by Derek Sisterhen on April 28, 2010
Over the last fifteen years, spreadsheet programs, software, and web-based account aggregators have made it incredibly easy to warehouse our spending activity. Some of us have years and years of recorded transactions stored on our computers, ready for quick and easy access.
It’s important to know what the August 1998 water bill looked like, isn’t it?
One of those hard life lessons – not just a financial lesson – that we all have to learn is that we can’t do anything to change the past. (If we could, I would’ve changed my bad tailgating habit as a teenager that resulted in two fender benders and skyrocketing insurance premiums, but that’s another story for another time.)
From a planning standpoint, I find most people are reactive budgeters. We’ll use our nifty computer programs and spreadsheets to track every penny we spent previously, and then create a budget for the coming month using averages from the last year. We react in frustration when, in that next month, life and our spending don’t line up with “how we’ve always done it”.
The problem with this approach is that we’re greatly inhibiting our ability to control the flow of money in real time. No two months are ever the same: creating a homogenized, carbon-copy budget from old data removes our ability to proactively plan for what is going to happen. Reactive budgeting is rooted in looking backwards – you can’t react to what you’ve spent until you’ve spent it.
Instead, get on the front end of your budget. What is happening in the next two weeks or the next month that will require spending? How will you allocate money for that amidst all the other categories? Now you know what you will do with your money before you ever do it. Use your bell-and-whistle programs to simply organize and track how the money flows after you’ve created your plan, but let the past stay the past. It’s time to get back to the future.
by Derek Sisterhen on April 28, 2010
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Past Due: Radio 103 – Buying & Selling Homes in Today’s Market
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Real estate agent and founder of Green Fox Realty Aaron Lee joined me to talk about buying and selling homes in the rough-and-tumble real estate market. We also talked about some of the critical lessons sellers have learning about marketing their homes in a buyer’s market.
We tackled whether real estate agents are even worth their cost. Aaron shared what both buyers and sellers need to know about working with an agent and the honest truth they should expect when interviewing potential agents.
Today’s Mentionables:
GreenFoxRealty.com – Lukas Coaching’s Real Estate Trusted Partner
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by Derek Sisterhen on April 24, 2010
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Past Due: Radio 102 – Of Contentment & Credit Scores
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Who would’ve thought that there’s a link between credit score infatuation and experiencing contentment? We had a blast talking about how credit scores are actually calculated and discussing why those who are so enamored with boosting their credit scores are misguided.
Del and I had a great email conversation this past week all about my latest blog “You Must Be Happier Than Me” and the issue of contentment. Does contentment mean you have to settle for less if you fall short of a goal? Or could it mean that you’re simply doing the very best possible with the resources available?
Today’s Mentionables:
How Foreclosure Impacts Your Credit Score – CNNMoney Article
Stop Osbsessing On Your Credit Score – FiscalGeek.com
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by Derek Sisterhen on April 20, 2010
I’ve read no fewer than six articles in the last week that deal with the issue of contentment. Whether talking about comparing income to others or wondering what life would be like if different decisions were made, it seems many of us are still focusing on that elusive Jones family and how to keep up with them.
A recent Harvard study asked college students if they would prefer to live in a society where they had an income of $50,000 and the average person earned $25,000; or one in which they had an income of $100,000 and the average person earned $200,000.
More than half chose the first option.
We love the idea that we’re making more than the average, don’t we? Makes us feel good deep down, like we’ve arrived. We love when we can tell someone that we’ve traveled to far-off destinations, too.
“Oh, you’ve never been there? I’ll have to show you my pictures.”
This must be what truly happy people do. They make more money and buy nicer things than the “average”. Who wants to be “average,” anyway? It’s such a bland word to define a whole group of people.
Unfortunately, contentment won’t be found in the next vehicle, house, vacation, dinner out, golf club, or handbag. If it was, there wouldn’t be so many weekend yard sales selling used contentment so inexpensively.
We’ll talk about how true contentment doesn’t equal consumption, but do we actually believe it? Our actions speak very loudly. When we compare our station in life to others, we begin transferring our power to change to someone else. You can redefine what contentment means in your own life; you don’t have to borrow anyone else’s version of contentment – nor the money to pay for it.
