By Kevin M

I’ve written much on the subject of credit cards—mostly that they aren’t your friend, but more like having an enemy living in your own camp. I’m not backpedaling on any of it; credit cards have been the enabler that has led many to financial ruin. But are there times when you’re better off having a credit card?

Absolutely. Even a zealot like me is prepared to admit to that.

There are at least five reasons why having a credit card is a “must”—just as long as you don’t overdo it by running up your balance and applying for- and loading up on- more cards. (No, credit card rewards isn’t one of them—I’ve never bought that argument.) Used responsibly, there are situations in which a good credit card is well worth having.

1. On large purchases, where buyer protection is required

I like debit cards for routine transactions, but when it comes to major purchases—the sort involving large dollar amounts and the possibility of a dispute—credit cards are the way to buy. It’s your ultimate protection against a transaction gone wrong.

Debit cards can offer the same ease of purchase, but they don’t offer the level of protection you’ll get from a credit card. If you need to dispute a transaction on a credit card you can file a dispute claim, and if the claim is substantiated your credit card issuer can refuse to pay the purchase. And since merchants and businesses who deal with major credit cards have ongoing relationships with the card companies, a transaction can even be charged back after settlement (within certain limits of course).

I’ve been through a couple of disputes myself, and have found that in most situations the credit card issuer will side with the buyer—that’s me and you—most of the time.

We shouldn’t need to think this way on a routine basis, but for those times when you have your doubts about a merchant or a purchase, credit cards shine as a method of payment.

2. International travel and transactions

Credit cards have grown up a lot in the past few decades—and not just up, but also out—as in out across the globe. Credit cards are accepted all over the world and even in places we might not think they would be. This is a good thing because they offer a serious advantage over other forms of payment.

For one thing, as discussed above, credit cards offer buyer protection, which becomes all important when your transaction goes sour in another country where you’re the foreigner. In that situation credit cards become the equalizer. You have no idea what commercial laws are in various countries and what recourse you have against a local proprietor, but you’ll still have a leg up because all vendors are beholden to their credit card arrangements—if they want to get paid. That speaks very loudly even in places where no one speaks your language.

3. As a back-up to a well funded emergency fund

Even an emergency fund needs a back up plan. One of the limitations of emergency funds is that it’s impossible to plan completely for all that can happen—that’s why they’re called “emergencies”. We can never know exactly how severe any given emergency will be, or even if we might be hit by more than one.

Make sure your emergency fund is well stocked—credit cards should never be a substitute for emergency savings. Then have a credit card with a large unused balance, just in case your emergency fund isn’t up to the emergency (or emergencies) you’re facing.

4. To establish or maintain a respectable credit profile

I’ve written it before, and I’ll repeat it here—don’t obsess on your credits scores! There are plenty of issues in life that warrant our concern, and this isn’t one of them. That said, having decent credit is preferred to the alternative. Credit cards are one way to make that happen, especially if you don’t have a mortgage or other form of debt.

The flip side—too many credit cards, with oversized balances and a poor payment record will undo all that you’re trying to do. Limit the number of credit cards you have (one or two should be enough), pay balances off monthly and make your payments on time. Poor payment is a primary reason why credit cards are frozen or terminated by the issuer, and once this happens you’ll be left with a debt to pay and no more access to credit.

5. For certain transactions like airline tickets

There are certain transactions where using cash or checks just won’t work, and debit cards aren’t much better. One is purchasing airline tickets—credit cards just seem like the way to go here. Another is when a transaction could result in add-on fees after the fact. (In certain transactions there is fine print language that grants the vendor just such flexibility, though they won’t emphasize the point in their sales pitch.) A credit card gives you a cushion (the credit limit) that’s beyond the initial purchase amount, which is something you don’t have with a debit card.

 
Credit cards CAN be an asset—used responsibly, and under the right circumstances.

Can you think of any other situations in which having a credit card would be a distinct advantage over debit cards, checks or cash?

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By Kevin M

Do you ever find yourself wondering—perhaps when you look at your paycheck or even your W2–I make a good living, why don’t I have more money saved up?

You might look at your income and your regular expenses and think that you should be saving more, but somehow it all seems to just disappear, almost as if there are termites gnawing away at both your wallet and your checking account. And perhaps there are a few termites infesting your finances. Call them “stealth expenses”—stealth because we usually underestimate them—if we even notice them–expenses because that’s just what they are.

We all have fixed expenses that we know only too well—house payments, car payments, student loan and credit card payments. There are also day-to-day survival expenses, like groceries and gas. We’re very familiar with all of these, but it’s those others, the variables, that slowly suck the life out of a budget. Those are the stealth expenses, the ones that aren’t always so easy to measure or even to prepare for.

”Where does all my money go?”

Stealth expenses are “soft” expenses that hit us in small chunks, but they’re substantial when taken together. Worse, because of the variables related to each, you can’t know with any degree of certainty what they’ll cost you in any given year. The prime suspects:

Insurance. This category is complicated by the fact that it usually has several components–home, auto, life, health, etc, that add up to many thousands of dollars each year. Often they’re paid in ways we don’t notice, such as payroll deductions for health insurance and the little corner carved out in the monthly house payment that includes homeowner’s coverage. Then there are some policies that have annual, semi-annual or quarterly payments that can escape yearly budget projections. They all add up to less savings in the bank at the end of the year.

Co-payments, deductibles and co-insurance provisions. Uncovered health expenses–deductibles, co-pays, co-insurance (the percentage of first dollar medical expenses you’re required to pay past the deductible—nearly every health insurance plan has this provision!) and costs for procedures that aren’t covered—also fully qualify as blind-side expenses, and they have an uncanny knack for hitting at the worst possible times. In any given year there’s no way to know what they can be, but they can torpedo a budget in short order.

Utilities. Utilities might the biggest of the stealth expenses. They can easily amount to hundreds of dollars per month but we don’t notice because it’s usually split between several bills (electric, water, garbage, gas, cable, internet, etc). A major complication is weather, which can increase payments even if you’re on a budget plan. Another is unexpected and often steep rate increases. Many utilities are virtual monopolies and if they’re approved for fee hikes you’re stuck.

Entertainment. The stealthiest of all stealth expenses, perhaps because we don’t like to think about budgets and saving money when we’re planning on having a good time. Like dominos, one fun activity usually leads to another, like dinner and a movie. Then there’s the gray zone factor—is eating our part of your food budget or is it really entertainment? What about cable TV? And how to you establish an entertainment budget—and live within it—when you don’t know exactly what your needs will be? Entertainment is, after all, driven more by emotional factors than logic.

Car repairs. Probably the most unpredictable of all stealth expenses, you can budget for this but you can easily miss by thousands of dollars. The reason is the wide variation in repairs costs. Replace a battery at $150—piece of cake—replace the transmission at $2,500–now we’re talking real money. Multiple major repairs could mean that all budgetary bets are off. This is a category where you can get off easy with $500 one year, then get clobbered by $5,000 the next. The older the car or the more vehicles you have, the less predictable the expense will be.

Holidays—especially Christmas. There’s often a tendency to think that this expense can be blended into a budget with little extra effort, a notion that usually breaks down quickly when the January credit card blizzard hits. Christmas in particular is difficult on a budget in part because of its sheer size. It sits astride the “holiday season”, sandwiched between Thanksgiving and New Year’s, and that season often facilitates a breakdown in budgetary order. Not only is there shopping for gifts, but there are dinners out “on the fly” because there’s no time to cook. Then there are decorations and often travel. A blessed holiday for sure, but a hard one on the finances.

If you think about if for a bit, you’ll come up with even more categories that qualify as stealth expenses, but the more important issue is taking control of them. Because stealth expenses have multiple sources, there need to be multiple plans on how to deal with them.

Keep close tabs on ALL spending

Stealth expenses like entertainment get out of control precisely because they escape close scrutiny. Tracking them will show the reality of what you’re spending, highlight substantial increases in spending trends and give you a chance to make cuts where necessary.

Controlling fixed expenses is more important than we think

Stealth expenses usually eat up a bigger chunk of your budget than you think. The wide variety of them can make it hard to establish a workable budget. An alternative is to lower fixed expenses, like housing and car expense. Not only are there fewer fixed expenses, but they’re usually larger so cutting will have a far greater impact.

And here’s a bonus: the lower your fixed expenses are, the lower your stealth expenses will be. For example, the size of your home will affect your utility expenses, while the cost and type of car you drive will have a huge impact on both car repairs and insurance costs.

Set up a dedicated savings account for predictable but irregular expenses

Set up a third savings category—somewhere in between an emergency fund and long term investments—that will cover the loosely expected and vaguely predictable nature of stealth expenses.

Emergency funds are typically based on predictable monthly living expenses, which include regular insurance and utility payments. However, car repairs and health insurance deductibles and co-insurance provisions are close to impossible to predict with any certainty—all we know is that they can happen, and will at some point in the future. How do you save for that?

One way is to average how much you’ve spent on these over the past few years. It’s far from scientific since car repairs can increase as your vehicles age, and healthcare is always an X factor. You could use a worst case scenario on healthcare, for example, by adding up the deductible and co-insurance provision that you would have to pay for a large medical expense for one person, then add in an average amount paid for car repairs. You could also begin loading up the account as the holiday season approaches, or you have a wedding or graduation to attend when entertainment expenses will increase.

Stay liquid!

Liquidity is vastly underrated as a budgetary tool. The lack of it is a primary reason people go into debt. Don’t overload investment or retirement savings at the expense of near term needs. You’ll pay for these one way or another, and it’s always best to do so without using credit.

A “stealth expense” is any expense that we would be likely to underestimate or to even exclude from our budgets; can you think of other examples?

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Guest Post by Jodie McDonnell

Many people across the United Kingdom fall victim to financial strife, often due to factors that are out of their control. A loan—when taken out for the right reasons—can help individuals who are in need of money for obtaining a mortgage, car loan, or other loan among other things.

Even more important is getting the right loan, a loan that will solve your problem and not make your financial situation worse. In order to do that, you need to approach borrowing with the proper attitude and a few tools that will help you to get the best deal to work within your circumstances.

Many times the reason people get into credit difficulty happens at the very time a loan is taken. The person could have been borrowing more than he could afford to repay, or doing so with stiff repayment terms he could never meet. You’ll only have one opportunity to prevent that from happening, and that’s when you are applying for the loan. It is therefore critical that you get this right at the very beginning when it counts most, and that means getting the very best loan you can.

Finding the best range of loan options

Loans vary depending on the creditor and type of loan; the best one for you will depend on your unique situation. With some simple tools, you can find a suitable loan that is tailored to your needs. It’s often best to start by investigating websites which offer the services of competing lenders, that way you’ll have a way of comparing the loan offerings of several lenders at the same time. Loan programs are all about numbers, which is where confusion begins to enter the picture. Any way that you can simplify loan comparisons will be a step in the right direction.

Try to search loans at Money Expert, a site that offers a comprehensive search of both personal and home loans from lenders across the UK. Your lender will award a specific loan amount to you with a set repayment period.

When signing a loan agreement, you are bound by the terms and conditions of the creditor and this is incredibly important. These conditions will include the obligation you are under to pay back the original loan amount plus interest; while the interest rate on the loan will vary from creditor to creditor. Given the current state of the UK economy, it has never been more important to research your options with different lenders. It’s absolutely critical that you obtain the loan that will not only meet your financial needs, but will also fit within your budget.

It’s not your imagination—it IS harder to get a loan now than ever

It is now more difficult to find a good deal on a loan, therefore it is important that you check to be sure you are getting the best interest rate for you. It is also important to remember that before you sign up for anything, you must check what the product is offering exactly and what you are about to legally bind yourself to.

Watch out for any hidden charges, penalties or terms in the small print. Also, personal loans come in a variety of forms including unsecured or secured lending—make sure you are certain of which you are taking and exactly what collateral you’re pledging for the loan.

The loan offer will depend on a number of factors including whether the borrower has a good or bad credit history or no credit history at all. For example, for a person with a good credit rating an unsecured loan may offer lower monthly repayments compared to a person with weaker credit history. In contrast, a person with bad credit history may need to put up property as security to be granted credit; this method is usually applied when the individual is in need of a larger loan or lower rate of interest.

Despite it usually costing more in interest repayments, many homeowners choose to take an unsecured personal loan so as not to risk their property should they experience financial difficulty and are unable to repay the loan in the future.

When borrowing money responsibly, you can develop a strong credit history that is useful should you need to borrow more money further down the line. For example, obtaining a mortgage, car loan, or other loan, is easier when you have a good credit history – you will also enjoy lower interest rates as a result.

What ever type of loan you choose, be absolutely certain that it is one that will improve your financial condition, especially in the future, and not act merely as a means of getting past a difficult moment. A loan should always be a financial instrument that moves you forward, and not one that puts you in a deeper hole than the one you’re trying to dig out of.

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By Kevin M

One year ago—just about to the day—I took my first stab at this topic in Why Earning More Money is More Important than Frugality. It was one of the most popular posts I’ve done in the two years that I’ve had this site up and running. It seemed for a while that I’d covered the topic as thoroughly as I could imagine, but the subject has hit the blogosphere with a vengeance in the past couple of weeks stimulating additional thinking.

That doesn’t mean I’ve changed my original thoughts on frugality—quite the opposite. I’m now even more convinced that I was heading in the right direction on the first go round. My comment on Len Penzo’s 100 Words On: Why Frugality Has Its Limits made me realize that the subject is even more important than I imagined and that it’s time to take it on with some fresh ideas.

Frugality in a changing world

I believe we’re in the early days of a massive era of change that will eventually earn itself a chapter or two in the history books. Think Industrial Revolution here—an event so all-encompassing that it will change life as we know it. Space doesn’t permit presenting all of my thoughts here so it’ll be the topic of a future post that I’ll roll out as soon as I get the bugs worked out of my crystal ball.

In the meantime, we can safely say that at the moment we’re living in world of changing circumstances—I’d dare say negative for most, though I think the very long term will hold many positive surprises.

When change comes, and it seems disruptive in nature, we can do one of two things. We can either circle the wagons and work to protect what we have, or we can plunge forward and try to reinvent ourselves to thrive in a very different looking world.

The obsession with frugality strikes me as part and parcel of the circle the wagons strategy. Inside the wagons, we may feel secure and think that we’re in control, but as conditions outside deteriorate they’ll eventually drag us down in spite of our best efforts.

Frugality works best when you have something approximating employment for life, in a job that pays a living wage WITH full benefits AND predictable increases in pay. In that situation, your income is reliable and rises with time. By cutting expenses and saving the difference you save your way to prosperity.

But that’s not the world we live in any more. Jobs and long term employment are no longer certain, benefits are being cut, and raises–if you get them–are puny. Frugality doesn’t work as well in that situation and isn’t a long term solution to that problem.

The ultimate solution is to move beyond the circle, charge forward and work to cut a new path. Frugality doesn’t prepare us for that, at least not the way it’s generally used.

Micro-frugality vs. macro-frugality

So I don’t risk painting with too broad a brush, let me say that I think there are different types of frugality, and I can identify two as general categories.

Micro-frugality. This type of frugality is searching two dozen expenses for savings in each in the hope that collectively they’ll reach the level of real money. While that may (or may not) happen, the effort itself is exhausting, and requires constant vigilance. It has us researching, analyzing, discussing and executing cuts in nearly all expenses that make up our financial lives, and the effort can easily rise to the level of a part time job.

Macro-frugality. This is cutting the two or three biggest expenses that have the greatest impact on your finances. If your house is costing you $2000 per month between the basic house payment, utilities and upkeep, you replace it with one that you could live in for $1200 a month. A car with a $600 payment is replaced by a used car with no payment.

Macro-frugality makes abundant sense, especially if you’re trying to lighten your load to make a career push forward. You cut the structural expenses—which often causes other expenses to drop as well—and let the rest go. It’s better because you make two or three major changes and then move on. Simple, with maximum effectiveness.

Micro-frugality on the other hand, has us buried in small details. While we should be focused on generating fresh income streams, we’re busy plugging small leaks in our budget. What’s the end game to that strategy?

Is frugality motivated by a hatred of work?

That’s a strong statement but before you judge me too harshly for writing it, I came up with it while reading the comments posted on a New York Times article, Forget Frugality: Focus on Earning More.

The article was written by Ramit Sethi at I Will Teach You To Be Rich, an author and personal finance blogger who’s been very outspoken in his criticism of the frugality faith. There were 90-something comments responding to the article, and from the 40 or so that I scanned, the responses were overwhelmingly negative. I’d even go so far as to say that some of them were hateful, as though Ramit struck a deep emotional nerve.

Why the rabid responses? Ramit was suggesting that rather than use their free time to find new ways to save money, that they instead find ways to earn more money. That was the bone of contention—the frugal wanted to save money precisely so they wouldn’t have to work more.

But was Ramit suggesting that they become workaholics? Hardly. He was suggesting that they think long term. What he was pointing out was that the better use of spare time is to use it to earn more money so that credit cards and other loans can be paid off or savings can be accumulated. With less debt and/or more savings, structural improvements in life take place ultimately resulting in less work, more free time and more money. Its old fashioned work-save-invest, but the masses apparently want no part of it—too much work in the short run.

The primary risk of over-emphasizing frugality

Ever wonder why human beings are creatures of habit? It’s because life is easier that way. We don’t want to have to stop and think about everything we do, to hatch new ideas for the things we do every day, especially those that are mostly about survival. Going into automatic pilot is what we might think of as “brain save mode”, and there’s a good reason for that.

Each of us has only so much creative capacity, and so much time. True, some people are more creative than others, but all of us have the ability. The difference is primarily that some people make better use of their creative skills than others. The same is true of time. Each of us have only 24 hours a day, and much of that is consumed by work and sleep, leaving precious little time for much else.

That begs an obvious question: what are we spending our creative energy and time on?

Are we going to spend it analyzing four cell phone plans to see which is the cheapest? Running from store to store to see who has the best price on laundry detergent? Investing 100 hours of our time on research and efforts to weather proof the home so we can save $25 a month on energy bills?

All of these can seem like noble pursuits, but making a deep dive into details can also be a form of creative avoidance–that’s majoring on the minors, and it’s guaranteed to keep us right where we are.

That’s the risk that frugality brings—that the lions share of our creative energy and time will be dedicated to what amounts to an effort to keep what we have. In a period of changing circumstances and declining economic fortunes, will that be enough? Will it move us successfully into the future? I have serious doubts.

Yes, income generation IS more important

Frugality has its place—certainly macro-frugality does—but what I’m challenging is the notion of frugality as some sort of overriding financial guiding principal. That’s a role it can never fill. If your income shrinks down to zero, you won’t be able to cut enough expenses to survive.

Only by increasing income and generating new sources can we move forward, but it may be even more important than that. Why?

1. Jobs and careers are disappearing fast, and many of us need to completely retool in order to be economically relevant

2. Employers are no longer providing the type of training that will lead us to relevant new careers (they too are circling the wagons and have largely abandoned forward strategies like training in favor of cost cutting and survival)

3. Entrepreneurial skills are becoming critical as the choice for the unemployed is increasingly between self-employment and no employment

4. Developing multiple income streams may be the single best survival strategy in a world where fulltime, fully benefited, living wage jobs are becoming increasingly rare

5. University educations are not only prohibitively expensive, but the coursework is increasingly out of step with the most recent developments in the economy and job markets

6. Developing new businesses and income streams will take time, so the time to get started is now

Income earning ability is our single greatest financial asset. Our overriding financial principle then needs to be that we’ll always have an income—preferably a generous one. Making that happen is now completely up to us, and where we spend our creative energy and time will determine how well we do on that front more than anything else.

If you’re looking for a way to spend more time earning income to help your cash flow, check out my post, The Freelance Blog Writer Side Hustle. Even if you’ve never written professionally in the past, this post will help you get started converting your passions and interests into an income earning business that you can work in from the comfort of your own home.

Your thoughts?
 

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Multiple Income Streams to replace One Man-One Job?

By Kevin M

Last week in The Power of Saying NO we covered how to free up your time and energy for more productive activities by making more frequent use of the word “no”. By saying “no” to the constant requests for help, participation, interaction and other forms of engagement others will draw us into, we can keep ourselves focused on our main goals.

Today I want to cover another common time and energy drain–multitasking. This has to be one of the most over worked phrases in the English language, and perhaps the most draining of all activities. What it mostly implies is that in order to be efficient, we need to spread ourselves wide and thin to do the jobs of several people.

It’s easy to see why multitasking is popular with employers—the more jobs they can get fewer people to do, the less staff they need. That translates to lower payroll and, in theory at least, a healthier bottom line.

But here’s what multitasking does to the individual and, by extension, to the organization:

• Creates an environment of perpetual interruption
• Makes personal and organizational goals harder to reach
• Dilutes (or even erases at the extreme) primary job functions
• Generates needless stress
• Eliminates specialization, or the efficient matching of jobs with personal talent
• Creates confusion—if everyone does every job in the organization, who should be doing which job and when?
• Transfers responsibility for all functions to the highest performers, who become bogged down covering every job rather than the one they were hired to do.

Is that any way run your department? Is that any way to run your business or your career? The goal of every manager, business owner, and employee needs to be to make their primary function the primary function!

Why can’t I make more money, or, Why isn’t my business or department more profitable?

Here’s a clue…if you’re a salesman, you have to sell; if you’re a writer, you have to write; if you’re an accountant, you have to be crunching numbers. The more time and energy spent doing something other than your primary activity, the less progress you’ll make in your career and the less income you’ll earn.

If you’re a manager or business owner and you’re staff is busy fielding customer service calls, filling out reports, attending meetings or planning the next company outing, it should come as no surprise that they aren’t being more productive in their primary jobs. How does that look in the bottom line?

The most important thing any of us can do in any income earning situation we’re involved in is to spend the majority of our best time working in the functions that are most important—and most profitable. Identify the one or two things that you do that are most profitable and concentrate on those first and foremost.

To the degree that we’re drawn away from these functions, our bottom line will suffer.

In his classic book, Looking Out For #1, author and motivational speaker Robert Ringer wrote:

“Get rid of all the garbage and excess baggage and get down to where it’s all at: profit is directly related to the number of uncluttered, creative hours one has at his disposal.”

Concentration…fortunes are built on it—or lost by the lack of it. Multitasking usually has a big, fat hand in the latter.

Daring to concentrate on what it is we do best

Hockey legend Bobby Hull was sometimes accused of “floating”, that is, not giving 100% of his best effort 100% of the time. Capable of incredible bursts of game-dominating drives, he often chose to do significantly less. Now one of the things that had to be admired about Hull—call it a “Hull-ism”—was his ability to articulate what it was he did that made him great, even in the face of criticism. I don’t think it was arrogance, but brutal honesty of the sort we all need to take heed of.

Hull responded that he was a goal scorer, that that’s what people came to see him do, and that’s what it was that he concentrated his efforts on. Back checking, playing defense, or chasing the puck into the corners wouldn’t make his game better–it would drain his energy and prevent him from doing what it was he did best. His performance over his very long career was a testimony to the effectiveness of his conviction.

I have a strong sense that anyone who’s great in any endeavor is doing something very similar, whether or not they can even define what it is. The fact is that even people who are superstars in their fields, don’t have unlimited time and energy. Their greatness is defined by their ability to allocate their time, energy and talents where they’ll have the greatest impact.

Freeing ourselves from the Multitasking Monster

OK, we’re not professional athletes, and no one is soliciting our opinions on how to be great. But how can we be greater at what it is we do than what we are now? By minimizing the paralyzing affects of multitasking from our work lives!

Try one or more of these:

1. Identify the functions in your job, business or career that are most productive and make them your priority. Nothing else you do will have a greater impact on your career or your ability to make money.

2. If necessary, make a list of all of your job functions, assigning the highest priority to the most productive, and work down from there. Create a hierarchy that will be a personal mission statement that keeps you on track. Avoid allowing yourself to get lost in busyness.

3. If some degree of multitasking is necessary, block out “quiet time” to do your most productive functions. Set it up to coincide with the most productive time of your day, what ever that is.

4. Conversely, run your day with most of your time and effort concentrating on your most productive functions, but block an hour or two to take care of the rest. Try to make it at a point in the day when it will have the least impact on your main productivity.

5. ”Do something great—before lunch time”—I forget who said this, but it’s virtually transformational. I know everyone has different peak production times during the course of the day, but by doing your best, most productive work early in the day, somehow the rest of the day just flows more smoothly. A sales friend of mine refers to this as “make the dreaded call first”—as a salesman, customer contact is the most important thing you do, and the whole day can go better if you make your sales calls first thing. Try it!

6. If you’re a manager or business owner with staff, hire one or two people to cover the multitasking functions—that ability is a talent by itself and should be respected as such. By doing so, you’ll free others to do the jobs they were hired to do. Do you think that might help your bottom line?

Maybe we can’t free ourselves completely from multitasking at some level, but we do need to be intentional at limiting its control over us. Our future success depends on it.

Is multitasking a problem in your job or business? Do you think it’s inescapable? What are you doing to control it?

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Steady Paycheck VS. Self-Employment; Which Is Right For You?

By Kevin M

Have you ever noticed that truly successful people have little trouble saying “no”? They may do it politely, but they do it and do it often. And they’re on to something.

“No” is a control word, a word that has real power. When we use it, we’re in control. When we don’t, we’re open to the control of others.

By saying “no”, we guard our time, our efforts and even our money. When we say “yes”, or even “maybe”, it can mean open season on all three. If you’re a “yes-junkie”—a person who feels compelled to say “yes” to nearly any request for help from nearly anyone—you might be your own worst enemy.

If we’re going to get anywhere in life we need to focus on what it is that we do best. Life is multi-faceted, but we all have two or three things that are especially important, and that’s where being able to say “no” is critical. It’s the little word that when spoken emphatically gives us the space we need to do what we do best.

Learning to say no—and meaning it—frees you up to move on to the next order of business, to that thing that moves you forward in your life. Is it any wonder that successful people master this concept?

Why we’re reluctant to say NO

What are some of the reasons we might find it hard to say “no”?

• We want to please others and saying “yes” usually accomplishes that
• Saying “yes” is easy; saying “no” often opens up a line of questioning
• We don’t like confrontation, and that happens a lot more when we say “no”
• When we’re really thinking “maybe” or “I’ll see”, we instead default to “yes”; after all, we never want to seem indecisive
• Saying “no” might indicate that we aren’t “team players”
• Like a candy bar, “yes” brings a short term high—“no” can bring on a guilt trip
• We learned to hate hearing “no” when we were small children and never outgrew it
• The word “no” has a negative connotation and we don’t want to be negative
• Saying “yes” has become a habit
• We think “I’m a nice person, and nice people say YES!”

It would appear that our reasons for not wanting to say “no” have more to do with psychology and emotion than with reason and logic. And that’s the main purpose for setting up a list that highlights the reasons. It might be easier to get control of our fear of saying no if we can get a handle on the reasons why we do.

The problems we cause by refusing to say NO

Not being able to say “no” has a way of complicating our lives. Not only will the infrequent use of the word take us away from our main goals, but it also has the potential to complicate life by drawing us into situations we have no business being in. Consider the problems we bring on ourselves because we don’t want to say “no”:

We can over-extend ourselves. How many obligations can you juggle in life? The more you say “yes”, the more obligations you take on. Each of us has time and energy for only so much activity, and if we get pulled in too many directions we can quickly become part of the problems in life, not the solutions.

We become distracted. Focus is an underappreciated concept. The more directions we’re pulled in, the less focus we have. The less focus we give to our most important endeavors, the less successful we’ll be.

We set ourselves up to be manipulated by others. If you’re a yes-junkie, then others will always have undo control over your time and efforts. Some people can never do anything on their own while others are perpetually needy. You can’t fix that and helping them will never improve their circumstances. The best thing you can do for them is to cut them off and let them learn to fend for themselves. (More likely, they’ll find other yes-junkies!)

We damage our self-esteem. What usually happens when we say yes to someone is that we give them our time or our efforts. If we say yes to most requests that come across our paths, then we can degrade our own time and effort. In most cases, we’re giving away our resources—time and effort—for free. If we’re virtually giving them away, then they effectively become worthless. When what we have to offer doesn’t have value, we can question our own worth.

We help everyone accomplish their goals, but never accomplish our own. This is the deepest root of the problem. While it may seem noble to help others, that effort can drain our ability to go where we’re heading. If you find that you’re always missing the mark on your goals, the answer may be in your inability to say “no” to enable yourself to concentrate on what it is you truly need to be doing.

The benefits of saying NO

When we learn to say “no”, we begin to free up our time and energy to concentrate on what’s really important.

Let go of the “chief cook and bottle washer syndrome.” Each of us can wear only so many hats in life and still be effective. When we say “no”, we’re getting rid of them, and that’s a good thing. No matter how talented you may be, you can’t do it all. It’s just a delusion, and once its gone life gets more productive.

Change the expectations of those around you. People have a way of coming back again and again to those who help them. Have you ever noticed that people will go to some for help while avoiding others completely? That has to do with expectations—and you want to be in the second group. While it might feel good to be needed, it isn’t terribly productive! If you stop trying to put out the fires in everyone’s lives, they’ll start respecting your time. We all need that.

Ability to concentrate. Each of us has only so much time and energy to live our lives, so it’s important that we spend it on activities that will have the greatest impact. Better to accomplish one or two goals completely than to hit a dozen halfway.

“Nothing can add more power to your life than concentrating all your energies on a limited set of targets”—Nido Qubein

Make sense?

More free time. Accomplishing our goals is important, but so is having time to enjoy life. The more we say “no”, the fewer obligations we have, and the more time we have for everything, including rest and relaxation. There’s a double benefit to this as well: the better rested we are, the more effective we can be at what ever we do. Think of it as an energy multiplier.

 
Sometimes it seems as if we wander through life in a fog. So much is coming at us so quickly that we feel overwhelmed. It’s not that we can’t handle what’s coming at us—we usually can—we just can’t handle so much at once. One of the best ways to get control of this is by using that tiny but powerful word “no”. It blocks the distractions, intrusions and manufactured obligations that can slow us down and drain the life out of us.

Try saying “no” more frequently and see if you don’t find yourself having more time, energy—and success.

Next Post: The Fallacy of Multi-tasking

By Kevin M

Money Reasons did a review on a book called How Rich People Think. I commented on the post, and it got me to thinking about some issues that may go deeper than rich versus non-rich. As much as we might want to think of rich and non-rich as a state of being, there are components to each that make them happen—a mechanical process perhaps.

Much of that seems to come down to how we think about money. Money is the conventional dividing line between rich and poor, but it seems that our attitude toward it—whether we see money as an obstacle or as an opportunity —seems to have a huge impact on where we go with it.

So how exactly do we define obstacle and opportunity mindsets as it relates to money? Rather than attempting a deep analysis, we might be better to focus on examples of each type of thinking. In this way, we can not only see our own thinking, but we might also see how it either holds us back or pushes us forward.

Money as an obstacle

If you see money as an obstacle, you’re likely to see common ground with several of the following:

• You’re mind is never far from your pile of bills
• A single large bill has you in a state of near paralysis
• You worry about potential upcoming bills
• You hope you can make it to the end of the month; next month, the same cycle will repeat as it has for years
• Your financial M.O. is centered on crisis management
• You’re scared to death that you’ll lose your job—and have no idea what you’ll do then
• You don’t particularly like your job, but you play the “go-along-to-get-along-(hopefully)-until-retirement” game
• You’ve stopped entertaining serious thoughts about what you’d actually like to do for a living
• Your house and car are important components of who you are
• You fixate on your employer paid benefit package
• A comfortable retirement is the holy grail of you financial plans
• You worry about how other people will perceive your financial situation
• You live for weekends and vacations
• You’re more concerned with keeping what you have than with advancing in your career and finances
• You mostly think that luck is the main reason other people are successful
• You periodically dabble in TV infomercial get-rich-quick schemes, hoping that you’ll discover your own lucky streak along the way
• Your dreams have morphed into wishes and outright fantasies

This list is long but please know that it isn’t an attempt to insult anyone. It’s easy to come up with so many examples because most of us are either in this mindset or were raised in it. You might even say that it’s the default financial mindset.

Look at the list in total, rather than at any one of its components. Notice that the thinking effectively puts you into a box. There are no doors, no windows, no way out—in other words, you’re stuck! Because you’re surrounded by fires that need to be put out, there’s never time, money or mental energy to move forward to a better life.

The money-as-an-obstacle mindset mostly repels money, which ironically keeps its absence as the central focus in your financial life.

Money as an opportunity

If you see money as an opportunity, you’re likely to see common ground with several of the following:

• Money is a resource to be channeled, leveraged and increased
• Money is a tool that buys the really important stuff, like free time, exciting adventures, interesting experiences, freedom from worry and choosing your own destiny
• Houses and cars are important, but not if they get in the way of the really important stuff
• Pursuing opportunity is the goal—there is no end game
• Problems are details that need to be solved
• You avoid having a big pile of bills, but if you ever find yourself with one and it’s interfering with your pursuit of the really important stuff, you’ll get rid of the bills and what ever amenities that are producing them
• Nothing is certain, but you’re willing to try anyway
• You see life as a dynamic, not as a status quo, and that dynamic plays into your life’s plans
• You see a day—any day—as an opportunity to do something important
• Retirement is not the goal—living a rich and fulfilling life is
• Building a box is for others; your life is “out there”…somewhere
• Investment losses don’t paralyze you; wealth building is a process and you’re in it for the long haul—you avoid high risk speculations for exactly this reason
• You must be self-employed—there are risks to this, but a traditional job will get in the way of the really important stuff in your life and could never contain your ambitions
• Being concerned with what others think of you or your finances gets in the way of the life you’re trying to lead, so you don’t bother yourself with it
• You associate mostly with like-minded people, who feed and strengthen your convictions
• Your like-minded friends are providing you with opportunities you would never have discovered or mastered on your own

Thinking of money as an opportunity doesn’t guarantee that you’ll be rich but it does seem to attract money and it’s easy to see why. Money is held up not as the solution, but rather as a tool, an enabler, that gets the opportunist what it is he truly seeks in life.

Ironically it’s also a freer way to live. The opportunist may decide, for example, that if a house in the suburbs with a big mortgage is an obstacle to his better life, then the house will have to go. Among the obstacle crowd, this would be a heresy.
 

Our minds work much the way the rest of our bodies do—repetition and regular exercise create new patterns and habits. Do you believe that coming to think of money as an opportunity is a state of mind worth creating?

Related Posts:

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Work/Life Balance: Lessons From the Sea
Steady Paycheck VS. Self-Employment; Which is Right For You?
Staying Motivated When You’re Stuck in Neutral
Are You Pursuing Your Own Goals – or Filling Quotas Set By Others?
Imagine Being Owned By No One

“You have to spend money to make money” is a popular business adage but the wisdom of this advice can be applied to your personal finances as well.

Spending money in business is all about assessing risks, taking chances which will grow your brand, and looking for opportunities. These are all attitudes you should take toward your personal finances in order to make your money work even harder, and to have the skills and knowledge to make the best investments.

Successfully making money by spending it will mean following these four tips to ensure you choose the right spending options which will make you money.

1) Conquer your fears

In order to spend money with the aim of making more, you need to actually spend it in the first place. However, most of us work so hard for our money that when it comes time to part with it again, we can hold a bit of a tight rein.

It’s easy to doubt yourself and question whether an investment really is the right thing to do with your funds – what if you lose the money, what if it’s all a scam, what if it doesn’t work?

You can sit for days on end thinking of reasons not to spend money to make money, but once you’ve made the decision to expand your wealth in this more aggressive way, you need to keep taking steps towards your goal. To help manage your feelings of fear about your investment, set yourself a budget and be as generous as you can. With that portion of money dedicated to your investment, it is already spent in your budget, so make sure you go ahead and spend it.

It is possible you will lose some of your investment, or break even for your troubles, however, if you are willing to keep researching and keep investing, your risks can take you where you want to go. There is no ultimate secret to making money through investments – it comes down to the fact that if you want to make big returns, you have to put in big investments and along the way you will gain the knowledge you need to take the risk out of the equation.

2) Invest in appearance

Significant amounts of a business’ income will be spent on their branding. This includes their website and business cards, as well as their advertising, promotions and PR. While we’d all like to think it’s what’s on the inside that counts, there is no escaping the fact that we are all judged by our first impression, and businesses know this.

That is why they work hard, and spend hard, to create the right image from the beginning. Even if a business is one guy working from his basement, it is important that he starts on the first day of his business with the image he wants to portray. It is easy to start out with cheaper business cards you’ve designed yourself or a Hotmail email address, however it is not as easy to change the public perception of yourself and your business once it’s out there.

You will be branded from the beginning based on how you appear to the world, so if you are going to spend money to make money, invest in your own branding. No matter what your goal in life, make sure you are ready to achieve it, and that you exude that confidence.

To be successful in any industry, whether you are a gardener or a lawyer, people need to feel comfortable in order for them to put their trust in you. Therefore, rather than turning up to quote for landscaping in a truck with equipment falling out of every window, invest in storage systems, invest in keeping your equipment clean, tidy and new and your customers will invest in you.

3) Invest in efficiency

Businesses also realize the importance of efficiency in their products, services and business operations because the turn around on a product or service can be the difference between you getting the job, or the contract going to your competitors.

It is also just as important that when you promise efficiency you can deliver and so successful businesses will start from a position of strength when it comes to their operations as well, investing in the equipment and technology which will allow them to deliver the best solutions from the start.

There are a number of lessons you can learn about efficiency in investments and the first is to do things right the first time. Don’t start out spending your money on investments without the professional advice of a financial planner or investment broker relative to your investment medium.

It is not an efficient investment practice to start out on your own, so plan to enlist the help of an expert when you can afford it, because without expert knowledge and advice you may never get to the point of being able to afford it!

Spending your money with the help of experts in the field will not only make your investments more profitable, but more efficient to fit into your lifestyle. You may not be able to afford to quit your job and become a career investor, but as the money you spend returns to you, you may have that option in the future. Until then, you need to get on with your job and your life, and with the help of a financial planner or broker, you will have the tools and technology to keep up with your portfolio, make decisions and stay informed with the minimum investment of your time.

4) You get what you pay for

You can spot the difference in quality a mile away between a Burberry trench and a department store knockoff and in order to spend money to make money, you have to spend it on the best. Work with the best people with the best experience in their field to advise you. Do your research into the best companies, stocks or properties in which to invest.

Most importantly expect the best at every turn because as soon as part of your team fails, it can bring the rest down with it. Don’t be afraid to maintain the best, because you are after all, paying top dollar and expect top dollar performance and results in return.

Alban is a personal finance writer at Home Loan Finder, a home loan comparison website.

Do you think there are things we should spend money on that have the potential to make us even more money? It doesn’t have to be investment, but anything that might improve job or business prospects, enhance income or reduce spending—the field is wide open, so have at it!

By Jacob Mojiwat

Being at sea for long periods of time can be isolating. You cannot access the Internet or reach your friends and family at a moments notice, but there is something wonderful about being out in a world that is just you, your crew, your boat, and the elements. I find that many of the principles I live by are ideas that I formed while I was out on these adventures, away from civilization.

Here are the main ideas that I’ve been contemplating lately, and find to be truly relevant in day-to-day life:

Sometimes you have to swim against the current if you want to get to where you are going

There are so many times in life when it feels as though everything is going wrong. They say bad luck comes in threes, but all too often it comes in a tidal wave, or at least a swiftly flowing current that feels as though it will wash us away. It is hard to swim against that current. It would be so much easier, and more peaceful, to drift along with it.

Maybe it would be easier to take a job that I don’t like rather than to keep struggling to make ends meet, while applying again and again for jobs that I truly want. Maybe it would be easier to stay in a relationship that my friends and family approve of, with a partner who is financially secure, rather than getting involved with someone I am passionate about who also happens to live a life on the margins of society, struggling to get by. Maybe it would be easier to easier to heat up a frozen pizza and spend the evening watching TV, rather than exercising and cooking a healthy meal afterwards.

The thing is, though, that if I drift with that current, it will wash me out to sea. Maybe I was hoping to explore a coral reef. Maybe I wanted to take some underwater photos. Maybe I just needed to get back to my boat. The current might be strong and really tugging on me, but at times, if I want to get to where I am going, I have to push back and find the strength in myself to swim against the current.

What always surprises me is that once I start swimming against the current, it is never as hard as I thought it would be. It isn’t a back-bending effort. Instead, it’s liberating and exhilarating to accomplish something that I set my mind, and body, to do.

At sea, it’s best to wear a life jacket

I don’t think I have to tell you why life jackets are important. They can save your life. We may think we don’t need a life jacket though, as I have gone boating many times with people who told me they were strong swimmers, the weather forecast was good, that the life jackets were too heavy, too bulky, too much of a nuisance. I just ignore them and tell them to wear the life jackets anyway. Why would I do that? I’m an independent thinker and I believe in swimming against the current. Why insist on a life jacket?

Because life happens, that’s why. You can’t really predict the weather. Even a strong swimmer can get hit on the head or faint or get sick. Likewise in life, at sea or on land, we all need an emergency plan. Especially if you, like myself, believe in swimming against the current. If you’ve done something that nobody in your support network of friends and family approves of, then you have to be ready to go it alone. And that means planning ahead and taking precautions. Don’t live beyond your means and always set aside a little money for emergencies.

Find a good friend or family member who you trust to be your emergency contact, in case you need help suddenly. Think ahead about the various ways in which life could take an unexpected turn and plan ways to cushion the impact when it does. I can’t predict the weather, but I can guarantee you one thing – life happens. And when it does, you’ll be better off if you’ve anticipated the unexpected.

The fishing is better after a storm

I love storms. The more thunder and lightning, the better. But there are times in life when we go through storms that are not exciting or fun. Storms that are more like hurricanes or tornadoes, that come through our life and wreck our plans for the future, leaving us marooned, stranded, or adrift.

I can’t tell you that there’s anything enjoyable about going through alife storm, whether it’s a physical and meteorological storm, or an emotional, financial, or occupational storm. But you know what they say about weather; if you don’t like it, be patient because it will always change. Once the storm is over, you can walk on the beach and pick up unusual seashells, or you can go fishing. If you can simply take time to relish the calm and be open to possibility, your intuition will guide you to something new and
wonderful.

There is something to be said for “no wake” zones

Nobody likes having to slow down. We all want to get to where we are going and in a hurry, in possible. This is particularly relevant to me as I am often running late. But in a no wake zone, we have to slow down – a lot. I guess this is what city people experience when they get stuck in rush hour traffic. It’s what athletes experience when they have an injury. It’s what parents experience when they have to stay home with sick kids and cannot go to work. Like it or not, you have to slow down.

If you have to slow down, whether you like it or not, then you might as well try to find peace with it. I’m not a Pollyanna or even an optimist, particularly. In fact, I can be as pessimistic as they come. But at sea you have to be practical and budget your resources. If you are in a situation where you are forced to slow down and take some time, then it makes sense to budget that time to rest and renew your spirit.

Later, when you are rushing forward and desperately trying to make up time, you won’t be able to rest. Rest, meditate, and take time to enjoy life when you can, or you will burn yourself out. Humans are not perpetual motion machines so we need to take time to do our own routine maintenance. Otherwise, you’ll blow a gasket later on when you don’t have time for it.

Even with a flashlight, you can only see so far ahead

My underwater camera has a flash that will allow me to take pictures even when it is very dark, but even with a flash, you can only see a certain well-defined area within the circle of light. Beyond that, there is nothing but inky blackness. In fact, using a flashlight to try to see better makes it easier to see the area right in front of you, but makes it harder to see into the distance.

Sometimes that is true in life as well. We all get lost or off track at times, even with GPS. Wise seamen know that even if you don’t know where you are, you are somewhere. Don’t panic – if a storm comes up, do what you have to and ride it out. Being prepared beforehand will keep you better off if you find yourself in the dark. Eventually you will find your way out again, so don’t be afraid.
 

I truly believe that living these principles of the sea in everday life, is the key to success. Slow down, be prepared, and when the unexpected happens, you’ll be ready for it.

Jacob Mojiwat is passionate about the ocean and water sports. Currently he is sharing the wonders of scuba diving in Malaysia with others. His company puts together Asia diving packages for an unparalleled diving experiences.

This is a guest post by RP who is a regular writer for various finance related communities. She holds a degree in Marketing and Finance and is currently working in a reputed bank as a relationship manager. She writes articles on debt consolidation, debt settlement, frugality, savings, economies of states etc.

It can be quite a complex situation that you face when your relatives ask you about your financial situation. If your finances aren’t in the best of shape, you may be embarrassed to answer their questions. Financial discussions of any type can put us—or even the people we’re talking too—in an embarrassing situation. You can find ways to channel the discussion into something that can save some embarrassment to all parties involved.

Much of our willingness to discuss finances with the people who are closest to us may depend on the state of our financial affairs—whether we’re struggling with money, or if we’re doing well.

Financial discussions can be embarrassing if you’re doing poorly

Sharing financial problems with your friends and relatives can depend on the type of people they are. If your family and friends are the caring type who can give you advice on your problems without judging you, then sharing your financial problems with them can be a real blessing.

However if your family and friends are the other type—the kind who might even pour salt onto already open wounds—the discussion can be worse than just embarrassing. In a different direction, if your friends are more prosperous than you, you might want to avoid the topic at all—especially if they’re the kind of people who tend to flaunt their wealth. In such cases, it might help to keep all discussions in an entirely different direction and away from money matters all together.

Debt can also be an embarrassing topic, as people often become judgmental and blame you for your troubles. (Sometimes that’s true, but sometimes debt stems from circumstances beyond our control.)

But what do you do if others initiate discussions of your finances, discussions you’re not comfortable entering into?

Friends and relatives may be well-intentioned by offering you advice, but if that advice comes with a sharp edge on it, it may not be the type that will be of any benefit to you. It can even make you feel worse than you already do and weaken any ambition you have for dealing with your circumstances.

If money discussions are embarrassing, it can help to control the flow of the conversation. You can initiate a discussion on the latest happenings in the world or in the media, for instance. That can keep your relatives and friends glued to other topics and away from your financial problems.

It can also help to emphasize those areas of your life that are going well, or on those things that you’re good at. For example, if you’re a good cook, preparing a delicious meal can make them completely forget about your financial problems. Being good at something can make others see the good in us.

But you can even feel reluctant if you are rich!

This is another kind of reluctance but in an entirely different direction. If you’re financially better off than your friends and relatives, discussing money can also be embarrassing. Many prosperous people don’t like to talk about money around their friends and relatives out of fear that they may be asked for money. Still others feel that money matters need to be completely private for one reason or another.

But money conversations may also be embarrassing for the people we’re talking to. If you aren’t careful how you handle it, you can make them very uncomfortable. Often people feel that those with money might be lording it over them, or even bragging. If you have a tendency to do that—and you really need to evaluate your conversations and use of words—you could scare them away.

If you’re better off than the people closest to you, make a special effort to make them comfortable in your presence. Try to be very modest in front of your friends especially those who you know are struggling. If they have any financial problems, try to sort that out instead of telling about your finances. Never judge them—there might be root problems they can’t or won’t admit to—try to offer constructive advice, and for goodness sake, don’t try to show off!

Be humble as everyone loves a modest person rather than a proud one. You can even try to reach your relatives and friends to help them in some way; advice and companionship can be every bit as important as money! If you’re blessed to be well off, do your best to be a help to others, not to be another one of their problems.

It doesn’t matter whether you’re doing well, or doing poorly, talking about finances can be uncomfortable or downright embarrassing.

How do you handle discussing your finances with family and friends—yours or theirs? Are you completely open about your finances with people close to you? Or do you prefer to keep things quiet where money is concerned?

Related posts:

What Would You Advise a Friend Facing Foreclosure?

Ten Financial Mistakes You Can’t Afford to Make

Ten Tips to Avoid Money Conflicts in Your Marriage

Is Borrowing “The American Way”?

Build Savings or Payoff Debt — Which Comes First?