Tag Archives: perseverance

3 Things to Have in Your Wallet

While most Americans are saddled with credit card debt, student loans, and monthly car payments, the underlying issued usually relates to how we view money in general. Most people would like to say they are responsible with their finances, but their actions tell a different truth.

Out of this basic mentality toward money often comes many damaging habits we see today. For example the uncontrollable, erratic spending that characterizes consumers can go back to the root cause of lack of responsibility.

Responsibility over every area of your financial life, especially what is in your wallet, comes from an understanding that personal finances are a crucial area to match with your values.

When someone takes responsibility over their wallet they should be aware of three items:

1. Cash

Most have heard the saying “cash is king” whether on the Dave Ramsey show or elsewhere. But is cash really that powerful? The truth is that sometimes yes and sometimes not so much.

For example if you’re buying a table on craigslist, cold, hard cash will probably be the most powerful negotiator. However if you’re buying a home, pulling out cash might make you look a lot like a drug lord…

Make sure to always have a good amount of cash in case an expense comes up that you can’t use your cards for.

2. Debit cards

Even more important than the credit card is the debit card. A debit card gives you access to your bank checking account and can often be the most popular means of payment. While you certainly don’t need to have multiple debit cards and different banks, there is certainly a case to having at least one.

3. Credit cards (maybe)

Some of the most daunting debt in the US is the credit card loans. According to the NY post, credit card debt in the US is approaching $1 Trillion. Why would you want to have a credit card?

When it comes to credit cards I believe that about half of people should not have them because of lack of discipline. The other half of people should have a few quality cards that are used regularly but sparingly to build credit. There might be some points or cash back in there, but that’s just icing on the cake.

Ultimately your use of credit cards should depend on your discipline and self-control. Everyone should have debit cards. And everyone should carry an adequate amount of cash in both fives, ones and a ten (maybe $50 total?).

Besides the payment-related items there are of course things like ID and insurance cards but I hope you have enough common sense in those areas. I hope this helps your spending habits on your financial journey for many years to come.

2 Things I learned from Ray Dalio’s Book

While often seen on TV and financial journals, Ray Dalio is somewhat of an unheard of figure outside of the financial world. He started broke, developed his skills, knowledge and habits, and today is the billionaire funder of the largest Hedge fund in the world.

In his new book, Principles, Dalio focuses on the principles or set of beliefs that have been the baseline of his success in both life and business. Throughout the chapters he illustrates just how crucial principles are, not matter the principles, to how you perform in each area of your life.

From his book I have taken 2 main points:

1. The things we do know are much smaller than the things we don’t know

While everyone would say they believe this idea in theory, when it comes to the actions we take, many of us, including myself, will puff up our egos higher than is actually the case.

Dailo states that people who have more knowledge, success and experience on a topic, should carry more weight in our decision-making.

2. Set up systems, or processes that help make decisions and see around emotions

While emotions are a natural and good part of life and human interactions, when it comes to making the best decisions, especially the business decisions, logic should be the ultimate decision maker.

Two of the greatest roadblocks to making quality decisions are the ego and the blind-spot barriers, which are both covered by the entrepreneur’s planet in their post: https://wordpress.com/read/blogs/150799291/posts/16

Ultimately being committed to integrity, open-mindedness, and self-improvement, are the largest factors that have contributed to Ray Dalio’s success and the principles he teaches.

 

R.E. Strategies: Investing Debt Free Vs. Leveraging Properties

When making financial plans there are two basic schools of thought to get your information from. One group says that debt is bad, and that you should limit or eliminate all debt as soon as possible. The other group argues that getting rid of consumer debt is wise, but that borrowing money to buy investment properties or start businesses can be a smart investment.

Who do you listen to? The answer is that it depends. For example let’s look at the debt approach.

If your strategy is to purchase single family homes at favorable mortgage terms, receive monthly cashflow, grow equity and increase the value of the property over time then this strategy may work. However the alternative, no-debt strategy would leave you saving up and purchasing the whole investment with cash. Sound difficult? You bet!

So which strategy is better? Well that depends on which provides a better, risk-reward ratio. The following are a few risks we should be aware of when investing in real estate: Law suit risk, credit risk(that we won’t be able to pay the mortgage, thus losing the property), cashflow risk (that costs will rise to the point where we don’t receive adequate cashflow). These are just a few risks.

Of these three risks, which ones are effected by taking out a loan? Credit risk and cashflow risk are both effected. Credit risk isn’t even a concern with the no-debt approach(because there’s no mortgage) and cashflow risk increases with the debt approach because there’s increased monthly expenses in the form of loan payments.

A different risk we haven’t discussed yet is the risk of loss of capital. For example let’s say you make the investment in a limited liability entity and are thus only able to lose the money you have into the deal. With the all-cash approach your risk is much higher than the debt approach.

Overall the risks of using debt are slightly higher. However in terms of returns the returns can potentially be much higher than if you only use cash. In addition, purchasing a property with cash takes longer to save up for , lengthening the time it takes to make the original investment in the first place.

So which is better? It all comes down to if you are willing to take slightly more risks to potentially make much more ROI. As long as you are sure to never borrow more than 80% of the value of a property, the debt approach will usually work slightly better. Lastly, the most important takeaway is that simply investing is the most important step. So stop waiting and start taking steps towards financial freedom today!

3 Different Ways to Look at Your Money

Often part of the natural inclination towards money is to view it as something that just pays the bills. While this perspective is certainly valuable in certain context, I want to share 3 different ways you can look at money that will change the way you see your financial life.

The 30,000 feet approach

When you look at any area of your life, health, emotions, mental health, relationships, spiritual journey, your money, etc… it’s easy to view them up close. But when we step back and view the specific situation through the perspective of our whole life, we can see how much it really matters or doesn’t matter.

Ask yourself, “Does spending $120 on a box of extra wineglasses fit into the overall priorities of my life?” If it does great, but more often than not, the priorities don’t align.

The time perspective

When you look at your finances through this lens, you imagine how your decision will look at the end of your life. For example I am thinking of buying a new vehicle that looks and feels cooler. However this expanse will postpone some of my retirement savings.

When looking at it though the time perspective you imagine how you’ll view this decision 40 years down the road. Ask yourself, “When I’m 80, how will I view this decision?” Often our decisions are based on short-term thinking, so this view can really help us realize the consequences behind our actions.

The business perspective

Imagine your financial life is a business. If your name is John Smith, your finances are managed by John Smith, CFO(Chief Financial Officer) of John Smith Corporation. As CFO you are responsible in allocating capital (money) towards the respective goals of the business.

If your job was to manage money for yourself (which it is) would you be happy with the job you’re doing? Or would you fire yourself?

Base your actions on whether they provide appropriate return on investment (ROI) for John Smith Corporation. While the goal of John Smith Corporation isn’t necessarily to maximize profit, your decisions should be aligned with your priorities in order to fit your values. Sometimes this could mean going on vacation, but other times it could mean increasing retirement contributions.

These perspectives are meant to help improve your decision-making processes with your money. They certainly have helped me in my financial journey. In what other ways can we view our finances?

 

Reading: Things That Will Change Your Life

As simple as it sounds, reading will change your life.

As I have lived on campus I have seen many different views when it comes to reading. Most students prefer to avoid it altogether if possible. A few people enjoying reading fiction, and then there are the true readers.

As part of this “club” of true readers I have seen firsthand how the books we read can change our life. And I don’t mean just any books, I mean nonfiction. Why nonfiction? There are two reasons nonfiction is more beneficial in our life over fiction:

1. Fact-based learning

When it comes to reading in general you are uncovering stories, facts and emotions. With nonfiction specifically, the base of your reading is centered around actual facts, not something made up.

2. Nonfiction books are often more relatable to real life

Whether it’s a nonfictional story, or a self-help book, reading nonfiction has a much greater footing in reality, and therefore more relevancy in our lives, than simply another story out of someone’s head. And often, depending on if it’s a self-improvement book, you’ll receive applicable steps for your life as well.

Other benefits to reading in general:

a. Learning and experiencing human emotion

This is by far the most dynamic and variable part about reading. As soon as you dive past the writing structure and all the mechanical, necessary aspects of the text, you are left with the “meat on the bone” so to speak. This gives us exposure to real or conjured human emotion, whether you’re reading fiction or nonfiction.

b. Inspiration

When you open the pages to a book, you are often met with unanticipated emotional boosts of energy, or inspiration. It is these sparks that can make all the difference in either our professional or business lives. Mark Cuban, Billionaire and owner of the Dallas Mavericks, is quoted as saying, “I’ll read hours every day because all it takes is one little thing to propel you to the next level.”

c. Literacy

The last major benefit to reading is the learning and literacy is brings to a person’s life. Learning new words, exposure to new ideas, and learning in general all enhance the reader’s perspective and knowledge about the world. The benefits apply whether you’re reading a nonfiction book or not.

Conclusion:

Frankly I don’t dislike fiction either. I certainly have enjoyed many bestsellers over the years like Harry Potter and others, that have inspired and entertained me. However I believe while reading fiction is good, reading nonfiction is better.

Excitement and Saliency: Why Accounting Is Important for Everyone

…Well technically accounting isn’t crucial for everyone. But accounting and the field of financial as well as tax accounting are very useful, valuable, and foundational fields to study for the vast majority of people.

As a business major I might have a slight bias, but the argument still holds for any other career or academic path – accounting is foundational. Why, you might ask, is accounting so important?

Accounting is important for two types of people: Business people (people involved in business decisions, management, and keeping business records) and regular people who make logical financial decisions.

First I will lay out merits of accounting for business people (who I’m sure already know a lot of them). Secondly I will cover reasons for accounting for individuals in their finances.

Accounting, specifically financial accounting is highly useful from a business perspective. Accounting has been known by many as the “language” of business. Accounting is a world of financial terms and figures that mean precise, crucial things to business owners and managers.

The three things useful to “business people” are: 1) Analyzing where the business is at, 2) keeping the business legal for tax purposes, and 3) presenting the business to others in a clear, conscience way.

 

Moving on to personal finances, there is a different use for accounting which lies primarily in the realm of clarity and accountability. Accounting on a personal level with individual or household finances is a fantastic way to get on track with finances.

There are two primary uses for accounting on a personal level: 1) Tracking where you’re at financially and 2) where you want to go. In addition, just like business, accounting on a personal level can prepare you for tax season and take away a lot of the headache. To be clear, business accounting is presented and formatted in a different manner than personal finances, but nonetheless the principles still apply.

Where can you go from here? Begin taking accounting seriously! You don’t have to become a financial major or geek out about it. But you should definitely learn the basics, and as a result set yourself up for many wise decisions to come.

3 Ways to Limit Your Spending and Pursue Your Financial Goals

Most people who grew up middle class know the value of cutting spending. In fact, when you’re starting out in either business or with your personal finances, the only way to move up financially is to take control of spending.

Because of this fact, I want to cover three of the simplest ways I have cut spending in my personal life and ways you can implement these techniques in your own life.

Prioritizing expenses

This by far is the most direct way to begin controlling your spending. As soon as you have a clear vision and are able to align your purchases with your values, your financial journey becomes a lot clearer.

It takes about 20 minutes or less. Take a sheet of paper or a document on your computer. Write out the major categories: taxes, necessary expenses(food, shelter, transportation, insurance), optional expenses/fun (toys, sports cars, Netflix subscription, tv, hobbies etc…), and giving. Now you have the list of types of expenses, begin prioritizing areas or particular expenses that you value more than others. For example, would you rather have a Netflix subscription or put that extra money towards a long-term objective like retirement?

Tracking Expenses

After prioritizing expenses and seeing where you want to be with your spending, you can see where you actually are. This is a major step in establishing and contemplating where you currently are.

Making a Shopping List

After deciding your priorities, tracking your past spending, and setting your trajectory, the last and final step is to make specific spending lists, also called shopping lists. “Why would I write stuff down,” you might ask, “when I know exactly what I want?” The reason for this is because making a list can limit your spending to only things on the list.

An example of this is once I was shopping to buy things for college and as soon as I got to the store I began buying things I thought I needed. The truth was there were a few things on the list that I actually didn’t need. It taught me a lesson: going in with a list is a positive step towards controlling spending.

Ultimately spending money and controlling your expenses doesn’t have to be a boring exercise. In fact, in time as your budget and income expand, you should be able to have a little fun with your spending.

Two Twenty-minute Tasks That Will Boost Your Financial Confidence

Most of the financially successful people we read about in magazines, books or see on social media are often portrayed as charismatic, energized, stage magnets. While a lot of them share many of these characters, what these men and women share more than any other trait is confidence. How did they get this confidence?

Confidence is often portrayed as something you can act or be or do. But while you certainly can “be more confident” simply trying to act this way won’t create the lasting change you’re looking for. When trying to build more personal confidence in yourself you have to be drawing this confidence from somewhere.

For example, while hosting at a sushi restaurant I have often heard fellow employees give me advice to “be more confident.” While I was certainly able to heed their advice and stand up straighter and with more confidence for short periods of time, I never was quite able to stick with it long term.

However the days I found it easy to be confident were the days I was diligently working, succeeding in customer service, and completing restaurant tasks with excellence. In a lot of ways it was a self-feeding cycle. I’d begin my shift with energy and confidence in my abilities and as the shift progressed my confidence would be reinforced by continuous action.

In our financial lives as well confidence can’t come from self-talk alone. Your mind has to feel both the emotional side as well as the logical side telling you to be confident. When you know that you are working hard, and have a plan it becomes easier for your emotional mind to reconcile the feeling of confidence with the logical one. Here are two major tasks you can do that each take about twenty minutes to complete:

1. Make a general (very rough) outline of where you want to be financially.

This doesn’t have to be complicated or long. Just take a piece of scrap paper out or grab your tablet and start brainstorming what kinds of things you really want to get out of your financially life over your lifetime. This task isn’t a one time event. You should be reinforcing this plan as well as refining the details of it, over the course of your life.

However this first basic exercise should catch the gist of where you’d like to be in the next year or two to help you get where you want to be with your long-term goals (5, 10 or more years down the road).

Organize your finances to see where you are

This step is just to catch a brief overview of where you money stands at this point. Get out your bank statements, look at your investment accounts, estimate the rough value of your home and the mortgage you have on it. Once you know your assets, liabilities, and the rough monthly budget you take in (income) and the expense you take out (expenses) you’ll have a very general picture of where you are.

These two, first steps alone will give you a sense of clarity about what really matters to you and where you are financially, thus what is needed to get you to the next step.

3 Ways to Get Your Own Cinnamon and Blueberry Financial Plan

There are a lot of ways to prepare a breakfast. Toast and jam, eggs (scrambled, sunny-sideup, over easy, etc…), milk and cereal, pancakes and syrup, bacon or sausage, yogurt with granola and fruit and then there’s oatmeal.

To be honest I’m not the most exciting person when it comes to making breakfast. I have the philosophy for myself to keep my first meal relatively healthy, to keep it simple, and to keep it consistent.

The last couple years have seen a great deal of changes in my life; I officially finished high school, got my first real job, took 3 big camping trips (2 to Canada, one to Pictured Rocks MI), had a chaotic semester (with both full-time work and full-time school), said goodbye to my family of two parents and four siblings who moved to Zambia, Africa, Visited them for 3 months, came back and took a 2300 mile road trip by myself, and now am finally beginning my first regular semester at University.

With all this change I have kept my morning routine fairly consistent. I wake up early, do pushups, run, do jumping jacks, or sometimes none of them. I take a shower, read, write, and I have my oatmeal.

The same is true with my money philosophy. While I am at this early stage of my career and investing I have only a few basic tasks to put my money towards: living (food, insurance, college, etc…), generosity, savings and passive investing. My goal in this period of life isn’t to make billions or millions – my goal is to set up my future.

Just like my breakfast isn’t meant to be fancy or complicated, neither should your finances. This rings especially true for those of us who are younger. The People who end up broke are almost always those who either spend all their money trying to feel rich or spend all their money trying to get rich (fast).

To follow in the footsteps of responsible millionaires you need to keep these three ingredients in your financial life: responsible actions taken simplistically over a long period of time (consistency).

3 Things to Value More Than $1M

As the U.S. continuous its decade-long economic improvement, it’s hard for many of the younger folks to remember a time where fear was prevalent and jobs were scarce. While I was much younger in 08 and 09 I remember the feeling and conversation around money during that period.

Not only am I confident that hard times will hit the U.S. economy again, I suspect (based on history) that some sort of crash or drawback isn’t too far away. Simply looking back at the last couple decades of market crashes gives us some picture of how rare the past 10 years have been.

We’ve seen relatively low turmoil in the market, particularly stocks. Except for a few difficult weeks, the U.S. stock markets haven’t experienced a real drawback since the mortgage meltdown. But just 5 or 6 years before that the markets were down in 2002. And just two years before that the markets were down in the technology bubble of 2000.

Consistently throughout history we’ve had market crashes or corrections every six to 10 years. Here we are in 2018, with trade fears on the horizon, wondering if another crash is near. It’s been about a decade.

With all the turmoil, fear, anxiety and uncertainty in the markets, it’s very easy to become focused so much on the world of money that 1) we lose historical perspective on a potential loss, but 2) we lose life perspective on the true importance of money as it relates to our life.

Which matters more, a 50% drop in the Stockmarket (which won’t be a permanent loss unless you panic and sell) or a loss of a close loved one? While most people would value the close relationship above a temporary financial loss, it’s strange that so many of us put more energy worrying about areas of finance we can’t control and less time improving our current relationships.

Don’t get me wrong, money is important. Money has power, both in our life (to buy things and help others we care about) and in politics (to influence people), but there are three big things more important than money we can’t forget:

1) God

2) Close relationships (friends and family)

3) Health (physical and emotional)

Deepening these areas of your life both in depth (deepened commitment and improvement) and in length (time spent improving and investing in) is a great first step in not only improving these three areas but also setting yourself up to improve the 4th area: Money.

Next time you’re planning or prioritizing your life in a way that isn’t consistent with your values, remember in what order your values lie.