The Million Dollar Question of Personal Finance: Should I pay down debt or invest? What if you could do both?

Traditional personal finance tells us to choose between paying down debt or saving and investing. The conversation usually goes like this, “Does the interest rate on your debt exceed the returns you could get investing in the market?”

For example, if you have a credit card at 20% interest, it would be in your best interest, no pun intended, to pay off your credit card because there are not many investments which will return 20% or more.

In another example, if you have an auto loan at 4%, it might be better to invest your cash in the stock market or other investments because you can earn higher returns than 4%. The stock market has historically returned 7-8% on average over the last century.

By investing in the stock market, you can theoretically grow your wealth 3-4% more than by paying off debt.

To pay off debt or save and invest is the million dollar question of personal finance. What can I do to prudently grow my wealth?

“Wealth is the ability to fully experience life.” – Henry David Thoreau

Benefits of Paying Down Debt

First, let’s start this section off by talking about mortgages: The word mortgage is derived from a “Law French” term used by English lawyers in the Middle Ages meaning “death pledge“, and refers to the pledge ending when either the obligation is fulfilled or the property is taken through foreclosure.

Literally, mortgage = death pledge.

“A man in debt is so far a slave.” – Ralph Waldo Emerson

Debt is mentally draining, financially draining, and affects your entire life if you are weighed down by the large barbell of debt.

The main benefit to paying down debt is increased cash flow. No more giving your hard earned cash to those pesky lenders!

If you choose to pay down debt, you will want to put extra cash towards your debt each month. This will increase the speed at which you pay down your debt.

By sacrificing short term and putting extra cash towards your debt, you can eliminate those debts in a much shorter time frame and pay off your debt fast. In addition, by paying off your debt faster, you will save money on interest!

Let’s do an example together.

Let’s say you have a $20,000 loan with a 6% interest rate and a 10 year term. Using an online calculator, your monthly payment will be $222.04.

Over 10 years (120 months), this will cost you $6,867.01 in interest. If you pay $100 extra a month, you can cut the time you are paying off your debt to 6.25 years (75 months) and you will pay $4,008.09 in interest. By paying an extra $100 a month, you will save yourself $2,858.92 and will be debt-free 3.75 years ahead of schedule!

As shown above, by paying extra each month, you can save money and reduce the amount of time you are paying off your debt. In addition, once the debt is gone you effectively give yourself a raise; you have more money falling to the bottom line each month for you to save, invest, donate, spend, etc.

---

Benefits of Investing

“Risk comes from not knowing what you’re doing.” – Warren Buffett

Really, investing can be as simple as you want it to be. Investing is not gambling. Investing consists of buying assets which have value and have the potential to appreciate in value over time.

Financial Markets

If you are interested in investing in the stock market, you have the capability to invest in low cost index funds. These index funds will “mirror” the market. As I mentioned above, the stock market has historically returned 7-8% on average over the last century. If you invest $10,000 a year in index funds for 30 years and get 8% returns, you will have a portfolio worth $1.2 million!

Vanguard has many excellent options if you want to diversify index funds (domestic stocks and bonds, dividend growth stocks, international stocks and bonds, etc.).

Real Estate

If you don’t want to invest in the stock market, and would prefer to invest in real estate through rental properties, you can do that. There are many advantages to investing in real estate. Why do I love real estate as an investment class? Real estate is:

• Accessible – Anyone can buy it
• Appreciable – Can increase in value over time
• Leverageable – You can buy on margin and borrow against equity
• Rentable – Cash flow baby!
• Improvable – Through sweat equity or contracting out
• Deductible/Depreciable/Deferrable – Amazing tax benefits

Other Investment Options

Or if you don’t want to invest in either the stock or rental market, you could start a blog and look to build a business online! There are 7 billion people in the world, do you think you can carve out a niche for yourself and your business?

Again, there are many investment strategies out there. Personally, I believe rental properties offer many long term wealth building benefits. I also believe there are many benefits from holding low cost index funds.

If you want to read more on investing, please take a look at the following books:

• How to Think About Money (book review)
• The Richest Man in Babylon
• The Millionaire Next Door: The Surprising Secrets of America’s Wealthy
• The 4-Hour Workweek: Escape 9-5, Live Anywhere, and Join the New Rich
• Money: Master the Game (book review)
• Think And Grow Rich
• The Intelligent Investor: The Definitive Book on Value Investing.
• How to Win Friends & Influence People
• Rich Dad Poor Dad

Should You Pay Down Debt or Invest?

There are many questions to ask when thinking about making decisions related to personal finance.

Before asking yourself the million dollar question of personal finance, should you pay off debt or invest, you should ask yourself the following questions:

• Do you have enough money each month to cover your debt payments? Do you have additional money at the end of each month to invest?
• How much debt do you have? What are the interest rates? Do you feel debt has a grip on your life or finances?
• If you have extra money available to you, will you actually invest it? Or will you spend it?
• Do you have an emergency fund?
• What are the terms of your debt? Are there any penalties for prepayment? Is your interest rate adjustable?

Once you are able to answer the questions above, it will be easier to decide whether to pay off debt fast or to invest.

Remember the golden rule: the person who has the gold makes the rules. – Unknown

How can you set financial goals that you are going to keep? How can you make a budget that you’ll stick to? Let’s talk about the answers to these questions and give you what you need to become a financial success.

Some people think worrying about tomorrow will spoil the goodness of today. But, the reality is, financial planning is as important as eating food. If you want to enjoy a stable and healthy financial life, then you need to plan for your financial future.

The problem is, when it comes to planning for the financial future, many people fail to understand where to start. A major part of Americans set up financial goals in the beginning of the year, but just 8% of them can achieve their goal successfully. What is the reason behind this poor result? The reason is, many people don’t know which goal to prioritize and how to achieve it.

How can you set financial goals?

The golden rule is – set a plan and follow that plan.

Here are 9 basic plans you can follow to improve your financial situation:

1. Formulate a budget and stick to it

Most experts agree that budgeting is useful and a great first step when it comes to setting and reaching your financial goals.

It helps to track your expenses and to get a clear understanding where your money is going. By planning a budget, you can meet your necessary expenses while saving a certain portion of your income regularly.

However, you have to create a realistic budget, stick to it, and revise it from time to time.

2. Pay off financial obligations

This is considered one of the top financial goals. Interest charges on credit cards or other debt accounts can eat up so much of your cash flow that could be put toward other objectives and financial goals. So paying off debt should be your first priority.

At a bare minimum, make sure you pay off the owed amount on time every month. Consider lifestyle changes to save more money to use it for paying off your debts. Once you pay off the debt, you can easily manage your financial situation effortlessly. However, if you feel your debt burden is unmanageable, then it is advisable to seek professional help.

3. Putting money into a savings account

Saving money in a savings account should be a given as part of planning for your financial future. When you are planning, make sure you start contributing a stipulated amount each month into the savings account.

The experts always recommend to save at least 10% of what you make in a month to build a savings fund. Irrespective of the amount you make in a month, you should save at least this amount to secure your financial future.

Having money in a savings account will provide you with a sense of confidence to achieve bigger financial goals.

4. Spend less than what you earn in a month

Make a list of the income that you make in a month from your day job and any other sources of income, and any investment assets. Then make another list of what you spend in a particular month on all your needs and wants.

Check whether or not your expenses are more than your income. If they are, you need to take some solid steps to curb your expenses and always keep them less than what you make in a month; lest you fall in a deep financial mess.

To do this successfully, you need to fill your wallet with cash instead of credit cards. Thus, you can avoid pushing yourself further into the credit card debt hole. When you can’t afford to buy something with cash today, you should postpone purchasing that thing.

5. Build an emergency fund

When you have an emergency fund, you can avoid taking out a loan during a financial crisis. You can use your emergency fund to paying off any unexpected expenses without having to go into debt. In a fragile job market or during an economic crisis, an emergency fund is a life saver.

So, saving a considerable amount in an emergency fund should be one of your financial goals. It is recommended by most experts to save at least 3-6 months’ worth of expenses in an emergency fund, with some suggesting saving up to a year or more of expenses. 

6. Prepare for retirement

You should prepare for your life during retirement, therefore, you need to have a proper investment plan so that you have a smooth financial life after retirement. Is your workplace providing you with a retirement account?

If so, are you contributing a portion of your monthly income? You should be contributing at least up to your employer’s match, if they offer one, otherwise you are literally missing out on free money!

Though a matched contribution from the employer is a boost, you also shouldn’t delay making contributions just because you’re not getting a matched contribution if that is not something your workplace offers. This should act as an untouchable fund and you shouldn’t withdraw money before your retirement age so as to avoid any kind of unnecessary fees.

7. Review your insurance policies

If you don’t regularly review your insurance policies, you may pay more on insurance coverage by unknowingly paying for coverage that you don’t need. You should review your auto insurance policy and your health insurance policy periodically and check whether or not you need all the coverage that you’ve taken on.

For example, you may have chosen a full coverage auto policy when you first bought your car, but now it’s several years old and you don’t need coverage to be as comprehensive. It’s also a good idea in general to shop around for different insurance policies because you could save by switching to a new company or plan. 

Prioritizing your Financial Goals

The golden rule is – categorize and prioritize.

Not every goals is the same. Some are more far reaching while others are easier to achieve. So it’s important to to categorize and prioritize your financial goals.

Renovating the home, replacing the thermostat, or planning a vacation are all examples of short-term financial goals, whereas, buying your dream home, building a fat retirement fund, investing money, or saving money for child’s education fall under the category of long-term financial goals. These financial goals usually take much longer to achieve.

Things like purchasing a car or paying off debts (credit card debts, student loan debts, payday loans) might be called mid-term financial goals, depending on the amounts owed. 

How can you be more focused on your financial goals?

Many people set financial goals, but few remain focused on achieving them. Most people fail to achieve their financial goals because they lose interest soon.

To remain focused on your financial goal, you can:

1. Write down one goal at a time in detail. The goal should be realistic, achievable.
2. Set a timeline for the goal and decide if it is a short term, a long term, or a mid term goal.
3. Revise your budget and make necessary changes as per your planning to achieve the goal.
4. Consider some room for fun. Self rewarding is very important to remain inspired.
5. It may be helpful to set easy and short-term goals first. Accomplishing the easiest goals can boost a sense of confidence and give you the push you need to keep working toward the bigger goals.
6. If achieving your financial goals requires some lifestyle changes, take note and plan accordingly. You may need to cut unnecessary expenses, save aggressively, or earn some extra money. Think positively, otherwise you may not be able to stick to your plan. All these may sound daunting, but not impossible.

Tips to Set Financial Goals Smoothly

Keeping track of your goal is very important. If you set a number of goals and don’t keep track, you will be stuck in the middle. Plus, you can celebrate when you meet your goals!

1. Affix a note of your goal to the door or wall for a visual reminder.
2. Mark a calendar with goal milestones as you achieve them.
3. Take advantage of apps that make tracking goals much easier.

Conclusion

Lastly, there is no other option but to set monetary goals when you want to lead a peaceful financial life. If you don’t know the right path, walking randomly will not help you to reach the right destination.

By planning for your financial future, you’ll set yourself up for success in reaching your financial goals.

Save

Many personal finance bloggers provide net worth, income and expense, and goal updates each month for their financial situation. Some of these bloggers go in-depth into the details and are fully transparent, while others will tell you at a high level their net worth and how it changed during the month. I’m a fan of being fully transparent with my life and I also believe you, my reader, appreciate it as well.

In this post, I want to lay it all on the line: I’m going to give you an in-depth look at my personal balance sheet, income statement, and talk a little bit about areas for improvement going forward. First, I will give you a high level overview of my assets and liabilities, my income, expenses, and taxes over time, and my savings rate for the first 6 months. Then, I will dive deeper into the details for my income and expenses and discuss my goals for the next 6 months.

My sincere hope is that you look at my transparency around my finances and look to take steps to make your financial situation better. I truly believe that everyone can get their financial situation in order and can be successful with money. It doesn’t matter how much you make, it doesn’t matter how much you have currently. By taking steps each and every month to earn money, save money, and invest money, you will be on the road to wealth.

Wealth is the ability to fully experience life.” – Henry David Thoreau

My Financials at a High Level at Age 25

This is a snapshot of where my finances were at age 25, in 2017. Personal finance is personal, so this will look different for everyone, but hopefully it gives you an idea of what one 25-year-old millennial’s personal finances look like.

First, I want to show you a high level view of my personal balance sheet and income statement. At the beginning of 2017, I had a net worth of $68,919. At the end of June 2017, my net worth was $96,073. This number is my assets minus my liabilities. The assets include my cash in my checking and savings accounts, my house and car, my 401k, IRA, HSA, and any other investments. The liabilities includes my credit cards, my mortgage, and my security deposits.

I was lucky to graduate college with only $8k in student debt, which I paid off in 2015, and while I did take out a loan on my car, I paid it off promptly in the few months after to keep my financial situation liquid. I’ve missed out on some market gains, but still did pretty well for 25.

In 6 months time, I was able to increase my net worth by nearly $30k through a combination of building my investments, and paying down my mortgage. I will go into more detail later in this post.

For my income, investments, expenses, and taxes, I break them out below. By June 2017, I’d made $56,178, invested $16,002, paid down my mortgage $9,934, spent $16,590 on various things, and paid $12,333 in taxes.

I really like looking at this table because it tells me the story of each month. In February, I received a nice bonus from work and was able to put $5,500 into my Roth IRA, and paid off an extra $2,800 in mortgage principal. Also, I break out taxes, because it’s interesting to see how taxes affects my savings rate.

Now, I will go into the details for each line item.

An Examination of a 25-Year-Old Millennial’s Balance Sheet

I break up my assets and liabilities into high level categories: cash, property, investments, credit card debt, mortgage debt, and miscellaneous debt. Each of these categories includes multiple accounts. Becoming wealthy is about increasing the quality and quantity of assets you have, and decreasing the liabilities you have.

Assets

As mentioned above, my assets includes my cash in various checking and savings accounts, my house and car, and my investments in various accounts (401k, IRA, HSA, taxable, and business accounts).

Cash

I could be a little more aggressive with my investments given my cash situation, but I like having at least $5-7k in cash from a psychological standpoint. I never know what will happen to my house, my body, or my life. Therefore, I treat my savings account as my emergency fund. As you can see below, my total cash has been relatively constant between $5k and $12k.

I’m fairly comfortable where I’m at right now with cash, but wouldn’t mind having at least $15k in cash when I’m done hitting my debt paydown and investment goals (more on this later).

Property

For property, I have a 2014 Volkswagen Jetta which I bought last February, and a house, which I bought July 2015.

For my car, I reduce the value by multiplying each month by 98% to simulate depreciation. This is not a scientific method, but it works for now.

For my house, I’m taking the most recent appraisal value (August 2016). I’m skeptical of Zillow’s Zestimate because earlier this year, my Zestimate was $360k, but then dropped to $315k, and now is back to $340k. I would rather not see big peaks and valleys in my net worth, and as a result, I’m keeping the house value at the appraisal value.

Overall, I’m happy with my property valuations and these numbers will be staying relatively the same over the next few months as I’m not planning on buying another car or another house!

Investments

I have a few investment accounts, some tax advantaged, some taxable, and one business line item. For the tax advantaged accounts, a 401k account, a Roth IRA, and my HSA. For taxable line items, I have a taxable account with some shares from the company I work for, and RSU’s from the same company. I’m happy my 401k balance has nearly doubled, but this is far from being satisfactory if I’m going to have a fat tax-advantaged retirement account 🙂

2017 was the first year I contributed to an IRA. Technically, I contributed the max for 2016 and haven’t contributed anything in 2017. I want to change this soon, and will look to max out my 2017 contributions in the next month or so.

My 401k account is a Roth 401k and I’m contributing about $800 a month. I’ve upped this contribution a little bit more to 10% of my salary, but am always tinkering with this number. I’m also thinking of switching to traditional because I was recently promoted and got a decent raise.

I’m maxing out my HSA account since this is almost free money… I put pre-tax dollars in and can spend those dollars without paying any tax – such a good deal!

Overall, I’m generally pleased with my investment growth, but will have to stay consistent with my contributions.

Liabilities

For liabilities, I have 4 credit cards, a mortgage, and security deposits for my roommates. My one roommate never gave me a security deposit, which I’m a little upset about, but haven’t (and won’t) taken action.

For my credit card debts, these are generally below $1,500 a month. I put all of my purchases on my credit cards and average 2% cash back. I pay off my balance each and every month.

My mortgage is a 5/1 ARM at a 2.625% rate. So far, I’ve paid off $9,934 in mortgage principal – a combination of regular and prepayments. I’m currently at roughly 85% LTV and have PMI to pay each month. To get rid of PMI, I will need to pre-pay roughly $20k of principal. I want to address this in the next 6 months, by either accomplishing it, or getting a solid start on it for 2018.

Net Worth: Up $27,154 From Beginning of Year

For the year, my net worth is up $27,154, mainly driven by an increase in investments of $16,002, and a decrease in mortgage of $9,934.

In the second half of 2017, I expect my net worth to hit $100k, and my investments to increase at least $15k, and my mortgage to decrease $10-20k.

One area of improvement that I see is increasing the distribution of my net worth to investments. Right now, my house makes up roughly 50% of my net worth (roughly $48k of $96k). I’m not sure if I want to address this concern this year given my goal of getting rid of PMI.

An Examination of My Personal Income Statement

To get to the balance sheet, we must examine what happens behind the scenes: what is my income and what are my expenses each month? Tracking your income and expenses is incredibly important in personal finance. What gets measured gets managed!

Income

Currently, I have 3 streams of income – 2 active and 1 passive. I work a 9 to 5 doing statistical analysis for a regional bank, and I have a few hours of statistical consulting work a month. My two roommates pay me $1,300 a month in rent, and this has allowed me to increase my income by roughly $8k per 6 months. I also include my utility income (which is technically income but is offset by when I actually pay the utilities), and any other income.

Expenses

It doesn’t matter how much you make, it matters how much you keep. It is important to live within your means – spend less than you make! I track expenses to make sure I’m living within my means!

The main expense categories are discretionary spending (Food and drink, shopping, recreation, travel, home improvement, donation, etc.), utilities and mortgage, auto insurance and gas, other expenses (investment contributions), and paycheck items (taxes and investments).

Discretionary Spending

My main expense each month is food and drink. I’ve definitely became a little more loose with food and drink as my income has increased (lifestyle inflation at its finest).

I’m averaging about $450 a month in food and drink, most of which comes from eating a $5-10 lunch at work. I don’t buy drinks or go out for dinner too much any more, but lunches add up!

Also, at the end of June, I booked a flight to Vegas to hang out for the 4th of July weekend. I haven’t done too much traveling, but realize if I want to widen my perspective on the world, it’s essential to get out there and see new things!

Recreation is another one that I think can get out of hand quick: this one is gym membership fees, golf greens fees, and other fun expenses, etc.

Utilities and Mortgage

Each month, my mortgage payment (principal and interest) is $1,104, insurance is $114, PMI is $144, and property taxes is $339. Utilities run about $300 a month, and this is split 3 ways.

As mentioned above, paying down the mortgage principal by roughly $20k will get rid of the PMI payment of $144 a month. Without any extra payments towards principal, my wealth grows roughly $530 a month through equity build.

Auto Insurance and Gas and Other Expenses

I usually fill up my gas tank one time a month because I don’t drive too much. In May and November, I have my car insurance payment of about $800. Car insurance is expensive!

For investment contributions, you will see in February, I contributed $5,500 to my Roth IRA, and in May, I put $6,000 to work in my business endeavors. Investment contributions aren’t technically aren’t expenses, they are a balance sheet transfer, but since cash is going out, I treat it as an expense.

These expenses are not a concern for me.

Day Job Paycheck Taxes and Investments

Everyone needs to pay taxes, and I’m no exception. With each bi-weekly paycheck, there are a number of things taken out, both pre-tax or post-tax. The main items I’d like to call attention to are the 401k and HSA line items. I’ve recently increased my 401k contributions and am maxing out my HSA account.

Overall Takeaways From My Personal Income Statement

Overall, I’m saving a good amount of money each month, and I’m able to put that money to work in a variety of ways. A savings rate of 49% post-tax is very good, but can always be improved upon.

One thing I’m hoping to do is travel a little bit more in the second half of 2017. Like I mentioned above, this past weekend, I went to Vegas on a whim and had an amazing time 🙂 I’m looking to continue to travel around the Midwest and continue to widen my perspective on the world.

What did you think of this detailed breakdown of my personal balance sheet and income statement as a 25-year-old millennial? I hope it inspires you to track your own finances, including income, expenses, assets, and liabilities, to ultimately have an idea of your net worth. As I’ve said earlier – what gets measured gets managed!

Have you ever set goals, and not achieved them? What went wrong with these goals? What steps can you take to succeed in life? How can you set goals you will actually achieve?

Setting goals is critical for reaching your dream life, and living the life you WANT and DESERVE.

Throughout childhood, and even into adulthood, we are always told how goals will change our life, and the importance of setting good goals.

How can you set goals you will reach? Is there a goal setting framework for success? Many people don’t know how to set goals, or don’t have the consistency to achieve their goals.

For example, a recent study by the University of Scranton found that over 92% of people who make New Year’s resolutions will fail to complete them.

Even if you’ve never tried to set concrete goals for yourself there are a number of steps you can take that will significantly increase your odds.

In this post, you’ll learn how to set goals for success, learn about S.M.A.R.T. goals, and learn a framework for setting goals you will actually achieve.

How to Set Goals for a Successful Life

The process of setting goals is not too hard.

However, the process of setting goals which you will actually achieve is a little tricky.

Make no mistake though, you can definitely learn the steps to setting good goals, and get in an action based mindset to achieve your goals.

When creating goals for your life, career, health, money, etc., there are a few things you need to do:

• Deconstruct your destination and goals and break them into smaller sub-goals
• Set both short and long-term goals
• Keep Things S.M.A.R.T.
• Write down your goals and keep them somewhere visible
• Share your goals with friends and family

Let’s get into each of these goal setting techniques so you can get on to setting goals you will actually achieve.

Deconstruct Your Goals into Smaller Sub-Goals

What is deconstruction?

Essentially, deconstruction is exploration.  To deconstruct something is to dig around, get the lay of the land, and understand what there is to do to reach your goals.

After getting a feel for what is out there, the next step is to try to figure how the smallest steps which you will be completing.

How can you find these steps?

• Reduction of the goal
  • What are the common patterns, strokes, actions, etc. which make up the desired result?
  • Figure out the mechanics of the result, and try to break it down:
    • For example, if your goal is to become a better runner, there have been countless studies on how to bring your foot up and then bring your foot down, for maximum power.
    • Without this knowledge, just going out and running probably won’t get us to our goals as fast as possible.
• Interview to learn more about other people’s success
  • Who are the experts in the skill or action you want to become better at?
  • Better yet, who are the people and practitioners who aren’t just talking heads, but actually have practiced and became better over time?
  • Find out from others who have been successful – stand on the shoulders of giants!
• Reverse engineer the problem
  • Have you ever heard of reverse engineering? Essentially, you go from a finished product, back to the bones.
  • This method works well with physical objects: cooking, electronics, etc.
• Look to other areas to see if there are any similarities you could apply
  • Are there any parallels you can draw to the current task at hand from previous experience?

Some of these goal setting methods will be better than others. Think critically about which one makes the most sense for you, and figure out what the best path is for your hopes, wants and dreams.

Set Both Short and Long-Term Goals to Achieve Your Goals

When setting goals, it’s important to distinguish between short term and long term goals.

I want to become a millionaire during my lifetime, and realistically, I realize that this probably won’t happen in the next day or week.

However, if I make it a goal of mine 10 years down the road, and set short term goals which can build up to the long term goal, then I will be successful.

For you, as we talked about when deconstructing your goals, if you can find the smaller steps, you can make these your short term goals. For the long term goals, this is your dream.

Short term goals include things like cleaning your room, paying the bills, and things that are on a week to week basis. This could even be something like not spending money during the week so that you can go out during the weekend. By breaking down your goals and taking the first step you are much more likely to achieve them. For example, if you want to lose weight, the first step could be to contact a Brandon weight loss clinic (or elsewhere closer to you) and book a consultation.

Long term goals include things like saving money for a car or house, losing weight, and learning a skill.

By chipping away at the short term and long-term goals, you will be able to get more done and get closer to your dream at the end of the road.

The Power and Potential of Using S.M.A.R.T. Goals

When learning about goal setting, a very popular goal setting framework and template are S.M.A.R.T. goals.

Setting S.M.A.R.T. goals allows you can clarify your ideas, focus your efforts, use your time and resources productively, and increase your chances of achieving what you want in life.

S.M.A.R.T. stands for Specific, Measurable, Achievable, Realistic, and Time-Bound.

• Specific
  • Create goals which are laser focused, and have a clear outcome.
• Measurable
  • If you had to, could you quantify your progress to see where you are along the way?
• Attainable
  • Are there any barriers in the way of your goal, or do you need additional steps?
• Realistic
  • Is your goal relevant to your life? Are you the right person to do this?
• Time Frame
  • How long are you giving yourself to achieve this goal? One week, one month, one year?

Creating your goals using the S.M.A.R.T. framework is one of the highest impact ways you can set yourself up for success.

Which do you think you would be more likely to follow through with:

“I am going to lose weight”

or

“I am going to lose ten pounds in two months by eliminating sweets and fast food and exercising for a minimum of twenty minutes per day”?

The first goal is too vague, and vague goals will most likely never be achieved.

The second goal is much better because it gets captures exactly what the final result is (lose ten pounds), specifies when it will happen (two months), and lays out the precise actions necessary to achieve it (eliminate junk food and get exercise).

By using S.M.A.R.T. goals, you will be able to create goals which can help focus your thoughts and actions.

The Power of Writing Goals Down on Paper

Setting goals is straightforward, but the real power comes from making them REAL. When setting goals, it should be more than just thinking about them.

To be successful with setting goals, write them down on a piece of paper and hang that piece of paper on the wall.

By writing your goals down on paper, you will keep your goals front and center. You will allow yourself to have them in the front of your mind every time you see that piece of paper.

To quote Aristotle, “We are what we repeatedly do”.

You’ll be much more likely to keep doing whatever action is necessary to reach your goal if you have a constant reminder.

By writing down your goals on paper, you make our goals REAL. When you put your goals out into the world, this makes them that much more tangible and powerful.

Share Your Goals with Friends and Family to Have Accountability

Do you know any people who constantly are setting goals and talking a big game, but never go anywhere in life?

What do you think of those people?

Instead of telling people about your goals and not following through, telling others about your goals can be a powerful tool.

You can keep yourself accountable by sharing your goals with friends and family.

Any goal becomes much more achievable with the right support network! 

If you want to lose weight, then say to your friends, “I am going to lose 10 pounds in the next two months.”

As time progresses, your friends and family will ask about how you are doing on your goals and want to help. With this support, the grind becomes a little easier.

Writing down your goals on a piece of paper will make them feel real, while sharing your goals with others will keep you accountable and motivated.

Now, let’s talk about the importance of action when setting your goals.

Focus on the Action, Not the Result When Creating Goals

What are your goals? What do you want to achieve?

When I read those questions and think about my answers, I generally will go straight to the result.

What are my goals?

• I’d like to have better relationships.
• It would be awesome to do 100 push-ups in a row.
• I want to be debt free.

All of these thoughts are fantastic, but how am I going to do any of this?

Let’s talk about becoming debt free for example.

It’s a great thought to have that you want to be debt free, but if you are just putting the minimum payment towards your debt and hoping it goes away, do you think you’ll get there?

Instead, we need to focus on the actions: pay off an extra $200 a month. Pay off an extra $600 a quarter. Pay off $2,500 this year.

YOU CAN CONTROL YOUR ACTIONS. You cannot always control the result.

This is why it’s so critical to focus on actions for achieving your goals this year.

Focus on actions, you cannot always control the result.

A 3 Step Framework to Setting Goals for Work and Life

Here are 3 simple steps for setting goals for your work and life.

As we discussed above, it’s first about asking yourself the right questions and understanding what you want in life, and then working backwards to find the actions that make sense.

1. Identify your goals and dreams
   • Split your goals and dreams into multiple buckets: social, financial, spiritual, physical, emotional, work, fun.
   • Ask yourself: where do you want to be in 1 year? In 5 years? In 10 years?
   • Do you want to get a promotion at work?  Do you want to increase your savings rate? Are you looking to retire early? Do you want more friends? Are you happy with your job? What things stress you out? Do you want to lose 10 pounds?
2. Figure out which actions you must take to reach those goals and dreams
   • You have your dream, now what do you have to do to make it happen? GO DOWN THE RABBIT HOLE!
   • Do you want to retire early? Ask yourself, what’s your savings rate? What is your retirement income goal? Are you currently saving enough to allow yourself to retire at age X?
   • Are you looking to get a promotion at work? Who are the key influences of your career? What skills are necessary to be successful at the next level? Should you be networking X times a week?
   • Do you want to lose 10 pounds? What are you eating each day? Are you exercising enough to get your body in a calorie deficit?
3. Make a Plan and Take action
   • If you goal is to lose weight, decide to cook your own food 5 times a week. If your goal is to save money, pursue money saving options in your housing, transportation and eating. The possibilities are endless!
   • It’s great to know what you have to do, but if you never take action, you will never achieve your goals and dreams.

Through using this framework for setting goals for work and life, you can create a plan for your success. There are so many ways to reach your dreams, and through effective goal setting, you can get there.

The Importance of Taking Action for Achieving Your Goals

“An ounce of action is worth a ton of theory.” – Ralph Waldo Emerson

Ideas, goals, and dreams are worthless without action.

Humans underestimate how much they can accomplish in a year, but overestimate what they can accomplish in a day.

Everyone on this Earth has 24 hours in a day, 168 hours in a week, 720 hours in a month, and 8,760 hours in a year.

What’s your idea? Where do you want to be in a year? What about 3 years? 5 years? What’s your goal?

Successfully setting goals is possible and doable. Now, that you have a framework for setting goals you will actually achieve, it’s time to get out into the world and achieve those goals.

Readers: what are your goals? What are you looking to achieve? How do you set goals?

 

Effective interviewing is possible if you have the right strategy for a winning interview. When starting off your career after college, or making a job change later in life, having interview skills is essential for getting the job you want.

Luckily, there are a number of job interviewing strategies you can practice and hone to impress hiring managers, and improve the chances of getting the job.

Are you looking to become a better interviewer? I want to help you improve your interview skills and get the job you want.

In this post, I will be sharing with you tips to perform successful interviews. I’m going to look to answer you interviewing questions, and provide answers on the following topics:

• How to prepare for a winning interview
• Helpful skills for completing a successful interview
• How to answer interview questions the right way
• 30+ common practice interview questions
• Questions to ask the interviewer
• How to impress during an interview
• What to do after an interview

Let’s get started with a discussion on what your job is as an interviewer is, and how you can set yourself up for interview success.

 

Your Job as an Interviewee: Show Value

When going for an interview, the sole purpose you should be focused on is showing your worth and value to the interviewers.

What is value?

For your career, value is the assessed worth of a service.

If you can show the interviewer that you are worthy of the job, and will be a good investment in the businesses’ time and money, you can secure the job offer.

Showing value while interviewing can be accomplished through the following:

• being confident in yourself and your answers
• understanding the needs of the company
• looking to connect with the interviewers

In addition to showing your worth and value through the tactics above, there are a few interviewing skills that will increase your chance of getting the job offer.

Interviewing Skills to Practice to Get a Job

To capitalize fully on the opportunity to interview, there are a few interviewing skills to practice to help impress the interviewers.

Through my experience, both as an interviewee and interviewer, there are 5 important interviewing skills. These interviewing skills are general, and can be applied to all disciplines and fields of work:

• Communication
• Big Picture Thinking
• Customer Service
• Problem Solving
• Sales

Why are each of these skills important? Below is a description of each skill necessary for helping you during the interview process.

Communication

Communication is arguably the most important skill to have and focus on growing in a person’s life and career.

In every day life, we interact with many different people. If you can’t communicate your thoughts and feelings in a coherent way, you will struggle.

Similarly for your career, written and verbal communication is so critical.

For improving your communication, seeking to understand, and then be understood, is the first step to succeeding with people.

Once you understand the question and perspective of the interviewer, then you will be able to answer in such way which satisfies the interviewer.

I’m a natural introvert, but through practice, I’ve improved my communication over time.

A few ways to improve your communication include:

• Writing in a journal or blog
• Reading books on communication and practice with friends out in the world
• Performing informational interviews to understand your industry’s jargon
• Recording yourself speaking on a topic, start a YouTube channel, or start a podcast
• Joining a local Toastmasters club

Communication is so critical, and it’s essential for interviewing success.

Big Picture Thinking

Big picture thinking is a rare skill. If you want to connect with the interviewer, big picture thinking is a must.

Big picture thinking is the ability to take in many different pieces of information, understand how all of the pieces of information work together, and then provide a strategy to produce a favorable outcome.

Hiring managers are tasked with a lot on a daily basis. They have to manage their staff, manage a profit and loss statement, keep up with industry best practices and regulations, and the list goes on and on.

If you can connect with the hiring manager at a higher level, this will instantly differentiate you from other potential candidates who are too focused or close minded.

For me, I improved my big picture thinking through reading books about broad topics, playing strategy games, learning about strategy, and taking a step back from the detailed processes to think critically.

It took a while, and I’m still not a great big picture thinker, but I’ve improved from where I was before.

Big thinking can bring big results!

Customer Service

What do businesses do to make money? Businesses provide individuals or other businesses value through products or services.

Typically, the buyers and consumers of the businesses’ product or service will have questions or comments. If you can reliably be respectful and helpful to the businesses’ customers, you’ll have a higher value in the eyes of the hiring manager.

Think about it, when you walk into a store, how do you like to be treated?

I’m guessing you’d like to be treated with respect, to have your questions answered in a clear and concise manner, and get on with your day stress-free.

Again, this isn’t rocket science, but if you don’t have much experience, start trying to become more friendly to people around you. Once you are on the job, you can continue these practices.

Likability is a huge component in raising your value as job candidate. Working on your customer service skills will lead to increased likability, and will help with getting the job offer.

Problem Solving

A skill listed on many job listings is problem solving.

In jobs which are straightforward and grunt-ish, it’s very difficult to work on problem solving on the job.

However, for business owners and managers, thinking outside the box is a must. If someone can help solve a problem, they are instantly more valuable to you.

A few pieces of problem solving include creativity and designing a solution for the situation at hand.

Learning how to problem solve can come through playing games, doing puzzles, and studying strategies for problem solving.

Whenever I come across a problem, I always take a step back, take a deep breath, and apply the following steps to maximize my efficiency. By practicing this process, you will be able to tackle much more difficult problems and be able to successfully apply what skills and tools you have.

1. Examine the problem and understand what the problem is asking
2. Figure out what tools you can use to solve it
3. Map out a high-level plan to the solution
4. Follow your plan from #3 and solve the problem

Becoming a better problem solver will help with interviewing.

Sales

Even if you aren’t applying for a sales based job, knowing sales and marketing can help with interviewing.

When interviewing, you are selling YOURSELF and your skills and knowledge to the business in exchange for a job.

By applying the principles of establishing authority, trust, and scarcity, you can improve your value in the eyes of the hiring manager and improve the chances of getting the job offer.

Learning sales and marketing can be done through reading different books, watching videos, or trying to sell a product yourself!

Before getting into the nuts and bolts of the interview process, I want to cover one more thing: gaining real world experience and learning job specific knowledge.

How to Gain Job Specific Knowledge and Technical Skills

All of the skills I mentioned above are great in general, but most jobs are specialized.

As you progress in your career, the jobs get even more specialized, and specific knowledge will be required.

For example, in my line of work as a programmer and statistician, I’m required to know the SAS programming language, and also understand regressions and statistical analysis.

If I didn’t know these pieces of information and possess these skills, I wouldn’t be qualified for this job.

With some jobs, you can learn this information on the job, but to succeed with your interviews, gaining relevant experience before the interview will be beneficial.

Gaining the proper training, education and experience can be straightforward for some industries with college, apprenticeships or certifications.

If you are looking for a job in an industry where the path is a little less straightforward, freelancing and doing self-directed projects can lead to impressive items on your resume.

Just the other week, I interviewed someone who ran a children’s book company in college! While that had no relevancy directly for programming and statistics, it showed entrepreneurial ability and big picture thinking.

Getting off the couch and getting into the real world will help round you out as a job candidate.

We have touched on the necessary skills for interviewing success. Now, let’s dive into the interview process and how you can create an effective interview environment for yourself to get the job.

What to Do in Preparation for an Interview

Congratulations! You’ve successfully navigated the human resources gauntlet and have finally secured an interview with the hiring manager.

Now what?

It’s time to prepare for your interview. It can sometimes seem intimidating going for an interview, but with the right preparation, you can succeed.

There are a few interview preparation strategies and tips to know before going for an interview. With these interview preparation tips, you will help your chances of acing your interview and being offered a position.

After we discuss these interview preparation strategies, I’ll discuss how to answer questions to impress the hiring manager. After you learn how to answer interview questions the right way, we will talk about interview day and impressing the hiring manager.

It’s important for any of these tips that you make sure you tailor them for the specific job you’re applying to. For instance, if you were interested in working at ITEC, you would alter your answers for working in engineering or manufacturing, highlighting your expertise in these areas and your desire to enhance your skills in a growing field.

3 Things You Need to Know When Preparing for an Interview

When preparing for an interview, there are so many things to consider and think about.

Do I have the right skills and experience for the role? Will the company be a good fit? Who will I talk to? What if they hate me? What will I wear?

Getting ready for an interview comes down to preparing the following 3 things:

• Your story (your experiences, skills, perspective, goals, etc.)
• Learning about the job position and company
• Coming up with questions for the interviewer

Interview preparation is all about knowing your story, and having the confidence to sell your potential to the hiring manager.

Knowing your story means knowing your abilities, education and experiences. 

If you don’t know your story, you’ll stumble during your interview and not get the job offer.

I’m sure you know someone when someone is making up a story or speaking about something you can tell they don’t understand. Don’t be that person during an interview. You are just wasting your time, and also wasting the interviewer’s time (and they are very busy).

The second part to interview preparation is having some understanding the job position and company. If you can have a basic understanding of the job position, you’ll be able to tailor your interview questions and answers towards the hiring manager goals.

Make no mistake, this is intimidating (especially if the company is small). However, with informational interviews and doing research online, you can get a feel for what a company stands for and how you could fit in as an employee.

Once you have an understanding of these few pieces of information, it’s time to practice your interview question responses.

Many people are smart and dedicated enough to receive a job offer. However, the ones who will get the job will be able to answer questions clearly, concisely and confidently.

Examples of How to Answer Common Interview Questions

When preparing for your interview, coming up with answers for common interview questions will be very beneficial for your interview.

When I was job searching, I had a 5-page document with questions and answers which certainly helped me feel more confident when interview day arrived.

As we discussed in the previous section, it is essential to be able to answers in a calm and concise manner.

Brainstorming good and complete interview answers, mock interviewing, and practice, you will become more confident over time.

Mock interviewing is especially important. The more that you interview and practice, the more familiar you will be with your story.

By performing many interviews, you will become more comfortable with discussing your past. Your level of comfort and confidence will be appealing to employers. This will lead to interview success and hopefully, a job offer.

How can you impress with your interview answers? Below, I provide an effective interview answer strategy for you to use when answering the interview questions.

Remember, the goal of your interview is to show you can be a valuable asset to the hiring manager and company.

How to Impress with Your Interview Answers

There are hundreds of common interview questions (which I’ll provide a list a little later on in the post), but for examples of answers, I’ve prepared four interview questions for us.

1. What are are your strengths?
2. Do you have any weaknesses?
3. Why do you want to work for this company?
4. Why do you want to leave your current job?

When preparing for an interview, it’s important to rehearse answers to the interview questions that you will be asked.

Before coming up with your answers, it’s critical to have a strategy for success. In the next section, I’m going to discuss a strategy for answering interview questions the right way.

You will see that by applying the strategy, you will hopefully paint a positive picture of a successful, confident, young adult full of potential.

By doing this, the hiring manager will have to offer you the job.

A Winning Strategy for Answering Interview Questions

Coming up with responses for your interview isn’t rocket science. While the thought of having to interview with a stranger can be scary, you can overcome it.

Here is my 4 step winning strategy for answering interview questions:

1. Start off by relating the question to some life experience of yours.
2. Tell the interviewer about your actions during the experience and how your actions affected the outcome.
3. Share the result with the interviewer and then reflect on the experience.
4. Examine ways how this experience will affect your work in the role you are interviewing for.
   • Use this time to describe how you’ve grown from this experience and will be able to tackle bigger and more complex problems.

If you can, try to always relate it back to the job description.

By following this 4-step process, you can successfully answer any interview question that comes your way.

Another tip is to use the power of 3’s. Our generation was conditioned into thinking in terms of three ever since elementary school.

For example, every paper needs an intro, three body paragraphs, and a conclusion. In your paper’s thesis statement, it’s important to have three topics that are relevant and powerful to give the reader a reason to continue reading.

When describing your story and what you have accomplished, focus on the power of 3‘s.

Finally, (this should apply to everything in your life) it’s especially important, to be honest!

An employer will find out if you are lying about something in your life.

People are not dumb and can pick up on even when you are telling a small lie about the time you saved a couple cats from a burning building (if you have done that, that is amazing!).

However, with preparation, everyone has enough stories and experiences to be able to answer the following questions successfully and ensure that they have a strong chance at getting the job offer.

Now, I’m going to provide a few examples of common interview questions and answers.

How to Answer “What are your strengths?”

Before answering any interview question, it’s important to take a deep breath and remember the strategy.

When answering “What are your strengths?”, the first step is knowing your strengths and how you could apply those on the job.

For example, if you are applying for an analyst position, your answer could be the following:

I’m a strong problem solver. I’m able to think big picture to come up with a solution, but also am detail oriented and can dig deep to resolve any nuances and smaller issues. Problem solving requires looking at a problem from multiple angles, coming up with a strategy, and executing on that strategy.

My problem-solving skills have allowed me to complete [insert previous relevant project or work experience here]. Through reading and learning about my industry, I have a broad view of what techniques I can apply to a given problem.

This job needs a strong problem solver, so I believe that I will be able to come in and make an impact immediately.

Everyone has strengths and it’s important to expand on what your strengths are.

Go into the details of how you received those grades and what were your strategies for success.

By going into the details, the interviewer will be able to obtain more information on how you will identify and attack problems, and what your plans for solving those issues are.

The Power of Story Telling when Interviewing

Tying each of the interview questions to you and your situation will be critical for differentiating yourself from other candidates. Also, you have to take into consideration the job position.

If the position is based off communicating with customers and other teammates, make sure to include in your response that you have exceptional communication skills and that you have experience working with teams.

After saying this, talk about an experience when you were in a team; describe what happened, the result of the issue, and how you and your team resolved this problem.

Including a story about your experience will further strengthen your answer. Storytelling is incredibly powerful and can leave a memorable impression for the interviewer.

This will show the hiring manager that you are not just saying words, but can back it up.

Again, make sure to look at the job description to make sure that you are portraying yourself as someone who the interviewer is looking to hire.

Go into detail about the strengths that are relevant to the position and that will enable you to succeed in your next job.

How to answer “Do you have any weaknesses?”

Answering “Do you have any weaknesses” can be a tricky interview question for many young adults.

When answering “Do you have any weaknesses”, it is important to spin the answer to discuss something you are working on.

Self awareness is an incredibly important skill for success in this world. By showing the interviewer you are self aware of a problem, but are working towards improving will lead to successfully answering this question.

An example answer to “Do you have any weaknesses” could be:

One of my weaknesses is communicating my ideas and thoughts clearly and confidently.

However, I’m currently working on this by attending Toastmasters, and working each day in my current role to be clear in my writing and speaking. I try to capitalize on every opportunity to present to my team for practice.

Growing up, I was naturally quiet and didn’t practice writing or speaking as much as I should have. Communication is one of the most important skills for success in life and career, and over time, I know I can improve on it.

For this question, be authentic. Do not say, “I’m a perfectionist”, or “I work too hard.”

NEVER SAY THESE STATEMENTS WHEN ANSWERING THIS QUESTION.

You want to distinguish yourself from the other potential hires.

Be original and speak to something that you are improving on. This will show that you are aware of your shortcomings but have been working to overcome the hand you were dealt. This shows resiliency and the ability to adapt in a professional way.

No one is perfect, but if you are working at your imperfections, this will show that you are successful and an asset that they need to hire.

How to Answer “Why do you want to work for this company?”

Answering the question “Why do you want to work for this company?” is straightforward, but can be a little tricky.

Having a solid answer for why you want to work for the company you’ve applied for is very important.

With a bad answer, the interviewer will be turned off.

If you don’t want to work for a company, why are you interviewing? If you don’t know why you want o work for a company, then what are you doing with your time?

However, with some research on the company, you can successfully answer this interview question.

Here is an example response for “why do you want to work for this company?”:

I genuinely believe that I can grow and achieve greatness at your company. You seem to have the tools and programs in place where I could prosper in the workplace.

I read [insert company] has won multiple awards for being a great employer in the region and I applaud that and want to be a part of this success.

I read about your new product and believe it working on it would be a very beneficial experience for both of us. By coming to work here, I hope that I can help improve the processes of producing that product.

Mentioning some of their successes and what they are working on is a good strategy.

This is an important question in the sense that if you say, “I don’t know anything about the company, I just applied and got an interview”, you will not look too good in the eyes of the hiring manager.

How to Research a Company Before Your Interview

For you, try to research and pick one product that the hiring manager’s group works with. Try to understand how the product works, and be excited with comments and questions on this product.

This research can be accomplished through informational interviews or searching online on the company’s website.

By doing this research, after you answer the question, you can go into a discussion on the product and what you will be doing to improve it.

These additional talking points will speak volumes about your ability to think ahead  on building a better solution. With this question, you can build up your reputation as someone who is eager to learn and wants a better understanding of what the company.

“Why do you want to work for this company” provides a great opportunity to show your value as a candidate, and is critical for establishing a solid impression.

How to Answer “Why do you want to leave your current job?”

Another tricky interview question is “why do you want to leave your current job?”.

The key to successfully answering this common interview question is to not talk bad about your current employer, but instead focus on the opportunity in job you are applying for.

An example answer for “why do you want to leave your current job” could be:

I’m looking to leave my current job because I’m not getting as much responsibility or opportunity as I’d like at this point in my career.

Coming to work for [insert company here] will allow me to grow as an individual and provide opportunity for me to improve my communication, learn new analytical skills, and show my leadership abilities.

There are many reasons why someone would want to leave their current role. The key to answering this question is showing the hiring manager that you are excited to come to the new job.

Again, do NOT trash talk your former employer.

Say that you enjoyed working for that company, but the growth and development potential that you experienced was not enough for you to want to stay.

A hiring manager will notice the fact that you want to learn and expand on your mental abilities and want to achieve remarkable things.

Growth and development are two skills are employers really want to hear about. A driven person will be thinking about these ideas and will be more attractive to companies.

30+ Sample Practice Interview Questions

We covered 4 example common interviewing questions above, but there are potentially 100s you could practice for your interview.

Below is a list of interview questions which will help you prepare for an interview. I’ve split them up into the following sections:

• Interview Questions about You
• Interview Questions about Your Experiences and Previous Work
• Other Interview Questions

Not all of these interview questions will apply to you or the job position you are looking to get an offer on, but should be a solid list to help you become prepared for your interview.

Common Interview Questions about You and Your Story

Below are sample interview questions about you, your story, and your goals. Brainstorming and creating answers for these questions will help get you prepared for you interview.

• Tell me your story.
• What motivates you?
• What are your strengths?
• What are your weaknesses?
• Are you a self-starter?
  • How much direction and feedback do you need to be successful?
• What is your greatest accomplishment?
• What things frustrate you the most?
• What are your career goals?
  • Where do you see yourself in 3-5 years?
• What would you most like to accomplish most in this job?
  • What skills and abilities do you want to learn?

Finally, another commonly forgotten question is how much money do you want? What is are your salary expectations? Understanding your worth through market research will be important so you don’t leave money on the table.

Common Interview Questions About Your Previous Work and Education

Below are sample interview questions about your previous work experience and education. Brainstorming and creating answers for these questions will help get you prepared for you interview.

• Discuss a specific accomplishment in a previous position that indicates you will thrive in this position.
• Describe a time you had a particularly stressful situation with a co-worker.
• What did you find most satisfying about this a previous job?
• If you were to ask a previous employer about your abilities, what would they say?
• Describe a time that you were part of a team; what was your role?
• Why do you want to leave your current job?
• Tell me about your most interesting class.
• Tell me about a class that you struggled with and what you learned as a result.
• What technical skills do you have that will make you successful in this job?
• What other skills and aspects of your education and training have prepared you for this type of role?
• How do you stay current on this field?
• What specific projects will be helpful for this job?

Other Common Interview Questions

Below are other sample interview questions about different work topics. Brainstorming and creating answers for these questions will help get you prepared for you interview.

• What interests you about this company?
• What interests you about this job?
• What questions do you have for me?
• Tell me about a time when old solutions didn’t work and what you did to change this.
• Describe a situation when you had to seek out information, analyze it, and make a decision.
• Do you volunteer?
• Convince me to hire you.
• Why shouldn’t we hire you?
• What is the biggest risk you have ever taken?
• Describe a time when your team did not agree with a decision you made. How did you overcome it?
• What would the person who likes you least in the world say about you?

Some of these practice interview questions might seem tough or unreasonable. However, it’s certainly possible that a hiring manager might want to know about a certain piece of information.

If you’ve done your research, prepared appropriately, and have great responses ready to go, then you’ll be able to crush your interview and improve your chance of getting the job offer you want.

Follow-Up Questions to Ask the Interviewer

The last step for preparing for a successful interview is preparing questions to ask the interviewer.

At some point during your interview, you will be asked if you have any questions about the job and company.

It is a best practice to have a list or script of questions to ask so that you can learn as much about the position and what your work will entail when you are hired.

Preparing for this part of the interview by having great questions to ask the interviewer is an excellent way to leave a fantastic impression.

Interviews are all about making the interviewer realize that the company needs to have you as an employee because it is an opportunity for them to grow!

Below is a list of questions which will leave an impression and will have the interviewer wanting to hire you. I’ve split them into 3 sections:

• Questions to ask about the interviewer
• Questions to ask about the industry
• Questions to ask about the company and your fit

Don’t ignore this step! Preparing questions for the interviewer is equally as important as preparing your answers to the main interview questions!

Questions To Ask About the Interviewer

Below are a few questions you could ask the interviewer about themselves.

Getting to know your future manager and work is important. It won’t be fun if you work for someone you don’t like!

• Tell me about your career and how you got to this point?
  • What do you like most about this field?
  • What do you do to stay current?
  • Tell me about a major project I will be working on?
  • Tell me about your most favorite aspect of working here?
  • Tell me about a typical day at your company.
  • What are your goals?

By getting answers to these questions, you can get a better handle on your future work, and also how your manager operates.

Questions To Ask About the Industry

Below are a few questions you could ask the interviewer about the industry that the company is in.

• Tell me about the most recent products your company brought to market?
  • How have the sales been?
  • What would you do differently if you were to produce another, similar product?
  • How have the consumers responded?
  • What have the competitors done to counter?

By asking about the industry, you can get a feel for how the hiring manager feels about the coming years for the company.

Questions About the Company and Your Fit

Below are a few more questions about the company and how you could potentially fit in with the team and culture.

• What is the team that I will be working with like?
• What are your goals for me when I come to work?
• When I come to work for you, what do you think I should focus on to be successful as quickly as possible?
• What should I look at or try to learn between now and the time that I come into work the first day?
• Is there anything on my resume that concerns you?

By asking about the industry, you can get a feel for how the hiring manager feels about the coming years for the company.

Things to Remember When Asking the Interviewer Questions

There are a few more tips to remember when asking an interviewer follow-up questions.

Do not start the question with, “If I get the job…”.

Instead, say, ” When I start…” or “When I come to work for you…”. This shows much more confidence and does not put the interviewer in an awkward spot.

“If I get the job” puts unnecessary pressure on the interviewer. “When I start” makes it sound like you already got the job and want to learn how to increase productivity.

Also, doing research on the interviewer before the interview so that you have an understanding of what the person’s past is. Researching will help you direct your questions better; use LinkedIn and Google to look them up.

By asking these questions, you will be viewed as a competent and confident professional with loads of promise and ability. The hiring manager will have no choice but to hire you because they will see that you have an active mind and are working towards learning as much as possible.

How to Perform a Great Interview to Get a Job

I’ll admit, interviewing can be really scary. However, you’ve spent the last few days preparing and practicing your interviewing skills.

You’re confident and have finished your preparation for your dream job interview.

• You have a list of questions that you will ask the interviewer
• You have prepared answers for all of the questions that they could ask you.
• And you know your story and know that you want to work for this company through extensive research and networking

Now, it’s time to talk about what to expect during an interview. In the next section of this post, I’ll share with you how to act and what to say to ensure you can secure the job offer.

The sections below include:

• What to Bring to an Interview
• How to Sit During an Interview
• The Importance of Listening Carefully During an Interview
• How to Speak Confidently and Clearly During an Interview
• How to Ask Questions During an Interview

After this section, to finish out the post, I’ll discuss what to do after the interview and how you can follow-up with the company and hiring manager.

What to Bring to an Interview

On the day of your interview, make sure you will arrive to our interview on time. If you are late, the chances of getting the job will drastically decrease.

Try to arrive at the building at least 10 minutes early.

There are a few things to bring to your interview:

• Make sure that you have a few copies of your resume with you as well as any other documents that you find necessary.
  • Also, a notebook and pen will be helpful if you have to write something down.
• Dress appropriately
  • Depending on the job and company, you will want to dress to impress. This could mean suit and tie, smart casual, or business causal.

After arriving, take a few deep breaths.

Trust your preparation: you have practiced and have honed my skills so you can effectively communicate your worth to the interviewer.

When the hiring manager or HR person comes to get you, greet them with a smile and thank them when they drop you off in the interviewing room.

It’s common courtesy to thank everyone. Make sure you don’t get in the way of anyone or anything, and be a decent person.

Relax, it’s just an interview. You have prepared for these for the past few weeks. Trust your preparation.

How to Sit During an Interview

When you meet the interviewer and go into the meeting room, relax, and take a few more deep breaths.

Stressing over your interview will be counterproductive.

Confidence is key for success in this world.

During your interview, sit back in your chair and keep your hands in your lap. There are a number of body language hacks you can use to show confidence. Bring your shoulders back, and don’t try to slouch.

Slouching is not advised during interviews because this will automatically make you less attractive of a person because your head will angle forward. When your head angles forward, there will be more shadows from the top of your head and your face will not look as bright. By sitting back in your chair, you will appear more attractive and confident.

Also, when you are in the middle of the interview, you might start to sweat a little bit.

By keeping your head up and shoulders back, this will naturally open your lungs for increased breathing. The combination of more effective breathing, attractiveness, and the belief that you will succeed will enable you to answer questions in an effective and successful manner.

Sit up straight and lean back in your chair. This will help you will look confident and ready to go.

The Importance of Listening Carefully During an Interview

One of Steven Covey’s 7 Habits of Highly Effective People is “Seek First to Understand, Then to Be Understood”.

It’s absolutely critical to listen before you speak.

This is a key step to a successful interview: everyone likes talking about themselves and no one likes interruptions. By being an active and effective listener, you will be instantly more valuable to the employer.

Eye contact is critical when listening.

LISTEN WITH YOUR EYES AND EARS.

By listening with both your eyes and ears, this shows that you are not afraid to communicate and puts you on the same level as the interviewer.

During the interview remember to sit back in your chair, use good eye contact, and take in everything that the hiring manager has to say.

By doing this, you will be able to have a clear picture in your mind of what words need to come out of your mouth to provide a concise answer.

By listening, you can set yourself up to answer the interview questions successfully.

After the interviewer finishes asking their question, use the 3-second rule of interviewing. The 3-second rule of interviewing is allowing 3 seconds to pass between the time that the interviewer stops their question and the time that you begin your answer.

By following the 3-second rule of interviewing, you allow the interviewer time to switch their attention from reading to listening. Also, if you start talking too soon, you will catch them off guard which can affect their ability to understand your answer.

Remember to allow the interviewer to finish their question and then don’t forget the 3-second rule of interviewing!

How to Speaking Confidently and Slowly During an Interview

After you have listened to the interviewer’s question and have taken 3 seconds to carefully gather your thoughts and prepare an answer, you may begin speaking.

I believe that the best way to convey your answer is to speak slowly and confidently.

Don’t talk like a mouse; speak with a purpose that you have and do not doubt your answers. Since you have prepared so well and you understand the industry, you shouldn’t have a worry in the world!

However, it’s crucial to speak slowly and make sure that the interviewer understands everything that you’re trying to communicate. Practice makes perfect!

Corporate communication training can be immensely beneficial in honing these skills.

Also, people who talk slowly are easier to understand because other people’s brains can comprehend slower speech more easily. The listener doesn’t need to try and keep up because you are speaking at a pace which is compatible with the interviewer’s level of comprehension.

Another reason why it’s important to speak slowly is it is easier to think and talk at the same time. You can be saying one thing and since you aren’t in a race to finish the sentence, you can think about what words you are going to say next to not misspeak.

Practice speaking slowly: this will help the interviewer understand everything you are trying to say as well as help you stay calm and cool.

How to Ask Questions During an Interview

As we discussed above, having questions ready to ask the interviewer will be critical for a successful interview.

You should always ask questions during the interview to grow your understanding of the interviewer’s job and the company’s product(s).

I like to think of it this way: even if you don’t get the job, the interview will be a learning experience. Consider it an informational interview, so you can learn more about the company and the interviewer for the future. The interviewer will be extremely impressed when you ask them specific questions about their work.

Asking them what they enjoy about the company or their job is a safe way to have the interview be more conversational.

Asking them their advice on certain topics could be interesting as well. Something like, “Based on my background, what do you think I should look for in a job in this industry?”. This plays to their expertise and their ego; it’s an indirect compliment.

Make the interview a conversation.

Your chances of getting hired will skyrocket when the interviewer views you as a peer!

Ending an Interview to Improve the Chances of Getting the Job

After you’ve successfully answered all of the interviewer’s questions, impressed the interviewer with your professionalism, and showed your value, it’s time to leave a lasting impression.

You’ve trusted your preparation and knew with the proper execution you could get the job. By acting with confidence and poise, you’ve impressed the hiring manager and the company.

Your job isn’t over quite yet though.

At the end of the interview, ask them about the timeline for getting a response and what you can expect.

Ask follow-on questions like “What should I look into before I start?”. Or, “Is there anything else I should become familiar with that to be more successful at this company?”.

By asking questions like these, you can play to the interviewer’s ego and expertise while also painting a positive picture of your motivation and drive.

After asking these questions, thank them for their time and get on your way.

The next step is to send the people that you talked with a thank you email and then sit back and wait for the offer.

Steps to Take After an Interview

Whew, that was a rough one! You finished your interview! Now starts the waiting game.

A lot of questions fill your mind while leaving the company’s building: when will they call me? What did I do well? What did I screw up on? WILL THEY GIVE ME A JOB OFFER?!?!?

At this point, there are a few things you can do to continue to build up your value and reputation.

Many people don’t think to do anything after the interview aside from waiting for a phone call or email.

While taking this approach won’t necessarily hurt you, it also won’t win you any brownie points.

Here are the next steps I recommend you take after every interview instead of simply sitting in suspense:

• Send a “thank you” letter
• Pause and Reflect
• Keep leveraging your network
• Relax!

Send a “Thank You” Letter After an Interview

Nothing says, “I care and this is important to me” like a thank you letter!

Wait a day or two, and then send a thank you letter. Personal touch goes along way in this digital world.

After your interview, it is important to send a thank you email to all the people who interviewed you at the company.

When sending your thank you letter, you should include the following topics:

• Follow up on ways to improve their team’s procedures and processes in an effective manner.
• Show you are excited to have the opportunity to come to work for them.
• Thank them for their time.

Below is a sample interview thank you letter.  Some people get a little more fancy with the thank you but keeping it simple and business is a good strategy.

Dear Mr./Mrs. (Hiring Manager’s last name),

Thank you for the opportunity to interview with you.

I am excited to say that I would like to work with you and your team for these reasons:

• Making an impact within the company
• Working with customers
• Working products that you really care about

When I come to work, I will do my best to improve the processes in place that we discussed during the interview. I am looking forward to showing my abilities in analyzing data in Microsoft Excel, and automating reporting to be more efficient.

Thank you again for your time and I look forward to speaking with you again. Have a wonderful day!

Sincerely,

Your name

Make sure to customize the email or note above to fit your interview experience

A few other thank you letter tips include:

• Don’t write the thank you email before the interview.
  • As you can see from the sample above, it should be an extension of the conversation that you had during the interview.
• Show that you are the perfect hire.
  • Your job as an interviewee is all about showing your value.

After writing your “thank you” email, relax, and wait for the manager’s response!

Pausing and Reflect After an Interview

When in doubt, WAIT! 

If they want you, they will not forget about you.

I cannot stress this enough. I received two job offers during my job search and on both jobs, I did not speak to the hiring manager a single time between my phone interviews, in-person interview, and the job offer phone call.

The complete process took over 4 weeks. Sometimes, the offer will come faster, but other times, there might be problems with human resources, budgeting, or hiring on the companies’ side which you can’t control.

Now that I am working, I understand this: the hiring manager is under a tremendous amount of stress to make the correct decision. By pestering them with phone calls and emails, all you’re doing is taking their valuable time away from their other responsibilities.

You should be confident in the fact that if they want you, they will offer you the job!

The Importance of Leveraging Your Network after an Interview

After the interview, it’s important to keep hustling and seeing what other jobs are out there.

Leveraging our network, and keeping a pulse on the job market will allow to you make sure you aren’t missing any amazing opportunities.

Keep learning about other job postings, keep networking and keep working towards your goals.

It’s never a good idea to put all of your eggs into one basket. Instead of taking your job search one interview at a time, keep pursuing other opportunities in case the current one falls through. Always have a backup plan.

If the position you just interviewed for is the only one on your radar at the moment, now is a perfect time to ping your network to see if any new opportunities have emerged.

Or, if you have any connections at your prospective employer, see if they can give you information on things like the company culture or management’s likes and dislikes in the event you’re called back for a second interview (or get hired).

Relaxing After an Interview

The interviewing process can be stressful and a lot of work.

Balancing work and life is crucial for success in life. After your interview, it’s okay to breath and relax.

If you get the job offer, it could be the last time where you don’t have a working obligation for a while.

Take advantage and have some fun! Relaxation is key so that once you start working, you will be able to make an impact on the workplace and increase productivity.

Burning yourself out with stress and anxiety right before starting your new job will only make the on boarding process that much more difficult.

Some people like to disconnect completely and zone out with no phone, internet, or TV. Others enjoy staying engaged with hobbies.

Remember, there’s a lot more to life than work!

Get the Job With Effective Interviewing

In this post, we discussed everything you need to know about interviewing. We touched on interview skills, common interview questions and answers, how to act during an interview, and how to follow-up after an interview.

With this information, you should have everything you need to know about the interview process.

By applying these interviewing techniques and strategies, you’ll be on your way to getting the job, and also hopefully increasing your income.

Hopefully this post has been beneficial for you during your interview preparations.

Readers: do you have any tips on interviewing I missed? What questions do you have about interviewing? Do you have some interview success stories to tell? I’d love to hear about these successful interviews!

Owning a trucking business or being a truck driver is not an easy feat. From getting your commercial driver’s license to your trucking business license to handling vehicle repairs or the long hours on the road, you may spend more money out of your pocket than other professionals. According to http://simplexgroup.net/tax-preparation/, tax season can be a chance to claim tax deductions and recover some of the money back. 

Who Is Eligible for Trucking Tax Deductions?

Unfortunately, if you are an employee of a trucking company and get a W-2 at the end of a year, none of your job-related expenses can be tax deducted. On the other hand, if you are a self-employed driver, you can deduct costs related to your work. 

The great news is that if you receive one or more 1099 forms, you can use them and your expense and income records to claim trucker tax deductions. For that, you must fill out a Schedule C Form for your expenses and income. It is also recommended to complete Schedule SE to report self-employment taxes, along with your Form 1040 tax return. 

Types of Trucking Tax Deductions

As an owner-operator or truck driver, it may come as a surprise to how many aspects of your daily work life are, in fact, eligible for tax deductions. The most common types of truck driver tax deductions are:

Insurance

Surprisingly, you can deduct property damage insurance, commercial auto liability, and loss of cargo insurance. In fact, any trucking-related insurance will count as a business expense and can be deducted. So, if you pay for health insurance, you can subtract this from your business expenses by using Schedule 1 From 1040 to deduct health, vision, and dental insurance costs for your and your dependents.

Work Clothing, Personal Products, and Meals

That’s right. You can deduct any body and safety gear or clothing you must buy for work. That can include safety goggles, back brace, company-branded clothing, or steel-toed boots. However, your personal clothing will not count. On the other hand, you can deduct your meal expenses if you are away from home and must stop for a rest and a meal. 

Meal deductions generally apply to regional or long-haul truck drivers, who can claim up to 50 percent of their meal expenses. But if you are subject to DOT’s hours of service limits, you can claim as much as 80% of meals you bought on the road. 

When it comes to personal products, you may be able to deduct expenses for the following items:

• Logbook
• Alarm clock
• Cleaning supplies
• Cooler
• Gloves
• Flashlight

Fuel and Travel-Related Costs

You can also deduct fuel and other trucking-related costs, such as parking fees or tolls. If you work long hours and have to spend the night at a hotel, you can also claim hotel costs. But please remember there is no per diem for lodging, so keep all your receipts to claim your expenses successfully. 

As truckers must file an International Fuel Tax Agreement report quarterly, you can recover the money back for fuel taxes and costs you pay while on the road.

Truck and Vehicle Expenses

Just think of how expensive it is to keep your truck in excellent condition. Some truck driver expenses, including repair, maintenance, and depreciation, are all eligible for tax deductions. Because your truck is a non-personal-use vehicle, you can deduct all the truck maintenance and repair costs.

In addition, you can claim deductions for association dues, laptops, phones, or tables used exclusively for work, education (the costs of your commercial driving license), office expenses, or trucking-related subscriptions.

What Expenses Are Not Deductible?

There are, however, some expenses that are not deductible, including the following:

• Home phone line
• Your everyday wear clothing
• Travel expenses and meals on your personal trips
• Reimbursed expenses
• Commuting costs between your house and business

Conclusion

Filing self-employment taxes is a complicated task, and unless you are a tax pro, it is best to use a tax expert to guide you step-by-step through your tax filing. By engaging the services of a tax professional, you will have peace of mind that your tax is filled perfectly and paid on time. Moreover, you can get tax deductions without worrying about documentation and paperwork. You need to fill out several tax reports at the end of each year, and it is crucial to understand how to manage your taxes, so your business keeps running.

Would you ever consider taking a pay cut in your day job if it meant more balance in your life, more time to do the things you enjoy, less stress, or more happiness in general? Would you ever consider leaving your day job altogether? Or would you always rather just keep grinding at your current day job, suck it up and save for the future? What if money didn’t matter? What route would you take? In this post, I want to explore the question, does money really matter?

Questioning the Default

In the book, Originals, the author Adam Grant advocates for individuals to question the default when going through life. Why is it that we peel bananas from the top? What if you peeled bananas from the bottom? Why are my habits the way they are? What if I changed some of my habits to live a better life?

As a personal finance blogger, I care a lot about money. I love seeing my savings rise every month, I love talking with other people about money and I’m always looking for new ways to build wealth. To question the default, what if money didn’t matter? What if I didn’t care about money at all? Would my daily habits change? Would I spend more, or would I save more?

If Money Didn’t Matter

If money didn’t matter, I would do a number of things differently. First, I’d explore taking more risk in terms of leverage and investment allocation. I’d start to treat making money more like a game, rather than a restriction on my lifestyle. Look at how many businesses are run these days: get into debt, try to extract as much profit out of as many units as possible, hope to not fail, rinse and repeat.

Could I amass $1,000,000 in the next 3 years by using leverage and taking extreme risk? Possibly. Could I lose everything by not being careful? That’s also possible. I try to map out all possibilities and scenarios, and even if money didn’t matter, my target would be somewhere in the middle, at the appropriate risk/return level.

If money didn’t matter, I’d spend more money on education and look to continue to gain more experiences. I’d spend more time with the people who matter to me, and help others with their goals. Being a mentor and seeing people make connections is something I love. I wouldn’t worry about needing to hit a promotion, get a bigger bonus at work, or even work those extra 2-3 hours a week.

My mindset toward finances wouldn’t change drastically, but instead of putting my money into the bank, I’d be putting it to work – to improve myself and my current situation. I’m looking to build a future of abundance for my future family members, and by using my knowledge and abilities, I’ll be able to do so.

As you can see, the importance of money can dictate a lot of choices in life as we know it. But I don’t want to let the importance of money be the reason why I don’t accomplish all those things listed above. So what’s the solution? Live like money doesn’t matter? Continue living the same was because money does actually matter? Where is the balance?

Would Treating Money as if it Didn’t Matter Be Reckless Behavior or the Right Behavior?

To anyone reading this post, the world is our oyster. There is so much opportunity in our world right now and we are just starting to see the effects of globalization. I have a virtual assistant in Africa that I’m paying $40 a week to help perform different graphic design tasks for my business. $40 a week puts him in the top 25% of earners in his country. Can you imagine the impact I’m making on him just by giving him work? $160 a month is scraps compared to what many people make in the U.S.A. and yet I get messages like, “Thank you Erik for payment. I’m very grateful and I appreciate.” I love doing things like this because I’m actually affecting other’s lives.

If money didn’t matter, why wouldn’t I go with friends to Vegas on a whim? Why not go travel the globe for a few years? What’s the risk in taking out a personal loan to increase my investments? I’m throwing around a lot of questions and thoughts in my head, and trying to be remarkable. I’m excited to see what the future holds.

Seeking Peace

Appointment at 9 am, meeting at 10:30 am, lunch plans with a friend at 12 pm, another meeting at 2 pm, hit the gym around 6 pm, and work for a few hours until bed. Life escapes the busy worker.

Mediation and visualization are two helpful ways to find peace with yourself and situation. I’m seeking peace and by writing and visualizing, I’ve become accepting of my situation and am excited for the next steps in my life.

Every day is a new day – a day to learn, a day to experience the wealth of the earth, a day to help other people. Saving at least 20% of your income a month will set you up for financial success. Become debt-free and build an emergency fund of 3-6 months of expenses and you’ll be on your way. At a certain point, money won’t matter. At the end of the day, our relationships, how we interact with others, and our experiences will be the only things that matter.

Does Money Really Matter?

After a certain point, money doesn’t really matter. If you have the income in place for your lifestyle, and have goals to increase your income and savings in other ways, money shouldn’t matter. Until you are debt free and have an emergency fund, money matters. Financial freedom is just that: freedom from finances – money doesn’t matter anymore, and now you can enjoy each day the way you want to enjoy it. I can’t wait to get there.

What does Capitalism actually mean? What is Marxism? Where could society and the economy go after Capitalism, and what is Post-Capitalism?

When searching for the truth, there’s a lot of information to read, consider, explore, and examine. When talking about money, the environment and economy, and other big picture thoughts, a lot of diving deep is required.

During high school, we are taught very briefly about the different economic systems of Capitalism, Socialism, and Communism. However, these are big ideas which are tough to comprehend (and admittedly, probably pretty boring for the typical high school student).

Today, let’s learn about these different economic systems.

In this post, we will explore (at a high level), the economic systems and theories of capitalism and Marxism, discuss the current economic and political environment through the lens of these theories, and talk about potential solutions for a sustainable future (guided by a book I read called Post-Capitalism).

An Overview of the Modern Economic System

Before talking about the current economic environment, let’s talk about the economic system we currently live in. Let’s dive into 2 systems (of many… think feudalism, slavery, socialism, communism, etc.) and thoughts which have influenced and formed the current economic system: capitalism and Marxism.

What is Capitalism?

Capitalism is an economic system where private entities own the factors of production. There are four factors of production:

• entrepreneurship
• capital goods
• natural resources
• labor

The owners of capital goods, natural resources, and entrepreneurship exercise control through companies. An individual owns his or her labor.

The economic system employed in the United States is capitalism.

In a capitalist society, owners look to maximize their profit for their companies, and derive their income from ownership. Individuals work for the owners and are paid an hourly wage or salary.

For Capitalism to work, it requires a free market economy where goods and services are subject to the economic laws of supply and demand: as demand and price have a positively correlated relationship (demand up means prices go up), and supply and price have a negatively correlated relationship (more supply means lower prices).

Capitalism works in this environment because, in theory, multiple companies will compete for profits which will lead to increased efficiency, moderate prices, and efficient production.

In addition to a free market economy, robust capital markets should allow participants to issue, buy and sell stocks, bonds, derivatives, currencies and other commodities.

What are the Political Implications of Capitalism?

Capitalism is an economic system, but also has political and government implications.

Depending on the situation, government involvement can vary from very hands on to very hands off. There are different schools of thought here, but I’m going to focus on Laissez-faire economic theory.

The role of the government which employs Laissez-faire economics involves a government which protects a free market and the conditions necessary for capitalism.

The government only steps in to prevent monopolies or oligarchies, and also prevents manipulation of information between parties and within markets.

To keep order in the economy and environment, the government should provide a strong national defense and maintain infrastructure.

What works so well in Capitalism is there is an intrinsic reward for innovation and growth: more money and profits for the owners. While Capitalism has seemingly worked for the past 200 years, but that doesn’t mean it doesn’t have it’s flaws or disadvantages.

What is Marxism and Marxist Thought?

In the 1800s, a man by the name of Karl Marx was coming up with his own economic system and theory while studying Capitalism and the economy: Marxism.

I’d like to preface this section by saying something I didn’t realize until after my research.

Back in high school when I was learning about economics and world history, we touched on Marxism a little bit, but didn’t dive in. For my learning, it seemed the teacher and classmates had the thought that Marxism was horrible and the same thing as communism.

Since that was the case, my logic was I didn’t need to study the theory because it was horrible and therefore probably misguided or wrong.

What I learned in my research is that Marx had some very interesting thoughts and points which had an influence on my thoughts.

A lot of Marxist thought surrounds challenging where Capitalism goes wrong -how it ignores social dynamics of a class struggle between workers and owners. It was very interesting to read about Marxism, since Capitalist thought doesn’t talk about this “class struggle”.

While there are quite a few logical fallacies and pieces which turned out to false in Marx’s thoughts, Marxism is a valuable system to study and I’m going to dive in below for us here.

The Issues of Capitalism from Marxist Thought

There are a main points that Marx talked about:

• The Theory of Alienation
• The Labor Theory of Value
• The Materialist Conception of History

These points came about through a few questions posed by Marx. In his eyes, it wasn’t enough just to hypothesize about the workers and owners in general, but to try to look through the eyes of those individuals and work his way up.

The questions were as follows (and with respect to the order above):

• How do the ways in which people earn their living affect their bodies, minds and daily lives?
• What is the effect of the worker’s alienated labor on its products, both on what they can do and what can be done with them?
• How did capitalism originate, and where is it leading?

Let’s dive in.

Marx’s Theory of Alienation

Let’s talk about the Theory of Alienation.

From Marxist thought, alienation of the worker occurs in a Capitalist society in a few ways:

• The worker is alienated from his or her productive activity – he or she plays no part in decided what to do or how to do it. Instead, the owner sets these conditions of work, the speed of work, and even determines when the worker can work (through hiring and firing).
• The worker is alienated from the product they are creating: they have no control or what is made and what happens to it.
• The worker is alienated from other human beings. Over time, the workers and owners become split as owners continue to use their control over the worker’s activity and product to further their own product.  But, even with in the working class, there’s alienation as people are trying to survive the best they can.
• Finally, the worker is alienated from something so near and dear to human beings: creativity and community. Since labor is predetermined, creativity is taken away and humans lose out on developing this skill over time in their work.

Through Capitalism, Marx argues, that when looking at The Theory of Alienation, a worker ends up being seriously diminished who is physically weakened, confused, isolated, and virtually without power. The products they produce are outside of their control, and the distribution is largely unknown as well.

Through this, the world ends up with a weakened working class which was enabled through the workers: they needed a wage, and exchanged their time for money.

Marx’s Labor Theory of Value

Now, let’s talk about another point Marx talked about: the labor theory of value.

In particular, Marx was concerned with the value of the products produced with regards to the “class struggle” and economy. Marx agreed with traditional economists that the value of any commodity is the result of the amount of labor time that goes into its production.

What is interesting about capitalism is that since the worker exchanges his labor for money, and is separated from the product he or she is producing, then as a result, at the end of the day, the worker cannot buy the same amount of product.

Stated a little more clearly, a worker to survive will sell their labor power, but as an after effect of alienation, will end up being able to buy back only a portion of what they’ve created in the marketplace.

Over time though, as efficiencies are found and implemented, a surplus of value is created through the use of machines and other methods. Through these efficiencies, less workers are needed, the profits increase for the owners, and the class divide increases.

Paradoxically, this surplus is also a weakness, as to sustain growth, the workers need money to continue to buy up the products. Under pressure from the constant growth of the total product, the capitalists periodically fail to find new markets to take up the slack. This leads to crises of “overproduction”, capitalism’s classic contradiction, in which people are forced to live on too little because they produce too much – and crisis occurs.

The Materialist Conception of History

The final question we are going to examine is “How did Capitalism originate and where is it leading?”

When looking at this question, Marx sees some contradictions to the general theory of Capitalism with itself.

How did Capitalism originate?

Out of the feudalism system, the lords and feudal rights were not beneficial for production and growth, and out of many political battles and uprising of the serfs, capitalism originated.

Now, capitalists had the freedom to pursue and maximize profits, and workers equally as “free” had the freedom to exchange their time for a wage. With these freedoms, technology, productivity and science (in addition to many other things) were able to grow without bound (in theory).

A few things come out of these freedoms which are not obvious to people who study capitalism:

• First, the goal of maximizing profits will tend to lead to rapid growth when there is not the demand for these products. As a result, frequent crises occur as this growth is not sustainable.
  • Owners buy and create factories, machines, materials, and utilize their workers’ labor power if they believe they can make a profit, no matter the availability of these factors and with little thought for the need of the consumers.
• Second, a class struggle is inherently a part of this system. The owners have a goal in mind: maximizing profits and securing more power, while the workers have alternative interests: higher wages, safe working conditions, flexible work arrangements, job security, and (some) power.
  • As the owners become more successful, they grow ever more powerful with influence in the state, schools, media, and other public institutions which keeps the workers down – a contradiction as capitalism seemingly should help everyone.
• Third, the state ends up being a partner to the corporations instead of what is traditionally portrayed by democracy (a political system associated with capitalism); namely, the state is chosen and a servant to the people.
  • The state acts to restrain the masses of workers should potentially could be upset in this constant class struggle. This could come through a variety of ways, but it typically will occur from passing and enforcing various laws and providing economic subsidies.

As these contradictions become more prevalent and intense, neither the state or owners can restrain the mass of workers who want more and will act upon their interests to get their fair share of the pie. The process of overthrowing capitalism would lead to a socialist society which would be constructed through democratic planning with the thought to serve social needs instead of maximizing profit.

Eventually, Marx believed that Capitalism would lead to socialism, and if fully actualized, communism.

While the application of Marxism in various European countries has not worked, I do find value from considering his thoughts and looking to see how we can build upon them for a better society.

Capitalism over the past 175 years and Today

The last 150 years, from the 1830s to 2018, the world, and in particular, the United States has seen incredible growth in technology, products and goods, and the average person’s standard of living.

From reading textbooks, you would have thought this has been the greatest period in history, though I’m going to take a little more skeptical position.

Hindsight is 20/20, and I’m going to get into some more of the things which have lead to this in the next post (monetary policy and the economic environment are intimately connected), but looking at present day conditions, there is much to be wanted from many of the “working” class.

In the 1800s and early 1900s, union and organized labor were big pieces in the workplace which kept owners from exploiting the workers for the maximization of profits.

Starting in the 1950s, unions started to decline and as globalization started to occur, a drastic decoupling of wages and productivity occurred (there’s a piece here that is related to monetary policy as well, but again, that’s for a later post).

Fast forward to today, in the United States, you have a number of people who are not pleased with these statistics and struggling to make ends meet. Many corporations spend thousands and millions of dollars to get laws passed to help profits and instead of passing these profits on to the workers, they instead use them for their shareholders (which is fine, just not good in terms of inequality of the population).

(a slight tangent, it’s important to remember the Pareto principle in terms of the distribution of wealth. Regardless of where the starting point is, 20% of people eventually will have 80% of the wealth)

This post is a discussion about the economic systems in place and I will not take an opinion on the graph above because that’s not the purpose of this post. I’m not going to say, “I’m pissed at this and give me money”, and likewise, I’m not going to say, “Well, those people who can’t get money need better education and to work harder”.

We live in a complex society where there are 100s of different variables at play.

My point here is that for the majority of people in the United States, capitalism isn’t optimal – as seemingly predicted by Marxist thought and taken advantage of through the owners and state.

Let’s not ignore what has happened in the last few years in America: there has been unrest of many people as the stresses of every day life has gotten to them. You see it in the rise of radical leaders all over the world and the protests which seemingly happen weekly.

I’m fortunate to have been blessed into a situation where I can write about this and not have to worry about a solid paycheck – but many are not in this position.

What is Post-Capitalism?

At this point, a question comes into my mind: is capitalism working in 2018? What are the alternatives? Could there be a sustainable way to promote growth, achieve prosperity, and share wealth while also having incentives for innovation?

Enter a potential way to fix the problems of today’s world: post-capitalism.

Post-Capitalism is a school of thought which is gaining some traction in the economic community, and also a thought that many people (think Democratic socialists) are going towards but don’t have the entire picture or a rational thought of what it would actually look like.

Post-Capitalism is a theory that I was exposed to through Paul Mason’s book, Postcapitalism. The book was very well received in the media.

For me, it was very interesting to see how Mason took Marxist thoughts and ideas, and looked to see how he could balance Capitalist and Marxist thoughts for a better society and economy.

What are the goals of Post-Capitalism?

Mason argues the following should be goals of a post-capitalistic society focused on social good rather than maximizing profits:

1. Rapidly reduce carbon emissions to stay below 2 °C warming by 2050.
2. Stabilize and socialize the global finance system.
3. Prioritize information-rich technologies to deliver material prosperity and solve social challenges such as ill health and welfare dependency.
4. Gear technology towards minimizing necessary work, until work becomes voluntary and economic management can focus on energy and resources rather than capital and labor.

The Post-Capitalism Framework

Mason proposes that these goals could be accomplished:

• Model policies thoroughly using abundant data before implementing them.
• Tackle public debt, not through neoliberal privatization and austerity, but partly by closing down offshore banking and by holding interest rates below inflation rates.
• Promote (partly through state support/regulations) collaborative/co-operative/non-profit forms of work and creative commons production, rather than highly unequal, autocratic and/or rent-seeking business models.
• Break up monopolies or, where this is impractical, socialize them.
• Socialize the finance system (via a transitional phase of re-regulating the finance sector).
• Pay everyone a basic income.

The traditional personal finance and economic conservative inside me is struggling to see how this would be paid for, but after deeper thought, it makes sense to me. I’m someone who tries to consider all sides of a situation and not be tied to my position.

While this has been taken as a Utopian thought by some, there probably is some value in examining this theory in the coming years as things continue to transpire in the United States and abroad in the 21st century.

Which Economic System is Best?

Capitalism is cheered in the United States, as well in many markets around the world, but there are still flaws which are exposed over time.

I’ve touched on a lot here, and there’s a lot more I have to learn, but I hope this has given you some food for thought. Critical thinking is something I value and a principle of mine for personal development and growth.

I don’t know if the thoughts of any of the systems Capitalism, Marxism, or Post-Capitalism are the answer and key to a successful economy for all.

All I can do is continue to learn, present information on this blog, and look to inspire deep conversations to spur connected thoughts and actions.

I swear that each and every day as I dive deeper and deeper into my research and analysis, I sit here today in some mental state between confusion, enlightenment, clarity and peace, and hunger for more. I’m not an expert (not even close), but am learning more and more and loving my progress.

After learning about economic systems, I’d recommended reading about the banking system, and how the economy works. 

Does it make sense to go into debt for home improvements? Should you pay cash for home improvements? When does it make sense to finance making your house look and feel nicer? Does financing energy efficiency projects for your house ever make sense?

These are some common questions when thinking what actions you should take with your money when considering doing work on your house.

Traditional personal finance says to stay out of debt. However, sometimes, going into debt for home improvements can make sense, and potentially improve your home value.

Usually, I’d say to avoid getting into debt if you can, because debt is restricting, constricting, and not fun.

But, there are times when it is okay to go into debt. The circumstances are rare, but sometimes it is okay.

In this post, I’m going to share with you why I’m going into debt for home improvements, how these improvements will improve my home value, and talk about the pros and cons of financing home improvements.

Is Debt for Home Improvements Bad?

First, let’s start this section off by talking about mortgages: The word mortgage is derived from a “Law French” term used by English lawyers in the Middle Ages meaning “death pledge“, and refers to the pledge ending when either the obligation is fulfilled or the property is taken through foreclosure.

Literally, mortgage = death pledge.

“A person in debt is so far a slave.” – Ralph Waldo Emerson

Debt is horrible: it is mentally draining, financially draining, and affects your entire life if you are weighed down by the large barbell of debt.

The main problem with debt is you are obligated to the bank or creditor to pay a certain amount each month. You signed a contract to pay them a certain amount and there are consequences if you don’t pay.

These loans and lines of credit can be seriously troublesome if a person is not careful.

I pay $1700 a month towards my mortgage – if I lost my job, I’d be in serious trouble paying my mortgage and avoiding delinquency or default.

As the title states, I’m going into debt. That prompts the question, is all debt bad?

Is All Debt Bad?

In actuality, not all debt is bad.

There is non-productive debt, which is debt that does not lead to a gain or cash flow, but there is also productive debt.

Debt’s role in society actually makes sense. If there was no one lending money, it would be difficult to build wealth over time as a society. To buy a house, you would need all of the cash on hand.

While no debt would solve many issues that people have today, it would be restricting on our lifestyles.

That being said, debt can certainly get out of hand, and I’m mostly speaking in general about the concept of debt. (I’m not going to get into how government and central banks use debt and the money supply in this post. This post and video is amazing for that: How the Economic Machine Works by Ray Dalio)

What is Productive Debt?

Productive debt typically involves financing an endeavor which will lead to an increase in value or cash flow.

For example, financing for rental properties can be considered productive debt. A person puts 20-25% down on the house, and is able to own a house to rent out to others.

In this case, if the renters cover the mortgage and the maintenance and upkeep is relatively low, that person can build wealth very effectively.

Without debt, that person may not be able to buy the rental property and as a result, would have to continue to save their cash until being able to buy in full.

Another example where debt may not be all that bad is when an interest rate is below the risk free rate. Typically, investors and bankers will use the Treasury Curve as the risk free rate curve. Right now, the 10 year Treasury rate is between 2% and 3%.

Since the probability of the U.S. Treasury defaulting is near 0%, we consider Treasury bonds to be risk free and the interest rates associated with them to be the risk free rates.

In recent years, many people have bought cars and other property where the interest rate they received was less than 2%.

Mathematically, you should never pay more than the minimum on these debts and instead invest the difference. If you invest at 7-8% returns and pay 2% on your debt, you are essentially getting a 5-6% risk free gain.

Are 0% Interest Rate Loans a Good Deal for Home Improvements?

In the previous section, I mentioned loans where the interest rate is below the risk free rate.

In particular, 0% interest rate loans and 0% debt is an absolute steal.

The lending companies are giving you free money. These companies are saying, “Here, have $10,000 and you can pay it back evenly over X amount of years and pay $0 in interest.”

This is free money!

For me, I received a 0% interest rate offer from a company willing to provide financing for windows. I was curious, and wanted to see if doing these improvements would lead to a favorable outcome.

The rest of this post talks about my experience updating my first floor windows with energy efficient windows, and the financial results behind this project.

Will Updating an Old House Lead to Improved Home Value?

My house is old. My house was built in 1900. The windows are original, the wood floors and wood trim are beautiful, and while the layout isn’t optimal, the place is a great place to live.

I received a post card in the mail a few weeks back that said: “Upgrade your windows with 0% financing!”

Pella Windows is one of the highest reputation window makers and installers in the industry, and I was definitely interested:

1. I had been thinking about updating my windows for quite some time.
   • Previously, I had to use 3M Plastic Wrap on the majority of the windows on the first floor.
   • Also, 5 of the 8 windows on the first floor don’t even open because they were painted shut or stuck.
2. Whenever I see 0% financing, my personal finance light bulbs start going on.

I called the next day and the company said they would send out a sales representative to give me a quote.

Using Debt to Improve my Home Value

When the sales representative arrived, I wasn’t sure how many windows I wanted to replace. I didn’t know if I wanted to replace any doors either. Honestly, I just wanted to learn more about how much windows would cost, how much it would be to install, and what I could expect going forward.

We walked throughout the first floor. The windows sales representative explained to me how my windows were single pane and were most likely the original windows. They were not energy efficient, and potentially were letting in UV rays into my house.

He showed me the catalog and noticed that we could have an extra match of color and keep many of the same nice elements by replacing the windows.

I was interested, but ultimately, I’d want to see the price for new windows.

How Much Does a New Window Cost?

We went through the house and identified 8 windows which I was interested to replace. There are two windows like the one on the right, and 3 windows like the one on the left.

For the window on the left, these would cost $750 for the materials and installation. For the window on the right, it would be about $1,300 for the materials and installation. I was actually a little bit drawn back.

Before the house tour, I thought I was going to be at least $1,000 per opening, and expected the price to be roughly $1,500 an opening.

For 8 windows, I was quoted roughly $8,500.

How much does a Nice New Door Cost?

Walking through my house, and seeing the old door, I stopped and wanted to see how much a new door would cost.

My front door has a little bit of a gap between the floor and door. In addition, the window is a single pane window. All together, the front door is very energy inefficient and makes the house quite cold when it’s below 0 in January and February!

For the front door, I was quote for $3,500 for the door and install. The door and window will be energy efficient and give a little bit more privacy into the main entrance.

In addition, the trim will be matching and I’ll have a fancy door handle.

Does 0% Financing Make Sense for Home Improvements?

After I received the quote, I decided with these window prices, it would be a good idea to replace the windows. Also, with the option for 0% financing, financing made sense for these home improvements.

We went through the numbers. I could get 8 windows and a door for roughly $12,000, and finance this purchase at 0% for 3 years.

This seemed to be a pretty good deal, and while $12,000 is a lot of money, I believed I was improving my situation in the following ways:

• I replaced 8 windows, 5 of which didn’t open
  • This will be great for Spring and Fall days when I can open up the windows for a breeze
• I now have a new stylish door which will increase curb appeal
• I’ve increased the energy efficiency of my house.
  • A value add for my energy bills and my comfort living in the house
• The 0% financing is free money and I’ve upgraded the value of my house
  • This is a great selling point and a great value add for renting the place out if I ever do that

The downsides are obviously getting into debt and losing out on some market investment opportunities, but I feel this is relatively safe for my situation (your situation might be different).

Now, let’s talk about the results from the last year of installing these new energy efficient windows.

Results from Getting Energy Efficient Windows and Doors

After getting my windows and front door replaced, I’ve been loving life.

No longer do I have to mess around with 3M plastic in October, nor do I have to worry about sitting in my living room with a massive blanket to stay warm.

In the winter, I enjoyed the warmth of my house without having to run the heat 24/7 and could actually walk around without having to be bundled up in a sweatshirt, sweatpants, and wool socks.

In the summer, some days we had the windows open, and on days when it was humid, the new windows kept the house cool.

The new comfort and look of these windows were definitely worth the dollar amount.

Comparing Energy Costs Pre- and Post- Improvements

Let’s compare the numbers of gas and electric costs over the last 10 months to the same time period from the year before.

In Minnesota, it’s gets very cold in the winter (typically February and March are the coldest), and my house is heated by a gas furnace. In the summer time, I have central air and this system uses electricity. Due to this, the energy usage for these two accounts are cyclical.

Here’s the monthly breakdown over the last 3 years:

Comparing the yellow to the green (pre- and post- improvements), the costs have 23% lower.

The sample size here is small, and also doesn’t take into consideration all the variables which go into energy efficiency, but the results seem to be pretty good.

If I save roughly $50 a month on energy costs, then to pay back the initial investment of $12,000, this comes out to about 20 years.

In reality then, until the loan is paid off, I’m paying $300 a month for more comfort and a nicer house.

Is it worth it? Maybe.

When I see it like that, $300 is a lot of money every month to spend on more comfort. At the same time though, I do believe that part of this investment was to also increase the value of my house.

All in all, I think it’s been a good choice and I’m definitely pleased with my decision. While it’s a little restricting to leading a flexible lifestyle, my income has increased to a level where I can afford this expense.

Going into Debt for Energy Efficient Home Improvements Can Be Worth It

While going into consumer debt is not a great option, I want to share with you an update on my housing situation with regards to these home improvements. My conclusions is energy efficiency is worth paying for (even with debt).

When making decisions about debt, it’s important to realize that debt will have an impact on your future self and future lifestyle.

In actuality, not all debt is bad. Debt’s role in society actually makes sense. If there was no one lending money, it would be difficult to build wealth over time as a society. To buy a house, you would need all of the cash on hand. While no debt would solve many issues that people have today, it would be restricting on our lifestyles.

I went into debt for home improvements and it made sense for me. Personal finance is personal after all.

I considered my current situation and goals, thought critically, and went into debt. Now, I’ve been paying the price over the next 3 years. At this point, since the interest rate is 0%, I don’t plan on paying it back any sooner than I have to.

At the end of the day, I’m glad I got the home improvements done and if I go to sell my house, then I’ll certainly be able to recoup my investment.

Readers: Do you think all debt is bad? Have you ever financed a home improvement project? What was the result? Did you look at the returns like this?

Many personal finance bloggers provide net worth, income and expense, and goal updates each month for their financial situation. Some of these bloggers go in-depth into the details and are fully transparent, while others will tell you at a high level their net worth and how it changed during the month.

I love transparency, and I’m a big fan of blogging income and traffic tracking, as well as sharing in-depth personal finance updates.

I believe tracking your income and expense is incredibly important for financial success. At the end of each month, I go to my personal finance spreadsheet, download my transactions from Mint, categorize these transactions, and assess my spending habits.

In this post, I’m laying it all on the line: I’m going to give you an in-depth look at my spending habits for all of the years I have financial data for: 2013, 2014, 2016, 2017, and the first 3 months of 2018. This will give you an example of the spending habits of one male millennial.

What gets measured, gets managed; this is a philosophy of mine and I want to show you how I’ve done it in recent years to inspire you to become better financially.

My sincere hope is that you look at my transparency around my finances and look to take steps to make your financial situation better. I truly believe that everyone can get their financial situation in order and can be successful with money.

It doesn’t matter how much you make, it doesn’t matter how much you have currently. By taking steps each and every month to earn money, track what you’ve earned and spent, and adjusting to ensure you are spending money on things and experiences that make you happiest, and staying consistent, you will be on the road to wealth.

The Spending Habits of a Young Adult Male in the Midwest

Comparing and contrasting yourself to other people is a natural thing we all do.

I see your success and I want to know how you did it because I want success.

I’m sure you have similar thoughts about certain areas of life you want to achieve success in.

Let’s get this out of the way: I’m a 25-year-old millennial. I’m a guy and I live in a big city in the Midwest. I’d like to say I’m relatively frugal (which frugality itself has many flavors and definitions). 

I’m going to show you exactly what I’ve spent on myself the last few years, starting in 2013, when I was still in college, to the first 3 months of 2018.

This should be a fun experience for both of us!

Spending Categories I Track

One of the first steps to setting up a tracking system is to determine which spending categories you track, as well as determining how granular you want to go with your tracking.

Back in college, this is what my spreadsheet looked like:

I didn’t really know much about accounting, but realized that tracking and seeing my spending over time would be more beneficial than not tracking it.

Starting off, the 5 categories I tracked were: food, rent, school related, recreation, and other withdrawals.

In college, I didn’t have a car or car insurance, I was still luckily on my parents’ health insurance plan, and I didn’t have to worry about any loan payments.

As I mentioned above, when determining your categories for expense tracking, you can be as granular or as high level as you want. I think going into the weeds is awesome, but you might not care.

Again, for me, I had a category of food. Thinking back, food actually meant a combination of the following:

• Grocery shopping
• Going out to eat or to a fast food restaurant
• Going to the bar
• Getting a snack at the local convenience store
• Buying alcohol at the liquor store

So really, I could’ve broken it out 5 ways, or at a minimum, made it food and drink, but I digress.

Again, it’s up to you to figure out what you like and how granular you’d like your financial tracking spreadsheet.

Creating a New Financial Spreadsheet

After getting a real job and finishing up all of my schooling back in 2015, I actually stopped tracking my finances.

What’s interesting about looking back on this, is that while my income increased from about $20,000 a year to $63,000+ a year, all of a sudden I thought I didn’t need to track my financial situation.

Luckily, I’m a relatively frugal person, and I didn’t let lifestyle inflation get to me.

In 2016, I realized I needed to get back on the tracking train and I’m glad I did it.

With a house, a car, car insurance, a real job, rental income coming from roommates, utilities to pay, and a whole bevy of other things to worry about, my financial spreadsheet needed a revamping from my college days.

Now, my categorization looks like this:

While not super granular, I do split up utilities, my mortgage and the costs associated with that, any auto expenses, and even track the different taxes I pay each month.

The discretionary spending piece of my spreadsheet hasn’t changed too much: I went from Food, Recreation and Other Withdrawals to Food and Drink, Shopping, Recreation, Hair, Home Improvement, Travel, and Cash Withdrawals. (Hair got it own category because it’s not really shopping, and it didn’t fit in anywhere else 🙂 )

I’ve determined that this expense tracking categorization works for me.

Food and Drink lumps together eating out, grocery shopping, drinks with friends, and drinks from the store. I could break this out, but that’s more work than I want to do.

Recreation? That is golf, the gym, rock climbing, and other fun activities.

Shopping? That’s me going on Amazon to buy books, or spending money at Christmas for my family and friends.

Again, this is the categorization that works for me (remember, personal finance is personal!)

Breaking it Down By the Numbers

Okay Erik, stop messing around! Show me the numbers!

I’ll admit, I’ve been rambling a little bit.

It’s time to get naked and bare all!

(I’m working on being more visual and descriptive with my writing, but I probably didn’t need to write that…)

Spending Habits during My Master’s Program

Back in 2013, I was finishing up my undergraduate degree and starting my Master’s in Financial Math.

The summer of 2013, I started working as a bookkeeper making $12 an hour. To give you a little bit of information on the income side of things, in 2013, I made about $15,000, and after taxes, I was able to keep around $12,500.

Here are all of my expenses from 2013:

I was bringing my lunch to work, going out once a week to the local college bar, and keeping my recreation expenses relatively low. For the first 8 months of 2013, I shared a 2 bedroom apartment with 2 other guys and was paying $522 a month in rent. For the last 4 months, we moved to a 3 bedroom duplex and our rent was $425. (The extra bit in the rent category is utilities I’m guessing).

Other withdrawals is a mystery here: I’m guessing this is shopping or something along those lines.

In 2014, it seems I became a little more comfortable with spending money, and to give you some perspective again, I was still working as a bookkeeper making about $20,000. I took home around $16,000 that year.

Back in 2014, I was networking more for work purposes (and for wife-y purposes, let’s be honest), and would go out to the bar most weekends with friends.

Here are all of my expenses from 2014:

In September, I moved again and started renting for $500 a month. It seems I was starting to spend more on recreation and food, but overall, spending only increased about $1,000 year over year.

Spending Habits after Getting a Real Job

As I mentioned above, I didn’t track my expenses in 2015. I was paying down debt at a rapid pace, bought a house, and started to contribute to my 401(k).

Focusing on the income side of things took focus away from my expenses, and as I said, being relatively frugal, the expenses clearly didn’t cross my mind too much.

In 2016, I started tracking my finances again, and have been ever since. To provide perspective again, in 2016, I made over $70,000 at my day job, and also had roommates paying me rent.

Here are my expenses from 2016:

With a higher salary and passive income coming in from house hacking, I definitely loosened the belt a little bit on food spending.

In 2013, I was spending about $120 a month on food. Now, in 2016, I wasn’t packing my lunch and would eat out at work. I was now averaging about $450 a month on food and drink.

You can also see how expensive owning a house is. Luckily, as I mentioned above, my roommates were covering about 80% of the mortgage, so while these numbers look big, I was able to hack them to minimize my housing expenses 🙂

Still, between utilities and mortgage payments, I spent $26,000+ on housing in 2016! Crazy!

Interestingly enough, recreation spending was down from 2014. With a 9 to 5, there isn’t too much time to golf!

Starting a Personal Finance Blog and the Impact on Spending

At the end of 2016, I started The Mastermind Within.

Focusing on financial freedom, personal finance, and self-improvement, I started to analytically dive in to my numbers.

With this in mind, let’s look at how this impacted my spending habits.

Again, to provide perspective, 2017 was the year I made over $100,000 at age 25.

Here are my expenses from 2017:

Comparing 2016 and 2017, my spending on Food and Drink decreased a little bit, and my spending on shopping, recreation, and travel increased.

At the beginning of 2017, I thought I wanted to get rid of PMI, but then changed my mind and have since looked to capitalize on asymmetric bets to build wealth. You can see two large principal payments in February and March that stopped shortly after.

Other than that, there’s nothing too notable about these expenses. Throughout this time, I was grinding on my blog and business, and didn’t have too much time to spend any money!

Starting a personal finance blog seems to have had a positive impact on my spending habits 🙂

My Spending Habits in 2018

In the beginning of 2018, I stayed pretty conservative with my spending. I was grinding and spending a lot of my time inside because it also was very cold!

Here are my expenses for the first 3 months of 2018:

My food expenses have decreased again as I’ve stopped going out during this super harsh winter!

Spending Habit Trends Over Time

Lifestyle inflation is something that gets the best of many people.

I’ve increased my income from $12,000 in 2013 to now over 6 figures.

Looking at my expenses, you have seen a slight uptick in food, travel, and recreation spending, but it’s not too much.

One thing that is definite, my housing expenses are much higher than college living, but I’ve also been very lucky to have been in a place to house hack and negate a good chunk of this expense.

In the next few years, it will be interesting to see how these trends continue.

If marriage and kids come into the picture, there will have to be some more lines added to the spreadsheet! 🙂

My Tips for Tracking Your Income and Expense for Financial Success

What gets measured, gets managed; this is one of my life philosophies.

For me personally, each month, I pull all of my transactions from my Mint account into my free Income Statement Spreadsheet. I categorize my transactions and see exactly where my spending and saving rate landed during the month, and look to see if there are any trends forming.

This is what I use, but you are your own person and might like a different method. I’m a big advocate of thinking for yourself and thinking critically, so stopping here would be short-sighted on my part.

There are a few other personal finance tools and applications I’ve used in the past which I believe deserve a look as well:

• Personal Capital
• You Need a Budget (YNAB)
• Other blogger’s spreadsheets
  • I’ve seen a number of bloggers posting their own spreadsheets and tools. I love seeing what other people have created, as there are many, many smart people in the world, and everyone has a unique take on life
  • A few I like:
    • Budgets are Sexy
    • Get Rich Slowly

You’ll have to figure out what works best for your own personal financial tracking situation.

Concluding Thoughts on Examining the Spending Habits of a Young Adult Male

Wasn’t that fun?

I hope that providing this level of detail with my finances will inspire you to go back to your own personal finance spreadsheet and see how you can improve.

At the end of the day, here are my recommendations for you:

• Track your income and expenses
• Make sure you are spending money on things and experiences that make YOU HAPPY

While I’m relatively frugal with my spending, my main goal is to increase my income.

That being said, I can’t forget about the other side of the wealth equation. Spending 100% of what I make will not make me wealthy, and tracking finances is how I can ensure I will be successful.

Readers: how detailed is your spreadsheet? What categories do you keep track of? Do you like when others go into detail with their numbers? Was this post valuable to you?

Erik