THE MOST IMPORTANT QUESTIONS FOR YOU TO ANSWER…

As I write this first post for my personal finance and investing blog, I feel that it’s important to begin with these two questions in mind. Everything we cover from this point forward will stem from these questions. This is, after all, the only reason why people care about money in the first place! We need to have money to cover our basic needs and we want money to buy some things and experiences that we enjoy. However, there comes a time in everyone’s life in which they consider their future well-being and quality of life instead of their present wants and desires. That is why these questions weigh on us all and we have to determine what our answer to them is. And, our answers are important, because they very likely determine whether we will or will not achieve financial independence.

Definitions vary slightly, but the essence of financial independence is to have enough money or passive income to live as you desire to without working. Basically, it comes down to retirement – when do you want to be able to retire and what standard of living do you want to maintain when you’re not working or unable to work? And the bigger question is, how can you achieve this?

If your answer to the questions in the title is that you don’t have no/little impact as to whether you will achieve financial independence because you weren’t born into a wealthy family, have bad luck in life, love and/or work, you’re not smart enough, or your circumstances are too difficult, then you very likely won’t be successful in your pursuit of financial independence! And if you are, it will ironically be due to luck!

But, if your answers are more along the lines of working hard, persevering through tough times, increasing your financial knowledge, and yes, you acknowledge that you hope and expect to get a little lucky on occasional, then you will likely get there! The reason being, that our outlook on this question determines whether or not we decide that financial independence is something worth working towards, and that is why this matters! It’s said that failing to plan is planning to fail, and this is never truer than in the financial aspect of our lives.

If we determine it’s not feasible for us to achieve, then we will live, work, get paid, spend, and save accordingly. But, if we do believe it’s achievable, then our lives, saving, and spending habits will look very different, as will the outcome of our financial future. Now, there are different circumstances for everyone. Not everyone reading this blog post may even be employed at the moment, not making the salary/pay they need to make ends meet, and someone is likely going through something that is likely a huge financial crush such as a medical emergency or other real-life emergency that drains their finances. Honestly, some people are in tougher situations financially than others. The good news is that regardless of what our current situation is, for the most part we still have control over large amounts of our finances. We can begin to practice and develop the same habits that make people financially successful. And in my opinion, one of the best and most freeing truths of financial independence is that we don’t all have to cross the same finish line! What is financial success for one person may not look the same as another! But both can honestly be financially independent as long as they’ve met their criteria (and their criteria was rational!) for financial independence. Financial success is flexible and adaptable as long as we are too! You don’t have to become a millionaire to say you’ve made it.

I would suggest that financial independence looks more like living in a house that is paid off, owning one or two cars that are paid off, and having enough income to pay your bills, have some fun, give to worthy causes that you believe in, and have enough cash in savings to withstand a large emergency or unexpected bill without having to return to the workforce. But really, it comes down to what you want to be able to do in the future. If your financial situation can support that, then I would say you’re financially independent as long as it’s sustainable! You can’t do what you want to do for a year or two and run out of money!

WHY ANOTHER PERSONAL FINANCE & INVESTING BLOG?

One of the best things about personal finance is that there’s no one perfect way to achieve success! In fact, I believe that that is one of the things that scares people the most about financial topics. We get distracted by a TV commercial about investing in gold and fifteen minutes later hear about reverse mortgages. Then someone comes on talking about investing in mutual funds followed by someone selling annuities! Follow that up with some nicely timed stock market crashes (2000-2002 and the most recent 2008 crash) and we get scared.

However, as the name of this website implies, among all the confusion, noise, and complexities surrounding personal finance and investing, there is also order and simplicity. So, while there’s no one secret formula for success there are some very un-secret, solid financial principles, that when followed, will lead you to achieve your goals. I personally enjoy reading a handful of other personal finance and investing blogs; each has its own “flavor” of financial wisdom and I usually get something from each article I read to apply to my life or at least alter my thinking by a degree or two. But, the deficit that I’ve noticed isn’t that there’s a lack of good blogs out there, it’s that there’s not a blog that I’ve found that is a how-to guide for digging yourself out of a hole, getting stabilized on solid footing, and then beginning the journey of building your future.

Most blog posts, even on the blogs I like, tend to be about a random financial event or topic, but they don’t build on one another. Sometimes they’re written just to be catchy but after reading them I ask myself, “What did I get out of that?” and if the answer is nothing other than an interesting thought or two, I feel like I’ve wasted my time. So, I am starting this blog because I want to provide a framework for people who are not financially literate or struggle with their finances, but are honest with themselves and want to do better. If that is you, then this is the place for you!

I will do this by providing the best personal finance and investing information that I know. I read a lot of good financial books and I like to read research on financial topics, so I’ll be incorporating those findings into the posts as well. My goal is to illuminate the simplicity of personal finance and investing theory, principles, and research to alleviate the stress and fear that so often surrounds financial planning and discussions of! That way you can talk about it at Christmas dinner and no one will argue! (just kidding about this one, that I can’t fix!) That’s why my mission for this website is:

to EDUCATE, EMPOWER, and GUIDE you on your journey to financial success!

A LITTLE BIT ABOUT MYSELF

For me personally, the first step was determining that I DO have a say in my financial future. That was actually the easy part for me, although it took reading a couple of specific books and listening to Dave Ramsey for a while to fully convince me! Because I reached that decision relatively early in life (my college years), I was set on the right path at an early age for the most part. The hardest part for me was figuring out the HOW aspect of financial success. And no wonder, as this is where most of that confusion around financial topics lives, because this is where the money is to be made by those who offer those services!

Fortunately, I did find the answer to my HOW question, and my plan is to systematically lay that plan out for you as a guide; this is what I wish I would have had a decade ago. If so, I’d be in a little better position than I am today. My goal is to provide this information in such a way that you will be able to see how it applies to your own life and financial situation and adapt the plan accordingly.

As I mentioned on the about me page, I’m not a financial adviser (although I am working through a Certified Financial Planner certificate program to advance my learning). But, I believe the fact that I am not a financial professional is actually a strength, because it puts us on common ground. I’m a normal guy that works ~40-50 hours per week at a job completely unrelated to the field of financial planning (I’m a Physical Therapist) and I’ve been able to navigate my way to where I am today. I’ve made some mistakes, and fortunately, I’ve learned from them! Some still hurt more than others, but that’s part of life. I have yet to meet someone that’s never made a financial mistake! But on the plus-side, I’ve also done some things right, and I’ve built on that success to get further ahead, and that’s a great feeling that I hope you have experienced or will soon. Really, when it comes to me and finances, it’s kind of like the Geico commercials of old, this stuff is so easy that even I can do it! And if I can do it, so can you.

Finally, one thing I’ve learned is that I really enjoy helping people improve their financial situation! If I can help you improve this area of your life, it improves nearly all other areas of your life! By taking small steps now you can change the direction of your marriage, your children’s future, your retirement picture, your ability to volunteer for that cause you’re so passionate about, and on and on. Our finances touch nearly every single area of life in so many ways. This is why I’m passionate about this and I hope you develop this same passion and share it with other people too, it’s very rewarding!

FINAL THOUGHTS

Let me share a few final thoughts on why I’m able to do it and why you are too, whether you realize it yet or not.

First, discipline is a muscle – the more often you flex it, the stronger it gets. But flex it as hard as you can for as long as you can, and you’ll end up with a cramp. I’m not talking about you becoming a tightwad or a miser (how’s that for an ancient word?!) What I’m talking about is making a few small changes in your financial life and from there adding another here and there. Discipline is key to financial success. It’s been said many times that financial success is 20% head knowledge and 80% behavior, and I certainly believe it. Once I gained traction in a few areas of personal finance it was easier to build on it. At first it was hard, but after a while it was just like riding a bike for the thousandth time!

Second, you can be quite average intelligence-wise and still be extremely successful in your pursuit of financial independence (I’m living proof!). This is the greatest freedom for us to actually pursue financial independence – it’s not complicated! There’s actually research that shows people with positive personality traits come out further ahead financially than those with the highest IQs! (Borghans et. al., 2017; Rode, et. al. 2016) Think about it – people who are more likeable, don’t over-react, can accept and deliver constructive criticism in appropriate ways, have self-control, and are good listeners sound like pretty good bosses, right? Yep! That’s why people with those traits are much more likely to be moved up the ladder of success! Now, of course it helps to be smart, but the research indicates it’s much more likely that strong personality traits are more likely to result in higher wages which in turn leads to improved savings potential. We’ll talk more about this in the future, because the best part of this is that these traits can be developed (so if you struggle with some areas, work on them!).

Third, perseverance is important. It’s so easy to be motivated to turn around your financial situation from bad to good or to begin saving and investing for your future, but the reality is that over time that excitement wears off. It’s just like how everyone can diet for a day or two, but when they don’t drop 10 pounds they say it didn’t work and go back to the same bad daily habits that got them into trouble in the first place! True perseverance means that you’ll change some of those habits over time, and if you relapse and have a bad spending spree or make a financial mistake, that you’ll get back on that horse after getting bucked off!

One of the biggest benefits of perseverance is that when these habits become normal to you you’ll realize that you can afford to splurge occasionally or that the financial mistake you made is more mentally painful than it is financially painful because the other 99% of the time you were nearly perfect. When you are consistently going the right direction is when you’ll begin to experience true financial peace. This is where you want to be, but you won’t get there if you only do the right things occasionally.

In closing, financial independence is very real and achievable. Much of the fear and anxiety that people feel about financial matters can be eliminated with solid education and a plan. That is the end-purpose of this blog. My passion is to help guide you to where you want to be. I myself am on the same mission with my family, and it’s a great journey!

SELF-APPLICATIONS

  • Why, or how, do people become financially independent and wealthy? Why does this matter to you?
    1. What personal values, ideals, or morals shape your answer(s)?

 

  • Where are you today – are you doing a GREAT / GOOD / FAIR / POOR job of managing your finances?

 

  • What is one thing you will start doing today and one thing you will stop doing today that will set you on a better financial path?

Finally, I’ll leave you with two quotes that I truly believe and motivate me every time I read them:

Wealth is more often the result of a lifestyle of hard work, perseverance, planning, and, most of all, self-discipline.” – Thomas Stanley, author of The Millionaire Next Door and other books on the “blue collar” wealthy in America.

And this second quote, I believe, illuminates an important perspective to have regarding money and life: “Money never made a man happy yet, nor will it. The more a man has, the more he wants. Instead of filling a vacuum, it makes one.” – Benjamin Franklin.

Well, best of luck on your journey to financial independence and I hope to cheer you on along the way!

Dan

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