Budgeting and Getting out of Debt
This is part three of a four part series on personal finance basics. Parts one and two are linked, but not required to read this post.
The story of a mid-20s millennial burdened with student loan debt, still living at home, is so oft-repeated that it has risen to some level beyond cliche. However, living through the 2008 recession has also left this generation in a more mindful state, conscientious of the risks of investing.
While developing a fancy investment strategy sounds fun to some, it is more important that your 20s are spent focusing on the fundamentals. Setting yourself up for success means paying off debt and learning how to budget. Practicing this delayed gratification will be hard at first, but will become easier as it develops into habit.
Paying Down Debt
There are a number of personal finance coaches who espouse the notion of “good debt” and “bad debt”. Good debt has a low interest rate and was used to buy an asset of value, that could appreciate over time (think of a mortgage for a house). Bad debt has high interest rates and might have been used to buy a depreciating asset (think credit card debt or car loans).
The reality is all debt is a limiting force that inhibits you from seizing new opportunities.
You are working at a medium sized corporation and your friend approaches you with an offer to join her fast-growing startup. You’d take a 50% pay cut, but get significant equity and the chance to take on a lot more responsibility. You’d love the experience, but your large monthly mortgage and car payments mean you’d barely have money for food and gas.
These large immovable payments are known as “golden handcuffs”. Don't let them slip on.
Your 20s are a time to be humble and thrifty. Just as it’s a bit obnoxious to think that you’ll be in the c-suite by 26, you shouldn’t be trying to live a lifestyle of someone who’s made it.
Quite the opposite in fact. The more money you can sink into you student loans and credit card debt, the less interest you’ll end up paying to the lenders you borrowed from.
Paying down the principal of your loans aggressively will afford you the flexibility and options to make real choices as you get promotions and raises.
Start with your highest interest debt and work your way down (don’t ever forget to make minimum payments on everything). As you pay off debts, it will snowball as you have more cash flow to aim at fewer targets.
Restrictions as a Path to Freedom (aka Budgeting)
Most people live like this:
Income - Consumption = Saving & Payments
Budgeting maestros flip the script to something better:
Income - Saving & Payments = Consumption
What does this actually mean?
Most people live their lives feeling guilty because they spend first and save second. Whatever is left over at the end of the month gets pushed into savings, fluctuating significantly month to month.
Along with being inefficient, this is a more mentally taxing system of saving. Each purchase is accompanied by a small (or large) pang of guilt, because you see each dollar spent as savings lost.
When you save first, by automating your monthly savings, you actually release yourself of guilt, knowing that you can spend whatever’s left, because the saving has already been done.
So how can you make this automation a reality?
Through your direct deposit preferences or your bank’s online services; you can select a percentage or fixed dollar amount to be regularly moved into specific accounts.
Allocating a specific amount to savings and debt repayment allows you to enjoy the rest of the money that’s leftover, guilt-free.
Automating your loan repayment means you’ll never miss a payment, and can sometimes get your interest rate reduced slightly.
Mint - One stop shop for budgeting and getting a full picture of your finances
Mr. Money Mustache - Blog with a cult-following where you can get a “personal finance PHD”
Budget Simple - Another, more simplified budgeting tool
This is part three of a four part series on personal finance fundamentals. Check out part one and two if you missed them.
This is part two of a four part series on personal finance basics. Part one is suggested, but not mandatory pre-reading. The beauty of having a blog is that you can share lessons you learn, right as you learn them. Hopefully, this post provides a useful nugget of info that you can apply sometime in the future.
As mentioned in part one, it’s important to be mindful of your credit score and work to improve it. A less commonly mentioned method of doing this is increasing your credit limit (the total amount you are allowed to charge to your credit card).
One method to improve your score is to increase your credit limit. This works by lowering your credit utilization ratio, which is the percentage of your available credit that you are using. Credit utilization accounts for 30 percent of your FICO score, meaning the lower your credit utilization, the higher your score.
You can get a higher spending limit by contacting your creditor and submitting a request. Make sure you read below before you make a move.
1. Your credit can automatically increase
There is a chance that you won’t have to do anything for your credit limit to increase. Credit card issuers periodically review their customer’s data and decide to increase their credit limit. A creditor is more likely to increase your limit if it is relatively low. The higher your limit, the less likely you’ll be automatically bumped up.
The best way to get an automatic increase is to ensure your account has relatively low limits. The higher your limit, the less likely it is that your issuer will hike it for you.
2. Don’t ask too soon
Don’t request a limit increase within six months of getting a new card, as it could be an instant red flag that could lead to denial. Creditors usually review accounts semi-annually and want to see some history of good behavior before considering increasing their trust in you.
3. Don’t ask for too much
It’s also wise to be conservative with your request. The size of your request factors into the creditor’s decision to approve, or deny, your increase.
Plan on asking for an increase between 10 to 25 percent of your current limit. If you ask for too much and get declined, you’ll have to wait at least three months before asking again.
4. Only request an increase for your best credit card
You shouldn’t be requesting increases on all your cards. When an issuer pulls your credit report to review your payment history, it causes a temporary dip in your credit score. If you are applying for increases on multiple cards, this will be a red flag that can both hurt your score and serve as cause for rejection.
If you make one strong case to your favorite company, your chance of success is greatest and you’ll save time.
What are creditors looking for?
I’ve already mentioned a few key components, but a creditor’s review is not pure math. They want to see a strong payment history, you should be paying your whole balance off every single month. Late payments are a red flag that indicate you shouldn’t be trusted with a larger balance.
When talking to the company, mention your loyalty, but don’t be afraid to mention that you are willing to take your business elsewhere.
Maintain this practice for a few years, and you’ll slowly build up a substantial credit allowance.
This is part two of a four part series on personal finance fundamentals. Click here to check out part one.
I did not break any records when I hit my Kickstarter’s goal, but I did hit it in three days.
Below, I’m going to outline three keys to my success that I would give to someone considering their own crowdfunding campaign.
In preparation for my campaign, I read the book Bold by Peter Diamandis, which has a whole chapter outlining how to crowdfund a project. Diamandis stresses the importance of how you communicate the purpose of your campaign to your potential backers. He cites multiple examples of successful campaigns and interviewed people who have made it happen.
There are also a multitude of “Kickstarter gurus” who offer their services to improve the quality of your campaign. While you may not have a budget to hire one, they often have blogs and YouTube videos that outline their basic keys for success.
1. Prep your backers and tout success
A crowdfunding campaign makes or breaks it the first week it is live. It is very uncommon to ignite a late surge that funds a majority of a project’s goal after it has floundered for a few weeks. People like to be part of something successful and join movements that others have already taken part in. This makes it extremely important that you reach at least 25% of your funding goal in the first 3 days.
Seem unreasonable? Not with proper preparation.
You have to develop a plan for how you will drive traffic to your crowdfunding page early. Obviously, you will post on various social media platforms and tell your friends, but that’s not enough.
I emailed more than 80 friends and family members multiple times before my campaign launched thoroughly explaining what I was doing. Most of them watched this video.
Many people emailed back that they wanted to contribute right now, but I simply told them they had to wait a week. While they were frustrated, I knew that I wouldn’t have an issue getting out to a fast start.
Once I launched, the pledges came rushing in. This meant that anyone who saw it through my post on social media came to a campaign that was already significantly supported. This social proof increased the likelihood of them joining in, too.
Later on, I made sure to update both supporters and potential backers on how well the campaign was going. Even if this only inspired people to look around, they were still interacting with me, my podcast, and my brand.
2. Build a great page
You will not be successful if you start your crowdfunding page and publish all in one day. Diamandis suggests at least a month of prep before your campaign launches. While that length is more important for folks with goals exceeding $20,000, I prepped for a little over two weeks.
What does preparation for a crowdfunding page look like?
First, you have to make a video for your page. Kickstarter’s blog has a great explanation on how and why to make a video. Their data set shows that your chances of success nearly double with a video on your page. Additionally, it allows you to clearly articulate why you are trying to raise the money.
My friend Adam Haritan helped me shoot and edit the videos for the campaign. They don’t need to be Hollywood standard videos- production and passion are more important.
Clear communication is essential for a crowdfunding campaign as well. Your page should very clearly explain what the money will be going towards. It should also be apparent in your budget that you are only asking for the minimum amount you need to succeed.
Not only does a lower goal increase your probability of success, but it also makes it feel more attainable to your audience.
3. Smart and strategic rewards
Every campaign should have clear and valuable rewards. Reward levels will vary by project, but everyone should have something at the $1, $25, and $70 level. These are the most common levels of contribution and will get the maximum number of backers behind you. Offer bigger rewards if you have something to offer that is worth such a donation.
Make sure you account for the cost of producing your rewards into the goal. I gave t-shirts to everyone who contributed more than $25, and each shirt cost about $10 to produce.
You don’t have to give a physical product at every pledge level either. I offered my time for anyone who contributed over $70. Both experiences taught me a lot about pricing physical products and charging an hourly rate.
Side note; Follow through and send your rewards. It takes work, but you owe it to your backers. Be reliable.
Mini-hack; The rewards also serve to benefit me as well. Every shirt I sent out has my logo on it, which will serve to build my brand. Getting coffee with larger backers has the potential to build both our networks and create new valuable relationships.
All of my advice essentially boils down to making it easy for people to contribute to a worthy cause. Make sure you take the time to say, “Thank you.” Basic manners and empathy are significantly underrated. An email or a phone call is nice, but take it to the next level with a handwritten note.
A large portion of crowdfunding campaigns are not successful, but, interestingly, crowdfunders are 50% more effective the second time they try to run a fundraising campaign. So, if you fail, dust yourself off, learn something, and try again.
If you liked this, be sure to check out all the people who helped:
Liam Rosen, TopScore
Squirrel Hill Chiropractic
Greeno, who has helped me edit a few episodes of the podcast
Dan O’Conner, the very first backer
Jimmy Leppert, UpCall Ultimate
Whiskey with Wes
James Park, Los Angeles Aviators
Elizabeth Craig Photography
Ryan, CB Insights
Dave & Portie Watson
Nathan D Hessington VI
Art & Denise Chau
A special thank you to my family members who supported me;
Aunt Cheryl - You rock!
Denny - Thank you, thank you, thank you!
Holly - You’re the best
Mom & Dad - thank you for your belief in me
Ashley - I couldn’t have done any of this without you
Young Professional Networking Done Right
Going to a networking event can be daunting, especially if you aren’t a regular. Whether you are attending for business reasons, to make friends, or just blow off some steam, keep in mind these important tips.
Find a way to be involved in leadership
Every networking organization has a few SuperConnectors in their midst. These are the folks that have 100s of LinkedIn connections and are happy to help you out without expecting anything in return. These are the people that you want to meet, and the best place to find them is in the leadership committees and boards for the networking group. Ask around and you will find them quickly.
Caveat; Only take a leadership position if you can handle the time commitment and want to contribute. There is real work involved and it needs to be done properly.
Step out of your comfort zone and introduce yourself
Walking up to a stranger and introducing yourself can be daunting. The reason you are at a networking event is because you get to be with a bunch of people who have self-selected themselves for this type of event. That doesn’t mean that 100% of people will be your soulmate or next business partner, but you’re going to get a lot of smiles.
Even if you aren’t in a client-facing role at your current company, social skills are a key trait to develop. Being comfortable making face-to-face conversation is a key skill. If it helps, see the hour or two as a gym session for your social skills.
Follow up with the folks you meet on LinkedIn/Email
Always grab a business card and keep a pen handy to write down a detail about the person or your conversation. You should definitely have a LinkedIn profile and try to reach out to all of the people that you talked to for more than 3 minutes. Save emails for the folks who aren’t on LinkedIn or to follow up about specific intros or business opportunities that you discussed in person.
Caveat; A lot of people make a big deal out of how long to wait before following up. If you are at a huge networking event or conference, then it probably makes sense to wait 3 days or so to follow up. For a small gathering, 1 day is plenty.
Try to pitch anybody at the event
This is a really bad look. If someone asks, feel free to give a brief explanation of what you do. But you are not going to close or sell anyone at a networking event. If there is genuine interest then ask for a meeting or call another day. Pitching at these events is a turn-off and reeks of desperation.
Give up after one event
The first event can feel like the first day of high school. Regulars congregate to catch up. Newbies hang out on the periphery. Even if the first event doesn’t go so hot, things will get better at you second and third events. After three, you’ll have a solid feel for the group and be able to make a reasonable decision about continuing to attend.
Worry about meeting everybody, aka “fast-food networking”
Even at a small event, it is unlikely, and unnecessary, that you try and meet everyone. If you rush from person to person dropping business cards, you are going to be forgotten or worse, not taken seriously. If you spend a whole event talking to one or two people, this is not a loss. In fact, you probably took important steps towards forging a new friendship.Make it a goal to focus on making one or two deep human interactions per event.
Caveat; Don’t linger or butt in. Social awareness trumps all.
By using the above Do’s and Don’ts, I was able to transform my network and even take a role in leadership in my own community with Pittsburgh Young Professionals. PYP provides career minded individuals with opportunities to develop socially, professionally, and civically. As a membership committee member, I help break down the awkward invisible walls that you might experience at networking events by being a friendly and engaging co-host while encouraging first-timers to sign up for membership or to become more involved.
While I love the events, the internal committee meetings may be even better. Since jumping on board in a leadership role, I’ve quickly realized how many driven individuals make up PYP’s leadership. Watching other extremely high performers conduct themselves while putting others first is a valuable, educational experience, and I learn so much from listening and interacting with local peer leaders. Being able to play a part in PYP greatly improving its member retention and total membership has been challenging, but most importantly, it confirms to me as to why you should be involved in a leadership role within your community.
Kenny Chen (far left) has introduced me to 4 of the guests who have come on my podcast. Ryan (far right) regularly sends me inspirational articles. More importantly, I have made real friends who are invested in my success as much as I am in theirs.
Overall, through my experience with PYP and other networking groups, I’ve challenged myself to become a SuperConnector by focusing on making introductions that can benefit others first. Approaching networking with faith and a long-term mindset allows me to avoid worrying about trying to talk to everyone or not giving a social group only one chance. I know that any introductions that I make now will come from a mindset of improving the Pittsburgh young professional community, which will in turn, help me reach the next level in my own career.
Bring this mindset to your next networking event, and I’m confident you’ll find it a success.
How to Survive an Eight Hour Bus Trip
The bus sucks, but it is an order of magnitude cheaper than flights and allow your attention to stray more than driving a car (at least for the next few years).
In order to get through a long bus trip as stress free as possible, you need to plan ahead. Here is my strategy for every trip.
Red Eye buses and planes got that name for a reason. An overnight trip is a guaranteed fitful night of sleep leaving you groggy and unproductive the following day. However, a day trip is total waste of your day and inspires violent cabin fever. The best strategy is to get a trip that either arrives late (think 10p-1a) or leaves early (4:30a-7a). This way you can plan to get 4-5 hours of base sleep in a real bed, and catch another 2-3 on the bus. If it takes 4 hours to get 3, all the better, you just cut your ride in half.
24 Hours Prior
The key to comfort is as much seat space as possible (the main selling point for first class plane tickets).
To maximize your probability of getting a free seat next to you, you're going to have to employ some GAME THEORY.
Step One - get in line early enough to snag your own pair of seats.
Step Two - Defend your turf. Right of the bat, men are going to have an advantage. We are larger and generally perceived as less friendly or hygienic. Your fellow passengers are looking for a quiet, no-drama ride when choosing someone to sit with. You need to look loud, large, stinky and/or rude.
Ladies, this is the time to let loose your crazy cat brain or pack twenty extra unnecessary things. Throw on headphones and apply resting bitchface.
Dudes, manspread and stack everything you own on the seat next to you. AVOID EYE CONTACT AT ALL COSTS. The eyes are the gateway to the soul so make like Donald Trump and put up a wall.
If you fail, be polite, the person sitting next to you isn’t excited about this either.
You need to dress in layers. The bus can and will go from freezing cold air-conditioning to a non-ventilated sauna in the blink of an eye. It is the will of the gods and most bus drivers will not be bothered to adjust any settings for you.
Pack non-perishables that are not going to be temperature dependent. Nuts, PBJs, and water are staples. Chocolate and guacamole are luxuries.
Congrats, you got your own pair of seats and crushed a 3 hour nap. We are now 5 hours to our destination with only one rest stop.
Do Not Count on Wifi
Just trust me. While I'm sure the technology to provide adequate wifi on a moving bus has been figured out, no company has made the considerable requisite investment.
Pack two books
I know you usually don't read, but this is a special case. It can be brutally boring and the solitude of a long journey will actually allow you to be absorbed by a medium that you have sacrificed in favor of Insta-pics, moderately witty tweets and useless blog posts. Show some discipline and bang some literature out.
If all else fails, just listen to people talk.
Bus people are neurotic and or crazy. Enjoy the ride.
Disclosure; Everything written above was transcribed in the back of a 114 degree Megabus somewhere in eastern PA by a dehydrated, malnourished, sleep-deprived blogger. Apply these principles at your own risk.
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