit more income. I am fine with the splurge because I will make sure to more than make up the difference with additional income.

Here is some recommended inspiration:
A Lifetime of Riches – Is it as Simple as a Few Habits?
YOU’RE NOT GOING TO MAKE MONEY WITHOUT DOING THE WORK
BREAKING BAD HABITS
10 TIPS FOR STAYING MOTIVATED TOWARDS YOUR FINANCIAL FUTURE
J.D. Roth: How I learned to Stop Worrying and Love Mustachianism

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Personal Finance Problems

I’ve found out that there is trouble in paradise! An author named Helaine Olen has written a book about the problems of the personal finance industry. Here are a few interviews/discussions:
– A shorter one (31 mins): http://youtu.be/ViaJQRbJrzg
– A longer one (1hr 7 min): http://youtu.be/MtaBXXCULMg

The author does seem to have some very valid points and makes good arguments, but I also feel that she is somewhat off on a few things. I just finished listening to the above interviews, but I haven’t read her book, so based on that, here’s some of the points and my thoughts on them:

  • Since the 70’s, the middle class has been having a harder and harder time ‘making it’. I do feel that this is overall very true. Overall, median wages in the US have been essentially stagnant for several decades while many essential costs of living have gone up. There are very few quick or simple answers to problems like this. I feel that the best approach is a multi-pronged, long view solution (I won’t expound on it here).
  • Pensions are gone and 401(k)s suck. Well, yes and no. Very luckily, my coworkers and I do still have pensions, but that is unfortunately a rarity. I do also know that many companies have very poor options when it comes to 401(k) choices (typically as high fee products that are offered to them). Again, this is where consumer education comes in (and an IRA). One of the bigger points in the book seems to be that people need to be taken care of for their future savings. While I agree that this was done well in the past, that time has gone the way of the pension. I would love it if I didn’t have to worry about saving for retirement and it would be done for me by the company that I worked for or my government, but, flatly, it’s not (or is done so in a supplemental way – i.e. Social Security). I’m totally for people getting together and petitioning the government and the places that they work in order to change things for the better (hey…that sounds like a union! Personally, I’m generally in favor of them.), but that is not happening on a large enough scale at the current time to change much at the time. Currently, it is up to the individual to do the planning, for better or for worse.
  • Financial advisers, investment ‘experts’, and Personal Finance gurus have their own interests in mind, not the consumer’s. While I mostly agree with this, there are exceptions and, in general, painting with a wide brush is ill advised. I think that this can be greatly solved with better consumer education. Generally, consumers see finance and investment as an extremely complicated and complex thing. Overall, this is somewhat true, but a slow, steady, informed approach should help consumers. The proliferation of decent to good advice on the internet from a variety of sources is also a good thing. The education that I would firstly give to consumers is something that I’ve stated before in a slightly different context, “Someone is always trying to sell you something or part you from your money!” Being an educated consumer about fees, pitfalls, stipulations, and ‘gotchas’ is the best way to save one’s self from bad experiences. Many advisers and experts charge fees of one sort or another. The same goes for wherever a financial product may come from. Finance gurus are usually peddling their latest book, conference, seminar, or whatever else that they are putting out. If consumers are aware of the offerings in the market, they will have a much better time knowing what is or isn’t a good deal for them.
  • “We were told that giving up our daily latte would lead to us being millionaires when we retire.” Well, it depends how expensive those lattes are 😉 Seriously, I don’t know who in their right mind would believe that $4 or $5 a day will make you a millionaire in 20 or even 40 years; though, over 40 years, $4 a day would get you around $275k and $5 would get you around $320k (assuming average annual return of 6.5% or so after fees and everything else). Not quite a million bucks, but still nothing to sneeze at! It looks like the magic number per day would be quite near $15.75 per day to hit a million dollars in 40 years, $32.22 per day to do it in 30 years, and $70.68 per day to do it in 20 years…
  • Consumers are basically helpless and easy prey to the financial professionals and gurus. Again, while I partially agree, education and interest in one’s own situation is key. Like in nearly anything, those that don’t know good products from bad or those in desperate situations can easily fall victim to incredulous people in the world. The best thing that someone can do is not to be a victim of the predators. Yes, bad and unfortunate things happen. We should have a bigger and better social safety net for those that run into bad times, but barring that, people need to also take at least as much responsibility in their own situations. There are many things in life that an individual has zero control over, but anyone has the power to change what they do have control over. It may not be easy or convenient, but it is possible to change things under one’s own control.

I also looked at a few reviews on the book while writing this. Feel free to do the same if you’re so inclined.

Let your thoughs and feelings on this be known in the comments.

Work Hard(er)

Do you work hard?

Yes! Of course you do. Most everyone does.

Do you do work at home?

Sure, lots of people do. I do too. Unlike some, I don’t bring work home from my day job. In fact, the work that I do at home has little to do in relation to my day job. Personally, I have several potential income streams that I can utilize if and when I choose or need to. I run an eBay store selling collectable cards and occasional computer parts, I build web sites/apps, I can build and fix computers, and I make a great chili (At least IMHO. OK, I don’t sell my chili). I’m usually eager to use and expand my skills in my particular areas of interest and expertiece. I use my skills to create efficiency for myelf. For example, I have been able to blend my eBay ‘skills’ and coding skills to creating a ‘program’ that helps me to create an eBay listing in two or three minutes instead of five to fifteen minutes that it once took. Even if I had to work with someone else or even pay someone else to do this for me, it would have more than paid for itself. Over the past four to six years since I had kids, I’ve been able to put far less time into selling things and doing other work, but I am able to do a bit here and there (not zero, but pretty close). Just this year, selling cards has enabled me to pay off $6k+ in debt that I otherwise would not have been able to (my day job money is earmarked for the family budget). I’ve also padded the household budget when we ran into a few tight spots. The extra work does make for a few late nights here and there, but those are few and far between. Overall, I put in a handful of hours a week into the side work. The ROI of my efforts compared to the debt relief is more than worth the additional hours that I put in. I could do much, much more side work than I currently do. It would pay immense dividends and get me out of debt and into saving for FI much more than I am currently able to. I have a long way to go, but working hard(er) is definitely helping!

Do you do any side work or have any other income streams? Sound off in the comments!