Archives For January 2012

How much money do you make? When you compare yourself to others, do you feel less significant than people who make more? Hopefully not, because your salary doesn’t define you as a person.

It might have something to do with our hierarchical nature or our competitive instincts, but we tend to rank each other, and salary is often a measurement. Are you intimidated when you are around someone who earns a lot of money because you think they have some higher powers the rest of us can’t tap into? I can’t imagine how nervous I would be around Bill Gates or Warren Buffett.

We put our own emphasis on the importance of someone and then their importance proves out in our psyche. They must be a big deal because they’re a big deal!

We also define ourselves by our salary and believe in our own mind that we are a certain way because of it. If you don’t make much money and you’re deeply in debt, you’re broke – not poor. Dave Ramsey says that poor is a mindset, and a dangerous one at that, but “broke” can be only a temporary state.

You could also make a small amount of money and be the happiest person ever because you’re so fulfilled by your work and your life. In this case, you’re probably in better shape than most people who make more than you.

I made minimum wage when I was mopping my own high school floors while in high school. However, I hoped (and knew) this would only be a temporary state while I continued to work hard to get ahead.

How do you break the habit of defining yourself and others by a salary?

We can break out of our current salary levels. We don’t live in a caste society where your salary and rank are determined at birth. We’re very fortunate to live in a day and age when your salary has a very high correlation to the amount of work you put into to something and your education (both formal and informal).

You might be limited in your education and experience, but you can do something about that too; even if it means educating yourself.

Making a lot of money only proves that you can make a lot of money.

A large paycheck doesn’t mean you’re exceptionally smart, a good person, or even happy! Some of the richest people or highest ranking employees in a company are the unhappiest because they’ve had to work very hard to get there. They made many sacrifices along the way and work might be the only thing they have left.

Working to the executive level in the company meant spending much less time with the family. They might seem very important at work, but they might be very unimportant at home. You should define your life plan so you have control of it and you OWN IT. If you want to be an executive be realistic about the sacrifices you’ll make to get there.

As written in the Bible, “Individuals and societies who devote themselves to money soon become devoured by it.”

I went through this decision myself. I spent seven years at my employer, and it would take at least seven more years to make the vaunted ‘partner’ level. This would have meant seven more years of weekly travel at a time that I’d probably start having kids and missing their precious moments in life. At the same time, I’m sure our expectations would rise along with the promotions, and the Golden Handcuffs would tighten.

My wife and I decided it wasn’t worth it. In the end, I found a better job with less travel, and now I’m spending all of my extra time on living and on my blog.

We ranked a happy life and marriage as more important than the potential high salary that came with a more prestigious job. Once I realized there was life beyond the company I worked for and the ranking I held, things were much easier. I realized I wasn’t defined by that position and salary.

Does your salary define you? What is most important to you?


Picture yourself cruising in style across the waves in your new Baja speedboat. You no longer have to dream about being at the lake every weekend, you can live it. The warm sun is pouring over your skin, the wind is blowing through your hair, and you feel the cool water splashing against you. You don’t have a care in the world.

Well, not a care besides the monthly payments; don’t forget the boat insurance and the new trailer! Oh yeah, and the cost of docking it and the gasoline. And the fact that you’re going to spend hours cleaning it and keeping it up every weekend. But besides that, enjoy your boat!

Many people find all of the work worth it, and that’s great. However, a common saying is the best days in a boat owner’s life are when he buys it and when he sells it. There’s a reason that’s a common saying. Owning a boat is a lot of work!

In Walden, Henry David Thoreau wrote, “Men are not so much the keeper of herds as herds are the keeper of men.”

My personal experience revolves around the house my wife and I purchased. We love having it and all of the perks that come with hit. However, we also spend many hours a week mowing the yard, weed-eating, planting, watering, cleaning inside, vacuuming, mopping the floors, cleaning the windows, general maintenance, etc. Sure, I was a janitor before, but I didn’t think I’d voluntarily do it again!

The things we buy end up owning us. We become a janitor to our stuff and the more we buy the harder it gets. If you don’t have a vacation home, you don’t have to worry about taxes, insurance, and maintenance on your vacation home

Is ownership of material items important? For example, could you be happy without owning anything at all, or only basic necessities? No house, car, major electronics, toys, etc. Some people, such as Adam Baker have been able to sell everything and live out of a backpack for years (albeit temporarily).

Many times we are inspired to work harder for the achievement of material items. We feel like we’re more successful when we own things. The Scottish Philosopher, Lord Kames, said we “establish government precisely to put a check on other people’s avidity for our personal goods.” Our stuff is that important to us!

We like our stuff, and it’s our reward for working so hard. However, when vanity comes into play and we buy stuff to make us feel more powerful or important, it can quickly get out of control.

So, how can you lower the risk of becoming a full-time janitor to your stuff?

Consider the advantages and disadvantages before you buy something. If we had to choose again, we’d still buy the house because it’s nice having our own place. We’re not dependent on our upstairs and downstairs neighbors for the amount of sleep we’ll get. We enjoy fixing it up, decorating, and spending time in our yard.

When you’re considering your next big purchase, determine if it’s a want or a need. If it’s just a want, try the product out before you take ownership (if possible). Rent a boat for a couple of weekends and see if all of the work is worth it. It’s perfectly reasonable to enjoy a boat so much that you don’t care about everything that comes with it. We’re all different, and we experience our ‘releases’ in different ways.

Thoreau also wrote, “The cost of a thing is the amount of what I will call life which is required to be exchanged for it, immediately or in the long run.”

The cost includes all of the time you worked to save up the money and pay for it, as well as all of the time you’ll spend keeping it up. Compare those total costs with the amount of time you spent earning the money to pay for it. It’s only then you can make a true comparison.

It’s easy to get so wrapped up in collecting stuff just to show off that we never truly find meaning and enjoyment in life. Are you a janitor to your stuff?

cash budget

We use a cash budget to control our money.

It was a cold and sunny day in November, so I wore my dark hooded sweatshirt and jeans.  The bill of my hat rested over my sunglasses, and I pulled open the bank’s front door – anticipating the feeling of doing something I’d never done before.  I walked in and demanded twelve $100 bills.  If they didn’t give them to me… well, we wouldn’t have our cash for the month!

I started using the cash budget when I paid off my debt in 2007, and my wife used it since we married in 2009.  It’s an important part of the Dave Ramsey plan to pay off debt, and it’s what finally helped me take control of my money.

One big argument against using a cash budget is people will spend all of the cash in their pocket.  Trust me, I used to be the same way.  Before I was on the cash budget, anytime I had cash it would quickly disappear.  My spending was out of control, and I wasn’t able to save money.

The key to controlling your cash is to pull out enough for the month and not spending anymore if you run out.  There were more than a couple of times I had too much month at the end of my money (Dave Ramsey saying), and I had to stop spending.

Need more proof it works?  Check out this feedback from a great YLTL reader (Jojie),

“I have had a budget created and tried to follow (for a number of years..yes years!) but never worked out. Your tracking plans made it all happen for me (and also the envelop system). These were the key for me with getting my finance getting sorted and it’s WORKING!”

If you need to take control of your money, the cash budget might be right for you.

How do we know how much cash to take out?

The first thing I did was complete a current assessment to figure out if I had any money.  Next, I retroactively tracked my expenses for the previous year by reviewing online statements from my credit and debit cards.  This gave me an idea of where my money was going and from there I set my budget.

You won’t get it right the first time, and you’ll probably need to adjust it quite a few times.  The important part is sticking to it.

Next, go the bank and pull out the amount of cash you need.  Dave Ramsey calls it the envelope system because you put your allocated amount of cash into a separate bank envelope for each category.  You don’t need to carry all of the envelopes around with you, but you do need to track which category you’ve taken the money from.

Your categories are the major spending areas in your life.  Most people will have an envelope for food (grocery store, goods, etc), entertainment (eating out, bars, kid’s fun, etc), clothing, and a few others.  I’d try to keep it around five maximum for your own sanity.

Why does a cash budget help?

1.  It creates an emotional tie to your cash, and it’s hard to give up the Benjamins!

We have a physical connection to cash that’s undeniable.  According to George Lowenstein, a professor of economics and psychology at Carnegie Mellon University, “People experience what my research collaborators and I call a ‘pain of paying’ when they pay for purchases, and this pain is more intense with cash than with cards.  Paying with cards is more carefree.”

I’ve had many times where my spending decisions have changed once I pulled out the cash.  Do I really need a beer with my meal and that $15 movie from Target, or will it jeopardize my ability to buy food at the end of the month?

2.  When you’re out for the month, you’re out

Admittedly, we’ve never starved ourselves if we ran out of money before the end of the month.  However, we’re much more careful with our money when we see the envelope dwindling down to nothing.  It’s a lot easier to actively manage your money in a cash envelope than ‘estimating’ how much you’ve spent by looking at your credit and debit card statements.

3.  You’re likely to spend less money when you’re paying with cash

It’s proven that people spend less when using cash compared to credit cards.  An often quoted study by Dunn and Bradstreet revealed people spent 12-18% less when using cash than when using credit cards.  It all goes back to point #1… it hurts to pay with cash.

The cash budget helped me get out of debt, and it helps us control our spending now.  We aren’t as strict on ourselves with it now as I was when paying off debt, but we still use it because it keeps us within normal boundaries and alerts us if a spending category is getting too high.

Have you ever used a cash budget?

His heart yearned for freedom, and he refused to accept anything less – even if the price was his own life. In the end, he inspired thousands to fight with him, but he still paid the ultimate sacrifice.

Your heart is free. Have the courage to follow it. – Malcolm Wallace

Every time I watch Braveheart, I’m ready to put on my kilt and head out to conquer the world!  Then the passion usually subsides when I remove my kilt (ok, don’t actually have a kilt), and I head back to my job the next day.  Of course in Braveheart, William Wallace was trying to fight for Scotland’s independence from England, and my fight isn’t quite as thrilling!

How is it we can become so easily excitable and passionate, only to fall back into our normal routine minutes later?  Maybe we’re not engaged in what we’re passionate about… or maybe it’s just not possible to always be passionate in life.  We have ups and downs.  Even a hero in a movie like Braveheart can be doubted.

Robert the Bruce was one of the Lords of Scotland and a big fan of Wallace.  However, he lived a noble life and his noble Father encouraged him to not sacrifice his family’s lands and power by going against the King of England.  His father told Robert, “You admire this man, this William Wallace.  Uncompromising men are easy to admire.  He has courage; so does a dog.  But it is exactly the ability to compromise that makes a man noble.”

If you’ve seen the movie, you know the father is a major villain, but what he says makes sense.  To be successful, we’ll more than likely have to make compromises along the way.  My freedom is to pursue my passion full time of helping others control their lives while taking control of my own.  However, I must compromise now and work full time at another job while I build it.

Then what should my battle cry be?  How about: “PERSISTENCE AND DEDICATION!!!!!”?  It’s not real exciting, but I think this will lead me to my freedom! A combination of persistence and dedication is what’s brought me here today.  It got me through college, helped me fight through $50,000 of debt, has helped me pursue my passion… and got my wife to marry me.  The last one was probably the biggest accomplishment!

Our ultimate goal should be to find something we love spending our time doing, and in the mean time, take advantage of our current situation to get there.  You should push very hard to get there, but most of us won’t be able to take the “FREEDOM!!!!!” approach and make it happen right away.

Every man dies, not every man really lives. – William Wallace

If we can pursue our passion with persistence and dedication, we’ll experience living.  The key is the pursuit.  What are you doing tonight to pursue your passion?

I have a friend baking pies, one getting started on his own blog, another deciding the next steps of his successful business, and another getting his dreams on paper. They are pursuing it with persistence and dedication. Are you willing to do the same?

It’s all for nothing if you don’t have freedom. – William Wallace

If you live your entire life as a slave to the lender, a slave to your job, and a slave to persistent thoughts of what you will consume next… do you have freedom?

Don’t be afraid to have a bold battle cry, but make sure it carries more meaning than a short burst of excitement.  Don’t be afraid to believe in your battle cry.

What’s your battle cry?  If it’s FREEDOM!!!!, what does freedom really mean to you?  I’d like to hear about it in the comments section.


Some more awesomeness from Braveheart (from the video clip above):

William Wallace: I am William Wallace! And I see a whole army of my countrymen, here in defiance of tyranny. You’ve come to fight as free men… and free men you are. What will you do with that freedom? Will you fight?

Veteran: Fight? Against that? No! We will run. And we will live.

William Wallace: Fight and you may die. Run, and you’ll live… at least a while. And dying in your beds, many years from now, would you be willin’ to trade ALL the days, from this day to that, for one chance, just one chance, to come back here and tell our enemies that they may take our lives, but they’ll never take… OUR FREEDOM!

Before you send me any mean emails, I do believe there is much wisdom gained through age, and this is more of a cautionary article.  Enjoy!

At first glance, my slowing mental faculties could be easily blamed on a variety of things.  Inhaling too many chemicals while renovating our house, living in New Orleans (and enjoying all of the New Orleans type things), or simply age.  However, there could be something more at play.

In fact, I’m going to make a crazy statement and say I was smartest at birth!  Hear me out… it is only then the mind isn’t walled off and contained by the ‘truths’ that we learn.  As John Taylor Gatto said, “Invention is the providence of youthful insight.”

Children ask ‘why’ to discover more about the world and attempt to define their limits.  Unfortunately, these attempts are too often answered by assuming adults and usually translated by the asker into the final word.

As we grow up, we are taught the lessons of life from our social circle; including our families, friends, teachers, and other adult influences. We are taught what they know and believe. I’ve already pointed out five things we don’t learn in school – I’m sure you could do more.

We’re taught what to expect from life, how to handle money, and what constitutes a good job. Their challenges and biases in life are imprinted in our own minds, and we learn to approach life the same way.

Their racism becomes our racism, and their hate becomes our hate. Why else would such a close-minded thing such as racism continue? It’s not passed down in our genes.

It’s not all hopeless as we are able to break free of these thoughts if we put effort into it. We are all unique and our social circle doesn’t influence everything. In fact, their loves don’t always become our loves and that’s one of the hardest parts to comprehend. We are all unique and have different personalities and passions.

Sometimes I can’t understand why people don’t love crunching numbers in Excel or reading books about genes! The answer is usually they aren’t nerds like me, so I’ll just learn to appreciate that!

We can have our own passions, but minds get closed with the assistance of those around us and the more we learn the dumber we sometimes become. The ironic part is that we get dumber while thinking we get smarter.

We use sayings such as: “This is the way it’s always been” and “because I said so” to act as if we’re an authority on the subject. We also learn to accept these answers from others and not question them. Don’t get me wrong, there are advantages to learning from others, and we can get far in life by listening to the right ones.

In his book Influence: The Psychology of Behavior, Robert Cialdini explains the genetic benefits of accepting this wisdom:

“Conforming to the dictates of authority figures has always had genuine practical advantages for us. Early on, these people (for example, parents teachers) knew more than we did, and we found that taking their advice proved beneficial – partly because of their greater wisdom and partly because they controlled our rewards and punishments. As adults, the same benefits persist for the same reasons, though the authority figures now appear as employers, judges, and government leaders. Because their positions speak of superior access to information and power, it makes great sense to comply with wishes of properly constituted authorities. It makes so much sense, in fact, that we often do so when it makes no sense at all.”

Listening to others to form our beliefs can make us lazy because we stop exploring for deeper answers outside of what we rely on from them. Life is easier that way. As we get older, we become even more set in our ways and refuse to question the “answers we already know.”

How can we combat assumptions becoming the end answer?

Many of the brilliant minds in the world got that way by breaking down their mental models and attempting to discover more. This is something Charlie Munger talks about a lot in my favorite book, Poor Charlie’s Almanack. He considers himself a learning machine and even believes learning is a moral duty.

Munger’s method is the typical Western world answer… digging deep and making new discoveries through reading and self assessment. You could also take the more Eastern philosophy route such as Buddhism or Hinduism which is done by observation and discovering the truths through discovering one’s self.

We must understand our current position and figure out how we got there. It is only then that we can begin to change and improve as needed. Take a look at your assumptions in life and begin to question them. Why do you think what you think?

There you go New Orleans, I’ve convinced myself that you’re not the sole reason I’m getting dumber. Good thing too, because Mardi Gras is just around the corner! What assumptions are holding you back? Will you challenge your current assumptions?