Better Future: Free Background Check Powered by Checkr

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(Update 2023: Better Future suspended their free background checks during the pandemic, but I just noticed that they are back up and running, An inaccurate background check can prevent you from getting a job, so it is better to check now and start the process to dispute any incorrect information immediately.)

While updating my posts on free Consumer Data Reports, I noticed that Checkr offered a free background check via the BetterFuture.com website. No credit card required, no trials. Checkr is a legitimate company that provides background checks for Uber, Lyft, Postmates, and Instacart, so I valued their results more than most other “free lookup” sites.

The benefit of knowing what is on your background check is that you can fix any inaccuracies before applying for employment. In return, Checkr makes money by trying to connect you with relevant job opportunities based on your unique information.

Better Future takes your basic information (name, address, SSN) and pulls data from federal databases and public records from over 3,200 local counties. The sections of the background check report are:

  • Address History
  • SSN Trace
  • Sex Offender Search
  • Global Watchlist Search (International crime databases)
  • National Criminal Search
  • County Criminal Searches

I decided to run a free background check on myself, and it only took about an hour even though it said it might take up to 3 days. The information shown was all correct to my knowledge. Here’s a redacted screenshot of my report:

The background check does not include Employment History, Driving Records, or Civil Records. Here is the disclaimer that comes with the report:

This background check is for the named individual only. Better Future searched the sources listed below based on the information you provided. Failure to provide accurate or complete information may affect results. Third parties, such as potential employers, may search other databases for information about you. This is not a “consumer report” as defined by the Fair Credit Reporting Act (FCRA) and may not be used for determining any person’s eligibility for credit, insurance, employment, housing, or for any other purposes covered under the FCRA.

Bottom line. Checkr offers a free background check via BetterFuture.com. No credit cards, no trials. In return, they can match you up with job opportunities (optional). I signed up for a free report and I found no errors in the information.

My Money Blog has partnered with CardRatings and Credit-Land for selected credit cards, and may receive a commission from card issuers. 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.

Off the Clock: Feel Less Busy While Getting More Done (Book Highlights)

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If you are serious about dramatically improving your personal finances (like getting rid of credit card debt), the first step is to find out exactly where your money goes – track every dollar for a month using a spending log. I recall it being quite uncomfortable, but also eye-opening. In the same way, the book Off the Clock: Feel Less Busy While Getting More Done by Laura Vanderkam is based on the detailed hour-by-hour time diaries of thousands of people.

What characteristics make some people both feel less busy yet still spend time on the activities that are important to them? Some of the highlights below you may have seen elsewhere, but I did discover some new, actionable advice.

Know where your time goes. Track it. Reflect.

As a born skeptic, I had long been fascinated by what these logs showed about the blind spots people have about time. There can be great gaps between how we think we spend our time and reality as recorded. People claim to have no leisure time and then can recount in detail what happened on the most recent Big Bang Theory. Or—I was guilty of this one—we feel like we spend hours unloading the dishwasher, only to learn it takes five minutes each time, the four times per week we do it.

First, people who feel like they have enough time are exceedingly mindful of their time. They know where the time goes. They accept ownership of their lives and think through their days and weeks ahead of time. They also reflect on their lives, figuring out what worked and what didn’t.

It is not that people who have more free time have the time to reflect. After all, people with low time-perception scores actually spend more time on social media and TV than people with high time-perception scores. Instead, people allocate time to thinking and reflecting, and then they feel that they have more time.

Get rid of time-wasting activities. Check your e-mail less often. Check your phone less often. It wastes time, makes you more anxious, and it doesn’t create lasting memories. Be aware and perhaps limit your TV time.

They scrub their lives of anything that does not belong there. This includes self-imposed time burdens, such as constant connectivity, that clog time for no good reason. Indeed, one of the most striking findings of my survey was the gap in estimated phone checks per hour between people who felt relaxed about time and those who felt anxious.

Accept the “good enough” and even “better than nothing”. Aim for small, daily habits that move you steadily towards your goals. Five minutes towards your goal every day is so much better than nothing.

They let go of expectations of perfection and big results in the short run. Instead, they decide that good enough is good enough, knowing that steady progress over the long run is unstoppable.

What type of person do you want to be? What do you want to be known for spending your time on? Pick your worthwhile struggle. Spend time on the important people in your life.

There is freedom from things we don’t want to do, but there is also freedom to do the things we want to do, and figuring out the right balance requires understanding when commitments are burdens and when they are benefits.

These choices involve commitments, but they also stretch time, because as you choose to spend time on these things, you become in your mind the kind of person who has the time to spend on these things.

Happiness requires effort. It is not just bestowed; it is the earned interest on what you choose to pay in.

If my anticipating self wanted to do something, my remembering self will be glad to have done it. Indeed, my experiencing self may even enjoy parts of it. I am tired now, but I will always be tired, and we draw energy from meaningful things.

Outsource the other pain points if possible. Outsource the chores and errands that cause the most stress and/or block other productive pursuits.

In my life, learning to use childcare strategically has been a big breakthrough.

Fight for more flexible hours or less hours at work. The author shares stories about an engineer that had to find a new job first and threaten to quit, before the old employer would allow them to work at home for 4 days a week. (Sounds familiar!) Others have cut their work hours to 80% of full-time or 50% of full-time (if they can afford the accompanying loss in income). However, I found this quote to be useful work advice:

Of course, not all organizations or jobs are amenable to part-time work, and sometimes going off a full-time track can have far-reaching implications for a person’s career. I find that part-time options tend to work best in careers (such as medicine) where hours are more set and you are either in the office or not. The danger in other kinds of salaried work, as my time-diary studies have found, is that if no one knows how many hours anyone is working, “part-time” can often mean full-time hours for less pay. If that sounds like the reality of your industry, it might be a more satisfying option to hunt for (or craft) a job you love, and then negotiate for flexible hours in lieu of extra cash. If you do elect to take a pay cut to go part-time, work out a schedule where you get real days off—for example, you don’t go into the office Thursday or Friday—rather than accept vague promises of a reduced workload. This has the virtue of reducing work hours and commuting time too.

Ready to do your own time diary? The author provides free timesheets (including PDF, xls, and Google Sheets versions) for her 168 Hours Time Tracking Challenge at LauraVanderkam.com where you can track your own time for a week.

After tracking your time, look back over your schedule and ask yourself a few questions: What do I like about my schedule? What would I like to spend more time doing? What would I like to spend less time doing? How can I make that happen?

This book was published in 2018, but the author also has a new book Tranquility by Tuesday: 9 Ways to Calm the Chaos and Make Time for What Matters that just came out October 2022, although I have not read it and don’t know how it differs from this book.

My Money Blog has partnered with CardRatings and Credit-Land for selected credit cards, and may receive a commission from card issuers. 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.

Your Workplace Is Not Your Family. You Will Be Replaced Immediately. (Why F- You Money is Awesome)

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A big takeaway from my time on the Early Retirement Forums is that while many posters struggle with the decision to leave their jobs, those that have done so rarely look back. If you are a hard-working, competent employee, it’s very likely your boss will be highly reluctant for you to leave. Employers may demand a full year of notice before leaving (only to let you go early once a replacement was found), plead and guilt you about abandoning your “family”, or simply abuse you until you break.

My wife used to be a very loyal employee that genuinely enjoyed going to work. However, over the years, that changed. The COVID pandemic only accelerated the problem. If you read this NYT article about how “non-profit” hospitals actually make huge profits (gift article), you can get an idea of what happened:

More than half the nation’s roughly 5,000 hospitals are nonprofits like Providence. They enjoy lucrative tax exemptions; Providence avoids more than $1 billion a year in taxes. In exchange, the Internal Revenue Service requires them to provide services, such as free care for the poor, that benefit the communities in which they operate.

But in recent decades, many of the hospitals have become virtually indistinguishable from for-profit companies, adopting an unrelenting focus on the bottom line and straying from their traditional charitable missions.

She didn’t want to leave. She wanted to feel like a valued worker in a safe environment that actually followed their claimed “mission statement”. When that failed, she just wanted an unpaid leave of absence. They denied her that too. The best way to tell this story is through a role play:

Worker: I need to voice my concern that the recent policy changes are detrimental to employee safety and patient care, even though you say that patients are your top priority.

Employer: No, of course not! You are a greatly valued employee. Have a company-branded mug!

[months pass]

Worker: Why did all the lower level staff receive a pay cut when none of the executive team received a pay cut?

Employer: We hear your concerns and will take them into consideration in the future! Would you like a company-branded backpack?

[months pass]

Worker: Dear Management, I am burned out.

Employer: Everyone is burned out! We are a team! Let’s go team!

[months pass]

Worker: It’s been several months. I feel worse. I request an unpaid leave of absence.

Employer: You are a critical part of our team. You will hurt the rest of your team if you quit. We need you!

[two weeks pass]

Worker: I am still very burned out. I am concerned about my physical and mental wellbeing. I officially request an unpaid leave of absence. I don’t want benefits. I just need a break. Please.

Employer: We officially deny your request. Please read this glossy pamphlet on how much we value “Employee Mental Wellness”. See you at work on Monday!

Worker: Okay. Well, I quit. Here is my official letter of resignation.

Employer: What?!? Really? Okay, okay, you can have the leave of absence. Sheesh.

Worker: Too late. I quit.

Employer: Wait, wait, wait. You win! We will give you a 3 month paid leave of absence! With benefits! Stay! Please? Pretty please?

Worker: I decline your offer. You already showed your true colors.

Employer: This is outrageous! You are just being unreasonable!

[a week passes]

Employer: We already hired someone to replace you. We had to pay them double what we paid you. Don’t forget to turn in your name badge.

(I tried to add some humor, but all this stuff actually happened. I can show you the backpack.)

Many co-workers and friends advised her to just take the three months of “free” money and then quit again afterward. But things had changed. She wanted a leave of absence to take a break and re-assess. She was unsure. When she was denied that simple and reasonable request, she no longer had to re-assess. She now knew that she would never go back to work for this current management team. Perhaps they should have read this Linkedin article Don’t beg employees to stay as they leave:

It’s disrespectful to the employee. When employers don’t consider an employee’s request for something to change to make their work environment better, the employee feels devalued. I’m speaking, of course, about high performers. You may not ever be able to make everyone happy but the worst thing you can do to your highest performers is to make them feel less than what they really are to you. Waiting until they threaten to leave to make a change doesn’t help. It takes a lot of energy for them to look for another job and go through interviewing processes. It is completely disrespectful to them when you make them an offer to stay only when you realize they can go somewhere else. […]

I’m not suggesting you give employees everything they want, not even your highest performers. The point is you need to take off the blurry glasses and at least take a hard look at what’s going on in your workplaces, how you are treating your best employees and consider making meaningful changes before you lose them.

The power of having F— You Money the ability to jump ship when you know it’s sinking, as you know you’ll be okay no matter what. She could explore her options, and already has a new position lined up. Otherwise, you may have to start your search while still working. But don’t let your employer convince you to stay longer with guilt trips and meaningless words. If your company treats workers like cogs in a machine, something to be constantly tracked and monitored, then they won’t hesitate to find replacement parts (even if those replacement parts cost them double due to their short-sightedness).

My Money Blog has partnered with CardRatings and Credit-Land for selected credit cards, and may receive a commission from card issuers. 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.

Improving Your Everyday Negotiating Skills (Never Split The Difference Book Notes)

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Initially, I viewed Never Split the Difference: Negotiating As If Your Life Depended On It by Chris Voss as a tactical financial book for specific situations: buying a car, negotiating a salary, buying a home, renegotiating rent, or any number of business transactions. After all, the author is the “FBI’s lead international kidnapping negotiator”!

Instead of a win/lose mentality, this book helps you find out what the other person really wants overall, what they will accept specifically within your own acceptable range, and to do it in a way that everyone feels respected. I found myself using the advice every day for all the little negotiations in life: getting the kids out the door in the morning, finding out why someone was mad at me, and so on. Admittedly, I had (and still have) a lot of room for improvement, but this book helped improve my communication and listening skills. I highly recommend reading the entire book, but here are a few selected highlights and excerpts.

What are the goals after learning these skills?

What were needed were simple psychological tactics and strategies that worked in the field to calm people down, establish rapport, gain trust, elicit the verbalization of needs, and persuade the other guy of our empathy. We needed something easy to teach, easy to learn, and easy to execute.

It all starts with the universally applicable premise that people want to be understood and accepted. Listening is the cheapest, yet most effective concession we can make to get there. By listening intensely, a negotiator demonstrates empathy and shows a sincere desire to better understand what the other side is experiencing.

Mirroring. Here’s a very simple tactic that you can try today (really! try it on your very next conversation) to help get more information, called “mirroring”:

It’s almost laughably simple: for the FBI, a “mirror” is when you repeat the last three words (or the critical one to three words) of what someone has just said. Of the entirety of the FBI’s hostage negotiation skill set, mirroring is the closest one gets to a Jedi mind trick. Simple, and yet uncannily effective.

It’s just four simple steps:  

1. Use the late-night FM DJ voice.
2. Start with “I’m sorry . . .”
3. Mirror.
4. Silence. At least four seconds, to let the mirror work its magic on your counterpart.

Here’s a short YouTube video with examples.

Labeling. We want to get on the same page. People want to be heard and understood. We can try to confirm a perception gently, show that we are listening, and validate their emotions with “It seems like…” phrases.

There are fill-in-the-blank labels that can be used in nearly every situation to extract information from your counterpart, or defuse an accusation: It seems like _________ is valuable to you. It seems like you don’t like _________. It seems like you value __________. It seems like _________ makes it easier. It seems like you’re reluctant to _________. As an example, if you’re trying to renegotiate an apartment lease to allow subletters and you know the landlord is opposed to them, your prepared labels would be on the lines of “It seems as though you’re not a fan of subletters” or “It seems like you want stability with your tenants.”

Here is an example from a grouchy relative at Thanksgiving:

“We don’t see each other all that often,” you could say. “It seems like you feel like we don’t pay any attention to you and you only see us once a year, so why should you make time for us?” Notice how that acknowledges the situation and labels his sadness? Here you can pause briefly, letting him recognize and appreciate your attempts to understand what he’s feeling, and then turn the situation around by offering a positive solution. “For us this is a real treat. We want to hear what you have to talk about. We want to value this time with you because we feel left out of your life.”

“How” and “What” questions are much more gentle and respectful ways to guide the conversation along. It frames it is as a collaborative effort and asking for help, not being accusatory or demanding was “Why”.

Here are some other great standbys that I use in almost every negotiation, depending on the situation:  

What about this is important to you?
How can I help to make this better for us?
How would you like me to proceed?
What is it that brought us into this situation?  
How can we solve this problem?  
How am I supposed to do that?

Instead of “No”:

The first step in the “No” series is the old standby: “How am I supposed to do that?” You have to deliver it in a deferential way, so it becomes a request for help. Properly delivered, it invites the other side to participate in your dilemma and solve it with a better offer. After that, some version of “Your offer is very generous, I’m sorry, that just doesn’t work for me” is an elegant second way to say “No.”

Used properly, these little things can really improve your everyday life. Learning about “negotiating” doesn’t mean you like fighting or painful conflict, it can actually mean less painful conflict:

If this book accomplishes only one thing, I hope it gets you over that fear of conflict and encourages you to navigate it with empathy. If you’re going to be great at anything—a great negotiator, a great manager, a great husband, a great wife—you’re going to have to do that. You’re going to have to ignore that little genie who’s telling you to give up, to just get along—as well as that other genie who’s telling you to lash out and yell.

My Money Blog has partnered with CardRatings and Credit-Land for selected credit cards, and may receive a commission from card issuers. 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.

103 Bits of “Advice I Wish I Had Known” by Kevin Kelly

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via GIPHY

Kevin Kelly of Cool Tools and many other endeavors is now 70 years old and has 103 more bits of “Advice I Wish I Had Known” for 2022. Very high density of insightful wisdom per sentence, so I like to read a little bit each day and hopefully let it sink in. Here’s a small selection:

– Don’t ever work for someone you don’t want to become.

The biggest lie we tell ourselves is “I don’t need to write this down because I will remember it.”

– Your growth as a conscious being is measured by the number of uncomfortable conversations you are willing to have.

– Habit is far more dependable than inspiration. Make progress by making habits. Don’t focus on getting into shape. Focus on becoming the kind of person who never misses a workout.

I missed last year’s version, so here are some from the 2021 version:

– That thing that made you weird as a kid could make you great as an adult — if you don’t lose it.

– If someone is trying to convince you it’s not a pyramid scheme, it’s a pyramid scheme.

– Most overnight successes — in fact any significant successes — take at least 5 years. Budget your life accordingly.

– To be wealthy, accumulate all those things that money can’t buy.

– Children totally accept — and crave — family rules. “In our family we have a rule for X” is the only excuse a parent needs for setting a family policy. In fact, “I have a rule for X” is the only excuse you need for your own personal policies.

Too often, advice like this just goes over my head until I’ve already had to learn it the hard way first. Still, worth a try to gain some wisdom the easy way.

My Money Blog has partnered with CardRatings and Credit-Land for selected credit cards, and may receive a commission from card issuers. 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.

The Four Core Types of Regrets + Thoughts on Financial Regrets

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According to the new book The Power of Regret: How Looking Backward Moves Us Forward by Dan Pink, only 1% of people say they never feel regret. Here are the most in-depth articles from the media tour: WaPo, BBC, Atlantic.

In 2020, the author Daniel Pink launched the World Regret Survey, the largest survey on the topic ever undertaken. With his research team, Pink asked more than 15,000 people in 105 countries, “How often do you look back on your life and wish you had done things differently?” Eighty-two percent said regret is at least an occasional part of their life; roughly 21 percent said they feel regret “all the time.” Only 1 percent said they never feel regret.

In the book, Pink identifies these four core types of regret:

  • Foundation regrets involves an irresponsible choice that changed the course of your life. This includes not saving enough money for retirement, not taking care of your health by eating well and exercising, or not putting in proper effort at school or work.
  • Boldness regrets come from being too cautious, and not taking certain risks. This includes staying in a “safe” job instead of going for a career changes more suited to you, or not asking out someone you liked on a date.
  • Moral regrets are when you don’t live up to your own values. You cheated, bullied, lost your temper, or didn’t stand up for something.
  • Connection regrets deal with lost relationships with family members, friends or colleagues. Too often, this happens due to neglect and passivity.

I used to think of regrets as equivalent to mistakes. In our household, we try to look at mistakes as a positive opportunity to “make your brain grow bigger”. This way, they are less afraid of trying something new or challenging. Regrets are simply mistakes, so we should just learn from them and move on, right?

However, now I see regrets as a special sort of mistake. They involve looking at the past and imagining different outcomes. Over time, you realize what kinds of choices are likely to lead to regrets, and what won’t. This can help guide you towards better future decisions. To me, the phrase “no regrets” doesn’t mean I don’t have any regrets. It means I know what will cause regret, and so I do things to avoid it. For example:

  • I won’t regret ditching a little bit of work for dedicated one-on-one time with a child. If you have kids, read The Family Board Meeting.
  • I won’t regret saving a few months of expenses to ride out life’s inevitable bumps.
  • I won’t regret waiting 24 hours to send that angry e-mail.
  • I won’t regret reaching out to a friend, whether it is because you need it or they need it.
  • I won’t regret taking the time to show or tell someone “I love you”.
  • I am much more likely to regret not taking a chance, than taking a risk and failing. In many cases, the downside isn’t so bad, while the upside could be limitless.

In terms of financially-related regrets, the two big ones are the foundational regret “I wish I saved more money when I was younger” and the boldness regret “I wish to took the risk to pursue a career better aligned to my personality and interests”.

A study by the Federal Reserve Bank of New York found that only 27% of college graduates work in a field related to their major. Career paths are long and winding these days. I remembering choosing my college major when I was 17 years old, since some colleges make you pick on your application. Even though I questioned my choice after a few years in college, I felt the “sunk cost” bias and didn’t want to risk the additional time, effort, and tuition to try and change majors. I was also “good” at the major, and so I kept going. That is one of my personal regrets.

In my view, finding the right career path where you get the trifecta of “I am good at this”, “I like doing this”, and “I get paid well for doing this” is like having a jetpack on your pursuit of financial independence. Once you have a job where you wake up and actually look forward to go to work and there is a small but increasing gap between income and expenses, you are ready to blast off and start compounding. You could try and pursue financial independence with a job that is missing any one of those three factors, but the journey will feel like a slow grind instead.

Eventually, the fact that I was missing the “I like doing this” starting bugging me enough, and I was ready to quit and go back to school. But the first thing I had to do was save up a year of expenses (also helped by minimizing those expenses). That little money cushion gave me the courage to make the leap. The “ROI” on that “emergency fund” was more than any index fund or rental property. So that’s what I plan to tell my kids: When you’re young, live simply and always create a cash cushion so that you can keep searching for the jetpack trifecta. This will minimize your financial regrets.

My Money Blog has partnered with CardRatings and Credit-Land for selected credit cards, and may receive a commission from card issuers. 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.

Anthony Bourdain: Not Too Late to Change Your Direction

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[Programming note: Posting will be light through the end of the year. Hope you have a restful and rejuvenating holiday season!]

The WSJ article Anthony Bourdain: Feast of Memory (link should bypass paywall as I am a WSJ subscriber) briefly highlights four different books that all explore his life and legacy from different perspectives:

So far, I’ve only finished the first one. This observation hit close to home:

At the news of his death, millions of people mourned—and not the way that we mourn a commodity celebrity, with a sharp breath of sorrow and a fleeting salute and a sad-face post on social media. Millions of people mourned Bourdain the way you mourn a friend: primal, personal, disbelieving, unreal, unhealed.

A good Bourdain quote:

“I used to think that basically, the whole world, that all humanity were basically bastards,” he tells John W. Little, in a 2014 interview for Blogs of War. “I’ve since found that most people seem to be pretty nice—basically good people doing the best they can.”

On being an enthusiast:

I’m passionate to the point of being evangelical about things that I love, that give me pleasure, and make me excited. And, um, you know I didn’t really travel until I was forty-two years old, I spent my whole life in kitchens. I’d seen nothing of the world. So, this is all still relatively new to me. People have been very kind to me. I feel very, very, very fortunate.

[…] I don’t feel like I’m an advocate, or a spokesperson for anything. I’m just, you know, I’m an enthusiastic son of a bitch.

Bourdain made a huge dent in the world after the age of 44. I took special notice that he didn’t publish his breakout book Kitchen Confidential until he was 44 years old. He wrote the book as memoir of sorts, by someone who felt at the end of his career. I am now 43 years old. I also feel at the end of some things, and smack in the middle of other things. Perhaps the trick is to also feel at the beginning of something new.

My Money Blog has partnered with CardRatings and Credit-Land for selected credit cards, and may receive a commission from card issuers. 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.

Savings Rate vs. Income Bracket: How Impressive Is Your Savings Rate?

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One of the criticisms of the pursuit of financial independence is that it is “only for the rich”. Certainly, having a lot more money coming in every month should make it easier to set some of it aside. However, you might also observe that most people with higher incomes have higher expenses – bigger homes, faster cars, fashionable clothing, and so on. What if everyone is basically running on a hamster wheel, regardless of income?

In other words, a 0% savings rate:

Well, according to this Economic Policy Institute analysis based on the Federal Reserve Board’s Survey of Consumer Finances and other data from 1989-2013, this is not far from the truth for everyone up to the 90th percentile of households:

This Mother Jones chart converts the percentile numbers into annual household income:

This chart shows the problem with any statistics about “average savings rate across all households”. While the average savings rate might be 10%, it’s basically zero for 90% of households while over 50% for those making over $750,000 a year (some of whom are making far, far more than $750k a year).

If you are making over $200,000 a year, then you shouldn’t be too proud that you are maxing out your 401k at $19,500 a year in 2021. If that’s all you are saving, that’s less than a 10% savings rate and you are barely average. If you’re making over $300,000 a year and only maxing out your 401k and your IRA every year, then you’re saving much less than your income bracket peers.

However, the most intriguing discovery to me is that the savings rate for those making $150k to $200k annually is essentially the same (zero) as everyone making $40k, $75k, and $125k a year! Within that wide range from $0 to $200k a year, it turns out to be pretty close to a hamster wheel! If you have any sort of significant savings in this income bracket, you should feel a little better today. Why does every household earning up to $200,000 a year, feel a need to spend nearly all of it on average? Perhaps in this range, you still believe that you are receiving “value” for that additional spending in terms of comfort, security, convenience, and/or happiness. If you can afford it, you really want it.

Let’s roughly estimate an ongoing 40% savings rate of your annual income as being on pace for truly “early” financial independence. (This assumes relatively constant income, not a big windfall.) Someone making $100,000 would have to spend as if they made $60,000 a year. I don’t see why this is impossible, as someone making $60k also spends $60k.

If people spend what they earn, why can’t they just pretend they earn less? If only it were so easy. So many of our choices are rooted in deep psychological desires, a combination of evolution (nature) and our childhood experiences (nurture). We are social, comparative creatures and have so many cognitive biases they barely fit on a huge infographic with tiny font. As Morgan Housel explains in The Psychology of Money:

Doing well with money has a little to do with how smart you are and a lot to do with how you behave.

As the data shows, for 99% of the population, anyone saving 40% of their income is a rare bird. While it is a more impressive and rare feat to see someone making $50k and spending $30k while putting $20k a year into productive assets, than for someone making $250k and spending $150k, you don’t get extra points for difficulty level! You should still work on increasing that income.

Bottom line. The average household earning between $0 to $150,000 per year spends nearly every dollar they year, but so does the average household earning $150,000 to $200,000 a year. Why is this, and what can we learn from it?

[Hamster wheel image credit]

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Are You Unknowingly a Time Billionaire?

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The 2021 Berkshire Hathaway shareholder meeting is streaming live on Yahoo Finance this weekend, and I am reminded of a lesser known quote from Warren Buffett about what is truly valuable. I believe he has said this elsewhere, but I found it repeated in a 2020 commencement speech (YouTube link) at the University of Nebraska:

There is nobody I would rather be than a young person graduating from the University of Nebraska today. […] I would say this to the current year’s class: ‘I would love to trade places with any of them.’ They feel they’re going out into an uncertain world and all of that, but there’s never been a better time.

During a Tim Ferriss podcast, investor Graham Duncan discussed the concept of a “time billionaire” and how it is hard to understand the magnitude difference between a billion and a million.

Graham Duncan: I was listening to a guy introduced a speaker a while ago. And he was saying people don’t really understand the difference between billionaires and millionaires. He said a million seconds is like 11 days. A billion seconds is 31 years.

This means a 20-year old is technically a time multi-billionaire. If you’re in your 40s or even early 50s, the odds are likely that you still have a billion seconds left as well. Have you considered how valuable that is? One of the richest people in the world would gladly trade places with you. I’m betting that nearly anyone with a billion dollars would trade it for a billion more seconds.

This Pomp Letter article and Wealest article both expand upon this idea of appreciating the value of time, including how young people should use this time to their advantage. Don’t take for granted the ability to throw yourself at something nonstop. I think short periods of crazy 100-hours-a-week focus is underrated. Take your shot. If you fail, so what?

If you fail, you have nothing, which is the same position you’re in right now.

You have no mortgage to pay, no family to support, and nothing to lose.

This makes you powerful. Your upside is many times greater than your downside.

Also mentioned is the Life in Weeks calendar from WaitButWhy.

Time is a limited resource, and just like with money, you have to spend it wisely and consciously. Don’t waste it without intention. Look at how many hours we spend on consuming media, via Visual Capitalist.

Bottom line. We can look up to certain wealthy people for knowledge and wisdom, but there are other important resources beyond money. Yes, it’s a cliché, but it is still so easily forgotten in this busy, competitive, stressful world. Many of us are extraordinarily wealthy in time, wealthy in love and relationships, and/or wealthy with a healthy mind and body. Someone out there would pay billions of dollars for what you have. I must remind myself to appreciate my wealth in all forms, and use it intentionally. I worry about running of out money, but also running out of time.

My Money Blog has partnered with CardRatings and Credit-Land for selected credit cards, and may receive a commission from card issuers. 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 Character Traits Test: Identify Your Signature Personality Strengths

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I’m now in Week 5 of the free Yale Happiness Course, which focuses on finding things that truly make you happy, as opposed to the 5 Surprising Things That Don’t Make You As Happy As You Think.

For example, instead of equating a “good job” with high income, you should redefine a good job as one that allows you to express many of your “signature personality strengths”. When regularly using their specific signature strengths in daily life, people reported higher levels or happiness and lower levels of depressive symptoms. In another study, being able to use your strengths at work resulted in higher productivity and job satisfaction.

In the early 2000s, something groundbreaking occurred in the social sciences: Scientists discovered a common language of 24 character strengths make up what’s best about our personality. Everyone possesses all 24 character strengths in different degrees, so each person has a truly unique character strengths profile. Each character strength falls under one of these six broad virtue categories, which are universal across cultures and nations.

How can you identify your signature personality strengths? The VIA Institute on Character offers a free Character Strengths Profile that takes about 10 minutes and will list your strengths from highest to lowest based on your self-assessment answers. Here are the six broad “core virtues” and the 24 character traits that they measure:

  • Wisdom: creativity, curiosity, open-mindedness, love of learning, perspective
  • Courage: bravery, persistence, honesty, zest
  • Humanity: love, kindness, social intelligence
  • Justice: teamwork, fairness, leadership
  • Temperance: forgiveness, humility, prudence, self-regulation
  • Transcendence: appreciation of beauty and excellence, gratitude, hope, humor, spirituality

Everyone likes a nice graphic, so here’s one that adds a short explanation (source .zip file):

Character strengths are the core personality traits that define your unique identity and make you feel authentic, alive and engaged in life. Your free Character Strengths Profile below lists your strengths from highest to lowest based on the positive qualities that are strongest in you! Research shows learning about your strengths and how to express them can make you happier, less stressed, more productive at work and better connected to others. Interested in exploring the best parts of yourself? Check out our personalized, in-depth Total 24 or Top 5 Reports and use your strengths to build your best life.

Out of my top 5 character strengths, two were from Temperance, two were from Wisdom, and one was from Courage. The self-assessment does require you to be honest about your weaknesses, even if it may not feel great to admit them. I didn’t pay for a premium report, but I printed out the results and hopefully can incorporate them better in my daily life.

This activity reminds me of the #1 Thing People Regret The Most On Their Deathbeds:

I wish I’d had the courage to live a life true to myself, not the life others expected of me.

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Scott Galloway’s Algebra of Wealth (or: How To Become Rich)

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Scott Galloway shares in The Algebra of Wealth his thoughts on how to achieve financial security (be rich). You should read the entire thing, but the ingredients in his formula are Focus, Stoicism, Time, and Diversification. I’m only including a few notes and personal interpretations here.

Focus. If you want to get rich, you have consciously take action to make it happen. It rarely happens by accident. Look for a good wave to ride when you are young. Look carefully for the right life partner.

Successful people often unwittingly head fake young people with the humblebrags of “follow your passion” and “don’t think about money.” This is (mostly) bullshit. Achieving economic security requires hard work, talent, and a tremendous amount of focus on . . . money. Yes, some people’s genius will be a tsunami that overwhelms a lack of focus and discipline. Assume you are not that person.

Stoicism. Develop some self-discipline and character. Be generous and helpful to others. This will help you spend less money.

Determine what you can and can’t control. You can control your reactions to temptation — a lack of discipline is the antichrist to economic security. Our society of superabundance makes this difficult. Billions of dollars are spent every year on schemes to manipulate our natural impulses into spending more money, consuming more fat, and believing everyone around us is more successful than we are. The upgrade from economy to premium to business to first class to private jet can seem like an investment in yourself — it’s not. The most powerful forward-looking indicator of your financial freedom is not how much you earn, but how much you save.

Time. Steady improvements over time can supercharge your results. Don’t focus only on the short-term. As the saying goes, “Time in the market is more important than timing the market.”

Compounding is not just a financial thing. The most important returns in life come from the compounded effects of our investments over time, whether in our finances, careers, hobbies, or relationships.

Diversification. Never expose yourself to a fully catastrophic loss. Make sure you can walk away to fight another day. If you do it right, you only need to get rich once.

Diversification is the kevlar that protects you — with it, bad decisions will still hurt, but they won’t prove fatal. Diversification, in other words, is your bulletproof vest. […] That doesn’t mean I don’t look for opportunities that offer asymmetric upside — I do. I just don’t ever take off my kevlar. You don’t need to be a hero to get to economic security.

There is no simple step-by-step plan to become financially independent, otherwise everyone would be rich. Luck matters too, but working on all of these factors helps maintain maximum exposure to good luck.

My Money Blog has partnered with CardRatings and Credit-Land for selected credit cards, and may receive a commission from card issuers. 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.

Money and Happiness: Happiness Keeps Increasing Past $75,000 a Year

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Did you know there was an iPhone app called Track Your Happiness? The app basically does what the name suggests:

A few times a day, you’ll get a notification and be asked some questions about your experience at that moment. The idea is that by measuring your experience at many individual moments, you’ll get an accurate picture of your life and the determinants of your happiness.

After collecting over 1.7 million data points from 30,000+ app users, here is the research paper Experienced well-being rises with income, even above $75,000 per year by Matt Killingsworth, published in the Proceedings of the National Academy of Sciences (PNAS). Thanks to reader Al for the tip. Taken from the “Significance” section:

Past research has found that experienced well-being does not increase above incomes of $75,000/y. This finding has been the focus of substantial attention from researchers and the general public, yet is based on a dataset with a measure of experienced well-being that may or may not be indicative of actual emotional experience (retrospective, dichotomous reports). Here, over one million real-time reports of experienced well-being from a large US sample show evidence that experienced well-being rises linearly with log income, with an equally steep slope above $80,000 as below it. This suggests that higher incomes may still have potential to improve people’s day-to-day well-being, rather than having already reached a plateau for many people in wealthy countries.

Here is a chart from the paper that illustrates how “experienced well-being” keeps increasing with log(income).

Why do I keep making log in bold? Because even though it was a long time ago, I still remember something about logarithms! The only two charts in the paper emphasize the nice line before and after the $75,000 income marker. This might confuse a quick reader to think that happiness keeps increasing linearly with income. In reality, here is a graphic (source) that shows the difference between rising linearly with n vs log(n). The relationship between happiness as income increases looks like the red line below.

If you read the entire paper, this is addressed (emphasis mine):

When interpreting these results, it bears repeating that well-being rose approximately linearly with log(income), not raw income. This means that two households earning $20,000 and $60,000, respectively, would be expected to exhibit the same difference in well-being as two households earning $60,000 and $180,000, respectively. The logarithmic relationship implies that marginal dollars do matter less the more one earns, while proportional differences in income have a constant association with well-being regardless of income.

In order to match the amount of happiness increase from $20,000/yr to $60,000/yr income, you would have to go from $60,000 to $180,000 year, or then $180,000 to $540,000 a year, and so on. Here a quick sketch that I made of this (gives me a reason to use my new $34 knockoff Apple pencil).

That… sounds pretty reasonable, doesn’t it? Happiness increases with money quickly at lower incomes, and as your income grows the incremental increases are smaller (but still goes up a bit). If you make $150,000 a year now, getting a $25,000 annual raise will still make you little happier, but nearly as much as someone earning $50,000 a year now.

If the past research said that you got zero additional happiness past $75,000 year, that would have been the surprising thing. If happiness forever increased directly in proportion with income, that also would have been surprising.

My Money Blog has partnered with CardRatings and Credit-Land for selected credit cards, and may receive a commission from card issuers. 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.