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Why you should NEVER buy an RV in retirement

“When I retire, I’m gonna buy an RV and travel the country”.

This may be great and all, but the year you turn 65 (or retire, pardon if I offend those who retire at 45 or 70) $60-80 thousand dollars could be a bit much.

I’m going to show you why buying an RV in retirement is a poor choice for most people.

Let Me Explain

Most motor homes people purchase cost somewhere between $50,000 and $300,000. This cost can be significant especially to the future value of your money. This graph is an example.

This is using a low-end camper probably used at about $60,000 dollars. ( https://www.rvtrader.com/dealers/American-River-RV—Sacramento-3018028/listing/2017-Coachmen-Freelander-26RS-119765660 ) over 30 years of retirement, that money can become quite substantial.

Now, Let’s consider vacations. Using “Get Away Guru’s” and other exciting promotionals. It’s not hard to find vacations. If you could budget $10-15,000 in travel a year during retirement that would be great! Maybe your goals are higher, but here’s the deal. In retirement you can travel a lot easier and on a moment’s notice. If you suddenly leave for 2 weeks in the middle of January to the southern hemisphere for warmer weather on a jungle safari, or to travel New Zealand, it won’t be as big of an issue as a family with kids going to school.

The mobility of being retired makes it easier to find travel opportunities at discounted prices.

Figure out what you want to do with retirement. Are you going to do several week-end trips, or do you want to do a 2-week expedition every year? How about several 4 day weekends at national parks around the country? There are so many options. Remember to consider that most people in retirement have a little bit less energy than a 30-year-old.

This is only assuming $80,000 of an investment in an RV type home. If you’re dropping $200,000 on an RV the numbers will only be bigger. With $200,000 the income at 6% being $12,000 a year.

How much vacation and travel can you get out of $5000 a year?

Remember, owning an RV doesn’t mean costs are gone, that’s just the cost of buying it. You’re still spending other money from retirement on gas, maintenance, RV parking, licencing, registration, and more.

Here are three articles that give some awesome consideration to costs, and lifestyle of owning an RV.

Consider the Costs of an RV- https://www.budgetsimple.com/blog/rvs-timeshares-and-vacation-homes-a-good-idea/

More thoughts on the expenses behind an RV – http://livingstingy.blogspot.com/2011/05/future-of-rving.html

Is an RV lifestyle right for you? – http://wheelingit.us/2012/10/17/the-darker-side-of-fulltime-rving-5-thoughts-to-ponder-before-making-the-leap/

My advice is If you are going to buy an RV in retirement to take trips in multiple times a year, save the money instead and use it on hotels and airfare. The bang for your buck is much stronger there, plus you aren’t putting your limited retirement savings into one of the fastest depreciating things you can. AAANND lets be honest, if you want to take an RV out for a couple of days, go rent one for one of those trips.

Ultimately it comes down to this: Keep it invested, the investment return is your play money in retirement.

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No More Resolutions: The 3 Keys of Achieving

Happy New Years Everyone!

Resolutions

I know now is the time of the year to be excited and happy about making a New Years Resolution.
“I’m gonna lose weight”
“I’m gonna start saving in my 401(k)”
“I’m going to read a book every month”
“I’m going to run every day even though its -1470 degrees outside”
And whatever other nonsense we tell ourselves once and then send into the magical air of wish-land *poof* to die a mysterious and definitely unnoticed death, because by mid-march you won’t even know your new years resolutions.

Real Goals

That’s because an unwritten goal is merely a wish. The goals that come to fruition are those that we record, monitor, and actively choose to achieve. We simply don’t take action on wishes. In Fact, According to Dr. Gail Matthews, the amount of success we have in reaching our goals nearly doubles when we create them properly.

The three  magic ingredients: Writing It Down, Commitment, and Accountability.

And even before you write it down, commit to it, or find accountability, you need to know what you want to accomplish! If you’re like most people you have the same 4 or 5 things that everyone wants, more money, more happiness, to do more fun stuff, to have less chaos, and to be more organized, but thinking why you want those, and what the purpose of accomplishing these goals when centered around your true character will make those goals that much easier to fully commit to.

VISION BOARDS – Not Resolutions

Might as well call this article Vision Boards Part 4. I’ve said it multiple times, especially in these articles get it from your head to paper,  how to write a vision statement, and utilizing a vision board, but it’s vital to learn about you. Write down whats most important to you, and then find ways to make those part of your daily actions. You’ll be happier. One way to learn more about you is through personality tests, such as the Color Code, or your HowToFascinate test.

How YOU Fascinate

HowToFascinate actually hooked me up with 100 Free copies of their basic HowToFascinate test for free! So, More than just finding your main definition and 3 or 4 characteristics, you can get some in-depth explanation of what it means to be like you are. Visit this URL and use the code “You-FinancialGinger”, until they are gone! http://bit.ly/2016YAF

Ingredient 1: Write It Down

Take some personality tests, and write that vision statement, then write down some of the goals you’re thinking of for new years. Do they even apply to what your personality tests say? Do they apply to who you are? It’s time to make the goals smart, specific, and personal. If it’s the same goal everyone else has, are you really doing it for you? Refine the list to look like you. Those you trust most can usually help to pin-point good goals.

For more science behind it, read this study about harvard students.
http://elitedaily.com/money/writing-down-your-goals/1068863/

“Harvard’s graduate students were asked if they have set clear, written goals for their futures, as well as if they have made specific plans to transform their fantasies into realities. The result of the study was only 3 percent of the students had written goals and plans to accomplish them…

After 10 years, the same group of students were interviewed again and the conclusion of the study was totally astonishing… The 3 percent who had written goals were earning, on average, 10 times as much as the other 97 percent of the class combined…

Think for a moment which group you belong to.”

(Bold, Italics, and Underlining added for emphasis)

Ingredient 2: Commitment

Commitment is a Vision Board. A super simple vision board I made was with blue painters type in a square right above my bed. I would draw or print pictures related to my goals with a word or 2 to explain it. I tape that picture inside the square and I’m now committed to achieving it.
Some of the goals came to fruition, I move them either to the trash, or to an accomplishment site on my wall, and some of them I end up not finishing or continuing either due to a change in priorities, information or ability.

Here’s my current vision board.

You can see I have goals to get a few more computer monitors to work better, to earn my Certified Financial Planner (CFP) designation, Publish 4 articles a month, start a podcast, have a date night every week, and make sure I take time for meditation and religious studies each day.

Those awkward ones on the right of my vision board. They are they rejects. One was a failed plan with a friend to create YouTube videos, another was the idea to do a super smash brothers tournament (I’m a pretty big nerd when it comes to that game), and the last one I removed because I ended up not getting this job with a tax firm I was shooting for.

The point is, those things change, and it’s good! Because you’re a human and you change. You’ve committed and worked toward the goal until you either a) accomplished it, b) changed your vision, or c) Lost the desire to finish it. I’m sure some goals we want aren’t being worked on, and we still certainly desire to accomplish them! Get them on the vision board. Commit to it.

Ingredient 3: Accountability

Everyone hates having a personal trainer, or a gym buddy; let me tell you – IT WORKS. When you have an accountability partner, someone who you must report to, you get to work on it much more effectively than not. Why else do you show up to work at a specific time the boss sets? It’s because if you want to get paid, you have to work for that specific time and you report to someone to prove it.
If you want your goals to be the same, then get someone you report to.

I’m accountable to readers to publish an article every week, I have people who I’m setting up to interview on my podcast that hold me accountable. My mates Andrew and Matt are my gym accountable people (and they keep on texting me every Tuesday and Thursday when I don’t show up. I love you guys!). Without them, I wouldn’t have gone to the gym nearly as much as I have. In-fact, our trainer showed me through my fat levels and weight gain that since going to the gym I’ve put on at least 5 lbs of muscle in 3 months.

If you don’t have an accountability partner, get one.

If you need one, get me. Email me! I’ll be your accountability partner for a few weeks until you find another. Here’s my personal email: [email protected] Put Accountability in the title and I’ll help.

This year, lets not make resolutions that we wont remember by march. Instead: Make a vision, Write your dreams down, Commit by putting it on the vision board, and Get the Accountability partner.

-TheFinancialGinger

  1. http://www.dominican.edu/dominicannews/study-highlights-strategies-for-achieving-goals
  2. http://elitedaily.com/money/writing-down-your-goals/1068863/
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Homeownership: Still the American Dream?

Is Home Ownership Still the American Dream?

Home ownership is at the lowest level in decades in the United States[i], and many industry pundits lay the blame squarely on millennials.  But is that fair?  Or even true?  Let’s examine this.

How did home ownership become equated with the American Dream?

The term “American Dream” was first coined by James Truslow Adams, an American writer, in his book The Epic of America published in 1931.  At the time, America was caught in the grip of the Great Depression.  Millions of families had lost their homes and found themselves homeless and starving.  The American Dream describes an ethos that folks desperately wanted to believe at the time that hard, honest work would result in financial security, the ultimate symbol of which was owning one’s own home.

We have found, however, that not all folks who work hard ever achieve financial security, or for that matter own their own home.  As faith in the traditional ethos fades, fewer Americans own homes, and the trend toward not owning is still growing.

Will it come back?

Traditionally families bought their first homes in their late 20s or early 30s, so we are looking to millennials to begin buying homes; but they are not – at least not in the numbers necessary to stabilize homeownership rates.  While many pundits posit that the reason is that millennials only want to rent in urban areas, Uber to work and walk to a coffee shop, there is really something else at work here.

Millennials are getting married and starting families later in life than their parents did, so they have less reason to buy a home early.[ii]  Add to this a decline in the belief that real e state is always a good investment, since many millennials watched their parents struggle to keep their homes during the Great Recession, or lose them altogether.  Moreover, because of low starting salaries, massive student debt[iii] and the lack of dual incomes, they have less ability to pay for a home early in life.

If we recall Econ 101 in college, we remember that the demand curve in the supply-and-demand model is driven by two factors: the desire of consumers for the widget and the ability to pay for the widget.  Homes are no different than any other commodity that way.  With less desire than their parents to own a home for multiple reasons, and less financial ability to jump into the market, it isn’t surprising that millennials aren’t buying at the same rate as previous generations.

But is this a wise move on their part?  If you can’t buy a home, then of course the decision is made for you.  But if you can buy a home, should you?

While watching their parents lose everything in a severe recession understandably made folks question the traditional wisdom (that homeownership is always a good investment), new regulations and lending safeguards make the financial crisis very unlikely to happen again, at least to the same scale.

Some folks have noted that it is much more expensive to own a home than to rent, and that it true – at first.  But tax deductions make up some of that difference for most folks.

Further, rent goes up, while mortgage payments do not – at least if you have a fixed-rate mortgage.  Property taxes and insurance go up over time, but usually at a much slower pace than rent, and they are only a small part of your monthly housing cost.  And with homeownership, eventually your mortgage is paid off and your payment disappear. *

Finally, there is the principle of leverage.  When you home appreciates, you are not only making money on the money you have invested in your home, but on the money your lender invested as well.  This simple principle will double or triple your return on investment.  You cannot leverage your savings accounts, and most folks can’t leverage their investment accounts, either.

Mortgaged real estate is the only real leveraged investment available to the average Joe.  The sooner you buy the sooner your monthly payments begin paying down your mortgage rather than paying someone else’s, and the sooner you eventually pay off your mortgage.

Still, owning a home is really not for everyone.

  • If you have to stretch to the very limit to buy a home, it may not be wise, because the first emergency could bury you financially.
  • It costs about 10% of the purchase price of a home to get in and out, in real estate commissions, title fees, etc. If you don’t plan to stay at least three years (or more, depending on the appreciation rate in your area) it may not be wise.
  • If you are likely to move for any reason within the next three years you should probably not buy a home. (Although I have clients who buy a home in their destination area a few years before they move.)
  • If you love to travel and want to spend your money there, the responsibilities of home ownership may not be for you.

However, if you want the stability of knowing you can never be forced to move, want the satisfaction of creating your own home exactly the way you want it, and want to build wealth over time with the greatest certainty, consider re-thinking your negative thoughts about the American Dream.

Casey Fleming, Author The Loan Guide: How to Get the Best Possible Mortgage (On Amazon)

Mortgage Advisor, C2 FINANCIAL CORPORATION

My Blog: www.loanguide.com

Facebook: C2 Financial Corp.

Facebook: The Loan Guide Book

Follow me on Twitter for interest rate updates: @TheLoanGuide

[email protected] NMLS 344375 / BRE 00889527

[i] Tuttle, B (2015 July 28) U.S. Homeownership Level Drops to its Lowest Level Since 1967, retrieved from http://time.com/money/3975212/homeownership-rate-record-low/

[ii] Davidson, J. (2014, November 12) What Everyone Gets Wrong About Millennials and Home Buying, retrieved from http://time.com/money/3551773/millennials-home-buying-marriage/

[iii] Notte, J. (2014 December 11) Why Millennials Aren’t Rushing to Buy Homes, retrieved from http://www.cbsnews.com/news/how-will-millennials-buy-homes-if-they-dont-know-their-credit-scores/

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Visions Part 3: Brain to Paper – 3 Places to Start

“How about… idea streaming? Like when you have this massive goal in mind but no idea how to get there. How to break it down into achievable components.” – Athena M.

Idea Streaming: From Brain to Paper

Thanks Athena!

Some of you have emailed me telling you that you don’t even know where to start with getting your ideas from mind to paper. We need that vision statement! You have sent me so many wonderful visions. Here are 3 ideas that I’ve personally used to write my vision statement.

1) Personal Relationships!

A good place to start is with those who you know well, whom you trust, and family members. Try to ask them these types of questions:

“What are some things I’ve always been good at?”
“What careers do you see me working in?”
“How do I communicate with people?”
“What is my biggest strength?”
“What’s the dumbest thing you’ve ever seen me do?”
“Why can’t I become a professional Oreo eater?”

And why not ask yourself some questions, nothing is more personal than yourself.

Think of your Core being:
What is your purpose?
How will you find peace in life?
What are things that really amaze and inspire you?
What do you always enjoy, even when you’re tired?
What do you believe is possible for you?
What is your biggest limiting belief?
If you left tomorrow forever, what what you have wanted to do today?
Here are a few question lists to get you thinking:

Get To Know Yourself: 29 Questions to Discover the Real You

20 Questions to Know Yourself Better and Unlock the Immense Potential Within

http://psychcentral.com/blog/archives/2012/08/06/5-ways-to-get-to-know-yourself-better/

http://tinybuddha.com/blog/getting-to-know-yourself-what-you-like-and-what-you-want-in-life/

2) Think Categories and Goals

This is my favorite way to do things.
I organize things into 5 categories

1) Physical (Food/Exercise)
2) Emotional (Relationships/Feelings)
3) Spiritual
4) Educational (Learning/ Occupational)
5) Financial

If you consider these 5 categories and where you want to be with each one, or where you can improve, or skills you already have in that area, you can learn alot.

3) Tests!

Okay, So maybe I lied. This is my favorite. I’ve taken sooooo many personality tests. I loved the ones in 8th grade that would say, “You could be a great Accountant or Firefighter.”

Here are some of my FAVORITE personality tests:

Myers&Briggs Test: I’m an ENFP (Extrovert, Intuition, Feeling, Perceiving), But I score really close to a Thinker (instead of a Feeler). I’m basically 100% on Extrovert.

ColorCode Test: I’m a Yellow: I inject shots of enthusiasm and optimism. I’m charismatic, spontaneous, and sociable. (Pretty much everyone loves me. It’s a fact: look it up)

Strengths Finder 2.0: see your top skills: I’m an Includer (Involve EVERYONE), Maximizer (Make pieces better), “Woo” (I want people to like me), Ideation (breaking down ideas into pieces), Communication (I tell people things). You can see this influence my vision statement. This test also comes with 3 sections: 1) awareness, 2) Application: with 10 action items for each, 3) Achievement: Quotes and what success sounds like for each of your top skills.

HowToFascinate: This is a great test that gives you some adjectives that describe you along with  a primary and secondary “Advantage”. I’m a Trendsetter: Innovation and Prestige are my “Advantages”. Cutting edge, Elite, Progressive, Imaginative, Edgy. This test, for a price, can give you pages of data about power words, how to explain yourself, and ways to utilize that in a business sense.

Culture Index (INC): I don’t know where to find this test, but I took one when I applied for a job and was emailed a printout of it. It gave me an ABCD score, an EU score, and an LI score which I have no idea what is. This test talks about how you work with individuals and companies. “Self-Reliant, Initiator, Effective with Setting my own priorities, quick paced and likes to handle problems right when they arise even if it means multitasking…” and other valuable information.
My favorite gem is this: “Prefers to delegate the completion of tasks to others, but is capable of limited attention to detail.” This is true! I start 100 things and finish 12 of them… and get my little sister to finish 4 of them, my brother to do 3, and my roomate to do 6 more. The rest are forgotten and eventually dumped into the pit, like in the movie “Inside Out”.

DISC: I’m an Influencer- I like to collaborate and dislike being ignored in teams and groups. There are four types: Dominance, Influence, Steadiness, Conscientiousness. This provides insights in how you work with team.

These tests are vital in crafting out information about yourself. Did I miss any? Let me know if there are others you like, and I’ll update this list.

Last Thoughts

An online place to organize your thoughts like Mindmeister or another website could be great for organizing or laying out your thoughts. It’s a difficult task, but is worth it. then, make that vision board, write that personal vision statement, and utilize them daily to accomplish you.

why?

Because knowing yourself and your goals is the first step in getting your money to work properly. It’s also they key to happiness. When your Money and your Dreams align, you will be happy.

Please feel free to share your thoughts, your vision board, your vision statement, or your test results for any of these tests! Maybe I’ll feature you on my website or in an article (with permission of course).

Happy Financing!

-Jacob Brad Johnson
The Financial Ginger

OnACouch
Drive a couch down the street! #GoalAccomplished
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Personal Vision: Part 2 – Vision Boards

Your Vision is in hand, but now what do you do with it? This is how to take your vision from paper, to action items.

Money is important. But your “why” behind your money is almost more important. Infact, It is more important.

I want money for a few reasons, I want to provide for a family I hope to have, I intend to use money to create a foundation to increase financial literacy in Utah, I want to be involved in Scouting and christian missionary work. There are reasons to the money. “Money for the Sake of Money” isn’t happiness. As I talked about in an earlier article, Experiences bring happiness, not “Plastic Crap”.

Many friends of mine have come to me asking, “How do you figure out what you want to do?”

Here is my answer.

How I Chose Financial Planning

I went to a small school, graduated from high school with an associate’s degree, then moved to Brigham Young University (BYU) studying Computer Science. I thought it was what I loved. My whole family works in computers, Dad, Brother, Little Brother. I’m different. During 2 years as a service missionary and proselyting minister for Jesus Christ to the wonderful people of New Zealand, I learned a thing or two about myself. This insight is a blessing. Jacob Johnson is a people man, he loves working with people, helping them, teaching them, breaking down their big ideas into pieces, which he then builds up into good points. Ideation, Maximzation, Includer, Communication, “Woo”-factor. When I jumped back into school, the answer wasn’t computer science. Quick talks with people sent me to try global supply chain management, marketing, and financial planning. Marketing people I interviewed all hated what they did, unless they were in charge of their work or ran their own firm. Supply chain was awesome except I don’t want to travel 6-10 months a year, not in the ropes for having a family. My old ballroom dance partner’s father was a financial guy. He loved his job. Dude from my girlfriends work did finances. Loved his job. Everyone I talked to that worked in financials loved what they did. Private firm, big company, RIA, Broker/Dealer, Insurance agents, 9 co-workers, 1 co-worker, 80 co-workers. They each loved it. They also did what I thought was great. They taught, they did technical work, they moved around, they left the office to visit and help, they weren’t stagnant, they were involved in the community, they were happy fun loving people; the people around them were happy.
The signs were enough. I knew where I belonged. So, I packed up from BYU and moved over to Utah Valley University (UVU) where tuition was $20 more expensive and the Financial Planning program has topped the charts since it’s been around with three times as many students as any other program in the U.S. only 400.

Gainz
This Should Be On Every Vision Board

How a Vision Board Got Me There

I’ll be honest, My vision was in pieces on my phone, in my wallet, papers on my desk, notes in other odd places, bits of my memory. AKA it was a disaster. I finally straightened out my vision board.

Purpose of a Vision Board

Vision boards connect actions with goals. Sometimes we are doing the right things, but it’s getting us no-where because it isn’t connected to our vision. Sometimes we have a vision, but no actions connected. The vision board is the intersection. It’s a logically and conveniently placed object that contains our current dreams and goals.

Daily as you consider the actions you will take, consider your board. Do they align with your goal? If not, 1) remove it from your to-do list, 2) add a new goal to your vision board, 3) do it anyways and wonder why you’re still where you’re at.

Nightly as you review what you’ve done. Consider your progress on your vision. Did your actions connect? Do you need to adjust any of your dreams?

Basically, the vision board removes waste, and focuses your efforts. Efficiency.

Creating A Vision board

Remember your vision statement you made in A Personal Vision? Whip that bad boy out, and read it. I’d recommend making reading your final vision statement daily as part of your confidence building routine. That should be a good base to start off. What is written on that that ties to things you want to achieve. Is a degree part of that? Is starting a company, changing industries, going to the gym, starting a blog, selling to 20 new clients, getting 3 computer monitors, etc on that?

Consider 5 areas:

  1. Financial – Where is my money going, how will I make it, how will I manage it.
  2. Physical – Fitness, eating, outdoor activities
  3. Social – Friendships, spouses, old friends, building a business network
  4. Emotional –
  5. Intellectual – reading books, developing your business skills, utilizing your brain, how do you waste time on your phone.

Also, Consider your Big Rocks. What are your responsibilities and titles? Parent, CEO, Small Business Consultant, Teacher, Brother, Minister, Soccer Coach, Student, ETC. What are the big visions you have for them?

Where to put it

It goes wherever you will see it the absolute most. Mine is right by my bed. Blue tape boarder, with pictures taped inside it. Maybe it needs to be in the kitchen on the fridge, or by your front door (though it can be hard to make it personal there)

Vision Board - Draft #1
An Early Version of My vision boards – Painters Tape and Photos

Areas of My Board – Money Gets Everywhere!

Now you might say, Jacob. This isn’t financial. YES IT IS. If you don’t have mastery of your vision and actions, you will never have control of your finances. It doesn’t make a difference if you make $25,000, or $250,000. I know people in both who are millionaires, I know people in both who still live paycheck to paycheck.

Every single task I do that makes me money is somehow connected to my vision board. That’s how simple it is.

Control your actions, create your vision. Utilize it daily. Happiness will ensue.

Share with me a picture of your vision board, or a copy of your vision statement and I’ll feature it in an article! Email me on my contact page or Here

-Jacob Johnson

Jacob is a crazy Vision Board wielder who also dabbles with small business review software, and financial counseling at UVU. He is an avid supporter of financial education and loves to work with event groups to get finances incorporated. Want me to speak or teach a class? Ask me Here

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A Personal Vision

The Realization

I cracked open a new self-help book, excited to read and learn the mysteries of sesquipedalianism and profundity.

When I read this,

“While we’re discussing self-help books, we wanted to mention a study… [asking if] ‘The Power of Positive Thinking”… [is] a real phenomenon?…
The Results? People with high self-esteem… were more optimistic… but participants with low self-esteem who intoned those five words” (I am a lovable person) “felt less optimistic than those who didn’t…
People with a negative self-image are reinforced in that belief when they try to will their way out of it.

-Belsky, G., & Gilovich, T. (1999). Why smart people make big money mistakes–and how to correct them: Lessons from the new science of behavioral economics. New York, NY: Simon & Schuster.

Like many of you, I have my own worries and things that I deal with. I’ve experienced that desire to no longer be where I am. In minor ways, I’ve had times where I’ve felt no matter what I’m doing, It’s not good enough. Self-Help books that teach us about how we use time poorly, or manage money in odd ways, or anything won’t help us if we don’t help ourselves!

But enough of that! I’m a positive guy with a talent for including people! So this exercise is for everyone to do, to know YOU better.

Vision Pitching

I was reading from a book called “To Sell is Human – The Surprising Truth About Moving Others” by Daniel H. Pink. He talks about creating sales pitches, but I think its high time to create a personal vision pitch.

* NOTE* this is my personalized version, you can get  the original version at http://www.danpink.com/pitch
20150703_072023
Let Go of the Ground in Vision

A vision is supposed to be the tone and aura you carry with you, representing what your theme of life is, where you’re headed, your dream, you passion, and your love. You are not who you think you are; you’ll find that out as you clarify your vision with others. The reality is that you are more than anything you can imagine with more power than you think. Ponder these questions before starting the vision:

Where do I see myself tomorrow?

What will I be working on in 5 years?

How will I be serving those around me in 20 years?

What will people say about me in 30 years?

How much time will I spend on my passions in 40 years? What is the passion you thought about when you answered that question?

Now that that you’re ready, remember this is practice not permanent. The last thing to do right before reading and starting this next bit is to physically move yourself! Would you feel comfortable with getting up and moving to somewhere you never go and then start. It is vital to be in a new or different location. Maybe you can set a timer and spend 15 minutes on it right now.

20150703_072201
Travel Away for a Minute to Refocus

Writing

Get a piece of paper, or use a writing app on your phone, and start your vision using these steps:

  1. One Word. Write as many individual words as you can that describe you. Try for 50.
  2. Question. What question do you ask yourself that makes you think deeply? What’s your question that makes others think and act? Write at least 10!
  3. Rhyme. Give a rhyme for where you’re going! What rhyme defines who you are? Write at least 10! It’s totally acceptable to google search [or ninja search] rhyme sites to help.
  4. Email. If you were to summarize your vision with a subject that would get everyone to open and read it, what would it say? Write 20!
  5. Tweet. You have 120 characters to write your vision statement, your guide to life. Write this.
  6.  Story. Read Below, and write your own.

Your try: Once upon a time ____________________________. Every day, _______________________. One day ________________________________________. Because of that, _________________________________. Because of that, __________________________________. Until finally, ___________________________________.

-Pink, D. H. (2012). To sell is human: The surprising truth about moving others. New York: Riverhead Books.

Refining

Now take your list and share it with the 5 people you know best. Ask them to remove and erase half of the remaining extras in each of your lists, until eventually you get down to you. Your Vision.

Here is Mine.

 

  1. Confidence
  2. Do you feel that way now?
  3. To feel confident, you must be cognizant.
  4. Smiling? After meeting this guy you’d better be.
  5. Worried by the future, you want peace. What’s uncertain to you? Feel confident, find your dreams with me!
  6.  Once upon a time, there was a ginger boy who loved everyone. Every day, he would laugh and smile with his family because he was confident that he was loved. One day he wasn’t so sure about what he was going to do with his life. Because of that he became very worried. Because of that he searched and learned and grew! Until finally, He was a Certified Financial Planner (CFP) who could help each beautiful person to discover and feel secure in their future.
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What It Feels Like to Share Your Vision Draft

Your statement

The last thing to do is to revise from those 6 points a paragraph, or maybe even a page. This can be detailed in statements about what you believe in, beliefs you would fight for, career paths, medium term goals, long term goals, habits you’ll pick up, habits you already have, or things that you are good at. We’ll talk more about refining the statement later.

I am a planner. When I am secure and anchored I am a blast to be around and a great communicator. Everyone is my friend and I naturally trust everyone. I’m a trendsetter seeking to push social boundaries and what is accepted to create a better experience or more learning. As a Visionary who prides himself in social engagement, I tend to be a social butterfly with friends in every group. I want everyone to like me with a ‘woo’ factor and work hard to be inclusive of every individual around me. I have a natural ability to break ideas into pieces; it is easy for me to find ways to improve a process and maximize results. I see the value in each piece. The Visionary within has come to believe in Jesus Christ and to feel the power in the principles of the Gospel with a firm desire to involve Jesus Christ in maximizing both my ability to help others, and ability to feel secure and anchored in my own life. The Analyst in me is great at counselling with others, helping them to see and create their own change, and can effectively communicate steps and processes to enrich and empower them to feel secure and plan for success. It is my choice to fight for families, fight for confidence, and involve everyone in things that will bring them security, peace, confidence, and knowledge that will improve their lives. I am Jacob. I am a family man, I am a hard worker, I am consistent, I am a networker, I am trustworthy, I am a creator, I am active, I am an empowering friend, and I am a child of God.

Send me feedback! What could be better about my dream? I know it’s already been shaved down, but it sure could use more work. Share yours here and let’s become better at sharing our visions with each other. Let go of who you aren’t and become who you want to be.

I’ll post some of your visions (with permission) if you send them to me here! Or you can email it to me directly at [email protected]

Next week I’ll share Part 2 of this series,  An Active Vision. Now that you have a vision, let’s make it happen.

-Jacob Johnson
Student of Personal Financial Planning at Utah Valley University
Expected graduation in December 2017

Pounamu- Green Stone (Jade) from New Zealand
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“Ahakoa He Iti, He Pounamu”
Though it may be small, To me it is precious.

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Do You See Where You’re Going?

 

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Money and Happiness: Experiences VS “Plastic Crap”

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Artist: Crystal Johnson

Have you ever had the thought, “I wish I had something to look forward to!”? When that thought occurs, what are you really wishing for? Are you hoping for a fun experience, or are you hoping for a new toy?

A Trait of Happy People

Happy people buy experiences, not objects. “[A] wandering mind is an unhappy mind.”[1] Throughout your life, people will say anything to get you to buy their product. They try to lure you in by telling you their product is the latest trend, or the item most worth your money. When these thoughts come, remember that your money is your tool to living the life that you want to live.

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Experiencing Dinosaurs: I’m the Kid in the Blue Soccer Jersey

Some Professional Opinions

“If you’re a materialistic individual and life suddenly takes a wrong turn you’re going to have a tougher time recovering from that setback.”[2] Materialistic people who turn to shopping or other types of spending are “likely to [experience] even greater stress and lower well-being.”[3]

Individuals who focus their life on financial success are more likely to have problems adjusting to life and also are likely to have lower well-being.

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Klondike: Bobsled Competition for Boy Scouting
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Experiencing Canoes

 

 

 

 

 

 

 

 

Most Importantly, it affects our satisfaction with life. Ed Diener, Happiness expert and psychology professor at the University of Illinois said that “[materialism] is open-ended and goes on forever—we can always want more, which is usually not true of other goals such as friendship”.[4]

Basically, Spend your money where it counts. Material things are a necessity, but moderation can help you to live a more fulfilling life.

Need, Want, Luxury.

There is a simple scale called: Need, Want, Luxury. You need transportation to and from work. You want to drive a car. A luxury  for me might be to drive a 2014 Mitsubishi Mirage (okay, weak sauce, but that’s the car I want to drive. That baby gets like 42 MPG!) (Okay, it may not be a luxury topping out at about $8,000).

You may be able to fulfill your need with public transportation to work, maybe you live close enough to school or work that a bicycle will do. The Important part is that your basic needs are fulfilled.

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My Needs Are Filled: Everything Extra is Icing. Don’t Let Icing Distract You From The Cake

After that, your money is Discretionary. Carl Richards, of Behaviour Gap, asks if we really do connect what is important to us and how we spend our money.[5] What is most important to you? Why do you spend the way you do? Do your spending habits come from your community, your parents, or others? That’s probably a strong source of where your money discontentment comes from. How will you change that?

Spend money on things you value, but also on experiences. Valuable experiences can often seem to be counter-intuitive when considering the cost. I recently got a gym membership. I have a free gym at my school, It’s just as nice or nicer than the gym my membership is at. Why would I pay when I have a free gym? It’s worth paying for that membership because of the experience it is with my two childhood friends. The three of us go and have a good laugh, some good lifting, and a friendship that pays me not in money, but in physical health and friendship.

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Volunteering with Hot Air Balloons

 

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   Competitive Ballroom Dance

Science and Money-Happiness

You will be happier if you spend money on things you can experience, but people “still choose to spend their money on material items because they think they’re of greater value.”[6]

Experiences have the power to make us happier. According to researcher Mr. Killingsworth,

“Minds tend to wander to dark, not whimsical, places. Unless that mind has something exciting to anticipate or sweet to remember.” Doctoral Candidate Amit Kumar’s research showed “when you can’t live in a moment, they say, it’s best to live in anticipation of an experience. Experiential purchases like trips, concerts, movies, et cetera, tend to trump material purchases because the utility of buying anything really starts accruing before you buy it.”[7]

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Boat! (Or Getting Stuck)
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 Touring New York
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Pyramid On Top of a Mountain
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Visiting an Indian Reservation
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Removing 400 Cubic Yards of a Forest at a Women’s Shelter in Gore, New Zealand

My Story

I remember being on the beach in New Zealand, standing with my Samoan friend as we watched an airplane fly directly over our head, yet again. Old bricks from houses built during the Great War scattered the seashore. This was the happiest moment of my life. My time, my effort, and my money were devoted to the experiences I wanted to create. I had decided to participate in a ministry for two years. I was a volunteer, 24 hours a day, 7 days a week. I met with other ministers to try to grow religious involvement in communities, taught lessons and scripture classes with groups and in the homes of families, and actively participated in service projects – vandalism clean up, fence and trail repair, service in soup kitchens, and horseback riding lessons for the disabled were among the many service projects I participated in.

Aside from a green-stone necklace from a dear friend, a few lavalavas, and some Weetabix All Blacks collector cards, I’m not sure I have any tangible souvenirs from that experience; my memories of sitting on a beach with my Samoan friend and watching countless airplanes fly directly overhead offer me some of the greatest and happiest memories of my life.

If you’re going to devote your time, effort and money toward something, wouldn’t you rather it be an experience that may bring anticipation, excitement, and prolonged joyful remembrance? Consider that next time you’re about to buy what I call “plastic crap” or non-essential material things.

Next week I’ll talk about some techniques for crafting your own personal vision so you can start aligning your values and money and avoid the “plastic crap” mind-set.

Jacob Johnson
-Jacob is a fidget-er who is always changing things, He spends his time making vision boards, experiencing things, and perusing business cards from years ago. If you want to add to his business card collection, send him one!

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Articles:

Experiences Vs Crap Design by Crystal Johnson.

[1] Hamblin, James. “Buy Experiences, Not Things.” The Atlantic, 7 Oct. 2014, www.theatlantic.com/business/archive/2014/10/buy-experiences/381132/

[2] Ruvio, A., Somer, E. & Rindfleisch, A. J. of the Acad. Mark. Sci. (2014) 42: 90. doi:10.1007/s11747-013-0345-6,
http://www.huffingtonpost.com/2013/12/02/materialism-health-effects_n_4344056.html

[3] Ruvio, A., Somer, E. & Rindfleisch, A. J. of the Acad. Mark. Sci. (2014) 42: 90. doi:10.1007/s11747-013-0345-6
http://www.huffingtonpost.com/2013/12/02/materialism-health-effects_n_4344056.html

[4] Diener, Ed. “6 Reasons Why People – Not Things – Will Make You Happier.” The Huffington Post, 2 December 2013, http://www.huffingtonpost.com/2013/12/02/materialism-health-effects_n_4344056.html

[5] Richards, Carl. “Do Your Values Align with Your Money & Time?” Behavior Gap, 22 April, 2015, www.behaviorgap.com/do-your-values-align-with-your-money-time/

[6] “Proof That Life Experiences — Not Things — Make You Happier.” The Huffington Post, 3 April 2014, www.huffingtonpost.com/2014/04/03/life-experiences-happier-material-things_n_5072591.html

[7] Hamblin, James. “Buy Experiences, Not Things.” The Atlantic, 7 Oct. 2014, www.theatlantic.com/business/archive/2014/10/buy-experiences/381132/

 

Here are A Bunch of other Experiences!

 

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Parenting: Whats A Good Allowance? How to teach your children REAL money lessons.

When I was a kid, we didn’t get an allowance. Sure, we could earn some things from doing extra chores, or get a little bit of an allowance on vacation to buy a souvenir or something extra, but weekly or monthly just for doing things? Nope.

I want to give you parents some idea of what the typical American gives their children, what the typical American pays their children, and some ways to build an entrepreneurial and financially sound mind in your children.

My Dad is a business man. He has managed for JC Penny’s, Home Depot, Toys ‘R’ Us, and some other similar businesses. He’s also worked in sales, selling software and hardware solutions to governments and schools. Needless to say, he worked hard.

And we worked hard…

 

We weeded gardens, helped plant trees, I learned how to make straight rows, and we cleaned our entire house each week. The six of us children had the house organized into six ‘zones’ we would rotate cleaning. We had a rotating list of household chores too; sweeping floors, dust fans, take out garbage, wash dishes, set table for meals, mow lawn, etc.

This isn’t about cleaning though, this is about money, and how parents think about and use it. My friends at COUNTRY Financial whipped up this lovely little chart for me.

Chore U.S. Average
Mowing the Lawn $6.28
Cleaning the Garage $5.20
Doing Laundry $2.82
Cleaning a Common Area $2.72
(i.e. living room, dining room, kitchen, etc.)
Be Responsible for a Pet $2.66
(i.e. feeding, walking, cleaning up after it)
Vacuuming / Cleaning Floors $2.55
Cleaning Surfaces $2.20
(i.e. dusting or washing countertops)
Cleaning the Bedroom $2.07
Doing the Dishes $2.03
Taking Out the Garbage $1.90
Setting the Table $1.31
Making the Bed $1.18

Americans are pretty good about wanting to teach their children about finance, but they want to teach it for the wrong reasons.

68 percent of Americans believe children should receive an allowance for completing chores. Furthermore, of the people who are currently providing kids with an allowance, more than half (54 percent) did so to teach their children money needs to be earned. A further 22 percent wanted to teach their kids the value of money, while only 12 percent said it was to teach them financial independence.

A Proper Allowance

$0. That’s just a fact. I’m being honest! Don’t give your kids money just for the sake of money.

The best reason to create and utilize a chore / payment type system is to teach your children that money is earned and that they can be financially independent. I’m not saying you should or shouldn’t pay your kids to do their chores, but at least having them do chores will help you teach them.

Independence

Independence is a skill that is taught, much like optimism, cooking breakfast, or welding. It takes time, patience, and a good teacher.

I recently was listening to Radical Personal Finance and his podcast about what he’s planning to teach his children when they turn 8 years old. His ideas were great! Here are a few of my own ideas too.

Teaching Skills

Spend time teaching your kids employable skills. They can learn to pull weeds, paint fences, sew dresses, clean toilets, cut wood, rake leaves, mow lawns, trim trees, keep pets, and more. Realize that each skill is something a child can do to make a dollar too! My father from a very young age would point out to me things I did that others would pay me to do.

I loved computers, and learned data systems pretty quick. Dad paid me to use his client database online: updating his contacts, notes, follow up appointments, leads, and referrals. He’d email them to me in a big spreadsheet as frequently as needed. He taught me that I could make money with my skills.

My dad at the age of 13 took me to the Flying Wrench class on fixing small engines. The next several summers I brought several lawnmowers back from the dead, replaced blades, fixed carburettors, shear pins, broken oil tanks, and a million other small repairs. Dad’s $75 investment was worth it.

Teaching Entrepreneurship

You can cultivate the idea of entrepreneurship and business in a child. Who hasn’t done a lemonade stand? Let’s think bigger though. I read an article about a child who negotiated with his neighbours to talk their garbage out every trash day for a quarter. Talk about a business! If a 10 year old kid has 50 garbage cans, that’s $12.50 every time he takes out the trash! My dad taught me some valuable lessons about entrepreneurship.

When I was about 15, a fellow home-schooling family, which produced educational materials, had a shortage in little wooden catapults. After a short debate and a set on price per kit produced, a delivery of two-by-fours and wooden sheets arrived.

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The Ultimate Catapult

I hired my siblings and got to work. I learned to keep a time sheet, to negotiate work schedules (okay, I’m dreaming a little bit), to build positive relationships, to use saws, drills, and sanders, and how to mass produce for time efficiency. Thanks, Dad. I ended up making about $25 an hour based on how much we were paid vs how much we worked on our time sheet.

There are so many ways to make money! Joshua Sheats from Radical Personal Finance says to build the entrepreneurial spirit, why not pay your neighbour to pay your kid to clean their bathroom? Why not see if your kid will take all those extra apricots from your tree and sell them to neighbours? They can learn to negotiate, they can learn about selling. They can learn about commissions. Tell them that you get a cut because it’s your tree. Or you get a piece of it because you bought the lawnmower. My friend Flia from the guest post told me that her brother outright bought his own lawnmower. That’s an entrepreneur.

Cultivating a successful atmosphere

How do you create that success in your child? It takes some commitment as a parent. It takes genuine desire for your child to become great and independent. You have to give them a vision and work at it every day. You also have to be an example.

I’m not a parent yet, but I’m grateful for the example my mother is. My mother made her own way. She paid for school working three jobs and paid for piano, voice, guitar, and cheerleading on her own. What a REAL entrepreneur. She had a dream. When you have a dream, you can accomplish amazing things. She is an example to me by always teaching piano, guitar, voice, and volunteering her time to what she loves. Storytelling is her passion, and she started her own scary story contest, and her own Utah’s Biggest Liar’s CompetitionAnd she has 6 children.

Last Words

I’m calling for parents to look for ways to craft their children into financial freedom, independence, and the ability to find satisfying work that will give them optimism, control, and confidence.

Share with me how you’re doing that! Share with me what your parents taught you!
BradJ[email protected]

 

-Jacob Brad Johnson
Jacob is a student of Personal Financial Planning at Utah Valley University. He enjoys counselling fellow students at UVU’s MMRC, volunteering for the Timpanogas storytelling festival, and late night taco runs. He wears a pink tie to church every first sunday of the month, and loves to share his favorite financial tips, tricks and ideas weekly on his blog.

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Thanks Dad!

I love to collaborate on podcasts and projects!

-Thanks to many friends and family who weighed in on this post! I feel so supported by the amazing writers and bloggers I know!

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Why you want a Certified Financial Planner, Why I don’t want to just be a “Financial Advisor”

Confidence comes through cognizance.

Now, everyone has heard the term ‘Financial Advisor’ before. However, did you know that not all terms mean what you think they mean.

Literally anyone can be a Financial Advisor. According to Investopedia,

“Financial advisor” is a generic term with no precise industry definition… What may pass as a financial advisor in some instances may be a product salesperson, such as a stockbroker or a life insurance agent. A true financial advisor should be a well-educated, credentialed, experienced, financial professional who works on behalf of his clients as opposed to serving the interests of a financial institution.

“Go to college;” I’m now a Financial Advisor by the legal definition. “Spend all your tax refunds on Pringles and Custom Baby-Seal Leather Boots;” I’m now a Financial Advisor. “Put that million dollars you inherited into this annuity;” I’m now a Financial Advisor and, depending on the company I work for, possibly $30,000 richer (assuming a 3% commission, some can be as high as 10%!).

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A well diversified Pringle portfolio
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Custom Leather Boots – Good Investment

 

 

 

 

 

 

 

 

Click on this link and print your own certificate of being a certified Financial Advisor from Last Week Tonight’s Financial Advisor Academy signed by John Oliver, the Dean of Financery! That’s how easy it is to say you’re a Financial Advisor.

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Boom – My dog is a Financial Advisor

The reason I want to be a Certified Financial Planner Designee is so that those served will be confident and secure the advice they are given is for their best interest. A CFP designation requires a LOT of work. Here are some of the many requirements

  • A Bachelor’s degree
  • Mastery of 100 topics of financial planning
  • Classes and credit hours in these areas:
    • Insurance Planning
    • Employee Benefits Planning
    • Investment and Securities Planning
    • State and Federal Income Tax Planning
    • Estate Planning
    • Retirement Planning
    • Asset Protection Planning
    • Estate Tax, Gift Tax, and Transfer Tax Planning
    • Financial Counselling
    • Capstone Course
  • Passing a 6 hour test with 170 questions about the application of the 100 areas including:
    • Two case studies
    • Mini-case problem sets
    • Stand-alone questions
    • This test has about a 42% pass rate
  • 3 years of work experience in all areas
    • Establishing and Defining Relationships
    • Gather Client Data and Goals
    • Analysing and Evaluating Financial Status
    • Developing and Presenting Financial Planning Recommendations and Alternatives (yeah. you can’t give one idea, but a cluster of them)
    • Implementing the choice
    • Monitoring the Financial Plan

Oh. And there are is more. There are ongoing requirements to be a CFP Designee.

There is a strict code of ethics involving criminal background checks and compliance to track everything you do. Every two year period requires thirty hours of ongoing continuing education.

Also, you CAN’T have a CFP Certification if you’ve had any of these.

  • Felony conviction for theft, embezzlement or any other financial crime
  • Felony for tax fraud
  • Revocation of any professional license previously (with exceptions)
  • Felony conviction for any degree of murder or rape
  • Felony for a violent crime in the last 5 years.
  • Two or more bankruptcies (with exceptions)

So, except for a violent crime lasting 5 years on your record, anything else is a permanent block from ever being a CFP Designee.

Who would you rather work with on creating your financial action plan?

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CFP Designees provide the best advice

Do you understand why it’s worth looking for a CFP with all of that under their belt, compared to just a “Financial Advisor” (I hope you printed that URL off, because if so, you’re an Advisor now, too!)

My interest in studying financial planning by becoming a CFP Designee is to help individuals feel aware, secure, and prepared for retirement. The peace that comes from knowing you are acting and achieving your own goals financially is  powerful and strong that builds real confidence to act. I’m also motivated to become a CFP Designee because it is something that is universal and needed for everyone; this field is a way to help all individuals and therefore families too, no exceptions. A CFP designation gives strong support to show I can do comprehensive planning, and have dedication to providing value and accuracy.  Attendance at finance conferences, Financial Planning Association meetings, and volunteer work through my school’s student financial counselling centre, the Money Management Resource Centre, are all ways I’m becoming as knowledgeable I can for the benefit of those I will work for. Individuals need help on a vision, and then they can make the wise decision.

I want to help millennial entrepreneurs, newlyweds, dance teachers, college students, and the active high paced people of today to understand how their money works and how to keep their wealth from slipping through their fingers. People are scared of money, or worried about money. If they are cognizant then they can be confident. My goal is to become a reliable counsellor; I will be a planner to help others make educated choices to feel confident and prepared to reach their vision: bear hunting in Europe, having a large family, creating a company from scratch, or planning 40 years in advance for retirement.

– Jacob Johnson is a student of Personal Financial Planning at Utah Valley University, He is a member of the student Financial Planning Association there and enjoys competitive ballroom dance.

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– Thank you Rebekah White for the wonderful craftsmanship and help in editing and reviewing my writing. Thank you for helping me to be confident. Rebekah has a degree in Creative Writing and helps authors and individuals express their thoughts in more effective and clear methods using their own natural voice. * If you’d like contact to her please let me know!

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Building a Credit Score, Things You Wish Your Parents Had Done

I’m currently being trained as a financial counselor at Utah Valley University’s Money Management Resource Center (MMRC). It’s a group designed to help students, teachers, and (soon) the rest of the community to understand and act on their financial situation. During tax season we volunteer to help with taxes. Outside of that we help educate on credit scores, surviving debt, student loans, budgeting, and prioritizing of debt/dealing with creditors.

They Key To Your Child’s Heart

In training, a friend of mine and I did a presentation about credit history. I was shocked when he shared during the practice demonstration that his credit score was over 800! That’s nearly a perfect score!

How had he done it? Simple. His parents had put a credit card in his name when he was a teen, and had paid for gas with it. They always paid it on time, and he used it for gas during high school. Eventually, of course, the son had a FANTASTIC credit score. He can buy a house at a lower interest rate, get an apartment easier, obtain lower auto loan interest rates, and, very importantly, receive cheaper auto insurance! Remember, building a credit history takes time.

The point is, you can help your child 10 years from now by putting a bill in their name and opening a bank account in their name. Just make sure the account is reported in their credit history.

Okay, so maybe it isn’t a key to their heart, but they sure will thank you later.

Parts of Your Credit Score

35% of your credit score is based on your payment history. Are you paying on time? If you aren’t, this is going to drop your score very quickly.

30% is the amount that you owe compared to your limit. Try to owe less than 25% of your maximum allotment. Basically this means that if your credit card max is $2000, then you should never have a balance greater than $500. But let’s be honest, you should just pay of ALL balances instantly when using credit cards. Use it, pay it off same day. This makes it a tool, and not a noose.

15% is the length of your history. This is where my friend had an advantage. Even though it;s only 15% of your score, it’s significant when I have 3 open accounts and each is 1-3 months old, as compared to my friend’s, who has 10+ years of history on one account, so they all seem longer. This has 2 parts, You want one account to be at least 10 years old, and the 2nd part is the average age of all credit accounts you have, which should stay above 3 years.

10% is new credit. Basically, don’t open a bunch of new accounts over a short time. Try to shop for cars or housing rates in a small time frame (about 45 days), because your credit score drops 5 points for every inquiry and stays there for 24 months.

The last 10% is the mix of credit you have. It’s good to have a mortgage, some sort of installment loan (personal, student, or auto loan), and then some credit cards (revolving credit). If most of your credit mix is in credit cards, that can be damaging to this part of your score. 

Now that you know a few basics, you can improve your credit score up to a perfect 850! or at least above 750 (which is the highest tier of credit scores) and help future generations to do so also.

What have your parents helped you to achieve financially? Share you story in the comment below!
-Jacob Johnson
Personal Financial Planning student at Utah Valley University
He enjoys ballroom dance, eating authentic mexican tacos, and  counseling fellow UVU students in the Money Management Resource Center on their student loans, and budgeting. He strives to become a Certified Financial Planner designee to help people capture and live their ideal life.

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Thanks for editing my writing and helping it to look great Briana! If you need an editor, this is the lady for the job.

-Briana Beers graduated from BYU with a degree in English and editing. She’s currently a stay-at-home mom who moonlights as an editor in her rare spare time. When she’s not chasing her kids or cleaning three week old food splatters off the light switches, she enjoys reading, baking, and spending time with loved ones.

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Financial AutoPilot: Why to Just Do It

When you have talked yourself into what you want, stop talking and begin saying it with your actions.

-Napoleon Hill

 

Ever heard of money scripts? Money scripts are the core beliefs and things that set off your “money button.” How does money make you feel? What role does it have in your life? Do you pursue money and think you can’t have enough? Do you wish money didn’t exist but accept that you need some? Psychologist Bradly Klontz made 4 general groups of people and how we respond to money.

  • Money Status: When you believe your net-worth equals your self-worth
  • Money Worship: Happiness is contingent upon having enough money
  • Money Avoidance: Money is bad, and it causes you anxiety
  • Money Vigilance: When you see yourself as your money’s Lord and carefully handle and direct its flow

Understanding your money script will help you see where some of your struggles lie. Everyone is weak, and everyone is human, but we also have some amazing strengths. We can recognize our weaknesses and find ways to avoid them, improve them, and sometimes overcome them and make them strengths. Key is: there is a struggle; people struggle to do things when they take a lot of mental effort and consistency. So, here’s the secret.

Put yourself on autopilot.

Let me say that one more time.

Put Yourself On Auto-Pilot

What do you think of when you think of an autopilot? If you saw something that was automated, perhaps driving or flying, without the need for constant human supervision, then you are on to something great.

As soon as your idea is strong enough to have a goal and a beginning action, don’t delay, put it into autopilot. Why do you struggle to wake up in the morning? Why can’t you stick to going to the gym? Why are you worried you can’t buy a house or go to college? It’s because you either didn’t start, or you didn’t follow through.

Here is how to put yourself on Autopilot, Financially:

1) Prioritize

First: Set your priorities. Where does your money belong? In 2-3 short sentences, or 5-6 individual words, summarize the most important things to allocate your precious hard earned Washingtons.

2) Where do you stand?

Second: List all of your obligations monthly. Figure out your debt, income, savings, and lastly, estimate how much you spend on different areas. Add it up. Does more money go out than in? Does more money get spent on areas you don’t want them to be?

According to Success.com‘s author Tom Corley, here is a standard budget draft you can think about to where you money goes and it looks something like this.

  • 25% maximum on rent/mortgage
  • 15% max on food
  • Limit entertainment (you know what that is) to 10% , Vacations should top out at 5%
  • No more than 5% on auto loans

In addition to these Guidlines here are a few more from my notebooks and practice

  • save 12-15% of your money for retirement (If you’re saving 10% and your company matches 3-5% then you’re good!)
  • Donate 10% of your income to charities that you love.
  • Get an accountability partner for your spending that you can share goals, numbers, and facts with

3) Auto Pay

Third: Auto Pay. Here is how many people try making their money work.
This is called “Mental Accounting.” It is a horrible thing.

The Real Slim Shady
Normal Person Mental Accounting

The problem with managing our money like this is all of your money is in the same place! We are normally poor at mentally accounting for our money. I won’t attempt an explanation of how, but the book, Why Smart People Make Big Money Mistakes by Gary Belsky & Thomas Gilovich will give you great insight to the many pitfalls of mental accounting, in addition to many other common money mistakes.

Alternative: This is called budgeting, and planning, and auto-piloting. It’s amazing! With mental accounting, if you have $500 (for simplicity sake) in your Selfish Money account for the month, then you know, I have that much money and it’s for whatever I want. When it’s gone, it is GONE. But I recommend going one step further, and this is called AutoPilot mode.

Establish separate accounts to be used. With your money in a different location it can’t be spent on what it isn’t budgeted for. Here’s how you can harness the power of Voluntary Automation (doesn’t that sound blissful?):

After Shady been slimmed
Each is it’s own account?

What if, when you got your paycheck, you set the money to AutoPay certain quantities to other accounts: 10% to retirement, $1400 for the mortgage, $500 a month for student debt, $200 selfish money, etc etc etc. The credit card in your pocket is only linked to the “Selfish Money” account, and the card you keep in your dash for fuel is linked to your car payment and gas money account. None are linked to the mortgage account, because the bank takes the money out of that account each month. I’m making this happen with several bank accounts and auto transfers set up.

Basically, the money is out of sight, out of mind (and you now have a license to be at peace. *Poof* Peaceful dust descends upon you).

There are many apps that can conglomerate multiple accounts so you can have a snapshot of how much money you have at any given point in all the accounts, or help you refine how much money you allocate to different accounts over time.

Then, once a year when you check your accounts, you can clear out the extra money to savings, more retirement, or maybe a surprise Christmas present.

4) Lastly: Stop checking your accounts daily! Stop checking your investments, your stocks, your 401(k)’s, your Roth’s, your {InsertYourAccountNameHere}. Just STOP. Although many want to argue differently- your human fear is going to have you selling things when they are dropping in value, and buying things that are rising in value.
The reason why is because of the Stair Effect. Over time stocks are going up, but experience highs and lows throughout the incline. This is because as you step up a stair, one foot follows the other, rising and falling, rising and falling, over and over and over. Walking up stairs doesn’t scare you, because you know you’re going to go up.
Investing should be like Christmas, or your birthday; best thought about for about 1 month a year, (all you people that play Christmas music in November… I’ve got my eye on you). Try this: pick the month (fine, semi-annually is acceptable) when you allow yourself to look at your accounts and mark it on your calendars.

 

Now you can kick back, relax, and go back to your beautiful life with one less item of stress going on in your mind. What ideas have you used to put yourself on Auto Pilot? I’d love to add to this list of ways to put yourself on autopilot! If you have an ideas, or critiques please let me know in the comments or email me:  https://jacobbradjohnson.wordpress.com/contact/
If this is helpful let me know also!

— Jacob Johnson is a student of personal financial planning (PFP) at Utah Valley University. He enjoys Oreos and Bacon with the occasional bowl of muesli and wakes up to read Napoleon Hill as a start to his day. He is an adept listener of Behavior Gap radio by Carl Richards, loves the blog of WorkableWealth by Mary Beth Storjohann, and ponders Jeff Rose the Finance Warrior’s blogs also.

— Our guest editor is Rebekah! She is a phenomenal editor with a degree in creative writing. She is such a blessing and help in defining what the purpose of a writing is, and helping individuals to craft language to not be redundant (well, at least in my case). Thank you Rebekah!

 

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Saving, not owning, up to yourself

One of my friends who is now a “gym-rat” was telling me about how his brother tagged along with him to invigorate his body with some work outs.

My friend has been at it hard for several years now, and I’d say though he’s definitely not Arnold Schwarzenegger, his bod is mod. He was expounding how his brother was quite upset after a few weeks. I can imagine the conversation going like this.

“Ugh. Why do you lift so much more than me!” the newcomer said.

The response, from my practical and no-need-to-hide-truth friend to his brother: “I’ve been at this for two years. How can you expect to be as strong as me after two weeks?

How can you expect to have as much savings as your friend who dragged you along to visit their CFP® counsellor. How can I expect to have as much experience and knowledge as the man who hired me as an intern for the summer? He has 40 years of experience. The principles of finance are the same as weight lifting. Judge yourself based on where you are now. The best place to start, is where you are currently standing.

Resisting the impulse to compare yourself to others is a difficult one, and one that requires a ton of practice, patience, and of course failure from time to time. It’s like learning to ride a bike; you start with training wheels and, if you’re me, still end up falling off the monsterous thing and splitting your chin open on that random rock that’s in your driveway (I’m still bitter about that if you can’t tell).

Speaking of bitter, you can’t hold past mistakes against yourself either. You made a bad choice in taking out that auto-loan. Fine! You’ve never had credit in your life and can’t even pass a check to get an auto-loan. Fine! You’ve tried four fad diets and *shocker* none of them worked.  Fine!

Here is where you start: Stop comparing yourself to others! Start comparing you to yourself and others who are at the point where you are.
Example: In my financial counselling class, where am I compared to these other kids with similar experience?
Bad Example: Walking into a room of M.D’s, where am I compared to these professionals with 30 years of brain surgery under their belt about identifying which nerve may or may not completely paralyze the patient permanently?

Let’s compare this to our financial selves. You’ve heard a thousand times that you need to start saving for yourself… I wrote down 10 of them when writing and then deleted them; you don’t need to hear it again. Why? Because you don’t need to own up to anyone else except you for your actions.

Napoleon Hill said it best,

“The right sort of actions require no embellishment of words. One of the most common mistakes is making excuses to explain why we do not succeed. Unfortunately, the vast majority of people in the world —those who do not succeed — are excuse-makers. They try to explain their action, or inaction, with words. When you succeed, accept the congratulations of others with good grace; when you fail, take responsibility for your actions, learn from your mistakes, and move on to more constructive things. When your actions are appropriate in every circumstance, you will never feel the need to explain them with words. Your actions will say all that needs to be said.” -Napoleon Hill (NapHill.org)

If you are doing the best you can, no explanation is needed. But just like building a credit score, it is time to start building your financial experience. You choose how you are going to start saving, then start doing it!

Remember, the best time for change is when things change for you.

New college student: I’m going to build my credit score by dropping $50 on a secured credit card so I can have revolving credit go on my record.

Go out of state for a summer internship: Start working on them biceps and fat legs with that special Planet Fitness $1 down $10 a month deal you saw. (This isn’t much to do with finance, but it’s so true for me right now)

New job after graduation: I’m going to open a second bank account and put 10% of my wages into that so I’m saving.

Job change: I’m going to do better by maxing out my company 401(k) contributions  that they match.

Moved across the country with your three children: We are going to start putting aside that $400 a month we’re saving on rent and save it for our children’s tuition in a 529 Savings Plan.

Shia LaBeouf proclaimed it best,

Don’t let your dreams be dreams
Yesterday you said tomorrow
So just do it
Make your dreams come true
Just do it

Some people dream of success
While you’re gonna wake up and work hard at it
Nothing is impossible

You should get to the point
Where anyone else would quit
And you’re not going to stop there
No, what are you waiting for?

Just Do It

Start saving, Just Do It. Start dancing, Just Do It. Step toward your goal and feel alive, Just Do It.

When you make a choice, don’t explain it to anyone. Don’t own up to anyone.

Own up to yourself.

 

 

-Jacob Johnson

Student of Financial Planning at Utah Valley University
Member of UVU’s student chapter of the FPA Association
Intern with Searcy Financial Services

  • Guest editing and creative writing advice from my good friend Rebekah White! Look forward to more of her powerful skills in making writing legible! Maybe next time I’ll even put some of her contact information in here.