Done To Zen

Filling your life with tasks that you are excited to do is a surefire way of beating procrastination on its head and sending it on its way to Antarctica.

When you love doing something, well, you do it, no hacking/whacking required. Suppose you love writing and hate shopping (one can wish); what are you more likely to procrastinate on? The writing or the shopping? When you do what you love, it doesn’t feel like work; instead, it’s like you’re playing 100% of the time.

While not all of us are fortunate enough to get to do what we like (and many a time it’s our own fault; nobody is forcing us to do the work at gunpoint), it still makes sense to find opportunities that will let us do what we like and shy away from those that may turn us into stress monkeys.

As I mentioned previously, one of my goals for 2009 is to earn $24,000 in side income; it’s also the hardest of all my goals. I spent a couple of hours today trying to figure out how to motivate myself in this area. It’s hard to motivate yourself to work an extra 10 - 40 hours every week and face whatever fears are holding you (me) back when your goal with the money is to invest it. Invest it for what? “Financial freedom” is one goal but it’s not enough to make me want to put in all those extra hours.

I instead decided to invest my side income for various big purchases I anticipate having to make over the next 10 years. Some of them are fun-related (such as a vacation to wherever) while others are huge expenses that I am certain to incur (for example, downpayment on a home I will buy with my husband).

As I was working on my long-term plan, I came across this article at Get Rich Slowly on purpose-driven investment:

Traditionally, most people invested for various vague goals and lumped all of their savings together in a single investment account. That’s pretty boring. It’s not very inspiring or effective.

Purpose-Driven Investing satisfies our need for a purpose and our need for instant gratification by thinking of each of our goals as a separate “basket”. Each of our baskets represents a single goal with a clear purpose that we can see and grow.

What does this mean in the real world? It means that we have a single investment account for every goal. For example, if one of your goals is to take the family on a European vacation, create a separate savings account called “Family European Vacation Fund”. This account or basket contains all of your savings toward that one goal. Every penny in the account is for the European vacation — not for retirement, a new car, your emergency fund, your kids’ college tuition, or any other goal. What was once just a plain investment account is now a dream — a real goal you are committed to achieving. Account statements have been transformed from boring pieces of paper into exciting treasure maps!

(Quoted from The Six Day Financial Makeover by Robert Pagliarini)

Purpose-driven investment is making a conscious decision on where to spend your money. That’s right — the decision isn’t so much on how much to save as it’s on where to spend the savings.

In the end, you and I aren’t pinching pennies and saving money to die with $15 million in the bank account. What’s the point if you have $5 million in retirement accounts but look back at the previous 60 years and end up regretting what you never did?

We save because we want to enjoy life to the fullest extent possible. This means being ruthless with unwanted expenditures and lavish with ones that we want. The reason we save is so that we don’t go into debt and stress out about the payments.

Whatever investment you make should have purpose behind it: investments into 401K and IRAs are to let you live comfortably in retirement while the purpose of your emergency fund is to save you in case of emergenices. Simiarly, every other investment should also have a purpose attached to it. Is it for a downpayment? Is it for college? Is it for a vacation? What?

Having finished mapping out where exactly each of the $24,000 will go (yes, this unfortunately includes taxes), I’m 300% more motivated to accomplish this goal than I was just three hours ago.

PT Money asks what is the best financial advice you ever received?. It’s a hard question to answer, not because I haven’t received any financial advice in the past, but rather because it’s so hard to settle on any one advice as being the “best.” Every time I think about it, I seem to pick a completely different advice as the “best” advice.

Here are some of the choices (in no particular order):

1. Make savings automatic.
2. Contribute to Roth IRA.
3. Contribute to 401K.
4. Ask for a discount.
5. Do not use credit cards.
6. Buy a house you can afford.
7. Open an emergency fund.
8. Save early and save a lot.
9. Pay yourself first.

Of the nine, I think number 8 is the most important. $500 at age 60 requires an investment (with 8% return) of:

• $23 at age 20
• $50 at age 30
• $107 at age 40
• $233 at age 50
• $500 at age 60

It’s true that it’s never too late to start saving, but it’s a lot easier when you start early.

The second most important is probably number 1. I first read about this six years ago in The Automatic Millionaire (an excellent book that should be required reading for everyone in high school), and there’s no doubt in my mind that this is one of the best steps you can take to super-charge your savings. I am convinced that the weakest link in any savings plan I come up with is me, so taking myself out of the equation can only make things go better.

What do you think is the most important financial advice you ever received?

“Whether you think that you can, or that you can’t, you are usually right.”
- Henry Ford

It’s my belief that how you feel about your net worth is a lot more important than what your net worth really is. Indeed, this is true in most other goals in your life. Do you really have a black belt if you have a black belt in karate but feel like you only have the skills of a blue belt? No, of course not.

When we say that we want a black belt, we don’t really mean that we want just the belt. If that was all we cared about, we could go buy one ourselves and put it around our waist, and now we have one. When we say we want a black belt, we mean that we want the skills of a black belt, we want to be able to perform our moves with the finesse of a black belt.

The same thing applies to finances, as well. When we say that we want a million dollars, we care less about the million dollars and more about how that amount of money affects us — the way we feel about ourselves, the way we talk, the way we walk, the way we live our lives.

This is why it’s so important to know why you’re earning a million dollars — if having a million dollars isn’t going to make your life significantly better in the areas that you care about, then you’re not going to be motivated to do all the necessary work required to become a millionaire. For example, say you’re a personal trainer passionate about exercising living a comfortable life. Would you really be interested in becoming a millionaire because that would allow you to buy gigantic houses? On the other hand, say you love decorating houses and holding parties. Are a million dollars going to interest you if you promise yourself to spend them on a vacation in Hawaii? People are different and have different interests. While a vacation in Hawaii and a large house are nice things to have, they are not the right motivators for everyone.

So, why do I want it?

After realizing this, I thought more carefully about why I wanted to become a millionaire. I thought on paper, because my brain is too fast for me — it thinks that it knows everything but I’m too slow to follow it around as it figures out all that it wants. Thinking on paper helps me make thoughts concrete. After about half an hour of brainstorming, this is what I came up with (might look familiar if you read Waking up at 4AM).

Here are my seven main reasons for wanting to become a millionaire:

I want to work because I want to, not because I have to. This is my number one reason for wanting to become a millionaire. It’s not even that I want to quit my job. I just want to work without wondering whether I’ll lose my job because a meteor crashed on our headquarters. Having a job is rather risky. I could lose it for reasons completely outside of my competency.

I want to have healthy investments and bank balances. Another source of stress is worrying about not having money for any future purchases. Nothing quite like looking at a table and being able to buy it right away. I don’t buy a lot of things. Honestly. But if I do want to buy something, I want to be able to buy it when I want to. I absolutely hate having to wait ‘til the next year while I save enough money to buy it.

I want to feel the satisfaction of knowing I achieved something difficult. Who wants to be average? Not me.

I want to take vacations. I love to go to the Angel waterfalls, London, France, the Amazon forest, Greece, the Caribbean, oh and Antarctica, too. Naturally, it requires certain amount of money to be able to do all this. More importantly, however, it requires time that I might not have as an employee. I have those 2 weeks of PTO, but it’s often difficult to use them as the year ends as we’re all busy trying to finish big projects.

I want to be healthy and fit my whole life. I want to stand on my own two feet and be able to do stuff by myself. I certainly don’t want to spend even a single hour in the hospital. Unfortunately, life in a cubicle will almost certainly lead to exactly that. Sitting in a chair and staring at a computer for 10 hours a day has so many problems, I don’t know where to start. Maybe I’ll list them in another article. Suffice to say, even meeting the suggested minimum of 10,000 steps a day becomes astronomically difficult with a cubicle life.

I want to have the time and money to pursue my interests. I love learning new things. Soccer, karate, piano, swimming, geocaching, mountain-climbing, writing, drawing…All of these cost money and require time. If I do one thing at a time, I’m going to be 50 by the time I finish my current list of wants. In the meantime, I’ll come up with another 30 things I want to do. When I’m 80, I want to look back and feel like I did all the important things I wanted to do.

Help others. Being broke sucks a lot. Being poor sucks even more. I want to help other people, not just by donating money but also by donating my time, skills, and experience. Reading about the advantages of having a mentor, I’ve always wanted to have one, but I don’t know how to get one. (Not very social, me. Completely opposite, in fact.) I would love to help other people achieve their dreams and enjoy their successes.

Why do you want to make money?

Many reasons: 1. I want to work because I want to, not because I have to. 2. I want to be able to buy anything I want without worrying about not having enough money. 3. I want to feel the satisfaction of seeing a healthy net worth that keeps growing. 4. I want to be the person that I am in awe of. 5. I want to go to the ten most beautiful waterfalls in the world. 6. I want to donate to charities. 7. I want to be a good example for my kids (not that I have any yet, but now seems like the right time to start).

When will you feel that you are rich?

I will feel rich when I am able to live forever without having to work. I’m doing terribly in this area. Right now, I would be able to live for only half a month without going to work.

Can you lower your expenses?

My unnecessary expenses have always been very low. My current spread of expenses looks like this:

Educational expenses (though education is an investment and not really an expense) will go away early next year.

Can you increase your income?

I’ve done freelancing projects before and they bring in about $1500 and take about 4 - 6 weeks. However, I’m terrible with such things as networking and marketing, so it’s always been hard to find projects. I also don’t want to stress myself out by piling so many commitments on my plate that I don’t have time to do anything fun.

What constitutes fun?

Good question. I really don’t know. I’m considering: skating, indoor soccer, volleyball, skiing, surfing, geocaching, kayaking, snorkelling, swimming, mountain climbing, biking, and reading. I already do a ton of the last (my favorite hobby ever), so I’ve grown disinterested. That’s happened to me before, so I’m sure it will go away in two to four months.

So, if you have to work an additional 2 - 4 hours a day but can go, umm, snorkelling, you’ll still feel positively about the day?

Yes, I think so.

I wonder whether you’ll have the time, though.

I’ve been thinking about that. If I work on my commitments in the morning, then I’ll have the evening (which is usually when most of the fun things are) free.

And how are you planning on working on your commitments in the morning?

How about waking up early in the morning?

What’s early in the morning?

How about 4AM?

You’re going to wake up at 4AM.

Sure, why not? At various stages in my life, I’ve had to wake up at: 5AM, 6AM, 7AM, and 9AM. No matter when I wake up (except the last), I’ve always felt just as reluctant to get out of bed. So staying in bed isn’t really helping me in any manner.

Don’t you need the 8 hours of sleep?

I could sleep early. 9PM.

I have serious doubts about you waking up at 4AM.

We could use June to try it out.

How are you planning on making yourself wake up at 4AM?

Several ways: 1. I practiced a couple of hours ago by setting off my alarm every 1 minute and jumping out of bed with a smile every time the alarm rang and going to the bathroom right away. 2. I’m posting this on my blog. 3. I have a good reason for waking up so early.

Yeah, I suppose…

What? You’re giving in, already?

Will you not do it if I ask you not to?

Umm. No.

Right. That’s what I thought.