The Most Important Investment

Most of my personal gym in the basement of my former Wisconsin home

Investing is one of my favorite activities and I look forward to writing plenty about it on this blog. But I’d be doing you a terrible disservice if I didn’t start with the most important investment: your health. The quote “health is wealth” and permutations of it are so common that there is no single known source and many of the quotes date back well over a thousand years. And it is universally true in every way possible.

There is certainly an economic argument. Health care is expensive. I don’t need to tell you it’s already expensive today at whatever age you are and the cost is only going to go up. The current estimate is that the average person will spend roughly $250k from traditional retirement age to death on health care and of course inflation will increase that number if you aren’t there yet. But in this case, the best defense is a good offense. If you are in good health, you can reduce your exposure to the health care system or even eliminate it for anything beyond your annual preventative care visits and the occasional issue that pops up. $250k is a huge figure to chip away at and you can start saving money in this area every year before you get to retirement age as well.

But this is even bigger than economics. After all, even a billionaire can’t buy back his good health once it’s gone. His vast fortune will get him the best care available and make him as comfortable as possible while he dies but it can’t get back what has been lost. Most of us will never be billionaires but this is one rare example of something we can have that some of them can’t.

And this is so much more than simply putting off death. By investing in your health, you will improve the quality of your life every single day. See those people all over the place who are so fat they can barely move much less live the kind of active lifestyle a fit person does? Now take a look at the attractive people the obese masses try so hard to convince you represent an unrealistic standard. Which group do you want to be a part of? How much money do you think the people in the first group would pay to be part of the second instead? That’s right; this investment yields a return you can’t even quantify. And it is much easier to stay part of the second group from day one on than it is to renounce your membership in group one and join group two. As in most areas of life, preventative maintenance is much, much easier and cheaper than repairing damage.

And please, ignore the naysayers. You do not want the bitter, resentful life they are living. You can’t change your genetics but you can certainly change lifestyle factors. Anyone could potentially get lung cancer but it is far less likely to happen to someone who doesn’t smoke. Everyone has heard of the occasional fitness fanatic who had a heart attack and died at fifty. But the only reason those stories are even noteworthy enough to get your attention is that the scenario is extremely unlikely and therefore shocking. Lifetime smokers, obese people, etc, die young every day so no one is even going to bat an eyelash when they do. You can’t outwork the possibility of all negative outcomes but you can most definitely put the odds in your favor and win most of the time.

So how do you start investing? You don’t need a dollar to do it although gym memberships are very cheap these days (I’ve seen as low as $10 a month) and that’s the most effective route for most people. Your main investments are time and effort but you also need knowledge and discipline – both of which can be acquired and increased with time and effort.

How much time? Your government overlords tell you 150 minutes per week is the minimum. I don’t like mediocrity so my minimum is 300 minutes. That’s 30 minutes of moderate intensity cardio every day with 30 minutes of serious resistance training three days a week. And again, that’s a minimum. That’s what you do if you’re sick or maybe rehabbing an injury. That also doesn’t include walking. It is very important to walk around at regular intervals throughout the day. You should avoid sitting for more than a half hour of uninterrupted time at all costs. Get a Fitbit or another fitness watch that incorporates a pedometer if it helps you. The science is very clear on the devastating impact of long periods of sitting – even if you get enough exercise overall.

Again, that’s the minimum. What do I do under normal circumstances? 570-750 minutes per week is a rough estimate. That is comprised of: 30 minutes of moderate intensity cardio every day, 60 minutes of serious resistance training 4-5 days a week, and 2-4 hours of participating in sports in a typical week (in my case, lately that has been mostly tennis, basketball, or hitting a heavy bag – no, I don’t count golf as a sport although I enjoy that too). Some weeks I’m a little below that and many weeks I’m above. The latest and greatest studies show there really is no reasonable upper limit to the amount of exercise people can benefit from. I actually consciously moderate mine as my body is very prone to overtraining and injuries in general so your numbers could go higher if you are more genetically blessed in that area.

Another facet is exercise intensity level. As a general rule, start slow/light and gradually work your way up. Don’t try to go from zero to hero overnight. The lost time spent dealing with injuries will easily destroy any additional benefits whereas the long term progress of ramping up gradually, but consistently, will be an incredibly rewarding experience.

Another huge aspect is diet/nutrition. This is easily an entire series of posts all by itself but here are some of the basics. In general, American portion sizes are much too big. You need a lot less food than you think. A good rule of thumb is that if you’re eating at a restaurant, you should be taking home at least half of what is served in a to-go box; this is a financially friendly practice as well. Eat lots of vegetables – at least five servings a day. You almost can’t overdo this. And no, potatoes and corn don’t count. Eat some fruit but in moderation as there can be a lot of sugar in it. Go high protein; .5-1 gram per pound of bodyweight per day is a good range for most people. Eat a moderate amount of high quality carbohydrates. So whole grain bread instead of white, brown rice instead of white, complex versus simple. These are items you should eat.

But you also need to minimize eating garbage or eliminate it altogether if you struggle with the minimal concept like I do. And yes, soda falls into the garbage category along with anything else that is highly processed or made of primarily sugar, fat (chips, fries, etc), or both (ice cream). And no, diet soda isn’t better. Soda in all of its forms is pretty close to cigarette status as far as your health is concerned; you simply shouldn’t ever consume it unless you really hate being alive and want to get it over with ASAP. Avoid soy as much as possible, especially if you’re a man. It’s horrifying how much of this poison has worked its way into our food supply. It requires tons of processing just to make it consumable by humans but even worse, it messes with your hormones. Anything in that category should be setting off a bright, flashing, go straight to jail, do not pass go, do not collect $200 alarm in your head. While we’re on the subject of avoidance, minimize dairy consumption. Studies are still somewhat conflicting but are starting to trend towards anti-dairy conclusions, particularly when you factor in how many of them are funded by the powerful dairy industry. I treat dairy as a garnish item and an occasional treat and even that policy is probably pushing it.

The most important thing with investing in your health is to get started. If you’re currently leading a sedentary lifestyle, I have good news for you. Just by getting started, you are likely to see benefits much more rapidly than the average person. That’s not to say that it isn’t worthwhile to work on improvements if you’re in that average camp or even if you are a fitness veteran. The further up the fitness ladder you can get without it becoming psychologically unhealthy, the better. Too much of anything can be problematic – even something good. But in modern society, we have precious few people who are in any danger of reaching that level in the area of fitness and nearly all of us could benefit from some ramping up. You will notice the differences all over your life – feeling better both physically and psychologically, people responding more positively to you, clothes fitting better, sleeping better, looking better, and on and on. Simply put, I can’t overstate the value of investing in your health and if you start doing it more, I almost guarantee you will agree.

My $12 Cell Phone Bill

How much is your monthly cell phone bill? It’s apparently not uncommon for people to spend over $100 a month. Even if you think your bill is low, I can pretty much guarantee that mine is lower. The title of the post gives it away but mine comes to around $12 after taxes and fees. And there is not one thing I need my phone to be able to do that it can’t. How? I use a company called Republic Wireless. This post is not only about the company’s service and how it works but it is also an example of how to cut just about any expense.

To solve any problem, step one is to assess the situation so you know exactly where you are now. When it comes to cell phones, that means figuring out how much data you actually use. Those of us who are old enough remember an era when minutes (yes kids, phones were once used to make calls) and number of text messages were also relevant but I digress. There are probably apps you can use to accomplish this. I did it a long time ago so I don’t remember what I used but I’m sure there are plenty of options. What I found way back then is that I actually used very little data. Why? Unless you live in a pretty old fashioned part of the world, there is wifi almost everywhere you go – at work, school, coffee shops, restaurants, stores, just about anywhere you can imagine. Hell, more often than not my phone connects to wifi when I’m stopped at an intersection; but then I live in a very populated area. Anyway, figure out how much data you’re using in a typical month when not on wifi.

That number is the key here. In my case, I use almost none. Don’t get me wrong. I use loads and loads of data just like anyone else. But the only time I ever use it when not on wifi is when I’m in a car and even that is minimal in the era of in car gps systems and usb slots that allow me to bring my entire music collection anywhere I go.

So I have a plan with Republic that gives me unlimited minutes and text messages (all their plans have those) for $10 a month plus taxes and fees. Then I have 500mb of data available for another $5 a month but any data I don’t use, which is usually all of it or very close, is refunded to me. The phone uses wifi whenever it can which is what makes it possible for the service to be so cheap but if it can’t access wifi, it uses the Sprint network. I know. But it is the cheapest network and since my second phone is on Verizon, I believe I’m qualified to tell you that the difference between the best network and the worst one is extremely minimal – all over the country and even in remote areas. Remember, I travel a lot.

This is where I have to give you some bad news. You didn’t think I’d give you nothing but smiles and sunshine, did you? Republic pissed me off last year. Hard. They changed their plans and got rid of mine. The closest new plan to the one I currently have is a whopping $20 a month plus taxes and fees. I know. The horror. The good news is that I am grandfathered in until I get a new phone. My current one is 53 months old and still going strong and here’s to another 53 months! Obviously I will have to upgrade eventually. But not a minute before I have to because I won’t reward a company for doubling their pricing. However, the other good news is that a Republic rep has assured me no further price increases are planned at this time and given the way this one has worked out, any current customers would probably be grandfathered in the same way I have been if there is another one.

So here is the way the new pricing structure works. The base price starts at $15 a month for unlimited minutes and text messages. Then $5 a month is added for each 1gb of data. You can get a plan with as much as 15gb of data if you want for $90. But there is almost no way you’re using that much unless you’re streaming HD movies on a regular basis. And if you’re doing that on a cell phone, well, I guess I can’t help you. But I can and certainly do suggest that you re-evaluate your life choices. Most people will be able to get by with far less than 15gb a month and will save considerably on their cell phone bills as a result.

You do have to buy your own phone with Republic. But I believe phones have gotten so expensive that most major carriers are making you do that anyway. And the good news is that Republic has a range of quality options that are also very competitively priced. For example, when I bought my Moto X1 it was $300 which was about the same anyone else was charging for that model. And at that time, it was every bit as capable as all but the high end phones on the market – certainly more than good enough to do anything that can be done on a phone by the average person. Today the equivalent available options are probably either the X4 ($349) or the G6 ($249). They also offer other brands including Samsung; currently they have the S9 for $719 and the S8 for $599. But frankly, my other phone is an S7 and I have to say that even being four years old versus the Samsung’s two, the X1 is easily better so I don’t think the brand name is worth the money. Samsung’s tvs are pretty disappointing too in my experience by the by. On my next one I will go back to Vizio since Samsung really doesn’t seem to offer any additional quality for the difference in price. But back to cell phones. You also have the option to get your own phone to use with Republic if you get one that is compatible. The website has the information you will need to do that. Sorry, Apple people. No soup for you. Then again, if you buy Apple products, you probably enjoy lighting money on fire in other ways too so you likely aren’t reading this anyway. Yes, my text messages are a different color and no, you can’t see when I’m typing a reply. And I wouldn’t have it any other way.

Republic Wireless isn’t perfect and it may not be for everyone. But it works just fine for me and if it works for you too, you will probably be able to cut your monthly cell phone bill in half or better. Now multiply this process of need assessment, researching alternatives, and making a change to most of the expenses you have and you’ll understand how I live an upper middle class lifestyle at lower middle class prices, allowing me to save and invest a middle class income’s worth or more each year. And that, my friends, is how you build wealth.

P.S. No, this is not an advertisement for Republic, nor am I getting any money from it in any way. No one reads this so there is no point in trying to advertise.

You Can Do Better than a One Sided Relationship

Since this blog is supposed to be written to the children I will never have, I want to write about an important lesson I’ve learned much too slowly in life. It has recently become relevant again with someone who was a close friend years ago but has long since drifted away. This is one of those things that can really hurt until you figure it out and feels like a weight being lifted off of your shoulders when you do. It may seem obvious to some folks but it didn’t come all that easily to me so in a way, I’m writing it as a reminder to myself. If it helps someone else, all the better.

There are so many things in life that are difficult to let go of but that require just that. Relationships can fall under that category as well and do for many of us. We all have that friend who only responds and never initiates. Sometimes even that can be too much to ask. Calls aren’t answered, text messages aren’t returned, plans you try to make never seem to be taken seriously. If called out on the behavior, these people will typically make all kinds of excuses about how busy they are.

For years of my life I let this kind of interaction bother me, especially since there are usually legitimate reasons I’m drawn to this person. Maybe she’s a lot of fun to get a drink with, maybe he gets exactly why I like a certain kind of music, maybe you have great memories together. But for whatever reason, there is less and less interaction or it’s consistently one sided. This situation used to really frustrate me and even occasionally had me questioning what about me was causing it. This usually resulted in me trying even harder to interact in a meaningful way. But thankfully, now I have a very different approach to these people. Fuck ‘em.

Here’s the thing. We’re all busy. I run from 6am to usually around 10pm with fairly few breaks in between. I have one very demanding job that often involves travel and a growing side business to run. I enjoy a long list of activities outside of my income generating pursuits. I have friends and family to keep up with. No matter what I’m doing, I’m choosing to prioritize that activity because I value it more highly than any other alternative at that moment. And that’s the only way anything gets done by anyone – if it is viewed as worthy of being prioritized. So when that “friend” tells you he is busy, he hasn’t finished the sentence. The completed version is: “I’m busy – with activities I prioritize higher than interacting with you.” Sorry, but it’s reality.

There are plenty of people on this earth. If one person isn’t willing to invest even close to as much in you as you are in them, there are over 7 billion others you can give it a shot with. I’ll bet everything I have that you haven’t met them all yet. So why are you trying so hard to make it work with someone who obviously cares less than you do? Rather than trying to shoehorn that person into your life or vice versa, you could be investing that time and energy into a mutually positive relationship with someone who truly values what you bring to the table.

Please don’t get the wrong idea. I’m not saying you should disown someone if a single call isn’t returned. What I am saying is that if there is enough of a pattern that it bothers you, it means you are trying to force something that isn’t there. You can try bringing it up with the person if you want. But you will probably find that any changes that result from the conversation won’t last long if it yields any at all. The reality is that whatever the person is doing without your intervention is what he is choosing to do and that is very unlikely to change if he is made aware that you prefer he do something different.

The good news is that you don’t have to have a falling out or a big confrontation with anyone. You can simply let nature take its course. If someone isn’t responding to you, divert your efforts to someone who is. If the first person cares, you will hear from her and you can resume the relationship. If she doesn’t, then you haven’t lost anything because there was no relationship to lose. Regularly look for new people to add to your circle – but only in cases where it truly makes sense. You will know without having to think about it because the interaction will make you feel good. And remember that people change and relationships change with them. Two people can be great friends at one time and have too little in common to support a relationship at another. And there is nothing wrong with this. In fact, it’s the way life works.

While Facebook would have you believe differently, people are not items that can be collected. They are individuals who think and act however they choose to. You can’t simply decide who you want to “let in.” It has to be a mutual decision that comes from both of you or it will be exactly the kind of one sided relationship you want to avoid. If you try to collect people, you will become one of those people whose efforts are spread far too thin. You will have hundreds of Facebook “friends” and no interactions more meaningful than “happy birthday!” with anyone. I would much rather have ten truly good friends than ten thousand happy birthday messages from people I don’t legitimately know. So double down on the good investments and cut your losses on the rest. This is somewhat different from financial investing, mind you, but that’s another post for another day.

Credit Card Fun

Well that was harsh. I lost both my adopted team and my long-time favorite in back to back playoff games. On the upside, they both had better seasons than I expected and at least in the case of the Seahawks, they are a young team again so they should be back even better next year. And they played a pretty good, entertaining game. Not so much the Texans. They came out flat and stayed that way. Also, I don’t hate the Cowboys. I just didn’t want to beat the Seahawks. Anyway, on to today’s post.

Today I will literally put money in some people’s pockets but I have to start off with a very important disclaimer. This information is strictly for people who use credit cards responsibly. Responsible credit card use is charging only what you have the cash to pay for and paying the full statement balance on time every month. If you ever fail to follow this, even once, then you absolutely should not be using credit cards because they will cost you far more than they will benefit you. I cannot stress this enough. With credit cards, you are playing a very dangerous game so if you can’t or won’t handle them responsibly, then don’t handle them at all. That said, if you choose to ignore my warning and those of so many other finance people, thank you. Without people like you fattening up the banks, those same banks wouldn’t be doing what I’m about to describe for people like me.

One more small disclaimer I should make is that most, if not all of the credit cards I’m about to mention require a credit score of 750+. If you don’t have a score above that, you will have to work on improving it before you can make much money with your credit cards. I will write a post about how to do that another day.

Credit card churning is very popular these days. Too popular in fact. If you don’t know what it is, it’s when people game the sign up bonus system. Step one, sign up for a card with a high bonus offer and a high annual fee, which is often waived for the first year. Step two, charge the minimum amount required to get the bonus in the first three months. Step three, get the bonus and close the account prior to having to pay an annual fee. Step four, enjoy your bonus – usually $500+ or 2+ round trip flights. And no, this is not taxable income; the IRS considers it a purchase rebate. Note that this is not the case when you play a similar game with bank accounts as those bonuses are paid out in the form of interest income. But the bank account version of this hasn’t been worthwhile for a while now, save for the occasional credit union giveaway that is only available to people who are eligible for membership.

Anyway, the banks are losing their appetite for the credit card churning game as more and more of us hop on the gravy train. American Express has made churning virtually impossible for those who aren’t willing to get absurdly creative and even Chase, the longtime favorite of every churner, has started to make things more difficult. I could write an entire book on just the ins and outs of credit card churning at this moment but by the time I finished it, half of it would probably be obsolete. The rules change rapidly in this game. So I don’t play it to the extent I did in the past. During the golden age, $3-5k was a fairly attainable annual goal. Today, that would take more dedication to accomplish than I feel it is worth.

These days I keep things simple and usually only churn two cards a year. That keeps me from running afoul of Chase’s infamous 5/24 rule (open more than 5 cards in 24 months and you will automatically be declined) and still allows me $1000+ in annual churning income. If you do want to get into churning more, I suggest exploring the business side. The restrictions are lighter and the profit potential is higher. But that is another post for another day.

In 2018 I churned Capital One Venture ($500) and started churning Amegy Amazing Cash ($550 when combined with a checking account and money market account for 90 days). I will be cancelling the Capital One card soon but I won’t need to do that with the Amegy card because it doesn’t have an annual fee. However, it’s a “sock drawer card,” meaning it isn’t for regular use. This is because it only pays 1%. I will also note that this was one of those oddball local bank deals – Texans only in this case.

My next one will be the Barclaycard Arrival Plus World Elite. It lives up to that fancy name with a generous $700 bonus – although the $5000 minimum spend requirement means it will take some planning even for an expense report beneficiary like me. If you have trouble meeting the minimums, I recommend timing your account openings to coincide with major expenses like annual insurance renewals, vacations, furniture purchases, etc. If you still can’t meet the minimums, enlist the help of a friend you trust who doesn’t care about credit card rewards. I’ve been working the non-Chase cards lately because you can only churn each one every other year. Of those, Chase Sapphire ($625) and Southwest Rapid Rewards (2-3 round trip flights) are my usual choices. I see they have a United Airlines one too now for folks who don’t care even a tiny bit about customer service when they fly. But watch your details with any churning because all the banks have been making cutbacks and increasing hoops that need to be jumped through.

The Southwest card in particular has a sign up bonus that fluctuates a lot throughout the year so make sure it is at least 50k points when you do it. One more important point on the Southwest card is that you can get the companion pass pretty easily if you use both a business and personal card. This allows you to book a second person on any flight for free for up to nearly two years if you do it right. I don’t have a consistent companion and don’t plan to ever again but for those who do, this can be quite the golden goose, especially when you consider that you can alternate with your spouse and have a companion pass between you basically all the time. There are other churning cards as well but I’ve mentioned all the ones I regularly use now that American Express cards aren’t worth the hassle anymore. At two a year I don’t have to scrape the bottom of the barrel the way I used to.

Other than churning cards, I use non annual fee cards and I rarely change those up. Right now, my wallet has the following weapons in it: American Express Blue Cash, Citi Double Cash, Bank of America Cash, Chase Freedom, Target Redcard, and Bank of America Better Balance. American Express Blue Cash pays me 3% on groceries. Citi Double Cash pays me 2% on any purchases I can’t get a higher rate on. Bank of America Cash pays me 3% on gas and 2% at Costco (I need this to get my minimum 2% because Costco only accepts Visa right now and Citi Double Cash is a Mastercard). Chase Freedom pays me 5% on categories that change quarterly. Right now those are gas and tolls meaning until the end of March, I’m buying gas with this card and my tolls are being charged to it instead of the Citi card I regularly use. The Target card pays me 5% instantly on Target purchases on the rare occasion I still go there. And last but not least, the Bank of America Better Balance card pays me a flat $120 a year for making one small charge a month. I won’t bother going into the details of that one because it isn’t available anymore; you can probably guess why.

This may sound like a lot to keep track of but it doesn’t have to be. I have a little chart that shows me which card to use for each type of purchase. I rarely have to look at it now unless something changes which is rare outside of churning. When I’m churning, I just divert as much of my 2% spending as necessary until I’ve met the minimum. And the payoff for doing this? I average around 3% back on anything I can pay for with a credit card. Combine that with what I get from churning two cards and it comes to around $2k a year in non-taxable gifts from the banking industry. Not bad for a hobby that takes up maybe an hour or two of my time per year.

A Happy Night of Insomnia

The McFaddin-Ward House in Beaumont, TX

It’s 2am and in spite of the very comfortable bed in my hotel room, I woke up and can’t get back to sleep. Insomnia is nothing new to me but it is unusual lately which has been a wonderful improvement. But the cause is even more unusual. I can’t seem to stop my mind from racing out of sheer joyful awe. This is going to get pretty personal so if you don’t want to humanize me, stop reading right now.

The last few years have been a whirlwind for me. In 2016, my marriage fell apart in catastrophic, but sadly fairly typical fashion. I lost most of what I loved and cared about in life. For at least a year after, I went through a tunnel of depression, terrible decisions, and little noticeable improvement. Not only had I lost my wife, I had also made a major job change soon after. It was a dramatic step up in both challenge and compensation but at a time when my personal stakes were already very elevated and my mental state was volatile at best. I had lost almost any sense of security exactly when I needed it most. Of course security is mostly an illusion so I wasn’t really any worse off. But it certainly felt that way and I nearly broke on numerous occasions.

And the situation got worse before it got better. One enterprising soul used my weakened emotional state as an opportunity to manipulate and take advantage of me for personal gain. I’ve forgiven this person but also discontinued any form of relationship as I believe any prudent person would have. I am not mentioning this to disparage anyone, but simply to illustrate my story more effectively. Anyway, it sounds strange but this sequence of events seemed to hammer home lessons I somehow hadn’t fully learned from the divorce. This was all very painful at the time but I certainly wouldn’t want to give any of it back now as the incredible value of the experience is mine for the rest of my life. Today I probably err on the side of being too guarded but at the advantage of being much less likely to be an emotional plaything for anyone. Most importantly, I got through it all. And two primary factors allowed me to do it.  

First, I had some amazing people in my corner. They are all flawed human beings like anyone else but they were instrumental to my recovery. So much love flowed from this group. I don’t come from a warm family of people and that’s nothing against any of them, it’s just the way they are. But for that reason, this overwhelming outpouring of nearly unconditional love was like nothing I had ever known before. It came from a variety of sources including people I hadn’t even known long and it was exactly what I needed to remind me that the person in the previous paragraph was the exception and not the rule.

Second, I took responsibility for my own health and success. The pity party had to end for a full recovery to be possible and it had only continued so long because I had developed the bad habit of leaning on people’s sympathy. Consequently, this is exactly how I had become an easy mark for someone masquerading as a sympathetic figure. Fully embracing this new total responsibility to myself was a crucial turning point. Ever since then, my mental health and stability have been reaching new heights on a regular basis and I have even been able to pay forward some of the support I received.

This brings me back to my insomnia. Where am I today that such a rush of positive sentiment is keeping me awake? Right now I’m on a short business trip. I’ve been accomplishing all my big picture goals one way or another but I’m also taking a little time tomorrow (ok, today now) to tour a historic mansion. I expect I will love it and go home richer for the experience in a way money can’t buy. I’m also eating delicious food, getting decent road workouts in, and generally enjoying myself in the process of this trip. When I go home, I will enjoy a weekend full of great football (that is as long as the Seahawks and the Texans win, fingers crossed) and spending some time with great friends. A somewhat disappointing December on the business side has turned into a January that is suddenly on the brink of success early on. Overall, I don’t believe I have ever been this happy.

I’m not a religious man but I can’t help but notice the parallels with the old testament story of Job. I lost everything not long ago but I have gained back much more than I had in the first place. I thought I was happy but it turns out I didn’t even have a clue what happiness could be. Life has a way of clearing out what doesn’t belong to make room for what does. It certainly didn’t feel that way at the time but that is exactly what happened for me. I decided to take a little break from my tossing and turning to attempt to record the genuine euphoria of this moment. I don’t know if I will ever be this happy again but I do know I’m going to make the most of it while I can. Be well, folks. Hopefully I’ll be able to get some sleep now.

Update: I was not able to. But I got through the day and managed to be creative and patient enough to overcome a big setback to salvage half of a profitable deal against fairly long odds.

Happy New Year!

Can you believe this blog survived 2018? Of course you can’t; you don’t exist because there is no one reading this. That’s all right. Did you have a good New Year’s? I know I did! For a few years running now, my celebration is always great. No, I don’t leave home for it. As wonderful as crowds of increasingly drunken fools, cover charges at bars that don’t normally charge them, and cops everywhere (seriously, it’s their damn super bowl) may be, I manage to resist. Why? I can go out and have a good time literally any of 364 days a year; I will leave this one for the amateurs. And there are always more than enough of them out there to make paying a huge premium over any other night a huge waste. Today I want to talk about what I do on New Year’s Eve because whether you like to take the night off or not, these are very important activities that can really help kickstart (that term didn’t used to mean online panhandling, sigh) your financial goals in the new year.

Throughout the year, I record my expenses, investments, and any other transactions. This can be done very simply using Mint or one of what I’m sure are many available apps. Or it can be done with somewhat more of a hassle but also the advantage of not connecting many financial accounts to a single online source if you’re like me and trust no one. Whatever method you choose, New Year’s Eve, or whatever day you do this, is the day it all comes together. So you want to be thinking about that end goal when you set this all up in the first place.

Anyway, while many people are out having one last hurrah before they swear off everything fun for at least the week or two their resolutions survive, I’m at home reviewing what I did over the course of the outgoing year and setting new goals for the new one. All those transactions get aggregated into a handful of spreadsheets, which I use for both direct analysis and creating financial statements – at least my lazy man’s set of financial statements – an income statement and a balance sheet. Screw you, cashflow statement and statement of owner’s (or stockholders’) equity!

The income statement puts all my income sources and expense categories in one place, making it very easy to see where I did well and where I didn’t. This year, there was plenty in both categories. My balance sheet shows me where I stand with everything right now – all my assets and any debts I would have if I were someone who did. These statements are especially useful when comparing them to last year’s versions so this exercise really needs to be done for at least two years to see the full value.

Why do I do this? Sure, part of it is because there is something wrong with my brain. I’d be lying if I said I don’t write a little executive summary and then read it to myself in a poor imitation of a CEO on an earnings call at the end. I do. But it amuses me. And I believe that at least a basic version of this process will help anyone. Not only do you get to see exactly where you stand financially, but if there are any concerns, you can go back and see the exact transactions that got you here. I can’t imagine a more effective way to look back at your year, set goals for the next one, and have a great picture in mind of exactly what it will take to meet them while doing it.

After all, fail to plan, plan to fail. And the information gathering stage is a vital part of planning. If your life is a ship, you’re the captain. How crazy would it be for a captain to care neither where he intends to go or even where he is now? If you want to improve your finances over the next year, and I think we all do, my New Year’s process is a great way to start moving in that direction. And no, you don’t have to do it on New Year’s. After all, if you do it a couple months later, you won’t have to go back and make updates when you have your final tax figures in hand like I do. But then again, your year will also be less fresh in your mind and I think you will lose some of the effect of punctuating one year and outlining the next. Everything is a trade off.

If you don’t know how to create an income statement or a balance sheet, I will outline the process – although before I do that, I will recommend that you learn the basics of accounting. It is a horrible field to work in. Horrible. I know because I did it for a while. But it is a very valuable skillset whether you want to gain insight into a publicly traded company you’re considering investing in or simply trying to understand why things are the way they are at work and how you can get ahead. With all the ways we waste time, I think it’s a crime not to invest some in educating ourselves on an ongoing basis. And accounting is a highly recommended area to do that.  

A balance sheet is simply an expansion of the basic accounting equation: assets minus liabilities equals equity. This equation really is the key to life. Think about it. It could just as easily be calories taken in minus calories expended equals live or die and then it literally applies to everything alive. So first you list your assets –  bank accounts, investments, vehicles, real estate, etc. These are the total values mind you – not the equity you have in them. Then you list your liabilities – any loans, credit card balances (hopefully not!) IOUs to your Mom, anything you owe anyone. Finally, you subtract total liabilities from total assets and you have your net worth. Some folks think you shouldn’t include your primary residence in that but let’s not split hairs. The point is to have a big picture view of your financial life and a basis for comparing one year to another. Oh. Every balance should be as of a specific date – December 31 in this case.

An income statement is a whole year statement as opposed to a snapshot at a specific point in time like a balance sheet. It looks a lot like a balance sheet but instead of assets, you start with income sources – employment income, business income, investment income, credit cards (yes, that’s in my income section ONLY; I’ll post a guide to doing that soon), and so on. Then you list your expense categories – housing, gas, food, insurance, taxes, everything, however you want to break it all up. Total income minus total expenses gives you your net income for the year. Bonus points if that amount for 2018 equals the difference between the 2017 net worth and your 2018 net worth from your balance sheets. Full disclosure: mine was off this year and I don’t care. It was by less than $1000 and even my insanity has limits.

Questions? Leave a comment or shoot me an email. Oh, that’s right. No one is reading this. Oh well. My net worth is soaring, even in a bad year which 2018 certainly was for a handful of reasons (but now I know the how and why and I can work on making the necessary adjustments), and my New Year’s exercise not only contributes to that indirectly by getting me in the right mindset, but it documents the whole thing for me. Here’s to a happy and prosperous 2019 for everyone!