The Hero’s Journey to Financial Independence (print edition) is available on Amazon.com
The Hero’s Journey to Financial Independence (Print and Kindle versions) on Amazon.com
Reply
Tag Archives: Follow your bliss
The Hero’s Journey to Financial Independence is in the Kindle Store
The Cult of frugality: Part II
Frugality is no longer a fad. (That ship has sailed)
Fads come and go
- The most recent wave of the fad of frugality is on it’s way out. This fad comes upon us when jobs are scarce and people are scared. Now that things are looking a bit rosier I urge you not to let it go. Donate your Crocs, Uggs and lowrider jeans but hang on to your frugality.
- The Dow Jones Industrial Average is hovering above 12,000. Consumer spending is up. Credit card interest rates are up as well according to this CNN Money article. It seems that the credit card reforms left out the most obvious culprit in the ‘debt is the slavery of the free‘ equation: Interest Rates.
- One of my favorite radio programs is APM Marketplace. Kai Ryssdal, besides having a pretty cool name, puts on an amazingly informative and entertaining half hour money talk. Today the Marketplace team reported that credit card use has risen while savings rates have dropped. Hmmm. I remember wondering last march how many people would retain their frugal mindset. What do these numbers seem to tell us? It is too early to tell but I think most of us have or will soon revert to previous habits of spending. If your pre-meltdown habits were frugal, great. If you, like millions of others, got caught up in the spend-for-all then you should probably hide your plastic right about now. Couple the past few years of recession fatigue with good news of the economy and an early spring and you could be in for some difficult consumer temptations.
-
Spring is near!
- Now, it is true that we need consumers (you and me) to go out and spend. Buying stuff is the engine of capitalism. Just make sure that you are building your contingency fund and investing in your long term wealth first. There is no benefit to our society when unhinged spending leads to a personal financial disaster. One of my all time favorite quotes is from public speaker and author Jim Rohn:
- “I will take care of me for you, if you will take care of you for me. ”
- Jim Rohn - It is important to understand that while it may seem like there is a direct cause-and-effect relationship between one and the other, The Stock Market is not The Economy. Experts use the economic indicators and stock indices to predict the future but are often wrong in their prognostication. The only relatively sure path to financial independence is to practice the fundamentals:
- 1. Give your money or time to a worthy cause (here’s a good one: Lovedrop)
- 2. Be frugal
- 3. Build a contingency fund
- 4. Park your money in well-balanced investment vehicles
- 5. Strive to find your bliss and follow it
- If you will do these things for me, I will do the same for you.
- -WR
- btw- I have a ton of Silly Bands, real cheap, if anyone is interested…
Love Drop: Giving back with style
How to Follow Your Bliss
It is no secret that I am a fan of the late Joseph Campbell. My book adheres closely to his concept of a monomyth. I do not pretend to be an expert on the subject matter that so fascinates me. I consider myself a student and will always be one. Comparative mythology studies the myths that people live by. It is as much concerned with paleolithic cave drawings as it is with modern middle eastern strife. The breadth is staggering. With our big brains and our assorted accoutrements of modern life it is easy to forget how closely linked we are to our rich mythological past. While there is an anthropological slant to many of the approaches I have studied, Joseph Campbell brings passion and more than a little dramatic flair to his chosen life-work. We all live by a myth, this is our personal story, our personal narrative. Sometimes this is a part of a larger worldview as in the case of membership in one of the great world religions. Sometimes we try to find our way by other means.
Joseph Campbell used to like to say “mythology is referred to as other peoples religion“ and that “religion is simply misunderstood or misinterpreted mythology“. He felt that the emphasis on the historicity of religious texts often got in the way of the spiritual message. While many people get caught up on both sides of the fence trying to either prove or disprove a finite act of religion, trying to tie a religious event to a real historic place, date or person, I believe that it is the abiding, guiding message that matters most in our lives. For example, flood myths preceded the Bible by many centuries. Deucalion of Greek myth was the son of Prometheus and Pronoia. Pelasgians were the neolithic culture that preceded the greeks and the story goes that Zeus let loose a heavy rain, the rivers swelled and the seas rose. Deucalion and his dad Prometheus built an ark and was saved from the deluge. Noah and the Sumerian Xisuthros are both heroes of the same myth, the same story. There are strikingly similar stories in the Koran, in China, in Aboriginal Australia and even with the North American Indian tribe the Menominee. These stories hint at both a universal threat of flood on the ancient world stage and the need for humans to mythologize about it. Our shared stories and ritual bring order out of chaos and help us relate to each other in meaningful ways. We destroy these relationships when we throw out the story and the ritual and instead cling simply to the historical vessel that carried them.
Any of Joseph Campbell’s densely academic books require dedication and commitment to thoroughly absorb. Among his pantheon of wisdom regarding comparative mythology he states that one needs to follow their bliss in order to live a fulfilling life. It is the history of the world as seen through the eyes of the great story tellers that bind us all together and in that vein Campbell drew heavily on the Hindu Upanishads to form his belief on this subject. Earlier, both Ralph Waldo Emerson and Henry David Thoreau espoused transcendentalism as a kind of personal mythology.
I try to view Campbell’s admonition within the scope of his greater body of work. He seemed to firmly believe that we are all intrinsically connected. We all share a common background that reaches back far beyond recorded history might suggest. The roots of the human condition dig deeper than many of feel comfortable admitting. Despite our apparent differences we all share a closely held need to help others. Our bliss is a reflection of that.
Another way of saying follow your bliss could be to follow that which holds you in rapture, that which arrests your soul. It is imperative for us to define our purpose in life and get to the business of following our bliss. Your bliss takes you by the hand and pulls you where you’ve always wanted to go but were afraid to tread there yourself.
What is my bliss?
What draws you forth?
What would you gladly do for free if your bills were paid and you had no obligations?
Imagine that after you die, there is a giant brass plaque erected in your honor…What would you like it to say?
In the ceremony, the great mayor of the city gives a speech in your honor…What does he say about your life, your contribution?
What does your family say?
To follow your bliss is to do what you are.
To follow your bliss is to help others with the gifts you were given, the skills you acquired and all the strength you can summon.
Write a one-page plan on how to follow your own bliss.
please comment
Contingency Theories
Do you have a well funded Contingency Fund? A Rainy Day fund? I would love to hear your thoughts on this subject.
Simply put, your contingency fund is money you have stashed away to protect you and your family from unforeseen circumstances (we all have these). This is usually the loss of a job but it could be a medical issue, legal issue or any other nasty thing that comes up from behind and bites you on your assets.
Having a contingency fund is the first step to building wealth. One of the major benefits I have noticed in my personal experience is that having a financial buffer actually helps me make better financial decisions. It’s as if just knowing there is a safety net helps me choose opportunities with clarity, take calculated risks and enjoy the process a bit more.
Now, you should not freak out and try to account for every awful possibility that could befall you but conversely you need to adequately prep yourself for life’s unexpected gifts.
Shouldn’t I pay off my credit cards or other consumer debt first?
No. (I am certain to get some hate-mail for this) Your contingency fund should be funded at the same time that your consumer debt is eliminated. You absolutely need to eliminate debt. That is a key component of any wealth plan. What is even more important is developing your Wealth Rituals. These are just habits that, over time, become part of the fabric of your life. Your financial success depends on the care and feeding of these habits. You should not have gotten into consumer debt in the first place but it will only be your rituals that get you out. Your ultimate goal is to form the rituals or habits that serve you and to eliminate those that don’t. If you have moderate debt (10% or less of your gross income) strive to go 70-10-10-10. That is, Give 10% to charity, pay down your debt with 10%, fill your contingency fund with 10% and live on the remaining 70%. Here is what I mean:
Adjust the percentages based on your situation. Maybe 97-1-1-1 is the best you can do at this point. Just make sure you do it. Lean heavily on getting your contingency fund up to your goal amount, though. maybe 70-20-5-5, with 20% Contingency.
Some questions that have come up in recent discussions are:
How much is enough?
This is obviously the crucial number. You want to have enough saved to pay your bills, fund your job search and possibly finance a bit of education if that makes sense.
The huge question here is for how long? 6 months? 12 months? 2 years? There is no single right answer to this. What is important to note is that you are not trying to replace your income. You are trying to stay afloat until you can regain full employment. Some things you spent money on while on the job are no longer necessary (Tolls, Parking, Gas, Lunches out) while some things might go up (beer, resume printing, beer). Up until recently, 6 months was proffered as a sufficient time-frame. I believe 6 months is still great for most people. Some executive level folks may need to have more of a buffer since the air is a bit thinner up there and it could take longer to land a comparable job. At whatever level we are, we need the assets in place to be able to bounce back from misfortune.
Here is the magic formula: My Monthly Expenses X 6 = My Contingency Fund
How much is too much?
After the bubble burst, for those who have been steadily employed and have drastically reduced their expenditures (mostly out of fear that they could be next in the unemployment line) They are finding themselves with huge bank account balances (an enviable position for many). Now that the recovery appears to be imminent, they want to make sure they are not missing key opportunities. Now is the time to max out your 401(k) and begin to fund a Roth IRA. I Recommend a mix of Extended Equity Index funds (Both domestic and international) and Bond funds in your 401(k). If you have some dough left to invest after the $16,500 maximum contribution, Call T Rowe Price or Vanguard and open a Roth IRA.
Some Q&A might be appropriate:
Q. What is my risk tolerance?
A. Personally, I think this should be based on dependents. The more humans(or animals) you have depending on you for survival, the lower your risk exposure should be. period. Going solo? No Worries! Have 3 kids, 2 cats and a spouse? Not so much. Make sure you can support you and all those who depend on you for a full year.
Q. Where should I put the money?
A. This is cash or cash equivalent. Ideally you should put this money into a FDIC insured account. What we have found is that many jobs are tied to the overall economy. When the stock market drops, companies tend to lighten their load (i.e lay people off). that is also when more financial institutions close up shop. If your contingency fund is in the stock market, you can lose your job and your money.
How do I do this, Where do I find the money?
There are essentially two ways to deal with this problem:
- Increase your income.
- Lower your expenses by trading down to wealth.
Increase your income
- Sell your stuff. Especially the stuff you have stored in a rented facility.
- Start a business based on your passion.. Follow your bliss! Your own home-based business can be a great source of income as well as a huge tax benefit.
Lower your expenses
By lowering your monthly expenses you drastically lower your risk exposure. This is an often overlooked benefit of a frugal lifestyle. How can I do this?
Trade down to wealth
- Buy used and invest the difference. Go to yard sales and estate sales in your area. Check out Freecycle and Craigslist. Above all remember that “New” is the most expensive adjective in the dictionary. What are you getting extra when you pay retail? A box? A tag? Not much!
- Eliminate debt. Consumer Debt is self-imposed slavery. Serfdom. No matter who you are it is stressful and painful. Get out of debt!
- Consolidate your fun. Stretch your entertainment dollar by looking at ‘experiences’ rather than ‘events’. A family trip to an historical park near you, for instance, is less expensive and MUCH more memorable than another trip to the multiplex. A little planning goes a long way.
- Be Healthy. Sounds silly, right? Walk, bike or jog every day or so and your outlook brightens while your medical bills go down. It’s a fact!
- Save on everything. The blogosphere is full of amazing resources to help you get the best deal on just about everything. Are you a mom? Check out Deal Seeking Mom. My favorite personal finance and frugal living blog has to be Wise Bread. Drive around your town on Saturday morning and take advantage of the yard sales & Estate sales going on. I have a very wealthy friend who loves doing this. Kind of like therapy.
Be joyfully frugal
Frugal living is not about sacrifice or pain, it is about wealth. You must free up your cash seeds to grow into cash oaks. Too many people eat the seeds! A reminder of what it is all about is probably in order:
Wealth is made up of the things that make life worthwhile
Only you know what these things are. These are the laughter of your kids, the smile of your spouse, the Saturday mornings with your family. These are the joy of a job well done or the feeling you get when you ‘nailed it’. Wealth is a personal, visceral, emotional experience that is unique to everyone. You must figure out your personal definition. Being disciplined with our money offers us these experiences. Frugality is money discipline and is the key to financial independence. Once we understand this and begin to see our seeds sprout into mighty trees, we can feel a sense of joy.
Frugality rule #1 : Spend money on things that go up in value. Be an investor, not a consumer.
Frugality rule #2 : The Joneses don’t give a rat’s nevermind what you drive or what you wear. Many are too self absorbed to notice. Buy, wear and do what is right for your family!
Having a 6 month fund based on conservative expenditures should be enough for most of us. If you are at the top of your earning pyramid, you should go for 9-12 months.
Building a 6 month contingency fund is the first phase of becoming financially independent.
-WR
