All posts by Hero

Achieve Success in Everything Through C.A.S.E.

I spend a lot of time thinking about success. It is one of the most fascinating topics we can encounter in life because everyone values and desires success to a certain degree. How we define success, respond to success, measure success, and seek to achieve success can vary significantly from person to person. However we choose to shape the model of success, one thing is clear: we all look to others in varying degrees as we shape our own success paradigms.

When I was a kid, I shot hoops in the driveway and envisioned what it would be like to be Michael Jordan. Though I wasn’t a Chicago Bulls fan, I was an MJ admirer. I watched his games, checked box scores, and read his interviews. I learned that Jordan often spent many hours practicing his skills outside on the family hoop, even if meant practicing in the dark and rain. This seemed like a smart idea to me, so I began began doing additional shooting drills in the dark and rain. That year, I became a starter on the school basketball team.

Around the same time, I began playing competitive chess and was drawn to Frank Brady’s Bobby Fischer: Profile of a Prodigy, which outlined the noteworthy, up-and-down life of the genius chess champion. I became enamored with the work ethic, drive, and determination exhibited by Fischer, and once again, I patterned some of my study habits after Fischer. I played over hundreds, if not thousands, of games of masters like Capablanca, Morphy, and Lasker, often taking detailed notes while being careful not to tip off my parents that I was still awake and studying into the early morning hours. Later that year, I won my division in the Michigan Amateur Chess Championship.

I had no idea at the time that my method of seeking success – emulation – was common. A kid acting on intuition doesn’t think about these things in this way. But over time, I found that my practice of following the paths of the greats was paying off handsomely.

Somewhere along the way growing up, I lost my way and stopped doing many of the things that had made me successful. I sought my own path, which was primarily built upon hard work. When others grew tired or decided to quit, I dug a little deeper and worked a little longer.

Sometimes it worked out, and sometimes it did not. Now, at the comparatively-ripe age of 30, experience has reminded me that there is a smarter way to achieve success in everything: C.A.S.E.

Goals can be elusive, but you can achieve success if you are in touch with your dreams and willing to emulate others using C.A.S.E.

Achieve Success and Build Momentum Using C.A.S.E. (Copy and Steal Everything)

In the last year, I have become increasingly interested in returning to my intuitive childhood roots and studying the lives and habits of all sorts of top performers like Steve Jobs, Bill Gates, and even Jordan and Fischer. In Outliers: The Story of Success author Malcolm Gladwell consistently attributes the success of top performers to what he calls the 10,000 Hour Rule. Through countless examples, he reasons that most successes can be attributed to practicing a skill the correct way over and over and over. Finding that “correct” way is best achieved by examining others’ habits and practices.

In other words, we should copy and steal everything if we want to put ourselves on the path toward success. If it is true that we are what we repeatedly do, then success can often be as simple as repeatedly doing what the top performers do enough times that it becomes who we are at our cores.

Am I advocating that we need to become a version of someone else before we can become the best version of ourselves? Not necessarily. But it might not be a bad path to getting there. Maybe the way to achieve brilliant success is not to blaze an entirely unique trail, but to spend some time on the trail blazed by others first. Consider this a sort of internship in success, if you will.

If you have goals and feel that you aren’t successful at this time, consider utilizing the C.A.S.E. method to jump start your progress. I recommend considering the following points before you start, as they will support your efforts to achieve success.

Craft Your Own Definition of Success

Following a blueprint to achieve success without actually pausing to consider what it is you wish to achieve is a major stumbling block for many ambitious people. They are heading completely in the wrong direction, but they’re just happy to be making excellent time! Be sure that you fully consider what success looks like to you before you take specific action.

If you don’t chart a path to achieve success as you see it, you will find yourself copying the life and values of another person. This approach has severe limitations, most notably that you are not exactly the same as others. The skills you possess will influence the path you take to achieve success.

For anyone who lacks understanding of his skills,  StrengthsFinder 2.0 remains my most treasured guide for discovering them. For mere pizza money, the book has had a profound impact on the direction of my life.

Copy and Steal From the Right People

Once you’ve defined your goal, it is important that you copy and steal from the right person. You must identify someone who has taken steps to achieve success in an area that is at least similar to your vision.

While you’re at it, do not limit yourself to emulating only one high achiever. We all stand to learn at least one piece of actionable knowledge from virtually any top performer.

Compare Yourself to the High Performers You Select

I’m a firm believer in the notion that comparison is the thief of joy, but I also believe this idea has its limitations. We can compare ourselves to others in a manner that brings us down, or we can identify strengths that we see in ourselves which are also manifested in the lives of others.

Before you identify a top performer to emulate, it is important that you first find common ground with that person. Fortunately, finding shared attributes with high performers is not highly difficult in most cases, but if overlapping strengths are not readily apparent to you, it may be time to look elsewhere.

For example, if you’re a writer who works best after a day’s worth of thought, movement, and exercise have taken the edge off, emulating a writer like Hemingway (who famously rose early to write each day) won’t likely work for you.

Don’t Rely on C.A.S.E. to Solve Everything

Personal growth guru Tony Robbins said, “If you want to be successful, find someone who has achieved the results you want and copy what they do and you’ll achieve the same results.” Actress Judy Garland reportedly said, “Always be a first rate version of yourself and not a second rate version of someone else.” The key to successful implementation of the C.A.S.E. method lies at the intersection of these two quotes – we should seek to emulate top performers who have achieved the success we desire while also remaining true to ourselves.

By starting with an understanding of your own values and what you hope to achieve, it is possible to copy others without becoming them. Surely copying others has its limitations, but human intuition cannot be entirely wrong. C.A.S.E. alone won’t solve all of your problems – whether they’re tied to your career, marriage, spending, or investments – but when utilized properly, it can jump start the pursuit of your dreams and help you to achieve success.


Readers, do you implement aspects of the C.A.S.E. method? If not, what is your primary method for seeking to achieve success?

Stop Money Fights With This Simple Solution

This post, “Stop Money Fights With This Simple Solution,” was updated on February 16, 2017.

Over 70 percent of couples report fighting about money over anything else. You can stop money fights by following this one simple recommendation!

Like many people, I lived in the dorms back in my college days. After surviving one semester with The World’s Worst Roommate™, I was fortunate to be granted a housing change. My new roommate, Erik, was everything one could hope for in a roommate: he picked up after himself, showered daily, loved to play table tennis until all hours of the night, and could binge watch TV like a pro.

Among the many shows Erik and I binged on, Married With Children was our favorite. Can you blame us? Ed O’Neill played the role of Al Bundy, a henpecked husband, broke shoe salesman, and father of two, to perfection.

Over 70 percent of couples report fighting about money over anything else. You can stop money fights by following this one simple recommendation.Brief digression: It is a crime that O’Neill never won a Golden Globe for his performance as Al Bundy, though his career has been unquestionably validated by countless nominations and awards for his performance as Jay Pritchett in Modern Family.

In one memorable scene, Al’s wife, Peggy, has just returned home from a lavish shopping spree. Al takes a look at the bills and delivers a typical, priceless line:

I hope one of these bills is for a coffin, because your shopping is killing me.

While MWC was a slapstick, controversial comedy which often crossed the line, this particular money fight between Al and Peggy hit the nail on the head in terms of its value as a social commentary.

Research supports my assertion. According to a Huffington Post article from 2014, a survey showed “that 70 percent of couples argued about money more than household chores, togetherness, sex, snoring and what’s for dinner.” Furthermore, survey records that the focus of 46% of all money fights was “frivolous purchases.”

I suspect that 54% of surveyed couples were not being entirely honest.

Over 70 percent of couples report fighting about money over anything else. You can stop money fights by following this one simple recommendation.
Graph credits to Huffington Post and Money.com

Mission: Stop Money Fights in Marriage

Last fall, I volunteered as a co-facilitator for a popular personal finance course. I have always enjoyed engaging in financial discussions with others, despite the general unwillingness to do so in most people, and serving as a group leader satisfied that urge while also providing a platform to help people and sharpen my own knowledge.

During our session on purchasing, a student in my group shared that she and her husband had previously been through several fights about spending over the years. I braced myself for a plea for advice, but what she said next surprised me.

“We found a solution that has stopped most of our money fights.”

Chatter among the group instantly ceased. Each group member, including me, was eager to learn this couple’s secret to stop money fights?

Solution: The Thirty Day List

In the moments which followed, we learned a lot about this couple’s experiences. Throughout their marriage and subsequent ushering of two children into the world, this couple had fought about many purchases: vehicles, clothing, electronics, and even groceries. Matters were not made any easier when the couple encountered financial hardships. In order to reduce and stop money fights specifically related to purchases, this couple implemented a procedure that they called “The Thirty Day List.”

They outlined the rules as follows:

  1. When considering a purchase over $50, write the item and cost down on the list and date the entry.

  2. Provide a brief rationale regarding the item’s utility and importance.

  3. Revisit the rationale in 30 days. If it still sounds like a good idea at that time, purchase the item.

Naturally, many students (budget nerds) were in favor of this approach, while other students (free spirit spenders) were against the restriction associated with this process. However, as the couple explained how it worked for them, the tone of the room shifted toward acceptance of this uncommon procedure. Some people even expressed hope that use of The List could stop money fights in their marriage.

Why The List Works

Among the benefits of the list which were described that day include the following:

  • The List often prevents unnecessary purchases. Sometimes you don’t buy the item because you realize don’t really need it.
  • The List eliminates susceptibility to high-pressure sales techniques. When a smooth talking salesman is rolling out every tactic in his arsenal to get you to purchase that new refrigerator with built-in social media access, you don’t even have to feel bad saying “no” because you are acting on a matter of principle.
  • The List causes you to wait, and sometimes this nets you a better deal. Patience puts you in a position to negotiate a great price. This extra time also allows you to thoroughly research a product, weigh the pros and cons of the purchase, and make a careful evaluation.
  • Similarly, after waiting 30 days, you retain the willpower to reject a bad deal. What is a few more days? You are in control and have the power to walk away.

Why The List Works

The Thirty Day List works in many situations because it leads to communication. When a couple collaborates to generate a unified position, a meeting of the minds and melding of ideas is often the result. However, this does not always happen quickly.

In such cases, a couple must take a step back and view the possible purchase from a wider perspective. By considering the purpose of the purchase from a variety of perspectives, the tone of communication shifts from one which is adversarial to one which is inclusive of both partners’ values.

Related Posts: See Values and Budgeting Part One and Values and Budgeting Part Two

Finally, the List provides accountability for larger purchases. It provides a framework and protocol which eliminates one partner from “going rogue.”

Downsides to The List

While the Thirty Day List may seem faultless in theory, it can be more difficult to implement in actual practice. After all, we live in a society in which it is easier and (often preferred) to ask for forgiveness after the fact rather than seek permission in advance. Many people would agree that this is a terrible way to act within your marriage or other committed relationship, yet that doesn’t stop some people. If this is your preferred practice, the List won’t work well for you.

The List is also not a good idea when you find yourself in a housing search, especially in a seller’s market. Often times, you will need to be poised to make quick decisions. This shouldn’t be a surprise, however, as when you are in the midst of such a search, you know the rationale and utility for the purchase.

Make the List Work For You

Perhaps the greatest feature of the List is that it can be modified to fit your circumstances. A high school student with a part-time job and an annual income of $1,200 and a married couple with a combined annual income of $500,000 can successfully use the List to their respective advantages. The figures may need to be modified, but at the end of the day, the principles remain the same whether zeros are added or removed.

If thirty days is too cumbersome for you, modify the procedure to fit your needs. You know yourself better than anyone, and using this knowledge is the best course of action when designing a List which will work for you to stop money fights and support wise purchases.

Further Recommended Reading: 

Money and Marriage: How to Talk About Money With Your Spouse

Want To Be Rich? Maintain Great Relationships


Readers, do you have a procedure similar to The List in place to assist when making significant purchases? Do you and your spouse or significant other routinely fight about purchases? What do you do to stop money fights?

How to Stop Fighting Over Money With Your Spouse

Research shows that over 70 percent of couples fight about money. This simple solution will help you stop fighting over money with your spouse or partner.

According to a Huffington Post article from 2014, a survey showed “that 70 percent of couples argued about money more than household chores, togetherness, sex, snoring and what’s for dinner.” Furthermore, survey records that the focus of 46% of all money fights was “frivolous purchases.” In my opinion, 54% of surveyed couples were not being entirely honest. And I bet 100% of couples would love to stop fighting over money with each other.

Even in the FinanceSuperhero household, we find ourselves fighting over money more than anything else. Of the top five money arguments listed in the graphic below, we tend to argue most about our monthly budget allocations. In the grand scheme of things, we’re fortunate to be arguing about allocations on things like dining out, clothing, and gifts to others. Though we mostly have our act together in this area, I’ll be honest – it still bugs me that these money fights pop up from time to time.

Research shows that over 70 percent of couples fight about money. This simple solution will help you stop fighting over money with your spouse or partner.
Graph credits to Huffington Post and Money.com

Mission: Stop Fighting Over Money With Your Spouse

I recently wrapped up another session of Financial Peace University at my church. I enjoyed engaging in financial discussions with others, despite the general unwillingness to do so in most people, and serving as a group leader satisfied mu urge to help others while also providing a platform to sharpen my own knowledge.

During our session on purchasing with last year’s group, a student in my group shared that she and her husband had previously been fighting over money repeatedly over the years. I braced myself for a plea for advice, but what she said next surprised me.

“We found a solution that has stopped most of our money fights.”

Chatter among the group instantly ceased. Each group member, including me, was eager to learn this couple’s secret.

Solution: The Thirty Day List

In the moments which followed, we learned a lot about this couple’s experiences. Throughout their marriage and subsequent ushering of two children into the world, this couple had fought about many purchases: vehicles, clothing, electronics, and even groceries. Matters were not made any easier when the couple encountered financial hardships. In order to stop fighting over money, purchases, this couple implemented a procedure that they called “The Thirty Day List.”

They outlined the rules as follows:

  1. When considering a purchase over $50, write the item and cost down on the list and date the entry.

  2. Provide a brief rationale regarding the item’s utility and importance.

  3. Revisit the rationale in 30 days. If it still sounds like a good idea at that time, purchase the item.

Naturally, many students (budget nerds) were in favor of this approach, while other students (free spirit spenders) were against the restriction associated with this process. However, as the couple explained how it worked for them, the tone of the room shifted toward acceptance of this uncommon procedure. Some people even expressed hope that use of The List could help them to stop fighting over money.

Why The List Works

Among the benefits of the list which were described that day include the following:

  • The List often prevents unnecessary purchases. Sometimes you don’t buy the item because you realize don’t really need it.
  • The List eliminates susceptibility to high-pressure sales techniques. When a smooth talking salesman is rolling out every tactic in his arsenal to get you to purchase that new refrigerator with built-in social media access, you don’t even have to feel bad saying “no” because you are acting on a matter of principle.
  • The List causes you to wait, and sometimes this nets you a better deal. Patience puts you in a position to negotiate a great price. This extra time also allows you to thoroughly research a product, weigh the pros and cons of the purchase, and make a careful evaluation.
  • Similarly, after waiting 30 days, you retain the willpower to reject a bad deal. What is a few more days? You are in control and have the power to walk away.

Why The List Works

Research shows that over 70 percent of couples fight about money. This simple solution will help you stop fighting over money with your spouse or partner.The Thirty Day List works in many situations because it leads to communication. When a couple collaborates to generate a unified position, a meeting of the minds and melding of ideas is often the result. However, this does not always happen quickly. Simply starting the conversation can often be the hardest part!

In such cases, a couple must take a step back and view the possible purchase from a wider perspective. By considering the purpose of the purchase from a variety of perspectives, the tone of communication shifts from one which is adversarial to one which is inclusive of both partners’ values.

Related Posts: See Values and Budgeting Part One and Values and Budgeting Part Two

Finally, the List provides accountability for larger purchases. It provides a framework and protocol which eliminates one partner from “going rogue.”

Downsides to The List

While the Thirty Day List may seem faultless in theory, it can be more difficult to implement in actual practice. After all, we live in a society in which it is easier and (often preferred) to ask for forgiveness after the fact rather than seek permission in advance. Many people would agree that this is a terrible way to act within your marriage or other committed relationship, yet that doesn’t stop some people. If this is your preferred practice, the List won’t work well for you.

The List is also not a good idea when you find yourself in a housing search, especially in a seller’s market. Often times, you will need to be poised to make quick decisions. This shouldn’t be a surprise, however, as when you are in the midst of such a search, you know the rationale and utility for the purchase.

Make the List Work For You

Perhaps the greatest feature of the List is that it can be modified to fit your circumstances. A high school student with a part-time job and an annual income of $1,200 and a married couple with a combined annual income of $500,000 can successfully use the List to their respective advantages. The figures may need to be modified, but at the end of the day, the principles remain the same whether zeros are added or removed.

If thirty days is too cumbersome for you, modify the procedure to fit your needs. You know yourself better than anyone, and using this knowledge is the best course of action when designing a List which will work for you to stop fighting over money and support wise purchases.

Further Recommended Reading: 

Money and Marriage: How to Talk About Money With Your Spouse

Want To Be Rich? Maintain Great Relationships


Readers, do you have a procedure similar to The List in place to assist when making significant purchases? Do you and your spouse or partner routinely fight about purchases? How have you been able to stop fighting over money?

Make the Most of Your Tax Refund in 2017

Tax refund. Next to the words “pay day” and “debt free,” these are my two favorite finance-related words. Whether my annual tax refund is a modest sum or a mid-size windfall, I am always happy to see my refund directly-deposited into my checking account. Once you know it is on its way, knowing how to make the most of your tax refund can be a daunting task.

Still haven’t submitted your 2016 tax returns? If you have a simple return, such as a 1040-EZ, I recommend completing your simple return with E-File.com today. You can complete your Federal return for FREE and receive free support along the way. And FinanceSuperhero readers can receive a discount on state returns by using this link – $6 Off State Filings With Coupon Code “6OFFSTATE”.

If you’re planning to complete a 1040A or require additional schedules, the team at Liberty Tax has local offices in your area to help you every step of the way. Other tax preparation services come and go, but LibertyTax has been helping people file their taxes the easy way since 1997.

Receiving a tax refund is a great opportunity to improve your financial outlook. Follow these 9 pro tips to make the most of your tax refund in 2017!

The FinanceSuperhero Guide to Taxes – Make the Most of Your Tax Refund

Assuming you have a tax refund coming your way, you could be on the verge of changing your financial picture.  With great opportunity comes great responsibility! The following advice will help you to make the most of your tax refund and make significant progress on your financial journey. I recommend following the steps in numerical order.

1. Give a Portion of Your Tax Refund to a Charitable Organization

Longtime readers will not be surprised that I am suggesting giving as the first step to make the most of your tax refund. As previously mentioned, Mrs. Superhero and I have placed Giving at the top of our monthly budget. Giving aligns with our values, and helping others provides us with much more satisfaction and enjoyment than buying more stuff or eating delicious food.

I strongly believe that giving 10% is the best way that we can make a charitable contribution prior to reaching financial independence (at which time we will significantly increase our giving). We have always done this, dating back to the time when we faced a mountain of debt, and we continue to do so today, even though we are only a few months away from carrying no debt other than our mortgage.

Why? As I mentioned, we believe helping others is both a calling and the most satisfying use of our money. Giving is also a strong reminder that money is not something to be hoarded out of greed. We want to value money and practice good stewardship, but we also want to remain far removed from the love of money.

Many people reject giving in favor of keeping their money strictly to themselves. Ironically, it is usually these same people who senselessly give their money to big banks and other financiers in the form of outlandish interest payments on cars, boats, and other stuff.

Personally, I would rather give in a meaningful way. Even if you give 1% of your tax refund, you will help others and begin to change the way you view money.

2. Increase Your Savings and/or Emergency Fund

When looking to make the most of your tax return, simply saving money can be a wise choice.
When looking to make the most of your tax return, simply saving money can be a wise choice.

After supporting societal progress by giving, use your tax refund proceeds to improve your liquid savings. Unless you are an extremely high income earner or have a stable passive income stream, you absolutely must have an Emergency Fund. If you do not have one, consider this a full-blown, alarm-sounding crisis that must be addressed immediately! Statistically-speaking, there is close to a 100% chance that you will experience some form of an emergency within the next decade, so be ready!

While I recommend maintaining an Emergency Fund of at least 3-6 months of minimum living expenses, you may also wish to establish an additional Opportunity Fund. I do not specifically recommend amounts or figures for this fund, and you may wish to skip it entirely in favor of moving onto Step 3. However, an Opportunity Fund could allow you to make a fun, somewhat impulsive decision without any accompanying feelings of guilt or regret.

3. Get out of Debt – Once and For All!

After you have given and increased your security via your Emergency Fund, you are fully-prepared to take on the primary barrier standing in the way of Financial Independence: Debt.

The sooner you eliminate your non-mortgage debts, the sooner you free a significant portion of your monthly income and simultaneously gain the freedom to invest in tax-advantaged retirement accounts. Both the Snowball and Avalanche methods are valid means to achieve debt freedom. For the purposes of this post, I am less-concerned with the method you implement to eliminate your debt; just get it done. You may get the push you need if you make the most of your tax refund in this way!

4. Invest in Tax-Advantaged Investments

The real fun begins when you no longer have non-mortgage debt. If you are free from the shackles of debt, the next optimal use for your tax refund is to maximize your retirement contributions. For the purposes of this limited space, ensure you are maximizing employer-offered plans, specifically if they offer a match, and then move onto your Roth IRA.

Want to make the most of your tax refund? Opening an IRA or taxable brokerage account with Betterment is a smart way to maximize the impact of your refund.
Betterment returns vs. US Market and Typical Investor Returns (Credit: Betterment)

If you’re looking for an easy to use platform for investing, Fundrise offers real estate investment options with low financial barriers for entry.. Their Tax-Coordinated Portfolio works to maximize your earnings and minimize tax burdens across all types of accounts, including taxable accounts, Roth IRAs, and traditional IRAs. It is simple to sign-up or rollover an account, select a portfolio of ETFs, and be on your way toward earning better returns right away.

Compared to other platforms, the Betterment portfolio is designed to achieve optimal returns at every level of risk. Through diversification, automated rebalancing, better behavior, and lower fees, the Betterment approach to investing can help you generate 2.9% higher returns than a typical DIY investor.

Make the most of your tax refund and start investing with Betterment by signing up today!

5. Contribute to Your Children’s College Funds

If you do not have children, skip ahead to Step 6. If you have children, you need to learn the nuances of the Coverdell ESA (Education Savings Account, also nicknamed the Education IRA) and 429 plan. The ESA has income and contribution limits (currently $2,000 per year), but I recommend you start with the ESA in most circumstances, if eligible.

The important thing to understand is that minimal contributions to these vehicles will place you in a position to send your children to college without the burden of student loans if you begin early.

Related PostEscape From Student Loans: How Two Educators Paid Off $17,831.65 in 54 Days

6. Destroy Your Mortgage Debt

Pause with me for a moment and imagine a life without a mortgage payment. If you can’t image it, check out the FREE E-book, How to Hack Your Mortgage and Save Thousands, written by my friend Andrew at FamilyMoneyPlan. This is the plan he and his wife used to wipe out their $320,000 mortgage in 6 years.

What could you do with an extra $1,000 per month? $2,500? $5,000? I just felt an overwhelming sense of excitement  and peace typing these words. The next time I visit my doctor and have my blood-pressure checked, I am going to visualize the wonders of a mortgage-free life to improve my numbers.

For the average family, mortgage interest represents the second-largest expense that they will pay in their entire lifetime. In some cases, total mortgage interest paid on a 30 year mortgage can be approximately 75-80% of total principal, even at today’s advantageous interest rates! Make the most of your tax refund to accomplish progress on an annual basis and you could shave several years off your mortgage, especially if you are already paying extra on principal on a monthly basis.

7. Invest in Non-Retirement Funds and/or Real Estate

If you have made it to Step 7, please allow me to offer my congratulations. With no debt whatsoever, healthy savings, and kids’ college covered, you are poised to generate significant wealth. At this stage, you may have achieved Financial Independence, depending upon your lifestyle.

I recommend using tax refund money to invest in simple index funds at this stage. A modest tax refund sum is enough to get you started with many index funds. Adopt a long-term approach, relax, and watch your money grow.

Similarly, this is the time to invest in real estate, if interested. Becoming a landlord isn’t for everyone, and paying a property manager could eat into your net profit from owning a rental property. However, a rental property can yield some of the highest annual investment returns if managed well and purchased at prices below market value.

Want to make the most of your tax refund? Investing in real estate with Fundrise is an exciting option for investors in 2017.Fortunately, today’s investors can invest in real estate without the hassle of becoming a landlord or hiring a property manager. Fundrise offers real estate investment options with low entry costs.. As of February 2017, they offer three eREITs for new investors: the West Cost eREIT, the Heartland eREIT, and the East Cost eREIT. It is amazing that technology has brought common investors like you and me the opportunity to invest in multi-million dollar buildings half way around the country!

Even if you’re on the fence about real estate investing or just not quite ready to dip your toe in the water, I recommend signing-up with Fundrise today – it is 100% FREE, with no obligation, and in doing so, you’ll position yourself to learn more and possibly avoid wait lists.

8. Improve the Value of Your Primary Home

At this stage, true fun begins. When you are financially well-poised for the future, a tax refund represents an opportunity to both invest and add joy to your life simultaneously. This is the time to make improvements around your home which increase your happiness and feature a high return on investment.

Good Investments: new front door, landscaping, deck or patio, kitchen or bath remodel, walkway lighting

Bad Investments: swimming pools, utility sheds

9. Build Sinking Funds for Bucket List Items

Last, but not least, comes additional saving for specific purchases. If you make it down to Step 9 when determining how to implement your tax refund, you are an authentic Superhero. I recommend establishing separate sinking funds for a variety of priorities, such as vacations, new car purchases, secondary homes, or major home additions.

The purpose of a sinking fund is to plan for future purchases which are far off in the future. At this stage, you do not want to be fooled into getting back into debt or be caught off guard by large, necessary expenses. With a sinking fund, you won’t be financially caught off guard when your house needs a new roof, your furnace fails, or your vehicle sputters and dies.

Are You Ready to Make the Most of Your Tax Refund?

A tax refund is a great opportunity to get ahead in your finances. I am confident that you will not fail to cover all of your bases by following these steps. Depending upon where you are in your journey toward Restoring Order to Your World of Finances, you may wish to skip steps or modify the order. For example, renters may wish to place saving for a home down payment in the Steps.

If you haven’t yet filed your 2016 tax returns, be sure to check out E-File.com or LibertyTax today. Either way, careful consideration of your circumstances will put you on the path to make the most of your tax refund this year!


Readers, did you receive a tax refund this year? Are you currently awaiting a refund? How do you plan to make the most of your tax refund?

How to Make the Most of Your Tax Refund

Tax refund: Next to the words “pay day” and “debt free,” these are my two favorite finance-related words. Whether my annual tax refund is a modest sum or a mid-size windfall, I am always happy to see my refund directly-deposited into my checking account. Admittedly, knowing how to make the most of your tax refund can be a daunting task.

Still haven’t submitted your 2016 tax returns? If you have a simple return, such as a 1040-EZ, I recommend completing your simple return with E-File.com today. You can complete your Federal return for FREE and receive free support along the way. And FinanceSuperhero readers can receive a discount on state returns by using this link – $6 Off State Filings With Coupon Code “6OFFSTATE”.

If you’re planning to complete a 1040A or require additional schedules, the team at Liberty Tax has local offices in your area to help you every step of the way. Other tax preparation services come and go, but LibertyTax has been helping people file their taxes the easy way since 1997.

Receiving a tax refund is a great opportunity to improve your financial outlook. Follow these 9 pro tips to make the most of your tax refund in 2017!

The FinanceSuperhero Guide to Making the Most of Your Tax Refund

Assuming you have a tax refund coming your way, you could be on the verge of changing your financial picture.  With great opportunity comes great responsibility! The following advice will help you to make the most of your tax refund and make significant progress on your financial journey. I recommend following the steps in numerical order.

1. Give a Portion of Your Tax Refund to a Charitable Organization

Longtime readers will not be surprised that I am suggesting giving as the first step to make the most of your tax refund. As previously mentioned, Mrs. Superhero and I have placed Giving at the top of our monthly budget. Giving aligns with our values, and helping others provides us with much more satisfaction and enjoyment than buying more stuff or eating delicious food.

I strongly believe that giving 10% is the best way that we can make a charitable contribution prior to reaching financial independence (at which time we will significantly increase our giving). We have always done this, dating back to the time when we faced a mountain of debt, and we continue to do so today, even though we are only a few months away from carrying no debt other than our mortgage.

Why? As I mentioned, we believe helping others is both a calling and the most satisfying use of our money. Giving is also a strong reminder that money is not something to be hoarded out of greed. We want to value money and practice good stewardship, but we also want to remain far removed from the love of money.

Many people reject giving in favor of keeping their money strictly to themselves. Ironically, it is usually these same people who senselessly give their money to big banks and other financiers in the form of outlandish interest payments on cars, boats, and other stuff.

Personally, I would rather give in a meaningful way. Even if you give 1% of your tax refund, you will help others and begin to change the way you view money.

2. Increase Your Savings and/or Emergency Fund

When looking to make the most of your tax return, simply saving money can be a wise choice.
When looking to make the most of your tax return, simply saving money can be a wise choice.

After supporting societal progress by giving, use your tax refund proceeds to improve your liquid savings. Unless you are an extremely high income earner or have a stable passive income stream, you absolutely must have an Emergency Fund. If you do not have one, consider this a full-blown, alarm-sounding crisis that must be addressed immediately! Statistically-speaking, there is close to a 100% chance that you will experience some form of an emergency within the next decade, so be ready!

While I recommend maintaining an Emergency Fund of at least 3-6 months of minimum living expenses, you may also wish to establish an additional Opportunity Fund. I do not specifically recommend amounts or figures for this fund, and you may wish to skip it entirely in favor of moving onto Step 3. However, an Opportunity Fund could allow you to make a fun, somewhat impulsive decision without any accompanying feelings of guilt or regret.

3. Get out of Debt – Once and For All!

After you have given and increased your security via your Emergency Fund, you are fully-prepared to take on the primary barrier standing in the way of Financial Independence: Debt.

The sooner you eliminate your non-mortgage debts, the sooner you free a significant portion of your monthly income and simultaneously gain the freedom to invest in tax-advantaged retirement accounts. Both the Snowball and Avalanche methods are valid means to achieve debt freedom. For the purposes of this post, I am less-concerned with the method you implement to eliminate your debt; just get it done. You may get the push you need if you make the most of your tax refund in this way!

 

4. Invest in Tax-Advantaged Investments

The real fun begins when you no longer have non-mortgage debt. If you are free from the shackles of debt, the next optimal use for your tax refund is to maximize your retirement contributions. For the purposes of this limited space, ensure you are maximizing employer-offered plans, specifically if they offer a match, and then move onto your Roth IRA.

Want to make the most of your tax refund? Opening an IRA or taxable brokerage account with Betterment is a smart way to maximize the impact of your refund.
Betterment returns vs. US Market and Typical Investor Returns (Credit: Betterment)

If you’re looking for an easy to use platform for investing, Fundrise offers real estate investment options with low financial barriers for entry.. Their Tax-Coordinated Portfolio works to maximize your earnings and minimize tax burdens across all types of accounts, including taxable accounts, Roth IRAs, and traditional IRAs. It is simple to sign-up or rollover an account, select a portfolio of ETFs, and be on your way toward earning better returns right away.

Compared to other platforms, the Betterment portfolio is designed to achieve optimal returns at every level of risk. Through diversification, automated rebalancing, better behavior, and lower fees, the Betterment approach to investing can help you generate 2.9% higher returns than a typical DIY investor.

Make the most of your tax refund and start investing with Betterment by signing up today!

5. Contribute to Your Children’s College Funds

If you do not have children, skip ahead to Step 6. If you have children, you need to learn the nuances of the Coverdell ESA (Education Savings Account, also nicknamed the Education IRA) and 429 plan. The ESA has income and contribution limits (currently $2,000 per year), but I recommend you start with the ESA in most circumstances, if eligible.

The important thing to understand is that minimal contributions to these vehicles will place you in a position to send your children to college without the burden of student loans if you begin early.

Related PostEscape From Student Loans: How Two Educators Paid Off $17,831.65 in 54 Days

6. Destroy Your Mortgage Debt

Pause with me for a moment and imagine a life without a mortgage payment. If you can’t image it, check out the FREE E-book, How to Hack Your Mortgage and Save Thousands, written by my friend Andrew at FamilyMoneyPlan. This is the plan he and his wife used to wipe out their $320,000 mortgage in 6 years.

What could you do with an extra $1,000 per month? $2,500? $5,000? I just felt an overwhelming sense of excitement  and peace typing these words. The next time I visit my doctor and have my blood-pressure checked, I am going to visualize the wonders of a mortgage-free life to improve my numbers.

For the average family, mortgage interest represents the second-largest expense that they will pay in their entire lifetime. In some cases, total mortgage interest paid on a 30 year mortgage can be approximately 75-80% of total principal, even at today’s advantageous interest rates! Make the most of your tax refund to accomplish progress on an annual basis and you could shave several years off your mortgage, especially if you are already paying extra on principal on a monthly basis.

7. Invest in Non-Retirement Funds and/or Real Estate

If you have made it to Step 7, please allow me to offer my congratulations. With no debt whatsoever, healthy savings, and kids’ college covered, you are poised to generate significant wealth. At this stage, you may have achieved Financial Independence, depending upon your lifestyle.

I recommend using tax refund money to invest in simple index funds at this stage. A modest tax refund sum is enough to get you started with many index funds. Adopt a long-term approach, relax, and watch your money grow.

Similarly, this is the time to invest in real estate, if interested. Becoming a landlord isn’t for everyone, and paying a property manager could eat into your net profit from owning a rental property. However, a rental property can yield some of the highest annual investment returns if managed well and purchased at prices below market value.

Want to make the most of your tax refund? Investing in real estate with Fundrise is an exciting option for investors in 2017.Fortunately, today’s investors can invest in real estate without the hassle of becoming a landlord or hiring a property manager. Fundrise offers real estate investment options with low entry costs.. As of February 2017, they offer three eREITs for new investors: the West Cost eREIT, the Heartland eREIT, and the East Cost eREIT. It is amazing that technology has brought common investors like you and me the opportunity to invest in multi-million dollar buildings half way around the country!

Even if you’re on the fence about real estate investing or just not quite ready to dip your toe in the water, I recommend signing-up with Fundrise today – it is 100% FREE, with no obligation, and in doing so, you’ll position yourself to learn more and possibly avoid wait lists.

8. Improve the Value of Your Primary Home

At this stage, true fun begins. When you are financially well-poised for the future, a tax refund represents an opportunity to both invest and add joy to your life simultaneously. This is the time to make improvements around your home which increase your happiness and feature a high return on investment.

Good Investments: new front door, landscaping, deck or patio, kitchen or bath remodel, walkway lighting

Bad Investments: swimming pools, utility sheds

9. Build Sinking Funds for Bucket List Items

Last, but not least, comes additional saving for specific purchases. If you make it down to Step 9 when determining how to implement your tax refund, you are an authentic Superhero. I recommend establishing separate sinking funds for a variety of priorities, such as vacations, new car purchases, secondary homes, or major home additions.

The purpose of a sinking fund is to plan for future purchases which are far off in the future. At this stage, you do not want to be fooled into getting back into debt or be caught off guard by large, necessary expenses. With a sinking fund, you won’t be financially caught off guard when your house needs a new roof, your furnace fails, or your vehicle sputters and dies.

Are You Ready to Make the Most of Your Tax Refund?

A tax refund is a great opportunity to get ahead in your finances. I am confident that you will not fail to cover all of your bases by following these steps. Depending upon where you are in your journey toward Restoring Order to Your World of Finances, you may wish to skip steps or modify the order. For example, renters may wish to place saving for a home down payment in the Steps.

If you haven’t yet filed your 2016 tax returns, be sure to check out E-File.com or LibertyTax today. Either way, careful consideration of your circumstances will put you on the path to make the most of your tax refund this year!

 

Note: This post was last updated on February 14, 2017.


Readers, did you receive a tax refund this year? Are you currently awaiting a refund? How do you plan to make the most of your tax refund?

Achieve Better Money Management in Only 10 Minutes Per Day

What's the key to better money management? Taking control! If you follow these five recommendations, you can manage your money in only 10 minutes per day!

I am often asked, “What’s the key to better money management?” I always remind people that money is like unsorted laundry: it is helpless without you. If your finances require some decluttering, whether minor or major, now is the time to take control and do what is necessary to provide the organization and structure your finances desperately need.

You can start by implementing these five easy steps toward better money management. If you do, you’ll spend no more than 10 minutes managing your money per day!

1. Automate Your Finances As Much Possible

I value time as much as I value money. By automating common expenses, such as mortgage or rent payments, utility bills (such as water, trash, electricity, gas, television/internet, and mobile phone), life insurance and disability monthly premiums, car payments, student loan payments, retirement account contributions, and even savings, you can save yourself significant time, energy, stress, worry, and, of course, money. As an added bonus, your days of writing countless checks, licking envelopes, and purchasing stamps will be over forever!

Most major banks will allow you to set-up auto-pay on these bills with very little effort involved. You can even negotiate with most providers to establish a chosen day of the month for your auto-draft to occur, which will allow you to spread out your payments to align with your pay periods. Some institutions, particularly student loan servicers, may provide a small APR reduction when you sign-up for auto draft and paperless billing.

And if you find yourself drowning in student loan debt, I recommend you pursue a better interest rate and refinance your student loans with SoFi. I no longer have student loans, but I recommend SoFi wholeheartedly. Plus, they currently offer a $100 sign-up bonus!

Related Post: Escape From Student Loans: How Two Educators Paid Off $17,831.65 in 54 Days

2. Sign-up for Paperless Billing

One of my daily chores is walking to the mailbox. You can restore fun to the act of walking to the mailbox each day by signing-up for paperless billing with all providers who offer this service. Doing so will literally and figuratively decrease the clutter in your mailbox and your finances.

Furthermore, with electronic copies housed by your various institutions on secure servers, your information will be protected, you will be less likely to experience identity theft, and you will not need to fear losing an important document or missing a bill in the mail.

While you’re at it, be sure you have identity theft protection in place, too! I recommend Identity Guard over all other providers due their high customer service rankings and comprehensive monitoring. See for yourself and sign-up for a free 30 day trial!

3. Use an Online Budgeting Tool

When it comes to monthly budgeting, I believe everyone should create at least one budget utilizing paper, a pencil, and a calculator. In the interest of decluttering and saving time, however, the average consumer has plenty of online budgeting tools from which to choose.

After utilizing Gazelle Budget for many years, I recently transitioned to a paid subscription version of EveryDollar, a product created by the team at Ramsey Solutions. EveryDollar is a very effective way to create detailed monthly budgets, track spending by linking with all of your financial accounts, and monitor progress on your goals. I particularly enjoy the features which allow users to create sinking funds and budget for irregular expenses. And the best part is that my wife and I can both use the app!

4. Use Cash Allowances to Pay for Basic Spending

While an automated budgeting platform can certainly ease the burden of tracking a multitude of debit and credit transactions within your monthly budget, I recommend providing cash allowances within basic categories such as groceries, restaurants, gas, and discretionary spending. You can include these cash allowances in your budget with one simple transaction on the first day of the month.

5. Eliminate Your Debts

For many families, debt can represent a significant percentage of their monthly budgeted income. When you shed the shackles of debt, you free up additional streams of income which may be re-allocated as automated contributions toward liquid savings, a home down payment, retirement accounts, non-retirement investments, or savings toward the purchase of rental properties.

Additionally, without multiple debt obligations, the sheer number of your monthly transactions will be reduced. Fewer transactions will lead to even greater simplification. You will also experience the peace that comes with no fear of missing a payment or incurring late fees and interest charges. Lastly, you will not experience guilt each month as financial institutions earn interest on your hard-earned income.

Final Recommendations for Better Money Management

If you are willing to dedicate a few hours this week, you can implement the above steps to get on the path toward better money management – then maintain a routine in less than 10 minutes per day! The sacrifices you make in doing so will pay great dividends, pun partially-intended, for your financial future. As a result, you will be free to turn your attention from fretting and worrying about your finances and onto building your future.


Readers, what are your tips and tricks for better money management?

Escape From Student Loans: How Two Educators Paid Off $17,831.65 in 54 Days

Money has a funny way of making people emotional. We are elated when we earn a raise, achieve a promotion, or unexpectedly win the lottery. On the other hand, losing money lets the wind out of our sails in a hurry. Today, the ongoing escape from student loans is one such soul-crushing experience for millions of people.

If two educators can escape from student loans - over $17,000 in only 54 days - so can you! Read on to see how they did it and how you can do it, too. In 2016, the average college graduate  graduated owes $37,172 in student loan debt; No wonder many pundits believe the student loan bubble may be the next to burst!

Since April 2016, I have been free from the shackles of student loan debt. No longer sending hundreds of dollars to Sallie Mae each month is a great feeling. My wife and I are now able to invest more freely, increase our lifestyle spending, and stress less about money.

I wish our escape from student loan debt were nothing but rainbows and butterflies, but good things rarely come without a grind.

The Back Story

In May 2014, I graduated with an MA in School Leadership. When I entered repayment that November, I owed $19,724.96. My first statement revealed that a ten year repayment plan would cost a total of $27,178.23In that moment, I was determined to ensure that my $18,000 educational investment would not become a $27,000 one!

The problem? I still owed over $5,000 on my undergraduate student loans. Yes, I was stupid. The kind of stupid with several zeros and even a comma involved. I took on additional student loan debt without paying off my existing student loans.

The Escape Begins

In the summer of 2015, I began a new job as an entry-level school administrator. In October 2015, we got down to business. That month we paid just over $4,300 toward my undergrad loans and tacked on an additional $829.00 in November to wipe out these loans for good! A three paycheck month, combined with extreme frugality, provided the funds for us to do so, even on two educator’s modest salaries.

Our momentum was halted a bit in December and January, but we paid an additional $2,338.79 on the grad school loans in February 2016. I don’t remember seeing the inside of a restaurant, Target, or Banana Republic during this time.

It was around this time that I truly began to hate my job. I realized my passion just wasn’t in this job, and I knew I had to get out. I didn’t get along well with my boss, to say the least, so the departure was going to be an easy one, even if it needed to wait a few months.

We paid minimum payments, an additional $1,100 in March and an additional $4,000 in April, thanks to another 3 paycheck month. It felt like we were on a roll in some respects, but the finish line still seemed like a faint mirage on the horizon; after all, we still owed $10,166.37 even after several months of living a scorched-earth lifestyle.

We reminded ourselves: slow and steady wins the race. I was content to push slowly and steadily toward the finish line and rest in the comfort of this phrase. 

Sitting on Savings

A quick look at our emergency fund and sinking funds revealed that we could make a final payment of $10,166.37 without exposing ourselves to the unnecessary risk of an underfunded emergency fund. Upon realizing this, I told my wife that this monster payment would be the best early birthday present I could receive. Without hesitation, she gave me the green light, and just like that, our escape from student loans was complete!

Our Escape From Student Loans

If you were expecting a magical solution to student loan debt, I’m sorry – no such solution exists.

We tackled my student loans with major aggression. It was hard work. But we also made smart choices.

First, we recognized the problem and reviewed our budget. We scaled back almost every unnecessary expense: dining out, expensive groceries and toiletries, entertainment, and beer.

Next, we pressed pause on all spending other than what was necessary to survive. During those months, we paid our mortgage, utilities, required minimum payments. And we bought basic groceries. That’s it.

In addition, we stopped investing, other than our required pension contributionsThis was a risk that worked for us, and fortunately, the markets were down overall during this brief time.

Finally, we bet on ourselves and utilized a large portion of our emergency savings. This money was sitting idly in an account while we were paying 6.5% interest. This gamble also paid off for us.

How You Can Escape From Student Loans

To be perfectly clear: nothing about our escape from student loans was special. We sacrificed, scratched, clawed, and busted our butts to do it.

You can do it, too!

It may take longer for you to knock out your student loans, or you may do it even faster. But don’t let student loans knock you down. If you worked hard to earn your degree, you deserve the chance to work for yourself now; the sooner you quit paying for that fancy piece of paper, the better!

I know many people who owe far more in student loan debt than I ever did. Maybe that’s where you find yourself. If so, accept that it’s going to take time, make a plan to break free, and also make sure you’re not overpaying on your interest rates.

If I still had student loans, I would absolutely refinance them with SoFi. For anyone paying ludicrous interest rates of 6.5% and above, a quick refinance will save you hundreds of dollars. And if you sign-up using any of the SoFi links on this page, SoFi will automatically sweeten the deal and give you back $100 cash. Currently, SoFi offers fixed rates at 3.375% and variable rates as low as 2.355% if you sign-up for Auto Pay. In a matter of minutes, they can help you refinance your federal or private student loans, consolidate multiple loans, and get on a quicker path toward freedom.  

Click here to refinance your student loans with SoFi and receive $100 today!


Readers, have you experienced any recent triumphs over debt? What were the keys to your success? How did you stay motivated? If you are still in debt, when do you plan to eliminate student loans or other debt?

The Fine Line Between Success and Failure

Today is February 1. As many turn the page toward a new month, this is often the time that goals, resolutions, and dreams are abandoned. This is prime time for rationalization and excuses. This is the time when many people just give up and return to their old habits.

The act of quitting is a puzzling phenomenon. Do quitters simply run out of steam? Did they set an unrealistic or unreachable goal at the outset? Did they choose a goal that they truly wanted to achieve?

Ultimately, we have a ready-made list of reasons for quitting before we even begin striving toward a new goal. Among the many standout excuses, the following are typical:

*Fear of possible failure

*Lack of noticeable progress

*Impatience

*Lack of support from loved ones and friends

*Goal does not align with true desires

*Too little time to devote toward the goal

*Distractions

*Reward does not appear to be worth the effort

*Inability to change current habits

If we are honest, most of us have probably fallen prey to most, if not all, of these excuses. When we give up, excuses provide comfort and relief, especially if others affirm and support those excuses. 

Yet at our cores, quitting is unsettling because it carries a weight of finality. When we quit, we close a door behind us. We eliminate the possibility of success, no matter how unlikely it may have appeared in the first place.

You Can Choose Your Side on the Fine Line Between Success and Failure

fine line between success and failure
Which miner will you be?

I often wonder, “What monumental achievements and advancements has civilization missed out on because someone decided to quit when they were unknowingly on the verge of a breakthrough?”

This is a tough question to answer. Perhaps it is best that we don’t have answers. But I can’t help wondering how many people have quit, like the man in the adjacent image, when they were on the cusp of success.

The fine line between success and failure varies greatly for each of us, but one element is a consistent factor in nearly all scenarios:

EFFORT.

No, effort alone is not enough. I have put forth strong efforts and failed at times. I have also put forth minimal effort and still achieved moderate success, much to my surprise. But more often than not, effort has been a difference maker.

The relationship between quitting and effort is as straightforward as they come; the act of quitting is a conscious decision to cease all efforts. As Sophocles said, “Success is dependent on effort.”

Don’t Quit on Yourself and Your Goals

If you’re currently considering easing up on a goal or even abandoning it altogether, scroll back up and look at the second miner. A few more reps in the gym, one more phone call, or even a few more dollars saved could be all that remains; you may be walking away from a fine line between success and failure which is just waiting to topple. Don’t quit now!

If you’re afraid to fail, remember this: What we fear rarely, if ever, comes to pass; at the same time, it is better to try and fail than to quit.

If you’re afraid that failure is permanent, remember that your past mistakes do not define your future unless you allow them to do so. Even the miner who threw in the towel can turn things around with one step in the right direction.

If you’re afraid of the ridicule and embarrassment which my arise out of failure, remind yourself of the convictions which led you to begin the pursuit of the current goal. And do not forget that no actions, no matter how flawless they may appear to you, will make sense to everyone else.

And finally, if you’re afraid of ongoing struggle and how it may impact your happiness, remember that you always have the choice to embrace the struggles inherent in challenges as opportunities to grow. You may even realize that you feel most alive when you face and conquer obstacles without succumbing to the desire to quit.

Don’t retreat – ADVANCE!

In his famous 1933 inaugural address, Franklin D. Roosevelt reminded the world about the nature of fear:

So, first of all, let me assert my firm belief that the only thing we have to fear is…fear itself — nameless, unreasoning, unjustified terror which paralyzes needed efforts to convert retreat into advance.

Historians and students alike focus primarily upon the first half of this timeless quote. They say, “Just don’t be afraid and you’ll be able to keep going!”

I, on the other, believe the careful application of the latter words to be far more important. Fear all you want. Fear can’t defeat you. Fear will not cause you to fail. Only retreat can cause you to fail. So, advance, even if you feel like quitting.

This is the true way to cross over the fine line between success and failure.

Count the Cost (In Remembrance of Grandma)

Every day is a transaction of sorts. We rise with the currency of time in our possession. How we utilize or spend that time varies greatly from person to person and day to day. When we make the choice to spend our time, we project the returns which may come our way –enjoyment, fun, accomplishment, or financial gain, to name a few. But do we always remember to count the cost?

With Grandma on Christmas Eve 2015

I have spent a great deal of time, somewhat ironically, thinking about this very subject over the past several weeks. Last Thursday, we said our final goodbyes to my grandmother. At 91 years old, she was the matriarchal head of the family. We will remember and miss her unwavering faith, sense of humor, unmatched skills in the kitchen, and wisdom which exceeded her years.

As I thought about what made Grandma special, it occurred to me that she rarely failed to examine all of the aspects of a situation or opportunity before moving forward. She was quick and decisive because she understood herself, knew her values, and could predict returns while also counting the cost.

Grandma married my Grandpa during the throes of WWII on October 1, 1942, while both were just teenagers. Their first apartment had few redeeming qualities, other than being “cheap.” But Grandma and Grandpa knew that their short-term sacrifices would pay great dividends in the future.

When my uncle was born one year later, Grandma and Grandpa kept their resolve. Grandpa worked as many hours as he could as a machinist at the local plant while also working side jobs delivering newspapers, butchering at the slaughterhouse, and painting with his father-in-law. Meanwhile, Grandma took care of everything at home, even as their family grew. At times, she worked, too.

At times, they sacrificed a great deal to get where they were going, but family always remained their top priority. If an opportunity arose and the cost was calculated to impact family priorities, it was promptly dismissed. Grandma in particular always maintained that Sundays were a day for God and family.

Because of her foresight and unwillingness to compromise that which she valued most, Grandma was able to achieve many goals in life without sacrificing that which mattered most to her.

As for you and me? We, too, need to learn to count the cost.

Considering a new job? Count the cost.

Evaluating options for college next fall? Count the cost.

Looking to start a business/side hustle, pick up a new hobby, or buy a new car?

Count the cost.

Every decision you make will have both an instant and an ongoing impact your time, life, and of course, money. Weigh your options carefully and evaluate the outcomes to the best of your ability. Do not sacrifice anything of supreme importance to achieve lesser goals. And once you decide to act, be sure to strive to begin, continue, and finish with the end in mind.

Each circumstance and opportunity we encounter throughout life is unique. However, while circumstances around you may change, that which you value and cherish most should remain mostly consistent over time. Your values will serve as the foundation upon which you ultimately evaluate possible returns and count the cost.

Like my Grandma and Grandpa, may you count it carefully.

Good Debt vs. Bad Debt – The Great Debt Debate

What’s the quickest way to start a heated debate among a room full of personal finance experts? I’m not certain, but starting a debate on the concept of good debt vs. bed debt must rank pretty highly on the list.

What factors matter the most when it comes to good debt vs. bad debt? In this debate, the circumstances of the debtor are everything!Opinions on the matter run the full gamut. Some people believe that debt is a tool to be utilized to finance a lifestyle – because #YOLO. Others would not borrow money for any reason whatsoever because debt is dumb and Dave Ramsey says so.

The trouble with such extremism, aside from being wildly unappealing, is the fact that a one-size-fits-all approach rarely works in life. The good debt vs. bad debt debate is no different.

What kind of debts are we discussing? What are the terms? What is the purpose behind the act of borrowing? Will the items or experiences being financed maintain value? What is the opportunity cost?

All of this is enough to make heads spin.

Traditional Stance on Good Debt vs. Bad Debt

Ask five of your closest friends whether they have any debt, and you’ll likely hear variations of the following:

“No, we’re not in debt. We just have a car payment, student loans, and our mortgage.”

“We have a few credit card balances – does that count?”

Answers like these can help us to begin to frame the issues surrounding good debt and bad debt.

Traditionally speaking, the average Baby Boomer defines good debt as money owed on an appreciating asset or an experience (i.e. education) which is likely to yield financial returns or benefits. Bad debt is defined as debt incurred on depreciating assets, i.e. does not yield positive cash flow.

Over time, however, these definitions have ridden the wave of cultural change. Today, in fact, some experts preach that all debt is bad.

Today’s Views

Grandma and Grandpa may hold a traditional view on good and bad debt, but to their instant gratification seeking offspring, all bets are off. “If debt allows me to get what I want when I want it, it must be good!” they reason. This is a classic example of the leap-before-you-look mentality, and the eventual landing usually isn’t a pretty one.

Generational assumptions aside, we find ourselves at a tipping point in the Great Debt Debate. With any luck, the following may shed further light upon the issue.

Less About the Debt, More About the Debtor

Debt is a undoubtedly a complicated concept. Perhaps the only piece of the puzzle which is more complicated is the debtor himself.

When we borrow money, we make a statement about ourselves. We claim confidence in our ability to pay back our debts. This confidence can be fully justified or woefully misplaced.

Suppose for a moment that an uber-wealthy  entrepreneur purchases a beach home on Lake Michigan and takes out a mortgage. Is this a good debt or bad debt? In this case, if she has the regular income and liquidity to pay off the mortgage in a relatively short period of time, we may safely consider this a healthy debt. After all, the home is likely to appreciate over time, and the mortgage provides additional flexibility to divert funds to other investments.

Let’s change a few pertinent facts in the above scenario for a moment. Suppose our entrepreneur is already upside down on her Chicago high-rise condo and is quickly burning through liquid cash like a raging wild fire due to a poor quarter for her business. We’re looking at a bad debt in this case, in all likelihood.

When evaluating debt, the circumstances of the debtor are everything.

Critical Circumstances

So where does this leave us? What circumstances impact whether a debt is good or bad?

1. Equity

Years ago I purchased a 2008 Honda Accord from my grandparents. The vehicle was worth $17,000 at the time. I put down nearly half of the cost and financed the rest. We quickly paid the vehicle loan off, but even if we hadn’t done so, we were protected by built in equity. If at any time things went south, we could have sold the vehicle, paid off the remainder of our loan, and used the remaining cash to buy a beater car and buffer our emergency savings.

Equity is a fine mitigator of risk associated with debt.

2. Consistent discretionary income

When it comes down to the bottom line, the scariest thing about debt is the prospect that we might not be able to pay it off. As we’ve seen, equity is a great hedge against this possibility, but consistent discretionary income is even more valuable.

For the family who routinely spends all of its earnings, it doesn’t take much for what was once a manageable debt to become a significant problem. But for those who maintain sizable wiggle room on a monthly basis – say 5-10% of monthly take home pay – a healthy buffer can eliminate the stress of difficult periods which stretch the budget.

3. Liquidity (Cash is King)

Dave Ramsey begins every radio show with the reminder that “Debt is Dumb” and “Cash is King.” I feel the latter is correct, but the former requires modification. “Some Debt is Dumb” is more appropriate.

Again, assuming reasonable interest rates, debt becomes a problem when the debtor cannot meet his obligations. A healthy level of liquid cash acts as an additional line of defense. With cash in the bank, the debtor has options if debt obligations become cumbersome. He may sell the asset, rely on discretionary income to avoid touching liquid savings, or draw on his savings.

Recommendations

If you find yourself in debt or are considering entering into a debt relationship, consider the aforementioned factors to evaluate the situation. Generally speaking, based upon the established criteria above, the following are examples of good debt and bad debt.

Good Debt

1. Mortgage on primary residence

2. Home equity loan for home improvement purposes* (Depending upon interest rates, expected rate of return on the project, and existing equity)

Bad Debt

1. Student loans

2. Auto loans

3. Revolving credit card balances

4. Cash advance and pay day loans


Readers, what is your position in the “good debt vs. bad debt” debate? How do you evaluate whether a debt is good or bad?