What I’ve Learned

On the anniversary of my first 40 trips around the sun, I wanted to take a moment to share with you what I’ve learned.

  • Community is everything.  Your family, friends, coworkers, the people you spend your life with, are everything in order to have a great life.  The connections, the support, the accountability, the help and wisdom they provide are everything. Everyday, if you work to better your community, you’ll find great purpose, I know I do. I find happiness, contentment and impact in working to advance others.  

 

  • I strongly believe in the power of the individual.  I believe each and every one of us is capable of doing anything, good or bad. When you look at a collective group, statistics are real.  But when you look at the individuals within that group, anything is possible. There’s a great quote by Ayn Rand that says “The question isn’t who is going to let me, it’s who is going to stop me.”

 

  • Each of us has to carry our own load, we each have to run our own race.  Every one of us has fallen victim to looking for answers outside of ourselves, or from other people, when in reality most answers come from within.  Now, to connect community to the individual, I think it’s imperative to take the position that you are responsible to people, not for people. Embracing this empowers you as well as the person you’re working to elevate.  

 

  • Know your values, goals and impact.  Can you list your core values? Mine are friendship, justice and learning.  Have you written down your goals? Do you understand and embrace the impact you have in your community?  The impact you have on your family? At work? You’re having one, embrace it.

 

  • Music makes everything better, turn some on.

 

  • “You don’t have to be serious to be responsible.”  Jennifer Moss told me that on a podcast and she’s right.  I can remember being at a leadership training conference when I worked a large financial company.  At that time, I was at the top of my group experiencing a lot of success and, as I like to do, joking around quite a bit.  The guy in charge came up to me and said “not everything’s a joke” and I realized I wasn’t long for that career path. You’ve gotta have fun.

 

  • I’d rather be useful than brilliant.  I’m very fond of saying this, but the reality of today’s world is that there’s a ton of noise all the time, almost a low frequency hum that sort of washes over us and doesn’t get absorbed  Whenever I find myself participating in that hum, I know I need to change gears.

 

  • Be where you are.  Your full, undivided attention is one of the greatest gifts you can give to another person.  Put your phone down, be present with the people you’re with, or simply sit quietly by yourself for a minute.  Blaise Pascal said “All of humanity’s problems stem from man’s inability to sit quietly in a room alone.”

 

  • Get and keep a sense of where you are.  Perspective is hard to get and harder still to keep.  It’s so important to consider your place in the world, your circumstances, your obligations, your responsibilities and how lucky and fortunate you are to be you.  

 

  • Get started.  Wherever you are, however old you are, timing will never be perfect, so get started.  The same goes for others, work to meet people where they are without judgement. Help others to get started.  

 

  • Discipline first, than personal responsibility.  I love the idea of personal responsibility, but I get that it’s a learned thing and it’s a muscle that needs to be strengthened.  Until you learn it and the muscle is strong, put some guardrails up. Real change happens incrementally, so take small bites, we get healthy the same way we got sick.  

 

  • How you look at something makes all the difference. You have a choice to focus on the positives or the negatives.  The same goes for the problems facing our world today. If you’re constantly focusing on international issues, you’ll lose your mind because you’re not going to be able to change them.  Instead, focus on how you can bring change to your community. We must tend to our own gardens and it’s important to focus on the parts of our garden we can reach.

 

  • Confidence isn’t everything, but it’s a lot of it.

 

  • “If you sit by the river long enough, you’ll see the bodies of your enemies float by.”  Sun Tzu. Be truthful, treat others fairly, be just and live with integrity. In so doing, the universe will reward you.  It will also balance the ledger because what goes around, comes around. So don’t seek vengeance when someone wrongs you, just know they’ll eventually get what’s coming.  There are a lot of similar quotes attributed to a lot of smart people, but essentially, “Resentment is like drinking poison and waiting for the other person to die.”

 

  • Financial peace of mind allows us to more fully pursue our passions.  I’m working to help people lead happier and more contented lives. For a lot of my life and for too many people, money has been more of a negative than it’s been a positive.  Gaining control of it will allow you to live a better life, free to focus on the things that are of the greatest importance to you.

 

Here’s to another 80 trips!

 

Short Deadlines, High Expectations

“Do not despair of our present difficulties but believe always in the promise and greatness of America, because nothing is inevitable here. Americans never quit. We never surrender. We never hide from history. We make history.”

From Sen. John McCain’s farewell statement

Before you get excited or depressed, I’m not going to talk politics.  Rather, I want to apply these thoughts to the finances of our fellow Americans.  

There are a lot of statistics I could (and have) cite to illustrate our current struggles with money, but this next one really sticks out for me.  

According to a recent article, 52.1% of Kids Live in Households Getting Means-Tested Government Assistance.

“Today, they are Americans under 18 years of age growing up in a country where the majority of their peers live in households that take “means-tested assistance” from the government.

In 2016, according to the most recent data from the Census Bureau, there were approximately 73,586,000 people under 18 in the United States, and 38,365,000 of them — or 52.1 percent — resided in households in which one or more persons received benefits from a means-tested government program.

These included the Supplemental Nutrition Assistance Program (food stamps), Medicaid, public housing, Supplemental Security Income, the Special Supplemental Nutrition Program for Women, Infants and Children, Temporary Assistance for Needy Families and the National School Lunch Program.”

Like me, everyone I’ve shared that with has been shocked.  So, what’s to be done? How can this problem be solved? Like most major problems, the way out is the same as the way in; incrementally.  

If you’re in debt, odds are, poor spending choices over time are responsible.  And the most effective way to get out of debt is to make a commitment and to pay it off over time.    

In social science, agency is the capacity of individuals to act independently and to make their own free choices.  One’s agency is one’s independent capability or ability to act on one’s will.

It’s through our agency as Americans that we’ll begin moving in the right direction financially.  I think Senator McCain’s thoughts are applicable here.

Short deadlines and high expectations

Procrastination messes with each of us, I know I’ve been lulled to sleep by the lack of a deadline.  If you give yourself 365 days to get something done, odds are you’ll put it off for several months before you get serious about it.  What if you had 30 days instead? Would you be able to get it done? I bet you would, and that’s the power of a deadline.

As for high expectations, I say “why not?”  If you’re reading this, I’m going to assume you’re a high-performing person, capable of doing great things.  

The time to act is now.  The time to make tough decisions is now.  The time to make make necessary changes is now.  You can do this!

 

No One Is Coming To Save You

On your journey to financial security and success, many external roadblocks exist.  Markets rise and fall, politics impact currencies and apartment rents are up 30% since 2010.  But the majority of the roadblocks in our way are self-imposed.  

According to a recent study by Bank of the West, one in three Millennials took money out of retirement accounts to buy a home.  When we want to make a purchase, it’s natural to look for any available resources, like tapping into a retirement account like an IRA or a 401(k).  The problem is, even if we get the money out of the account without paying immediate monetary penalties, the cost to us is great.

Time Value of Money is the fundamental financial concept that “money available at the present time is worth more than the identical sum in the future due to its potential earning capacity. This core principle of finance holds that, provided money can earn interest, any amount of money is worth more the sooner it is received.”

Here’s an example-

If you start with $20,000 and earn a 8% interest rate, compounded monthly, after 30 years the future value of your lump sum will have grown to $218,714.59 — of which $198,714.59 is the total interest earnings.

That same scenario, but using 20 years instead of 30, the future value of your lump sum will have grown to $98,536.06 — of which $78,536.06 is the total interest earnings.

Money inside a retirement account enjoys tax-free growth and compound interest, which as you can see, is extremely powerful.  

So what’s the impact of a decision like taking money out of a retirement account?  In the above example, we’d be setting ourselves back by over $100,000.

As you’re making the massive financial decision of buying a home or renting an apartment, ask yourself “why am I doing what I’m doing?”  Why do I want to live in a particular neighborhood? What are the real reasons? Are those reasons worth the price you’ll pay, both now and into the future?  

Access to quality schools is probably a good reason.  Status is not. All too often, we’re guilty of doing things and making decisions based on how we want others to perceive us.  I submit that no one has time for that from a financial perspective.

Gut check time

It’s a grown up truth that no one is coming to save you.  It’s up to you to make good decisions. Decisions that will mean less now, but more later.  I’m not saying a vow of poverty is necessary, but housing is a massive part of our budgets and we can’t afford to make a bad choice.  

I’m writing this because I know you can do it and at we’re all in this together!

 

Tree of Gratitude

What’s up sisters and brothers!

As we head into the 4thof July Holiday, I want to take a moment to talk about what I’m grateful for.  When I started thinking about all the things I have to be grateful for, it made me think about how, if certain things had been different, how would my life be different today?  That lead me to the visual of a decision tree (If this, then that) and so I’d like to start from the beginning:

  • I was born here in the US-what if I had been born somewhere that didn’t enjoy the same freedoms we do? How would my life be different today?
  • I was born to loving parents-what if I had been born to parents who hadn’t been ready or interested in a child? How would my life be different today?
  • Throughout my life, I’ve enjoyed good health-what if I had fallen ill or been in some kind of accident? How would my life be different today?
  • I’ve had the opportunity to matriculate through an undergraduate degree-what if I hadn’t had the same quality of schooling or the same quality of teaching and support?How would my life be different today?
  • I’ve had and continue to meet amazing friends-had I not formed the relationships I’ve had over the years, how would my life be different today?
  • I’ve had the opportunity to be employed and even to start businesses-what if I lived in a country with less opportunity and more barriers to entrepreneurship? How would my life be different today?
  • I had the good fortune of meeting and marrying my wife-we have the good fortune of having a son. So many variables had to be right for these two things to become reality.   How would my life be different today had they not?
  • Both sets of our parents are still alive. While some of you may be questioning the validity of calling this a blessing, we’re fortunate to have them in our lives.  How would our lives be different today if they weren’t with us?

Perspective is so valuable and so difficult to get and maintain.  That’s why practicing gratitude is so worthwhile.  I had Dr. Gregory Sadler, a philosopher in the Stoic tradition, on the Money Savage podcast last week.  If you’re not familiar with Stoicism, it offers valuable tools for dealing with the many curveballs and setbacks that life throws at us. While not everything is going to go our way, it reminds us that we almost always have a choice in how we respond to adversity.

Please work to keep everything in perspective; the things you have influence over like family and community, as well as the things we have little influence over like national politics.  Wishing you and your family a safe and happy Independence Day!

George

You Can Do It!

The High Price of Education and Ignorance

 

“If you think education is expensive, try ignorance.”

-Derek Bok, Harvard University President

We all know the cost of education as been increasing in recent memory and will probably continue doing so.  A normal and somewhat understandable response would be to throw up one’s hands and/or bury one’s head in sand; doing nothing about it.  A secondary option is to begin setting aside some money each month.  The latter is what we’ll be talking about today.

While there exist several options for saving for college, I’m going to focus on 529 plans.  A 529 plan is a tax-preferenced account that sometimes offers a tax break on the contribution, almost always offers tax-deferred growth, and almost always allows tax-free withdrawals for education related expenses.  For information on specific plans available to you, click here.

So, how much does one need to save?  Let’s assume you’d like to have funds available to pay for half of the cost of four years at a state school; here’s how much you’d need to save on a monthly basis to get there.

If you started when you’re child were born, you’d need to save $185 a month.

At five years old, you’d need to save $247 a month.

At 10, you’d need to save $384 a month.

At 15, you’d need to save $971 a month.

If you’d like to plug in your own numbers, click here.

Another option, and nice feature of 529 plans, is crowdfundingyour kid’s education.  What I mean is, a 529 plan allows anyone to contribute to your child’s account-grandmas, grandpas, aunts, uncles, your neighbors; anyone is able to contribute up to $15,000 a year into the plan.  All kidding aside, it’s a common practice for grandparents to contribute to 529 plans, click herefor more information.

Last month, I interview Katie Flynn from SavingForCollege.comon the Money Savage podcast.  We go into depth on this topic and she provides a lot of valuable insight, you can listen on the links below.

iTunes

Google Play

What Money Can’t Buy

First, the Beatles informed us that money can’t buy love, and in yet another blow to money, Warren Buffett tells us it can’t buy happiness either.  He said, doubling your net worth won’t make you won’t make you happier.
I spend a good amount of time thinking about how I can help people to lead more contented lives.  Lives in which they wake up inspired to go to work, are fully engaged while they’re there and return home fulfilled at the end of the day.  The reality is, most of us spend more time at work than anything else.  A second reality is, many of us don’t enjoy the work we’re doing.
If getting rich is your desired endgame, Buffett still advocates for happiness along the way.  Instead of letting your happiness be defined by what you don’t have or how quickly you make money, Buffett said “you can have a lot of fun while you’re getting rich.”
Or, instead of letting happiness be defined by the amount of money we make, which sometimes leads us to work that we don’t enjoy, which takes us away from what we do enjoy, perhaps a change of perspective would be beneficial.
In my recent podcast with Louis Efron, VP of Teammate experience at DaVita Kidney Care, you’re professional happiness all comes down to meaning.  The more you’re able to connect to your purpose, the better.  Do you know and embrace the purpose of the company you work with?  Have you taken the time to explore your own purpose?  Louis encouraged people to think about what truly gets them out of bed in the morning (not the alarm clock) and to think about what they’re truly best at.  From there, have conversations about that purpose with your family, friends, coworkers and managers.  This will help you to both personally and professionally align.
Life’s to short not to feel good about what you do.
Contact me with any questions!
Click on on the links below to listen to my podcast on Finding Your Purpose with Louis Efron.

Personally Responsible

This morning, I published a podcast episode with a well-known financial expert, Peter Dunn, better known as Pete the Planner. We covered a lot of ground, but two main ideas came forward:

  1. It’s imperative to take personal responsibility for our financial futures.
  2. You need to become a millionaire.

Pete referenced a University of Utah study he found troubling. In the study, the people who participated felt their personal health was only 46% their responsibility. They felt their doctors and others were responsible for the majority, or the remaining 54%.

He connected that study to the world of finance, specifically retirement savings. We talked about how it hasn’t been that long since we, as Americans, have become almost completely responsible for our financial success. It used to be that we’d work at the same company for 30 years and didn’t need to worry about saving money because we’d retire with a pension. Not anymore.

Now, pensions are available to only a small percentage of employees. It’s time we caught up with the reality that it’s up to each of us to save money.

Another topic we talked about was the idea that you need to become a millionaire. In order to replace 20 – 30 (or more) years of income in retirement, it’s probably going to take $1,000,000. Think about it: if you retired at 65 or 70, it’s highly possible you’ll live to 100. We tried to demystify the idea of becoming a millionaire and shared the reality that you can – and need – to expect to become one.

Obviously, everyone’s situation is different but it’s time for each of us to do our part. Accept personal responsibility for your financial success.

Click one of the links below to listen to my podcast episode with Pete the Planner.

iTunes

Google Play

Stitcher

Podbean

 

Time

“Tell me how you use your spare time, and how you spend your money, and I will tell you where and what you will be in ten years from now.” Napoleon Hill

 

Do you ever feel like there just aren’t enough hours in the day to get things done? Do you know how much time you spend working everyday? How about how much time you spend on your phone? Do you ever feel like you’re wasting time?

 

I’ve been guilty of wasting time and still am today, but I’ve grown to better recognize when I’m doing it and to refocus. I’ve also learned that having a one year old limits my “free” time, so I better become more efficient.

 

According to the Bureau of Labor Statistics, here’s how the average American spent their time in 2016.

 

8.77 hours personal care including sleeping

1.08 eating and drinking

1.07 household activities

.50 purchasing goods and services

8.28 hours working

3.13 leisure

 

Here’s an ugly number-the average American spends 2 hours and 51 minutes a day, 86 hours a month, on their phones. Safe to say, not the most productive use of one’s time.

 

To make matters worse, our minds wander 46.9% of the time. So, going back to the idea that there are never enough hours in the day may or may not be true. Perhaps we’re simply not effectively utilizing those hours.

 

The concept of Deep work tells us “To produce at your peak level you need to work for extended periods with full concentration on a single task free from distraction.” I fully embrace this idea and know I’m a terrible multi-tasker. One proven method to practice deep work is the Pomodoro Technique.

 

The Pomodoro Technique is a method of time management developed by Francesco Cirillo in the late 1980s. It uses a timer to break work down into 25-minute intervals with short breaks in between each interval. The technique also advocates planning your work in advance, tracking each 25 minute segment on a piece of paper and talking a longer break of 30 minutes after the fourth segment. Give it a shot, many people get great results from using it.

 

In the spirit of, “what get’s measured, get’s done,” there are many ways to track time; I personally use the Hours Pro app.

Food

“That which nourishes me destroys me.” –Christopher Marlowe

Turkey, stuffing, Christmas cookies, things made out of pumpkin-so many good things to eat this time of year. How do your spending habits on food stack up to the average American? Let’s take a look.

Food accounts for 12.5%, or just over $7,000 in the average budget according to the Bureau of Labor Statistics.

And with so many good things to eat, and some many great places to do that eating, an incredible thing happened since that most recent survey from the Bureau of Labor Statistics; Americans began spending more money at restaurants and bars than they did on groceries. How you react to that information is probably telling regarding your eating behaviors.

And how does this fit into the 50 20 30 budget model? This is trickier than you might think because technically, food falls into the Needs category. But, going out to dinner at your favorite restaurant bleeds over into the Wants section. And when I say “bleeds over,” I mean it moves completely over to the Wants section. Therefore, for many Americans, the money they are spending on food has moved from the 50% Needs category, to the 30% Wants category, and without knowing the details of their personal budget, I’m going to assume it wrecks it.

Going out to eat is one of my favorite things to do, as it is for so many of us. It’s also a quick and easy way to wreak havoc on our budgets. Be mindful and strong this Holiday Season!

Cars

Americans have always had a love affair with cars. But are they messing up our finances? Are you paying too much for your car (or even for multiple cars)?

Here are some stats for perspective:

  • 1 percent of total petroleum consumption is by people in the United States
  • In 1960, Americans owned more than 61 million passenger cars—about one car for every three people.  In 2008, Americans owned 137 million passenger cars—a little less than one car for every two people
  • The average new car cost in 2017 was $31,400 after incentives

Experian Automotive 2017 reports show:

  • 86% of new cars were bought with the help of financing, higher than in previous years
  • The average car loan was $30,000, the highest since Experian began tracking the data
  • The average length for a new-car loan was 68 months—or five and a half years—and some loans are for as long as seven years.
  • Auto leases are becoming more popular, accounting for more than 30% of new-car transactions in the first quarter

The annual cost to own and operate a vehicle in the United States in 2016 was $8,558 according to AAA’s 2016 Your Driving Costs  study. Here’s how that breaks down:

Fuel $1267.50
Insurance $1,222
Depreciation $3,759
Maintenance $792
License, Registration, Taxes $687
Finance Charges $683
Tires $150

In 2015, Americans spent $1,184 billion on transportation, or 9.6% of all personal consumption expenditures per household.

Bankrate provides a tool to encourage better car buying habits. Remember the 20/4/10 rule:

  • Aim to put down at least 20% of the car’s price in cash
  • Take a loan for no more than four years
  • Keep the cost of transportation to no more than 10% of after tax household income.

Care for an example or two to see this in action?

  • Assuming an annual income of $75,000 and income taxes of $11,925 (15.9%), you should spend no more than $6,307 (or 10%) per year on a car.
  • Assuming an annual income of $150,000 and income taxes of $28,200 (18.8%), you should spend no more than $12,180 (or 10%) per year on a car.

*Find a table to figure out your tax bracket here.*

Add up your auto loan, car insurance, monthly gas expense and any other auto related expenses. How are you doing? Is your auto expense 10% of your after-tax income? More? Less?