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Archive for August, 2014

Don't Short Sell Life After Retirement

August 26th, 2014 at 12:45 pm

(I now blog weekly on frugal living, personal finance & earlier retirement at:
retiredtowin.com)




Very often, lack of money is not what keeps people from retiring. What keeps them on the job is that they are afraid that they will have nothing to do in retirement. That it will be boring. But I think that's nonsense.

Of course there is life after retirement!

Since I earlier retired some 14 years ago, most of the time I have not even had time to be bored. I've always had a new personal project in the works to get interested in. Or a trip to plan. Or a home improvement project to ramrod. Always there has been something. Usually more than one something.

I really think people who actually become bored in retirement, not knowing what to do with themselves, have sold themselves way short. They just won't sit down to look inside themselves to find the things they would like -- even love -- to do. They just won't give themselves a chance.

And that's a shame. Because they could be having a great time in retirement. Like I am.

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Fiscal Discipline: It Means a Better Future

August 23rd, 2014 at 07:52 am

Children live in the present. At best they can project themselves into their short-term futures. But adults can hold the vision of a long-term reward in their mind's eye and control their present actions by being able to visualize and live mentally in that future.

Fiscally disciplined grown-ups choose meaningful long-term satisfaction over transitory instant gratification. Children cannot help themselves. They want that treat now. They must have that toy now. Future rewards for self-control hold no attraction for them. A frustrated desire in the present triggers emotional turmoil in a child that can easily lead to pouting, crying and tantrums.

Adults behave differently. They can keep their eyes focused on the more valuable goal ahead. They can keep their heads in the face of spur-of-the-moment temptations.

Imagining myself living in my house worked that way for me. And every debt-lowering payment and every savings account deposit reinforced that vision, making it easier and easier to stick to my financial plan. Until it just became second nature. No new shirt, gadget or night on the town could any longer compete with the emotional highs that came from each lowering of my credit card debt and each increase of my downpayment savings.

In effect, I was already happily living in my future through my fiscally disciplined actions in the present. Anticipated long-term satisfaction had won hands down over instant gratification, And I think that is the hallmark mindset of a fiscally disciplined adult.

The takeaway: The end-game reward for being fiscally disciplined now is to be in control of one's future. The reward, when all is said and done, IS the future.

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Fiscal Discipline: Goals Facilitate It

August 19th, 2014 at 06:39 am

It is long term goals that facilitate fiscal discipline. In my case, that first big goal was a house. Before that, I really lived financially day to day. I bought on credit and then made payments. I knew enough to keep my spending within my means (to make those payments). I had enough sense not to chase after extravagant whims of the moment. But otherwise I was just financially coasting.

Setting a strategic financial goal of buying a house changed all that. I would need to save for a down payment (which was a requirement back then). And I would need to keep my debt to income ratio low enough to be acceptable to banks. And those 2 tactical motivators kept me on a fiscal discipline course towards my goal.

A reason to save for later instead of spending it all now. Perhaps it is there, at the setting of that first financial goal, that we can find the real beginning of fiscal adulthood. Because the lessons learned from the setting -- and from the achieving -- of that goal have to be tremendously powerful. That we can aim at something better. That we can hold our course towards it. That we can reach it, under our own financial steam and control. Very powerful lessons. Very empowering lessons. IF one actually stays the course by not frittering away one's money on the whims of the moment.

The takeaway: When it comes to actually being fiscally disciplined over the long haul, financial goals are the name of the game.

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Fiscal Discipline: It Has to Have a Purpose

August 12th, 2014 at 11:41 am

Intellectually, I can see that being fiscally disciplined is in a way its own reward. Being in financial control of yourself is good in and of itself. But when you are embarking on a lifelong journey of fiscal discipline I think you need a destination. A goal. A reason to stay the course. A carrot. A heavy-duty carrot. Without that very strong long-term incentive, it could be too easy to dribble away money on shorter gratifications like lattes, a seventh pair of shoes, or the third vacation of the year.

For me, the first financial discipline goals were easy to define. Get my income to exceed my living expenses so I could stop living on borrowed money. Then build up an emergency reserve to backstop that income. Then save the money to buy for cash a car I could be happy with for a long time and dump the old wreck I was driving. Then move to a decent apartment I could afford and furnish it modestly but comfortably. At which point, about one year into my fiscal discipline journey, I had had the time to decide on my first truly heavy-duty carrot: buy a house and stop paying rent.

Setting those initial goals in sequence and keeping my money in my pocket so I could reach them was an adult thing to do. It required planning ahead and it required financial self-control in the present. And the carrot of those goals made the self-control much easier.

But just about everyone gets that far: job, car, reasonable housing, bills paid on time. Somehow, though, a lot of people seem to get stuck at that point. It just seems that they do not look beyond job, car, and a place to live. So, as their incomes improve, they just keep increasing the amounts they spend on car, housing, and an ever increasing load of consumer installment debt for recreational distractions needed to offset job stress and tedium.

They are living in the "now", not looking very far ahead. Like a child would. It is life caught in a consumerism hamster wheel.

The takeaway: It is terribly difficult to be fiscally disciplined in a vacuum. You need to give yourself a reason to be fiscally disciplined. You need to look ahead, use your imagination and set financial goals.

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Fiscal Discipline: It Is About Looking Ahead

August 8th, 2014 at 10:56 am

Fiscal discipline is about looking ahead. Because tomorrow does come. And a grown-up knows that more can be done than just sitting in the present waiting for whatever that tomorrow may bring.

A child may keep eating cookies until he or she gets a bellyache. But an adult sees the bellyache coming and knows to stop. Likewise, a grown-up sees the financial bellyache coming and does not just keep spending money until it is all gone. Or just keep charging on credit cards because there is still some available credit not yet used up. An adult looks ahead. Or, perhaps more realistically, an adult should look ahead. So why do so many people behave like children and not look beyond spending more and more in the present?

In my case, increasing income did not automatically result in increasing spending. It is hard to explain why. I loved my well-maintained, gorgeous-looking ten-year-old Thunderbird. I did not covet a newer car. One business suit for each day of the week, with a dozen ties and shirts to vary the look, was enough for me. I did not wish for more. And why would I ever want more than 4 pairs of dress shoes?

Instead of automatically and thoughtlessly continuing to bump up my consumption in the present, I asked myself what could that money do for me in the future. And in that future, I saw myself living in my own house.

I saw myself with no neighbors stomping on my ceiling or banging on my walls. With no daily rides in crowded cramped elevators. With no tedious weekly up-and-down-the-hall laundry trips. With no jogs across the parking lot in the rain to get to my car. With no inevitable rent raises every year. With the freedom to paint my walls, or install a built-in, or play loud music. In short, I saw myself living a much better life. And "all" I had to do to make that future a reality was to keep my wallet in my pocket in the present. To be fiscally disciplined now.

It was an offer I could not refuse. I had a future to look forward to. I had a reason to remain fiscally disciplined.

So why doesn't everyone look ahead? Why do so many people just choose to spend in the present with no thought of the future?

Fiscal discipline has to have a purpose. A goal. A heavy-duty carrot in the future to help staying on course today.

Fiscal grownups choose meaningful long-term satisfaction over transitory instant gratification. And it is goals that will keeping eyes and mind focused on that long-term satisfaction.

The takeaway: "Some" tomorrow is coming. Fiscal discipline can make it a tomorrow worth looking forward to.

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Fiscal Discipline: It Has to Be Hands-On

August 5th, 2014 at 06:35 am

An epiphany came to me in 1980, at the age of 33, after 10 years of short-term financial "thinking" that had left me sitting flat broke in a cramped one-room studio apartment with virtually no money, absolutely no credit and just a beat-up old car to my name. I looked around, I looked at the way I was living, and I just said "no." I did not like what I saw. I did not like the direction I was going. And I just rejected it all.

I resolved to have a good financial future, even though I did not yet know what I wanted that to look like. I resolved to use my own skills and energy to steer a course towards that future. And I resolved to get underway even though my eventual destination was not yet defined.

Fiscal discipline starts with assuming responsibility for your financial destiny. I realized that you must resolve to take control. That you have to acknowledge and accept that your financial destiny is up to you and no one else. That you are going to have a financial future -- good or bad -- whether you like it or not. That no one else has any obligation (or even inclination) to do anything for you or about that financial destiny of yours.

And you have to realize that, yes, you CAN do something about how your financial future turns out. That you are not a helpless, rudderless skiff doomed to just drift along out of control. No. You have to discover that you are instead a motor-sailor able to take advantage of favorable financial winds as well as capable of advancing even when you run into the occasional fiscal squall.

But why didn't I just throw my hands up in the air and play financial victim? Why didn't I just blame the economy, fate, or "the rich" for my situation and just keep wallowing in it? Why do some other people do that? Why don't they realize the future is coming? What makes the difference?

Fiscal discipline is about looking ahead. Because tomorrow is coming. Beginning to look to the future will make a difference.

Fiscal discipline has to have a purpose. A goal. A heavy-duty carrot. Setting financial goals will make a difference.

It is those goals / carrots that will facilitate fiscal discipline. And staying on course will make a difference.

Fiscal grownups choose meaningful long-term satisfaction over transitory instant gratification. Keeping eyes and mind focused on the more valuable goals ahead will make a difference.

The takeaway: Fiscal discipline has to be hands-on. And it is some basic but vital actions that make the difference to make fiscal discipline happen.

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Fiscal Discipline: It Is About Perspective

August 3rd, 2014 at 07:11 am

Fiscal discipline is all about perspective and behavior. More specifically, it is about the difference between the perspective of an adult and that of a child. And about the very different behaviors that come from those perspectives. Acceptance of the reality of personal responsibility and effort versus the unfounded longing for financial windfalls that require neither. Long-term thinking versus short-term thinking. Planned goal setting versus vague wishing. Holding out for long-term satisfaction versus giving in to instant gratification.

And all those factors are connected. Either as steps in a ladder taking you up or as dominoes in a row pushing you off a cliff. How does a person standing at that cliff edge step back and get on the ladder?

Fiscal discipline starts with assuming responsibility for one's financial destiny. So that person must resolve to take control.

Fiscal discipline is about looking ahead. So that person must begin to look to tomorrow because tomorrow is coming.

Fiscal discipline has to have a purpose. A goal. A heavy-duty carrot. So that person must think things through and set financial goals.

It is those goals / carrots that will facilitate fiscal discipline. Goals will help to keep that person on course.

Fiscal grownups choose meaningful long-term satisfaction over transitory instant gratification. So that person must keep eyes and mind focused on the more valuable goals ahead.

The takeaway: Fiscal discipline doesn't just happen. To make it happen, a person must put out the effort and do the thinking to make crucially important informed adult choices.

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