Don’t Let Lazy Take Over Your Financial Life

Most of us are creatures of habit.

Changing something once it becomes a habit can be a bit of a pain.

Unfortunately, those habits can cost us money, too.

The Cable Modem Rental Fee

We had an old cable modem when we signed up for our cable, internet and phone package.

We found out my old modem would not work with the new company’s system when they came to hook up our services. I wasn’t too surprised as the modem I had was quite old but it was a bummer still.

The company let me rent a cable modem from them for $8 a month. At the time I vowed to buy myself a modem so I didn’t have to pay this rental fee. Sadly, I got lazy and never bought the modem.

I saw the modem rental fee on every bill. It isn’t like I forgot about the monthly fee because I actually read all of my bills. Over a year later I was still using the rental modem. The price has even gone up 25% since I first started renting it.

One day, I finally researched cable modems on Amazon. I called the cable company to ensure the modem I was considering buying would work with their system and that it wasn’t a technology that was going to become obsolete soon.

The modem was $80 but it sure beats paying $10 a month. The modem will pay for itself in just 8 months. If I hadn’t been lazy when we had the service hooked up the modem would have already paid for itself.

It Could Have Been Worse

The cable modem fee, while annoying, wasn’t a huge monthly expenditure. It did provide a needed service because we didn’t have a modem we could have used. What really gets me are the bigger fees or avoidable expenses that people don’t discontinue because they are lazy.

Remember that service you signed up for a year ago that you never use anymore? Why don’t you cancel it? You know it is because you’re lazy or you think you’re going to use it but never will.

Just cancel it and save the money! When you’re ready to start back up again you can sign up again if you wish.

The other one that really gets me are the fees or avoidable expenses that provide absolutely no value.

Have you ever had a bank account that originally had no fees and then decided to add some crazy fee that adds no value for absolutely no reason at all?

Yes, it would be a hassle to switch banks but I would never support a company that does this to their customers. Get out before it gets worse.

Banks Are Some of the Worst Offenders

My wife had an account with Wachovia many years ago. Wachovia was decent to her and she wasn’t ever charged any fees. Then Wells Fargo came along and bought Wachovia. It was a painful transition that resulted in eventually charging her fees.

She had already moved most of her money and banking to a fee free online bank but still kept the Wells Fargo account open for access to a local branch.

After Wells Fargo added these minimum balance fees she closed her account and opened one with a local credit union that doesn’t charge any crazy fees just for having an account.

Has there been anything in your financial life you’ve gotten lazy about? Come on… be honest… what is it? Whatever it is, let me know in the comments below!

Why It’s Nice To Have Some Buffer Room

It is nice to have buffer room in your budget or savings account.

Sometimes things pop up or life gets busy.

Other times there are special or once in a lifetime occasions.

There could even be a one time sale that is too good to pass up.

If you don’t have that buffer, things probably won’t go over very smoothly.

A Buffer Helps Relieve Stress

If you have no buffer in the bank or your monthly budget, the lack of money can cause a ton of stress when something unexpected or bad pops up.

Whether it is a flat tire or a last minute weekend trip to visit a sick relative, if you have no buffer your stress level will be through the roof even more than it would be normally in a bad situation.

Luckily, even a small cash buffer could allow you to avoid the stress of trying to round up some money at the last minute.

You won’t have to go beg friends or family to lend you money. You won’t have to turn to your credit cards either, which will likely put you in debt at a high interest rate.

A Buffer Allows You To Take Advantage Of Opportunities

The same buffer that will allow you to get through the bad times can help you out when a can’t miss opportunity throws itself at you. Your neighbor might have an awesome sofa that you’ve always wanted but it was way out of your price range.

If you find out your neighbor is moving to another country and is selling all of their furniture for rock bottom prices, you’ll wish you had that buffer. It’d be a perfect time to pick up that awesome couch at a reasonable price, but if you don’t have the money you’ll miss out.

A Buffer Helps You Enjoy The Moment

While some people think saving sacrifices living in the now, it can be argued that it actually allows you to be able to live in the moment more than those with no savings.

You may have to sacrifice a bit in the present when nothing special is going on, but building that buffer will allow you to enjoy those once in a lifetime moments to the fullest.

Whether you’re on a one time trip to an exotic location, graduating from college or getting married, having that buffer will allow you to be able to think a little bit less about money when an opportunity for a splurge pops up.

As long as you know your limits, you can spend within reason without having to worry about how you’re going to have to pay off a small splurge on an already planned for event.

It’d be a major bummer to be in Paris, but not have the money to go up the Eiffel Tower like you have been dreaming about for your whole life.

It’d suck to be at your wedding and be worrying about how you’re going to pay off the little details you’ve dreamed about.  Save your money today to have that buffer so that you can use it when the time is right. I’d hate for you to miss out on that once in a lifetime thing.

What has your buffer allowed you to do that you would have otherwise missed out on? Was it worth savings a little now to be able to afford it?

One Simple Trick To Push Forward When You’re Ready To Quit

Do you have problems completing tasks?

Have you been having trouble sticking to your budget?

Have you set goals before and never even gotten started?

Want a way to fix these problems?

Does this sound like a cheesy infomercial so far? Hopefully you said YES to the last one!

If you haven’t ever had the problems above then you are probably very driven, but not everyone can say the same thing. If you fall into the latter group keep reading.

Deciding you actually want to complete whatever it is that you have been putting off is the first step, but now that you’ve done that what is next?

Get An Accountability Partner

What is an accountability partner? They are someone (or something) that will help to keep you accountable for reaching your goals, completing your tasks, sticking to your budget or anything else you want to do.

The idea is by telling someone what you want to accomplish you will feel like you owe it to that person (in addition to just yourself) to finish the job.

When you do complete your goal, you get to tell them about your success. Basically, in addition to the great feeling of accomplishing your task you also get the chance to share that feeling with someone else!

I don’t know about you, but one of the things I hate the most is letting someone down. When you told your accountability partner about your goal, that means someone else is interested in you completing your goal.

If you don’t complete your goal, you’d likely feel like you’ve let them down if you didn’t finish.

How To Find An Accountability Partner

So, now that you know about what an accountability partner is you may be asking “How can I find one?”. Chances are they could be sitting in the same room as you right now. A good accountability partner will be someone who you interact with often.

It helps if they are supportive of what they will be holding you accountable for and you are comfortable talking to them about the goal you are trying to reach. So who could this person be? Here are some ideas:

  • Your best friend
  • Your spouse, significant other, boyfriend/girlfriend, etc.
  • Your parents
  • Your kids
  • Your online blog community (thanks guys!)

Be careful who you pick and which of your goals you ask them to help you with. It probably wouldn’t be a great idea to have your coworker or boss be your accountability partner if you really want to find a new job.

Think you have an idea for who you would like to be your accountability partner? Great! Go talk to them as soon as you can.

Ask if they would mind helping you with something and explain to them that you would like an accountability partner for whatever goal you are trying to accomplish.

If they agree to help you, figure out how often you should update them or how often they should ask  you for an update. The only thing left now is to go get started. What are you waiting for?

If you know someone who is about to embark on the process of completing a difficult goal, do them a favor and share this post with them. It only takes a quick second to email this article, and it could change that person’s life!

Do you have an accountability partner? If so, how has it worked out for you? Let me know in the comments!

This is an updated article. It was originally published on May 4th, 2012.

You Will Never Get Rich By Just Saving – Do This Instead

I’m here to tell you that you’ll never get rich by just saving money.

It’s a simple fact of life.

Unless you’re a ultra high earner, saving alone won’t make you rich.

However, people tell you every day that you need to save money. They have to be on to something.

How can these people be financially successful if they aren’t saving money?

The answer is simple and requires a small distinction.

That small distinction is what makes the difference from someone just getting by and someone who has promise to accumulate wealth. Would you rather just get by? Or do you want to accumulate wealth?

The key difference is what you do with the money you save.

Just simply saving money, whether you put it under a mattress, bury it in a can in your backyard or put it in a saving account earning a measly 1% interest, will never allow you to grow meaningful wealth if you start from nothing.

Instead, you must invest your savings. That is the key.

When To Invest

Investing makes many people uncomfortable, so not everyone invests. How can you bypass the uncertainty and lack of comfort with investing?

First, you need to set up a stable base in your emergency fund. You can start investing before your emergency fund is full, but it should be full before you put all of your extra money every month into investments.

This base should give you the comfort you need to take that next step to start building wealth by investing.

After you’ve built up a suitable emergency fund for your family, it’s time to start investing full speed ahead. Putting more money into liquid savings beyond an emergency fund is a wealth destroyer, unless you’re saving for a specific short term goal.

What To Invest

Now that you have your emergency fund, or at least have it started, what money do you invest? Great question!

You need to be investing any and all money you don’t have any other purpose for. If your money just sitting around in a liquid form, such as cash or your savings account, then it isn’t working for you.

It’s that simple! Don’t let fear and uncertainty destroy your future wealth potential. Start investing that idle money today. But what should you invest in?

What To Invest In

What to invest in is the tricky part that most people get stumped on. However, with a little bit of work, and I mean VERY little, you can come up with a strong investing plan for yourself.

The first thing you need to do is determine your risk tolerance. Next, come up with a set of future goals for your money. After that, just invest your money according to your risk tolerance and future goals.

Determining Your Risk Tolerance

Risk tolerance is a fancy way of saying “When will you freak out and sell all of your investments in a downturn?”.

Can you only accept moderate declines before you start screaming at your financial adviser to sell everything? Or do you have a mindset that no matter how low stocks go they’ll eventually recover without a doubt?

Figure out how comfortable you are with risk and that will help you determine what investment options you have available to you.

If your risk tolerance is low, you should invest in safer, less volatile assets and if your risk tolerance is crazy high, consider investing in riskier, more volatile assets.

Generally, risk and reward are correlated with investments so in theory higher risk equates to higher potential returns. Just keep in mind, depending on what your goal is, you may have to invest crazy amounts of money with a low risk tolerance to reach your goals.

Setting Goals

Setting financial goals is key in order to determine how your money needs to work for you.

The two factors that are most important, in terms of investing, is the time until the goal needs to be complete and how important it is that the money is available for the goal on that date.

While you may be able to put off buying a new car for a year or two because it is a want, nothing is going to change the fact that your child will graduate from high school at 18 and college bills will be due shortly after.

The further away the goal is, the more risk you can take with your investments since you’ll have more time to recover from potential losses.

The more flexible your goal timeline is will allow to you to take more risk as well. However, if your time frame is short and you have to have the money, you’ll generally want to stay away from riskier investments.

Invest According To Your Risk Tolerance And Goals

Based on what you’ve learned about your risk tolerance and your goals, pick an investment that matches your constraints.

In general, the less time and less flexible your goal timeline is, the more conservative your investments should be regardless of your risk tolerance.

The longer and more flexible your timeline is, the more risk you can take, as long as it doesn’t exceed the your overall risk tolerance.

All you have to do now is do a little bit of research to find an appropriate investment and start investing your money today.

What’s holding you back from investing your money rather than just saving it?

Please keep in mind, I am not an investing professional and the above is not advice for any specific individual situation. Please consult with an appropriate investment adviser before making any investing decisions to assess your personal investment plan.

3 Keys To Prepare Now – Take Advantage In The Next Recession

Believe it or not, the economy goes through the same economic cycles over and over again.

The economy will go into a recession or a depression and bottom out.

Next, the economy will start to grow, even if we don’t realize the recession is over.

Eventually, growth will pick up and we’ll notice we’re in a recovery.

One day we’ll hit the top, which may be a new economic high. The problem is, we don’t know it is the top at the time and a recession will follow it. This is a pattern that has been going on for long time.

However, people are always shocked when the next recession hits. Instead of being shocked, you can prepare for the next recession and position yourself to take advantage when others are struggling.

How To Prepare For The Next Economic Downturn

Preparing for an economic downturn is easier than you’d think. Why? Because the steps you follow to prepare for an economic downturn are the same basic financial rules you should be following anyway!

Have An Emergency Fund

An emergency fund is an essential piece to preparing for the next economic downturn. Your emergency fund will allow you to be able to sleep at night when horrible economic events are occurring all around you.

With 3 to 12 months of expenses sitting in cash in the bank, you know you’ll be able to withstand almost any financial challenge you may face.

Whether you get laid off or have a medical emergency, your emergency fund should be able to hold you over until you can find a new way out of your situation, even in a recession.

With an emergency fund, you can wait for a better job offer to come along after a lay off or you could take a lower paying job until the economy recovers and cover the pay difference with your emergency fund.

Have Multiple Streams Of Income

In order to decrease your reliance on your income from your job, you can diversify your income by having multiple income streams.

Whether you have a significant amount of income from dividends or a side gig that makes a few hundred a month on the side, having multiple income streams will make you feel a little more at ease during a recession.

Even if one income stream dries up, combined with your emergency fund, your other income streams could keep your head above water while others start drowning in the recession.

If the economy takes a major down turn, you may even be able to turn a side income stream into your new full time income.

Make Large Purchases When They’re On Sale

While the first two tips help you position yourself to survive an economic downturn, this tip helps you take advantage of an economic downturn. Very few people take the opportunity to enhance their financial position in an economic downturn. Don’t be one of them.

Rather than sitting on the sidelines waiting for things to get better, you should take advantage of all of the discounts that arise in an economic downturn.

Whether you’re looking to buy investments, real estate or cars, chances are almost all of these will be on sale in a recession because other people need to sell them quickly to raise money.

Take advantage of their poor financial position and get a huge discount on your next new car, home or investment.

It will be impossible to tell if you’re buying at the beginning of the downturn or the end of the recession.

However, if you’re making a purchase you would have made anyway, you’re probably going to get a better deal than you would have during the prosperous times.

The more luxurious these items are, the more likely they’ll be on sale. Vacation homes can quickly drop in value as they’re a luxury people don’t need in their day to day lives.

However, you will be in great financial shape and can likely afford to take advantage because you will have an emergency fund and multiple streams of income.

Economic downturns, whether they’re a recessions or a depression, can easily destroy your financial security if you’re not prepared. Don’t fall victim to an economic downturn.

You know they’re coming, so prepare now while the economy is growing. Secure your future with an emergency fund, multiple streams of income and be ready to take advantage when others are desperate financially.

Are you prepared for the next economic downturn? Do you have an emergency fund and multiple streams of income? Do you look forward to getting a house, car or investments on sale during the next recession? I’d love to hear your thoughts!