LivingCheaply.net » Psychology

Productivity Lagging? Take a Siesta

LivingCheaply — Tue, 27 Jul 2010 17:00:00 +0000

This post is from GRS staff writer April Dykman . I’ve discovered that one of the biggest benefits to being a full-time freelancer can be one of its drawbacks: setting ones own schedule. Don’t get me wrong, it’s the reason I wanted to get into freelancing in the first place, but I keep wondering if I’m working enough . Am I getting enough done in a day? How often should I take a break, and for how long? It sounds like a minor consideration, but breaks during the day can have a positive effect on productivity. Work like Leonardo In many work environments, there’s an expectation that working longer and harder equals greater productivity. Whether explicit or implicit, the employee who works through lunch, evening hours, and weekends is often perceived to be more productive than an employee who takes regular breaks and works more reasonable hours. But rewarding the nose-to-the-grindstone mentality results in bad judgment calls, mistakes in execution, less creativity, and more aversion to risk. Jim Loehr and Tony Schwartz write about the importance of mental recovery in their New York Times Bestseller, The Power of Full Engagement : The key to mental recovery is to give the conscious, thinking mind intermittent rest. In his provocative book, How to Think Like Leonardo da Vinci , author Michael Gelb poses a wonderfully revealing question, “Where are you when you get your best ideas?” Gelb has asked this question to thousands of people over the years, and the most common answer he gets include ‘in the shower,’ ‘resting in bed,’ ‘walking in nature,’ and ‘listening to music.’ We ask our own clients a similar question and their answers have ranged from taking a jog to meditating to dreaming to sitting on the beach. ‘Almost no one,’ Gelb writes, ‘claims to get their best ideas at work.’ Gelb also notes that as prolific a scientist, inventor, and artist Leonardo da Vinci was, he took regular breaks and naps, even to the frustration of his employers. Da Vinci wrote, “It is a very good plan every now and then to go away and have a little relaxation…When you come back to the work, your judgment will be surer, since to remain constantly at work will cause you to lose the power of judgment.” Power napping around the world In some countries, the afternoon siesta is part of a normal workday. Greece, Italy, and Spain incorporate the lunchtime nap, and have lower incidents of heart disease. A study by the University of Athens showed that working men who took a nap during the day had a 64% lower risk of dying from heart disease . Long working hours and high stress levels in Japan have led to the creation of a new official cause of death — karōshi , or “death from overwork.” In response, some Japanese companies have started to limit overtime hours and bring the power nap into corporate culture. In fact, an an employee’s dedication to their job is often judged by the frequency in which they engage in inemuri , or “sleeping while present.” Coming to America? At the average American company, it’s socially unacceptable to take a nap during the day. (Though it is okay to fuel up on coffee and Red Bull, which is nowhere near as effective in revving up after the afternoon dip in energy .) But that’s starting to change. Snoozing in the middle of the workday was once seen as lazy, but more and more companies are realizing that naps increase productivity, thanks to studies like NASA’s that showed that a nap of just 26 minutes can boost performance by 34% . Napping rooms have started to pop up in the U.S., from small companies like Yarde Metals in Pelham, New Hampshire to giants like Nike. U.S. trucking and rail industries have napping policies, and many hospitals are starting to look into it. Procter & Gamble, Cisco, Stanford Medical Center, Carnegie Mellon, and the Jetsetter Spa at Miami International Airport have installed EnergyPods , napping chairs with noise-canceling headphones and gentle wake-up calls. How you can recharge If your employer has yet to embrace corporate napping, you could still get some shut-eye if you have an office (with a door) or live near work. Sleep scientist Sara Mednick and author of Take a Nap! Change Your Life , recommends a 20-minute nap sometime between 1 p.m. and 3 p.m., right after lunch. Any more than that, and you might have a hard time getting back to work. If a nap is out of the question given your schedule or work environment, Loehr and Schwartz recommend taking recovery breaks during the day. Walk outside for some fresh air, chat up a coworker about something not related to work, or eat your lunch at a nearby park. As for this type-A personality, I’m starting to build breaks into my schedule every two hours to recharge and avoid burnout. Leonardo da Vinci would approve. J.D.’s note: This is a great message, but one I have a tough time adopting in my own life. I know that I get my best ideas — those sudden bursts of creative insight — when I’m exercising or working in the yard. I can point to dozens of examples. Yet when I feel like I absolutely must get work done, I cloister myself in my office, where I often can’t get anything done at all. That’s one reason I try to make myself walk to lunch a couple of times per week. — Related Articles at Get Rich Slowly: Zen to Done: The SIMPLE Productivity System links for 2006-10-12 links for 2007-02-11 links for 2007-01-02 A List of Excellent Personal-Development Sites

View post:
Productivity Lagging? Take a Siesta

A Simple Question to Jump-Start Your Finances

cheapo — Tue, 20 Jul 2010 19:00:55 +0000

This video post by staff writer Adam Baker is the last of a four-part series. Baker previously featured a post on his own blog entitled, Debt Tsunami: The Ultimate Method to Paying Off Debt . Courtney and I have recently stumbled upon a new hurdle in our personal finance journey: complacency. You see, we’ve experienced just enough success to make us feel comfortable, but not enough to be even close to accomplishing what we want. We budget fairly well, we live on less than we earn (or right at what we earn), and we’re able to explore passion-based income opportunities. On the flip side, we’re still making far less than we’re worth, we aren’t saving for college or retirement, and we still have a bunch of student loans. In our current situation, I’m always looking for ways to jolt our perspective and spark a bit more motivation. In the past, we’ve tried brainstorming more exciting ways to frame our goals, or sharing empowering stories we’ve read about from others’ lives. These can work, but they’ve began to lose their effectiveness. Recently, however, I stumbled across a simple but powerful question that helped us shift our perspective and smash our complacency: What would you do if, starting tomorrow, your income was immediately cut in half? To receive benefit from the question, it’s important to leave details on the sideline. It doesn’t matter how or why it happened; instead, focus on what steps you’d take if you had to live on half your income starting tomorrow. Most people would have to make radical changes. As I talk about in today’s video , you can approach this question on the expenses side or on the income side (earning back that income quickly). Neither side is more valuable than the other, and both are worth exploring further. Here’s a timeline of this presentation: The question [0:28] The expenses side: What would you cut first in order to survive? [0:42] The income side: How could you double your income next month? [2:10] In order to derive any benefit, you’ll need to really adopt the mindset implied in the question. Don’t focus on whether it’s possible , but instead on what would realistically be the first expenses to go and the first steps to replacing the income. Once you’ve made a list for both sides of the question, you’ll want to review it for any areas that seem realistic, even at your current full income. For example, your first steps may include selling an extra car, canceling an expensive cable package, and slashing your grocery budget in half. In this situation, you’ve likely brainstormed areas of your budget where you aren’t spending as optimally as you may like. You may choose to go ahead and try some of those options out, or at least take steps to narrow the gap between your life at 100% income and your life at 50% income levels. The same process is important when attempting to make the income back as quickly as possible. Realistic options could include enrolling in a course (applying for aid if needed), launching a side business, and/or picking up new clients or leads. Nearly every time I brainstorm options for doubling my business income, I unearth something I hadn’t thought of before. Acting on these new ideas has helped me tremendously in generating new income (even if it doesn’t immediately double it)! The next time you’re feeling a bit complacent in your finances, try exploring this simple question. What would be the first expenses you’d cut in order to survive on only half your income? What would be the first steps you’d take if you had to earn it back? I think you’ll be pleasantly surprised by the results of this experiment!

Use an Informational Interview to Overcome Mental Barriers

jos — Tue, 13 Jul 2010 10:00:05 +0000

This post is from GRS staff writer April Dykman . Less than a year ago, I was stuck. I knew I wanted to start a side business that had potential to grow, but I had no idea what to do or how to do it. I was feeling stagnant, suffocated, and tired of dreaming about possibilities, but never making progress. In hindsight, it’s clear that I was spinning my wheels. I was optimistic one day, bursting with ideas and plans, and then the next I was deflated because I thought of 20 reasons why an idea wouldn’t work, or someone made a negative comment that made me believe it was better not to try. Wouldn’t want to waste my time if it won’t work out in the end, right? The risk of doing nothing Our barriers, or excuses, always seem legitimate when we’re creating them. Here are a few of mine that I can recall: “I can’t start a business without a website.” “I have a full-time job. Maybe if I didn’t have to work I could do it.” “No one can make money doing XYZ. So-and-so knows someone who tried it and failed.” None of these excuses hold water. Everyone has a life situation that might make their goal more difficult — family demands, kids, lack of money, lack of education — but if you focus on those, you’ll do nothing. And if you think going after your goal seems risky, doing nothing can be even riskier. Susan Su wrote about the risk of doing nothing at I Will Teach You to Be Rich: ‘Nothing’ is not innocent. It can carry huge potential risks. Remember opportunity cost from basic economics class? There are opportunity costs with everything that you’re currently doing — including nothing. Doing nothing might be your most threatening risk precisely because it’s so invisible. It’s invisible, but we can still measure it. Doing nothing seems to be completely unrisky — it’s sort of like hunkering down in a bomb shelter. What could possibly happen to you in there? Probably nothing. But even ‘nothing’ has a cost. If you do nothing — or if you hunker down in a bomb shelter — you’re probably safe, but you’re also missing out…on a lot. While most people create barriers against earning money on the side (“Oh no, I have to make business cards!”), their biggest fear should really be continuing to do what they’re already doing, and nothing more. It’s worth reading the full post to see her numbers-based example of how doing nothing can cost you money. Now, I want to pause for a moment here to point out that this isn’t just about earning money or starting a business. That was my goal. Maybe you share it, maybe you don’t. The bigger point is that we all have things we want to do and reasons why we aren’t doing them. Maybe you want to pay off your credit card debt, but it seems impossibly large. Maybe you want to see Thailand someday, but you’ve never been overseas, and you think it’s a pipe dream. Maybe you want to understand more about investing, but it’s so complicated and you failed 8th grade algebra. Doing nothing will cost you. Another use for the informational interview It took me awhile to figure out my path (I’m still working on it, and probably always will be), but one thing that helped me to get started was the informational interview . I wasn’t interviewing people as part of a job search, though. I was interviewing them to break down my self-imposed barriers. For example, last summer I was trying to decide if I should sign up for a yoga teacher training program. I was hungry for the knowledge I’d get in an intensive course, and I thought it might be a good business, as well, since it’s something I love. Unfortunately, my bubble would burst when I’d mention my interest to someone, and he or she would make one of the following statements: “There’s a lot of competition; there are so many experienced yoga teachers in this town.” “Yoga teachers are lucky if they can pay the bills.” “[Local studio] barely pays new teachers anything, and it’s impossible to get on the teaching schedule.” I probably took these statements to heart because the person was voicing a fear I already held, and in the past, I might have stopped right there and given the whole thing up. But luckily I really love yoga, and I also happened upon an interview with a yoga teacher who was making my salary and working less hours. I bookmarked the article and would read it over and over again, looking for both advice and inspiration, but I had questions, as well. One day, I worked up the courage to contact her through her website. I was hoping I could e-mail her a few questions, not wanting to take up her time. She wanted to set a date for a Skype call, and she wanted my questions in advance so she could give each one enough consideration beforehand. I was floored that she would be so generous with her time. As the call came to an end, she asked that I keep in touch to update her on my progress. Lesson: People usually want to pay it forward and help others who are serious about reaching their goal. Motivation, inspiration, and networking I started to use the informational interview to break barriers by finding people who were doing the very thing I wanted to do, and talking to them instead of listening to random comments by other people or even listening to myself and my excuses. I still review the notes from that Skype call for motivation and inspiration, and although I’m more focused on my writing business at the moment, I finished the yoga teacher certification in May and plan to start teaching regularly. The informational interview is powerful tool because you get an audience with someone who has already accomplished your goal. If you’re a single mom who is struggling with debt, find another single mom who paid off her credit cards. If you think you’re too old to start a new career, talk to someone like Helen Small, who received her undergraduate degree at the age of 87 and her master’s degree at age 90 . Even more important than the interview is making contact with people you can lean on when you’re creating barriers to your own success. Finally, if you setup an interview, send your interviewee a thank-you note immediately after, and send useful information or articles every now and then. Make sure you’re putting in as much as you’re getting from the relationship, not making contact only when you need something. I don’t know what took me so long to reach out to others, but I’ve learned that most people want to help. When negative comments, either from others or yourself, are holding you back, it’s time to meet new people.

View post:
Use an Informational Interview to Overcome Mental Barriers

Bigger Isn’t Always Better: Remembering to Appreciate What I Already Have

LivingCheaply — Tue, 22 Jun 2010 10:00:34 +0000

Walking home from work today, I decided to take the long way. Most of the time, I choose the easy quarter-mile stroll downhill from the office to our happy half acre (or happy .62 acre, if you’d like to be precise). But to celebrate the first day of summer, I took the river-forest loop. The river-forest loop is exactly what it sounds like: a series of quiet streets that wend along the east bank of the Willamette River, easing their way beneath stands of tall oak, fir, and pine. It’s three miles from our house down the river-forest road and back again. I choose this route when I need exercise or want to think. And, on days like today, I choose it to soak up the scenery. As I walked, I looked at the trees and the river and the lake. I listened to the birds. I watched the squirrels go about their squirrely business. I nodded to the neighbors, and (strangely enough) I encountered three different loose dogs traipsing around unleashed, each of which was pleased to spend some time walking with me a ways. After a while, I stopped looking at nature and started looking at the homes. The river-forest loop has some great houses. In fact, the side of the street next to the river is lined with what can only be described as mansions. The homes are stately and ornate, with beautiful, manicured lawns. (Rumor has it that one of these homes belongs to Will Vinton , of California Raisins fame.) Dream house? Or an example of potential lifestyle inflation? I’ve looked at these homes before — and even have my favorite (which I’m dying to buy if it ever goes on the market) — but usually in just a cursory fashion. Today, I really looked at them. And as I looked, I began to covet. “I want a house like that,” I thought as I passed the new house built from river rock and brick. “Or maybe one like that,” I mused while considering the next lot, which includes a tennis court. I imagined what it would be like to live in homes like these, homes with arched double-door entries, vaulted ceilings, and wrap-around porches. How much would it cost? (And where would I get the money?) What would this new, wealthier J.D. be like? What would I do? How great would my life be? But my imagination really took flight when I saw that one of the homes was for sale. I stopped at the top of the driveway to admire all of the gables, the fountain , and the three-car garage. I pictured the other side, which must sit right at the river’s edge. (The above cell-phone photo is of this house. It’s listed for $2.3 million , or almost ten times what we paid for our house.) “Wow,” I thought. “If only I could afford a place like that!” Yes, J.D. If only. And then what? Would that make you satisfied? As I resumed my walk, my route led me back through normal neighborhoods: ranch houses and minivans and small city lots. Several folks were out working in their yards, just as I’ve been doing for the past few weeks. Like me, they’re trying to make their homes look as pretty as possible. Suddenly it occurred to me that I didn’t need some fancy dream house. I already have one. I recalled the excitement that Kris and I felt when we first found our current place back in 2004. We thought it was perfect. Our hearts broke when we thought we’d lost the home by $500. And our spirits soared when the prospective buyers backed out. When we moved in, we were overwhelmed, but mostly in a good way. We thought this was our dream house. Our home, which we call Rosings Park. You know what? It is our dream house. And I have a great life already, even without a fountain or a riverfront view. Here it was, three in the afternoon on the first day of summer, and I was walking home from work. And here I was again, half an hour later, plopped on a park bench writing a blog post in a notebook while all around me kids played tennis and basketball. At home I’d grill some steaks and pet my cats and read a couple of comic books. What more could I ask for? (Well, besides for Kris not to be on the road for work, that is.) I’m always urging others to appreciate what they have. When you feel that aching urge to keep up with the Joneses, when you wake up and realize you’ve begun to succumb to lifestyle inflation , it’s time to pause and take stock of what you have. When you slow down and really appreciate what you already own, you can often slake the thirst for something bigger and better. Maybe it’s time to take my own advice. In my case, I reminded myself that although our house has been a little rough around the edges lately, that’s mostly because I haven’t had time to take care of the property like I ought to. After I’m through with my big yardwork push, and now that we’ve repaired the sewer line, and after we purge a little more Stuff, I’ll feel much better about our place again. We’ll have people over. We’ll laze in the afternoon sun. We’ll pick peas and berries from the garden. I’m smart enough to realize that a $2.3 million dream home won’t make me any happier than where we live now. I think I’ll stay put. — Related Articles at Get Rich Slowly: links for 2006-12-30 Keep Track of Food with a Leftovers List Ask the Readers: What Can I Do If My Girlfriend Isn’t Serious About Money? Daily Links: Compound Interest, Web Income, and Happiness You Can’t Always Get What You Want: The Dark Side of Personal Finance

The rest is here:
Bigger Isn’t Always Better: Remembering to Appreciate What I Already Have

Patience and Personal Finance

LivingCheaply — Mon, 21 Jun 2010 10:00:57 +0000

This post is from GRS staff writer April Dykman . I used to describe myself as impatient as though it were a trait of which to be proud. While I still have a long way to go, I think back on that and have to smile and shake my head. Impatience is the quickest route to misery. I recently read an article by Eknath Easwaran, teacher, author, and founder of Blue Mountain Center of Meditation, called In Praise of Patience , where he asks where the extolment of patience is in today’s society. Easwaran writes: There almost seems a conspiracy in our modern civilization to counsel just the opposite: be impatient, be angry, “look out for number one.” But what is life without patience? What use is money if we live in exasperation with those we love, if we cannot stand to live with our own family? What good is it to have your picture on the cover of Time [magazine] if you cannot be patient with yourself?…We seldom realize what power there is in patience. It’s often been said that personal finance is simple — spend less than you earn. The implementation isn’t easy, and what prevents you from developing good habits is largely psychological . Most people don’t want to get rich slowly , they want to win the lottery or pick a hot stock. They want the fast track. They don’t see how saving a mere $50 per month matters, so they don’t bother saving anything at all. Getting rich slowly requires a great deal of patience. Paying off debt When you make the decision to stop acquiring new debt, it’s like being at the bottom of a mountain and starting the climb to the top. You see the peak; it seems impossibly high. I once heard someone say, “We’ll never get out of debt. We’ll just be in debt until we die.” My heart sank for this person. With no end in sight, they were choosing to continue to make monthly calls to creditors for extensions and shuffle around money to make the minimum payments. It’s hard to stick with a debt repayment plan. You’re usually trying to change ingrained money habits, as well. It’s discouraging when you make a mistake, when you have to turn friends down for dinner at a pricey restaurant, or when your kids are complaining that they don’t have the things their friends have. You feel like you’re going without, yet your credit card statement shows you’ve barely made a dent. For an impatient person like me, paying off debt was torture! Buying decisions Impatience with a buying decision is another example. Maybe you put something on credit because you’re too anxious to wait and save the cash. Maybe you just want it done , even though you know you could have found a better deal with one or more of the following actions: Searching the Internet for deals and coupon codes Visiting different retailers Waiting for a sale Finding a free or DIY option I know impatience is a big reason why I acquired some of the debt I once had. “This trenchcoat is an investment piece. I’ll just buy this now, and then I’ll never need to buy another one.” Puh-lease! Investing A couple of years ago, The Motley Fool published an article about why Warren Buffett is a better investor than you , and some readers were quick to point out Buffett’s advantages, which The Motley Fool addressed in a follow-up article , writing: It isn’t anything artificial that makes Buffett a better investor than you; it’s his patience, discipline, and willingness to act when others won’t. Buffett’s abilities did not develop overnight. It’s been a lifelong process — one that he began at age 11. So while he may be a better investor than we are today, we can at least learn from his experiences and — like he did — become superior investors over time. The article describes how Buffett researches extensively, buys small, and thinks long-term. It takes a great deal of patience to be an astute investor, especially in tough economic times when the market seems risky and the evening news is giving you heart palpitations. Starting a business J.D. once addressed what it takes to start a business, so I’ll borrow his words on hustle and patience : [Most people who begin blogging for dollars] come here, for example, and see that Get Rich Slowly has 70,000 subscribers and gets over 25,000 visitors every day, and they imagine that maybe it makes a lot of money. They figure they’ll start right up and do this, too — they’ll get rich quickly. But they don’t see the fifteen years I’ve been writing on the web, the ten years that I’ve had an online journal, the eight years I’ve had a blog, the three years that I’ve been building Get Rich Slowly. They want to go from zero to 70,000 in two months. It doesn’t work that way. It takes effort — and lots of it. And when you feel like you’re working incredibly hard and it’s not paying off as quickly as you might like, that’s when most people give up. Most don’t push through the pain period . I doubt there’s anyone who couldn’t exercise a little more patience in their lives, and you can find some great tips on the web to help develop and increase your patience. What works best for me is fairly simple. When anxiety and restlessness take hold, I stop for a moment and think about the Big Picture. And when I think about the Big Picture, I remember everything I have for which I’m grateful. Emptying myself of impatience and refilling with gratitude never fails to make me laugh at myself for losing perspective. As comedian Bob Newhart once said, “Laughter gives us distance. It allows us to step back from an event, deal with it, and then move on.” Finally, remember that patience is a work in progress. You’ve spent your entire life creating your present personality, so don’t expect to change it overnight. Have patience with yourself, too. J.D.’s note: April’s article reminds me of a book I read a couple of years ago, but have never reviewed for GRS. In Mastery , George Leonard argues that to master a new skill, you must practice it patiently, diligently, and consistently. It’s easy to get frustrated by plateaus (or worse yet, pitfalls), but in order to succeed, you have to be patient and work through the problems. Mastery is a great book, even though it’s not specifically about money. Pick up a copy at your public library. — Related Articles at Get Rich Slowly: When Is It Okay to Finance Fun? Technical Difficulties: Spamfilter Woes A Brave New World: Welcome to the Get Rich Slowly Re-Design Hustle and Patience: What It Takes to Succeed in 2009 Understanding the Seven Habits of Wealth

Original post:
Patience and Personal Finance

Patience and Personal Finance

jos — Mon, 21 Jun 2010 10:00:57 +0000

More here:
Patience and Personal Finance

Finding Your Financial Blind Spots

cheapo — Thu, 10 Jun 2010 10:00:44 +0000

This post is from staff writer Sierra Black. Sierra writes about frugality, sustainable living, and getting her kids to eat kale at Childwild.com . Every month, you spend money you don’t need to. No matter how good your budget is, or how closely you track your spending, something slips through the net. J.D.’s post last week about casting stones at our friends’ financial choices struck a chord with me. His friend is struggling financially, and yet he’s just bought new iPhones for his whole family. It’s obvious to J.D. that this is a bad financial move, yet his friend seems oblivious to it. He’s trying to get his act together, but even in the midst of that effort he can’t see that his spending choices are perpetuating his problems. He has huge financial blind spots, areas of his personal finances that are just invisible to him. We all do. My own blind spots When my family was in financial trouble, it felt like we were living as simply as we possibly could. There was no money for luxuries. We couldn’t even cover the basic necessities some months, and we were sinking into debt. Looking back, though, it’s easy to see how some of the “necessities” we paid for then weren’t really needed at all. Did we have to have a daily newspaper subscription? Two cars? How essential were the swim lessons and music classes our kids were enrolled in? In the midst of that crisis, I spent many nights poring over our budget, trying to find things to cut. Yet somehow I was blind to excesses that now seem so obvious to me. I assume that I’m still doing the same thing today. I’ve cut the newspaper subscription, and a lot of other major expenses. Our household finances are no longer sinking fast. But we’re still living on a pretty tight budget, and I’d like to be in a more secure position than we’re in. When I look at the budget each month, it looks so tight to me. We’ve dropped all the extra classes. We canceled all our subscriptions. I’ve slashed our grocery budget in half. What’s left for me to cut? The simple truth is: I don’t know. Five years from now, I’ll look back on my life today and the waste will stand out like weeds in a garden, but right now I can’t see it. Finding your blind spots How can you identify the excesses in your own budget? Here are a few bits of advice: Knowledge is power. I’ve said it before but it still bears repeating: Track your spending . When you don’t know what you’re spending your money on, you can’t know if those dollars are well-spent or wasted. Use some system, whether it’s sophisticated software or the back of an envelope, to track every cent that comes into or goes out of your household. Ask yourself. As you review your spending, ask yourself a few simple questions about your purchases and expenses. Did I need this? Did I even want it? Did I use it? Was it worth the time and money I put into it? A few careful passes with these questions in mind should help you ditch a lot of the dead weight in your budget. Ask someone else. Ultimately, you won’t be able to see into all of your blind spots; you’ll need someone else to help you look at your financial picture if you want to see it clearly. You can hire a financial advisor to do this. If you work for a university or large company, your HR department may even be able to connect you with free financial counseling. If you’d rather take the amateur approach, find a friend who is sensitive and smart, and ask them to go over your expenses for the past few months with you. Finding the extra expenses in your budget can be painful. Those blind spots are there for a reason. You probably don’t want to know, on some level, that you’re overspending. The places where I still break my budget are entirely emotional ones: I spend too much on my kids, because I like doing nice things for them. I spend too much when I’m sick, or tired, or anxious. I spend too much on dates with my husband, because we get so little time together. This is why a trusted friend or financial advisor can be such a great weapon against emotion-driven budget busters. Sometimes, we all need someone to very gently and calmly explain that we just can’t afford the new car, or the family vacation, or the sexy boots. That wanting something badly enough doesn’t mean we’re entitled to it, and now isn’t the time to take on a new debt. Once you’ve cast a light into a wasteful corner of your spending life, do what you can to curb that expense. Cancel the subscription, stop buying the morning latte, take up running around your neighborhood instead of going to the gym. But accept that you have more blind spots. Do the best you can, knowing that five years from now you will in all likelihood look back on your present life and think, “Really? I spent all that money on that ? It seemed so important at the time. What was I thinking?” — Related Articles at Get Rich Slowly: Four Retirement Blind Spots Daily Links: Blind Money, Check Fraud, and Economic Stimulus Munny Journey: A Journal for Your Child’s Financial Development Daily Links: Tax Deductions, Savings Accounts, and GTD Frugality in Practice: Back Porch Furniture

More here:
Finding Your Financial Blind Spots

Three Passive Barriers I Use to Counter Consumerism

cheapo — Thu, 03 Jun 2010 18:02:20 +0000

This video post is by staff writer Adam Baker. Baker previously featured a post on his own blog entitled, Dave Ramsey Vs. Suze Orman . Passive barriers are those small mental impediments that keep us from making smart choices. Things like over-drafting your bank account because you’re too lazy to stop by the bank to make a deposit, or not going for a run because it’s a pain to get your exercise clothes together. But while passive barriers can prevent us from meeting our financial goals, they can also be used as a force for good. In the video below, I discuss three passive barriers (some might call these money hacks ) that my wife Courtney and I use to help fend off consumerism. In the past, we’ve had these sorts of barriers work against us in our finances. It feels good to turn the tables. Rather than just have passive barriers that work against us, Courtney and I decided to install some that would work for us! In the video above, I discuss the following concepts that have worked well for us: The 30-day list for Wants – [1:20] Two items out for every on item in – [2:40] Experiences over possessions – [3:55] The trick for us is to make these consistent. Whenever we face a buying decision, we want it to pass through these barriers. If it makes it through, then great! There’s nothing wrong with purchasing something valuable or that we’ll really enjoy. Using these barriers helps to ensure that our spending is as intentional as possible. They counteract (and even replace) our old barriers and justifications. Of course, these are just three examples of dozens that could be effective. I’m sure that many of you use similar methods. What barriers or filters have you experimented with in your life? Let me know in the comments below! — Related Articles at Get Rich Slowly: Daily Links: Crying Librarians Edition The Psychology of Passive Barriers: Why Your Friends Don’t Save Money, Eat Healthier, or Clean Their Garages Toward Financial Independence The Loneliness of the Long-Distance Debtor Investing 101: An Introduction to Index Funds and Passive Investing

View original post here:
Three Passive Barriers I Use to Counter Consumerism

How Quickly Wants Can Turn to Needs

LivingCheaply — Fri, 28 May 2010 10:00:42 +0000

This article is by staff writer Adam Baker. Baker recently featured a post on his own blog entitled, Are You Eating Yourself Into Debt? As some of you know, Courtney and I recently spent just under a year traveling abroad with our two-year-old daughter. A couple of months ago, we returned home to Indiana and decided that we’d take a six month break from our mobile lifestyle . Our decision meant we needed to start looking for short-term rentals that would meet our temporary needs. When we started to browse rental options, we created a list divided into Wants and Needs. Some of the Needs included things like two bedrooms, a safe neighborhood, flexible lease terms, and some sort of yard or grass. Note: Technically, these aren’t raw Needs. While traveling we spent weeks in a tent, months in a spare bedroom of another family’s house, and dozens of nights in 100-square-foot single rooms. But these few items were basic enough conveniences that we felt comfortable labeling them Needs for our situation. Under Wants we placed criteria like a standalone house, a fenced-in back yard, a one-car garage, and proximity to decent sidewalks or paths. Remember, we weren’t buying a permanent home: We were searching for a quick six-month stop. As we started to comb through different properties on the market, I said to Courtney, “You know, it would be so nice to have a separate work area where I could go to write. I don’t need it, but it would be nice .” This wasn’t the first time I’d voiced this desire. Courtney had to put up with my complaining for the last year about not having designated work space. It was primarily an excuse for procrastination or lack of motivation, but there was a part of me that wanted to see what it would be like to have a specific space for my work. A Want becomes a Need After mentioning it a couple of more times, we agreed to expand our search to two bedrooms with bonus rooms, offices, or even large closets (yes, I’m serious). In general, a two bedroom home with a bonus room or office will be cheaper rent than a comparable three-bedroom place. Even with a background in real estate , it can be hard to search for houses with extra rooms. Each owner, agent, or listing may refer to the space in a different way. Often these homes have unique floor plans, and it’s nearly impossible to understand them unless you visit each home individually. Finding matches was difficult. Out of frustration at the lack of two-bedroom options that also included a bonus room, I allowed myself to do something that changed everything: I expanded our search to three-bedroom rentals. Suddenly, the flood gates were opened. After a couple of days searching all of the new options, I called my friend/ex-partner in real estate and gave him several listings. I remember saying something like, “I know we could fit into two bedrooms, but we really need three bedrooms these days.” It had happened. Of the five listings I sent to him to schedule showings, not a single one of them had only two bedrooms. Somehow over the course of just a few weeks, I’d managed to shift our Needs from two bedrooms to three bedrooms. My attitude had changed. In our market, we could have easily found a two-bedroom rental in the $600/month range. Our current rent (on the three-bedroom rental we selected) is $900/month. For those of you counting, that’s a 50% increase — or around $300/month. An indulgence For me, the issue isn’t the extra money per month. It’s a matter of perspective. We aren’t going to be financially ruined by this choice, and we’re paying for other benefits in that increase. But, I want to be sure that I view our rental for what it is: a Want. Heck, we could even label it a luxury for us. If I continue to view this as a Need, it’s easy to focus on the negatives. For example, the air conditioner takes hours to cool anything, the lighting is terrible in the home, and the garage doesn’t have an automatic opener. If I were to take the situation for granted and focus on the negatives, it would be easy for my standard of living to creep even higher and higher. In retrospect, if I see this home for what it really is — an indulgence — those little things lose their importance. I appreciate my little workspace so much more. I appreciate the fact the my daughter Milligan can play out back, and that we have space to host guests. The truth is, for our family of three, anything more than a safe, one-bedroom home with a roof, heat, and simple kitchen is a luxury. It’s a Want, not a Need. By realizing that, we can stop taking things for granted, and start being thankful for what we have. But shelter is just one area of our budget where this shift in thinking can happen. Luckily, this experience has helped me become more aware in other areas, such as Food, Clothing, and Transportation, where my definition of Need can easily grow beyond what is truly needed. Indulgences in life are great. I’ve met very few people who want to live at the bare minimum level of their Needs. But taking steps to ensure we recognize our indulgences as indulgences allows us to appreciate how lucky we truly are! — Related Articles at Get Rich Slowly: Turn Your Loose Change Into Lattes Six Steps to Learning Difficult Subjects Quickly Follow-Up on Casey Serin, the Man Who Would Be Rich Shaking the New Car Itch: A Tale of Priorities Reader Story: How I Saved Hundreds of Dollars on Insurance

View post:
How Quickly Wants Can Turn to Needs

Social Capital: More Valuable Than Money?

LivingCheaply — Thu, 27 May 2010 10:00:12 +0000

I’m back! After ten days boating through southeast Alaska (and two days of recovery), I’m ready to think about personal finance once again. Actually, it’ll probably come as no surprise that I never stopped thinking about personal finance. Even while we were skirting among ice floes , pulling up prawns , and admiring whales , my mind never strayed far from the topic of money. (I’m not saying this is a good thing, but it’s the truth.) It’d be all too easy for me to share another sermon about the perils of Stuff — when you spend ten days on a 38-foot boat, living out of a single carry-on bag, you come to realize how little you actually need in life — but I feel like I’ve beaten that topic into the ground over the past few months. I’m working to cut down my dependence on things, and I know that many of you are, too; let’s save further discussion for another day. Today, I want to talk about the value of social capital. Though I don’t mention it often around GRS, the idea of social capital is constantly lurking behind the scenes. It’s a notion that can be hard to define. In fact, rather than try to do so from scratch, I’m going to quote myself. The next section is an excerpt from my book, Your Money: The Missing Manual . What is social capital? You create social capital — mutual goodwill — when you volunteer at a soup kitchen, help your neighbor move a piano, have your Sunday School class over for a barbeque, or join a softball league. Any time you participate in your community, you’re generating social capital, both for yourself and for the other people involved. People with lots of social capital can find help when they need it; those with little social capital can spend a lot of time frustrated and alone. The classic Christmas film It’s a Wonderful Life is a great illustration of social capital. Jimmy Stewart plays George Bailey, a man who repeatedly forgoes his own interests to help his friends and neighbors. It costs him — financially and mentally. When disaster strikes, Bailey decides he’s worth more dead than alive, and plans to commit suicide so that the proceeds from his life-insurance policy can set things right. In the end, Bailey is saved when all the folks he’s made sacrifices for over the years come to his aid. Sure, it’s a schmaltzy, feel-good moment, but it’s a fine example of social capital in action. When Bailey’s brother declares that George is “the richest man in town”, he’s not joking: Bailey may no have much financial capital, but he’s flush with social capital. You don’t have to sacrifice your own interests to create social capital. You can often create win-win situations where everyone profits. But the best way to build social capital is to help others without expecting anything in return. There’s more to wealth than just money. Social capital is just as real as financial capital — and often more valuable. Note: For an in-depth look at social capital, pick up a copy of Bowling Alone by Robert Putnam. But be warned: It’s a dry read. The extraordinary power of compound kindness Social capital comes from building a broad network of relationships, a network that you can draw upon to help yourself and help others. This isn’t networking in the smarmy, slimy sense, but in the authentic “I’m your neighbor and your friend” sense. A complex network of people will have thousands (millions!) of connections, creating a powerful web of support. (You can see great examples of this in Ben Franklin’s autobiography and in Keith Ferrazzi’s Never Eat Alone .) These networks are usually built through everyday kindnesses. These actions compound (just like compound interest ) to yield larger returns in the future. From my trip to Alaska, here are some examples of the sorts of small actions that help create community and help build social capital: Southeast Alaska is peppered with small villages separated by large expanses of water. Boaters (and not just my skipper John) stop to check on each other, and on the people they know in out-of-the-way spots. Another way to cope with this isolation is book exchanges. Many of the small airports and harbors contain bookshelves where folks can discard the books they’ve finished and pick up new ones. This is a brilliant idea! We had miserable luck crabbing and fishing during the first part of our trip. One night, a small charter boat invited us over to share in the halibut they’d caught earlier in the day. Later, after we finally caught and filleted our first salmon, we handed off some of the meat to a passing boat. Some of the summer boaters actually live in southeast Alaska. These folks have vehicles in their home towns, and they share them with other boaters they know well. When we docked in Sitka, for example, we were able to borrow a truck from Sailboat Bob so that we could run our errands and drive to dinner. Every morning at 6:30, John gets on his ham radio to check in with the Great Northern Boaters Net , where dozens of different boats check in throughout the week, giving updates on their progress. This allows folks to keep tabs on each other, to ask for and receive advice. These are just a few of the ways I saw social capital in action during my trip; there were many other examples, both large and small. Taken together, the community spirit I saw was amazing. Social capital in real life Social capital plays an active role in your life, too. The broader your circle of friends, the bigger your family, the better you know your neighbors, and the more involved you are in your community, the more social capital you have. (And the more social capital you contribute to others — it’s a reciprocal thing!) The Dark Side of Social Capital. As great as social capital is, it’s not without its downsides. Though they’re built on the same stuff I’m talking about here, Good Ol’ Boys networks can make it difficult for outsiders to become part of a group. Some people contribute only with the expectation of return. This sort of manipulative behavior leads to minor versions of Don Corleone from The Godfather : They’ll do you a favor, but only because they want you to owe them. For social capital to be productive, it has to promote the welfare of the community. Here are some everyday examples of how you and I generate social capital: When I loan my rototiller to a friend, that builds social capital. When I then crash my bike and have to ride to his house for first aid (yes, this really happened), that generates social capital. When your community comes together to clean up a run-down park, that generates social capital. You create social capital when you join a bowling league, a knitting circle, or a book group. You create social capital when you go to church or join a social club. When you stop to help a stranded motorist, you’re creating social capital. Social capital grows when you share the surplus from your vegetable garden with your neighbors and co-workers. As you can see, social capital is most often generated by doing things that help other individuals — or your community. It exists everywhere, but some places have more of it than others. I’m not sure why I was so struck by the community ties I saw in Alaska. Are these ties really stronger than elsewhere? Were they just more obvious because they took different forms than I’m used to? How can I learn to see (and contribute) to the social capital here in Oak Grove, Oregon? I don’t have the answers to these questions, but I’ll certainly be thinking about them a great deal during the coming weeks. As I say, social capital is always lurking in the background here at Get Rich Slowly. There’s more to being rich than just having a lot of money; there’s real wealth in having a large network of friends, too. Note: If you’d like to read more about this subject, check out this fantastic article about the subject from The Encyclopedia of Informal Education . — Related Articles at Get Rich Slowly: It’s a Wonderful Life and the Value of Social Capital Daily Links: Great Comments Edition Invest in Your Most Important Income-Producing Asset Saving and Investing: Providers and Users of Capital What’s the Reason for Saving and Investing?

View post:
Social Capital: More Valuable Than Money?