August 2016 - Rebel with a Plan

Month: August 2016

Don’t Neglect Personal Development

August 29, 2016

We’re pretty bad at taking care of ourselves. Usually when it comes to health. How many times have you used that gym membership you got three months ago? Health and eating one-to-many sweets aside, the area people just as often neglect is personal development.

Most of us just don’t make space for it in our lives and our budgets.

One of the first things to do when getting serious about your money is to look for ways to cut back your expenses. Cut the cable. Don’t eat out (no more Chipolte 🙁 ), make your coffee at home instead of getting it at the coffee shop. You know the gist.

Everyone is told to do it because of the importance of awareness in spending. It’s what I did when I first set out to understand my personal finances. I looked up “how to make a budget”, quickly got distressed because several of the budgeting styles sucked, then found a budgeting style that worked for me (!!) and got to work on figuring out where I could cut back.

While I didn’t have the big evil cable bill, I was able to find different areas I could cut back. Some of my bills, auto insurance especially, I was able to get reduced by calling in and asking about ways to lower my bill.

Fresh off from cutting expenses, I felt great. My budget categories mirrored what was on other popular budgets, so it made me feel good. I’m in with the crowd! I have a budget and know where my money is going! *gives self a high five*

But then things started to suck. Not in the typical, “I hate budgets” kind of way (because I had found a budget style that worked for me). What sucked was guilting myself out of buying anything that interested me educationally or in a growth sort of way.

A membership to Treehouse? Sounds awesome! But it’s not really necessary, so I don’t need to buy it. *spends the rest of the day passively watching TV while the thoughts of not having the thing consume my mind*

Often times, in the quest to cut expenses, spending on personal development gets cut. Sometimes without even realizing it. Many budgets don’t have a category for personal development. And if you do spend on personal development, then it’s seen as wrong or unnecessary.

When a book lover mentions that they *actually* spend money on books for leisure reading, the spending is knocked down. You know there are libraries, right?! Just read stuff online for free!

These purchases aren’t bad. Spending money on yourself, on things you feel will enrich you, is not bad. When you consider how personal finance is largely behavior and personality influenced, you can start to see how closely it relates to personal development. Personal growth matters in personal finance.

Recently I’ve started allotting money towards personal development every month. It’s now factored into my budget. Sitting pretty right in between that pesky electric bill and my entertainment budget. So next time I see an e-course on self-pub book design, photoshop, or a hand-lettering guide, I can buy without remorse because I know I’ve made space and budgeted for it.

Don’t Ask Your Bank Account to Spot You

August 25, 2016

Don't spend with the expectation of getting paid by a certain date/amount. It's important to always keep a healthy buffer in your bank account. Click through to read more

Payday always seems like so far away. You get paid, money goes to bills, food, and your other expenses and then it feels like dry season for a while until next payday.

Right in the middle of this banking drought of yours, you are tempted to purchase something. A crazy flash sale might be going on at the mall. A surprise Beyonce concert could have just popped up. Dog adoptions are going on across the street (my weakness…).

You’re tempted to make a big purchase but payday is far off. It’s crackin’ decision time. The agonizing choice of a) not buying it (nooo!) b) putting it on the credit card and worrying about it later or c) pulling out your debit card and using the small amount you have left in your checking account. Waiting on a hope and a prayer for payday to come fast.

The hope is that your bank account will spot you.

It’ll look out for you while you make the purchase. There isn’t much left your bank account can give you but payday should be coming soon so all will (in theory) be well. The money will come in hopefully as expected.

That person you helped out last week is supposed to be giving you a check on Wednesday. The direct deposit from your full-time job will hit on Friday. Your one pesky freelance client who still hasn’t paid you said they will be sending the money over tomorrow.

Everything will be fine, you say with a slight twitch in your eye and faster than normal heartbeat. Your bank account isn’t a good thing to provide you a spot. Keep a buffer in checking account.

Maybe you’re a person that likes to live on the edge. A few steps from an overdraft notice or a credit card bill to big to pay in full at the due date. While it’s cool to buy something you’ve had your eye on, make sure your checking account is in a healthy place to justify it.

Not necessary an emergency fund (although those are important!) but also have a buffer in your checking account. Some wiggle room. A cushion that won’t deflate quickly in the event of a payday delay.

Asking for a spot is good, but keep it to the gym and not your bank account.

What you do think about asking your bank account for a spot? Should you go out and spend money on the expectation of getting paid by a certain date?

The Price Tag of Motivation

August 22, 2016

What happens when your motivation goes away and need some more? More self-development books? Sign up for a yoga membership? Click through to read about the price tag of motivation (and a better way to help reach your goals!)

I never cared much for the movie Anchorman 2: The Legend Continues. Like many unnecessary comedy sequels (I’m looking at you Zoolander 2) it felt forced and flat in comparison to the original Anchorman movie. Which, let’s be honest, everyone can at least laugh at little at it.

Ron Burgundy’s special bond with his beloved dog Baxter made #dogbonding even more profound. Every wants a bond like that!

The difference between Anchorman and Anchorman 2 is the fact that the first one gave people an upbeat feeling and feel-goodness while the second movie went downhill fast and wasn’t very satisfying.

Motivation kinda words the same way.

Having motivation is a wonderful thing…but not all it’s cracked up to be. I mean, it can be really freaking unreliable. It’s kind of like the over zealous friend who, on a Tuesday morning, proudly declares to go out for drinks on Friday night. Then Friday rolls around and they cancel. (Maybe try again next week?).

Everybody loves a good motivation boost. The most notable one being New Year’s resolutions. You know how it goes. You set a big, ambitious goal to (lose weight, be productive, write the next great American novel, etc) and for the first few days, things are good. You go to the gym (exercise! new body, who dis?), be super productive (even with checking your phone every five minutes) and write your heart out for half an hour on your novel.

Then you might skip a day. Practice a little less the next day. Get busy for a week. Then it’s all over and your back to being in a slump. The motivation is gone and you need some more.

How much is all of this motivation costing you?

Buying a bunch of self-development books

…without taking action after reading them. I see this sometimes when discussion comes up about self-development and motivation booster books.

“Yeah, I just finished Big Magic. It was so good! Now I’m reading Daring Greatly, then I’m going to read The Desire Map!”

Woah, slow down a little! All of those books are great (and you should definitely read them!) but don’t let yourself get caught up with reading so much that you don’t practice some of the stuff you have read. Action cures a lot.

Getting yoga and gym memberships

Signing up for a yoga and/or gym membership seemed like such a great idea. Maybe you were enticed by the promotional New Year’s pricing and felt like you just had to sign up. Getting a gym membership seemed like the perfect motivation for exercising more. Now every month you’re dropping $30-100 a month on something you might only be using whenever you have a motivation boost.

Small “treat yo self” splurges

A Starbucks latte is a powerful thing. Mainly because it’s ~~loaded with sugar and only about %5 coffee~~ a motivator for people. The perfect “pick me up” to starting something. Even if you only buy one $5 dollar latte per week, that means your motivation boost is costing you around $20 per month.

We’re addicted to constantly seeking out motivation. We have a price tag placed on it, get it, then it runs out, and we want more. It’s a good thing to get started with but not all that reliable.

Building new habits is hard and solely using a motivation boost to develop them isn’t going to go over well. Motivation is fleeting while consistency and daily actions are constant.

The price tag of motivation. How much are you spending on it?

Dear Debt: A Story About Breaking Up With Debt

August 15, 2016

Dear Debt: A Story of Breaking Up With Debt, book review. How one woman was able to pay off $81,000 in student loans (without living with parents or making six figures). Click through to read!

Being in debt is lonely and mind numbing, but it doesn’t have to be. Dear Debt is a story of one woman on a journey getting out of $81,000 of debt, without living with her parents or making six figures. She launched a new career and money mindset in the process.

Melanie Lockert, author of the book, is a freelance writer and event planner, who runs the popular blog, Dear Debt, which won the Best Debt Blog award at the 2015 Plutus Awards. The site features a diverse group of people writing letters of action to break up with their debt.

Dear Debt was actually one of the first blogs I read when I started to get interested in personal finance. I found the site from my google searches of hating debt and wanting to get rid of my student loans. It’s been a great relief to read people’s different debt stories and the mutual hatred of debt. Who knew debt hatred could be such a bonding and relatable experience! 🙂

Recently, Melanie released her first book, Dear Debt: A Story About Breaking Up With Debt. The book chronicles her first tango with debt at age 17 when signing up for student loans, all the way to graduate school and later on with life and the presumed societal inflations of lifestyle.

The book was released on Friday and I devoured it over the weekend. I kinda got really enveloped in it to point where I forgot about finishing my binging of Stranger Things on Netflix. So yeah, the book was more important to me than “netflixing”, that should tell you how good it is!

The beginning of the book frequently mentions the psychological and societal attitude towards debt. People, starting when they’re teenagers and signing for their first set of student loans, are led to believe debt is a normal thing and not something to worry about. Everyone’s doing it. Melanie talks about how she broke free from the perspective and took charge of her debt situation.

People like to say money isn’t everything. While that’s true to an extent, I firmly believe the only people who say that are people who haven’t been face-to-face with being broke or feeling buried under debt.

Melanie went through college and graduate school pursuing various creative endeavors in theater and the arts. She got her bachelor’s degree in theater and master’s degree in performance studies. Because of her activities in the creative field and non-profit work experience, she thought she was destined to a path of low wages and struggle.

Many people have similar mindsets to where she was at. They think they will never be able to reach financial independence or be in charge of their money due to their situation. The book breaks down different steps on moving past a limiting money mindset to developing a proactive view towards money.

Money is not good or bad. Money is simply a tool for opportunities

Melanie talks about the negative toll her student loan debt took on her and how got out of a rut. She details different steps she took to start saving, even through seasons of underemployed and a low-wage nonprofit salary.

The book covers how to get started with side hustles: strategy, building your brand and dealing with things like taxes.

The biggest lesson is shifting your money mindset. We all have a unique mindset when it comes to money: the way we view saving, making more, and spending triggers. Mindsets and bad habits can be remedied and improved upon. Changing your money mindset is arguably the most important thing towards staying motivated to eliminate debt and achieve your financial goals.

Being in debt doesn’t have to be a miserable and lonely experience. This book helped me remember that.

Dear Debt: A Story About Breaking Up With Debt is available now!

Robots Got Me To Start Investing

August 8, 2016

Investing always seemed like a complicated and scary process. Using a robo-advisor helped me get over my fear and confusion of investing. Click through to read more about it.

I’ve always had a problem with waiting until things were perfect and tidy before doing something.

Whether it be spending half an hour to write a simple email, waiting until I had the perfect desk set up before I started working, or spending an hour in Sam’s Club trying to buy all the things in order to get my money’s worth. Yes, I definitely need that 30 pack of paper towels. Err…

My Type A tendencies are partly to blame. My personality seems to prefer when things are organized, put together, and backed with several hours of research.

This bad habit somehow trickled into my retirement planning. I read several (read: dozens) of blog posts about ways to save for retirement, different accounts to have, how to maximize, amounts to save and so forth.

I gobbled all the information up and had a craving of curiosity for more. I read more about the different types of investments to buy and why low-cost index funds were great. I stared at so many graphs showing the importance of compound interest that I started having dreams about it.

It felt great reading all of it! I was inspired and went out and set up a Roth IRA account with Fidelity. I felt semi-obligated into opening an account with them because my 401k with my then employer was there and I wanted to keep the accounts under the same branch.

Then, for the next several months, my Roth IRA just…sat there. I was contributing to it but the money wasn’t invested in anything because I didn’t have the minimum investment amount to buy into any funds.

Most of the funds Fidelity offered required a $2,500 minimum to invest. I wasn’t near that, given my situation. My quick thinking made Vanguard pop into my head. Lots of people in the personal finance blog world use them! Awesome! I’ll switch to them! Nope. Vanguard required a minimum to invest for many of their funds. The only way to get around the minimums was to enable auto-deposits, which I couldn’t do.

I looked up ways on how to invest with little money, not expecting to find anything worthwhile.

I was still under the assumption I needed a good sum of money before I could invest. When I found a robo advisor, like Wealthfront, I found out the possibilities of being able to invest with a small amount.

Holy moly. These things can be really awesome! Robo-advisors make investing less scary.

After reading countless articles on investing to make myself more comfortable with it, I realized I’m more of a hands-off type of investor. At least for now. No matter how much I read about index funds and ETF’s, I still don’t feel comfortable buying them and rebalancing my portfolio myself.

When I finally realized this. I went out to find the robo-advisor to go with. While there are many, the two big ones are Betterment and Wealthfront. It seems like eeeevery PF blogger has covered Betterment. So I knew a lot about them already from the many articles I had already read.

Ultimately I ended up choosing Wealthfront.

Wealthfront won out over Betterment due to their fee structure. Betterment charges $3 per month for accounts under $10,000. 0.35% for account under $10,000 and $100/month auto-deposit enabled. The fees drop to 0.25% after $10,000 account balance and 0.15% after $100,000 account balance.

Wealthfront’s fee structure was more simplified. The first $10,000 is managed for free. Then it’s 0.25% afterwards. I signed up through a referral and was able to get my first $15,000 managed for free! Whooo!

I love it. With my first $15,000 being managed for free, I’m just paying the ETF fees (which average 0.12%). So I’m getting the simplicity and peace of mind of having a robo-advisor without having to pay the additional fee for the service (at least right now).

Setting up the account was super easy. I answered 10 or so questions relating to my age, when I want to retire, risk tolerance, and goals. The Wealthfront account dashboard was really well designed and laid out. Everything was easy to find and visually appealing.

They even had cool charts showing what my contributions could turn into over time. Everything about the setup felt way better than Fidelity’s interface. Even the mobile app feels better!A robo advisor got me to finally stop procrastinating about investing

A robo advisor got me to finally stop procrastinating about investing

A great thing about robo-advisors is the low minimum required get started investing. Wealthfront only requires $500 to get started. Betterment has no account minimum. This is great for people who know they should get started investing, but don’t have the $2,500 or $3,000 that many brokerages require. A lot of people say they can’t invest because they don’t have enough money. Robo-advisors, like Wealthfront and Betterment, are a way around this problem

I was able to let go of my restlessness from waiting around while I grew my savings enough to meet the minimum balance at Fidelity. Now I’m investing! Finally!

Do you use a robo-advisor for investing? What are some of the pros and cons to robo-advisors?

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