Survival of the Fittest
September 30, 2011 by admin · Leave a Comment
As hard as we try to control our environment, the reality is that things are always changing; things that are beyond our control. Adaptability becomes the great separator between surviving well, getting by, and being destroyed. How we choose to move forward, and how well we anticipate and adjust to circumstances makes all the difference to the outcome. Those things we do control. Survival mode isn’t a bad thing; it actually forces us to be more creative and look at our challenges with urgency (and perhaps, a fresh eye). Consider examining your worries and see what creative solutions you can come up with. Be an active participant in your life, and don’t wait for the ceiling to come crashing in before acting. Anticipate well and make your move before you need to, in order to strengthen your chances for success. Here are some actions you can take now:
Increase Job Security. One of the greatest fears in a weak job market is being laid-off. In addition, there are jobs that are being exported overseas. Worrying and complaining about this won’t change the situation. Take this time to formulate a Plan B, and be wise to the writing on the wall. If your job (or your spouse’s job) is always dangling by a thread, it’s time to look at the skills acquired and the contacts made. Can this experience translate to another industry? For example, an unemployed teacher might pursue a career as a corporate trainer, which requires the ability to communicate and instruct.
Consider freelance or consulting opportunities available (provided your employer doesn’t forbid this). Would an investment in more education or training improve your job prospects? Is there a side business that can be started with little or no capital (ideally, that would allow you to keep your full-time job)? Maybe you have been itching for a change and want to explore a passion. Or, maybe you see a need that isn’t being filled in the market right now. Again, use the experience and skills you already have to turn this into something profitable. Brain storm, and write down everything you can think of, no matter how far-fetched it may seem. You may end up with a clear idea of where you should be personally and professionally.
Tap Resources. Local colleges and universities and libraries have education and job placement counseling. There are small business development centers that offer free mentoring to start-ups, including assistance with fleshing out your idea, developing a business plan, marketing and management issues. Career Zone and Job Zone can help you match your talents with prospective careers. There are resources for retired/mature workers looking to transition back into the workforce. Women and veterans have agencies dedicated to working with their needs. The Small Business Administration, SCORE, and the US General Services Administration are some websites to explore.
Work Hard. This sounds obvious, I know. But, how we invest our time has a lot to do with our success. Two hours of television watching could be better spent planning a new business, or going to school to get additional training. Of course we all need to unwind and recharge, but find the time to invest in getting “fit” for the challenges that may lie ahead.
Budget Wisely. A budget is only as good as the information you put in it. That is why you have to keep track of everything that you spend and everything that you make. Only by tracking every little expense can you see where the “fat” is. Saving/investing must be a line item in your budget. Make room for it by cutting unnecessary expenses. Every month, you should aim to put away at least 10% of your income (more, if you can). If you are contributing to a retirement plan at work, this money would count toward the 10%.
Refinance. With fixed mortgage rates at unbelievable lows, you can immediately improve your cash flow by refinancing. The key here is to pocket the difference, not spend it. This money should be used to fully fund your retirement, or to build up the emergency fund. If you are branching out into a business, some of these funds can be used in that manner. This money should strengthen you, and not be used to buy more stuff.
Pay Down Credit Card Debt. Get healthy and shed as much of this debt as you can. You should aim to pay off more than just the minimum and look to consolidate the debt to one lower rate card. Talk to your card company and try to negotiate a better rate. If you still have high rate cards, be sure to pay them off first. Of course, stop using credit cards for any new purchases.
Delay. Again, if you are nervous about job security, or debt is creeping up on you, put off purchasing anything you don’t really need. Don’t eat out, don’t go on a vacation, don’t buy a new car, don’t indulge in anything that you would consider something you want (a manicure) versus a need (an annual check-up).
Difficult times provide a chance to examine your life and to truly grow and benefit from the experience. Preparing for survival mode will strengthen you and, more important, give you confidence when you do rise to the occasion. Suddenly you will see possibilities that otherwise you might have never considered. Growing pains aren’t easy to bear, but they are necessary for survival.
Making Your Own Luck
September 22, 2011 by admin · Leave a Comment
“What’s your goal?” My husband’s question was simple, but I didn’t know if I should bother to share my complete answer, because it seemed unreasonable.
We hadn’t started our family yet, which was a goal of ours. But I wondered if winning Lotto was the only ticket to my other dream: to be able to stay home with our kids for as long (or short a time) as I wanted. Back then, my earnings were almost five times his salary and I doubted we could sustain ourselves on his take home pay alone, especially with the added costs of a baby. Sharing this thought with him might have made him feel badly; instead it motivated him.
”That’s it? That’s the goal?” Tony said, as if he had known it all along. “OK, give me some time, I’ll figure it out.”
I had it drummed into my head from friends and colleagues around me, who were enslaved to the double-income household: “There’s no way you can live on one salary – especially a teacher’s salary.”
Quietly I worried that I had given him a goal that was not within reach. I thought, maybe I could stay home for a year at most. I even started to accept that option, if it came to that. Thankfully, it never did. The more naysayers there were, the more determined he was to make a viable plan.
Stock piling became the first part of the strategy; generating investment income was the other component. We lived as if his salary was the only income we had, and aggressively saved and invested my salary and bonus. That is not to say that we didn’t enjoy ourselves. We made time for some travel; we ate out at restaurants within reason – but the savings/investing came first; what was left over was ours to play with. We put off starting a family until we felt we were on solid ground.
An interesting thing happened along the way. We had the opportunity to buy a small cabin in New England for a great price; it was very tempting and we came close to doing it. It was affordable based on our total income; but ultimately it would have taken us off our goal. When another opportunity presented itself — to move farther from New York City (where I worked) to an area we loved and where we wanted to raise our family– we struggled with the idea. I didn’t want all our savings/investing to dry up because this house was more expensive than the one we were living in. After careful consideration of all the numbers, Tony figured we could swing it, provided I was still willing to commute an extra 2 hours each day until we started our family. With trepidation, I agreed.
Then we faced a series of unexpected events. For starters I became pregnant and soon we found out we were expecting twins. Almost immediately, I ended up on bed rest. Short-term disability gave way to long-term disability, which was less than my salary (although I wasn’t spending any money commuting). When our sons arrived a full two months early, we were stunned. After more than two weeks in the neonatal intensive care unit, they were released to come home – but with all sorts of equipment (like an apnea monitor to detect the cessation of heart beats or breathing and caffeine to keep the heart beat rate up). To add to all this tension, I had used up all my leave and was due back almost as soon as the boys came home from the hospital. I still can’t say how I would have been able to leave my babies under those circumstances – or who we would have asked to take on such a grave responsibility. I am just so thankful that Tony thought to ask the question about my goals – and that I dared to utter it out loud. Otherwise, our backs would have been against the wall.
Many times, there isn’t one right way to reaching a financial goal. Sacrifices, compromises, and non-negotiable items differ by household. The point is the goal kept us focused and shaped all the decisions we made – we passed up opportunities to spend our money in favor of getting us closer to what was our top goal. Most important, had we not planned this out, I would have been headed back to my four-hour roundtrip commute; our preemie babies occupying my every thought. Some call it luck – but I know Tony’s careful planning and our commitment to reaching our (seemingly unreachable) goal had a lot to do with the blessings that came our way.
The financial wisdom I would like to impart is: Don’t be afraid to look at your dreams – even if they seem impossible to reach. Instead of thinking about why you can’t get where you want to go, ask how you might get there. Do this, and down the road, you may find yourself being referred to as the “lucky one”.
10 Steps to Financial Strength
January 11, 2010 by admin · Leave a Comment
With the day-to-day pressures you face, it’s easy to let your financial life go unattended — especially if there’s money left over at the end of the month. Yet, if you pay just a little more attention to your savings and spending habits, and get clear and specific about your goals, you will find yourself in a position of financial strength. Here are some quick steps you can take that are easy to implement and will get you results fast:
- Get Organized. An organized household spends less money. Why? Because when you know what you have you won’t buy duplicates. When you plan your meals ahead, and know what’s already in your pantry, you don’t overspend. When you keep track of your checking account balance and your bills, you avoid late fees, and bounced checks. What’s more is you save time – something we can always use. This step is also vital if you plan on following recommendations #2 and #3.
- Know Yourself. Track your expenses, so you have a good sense of what you spend, and where it goes. Then, and only then, can you see where your priorities have been. The question is: Is this how you want to spend your money? Or, do you need to shift your spending patterns to reflect your priorities?
- Cover your Bases. Make sure you have adequate life insurance on both spouses (about 7-10 times annual household income), disability insurance for all working spouses, and an emergency fund to cover at least 6 months’ of living expenses. Also, make sure your wills are up-to-date. A strong foundation makes all the difference in an emergency situation.
- Eliminate Credit Card Debt. If you carry a balance every month, make a plan to pay as much as you can each month – not just the minimum.
- Shop Smartly. Check the circulars and plan your meals accordingly. Add more beans and veggies to your meals (your wallet and waistline will thank you). If you are tempted to make a big purchase, go home and sleep on it. You’ll be surprised how these urges can pass.
- Eliminate the “Sin Tax”. Tobacco and alcohol carry heavy taxes. Cut back or eliminate these habits and you’ll improve your health and finances. While you are at it, bag the lottery. Wishing for a windfall is a waste of energy, especially when creating one is within your control. Take the money you would put into lottery tickets, and increase your emergency fund, retirement fund, or college savings. It will serve you better if you put the money there.
- Conserve. Conserve. Conserve. It’s not only good for the environment, but it’s good for your wallet. Shut off lights, use energy conserving bulbs, repair leaky faucets, and add weather stripping. Who needs to waste money and energy?
- Make a Plan. Where are you now, and where do you want to go? You’ll never reach your goals if you aren’t clear about what they are, how much time you have to get there, and how much you will need. Be specific, and list them all — short-term goals (e.g., paying off your credit cards in two years), to intermediate (e.g., sending two children to college in eight years), to long-term (e.g., retirement in 15 years). Work with a financial professional to estimate how much you will need, what the effects of inflation will be on affording these goals, what type of investment commitment per month you will need to make, and what range of investment returns you will need to receive to stay on track.
- Pay Yourself First. That’s right, you’ve earned it. Treat your financial goals with the same seriousness you treat your housing, car, cable and utility bills. That’s the only way your dreams will ever become a reality. Make sure you are participating in any company sponsored retirement plans available to you, and make sure you open an IRA or Roth IRA for you and your spouse.
- Know What You Own. What mutual funds do you own? What do they invest in? Make sure they invest in different types of securities; otherwise you’ll end up with all your eggs in one basket. Know what fees and sales charges you pay, as these expenses can really add up over time. It may be boring to read, but the prospectus has all the answers to these questions.
Remember, if you don’t care about your own money, no one else will. Pay attention to the areas where you can improve, and make your financial goals a top priority. These small changes will allow you to reap benefits for many years to come!
