Done To Zen

I didn’t start 2008 with any clear goals in mind, so it’s difficult to judge how well I did over the year. I want to have a focused, stress-free 2009, so I’ve spent most of December trying to figure out my goals for the coming year. Being a believer of positive peer-pressure, I’m posting my financial goals here:

Emergency Fund

The last couple of months of 2008 brought my emergency fund to its knees — I don’t even have one month of reserves anymore. I’m going to bring the balance up to $10,000.

Retirement

I’m going to fully-fund my traditional 401K ($16,500) and my Roth IRA account ($5,000). I’m also going to fund as much of a SEP IRA as possible.

Investment

I want to invest about $3,000 into ESPP. It would be nice if I could invest more, but that might not be possible in light of my other goals — unless I meet “side income” goal, in which case this I will be able to take full advantage of ESPP.

Debt

I have $7,370 on a 0% APR card that signifies the only “student loans” I’ve used to finance my MBA. I want to get rid of the debt in six months.

Sanity

To ensure my sanity (now that I have so many different bills to pay), I’m going to setup automatic payments for all recurring expenses.

Side Income

Goal is to earn $24,000 in income from side jobs. Every penny of this money will go to either a SEP IRA account or an index fund.

529 Plans

My goal is to dedicate at least $1,200 to three plans (total). If possible, I want to fund one of them with another $2,400.

Charity

My company matches the first X amount of money I donate to a non-profit org. So my goal is to donate at least that much to charity by year-end. If side income goal is met, I want to donate at least double the minimum.

Fun

I will spend $600 on fun experiences; this means that the $600 cannot become a recurring bill, cannot be used to purchase tangible products, cannot be used for food/restaurant/grocery purchases, and cannot be used for purchase of gifts.

Net Worth

I ended 2008 with a net worth of $40,000. After doing some proof-of-concept calculations, I think an attainable net worth goal is $115,000 $85,000. This is almost three times more than twice my net worth in 2008, and it partly depends on what I manage to earn and save in side income, but even without it, I should be able to come in quite close. (Screwed up with the calculations)

Expectations

Of all the goals I have set out for 2009, the side income goal is going to be the hardest. I’m afraid that I’ll fail miserably at this goal, which is probably not a very good way of going into it. I’m determined to make it, however, so we’ll so how it goes.

So, what are your goals for 2009?

Until I crunched the numbers, I had no idea how December went. I thought that it might have gone positively, but I hadn’t been expecting a big increase in net worth. Well, the numbers tell another story (in a good way)!

Highlights

1. Most of the decrease in emergency fund got redirected to Roth IRA (some of the transfer is still in a holding account — look at the “Others”).

2. Most of the increase in 401K (which accounted for 91 percent of my net worth increase, by the way) comes from contributions. The contribution for November got put in a little later because of Thanksgiving. I had forgotten about this, and so spent three hours trying to account for the increase.

3. I got around $240 refunded from my escrow account, because they found out that they’ve been holding too much money. It pretty much went into Roth IRA.

4. I invested $100 into a DRIP and promptly lost $11 to fees. :-(

5. I also opened another 529 plan this month, though I don’t know if I’ll be able to save into it regularly.

Internet is such a big time waster that I feel like we should have a word for it. I couldn’t find a word, so I made one up myself.

Wasterneting: wasting time by browsing the Internet.

Stopping this bad habit feels impossible, but it doesn’t have to be. If you’re on the quest to become an ex-wasterneter, then here are some tips:

1. Figure out where you’re spending most of your time. “Browsing the internet” is a rather ephemeral concept and therefore difficult to fix. The first step to identify where exactly you’re spending your time. What sites do you frequent? What blogs do you read and re-read? What forums are you addicted to? My time-wasters are (1) personal finance blogs, (2) programming sites, and (3) Google Finance.

2. When do you turn to the Internet? Most of us aren’t on the Internet 24/7 (though it feels that way sometimes). Being a veteran Wasterneter myself, I can guarantee you have an event that triggers a relapse into time-wasting. I end up turning to the Internet in one of two cases: (1) I don’t want to do what I’m doing right now or (2) I’m stuck on a problem that I don’t care about and want to procrastinate on. To put it simply: bored = Internet. I bet it’s true for you, too. After all, if you’re engrossed in something you like, you aren’t going to be thinking, “Hey, maybe I should waste some time on the Internet.”

3. Identify a couple of replacements to Internet. There is a reason you go to the Internet. If you use it as a procrastination tool, like I do, then you need to figure out what you’re going to do (other than browse the Internet) when you want to procrastinate. Otherwise, you won’t get anywhere. Even if you manage to stop wasting time on the Internet, you’ll probably fill it with something equally bad.

4. Rank sites in order of addiction. You probably go to some sites a lot more than you do others. For example, there are two blogs whose archives I’ve gone through at least a dozen times in the last several months. These blogs are updated maybe once every couple of days, but I check them obsessively several times a day.

5. Take it one site at a time. Stopping all Internet activity might be too hard for many of us, but not going to one site is much easier to accomplish. Once you feel comfortable about the most addicting of your site, go on to the next one.

6. Do replacement activity whenever you feel like going to the sites that you stopped going to. This means, of course, that you should enjoy the replacement activity as much or more than you enjoy browsing site X. Otherwise, you probably won’t do it. At the very least, you should like the activity more than whatever activity it is that you’re trying to get out of.

7. See if you can’t delegate your ugly frog¹ of a task to somebody else. You have a task but you don’t like it, and that’s why you’re procrastinating. See if you can’t get someone else to do the task for you. Then you can procrastinate on some other task that you don’t want to do but have to do, but maybe you can foist it upon someone else, too…(Just to point out something: just because you don’t like something doesn’t mean that everyone doesn’t like it; I might hate shopping but there are definitely people who love it.)

8. If you can’t delegate, see if you have to do it at all. There are many tasks that don’t need to be done. You ignore them long enough, they will go away. If your task is like this, then don’t work on it. Simply move onto another task, hopefully something that you like. Cut out the part in the middle where you’re procrastinating.

9. If you have to do it, do it first thing. If you have a task you like and a task you don’t like, then commit to doing the task you don’t like the first thing every day. That way, whatever you have to do for the rest of the day is easier and therefore less likely to lead to procrastination.

Bonus Tip: Think in terms of years, not months. The more addicted you are to Internet, the more time it will take for you to get rid of it.

What about you? Do you have any other tips that helped you battle your Internet addiction?

1. Ugly frog is a term coined by Brian Tracy [↩]

30 Day Trials are one of the most powerful tools in your arsenal of personal development. I can talk about why they are so brilliant, but there are already hundreds of articles on the subject. This article is about some of the things I noticed in the last two years that I’ve been employing this tool.

1. Sometimes, no matter how much you push yourself, you simply cannot see a trial to its end. Don’t beat yourself up over it; it’s simply not worth getting frustrated over. Try again next month. In 2007, I think my failure rate was 90%. In fact, I failed the same trial 12 times (if you guessed that this was the “don’t eat out” trial, you are right). I became rather depressed last year, but what’s the point? If it were easy to change habits, you wouldn’t need all these tricks and tools, would you?

2. On the other hand, sometimes it feels like the stars align and the universe bends over backward to make sure that your trial is a success. This certainly felt like this when I finally managed to stop eating chocolate in January. This, by the way, is after several trials, some successful (during which I didn’t eat chocolate for 30 to 60 days) and some not so successful. I wish I could say how to bring about these perfect trials but I have no idea why, sometimes, everything just works.

3. It’s OK to attempt more than one trial at a time, but don’t attempt more than one hard trial at a time. I often try out two to three trials in any one month, but I give myself two easy ones and one hard one. For example, running for me is hard. I hate running with a passion but I keep wanting to become a runner (if you’re wondering why I do this to myself, it’s gotten me stumped, too). So I’m once again attempting to make running a habit this month. But as this is my hard trial, I’m not trying any other hard changes. Trying to make two hard habits at the same time is sure way to fail in both of them.

4. Make your trials public. If you can do only one thing to ensure that you succeed, this has to be it. Nobody likes failing in front of other people. When it’s only your motivation that you have to rely on, it’s rather likely that you will fail. Let’s face it: the habits you want to make or change are never easy. But you can dramatically increase your chance of success by telling other people that you are going to make something happen: I’ve succeeded in more trials in 2008 than in all the previous years combined.

5. Check-in regularly. I found out that the trial is much more likely to go smoothly if I check in with my progress every day. This is something I learned during my “Wake up at 4AM” trial. I’ve tried this trial a couple of times before, to some success but it was always a painful experience. But the last time, I was excited to wake up early because I couldn’t wait to toot my horn so as to speak.

6. Trials will get easier. Trust me on this one. The first trial is always the hardest, even if what you’re trying to change is not that hard. By the time you’re at your tenth trial, it becomes very easy to make yourself stick to to your new habit for at least the 30 days that you are on your trial, after which, of course, it typically becomes trivial to maintain the habit. This is true even when you’re trying to break habits that you are really unhappy about breaking (ex., eating out for lunch every day).

7. Don’t commit to more than 30 days when trying to make/break a habit, especially not when it comes to those hard-to-change ones like eating out less, not smoking, and exercising more often. If I had started my “don’t eat chocolate” trial thinking that I was not going to do it for the rest of the year, I would surely have failed. I love chocolate too much, and it was hard to fathom the misery of having to force myself to not eat chocolate every day. So I started by committing to it for just 30 days. It was still hard, but it was not so bad because there was a clear-cut end to my self-inflicted torture. Once I was done with 30 days, I extended the trial another month. It was much, much more peaceful; I hardly thought about it once. I haven’t had a single bite of chocolate since January, and I can’t say that I’ve thought about it at all over the past several months.

8. When trying to make a habit, do it every day. It’s hard to make a habit when you’re doing it only once or twice a week. It takes too much self-discipline and you can’t ever really make it a habit anyway. Even if you have to do it only once every week, do it every day. For example, if you want to clean your bathroom every week, do it every day anyway. You are far more likely to stick to it.

9. The people around you can make or break some trials. For example: eating out. I used to go out with my colleagues for lunch for the better part of 2007 and 2008. Everyone goes out a lot at my workplace; on any given day, at least three people used to ask me out for lunch, and this made it all that much harder to stick with my trial.

10. If people are pressuring you to quit the trial but you don’t want to share with them why you’re doing the trial, then simply make something up. The goal is to get people to stop blindsiding you. You don’t want to tell people that you don’t want to go out with them because you want to save money? Tell them that you’re trying to get healthier or that you’ve got work to do or that you don’t like the restaurant. Whatever. It’s easier when your excuse is more long-term (”I want to eat healthier,” you can use over and over again, but “I don’t like the restaurant,” not so much).

Bonus Tip: Don’t start a trial on January 1st — thanks to long years of failures with January 1st goals, most of us are probably conditioned to fail just because we started the trial on that date. Start on December 31 or January 2. ;-)

What about you? What tips do you have on 30 day trials?

Earlier, I promised to go into more detail about what my expenses were for the month of November. Even before I opened the statement for the last month, I knew that I would have something along the lines of $150 - $200 that I should not have spent, and I was right:

And how I wasted the money:

1. The “fast food” spending is so high because I paid for dinner for my family one night. I did pretty well in this area otherwise; I’ve dutifully packed my lunch since the 6th and stayed away from not just restaurants but also shops of all kinds, shapes, and sizes.

2. I obviously spent a lot more in books than I should have. Every single penny of the money could have been saved easily; about three quarters of the way through the month, I ended up subscribing to a technical site, which cost me about $50. (I am, however, going to unsubscribe at the month end, so it’s not a recurring bill.) The rest of the money was spent on a variety of books, of which I only liked about half.

3. It’s kind of funny that $200 is about what I used to spend per month in 2007 and early 2008. Only, then it was on food. Now that I cut down on food, I’m spending it on books, apparently.

4. You might remember that my goal was to not spend on anything that isn’t necessary, but it obviously didn’t work out. I had discretionary spending on the following days:

Of the 30 days in November, I spent on only 8 days. Over half the money was spent on just 2 days, and over 80% of the money was spent on 4 days. If I had exercised a little self-discipline on the 17th and the 21st, the urge to spend would probably have gone away, allowing me to save the money. I can’t say the same about the spending on the 26th and the 28th, though.