Eventually, every homeowner finds a sizable home improvement project that they’d like to tackle. Perhaps the project is rebuilding a deck. Maybe it involves putting new concrete in the driveway.
Whatever it is, it’s big. You could tackle it yourself, but you’d be working on it after work for weeks, losing many, many hours that could be spent on other activities. So you either dig into the drudgery yourself, put it off, or, worst of all, hire someone to do it.
I suggest a different route.
My biggest criteria for most of my purchases is simply price. What’s the best deal I can get on an ear of corn or on a book? The answer to that question usually pushes me towards the checkout line.
Yet, quite often, I find myself not always going for the rock-bottom price on specific items. I’ll pay a bit of a premium at a farmers’ market, for example. I’ll stop at the tiny market in my town for a few items quite regularly.
Why would I regularly abandon the lowest possible price? For me, there are a number of factors at work.
Ada writes in:
Like you, I think the stock market is near the bottom right now and will go up greatly in the next three to five years. I have some extra cash (about $10K) but I don’t know exactly what to do with it to get on board. How would you do it?
In fact, I’m already doing it. My wife and I made the decision to start investing much of our long-term savings for a home into stocks because we both feel that the market is at the bottom right now and is poised for a big rebound in the next five to ten years.
Here are a few recent emails I’ve received. From Connie:
Over the last few years, I’ve taught myself to play acoustic guitar and lately I’ve started writing a lot of songs. I’d like to record them and share them with others and maybe eventually start playing concerts, but every time I think about it, I want to do something else. It just seems so big.
Every month, I spend some time on a personal finance statement. I’m careful to include the current balances on all of my debts and assets, then I add up the assets, subtract the debts off the top, and wind up with a number that, in one single value, represents my financial standing in the world.
I often wish that, when I look at my balance sheet at the end of the month, the difference between my assets and my debts was substantially larger. I would love for that number to be big enough for me to declare true financial independence.
Spend less than you earn doesn’t just mean cut back on your spending. It also means striving to earn more income when you can, because the real goal is to maximize the gap between your income and your spending and then use that for a greater purpose (saving for your goals).
When the economy is good, there are a lot of ways to increase your income: hunting for a new job, asking for a raise, switching careers, starting a side business, and so on.
Carl writes in:
I am 21 years old and am still in college earning my degree. As of lately I have begun thinking about my future and what I will do with my money. I understand saving is a crucial part of living a successful financial life, but I am confused on how to attack such an issue. I have decided that I will definitely get a Roth IRA, but outside of that I don’t know what else to do with my money. I want to invest in the stock market in the long term most likely a index fund or a portfolio of low risk companies, would that be a form a saving?
A few days ago, I was being interviewed by a local newspaper when the interviewer, after asking a ton of questions about frugality and my ideas on personal finance, simply asked me the titular question.
Do you want to be rich?
I thought about it for a moment and realized the question - and the answer - isn’t as easy as it sounds.
Let’s face it: talking about money can be very, very difficult. I’m speaking from experience here: when my wife and I first started addressing our financial situation, it was extremely challenging to talk about money. We’d look at our financial state, see that we weren’t where we wanted to be, and would seek someone or something to blame - and rarely would that blame be directed toward ourselves. Of course, that was when we actually even managed to make it to the discussion table at all.
A little over a week ago, J.D. at Get Rich Slowly posted an article entitled “What Next?” The Third Stage of Personal Finance, where he discussed the fact that he had dug himself out of his financial hole and was beginning to accumulate wealth. The “problem” here is that it meant that he was having to reconsider many of his goals - for so long, his goals had revolved around straightening out his financial ship and paying off debts, but those goals had been accomplished.