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| If I started investing 20 years ago, I'd be long retired by now. |
One of my biggest motivators
for striving to work so hard now is looking forward to a rewarding future. Where you are now with regards to your
health, wealth, relationships, and happiness come largely from decisions you’ve
made 1,5,10 or more years ago.
Sometime in the future, you
will look back at your past. How do you
want to reflect back upon your life? Do
you want to be proud of the choices that you’ve made?
Today I want to talk about
things you can do now that your future self will thank you for.
Start improving your financial situation today
If you are living paycheck to paycheck with no adjustments to your spending or saving, a year from now you will likely still be living in the same dire situation. One financial emergency can put you into a debt spiral. If you have credit card debt and only make the minimum monthly payment, a year from now your debt will still be sizeable.
If you are living paycheck to paycheck with no adjustments to your spending or saving, a year from now you will likely still be living in the same dire situation. One financial emergency can put you into a debt spiral. If you have credit card debt and only make the minimum monthly payment, a year from now your debt will still be sizeable.
Life is long
An argument many younger people in debt often make (myself included when I was younger), is that you should live only for the moment, since life can be short. What these spenders fail to realize is that statistically, life is long, and you should plan accordingly. If you don’t plan for your retirement, you may find a lifetime of working forever until your body gives out. Otherwise you may find yourself to be a burden on others, whether it’s your family or society. Read this depressing article about what life without retirement savings looks like. Valuing your free time is one of the best reasons to strive for financial freedom.
An argument many younger people in debt often make (myself included when I was younger), is that you should live only for the moment, since life can be short. What these spenders fail to realize is that statistically, life is long, and you should plan accordingly. If you don’t plan for your retirement, you may find a lifetime of working forever until your body gives out. Otherwise you may find yourself to be a burden on others, whether it’s your family or society. Read this depressing article about what life without retirement savings looks like. Valuing your free time is one of the best reasons to strive for financial freedom.
If you are in the middle
class and have financial problems, I’d argue that there is always a way to
improve your situation. But some action
does need to be taken. Let’s face it,
your money problems are not likely to go away by winning the lottery, marrying
rich, or getting a surprise inheritance anytime soon. We are not all given the same advantages in
our lives, but most of us do have some choices that will shape our future.
When I first started working
in 2008, I was living paycheck to paycheck.
I was living for the moment and I told myself I would start saving and
investing “sometime in the future when my income increased.” Credit card debt was normal and just a part
of my life – I would always be one month behind on my debt since I took
advantage of credit card interest arbitrage.
Thankfully, I always found a way to pay off my monthly credit card
balance in full.
It’s not just about making more income
In the past, if I wanted something, I’d just buy it and charge it on the credit card. Since I was too lazy to cook, I ate out all the time. If I needed more money, I would just go out and hustle for more. I would take on several side jobs or buy and sell merchandise on eBay. I told myself that the way to get financially ahead was to make more money. Saving more wasn’t even an option I considered.
In the past, if I wanted something, I’d just buy it and charge it on the credit card. Since I was too lazy to cook, I ate out all the time. If I needed more money, I would just go out and hustle for more. I would take on several side jobs or buy and sell merchandise on eBay. I told myself that the way to get financially ahead was to make more money. Saving more wasn’t even an option I considered.
I made a good salary but I
still felt constantly broke. Every time
I got paid, the money would go towards paying off my credit card bill. I always found ways to make more money, but I
didn’t even think about all the money I could find by just cutting back my
expenses.
When the financial crisis
occurred, many people around me lost their jobs and were unemployed for a long
time. I watched the news about how the
stock market was crashing and how the US economy was in a recession. People at work started talking about the
importance of saving money. Almost all
of my coworkers started to bring their lunches to the office. I felt guilty going out to lunch while
everyone was bringing his or hers into the lunchroom. I joined them and appreciated how easy it was
to bring my lunch. I immediately noticed
how much time, money, and fuel I saved if I just stayed in the office during my
lunch hour. A common topic of
conversation during these lunch hours was how broke everyone was. Many of these individuals were decades older
than me, still complaining about living paycheck to paycheck and struggling to
make ends meet.
I didn’t want to live like
these broke coworkers, so desperate for their next paycheck. Many of them sadly had a lifetime of working,
yet almost nothing to show for it. Some
expressed regret that they didn’t have any money to buy into the stock market,
which at one point had dropped 50% in value.
That’s when I decided it was time to take action and fix my
finances. All I knew about stocks during
this period was that money was made when you “buy low and sell high.”
I turned to the internet to
search for ways to save money and invest.
I read every single financial blog and book I could get my hands
on. I actively read through as many
financial posts at Bogleheads.org that I could,
learning as much as I could about saving and then investing in index funds. I met and married a frugal wife. Discovering the Mr. Money Mustache blog really lit a
fire under our asses to work relentlessly to improve our finances. We started saving money by bringing our
lunches to work, cooking dinner at home, getting haircuts at home, cancelling
cable, and making coffee instead of going to Starbucks. Having a high savings rate set the foundation
for having an abundance of money that we could invest. It took many years for me to go from a
paycheck to paycheck existence to saving over 50% of my income.
The most important thing you can do is take action
You can read through a ton of investing blogs and books, but none of this information will matter unless you take action. Investing for your retirement doesn’t have to be difficult. The simplest of all portfolios could simply be to invest everything into one stock market index fund. The Vanguard Total Stock Market index fund (VTSMX) has a minimum initial opening deposit of $3,000. After that, each contribution can be as little as $50. Vanguard Target Date Funds have a good mix between domestic and international stocks and bonds with a minimum initial opening deposit of $1,000. Future contributions can be as little as $50. For those looking to invest in an index fund with even less money, the Schwab Total Stock Market index fund (SWTSX) has a minimum initial investment of $1. Opening a retirement or investment account will take less than 10 minutes of your time. Every single dollar you invest and hold onto today will continue to increase in value and pay you dividends over time. These small investments over time can add up to make a big difference.
You can read through a ton of investing blogs and books, but none of this information will matter unless you take action. Investing for your retirement doesn’t have to be difficult. The simplest of all portfolios could simply be to invest everything into one stock market index fund. The Vanguard Total Stock Market index fund (VTSMX) has a minimum initial opening deposit of $3,000. After that, each contribution can be as little as $50. Vanguard Target Date Funds have a good mix between domestic and international stocks and bonds with a minimum initial opening deposit of $1,000. Future contributions can be as little as $50. For those looking to invest in an index fund with even less money, the Schwab Total Stock Market index fund (SWTSX) has a minimum initial investment of $1. Opening a retirement or investment account will take less than 10 minutes of your time. Every single dollar you invest and hold onto today will continue to increase in value and pay you dividends over time. These small investments over time can add up to make a big difference.
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| S&P 500 returns since the beginning. You want to start investing as early as possible. |
Our financial situation did
not improve overnight. Little by little
we worked on cutting out expenses and increasing our savings rate. As our income has increased, so have our
investment contributions. I slowly
increased my paycheck contributions into my 401K (sometimes by as little as 1%
every few months) until I could max it out.
We slowly saved enough to buy a rental property, which continues to give
off monthly income and tax deductions.
If you are looking to improve
your finances today, the first recommendation I would make would be to track your spending. We automatically track our spending with Mint. We automatically track our investments and asset
allocation with Personal Capital. We
manually track our spending with ClearCheckbook. After you get a good idea of how much money is coming
in and going out of your checking account each month, you can start to optimize
your budget and investment accounts.
I’m thankful today for the
investment contributions we made years ago.
Many of these contributions were as little as $50. Our investment accounts are now close to
reaching $400,000 and our net worth
is now over $1 million. This is all due to decisions we made and stuck
to in the past. Sometimes I regret not
investing more when we had the chance, but there’s no sense in dwelling on the
past. What we can change is our
future. We continue to save and invest
because we likely have a long future ahead of us. Decades from now, I want us to look back on the
financial decisions we continue to make today - and be thankful.
Start
improving your health now
Aside from your
finances, maintaining good health also pays off tremendously in the
future. Small health choices today can
end up making a huge impact on you’re your health tomorrow.
Getting just one extra hour of sleep every night
can make a huge impact
If I don’t get restful sleep
at night for two consecutive days, I find that my mood, creativity and energy
levels suffer the next day.
A recent study found that losing
one hour of sleep when switching over to daylight savings time was associated
with a 24% increased risk of having a heart attack. Insufficient
sleep has also been associated with conditions such as obesity, diabetes,
stroke, heart disease and even cancer.
What small changes can you do to your daily activity to get a little bit
more restful sleep? Here are a few ways
that I try to focus on getting more sleep.
I have set a
personal rule of never using my smartphone while lying in bed before
bedtime. When I used to have trouble
sleeping, I would just lie in my bed and mindlessly browse the internet on my
iPhone. Over the years, I’ve learned
that doing so just makes it more difficult to fall asleep. Now, I use the last moments before falling
asleep each night to reflect on my day, visualize my goals, and to be thankful
for everything that I have. A recent study
found that screen time was associated with poor sleep. Those that spend longer times staring at
their screens suffered from shorter sleep duration and worse sleep
efficiency. It took them a longer amount
of time to fall asleep and their quality of sleep was poor as well.
One routine I don’t
like doing JUST before bedtime is flossing, brushing my teeth, and washing my
face. Going through those motions seems
to give me a refreshing feeling, instead of putting me to sleep. To avoid this, I’ve now developed the habit
of doing those things 2 hours before I go to sleep. This way when it’s time to go to sleep, I
don’t have to worry about doing anything else.
I just hop into bed.
A little exercise (even walking) goes a long way
Walking is one of my favorite forms of exercise. It’s relaxing, low impact, and always helps me clear my head. Walking at least 30 minutes daily can lower your risk of high blood pressure, high cholesterol, diabetes, stroke, heart disease, osteoporosis, breast cancer, colon cancer, and obesity. Walking is an underrated form of exercise that will improve your physical and mental health.
Walking is one of my favorite forms of exercise. It’s relaxing, low impact, and always helps me clear my head. Walking at least 30 minutes daily can lower your risk of high blood pressure, high cholesterol, diabetes, stroke, heart disease, osteoporosis, breast cancer, colon cancer, and obesity. Walking is an underrated form of exercise that will improve your physical and mental health.
Since we adopted our dog, we spend a lot of time
walking her. Our dog goes on a walk at
least 4 times a day. While these aren’t
extremely long walks, we do get to stroll around our neighborhood to meet our
neighbors and their dogs. Our dog has
made us more sociable with our community and makes us feel much more connected
to our neighborhood.
Our son absolutely loves being outside. He loves running around our neighborhood and exploring. He is fascinated by all of the birds, squirrels, pinecones, flowers, and plants we encounter on our regular walks. Sometimes it’s hard to keep up with our little man since he runs so fast. Many studies including this one found that outdoor activity has been directly linked to less nearsightedness in children. Having 2 children in the house has definitely kept us busy, but we are always able to squeeze in some outdoor time to walk.
Our son absolutely loves being outside. He loves running around our neighborhood and exploring. He is fascinated by all of the birds, squirrels, pinecones, flowers, and plants we encounter on our regular walks. Sometimes it’s hard to keep up with our little man since he runs so fast. Many studies including this one found that outdoor activity has been directly linked to less nearsightedness in children. Having 2 children in the house has definitely kept us busy, but we are always able to squeeze in some outdoor time to walk.
The lifetime benefits of healthier eating
We mostly cook food at home and we focus on trying to eat a lot of fruits and vegetables. Plant based diets have been shown to reduce risk of diabetes, high blood pressure, heart disease, and even cancer. Recent research suggests that diets rich in fruits and vegetables reduce the risk of heart disease. We minimize our red meat consumption and stick to eating reasonable portions of chicken and turkey. We try our best to balance our intake of healthy foods daily. This includes keeping unhealthy snacks and junk food out of our home. If we don’t have any unhealthy food in the pantry, there’s no temptation to eat it. And if we do splurge by eating an unhealthy meal, we try to make up for it by having our next meal be healthy.
We mostly cook food at home and we focus on trying to eat a lot of fruits and vegetables. Plant based diets have been shown to reduce risk of diabetes, high blood pressure, heart disease, and even cancer. Recent research suggests that diets rich in fruits and vegetables reduce the risk of heart disease. We minimize our red meat consumption and stick to eating reasonable portions of chicken and turkey. We try our best to balance our intake of healthy foods daily. This includes keeping unhealthy snacks and junk food out of our home. If we don’t have any unhealthy food in the pantry, there’s no temptation to eat it. And if we do splurge by eating an unhealthy meal, we try to make up for it by having our next meal be healthy.
James Clear wrote a
great article about effortless
ways to lose weight and eat healthy that is definitely worth reading. Maintaining a healthy lifestyle now pays off
in the future with less sickness, less money necessary to pay for health
expenses, and an overall better quality of life.
Live a life
that you will be proud to look back on
10 years from now, do you
want to be in the same financial situation you are in today? Do you want to be overweight? Will you reach financial freedom 10 years
from now? Do you want to look back at your life history with regret, or with
appreciation? Change doesn’t happen
unless you take action.
