Monthly Archives: March 2010

Best of the Rest: Saying Goodbye Edition

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This weekend, one of my best friends for the longest time is in town to visit before he moves out of the country for good. We’ve been through a lot together, and it’s definitely tough to come out of college and realize that people go their different directions, but the direction of very far away for a very long time is a litle strange for me.

Instead of sulking and reminiscing this weekend, we’ve got some exciting plans. We’re going golfing on Sunday for the first time together. I own the mini golf courses, but it will be interesting to see how many shots (and balls) it takes me to get to the green. I’m shooting for a 50 for nine holes.

Before going onto a few of my favorite articles this week, I want to highlight a few people who have done a great job of promoting me this week. Neal from Wealth Pilgrim had me over for a guest post which was a lot of fun, and on Friday, I was part of My Next Buck’s Friday Financial Foul Ups series. I pretend that I don’t have any stories of financial mistakes I make, but that’s actually quite far from the truth.

I was linked to in several round-ups, and I’d like to give some love back to Ultimate Money Blog, who’s been a great Yakezie member. Also, I have been part of the Yakezie carnival, most recently two weeks ago at CJ Bowker. Check out Eliminate the Muda for this week’s carnival.

And here are my three favorite articles from this week:

How To Apologize For An Error? Martyr Yourself! @ Financial Samurai

I wish this article didn’t have to end. We’ve all done some stupid stuff, but taking the blame and exaggerating it seems like a great way to not only move past it and avoid being scolded, but maybe gain some sympathy. It’s far worse to be outed later for a mistake than to own up to it when it happens.

Are you Sure you Want to be Your Own Boss? @ Suburban Dollar

Being your own boss sounds like the perfect life of never having to answer to anyone, creating your own hours, and being fairly compensated for your effort. But Joel’s guest post points out some reasons why this type of lifestyle may not be for everyone.

Is a 15 Year Mortgage Financial Suicide? @ Fiscal Geek

Kevin from Out of Your Rut guests posts about the cons of a 15 year mortgage and does a great job of explaining why in the current market, a 30 year mortgage may be beneficial for several reasons. I’m nowhere near buying a house, but when I do, I’ll be sure to look at the interest rates and calculate just how much I’ll be paying per month under both scenarios

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Interview Series: Eliminate the Muda

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Today’s interviewee is Lean Life Coach from Eliminate the Muda. I can’t seem to get enough of his writing and he’s a consistent commenter on the site. Enjoy his fantastic interview:

What the heck is Muda? Muda is a Japanese word for waste. However as many things in the Japanese culture this seemingly simple word has a very deep and complex meaning in the context with which I teach it. Muda refers to any action, expense or effort that adds no value. The concept was popularized with a well known business management philosophy generically called Lean Management. In essence and properly applied it is a way of business that focuses on the customer first. Delivering the greatest value in products or services at the lowest price possible. In business this means eliminating the unnecessary. If you have ever worked for a company, any company big or small you have seen waste in many forms. Lean empowers and teaches employees how to identify and eliminate them.

In one’s personal life these same principles can be applied. For example, as the resident weekend breakfast maker in our house, I took a 40 minute process cooking pancakes and bacon a few years ago to a 20 minute process today. My wife teased me saying this was a silly example. But think about this, 20 minutes saved two days a week for 52 weeks a year times say 25 years gives me an extra 36 day of life to do what I please. It also manifests itself in money, not only does more time represent more opportunity to earn or save, but these principles guide sound spending habits.

What is the most important personal finance lesson you have learned? You thought I left you hanging on that last question? The most valuable personal finance lesson I learned was the value of money and how to make sound judgments when spending. For many years my wife was not my partner in finance. Until that is I shared with her my most important lesson: The value of savings.

In a nutshell it is this, your savings are worth more than any other money you have. Assume I have a 5% savings rate. This means out of every one hundred dollar I earn, ninety-five is spent on bills and discretionary items. Let’s say this 5% represents $1,000 meaning I earned just $20,000 per year. Furthermore lets say that I made a bad choice and blew $50 on a pair of rockin new shoes that I wanted (but didn’t need). That $50 comes from my savings, right. So if after bringing the shoes home I have remorse and want to recover the wasted money. How much extra do I need to earn?

If 95% of all earnings are already spoken for than only $5 of every hundred can be used to make up my savings shortfall. To recover $100 lost I must earn $2,000 additional dollars. I need a 10% increase of income to cover a stupid $50 purchase! How’s that for a different perspective?

What was first personal finance memory?

My earliest personal finance memory was in the second grade. I had a spare Cox airplane engine and no plane for it to go on. A friend at school learned of it and offered to buy it from my. Hey, what the heck it was doing me not good. So I brought it to school and took $10 in payment. It took about 30 seconds for us both to end up in the principles office and another thirty for my Mother to show up. I was punished for being a capitalist was all I could think of at the time.

Why did you join the Yakezie group?

I’d use golf as an analogy. they say when you play with a group that is better than yourself, you play better. Until just a few weeks ago I paid little attention to any performance metrics for my blog. My only focus has been on sharing my perspective, learning the technology, and working on improving my writing skills. The group is filled with some amazing writers, a tremendous amount of talent, and a wide array of skills. When the challenge was launched I saw it as another path for continuous improvement.

If you could go back and tell your 20 year old self one thing (about personal finance or not), what would it be?

Don’t I wish! I would tell my 20 year old self the same thing I’ve been telling my kids since they were toddlers. “Always save twenty percent!”

Which is your favorite post? Why?

This is a tough choice. There are two that compete. Combat the Closing Techniques – The Puppy Dog Close was the first in a series I am working on to educate my readers on how to deal with salespeople. While I’ve really enjoyed researching and writing this series I am especially proud of this one because it was a Best of Money Carnival editors pick.

As a hobby I am a woodworker building furniture and turning bowls. Another post that means a lot personally is The Value of DIY is Greater Than Just Savings. This one was really enjoyable because I was able to share some amazing work by three fellow bloggers.

What motivates you to keep writing?

Professionally I teach many of the same principles of Lean that I share in my blog for personal use. There is tremendous personal reward every time one of my clients benefits by learning and applying these ideas. Blogging leaves me a little more disconnected than when I am consulting but What motivates me is the thought that I can make a difference in somebody else’s life.

Daily Yakezie Short Carnival:

Coupon Strategies – Establishing a Workable Coupon System @ Not Made of Money

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Lessons Learned from Who Wants To Be A Millionaire

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When the weather isn’t nice, I spend my lunches at work watching “Who Wants to be a Millionaire.” So for the past four months, I’ve watched a lot of Millionaire, watched several people miss the first question and undoubtedly learned a ton of random trivia that I’ll most likely never ever need.

But in watching the contestants all this time, I’ve learned a lot about the game show, and it turns out that a lot of it relates to personal finance. So her are the 3 lessons I’ve learned and if I could, what I would tell every contestant and investor.

1. Plan ahead!

The most frustrating thing about watching every day is how quickly contestants are willing to use their “ask the audience” lifeline. The audience is right about 95% of the time, so why not save it for a later question when you’re really in a bind? If it were me, I’d use the “ask the expert” if I was having trouble with an early question because their success rate with the harder questions is only around 50%. They are likely to be more helpful with the easy questions, but most people don’t employ this strategy.

In terms of personal finance, it’s very important to look at the big picture and to plan ahead. Like the contestants, we shouldn’t plan only for the short term. We should put money away now so that we’ll have a little insurance later. If we spend a majority of our money now, we won’t have it later when we really need it. And in life, you can’t just walk away and take the $100,000.

2. Don’t Be Afraid To Get Advice

When contestants use their “ask the expert” lifeline (which most of the time is just asking a comedian I’ve never heard of) they too often follow the advice blindly. They don’t consider that this is just a random person and there’s no reason to think they have a better chance of getting it right. No matter how little confidence the expert has, the contestant always seems to go with their answer, and with a 50% success rate, that leaves a lot of unhappy contestants.

I think that getting advice from a professional is a great idea if you’re not sure what to do with your money or if you feel you’d rather have someone qualified making your investing decisions rather what feels to you like rolling the dice. However, keep in mind that while they may be experts, in the end of the day, you are the one who is responsible for your decisions and you will feel the full effects of our choices. Don’t blindly follow someone who will get paid regardless of the outcome.

3. Don’t be greedy.

When players get into the $50,000 range, they suddenly think that they are invincible for some reason. They are willing to take more risks because they see the holy grail of $1,000,000 and think that nothing else is worth it. Well it turns out that $50,000, $100,000, and $250,000 are all huge amounts of money and sometimes it’s better to know when to walk away than to risk it and fall back to just $25,000.

Just like my friend who started day trading, make a bit of money at the beginning and then slowly realized that it wasn’t quite as easy as he thought, we should know when to walk away. There is a certain amount of risk with any investment, but people always kick themselves when they have something and let it go. Take what you can get but don’t go over the top. Because a 9% yield in a year is great, don’t risk too much trying to get to 12%.

Maybe being on TV and having the opportunity to bag a huge amount of money makes people act irrationally. Maybe they become shortsighted, too trusting, or greedy. Try to avoid the mistakes Millionaire contestants make in your life and you’ll be much better off.

Daily Yakezie Short Carnival:
Ideas for Vacationing on the Cheap @ Little House in the Valley

How I Maximize What Our Library Has To Offer @ Money Beagle

The Ultimate Motivator: Compounding Interest @ My Financial Objectives

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How to Stop Sweating the Small (and Big) Stuff

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This is a guest post by Neal Frankle. He blogs about finding self, health and wealth. He’s a CFP and overcame huge personal obstacles starting at a very young age. After you finish reading this, get his updates at Wealth Pilgrim.

Daniel really honored me by extending an invitation to submit a guest post to his amazing blog.

I’m especially intrigued by the title Daniel chose: Sweating the Big Stuff.

Maybe like you, the blog title reminded me of Richard Carlson’s book, “Don’t Sweat the Small Stuff”. I thought about the message and realized what a stroke of genius Daniel had by selecting the name he did.

At first, I thought he was sending a message similar to that of Carlson’s.

But then I realized what I mistake I’d made.

Carlson’s message is an important one – don’t waste time on trifles.

But Daniel’s message, at least in my opinion, is completely different – and actually more important.

Not only do you have to stop wasting time on small matters, you actually have to do the work - focus on the big stuff and get in gear. You have to be clear about what’s important and then do it. It will mean trade-offs but it will be worth it.

The concept of this was really made clear when I considered all the energy I spend blogging.

When I started out, I was really clear as to what my objectives were. I wanted to become an authority blogger with a large audience and I wanted to forge strong connections with other great bloggers.

The later has been easier to do than the former. Fortunately, the PF blogging community is replete with a huge tribe of wonderful people. They are only too happy to help and they are very welcoming. I’s been a really fun and wonderful experience getting to know people like Daniel.

But let’s get back to the stuff I’ve been sweating.

Of course I am proud of the growth I’ve experienced – but I wanted more. As a result, I started sweating the stuff I thought was big.

For awhile I thought that all that mattered was my subscriber numbers. I did everything I could to grow that number.

Then, I focused on traffic.

After that, it was revenue.

Wrong wrong wrong.

I was sweating the big stuff because I forgot what the big stuff really was. I starting fretting and having real emotional and financial stress.

So what is my real big stuff?

Have faith.

Be honest

Help others.

Take care of my family

Make a living.

For me, those are the big things.

Unfortunately, what happened (slowly at first), was that I lost sight of these big ticket items. I turned blog success into numero uno.

Mistake!

As a result of that error, I actually became less able to do the big 5 that mean more to me.

I lost balance. Fortunately, I’m regaining it.

How did I regain my footing?

I created a daily schedule.

I list everything I want to get done and the order of importance. I allocate a certain amount of time and that’s it. If my time is up, I’d simply don’t do anymore.

If that means it doesn’t get done, it doesn’t get done.

My sense is that there will always be more to do in this world and that I can’t learn it all or do it all. If it takes me an extra year or two to master some aspect of blogging, so be it.

I’m the kind of person who is very focused and goal driven. I need to put limits on myself or I go off the deep end.

By putting a schedule together I am able to limit the time I spend on blogging, make the time I do spend very high impact and have a life at the same time.

Do you think you’ve given up too much of your life as a result of blogging? How do you stay balanced?

Daily Yakezie Short Carnival:

How much should I put in an Emergency Fund? @ Cool to be Frugal

Ignore Social Norms and Save More @ Engineer Your Finances

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