Tag Archives: finance

What I learned from Malcolm Gladwell’s book Outliers

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Have you ever wondered why nearly all the top hockey players were born in January, February or March? Ever wonder why the smartest people in the world aren’t the most successful? Malcolm Gladwell’s book contains these exact answers and more.

I found his book extremely revealing. I came into the book thinking that success was almost completely determined by intelligence, hard work and intentionality. While these traits are significant parts of making the most with what you have, Gladwell illustrates that much of what determines success is due to completely unpredictable and random factors.

While much of our success is determined by luck – where we were born, who are parents are and their respective network and culture – a lot of these advantages can be recognized and limited. But we can’t just assume luck isn’t impacting these things – it always is.

Recently I’ve been reflecting on my current reads and taking notes to summarize what I’ve been getting out of the books. I did this for Outliers and took away a few key points. Here they are below:

  1. If you see a pattern, don’t assume it’s random, examine the history behind it
  2. Understand your own history and the apparent consequences/indications of what that means for you

I hope these two points are helpful. A key takeaway was to look at the contributing factors and history behind success. This, of course, is consistent with the title of the book!

A Logical Approach to Getting into Debt

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The largest expense most folks in the U.S. incur is a home. When buying a home most Americans choose to take out a home mortgage. So how do you go about buying a home? I’ll share that with you in the steps below.

To be honest, I have never purchased a home of my own, however, I plan to. These are the steps I will take in a couple years when buying my first place. I also will incorporate the experience and knowledge I’ve learned from my Father who was both a home builder, carpenter and owner multiple times during my teen years and still is today.

Place and Purpose

Where and why you want to purchase a home are some of the most fundamental questions. For example are you wanting to buy in San Fransisco, CA? In that case you’re probably okay with a price range of $300K-$400K+. Thinking about Lansing, MI? It’ll cost you around $75K-$250K. These ranges are drastically different so deciding on where you want to buy is the first step.

Then ask, why am I buying? Maybe you intend to “house hack” and move out a year later to turn it into a rental, or maybe you want a quiet family home in the country that you can live in for 30 years. Maybe you just want a place large enough to house your aging parents as well as your growing family? There are many reasons for buying.

With those two things in mind, your location and your reasons behind buying, you are ready for the next crucial step, Financing and Finances.

Financing and Finances

Financing and Finances are the most analytical and numbers-based part of purchasing a home. First look at your finances. How much house can you afford? How much home do you actually want or need for your situation? In which ways will a home limit or help you financially?

Financing a home is fairly straightforward and complex at the same time. One one hand all you have to do is go to a bank, get approved for a loan, and then pick a house to buy right? While this is certainly the gist of it, there are most considerations and steps involved.

For example how much downpayment are you putting down? This will determine whether or not you need an FHA loan or conventional loan. What interest rate will you most likely have? What kind of monthly payment will that mean and will you be able to afford it? This kind of ties back into the realm of Financial analysis.

Comparing, Choosing and Closing

In you first step you decided on what you wanted generally speaking and where you wanted to live. In the second step you got approved for a loan and made sure you knew how much you were willing to spend and if you could afford it. Now it’s time to find a place.

First you’re going to need a realtor. This real estate agent will be able to help you locate properties in the area you identified. As they show you properties you will get a feel for the characteristics that you like and the ones you don’t. You’ll ask questions like, “would I  be willing to pay more for a pool?” Or, “Should I pay less for no garage?”

After looking at enough properties you will decide upon one or two that suite you. Get you Realtor to put in offer and you may have to negotiate a little. After agreeing on a price and terms (which is often a long process) you will come to sign the contract. As the day of closing comes near you will have to be aware of the following closing costs:

Realtor Commission

Property Appraisal Fee

Due diligence costs

Attorney fees

Other closing costs

These closing costs and others will usually range between 5% to sometimes even 10%.

Next you’ll have to start moving in, which is a whole different process. But for now I hope I’ve helped you develop a plan for your own home buying.

3 Often Overlooked Disadvantages of Going to College

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Around this time of year, many of us are heading off to college, anxious to begin the next academic year. However when comparing colleges or even contemplating college altogether, there are a few key disadvantages that many dropouts understand.

Schedule

When you’re in school there are often many activities, events, and even classes themselves that interfere with your ability to do what you’d like with your time. While this can certainly be an advantages because it keeps you busy, it also has drawbacks like committing you to spend your time doing things you don’t necessarily want to do.

Costs

When you enter college you most likely will have a big bill to pay. Unless you are a high athletic or academic achiever, or have worked really hard to get scholarships, you most likely don’t have too much financial relief in the way of expenses. This can make it particularly hard to stock money away for a home, living expenses, or even retirement planning.

Freedom and Mobility

Not only can the college experience place more restrictions on when you can go, it can also place restrictions on where you can go. During college there are usually rules on when you can be back. This, by definition places a time limit on how long you can be gone, and thus how far you can go.

When entering college you will be giving up these freedoms as well as a few others. Please don’t think I’m against college altogether. But it certainly is a good idea to compare these various factors when thinking about going to a specific college or university.

How I Drove 2,300 Miles Without My License (And Why You Shouldn’t) Part 3

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As I left Dallas I realized the trip was almost over. “What’s next?” I thought as I drove up towards Oklahoma City, OK.

Later that night I decided I would be traveling up through Kansas. Sounds like a cool place right? So off I went, driving late into the night. I was ready to explore Wichita and Kansas City as soon as I found a place to stay for the night.

At this point I was in southern Kansas, near Wichita. It was near midnight. Out on the country road it was 65mph but as I entered a little town I didn’t see the sign that said 45…  oops.

Lights flashed behind me. Even though this was my first time being pulled over after four years of driving (I’m not a bad driver btw) I couldn’t help feel a little discouraged. Was it a speed trap?

As the female officer walked up alongside the vehicle I pulled out my registration and reached for my wallet. “Hello,” she said, “I just wanted to let you know you were speeding. Not by too much, though. Can I see your license and registration?”

I handed her the registration. Opening my wallet I fumbled as I opened up where the license normally is supposed to be. I pulled out the enhanced license slip that holds the license. Opening up, I looked inside… my license was gone.

“Umm,” I awkwardly said, still looking through my wallet to see if it was somewhere else. “I can’t find my license.”

“Ok,” she said, “Can I see maybe student ID or something with a picture on it while you keep looking?” “Sure.” I handed her my student ID.

I continued to look as she went to her car. A few minutes later another police car showed up. This time a man stepped out. He and the woman walked up alongside the car. “Did you find it?”

“No luck I said,” glancing up. I got out of the car and started looking in the back. “Where is it?” I thought. I was so confused as to where it could have gone. I continued to look. “Here, can you use this?” The man officer held out a flashlight. “Thanks,” I said, realizing I also had a flashlight somewhere in the car.

After a little while they told me to pull up a few hundred yards to a little gas station. Shortly after parking they asked me to put the car keys in the car and get out. “Look,” the man said, “from our perspective this whole situation is bizarre. It looks like you’re telling the truth, but it’s taking a lot time for us to look you up in the Michigan Driver’s records.

Finally, fifteen minutes or so later they were able to look me up and get my drivers license number. I wrote it down and we said our goodbyes. The male police officer, George, shared his name and we shook hands. They were very nice and considerate.

Whatever happened that day, I’m very glad for kinder, understanding police officers.

By the way, I did find my license a few days later, but that’s a whole different story. At the end of the day we can take one big lesson a way: Even if you think your license is in your wallet, it never hurts to double check.

How I Drove 2,300 Miles Without My License (And Why You Shouldn’t) Part 1

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You might be thinking this is clickbait. Or is that a typo? No, I really did drive 2,300 miles, without my license, by myself, at 18 years old across the country. Now before I tell you how I ended up in the middle of Kansas, at midnight, with no license I need to give you some background.

In the summer of 2017 I started thinking about what I wanted to do with my life and what I wanted to become. This was around my 18th birthday in July. As the summer finished and the School year began, I started realizing that I could, if I wanted, take a trip that would give me further knowledge about what was out there.

In December 2017 I decided to follow through. During this time I was working full time as well as doing school full time so there wasn’t a lot of access time for spare planning. But I did manage to put together an incomplete document that would start me on my preparation.

Around Christmas I headed over to Zambia, Africa (I was visiting my family who moved for orphan missions, but more on that in another post). In Zambia I finalized my plans, which were fairly detailed, deciding against the 8,000 mile trip I was originally planning.

My new plan was to head down to Florida, explore, head back up through Louisiana to Texas, explore, and then head home to Michigan. All with a few minor stops along the way. The trip was around the corner. I was so excited!

It was a bittersweet moment for me. My time in Zambia was about over. And, in March 2018, I said goodbye to my family after 3 very special months. This had been a great period to rest, learn, and spend time with the most important people in my world.

I flew back to Lansing by myself, pondering and searching for a single feeling to feel. But there were so many. I felt alone. Even though I was going to live with my Grandma (and what a blessing that is), I was missing the people who had been with me my whole life.

I also felt anxiety. Here I was, 18 years old, with so many life changes like college, work, summer plans, and then my trip, all coming up just around the corner.

But I was also excited. My life had been, for the most part, out of my control up till this moment. And now the pen and paper were finally getting handed to me to write my own story. I thought I was ready.

With these emotions and so many others spreading around in my mind and nervous system, I really was starting to grow up. Not all at once, but slowly.

The plane landed.

I got to Lansing, spent time with friends and Grandma, and after one week it was time to leave. Finally, the moment I had been waiting for had come. Again, I thought I was ready. So, in the first few days of April, I left.

 

Get Rid of Your Money

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Most Americans don’t have very much in savings. Those that do try to protect the amount they have, whether that’s $1,000 or $100,000. But I have a challenge to everyone who thinks stashing money will make you more secure. What if you got rid of your money, what would you do?

If you had $3,246 in the bank one day and $25.47 in the bank the next you’d probably go into panic mode. Your instincts would start kicking in. You’d figure out how to cut spending, eliminate waste from your life, and earn more income to make the difference. In other words, you’d wake up.

What happens when we have chunks of money sitting in the bank is that we convince ourselves that we’re making it, or that we’re safe. This is dangerous.

Instead, realize that the little money you have in the bank, be it $45 or $45,000 still makes you broke. I know to a lot of people $45,000 is a lot of money, but if you want to change the way you think about money, it starts here. Instead of thinking of what you could buy with $45,000, think of what you’d like to buy.

As soon as you realize that the $36,000 car, $5,000 vacation, and the 25 year retirement are on your list, $45,000 doesn’t seem like very much does it?

I personally have a little over $6K in the bank. Currently I’m gearing up for another year of college. With 2.5 to 3 years left I’m beginning to realize that it’s going to be difficult to get through college with no debt, even with lower costs than most, on just $6K. It’s time to up my game.

I’m going to have to start stashing away for college next year, both by working over the summer, taking odd jobs, and even working during the semester. Having perspective on that $6,000 helps me realize that it’s really not a lot of money – that reaching my goals will require a change in mindset.

For everyone who’s out of college and not saving for something that’s just around the corner, consider getting rid of your money. Now I don’t mean you should go and buy a newer car or travel to Europe. But it’s possible that some day you can do those things if you do what I’m going to suggest you do with the money: invest it.

Investing the money you have other than an emergency fund is a great move. Make sure you have enough money for 3 to 6 months of expenses and everything over that needs to get out of there. Put it into retirement accounts, buy real estate, pick an investment that you feel comfortable with and are ready to pull the trigger on. (just make sure to do your research)

So next time you get a $3,000 bonus, inheritance or gift, consider getting rid of it by paying off debts, securing an emergency fund, and finally putting everything else out the door into the world of investing.

Disclaimer: The information regarding personal finance found in this blog is not a substitute for professional guidance. By following the guidance in this blog you are doing so at your own risk. This blog is simply the option of one person for informational and educational purposes. Please refer to your personal financial advisor in regards to guidance over your specific situation.

The Art of Being Short

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Depending on who you hang out with, a lot of your friends may be taller than you. While it can be fun to poke fun at each other’s heights, (especially when we’re younger) the truth is height can have big impacts on what you become in life.

Generally speaking, the taller you are, the easier it is to garner attention. While attention in and of itself isn’t a prerequisite for success, it certainly helps.

One of my friends, 6 foot 1, has certainly had interesting conversations with me about height and what it means for our potential future. For example, did you know that most U.S. presidents were taller than the average height at their time? Is this just chance?

I don’t think so. I think there is a pattern. Generally, with greater height comes greater self-confidence and potential social skills. And with each of those comes the potential to look, act and be more of a leader.

But what if I’m not tall? Can I still be successful? Definitely. Especially if you understand the reasons behind tall-peoples’ success. Former president James Madison was pretty short. One of the richest people in the 19th century, Andrew Carnegie was short as well. If they can do it, there’s a chance you can too.

Recognize that just because someone is taller doesn’t make them any more of a leader than you. It just means they are perceived to be more of one and therefore have an advantage. The best way to overcome this gap is to step up your game in the realm of social confidence.

Sit up straight. Hold your head high. Act like a leader. Before you know it you’ll be going toe to toe with tall people everywhere.

How do Most People get Rich?

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What if you had to choose one investment vehicle to get you to riches? What would it be? It’s an intriguing question not only because so many people have done it so many different ways, but because the question deals more with the future than looking at the past.

The vast majority on the Forbes billionaires list have gotten there through owning all or part of their own business. The industries range from technology to finance to fashion and even real estate.

Most of the newer billionaires have done it through technology (like Mark Z., Bill Gates, and Jeff Bezos). A good portion of the older billionaires have made it though finance. But even within sectors there is great variation as to how the billionaires made it. For example in the technology sector Jeff Bezos has done it through online retail while Zuckerberg has done it through social media.

Real estate, whether you consider it a business(which it true) or it’s own investment category altogether has also created many wealthy people. One notable difference between billionaires in real estate and millionaires in real estate is that the millionaires have focused primarily on single family and small multifamily homes while the billionaires have purchased scalable, large operation commercial properties. (For example Donald Bren.)

Arguably it’s very difficult to get into these large operations without significant capital. So for the average investor a good place to start is either smaller properties or partnerships. Either way you look at it, real estate as a whole has been a solid investment for both the well-off and the ultra-rich.

If you’re looking to the fastest made billionaires technology businesses are your best bet. If you’re looking for the most stable, predictable, simple and versatile investment, real estate is your best choice. Most of the other investment options including bitcoin, gold, bonds, futures, options and commodities have considerably less stellar track records. However the one similarity between the ultra rich is that they have done so with extreme focus and specialization – becoming experts in their field of influence.

As times change and new technology becomes more mainstream there becomes a great advantage to the person who is willing to pick one thing, just one thing, and focus entirely on it.

A Picture Made Clearer

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My first job ever was when I was 17. I got hired in as a host at Cracker Barrel. I would guide people to their seats while keeping track of which seats were clean and open. This job taught me a lot about what I didn’t like doing – interacting in that type of busy social setting – but it didn’t necessarily tell me what things I enjoyed doing.

I started understanding more about myself. That’s a very important step. You need to start painting a picture of you endgame – what you like, dislike and ultimately want you want your work to look like. Even if your endgame changes with time, the very fact that you’re aiming for something makes the drive behind your actions that much more purpose-driven.

When you’re young there’s not a lot you can say you’ve experienced. As time passes if you’re not diligent, it’s easy to simply take the situations life gives you without paying attention to what they mean for you. Ask yourself: What has this taught me about myself? Why did things happen the way they did?

Once you have an idea of what you’re like – what interests you and what turns you off, you can take some of the first big steps.

Now if you already have a family I can see how it would be much harder to both provide and transition through many different life changes. My advice would be to pay attention to the money first – make sure you have enough for your family. If you know you can take care of your family financially then you can start experimenting with side-businesses, side-jobs, side-hobbies, and side experiences.

Never lose sight of what you know you want to do, even if what you want to do is constantly changing. This strategy has definitely worked for me so far. I’ve begun to paint a clearer and clearer picture of what I want to do, even at a young age. I know it will continue to work for me in the future.

And who knows, there might be a day where you finally can see enough of your picture to take the first step forward.

Vison & Purpose: The Freedom to Dream

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Whenever I travel somewhere I always enjoy imagining what the city will look like in the following decades. For example in my recent travels to Dallas, TX I couldn’t help but wonder what this city, which has been growing rapidly in the past decade will look like in the following two.

It’s fun to create these kinds of imaginative pictures but we can also do the same with our personal lives. In my personal financial journey I’ve begun to dream, plan and execute towards an amazing future. However often times I’ll talk to folks who don’t know where they’re going with their finances. They can’t see beyond the current year or decade. These people don’t see how fun and exciting creating a financial vision can be.

The blog up to this point has been primarily focused on my experiences as a traveler. Although I will continue to share stories from future trips (and a particularly special adventure I had last April), I will be sharing more about my truly greatest interest: personal finance.

There are so many facets of the personal finance world I can’t expect to cover all of them in the scope of just a few blog posts. As with a lot of things, personal finance isn’t as simple as chewing gum (which probably actually has a pretty complex molecular structure). However I hope I can demystify the subject at least a little.

While I don’t claim to be an expert I know I can provide value to a lot of you by summarizing wisdom I’ve gleaned from some of the leading financial experts – wisdom that I got from reading literally hundreds of books, videos, and articles. I may even take you on a tour through my personal finances.

For me dreaming bold has always been a natural outflow of my outlook on life. I view the world through the lens of what things are capable of being, and how they can improve in the future. While I recognize there can be extremely painful periods for everyone, I know we will continue to see the overall improvement of living standards for third world countries as well as America.

That’s why I’m so optimistic about my future and the future of everyone else in my age group. As this younger generation begins rising up in the workforce a few things will become apparent. 1) This is one of the best times to be alive for anyone who wants to create financial freedom. 2) The sooner you take personal responsibility for your finances and take initiative to understand more, the sooner you can begin making moves that will set you up for a better life in your 40’s, 50’s, 60’s and beyond. And lastly 3) For anyone who thinks this isn’t important or it’s too complicated or boring, remember: Personal finance is one of the top 4 most important topics (up there with God, relationships, and physical health).

On this fourth of July I hope we can appreciate the opportunity we have in this country to both dream and pursue happiness. Personal finance doesn’t have to be boring or complicated – that’s what I hope you take away in this blog.

Disclaimer: The information regarding personal finance found in this blog is not a substitute for professional guidance. By following the guidance in this blog you are doing so at your own risk. This blog is simply the option of one person for informational and educational purposes. Please refer to your personal financial advisor in regards to guidance over your specific situation.