8 Bad Financial Habits to kick today

1)      Not saving anything for retirement. Come on, nothing? Who’s gonna take care of you when you get older? At least try to save 1% to 2% of your salary per month. That could be like $50 per month, we all should be able to afford that.

2)      Not keeping tabs on your finances and over-drafting your accounts. My wife used to do this all the time. You’ll overdraft your account (i.e. not have enough to cover a check or debit card purchase) and get hit with a $5 or $10 fee. That’s money being thrown away! Learn to balance your bank account and try not let this happen anymore!

3)      Picking up something in the ‘impulse’ section of the checkout. I know how enticing those candy bars and magazines look while you’re standing there waiting to checkout. That’s because retailers have concocted an evil plan to make you cough up a little extra dough at the checkout. Don’t fall for their trap!

4)      Carrying debt on your credit card. Some credit cards could carry an interest rate of 15%-25%. Yikes, that sucks. That means your debt is growing every month you don’t pay it off…and growing fast. Do what it takes to get that paid down…ASAP!

5)      Buying things and not using them. Sure getting a membership at the gym seemed like a good idea at the time, as well as the premium cable package. Don’t lie to yourself; if you’re not using memberships, admit it and cancel the policy. No use throwing away money each month.

6)      Paying unnecessary fees. We often will get hit up with small, couple of dollar fees. Whether it’s your bank charging you a $12 monthly service fee or your utility company assessing a $3 “service fee” to run your credit card, these things need to go. Where there’s a will there’s a way. Switch banks or set up a bank withdrawal system to pay your utility bill without a credit card. With a little digging, you almost always can find a way to avoid paying those pesky service fees that can add up.

7)      Eating out too often. Eating out is both super convenient and super delicious. Problem is, it can get super expensive. All those lunches we go out on and dinners we pick up on the way home eat up a large portion of our monthly budget. Learn to set a goal for yourself and pack your lunch or cook your dinner a couple more times each week.

8)      Hitting up the vending machine at work. We’ve all been there, the mid-morning/mid-afternoon sweet tooth. Unfortunately, those overpriced snacks and sodas are both pricey, and unhealthy. Do yourself a favor and next time you’re at the grocery store, buy a couple snacks in bulk. While you’re there, pick up a 12 pack of your favorite soda. That’s basically what the vending machine people do; buy in bulk and then double the price and sell it to you. Keep your desk stocked with delicious snacks and you’ll certainly be doing your wallet a favor (no promises about doing your waistline a favor…)

Kicking these 8 bad financial habits won’t make you rich overnight. They’ll certainly get you on the right track though!

Check out these other lists if you enjoyed this one:

8 ways to pull off brown bagging

The top 11 excuses to get out of yet another dinner with friends

Sunk Costs…how we can just learn to move on already

Being the nerdy financial blogger that I am, I recently was having a discussion with a friend on the idea of sunk costs. We came to the conclusion that sunk costs play a huge role in our lives and yet are not at all understood. I’d like to change that, prepare to have your mind blown. Once you understand sunk costs, you’ll never go back.

The idea of a sunk cost is that past events should not direct our future decision making. The variables that help us make a decision should be independent of something that occurred in the past. We see this play out in a lot of areas of our lives, both big and small. Let’s talk through a couple of examples.

This past fall, my beloved UNC Tarheels came into town to take on the Yellow Jackets of Georgia Tech. A couple of friends and I decided to go. We each bought a ticket for $50. The day of the game came and it was pouring rain, and it was cold. Cold, wet and miserable. We had a decision to make–whether to go to the game or not. We’d spent $50 on tickets, which isn’t a small sum. We sort of didn’t want to throw that money away. However, more than not wanting to waste money, we really didn’t want to stand in the cold rain. Using the idea of sunk costs, we realized that we’d already spent the money on the tickets and that the cost shouldn’t affect our decision. Our decision at the time was not about whether to get our money’s worth, but whether we wanted to stand out in the rain or not. We decided to skip the game and to stay in, and happily watch the game from our living room.

A sunk cost is the idea that you can’t get something back. We’d already spent that $50 on the tickets and weren’t getting it back. We then factored it out of our decision making process. The two common things that come up with sunk costs are time, and money. You’ll hear people say things like ‘well I’ve already spent so much time on it…’ or ‘well I want to get my money’s worth’. Nope. Get that attitude out of there. Stop making decisions based on something that you can’t get back.

The other classic example is an all you can eat buffet. You pay your fee to get in, and then can eat to your heart’s desire. The problem is that most of us really want to get our ‘money’s worth’, and we end up overrating. Using sunk cost, we should realize that the fee we paid to get in isn’t recoverable, and shouldn’t factor in to our decision of how much to eat. We should eat until we are full and not a plate more.

The economic term for this is: maximizing your utility. When making a decision, be forward looking, not stuck in the past. Learn to realize that money and time spent isn’t returnable, and therefore shouldn’t play a role in your decision. Learn to live in the present and it will set you free!

Hope you enjoyed the article! Here’s another two you might enjoy:

Any attitude of doing, not reading

6 ways personal finance is just like working out

 

1 Year Anniversary

One year ago I had this crazy notion that there were other young professionals out there who would be interested in listening to what I had to say about personal finance. I was just this pretty average yopro (young professional…don’t worry, it’ll catch on) who didn’t have any experience blogging and kept a simple Excel spreadsheet as a budget. It’s been a remarkable year for me, and I’ve been blown away by how much fun I’ve had. So I wanted to take a quick post to thank a few people, look at where YMF has come, and discuss where I’d like YMF to go.

Thank you

I definitely need to thank a few people. I’d really like to thank my wife, Christina, for all her loyal support of the blog. She not only puts up with me as I slave away on writing my next article and edits a lot of my articles, but she’s also encouraged me when I hit some low points blogging and celebrated with me during the high points. I’d also like to think my main editor, Jonathan. In a way he’s been my most loyal user, as he’s read almost every article I’ve put out. In addition to fixing my many spelling and grammatical errors (Word doesn’t catch all of them!), he also provides both helpful and snarky comments that keep my writing fun. A big thank you also needs to go out to Brian of FreeMoneyMinute. We started our blogs around the same time and it’s been awesome having a fellow blogger to encourage and teach me a thing or two.

Secondly, I’d like to thank my readers. You are the reason that I continue keeping this blog. Whether it’s just the fact that I see my stats and know that people are still reading the articles or when I get comments thanking me for a certain article, I really appreciate it all. A big shout out also goes out to those who have re-posted or shared articles on Facebook, Twitter or email. Whether it was voluntarily or after I shamelessly begged you to, it is always super appreciated. I can only do so much publicizing the word about YMF, and it’s because of the efforts of caring people who share that YMF has been able to grow.

Looking back

Over the past year:

• YMF posted 99 articles ranging in topic, including budgets, attitudes, retirement, investing and even helpful tips like how to get out of yet another dinner with friends.
• YMF has been fortunate enough to have been visited by young professionals from 49 countries. That’s every continent except for Antarctica, and I don’t think they really count.
• YMF’s articles have been read just over 9,000 times. Wow.

I’ve literally been blown away by these numbers and am just thrilled that there are that many young professionals (and even old professionals too!) who are interested in improving their finances.

Moving forward

For 2014, I’ve set a couple of goals that I’d like to see for the blog:

• Continue writing articles that are not only helpful, but also relevant
• Increase communication with my readers. For a blog to be successful, it really needs to be a two-way street. My articles will only be relevant if people reach out to me and let me know the types of questions or concerns that they have with their finances. My articles will only be helpful if from time to time readers reach out and tell me!
• Double the number of readers from last year. Wow! That’s quite an ambitious goal, right? (Did you read my article on setting a BHAG?) Personal finance is a huge area of concern for young professionals like us. Although I don’t have all the answers, I can certainly help point people in the right direction. Our first few years out of college can really set us up for financial success for the rest of our lives, or start us on a downward trend that will leave us in debt and forced to work forever! I’d love to continue spreading my articles and helping people out!

What I need from you:

• As I said earlier, a successful blog should be a two-way street. Please, please, please reach out with feedback (both good and bad) and with article ideas. The more I can hear from readers like you, the better the blog will be!
• To continue doing what you’re doing: spreading the word. Although I don’t expect every person reading to share the blog on Facebook or Twitter, perhaps you could tell some of your friends the next time you’re discussing finances (I know it happens!).
• Finally, keep reading!

This first year has certainly been a wild ride for YMF, and I look forward to seeing what 2014 has in store for the blog!

-Ben
youngmoneyfinance@yahoo.com

The 75% Rule

Payday, it’s everybody’s favorite day of the week. We finally get to see something for all the hard work we’ve put in. When the check finally clears in the bank, what’s your strategy to disperse your money? Do you have an automatic savings transfer that moves a pre-determined amount of money over to your savings account? Do you participate in your employer’s 401(k) plan and have the money automatically placed in your retirement account? How often do you make donations to charitable organizations? If you’re like most of us, these things probably don’t come easy. Your paycheck probably goes out almost as fast as it comes in. Before even thinking about setting up a budget to manage your spending, you’ll need to have the right mindset. I’d like to introduce you to what I call the 75% rule of managing your money.

Before spending a dime of your money out at restaurants, paying your cell phone bill or putting gas in your car, there are four important buckets to where your money should go. These four buckets should make up about 25% of your income, and are crucial to anyone that is trying to get or keep their finances in order. Here are the first four ‘transactions’ each month that you should make:

• Retirement: The old saying goes that you need to look out for number one. None of us want to work forever and we certainly can’t rely on the government or even family to take care of ourselves in our old age. If you’re not already, start saving 10-15% of your paycheck towards your retirement.
• General Savings: We all need an emergency fund and after that a savings fund for our more immediate future (5-10 years). Perhaps you’re looking to buy a house in the future or even a new (better be used!) car. A good 5-10% of your paycheck should be deposited into a savings account where it can earn interest and grow.
• Debt: Sure, debt’s no fun, but it got us to where we are today. Whether it’s the student loans that got us to college or the credit card loans that got us through that tough stuff, we’ve gotta pay them off. Always try your best to pay more than the minimum; none of us want to be in debt forever!
• Charitable Giving: Although you might not agree with me on this one, I believe it’s important for young professionals to give back to our communities, whether it’s to religious or other charitable organizations. We’ve been so blessed and it’s important to have an attitude of leaving our world a little bit better than we found it.

By consistently depositing the first 25% of your income into these 4 buckets, you’ll be setting yourself off on the right foot. Start looking at your income not as just one big amount that you can spend. Look at your income as 75%. If you make $50,000 per year, don’t think of it as being $50,000 to spend, think of it as being $37,500 (75%) to spend. Let your first 25% be as automatic as possible. By getting in this mind set of only having 75% of your income to work with, you’ll have the peace of mind to know that your future is being taken care of.

Thanks for reading! Here’s another one you might enjoy:

Big Picture planning

Store Credit Cards: What’s the real deal?

We’ve all seem them, almost every time we’re in a store at the checkout. “Would you like to sign up for a ‘xxx store’ credit card today? You can save $50 on your purchase today by doing so.” The offer always seems tempting. As we look at our purchases and consider what it’d be like if they were ‘free’ today, the offer actually seems pretty good. A reader commented on how he was in Home Depot recently and signed up for the Home Depot credit card. He was able to get $50 off his purchase that day and hasn’t used it since. To my horror, my wife pulled a similar stunt on me recently as well when she came home and announced that she’d opened a credit card at Loft. She was able to save $100 on her purchase and paid it off right there at the checkout. So I got to thinking, and I’m sure that some of you have as well, are store credit cards really a good deal or not?

Why do stores offer them?

Stores often put out their own credit card for the same reason that Delta Airlines or Marriott does. By tempting you with some ‘rewards,’ they bet that you’ll spend a little more with them and that you might even spend more than you can afford, and have to pay interest charges on it too. It’s win-win in their minds: more money for them and all they have to do is dangle a couple of free rewards that a good chunk of us won’t even utilize.

How does the card work?

Adding a store credit card is just like adding any other credit card to your wallet. They’ll run a credit check to make sure you are eligible and then it’ll be treated as a normal credit card. Some store credit cards you can use elsewhere (i.e. the Loft card has the Visa logo so you can use it elsewhere), whereas some you can only use at that store. You’ll then get a bill every month for the balance and if you don’t pay it off in full, you will be charged interest.

Will it affect my credit score?

Yes it will, and mostly in good ways. As it is just like a normal credit card, it can actually affect your credit. Part of your credit score is determined by the total amount of ‘credit’ that has been extended to you. By having more available, it shows that you are in fact more trustworthy. By paying your balance off in full and on time, it further demonstrates that you are a good steward of your credit. Both of these should increase your credit score by a couple of points.

Should I feel obliged to use it?

No. I’ve had a Belk Credit Card (thanks Mom for making me sign up) for probably 4 years now. I was buying a new suit and got like $30 off my purchase by signing up. I’ve used it twice since then. It just sits in my drawer at home. Even when I go to Belk nowadays I don’t even use it, because I’ve got my regular rewards credit card that in my mind gives me a good deal. If the card comes with a good rewards program then by all means do use it. However, most don’t offer that many valuable rewards for frequent use other than an occasional coupon. If it’s not worth it, certainly don’t feel obliged to use it. After a while, they might close your account for inactivity, but that shouldn’t matter to you because you already got your $50 off.

Is it really a good deal?

Not in my mind. I’ve got my Capital One Venture Card (Double miles on every purchase…thanks Alec Baldwin!) that I use for 99% of my credit purchases. It has the best rewards program out there that dwarfs any measly store rewards program. Sure, it doesn’t take too much trouble to sign up and make a purchase or two on a store credit card, so it wouldn’t be the end of the world to sign up for one or two. The $50 free cash offer just isn’t worth it to me. I don’t really want to be getting another bill every month in the mail and having to worry about something else to pay off and keep track of. I’d hate to worry about having another credit card out there that could get stolen and used fraudulently. I definitely run a pretty tight shift with my finances and try to keep everything to a minimum. For you, however, it might not be a hassle and you may just use it once. If it is a good deal in your mind (it’s hard for YoungMoneyFinance to say ‘no’ to free money), I’d say go for it, why not?

Thanks for reading! Here’s another article or two that you might enjoy:

How can I get my credit score?

Getting a car loan to improve my credit score?

Credit forgiveness programs

Help with New Year’s Resolutions

Hey there! Happy New Year to you. How is your 2014 looking so far? Did you make any good resolutions to better yourself this year? How are those going so far? How many times have you made it to the gym? How is that new diet working out? Have you already busted the budget that you promised yourself that you’d stay on? If you’re anything like me, sticking to your new year resolutions are tough, especially money ones. I think sometimes it’s easier to go to the gym twice a week rather than saying no to the $3 latte in the mornings. Well, I’d like to help make your new year’s resolutions (at least the financial ones) a little easier to stick to. Here are a couple of resolutions I know a lot of you are probably making for 2014 and then some older articles I’ve written to help you stick to them.

1) Make a budget. It’s tough to know where you stand financially if you don’t have a budget. A budget is not only a great tool to keep track of how much money you’re spending, but also a tool to help you set and achieve financial goals for yourself.

Where does all my money go?

Take the first step, make a budget!

If going old school with a spreadsheet isn’t for you, have you considered Mint.com? A lot of the readers here really enjoy it and rave about it. If you’re still not sold, check out this article on one of our readers and their experiences with Mint: Interview with mint.com user

2) Spend less money. Ain’t that the truth! It’s tough saying no to going out to lunch with coworkers or saying no to ordering dessert at dinner. There are two ways to manage your money; either make more money or spend less. Unfortunately, it’s much tougher for young professionals to make more money (unless it’s a side hustle!). One of the quickest and easiest ways to get your finances in a better place is to spend less money. It’s all about having the right attitude and mindset!

Having an attitude of never paying full price

Ways to save $110 this month

8 ways to pull off brown bagging

Excuses to get you out of another dinner with friends

3) Save more for retirement. If you’ve been reading this blog for any amount of time now and I somehow haven’t convinced you of the need to put aside some money for your retirement, I’ve certainly failed! To save beating a dead horse, I’ll focus on helping you save more for your retirement.

Two no brainer ways to save more for your retirement

How should I invest my my retirement money?

Traditional 401(k) vs Roth

4) Improve my credit score. It’s incredible how one little number can make or break you. Having a good credit score will help you getting a lower interest rate on a house, get a job, buy a car or even qualify to rent an apartment. How’s yours look? Could be better? Let’s make that happen.

How can I get my credit score?

Getting a car loan to improve your credit score?

5) Have more fun with my money. Honestly, the point of money is to enjoy it. YOLO!

Not forgetting to enjoy your money

How saving money can be fun

Consider making getting  your finances in order one of your 2014 New Year’s resolutions. Although it can be tough, it’s certainly not impossible! Best of luck with your endeavors and always feel free to reach out with successes or questions! youngmoneyfinance@yahoo.com

2014: The Year of the BHAG

As we prepare to close the books on 2013, there is always a great deal of reflection of the past year and anticipation for the coming year. We’ll look back and remember the good times, and reflect on the bad times. We’ll consider our shortcomings and make promises to ourselves for the next year. We’ll often make resolutions for the coming year. A good number of us will resolve to work out more, work at our jobs less, enjoy friends and family more, travel more, and worry less. What about a financial goal? Our finances, for many of us, aren’t at the top of our lists when making our New Year’s resolutions. They should be, and I hope that after reading this post, you’ll have a financial goal for yourself.

I hope that you won’t just set any old financial goal for yourself; I would encourage you to set a BHAG. A BHAG is a Big, Hairy Audacious Goal. It’s something so farfetched that people might laugh at you when you tell them about it. “I’m going to get debt free in 2014” or “I’m going to contribute 15% all year to my retirement”. Crazy talk! How in the world are you going to achieve those goals? It might almost seem not worth making the goals if they are so unlikely to be attained. False. What’s the old saying about shooting for the moon? Oh yeah, if you miss at least you’ll land in the stars. Don’t set simple goals for yourself just so you can cross something off your list and feel good about yourself. Set a goal that you’ll actually have to work hard for. Set a goal that would be awesome to achieve and let yourself get fully committed to it.

What’s my BHAG in 2014? Buying a house. Crazy, I know. I’ve been out of school for 2.5 years. My wife still has some college debt to payoff. Our emergency fund is good, not great. I’m not saving as much for my retirement as I’d like. We’re completely new to the real estate market here. There are a lot of things stacked up against us. For me to achieve this goal, I’ll have to really focus and control my expenses. I’ll have to remember that I’m buying a house if I get a bonus this Christmas and if I get another raise at work. I’ll have to focus my mind on that house whenever I feel like splurging at the store or when I go out to eat.

Having an ambitious BHAG will help keep you focused. It’ll help keep you on track because the only way you’ll achieve it is by staying on track. Your BHAG will start to be a major focal point in your life. You’ll dream of it when you go to bed at night and plan for ways to achieve it when you wake up in the morning. When tempted to get off track, it’ll pull you back in. “Sorry, don’t think I’ll be able to make the MLK weekend Ski trip. I’m trying to pay off my student loans this year.” A BHAG will be your focus and will keep you on track.

Take control of your finances and let 2014 be the year in which you are able to look back with pride. ‘I paid off $10,000 of my student loans in 2014’. ‘Wow, that’s crazy, how did you manage that?’ A BHAG. Set a Big, Hairy, Audacious Goal for yourself, one that will take focus and a lifestyle change to accomplish. Come up with a plan to make it happen and let the beauty of achieving the goal keep you focused. Let 2014 be a big year for you!

Feel free to leave a comment with your 2014 BHAG, we’d love to know what it is and help keep you on track!

Happy New Year from YMF! Here’s one other article you might enjoying reading:

Keeping up with your New Year’s resolutions

Seven free (or cheap) gifts that you can give this Holiday season

Nothing can be more stressful this time of year than not knowing what to give for gift exchanges. Whether it’s the Secret Santa at work or gift giving among friends and families, it can certainly be a stressful time. The pressure is on to get the right gift, often with a limited budget. Often we run out of time without having found a good gift and end up getting them the ol’ Starbucks gift card. #Classic. Instead of feeling pressured this year to buy another gift that the recipient may or may not like, here’s 7 free (or cheap) things that might just be better received:

1) Cook your friend or family member a nice dinner. Nothing says “I’m glad you’re in my life” more than a delicious home cooked dinner.

2) Cleaning. Who doesn’t like to keep either their workspace (co-worker) or their room (family) clean? But, who actually has the time or the motivation to do the cleaning itself? Get in a little early to work and tidy up your co-worker’s desk for them. Or come home early one day and tidy the house up for the family member. What happens if you work with family? Nice! Clean both for a double gift.

3) Re-gifting. Now I realize that this can be a little frowned upon, but hey, no shame in my game. Forget the thought; it’s really the gift that counts, right? So if you’ve got a gently used item that’s been lying around your house for a bit that you know someone else would enjoy, why not give them that? Get a gift from someone else that you’re not crazy about? Pay it forward and re-gift it!

4) Experiences. Nobody really wants another sweater, tie or gift card that they’ll lose next week. Get a little creative and give your giftee an experience they won’t quickly forget. It doesn’t even have to be big; often it’s the little, creative things that go a long way. Take that co-worker out for coffee one morning or take your friend out for lunch one day. Take your sweetheart on a walk in nature that surprisingly ends up in a picnic. Take that family member out and throw the ol’ pigskin for a bit.

5) A heartfelt, handwritten, letter. Handwritten letters are certainly a lost art. Try giving a meaningful gift this holiday season, and express your appreciation and gratitude towards a friend in a letter form. It’ll stop them dead in their tracks. Last I checked, stamp prices in the US were $0.46. I think you can afford that!

6) An IOU. Also known as a coupon, this type of gift is a promise to perform a certain act in the future. Perhaps it’s good for 5 back rubs for your significant other. Maybe it’ll be for a random coffee outing when you’re coworker is really feeling stressed. Perhaps it’s good for lunch anytime with a friend. Get creative here; it doesn’t have to cost a lot to be meaningful!

7) The gift of financial freedom. Introduce your giftees to this wonderful, really insightful, funny and helpful blog called YoungMoneyFinance. It’s completely changed your outlook on your finances and you’re confident it can help your giftee out as well! (Shameless plug…)

Gift giving around the holidays doesn’t have to be stressful. Don’t give into the pressure to buy a pricey looking gift just to impress the person you’re giving it to. Put a little more thought into the give – and perhaps a little less cash – and you’ll be well on your way to a great Christmas and holiday season.

Here are some other articles you might enjoy:

The end of year holiday bonus

Having an attitude of never paying full price (without at least trying)

Charitable donations at year end

If you’re anything like me, you’re probably bombarded this time of year with requests from charities for donations. Whether it’s the Salvation Army ringing bells at the local department store or calls from your alma mater guilt tripping you into donating to the school or your local church sending you emails with a 2013 budget update, requests for charity are all around at this time of year. Now don’t get me wrong – I’m all for donating a portion of your income to charity; I think it’s a great idea. But before you go writing those checks, here are a couple of things to consider:

1) Tax deductions. Charities will often use this as a big selling point, especially at year’s end. “Maximize your tax deductions in 2013…the end of 2013 is coming; donate to charity instead of the government.” Please see my post on taxes for more info, but basically, for most of us, this will be a moot point. When it comes tax time, there are two different methods of calculating your total net income. You can either itemize all your deductions (charitable, mortgage expenses, any medical expenses) or take a standard deduction ($6,100 in 2013). For most of us, the total of all our itemized deductions won’t be greater than $6,100, so we’ll just take the standardized deduction when calculating our taxes. Therefore, our charitable deductions won’t really come into play. So don’t fall into the trap of thinking that by donating more to charity that you’ll automatically save on your taxes, because most of us won’t.

2) All charities aren’t created equally. Although all charities will have been approved by the IRS (Internal Revenue Service) as a not-for-profit institution, your money won’t go as far in some charities as it will in others. Check out Charity Navigators  and prepare for your mind to be blown. I checked on the 10 ten “worst charities” and found the Firefighters charitable foundation. Now, if any of us got a call from this charity, our hearts would certainly be drawn towards them. Who could say no to helping firefighters? Well, once you see how effective they really are, you probably wouldn’t give to them. According to Charity Navigators, only 7% of all the funds you give to them help their stated mission. The other 83% goes to fundraising expenses and admin costs. Wow. Then check out Teach for America. Almost 83% of the money given to TFA goes to its stated mission. Quite a difference. Be smart with your donations and make sure it’s going as far as it possibly can.

3) With any expense, make sure it’s in the budget. What does a contribution to the Red Cross have to do with buying a cup of coffee at Dunkin Donuts? They both need to be in your budget before making the purchase/donation. I know, I know – how can I be so critical? Have I no heart? I love giving to charity just as much as you do, and my heart goes out to those in need. What I don’t condone, though, is over-giving, just like I don’t condone overspending. I guess if I had to recommend one over the other it’d be over-giving, but it’s still not ideal. You need to make sure your own financial house is in order before going to help others. Just like on airplane flights when they instruct you to “secure your own oxygen mask before assisting others.” As 2013 draws to an end, sit down and have a little H2H (heart to heart) with yourself and figure out an appropriate amount that you can afford to give. Those charities aren’t going anywhere, and will still be there in 2014.

The holidays are always a special time of year. We are so blessed and have more than we need. Please do consider giving back to your community to your charity of choice.

Thanks for reading! Here are some others you might enjoy:

Taxes FAQ

What to do with the year end bonus

The Trap of Contentment

The other day I was sitting back taking inventory of my finances. I’ve recently gotten a raise at work and the state of my finances certainly reflected that. I’ve been contributing 10% to my retirement fund and my balance has returned 20% this year. My emergency fund is well stocked and I’m well on my way towards my goal of having a down payment on a house next summer. My wife and I live a very blessed life. We’ve set aside some money already for Christmas presents and were able to go out to eat some this past weekend. Life is good I thought, perhaps I’m saving a little too much; we deserve to live life a little more comfortably. I had to snap myself out of it, what was I saying? That I should stop saving as much and can afford to spend a little more money each month? I’d realized that I’d fallen into a trap of contentment.

There’s an old saying that states “if you’re not moving forward, you’re moving backwards”. I’d realized that I’d gotten a little too comfortable recently and that in my comfort, I’d put future savings goals on hold for present comfort goals. It’s certainly easy to get side-tracked on our financial plans. Future things like: retirement, financial safety nets and buying a house can quickly seem far away when we’re not focused on the end prize. Financial distractions like supersizing our meal at McDonald’s, getting our morning $3 latte from Starbucks or buying that cute new outfit can and will pop up all the time. It’s easy to lose our momentum and drive and get sucked into the trap of contentment.

Eye on the prize

Let’s let ourselves daydream for a bit. Picture your future retired self. Where are you? I’m on a warm beach somewhere, and don’t have a worry in the world (except that the tide will reach my chair). Does that sound similar to your dream? Worry free and able to pursue your passions? Well achieving that dream of future freedom requires sacrificing some of your money and satisfaction here in the present. You’re depositing a part of your present with the knowledge it’ll be multiplied and returned to you in the future.

I know it’s not easy setting aside money each month for my retirement plan. I realize it’s not easy to say ‘no’ to going out with friends, especially after getting a raise at work. Dave Ramsey has a famous quote that says, “If you will live like no one else, later you can live like no one else”. That’s what it’ll honestly take for me to achieve my retirement dreams. I have to have a budget and stick to it. When I get a raise at work, I’ll have to increase the amount I deposit into my savings account and then increase the amount I spend on fun.

All about the mindset

The key to being successful with your finances isn’t necessarily saving more and spending less. They key is having the right mindset. It should be a mindset with an end goal in mind. It should be a way of approaching your finances with the mentality that where I’m at isn’t good enough and that I can always do a little better. I can always find ways to be smarter with my money.

Always keep yourself in check and do whatever it takes to avoid falling into the trap of contentment!

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