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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.

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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 Surety Bond Brokers? Business https://www.iwillteachyoutoberich.com/blog/how-to-pay-off-student-loans/

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paulckrueger · 3 years ago

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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.

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

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.

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

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.

from Surety Bond Brokers? Business https://www.iwillteachyoutoberich.com/blog/diversified-portfolio-examples/

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paulckrueger · 3 years ago

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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.

Saving for retirement is a habit you can build. Learn how to build good habits and break bad ones with our FREE Ultimate Guide to Habits.

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.

from Surety Bond Brokers? Business https://www.iwillteachyoutoberich.com/blog/roth-conversion-ladder/

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paulckrueger · 3 years ago

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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.

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

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.

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

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.

Bonus: Want to know how to make more money so you can live life on your terms? Download our FREE Ultimate Guide to Making Money

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 Surety Bond Brokers? Business https://www.iwillteachyoutoberich.com/blog/informational-interview-questions-that-create-a-lasting-impression/

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paulckrueger · 3 years ago

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Animal Spirits: Hyperinflation, It’s Happening

This week’s Animal Spirits with Michael & Ben is supported by YCharts: Mention Animal Spirits and receive 20% off your subscription price when you initially sign up for the service. We discuss: Is Tesla the most impressive stock of this cycle? Why you shouldn’t waste your time worrying about risks in the market Inequality in the stock market Why does Congress still get to trade individual stocks? Boomers ... from Surety Bond Brokers? Business https://awealthofcommonsense.com/2021/10/animal-spirits-hyperinflation-its-happening/

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paulckrueger · 3 years ago

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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.

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

from Surety Bond Brokers? Business https://www.iwillteachyoutoberich.com/blog/how-to-crush-your-performance-improvement-plan/

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paulckrueger · 3 years ago

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Ownership Inequality in the Stock Market

The Federal Reserve has a quarterly report that breaks out the assets held by wealth percentile of U.S. households: This data is kind of depressing. The top 10% owns 45% of the housing market while the bottom 90% owns 55% of real estate in this country. And if you think this seems out of whack just wait until you see the ownership numbers for financial assets. The top 1% now owns nearly $22 trillion in stocks and funds w... from Surety Bond Brokers? Business https://awealthofcommonsense.com/2021/10/ownership-inequality-in-the-stock-market/

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Talk Your Book: How to Use Thematic ETFs

Today’s Animal Spirits: Talk Your Book is presented by Direxion. We spoke with Dave Mazza about Direxion’s thematic ETFs. We discuss: Do interest rates matter for growth stocks? Work from home is like electricity? How thematic ETFs have evolved Performance vs. flows in thematic ETFs What are the technological tools that were accelerated in the pandemic? Which companies are positioned to take advantage of the wo... from Surety Bond Brokers? Business https://awealthofcommonsense.com/2021/10/talk-your-book-how-to-use-thematic-etfs/

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paulckrueger · 3 years ago

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Inflation vs. Stock Market Returns

The headlines from this week make it feel like people are throwing in the towel on the idea of inflation being transitory: I’m still not sure we can all agree on what ‘transitory’ actually means at this point but it’s hard to deny prices seem to be rising across a wide range of goods and services in the economy. Maybe this will turn out to be a one-time spike that falls back to trend but itR... from Surety Bond Brokers? Business https://awealthofcommonsense.com/2021/10/inflation-vs-stock-market-returns/

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paulckrueger · 3 years ago

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Wealth Management Money is Coming For Crypto

This week saw the first Bitcoin ETF become available in the United States. I figured the fanfare for this one would be large despite the fact that it’s a fund that invests in Bitcoin futures, not the spot price (read here and here for the details on why a futures fund is suboptimal). I wasn’t thinking big enough. This thing blew the doors off. The ProShares Bitcoin ETF (ticker BITO) garnered more than $1 billi... from Surety Bond Brokers? Business https://awealthofcommonsense.com/2021/10/wealth-management-money-is-coming-for-crypto/

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paulckrueger · 3 years ago

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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?

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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 Surety Bond Brokers? Business https://www.iwillteachyoutoberich.com/blog/money-dials/

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