Eighteen months ago, I read Switch: How to Change Things When Change Is Hard by Chip and Dan Heath. This book changed my life.
Switch explores the difference between the life changes we eagerly embrace and those we struggle with our entire lives. The book radically altered the way I plan, budget, eat, sleep, and work. Thanks to Switch, whenever I warnt to change any habit in my life, I now think of elephants.
Let me explain. Continue reading...
Over the last few months, I've spent countless hours researching the process of selling items online for a large project I've been compiling. It's taught me that as much as I thought I knew about selling online, there's so much more that I have no clue about!
For example, a family member recently asked for my help selling an unneeded car on the internet. "Sure!" was my first thought. "Heck, maybe I'll even use this as a case study!" However, there's one major problem with this situation: I'm completely ignorant when it comes to cars.
Actually, I shouldn't say completely ignorant. That's not correct. I'm inexcusably ignorant when it comes to cars.
There I was, bustling around the kitchen making lunch for my daughter when our late morning routine was interrupted:Boom! Boom! Boom!
Milligan and I glanced toward the front door where the thunderous pounding had originated. "Holy cow!" I thought to myself, "There are only two groups of people who knock like that! This may not be good..."
Luckily, as I slowly opened the door, there was a stocky little lady in her late forties or fifties (with no badge). "Afternoon," she said. "I've some packages for you... several packages for you. I'm gonna need some help carrying these around to the door."
Courtney and I have recently stumbled upon a new hurdle in our personal finance journey: complacency.
You see, we've experienced just enough success to make us feel comfortable, but not enough to be even close to accomplishing what we want. We budget fairly well, we live on less than we earn (or right at what we earn), and we're able to explore passion-based income opportunities. On the flip side, we're still making far less than we're worth, we aren't saving for college or retirement, and we still have a bunch of student loans.
In our current situation, I'm always looking for ways to jolt our perspective and spark a bit more motivation. In the past, we've tried brainstorming more exciting ways to frame our goals, or sharing empowering stories we've read about from others' lives. These can work, but they've began to lose their effectiveness.
This video post is the third of a four-part series.
Last week, I introduced the concept of a Budget Buster, which is any irregular expense that I fail to plan for. These are't true emergencies, but rather expenses that pop up to surprise me, even though I should have easily seen them coming.
This week, I'm concentrating on the largest budgeting category for these surprise expenses: home ownership. When looking for housing Budget Busters, those of us making the transition from renting to home ownership need to be especially wary; lack of experience leaves us exposed to a barrage of these expenses in the first few years.
Courtney and I apply a fun name to any expense in our lives that we should've planned for in our budget, but didn't. We call them Budget Busters. Even with persistent effort, we find it impossible to account for every irregular expense. As I note in this week's video, we make an important distinction between a true emergency (random events we cannot foresee) and irregular expenses that we should have known were coming.
We have two primary categories where Budget Busters tend to run rampant: transportation and home ownership. I've broken these two categories into two separate posts and this week, in part one, I'll be focusing on transportation.
Almost everyone is used to planning for gas, oil, and auto insurance, as these are routine costs associated with operating any vehicle. However, it's much rarer to account for all the miscellaneous expenses that can come up, such as accidents, tires, repairs, tickets, parking, registration, plates, fares, tolls, and so on.
For many people, the process of personal finance cycles between intense motivation and devastating burnout. A life event, a powerful communicator, or maybe even a simple blog post creates an initial spark. Before we know it, we're wound up and ready to pounce: We vow to finally get our finances in order.
We slash our restaurant budget to nothing. We research car-pooling options in our area and collect quotes on refinancing our mortgage. We start clipping coupons, cut out our spending vices, and craft fancy budgets with dozens of categories. Unfortunately, few battles in history have ever been won when waged on so many fronts. Our best intentions soon crumble to the inevitable. We become overwhelmed. Burnout creeps in, and few of our positive changes stick.
This was what happened consistently to Courtney and me several years ago. In the following video, I elaborate on the technique we employed to finally break this pattern and create positive change that lasted.
Passive barriers are those small mental impediments that keep us from making smart choices. Things like over-drafting your bank account because you're too lazy to stop by the bank to make a deposit, or not going for a run because it's a pain to get your exercise clothes together. But while passive barriers can prevent us from meeting our financial goals, they can also be used as a force for good.
In the video below, I discuss three passive barriers (some might call these money hacks) that my wife Courtney and I use to help fend off consumerism. In the past, we've had these sorts of barriers work against us in our finances. It feels good to turn the tables.
As some of you know, Courtney and I recently spent just under a year traveling abroad with our two-year-old daughter. A couple of months ago, we returned home to Indiana and decided that we'd take a six month break from our mobile lifestyle. Our decision meant we needed to start looking for short-term rentals that would meet our temporary needs.
When we started to browse rental options, we created a list divided into Wants and Needs. Some of the Needs included things like two bedrooms, a safe neighborhood, flexible lease terms, and some sort of yard or grass.
Under Wants we placed criteria like a standalone house, a fenced-in back yard, a one-car garage, and proximity to decent sidewalks or paths. Remember, we weren't buying a permanent home: We were searching for a quick six-month stop.
I struggle with weight. In fact, it's a far more difficult issue for me than personal finance. Honestly, I'm not completely sure why, but it's true.
There are many similarities between paying off debt and creating a healthy lifestyle. For starters:
- Correcting both issues starts with awareness. The key to turning around my financial life was realizing exactly how bad it was. After that, I was able to connect deeply with the burden that my lazy financial habits created in my life. While I understand that I'm unhealthy, I haven't fully connected with the burden it brings into my life.
- Both issues have simple solutions. Notice I said simple, not easy. Personal finance can really be boiled down to "spend less than you earn". There are plenty of details, techniques, and strategies, but it all comes back around to that one basic concept. Creating a healthier lifestyle is also simple: Eat fewer unhealthy foods, exercise more. Remembering these simple foundations can help us from distracting ourselves in a search for a mythical secret solution.
- Both issues require more motivation than "it's good for you". The vast majority of people who struggle with money realize that consumer debt is bad for them. Most people who carry credit card balances know "they shouldn't". But this doesn't keep them from doing it or help them from being susceptible to credit card tricks which can increase their fees. I know my diet is poor and I'm not as active as I should be. Just because eating better and exercising is "good for me", doesn't mean I'm going to do it. Sadly, most of us need more motivation (and more specific motivation) to overcome either issue.
Even though intellectually I can identify these similarities, I haven't been able to bridge the strides in my financial life to my health. I need more awareness and a more specific type of motivation. I recently stumbled upon an interesting concept that may help me with the latter.