Category Archives: Motivation

To the Class of 2012…

Graduation season is winding down, and I’ve been thinking a lot about the college graduates who are now entering the “real” world.  The transition from college student to independent adult is mostly awesome, though it does entail some new challenges.  All you new graduates out there now have the freedom (and responsibility) to manage many more areas of your own lives, including your finances.  Even if you are still searching for that first job that will launch your career, you can and should begin to develop a relationship with money that is healthy and positive.

In the ten years since my own college graduation, I’ve learned a few things about money.  I continue to be a student of personal finance, but I hope you will allow me to share with you the most important things I’ve learned so far:

The way you spend your money is a direct reflection of your values and priorities in life.  It’s very easy to mistake success for “stuff.”  Wearing a tee shirt with a designer logo does not mean that you are successful; it means you are susceptible to marketing.  If you looked at your spending as a snapshot of who you are, would you like what you see?

Experiences make you much happier than “stuff.”  Experiencing something is truly living.  You and your college friends will be separated in the future by time and distance.  Spend less of your money on “stuff” so that you can afford to meet old friends for dinner, or even vacation.  Remain connected with people you care about by experiencing things together.

You will never, ever regret starting to save sooner rather than later.  Albert Einstein said, “Compound interest is the eighth wonder of the world.  He who understands it, earns it.  He who doesn’t, pays it.”  Personal finance can seem complicated, but the most important principal is easy enough for a child to understand: Save as much as you can as early as you can, and you will build wealth.  It really is that simple.

If you want to live a free and independent life, avoid debt.  You must give up your time and energy to earn money, so having debt means that someone else owns a piece of your life.  Sometimes debt is necessary, but be honest with yourself about the significance and gravity of obligating your time and energy to someone else.

You don’t need to have personal finance figured out all at once.  Slow and steady wins the race.  Small successes in managing your finances will make you feel incredibly proud.  Congratulate yourself on every small victory.  Use that positive momentum to learn more and to create new goals for yourself.  In a very short time, you will feel confident and in control of your finances and your future.

We all have our own definitions of success and our own ideas about what makes for a happy life.  Regardless of what your ambitions are, always remember that the lead role in your life should be played by YOU.  Money should never play anything other than a supporting role. 

Congratulations, 2012 Graduates, and best of luck.  Viva la frugal!


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Filed under Money Philosophy, Motivation, Personal Finance

Kickin’ Worry to the Curb

When I began living frugally and writing this blog, I really had only one goal: to live comfortably and never worry about money.  Anything more specific than that – building an emergency fund, paying off my HELOC, saving for retirement, etc. – was really just a tactic to achieve the overall goal of financial freedom and comfort. 

I thought that I would achieve this goal sometime in the very distant future.  I imagined that there would be some tangible measure or trigger that would let me know that I could finally stop worrying about money.  Maybe it would be paying off a mortgage and owning a home outright, or maybe it would be reaching a $1 million balance in my retirement accounts.  Whatever “it” was, I mentally prepared myself to wait a good 20+ years before I felt confident enough to say, “I no longer worry about money.”

In actuality, it took only 12 months to reach that point.

Now, don’t get me wrong… I certainly did not achieve any exceptional financial milestones in that time.  I didn’t generate an impressive investment portfolio, and I didn’t pay off my mortgage.  But after 12 months, I did have a focused goal, discipline, and enough progress to feel confident and excited about my financial future.  As it turns out, that’s all I really needed to stop worrying about money.

It’s probably important to clarify what I mean when I speak of worrying about money.  To me, worry is what I feel when I’m scared or insecure.  I worried about money when I asked myself these types of questions:  Am I going to be able to pay my full credit card balance this month?  If my house needs a major unexpected repair, how am I going to pay for it?  If I become really miserable in my job, can I afford to look for another one?  Am I going to have enough money to retire at a reasonable age?

When I worried about money, I didn’t have answers to these questions.  All it took to rid myself of worry was to have good, solid answers:

Q:  Am I going to be able to pay my full credit card balance this month?
A:  Of course.  My spending has been within budget so I’ll have the cash to pay the bill.


Q:  If my house needs a major unexpected repair, how am I going to pay for it?
A:  From my emergency savings fund. 


Q:  If I become really miserable in my job, can I afford to look for another one?
A:  If I ever feel miserable because I’m being put in a position that violates my personal or professional ethics, I can afford to resign and live off of emergency savings while I look for another job.  (Note: This is obviously an extreme situation, and not one I have ever been in or expect to be in.  But it’s very good for my peace of mind to know that I can afford to get out of a seriously bad situation.  If I simply didn’t like my job, I would probably never quit unless I already had another one in the bag.)


Q:  Am I going to have enough money to retire at a reasonable age?
A:  Yes.  I am contributing to my 401(k) aggressively and when I calculate my compounded return over the next 30 years, I can see that I’ll be in great shape. 


It was really important to realize that I could stop worrying about money simply by having a plan and sticking to it.  I’ve definitely lacked discipline in my spending over the last couple of months since I bought my new house, but I know I can get back on track.  In a way, getting off track has been good for me…  I absolutely love my new house and the things I’ve bought for it, but I hate feeling the financial worry creep back into my life.  This has been a good reminder that I love independence and financial freedom more than I’ll ever love things, even beautiful things that make my house look amazing.

The past couple of months have been a financial hiccup for me, but I’m going to take it in stride.  I’m going to use the worry that I feel to reinforce the importance of my long term goals.  There’s no reason why I can’t be worry-free again in a few months, and that’s something I will work toward with focus and confidence.

Viva la Frugal!

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Filed under Frugal, Money Philosophy, Motivation

Save, baby, Save!

I’m pleased to announce that I have a buyer for my house and we will be closing at the end of June!  The terms of sale have been negotiated and agreed upon, so nothing should go wrong between now and closing.  That means it’s time to start making plans for the money I’ll be getting after the sale.

Yep, I am one of the lucky few who have been able to sell a house in this market and make a small profit.  It was great luck that I bought my house in 2004 before the market went crazy and housing prices shot up.  Even though the bubble has burst and prices have fallen, they are still a bit above what I paid.  After my mortgage and HELOC are paid off and the closing costs are covered, I should clear about $12,000.

I don’t plan to spend any of that money, but I still feel like a kid at Christmas!  When the sale goes through, I am going to have the $24,000 emergency fund I’ve been working so hard to accumulate.  By the end of June, I will have grown my emergency savings to $12,000.  I’ll add the $12,000 from the sale and be done.  Why am I so excited about that?  Because it means that all of the savings I do from that point on will be for something much more rewarding than a cash cushion I can never touch. 

I plan to go right on saving like a fiend.  I will open a Roth IRA with the next $5,000 I save, which is the maximum allowable annual contribution (to learn more about IRAs, check out  I’ve always contributed to my 401(k) at work, but this feels like the first time I’ll be taking really proactive steps to achieve my goal of early retirement.  It’s a great feeling. 

A sidebar on the wonders of compounding:

There’s a great tool at that allows you to calculate the value of an investment that compounds over time.  Withdrawals from a Roth IRA are allowed at age 59½.  I am currently 30½ years old.  That means I can make 30 annual contributions and earn compounding returns for 29 years before I’m eligible to make withdrawals.  I plan to contribute the maximum amount allowed each year, which is $5,000. 

I’m assuming that I will achieve a 5% rate of return.  This is conservative, but I want to err on the side of caution.  Also, I’m a little more risk averse than many people when it comes to investing.   I’m likely to switch to lower risk / lower return funds earlier than most people would. 

I entered all of these variables into the calculator at Moneychimp and it revealed that my IRA will be worth approximately $347,775 when I’m eligible to begin making withdrawals at age 59½.  My total investment of $150,000 will generate $197,775 in earnings over 29 years.  Sweet!

But since I occasionally like to torture myself with regrets…  I used the calculator to see how much money I would have if I had contributed $5,000 per year beginning at age 22 when I started working.  By age 59½, my IRA would have been worth $563,955.  My total investment of $190,000 would have generated $373,955 in earnings.  By spending money throughout my twenties on a bunch of crap I didn’t need, I basically threw away $176,000.  Aaaarrrrggghh!! 

Lesson learned:  When you have the opportunity to earn compounding returns, invest as much as you can as early as you can!


After this year’s IRA contribution is covered, savings from that point on will go toward the purchase of a new car and a new house.  I have to say, those savings goals are a little daunting…  Actually, they’re a lot daunting.  I’m going to need around $20,000 to purchase a reliable but modest new car when the time comes (probably in five or six years if I can stand to wait that long).  I’ll need another $50,000 in order to purchase a $225,000 home with a 20% down payment and enough cash to cover closing costs.  So basically, my next savings goal is $70,000.  VERY daunting. 

But I’m not going to freeze like a deer caught in the headlights of my savings goals.  As always, I’m going to maintain my motivation by focusing on the big picture and by feeling proud of what I’ve accomplished so far.  The truth is, I should be able to achieve my new savings goals within six years (while still making my annual IRA contributions).  In the grand scheme of things, six years isn’t that long.  At 36 years old, I will be in great financial shape.  It’s difficult to predict what my financial goals and priorities will be in six years, but I love knowing that I will have options.


Filed under Motivation, Savings & Retirement

Dear Motivation, Please Don’t Leave Me. Thank You.

Motivation is a funny thing…  No matter what kind of goal I’m working toward, motivation always comes to me in fits and starts.  Generally, this isn’t something that worries me too much.  If I’m working on a project that’s part of a hobby, it’s not a big deal if I lose interest in it and neglect it for a while.  Even if I’m working on something important for work, I know that I perform best under the pressure of an impending deadline, so I can comfortably kick back and wait for a strong fit of motivation to set in.

Unfortunately, this would likely be a dangerous approach to financial management.  Money is always a part of your life.  It doesn’t matter how young or old you are, whether you’re single or married, whether you’re sick or healthy.  Money impacts the way you live your life now and the type of life you will have in the future.  Can there ever be a time when it’s okay to indulge in a lack of motivation and disregard financial goals?  I’m pretty sure that the answer to that question is no. 

For someone like me whose motivation tends to suddenly vanish without a trace, this is seriously scary.  So far, my motivation to be financially secure is not waning.  It’s not even wavering.  But I know myself, so I’m worried about how I might feel in a few years, or even in a few months.

With that in mind, I’ve been giving a lot of thought to how I can keep myself motivated, not just right now but for the rest of my life (yikes!).  This blog definitely plays an important role.  There’s nothing like the potential for public embarrassment to keep a gal on track.  I really don’t want to have to write a future post entitled “My Shoes are Fabulous, but Living in a Shack is Not.”

Beyond a public admission of financial failure, I’ve thought of some other things that will help keep me motivated:

  1. Never having a car payment for the rest of my life.  I currently drive an eight year old Honda Accord with 80,000 miles on it.  Since Accords often survive for 200,000+ miles, I’m going to want a new car before I actually need one.  If I stick to my current savings rate, I can build an emergency savings fund AND a $25,000 new car fund by the end of 2012 at the latest.  It is amazing to think that I’ll be able to buy a new car with cash and absolutely no debt!
  2. Retiring at age 50.  This one could be a stretch, but I just might be able to pull it off, or at least come close.  With aggressive saving, smart investing, and a little career management, I hope to be in a position to stop working full time in twenty years.  I might not be able to do a full retirement that soon, but maybe I can work part time doing something I really enjoy even if it doesn’t pay all that well.  Time will tell, but the possibility alone is hugely motivating.
  3. Making my community (maybe even the world?) a better place.  As I build wealth, I will be able to comfortably contribute to causes and local organizations that I care about.  I really look forward to the time when I can make a generous donation without feeling like I’m making a huge sacrifice.  (By the way, before anyone gives me too much credit for having this item on my list of motivators, I should tell you that I am really selfish when it comes to my time.  I’m not proud to say this, but I really don’t like volunteering.  I’ve decided to make up for it in the future by writing checks.  That’s not too terrible, right?)
  4. Feeling in control, secure, and satisfied.  More than anything else, I think this will be my best motivator to stay on track financially.  Within five years, I should be reaching a point where I don’t have to worry about money.  That doesn’t mean that I’ll be able to start spending freely and neglecting long-term financial planning, but it does mean that I won’t have to actually worry about money.  I’ll have everything under control.  I can’t wait to see what that feels like!  Once I get to that point, I know I’ll never want to go back.

I’ll always have short-term goals and benchmarks to keep me motivated, but if I’m ever really struggling, I hope that these “big picture” items will help me stay on track. 

I’m very interested to know what others do to keep themselves motivated…  How do you resist the urge to make a big impulse purchase?  How do you stay committed to saving aggressively?  How do you turn off that inner voice that is so good at rationalizing bad financial behavior?  Please share your thoughts in the comment section.  If you don’t mind, I just might borrow your motivation sometime when I really need it.


Filed under Motivation