Thursday, May 31, 2018

What Does ‘Frugality’ Mean?

In about a month, I’m going to launch a series of (tentatively) eight weekly articles discussing the book The Wisdom of Frugality by Emrys Westacott. It’s a book that covers what one might call the philosophy of frugality as it tackles a wide range of issues surrounding frugal living, why people choose to do frugal things, and how those frugal things impact the world.

It’s an excellent book, one that I’ve read several times now. I’ve attempted to write a single article summary of it multiple times, but I always end up with far more to say than could fit in a single article, so I decided to make a series of articles out of it. I’m giving plenty of notice in advance so that those who might want to read the book in advance or along with the articles will have plenty of time to check out the book from the library.

That being said, a big part of what underlines that whole series is the idea of what frugality is. What do I mean when I use the word “frugal” or “frugality”? One of the key lessons I’ve taken from The Wisdom of Frugality is that people often mean different things when they use the word “frugality,” and I wanted to somewhat define what the word means to me.

So, let’s dig in. You’ll find some useful things here, I promise.

Frugality = Bang for the Buck

When I say “frugality,” I simply mean a conscious effort to get the most value I can whenever I’m spending some of my resources. Usually, when I say “resources,” I mean dollars and cents, but not always (and I’ll get back to that in a little bit). Whenever I spend a dollar, it is important to me to get the most value I can for that dollar.

At first glance, one might think that would mean that I’m super price sensitive about everything and will always buy the lowest priced option, but that often ends up not being the case.

Why? To me, part of “value” means doing the job well, not just doing the job minimally.

I’ll use my favorite example of trash bags to make this clear. Many years ago, when I first started diving into frugality, I went the “cheap” route on virtually everything I could, and one of those things was trash bags.

Now, for most of the store brand and generic items I purchased, the item did exactly what was intended and I was very happy with that purchase. I was thrilled with store brand dish soap and store brand flour and store brand breakfast cereal and so on, as almost all of them were indistinguishable from the name brand for our purposes. Those were frugal purchases – I was getting the most “bang for the buck” for my dollar from those purchases because they worked just as well as more expensive name brand options for my needs.

With trash bags… that wasn’t the case. I found that I could only fill them up halfway, which meant that I was investing more time taking the trash out. Even worse, about one in 30 or so of the bags would split all over the kitchen floor, creating a big cleanup hassle that I had to deal with. These bags cost about $0.05 each, whereas the brand I was using before cost about $0.20 each, but I could fit twice as much in the more expensive bags and I never had blowouts.

In other words, there was a big extra hidden cost in the cheap bags. I was taking out the trash twice as often, which was eating up a minute or two here and a minute or two there, and about once a month there would be a huge mess in the kitchen that would take extra time to clean up. The generic bags were adding a time cost compared to the better bags.

So, while I might be able to buy a box of 100 cheap trash bags for $5 versus 100 good bags for $20, the truth is that I was using the cheap bags twice as often, so the real match was buying two boxes of those cheap bags, which cost me $10, and then watching lots of minutes here and minutes there come and go with the occasional blowout in the kitchen. All of that lost time didn’t add up to $10 in savings to me, so I switched away from the generics.

My point is this: There are more costs to the things you buy than just the initial dollars and cents. Using things costs time and energy, too. If you’re saving money on something that’s going to end up requiring additional time and energy to use, you need to make sure that the saved money is worth the extra time and energy.

Resources Are Transmutable

So, let’s back up to that definition of frugality again. When you choose to buy something, you’re essentially committing a certain amount of resources to it in the hopes of getting value out of it. Frugality is all about making sure that you’re getting maximum value out of the resources you commit, whatever they are.

There are lots of resources to consider. Money is the most obvious one, and time and energy and focus are right behind money. For example, if you buy cheap and hard to use trash bags instead of more expensive and easy to use trash bags, you’re not really being frugal because you’re just substituting time and effort for money.

There are more values even beyond those ones. What about supporting your local community? What about the environment? What about the value of treating guests in your home well? What about your stress level?

All of those are values that you’re either putting into a purchase or getting out of a purchase, and they all are part of what I consider when I think about “bang for the buck.”

The catch – there’s always a catch – is that all of these resources are actually transmutable, meaning that each one can actually be swapped for another one. This might seem hard to believe at first, but it’s actually true. All of the values you put into something or get out of something have a dollar amount that you put on them, whether you initially see it or not.

If I spend two dollars extra to buy a dozen eggs locally from a truly free range chicken farm, that means I’m putting a certain dollar amount on how much I value local farming and animal care. That doesn’t mean that either choice is wrong, just that I put a certain value on things.

If I buy a pineapple for $5 instead of buying an equivalent amount of cut up pineapple for $15, that means that I’m willing to save $10 to invest the time and energy needed to cut up that pineapple.

We all make lots of choices like this, mostly based on our gut instincts. Most of us don’t sit down and actually try to calculate out the exact ratios and dollars and cents that we put on a certain value. We mostly just trust our gut.

So, this leads me to refine my definition of frugality yet again. Frugality simply means that you’re paying a little more attention to how much you view various values to be worth in comparison to each other. The more you consider the actual cost of things or the actual value you’re getting, the more frugal you are.

Some Examples

A few examples here might be in order.

Let’s say I’m going to the grocery store to buy trash bags (I love the trash bag example because it’s so clear what I’m talking about).

A person who isn’t frugal is going to walk down the trash bag aisle, look at the options, grab the package that seems familiar because of good marketing, and keep rolling. They’re not very concerned at all about how well the trash bags will perform or anything like that. They want something that will hold their trash and do a good job of it and they put minimal effort or thought into meeting that need.

A slightly frugal person will walk down the trash bag aisle and buy the cheapest ones they can find. That person recognizes that the only real value they get out of trash bags is that they will transport trash out to the trash can, and thus spending the minimum possible amount on whatever gets that job done is a good choice.

A more frugal person will walk down the trash bag aisle and think about past purchases a little. Have they tried the cheap ones before? If so, did they do the job? If not, have they tried this next cheapest brand? How did that brand do? They’ll try to buy the least expensive brand that they know will do the job well and have minimal time and energy costs later on.

An even more frugal person might walk down the trash bag aisle and identify the best “bang for the buck” brand of trash bags – the cheapest one that gets the job done with minimal fuss – and then will seek out the best bargain on those bags or of higher quality ones. They’ll examine the cost per bag and the bulk buy options carefully and walk away with the lowest possible price per bag, which is probably a midrange bag in a big bulk box.

What’s the difference? At each step, a little more thought is given to the resources put in versus the value received and that additional thought is rewarded by either having to put in fewer resources or by getting better bags for the same resources.

The Value of Thought

This is just a simple example, of course, but it illustrates a very valuable key point about frugality: The more you think about something, the more likely it is that you’ll get more value for the resources you put in.

This leads to another interesting crossroads when it comes to frugality. Many people who reach this realization about frugality then come to see frugality as a sport of obsession. I see this a lot in the comments of posts I write about frugality. “You obsessed over something that will save four cents? What? Why?”

That utterly misses the point.

First of all, the time spent figuring out how to save four cents usually relates to something that repeats with a high level of frequency. If I’m worrying about something that saves four cents, it’s probably something that occurs at least once a day in my home.

Second, the time spent usually uncovers a good principle to follow that will last for a very long time. I can keep using that principle for the next decade to guide my purchases to a pretty good destination. This is because I do that kind of thinking once to uncover the best answer and then ride that answer for a very long time without thinking about it. I’ve already invested the thought – I don’t think it all out again the next time I buy trash bags or whatever the case might be.

Taking those two together, let’s say I obsess for a while over trying to optimize something that happens in our home every day and I figure out how to save four cents a day on it. I invest two hours trying out different strategies and thinking through it. “YOU INVESTED TWO HOURS TO SAVE FOUR CENTS?” No, I invested two hours to save four cents a day for the next decade, plus I basically don’t have to think at all about this again for a very long time, so I likely slowly recoup that time invested. That four cents a day for the next decade, by the way, turns into $146.

Third, when I write a post that dissects some specific frugal tactic, I’m usually doing it to share the results with a reader so that reader doesn’t have to think through all of this. They can just see the argument, borrow the conclusion, and use it in their own life as if they’d figured it out themselves. That’s the point of the article.

Finally, I actually enjoy figuring out the best way to do little things like this. I like to figure out how to optimize soap use or how to get the most value out of a garbage bag. If I can figure out a better way of doing things, that feels good to me. It’s the “engineer” side of me peeking out.

So, again, let’s redefine that definition of frugality. Frugality is about living by a series of well-considered principles that help to ensure that you get the most value out of the resources that you have.

We’re getting pretty close to what I think frugality means!

The Value of Principles

It’s worth noting that a big part of that last section is about living by a set of principles that guide your behavior. The idea of principles is really important here.

To me, principles are a really powerful tool for getting through life. Good principles that you trust will guide you through all kinds of situations with great results. I find that having a set of well-considered principles that you innately understand and trust will guide you to good things in almost every aspect of your life.

This requires two things.

One, you have to have good principles to begin with. In other words, you need to have some fundamental rules that you follow that guide your behavior. Frugality is just a way of describing some of those principles by simply saying that it’s important to you to get the most value out of the resources you spend.

Two, you have to trust those principles. Once you’ve figured out a really good way of doing things, you have to trust that those principles are right. I almost entirely trust my principles to guide me through lots of different kinds of situations – not just things related to finance, but everything in life.

I only start questioning principles when I start getting results I don’t like. For example, if I notice that my spending is going up a lot, then there’s probably some issue with my spending principles and I need to rethink them a little. As long as I’m getting results I like, I just keep living by my principles and I don’t really have to think about them too much.

(I will say that there’s usually at least one or two areas in life where I’m not getting the results I want and thus I’m questioning my principles in that area. Finances are quite often one of them, mostly because my mind is on my money quite a bit simply because I write about finances every day.)

This brings us to what I think is the final and fundamental point in all of this.

Frugality Is a Value

Principles – the rules we live by – are founded on values – the things that, at our core, define our sense of right and wrong and what we want to achieve and get out of life. Frugality is one of those values, a very fundamental one, in fact.

To me, frugality is simply a fundamental value that says “I consider it good to think about my choices in life carefully to ensure that I’m getting the most value out of those choices compared to what I’m putting in.”

Others may or may not hold that value. They may find such a use of thought and time and energy to be better used elsewhere and then base their decisions on other criteria, and they’re not necessarily right or wrong. I think that a lot of people reading The Simple Dollar do hold that value, though.

Most of the time, when we talk about frugality, we’re talking about money, of course, because money is the common medium of exchange. We value our time and energy in terms of money because we work for money. We value the things we own in terms of money because we spend that money to buy those things. Thus, frugality is easiest to see when it comes to money, but it applies in a broader way to almost everything in life.

So… What’s Practical Here?

If you’ve read through this whole article, you might be wondering what’s practical in all of this. For me, thinking about what frugality means to me exposed three very practical things.

First of all, a reasonable amount of time invested up front in thinking about a purchase or expense almost always pays off. That’s because if you’re thinking in depth about a small expense, it’s probably one that’s going to repeat often so even a small savings will add up, and if you’re thinking about a big expense, even a small percentage savings will result in a lot of money saved. In short, if you’re a frugal person, thinking carefully about a purchase is almost always worth it. This extends beyond purchases and dollars into almost anything you care about in life, in my opinion, but as I noted above, frugality is usually focused on dollars and cents.

At the same time, borrowing a frugal strategy from a trusted source is a good time saver. It’s not really even a money saver because it’s typically something that you’d figure out on your own with some time investment. The reason I read frugal websites and practical magazines like Consumer Reports, in the end, is to save time thinking through a purchasing decision or a “best” way of doing things. If a source I trust comes to a conclusion about something, I’ll just adopt that conclusion and use it. Spending ten minutes reading a blog post or a magazine article that results in something actionable is great because it probably means I saved two hours trying to figure the same thing out on my own. Even if only a small fraction of the things I read are actionable, it’s still worthwhile because the ones that are are really big wins. It’s worth noting here that “trusted” doesn’t mean you always have to agree with the source nor does it mean that the source is perfect, but that the source strives to always be honest and true to their values. A “trusted” source might give out a strategy that’s not perfect for you, but it’s probably perfect for someone.

Finally, the time you spend reflecting on any aspect of your life or idea that’s important to you is time that usually ends up paying for itself. If you find yourself struggling with a buying decision, a reasonable amount of time you spend really figuring out the right solution is time well spent. Sometimes, I’ll just make a choice in the moment that matches my gut instinct and then I’ll think about it in depth later on, which is a great strategy to rely on. I spend a lot of downtime reflecting on recent choices and asking myself if I made the right choice or if there was a better way to do things and that thinking either reinforces or refines one of the principles I live by. That time investment is almost always worth it. Don’t lament the past or a mistake you made in the past; instead, mine it for clues as to how to live better in the future. That works for frugal decisions and almost any aspect of life. Don’t be afraid to think things through.

Frugality is like any value that we have in life. The more we lean into it and trust it, the more value it brings to us.

Good luck!

Related Reading:

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New Grads: Seven Ways to Stand Out During an Entry-Level Job Hunt

As a manager at a growing technology company, I’m deeply involved in the hiring process for my team. I’ve learned a lot over the last couple of years about what makes a candidate stand out during the application and interview process.

While I think this advice can be especially helpful for new college graduates, I hope these tips — which go step by step from the initial search to the follow-up email — can prove useful to job seekers of all ages who are trying to cut through the noise and get noticed.

Applying for Roles: Speed Is Key

After I post a position to the job boards, I’ll check back after a few hours to see if any applications have rolled in. If I find someone great within the first 10 submissions, they have a huge leg up in terms of advancing in the process.

In a perfect world, I’d meticulously review the 50th applicant just like I did the first, but that’s just not how it works. Every employer is hoping to find someone quickly, as hiring is a time- and resource-intensive project. As annoying as it can be to apply for jobs, the hiring process can be just as tedious. Everyone is hoping to get it over with as quickly as possible.

If I was on the hunt, I’d be checking relevant job boards whenever I had a spare moment. This includes the huge ones like Indeed, Glassdoor, and Monster, but also industry-specific boards and smaller sites such as WayUp, which is tailored toward helping recent grads.

You can also be more targeted. For instance, if you know you want to work at a startup, you can check AngelList. Or if you have a strong desire to work for a company backed by a premium venture capital firm, you can check out websites of the big VC firms and see if they list open roles for companies they invest in (a lot of them do).

If you’re hunting for a new job while working a full-time job, I’d suggest checking job boards in the morning and on your lunch break, if possible. Set reminders for yourself so you don’t forget to give them a quick look. And make sure your resume is up to date and that you’re ready to shoot off the PDF at a moment’s notice.

The Resume: Use the KISS Method

Feel free to distinguish your resume with a few interesting design flourishes, such as using a colorful header with a unique font. You don’t have to use the exact same format as everyone else, and being unique can make you stand out from the pack. I’ve looked at a cleverly designed resume and thought, “What a fun idea, and so well executed!”

But, be careful of going overboard. When in doubt, think of the KISS acronym (keep it simple, stupid). I’ve seen resumes that look like a Picasso painting. There are colors, jagged lines, boldface words, and bright shapes. It can be overwhelming. You should do what you can to highlight your skills, but you never want to be jarring or muddle the message. Show your resume to a few friends and ask for honest feedback on your layout. When in doubt, keep it simple. Readability is much more important than creativity.

Finally, always keep your resume to one page, especially early on. I’m sorry, but no one cares about your high school internship working the front desk at the YMCA, and in no universe should you bleed onto the second page to talk about it. I am instantly skeptical of someone who can’t be concise enough to list what they need to say on one page.

As for content, again, keep it simple. If you’re applying for an entry-level role, the reality is that it’s unlikely anything you’ve done up to this point in your career is that impressive. There’s no need to make your internship at the local bank sound like you were clerking for a Supreme Court justice. Just be concise.

Also, it helps to use concrete numbers wherever possible. Instead of saying, “I supported the marketing team and helped launch their new campaign,” it’s better to say, “I generated 27 different marketing templates in a two-month period, which improved our email open rate by 42%.”

The Phone Screening: Bring the Energy, Be Concise

A recent study out of Yale concluded that we feel a stronger emotional connection with people when only listening to their voice than when we can actually see the person. This is counterintuitive, but highly useful information for interviewees during the phone screen phase. It means that the initial phone screening is an ideal opportunity to show that you’re enthusiastic and friendly. You should strive to talk clearly, confidently, and in an upbeat manner.

The other main way to stand out in this phase is to be concise. There’s something about a phone call that encourages rambling monologues covering every aspect of the candidate’s life. You should focus on hitting the key points you want to cover.

For instance, if you once worked on a project that was perfectly applicable to the role you’re applying for, find a way to quickly hone in on that one story. Doing so will show that you respect the interviewer’s time and also that you’re confident enough in your resume that you don’t have to talk ad nauseum about every aspect of it.

On a similar note, always leave pauses for the interviewer to jump in with questions.  If you’re worried the conversation is headed in the wrong direction, don’t just keep talking. Usually, if you take a breath, the interviewer will get a chance to ask a new question and get things back on course.

The In-Person Interview: Have Fun, Do Your Research

Finally, we get to the most important step. In my experience, the in-person interview for entry level roles is mostly about answering one question: “Would I be okay sharing a relatively small space with this person for eight hours per day?”

That might come as a surprise. Isn’t the in-person interview when you have to prove how smart and qualified you are by answering tough questions on the spot?

Well, that’s often part of it, and you certainly want to be prepared for those questions. But the truth is that, especially at the lower levels, you’re not likely to have a huge impact on the business’s bottom line. You’re being hired to play a small role. If you do that well, then you’ll be evaluated for promotions.

I’d rather hire an upbeat, optimistic, energized person with slightly less qualifications than a person who looks great on paper but comes across as surly and negative.

Any hire has the potential to have a tremendous impact on the overall atmosphere of the office and on team culture. As the saying goes, it only takes one bad apple to spoil the bunch. You want to come across as calm, friendly, easygoing, and supportive. I understand that acting that way is easier said than done, especially when you’re nervous. Maybe it will help to really think about the fact that, for a lot of jobs, cracking a funny joke and just generally being relatable is of more importance than having a compelling answer to the question, “Where do you see yourself in five years?”

It’s also key to do your research about the company. The people you’re interviewing with usually have a passion for what they do. You want to be able to match that. At the bare minimum, you should have a strong understanding of what the company does and what their mission is. There’s nothing worse than interviewing a candidate who didn’t bother to do even the most rudimentary research about the company. You never want to find yourself saying “Oh, so that’s how the product works, I had no idea!”

The Follow-Up Email: Don’t Overthink It

It’s considered standard protocol to send a quick note to the people you met with. This can be done a few hours after the interview or the next business day.

In my opinion, it’s best to keep this short and sweet. There is no need to wax poetic about how much you loved the people, the office, the receptionist, or the picture in the bathroom. There’s also no need to reaffirm what a perfect fit you are. The reason you made it so far was that the company already likes you!

I see the follow-up email as the job hunting equivalent of saying “bless you” when someone sneezes. Some think it’s polite, some think it’s totally unnecessary, some don’t care one way or the other. Whatever your stance, the choice to say “bless you” or not is never going to be that big of a deal.

That being the case, the follow-up email is not the make or break moment of the job hunting process. I’ve never read a post interview email that swayed me in one direction or the other. So, just pump out a quick thanks and move on.

Summing Up

I hope the above steps can help reduce some of the anxiety that inevitably comes along with searching for a job. The keys, in my mind, are to cast a wide net and apply quickly, then demonstrate an easy-going enthusiasm if you make it to the phone and in-person interviews.

It can feel like a balancing act and it’s not always easy, but with some practice you should be able to put your best foot forward. Good luck!

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Wednesday, May 30, 2018

The High Probability of Low Probability Events

As many of you know, I keep a pocket notebook where I jot down ideas and things I need to do and things I hear and things I read and basically just anything I want to remember for the future. I do this throughout the day whenever something comes up, and then at the end of the day, I go through the notebook, doing something with each item (adding a new item to my to do list, adding a new item to my calendar, and so on).

Every once in a while, I come across something in my notebook that I simply don’t understand or know where it came from. Usually, it’s some strange idea I had that I didn’t record well enough, or something I overheard that I didn’t source.

This happened to me a few weeks ago, and the phrase I wrote down has stuck in my head.

The high probability of low probability events

What does that mean? I’ve found myself thinking about this phrase quite a bit lately, and I’ve come to realize that it points to a pretty important phenomenon when it comes to personal finance.

This idea is probably best explained by an example, so let me spell it out for you clearly.

In a given month, the probability of, say, my car breaking down is extremely low. The probability of having a flat tire is pretty low, too. The probability of losing my job is really, really low. The probability of someone getting seriously ill in my family is very low.

I could make a giant list of unfortunate events for which the probability of each is really low.

Of course, it’s likely that at least one of the unfortunate events on that long list is going to occur this month. By simply adding up the very small probabilities of thousands of unfortunate events, the actual odds of any of those unfortunate events occurring is actually fairly large.

Let’s say there’s a 1% chance my car will break down this month. Planning ahead for that emergency alone might not be the best move, right? If that was the only emergency that would befall my life, making a bunch of financial plans around that is probably not the wisest choice.

However, at the same time, there’s a 1% chance that I could lose my job. There’s a 1% chance that someone could get really sick in my family. There’s a 1% chance of significant storm damage to my home. There’s a 1% chance of my wife losing her job. The list goes on and on, with different percentage odds and different events.

Let’s say I can make a list of 100 events, each with a 1% chance of occurring. The way you figure up odds like that is that you actually calculate the odds of each event not occurring – a 99% chance – and then you multiply that together and then subtract from 100%. It turns out that on that list of 100 unfortunate events that each have only a 1% chance of occurring, there’s actually a 40% chance that at least one of them will occur this month, and a 0.5% chance that at least two of them will occur this month.

A 1% chance of an unfortunate event isn’t really enough to worry about. A 40% chance? That’s pretty significant.

If you think about this in the context of your own life, it’s not really surprising. Think about the last few months. You can probably think of a couple of unexpected unfortunate events that occurred, right? However, the odds of each one of those events occurring is actually pretty low in the big scheme of things. It’s just that there are so many different unlikely events that could happen that the odds are that at least one of them will happen every month or two.

In other words, there’s a high probability of a low probability event occurring. We’re not talking about a specific event, but one of a large pool of unfortunate events that might occur.

Take our family, for example. In the last month, we had a tire blowout and some wind damage from a storm. Over the course of years, those individual events might happen once, or might not happen at all, but that’s true of a lot of unfortunate events. However, eventually things like this are going to happen, and we have to be ready to financially deal with them.

To me, this is a brilliant case for why we need an emergency fund. An emergency fund isn’t necessary to protect against a singular unfortunate event. Having a fund set aside for something like a blown tire alone or wind damage alone is pretty silly – those are individually low probability events. Our emergency fund came through for us this month, in fact.

An emergency fund is very useful for the high probability of low probability events, though. It’s highly likely that over some period of time there will be some kind of an unfortunate event in your life – a car breakdown, a job loss, a sick family member, an unexpected funeral in another state, a washing machine that dies and floods the basement… the list goes on and on.

The purpose of an emergency fund is to step in and help out your monthly finances when you can’t handle an unexpected expense. Some unexpected events will happen, even if the odds of each individual possible unexpected event is tiny. Ideally, many people have enough flexibility in their budget to handle some smaller unexpected events. It’s the bigger ones, or the occasional situations where unexpected events come in bunches, where the emergency fund comes in handy.

The key thing to remember is this: an individual specific unexpected event is unlikely; however, some kind of unexpected event is actually fairly likely because there are so many different specific unexpected events that could happen that the odds add up. Because you know that some kind of unexpected event is likely to occur sometime soon, it’s a good idea to prepare for it now because you’re pretty certain it’s coming.

How do you prepare for it, then? I’ve written a great guide for building an emergency fund but it boils down to just a few simple steps. All you really need to do is set up a savings account somewhere – an online bank like Ally is a good choice. Then, set up a small weekly automatic transfer from your checking account to this savings account. After it’s set up, each week a small amount of your choosing will automatically be drawn from your checking account into that emergency fund savings account. Then, whenever you have a genuine emergency that you can’t handle, just transfer the money back from your emergency fund savings into your checking. That’s it – that’s all you have to do.

How much should you transfer? Smaller but more frequent amounts are a good idea. I recommend trying out $20 a week – that adds up to $1,040 over the course of a year. Don’t worry too much about how much you should have in that emergency fund, or how much is too much, or whether you have too little. Just let the automatic transfer drip money in there and don’t worry about it.

Also, don’t rely on credit cards as your “emergency fund” because credit cards can be lost or stolen or your identity can be stolen or the credit card network may go down. A credit card is convenient, but there are many emergencies where it just doesn’t help.

The thing to remember with an emergency fund is that it’s not just $20 disappearing each week. Instead, look at that money as security against a big disaster in the future, something that will happen. A specific type of disaster is unlikely, but a disaster of some kind likely will occur at some point in the fairly near future and you’re going to want to be prepared.

The high probability of low probability events is a real thing. Plan for it. You’ll be glad you did.

Note: I did finally figure out where the phrase came from. It came from the book Triggers by Marshall Goldsmith, which I happened to be reading at the time. It was just an offhand phrase that wasn’t really connected to the main topics at all, which is why I didn’t initially remember where it came from.

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Nine Ways to Protect Your Kids From Identity Theft


More than one million children were the victims of identity theft in 2017, according to a new study from Javelin Strategy & Research. Two-thirds were under age 8. These crimes led to losses of $2.6 billion – some of which came from the pockets of the victims’ families.

Why would identity thieves go after kids? It’s not like they have credit histories, right?

That’s exactly the point. The blank-slate status of a child lets a thief apply for credit cards, take out loans (including mortgages), open utility accounts, and commit fraud on tax, employment, health, and government forms.

Unlike their elders, children don’t generally monitor their accounts or have protections like bank alerts or identity theft protection services in place. That lets the crooks open accounts gradually, giving the appearance of legitimate credit activities.

This means fraudsters can steal a lot more. On average, a child’s identity theft cost $2,303 – more than twice the amount stolen from adult victims. To add insult to injury, the children’s families were held liable for at least some of the fraud, an average of $541.

Data breaches are harder on kids than adults. Among people who were notified that their information had been compromised, 39 percent of minors ultimately became victims of fraud. By contrast, identity thefts went after only 19 percent of the adults whose material was stolen.

Children are vulnerable. Here’s how to protect yours.

Secure physical documents.

Three out of five child ID theft victims personally know the crooks. That could mean relatives or people with access to the child’s information, such as a medical care provider.

Don’t make it easier for thieves! Lock up a child’s birth certificate and Social Security card, either in a file cabinet or a safe deposit box.

Be careful what you give out.

When filling out medical or school forms, skip the part that asks for the child’s Social Security number. You don’t have to give it. If an overzealous clerk at the doctor’s office asks, politely say that you’re concerned about ID theft and therefore decline to use the number.

And if the clerk says, “But this computer form requires numbers in all fields,” do what Consumer Reports suggests: Ask the clerk to fill in the field with all zeroes.

It’s easy to share info accidentally, such as when you let your kid sign up for a rewards club offered by his favorite store. Instead, use your own information rather than letting him have the account in his own name.

Be careful what the school gives out.

Sometimes schools release information about students – including personally identifiable material such as address, date of birth, phone number, e-mail address, and even photos – to third parties.

Ask your child’s school about how to opt out of having this material made public.

Be careful what your child gives out.

It’s never too early to teach kids to be cautious about their digital identities. When signing up for online forums or gaming groups, tell them not to provide identifiers like a middle name (if possible, avoid using even a first name in favor of a nickname like “Destroyer of Worlds”), or date of birth (it’s okay to turn “8/19/2006” into “12/25/2006”), home address or, heaven forbid, a Social Security number.

Children are accustomed to having a ton of anonymous “friends.” Don’t let them be catfished into sharing vital information. Speaking of which, you should…

Monitor your child’s online activity.

Remember those anonymous friends and fellow gamers/commenters? You have no idea who they are. Your daughter is likely to believe that Destroyer of Worlds is also an 11-year-old girl – which she actually could be. However, DoW could also be an identity thief.

If you do allow your child to participate in social media and other online activities, make it clear that the password will always be available to parents, who plan to check regularly on Junior’s activity. Ideally, such activity would be done in a common area of your home.

Yep, your kid may just hate these rules. But that’s what parents do sometimes: Aggravate their children in order to keep them safe. You need to know where your child’s conversations take place and what kind of info he’s sharing online.

Monitor your child’s finances.

That bank account or college savings plan can and should be checked regularly. Review statements at least monthly and if there’s an option for account alerts, sign up.

Watch for warning signs.

Imagine getting a pre-approved credit card offer in your child’s name. Just a funny computer glitch, right?

Maybe. Maybe not. Someone who’s using your kid’s identity may be so good at opening cards that other companies want in on the action.

A few other warning signs:

  • Bills or collection notices in your child’s name show up.
  • An application for government benefits gets refused because someone else is already using that Social Security number.
  • The IRS writes to say your child owes taxes. (Note: Any phone call from an “IRS employee” is fraudulent, since the IRS communicates by mail only.)

If you see one or more of these signs, you should…

Find out if your kid has a credit history.

Contact all three of the major credit reporting bureaus to ask for a “manual search” of files relating both to the child’s Social Security number and to the child’s name and Social Security number.

Here’s how to get in touch:

You’ll likely be asked to provide information, such as copies of the child’s Social Security card and birth certificate.

Incidentally, the FTC suggests checking for a credit history close to the child’s 16th birthday. That gives you time to correct any issues, before the child needs to apply for a student loan or an apartment rental. (Learn more at the FTC’s “Child Identity Theft” page.)

Consider a credit freeze.

A credit freeze keeps potential lenders from accessing your child’s account. Should someone steal Junior’s info and try to open a new credit card, the freeze acts as a shield. No federal standard exists regarding credit freezes for minors, but many states allow it.

If you learn that your child’s credit has been compromised, take action. The FTC offers information on tactics like placing a fraud alert and creating an identity theft report.

Does this sound scary? That’s because it is. Don’t let thieves cause personal and financial stress for your family. Be as vigilant about your child’s credit as you are your own.

Veteran personal finance writer Donna Freedman is the author of “Your Playbook for Tough Times: Living Large on Small Change, for the Short Term or the Long Haul” and “Your Playbook for Tough Times, Vol. 2: Needs AND Wants Edition.”

Related Reading:

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Tuesday, May 29, 2018

How to Reduce the Urge to Eat Out

Jennifer writes in with a bit of a twist on a topic I’ve addressed in the past:

How did you and Sarah break out of the routine of eating out all the time? You mentioned that the two of you used to eat out several times a week and now eat out once a month or less. How did you do it? It always feels like it’s just way easier to eat out.

I’ll be fully honest – a big part of the equation was having children. Children present a certain set of difficulties when going out to eat at a restaurant. Children can be noisy and impatient and picky eaters; though that’s not true of all children all the time, it’s definitely true of most children at least some of the time, and such a situation is very hard to deal with in a restaurant setting. Family restaurants tend to succeed when they cater to this by having a children’s menu and some sort of activity to keep children distracted for a short period, but even then, it’s often not worth the added expense and the additional effort to take a child to a restaurant as compared to one or two adults without children.

Having children wasn’t the whole solution, however. During our financial turnaround, Sarah and I made a lot of conscious decisions about our spending and tried out numerous approaches. Our goal was simple: we wanted to get our food spending in check. It was unnecessary for us to be spending a thousand dollars a month for Sarah and I and our infant child simply to eat. We should be eating on a third of that, or less.

The thing is, as Jennifer mentioned, eating out has a lot of advantages, most particularly the convenience of it. It’s easy to just go to a restaurant, sit in a chair, have someone bring you food, and then have someone clean up after you. The convenience of that, especially at a quick glance, is pretty compelling when you have a busy life without a whole lot of downtime. Eating out is an expensive routine, but it’s a routine with a lot of perks.

How did we break this habit? Here are some of the strategies we employed.

Consider the Full Cost of Eating Out

Eating out at a restaurant isn’t just the financial cost of the entrees you order. You have to add in the cost of the drinks. You’ll add in the cost of the tax on your meal, which can be as much as 10%. You’ll be adding in the cost of the tip, which is somewhere around 20% of the bill. You’ll be adding in the cost of transporting yourself there and then transporting yourself home – that’s gas and miles on your car. All of that really adds up.

Let’s say, for example, that Sarah and I decided to go out for dinner at Red Robin. I’m just pulling a restaurant out of the air, an established one that many people might recognize that isn’t overly expensive but has a pretty decent reputation.

I order the veggie burger for $9.99 and Sarah orders the grilled turkey burger for $9.69. We skip the appetizers. We each order an iced tea for $2.99 to go with it and skip any alcoholic drinks. It’s a pretty cheap meal, as meals go, right?

Our bill comes to $25.66, but we’re not done there. There’s $2.05 tacked on for sales tax. We decide to give a 20% before-tax tip, so we leave $5.14 as a tip. We’re at $32.85, just for two burgers and an iced tea for each of us at Red Robin.

We’re not done there. We had to drive to the nearest area where there are restaurants in amongst our normal activities – let’s figure it’s 5 miles out of our way, on average. That’s 10 miles. The current federal government reimbursement rate, which is a pretty good average of the cost of gas and maintenance and auto depreciation, is $0.53 per mile. So that’s an extra $5.30 to get there and get home. Our new total? $38.15.

It costs us almost $40 in total to each have a burger and fries and an iced tea at Red Robin. Ouch.

I’m not picking on Red Robin here. It’s a good restaurant – it’s just the one I decided to use as an example of a well-regarded chain restaurant many might be familiar with. Your mileage may vary when you eat out – you may eat at a cheaper place. Still, the point is that when I simply look at the cost of a burger on the Red Robin menu, I see $9.99, but the cost is actually much more when I sit down and look at the full picture.

What if you go super cheap? At that point, you start getting into some pretty substandard quality with your food – it just isn’t good food. It’s often pretty poor quality food with some flavorings slapped on it.

The point is this: restaurant eating is expensive. Whenever you eat at a restaurant, the cost is usually more than you think it is.

Doubt it? Go through your credit card statement and bank statement and look at all of the entries associated with a restaurant meal over the course of a month. Each one of those covered one meal for you – maybe with some leftovers it covered two, but that doesn’t always happen – and maybe meals for dining companions. See how much that all adds up to over a month. I bet it’ll shock you. What’s the average cost per meal, too? I bet that’s a painful number as well.

It’s well worth your time to look at the reality of the costs of your own restaurant dining. It almost always adds up to a lot more than you expect that it will, and knowing that there are a lot of hidden costs in eating out can nudge you away from the concept.

Add Up the Full Cost of Eating at Home, and Compare

One great way to put that cost of eating out in perspective is to simply sit down with your grocery bill, subtract out the household items (the things that aren’t directly food related) and the taxes, and then divide that remaining total by the number of meals that the receipt represents.

So, for example, let’s say I spent $180 at the grocery store for actual food items (this was a recent receipt for us) and those items represented breakfast for all five of us for seven days, lunch for me and Sarah for five days, lunch for all five of us for two days, and dinner for all five of us for six days. That’s 35 breakfasts, 20 lunches, and 30 dinners, or a total of 85 meals. $180 divided by 85 is a cost of about $2.12 per meal. This was actually an above average receipt for us, as we stocked up on some items that we’ll use in the future when we have much lower food bills. (Another thing to note: that also includes things like after school snacks and having fresh fruits on hand.)

Now, a person could in theory eat off of the dollar menu at fast food restaurants and get by on about 1500 junk calories a day if you spend $2.12 per meal. You’d order something like a double cheeseburger or an egg sandwich with water to drink and that’s all you’d have for every single meal if you’re figuring in the extra transportation cost, taxes, and so forth.

The thing is, if you start using that $2 per meal baseline to compare all of your restaurant meals, which is what I do, they all start looking overpriced really fast.

I encourage you to do this yourself. Sit down with a grocery store receipt, figure out much all of the food actually cost by subtracting out the household supplies, and figure out how much that represents per meal. You’ll be stunned how low it is.

Step Up Your Cooking Game

Once it’s clear to you how much eating out is really costing you, the next step is to start clearing out the challenges to cooking at home, and those challenges really boil down to one thing: experience in the kitchen. The more familiar you are with your home kitchen and how to prepare a variety of meals, the easier it becomes to just eat at home instead of eating out.

For me, the most effective way of getting started cooking at home is to cook really really simple meals I knew I liked on weeknights and then learn how to cook more complicated things on weekends.

On weeknights, at the start of all of this, we had a lot of spaghetti nights. We had a lot of scrambled eggs and bacon and toast nights. We had a lot of grilling nights. We had a lot of taco nights. Those were all things that I knew I could prepare at home and that I knew that I liked. The thing was, even though I felt okay tackling those kinds of simple meals at the start, practicing them over and over made me more efficient at them. With practice, I learned how to crank out those meals quite quickly with good results and really efficient cleanup.

On weekends, I started cooking more complex meals. I made lasagna. I learned how to cook roasts. I learned how to make a small rotisserie-style chicken in the oven. Sometimes, these experiments took way longer than necessary. Sometimes, they turned into a disaster. Each time, though, I learned quite a few things, and I usually ended up with a pretty good meal for my family. Over time, my cooking skills grew and grew, to the point where I started preparing things like this even on weeknights, when I needed things done quickly with minimal fuss.

I started learning nice shortcuts, like how to use a slow cooker and making meals in advance starting with just making things the night before and eventually progressing to making several batches of meals and freezing them.

Basically, I just cooked and cooked and cooked some more until it felt really easy and natural, and I got started by making really really simple meals at first until I had those down to an exact science.

Splurge a Little on Home Cooking

To me, this is one of the advantages of cooking at home: you can splurge on the ingredients and the cost is still way cheaper than eating anything comparable at a restaurant. So, splurge on ingredients when there’s reason to!

That doesn’t mean that every meal should be made solely of gourmet ingredients. That would be silly and wasteful, honestly. Many meals that you eat at home are going to be quickly assembled and eaten, so there’s no need to go beyond the basics.

However, when you’re looking at a meal where you might otherwise obviously go out for a nice meal instead, consider making something amazing at home instead. It’s really okay to splurge a little.

I really like pasta, so for me splurging means eating fresh pasta. It takes time more than anything to make fresh pasta, so it’s a splurge for me. I also love fresh mushrooms and good craft beer, and if I’m going to have a good meal, I’m willing to splurge on those things.

Even with the splurging, though, I’m still making a less expensive meal than I would if I were going out to a restaurant, and it’s likely a tastier meal, too. We tend to splurge on one or two meals a week at home in this fashion.

Do Some Meal Prep in the Morning

Before you go to work, spend a little bit of time doing some meal prep for the meal you intend to eat in the evening. Chop some vegetables, put something in the slow cooker, put something out to thaw, whatever it is that is appropriate for a meal you’re considering having that evening.

The reason this trick is so effective is that it really nips the “spontaneous meal” in the bud. You might be tempted to just get takeout after work or just meet at a restaurant, but knowing that you’ve already invested time in getting a meal going at home will often motivate you to just go home and make that instead.

What you’re doing is taking advantage of the sunk cost to nudge you in the right direction. The time invested in that stuff is already lost, but the output of it just goes completely to waste if you don’t go home for dinner, and that feeling of having wasted your time and energy that morning is not a good one. It can push you to simply go home and make dinner.

Another advantage is that the meal prep steps you took earlier in the day will make the actual meal preparation in the evening that much quicker. If you made a slow cooker meal, then you probably don’t have to do anything much at all when you get home. If you chopped the vegetables, you probably just have to go home, turn on the skillet, and throw those vegetables in there. The time and energy you’ll need in the evening to get dinner on the table is less if you have some elements of the meal already finished.

I do this all the time, even now. I’ll put a meal in the slow cooker, or I’ll put some rice in the rice cooker and set the timer, or I’ll chop up a bunch of vegetables. I just try to take care of some portion of the meal prep earlier in the day so that I’m motivated to finish it that evening.

Issue Yourself a Challenge

One great way to initiate this kind of habit in your own life is to issue yourself a thirty day challenge. Simply pledge for the coming month that you’ll cook every evening meal at home for thirty days. That’s it. The purpose is to show yourself that it’s actually easier than you think to pull it off, but such a challenge doesn’t seem impossible.

Then, simply spend the next thirty days doing just that. Cook every meal at home and don’t go out once during those thirty days. Try making lots of different simple meals, but also don’t be afraid to repeat them, either, if you find that you like them, because repetition leads to mastery.

Thirty day challenges are really effective for things like this because they push you to really try something new in your life, but don’t push you hard enough that it becomes miserable. It’s long enough to really enjoy the “honeymoon” phase of a new initiative and to assess whether it can become a permanent thing for you, but it’s not long enough that it becomes dull and oppressive. I use thirty day challenges all the time to try out new routines and life patterns, and I stick with the ones that really work well and discard the ones that do not.

Don’t Break the Chain

One of my favorite strategies when trying to establish a new daily habit in my life is to use the “calendar chain” strategy popularized by comedian Jerry Seinfeld, which I’ve discussed before.

The “calendar chain” is simple, really. Just put up a wall calendar somewhere where you’ll see it all the time; a full year calendar like this one is perfect. Each day you live out the habit you’re trying to encourage, cover up that date with a big fat X. After a week or two, you’ll start to notice that you have this long chain of Xs starting to build up, and what you’ll find is that you really don’t want to break that chain of Xs. You don’t want to finish your day without adding an X to that chain.

The motivation to keep the chain going is often plenty of motivation to keep doing something. You can most certainly apply it to cut into the urge to eat out. Simply make an X on any day where you chose not to eat out. You can make exceptions for professional-related meals, but any time you’re choosing what to eat on your personal time, if you didn’t eat out, put an X on that calendar.

Soon a chain will form, and you’ll feel proud of that chain, and you won’t want to break it. That’s a pretty big nudge in a positive direction.

Final Thoughts

There is no “magic key” for breaking the urge to eat out. For us, it was a confluence of many of the above factors all at once, but it’s really hard to say which one really caused us to switch from eating out several times a week to eating out once a month or so. It just happened, thanks to a mix of children, becoming more adept at home cooking, and making a conscious choice not to eat out.

The main goal of all of these tactics is to reset your mind so that you view eating at home as the absolute normal thing to do, while eating out is an expensive splurge to be done when it’s a treat and when there’s a social benefit to it. Once you start to view eating out with that mindset, eating at home almost all of the time becomes natural.

Good luck!

The post How to Reduce the Urge to Eat Out appeared first on The Simple Dollar.

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Monday, May 28, 2018

Questions About Retirement, Motivation, Eggs, Time Management, and More!

What’s inside? Here are the questions answered in today’s reader mailbag, boiled down to summaries of five or fewer words. Click on the number to jump straight down to the question.
1. Figuring out retirement investment options
2. “Done” when I retire
3. To do list specifics
4. When should I quit?
5. Real estate questions
6. Staying motivated to save
7. Journals after filling
8. Egg sale question
9. Interesting use for leftovers
10. Blocking off time
11. Walking shoe suggestions
12. Triggering questions

This was one of those weeks where almost everything I wrote generated several good follow-up questions or comments, so this mailbag issue is pretty heavy with questions and issues related to things you may have read in the past week.

On with the questions!

Q1: Figuring out retirement investment options

I am a 36 y/o working in the medical profession. I am newly married with no children. I am slowly working on a financial turnaround, which has been prompted by credit card debt that I allowed to get away from me.

I am embarrassed to say that I am also just now starting to contemplate my future retirement. My employer offers a 3% contribution regardless of my allotment. I wish to match that 3% on my own. I am currently staring at my 401(k) election form from my employer and have no idea what I am doing.

I have followed TSD for some time now and it has been truly educational and motivating for me. I know that you have a history with Vanguard and seem pleased with them. I have a wide variety of Vanguard options; including: the 500 Index Adm, Mid Cap Index Adm, Small Cap Index Adm, Total Intl Stock Index Adm, Total Bond Market Index Adm and Equity-Income Adm. Plus, there are also options for T. Rowe Price target retirement funds, of which the 2050 would likely be the best match – I would be 68 at that time. I have attempted some research on my own, but feel overwhelmed by all of the options. I am eager to find some direction.
– Jane

The answer really depends on how much time you want to spend on your investments – learning about investing, reading articles, and so on. If this sounds… not particularly enjoyable to you, the T. Rowe Price target retirement 2050 fund is a solid choice in which you can simply put all of your retirement savings and be just fine.

Now, if you want to beat that fund’s performance, you probably can, but it will take a fair amount of time getting up to speed on all of your retirement options. What you’d likely be aiming to do is match that target retirement fund or go slightly more aggressive (meaning a higher percentage of stocks) while you’re young. This would mean studying up on a lot of different funds to see what compares to the contents of the target retirement fund and building your own set of funds that somewhat matches what they’re doing with better individual selections.

You may or may not be interested in that extra effort. It likely will earn you a better return on your money, but how much better is really hard to say, and it will take some effort. It’s really your call.

Q2: “Done” when I retire

I am 62 years old and obviously not ready to retire yet. However, I do think about it. I’d like to work till age 70 or even 72 (my health is excellent & I enjoy my job), and after that I would like to be done. I mean, done. I have worked virtually all my life. First taking care of my alcoholic mom & abusive dad and raising my brother and sister; then working my way through college, helping my sister with her college expenses, and raising 2 kids, one of whom has autism. You know the drill. I won’t bore you with it. I feel no real “pull” to volunteer in my later years, or to get yet another job, or anything like that. I feel really guilty about it. Any ideas?
– Nina

What do you mean by “done”? What do you envision your days being like when you’re retired?

Whatever you choose to do, I strongly strongly discourage you from just sitting in a chair and growing old when you retire. Many people who retire fully fall into that trap of just sitting in their chair and growing old with a quick decline. My own great grandfather did exactly this. It’s not an enjoyable decline for anyone.

I strongly encourage you to figure out how exactly you’ll fill your days when you retire, and being sedentary all day long and not doing anything at all is a poor idea. For your own health and quality of life, you should do something. It doesn’t have to be work or volunteering – just figure out some things you actually enjoy doing that aren’t sedentary and do them. (You can do some sedentary things, too, just do them in balance.)

If you have adequate income to live on, the world is your oyster. Do whatever it is you want! Just do something, and you have time to figure out what that something is.

Q3: To do list specifics

What kind of detail do you put into your to do lists? Like do you include things like brushing your teeth? Or is it just big stuff?
– Andy

My rule of thumb is that if something is going to take more than two minutes or if it’s something I can’t conveniently do right this instant, it goes on my to do list. Otherwise, I just do it immediately and don’t worry about it.

The exception to that are things that are more along the line of checklists, like my morning routine. I try really hard to make my morning routine as much of a “routine” as possible so that I’m doing the same things every day and they get me as set up as possible for a successful work day. Those types of “checklists” will have things that take less than two minutes on it.

Some other “checklists” I have include my current exercise routine, my “kids home from school” routine, and my normal evening routine. Each of those has at least one item that takes less than two minutes on it.

So, no, I don’t add things like “brush my teeth” to my to-do list unless I’m sitting at my desk working, run my tongue along my teeth, and realize that I need to brush them and just jot it down to do later or something like that (I don’t t think this has happened, but it could happen).

Q4: When should I quit?

I have been working at a small software firm for two years. While I have learned a lot here and the pay is good, the people running this firm are insane tyrants. They constantly put us on unrealistic dev schedules and go crazy when we don’t meet their stupid deadlines. They yell and scream and throw books and stuff. They tell us that every waking hour we spend not sleeping or eating during crunch time should be spent coding and that we can use this money we’re earning when we’re millionaires later.

It’s absolutely crazy and I am sick half the time because I eat like crap and don’t get enough exercise. I don’t want to work here any more. I am fine financially but I don’t want to burn bridges in the industry. I have asked about this on software sites and the advice is always JUST QUIT AND YOU WILL FIND WORK ELSEWHERE ASAP but I don’t like to jump into the complete unknown like that. Advice?
– David

Right now, go update your resume on every website that you might ever want to have your resume on. Make sure it’s completely correct with your current information and skill set and work history.

If you have any friends in the industry that you trust deeply, contact them discreetly (using non-work email or other private means) and ask if they know of any openings or if they can pass along your info discreetly to any hiring agents. Keep this private and completely separate from your work.

Do not include anyone in your current workplace as a reference. If you’re trying to get out of a workplace in which there’s a climate of fear, you’re likely not getting a good reference anyway. Just note that references are available upon request and if they’re requested, give references that don’t include the angry people at work.

If you do get a job offer (and you negotiate and accept it), tell your current boss immediately, give your two weeks’ notice, and do not even listen to a counteroffer, no matter how great they make it sound. Get out of there.

Q5: Real estate questions

Why do you never talk about investing in real estate? You talk all the time about stock investing but never real estate investing?!
– Daniel

There are a bunch of reasons, but they really boil down to three core ones.

First, it’s pricy. You either have to be willing to leverage yourself into a lot of debt to get started or else invest a lot of your own money. Debt leveraging is a risky proposition because if the real estate market ever burps, you can end up in a huge mess very quickly, so I don’t recommend that route. I generally don’t talk about super high risk investments unless readers in large numbers email me about them. I also don’t talk about investments with a large up front cost.

Second, it’s a lot of work. If you’re involved in the usual entry level method of real estate investment (meaning you’re not leveraging or investing large sums of money), you’re probably serving as a landlord for a house or two or a small apartment building. That ends up being a lot of work – you’re repairing all kinds of things, doing all kinds of maintenance, and so on. Managing even a small handful of properties ends up being at least a part time job. If you hire someone to do the property management for you, you’ve drastically cut into your income and it ends up often being not all that great of an investment (back to the risk issue again).

Third, aside from the risk elements noted above, it still remains a risky proposition for most investors. You have legal risk. You have “all of your eggs in one basket” risk. If you’re taking on a lot of debt, you’re looking at leverage risk, as mentioned above. Those are risks above and beyond most investments.

Added together, real estate investing is great for the small subset of people who don’t mind the risk and relish that type of work, but for everyone else, it’s not a good choice. It’s a type of investment that requires a lot of active involvement even if you hire a management company and involves a lot of risk.

Q6: Staying motivated to save

I’m saving up for a new house, and I need a high-flux Internet connection that is non-satellite for my work-from-home full-time job. This typically means I need cable Internet with about 200 Mbps down and 20 up. I want to live on a large property in a custom-built home in a rural area near a college town, because I may want to resume teaching part-time at the college level. How do I keep motivated to save? I’m debt free, high-net worth, and saving and investing over 50% of my take-home pay. I have approximately 35% of the total amount saved so far for the new home. My neighbors, to add to this conundrum, are a problem, but I’m ignoring them and carrying on with my plan, although it is a constant source of annoyance…trying to remain focused on the goal. It will take about 4 more years to reach that goal. I’ve considered buying an interim house elsewhere, with a loan and large downpayment, to get away from the neighbors. House prices are high so it would be a good time to sell my current place. I guess I need a pep talk! I already do mindfulness practices such as Zen meditation, yoga, and journaling.
– Alice

For me, it’s honestly not motivation to save that brings financial success, believe it or not. Once the initial excitement of turning my financial ship around wore off – the “honeymoon” was over, in other words – I attribute almost all of my continued financial success to one thing: automation.

Sarah and I automate almost all of our savings. Money comes directly out of our accounts for things such as emergencies, retirement, college education for our children, and big upcoming expenses like car replacements. We do not even think about it most of the time, to tell the truth. It just happens.

Instead, most of our focus is on making our day-to-day ends meet on the relatively smaller pool of money that stays behind in our checking account after all of those transfers. We put ourselves in a position where we have to be at least a little careful with our money. We’re frugal so that we can afford some nice things without ever touching that automated savings.

My suggestion: when you’re really consciously focused on financial planning and saving for the future, set up something and fully automate it. Then, once that’s done, you’re left with the task of making ends meet with the remainder of your pay. Each period, your check will be a bit smaller, or each month, money will just vanish out of your checking. How will you make ends meet? It becomes a practical problem rather than a motivational problem.

Q7: Journals after filling

What do you do with your journals after you fill them up? Do you save them or throw them away?
– Anna

I do both, actually. Every few days, I take pictures of my last several pages of journal entries, giving me a digital copy of all of my journal entries. I do this right into Evernote, which makes the pages searchable. I generally create a single note within Evernote for each day of journal entries, which sometimes consists of several images if I have several pages of journal scribbling.

I usually burn journals once they’re filled and I’ve scanned all the pages. I’ll literally toss them into a campfire. I’ll save them during the winter and burn them all during the summer. I really have no interest in anyone else reading the things I’ve written and that takes care of the problem.

I do have a few journals I’m saving, but they’re journals being written for my children that contain things like family history and some life advice I want to make sure to share with them in adulthood if I’m not around to do so.

Q8: Egg sale question

About a month ago a local store had a huge sale on eggs. They must have had some kind of overstock or something. We bought about 12 dozen eggs and filled our fridge with them figuring we would use them for all kinds of things. We got through about 6 dozen and the rest are left and nearing expiration date. Don’t want to throw them out!
– Annie

My suggestion is to make breakfast burritos. A lot of breakfast burritos.

My actual method for doing so has changed recently. What I do now is beat two eggs together, put just a bit of oil or butter in a small skillet, then put the beaten eggs in the skillet over medium heat. I cook this until I can flip it, cook it for just a moment more, and then take it off and put it on a plate. I will make these “egg discs” using as many eggs as I have – if you have 6 dozen, you can make 36 discs.

Then, get a big soft flour tortilla, lay it out flat, grab an egg disc and pat it dry, then lay that egg disc in the middle of the tortilla. Spread dry toppings on top of the egg – shredded cheese, salsa with minimal liquid, other vegetables, cooked sausage, whatever floats your boat. Do not add condiments unless you want a gooey mess when you reheat – if you want hot pepper, put in dried pepper flakes. Spread the ingredients evenly and thinly over the egg, then wrap the egg up in a tube with the ingredients inside. Wrap this tube in the tortilla, then put the finished burrito in a freezer safe container, like a quart Ziploc bag. Freeze them, then pull them out as needed.

I made a batch of burritos like this and it worked like a champ. I cooked all of the egg discs first, then I assembled all of the burritos.

Q9: Interesting use for leftovers

We really can’t seem to do leftovers more than twice. I found what I think a great resolution to this. I have a friend who lives alone, eats all convenient crap, etc. I bag up these leftovers and they are the perfect one person meal and he doesn’t see this as the third day of the leftovers. He feels loved, taken care of, and we feel like we’re helping someone who doesn’t cook and works far too many hours. Yep, probably enabling him to not learn to cook but I was single until my early 30s and I KNOW that cooking for one is just the loneliest feeling. (I have tried freezing these things but find we end up tossing them and then I feel bad that I coulda fed a hungry person ‘at the time of’.)
– Dana

Right in the midst of this comment is a great suggestion for leftover use. Just simply take your leftovers, package them as a standalone meal, freeze that standalone meal, and then pass it along to someone who can really use it.

In this case, Dana is passing along meals to a friend who works extremely hard and has little time for meal prep, which is definitely an awesome choice. Other good options: elderly relatives, shut-ins in your community, people recovering from medical challenges, depressed or grieving friends, and so on.

If you find yourself with leftovers regularly, consider adopting this as a practice. Make standalone meals, pop them in the freezer, use them yourself if needed, and give them away easily to friends and family and community members who could really use them.

Q10: Blocking off time

Could you explain a little more about what you mean by “blocking off time” in your calendar?
– Aaron


Most of the time, my calendar looks utterly full to the brim, around the clock. The truth is that many of those things are actually just blocks of time that I’m setting aside for specific purposes.

For example, I have a block of time from 10 PM to 5 AM for sleep each day. Most days, I have a block from 8 AM to noon for focused writing. I usually have a block from 5:30 AM to 8 AM for my morning routine. I have blocks in the afternoon and evening for family time and exercise and reading and light work tasks and so on. I also have a “flex time” block that I use to make up for blocks that were interfered with in some way.

I stick to these blocks as much as humanly possible, but sometimes other events interfere. When I add stuff to my calendar, it usually takes priority over those blocks, so on that day, I’ll compress some of the blocks or move others around or even delete some blocks.

The purpose of all of this is to keep myself moving. By planning my day like this in advance, I don’t fall into the trap of sitting around trying to decide what to do next. It’s extremely clear at any given moment what I should be doing.

Q11: Inexpensive walking shoes

Do you have a recommendation for good inexpensive walking shoes? Going on a trip that involves a lot of walking and don’t want to spend $200 on walking shoes.
– Chris

In terms of “bang for the buck” for walking, New Balance shoes tend to be the right choice. That’s pretty much their wheelhouse – high quality midrange walking and general use shoes – and they do it really well.

Cheap shoes tend to have little internal foot support and fall apart quickly. Your feet would regret such a purchase. Higher end shoes will work great, but they won’t offer a significant advantage over New Balance for an ordinary vacation with a lot of walking.

If you want a specific model, I’d suggest this men’s model and this women’s model, based on my own research, experience, and anecdotes from friends.

Q12: Triggering questions

I didn’t understand what you meant by how you use “triggers” in your article about getting things done.
– Bryan

This is a trick I learned from the book Triggers by Marshall Goldsmith, which I read earlier this year and which has really helped me start making some changes in my life. I’ve tweaked it just a little to work for me.

Basically, what I do each morning is think about several behavior changes I want to make in my own life to improve myself. For each one, I write a sentence like this:

I will try my best to eat a healthy diet today.
I will try my best to get a healthy amount of exercise today.

I have a list of eight of these statements. Each morning, I write each one of them down in my journal and think about that statement as I’m writing it. How will I eat a healthy diet today? I kind of visualize the day ahead of me a little bit.

Then, at the end of the day, I sit down and ask myself a very similar group of questions.

Did I do my best to eat a healthy diet today?
Did I do my best to get a healthy amount of exercise today?

Then, I give myself a score – a simple number between 1 and 10. 1 means I was absolutely atrocious in this regard; a 10 is as good as I could possibly hope to be in that regard.

On a 1 day for exercise, I did nothing at all. On a 10 day, I went to a vigorous taekwondo class, played soccer with my kids, walked 15,000 steps, and did my bodyweight exercise routine on a normal day. Sometimes, days are more challenging than others, so what I’m really focusing on is whether I put in the effort to really do my best at that individual thing.

I absolutely hate writing down a low number for the day on something I’m seriously trying to improve in my life. Seriously. I get really frustrated with myself when I have to write down a 1 or a 2 or a 3 on a day where there was no good reason for it.

This practice seems to really click with me for some reason, and it works with all kinds of habits. I highly recommend it. I will likely write a full article or two about it in the future.

Got any questions? The best way to ask is to follow me on Facebook and ask questions directly there. I’ll attempt to answer them in a future mailbag (which, by way of full disclosure, may also get re-posted on other websites that pick up my blog). However, I do receive many, many questions per week, so I may not necessarily be able to answer yours.

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Sunday, May 27, 2018

The Biggest Retirement Risks and How to Prepare for Them

Over the past century, life expectancy in the United States has dramatically increased, a fact that has profoundly impacted the financial security experienced during our golden years.

After World War II, the first generation of retirees were generally expected to live less than a decade after leaving the workforce. Now, the average American is living to be about 78.8 years old, and as a result retirement can last anywhere from 20 to 30 years, with some people spending more time retired than they did working.

That sort of longevity is wreaking havoc on the best of financial plans, particularly when combined with the rising costs of some of life’s most significant expenses.

“About half of Americans are at risk of not being able to maintain their standard of living throughout retirement,” said Michael Gerstman, CEO of Fort Lauderdale-based Gerstman Financial Group.

Health care (including long-term care) and housing are among the biggest financial burdens and potential threats to your stability during retirement, said Gerstman, often derailing retirement plans.

What’s more, depending on which financial advisor you speak with, there are additional costs that many retirees fail to anticipate or properly plan for, from inflation to the premature death of a spouse, to things like unexpected emergencies, caring for children and grandchildren, and the cost associated with filling all of your newfound free time.

Taken collectively, or even individually, these issues can seem overwhelming at best.

Health Care

A male retiring today can expect, on average, to spend about $245,000 on healthcare during retirement, according to the recently published book Common Financial Sense. It’s a figure that excludes nursing home or long-term care expenses. And because of longer life expectancies, women may have to spend even more than that after retirement to cover general medical expenses.

As for those long-term care costs, they now average more than $43,500 per year, while a bed in a semi-private room in a nursing home carries an average charge of more than $82,000 a year.

“No one really understands healthcare costs and how they can escalate,” explained Greg Makowski, one of the book’s authors. “We’re so used to being under an employer’s plan,” he continued. “All of sudden you hit 65 and are on Medicare, and you could be paying $10,000 a year for premiums.”

Most people don’t pay for Medicare Part A. But if you do have to pay for it (generally because you didn’t pay Medicare taxes for a long enough period), premiums for a couple retiring at age 65 currently average $644 per month, according to the book. By age 75, average expenses escalate to $1,239 a month, and by age 85 they reach $2,387 per month.

Those costs are simply for Medicare Part A costs like premiums and coinsurance. There’s also the financial burden associated with Medicare Part B (which covers 80 percent of outpatient care), and all of the supplemental insurance that people are not necessarily accounting for – such things as vision, hearing, and long-term care. None of these things is paid for by Medicare, and thus typically come out of your pocket.

“As you get older, you lose your hearing, you need eye surgery, and your teeth go because you wear them out,” said Makowski. “And these things – hearing aids, vision, dental – are not covered.”

So what’s the solution, if there is one?

Makowski says as a society we have not yet developed a meaningful way to address the financial realities of retirement other than socking away all the money you can away in 401(k) plans, savings accounts, and health savings accounts, while you’re still working.

“What ends up happening is people can’t live the retirement they thought they could live,” continued Makowski. “They end up living very modestly.”

Meanwhile, Gerstman said he often suggests clients purchase a life insurance policy that includes a long-term care rider.

“How it works is that if care is needed, the amount of the death benefit is the amount that can be used for the long-term care expenses, with certain annual maximums,” Gerstman explained. “If the coverage is not used up in your lifetime for long-term care, the balance is paid out to your named beneficiary.”


Housing costs make up close to half of the expenses identified by the Consumer Price Index–Elderly (CPI-E).

To help reduce this cost, homeowners and those considering buying a home should plan to pay off their mortgage before retirement, says Steve Wang, a certified financial planner and personal finance expert.

“If your current mortgage doesn’t allow for that, then consider refinancing it to a fixed-rate loan,” said Wang.

Homeowners with traditional 30-year mortgages can eliminate about seven to eight years of payments — and tens of thousands of dollars in interest — simply by making one extra payment annually toward the principal, added Gerstman.

“If you can further increase your monthly payment to your mortgage, let’s say an additional 5%, you can knock more years off of the loan,” said Gerstman.

Renters, meanwhile, have the advantage of not worrying about home repair costs, but will face the disadvantage of having a housing expense that never goes away. If you’re in this boat, it’s important to start saving sooner rather than later for housing expenses in retirement.

“Start saving now and make your money worth more down the road when you retire,” said Wang.

Inflation, Death of a Spouse, and More

While the Federal Reserve currently targets a 2% inflation rate, inflation has averaged about 3% annually since 1913 and 4% annually during the past 50 years, according to data from the U.S. Bureau of Labor Statistics.

“However, there have been periods when inflation exceeded 15%,” says Thomas Walsh, a certified financial planner at Palisades Hudson Financial Group. “While you can’t tangibly see it, inflation, especially unexpected increases in inflation, can do real damage to a retiree’s purchasing power, many of whom are living on a fixed income.”

To address this problem, Walsh says it’s important to continue to maintain some exposure to more aggressive investments during retirement, including equities. Being too conservative with investments during retirement can be costly if inflation spirals out of control.

The premature death of a spouse during retirement, meanwhile, will be made even more difficult if it brings with it a financial surprise.

“It’s important for both spouses to understand how their income is generated and what will happen when one spouse dies,” Walsh continued. “Going from two Social Security checks to one can represent a significant drop in income. The loss of a pension benefit, or a cut in the survivor’s benefits, can lead to the same issue.”

Again, it’s important to plan for such scenarios and to understand how they impact the household finances, in this case for the surviving spouse. Walsh recommends purchasing enough life insurance to make up for any loss of income and to cover funeral expenses.

The Cost of Free Time

One last cost associated with retirement that’s often not properly budgeted for – the expense of filling your free time.

“I like to say that retirement is having your week be comprised of six Saturdays and one Sunday,” says Jeff Motske, who’s recognized as one of the top financial planners in America and is author of The Couple’s Guide to Financial Compatibility. “It’s wonderful to finally have the time to devote to all those activities and projects you’ve been putting on the shelf. Unfortunately, a lot of those projects typically have a price tag attached to them.”

Whether it’s home improvement, traveling, or a new hobby, many retirees’ newfound projects take up both time and money.

Yet another reason to begin saving early, create a well-thought out retirement plan, and minimize expenses wherever possible.

Related Reading:

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Saturday, May 26, 2018

How I Get Things Done

One of the most regular questions I get from readers centers around how I manage my time and focus. The questions tend to focus on some specific element of my overall system for managing all of the things that I need to get done in my parallel roles of writer, father, husband, coach, involved community member, child, and all of the other roles I fulfill in a given week, along with some time left over for self-care.

I’ll be the first to admit that it’s hard to juggle all of those things. There are constantly things to be done, appointments to remember, places I’m supposed to be, tasks that need to be done. It is utterly relentless.

Over the years, I’ve tried all sorts of tactics and techniques for managing my time and focus and energy to get as much value out of each day as possible. My systems for doing this have evolved over time, in ways I’ll mention below, but here is my system for getting things done and staying sane.

Key Principles

Before I dig into the specific tools I use, here are the five key principles that underlie the entire system. All of the tools and practices I have follow these five key principles. If I try something and it doesn’t measure up to these principles, I don’t keep it.

Full trust I absolutely have to trust the systems I’m using. If I find that I’m trying to remember tasks or appointments or other things rather than fully trusting my system, then something is wrong with the system.

The entire purpose of all of the things below is to make sure I don’t have to waste any of my thinking on trying to remember appointments and tasks and other random pieces of information. They don’t have to enter my mind, ever. I know that everything I need to know is stowed away in my calendar, my to-do list, or in an inbox that’s about to be entered there.

If I ever doubt that feeling, then something is broken in my system and needs to be fixed. I absolutely have to fully trust it or it’s more trouble than it’s worth.

Positive value Every single element in my system must give me positive value for the time and effort I put into it. If I spend fifteen minutes a day dealing directly with managing my to-do list and calendar, that time better be repaid in efficiency throughout my day (it clearly is, as I’ve discovered when trying to manage life without those tools).

I use this rule of thumb for every single thing I try to add to my life for the purpose of being more productive. Is it a net positive in terms of productive time? Does it make it easier for me to have time left over for self-care? Does it make it easier for me to get everything done in the allotted time I have each day? If the answer is yes, I’ll keep it. If the answer is no, or even if the answer is unclear, I’ll ditch it.

Managing energy above all else The truth is that all of the things I’m describing here manage my energy more than anything else. It’s all about organizing my day so that there’s something to fill the time no matter where my energy level is or where my focus level is.

I know from experience that my focus for writing and other “deep” tasks peaks between 8 AM and noon each day, so I do those kinds of “deep” tasks in that time frame. Before that, I know that my brain is creative and fairly “off the rails,” so I use the early morning time for brainstorming and brain dumping and some small bites of learning. In the early afternoon, I’m often dull and tired, so I do mindless tasks. In the late afternoon, my focus and energy come back somewhat, so I address the class of things I consider “important but not urgent” in my life.

Almost all of the things I mention here allow me to take advantage of the moments in my life when focus is strong and to get the most out of times when focus isn’t as strong. They form a structure in my life where productivity comes naturally to me.

Self care is not optional Spending time and energy ensuring that I am healthy and rested is not wasted time. In fact, it is the most valuable time. It is the time that needs to come first.

I block off time for things like exercise and making home cooked meals and simply enjoying my hobbies, and those times are sacrosanct. They are among the most uninterruptible times on my schedule. If I have a block set aside for hobbies, it doesn’t matter how much I have undone in other areas, I set those tasks aside and go read a book. The same is true for exercise.

This is difficult, don’t get me wrong, but I recognize that self-care and managing core relationships is pretty much the embodiment of “super important but not urgent” and I intentionally make sure I always have room for them. They come first. It’s not that much different than a “pay yourself first” financial strategy.

Always aim for the “flow state” The “flow state” is when you’re so mentally (and sometimes physically) engaged with what you’re doing, you lose track of time and place for a while and just do it. I find that any time I spend in a flow state is incredibly valuable and highly productive time. I get fantastic results from almost anything I do in a flow state.

Thus, a big part of these tools and this system is to nudge me into flow state regularly. The fewer distractions I have and the sharper I am, the more likely I am to fall into a flow state, so this entire system is all about minimizing distractions and getting me mentally sharp.

There are other secondary principles that I use that will come out in the following sections.

Key Tools

Here are the tools that I use to keep everything going. Note that the specific tool of each type is just one that I prefer for my own needs. There are lots of different digital calendars, for example; try some and use the one that works for you.

Digital Calendar
My preferred tool: Fantastical as a front end for Google Calendar

The purpose of my digital calendar is to organize my day. This doesn’t mean just managing appointments, which is of course vital, but organizing my day into blocks of time that I use for different tasks.

Most days, I have blocks of time for exercise, for family, for writing, for brainstorming, for a morning routine, for an evening routine, for household tasks, for self-care, for flex time (to make up for unexpected events), and for sleep. I do my best to actually stick to that schedule each and every day. (I’ll get into the specifics of this again in a little while.) It makes for a calendar that looks quite full, but it really doesn’t feel that full in practice.

The real purpose is that at any given time during the day, I can look at my calendar and know what I’m supposed to be doing. I don’t have to think about it. My thinking in terms of deciding what needs to be done is mostly done well in advance and reviewed the night before and in the morning. I don’t have to think about it during the actual day – I just get stuff done.

Having a digital calendar means that it’s loaded with all kinds of reminders that tell me when I should be switching from one task to another and sometimes with advance alerts of things I need to know are coming up in the next hour or two (like going to my child’s school for a parent/student lunch or something like that). My calendar is one of the few interrupting distractions that I allow, and it also functions as a timer of sorts that tells me when it’s time to switch to something else.

Digital Task Manager
My preferred tool: Omnifocus

A digital task manager is basically just a fancy to-do list that allows me to categorize tasks and move them around without having to erase and recopy tasks in a paper planner. The real purpose is to simply keep track of the multitude of tasks that need to be done.

I keep all of my tasks in various categories that match up with the blocks of time I have during the day. I have a “Work” category, a “Household Tasks” category, and so on. I even have categories for things like “Family/Friends” and “Self Care” and “Hobbies,” though the tasks in some of those areas tend to be sparse much of the time. I will also sometimes make up sub-categories under these for tasks related to specific projects, like planning a trip or something like that.

Most of the tasks have a due date associated with them, and I usually assign a high priority to tasks that I really need to get done today (I do this during a morning review, which I’ll talk about in a bit). My task manager makes it easy for me to find these things.

Again, a key part of what makes this work is trust. I trust that everything I need to do is in my task manager. Without that trust, it’s not a very efficient tool. When I don’t have that trust, I’m always trying to remember things I need to get done. When I have that trust, I don’t think about that at all, just the task at hand. Thus, trusting my to-do list means I can focus much better on the task I happen to be working on, and that means it gets done much more efficiently and with higher quality results than if I didn’t trust my system.

Pocket Notebook
My preferred tool: Field Notes with a Uniball Signo 0.38 mm black pens

One of the big challenges with to-do lists is that I’ll often be in the middle of one task and I’ll suddenly recognize something I need to do in the near future. I’ll be writing an article and it will suddenly occur to me that we need to get some nails to re-shingle our rabbit hutch for our children’s pet rabbit, or I’ll be doing the dishes and see that we only have a little bit of dishwashing detergent left and realize that we need to get more.

For those moments, I keep a pocket notebook in my hip pocket at all times, along with a pen that won’t break or leak. When that fresh idea or task or whatever pops into my head, I pull out that notebook, write down the idea or task or whatever it is, and then go right back to work.

Later on in the day – usually in the evening, but sometimes I’ll do it during the day, too – I’ll pull out that pocket notebook and go through it, copying everything over to where it belongs. Appointments go in the calendar. Tasks go in the task manager. Ideas go in my idea repository (literally the next section in this article). I cross them out as I go along and when everything is crossed out, I move on with life.

This pocket notebook is key. It is a big part of ensuring that things don’t slip through the cracks. It ensures that I don’t forget ideas in the moment and that I don’t lose focus on my current objective while trying to remember them.

Electronic Document and Note Storage
My preferred tools: Evernote and Dropbox

Evernote and Dropbox are my storage solutions for all kinds of information. I use them because they’re easy to access from pretty much anywhere and allow me to organize things how I want them.

I mostly use Evernote for text-based ideas with maybe a few pictures thrown in here or there. I use it as an idea repository for my writing, as I have folders for things like potential article ideas or things I should read or follow up on. I use it as an idea repository for most other projects in my life, too.

I use Dropbox for documents of all kinds that I want to have access to everywhere I’m at. Photos, PDFs, and all kinds of other things are stored in Dropbox in a file folder structure that I understand well. I can find almost anything within a few clicks in Dropbox because I have it organized in a way that makes sense to me.

Every sort of document or note that I want to keep around winds up in Dropbox or Evernote, depending on what type of document it is. When I have tasks in my task manager or appointments in my calendar that require notes or documents, I know I can just find them in Dropbox or Evernote.

Paper Journal
My preferred tools: Leuchtturm 1917 dotted medium journal and Uniball Signo 0.38 mm black pens

The purpose of having a paper journal is for reflection and what I like to call “sharpening the axe.” I use it in both the morning and evening to reflect and brainstorm on my life and get things out of my head that aren’t always easy to extract. For me, it’s less of a recording of the events in my life than a way to make sense of and clarify the mishmash of thoughts and emotional responses in my head so that, when I’m done with the journal, my head is clear and focused and ready to deal with the day or sleep in peace.

There are three big things I do with the journal regularly, usually every day.

First, I write three morning pages. It’s basically just three pages, written by hand, on whatever is in my head. I just dump out whatever is on my mind at the moment onto paper. I don’t question it or guard it, I just let it come out. I find that forcing myself to think about those things at the pace of my handwriting brings a ton of clarity to the ideas I’m struggling with or the life issues I’m trying to figure out. I do this in the morning, usually before anyone else wakes up – I consider it a part of brainstorming.

Second, I go through a modified practice that I learned from Triggers by Marshall Goldsmith. In the morning, I simply write down a list of things that I want to be working on today. These aren’t necessarily tasks, but ways in which I want to behave and interact with the world. I want to do something to encourage my physical fitness. I want to eat healthy foods. I want to write well. I want to spend as little money as possible. I want to work on my virtues. I write each of these as sentences describing what I’m going to do today. In the evening, I review each of those and give myself a score on how I did today on those things. I usually keep them up for at least a week at a time and then reconsider them each week during a weekly review. This is so powerful in terms of nudging me to be a better person.

Finally, I go through a series of eight questions suggested by Michael Hyatt. I usually do this in the morning as well. The biggest one for me is his question of “what lessons did I learn from yesterday?” I usually note a few lessons, but I usually take one and tear it apart, doing an after-action review of it in detail.

I won’t lie – this takes a long time. I probably spend an hour, and sometimes more, doing this each morning (usually from about 5:45 to 6:45 AM) and probably another 10 to 15 minutes in the evening. That seems like a ton of time, but what I’ve learned is that when I’m done with this practice, I am absolutely ready to nail the day. I have a sense of mental clarity about what I should be doing and a great ability to focus for most of the day. On days when I don’t do this, I often feel like a lumbering sloth meandering through the fog in comparison. I more than make up that hour spent on journaling on days when I journal compared to days when I don’t really get it done.

So, how do I actually use these tools?

“Ideal Week”

It starts off with the “ideal week.”

Each week, I spend about an hour or so on Sunday reviewing the week and getting myself prepped for the next week. One part of doing that is reading through my journal for the week. I also go through my to-do list and see if there’s anything really vital that was left undone.

Perhaps the most important part, though, is the “ideal week.” I plan out my week to come, starting off with a calendar template that I call the “ideal week.”

Basically, this just consists of a whole lot of repeating events in my calendar that specify what I would be doing each hour of each day assuming that I am going through an average week that’s going along perfectly with minimal interruptions. Assuming everything was perfect in my normal life, what would an “ideal week” look like? I basically just fill that out in Google Calendar and set every single block of time to repeat every week.

So, on Monday, it starts off with a block for sleep starting at 10:30 PM Sunday and running to 5:30 AM Monday. That’s followed by a block of “morning routine” and journaling from 5:30 AM to 7 AM, followed by half an hour of getting the kids ready for school, followed by another half an hour of “morning routine” (I’ll get back to that in a second). After that, I have a four hour block of “writing” scheduled, followed by “lunch,” followed by “exercise,” followed by “other work tasks,” followed by “deep reading,” followed by “flex time,” followed by “family time,” and so on. You get the idea. I just block out my whole day with what I will ideally be doing during each hour.

When I add events to my calendar, those are deviations from the “ideal week.” During my weekly review, I look ahead and try to resolve any conflicts for the next month or so between my “ideal week” and the things I add to my calendar, usually giving the appointments priority. I figure out what needs to be moved around and make room for the appointment. What am I giving up? I decide that then.

Most of the time, this is pretty easy. I’ll usually shrink down a few things and then expand them on the weekend, which is mostly made up of self-care, family and community commitments, and flex time. For example, I’ll often shrink down my daily “deep reading” (basically research or trying to learn a new topic) and then expand that very activity on the weekend.

I usually try to keep my morning routine and writing routine sacrosanct unless weeks are very exceptional, like family vacations or holidays. Even then, I’ll often still do some smaller form of those routines.

“Morning Routine” and “Evening Routine”

So, what exactly are my morning routine and my evening routine?

My morning routine is the big one, and it usually eats up about two hours of my day if I do it in full, with journaling taking up about half of that or a little more. The rest of that routine involves reviewing my calendar and to-do list (and picking out a few high priority things to be done today), doing some basic morning hygiene, meditating for fifteen minutes, exercising a little (this is mostly stretching and a bit of calisthenics in the living room, usually stuff to supplement my taekwondo classes), and doing a bit of reading.

My evening routine is basically a review of the day. I write in my journal a little bit, peek at my calendar and to-do list, and get ready for bed with some evening hygiene (brushing my teeth and so on). I just try to do the same four or five things every evening so it feels completely natural.

I tinker with the exact contents of my morning and evening routines regularly, but they’re largely settled at this point. My “tinkering” mostly involves messing with the order of things, changing up my exercise tactics, or trying out a new element for a while.

Going Through the Day

During the day, I mostly just follow my calendar, which is usually made up of time blocks. During those time blocks, I follow what’s on my to-do list associated with that time block.

So, when I’m in the midst of a “writing” block, as I am right now, I’m basically just going through my list of to-dos related to writing. Those usually involve drafting a specific article, then editing and formatting that article (a separate task, because I give it some breathing time between those two steps), then scheduling and posting that article, along with some brainstorming tasks and reminders to check the various places where readers send messages. I have other work tasks, but those are the ones really associated with The Simple Dollar directly in terms of what you guys read. I spend my work block mostly doing those kinds of things in 50 minute stretches, with 10 minute breaks to stretch and go on a short walk around the block.

The same is true for other blocks. During household chore blocks, I go through my list of household chores and just knock off as many as possible. During focused family time blocks, I try to do things with my family with all digital distractions shut off. You get the idea here.

If something pops into my head that I want to deal with later, I just pull out my pocket notebook and write it down. This keeps me away from digital distractions. About once a day, as part of my evening routine, I copy everything over to my other systems as described above.

I usually have timers that go off at the end of time blocks, letting me know it’s time to switch to other things.

A big part of this system is freeing myself up to get into a “flow state,” as I mentioned earlier. If I can slip into a flow state during any one of those blocks, it’s going to go really, really well. If I can do it several times during the day during various different blocks, it’s going to be an amazing day.

The Perfect Is the Enemy of the Good

This system might seem complicated at first glance, but it works extremely well for me. It enables me to keep my mind very sharp throughout the day – my mind doesn’t wander due to having things on my mind. I do focused things when my energy and focus levels are high and do less intense things when my energy and focus levels are low. It enables me to prioritize self care without letting go of all of the other things that I’m responsible for in my life, so that I can continue to be responsible for those things into the future.

That being said, I’m not perfect with this system. There are days when I don’t execute perfectly. I don’t write in my journal some days, though I try to at least get something down every day. I don’t exercise as much as I should every day. The one element I really strive to be perfect on is to keep my calendar and to-do list as trusted as possible by writing things down in my pocket notebook and adding them to those tools as needed, but pretty much everything else will sometimes slide if I’m not feeling 100%.

That’s okay. The perfect is the enemy of the good. A bad day doesn’t mean I discard the system and give up and think of myself as a failure. It just means that I do better tomorrow.

I do know that when I nail all of this stuff, I feel practically superhuman in terms of how much I can get done in a day. My mental clarity in the middle of the day if I’m nailing all of these things is just incredible. I genuinely feel like there were earlier parts of my life where I was practically working in a fog at half speed all the time. It’s those ideal days, when I am constantly slipping into a flow state and really getting lots of things done, that makes all of this worthwhile, because those days are amazing and they happen surprisingly often.

What Can You Take Home?

If you pull out anything from this, it’s that those five key principles are the foundation of everything else I’ve written.

Get things out of your head and into a system that you fully trust. Everything you do should have positive value – it’s either improving you (I put self care and genuine leisure time in here, but not time wasting), improving a relationship, making money, or making one of those other things more efficient. Do high energy and high focus things when you actually have energy and focus; do mindless things when you feel mindless. Do not skimp on self-care, which includes genuine leisure time, good healthy food, exercise, good personal relationships, and adequate sleep. Aim for the “flow state” in everything you do, because you’ll never be better than when you’re so engaged that you lose track of time and place and just get lost in the moment.

All of the stuff in this article is an embodiment of those principles that works well for me. Some of those specific tactics might work well for you, or they might completely fall flat. We all have different minds and bodies that work in different ways. Try things and figure out what works best for you, and use the tactics here as things to try out, not things to blindly follow.

Good luck, and may your days be amazing!

The post How I Get Things Done appeared first on The Simple Dollar.

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