Archive for the ‘Ideas’ category

Evolving Ideas to Make Better Financial Solutions and Experiments

December 28th, 2011

I find that my ideas are continually evolving instead of being cast in stone (or near stone), and this works fine for me.

Ideas cast in stone

Some people see their idea before they even start to write their thoughts down.  It’s fully formed and they carve out all of the smallest details before they even take their first action.  Kind of like the way Mozart would do his compositions in his head and playing on the piano before writing it down to paper.  Beethoven was a direct contrast to Mozart, and although I’m no Beethoven, tend to follow a similar path with my ideas.

One of my most successful ideas that I’ve had on this blog is my “Lunch Dividend Experiment“, but this is not how the idea started!  The real formation of my Lunch Dividend Experiment began as a thought in a post called: “Paying an Adult Allowance“.  And to be honest, it actually went through a few other posts before the name “Lunch Dividend Experiment” was the title that I decided to stick with.

Another example of an idea that is still evolving for me (albeit much slower than the comparatively simple “Lunch Dividend Experiment”), is an article that I wrote called: Skipping The Inheritance, Creating Income Streams For My Kids.  This idea is still a work in process although I have invested some money for them into growth and dividends stocks.  I’m not really crazy about the length of the title, I need to simplify it and compress the ideas into a more actionable plan, but at least it’s a start.

The thing I find is that initially my ideas are not very clear, but usually somewhat original, or at least in my opinion, clever.  I’ve noticed that I was more forthcoming with such ideas when I started blogging, but then scaled back, perhaps because I wanted to be more professionally, or perhaps it was because of a few other bloggers that didn’t get it.  For instance one of my thoughts was called “Paying Off Your Mortgage is Like Working at a Second Job“, in it, one particular blogger tried to take the post in an entirely different path.  Instead of following the increased cashflow, the blogger focused on basic financial and tax specifics that were obvious.  This blogger missed the forest for the trees in that the amount of discretionary income in my pockets increased by over $1,000 once my mortgage was gone and I became totally debt free!

I’m determined that next year, I will no longer let such comments pollute the idea and crux of the posts that I create.  And so, I will again try to become more financially creative in my thoughts and experiments.

Here’s to the New Year!!!

MR

The Week Before The New Year

December 26th, 2011

There aren’t many magical times in the year, but the week before New Years is one of them.

Why?  you might be wondering…

Reasons the Week Before New Years is Special:

  • This most productive time straddles the two holidays Christmas and New Years!
  • Most people have this time off because of two holidays being so close together.
  • This is an incredible time when many see friends and family not typically seen.
  • While this is a resting period when many parents play with their children in new games and other activities.
  • The week is a paradox of time, where people are both more restful and more active mentally at the same time.
  • This is the time when planning for the next year happen

Okay, above I mentioned the paradox of time, which is the entire basis of this post!  I find it fascinating that many of us take off the time between Christmas and New Years, and during that time we rest the most and at the same time we pull out of the ether our entire plans for the following year!  If that’s not magical, then what is?

At  the end of year 2010, I decided to keep it loose and just let what happens happen…  In one sense that experiment was an incredible flop in that I didn’t really did get any traction on any of the loose goals that I half imagined that I would undertake.  But on the other had it was a great success in that I’ve been able to take a very deep analysis of my life and the way that it’s being consumed by time.  This has enabled me to realize that I do have room to improve it.

In 2011, I’ve come up with what I consider some interesting new ideas, many of which I’ll choose and track in the coming new year.  So while I physically rest on my couch writing stuff on my laptop, I’ll be thinking hard creatively and in a goal oriented fashion!

So hopefully this “week before the new year” will be a magically productive time for me creatively!

MR

Having Stock Dividends Pay Money For Allowance

November 30th, 2011

Once my son and daughter turn 18 (or 21), I will stop paying them allowances.

It’s not that they were bad, or that I will have a sudden change of heart with the matter, it’s just that they’ll be adults then and traditionally that’s when such things stop.  But in ways isn’t this almost like a punishment for becoming an adult?  Perhaps at some subconscious level, it deters kids from wanting to strive out on their own, becoming totally financially independent from their parents?

Money Gift

After talking this over with my son last night, we decided to change the way that he receives his allowance.  While the details are still being ironed out, basically we going to take most of his money from his saving account and invest that amount into one or more dividend paying stocks.  The idea is that I will still pay him an allowance, but the dividend from these stocks and a portion of the money from his allowance will go into buying more stocks (along with Christmas & Birthday money along with any earned money that he might receive).  We are still working out the details, but the idea is that if we do it right, we should be able to accumulate enough stocks that pay a dividend to provide him a passive dividend stream when he turns twenty-one.  Ideally the amount would be at least $21 per week, which would match the current allowance program that I have my kids on.  Of course, I’m hoping for a higher amount to offset taxes, but who knows, only time will tell.

So what are the benefits of such a Dividend Allowance Paying program?

  1. My kids continue to receive an allowance, but instead of me paying for it out of my earned income, they will pay themselves via the passive income received from dividends.  This is one of those “the gift that keeps giving” kind of ideas.
  2. They start to learn about investments and the power of dividends and passive income at an early age.  Hearing about passive income and actually receiving passive income are two different things entirely.  Until you have passive income, it’s just a money myth.
  3. They will be able to gain investment experience, learning that stock prices go up and down with time, and experiencing recessions.
  4. The learn the concept of having your money work for you.  This will help them visualize money as a tool.
  5. I may gain kids that can talk to me about stocks, we will grow closer as we will have more in common.

Of course I can always follow a different path and invest in dividend yielding mutual funds too.  But since I not that crazy about the fund fees, for now I think I’m going to stick to individual dividend stocks in the short-term.

I really like this idea and one that I’m excited about along with my son (my daughter’s to young to get excited about it yet).

Bests,

MR

Automating Your Personal Tasks

October 31st, 2011

A big part of personal finance strategy is the automation of repeating financial tasks.

HAL

Hall From 2001

The first thing that gave me exposure to automation was the payment to my employer’s 401k.  This is the best way to participate in a 401k!  Since I wanted the match that my employer provides (100% match on the first 5%), I jumped into this as quickly as possible.  It was so successful, and so painless that this exposure to automation made me decide to automate other reoccurring personal finance events.

The hidden beauty of my employer’s 401k plan is it basically enables me to participate in a dollar cost averaging mechanism automatically.  This is nice because when the financial market’s dip, my 401k automatically buys more shares in a given investment because the investments prices have dropped while the amount I put in to the 401k remains the same.  This takes some of the bites out of the times that the economy has a small correction or a shorted lived, recessionary dip.

The next thing that I automated was our cellphone payments.  After about 6 months, we then automated most of our re-occurring bills.  My wife does the bills, and this cut down on the amount of work that she has to do saving her some very precious time.  Ironically, this wasn’t the reason we automated most of our bills, instead it was to save over 30 cents for each postage stamp that we hated putting on each envelope.

Our kid’s college savings is automated too!  We primarily use 529 plans provided by our state to save for our kid’s future college expenses.  Each month, the 529 pulls money out of my checking account to buy my kids shares in the mutual funds within the plan.  This is nice because the plan also provides a form of dollar cost averaging too.  It’s not quite as good as my 401 plan though because my 401 plan purchases shares bi-weekly.  But it’s one less worry that my wife and I have to take into consideration.

I’ve also have what I call an automated budget, but it’s really more of a quick monthly reconciliation process.  I find that my automated budget works best for me though.  In contrast, other might prefer zero based budgeting, but I’m more of an automatic/automation kind of guy.

Since the birth of my son and daughter, time has become more valuable to me, so lately I’ve been automating certain non-financial tasks.  For example, I’m starting to use Google calendar to send me reminders of certain events that are happening such as birthdays, and important events.

I’ve also started automating blogging tasks!  I no longer need to perform manual backups of my blog site!  This has been automated via a DB backup plugin, and a custom script that I wrote to perform a backup of this site to my local desktop at home.  Eventually, the next step in this recent process it to copy the backup to online storage.

Above are a few ways that automation is saving me both time and money.

Do you automate any tedious tasks that you hate performing?

Happy Halloween,

MR

Becoming Rich or Successful By Communicating Selectively and Effectively

September 16th, 2011

As some of you may know, in addition to sharing my story and progress (see my gain in Net Worth article), one of the big reasons I blog is to improve my communication and thinking skills.  Lately, I believe both of these two skills have jelled to enable me to see more about my life as an employee than it had in the past with respect to my career as an employee.

Are You Brilliant But Unknown?

Have you noticed that a lot of your ideas are all around you at work, but you still not a director or higher yet?

Well it could be that you ideas are being credited to others around you.  I use to be open with my thoughts on particular problems and would speak about my solutions to any peer or friend that was within earshot.  Surprisingly (or perhaps naively), I never communicated those ideas to my bosses and their bosses…

A few years back I remember telling my boss a brilliant idea that I had that would save the company hundreds of thousand of dollars each year.  The idea was unique and I’m quite sure that it was all mine.  I remember being excited about the idea and upon thinking of it, immediately requested a meeting with my boss (at that time) to discuss the idea.  We had the meeting, and while he didn’t shoot it down, he was reserved and said he would look into it.

Time passes and a few month later, my boss tells the my department, this brilliant idea at a departmental meeting, and gives credit to a peer that was a good buddy of his.  More time passes, and he gets the credit (via corporate awards) entirely with no mention of me (or even his buddy that he mistakenly gave the idea credit to).

Yeah, I was bitter, but you want to know something…  It was entirely my fault for not gaining the credit that I should have had!

Why?

First, I knew of the reputation that my former boss had and knew that I shouldn’t have told him the idea in private meeting (what was I thinking?).  Telling my boss alone, was like putting both a shark and a seal in the same SeaWorld aquarium…  (poor seal…)

Second, I didn’t write-up the idea in a written proposal and email it to a few of the big bosses!  Such an action could help your idea get recognized by someone in a higher management position, or perhaps you might start to develop a friendship with one of them.

Third, I didn’t re-enforce the idea by being more social with management.  After sending the proposal, I should have tried to meet with the few managers to point out the strengths of my idea and answer any questions about the proposal.  I could have even scheduled a meeting as a friendly Q & A (question and answer) session.

Forth (and this may be the most important), I should have tried to socialize more with management!  I’ve seen many a lesser peer get promoted faster than I have because they are a golfing, card playing, or sport watching buddy with management.  It’s human nature to try to surround yourself with people who like you and you like too.  This is one of my biggest problems over my career, and is totally my fault (I’ve had opportunities).  Remember, your managers are still just people…

Believe it or not, the same principals apply to becoming rich too!  I’ve discussed these ideas with a few of my friends that are millionaires, and they say the same communication skills apply to gaining business (becoming rich), too.  Of course upper management in their case are clientss, and other business connections.  Obviously, they aren’t going to share their ideas either, instead they are going to present products for their business clients to buy…

I hope this little insight helps those suck in a dead end job or those just starting out.  If you want to hear specific stories (I have plenty), email or comment below and I’ll introduce some in future articles.

Bests to you,

MR

 

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