Category Archives: Personal Development

Successful Personal Finance Traits

I have always felt that how a person manages their finances is a good reflection of their overall life.  People who are successful with their money always seem to look for ways to improve everything they do.  People who are good at managing their personal finances share a few common traits.  Those traits are not the ability to demand an above average market salary, have an above average IQ, or have graduated from a top-20 university.  The traits that are required to be wildly successful with your personal finances can easily be looked over.

Tuning Out The Noise

There are ads everywhere.  Marketers use TV, radio, print, and digital to push their products and services to the world.  People who are in good financial shape are masters of tuning all of that noise out.  They can delay gratification.  They are conditioned to identify all ads as spam.  People who are struggling with their finances always seem to fall into the must-have-it trap. Most people who are doing well financially do not even notice the noise.

Happiness

They know that spending money on things that are marketed to provide happiness is a lie.  The short-term high of buying new stuff wears off quickly.  They see the live life for today crowd as being short-sighted.  Tomorrow might never come, but if it does, it is better to have the resources to support oneself.

Organized

People who are good at managing their personal finances are organized.  Obviously, they are good at managing their bank account, paying bills on time, and keeping up with their investments.  They are neat, structured, punctual, and live a more orderly life.  If someone looks like a wreck, odds are, so do their finances.  Sure, there is always the eccentric millionaire, but they tend to exist more in fiction than in reality.  People who are organized financially tend to carry that virtue into all of their affairs.

Value

The people who are good at managing their personal finances have diverse interests.  They do not waste their time shopping and buying stuff they do not need.  When they do spend money, it is about buying quality products or meaningful experiences.  They understand the concept of spending a little more for a quality product than spending less on an inferior product that will wear out and have to be replaced.  They have developed the knack for when it is the time to be cheap and when it is the time to be frugal.

Intentional

Sure, people who are getting ahead in this world know how to read financial statements, but they are analytical in everything they do.  People who are good at managing their personal finances are intentional.  They do not rush to decisions or fly by the seat of their pants.  They think before they act.  Being analytical does not require the use of advanced statics.  Don’t fall victim to analysis paralysis.  A simple practice that anyone can apply is to make a pro and con list when it comes to making a financial decision.  If the pros outweigh the cons, move forward.  If the cons outweigh the pros, hold tight.

Balance

There will be many ups and downs in life that can lead people to make poor financial decisions.  The focus always needs to be on the big picture.  While money is extremely important because it is our life’s energy, it truly is just currency.  Most people have many responsibilities in their lives.  Health, family, community, and other areas of life are equally important.  Yes, we hear about the workaholic who has poor health and family issues.  Most of the people who I have met in the financial independence community are masters at living a balanced life.  By having a balance in their life they are in harmony with the universe.

Freedom

I have had sit-down discussions with many people who are in the financial independence community.  Some have their own blog and others just participate by being active on different financial forums.  While they all come from different backgrounds, they all seem to generally get it.  They better understand life, know that money cannot buy happiness, yet understand that many wonderful things come to pass for those who reach financial independence.  Their general understanding is that money equals freedom and freedom equals happiness.

This group has broken the chains that bind most people to their poor habits and financial woes.  They do not use leverage as a get rich quick scheme nor are they fearful of debt.  Their debt ratios are healthy.  They also know how to use debt in ways that can be extremely lucrative like credit card churning.

Be Present 

Everyone is on his or her own journey toward financial independence.  A person might be fresh out of college and ready to start a rewarding career where they have to manage their own personal finances for the first time.  Someone might be at mid-career where they are entering their high earning years and are trying to ramp up savings.  Another person might be near retirement or already retired and has to manage their personal finances during the drawdown period.

Conclusion

No matter where you are in life or what your financial situation looks like, always strive to get better.  Read blogs, listen to podcasts, or participate in constructive forum topics.  Learn from what others have to offer.  Create a blog and share how your own struggles were turned into victories.  By being active, I learn new ways to increase savings, pay down debt, and to improve earnings almost every day.

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Side Gig: Adjunct Professor

An Adjunct Professor is a Professor who is not on the tenure track.  Most Adjunct Professors are professionals who have an advanced degree (MS, MBA, MA, JD, or Ph.D.) and have full-time careers outside of academia.  Many teach evening, weekend, or online classes.  Adjunct Professors are utilized to teach both undergraduate and graduate classes based on their own current level of education and specialization.

If you have an advanced degree, want to earn some extra money, and like the idea of teaching without becoming a full-time professor, working as an Adjunct Professor might be a good side gig for you. There is currently a big demand for Adjunct Professors.  That is due to the increasing enrollment at colleges and universities.  It is also due to the growing availability of taking online classes.

Students are no longer limited to physical classrooms.  They can now take a class anywhere in the world provided they have a laptop and internet access. That provides more teaching opportunities for Adjunct Professors to teach online.

Qualifications

The primary requirement to work as an Adjunct Professor is to have an advanced degree.  To teach at a community college or junior college, the instructor generally must have 18 credits beyond a Bachelor’s Degree and be enrolled in classes towards a Master’s Degree.  The general rule to teach undergraduate classes at a four-year university is to have completed a Master’s Degree.  To teach graduate level classes, most universities require a Ph.D. or at least be enrolled in a Ph.D. program.

A Broken System

After talking with many different people who teach as Adjunct Professors, they all claim that the Adjunct Professor system is broken.  They all make that statement because the pay is low and almost zero benefits are offered as part of the compensation package.  On average, an adjunct professor earns $2,700 per class.  The average salary for a Tenured Professor is $84,000 plus full benefits and job security.

Not Ideal For Full-Time Employment

If being an Adjunct Professor is your full-time job, I agree that the salary is low based on the level of education required to do the job.  However, when I was in college, most of the Adjunct Professors who I had also had full-time careers outside of the classroom.  They taught classes at night or on the weekend to supplement the salary from their full-time position.  For side money, if someone teaches 5 classes per year, at $2,700 per class, that equals $13,500 per year.  In my opinion, that is decent money for a side gig.

Part-Time Benefits

Being an Adjunct Professor allows a professional to teach without having to stress over all of the requirements that an Assistant Professor faces on their way towards becoming a Tenured Professor.  An Adjunct Professor does not have to conduct research and consistently publish articles in academic journals.  An Adjunct Professor’s main duties are to develop the syllabus, facilitate the class, grade assignments, and meet with students to ensure that they are learning the required materials.

Development

As an Adjunct Professor, not only do you get to share your own professional experience with students, but you get the chance to actively enhance your own professional development.  While Adjuncts don’t have to conduct research, they do get to interact with Tenured Professors who are experts in their area of study. That contact with Tenured Professors allows Adjunct Professors to stay current with all the new cutting-edge information in their discipline.

Networking

There is also the opportunity to interact with other Adjunct Professors.  This opens countless networking situations with local professionals in your field of study or in other departments.  This contact with other instructors can truly be useful in helping you to find ways to improve the students learning experience.

Sacrificing Time

There are also some potential negative points to consider before becoming an Adjunct Professor.  It is time-consuming to prepare lectures, grade assignments, and to meet with students.  However, once you prepare a lecture, you can use the outline for classes you teach in the future.

The Path To Becoming Tenured

Another issue to consider is that teaching as an Adjunct Professor is not the pathway to becoming a Tenured Professor.  Even if you teach a variety of different classes as an Adjunct Professor over the period of a few years at different colleges, a major part is missing.  As mentioned earlier, Assistant Professors must conduct research and be published on their path to becoming a Tenured Professor.  How you teach is as important as where and what you teach on the road to becoming a Tenured Professor.

Side Gig

I feel that working as an Adjunct Professor is a great side gig, but a poor choice for full-time employment. It allows you to put your advanced degree to use in an academic setting.  It is decent part-time money to use for enhancing your savings or to use to pay off a graduate school debt that you might have incurred.  It is a great way to help students by sharing your professional experience to complement the required curriculum of the class.  Lastly, it is a great way to network and stay current with new trends in your area of expertise.

Conclusion

Currently, I am considering becoming an Adjunct Professor.  I have the opportunity to teach evening and weekend classes at a local community college.  It is an opportunity to earn extra money, but I just do not know if I am willing to commit my free time to a second job.

Have you ever worked as an Adjunct Professor? Was it a positive experience?  Do you recommend it as a side gig?

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Debt: Reaching Step Zero

The first step in correcting a problem is to admit that there is a problem.  Prior to admitting that there is a problem, there is another step.  That is when a person reaches their breaking point and cannot go on living the way that they are living.  That is often referred to as step zero.  Step zero is when a person says to themselves “this crap has to stop”.  It is the breaking point.  It is the point where a person becomes willing to take corrective action.  They become willing to try a different approach of living because of a psychic change.

Have you reached the point where you realized that your way of managing money is not working?  Are you spending more than you earn?  Does all of your earnings go towards paying bills?  Do you have creditors calling you who want to be paid?  Do you have to borrow money when an emergency occurs?  Do you find yourself spending money that you do not have in order to keep up with your friends, neighbors, or relatives?  Do you feel broke even though you work hard and earn a good income?  Do you contribute any money to your retirement savings accounts?

Have you reached step zero? Do you want to change how you manage your finances?  Do you want to take control of your life?  Do you want to break away from the bondage of debt?  Are you at a point where you are totally dissatisfied with how you are living because of debt?

The good news is that there is hope.  It can get better.  It is all up to you.  It is based on your willingness to change.

Now that you have admitted that your way of managing your finances does not work, how should you start the mending process?

Measuring the Damage

Start by measuring the damage that you created.  Before you can move forward, do an analysis of what you owe.  My favorite tool to assess debt is the debt-to-income ratio.

To calculate your Debt-to-Income Ratio, see the formula below:

Debt-to-Income Ratio = Monthly Debt Payments/Monthly Income x 100

Example: $1000 in Monthly Debt Payments/$3000 in Monthly Income x 100 = DTI of 33%

What is considered a bad DTI Ratio?

If your DTI Ratio is higher than 36%, you are in the danger zone.  The higher your DTI Ratio is, the less money you have to cover your living expenses.  A healthy DTI Ratio is less than 16%.

Where to Start

After you know your DTI Ratio, it is time to start paying down that debt.  Start with paying off all of your bad debt.  Pay off all of your payday loans, credit cards, and auto loans.  Next, start to pay down your student loans, mortgage, and business loans if they exist.

Stop the Bleeding

Stop buying stuff you do not need on credit.  Identify what you need and only pay cash for those needs.  A few examples of needs are food, clothing, medical supplies, transportation costs, and housing expenses. Wants are fancy cell phones, cable TV, designer clothes, eating at restaurants, or any other expense that is not required to live.

Income

If you are part of a dual-income household, learn to live off of one salary.  Use the higher of the two salaries to pay for all of the household living expenses.  Use the lower of the two salaries to pay down debt.  After your debt is paid off, you can start to focus on saving money.

Get a second job.  Find a side gig to earn money to pay down debt.  If you spend your free time working, you will be less likely to spend money on stuff you do not need.

Create a budget.  A budget is a plan that allows you to break down where your earnings will be allocated based on a percentage.  For example, 25% for housing, 11% for transportation, 20% to pay off bad debts.  Once you have a budget established, all you need to do is follow it.

Recreation

Even though you have debt, you still have to live your life and have fun.  Find ways to enjoy what your local community has to offer.  Instead of going to high priced movies or amusement parks, go to local parks or free museums.  Instead of going to a high priced gym, exercise outside by walking.  Instead of going on a luxurious vacation, take a staycation.

Guilt & Shame

There is no use in feeling bad about having debt.  You have identified the problem.  Now is the time to move ahead and to make positive changes.  Having ill feelings is not a solution.

Focus on the positive and on everything that is possible once your debt is under control.  Try to take small steps and to monitor your progress.  Don’t strive for perfection.  If you have a slip, don’t beat yourself up.  Pick yourself back up and keep striving for progress.

Conclusion

Debt is similar to hiking.  Once you walk 5 miles into the woods, you have to walk 5 miles to get out.  Now that you have decided that a change is needed, it is up to you.  At this point, there is no use in looking for someone or something to blame for your debt.  You cannot change the past.  You can just pick up what is left and apply a solution.  If you learn from the situation, it was not a waste.  As you move forward, you can also use it to help other people who are struggling with their own financial issues.

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Be Intentional

I recently attended a leadership training seminar at a local college.  This seminar was about managing the multi-generational workforce.  The facilitator covered many topics and I am not going to get into any of those details in this post.  He said many interesting things, but the one statement that made me think was that he said that we should always be intentional.

Everything we do should be with intent.  Our actions should have an intended outcome.  Our words should have an intended message.  Even our thoughts should be focused and have a purpose.

The purpose of this training was meant for workforce development.  The message can easily be applied into everyday life.  It is ideal for managing money.

Too many people just coast in life.  They walk around making noise and bumping into things.  By not having a plan, they will just land at a random destination.  What could possibly go wrong with that approach?

To be successful in all your affairs, practice being more intentional.  A great place to start is with how you manage your personal finances.  You should know the why behind everything that you do.

Savings

Do you know what your savings rate is?  You should be able to answer this question without giving it any thought.  Is it 10%, 20%, or more than 30%?  Your savings rate is the most important factor that will determine if you will reach financial independence or not.  It is also one of the rare aspects that you have control over.  Nobody can control what the S&P 500 will return this year, what direction interest rates are headed, or if there will be a spike inflation.  Everyone, however, can control what their saving rate is.

Spending

Your savings rate is directly impacted by your spending.  Do you just spend money without thinking?  Do you go to the mall, outlets, or online and buy things that you do not need?  If you want to change this trend, become intentional with your spending.  Before you buy something, ask yourself if you need it or truly want it?  If you must spend the money, did you shop around for the best price?  Is there a low-cost alternative to making the purchase?  Even if there isn’t a better alternative, at least you did your due diligence and gave thought to the purchase.

Debt

Does your credit card bill arrive, and you cringe when you look at your balance due?  Do you make late payments or just pay the minimum balance on your credit cards?  Do you know what your credit score is?  Do you know what your debt-to-income ratio is and what a healthy ratio should be?  Do you know how to calculate your debt-to-income ratio?  If you want to improve how you manage debt, take a more intentional approach.  Learn what your credit score is, identify if you have too much debt for what your income is, and ultimately establish a plan to get out of debt.

Earnings

I bet you know what your annual salary or hourly wage is?  You get a paycheck every week or bi-weekly, so you are reminded frequently about that rate.  Do you feel that you are underpaid?  Doesn’t everyone?  Maybe you are underpaid or maybe you are overpaid.  Before you ask for a meeting with your supervisor demanding a raise, you should do your homework.  Be intentional and research what the market rate for your position is based on your location and level of experience.  If you are under market rate, you might have a case.  If you are over market rate, but not satisfied, you might need to develop more skills or ask for a more challenging assignment.

Investing

If someone asked you what type of investor you are, could you answer them?  Are you a market timer?  Do you buy and hold equities?  Are you a passive investor who invests in a few different mutual funds?  Do you simply try to capture what the market returns with a total stock market fund?  Do you use value tilts?  Do you buy dividend stocks?  Are you trying to get rich by investing in Bitcoin?  You are free to decide how you invest your money, but you should know the why behind your plan.  Your approach to investing should be intentional.  Nobody knows what the future market returns will be, but you should at least know what you are intending to accomplish with your asset allocation.

Financial Independence

Do you know how much money you need to have in savings to reach financial independence?  To declare financial independence, the general rule is to have 25 years worth of living expenses in savings.  That is based on a 4% withdrawal rate that most financial professionals consider to be acceptable.  Do you know if you have obtained this milestone or how close you are?  Most people who reach financial independence do not get there by accident.  They live intentionally for many years.

Early Retirement

Do you have a target-date as to when you want to retire?  It might be next week, or it might be in 10 years.  If you have an established early retirement date, what are you doing to make that goal a reality?  Are you doing everything you can to maximize your salary and taking on side gigs?  Are you saving until it hurts?  Do you have the right mix of investments to both reach your goal and sleep comfortably at night?  If you do, you are acting in an intentional way.

Conclusion

The nice thing about being intentional is that you can start this process now.  Start by reviewing your current financial situation.  Can you answer why for all your financial decisions?

If you have a financial plan, use it as a guide.  If you do not have a written plan, write one.  That is a good starting point if you want to become intentional.  Review your plan for areas of your financial situation that might need to be amended.

Some fixes are quick, and others require time to implement change.  Moving forward, wherever money is concerned, ask yourself why before you make a final decision.  If you cannot answer why you are doing something, give it some thought and find out what your true intentions are.

This is just another example of how to improve your financial situation.  It provides a pause before you act.  Sometimes giving a decision an additional few seconds of thought can turn a bad decision into a good decision or a good decision into a better decision.

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Money & Happiness

Money can do many things.  If you have money, you can live life to the fullest.  Money enables people to cover all their necessities including food, shelter, and healthcare.  Having money is a key requirement to get the best education in the classroom and by way of traveling the world.  Money is also required if you want to add convenience and have some luxury in your life.  Money is tied to almost every aspect of life, but can money buy happiness?

In 2010, a study was conducted to determine if happiness can be increased when income is increased.  These researchers found out that it can.  There were limits though.  The researchers discovered that happiness increased with income, but only up to the amount of $75,000 per year.  People who earned over $75,000 were not happier than those who earned $75,000.

That sounded reasonable to me.  $75,000 would be enough to live a reasonably comfortable life in most parts of the country excluding New York City, San Francisco, or some of the other major coastal cities.  Even in smaller markets, $75,000 will not be enough to afford a first-class lifestyle.  It should be enough, however, to cover your needs, some wants, and have enough left to save for retirement.

A more recent study was conducted by Researchers from Harvard Business School.  This survey was given to 400 millionaires.  They were asked to rate their happiness based on a scale of 1 to 10.  This study found that the people who had at least $8,000,000 were happier than those with less than that amount.  Many agreed that they would be happier with even a little more wealth.  Most felt that they needed much more than what they currently have.  To score a perfect 10 on this happiness survey, the results stated that the millionaires who took this survey would need to have a 1,000% increase in their net worth.

In my opinion, money can buy many things, but I do not know if it can buy true happiness.  There have been times in my life when I had very little money.  Based on my current lifestyle and expenses, I have enough money to live for a couple of decades without having to work.  I feel blessed, but I do not think I am happier today compared to when I was just starting out.

Obviously, life is better with money compared to being broke, but I do not know if there is much of a difference on the happiness scale.  I view having money as the means to more options in life.  That makes me happy.  In my opinion, money equals freedom to live a life on my own terms.  That also makes me happy.

I just don’t think that money itself makes me happy.  Money pays the bills and allows me to buy things.  I am not overly materialist and don’t want for much.  Material possessions generally do not make me happy.

Accomplishment

There are a few things in life that make me truly happy.  The first is when I accomplish a goal.  Even though I am focused on early retirement, I do get a great feeling when I accomplish a goal at work.  It is not based on the praise from others.  It comes from that internal sense of accomplishment.  The same feeling of satisfaction can be found when I accomplish a home improvement project, complete a workout, finish a book, or make an improvement to my blog.  For example, I am happy that you took the time to read this post.

Laughter

I also find joy in the simple things in life.  Laughter makes me happy.  I take my work and my goals seriously, however, I do not take myself seriously.  I have been humbled enough times to say that my ego is right-sized.  A therapist friend of mine recently told me that a good sign of emotional intelligence is to have a good sense of humor and the ability to laugh.  I find it therapeutic to laugh at myself as well as to laugh at the absurdities of life.  I am also happy when other people laugh.

Nature

Spending time in the outdoors makes me happy.  I love going to the local park with my wife and our dog.  It feels great to breathe in the fresh air while hiking the trails and to take in the wildlife.  One of my favorite hobbies is spending an afternoon in my kayak bass fishing.  There are few things more exciting than catching a bass on a topwater lure.

Service

The closest that I have ever come to experiencing true happiness is when I am being of service to others.  In my experience, if you want to find pure joy, go and volunteer at your local soup kitchen.  The fear of stock market volatility quickly vanishes when you tune into the needs of those who truly have nothing.

Helping people who are less fortunate than myself gives me gratitude that lasts for weeks.  It puts my problems into perspective.  These people are not thinking about finding investments with the lowest expense ratios or finding ways to pay fewer taxes on capital gains.  These folks are literally wondering where their next meal is coming from.

My wife and I try to volunteer a few times per year.  We try to not tell anyone about it.  We Just simply show up at the food kitchen on a Saturday morning and volunteer for a few hours.  Nobody needs to know how wonderful we are.  I feel that if I talk about it, it becomes more about me than about the act of giving back.  That just reduces the degree of happiness that I find in this type of volunteering.

If you are intimidated by the thought of helping the homeless, don’t get discouraged.  There are many ways to volunteer.  It does not have to be a formal process.  Take a ride to your nearest park and bring a trash bag and gardening gloves with you.  Spend one-hour walking around the park and picking up litter.

I have found that many people in the financial independence community have discovered the joy of helping others.  A good example of this occurs at the Chautauqua Financial Independence Conference.  I have read that it is common for a day of community service to be added to these events to go along with the lectures and discussions about financial independence.

Conclusion

Can money buy happiness? I honestly don’t know for sure.  The research shows that it can up to a point for some people.  For others, it seems like happiness is based on having more.  I also don’t know if people should be basing their happiness on how much money they have.  I have found that having money is better than not having money if the rest of your life is in order.  If you have enough of it, you have more options as to how you choose to live.  That will afford you the ability to focus your time and energy on what you are passionate about.  If the concept of being free makes you happy, money is a means to that end.