Hindsight Is 20/20

When I look back at my overspending days, it’s easy for me to see the many, many mistakes I made. My life was littered with them. There are some old journal entries of mine that are absolutely cringe-inducing to read. I still have quite a few items in my closet that are just the result of blind conspicuous consumption. I didn’t save. I didn’t invest. I didn’t plan. I didn’t focus on building the career I truly wanted.

Looking back, I see all of those mistakes and missed opportunities and poor choices. I want to smack my 23 year old self on the head and yell, “Get a clue!”

Yet, I also know that hindsight is 20/20.

Back then, I had a sense of what I wanted – a nice home, a marriage to Sarah, kids, a job that gave me the flexibility to spend lots of time with them – but I didn’t have any idea how to get there. Today, though, I have the knowledge and time to reflect – and I now see all of the mistakes I made.

Here’s the real key, though: those mistakes are done and over with. I don’t have a chance to repeat those days and make better choices.

Instead, I have two things I can do today.

First, I can strive not to repeat those mistakes. I know now that my life is perfectly happy without having all of the latest and greatest stuff. I don’t need to go out to eat constantly or go golfing or buy nice clothes or own a new gadget or go on ridiculously expensive trips (like a week in a hotel room in London with a view of Hyde Park and the Royal Albert Hall like we had on our honeymoon, for example) to be happy. I know what I value and love and need in my life.

Second, I can share what I’ve learned. For some people who are eager to find a better path, it’s easy for me – that’s what The Simple Dollar is for. When I learn something new about personal finance and the great life sensible money management can build, I can share it here.

There’s also a need to share things with people who aren’t at that same stage in life. How exactly can I reach out to them without being overbearing? For me, it’s usually a matter of just dropping a book in their hands or just asking what they want to do in their lives and then asking them what things they’re doing today helps get them there.

Don’t waste your time beating yourself up over the mistakes of the past. Those choices have already been made – no amount of anger or disappointment at yourself can undo what’s already been done. Instead, focus on the choices you make today and revel in making good choices now.

You can never change the past, but you can certainly learn from it. Better yet, you can take what you’ve learned and apply it to improve the present – and drastically improve the future.

Continue reading Hindsight Is 20/20 …

From The Simple Dollar.

“I Just Want to Have Fun, Live My Life, and Worry About All That Stupid Personal Finance Stuff When I’m Older”

It’s the refrain of countless Americans of all ages – and it was my refrain, too.

It’s easy to see why, too. At first glance, personal finance looks like a bunch of boring and un-fun stuff. Paperwork. Sacrifice. Living in an un-fun way.

On the other hand, living a big spending lifestyle seems quite fun, as you don’t have to think about the stuff that you want. You just go and get it until the money (or, quite often, the credit) runs out.

I’ve been there. I spent myself into five figures of credit card debt.

What I found when I got there is that I didn’t really have the stuff I wanted most in life. Yes, I had an iPod and a huge DVD collection and a nice vehicle in the driveway. What I wanted, though, was a writing career and the flexibility to do what I wanted during the day and a lack of fear of checking the mail.

At the same time, though, I didn’t want to give up my lifestyle. I pretty much thought that buckling down and living frugally would mean that my life would begin to be incredibly boring. I’d have to give up all of the stuff I loved, right?

Here’s the truth: I didn’t give up a single thing that I loved. Yet I managed to get out of debt in just a few years and find the career of my dreams.

What’s the catch?

There is none.

All you have to do is one simple thing. Step back for a moment, look at your life, and ask yourself what elements of it actually matter to you. What brings you genuine, lasting happiness in your life? What do you do that you’ll remember in five years?

Figure that out. Make a list, if you want.

If you simply look at your life through that filter, it’s easy to see that a lot of the day to day stuff really isn’t all that important. Sure, there are a few key things that are, but those key important things vary for all of us. For me, it happens to be the time I spend with my family and the time I get to spend reading and writing. Those things bring me genuine, lasting joy.

Everything else? It doesn’t really matter in the big scheme of things.

All of those things that don’t matter are the things that I cut my spending on to the absolute minimum. I don’t get a life-affirming rise out of eating at Applebees, so I’ll save $20 and eat at home. I don’t really need the ultra-premium toilet paper since the quality of my life isn’t judged by my bathroom experiences, so I’ll buy low-end toilet paper and I’ll buy it in bulk.

If you value going out with your friends, it becomes a lot easier to do that when you’re not dumping money into your household budget on unnecessary premium products. If your art is the center of your life, it becomes a lot easier to make the leap into an art career if you aren’t tossing cash towards an oversized apartment and the finest decorations from Pier One. If you love to travel, it’s a lot easier to take amazing trips (and actually afford them) if you aren’t pouring money down the rathole of your energy bill because you’re using energy inefficient lighting and don’t have a programmable thermostat.

Once I figured that out, the rest was easy. I took all of that money I shaved from the stuff that doesn’t matter to me and I threw it directly into my debts. Once they were under control, I put it towards doing the things that I loved – reading, writing, and spending time with my family. Eventually, those three things became my lifestyle without any real financial worries to boot.

So much of our day to day lives really doesn’t matter in the big scheme of things. So why spend money on it? Put that money towards things that do matter – peace of mind, your passions – and you’ll find a much better life without giving up even the littlest bit of what you really care about.

Continue reading “I Just Want to Have Fun, Live My Life, and Worry About All That Stupid Personal Finance Stuff When I’m Older” …

From The Simple Dollar.

Wisebread: How debt fools people

Wisebread is bringing up some points about debt that are easily overlooked at How debt fools people.

A snippet:

The reality of debt spirals is more insidious. It results from the loss of flexibility when a household incurs a perfectly reasonable amount of debt — or even no debt at all, but some amount of fixed monthly expenses — and then suffers a negative economic event such as a large unplanned expense or a drop in income.

Because that’s the way that debt really works its harm. It’s not that it costs so much money (although it can), nor is it people obligating themselves beyond their means (although some do). It’s that it makes the household finances so much less flexible. It’s not the extra $28, it’s the inability to adapt.

Continue reading Wisebread: How debt fools people …

From Monroe on a Budget.

Wisebread: How debt fools people

Wisebread is bringing up some points about debt that are easily overlooked at How debt fools people.

A snippet:

The reality of debt spirals is more insidious. It results from the loss of flexibility when a household incurs a perfectly reasonable amount of debt — or even no debt at all, but some amount of fixed monthly expenses — and then suffers a negative economic event such as a large unplanned expense or a drop in income.

Because that’s the way that debt really works its harm. It’s not that it costs so much money (although it can), nor is it people obligating themselves beyond their means (although some do). It’s that it makes the household finances so much less flexible. It’s not the extra $28, it’s the inability to adapt.

Continue reading Wisebread: How debt fools people …

From Monroe on a Budget.

The Sleeping Fox Catches No Poultry

I love reading essays, and I have a collection of essays that have truly inspired me and made me think. Among these is Benjamin Franklin’s classic The Way to Wealth – something I often read when I need a piece of financial inspiration. If the circa-1750 language is rough on your eyes, here are the principles summarized well by Art of Manliness.

Just a few days ago, I read The Way to Wealth again. I was inspired to read it by our survival of the “summer of low income” – I made a tough choice to switch my advertising revenues for The Simple Dollar that resulted in basically no income during the summer, but we made it through to the other side with little problem.

As I was reading through The Way to Wealth, one phrase really stood out at me this time:

The sleeping fox catches no poultry.

What exactly does that little phrase mean in terms of our modern lives? I see it as a call to five things.

It’s a call to be alert. Our world is full of opportunities. Sales. Small investment opportunities. People trying to get rid of things. New jobs. New careers. Love interests. Friendships. Ideas. Purely lucky events, like finding fifty dollars in a parking lot. Every day, we’re brushed with many of these things. If we’re alert, we can see them – and if we choose to, we can take advantage of them, jumping in with abandon. You’ve got to keep your eyes open and see the world as a field of blossoming opportunities.

It’s a call to have resources in reserve. Of course, many of those opportunities are hard to pluck if you don’t have anything to pluck them with. It’s incredibly useful to have some money in reserve. However, money is just one of many resources that’s useful to have in reserve. Do you have relationships you can tap for advice or other things? Do you have time – are you not booked to the maximum with no flexibility in your schedule? Do you have patience to wait for good things to come? Do you have skills and talents that you can apply and share? Resources mean more than just money – much more.

It’s a call to know what you want. The fox sleeps outside the henhouse because he has a hunger for chickens. What are you hungry for? What are your passions? Figure them out and follow them, because when you’re chasing your passions, you’re showing others – and yourself – that this is a life direction that you want. You see more opportunities because you’re passionate, and you’re able to follow up more often because of the knowledge and insight you’ve picked up chasing your passions.

It’s a call to be aggressive. If you’re sleeping, you’re letting the world pass you by. Instead, seek out the opportunities in life. Instead of glancing at that yard sale, stop there. Instead of debating whether to pay $35 for that oak desk, offer $20 for it. Instead of thinking how fantastic that job would be, ask for it. Learn how to be assertive and go after the things you want.

It’s a call to get out there and DO something. Today.

Are you the sleeping fox? Or are you out there, alert, aware, drawing on all of your resources, and catching those hens that you hunger for?

Continue reading The Sleeping Fox Catches No Poultry …

From The Simple Dollar.