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andrewdburton · 2 years

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How Much Should You Really Have in Your 401k (by age)

At IWT, we talk about 401ks – a lot. (See here, here, or here for proof)

And, that’s with good reason. If you want to be rich, the 401k is one of the most powerful investment tools at your disposal, especially for retirement planning. It is also one of the most misunderstood money-maximizing vehicles, starting with how much you should have in your 401k.

That is a solid question, but it doesn’t have a simple answer. To answer that burning question — How much should I have in my 401k? — we need more details. How much to invest in 401k investments will depend on your age and a few other considerations.

Let’s start at the beginning.

Bonus:If the COVID-19 pandemic has you worried about money, check out my free guide on Coronavirus-Proofing your Finances with the CEO approach

What is a 401k?

A 401k is a powerful type of retirement account that many companies offer to their employees as a perk. With each pay period, you put a portion of your paycheck into the account. It happens automatically so you don’t have to do anything special and there are a ton of benefits.

A 401k is called a “retirement” account because it gives you huge tax advantages if you don’t touch your money until you reach the minimum retirement age of 59 1/2 years. While you will have to pay a penalty if you touch your 401k savings before you reach retirement age, the benefits far outweigh the risk.

Here is a snapshot of the benefits of having a 401k:

Tax benefits

The money you contribute to a 401k isn’t taxed until you withdraw it, which you can’t do without penalty until you reach 59 ½. This means you have much more money to invest for compound growth. In comparison, if that money was invested in a normal investment account instead, a portion of it goes towards income tax.

Also, you have some control over how much you withdraw. With careful planning (definitely talk to your accountant for this one) you can minimize your tax burden (win-win)

Employer match

Most companies offering a 401k will match you up to a certain percentage of your paycheck. In many cases, they will match their employee contributions 1:1. To put that in perspective, let’s say your company offers 5% matching. Now, if you earn $100,000/year and invest 5% of your annual salary ($5,000), your company would match you $5,000 — That doubles your investment without costing you a cent. It’s free money! Not basically free, “like” free, or practically free. It is FREE MONEY and you are leaving it on the table if you don’t take advantage of the employer match. Plus, if you don’t invest in a 401k with employee matching, you are missing out on all the returns that free money will generate. It adds up.

Bonus: Ready to ditch debt, save money, and build real wealth? Download our FREE Ultimate Guide to Personal Finance.

Automated contribution

With a 401k, your money is taken from your paycheck and invested automatically, which means you don’t have to go into a brokerage account to invest each month. You don’t actually have to do anything. Your 401k contribution is deducted from your paycheck the same way that your federal income tax or health insurance premium is deducted. This is an excellent psychological trick to keep you investing.

Check out the graph below that illustrates why you should always invest in your 401k:

Age Your Contributions Employer Match Balance without Employer Match Balance with Employer Match 25 $5,000 $5,000 $5,214 $10,428 30 $5,000 $5,000 $38,251 $76,501 35 $5,000 $5,000 $86,792 $173,585 40 $5,000 $5,000 $158,116 $316,231 45 $5,000 $5,000 $262,913 $525,826 50 $5,000 $5,000 $416,895 $833,790 55 $5,000 $5,000 $643,145 $1,286,290 60 $5,000 $5,000 $975,581 $1,951,161 65 $5,000 $5,000 $1,350,762 $2,701,525

So, one good answer to “How much I should have in my 401k?” is at least enough to get the employer match. And really, there are only two reasons for you NOT to invest in a 401k:

1. You’re trapped on a desert island, and the employee benefits are lacking.

2. Your current employer doesn’t offer a 401k.

What is the maximum 401k contribution amount?

Starting in 2020 (and for tax year 2021), you can contribute up to $19,500 each year to your 401k if you are under 50. If you are over the age of 50, you may be able to make catch-up contributions. This provision lets you invest up to an additional $6,500 in your 401k (tax years 2020 and 2021).

PRO TIP: You need to be behind in your 401k contributions to make catchup contributions.

When compared to a Roth IRA, where you can only contribute up to $6,000/year, this is an amazing opportunity — especially since your pre-tax money is being compounded over time.

How much should you have in your 401k by age?

Now that we have established that you need a 401k in your life and explained how much you can contribute, let’s talk cash. Aside from investing enough to meet your employer match, how much should you have in your 401k, really?

One way to answer that question is to look at your age.

While there is no one-size-fits-all answer to the question, “How much should I have in my 401k?” there are some best practices you can keep in mind to guide your efforts. Yes, while you should start investing in a 401k as soon as possible, some people might not get that opportunity right away — and that’s okay. The point is to do it when you can.

When you do finally start investing, there are a few good rules of thumb to help you make a sound decision on how much you should have in your 401k.

Age 30

Ideally, you should have at least one year’s worth of income in your 401k. That means if you make $60,000, you should have at least that much saved in your 401k.

Age 40

Once you hit 40, you should have at least three years’ worth of income in your 401k. That means if you were making $80,000 by the time you turned 40, you should have at least $240,000 saved in your 401k.

Age 50

When you turn 50, you should have at least five years’ worth of income in your 401k. This means if you increased your income to $100,000, you should have $500,000 saved up in your 401k.

By retirement (age 65)

Once you reach 65, you should have at least eight years’ worth of income in your 401k. That means if you increased your income to $150,000, you should have $1,200,000 saved up in your 401k.

Is your 401k savings on track?

Have you met your mark? If you aren’t there yet, don’t panic. These are just rules of thumb. That means they only give you a rough estimate of what you should ideally have by the time you hit these ages. They do not take into account your individual income and experiences — or other investments you might have in play.

In reality, there’s no one hard answer to how much you should have in your 401k — and anyone who tells you otherwise is either lying to you or just doesn’t know much about finance. We could pull up a bunch of figures and show you how much someone in their 20s or 30s is saving — but that would be a complete waste of time for two reasons:

1. It’s impossible to compare two investors fairly. Everyone has their own unique savings situation. That’s why it’d just be dumb to compare the Ph.D. student saddled with thousands in student loan debt with the trust fund baby who just snagged a cushy six-figure corporate gig the first month out of college. They’re both going to save very differently, so it’s not worth comparing.

2. Most people aren’t financially prepared for retirement. The American Institute of CPAs recently released a study that found that nearly half of all Americans aren’t sure if they’ll be able to afford retirement. That’s even scarier when you consider the fact that many people underestimate how much they’ll need for a comfortable retirement.

So instead of worrying about minutiae like how much you “should have” saved, focus on the future. What’s important is that you:

• Do your research. You are already doing that by reading this article, but don’t stop here. Keep reading. We recommend Investing for Beginners and How Much Do I Need to Retire?

• Be disciplined. This means consistently putting away money and not touching it (except in rare situations — more on that here). Do not treat your 401k as a savings account or an optional expense. Make regular contributions.

• Start early. The best time to get started investing was yesterday. The second best time is right now. Wherever you are in your financial journey, get started as soon as possible. Investments earn returns, but those returns can compound over time.

That’s why it’s so important you understand exactly what your 401k is — and why it’s so important to your retirement strategy.

So, how much should you invest in your 401k?

Okay. So, while investing is highly personal and financial goals should be personalized, you are here so we can teach you to be rich. We have some advice to get you started.

How much you should actually be investing each month depends on a system we call the Ladder of Personal Finance. Check out this video, or read about the Ladder below:

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1. Your employer’s 401k match. Each month you should be contributing as much as you need to in order to get the most out of your company’s 401k match. That means if your company offers a 5% match, you should be contributing AT LEAST 5% of your monthly income to your 401k each month.

We’ve already discussed the importance of this – don’t throw away free money and the returns from that free money.

2. Whether you’re in debt. Once you’ve committed yourself to contributing at least the employer match for your 401k, you need to make sure you don’t have any debt. Remember, if you have employee matching, you are effectively earning a 100% return on every penny you invest in your 401k — that is significantly more than the interest you would save by paying down your debt.

If you don’t, great! If you do, that’s okay. You can check out my system on eliminating debt fast to help you.

3. Your Roth IRA contribution. Once you’ve started contributing to your 401k and eliminated your debt, you can start investing in a Roth IRA. Unlike your 401k, this investment account allows you to invest after-tax money and you collect no taxes on the earnings. As of writing this, you can contribute up to $6,000/year ($7,000 if you are 50 or older).

Once you’ve contributed up to that $6,000 limit on your Roth IRA, go back to your 401k and start contributing beyond the match. Remember, you can contribute up to $19,500/year on your 401k if you’re under 50. So, you should have no issue continuing to invest in your 401k. And if you are able to max it out, please be sure to give us a call. We’re going out for drinks — on you.

“But, why would I max out my Roth IRA before my 401k if it’s so good?”

There’s a lot of nerdy debate in the personal finance sphere about this very question, but our position is based on taxes and policy.

Assuming your career goes well, you’ll be in a higher tax bracket when you retire, meaning that you’d have to pay more taxes with a 401k. Also, tax rates will likely increase in the future.

The Ladder of Personal Finance is pretty handy when considering what to prioritize when it comes to your investments, but it is just a tool. For more about the Ladder of Personal Finance and how to make it work for you, check out THIS video where I explain it.

PRO TIP: The video is less than three minutes long. It is worth your time.

Start earning more for a better financial future

The answer to “How much should I have in my 401k?” is an important one — but it’s not the only way to ensure your financial future.

We are going to let you in on a little secret. It is one that has helped thousands of people live their Rich Life:

There’s a limit to how much you can save, but there’s no limit to how much money you can earn.

Bonus: Want to know how to make as much money as you want and live life on your terms? Download our FREE Ultimate Guide to Making Money

Many people don’t understand this and because of that, they’re content with contributing very little to their retirement accounts. When they actually retire, they’re surprised when their nest egg is a lot smaller than they thought and they have to get a job as a Walmart greeter to pay for their condo.

If you realize that your earning potential is LIMITLESS, you can truly get started working toward living a Rich Life today.

We recommend three ways to start earning more money:

1. Negotiate a salary raise. 99% of people are content with not asking for a salary raise. So if you are willing to negotiate, that puts you in the 1% and showcases to your boss that you’re a Top Performer willing to work hard for more money.

2. Start a side hustle. One of my favorite money-making tactics is starting your own side hustle. We all have skills. Why not leverage those skills to start earning more money in your free time?

3. Practice conscious spending. If you want to be rich, you have to start spending money like a rich person. No, I don’t mean going out and buying a Corvette. I mean spending money consciously so you know exactly how much you have to spend each month — while earning money passively.

We want to help you get started on one of these tactics today: Starting a side hustle.

We know. We know. The word “side hustle” tends to dredge up images of people working odd jobs and late hours, running errands, or making something to sell — but the reality isn’t like that at all! Freelancing is one of the easiest ways to have a side hustle, and you can get started right now.

Living a passive-income lifestyle with little to no work is a fantasy. If you are serious about earning additional income, you have to take an active role in your side hustle. Eventually, you may be able to earn money passively — but why would you be content with that. More is more, and we can show you how to get there.

That’s why we want to offer you my Ultimate Guide to Making Money.

We created this all-inclusive guide because we were sick of the awful advice that we found masquerading as legitimate money-making tips.

Stuff like:

• “Earn $100k a year in 4 hours a day.”

• “You can make money by joining an MLM opportunity.”

• “You just need to learn to live within your means.”

UGH.

No. You cannot expect to earn that much money with only a few hours of work when you are just getting starting.

If you can earn $100k per year in 4 hours a week, why would you only 4 hours a week? We want to maximize earns AND have a good quality of life.

MLM opportunities and other ready-made side hustle solutions only make money for the people selling them. You can make more as a freelancer than you would from any of those pre-fab solutions.

Living a good life can mean going outside of your budget. If you are working late hours at a side hustle, you may need to have a sandwich for dinner to get it all in before bedtime or you may opt to order takeaway from a restaurant instead of taking the time to cook. There is nothing wrong with that. Your Chinese delivery or sandwich ingredients cost maybe $10. If you are earning $400 on your side hustle and that convenience means you can work through the evening, it makes cents (see what we did there?)

Enter your info below and get the PDF for free today — and start the extra money you need to make your retirement goals come true.

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How Much Should You Really Have in Your 401k (by age) is a post from: I Will Teach You To Be Rich.

from Finance https://www.iwillteachyoutoberich.com/blog/how-much-should-i-have-in-my-401k/ via http://www.rssmix.com/

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andrewdburton · 3 years

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Should I Pay Off My Student Loans Or Invest? Here’s How To Decide

Student loans in America average near the $40,000 mark, and it makes it difficult to decide whether to invest or pay off student loans. Because, let’s face it, getting out of debt and saving for retirement is equally as important.

Pay down debt or invest? Factors to consider

There are three elements that determine which route will suit your needs best. These are:

The mathematical approach: Using math, you can figure out what will be more beneficial – paying down debt or using extra cash to invest. For example, if you have a higher interest rate than what you’re earning on your investment, you might opt to pay off the debt first. But math isn’t the only important factor at play.

The emotional approach: Having student loans looming over your head sucks, and it’s only natural to want to get rid of it. The emotional decision might lead you to a decision that makes you feel better, even if it doesn’t make as much sense financially.

A hybrid approach: With the hybrid approach, you do both – pay down debt while simultaneously saving for retirement. But this approach deserves some investigation to make sure your split has the best possible result – we’ll get into those nuances in this article.

But before you dive in, it’s important to understand external factors may affect your decision.

Your personal financial position

A critical factor in deciding whether to pay down your debt as opposed to boosting your retirement savings is the effect the move will have on your finances. Things to consider, include:

Emergency savings: It’s important to have money tucked away for a rainy day. These funds need to be instantly accessible and are used in the event of a financial crisis. While financial pundits may recommend a good three to six months’ worth, our founder Ramit Sethi considers 12 months’ worth of emergency savings a safer option. Your emergency savings need to be topped up first before you can start paying additional funds towards debt or investments.

Payments up-to-date: If you happen to be behind on any of your debt, it’s better to get back on track before adding money to an existing installment. This is because those arrears can wreak havoc on your financial standing with your bank and other service providers. It can also wreck your credit score.

Your basic needs are met: While long-term plans such as debt repayments and retirement planning benefit from added payments, it’s important that immediate needs are seen to. This includes housing, food, transport, and utilities.

You still have fun money: When you’re not able to do any of the things you love, the road to financial freedom becomes a dreadful journey. Choose something that you’re happy to save some guilt-free spending on. This amount can increase as you start ticking financial goals off your list.

Bonus: Making more money can help you get out of debt faster while still having room to invest. Learn how by downloading our FREE Ultimate Guide to Making Money

The amount of your debt

The average student loan debt of $40,000 might seem doable, especially if you’re earning a decent paycheck. But let’s consider those specialist degrees where your student loans creep up to the hundreds of thousands of dollars. Suddenly this amount seems like a behemoth and it might not make sense to throw money at anything else until you get this huge number under control.

The flipside is that with all those years you devote to paying off your student loans, you could have built up your retirement savings. You may want to predetermine a goal that will give you some wiggle room to focus on investments. For instance, you might set the goal that once you reach the halfway mark of your debt, you’ll start contributing to your retirement accounts.

Remaining years

If you’re right at the beginning of the loan period, for instance, fresh out of college and working that first job, your priorities might be different to someone close to retirement.

The cost of your finance

There are only a few instances where the debt interest rates are lower than what you would earn on an investment, but it happens. When it does, you want to make sure that you’re getting the best value for money. A low-interest rate student loan might just be better off with that minimum installment if you haven’t maxed out your 401(k) just yet.

However, if the interest you’re paying is on the higher end, you might want to consider paying your debt first before increasing your investment contributions.

Student loan options – which one’s yours?

Fast-tracking your student loan payments can save you a stack of money in the long term.

For instance, an extra $100 goes a long way to clearing off the interest portion faster.

Here’s an example. Let’s say you have a $10,000 student loan at a 6.8% interest rate with a 10-year repayment period. If you go with the standard monthly payment, you’ll pay around $115 a month. But look at how much you’ll save in interest if you just pay $100 more each month:

Monthly paymentsTotal interest paidYou save$115$3,810$0$215$1,640$2,169$315$1,056$2,754$415$728$3,027

It’s worth knowing that there are a number of options open to those who wish to pay off their student loan debt.

Understanding the type of loan that you have (or are planning to take on)

There are three student loan types to consider: federal, private, and refinance loans. Each has its own set of rules and carries a few pros and cons.

A big plus across the board, however, is the fact that you can pay extra or make prepayments into an education loan without penalty charges. How’s that for an incentive?

Federal student loans

The government makes provision for loans for students in order to access higher education. Instead of students borrowing from banks and other financial institutions, these loans are entered into with the federal government.

There are three types:

Direct subsidized – suitable for students who need financial assistance.

Direct unsubsidized – no need to prove financial need, available to all applicants.

PLUS loans – these loans are for graduates and professionals to cover the shortfall of tuition not covered by other programs. You will need a good credit score, and these loans have a higher interest rate than other federal student loans.

Positives include that it’s easier to apply for a federal loan and in times of hardship, there are deferral and forbearance options. They also tend to offer lower interest rates as the rates are controlled by the government.

It’s important to note that these loans carry costs and charge an initiation fee of 1.057% to 1.059% for regular student loans and 4.228% to 4.236% for PLUS loans.

Private student loans

There are a number of private student loan products offered by banks and other institutions. What’s great about these loans is that they can tailor the loan type to suit the need, for instance, there is a loan for bar exams, another for medical school, and even a product for those with bad credit.

These loans tend to be a little more costly and while there aren’t initiation costs, the interest rate is not fixed by the government. This means that the rate can be substantially higher than that charged on federal loans.

Applicants will also need to show a good credit score. It’s also worth knowing that these loans aren’t part of any government forgiveness programs. So why get it at all? Turns out these loans are great for those who have high study costs.

Student loan refinance

High-interest rates on a student loan are a real kick in the teeth and what better way to get your own back than by opting for a product with a lower rate? Student loan refinance products are offered to students who have a decent credit score with the aim of reducing their interest rate. This is not a great option for those with federal loans, however, as you will lose the federal protections and benefits should you opt to refinance.

Bonus: Ready to ditch debt, save money, and build real wealth? Download our FREE Ultimate Guide to Personal Finance.

Your retirement options

Saving for retirement is an essential component of building wealth. It also happens to have tax and other benefits that you simply can’t get from regular savings or investments. But how do you make the decision to pay your future self when you still have debt? It will be easier to unpack that mule of a question when you understand retirement investment options a little better.

Roth and Traditional IRA

These retirement plans allow you to contribute to your retirement savings up to a certain threshold per year. In 2020 and 2021, this annual threshold was $6,000. That means that if you’re worried about paying off debt or saving towards retirement, first check that you’re not already maxed out on these contributions.

It’s worth noting that a Roth IRA also has an earnings limit of $140,000 for individuals.

401(k)

There is no cheaper way to fund your retirement than a matched 401(k). Read that again. If you have extra cash lying around and you’re not maxed out on this, you’re losing out. Let’s explain.

A matched 401(k) means that your employer will match your 401(k) contributions either fully or partly up to a certain percentage. Now just bear in mind, there is a limit of just under $20,000 per year, or 100% of your salary, whichever is the smallest.

How to pay down debt while investing

Know what your financial position is

Okay, we’ll admit it, you’re going to have some work to do. But a little bit of effort now will save you a ton of financial admin in the future. There are a few things you need to know before you can make a decision about whether to pay student loans or invest.

What is my outstanding debt? You want to check the installments, when your last installment is due, and what the settlement amount is. This may seem like a no-brainer, but there’s a surprising amount of people who prefer to play ostrich to their debt. They’re either scared that the debt is more than they thought, or they’re embarrassed to admit that they’re probably net negative (which means their debt is more than their assets, yikes!). But here’s the thing, no one cares (or will for too long). Also, it’s not going to go away just because you don’t want to think about it.

Which item has the highest interest rate? Who knows, your student loans might be the least of your concern. Check credit card and personal loan details too to make sure you’re focusing on the right debt. If these are off the charts, you might be a good candidate for debt consolidation.

What am I paying each month? We want you to be conscious about your spending. You need to know what your fixed expenses are, what you’re spending on savings and investments, all your fun money, and yes, it’s important to own up to those monthly subscriptions that you haven’t used in over a year.

Bonus: Ready to ditch debt, save money, and build real wealth? Download our FREE Ultimate Guide to Personal Finance.

Use the envelope system

An envelope system is a budgeting tool that allows you to allocate all your money to payments, savings, and such. It works on the premise that, if you had cash, you would stick your dollar bills into various envelopes and then mail them off to cover the bills.

An envelope system works well because you decide the categories. While housing and utilities are a given, you can also have an envelope for lattes, entertainment, etc. Sure, you can decide that the biggest chunk of your salary goes to Target, but the point is to cover your expenses and bills, put aside money for saving and investing, and still have some fun money.

When you’ve used all your entertainment money, the idea is that it’s done. When the envelope is empty, that’s when you stop. Not only will this allow you to allocate more effectively, but it will also stop the frustrating overspending that seems to befall us when we’re low and there’s this great pair of shoes… stop!

Now, here’s the great part. You can have an envelope for additional payments to your student loans AND you can have an envelope for investments.

Choose investment options that suit your pocket

When you have to ask the question, “Should I pay off my student loans or invest?” chances are good that you’re not interested in spending a ton of cash on fees and expensive investment products.

You have two enormous financial goals and the quicker the better. That means you’re going to need options that will allow you to do both.

So out comes Ramit Sethi’s Ladder or Personal Finance. It’s a gamechanger when it comes to building wealth and vanquishing debt. And here’s how it works:

Get that 401(k) going: It’s cheap investing and your future self will thank you.

Slash the high-interest debt: High-interest debt just sticks around for too long. Boost your repayments to get this down fast.

Contribute to a Roth IRA: Retirement is cheap investing, oh wait, we said it already. But hey, if it’s true it’s true.

Max out your 401(k): You want to get the most out of this product!

Diversify your portfolio: Start looking at other investment products such as stocks, CDs, and bonds.

The bottom line

Let’s face it, student loans are a drag. It’s only natural to want to get rid of them ASAP. But here’s the thing, we’re also getting older. Investing shouldn’t be relegated to some future date when things are peachy and the debts are done.

Do you know your earning potential?

Take my earning potential quiz and get a custom report based on your unique strengths, and discover how to start making extra money — in as little as an hour.

Start The Quiz

Should I Pay Off My Student Loans Or Invest? Here’s How To Decide is a post from: I Will Teach You To Be Rich.

from Finance https://www.iwillteachyoutoberich.com/blog/how-to-pay-off-student-loans/ via http://www.rssmix.com/

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andrewdburton · 3 years

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What is a diversified portfolio? (with examples)

When it comes to building the best investment portfolio, you’ll often hear that diversification is key. But what does that even mean — and why do you need to bother with it? After all, you already own a wide range of stocks, from that skyrocketing Amazon stock to your Apple and eBay stocks, and you’re raking in the profits. What could go wrong?

If you’re relying on a portfolio filled with big tech stocks or energy stocks to get you through to retirement — or if you’re banking on picking the right stocks forever — you may be in for a surprise during the next market downturn. It’s pretty easy to pick the “right” stocks with the market is overvalued. But, when a market correction happens, you’re probably going to be wishing you’d paid more attention to the advice about diversification.

If you want to build wealth and make the right moves for your investments, you need to build a diversified portfolio.

What is diversification?

Have you ever heard the saying, “Don’t put all your eggs in one basket?” That’s the same principle that drives investors to diversify their investments.

When you diversify your investments, you spread your money out across different investment options to lower the risk that comes with investing. In other words, investors use diversification to avoid the huge losses that can happen by putting all of their eggs in one basket.

For example, when you diversify, you allocate a portion of your investments to riskier stock market trading, which you spread out across different types of stocks and companies. When diversifying, you also put money into safer investments, like bonds or mutual funds, to help balance out your portfolio.

The idea behind diversification is that you avoid relying on one type of investment or another. When one of your investments takes a tumble, the others act as a life raft for your money, providing solid returns until the riskier investments stabilize.

Bonus: Ready to learn more about investing? Download our FREE Ultimate Guide to Personal Finance.

Why is diversification important?

A lack of diversification can cause big trouble for your money. That’s because:

Investing with the main goal of making money immediately is an easy way to lose. Anything can happen in the future. Stocks tumble, markets crash, and fluctuations and corrections happen.

It’s not enough to diversify the types of stocks you invest in, either. You want to focus on different types of stocks, not just tech or energy stocks, but if the whole market takes a downward turn, or if a correction happens, you need other investments to help balance it out.

Having a variety of investments in your portfolio is the only way to balance out market downturns. If you don’t diversify, you’re banking on the idea that your investments will always pan out the way you want them to. And, if you ask any seasoned investor, that’s not the best plan.

Let’s say that you think tech stocks are the future. The tech industry is growing at a monumental pace, and you’ve been lucky with your tech stock purchases thus far. So, you take all of your investment money and you dump it into buying stock for large-cap tech company stocks.

Now let’s say that the tech stocks have a steep uphill trajectory, making you tons of money on your investment. A few months later, though, bad news about the tech sector makes headlines, and it causes your cash-machine stocks to plunge, losing you tons of money in the process. What recourse do you have other than to sell at a loss or hold and hope they recover?

Now, let’s say you invested heavily in large-cap tech stocks, but you also invested in small-cap energy stocks or medium-cap retail stocks, as well as some mutual funds, to balance it out. While the other types of investments have lower returns, they’re also consistent.

When your sure-thing tech stocks take a nosedive, your safer investments help to protect you with ongoing returns, and you can better afford the losses from the riskier investments you made. That’s why diversification is important. It protects your money while letting you make riskier investments in hopes of bigger rewards.

Diversification breakdown by age

Diversification is important at any age, but there are times when you can and should be riskier with what you invest in. In fact, most money experts encourage younger investors to focus heavily on riskier investments and then shift to less risky investments over time.

The rule of thumb is that you should subtract your age from 100 to get the percentage of your portfolio that you should keep in stocks. That’s because the closer you get to retirement age, the less time you have to bounce back from stock dips.

For example, when you’re 45, you should keep 65% of your portfolio in stocks. Here’s how that breaks down by decade:

20-year-old investor: 80% stocks and 20% “safer” investments, like mutual funds or bonds

30-year-old investor: 70% stocks and 30% “safer” investments, like mutual funds or bonds

40-year-old investor: 60% stocks and 40% “safer” investments, like mutual funds or bonds

50-year-old investor: 50% stocks and 50% “safer” investments, like mutual funds or bonds

60-year-old investor: 40% stocks and 60% “safer” investments, like mutual funds or bonds

70-year-old investor: 30% stocks and 70% “safer” investments, like mutual funds or bonds

Diversification vs. asset allocation

While asset allocation and diversification are often referred to as the same thing, they aren’t. These two strategies both help investors to avoid huge losses within their portfolios, and they work in a similar fashion, but there is one big difference. Diversification focuses on investing in a number of different ways using the same asset class, while asset allocation focuses on investing across a wide range of asset classes to lessen the risk.

When you diversify your portfolio, you focus on investing in just one asset class, like stocks, and you go deep within the class with your investments. That could mean investing in a range of stocks that have large-cap stocks, mid-cap stocks, small-cap stocks, and international stocks — and it could mean varying your investments across a range of different types of stocks, whether those are retail, tech, energy, or something else entirely — but the key here is that they’re all the same asset class: stocks.

Asset allocation, on the other hand, means you invest your money across all categories or asset classes. Some money is put in stocks and some of your investment funds are put in bonds and cash — or another type of asset class. There are several types of asset classes, but the more common options include:

Stocks

Mutual funds

Bonds

Cash

There are also alternative asset classes, which include:

Real estate, or REITs

Commodities

International stocks

Emerging markets

When using an asset allocation strategy, the key is to choose the right balance of high- and low-risk asset classes to invest in and allocate the right percentage of your funds to lessen the risk and increase the reward. For example, as a 30-year-old investor, the rule of thumb says to invest 70% in riskier investments and 30% in safer investments to ensure you’re maximizing risk vs. reward.

Well, you could allocate 70% of your investment to a mix of riskier investments, including stocks, REITs, international stocks, and emerging markets, spreading that 70% across all these types of asset classes. The other 30% should go to less risky investments, like bonds or mutual funds, to lessen the risk of losses.

As with diversification, the reason this is done is that certain asset classes will perform differently depending on how they respond to market forces, so investors spread their investments across asset allocations to help protect their money from downturns.

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Components of a well-diversified portfolio

In order to have a well-diversified portfolio, it’s important to have the right income-producing assets in the mix. The best portfolio diversification examples include:

Stocks

Stocks are an important component of a well-diversified portfolio. When you own stock, you own a part of the company.

Stocks are considered riskier than other types of investments because they are volatile and can shrink very quickly. If the price of your stock drops, your investment could be worth less money than you paid if and when you decide to sell it. But, that risk can also pay off. Stocks also offer the opportunity for higher growth over the long term, which is why investors like them.

While stocks are some of the riskiest investments, there are safer alternatives. For example, you can opt for mutual funds as part of your strategy. When you own shares in a mutual fund, you own shares in a company that buys shares in other companies, bonds, or other securities. The entire goal of a mutual fund is to lessen the risk of stock market investing, so these are typically safer than other investment types.

Bonds

Bonds are also used to create a well-diversified portfolio. When you buy a bond, you’re lending money in exchange for interest over a fixed amount of time. Bonds are typically considered safer and less volatile because they offer a fixed rate of return. And, they can act as a cushion against the ups and downs of the stock market.

The downside is that the returns are lower, and are acquired over a longer-term. That said, there are options, like high-yield bonds and certain international bonds, that offer much higher yields, but they do come with more risk.

Cash

Cash is another component of a solid portfolio, and it includes liquid money and the money that you have in your checking and savings accounts, as well as certificates of deposit, or CDs, and savings and treasury bills. Cash is the least volatile asset class, but you pay for the safety of cash with lower returns.

Additional components of diversification

There are other components of diversification, too. As with the other asset classes, these alternative assets are used by some investors to further protect their portfolios. These include:

Real estate or REITs

You can also use real estate funds, including real estate investment trusts (REITs), to diversify your portfolio and provide protection against the risks of other types of investments. Real estate funds work similarly to mutual funds, but rather than investing in a company that buys shares in bonds, stocks, and other common securities, you’re investing in a company that owns, operates, or finances income-generating real estate, like multi-unit apartments or rental properties.

Asset allocation funds

An asset allocation fund is a fund that is built to offer investors a diversified portfolio of investments that is spread across various asset classes. In other words, these funds are already diversified for investors, so they’re often the only fund necessary for investors to have a diversified portfolio.

International stocks

Investors also have the option of investing in international stocks to diversify their portfolios. These stocks, issued by non-U.S. companies, can offer huge potential returns, but as with any other investment that offers the potential for a big payoff, they can also be extremely risky.

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Diversified portfolio example #1: The Swensen Model

Just for fun, we want to show you David Swensen’s diversified portfolio. David runs Yale’s fabled endowment, and for more than 20 years he generated an astonishing 16.3% annualized return — while most managers can’t even beat 8%. That means he’s DOUBLED Yale’s money every four-and-a-half years from 1985 to today, and his portfolio is above.

David is the Michael Jordan of asset allocation and spends all of his time tweaking 1% here and 1% there. You don’t need to do that. All you need to do is consider asset allocation and diversification in your own portfolio, and you’ll be way ahead of anyone trying to “pick stocks.”

His excellent suggestion for how you can allocate your money:

ASSET CLASS% BREAKDOWNDomestic equities30%Real estate funds20%Government bonds15%Developed-world international equities15%Treasury inflation-protected securities15%Emerging-market equities5%TOTAL100%

What do you notice about this asset allocation?

No single choice represents an overwhelming part of the portfolio.

As illustrated by the tech bubble burst in 2001 and also the housing bubble burst of 2008, any sector can drop at any time. When it does, you don’t want it to drag your entire portfolio down with it. As we know, lower risk generally equals lower reward.

BUT the coolest thing about asset allocation is that you can actually reduce risk while maintaining a solid return. This is why Swensen’s model is a great diversified portfolio example to base your portfolio on.

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Diversified portfolio example #2: Ramit Sethi’s diversified portfolio example

This is our founder, personal finance expert Ramit Sethi’s investment portfolio.

The asset classes are broken down like this:

ASSET CLASS% BREAKDOWNCash2%Stocks83%Bonds15%TOTAL100%

Here are three pieces of context so you understand the WHY behind the numbers:

Lifecycle funds: The foundation for my portfolio

For most people, Ramit recommend the majority of investments go in lifecycle funds (aka target-date funds).

Remember: Asset allocation is everything. That’s why Ramit picks mostly target-date funds that automatically do the rebalancing for him. It’s a no-brainer for someone who:

Loves automation.

Doesn’t want to worry about rebalancing a portfolio all the time.

They work by diversifying your investments for you based on your age. And, as you get older, target-date funds automatically adjust your asset allocation for you.

Let’s look at an example:

If you plan to retire in about 30 years, a good target date fund for you might be the Vanguard Target Retirement 2050 Fund (VFIFX). The 2050 represents the year in which you’ll likely retire.

Since 2050 is still a ways away, this fund will contain more risky investments such as stocks. However, as it gets closer and closer to 2050, the fund will automatically adjust to contain safer investments such as bonds, because you’re getting closer to retirement age.

These funds aren’t for everyone though. You might have a different level of risk or different goals. (At a certain point, you may want to choose individual index funds inside and outside of retirement accounts for tax advantages.)

However, they are designed for people who don’t want to mess around with rebalancing their portfolio at all. For you, the ease of use that comes with lifecycle funds might outweigh the loss of returns.

Conclusion

As an investor, it’s never wise to put all of your eggs in one basket. The key is to find the right strategy, whether that’s focusing on one asset category and going all-in on a wide range of investments within that category or spreading out your investments across all asset classes.

Either type of investment strategy can help reduce the risk while increasing the possibilities of rewards, which is what investing is all about. Make sure you do your research and have the right approach for your needs, and you should be able to reap the benefits that a well-diversified portfolio offers.

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What is a diversified portfolio? (with examples) is a post from: I Will Teach You To Be Rich.

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andrewdburton · 3 years

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Using a Roth Conversion Ladder to Retire Early

Many of us have dreamed of the potential of early retirement or FIRE, but it can be overwhelming to figure out how you might sustain yourself as you move into this new phase of your life.

Luckily, there are many options. Aside from saving the amount you need to retire, you can also leverage several tax loopholes in order to acquire funds in your tax-advantaged investment accounts.

One loophole: Build a Roth conversion ladder.

A Roth conversion ladder works by converting money from a 401k to a Traditional IRA to a Roth IRA, and withdrawing the principal amount after five years without any penalties.

This means you’ll be able to withdraw money from your 401k and Roth IRA earlier — allowing you to use your money faster and retire sooner (if that’s your thing).

There is a bit more to it than that though. To fully understand how it works, we need to take a look at the issues with a Roth IRA on its own.

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Roth IRAs and early retirement

When considering early retirement, traditional IRAs and 401ks can seem to put you in an impossible situation. Don’t get us wrong. We love both of these forms of retirement savings, and they absolutely have their place on the journey of smart investing for retirement.

Both of these accounts enable you to save for retirement in a highly productive way. A traditional IRA leverages your after-tax income to compound interest on your investments over time. You also don’t have to pay any taxes on it until after you withdraw it.

The drawback? You can only withdraw your money once you reach retirement age. That means when you turn 59 1/2, you can finally get access to all that money, likely years after you would like if you are planning to retire early.

Traditional IRA

Uses after-tax income

Pay no taxes when you withdraw at age 59 ½

10% penalty if you withdraw early

401k

Uses pre-tax income

Employer match

No taxes on it until you withdraw at age 59 ½

10% penalty if you withdraw early

A 401k offers you similar gains and drawbacks to an IRA, giving you the chance to contribute pre-tax income this time which an employer can match. You still pay no taxes until you withdraw it at retirement age, but you also incur a penalty of 10% if you withdraw it before that age.

This information can make some people feel like they are stuck between a rock and a hard place. But, luckily for you, this is where the Roth conversion ladder comes into play whether you have an IRA or a 401k.

Bonus: Unsure what the difference between a 401k and a Roth IRA is? Check out my Ultimate Guide to Personal Finance where I explain everything you need to know about retirement accounts.

What is a Roth Conversion Ladder?

Simply put, a Roth conversion ladder is the loophole you have to withdraw a large pool of money from your retirement funds, both tax and penalty-free. Without this technique, anyone in the FIRE community will end up getting an early withdrawal penalty of up to 10%, taking quite a chunk out of those hard-earned savings.

Most of those seeking early retirement do so because they have amassed a large amount of net worth. Their retirement investment accounts, such as a 401k or traditional IRA, will reflect this worth. For most of them, they plan to live on these investments for the rest of their life. The Roth conversion ladder allows them to access the accounts early in order to do that.

The Roth conversion ladder essentially involves moving your money from your restrictive retirement accounts to more of an open system. Keep reading to figure out exactly how we recommend doing this.

Who should use a Roth Conversion Ladder?

A Roth conversion ladder is specifically useful for people who want to retire early. For example, if you plan to retire after you are 59 1/2, you will only lose out by transferring your money into a Roth IRA since it is no longer tax-protected. The positive aspect of the Roth conversion ladder is that it allows you to withdraw money to live in during early retirement.

You should NOT use this method to supplement your income to achieve a lifestyle you can’t otherwise afford. Instead, the money should realistically stay in your retirement accounts to accrue as much tax-free interest for as many years as possible, or you will find retirement quite a challenge.

How to set up your Roth Conversion Ladder

Utilizing a loophole to the penalty system in place around retirement funds might sound complicated. However, building an effective Roth conversion ladder is simply a matter of moving your money around and patience until it becomes usable. Start your Roth conversion ladder in just four steps.

Start by rolling over your 401k into a Traditional IRA. You should do this once you quit your job. From the time you quit any job, you are free to move your 401k money from that job into an IRA. Also, be aware you aren’t obliged to keep it with the same company that was holding your original 401k. Make the choice that is best for you after considering the options.

The next step is to transfer some funds from the traditional IRA account into a Roth IRA. Transfer the annual amount you want to access in five years. Do you already have some income from Roth investments you made while working? Then, we suggest only transferring the amount to bring this up to the amount of your annual expenses instead of transferring the entire sum of annual expenses. You will lose less money on taxes doing this in the end.

Next comes patience. Wait five years. The “Five Year Rule” applies to any investments in an account like a Roth IRA. It means that the investor can only take out the invested money after a five-year waiting period.

Finally, withdraw the money you converted like an old friend you haven’t seen for five years.

The “ladder” part of the strategy comes into it when you use the technique on a recurring annual basis. As you move toward retirement, you continue to use the ladder to supplement your annual funds until you have reached five years before 59 1/2 when the funds become available.

Why not just contribute annually to a Roth IRA?

You take money out of a tax-protected account when you transfer money from a traditional IRA into a Roth IRA. That means you need to be ready to pay taxes on any money you transfer from a 401k or IRA into a Roth IRA. This is because contributions to a Roth IRA don’t lower your adjusted gross income, whereas you can get tax breaks when you make contributions to your 401k or traditional IRA. Instead, the money you transfer becomes taxable income for the year.

Another reason you should avoid contributing to a Roth IRA annually is if you are getting anywhere close to emptying your retirement accounts before retirement age. You need to have enough saved to keep up your preferred lifestyle for as long as you plan to be in retirement.

Additionally, you can only take money out of a Roth IRA five years after initially transferring the money into the account. You need to find some money to live on until then. You might already have this covered from

There are plenty of ways to do that, though. Here are a few we at IWT love:

Create a side hustle

Negotiate your rent

Sell stuff online

Don’t forget about standard retirement accounts for early retirement

Since your Roth conversion ladder only provides you money until you reach 59 ½ years old, you need to have a retirement savings plan for the years beyond that. The first step to finding out exactly how much you need for retirement, which you can do following the steps in the next section. However, when it comes to investing the money you save annually, you need to know what kinds of standard retirement accounts you should keep to make the most out of your money for early retirement?

You will likely be saving a significant portion of your income each year for retirement, particularly if your goal is to do this early. However, it would be best to maximize your retirement accounts to make the journey faster. Although it will look different for anyone on the road to financial independence, the common accounts you can build while you are still working include:

Traditional IRA

403b

401k

Each of these works slightly differently and has various potentials of effectiveness for your retirement funds. So what do we mean by maxing these accounts out each month or year?

All three of these accounts are tax-protected. The government caps the amount of investment in these so that those in a higher wage bracket don’t benefit more from tax breaks than most lower earners.

Reaching these caps is your goal.

From the time you build your net worth to your retirement goal, you are then ready to retire early and reap the rewards of these accounts using the Roth ladder strategy.

Commonly asked questions about a Roth conversion ladder

How much money should I convert each year?

The amount you should convert each year you employ the Roth ladder strategy depends on how much you have saved and how much you intend to spend each year. As long as you have enough saved for retirement, you should be able to send over the intended amount you will spend annually. So the real question is, how much should you save for retirement?

You’ll need to look at three numbers to figure this out:

Your income, meaning the amount you make a year after tax.

The amount you spend each year, or your expenses. These include absolutely everything you spend money on during the year, including utilities, groceries, rent, clothes, vacations, insurance, gas, etc.

Your intended retirement date. Once you start considering “early” retirement, you get into a pretty subjective area. You need to set out a timeline for your early retirement plans to be truly prepared to be financially independent for the rest of your life.

You might figure all these numbers out and then, six years later, experience a significant life change. Remember to be flexible with all of these, whether they go up or down. You never know what life has in store for you.

Once you have calculated these numbers, you can come up with an annual savings rate for the precise amount you should be saving each month for your retirement.

You can use this convenient calculator to figure it out. It utilizes the 4% Rule of a safe withdrawal rate. Do you not want the calculator to do the work for you? You can figure out your own 4% Rule number by:

Figuring out your yearly expenses.

Multiply this by the number of years you anticipate being retired. For typical retirees, this will be estimated at 25. For early retirees, add the assumed amount of years.

The estimates below are all based on the expenses being multiplied by the typical 25 years assumed for a retiree.

ANNUAL EXPENSESHOW MUCH YOU NEED TO SAVE$20,000$500,000$30,000$750,000$40,000$1,000,000$50,000$1,250,000$60,000$1,500,000$70,000$1,750,000$80,000$2,000,000

Although the numbers might seem quite large, we are talking about what you need to save across a diversified portfolio of accounts over quite a few years. As long as you are willing to put the effort in and realize that the more you save, the earlier you can reach your retirement goals, you won’t have an issue hitting your goal numbers.

How much should I expect to pay in taxes on a Roth IRA conversion?

The exact number depends on the exact amount you transfer each year, tax percentages the year you transfer and inflation rates as time moves forward. However, the amount isn’t quite as important as the method you will use to pay that amount. Once you have figured out exactly how much you should expect to pay each time you move money from your 401k or IRA to a Roth, you need to be prepared to pay it.

However, you shouldn’t have to worry too much about this since you will likely be living off the Roth contributions you made while working with a supplement of the money from your retirement funds. Moreover, since Roth contributions are already taxed, your tax bracket will only account for the yearly transfers and thus should be very low.

Is there a limit I can convert into a Roth IRA?

There is no limit to how much you can convert from your various retirement accounts into a Roth IRA. However, keep two things in mind.

First, once that money leaves the tax-protected accounts, you will have to be ready to deal with the annual taxes.

The second thing to remember is that a Roth ladder strategy only works as it should if you don’t run out of money. Therefore, it is essential to evaluate the long term to ensure you will still have the funds to continue supporting your lifestyle even after turning 59 1/2.

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What is the best time to start a Roth conversion ladder?

When implementing a Roth conversion ladder, you should start your first Roth conversion the year you plan on retiring. After that, you should continue to make conversions for the annual amount you require to live each year, with conversion continuing up to 5 years before you turn 59 1/2. That way, the only financial “gap” you will have from your Roth conversion will be in the first five years of retirement. Once you reach 59 1/2, you can freely withdraw money from any of your retirement accounts.

You can also do a Roth conversion after you have reached 59 1/2 years old. However, this kind of conversion always comes with a tax bill. While this is acceptable when the alternative is taking a 10% penalty fee that would come from withdrawing from your retirement accounts early, it isn’t necessary after you have reached retirement age.

Additionally, when you move the funds out of your 401k or a traditional IRA, it means you will miss out on any tax-free growth you could have had.

Playing your cards right during your working years can seem worthless if you have to take penalty fee after penalty fee to access your money. However, using a Roth conversion ladder gives you a way to join the FIRE community, enjoying early retirement without a 10% fee for it. If you are wondering how you might jump on this bandwagon of financial independence, check out our Ultimate Guide to Making Money so that you can start your own path to join the FIRE community.

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Using a Roth Conversion Ladder to Retire Early is a post from: I Will Teach You To Be Rich.

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andrewdburton · 3 years

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Informational interview questions to ask that create a lasting impression

What if you lost your job today and needed a new job in a week? Could you do it?

What if you just wanted some advice for a tough career decision? Is there someone you could ask?

Or what if you wanted to make a big career change, like switching industries? Is there anyone you could call for help?

The secret to solving all of these challenges is the same: informational interviews.

Informational interviews: What they are and how they work

You’ve likely heard employment buzzwords like networking or mentoring being thrown around, but have you ever heard of the term informational interview? Informational interviews can be the difference between a thriving career and a career stalemate, but not everyone is familiar with how these types of interviews work.

At a high-level, here’s how an informational interview works:

You find someone doing the job you’re interested in

Invite them out to coffee or ask them to chat over the phone

Ask key questions about the job and gather insider information

Then, use what you learned to make an informed decision about your career

Simple, right? It is — as long as you understand the rules:

It’s not about a job. You’re not actively trying to land a new position with an informational interview.

You’re there to learn. The purpose of this type of interview is to learn about what the other person does, how they do it, and what they like or dislike about their job.

You listen and they talk. The other person does the talking, but you steer the conversation with insightful questions that matter to both of you.

That said, informational interviews can most certainly lead to more job opportunities in the future, but only if you conduct them in the right way by asking the right questions to the right people.

Let us show you how to master this powerful job search tool.

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How to ask for an informational interview (and who to ask!)

One of the biggest hurdles to getting an informational interview is knowing how to ask for one and who to ask. An informational interview is only useful if you target someone whose role you could see yourself in, whose field you may be interested in, or whose team you may want to be hired onto in the future.

Otherwise, it’s just going to end up being coffee and a Q&A with no real purpose. While that’s nice, it’s not exactly the goal of the exercise.

Before you send out any invites, though, be sure you know who exactly you need to interview. Here are a few tips to help narrow it down:

Know the right type of person to ask. This could be people who are already in your network of contacts in a particular field, company, or job that interests you. Or, it could be someone you cold call (or cold email, rather) with the request.

Don’t have someone in mind? Look through your networking contacts on sites like LinkedIn or any other social media outlet. These sites can be gold mines when it comes to building work contacts. You may even have a connection with someone in your ideal role or field already.

Can’t find the right person in your connections? Don’t let that stop you. A connection in a similar field may be able to help identify the right person to contact for a coffee chat email. It doesn’t hurt to reach out.

Or, just search and identify a few people you may want to ask for an exploratory interview. You can use a social networking platform or a simple Google search to do this. You’d be surprised how many people are willing to take a quick call or coffee break to chat about their jobs with you.

Once you’ve identified the person or persons you want to ask, all you have to do is reach out to the person you want to meet with by sending a friendly but concise email asking for a meeting.

You’re free to word these requests as you see fit, but the wording of the email could be as simple as:

“Hi, Brad! My name is Ann, and Kelly Smith suggested I speak with you because I am interested in learning more about your field or role. If you’re open to it, I would love to get some advice from you on this role or field. Would you have time in the next two weeks to meet for coffee so that I can learn more about your company and the role or field?”

If you aren’t sure what to say, there are even word-for-word email scripts that can help. The hard work is basically done for you.

You may strike out a few times, and that’s OK. Just keep reaching out to the right people, and eventually, you’ll find success.

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How to ask the right informational interview questions

Once you’ve landed a “yes” for an informational interview, you need to take time to prepare for the interview, which starts with compiling a list of the right questions to ask. This step is crucial if you want to learn more about a role or company.

It’s important to start the process of an informational interview with just one goal in mind: learning more about what the other person does and how they feel about it. These tips can help you ask the right types of questions:

Leave out any questions that you could learn the answers to by a quick Google search. The internet is a well of information on things like company benefits, salary information, career trajectories, and other hard and fast facts, so leave those out of the equation.

Ask the types of questions that require a personal answer. Inquire the person about the career path was that they took to get to their current position, or ask about what special certifications or education they pursued that may have set them apart.

Make sure your questions are open-ended. Try not to ask yes or no questions, even on follow-ups. Doing so will quickly put a damper on the conversation.

Tailor your questions to focus on their experiences in the industry or role. The goal is to get them to tell you about themselves and their path to the role that you’re eying.

These types of open-ended, well-phrased questions make the person you’re interviewing feel comfortable with you. They’re also a sign that you have respect for the other person’s experience and expertise, which is important if you want to also build a networking relationship.

Here are a few examples you can use to help you craft your own questions:

Example 1:

Good question: “I noticed on your LinkedIn that your job in this industry focuses around <insert a special niche or project>. That seems like a unique opportunity to be given in this field. How did you find an opening to pursue <the special project or niche>? It sounds like something I’d also like to pursue in the future.”

Not-so-good question: “You work in a <insert special niche or field at company> that I’d like to be in. Can you help me get a job at your company?”

Example 2:

Good question: “What steps did you take to work up to your current earning potential? Do you have any tips for those of us who are just starting out in the field?”

Not-so-good question: “How much money do you make?”

Example 3:

Good question: “What are some of the more difficult challenges or hurdles you face in this role?”

Not-so-good question: “What do you hate about this job?”

Notice the subtle differences? The good questions are open-ended and inquisitive. The not-so-good questions are pointed, closed questions that are going to make the person you’re interviewing very uncomfortable — and put your interview at risk of going downhill.

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The big mistakes to avoid during informational interviews

Knowing who to ask for help — and what to ask — are just two small pieces of the informational interview puzzle. There is an art to pulling off a successful informational interview, and it involves a lot more don’ts than do’s.

If you want to successfully navigate the art of informational interviews, you should make every effort to avoid the big (and surprisingly common) mistakes. These include:

1. Arriving late — or way too early

If you’re pursuing work- or career-related tips from your interviewee, chances are that they’re a busy professional with lots on their plate. What that means is that you should make every effort to avoid taking the other person’s time for granted.

Don’t be late for your meeting — that’s an obvious one — but avoid being early, too, especially if you’re meeting at their place of employment. Don’t arrive more than five minutes early or you could put them in a precarious position (or embarrass yourself by barging in on a meeting you weren’t invited to).

2. Asking for a job

While you may want a job from this person. In fact, what they do may even be your dream job, but you need to avoid asking for a job opportunity at all costs. If you crafted your initial email the right way, you’ve already made it clear that you aren’t asking for anything other than the person’s time and insight. So, don’t flip the script on them when you meet in person.

If you conduct yourself professionally and make a good impression, a job offer may organically grow from your interactions. But you are not there for a job interview, so don’t expect a job to grow out of your interactions. If it does? Great. If it doesn’t, you’ve still gained a lot of value from their time and insight.

3. Dominating the conversation

If you’re nervous, or if there are awkward pauses, you may feel tempted to try and fill the silence with nonstop chatter. Or, you may feel the need to offer commentary after every question is answered. Don’t do that. Ask and actively listen instead.

Remember that the goal of this informational interview is to learn what you can from another professional who works in a job or at a company you’d like to pursue. You should be spending about 90% of your time during this interview on the listening end — not the talking end. If you’re finding yourself talking more than listening, you’re headed down the wrong path.

4. Asking for introductions

You may have targeted your interviewee because they have great connections in the industry you want to be in. They may know the CEO of a certain company or have a friend or acquaintance who works in recruiting for a major firm. That’s all fine and good, but don’t allude to the fact that you’re looking for introductions to these key people.

Keep the talk about the interviewee — not about who they know. And whatever you do, avoid asking for introductions to anyone on their connections list, in their current company, at their former company, or in their inner circle. You asked to meet with them to discuss their experience and role — not to meet another party who may benefit you more.

5. Skipping the thank you

One of the biggest mistakes people make is skipping the formal thank you after the informational interview. Remember that the person who met with you took time out of their busy schedule to try and help you. A sacrifice like that requires proper thanks.

Send a card, an email, or some other form of written communication to thank them for the time they spent on you. Show them that you’re grateful for their help and advice, and do so quickly after you meet. This showcases your professionalism, and leaves them with the best impression of you possible — which can come in handy should future opportunities arise that you may be a fit for.

Bonus: Want to fire your boss and start your dream business? Download our FREE Ultimate Guide to Business.

One final informational interview tip

While it’s important to have the right questions in mind and avoid the big mistakes when conducting an informational interview, you should also try not to overthink it. The goal of this process is for you to learn and grow while networking — not conduct every word, mannerism, and interaction by the book. That’s way too much pressure for one person to handle.

But if you relax, engage, and most importantly, listen, you’re much more likely to come out of the process with the information that you need and a new networking contact on your side. If you’re too busy focusing on what to ask next or how to phrase the questions the right way, though, you’ll run the risk of missing vital information or advice — and that’s the opposite of what you want to achieve.

Do you know your earning potential?

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Informational interview questions to ask that create a lasting impression is a post from: I Will Teach You To Be Rich.

from Finance https://www.iwillteachyoutoberich.com/blog/informational-interview-questions-that-create-a-lasting-impression/ via http://www.rssmix.com/

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andrewdburton · 3 years

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How to Survive a Performance Improvement Plan

Being put on a Performance Improvement Plan (PIP) can feel like a kick to the gut, especially if it comes out of the blue and you don’t understand why. However, in most cases, it’s not a surprise. It usually comes after an employee has been struggling in their role or with some other issue at work.

If you’re faced with a PIP and don’t know what to do, don’t panic! Below, you’ll learn how to survive and even thrive during a Performance Improvement Plan.

For those who decide the job’s not right for them, there are also some bonus tips on how to find your dream job if this one doesn’t work out.

Let’s get started on how to respond to a Performance Improvement Plan in the best ways possible.

What is a Performance Improvement Plan (PIP)?

A PIP is a set of objectives given to an employee to help them develop in their role. It’s designed by employers to help their workforce better meet the responsibilities of the job.

In a PIP, employers typically outline what needs to be improved in an employee’s skill set and experience. Later, the employee will be reassessed to see how they’ve improved.

If you’re put on one, keep reading for some tips on how to survive a PIP.

Why do managers use PIPs?

Managers will create PIPs to help employees improve their work, boost efficiency, and that has a ripple effect across the rest of the business.

It gives clarity to the employee as well because they know exactly what they need to do to improve and grow.

If poor work habits have landed you on a Performance Improvement Plan, it’s not too late. Learn how to build better habits and break bad ones with our FREE Ultimate Guide to Habits.

What to do if you’re put on a Performance Improvement Plan

Being put on a plan that tells you how much you need to improve can feel a little soul-crushing. You might be kept up all night thinking, “Am I going to get fired? Should I look for another job?”

Honestly, maybe. It’s entirely possible that the performance review plan is only there to cover your boss legally before they boot you out the door. But before you panic, it’s also just as possible that your company is genuinely invested in you and hopes you hit your goals so they can keep you.

Now, it goes without saying that it’s important to take your PIP seriously. There’s zero wiggle room for mistakes and not hitting the goals laid out. If you want to impress and keep your manager happy, here’s how to respond to a PIP.

Don’t panic

When you’re put on a PIP, panic might be your first response. You may be worried about losing your job, disappointing people, or appearing bad at your job.

There are multiple reasons why someone might be put on a PIP. It might not all be down to you, and instead is about the company taking ownership as well.

Focus on what you can do next and what you can control. It’s important that you react in a professional manner as your manager could be trying to gauge your reaction as well.

A PIP doesn’t mean you’re going to be fired. In fact, it’s actually a good sign that the company wants to help you improve things. Rather than firing you outright, they want to help you develop in your role. So, try to look at it through a more positive lens … and take some deep breaths.

Go in with a positive attitude

No matter what your employer’s plan is or whether they have another agenda, you should remain calm and professional. Look at it as a way to develop your skills and improve yourself rather than a punishment.

Your attitude will tell your employer a lot. If you are receptive to their suggestions, this is a good sign. If not, then they might think of alternatives that may involve hiring someone else.

Ask for help

If you know there are areas you’re a little less knowledgeable or experienced in, it’s time to reach out for help. Ask your manager, colleagues, or mentors for advice and guidance.

If you’ve been put on a PIP, there are areas for improvement. So, try to set up weekly check-ins with your manager or ask for feedback from your boss. If you want to get ahead on this, be the first to suggest it. This will show you’re open and dedicated to improving.

Take charge of your progress

If you’re committed to making progress, you need to own it and take the lead. Your manager may be in charge of drawing up the PIP, but it’s up to you to follow through.

Make sure you take a close look through the plan and question anything that you need clearing up. Note, we said “question” not argue. You still need to stay on their good side.

Take an active interest in everything being said and try to make suggestions of your own for how you can improve. Everyone could do something to improve, so find out what you could do. Admit it and be open about it.

You could also make suggestions or ask about what the next steps are, whether they’re weekly check-ins or monthly one-to-ones. You want to show that you’re taking this seriously and are committed to progress. This will help ease any doubts the manager has about keeping you on the payroll.

Identify the reasons

Somewhere along the way, something’s gone wrong. But it’s not always crystal clear what went wrong and when. When you first applied and got the job, you were qualified and experienced for it. So where’s the gap now?

Did your job role change but you didn’t get any extra training? Have the manager’s expectations changed but there hasn’t been an open dialogue about it? Are there circumstances in your personal life affecting your work performance?

Take some time to really dig into the reasons leading up to you getting a PIP. This isn’t about finger-pointing and seeing whose fault it is. It’s more about seeing the route cause and retracing your steps. That’ll help you and your managers come to a more informed decision about the next steps.

Bonus: Want to work from home, control your schedule, and make more money? Download our FREE Ultimate Guide to Working from Home.

Don’t go the extra mile – Go the extra inch

Nothing says “I’m taking this seriously” than doing just a little bit more than everyone else.

We interviewed Pam Slim, author of Escape from Cubicle Nation, about how to become invaluable at your job. She told us a great story of how she went above and beyond to become amazing at her previous job. Here’s what she had to say:

“I would get up really early in the morning and go sit with the traders on the floor. I would see what they did and proactively go to lunch with the most senior people who were great at giving financial advice, who were really like leaders in the industry. Because I was interested and because I, as the training and development director, wanted to really understand what they did to better serve their employees.”

She went out of her way to take experts and co-workers to lunch to pick their brains, knowing she could learn information that would make her better at her job.

This is a great tactic that we highly recommend. We also suggest checking out books and podcasts by industry leaders so you can learn from their years of experience.

Keep in mind: Becoming great at your job doesn’t have to be drudgery. If you enjoy what you do, then learning how to do it better can be fun! Especially when you know it will make you invaluable to your company (and worth paying more.)

A lot of the time, it’s simple acts like these that help you get ahead. Because guess what, most other people don’t bother. Taking the time to actively improve your knowledge and experience is exactly the kind of dedication and progress managers want to see.

Answer questions before they’re asked

Imagine you’re at work. You think everything’s going great. But then your boss calls you into his office and starts in on everything you’ve done wrong.

Total nightmare. To avoid this, do what top performers do.

First, be proactive and keep your boss or manager updated with where your projects are at. Don’t wait for them to ask. If you know a question is coming soon, give them the answer before he can get the words out.

For example, you can ask your supervisor if he’d like an “End of Day” report where you briefly tell him what you accomplished and what you have planned for tomorrow. It could look something like this:

An email like this lets your supervisor know you’re on track.

Second, get in the habit of asking for feedback. Ask your boss how things are going from their perspective and what improvements they’d want to see from you.

Asking for feedback may be uncomfortable at first, but it’s incredibly valuable. Constantly receiving and implementing feedback means you’re getting better at your job every day. This is a skill hiring managers are looking out for, and it’s surprisingly rare to find.

It’s also a great way to show that you’re dedicated to improving things and managers love to see it, especially when they’ve drawn up a PIP.

Look elsewhere if things don’t work out

If you’ve exhausted all of the above and things don’t seem to be improving, there’s another thing you can do — look elsewhere.

You might try your absolute best to rectify things with a PIP, but sometimes there’s only so much you can do. If the job is not the right fit for you, you can look elsewhere for a better fit.

It’s still well worth trying to improve and progress in the meantime. It’ll keep your managers happy and it’s also good to leave on positive terms (especially if you need a referral).

But don’t just go for any old job to replace this one. You could end up right back where you started. Instead, play it smart and develop a plan to find the right job for you next time.

Keep reading for some simple pointers on how to do that…

If your PIP doesn’t work out: How to find a job you love

Sometimes it just doesn’t work out how we hope. Whether the blame rests on your shoulders, your manager’s, the company’s, or something else entirely, there’s no shame in walking away.

Plenty of people take on jobs and realize months or years later that it’s just not a great fit. Everyone’s been through that at some point.

If you decide that the job is not right for you and you’re likely to see another PIP or even disciplinary action in the future, it might be time to look elsewhere.

Being put on a Performance Improvement Plan doesn’t make you a bad employee. It may be that this job isn’t the right fit for you. And you’re better off finding a job that challenges you and pays better.

The problem is, very few people know how to find a job like that.

People hop on Indeed or LinkedIn, fire off two dozen resumes in a weekend (to jobs we may not even want) then sit back and wait for a reply (which never comes).

Top performers do things differently. They know how to find out exactly what job they want and what company they want to work for. They’ll even put out feelers to friends and co-workers to stay aware of what opportunities are out there.

Top performers have much more clarity on what they want and how they can get there. It’s something that most people struggle with when it comes to the dreaded job hunt.

Here’s an example from Judd W, an IWT reader, and graduate of the Dream Job program.

“Last year I realized I wanted to switch industries. [IWT] helped me focus my search, network with insiders at the company I wanted to work with, take my interview skills to the next level, and, when the offer came in, negotiate what I was worth (over 20% more than the initial offer).”

See? No wasting time on resumes or staring at the computer feeling lost. Judd followed a proven system for finding and landing a dream job and got tangible results.

If you want a peek into the system top performers use to land dream job after dream job (even if you don’t have experience or a fancy degree), enter your name and email below.

We’ll show you a special video on how top performers skip the front of the line and land a dream job that pays them 10%-50% more than they’re making now. And how you can follow that same system to find out what your dream job is, land it, and get paid what you’re worth.

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How to Survive a Performance Improvement Plan is a post from: I Will Teach You To Be Rich.

from Finance https://www.iwillteachyoutoberich.com/blog/how-to-crush-your-performance-improvement-plan/ via http://www.rssmix.com/

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andrewdburton · 3 years

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Money Dials: The Reason You Spend the Way You Do According to Ramit Sethi

I always say, “Show me a person’s calendar and I’ll show you their priorities.”

Well, I have a newer version of that: Show me a person’s spending, and I can show you what they love.

I spent years talking to people about their spending habits, and I boiled them down to 10 “Money Dials.” They’re called Money Dials because you can “tune” them up or down — just like a dial.

If you were to look at someone else’s spending for 10 minutes, you would instantly know what their Money Dial was. And if I were to look at your spending, I could tell you what yours is. Money Dials allow you to understand why people make the choices they do … and then go deeper than you ever thought possible.

I find Money Dials fascinating for several reasons: People go where their time and money go. For example, fit people spend time and money to be fit. Fashionable people spend time and money reading fashion magazines and shopping.

The most fascinating part is when we’re misaligned. For example, some people say, “Family is #1,” but if you look at their calendars and spending, family is not even in the top 10.

Money Dials are an easy way to diagnose what you claim is important vs. what is actually important.

Ready to set up your finances to align with your Money Dials? Download my FREE Ultimate Guide to Personal Finance.

Every one of us has an area that we naturally love to spend money on. I’ve identified 10 Money Dials that we LOVE to pour our money into.

If you look at your own spending, what gets you excited?

Convenience

Travel

Health / fitness

Experiences

Freedom

Relationships

Generosity

Luxury

Social status

Self-improvement

If you had $25,000 to spend on any of the above, which would you put your money into? Your answer — the one you instinctively came to within seconds — is likely your #1 Money Dial.

Want to know how to make as much money as you want and live life on your terms? Download my FREE Ultimate Guide to Making Money

Knowing your Money Dial can transform the way you think about your spending, because it lets you understand what you spend money on and why, and it enables you to redirect your spending from other areas to spend extravagantly on your Money Dial. THIS is what true Conscious Spending looks like.

Money Dials are the evolution of Conscious Spending and zoom in on the concept of spending extravagantly — guilt-free.

Below, I’m going to show you examples of people with different Money Dials.

But the common theme is that whatever Money Dial a person chooses, they can build a life that allows them to spend extravagantly and unapologetically on the things that truly matter to them but also cut costs mercilessly on the things that don’t matter to them.

This is the power of Money Dials.

My favorite part of Money Dials is that once you understand your own, and you accept it, you can zoom in on what you love by TURNING THE DIAL ALL THE WAY UP.

Finding your own Money Dials

To find your Money Dials, you just have to ask yourself one question: What do you LOVE to spend money on?

That can be a deeply uncomfortable question to ask. It can actually be a little scary. Our culture and society love to demonize spending, especially when it comes to spending on ourselves. It comes with guilt, shame, and judgment.

Don’t believe me? Here are some comments I’ve received on my various spending posts:

What a judgmental reaction — as if it’s forbidden and downright evil to spend on the things you love (and have the means to purchase).

But what if we take these same judgmental people and examine their spending for a month? I bet I’d be able to find areas in their life where others would think they’re “wasting” their money too.

It’s OK to recognize that you have areas you naturally love and want to spend on. What others think of your spending doesn’t matter because everyone has different Money Dials. It’s simply a matter of different priorities! In other words, what you value will be different from what others value. If you LOVE to spend your money on week-long trips to exotic locales, but someone else would rather spend that same amount of money on having the latest iPhone, that’s great — and perfectly normal!

It’s just being true and honest to ourselves about what our Money Dials are.

In fact, when we’re honest about acknowledging our Money Dials, we can adjust the dial (hence the term) as we need to be moderate, or turn them all the way up to spend even more on the things that bring us joy and more pleasant experiences (think splurging on first-class tickets instead of economy all the time, for example).

This is crucial psychologically.

Not only will we have more money and energy to spend on the things that bring us happiness, but we’ll be able to spend on those things guilt-free, since we know we’ve freed up the money by ignoring everything else.

It’s intimidating and liberating at the same time. It allows us to say, “Hey, this is important to me — and that’s not.”

The most successful people I’ve met are all very conscious about how they spend their money. That doesn’t mean they don’t spend at all. It means that they choose HOW and WHERE to spend their money, and are unapologetic in allocating significant resources to live a better life.

Want to work from home, control your schedule, and make more money? Download my FREE Ultimate Guide to Working from Home.

10 most common Money Dials

Do you know what you naturally gravitate toward spending on? Most people don’t — even though everyone tends to have a few overriding priorities for their discretionary spending.

When it comes to Money Dials, though, people’s spending almost always matches up with these 10 priorities.

Convenience

Travel

Health / fitness

Experiences

Freedom

Relationships

Generosity

Luxury

Social status

Self-improvement

I want to take a look at the four most common Money Dials. As you read, take note of how they fit into your spending habits.

Here are the categories again:

Convenience

Travel

Health / fitness

Experiences

Freedom

Relationships

Generosity

Luxury

Social status

Self-improvement

Let’s take a look at what each of these Money Dials looks like. As you read, take note of how they fit into your own spending habits.

Money Dial #1: Convenience

This Money Dial means spending on anything that makes your life more convenient.

Examples:

Travel apps

Ubers

Extra iPhone charger

Pre-cooked meals

Everything delivered

Automated bank accounts (and automation in many parts of life)

I love spending my money on convenience. I’ve turned the Money Dial all the way up. I spend more than $50,000 a year on a personal trainer, chef, and other luxury services to streamline my life and reduce stress in those areas. And I also have a VA who:

Optimizes my calendar for me

Arranges all my travel — right down to the perfect seat on the perfect flight and the perfect route to the airport

Schedules all my appointments and calls

When a friend tells me a story about how they built a system that lets their assistant manage their workout schedule to save them an hour a week, I’m like “What! How’d you do it? I want that. I need that!” In other words, anything related to convenience gets me really fired up. It’s just how I’m wired. I love it.

If you want more convenience, simpler examples would be buying pre-cut vegetables at the grocery store so you can avoid the messy and time-consuming chopping at home.

Here are other examples from our readers:

“For a year we spent money on Blue Apron. It made life easier to come home and know what we were having for dinner and everything was right there in the fridge…I love buying back my time!”

“Splurged on a luxury car service to take me from Los Angeles to Huntington Beach. Cost hundreds more than an Uber would have, but I wanted the convenience of knowing I’d have a ride at the time I wanted. I rode in style and comfort and didn’t need to worry about the logistics of that trip: I learned that when you splurge on a ‘luxury’ experience, they take care of things like showing up on time for you — you don’t need to worry about that.”

“The $350 I spent on a Roomba was a game-changer in the dog hair game.”

Money Dial #2: Travel

What do average people do for travel? Maybe they take a one-week vacation at Christmas, and a one-week vacation in the summer. But if travel was their #1 Money Dial, what would that look like?

Here are some basic examples:

On January 1st, they already know where they’re traveling this year

They’re often masters of points/travel hacking

They have an overflowing list of travel destinations saved and their conversations revolve around where they’ve been and where they’re going

They have strong opinions about the “right” suitcase, the right way to pack, and the best seats on the plane

But what if someone REALLY loves travel? Here are some extreme examples:

Once a year, they take their family to Paris for a full month and rent a beautiful apartment above a patisserie

They surprise their partner with weekend road trips once a month

They fly Emirates first class to Dubai

If you turn this Money Dial all the way up, it means traveling for months every year; joining a travel group; splurging on high-end travel experiences like a safari, Inspirato membership, or multi-generational travel; and developing strong perspectives on travel, including which friends to invite, how much “authenticity” matters, and specific parts of the world to return to.

Here are some examples from our readers who value travel as their primary Money Dial:

“I didn’t really think it would be travel, but realized that my husband and I have owned three campers now (which is still much cheaper than a flight — so it doesn’t feel extravagant) but still eats into a significant amount of our free time and discretionary funds. I am not into camping at all, so this is shocking to me. Having a camper allows us to travel with our dogs without worrying about whether a place will be pet-friendly or trying to get them on a plane. My husband gets to do the type of travel that he wants, which is to be in the middle of nowhere, and I get to do the type of travel I want — which is to explore a new city — all in the same trip because we can move every day (or not) without the inconvenience of changing hotels. Between the payment, insurance, and parking, our monthly cost is about $550. That doesn’t include gas or fees for parks (if we stay in one). That is a lot of money on our budget, but it’s worth it because it gives us the type of freedom we want to explore.”

“We have spent $15,000 two years in a row (and will probably do it for another five years, even though it extends our budget and we make sacrifices in other places) for a week-long family trip with kids (8 and 11) to Tavarua Island in Fiji. Best family time, surf time (my passion), and dedicated time with family and friends every year. My kids want us to book it for next year the second we start to pack up. May have to sacrifice a year or two at some point to make sure we keep overall finances in check.”

“I spent on family Disney vacation. We stayed at the Disney’s Polynesian (right on the Monorail line) and bought the full meal plan and the full ‘Park Hopper’ tickets for the entire vacation. I know it was a crap ton of extra money than trying to go cheap. But my family and I spent the entire vacation just having fun. We never worried about food. We never worried about where we wanted to go that day, because we had complete freedom. The memories are priceless.”

Starting your own business can help you take your money dials to the next level. Learn how to start with my FREE Ultimate Guide to Business.

Money Dial #3: Health / fitness

LeBron James spends $1.5 million a year keeping his body in top form, according to this article from The Ringer, investing in nuanced health-promoting practices like cryotherapy and hyperbaric chambers. Not to mention his personal chefs and trainers who help him adhere to a strict diet and routine.

I LOVE IT.

Everything in his life, down to the last detail, is focused on achieving peak physical fitness. He’s not just spending $100 on a massage and calling it good. His #1 Money Dial is health and fitness, and so he’s architected his life and finances around physical fitness and investing a significant amount of money in it.

Here are some other examples:

Membership at a gym based on quality, not necessarily distance to your house / apartment

Personal trainer + nutritionist

Choosing food based on macros, not simply taste (e.g., Ezekiel bread)

Selective about your workout gear (Lululemon + Nike are the best)

Taken to its logical extreme, the health and fitness Money Dial can mean annual yoga retreats, always checking restaurant menus before you go, and joining social groups based on fitness.

Here are some additional examples from readers:

“Currently paying a nutritionist $275/month for a six-month program.”

“I spend around $12,000 per year in personal trainer for Pilates and Gyrotonics class. It’s absolutely worth it.”

“Right now I am spending a bit more than average of my monthly income to go to a specific karate dojo in town. I take classes with one of the best masters of karate in Europe. It was one of the best decisions. I am in better shape than ever, physically and mentally (this master is old school so he includes all the spiritual parts of karate in his classes).”

Money Dial #4: Experiences

The experiences Money Dial is perfect for anyone who values novelty and unique experiences over material possessions.

Examples:

Skydiving

Concerts

Unique vacation activities like swimming with blue whales

Dinners at Michelin-starred restaurants

Recently, I’ve been turning up my experiences Money Dial. I decided that my dream was to take my whole family to a huge house somewhere in the Caribbean. We could all be together, the kids could be playing in the pool, we could rent this big house. There would be someone there to make the beds and clean. My mom wouldn’t have to cook. We did it, and we ABSOLUTELY LOVED IT. It was amazing to see the family together in this awesome environment for a week together. We just played and built great memories spending time together.

I also took a factory tour of one of my favorite Italian clothing brands, because I love learning about craftsmanship.

On our honeymoon, we spontaneously decided to hire a photographer at the Taj Mahal, something we would normally never do. I have those photos sitting on our living room table. I really love these photos and these memories, because normally I would have never done this. But the photographer was there. Yes, he charged more than I normally would have paid, but I thought to myself, “This is something we’ll never forget.” So I was happy to do it.

Here are some more examples from our readers:

“I always buy concert tickets VIP. Box seats have a great view, private wait staff with better food, etc. I’m not smashed next to sweaty armpits (I am short so this is reality), and VIP parking is usually included and is extremely close to the venue. Sometimes there’s a catered event pre-show or meet and greet with different bands. I’m not 15 anymore — roughing it is not my style. I’ve spent $100 and [as much as] $1,000 on a single concert ticket. It’s like a game to find the best tickets, and I never regret going to a show.”

“I bought 2017 World Series tickets: $2,600 for two bad tickets, but I HAD to experience it.”

“I spent $1,000+ (a LOT of money for me) to go to Las Vegas to see Stevie Wonder in concert. I didn’t care about going to Vegas, but it was one of only two places Stevie was performing this year. He is my favorite living musician, but I’d never seen him live before. I splurged and got a great seat — on the floor, in the center, 13 rows back. He was, as you would expect, a wonderful performer, and I had a fantastic time. It made me so happy to be alive. I would absolutely do it again.”

Money Dial #5: Freedom

For me, a Rich Life is about freedom. It’s about not having to think about money all the time and being able to travel and work on the things that interest me. It’s about being able to use money to do whatever I want, and not having to worry about taking a taxi or ordering what I want at a restaurant or how I’ll ever be able to afford a house.

People with a freedom Money Dial value the ability to do what they want, when they want. Money is no longer a major constraint in their lives. In fact, cost is rarely the first thing they consider. More often, it’s time, quality, experience, relationships, or simply “I want it.”

Here are some examples from readers:

“Self-funding our own 1-year mat leave. A lot of our friends have full-time jobs that they hate but stick around because it ‘has benefits.’ People also believe that because we run our own business, that ‘Oh, it’s too bad you don’t have benefits or mat leave to fall back on.’ It makes me feel awesome that we have a profitable business that we love to work on and that pays us more than enough to self-fund our own mat leave. It’s still a work in progress (we’re planning to start a family 2 years from now) but it feels great to know that we’ll be ready and can enjoy the early parenting experience without worrying about money.”

“My wife is about to finish medical residency, and it doesn’t matter if she works, how many days she works, or how much money she makes for the days she does work. She can literally pick exactly the job and hours she wants without having to worry about our overall family financial health. Freedom!”

“I set aside enough money to free up some of my time to focus on my writing and dream of becoming a screenwriter. After ‘dabbling’ in short fiction and documentaries for years, I gave myself a 5-year time limit to get my first feature in the movie theatres. Turns out I didn’t need much money to get by without feeling like I was losing out on anything.”

Money Dial #6: Relationships

I have a friend who’s 40-something and works in tech. He earns multiple 6 figures per year. By most accounts, he has enough money to do anything he wants in life. Travel the world, retire early, or buy expensive watches and cars.

Instead, he chooses to live in Palo Alto — one of the most expensive areas in the U.S — to be close to his family. He’s not considered rich in Palo Alto. If anything, he’s middle class there. He also chooses to send his kids to private school, which costs tens of thousands per year. To top it off, he just bought a property and is building a dream house with a special suite for his parents. The trade-off means that, despite his high income, he almost never goes on lavish trips or buys anything fancy for himself — but none of those things matter to him.

Whenever we talk, he loves talking about his family. It makes perfect sense. That’s because his relationship with his family is his #1 Money Dial.

That’s one flavor of making relationships your #1 Money Dial. I’ve got another friend who sends a “FUN LIST” email to all his friends once a month with events and activities in NYC. It’s packed with things like a “Taste of Tribeca” food tour, a Cinco de Mayo event and fundraiser, and something called “Intrepid Summer Movie Series,” where you watch movies on an aircraft carrier. Then he goes with friends to the ones they get excited about. This is a great example of someone who spends his time and money on relationships with friends.

Here are a few great examples from readers:

“Greeting cards, like for birthdays or bridal showers. No matter the level of relationship, I skip the cheap options and get a bomb-ass card. I keep a lot of the cards I receive and a quality or special card is a really nice touch for a gift or milestone.”

“We booked both our parents on a 7-night cruise (our treat) for their anniversaries. This is something they wouldn’t have thought of or done otherwise. It made us happy that we could do this for them, especially after everything they have done for us.”

“My brother and I took my mom (and dad and our families) to Rome for 10 days. A Latin teacher her whole life, my mom (shockingly) had never been to the very place she taught kids about for decades! That changed in 2016 when we plunked down a bunch of $$$ (thanks to my part-time wedding photography business) and spent over a week in the eternal city. We STILL reminisce about the pizza and gelato! Best $$$ ever spent!!!”

Ready to set up your finances to align with your Money Dials? Download my FREE Ultimate Guide to Personal Finance.

Money Dial #7: Generosity

Most people donate to charity at the end of the year. Or they volunteer at their kids’ school every now and then. Maybe they offer to drive their friend to the airport.

But if generosity was your #1 Money Dial, what would that look like?

You could become known for giving great tips. 25% tips? That’s your minimum. 100% tips? Sure, why not.

You’d surprise your nieces and nephews with gifts just because.

Every year on your birthday, you’d throw a huge event and raise $10,000 for your favorite charity.

A few years ago, my wife and I held a fundraiser in NYC. We both come from families of immigrants and we wanted to raise money for families being separated at the border. What we saw made us feel helpless, outraged, and sad. But we also know that we’re in the enviable position of being able to do something about it. So we did.

When this is your #1 Money Dial, you can be truly generous.

Here are other generosity examples from readers:

“When Beyoncé was on tour a couple years ago I bought tickets for my wife and whichever 4 friends she wanted to bring with her (five people in one car). The tickets were around $200 each, so around a grand total. The look in her eyes after I gave her the tickets was something I’ll remember forever and she still talks about that concert.”

“On an annual basis, I donate $15,000 to various charities. I consider this as luxury living and some may call me crazy because I could have had fancy dinners, BMW, jewelry, etc. Giving back is my priority.”

“One of my best friends was in some credit card debt and was killing herself to pay it off … but worked for a nonprofit (read: doesn’t get paid much). It was going to take her years! Two of us went in and paid it off for her, just like that. Writing a $5,000 check that frees a friend from chains without having to think twice? Priceless.”

Money Dial #8: Luxury

Most people think of luxury as “excess.” It’s someone paying more than they “should” for something that you can get for a lot less. Or it’s something that’s “totally unnecessary.” Who needs a $20,000 watch? A $15 Timex has the same, or even better, functionality.

But luxury is about the emotion, the feeling, the packaging. It’s about the identity you create by indulging in a luxury product.YOU choose what luxury means to you.

Notice our first reaction: “LOL, stupid people. Don’t they know they’re getting ripped off?”

But it’s not stupid.

I might think it’s insane, your college friend might think it’s insane, but if you’re getting superlative value from it, that’s luxury.

Why do you think Mercedes-Benz chose “The best or nothing” as their slogan? Can’t a Honda Civic get you from place to place without premium sound or a 577 horsepower engine? Of course. But Mercedes owners want more than functional transportation. They want an experience.

Here are a few examples of luxury from readers:

“A well-designed high-quality backpack. I spend a lot of time commuting on public transit, so having a bag where everything is easily accessible when you’re in a cramped space is crucial. I recently got a Peak Design backpack and I love it.”

“I spend $300 a pop on Allen Edmonds shoes (I own two now). People freak out when I tell them what I paid. It’s such a luxury purchase that most of my friends and family can’t conceive of having $300 extra to spend on something as ‘frivolous’ as shoes. However, everyone comments on how nice they are and what it does for my overall appearance.”

“Paid thousands for an Eames lounge chair. Haven’t regretted it for a moment, and it automatically improves my day every time I sit in it. Worth every penny.”

“I spent $700 on a pair of boots over 7 years ago and at the time it was an insane luxury. I almost hyperventilated when I bought them, I felt irresponsible, I was anxious, and I LOVED THEM! … 7 years later I still have them and I still wear them and they’re still hot!! I still get compliments.”

Money Dial #9: Social status

Social status may at first seem a bit shallow — and sometimes it is! We remember back in high school when we were judged by the brand of clothing we wore. Ugh.

But there can also be good reasons to value social status.

For example, a Rolex watch or Loro Piana sweater is functionally the same as something 1/100th the cost, but it signifies certain things about who’s wearing it. Don’t laugh — most people scoff at status (which is ironic since every one of us factors in status to other parts of our lives: the college we attend, the neighborhood we live in, the job we take). But these items convey a subtle status that can garner people “in” status because it says something about their income or personal taste or style.

Airlines, hotels, credit cards, retail stores, and others offer loyalty cards that can get you extra benefits — better rooms, higher cash back, free trips, and so on. Having a higher status can be worth thousands of dollars per year.

Here are a few other examples of what the social status Money Dial looks like:

“I was scheduled to have a vanilla wash and wax on Sunday, and instead I asked them what their highest level of service was. They told me they often prep cars for car shows or dealer rooms, everything from high end exotics to antique cars, and can do everything from mirror shine polishes to full paint jobs. I ended up paying them just shy of $1,000 to do a full paint correction and a bunch of other stuff. Basically 3 guys rubbed stuff on my car for about 8 hours. I don’t know exactly what all it entailed, but it looks badass and I feel like a badass.”

“Three months ago I signed up for a $159 monthly subscription to Rent the Runway, a designer clothing site that sends you 4 pieces at a time to keep for as long as you want. I spend less time making decisions about what to wear, I feel and look better wearing well-made clothes, and I’m never bored with my closet. It feels a bit extravagant but it’s so worth it.”

“I bought a $1,500 tailored full-canvas construction suit made in the U.S. People say ‘You know how many suits I can buy for $1,500?? Just buy off the rack and get alterations.’ It’s hard to buy suits in my size. The first time I wore a tailored suit, my VP at the time said, ‘Dude, you look like a model.’ I continue to get comments like that. With the above purchase, people assume you take yourself seriously and they, in turn, take you seriously. This is worth far more than a few grand.”

“I pay $450/year for a Chase Sapphire Reserve card that gets me airline lounge access for comfort and relaxation plus car rental status to get any car off the lot (from Corvettes to SUVs and I only pay for midsize).”

Money Dial #10: Self-improvement

There are several ways most people spend money on self-improvement:

Take an online course (copywriting, social skills)

Hire a trainer at the gym

I’m a big reader (I try to read two books a week). In fact, I came up with “Ramit’s Book-Buying Rule”: If you think a book looks even remotely interesting, buy it. Don’t even waste five seconds debating it. If you glean just one idea from the book, it makes it even more than worth the price. That idea could be the one that changes your life or simply challenges long-held beliefs you’ve always had. And those moments are invaluable to your development.

Another great way to think about self-improvement is called “The Hotshot Rule.” It comes from former Cinnabon president Kat Cole: Four times a year, Cole would go somewhere quiet, think about the state of the company, and ask herself: “Let’s say a hotshot takes over my job today. What two or three things would the hotshot look at and say, ‘That’s unacceptable’”?

I think that’s a great rule not only for business but also for every area of life. If someone else came in and looked at a certain aspect of my life — what food I eat, my relationships, my health — what would they say is unacceptable? When you identify those areas, you can focus on making changes.

Here are some examples from readers of how self-improvement is their Money Dial:

“Ski instruction. I do it every day we go. It has changed my abilities, and with greater abilities you get much better experiences (views, terrain, thrills, peace) on the mountains.”

“I spent $15k on a sales coach. Turned out to be the best investment I ever made. More than doubled my income in less than a year. Was promoted, then later headhunted for an incredible job. About 9 months later, work volunteered to start paying for it. New co I’ve joined sends the other managers to similar programs now. My only regret is not doing it sooner.”

“I love to spend money on improving my electric guitar skills by taking lessons from really good people. I recently had the chance to take lessons with the lead guitarist of an international touring heavy-metal band from the Bay Area. I have looked up to these guys for years and my abilities have gone through the roof.”

What’s your Money Dial?

One thing you may have noticed is that several of these Money Dials overlap — some things we spend money on appear in two categories. For example, a Rolex can be both a luxury and provide social status. Or hiring a trainer can be for health / fitness and for self-improvement.

That’s OK!

If something that you spend money on appears in two categories, see if you can quickly identify the primary category it belongs to. If it still isn’t clear, look at other things you spend on. Are they in one of those two Money Dials?

Once you identify your #1 Money Dial, it flows through your life, and it affects everything about how you spend your money. It’s your personal strategy. And the ways you spend your money are the tactics to implement that strategy. You are now the CEO of your life.

My favorite part of Money Dials: Once you recognize yours, and you accept it, you can zoom in on what you love by turning the dial all the way up, as I’ve done for myself for convenience.

This might seem extreme to some — but for me it’s a complete no-brainer. Because I know my Money Dial and can focus on it, I actually free up time to invest in my company … and I can earn even more money as a result.

Money Dial challenge

Here’s my challenge for you: If you can afford to, take $500 and spend it extravagantly on something you love.

That’s going to be a lot of money for some of you — but that’s the point. Spending money on the things you love can be uncomfortable at first. Especially when you consider all the “Invisible Scripts” — the ubiquitous assumptions that we no longer question in our lives — and noise around spending.

But when you do, you’ll feel the value these things bring to you. And that allows you to tailor your spending so that you can live your Rich Life.

Do you know your earning potential?

Take my earning potential quiz and get a custom report based on your unique strengths, and discover how to start making extra money — in as little as an hour.

Start The Quiz

Money Dials: The Reason You Spend the Way You Do According to Ramit Sethi is a post from: I Will Teach You To Be Rich.

from Finance https://www.iwillteachyoutoberich.com/blog/money-dials/ via http://www.rssmix.com/

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andrewdburton · 3 years

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The Get Rich Slowly file vault

A new Get Rich Slowly subscriber emailed me yesterday to alert me of two problems.

First, all of the free resources I share on Google Drive have magically switched from publicly-available to private.

Second, the automated email sequence for new readers is broken (which means that folks aren't receiving The Money Boss Manifesto).

Fixing the email sequence will take some work. It wouldn't take much effort to make it functional again, but while I'm in there mucking around, I might as well make a pass to revise it. The info and examples are five years old. (Meanwhile, the current version of The Money Boss Manifesto can be downloaded here.)

Fixing the shared documents on Google Drive was easy, though. They should once again be publicly viewable. Please let me know if they're not.

The Get Rich Slowly File Vault

This seems like a good time to remind readers that the Get Rich Slowly file vault exists.

The GRS file vault contains a whole host of free resources that I've gathered over the years. Some of those resources are from me, but most are from other folks. Everything in the file vault is free and legal to share.

What kind of cool stuff can you find in the Get Rich Slowly file vault? Here's some of what's currently available.

A collection of 66 public-domain books about personal finance and self-improvement from ancient Rome to 1926.

An amazing library of 205 public-domain educational films from the 1930s through the 1960s. Most of these are related to money and/or personal development, but some are just for fun. They're all interesting artifacts of their era.

A handful of U.S. government documents and publications related to personal finance. I'd love to expand this section.

A tiny selection of public-domain personal finance comics. Right now, this area contains only old Keeping up with the Joneses strips. Someday, I'll add more stuff.

The Get Rich Slowly file vault also contains a handful of “GRS Originals”, documents that I've created over the years to share with various audiences. These include:

The Money Boss Manifesto, the 87-page ebook that summarizes the Get Rich Slowly approach and philosophy. This is the same info that you'll find scattered in various articles around this site. It's also a sort of working draft for what became my Audible course.

The Money Boss Method, which is a one-page version of the GRS approach and philosophy. It's basically an outline of the modern approach to financial freedom.

The one-hundred words poster I created in 2013 in partnership with my friend, Lisa. This is a short list of guidelines meant to help me lead a happier life. Other folks wanted a copy, so I added it to the file vault.

A one-page PDF with an exercise meant to help you create your personal mission statement.

For my article on the six stages of financial freedom, I shared an image that summarizes the path from financial dependence to financial abundance. By popular request, I've created a PDF version of that roadmap.

I would love to have help with the Get Rich Slowly file vault.

If you know of other free resources that should be added to the GRS file vault, let me know. And if you notice any problems — if you're unable to access the files — drop me a line. My aim is to make this a fun and useful collection of stuff for people to browse.

Future Plans

Now that Kim and I have resolved our uncertain future, now that we've moved to Corvallis, unpacked, and begun to settle into our new lives, I find that I once again have time and motivation to publish here at Get Rich Slowly.

But I don't want to set expectations too high! I am not in a headspace where I want to churn out 3000-word articles on deep subjects. Instead, I've found myself wanting to pursue three different aspects of the site.

First, I want to devote most of my time and energy to creating what I think of as an online textbook about personal finance. This would essentially be an organized collection of the most important and useful articles at this site, and it truly would be organized as if it were a textbook. So, for instance, I might take all of the many “get out of debt” articles I've written over the years and combine them into a single, definitive piece about how to get out of debt.

Second, I want to create a library of personal-finance resources. I have dozens of book reviews at this site, but no organized way to view them. I don't do a lot of personal-finance product reviews, but I'd like to do more. (Or, more precisely, to have my business partner Tom do them.) And so on.

Lastly, I want most of my “new” articles (as opposed to the “old”, revised pieces for the “textbook”) to be brief write-ups of interesting stories I find around the web. Amazon rigs its search results? Shocking! What makes a job meaningful? Thoughts on the pursuit of childhood joy? These are all things that might be of interest to GRS readers, but which don't merit 3000-word articles, you know?

Anyhow, I hesitate to share these plans because I know I have a piss-poor track record of actually following through with my intentions lately. (So, no need to remind me of that haha.) But as I think of what I'd like to do with Get Rich Slowly, these are the primary outlets I'm aiming for.

from Finance https://www.getrichslowly.org/get-rich-slowly-file-vault/ via http://www.rssmix.com/

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andrewdburton · 3 years

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3 conversational skills everyone should master

Social event: check. Standing in the corner creepily observing guests hoping someone will come over: check.

It doesn’t take a genius to know that staring people into a conversation doesn’t work. Quite the opposite, in fact. But what if you’re just not social?

Here’s the thing. Founder of I Will Teach You To Be Rich, Ramit Sethi, has discovered something influencers and easy communicators already know: Being a better conversationalist is a skill. And if it’s a skill, you can learn it. Let’s get started with our best tips for improving your conversational skills!

It’s never too late to start building healthy habits. Download Ramit Sethi’s Ultimate Guide to Habits to get started TODAY.

1. Write a script

The perfect conversation starter depends on the situation and where you find yourself. For some reason, we tend to gravitate to the cliched, “So what do you do?”, which might help you launch a conversation, but it makes people feel ick.

Not everyone wants to be defined by their job, more importantly, a social event allows them to step away from their corporate work for a change. So instead of defaulting to the weather or what the other person does to pay the bills, how about getting to know them first?

Here are three simple scripts you can use to start a conversation:

What brought you here?

Hi, I’m [YOUR NAME].

How do you know the host?

Do these seem dead simple? Good. Conversation starters should be simple! Your script doesn’t have to be Shakespearean in nature – it just has to open the door for good conversation to flow.

2. Practice your social skills

If you’re not great in social situations, you need to practice in order to improve. It may feel uncomfortable, but it’s the only way to get better. It also helps if you have fun with it! No need to take yourself too seriously.

Step 1 – The Mirror: Yes, there will be mirror work. It’s important that you have your first go at practicing your scripts in front of the mirror. Are you smiling? Is the smile any good, or do you resemble Jack Nicholson’s character in The Shining? Do you seem approachable?

Step 2 – The Camera: Use the broom or your kid’s giant teddy as a prop and practice those skills while recording on your smartphone. While it may seem strange at first, playback will reveal whether you’re asking too many questions, talking too fast, or even whether you have that dull expression and one-tone-drone that will scare away even the most desperate conversationalist at the party.

Step 3 – The Interaction: You’re going to take this to the next level and meet an actual person. Then you’re going to ask another person to film it. Meet at a bar or coffee shop to make it a little more interesting. Interacting with an actual human being will go a long way in determining any social killers. Check your posture, whether you’re blocking conversation, and if you’re applying the script effectively.

3. Start at small, personal gatherings

Before running a marathon, it’s worth taking a jog around the neighborhood to make sure your lungs and legs can cope. Then, build up slowly until the full race feels achievable.

The same with social skills. Don’t wait until that all-important business networking meetup to test your scripts. Use it on smaller events like the neighborhood cookout, a birthday party, even a small wedding.

The key is to build your skills before you jump into a major soiree.

It’s never too late to start building healthy habits. Download Ramit Sethi’s Ultimate Guide to Habits to get started TODAY.

4. Put your script to practice

While a script will help you get things started, only practice will enable you to gracefully enter and exit a conversation without being obvious. Or weird.

Here are the tools you need to start, join, and hold a conversation.

Start a conversation

Look for that one person standing by themselves, possibly in the opposite corner. Approach them and introduce yourself. Now, this is the fun part, you’re going to smile and you’re going to use one of those three conversation starters, or even all three.

Reminder on the conversation starter scripts:

What brought you here?

Hi, I’m [YOUR NAME].

How do you know the host?

Just pretend that you’re meeting a potential future friend or colleague.

Join a conversation in progress

You might have to eavesdrop a little to get this one right. The best part about eavesdropping at a social event is that it happens to be a great conversation starter. Introduce yourself by saying, “I couldn’t help overhearing that you guys are discussing cause and effect in early childhood development. I’ve just completed this great course, you guys might have heard of it. By the way, I’m John.”

Hold the conversation

“So how do you know Sally?” you ask. “We met in high school,” they respond. “Oh cool.” you kill the conversation.

Questions are a natural way to let the conversation take a different direction and allow you to build rapport with the other party. Even if it includes a little bit of small talk. Not every conversation has to be about big philosophical life questions. Some conversations can be about whether bulletproof coffee has run its course or whether pineapple belongs on a pizza (although that last one may cause spirited debate).

But be warned. No one likes feeling interrogated. So tweak your script with a few guidelines:

Don’t ask too many questions.

Make a statement reflecting on what they responded (Oh I never thought about that. That’s an interesting approach).

Only ask, “What do you do?” if it’s relevant, and please, for the love of keeping your conversation going, don’t lead with it.

5. Psyche yourself up

You’ve done about five outfit changes and read just about every book you can on how to improve your conversation skills, yet you’re still sweaty-palmed and dry-mouthed at social gatherings. You bristle like a porcupine when anyone comes near you, even though you actually crave the distraction of conversation.

Here’s the thing. You can get those nerves under control. What’s more, you’re not going to need five scotches and a beer to do it.

It starts at home: Psyching yourself up starts before you even get to the event. You’re going to wear a smashing outfit, take time with your appearance, and talk to yourself in the mirror. Tell yourself how great it’s going to be, and be happy to have an opportunity to make real connections.

Give yourself enough time to get there: Want to know how to instantly increase the suck when you’re nervous about a social event? Be late. Don’t be early either. That sucks too and will increase the chances of you choosing a creepy corner to wait out the time.

Breathe: One of the best ways to instantly make yourself feel better, is by taking long, controlled breaths. This will help you regulate that racing heartbeat and hopefully take care of the sweaty palms too. Look for well-ventilated spots such as balconies or patios.

Smile: Just a gentle, upturned mouth that touches your eyes. Not only does this make you seem more approachable, but it also lets you feel better.

Be confident: Confidence is attractive and even if you’re not feeling it, fake it until you do. And why the heck shouldn’t you be? You have the perfect scripts for these things and you’re excited to test them out, aren’t you?

Be willing to flake once in a while: Not every social encounter at every event is going to work out. Heck, it’s guaranteed not to because we’re all so different. But that’s what makes this great. Every time you put yourself out there, you learn. You start adapting your scripts, body language, and even mannerisms to make new meets more comfortable. But you’re not going to ace it at the first try every time. You’re going to get shut down and ignored. You’re going to leave some events feeling a little underwhelmed. What’s important is that you learn to read the room and slowly build those social skills.

6. Master your body language

Master these body language hacks, and you’ll be amazed at how strongly and positively they impact the people around you.

Smiling

How to improve: This week, when you greet someone, try smiling more than you normally would. Think about your best friend. Think about the funniest situation you’ve ever encountered. Whatever it takes to get that smile.

Notice the difference between a smile with no emotion behind it and a smile when you are thinking about your best friend doing something hilarious. Way different, right? The boring smile makes you look crazy or fake, while the other smile makes you happy. That’s what you want to do every time.

Energy

How to improve: Take whatever energy level you’re at now and add 50% more energy. Test it in small, anonymous places like at a coffee shop. See what kind of reactions you get. Then work up to using it at work and with your friends. You’ll be amazed at the difference.

Talk slower

How to improve: If you’re a fast talker, try forcing yourself to slow down by at least 50% It will feel sluggish to you but perfect for everyone else. One easy hack to help you slow down is to focus on enunciating your words

Use your hands

How to improve: First, make a mental note of how you currently use your hands. Then test different ways of using them. Notice how the more you use your hands, the more open your body language becomes.

The result: The more open your body language is, the more welcoming and confident people will think you are.

Eye contact

How to improve: we have two suggestions for improving how you use eye contact:

Study people who make you feel comfortable. What do they do with their eyes when they speak to you? You’ll discover they don’t just continue staring at you for minutes at a time. They look away, they smile, they take a look at what’s in their hand. They’ll do all kinds of things but they’ll come back to you. This is something you can learn to do.

Experiment. Treat eye contact like a game. Try looking at people for 5 seconds and see what evokes the best response. Then try it for 10 seconds. Once you test this enough, you will find what works best for you.

7. Learn from the pros

Ever try to bake a souffle from the recipe and it turned out a dud, but watched a YouTube tutorial and aced it? Learning from the social butterflies in your social circle is pretty much the same thing. You know who they are and this is the only time we’ll give you that nod of approval to just stand around at socials and observe.

Take a cue from that coworker that has a war story for every occasion. If you stick around long enough, chances are you’ll hear those stories more than once. Ramit often talks about the toolbox for interviews which allows you to skirt difficult questions with stories that you’ve memorized and tweaked accordingly.

There are also story and question toolboxes to improve conversation skills. Wing it while you’re learning how to relate stories naturally. More importantly, see how successful communicators use their toolbox.

The length of time they hold eye contact for.

Watch how they laugh and smile.

Observe their posture and stance, are they relaxed?

The timing between their questions, responses, and how they give others the floor to speak.

8. Ask for feedback

This is a toughy, but a goodie, and that’s because you may need to shoulder some criticism, but all in the spirit of growth. There are different ways to approach this, according to your level of comfort.

Friends and loved ones

Possibly the hardest group to ask because the feedback will feel brutal. But take it in your stride and enjoy a few laughs and giggles as you work your way through their points.

Have a one-to-one with that bubbly cousin who gets invited to everyone’s Thanksgiving dinner and has more job offers than dollars in their bank account.

Find out from your best friend whether you talk too fast or have a one-tone voice.

Ask loved ones whether they can recommend ways for you to engage others a little better.

Your followers

If you happen to have a following on social media, you already have a test group ready and waiting to give you feedback. Harness the resources you have to build the best social version of yourself.

The bottom line

Improving your conversational skills may take a little time, especially if your idea of a good night out is watching the late-night movie by yourself so you can wear your pajamas without judgment.

It will take more than a good jacket or a new pair of shoes. Your social skills depend on how well you can connect with the other person and form relationships. It’s as simple and hard as that!

It’s never too late to start building healthy habits. Download Ramit Sethi’s Ultimate Guide to Habits to get started TODAY.

Do you know your earning potential?

Take my earning potential quiz and get a custom report based on your unique strengths, and discover how to start making extra money — in as little as an hour.

Start The Quiz

3 conversational skills everyone should master is a post from: I Will Teach You To Be Rich.

from Finance https://www.iwillteachyoutoberich.com/blog/conversational-skills/ via http://www.rssmix.com/

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andrewdburton · 3 years

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Your First Rental Property

It's official: Kim and I have moved from Portland to Corvallis, Oregon. We closed on our home — a 1964 daylight ranch with fully converted basement — at the end of August, and we've spent the past six weeks moving and unpacking. I thought I'd have time to post the gory details of our purchase, but obviously that hasn't happened. We've been too busy!

The short version is this: After offering $128,000 over asking on our dream home (and still losing out to a cash offer), we came close to joining in another bidding war on a similar house. But we didn't. While other folks were bidding up a place down the street from $589,000 to $707,000, we snuck into a home we liked better for $680,000 — just $5000 over asking. We got lucky.

And while I was worried that we might experience buyer's remorse, I'm pleased to report that absolutely has not happened. We love our home and we love Corvallis. How could we not?

Corvallis is the best biking city in the state of Oregon. (Yes, even better than Portland.) Our home isn't a walker's paradise, but it is within range of two grocery stores and a handful of restaurants. Corvallis has hardly any traffic congestion. The town is surrounded by forested foothills filled with hiking trails. Every day, we have squirrels and deer and wild turkey in our yard. There are two off-leash dog parks nearby. Our neighbors are super friendly.

I could go on, but I won't. You get the picture.

We had high expectations for Corvallis, but so far the city has exceeded them. I'm not kidding. This is exactly what Kim and I were looking for during our three-month search for a new place to live. It's our Stars Hollow.

And our home, while ginormous for two people, has also exceeded our expectations. Sometimes it feels as if it was custom-designed for the two of us and our lifestyle. Early days yet, I know, but after six weeks we're pleased.

A Tiny Real-Estate Empire

Kim and I also like that we've already begun building friendships in town. I've spent some time with Jeff from The Happy Philosopher, for instance, and Kim does weekly dog walks with one of the neighbors. Last weekend, we enjoyed happy hour with our real-estate agent and his wife.

Michael and Rae have lived in Corvallis for maybe ten or twelve years. In that time, they stumbled on the idea of “financial freedom” without ever discovering the burgeoning FIRE movement. (FIRE is a clumsy acronym for “financial independence and early retirement”.) Like many others who eventually find FIRE, these two invented their own version in a vacuum.

Michael and Rae have been slowly building a tiny real-estate empire, which currently comprises six homes. They'll buy a place, live in it while making improvements, then rent it out when they're ready to buy another property. Their goal, which they're approaching, is for the cash flow from their rentals to cover their monthly expenses.

Last week, over cocktails and appetizers at Magenta, Kim and I grilled Michael and Rae about their experience.

“Now that we've settled here in Corvallis, we've begun to talk about the idea of buying rental properties ourselves,” I said.

“I just turned 49,” Kim said. “My years as a dental hygienist are starting to take their toll. My back hurts. My shoulder hurts. My wrist hurts. I want to find a way to earn money without killing myself.”

Michael nodded. “We're happy to share what we know,” he said. “But you need to understand that this isn't some magical path to wealth. It's work. Maybe not the same kind of work you do now, but it's work. And it takes time to build an income stream.”

“I get it,” Kim said. “I get it. It sounds like you guys have it figured out. Didn't you tell us that you're renting only to college students? And that they come back year after year after year?”

“We don't rent only to college students,” Rae said, “but it's mostly students. Right now, one of our six homes is rented to a ‘normal' family. But you're right. We've been lucky to have low tenant turnover.”

“We try to maintain long-term relationships with our tenants,” Michael said. “We don't want to be their friends, but we do want to have good communication. We want them come back every school year. Often that means we don't raise their rent. Or, when we do, it's a very small increase.”

“That's smart,” Kim said. “It makes your tenants more loyal and prevents turnover. Turnover is probably tough.”

“It is,” Michael agreed. “We'd rather keep our tenants in place at rents slightly below market rate than deal with turnover every year. When somebody moves out, then we can move things to match the market. Besides, building strong relationships with our tenants seems to help keep them motivated to care for the place. And we're starting to see it helps when their siblings come to school in Corvallis. They contact us because their brother or sister had a good experience with us.”

“I like your ethical approach,” I said. “And listening to you talk about this makes me want to learn more about real-estate investing.”

“You know that I want to learn about it,” Kim said. “I've been saying that for years.” (She has!)

“You know,” I said, “many of my colleagues are into real-estate investing. I've talked with them about it, even though I haven't ever pursued it for myself. Do you read any of the real-estate blogs?”

“Not really,” Michael said. “I'm familiar with Paula Pant at Afford Anything, though. I like her stuff.”

“Paula and I are good friends,” I said. “We've been close since 2012, and we often call or text to catch up on life. In fact, we just hung out last week at Fincon in Austin. She asked me to help promote her real-estate course.”

“You should do it,” Michael said. “I haven't seen the course, but she has solid info on her site.”

I thought for a moment.

“You know what I should do,” I said. “I should help Paula promote the course, sure, but more than that I should take the course for myself. I should take it so that I can learn about real-estate investing.”

“Yes, you should,” Michael said. “Not that I have an ulterior motive in having you buy more properties.” We all laughed at that.

“You know what'd help?” I said. “Whenever a rental property comes on the market, you send out a video that analyzes its potential. I love those, even if I don't completely understand everything you're talking about. I particularly like the spreadsheet you use to crunch the numbers.”

“That's no surprise,” Kim said.

“Would you be willing to record a YouTube video that explains your rental property spreadsheet?” I asked. “I could play with that spreadsheet myself while I take Paula's course at the same time.”

“You bet!” Michael said. “I'll record a video for you next week.” And that's just what he did. Here's Michael explaining the spreadsheet he uses to screen potential rental properties.

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Your First Rental Property

I recently read Todd Tresidder's How Much Money Do I Need to Retire? I may write a full review of the book at some point. The key thing to understand at the moment, though, is that Todd thinks that it's somewhat risky to use the four-percent rule as a gauge for financial freedom. He makes a compelling argument that it's much safer to define financial independence the way Vicki Robin does in Your Money or Your Life: that point at which your passive income exceeds your expenses.

While my recent move to Corvallis has led me to once again become financially independent when defined in terms of the four-percent rule, I am not financially independent based on cash flow. My expenses exceed my passive income. I'd like to change that. And I think rental properties could be a part of a strategy for doing so.

This morning, I signed up for Your First Rental Property, Paula Pant's real-estate course. Reading the sales copy on the landing page was entertaining. I generally hate sales pages, but it was as if Paula had written this one with me in mind. It sounds as if the course is perfect for my needs.

It helps, I think, that I know Paula personally. Over the years, she and I have talked a lot about her various real-estate adventures. I've watched her slowly build her rental portfolio. Plus, I know that she's both smart and trustworthy. If I'm going to pay anyone for a real-estate course, it's Paula.

I also like and trust Chad Carson. Coach Carson's real-estate courses would be a good option too, and I may actually look at them for myself in the future.

Here's the thing. I get a lot of requests to promote books and courses and events here at Get Rich Slowly. I nearly always decline. I've never wanted this to be a platform for promoting products. I want GRS to be a platform for education.

That said, I do enjoy sharing books and events that I believe you folks will find valuable. That's why I'm keen on Ramit Sethi's I Will Teach You to Be Rich. That's why I've been personally involved in this year's EconoMe Conference, and why I'm urging others to join us in Cincinnati next month. Some of this stuff is terrific and ought to be shared.

Obviously, I cannot yet vouch for the quality of Your First Rental Property, but I did just plunk down my own money to purchase it. (“Did you mean to buy the course?” Paula's assistant emailed me. “Yes,” I said. “I want to take it.”) I'm going to ask Kim if she wants to work through the course together. I think it'd be fun to do as a couple!

And who knows? Maybe in a few years we'll have acquired some rental properties of our own…

Your First Rental Property, like many online courses, has a limited window of availability. (I think Paula offers it only once per year.) Sales for this cohort end October 14th. Get Rich Slowly earns a commission on each sale through our site.

from Finance https://www.getrichslowly.org/your-first-rental-property/ via http://www.rssmix.com/

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andrewdburton · 3 years

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My morning routine isn’t guru approved – and that’s what makes it perfect for me

God, can we please stop with guilting people over the morning pages, the journaling, the meditation, the drinking 18 gallons of mint-infused water, and the yoga?

If you want to do those, GREAT! But you don’t have to.

My rules for the perfect morning:

No, you don’t need to meditate to be successful!

No, you don’t need to journal or do yoga.

It’s OK to check Instagram first thing in the morning. (I do.)

If it’s not on your calendar, it doesn’t exist

You decide your Rich Life, including your morning routine.

View this post on Instagram

A post shared by Ramit Sethi (@ramit)

Why we take bad advice about morning routines

There’s a new cottage industry of people telling you all the thing you “should” do every morning. But as it gets more absurdly specific, it gets even more performative. Drink a glass of water? No! Make sure you infuse it with turmeric and mint.

If you like mint, great. But just adding mint doesn’t do anything. The real win here is to be intentional about what you want to do — and how you want to do it.

This is a lot harder than making an esoteric recommendation like drinking 6oz of yak tea. People love those recommendations because all of us want a magic bullet, or “secrets” that will magically change everything for us. Deep down, we know it’s all bullshit.

I spoke to Tim Ferriss about this on his podcast a few years ago – you can watch the interview here:

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How to create the right morning routine for you

Real happiness and productivity comes from making much deeper changes.

If you love waking up without an alarm clock, how can you go to sleep at a time where you can make that a reality?

If you want to make breakfast for your kids every morning, how can you set things up the night before?

If you like to have a leisurely morning where you take 2 hours to watch TV, what does it take to make that happen?

This is a lot harder than taking some magic pill. It means fundamentally restructuring your lifestyle, including how you work (maybe even where you work), how you relax, what time you go to sleep, and even what you think of yourself (“I’m not a morning person” is an identity you can rewrite).

Learn how to build good habits and break bad ones with my FREE Ultimate Guide to Habits.

Real morning routines are decided the week before, month before, and year before

I love the idea of crafting a meaningful morning for your personal Rich Life. I do not love the cargo-cult fanaticism about random tactics. The best morning routine is decided the day before, the week before, and the year before by mastering the fundamentals.

What I mean by this: When I wake up and have a leisurely morning, then wander over to start working, I open my calendar. What I see has been decided weeks and months before:

I know what I’m working on because every Monday looks the same, every Tuesday looks the same, etc.

I’ve customized my work to what works for me. For example, I’m more creative in the morning, so I have writing time scheduled then. I do most calls in the afternoon.

I honor my own commitments. If it’s on the calendar, it’s getting done. If it’s not on the calendar, it’s not. You know how we don’t “try” to brush our teeth every morning? We just do it. Same thing for a schedule: Once it’s scheduled, I’m going to honor it. That’s become a habit — and you can build the same habit!

It’s far better to consciously decide what your morning looks like. If you want to roll over and check Instagram (as I do), that’s great. The first thing I get to read is some 17-year-old telling me I am wrong about investing. Good morning, @crypt0_4_lyfe7291. Thanks for your contributions to the investing literature.

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A post shared by Ramit Sethi (@ramit)

Be realistic about your time and energy

Look at your calendar for tomorrow. Have you thought about how your energy fluctuates throughout the day? Does your calendar include the 3 most important things that need to get done? Is it realistic — does it include time to use the bathroom and eat and just zone out?

These are much more important than decisions than how many ounces of water you’re going to drink. They’re also harder, which is why we avoid them. I believe in tackling the Big Wins in life, not chasing tiny decisions that are ultimately meaningless.

If you want your morning routine to stick for good, learn how to master your psychology in my free Ultimate Guide to Habits.

3 questions to ask yourself when designing your morning routine

What would your perfect morning look like? Think expansively. They could involve walking your dog in the park, making the perfect cup of coffee, or watching an hour of TV. You decide!

What are all the reasons this will never work? Get them out on paper. I know, I know. You’re not a morning person. Your boss won’t let you start working at 9:30am. Your kitchen is too cluttered. You don’t have the right equipment to make an espresso. Write all of the reasons down.

What are all the reasons you could make this work? Now reverse it: If you absolutely had to, what could you do to make your perfect morning happen? Perhaps you could come to an agreement with your boss about your start time. You could buy an espresso machine. You could even move closer to a park. Think big and don’t limit yourself.

As you tackle these questions, you may realize that your perfect morning is a lot closer than you thought.

My morning routine isn’t guru approved – and that’s what makes it perfect for me is a post from: I Will Teach You To Be Rich.

from Finance https://www.iwillteachyoutoberich.com/blog/morning-routine/ via http://www.rssmix.com/

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andrewdburton · 3 years

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Our DIY Heat Pump Install – Free Heating and Cooling for Life?

A work of art.

To most of the Internet, Mr. Money Mustache is known as the quirky early retirement financial guy, and this is a blog about Money.

But really, I’m not a finance guy – someone who devotes most of his time to optimizing money. I’m more of a general Life Engineer – someone who tries to optimize everything that is fun and interesting in life, and money is just one of those things.

Optimizing means getting the most good out of something – whether it is money, time, health or happiness, while minimizing waste. This is what allows us to make win/win decisions (for example things that make you richer and healthier and happier), rather than win/lose compromises (giving up something you actually like, just to save or earn more money)

One of these win/win things for me has always been optimizing my own houses and buildings to be more comfortable and stylish, while costing less to own and maintain and heat and cool. After all, out of all possible decisions, your choice of home may have the biggest effect on both your financial and emotional wellbeing. Get a reasonable house that is close to your friends and your work, and you’re off to a great start.

So anyway, this past summer all my favorite factors of optimizing, learning, effort, saving shit-tons of money and reducing loads of waste and pollution came together in the form of a DIY Heat Pump Installation on our commercial building downtown, the home of MMM HQ Coworking.

Why Are Heat Pumps Super Exciting?

Heat pumps are a technology that has recently jumped into prime time and are about to change everything about houses, just as the iPhone did to the tech industry about twelve years ago and just like electric cars are doing to transportation right now. The reason is that they have these fundamental advantages:

Heat pumps do the double-duty of heating and cooling any building way better than our existing systems do, but with only one machine.

They are super easy to install, and way cheaper to run. They also allow houses and buildings to be constructed more cheaply (less materials and labor).

They eliminate a big part of the world’s pollution that is caused by burning oil or gas for heat (as long as you get your electricity from clean sources).

And yes, nowadays they work in virtually all climates (down to -20F / -29C): tech improvements have shattered the old limitation where they only worked in places without a real winter.

How Does a Heat Pump Magically Suck Heat Out of Cold Air?

Heat pumps save money and energy because they aren’t generating heat directly like an old electric baseboard heater. They are mostly just moving heat around – from inside to outside in the summer, and from outside to inside in winter.

To many people, that second situation sounds like magic, but that’s just because of our skewed perception as human beings – a creature that evolved in the warm tropics of the planet Earth. Really, there is plenty of heat even in winter air – if you view it from the Eyes of Physics:

Every spot on our life-nourishing Earth has loads of heat energy (Kelvins), which means it’s easy to harvest some of it.

So, a modern heat pump can easily suck loads of heat even out of air that feels cold to your skin. It does it like this:

Summer vs. Winter modes of a heat pump. The key to everything – fridges, A/Cs and heat pumps – is that the refrigerant gas gives off heat (gets hot) when you compress it, and absorbs heat (gets cold) when you expand it.

You know what else does this exact same trick? Your own FREEZER! Those things typically maintain an inside temperature of about -10F, which means that somehow it is sucking heat out of the air even at sub-zero temperatures, pumping it out to the coils underneath with a fan blowing past them. And if you put your hand there to feel that airflow, what do you feel? Warmth!

Show Me The Money

Here’s our gas bill history – Yuck! Most significant is the fact that the monthly fee-for-nothing ALONE had risen to $40. $480 per year before you even get any heat out of it!

Before we get into the real details, check out the quick numbers for the heat pump I just installed. Note that I live in Colorado, which has lots of heat and a moderate amount of cold – right about what you’d expect from our position halfway between Maine and California.

Cost of the system including all install materials: About $4500

My building’s previous annual gas bill: $951

Our new annual electric bill for heating and cooling (estimated): $275

Annual savings: $676

Annual return on investment (ROI) rate: 15%

Even better: That $275 annual figure for our electricity consumption is what we would have paid, if we had to buy all our electricity off the grid at 10 cents per kWh. But since we generate a surplus of power from our DIY solar array, our net cost is much less than that.

You could even say that all of our heating and cooling is “free” on an ongoing basis, although we did spend $5000 to build the 5.5 kW solar setup in the first place.

So Is A Heat Pump Really a Do-It-Yourself Project?

Our installation team celebrates at the end of a successful project. To be fair, Mr. 1500 and I are both pretty experienced tradesmen, but this felt like a relatively easy project to us.

In a word: Yes, if you are a fairly competent do-it-yourselfer, and you choose a DIY-friendly heat pump kit. It is considerably easier than installing a gas furnace or a metal roof, but not as easy as putting together IKEA furniture.

Our first install took about 16 person-hours of work for the main job (two people working a full day). Plus I spent about another sixteen dusty hours upgrading the duct work and building custom metal shapes to route the air because our coworking building was so old that the original asbestos-and-mouse-shit ducts were just not worth keeping.

Hmm.. Okay yeah I think I’ll go ahead and replace these ducts.

The value of doing it yourself is that furnace work is one of the biggest returns on your time as a homeowner. Where I live, even a gas furnace + air conditioner replacement can cost $10,000. And although a heat pump hardware only costs about the same amount as conventional furnace+AC ($4000), the companies like to charge more for the newer stuff (or even worse, try to convince you that you’re stupid for even asking about it!).

In other words, even conservatively speaking, for a basic installation you are saving about $6000 in exchange for doing that 16 hours of work, which amounts to a solid $375 per hour.

But Wait! Don’t forget about Rebates!

Even if you’re not a tinkerer, there are some good programs out there that will help subsidize the cost of an upgrade like this. The US EPA offers federal tax credits for lots of things including heat pumps, and local agencies have their own programs – for example neighboring Fort Collins will chip in $2200 towards a unit like ours, which could cover most of the cost of a professional installation!

So if you are ready to upgrade to a heat pump, you either need an honest HVAC company who will install a reasonably-priced machine for you and charge you a reasonable hourly rate. Or, you need to flex your Money Mustache Muscles on the project and do it yourself.

Of course, I chose the latter approach as always, so let’s get into the details of or install!

Step One: Pick a Heat Pump

There are two things you’re looking for here: physical size and heat output.

The size and shape of indoor portion (the air handler) of the new system have to be similar to your old furnace, or you need to have a plan for how to adapt the new one to blow into your old pipes. As you’ll see below, I chose to do the adapting.

As for the heat output, old furnace was a “100,000 BTU” unit, which is a measure of the amount of natural gas it can suck in and burn each hour. Since it was only about 75% efficient, the heat output was about 75,000 BTU (the real units here are the archaic “British Thermal Units Per Hour”, but all you really need to know is that this is still more than enough to keep our leaky, sprawling 2400 square foot brick building warm easily through even the coldest winters.)

In the most extreme situation (for us this would be a 24-hour period where the temperature is barely above 0F, and it typically does happen at least once every few years), I measured that our old furnace was running for about 8 hours per day, which means our average heat loss was about 25,000 BTU on a continuous basis (75k multiplied by ⅓ of the total hours in a day)

On the cooling side, we had virtually no air conditioning. Just a few crappy portable units scattered throughout the building, with a total combined cooling power of about 20,000 BTU. This wasn’t quite enough to beat the heat in the event of a fully occupied building on a 100F day.

The solution for me was thus pretty simple: the biggest Mr. Cool “Universal” combined heat/cool system, which I started conveniently seeing Google ads for everywhere once I started my research. This beauty is good for about 60,000 BTU of both heating and cooling, which could also be expressed in the even more archaic form of “5 tons”

So I bought the circled option above. In my case, I placed the order through Home Depot website, with the free “ship to store” option, but you could also try your local Lowe’s, Alpine Home Air is good, and Ingrams now sells this unit (including the required 25 ft lineset) through Amazon.

Step Two: Remove your old furnace

This part was pretty easy – except carrying this old block of iron out of the basement.

Safety tip: Make sure you turn off both the gas and electric supply to your furnace before messing with it, as well as opening some windows and running a fan to clear out any remnants of gas as you disconnect pipes.

But once you have it safely disabled, it is as simple as carefully un-wrenching, unscrewing, and cutting away parts of the old furnace (while carefully preserving your existing ductwork) until you have the old one fully removed. You can sell or give it away on Craigslist, or drop off for free at a metal recycling facility.

Farewell old furnace, may your steel find a fun new life somewhere else.

Step Two: adapt the ductwork as needed

Top Left: an output air adapter box I made to channel the air out to the right places. Right: A prefab filter/input box I bought off of my neighbor (who is also a builder). Bottom: You can see where the two things fit into place along with the horizontally installed heat pump air handler.

If you’re lucky (the old furnace and new heat pump are almost the same size), this step will be easy. You just connect the return ductwork to the bottom of the machine, and the supply ducts to the top. However, I was not lucky.

Because our basement ceiling is so low, I had to install the heat pump horizontally (it is designed to allow this), and then build some adapters to allow the air to flow the way I needed. On top of that, most of our ducts were falling apart and poorly shaped and useless – so I repaired or replaced a bunch of them while I was in the process. This took a lot of work, but my biggest allies were a huge roll of wide, reinforced silver tape, and simple sheet metal tools like shears, angle grinder, self-piercing screws, a good breathing mask, headlamp and work gloves.

Here’s yet another adapter I made to channel some of the air supply. The curvy box below was salvaged from the old ductwork, but I added the end cap and two 7″ air outputs to break this stream of air off to serve two different parts of the building.

Step Three: Fit in the new heat pump

Duct fitting in progress. Okay, I admit this is looking a bit patchy, but it works great! Work like this is a tradeoff between time, cost, and beauty. Since this is in an old building that is probably going to be demolished and replaced with a luxury mixed-use apartment complex when we sell it, I try to keep things functional but simple. In a high-end, permanent house, you’d take more time to make the ducts pretty.

Aside from the fact that the thing is heavy (ours was around 250 pounds), this connection is surprisingly easy once you have the ducts ready. You just screw and seal the sheet metal boxes to the bottom and the top of the heat pump. And at this point, you should be getting excited because the end is in sight.

Step Four: Place the Outdoor Unit Where You Want It

Since the outdoor unit is another 300 pounds, you’ll want a high quality dolly and some ratcheting straps, as well as a strong friend nearby to help you wrangle it into place. Your goal is to put this thing somewhere beside your house that is out of the way, but also close to wherever you just put the air handler in the basement. Then you need a lineset that is long enough to connect them together – and shorter is generally better for both cost and performance reasons (we used a 35 footer).

We put our condenser on a couple of sturdy, level concrete pads.

Step Five: Run the Lineset

You need about a 4″ hole in your house in order to feed through the insulated lineset. Since our building is made of brick, I needed this crazy masonry core bit – hopefully yours is easier! NOTE: this is an in-progress pic, later I covered these lines with a protective steel box.

The lineset is a pair of flexible copper tubes that are wrapped in insulation. They are bulky, so even our 35-foot set came in a BIG roll the size of a big-screen television box. You need to carefully unroll and straighten it, and feed it in through a roughly 4” hole you drill in the side of your house so you can connect the condenser outside to the air handler unit inside.

We had the added challenge of having to punch through an eight-inch-thick BRICK WALL, so I had to spend some good workout time wrestling with this massive concrete core driller, mounted to a high-torque low speed drill.

Wrenching on the lineset before releasing the gas (and then testing for leaks). There are just two nuts at each side of the line.

Once the lineset is in position, the connection is refreshingly easy: you carefully follow the instructions to tighten on the right nuts with a wrench, open some valves with an alan key, and you will hear the refreshing PSSSSssssssshhhhh as the refrigerant is released into the system. (This is the part that an HVAC technician would normally have to do, Mr. Cool gets around the issue by using special valves and having pre-charged linesets. More expensive, but very much worth it for the time and labor savings!)

Final Step: Run the Electrical Wires

Drilling a hole for the electrical wire (which we ran in a conduit, the new 40-amp breaker, inside unit wiring including thermostat, Carl celebrates completion of the outdoor unit wiring.

This will vary depending on the system, but ours called for the following wiring, which I subcontracted out to my partner Mr. 1500:

A 40 amp / 240 volt circuit to the outdoor unit (which simply means running a length of 8 gauge wire and adding a 40 amp breaker to the box).

A 20 amp / 240 volt circuit to the main unit

Standard six conductor thermostat wire between indoor and outdoor units

And finally, a run of the same thermostat wire between the indoor unit and your thermostat. We took the opportunity to upgrade to the super-lovely Ecobee Lite smart wifi thermostat, which I now use (and love) in all my projects.

The Victory Lap: Fire It Up!

It’s Alive!

We cranked through all of these steps carefully and then flipped on the breakers with great fanfare: SUCCESS! – The Ecobee lit up and started guiding us through its setup screens. Once complete, we slid the desired temperature way down in hopes of experiencing some much-needed Air Conditioning on this hot July day.

And nothing happened. We ran out to the outdoor unit and found it was just sitting there, with LEDs illuminated but nothing else happening.

We both started sweating bullets. Had we made a foolish mistake and bought a faulty unit? Did we screw something up in the install?

Nope – it turns out there is simply a three-minute delay between that first activation and the time Mr. Cool starts his cooling. Very slowly and with great grace, the big fan blades began to rotate, graaaaadually speeding up, with the hum of the compressor so quiet in the background that I had to press my ear up to the thing just to verify that it was really working.

But boy was it ever working – we ran inside and found that that icy cold air was just blasting out of each of the seven large vents spread throughout our building, and baking hot air was now shooting out of the outdoor unit. We had instantly beat the summer heat and everybody inside raised a cheer to this new luxury.

Epilogue, Three Months Later: How Well Does It Work?

A scene from The Extraordinary Event, a weekend-long set of talks and classes featuring Rebel Business School founders Alan and Katie Donogan. Videos coming soon on my Youtube Channel!

Throughout the rest of the summer, we have had a lot of fun putting this system through its paces, and it has proven itself to be an incredible cooling machine. We had several events with over fifty hot bodies packed in for some of our entrepreneurship and social gatherings while outdoor temperatures were in the 90s – and we were able to maintain comfort effortlessly.

The next test will of course be the winter. Here in early October, we have just turned the corner where the building has required just a bit of heat to start some mornings. With a few taps on the Ecobee phone app, I was able to flip the system over to heating mode and give it a whirl. It worked great – heating the building quickly and quietly.

But I’ll update this article over time as we move through cooler seasons. I expect it to continue to perform just great – but it will be fun to verify and reassuring to skeptics out there once we see it with our own eyes.

Extra Cool Detail: How Much Electricity Does It Use?

Screenshots from the Emporia energy tracker app

Of course, being MMM I was not content to just sit back and soak in the cool breeze of accomplishment just yet. I needed one final bit of data – a record of just how much energy this heat pump was sucking down in both heating and cooling modes, so we can get a better estimate of how much money it is saving us over the years.

So I installed a system called the Emporia Energy Monitor into the circuit panel, which is currently the best value on the market for such a well-designed gadget. This allows me to track and record the full details of the energy flow – through every circuit in the house if I choose to do so. For now, I just have it watching over the heat pump.

What I found is that in cooling mode, the Mr. Cool uses about 2600 watts on an ongoing basis (about the same as two large window air conditioners), which translates to 26 cents per hour of electricity. On the hottest days with the most people, I found the system ran about six hours, meaning our peak electricity use was only about $1.50 per day!

To me, this was pretty remarkable – this was a 95 degree day with 50 people in the building, roughly equivalent to trying to cool a mid-sized restaurant in Texas. Yet even if we repeated this extreme situation every day, we’d rack up an air conditioning bill of only about $45.00 per month!

I found that the heating mode was a bit more thirsty, with consumption at 4000 watts, or 40 cents per hour. Based on my earlier estimates of heat loss on the coldest possible days, we could be in for about 18 hours of runtime per day, which would be $7.20 of electricity. So, if the Headquarters were moved to an extremely cold climate and plunged into neverending 0F / -18C conditions for an entire month (which would make it colder than Duluth Minnesota or Ottawa Canada), we’d still face a heating bill no higher than $210 for the month. But in more realistic conditions for Colorado, we would expect about half of that level of energy consumption. And of course this is only for the month or two of our short cold season. For the rest of the year, heating is even easier.

Conclusion: Heat Pumps Are The Bomb

So there you have it: we dreamed about it for years, finally did it, and I could not be happier. It is such a joy to not even have an account with the gas company, and to know that this part of our expenses will be zero, forever.

And of course it’s even better to know that even the electricity cost numbers in this article are just for your own comparison – in reality, we make more than enough solar electricity run this whole thing for free just from the pretty squares of black glass on the roof. Free heating and cooling for life, with no pollution (with free operation of our laptop computers and beer fridges, and free charging of our electric cars to boot) – This truly is the way of the future!

In The Comments: Do you have any questions about heat pumps or other home efficiency products? And if you have a heat pump of your own, what do you think of it?

from Finance https://www.mrmoneymustache.com/2021/10/05/diy-heat-pump/ via http://www.rssmix.com/

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andrewdburton · 3 years

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Debt consolidation: How does it work and is it right for you?

When you have debts everywhere you turn, it can feel like you’re completely swamped. Your hands are tied every payday as you funnel money into paying off debts, leaving you with no room to save.

That’s why a lot of people turn to debt consolidation, which is when you use a loan to pay off all of your debt — and it can seem like a godsend.

But wait, how is ANOTHER debt supposed to help?

Of course, you’re right to be suspicious. The thing is, it can help but only if you do it right. Do it wrong and you’ll be kicking yourself from a position worse than you’re in now. So, should I consolidate my debt?

Debt consolidation can work as a way to pay off debt faster. However, if you’re not disciplined and look for help in the wrong places, you’ll end up spending MORE time paying off your debt.

Let’s take a look at what debt consolidation is, how to consolidate debt, the pros and cons, where to find a reputable organization to help you, and ways you can get out of debt fast.

What is debt consolidation?

Debt consolidation combines all of the debt you owe into a single payment with a lower monthly interest rate. This typically works by taking out another loan in order to pay off all of your other debt.

Let’s say you have debt across three credit cards and you owe the following:

Credit card A: $2,000 at 10% APR

Credit card B: $1,000 at 20% APR

Credit card C: $1,000 at 15% APR

Each month, you’re contributing $100 to each card for a total of $300 — however, a portion of each is being eaten by interest:

Credit card A: $16.67

Credit card B: $16.67

Credit card C: $12.50

So in all you’re paying $254.16 towards your debt rather than the full $300.

With debt consolidation, you take out a loan of $4,000 and pay off ALL of the above debt — and you get a lower interest rate for the loan at 10%.

Now each month when you contribute $300 you’ll pay $266.67 towards your debt rather than just $254.16.

In theory, this means you’ll be able to pay off your debt faster.

The interest rate you’re able to get depends on which type of loan you attain:

Secured loan. This is a loan where you put up an asset (e.g., car or home) as collateral. If you default on your loan, your creditor will repossess said asset.

Unsecured loan. This is a loan that just uses credit. As a result though, you might end up with higher interest rates than if you had a secured loan.

If you want to get your debt consolidated, you’ll have to go through one of the two routes above — which we’ll get into later.

Before we do that though, it’s important you know the dangers around consolidating your debt.

The problem with debt consolidation

But before you click on one of those scammy internet ads marketing “DEBT CONSOLIDATION — BE DEBT FREE IN 3 HOURS,” consider the big drawbacks to debt consolidation:

1. It could take longer to pay down your debt

If there’s anything we’ve learned about human psychology over a decade of studying behavior and personal finances, it’s that things like that are easier said than done.

For example, if the average person ends up saving $300 in interest payments because of debt consolidation, do you think they’ll use that extra money towards their debt OR do you think they’ll end up spending it?

Most likely, the latter.

Human willpower is limited. It’s the same reason why cutting out lattes or skipping lunch to save money doesn’t work.

A person with 300 “extra dollars” might end up just blowing it on something else.

What happens then is it takes longer to pay down debt. This results in even MORE fees they have to pay.

Aside from diminishing willpower, many debt consolidation loan companies offer up longer loan terms than people realize. So while the interest rate is lower, they end up paying more because they didn’t take into account how long they’d have the loan for.

2. You could lose your home or car

If you decide to put your car or home down as collateral you stand to lose much more than a few thousand dollars off the life of your loan.

A home equity loan is also known as a second mortgage. Taking a second mortgage out on your home means you risk losing your house if you fail to make payments.

Of course there are some advantages to going this route. For one you can deduct the interest payments from your home equity loan from your taxes. Plus you’ll be able to get a lower interest rate than if you went the unsecured route.

Overall, though, it’s just not worth the risk — especially when there are better ways to go about it.

3. Your credit score will suffer

There are a few things that go into making a great credit score. One of them is your credit history — or how long you’ve had credit for.

It actually accounts for 15% of your overall score.

That might seem small but consider this: If you get rid of a bunch of different lines of credit at once, your credit score is going to take a huge drop. That drop gets bigger with more and more lines of credit you close.

How do you know if debt consolidation is right for you?

Debt consolidation can be a great way to plan your route out of debt. But that doesn’t mean it’s the perfect solution for everyone.

The benefits of debt consolidation are hard to argue with. You can simplify your debt, save money on interest, only deal with one creditor, and (hopefully) clear your debt faster. But there are pros and cons you need to know about before you make this decision.

It can be the best move for some, but worse for others.

Signs debt consolidation is right for you

You have high-interest debts

The number one sign that debt consolidation is a good option for you is if you have several high-interest debts. Why pay interest on several debts when you can pay it on just one?

If you know you can secure a lower interest loan, it makes sense to consolidate your debts.

According to Experian, the average personal loan interest rate is 9.41% — whereas the average interest rate for credit cards is around 16%. So, if you’ve got a ton of credit card debt, it’s worth considering debt consolidation.

You have good credit

If you’re already in debt, getting another loan might be tricky unless you have good credit. Most creditors will want a credit score of around 670 (FICO Score).

If you have good credit, you’re more likely to get approved, and also get a loan with decent interest rates. Remember, you want a loan with lower interest rates than your current debts, so this part is key. If your credit score isn’t the best, a new loan might not have favorable interest rates.

You want a fixed repayment schedule

With some debts like credit cards, it’s easy to just make the minimum payments or even miss a payment (please don’t do this). This makes it harder to clear the debt because some of it relies on willpower.

With a personal loan, you have a fixed payment and loan term that you have to abide by. This makes it much easier to stay on track and clear your debts. It also means there are no fluctuations in your monthly debt payments like with a credit card so it’s easier to budget for.

Signs debt consolidation is NOT right for you

You have a poor credit score

Having a poor credit score is one reason why a lot of people want to get out of debt as fast as possible.

However, debt consolidation relies on you not only being able to take out a new loan but also getting one without crazy high interest rates.

If the only loans you can take out mean you’ll be paying MORE in interest rates, then it’s not worth it. In this case, the only benefit would be to simplify your loans.

But what you really need is to save on interest so you can clear the debts faster.

You’re on the verge of bankruptcy

If things have taken a downward turn and creditors are threatening to sue, then a debt consolidation loan may not even be accessible to you. Bankruptcy is a scary thought, but if this is your reality, you are unlikely to qualify for a debt consolidation loan.

If this is your current situation, you would be better off looking into debt settlement to try and reduce your debt amount first.

You can’t afford the monthly repayments

Taking on another debt is tricky if you’re already in debt. While you can use this one to clear your other debts, you need to make sure you can cover the monthly repayments.

As it’ll be a higher debt amount (to cover all your other debts), the monthly repayments will be higher. Make sure that you can fit it comfortably into your budget before taking on new debt.

After all, missing repayments can set you back even further.

How to consolidate debt — and get rid of it completely

If you’re STILL interested in consolidating your debt, I want to help you.

Because there are a LOT of scammy consolidation services out there. These “businesses” will promise that they’ll help you get out of debt fast through their loan packages …

… only to screw you with hidden fees, bloated interest rates, and long loan terms.

The trick here then is to separate the good debt consolidation organizations from the bad ones.

Step 1: Find a non-profit debt consolidation firm

Non-profit debt consolidation firms are 501(c)(3) organizations that help provide you with consolidation services, credit counseling, and will even negotiate with your creditors for you.

The best part: They do so with little to no costs to you since they’re funded by third-party sources such as donations and grants.

Unfortunately, even scammers and bad consolidation services have non-profit status. So you’ll have to do your research into finding a reputable one.

Two good signs a non-profit debt consolidation firm is the real deal:

Fees. A reputable non-profit will likely have monthly maintenance fees. Luckily, they’re relatively low cost — and if you’re in really dire straits, some non-profits will waive the fees entirely for you.

Non-profit status. This might seem like a no-brainer but it still needs to be said: Ask them for verification of their non-profit status. Too many scam companies pretend they’re non-profits in order to lure people in. Don’t be one of those people.

Make a list of 5 to 10 non-profit debt consolidation firms. Spend the next week calling each of them and getting a consultation on your situation and what they can do for you.

A good non-profit will spend about an hour on your consultation. Beware of any organization that wants to take your money and put you into a plan right away. They are NOT looking out for your best interests.

Step 2: Eliminate temptation

Luckily, a non-profit debt consolidation firm will take care of a lot of legwork for you. That means they’ll call your creditors, negotiate down your debt and interest rate, and work with them to consolidate all of your debt into one manageable monthly payment.

Unluckily, that’s the easy part. The hard part means actually doing the work of paying down your debt — and that’s up to you.

To do that, you need to first get rid of the temptation of using your credit cards until you’re debt-free. If you ever expect to pay down your debt, you can’t add more to it.

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

Seriously. Remember what we said about human willpower? It’s very weak — so weak that a solution like freezing your cards is necessary sometimes to delete temptation.

When 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.

You can also give them away to a loved one to keep until you’re out of debt.

Step 3: Confront your debt

It’s good to finally confront your debt. That’s the first step to getting out of it.

While it may be tough to climb out of debt, the sooner you make a plan to do so, the better. You’ll be able to repair your credit score, work on boosting your savings, save on interest, and finally get some sleep at night. Debt can weigh heavily on the mind, after all.

The good thing is, you don’t have to do this all alone. There’s help at hand. You can get in touch with a non-profit debt consolidation firm to help you. Take advantage of their credit counseling services to help steer you through unmanageable debt. Do your research and find a non-profit so you can avoid the scammers out there.

It’s easy to feel bad for yourself and avoid confronting your debt. It’s harder to actually step up and do something about it.

Since you’re here, that means that you’re willing to put in the work to dig yourself out of your financial hole which is amazing!

What is the difference between debt consolidation and debt settlement?

Another term you’ll likely come across in your quest to clear your debt is debt settlement. But what is it?

Both debt settlement and debt consolidation are used to handle personal debt, but they work in very different ways.

Debt settlement is used to reduce the total amount of debt owed. Whereas debt consolidation is about reducing the number of creditors you owe.

With debt consolidation, you combine multiple debts into one. Debt settlement is when you ask one or more of your creditors to accept less than you owe.

If the creditor agrees, you both reach a settlement agreement in either a lump sum or installments.

Which one is best for you?

This depends on your circumstances and what the creditor will agree to. If you want to make your monthly repayments more manageable and reduce the amount of interest you pay, then debt consolidation is the way to go.

If you’re already behind on payments and are struggling to meet them, then debt settlement might be a better option.

In this case, if you’re already behind on payments you might struggle to get a debt consolidation loan anyway because of the impact on your credit score. So, debt settlement is definitely something to try out to reduce the burden.

Debt settlement is the next logical step if you’re out of options, have poor credit, and want to avoid declaring bankruptcy if at all possible.

It may mean taking a hit on your credit score, but you might have to just accept that. Once the debts are clear, you can get to work on repairing that damage.

How does debt settlement work?

Debt settlement is a tricky one and requires you to whip out your negotiation skills. There’s no guarantee the creditor will agree, but there’s no harm in asking.

The process is pretty simple. You can ask your creditor if they would be willing to negotiate a settlement. Do this over the phone or in writing to keep a record of the conversation.

A creditor can do one of three things:

Accept it

Reject it

Make a counteroffer

With the counteroffer, you will need to consider if the amount they want is affordable in your budget. Make sure you’re agreeing to something that’s realistic and fair.

Once you agree on a settlement amount, all that’s left is to arrange the payments. This can either be a lump sum or through installment payments, whichever you agree to.

After you’ve made the payments, the remaining balance that’s been hanging over your head will be a nice round zero.

If negotiating debt settlement on your own sounds like a nightmare, don’t worry. There is help at hand. You can hire a debt settlement company to negotiate on your behalf. However, this does involve paying them a fee, and again, you have to do your research to avoid hiring a scammer.

Pros and cons of debt settlement

Pros

You reduce your debt amount

The biggest pro to debt settlement is simply that you reduce your debt amount. A lot of people don’t know that you can ask your creditors for this. So they carry on struggling.

But if you’re struggling, it can’t hurt to ask. If a creditor agrees, you could cut hundreds of dollars from your debt and all the interest that comes on top of that.

You can clear your debt faster

With a smaller debt amount to pay off, you can pay it off faster. Whether you agree on a payment plan or a lump sum, you’ll be able to say goodbye to your debts much sooner.

This means your money will be freed up faster to put into savings accounts or whatever else you want to spend your money on. You can also get to work repairing any damage to your credit score once the debt is clearer. The sooner the better.

It could help you avoid bankruptcy

If bankruptcy is on the horizon, debt settlement should absolutely be a consideration. The last thing you want is a bankruptcy on your record. You can pretty much say goodbye to being able to take out credit for a LONG time if you reach this point.

Cons

Your credit score will take a hit

Naturally, debt settlement does not reflect well on your ability to repay debts. If you have debt settlement in your credit history, it signals to future creditors that you are riskier to lend to. This could result in sky-high interest rates or outright credit rejection in the future.

However, if your credit score is already low and your debts are just making it worse, then you pretty much have nothing to lose. Yes, you’ll take a hit, but you’ll also get out of debt sooner if your creditors agree to debt settlement.

You might struggle to get credit again… especially with those creditors

A lower-than-ideal credit score does affect your ability to take out credit in the future. However, if you’ve been in a tricky situation with credit, it’s probably worth avoiding new loans and finance for a little while anyway.

The creditors who agree to debt settlement will likely avoid lending to you again because they will be worried about losing money. This could limit your options in the future. But if it’s your only option, you might just have to just bite the bullet.

There is no guarantee creditors will agree

Unfortunately, if you’re relying on creditors to throw you a lifeline here, you might be out of luck. In an ideal scenario, they’ll be forgiving and offer you a way to climb out of debt in a way that benefits everyone.

But there’s no guarantee they’ll do this. They could outright reject your request or be inflexible with their counteroffer.

There’s little you can do if this is the case. You can try another of your creditors if you have several debts to see if any of them will agree.

Avoiding debt in the future

After you’ve decided on a method to reduce your debt – don’t stop. Ridding yourself of debt is just one key part of building strong personal finance. The other part of the puzzle is to manage your spending so you don’t end up in the same position as before.

The last thing you want to do is put all your hard work into clearing the debt, only to succumb to temptation or poor money management which puts you right back where you started.

That’s why we want to give you something that can help you take your personal finances to the next level: The Ultimate Guide to Personal Finance. In it, you’ll learn how to:

Master your 401k: Take advantage of the free money offered to you by your company.

Manage Roth IRAs: Start saving for retirement in a worthwhile long-term investment account.

Spend the money you have — guilt-free: By leveraging the systems in this e-book, you’ll learn exactly how you’ll be able to save money to spend without the guilt.

Enter your info below and get on your way to living a Rich Life today.

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Debt consolidation: How does it work and is it right for you? is a post from: I Will Teach You To Be Rich.

from Finance https://www.iwillteachyoutoberich.com/blog/debt-consolidation/ via http://www.rssmix.com/

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andrewdburton · 3 years

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Is Renting a Waste of Money? Ramit Sethi Explains

I know, I know. You’ve been told you’re “throwing money away on rent.” Someone in your life made you feel guilty for not buying a house and building equity. And let me guess: They said something like, “Ugh, I just hated paying someone else’s rent!”

Right?

There’s just one problem: It’s not true.

First, let me ask you a simple question: Do you “throw money away” when you eat out at a restaurant? Of course not. You’re paying for value.

Yet somehow this logic totally falls apart when you apply it to real estate.

I decided to run a poll on Twitter to ask what people thought.

Not surprisingly, 95% of people said, “No, you didn’t ‘throw money away’ on a nice meal.”

Then I asked the same question — but for rent.

LOL! Notice the drop from 95% to 81% when I asked if I was ‘throwing money away renting.’” In other words, many more people believe that renting is throwing money away.

You and I know that if we spend $20 eating out, we were happy to spend it to get good food, table service, and someone who cleans up our dishes.

Paying for rent is exactly the same: You’re paying for a roof over your head (the meal). You’re also paying for a landlord to deal with any paperwork and maintenance issues (the service).

So why do so many of us blindly repeat this phrase that we’re “throwing money away on rent?”

Why do people believe that rent is a waste of money?

Understanding why this myth persists is the first step in understanding the truth about buying vs renting. Check out these reasons why many people believe that rent is a waste — what do you notice?

1. Propaganda

The powerful real estate lobby, the government, and our parents all tell us that “real estate is the best investment of all.” There are even governmental tax incentives to buy! Repeat this for decades and a population starts to blindly believe, rather than running the numbers.

Here’s a tiny glimpse of how the real estate propaganda machine works. In this article from the New York Times, buying a house subtly portrayed as the ultimate, foolproof way to get rich in America. Fast. Hurry! Prices only go up! Add in HGTV, economic malaise, & phrases like “you’re throwing money away on rent.”

“Minus expenses.” LOL. Given that “expenses” can run over 10% of a house’s selling price, that’s like me saying, “I really enjoyed this trip to the Grand Canyon! All except for the part where my son fell off a cliff and died. Anyway, it was fun!”

Hurry or you’ll forever be “priced out.” This is the message that people receive, causing them to make irrational financial decisions.

In reality, real estate is not always the best investment. It comes with significant phantom expenses. And there are often better investments, such as a simple low-cost index fund. This is well-understood by sophisticated investors but ordinary Americans have been duped into thinking their primary residence is a great investment. Often, it is not. (I could buy today but I rent by choice because it is a better option for me.)

Bonus: Want to learn a better way to master your finances and build real wealth? Download my FREE Ultimate Guide to Personal Finance.

2. Financialization of real estate

In America, we believe that our house should also be an investment. Why? It’s not like that in many other countries. In fact, if you sit down at the dinner table with your parents, they want the price of their house to stay high — while younger people want the price of housing to go down!

3. The idea that someone’s “getting one over on you”

Americans HATE the idea that someone is making money off them. A Reddit comment said (paraphrased) “If you buy, it might cost more but at least you won’t be paying your landlord’s rent.” Do you understand how crazy this is? When you eat out, do you say, “I like the food here but I just hate paying this restaurateur’s rent?” Of course not. We only repeat this phrase with real estate. Stop it.

4. Lack of understanding about phantom costs

People believe if you buy a house for $200K and sell it for $450K, you made $250K. This is false. They don’t understand maintenance, taxes, and other phantom costs, and they don’t compare ROI to other investments. Also, did you know real estate prices also go down?

5. Following the same playbook as always

Buying a house was, in general, a good thing for most Boomers. There were also fewer low-cost investment options like index funds in the 70s and 80s. Therefore, stuck in the past, they parrot the same lessons to millennials, who face unaffordable housing, stagnating wages, and better investment options. This is the problem when people (Boomers) recommend something, but don’t actually understand why it works: They just keep repeating it, over and over, even though the situation has changed.

Bonus: When it comes to your finances, you shouldn’t be following the same old playbook. Download my FREE Ultimate Guide to Making Money to learn a better way.

What you should know about buying vs renting

Renting isn’t necessarily better than buying and buying isn’t necessarily better than renting. It depends on many things:

Your city

If you’re ready to buy a house

Why you want a house: to raise a family? Because you want to renovate it? As an investment? Or for pure desire?

My advice: Run the numbers and get educated. But never, ever say you’re “throwing money away on rent.”

Is Renting a Waste of Money? Ramit Sethi Explains is a post from: I Will Teach You To Be Rich.

from Finance https://www.iwillteachyoutoberich.com/blog/renting-is-not-a-waste/ via http://www.rssmix.com/

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andrewdburton · 3 years

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How to nail any phone interview (the ESSENTIAL 2021 guide)

Looking to nail a phone interview you have coming up? Well read on.

Interviewing is hard.

One of the few ways to make it even harder is to make it a phone interview. In-person, you can read and respond to all of the interviewer’s physical cues, but on the phone you’re often left to guess if they’re engaged in what you have to say or busy checking their inbox while you ramble on.

Unfortunately, many application processes begin with a phone interview.

I used to hate phone interviews…at least until I learned a few simple tips that turned this typically uncomfortable conversation into a job offer — or a follow-up, face-to-face interview — every time.

What is the purpose of a phone interview?

In a phone interview, the interviewer wants a condensed version of your story and why you’ll be good for the job. It’s your foot in the door and a critical part of the interviewing process. It acts as a screening interview to narrow down the candidates.

How to prepare for a phone interview

You may think it’s simply making sure your phone is loud enough to hear it over reruns of Friends as you contemplate changing out of your pajamas into fresh pajamas. But if you really want that job, you’ll want to take it as seriously as any in-person interview. These are our top phone interview tips.

1. Prepare for what you need

If you’re a compulsive list-maker, eat your heart out because this is your time to shine, baby! List everything that you’ll need during your interview slot:

Your phone – Make sure the phone is charged and have the charger handy just in case.

A quiet place – No bustling coffee shops or your kitchen when everyone is home for the day. Choose a quiet space that allows you to focus on the interview. It’s also important in terms of professionalism. If you’re in a chaotic environment, it might make your interviewer feel like you didn’t prioritize the meeting enough for you to seek out a quiet spot.

A notepad and pen – Hopefully you’re going to ask some questions, even if it’s just to build rapport with the interviewer. Keep those notes so you can do a follow-up, or better yet, provide feedback when you land the in-person interview.

Your notes – Having your notes on-hand is kind of like taking an open book exam. You don’t get any award for not using notes! You’ll know exactly what to do in a phone interview, which takes some pressure off the interview.

Bonus: Want to finally start getting paid what you’re worth? We show you exactly how in our Ultimate Guide to Getting a Raise and Boosting Your Salary

2. Prepare yourself

Business at the top and party at the bottom might help save face during video interviews, but it does nothing for your confidence. Shower, do your hair, do makeup (if that’s you), and get dressed as if you’re going for the in-person interview. At the very least, get out of those pjs and wear some grown-up shoes. Who knows, this might switch over to a video screen interview without warning.

3. Prepare your responses

Knowing what to say during the actual interview will rely a lot on your level of preparedness. Recruiters often post some questions along with the job offer, and those questions give you insight into the topics up for discussion during the interview.

Research the company: Use resources such as Linkedin, Glassdoor, and Indeed to do research on your potential future employer. This allows you to get a feel for the company structure but also gives you an idea of the scope of growth in your chosen field. You also want to see if there are gaps that you can help them fill, but more on that later.

Research the interviewer: If the interviewer’s name is provided, you can do a quick search to find out where they are in the structure of the organization. This gives you an idea of whether the interview is being conducted by HR, or your next line manager. You’ll also get an idea of their personality and interests. Just be sure to keep the info to yourself, as you don’t want to give off creepy vibes.

Get your story toolbox ready: Interviews generally follow the same scripts, mostly because all interviewers want to know one thing, and that is, “What makes you a better choice than any of the other guys out there?” They want to know why you’re the best fit for the job. Your story toolbox allows you to answer some of the more difficult questions, such as “Tell me about yourself” and “What about this job appeals to you?” By preparing stories that match that line of questioning, you’ll be ready with a response they want to hear, and you won’t waste time rambling.

Bonus: Want to work from home, control your schedule, and make more money? Download our FREE Ultimate Guide to Working from Home.

4. Know what you want from the interview

Before you answer that interview phone call, make notes on your expectations of the role and the company.

Write down your salary expectation.

Find out what the actual job title is, roles and responsibilities, and where it lands on the salary band (are you nearing a salary cap?).

Ask who you’ll report to and the size of the team.

Find out whether you’re expected to commute or whether the job allows remote work.

These are just a few examples of possible questions. It’s important that you know what you want from your new role and whether it’s worth the change from the existing one.

Practicing for your phone interview

You didn’t think you were going to get out of this without practicing, didya? Practicing allows you to plan out the interview and make adjustments as you go along. So here’s what you do.

You’re going to phone a friend

Prep your friend with an interview question list and press “GO!” If possible, record the conversation so you can listen to the exchange afterward. You’ll be surprised how many strange quirks you might have, for instance, constantly clearing your throat or saying “um” all the time.

Use the mirror

This may seem like a bizarre tip, but hey, trust us. When you practice your scripts in the mirror, you immediately start making subtle changes such as changing your posture, fixing your hair, and possibly even smiling. These are all little efforts to boost your confidence and shouldn’t be taken lightly. Just do it!

Make notes

Whether you’re practicing with a friend or your reflection, takes notes of things you observe and your responses to the questions. Before your telephone interview, be sure to go through these notes again just to keep them top of mind.

Pump yourself up

Instead of thinking about the interview as scary and something you would rather not do, psych yourself up. Start telling yourself that this is going to be a fun interview, even if you need to be professional and alert. Do what it takes to get yourself motivated as the excitement and energy will carry through to the interview.

Practice small talk

If you’re a straight-to-the-point kind of person, this might be a tough one to swallow. Small talk might seem superfluous and juvenile, but it’s a necessary means to an end. It allows you to build rapport with the interviewer and it also gives you that legroom to relax before bombarding the other party with stories of your greatness.

Bonus: Want to know how to make as much money as you want and live life on your terms? Download our FREE Ultimate Guide to Making Money

During the interview

This is your moment in the ring and while it might just be the first knockout round of the tournament, show up for it in a big way.

Be professional

Even if you’re applying for a job as a children’s entertainment manager on a cruise ship, any job you apply for will have some form of responsibility, so professionalism is still important. You can talk about the elements of fun, but try to remain on topic and answer the questions as thoroughly yet concisely as possible.

Don’t ramble

It’s tempting to start pulling out all those stories from your story toolbox and just run with it, but chances are good that you’ll miss the question and end up boring the interviewer. Respond to the question and keep it short yet informative.

Stand

It’s a natural instinct to want to hunker down and protect your vitals, but it doesn’t translate well over the interview. By standing up, you improve the blood flow which is a quick energy boost. This allows you to literally think on your feet as those questions start coming in. Standing also boosts confidence, by the way, and who doesn’t need an extra boost?

Watch your breathing

Breathe. Focus on measured breathing but make sure it doesn’t sound like you’ve just run a marathon on the other side. Steady breathing also does wonders for circulation, which is needed when you’re cornered with the OG of questions, “So tell me about yourself.” When you’re breathing is erratic, the body tries to protect the organs which could leave you feeling dizzy and disorientated. Which seems normal for an interview, right? But trust us, you don’t have to have a racing heart and sweaty palms.

Be prompt

You want to start off strong and this means that you need to be prepped and ready. Be ready for that call and don’t let it ring more than three times. You want the recruiter to know you were ready and waiting for their call. Use a greeting that is professional and a little more than just “Hello.”

A rule of thumb is to start off with your name, “Hello, this is Joe Greene.” Anything more than this might just be a bit much before the other person has had a chance to introduce themselves. When they do, let them know that you’ve been expecting their call and that you’re excited about the interview.

Smile

Yep, we’re back with this one, but only because it’s so dang important. Something changes in your vocal cords when you’re smiling. Plus, there’s that positive effect smiling has on your nerves, to consider. You’ve practiced this in the mirror, so now it’s just a matter of applying it during the interview. Trust us, it’s pretty hard to sound happy and upbeat when you’re not smiling.

Be the voice

There are few things that put people to sleep faster than a one-tone drone. Make sure to add some excitement to your voice by alternating the pitch slightly. While that monotone voice might be your usual style, it comes off as lacking interest. Ouch!

While you’re at it, check your volume. You want to be heard, but you also don’t want to blast the interviewer’s eardrums.

The final voice trick is to make sure that the pace is good. While there is too slow, slow is still better than too fast. The last thing you want is losing the interviewer because they can’t keep up with your runaway soliloquy. Acing a phone interview depends a great deal on keeping the other party engaged throughout the call.

Prepare yourself for potential issues

The neighbor suddenly starts their renovation project in the middle of the interview, or there’s a medical emergency, or your phone battery decides to retire, whether you’re on charge or not. Decide beforehand how you will handle events like these and have a plan B. For starters, you might want to have a second phone handy or another place to conduct the interview, that’s easily accessible within a few seconds.

Or, worst case, you might have to phone the interviewer back as soon as you can and apologize. Ask whether it’s possible to reschedule.

The Bottom Line

Knowing how to do well in a phone interview relies a lot on your ability to stay calm and focused. Preparation will get you halfway there, and the other half is just harnessing your inner best self through little confidence boosts along the way. Success comes with following sound advice, applying what you learn, and preparing for all eventualities. If you want to learn more about landing your dream job, we’ve got you covered!

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How to nail any phone interview (the ESSENTIAL 2021 guide) is a post from: I Will Teach You To Be Rich.

from Finance https://www.iwillteachyoutoberich.com/blog/how-to-nail-any-phone-interview/ via http://www.rssmix.com/

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andrewdburton · 3 years

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What Is Strategic Asset Allocation? Definition + Allocation Strategies

Strategic asset allocation is the practice of setting a goal for each of your asset classes (e.g., stocks, bonds, cash), and rebalancing it every year as you realize earnings on your investments.

This is a great tactic if you want to:

Focus on long-term financial goals

Enjoy a hands-off approach to your portfolio — and not wring your hands over how the market is performing

Reduce your risk as an investor

In this post, we’ll walk you through how to set up your asset allocation in a way that makes sense for your goals.

What are investment assets?

When you invest, your money goes into different assets. These are government bonds, mutual funds, stocks, retirement savings, and even real estate.

Not all of these assets carry the same risk. For instance, stocks are deemed riskier than say government bonds. Choosing your ideal mix of assets will depend on various factors including:

Your age: Your allocation strategies shouldn’t be the same in your twenties as in your fifties. That’s because the risk needs to start reducing towards the end of your investment journey so you can start preserving more of your capital.

Your risk appetite: The mixture of asset classes will depend on whether you’re a conservative investor or not. Those who are willing to take on more risk, might include assets such as cryptocurrency in the mix, or have a higher percentage invested in stocks.

Your goals: If you’re saving for a gadget you want to buy in a few weeks or months, it doesn’t make sense to put that money into a volatile, high-risk stock. Sure, it might pay off and you’ll have a quick return, but that’s not the norm. Short-term investing should be in a low-risk, even no-risk portfolio. Retirement is different, however, as investors often start in their twenties or thirties with the hopes of retiring in their late fifties to early sixties. This gives enough time to catch up with the many market downturns synonymous with investing.

Bonus: Ready to ditch debt, save money, and build real wealth? Download our FREE Ultimate Guide to Personal Finance.

Why do we recommend strategic asset allocation?

Strategic allocation allows you to be intentional about your investment choices, without being chained to the mundane of everyday management. Sure, you might have to spend some time on it, but make it a once-a-year thing if you can.

So how do you do this? Automated investments. You can automate everything from the money that goes from your bank account into the fund, to choosing funds and assets. You can even put a mandate in place for fund switches when there’s a serious market nosedive.

How to set up strategic asset allocation

First, let’s start with an example:

Imagine you’re a 24-year-old who just opened up a brokerage account with $3,000. If you want to employ strategic asset allocation, you’ll want to set certain percentages you’ll want in each asset class based on your goals.

Since you’re young and have many years before retirement, you might be more willing to take risks with your portfolio. Considering this, you decide to be aggressive and put your money in 80% stocks ($2,400) and 20% bonds ($600).

A year later, you discover that your stocks accrued 20% from your initial investment, while your bonds have earned you just 2%. This leaves your assets at 82% stocks ($2,880) and 18% bonds ($612).

Now your assets are “unbalanced” in accordance with the goals you set for them and it’s time to rebalance them.

In order to stay in line with your strategic asset allocation strategy, you’ll need to take 2% or about $57.60 out of your stocks and into your bonds. That’ll leave your portfolio nice and balanced at 80% stock and 20% bonds once more.

Of course, your goals will change over time. As you get older, you’ll find that you might want to be more conservative with your investments, and you can change your asset allocation percentage so they fit your needs.

Consider the following scenarios, including your timeline and risk tolerance to help you figure out the best asset allocation strategy for you.

Determine your investment timeline

Your asset allocation should be adjusted according to the amount of time you have to invest. For instance, if you have a one-year goal or a fifteen-year goal, the investment strategies should look different. The shorter the term, the less risk you should have in your portfolio. Ideally, investments should run for a minimum of ten years to get the most out of the markets.

Assess your risk tolerance

Risk tolerance is how much risk you want to expose your capital to. An aggressive approach might not be for everyone, even if they have 20 years plus to ride out the markets.

It’s important that you are comfortable with your risk tolerance because there is always an opportunity for loss in investing. The higher the risk, the higher the chance of loss. But there’s also a chance of higher earnings. The point is, you need to be comfortable with the potential of your risk class compared to the potential for total loss.

Determine your goals

What is the point of investing and how will strategic asset allocation play into those goals? If your goals are to spend as little time micro-managing your investments as possible, then strategic allocation is your best investment friend. Add to that investment automation and you’ll have plenty of free time to do whatever you want instead of scouring newspapers, widgets, and indicators for hours a week trying to maximize your returns.

Sure, there is a time to intervene but knowing when and how often is what will allow you to strike a good balance.

You want to spend less time figuring out financial jargon

You prefer investment automation

Risk tolerance is worked into your allocations

There’s a planned review every year to determine whether you’re still on the right course and whether your allocations are where they need to be

Purchase funds in each asset class

This is a simple way to make sure you have a nice, diverse investment portfolio. And diversity matters. Remember when financial pundits were telling everyone that property was the safest portfolio and that the likelihood of a market crash was just, well silly?

Turns out that did happen and well, we literally refer to it as the mortgage crash. Now, property is still worth looking at when considering your investment strategy because the market did quite a rebound. But here’s the thing. Don’t tie all your money up in that one asset that seems to be going well at that point in time. Those who were able to wait it out managed to make their money back and then some. Those who retired at the time of the crash, not so much.

Split your assets as much as possible to increase your chances of good returns and reduce your risk. Even when you’re investing in an asset, for instance, stocks, split those funds even more. Consider index funds that include a basket of funds so you’re as diverse as you can possibly get.

Bonus: Ready to ditch debt, save money, and build real wealth? Download our FREE Ultimate Guide to Personal Finance.

Rebalance your portfolio every 12-18 months

In order to stay balanced, you’ll need to check out your portfolio and rearrange funds in order to stay in accordance with the allocation percentages you set as a goal.

Strategic asset allocation vs tactical asset allocation

Now, it’s worth mentioning that these asset allocation strategies don’t exist in isolation. Also, strategic asset allocation is just one method of dealing with your investments. There’s also no rule that says if you choose one method, you need to stick to it for the next thirty or forty years.

It’s not unusual for you to use several methods at times, even if you have a main method. For instance, you can opt for strategic allocation, and at times, employ tactical allocation.

Tactical allocation simply means you’re in the thick of it all the time, making even the minutest decision regarding your investments. It’s the opposite of the hands-off strategic allocation model.

Fund managers often use a tactical approach to asset allocation and it works, because they know what they’re doing. The goal here is to maximize profits and when this is done, the portfolio is returned back to its original state. It’s only supposed to be a temporary measure.

There are other allocation methods too.

Constant Weighting Asset Allocation: You allocate certain percentages to certain asset classes, for instance, 80% to stocks and 20% to bonds. When the markets shift and you’re suddenly 25% in bonds, you immediately adjust this. Some investors allow the balance to tilt by up to 5% before they adjust their investment split.

Dynamic Asset Allocation: You’re in a constant game of buy and sell. When markets are weak, you sell and when they pick up, you buy. This method plays into the strengths of portfolio managers.

Insured Asset Allocation: This method allows you to establish a base profit margin and should the investment dip below it, you start moving funds to secure investment assets that carry little to no risk.

Integrated Asset Allocation: This method is entirely focused on risk and may include aspects of the other methods. Assets are chosen with the investor’s risk tolerance in mind and all decisions regarding investments are weighed up against risk, not possible future returns.

To conclude

Investing can be as easy or as hard as you want it to be but when your portfolio strategy is all about asset allocation, you’re one step closer to a healthy asset mix. But if you really want to know all the ins and outs of investing, saving, and more, you should check out our Ultimate Guide to Personal Finance.

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What Is Strategic Asset Allocation? Definition + Allocation Strategies is a post from: I Will Teach You To Be Rich.

from Finance https://www.iwillteachyoutoberich.com/blog/strategic-asset-allocation/ via http://www.rssmix.com/

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andrewdburton · 3 years

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How to Choose a Career that You’ll Love (even if you don’t know what you want to do)

How do most people choose a career?

Well…they don’t. They stumble into a job after college, take whatever they can get, then follow one of the few paths available from that random job.

No wonder most people are frustrated in their careers.

But there actually IS a way to narrow down your potential interests to choose a career that you will love.

Ramit Sethi, our founder and career-path guru, has put together a Dream Job system that helps you explore ALL the careers you’re interested in, test each to see if you’d really enjoy doing them, and move on to other jobs if they’re not a good fit.

Here are some of our best tips on finding a career you love – even if you have no idea what you want to do.

1. Understand yourself and your personality

A good evaluation of your personality defines the kind of job you would fit into. And we’re not talking about taking a random career personality test and doing whatever it tells you to do – those tests are usually unrealistic, and can’t paint a clear picture of what really drives you.

Instead, ask yourself the following questions and let your responses guide your career search.

Bonus: Want to fire your boss and start your dream business? Download our FREE Ultimate Guide to Business.

What motivates you?

The first step in assessing your personality is finding out what motivates you. If you can’t answer that question on your own, turn to friends, family, and colleagues to understand your driving force. When do they recognize your eyes lighting up? Maybe it’s after you’ve helped someone, or when you’ve solved a difficult problem. Understanding what gives you energy can help point you in the right career direction.

Evaluate your skills

Some jobs tap into soft skills, like communication and personality, while others demand a particular academic skill set. For instance, technical jobs automatically require you to possess an analytical mindset/background. You cannot apply for a scientific research position when your only training is in art history. If you do want to make a career switch, that’s ok, but understand that you’ll likely need additional training.

Understand your weaknesses and dislikes

Have some self-awareness and get clear on your major weaknesses and dislikes. You may realize that you have poor delegation skills or that you hate team collaboration. You’ll need to recognize where you have weaknesses or outright dislikes. For example, if you don’t like talking to people, you probably won’t want to consider a career in customer service.

2. Make a list of potential careers to explore

One of the most daunting parts of choosing a career is picking just ONE job…that you’re supposed to do for the rest of your life.

“What if I decide that I hate doing X? Can I ever do something else?”

“What if I want to change careers in a few years? What do I do then?”

“What if I like to do LOTS of things and can’t decide where to focus?”

Just start by listing ALL the careers and job titles you might be interested in.

Anything you want to explore, just write it down.

Think copywriting sounds fun? Add it to your list.

You can imagine yourself as a marketing director? List it out.

Know someone that does inside sales and what they do sounds cool? Put it on the page.

Have you toyed with the idea of being a baker? Nothing is too left field. Write it down.

Ramit call this the Cloud Technique because your options are as open as the sky.

This lets you say “Yes” to EVERYTHING you’re curious about instead of constantly saying “No, I can’t do that because…”

Where should your ideas come from? Here are a few career brainstorming tips:

List any careers or job titles that caught your attention in the past.

Go to LinkedIn or another job listing site and read job descriptions. If anything catches your eye or seems like it’d be fun to do, add that to your list of potential ideas.

Think about the skills you already have or the ones you’d like to develop. Then, search for jobs that involve those skills. For example, do you really like design and being creative? See what jobs require those skills by searching online. Put these options on your list of potential careers as well.

Think about people whose jobs you envy. Have you always been jealous of your aunt because she is a tour manager with your favorite band? Write that down.

Bonus: Want to finally start getting paid what you’re worth? We show you exactly how in our Ultimate Guide to Getting a Raise and Boosting Your Salary

3. Research your top choices

Once you’ve tentatively selected a few job titles, it’s time to do some deep research. This is where you go from “Hmm…sounds interesting” to truly understanding what the job is about.

Remember: You don’t have to become 100% knowledgeable about these roles… just yet. You just want to learn as much as you need to see if a job is right for you.

Let’s use the job title of “engineer” as an example of what you’ll want to look for.

The first thing, you’ll want to do is get a bird’s eye view of the job:

What do engineers actually do?

What are the different types of engineers out there (petroleum, electrical, civil…)?

What kinds of companies do they work for?

You can find this info with a quick search through Wikipedia or Googling “introduction to [INSERT JOB].”

As you tackle those broad and sweeping questions, you may start to eliminate some options you originally listed. And that’s okay. In fact, that’s expected. Just because something sounds interesting in theory, doesn’t always mean it will be.

You actually want to narrow things down in this stage. If at any point, you run out of job titles on your list, simply go back to step three (with your new insights on what you want from a job) and start again.

Once you have a basic high-level understanding of the positions, you can dive deeper into the nitty-gritty details:

What does this job pay?

What type of educational experience is required?

What’s the trajectory?

What does the job look like on a day-to-day basis?

How many hours per week do they work?

Is there travel involved?

What makes a great engineer vs. simply a good one? Is it a strategic vision? Creative ideas? Quantitative skills?

What blogs/books/websites do they read regularly in order to stay “in the know?”

Bonus: Want to work from home, control your schedule, and make more money? Download our FREE Ultimate Guide to Working from Home.

The whole time you’re going through this process, ask yourself “Could I see myself doing this?” and “Is this something that still interests me?”

This process helps you discover what it is you truly enjoy. Once you’ve narrowed your list down again, you’re ready to hear from people who actually work in these roles. That’s how you guarantee this is the right career choice.

4. Conduct informational interviews

An informational interview is an informal talk you have with a subject working in your desired profession. It is the last step you take when deciding your career path.

You may have heard about informational interviews before, but few people actually take this critical step. Two things you need to know:

An informational interview is an opportunity to meet someone you’re curious about and learn from them. So if you’re curious what a product manager or engineer really does and want inside tips about the job, this is how you find that out.

People want to meet with smart people who are curious in the same things. That means you, if you send a great email, have insightful questions, and are interesting.

Here’s how to set up an informational interview:

Book their time

First, identify people who you’d like to speak to. Then, reach out with a friendly email asking if they’d be willing to meet with you. Here’s a sample email script you can modify and use.

Subject: Hello, Allen!

I hope all is well and that this email finds you in good spirits. I’m thinking of catching up on a few things regarding my career choice.

I read about quality control in large pharmaceutical companies and am passionate about it, but there is not much information on the ground experience. The job will have me on the production line, and I’m interested to know what that looks like and what should I be ready for? I know you are resourceful, given your over a decade-long career in the same line, which I admire greatly!

Would you mind virtually connecting with me for a brief period where I can get your ideas on quality control as a line engineer?

Please let me know a good time to connect.

Kind Regards,

Tommy

Keep it short. Go straight to the point and give a compelling reason.

Prepare talking points

You don’t want to show up to an informational interview with nothing to say. Prepare your questions ahead of time, and do a little research on the person you’ll be interviewing, too. This will help you connect with them while getting the most out of the interview.

Speak about your challenges truthfully

An informational interview is the perfect place for you to share reservations about the job you’re learning about. After all, you haven’t chosen it as a career yet. It’s better to find out that it’s not a good fit for you now than in the future once you’ve started in that line of work.

Be a good listener

Be attentive and take notes during your informational interview. Ask questions during the conversation. If you don’t know what to ask, you can always ask an open-ended question like, “Is there more you can tell me more about XYZ?”

Send a thank-you note

Sending a thank-you note is mission critical after an informational interview. Even if you don’t want to go into that line of work after the interview, you never want to burn a professional bridge by not following up. Drop the person you spoke with an email and let them know how their advice is helping you achieve your goals.

While a dream job falling into your lap is rare, you can systematically find one. We see many students struggle to get a job of their choice, and we step in to help. This is not to say that it is always easy. But it is possible.

Let us help set you up for success by guiding you on a career path you love. Let us help you in your quest to find your dream job.

Bonus: If you’re worried about your personal finances, you can improve them without even leaving your couch. Check out my Ultimate Guide to Personal Finance for tips you can implement TODAY.

Do you know your earning potential?

Take my earning potential quiz and get a custom report based on your unique strengths, and discover how to start making extra money — in as little as an hour.

Start The Quiz

How to Choose a Career that You’ll Love (even if you don’t know what you want to do) is a post from: I Will Teach You To Be Rich.

from Finance https://www.iwillteachyoutoberich.com/blog/how-to-choose-a-career-that-youll-love/ via http://www.rssmix.com/

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