Reader Mailbag: Shortcut Fixing
What’s inside? Here are the questions answered in today’s reader mailbag, boiled down to five word summaries. Click on the number to jump straight down to the question.
1. Higher salary or better benefits?
2. Cheap land lines
3. Moving in with parents
4. Prepaying student loans in forbearance
5. The Hindenburg Omen
6. Post-graduation financial independence
7. Mid-college personal finance advice
8. Cherry picking the past
9. Tracking passwords
10. Replacing cable with Netflix
As many of you know, a month or two ago, I changed the format of the reader mailbags so people could just click on the number next to the shortcut above to hop down to the question. On the “back end,” I simply named the questions 1 through 10 (or 11 or whatever), so that when you click on the shortcut for question 1, it hopped down to question 1.
There was a pretty nifty little problem, though. If you had two reader mailbags on the same page, there would be two questions and answers named “1″ on the same page. Thus, depending on your browser, clicking on the “1″ could send you to the right question – or to the “1″ question in a completely different mailbag!
I solved this problem by simply changing how I numbered the questions on the “back end.” Today, if you click on the “1″ above, you’ll actually be jumping down to “1826.” What’s that number? 1 (for the first question) followed by 826 (today’s date).
If I number all future mailbags in the same way, the problem won’t occur. In other words, if you happen to see a bunch of mailbags on the same page in a few months and click on a question, you’ll go to the right question.
I am 24 years old. I was recently laid off from a local government job (with all the benefits that come along with that) making around 60K due to a reduction in force. I was offered a job in the private sector making the same, but with all the lack of benefits and the longer hours that come along with that. I have also been looking around and have been able to go on interviews for several government jobs in which I would be making anywhere from 40K to 55K, but with good benefits. My main concern is the pension and the fact that I could potentially retire at 55 because I’m a veteran if I stick with the government.
I guess my question boils down to: should I shoot for the money or the benefits with lower pay? What do you think is best long term?
Note: I have about 16K in student loans from my master’s, which will probably end up around 24K. My yearly expenses are around 21K. And have a modest emergency fund of around 9K.
- Joan
It depends specifically on what benefits you’re gaining, but likely the benefit-rich job will be superior.
For starters, the salary difference isn’t as big as you think considering that the difference in salary will be taxed at your top rate – 25% or 30% or so will go to Uncle Sam, with some additional amount likely going to your state.
Another reason the benefit rich job will likely work better is that you’ll likely receive some form of compensation into your retirement savings. Many government jobs will match 5% of your pay and some will match 10%. So, if you have a 10% match job and make $50K, you can get $5K more just by investing properly in retirement – and that investment is tax-deferred, so you don’t have to worry about taxes right now.
Add on top of that the health insurance, life insurance, flexible savings accounts, and other benefits and you’ll likely get much more value out of a job with good benefits at $45K than you would out of a job with awful benefits at $60K.
We’ve been trying to cut down on our utilities, especially phones and internet. We have pay-as-you-go cell phones, but we still pay $50/month for our landline and our internet. I’m trying to figure out how to reduce this cost, because $50 a month seems like a lot to me. We currently have internet and phone through AT&T, our local phone company. I’m thinking if we switch the internet to something like DSL Xtreme, we could reduce the internet cost by about $10/month. But what about the landline? I’d like to still keep a land line, because this is the number I give out to anyone who’s not a friend, so I use it to field phone calls from businesses and potential telemarketers, etc. Is there a cheaper way to keep a land line than for $25/month?
- Mylinh
For your use, I would suggest just using a DSL and Skype (I use Skype). You can use your cell phone for 911 purposes.
To have a phone number with Skype costs you about $3 a month, which also gets you unlimited calls in the U.S. All you have to have is a computer with a broadband connection, speakers and a mic or a headset and you’re good to go.
This would save you about $22 a month overall, based on the numbers you provided.
I was just curious about your opinion on moving in with parents. I’m not talking about newly graduated kids, I mean established couples that live with one of their parents “to save money.” Is this something new that couples like to do now? I’ve seen this happen with friends a couple times now (I’m 30, they are about the same age); each was saving for a house or wedding (good things to save for, for sure), and one had a child already. The thing is, neither of these couples are anywhere close to thrifty, to put it nicely. We see a lot of unneccessary spenditure, which if they controlled they could save a lot. So moving in with the parents just seems like a cop-out to me. I’m saving for a wedding that I have to minimalize just to afford, and can hardly save any more, and perhaps it’s only pride, but there is no way I would want to live at someone else’s house. The stress of dealing with in-laws in a less-than-ideal situation doesn’t seem worth it.
Any thoughts? Or is it just that I’m at an age where stuff like this happens?
- Alexandra
I think you’re looking at someone else’s life through the lens of some things you value (thrift, financial independence) and seeing others come up short.
If I’ve learned one thing from The Simple Dollar, it’s that not everyone values financial success. People find success in a lot of ways in their own life depending on their own definitions, and certain kinds of success dominate other kinds. Financial success and material success often oppose each other. Family success and career success often oppose each other.
I’m of the belief – like you are – that financial success creates the foundation for a better life. It doesn’t matter how deeply I believe it or how many times I say it, though, some people won’t buy into it. Or, they don’t buy into it now and will only come around when they fall over a financial cliff and see how scary it can be.
You can’t live other’s lives for them. However, you can pick and choose who your friends are and who you spend time with, so it’s usually worth your while to be selective with your friends if you are having a difficult time accepting their values.
I have placed all of my student loans on forbearance while I seek a full-time teaching position. I have 14 student loans with balances that range from $250 to $20,000 and total $76,000. I plan on taking a Ramsey approach, ranking them according to their balances and paying the smallest first until they are gone. However, since they are in deferment should I pay a small amount on each loan, like $25 which is all I can afford, and whatever remains on the smallest balance. Or, should I use all of my income after mandatory expenses for the smallest loan and make one large payment on the that loan? Thereby, taking full advantage of the forbearance on the larger loans. Basically, is it worth it to pay such a small amount on loans while they are in forbearance or am I just throwing that money away?
- Darren
Your best bet would be to pay against whatever loan has the highest interest rate, because those payments will save you the most interest over the long haul.
You also need to make sure that none of your loans have put their interest into forbearance as well. Most loans continue to apply interest to the balance while in forbearance, but some loan arrangements do not. If you have a loan that is not accruing interest, it still might be worthwhile to pay ahead on it, but only if it’s of a significantly higher interest rate than other loans.
Your best bet, though, is to consolidate that mess. 14 student loans? Just by sheer human nature, you’re bound to run into some sort of issue with one of them. With interest rates as low as they are right now, you should really consider consolidation.
I’ve recently been seeing a lot of references to the Hindenburn Omen on various financial and pf blogs and websites, along with many panicked questions about whether the market is going to crash in September. When I look at the many requirements that go into detecting the Omen, it seems quite technical with a lot of jargon that most regular American (including myself) wouldn’t understand. My questions to you:
* Can you simplify this concept at all so normal people like myself can wrap their minds around it?
* Does the Omen have actual technical merit or is it just an ominous-sounding, overly-complex financial Ouija board?
* Should I be worried and looking into moving my investments into more conservative choices? I understand that this is the kind of thinking that could turn the Omen into a self-fulfilling prophecy, but a crash is a crash regardless of what caused it. The effect of such a drop will be the same on my 401(k) regardless of whether the Omen actually caused it or if the thought of it just got a bunch of idiots panicked and in the mood to dump all their investments.
- Jessie
The Hindenburg Omen refers to a pattern in stock prices that is said to show up in advance of some stock market crashes based on historical data. To put it simply, the Hindenburg Omen occurs when a lot of stocks are reaching 52 week highs and another significantly sized batch of stocks reach 52 week lows on the same day.
If someone goes and looks at the historical data of the New York Stock Exchange, the exact parameters of the Hindenburg Omen usually pop up a few times before a stock market crash (a drop of 5% or more). However, the Hindenburg Omen sometimes pops up nowhere near a stock market crash and at other times a stock market crash occurs without a Hindenburg Omen.
What does that mean for you? If you have investments that are improperly balanced and weighted too heavy towards stocks, you should probably not have as much money in stocks as you do right now. However, that’s true no matter whether there’s an “omen” or not. You should always spend time figuring out how much you’re comfortable with in stocks, invest that much, and put the rest somewhere safer.
Do I believe in the “omen”? I think any time you have a pile of data, you’re going to see patterns in it. Some of those patterns actually mean something. A lot of them do not. I’m not sure which side of the line the Hindenburg Omen lies. I think it’s something that some stock speculators and doomsayers are hyping right now because, frankly, it gets them an audience.
I am a 10′ grad of a high school from my home of Phoenix, Arizona and will be going to Wellesley College (small, all-women’s liberal arts college in Boston, Massachusetts) this fall. My parents will be paying for all my school and basic living costs (room, board, food, books, basic clothes, etc.) for all four years. I will also be receiving an allowance of $250 per month for “fun” stuff (eating out, clothes, etc). I have about $2,500 saved up in an account from various things in high school.
I recently read an article in the New York Times (http://www.nytimes.com/2010/08/22/magazine/22Adulthood-t.html) about kids who are moving back home after school. I don’t want that to me be! My goal is to be financially independent by graduation. For me, this means having enough money to have my own place to live and pay all my own expenses. Basically, after graduation day, I don’t want my parents to be supporting me. What is the best thing I can do in my college years to achieve that goal?
- Erica
The best thing you can do is minimize every possible dime you spend while in college. If it’s an optional expense of any size, think carefully about it before spending it. Try to go “under” the $250 a month as much as you possibly can.
Whenever you can, sock money away in a savings account somewhere. Then, when you graduate, you’ll have some money with which to support yourself during your efforts to find post-graduate work or further schooling.
Kids that move back home after school often don’t have the opportunities you do (everything paid for with a $250 a month “fun” stipend) and often spend everything they have during their college career, coming out the other side with debt and no money saved up to deal with the immediate post-college expense. Don’t let that be you.
I’m 19 years old and will be graduating in two years. What should I be doing right now to prepare for my financial future? What personal finance info should I know?
- Kate
Read my answer to Erica, above.
Beyond that, I would strongly recommend educating yourself about personal finance. Hit your local library, take a look at these four books (all linked to my reviews of them), and check out the ones that seem to match your interests.
You’re So Money by Farnoosh Torabi
Please Send Money by Dara Duguay
Automatic Wealth for Grads by Michael Masterson
Your Money or Your Life by Joe Dominguez and Vicki Robin
All of these are excellent books that will get you on the right path.
10-12 years ago, conventional wisdom said to buy index funds for your investing. And conventional wisdom was right! The stock markets for the preceding years had marched in “lockstep” and indexes could outperform almost any actively managed funds. However, over the last 10-12 years, that wisdom had not been correct. For example, the bellwether S&P500 Index has lost somewhere around a 1% over the the last 10 years, where I can find many managed funds–load and no load–and many diversified portfolios–load and no load that far exceeded the S&P500, even after any loads or other management costs are calculated in. That being said, I humbly advise you to take a look at the statistics a little more carefully, as you tend to advise (and seemingly blindly?) investing in index funds without other thoughts.
- Marvin
Of course you can find funds that earned more over the past ten years than an index fund. Hindsight is 20/20.
The point of an index fund is not to be the best fund out there. It’s to have average returns with very low costs, which means it’ll beat about 60% of the funds out there.
“Well, I want the top fund!” If you can tell me with 100% certainty which managed fund will earn me a better return after costs than a marketwide index fund over the next ten years, I’d love to hear it. You can’t, though. Why? Because you can’t read the future. No one can.
It’s easy to look back and identify funds that beat the market. It’s impossible to look forward and do the same thing. Managed funds with a great record tank all the time. Awful funds start hitting hot streaks.
Index funds are just the average of all of these things, except that they have very low costs, something that managed funds can’t match. As a result, they’re at about the 60th percentile – but they’re always at that percentile, while other funds soar above and crash below.
If I wanted to take on more risk than that, I’d invest in individual stocks of companies I trusted.
Do you have any tools for keeping track of internet passwords and login information? Do you keep it in a safe? I realize this is probably not a question you’d want to answer very specifically (for safety and privacy reasons!). I’m also interested in your tips for constructing a safe password and login name that is secure but still easy to remember. I often get overwhelmed by the amount of internet passwords I need to keep up with.
- Emily
The best solution for most people is probably a program like KeePass. KeePass is a free open source software solution that stores all of your passwords together in a single heavily encrypted file. All you need to remember is one master password (and make it a very strong one).
Another great solution – and the one I use – is to have a “password system” rather than a single password. A “password system” is a way of coming up with and then remembering a unique password for any service that you might use.
It’s pretty easy to do. First, come up with a short, complicated password that you’ll remember – a sequence of five or so characters. I usually encourage people to have an uppercase letter, a lowercase letter, and a number in there. Maybe it could be three consecutive characters on a keyboard, the capitalized first letter in your name, and the number 9 – so for me, it would be sdfT9. That string, whatever it is, would be the start of all of your passwords.
After that, just have a method of including more characters that makes it unique based on the site that you’re at. So, for example, you might just tag on the first four letters of the domain name, but in reverse. Thus, at google.com, with this system, my password would be sdfT9goog. At yahoo.com, my password would be sdfT9ohay. At amazon.com, my password would be sdfT9zama.
I suggest that you come up with your own patterns, but it should use the same system – five letters or so of prefix that you’ll memorize, plus four letters or so of suffix that can be obtained from the website you’re at. If you’re required to use longer passwords for some of your essential services, make the prefix longer – use sdfT9wer or something like that. My own patterns are quite a bit different than these, but this gives you the idea.
That way, you have a tricky password that’s different for each site you use.
I love your blog and appreciate the honesty and thoroughness of your posts. My husband and I have taken a month off from television to re-prioritize, and in doing so, have become more interested in cutting the cable altogether in favor of Netflix and the streaming television option. (Of course- we don’t mind saving about 90.00 a month either- we recently killed our “debt snowball” with the Ramsey plan!) I can’t seem to find any type of listing of the television shows available on Netflix to watch- would you mind expanding on this? I know you’ve mentioned it before. Thanks!
- Elizabeth
It’s pretty hard to get a full list. You can get a bit of a preview by going to Netflix, clicking on “Browse Selection,” then clicking on “Television” in the Instant Streaming box.
Shows we’ve watched using it include Weeds, Arrested Development, Firefly, Doctor Who, Bones, and The Office. There are a ton of other series on there as well. Just use the search box to search for ones you’re interested in.
Given that we don’t watch all that much television to begin with, streaming is a great choice for us.
Got any questions? Email them to me or leave them in the comments and I’ll attempt to answer them in a future mailbag. However, I do receive hundreds of questions per week, so I may not necessarily be able to answer yours.
Continue reading Reader Mailbag: Shortcut Fixing …
From The Simple Dollar.
The Simple Dollar Weekly Roundup: Memorizing Poetry Edition
All through my life, I’ve spent time memorizing various poems. The Road Not Taken by Robert Frost. anyone lived in a pretty how town by e. e. cummings. Pioneers! O Pioneers! by Walt Whitman (probably my favorite).
I like the way the sounds roll off the tongue and paint pictures. I like reciting them (or pieces of them) to my children. I like the flavor of the words.
How to Adopt an Attitude of Gratitude Lately, I’ve been focused on seeing the good in every situation. There are many situations where it’s easy, but if you look deeply, there is good in every situation. (@ dumb little man)
Wants that Morph Into Needs This is lifestyle inflation and it’s one of the most dangerous opponents people have to building a sustainable free life. (@ personal finance advice)
See The Impact When You Donate To Charity I think the big reason that many people struggle with charitable giving is that it feels like a “give and see nothing in return” exchange. I don’t think there’s anything wrong with wanting to see what your money is going for. (@ christianpf)
I’m So Judgmental. I Want to Conquer This! Any Suggestions? Everyone has their own path. You can’t fairly judge others by the path you’re on. It’s like comparing a track sprinter’s times to that of a cross-country skiier. (@ happiness project)
It’s So Easy to Talk About Lunch I love this. If you want someone to talk, give them something very easy to talk about. Seth suggests talking about what to have for lunch, because everyone has an opinion. (@ seth godin)
Ask Unclutterer: Encouraging kids to help out at home My technique is to do it in very small timed batches. Our kitchen clock has a countdown timer, so we’ll designate a very specific task – “Pick up the Lincoln logs!” – with a very specific time frame – “Can we get it done in five minutes!?” – and then set the timer. The immediate focus and the short term really helps our kids (ages four and two) to take care of their stuff. (@ unclutterer)
Continue reading The Simple Dollar Weekly Roundup: Memorizing Poetry Edition …
From The Simple Dollar.
Pay What You Want
Let’s say you go to a restaurant somewhat regularly and each time you go, you spend about $10 on your meal. One day, rather than receiving a bill, you’re simply directed to a box on your table that said “pay what you want for this meal.”
Would you put in anything at all? Would you put in the usual $10? Would you put in less than that? More? Does it depend on the specific circumstances in your own life at the moment?
What is that meal worth to you?
The interesting part is that this is really all about negotiation. When a restaurant puts a price on the menu, they’re telling you what value they expect for the meal. You can either accept that value or simply go elsewhere.
Now, let’s say you prepare a meal at home. You choose what meal you want to make. You also choose what ingredients you want to use and how much labor you want to put into it. The end result? You pay a much more reasonable price for your meal.
The lesson here is simple. The more you do it yourself, the better the bargains are and the more your spending is in line with what you value.
The same principle holds true with, well, almost everything. Take The Simple Dollar, for instance. Almost all of the people who read The Simple Dollar pay nothing for the articles posted here – I make income from the site indirectly through sidebar ads and other writing opportunities brought on by what’s posted here.
But if I place a “Donate” button here…
… almost no one will click on it (yes, a few of you will, and yes, a few of you are awesome). Why? It’s a better bargain not to donate if you can already get it for free.
This is because of the same principle listed above. A blog like The Simple Dollar is a great value in seeking personal finance advice. Because readers “did it themselves” and sought out multiple sources of information, they found that a free subscription to The Simple Dollar provided more bang for the time and money investment than a subscription to an expensive personal finance magazine.
(Of course, I could change that value structure by charging for it, and some of you might continue to see the price as a good bargain for you, but many of you would not. Or I could write a book with new material not given away for free and some of you will choose to purchase it to accompany the site – again, a different alignment of value for your dollar and for your time.)
So what’s the point? The more you “do it yourself” and seek out lots of solutions to your needs in life, the better value you’ll find. If you just stop with the first option – say, a restaurant or a DVD series purchased off of an infomercial – you’re probably not finding the best value. Keep searching. Make a meal at home. Visit the library. Read some blogs.
If something is important to you, keep seeking value and you’ll find it. It’s a journey that constantly rewards you with better and better value for your dollar and for your hour. Good luck.
Continue reading Pay What You Want …
From The Simple Dollar.
Pay What You Want
Let’s say you go to a restaurant somewhat regularly and each time you go, you spend about $10 on your meal. One day, rather than receiving a bill, you’re simply directed to a box on your table that said “pay what you want for this meal.”
Would you put in anything at all? Would you put in the usual $10? Would you put in less than that? More? Does it depend on the specific circumstances in your own life at the moment?
What is that meal worth to you?
The interesting part is that this is really all about negotiation. When a restaurant puts a price on the menu, they’re telling you what value they expect for the meal. You can either accept that value or simply go elsewhere.
Now, let’s say you prepare a meal at home. You choose what meal you want to make. You also choose what ingredients you want to use and how much labor you want to put into it. The end result? You pay a much more reasonable price for your meal.
The lesson here is simple. The more you do it yourself, the better the bargains are and the more your spending is in line with what you value.
The same principle holds true with, well, almost everything. Take The Simple Dollar, for instance. Almost all of the people who read The Simple Dollar pay nothing for the articles posted here – I make income from the site indirectly through sidebar ads and other writing opportunities brought on by what’s posted here.
But if I place a “Donate” button here…
… almost no one will click on it (yes, a few of you will, and yes, a few of you are awesome). Why? It’s a better bargain not to donate if you can already get it for free.
This is because of the same principle listed above. A blog like The Simple Dollar is a great value in seeking personal finance advice. Because readers “did it themselves” and sought out multiple sources of information, they found that a free subscription to The Simple Dollar provided more bang for the time and money investment than a subscription to an expensive personal finance magazine.
(Of course, I could change that value structure by charging for it, and some of you might continue to see the price as a good bargain for you, but many of you would not. Or I could write a book with new material not given away for free and some of you will choose to purchase it to accompany the site – again, a different alignment of value for your dollar and for your time.)
So what’s the point? The more you “do it yourself” and seek out lots of solutions to your needs in life, the better value you’ll find. If you just stop with the first option – say, a restaurant or a DVD series purchased off of an infomercial – you’re probably not finding the best value. Keep searching. Make a meal at home. Visit the library. Read some blogs.
If something is important to you, keep seeking value and you’ll find it. It’s a journey that constantly rewards you with better and better value for your dollar and for your hour. Good luck.
Continue reading Pay What You Want …
From The Simple Dollar.
Pay What You Want
Let’s say you go to a restaurant somewhat regularly and each time you go, you spend about $10 on your meal. One day, rather than receiving a bill, you’re simply directed to a box on your table that said “pay what you want for this meal.”
Would you put in anything at all? Would you put in the usual $10? Would you put in less than that? More? Does it depend on the specific circumstances in your own life at the moment?
What is that meal worth to you?
The interesting part is that this is really all about negotiation. When a restaurant puts a price on the menu, they’re telling you what value they expect for the meal. You can either accept that value or simply go elsewhere.
Now, let’s say you prepare a meal at home. You choose what meal you want to make. You also choose what ingredients you want to use and how much labor you want to put into it. The end result? You pay a much more reasonable price for your meal.
The lesson here is simple. The more you do it yourself, the better the bargains are and the more your spending is in line with what you value.
The same principle holds true with, well, almost everything. Take The Simple Dollar, for instance. Almost all of the people who read The Simple Dollar pay nothing for the articles posted here – I make income from the site indirectly through sidebar ads and other writing opportunities brought on by what’s posted here.
But if I place a “Donate” button here…
… almost no one will click on it (yes, a few of you will, and yes, a few of you are awesome). Why? It’s a better bargain not to donate if you can already get it for free.
This is because of the same principle listed above. A blog like The Simple Dollar is a great value in seeking personal finance advice. Because readers “did it themselves” and sought out multiple sources of information, they found that a free subscription to The Simple Dollar provided more bang for the time and money investment than a subscription to an expensive personal finance magazine.
(Of course, I could change that value structure by charging for it, and some of you might continue to see the price as a good bargain for you, but many of you would not. Or I could write a book with new material not given away for free and some of you will choose to purchase it to accompany the site – again, a different alignment of value for your dollar and for your time.)
So what’s the point? The more you “do it yourself” and seek out lots of solutions to your needs in life, the better value you’ll find. If you just stop with the first option – say, a restaurant or a DVD series purchased off of an infomercial – you’re probably not finding the best value. Keep searching. Make a meal at home. Visit the library. Read some blogs.
If something is important to you, keep seeking value and you’ll find it. It’s a journey that constantly rewards you with better and better value for your dollar and for your hour. Good luck.
Continue reading Pay What You Want …
From The Simple Dollar.
Why Do You Buy?
What’s the single most important piece of personal finance advice you would give a person?
I’ve heard this question (or variations on it) many times. I have a very simple answer to it.
Whenever you buy anything, ask yourself why five times.
That seems really off the wall at first glance, but I firmly believe that no single piece of advice can match it in terms of getting your money under control.
I’ll show you what I mean through the lens of three purchases I considered recently.
I have about $1,000 saved up for a big personal purchase. I had been considering buying an iPad with it, even before the Apple announcement in January. I held one in my hands a couple days ago and considered it.
Why do you want an iPad? It’s an impressive gadget to hold in your hands. I can see myself using it and enjoying it.
Why would you use it? I can surf the web on it and read books on it and periodicals, too.
Why not just use your laptop? This is more portable.
Why not just use your iPod Touch? …
Why not just read a paperback? …
And, boom, my argument for buying an iPad goes down the chute. Sure, I can afford it, but why? It doesn’t fulfill a need in my life that isn’t already fulfilled by something else, or at least not in a compelling enough way to pay hundreds for it. Yes, I’ll probably buy a tablet computer someday, but not yet. It doesn’t actually fiil any sort of need.
I allow myself $30 a month to spend on books. I was in the bookstore recently, considering whether to pick up a copy of a novel I’ve been looking forward to for a long while.
Why do you want this novel instead of the books you already have? It offers a compelling story, but I do already have a few to read.
Why not just wait until it’s on sale or in paperback? I want to read it now!
Why not just ask for it on PaperBackSwap? It’ll take some time to get it there because it’s such a new release.
Why not just request it at the library? I could do that… it might take a few weeks.
Why not see if one of your friends has picked it up and swap with them when they finish? Even if the library doesn’t have it, one of them might.
And, boom, I’ve got several avenues for reading the book without spending the money. This keeps me from buying a lot of books because my actual need (to read) is fulfilled in other ways for much less cost.
Another example: I’m considering buying a one pound small wheel of Maytag blue cheese at the store.
Why are you buying this cheese? I want to make some good blue cheese burgers and I want some to sprinkle on my salad.
Why are you buying a pound for that? It’s cheaper per ounce.
Why would you let the eight or so ounces you won’t use go to waste? I, uh, wont?
Why not get feta for your salad because it’s cheaper and tastes more appropriate? Hmm… that seems reasonable.
Why not just get a four ounce piece of the blue cheese? …
And there you have it. Instead of buying the one pound chunk, I bought a four ounce chunk and some feta.
In each example, I came up with a result that either made me realize I didn’t really need the item at all or pushed me to another purchase that met my needs for a much lower cost.
The five whys push me there every time. The simple process of thinking through a purchase almost always leads me to a better solution that my first impulse points me to. This saves me money and prevents me from making impulsive, wasteful buys. Instead, I find I have plenty of money left for the things that really do matter in my life.
Continue reading Why Do You Buy? …
From The Simple Dollar.
The Simple Dollar Time Machine: November 7, 2009
Many newer readers of The Simple Dollar haven’t been exposed to the hundreds of great articles in the archives of the site, so this is a weekly series that highlights the five best posts from one year ago this week, two years ago this week, and three years ago this week. I call it … the Time Machine.
One Year Ago (November 1-7, 2008)
Lessons from that Old Coffee Can over the Kitchen Sink This post makes me feel good because it conjures up one of my few very vivid memories of my paternal grandmother, who passed away when I was seven. Almost all of my memories of her make me feel as though she loved me very much.
A Guide to Winterizing Your House Winterizing your home can be a very powerful way to cut down on your winter season expenditures.
Excuses, Excuses It’s incredibly easy to make excuses. It’s incredibly hard to look past them and realize that often you have only yourself to blame.
The Suitcase Test: The Things You Really Need For me, this was a really powerful thought experiment. I do it every once in a while and it gives me great insight into what’s important and what’s not important in my life.
How to Focus in a Heavily Distracting Time These are the tactics I use when I have to work near the holiday season. For example, it’s two days before Christmas, I’m trying to get some work done, and there’s nothing but chaos around me.
Two Years Ago (November 1-7, 2007)
Revisiting The Happiness Scale This is a pretty interesting revelation about the things that bring us happiness in a given day and how it relates to how we spend monney.
Review: Born to Buy While it doesn’t offer personal finance advice per se, I found that Born to Buy had more impact on my decisions as a parent than any book I’ve read so far (except for perhaps Mindset).
Should I Eliminate Financial Support For My Child After High School? This one really fired up some debate. I’m in favor of eliminating such support, by the way.
Should I Go Without Health Insurance For A Better Career Situation? I really hope that this question becomes a non-factor in the near future. The lack of opportunity to buy health insurance shouldn’t restrict anyone from making a good career choice.
How to Construct a Killer Resume, From Start to Finish The advice here still generally holds. I’ve long thought about making an updated version of this article with a real-world example in it.
Three Years Ago (November 1-7, 2006)
Turning Off The Financially Irresponsible Mindset This article includes five really simple and straightforward tactics for changing your financial mindset. I really like how some of the earliest articles on The Simple Dollar reveal nascent versions of many of the values I’ve come to rely on in my life.
Liquid Laptop Accident? 9 Steps To Save Your Laptop I still remember this horrible, gooey mess like it was yesterday.
14 Ways Your Computer Can Put Money In Your Pocket I believe a home computer can be one of the greatest resources for saving money in a home.
The Road To Financial Armageddon #5: Love and Marriage This is a partcularly painful entry for me to read now, because I see that our shared love didn’t have to be signified with a spending orgy.
The Road to Financial Armageddon #7: Here Comes Baby That baby wound up being the inspiration for our financial turnaround.
If you’d like to browse through more of the archives, visit the chronology, where all posts are listed in chronological order.
Nine Ways to Get More out of The Simple Dollar
This is kind of a FAQ for new readers and is posted each week along with the Time Machine. Here are nine great ways for new readers to dig deeper into The Simple Dollar.
1. Subscribe by email or RSS. Visiting The Simple Dollar’s website is great, but for many people, it’s more convenient to receive the articles in another form. It’s easy to join 60,000 other subscribers and get The Simple Dollar’s content by email or in your RSS feeder (if you’re unfamiliar with RSS, check out Google Reader.
2. Comment. Each article on The Simple Dollar has lively discussion. Just click on the green square in the upper right of each article on the website and join in!
3. Read my story of financial meltdown and recovery. The Simple Dollar isn’t based on what I’ve read in books or learned in school. I’ve made a lifetime of financial mistakes – The Simple Dollar is a record of what works for me during the process of getting my life on a better track.
4. Download my free 49 page e-book. Everything You Ever Really Needed to Know About Personal Finance On Just One Page is completely free. It summarizes all of the key lessons I’ve learned along the way about personal finance in one tidy package – in fact, all of the main principles can be found right on the cover.
5. Follow me on Twitter – or other social networks. I post tons of interesting articles, quotes, follow-up material, commentary, and other material on Twitter. Follow me! If you’re unfamiliar with Twitter, it’s essentially an open discussion forum for people to share ideas and thoughts with other like-minded folks – you just choose the people you want to listen to and their ideas and thoughts are all delivered to you on a single page.
I also participate on several other social networks. Feel free to check me out on del.icio.us (it’s where I collect links, from which I select the ones that appear in my weekly roundups), wakoopa (what software I use), GoodReads (what books I’m reading), Facebook, and FriendFeed (which aggregates everything). I also have an irregularly-updated personal site, TrentHamm.com.
6. Dig through “31 Days to Fix Your Finances.” 31 Days to Fix Your Finances is an article series that outlines how you can get a grip on your finances over the course of a month.
7. Send me your questions and suggestions. Send me an email and let me know what you’re thinking, what you’d like to see, and any questions you might have. I try to respond to as many emails as possible and I read them all. I may even use your question in a future article!
8. Become a “Friend of The Simple Dollar.” If you find the stuff on The Simple Dollar valuable and are willing to spend five minutes or so a month to help me out with small things, please consider signing up to be a “Friend of The Simple Dollar”.
9. Email a great article you find to a friend. Find an article that you think your friend would love? At the bottom of each article, you’ll find a link that says “Email this” – just click on that, type in your friend’s address, and send it right along to them!
Continue reading The Simple Dollar Time Machine: November 7, 2009 …
From The Simple Dollar.
Review: It’s Not About the Money
Every other Sunday, The Simple Dollar reviews a personal finance book.
I’ve always been interested in the areas where spirituality and personal finance meet. Blogs like ChristianPF and people like Dave Ramsey who heavily tie their faith into their personal finance message bring a completely different flavor to the table, one tinged with a sense that personal fiance success is a method of getting more deeply in touch with one’s spiritual side and that there is a faith-based calling to better money management.
It’s Not About the Money by Brent Kessel takes another angle on the tension between money management and spirituality. Kessel is a Zen buddhist who practices yoga and spends much of his time seeking spiritual enlightenment. His argument is that in order to find spiritual abundance, one must be free as possible from the shackles of personal finance, and that requires good money behaviors and money management.
Throughout the book, Kessel ties together the principles of Zen buddhism and the principles of personal finance, making a great case for how the two walk hand in hand towards a life of true abundance.
Let’s dig in.
You Will Never Have Enough
Our nature, as humans, is to want more. We’re always looking ahead to the next journey, the next goal, the next desire. We always have a concern of some kind in our hearts and we’re always headed towards something. You’ll never have enough.
That seems to run contrary to most personal finance advice, which encourages you to figure out what “enough” is in your own life. Yet, on many levels, I think Kessel is quite accurate with this assessment. There’s always some new journey to take on, some hill to climb.
Our real challenge in life is not eliminating that desire for more, but figuring out what goals we have. What are we really striving for? What provides us with the most thorough joy? Those are the directions we should be striving for – it’s fine to strive for more in an area where you’re thoroughly and deeply passionate and engaged.
The Unconscious Wins Every Time
We all have a story about ourselves in our mind that determines what we think we deserve. That sense of what we think we deserve drives how we manage our money. If we believe we truly deserve more than we have, we tend to spend more to acquire it. Advertising and social cues often prey on that knowledge, doing everything they can to make us believe that we deserve more than we have and this product or this upgrade is what we deserve.
It’s challenging to rewrite that story. It requires a lot of careful introspection and thought about who we really are and what we want from life. From this perspective, it seems clear to me that part of the impetus for our financial turnaround was my impetus to change my story from “successful young professional” to “good parent.” That alteration shifted my goals and priorities significantly and enabled me to make some serious changes to how we spent money.
Throughout the middle third of the book, Kessel looks at eight different financial archetypes. These archetypes describe the positive and negative traits of a particular mindset. Kessel notes, of course, that every person has some combination of these archetypes, and some mix better for financial success than others. Whatever the story is we’ve written for ourselves in life, it requires that we adopt some combination of these archetypes to make that story happen.
The Guardian
The first archetype is the guardian. Kessel identifies the guardian as being alert and watchful, wishing to protect something. The guardian is often full of worry and anxiety, but is prudent and always aware of threats to whatever he or she is guarding.
I have a lot of the guardian within me. At one time, I zealously guarded my career. Now, I’m more focused on guarding my children – I now see my career as part of guarding my children. That shift in perspective of how I view my career was a big part of why I made the leap to being a full time writer. I made less money, but my time was much, much more flexible than before, which made it easier for me to be a better guardian for my children.
The Pleasure Seeker
The pleasure seeker puts a huge priority on pleasure in the here and now. They want to have fun and enjoy life now and not worry much at all about tomorrow. Pleasure seekers tend to be hedonistic and impulsive, but they also tend to have a high level of enjoyment of what they’re doing.
Over time, my sense of pleasure seeking has gone down a bit. I’m no longer as concerned with maximizing my enjoyment in the here and now. I’m much happier engaging in things that fulfill my other roles in life. For example, I used to go out almost every night and have fun with friends. Now, I rarely do that – I often have much more fun at home with the simpler pleasures in life.
The Idealist
The idealist believes heavily in creativity, compassion, social justice, and spiritual growth. They tend to believe that their efforts really can change the world – and for the better. Unfortunately, because of their idealism and the crooked nature of the world, idealists tend to often be very wary of others, particularly those they see as obstacles to a better world. Idealists tend to have a difficult time with trust and are often averse to the suggestions of others. However, they’re also often compassionate and have grand visions.
Over time, my idealism has gone up. After all, I went from working as a cog in a huge organization involved with projects that tangentially were helpful to the world to working solo on a website with the goal of helping others with their money problems. I believe that what I do does help a lot of people, but I sometimes fall into that “no compromise” trap that idealists tend to fall into.
The Saver
A saver is always looking for security and abundance. They believe this security and abundance can be found through the careful accumulation of financial assets. Quite often, this means that they forsake spending money at all in order to save more and more. They’re hoarders and penny-pinchers. However, they often are self-sufficient and they usually have more than enough to ride through any crises, which makes them very stable.
I’ve never been a saver unless I can clearly see how it matches a goal of mine. Right now, the heavy guardian in me forces me to see the benefit in saving, so my tendency to be a saver has definitely grown over the past few years.
The Star
A star’s self-worth is rooted in what others think of him or her. They’ll save if it’ll make others think more of them. They’ll spend if it’ll make others think more of them. They’ll give money away if it’ll improve how others think of them. A star strives to be seen as cool or hip or classy, and that often translates into pretentiousness and self-importance. At the same time, the star is often a natural leader – they often ooze leadership skills – and they often do a great job of setting the tone or style of an event.
I’m about as far away from a star as a person can possibly get. I really don’t care much at all what others think of me. I try to get along with others, but I don’t have any need to be a trendsetter or to be seen as cool. I’m just me.
The Innocent
The innocent tends to avoid thinking about money at all. Instead, they rely on good luck and the kindness of others. They just simply believe that over the long run, things will work out for the best. Innocents often are helpless and they tend to avoid financial situations, but they’re often very adaptable to whatever situation comes their way and they have a great deal of hope for the future.
I’m also not an innocent. I’ve never believed that things will just “work out” in the future.
The Caretaker
The caretaker gives and lends money to others. Often, if there’s a person in your family that’s always lending family members money, that person is a caretaker. They’ve got tons of compassion for others and lots of generosity. Unfortunately, they’re also enablers, meaning that their presence often enables the worst behavior in others.
I used to be more of a caretaker, but it was often in conflict with being a guardian, plus I often felt like I was being an enabler. Thus, I’ve pushed this mindset more and more to the background.
The Empire Builder
The empire builder is someone who thrives on power. They want to create something of enduring value, something that will last for a long time, and they’re quite happy to step on others to get there. They want power. Empire builders are usually greedy and seek to dominate others, but they’re also very innovative and decisive.
This is another mindset that I rarely see in myself. I don’t feel the need to build an empire of any kind.
The Middle Way with Money
Obviously, there are good and bad aspects of each of these money archetypes. They each exhibit both bad traits and good traits, and people often mix and match them within themselves.
Some mix poorly. An empire builder and a pleasure seeker together in the same person will throw a knife in your back and twist it without ever thinking twice, but they enjoy life from their perspective and they’ve often got power. These people can be very difficult for others to trust.
On the other hand, a guardian and a caretaker tend to mix well, as they seek to protect things but often choose to do it with prudence. People that others think of as being “steady as a rock” often mix a guardian and caretaker mindset inside themselves.
What’s the best thing you can do? Work to cultivate each of the mindsets a little, so that the good traits can be utilized and the bad traits can be counterbalanced by the good traits of other mindsets.
The Conscious Investor
I felt that this was easily the weakest chapter of the book. Kessel argues here that a successful investor utilizes all eight of the mindsets in various ways to improve their holdings and he makes a good case for each one as a tool to an investor.
The only problem is that the overall investing strategy talked about here is all over the place. It involves simultaneous long term investing and very short term market timing. It involves some “hands off” investing, but also talks about technical analysis.
Rather than presenting a cohesive investing plan, Kessel mostly just describes how the various archetypes can actually be useful for a certain type of investing. The only problem is that the mentalities that succeed at short term investing, if left alone, would result in disaster, as prudence isn’t involved.
As always, the best solution is a good mix of archetypes – that’s true in investing and in life.
The Yoga of Money
Kessel closes the book with a look at money’s role in a broader and more complete life. After all, money is merely a tool to allow you to do what you want to do.
In a nutshell, Kessel argues that no matter what your desires are, you’re served by having money in the bank because your options are much wider open. Of course, for some archetypes (like the pleasure seeker), it’s harder than it is with other archetypes. That’s why a balance is useful – it allows you to find happiness now but also seek happiness later.
Good money management allows you to have your cake and eat it, too.
Is It’s Not About the Money Worth Reading?
It’s Not About the Money is a very powerful book to read if you’re interested in the spiritual side of money, no matter what your faith. Kessel does a very powerful job of connecting the spiritual to the financial through the precepts of Zen buddhism – there’s a lot of thought-provoking material here, the kind of stuff that will leave you thinking deeply about what your role in the world is.
This isn’t a particularly strong book in terms of specific money advice. Instead, it works in the sense that it helps you get your bearings in terms of what you actually want out of life and how it relates to your money. If you’re looking for specific advice and tactics, look elsewhere.
It’s Not About the Money succeeds in making you think. That’s what the best books do.
Continue reading Review: It’s Not About the Money …
From The Simple Dollar.
Review: It’s Not About the Money
Every other Sunday, The Simple Dollar reviews a personal finance book.
I’ve always been interested in the areas where spirituality and personal finance meet. Blogs like ChristianPF and people like Dave Ramsey who heavily tie their faith into their personal finance message bring a completely different flavor to the table, one tinged with a sense that personal fiance success is a method of getting more deeply in touch with one’s spiritual side and that there is a faith-based calling to better money management.
It’s Not About the Money by Brent Kessel takes another angle on the tension between money management and spirituality. Kessel is a Zen buddhist who practices yoga and spends much of his time seeking spiritual enlightenment. His argument is that in order to find spiritual abundance, one must be free as possible from the shackles of personal finance, and that requires good money behaviors and money management.
Throughout the book, Kessel ties together the principles of Zen buddhism and the principles of personal finance, making a great case for how the two walk hand in hand towards a life of true abundance.
Let’s dig in.
You Will Never Have Enough
Our nature, as humans, is to want more. We’re always looking ahead to the next journey, the next goal, the next desire. We always have a concern of some kind in our hearts and we’re always headed towards something. You’ll never have enough.
That seems to run contrary to most personal finance advice, which encourages you to figure out what “enough” is in your own life. Yet, on many levels, I think Kessel is quite accurate with this assessment. There’s always some new journey to take on, some hill to climb.
Our real challenge in life is not eliminating that desire for more, but figuring out what goals we have. What are we really striving for? What provides us with the most thorough joy? Those are the directions we should be striving for – it’s fine to strive for more in an area where you’re thoroughly and deeply passionate and engaged.
The Unconscious Wins Every Time
We all have a story about ourselves in our mind that determines what we think we deserve. That sense of what we think we deserve drives how we manage our money. If we believe we truly deserve more than we have, we tend to spend more to acquire it. Advertising and social cues often prey on that knowledge, doing everything they can to make us believe that we deserve more than we have and this product or this upgrade is what we deserve.
It’s challenging to rewrite that story. It requires a lot of careful introspection and thought about who we really are and what we want from life. From this perspective, it seems clear to me that part of the impetus for our financial turnaround was my impetus to change my story from “successful young professional” to “good parent.” That alteration shifted my goals and priorities significantly and enabled me to make some serious changes to how we spent money.
Throughout the middle third of the book, Kessel looks at eight different financial archetypes. These archetypes describe the positive and negative traits of a particular mindset. Kessel notes, of course, that every person has some combination of these archetypes, and some mix better for financial success than others. Whatever the story is we’ve written for ourselves in life, it requires that we adopt some combination of these archetypes to make that story happen.
The Guardian
The first archetype is the guardian. Kessel identifies the guardian as being alert and watchful, wishing to protect something. The guardian is often full of worry and anxiety, but is prudent and always aware of threats to whatever he or she is guarding.
I have a lot of the guardian within me. At one time, I zealously guarded my career. Now, I’m more focused on guarding my children – I now see my career as part of guarding my children. That shift in perspective of how I view my career was a big part of why I made the leap to being a full time writer. I made less money, but my time was much, much more flexible than before, which made it easier for me to be a better guardian for my children.
The Pleasure Seeker
The pleasure seeker puts a huge priority on pleasure in the here and now. They want to have fun and enjoy life now and not worry much at all about tomorrow. Pleasure seekers tend to be hedonistic and impulsive, but they also tend to have a high level of enjoyment of what they’re doing.
Over time, my sense of pleasure seeking has gone down a bit. I’m no longer as concerned with maximizing my enjoyment in the here and now. I’m much happier engaging in things that fulfill my other roles in life. For example, I used to go out almost every night and have fun with friends. Now, I rarely do that – I often have much more fun at home with the simpler pleasures in life.
The Idealist
The idealist believes heavily in creativity, compassion, social justice, and spiritual growth. They tend to believe that their efforts really can change the world – and for the better. Unfortunately, because of their idealism and the crooked nature of the world, idealists tend to often be very wary of others, particularly those they see as obstacles to a better world. Idealists tend to have a difficult time with trust and are often averse to the suggestions of others. However, they’re also often compassionate and have grand visions.
Over time, my idealism has gone up. After all, I went from working as a cog in a huge organization involved with projects that tangentially were helpful to the world to working solo on a website with the goal of helping others with their money problems. I believe that what I do does help a lot of people, but I sometimes fall into that “no compromise” trap that idealists tend to fall into.
The Saver
A saver is always looking for security and abundance. They believe this security and abundance can be found through the careful accumulation of financial assets. Quite often, this means that they forsake spending money at all in order to save more and more. They’re hoarders and penny-pinchers. However, they often are self-sufficient and they usually have more than enough to ride through any crises, which makes them very stable.
I’ve never been a saver unless I can clearly see how it matches a goal of mine. Right now, the heavy guardian in me forces me to see the benefit in saving, so my tendency to be a saver has definitely grown over the past few years.
The Star
A star’s self-worth is rooted in what others think of him or her. They’ll save if it’ll make others think more of them. They’ll spend if it’ll make others think more of them. They’ll give money away if it’ll improve how others think of them. A star strives to be seen as cool or hip or classy, and that often translates into pretentiousness and self-importance. At the same time, the star is often a natural leader – they often ooze leadership skills – and they often do a great job of setting the tone or style of an event.
I’m about as far away from a star as a person can possibly get. I really don’t care much at all what others think of me. I try to get along with others, but I don’t have any need to be a trendsetter or to be seen as cool. I’m just me.
The Innocent
The innocent tends to avoid thinking about money at all. Instead, they rely on good luck and the kindness of others. They just simply believe that over the long run, things will work out for the best. Innocents often are helpless and they tend to avoid financial situations, but they’re often very adaptable to whatever situation comes their way and they have a great deal of hope for the future.
I’m also not an innocent. I’ve never believed that things will just “work out” in the future.
The Caretaker
The caretaker gives and lends money to others. Often, if there’s a person in your family that’s always lending family members money, that person is a caretaker. They’ve got tons of compassion for others and lots of generosity. Unfortunately, they’re also enablers, meaning that their presence often enables the worst behavior in others.
I used to be more of a caretaker, but it was often in conflict with being a guardian, plus I often felt like I was being an enabler. Thus, I’ve pushed this mindset more and more to the background.
The Empire Builder
The empire builder is someone who thrives on power. They want to create something of enduring value, something that will last for a long time, and they’re quite happy to step on others to get there. They want power. Empire builders are usually greedy and seek to dominate others, but they’re also very innovative and decisive.
This is another mindset that I rarely see in myself. I don’t feel the need to build an empire of any kind.
The Middle Way with Money
Obviously, there are good and bad aspects of each of these money archetypes. They each exhibit both bad traits and good traits, and people often mix and match them within themselves.
Some mix poorly. An empire builder and a pleasure seeker together in the same person will throw a knife in your back and twist it without ever thinking twice, but they enjoy life from their perspective and they’ve often got power. These people can be very difficult for others to trust.
On the other hand, a guardian and a caretaker tend to mix well, as they seek to protect things but often choose to do it with prudence. People that others think of as being “steady as a rock” often mix a guardian and caretaker mindset inside themselves.
What’s the best thing you can do? Work to cultivate each of the mindsets a little, so that the good traits can be utilized and the bad traits can be counterbalanced by the good traits of other mindsets.
The Conscious Investor
I felt that this was easily the weakest chapter of the book. Kessel argues here that a successful investor utilizes all eight of the mindsets in various ways to improve their holdings and he makes a good case for each one as a tool to an investor.
The only problem is that the overall investing strategy talked about here is all over the place. It involves simultaneous long term investing and very short term market timing. It involves some “hands off” investing, but also talks about technical analysis.
Rather than presenting a cohesive investing plan, Kessel mostly just describes how the various archetypes can actually be useful for a certain type of investing. The only problem is that the mentalities that succeed at short term investing, if left alone, would result in disaster, as prudence isn’t involved.
As always, the best solution is a good mix of archetypes – that’s true in investing and in life.
The Yoga of Money
Kessel closes the book with a look at money’s role in a broader and more complete life. After all, money is merely a tool to allow you to do what you want to do.
In a nutshell, Kessel argues that no matter what your desires are, you’re served by having money in the bank because your options are much wider open. Of course, for some archetypes (like the pleasure seeker), it’s harder than it is with other archetypes. That’s why a balance is useful – it allows you to find happiness now but also seek happiness later.
Good money management allows you to have your cake and eat it, too.
Is It’s Not About the Money Worth Reading?
It’s Not About the Money is a very powerful book to read if you’re interested in the spiritual side of money, no matter what your faith. Kessel does a very powerful job of connecting the spiritual to the financial through the precepts of Zen buddhism – there’s a lot of thought-provoking material here, the kind of stuff that will leave you thinking deeply about what your role in the world is.
This isn’t a particularly strong book in terms of specific money advice. Instead, it works in the sense that it helps you get your bearings in terms of what you actually want out of life and how it relates to your money. If you’re looking for specific advice and tactics, look elsewhere.
It’s Not About the Money succeeds in making you think. That’s what the best books do.
Continue reading Review: It’s Not About the Money …
From The Simple Dollar.
Review: It’s Not About the Money
Every other Sunday, The Simple Dollar reviews a personal finance book.
I’ve always been interested in the areas where spirituality and personal finance meet. Blogs like ChristianPF and people like Dave Ramsey who heavily tie their faith into their personal finance message bring a completely different flavor to the table, one tinged with a sense that personal fiance success is a method of getting more deeply in touch with one’s spiritual side and that there is a faith-based calling to better money management.
It’s Not About the Money by Brent Kessel takes another angle on the tension between money management and spirituality. Kessel is a Zen buddhist who practices yoga and spends much of his time seeking spiritual enlightenment. His argument is that in order to find spiritual abundance, one must be free as possible from the shackles of personal finance, and that requires good money behaviors and money management.
Throughout the book, Kessel ties together the principles of Zen buddhism and the principles of personal finance, making a great case for how the two walk hand in hand towards a life of true abundance.
Let’s dig in.
You Will Never Have Enough
Our nature, as humans, is to want more. We’re always looking ahead to the next journey, the next goal, the next desire. We always have a concern of some kind in our hearts and we’re always headed towards something. You’ll never have enough.
That seems to run contrary to most personal finance advice, which encourages you to figure out what “enough” is in your own life. Yet, on many levels, I think Kessel is quite accurate with this assessment. There’s always some new journey to take on, some hill to climb.
Our real challenge in life is not eliminating that desire for more, but figuring out what goals we have. What are we really striving for? What provides us with the most thorough joy? Those are the directions we should be striving for – it’s fine to strive for more in an area where you’re thoroughly and deeply passionate and engaged.
The Unconscious Wins Every Time
We all have a story about ourselves in our mind that determines what we think we deserve. That sense of what we think we deserve drives how we manage our money. If we believe we truly deserve more than we have, we tend to spend more to acquire it. Advertising and social cues often prey on that knowledge, doing everything they can to make us believe that we deserve more than we have and this product or this upgrade is what we deserve.
It’s challenging to rewrite that story. It requires a lot of careful introspection and thought about who we really are and what we want from life. From this perspective, it seems clear to me that part of the impetus for our financial turnaround was my impetus to change my story from “successful young professional” to “good parent.” That alteration shifted my goals and priorities significantly and enabled me to make some serious changes to how we spent money.
Throughout the middle third of the book, Kessel looks at eight different financial archetypes. These archetypes describe the positive and negative traits of a particular mindset. Kessel notes, of course, that every person has some combination of these archetypes, and some mix better for financial success than others. Whatever the story is we’ve written for ourselves in life, it requires that we adopt some combination of these archetypes to make that story happen.
The Guardian
The first archetype is the guardian. Kessel identifies the guardian as being alert and watchful, wishing to protect something. The guardian is often full of worry and anxiety, but is prudent and always aware of threats to whatever he or she is guarding.
I have a lot of the guardian within me. At one time, I zealously guarded my career. Now, I’m more focused on guarding my children – I now see my career as part of guarding my children. That shift in perspective of how I view my career was a big part of why I made the leap to being a full time writer. I made less money, but my time was much, much more flexible than before, which made it easier for me to be a better guardian for my children.
The Pleasure Seeker
The pleasure seeker puts a huge priority on pleasure in the here and now. They want to have fun and enjoy life now and not worry much at all about tomorrow. Pleasure seekers tend to be hedonistic and impulsive, but they also tend to have a high level of enjoyment of what they’re doing.
Over time, my sense of pleasure seeking has gone down a bit. I’m no longer as concerned with maximizing my enjoyment in the here and now. I’m much happier engaging in things that fulfill my other roles in life. For example, I used to go out almost every night and have fun with friends. Now, I rarely do that – I often have much more fun at home with the simpler pleasures in life.
The Idealist
The idealist believes heavily in creativity, compassion, social justice, and spiritual growth. They tend to believe that their efforts really can change the world – and for the better. Unfortunately, because of their idealism and the crooked nature of the world, idealists tend to often be very wary of others, particularly those they see as obstacles to a better world. Idealists tend to have a difficult time with trust and are often averse to the suggestions of others. However, they’re also often compassionate and have grand visions.
Over time, my idealism has gone up. After all, I went from working as a cog in a huge organization involved with projects that tangentially were helpful to the world to working solo on a website with the goal of helping others with their money problems. I believe that what I do does help a lot of people, but I sometimes fall into that “no compromise” trap that idealists tend to fall into.
The Saver
A saver is always looking for security and abundance. They believe this security and abundance can be found through the careful accumulation of financial assets. Quite often, this means that they forsake spending money at all in order to save more and more. They’re hoarders and penny-pinchers. However, they often are self-sufficient and they usually have more than enough to ride through any crises, which makes them very stable.
I’ve never been a saver unless I can clearly see how it matches a goal of mine. Right now, the heavy guardian in me forces me to see the benefit in saving, so my tendency to be a saver has definitely grown over the past few years.
The Star
A star’s self-worth is rooted in what others think of him or her. They’ll save if it’ll make others think more of them. They’ll spend if it’ll make others think more of them. They’ll give money away if it’ll improve how others think of them. A star strives to be seen as cool or hip or classy, and that often translates into pretentiousness and self-importance. At the same time, the star is often a natural leader – they often ooze leadership skills – and they often do a great job of setting the tone or style of an event.
I’m about as far away from a star as a person can possibly get. I really don’t care much at all what others think of me. I try to get along with others, but I don’t have any need to be a trendsetter or to be seen as cool. I’m just me.
The Innocent
The innocent tends to avoid thinking about money at all. Instead, they rely on good luck and the kindness of others. They just simply believe that over the long run, things will work out for the best. Innocents often are helpless and they tend to avoid financial situations, but they’re often very adaptable to whatever situation comes their way and they have a great deal of hope for the future.
I’m also not an innocent. I’ve never believed that things will just “work out” in the future.
The Caretaker
The caretaker gives and lends money to others. Often, if there’s a person in your family that’s always lending family members money, that person is a caretaker. They’ve got tons of compassion for others and lots of generosity. Unfortunately, they’re also enablers, meaning that their presence often enables the worst behavior in others.
I used to be more of a caretaker, but it was often in conflict with being a guardian, plus I often felt like I was being an enabler. Thus, I’ve pushed this mindset more and more to the background.
The Empire Builder
The empire builder is someone who thrives on power. They want to create something of enduring value, something that will last for a long time, and they’re quite happy to step on others to get there. They want power. Empire builders are usually greedy and seek to dominate others, but they’re also very innovative and decisive.
This is another mindset that I rarely see in myself. I don’t feel the need to build an empire of any kind.
The Middle Way with Money
Obviously, there are good and bad aspects of each of these money archetypes. They each exhibit both bad traits and good traits, and people often mix and match them within themselves.
Some mix poorly. An empire builder and a pleasure seeker together in the same person will throw a knife in your back and twist it without ever thinking twice, but they enjoy life from their perspective and they’ve often got power. These people can be very difficult for others to trust.
On the other hand, a guardian and a caretaker tend to mix well, as they seek to protect things but often choose to do it with prudence. People that others think of as being “steady as a rock” often mix a guardian and caretaker mindset inside themselves.
What’s the best thing you can do? Work to cultivate each of the mindsets a little, so that the good traits can be utilized and the bad traits can be counterbalanced by the good traits of other mindsets.
The Conscious Investor
I felt that this was easily the weakest chapter of the book. Kessel argues here that a successful investor utilizes all eight of the mindsets in various ways to improve their holdings and he makes a good case for each one as a tool to an investor.
The only problem is that the overall investing strategy talked about here is all over the place. It involves simultaneous long term investing and very short term market timing. It involves some “hands off” investing, but also talks about technical analysis.
Rather than presenting a cohesive investing plan, Kessel mostly just describes how the various archetypes can actually be useful for a certain type of investing. The only problem is that the mentalities that succeed at short term investing, if left alone, would result in disaster, as prudence isn’t involved.
As always, the best solution is a good mix of archetypes – that’s true in investing and in life.
The Yoga of Money
Kessel closes the book with a look at money’s role in a broader and more complete life. After all, money is merely a tool to allow you to do what you want to do.
In a nutshell, Kessel argues that no matter what your desires are, you’re served by having money in the bank because your options are much wider open. Of course, for some archetypes (like the pleasure seeker), it’s harder than it is with other archetypes. That’s why a balance is useful – it allows you to find happiness now but also seek happiness later.
Good money management allows you to have your cake and eat it, too.
Is It’s Not About the Money Worth Reading?
It’s Not About the Money is a very powerful book to read if you’re interested in the spiritual side of money, no matter what your faith. Kessel does a very powerful job of connecting the spiritual to the financial through the precepts of Zen buddhism – there’s a lot of thought-provoking material here, the kind of stuff that will leave you thinking deeply about what your role in the world is.
This isn’t a particularly strong book in terms of specific money advice. Instead, it works in the sense that it helps you get your bearings in terms of what you actually want out of life and how it relates to your money. If you’re looking for specific advice and tactics, look elsewhere.
It’s Not About the Money succeeds in making you think. That’s what the best books do.
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From The Simple Dollar.