Best 20SomethingFinance Posts of 2009

Hi 20SF’ers. This will be the final post of 2009. It’s been a fantastic year (the second full year), and I’m very excited about where things are heading with the site in 2010.

20somethingfinance has grown to well over 2,000 subscribers and 50,000 monthly visits (and it keeps doubling every few months). Thanks to all who have helped build a strong community here at 20somethingfinance in 2009.

For 2009, here’s a month-by-month breakdown that includes some of my personal faves and the most commented on posts. If you’re newer to the blog, you might want to check out the best posts of 2008.

I would love to hear what your favorites were and suggestions for post topics that you’d like to see in 2010! Have a safe, happy, and prosperous new year!

January:

• 10 Characteristics your Financial Planner Must Have
• Can Money Buy Happiness? 5 Arguments for (and Against)
• Roth IRA Basics in a Question & Answer Format

February:

• 5 Ways to Use Craigslist to Save & Make Big Money
• 7 Personal Finance Teachings that Could Save our Nation

March:

• How to Use Ooma & Net10 to Cut your Phone Bills in Half
• The 5 Best Places to Sell your Stuff
• How to Buy Quality EyeGlasses Online & Save Hundreds
• My Battle with Etrade over a $25 Fee on a No Fee IRA

April:

• My Review of the Budget Slimming Ooma VOIP System
• A Review of Net10’s Prepaid Wireless Service
• The Before you Turn 30 Financial Goals Checklist
• Pensions vs. 401(k)’s – why you Should Care that Pensions are Going Extinct

May:

• The Economics of Owning a Motor Scooter vs. a Car
• The Service Engine Light: Your Mechanics Dirty Little Secret

June:

• The Beginner’s Guide to Backpacking

July:

• The 5 Best Ways to Absolutely Destroy your Personal Finances

August:

• Battle of the Sub Sandwich Franchises
• A Look at the Tiny House Movement

September:

• Harvard’s Endowment Fund Hoard
• 3 Simplistic Strategies for Getting Rid of Clutter

October:

• The Next Sin Tax: Twinkies and Ice Cream?
• The Shockingly Low Amount of Retirement Savings Per American

November:

• 4 Things you Should do Before Open Enrollment Closes
• The 5 Worst Twenty-Something Personal Finance Blunders
• Pet Owner? The Happy Tax Might Bring you Tax Deductions

December:

• My Personal Quest to De-Commercialize the Holidays
• The 3 Questions you Must Ask Yourself Before Reading Another Personal Finance Post
• The 12 Best Songs About Money. EVER.
• 2010 Financial Resolution Guide: 10 Choices A La Carte Style

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The good old days of employer funded and managed pension programs are a thing of the past. More and more retirees are managing and/or funding ...

Healthcare

Jennifer Blanchard talks about becoming better prepared financially to meet your healthcare needs.

Do you earn money outside of your job? Tell me about it

Do you earn money outside your fulltime job? If you earn money on the side as a consultant/freelancer or a side job, please tell me about how you do it. Pick all that apply.

Specific occupations

• You’re a writer who makes over $900 per month. Click here.
• You’re a programmer/developer who makes over $900 per month. Click here.
• You’re a designer (web, print, etc) who makes over $900 per month. Click here.
• You’re a business/marketing consulant who makes over $900 per month. Click here.
• You do something unusual (like training pets, babysitting) and make over $900 per month. Click here.

Random questions on side jobs

• You earn over $100,000/year doing independent consulting/freelancing. Click here.
• You’re an independent consultant interested in doing a “Freelancer Diaries” entry similar to the Money Diaries. Click here.
• You earn money on the side to support a lifestyle (i.e., you could make more, but you spend your time traveling, doing yoga, being with your family). Click here.
• You started out with a job that doesn’t typically translate to freelance work (e.g. a physicist, cardiac surgeon, middle manager) but figured out a way to earn money on the side. Click here.
• You overcame a limiting belief to become a successful freelancer (”Nobody will pay for this,” “Freelancers never make any money”). Click here.

For everyone

• For anyone (not just independent consultants): You spent over $1,500 on personal development in 2009 (courses, business travel, books, Spanish lessons, etc). Click here.

2010 Financial Resolution Guide: 10 Choices – A La Carte Style

Looking for Financial Resolutions that you can Actually Stick to this Year?

If anyone knows how hard it is to stick to resolutions, it’s me. If I had a dollar for every time that I vowed that I was going to… stop talking about how real Sasquatch is, or… stop farting in the company of my dog and blaming it on him – then I’d be rich.

Giving a one-size-fits-all personal finance resolution list is incredibly unrealistic, and just downright arrogant. That’s why I wanted to provide a list of 10 financial landmarks that you can set out to achieve in 2010 to enhance your financial well being and build a good foundation for the future.

My challenge to you is to pick 3 of the 10 to focus on in 2010 and share what they are in the comments. Cross more than three off the list? You’re an all star. Have all of these crossed off your list already? Then what is next for you? Share with us!

1. Start up an IRA

An IRA is ESSENTIAL to any retirement strategy. If you don’t have one, what are you waiting for? It wouldn’t be a bad idea to have both a traditional and a Roth IRA either, to give you options come tax time.

I recently moved my IRA from ETrade to TradeKing, because Tradeking offers zero inactivity fees, zero annual fees, they get consistently good reviews, and trades are only $4.95. It might be a good place to start. Also, check out my recent post on 2010 maximum IRA contributions for some pointers on IRA limits and deadlines.

2. Create a Budget – and Stick to it

This should really be step one for everyone. And I’m not just talking about looking at your Mint income and expenses and if you’re in the black, calling it good.  True planning requires you to know every source of recurring expenses and income and then planning for the larger one-off expenses. Here’s a free budget planning worksheet that I created and use to get you jump started.

3. Rollover Old 401K Monies Into your IRA

If you have old 401(k)’s from previous employers just sitting around, they may be doing nothing but collecting high maintenance fees. Consolidation of your retirement accounts can be extremely motivating and save you money in the long run. Not to mention, it can be extremely difficult to get an overview of your diversification across a large number of retirement accounts.

4. Downgrade your Vehicle

My decision to sell my vehicle and start taking public transportation was one of the best decisions that I ever made financially. If you are able to go that far, I’d highly recommend it. I estimate that I was able to save, at a minimum, $3,500 annually.

At the same time, I reduced my total carbon footprint by 1.3 tons (10%) annually. If public transportation is not an option, and you are making payments on a vehicle, consider downgrading to save extreme cash in 2010.

5. Get your Full Employer’s 401(k) Match

Whether your employer is willing to match 2 or 100% of your 401(k) contributions, its crazy not to take advantage of the match, if you have the money available to contribute. Check with your employer to see how you can maximize their match.

6. Save a Year’s Worth of Living Expenses in your Emergency Savings

It may sound like a bit much, but if you are able to do it, it can be a life saver. With my wife being laid off for 3 months in 2009, I don’t know what we would have done had we been living paycheck-to-paycheck. Here are some tips on getting your emergency savings ramped up.

7. Eliminate all Bad Debt

Virtually all debt outside of student loans and mortgages could rightly be considered ‘bad debt’. Make 2010 the year that you will pay it off and begin a new financial chapter in your life.

8. Clean up your Credit History

Annualcreditreport.com (a govt. mandated site) offers you three free credit reports annually from each of the three major credit monitoring companies – Equifax, TransUnion, and Experian. Space them out 4 months apart to stay on top of any major changes. Close down all accounts that you have no intention of using again and dispute any discrepancies or strange items that you cannot explain.

Watch out for credit score upsells, and by all means, stay away from less reputable sites such as freecreditreport.com.

9. Cut your Utility Bills

With a combination of simply asking and doing a little research, you can cut your bills significantly. In 2009, I was able to cut my phone bill in half with Ooma (for a savings of $30/mo.), and cut my Comcast bill by 33% (for a savings of $43) without losing any service! That’s $73/mo. in savings, or $876 annually!

10. Plan your Meals at Least a Week in Advance

May sound kind of ridiculous, but planning out your meals ahead of times ensures that when you go grocery shopping, you purchase everything you need. This cuts down on impulse food spending from eating out or worrying about where you’re going to find your next meal. It also eliminates the stress of not having your next meal around (we’re hunters by nature, after all).

Reader Discussion:

• Which 3 of the 10 would you pick to focus on? Why?
• Have all of these crossed off your list already? Then what is next for you? Share with us!
• What are your financial goals for 2010?

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2010 IRS Maximum Allowed Roth & Traditional IRA Contribution Limits

The Deadlines for your 2009 and 2010 IRA Contributions

As we roll into tax time, it’s important to know how much you are able to contribute to your IRA’s in both 2009 and 2010 and the deadlines to contribute by. You are able to contribute to your IRA’s for 2009 up to the 2009 tax deadline of April 15, 2010. Additionally, you can contributed to your 2010 IRA’s starting January 1, 2010 (which has a deadline of April 15, 2011).

Why is this important? First, it’s not too late to contribute for 2009, you have a few months. Second, if you wanted to, starting January 1, you could contribute both your 2009 and 2010 contributions at the same time, up through April 15.

2010 IRA Maximum Contribution to Equal 2009 Maximum IRA Contribution

The IRS confirmed the 2010 maximum IRA contribution amounts back in October, but I wanted to bring it back to your attention in light of common confusion around the contribution deadlines that I just highlighted.

The 2010 maximum contributions for both Roth and Traditional IRA’s are the same as 2009, at $5,000 per calendar year.

What about the IRA Catch-up Contribution Amount?

This only applies for those over the age of 50, but they are able to contribute a combined $6,000 (an additional $1,000) to their IRA’s.

What if I have a Roth & a Traditional IRA?

The contribution limits are the combination of the two, and you can have both, if you’d like. It’s actually a smart strategy, in my opinion, to have both available to you because it allows you to diversify your tax strategy. Traditional IRA’s allow you to get a tax break now, while Roth IRA’s result in a tax break in retirement.

Reader Discussion:

• How much do you plan on investing in your 2009 IRA contribution?
• What about your 2010 IRA contribution?
• Have you ever maxed out your IRA contributions in addition to your 401(k)?
• Do you have both a Roth and Traditional IRA? Which do you contribute to more?

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You may also find the following articles of interest:

2010 401(k) Contribution Limits

The Complete Guide to Choosing Between a Traditional 401K and a Roth 401K

Choosing Between a Traditional 401K and a Roth 401K, Part II: How will my Choice Effect Early Retirement?

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The 12 Best Songs About Money. EVER.

When I awoke this morning, like a flash of lightening, I thought, “how about writing a post that combines two of everyone’s favorite things – money, and music.”

I know I’m a bastard for leaving a few of your faves off the list, but one of my criteria was that I had to actually like the song at least a little bit. Don’t agree with the list? Let me know what I missed in the comments.

Here’s the 12 best songs about money. EVER. Rank ordered from#12 to #1. With selected lyrics. And if you’re reading this via RSS or email, there are some YouTube videos embedded. The links in some of the titles lead to Amazon if you’d like to download the .mp3 and hear what you’ve missed (or get nostalgic on what you already know). Drumroll…

12. Taxman – The Beatles

The Verve Pipe does a great cover of this song in their live shows.

(if you drive a car, car;) – I’ll tax the street;
(if you try to sit, sit;) – I’ll tax your seat;
(if you get too cold, cold;) – I’ll tax the heat;
(if you take a walk, walk;) – I’ll tax your feet.

Now my advice for those who die, (taxman)
Declare the pennies on your eyes. (taxman)
‘Cause I’m the taxman,
Yeah, I’m the taxman.

11. It’s All About The Benjamins – Puff Daddy

Honestly, the Weird Al parody – All About the Pentiums was the better version. Nevertheless, it makes the list.

Now… what y’all wanna do?
Wanna be ballers? Shot-callers?
Brawlers — who be dippin in the Benz wit the spoilers
On the low from the Jake in the Taurus
Tryin to get my hands on some Grants like Horace
Yeah livin the raw deal, three course meals
Spaghetti, fettucini, and veal.

10. The Gambler – Kenny Rogers

I’m guessing poker is a metaphor for life in this song, however, it’s still a classic.

You got to know when to hold em, know when to fold em
Know when to walk away and know when to run
You never count your money when you’re sitting at the table
There’ll be time for counting when the dealer’s done

9. Million Dollar Man (WWF) Theme Song – Ted Dibiase

This is for anyone who grew up on WWF. You’re welcome. The Million Dollar Man (also known as Ted Dibiase) was a wrestler who was known for stirring up all kinds of controversy via buying other wrestlers out with all of his money. He even had a very un-PC arrangement with an African American ‘valet’ named Virgil whom he had bought out.

Money money money moneyyy
Everybody’s got a price
Everybody’s gonna pay
‘Cause the Million Dollar Man
Always gets his way

Money money money money

Some might cost a little
Some might cost a lot
But I’m the million dollar man

And you WILL be bought *hah hah ha ha*

8. Living For The City – Stevie Wonder

More about the city than money… but a powerful message about working hard just to scrape by.

His father works some days for fourteen hours
And you can bet he barely makes a dollar
His mother goes to scrub the floor for many
And you’d best believe she hardly gets a penny

Living just enough, just enough for the city…yeah

7. Eat The Rich – Aerosmith

I like the angst against the rich in this song. However, wasn’t all of Aerosmith filthy rich when they wrote this?

Believe in all the good things
That money just can’t buy
Then you won’t get no bellyache
From eatin’ humble pie
I believe in rags to riches
Your inheritance won’t last
So take your grey poupon my friend
And shove it up your a**

6. Head Like A Hole – Nine Inch Nails

Wow. I immediately started headbanging when I thought of this one.

God money’s not looking for the cure
God money’s not concerned about the sick among the pure
God money let’s go dancing on the backs of the bruised
God money’s not one to choose

5. Can’t Buy me Love – Beatles

Annoyingly addictive chorus.

I’ll give you all I got to give if you say you love me too
I may not have a lot to give, but what I got I’ll give to you
I don’t care too much for money, money can’t buy me love

4. I Wanna Be Rich – Calloway

Such a lame, but great 80’s song, I had to list all the lyrics. Watch the video, or you’re missing out.

Cash cold that’s what I need
These bill collectors they ring my phone
They bother me when I’m not at home
Ain’t go no time to be fooling round
Feet touch the floors and I get on down, you see

Chorus:
I want money lots and lots of money
I want the pie in the sky
I want money lots and lots of money
So don’t be asking me why

I wanna be rich oh
I wanna be rich
I wanna be rich oh
I wanna be rich

For a little love peace and happiness

I want my cake wanna eat it too
I want the stars and the silver moon
I spend my money of lottery
My favourite number is 1 2 3, you see

Chorus

Everyway rich
Love peace and happiness
I want all the things that lovers do
A pocketfull of dreams come true
Everything you can not find
Want you by my side?

That keep you satisfied and rich
Here is what you gonna do
Say oh I say uh uh
Got to be baby
I just wanna be rich
I just wanna be, just wanna be
Cause baby

Chorus

Be rich I wanna be rich
I know what I mean baby
Everyday and everyway
Play baby there is lots for everyone

3. Money – Pink Floyd

An essential classic rock song.

Money, get away.
Get a good job with good pay and youre okay.
Money, its a gas.
Grab that cash with both hands and make a stash.

New car caviar, four star daydream,
Think Ill buy me a football team.

2. Money For Nothing – Dire Straits

Anyone ever heard the unedited version of this? Kind of inappropriate. And is that Sting singing back-up? The buildup and opening guitar riff always gives me chills.

Now look at them yo-yos thats the way you do it
You play the guitar on the mtv
That aint workin thats the way you do it
Money for nothin’ and chicks for free

1. Satisfied Mind – Jeff Buckley

If you’re not familiar with Buckley, you should be. This song was actually the first dance song at my wedding. So it had to be number one. Wish I could hear the chorus of “awwwwws” from the ladies.

Money can’t buy back all your youth when you’re old
A friend when you’re lonely, or peace for your soul
The wealthiest person is a pauper at times
Compared to the man with a satisfied mind

Readers:

Let’s hear your picks!

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The Average American’s Holiday Spending will Drop. What About Yours?

According to the National Retail Federation, the average American was expected to spend an average of $682 this year on Holiday gifts versus $705 last year (a 3% decline year-over-year).

Interestingly enough, those surveyed in the 18-34 age group are going against the trend and said that they would spend an average of $657 this year vs. $552 last year (a 19% increase). Surprising, especially considering the incredibly tough job market for new grads.

You’re going to think we’re scrooges, but in-line with my declaration against Holiday consumerism, my wife and I are spending an average of about $100 this holiday, including $0 on each other. We’re providing experience related gifts to my parents, her parents, and traditional gifts to our grandparents. We have asked for nothing in return.

How much have you spent  (or if you’re a latecomer, ‘will spend’) on gifts this Holiday season?

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7 lies we tell ourselves about money

See the 7 lies below — plus a holiday gift at the bottom.

1. “I want to make passive income”

I love when people say this because you can tell they have no idea what they’re talking about. It’s kind of like trying to identify people with bad taste: Just go to the local Hometown Buffett. They’re all there.

I hate to say it but most of us don’t need to focus on passive income, we need to focus on improving our active income — our jobs. How? By becoming more skilled, solving more problems for our bosses, and basically out-hustling co-workers.

A lot of people don’t like to hear this because it means that instead of reaching for some dream of $500/day in passive income, they actually have to do some work right now at their jobs. But your job is the most likely place you can significantly increase your income.

Solution: Get better at your job and negotiate your salary. Here’s how:

2. “If I just try harder, I can save more.”

This is like a fat man swearing off sugar and delicious Taco Bell. Not even swearing it off, just saying he can swear it off “some day.” The truth is, we all know we need to save money, exercise more, call our family regularly…but there are serious barriers to doing all of these.

There is significant research indicating that simply trying harder will not help you get started investing.

Solution: Automate your finances so you’re not dependent on your willpower.

• Personal finance is not about more willpower, including specific details on my automation system for your finances & a 12-minute tactical video
• The psychology of passive barriers (why we can’t seem to do things we “know” we need to do)

3. “I’m going to start keeping a budget”

Do you guys remember when I made fun of stupid frat-boy business ideas, the worst one being when a bunch of dudes get together and decide to start a t-shirt company?

This is like that, only for grownups. At some point in our lives, each one of us will get motivated and decide, “Yes! I’m going to track my spending.” This will last about 10 minutes until we realize it’s (1) really hard, (2) we don’t like ourselves when we objectively analyze our spending, and (3) it’s much easier to do nothing than to subject ourselves to the pain of budgeting.

In fact, I am going to quote a very wise man on this one: myself. Here, directly from my book, are my thoughts on budgeting:

“Create a budget!” is the sort of worthless advice that personal-finance pundits feel good prescribing…Who wants to track their spending? The few people who actually try it find that their budgets completely fail after two days because tracking every penny is overwhelming. Amusingly, in a 2007 survey by bankrate.com, 75 percent of Americans said they have a budget—which is complete nonsense. “There’s probably a lot of wishful thinking in this response,” says Jared Bernstein, director of the Living Standards Program of the Economic Policy Institute. “It’s probably more accurate to say that three-quarters think they should work on a monthly budget.” My kind of man: exposing the delusions of people everywhere!”

Solution: Create a Conscious Spending Plan that will let you spend extravagantly on the things you love, as long as you cut costs mercilessly on the things you don’t.

• Conscious Spending: How my friend spends $21,000/year going out
• Full Conscious Spending Plan (with specific recommendations on percentages for each category) is available in my book

4. “My friend goes on vacation 4x a year and he makes less than me!”

Your friend is either a highly skilled practitioner of Conscious Spending, or an idiot. What’s funny is this becomes more true as you get older, yet we get even more jealous. Think about it: How many times have you heard one of your parents ask the other one, “Why can’t we go on vacation like they do?” without understanding how their spending breaks down?

Odds are, they’re not conscious spenders, but rather overspenders.

The single-best book on this is the Millionaire Next Door, where we learn surprising facts about the average millionaire: 80% are first-generation affluent, invest 15%-20% of household income, buy used cars, and rarely buy expensive watches or suits. They’re the ordinary neighbors who are saving money instead of spending it on a new Mercedes.

Solution: Would you look at a bunch of blue whales for advice on losing weight? Then why would you look at your ordinary friends, who are making ordinary money decisions, and will end up with ordinary results — not having enough money — as role models? Refocus your financial aspirations to people you value and their conscious decisions, not showy displays of wealth from people who are poor role models. If you suspect they can’t afford it, they probably can’t.

5. “I’m different than everyone else…I don’t need to save up for a wedding/kids/car/life insurance”

This is also known as, “Ugh, Ramit, I’ve already done all the stuff you’ve told me…now what?”

People are delusional about what will happen in the next 10 years. For example, if you’re in your 20s, the next 10 years will bring kids, a new car, a mortgage, taxes, insurance, maintenance, travel, life insurance, medical insurance….etc.

Every day I get frustrated people who tell me they’ve implemented all my strategies, yet when I tell them the next step is to implement the Ten Year Savings Strategy — where they save for the most likely things they’ll encounter within ten years — they become oddly dismissive.

Why? Because it’s not sexy. They want advanced “tips” and “tactics” to do something cool…even though saving money for the things they will almost certainly need is the most pragmatic thing to do. They actually say things like this (a real comment):

“First of all, I’m not getting married. No, this isn’t just the talk of someone who can’t see far enough into the future. We all know the only benefit of getting married is in avoiding divorce.”

Solution: If you think you’ve already optimized your finances 100%, use my Ten Year Savings Strategy and ask a few people 10 years older than you what they wish they’d saved for. Then do it. Oh yeah, and if you’re “sure” you’re not going to have kids or get married because it always ends in divorce, just go hang out with your 14-year-old friends and come back here in 10 years.

• The Ten Year Savings Strategy: Saving money after you’ve already handled the basics
• Why do delusional people think their spending will be different than other people’s?

6. “I’m going to invest in stocks”

I am getting so mad typing this that I don’t even know where to start. First of all, let me acknowledge that fewer than 5% of people will probably ever say this, since most people don’t invest at all, then turn 40 and get scared, call their HR rep, set up some kind of mis-allocated 401(k) plan, and then go on their merry way whistling and eating walnuts.

So if you’re thinking about this, it’s actually a good thing — it means you’re probably thinking about investing far sooner than others.

Unfortunately, “investing” does not mean picking stocks. It also does not mean buying a house, but that’s another story.

Even the fanciest portfolio managers fail to beat the market most of the time, which is why I argue for target-date funds, where you simply pick a fund determined by your age, set up automated payments, and get on with your life.

It’s also critically important to note that your asset allocation is more important than the individual investments you make. Think about it like this: If you write a book, your Table of Contents is more important than any individual word you write. Yet people obsess about the words instead of spending the bulk of their time on the TOC.

Solution: Stop trying to pick stocks. Instead, automate your investments with target-date funds or, if you really want to control your investments, a group of low-cost index funds.

• Behavioral psychology/economics on why you are not a good stock-picker
• Full chapter on why investment “experts” are overrated and hilariously wrong in my book, along with another chapter on specific ways to automate your investments with sensible, long-term investments

7. “Money is just for greedy people…I don’t need to worry about this stuff”

No it’s not. This is the excuse of lazy people who don’t want to spend a weekend learning about money, but instead worry and complain about it for the rest of their lives. I’ve said it since this site came out: “Rich” isn’t just about money, it’s living a rich life, whether it’s buying nice clothes, traveling around the world, spending extravagantly on your hobbies, or spending as much time with your friends/family as possible.

But part of that is money. If you haven’t optimized your money — whether you earn $35,000 or $350,000 per year — it doesn’t mean you’ve taken a principled stand against consumerism. It means you’re lazy.

Solution: Take one weekend to learn about your personal finances. Once you automate your money, you’ll never worry about it again.

• Automate your money
• Some of my favorite books on money
• My Scrooge Strategy premium tips, which will save you hundreds of dollars per year

* * *

Save hundreds and get a last-minute holiday gift. I’ve recently added new premium tips to The Scrooge Strategy to help you save money, including:

• How to save $940 on domestic flights
• Using cognitive dissonance to force yourself to save money,
• Specific phone calls to make once/year to save hundreds

…and lots more. Sign up for a 1-month free trial at The Scrooge Strategy.

Once-a-year gift: Sign up by December 24th, 2009, and you’ll get a free gift Scrooge Strategy subscription to give to a friend, including proven tips to save, earn more, and optimize spending on day-to-day purchases.

1. Sign up for Scrooge Strategy
2. You’ll receive an email with instructions on adding a complimentary subscription for a friend. As long as you’re a member, they’ll stay a complimentary member. They’ll receive their subscription on Christmas day.

The 3 Questions you MUST Ask Yourself Before Reading Another Personal Finance Post

If you’re reading any post on a personal finance blog, the odds are that you are trying to achieve a goal through the means of money. But you may be wasting a whole heck of a lot of time diving through post after post in the personal finance niche without first asking yourself a few questions.

There are three questions I would strongly urge you to consider before ever reading another post on personal finances. If you can come up with a set of answers that satisfies you, it might just add an increased level of purpose and determination to your efforts. If not, well, at least they will have inspired a little introspection.

1. What is the End Goal?
When I say ‘end goal’, I’m not talking about superficial achievements such as buying that Ferrari you’ve always wanted or a house, or even things like getting out of debt or retiring. On the surface these may be short-term goals that you want to achieve, but what emotional need is lurking underneath?

What are you really trying to accomplish with money. Are you trying to eliminate fear? Eliminate stress? Buy more time for yourself? Free your mind? Experience more that life has to offer so that you don’t feel regret later in life?

2. What do I have to Sacrifice?
Achieving big financial goals to fulfill emotional needs requires sacrifice. It’s one thing to aim for being completely free of financial stress and fear – but achieving that goal often requires a whole lot of work, stress, and sacrifice to get there.

What exactly will you need to sacrifice? This may require some serious number crunching. It also may require you to re-evaluate the true value of financial and career goals, material possessions, and time. Are your end goals worth these sacrifices?

3. What am I going to do when I Get There?

We’ve all heard the stories of people who have worked so hard all their lives to finally get to retirement and are surprised that when they get there they are no happier than while they were working to get there.

Here’s the rub. As humans we set big goals. And when we get there? Well, we tend to ask yourselves ‘what’s next?’.  We’re ambitious creatures. And ambition often clouds our judgment.

What I’m suggesting here is to really ask yourself if achieving your goals and fulfilling your emotional needs via money is going to make you happy. Or will more happiness come in finding the proper balance between the means and the end?

So, my friends, what are your answers?

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