One Thing I Don’t Skimp On

I don’t mind cutting back on food cost, reigning in frivolous entertainment costs, or driving an old car until it dies on me. But there’s one category I’m completely okay with spending money on.


I don’t just mean school, although it’s certainly helpful. I’m now heading into my last semester of graduate school for an M.S. in Finance. I decided two years ago that a formal education in the subject would contribute to my career niche as a Quant Developer for an investments firm, while also satisfying my personal curiosity in the subject. Fortunately, the company I work for covers most of the tuition cost, so it’s primarily an investment of time and mental energy.

But to me, education goes so far beyond the rigid walls of an academic institution. I feel that continuing to explore hobbies and master skills that interest you is a critical component of a happy life.

So when my wife wanted to take an online photography course with me that costs a few hundred dollars, I was thrilled to jump in. Sure, there’s a lot of material available online for free, but she had followed these guys for years and knew the quality of the lessons would be top-notch (and so far they are!). Regardless of whether this skill set ends up having a financial reward, the investment in our own personal interests and development is going to be more than enough reward.

When she wanted to take another certification for health coaching, I wholeheartedly supported it. These kinds of decisions are even easier, since the return on investment from a financial perspective is obvious in addition to the personal development.

I’m also a big fan of books. I do try to take advantage of the library as much as possible since I don’t read most books more than once. But, I’ll often drop $30-$50 on software development books to grow my knowledge of industry topics I’m excited about, ranging from web development to machine learning and statistics.

Similarly, I’m pretty quick to spend a little money on online tutorials to supplement my learning on those same subjects. Most content in these areas is freely available, luckily, but there are some guided ones on Coursera and Udemy that I’ve gained a lot of insight from.

I don’t hesitate to keep my Audible subscription around. Even though I might be able to find some of the books free through library-based apps, the selection is limited and the apps are clunky, resulting in me consuming less material. I will try to find deals on Audible pretty regularly and have had good luck doing that, but I really don’t worry about those costs at all. Even if I’m spending $30 a month for two books, I’m probably spending 20 more hours listening to books than I would if I couldn’t find what I was looking for on another free app. Completely worth it.

In the future, I’d like to take a cooking course to become more proficient at making great-tasting meals at home. I’d also like to learn Spanish. There are so many things to learn about in the world, and so little time to learn them! If I have to spend a little money to achieve those things, it will have been money well spent.

I’m not sure exactly what point I’m trying to make. I guess I just hope we can all become more comfortable with spending money on learning things that are valuable to us and more indignant about spending money on things that waste our time and potential. At least, that’s what I’m trying to do.

What about you? What kinds of things do you spend money on that provide educational value to you? On the other hand, what things add significant educational value to your life with little to no monetary cost?

You Won’t Own a Car in 15 Years…and Other Predictions

Automated Cars

In 15 years, you won’t own your own car. You won’t need one.

Google, Uber, Apple, and others will own a fleet of self-driving cars that can be hailed on-demand or scheduled on a routine basis, like for your commutes. Think about it – your car sits unused about 95% of the time, depreciating in value, requiring maintenance, cleaning, and insurance.

Automated driving technology is making strides every year toward being commercially viable. It’s inevitable that these companies will work out the kinks and edge cases needed to pass the regulatory hurdles in front of them within the next generation. I’m almost certain that by the time my future kids are 16, they won’t have a need for a driver’s license.

It won’t happen all at once. First, people will become more comfortable with their cars auto-piloting only on highways, which is the easiest situation for automated driving systems to handle. Before long, people will get used to letting their cars drive through populated cities and heavy traffic. Eventually, people will realize it no longer makes sense to own a car. Instead, you’ll be able to request exactly the kind of car you need whenever you need it. Need to haul a load of mulch from Home Depot? Request a pickup truck for a few bucks. Going camping? Grab an SUV. Just need a commuter car? Take a small electric sedan  or carpool with others to save money (gas-powered cars will be an antiquated idea in 15 years).

In addition to the convenience and money savings, automated car sharing will drastically reduce the number of car accidents. Drunk driving will be virtually eliminated. People won’t fall asleep at the wheel or rear end each other while texting. Once automated vehicles reach a critical mass, they’ll also be able to communicate with each other to optimize traffic flow, reducing everyone’s drive times. Meanwhile, you can take a nap or watch Netflix while you get to your destination.

Deliver All the Things 

In 3-7 years, almost everything you buy will be delivered directly to your house. Gone will be the days of weekly grocery shopping. Instead, you’ll set up a weekly subscription of your staple food items which will cover your basics. Beyond that, you’ll be able to order your forgotten ingredients and have them delivered to your door by drone within a matter of 30 minutes. There’s a reason Amazon acquired Whole Foods last year – and it’s not just to try to keep selling you overpriced groceries inside their stores.

Drone technology has improved drastically within the last few years, making mass deliveries with them an absolutely realistic prospect within the next several years. Amazon will save money on labor, insurance, and vehicle costs from their drivers, and you’ll be able to get smaller deliveries much more quickly. This will also make returns much simpler. Imagine you’re interested in a new jacket, but you’re debating between two sizes. A drone can bring you both sizes, you can try them on, and quickly return the one you don’t want.

Drones will also make carry-out food orders a lower-cost option. You won’t have to go pick up your Chipotle order or pay a hefty delivery fee and tip to a driver. Instead, you’ll pay a dollar to have your burritos dropped off on your front step. Better yet, restaurants will probably provide the service for free with a minimum order.

Effectively, there will be very few things which you’ll need to leave your house to buy. While this will make life more convenient for everybody, we’ll pay a price for it through increased consolidation of retailers. We’ll continue to see the collapse of malls and the bankrupting of traditional retailers. Small businesses will struggle more and more to stay competitive on price and to attract foot traffic in their stores, losing sales to the giants who can afford the improved delivery technology.

Cutting the Cable

There’s simply no way my generation will keep paying for the $150 cable packages that our parents’ generation has been victim to. We’ve gotten a taste of the value a $10 Netflix subscription can provide, meaning the expensive bundle garbage isn’t going to fly anymore. Netflix is pouring billions of dollars into producing amazing original content and making deals with reputable creators. At the same time, they’re continuing to master the art of the recommendation engine using sophisticated machine learning algorithms. If cable providers are going to stay in business, they’re going to have to offer ad-hoc channels at lower costs or say goodbye to Millenials who are happy to pay their $10/month to binge the next season of Stranger Things.

What Do You Think?

Am I way off base and optimistic on my predictions? What areas of the economy do you think will be drastically overhauled within the next generation? I’d love to hear what you think.

How We Flew Round Trip to Europe for Free

We just returned from an excellent ten-day trip spent mostly in Switzerland, including a couple of relaxing days in Lake Como since it was on our way up from the Milan airport. It was a trip full of beautiful nature, breathtaking panoramas, and snowy walks.

Photo Credit: Marian in Lake Como for Flytographer

For the nonstop flight we took on Emirates, the normal airfare might have been in excess of $3,000. But, thanks to a combination of a deal we found on Slickdeals and some travel rewards we had banked up from a credit card, we paid absolutely nothing out of pocket to fly both directions.

Every year around the end of January, Emirates tends to put out an offer for two round trip tickets from JFK Airport in NYC to Malpensa Airport in Milan, Italy, for around $800 combined. This is an amazing deal, and it’s the same one that we jumped on back in 2015 when we spent two weeks traveling down Italy and into Greece. Emirates is an excellent airline with some of the most generous baggage allowances, free alcoholic beverages, a couple of meals, courteous staff, and a great selection of free movies to pass the time.

For this particular deal, you have to have some flexibility in your travel dates, as the heavily discounted rates are only applicable during certain timeframes which don’t usually include peak summer dates. Also, because the deal is so good, tickets tend to get snatched up within a couple of days. You need to be able to act decisively if you have the opportunity.

Fortunately, we were able to find some dates in early April that worked for both of us with tickets costing only $820.82. To sweeten the deal, we had earned over 75,000 in credit card reward points earlier in the year by opening a Chase Sapphire Preferred card and spending $4,000 within the first three months on bills and other regular expenses. The bonus itself was 50,000, with another 10,000 points coming from referring a friend, 5,000 from adding my wife as an authorized user, and other points from regular spending. The 75k points were worth over $900 toward travel, so we were able to cover the entire flight plus a portion of one of our hotels.

Credit card hacking has gotten a bad rap in many parts of the personal finance community. I used to be skeptical and dismissive of it myself. I worried about damaging my credit or figured it probably wasn’t worth devoting time to earn a handful of points. However, as I learned more about it, I found that there are a number of cards that offer many hundreds of dollars in signup bonus points with completely minimal investment of time or energy. I’m not one to complicate my financial life for no good reason or to chase pennies, but in this case, I realized my effective return worked out to an hourly rate of several hundred dollars. And my credit score has only gone up in the meantime, standing at 785 right now.

I won’t attempt to rewrite a full guide here, since there are already other sources which are much better for that purpose. If you’re interested in learning more, I’d highly recommend checking out these podcasts from ChooseFI.

I personally started with the Chase Sapphire Preferred card, which has one of the best signup bonuses and perks available. I followed that with the Southwest Rapid Rewards card, which at the time gave me a 60,000 point bonus for spending $1,000 in the first 3 months. We’ve already booked two round trip flights to Florida this summer and a flight to Cincinatti to visit family, while still having about half of those points left to spare. Before our trip to Switzerland, my wife signed up for her own Chase Sapphire Preferred so that we could put our travel expenses on it and start toward another bonus. We’ll probably do the same again for the Southwest card to keep the points rolling.

The Chase Sapphire Preferred also has some nice benefits built in, especially for travel, making it my new everyday card for most things. For example, they’ll reimburse you up to $100 per day if your luggage is lost, up to a certain amount. They have travel insurance, so if you get sick or can’t fly for a valid reason, you can provide them a doctor’s note or other evidence and they’ll reimburse you for your booked flights or hotels. I think they also extend warranties on most product purchases. If you go with the fancier version of the card, the Chase Sapphire Reserve, you’ll get access to airport lounges, a free TSA pre-check, and $300 worth of credit every year toward any travel expenses. Keep in mind that the annual fee on the Reserve is $450 compared to $99 for the Preferred, but if you travel much, it’s probably worth it. I don’t normally do any kind of ads, and this isn’t one, but if you decide you want to sign up for the Sapphire Preferred or the Southwest Rapid Rewards, I’d love it if you’d send me a message and let me know so I can get the referral points.

I’ll leave off here and may add more in a future post if I go much farther down the rabbit hole of credit card hacking. I hope that, if nothing else, this post helped show that credit card rewards aren’t just some scammy, dangerous tactic, and can truly be a viable option for responsible users.

***If you have had problems with credit cards in the past, have any current credit card debt, or carry balances month-to-month, stay away from travel hacking. You’ll end up getting yourself into trouble and it’ll cost you more than you’ll ever gain from the points. Also, if you are planning to buy a house in the near future, it’s probably best to wait until after purchasing, as your credit usage and new credit lines will be scrutinized heavily during the approval process.




Why I’m Not Rushing to Pay Down Loans

When I first started on my personal finance journey years ago, I was 100% in agreement with everything Dave Ramsey taught. I was firmly anti-debt, swearing off any type of loan, no matter its rate or purpose. I was only ever going to pay cash for a car. I told myself that when I have a house, I was only going to take out a 15 year mortage and I would try to pay it off as quickly as possible.

As I progressed in my journey and we solidified our long-term goals, however, I’ve come to believe that debt isn’t really as black-and-white as I once thought. As heretical as this would sound to myself a few years ago, I don’t think all debt is bad if it’s used responsibly and if it is in line with long-term financial goals.

You see, in our current post-recession economic climate, the Federal Reserve has kept interest rates for Treasury bonds intentionally low in order to stimulate the economy. Interest rates on things like car loans and mortgages are based in large part on these Treasury bond rates, so we’re seeing some of the lowest interest rates in recent history for many types of loans.

What does all of this mean for us as individuals? Well, it means that the decision about whether to pour loads of cash into big purchases is less cut-and-dry. The reason is that opportunity cost is a much bigger factor for consideration now. Opportunity cost is the loss of potential gain from alternative choices when one choice is made. If we apply this concept to the purchase of a car, let’s imagine that you were going to buy a $15,000 used vehicle. You could pay $15,000 in cash to purchase the car outright, or you could take a loan with a $3,000 downpayment and a 2% interest rate for 4 years. The average expected rate of return for index funds in the stock market is around 8%. So, if I take the cash I would have put toward the car and instead invest it in the market, I can likely get a 6% greater return on my cash.

There are, of course, some caveats to this way of thinking. First, you must have enough cash on hand to cover emergencies like a job loss or major car/house repair. If you take on a car loan or a mortgage that completely depletes your cash reserves and then encounter an emergency that costs several thousand dollars, you’re going to end up financing your emergency with high-interest debt, completely reversing any advantage you might have gotten. Secondly, if you’re not actually investing the difference in the market, then this approach is nothing more than an excuse to spend more.

In my case, my future plans involve reaching financial independence at as early an age as possible. Because of this goal, the future value of our cash is more valuable than 2%. So, I’m okay with not paying down our 2% car loan if it means I can instead invest that cash in the market and build a bigger nest egg more quickly.

I do find myself flip-flopping a bit on this whole thought process, as there is a definite psychological win in having a paid-off house.

What do you think? Where do you fall on the debt-aversion spectrum?

Stocks, Mutual Funds, and Retirement Accounts: A Beginner’s Guide

Often, I believe, the greatest barrier to entry into investing is not knowing quite where to start. There are all these different kinds of accounts and acronyms with their own advantages and disadvantages. It all seems overwhelming and everybody recommends doing different things. So, where to begin?

Let’s take a step-by-step approach and work our way through all the basics. By the time you reach the end of this post, the goal is that you’ll feel confident enough to actually open an account somewhere and start investing.

First, let’s start with stocks. When you put money into a stock, you’re buying some number of “shares” in that company. When you buy shares, you really own a small piece of that company. And by small I mean a tiny fraction of a percent of that company. But it’s yours. If the company does well, earns profits, and grows, so does your piece of the company pie. On the flip side, if the company tanks due to a scandal or bad performance, the value of your shares decreases along with it.

For example, let’s say you own shares in Apple. Apple owns factories, store buildings, inventory, patents, a reputable brand, etc.. All of these things, combined with the assumption of future profits, is what makes Apple valuable. When you own shares in Apple, you essentially own a small fraction of all these things. The value of your shares is partially based on all of these, but is ultimately determined by what other people are willing to pay for it.

Companies will usually pay out to shareowners some portion of their profits each year to keep investors interested. These payouts are known as dividends and they also play a part in making a stock valuable.

Putting all of your money in one company can be really risky, though. On the risk-reward spectrum, buying stock in one company is near the farthest end of “High Risk, High Reward.” If you were lucky enough to have bought stock in Google back in the ‘90s, you’d probably be rolling in piles of money as you read this sentence. However, if you’d bought another web company like or any of the hundreds of others that went bankrupt during the tech bubble of the early 2000s, you’d have lost all your money.

This is where mutual funds come into play. Instead of buying one company’s stock, you can pool your money with thousands of other people and invest in a “mutual fund” comprised of hundreds of different companies. Some of the stocks in that fund will do really well, and some will do poorly, but the idea is that because you’ve spread your money across all these companies, you’ve also greatly reduced your risk. Overall, the goal is that the fund will slowly but reliably increase in value over time.

This goal isn’t some pie-in-the-sky, unsubstantiated dream, either. If you look at a graph of the Dow Jones Industrial Average, which represents the average performance of stocks over the last 100+ years, you’d see that there’s no single 15-year period where the stock market has lost value. You’ve got your spikes and valleys, to be sure, but note that none of them seem quite so bad when you look at them in context. Notice that big drop near 2008 when the housing market fell apart, banks were being bailed out, we entered a big recession, and everybody lost their minds? Did you notice that about a year later, the market blazed right on past its previous high and continued to go for a huge climb for the next 5 years?


There are two kinds of mutual funds: actively managed mutual funds and passive index funds.

As the name suggests, an actively managed fund is run by a portfolio manager with a team of analysts and researchers who try to select which stocks will outperform the average return of the stock market as a whole.

The other kind of fund is an index fund, which bases the stocks it holds on some standard list of stocks rather than a person selecting stocks. To understand what an index fund is, we should take a step back and look at what an index is. In the investment world, an index is a list of stocks that meet some criteria. The S&P 500 (Standard & Poors 500) index contains 500 large companies. The performance of this index is closely correlated with the performance of the stock market as a whole. An index fund invests in the stocks that make up the index on which it’s based. So, an S&P 500 index fund is a mutual fund that holds the 500 stocks that make up the S&P 500.

Now you’re probably asking, “which is better, an actively managed fund or an index fund?” You might tend to think a portfolio manager with a PhD in finance, decades of experience, and a team of researchers all devoting their careers to studying companies would be able to pick out a portfolio of stocks that performs at least slightly above average. The problem is that research tends to find that the majority of actively managed funds actually underperform the market average. In addition, actively managed mutual funds charge much higher fees than index funds because you’re paying for the salaries of dozens of people. Essentially, you’re paying more for less in most cases. Picking a portfolio manager who can consistently outperform the market average is as difficult as picking an individual stock that can do that.

Personally, I invest all my retirement money in an S&P 500 index fund. The fees are incredibly low and the performance is best-in-class. In fact, one of the world’s greatest investors of all time, Warren Buffett, recommends this kind of index fund for the average investor. If it’s good enough for Warren Buffett, it’s good enough for me!

Since we’ve got the concept of stocks and mutual funds under our belts now, we’ll want to take a look at the different kinds of retirement accounts you can choose from. For this post, we’ll consider the 401k, Traditional IRA, and Roth IRA. If you’re a teacher or government worker with a 403b, substitute 403b in anywhere you see 401k, since they effectively work the same way.

Think of these types of retirement accounts as buckets inside of which you invest in mutual funds. They aren’t really “accounts” at all, but they simply designate how your invested money should be treated from a tax perspective. The government wants to incentivize people to be responsible citizens who invest for their own retirement, ultimately requiring less outside support in the future. They create these incentives  through tax-advantaged accounts.

A 401k is a retirement account that’s run through your employer. If you invest in your company’s 401k, you get to take a tax deduction at the end of the year on any money you put in (up to $18,000). For example, if you earned $50,000 this year and contributed $10,000 to your 401k, you only have to pay income taxes on $40,000 at the end of the year. Often, employers will match some portion of what employees contribute to their 401k as a benefit, but this is gradually becoming less common.

A Traditional IRA is similar to a 401k, except that it is not through your employer and you can only contribute up to $5,500 per year to it. The tax advantage works exactly the same way, though.

There’s another type of retirement account called a Roth IRA, which is different from the 401k in a couple of key ways. First, this account is not tied to your employer in any way. It’s your own personal account, just like a Traditional IRA. This means you have more freedom in terms of what you invest in, and what financial institution you go through. Secondly, and most importantly, instead of getting a tax deduction in the year you invest in your Roth IRA, you get a tax deduction when you withdraw the money in retirement. So, if you make $50,000 in a year, and you contribute $5,500, which is the maximum you can contribute per year, you will still pay taxes on the whole $50,000, However, once you reach 59.5 years of age, you can start withdrawing from your Roth IRA and you won’t have to pay any taxes on your earnings at that point like you would with a 401k.

A general rule of thumb is that if you’re early in your career and will be making significantly more in the future, a Roth IRA is a good way to go. If you’re nearing retirement or are on the later end of your career, a traditional 401k and/or traditional IRA can make more sense. It all depends on your plans for the future, so it’s worth doing some thinking and research about your specific situation.

15% of your gross income is generally a good number to shoot for, although you can bump that percentage down a few points if you’re young and can’t quite make 15% work. I’d personally try not to go lower than 12% if you can help it. Conversely, you might want to push that percentage up if you’re getting a later start in life. The most important thing is that you’re putting some amount away for retirement, you’re building the habit of investing, and you’re shifting your mindset to be more future-oriented rather than paycheck-to-paycheck. If you can do this, you’re already ahead of the vast majority of your fellow Americans.

I hope this has all been helpful. If you have any questions at all, please don’t hesitate to drop a comment and I’ll answer it to the best of my ability.


Insecurity is an Expensive Flaw

Last week, my wife and I enjoyed a week in the tropical Punta Cana, located in the Dominican Republic, with another couple. We sipped Piña Coladas and relaxed on the white sandy beaches, occasionally immersing ourselves in the clear blue ocean water that puts our American East Coast beaches to shame. Thanks to a Groupon all-inclusive deal, we lived a week of leisure at the resort without worrying about paying for food, drinks, or anything else except tips for the workers who helped make our stay so enjoyable. I’m happy to be feeling refreshed and ready to jump back into a routine.

On the shuttle ride from the airport to our resort, my wife and I, along with the couple we vacationed with, got to talking to an older couple in the seats near us. We found out that they had been married 27 years and they’d vacationed a time or two on other islands. They asked how we’d found out about the deal, and we mentioned we’d found it on Groupon as they had. We told them we like to find good deals for traveling, like when we used a site called Slickdeals to find crazy-cheap flight tickets for another trip. As the conversation moved along, the husband then mentioned that he works for a factory that makes foam for diapers which are used somewhere near where we were vacationing. We talked about that for a bit, then after a bit of pause, he asked me (seemingly out of nowhere), “You drive a Jaguar?” Chuckling, I say, “Nah.” “Mercedes?” “No,” I say, “I just drive a little Mazda3.” Thinking maybe he’s a car guy who was trying to transition into a topic he was interested in, I asked him what kind of car he drove. I think he said he drove a Nissan Maxima, but he didn’t say anything more to express interest in cars. “Oh, nice, that’s a good car.” I replied, not sure where to go from there. It’s a fine car, but not in the same category as a Jaguar or Mercedes, so I was still puzzled by his question. That was the end of that exchange.

When we got off the shuttle, the four of us talked about how weird and out-of-the-blue the question was. If you know the way I dress and present myself, you know I’m unfashionable and I’m certain I’d never give the impression I drive a fancy car. As I thought about the question for another second and about the kind of false bravado his personality seemed to exude, I wondered aloud to the others: “If he would randomly ask me, a guy he’s just met, if I drive a Jaguar, status must be something he values about a person. He also talked about taking his wife out to eat every night when they were young, that she never had to cook. Since he’s a factory worker, maybe his income is a bit on the lower end. Nothing wrong with that, but maybe he feels some kind of pressure to overcompensate, to make himself out to be a wealthy guy by making comparisons. He seems like the kind of guy who’s really insecure about himself and about his financial situation, and as a result tries extra hard to keep up with the nonexistent Joneses.”

The next morning, my buddy tells me “I ran into Jaguar guy at the gym this morning. What you said about him being insecure definitely seems to be true. I was benching and this guy goes, ‘How much you benching? I bet I can bench that’. He did like 2 reps and then gave up. ‘You’re a big dude, I’ll give you that.'” My friend was pretty annoyed by this grotesque show of one-upmanship and tried to ignore him the rest of the time at the gym.

It was now so obvious that this man was an insecure mess, trying to prove his manliness and status by talking about cars and daily restaurants, and trying to prove his strength at the gym. The need to try to compare himself favorably against other people to puff himself up was painfully apparent to us.

I have to imagine this guy was probably in a load of debt as he tried to hold himself up to a standard of living and status that nobody else actually cares about. It seemed like his whole sense of self depended on his ability to spend on luxuries he likely can’t afford, thinking others are going to be impressed.

While most of us aren’t so transparently insecure, we all are tempted at times to compare ourselves to those around us in order to gauge our success in life. We see on Facebook the cars and houses our friends buy, the careers or promotions they achieve, the trips they take, the weddings they celebrate, and we subconsciously compare ourselves to see how we’re doing. Since we’re seeing the highlight reel of everybody else’s life, this comparison doesn’t tend to work in our favor.

The important key, however, is to learn to celebrate these good things in other people’s lives, to share in their joys and to genuinely congratulate them on their achievements. Generally, I think the happier we are for others and the more excited we are for them in their triumphs, the happier and more excited they tend to be for us. Jealousy and envy are worse than useless. They only embitter the heart and lead to unhappiness, strained friendships, and poor financial decisions in an attempt to keep up.

Learn to be confident and content in your own income, your own house and car, your own relationship, your own accomplishments, and your overall situation in life. Live according to what’s wise and prudent for you, not what may be wise (or unwise) for somebody else’s financial situation.

Don’t worry about anyone else.

Don’t compare yourself.

Be content.

Enjoy life.


Work While You’re at Work

If you work a desk job like I do, it’s only a matter of time before you’re going to be tempted to surf the web and relax during your less pressing times. Maybe things are slow, you’re so overwhelmed you don’t know where to begin, or you look around you to see that your co-workers are taking it easy, so you don’t feel you should bother. But, I would argue your productivity and the long-term success of your career are dependent on how you use your so-called “down time” at work.

Now, I’m not saying that you shouldn’t take periodic breaks between blocks of work. I’m a firm believer in taking some time throughout the day to get up from your desk, walk around, and enjoy some time to yourself between tasks (if the nature of your work allows it). I think this helps improve productivity, as our brains need rest from mental exertion just as much as our bodies do from physical stress.

However, be careful that your breaks aren’t crowding out your best time, because in the end, you’re not gypping your employer, you’re gypping yourself of increased competency and skill, which translates to money. You won’t enjoy that time you’re wasting because it will catch up with you in the form of mediocre performance reviews or stagnation in your current role.

What if you spent the last hour of your work day studying a skill at which you’re less proficient than you’d like to be? Maybe you spend an hour organizing your plans for the week or brainstorming ideas for improving your day-to-day workflow, making you more efficient at what you do. Personally, I like to spend the slower times in my work day studying a new programming language or reading up on a technical concept I’m not familiar with.

The reality is that wasting time at work is extremely unsatisfying. You’ll feel guilty for doing it, you’ll stress about trying to hide what you’re doing or worry about finding excuses for not being as productive as you know you could be. Why put yourself through all this when you could benefit yourself so much more by improving yourself professionally? You’ll feel better about yourself as you work with integrity. More than likely, you’ll also find yourself naturally progressing in your career as a byproduct, since your boss and co-workers will notice. That’s a win-win!


Production Beats Consumption

This past Christmas, my younger brother decided he didn’t want his Xbox One anymore, so he generously let me have it. Having not played in at least 5 years, I was excited to buy the game “Halo 5”, to relive the fun of playing with my friends and other brother. I had played earlier versions of Halo in high school into early college, but eventually I had no time for games due to coursework and jobs. Now that things had settled down and I once again had a game console, I could enjoy the hobby again.

For the next month and a half, I played almost obsessively, passing most evenings after work playing online, enjoying the time as I expected I would.

As the weeks passed, however, I started feeling a nagging discontentment with the amount of time I was spending on the Xbox. Sure, I liked the game well enough, and the extra time hanging out online with friends I don’t get to see often was great. If I was just spending a half an hour or an hour per night playing, that would have been perfectly fine. But, I found myself hooked, sometimes spending entire evenings of 3 or 4 hours playing.

Eventually, I realized that this habit, if continued, would lead me away from becoming the type of person I wanted to be. It’s not that video games are somehow bad, it’s just that for me they absorbed hours I could have been devoting to growing as a human being. I wasn’t satisfied with being merely entertained night after night because it was leading me to feel justifiably melancholy. It’s as if our minds are attention-hungry toddlers that will lash back against us emotionally if we ignore them. So, I decided I would give myself a reading challenge to deviate my attention from games to a more intellectually productive endeavor.

This has been working well so far. I’ve read 6 books so far totaling over 2500 pages. More important to me than any quantitative accomplishment, however, is the deep level of satisfaction that comes from challenging myself to learn and grow. It’s a much more profound and holistic level of happiness than can be achieved by mere passive entertainment.

This same type of satisfaction is naturally achieved by any number of productive endeavors: fixing up a car, renovating your house, creating a piece of art, writing a book, developing a program, planting a garden, practicing an instrument, learning a language, or cooking a good meal. Your body likes to reward you emotionally when you improve a skill or learn new things about the world around you. When you unlock a new concept in your mind or create something new out of other materials/ideas, you are fulfilling some of the most natural and deep desires we have as human beings.

Conversely, when we spend time passively consuming other people’s work, we tend to feel internally restless. We’re not creating or contributing anything to ourselves or others. Watching TV or movies, shopping aimlessly, surfing Facebook or YouTube, and playing video games are all fun activities, but when we give too much time to them, we don’t feel truly happy.

I encourage you to evaluate your daily habits to consider which ones are constructive and satisfying, and which ones are passive, leading to feelings of discontentment when done excessively. Please don’t misunderstand – I’m not advocating being a workaholic or feeling obligated to devote every waking second to productive activities. But I do think it’s healthy to evaluate whether our habits are in line with the version of ourselves that we’d like to be in the long run.

Why I’m Considering Using a Donor-Advised Fund

In a previous post, Double Your Donations for Free, I talked about how you should check if your employer has a gift-matching program for donations made to nonprofit organizations. While I’ve been taking advantage of this program for giving to certain organizations, I forgot to include the caveat that some employers’ gift-matching programs only match donations to certain qualifying types of nonprofit organizations.

In my case, my local church does not qualify under the criteria that are set for the matching program. I can still get matches to many parachurch humanitarian aid organizations like Compassion International,  but the 10% of our income that we give to our church each month can’t be matched. The criteria are put in place to keep matching funds in line with the employer’s legal requirements, which I certainly understand, but nevertheless it’s a bit disappointing to see a significant amount of money go unmatched.

Then, I started reading about donor-advised funds and realized I might have found a workaround for my problem.

You can open up a donor-advised fund (DAF) with most of the big investment companies that you might have your IRA or 401k with. This fund is essentially an account containing a mutual fund to which you contribute funds and from which you have the ability to write “grants” (i.e. donate money). Because the fund is technically housed inside a 501(c)(3) organization by the investment company you chose, contributions to your fund are tax-deductible in the year that you make them. You can then make donations from your fund to any other legitimate 501(c)(3) nonprofit organization, such as a church. Some DAFs have additional restrictions, so you’ll want to read the guidelines carefully, but most that are run by the big investment companies are extremely loose. As long as the organization is a legitimate nonprofit recognized by the IRS, you should be good to go.

There are some things you should be aware of:

  • The lowest minimum to open a DAF with any of the companies I’ve found is $5000
  • Sometimes there is a minimum percentage of funds you have to “grant” from your account each year, or a minimum balance above which you must stay each year to keep it open.
  • Contributions to the account are tax-deductible in the year that you make them, not in the year that you distribute money to an organization.

There are also some major benefits to this approach:

  • All of your donations to nonprofit organizations are made under this account, so when tax season comes you only need your form from the donor-advised fund. You don’t have to worry about getting documents from all the different organizations you donated to at the end of the year.
  • You can take the tax deduction in the year it’s most beneficial to you, while donating money to an organization when it is most helpful for them. For example, if you knew an organization was going to need money next summer, but you know you’re facing a higher tax bill this year, you can contribute to the DAF this year, but grant money to the organization next year. Win-win!
  • Donor-advised funds make it easy to donate stocks and other more complicated assets that most organizations like churches don’t have any way to handle. The company handling your DAF deals with liquidating the asset and you get cash in your fund to donate. You get to avoid capital gains tax on assets such as stocks that have appreciated and you avoid hassle.
  • You can choose what type of mutual fund to keep your contributed money in until you donate it. If you want to keep it in a mostly-cash mutual fund to minimize risk, you can do that. If you want to try to grow the money by allocating some of the money to stocks/bonds before donating it, you have that option as well.
  • You’re likely to be more intentional and thoughtful about giving than you otherwise would be.
  • You can give family members or friends, including children, the ability to write grants from the fund.
  • Your company might match donations to your donor-advised fund, while they might not match donations to certain other organizations.

That last point is the primary reason that I am planning to open a DAF. I can route my contributions through my DAF to my church and take advantage of the employer match in the process.

My wife and I will set aside our tithe (10% of income) into a separate savings account throughout this year. Once we get up to the minimum $5000 needed to open a DAF account, we’ll open it up and request a company match. After doing so, we’ll immediately have a fund containing $10,000 from which we’ll make our donations to our church and other organizations.

When I first heard about donor-advised funds, I had a lot of questions, since they’re not talked about very much in the personal finance blogosphere. Feel free to leave any questions you may have in the comments and I’ll be happy to answer them as best as I can.




Why I’m Okay with “Losing” $3000 in a Week

The sky is falling!

At least, that’s what you would think if you read financial news headlines after the S&P 500 dropped over 3% in just one day last Friday.

“Stocks are freefalling!” read one particular article I came across.

I’ve felt the hit a little, myself. I saw our investment accounts drop around $3000 in the last week or so. While not a huge amount compared to the decreases long-time investors have seen, it’s still not so much fun to watch the numbers fall.

So, you know what I’m doing differently with our investing since the stock market is going down?

Absolutely nothing.

The reality is that this is actually a relatively small drop compared to the market crash in 2008 or the tech bubble burst of 2000. Despite all the noise from financial media, the S&P 500 is only down about 7% for the year, compared to 43% in 2008.

And even if we were seeing a bigger crash like that of 2008, it wouldn’t affect my long-term investing outlook at all, except that maybe I’d invest even more heavily. In fact, when you’ve got a lot of years until you plan to touch your invested money, market drops are like the clearance aisle of the stock market.

Historically, I know that the market has gone up over every 15-year period in the last 100 years, and I don’t see any reason that trend shouldn’t continue. There are terrible months and even years in history where it has plummeted, but it always comes back up and surpasses its previous high point.

Long-term investing is pretty boring. You just keep putting money away with each paycheck, ignoring the financial news, and you go about your life. Frankly, I’m not interested in what the market’s doing today because it has no bearing on my financial behavior at all. There are plenty of far more important things to think about – like what I’m going to eat for breakfast tomorrow