3 Tips to Manage Your Career Progression

Do you let life just happen to you? Or do you grab the bull by the horns and make life happen?

How you answer those two questions will often determine how you attack your career progression. If your career isn’t going anywhere is it really just a bad job market or are you not doing anything on your end to propel your career forward?

How to Intentionally Manage Your Career Progression

Don’t let your career years burn by without owning part of the process. Yes, you’ll need some luck and good timing along the way. But sitting back and letting your career happen to you is not an option if you want to continue to grow. Here are three tips to help you keep your career on track:

1. Have a destination in mind.

First, you need to have a destination in mind. For some people this means they know they want to be in “X” position at “Y” firm at “Z” date.

But that’s a little specific for my taste. You wanted to be a firefighter when you grew up. Guess what? Things change. Picking out a specific position 20 years in the future is a bit of a stretch.

But aimlessly wandering through the career desert is a poor choice too. Have some short, mid, and long-term goals. Know what type of work you want to be doing in a few years and where you’d like to be in five more years. Your goals will guide you along your decision making process as you take ownership of your career path.

2. Network with others along the way.

Now that you have a general idea of which direction you would like to go, it is time to meet some fellow travelers that are headed down that same path.

There’s a career proverb out there you should pay attention to: it’s not how much you know, it’s who you know.

The bottom line is you can have all the skills in the world, but if no one knows you then your career path will be stunted in comparison to what it could have been.

Go to conferences, user group meetings, or lectures. Shake hands and come back again. And again. You’ll slowly develop a group of professional contacts that you can start to grow closer with.

But I would be remiss to mention networking without mentioning one critical aspect of it . . . .

3. Provide value to your network.

When I say shake hands and meet people, I don’t mean shake hands and kiss babies in the sleezy politician kind of way. That type of networking is transparent and your insincerity will be evident to everyone you meet.

No, proper networking has a key word in it: work.

Being a strong member of your own network requires work. It requires reaching out, follow up, and – gasp – caring!

Here’s the thing: If you never provide any value to your network you should never expect it to provide any value to you. The best networkers are those that meet people, learn about them, and let the other person talk. Then the networker helps that person in the network connect to another or simply provides some guidance on an issue.

Rinse and repeat . . . for months!

If you’re constantly giving out to your network you are building up intangible connections and goodwill with other individuals. Just like you shouldn’t wait until you are laid off to update your resume, you shouldn’t build your network the moment you need it. You want to cultivate your network over time so that when you do need it, it springs forward to help.

Bottom Line

Aimlessly coasting through your career won’t get you very far. Be proactive, engaged, and beneficial to others and you’ll find success along the way.

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How Often Should You Update Your Resume?

Finding a new job requires you to have a few simple things. The first is an updated resume that accurately depicts your career skills and experience. The second is references that can vouch for your experience in the field you are looking to work in. And lastly you need either a solid network of contacts in the industry or a lot of luck.

Unfortunately, most people wait until it is too late to update their resume. They’ve had to come home and tell their families they won’t be going the next day. They’re panicked and an emotional mess. Amidst all of this they boot up the computer and start putting a resume together.

It’s too late.

They will eventually land a job, but they’ve missed out on some serious benefits of updating their resume on a regular basis.

Where Almost Everyone You Know Fails at Updating Their Resumes

First, let’s clarify what failure looks like:

• If you haven’t updated your resume in 12 months.
• If you don’t have a resume.
• If you wait until you get laid off to update your resume.

All of these are detrimental failures in terms of being able to quickly land that next position. Why?

Imagine an interviewer asking you the following questions with your old resume sitting in front of you:

• Tell me about the last 12, 24, or 36 months of your career.
• What major projects did you complete?
• What interesting work did you do?
• Who did you work with?
• What was the name of the Vice President you brought that last project proposal to?

It’s good to have some interview tactics under your belt before you sit down with a potential employer. If you haven’t updated your resume in three years you will spend a lot of time saying “Uhhh, well, let me think . . . .” The interviewer then inevitably thinks, “Wow, this person can’t remember what they did at their last job? Are they making it up on the spot?”

Utter failure.

Don’t be like that. Be different. Update your resume more often than that. But how often is the right amount?

How Often Should I Update My Resume?

In my opinion you shouldn’t go more than six months without updating your resume. Now if you do the same basic job day in and day out, you might be able to stretch this a little bit further. (And you might want to consider trying to move your career up a few notches if you aren’t working on anything interesting.)

Why a maximum of six months between updates? You simply can’t remember all that you did in 26 weeks. That’s a long, long time. There’s a lot of family time, work time, sleep, sporting events, and hobbies mixed in there. You may have had a contribution on a major project that completely slips your mind because you didn’t write it down.

If you work in a dynamic and fluid industry with a lot of constant changes or mini-projects – think of a software developer working on several apps for his employer – then you might want to consider keeping a running log of your accomplishments before your six month update. If you don’t go that far at least try to update it twice per year so you can remember all that you accomplished.

Benefits of Frequently Updating Your Resume

The best part of updating your resume more frequently is it can take a lot of the sting out of the process. If I asked all of our readers how many of you would rather spend four hours updating your resume or be forced to dig ditches in the summer heat, an unhealthy portion of you would probably ask to see where the shovels were.

Updating your resume doesn’t have to take a long time – that’s the beauty of it. If you spend 15 or 30 minutes every six months jotting down your most recent accomplishments you never have to sit down for hours on end to remember all that you did over a several year span.

Oh, and there are three other specific benefits:

You’re Ready for a Pink Slip

If you’ve updated your resume in the last six months and get laid off today, the document sitting in front of you is mostly ready to be sent right out for employers. You’re prepared for a pink slip – at least from a resume standpoint. (You should probably have an emergency fund as well to bolster your layoff defenses.)

You’re Ready for Career Progression

Having a resume ready to go makes it a lot easier to send one quickly to a potential employer that you run into in an elevator. “Hey, send me your resume when you get a second” doesn’t literally mean right that second, but you can’t wait five days to update and send your resume either. It makes finding that next job a lot easier because the best time to look for a job is when you have one.

You’re Reminded to Network with Colleagues

As you’re remembering details of those important projects you’ll suddenly remember the two team members you collaborated on that you haven’t touched base with in a while. Maybe one moved on to a new employer and the other switched departments. While you’re updating it makes sense to call them up to grab lunch. This strengthens your professional network and makes finding a job if you are laid off a lot easier. (Or maybe those friends suddenly come across a great opportunity in their new area and try to get you on their team).

Final Thoughts

How often you should update your resume really depends on your industry. However, it is universally true that waiting years to update is a poor career choice. Spend a little bit of time every so often to update your major accomplishments so you don’t find yourself in a panic when you need your resume put together quickly. If you’re struggling with your resume there are resume services you can hire or you could even look into what services career coaches might offer regarding resumes.

Are you updating your resume on a regular basis? Let us know in the comments!

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5 Smart Moves for Lottery Winners, Inheritances, & Maybe Even You

This is a guest post from Jason Price, husband, dad, soccer fan, and blogger on the journey to financial freedom at OneMoneyDesign.com.

Sure I’ve had thoughts about winning the lottery.  I think most of us have at one time or another. Personally, I don’t play it, but I’ve purchased a few tickets here and there in the past for fun.  I think playing must be done so with budgeted entertainment money because the chances of winning are just too ridiculously small. It would be foolish to waste large sums of money on playing.

That being said, let’s dream a little… can you imagine waking up the next day to find out you’re a multi-million dollar lottery winner?  Ha, wouldn’t that be something!  Life would be changed in a matter of hours.  Would you go to work the next day?  Buy your favorite car?  Give money to someone or a great cause?  It all seems like wonderful possibilities.

But would this new found fortune be a good thing?

I’ve watched TV documentaries in which lottery winner’s ruined their lives after winning all that money.  Some lost their friends, spent all their earnings, became addicted to drugs, and let money completely became the owner of their lives.  These were frightening, but real stories of what large sums of money can do to people if mismanaged.

But does winning the lottery, or even receiving a large inheritance, have to be such a misfortune?  I believe it doesn’t if you manage it well.  In fact, if you can manage your monthly income well, and have your priorities in order, you’ll likely do very well if you were to receive a large, life – changing sum of cash.

Let’s dream some more…you just received a multi -million dollar fortune, whether it be lottery or other.  People are knocking on the door to shake your hand.  They want to meet you, rub elbows with you and congratulate you.  Some will be friends, long lost relatives and many, many people who will claim they can help you manage the fortune.

So, you ask for some help and I come up with 6 simple moves that will insure you don’t let your emotions or the money control your life.  Let’s take a look.

1. Give – the first order of business is to give at least 10% + away to a charity you’re passionate about, or to your church as a tithe.  At this point, I would caution about giving to individuals.  I know many people have needs, but unless it is a life or death situation, I would not give anyone money.  Giving is a matter of the heart and it will insure this new money doesn’t have a hold on you.

2. Become debt free – The second thing I would do is to go ahead and pay off all those debts.  Yep, pay off every credit card, school loan, car loan or other.  If you’ve filed bankruptcy in the past, you should pay debts back that you were released from without further obligation.  It sounds crazy, but you will appreciate being emotionally released from that debt too. 

3. Save – The third thing I would do is open a savings account and deposit the rest of the money. Yes, nothing should be going in a primary checking account.  NOTHING.  At this point, it’s important to try and forget you won the money.  It will be difficult at first, but give it time to let emotions settle.  Stop taking phone calls and talking to people about it.  Do everything possible to keep life moving forward as it was before winning the money.

4. Work – I would definitely continue to work at the same job for 6 months.  No buying new cars, toys, NOTHING.  Continue to work at the same job and be still.  Be silent for 6 months and let that money sit in the account. 

5. Plan – Across these next 6 months I would reconsider my life goals and create a plan.  Identify those passions in life.  It should be very clear (and list on paper) what your life goals are before ending that 6 months.  If not, take more time to plan. 

Within the 6 months it’s also time to find trusted experts to plan for things such as taxes, paying off a mortgage, if that’s a goal, investing for retirement or in a business and much more.

In summary, the idea is to continue to stay active, work and have a plan for the money.  Without a plan, we would all be at the whims of the power of the fortune and it would surely wreck our lives.

Let’s turn back to reality now…  The interesting thing about these moves is they could be applied to any situation, whether someone inherits millions, wins the lottery or makes $30,000 per year.   Give, get out of debt, save, work hard and have a plan for your life and money. 

So, what do you think of this plan? Could you use it if you were to come across a large sum of money one day?

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FinCon Virtual Networking Giveaway

Do you remember how boring your first day home was after spending a week or two at summer camp as a kid?  That’s how I felt when I walked into work on Monday morning following last weekend’s Financial Blogger Conference. 

It’s hard to replicate the energy you get when you pack over 300 passionate money bloggers into a conference room and have the keynote presenter inspire them to make their mark on the world before they die!

Although I hung out with lots of these amazing people, there were many more that I didn’t get the chance to meet… and I’m going to right that wrong with a contest.  I want to connect with everyone I didn’t meet in Denver, and anyone who wanted to attend but didn’t get a chance.

I know it’s not the same as meeting in person but connecting on Facebook and Twitter will have to do for now, at least until next year! 

The contest will have two winners, one person will win a free ticket to FinCon 2013 (bloggers and authors only, sorry no corporations) and the other will win a virtual ticket to FinCon 2012 (a video collection of all the presentations that were recorded).

So to enter the contest, follow me on Twitter and become a Fan on Facebook, use the tool below to enter and it’ll track your participation. Don’t worry, even if you already follow me on Facebook and Twitter, you can still enter.

 

I also want to say thank you to everyone at the conference that gave me feedback on my new super-secret project.  As you may have heard in my conference session or read in my FINCON Connection article, I’ve been working on a new web tool for a while now.

Several people were gracious enough with their time to let me give them a demo and then offer feedback. I really appreciate it, so a special thanks to:

• Jason Price of One Money Design
• Flexo of Consumerism Commentary
• Mike Piper from Oblivious Investor
• Ashley Jacobs from Wise Bread
• Mike Colella from AdBeat
• Andrew Schrage from Money Crashers
• Ramit Seti from I Will Teach You To Be Rich
• Cap from Stop Buying Crap
• Adam Baker from Man Vs. Debt
• Chuck Rylant from Chuck Rylant

and of course anyone else who I left off the list. 

I also want to thank the folks at Swift Media who have been helping me make this thing a reality.  My goal was to get it launched before the conference and I really cut it close. I finally published it to the web around 4 AM and then caught my flight to Denver 5 hours later.

As you can see from this screen shot of our Google chat, John was up working on it with me until almost 1 AM to help me hit my deadline.  Now that’s going above and beyond in my mind.  Not only have they been responsive, John’s always been able to work his design magic and figure out a way to do what I needed, so thanks to those guys.

So lets connect! To enter, follow me on Twitter and become a fan on Facebook using the widget above. Good luck and I look forward to “meeting” you.

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4 Early Retirement Risks – and How to Avoid Them

In the last few years early retirement has become the holy grail of retirement planning. After all, if retirement is a good thing, then early retirement is even better!

The abundance of investment vehicles like the IRA and 401k combined with easier and wider access to investment information, in tandem with the power of compound investment income has even made early retirement more doable than ever before.

But with all of its positives, early retirement is not without some risks. Here are at least four that I’ve been able to identify.

Out-living your money

With people now routinely living into their 80s and even 90s, there is a real risk of out-living your money even if you retire at age 65. Taking early retirement at 50 or 55 only increases that risk. By retiring at 50, you may need your investments to cover 30, 40—even 50 years. That’s a tall order even in the best of circumstances.

How do you avoid out-living your money when you retire?

1) Build a bigger investment portfolio than you think you’ll need. One of the best ways to insure against out-living your money is to have more of it than you’ll need. If you think you’ll need $1 million to retire at 50, plan on having $1.5 million or even $2 million. Then plan to draw income from the $1 million you think you’ll need, and pretend the extra money doesn’t even exist.

2) Start saving and investing early. If you’re going to live 30 or 40 years in retirement, you’ll probably need at least that much time to prepare for it. And the normal 10-15% of income that many people consider to be adequate for retirement savings probably won’t cut it. 20-25%, or even 30% or more is more like it.

3) Plan to live beneath your means in retirement. If you’ve been saving an outsized percentage of your income in order to prepare for early retirement, you’ll already be ahead of the game. But when you retire, plan to cut your standard of living even more, run the numbers in a retirement calculator to see how much you’ll really need to live on. This will be especially important during the first years of retirement. You don’t want to be drawing down your investments too early.

4) Don’t ignore inflation. Inflation is the silent enemy of retirement. It’s been tame for the past few years, but don’t rule out a return. This is especially important when you retire early. The investment portfolio that provides so well for you at 50 can drop substantially in value by the time you hit 65 or 70. Getting a return on your investments that supports your lifestyle won’t be sufficient. You’ll have to cover lifestyle and inflation. That means you’ll have to continue to invest at least a portion of your retirement portfolio in growth type investments throughout most of your retirement.

Relying exclusively on retirement assets

One of the things you don’t want to do very early into your retirement is rely entirely on your investments to provide your living. (Of course, if your retirement stash is well into the millions, feel free to disregard this advice!) Since you will need your retirement investments to cover not years, but decades, you’ll have to have a strategy in place what will extend your portfolio to cover the rest of your life.

There are two problems that could happen if you try to rely entirely on your investments:

1. You could be draining assets that you’ll need later in life, as in really need later, and
2. You might use up investment assets in a bear market that may be needed to recover lost ground when the market turns up (more on this one in the next section).

The “safe withdrawal rate” on retirement assets is generally considered to be 4% of your portfolio, but I wouldn’t test this theory too heavily—at least not in the early years. You might want to have other income sources that will help provide for you through the time of your retirement up until you reach 65 or 70. Those sources could be passive income streams, proceeds from the sale of property or even some kind of part-time employment like freelancing or consulting work (more on that too).

Once again, you’ll be providing for yourself for decades and anything you can do that will reduce the drain on your investments early on will pay for itself later.

An untimely bear market or even a crash

Bear markets and crashes are bad enough when you’re in your working years and saving up for retirement. But if one hits when you’re retired it could force you to change your plans. A 40% or 50% slide shortly after retiring could even take you out of retirement.

What do you do to prevent this from happening?

• You may have kept 80, 90 or even 100% of your investment capital in stocks while you were working, but once you retire you’ll have to move a big chunk of it into more conservative assets—the type that aren’t likely to tank with the market. They’ll limit your gains in bull markets, but they’ll lower your losses in bear markets and when you’re retired that’s a good trade off.
• Have a pile of non-retirement savings that you can tap for living expenses during bear markets; this will allow you to keep your capital intact to invest for eventual recovery rather than using it to pay bills.

Letting your career skills slip

Just because you’ll be retired doesn’t mean you should become irrelevant from an employment standpoint. We’re discussing the risks of early retirement and it’s pretty clear that the best way to prepare for those risks is by having alternate sources of income. Your career skills should be one of those sources.

We touched on this a bit earlier, but keep some sort of connection with your pre-retirement career so that you can do freelance or consulting work if you need to in a pinch. You can also develop new skills or consider starting some sort of part-time business. The purpose isn’t to get so deep into working that you’re not truly retired, but rather to have a Plan B just in case you have to.

And this is just a guess, but if you retire at 50 or shortly there after, it’s very unlikely that you’ll become completely idle. At that age you’re far too young and still have too much to offer, and you’ll probably want to do something that looks a lot like gainful employment.

The point isn’t to compromise your retirement, but to be ready to do what ever you need to to sustain it over the decades to come.

Good deal?

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Life Insurance Exam Blues?

Other than deciding which type of life insurance to buy, how much coverage they need, and life insurance costs one of the other things people tend to worry about is the life insurance exam.

None of us like tests and most people don’t like going to the doctor so when you combine the two you give lots of people a reason to avoid applying for a life insurance policy.  They know that after they choose between life insurance quotes, pick the right amount of coverage, and fill out their application that they’ll have to face the dreaded exam to get approved.

Life Insurance Approval Process

To help calm those fears a little I’ll walk you through my recent life insurance exam and what all it entailed. For years I’ve had life insurance coverage through my employer, but after we had our third kid I decided it was finally time to buy a separate term life insurance policy. 

After submitting my application the next step was a medical history follow up.  The insurance company didn’t do that follow up themselves – they use a third party service that called me up a few days after I had applied.

Phone Interview

I spent about a half an hour on the phone answering all kinds of medical questions, some of which I wasn’t ready for.  The questions made sense it’s just that I didn’t really have all the information in front of me.  For example they wanted to know the date of my last physical exam, if you’re a relatively heathly person, who can remember in detail the last time you went to the doctor for a checkup?  If you’re also applying for a policy for a spouse or your kids, they’ll want to know the dates of their last checkups as well.

The lady on the phone also wanted the address and phone number of my doctor, which I didn’t have handy either.  I did know my physicians name so they were able to look up her information for me.  At the end of the approximately 30 minute conversation they said someone would be contacting me to set up an actual physical exam. 

Life Insurance Exam

After another few days I did get a phone call to set up a physical exam.  I explained that with a job and three little kids I was pretty busy and didn’t have a lot of free time to be making doctor checkup appointments.  So they were actually able to schedule it on a Saturday and had someone come out to my house and do the physical here –  definitely very convenient. 

The physical exam itself was not very involved.  It basically consisted of a lady weighing me, measuring my waist, taking blood and urine samples, and asking me a few more questions.  She was gone about half an hour after she showed up at our door.  So the exam itself was no big deal.

Motivation to Get Healthy

If you’re wanting to lose weight, the exam can be a good motivator.  You know that you can probably get a better life insurance rate if you weigh less so you’re motivated to lose weight for two reasons, to get healthy and to save money.

Ideally you’ll lose that weight before starting the life insurance application process because during the phone interview, one of the questions they ask is how much you weigh.  However, by the time you hear back to schedule your physial exam and pick a date that works for you, you might have 2–3 weeks after the phone conversation before your exam.

So if you schedule strategically you could have several weeks time to hit the gym, eat uber-healthly, and shed the pounds.  You’re basically losing weight for a weigh-in, kind of like your wrestler friends did in high school. Someone’s going to show up at your house and put you on a scale and you had better weigh the amount you said on the phone.

I’m not suggesting that you should lie on your phone interview because they base their rate quote on the information you give them over the phone.  But who knows exactly how much they weigh right?  If you’re accidentally 10 pounds off with your answer you’ll probably be super motivated to lose that weight before they show up.

Passing Your Life Insurance Exam

So overall, the exam itself is no big deal.  Just be aware that they’re going to ask you a lot of questions on the phone and for the sake of saving money on life insurance (and your health) you want to be able to give the “right” answer. 

There are some answers you have no control over.  Like, “Did either of your parents die before the age of 60”?  But, like your weight, there are definitely things that you can anticipate and make changes for.  Do you smoke? Do you drink alcohol? Do you have high blood pressure?

The physical exam and lab work they do will verify some of your answers. They’ll probably also require your permission to contact your doctor and look at your medical records. If you’re not truthful, they’ll probably figure it out.  So just try and plan ahead and adjust your habits so you’ll be able to give answers that will cost you less money.

This post is part of the Life Insurance movement, out to educate consumers about the ins and outs of life insurance.

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Pay Off Student Debt Early?

Student loan debt has been in the news a lot lately and not for any good reasons.

Some see student loans as being the next potential bubble to blow, not unlike the mortgage loan mess of a few years ago (that’s still being worked out even now). Will they go the way of mortgages and have a full blown meltdown?

Who knows? But one thing is certain, millions of young adults are having to deal with the weight of some pretty large debts very early in life and that will impact them for years to come.

No matter how we might want to sugarcoat the virtues of student loans, they are still debt, and have all the same potential pitfalls of other, less highly regarded loan types. And we should want to pay them off for all the same reasons—elimination of the monthly payment, peace of mind, lowering the cost of living or just being free to move forward in life.

But I think there’s one reason that stands above all others as the reason to pay off student loan debt as early as possible: student loans can be the beginning of the debt treadmill.

Getting on the debt treadmill early

Once you start borrowing money—especially before you’ve even earned any—you’re setting up a negative dynamic in your financial life. One debt, your student loans, will lead to another debt, and yet another and so on. Ironically, this will be especially true if your college graduate salary isn’t quite what you hoped it would be.

Here’s the basic problem: student loans are massive, unsecured loans, taken out by people very early in life. According to the Project on Student Debt, the average student loan balance is now over $25,000 per student, and there are many who owe substantially more. Stories of people who owe over $100,000 are hardly uncommon.

To owe that much money when you’re in your early 20s and just coming out of the starting gate of life is a lot to handle. But you’ll also need money to pay for all the other start up expenses in life, such as a car and an apartment and everything that goes into it. Where will that money come from? All too often: D-E-B-T. And then you’re on the debt treadmill. Unfortunately, it’s much easier to get on a debt treadmill than it is to get off.

Juggling multiple debts

One of the reasons it’s so hard to get off the debt treadmill is that income doesn’t match up well with debt. Let’s say you graduate from college, and the two major components of your financial profile are a $50,000 salary, and $50,000 in student loans. On the surface it looks like an even exchange, but it’s really not. Income, you see, has claims against it, like payroll taxes, benefits, debt service and general cost of living. Debt, on the other hand, just sits out there staring at you as a giant whole number, free of any reductions except what you are able to pay into it.

Let’s look at some typical expenses and what they do to your $50,000 salary.

• Income taxes—roughly 8% for FICA, 10% for federal income taxes, 5% for state income taxes, or 23%. That’s $11,500.
• Health insurance contribution (employer pays 50% of $3,000), $1,500.
• 401K contribution, 6% because employer matches 50% up to this point–$3,000.
• Rent of a modest apartment at $800-$850 per month, say $10,000 per year.
• Utilities, internet/cable, cell phone, etc, $250 per month, or $3,000.
• Student loan repayments, estimate 1% of the $50,000 balance, or $500 per month, $6,000 per year.
• Loan repayment for a modest car, $350 per month, or $4,200 per year.
• Car insurance, repairs, maintenance, gas, about $4,000
• Credit cards totaling $10,000 paid for apartment furnishings and a post graduation trip to an exotic destination, $250 per month, or $3,000 per year.

If my math is correct, the total of all of these predictable claims on your salary is $46,200. That will leave you with $3,800 per year, or a little over $300 per month, to pay for food, clothing, entertainment, haircuts and everything else you need in life. What it won’t leave is money for savings or for debt reduction.

How quickly do you think you’ll pay off your student loan with a financial situation that’s even close to this? What are the chances you won’t borrow even more money to pay for what your salary doesn’t cover?

This is why people have student loans into their 30s and 40s, and why they can never get out from under.

Dig out from under before you dig any deeper

The counter argument to the admittedly dreary profile above is that you’ll be able to pay off your student loans out of the higher income you’ll earn later in your career. That may be true, but it’s equally true that a career setback or the birth of a child or any number of other life events can easily get in the way of that assumption.

So what’s the solution? Pay off your student loans while you’re young and single and don’t have any obligations in life.

Instead of renting an apartment, live home with your parents, share an apartment, or rent a room for as long as it takes to pay off your loans. Instead of buying a new car, buy the cheapest one you can afford without taking a loan to get it. Delay contributing to your company 401K—once your student loans are paid you’ll easily make up for it.

Using the example above, freeing up an extra $10-12,000 per year can enable you to pay off $50,000 in 4-5 years, or roughly the time it takes to pay off a typical car loan.

You may want to free yourself to start your own business, to take in interesting (but lower paying) job, or even to take a less lucrative job in a different location. By paying off your student loans you’ll be able to do any of those and more.

Student loans may have been the only way you could get your education. But just because you have them doesn’t mean you have to keep them. Take what ever time and efforts you need to get rid of them—before life starts getting more…complicated.

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Chip Away at Your Debt in Under 10 Minutes a Day

Paying off debt can feel like a daunting process, but don’t let feeling overhwelmed stop you from getting started. Today, Shannon McNay from ReadyForZero will give us some tips on paying down our debt at little at a time.

Chipping Away at Debt

One of the problems with debt is that it can sneak up on you a little bit at a time.  You borrow money to cover one small expense here, another there, and before you know it you owe far more than you intended to borrow.  Then you top it off with compounding interest and your balance is quickly ballooning out of control.

The good news is, while you can you slip into debt a little at a time, you can also escape from the burden of debt by taking small regular actions. By starting to make small changes in the way you approach your finances now, you could soon starting paying off your debt and someday acheive debt freedom.

Start chipping away at your debt in only minutes per day by following this week long program of small tasks.

Day One: List Your Expenses
You may have to bear with me here – I really like lists. Seeing things on paper helps to give a realistic view of your financial picture.  So to start, take a sheet of paper or create an excel spreadsheet and make several horizontal columns. For example:

Expense  | How Often It Occurs  | Cost
Student loans | Once per month   | $300
Mortgage       | Once per month   | $1200
Gas               | Once per week    | $40

Easy enough, right? Next, just make a second list of these expenses and list them from top to bottom in order of importance. When doing so, don’t just consider what you want to pay the most, but what you need to pay the most. For example, you may want to put your student loans on top of the list, but it makes more sense to put your vital needs like shelter (your mortgage) first.

Day Two: List Your Income
Time for another list. This time, take a new sheet of paper (or excel spreadsheet) and list from top to bottom all the income you have coming in. This could be your job, a side hustle if you have one, returns or dividends on investments if you have them, and any other extra money coming in. If all you have is listed is one job don’t feel bad, you just finished today’s step even faster. For example:

Income | How Often It Occurs  | Amount
Day job | Twice per month   | $1500

Day Three: Balance Your Expenses and Income
This is the final – and ultimately most important – list. Take a new sheet of paper (or excel spreadsheet) and make two horizontal columns: Money In and Money Out. The time period of this list should be framed in one month increments.

Start with the amount of income you have coming in for one month and deduct each expense as you go down the list. Is the number at the end positive or negative? If it’s positive, put extra money into an emergency fund and then towards paying off debt. If it’s negative, then you’re going to have to make some changes – but we’ll get to that in the next few days.  For example: 

Day Four: What can you cut?
Now you should have a clear picture of your current financial situation. If the total from the day before was negative, then it’s time to look for things that can be cut. Even if there’s nothing that can be cut, there may be things that can be decreased in frequency.

For example: in the list above gas occurs once per week. But if the person creating this budget could take save money by taking the bus to work, maybe the gas expense could only occur once per month. Of course a public transportation column would have to be added to expenses – but if it’s less expensive than gas then that’s a win.

FYI – even if your total amount from yesterday was positive, that doesn’t mean you should skip this step. A closer look at your expenses may reveal things you no longer want or need, or that you’d like to cut down so more money can go towards paying off your debt. 

For example, let’s say you had family dinners out on your list for four times per month. Maybe you decided that you can have equally as nice family dinners at home and cut that to once per month. That money saved can go straight to paying off your debt.

Day Five: Make the Call
Up until now, you may have already done all these steps in the past. But many overlook today’s step. Today you should go back to your list of expenses and determine what you may be overpaying on.

This can be a multitude of factors but will most often come in the form of interest rates and fees. Have a credit card? Call your lender and ask them to lower the interest rate. Multiple credit cards? See about getting a balance transfer onto a new card with little to no interest.

Are you losing money to overdraft fees? Sign up for overdraft protection. What about fees on your phone, could you save money on your cellphone bill? Are you paying late fees on bills?

Sign up for automatic payments so you’ll never be late again. If you’re going over on minutes, change to the next highest plan. It may have a higher base cost but could save you a lot in the long run.

Day Six: What Can You Add?
You are now finished thinking about ways to cut down on expenses. Now let’s talk about adding income. First look at ways you can earn extra money at work. Don’t just stop with the job you already have.  You may be able to earn more by making extra money on the side.

Taking on a second job can come in many forms and doesn’t necessarily mean doing shifts at the local restaurant or retail store. Other ways you might earn extra money: sell your unwanted items on ebay, sell crafts you’ve made on Etsy, pick up odd jobs on Fiverr…the list goes on and on. Be creative and you may find some easy and fun ways to add to your income list.

Day Seven: Create a Follow-Up Plan and Get Informed
Congratulations! You’ve now completed a budget and plan to pay off your debt. What’s left to do? Follow it diligently!

Ride the positive momentum from this week and hold yourself accountable for staying on track. Write down your expenses regularly to make sure you stay on budget. Mark your calendar for once quarterly (every three months) check ins with your lists to see to if any changes can or should be made.

You can also mark your calendar for twice a year check ins to re-contact your lenders and negotiate interest rates. If you have credit cards or student loans, an online tool like ReadyForZero to help you get out of debt. Finally, stay on top of changes in the economy, consumer issues, and personal finance trends by regularly reading online.

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Financial Independence Day – Escape the Rat Race with Lessons from our Forefathers

Financial independence is not out of your reach, despite how difficult a goal it may seem at times. You don’t have to take my word for it, looking back in history you can learn the principles that will help you overcome massive obstacles and achieve financial independence.

Here are some factors that were key to the success of the Continental Army in winning the Revolutionary War and gaining independence for the United States.  We can follow these same principles in our quest for financial independence.

Sacrifice – The good news is we don’t have make the ultimate sacrifice for our cause like the many Continental Soldiers that died in the war.  In comparison to them, our “sacrifices” of going without material goods or services in order to save money should be no trouble at all.

Perseverance – Despite the miserable conditions at Valley Forge the Continental Army held together and emerged from the winter ready to do battle.  We’ll have tough days, weeks, and months in our quest to achieve financial independence but we can’t let them stop us from going after our goal.

Humility – Without the assistance of France the US may not have been able to win the war.  We can’t be too proud to accept the help of others.  Be willing to ask for help when you need it and learn from other people.

Training – Many people who fought in the Revolutionary War had to learn how to become soldiers.  Lacking the skills of the professional British soldiers, they went through drills and training to learn how to fight. A lot of their training also came in the line of fire. 

There may be many things you don’t know about finances, insurance, investing, etc but you have to teach yourself those things to be financially independent.  The best way to learn something is “in the line of fire”, just start investing or chasing your business idea and you’ll learn and adapt along the way.

Innovation – Out gunned and out numbered, soldiers like the Swamp Fox realized they couldn’t beat the British in the “conventional” methods of war.  They adapted their methods to suit their home turf and to maximize their strengths. 

There are countless numbers of ways to save money or make more money.  If you feel like you can’t get ahead working your current job and paying the bills, look for creative ways to save a little more each month or make some extra money.

Leadership – Every army needs a general like George Washington to make a plan, to set the direction of the troops.  We have to realize that we’re our own general. If we don’t make a plan and hold ourselves accountable to it there won’t be anyone else to lead us to financial independence.

Camaraderie – War is a horrible thing but the bonds that are formed in battle often last for a lifetime.  The camaraderie amongst soldiers is part of what keeps them fighting on. 

If you feel alone in your financial struggles, find a debt buddy, business partner, or mastermind group to share your experience with.  You can trade ideas, offer assistance, or just lend a listening ear. It’s always easier when you’re not alone.

Bravery – I remember when I was a kid and my dad shipped out for the Gulf War.  I’ll never forget a time before he left, sitting in our basement with his Army gear spread on the floor and talking about where he’d be going.  As a father myself now, I can only imagine how scared he must of been to go over there.  Knowing he may never see his family again, he got on a plane and flew halfway around the world. 

I admire the bravery of any person that puts on a uniform and goes into battle. Knowing the mental and physical challenges they face, it’s ridiculous to think we can’t be brave enough to live our lives a certain way in peace time.

Honor their Sacrifice By Achieving Your Goals
I think its Dave Ramsey that talks a lot about having the courage to make financial decisions that aren’t popular with your friends and family.  If our parents, grandparents, great-grandparents, ….. were brave enough to fight for our country we should at least be able to find the courage to try and live the life we imagine; to exercise the freedom of choice and the pursuit of happyness that they fought and died to protect.

Happy Independence Day!

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3 Money Lessons I Missed in High School

[I’ve shared my money story from childhood but of course everyone’s exposure to and experience with personal finance topics is different when growing up. Today Matt Geer looks back on his teenage years and shares some things he feels like he missed out on].

I’ve learned a lot of lessons the hard way. Unfortunately for me, most of these lessons revolved around money. I know first hand what it’s like to live paycheck to paycheck, not have money for emergency situations, and how easy it is to screw up your credit.

So what I want to do is share some of things that I wish I would’ve learned in high school that might’ve helped me from becoming so poor and resorting to a top ramen diet during my college years.

 

3 Things I Wish I Had Learned in High School

Of course, there are more than 3 things I wish I had learned in high school but here are three big ones when it comes to personal finance.

1) Credit: What Is It & How It Works

This is the lesson I wish I was taught the most while in school, hands down. My reason for this is simple; you can be bad with the money that you earn from your paychecks, and the worse outcome is usually that you’re broke until you get paid again. You’re not going to dig yourself into thousands of dollars of debt.

But you can with credit cards and loans.

It’s a hard lesson to learn, and one that many people do the hard way. Between student loans, credit cards and auto loans, many people are tens, or even hundreds, of thousands of dollars in debt before they finish college.

I was so bad with my money that I ended up using credit cards for everything. It didn’t matter what it was or what it cost — if I had the credit for it, I usually bought it. Between the excessive use and me only paying the minimum payment each month, I really could’ve used a basic course in “credit 101.”

2) The Importance of Money

I want to clarify that when I say “the importance of money,” I mean how you go about handling your money. Understanding the value of a buck.

I was bad with my money, which is why I resorted to credit cards. I’d receive my paycheck and within days it’d be gone. I’d pay the few bills I had back then, then blow the rest on eating out, movies and video games. Nothing ever went into savings.

The biggest problem I ran into was having a week to go before payday and not having enough money to make it there. I ended up using my credit cards, which quickly led to maxing them out. When I couldn’t use those anymore I resorted to borrowing money from friends, family or from payday loan lenders.

I’ll tell you what — although it wouldn’t have made my situation that much better, knowing how to budget and stretch my paycheck for 2 weeks would’ve been extremely useful. It’s possible (possible, not necessarily probable) that I would’ve used less credit than I did then.

3) Monthly Expense and How They Work

In addition to understanding the importance of money, something I failed to learn are the types of expenses that you have as an adult. I wasn’t totally oblivious to them, as I had to take care of my own gas and car insurance while still at home. But I didn’t fully understand the extent of what monthly expenses consisted of until I got out on my own. This included rent, electricity, water, phone and food.

What’s more is realizing that these bills are regular expenses, that all have their own due dates. You have to pay the amount they ask for by this time or else you have no lights, water or telephone service.

By now you can probably see the snowballing effect. I was bad with my paychecks, barely paid my bills and monthly expenses, assuming I didn’t forget them, then used my credit cards to make it by until I got paid again.

Then, rinse and repeat.

It’s no wonder at all why I was so far in debt so early in my twenties.

Why Didn’t I Learn About These Things in School?

Well, for one thing, many schools don’t teach any kind of financial literacy course. Mine didn’t, and who’s to say that if it did it’d be mandatory for graduating.

There are schools out there that have, or have had, financial classes. There has been reports that these classes did students more harm than good. But I wonder how much of that has to do with the actual topic being taught. Stocks? Do kids really need to know about that in high school? Maybe. But let’s teach them how to stretch their paycheck to beyond the next one first, shall we?!?

My parents weren’t very literate when it came to money either. Both made mistakes, but they didn’t relay those lessons to me very well. I do have to give some credit though. I was told to save. The downside was not being explained to what for or why. I think that’s very important. Not just telling your kids to save or use credit wisely, but why these things are important. Give examples that they understand.

I’ll take some of the blame too. I never thought about money much other than making it by the time I was old enough for a part time job. I did save some money, but I wasn’t very consistent. And I never did research credit cards or retirement options — I just spent money and used credit up.

How These Experiences Can Be Inserted Into the Teenage Experience

I do feel that schools should have courses for students to take. Not classes that teach stocks or trading forex, but just how far money will go, bills that have to be paid and a primer to how credit works. These are things that nearly everyone has to use or deal with. Not everyone decides to invest in the stock market, much less are ready to invest right out of high school. However, most kids are going to have bills to pay and food to put on the table when they go to college.

Parents should also take it upon themselves to teach their kids how to handle money. And if they’re not good at it themselves, then they could have their kids take a class on the weekend or something. Better yet, it could be a family event. Just position the child to learn about finances. That’s all they can really do.

And if you’re reading this, and you’re in school now and don’t understand what credit is or how to budget your money, take the time to learn about it now. You’ll thank yourself later, believe me.

As I said above, this isn’t about crying about things I’ve experienced, and I should also stress that I’m not placing the blame on anyone either — even if that’s how it sounds.

But I do want to make it clear the things I’ve seen or done, so that maybe everyone else who reads this can rely this information to other parents or their kids or teachers. Maybe we can help others become better handlers of their financial destiny, especially in this time where people need every penny they can get their hands on.

About the author: Matt Geer is co-founder of PlugThingsIn.com, a site that helps you get the most for your money when dealing with cable, internet, and phone companies.

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