Best credit cards for 2019

I’ve shared my favorite personal banking tips with you in the past.

• Here’s my pick for the best checking account
• Here’s my pick for the best savings account

Today, we’re going to talk about credit cards.

Let’s get to it.

When my book was originally published, I named names. This is why some banks will never, ever partner with me. Oh well!!

My old favorite credit card: Citi PremierPass card

Anyway, in the first chapter on credit cards, I shared the details of my favorite credit card at the time: the Citi PremierPass card. In fact, I had used it as my primary credit card for several years and recommended it to hundreds of thousands of people.

That’s changed now.

Citi tightened up on its credit-card lineup, dropping several of their most compelling rewards. This was highlighted in a devastating column in the New York Times.

Hilariously, Citi actually mailed out a note to cardholders trying to spin the reduction of benefits into something like “exciting new features” — but it was obvious to anyone with a pulse that the most compelling rewards were being removed.

And so I began an exhaustive search for a new credit card. Because I spend a significant amount on my credit card, I expect significant rewards. Also, I consider it a fun game to find the 99.99999th percentile best card in the world.

Today, I’ll share my new favorite credit card. I consider it the best credit card on the market — even better than my old Citi card — and in addition to using it myself, it’s the card I’m recommending to my readers.

First, 6 rules about credit cards

1. Interest rate doesn’t matter if you don’t carry a balance. The interest rate is irrelevant, as long as you’re paying off your entire balance each month. Don’t keep a balance, please – if you are, stop reading now and read our article on crushing debt to get it down.
2. Use a rewards card. The vast majority of people should use a rewards card. If you’re already spending money, you should be rewarded for it. Exceptions are people who can’t qualify, who should instead use a secured credit card.
3. Travel credit cards are better than cash back. Most people would benefit more from travel rewards than from cash back. I describe the details of why travel credit cards are better here. For some reason, people get really mad when I make this recommendation, but I don’t care.
4. General rewards cards are better than airline-specific cards. Unless you fly a majority of flights on the SAME airline, I prefer a general travel card instead of an airline-specific card (like a United card). For example, I fly JetBlue and Virgin a lot, so I want a travel card that I can redeem on multiple airlines, not just one.
5. Annual fees are not Satan’s spawn. I know it may be blasphemy to personal finance “experts,” but I’m willing to pay an annual fee for my credit card! OMG! This is why you can call me RTR: Ramit The Rebel. In some cases, there are no-fee versions of the card, so you should always calculate if you spend enough to justify it. Still, $65/year is just not that significant to my financial situation anymore.
6. I am merciless about using my credit card perks. Credit card benefits can easily be worth $1,000/year. DO THIS.

Bonus: Want even more great advice for money management? Check out my new Free Ultimate Guide to Personal Finance.

What I want from the best credit card

My bottom line is this, the best credit card is the one that gets you the most free flights and free hotels. For example, I want a card that rewards me when I go on vacation, travel for friends’ weddings, or travel between NYC and SF.

Alternatively, I want to upgrade to business class when I travel abroad.

And I don’t want to be nickel-and-dimed for idiotic things like blackout dates, penalties, and fees.

So with that in mind, here is…

The best credit card for 2019

The best credit card for 2019 is the Chase Sapphire Reserve® Credit Card from Chase.

This is the best travel card on the market in 2019. Here’s why:

4 Sapphire Reserve perks that matter most

1. 50,000 point sign-up bonus: Chase Sapphire Reserve gives you 50,000 bonus points for signing up if you spend $4,000 on the card in the first few months. As my friend Brian Kelly from The Points Guy points out, that’s $1,000 in value — meaning if you can commit to that $4,000 spending amount, the $450 yearly fee pays for itself — twice.
2. $300 annual travel credit: A lot of travel cards offer travel credits — money they just give you back at the end of the year for spending on travel. At $300, Sapphire Reserve’s travel credit is on the high end. Not only that — it applies to any travel purchase, including airlines, hotels, cruise lines, travel agencies, car rentals, even Airbnb and Uber. (You can find a full list of what Chase counts as “travel’ on their FAQ page here.) That makes it super easy to get that $300 credit, and makes the $450 yearly fee even less of a barrier.
3. 3X points on travel AND dining worldwide: Chase gives you 3X the points for money you spend on flights, cruises, hotels, car rentals, trains, taxis, and … wait for it … FOOD. If you follow me on Instagram, you know how important food is to me, and you better believe I think this perk is amazing.
4. No blackout dates or restrictions: Some cards restrict use of their card on certain types of flights or on certain dates (like around the holidays). Not Sapphire Reserve.

Other perks:

• Chase Unlimited Rewards®. This is Chase’s premier rewards program, which lets you redeem rewards for travel, experiences, gift cards, cash back, and more.
• Unlimited points. There’s no limit to how many points you can earn, and points don’t expire as long as you keep the card open.
• 1X points per dollar on all other purchases.
• Terms and restrictions apply.

A quick note about fees

As I’ve said already, credit card fees are NOT Satan’s spawn, and you don’t need to utter any chants or spells to protect yourself from them.

That said, the $450 fee for the Sapphire Reserve is steeper than most, so it’s worth talking about. If you’re a heavy traveler like me, that’s not a problem, because the rewards you’re racking up will make that fee up in no time. Even if you’re a lighter traveler who only does one vacation per year and flights home for the holidays, you can recoup that fee no problem. Plus, there’s that easy-to-grab $300 travel credit, which effectively lowers the fee to $150 per year.

Still, a fee’s a fee. If you’re not 100% comfortable with a fee that steep, or you’re not sure how much use you’ll get out of it, try the Chase Sapphire Preferred Card (mentioned below). It has some of the same perks as the Reserve, but a much lower yearly fee of $95, which you can waive for the first year.

Places to read about this Sapphire card

You should always do your own research. Here are two places to see what others have said, as well as understand the perks/rewards in great detail.

• Chase website: Sapphire Reserve
• The Points Guy: In-depth analysis of the card, plus discussion

Other travel credit cards I recommend

I know that this card isn’t for everyone.

That’s why I turned to one of my friends, Chris Guillebeau, to get his other top 3 favorite travel credit card picks.

Chris has traveled to 193 countries (yes, that’s every one of them) and he regularly earns more than one million miles a year, with the majority coming through credit card bonuses and other non-flying activity. One reason he was able to do this is because half of his trips were nearly free — all paid for with miles and points from his rewards credit cards.

Here’s everything you need to know about travel credit cards. If you just want the highlights, keep reading.

1. Chase Sapphire Preferred® Card

First up is the Chase Sapphire Preferred® card, mentioned above.

What Chris loves about this card:

• Double points on all dining and travel expenses.
• No foreign transaction fees.
• You can get the annual fee waived the first year — so it makes signing up a no-brainer.

If you don’t have it already, now’s the time to get started.

2. The Chase Freedom Unlimited (SM)

What Chris loves about this card:

• When you spend $500 in the first three months, you instantly get $150 cash back.
• No annual fee — ever.
• Unlimited 1.5% cash back on all purchases.

3. The Platinum Card® from American Express

What Chris loves about this card:

Even though this card comes with a steep $450 annual fee (that can’t be waived), it comes with a TON of great benefits for heavy travelers, including:

• Lounge access in the U.S. and throughout the world.
• $200 credit that can be used for airline extras on any carrier.
• Reimbursement for your Global Entry application.
• No foreign transaction fees on any purchases.

Want more? Here’s everything you need to know about travel credit cards, or head over to Chris’s site, Cards for Travel, for more info on any of these cards and more travel tips.

Other credit cards I recommend

For cash back, I like the Alliant card and Fidelity card.

Should you keep your old credit card?

My recommendation: If you’re looking for a good credit card, apply for this, and if you get accepted, start transitioning your auto-pays to this card and start accumulating miles. You can close your old accounts or keep a small amount autopaying on it.

If you want my favorite credit card

If you’re interested in getting this card, here’s a link to see if you’re approved.

P.S. I have a few special, obscure tools I use with my credit card to optimize the experience. I’ll write about those in the future.

Tomorrow, the best savings account for 2019.

Bonus: Get more exclusive credit card perks

You can now get a full chapter on optimizing your credit cards from my New York Times bestselling book, I Will Teach You To Be Rich, for free.

It’ll help you tap into even more perks, max out your rewards, and beat the credit card companies at their own game.

I want you to have the tools and word-for-word scripts to fight back against the huge credit card companies. To download it free now, enter your name and email below.

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Saving regret — and how to avoid it

In November 2018, the National Bureau of Economic Research published a paper called “Saving Regret” [here's the full PDF version]. Once you wade through the study's academic language, there's some interesting stuff here about why people do and don't save for retirement.

Saving regret, the authors say, is “the wish in hindsight to have saved more earlier in life”.

Obviously, you can suffer from saving regret at any age. When I met 31-year-old Debbie for dinner last week, her issues boiled down to saving regret. She wishes she'd saved more when she was younger. But for the purposes of this paper, the authors turned their attention to folks aged 60 to 79, people of traditional retirement age.

The researchers found that two-thirds of those surveyed said they should have saved more when they were working: “66.6 percent said they would save more if they could re-do their earlier life.”

As you might expect, the authors found that high-wealth and high-income people experience less saving regret. (I'm pleased that the researchers recognize that there's a difference between income and wealth.)

But what causes saving regret in the first place? Why don't people save more? Let's take a look at what the study found.

Sources of Saving Regret

In their survey of 1590 people, the authors asked about education, personality, and what they term “positive and negative shocks”. (The latter is basically trying to to determine how unexpected events affect saving.)

After compiling the results, they reached these conclusions:

• “We found only modest evidence for a relationship between our measures of procrastination and the desire to re-optimize saving.” Yes, procrastination is a factor in saving regret. But it's not as big as you might expect.
• Failure to anticipate negative shocks — underestimating their probability and effects — has a greater effect on saving regret.
• Overall, “a substantial percentage of respondents view their economic preparation to be adequate, yet they nonetheless express saving regret.” In other words, as many GRS have experienced, even when you think you have enough saved, you often wish you had more.

“Saving regret is high at the time of or shortly before retirement but is much lower at older ages,” the authors write. They believe there are two reasons for this.

First, when people stop working, they're faced with a lot of uncertainty. This uncertainty makes them long for a larger safety net, makes them wish that they'd saved more. In a sense, this is why I have been experiencing saving regret. When my life was settled, I was fine with my nest egg. But over the past couple of years, there's been a lot of unexpected, unplanned spending. Things seem uncertain. Because of this, I wish I had more saved.

Whether or not there's any actual increased risk to a person's savings, if she feels like there's increased risk, this leads to saving regret.

There's another reason saving regret declines with age: Consumption patterns change. The older people get, the less they spend. This decreased spending leads to greater relief. It lessens the stress.

A Shock to the Savings

Saving regret was greatest among people who always settle for mediocre results (85.8% of these folks experienced regret) and people who always put off difficult things (88.2%), but this is a very small sample of the whole. Plus, these are personality traits that, with effort, can be changed.

Another huge factor — one that could affect anyone — is what the authors term “economic shocks”. A positive economic shock might be receiving an inheritance. A negative economic shock might be losing your job.

From the paper itself, here's a table demonstrating the relationship between saving regret and economic shocks. (The number you want here is the “mean”. Convert this to a percentage to find out the relationship. For example, the 0.794 listed under mean for “Health limited work” indicates that 79.4% of those whose health affected their ability to work wish they had saved more.)

“Among those with saving regret,” the authors write, “66 percent reported experiencing a shock earlier in life leading to adverse economic consequences, compared with just 43 percent among those without saving regret.”

I found this tidbit interesting too: “Among those with regret, 38 percent reported that Social Security benefits were less than expected compared with just 26 percent among those without regret.” Perhaps it used to be difficult to anticipate Social Security benefits, but nowadays they should never come as a surprise. That info is easy to find.

In a lot of cases, it's not the shock itself that causes the problem. It's the failure to anticipate a possible shock. It's poor preparation.

The authors believe that people tend to be over-optimistic. They “[expect] future outcomes that are better than reasonably likely”. They think they're better than average and will achieve better than average results. Plus, they suffer from the “illusion of control”, an exaggerated belief in their ability to direct their destiny.

This last point is important for me (and many GRS readers).

I am a vocal advocate of becoming proactive. I believe strongly that, to the extent possible, we should all work to manage those parts of our life that fall within our “locus of control”. Some things — the weather, the economy, the actions of other people — are outside of our control, and it's foolish to spend our attention on them. But others — our attitudes, our relationships, our saving rates — are absolutely under our control, and it's foolish to ignore them.

When reading this article, I fretted at first that the authors were arguing that people like me believe we can control more our life than we actually do. I realized, however, that they're actually saying something different: Those who experience saving regret mistakenly believe that people and events in their Circle of Concern actually fall in their Circle of Control.

Money bosses like you and me may not have perfect perceptions of what we can and cannot control, but I believe we have a better understanding than those who express saving regret. We recognize that many things are beyond our control, so we prepare for possibilities. We expect the unexpected.

Avoid Saving Regret

The authors of “Saving Regret” don't delve deep into solutions. Their paper is informational, not prescriptive.

That said, I think the info provided in the paper suggests a handful of solutions to saving regret. If you want to save enough for retirement, do the following:

• Forecast the future. I know it's tough to tell where you'll be in five or ten years. Sometimes, it's impossible. All the same, it's important to try. Having a plan reduces saving regret. The researchers found that “saving regret was highest among respondents who stated that they do not have a financial plan”. The longer a person's planning horizon, the lower their levels of regret.
• Plan for problems. You cannot predict when bad things are going to happen. You don't know if (or when) you're going to get cancer, a drunk is going to crash into your car, or a typhoon will wash away your beach home. You can, however, be relatively certain that something bad will happen sometime. Your best bet is to be prepared — just like a Boy Scout. Maintain an adequate emergency fund.
• Be proactive! There is never ever a reason that your Social Security benefits should come as a shock. The Social Security Administration issues periodic statements about estimated benefits. Plus, it's easy to look up projected benefits online. This is but one example of how you can take steps to prevent future surprises.
• Master your money. “The relationship between saving regret and financial literacy is also strong,” the authors write. People with high levels of financial literacy experienced half as much regret as those at the lowest levels. To avoid disappointment later in life, learn everything you can about personal finance.
• Save more. Yes, this is an obvious solution to saving regret. I get it. But let's make this explicit: Your saving rate — the difference between what you earn and what you spend — is the most important number in your financial life. Saving rate isn't just vital for money nerds who want to retire early. It's a key factor for achieving any financial goal.

Nothing can guarantee your financial future. The slings and arrows of outrageous fortune can wreak havoc on even the best-prepared people. But you can maximize the odds of positive results by taking smart steps now. You can decrease the likelihood that you will experience saving regret by taking action today.

Final Thoughts

If we knew when we were going to die, financial decisions would be much easier.

If I knew, for instance, that I would be mauled by a bear on, say, 04 July 2029, then it would be a simple matter to make sure my retirement nest egg lasted another ten years.

On the other hand, if I knew that the fateful bear attack wouldn't come until I was 120, then I could take appropriate steps so that I had enough money to last me seventy years.

But I don't know when and how I'll die. Neither do you. As a result, the best we can do is guess how long we'll live and how much money we'll need.

Very few people regret saving money. In fact, these researchers found that only 1.7% of respondents would have saved less if they could re-do their earlier life.

While 66.6% of respondents wished they had saved more when they were younger, about 10% of these folks say they could not have done so. There wasn't any way they could have spent less. But that means 60.9% of those surveyed could have and should have increased their saving rate.

What do people wish they'd spent less on? Men wish they had spent less on cars. Women wish they had spent less on clothing. And as much as it pains me, everyone wishes they had spent less on vacation. I sure hope my own travel spending doesn't come back to haunt me later in life.

Poorer people have greater saving regret. The authors write: “Among those in the highest wealth quartile, 38.9 percent expressed saving regret; among those in the lowest wealth quartile, 71.9 percent did so.”

It's tough to trace cause and effect here, of course, but I don't think it matters. The message is clear. The poorer your personal economic situation, the more important it is for you to save!

Wading through the jargon, there's a lot of interesting stuff about aging and aging in this paper. I've touched only on the main points. Some of the background info and asides are equally fascinating. (How do researchers predict how people will make future decisions? How do they model saving habits? What do they think of self-determination?)

But the bottom line is obvious: To avoid regrets when you're older, save more now.

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RBC InvestEase

This article is sponsored by RBC, but all the opinions expressed herein are my own!   Why automated investing is for everyone Investing in the stock market can feel overwhelming and intimidating, but most people understand they need to do it if they ever want to enjoy long-term financial security. I’ve managed my own portfolio since [...]

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Twenty years of U.S. government inflation data

Inflation is the silent killer of wealth. Year after year, the purchasing power of your dollar (or pound or euro or yen) gradually erodes. My father was one of those “hide money under your mattress” type folks because he believed that was the best way to keep his cash safe. He was wrong.

If you sit on your money, it doesn't maintain its value. It loses value.

At his Carpe Diem blog, economics professor Mark Perry recently published a new version of the following chart, which visualizes the effects of inflation on certain consumer goods and services.

As you can see, this chart tracks 21 years of inflation data: from January 1998 to December 2018. (Perry uses official Consumer Price Index data from the U.S. Bureau of Labor Statistics.) He writes:

During the most recent 21-year period from January 1998 to December 2018, the CPI for All Items increased by exactly 56.0% and the chart displays the relative price increases over that time period for 14 selected consumer goods and services, and for average hourly earnings (wages). Seven of those goods and services have increased more than average inflation…The other seven price series have declined since January 1998.

In the chart, the black line indicates average inflation over the past 21 years. Red lines indicate items that have increased in price at rate faster than inflation; blue lines have decreased in price relative to inflation.

If you read the accompanying blog post — and especially the comments that follow — you'll see that people are quick to jump to partisan conclusions regarding this chart. “The more expensive stuff is a result of socialism and government regulation!” “The less expensive stuff is open to free market competition.” (These comments aren't surprising considering the blog is published by a conservative think tank.)

I believe these responses are overly simplistic. Besides, they miss the really interesting stuff.

For instance, look at the price of televisions. According to the CPI, the price of TVs has declined 97% in the past 21 years. I think we all know that's not actually the case. TVs have grown more expensive, along with most everything else. So, why does the data state otherwise?

According to the frequently asked questions about the Consumer Price Index:

A fundamental problem for the goods and services in the CPI sample is that their characteristics, not just their prices, change over time as the retailers introduce new versions of items and discontinue the older versions. In many categories of items, this is the primary time when price change occurs. The new version of the item may provide additional benefits or, in some cases, reduced benefits. This change in benefit is quality change.

To measure price change accurately, the CPI must be able to distinguish the portion of price change due to this quality change.

To compensate, the CPI uses a technique called “hedonic quality adjustment”.

As new features are added to existing products, economists attempt to model what the new features are worth if broken down to their constituent parts. In 1998, your television was a boxy beast. In 2018, it's probably a big, slim wall-mounted display with dozens of nifty features. Each one of those features has a value that gets included in the inflation calculations.

If you could have purchased a modern TV in 1998, it would have cost a small fortune. And in 2018, an old CRT TV would only cost a fraction of what it did back then.

It's also interesting to note that the cost of manufactured goods (like cars, toys, and TVs) has declined more than the cost of services (such as medical care and education). I'm not sure why this is the case, but it's true.

When I look at this chart, I see something else. It appears to me that those things that are most useful or most necessary have had the highest price increases. Those things that are least necessary have seen the biggest price drops. If I had more time, I'd dig deeper into the data to see if this is actually the case.

Inflation statistics are one thing. Actual experience is another. When Kim and I complain about prices, food is what bugs us most. Nowadays, dinner in an average restaurant runs about fifty bucks. That would have bought a fancy dinner in 1998. Even my standard two cheeseburger meal at McDonald's costs more than $5 now. (I don't get it very often, but it seems like it should cost $3.) Groceries show similar increases.

Home prices seem outrageous in Portland still. Health care prices also seem crazy. We also think most entertainment options — movies, sporting events — are exorbitant. I think books are spendy too. (Do I sound like a grumpy old man yet?)

Meanwhile, clothing seems cheaper to me than it did two decades ago. (And I say this as a guy who used to shop at thrift stores!) Now that we're preparing to buy a new car, vehicle prices don't seem that bad — at least not for the low-end models we're considering.

As a final note, I'm puzzled by the items the chart chooses to track. They seem arbitrary. Why show toys and televisions but not energy or transportation? Why, specifically, cell phones? Why not entertainment and recreation? And so on.

I'd love to see a similar chart with a more robust set of data. (Maybe this is a job for Zach from Four Pillar Freedom?)

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Case study: Deep in debt but scared to take action

Last night, as I do from time to time, I met with a GRS reader. Actually, Debbie doesn't read this site but her sister does. And Debbie means to. Although I met Debbie's sister last year at a Camp FI event, I'd never met Debbie before.

“So, what's your situation?” I asked after our waiter had brought us each a glass of wine. “What do you want to know about money?”

“Everything,” Debbie said, laughing. “I feel like I don't know much at all right now. I guess deep down, I know what I need to do. I just don't do it.”

I nodded. “I'm like that with fitness,” I said. “I know what I need to do, but I just don't do it. I know I need to exercise. I know I need to stretch. I know I need to eat better food. But for a lot of people — people like you and me — there's a barrier between knowledge and action. It doesn't matter if we know how to do the right thing. It's the action that matters.”

“I buy books about money but I never read them,” Debbie said. “I have Dave Ramsey and The Millionaire Next Door.”

“Those are both good books,” I said. Then, I shifted gears.

Looking for Purpose

“This might seem odd, but let's talk about your goals. What do you want out of life? What are your big plans?” Our waiter brought Debbie a bowl of mussels and me a plate of pasta.

“I want to make the world a better place,” Debbie said. “I'm young. I work for a huge multi-national company. But I don't believe in the company and I don't believe in my work. I get paid $20 an hour to bring people coffee and water all day. I have a bartending gig on weekends. I want to do something that matters. Maybe improve our food system, for instance. I hate how people eat. I want more people to have better access to high-quality food.”

“That sounds like a noble goal,” I said. “How do you get there from where you are now?”

“I don't know,” Debbie said. “It seems impossible. I have $80,000 in student loans but they're in deferral. I don't have to pay anything on them, but they still accumulate $600 in interest every month. How can I ever hope to catch up?”

“Yeah, that's rough,” I said. “I used to be in a similar position. Twenty years ago, I had over $35,000 in credit card and consumer debt. That's not the same as your $80,000, but it'd probably be equivalent to about $50,000 today. I carried that debt for a long time, just treading water, never getting ahead. I felt like I'd never get it paid off.”

“But you did it?”

“I did,” I said. “I did it by creating a gap between my earning and spending. Fundamentally, there are only two things you can do to improve your situation. You can make more money or you can spend less. Ideally, you'd do both. You want as wide a gap as possible between what you earn and what you spend. Right now, it sounds as if you don't have a gap. You have a deficit.”

Debbie nodded. I slurped down some noodles.

Two Familiar Foes

“How much is your rent?” I asked.

She looked sheepish. “I pay $1200 for an apartment in northeast Portland,” she said. She gave an address near where I lived after my divorce. “I know I should have roommates but I don't. I don't want the complications.”

“And what's your take-home pay?”

“Just over $2000 per month,” Debbie said.

“Yeah, your rent is pretty high,” I said. “I mean, it's not high compared to other places in Portland — it seems about average — but it's high compared to your income. Nearly 60% of what you earn is going to housing. That's a lot! The average American spends about one-third of their take-home pay on housing. So, that's a great place to try to cut costs. Maybe not right now, but over the long term.”

“I like where I live,” Debbie said, prying open a mussel.

“You might want to consider roommates,” I said. “Aside from your housing costs, it doesn't sound like the rest of your spending is outrageous. Honestly, if I were you, I'd try to find ways to boost your income. Especially since you hate your job.”

“I know,” Debbie said. “I've thought about that. I have a marketing degree that I'm not using. My current company offered to give me a raise and a promotion, but I turned it down. I would have been doing work that I hate even more. It would be difficult for me to be in a position where I had to represent a company I don't like.”

“Why don't you quit?” I asked.

“I did once,” she said. “But then I went back right away. I was scared to apply for new work. I don't have much self-confidence. I mean, I'm 31 and have a marketing degree, but I don't have any experience. Who would hire me?”

“I get the lack of self-confidence,” I said. “I totally get it. I struggle with that every day.”

“You do?” Debbie said. She seemed surprised.

“Yes,” I said. “Every day. Even today, I've been dragging around with my head full of negative self-talk. But here's the thing: I've learned to just do the stuff that scares me anyhow.”

The Importance of Action

For some reason, our conversation turned to running. Debbie wants to run a marathon in two months, but she doesn't feel ready. “Have you run a marathon before?” she asked.

“I haven't run a marathon,” I said, “but I've walked one. Ten years ago, when I was fifty pounds heavier, I trained to run the Portland Marathon, but I got hurt. Instead, when the time came, I walked the entire thing.” I paused and pointed at my feet. “And I walked it in these hiking boots!”

“For real?” she said.

“Yes,” I said. “Looking back, it was goofy. But I really wanted to complete the marathon, so for some reason I decided the best way to do it was just to have fun. Since I was too hurt to run, I walked in street clothes, as if I were out for a hike.”

“Anyhow, this kind of ties back to you looking for work. I could have easily decided to not do the marathon since I was injured. I could have given up. Instead, I found a way to do it. I know that applying for jobs sucks. I know you're worried about rejection. But I think you should do it anyhow. Accept the fact that you're going to get rejected. Screw it. Apply anyhow, and look at the whole thing as practice. Tell yourself that even if you don't find a better job, you'll be getting experience with interviews and the hiring process.”

I took one last bite of my pasta. “Really,” I said, “it's all about taking action. Even if you're scared.”

I told Debbie about my friend Mike. Mike is a software engineer who is happy in his high-paying job. All the same, once or twice each year he takes time off work to interview with other companies. He's not actively seeking to leave his job, but he wants to stay sharp. He wants to see what other opportunities are out there. He wants to get practice interviewing.

Obviously, Debbie is in a different situation, but I think she can apply the same principles: Actively apply for other work. View the experience as an exercise, not a necessity. When she doesn't get a job, she should follow up to find out why not.

Ultimately, I didn't have any magic answers that could make Debbie's money problems disappear overnight. As is often the case, she's going to have to do a lot of hard work (and make some sacrifices) in order to improve her financial situation. She's going to have to avoid falling into the forever fallacy, the mistaken belief that she'll always be struggling at a job she hates while carrying a mountain of debt. Things will be tough for a while — but if she can make some course corrections, they'll improve.

“Thanks for meeting me,” Debbie said as we left the restaurant.

“I hope it helped,” I said. I'm never convinced that these conversations are actually useful for the people I meet. Like I said, I too lack self-confidence.

“It did,” she said. “I'm going to get a new job.”

It Gets Better

My dinner with Debbie reminded me of a conversation I had last year with my friends Wally and Jodie. As I shared last August, this couple has decided to take control of their finances, but they started with less than zero. In fact, their situation is very similar to Debbie's.

When I wrote about Wally and Jodie in August, their income and spending were qual. They couldn't save anything. They had $35,000 in debt and were behind on a car payment.

I don't know their exact situation today, but I know they've been working together to increase their saving rate. They don't go out to eat. They don't drink alcohol. They work constantly at multiple jobs.

“It sucks,” Wally told me last weekend. “We're tired all of the time. We can't wait for this to end. But you know what? You were right when you said that it won't last forever. Already, we can see that. Last summer, we had no margin. Now we have an $800 gap every month.”

“Wow,” I said. “Nice work!”

“Yeah,” said Wally. “It's very tempting to spend that money, but so far we haven't. We're using it to catch up on our debt. It's only a matter of time before everything is paid off and we can go back to saner hours. It feels good.”

I love hearing success stories like this. I love seeing people taking action to turn their lives around. I believe strongly that Debbie can turn her life around too. She's young. She's smart. She's engaging. She lacks self-confidence, but that can be faked.

If Debbie is willing to make a couple of big moves — reduce her rent and find a new job — I suspect that in six months or a year that she too will find that she has a gap between what she earns and what she spends. And when she creates this gap, her worries will diminish. (They'll never go away, but they'll decline.) In time, she will pay off her student loans, find work that she loves, and change the world.

The post Case study: Deep in debt but scared to take action appeared first on Get Rich Slowly.

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The end of the road: Preparing to buy a new car

Yesterday, Kim and I joined my cousins for an afternoon trip to the Oregon Coast. Our aim was to harvest a bounty of clams. We came home with zero. We managed, however, to harvest a bounty of mussels. Plus, the dog had fun.

My cousin Duane carpooled with us to and from the beach. We rode in Kim's car: a 1997 Honda Accord that's showing signs of its age.

“It's a little warm in here,” Duane said about ten minutes into our drive. “Would you mind turning down the heat?”

“Well, I can't turn down the air,” Kim said. “It's stuck on high. But I can turn down the temperature.” She laughed as she demonstrated that the knob for the air volume has broken off at the post. The vents now permanently blow at full force.

“This car is falling to pieces,” I said. “Literally.” As if to prove my point, a bit of molding fell from a roof handle. I picked it up and wedged it back into place.

“I like my car,” Kim said. “I have an emotional attachment to it. But I've come to the realization that it's time to start searching for something else.”

More and more, it looks like our vehicles have reached the end of the road.

The End of the Road

Kim bought her car 22 years ago at a model-year closeout sale. It's lived with her in Minnesota, Arizona, California, Idaho, Washington, and Oregon. In that time, the Accord has logged nearly 250,000 miles and never given her any major problems.

For a decade, I've been driving the 2004 Mini Cooper I bought as my first exercise in saving after I paid off my debt. In the ten years I've had it, I've put 90,000 miles on my Mini (bringing its total mileage to 150,000). We even took the Mini with us on our 15-month cross-country RV adventure!

Until the past couple of years, the Mini was trouble-free. During the RV trip, however, the fuel pump died. Then, when we got home, I funneled about $4000 into several repairs over a twelve-month span.

This winter, the Mini developed another problem: The sunroof began to leak (and in a big way). This isn't good during rainy Oregon winters. In fact, it basically means my little yellow friend is unusable until things dry out.

Meanwhile, the old reliable Accord has developed an oil leak. The leak is dripping onto the fan belt. Our mechanic says Kim's car needs about $1500 in repairs. That's not too bad, but it's more than the car is worth. Plus, we suspect that's just a small taste of what's to come.

Because I could see the writing on the wall — and because we need something to haul Big Stuff at our country cottage — I picked up a 1993 Toyota pickup at the end of 2018. I love it. (Seriously, I do. I just bought Taylor Swift's latest album on cassette so that I can make use of the tape deck, which makes it even more fun.)

But the truck is a stop-gap measure. Kim and I feel like it's time to pick up a newer, more reliable vehicle. Neither of us relishes this idea, but that's where we are. Last August, I asked you folks which new car I should buy. You offered a lot of great suggestions. But by purchasing a used pickup, I've put my own car dilemma on hold — for a time, at least. Kim's situation, however, seems pressing.

Fuzzy Math
I found it surprisingly difficult to decide whether or not I should buy a 1993 pickup with 211,000 miles on it. The previous owner is a friend and colleague. I trust him. He says the truck runs great. And, so far, it does. But it's 25 years old! I worry.

I paid $1900 for the truck. How many miles and/or how much time do I want to get out of it before I consider I got my money's worth? I'm not sure. I paid $15,000 for the Mini and have driven it for ten years (and 90,000 miles). That's roughly $1500 per year and 17 cents per mile. Using these numbers as guidelines, I guess I hope that the truck will last a year or two, or that it'll get me 10,000 to 12,000 miles.

On the other hand, I just bought brand-new 45,000-mile tires for the truck, so maybe I'm hoping it'll last me for several years!

Kim's Car-Buying Priorities

Before the Accord started showing its age, Kim's plan had been to sell the car to a couple of young women we know. They're in the process of getting their driver licenses and will soon be looking for a cheap car. We thought the Accord was perfect! Now, though, we're not so sure. Is it really fair to sell them a car knowing it needs $1500+ in repairs? (Maybe we should just give them the car and tell them about its issues?)

Regardless what happens with her current car, we both agree that it's time to accelerate her timeline for buying a new vehicle.

“What are your priorities for a new car,” I asked last week.

“Well, I want something that fits our lifestyle,” she said. “Apparently, we take the dog everywhere, although I doubt they make dog-specific cars. I want something that lets us haul the kayaks and the bikes. I want to be able to make long road trips comfortably. Ideally, I'd buy an electric car or a hybrid.”

“Anything else?” I asked.

“I want heated seats,” she said. “And a place to put my sunglasses and chapstick.” (If Kim could only take one thing with her to a desert island, it'd be chapstick.)

“Because our cars are so old, any reasonably new vehicle is going to seem like a massive upgrade,” I said. I've spent approximately thirty days in rental cars over the past year. They all seem like they're from the future. (And my friend's $150,000 Mercedes S550 I rode in last spring? Totally the Enterprise 1701-D!)

“What's your budget?” I asked.

“I have $16,000 in a targeted saving account specifically for a new car. If I sell my motorcycle, that would probably give me about $5000 more. So, I guess I'm looking at somewhere between $20,000 and $25,000.”

Preparing to Buy a New Car

Between us, Kim and I own three vehicles. Their average age is 21 years and their average value is maybe $1750 each. Obviously, we're not car people. We place no value in having the latest, greatest vehicle. Neither one of us is looking forward to the car-buying process. It sounds like an ordeal, not something fun.

Fortunately, we know better than to visit dealers until we're absolutely ready to purchase. (And truthfully, Kim is more inclined to buy a used vehicle from a private party.)

Kim had planned to put off buying a new car until sometime this summer. Now we suspect we'll have to make the move sooner rather than later.

To that end, she's started doing research. She asked her Facebook friends for their recommendations. I polled the people who subscribe to the weekly GRS newsletter (and received some terrific response!). Kim has been reading about different cars online. And soon — maybe next week — the annual Consumer Reports car-buying issue will land in our mailbox.

Over the past thirteen years here at Get Rich Slowly, I've shared many articles about the car-buying process. Here are some of the most useful:

• How to find a good used car at a fair price.
• How one GRS reader bought a new car.
• The inner workings of a car dealership — and how to use them to your advantage.
• A guide to certified pre-owned vehicle programs.

It'll be interesting to see which car Kim chooses and how we end up buying it. Deep down, I know she longs for a Tesla Model 3 but at $35,000+, they're far outside her budget. I suspect she'll end up with a Subaru Outback or something similar.

Maybe the next time we take Duane to the coast to dig clams, we'll ride in comfort…and actually catch some clams.

Ironic Footnote
As I was writing this article, Duane phoned me. “Can you pick me up and take me to my oncologist appointment?” he asked. “My car just died.” I spent the next three hours helping him get things sorted.

My post about our dying cars was delayed by Duane's own dying car.

“Maybe I should buy Bob a new car,” Duane said as we waited for the tow truck to arrive. It was a morbid joke. Duane has terminal cancer. Bob is his brother. If Duane were to buy a new car, he wouldn't have it long. It'd soon get passed along to his Bob. This adds wrinkles to his own vehicle dilemma.

The post The end of the road: Preparing to buy a new car appeared first on Get Rich Slowly.

from Get Rich Slowly http://bit.ly/2GMV8v4

Best Personal Finance Books You Need to Read in 2019

Many people complain that there’s a lack of formal financial literacy education in schools and at home. And yet, no one says exactly what the right money curriculum looks like. If you want to learn about money, you’re going to have to do it yourself. Thankfully, there are some great books to help you on [...]

The post Best Personal Finance Books You Need to Read in 2019 appeared first on Money After Graduation.

from Money After Graduation http://bit.ly/2TUByB3
#money #finance #investments

15 lessons on money and marriage from couples who have been married 10+ years

We asked members of the IWT community who have been married at least 10 years (aka “forever” in Hollywood years) to share their #1 piece of financial advice for couples.

Here’s what they said:

1. Make sure you have chemistry when it comes to money

“Marry someone with the same values and everything else just works out. 27 years of marriage and we’re as strong as ever.”

2. Don’t try to change the other person

“Do not attempt to change your spouse’s spending/savings habits. People rarely, if ever, change.”

3. Talk openly with each other about where you’re starting from financially  

“I like the term financially naked. We were very upfront with each other from the beginning about what we had and how much we owed.”

4.  Understand one another’s money mindset

“Understand where you both are on the spender-saver/nerd-free spirit quadrant. Play to each of your strengths and learn from each other.”

5. Talk about money — A LOT

“Talk about money often. It should be a routine part of your relationship, and not a point of pride for one person or another.”

6. Have frequent money dates to stay on the same page

“We meet each Sunday to go over the upcoming schedule, meals, travel, budget, gifts, house, family, and friends. Talking about our money each week as part of our household planning makes it much less stressful and scary.”

7. Make big financial decisions TOGETHER

“Be equal partners in all major financial decisions. It’s not the lattes that impact your family’s financial health, it’s the big financial decisions.”

8. Find a financial division of labor that feels right to you

“Don’t assume the person with the most ‘knowledge’ is best in practice. Once I realized [my husband] was good at making money but horrible at spending it, things turned around for us financially.”

9. Make sure you both know the important stuff

“I handle the daily and keep my husband updated with the monthly snapshot and how long-term goals are shaping up. I have a sheet of financial info so he can step in should that be necessary. He has a finance degree, but he needs to know which accounts are where, ya know?”

10. Don’t micromanage one another’s spending habits

“Work toward agreed upon financial goals but do not let that block either partner from the dreams and hobbies they would have pursued on their own. Also known as: why my husband has more than one chainsaw, even though I think that is ridiculous.”

11. Maintain separate Passion Funds for your personal interests

“Create a ‘Passion Fund’ for each partner and be disciplined about filling it up. My passion is travel. Hers is home improvement. Having the money to enjoy those passions has kept resentment at bay and our marital satisfaction high.”

12. Set ground rules for what gets discussed, and what’s Guilt-Free Money

“Each person gets weekly cash you can do anything with, no questions no judgement. Beyond that, if it’s under $100 go ahead without discussion. If it’s over $100 the other can veto.”

13. DO NOT hide your spending from your spouse

“Don’t try to hide your spending (large or small). They’ll find out eventually. Then you lose trust and it takes time to earn it back.”

14. Lean on each other when times get rough  

“I found out my husband had $40K in credit card debt. I didn’t have a job, so I took a job at Starbucks and helped him. Two years later, we were debt-free.”

15. Make sure you have the money fundamentals mastered

A final piece of advice that our couples enjoying 10+ years of marriage recommended: make sure you have the financial basics down cold.

What are those basics?

• Spend less than you earn (and look for ways that one or both of you can earn more).
• ALWAYS keep some money in reserve.
• Automate your bills and AGGRESSIVELY automate paying off debt and saving for retirement.
• Focus on the Big Wins that will REALLY move the needle on your financial situation.

And if money is something that you and your partner are just now starting to figure out, why not learn together?

In fact, why not start now?

15 lessons on money and marriage from couples who have been married 10+ years is a post from: I Will Teach You To Be Rich.

from I Will Teach You To Be Rich http://bit.ly/2Gq3Tfw
#money #finance #investing #becomerich

Book review: Work Optional by Tanja Hester

Last week, I published an extended excerpt from Grant Sabatier's new book, Financial Freedom. Sabatier's core message is that time is more valuable than money — and that freedom is more valuable than time.

Several GRS readers took issue with the book's seemingly anti-work tone.

• “There is a lot of talk about the drudgery of work; [I'm] pretty lucky [that] I love my job and have a lot of autonomy,” wrote Angelica.
• S.G. said, “The ‘wage slave' rhetoric gets old.”
• And our pal El Nerdo didn't like this sentence: “I retired early because I didn’t want to spend the best years of my life working in a poorly lit cubicle at a stressful job I didn’t particularly enjoy.” El Nerdo's response? “Could you maybe just find a better job? One that you enjoyed? With no cubicles, and better light?”

These comments are telling. They're representative of a common complaint leveled against the FIRE movement. (As you probably know, FIRE is a clumsy acronym for “financial independence/retire early”. The FIRE movement is all about saving enough to retire as soon as you can.)

Much of the financial independence and early retirement messaging comes off as anti-work. While this appeals to some folks, it repels others. Not everybody hates their jobs. In fact, some people truly enjoy what they do.

If you love your job but are still interested in what the FIRE movement has to offer, you should take a look at Tanja Hester's new book, Work Optional, which was released today. It's a solid addition to anyone's personal finance library, with a core philosophy very much aligned with the one I espouse here at Get Rich Slowly. Best of all? As you might guess from the book's title, Hester doesn't pretend that work is a cage that we all want to escape.

For those unfamiliar, Hester is the braniac behind the popular Our Next Life blog and The Fairer Cents podcast. She's also an all-around cool cat.

The Value of Work

“This book is not anti-work,” Hester writes in her introduction. “Work is a good and noble thing, something nearly every person ever born has had to do in some form, whether or not they were formally employed…The problem isn't work itself, but our current societal work culture.”

Hester says that Work Optional is about “reclaiming your life from our nonstop work culture so that you decide what role work will play in your life, instead of society deciding for you”. She truly wants to help readers find ways to make work optional, an activity they can do or not do as they see fit.

I like this. It's a conventional idea of financial independence stated in a new way, a way that gives power to the individual without denigrating all work as undesirable. I also respect that Hester and her husband had fulfilling careers they enjoyed. She writes:

To us, retiring early was never about not liking work. Work can be a source of self-worth, of community, of proof that we add value to the world. And Mark and I both got that from our careers. We just didn't want to let work be the defining feature of our entire lives…

Because of the book's title and because its message is not anti-work, I had high hopes that Hester would spend more time exploring this concept, re-framing of early retirement and/or financial independence in a new way. I love the notion that we can reach a point at which work is optional.

And make no mistake: Much of this book is indeed about constructing a life in which work isn't necessary. The problem, however, is that Work Optional tries to tackle two themes at once. Is the book's subject early retirement? Or is the book's subject its stated thesis: creating a work-optional life? There's plenty of overlap between these two topics, sure, but they're not the same thing.

Look at it this way. I've written before about the stages of financial independence.

Early retirement is the fourth or fifth stage of financial freedom, the point at which you have enough money to support yourself for the rest of your life. Hester's “work optional” point, however, is more like the third stage of financial freedom, at which you could quit your job without a moment of hesitation.

In other words, you can reach the work optional stage without ever reaching early retirement. Many people do.

Okay, enough nitpicking! Let's take a quick look at what this book covers.

Define Your Work-Optional Life

The the first section of Work Optional is its best. The first chapter provides info on the history of retirement (and early retirement), as well as background on Hester herself. The next two chapters are all about defining what a work-optional life means to you.

“The money part of early retirement is deceptively simple,” Hester writes. “But the life portion — the far more important part — is significantly more complex.” She leads readers through four pages of questions designed to spur self-reflection. From these answers, she then urges folks to find interests and themes. (This process is similar to some of the exercises for finding purpose that I've shared in the past.)

These interests and themes will help direct what you do with your life.

After you've mapped the interests and themes you'd like to pursue with your life, Hester asks you to create a money mission statement, which “[outlines] a spending philosophy that's aligned with your priorities.”

“Spending isn't inherently bad,” she writes. “Spending on the things you truly value is the best thing you can possibly do with your money.” Or, as I've been writing here at Get Rich Slowly for nearly thirteen years: Do what works for you.

What does a money mission statement actually look like? Here's an example.

My money’s mission is to provide for my life of service, adventure, and creativity, eventually allowing me to retire early and stop working for money. To support that mission, I will stop shopping online without a list, I will stop shopping at Target, and I’ll notice when I’m spending aspirationally in hopes that a product will make me better in some way. And I’ll be more mindful about the money I do spend on adventures so I get the full experience without spending more than I must.

As I said, I like the first section of Work Optional very much. No surprise, I guess. It explores themes that are near and dear to my heart. I like Hester's exercises so much, in fact, that I hope to find time to share one or two of them here at GRS in the near future. And I'll absolutely be using them (and crediting her when I do) in upcoming talks and presentations.

Create a Financial Plan

I have a love-hate relationship with the second section of Work Optional. The content is great; the organization is lousy.

After walking through the emotional and psychological aspects of prepping for a work-optional life, Hester devotes a bulk of the book to exploring familiar personal-finance topics in order to help readers create a financial plan. Although Hester covers a lot of familiar material — saving rate, safe withdrawal rates, index investing, and so on — she does so thoughtfully, often presenting new ideas or new perspectives. This is a Good Thing.

It's an even Better Thing that she tackles topics that are rarely covered elsewhere: the pros and cons of homeownership, substantially equal periodic payments, Roth conversion ladders, sequence of returns risk, and more.

I especially like Hester's diagram for “sequence of saving”. While this isn't an ironclad rule for everyone, it's a general guideline that most of us can build upon to determine what to save first…and what to save next.

In a way, this is like a super-advanced version of Dave Ramsey's “baby steps”. I like those baby steps, and I like this “sequence of saving” flowchart even more.

What I don't like, however, is how this section of Work Optional is organized. This is the largest part of the book. It's the meat. It's the heart. It contains some excellent information, but it doesn't follow a logical progression.

• After the book's first section (about psychology, purpose, and missions), we jump immediately to a chapter on investing. Whuh? That's a strange transition. It feels like we're taking on advanced stuff before addressing the basics.
• Next is a chapter on big expenses, like housing and health care.
• This is followed by a chapter on saving rates and withdrawal rates.
• The fourth chapter of this section is about the mechanics of expense tracking and saving. I feel like Part Two should have started with this info!
• Next up, Hester tackles income and more large expenses. This should have been the second chapter in Part Two.
• The section closes out with a chapter on making your financial plan “bulletproof” via insurance, etc. It's the only chapter that feels like it's in its proper place.

Because the info in this section is vital, I wanted the concepts and chapters to build on each other in some sort of natural way. They don't. This might sound like a minor quibble, but I found myself frustrated with the order the topics were tackled. Why are we discussing index investing before we ever touch income and expenses? Why aren't basic concepts covered first?

(I'm especially sensitive to this issue because my own book, Your Money: The Missing Manual received plenty of justified criticism for the same problem!)

Make the Leap

The book's final section is short but valuable. It covers how to actually make the leap to a work-optional life.

How do you prepare to leave work? If you're losing some (or all) of your income, how do you replicate a regular paycheck with your investment accounts? (This is something I wish I'd known five years ago!) What about taxes and continued retirement contributions? Most importantly, what about your mental, physical, spiritual, and social health?

A lot of the concepts in Work Optional will be familiar to GRS readers. I write frequently about mission statements, lifestyle inflation, mindful spending, and so on. The value of this book, however, is that it brings everything together in one cohesive package. (In some ways, it's like a supersized version of my Money Boss Manifesto.)

One of the book's strengths is Hester's voice. She's not judgmental. She's not arrogant. She's not prescriptive. She's smart, thoughtful, and approachable. Reading Work Optional feels like you're reading the thoughts of a friend, not some out-of-touch money guru who thinks his way is the only way.

I've shared a couple of concerns about Work Optional, but don't let that fool you. I like this book. It's well written, well edited, and filled with useful information. As a result, it's a pleasure to read. This might not be a big deal to some folks, but I appreciated reviewing a money book that I wanted to read instead of feeling like it was a chore.

This book has earned a permanent spot on my reference shelf. I know I'll use it not only to research future articles here at Get Rich Slowly, but more importantly to look up info I need to know for my own work-optional life.

The post Book review: Work Optional by Tanja Hester appeared first on Get Rich Slowly.

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My boss went on a dream six-week vacation, and these are 5 things I now consider for my future travels

Have you ever met someone who’s told you, “Traveling to experience different foods, sights, cultures, and people? Ew, no.” Me neither.

The point is, the majority of us looooooove to travel, but we all have different styles of how we plan for it and actually prefer to travel, based in large part on our inner math of whether certain experiences are “worth it.”

For example, I’m kind of a rugged traveler. The idea of swank five- or even four-star hotels never appealed to me. A bag of M&M peanuts for $5? No thanks, I brought my own. An $8 bottle of Fiji water? Just tap water for me.

My travel preferences are the complete opposite of IWT CEO Ramit Sethi’s (aka my boss), who recently returned from his six-week (!) honeymoon. The trip spanned across countries: Italy, Kenya, India, and Thailand. You can read all about his trip starting here.

Real picture of a real lion that Ramit took.

For me, luxury and travel are like oil and water — like, why bother mixing them? If I traveled, I’d usually rough it out — in the occasional hostel, and for longer term stays, in affordable Airbnbs, just as I did back in my nomadic days; whereas Ramit deliberately immersed himself in absolute luxury, juxtaposed against local life, like touring the street vendors or cooking at a local woman’s house.

Maybe it was Ramit’s excitement about his experiences as he was telling it, but the idea of traveling in luxury became a contagion that latched on and proliferated in my thoughts, shifting my perspective from wanting to ask not “why?” but “why not…?”

• Why not try splurging on lavish experiences when I’m traveling (I am older now, after all)?
• Why not have both worlds of “ultra lux” and the humility of local living?
• Why not be open-minded and dream BIG?

Maybe it’s meta to be cross-examining my boss’s style of vacationing with my own travels on the very blog that he founded, but it’s important to also acknowledge that just because I’m part of the team here doesn’t mean we’re a hivemind. It doesn’t mean I just “get it.” Like you, I must undergo a process of exposing myself to different and interesting ideas and letting them percolate until I choose to make them a part of my decision-making, as long as they make sense to me.

And ultimately, what I took away from his retelling of his experiences isn’t that I necessarily need to also travel lavishly or that I should go to Thailand or India or Kenya. It’s that…

1. My own dream vacation is within my reach … I just have to plan it

While I don’t care to go on my own safari adventure, I’ve been inspired to figure out how to make my own dream vacation — a multi-month stay in Tokyo for the 2020 Olympics — a reality.

My goal for the 2020 Olympics in Tokyo isn’t a spur-of-the-moment thought I came up with just now while thinking about eating sushi for dinner (¬_¬). It’s actually been on my mind since

I got to stay in Tokyo for four months back in 2016. At the time, it was a feel-good fleeting thought — something that I’d pushed off until now obviously to start thinking about manifesting.

Stephanie’s thought process then: “Future Stephanie will figure it out somehow!”

Stephanie’s thought process now: “OK, well, I am Future Stephanie now, so the first thing to do is start automatically transferring savings into an account that’s dedicated for this trip (done); find someone who can help me maximize my credit card points between now and then (in progress); then use my hella points to book first-class tickets to Tokyo.”

The main difference between thinking about Tokyo 2020 then and now is, as you can plainly see, I am aligning my actions with this goal. As of this writing, I have more than a year to go, and automatically saving for this specific goal has already liberated me from the mental strain of thinking about putting funds aside every month (we call this automating our finances).

2. I could share my travel experiences with loved ones

It’s no secret that Ramit took his parents and in-laws with him on the first leg of his honeymoon. But what really fascinated me was what Ramit said to Brian Kelly, aka “The Points Guy,” on Brian’s Talking Points podcast:

“My parents had four kids, not a lot of money. And I was just thinking that if they were to come to Rome, they would’ve come during the hot summer. They would have planned out everywhere they went based on how much it cost. And so for us to even be like ‘Don’t even think about it, just show up.’…

We took private tours of the Vatican. We took them to a cooking class. Both of the moms have never taken a cooking class in their lives. They’ve been cooking for 30-plus years! We all just hung out. And the dads bonded. It was just one of the best memories of our lives.”

I bolded the above because I understand that exact sentiment. My Asian parents would rarely go traveling, much less even *think* about spending more money than necessary on a luxury vacation. The idea simply doesn’t exist in the realm of possibilities for them.

One year I took both my parents with me to Toronto. And I remember my dad telling me how grateful he was to have been able to reconnect with his cousins after 30 years, which wouldn’t have been at all possible had I not booked his ticket and stay.

Having the perspective and ability to share these travel experiences with loved ones to me is truly the idea of abundance and generosity, as well as a powerful motivator for why I work so hard to earn money.

3. I don’t have to fall for the mindtrap of “finding a better deal”

It used to make financial sense to forego luxury hotels and experiences and restrict myself to the idea of budget travel when I was but a broke college kid. And so I’d try to calculate cost and my expected value and level of happiness or satisfaction.

More often than not, this math was way off. One year I recall passing on the opportunity to swim with dolphins in the Bahamas. Although I was interested, it was quite a bit out of my budget but still something I could afford. But I’d convinced myself that it wasn’t worth it or that I could find a better deal elsewhere.

In the end, I missed out completely, and for months that was all my friends who did partake talked about. #FOMO

Old money decisions die hard. But as I’ve learned through adopting new money habits, cost and expected outcome aren’t something I could predict or are necessarily even meant to be predetermined. It’s not always about the deal, but about the convenience and immediate opportunity of being able to indulge in something fun and unique that I otherwise would never get to experience.

4. It’s okay to spend on things I love or just want

How many of us feel a nagging guilt that we “shouldn’t” spend money on that $65 shirt when we already have 12 other shirts, even though we WANT it? It’s hard to justify, and we all feel this, even people like Brian, who travels in style for a living. Here’s a transcription of the Talking Points podcast mentioned above that I thought was particularly profound:

Brian: “I always struggle, especially in a country like Thailand, Amans are expensive wherever you go. And people will grouse, I know, whenever I say the nice hotel in Thailand, but, yeah. I mean, it’s all about the experience.”

Ramit: “I agree. I don’t think it’s for every day. I’m perfectly happy staying at a very budget airport hotel when I need to. I don’t mind it. But I do think that there are moments in life where you say, ‘I truly want to go as far as I can on this.’ And I have this concept on my site where I talk about Money Dials. Think about a dial on your car radio.

And most people have one or two Money Dials that they just love spending on. For you, it’s travel. And so you can turn that Money Dial all the way up and you can stay at Aman’s, Ritz Carlton, wherever it is that you love. Some people just couldn’t care less. But they love clothes. A lot of people love convenience. I love convenience, that’s mine. So if you know what your Money Dial is, then you can go all in and you can spend extravagantly on the things you love.”

We each have an area in our lives where we just naturally spend more money on. These Money Dials explain why we spend money the way we do. In other words, Money Dials is a way for you to figure out what’s important to you and what’s not. For example, I value relationships, so I’ve spent more money to live in a centrally located apartment, furnished from zero, to be more welcoming and host my new and old friends much more easily.

For me, the idea of Money Dials has provided me that healthy balance of knowing that I could spend money on something — guilt-free — because it’s important to me, instead of feeling like I should only be squirreling away money for an indeterminate future.

I could have both — and spend wisely and extravagantly as long as I can afford it and it makes me happy.

5. My dream vacation shouldn’t just be a dream

We often hammer home the message of “you define what a Rich Life means to you,” but I must admit that I have to constantly think about what this means for myself.  

Through writing this article, I realized that part of my Rich Life is being able to figure out that I CAN make my “dream vacation” possible for myself.

Maybe not tomorrow. Not next week or in the next six months.

But definitely in a reasonable and achievable timeline that wouldn’t get drowned out by vague “someday” hopes. I’ve already set up my savings, and it’s only a matter of time before I start looking at flights and places to stay.

The overall message here is simple: it’s important for all of us to think about why we strive to live a Rich Life. For me, it’s about being in control and deciding what my money can do and is for.

And at least for the foreseeable future, it’s living in my posh apartment to spend more time with people I care about and then taking off to Tokyo in summer 2020 to mash myself against hundreds of people from around the world to celebrate amid the biggest stage in sports ever.

See you there?

My boss went on a dream six-week vacation, and these are 5 things I now consider for my future travels is a post from: I Will Teach You To Be Rich.

from I Will Teach You To Be Rich http://bit.ly/2DwhQo9
#money #finance #investing #becomerich

By the numbers: My spending for January 2019

You know how sometimes you let chores and errands and obligations pile up until there's nothing left but to ignore what you want to do and take time to actually do what needs to be done? Yeah, well that's what the past week has been like for me.

I've spent most of my waking hours cleaning and repairing the house, driving around Portland to take care of troublesome tasks, and calling companies (and government agencies) to close accounts and/or clarify questions. This includes six hours I devoted to replacing the kitchen faucet. Ugh.

All this is to say: I haven't had time to work much on Get Rich Slowly during the past seven days.

That said, I have been diligently tracking my expenses. As I mentioned at the start of the year, one of my goals in 2019 is to get back to basics. I'd grown complacent over the past few years. I'd succumbed to lifestyle inflation. I want to cut back on expenditures large and small this year to bring my budget more into balance.

Let's see how I did.

January Spending Report

This month, more so than normal, I was eager to analyze my spending. I spent half an hour clicking through Quicken to see if/how my habits have changed since the first of the year. Here's what I found:

• I spent $701.01 on food in January. Of this, $211.63 was spent on dining out, $346.63 was spent on groceries, and $137.77 was spent on HelloFresh. (The final $8.98 was spent on junk food. I track how much I spend on buying crap at gas stations and convenience stores.) Last year, I averaged $1038.03 per month on food, so this is a delicious decline of 32.5% from that level. Nooice! My hope is that I can cut this even more. Even with the drop, this is way way high.
• I spent a lot on health and fitness in January. Much of this was spent to purchase a new indoor bike trainer — a stand on which I can place my road bike so that I can ride it in the house. I also bought a new yoga mat, etc.
• The pets cost us $186.63 in January. Hmmm. I didn't know they were this expensive. Seriously, I haven't been paying attention to how much our zoo costs us. What really surprises me is that our three cats cost more than the dog!
• I spent $326.08 on “sin” spending in January. That's way too much. I track how much I spend on alcohol and marijuana. (Pot is legal in Oregon, remember. I don't often use it recreationally but I do use it for sleep almost every night.) As I'll probably write about in the near future, my alcohol spending should decrease sharply in coming months. I've decided that I have a problem and I want to change when and how I drink.
• I only spent $3.99 at the iTunes store in January! This is a huge win for me. I spent less than Kim did at iTunes this month, which is crazy talk. I spent far less than the $204.85 I paid in December. How did I do this? Simple. I didn't let myself browse the new releases. (That said, when I opened iTunes the other day, I did notice that a movie I've been wanting for a long time — Willow — is now available. It took some strength to resist that. I put it on my Wish List in hopes that I'll see it on sale sometime.)
• I pumped $5141.33 into Get Rich Slowly to make up for a cash-flow crunch. We switched primary ad sources in November, and there's a gap while we wait to get in the new vendor's payment system. (Money came in last week. Yay!)
• My home value continues to decline. Zillow now says our place is worth $422,000. Nineteen months ago, we paid $442,000. Since then, we've put in about $100,000 of necessary repairs — plus another $50,000 in upgrades. In other words, our home is worth $170,000 less than we've spent on it. This whole situation remains a sore spot with me. But, as many readers have noted, because Kim and I love this place and have no plans to move, it's a sore spot that doesn't really matter. (And I'll bet some of you would be happy if I stopped bringing this up.)

If we ignore the Get Rich Slowly cash infusion, I still spent $4819.27 last month. That's about $1000 more than I wanted to spend.

Looking through my list of expenses line by line, I actually see $1034.40 of one-time expenses. So, in theory, next month my spending should be under $4000. In theory. The problem is that I suspect other one-time expenses will arise. I have this sneaking suspicion that I'm constantly rationalizing “one-time” purchases…as if there should be a $1000/month line-item just for “one-time” expenses. I hope not. But I suspect it's true.

Final Thoughts

Last month, my net worth increased by $30,617.91 (or 2.29%). That's amazing! This was all because the stock market was on a tear, though. The gains aren't due to any acumen on my part.

My goal for the first quarter of 2019 is to become more mindful about my spending. Sure, I want to slash what I can, but my main aim is to be aware of where my money goes, to track it diligently so that I can make appropriate changes going forward.

I doubt I'll post a spending update every month — I'm not sure there's much value in these for anyone other than myself — but I'll publish a few throughout the year. If all goes according to plan, by the end of December I'll have broken some bad habits and built some better ones!

The post By the numbers: My spending for January 2019 appeared first on Get Rich Slowly.

from Get Rich Slowly http://bit.ly/2N0iYVr

Introducing KOHO Joint Accounts!

The newest thing in Canadian fintech is KOHO joint accounts, making it easier than ever to share expenses and savings goals with someone else. If you have a roommate or a co-parent or anyone else you need to split bills or save for something with, KOHO is the brand new solution to sharing money. Please note [...]

The post Introducing KOHO Joint Accounts! appeared first on Money After Graduation.

from Money After Graduation http://bit.ly/2I9kllQ
#money #finance #investments

How to get out of debt fast (…even if you’re dead broke)

Getting out of debt isn’t easy — but it is possible, even if you have no money, no assets, and no idea how to start. Check out these tweets from people who followed my advice and got rid of their debt forever:

Today, I’m going to teach you my five-step system for quickly paying off debt so you can join them too.

How to get out of debt fast: My 5-step system

Step 1: Use this tool to find out how much debt you REALLY have

Step 2: Choose your “plan of attack” for paying off debt

Step 3: Freeze your credit card debt — literally — to stop it from growing

Step 4: Follow this script to negotiate a lower interest rate (Saves you THOUSANDS)

Step 5: Tap into your “Hidden Income” to drum up an extra $1,000+/month

Bonus step: Turbocharge your debt payments with my favorite resource

Step 1: Use this tool to find out how much debt you REALLY have

You wouldn’t believe how much money people waste by skipping this step and blindly paying off any bills that come in with no strategic plan.

This boils down to the fact that people feel guilty about their debt. They’d rather bury their heads in the sand than look at the reality of the situation and do something about it.

This is exactly what credit card/loan companies want — for you to hide from your statement every month and just blindly send them the minimum payment thinking you’re getting out of your debt. They LOVE it when you do that.

The reality is that minimum payments dig your hole even deeper.

It might be painful to learn the truth but you have to bite the bullet. Then you’ll see that it’s not hard to end this bad habit. In fact, you can get the credit card companies to help you. Just look at the back of your credit cards for their number, call them, and ask them for the amount of debt you owe, the APR, and the monthly minimum payment on the card.

I challenge you now to step up and own your debt. You can do the hard work now, or the impossible work later.

Use this tool to track it (it’s the second link on this list). The chart looks like this:

It’ll help you find out how much you owe to each company and what your interest rates are.

Stop right now and do this.

Done?

Congrats! Taking the first step is one of the hardest parts — now you’re well on your way to a Rich Life.

If your total debt number seems high, remember two things:

1. There is a large group of people with MORE debt than you.
2. From this day that number is only going to go DOWN. This is the beginning of the end.

Once you know how much you owe, the next step in learning how to get out of debt is …

Step 2: Choose your “plan of attack” for paying off debt

Once you know exactly how much you owe, you’re ready to strategically attack your debt.

To do this, you need to prioritize which of your debts you’re going to pay off first — whether it be your credit card, student loans, whatever — based on the interest rate.

To get out of debt the absolute fastest, you’re going to want to pay off the loan with the highest interest rate first.

For example, let’s say Credit Card A has a balance of $1,000 and a 12% interest rate, and Credit Card B has $1,500 at 6% interest. You put down $150 total every month, paying the minimum payment (3%) on one and whatever’s left on the other. You’re going to save more money by eliminating Credit Card A first ($147 in total interest) vs Card B ($188).

Once you’ve decided what you should prioritize, it’s time to come up with a plan of attack.

When it comes to your student loans, you can actually save thousands of dollars each year — by paying down your debt more each month.

Yes, you read that right. You can save money by spending MORE.

Let’s say you have a $10,000 student loan, at a 6.8% interest rate, and a 10-year repayment period.

If you go with the standard monthly payment, you’ll pay around $115/month.

But check out how much you can save per year if you paid just $100 more each month:

Like I said before, paying the minimum digs you into a bigger hole. Even $20 more per month can save you huge amounts of money.

I’ve written about this before and linked to two great articles regarding the tactic. If you can contribute even a small amount more per month, the benefits can be significant. See for yourself by calculating your savings using this calculator.

Alternatively, you can use the “debt snowball” method, which I explain here (at around 2:00). Mathematically it isn’t the fastest method, but it’s designed to make you feel GREAT about making payments:

Step 3: Freeze your credit card debt — literally — to stop it from growing

If you ever expect to pay down your debt, you can’t add more to it.

That’s why you need to do the following things:

1. Take out your wallet.
2. Dump out all your credit cards.
3. Mail them all to Antarctica.

Well, maybe you don’t have to be that extreme … but the point is to remove all temptation of ever using your credit cards again until you’re out of debt.

Here’s my favorite tip: plunge your cards into a bowl of water and shove it all into your freezer.

Seriously.

Once you literally freeze your credit, you’ll have to chip away at a massive block of ice in order to get it back — giving you time to think about whether or not you want to go through with whatever purchase you were going to make.

Alternatively, you can lock them in a safe or have a friend / parent / sibling / whoever-you-trust hold on to them for you. As long as you’re not adding more to your credit card debt, any method is good.

Step 4: Follow this script to negotiate a lower interest rate (saves you THOUSANDS)

Not many people realize this, but you can actually save over $1,000 in interest with a single five-minute phone call.

Through simple negotiations, you can lower the APR on your credit card and put thousands of dollars back into your pocket.

I LOVE negotiating interest rates.

It can be crazy simple too — in fact, here’s a word-for-word script that many of my readers have used already to lower their interest rates:

YOU: “Hi, I’m going to be paying off my credit card debt more aggressively beginning next week, and I’d like to lower my credit card’s interest rate.”

CC REP: “Uh, why?”

YOU: “I’ve decided to be more aggressive about paying off my debt, and that’s why I’d like to lower the interest rate I’m paying. Other cards are offering me rates at half what you’re offering. Can you lower my rate by 50% or only 40%?”

CC REP: “Hmmm … After reviewing your account, I’m afraid we can’t offer you a lower interest rate.”

YOU: “As I mentioned before, other credit cards are offering me zero percent introductory rates for 12 months, as well as APRs that are half what you’re offering. I’ve been a customer for XX years and I’d prefer not to switch my balance over to a lower-interest card. Can you match the other credit card rates, or can you at least go any lower?”

CC REP: “I see … Hmm, let me pull something up here. Fortunately, the system is suddenly letting me offer you a reduced APR. That is effective immediately.”

It’s really that simple to save money in five minutes.

Make the call, and if you’re successful, do two things:

1. Celebrate your accomplishment (this is a big deal).
2. Make sure to adjust your debt chart from step one. You get to chop that big ugly interest rate down and lower your monthly payments.

Repeat this process for any other cards you can, and then move on to my favorite step.

Negotiate the impossible: How to save big on student loan debt

If you find that no matter how you run the number you’re not going to be able to pay your student loans off in any reasonable amount of time, it’s time to call your lender.

Look at the phone number on that monthly bill staring you down. Call them up and ask for their advice.

Seriously, I can’t emphasize this enough. Your lenders have heard it ALL, from “I can’t pay this month” to “I have five different loans and want to consolidate them.”

For your purposes, ask the following:

• “What would happen if I paid $100 more per month?” (Substitute any number that’s right for you.)
• “What would happen if I changed the timeline of the loan from five years to 15 years?”
• If you’re looking for a job, you might ask, “What if I’m looking for a job and can’t afford to pay for the next three months?”

Your lender has answers to all these questions — and chances are they can help you find a better way to structure your payment. Typically, they’ll help you by changing the monthly payment or the timeline. Just think: With that one call you could save thousands of dollars.

Step 5: Tap into your “Hidden Income” to drum up an extra $1,000+/month

If you’ve followed along this far, you’re probably thinking, “This is great and all, but where do I get the money to pay down all these bills?”

I recommend four things:

1. Use the cash you’ve freed up from Step 4
2. Use money you have from your Conscious Spending Plan (this is how my friend spends over $21,000 a year on going out)
3. Tap into Hidden Income
4. Earn more money

I’ve already explained how to get cash from lowering your interest rates and you can learn more about creating a Conscious Spending Plan here.

Now, I want to show you how to get money with methods that’ll push your self-development to the next level and build a foundation for your Rich Life.

Tapping into Hidden Income

Instead of strict budgets or extreme frugality, I prefer to cut costs mercilessly on everyday bills. These are things like your cell phone, car insurance, and other monthly expenses.

Saving money on these everyday items is an easy way to free up cash to put toward your debt. The cool thing is, we can show you how to save $1,000 — without cutting back on the things you love — like these people did:

Just check out my Save $1,000 in a Month Challenge here.

It’s a great way to focus in on your willpower and expand your knowledge on how you spend money.

Earn more money

I’ve always believed that there’s a limit to how much you can save but no limit to how much you can earn.

What does that have to do with paying off debt? Well, imagine having an extra $1,000/month (or more) that you could put toward your bills.

The best part: it’s far easier to earn $1,000 than to slash $1,000 from your budget.

Just a few examples of ways to earn more money:

• Get a $5,000 raise with a simple, 15-minute conversation with your boss.
• Earn $1,000, $2,000, even $5,000 or more on the side, every month, while still keeping your day job.
• Or — this is my favorite option — you could give yourself ultimate freedom and unlimited earning power with an online business.

Whatever you choose, the rewards can be huge and make a significant dent in your debt today.

Getting out of debt quickly is one of the best financial decisions you’ll ever make.

And earning more money is the secret weapon for paying down your debt as fast as possible.

Bonus: Turbocharge your debt payments with my favorite resource

Download a free copy of my Ultimate Guide to Making Money to learn my best strategies for creating multiple income streams, starting a business, and increasing your income by thousands of dollars a year.

Just enter your name and email below to get instant access to the Ultimate Guide to Making Money. The strategies in this guide could shave YEARS off your journey to get out of debt:

How to get out of debt fast (…even if you’re dead broke) is a post from: I Will Teach You To Be Rich.

from I Will Teach You To Be Rich http://bit.ly/2tIrtML
#money #finance #investing #becomerich