What Are Your Priorities in Life?

He knew what his priorities in life were.

“Action expresses priorities.”
― Mahatma Gandhi

What is a discussion about priorities in life doing in a finance blog? Everything. Your priorities in life should be dictating what you’re spending your money on. If you’re not going through your life with intentionality, you won’t be aligning your resources with your priorities. If you’re not budgeting, then I can almost guarantee that you’re not spending money in line with your priorities.

Take a minute and jot down what you think your priorities are. In priority order. It doesn’t have to be a huge list. After all, chances are that you’re never going to spend time or thought cycles on item number 78 in your list. If you are, you’re wasting your time. Don’t overthink it. Go from the gut. Malcolm Gladwell spent a lot of time researching why your gut is right (#aff), particularly when it comes to you.

Now, do you have anything which tracks your spending? Go to it and take a look. If you don’t have something, download your data into mint.com. Take a look at where you’re spending your money. Compare it to the list of what your priorities are.

Do they align? Probably not.

The voice inside your head is already thinking of retorts. I *have* to spend money on housing, the inner voice chides. Sure, but where does where you live rank in your priority list? If it’s number one, then, by all means, allocate more of your budget to housing and live in a nicer place, because that’s where you’re truly going to get the most meaning out of the money that you’re spending. Some people love their homes. They spend all of their time there and they host friends and they love it. They *should* be spending more of their resources to make their homes as comfortable and inviting as possible.

You can always make more money. But you can never make more time. – Click to Tweet

Does food rank that highly? Where is giving? Does your spending align with where those priorities are?

No list of priorities is right or wrong. If you spent the time to think about your priorities and you wrote truthfully and honestly, then the only right answer is the one that you put on the page. If you have the right answer on the page and it shows your priorities as they really are in your life, then does your financial life mirror those priorities?

If not, then it’s time you put them on track. Spend in accordance with your priorities. Eliminate your cognitive dissonance because you’re spending your resources on things which aren’t that meaningful to you. Find an accountabilibuddy who will hold you to the alignment between what you say is important and what you show is important. Then work to get to the point where you can spend your time in the same manner.

You can always make more money. But you can never make more time. Live a life that aligns with what is truly important to you.

Retire Early And Die!

Chief Justice John Roberts probably never thinks of retiring!

“All men think all men mortal, but themselves.”
–Edward Young

A recent study of a cohort of Austrian retirees came to the conclusion that retiring early was likely to decrease your life expectancy, particularly if you are a male.  The title of the study even could lead one to believe that the best way to live forever is to work forever. The title is “Fatal Attraction? Access to Early Retirement and Mortality.” It’s not one that inspires confidence, and it’s easy for writers to come to the conclusion that retiring is bad for your health without looking at the underlying causes which the authors of the study went to some lengths to tease out the underlying causes.

First off, it is important to understand that causation is not the same as correlation. There’s probably a high correlation between sunburns and amount of sunshine in a day. That one is pretty easy to understand. Ultraviolet rays cause sunburn. However, there’s also a strong occurrence of the sun rising on days that end with Y. While the two are correlated (it happens every day), there is no causation. The day ending in Y does not cause the sun to rise. The sun rising does not cause the day to end in Y.

The same is true for this general conclusion about retirement and early mortality. While the two are correlated in the study – there was a link between retiring early and dying earlier – that is not to say that there is causation.

Chicken Little thinks early retirement causes death. – Click to Tweet

Deeper in the study, behind the headline number showing an increase in male mortality tied to early retirement, the authors pulled out two main drivers of the increased mortality.

  • Health-related problems. There certainly is an argument to be made that some people choose early retirement because health prevents them from working to a normal retirement age. The authors of the study work to eliminate selection bias of unhealthy workers who choose to retire because they’re unhealthy, but they cannot. They do, however, point out that there is a significant amount of death caused by preventable causes.
  • Involuntary retirement. Again, while they don’t have definitive data about whether or not people retired after being laid off, they do a reasonable job of making inductive reasoning to determine whether the retirement was voluntary. Involuntary retirements seemed to have a negative effect on life expectancy.

How to retire early and avoid an early grave.

It’s never too early to start thinking about retirement, unless, of course, you never plan on retiring . Here are a couple of things to consider, particularly in light of the Austrian retirement study (which was conducted by a Swiss university, by the way):

  • Establish and keep a healthy lifestyle. This includes getting adequate and sufficient exercise, eating well, and staying active. Your physical, mental, and spiritual health is important. Don’t smoke, and don’t drink in excess. It’s impossible to tell if it happened, but the authors of the study posit that it’s likely that retirees engaged in unhealthy behaviors. My personal theory is that they became inactive, and the inactivity led to increased health problems. Therefore, it’s important to retire TO something  so that you have a reason to stay engaged.
  • Find meaning in life outside of your work. Getting laid off stinks, no matter what age you are. One of the ways to build mental resiliency is to have areas of your life which invigorate you that are outside of your regular job.
  • If you are laid off, find work as quickly as possible, even if it’s temporary or part-time. A corollary to finding meaning outside of your job is that if you can find another job, you fill that gap which is caused by the shock of losing your job. If getting laid off provided the happy “golden parachute” that allowed you to retire happily then this suggestion will not apply.

Don’t get caught up in the Chicken Little conclusions about early retirement causing death. There are other factors involved which you can prepare for long before you retire that will give you a higher probability of a long and prosperous post-retirement life.

Personal Finance FAQ Series: Why Should I Pay My Credit Card Off Each Month When I Can Just Pay the Minimum Balance?

Today’s FAQ series post answers a question that a lot of us have about our credit cards:

Why Should I Pay My Credit Card Each Month When I Can Just Pay the Minimum Balance?

What questions would you like to see me answer? Leave me a comment and let me know!

There Are No Financial “Secrets”

The only secret here is a secret garden.

“A writer should have this little voice inside of you saying, ‘Tell the truth. Reveal a few secrets here.’”
–Quentin Tarantino

“Three may keep a secret, if two of them are dead.”
–Benjamin Franklin

Let me let you in on a little secret. There aren’t any financial secrets. Nobody has the secret formula for investing in gold, options, emerging market funds in Bhutan, or pork belly futures that you don’t already know or can’t already find. There are no secret gimmicks for making you magically pay down your debt with some fancy payment system. There are no secret ways to invest in zero money down distressed real estate in Barrow, Alaska which will give you boundless income for life. There are no secrets for starting a business and making it successful which will suddenly make you cash flow positive and cause owners’ equity to soar. There are no secrets for allowing you to eat 2,000 calories per day more than you burn and not gain weight.

None. Zero. Zilch. Yet, it seems, everyone who advertises on the Internet, television, or radio has a secret that they want you to pay them money to reveal to you, and in doing so, they’ll give you a shortcut in life that will speed everything else along and make your life so great that you’ll live in a land of rainbows, unicorns, and maple-coated bacon.

Why the abundance of secrets, then?

By the way, once a secret is shared, even for the low, low cost of $9,999, isn’t it no longer a secret? I can answer that question in one word: marketing. Sellers want you to feel like you’re getting value for the money you’ve spent, and if you’re getting a secret, being let into an exclusive club, the [fill in the blank here] equivalent of the polo club, replete with ponies, butlers, and swank. They probably also want to upsell you on some other, better program which will cost even more money.

Truth in advertising would look something more like this: I’ve spent a lot of time learning my craft and perfecting what I do. I have a lot of expertise, which is garnered through hours and hours of study and through years and years of experience. I’ve made a lot of mistakes along the way and I’ve learned from them. You, too, could spend the time required to gain the level of knowledge and mastery that I have, and you’d be an expert too. However, you don’t want to spend that much time learning because you’d rather be traveling, reading, camping, exploring, giving, and spending time with your loved ones. Your time is valuable. Because of that, we’re going to make an exchange. You’re going to pay me to give you the most pertinent and valuable pieces of wisdom that I can offer regarding your specific financial situation and to set you up in a way that provides you with the greatest opportunity to win financially and to enable you to meet your goals in life as they pertain to money. You’ll get a game plan and be armed with the particular pieces of knowledge that you need to know in order to move forward confidently in your financial life.

I’ve spent a lot of time learning my craft and perfecting what I do. – Click to Tweet

If you don’t want to go forward with that particular deal, that’s fine. You won’t miss out on any secrets, and the world is your library. All of the “secrets” are out there, waiting to be discovered.