Sometimes when someone gives you a piece of advice, it just resonates and almost creates an imprint in your mind. I know I have gotten some advice that even though I didn’t want to hear or believe, I just couldn’t shake it because deep down I knew it was true.
The recent issue of Money has a great article with over 30 well known people contributing their best pieces of advice they’ve received. I really agree with a whole bunch that were listed. And these are my favorites….
The best advice
1. Live within your means.
The simple basic rule of personal finance: spend less than you earn. As Dave Ramsey says, “it isn’t rocket science.” It is such a simple thing, but yet so few people successfully pull it off. If you have successfully done this, you know the freedom that it brings. If you haven’t you are probably aware (or you will eventually become aware) of the struggle that results from it.
2. Be frugal, but not stingy.
John Wesley said, “Make all you can, save all you can, give all you can.” Practice developing your generosity.
3. Do what you love.
This is one that took me a little while to learn, but is worth learning. For everyone who trades hours for dollars in a job they don’t enjoy - you know how painful it can be going to work each day just to get a paycheck. There is more to life than money, I would take a job that pays less over one that paid more that I didn’t like any day. How about you?
4. Money doesn’t make you happy.
If your career is tied to what you love to do rather than how much you can make at it, you are probably a lot more likely to make more money at it. Ironic, isn’t it. I know that isn’t always the case, but life is too short to spend most of it doing something you do not enjoy!
5. To excel at something, immerse yourself.
Dabbling in somethings doesn’t make you an expert. In order to become truly great at something, you have to live, breath, think, and dream it. Find every book you can read about the subject, start doing what they say, and teach others about it. You retain the highest percentage of what you learn when you share it with others.
6. Don’t get too good at the wrong stuff.
I have done a lot of reading about people who have accomplished great things. This seems to be a common thread that runs in all of them. They focus. There are so many distractions, so many good things that you can do. Those who accomplish great things do not focus on the menial things that can suck up all their time, but they focus most of their time and energy on that which will produce the most and best results.
7. Take risks when you can.
Take calculated risks. Do everything reasonable you can to minimize the risk, but don’t be afraid to take a risk. It is okay to make mistakes. Human beings are designed for this. Life is just too dang boring without them.
8. Tap the power of compounding.
Albert Einstein said that compound interest is the most powerful force in the universe. This is a perfect reason to get started investing today and put it to work for you!
9. Don’t save too much.
Life is about balance. God gives us our daily bread and Joseph was instructed to save for the 7 years of famine. Saving should be part of your financial plan, but you shouldn’t put off all your living until you retire.
10. Don’t follow the herd.
I used to think that there was some safety in doing what everyone else was doing. The more I learn, the more I find areas that I want to do the opposite of what the herd is doing.
11. Develop a healthy skepticism.
This has worked hand-in-hand with the previous piece of advice. You should never let your skepticism keep you from opening your mind to new possibilities, but you also should not be naive.
“The naive believes everything, but the prudent man considers his steps.” Proverbs 14:15
12. Ignore short-term market swings.
The stock market, housing market, U.S. dollar, economy all goes up and down. Each time people are saying, “but this time it is different.” It’s not different. It might have a different mask, but it is the same underlying pattern. Just close your ears and wait and as you ride out the storm, you will be sitting pretty when it is all done.
This article was included in the carnival of personal finance
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This article is a reprint of one I wrote for Gather Little By Little a few days ago…
I was thinking about how I have spent a whole lot more money on certain items only to find out that they are just a little bit better than the cheaper alternatives. And on the other hand there have been things I have spent just a bit more money on and they were a whole lot better than the cheaper alternatives. When you look at buying decisions this way, it can dramatically change how and what you buy.
Let me first say this is my list of things that I have found to be worth spending more money on. Everyone will have a different priority list of what is most important to them. But maybe this will generate some ideas for you. Here goes…
1. A Mac.
I know that this may rub some of the PC people the wrong way, but I just switched to Mac about a month ago and I just can’t believe what I was missing out on. The overall simplicity has saved me countless hours of time and frustration that was a regular event with my PC.
2. Quality food.
I am not necessarily talking about $100 meals prepared by French chefs, but rather food that will benefit your health rather than harm it. Organic food is great, but even just eating fruits and vegetables rather than hyper-processed stuff that once resembled food. There are consequences to our actions and decades of eating fast food 5 days a week is not likely to yield a good result.
3. A Honda.
Or Toyota. They are more expensive than a lot of cars on the market on the front end, but looking at the big picture you will end up saving money in the end. Consumer Reports says that the Honda Civic has the overall lowest total cost of ownership. This figure includes everything from sticker price, car depreciation, insurance, repairs, to resale value. After it all is calculated the Civic was the cheapest to own. But if you just look at the sticker price, you will find that there are a lot of cheaper cars out there.
4. Medical expenses.
Eating better is my attempt to prevent these from occurring, but when I am in the hospital I want the best Doc I can find working on me. It is amazing how little money seems to matter when you are in pain.
5. Looseleaf Tea
If you have always drank bag tea and never tried looseleaf do yourself a favor - find a Teavana near you and get some Rooibos Vanilla. You can thank me later.
6. Nice dress shoes.
(Disclaimer: I am a guy, I have no idea if this is true for ladies) Working in an office environment for most of my career, I have come to appreciate high-quality dress shoes. You can spend a couple hundred on a nice pair of shoes that can last you decades. You may need to replace the soles every few years, but if you take care of them they will last. The conservative business style hasn’t changed much over the last 50 years - I anticipate it to stay that way. (Tip: to save money, check what the Ebay sellers are selling them at. I have found some great bargains on Ebay.)
7. Potting soil.
I planted a balcony garden this year and I have always heard this from gardeners and it is true. Get good potting soil, it will make a tremendous amount of difference.
8. A wallet.
Like my dress shoes I like to keep my wallets for a long time. They get broken in so nicely and get contoured to fit just perfectly to your body. But if you don’t get a nice leather one, they probably won’t make it that long. I actually just retired my old wallet that I had for about 12 years. My wife bought me a new one from Coach - isn’t she sweet?
9. A bed.
We took all of our wedding money and bought a nice King sized bed. I am convinced that it was and will remain one of our best buying decisions of our marriage. You spend 1/3 of your life in it - it ought to be nice!
10. Chocolate.
I prefer to minimize my indulgences, but to make them really good. Quality over quantity is the key here. I like the darkest dark chocolate you can find. It is so strong that you can’t really overindulge like you can with milk chocolate. And the added bonus is that Dark Chocolate actually has health benefits!
What about you? What do you think is worth spending more on?
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I know that the whole “Mac vs. PC” debate can get almost as heated as the Obama vs. Clinton race, but nonetheless I will share my story…
I have had PCs since the early 90s and really didn’t ever consider a Mac as an option. I had heard that they were good for video and graphic work, but other than that all I knew was that the vast majority of computers purchased were PCs.
I figured that is was safe to be on the side of the majority, I mean if (almost) everyone else uses PCs they must be fine. I defaulted to following the crowd. Without getting into all of the reasons why you need to tread cautiously when following the crowd, I will just say that some of the greatest things that have happened to me have been a result of NOT following the crowd. I have to admit that I think my decision to switch to a Mac can be added to the list.
My frustration with PCs
There have been 2 main sources for my frustrations with my PCs:
- Lack of stability - crashing at random and often inconvenient times
- Lack of simplicity - I often had to take 5 steps to accomplish something that should be able to be done in one or two steps
Lack of Stability
As the Apple commercial eloquently puts it, “it’s not PC’s fault.” I actually feel bad for the PC guys, because with the thousands of new pieces of software being created each day - how can they possibly keep up with it all to make sure that it “plays nice” with the rest of the computer? Apple on the other hand has worked hard to keep tabs on the software designed for it’s system. This has resulted in a fewer options, but a better assurance that it will function properly.
Lack of Simplicity
I wrote about my interest in minimalist living and my longing for a simplified life. I don’t know how to describe this other than by comparing the two against each other. In less than one week of Mac ownership I looked at three tasks that I do on a regular basis that require only a push of a button on my Mac. On my PC, these three tasks require many more steps and ultimately a lot more time to complete the task. Things like setting up a wireless network took me hours of frustration with my XP and Vista machines, but was done with no effort on my part when I got my Mac. There are so many processes that I had just adapted to on my PC that I didn’t realize how difficult they were until I saw how simple they could be on a Mac.
The Mac Mini purchase
I ended up purchasing a Mac Mini mostly because it was the cheapest option and I was still a little skeptical of whether it was worth the extra money. But the other reason was that I could still use my PC monitor, keyboard, and mouse.
Once it arrived, it was just like you would expect from Apple - simple. It came with the Mini itself, a remote control, a power cord, and a monitor adapter. I plugged my old monitor and keyboard in and powered her up. It walked me through a quick and easy set up process that lasted maybe 2 minutes and that was it.
If you have more questions about switching check out this page - it will likely have some answers for you.
The Cons of Macs
Just to be fair and give both sides of the coin, here are some of the downsides of switching to a Mac…
- Macs are more expensive for the same level of performace as a PC. Apple products are generally more expensive than their counterparts. The thing I noticed as I compared the specs of my Mac to comparable PCs is that Apple seems to include more bells and whistles than low end PC makers do. For instance I mentioned the remote control that came with the Mac I got and it also came with a built in wireless card and Bluetooth. All things that don’t come with many PCs in that price range and no you probably don’t have to have it, but it is just a nice touch.
- It is still going down in value: fast. If you think cars depreciate fast , computers can become near worthless (in resale value) in just a couple of years. Again just like cars the more it costs, the more expensive ones go down in value quicker. That said, I would liken Apple to Honda. They still depreciate but not quite as fast as a PC (Chevy) and there seems to be a decent enough demand for them in the secondary market (craigslist.org).
- You will not have as many software options as with a PC. This seems to be gradually changing as Apple gains market share, but still needs to be considered. Although, I should mention that you can now run Windows on your Mac.
Ok, let me have it - Tell me why I am wrong and why I just wasted my money on a half-eaten apple 
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I am a subscriber to the Gmail blog - because I am a moderate Google nut and like to stay in the loop with what they are doing. Well, I saw this tip on their blog and actually on another productivity blog, and it is just too good not to share.
I guess I will remind you what my favorite Gmail tip is before I get into the second one: Gmail is an email management system. I wrote about this before, but it bears repeating for those who have multiple email accounts and are in desperate need of organization or simplification.
What this means is that you can have all of your email from all of your accounts going directly into your single Gmail account.
You say, “great. I already knew that.”
Okay, but the good part here is that you can also SEND email from your other accounts WITHIN your Gmail account. So, if your email address is Billy@hotmail.com you can now send emails from that address within the comfort of your Gmail home (as well as any other accounts you have.)
So, what is your 2nd favorite Gmail tip?
Ok, so on to the 2nd favorite Gmail tip.
Say my Gmail address is Ihatespam@gmail.com. I can send emails to Ihatespam+bob@gmail.com or Ihatespam+anything@gmail.com and they will all go to my inbox.
You can add a “+” sign to the end of your Gmail id (Ihatespam in this case) and add anything you want after it.
If you think about this just a little bit, you will be able to see that this opens up a lot of possibilities for organizing your inbox.
- You can have work or school emails come to separate address and then filter them to go into different folders in your inbox
- You can have newsletters etc. filtered in to different folders as well
- You can easily weed out spam by using this technique. If, whenever you offer up your email address on a website you add the “+somewebsite” you will always know how spammers got your email address. Then you can quickly filter all of these emails into your spam folder. Problem solved.
My experience with this Gmail tip
I have tried this and really like using this tip along with the filters in Gmail. It really can help organize your inbox.
However, I will say that not all websites allow you to enter an email address that includes a “+”. I was a little bit bummed about that, but hey it is better than none, isn’t it?
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I just picked up the recent issue of Consumer Reports magazine and the issue is dedicated to cars: quality, reliability, performance, and safety.
Honda and Toyota are the best cars
It is little surprise to find out that Honda is number one on the list and Toyota is number two. These Japanese car companies have come to be synonymous with reliability. CR’s (Consumer Reports) rating was based on performance and reliability. They took each company’s score in these two categories to come up with the overall score. Here is how they all stacked up:
- 78 - Honda
- 75 - Toyota
- 72 - Subaru
- 71 - BMW
- 71 - Nissan
- 71 - VW
- 71 - Mazda
- 67 - Mercedes-Benz
- 66 - Hyundai
- 64 - Volvo
- 63 - Mitsubishi
- 61 - Ford
- 54 - GM
- 49 - Suzuki
- 49 - Chrysler
“Honda earned the top score in our analysis because it builds very reliable cars that perform very well.”
GM and Ford have improved
GM and Ford are still towards the bottom of the list, but have seen significant improvements over the last model year. I have owned a few Fords and am glad to see that they are taking it up a notch.
Japan is still making the best cars
A few points worth noting about Japanese cars:
- Only Honda and Subaru earned the distinction of having all of the models tested make it on the CR recommended list.
- Honda is the only automaker whose entire model lineup is currently recommended by CR.
- Seven-year-old vehicles from Toyota and Honda have roughly the same number of problems as three-year-old vehicles from most other car companies.
My personal choice
I have owned American cars all of my life until our purchase of our Honda Fit last year. I have been frustrated with the lack of reliability in all of the cars that I have owned. I have been diligent with the maintenance and have taken care of them, yet they still seem to have quite a few problems.
Meanwhile, I have had friends with old Toyotas or Hondas who do almost no maintenance and the cars go for 250,000 miles. That’s what caused me to go with Honda. So far, so good with the Fit. I will keep you updated if anything changes.
Technorati Tags: best cars, Honda, Toyota
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Kiplinger’s just came out with their best list of 2007. In it they cover a wide range of services and products they have ranked. Here are a few that stood out to me…
Best Checking account -ING Direct
No surprise to me. If you have been a reader for any length of time, you will probably know how I budget with ING and how I am a strong supporter of their products. Kiplinger’s mentions the 3.5% rate that ING pays on their checking, the free bill pay service they offer, the no minimum balance, the no fees, and how ING will send e-checks for you free of charge. They have a great thing going - if decide to open an account they will pay you $25 if you contact me first, so I can send you an invitation.
Best All-Around Retirement Account - Roth IRA
I understand why they think this. The ROTH IRA has become the default retirement account for most people. After contributing enough to get the full match from your 401k or 403b, this is generally the next step to building your retirement savings. The ROTH is not ALWAYS a better choice than a traditional IRA, but for most people it is the best choice.
Best Online Broker for Fund Investors - Muriel Siebert
I had honestly never heard of Muriel Siebert before reading this issue, but it looks like the do offer a valuable service. According to Kiplinger’s they “carry a selection of nearly 3000 no-load funds and more than 1800 of them are available without a transaction fee.” They also mention that Muriel’s website offers countless ways to compare and contrast funds.
Best Websites to Meet Various Personal Finance Needs…
- AnnualCreditReport.com - They allow you to get a free credit report from the three major credit bureaus at once.
- myFICO.com - This site will get your credit score (which is not included in your credit report) for $15.95.
- Wesabe.com - A free budgeting service that helps you track your spending with a social flair to it.
- InsWeb.com - They can get you several insurance quotes in one sitting.
- RetailMeNot.com - This is an online coupon site that is actually organized and easy to use
- LastMinute.com - They provide an easy way to get last-minute travel deals.
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As promised, the rest of the M-Network and I are posting our best and worst financial decisions. I suspect that we all have more to say about our failures, than our successes. I guess that is why we are interested in helping others avoid some of the challenges that we have faced.
My worst financial decision
I decided that I was going to narrow this down to the single worst decision. If I was to make a list, there would be quite a few, and I am sure I will touch on them over time. But, for now my worst decision or group of decisions was:
The way I paid for college
At the time I had just about no concept of money or debt. I would have cared no more about having $80,000 or $10,000 of student loan debt. They were merely meaningless numbers to me that I didn’t face up to, because I figured I would take care of it later, when I was making the “big bucks” as a 22 year old college grad. Well, 22 came and my first “job” actually paid “small bucks” (about half of what I had assumed I should be making). Over the next couple years, I slowly began to get a grasp of the $30,000 student loan debt that I owed. The numbers were finally starting to sink in.
I was like many college kids, switching majors a few times, and finally settling on a business degree, because, “you can do anything with a business degree.” Or so I thought. The lesson I learned is that MORE doors will be opened with a basic degree, but since it is so unspecialized the job will most likely pay LESS.
Because I didn’t have a concept of what debt was, I didn’t care how much I was accumulating. Rather than going to a community college to get my general education classes out of the way, I preferred to have my ego stroked by saying that I was attending a 4 year college. What I was not realizing was:
- I was wasting a lot of money on a 4 year college as I was still trying to figure out what I wanted to do.
- When you graduate, your resume doesn’t show what college you started at. It lists where you graduate from.
- From the few classes I did take at the community college I was surprised to find that they actually required some work. In fact, some of them were more difficult than some of my 4 year college classes.
What I finally figured out is that I could have gotten the same degree, with an equivalent (if not better) education for a fraction of the cost.
My little sister took a smarter approach and began at a community college as she was searching for a major. She then settled on a specialized business degree and took as many classes at the local community college as she could, before transferring her credit hours to the 4 year college. She also chose to go the local state school (this was considerably cheaper than the private college that I attended) that had a reputable business program.
Two years later she graduated with a fraction of my $30,000 debt, a solid education, and a similar degree to mine from a better business school.
My Best Financial Decision
The challenge with the good financial decisions is that often times you will not see the fruit of it until years later. But, I think there is one financial principle that is foundation for just about all good financial decisions. It is repeated incessantly in the personal finance world, but that only increases its validity.
It is cliche, but needs to be repeated. It is simple, but not easy. It is what everyone who has money does, and what everyone who doesn’t have money wishes they could do. The best financial decision I have made was to:
Spend less than I earn
It doesn’t matter if you make $10,000 or $1,000,000 a year, if you spend more than you make you are in debt. Many people who are spending more than they earn will say that, “if I could just make a little more money, I would be fine.” Rarely, if ever, is this true. Overspending is not a money problem, it is a behavior problem.
I had a behavior problem in this area. I think I was no different than most Americans. I spent my money and wondered where it went. I was frustrated that I was falling deeper and deeper into debt. I wanted to be able to save and invest money, but I always said, “someday when I have more money I will do that.”
I finally decided that I needed to take action and work towards my goal of spending less than I made. I started a budget and learned how to quit spending too much money because, I knew it was not going to happen automatically.
It took me a couple of years to go from spending 115% of what I made to 85%, but only a few years later, I have already seen many benefits because of it. The good thing is that I know the best rewards from making this decision are still to come.
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Budgeting with ING Direct
ING Direct has played a critical role in helping me get my financial life organized. They don’t advertise themselves as a great budgeting tool, but they really are. You could probably use this same budgeting technique at other banks, but I will show you why it is more beneficial at ING Direct.
1. Open multiple ING savings accounts
The first step is to open up multiple savings accounts at ING Direct (Yes, ING does allow you to open multiple accounts). At most other banks, this is discouraged, if not by the bank itself, by the amount of paperwork required for each. However, at ING once you have opened up your first account, any additional accounts can be opened with about three mouse clicks.
Each one of the accounts that you open will be something that you are saving (budgeting) for. For example, I have my emergency, vacation, car maintenance, entertainment, clothing, and any other savings funds at ING. I put a fixed amount into each account every pay period (ING can automate this if you would like).
2. Open up a ING Electric Orange Checking account
It is really this checking account at ING that makes this budget system possible. You could still use the ING savings accounts to budget without the ING checking account, but it will be much easier if you have the ING checking as well. And to be honest, I don’t think there is a better checking account out there that is better than ING’s.
ING’s Electric Orange checking is unique in a few ways:
- They do NOT offer checkbooks. It is a debit card based account
- You can send E-Checks to someone elses bank account for free
- It has a 3.93%(at the time of this writing) interest rate even with a $10 balance (try to find that at your local bank)
- Free ATM access at 32,000 locations across the country
- There are no overdraft fees. Instead of charging you $30 when you bounce a check, they just lend you the money until you bring the balance back up to $0. So instead of having a $30 NSF fee, you might have a $.50 interest charge. This alone is reason enough to switch. ING has saved me a lot of money with this feature.
3. Use the ING debit card to pay for items budgeted for
Once you have the first two steps taken care of and have saved up money in the accounts you are ready to go. Now is the fun part: SPENDING!! You have to do some work on the car? Just transfer the money from you car maintenance fund (this is a real-time transfer) to your ING Checking and head to the dealer or if you are like me and like to do car maintenance yourself, head to Autozone and swipe the debit card.
How is that for a simple budgeting tool?
I just get a lot of pleasure in simplifying my life. If you have ever used the envelope system for budgeting, you should be able to notice the advantages of this system. Like I mentioned earlier, you can probably do this at variety of banks, but I think it would be difficult to find a bank that offered all of the conveniences of ING as well as the great rates.
The negatives of using ING as a budget tool
The two things I would warn anyone trying the ING budget:
- Stay on top of your transfers from your ING savings accounts to your checking. If you do a lot of budgeted spending for a couple weeks and forget to do the transfers, it can be difficult to backtrack. Like most things in life, it works better with regular maintenance.
- You can only transfer FROM the savings accounts 6 times per month. This really hasn’t been an issue for me but maybe once or twice in the few years that I have been using the ING budgeting method. (But, I figured out a simple hack to getting around this restriction.)
If you are interested in signing up with ING make sure you contact me so I can get you a $25 bonus for signing up.
How to budget with other tools
If the ING budge method doesn’t interest you, then you could try the envelope system of budgeting. If you are looking for budgeting software to help you budget you can check out YNAB’s personal budget
del.icio.us Tags: How to budget , ING Direct
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ChristianPF.com at the top of the list?
Well, I must have done them a favor that I forgot about. 
I mean, I know everyone thinks their kids are perfect, but there are quite a few big names on their list of the Top 50 Christian Business and Finance Blogs who have been blogging a lot longer than I have.
I think they are right on with some of the blogs listed (there really are some good Christian Money blogs on their list) and I am excited just to be listed, much less at the top.
I wouldn’t have placed ChristianPF.com in the #1 spot, but who am I to argue? Maybe they are a better judge of talent than I am.
del.icio.us Tags: Money, Blog, Christian, Finance, Best
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In this month’s issue of MONEY magazine they have an article titled “The Best Advice of All Time.” In it they look at 20 rules for success from some of the wisest people who have lived. I have pulled out a few of my favorites:
Many receive advice, few profit by it.
-Publilius Syrus, 42 B.C.
I have noticed this to be true more times than I can count. It is difficult looking back and realizing that things could be much different now, had you heeded some wise advice then. I think there is no more of an appropriate example than saving for retirement. How many of us received good advice when we were younger, but failed to realize how valuable the advice was until years or decades later?
For age and want, save while you may; no morning sun lasts a whole day.
-Benjamin Franklin
Even back in Ben Franklin’s day having a emergency fund was a good idea.
The best way to own common stocks is through an index fund.
-Warren Buffett
Many advisors will dispute this advice saying that you are better off with a professionally managed mutual fund. What is interesting is that the vast majority of mutual fund managers fail to beat the index. Yes, that is correct, they get paid hundreds of thousands of dollars even when most of them fail to beat the index.
You do not hear Warren’s advice too often, because most of the people who are giving the advice are getting paid by the mutual fund companies.
Bottom line: Index funds are generally a safer alternative than mutual funds and are a great starting point for a beginning investor.
Performance comes and goes, but costs roll on forever.
-Jack Bogle
Another argument for the case of index funds is the costs associated with them. Many mutual funds will charge 1% or higher per year in expenses, and many index funds are lower than 0.3%. This may not seem like a big difference, but over the course of decades it adds up to huge amounts of cash.
For instance, lets say you invested $100,000 for 30 years and got a 8% return on your money. If you invested it in a fund that charged 1.5% per year in expenses you would end up with $639,440. Now if you had invested it in a fund that charged 0.2% you would have earned $947,608 in the same time period. That is a difference of $308,168!!
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