live well. the message of carl creasman.

February 2, 2012 at 7:13 am, by Carl

I wrote back in November 2011  that German martyr Dietrich Bonhoeffer came to understand that the Christian’s real experience of faith comes as one interacts with society.  He was arguing against a German church that shrank from the evil in its land, preferring to not get too involved.

Yet, Bonhoeffer also saw the need, the critical understanding, for the committed, intentional community of faith.  His view of the church was not merely of the Universal, Invisible Church to which all Christians belong, nor just some social agency existing to only provide goods or services for those in need.  Living at that time when many Germans spied on another, he understood the call for a people to be devoted to one another in a way that demanded trust.   Writing in 1943, Bonhoeffer reflected back on the previous 10 years since Hitler had been elected to lead the nation.

There is hardly one of us who has not known what it is to be betrayed.  The figure of Judas, which we used to find so difficult to understand, is now fairly familiar to us.  The air that we breathe is so polluted by mistrust that it almost chokes us.  But where we have broken through the layer of mistrust, we have been able to discover a confidence hitherto undreamed of.  Where we trust, we have learnt to put our very lives into the hands of others; in the face of all the different interpretations that have been put on our lives and actions, we have learnt to trust unreservedly.  We now know that only such confidence, which is always a venture, though a glad and positive venture, enables us really to live and work.  We know that it is most reprehensible to sow and encourage mistrust, and that our duty is rather to foster and strengthen confidence wherever we can.  Trust will always be one of the greatest, rarest, and happiest blessings of our life in community, though it can emerge only on the dark background of a necessary mistrust.  We have learnt to never trust a scoundrel an inch, but to give ourselves to the trustworthy without reserve.

Immediately after putting Bonhoeffer’s Prison Letters down, I read Paul’s words to the small church in Thessalonica.  The connection between Bonhoeffer’s call for devotion and trust, and then Paul’s words about how the local community of faith must live, should be easy to see.  I have quoted Eugene Peterson’s paraphrase from The Message because I love some of his phrasings (highlighted below).  Take a moment and drink in the Word of God written to a specific church in a specific place.

What would be an adequate thanksgiving to offer God for all the joy we experience before him because of you? We do what we can, praying away, night and day, asking for the bonus of seeing your faces again and doing what we can to help when your faith falters.

May God our Father himself and our Master Jesus clear the road to you! And may the Master pour on the love so it fills your lives and splashes over on everyone around you, just as it does from us to you. May you be infused with strength and purity, filled with confidence in the presence of God our Father when our Master Jesus arrives with all his followers.

One final word, friends. We ask you – urge is more like it – that you keep on doing what we told you to do to please God, not in a dogged religious plod, but in a living, spirited dance.

You know the guidelines we laid out for you from the Master Jesus:

• God wants you to live a pure life. Keep yourselves from sexual promiscuity.
• Learn to appreciate and give dignity to your body, not abusing it, as is so common among those who know nothing of God.
• Don’t run roughshod over the concerns of your brothers and sisters. Their concerns are God’s concerns, and he will take care of them.
• Just love one another! You’re already good at it…keep it up; get better and better at it.
• Stay calm; mind your own business; do your own job.
• We want you living in a way that will command the respect of outsiders, not lying around sponging off your friends.

You’re sons of Light, daughters of Day. We live under wide open skies and know where we stand. So let’s not sleepwalk through life like those others. Let’s keep our eyes open and be smart. People sleep at night and get drunk at night. But not us! Since we’re creatures of Day, let’s act like it. Walk out into the daylight sober, dressed up in faith, love, and the hope of salvation.

So speak encouraging words to one another. Build up hope so you’ll all be together in this, no one left out, no one left behind. I know you’re already doing this; just keep on doing it.

And now, friends, we ask you to honor those leaders who work so hard for you, who have been given the responsibility of urging and guiding you along in your obedience. Overwhelm them with appreciation and love!

• Our counsel is that you warn the freeloaders to get a move on.
• Gently encourage the stragglers, and reach out for the exhausted, pulling them to their feet
• Be patient with each person, attentive to individual needs.
• And be careful that when you get on each other’s nerves you don’t snap at each other.
• Look for the best in each other, and always do your best to bring it out.
• Be cheerful no matter what;
• Pray all the time;
• Thank God no matter what happens. This is the way God wants you who belong to Christ Jesus to live.
• Don’t suppress the Spirit,
• Don’t stifle those who have a word from the Master.
• On the other hand, don’t be gullible. Check out everything, and keep only what’s good. Throw out anything tainted with evil.

Do you see both ideas?  Bonhoeffer reminds us that as believers, we have been saved, we have been changed through the love of God.  That change allows us to offer a cup of cold water to anyone in need.   Christians are meant to be God’s representatives to the world.

And, to accomplish that, we push deeper as Paul urged, to a unity that isn’t drudgery, but rather a “living, spirited dance.”  That dance, that love, works itself out into a place where we experience a trust that most people never know.

My prayer for you this day is that God will bring both ideas more firmly into focus in your eyes, that you live your life in a way that others can see You, and builds up the body of Christ in your local church.

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January 31, 2012 at 6:54 am, by Carl

Perhaps it is the approaching doom of 2012 (have you noticed it yet, or are  these first weeks and months of the year just the same old thing), but I have been drawn back to the two great futuristic works of the 20^th century: 1984 and Brave New World.  Orwell’s work, 1984,  was actually much more familiar to me, having read it several times to observe the scary world where the government watches everything we say or do.  Since today, here in Florida, is the election primary day (mostly focused on the Republican candidates), I thought it apt to bring up the power of these two looks at what our future was assumed to become, and where we still might go.

Aldous Huxley’s book published in 1932 was less familiar to me, so as I began to search for it, I was captured by how well he had seen the future, at least at points.  That he was writing against materialism and hedonism was an even stronger connection for myself since so much of my writing and thinking is aimed against those same things.  In my mind, the future that Huxley wrote about has become true, at least as far as everything exists for our own pleasure and we have lost connection for things that are real.

In 1958, Huxley wrote Brave New World Revisited.  This work is not fiction, but rather a series of essays where Huxley comments on the world as it is, as it is different or the same from his work of 26 years ago.  In there, he starts by saying that while he had hope the world might turn out well, “I feel a good deal less optimistic than I did when I was writing Brave New World.  The prophecies made in 1931 [when he wrote BNW] are coming true much sooner than I thought they would.”

Reading his ideas now, in early 2012, is an interesting exercise.  I was captured by many of his 1958 thoughts, and so, what follows, are quotes from Huxley and brief comments of mine.

1. Huxley first wrote about the threat of overpopulation.  Since, as you should know, the world hit 7 billion people, doubling over from the world of Huxley which was approaching 3 billion in 1958.  To this threat, Huxley wrote “the probability of over-population leading through unrest to dictatorship becomes a virtual certainty. . . .If the newly formed dictatorships were hostile to [still democratic countries], and if the flow of raw materials from the underdeveloped countries were deliberately interrupted, the nations of the West would find themselves in a very bad way.”  Well, if you know our history, you know that oil in particular has become that very resource that underdeveloped countries could use to threaten the West.   The oil embargoes of the 1970s ruined economies, led to wars about oil, political unrest in Iran and our further complicated relationship in the Middle East.
2. Huxley then wrote about the decline of quality and morality of a culture.  OF course, this would be highly inflammatory today (as probably my post will be), but Huxley was unafraid to speak prophetically about the world actually depicted in the movie Idiocracy.  That movie’s basic premise was that lesser intelligent people will continue having babies, while more intelligent people will not (whether due to not wanting to raise more kids or concerns about the population of the planet, the end result is the same).  So, according to the movie, at some point in the future, society is overwhelmed by too many people who simply do not have the mental capacity for wise choices or decision-making.  Now, listen to Huxley—in an overcrowded world, aided by supposed improvements in the medical field that allows people to live longer, “the physical health of the general population will show no improvement, and may even deteriorate.  And along with a decline of average healthiness there may well go a decline in average intelligence.”  So, he wonders, what happens to a country like the USA?  “For how long can a society maintain its traditions of individual liberty and democratic government [if IQ and physical vigor are on the decline].”  One doesn’t have to look too far in 2012 to see the results of this, at least on the physical level—the USA is an obese society and the cost to medical insurance continues to skyrocket because of it.
3. Moreover, Huxley argues, foreseeing the complaints of the “Occupy Movement” (and many like it), where is the good to extend life, thus over-populating the planet if that dooms millions to live an undernourished life.?  “The hundreds of thousands of human beings thus saved, and the millions whom they beget and bring to birth, cannot be adequately clothed, housed, educated or even fed….Quick death by malaria has been abolished; but life made miserable by undernourishment and over-crowding is now the rule, and slow death by outright starvation threatens even greater numbers.”
4. Government, according to Huxley, was going to move to distract people, to keep them happy (perhaps “dumb, fat and happy” would have better represented his feelings).  In the book, he wrote about some use of a drug, but 27 years later, he noticed that the real distraction would come from media.  He mentioned that previous to the 20^th century, the distractions within a society came infrequently (a 4^th of July party, a church pageant, etc…), but now “For conditions even remotely comparable to those now prevailing we must return to imperial Rome, where the population was kept in good humor by frequent, gratuitous doses of many kinds of entertainment….But even in Rome there was nothing like the non-stop distraction now provided by newspapers and magazines, by radio, television and the cinema.”  Huxley would have been devastated to learn about the Internet, gaming, facebook and twitter.  Yet, his point is clearly demonstrated in our world today where, according to experts, the average person consumes 11+ hours of media content…and they somehow do it in 7.5 hours through the miracle (evil?) of multitasking.
5. To Huxley, the real danger is to liberal government, that idea of “Government of the people,” where active citizens engage in governing themselves, typically through representatives from their own communities, protected by a written document of law (a constitution).  With overpopulation and the ease at which the governing powers can distract the populace, self-government becomes nigh impossible and a dictator, or forces that act dictatorially (even constitutionally elected forces) can easily take over.  Huxley believed that could easily happen through consumerism where the real dictatorial powers would be corporations.  Having just gone through our own high holy day to the USA national religion of consumerism (Black Friday and the other holiday shopping associated with the late-October – early January period), it is easy to see how prescient Huxley was.  He wrote, “In due course, [children] these living, talking records of television commercials will grow up, earn money and buy the products of industry…millions, tens of millions, hundreds of millions of children are in the process of growing up to buy the local despot’s ideological product.”
6. And if not corporations, then real dictators emerge because a republic like the USA cannot stand without invested citizens.  “Self-government is in inverse ratio to numbers.  The larger the constituency, the less the value of any particular vote. When he is merely one of millions, the individual elector feels himself to be impotent, a negligible quantity.  The candidates he has voted into office are far away, at the top of the pyramid of power. Theoretically they are the servants of the people’ but in fact it is the servants who give orders and the people, far off at the base of the great pyramid, who must obey. Increasing population and advancing technology have resulted in an increase in the number and complexity of organizations, an increase in the amount of power concentrated in the hands of officials and a corresponding decrease in the amount of control exercised by electors, coupled with a decrease in the public’s regard for democratic procedures.”   Please read that long quote again; get it locked into your mind.  Huxley wrote that in 1958, not 2008.  Obviously in this, he was clearly right.  We are there now.

Huxley concluded his series of essays with a few jabs at what to do.  Education, not surprisingly, was a part of his list.  But also a warning to fight for who controls the definitions.  If not challenged, then the controlling elite (media, the masses, corporations, government—any of these can be the controlling elite) are allowed to redefine words like freedom or democracy in the way that works best for them.  We are, of course, seeing this happen in our day too.

We must continue to fight for freedom, just as long ago when the English were determined to get the right of habeas corpus, and did so initially through the Magna Carta in 1215 and then, defended by the Glorious Revolution of 1689.  Freedom extends to our person, both physically and mentally, as well as our property.

But, we must decide to also look in the mirror and choose our own actions.  No one made us shop like crazy through the holiday season, even though we knew we were in financial challenging times.  No one made us overeat through the holidays, even though we knew we already were largely unhealthy.

In the end, the hope or ability to avoid the dystopic world of 1984 or Brave New World depends as much on ourselves as it does on the “powers that be.”

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January 26, 2012 at 6:46 am, by Carl

Recently I had coffee with a casual friend.  I say “casual” because it’s not quite fair to call him a “friend” or a “close friend” yet when we meet, we enjoy each other’s company.  We connected a few years back through a mutual interaction with an organization.  In our initial conversations, I, the older of the two of us, was giving advice, but through the years, we’ve found mutual moments of help.

Sharing with him reminded the value of community and our shared existence.  When we first met, I, in essence, gave him a hand up through a situation.  Why do that?  I didn’t really know this person well at the time.  In fact, why help anyone out?  Some would argue that helping another is a sign of weakness, or at least making yourself vulnerable.  All to the contrary, I would offer that helping another provides you an investment with that person.

Your hand out now provides a good reason for that person to help you out in the future.  Sam and Frodo, of Lord of the Rings fame demonstrate that well in Peter Jackson’s rendering of the famous story.   Take a look:

Did you catch it?  Maybe you don’t know the story well enough, but the first clip comes at the moment Frodo decides he must go on with the quest alone.  He is intending to make the perilous journey without endangering anyone else.  It is the mark of a strong person, confident in their abilities.  Yet, it is also typically an unwise move, a person unaware of the limitation of their abilities.

Fast forward about seven months and we see the weakness of Frodo, almost incapable of taking another step.  Now Sam, previously the weaker of the two, finds himself in the position to offer the hand up.  If Sam doesn’t feel the need to return the favor of a hand, pulling his friend to safety, then the quest fails.

As we roll in the early months of 2012, look to see where you can build community.  Perhaps, in your new classes this semester, you can offer a hand of help to a classmate; perhaps you have already had this professor and provide guidance.  Maybe you have the ability to help share a car ride to school with a new student.

In your workplace, look around to consider whom you can assist—is there a new employee who needs a helping hand to really get the hang of the job?  Is there a new neighbor who has moved into your apartment building or neighboring house?  Why not go welcome them into your world with a helping hand in the moving, or in some other way.

Like Frodo, though you may feel strong right now, in the future, it could be you who needs some help.  Make that investment now by helping another.  Not only could that person be your salvation later, offering your help is just a powerful concept.

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January 24, 2012 at 6:23 am, by Carl

A few weeks ago I wrote about choices made by two football coaches were conservative and in the end cost their team victories.  In describing those choices, what I was discussing were tactical decisions made by the coaches.  As I was writing, I described how my own approach to decisions is sometimes hampered by my strategic vision.  Strategy and tactics are partners in making decisions, accomplishing things, but they are not synonyms.

You often hear these words used in connection with war, so if you look them up, you’ll see military descriptions used first.  Yet, for the rest of us, the idea of tactics or strategy are useful in making good decisions and plans for our future.  So, what do these two words really mean?

Tactics, according to Webster’s, is “the art or skill of employing available means to accomplish an end.”  In other words, tactics involves making an “on the spot” decision about employing your skills, your means, your efforts to meet a goal.

Strategy, on the other hand, takes the longer or higher or deeper view about the issue.  The Google definition says “A plan of action or policy designed to achieve a major or overall aim.”  Webster’s adds “the art of devising or employing plans toward a goal.”

For our uses, think of it this way.  When you think about an overall issue whether that is deciding on a major or making vacation plans, you use strategy to build a plan, consider your strengths and weaknesses, constraints and opportunities.  Then, as you put the plan into action, you bring in tactics to accomplish the end, including minute shifts and changes as new information comes up.

Your strategy of taking a certain class during a certain semester will then need tactics to ensure that you pass the class.  And, while your strategy may have hoped to take a certain professor or avoid having too many essays to write, as you come into the class, you find out that your professor had to drop the class due to an illness or that an extra essay was included in the course.  Now, you have to apply good tactics to accomplish working with a new professor or making sure you finish the paper.

Your strategy determined that you would travel on a certain Interstate and then visit a specific museum.  Yet, as you drove, you found yourself facing a 3 hour backup on the road, so good tactics would take your available means, say a map or GPS, to find a new route.  Then when you got to the museum, you found it closed on this day, so now you had to employ good tactics to rearrange the travel day, moving events from the next day to now, or finding what other options would be open today.

You need both strategy and tactics.  Want to get better at strategy?  Play chess.  Better at tactics?  Play checkers.  Both games certainly use tactics and strategy, but chess strengthens your ability to strategize a long-term plan, which checkers moves more quickly, often turning quickly, demanding that you bring in good tactics to the game.

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January 19, 2012 at 6:47 am, by Carl

My friend J. D. Roth produces a great website/blog for money matters.  I like his work so much, mostly because its coming from a “regular dude” and built on experience (rather than some money website from some corporation or “financial planner”).  Yes, I also like Dave Ramsey’s thoughts as well.  J.D. sent out a great overview with tons of links to help you jump-start great financial wisdom in 2012.  For all of us, but particularly for those of you making financial goals in 2012 (like, “get out of credit card debt” or “make wise purchases”), you need to read it all very carefully!

We discuss many aspects of personal finance at Get Rich Slowly. We explore ways to earn more money, get out of debt, and build anemergency fund. We talk about the psychology of money management, and we share tips and tricks for making the most of your savings and your career. Basically, we do our best to help readers take control of their financial lives.

Sometimes it’s easy to get lost in the little details of money management. Sometimes we forget the Big Picture. Because of that, I like to devote my annual Happy New Year post to a colossal summary of the collected wisdom at this site.

If you’ve resolved to take control of your finances in 2012, this article is the place to start.It’s packed with tips and resources for making the most of your money. And as I do every year, I’ve added one tip to the list.

Here then are twelve simple but effective steps to take control of your finances in 2012.

Step #1: Set financial goals
The road to wealth is paved with goals. If you don’t know why you’re doing this — why you’re making sacrifices, why you’re working so hard — it’s too easy to fail. But if you set goals, they can help guide you even when things get tough. When you have to make decision, your goals can help you stay focused on what’s important.

For your goals to be effective, they have to be personal. They have to mean something to you. Right now, one of my goals is to save money for travel. A couple of years ago, my goal was tosave for a Mini Cooper. Before that, my goal was to get rid of 20 years of debt.

To keep your focus front and center, you might use web-based tools like Joe’s Goals, StickK, or43 Things. You might find an accountability partner. Or you might advertise to yourself. And be prepared for setbacks. You’re not going to meet your goals without mistakes. Stuff happens. Thebest way to deal with problems is to have a plan before they occur.

Step #2: Track every penny you spend
The authors of Your Money or Your Life urge readers to “keep track of every cent that comes into or goes out of your life.”

[This is] the best way to become conscious of how money actually comes and goes in your life as opposed to how you think it comes and goes…This is the step that somehow makes the biggest impact.

Last year, I stopped tracking my spending. I was spending less than I earned, and I figured it was too much work. I regretted that. In fact, I’ve vowed to resume tracking my spending again in 2011. I’m glad I did. I was able to see some trouble spots (comic books!) and make corrections.

It doesn’t matter how you track your spending — the most important thing is to do it.

• You can use a cash notebook.
• You can use an online tool like Yodlee or Mint. (I tried Mint, but it didn’t work for me. I’m trying Yodlee now.)
• You can use a piece of software like Quicken. (Here’s a list of 16 powerful personal finance programs.)

Whichever method you choose, stick with it. Make it a habit. Don’t fudge the numbers. Record your transactions as soon as possible. Most of all, don’t judge yourself. Tracking your spending is an exercise in data collection; it’s not the appropriate time to change your habits.

   

Step #3: Develop a budget
After you’ve tracked your spending for a few weeks (or months), use the data you’ve collected to develop a budget. According to The Millionaire Next Door, budgeting is one thing that sets the wealthy apart from the rest of us — 55% of millionaires keep a budget.

Many people — myself included — fail to budget for a variety of reasons: it’s boring, we don’t think we need it, or we don’t know how. But this simple act can provide a roadmap for your money.

There are a variety of budgeting methods you can choose, from Andrew Tobias’ three-step budgetto the 60% budget. My recent favorite (and a favorite of GRS readers) is Elizabeth Warren’sbalanced money formula: 50% to Needs, 20% to Savings, and everything else to Wants. Simple but effective.

Crave more budgeting tips? Check out this article highlighting 13 tools for building a better budget. Hate the idea of budgeting? Consider the spending plan, a budgeting method for non-budgeters.

Step #4: Review your bills (and ask for discounts)
At least once each year, you should review the contracts and agreements you have with various banks and service providers. This is also a great time to review your financial accounts to be sure everything still matches your needs.

• Read your credit-card agreements and make sure you understand everything. (If you don’t, then ask questions.) When I read my own agreements, I just dial the customer service line and ask for clarification.

• Check your service levels. We have a tendency to keep paying for the same service we’ve always had, whether it’s with our phone, our electricity, or our gym membership. Now’s a good time to make a quick check to be sure you’re only paying for what you need.

• Ask for lower rates. In 2009, G.E. Miller shared how he cut his cable bill by 33% without losing any service. Many GRS readers reported similar success. Look through your monthly bills to see if there are any you could call to ask for a reduction on.

• If you rent, review your lease or rental agreement to be sure you’re clear on all of the policies. While you’re at it, consider asking for a rent reduction. Sound crazy? If you’re a good tenant and regularly pay on time, it’s not so far-fetched.

• Review your insurance. Are you carrying policies with three different companies? Consolidate them at one place. Check the deductibles on your auto and homeowners insurance. Are they too low? Could you afford to raise them and “self-insure” the first $1,000 of damage? And is your liability coverage high enough?

• Go over your investment accounts. Check your balances and asset allocation. Are you too heavy in stocks for your risk tolerance? Should you own more stocks? If so, shift things around to get to your target allocation.

This task may be boring, but it’s important. Terms change all the time. Your own financial situation changes. Spending one afternoon a year to review your agreements (and ask for discounts) can keep you from getting trapped in contracts you don’t want and save you money in the process.

Step #5: Optimize your accounts
For seventeen years, I was an account holder at a large national bank. I paid an $8 “service charge” every month, as well as many other fees. I received terrible service and earned no interest. Over the last couple of years, I’ve finally begun to optimize my accounts. If you haven’t already done so, consider the following:

• Open an online high-yield savings account. Interest rates are about as low as they can go, and should increase in the months and years ahead.

• Choose a rewards checking account. Believe it or not, it’s possible to find checking accounts that pay interest. The best online checking accounts are paying about 1% right now, depending on your balance. But you can usually find an even better deal through your local bank or credit union. Check out this list of rewards checking accounts for rates of up to5%.

• Use a rewards credit card. If you have trouble with credit, it’s best to avoid plastic altogether. If you can use credit responsibly, be sure to choose a credit card that pays you. Avoid cards that carry an annual fee. Find a rewards program that matches your lifestyle. But don’t choose a card just because it offers a signup bonus or because it gives you a discount at your favorite store. Remember: your goal is to find a useful tool. Look for a long-term relationship you can live with.

It’s important to choose accounts and systems that work for you. I signed up for a rewards checking account at a local credit union, but the nearest branch is fifteen minutes out of my way. I never used it, so the credit union closed the account. I compromised by opening on online checking account instead. I earn a lower rate, but it’s an account I’ll actually use.

Step #6: Start an emergency fund
For years I lived paycheck-to-paycheck. I spent everything I earned. This worked well until something went wrong. Suddenly I’d find myself without money to pay for a car repair, or facing an expensive doctor’s bill. I financed emergencies with credit cards. Eventually I saw the light and built up a rainy-day fund.

After you’ve optimized your accounts, make it a priority to save for emergencies. In The Total Money Makeover, Dave Ramsey explains why he believes an emergency fund should come before anything else:

Since I hate debt so much, people often ask why we don’t start with the debt. I used to do that when I first started teaching and counseling, but I discovered that people would stop their whole Total Money Makeover because of an emergency — they felt guilty that they had to stop debt-reducing to survive.

Open an online high-yield savings account and add $20 or $50 to your account ever time you get paid. Two years ago, I opened an account at ING Direct, where it’s simple to schedule automatic deposits. After you’ve saved $1000,then you can attack your debt.

See also: Learning to love the emergency fund.

Step #7: Get out of debt
Are you struggling under a heavy debt load from credit cards or student loans? Make it a priority to unload some of this this burden in 2012. At the end of 2007, I said good-bye to 20 years of debt — it feels fantastic to have that weight off my shoulders.

If you have the mental discipline, you’ll save money by paying down your high-interest debt first. But if you’ve tried that method before and failed, consider using a debt snowball. Pay your debts starting with the smallest balance first. Here’s how:

1. Order your debts from lowest balance to highest balance.
2. Designate a certain amount of money to pay toward debts each month.
3. Pay the minimum payment on all debts except the one with the lowest balance.
4. Throw every other penny at the debt with the lowest balance.
5. When that debt is gone, do not alter the monthly amount used to pay debts, but throw all you can at the debt with the next-lowest balance.

The debt snowball can give you awesome psychological payoffs, keeping you motivated to stay in the game. It’s not mathematically ideal, but it worked for me (and for many others besides). However you choose to get out of debt, stick with it. Don’t give up.

Step #8: Fund your retirement
If you’re young, you probably don’t think you need to start a retirement account. You’re wrong. No matter how old you are, now is the time to begin saving for retirement. The extraordinary power ofcompound interest favors the young — and in a big way! In The Automatic Millionaire, David Bach writes:

The single biggest investment mistake you can make [is] not using your [retirement] plan and not maxing it out.

If your employer offers any sort of retirement-contribution matching, such as a 401(k), be sure to take advantage of it. It may not be “free” money, but it’s darn close. Also consider starting a Roth IRA.

After reading The Automatic Millionaire a couple years ago, I opened a Roth IRA at Sharebuilder. It was easier than opening a checking account. I’ve managed to make the maximum contribution since 2006. In 2008 and 2009, I maxed out my 401(k).

Don’t understand retirement accounts? No problem. Download the free Get Rich Slowly Guide to Roth IRAs, which explains everything you need to know about these accounts.

Step #9: Automate your finances
Over the past few years, I’ve been moving toward a system of paperless personal finance. Along the way, I’m learning the value of automating routine transactions. When you make things automatic, you remove the human element, making it more difficult for you to mess things up.

The classic example is overdraft protection. By tying your checking account to your savings account, you have a safety net if you bounce a check. But there are other ways this can work for you. For example, I’ve set up automatic payments with the gas company, the cable company, and my auto insurance company. I also make automatic deposits to my online savings account.

One terrific advantage to automation: when you pay your bills and do your saving and investing automatically, it’s easy to tell how much you have left over to spend at the end of each month!

Step #10: Earn extra money
You can meet a lot of your financial goals by reducing your spending and using the right tools. Butnothing supercharges your progress like a boost in income. How can you earn extra money?

• Ask for a raise. Several readers have written to tell me how they’ve given themselves a raise through ambition and ingenuity. Here’s one example. (Don’t know how to ask for a raise? Here’s how to negotiate your salary, either before or after you’re hired.)

• Switch employers. Not every employer is able or willing to offer raises, even when they’re merited. If you’re in a position where a raise isn’t possible, consider finding a new employer.

• Take a second job. Many people find that the best way to get out of a financial hole is to temporarily take a second job. Nobody wants to work more than 40 hours per week, but sometimes that’s what’s needed to get out of debt or to save for a house. Just remind yourself that you’re doing this for a short time.

• Use your hobbies. Yes, it’s possible to have money-making hobbies. You’re not going to get rich playing World of Warcraft, but many people use productive hobbies to earn a little extra income.

• Volunteer for medical research. In August 2008, I earned $120 for a couple of hours spent participating in medical research. GRS staff writer Donna Freedman has earned extra cash by giving blood and watching porn (though not at the same time).

• Sell things. When I decided to get out of debt, one of my first steps was to sell a bunch of the stuff I’d bought with that $35,000. I used eBay, Craigslist, garage sales, and the Amazon Marketplace to sell the things I no longer needed or wanted. The money I earned jump-started my debt reduction.

Another effective way to increase your income is to pursue entrepreneurship. While working to defeat my debt, I started a small computer consulting business. It didn’t generate a lot of income, but it did provide $2,000 a year that I wouldn’t have had otherwise!

Step #11: Learn the Art of Conscious Spending
Being frugal doesn’t mean you have to deprive yourself. You’re not giving up the good stuff for the rest of your life. Instead, frugality is about choosing to spend it on the things that are important to you while cutting back ruthlessly on the things that aren’t. Ramit Sethi calls this conscious spending, which is a fantastic way to describe it. Conscious spending implies that you’re actively choosing to spend on some things and not on others.

Contrast this with how most people spend. We tend to spend on reflex. We buy things because we’re expected to, because everyone else does. We spend to have what other people have. We sign up for gym memberships that we never use, subscribe to magazines we never read, and pay for golf clubs that get buried in the garage.We make impulse purchases at the grocery store — or even on large items, like computers and cars. Most of the time,people spend without thinking.

But with conscious spending, you evaluate every purchase. You ask yourself: “Will buying this help me meet my goals? Will it make me happier? Is it congruent with who I am and what I want to do?” I know this sounds like New Age mumbo-jumbo, but it’s not. These questions can have a powerful positive effect on how you spend and save.

Conscious spending isn’t restrictive; it’s liberating. It lets you cut back on the things that aren’t important to you so that you can spend on the things that do matter. Learning to practice conscious spending is a sure way to improve your quality of life.

Learn more: Conscious spending in action.

Step #12: Educate yourself
Knowledge is power. Personal finance doesn’t have to be a mystery. Subscribe to this site.Read other personal finance blogs. I recommend:

• The Simple Dollar
• I Will Teach You to Be Rich
• The members of the Money Scribes network
• The members of the LifeRemix network

Visit your public library. Borrow money books and self-development manuals. Here are four of my favorites:

• If you’re in debt and can’t seem to find a way out: How to Get Out of Debt and Live Prosperously
• If you’d like to know more about investing: The Random Walk Guide to Investing
• If things are tight and you need to find creative ways to make ends meet: The Complete Tightwad Gazette
• If you want a motivational manual to prompt you to pursue your goals: The Magic of Thinking Big

You don’t have to agree with everything in a book to get something out of it. I read a lot of personal finance books — some are good, but many are not. Even the worst books usually have one or two things I can pull from them. Learn how to read a personal finance book so that you can pick and choose those pieces appropriate for your life.

Final thoughts
Taking control of your finances can be intimidating — there’s so much to do! — but it doesn’t have to be that way. One effective solution is to take a vacation day from work: designate one specific date as your personal “Money Day”. Use this day to finally set up Quicken on your computer, to open a retirement account, and to call around for a better deal on your insurance.

The good news is that you can get out of debt. You can save for retirement. If I can do it, so can you. Best wishes for a prosperous new year!

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January 17, 2012 at 6:33 am, by Carl

Over the recent New Year’s holiday season, I enjoyed some college bowl football games.  During the January 2 games, two different teams ended up with sad (for them) outcomes due to too much caution.   My general philosophy of life is a cautious one.  Actually, a better reflection would be that I analyze everything deeply.  I have long enjoyed playing chess, but better than actually playing the game, I enjoy the strategic thinking that chess teaches.

What that means, simply, is that I am often taking time to slowly create a plan of action that takes into account the various possible events or issues that will emerge as the plan moves forward.  Or, from the chess board, it is playing the game without moving the pieces.  A strong chess player can see at least 3 moves ahead; a chess master can often go 7 or 8 moves deep.  For a great example of this, watch the final minutes of the new Sherlock Holmes movie.

However, at times, this much strategic thinking can make you quite cautious, concerned that you haven’t fully considered all of the information.  Too much caution can mean that you miss opportunities.

In the two bowl games, we saw two classic examples of this caution.  In the Georgia vs. Michigan State game, the teams went to overtime.  In the first overtime, Georgia successfully stopped Michigan State with an interception.  If you know the college football rules, that meant all UGA had to do was score to win (as opposed to scoring to tie Michican State, had they scored).  This opportunity, though caused caution on the part of the Bulldogs, or at least for their coach Mark Richt.  Rather than coming out with a plan to attack as they would have normally, they played cautiously on the first two plays gaining about 3-4 yards.  Then on third down, they decided to just go ahead and kick the ball for the winning field goal…except their kicker missed the 42 yard kick

Now, the logic here is that perhaps they’ll fumble or thrown an interception, and since they only need 1 point to win, why not kick.  Added to that, would be the assumption that a good college team will have a solid kicker who should normally be able to make that kick.  But UGA’s kicker had had a poor year, connecting on only 60% of his kicks.  The bolder move for Richt would have been to play hard on all 3 of the Georgia downs; kick it only if you have too.  Perhaps, they would have made a first down, getting closer; maybe they score the touchdown.  Instead, they were cautious, attempting to make no real yardage and in the end, they paid the price.  They lost in the 3^rd overtime and that was that.

Later that evening, Stanford paid the same price in their game against Oklahoma State during the Fiesta Bowl.  In a tight game between two very strong teams, Stanford had the ball last.  Their excellent quarterback, Andrew Luck, took over on their own 20 and quickly took the team down to the OSU 25.  Just like Georgia, that would be a 42 yard field goal.  However, also just like Georgia, Stanford decided to sit on the ball even though they had 52 seconds left in the game.  Clearly they could have attempted to pass the ball again (the previous two successful plays had been passes; Luck is one of the top QBs in the game).  Instead, they ran two safe running plays designed to use up the clock and move the ball to the middle of the field.  Those two plays put the ball on the OSU 17, so a 35 yard field goal.  Now, their kicker was a slightly better kicker than the one from Georgia, but the result was the same.

Miss.

In OT, the poor young man missed again, this time from 43 yards.

In both games, clearly, the bolder move would have been to play their normal play calling, as if you knew that if you didn’t score, you would lose.  Instead, both teams went cautious as if they knew that “of course we’ll make this easy field goal and win.”

Certainly, at times, being cautious is important.  I mean, that’s my typical way of looking at things, but you must also be willing to make a move that is aggressive.  Last night, neither Georgia or Stanford would have had to become risky or attempt unorthodox plans.  Just execute part of their normal, aggressive play calling and go for the score.  If, in the end, you still have to kick the field goal, then you make that call, but instead of trying to be conservative, trying to settle, they ended up giving away their games.

This year, don’t give away games.  If you try something and lose, then you lose.  At least, at that point, you won’t leave anything on the field.  Put everything out there.

Plan, yes…but don’t hold onto too much caution.

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January 12, 2012 at 7:01 am, by Carl

I’ve mentioned several times my enjoyment of reading Seth Godin’s work.  On 12/31 and 1/1, he came with a wonderful double wammy of wisdom about living each day well.  I especially appreciated him focusing on the fact that we should not get trapped by any articificial understanding of time.  This concept is often seen around the New Year celebration.  Americans by the millions decide on this one day to think about doing things new.  However, EVERY DAY is the start of a NEW YEAR, so if you feel trapped by work, by bad habits, in poor relationships….well, the only thing stopping you from a new year’s resolution is you choosing to be so bold.

So, be bold.

Listen well to Seth (from 12/31):  “A friend asked me the other day, “…given the sorry state of so much in the world, what’s possible to look forward to?”  The state isn’t sorry. It’s wide open.  Interest rates are super low, violence is close to an all time low, industries are being remade and there’s more leverage for the insurgent outsider than ever before in history.

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