God's Solutions To Debt

This is a continuation of our finance series. Here are the others so far:

Managing Our Finances
Dedicating Our Finances
Spend Less Than You Earn
Giving As An Act of Worship
Saving and Investing

Before 1958, people were basically limited on how much they could spend by their paycheck. Then in 1958 Bank of America figured out how to create the all-purpose charge card, called the BankAmericard. Before then, each individual company had it's own card, but it was a pain to keep track of and therefore credit wasn't readily used. With this new card, people could instantly use it at 20,000 stores across California. Bank of America realized that like the telephone, the power of their card was the network: the more users the better. So they began to license their card and system to other companies in the US and eventually across the world. As this system got bigger and bigger BofA eventually gave up control of their system to a third party who's sole job was to manage the system. In 1976, that group brought all the independent licenses together and changed their name to one brand: VISA. Since then VISA has continued to be the largest credit card in the world. This, in part, lead to massive economic growth because people could buy something today based on future income earned.

On a personal level, when I started my shirt printing business I was mailed a credit card. It had great terms even though they knew nothing about me. Suddenly, my business had more credit than I did personally. It was crazy! Still, I used the card to buy the equipment and materials needed to get going. Within a few orders, I had made enough money to pay off my card and start saving for Legos. Had I not had the card, I'm not sure how I would have gotten going so fast. So I fully appreciate the power of credit and debt. However, I also know that there can be downfalls. Specifically, I'd like to talk about three potential pitfalls.

Expected Income

When you buy something on credit, you do it based on an expectation that you'll be able to make the payments later. However, there are a couple problems. First, sometimes we don't actually have as much as we think we should (due to a cut in pay or an increase in another expenses). When this happens, you fall short and a hole starts to get dug. This is the risk of credit. Unfortunately, our bet works out so often that we get lazy and make assumptions (yeah, I should have enough this month). It's when (and believe me, it's "when", not "if") we lose this bet that we get into trouble. By avoiding debt, you avoid this risk.

Fake Money

I remember when I first started working for Arby's my whole outlook on spending money changed. If something cost $20, it no longer represented a single green bill, but over 2 hours of my life! It really made me stop and think about each purchase because the idea of trading time for money was VERY real to me. However, over time I stopped making that comparison because I became deadened to the idea of trading time for money (just like watching violence on TV).

Making purchases with a card removed me one more step from that idea. Now instead of at least having to count out the bills, I swipe a card. It's painless and there's just a number on a screen for a few seconds. It many ways, it's fake money. It has no real meaning. I have to work REALLY hard to connect it to my time. As a result, it makes it easy to buy things. It's only $20? What's that? Nothing. Swipe.

One Master

Unfortunately, it is easy to get caught up in our debt mentally. We focus on having it, paying it off, and let it rule our lives. The Bible even points this out when it says, "... the borrower is servant to the lender" (Proverbs 22:7b NIV). As our debt increases, the likelihood of this happening increases. Since God wants us fully devoted to Him, you can see why debt could be an issue.

Given these pitfalls, it's important to try and reduce your debt as much as possible. We talked about 9 steps you can take to reducing your debt.

1. Pray: Part of dedicating everything to God is also dedicating your debt to Him. So start with prayer.
   
2. Develop a debt-free mind set: Decide you will no longer rely on credit cards and that you'll wait until you have the money actually saved.
   
3. List all your debts: Also write down the interest rate on each debt. It will help you decide which debt to pay off first. Then focus on paying off one at a time.
   
4. List everything you own: Is there anything you can sell which can be applied to paying off debt?
   
5. Establish a spending plan: Can you do something for less? Where are the areas you can cut?
   
6. Establish a debt-repayment schedule: know how far you have to go and see where the goal is.
   
7. Consider earning additional income: See my early post on Saving and Investing for some ideas.
   
8. Consider a radical change in your lifestyle: Many people temporarily lower their cost of living to become debt-free.
   
9. Don't give up!
   

Finally, I'd like to share two practical ideas.

First, here's what you do to escape the auto debt trap: Decide that you're going to keep your car three years after it's paid off. Then, continue to make the same monthly payment to your savings account. Then, when you're ready to replace your car (which could be another 5 years if you're really careful), you can use your savings plus anything earned from a sale on Craig's List, it should be enough to buy a good, low mileage used car. Then repeat the savings.

Second, learn to distinguish between good debt and bad debt. Good debt puts money into your account each month and/or goes up in value over time. An example of good debt is a piece of investment real estate because you earn money and it tends to go up in value (especially if you fix it up). Bad debt takes money out of your account each month and/or goes down in value over time. An example of bad debt is a car because you typically don't earn money off your car and it goes down in value the second you buy it. By learning about good vs. bad debt, you change your focus (like in step #2) on why you're making the purchase. You start to think about the financial impact instead of just the potential enjoyment or dissatisfaction of taking on the debt.

Debt can be a powerful tool, and something that destroys your life. When managing your finances, the 9 step plan can help you reduce your debt to a manageable level. When this happens, you open yourself up to more options and flexibility.

Never Eat Alone

Never Eat Alone, by Keith Ferrazzi, is a book about connecting with people. Ferrazzi himself is a master connector. A connector, as Malcolm Gladwell describes it in The Tipping Point, is someone who links the world together. Someone who has a knack for making friends and acquaintances. In real life, their social network is at least 100 people. On Facebook, it's probably closer to a minimum of 1,200 friends. I'm sure we can all think of one or two people like this (that's the nature of it... they're already you're friend). By the way, I just looked up his profile on Facebook and he has an extremely active Fan Page with about 8,900 fans.

In the book, Ferrazzi talks about the skills and habits he's acquired that has helped him connect with people. He starts off talking about how to create a mindset of a connector - to always be on the lookout to help someone. He emphasizes how critical it is to memorize people's names and something special about them. And how doing that can lead you to meeting people you never thought possible (by, for example, getting to know the gatekeeper of some super-busy executive). When meeting with someone, Ferrazzi likes to share his passions with them and learn about their passions. Then, take it a step further and try to figure out a way to help them with their passion. Can you do something yourself? Do you know someone who might be able to help? One of his favorite things to do during a meeting is say, "I know someone you absolutely must meet." Right then he opens his phone and dials the person and says, "I'm sitting with [name] and you have to meet him. He's interested in [his passion]. Would you be willing to meet with [name]?" Then, during the critical follow-up, he makes sure the two of them were able to get together. Ferrazzi also goes into detail about what he does at conferences and how he handles small talk. The big take-away I got was this: be an active person and invite people to join you. It's these activities, and shared experiences, that create the raw material to form a relationship. Oh yeah, and always follow-up.

Ferrazzi finishes up the book talking about larger issues. He talks about creating your own personal brand, finding people in your life to ground yourself, and pinging people constantly. It is packed with advice. In some ways it's like a textbook that can't be read casually because there's too much to take in. Actually, that would be my one criticism of the book: Since connecting comes so easily to Ferrazzi, he tends to touch on one piece of advice and then jump to the next instead of staying on a few topics and really diving down into the details of each one. My next steps are going to be to go back and focus on a couple areas I'd like to improve upon and learn how to do those better.

Overall, I thought it was a good book and worth my time. I'm glad I read The Fine Art Of Small Talk first because it gave me a solid rolling start into this book, and would recommend others read them in the same order too.

Saving and Investing

This is a continuation of our finance series. Here are the other's so far:

Managing Our Finances

Dedicating Our Finances

Spend Less Than You Earn
Giving As An Act of Worship

Saving and investing is a very important piece of our financial plans. Here's a classic exert from the Bible that speaks to the importance of saving and investing:

The servant to whom he had entrusted the five bags of gold said, "Sir, you gave me five bags of gold to invest, and I have doubled the amount." The master was full of praise. "Well done, my good and faithful servant. You have been faithful in handling this small amount, so now I will give you many more responsibilities. Let's celebrate together!" - Matthew 25:20-21 (NLT)

How we manage our money is practice for later. It's like when we practice our "times tables" in grade school - we did it so we could do more complicated math easier. As the passage indicates, managing our money, and investing it wisely, is very important. Before we can dive into the wonderful world of investing, we first need to talk about saving.

Saving

Part of being a good steward of your finances is saving. Believe me, this is tough to do because it requires patience and a very long term view. In our world where instant gratification is highly rewarded and encouraged, it's hard to go against the flow. For me, I have to remember the numbers are in my favor if I wait. Here's a simple example showing a $1,000 purchase. One is by saving for the purchase at 1% APR (currently ING is offering 1.1%) where you make the purchase when you have enough money (in month 11). The other is using a credit card at a rate of 10% to purchase the item right away (month 0). Both assume you are able to contribute $100 each month toward the purchase.

Making this purchase using a credit card will cost you $53 more - that's like an additional 5% tax on your purchase! Now imagine if the purchase was $30,000 and lasted about 5 years - the difference would be substantial! Of course, if you need the item right away, it might be worth going into debt. Deciding whether you need it, or want it, is very important. Jessi and I want another computer, and so we're going to wait and save for it (believe me, it's tough waiting, but it's worth it). Another huge difference, which you can't really quantify is that by saving you have options. For example, Jessi needed to pay to get official credit for a class she's taking to keep her teaching licence updated. We were able to take part of our computer fund money and use that to pay for her credit. That's peace of mind that is worth many percentage points!

We open saving accounts for everything simply because of this principle. We save for travel, car maintenance, Christmas and birthday gifts, impulse shopping (I know... ironic), etc. Basically, we save regularly for expenses that tend to happen in big chunks and are sporadic. This helps us avoid using our credit cards, earn a little interest in between, and thus actually save money. To be clear, it's hard, if not impossible to save for huge purchases. For example, we took out a loan for our duplex because otherwise we would have never saved enough, and the alternative, renting, wasn't really saving us money anyways. A car might be another example, but you really need to evaluate whether you want or need it to be new. OK, let's get more tactical.

The recommendation we were given for saving were these steps:

Step 0: Spend less than you earn - if you don't do this, nothing else matters.

Step 1: Pay off your consumer debt - specifically, pay off your credit card debt and personal loans. At this time I wouldn't worry about paying your car or home loan faster.

Step 2: Set money aside for an emergency - the amount you want to save will depend on your tolerance. Jessi and I are aiming for 3 month's worth of expenses, plus 3 months worth of rental income. What counts as an emergency? There's no strict definition, but you really want to only use it for things you need and don't currently have saved for.

Step 3: Save for major purchases - set up a separate savings account and add to them. It's so much fun to see the balance tick up! Great examples are computers, cars, furniture, appliances, TV's. For some of ours, we automatically deduct somewhere between $10-$100 monthly and then add on top of that as we're able.

Step 4: Diversify your investments to meet your long-term needs - start saving for retirement. By the way, when have you saved enough for retirement? When the principle and interest can pay all of your expenses from when you stop working to when you pass away. Do you know who much that is? Are you saving at a rate that will meet that goal? Obviously, the huge unknown is when you're going to pass away, but don't let that stop you (pick 120 years old if you want to be safe). I HIGHLY recommend getting together with an expert and figure out those numbers. The sooner the better too because you'll get to take advantage of compounding interest over time (more later).

Now it's time to switch gears to investing.

Investing

The very first thing we learned about investing this week was that there's no such thing as a perfect investment. In business school, they always said the perfect business was a mailbox where people show up and drop off their money on a regular basis. No work required, no risk, and a practical infinite return. Clearly this doesn't exist, but I think it can lay the framework for how you evaluate the types of investments you want to make.

When looking at investments, I typically think of two components, and two multipliers: (Money & Time) X (Leverage & Market). The choice of your investment will most likely be determined by what you have available.

Money

If you have money to spare because you spend less than you earn. Awesome! You can choose investments that require money. Classic choice = mutual funds.

Time

Maybe you don't have money, but you have time to spare and work on a side project. Sweet! Pick an investment that doesn't require much, if any, money. Instead trade your time. Classic choice = a job.

Leverage

This is the degree to which you can use other people's time and/or money. The more you can leverage those, the more powerful your investment will be.

Market

This is the risk side of the equation. Part of your investment's success is determined by the market in which your investment is in. Some markets are growing, some are shrinking, some have too many competitors, some are brand new. By doing your research, you can reduce much of this risk.

This is why starting a business can be so powerful. If you identify a need within a market and create something to fill that need, you can get a business loan from a bank and then with that money you can hire others to help you. That's doubly powerful! Of course, it requires a lot of your time and your money, so it isn't perfect either.

One of the reasons I decided to start up my shirt printing business was because I didn't have much money, but I had the time (sounds crazy for grad school... I know). Unfortunately, this business had zero leverage: it was only me and I used money I already had. When I started working full time, it didn't make sense to continue to invest in this business: I had less time and more money. So I changed my focus to investments that could leverage my money and my time. Now we own a duplex which is leveraging our money. We also have Univera which allows us to leverage our time as we build a team around us.

By the way, Jessi and I don't have any kids, and don't live near our family. So these investments make sense for us because we have a lot of time. Perhaps you work full-time and want to spend time with your kids. Investing in your company's 401K might be perfect for you. Later down the line, we'll probably change our focus as our situation changes (but that's not any time soon... for family who's reading).

Speaking of investing in your 401K, I can't talk about investing without bring up the power of compound interest. Compound interest is when you gain interest off of your interest - another example of leverage. Here's a table from The Automatic Millionaire which shows how profoundly different investments can be when you combine compound interest with time:

I realize that a huge drop in the stock market can negate most of these gains (that's part of the risk of that market), but assuming everything is the same, you're much better off investing a little bit up front instead of trying to play catch-up later in life. Much like giving, you should start investing now, even if it's only a very small amount.

There's so much to talk about when it comes to investing, and a simple blog post is just the tip of the ice burg. Hopefully, you've been intrigued enough to do your own research on saving and investing.

The Computer Market

I knew this day would come. Actually, I've been kind of excited dreaming about this day because of the possibilities. Though in all honesty, I wasn't really prepared for it when it happen. What is "it"?

A little while back I was traveling in Boise on business. While in a meeting I got a couple calls in a row from Jessi - a clear sign that something was up. When I finished my meeting, I called home to a crying wife. What in the world could be causing such a problem? As the title suggests, it was her computer. For the third time it has failed on her. When she tried to start it up, all she got was the blinking cursor in the upper left hand corner.

I've been saying for a while that I'd like to buy a Mac and that I was just waiting for one of our computers to die before I bought one. Normally, I'd suggest she just get the hard drive replaced, but this is the third hard drive for her computer and neither one of us really like the computer anyways.

So, after a little bit of research, I think we're going to go with the Mac Mini. It makes sense for us on a couple of levels. First, it gets us into the Mac ecosystem at a cheap price. Second, I already have a laptop from work and my own personal laptop, which means our mobile computing needs are met. Third, I already own a sweet monitor, keyboard and mouse (I got ergonomically aware once I actually had money to invest in it.) Fourth, Jessi doesn't do much heavy duty computing and really wants a computer that just works.

Of course, I've also been telling people that if they give me three cool iPhone App ideas, then I'd buy a Mac Mini and help program it. Now that we'll actually own one, that excuse won't really work anymore. I'm pretty sure one of the first things I will do is download the iPhone SDK and create a "hello world!" app.

Giving As An Act of Worship

This is a continuation of our finance series. Here are the other's so far:

Managing Our Finances

Dedicating Our Finances

Spend Less Than You Earn

This week (well... last week now) we focused on giving our finances.

Typically, before we even get started the question comes up of how much to give. Is it 10% or 23%? Is that net or gross? If you want to get old testament legal, the answer is just under 23% of your gross income. However, I think focusing on just the bottle line misses the point entirely.

Here's a question: How much of your money does God need? None. He's the creator of all things, and in charge of everything. If He wants something to happen, He's not constrained by money.

So given this, why give? If you think of giving your money as an act of worship, it makes more sense. I give God my time, my energy, my thoughts, and my money - all of my resources. The line, "Put your money where you mouth is" comes to mind. It's one thing to say you follow God, it's another to actually give your resources to Him. Yes, actions do speak louder than words.

I think another practical reason for giving is that serves as a reminder that you are just a manager of God's wealth. It's really hard to get into the Scrooge mentality if you're regularly giving. It helps to put your focus back on God instead of acquiring material wealth.

Finally, like it or not, our world requires money to function. This includes your local church and charities. It's through giving that these organizations are able to operate.

OK. Seriously. How much should you give? I'd like to echo the same advice my mom gives people when they're thinking about saving for retirement: It doesn't matter, just start. Maybe you can only give 1% or $50. Perfect! Start there. Maybe you can give over 10%. Wonderful! Give that. Decide how much you can give and start giving regularly. Then adjust as needed as your life changes. Remember, giving is an act of worship.

Ender's Game

As friend of mine gave me Orson Scott Card's "Ender's Game" as an audiobook. I've never been a huge science fiction fan, but this book was great. Once I started it, I had trouble turning it off. This book has won many awards, and as far as I can tell it deserves them all.

The book follows a child, named Ender Wiggin, through his training at battle school. He is recognized as a tactile genius and quickly progresses through school at a very young age. All his training is focused on destroying an evil alien race known as the "buggers". As would be expected, there are sweet battle scenes and plenty of childhood bantering.

One interesting point is that at the end of the book Card gives a quick interview. He talks about the book and how it came about - kind of like a special feature on a DVD. He also says that he was originally a Broadway play writer and that when he writes, it's meant to be spoken out loud. Therefore, he concludes, listening to the audiobook is the best way to enjoy his story.

Being that this is an award winning best seller, I'm sure many people have already read it. However, if you have not, I highly recommend it. It's an easy listen and really entertaining.

The Business School For People Who Like Helping People

Some friends of ours let Jessi borrow Robert Kiyosaki's book The Business School For People Who Like Helping People. She read it and loved it. Jessi then let my mom borrow it. She read it and loved it. My mom returned it to us to return to our friends (are you still following?) and that's when I saw it, read it and loved it. I think now we can return it.

As with all Kiyosaki books, this one is about starting your own business. Instead of it being a how-to book, Kiyosaki stays with his tried and true style of convincing you WHY you should do it and hopefully motivate you enough that you actually go and do something about it. It works for me, though others hate it.

As a side bar: A how-to style get rich book won't work. The fortune is in doing something creative - providing a good or service that hasn't been thought of yet. When you do that, you create value and people are willing to pay for it. Someone holding your hand, telling you exactly what to do, does not create value. Beside, unless you're the one writing the book, chances are enough other people have done it that even if there is value, it's small.

OK, on with the book review. In this book, Kiyosaki talks about the benefits of network marketing.

1. There's true equal opportunity - everyone is qualified to try and all types of have been successful. The low start-up costs and included training make this possible.
2. Life changing business education - this one is huge. You are taught how to run and operate your own business. More on the benefits of a business later.
3. Friends who pull you up, not push you down - your business partners want you to be successful because that feeds their success. It truly creates an atmosphere of helping.
4. The value of a network - the trick is not just to only sell yourself, but to train others to sell. When you do that, the results are exponential (Metcalf's Law).
5. Develops your most important business skill: sales - in order to be successful in a business you MUST learn how to sell. Networking companies train you how to do that.
6. Leadership - as you succeed, you get put into leadership roles. You also learn how to speak to large crowds and motivate people.
7. Not working for money - if you choose a business that offers residual income, you are building wealth, not income. In other words, you no longer have a direct 1-to-1 trade off of trading time for money. Even the tax advantages alone make it worth it.
8. Living your dreams - Networking companies encourage you to dream and reach those dreams. This goes right with #3 & #7. They also allow you to start part-time and build at a pace that is right for you.
9. Marriage and business - Jessi and I know this to be true. Unlike working for company alone most of the day, Jessi and I get to run our business together. We lift each other up.

One of the concepts Kiyosaki keeps refreshing is the cash flow quadrant.

I've talked about this before, and the diagram is relatively self explanatory, so I'll get to the take-away. In Built To Last, Jim Collins talks about clock building. Some companies tell time. Other companies build clocks. Both have the same end result when asked what time it is, but building clocks allows people to continue to tell the time on their own... when you are gone. That's what being a true business owner is all about: You create an independent system that works for you. Network marketing is about creating a duplicate-able process, a system that self duplicates. This is what #4 talks about - the power of that leverage.

Like most of his books, this is a quick read that is definitely worth it. You'll enjoy it and definitely learn something new.

Microtrends

I was given Microtrends as an audiobook for easy listening. I especially enjoyed listening to it while running. It gave me something to think about while not completely distracting me.

Mark Penn describes a microtrend as something a group doing something makes up at least 1% of the population and is growing. He then goes on to describe 75 microtrends he has observed based on poll data and other research. Interestingly, this book was published in 2005 and it already showing signs of being old: He predicted the Zune was going to transform the way we share music.

One interesting trend Penn points out is the coming difference in age between the US and Europe. Currently, US birth rates are keeping up with death rates. However, Europeans are having far fewer children then deaths. Right now the average age in US/Europe is 25/26. However, in 15 years it will be closer to 26/50. There will literally be a generational gap in addition to an ocean. This could have huge implications. If Europeans this we're brash and stupid now, just wait.

So, if you're looking for a fun read to fill you with a bunch of facts you probably won't remember, then I recommend this book. However, I would probably go with something more timeless in the future that talks about principles. Still, it's fun to review the last 10-15 years and talk about explicit trends and discuss why they're happening.

In an effort to stay more up-to-date, Penn does have a website which features more current trends. That's at least worth checking out.

Spend Less Than You Earn

This week's financial class was one that seemed pretty basic on the surface, but when you start digging into it, you find it's really not that easy. We learned four principles:

1. Spend less than you earn
2. Avoid the use of debt
3. Build and emergency fund
4. Set long-term goals

Clearly, all of these are inter-related: If you can't spend less than you make, it makes it hard to avoid debt and build an emergency fund. When looking for practical advice, I recommend the book The Richest Man in Babylon by George Clason. It's half a how-to book and half a story book. There's a bunch of short stories, and each one has a clear, practical tip. Though, in all honestly, I think it's more a mindset than a lack of ideas. Once you decide to get out of debt, you will figure out ways to do it on your own.

So, I would follow Stephen Covey's advice. In his book, The 7 Habits of Highly Effective People, one of Covey's habits is to "Begin with the end in mind". I like doing this because it helps to focus on what's important. So, I recommend setting long-term goals first. Give yourself a purpose to get out of debt. Once you have that - and truly want to achieve that goal - you will begin spending less and saving more.

Your goals will obviously depend on where you are in life and what your priorities are. So, think of the following suggestion as a primer for some possible goals.

• Pay off your house.
• Save enough money to send your kinds to college.
• Contribute $5,000 to a mission organization over the next 10 years.
• Pay off all credit cards.
• Contribute $4,000 each year towards retirement.
• Save $20,000 for a down payment on a rental property.

Think broadly and pick things you really want. My mom wanted to be able to take the whole family on a nice vacation every 5 years. She would save around $100 each month which generally would pay for all 5 of us. Two years before it was time, she would start to ask us where we wanted to go. A year before it was time she would start actually making plans. By the time we went we had most of, if not all of, it paid for. Now, that is a savings plan anyone could get excited out.

As a final thought, I'll leave it to SNL. Then next time you're thinking about spending money you don't have, picture this: (hulu.com)

Dedicating Our Finances

As promised, we've learned more about managing our personal finances and I'd like to share. Here's what we learned this week.

The first step in managing your finances for God is to dedicate it all to Him. I realize this is much harder to do than what I just wrote.

The first step is realizing you own nothing. "The earth is the Lord's, and everything in it, the world, and all who live in it." (Psalm 24:1). This means your wealth is not actually yours. Instead, you are simply a steward. A steward of your house, car, family, and money. Everything. Take a minute and wrap your head around that one. This is the exact same relationship I have with HP. They gave me a computer to use and take care of. When I'm done at HP, I will give the computer back. Everything I do on the computer should be to help HP. Now image you worked for God and he gave you everything in your life. Are you using all of it for the good of Him? I realize it's a high standard - I'm not even perfect with HP.

Of course, there are some benefits to this situation too. Since I'm just a steward (or manager, whatever), I do not need to be wrapped up in all "my" things, because they're not mine. If I lose or gain something, it shouldn't matter because it wasn't mine to begin with. Hopefully you also understand that, like when borrowing something, it's still your responsibility to take care of it and try not to break or lose it. It's a subtle shift in thinking, but a powerful one.

It was strange waking up this morning because when I looked at Jessi, I realized she's been temporarily entrusted to me. I need to take care of her, but not for my own pleasure, but for God's pleasure. In some ways, that implies a whole lot more responsibility.

The Fine Art Of Small Talk

I recently read a short, but powerful book. I originally saw it in a Kinkos and probably over a year later got around to actually reading it. I was going to be taking a short plane trip and wanted something I could easily finish. Debra Fine's The Fine Art Of Small Talk slid right to the top of the list.

The book starts out recognizing that everyone is afraid of being stuck in a situation where they don't know anybody. Where you literally have to start up a conversation with a complete stranger. You absolutely wish somebody would come along and take YOU out of your misery by simply starting up a conversation with YOU. The great revelation is that YOU can be that somebody that rescues somebody else, and in turn rescues each other. The book then goes on to give advice and tips to make it easier to be that person who succeeds in small talk.

At the end of the book, Fine gives a list of Do's and Dont's which I printed off for each car and Jessi and I now review on our way to any event. It serves as a great refresher, and gives us the courage to be better at small talk. I won't give away all of Fine's secrets, but here are some of the good ones:

• Do take the risk and introduce yourself to others.
• Don't hope that your grandmother from St. Louis will arrive and introduce you to all these strangers. (Jessi's favorite)
• Don't use nicknames without permission!
• Do make people feel special by using their names during conversation.
• Do ask a person's name if you've forgotten it.
• Do prepare icebreakers that show a genuine interest and are tailored to the occasion or situation.
• Do "play the conversation game," offering information about yourself and your activities so others can learn about you.
• Don't monopolize by speaking for more than four to five minutes - throw the conversation ball back and forth. (I'm guilty of this)
• Do practice an "elevator speech," offering a couple of interesting sentences about your work.
• Do use humor whenever possible to overcome uncomfortable moments.
• Don't tell jokes unless you're a master joke teller.
• Do get excited about other people's activities and interests.
• Don't melt away from conversations.
• Do issue invitations to continue relationships.
• Do regularly stay in touch with those you meet.
• Do keep track of what you learn about people so that you can use that information in future communications.
• Do use open-ended questions such as, "tell me about..." and "How did you come up with that idea?" to jump-start a conversation.
• Do come prepared to change topics if a conversation has lost steam or encounters a roadblock.
• Do compliment others about their behavior, possessions, or appearance.

Fine has many more which are just as good. The book is a quick read, and it is worth reading.

Managing Our Finances

Jessi and I recently started a personal finance class put on by our church. The curriculum is called Managing Our Finances God's Way and was created by Crown Financial Ministries (lead by Rick Warren who wrote Purpose Driven Life). We're just getting started, but already it's got us thinking.

In all honesty, I didn't really want to go originally because I'm not a really a fan of spending a ton of time thinking about finances. I don't like creating and tracking budgets. I don't follow the stock market. I don't compare 401K and IRA plans. I don't like trying to figure out the right amount of life insurance. I don't calculate my personal saving rate or any other measures of "success". The only thing I really look at is my bank balance twice a month which tells me how much I can spend. That's just about the most time I want to spend managing my finances. I'm able to do this by following Timothy Ferriss' 4-Hour Workweek plan: I invested the time upfront to create a system I could walk away from (I give credit to Timothy for helping me articulate and refine a system I had already created).

I also didn't want to go because I had a feeling the class was designed for employees. Robert Kiyosaki has a visual he uses (you can see it on the cover of Cashflow Quadrant) to talk about employees, self-employed, business owners, and investors. It isn't that any group is better or worse than the other, they just have different values when looking at life. We all occupy each in some way in our life, it's just that some tend to dominate others. Here's a quick description of the different values:

E values security

S values independence

B values teams work

I values financial freedom

I'm trying to transition my thinking from an employee to a business owner. Talking about retirement planning is boring (unless it's with my mom. She does it for a living and we get into awesome debates). Instead, I'd rather talk about businesses and investments. I want to know how to structure and run a business that glorifies God. Again, I don't want to spend my time thinking about finances, I want to spend my time living life and working on a business.

Even though I don't spend much time thinking about finances, it doesn't mean I have a super simple structure. Here's how I set up my system: I currently have 10 checking/saving accounts (ING is amazing because it's so easy to set up new accounts as I need them) where each one has a specific purpose which draws automatically from my main checking account. For example, I have a car maintenance account, emergency savings, rental reserves, travel fund, gift fund, and charity fund, etc. Trust me, it's really hard to spend extra money when it's all in separate accounts and all I see, and can access when shopping, is the money transfered to my living expenses account. Plus, since everything gets transfered automatically, I don't have to remember to do anything. Thanks to Mint, I've aggregated everything together so keeping track of it all is a breeze too. I literally spend less than an hour a month quickly checking over everything to confirm the system is working.

I remember when I first proposed this structure to Jessi she thought I was crazy. She wanted to have one joint account that we did everything out of. I had her read The Automatic Millionaire by David Bach who gave me the original foundation for this structure (I always give her permission to skim the technical parts :-). She loved it and quickly saw the benefits. She no longer has to track everything in a spreadsheet. She no longer has to remember, or rely on will-power, to transfer money or save. All of this translates into less time thinking, and typically worrying, about finances. It has freed us up to do more important things, like actually living life.

Maybe you can see my apprehension to join this class. I already have a sleek system in place that works. At the least, this class would waste a couple hours for the next 7 weeks. At the worst, it would create more work which I didn't want.

Thankfully, after going to a couple of classes, I don't think either one of these will be the case. I probably won't need to change much in my system, but I can already feel a shift in my attitude toward managing our finances: from wishing I didn't have to, to respecting it's importance and remember the purpose behind finances. Plus, this gives me an opportunity to share here.

The first thing we learned (and my original topic when I sat down to write) was the importance of managing our finances. The Bible has 2,350 verses in the Bible about money. Clearly it's important, but why?

How you manage your finances is preparation for Heaven. Luke 16:11 says "If you are untrustworthy about worldly wealth, who will trust you with the true riches of heaven?" In Paul's letter to Timothy about the people of Ephesus he says, "Tell them to use their money to do good... by doing this they will be storing up real treasure for themselves in heaven - it is the only safe investment for eternity!" (1 Timothy 6:18a, 19a).

What does this mean practically? Well, I'm not 100% sure yet. What I do know is that whatever I do I need to do it purposefully and carefully. God will be watching to see how I do with this small(ish) task. It's OK to spend time thinking and planning about finances as long as it's done for the right reason. Furthermore, running a business that is designed to glorify God has two benefits. 1) It glorifies Him. 2) It uses our finances for a good purpose.

Over the next few weeks I hope to learn more about how to successfully manage our money. I'm pretty sure we're doing it right, but the reason why we're doing it right will probably shift slightly. I'm also pretty sure the focus will be 100% on personal finances.

To end with, we were shared a prayer from Agur in Proverbs 30:8-9. I really liked it because it talks about balance in respect to finances.

"Don't let me too poor or too rich.

Give me just what I need. If I have too much to eat,

I might forget about you; if I don't have enough,

I might steal and disgrace your name."

2010 Goals

I don't know about you, but this year has taken off like a rocket for Jessi and I. We started the year in Michigan with Jessi's Aunt (A Qik video). Then we headed home and remodeled one of the kitchens of our duplex with my family (Another Qik video). We advertised it for rent and just found our new tenants yesterday.

Somehow I also managed to sit back and reflect on what I want to accomplish this year. My friend, Biraj, said I should post them to my blog, so here it is.

In an attempt to create SMART goals, I tried to get pretty specific. I explain what it is and my plan to accomplish them. Furthermore, these are in order of importance.

1) Read Bible 3x/week

As the foundation for all my decisions, I need to spend more time in the Word. Last year I said something about being more "consistent". This year I want to be more concrete. Eventually, I'll be up to every day, but right now it'll follow my workout schedule. So, when I do my push-ups and crunches, I'll read between reps.

2) Share the Gospel with 1 person

Our church has been talking about the importance of not only living a Christian life, but sharing our faith with others too. I'm not 100% sure how to accomplish this goal yet, but it's something I want to do. It'll start with building genuine relationships and taking advantage of opportunities when they present themselves. I still need to work on the "take advantage" part and will spend time developing that.

3) Hug more people

Hugging people is so much fun because it's so personal and better communicates how I feel about them. I don't even do this enough with Jessi. I realize it isn't exactly SMART, but it sounds weird to say, "hug at least 3 people a week" (IMO).

4) Communicate my excitement!!

I think this goal relates to hugging pretty closely. I need to improve sharing my emotions with others. I've had a couple people doubt my excitement because I can be pretty placid when I am actually excited. I'm not 100% sure what this looks like, but I do know how I acted when Jessi and I went to Disneyland (I was visually excited) and Jessi herself gives a good example of what it looks like to be excited about something.

5) Achieve ZERO short-term debt

Thankfully, we don't have a lot of short-term debt. However, Jessi and I started taking a finance class put on by our church and this is one of the goals laid out in it. I think it's achievable. The way I typically spend money is to use my credit card and then pay it off that month (or shortly after). It worked really well until we started doing repairs on our duplex. Now I need to pay off those repairs and make a shift from spending on credit to spending from a checking account, which requires a shift which income I spend. Without getting too mathy, we should be able to accomplish this because our expenses are less than our income. It will just take time and smart choices each month.

6) Find 3 business builders

Our Univera business has been fairly stagnant the last two months and now that our duplex is starting to switch over to autopilot I need to focus more here. Again, this will start out with building genuine relationships and if Univera fills a need for someone, present the business to them. I also need to get better at being rejected so I can engage people without fear.

7) Level 4 conversation 4x/week

Have you noticed a trend yet? Lots of my goals this year revolve around building and maintaining relationships. It's become very apparent that I'm OK at it, and if I truly want to be successful, I need to include others and build them up in the process. I don't remember where I learned the 4 levels, but here they are:

Level 1: Superficial (ex: talk about the weather)

Level 2: Facts (ex: talk about what you do for a living)

Level 3: Opinion (ex: talk about what you think about the latest political bill)

Level 4: Deep Insight (share something personal)

You typically need to work down each level before you can learn something special. I worked on this a lot the second part of last year and am looking to further improve. This will lead to having deeper, higher quality relationships instead of just a bunch of superficial ones.

8) Find 3 customers

Finally, I want a obtain 3 new Univera customers. I'm pretty sure this will happen naturally as the other goals develop over time, but I wanted to explicitly remember to do this.

That's it. It should be a fun year, and a busy year. By accomplishing these goals I believe I will be living a rich life and a life on purpose for God.

How to Install a Water Back Flow Prevention Valve

Have you ever wondered how to install a water back flow prevention valve?

When my parents came to visit over Thanksgiving my dad helped Jessi and I install one. We were concerned that water was getting under the house from the storm drains and installing this valve will stop that from happening. This video chronicles the process and fun we had installing the system.

Garage Videos

Jessi and I are currently in the middle of our garage adventure, and believe me, it's an adventure. So far we've only had to buy one item because we couldn't find it - a can opener. We've created our own inside joke for anything else we can't find, "Oh, it must be with the can opener." Let me tell you, whatever container that can opener is in, is huge.

I created these two videos during our move, but haven't uploaded them until now because I didn't have my personal computer out. The first is me ruminating on our "stuff" and the second is a short clip of Jessi and I playing "I Spy".

My YouTube Channel for more videos.

All Fixed

For all of you worried sick about our Lego accident I thought I'd give a quick update. Tonight Jessi and I started a show on Fancast and worked to fix our tower. We slowly sorted all the pieces and started sticking it back together. Thankfully it's such a symmetrical structure it wasn't too tough.

So our Lego Eiffel Tower is once again complete and Jessi is all smiles again. It is a happy ending. :)

A Broken Tower

This evening I was getting ready for a meeting with a tax consultant regarding our duplex. I was looking over documents and had asked Jessi to find some other paperwork since she always seems to know where they are. When the door to the garage opened (remember, we're still doing that whole thing) I heard gushing tears. I immediately jumped up assuming something had fallen on Jessi and that she was hurt.

Not exactly. While standing up with the paperwork, she bumped our Lego Eiffel Tower and sent it crashing to the cement floor. Jessi was in tears because she had accidentally broken a set of Legos. Now, I'll be honest. This kind of warmed my heart in a "guyish" type of way. I knew Jessi enjoyed building Legos with me, but I didn't realize she was THAT attached to it.

So this weekend I will get to play the role of super husband who figures out how to put our Eiffel Tower back together. At first glance I don't think it'll be too tough and I'm actually kind of excited to try and build it again. Then I'm going to store it in one of our obscure corners where we don't go... next to the Death Star which would probably make both of us cry if broken.

Leadership Definition

This last Saturday Jessi and I went to a Univera regional event. It's a ton of fun because we get to see many friends from across the country. It's also educational with great speakers all day. I thought I'd share one of the things I learned today: The definition of a leader (at least according to Univera, though I'll try to generalize)

Clearly Established Priorities & Values

First and foremost it's important for a leader to have balance in their life. Some areas to consider are spiritual, family (spouse, children), business, recreation, fitness & friends. If their life is in balance, they will find consistent success and not burn out.

Desire to be Free Financially

A leader has goals, both short-term and long-term. More importantly, they're willing to sacrifice to achieve those goals (yes, be willing to sacrifice TV). It's actually this desire, not just financial freedom, that drives people to be and do their best. Without desire you get one of two possibilities: 1) They give up when times get tough or 2) There's a flurry of activity with little actually being accomplished.

Coachable & Teachable

A leader will use a system that works, and improve the system when it doesn't work. They will study and strive to be the best they can be. Part of that involves reading daily and attending training courses.

Is a Team Player

A leader is willing to do the work themselves to become great (sometimes called "Leading from the front). Others are inspired others because of their leader's work ethic and compassion. Obviously, leaders work well with people. They are positive, energetic, empowering and engaged.

Invests in the Business

I'm talking both time and money here. A leader invests in people and themselves to help achieve their goals. With Univera, this involves buying products and going to team events. Maybe it requires buying a piece of equipment for a different business.

Has the Magic!

People are attracted to leaders - they are inspired and believe the vision set by the leader. Leaders are fun to be with. They laugh a lot and are always smiling. They also submit their ego, utilize personal power & credibility, are mentally tough and have a huge heart for people.

Draws out the Key Leaders In Their Group Everyday

A great leader figures out who else is a leader within their organization and helps them become even better.

Well, those are some thoughts on leadership I took away from this weekend. I know it's much more complicated, and in some ways simpler, but I thought this was a good way to think about leadership. Enjoy.

A Couple Thoughts On Getting Out of The Rat Race

I recently had lunch with a new friend and the conversation quickly turned to one of my favorite topics: getting out of the rat race. I love talking about why people want to get out and then sharing ideas on how they're doing it. I've learned a lot from reading and talking with people and thought I'd share just a little bit.

The Why

Despite everyone having seemingly different reasons (travel more, sleep in, be with children, etc.), I've found that it always boils down to one thing: they're seeking some sort of control in their life. Once I realized this, it opened me up to even more possibilities. What I am looking to control? Can I achieve it without getting out of the rat race? For example, if all I wanted was to be able to sleep until 8am, I could simply change jobs and reach my goal.

The How-To

Just as much fun to talk about are ways to create passive income which frees up your time to do other things. Note: passive income does not mean you never have to touch it. You will have to check in and do stuff, it just doesn't require 40 hours every week. Now we all know of the classic businesses like real estate and laundry mats which take a significant amount of capital to get started. Instead, I wanted to share a couple smaller ideas I've heard.

• Own and rent pinball machines to other businesses. This is exactly what Warren Buffet did when he was a kid.
• Own and rent candy/soda machines to other businesses. Jessi knew some family friends who did this with each of their kids to teach them about passive income.
• Raise animals for later sale. My friend bought some cows, is raising them, and will sell them in a couple years. His kids help him feed and take care of them. If you already have the land, this could work well.
• Grow plants. Another friend grows hay. It's relatively low maintenance, you earn some money, and the tax advantages are nice.
• Create a website selling drop-shipped items. You sell it, another company makes and delivers if for you. Being an amazon affiliate is another type of example.

There are tons of ideas out there. Each idea I just mentioned could potentially get you out of the rat race, plus they're great learning tools for kids. You start small and continue to reinvest to grow your business. Eventually, you reach a large enough scale that you can hire someone to help with the day-to-day operations (Raising 12 cows is do-able. A couple hundred requires help). For example, we own a duplex now which we manage. We will buy and manage more property in the future. Eventually we'll own enough that we can trade them in for a larger complex and hire a management company to run it for us. Remember: owning a business, not managing it, is what you want if you're looking to get out of the rat race.

Fix Up Videos

Jessi and I were in high gear this weekend working on our new digs. It's a lot of work, but ultimately we're enjoying it. Here's one of my favorite videos which captures our realization that we still have a long ways to go on this painting project.


We have more short clips which you can watch on my YouTube channel.