This is not a scam. I am not asking you to fill out online surveys or go for a Hail Mary get rich scheme. This method is available to everyone, yet I constantly see people pass on this opportunity simply due to pride, laziness, or a combination of the two.
It is really this simple: you simply have to pick up every dime or quarter you see on the ground. It takes less than a second to pick up a coin, and with 3600 seconds in an hour, it’s easy to see how, over time, this method can add up.
If you are still reading, you probably feel cheated and mislead, and I don’t blame you. I urge you to think about the mindset that goes hand in hand with picking up the coin; That you will seize opportunities that arise to save and invest, where others will let the opportunities pass by due to their laziness and pride. This mindset will carry over into other aspects of your life, so embrace being different!
Yikes. Writing a blog post with a title like that seems hypocritical, but let me explain: Stop reading blogs about people’s financial success and comparing it to your own.
Nearly every blog post that details advice on reaching financial freedom is exaggerated and riddled with hindsight bias, to the point that they become unattainable benchmarks for everyone else. Do you ever wonder why you don’t read any blogs where the writer’s net worth tanked? I can’t tell you the number of blogs I read that omit the fact they received a huge inheritance or bought an extremely risky asset that jumped in value, both of which are not easily reproduced to the ones of us who are not that lucky.
The real solution is to learn stategies and techniques to reach your financial goals that work for you and maintain or improve your quality of life. Don’t stop eating the food you love because blogger Gary urges you to, instead decide if it is worth the sacrifice.
That’s right, despite the millions of blogs, articles, and advice, being debt free is for fools and suckers! Now, this may not apply to the readers with rich relatives, eager to bail you out in a crisis, but to the rest of us practicing responsible finance, less debt actually means less flexibility!
As fun as it would be to end the article right here, I will explain myself – being so eager to eliminate debt inherently means you will have less cash and assets, which may be exactly what you need depending on where life takes you. Consider all the people who payed down their mortgage leading up until 2008, only to lose their jobs and be foreclosed on! If they had instead built up a sizable, flexible emergency fund, they would have been able to continue to make payments on their mortgage, and continued to enjoy their lives with more financial freedom from the unknown.
This example may be simplistic, but consider the opportunities you could also miss by losing this flexibility! Consider the opportunities this flexibility gives you, whether it is a great deal on a house, an opportunity to invest in a business venture that you believe in, or even a great deal on a vacation package. With true financial flexibility through KEEPING debt, the world is yours!
I will cover my specific thresholds for what your savings should be as you pay off higher interest debt, but as a rule of thumb, the debts you should consider keeping in this current market should be under about a 5% interest rate.
If you are splitting expenses 50-50 with your significant other, you are doing it wrong! To create a situation that is most equitable and fair, instead create an income based arrangement. To do this, first determine what percentage of the bills total each person should pay:
- Person A income = $45,000/yr
- Person B income = $65,000/yr
- Sum the incomes = $110,000/yr
- Divide each income by the sum to determine the percentage of the bills total each person should pay: Person A: 40%, Person B: 60%
This income based breakdown promotes a greater quality of life by promoting a more equitable disposable income for each person. It also can help reduce resentment or restrictions, for example, if Person B wants to purchase a more expensive home, they can do so without providing quite a large burden on Person B. In a traditional 50-50 split, the person with the lower income would have been the bottleneck that determined the maximum affordability for a home.
To determine the the monthly bill total to base your percent on, take the total of all bills that are truly shared, and exclude amenities that only one person deems important. Some examples of each are:
Bills that should be split:
- Rent, mortgage, insurance, property taxes, and other property related costs
- Expenses related to shared responsibilities, such as shared pets
Bills that should not be split:
- Car payments and maintenance
- This allows you flexibility to spend more or less of your income on the car you want
- Personal hygiene products
- Clothes, electronics, and other expenses that relate to how you want to spend your disposable income
Bills that you can consider splitting based on mutual agreement:
- Food, restaurants, and entertainment
- This one should be taken with caution, because resentment can occur if one spends more lavishly
- You may consider splitting this casually or more strictly by summing the totals at the end of the month
The most important takeaway from this post is to keep open communication between your partner, and use trial and error to find the right agreement to achieve Financial Nirvana.
For the next 24 hours, look at the brand, wear, and condition of the shoes of everyone you encounter. You will likely notice a couple clear patterns:
- Almost everyone is wearing shoes that are close to new
- No one is remotely close to fully consuming their shoes, to the point where their shoes are too worn to wear
Why does this happen? Why will people spend time and money on something superficial such as shoes and not on their own health, image, and happiness? One reason deals with a short term bias toward products; It’s easy to buy a pair of shoes to quickly feel good without considering long term goals and aspirations. This article’s intent is not to delve into a complex analysis of the human brain to determine all the reasons we behave this way, but instead to challenge its readers to leverage this realization to make choices to better their lives.
By breaking down purchases into pros vs. cons, it’s easier to determine the value a purchase will bring to your life. To illustrate this, see my recent breakdown on a pair of athletic shoes I ultimately decided not to purchase:
- Great price at $40 for a brand I like
- Styling is nice
- Fairly solid constructed
- I have four other pairs of athletic shoes
- These four pairs have over 50% of life remaining with basic upkeep (changing insoles, new shoe strings, etc
What I could do with the money instead:
- Put it toward a vacation fund (this purchase alone would be 1% of a $4,000 lavish vacation, that is huge!)
- I can spend half of the savings on an experience that I love, such as bowling, and save the other half.
This post focused on shoes as an example of our tendency to overconsume, but this way of thinking needs to be expanded to all purchases you make. Try to challenge your choices on going out to eat meals, impulse purchases, electronics purchases, automobile upgrades, and more.