Monday, April 29, 2013

My Evolving Priorities

Admittedly at first glance it may appear that we no longer know how to have fun. In fact when I was even thinking it over internally I began to question it myself. This whole notion though kind of jump started at my prompting. My wife and I have been talking about having kids and raising a family a lot over the last year, and there’s a very good chance (at LEAST over 60% by my unscientific count) that this will be our last spring and summer as D.I.N.Ks. (double income, no kids).

So I asked my wife because I was kind of short on ideas, “What can we do to really embrace our last warm season with just you and I?” And she looked back at me with the same blank gaze that I gave myself in the mirror when I posted the question to myself just ten minutes earlier.

It’s not that we don’t go out. Just this last week we took on the following just between the two of us: 3 Smart Money presentations, a free independent movie screening, I had gone to individual counseling, beginning production on a new business venture (and with low cost, more to come later), a weekly small group gathering AND meeting up for an FPU class.

So we’re not short on extracurricular activities. In fact we were both exhausted by the middle of last week from our frantic schedule. But when I pulled back and essentially asked myself and my wife, “What do we want to do for fun that we won’t be able to do with kids for one last time?” The answers were pretty slim.

My knee jerk reaction was to spend Spring and Summer nights venturing all over our city’s great neighborhoods, catching great live music acts at our favorite venues and bar hopping until last call. But then I recalled that since Easter I’ve had two beers and they were both at a wedding we went to in Arkansas. Since we’ve switched to juicing morning meals and evening snacks daily, I’ve had less of an inclination to eat unhealthy foods, and have been even more reluctant to drink alcohol.

So we could bar hop and go hog wild on water, but just the idea of staying out late until the sun comes up and being completely unproductive the next day just sounds draining to me. For anyone that knew me in college, you are probably thinking that I have been a victim of body snatchers and the aliens are already making their way across this planet. But I assure you there has been no such abduction; I guess I’m just starting to grow up.

In my pre-Ramsey days, my checking account and credit card balances were not the only things that I failed to pay attention to. The truth is that I made a ton of really bad health decisions from what I ate and what I drank. Fast food was pretty normal for me a few times a week and at every party and outing I was the life of the party and fit right in with the rest of the inebriated crowd.

But this is very clearly not the person that I am today. These days I find myself more concerned with getting enough sleep before work the next morning and not being out too late on a Saturday night so I am refreshed for church and lunch with my wife on Sundays. And you will never catch me eating fast food, I know it comes across as pretentious and when I was in high school and college that I used to make fun of people (viciously mind you) that sounded like this, but it’s genuinely true: I truly enjoy taking care of my body and feeling good.

McDonald’s, Budweiser, being out until the sun comes up, going home with ringing in my ears from a band’s speakers being too loud, it all just does not sound appetizing to me anymore. Which even as I write this is something that I kind of can’t believe that I am writing.

So what do we plan to do for what might be our final Spring and Summer season as D.I.N.Ks? Aside from a few planned trips, I for one am looking forward to being out on the lakefront with my wife and strolling through our neighborhood on warm evenings with gelato in hand.  I’m sure some live acts, street festivals and our favorite music venues will see a few turns, but I think for this summer we are going to be more intentional to try our hardest to slow life down and just embrace and enjoy the company of one another.

My Quick Thought on: Home Renovation Loans

If you need a loan to renovate the property after buying it, you can't afford to buy the property.

Saturday, April 27, 2013

My Comparative Study

Now while I’m not one for direct financial comparisons, I do like to occasionally go in for a checkup to see how I’m faring statistically against the rest of the country. Everyone’s circumstances are different so any comparisons I have made, make and will make are entirely taken with a grain of salt. Some people have a larger income than me, others make less. Some came out of college with more debt than I and others never went to college and never had student debt. But nevertheless when studies come out that take a temperature gauge of American households, attention is definitely steered in that direction.

A study recently came out by the Pew Research Center that analyzed Census Bureau data. The study centered on statistics related to American household wealth from 2009 to 2011. Here are a few highlights from the study:

  • The richest 7% of families saw their net worth rise by 28%
    • Of those 7% their net worth rose from an average of $2.48 million to $3.17 million
  • The remaining 93% of families saw their net worth drop by 4%
    • Of those 93%, only 13% owned stocks and bonds and their net worth fell from an average of $139,896 to $133,817
  • 6 out of 10 households with a net worth of $500,000 or more owned stocks and mutual funds

The conclusion of the study was that the majority of US households have the bulk of their net worth tied up in the value of their homes. And as a result the majority of US households miss out on the magic carpet ride that is the historically growing equities market.  Like Dave Ramsey, I believe in home ownership as a solid piece of every financial game plan. My biggest beef with it lies in mortgages. When little to nothing is put down in real estate and you move in with additional debt, no emergency fund and no personal plan for retirement, then you leave yourself susceptible to being on the receiving end of financial ruin. My game plan is to pay 100% cash for our first home and have our emergency fund intact, contributing 15% towards retirement and be entirely debt free. That way we can take on taxes, home maintenance & insurance costs and an increase in utilities and not break a sweat if home values rapidly decrease during a short term time horizon.

But back on point, how did I fare financially from 2009 through 2011? Here are a few highlights.

  • Our net worth grew from *I started keeping tally of my net worth in Q3 2009* $143,260.42 to $223,229.88
    • An increase of 56%, or as I like to lovingly put it: my net worth grew by an average of 21% per year 

I’ve heard it said that mimicry is the best form of flattery. So in the last few years I guess you could say that my wife and I have been working and investing our tails off so that one day we can live off our investment income rather than earned income.  So we’ve held off on buying real estate and have funneled our money to mutual funds in our retirement and taxable investment accounts.

So we have happily been a part of the market downfall and rise over the last few years. The payoff has been that we are on a strong financial foundation as we move towards our hopes and dreams. Whether the market drops sharply or continues its steady ascent we plan to buy and hold ourselves into riding the long term proven growth of the equities market. We plan for real estate to be a piece of our portfolio, but not in that we are overweight in it.

So while it’s nice to know that by comparison we have weathered the storm of the Great Recession a little better than unscathed, we are still keeping our eyes on the prize and moving like a turtle: with consistency and intent over long periods of time. And yes I firmly believe that you too can get these exact same results, if not better, following Dave Ramsey's principles.

Thursday, April 25, 2013

My Smart Money Week Adventure

I would consider myself to be a blogger that is “dropping the ball” if I failed to mention that this week is Money Smart Week. Upon approach of this week on my calendar my nerd scale went right off the measurable radar. Money Smart Week, according to the site, is a public awareness campaign designed to help consumers better manager their personal finances.

Throughout various venues in Chicago and its suburbs are presentations on various personal financial topics. From real estate, to budget and retirement planning to kids and money, with the exception of the credit sessions, I must say that I was very happy to see Money Smart Week veer its way back to the windy city.
At last year’s session my wife and I used the free financial checkup seminars to get a gauge on where our household was at financially, as well as if there were any nuts and bolts we could tighten with our plan. This year we have opted to learn and focus more about a topic very near and dear to us, buying a distressed property.

Our overall financial game plan when it comes to real estate is pretty cut and dry. We plan to buy, in cash, a distressed property as our primary residence. This way we buy at the bottom of the market in a great neighborhood and maximize appreciation over the years.

So obviously there exists a knowledge gap between my plan and what I know. At this point in my life I have never had the experience of witnessing firsthand the financial transactions of a short sell, auction or foreclosure. So with textbook knowledge in hand, my wife and I attended a financial session on buying distressed properties.

 The first and foremost lesson that stuck out to me is that in the realm of distressed properties, cash truly is king J! If I can walk in with 100% down and minimal contingencies, I am more likely to get the best price possible and close on the property. But minimal contingencies can be subjective, as my wife and I pretty much have one simple yet loaded one: To be allowed to hire a home inspector to give the property a thorough exam. We have come to expect that when the time comes that we will put more than our fair share of elbow grease into repairing a distressed property, so we are looking for confirmation that the property is free of mold, has a solid foundation and that the walls and/or roof won’t cave in after we move in.

One negative piece of information that I learned is that more than likely, if there are back taxes due that the new owner is more than likely to shoulder that cost. Another is that state law, pending on the state you live in, can stretch out the entire “distressed” selling process by favoring the homeowner that is behind on their mortgage payments. So patience and some extra cash on hand to handle back taxes or certain types of liens are some more weapons we’ll need in our arsenal when we move to buy a distressed property.

In general, homes that go through short sells tend to be in better physical shape than foreclosures. And to find homes that are seriously considering short selling, it’s best to get paired up with a buyer’s agent who has a strong track record and history in distressed property transactions, who has knowledge of seller’s agents that have distressed homes in their inventory. Essentially, if a home is found through a selling agent and is being touted as a short sell, the sellers are serious about getting out from the home.

There were definitely a few more tidbits and pieces of information that I will keep in my back pocket, but those are a few of the major bullet points. I definitely plan to become better educated and eventually become a self-taught expert in buying distressed properties, even before we set eyes on the home we want to buy. So I encourage you as well to get out there and learn, learn, learn and learn everything you can when it comes to personal finance. 

Wednesday, April 24, 2013

My Joyful Memories

This past week I received the sad news that my childhood neighbor passed away.  This lovely woman, whose name was Cleta and her husband Jake had lived next door to my family for over 40 years.  Looking back, I have to honestly say that Cleta and Jake were one of the bright and shining lights of my childhood, I never realized until today, that their influence and presence is one of the things that makes me smile when I think back on how I grew up.

The timing of receiving this news certainly weighed on my heart heavily as earlier this week, in part of my on-going therapy, I had assessed the state of relationships of my family of origin from age 0 to 18.  The result was a full picture of the hurts and hang ups that I’ve carried with me for a lot of my adult life. 

My father’s alcoholism and ability to turn off feelings and emotions had a rippling effect on how I saw myself and the world around me. In the last few years through therapy, I’ve begun to work through a lot of the emotional baggage that I have carried with myself for nearly 3 decades.  There’s lots of hurts, loss of relationships and pain between myself, my parents and my siblings.

When the assessment was done I felt exhausted, sad, angry and let down.  Within a rough rubric, I saw specific relational categories that were void in my family of origin: communication, empathy, respect for one another and self-value.

The therapeutic assessment made me feel dejected, but after hearing the news of Cleta’s passing, and collecting my thoughts and emotions, when I thought back to my memories of growing up next to her and Jake, I smiled, and found a childhood memory that filled me with happiness.

I thought back to the summer of the McGuire-Sosa home run chase, hurrying home from school, rushing through my homework, and heading to Jake and Cleta’s to watch the games.  Jake would sit in his rocker and take in that home run chase with pure glee. He shared with me EVERYTHING he knew about baseball, and that man seriously knew everything, I seriously think he could give Vince Scully a run for his money.  And while taking in games, Cleta would tell me about growing up in the Midwest, what took her out West, and how she fell in love with a baseball loving World War II veteran, who had seen London in rubbles following the Nazi Blitzkrieg.

And her persimmon cookies were second to none.  I have never tasted anything else that could come close. I also remember long chats with Cleta during summers, when I would help her and Jake keep their lawn watered.  I recall her wanting to pay me for my time, and you better believe I declined cash, and countered for a plate of those persimmon cookies instead.

Cleta had an unbelievably caring heart. For many years she served as a caretaker for both her mother and her ailing husband.  I have no idea how she found the time and energy to care for two of the closest people in her heart, I know for me it would take an emotional toll and I would need mental and physical breaks from it after a few months, but she carried on doing that for years.

Over time I said my goodbyes and moved away to college. And soon Cleta would be caregiving for one, and then eventually have only herself in the house next door to my childhood home. But to be honest her energy, love and joy from being around others never faltered.   Just about every time I would call to catch up with my parents, and ask how Cleta was, she inevitably was just about always out or gone visiting and spending time with friends and family.  It felt like she had no off button, and that age was just a number to her and was no reason to slow down.

So to Cleta and Jake I say thank you.  Thank you for being the best neighbors a kid could ask for. Your happiness and joy was infectious and when I look back on my early life, I really can smile because of you two.  Thank you. Thank you for the love and friendship you shared with me, I will carry and remember it for the rest of my life.  And fingers crossed, maybe one day my wife and I can be the same kind of neighbors you were to me, to our next door neighborhood kids.  Thank you for the memories and I can’t wait to see you two again.

Friday, April 19, 2013

My Juicing Adventure

Just when I didn’t think I could improve my living habits any further, my wife and I have found a new way to go about one of our favorite activities: eating (or in this case drinking). Up to this point I thought we were doing pretty well. Our frugal fury fighting days turned us towards grocery shopping on a budget and planning out ahead of the times the frequency that we dine outside of our apartment. I had been inspired by Jeff Yeager to only buy in season fruits and vegetables at around a dollar a pound. And when we were attacking debt we really did live off of rice and beans and beans and rice.

So now that we are 9 months into a completely debt free marriage and we’ve developed an even bigger margin between us and life, we’ve started looking around our normal and everyday expenses and asking ourselves, “what else.” What else is important to us that we want to prioritize that may have been an extra cost we didn’t want to occur when we were fighting the debt monster.

That lead us to an interesting film by Joe Cross titled, “Fat, Sick and Nearly Dead.” In this documentary, Aussie Joe takes viewers on his journey through a 60 day juice fast. For two months Aussie Joe cut out solid foods, coffee, alcohol and just about everything except water, and only consumed juiced vegetables and fruits for 60 days. Skeptical, interested and inspired were the exact emotions I went through as we watched the film. So my wife and I decided to start incorporating juicing into our daily lives.

Now while Joe’s circumstances for pursuing juicing are different from mine, I still wanted to give it a try. What caught my attention were his higher levels of energy and focus. Up to this point in time, I needed about five cups of coffee in the morning before I could even begin to gather my wits. And although we have heavily cut out meat from our diet, like in personal finance, I knew that there was always room for improvement.

So we bought this guy and immediately stocked up on vegetables and fruits:

Carrots, kale, oranges, sweet potato, spinach, apples and ginger have seriously been staples in a lot of our meals over the last 2 weeks (and might I add happily devoured!). The first few days were rough as I switched off coffee, but once the migranethatwassobadiwantedtorunmyheadintoawalloverandoverandoverandoverandover was gone and coffee was replaced with fresh vegetable and fruit juice, the turnaround has truly been amazing.  

Although we aren’t solely juicing as Joe did in the film, I have been thoroughly happy with the results. I have replaced my morning pitcher of coffee and late night sweet tooth and empty calorie eating binges done out of boredom with juicing. In 2 weeks I seriously have felt an enormous uptick in energy and focus, and in general I feel great. And might I add the taste of our various combinations of juices tastes awesome, I know, I was surprised too, but honestly try it before you knock it! J You’re welcome in advance.

And though odd, I feel compelled to take care of my body. I’ve been hitting the gym more regularly and I haven’t had a sip of alcohol since Easter.  I’m neither an infomercial nor an advertiser for anything, but seriously people, juicing really works.

At this stage in the game financially it was a pretty easy switch to make as well. We used current month income to buy the juicer, which was around $150. And through 2 weeks of mostly stocking up on fruits and vegetables our weekly grocery bill has actually gone down. So I feel better, I’m eating/drinking healthy and my weekly grocery expenses have gone down…that’s a win-win in my book.

Turns out fresh vegetables are better for me and my pocketbook than red meat ever was! I’ll definitely keep you posted as my juicing adventure continues.

Tuesday, April 16, 2013

My Assessment on Financial Risk Management

Risk…It’s certainly a combustible topic and one I would love to explore today.  What got me in a tussle about this topic was a recent publication I read in a magazine geared towards professional investment advisors. And what did I learn after an entire issue dedicated to risk? That most financial advisors use $100 words to tackle this $2 challenge, and charge accordingly. 

While I’m not one to make light of risk, the attitudes toward it in the investment world are straight out frustrating: yes I agree that risk runs on opposite spectrums: do no investing and keep your money under a mattress or a simple savings account and that risk will cause you to lose purchasing power due to inflation over long time periods.  And when it comes to investing, well, a lot of financial snobs will tell you that intricate risk strategies are the way to go when investing.

Allow me to assert that spreading your investments across equities, bonds, futures, commodities, real estate, R.E.I.Ts., ETFs, single stocks, fund of funds and securities lending, all in the name of risk management is just plain stupid.

Never let a slick guy in a suit make decisions or develop strategies for you. More often than not, all these “risk management” strategies do is take away the risk of the advisor missing out on their commission.
So let’s explore what risk is before I share how I manage it in my portfolio.  At its core, risk is about losing money, whether due to inflation, taxes or an investment loss, in the financial realm risk is about the fear of losing money on your investment.  Whether the single stock drops, real estate crashes, we hit a recession, or that 92 day Gold Future just doesn't go your way.  We all have a fear of losing what we put into our investments.

No one has a crystal ball and can dictate what the overall market is going to do in the short term.  To me the best we can do to minimize risk is to take the best, well-informed, well-educated and well calculated risk. Looking historically at measures like the DOW and the S&P, we can see consistent trends that in 5, 10 and 15 year periods of time that equities have consistently risen.  In a broader context equities have grown, in long term time horizons, bigger, faster and stronger than bonds.

I’m not going to jump in and out trying to time the market. I don’t know what it’ll do day to day, month to month, or year to year.   But history shows that in long time horizons, equities win out over any kind of investment for growth.

So before I bought my first investment, I put my emergency fund in place. I set aside 6 months’ worth of living expenses, to keep from having to sell my investment for at least that same period of time (6 months). I’m investing for the long haul and planning to ride the 5, 10 and 15 year tidal waves by buying and holding.

When I did look at investments I acknowledged my limitations. I can’t pick or find the next Google, Apple or Disney - neither can nerds who live and breathe the market, neither can a dart board, and neither can you. So to maximize growth and capture equities without single stocks, I use mutual funds.  Mutual funds are baskets of stocks and depending on the size of the funds can hold essentially hundreds or even thousands of stocks.  I only buy proven winners that have been around for at least 10 years and have at least 12% average annualized returns since inception.  I buy 4 types of mutual funds: Growth, Aggressive Growth, Growth & Income and International.  This way my investments capture thousands of companies across dozens of sectors across the entire world.

I don’t invest with intent to make 5-7% on my money, I aim for 12% average annualized returns every time. Gold would drag my number down. Bonds would drag my number down, oil and pork bellies would drag my number down. Betting Microsoft will rise in stock price by 6% over the next 60 days will drag my number down. And lending my securities to the open market to try and short the price, you guessed it, will drag my numbers down.

But what about ’08?  My investments fell just like yours. But I didn’t lose a single penny. I held everything I bought up to that point and continued to regularly invest in my little army of mutual funds through the dip and through the current mountain peak today. And this strategy has thus far earned me 16% of my investments.

No tricks, no gimmicks and no magic carpet, just simple and straight forward thinking. Owning “sets” of different asset classes is not diversification. It’s stupid, keeps your hard earned money from building at a higher rate and puts a little extra coin in everyone’s pocket but yours.

I’ll end this tirade by picking on bonds. More often than not, bonds are considered safe investments. For generations now advisors have told us that as we approach retirement to shift a heavier allocation towards this “safe investment.”  But these goobers never tell us, that while we make 6% on that bond over decades, we’re missing out on an extra 6% of compounding growth during that time. And especially now, as retirees hold bonds in higher weight, when interest rates rise and bond prices fall, it’s going to be a blood bath out there for the “safe investment.”  The only safe investment is the well-calculated and thought through risk.

Thursday, April 11, 2013

My Shrewd Observation on the Usage of Credit Cards

So the below gem has been recently brought to my attention, and I found it fitting to share some of my thoughts on it. The graphic below was produced by Bank of America.  BofA surveyed 1,500 of their clients between February and March of 2013. I assume that base criteria for participants to be eligible to have their voice heard was to hold at least one credit card obtained through BofA.

 I happen to find the results of this survey to be fascinating. I find it fascinating because I have not owned a single credit card for over four years. I used to believe a lot of the credit myths out there like: it’s important to build your credit score, student loans and mortgages are good debt and of course the nose in the air arrogant myth that “debt is a tool used to build prosperity.” I live my life off a zero based budget planned for at the start of every month. I use cash to make everyday purchases and write checks and use online payments for monthly, quarterly and annual bills due. So during the course of time in between that it takes for the Summer Olympic games to occur, perhaps I have lost touch with the psyche of credit card users, and probably more importantly their behaviors. So here’s the chart showcasing BofA’s findings.

Now when I started to piece together some of this information I actually started to find it rather humorous. More than half of BofA credit card users carry a balance on their card every month, nearly 9 out of 10 of them want to be rewarded with cash back while just under half want to be rewarded for responsibly managing their credit cards.

To me these numbers translate to this: Nearly everyone wants cash back on the use of their credit cards, but less than half use the cards responsibly.

Just as alarming is that more than half of users carry a monthly balance. And a third pay more than the minimum payment due, but fail to pay the balance off. Across 1,500 people, that is an awful lot of interest that is accruing and leaving the consumers’ pocket and finding its way to the fine people at BofA.

Look, I get it. Conceptually credit card users want to use credit cards for everyday purchases that we were planning to buy anyway: groceries, gas, rent, utilities, etc. And with these fixed expenses we plan, through credit cards, to put a little more coin in our pocket by getting an “easy” 3-5% back on these purchases.
“I won’t overspend.” “It will never happen to me.” “I’m going to borrow responsibly.” We all say it. Hell, even I used to say it. But statistically this is just not what’s happening out there. This study shows that we know we’re overspending, but as long as we get our “cash back” we don’t give a damn.

Well I’m telling you to give a damn. Easy access to credit through a credit card increases our likelihood of overspending. It happened to me, it’s happening to the majority of the 1,500 respondents and statistics are showing that it’s happening to the majority of credit card holders out there. BofA, Visa, MasterCard, Chase and all issuers of credit cards are not non-profit entities. They are not in the business of giving away profits in the form of “cash back.” The facts and statistics are showing that the interest paid on credit cards are large areas of profit for the lenders did an assessment based on data from the Federal Reserve that stated through the end of February 2013, American households owed $848 Billion dollars on credit cards alone. And when you factor in stupidly high interest rates north of 16%, that totals out to a lot of stupid tax.

So I made the decision 4 years ago that I’m not playing games anymore. Credit card lenders were preying on me and foaming at the mouth for me to overspend and pay interest. So I switched to a cash based lifestyle, and must say that it’s been working pretty well for me.

I don’t get 3-5% back on my grocery purchases. Instead I am calculating and intentional with all of my purchases and do not overspend in my budget categories. I prioritize saving and am currently sending 6% of my gross income to my 401k and am heaving disposable income into my brokerage account. So ultimately I’ve traded making 5% cash back on money spent for making 16% on money that I’ve saved. And you know what’s better about the latter? At the end of the day I have the money saved still with me and the power of compound interest working for me instead of spending without a plan to earn a pathetic amount in cash back and wondering why I don’t have any money at the end of the day.

I’ll end this post with one of my favorite quotes from Albert Einstein: “Compound interest is the eighth wonder of the world. He who understands it, earns it…he who doesn’t…pays it.”

Tuesday, April 9, 2013

My (financial) Faith

I recently heard an absolutely riveting sermon in church that was interestingly related to personal finance. The topic hovered around faith and doubt and the relationship between the two. The preacher’s point that I walked away with was that strong faith is based on two things: logical information and real world experience. Doubt enters the mind (and soul for that matter) when either logic or experience is missing.

The preacher used a brilliant illustration of zip-lining. Through information we know that the harness will hold our body weight. But to embrace and enjoy the outdoor adventure that is zip-lining, you have to put that knowledge into action by climbing up a few stories and taking the leap. A child may fear taking that leap because they may genuinely fear that the harness will not hold them. Mom and dad can relay the evidence, the strength of the gear and even go ahead of junior to show that the harness will hold their adult bodies. But if junior doesn’t trust the harness, he will not step into action. Junior may have the head knowledge that the zip-lining gear is safe, but until he puts that knowledge into action it he won’t experience faith come full circle.

So what in the world does this have to do with personal finance? In my little world here on the North Side of Chicago I gathered as much head knowledge as I could about personal finance. I learned everything I could get my hands on from ways to make a budget to insurance to investment vehicles to the right kinds of insurance to the importance of an emergency fund. But none of it would mean a single thing if I didn’t put this head knowledge into action.

Through that action I have been able to build and gain traction in my life. That traction has given me hope and the ability to plan for things I seriously didn’t think were possible for the first 20 some odd years of my life. Unfortunately though I have been coming across many writers, bloggers and editorialists that don’t share my hope. Instead I’ve noticed over the last month a sad uptick in volume from naysayers suggesting that wealth building for the common person is not possible. And to me it seems that these voices have lost, or perhaps have never had, real faith.

There are tons of voices out there. Mine is a pebble in the middle of a vast ocean, but the likes of Ramsey, Orman and even that idiot who made “Rich Dad, Poor Dad,” have become household names that surely the naysayers have heard of once or twice. But the naysayers don’t believe, and that in itself is thoroughly heartbreaking to me. Without a glimmer of hope, without wheels in motion and without a proven and workable game plan for financial success, I can understand why a lot of these voices are angry, bitter and quick to put down those that are frugal and beating debt into submission.

I will admit that it is indeed tediously difficult to prosper financially. I had to develop some head knowledge through self-directed research and began, four years ago, to step into the zip-lining harness. For me that included saying no to impulse purchases, writing out a zero based budget, opening my ROTH IRA and 401k and getting the right insurances in place. But the toughest, yet at the same time the most vital part of the entire ordeal was stepping to the edge of the plank with my harness secured, and taking that leap.

Taking that leap meant actually living on my zero based budget through the month. It meant engaging my wife and getting on the same page financially and agreeing how to save, spend and give every dollar that passed through our household. It meant working my debt snowball and going after my $24k student loan with gazelle intensity. For me, it also meant cutting my standard of living down to near $20,000 a year to build my emergency fund and defeat debt forever. And it all started with a little head knowledge and a lot of action to build my faith in the fact that the little man can get ahead in our world.

When it comes to personal finance that’s really all it takes. Just a little head knowledge and lot of action. And if that action is based on well-founded head knowledge and a solid financial game plan, then you will lead yourself to exactly where you are trying to go. J

Sunday, April 7, 2013

My Warmer Weather Plans

Last week here in the windy city we had what everyone agrees is the happiest day of the New Year: the first warm day. And simply put, it was awesome. The weather crept up to and flirted with 60 degrees. Children were running and playing in parks, adults were running along the lakefront with only one layer and hundreds if not thousands of people dug out their shorts and sandals from their closets to mark the occasion.

Now while we are still weeks (maybe a month more skeptically) away from consistently warm weather, these early 60 degree days are warning signs. For many here in this beautiful city it’s a warning sign that beach season is around the corner and it’s time to whip the winter flab into spring and summer muscle. So for us winter warriors who go to the gym year round, we will certainly be annoyed at the influx of people occupying our weight machines. But by and large for me, the prospects of warmer weather mean that it’s time for me to envision a fun and active warm weather season that doesn’t impede my financial plans.
Fortunately Chicago is a huge city with tons of low cost options during the spring and summer that have been very friendly to me during my frugal fury fighting days, and which even at this stage in my financial game plan, I still enjoy and love. So here’s a few ideas in and around Chicago that I use to enjoy the warmer weather that still help keep the cobwebs in my wallet.

Aside from street festivals,  movies in the park is my next favorite thing to do in the city during the summer season. There’s a plethora of city parks and neighborhoods that host these events. My wife and I make a date night of it and bring a picnic dinner to enjoy the show. We’ll either pickup take-out or make a meal at home and bring it to the venue to enjoy great (and free) movies under the Mid-West night sky.

I’m more of a music guy myself, so an after work date with my wife in the loop is definitely in order. During the summer there is a summer music concert series at the famed Millennium Park. My wife and I will usually grab a quick Subway sandwich meal after work, and with our blanket in tow enjoy great sounds in the loop for free.

Lake front Picnics

If you can’t tell from some of these themes I’m quite the foodie. But to commemorate one of the first warm days here, my wife and I grabbed some bread from our local French bakery (roughly $5) and then stopped into a nearby Chinese restaurant for a large Hot and Sour Soup ($3), chopped up some celery and carrots at home, and headed for the lakefront to enjoy a weekend afternoon picnic. I loved being outdoors with my wife, talking, connecting and eating French bread with Chinese soup and taking in the views of Lake Michigan. Seriously, it’s the little things in life that make me smile! J

Community Groups

Although we primarily have used these through our church, but these days with things like and the like, it’s a lot easier now than a decade or so ago to meet up with people with similar interests for an outing. Through the years church’s that we have been a part of hold book club like get togethers weekly. The fellowship and friendships are amazing and the group participation definitely helps lighten the burden financially. In groups we have been apart of, food and beverage responsibility is passed from person to person each week so that the host and group doesn’t carry the burden of feeding a dozen people every week. It’s nice, simple and very easy to work into the budget.

Okay, so this one is a shameless plug for my favorite tea lounges in the city. But great places like this host free concert series’ without door cover. At Loose Leaf, all that is asked is a donation for the performers playing the night you drop in. No cover + great music will always = a positive in my book.

So that’s just a few of the things we do in and around this city when the weather picks up. So enjoy the warmer weather and happy spring and summer frugal finding to all of you!

Tuesday, April 2, 2013

My Walkaway Power

One avenue that the road to financial freedom has led me to has resulted in a thorough examination of my career path. Roughly five years ago I took the first job that I could find after transplanting from New York to Chicago. That decision lead me into what is now a five year career in finance. I was a Communications major in college and struggled horribly through upper division mathematics in high school, so the 18 year old in me is quite impressed with where the (latter) 20 something version is at career wise.

Since that time however I have learned to master my money habits and am finding financial peace. When I first started working for my employer though a lot of my energy and focus was on the paycheck. The money came in and I wandered through my earnings without a fiscal plan. Now though I spend every dollar on paper before the start of every month and follow through. As a result I write to you today debt free and moving towards prosperity on a middle of the road income.

Consequently my views and attitudes towards work have shifted as well. At first I was the gerbil on the wheel needing my employer more than they needed me. Now my wife and I can live on roughly $20,000 a year without impacting our standard of living, and we are in a strong (and disciplined) enough position where our employers need us m ore than we need them.

 I could walk away from my employer today and find a new job that pays half of what I make now and our household could still thrive financially because of our mad budgeting and low cost of living skills. It has been quite an experience walking through my employer’s doors, once needing them to pay off debt, to now where I walk through because I want to be there.

But the entire ordeal has caused me to re-evaluate where I want to be in my career. Essentially I am asking, “What’s next?” in regards to my career. Don’t get me wrong though, I do enjoy the work I currently do and I enjoy the company of my colleagues, but deep down inside of me there is just something that has been driving me to want more fulfillment, more passion, more gusto if you will. I’ve mentioned here before that I would love to work as a financial advisor servicing middle income households. And last week I took the first step in seeing what this dream would look like in reality.

I met with some of the great people over at Morgan Stanley to learn about their financial advisor training program. I can confidently tell you that the meeting went really well and Morgan Stanley has a ton to offer. Their training program is rigorous, thorough and honestly was extremely tempting. During the first 3 years the training program includes learning all you can while obtaining pertinent licenses, job training in New York and an excellent pay package that includes a generous base pay that slowly phases out after 3 years as the advisor moves to commission based pay.

So what’s the hang up? Why isn’t the title of this post, “My New Job?” Because deep down, at the end of the day, this particular move wouldn’t have been a long term fit for myself, and it would not have been a good fit for Morgan Stanley. At the core of the issue is that the company’s performance expectations and standards for its financial advisors skew the advisor to pursue high net worth clients with significant investable assets. I plan to work with middle income households with little to medium investable assets, and help turn them into high net worth households with significantly high levels of investable assets J!

So I’m keeping my cards close to me. Jon Acuff would be proud to hear me say that I’m keeping my No’s open. I am working in a job that I have fallen in like with, while I scan and search for the perfect fit that will lead me to my dream job. So for now I’m keeping my ears and eyes open for just the right opportunity and keeping my walkaway power intact.