In What Next I write that “it’s not the plan for the expected outcome that saves you, it’s the plan for the unexpected outcome that does.” This is what preparation is all about and why I often have a plan B, C, D, E, and F.
I haven’t written many blog posts in a while because I’ve been busy working on my latest What Next venture, my current priority.
The reason I’m writing this is that two months of planning, two months of high expectations, may end badly. I will be sad, upset, worried, and yes even angry, if this falls through, but one thing I won’t be is beaten. I won’t be much worse off even if it goes terribly wrong because of the preparation I’ve done, not just for this one thing but throughout my life.
As you live your life, are the things you’re doing now putting you in a stronger position later? It’s worth asking so you’ll be able to succeed no matter what happens.
Posted in General, Success, Taking Action and tagged goal, plan, planning, success, unexpected by AJ with no comments yet.
A recent post of mine (Are You Crazy???) was written in frustration. There is a lot of good financial advice out there but it doesn’t seem like anyone is listening. Maybe they are listening but they aren’t taking action, they’re not asking What Next and doing anything to improve their future. So I decided to write this action plan for success. Will you follow it?
The past is over. The best you can do is learn from it because you can’t change it. You’re in debt? Ok, just don’t continue doing the same thing that got you there. You haven’t progressed in your career as quickly as you would have liked? Ok, but change what you’re doing. You haven’t saved enough for retirement? Ok, start now.
This is your moment. The present is here to bring about the future so get to work.
If finances are a problem you first have to understand the cause of those problems and that means having a clear idea of where your money is going. This means you have to track every penny you spend. It’s not as hard or time consuming as it sounds. I talked about one way to do that in this post. Another thing you have to do is stop spending, for a short period of time. Change your habits. I wrote about that topic in this post, and encourage you to take the three week challenge. Make the commitment now and stick with it.
This isn’t a pleasant word but success requires sacrifice. At the very least success requires restraint. My car is nearly ten years old and I would love a new one, a rather expensive Audi R8 to be exact and I could probably figure out a way to afford it but I’d have to sacrifice a lot to do it. I’d rather sacrifice the Audi for a secure future. That’s the kind of sacrifice, restraint, I’m talking about. So if you already have the fancy car with an expensive monthly payment, sacrifice may mean giving it up for a far less expensive car. You’ll be trading status for security. Make this decision now and follow through with it.
Maybe you feel you deserve a raise, then ask for it. Don’t just ask for it, pitch it, explain exactly why you deserve a raise. If you can’t come up with a strong enough case then make yourself indispensable, become the best employee ever and create the strong case. If that doesn’t work look for another job, if nothing else you will learn that maybe your salary is pretty good after all.
Even if you are satisfied with your job, you should have a resume ready to go at a moment’s notice, that’s being prepared for the unexpected, or go on interviews just to stay fresh. This is What Next thinking and those who master that will be more flexible, more successful.
Can’t get the raise? Can’t find a new job at a higher salary? Then sell things on ebay, turn a hobby into extra money, pick up side jobs in something you’re good at. Have a goal you want to reach, like paying off a particular credit card and figure out how to make the extra money to achieve it. Without a goal, a clear objective, you’ll delay taking action.
On a tv show I watch called Till Debt Do Us Part, the host, Gail Vaz-Oxlade shows the financially struggling couple that if they continue on their current path they will be in serious debt. In one typical episode the couple would have $500,000 of debt in five years if they didn’t change their habits. By the end of the program, if they follow Gail’s new plan, they would have $1,000,000 saved by the time they retire. Gail’s advice emphasizes the word action in “action plan.”
Such a transformation is the power of making the right decisions in the present for a better future. It is the benefit of being proactive.
My angry post borne out of frustration was about the many people who aren’t willing to plan for the future but you’re not one of them, are you?
Posted in General, Success, Taking Action and tagged action, finance, plan, planning, success by AJ with 2 comments.
The first step to success is recognizing potential.
When I was planning to make the transition into financial planning as a career I volunteered to speak and answer questions at informational sessions for National Guard troops and their families that were being deployed overseas. While these men and women, both the soldiers and their families, were sacrificing for their country, they were also being offered unique benefits. (Not that they were enough compensation but at least it was something).
One benefit was that the soldier’s income while overseas was tax free. Even better than that is the fact that they could also contribute to a Roth IRA – that was huge. Why? Because normally Roth IRA contributions are after tax, meaning you pay tax before contributing. When you withdraw the money in retirement it is not taxed so you get the benefit of tax free growth. What these soldiers were being offered was an opportunity to invest money and have it grow without ever, let me repeat, ever, paying taxes.
I was standing at the back of the room when my colleague was making this presentation. A soldier and his wife were standing next to me and the wife pointed out this unusual and generous benefit. “I don’t care about that,” the soldier said. He was in the right place at the right time but unless he acted on that information, the opportunity would be lost. I wonder how many of the people we owe so much took advantage of that benefit.
Taking action is the second component of success.
The other aspect of success is that once you recognize an opportunity, you have to be willing to sacrifice to get the benefit. The soldiers aren’t paid well for their service and diverting $4,000 (the maximum at the time) into a Roth IRA could be a hardship. If they looked far enough into the future, however, they would have seen the benefit of this action but I suspect that many did not.
Are you open to opportunities? Are you constantly on the lookout? Would you be willing to sacrifice, now, for a benefit that is years in the future? Then why aren’t you?
Posted in General, Money, Taking Action and tagged investment, IRA, opportunity, planning, Roth IRA, taxes by AJ with no comments yet.
Julie and I lived together, she had a good job so we weren’t too concerned with the lack of income. But without knowing how long this would last or even if I’d have a job after it was all over, we decided to plan for the worst.
You can’t always live in fear that the worst will happen but you can’t live as if nothing bad will ever happen either. You have to find balance between being prepared and enjoying life. At the time of the lockout I decided to test my will. I decided that other than fixed costs such as my mortgage and utilities, I wouldn’t spend any money on discretionary items. That meant no eating out, no take-out, no movies or even video rentals (it was a long time ago). The lockout occurred just as winter was beginning and I had recently begun skiing, but until we were allowed back to work, there would be no skiing for me. I didn’t buy any music or take any trips. I didn’t spend money on anything unless I absolutely had to. This was not the easiest thing to do, to deny myself the little pleasures in life, especially with all the free time I had.
Over those 11 weeks, almost three months, I lost over $13,000 in income but when it was over and we returned to work, my bank accounts were lower by only $4,000. By the end of the lockout one co-worker declared bankruptcy and others were precariously close to calamity. I also know people who counted on the union winning an arbitration award that would give us back pay, but that never happened, and those who expected back pay were in much worse shape than those who assumed the money would never come.
The greatest lesson from this event was that I realized that I could live much farther below my means, that a sudden shock to my income such as a job loss, wouldn’t be the end of the world. Can you say the same thing?
If you’re serious about being prepared for the future, serious about doing what it takes to get much farther ahead in life, then you have to make a commitment to do whatever is necessary. You can get rich no matter what your income but the less income you have the more you’ll have to do. Keeping track of your income and expenses is crucial, spending less than you earn is an absolute requirement. Discipline can be learned.
I found that the three months I was locked out, and my subsequent choice to eliminate discretionary spending, gave me the discipline I needed to really concentrate on building wealth. I call this time my three month test and I suggest that you might want to try the same thing.
That’s right I’m asking you to stop spending money on anything other than essential items for three months. You obviously have to pay for your mortgage or rent, your utilities, groceries, and other necessities, but if you’re serious then you have to give up everything else for three months.
Ok. I’ll stop here and give you permission to do a trial run. Three months might be too much to ask and could just set you up for failure, but how about three weeks? Are you willing to try this out for three weeks to see if you have what it takes to really build wealth?
The rules are fairly simple. You can keep the services you currently have like cable, cell phone or magazine subscriptions. You can keep any recurring bills but you can’t upgrade those services like the cable, for example. You can’t add any channels, subscribe to any new websites, magazines or newspapers.
This test is not meant to see if you can live like Scrooge but it’s also not meant to be easy. You’ve seen in the news the low paid worker who dies leaving behind millions of dollars? Well how do you think they got all that? Ok, you’re right, they probably lived like misers but there can be a balance if you just try. After all, what good did that money do them now that they’re dead?
This test might crimp your social life but that’s the challenge. How can you still enjoy yourself for less money? That’s the key to the test. Once you see that you can do it, you’ll think twice before getting together with friends at a bar and instead invite them over to your place where the alcohol and food costs significantly less.
If you choose to take this test, and treat it seriously, you can find out a lot about your spending habits. You’ll see how much that coffee at Starbucks is really costing you. You’ll notice that stopping to get a donut on your way to work is a significant amount of money (and fat) over even three weeks. Oh yeah did I mention the other benefit? You might lose weight (if that’s something you want) since you’ll be either eating at home or not eating because even a quick stop at McDonalds is out the question for those three weeks.
Do you have what it takes to commit to a better future? Are you up to the challenge? I did it because I felt the pressure of not having an income for an unknown period of time but it turned out to be a great test. Now it’s your turn – you can do it.
Posted in General, Money, Success, Taking Action and tagged income, planning, preparation, success by AJ with no comments yet.
I feel myself becoming scattered. It’s a common problem for people like me, people with lots of ideas, lots of thoughts running through our heads. It’s difficult to maintain focus but the ones who can, who can limit their attention to two or three priorities, are more likely to be successful.
My focus should be on the book and the message in the book, so while I reserve the right to drift a bit, I’m going to write a series of posts highlighting the various concepts from the book. I’ve written about curiosity, an important part of What Next, often mentioning hiking, or the benefits of meeting new and interesting people. I’ve written about a concept called coasting and the need to become unstuck, all of which can be referred to as procrastinating.
Today the concept I want to pick apart is the broad notion of being proactive, it’s part of the book’s title after all.
The first part of being proactive is deciding that you need to take action. This action could be a new idea such as a business you’d like to start or a hobby you want to begin. The action can also be a situation you want to correct, which is really a reaction, such as deciding that being in debt is holding you back, or that your job has become unbearable and it’s time for change. I believe the first type of action, born from your ideas, is a much stronger position to be in than the second type of action, a reaction to something that has already occurred.
“I would rather be prepared and have a plan than have to react to the unexpected,” I write. I’d rather do that but it’s not always possible. The vital part of being proactive is doing something once the decision to act is made. That’s the part I’ve been having trouble with lately. I can’t seem to decide on a plan and without a plan I’m just winging it, a position of weakness.
The problem I’m having is a lot like the idea of inspiration, I’m inspired to act but can’t seem to get moving. Inspiration without action is just a good intention, and good intentions don’t accomplish goals.
This post is my first step toward implementing my plan, such as it is. What is your first step toward what next? What action are you going to take now? I have a page on this blog called “Share Your What Next With the World” because I feel it’s important to make your dreams real by sharing them with others, forcing yourself to get moving. Not everyone shares that view but I’m convinced you’ll be held accountable, by yourself or by others, if you share your what next.
Tomorrow’s post will provide two examples of being proactive. One was a reaction to another event, the other was created from nothing.
Posted in General, Success, Taking Action and tagged action, ideas, plan, planning, proactive, success by AJ with no comments yet.