Have you ever received a great, big, ugly bill for services rendered from a hospital or other healthcare provider? This can happen to just about anyone, whether or not you have health insurance. When a bill of this size comes in, you can sometimes get it cut by using the services of a hospital billing negotiator.
That’s a person or agency who steps in on your behalf and negotiates a reduction in the amount of the bill, or can set up other terms that will make it easier for you handle the obligation.
Why you may need a hospital billing negotiator
There was once a time – long gone – when you could have a major medical procedure and never see a bill from a provider. If you did, it was a small amount, probably no more than a few hundred dollars.
That whole situation has changed today. It’s now more the rule than an exception that you’ll receive a bill for thousands of dollars in connection with just about any health care procedure you have. Whether or not you have health insurance will determine the size of the medical bill you need to pay. If you have health insurance, your portion may be a few thousand dollars. But you don’t have insurance, the bill will likely be in the tens of thousands of dollars.
In recent years, health insurance companies have increased the amount of out-of-pocket payments by patients in order to keep premiums more affordable. The kind of health insurance that will provide you with top coverage without ever seeing a bill from a provider is prohibitively expensive, if it’s even available.
The patient portion – comprising the bill you’ll receive – typically includes co-payments, deductibles, co-insurance, and uncovered charges. It’s precisely that combination of responsibilities that can make figuring out a health care bill so complicated.
As a patient, the complexity of a medical bill can be overwhelming. Not only will the bill be written in some language that looks like Greek, but if you have no experience in negotiating, trying to handle it yourself can be beyond difficult.
Going the DIY route to negotiating
If you have at least some basic knowledge of medical billing, and you are confident in your ability to negotiate, you might want to try the do-it-yourself route.
If you do, make sure that you review any bills you receive from the healthcare provider. Check the bills for errors, as well as for overcharges and for services not provided. If there are any items on the bill that need to be disputed, this should be the first place you’ll start your negotiations. You want to get the bill down to its true amount, and nothing more.
Once you and the healthcare provider are in agreement on the amount owed, it’s time to do what you can to cut down the bill to a number that you can actually afford to pay.
Healthcare providers, and especially hospitals, often negotiate lower settlements. Just like everyone else, providers want to get paid, and they are well aware of the half a loaf is better than none doctrine. In addition, they don’t want to push the patient into bankruptcy, in which case they’ll get nothing at all.
You can use this to your advantage. Try to get the provider to cut the bill as low as possible. You may have to make the entire payment in order to get the biggest reduction. But failing that, make the biggest upfront payment that you can, and work to arrange a monthly payment plan that your budget can accommodate.
Using a patient advocate
Healthcare providers, and especially hospitals often have a person on staff – either an employee or an outside contractor – known as a patient advocate. It’s this person’s job to represent the patient’s interest throughout the process, typically from pre-admission through your final payment.
While the job of the patient advocate isn’t strictly to handle the financial side of your treatment, they can nonetheless represent an inside contact when the bills start coming in.
The advantage to using a patient advocate is that they are involved in the system, and understand how works. They are aware of various financing options that the provider has available, options that you as a patient would never know about. They may be able to direct you toward the proper parties within the organization, help to arrange financing plans, or even settlement options.
However else you might plan to handle your hospital billing, it’s a good idea to start with the patient advocate.
Using a professional hospital billing negotiator
If you’re not getting much help from the patient advocate, or you don’t feel comfortable negotiating a settlement on your own, or the size of your bill is just so enormous that you have no capability of ever paying it, you always have the option of bringing in a hospital billing negotiator.
This is a person or agency specifically involved in the business of negotiating medical bills. Since this is what they do, they have a solid idea as to what can be done to reduce medical bills, and even how much flexibility a specific provider will offer.
A good hospital billing negotiator starts by validating the accuracy of your bills. Once that’s done, they will handle the negotiations for you, and negotiate the best settlement possible. Some will even review and negotiate your charges prior to your receiving services.
Hospital billing negotiators do charge fees. However, they do it by charging a percentage of the amount they’re able to save on your overall bill. Their fees are typically somewhere between 25% and 35% of the amount that they reduce your bill.
Let’s say that you receive a bill of $10,000 from a hospital for a recent stay. If the hospital billing negotiator can get that bill cut down to $5,000, and their fee is 30%, they’ll take $1,500 of the $5,000 that they saved you. This is similar to attorneys working on a contingency basis, and only charging you if they win your case.
This will mean that you will owe the hospital $5,000, the hospital billing negotiator $1,500 ($5,000 X 30%), and you will get the benefit of a $3,500 savings on what was originally a $10,000 bill. You’re total out of pocket on the bill will be reduced from $10,000 down to $6,500.
Which ever way you choose to go – DIY, patient advocate, or hospital billing negotiator, it’s important to develop a strategy for dealing with large medical bills. It‘s likely they’ll only increase in the future.
This is a touchy subject – it’s easy making a case for keeping personal debt problems secret from your family and friends. But let’s take the opposite side of that debate – should you let your family and friends know about your debt problems?
Despite the problems that are inherent in sharing negative information about yourself with people close to you, there are compelling reasons it may be to your advantage.
They may be able to help
Generally speaking, no one is in a better position to help you – or more willing to do so – then the people who you are closest with. Even though family and friends may not be able to help you to completely fix your debt problem, they may be there as a safety net to provide for short-term needs while you’re working out a longer-term solution.
Family and friends may also know of people or organizations that can help you to deal with your debt. Simply pointing you in the right direction might provide the kind of assistance that even money can’t buy.
Under extreme circumstances, and if the friend or relative has the money, they might be able to help you in a more direct way. For example, they may offer to payoff your debt with the stipulation that you will repay them.
This arrangement, while tempting, will represent transferring your debt problems from creditors to a friend or family member where the arrangement will be very personal. You have to consider the possibility that the relationship may be impaired or permanently destroyed if you are unable to repay the debt to that person. You may not be able to do it, for all the same reasons that you can’t pay your creditors now. Tread lightly if this offer is ever made!
Still, even if you don’t accept such an arrangement with a friend or family member, it can be comforting just knowing that it’s available – just in case.
You’ll have less explaining to do when you can’t afford something
One of the stickiest parts of not telling family and friends that you have a debt problem is that it leaves you constantly explaining to them why you can’t participate in certain activities. This practice gets old in a hurry. If you let family and friends know that you’re having debt problems, that you can’t afford to keep up with them, you might be lifting a major burden from yourself.
If nothing else, you won’t need to come up with an excuse every time you can’t afford to do something with other people close to you.
You may be surprised to find that some of them have the same problem
When we’re going through a crisis of any sort – including debt problems – we often think that we’re the only ones who have the problem. But it can be both a shock and a comfort to find out the others close to us are having the same issue.
That’s not even an unlikely situation. A lot of families have still have not recovered fully from the recession a few years ago. Many are still dealing with either a career crisis, or the aftermath of an extended period of unemployment. Any of those situations could leave them saddled with oversized debts.
If you find a friend or family member with debt problems, you’ll have a confidant to talk to about your problems. And you can know that person fully understands the situation in you’re in, and won’t judge you.
You should never go through a serious crisis alone
Money problems can be embarrassing, which is why a lot of people try to keep it from others, especially those closest to them. It’s hard not to blame yourself for debt problems, even if you weren’t entirely to blame.
A debt problem is a crisis, even if you are fully responsible for it. And like any crisis, you should never go through it alone. You need people, especially family and friends, to help you go through it. Their camaraderie alone can make the experience easier to live with, and even speed a solution.
There are whole lot of emotional issues that go with debt problems, and you’ll need the people closest to you to help you weather those issues.
People tend to go through debt problems alone, embarrassed that anyone else might know. They also cling to the idea that somehow “I can handle it”.
In truth, if you don’t share your debt problems with at least one or two people who are close to you, the chances that you will come out victorious over the problem is a lot less likely.
Accountability is often necessary in order to deal with a long-term problems like debt. If secrecy is one of the fundamental reasons for debt, accountability will be one of its solutions. The fact that someone else is aware that you have a debt problem, and especially the magnitude of it, can make you accountable to them should you decide to come up with a plan to pay your debts off.
It’s human nature that we tend to behave better when we know that other people are watching. That’s what accountability does for people with debt problems. If there’s no one keeping an eye on what’s going on except for you, there is a very good chance that the problem will continue to do what it has always done, which is to get worse.
Is there a downside to cluing in family and friends about your debt problems? Of course. But in many cases, the benefits outweigh those negatives.
Every year thousands of people raid their retirement savings early. It could be to get out of debt, to cover living expenses during a time of unemployment, to deal with a medical crisis, or even help a family member in trouble. While the reasons for doing so may be perfectly noble, it’s best to consider all possible alternatives before doing this.
There are at least four reasons why raiding your retirement savings early is not in your best interests:
- Income tax liability – If the money is withdrawn before you turn 59 ½, the amount of the distribution will be added to your income, and taxed as ordinary income.
- Early withdrawal penalty – If income tax liability weren’t bad enough, you’ll be subject to the IRS early withdrawal penalty, equal to 10% of the amount of the distribution.
- Permanently weakening your retirement – Because of the time value of money, any funds that you withdraw will represent a permanent reduction in your retirement plan. That means you will have less money available when it comes time to retire, and there’s no way to make that up once you do.
- Selling “the family jewels” – In most households, retirement savings represent the largest percentage of their financial assets. This is long-term money, and if you withdraw it for short-term needs, you will be weakening your family’s overall financial position.
What alternatives do you have to avoid raiding your retirement savings?
1) Sell what ever you don’t need
If you absolutely need a few thousand dollars to cover an emergency expense, consider selling some kind of personal asset instead of raiding your retirement savings.
It could be an extra car, a recreational vehicle, a boat, or even a second home. Selling any of these would be preferable to liquidating retirement savings, as they generally will not create an income tax liability (except perhaps the second home), and certainly not a penalty on top of it
2) Borrow from a family member
Still another way to borrow money rather than liquidating retirement funds, is to get a short-term loan from a family member. If the need for cash is brought on by a true emergency, then a family member would be more likely to step in and help you in your time need.
Once the crisis passes, you can begin working out repayment using one or both of the strategies below.
3) Slash your expenses radically
There are two factors at play here. First, it’s often true that when a person needs to tap retirement savings early, it’s due to some kind of financial imbalance. While the imbalance could be due to temporary factors, such as a job loss (which could become long-term) or high medical bills, it can be due to long-term factors just as well. That might include excess debt levels, high living expenses, or a lack of liquid savings.
If the need for cash is in any way related to long-term financial difficulties, you should seriously consider slashing your expenses radically. That will be the best permanent solution to your money troubles.
Second, lowering your living expenses will also help you to pay off any short-term financing you took to deal with your emergency. Eliminate any recurring expenses that you don’t absolutely need, cut way back on discretionary spending, and even consider how you can reduce your major expenses.
It may be that the house you’re living in is simply too expensive for your income level. In that case you may have to consider downsizing your living space. Or it may be that you have two cars, both of which have payments. You may need to sell one of the cars, and replace it with a very used car that does not require a monthly payment.
Sometimes the only way to get control of your finances is to cut your structural expenses. Not easy to do, granted, but it is a permanent solution to a financial problem, and may help you to repay short term loans taken to deal with the emergency.
4) Borrow from your 401(k)
If you have an employer-sponsored 401(k) plan, you probably have the option to take a loan against it. Under IRS regulations, you can typically borrow as much 50% of the value of the plan, up to $50,000. And you’ll have five years to repay the amount of the loan.
Borrowing money would be preferable to taking distributions because not only would it avoid creating a tax liability, but it would also leave your retirement savings intact.
5) Create an additional income stream
Creating an additional income stream can work well in combination with a short-term loan from your 401(k) plan, a family member, or some other source. The idea is to borrow the money that you need – without taking distributions from your retirement savings – and then to pay it back out of the additional income.
The extra income could be from a part-time job, or a side business. Not only can this be used to cover short-term loans once the crisis passes, but it may also be a way to improve your long-term financial situation, so that you will have less debt and more liquid savings. When the next crisis comes, you’ll be in a better financial position, and won’t need to consider raiding your retirement savings early.
Avoiding early withdrawal of retirement savings is mostly about advanced planning. That means creating extra room in your budget – either by lowering your living expenses or creating more income – so that you won’t have to resort to raiding your retirement savings.
Any one of these strategies will put more money your pocket, without causing an income tax liability that will only add to the financial problems caused by the emergency you need to deal with.
Want a hot tip on the stock market? It’s more profitable to reduce risk at the top of the stock market than once a full-blown bear market develops. Is now the top of the stock market? We can’t know for sure, but what we do know is that the market remains in record territory, and that’s when it’s time to take steps to reduce your portfolio risk.
What can you do now to lower that portfolio risk?
Take some profits
There’s no need to perform a wholesale liquidation of your stock portfolio if you feel the market is flying a bit too high. But you can take some profits in order to reduce your overall exposure to stocks, while leaving most of your positions intact. That’s a good strategy because market tops are notoriously hard to anticipate, and stocks can continue rising for much longer (and farther) than anyone thinks.
But if you have stocks that have done particularly well for several years, you might consider selling them to take profits. By selling stocks that have done well, you are locking in your gains on those trades. Sooner or later, the market will fall, and if the fundamentals of those winning stocks are still strong, you can buy them back at lower prices.
Stop funding new stock purchases
One of the best ways to lower your risk in a record stock market is by not investing fresh cash contributions into more stocks. You don’t sell your primary stock positions (other than the profit taking on the best performers as discussed above), but you increase your non-stock positions (cash) with the new money you contribute.
This will lower your stock allocation without selling off large blocks of stocks. You can use the money either to build up cash, or to invest in assets that might have a better chance when the market turns down.
The time honored technique for making money in the stock market has always been buy low, sell high. Though it may not necessarily be time to sell, by not funding new stock purchases with fresh cash, you will at least avoid buying at the top of the market (or “buying high”).
Increase your cash
By taking profits on some high fliers and not buying stocks with your fresh cash contributions, you’re accomplishing something that’s fundamentally important at market tops: you’re raising cash.
Though some people try to raise cash during bear markets, it’s usually much easier to do at or near market tops. This is because you’re in a position to sell when prices are high, which not only raises greater amounts of cash, but it also avoids selling stocks into declining markets where you will lock in losses on those trades.
Cash is typically the single best asset to have during market downturns for the following reasons:
- It reduces portfolio losses during general price declines because it has a fixed value.
- It can be invested in interest bearing assets, providing at least a small cash flow while equities are losing value.
- It can be accumulated so that you will have ready capital available so that you can buy stocks at bargain prices after a significant fall.
Unfortunately, cash is also perhaps the most under-appreciated asset class at market tops when everyone wants to be “fully invested”. But start building your cash reserves now and when the direction of the market turns, you’ll be in a perfect position to ride out and exploit the changing circumstances.
Move money to income producing assets
We just touched on moving cash into interest bearing assets as a way of generating an income, but you can do this with stocks as well. High dividend paying stocks can often be the perfect place to ride out a downturn in the market. Not only will the dividend income provide a reliable income stream, but high dividend stocks also generally resist market declines, preserving your portfolio’s value.
The one caveat with high dividend stocks is a market decline caused by rising interest rates. In periods of rising rates, high dividend stocks function much like bonds, moving in an inverse direction from interest rates. Thus when interest rates rise, high dividend stocks tend to fall in price.
Still, high dividend stocks can represent a diversification away from typical growth stocks that are a pure play on price appreciation – something that’s in short supply in declining markets.
Have you been giving any thought to lowering the risk in your portfolio with stocks being in record territory?
One of the biggest fears that many current retirees have is that they might out-live their retirement savings. That can be a particularly difficult problem, because once you’re retired there’s not much you can do about it. But if you’re planning for your retirement, there’s a lot you can do about a right now.
Here are five ways to not outlive your retirement savings:
1) Delay Retirement
This is something virtually anyone can do, as long as you are in good health. Actually, there is nothing sacrosanct about age 65 as the preferred age of retirement. The Social Security Administration is now in the process of forcing full retirement to gradually move up to age 67, for those born in 1960 or later.
But if you are concerned about outliving your retirement savings, you can delay the date of your retirement for virtually as long as you are able to work. And considering that people today are living longer, and are generally healthier, than what they were 50 years ago, delaying makes abundant sense.
If you can delay for retirement until age 70, you’ll reduce the number of years that you will live in retirement by five (with the assumption of 65 being a normal retirement age). For example, let’s say that for planning purposes you expect that you will live to be 90. If you retire at 65, you’ll need to provide for 25 years in retirement. But if you delay until you turn 70, you’ll cut that down to just 20 years. The difference in required financial resources will be substantial.
There is a another benefit to delaying retirement at least until age 70. Social Security will increase your monthly benefit by 8% for each year that you delay retiring past your normal retirement age. If normal retirement for you is 67, and you delay collecting benefits until 70, your monthly benefit will by 24% over what it would be if you retire at 67. (There is no benefit to delaying past age 70, as Social Security will no longer increase your monthly benefit beyond that age.)
2) Work Part-Time For as Long as You Can
This can be a halfway option, that will enable you to delay retirement out-right. Instead of delaying full retirement to, say age 70, you can instead spend the first few years of your retirement working part-time. Under that scenario, you’ll be trading full-retirement for semi-retirement. And the fact that you will be relying less on investment income will help you to preserve those assets for the time in your life when you’re not able to work at all.
This can work for people on a lot of fronts too. You may not be quite ready to fully retire at age 65 or 67, and working at least on a part-time basis – or starting your own part-time business – could help you to ease into the transition of finally living the work-free life.
3) Set Up a Roth IRA and Save It For…Later
We’re hearing a lot these days about the many benefits of the Roth IRA. These plans are something of a supercharged retirement plan, because they enable you to withdraw money from the plan tax-free, as long as you are at least 59 ½ when you begin taking distributions, and you have been in the plan for at least five years.
Other tax-sheltered retirement plans require that you begin paying taxes on any money that you withdraw from the plan. Unlike the Roth IRA, these plans are merely tax-deferred, and not tax-free.
But Roth IRAs have another advantage over ordinary retirement plans, one that make them particularly suitable as investment vehicles to keep you from outliving your retirement savings. Roth IRAs do not require you to take required minimum distributions (RMDs) when you turn 70 ½. Virtually every other retirement plan requires that you take RMDs as soon as you reach that age. That will virtually guarantee that other plans will eventually be depleted.
This is not true with the Roth IRA. Since there is no requirement to take RMD’s, you could allow the money in the account to continue to earn investment income and to grow until the time comes when you need to funds. This can enable you to live out of other retirement accounts, while you hold your Roth IRA funds until you actually need the money. Even if you exhaust other plans, you can still have your Roth IRA growing for the day when you need the money. You can delay withdrawing your Roth IRA funds until you’re 75, or 80, or what ever age you decide you need to.
4) Live on Non-Retirement Savings For as Long as You Can
If the idea of delaying retirement, or working part-time for the first few years, don’t interest you, you could also consider living on non-retirement savings for the first few years. This will enable you to delay tapping retirement savings for several years. During that time, the plans can continue to grow, so that you will have more money available in them when you finally do begin taking distributions.
As an example, let’s say that you begin taking Social Security benefits at age 65. You also have $100,000 in non retirement assets – savings, CDs, money market funds, stocks, mutual funds, etc. Rather than beginning to draw funds out of your retirement accounts at age 65, you instead withdrawal $20,000 per year from your non-retirement holdings for the first five years. That will allow your tax-sheltered retirement plans to continue growing for an extra five years.
Perhaps equally significant is the fact that your non-retirement assets can be withdrawn without creating an income tax liability.
5) Keep Your Cost of Living to an Absolute Minimum
This has to be a strategy if you are at all concerned over the prospect of outliving your retirement savings. There is nothing at all exotic about this strategy either. The less money you need to live on, the less you’ll need to withdraw from your retirement savings, and the longer they will last.
This involves keeping your basic living expenses as low as possible. That can mean trading down to a less expensive home, driving a modest car, and avoiding expensive entertainment hobbies. Even more fundamentally however is that you should make sure that you are completely out of debt. That means everything – credit cards, car loans, installment loans of all types, and yes, even your mortgage. The less money you owe, the lower your cost of living will be, and the longer your retirement savings will last.
Do you ever worry about outliving your retirement savings?
Do you have a good life? Maybe compared to some, yes. Perhaps compared to others, no.
A lot of it depends on your perspective and how you measure your life.
Last year I had a good life but sadly didn’t realize it until I was abducted by a UFO and held prisoner in an alien dungeon. Okay, there were no UFO’s or aliens involved in my life catalyst, just a health scare.
But it did open my eyes to how I was measuring my life and the things I was taking for granted.
So whether you think your life is awesome or whether it seems to suck there are a few things I wish for you next year.
Note: I know you may feel too busy getting ready to “crush it” in the new year to listen to my wishes. What I’m going to share won’t make you the most productive you’ve ever been. However, I believe it will help you enjoy what you do produce.
In addition I think it can help you focus on the journey of earning a living and building a legacy rather than just focusing on the dollars and cents of your bank account and retirement plan.
Your life struggles won’t get any easier. The decisions and choices you make won’t change, it’s how you approach them that can make you happier.
So here are four things I hope you can do next year.
1) Enjoy Life More
Many of the simple things I had taken for granted before last year have regained some of their wonder. I always get jealous when I watch one of our young kids experience something for the first time. They can be amazed by the seemingly simplest of things. I find myself wishing I could see the world through that lens again.
Thanks to my new appreciation for life, it’s much easier for me to enjoy the small things and not get so hung up on trying to “manage life”. It’s much easier to enjoy your day when you put things in perspective and just be thankful that you’re alive.
As Willie Nelson puts it, “blue skies smiling at me, nothing but blue skies do I see. Blue days all of them gone, nothing but blue skies from now on!”
I think part of this is giving up some of the absolutes and rigidness to how I approached the different compartments of life. Just because things don’t go as planned today doesn’t mean they can’t eventually end up heading in the right direction.
So if you’re on a diet and want to eat a cookie, then eat the tasty treat. Don’t eat the whole box and don’t do it every day, just eat one and take the stairs at work.
Or if you’re on a tight budget and you want to buy a latte, then drink the frothy caffeine. Spend on what you want and cut something else you don’t need. Or find a way to earn more money.
2) Be Content
It’s tough to be present in your life and content with what you do have when you’re constantly thinking about what you’re trying to acheive in the future.
It used to be that I was so caught up thinking about the future that I would miss things in the present. For example, on a Saturday at the start of last year I would spend time with my kids in between work times. The work was the main thing, the family time was just squeezed in the gaps.
Now I can spend a Saturday with my family and not feel guilty and stressed that I should be working.
Part of being content is not feeling your chest tighten with jealousy when you hear about the success of others. I feel blessed to be alive and thankful for the chances and opportunities that I have. So now when I hear about the success of others it doesn’t make me feel inadequate or jealous. I can genuinely feel happy for them and inspired by their progress.
3) Take Health Seriously
For years my family would tell me that I needed to get more sleep and more exercise. I waved them off thinking that when things slowed down I would be healthier. Now I realize that I was being quite foolish. As you probably know, life doesn’t really tend to slow down.
So if you put off exercising until you have time, then you’ll never do it. Eating healthier, exercising more, and getting more sleep has had it’s benefits. It’s not just that I weigh less and have better scores on my annual checkups.
I feel better in general. I have more patience with my co-workers, family, strangers, and just life itself.
That’s not to say I don’t have stretches where I work out less and get too little sleep. But when that happens it’s only for a period of time and then I get back to the healthy habits again. I’ve realized that I’m not invincible and that if I don’t take care of myself then I won’t be around as long to enjoy life.
4) Think of Your Legacy
This sounds crazy on a personal finance site but I’ve come to realize that people don’t care about money. We only care about what we can do with that money.
What doors the money opens for your family and the people around you. What difference you can make in the world with that money.
So money still matters to me, a great deal. But it’s not for the sake of having money, it’s about the experience that the money can offer.
The things you create and experience in life, and the people you create them with, are what builds your legacy. Those things add up over time, they define how people remember you and what mark you leave on the world.
You’ve probably heard someone says “you can’t take it with you”, referring to the money you make in life. The logic is sound but most of us probably don’t think we’re going to die in the near future.
So we shrug it off.
We work hard to make money and don’t think about what it would be like if we weren’t around.
You may know the story of people who wait until they’re 60 to start saving for the challenges of getting older. They say, “if only I’d known to save sooner, things would be different now”. There are still things they can do but they missed out on 3 decades of investing time they can never get back.
The same thing happens to people who miss out on life because they’re so busy with “planes to catch and bills to pay” as Harry Chapin sings about in “Cats in the Cradle”.
Nobody wants to look back and regret the things they missed out on or didn’t do. The problem is that we often don’t realize it until it’s too late.
You’ve probably had the experience where you hesitated to say or do something and then the moment passed and it was too late. In those cases the time is short, so we feel the pressure to act and we feel regret when we don’t.
The difference with our life legacy is that we believe that our life will go on for decades. So that urgency to act often isn’t there. When we’re so busy that we miss things that are important to us in life (our kids events, a date with our spouse, drinks with friends, the weekly workout, the trip we’ve been wanting to take, coffee with a business mentor, our monthly volunteer event, etc) we tell ourselves that we’ll do it “next time”.
Weeks, months, years pass by and that “next time” materializes never or infrequently.
Often times it takes a major life catalyst to open our eyes to what we’ve been missing out on or taking for granted. Sadly we may not experience that catalyst until decades in the future, at which point we look back with hearts full of regret and wish we’d realized sooner the things we’d been neglecting.
I don’t want this to happen to you. I went through a life catalyst just last year and it transformed my life. I want you to have the same chance. That’s why I put together a checklist of 5 ways you can start building your legacy today and why I’m working on a project to take that much further.
Enter your email below to get the checklist and for early access as more tools are ready. Here’s to a great year!
Car insurance is one of those necessary evils in life. No one wants to pay for it, but then no one wants to be without it either. And no matter what you think about it, it’s required by state law so you must have it. But just because you have to have it doesn’t mean you can’t make it as inexpensive as possible.
Like most other types of insurance this recurring cost pops up on a regular basis so cutting its costs means you’ll be saving money every time your policy is renewed. We’ve talked in the past about a few different ways you can save on car insurance, some are easier than others. Here’s another look at some strategies you can use to lower your car insurance rates, and it’s generally without increasing your liability in the process.
1.Ask About Discounts
Most of us know about common discounts, like good student driver discounts or discounts for driving certain types of cars that are deemed to be especially safe. But there are all kinds discounts available, and they can even vary from one auto insurance company to another.
For example, there can be discounts for having certain types of safety equipment on your car, and these can be extremely specific. There may also be discounts for employment in certain occupations. You can also get discounts for paying your premium in full, rather than in installments.
Ask your insurance company for a list of all of the potential discounts that they provide, and see if you qualify for any. It is highly likely that the company did not inform you of all the discounts they have at the time when you applied.
2. Bundle With Other Insurance Policies
This is a standard recommendation, so we won’t spend too much time on it. But you can often get discounts – sometimes substantial ones – by bundling your auto insurance with other policies that you have. Homeowners insurance is a common one, but it’s also possible that you can get a discount if you combine your auto insurance with a business insurance policy that you have.
You don’t want to go too far with this, since not all insurance companies offer every type of coverage you may need. You also don’t want to accept inferior coverage in another area just so that you can save money on your auto insurance.
3. Raise Your Deductible
This is another standard recommendation to lower your insurance premium, but it’s also a good one. Just by raising your deductible from $500 to $1,000 you can save a significant amount of money on your premium.
One way to raise your deductible without increasing your risk, is to simply have an amount equal to your deductible sitting in your emergency fund. As long as you have the money available, you’ll be covered in the event of an accident. And if you never have one, the savings will be yours to keep.
4. Watch Your Driving Habits
If the major reason why your auto insurance premiums are as high as they are is because you have a history of traffic violations and accidents, it’s time to clean up your act. Drive more carefully, obey traffic laws to the letter, and always watch out for the other guy – especially pedestrians.
Driving is never an area of life where you should throw caution to wind. If you tend to speed and disregard traffic signals because you’re perpetually late, get in the habit of leaving a little early so that you won’t feel the need to break traffic laws.
If you can keep your driving record clean for at least three years you should start to see your insurance premiums fall, at least in most states.
5. Take a Defensive Driving Course
Most of us only think about defensive driving courses when we’re getting our licenses. Auto insurance companies offer discounts if you complete such a course. You can actually take a defensive driving course at any point in your life, and it is strongly recommended if you’ve recently been in an accident that was your fault, or if you’ve been given a traffic citation.
Insurance companies will often waive surcharges if you complete a defensive driving course. The courses however are not free, so you’ll have to weigh the cost of the course versus the savings that will result in your insurance premiums.
6. Ask What You Can Cut That Would Have the Least Impact
I’ve actually done this very recently myself. My wife had a minor accident, judged to be her fault, and our premiums increased. I simply contacted my insurance company, and asked the agent “What would you do to lower the premium if it were you?” The agent quickly asked me if we have medical insurance – which of course we do. She then suggested that we can cut some of the medical insurance benefit on the car insurance, since it essentially represented duplicate coverage.
Reducing the coverage brought our premium back down to where they were originally, but it only increased our medical liability by $1,000 – and then only under the assumption that we were to cancel our medical insurance.
Anytime you’re unhappy with your insurance premium, or if you’re suddenly increased as a result of an accident of violation, try contacting your insurance company and asking that question. You may be pleasantly surprised what you find out.
7. Buy a Less Expensive Car
People often buy the best car they can afford, and with little regard to the impact that it will have on their car insurance. But it is a fact that a more expensive car, or certain models – particularly sports cars – result in higher auto insurance premiums, often much higher.
You certainly don’t want to sell your car if it’s one of the reasons why your car insurance premium is so high. But it is certainly something to keep in mind when the time comes to buy a new car. As a general rule, the less expensive and more conservative the car is, the lower your auto insurance premium will be.
No one likes his or her job all the time. Even if you have what you consider a “dream job,” chances are that there are some days that you just aren’t giving 100 percent, or days that you just don’t want to do the job. If you start to dwell on these downsides, you will eventually have a hard time sticking it out at work.
Happiness in your work is one of the things that can help you relieve stress, and feel better about life in general. As a result, it makes sense to do what you can to be mostly happy with your good job, and do what you can to make an “ok” job mostly bearable.
Here are 5 tips for staying happy at work:
1. Work Toward Making Yourself Indispensable
We all like to feel appreciated, and as though we are an integral part of the team. If you want to feel essential at work, though, you have to actually make yourself essential. This doesn’t mean that you take on a ton of responsibility leading to burnout. Instead, it means making yourself a solid part of the team. You should be reliable, and a problem solver. If you know that you would be hard to replace, you are more likely to be satisfied at work, and even improve your productivity.
2. Take Appropriate Breaks
Too often, we don’t take breaks at work. It starts to feel like a grind. If you want to enjoy your day a little better, take appropriate breaks. Don’t work through lunch. Take a five minute break to stretch your legs. If you have vacation days built up, find a good time when work is a little slower and take a vacation. Give yourself permission to step back, reset, and come back to the task refreshed and better focused.
3. Focus on the Good You Do
Look for the purpose in your work. If your company provides products that make life better for thousands of people, that’s something you can be proud to be a part of. Look for the good in what you do. Even if the good you find is the fact that your work puts food on the table and lets your family live a good life, that can be a reason to keep with it. Focus on the good things that come from your work, and you will be happier to do it.
4. Find a Good Friend at Work
Often, we feel better about whatever we are doing when there are people we like nearby. Look for a friend at work. This can be someone who you get along with, and who has similar interests to you. The good news is that you don’t even have to do a lot with your friend outside work. If you have someone that you can look to and trust at work, and someone you can hang out with at work parties and functions, it can make your job more enjoyable. Look for someone you can connect with as a friend, and your job will be happier.
5. Follow Your Industry
Get involved with your industry, and keep up with the latest developments. This makes you a valuable employee, but it can also help you feel a connection to what you do. When you are immersed in your industry during work, it feels like a part of your life, rather than being a drudgery that you try to escape. While you don’t want to focus on your industry to the exclusion of everything else, you can still derive satisfaction and a lot of benefit from staying up with the latest industry trends.
What are your best tips for staying happy at work?
It all began last summer when I ran the tryouts for my son’s youth soccer team. As part of my mission to live with no regrets I had agreed to be an assistant coach for his team in the upcoming Fall season. Little did I know what I was getting myself into!
As I threw myself into this new role it ended up turning into a side job (unpaid of course). I don’t know how many hours a week I spent on it but my wife was glad when the season finally ended : )
I had a lot of fun but it was definitely a learning experience. I’ve been a leader on a team of adults before but I’ve never been responsible for the development and success of a team of kids. While reflecting on what the boys learned last season I realized there are many lessons I observed/learned in coaching kids that can also be applied to your career.
Here they are, please feel free to add your own comments at the end:
1) Move Without the Ball
High level professional soccer players may only have the ball at their feet for a total of 1 or 2 minutes during an entire game. The rest of the time they spend anticipating the play, running to get open, or getting back on defense. This can be exhausting but making the right run can put you on the end of a great pass and could end up saving or scoring a goal.
Just like the hard work of making a run and getting open can make a goal look easy, doing the prep work in your job can make you look like a star. Anticipating potential problems, researching solutions, and proposing alternatives are all things you can do to help make your project a success.
Kids don’t like to make those runs because they don’t always get the ball. They may sprint down the sideline only to have their teammate pass to a different part of the field. It takes a while to learn that doing that “unrewarded” work is just part of the game.
If you watch a professional soccer game you’ll see many instances of players making runs to get open and have it lead to nothing. Yet they keep making those runs and eventually they’re in the right place at the right time and help the team with a goal or an assist.
Sometimes in your job you may do work that seems to go unnoticed. You may be tempted to only do your “assigned work”. This is fine if you’re not looking to advance but if you’d like to get ahead in your career then be sure to “move without the ball” at work.
Just like coaches notice players who are working to get open and make plays – your boss and co-workers will notice when you’re working hard to put out fires, squash bugs, prevent errors, please customers, add features, trump competitors, make more sales, or anything else that goes into making your team a success.
2) Find a Coach
When we’re kids it seems like we have a coach for everything – our teachers in school, coaches on the field, instructors in the arts, etc. We’re soaking it all in and learn a lot from various coaches – we look up to them and often look forward to our time spent learning from coaches.
Then we grow up and find ourselves thinking we’re too mature and experienced and worldly to need a coach. Since we’re adults we think we should be able to figure things out on our own. However, trying to go it alone can be counter-productive. Often a coach can often point out a few areas you can improve in, or even just best practices to use, that can result in big performance gains.
Your coach doesn’t have to be the world’s leading expert on your industry or career. As long as they’re knowledgeable about your topic then you stand to gain a great deal from tapping into their expertise. You don’t have to pay an arm and a leg for coaching. Technology has made it much easier and cheaper for experts to deliver coaching, checkout Google Helpouts as an example.
3) Be Self-Motivated
The kids who improve the most in youth sports are the ones who want to get better. Kids that are self-motivated to improve are the ones who listen (most of the time) and make the effort to do things the “right” way. They focus rather than complain. They’re open to hearing and trying out feedback.
They put in the extra effort to do drills outside of practice. They try to learn the bigger picture and how smaller skills and details work in tandem towards achieving a better result. It’s obvious to the coaches who these kids are. It’s likely just as it’s obvious to your boss who the achievers are in your group.
You have to be self-motivated to excel at work and in your career. If you don’t want to improve and don’t feel the need to get better then maybe it’s time to think about adjusting your job or career in a direction where you would feel more motivated.
4) Understand How to be Part of a Team
Coaches value kids who are mature enough to understand that sometimes the team comes before the player. Kids who fill the role where they’re needed even if they don’t particularly want to be in that role.
Coaches aren’t fans of players who throw a fit when things don’t go their way.
A coach will always cheer for a player who steps in to cover when a teammate makes a mistake. Coaches notice when players are kind and supportive to their teammates and when kids are positive and have good sportsmanship.
Many of these things can be said for your team at work and your boss. These are the types of things that aren’t going to directly earn you a bonus or a promotion but they’re noticed by your peers and superiors. This type of behavior adds up over time, negative or positive, and will have an impact on your career over the long term.
5) Communicate Effectively
Players who are good communicators make the team better.
For example, kids who speak up to say they don’t understand a drill or a new skill or tactic we’re learning.
They give the coach a chance to address the ambiguity or confusion in advance rather than during a game situation.
Kids who tell you where they want to play can be a little annoying when they ask over and over if they can play striker. However, if that’s where they excel and are most motivated to play hard, it’s good that they let the coach know where they think they can contribute best and are volunteering themselves for that job.
Players who communicate with their teammates in the heat of the action can help the team find the open player, get the extra pass made, get back on defense.
You can apply many of these things directly to your job. Let people know when things are unclear and need more detail or direction. Double check with people on your team to make sure they understand both expectations and the plan for meeting them. Let people know the areas you’re strong in so they can reach out to you when they need help. Keep your boss and team apprised of delays, roadblocks, and schedule changes.
6) Accept & Learn from Criticism
As part of any team you’ll eventually run into a situation where you make a mistake and it costs the team. In sports it might lose you the game, at work it might cause you to miss a deadline or even lose a client.
When a kid makes a mistake that results in a goal, we let him know right away what he did wrong. I’m sure it probably hurts his pride being called out in front of his team but we do it in the moment so they can learn from their mistake.
Whether in an email or a team meeting it sucks having your mistakes being pointed out in front of your co-workers and boss. Often our immediate reaction is to defend our actions and maybe even get dragged into an argument
The best way to shake off a mistake is to own it. Acknowledge your mistake, don’t make excuses or blame others. You may be tempted in the heat of the moment but it usually works out better if you just apologize for any mistakes and pay attention to the feedback on how to avoid it in the future.
7) Be Consistent
Being consistent is very important when you are part of a team if you hope to be a part of that team’s success.
We had kids who would play amazing one game then disappear for the next 1-2 games. Our players are only eight so we know that we can’t expect them all to be super consistent – however the ones that always show up ready to play definitely stand out.
It’s frustrating to your boss and your team members if they don’t know if they can count on you. I’d bet that many a boss/coworker would prefer to work with a consistently good performer over a superstar who only shows up 60% of the time.
Consistent results will be noticed by your team and your superiors. One of the main hurdles to achieving consistency is that it takes commitment and discipline. Whether in sports or in your career you have to make the decision to put in the work, even when you’re having a lousy day, week, or month.
Remember this, if your boss knows they can count on you they will likely give you the support and training you need to do your job even better. Just make sure that they don’t take advantage of your consistent performance and willingness to do the work.
8) Know Your Strengths/Weaknesses
I learned this season that I’m a much better assistant coach than head coach. I’m good at working one on one with players and coming up with ways to motivate them to improve and to build their confidence. I’m good at preparing them to play but I discovered that my weakness is running a game.
The first weekend the head coach was out of town I really struggled with game management. I was so caught up in coaching the game I lost track of the subs and who had played and who needed a sub.
You probably won’t be good at every part of your job so dealing with your weaknesses is an important part of your career. There are really two parts to it:
- recognizing those areas you need help
- adjusting your actions to account for your weaknesses.
In my situation I asked another parent to help manage the substituting so I could focus on coaching the players on the field. At work you can reach out to your boss or co-workers to ask for help in areas where you’re struggling. This isn’t always easy to do – it can be hard to admit that your skill or experience level isn’t where it needs to be for a task or project.
Most reasonable managers would rather have you acknowledge you need help so that the project can turn out a success, rather than you struggling in silence and having the project delivered with sub-standard quality or fail altogether.
Obviously, having others do part of your job for you isn’t really a long term solution. So once you recognize areas you need to work on you have some decisions to make. If those skills play a big role in your job and you don’t really want to do those things then maybe you need to look for a different job that requires many of the same skills you have but avoids the areas where you are lacking.
Alternatively you could get training to improve your skills in those areas. Some companies have documentation or a knowledge base on industry or company specific challenges that you can turn to for guidance. Keep in mind there are some things that you get better at mostly through experience. In those cases it helps to find a more senior professional to mentor you through those growing pains.
Remember that everyone always has more to learn. So be prepared to recognize and handle weaknesses as you come across them in your career.
9) Don’t be a Waste of Talent
Some kids on our team are naturally skilled at soccer and others have to work a lot harder at it.
When you see a kid who’s good but always goofing off it makes you wonder how much better they could be if they took it seriously and worked hard.
If you’re good at something in your career strive to be better at it, to be the best. Carve out a niche in that area and use your skills to your advantage.
10) Challenge Yourself
My son’s team sometimes chooses to “play up” against older kids who are bigger, stronger, and faster in order to challenge the boys. The challenge makes the kids work harder but it helps them get better.
They’re more likely to lose to an older team than if they played kids their own age but those tough games help make them better players.
The same is true in your career. Taking risks and challenging yourself is more likely to result in harder work and potentially more failures but you’ll be learning (and hopefully improving) along the way.
In many companies if you want a promotion you have to prove that you’re capable of handling that next level of responsibility. Often this is by doing the work of the job you want, not the one you have. You may be taking on work that feels out of your league but if you don’t challenge yourself you (and your boss) will never know what you’re capable of.
11) Set Yourself Up for Success
This point may seem to contradict the previous one so let me explain with another soccer example. Our soccer team challenges itself by “playing up” during season games and maybe finishing with a .500 record, or worse, for the season.
While it’s good to challenge yourself, it can be a confidence killer when you feel like you’re working hard but never coming out on top. So while we play up in league play, we enter all tournaments in our proper age group and are usually very competitive – often coming away with a confidence building 1st or 2nd place finish.
So while you want to challenge yourself in your career you also have to be realistic about your abilities and what tasks you can take on. One way to do this at work is to volunteer for tough tasks but to build in time for learning when you put together a schedule and offer estimates and commitments to your team and your superiors.
Another way to increase your chances of success is to negotiate the scope of the work on your project. If you’re tackling a tough problem try to break it down into smaller deliverables, focus on the first few, and see if you can push the other less critical aspects back a little.
12) Look for Teachable Moments
Mistakes are a perfect chance to teach, whether you’re working with 8 year old kids or middle aged cube workers. Often whether the offending party learns anything has to do with how you approach your critique.
If you make them feel foolish and put them on the defensive they’ll be more focused on denying/defending themselves than learning from what they did wrong. If someone on your team is making bad decisions or doing things the wrong way it’s often best to communicate with just that one person so it doesn’t look like you’re calling them out. For example, email just them rather than copying everyone on the team.
One strategy is to offer a suggestion on a better way to do it but make it seem like their idea.
You don’t even have to always point out their mistake. For example, with our boys we watch recordings of professional games and point out examples of mistakes the pros are making that are kids are making as well. We pause/rewind and talk about what went wrong and what they could have done differently. For many work problems you can find articles online about similar issues and use those as talking points.
Occasionally we’ll tape our game and review the recording for improvement. At work you can do something like that with post-project reviews or even smaller scale post-mortem on individual issues. Check out the 5 Why method.
13) Learn How to Motivate Others
I talked in an earlier point about being self-motivated. To do this you have to figure out what motivates you and what it takes to push those buttons. However, when you’re part of a team it also helps to know how to motivate the people you’re working with.
A former soccer teammate of mine (who now has some grey in his beard), went on to become a successful college soccer coach. Years back I asked him about how he transitioned from a player into such a good coach and he shared that it was because he figured out how to motivate each player to do their best. At first he wasn’t great at all the technical aspects of coaching but he was really good at getting each player to perform at or above their peak level.
You can use the same approach in projects you encounter in your career. The secret to learning how to motivate others is to listen to what your team members talk about in team and project meetings. What do they feel strongly about? What gets them fired up or what’s something they can talk about for hours? What do they take pride in?
Inevitably you’ll be faced with a tight deadline and you’ll be asked to do more than you can with less than you need. Times like those are when it really pays to know how to motivate others on your team.
These last two lessons are the most useful to people in a new job or career. As I watched young kids learn the technical aspects of soccer I saw that focusing on the fundamentals made them more comfortable on the field and gave them more confidence. Something similar can be said for a new job or skill. Don’t get ahead of yourself. Focus first on getting the basics figured out.
14) Building Confidence is Key
The young players who build confidence to call for the ball, attack the defense, and to make the runs up the field are the ones who will score the most goals.
The ones who are somewhat intimated and sit back and watch won’t see as much action.
In your career, having the confidence to tackle new assignments and to voice your ideas to your boss and team can help you build experience – and ultimately to advance.
What I learned from the scampering soccer youths is that using the right techniques to learn the fundamentals helps you pick them up more quickly and remember them more easily.
Rather than expecting yourself to figure everything out on your own when you start a new job – seek out training and mentorship. There are many online platforms that not only teach you the subject matter but also help keep track of your progress. As your skills improve so will your confidence in your ability to use them.
Part of this goes back to finding a mentor or “coach” as I mentioned earlier. There may be concepts or techniques that are difficult to conquer all at once in your job. More experienced experts in your company can help you break the problem down into smaller more manageable pieces and help you build confidence as you see small successes. This leads us to the final lesson.
15) Patience Young Grasshopper
Just as it’s hard to explain to 8 year olds why moving without the ball on the soccer field is important, it can also be tough to explain to a rookie programmer the importance of code that’s loosely coupled and has high cohesion. Pick your industry, there are always concepts that are difficult to fully grasp when you’re getting started. It takes time to understand the value of these concepts and incorporate them into your craft.
The trouble is some of these practices may seem inconvenient or a waste of time when you’re first starting out. If you find yourself questioning the value in the seemingly extra work just think about Mr. Miyagi and how he taught the Karate Kid to “wax on, wax off”. If you haven’t seen the movie, the idea is to train yourself by repeatedly using basic skills until they become second nature.
In sports it’s often referred to as building muscle memory. Experienced players who have practiced and used the fundamentals many times are able to subconsciously control the mechanics of their body movements and instead focus their brain on higher level tactical and strategic tasks.
So in the beginning of learning a new skill or career it really pays to focus on the fundamentals. Even if it feels like progress is slow, have patience while you build those skills. Eventually it will click.
Life After Your Job
I took my son to the NCAA DIII Championship games last weekend and as the final match came to a close I thought about the seniors on the losing team whose soccer careers effectively ended with the final whistle.
Although their 15 years of intense work and effort ended just short of winning the championship they came away with a lot more than a second place trophy. They take the lessons they learned about team work, perseverance, mental toughness, etc. into the next stage of their life.
Just the same, you can use the skills you pick up at work in your next job. I don’t know the exact statistics about how few youth athletes go on to get college scholarships and how even fewer become professional sports players. I do know that proportionately few workers will become CEO or a senior executive at their company. Chances are higher that you’ll be transferred, laid off, or maybe just change jobs.
So work hard but be purposeful about the skills you’re learning, relationships you’re building, and industries you’re entering. Remember it’s not all about the trophy (promotion, awards, pay raise). Chances are your current job isn’t forever so those things are temporary.
Don’t feel like you have to put it all on the line for the promotion. Be wary of working your fingers to the bone just for the promise of a pay raise. If you’re an at-will employee then job title and salary are temporary.
However, the skills you learn and the relationships you form can carry with you into your next job. Focus on building some of the career fundamentals we’ve talked about – being consistent, a team player, adaptable, driven, patient, a communicator, motivational and you’ll be in good shape when it comes time to move onto your next job.
Any more career tips you’ve learned through sports? Please feel free to share them below.
Have you ever heard the saying as the twig is bent, so grows the tree? That’s kind of how it is when it comes to money and finances. The money habits you develope in your 20s will help or hurt you for the rest of your life. What’s more, you have a very large degree of control over how it all turns out.
Like so many other decisions that you make early in life, the choices that you make when it comes to money in your 20s will have a huge impact on the rest of your life. Since financial situations develop over many years – often decades – the patterns that you set in your 20s will have a profound effect on your level of prosperity throughout your life.
Here are some of the major decisions that you will have to confront and settle shortly after graduating from college.
To save or not to save
The savings rate in the US is appallingly low. The majority of people seem have little or no savings, while the top 10% or 20% of households are perpetually flush with cash. You can and should make a decision on this while you’re in your 20s.
As much as anything else in life, like diet, exercise, and work style, saving money is a habit. If you get yourself into that habit early in life, you’ll generally find you will have money throughout your life. Even if you start saving a small amount, you’ll be setting a pattern that you will follow without much thought in the years ahead.
The impact of this kind of a decision will grow over time. Though your savings may be relatively small while you’re still in your 20s, they will begin to growth in your 30s, and by the time you hit your 40s you will have options that other people only dream of.
This is decision that you have to make right now – to save or not to save – over the course of your life. This is especially important because life has a way of getting more complicated as we get older. Though you may think that saving is a decision you can make “later”, your circumstances may not allow it. But if you’re already in the habit now, you’ll be likely to continue to do it even when those complications set in.
Investing as a life choice
Investing money is a natural extension of savings. It’s what you do with savings that are in excess of your immediate needs for cash. And just like saving, investing is a life choice.
Study after study have shown that the people with the largest investment portfolios are those who began investing early in life. This is because of the time value of money – the earlier you begin investing, the more time your money has to grow.
Get on the investing bandwagon early in life, and your portfolio will grow as you get older. And as it does, the options that you will have in life will steadily increase.
But like saving money, investing is a choice, one best made here and now.
Debt is not your friend – or maybe you think it is
Debt is almost the “B side” of investing. More particularly, those who choose not to invest usually have more than a fair amount of debt.
While this may have something to do with patterns of consumption – which we’ll deal with next – it’s probably more a function of not having savings and investments to pay for major purchases and expenses.
The person who has a sufficient amount of savings and investments, has a ready source of capital to draw on when they need to make a major purchase, such as a car or a vacation. The person who lacks financial assets is more likely to go into debt to pay for what they want but cannot afford.
Unfortunately, it’s very easy to get into debt. Many young people do it as a function of student loans. When they graduate college, and they’re beset with the startup expenses of life, they turn to credit once again. With each purchase, a decision is being made to go deeper into debt.
You can choose to break this pattern, and it’s best to do it early in life. Don’t buy anything that you can’t afford to pay for with cash. Plan to buy what you need secondhand – you can usually get it for pennies on the dollar. Don’t start trading up on your possessions until you have the income and assets to justify it. Those are habits you need to get into now.
Living large – or living on the down low
Your 20s are also a time in life when you’re making choices about how you want to live. Some young people – anxious to start living the good life – start patterning their lifestyles on free-spending friends, or even on people on TV. Delayed gratification isn’t in their vocabulary, they want it all now.
It’s fine to want to live well, but that’s also an expensive way to live. It’s the kind of mentality that creates debt, and a perpetual need to make more money. Because of income taxes and other fixed expenses, there’s never quite enough income available to pay for the lifestyle that you want to live. That’s where debt enters the picture.
Choose to go in the opposite direction. Delayed gratification has to be your mantra. You’re young, and you’re just starting out, so it’s perfectly okay to live on the down low. Keep your expenses low – rent an apartment with roommates, buy a secondhand car, and find ways to travel on the cheap. It’ll all work out with a stronger financial position later in life.
Hard assets vs. financial assets – stuff vs. money
This is a problem in our culture, and it starts in youth. It’s probably not a conscious decision, but we have to make a choice as to whether or not our money will flow into hard assets – stuff – or financial assets. Financial assets are the kind of assets that provide future income. Hard assets are the type of goods that provide some current use.
If too much of your money is going into hard assets, little will be available to go in a financial assets, which is to say that you won’t be able to invest.
This is another major choice and you have to make right now. Will you put your money into stuff, or will you invest it in financial assets? The quality of your future financial situation hangs in the balance on that decision.
As much is may be tempting to go for the good life while you’re in your 20s, recognize that life goes on for decades, not years. You’ll need to provide for yourself over the course of your life, and the more that you can do now to set yourself in the right direction, the easier the rest of your life be.
It will be based on a set of choices that you can make right now.