Month: April 2016 (Page 1 of 2)

Northern Expressions

Northern Expressions: Savings Muscles

Savings habit is like a muscle

“The savings habit is like a muscle. The more you use it, the stronger it will be. No one expects you to start with a fifty-pound weight when you first go to the gym. That’s why the one-pound weight exists.”

Today’s Northern Expression comes from The Index Card by Helaine Olen and Harold Pollack. I really enjoyed this book and think it is a perfect book to recommend to financial newbies. It introduces all of the important things in simple, actionable sections. I hope you’re inspired to start small and grow big savings muscles! Happy Friday, friends!

Love, Maggie

Financial reflexes

Do You Know Your Financial Reflexes?

A reflex is defined as an “an action that is performed as a response to a stimulus without conscious thought.” When the doctor hits your knee, your leg goes up. You don’t will it to do so. It just does. I was at a friends’ house last month. She had a broken toe. She walked into her kitchen and accidentally kicked a Lego with her broken toe that her kid had left on the floor that she didn’t see. Her reaction: Deep breath, pick up the Lego, and walk away. WHAT?! No cussing. No yelling. No throwing things. She just took a deep breath and moved on. Now, I’m a yeller. My kids know I’m working on it and they are very good about reminding me to calm down. But you know what my reflex is if I were to kick a Lego with a broken toe? YELL AND SCREAM! I don’t consciously think “I’m going to yell about this painful, frustrating experience now” and then yell. It is my automatic response. The stimulus hits and I respond with yelling without conscious thought.

Everyone has reflexes/defaults/automatic responses. These are the things you do without consciously deciding to do so. Unfortunately, some aren’t quite as obvious as yelling in a frustrating experience. A lot of financial reflexes are ones we can’t pinpoint and that often causes problems. Tracking your spending to the penny helps identify these things, but think about different scenarios. I’ll present a few, but there are thousands! Instead of thinking about what you THINK you would do or what you know you SHOULD do in these situations, try to stick with your instincts. Try to identify what your default would be. I’m also not necessarily saying there are right answers to your reactions here. They will be different for everyone based on your priorities.

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Kaleidoscope

Designing Our Kaleidoscope

Last month, Harmony over at Creating My Kaleidoscope, offered a challenge to design your own Kaleidoscope. In short, the challenge is to discuss what you see when you look at your future through your kaleidoscope and how you’ll get there. Since I’m a planner and a schemer, I love this idea, but I also love the imagery she’s created. There is a big difference between a telescope and a kaleidoscope. The telescope allows us to see things that are far away close up. Through the telescope, we can see details as if we were right there. Through the kaleidoscope, you see something that isn’t really there. Most kaleidoscopes show just color and shape and when you turn it, those colors and shapes dance and change and create something that wasn’t there before. In some kaleidoscopes, you can actually see what is on the other end of it, but through a distorted, fragmented lens. You might be able to see a face. Sometimes 30 images of the same face. And sometimes, when you turn it, the face disappears completely.

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Roth IRA Challenge: From Frugal to Free

karaHappy Friday everyone! I’m so excited to introduce Kara today on the blog. She writes over at From Frugal to Free. She has a track record of kicking debt fast and now she’s just about to venture out on her own! She’s here today to report on taking the Roth IRA Challenge which tracks $5500 of money (how it was earned, where it went, and lessons learned). Take it away, Kara….

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Broken hose pipe

How to Stop Leaky Spending

Last week, Mr. T turned on the outside hose for the first time this spring. The water trickled out. After some sleuthing, we realized the pipe had burst and as soon as Mr. T turned on the hose, the water started going in the (newly insulated and beautiful) crawlspace! Upon seeing the water all over, my first reaction was “SAVE THE STUFF!” I mean, that insulation was not cheap. And the boxes sitting in the water weren’t going to save themselves! Mr. T looked at me and said: “First we have to stop the leak.” He’s so sensible. That’s why I married him. Obviously. He made an excellent point. The order matters! 

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Little feet

The 4-Year Potential

Two weeks ago, we did some recalculations and came up with three potential plans. The two plans that would allow us both money AND freedom would take significantly longer than four years. The really lofty goal date on our blog is 2022, which is 6 years away. So what’s the big deal with 4 years? As the school year wraps up, the temporary state of Penny’s childhood is weighing heavy on my mind. In 4 years, Penny will be done with elementary school. Based strictly on our calculations, by the end of May 2020, we expect to find ourselves with a paid-off house and $321,000 in investments. Those numbers won’t get us close to financial independence. And freedom in that plan would mean continuing on our current path for the next four years and then just quitting to be irresponsible for a bit! But looking back on our historical 4-year accomplishments, in all likelihood, stagnation isn’t an option.

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Northern Expressions

Northern Expressions: Stuff vs. Time

Buying stuff and buying time are in direct competition for you hard-earned money

“Buying stuff and buying time are in direct competition for you hard-earned money, and the choices you make in this regard have a direct bearing on your future.”

-Robert & Robin Charlton in How to Retire Early

Enjoy some Friday inspiration from a seriously awesome book that uses real numbers to show how they actually earned early retirement! Happy weekend, friends.

Love, Maggie

money and death

Breaking Research: Live Rich or Die Young

You’ve probably already seen the news about this study, but as a behavioral economics researcher by day and a personal finance blogger by night, I can’t ignore it here. Published on Monday in the Journal of the American Medical Association was the paper titled The Association Between Income and Life Expectancy in the United States, 2001-2014. First off, let me address the large scale of this study. It’s amazing. I mean, how does one go about getting “tax records for every individual [with a social security number] for every year from 1999 through 2014”?! That’s crazy! The sample size: 1, 408, 287, 218 person-year observations – no that’s not a typo! They also looked at specific geographic areas and if someone moved after 63, they counted their area as the place they were living at age 61 while working (they’ve seemingly thought of everything!). So let’s get to the findings:

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One Change

The Impact of Making Just One Change

A few months before we dove into purging our stuff, Mr. T got new socks. I was reading The Lifechanging Magic of Tidying Up to prepare for the big event. I was just reading the socks section when Mr. T was unpacking his new socks. “This book says you should roll your socks to let them rest.” Probably more to get to me to stop talking about the book, Mr. T dutifully rolled all of his socks. For two months, those perfectly sushi-rolled socks taunted me. They actually seemed happy. Socks. Happy. Crazy? Right? I wanted our whole house to feel that way. Every time I saw his socks, I wanted more! I wanted to dive right in and make it all better.

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How Parents and Significant Others Impact Student Finances

On Monday, we discussed how people are sometimes dumb with money and love, but it’s not all bad news. Today, we highlight research that shows love can positively influence our finances. The first study, published in December 2015, followed 693 University of Arizona students. The (mostly white, female) students were extensively surveyed toward the beginning of college (ages 18-21) and then again toward the end (ages 21-24). The 693 study participants were all included because they reported being in a serious, committed relationship at the second survey. The study was trying to figure out the impact parents and romantic partners have on the financial behaviors and attitudes of college students.

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