Category Archives: Finance

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?

Change is Hard

January is a month for hope and optimism. You wouldn’t know it based upon the doom and gloom floating around in the newspapers and social media this year, but most folks are as optimistic as ever during the first month of a new year. They know change is hard, but emotions fly high.

The distance between change and complacency is small - a single step in the right direction. Change is hard because complacency is easier. But you can win!Many people hit the gym and begin a new diet with dogged determination that they will finally lose that extra weight. Others pledge to finally start saving for their dream purchase or investing for their retirement. Some people pledge to reestablish their priorities with regard to work, family, friends, and leisure.

The month of January represents new beginnings. A clean slate. A chance to start afresh and anew.

It is an opportunity to implement changes big and small. Yet January also brings about a sobering reminder each and every year:

Change is hard.

Figuratively speaking, the distance between change and complacency is very short. The difference is a single step in the direction of our goals. But taking that single step is often challenging.

Change is hard, complacency is easier

The human search for homeostasis has led us to really enjoy our comforts. I know that is why I love dining out, even if at McDonald’s. It is why I love sports, TV, and movies. It is why men love their recliners. These things provide comfort.

In order to change, you and I have to exit that comfort zone. On purpose. Repeatedly. We have to force ourselves to live on the edge of discomfort. Sometimes we may have to face our fears.

To lose a few pounds, I need to stay away from the comforts of restaurants and overindulgence in dairy, fried foods, and beer, and increase my intake of lean protein, vegetables, and fruits.

If saving money is my goal, I need to take a long, hard look at my spending habits and trim away waste. Psychologically, this type of self-correction is very necessary yet incredibly difficult to achieve with honesty and integrity.

Improving the performance of my investments is a difficult change to enact. It reveals that simple human desire and motivation are not always enough if we seek complex change. Sometimes we can do everything right and still fall short of our goals. This leads us to fear failure and avoid change.

Even our goals change from time to time. For example, a few months ago on my 30th birthday, I set five primary investment goals for the next year:

INVESTMENT GOALS
1 – Max out both of our IRAs for 2016. $11,000 total investment.
2 – Invest a minimum of $2,000 with Fundrise.
3 – Grow my overall account value with Betterment.
4 – Increase our overall net worth by 50%.
5 – Set a target date for early retirement and formulate a plan to get there.

Related Post: The Fundrise eREIT: Accessible Real Estate Investing for the Average Investor

As I write, we are most likely to fail at goals 1 and 3. Instead, due to changing circumstances, we opted to invest funds earmarked to achieve these goals in finishing our basement. These circumstances even led us to make a surprising decision – we borrowed money to complete this project. Gasp, I know. But the extremely low interest rate combined with maintaining liquidity were just too significant to pass up.

Even the decision to change our investment goals and instead invest in our home was not an easy one. My wife and I went back and forth on it many times, even though we knew that completing the project would instantly increase the value of our home by an additional 40-50% beyond the initial investment.

We hemmed on and hawed over a decision that would increase our net worth? Yup.

Change is hard because the act of change admits that are wrong in the present. Sometimes this hefty dose of humility can be too much to accept.

Change is hard because it is an act of giving up something to gain something else. And we don’t know if we all we hope to gain will be better than that which we are giving up.

Change is hard because we are often left swimming upstream, fighting against the currents of life. Two or three steps forward followed by one step backward only feels like progress for so long to our instant-gratification-seeking hearts.

Change is hard because it requires renewed commitment on a daily basis. As my father-in-law often says, there is no glory in yesterday’s victory.

Change is hard because we do not always instantly see the fruits of our labor. This is why your local gym is full in January and half empty again by the end of February.

So how can you and I change?

Change Comes From Within

I’m reminded of a vivid training scene in Rocky III, in which an over-the-hill Apollo Creed is training Rocky Balboa for his rematch with Clubber Lang. Creed pummels Rocky with a steady stream of right hooks, and Rocky’s lifeless approach to improving his technique leads Creed to question, “What’s the matter with you?!”

Rocky responds, “Tomorrow. We’ll do it tomorrow.”

A fired up Creed denounces this attitude, stating repeatedly, “There is no tomorrow!”

Rocky continues to go through the motions in training until he hits the ultimate low point. Creed deserts him and states, “It’s over.” Rocky is really on the ropes this time.

When he needs it the most, Rocky’s wife, Adrian, provides a dose of wisdom.

“Apollo thinks you can do it. So do I. But you gotta wanna do it for the right reasons. . . Not for the people, not for the title, not for the money, or me – but for you.”

“And if I lose?”

“Then you lose. But at least you lose with no excuses. No fear. And I know you could live with that.”

I think I could live with that, too. Can you?


How are you striving to change in 2017? How will you sacrifice to make it happen?

Leave Behind These 8 Bad Financial Habits in 2017

Today’s post, “Leave Behind These 8 Bad Financial Habits in 2017,” is a guest post by Carol Soriano, a consultant for PawnHero.ph, the very first online pawnshop in the Philippines. A writer at heart and a social media enthusiast, she is passionate about personal finance, investment and all money matters.

 

 

 

Take it away, Carol . . .


It’s 2017! Were you able to save up money for the New Year? Have you been able to reach your financial goals? If you failed to do so, it’s time to turn over a new leaf and correct those bad money habits from the past year.

Your financial goals should include setting target digits for your savings account and having funds to cover you during emergencies and whatnot. Should you ever find it hard to reach your money goals even after trying, there must be a rooted bad financial habit that’s keeping you from achieving financial success.

To help you reach your goals in 2017, below are eight bad financial habits that you should be really ditching this new year!

1) Living from paycheck after paycheck

A common financial crime amongst the working class is having a one-day millionaire lifestyle. This means getting by living from paycheck after paycheck. They may have the job, but they don’t have the stable income. If this is a habit to which you’ve become accustomed, stop!

This is troublesome to your financial and personal well-being since living up to the “first day after paycheck versus last day before paycheck” meme is just exhausting. This scary habit leaves you without any safety net as you only rely your financial security with your job, and the thought of it is alarming! If you only have one stream of income like your job, then you especially might want to reconsider your saving habits.

2) Being brand conscious

They say, you are what you wear, but not entirely! Sometimes, a good Prada covers up the real financial situation. There are those who maintain their financial reputation through brands. But as Psychology 101 dictates, material things do not maintain steady happiness. Having a brand conscious mindset won’t get you to your financial goals.

So, while you cannot afford to both buy a branded item and save money at the same time, make it a priority to save first! Save for the first three months and eventually, you will make it a habit to be frugal instead. Those brands can wait; your finances don’t.

3) The love for foreign products

Going to grocery stores and shopping on the imported aisle section just because you think it defines who you are—expensive—doesn’t help… at all! Frankly, you can go after budget-friendly goods and save more. The only difference is the brand and the tax that comes along with it. So, go local, spend less to save more moolah.

4) Investing for instant gratification

Those social media money talks about investing on networking and other easy money schemes can be a headache. Keep in mind that money doesn’t grow on one sitting while waiting for recruits to cash in. It doesn’t work that way. But there are those who still fall prey to this investment pitfall.

If you are serious about growing your money, get inspirations from overseas workers-turned-entrepreneurs who became rich through smart investing. Remember, investing requires patience.

5) Dependence on family or friends for financial stability

Being dependent on family or friends for financial stability is a bad habit to follow. If you have been making them your last resort for financial security, there’s something wrong with how you manage your finances. There’s nothing more embarrassing than being capable of earning yet incapable of paying off debts.

Strive to a point to save enough, avoid wants, prioritize needs and save your face from asking a favor to owe money from your family or friends.

6) Lack of financial literacy

Being financial literate means understanding how money works to make more. If your expenses are greater than your savings, you have a big problem. But don’t feel bad, you can still be financially savvy. By asking the right people, learning about investments and developing a saving habit, you can become financially literate. Moms are known to be good with money. Try getting budgeting tips from moms to learn from the best.

7) Late working age

Traditional working age is 21 (FinanceSuperhero note: This varies from community to community), but it doesn’t mean you have an excuse to make money mistakes at this age. In fact, you are a young adult. That means you need to be financially responsible as well.

Your money habits start young, and like the saying goes, old habits die hard. Always start young with how money is being managed.

8) Aspirational lifestyle

While most try to climb from lower to middle class, the majority live for the aspirational lifestyle. Peer pressure and social media may have played an important role to establish this ideal. The practice of sacrificing a budget for the sake of an aspirational lifestyle is damaging. If this is one habit you’ve been living through, then it is high time to quit.

Final Word

Financial security should be a serious responsibility when adulting. You don’t want to be frowned upon for your bad money habits, and most of all you do not want to regret not having been a smart saver at a young age. So, with the New Year, you have a fresh start and a clean slate to make your financial goals count! Stop promising and start doing. It will pay off!


Has your 2017 gotten off to the start you imagined?

Are You Destined to Follow in Your Parents’ Footsteps?

In life, we receive so much from our parents; overall looks, hair color, height, and a host of other genetically-driven predispositions are largely hereditary. Sometimes, we follow in our parents’ footsteps, and sometimes we do not. With some notable exceptions, we get what we get, and life keeps rolling on – for better or for worse.

Recently, I read an article in The AtlanticRich People Raise Rich Kids – which caused me to ponder the financial impact our parents have upon our life trajectory. The issues explored and conclusions drawn in the article are thought-provoking, to say the least.

If “Rich People Raise Rich Kids,” does that imply that the corollary, i.e. “Poor People Raise Poor Kids,” is often true?

We receive much from our parents: overall looks, hair color, etc. But are we destined to follow in our parents' footsteps in other ways? Of course, life experience shows us the impact our parents can play in financial futures. Plenty of people are born into money, but countless folks create their own wealth. Many of us will learn to manage money, for better or worse, in the same manner demonstrated by our parents. Others will seek their own path, if they bother to pay attention at all.

And all of this says nothing of the fact that our trajectories may change over time, though change can be hard to set into motion. The poor can become rich, and the rich can lose it all, sometimes in shocking fashion. This is America, after all. *Cues chants* USA! USA! USA!

The power and importance of environment is one point which I tend to agree with wholeheartedly from the aforementioned article. My life story bears out this truth every step of the way.

My Story

I grew up in a typical middle class home in West Michigan. My mom worked as a departmental secretary for a reputable regional bank, and my dad worked in manufacturing for one of the largest aerospace engineering companies in the country. Mom earned her Associates degree, while dad entered the work force after completing high school.

We lived in a 3 bedroom, 1 bathroom ranch home which was conveniently located within a few miles of everything: school, work, shopping, and my grandparents. Our family was solidly middle-class, though I had no idea or even any understanding of what that meant at the time.

My parents made the very best of the overall environment in which I was raised. When I was four, they sold our house and moved to the other side of town so I could attend the best schools in the area. I didn’t know at the time, but my mom often remarks today that this move was a financial sacrifice in may respects.

For reasons which I still do not fully understand, I was born with a sharp edge to achieve, and this desire only strengthened itself as I grew up. I didn’t want to just do something – I wanted to win, to be the best, to get a share of the spotlight. Of course, it didn’t work out every single time, but that internal motivation was sometimes a difference-maker.

Equally important, my internal motivation was complimented by external factors. My grandfather always pushed me toward the improbable and believed so much in me that I began to believe in myself.

My self-belief and confidence was shaken many times, but I survived and grew stronger because my parents were not of the helicopter variety. They allowed me to be independent, solve my own problems, and experience difficulty. I learned to bend without breaking.

My parents supported all of my far flung endeavors – competing in chess tournaments all across the country, basketball leagues and camps, and music lessons – and encouraged me to do my best. I was strong-willed and in hindsight demanded a lot. I was lucky to have good parents who provided opportunities.

The rest of the story is simple. I went to college, got a job, and moved out of state, like countless other people before and since. I am not special, and my life is not remarkable. My parents, extended family, and the environment they cultivated for me, on the other hand, are special and remarkable.

Foster a Great Environment For Your Kids

So how can today’s parents foster a positive environment for children and put them in a position to become successful? The following solutions offer a good starting point:

Get to know your children. A one-size-fits-all approach will never work. In the interest of transparency, I am not yet a parent, but my experience as a teacher illustrates the importance of knowing children as individuals. Spending time with them is the best way to get to know them.

Model a balanced, prioritized lifestyle. Kids are impressionable and form a surprisingly-high number of conclusions at young ages. As adults, they will remember how you spent your time and model their own priorities after yours in many ways, whether consciously or not.

Teach them how to save money. For most children today, spending will come easily and saving will not; our instant-gratification culture is to blame. If you show your kids how to save, they will experience a valuable lesson.

Allow your children to fail and encourage them to persevere when they do. They will learn important lessons as a result. They will become resilient, strong, and unafraid to fail, all of which are characteristics which will help them to succeed.

Related: How to Overcome the Fear of Failure

These practices are not perfect, but they will help you to create a growth-inspired environment for your children. They just may follow in or even exceed your footsteps as a result.


In what ways have you followed in your parents’ footsteps? What did they specifically do to help you in that regard? For parents – how are you helping your children to follow in your footsteps?

The Big 100: Reflections on the Journey

Sometimes I keep my nose so close to the grindstone that I momentarily lose touch with everything going on around me. This ability channel tunnel vision and focus my attention is good at times and burdensome at others. It leads me to accomplish many of the goals I set into motion, yet it often stifles my ability to switch gears.

I have been in two primary gears the past several weeks: school-mode and real estate-mode. At times, my real estate side hustle has been the equivalent of a second full-time –albeit, a very fun, second full-time job which feels like anything but a j-o-b.

As you may imagine, I’ve lost focus and time on the blog during that same stretch. Posts have been a bit more sporadic, and reading and commenting on my favorite blogs has been sparse. Yet somehow, I find myself siting here ready to publish this post, number 100, and marveling at how far this little website has come in only 7 months.

Any blogger will gladly tell you that maintaining your own blog requires tremendous commitment. The hustle and bustle of life fight to test that commitment. They challenge a blogger’s resolve. Today, as I enjoy time to reflect upon the goals and mission which inspired my creation of this site, I am reminded of its value.

If the use of my time were simply a matter of achieving the best financial outcomes, I would certainly cease devoting time to such a relatively low-income hobby and funnel all of my available discretionary time toward my real estate business. In the grand scheme of things, increased efforts in this area hold the highest probability of increased returns, mathematically speaking.

As I reflect, it is hard to envision where and how commitment factors into the equation. It’s been over a decade since I last studied calculus, and I don’t think basic arithmetic will get the job done in this case, so let’s distill this down in the only way I know how:

Personal finance has surprisingly very little to do with figures and a lot to do with feelings.

Many financial writers argue that separating feelings and money is vitally important. They speak as if a consistent level of stoicism is the solution to all financial woes. I used to think in this manner.

Other writers feel that some emotions and feelings – namely peace, joy, and contentment – should not be separated from our financial outlooks, while some – fear, jealousy, and embarrassment, among many others – have no place in a healthy financial outlook. I agree with many folks in this camp.

The more I write and reflect upon the role of money in my life,  my vision for “Restoring Order to the World of Finance” becomes simultaneously clearer and murkier. (It’s no surprise to me that it has taken 100 posts to reach this level of clarity; truth be told, I consider myself to be a rather slow learner.) Rationality, logic, and planning are constantly at war with personal biases, behavioral tendencies, and the chemical/biological processes which influence them. In short, personal finance is complicated stuff.

So what should we do about all of this? Keep thinking, feeling, experimenting, testing, discussing, and growing, for starters. Continue learning from others. Challenge patterns and long-held assumptions.

As for me, I will keep writing. My thoughts and feelings on personal finance have changed more in the last 7 months than I ever could have imagined. I’m looking forward to learning more as this journey continues to unfold.

Here’s to another 100 posts and a continued resolve toward Restoring Order to the World of Finance,

Finance Superhero

 

Four Financial Lies People Actually Believe

It has been over six months since I launched Finance Superhero. Life is completely different now than it was back in April 2016. The changes have all been for the better. I am living, breathing proof that it is possible to make big changes if you’re willing to reject financial lies and avoid the path of least resistance. My situation is nothing special; in fact, other bloggers have stories which are far more inspirational and motivating.

During the past several months, however, I’ve noticed a consistent problem is being perpetuated among those who doubt the benefits and joys of common sense financial management. There is a prevailing sense among many people that their situation is somehow different, special, or daunting, and that these specific circumstances prevent them from paying off debt, building emergency savings, buying a home, or investing for retirement. For these people, whining and complaining drive the self-pity train toward mediocrity.

Most people are quick to give in to their own inner whining and accept the path of least resistance. I do it time to time, and so do you. We have bought into financial lies!

Common Financial Lies

Over the years, I have heard a number of financial lies. As they are repeated over and over, louder and louder, many people buy into the myths. Then they join in and spread the nonsense themselves. In no particular order, here is a collection of common financial lies:

1. The little guy never gets ahead.

I often wonder who started this myth and why it continues to linger in the collective consciousness of the people. It is ironic that this statement is believed by so many, while countless underdog stories prove otherwise.

For example, consider the life of businessman Tom Gores. Born in Israel, Gores moved to the United States prior to turning five years old. He grew up playing playing football, basketball and baseball at Genesee High School in Genesee, Michigan. He stocked shelves at his father’s grocery story in nearby Flint, graduated high school in 1982, and attend Michigan State University, where he earned a Bachelor of Science degree in Construction Management.

A host of financial lies continue to spread and stop the average person from winning with money. Reject these typical financial lies immediately!
Photo credit to Carlos Osorio/AP/Detroit Free Press

Gores did not experience a privileged upbringing by any stretch of the imagination.

Today, Gores’ net worth is $3.3 billion. The founder of Platinum Equity and majority owner of the NBA’s Detroit Pistons, Gores is a self-made man. His high school coaches credit his business successes to his competitiveness, perseverance, and decision-making. None of them expected the quiet-but-talented athlete from a town of 24,000 people to follow the path Gores has blazed, but the little guy did it.

2. I’ll always have debt of some kind. It is a necessary tool for most people.

My head nearly explodes every time I hear this or a similar variation. Yes, debt is a tool, and I do believe it can be used wisely in select situations. But to insinuate that it is necessary hints at a larger problem: Americans are drowning in consumer debt.

I will not sport a holier-than-thou position and claim that debt has not helped me. Debt has allowed me to earn two college degrees and buy a house. However, these experiences would have been unquestionably sweeter had debt not been part of the equation.

3. I’ll always have a car payment/car lease because I can’t afford a nice car without one.

This financial lie makes my blood boil. The truth is that moving up in vehicle is a process which need not involve debt nor take long if you are willing to be patient for a short time. Mathematically-speaking, a car payment is costly and a car lease is usually the worst method of operating a vehicle.

Related: The Finance Superhero Rules for Car Buying

Let’s suppose you currently own a $2,000 beater car. While it is likely to depreciate over the next 12-24 months, I am willing to bet the vehicle could be sold for $2,000 in 18 months with careful marketing. Let’s also suppose that you saved $250 per month for 18 months prior to selling the beater. Through this flipping method, you could afford a $6500 vehicle. Continue the plan for another 18 months and an $11,000 vehicle is in reach. One additional cycle could allow you to purchase a vehicle valued at $15,500.  In four and a half years, you’ve moved up in car from a 1993 Honda Civic to a 2013 Hyundai Elantra. And you did it without a single payment! Of course, saving more than $250 per month could significantly change the conversation.

4. I deserve to be paid more than my current salary.

I find this phrase (and similar offshoots) is most often uttered by millennials. Please allow me to apologize for the collective whining of my generation.

Most millennials really need a lifestyle and attitude adjustment, not a salary adjustment. While the millennial median income is admittedly low across the United States, that hasn’t stopped millennials from living far beyond their means.

Facebook envy and the fear of missing out is largely to blame. Pictures of new cars and new houses lead the average millennial, especially men, into foolish spending in order to maintain appearances.

I am not saying that millennials should not increase their earnings. However, I am saying that whining is not the way to achieve that increase. If you believe you are underpaid, demonstrate your worth. Gather statistics which prove your worth and present them to your supervisor at the appropriate time.


Readers, what financial lies do you most often hear? Why do you think they continue to spread?

Retire With Dignity – Reject the Normal Financial Outlook

Everything is relative when it comes to money and determining what is “normal.” At least that is what we have been conditioned to believe over time. The normal financial outlook is very different for blue collar workers and executives, plumbers and CEOs, and teachers and doctors. Unfortunately, a statistical average generated among such a wide variety of professions and incomes does little good in helping us learn what normal looks like today.

Income, of course, is only half the battle. On the flip side, expenses complicate the search for normal even further. Even two doctors with identical incomes and living in $450,000 homes in San Francisco, California and Arlington, Texas, respectively, may have wildly differing expense to income ratios due to property taxes and cost of living discrepancies.

So where does this leave the search? Is a “normal financial outlook” definable?

Is a "normal financial outlook" definable? Everything is relative when it comes to money, yet the desire to be normal could be sabotaging your efforts.

A Normal Financial Outlook is a Fallacy

The other day, I spoke with a friend about the manner in which “normal” people manage their finances. After citing problem after problem, we came to a realization: We won’t want to be normal. Normal is broke, greedy, overconfident, and unfulfilled. 

Following our conversation, I pondered the idea a bit more and came to a conclusion which I believe is tight enough to hold water: the average person’s desire to be normal is to be blame for his pessimistic financial outlook. Furthermore, normal is simply a self-defeating social construct which ultimately holds us back.

Consider the following connections:

*The desire to be normal drives us to take on a 72 month auto loan so we can drive the same car as our colleague; never mind the fact that the vehicle will be worth a fraction of its sticker value when the loan is paid off.

*The desire to be normal motivates us to take on the maximum pre-approved mortgage when looking for a home. It also causes us to spend at an unreasonable clip to furnish the home at high interest rates and rationalize it because “everyone else is doing it.” Many normal people will end up paying nearly twice the value of their home due to 30 years of interest accumulation (or more if they refinance to another 30 year mortgage after several years of paying on an initial 30 year mortgage).

*Because most normal people do not have any idea how much money they will need to live on in retirement, we adopt a normal mindset and rationalize that “it will all work out.”

*The desire to be normal leads us to go out with colleagues each day rather than brown bagging it for lunch. This kind of “normal” comes at a cost of over $100,000 over a working career.

These are only a few examples, but they drive home the truth that normal is bad.

Normal is the Worst

Statistically speaking, normal people are house poor, broke, in debt, and destined to slave away for 40-50 years only to retire in old age and poor health. And this is what most of us strive to become?

I have a different vision for my future. I don’t want it to be anything close to “normal.” As a result, I’m doing the sensible things now to ensure that my family’s future isn’t depressingly bleak.

First and foremost, I am consistently striving to challenge my everyday perception of “normal.” I know that if I surround myself with people and experiences which are “normal,” I will fight the desire to live abnormally. On the other hand, if I surround myself with people who share my view of what is “normal,” I am cultivating a healthier perception of the idea itself. This is vital.

Mrs. Superhero and I have intentionally taken steps to become good friends with others who share this mindset. For example, one couple we frequently spend time with also maintains an entertainment/dining budget. We have no qualms with being transparent about that among our families, which often leads to double dates at our home in lieu of expensive meals out. We look at as iron sharpening iron.

Secondly, Mrs. Superhero and I have worked at minimizing the frequency with which we experience luxury in our lives. We know that once we become accustomed to luxuries it can be very hard to give them up. Once luxuries become the norm, it can become very difficult to grow wealth and develop a favorable financial outlook; raising the bar in this manner is “normal,” but it minimizes satisfaction and happiness while permanently raising one’s bottom line required spending. We aim to make luxurious experiences the exception, not the norm.

Third, we are diligent in taking excellent care of the nice possessions which we have prioritized over the years. We have found that we appreciate these items for their true value, utility, and contribution to our overall happiness simply because we exhibit pride in maintaining what we have worked and sacrificed to gain. For example, I marvel at the fine condition of my 2008 Honda Accord while driving to work each day. Instead of dwelling on the fact that it is nearly nine years old now,  I choose to take pride in its fine condition.

I often think that if we were resigned to a normal financial outlook, we would be far less mindful about these sort of things. In rejecting this kind of thinking, we choose to believe that there is a better way to live. It is a path lined with hard work, sacrifice, and self-control, but we firmly believe it is the best path toward happiness both in the present and in the future.


How do you define “normal” when it comes to money? Do you have a normal financial outlook? In what ways do you reject being “normal” on your path toward happiness both in the present and in retirement?

Money Quotes – A Collection of Financial Knowledge

Even though my friends and family look to me as some sort of financial guru, I will be the first to admit that I don’t know very much about money. I know a little bit about a lot of financial topics, which makes me a solid non-expert.

Before I take further steps to squash my credibility as a financial blogger, allow me to state that I don’t think it is a bad thing to know a little bit about a lot of financial topics. Yet, there is a fine line between balance and mediocrity. When I read complex analyses regarding Keynesian economics, the Rule of 72, or building a Roth IRA conversion ladder, I feel like my work sometimes straddles this line more often than I would prefer.

In many ways, my approach to personal finance remains that of a simpleton: work hard, earn as much as I can, spend wisely, invest simply and consistently over time, and leave a legacy for my family. On the other hand, I feel it is time to up the ante a bit here at Finance Superhero and delve into some unfamiliar territory in the next months. After all, if this blog is truly going to “Restore Order to the World of Finance,” it cannot continue to neglect a discussion of some of the most important aspects of personal finance.

In order to take a broad look at money and stimulate critical thought as I embark on this direction for the blog, I have pulled together the following list of money quotes. They represent a wide array of ideas and theories about many aspects of money; some are old favorites, while others are money quotes which are new to me. At any rate, I hope they will provoke as much thought for you as they have for me.

Money Quotes

After a certain point, money is meaningless. It ceases to be the goal. The game is what counts.   Aristotle Onassis

Where large sums of money are concerned, it is advisable to trust nobody.  Agatha Christie

The safe way to double your money is to fold it over once and put it in your pocket.  Kin Hubbard

Men make counterfeit money; in many more cases, money makes counterfeit men. Sydney J. Harris

Greed is not a financial issue. It’s a heart issue.  Andy Stanley

A bank is a place that will lend you money if you can prove that you don’t need it.  Bob Hope

Wealth and want equally harden the human heart.  Theodore Parker

Money will buy a pretty good dog, but it won’t buy the wag of his tail.  Josh Billings

A business that makes nothing but money is a poor business.  Henry Ford

I love to go to Washington – if only to be near my money.  Bob Hope

Of the billionaires I have known, money just brings out the basic traits in them. If they were jerks before they had money, they are simply jerks with a billion dollars.  Warren Buffett

I try to treat all the money I’m making like it’s the last time I’m going to make it.  Eminem


What are your favorite money quotes?

How Much Money Do You Need To Be Rich?

Ask the average American on the street if they are in favor of raising taxes on “the rich,” and invariably, you’ll receive a “yes” answer. They will cite tax loopholes, fairness concerns, greed of the wealth, a stalled economy, and virtually any other reason to make their case. Of course the rich should pay more in taxes. Wealth is evil and should be punished!

The problem is that no two people are likely to agree with a definition of “rich.” Ask an attorney if he is rich, and he will likely say “no.” Ask the same question of a surgeon, and she will answer in kind. But to a city bus driver, the attorney and the surgeon are rich beyond imagination. And to  the widowed mother of three children who works at the local diner, the bus driver is surely living a lavish life!

According to the Washington Post, a Pew Research Center Poll revealed that 54 percent of Americans favor raising taxes on the rich to expand programs for the poor. The problem is that fewer and fewer Americans are able to identify whether they are rich; they think a “rich” person is someone who earns more money than they do.

Side note: I once heard a joke that the ticket to becoming rich is earning more money than your brother-in-law!

The Washington Post provides further intriguing data on the matter straight from the minds of Americans:

According to a 2013 Washington Post survey, people who live in households making less than $50,000 say that an income of $200,000 would make you rich, while people with incomes between $50,000 and $100,000 say you’d need $260,000 to be rich. And people making over $100,000 say they wouldn’t feel rich unless they were making a cool half a million dollars a year — or more.

A majority of people desire to be rich, but what exactly does "rich" mean? Is the key to becoming rich tied to income, assets, and possessions?

THE GREAT DIVIDE

Americans are clearly divided on this issue, and perhaps for good reason. After all, a number of factors are at play in the “how much is really rich” discussion, including family size, location, expenses, level of consumer debt obligations, amount of savings and investments, and so on.

Yet the United States tax code is calculated and cold when it comes to many of the aforementioned factors. Barring unforeseen variances, a married couple earning $50,000 will still pay the same amount of federal taxes in Manhattan as they would in rural Tennessee. The primary difference is they might feel rich living in Tennessee. 

So is “richness” forever destined to be defined in an ambiguous, subjective manner?

THE GRAND CONFUSION

I vividly recall a family discussion from my childhood regarding the supposed “riches” of a distant family friend. One family member reasoned that this friend, a respected businessman, must be rich due to his sizable income. Another member of the family supported her hypothesis by citing the friend’s large home on the lake, fleet of luxury vehicles, and designer wardrobe.

As I child, I simply nodded my head in agreement and wonder. As an adult, I see the truth.

Income, no matter how high, does not make a person rich. Possessions, no matter how numerous and luxurious, do not make a person rich.

Consider two fictitious people. We’ll call them Charles and Leonard. Chuck earns $100,000 per year, and Lenny earns $150,000. Lenny may appear to be the richer of the two, but his 6 bedroom home, BMW, and multi-millionaire lifestyle comprised of weekend trips to the casino and multiple rounds for the entire bar are sucking him dry. Meanwhile, boring Charlie spends only $45,000 per year, lives in a modest town home, and drives a Toyota Corolla. Now who is rich?

Sadly, most Americans have defined richness in a backwards manner. We put Lenny on a glorified pedestal and lament Chuck’s evident misfortune. In doing so, we have it all wrong.

As Paula Pant is famous for stating, you can afford anything, but not everything. Being rich doesn’t mean having all the things. It means having money and freedom to buy all the things. Richness is not all about how much money you earn; it is about how much you keep. Richness is not all about how much you spend; it is about how you spend it.

HOW TO BE RICH AT ANY INCOME

This isn’t the first piece written about how much money it takes to be rich, and it won’t be the last. But this will be one of the few articles which rejects stating solid income and asset amounts as a threshold for being rich. The simple reason?

I believe anyone can be rich at any income.

At the end of the day, the only person who determines whether you are rich is you. Others can point, gossip, sneer, and conjecture all they wish, but it will only impact you if you allow it.

If you want to be rich, regardless of your income, it’s up to you to set about changing your mindset and actions. Most “rich” people have mastered the act, and you can learn from them.

1. Stop caring what other people think of you

If you care what other people think of you, you will have a difficult time becoming or even feeling rich. A desire to impress others is a sure fire path to financial mediocrity. Be a kind, caring person to the best of your ability, but don’t allow others’ feelings to impact your finances.

2. Think more about what you have and less about what you lack

Are you a glass half-empty or glass half-full person? I aim to be neither. Though it is hard, I try to navigate my life by a “full glass” mindset. Even a glass half-full mindset leaves you wanting more. And the trouble is that even when you do get more, the glass perpetually remains half full. Learn to practice gratitude for what you do possess.

3. Know your most precious asset

Ask the world’s billionaires to pick one asset which they covet most, and I believe most would say “time.” In a world of great inequality, time is the great equalizer. Use time well and you can make a lasting impact; waste time, and it is gone forever.

Most people would benefit from the eye-opening experience of charting their time in fifteen minute blocks for an entire week. I have done so for a few days in the past, and the results were humbling. The ways you choose to spend your time indicate what is most important to you.

By building habits, routines, and structures into your daily life, it is possible to unlock the full potential of the time which is available to you.

4. Save first, spend what is left

While the first three action steps reside in your psyche, the final step is as practical as they come: rather than spending first and saving whatever money is left, save first and allow yourself to only spend what remains. This is a sure fire way to grow the gap between the two most important numbers for financial success: your net income and your net expenses.

THE HEART OF THE ISSUE

French designer Coco Chanel said, “There are people who have money and there are people who are rich.” According to Benjamin Franklin, “Content makes poor men rich; discontent makes rich men poor.” These two anecdotes strike a powerful chord. They speak to the power of the human mind and spirit. Ultimately, it is up to individual to change her mindset and take action to build a rich life.


What does it mean to be “rich” in today’s world? How do you define it?

 

A Life of Excess is a Life of Weakness

I spent half of last week in the city which is the poster child for a life of excess: Las Vegas, Nevada. This was my first trip to Sin City, as it is called, and my wife and I had a good time.

We didn’t gamble (gasp!) or stay up all night (blasphemy!). We enjoyed our kind of vacation, which means we spent a very un-FinanceSuperhero-like amount of money on meals and shows. We had fun and paid for the trip with cash. It was relaxing.

However, if you’ve been reading articles on this site for a while, you know that every moment for me is a cerebral experience which leads to critical thought and analysis.

It is human nature to believe and act as if a life of excess will make us happy. In reality, living a life of excess often leads to exactly the opposite.

Over the course of three days and nights, I took in the sights, sounds, and smells around me and learned a lot about the world. I reclined on a plush, poolside chaise lounge and observed other resort guests joyfully playing black jack at one of several swim-up bars. In the afternoon, I marveled at other vacationers’ massive 50 ounce margaritas as they passed us on the street. And at dinner, I enjoyed the festive atmosphere as patrons dined on creations by chefs Gordon Ramsey, Bobby Flay, and others.

In the midst of this vacation, in which I was supposed to be enjoying time off from work and letting loose, I couldn’t help but notice a prominent trend: Excess did not make me as happy as I thought it would, and by all indications, it didn’t make other people happy, either.

While laying by the pool, I didn’t feel any happier than normal. In fact, by the third day of vacation, I began to resent rest and relaxation. After enjoying a couple over-sized pina coladas myself, the novelty lost its allure. And by the time we sat down for breakfast on our last day of vacation, there was little discernible difference between the food I was supposed to be savoring and a ho-hum bowl of Cheerios.

Others did not appear immune to the effects of excess. The enthusiasm and smiles from the same group of folks cavorting at the swim-up bar had strangely vanished just a few days later. Sunday morning in Las Vegas showcased a palpable difference in energy and happiness, and it wasn’t just because half of the guests on the strip were hungover from a night of partying into the wee hours of the morning.

Near the end of the trip, I grasped the reality of the situation:

It is human nature to believe and act as if a life of excess will make us happy. In reality, living a life of excess often leads to exactly the opposite.

This trip wasn’t the first time I experienced this phenomenon, and I’m sure you’ve experienced it for yourself, too. If we’re honest with ourselves, we feel the effects of “the letdown” following the excess of holidays, birthdays, and even weekends. It hits us after our favorite team wins a championship, our children get married, and we get that big promotion. It’s that nagging voice in our heads which asks, “OK, what’s next?”

So why exactly does a life of excess, or even fleeting moments of indulgence, fail to satiate our desires and make us happy? Why does dry-aged steak begin to taste like ground round after only a few days? Why can’t we seem to reach a lasting state of fulfillment?

Our outlook on happiness is all wrong.

The Roots of Excess

For centuries, man kind has toiled away to develop a laundry list of modern conveniences which are supposed to simplify life, make living easier, and increase happiness. Yet in many ways, we are more miserable than ever before.  These modern “conveniences” have relegated many of us to the role of consumer, while life experience and plenty of research show that producers are happier.

We have raised the bar to unsustainable levels. In doing so, we have removed the elements of competition, growth, progress, and striving for something new. This leaves few avenues by which we can seek fulfillment, so we look to food, entertainment, or perhaps the bottle. And we’re befuddled when these pursuits don’t provide lasting happiness.

Happiness brought on by a life of excess is only temporary. We might be happy for a short time after moving into that new house with two bathrooms for everyone or buying that new watch on Amazon, but that happiness will fade.

On face value alone, things are things and experiences are experiences. Most are neither intrinsically good nor bad. Strangely, excess has a way of transforming neutral things into bad things. It transforms what may otherwise be good things into weakness.

When you buy a five ton, gas-guzzling SUV in order to drive your two kids to school and back on paved roads, your excess is weakness. When you swing through a drive-through for a burger and fries when you have ingredients for a far more delicious meal at home, your excess is weakness. When you go on a shopping binge at Lularoe online, your excess is weakness.

I’m not advocating for stoicism or minimalism in this space. I am calling for moderation.

The Benefits of Moderation

Ditching a life of excess and adopting a life of moderation is not easy. The desire to keep up with the Joneses, the fear of missing out, and common insecurities trick us into believing that excess is the key to happiness.  Our minds may realize otherwise, but our hearts are deceiving.

By choosing to embrace moderation rather than a life of excess, we can enjoy the following benefits:

*The ability to enjoy experiences at face value
*The adoption of realistic expectations
*Greater fulfillment and gratitude for what you already possess
*Increased likelihood that you will give and help others. An excess mindset prompts most people to horde wealth like a pack rat. Moderation, on the other hand, encourages people to exercise all of the benefits of money, including helping others. After all, if you’re not generous with a dime out of a dollar, how will you be generous when your net worth reaches one million dollars?

Next steps

If you find yourself clinging to hope that reaching “the next step” is going to bring you happiness, reflect and consider whether you are currently living a life of excess. If you continue to search for happiness and fulfillment in all the wrong places, you will continue to be unhappy and unfulfilled.

Roll up your sleeves, get to work, and fulfill a purpose. It is in these moments that I often find fulfillment and happiness, and I believe it will work for you. Ditch a few of life’s excesses, get out of your comfort zone, and experience all that life has to offer.


How do you measure happiness? Is your vision of happiness tied to excess? What makes you most happy?