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”.
Father Knows Best
June 18, 2011 by admin · Leave a Comment
No Father’s Day would be complete without reflecting on lessons learned from my own Dad. “Tony G” – as I affectionately refer to him – had a financial smartness about him that few MBA grads possess. His intuition, wisdom, patience and discipline all made him ideal for investing. And while it was simply a hobby, I think he could have made a living at it. Most important, how he lived his life is ultimately what made him successful as a father, husband and a man. Here are some lessons I learned from him that I will always treasure, and will pass on to our boys:
1. Marry well. No, it’s not what you think. Do not marry for money, but make sure you are compatible in all areas (money included). I never remember hearing my parents fight over money. They both worked hard to make the most of what little they had while they struggled to raise a family of seven kids on a military salary. The only way it worked is that they were both on the same page.
2. Don’t follow the crowd. Investing, like life, means making choices and tuning out what the hysterical masses are doing so you can think for yourself. Dad never cared what others were doing and we were always encouraged to make our own path.
3. It doesn’t matter where you came from. Dad had humble beginnings. He dropped out of high school and joined the military. Through hard work, he studied laboratory sciences and Cytology, earned his high school equivalency and took college level courses. Eventually, he headed up Coney Island Hospital’s Cytology/Laboratory efforts. He didn’t have a cushy upbringing, he had a lot of mouths to feed, he didn’t have a lot of money, but he knew he was capable of having a better life for his family. And, as little as they had, he always put away as much as he could towards savings/investing.
4. Who cares what you have? He was never boastful, never bragged, and never talked about what he had. He didn’t have to because he was secure. The money he earned and successes he achieved were for his personal satisfaction and not to “one-up” others. Money did not define him.
5. It can wait. We were never the family who got things first like the latest and greatest new gizmo. The most important basics always came first, and that included savings and investing. It is this discipline that allowed my parents to enjoy all their hard work in their later years.
6. Take chances. You can’t grow without taking risk. That means in your personal life, career and in investing. Anything worth having requires that you stretch outside your comfort zone. Not getting in the game costs you more than getting in and making mistakes. But, that doesn’t mean that all caution should get thrown to the side, either. Being impulsive and poor planning can ruin the best of intentions. Dad was good at seeing opportunities, and doing his research so that the chances he took weren’t gambling, but measured risk.
7. One for all and all for one. With a family as large as ours, there was no room for selfishness. If we had, we all had. If we didn’t have, no one had. He did not buy himself fancy toys at our expense. He was not overly extravagant with us or himself. Because of that, I never equated “gifts” with a measure of love.
Father’s Day, like every day, I miss hearing my Dad’s thoughts, learning from his very rich and full life, and laughing with him. So I say quietly, “Thanks Dad for teaching me and loving me well.”
If you are lucky enough to be able to speak to your Dad, let him know how valuable his love and advice are to you.
Happy Father’s Day to all the Dads out there!
Marriage and Money: Learning to Get Along
May 25, 2011 by admin · Leave a Comment
If fighting about money has become a ritual in your household, you are not alone. Money is a leading cause of tension between couples. Before it goes too far, realize that you both have control of the situation. These steps can help you work together to fix your differences:
1. Know both of your money personalities and create a plan/budget that works. There are three basic money personalities: hoaders, splurgers, and avoiders. Understanding why you treat money the way you do, and gaining insight into how your spouse feels about money, will make it easier to manage your situation.
Hoarders love to save and bargain hunt. Because they fear that they’ll never have enough, spending money makes them uncomfortable. Luckily, they are happy creating a budget, because they enjoy keeping track of their finances. By putting “splurge money” into the budget they can learn to enjoy their money without worrying that they are spending too much.
Splurgers are happiest when treating themselves (or others). Spending makes them feel loved and successful. The danger is that they will spend far more than they bring home. Because they like to be rewarded, they too can benefit from putting a line item in the budget for reasonable splurges.
Avoiders lack the confidence to deal with money. They ignore their financial responsibilities, such as balancing the checkbook or researching their investments. Their greatest risk is missing opportunities to make their money go farther. And, if they are married to a splurger, they won’t realize that debt is mounting up until it is too late. The best strategy for Avoiders is to take a class or read up on basic finances. Creating a budget is the best way to get familiar with the situation they were trying so hard to ignore. Because Avoiders tend to procrastinate, setting up automatic bill payment and automatic investments (where money is wired from a bank account to the vendor or investment account) is a helpful strategy.
2. Discuss the division of labor. Make use of your natural talents and assign responsibilities accordingly. Maybe one of you is efficient at bill paying, but the other is better at balancing the checkbook. You do not need to do all the jobs together, as long as you both remain informed. The same goes for recordkeeping and investing.
3. Agree on the ground rules. Obviously, no lying and no concealing are mandatory rules. Another good one: large ticket items need to be discussed before purchasing. Just make sure you agree on what dollar amount constitutes a large purchase.
4. Make sure long-term goals are in synch. For example, if you have been a stay-at-home Mom, your husband may be counting on you returning to work. However, secretly you may be dreaming of setting up your own business. Make sure you thoroughly discuss where you both see your lives in the near future. Now is the time to work any long range goals into the budget (such as laying the groundwork for a business, career change or early retirement). Be very specific about what you want saved and by when. That is the only way you can see if you are making progress.
5. Communicate regularly. Even if one of you primarily controls the budget and bill paying, you both need to review what is going on. Make a monthly date to discuss your money.
Keep in mind, as you put together your budget, there needs to be a regular amount allocated to saving and investing. Work first on creating an Emergency Fund, and then fund retirement. Aim to save at least 10% of your income, then you can get started on college savings. Together, you can fix your differences and work towards shaping your future instead of your future shaping you.
