I got into a conversation a few weeks ago about the idea of “stretching” to buy a nice home. The idea that was given to me was that it’s worth it to pay a little more than you might want to right now, in order to get a house that’s a bit out of your comfort zone financially.

The justification was that over time, your income should go up, while the mortgage payment will be fixed.  Thus, what seems like a big payment now based on what you see in an E-Mortgage calculator will seem much smaller later. Additionally, the idea went, if you buy a bigger home up front, you won’t have regrets later.

This isn’t the first time I’ve heard this. And just like I did that prior time, I argued against the notion of stretching once again.

Admittedly, I think that I might be in the minority when it comes to such a belief.  When I bought a condo way back in the day, I was in the majority of first-time buyers that simply didn’t fully understand all the nuances of mortgages, they payments that go along with them, and where they can fit into your overall finances.  Luckily, I ended up selling the thing for a small profit. Hooray! However, there are clearly some people who weren’t as lucky, and got burned.

My guess is that they didn’t run the numbers, didn’t have a household budget, and didn’t really plan enough for the payments. What I think many people with financial literacy issues do is just listen to what the lender tells them they could afford. Then, they spend that much. After that, they just try to figure out how to live on the rest.

Why? Good question. My guess is that for many people, a home is an overly emotional investment. Somehow, it’s looked at as worth spending a ton on because it’s a place you’re actually living. Or, there’s an assumption that a home is always a good investment. Or, perhaps, some people still think that the bigger the interest payment, the bigger the tax benefit, thus take out a big loan (NO!).

Whatever the case is, I think it’s important to separate emotions from the decision to buy a home, as much as realistically possible.  More importantly, think in terms of wants versus needs.

For example:

• Is it truly necessary to buy a newly constructed home, or can you live in a 20 year old house?
• Do you actually need that 4th bedroom, or can you make do with 3 bedrooms?
• Does your lot have to have a huge yard, or can you live on less space?
• Do you really need to have granite counter tops, or can standard counters work for now?

By thinking about wants vs. needs, we can truly be willing to understand that when buying a house, we’re making purchasing tradeoffs just like we do with other decisions. The difference is that the stakes are likely much higher here.

You can end up spending a ton more money to get something you want vs what you need, and end up having to work harder and for more years to make those extra payments on the wants versus the needs. Plus, as we’ve seen, homes aren’t always liquid assets, and they can actually decline in value quite a bit in the wrong circumstances.

Bottom line: While emotion and preferences of course have a place in the home purchasing process, I think it’s important to buy a home primarly based on logical needs, not emotional wants. To those who think that this takes away from the enjoyment of life in some way, I’ll come back by saying that it probably enhances the enjoyment of life, as you’ll have less pressure and more free time due to having to spend less money on the home.

My Questions for You:

Do you think it’s a good idea to stretch for a more expensive home, or do you think it’s best to find a home that fits your current financial situation very comfortably?

Do you also think that many people let emotions get in the way when buying a home, or do you think that a home is a much different type of purchase in which emotions are a big part of it?

Free is good right? Or, getting something at a bargain price that’s almost free. Either way, getting something for minimal outlay can be enticing. How about a free trip to Japan, with roundtrip airfare paid. Good deal, right?

Well, maybe not.

At first, my eyes lit up when I saw news stories pop up that the Japan Tourism Agency might be offering 10,000 free roundtrips to Japan. Word was that if funding was approved, signups could begin as soon as Spring 2012. The idea appears to be to kickstart tourism there again, to get visitors coming again and spending money, following the fears after the nuclear disasters there. I had posted months ago about my concerns about being near the Japanese nuclear facilities. Seems like people like me would be candidates to have our minds changed, at least on the surface.

Here’s the part that really got me even more interested: they would want the recipients to be able to promote the trips on blogs or social media. So of course I thought “Hey wait a minute. I have a blog, I have a Twitter account…hey, why not me? I could see it now, The Wise Squirrel in Japan…”

There is No Such Thing As a Free Lunch

This is a saying that my father mentioned to me on more than one occasion when growing up. I had previously relayed a story on a free lunch that I had received which got me thinking how it wasn’t truly free. It was sponsored by a company promoting the upcoming launch of a new television show, and they also gave out some promotional material with the sandwich. Of course that got me to tell people about it, and search for it online.

Well, that concept of “there is no such thing as a free lunch” can apply to this trip to Japan too. Note that the terms of the free trip as mentioned in news reports indicate that round trip air fare would be provided under that potential program. Hotel accomodations, food, and other expenses were not mentioned.

That’s a big deal, actually. Tokyo is well known as being a very expensive city, with hotel rooms that cost an outrageous amount of money. Plus, food can be expensive there as well. Want to get around the city? Interested in venturing to other parts of the country? That will cost you money from your own pocket as well.  All of these costs are not insignificant.

If someone is on a strict budget, or is carrying debt, is a vacation that will ultimately cost thousands of dollars anyway really worth it?

$1 Houses

The trip to Japan is a compelling example as it’s based on more recent news. However, there is another example that comes to mind. I had written a post in 2010 about $1 houses in Detroit. In that post, I commented on how a house can be purchased for the price of a cup of coffee. After looking at this further, it’s clear that there’s more involved than just getting a cheap house. In reality, those houses might require some signficant work to become habitable. Additionally, there are taxes and other expenses that generally don’t go away. As I noted in another post, just by paying off your home and owning it outright, you never truly “own” your home free of major costs.

Back to the “Free” Japan Trip

Based on how this has been described, would I take this Japan opportunity if offered to me? No, probably not.

I would like to visit Japan someday. I’ve visited a other Asian countries (China, India) and would like to explore Japan.  Frankly, I’m not worried about the nuclear plant in terms of visiting other parts of the country – such as Tokyo, for example.

However, as I noted, those other costs would be too high. Sure, the overall trip costs would be a lot lower than if I would otherwise take the trip. However, just because something is on sale or at a discount, it doesn’t mean that it’s worth it.  We understand this concept with normal consumer purchases, so it applies here too.

Of course, if people could turn around and sell the free trip on some secondary market, that might be a win-win

My Questions for You

Based on the terms of trip as you know them to be (roundtrip air provided but nothing else), would you take them up on such an offer?

Do you see this way differently from how I do, or are you aligned with my position? Curious about why or why not?

Have you ever experienced situations where you had a chance to buy something for a big discount, but turned it down?

After hearing a popular song a few times recently, I’ve been thinking about how Katy Perry relates to personal finance.

What? How are Katy Perry and personal finance related? Well, I’m sure she’s making a ton of money, so her financial situation is much different than any of ours, right? Well, that’s my assumption anyway. If I’m wrong and you’re pulling in millions per year, then that’s great for you:)

The real reason I think of Katy Perry and personal finance is her song “Last Friday Night”.  In case you aren’t into that part of the music scene, that song is one of 5 from her latest album that reached #1 on the Billboard Top 100 Chart. This feat tied Michael Jackson for the most songs from the same album to reach #1. It’s a song where she talks about a crazy night out, including a line about maxing out credit cards!

Here’s the sequence in the song.

Last Friday Night

Yeah we maxed our credit cards

And got kicked out of the bar

So we hit the boulevard

Last Friday Night

Later in the song, after talking about a bunch of other wild and crazy antics from that night out, she says

This Friday Night

Do it all again

It’s a fun, catchy song many might agree. Clearly, it hit #1 on the charts.

It also apparently includes, in the narrative of the fun night out, maxing out credit cards as a part of it.  I’ll bet very few people thought twice when hearing the lyrics to the song, with respect to that line. It seems like it signifies part of a great time, maxing out credit cards. There are other memorable lyrics in the song anyway I suppose. “Maxing out credit cards” probably won’t raise too many eyebrows, right?

Well,  it didn’t get by this personal finance writer.

This maxing out credit cards for fun stuff is the type of behavior that gets people in all kinds of trouble. It’s too bad that these sorts of choices are glorified, especially for younger, impressionable people.

Of course, who in the world would enjoy lyrics about a fun night out that involved being frugal instead of saying that they maxed out their credit cards? Yeah, not many people. I know. Well, in any event, how about something like this:

Last Friday Night

Didn’t touch our credit cards

Saved our cash when at the bar

Fillin’ up the penny jar

Last Friday Night

Ok, I know. You don’t have to say it:)

I wonder if saving money will ever be cool? What do you think?

It’s cool when readers make comments that prompt you to create a post on a certain point, no matter how brief. Recently, on my post 5 Rules for Achieving Debt-Free Living, a simple yet valuable point was made in one of the comments:

“Look at what you want and figure out how many hours (post-tax!) you will have to work to earn it. Do you want it badly enough to buy it?”

It’s something I have thought about before. These days, I think in terms of maximizing the income minus expense gap, investing intelligently, and the concept of time is money.  This approach is one I actively thought about as a teenager, when I realized that for me to spend $9 to see a 2.5 hour movie and enjoy popcorn and a soda, it would take me that long at work just to do that. It got me thinking about how maybe I didn’t need to get the popcorn and soda, and maybe should just get one or the other:)

But as adults, it helps to remember that calculation from back in the day. I had a few friends who, upon getting their first jobs out of undergrad studies, purchased new cars. Not just new cars, but nice new cars. This was a while ago, and these people were buying $25,000 cars. Keep in mind, their salaries were in the range of $25,000 as well. Pre-tax.

These guys spent a lot of time working just for a car.

So, let’s do the math.

1. $25,000 salary, divided by 250 working days, = $100 per day.
2. $100 per day, divided by 8 hours, = $12.50 per hour.
3. $12.50 per hour, multiplied by 75% - to account for tax – = $9.38 per hour post-tax
4. $25,000 car, divided by $9.38 hourly rate, = 2,665 hours.

They worked 2,665 hours for those cars. When you consider that the calculation above assumes 2,000 working hours per year (when you consider #1 and #2 above), this comes out to 1.33 years of their life that they worked just to pay off a car.

If they just would have purchased a decent used car for much less, it would have made a lot more sense, though it wouldn’t have been “cool”.

The good news is that many years later, both guys are now savers who try to put a way a solid percentage of their income. I have only talked to one about the cars he bought when younger, and he acknowledges that it was totally nuts for him to do that.

Maybe he started to do this type of math exercise and figured it out later!

Question for You: Do you ever think of things in this way, figuring out how much you would have to work in order to pay for something you wish to purchase? This can apply to any big purchases, not just cars.

It’s great to wake up in the morning refreshed, energized, and ready to go, don’t you think? If you have kids, or remember back to when you were a kid, it seems like children can get up and charge into the day. For adults, who have to either go to work or take care of a family at home, it can be an elusive goal.

Many of us can use more sleep, and feel great when we get it. The thing is, we have so much to do that we often end up shortchanging sleep. As a consequence, we might drag in the morning instead of being energized and ready to have fun conquering the day.

Given a choice, isn’t having fun conquering the day better than dragging through the day? I think so.

Getting more sleep can help us with many aspects in our life. You might recall my thoughts on the role of money in our life, where I gave my views on how health, wealth, and relationships are all interrelated. When one is improved, the others can benefit as well. Thus, while getting a great night sleep of course helps our health, it can also help us as we relate with others and can impact our wealth.

Now, I suppose it would have been inappropriate to advocate “sleeping your way to wealth”:)  So, let’s rephrase that appropriately and operate with the premise that one can “spend more time asleep to help make money”.

OK, I know someone might suggest that while one person is getting a great night sleep, someone else is getting an hour less sleep and getting more done. Sure, some lucky people need less sleep, but if you’re cutting out the sleep you need, there will be a price to pay. It’s not easy to get something for nothing!

Here are 5 benefits to getting a good night sleep:

1. Better Diet.  So, how does sleep impact diet? Well, I can speak first hand about times in my career when I was tired after work, and either picked up dinner or ate at home but snacked on junk. Lack of sleep can affect our appetite, and can impact our metabolism. Again, back to the health/wealth connection, by avoiding this negative cycle, we can keep ourselves in better shape to make money.
2. Better Attention and Retention.  If you’re tired, it will be tougher to stay on the ball and be fully engaged. Additionally, getting proper sleep will allow you to retain information better than if you’re sleep deprived.
3. Better Mood.  If you’re cranky, impatient, or thinking of sleep, you won’t be as productive as you could otherwise be. Besides, who wants to work or live with a grouch? Get your sleep, and you’ll be more motivated and able to focus on activities leading to wealth creation and preservation.
4. Safety.  I recall one night when I had to work super late for a crunch at work, and was in the office until close to midnight. I was exhausted, and still had to make the commute home. Driving home, I felt myself lose concentration as my car was swerving to the next lane. If I had gotten in an accident, who knows what would have happened to my health? What about my ability to provide for my family?
5. Health.  This could be tied into #1 (Better Diet), but improved sleep can also help with other areas of health, such as less stress and less wear and tear on your body. You’re more likely to get sick if sleep deprived, which impacts your overall life….including ability to make money and good decisions.

My view is that if someone regularly shortchanges sleep in order to get more done, that person will get less done over the long run. Productivity will be down, and other factors can come into play in different ways that can impact health.

Getting a good night sleep as a regular practice can only help health, and ultimately wealth creation.

What do you think? Do you get enough sleep to feel energized and productive throughout the day, on a regular basis? Is this an area in which you need improvement, or do you already prioritize it?

I absolutely detest debt.  The idea of having a financial obligation as a monkey on my back is not something that works for me.

By carrying debt, and using cash flow to pay it off, you’re not directing income toward savings. By postponing savings, you’re forcing yourself to work more – whether more hours during the week or month, or for more years in total. To me, financial freedom is a long-term goal, and debt inhibits the accomplishment of that goal.  Most of us would like to reach financial freedom, right?

So, with that in mind, I have come up with 5 rules for staying free and clear of debt:

1. Visualize Working Hard While Old.  Does this take you by surprise? Well, I know it’s a bit unusual, but it’s what works for me. Give it a try, and think about it. Realizing how people that are well past traditional retirement age tend to have less energy and more health issues that those of us much younger, it stands to reason that we don’t want to be in that position of having to work then. Envisioning it is a real motivator to avoid debt, and free up cash flow for retirement savings.
2. Pay Yourself First.  Put money away for yourself upon receiving it through your income. Set it aside, then forget about it. Well, don’t really forget about it, but make the effort to prioritize savings. This way, if you really need money for whatever reason, you have it.  You won’t have to go into debt, and can prevent such a situation from arising.
3. Pay Off Credit Cards in Full Each Month.  No matter what you might charge within a given month, focus on debt reduction and make a plan to have it paid off in full when the bill comes due. Interest charges and late fees can be very costly. If you do have it, pay down debt without taking from other sources. For example, using 401k for credit card debt.
4. Know Your Expenses.  This can also be seen as learning how to budget, or spending within your means. Either way, the key action point is to understand where your money goes, and how much you can effectively spend each month. And part of knowing your expenses includes knowing wasy to reduce those expenses; for example, if you have to make home improvements, think about shopping around, getting multiple bids for work, and remembering the 2011 home improvement tax credit. Bottom line: know what you’re spending and how it can be smartly reduced.
5. Discern Wants from Needs.  There are some things that are needs, such as food, shelter, and basic medical care. Then, there are are similar things that are wants – an expensive dinner, a newly constructed McMansion, or cosmetic vanity procedures. Or, more pervasive, smaller expenses that chip away at your cash flow. Wants are wonderful, and needs are just that: things you need. Understanding this distinction can help you get out of debt, or avoid it altogether.

Do you have any rules for keeping out of debt?

How much would you pay to lose 10 pounds (about 4.5 kilograms)?

This question has come to my mind, as I am trying get in better shape. I’m noticing that what was once easy – getting back in shape and losing weight quickly while keeping it off – is a bit harder as I knock on the doorstep of 40 years old.

We all know that there aren’t any shortcuts to getting in shape.  You need to eat well, and you need to exercise. It doesn’t require extreme behavior, such as eating zero restaurant meals for 12 months, or exercising 2 hours a day, 7 days a week for months on end. It does, however, require a certain level of persistent effort and discipline over a given period of time to make a lasting impact. Losing 10 pounds

That persistent effort and discipline I just mentioned would probably mean behavioral changes, if someone is trying to get in shape. After all, it’s likely that some less than optimal behaviors contributed to getting out of shape in the first place, right?

Those behavior changes aren’t always simple to undertake. There can be inertia and resistance to change. We may like our existing behaviors, even though we know we could make better choices.

That’s where my question comes in. Taking all of this into consideration: How much would you pay to lose 10 pounds?

I’m not talking about losing it over time. Rather, I’m talking about  purely hypothetical scenario where you could – presto! – instantly get into get into better shape.Lose the 10 pounds, and get all the associated positive effects that the exercise would have provided to you: more energy, improved cardiovascular endurance, improved muscle strength, etc.

This type of deal doesn’t exist. But if it did, how much would you pay right now to make that happen? Keep in mind: once you pay, you get the benefits instantly.

Once you have answered that question, please consider this follow-up question: If you found out that you were going to instantly gain 10 pounds – the reverse of the previous example – how much would you pay to avoid that? In this case, keep in mind that if you didn’t pay, you would instantly and unavoidably gain weight and get out of shape.

Do your answers to the two questions differ?

It’s interesting to think about this in the context of how important our health is to us, and how we would trade money for better health. To me, it’s a way of demonstrating how ultimately, no matter how much money we accumulate, it loses some value if we don’t have the other important things in life – such as our health.

It takes a highly positive, can-do attitude to be a great athlete. You have to have a vision to be the best you can be. Set high goals, work hard, practice, and demonstrate great determination. Make it all second nature, a part of your persona.  Then, after a lot of effort, commitment, and dogged perseverance, you make yourself into the athlete who wins the big trophy.

The frugality trophy, that is.

What? Did you think I was talking about sports or fitness?

Actually, I was talking about what it takes to become a great frugal athlete!

The term “frugal athlete” could mean many things. One definition could be an athlete that happens to be frugal. You know – someone who wants to get in shape without spending a lot of money. That would be a great topic, perhaps one for another article, but I’m talking about something different here. When I talk about a frugal athlete, I’m talking about someone who is a highly skilled, competitive athlete in the sport of frugality!

Let’s face it: there are many people that thrive on living within their means, and maximizing the income minus expense gap. To do that, you have to:

a)      protect and maximize your income earning potential; and

b)      maintain a disciplined approach to keeping expenses low

As financial athlete, you take the two together. We can call that cross-training:) But in terms of the sport of frugality, we will focus on the latter: managing expenses. 

So, how do you become a frugal athlete? Well, let’s just say I’m continually working on the “manual” as I train, day by day! But here is how I view it: 

1)      Visualize success. Just as athletes work toward the goal of winning a championship, making the game winning shot, or getting the clutch game winning hit, the frugal athlete can work toward his or her individual, overall financial goal. Within that goal is the sub-goal of reducing expenses to the lowest reasonable level at which a comfortable lifestyle can be lived. As with many things, what is “comfortable” is relative to each of our individual tastes. That said, it’s visualizing where you could be in terms of spending – living a waste-free life that’s comfortable, where you don’t throw away money but do get value for every hard-earned dollar you spend.

2)      Break apart the long-term goal into tangible, intermediate goals. Just as a pitcher in baseball learns his pitching mechanics, fastball, curveball, pickoff move, fielding skills, etc – you can break up your frugality goals into different tasks. These might include: deciphering wants vs. needs, knowing where to shop for groceries, learning how to obtain the best mortgage, learning the best sources for online coupons, etc.

3)      Train effectively. Just as an athlete works with knowledgeable trainers and uses the latest techniques, the frugal athlete should do the same. To me, this entails spending time learning from the most current and knowledgeable sources – such as books, blogs, and those who have achieved frugal success themselves.

4)      Practice Regularly and Routinely. Natural talent alone will not get it done here; you must work hard at making frugality a part of your daily routine. This could mean substitution: cutting out that $3 daily latte for a $1 cup of coffee instead. Or, it could mean cutting out that cup of coffee for water, thereby kicking that caffeine habit. Perhaps it means checking online for coupons before grocery shopping at a store with good prices, as opposed to going to a pricier store that you’re used to visiting. No matter how you do it, you have to practice. The more you practice, the better chance you have to succeed.

5)      Persevere. Just as an athlete must press onward in the face of obstacles, so must the frugal athlete. A basketball player, for example, may get up at 5:30am in the off-season to run sprints and keep in tip top shape. If he gets tired, loses focus, and skips a few days – then he slips back a bit in his conditioning. He needs to be mentally tough. With the frugal athlete, it means keeping your focus and discipline when you have weak moments. For example, you may want to give in to the temptation of buying a very nice pair of shoes at the mall, but when you realize it will blow your budget, you pass on the opportunity and head down to a less expensive store. Emotion can be a big obstacle to staying disciplined. 

Ultimately, the athlete who takes these steps will be in a great position to succeed and meet that big goal, be it winning a tennis tournament or achieving a personal best in a marathon. For the frugal athlete, taking these steps could lead to achieving the goal of bringing down expenses as a part of maximizing the income minus expense gap. The prize in this case could ultimately be financial freedom. 

Is this a bit esoteric? Maybe it is. But we can learn a lot about reaching goals and becoming our best from areas outside of personal finance. Applying these principles to our money management could lead to our own victories that bring us a higher quality of life. 

What do you think? Do you think that we can learn from other disciplines to become better at managing our money and reaching our overall goals?

This post was included in Festival of Frugality #232 at Provident Planning

There are plenty of people who have achieved greatness in different walks of life. Many of these people are in the public eye, and have achieved notoriety through their achievements in certain high profile vocations. Politics, sports, entertainment – these have created some of the most popular examples of success in our modern society.

What makes some of these people so successful? Sure, some have inherent, incredible talent – but many of these people needed a chance to develop their skills, and often times it’s a matter of opportunity and practice that got them to where they are. 

Two books – Malcom Gladwell’s “Outliers”, and  “Talent is Overrated” by Geoff Colvin, take fascinating looks at what gets someone to be successful to the point of being exceptionally successful in their specific areas of focus. In “Outliers”, it becomes clear that it’s not just the natural inherent talent that certain people have which gets them successful, but it’s a matter of opportunity as well. Once they get the opportunity, they may get even more opportunities, exposure, etc – which leads them to success. For example, Canadian hockey players who are born soon after the January 1 age cut off tend to be disproportionately part of top teams even later in their teen years. These kids were more physically advanced at early ages than their counterparts born later in the year, and were selected for the top teams, received the best training, most ice time, etc – until they became the best. The results fit the selection. 

In “Talent is Overrated”, the author looks beyond natural gifts, and focuses on practice as a means to greatness. It is the hard work and deliberate, repetitive practice that someone takes on which can ultimately drive the person to high levels of success. 

Taking these two interesting books together, it can be surmised that greatness might not be just a matter of natural talent, but rather of opportunity plus hard work. Old fashioned, but in this day and age of instant celebrity status, perhaps it is these standby approaches to success that still hold true. 

Taking this further, can this be applied to personal finance? In other words, is it possible for any of us to achieve “financial greatness?” 

I say yes! 

Sure, it will be harder for some of us to achieve certain levels of strictly financially-measured levels of success than others. Some already have more than others, are born into wealthy families, have lives free from encumbrances, are healthier than others, etc. That said, I think success is a relative term, and it is different for each of us. What financial greatness means across the board, however, is reaching levels of success that are truly beyond what we originally thought possible. 

How do we get there? Well, I’m not there yet, so I can’t give you a foolproof path to riches. Even those that are there can’t give us a guaranteed path, because otherwise we would all be on the way there. But I’m willing to say that learning from the examples in the books I mentioned, it’s possible for each of us to reach extraordinary levels of success. For some of us, it could be a matter of opportunity – or putting ourselves in position to succeed. For most of us, I suspect that hard work and a regimented, disciplined approach to money management can get us there. If this has worked with athletes, musicians, actors, public speakers – as well as people studying math, history, etc – then I believe it could work with personal finance. 

Here is my suggested approach, utilizing 6 steps: 

Have a philosophy: Visualize what you want your life to be like, and where money fits into it. For me, money is part of what I call the HWR framework – interrelated with health and relationships as a component of overall quality of life. Since I would like a high quality of life, with strong relationships, strong physical health, low stress with lots of enjoyment, and plenty of generosity, I think having money to fulfill those dreams can be helpful. It’s not just about accumulating the highest dollar total for me; it’s about total quality of life. Of course, if it’s about the bottom line for you, so be it. This part is highly individual. 

Set goals: Ok, so I just got done saying its not just about accumulating the highest dollar total for me. True. But, in order to facilitate the bigger overarching goals I have, specific money amounts do come into play. This is where goal setting comes into play. I believe that as in many other activities, it helps to set a goal that is aspirational yet conceivably achievable. Figure out how much you need to make your dreams come true, and go for it. Write it down, record it – make yourself aware of it on a regular basis, while not obsessing. The goals may be different for each of us – sky high for some, while many of us will have more modest goals, relatively speaking. Again, the specific goals are highly individual. Putting this into practice, one can determine goals at the 1, 3, 5, 10, 20 year markers. 

Learn: Get educated, and make it a continual practice. There is always something new to learn every day. Keeping a mindset that is attuned to constant learning can only help. Reading books, blogs, talking to people – these are all great ways to learn. For me, blogging on personal finance is a way to increase my knowledge of this space. Learning about financial concepts, different asset classes, how debt impacts your finances, different products in the marketplace (such as an Empire Building Kit), and ways to save money on purchases are all good uses of time. Often times, it’s what you don’t know that you need to know that can help the most. That’s a continual journey for all of us. Let’s put ourselves in a position to succeed. 

Record Expenses: Keep track of your expenses, and analyze where you money is being spent. It’s a topic that is blogged about frequently, and I am a proponent of doing this, at least on a period basis. If never done before, it can be an eye opening experience. Done right, it can tell you where your money is going, and help you control where future cash outlay is going, in order to meet your goals. 

Spend in a Disciplined Way: This, I believe, is a critical aspect of influencing a successful outcome vs. the alternative. There are plenty of stories about regular people of average means who were able to grow a comfortable next egg just by being disciplined in their money spending decisions. This helps maintain or even grow the important income minus expense gap. 

Manage your Career: This can take different forms, but it essentially means protect and ideally grow your potential to bring in positive cash flow. How can such cash flow come in? Well, if it is passive cash flow that requires very little effort, that’s great. For most of us, however, we need to get to the point of having such investments that can do that for us. This is where your career comes into play. It is the other side of the equation – it provides the money that you can manage through steps I mention above. While many of us tend to spend a lot of time thinking of ways to save money, it’s often the income stream that makes the biggest difference. Actively managing your career so that you can put yourself in a position to maximize your earnings potential can only help. Over deliver on the job, seek promotions, build your resume, learn in everything you do, and keep a strong network going. Combine those actions with long term goals and keeping your head in the game, and you’ll be on the way to financial success. 

I plan to follow these 6 steps, with overall discipline and practice, day in day out. I don’t plan to be obsessed with this. Rather, I am working toward making this a part of my routine, like brushing teeth  

This is my game plan, and we’ll see what happens. My strictly financial goals are probably more modest than others, but as I said, it’s all individual. 

What do you think? Is it possible for the average Joe or Jane to achieve “financial greatness” using such disciplined strategies?