Archives for March 2011

Book Review: The Art of Non-Conformity

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I’m trying to read more books by other bloggers, and the one I managed to finish first was The Art of Non-Conformity. Based on the writings at eponymous ChrisGuillebeau.com, the book’s tagline is “Set Your Own Rules, Live the Life You Want, and Change the World”. Sounds good, eh?

I’m not sure how I found the site initially, but I remember finding it neat that he resides in my old zip code of 97214. Awesome neighborhood. 🙂 As you might expect, it is more of a “lifestyle design” book than anything specifically financial.

What do you want from life?

The author’s adventures so far has included going from doing manual labor at FedEx, to selling stuff on eBay, to volunteering with a medical charity in West Africa for four years. He now makes a living as a writer, selling a variety of “unconventional living” eBooks and now this physical one. One of his current big goals is to visit all 192 countries in the world.

A big chunk of the book is about finding what you really want to achieve in life. Instead of trying for less work, why not better work. What do you imagine as your legacy? When trying to figure this one out, Guillebeau pushes you to think openly – take risks and don’t listen to what others say can’t be done. Sprinkled throughout the book are stories about his experiences and those of others who are leading non-traditional lives. Two of my favorite quotes:

Take your dreams seriously.

We tend to overestimate what we can complete in a single day, and underestimate what we can complete over longer periods of time.

Making it happen
How do you create your ideal life? Spend your time towards your real priorities. Stop spending time on busywork or other inefficient activities. Realize that a “Stop-Doing List” is just as helpful as a “To Do” list. Instead of a “work/life balance”, which often works out to be “stop working so much, since you hate it, but enough so you can eat”, why not make your work align with what you want your effect on the world to be?

The author is a strong proponent of self-employment, especially through internet-based businesses that allow you to be location independent. This makes sense, because this is exactly what he has done successfully. However, at times I felt the book was colored a bit too strongly with his own experiences.

One example is how he’s not a big fan of college and graduate degrees, noting repeatedly that 80% of it was a waste of time. (I’d say his eventual occupation and his degree of Masters in International Studies had something to do with it. Many engineers or medical school graduates probably think higher of their education.) School isn’t always the answer, but he really seems to dismiss it too easily because it didn’t help him personally.

Personal Finance
I’ve already said this isn’t a financial book, and so don’t be surprised that the section on personal finance is pretty sparse. Most of the advice is of the big-picture variety, and parallels his life advice. Just like you should only spend time towards what you really value, you should spend money happily on what you really value. Don’t spend a dime on the rest. Life experiences are more important than physical stuff.

One interesting idea was his preference for what he calls Income-Based Financial Independence as opposed to Wealth-Based. Basically, he dislikes the traditional goal of having a “Number” of say a million dollars as a goal. Instead, he wishes to create a certain income from work that he likes to do, while also having the freedom and time to do all the other stuff he wants. Somehow he avoids the term “passive income”, but he does tell you to avoid work that simply trades time for money.

Wrap-Up
By far, the strongest part is the author’s easy and energizing style of writing, which makes adventure seem within grasp to everyone. If you have that little idea in your mind that you want to do something different/drastic/scary, then this book will help push you to take the next step. Cynical readers will just see this as rah-rah impractical dreamy fluff. However, I happen to agree that accomplishing just one bold task can make us feel invincible, propelling us to do more. Hopefully, this review will help you decide if this book is for you.

My Money Blog has partnered with CardRatings and may receive a commission from card issuers. Some or all of the card offers that appear on this site are from advertisers and may impact how and where card products appear on the site. MyMoneyBlog.com does not include all card companies or all available card offers. All opinions expressed are the author’s alone, and has not been provided nor approved by any of the companies mentioned.

MyMoneyBlog.com is also a member of the Amazon Associate Program, and if you click through to Amazon and make a purchase, I may earn a small commission. Thank you for your support.


Life Planning Exercise: Creating My Perfect Day

My Money Blog has partnered with CardRatings and may receive a commission from card issuers. Some or all of the card offers that appear on this site are from advertisers and may impact how and where card products appear on the site. MyMoneyBlog.com does not include all card companies or all available card offers. All opinions expressed are the author’s alone.

I am currently reading The Art of Non-Conformity by Chris Guillebeau (review coming shortly). In one of the early chapters, he talks about an exercise where you write out how your perfect, idealized day would go in great detail, hour-by-hour. I’ve read about this method other places, but never actually write it down. As I go into it, I found myself getting really into it and making several changes throughout today. Here goes:

Early Morning
I wake up, naturally, after 8 hours of sleep. Many people don’t need that much sleep, but I do. I love waking up naturally, but will set an alarm as a backup, because… I have to wake up the kid(s) and get them ready for school. I still don’t have kids, but I really want them.

I make their lunch, and perhaps drop them off at school in my 10-year old Honda if it’s close enough. I take the dogs for a walk in the neighborhood park. I then do my exercise for the day. Most days it will be something active and fun, like swimming, bicycling, tennis, or running. To mix it up, sometimes with a buddy or group. Swimming in open water is fun, since I live by the ocean.

Morning to Early Afternoon
I shower and change into shorts and a t-shirt. I work at home and live in a temperate climate, so that’s what I wear every day. At the computer, I check the morning’s e-mails and do some work. Work consists primarily of reading books and online articles from thoughtful authors (not 24/7 cable news or superficial fluff), and then researching and writing on topics like personal finance, nutrition, web design, or graphic design. I actually only do specific jobs for clients occasionally, because I’m tired of dealing with customers. Writing is so much less stressful. I might also run a small e-commerce website, but nothing that requires constant attention. Part of the year, I teach something small at a local community college.

I only work 4 hours a day. I can do this because I’m smart with money and have saved up a big chunk. Mrs. MMB works half-time as well, still 9-5 downtown, but only 2-3 days a week. With a relatively simple lifestyle, our income still pays the bills with a little left over. Our portfolio is left to grow for “advanced” retirement once the kids are in college and Mrs. MMB quits completely around age 50. I feel like I’ll be doing something that earns income until at least 60.

Afternoon
I work until a late lunchtime, and then I take the dogs for another walk. If Mrs. MMB’s not working that day, we do this together. She loves to garden and much of our food comes from there. Some days, we walk to a local eatery with the dogs and dine al fresco.

I wait for the kids to come home from school or pick them up. We ate some snacks, then I help them with their homework. Next up: sports, 4-H, girl/boy scouts, or science club or whatever fills up the afternoon. I love being able to spend time with them. We shop every day at a local market for ingredients for that night’s dinner, before the after-work rush. Did I mention I never have to go to Costco or any megastores on the weekend?

Evening
Dinner is a family affair. Once a week, the grandparents come over for dinner or we go over to their place, since we live in the same city. After dinner and homework is finished, perhaps a DVD or pre-planned TV viewing. I could say “NO TV!!!”, and I’d still like to severely limit TV viewing in the house, but do think there is good content out there. Why not watch it together? Otherwise, we might play a board game or learn about that year’s Big Adventure. I am not a fan of video games at all, unless educational and done well.

I used to worry that once I had kids, I wouldn’t be able to travel anymore. However, I’ve been learning about parents who take their kids traveling around the globe for a year or longer. I don’t think that’s my style. I’d rather visit one single country/region for an entire month during the summer. I call it Big Adventure. Renting a house or apartment for the entire month would be more economical, and we could use that house as a base. During the rest of the year, we could research the country’s language and culture to plan out activities.

After the kids go to bed, I’ll probably be exhausted as well. If not, I’m sure I’ll poke around the internet some more before I pass out.

How would your perfect day go?

My Money Blog has partnered with CardRatings and may receive a commission from card issuers. Some or all of the card offers that appear on this site are from advertisers and may impact how and where card products appear on the site. MyMoneyBlog.com does not include all card companies or all available card offers. All opinions expressed are the author’s alone, and has not been provided nor approved by any of the companies mentioned.

MyMoneyBlog.com is also a member of the Amazon Associate Program, and if you click through to Amazon and make a purchase, I may earn a small commission. Thank you for your support.


AutoSlash.com: Car Rental Price Search Engine

My Money Blog has partnered with CardRatings and may receive a commission from card issuers. Some or all of the card offers that appear on this site are from advertisers and may impact how and where card products appear on the site. MyMoneyBlog.com does not include all card companies or all available card offers. All opinions expressed are the author’s alone.

It’s always fun to find out new tools to save you time and money. Started by some regulars on the Flyertalk travel forum, AutoSlash.com is a website specifically made for car rentals. Yes, all the big guys like Expedia and Hotwire do car rentals. However, this one is a bit different.

First, you need to remember the unique quirk of car rental reservation systems. When you make a reservation at most car rental shops, you simply get a quote and make a non-binding reservation without giving any payment information. You can cancel at any time, without penalty. Heck, even if you just don’t show there is no penalty, besides the bad karma of knowing that you maybe messed up their inventory management for others.

Second, you add in the fact that for us deal-hunters, there can be hundreds combinations of discount codes, CDP numbers, and promotional codes that must be found to get the actual lowest rate on a rental. Autoslash uses computers to test out the codes in its database for you. The best part? It keeps checking every single day to see if it can get you a lower price. If it does, it automatically cancels your last reservation, books the new one for you, and sends you the new reservation code.

Last week, I was searching for a week-long rental in Orlando, FL next month. I checked the usual suspects like Expedia and was getting about $700 for a week-long rental of a mid-size car. Must be some huge event going on that weekend?! So I tried Autoslash.

  • Day 1 – I was bummed to see the lowest price was also $665.61 including all taxes and fees, with Payless.
  • Day 2 – I was rebooked on Dollar Rent A Car at $346.18.
  • Day 3 – I was rebooked again on Dollar for $320.41. Sweet!

The primary drawback that I can see is that they don’t support all the rental car agencies. Specifically, I did not see Avis or Budget in my comparison matrix. Also, the quality of their results depends on the quality of the coupon codes in their database. Basically, it may be possible to get a better deal on your own. However, given the fact that I can always cancel, AutoSlash does provides a very good baseline deal for almost zero work.

My Money Blog has partnered with CardRatings and may receive a commission from card issuers. Some or all of the card offers that appear on this site are from advertisers and may impact how and where card products appear on the site. MyMoneyBlog.com does not include all card companies or all available card offers. All opinions expressed are the author’s alone, and has not been provided nor approved by any of the companies mentioned.

MyMoneyBlog.com is also a member of the Amazon Associate Program, and if you click through to Amazon and make a purchase, I may earn a small commission. Thank you for your support.


Free Star Alliance Silver Elite Status (Free Checked Bag on Continental/United and US Airways)

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British Midland International, an airline based in the UK, is currently offering new members of their frequent flier club Diamond Club instant a free upgrade to Silver Elite status, good for 12 months. The important associated perk is that this gets you Silver status for Star Alliance, a global group of airlines including Continental, United, and US Airways. Assuming you don’t have a better alternative, this will get you a free checked bag when traveling (and potentially other smaller perks depending on the airline). Via ViewfromtheWing.

One annoying factor is that you may have to provide your BMI Diamond Club number initially with your reservation in order to get the free checked bags and sometimes Priority security lines, and then switch to your “regular” frequent flier number to actually earn miles on the program that you want. This must be done at the gate before you board the plane. Last month, I was checking in for a flight behind an angry guy who couldn’t believe you actually had to pay to check a bag. How quickly things change in a few years…

My Money Blog has partnered with CardRatings and may receive a commission from card issuers. Some or all of the card offers that appear on this site are from advertisers and may impact how and where card products appear on the site. MyMoneyBlog.com does not include all card companies or all available card offers. All opinions expressed are the author’s alone, and has not been provided nor approved by any of the companies mentioned.

MyMoneyBlog.com is also a member of the Amazon Associate Program, and if you click through to Amazon and make a purchase, I may earn a small commission. Thank you for your support.


Bought A Pre-Made Emergency Bug-Out Bag

My Money Blog has partnered with CardRatings and may receive a commission from card issuers. Some or all of the card offers that appear on this site are from advertisers and may impact how and where card products appear on the site. MyMoneyBlog.com does not include all card companies or all available card offers. All opinions expressed are the author’s alone.

(As I publish this post, I see that California and Hawaii are on a tsunami watch after an 8.9 magnitude earthquake hit Japan. Goodness.)

Earlier this week, my brother-in-law sent me a link to a post on the Art of Manliness blog on How to Make a Bug Out Bag: Your 72-Hour Emergency Evacuation Survival Kit by a wilderness survival instructor. He knows that I have a fascination with survival gadgets in case of disaster or “revolution”.

From what I’ve read about governmental emergency response, in a real mass disaster, average citizens should not expect assistance for at least 72 hours if not a week. Chances are that it will be chaos and only the seriously ill will be attended to. You’ll be on your own for a while, so you should be prepared.

Ever since reading the book Emergency: This Book Will Save Your Life, I have been collecting bits and pieces of emergency gear. I went on a flashlight binge, buying a solar-powered flashlight, LED headlamps, big D-cell maglites, tons of cheap LED flashlights, and stocking up on batteries. I bought a couple big pump-style water filters, and small hiker-style water filters. I have other basics like a first-aid kit, and the standard case of water bottles on rotation.

But as a highly analytical person, I think I really just like spending hours and hours reading reviews and weighing the pros and cons of different brands of devices. As a result, I don’t actually have a fully equipped “bug-out bag“, and all my stuff is definitely not in a backpack ready to grab-and-go. Since the pursuit of perfection is often the enemy of good-enough, yesterday I went out and spent $100 on this pre-packaged Emergency Kit.

Yes, I already have a lot of the stuff inside already and yes, I probably could have made something better myself for cheaper, but I feel better already. (After I get the bag, I’ll see if I really can make something better for cheaper.)

My Money Blog has partnered with CardRatings and may receive a commission from card issuers. Some or all of the card offers that appear on this site are from advertisers and may impact how and where card products appear on the site. MyMoneyBlog.com does not include all card companies or all available card offers. All opinions expressed are the author’s alone, and has not been provided nor approved by any of the companies mentioned.

MyMoneyBlog.com is also a member of the Amazon Associate Program, and if you click through to Amazon and make a purchase, I may earn a small commission. Thank you for your support.


Getting Married To Save Money On College Tuition?

My Money Blog has partnered with CardRatings and may receive a commission from card issuers. Some or all of the card offers that appear on this site are from advertisers and may impact how and where card products appear on the site. MyMoneyBlog.com does not include all card companies or all available card offers. All opinions expressed are the author’s alone.

After seeing my Grandparents and 529s article, a reader sent me a link to WhyPayTuition.com, which is a matchmaking site that promotes the idea of getting a “convenience” marriage solely for the purpose of reducing your tuition bill:

The easiest way to obtain free tuition is to get out from under your parents financial umbrella, and fall into the college’s low-income aid category. Most colleges offer free tuition, reduced tuition and reduced fees. […]

The idea is to get married, remain married for the duration of your college years, then get a non-contested, no property divorce. The girl will keep her last name, you live separate lives, and no one will need to know you are married.

As long as both parties are US citizens, there appears to be nothing illegal about this. Certainly it seems a bit overboard, but so is giving any 18-year old with zero income the ability to take out $200,000 in loans. This NY Times article mentions several student-couples who have saved $50,000 or more by getting married and qualifying for in-state tuition:

Economically, in-state students have a huge advantage over non-Californians, for whom tuition costs an additional $22,000 a year (as of 2010-11). […]

A few years ago, a student from the Midwest believed she could not afford the annual $30,000 in student fees (including $20,000 in out-of-state tuition), so she posted on Facebook that she was looking for a husband. […] An out-of-state student whom she did not know responded to her post, and they married in 2007, the summer before her junior year. She graduated in 2009 and estimated that the marriage had saved her $50,000. The couple has divorced.

But being married has many potential pitfalls. This WalletPop article gets some opinions from a divorce lawyer:

“If you’re someone who is jumping through these hoops to save money going to college, at least be smart enough to get a prenuptial agreement,” he said.

Potential problems in not getting a prenuptual agreement, in addition to having to share earnings for life, include being responsible for the spouse’s debt and other issues that married couples face, such as inheritance if one person dies.

I know of people getting married for health insurance reasons, which outlines another societal problem. As the college tuition bubble also continues to grow, I expect more and more stories like this to pop up.

My Money Blog has partnered with CardRatings and may receive a commission from card issuers. Some or all of the card offers that appear on this site are from advertisers and may impact how and where card products appear on the site. MyMoneyBlog.com does not include all card companies or all available card offers. All opinions expressed are the author’s alone, and has not been provided nor approved by any of the companies mentioned.

MyMoneyBlog.com is also a member of the Amazon Associate Program, and if you click through to Amazon and make a purchase, I may earn a small commission. Thank you for your support.


Creating Lifetime Income via AARP Immediate Annuity

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While perusing through old magazines in the dentists office, I came across an ad for annuity with the usual headline “Get a monthly income check GUARANTEED for life”. I took a picture of the ad, the payout rates are below:

The specific product is a fixed immediate annuity where you pay them a lump sum and received regular monthly payments until you die. It is called the AARP Lifetime Income Program (guaranteed by New York Life and only endorsed by the AARP). There are two options to protect you in case of an early death – either a “cash refund” or “20-year guarantee” feature:

  • “Cash Refund”: if you die before your total payments equal your annuity purchase price, your beneficiary will be paid the difference.
  • “20 Year Guarantee”: if you die before 20 years has passed, your beneficiary will receive the remaining monthly payments during the 20-year guarantee period.

DIY Early Retirement Pension?

Since my wife and I don’t have any pensions to look forward to, one way to create our own pension is to buy a fixed immediate annuity. I used their quote calculator to see what I could get right now if I was 50 years old and with the 20-year minimum payout.

So with a lump sum of $100,000, I could get $445 a month for life. That works out to a 5.34% payout rate.

The “guarantee” for annuities are only good as long as the issuing insurance company stays in business, but many states have a guaranty association that provides an additional backstop. For example, in Florida the total annuity cash surrender protection per owner per member company is $100,000, and the maximum aggregate benefit for all insurance lines is $300,000. I am not a lawyer, but from what I read that means I can buy three $100,000 annuity policies from three different insurance companies, and have it all backed by the state if any or all of those insurers goes bust.

That means if we were both 50 years old right now (which we aren’t), both my wife and I could put $300,000 across different insurers and both get about $1,300 a month in lifetime that is about as safe as one can make it. Together, that’s a cap of $2,600 a month. I don’t want to annuitize our entire portfolio, but I imagine that it would relieve a lot of my stress if our basic needs could be met with a monthly annuity payment that doesn’t depend on the performance of the stock market.

Now, these numbers above do not adjust for inflation, and so will buy less and less goods each year. This is important, especially if I am going to be buying so early at age 50. Inflation-adjusted annuities are available but the payouts are significantly lower and I feel the competition is not as good. One alternative is to start small and ladder additional annuities as you age.

There are many of these types of annuities available out there. I’m not recommending this one in particular, I was just using it as a handy example for some rough number calculations. A good comparison site is ImmediateAnnuities.com.

My Money Blog has partnered with CardRatings and may receive a commission from card issuers. Some or all of the card offers that appear on this site are from advertisers and may impact how and where card products appear on the site. MyMoneyBlog.com does not include all card companies or all available card offers. All opinions expressed are the author’s alone, and has not been provided nor approved by any of the companies mentioned.

MyMoneyBlog.com is also a member of the Amazon Associate Program, and if you click through to Amazon and make a purchase, I may earn a small commission. Thank you for your support.


MicroPlace Microlending: Free $20 to Invest

My Money Blog has partnered with CardRatings and may receive a commission from card issuers. Some or all of the card offers that appear on this site are from advertisers and may impact how and where card products appear on the site. MyMoneyBlog.com does not include all card companies or all available card offers. All opinions expressed are the author’s alone.

As you may know, I support microlending to poor entrepreneurs in developing countries through Kiva and Microplace. I have a little under four thousand dollars spread across both sites, and intend to continuously reinvest my principal and any earned interest to create a “foundation” where my money keep being lent out over and over. Kiva is non-profit, while Microplace is for-profit. I have lost some principal at Kiva, but none at Microplace yet. Here are my previous posts mentioning Microplace.

Yesterday after reinvesting some funds, the website provided me a link to share that appears to give any new investor a free $20 to invest. No strings attached. When the investment matures, you have the choice of either withdrawing the investment (plus interest) to your Paypal or bank acount, or reinvesting it again in another loan. Why not try it out?

Update: Apparently this link is open to any investor once, not just new investors. I just tried it for myself and it did not give me a choice in investments. The $20 will be invested in “Reduce extreme poverty in Haiti and help reverse its fortune – Sevis Finansye Fonkoze via Oikocredit GC Note”, earning 2.0% per year until April 30, 2014. You do have an alternative to simply donate the $20 instead and receive the tax deduction.

My Money Blog has partnered with CardRatings and may receive a commission from card issuers. Some or all of the card offers that appear on this site are from advertisers and may impact how and where card products appear on the site. MyMoneyBlog.com does not include all card companies or all available card offers. All opinions expressed are the author’s alone, and has not been provided nor approved by any of the companies mentioned.

MyMoneyBlog.com is also a member of the Amazon Associate Program, and if you click through to Amazon and make a purchase, I may earn a small commission. Thank you for your support.


Grandparents + 529 College Savings Plans = Loophole?

My Money Blog has partnered with CardRatings and may receive a commission from card issuers. Some or all of the card offers that appear on this site are from advertisers and may impact how and where card products appear on the site. MyMoneyBlog.com does not include all card companies or all available card offers. All opinions expressed are the author’s alone.

There was a discussion on Bogleheads recently about giving money to grandparents so that could invest in a 529 college savings plan for their grandchildren. While it brought more light on what I think is a flawed financial aid system, it also presented a learning opportunity for me and any parent with college-bound kids.

The idea was that if a 529 plan is owned by someone other than the parent or child (e.g. aunt/uncle, grandparent), the plan will not be considered as an asset for financial aid purposes. It won’t be a parental asset, and it won’t be a student asset. This, in turn, will lower your “expected family contribution” and increase the possibility of receiving financial aid. Loophole! Note that this holds for the popular FAFSA, but not schools that use the CSS Profile, which requires you to list all 529 plans with the student as beneficiary.

However, there is a catch. If a qualified education benefit such as a 529 plan distribution is not reported as an asset on the FAFSA, then those distributions are reported as untaxed income to the beneficiary on the subsequent year’s FAFSA. (You must fill out a new one every year.) As a result, next year’s financial aid eligibility for the student can be significantly affected.

Still a loophole, just smaller. So what can you do? If a grandparent has money in a 529 plan for your child, they should delay taking a distribution until the student’s senior year in college, so next year’s financial aid picture won’t matter. (Assuming no graduate school or that you won’t need aid there.) According to Finaid.org, technically you can take the distribution any time after January 1st of the junior year in college.

Theoretically, the grandparents could fund a quarter of the undergraduate education this way, without the assets in their 529 plan ever counting against any financial aid eligibility. I never knew this, but it’s true unless future legislation changes it.

Sources: FinAid.org, The Guide to Federal Student Aid

My Money Blog has partnered with CardRatings and may receive a commission from card issuers. Some or all of the card offers that appear on this site are from advertisers and may impact how and where card products appear on the site. MyMoneyBlog.com does not include all card companies or all available card offers. All opinions expressed are the author’s alone, and has not been provided nor approved by any of the companies mentioned.

MyMoneyBlog.com is also a member of the Amazon Associate Program, and if you click through to Amazon and make a purchase, I may earn a small commission. Thank you for your support.


Reaching the “I Can Do This” Moment

My Money Blog has partnered with CardRatings and may receive a commission from card issuers. Some or all of the card offers that appear on this site are from advertisers and may impact how and where card products appear on the site. MyMoneyBlog.com does not include all card companies or all available card offers. All opinions expressed are the author’s alone.

Like millions of other people out there, I decided to start trying to lose weight and get in better shape on January 1st. I cut out virutally all meat and was eating tons of fresh vegetables and whole grains. I went to the gym, ran outside, or played sports with friends nearly every day. I rarely ate out at restaurants, and when I did I ordered things like steamed vegetables and brown rice. I lost 15 lbs. within the first month.

Then I hit the wall. I was still exercising almost every day, but I started to dread the workouts. Even worse, I stopped losing weight. I started eating meat again, and adding some snacking back in. I could feel myself losing willpower. I was horrified to discover I had gained weight back.

I knew I had to make some changes. I allowed myself one “cheat day” per week so that I could eat out or drink a beer. I made an exercise routine for the whole week in to be more efficient and starting doing some workouts first thing in the morning before work. I try to only have one big meal a day and the rest much smaller. I acknowledge that I have my weaknesses (like snacking while watching ESPN, and getting hungry after watching Food Network) and avoid doing those activities. I started losing weight again, at a more regular pace of 1-2 pounds per week. More importantly, it didn’t feel like deprivation.

I’ve read that it takes 30 days to break a habit. Well, it took me 30 days to perhaps break my habit, but it took another 30 days to create a new habit that I feel that I can live with for the long run. The best part is the feeling of control that I have now. I know the things I need to do to lose weight. I know the things that I could do that will make me gain weight. It’s up to me. I call this the “I Can Do This” moment.

Applications to Saving Money

Like many other folks, I draw parallels between the actions of saving money and losing weight. In dealing with food, I often tell myself I have 1,500 calories a day to “spend” and so I should get the most value from my calories in terms of flavor, texture, and hunger satisfaction.

When I thought about this, I remember the same thing happened when I graduated college and started earning money on my own. Could I pay down my $20,000+ in student loans? How long would it take? Could I still afford the things I wanted? But the paychecks started coming in, and you started having to balance what was coming in and what was going out. Some things like electricity cost about the same each month, but then you learn to deal with things like car repairs and new computers. Eventually, I reached the “I Can Do This” moment where I felt a connection between my actions and the resulting surplus I had each month.

Here are some observations about reaching this point, which you may or may not agree with:

  • When starting a difficult task, it’s good to go all out for a while even if you run out of willpower eventually. I needed that first 15 lb. loss. The same could be said about going on a “no-spending month” and saving up $500 or $1,000. I had built up something that I didn’t want to lose.
  • It’s important to see a direct connection between your actions and the results. (At least initially.) This is why I no longer like articles with “52 ways to start investing with $100”. If you’ve managed to save $100 a month, it should go in the bank. If you invest it and one day your $1,000 balance turns to $500, then it affects your emotions and motivation. You’ve just lost 5 months of hard work. With a interest-bearing savings account, the amount will always be higher than yesterday. These days it’s not much, but it’s still higher.
  • Routine makes everything easier. Make less decisions. Don’t make every single thing another mental decision. “Should I work out today?” “What about tonight or tomorrow instead?” That’s exhausting. Go to your Yoga class every Tuesday and Thursday. Every. Week. Tell everyone you’ll be there and not at happy hour. Remove the decision. Along the same lines, having money taken out of your paycheck or bank account automatically just keeps your mind from decision fatigue.
  • Keep supportive friends. Changing your lifestyle often alienates you from some of your existing friends, and they may see it as a negative judgment upon themselves. They can sabotage your best intentions with their own selfishness, so be sure to find and keep people who support your decisions.

Do you remember your own “I Can Do This” moment?

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Net Worth & Goals Update – March 2011

My Money Blog has partnered with CardRatings and may receive a commission from card issuers. Some or all of the card offers that appear on this site are from advertisers and may impact how and where card products appear on the site. MyMoneyBlog.com does not include all card companies or all available card offers. All opinions expressed are the author’s alone.

Net Worth Chart 2011

Oh alright, here’s another net worth update. My last snapshot was about 9 months ago. I know people like the voyeurism, but hopefully my commentary will also provide some helpful insights as to achieving our goals.

Credit Card Debt
I used to take money from credit cards at 0% APR and place it into online savings accounts, bank CDs, or savings bonds that earned 4-5% interest (yes I know, much less recently), keeping the difference as profit while taking minimal risk. (Minimal in regards that the risk was only dependent on my behavior and not outside factors.) However, given the current lack of great no fee 0% APR balance transfer offers, I am currently not playing this “game”.

Most credit cards don’t require you to pay the charges built up during a monthly cycle until after a grace period of about 14 days. This theoretically provides enough time for you to receive your statement in the mail and send back a check. As this is simply a snapshot of my finances, my credit card debt consists of just these charges. I don’t carry any balances or pay any interest charges.

Retirement and Brokerage accounts
Since my last update, the broad stock indexes have risen significantly, about 25% including dividends according to Vanguard Total World Stock Index ETF (VT) that I use as a general benchmark. Although these high valuations make me nervous, I am still a believer in stocks for the (very) long run and rebalancing your asset allocation regularly. Don’t buy high and sell low.

Here is our target asset allocation. Being heavy in stocks, our portfolio bounced back significantly as well.

Our total retirement portfolio is about $360k or on an estimated after-tax basis, $318,000. At a theoretical 4% withdrawal rate, this would provide $1,060 per month in retirement income, which brings me to 42% of my long-term goal of generating $2,500 per month. These are all really rough numbers, but helpful to measure progress and visualize living off your portfolio.

Cash Savings and Emergency Funds
We are happy to hold a year’s worth of expenses (conservatively estimated at $60,000) in our emergency fund. According to my emergency fund poll, many of you readers also have substantial savings set aside, with most having at least 4 months of expenses. Very nice.

Recently I wrote about how I maximize interest in my emergency fund, including the specific banks and institutions I use.

Home Equity
I would like my house paid off in 15-20 years at most, so I’ve been putting some extra money towards the mortgage. Note that this is only after maxing out both our 401k plans, fully funding IRAs every year, and creating a one-year emergency fund. I’d like our mortgage pay-down progress to parallel our portfolio growth so that both are ready for at least partial retirement in about 10 years.

So there you have it. Mrs. MMB and I both earned a six-figure salary again last year, which combined is in the top 5% of households. We try to save a lot of it while it stays this way. 🙂 The future is hard to see, but we’re getting there a lot faster than we thought we could.

My Money Blog has partnered with CardRatings and may receive a commission from card issuers. Some or all of the card offers that appear on this site are from advertisers and may impact how and where card products appear on the site. MyMoneyBlog.com does not include all card companies or all available card offers. All opinions expressed are the author’s alone, and has not been provided nor approved by any of the companies mentioned.

MyMoneyBlog.com is also a member of the Amazon Associate Program, and if you click through to Amazon and make a purchase, I may earn a small commission. Thank you for your support.