Nothing Wrong with Simplicity

I think we make our lives more difficult than we need to – in all aspects. Almost like we think we’re doing something wrong if we can explain ourselves in one sentence. But in my opinion, this is what we should be striving for. Life is complicated enough, I don’t feel like it needs any help from me.

More often than not I’ve found the mantra “keep it simple” has steered me in the right direction – even (or especially) when I’m working with clients. To be clear, you must absolutely do your due diligence when considering alternatives, but I’ve found those that you can easily understand and require the least amount of effort will often work.

This shouldn’t necessarily be applied when pursuing a degree or picking a home to live in for the rest of your life – because there is usually a lot of other things to take into consideration. But how you pay for school, or the home, shouldn’t be that complicated or fancy.

Call me boring, but I like to set things in place and then forget about them – secure in the knowledge that it’s doing what it’s supposed to do. Saving for college in a 529 plan – why not pick a target date fund with the year closest to when you’ll need the money? The same goes for your current employer sponsored retirement plan. Both of these will likely have a bunch of other options available, and not necessarily anyone available to help select what works best for you.

Alternatively you could hire someone to take care of it for you; my only input being make sure you understand what they are doing. This can apply to having a housekeeper, landscaper or financial advisor – in each case you’ll want to be very clear of your expectations, and understand what they will be delivering. Once the ground rules are laid, you can shift your focus to other things – circling back periodically to check on things.

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Don’t Let the Tail Wag the Dog

I enjoy coaching business owners, helping them determine where they can increase efficiency and dial in their focus running the business – as opposed to the business running them. Over the years I’ve found some very common themes – “not enough time” and “too much to do”; both of which can be addressed by stepping outside the business and looking at it as a perspective buyer, rather than the owner. Buyers look for opportunities and weaknesses (so they can bid the price down), they’re not emotionally invested in the company and won’t make excuses about why something is happening.

Unfortunately, many of us get so wrapped up in the day-to-day operations we lose sight of the bigger picture – where we want our company to be in 5, 10 or 20 years; and what is the core service or product our business provides. If you don’t have a vision for your company, or if you can’t put your finger on the core service/product, then ask yourself why you’re a business owner. Sure, there’s a lot of hype right now encouraging people to be entrepreneurs and chase their passion; but that passion may be met through hobbies or volunteering at much less cost than starting a business.

Same goes for “side hustles”. Unless you’re working part-time for someone else, you should be treating your hustle like a business. If you’re an Uber or Lyft driver, or you rent room(s) on Airbnb, then understand what your expenses are – please don’t delude yourself into thinking what you earn is “all profit”. I would also like to encourage those of you with side hustles to ask yourself “why”. Why do you have the hustle, what is the money going to help you do? Take this answer and make sure you’re taking the steps necessary to follow through.

Perhaps you’re saying “sure, this all sounds like a great idea; but you just don’t understand how busy I am”. Again, I challenge you to think as a buyer. Do you care how busy someone is, do you let them off the hook for a poorly delivered service or product? No, of course you don’t – so why are you treating yourself any different?

Make the time. Set at least one day each month aside for your business. Instead of arguing how much business  you’re going to lose (cost); think of it as an investment which will increase your profits by improving efficiency and honing your focus. Create an agenda for your day, and follow it. It’s going to feel weird at first, and maybe you’re not super productive right away – it’s a new skill and it’s going to take time to get good at it. Don’t give up, push through. If you’re not sure how to start find a mentor or hire a coach.

I need to stay busy, but I don’t like to waste my time. Think back to why you started your business or side-hustle; I’m willing to bet it wasn’t so you filled your every waking moment with work. Be honest with yourself, do you really want to run a business? Be okay with the answer, whatever it is, and take the necessary steps to be successful. Just do something.

How to Transition to a Monthly Paycheck

For most of our working years I think it’s safe to say just about all of us receive our checks weekly or every other week; and plan to pay our bills accordingly. Speaking for myself, while on Active Duty my wife and I designated the 1st’s paycheck to the mortgage and the 15th’s to our living expenses. Simple and easy to repeat; and I’d wager many others do something very similar.

I never considered what would happen if I was only paid once per month – and although I “knew” it’s what would happen when I retired from the Navy I wasn’t ready for it. It’s a different dynamic, even if you’re being paid the same or making more; because if it’s something you’re not used to it’s easy to spend like you have another check coming at the halfway point – and if you’re used to weekly paychecks it can be even worse.

To add insult to injury, it’s likely there is going to be a gap of at least (1) month between your last regular paycheck and your monthly check when transitioning to a military pension or social security. It could be even longer if you’ve filed a VA claim, I believe the current wait for fully developed claims is (6) months – a fully developed claim is one in which all supporting documentation has been provided and the VA forms have been completed correctly.

So what can you do to help yourself?

At least six months, a year would be ideal, start gradually transitioning to paying your bills within the first week of the month.

First, figure out your living expenses. Start with tracking all your spending, Mint.com is a useful tool; but many banks will include a similar tool. This will tell you how much you need to earn, and if you’re not interested in transitioning to another job/career; it will help you determine if, and where, you need to cut back. For those who are Active Duty and are being paid BAH cut your expected earnings by almost 2/3 – because you will receive ~50% of your base pay only (whatever percentage you’re entitled to, it’s calculated off your base pay). If your expenses are more than your new income you have two choices – find another income source (not credit cards or other debt instruments) or dial back your expenses.

After you’ve calculated your living expenses and your monthly income, train yourself to live off one pay period.  For most of us this is going to take some coordination, because we don’t have sufficient savings to serve as a buffer. Start small, with a bill or two that are fairly consistent – like phone and/or cable. You know how much you need to set aside, and can plan for it by dialing back accordingly.

When you’re ready to start, set aside 1.5x’s the amount of the bill(s) you’re adding to the first of the month; and I recommend putting this somewhere other than your everyday savings/checking. You’re saving more than you “need” to build the habit and get you used to having less money available from your other checks. This also gives you the extra money you’re going to need to have available on the first of the month. If you cannot afford to save the full amount, then start by setting aside at least an extra $25. The less you can afford to set aside the more time you will need to give yourself for the transition, because we want the habit firmly anchored before the transition occurs.

The goal is a complete transition to paying all your bills on the first of the month before you leave the work force. This isn’t the only way to do this, and if it doesn’t appeal to you my hope is it has at least got you thinking about when you’re only going to have a monthly check. Don’t hesitate to get help if you need it, in this particular case I would recommend a fee only (hourly) planner – Garrett Planning Network, NAPFA, and the CFP Board all have “Find an Advisor” tool; to name a few organizations.

 

 

Simplify – Keep, Delete or Delegate?

How many of you have ever felt overwhelmed – like there was just not enough hours in the day to accomplish everything that needs to be done? I know I have in the past, and at times still do – usually because I put something off until the last minute and then other stuff pops up. But this is within my control, I have no one to blame but myself – and it’s not the focus of this article.

Instead, I want you to think about what you can get rid of. What eats at your time and either doesn’t add value, or even though it adds value it stresses you out. When do you feel overwhelmed – is it Sunday night because you “know” Monday is going to bring a host of new problems, or is it Friday because “there is just no way you can get everything done before the weekend”? Or is it something else entirely? Whatever it is, write it down – I’m going to share how I was able to reduce my stress/anxiety, and hopefully some of these tools will work at least equally well for you.

Make a list of what you, and only you can do – this is going to be the baseline of what you keep. Some examples are paying the bills, projects at work, taking care of the kids, etc; but be realistic – this should not mean only you can do it because no one else will do it the way you like. If the only reason you’re not delegating is because it’s not getting done the way you like, ask yourself is it really that important to have things done your way, or is it something you can let go and accept it may not be “perfect”, but it’ll work. Often I’ve found we get in our own way by telling ourselves things “must” be done a certain way; when the reality is there are other options if we keep an open mind.

Next, make a list of what you absolutely hate doing – and be honest. Looking at this list what can you get rid of? If you have children, is there anything you can assign to them as chores; or perhaps hire help. If you can’t get rid of it, can you set aside specific times to get it done, and be done with it? For example I hate maintaining my yard, cooking, and reading e-mails. So I have a “yard guy”; I cook on Sunday, making a week’s worth of meals (usually in the crockpot, eating the same thing every night for dinner); and I’ve built reading e-mails into my work calendar (I check it 3x’s/day, that’s it).

I use work lists, it helps me organize my thoughts around what needs to be done; but I don’t expect to accomplish everything in one day. I note which 3 or 4 things are the most crucial to accomplish, and the rest is there for when there are lulls – appointments cancel, dead time waiting for a meeting to start, etc. I also like to combine tasks – for example walking the dogs while waiting for laundry.

We all have time-wasters, those things we know don’t add any value yet can’t seem to get enough of. Facebook, games on the phone, etc are just a few examples; and they can eat up a lot of time if you let them. Rather than try to eliminate them completely, set a timer – allow yourself 5 – 10 minutes of mindless activity to reset, and stick to it. I got rid of cable because I used to love reading, yet I would feel obligated to catch up on shows because I wanted to get something for all the money I was paying – leaving me little time for what had once been a passion. It’s been over a year since shifting to Netflix (significantly cheaper) and I’ve found myself back in the groove reading, while still enjoying the occasional, guilt-free, show.

At the end of the day the only one who knows what you absolutely have to do is you. It’s up to you to decide how you want to spend your time; and if you decide to delegate or sub-contract (hire a housekeeper, landscaper, etc) take the time to understand how it will affect your budget. You may have to give something else up, so only do so if getting your time back is truly worth it. I reduced my phone’s data plan to free up cash flow, and to prevent myself from getting on the internet every time I had a free second. What can you do to regain an hour a day?

 

Check Yourself!

This year my son turns 18, which by any measure is a major milestone; but I’m finding it especially noteworthy as I consider what it means with regards to my estate planning and his disability. When he was younger I was able to delude myself into thinking there may be a miracle cure, he’d suddenly wake up one day and no longer have the cognitive delays he’s had since birth. Some of this is hyperbole, I’m certainly being melodramatic – but it has been weighing on my mind.

Specifically what will happen when I’m gone. Having lost my spouse to a sudden illness, making the toughest choice I’ve ever had to make taking her off life support; I understand nothing is promised. I have an estate plan, I completed it the year after my wife died; but so much has changed in the intervening years – now it’s time to revisit the plan and make the appropriate changes.

Many of my readers will experience similar thoughts and feelings, if you haven’t already; the question is what are you doing about it? It’s much easier to turn a blind eye and say “I’ll get to it”; but let’s be honest – for a myriad of reasons we never do. Me, I’m waiting until after my son’s birthday; for a couple reasons. First, I’ll be applying to the VA for his “helpless child” status; an unfortunate moniker which nonetheless will enable him to receive my Survivor Benefit Plan (SBP) when I’m gone. For those of you who are not familiar with SBP, it provides a spouse and/or child(ren) with up to 55% of the veteran’s pension.

The other reason I’m waiting is because I need to make the decision about becoming his Guardian. As a minor this is automatic, but after he becomes 18, should I choose to pursue this option, I will need to prove to a judge he is incapable of taking care of himself. In my son’s case this isn’t as simple as “yes” or “no”. I’ve always, and regardless of if my decision is for guardianship, will continue to be, a proponent of alternatives to guardianship. That’s a topic for its own blog, but needless to say I have some major decisions to make in the next few months.

Why am I writing all this? To show you I “get it”. I understand how difficult it can be to verify asset titling and beneficiary designations, and why you may not want to make that call to the estate planning attorney to get your documents in order. But believe it or not, doing so WILL help. In some ways I can’t wait to get mine done, ensuring my son’s first and third party trusts are established so he has one less thing to worry about when I’m gone.

Losing someone is difficult, there is so much to be done it’s often hard to conceive how you’re going to accomplish it all. Why add to this by making your family and loved ones try to figure out what you would’ve wanted? Have the tough conversation, and get your final wishes in writing – it’s a whole lot less unpleasant than not having anything when the unforeseen happens. My wife and discussed extreme measures, and although it didn’t make the decision easier when I had to make it; I’m glad I knew what she wanted – because I knew ultimately I was honoring her. So take a look at your documents, if it’s been more than 4 years since you had your estate plan done (or you haven’t gotten around to it yet) reach out to an attorney. I’m here for my clients should they need the moral support, and I’m sure many of you can rely on your Advisors as well.

Clutter & Chaos, or Collections & Tranquility

I’m often told “I’m overwhelmed, I don’t know where to start” by my clients; and it’s understandable – without systems in place it’s easy for anything to get out of control. I will admit to some OCD-like tendencies, perhaps because of spending so many years living on a submarine and having no room for anything. There were several years where I was hot-racking, sharing 2 racks between 3 people; out of necessity you learn how to pack and bring only what you absolutely need. Add to that my training as a Lean Six Sigma Green belt and it’s a wonder I don’t have my everything in my house labeled and it’s location identified (I don’t, I promise : p ). I am NOT a professional organizer, although I do know a few and will gladly recommend them if asked.

When my wife passed away I was overwhelmed by how much she had left behind that I didn’t see the value in – they weren’t my hobbies or passions; to me it was just “stuff”. I didn’t want to get rid of anything at first, because it reminded me of her, but it also really stressed me out. So I started by moving anything I was absolutely sure I would never use – like a sewing machine and food mixer – to a corner of the living room. These were eventually sold on Craigslist, several months after I started the process. And (5) years later I still have things of hers that I’ll never use, like clothes and knick-knacks; I’ve kept because they remind me of her; but now they have a place that makes sense to me and I don’t feel overwhelmed.

But what about everyone else, where can they start? When you get to the point where you’re feeling overwhelmed it’s really difficult to overcome inertia – and it can feel like you’re not making any progress. So let’s begin by addressing what to do before it gets to this point, and many of the same steps can be taken at any time – it’s never too late.

For me, the easiest place to begin is getting rid of loose papers. If it’s documentation I need to keep – like tax records, my son’s IEPs, etc; I scan and digitally back them up. I can always print them again if needed; then it’s off to the shredder. Paper can take a LOT of space, and it doesn’t take very many loose pages to give the perception of a mess. It’s also fragile – susceptible to water damage, tearing, fire – you get the idea. With the availability of the free cloud resources, Google Drive for example, there are plenty of places to back your records up. And documents do not take much memory. This has the added advantage of allowing you to keep things indefinitely. I know many people who don’t want to get rid of their documents, just in case.

Next thing to consider is anything you haven’t looked at in a while – to start let’s say > 1 year. This could be boxes in the attic or basement from when you moved, or even a storage facility you’re paying for but haven’t been to in a while. I think it’s safe to say most of us have something like this. This isn’t the holiday ornaments you only break out once/year; it’s the items that don’t seem to fit in your home now, or things you put into storage a while back because you didn’t know what else to do with them.

I’m a financial planner, my career and profession is centered around helping people get the most out of the money they have. In my opinion it’s easy for storage facilities to shift from a very useful tool to a money pit – if for no other reason than someone has the wrong size and could be saving themselves a little on the monthly fee. More often it’s because people have forgotten what they put in storage. If it’s family heirlooms or antiquities you’re protecting until your young children are old enough to understand the value, that’s one thing. But if it’s IKEA furniture bought when you got your first apartment and stuffed into storage after you got married let’s look at getting rid of it and invest the money spent on the storage facility towards your future.

The same goes for your house, it’s easy to accumulate stuff – especially the longer you live somewhere. So start small, especially if it feels overwhelming. Rather than tackle the entire room, pick a dresser or shelf and work on that. Let yourself see that you CAN have an impact – even if it’s just getting rid of clothes you never wear or creating a clear space on the shelf. Take small steps if this is uncomfortable. Bag clothes up and put them in the closet or somewhere out of sight, then in 2 – 3 weeks if you haven’t missed them, drop them off at a charity thrift store or call for a pick-up (tax deduction).

No, this isn’t going to make you rich; but that’s not the intent. It’s one less thing you need to think about, it’s going to free up some bandwidth. We all can only fit so much into our brains, and then something has to give. And it’s important to understand this isn’t an overnight solution, it’s not meant to be. For some of us it could take months or years, depending on our circumstances. And I’m not suggesting you live like a monk, if you enjoy a collection of something that is not the same thing as being overwhelmed by clutter. And there are professionals who can help – not just empty a house, but creating better habits and understanding why you feel the way you do. At the end of the day it’s a question of your comfort, no-one else.