SMS 147 – Measuring Financial Progress

Measuring Financial Progress

Whenever you are measuring anything in personal finance never use comparison as a guide.

Reason to measure progress:

  1. Make sure you are moving toward your goals
  2. Stay motivated
  3. Observe cause and effect
  4. Stop chasing a financial horizon

How to measure financial progress:

Hard measurements:

  1. Debt reduction
  2. Savings goals
  3. Income level
  4. Net worth
  5. Financial independence number

Soft measurements:

  1. Financial edge concerns
  2. Reduction in stress
  3. Your goals seem more realistic
  4. Frequency you celebrate wins – read the sign posts
  5. An increase in time spent enjoying life

SMS 145 – A Cost Effective Approach to Technology

A Cost Effective Approach to Technology

The problem with technology:

  1. Product lifecycle – built in obsolesces
  2. Brand ecosystem – ties you to a brand
  3. Peripheral equipment – requires endless accessories
  4. Compatibility issues

Uses of technology:

  1. Entertainment
  2. Convince
  3. Essential – cell phone, GPS
  4. Critical – medical, employment

Approaches to technology:

Early adopter

The Good:

  • You get the latest products – status
  • By working through the issues you become a product expert

The Bad:

  • very expensive products
  • products are in the developmental stage

Mainstream adopter

The Good:

  • You get the latest products – status
  • By working through the issues you become a product expert

The Bad:

  • very expensive products
  • products are in the developmental stage
  • expensive because demand is high

Late adopter

The Good:

  • substantially reduced price
  • fully tested product
  • Second hand market

The Bad:

  • do not get the latest features
  • lifecycle time has elapsed
  • compatibility issues

SMS 144 – Passion vs Profession

Passion vs. Profession

The average person will spend 90,000 hours at work

Article from Radio Canada International: A recent survey shows only 27 per cent of Canadians say they are satisfied with their current employer and are not interested in a new job. – https://www.rcinet.ca/en/2018/12/17/only-about-one-quarter-of-canadians-satisfied-with-their-job/

“Millennials have a desire to do work that is interesting to them. Things that give them joy and satisfaction. I think they’re more willing to walk away than the generations that came before them.” – https://www.cbc.ca/news/business/job-satisfaction-employee-retention-canada-1.4945021

Therefore, can your profession be your passion?

What is a passion?
Definition
Dig deep (i.e. personality type etc.)

What is a profession?
Definition
Ask yourself, are you really feeling intrinsically rewarded?

What’s holding us back from turning our passion into a profession? — The “F” word…
Fear of investment (time, money etc.)
Fear of judgment (others’ opinions)
Fear of failure (idea/business fails at any point of execution)
Fear of commitment (your interest will waiver; to ourselves)
Fear of unprofitability (idea/business does not perform well)

Can a passion really be profitable?

When should you turn your passion into a profession?
Testing ground to full-time: start a profit-earning side hustle (ex. online store, live market place – craft show, coffee house, art gallery, farmer’s market etc.); launch a free resource and monetize (ex. YouTube channel, blog, podcast)
Supply and demand — when your passion project gets too successful or popular to just maintain on the side
Just do it — Rachel Hollis: no one wants something more badly then you want it for yourself

Eight ways to find the true passion in life that has eluded you

SMS 143 – Staycations

Staycation is a combination of vacationing and staying at home or limiting the number of nights away from home.

Benefits of Staycations:
Save money – accommodations, transportation, & meals
Less stress – planning and coordinating
More time to relax
Support your local economy
Appreciate where you live

Make Some Rules:
Have a budget
Break your daily routine
Limit your chores to the bare necessity
Use you home as a hotel room
Tell your family and friends you will be on vacation

30 Ideas for Summer Fun, Staycation Style

SMS 142 – Camping Considerations

Camping

Questions to ask yourself: Do you really enjoy camping?

  1. Are you camping for convenience and/or cost
  2. Do your really enjoy nature
  3. Given unlimited money would your still go camping

Types of camping:

  1. Car camping (intermittent hotel/camping)
  2. Wilderness camping – back packing, canoeing
  3. RV camping – tent trailer, travel trailer, motor home

Camping considerations:
Most kids love camping
Camping comes with built-in entertainment
Equipment – the right equipment will make a big difference
Location – if you desire the most sought after places it will cost (proximity to attractions)
Meal preparation – can be a plus and a minus at the same time
The more comforts of home you desire the harder you will work
Have dedicated camping equipment and supplies
Build a family legacy, early exposure may have a lasting impact
Don’t overstay your welcome
Go with no expectations

30 Ideas for Summer Fun, Staycation Style

Full Time Canada RVing

SMS 141 – Financial Decision Fatigue

Financial Decision Fatigue

Decision Fatigue: In decision making and psychology, decision fatigue refers to the deteriorating quality of decisions made by an individual after a long session of decision making. It is now understood as one of the causes of irrational trade-offs in decision making.

The problem with decision fatigue
Bad decisions lead to bad outcomes which will result in reduced confidence
Procrastination – no decisions often leads to a decision
Impulsive decisions – lack of logic or emotion often leads to regret
The path of least resistance is not the path to prosperity

Solutions to decisions fatigue
Routine will automate the small decisions leaving time and energy for the big ones
Put big decisions on the calendar – use time to your advantage.
Eliminate distractions – when a decision is required make sure you are in a good place
Write it down – emotions turn off and logic turns on
Don’t operate in a silo – use your support system
Have a value system – these are pre-made decisions

SMS 140 – Harnessing Your Financial Emotions

Harnessing Your Financial Emotions

Your emotions make most of the decisions in your life and our logical brain tries to create sound reasoning to support your emotional decision.

Control: We have the elution that we control things we actually have no control over. If we submit to the fact that our emotions are in charge and we control far less that we think we do you can begin to put in place a framework of a financial value system that will drive our actions.

The problem with making emotional financial decisions is we often evaluate those decision later with logic.

How do you know you are making an emotional based decision?

  1. Excitement
  2. Sadness
  3. Anxiety
  4. Anger

Ways to control your emotions when making financial decisions

  1. Don’t rely on your “gut”
  2. Pause and come at it from a different angle
  3. Write it down – Pros and Cons (pen to paper awakens the logical brain)
  4. Get external opinion – hire a professional (lawyer, agent, accountant)
  5. Don’t marry yourself to an outcome – make it about the process

Solution: Have a value system based on overarching rules that you can rely on for your decision making process.

  • Car loan: maximum 3 year
  • Mortgage: paid off in 15 years
  • I will never pay for a service I can do myself
  • I will not commute more than 30 minutes
  • Borrowing money for things that go down in value is not an option
  • Credit cards are a form of payment never to be used for credit
  • I will never use the equity in my house as a source of money
  • Replacements decisions are based on an items functional utility
  • Never mix money and family

SMS 139 – Living on Minimum Wage

Living on minimum wage

Can it be done?

If you do figure out a way to survive on minimum wage you actually have a superpower.

When does it make sense:
To build a career or it leads to greater prosperity
Semi-retirement
Supplemental income
Summer employment

Concerns with living on minimum wage:
Not a long-term solution – deprivation will catch up to you
Living on the financial edge for an extended period of time will wear you down
Raising a family would be a challenge
Credit could be your undoing
Location is important – if you can’t solve the income equation work on the expense side
You will not be able to build wealth
Are you really being deliberate?

SMS 138 – Rent – How Much to Pay or Should You Buy

How Much Should You Pay for Rent?

  1. One week’s pay equals on month’s rent
  2. Consider all of the costs when comparing

Determining Your Housing Rental Needs:

  1. Can you do a reference check on your landlord?
  2. Location, location, location
  3. Assess how long you plan to live there
  4. How much space do you really need
  5. Luxury comes at a cost
  6. Beware of a deal that is too good to be true

Rent vs Buy:

  1. You are not throwing money away – you get a place to live
  2. Home ownership is not for everybody
  3. Home ownership does not make sense at every stage of life
  4. There are more costs to home ownership than just mortgage payments
  5. The transactions cost of buying and selling are significant
  6. Read the Wealthy Renter by Alex Avery