Don’t Be A Lifestyle Slave and You Will Be Much Happier

Being fully present while observing this beautiful sunset doesn’t cost a penny. Image courtesy of Jean-Marc Buytaert

The Matrix was an amazing movie. Yes, the entertainment value was excellent. But what really made it special was the way the concept got people thinking. It can apply to so, so many areas of life. The Red Pill community has literally based its name on the movie, and with good reason. The concept of unplugging oneself from an entire system of intentional, insidious deception, whether living in an entirely virtual world, as in The Matrix, or in a feminine dominated reality that is blindly accepted by almost everyone in our society, is powerful. Today I want to challenge you to do it with the supposed connection between consumption and happiness. And what better time than just before Christmas?

Look around you. Everywhere you go, someone is trying to convince you to spend your Christmas dollars with them. And everywhere you look, someone is rewarding that effort by doing just that. There are literally people taking out loans or loading up their credit cards because of the social pressure they feel to participate in this annual spending orgy. And these poor decisions aren’t just being made on an individual basis; to the contrary, this is a movement of self destruction that has a nearly religious fervor.

Don’t get me wrong. As a member of society with family, friends, etc, I participate in all of this to some degree. It is definitely possible to derive joy from the act of giving. But my giving is entirely grounded in my ability to do so. If I were living paycheck to paycheck, struggling to pay down a mountain of student loan debt, unemployed, or in any other form of financial difficulty, you can bet my efforts would be focused on putting out that fire. I happily give out gifts at this and other times of the year solely because I have excess available to dedicate to that purpose.

But save for a short, unfulfilling period of my early twenties, I have never completely subscribed to the “buying more crap will make me happy” mentality we see all around us. Bigger houses to fill with more and fancier furniture, more expensive vehicles, stuff galore, it doesn’t matter. The theme permeates everything. More is better. But there’s just one little problem. It isn’t. In fact, quite the opposite has been true for me. And I don’t believe I’m alone in that.  

I lived a relatively simple life before I moved from Wisconsin to Texas. My commercial quality home gym was by far my most prized set of possessions. But I still had to get rid of over a thousand square feet worth of stuff before I could move because I had decided to live in a nice, but small apartment while I got acclimated to my new home. Every item I had accumulated over the years was something I had just had to have when I originally bought it. And most of them had seemed too important to get rid of at any point before that. But when suddenly forced to get rid of all but a small, carefully chosen selection of my earthly possessions and move into a much smaller space, a funny thing happened. I felt better.

Today, I have almost no desire to buy or rent a larger home in spite of the fact that I could easily afford to do so. In fact, the mere thought of doing so stresses me out. If I bought a house and suddenly had more space, I would almost certainly fill it with similarly pointless possessions to the ones I had previously thought I wanted, but had felt liberated by getting rid of.

Now let’s look at the other side of this equation. By avoiding being one of the many people whose very life embodies an obsession with the word “more,” I’m able to save and invest over half my income. This has given me something intangible that no “stuff” could: peace. For example, my industry is currently in a deep, ugly recession that has destroyed jobs, businesses, and even lives. And at the moment, no end is in sight. But I have over a year’s worth of living expenses in cash alone and much, much more in other forms.

Is a man like me likely to be unemployed for an entire year? No. Unemployment is extremely low and I’m a high achiever. And besides, already growing very weary of the sucking dick for money that is most W2 employment, over the last year, I’ve already taken the initiative of starting three businesses. One was a fairly quick failure but another has been a modest success so far and will likely continue to be that at a minimum. And I believe the third, and latest one, has a strong possibility of not just paying my expenses, but replacing most, or even all, of my current income by the end of 2020. So in the midst of relentless job attrition in my industry, and even within the smaller world of my employer, I sleep great at night. In fact, if I were offered any sort of reasonable buyout today, or forced to take one, as is the more likely scenario, I would gladly take it. I’m confident that between my currently small, but rapidly growing business income, my investment income, my cash, and if all else fails, getting another job, I will be just fine. To me, that is worth more than almost any possession I could possibly have.

But this isn’t just because I’m good at making money. It’s also because I keep my expenses reasonable, thus setting myself a low bar to clear. With the combination of the two of them, I’ve set myself free from the shackles that keep most people trapped in enormously stressful lives that are so far from ones they would truly love. And you could do the exact same thing. But it would probably require challenging some assumptions you’ve been programmed to believe – like “more is better” or that any worthwhile people might love you less if you don’t give them the right gifts.

So this Christmas, why not enjoy some time with the people you love while also being thankful for free will? Why not use that free will to start questioning your expenses one after another – are they really making you happy in a way that you wouldn’t be without them? Are they really worth more than the step closer to freedom that money could be instead? It’s your life. You have every right to live it the best way you can find. What a tragedy it would be to spend the entire thing as a plugged in consuming machine without ever even trying anything else.

How to Take Vacations for Little or Nothing

A sign I saw in a delightful little bar in St Pete Beach. The owner was actually a fairly young guy from New Jersey, who had said “fuck it” one day, moved down, and started a totally new business. He had me thinking about whether maybe I, too, should make a major change and literally make vacation my day job. However, thus far, I have taken zero steps towards doing so.

Happy Monday! I almost feel a little silly writing this post as I haven’t taken anything beyond a few day vacation in about four years now, but it’s the second to last post in my Annual Expenses series, so I’m doing it anyway. Over 2017 and 2018, I averaged $300 per year in vacation spending, which included nothing at all in 2017 and short trips to Wisconsin and Tampa Bay in 2018. The minimum level of spending in the vacation category would, of course, be zero, since this is an entirely optional category. That said, I sure could use a vacation. Anyway, let’s get into it.

My first piece of advice on cutting vacation expenses is to use the specific advantages you have. If you have a job that involves a lot of travel, you may be able to use rewards programs with hotels, airlines, rental car companies, restaurants, etc, to very nearly eliminate the need to spend money on those areas altogether when you go on vacation. If you live near a cruise port or somewhere else awesome, you can probably get a last minute deal for practically nothing if you’re vigilant. Don’t overlook the low hanging fruit.

My next best tip is to use credit card churning to pay for some or all of your vacation. While the situation has deteriorated dramatically over the last year, there are still some cards available with large enough bonuses to cover a round trip flight or two, several nights at a hotel, etc. Keep in mind that you need to plan ahead to make this option work. I recommend four to six months, unless you’re looking to get multiple cards, in which case you probably want to start working on it a year out. Some people don’t like churning for various reasons. My take is that if you do the math and figure out what you’re getting “paid” per hour of actual effort (keeping in mind that this is tax free), it makes a lot of sense to work through whatever issues you have. Very few people make THAT much per hour in their day jobs. If you want to look into this option, this post or this post talk more about churning and this website is probably the best source I know of for detailed, up to date information on what specific cards are offering at this particular moment, whether it’s a good deal or not, etc. You can also check out www.reddit.com/r/churning/.  

Vacation doesn’t necessarily mean going anywhere exotic, or even outside of the United States. Road trips are a great way to go on a vacation without spending a fortune. The more people in your family or group, the better the value since each additional person in your vehicle will reduce your gas mileage only slightly, but would require an entire additional plane ticket if you flew. Think of all the amazing things there are to see and do near where you live. I bet you haven’t even been to them all yet. And there are 49 other states full of them, just waiting to be discovered. You can even get suites in extended stay hotels that have kitchens in them, allowing you to avoid eating some of your meals in restaurants. This type of hotel is usually on the more affordable end. For example, Marriott’s Townplace Suites is usually around $100 or so per night in my experience. Or if you’re adventurous, you can even bring camping stuff and avoid some hotel nights altogether. I myself am not that variety of adventurous. But if you are, more power to you.

One other idea is to use online travel sites. Many of them just aggregate the same deals you could get buying from airlines, hotels, or car rental companies directly. However, some of them offer “blind” deals that can save you some serious money. With those, you commit to buying before you find out exactly what you are getting. But with the hotel deals, for example, you usually get to pick an area of a city and the number of star hotel you want. I remember paying less than $50 a night for a few hotel rooms that regularly went for $100+ doing that back in the day.

And as usual, Costco can save you money here as well. They have an entire travel division offering a wide range of vacation options. They also offer rental cars, which have been the best deals I could find more than a few times. But then, if you’ve been reading this blog for any length of time, you already know that my answer to just about anything is going to be “check Costco first.” It won’t save you money every time, but often it will give you a great product or experience for about the same price as a significantly lower quality one.

So there you have it – some ways to save money on traveling from a man who travels for work and almost never for vacation. But remember, that is only my current state. One day when you’re sitting on a beach somewhere, you’re going to look over and see me enjoying some delicious vacation-y looking drink in a seriously relaxed fashion. You won’t know it’s me, of course. But if you follow some of these tips, maybe, just maybe, you will have spent as little as I did to get there. Have a great day, Everyone!

How I Keep My Utility Expenses Low

I’m sure there are some energy company buildings in there. Image courtesy of Jean-Marc Buytaert

Happy Monday! I hope everyone had a great Thanksgiving break and filled it with happier and less stressful activities than work. Today, I’m going to tell you how I keep my utility expenses down. Over 2017 and 2018, I spent an average of $1100 a year on utilities. While I spent 2017 living in a three bedroom house in frigid Wisconsin, in 2018, I enjoyed the advantage of living in a 700 square foot, one bedroom apartment. My cost per year in my current situation is closer to $600. If you have a 2500 square foot house, you’re obviously going to be spending more than I do. So that is actually the first example of how I keep this expense down – I simply have less space.

First, let’s address one other advantage I have today that many households do not: choice. In most places I’ve lived, there is one utility company in town and they raise rates with impunity every chance they get. Not so in Houston, the energy capital of the world. While I believe there are only two electric companies here, there are almost countless service providers to choose from. And each of them has multiple plan options. There are plans that are oriented to save money for all different levels of use. The key is that you have to figure out how much you use, do the math, choose the best plan, and then repeat the process and switch at the end of the term when your rates would otherwise be raised through the roof. Living in Houston, it is possible to keep your electric bill under $100, or often even $50, at almost any reasonable level of use. And since the weather is good enough that I’m often still using the AC in December, there really isn’t much need for natural gas. So in many cases, all you have are the electric bill and the water bill (usually about $30 a month in my case).

But in spite of the seemingly infinite population living in Houston, most people do not, in fact, live here. What can you do if you don’t? Use less. There are a million tips out there on how to reduce your electricity and natural gas consumption so I won’t go into too many here, but in general, your biggest electricity hogs are your refrigerator and whatever is connected to your thermostat. So optimizing those items will probably be the best place to start. You can adjust the temperature of your refrigerator and freezer to find the best balance between spending a fortune and having food go bad (I never really had a problem when I tried it). Programmable thermostats are great, but the most effective method for battling that thermostat is resilience in the face of slightly uncomfortable temperatures.

From there, you may want to try something like the Kill-A-Watt Electricity Use Monitor. If nothing else, it will get you thinking about electricity use and give you a better understanding of which types of devices use a lot and which don’t. As for water, you can get low flow faucets, toilets, showerheads, etc, that will help cut down on use. But usually this is a fairly cheap bill.

Saving on utilities isn’t anything groundbreaking – it’s mostly all about use. Choosing a modest housing option in the first place is a huge part of it. From there, investing a little bit of thought into what you’re doing goes a long way. To be honest, this would have been a much better post years ago, when I was paying over $100 a month total and that was still on the low end for my area. Utility costs are so low in Houston that I’ve had the luxury of getting lazy and have nearly forgotten most of the measures I used to use to keep them that way.

How I’m Getting Back on Track After a Few Very Tough Weeks

Ridiculously cheap seasonal produce deals can help to perk me up sometimes. These apples are perfect for my green smoothies and they have a good shelf life, so yes, I bought a few bags!

Over the last few weeks, my day to day life has grown brutally demanding and I’ve been pushing myself very hard, including a few consecutive days of working nearly around the clock. As a result, I started getting pretty run down. Exhaustion set in and with it, some weak thinking that led me back down the path to my old nemesis, depression, which I had not experienced in quite a while. All my problems seemed to have grown to insurmountable sizes and new ones were popping up faster than I could deal with them. I was really letting things get to me until Saturday night, when I made a conscious decision to get the situation under control.

I determined that in my overloaded state, I had fallen into three main forms of self destruction. I chose to focus on attacking just those items. First, I had been getting very little sleep to the point where I wasn’t even physically able to get up at my usual time (lately between 5 and 5:30). As a result, I would be behind schedule before my day even started. I had even missed two workouts – something I try extremely hard to avoid. This was happening partially because of the very high demands on my time, but also due to something I was doing. When I get too stressed out, I tend to get stuck in a state of mental paralysis and waste a bunch of time browsing the internet on my phone, and I had fallen back into that habit. So that was the second thing. Third, I was making everything more difficult by indulging my sweet tooth too often – another habit I’m prone to when I’m overstressed. Each of these things was causing problems on its own, but each was also making the others worse in some way. I had trapped myself in a negative feedback loop.

So I resolved to get those three things under control. I would force myself to get to bed by 9:30 each night so I could be up by 5:30 and still get enough sleep. I would limit myself to only browsing the internet on my phone during my time on the cardio machines throughout the week. And finally, I would limit myself to a maximum of one “treat” per week. I didn’t go extreme on any of these items, but set goals I felt were both reasonable and adequate to improve things dramatically.

Getting up this morning was brutal, but I did it. I suspect it will be easier to fall asleep tonight (I’m writing this on Sunday). The phone item proved too difficult on fantasy football day, but I only had a few quick lapses, which didn’t waste more than fifteen minutes or so total. And I successfully got through the day without eating any treats. It helped that I made myself some delicious, but healthy meals to enjoy. And the results? I do feel much better. Things aren’t completely back under control yet, but I believe I’m well on my way to getting there. Of course, it remains to be seen how I fare with Monday morning, as I’m sure the stress level will be cranked right back up to eleven. But hopefully I will be able to keep myself mindful of the fact that the way I respond to things is extremely important. Plus, I only have to make it through three days this week and then I have four more to use for further recovery purposes.

Do you have any preferred methods for snapping yourself out of it when you lose sight of things? Please share them in the comments or email them to admin@healthwealthpower.com. And have a great Monday!

Just a Quick Monday Morning Reminder: I’m Here to Help!

It doesn’t really have anything to do with this post, but what a cool looking building! Apparently it’s in Hong Kong. Image courtesy of Jean-Marc Buytaert

Good morning! When I started this blog, my general goal was to provide information to the widest possible audience that would help people to improve their finances and live better lives in general. Looking back after almost a year of posting, I’m pretty happy with the material I’ve put out there. But I’m always looking for ways to improve. In my day to day life, I regularly advise people on various matters. It has occurred to me that some of these conversations would likely be valuable to more people than just the ones directly involved. That got me thinking. And I realized I’m going to need some help…from you.

I’d like to add an interactive element to this blog. It could take almost any form. But in general, I’d like to offer my advice on virtually anything anyone could use it on. Yes, my primary area of expertise is finance. But if you read my blog regularly, you know I’m also pretty knowledgeable about a wide range of other issues.  

So if you have a problem with your finances, or with any other aspect of your life, I’d like you to email me at admin@healthwealthpower.com. Tell me the situation in whatever level of detail you’d like to provide and ask whatever questions you want to. I’ll do my best to answer the question and hopefully it will be helpful to you. The only thing I ask in return is that you let me post the question and my answer on this blog in case it could be of value to anyone else as well. I promise not to reveal your real name or any details that could possibly identify you. If it makes you feel better, you don’t even have to tell me your name in the first place! You have nothing to lose so why not give it a shot?

My hope is that together, we can make this a better resource. Have a great day!

My Recent Car Episode and How I Could Have Wasted A Lot of Money on Nothing

The engine bay where my diagnosis journey started. The battery and one of the fuse boxes are in the back left compartment.

A couple months ago, I replaced my car with a nicer, newer one. Unfortunately, cars can have issues at any time – even early in life. And on one recent morning, when I went out to the garage, my car wouldn’t start. In fact, the dash wouldn’t even light up. The battery was 100% dead. Thankfully, I have AAA, so I was able to get someone out there within about half an hour to jump it.

As anyone who has bought a battery for a late model car already knows, batteries die all the time now. In a typical example of “progress” in action, what had been a $50 purchase that would last roughly a decade is now an often $150+ purchase that lasts about three years. The warranty period, of course, has adjusted to reflect this new reality and in my experience, batteries tend to survive just barely long enough to surpass it. The culprit, of course, is our obsession with putting more and more electronic crap in cars, including a significant amount that continues to draw when the car is turned off. Today’s batteries are actually much more powerful than the ones that used to cost so much less, but the demands on them are also much greater.

Anyway, I priced out batteries while I was waiting for AAA to show up and determined that NTB had the best offering for my car. Once the car had been jump started, I drove straight there. It was less than a ten minute drive, but interestingly enough, by the time I got there, the battery tested perfectly fine. It was still a little low, but it had more than enough juice to start the car. I discussed this with the manager, who ultimately advised me to test it again after driving a further distance I had planned for that day. He suspected that it may be the alternator. In the over 250k miles of driving I’ve done in my still relatively young life, I’ve never once had an alternator fail. And I would have been rather surprised to see it happen on a five year old car with well under 50k miles, but testing is free and my AAA membership would have taken care of me again if the battery died again, so I went on my way.

I drove around for the rest of the day without incident. Of course, this only deepened the mystery of how the battery had died. But that very evening, I had a lucky break that led me to the answer. I happened to leave something in the car after I had closed the garage so I went back out to get it. To my surprise, when the door was open, I discovered that the headlights were still on. Like any modern luxury car, my car has automatic headlights. So while the battery mystery was immediately solved, it also gave way to another one. Why weren’t the headlights turning off?

When trying to diagnose any car problem, you want to start with the simplest possible explanation. In the case of an electrical problem, that means checking any potentially applicable fuses, which I immediately did. But none of them were bad. So I was back to square one, although at least for the moment I knew I could keep the battery from dying by turning the headlights on and off manually. But I had a lot of other stuff that had to get done so I moved on from the car situation for the night.

The next morning, I thought more about the car as I sat in the sauna. I had realized something had been different for a few days, but I couldn’t put my finger on what. But in thinking about the automatic headlights not turning off, I realized what it was. The dome lights, which are inexplicably non LED and incredibly dim to begin with in this car, had not been coming on. And that’s when it came to me. The automatic headlights were working fine. The issue was that the car didn’t know the doors were being opened and closed! When I thought about it, the automatic adjusting windows, which open slightly when the doors are opened and then close when the doors are closed again, hadn’t been functioning normally either. Clearly I had found the problem. But how to fix it?

First, I went back to the fuses again, this time looking for any door specific ones. But again, none were bad. So I started looking very closely at the doors, checking to see if any wires looked damaged, etc. Everything looked ok. But there was one thing slightly – and I mean SLIGHTLY – out of place. This little guy.

Literally one screw that holds this thing on being slightly loose was causing all of these problems!

It was just slightly loose when I touched it. I didn’t know what it was, but I figured it had to be related to the door somehow due to its location in the door jamb. I tightened it up and VOILA! Suddenly everything worked correctly again. Apparently, the little thing is a sensor that compresses when the door is opened and decompresses when it is closed. And apparently it is very sensitive. So what lessons are there in this experience?

First and most importantly, don’t make assumptions with cars. There are way too many mechanics out there who will just start replacing parts that might solve the problem rather than first finding the exact diagnosis. This can be simple inexperience, but it can also be more sinister. After all, the more work they do, and the more marked up parts they replace, the more money they make. And there is really no way of holding them accountable for doing that aside from not coming back. Had I taken that approach in this case, I would have replaced a perfectly good battery for about $150 and been no better off than when I started. Then, when that didn’t work, I may even have replaced an alternator for considerably more than that. Thankfully, most auto parts stores are happy to help you with testing and even some advice, as the friendly folks at NTB were in my case.

Second, know your car and pay attention to it. While I am no electrician, had I been more observant, I could still have solved this pretty easily. I would have noticed the dome lights not coming on and the automatic adjusting windows not adjusting. At that point, I would already have known what the problem was and could have skipped straight to the last step of the process I just finished describing. Sadly, with as much as I have going on in my life, someone in a clown suit could probably be riding a giraffe through the parking lot of my apartment complex as I walked out to the garage and I’d say there’s at least a decent chance I wouldn’t notice anything unusual. In today’s world, I’m guessing I’m not alone in that.

Third, even in a world of incredibly complex cars with numerous computer modules and miles of wiring, the simplest solution is usually the right one. Yes, a bad battery would have been an easy explanation in this case – but not the correct one. That was in doubt as soon as I got to the auto parts store. In the end, it turned out to be a part so simple that cars have probably had them for as long as they’ve had dome lights that turn off when the doors open. And it wasn’t even bad – just slightly loose.

Sharpening the Saw – Possibly Covey’s Most Underrated Habit

Believe it or not, this tranquil scene of water and mist is on a little trail at a rest area only a hundred or so feet from a major highway between Houston and Dallas. Spots like this offer a great opportunity for travelers like me to “sharpen the saw,” if only for a few minutes.

Happy Monday! If you haven’t read The 7 Habits of Highly Effective People by Stephen Covey, I highly recommend it. Most likely, it will either help to explain some of the trends you’re seeing in your life or it will give you some ideas that will improve that life dramatically if you implement them. Simply put, it’s an absolute classic in the world of self help, success oriented books. I could easily write posts about every one of the habits and how they’ve helped me, but right now I feel compelled to write about the very last one: sharpening the saw.

The reason I want to write about this concept is that although last week was pretty rough, today, I feel better than I have in a while heading into a new one. What did I do this weekend that brought this about? Yes, I did some work on both of my side businesses (I’m working on a brand new second one; I’m sure I’ll talk more about that as it progresses), this blog, and my W2 job. But mostly, I sharpened the saw. What does that entail? Instead of focusing on production, you focus on doing the things that support it.

In my case, I got some fresh air while playing tennis, did my usual weekend cardio, cleaned up my apartment, read, drank delicious coffee, talked to some good friends, made and enjoyed some delicious food, watched some quality football (unfortunately the Packers won, but at least it was a good game), and just generally relaxed and recharged. None of this is revolutionary stuff, and none of it will directly result in anything measurable. But that’s not the point.

The point is that on a Monday morning, I feel energized and ready to attack my workout and get my week going. As always, there are plenty of challenges ahead. Plenty of things I would rather not do, or even think about. But take away that weekend I had, and rather than feeling ready to take all of it on, I’m feeling run down and nowhere near in the right frame of mind. So that’s about it for today. When you get a chance in your life, I encourage you to sharpen your own saw.

Here’s to an awesome start to the week for all of us!

Watch Out for this 401k Trap Later in the Year

A very amateur picture of the mighty Jerry Dome, where the Cowboys would be crushing the hapless Giants tonight if not for it being an away game

Happy Monday, Folks! Today’s post is not going to apply to everyone. The problem I’m going to address falls into the category of “good problems to have.” However, if it does affect you, it will cost you money if you don’t address it. The post applies to folks who A) max out their 401k contributions, and B) have variable income – commissions, bonuses, etc. For those who don’t fall into both of those categories, don’t feel bad and don’t underestimate what can happen in your life either. This is only the third year this information has applied to me and the year before the first, I never would have seen it coming. This method may seem complex, but it is actually really simple once you understand the concept.

In most employer sponsored 401k plans, employers match some percentage of your contributions. The most common one I’ve seen is 3% if you contribute 6% of your salary, or simply 3% of your salary to keep things simple. Some are more generous than that, and many are less so. But let’s use that for the sake of our example. Let’s say you have a set $100k a year salary and want to max out your contributions for 2019. Since the limit is $19k this year, you would simply need to contribute 19% of your salary, which would both easily cover the 6% requirement to get the entire match and hit the contribution limit exactly by the end of the year. If you did that, you would contribute $19k, your employer would contribute an additional $3k, and your total would come to $22k. Bueno!

But what if your income varies depending on performance and other factors? Herein lies the problem. If you anticipate your income will end up being roughly $100k, you want to max out your contributions for the year, and you subsequently set them at 19% and forget it, one of two things is very likely to happen. Either you’re going to undershoot and leave tax shelter on the table (every dollar you contribute to a 401k reduces your tax liability) or you’re going to overshoot and lose out on some of your potential employer contribution money.

Here are some examples to illustrate the point. Let’s say you end up making $80k. At the end of the year, you will have contributed $15,200, missing out on $3800 of tax shelter. You can multiply your top marginal tax rate by that number to determine how much that will wind up costing you. But regardless, ouch! Now the opposite scenario. Instead of making $100k, you wind up making $120k. You would have contributed more than the maximum $19k at some point, except that whatever company administrates your plan is likely to simply cut off your contributions when you hit the limit. So instead, you would have finished making your $19k in contributions for the year at some point before the end of the year. It’s good to be early, right? Not in this case. Unless your employer “trues up” the match at the end of the year, which I doubt most do, you would have left $600 in employer match on the table. Why? Barring the “true up” exception, an employer matches check for check. In other words, you wouldn’t be getting any match for the $20k you had left to earn after you made the first $100k and had subsequently contributed 19k. Once again, ouch!

So how do I avoid either of these scenarios? I make adjustments throughout the year. At the beginning of the year, I set my contribution percentage as if I were only going to make my base salary. In other words, it is much higher than it will be by the end of the year, but if I don’t make a single dollar in bonus compensation throughout the year, I will still max out my 401k. Then, each time I get a bonus, I calculate how much I have left to contribute for the rest of the year, divide it by the amount of base salary I have left to make, and make the result my new contribution percentage. Admittedly, this is a conservative method. But that’s the way I prefer to operate.

You can modify this system to your liking, and you may have to if your base salary is a relatively small percentage of your total annual income. It just requires a little “guess and check.” For example, if your base salary is $40k and your total annual bonus is typically in the high five figures, you’re not going to start the year contributing 47.5% of your salary. Not only would that make for some very lean times until you got your first bonus, but it would also very likely cause you to eat up way too much of your $19k way too quickly, thus eventually defeating the purpose of the entire exercise once you couldn’t contribute a large enough percentage to get the full employer match without going over the annual limit. So in a situation like that, I would probably just estimate, start out contributing around 15-20%, and adjust as needed to stay on pace.

But one nice side advantage of doing things my way is that as the year goes on, the paychecks get bigger. In my case, the result is that I tend to do more of my after tax investing later in the year since I have more cash coming in the door. But regardless of how you do this, the important thing is that you not leave money on the table – either with your employer, or with the bad guys. I know this may seem like overkill to some of you to save what will likely amount to less than $1k a year, but this is a finance blog. And besides, no one knows what the future holds. When you’re at retirement age, you just might need that money and besides, it will almost certainly have grown considerably by then. Plus, although this took a lot of words to explain, it only takes me maybe fifteen minutes total of calculating and making adjustments throughout the year, so in my opinion, it is well worth doing. Have a wonderful week and go Cowboys!

Every Step Affects Your Destination So Choose Wisely

Getting out in the woods can be a great way to quiet your mind and figure some things out.

Today I’m going to write about something that is breaking my heart because I see it happening way too often, resulting in devastating consequences in people’s lives and subsequently, for society at large. There seems to be an epidemic involving people thinking they can have whatever they want without paying any cost at all. I’ve succumbed to this siren song at times in my own life so I know it’s very powerful. But I’ve learned that everything on life has a cost. Everything. Want to be in great physical shape? You pay for it by spending a lot of time in the gym and eating well. Want to live in a big, beautiful house? You have to pay a lot of money. Want a good career? You have to dedicate a lot of time to it.

What I’m describing ought to be considered a law of nature at this point. If there were no costs, what would anything be worth? Everyone would have the best of everything and none of it would have any meaning whatsoever. But the world doesn’t have the resources to support that and even if it did, we would all be living terribly unfulfilled lives. Why? Fulfillment comes from facing challenges, overcoming them, and growing as a result. You get none of that when you take the easy road. Imagine if you had everything you wanted right now – a big mansion, millions of dollars, a fleet of expensive vehicles, a beautiful and loving family, the admiration of many people, etc. Your vision probably includes you being happy. But what happens if you stay in that vision as the days, weeks, months, and years go by? I believe that smile is going to fade. Why do you have all those emblems of success? Why do those people love you? There isn’t a reason. You didn’t earn any of it. And that element is crucial. So many people don’t understand this and it crushes them in life. They fetishize the material rewards of success but that’s nothing but fool’s gold. The value of success isn’t in rewards; it’s in the process of earning it.

And beyond simply depriving yourself of fulfillment, making the easy choices in life will actually make things worse for you. By bypassing paying the cost of something, you increase the cost you will eventually have to pay. If you just make the minimum payment on your credit card bill today instead of paying the full statement balance, that bill is going to come back bigger next month. If you keep doing it, eventually you are going to drown in credit card debt. If you skip the gym today, tomorrow you’re going to have to work even harder just to get back to where you could have been. If you stop going to the gym altogether, eventually you are going to have health problems you otherwise wouldn’t have had.

Most people aren’t very future oriented and as a result, they see substantially higher long term costs as a perfectly acceptable trade off for somewhat lower costs today. This is how obese people are built – one bad decision at a time. This is how people in their sixties with no choice but to work until they drop dead got there – “I’ll start saving tomorrow.” Please do not choose that kind of path for yourself. I highly recommend The Time Paradox by Philip Zimbardo and John Boyd. That book explains this concept brilliantly in scientific terms.

Think about who you would be in life if there were no limits. Whatever that looks like, I’m here to tell you that you can have it. Maybe not exactly what you pictured, but you can make your life look much more like that than it does now in ways that you will never believe. But you have to start doing the work. Not next week, not tomorrow, NOW. You are building your future with every decision you make. Instead of what is easiest right now, think about where you actually want to go in life and make the choice that is going to move you in that direction. It won’t be long before those little, good decisions will start to add up to big, positive changes and you’ll realize how important every one of them really was. And from there, it will get easier and easier to make more of them – and bigger ones too.

Or, you can stop working on something important because it’s too hard. You can have a Twinkie because vegetables don’t taste as good. You can sit on your increasingly fat ass and watch mindless garbage on tv because you don’t feel like doing anything productive. You get the idea. But don’t blame anyone else when you have gone nowhere in life in twenty years. Don’t demand that successful people pay for your mistakes. Don’t try to force your bitterness on others who have made better choices than you have. Whether or not you want to earn anything in life, I can assure you that you will. But it might not be an outcome you, or anyone, would want. Please choose something better and make something out of your time on this earth.