One of the questions I ponder often is what makes one person different from another in terms of what they achieve.  The biblical parable of the sower talks about good seed that falls on rocky soil, seed that is stolen by birds and seed that takes root yet has different yields.  All of it is good seed yet some yields 10, 50 or 100 fold.  In other words the same good seed in good soil has different yields.  Why?  Perhaps his is a question best answered by the wisest sage.  So despite the fact that I constantly ponder this question, I’ll take it down a notch and apply the question to gardening, personal finance and task completion.

Why do some people complete their tasks online while others are late?  Why do some gardeners lose their plants to common pests like aphids and wind burn while others do not?  Why are some people plagued by late fees while others are not?

The answer lies in what you value and in the concept of routine. If you value the timely completion of tasks what do you do to make sure that happens? If you hate late fees, what do you do to make sure you never get one? If you love gardening, what do you do to make sure that your garden thrives and that you are not spending hundreds of dollars every year replacing dead plants?

The answer is routine. You develop a routine to make sure that your garden thrives, that your bills are paid on time, that your work is completed on time.  I have a great garden.  I love it and it has taken years to create.  In the fall, I winterize it.  In the spring I trim the previous year’s dead matter from the perennials.  I placed a drip irrigation system as the garden was going in so that I could water systematically with the turn of a knob rather than drag hoses all over the yard each time I watered.  I have tried very hard to systematize everything to make maintenance convenient.  Every morning in season when I have my coffee, I patrol the garden looking for pests and sign of sun and wind damage.  I perform the same task in the evening.  Walking through my garden during the growing season twice a day has become part of my daily routine.  Over the years certain tasks have become much less fun than others therefore I have learned to farm those tasks out, because having a thriving garden has remained a value to me.

Some might argue that I take the matter of routine a bit too far.  A friend of ours owns a nursery and greenhouse.  Like a phoenix from the ashes this garden paradise arose from an asphalt parking lot and a foreclosed upon Mexican restaurant.  I have a routine whenever I go there.  I go first to the grapevine and then to the honeysuckle. I have 3 shrub varieties and 3 vine varieties that I was introduced to at this green house.  I inspect.  What did I find today?  Aphids galore on the golden flame honeysuckle.  I told the owner who was grateful, but already knew determined to let the ladybugs do their job, eventually.  We both laughed agreeing that there was probably a program for me.  Then I remembered the orchid that I brought home only to find aphids on it picked up from the greenhouse where I bought it.  I’ll take my routine and philosophy any day rather than surrender my efforts to the devouring pests of aphids, late charges, over drafts and the like.

I took a sales class a few years ago.  The instructor had us do a painful exercise all on our honor of course.  Each night that we failed to make sales calls, we were to take a dollar from our wallets and burn it.  Just the thought of the exercise gave me palpitations.  Late fees provoke the same feeling in me.  Paying a late fee is literally a waste and does not enhance the value of the product purchased.  Paying a late fee on your mortgage doesn’t increase the value of your home and paying a late fee on your rent does not mean your landlord is going to reward you by putting in a new pool or laundry services.  Late fees are literally money up in smoke or money down the toilet.  They represent a waste and poor money management skills.  Anyone with a telephone, ATM card or access to a personal computer can pay their bills on time.  So if it is of value to avoid the fees it is easy to establish a routine around paying the bills on time.  Simply logging in, calling in or going to the ATM machine can be done on any schedule to make sure late fees never occur.

The same is true with task completion. If the desire is to write, then write a page on something every day.  If your boss has a project for you figure out how long it will take to complete and establish a routine around task completion until it is done.

I have become convinced that the reason some individuals are more productive than others is that the more productive ones have established routines geared toward what they value and ultimately toward higher production.

We have a choice, to maintain our homes through routine or risk coming home to a flooded house because we forgot to swap out the old hoses to the washing machine for new ones.  We can paint siding each year or have the sun blister and warp it until it needs to be replaced.  We can develop the routine of saving when we are 20 or 30 or go into panic mode at age 52.  There are so many things that we can do to unleash the power of routine in our lives.

Please comment. What are the things that have made a difference for you?

A while back I blogged about the book, The Secret Currency of Love.  Now I am reading Financial Infidelity by Bonnie Eaker Weil.  There was an article on CNNMoney some time ago about the financial crimes committed in relationships and this book was referenced.  The contributors to The Secret Currency of Love, many of them high income earners,  were ashamed to admit that they wanted to be taken care of financially.  Dr. Weil reveals that at least a third of women desire to be taken care of financially regardless of their level of income.  This concerns me.  To be out of control and blissfully ignorant financially is to be a slave.  And I am of the belief that their are no benign slave masters even if that master is your domestic partner.  There is also a startling statistic:  either through divorce or death of a partner a woman will, at some point in her life, find that she has become head of household.  AARP data indicates that 48% of women over 75 will live alone.

Over the years I have worked with women whose spouses suddenly died or filed for divorce.  One of my friends told me of the humiliation that she felt when she realized that as as a result of her divorce, she was getting stuck with half of her husband’s credit card debts most of which were incurred while he entertained his mistress.  One of my colleagues experienced the sudden death of her husband only to find her grief turned to outrage and fear when she discovered that he had allowed his life insurance policy to lapse and he had amassed credit card debt that she knew nothing about.  She told me that for several months after her husband’s death opening the mail and packing his things revealed debt and expenses that she was simply unaware of.  She said that being at home was like waiting for bombs to go off as she discovered more and more about how her husband really ran their household.  I’ve worked with nurses who have had to endure personal bankruptcy because there were no marital assets to divide in divorce and the debt outstripped their income.  The converse is also true.  Women who are financially “in-the-know” can choose to leave unsavory relationships because they have the means to do so. A financially savvy nurse recently told me that she was happy she had the financial resources to leave her husband of 20 years after she learned that he was having an affair and refused to end it. As Carla Fried writes in her CBS MoneyWatch post:  “If women don’t see the value in being an active decision-maker in their financial security, then they bear plenty of responsibility for any future financial disadvantage.”  And therein lies the rub.  There is risk, not bliss, in ignorance.

Dr. Weil articulates that money is a stand in for many issues in relationships.  Issues that often began in childhood and were nurtured into adulthood.  She asserts that 33% of women will be be secretive in the area of money and, therefore, damage their relationship with their partner while 26% of men will.  A partner’s unwillingness to be open in the arena of money is a sure sign that the couple needs to go for counseling because deception or lack of openness in one area is a sign of deception in others.

I have simply seen too many women who refused to participate in their household finances find themselves left with relatively little after even decades of marriage failing to understand that the situations in which they were living were on some level simply unsustainable. Some of the wealthiest men I have come to know over the years have credited their wives with their success.  These men are business owners  with 30 to 50 years of marriage and I have found two traits they have come to value in their wives:  active involvement in the running of the family business(es) and frugality.

What can women do?  The road to becoming actively involved in family finances may be a rocky one and may require the aid of a counselor to navigate well.  These are strategies that I have found in the world of personal finance that women can use to become more actively involved:  1) review trusts and wills, regularly making adjustments as children age. 2) regularly review insurance especially life insurance.  Are the coverage amounts sufficient to replace at least 3-5 years of lost income?               3) review credit reports at least yearly. 4) review all bank accounts and the reasons for those accounts. 5) develop a household spending plan and stick to it.  6) regularly review retirement accounts.  7) know where all important documents are being kept.

These few strategies can help women remain in touch with their household’s relative wealth so that they can make responsible financial decisions regardless of their stage of life.

What are your thoughts? Please comment.

Because as every housewife knows, the first check you write is for the mortgage and the second is for the insurance.

Leigh Ann Tuohy, The Blind Side

One of the first steps in sound personal finance is understanding and exercising spending priorities.  This simple opening from the Blind Side illustrates a sound principle: pay for the roof over your head first, then pay for the insurance to protect the roof over your head.  In personal finance an appropriate modification would be to pay yourself first at least 10% of income, then the roof over your head etc.  Unfortunately very few people exercise spending priorities.  They treat their household budgets as ants treat food at a picnic, clamoring for every morsel until the meal is completely carried off.

I am amazed by the people that we have to evict from our properties, not because they don’t have the income, because they choose not to pay a portion of their income to keep a roof over their heads.  I am amazed by the people with mortgages who are paid on the first but who are constantly paying late fees to their lender because their mortgage payment is late. Financial stress is the number one reason for divorce, but if we dig a little deeper we would find that the number one reason for divorce is that the couple fails to develop and stick to a plan of spending priorities that makes sense.

Robert Kiyosaki revealed in Increase Your Financial I.Q. that it wasn’t until he and his wife hired a book keeper to whom they gave a set of non-negotiable spending priorities that included saving, that they realized how broke they were.

For far too many people, the pay check arrives and sensible priorities are drowned out by poor planning and apparent needs of the moment, the relatives, the car, the candlestick maker.

Oddly enough, spending priorities are a constant.  A quick Google search of the term “how to prioritize bills” reveals lists of spending priorities and they all look remarkably the same.

Bankrate and Smart Money offer priority lists.

Here is mine today:

1) Saving

2) Mortgage, taxes and insurance

3) Food and Gas

4) Utilities

5) Disability and Life Insurance

But this wasn’t always the case.  Years ago when my housing costs were  50% of my take-home pay, my spending priorities looked something like this:

1) Mortgage, taxes, insurance

2) Car payment

3) Food and Gas

4) Utilities

5) Disability insurance

6) Tithing

Everything else went on a credit card.  That included meals out, trips home and vacations.  Knowing what I know now, I would put saving at the top of the list and divide those funds into charitable giving and other discretionary spending as I do today and forget the credit cards. Yes, some money that I mark to be saved today is saved for immediate use, other money that I save is set aside for charitable giving and other money is set aside for capital investment.  Why bother to call it “saving” then?  Simple.  When ever I save something, I understand that I will use it later.

Saving is, by definition, deferred consumption.  Because I save with purpose, and don’t leave money sitting in my checking account where the ants can get at it, I will only release designated amounts for spending if the reason for spending is in alignment with the reason for saving.  When I come across something to buy, I ask one initial question of myself: “Is this an impulse buy?” If the answer is yes, the second question is “How are you going to pay for it?” (credit card is not a suitable answer).  If the answer is that I will use my savings account tagged for discretionary spending, I then ask “is there anything else on your purchase list of higher priority?” If the answer is yes then I ask if I can buy both.  If the answer is no, I don’t buy the impulse item.  If the answer is yes I will buy both.  As I write this I am chuckling to myself because I realize that this seems like a cumbersome system, but the reality is that this exercise only takes about 10 minutes for me to perform and I perform it faithfully.  Truth is that I am not cloistered in my home, I venture out regularly and, because I do, I am aware of the opportunities to spend money.  Just to be clear, I classify an impulse item as an item that I may have been looking for for a while, but which suddenly becomes available at a desired price.  As an example, I needed a couch.  I looked for one for 4 years, but couldn’t find the right price and quality.  I walked into a local furniture store about a year ago that was having a closeout sale.  The sofa that I wanted was 50% off.  I performed the internal calculations and bought the sofa.  A similar thing happened this year with a chair.  I had been looking for a specific chair for over 5 years.  Found a floor model for 30% off and got an additional 5% off just for asking.  In this case I had been planning to buy the iPad, but the initial Wi-Fi issues with the iPad knocked it down on my list of spending priorities.  I bought the chair and not the iPad.  One other method to my madness is that I don’t shop.  I hate shopping and I can always find something to buy so my spending is ultimately based on things that I need or things that I want and have thought a long time about buying.  Ultimately, though, I don’t care when I get the things that I need or want.

What are your methods for setting spending priorities?

Please comment.

Adam Baker’s Man versus Debt is one of the blogs that I follow.  This post was inspired in some ways by Adam’s April 27th post When to Quit Traveling. Adam at the age of 24 or so, didn’t like the way his life was going accumulating things and personal debt so he and his family decided to sell their possessions and travel for a year.  They decided to cut their trip short by a couple of months and return home.  Adam discusses the implications of that decision on their present and future realities on his blog.

I am middle-aged.  I don’t say that like it is a medical diagnosis with all the emotional impact that medical diagnoses can have.  I say that at a statement of fact.  I am middle-aged.  I have also had a long and rewarding professional career and I have gotten to a point where I can see beyond my career to other opportunities.  Honestly, going to school for years and training to become something, in my case a doctor, can make you feel that you always have to be that thing you trained to become or practice that thing you trained to do the same way you have always done, but you don’t.  You always have the right to change your mind no matter how crazy every one around you may think that you are.

I have taken enough personal development classes to know that bringing about an even slightly different reality than the one I currently enjoy will require a great deal more than wishing.  It will require beginning with the end in mind.  The first time I heard the catchy phrase “you plan your life first by beginning with the end in mind”. I thought what kind of BS is this?!  Personal development programs always use the example of travel.  We plan trips toward a specific destination and, although there may be many ways to reach that destination, we always settle on a specific route.  The problem is that travel is easy and life can be a bit more challenging.

In the additional years of living since I first heard that phrase I now understand what that phrase truly means.  I will never reach a destination without first setting that destination as specifically as I know how. I then have to reject the things that prevent me from reaching that destination.  Wow, that sounds kind of harsh but ultimately that is really true.  If I know that in 10 years I want to be a person who owns 10 investment properties and that those properties will require a down payment of $20,000 each, I will have to engage in behaviors today that enable me to develop the requisite funds.  That will certainly mean saving money, it might mean networking to find like-minded business partners, it will also mean controlling day-to-day expenses as well as large purchases to make sure that I have the funds on hand that I need to buy the investment properties.

The toughest thing about beginning with the end in mind is deciding what that end is, deciding what I want my life to look like in all areas.  If I make one decision will that close off other opportunities?  Probably, but life teaches that a decision will also create opportunities.  There is a whole multi-million dollar  industry called personal development and life visioning to help people decide what they want illustrating that this is the toughest part of the life change process.  What if I make a decision and fail in the attempt?  I have to ask myself what is the worst that could possibly happen and can I survive that?  Yep, fear of lost opportunities and fear of failure are probably the two reasons people find it hard to decide what they truly want and therefore find it hard to make change.  I know that is surely the case for me.

Looking back, I found it relatively easy to be where I am today.  I certainly worked and worked hard and there were times that I felt quite alone. Looking forward feels a bit different because there is a certain level of complacency.  I really don’t have to do anything different and, except for the stirring in my heart, I would make no change at all.  Fortunately I am into listening to my heart these days.

First step?  Begin with the end in mind.  Quite fortunately in life we can have several beginnings.  Thank God for yellow note pads!

Are you beginning with the end in mind?

Please comment.

Some years ago, Brian Klemmer wrote, If How To’s Were Enough, We’d Be Skinny Rich and Happy.  Klemmer said something that few of us want to face: having the instructions, knowing what to do is rarely enough, why because “something” can prevent us from accomplishing even the simple things of life, even if we know what to do.  I am more of a philosophy kind of gal.  Meaning I really want to have a thought  or an understanding about why I do what I do. Truth is, I can tell many people what to do to increase their wealth, save money, live frugally (although some of my more radical friends and acquaintances would say I am a frugal wannabe). Yes, I do reuse aluminum foil.  I am generally happy to share what I have done step by step.  But I have come to realize that knowing the step-by-step is really only part of truly knowing.  I cannot tell you the number of times I tried budgeting and paying off my debts until one day everything just clicked.  If you believe my mother (who has been spilling my dirty laundry on this blog as well) things clicked when I had to borrow her credit card to rent a car.  It wasn’t then.  Something else happened sometime much later.  I am always reading personal finance books.  Why?  Because  I want to keep personal finance ideas at the forefront of my mind. Why?  Because I have the attention span of a gnat.  If I don’t read a personal finance book for a while, I forget and run the risk of slipping back into bad habits.  There is that indefinable something that determines when we take action or not.  And knowing the how to is not that something.  To borrow a phrase from “Three Men and a Little Lady”, you cannot swing a dead cat without hitting a “how-to” book or article. How to books and articles sell and make beaucoup (pronounced boo coo) money. I was speaking with a friend of mine who is a recovering alcoholic.  He’s been sober for over a decade.  He knew the steps to sobriety long before he took them.  His something?  Driving home one night, not remembering how he got there and finding brush embedded in his bumper.  He told me that that experience isn’t enough for some people and they continue to drink until something else happens.  For me it was $80,000 dollars in consumer debt and the attendant dramas that went with it.  For others it is $1000.  For others those numbers are chump change and it takes more than a million dollars in consumer debt to spur them into action.  For some people it takes homelessness.  For others homelessness is a temporary inconvenience until they get another credit card.  When I started this blog I was going to write a series of “how to” articles.  Then I thought how can I do that when I understand full well that many will not be able to implement the steps because the time to make a change has not yet come.  It how to’s were enough, I’d be Billy G. because I would have flawlessly implemented what I read. If how to’s were enough I would make a mint writing how-to articles.  This isn’t about having a strong why!  Frankly, I would like to shoot the next person who says, “you just have to have a strong why to make change”  or “if you failed, you just didn’t have a strong why.”  The myth of the strong why simply puts people on the path of making value judgments about themselves and other people and the world is full of value judgments.  Where is all this going?  Well, we don’t suffer and disappoint ourselves for lack of knowledge.  There is that something else.  We could call it a habit of making poor choices, but that too is an oversimplification.  Truth is, lack of knowledge is rarely the problem.  It is that certain something else, that missing ingredient that lies within each of us that triggers action.

Please comment.

Master, don’t take it to him
He wants the precious.
Always he is looking for it.
And the precious is wanting to go back to him…
But we mustn’t let him have it
Gollum

It’s a livin’ thing
It’s a terrible thing to lose
It’s a given thing
It’s a terrible thing to lose
Electric Light Orchestra

The importance of money
flows from it being a link between
the present and the future.
John Maynard Keynes

Money is a living thing. That it seems to have a mind of its own is why so many of us seem to have such poor control over it. The hot stock tip that crashes, the totaled car that you still owe on, the feeling that when you get ahead just a little bit, someone steps up to claim your surplus. Money like the ring of lore truly seems to come and go where it pleases providing the link in our lives between planning for today and planning for the future. Who plans for the future without consideration of money? Money seems to hang out with some people and flee the company of others. The presence of money can create poverty in the lives of those who have it and the absence of money can create wealth in the lives of those who know how to live richly. What is money then, is it want and desire does it feel or is money simply neutral responding to the feelings and emotions of those who handle it?. In my post The Money Shot I talk about an amusing and fun exercise that I did to forge a conscious relationship with my money. The truth is that until my Walmart epiphany I had engaged in behaviors that told money that I had no respect for it. I spent what I did not have on things that I ultimately did not remember buying. Many of the items that I did buy were consumed, given away unused or damaged beyond repair when my home flooded. I had lost the connection, if I ever had it, between me, my work product, the money that work product created and the items that money could buy. I never asked myself, while I was going crazy, if the items I bought were worthy of my work. I finally figured out that money hangs out with people who have the following characteristics. 1) generosity of spirit (by this I don’t mean giving money to constantly broke relatives or to people who have proven that they cannot handle money. I mean giving money to situations and charities in which you know the money will be used in line with your priorities). If feeding the poor is important to you then generosity of spirit may mean that you donate your time and money to the local soup kitchen. 2) a purpose for money. Money has specific goals in their lives 3) respect for money. You know where your money is going and why 4) value for money. By this I don’t mean that people understand that money is valuable. What I mean that people who create and hang onto money understand that money follows value. See it is not just enough to pay off debt. Once the debt is gone, or better yet while you are paying off the debt, you have to develop a clear philosophy with respect to money or the same financial challenges that led to the debt will manifest in a new form. I have been out of short term debt and on solid financial footing for a over a decade now, but like the alcoholic who is one drink away from falling off the wagon, I am occasionally afraid that I will overspend. I simply have to trust that the financial habits and philosophies that I have developed over the past 13 years and my on-going financial education will see me through as I forge my link from now to the future.

About 3 weeks ago I wrote in “The Great 401K experiment and 16 Ways to Create Wealth, that gaining new skills was essential. Today, The Simple Dollar posted this article about gaining transferrable skills.
Enjoy!

The Power of Transferrable Skills – And Six Areas to Work On
Posted: 19 May 2009 01:00 PM PDT
When I was in college, the vast majority of my classes were effectively training for a career in research and scientific data management. Seven years after graduation, though, I find myself drawing instead on the transferrable skills I picked up in other classes: public speaking, writing, leadership, information management, and so on. To put it simply, transferrable skills are those things that you can utilize no matter what specific career path you find yourself on.

Transferrable skills are often left by the wayside in competitive college majors. In order for a computer science major to get a leg up in the post-graduation workplace, for example, it’s often preferable to jam in another programming or algorithms class than it is to insert another public speaking class. Even if the program does require classes on transferrable skills, those classes are often looked down upon as “blow off” classes – ones that have to be finished in order to get down to the real classes within the major.

I believe this is a mistake. As change in this world accelerates, people are spending less and less of their life strapped to one particular career. They have the freedom to choose other avenues – starting a new career, starting their own businesses, and so on. In that environment, transferrable skills become more and more valuable. In fact, a well-polished transferrable skill makes for brilliant resume fodder no matter what your job – communication skills and leadership experience are a plus for almost any post-college job you might apply for.

Obviously, course loads often aren’t very flexible in a college environment, so my recommendation would be for college students to seek out other sources for picking up and mastering transferrable skills – extracurricular activities, internships, and other sources. Beyond college, transferrable skills are useful for everyone to work on at any stage in one’s career

Here are six significant areas of transferrable skill well worth working on, both to improve yourself and to prepare for your future.

Leadership Can you actually lead a team? Can you herd a group of people towards a greater purpose? Are you self-motivated enough to do this? Can you set goals and actually achieve them? Can you plan large projects and push them forward?

How can I get it? Join a community or student organization and take charge of a large project. Later, run for a leadership position within that group. The best way to learn leadership skills is to learn them in the laboratory of life, and organizations provide the perfect opportunity.

Administrative skills Are you able to prioritize the tasks in front of you? Can you analyze information and then describe it in layman’s terms for others to understand? Can you interpret rules and use them effectively?

How can I get it? Get involved in the planning of as many large projects as you can. Project planning teaches you many of the administrative skills you’ll need in life. If there is a large project, volunteer to help with the planning – if there’s already a planner in place, learn everything you can from that planner.

Information management Can you actually research a topic? Can you take a pile of research and use it to answer worthwhile questions? Can you communicate those facts to others? Can you manage a budget and handle financial records? Can you use a wide variety of computer programs?

How can I get it? If there are opportunities to present anywhere around you, take them, even if you aren’t familiar with the topic. Of particular use are topic areas where you’ll have to do some research in order to get the presentation right. Another great avenue is to volunteer to be the secretary or (particularly) the treasurer for a group. Such activities will require you to carefully manage a large amount of information on behalf of a large group.

Creativity Can you come up with interesting ideas of all kinds? Are you good at coming up with marketing ideas? Are you good at formulating the next step in a process? Are you good at creating visually appealing layouts?

How can I get it? Create some websites for groups – and learn how to do it along the way. Whenever there’s an opportunity for brainstorming, get involved and throw out ideas. Creativity is something that is best learned by practice – so practice it.

Interpersonal communications Are you willing to speak in public? Can you communicate your ideas well in writing? Can you lead a conversation? When you communicate with others, do they understand your ideas?

How can I get it? Participate in conversations and meetings instead of just sitting there. Volunteer for any and all public speaking opportunities that come your way. Volunteer for difficult and arduous tasks of documentation – that’s the best way possible to practice writing to communicate information.

Personal development Can you use the experiences in your life as a source for growth and personal change? Do you have a personal moral code that you actually follow? Can you effectively and honestly evaluate the strengths and weaknesses of others (both people and things)? Can you deal with stress?

How can I get it? Don’t shy away from challenges – step up to big projects. Keep a journal and use it to explore what you really think about things, particularly the people around you.

Every moment you spend learning the above skills is a valuable moment. You’ll find yourself returning to these skills time and time again throughout your life – and they’ll provide a surprisingly strong backbone for your career and personal success.