Your Habits Are Showing

What’s one thing that will produce dramatic results in your life, for good or for ill?  Habits.  Today, we’ll explore why habits are so powerful and what you can do to take advantage of an amazing source of power within your own life.

Your Stomach Has Habits

For our purposes, we’ll define a habit as something you do consistently, with little or no conscious effort or decision-making.  One simple example that illustrates this point is a habit most all of us have:  eating breakfast.  When you wake up in the morning, how much time do you spend thinking about whether or not you’ll have breakfast?  If you’re like me, none.  I may spend a minute thinking about what I’ll have for breakfast, but I never deliberate on whether or not to eat it–I’m hungry and breakfast will be eaten!

Other examples of habits may include listening to a certain radio station on the way to work in the morning, visiting the vending machine at 2:30 each afternoon, or taking your spouse our for dinner one Friday each month.

So what does this have to do with finding incredible power and effectiveness on your path to thriving?  The secret lies in the cumulative force of months and years of positive habits.  One clear example of this power is shown by bodybuilders, strength trainers, runners, and Olympians.  Look at an athlete who engages in one of these activities and experiences success.  What did they look like last week?  Last month?  Last year?

The answer is that they made it to where they are currently via steady progress.  Like the stream of water that eroded a large rock, these athletes made gains one day at a time.  They ate right and hit the gym while everyone else was pigging out and goofing off, and now they sit at the head of the pack as a result.

Winning in Your Life

You don’t have to have the fire of an Olympian to benefit from this concept.  Just take this principle and apply it to whatever area of your life where you desire dramatic improvement.  If you want to be a great dad, but have thusfar been lacking, decide today to spend 30 minutes every day on improving.  This could mean helping your daughter color for 30 minutes, going for a bike ride with your son, or reading a book on parenting.  The point is, it’s got to be a habit.  30 minutes, every day [or 5 days a week, at very least].

Perhaps you’re dissatisfied with your financial life–you know you should be doing a budget but you just can’t stick with it.  The answer is habit.  Block out a set time each week to spend time on your finances.  During this time (say Monday nights from 7-8), balance your budget, pay your bills, set and track your goals, or read a good book on personal finance.

The First Step

As in our example, your physical fitness is a great area to test this idea and see real and dramatic results within a relatively short period of time.  If you don’t currently have a fitness regimen, try this:  put your workout clothes on every day, starting today.  I don’t even care if you work out at first–just put your workout clothes on, every day.  Once they’re on, how about doing a few jumping jacks?  Get your heart moving, even if just for 5 minutes.  Then, carry on with your evening as normal, you’re done for the day.  Tomorrow, get the workout clothes on again.  Try some pushups or squats, or maybe one of the workouts posted in the ThriveFit section of the site.  But do something, and keep it up, every day.

If you’ll do this, committing to doing something every single day, you’ll look up a month from now and notice huge gains in your fitness level.  You’re getting there one day at a time, just like Olympians do.

Habits for Eternity

Finally, consider your spiritual life.  Do you have any habits that will feed your soul?  Do you attend a church with gospel-centered preaching where the Word is shared each week?  Do you seek the Lord in prayer, or read the Bible to commune with Him?  If not, you are missing profound wisdom, comfort, love and hope from the Father who loves you more than anyone else.  Will you begin today by seeking Him in prayer?

By adopting these habitual practices–spending time working on an area of your life where you desire improvement–you will gradually begin thriving, with success building on success.  The next thing you know, you’ll be standing on the mountain heralding to others that they can get there too.  All they’ll is a little encouragement and a few good habits!

Mortals Only — Part II

Several weeks ago, we shared the shocking news that yes, even TotalThriver members will one day face their mortality.  Since death is one day closer today than it was yesterday, we highlighted the importance of getting good life insurance in place.

Today, we’ll explore another aspect of financial planning related to caring for your loved ones after you are gone:  estate planning.

I’ll get to it tomorrow…..

Though not always the most glamorous or delightful topic, getting a will in place is a vital part of any good financial plan.  Even though we all know that death will catch us some day, we seem to be in denial that that day is actually coming.  According to a recent survey conducted by findlaw.com, nearly 60% of American adults do not have a will (http://commonlaw.findlaw.com/2008/06/findlaw-survey.html)

Obviously, getting your will in order doesn’t benefit you–you’ve got to be dead to use it!  But it does provide great benefit to your family and other loved ones.  Some people think that drafting a will for themself is unnecessary, because, “of course, everyone knows that I’d want to leave everything to _______.”  The problem is that the one person who makes the call–the judge–doesn’t know you!  So, the only way to make sure that your antique rifle collection goes to your son and not your crazy old hunting buddy is to write down your wishes.  Otherwise, your son may have to spend thousands of dollars in court fighting for what’s rightfully his.

Get it done right

The best option for getting a will done properly is to consult with a local attorney who specializes in estate planning.  If you live in the Omaha area, I can personally recommend Lynne Timmerman Fees, an experienced professional with great qualifications.  Find out more about her practice here.

Although hiring a professional is the only way to be assured that your will is done properly, sometimes using generic forms can be a cheaper alternative.  Places like uslegalforms.com can be a good stepping-stone for recent grads or families struggling financially who need to get a will in place but can’t afford an attorney right now.  Of course, if this is you, just keep following us at TotalThriver and we’ll have you in a strong financial position in no time!

Demonstrate your love

In closing, although estate planning is not particularly glamorous, it is an essential part of your financial life.  To ignore the fact that you need a will is to do a disservice to your loved ones, and create legal battles for your money and property in the months and years following your death.  Won’t you take these steps today to love your family well?  The small investment of time and money you’ll make today will pay large dividends when they’re needed most.

Wandering into Trouble

I’ve enjoyed many hiking and camping trips since I was a young child.  Walking through the forest, listening to the sounds of wildlife and seeing the sun gleaming through the trees, I’ve had a chance to appreciate the beauty and creativity of our Father’s world.  Occasionally, my hikes have become extended for a bit longer than I was planning on, due to an underestimation of how long a climb might take or a casual disregard for things like maps and compasses…. 

Oblivious to the Peril

The funny thing about getting lost is that you don’t realize you’re about to get yourself in trouble until you suddenly realize that you are in trouble!  On a certain camping trip with a buddy of mine in Arizona, we hiked out into the desert loaded with many gallons of water.  We found a good site, set our provisions down, and trotted off in search of a good “sitting log” to place beside the firepit.  We found a good one a short while later, and began carrying it back to our campsite.  At first, we thought it was pretty funny that our campsite was taking so long to get to.  “Strange how it only took us 10 minutes to find this log, but we’re taking 20 minutes to carry it back,”  we laughed.  Slowly we realized that we were actually lost, and we’d been walking for so long because we didn’t know where we’d left our jackets and water!

A few hours later, tired and thirsty, we found our campsite as the sun finally set.  This set us up for a cold night (the coldest night of my life, in fact), since we’d wasted our afternoon and now had only a half-built shelter.  But we were thankful at least for the jackets and water that we had nearly lost.

This story is an example of how we can be walking along unaware, and suddenly find ourselves in an overwhelming situation.  We were too confident that we wouldn’t get lost, and by the time we recognized our precarious position, it was too late.

Common Financial Dangers

In a similar way, we can tend to be very blasé with debt in America today.  We look around at our friends and neighbors, and many of them have student loans.  Everyone’s got a mortgage, and some debt on their cars.  And of course we’ve all got to have our credit cards!  But even though we all know that people get trapped and pulled under by debt, we mistakenly think that this can never happen to us.

Confident of our ability to keep our debt in control, we walk right along the edge of a financial cliff.  We buy a nice big house, great new cars, and a brand new living room set—all on payments.  At the end of the month, we’ve got $25 leftover after all the credit payments are made, and we think, “All right! Everything’s going great!”  But then comes something unexpected, and all of a sudden we’re $175 under instead.  No big deal, we think, “I’ll just pay the minimum credit card payment this month, then get everything cleaned up next month.”  But again, something unexpected comes, and now the balance we carried last month is compounding on us.  On and on it goes, and the debt pulls us down deeper and deeper.

Recognize the Trap

This story has sadly happened to too many people who are able to escape only through a long and painful bankruptcy.  If you’re fighting this now, know this:  many have overcome this situation through wise money management, hard work, and tenacity.  If you’re still dabbling with debt and don’t think this could ever happen to you, think again.  Banks are not evil, but they are concerned with making money, not ensuring that you keep your head above water.  Knowing what you can afford and what you cannot is your responsibility, and you owe it to your family and to God to manage the money He’s given you wisely.

The most reliable way to make sure that you can afford something is to simply buy only with cash (or debit cards/checks).  The one exception might be a mortgage on a 15-year fixed rate with the monthly payment of 25% of your take-home pay, which can be a reasonable debt, provided that you have a substantial down payment.  And some financial experts would contend that there are a few other “reasonably safe” debts as well, but use these very carefully.  It is much easier to lose your way than you think.  Decide instead to take control of your financial life by eliminating debt and paying with cash.  The confidence and freedom that come with becoming debt-free will serve you well on your path to a thriving life.

But I’m special….

Ask five of your friends if it’s important to have money saved for an emergency, and you’ll likely get five affermative answers.  Now ask the same five friends if they have such an account, and you’ll probably get some resounding no’s.

Yeah, what do they know?!

We’ve all heard from financial experts over and over again how important it is to have an emergency fund.  “Three to six months expenses in a savings account or a money market account,” they say, and we think to ourselves, “yeah, that sounds like a good idea…”  But look at our accounts in a month or two and nothing has changed.  What’s the problem?

For one thing, saving for emergencies isn’t too exciting.  It’s much more fun to spend a few hundred dollers on a weekend getaway, new set of clothes, or a night out with friends that to put money into an account for “future unexpected expenses.”  Some of us also balk at the thought of earning a measley 1% interest in a money maket account when we could easily average 10% in the stock market.  Emergency funds aren’t slick, cool, or sophisticated, so we’re tempted to consider them optional.

The problem is, that unexpected things do tend to happen, and on a long enough timeline, they’ll happen to all of us.  Just think about this for a minute: do you know anyone who has been laid off from a job?  Or someone who’s gotten hurt or sick and required hospitalization?  Do you think that person expected those things to happen to them?

Knowledge gained vs. knowledge applied

Of course, we all know people in these situations, and we understand intellectually that having money saved is very important in such times.  The problem is, we just don’t connect it to our lives.  We assimilate the knowledge in our heads, but our hands never carry out any action to create change.  We delude ourselves into believing the lie, “that won’t ever happen to me,  I’m special!”

While every TotalThriver reader is special to me, you don’t have any unnatural abilities to avoid emergencies.  In the next several years, you’ll very likely encounter a layoff, sickness, injury, or family situation where a fully-funded savings account will be of great value.  Like our discussion regarding insurance, these financial foundations are often not appreciated until they’re needed.  And by that time, it’s too late to prepare.

A choice today affects life tomorrow

Those who succeed with life and money are those who understand the long-term consequences of decisions they make each day.  They realize that the decision they make today to forgo a trip to the beach to save money for an emergency will pay them dividends in the future when their house gets flooded and they have money to pay for a hotel room.

Will you apply these concepts to your life?  Will you commit to eliminating one fun thing from your expenditures this month, and put that money toward an emergency fund?  If you will set a goal that includes a total amount to be saved along with a timeline to meet that goal, you’re well on your way to financial security.  Not only that, but you’ll have put into practice the habit of acquiring knowledge and applying it toward long-term success, an ability that will bring prosperity and peace to many other aspects of your life as well.

Mortals Only

For those of you who aren’t invincible, today’s post will show you one vital practice for demonstrating your love to your family.  It is important that we express our love and affection verbally, but oftentimes it is our actions that truly show our hearts.

First some bad news:  you’re going to die.  You knew that, right?  Now, I can’t tell you when it will happen, but I will tell you  one thing–that day is one day closer today than it was yesterday!

Of course we all think that our final day is way off in the future, and for many of us, it will be.  The problem is that for some of us, that day will come quite soon, perhaps even before our kids are grown and our retirement portfolio is sufficiently large.  We need some way to guard our loved ones from the compounding diffiulty of a parent’s premature death and an impossible financial situation.

Thankfully, generations ago, our forefathers instituted insurance programs to protect their families as well as future generations like us.  Insurance companies collect premiums from large groups of people, most of whom do not die while the policy is in effect.  But for those few who die in the prime of life, the revenue generated by everyone’s premiums is paid out to the family of the departed.  And thanks to significantly improved technology and business models, today most healthy people can obtain this protection for next to nothing.

Between my wife and I, we have a 20-year term policy for close to $1,000,000 which cost us less than $40 per month.  For less than what many people pay for cable, we are protecting our children and each other in the event that death comes sooner than we expect.  Over the next 20 years, it is vital that we invest aggressively, building our portfolio to a large enough value that insurance is no longer needed.

For those who do not have the discipline to save an invest, insurance companies also offer “whole life” policies.  Unlike term policies, these insurance products do not expire at a set date in the future.  Rather, they are a policy that you plan to pay into for the rest of your life.  In addition to the insurance coverage built into these plans, they also have a savings account inside.  So instead of paying the $40 like in our example, you might pay several hundred per month.  Some of the extra money you pay goes into a savings account that you own, which grows over time.

Many people like the whole life policies because they have a built-in way of forcing you to save money.  However, these products often carry significant fees and underperform compared with a good mutual fund or a 401k.  Therefore, it is our recommendation that you purchase a sizeable (say $500,000 for an average person) term policy on a 20 or 30 year term.  Plan to invest at least 8% of your income into a 401k or Roth IRA during that time, so that at the end of the term you will have become self-insured and will no longer need life insurance.

Taking these few simple steps is the difference between leaving your family vulnerable and destitute or loved and financially secure.  Make the time today to investigate rates at a few different companies before purchasing, and rest confidently knowing that your family is being loved well.

Planning for Unusual Expenses

Last week, we discussed the importance of including unusual but predictable expenses in your budget.  Items on this list include things like car repairs, home improvements, large gifts, or vacations.  By allocating a fixed amount each month, these big expenses don’t have to catch us off guard.  For example, my wife and I set aside $60 each month for car repairs, which has been plenty for the minor repairs and maintenance that our vehicles have required.

This brings up a small wrinkle in your budget, though, since you’ve allocated money to be spent on a certain day, but since you likely won’t have a $60 car repair this month, your account will be out of balance if you don’t correct for this.

Thankfully, this feature is built right into the ThriveWealthy advance cashflow planning program.  If you’ve not downloaded a copy yet, be sure to head over to the ThriveWealthy page and download the latest version.  Start budgeting next month’s income in the colored boxes, along with the dates your paychecks come.

Once you’ve entered your income and expenses in the appropriate categories, notice the orange box in the upper left part of the screen.  This section is called, “pending expenses” in the example tab, and is used to balance your budget with your current bank balance.  This section is also where you’ll keep track of your car repair fund, and any other “funds” for big items that you’re saving for.

Keeping with our example of $60 per month for car repairs, let’s say that we’ve reached the 15th of the month, which is the date we entered the car repair fund to be spent.  But, since we’ve not needed any repairs or maintenance this month, that $60 is still sitting in our account.  To ensure that the budget matches the actual bank balance (ascertained by logging into your bank’s website), we need to enter the $60 as a pending expense.  Next to the value of $60 that we enter in the orange box, we need to title the expense as, “car repair fund.”  The spreadsheet will automatically adjust the budgeted balance, and the “difference” value in cell C25 should drop to 0.

Next month, we’ll have the same thing happen, and assuming no car repairs are needed by the 15th of that month, we’ll follow the same procedure.  On the 15th, we’ll replace the $60 value in the orange box with a value of $120, and so on and so on, month after month.  Anytime money is spent at the auto repair shop, simply reduce the pending amount by the total amount spent.  So, if on the 18th of that second month, you spent $20 on wiper blades, simply reduce the pending amount from $120 to $100.

Following this plan will bring you such a sense of peace–bring ahead of these unusual expenses instead of getting knocked down by them.  Please enter any questions or clarifications you have in the comments section, and as always, remember that we’re here to help you thrive!

Overcoming the Unexpected

Most of us have been through the following story at some point in our lives: We resolve to “do better” with our money. That credit card company has taken advantage of us for the last time! We’re angry that we let ourselves get into such a vulnerable position and we’re angry that the credit card company hit us while we were down.

So, we get out the yellow pad or the computer spreadsheet and we get to work on a budget. We allocate our money carefully, taking our best estimate at what we’ll spend in the following month on groceries, gas, and utilities. Everything’s going fine until the 9th of the month…

That sinking feeling

On that day, two tires go flat on our usually-reliable family car. Your dentist sends you a second bill for the work done last month to resolve a clerical error. And your electricity bill is $30 higher than usual. What in the world is happening?!? Why is this all hitting at once???

Unfortunately, these unexpected things do seem to hit us just when we think we’re getting it all together. However, even though they seem like a string of improbable flukes, the root of the issue closer than the mechanic’s garage or the dentist’s office–the problem is us!

When we get used to living life without an advance financial plan (a budget), we quickly lose touch of what we really spend each month. Ask me before I started budgeting what I spent on groceries each month, and I would have said, “like $150 or so.” (reality = $400) Or ask me how much I spent on car repairs per year: “like $450 I think…” (reality = $60 per month)

The point is, our perception of reality is quite different than the truth of the situation, and we tend to underestimate how much we spend each month on these “unusual expenses.”

So be encouraged–you’re not alone when you’re hit by a “string of flukes,” in fact almost all of us have been there! If you’re starting (or restarting) budgeting for the first time, be generous with your grocery budget, and include $60 per month or more for car repairs. You may not need it in the first month, but soon you will, and having $180 sitting in your account waiting to be spent on car repairs makes that phone call from the mechanic a great deal less stressful!

If you haven’t yet downloaded the most recent version of ThriveWealthy, please spend a few minutes trying it out for yourself now. And as always, let us know of anything we can do to improve your experience at TotalThriver.com! Remember, we exist to help you Thrive!