Tag Archives: personal planning

What’s Your Source – A Game

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In my early 30s, I gave up climbing as a favor to my family. It was a choice that left me starved of my core need to exercise alone in nature. The “gift” I gave my family had the unintended consequence of starting me down a path that lead to triathlon, as well as my divorce.

Do you know what provides deep personal satisfaction?

Anger, drug and alcohol abuse, fear, depression, gluttony… in my life, these are a sign that I’ve fallen away from a life with meaning.

As a husband, and father of three young kids, I can feel good about putting marriage and family first in the short term. However, if I lose track of my own needs then I end up depressed, angry and full of resentment for the people I was trying to help!

Here’s a game that you can play to stay on track.

Think of yourself and fill in this blank 2 or 3 times…

I am most myself when__________

In my case, I came up with when… I’m riding, uphill, at altitude, in a forest, on a cool day.

Another visualization was when… I’m standing on a ridge line, far above the valley, in the sun.

Another… I’m standing in a forest, it’s snowing and very quiet.

When I see my essential self, I tend to be alone and up high. Mountaineering was a good fit for me.

Then shift your focus to your spouse. In my case…

Monica is most herself when__________

You are likely to find that you skew your view of your spouse based on how you see yourself. I saw my wife swimming (alone) in a pool.

After you’ve had a chance to think through each other, compare notes. I found out that I got my spouse-vision completely wrong!

Monica’s self-image surprised me (at first) because the visions were about helping people. She’s in a good spot as a mom and swim coach – those roles are how she sees her true nature and consistent with some profiling that we’ve done (Myers Briggs).

I hadn’t realized that swim coaching was feeding a core aspect of her personality. It turns out that coaching is a source of energy, satisfaction and meaning for her. It was an important realization for our marriage – we’d be smart to keep that work!

With a young family, you’ll be tempted to lose yourself for the benefit of the kids, or your spouse. You will need your spouse’s support to keep your essential nature in the marriage. The visualization game is one way to start the conversation, and far better than the trouble we cause ourselves when lost in a relationship.

If you keep a daily dose of your essential nature then you’re likely to be a better, and happier, parent and partner.

And now, I’m off for my walk in the forest (uphill, alone, at dawn) after writing my article (quiet, alone, sharing).

It’s important for me to remember that the value of time alone isn’t in the leaving. The value lies in my ability to continue to do work in the world.

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Further Reading: How To Make Love All The Time by De Angelis (yes, I read it)

Should You Borrow?

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Last year, 50% of my cost of living was related to preschool fees and childcare expenses.

This cost can be a source of anxiety, especially when faced with a grumpy toddler. Interestingly, the only cure appears to be: (a) train morning and night; and (b) write an article during the day. If I do that then life seems pretty good.

Another way to counteract the anxiety is to raise enough cash so that I’ve funded my childcare expenses from now until my youngest is in school, five days a week.

I’ve been looking at borrowing against an investment property. Even though it is irrational to borrow (now) to reduce anxiety about a future expense, I’ve been thinking about putting a loan in place.

Here’s my advice to myself. You might find it useful as debt markets improve for borrowers.

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Should I borrow?
Generally no.

However, there are some exceptions that have worked for my family.

Housing – A 30-year fixed loan for a well-located home that has a cost of ownership (mortgage, taxes, insurance, repairs) that is materially less than your cost to rent. If you are unlikely to move for a decade then this type of loan can be a great deal.

There’s a lot in the paragraph above: location, buy vs rent analysis, likelihood of staying put and ability to hold long-term. To stack the deck in your favor, each of these characteristics is essential.

Saving – some folks struggle to save. So a mortgage, particularly a shorter duration one (like 15 years), is a form of forced savings that would not otherwise happen. Still, being locked into a location for 15 years is a big commitment, and inappropriate for most young people.

With real estate, on average, I’ve sold within three years. As a result, the investment return is greatly reduced by the large fees and expenses. To encourage myself hesitate, I assume that I’m losing 10% of the purchase price immediately after I buy. This makes it much more attractive to rent, and if that goes well, then buy small.

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The freedom that comes from a debt-free life is empowering and, my willingness to do “no deal,” has saved me from many expensive errors.

My hit rate on offers has been less than 35% and I’ve been fortunate to miss out on some deals.

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I’ve been thinking about taking out a loan on an investment property that I own. So, I asked my financial adviser his thoughts and he came up with:

Borrow to buy income

Borrow for specific purpose, say, in advance of money coming in later that will repay the loan

Borrow early in one’s career to buy assets that can be used to good affect and which will likely appreciate – eg home mortgages // but remember that being able to move at short notice can be a great way for rapid career advancement

Borrow to avoid selling assets at a bad time market wise – this one is huge and why I like to have a line of credit available to my family (as well as at least one year’s living expenses held in cash)

Borrowing to supplement cash flow is dodgy unless you know how cash flow is going to increase thereby enabling you to repay – this is the classic way the we end up underwater with credit card debt.

In private equity we had a saying – never fund operating losses. In other words, force yourself to cover your cost of living. If you can’t do that then scale back your living. With my childcare costs, I’ve been running an operating loss for five years and it is a source of stress. More debt, to facilitate more spending, is rarely a cure for financial anxiety.

It’s tempting to borrow when the debt markets are good. I’ve found debt to be most useful when:

  • It sits in a company and is non-recourse
  • It is fixed-rate and used to purchase assets that can generate a significant premium to my cost of finance

Where things have gone well, I’ve tended to take a binary approach. I will either invest in a highly leveraged company or, in the case of my personal portfolio, invest in the assets directly, without additional debt.

The key thing to remember is you don’t need to borrow and it’s awful to trade your freedom for something that doesn’t cure your condition.

Aside from professional education, most ‘things’ don’t make a difference – especially when compared to the health benefits of living a lower stress life.

Beware Of The Fun Police

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Can you write a list of the things that make you laugh?

Since last summer, I’ve been working on three traits:

Humility – taking the appropriate space for a situation. My work with hospice challenges me to listen, to not-solve and to focus on quiet presence.

Equanimity – practicing not-reaction, not-replying and letting it roll. First in my actions, then in my words and eventually, I hope, in my thoughts. To challenge myself in this department I’ve opened up my social networks a bit. I’m doing well with not replying in writing – less so with not replying in my head!

Enthusiasm – I’ve noticed that the best parents and teachers have managed to hold onto their childish enthusiasm. Discipline, divorce, insolvency, fraud and positive feedback from being serious… have driven away most of my boyish enthusiasm. It takes a lot of exercise, or alcohol, to get me to let loose.

Why is fun important?

I’m awful at predicting what will make me happy. My default response to stress – sleep more, drink more, do less, eat more and take it easy – is a personal disaster for me.

It’s been this way for a very long time and I have learned to cope via two main strategies:

The Big Hairy Goal – via external validation – I wrap my identity around achievement of something most people find too difficult. The “can’t” of others becomes my reason to live.

Habit – flowing from the BHG, I create a plan that requires me to get out of bed and do work.

I’m not convinced that my method works for serving my wife, kids and family.

So I’ve been paying attention to what makes me laugh.

Laughing happens at times, that are very different to what I believe will make me happy.

  • Adversity – especially extreme weather adversity
  • Riding uphill at altitude
  • Jogging in a forest – trees (and oceans) make a difference to every experience
  • High quality coffee – strong – as in, coffee you feel
  • You Tube – the Fun Police would look down on the stuff that makes me laugh
  • The Onion – my #1 news source
  • Memories of Molina, my buddy KP and Penfold – I’m grateful that my mind skews my experience
  • Being with my wife
  • Aussies – the more abrasive the better
  • Chris Rock – this one makes sense
  • My son, Axel – laughing with a two-year old? I thought “less toddlers” was the answer
  • Sunrises – isn’t getting up early supposed to be a hassle?

Combos are even more effective – riding uphill, after strong coffee, in the snow, thinking of Molina… that’s a powerful laughter inducer.

The most dangerous fun police are the ones living in my head.

Working For Your Spouse – Family Tax Planning

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In finance and sport, we find participants that make a lot more money than their spouses (bankers, executives, athletes, doctors, lawyers). Even when a couple files jointly, there can be benefits to splitting income.

If you are an athlete then you might want to hire a coach or agent.

If you are a professional then you might have a separate consulting business that requires the services of an administrator, executive assistant or bookkeeper. This separate business might need it’s own office premises and these premises could be located in your home.

Providing there are real services exchanged, at fair market values, there can be benefits to your family with having your spouse own, and run, a separate services business.

The benefits come from:

  • Improved financial power dynamics within your relationship.
  • The ability to compensate a member of your family, for services that you’d have to hire independently.
  • The ability for a younger, or lower earning, family member to qualify to make their own retirement account contributions. See single-k for more information.
  • A reduced overall tax burden by bringing business expenses (occurred by outsiders) into the family’s allowable deductions. Examples might be travel or professional fees.
  • Improving the credit rating of a family member, thereby saving the family money on it’s overall cost of borrowing.

What’s reasonable will vary on your situation and an experienced tax accountant can guide you on what’s appropriate.

Moving Into An Equity Position

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A friend asked how to gain equity exposure via the stock market.

I recommended John Bogle’s Book and shared what I do for my own family.

Decide what pot of money to invest – in order of priority

  1. Tax deferred retirement accounts for me and my wife
  2. Tax deferred 529 accounts for my kids’ education
  3. Taxable investment accounts for my family

In Colorado certain 529 accounts also have the benefit of a 1-for-1 deduction from state taxable income in the year of investment. However, the 529 accounts have a higher expense ratio than the funds I access for our retirement accounts (0.45% vs 0.05%). The Colorado state income tax rate is 4.63% so the tax savings helps me justify a higher cost.

For #1 and #3 I prefer to use Vanguard’s Admiral Shares for their Total Stock Market Return Fund (VTSAX) – it has an expense ratio of 0.05%.

I always compare expense ratios for products. For active managers, and fund-of-funds, make sure you get the total expense ratio that looks all the way through the final investment products. Many advisers have a financial incentive to layer fee-generating products and you may have additional taxes due if your portfolio has a lot of (largely unnecessary) churn.

It is important to remember that most people lose the majority of their return via investment churn, taxes and expenses.

Let’s use an actual case study with numbers…

If I wanted to invest $100,000 then I’d move into the position gradually with a fixed dollar amount of VTSAX purchased each week. An example would be $10,000 initial investment (to qualify for the Admiral Shares) then $360 automatically purchased every Wednesday for the next 250 weeks. Five years later, you have your position.

The toughest part about the above strategy is leaving it alone. There will be times when you want to invest more, or less, depending on the emotions involved with following the market. Research shows that our emotions are lousy investment guides. So…

My recommendation is to set the automatic investment at a level that you can sustain FOREVER and leave it alone. Let surplus cash build up in another account and use that for opportunistic investing.

Don’t believe the fallacy that you need a portion of your portfolio “for fun.” The purpose of investing is to earn a return on investment, period. When I want to have fun I go for a bike ride with my pals, I don’t speculate with my family’s capital.

When I do a portfolio review, I look at my total exposure by $ amount and asset class. I review the position “right now” as well as how the position is likely to change, based on future investments, earnings and expenses.

If I’ve lost you at this point then you’re not alone. Sitting down with a financial planner can be extremely valuable. Make sure your adviser makes money by advising you, not selling you products. Firms, like Vanguard, offer financial planning services for a very reasonable fee.

Last week, I shared that I felt over-invested in Real Estate so I’ve made a decision to reduce my holdings. Once I’ve reduced my exposure to real estate, I need to figure out what to do with the cash. Today’s blog post is one option (buy equities over five years). Another option is do “do nothing” and wait for the next crisis. It’s really hard to “do nothing” so, perhaps, I’ll do something really slowly and buy equities over 10+ years.

A long range projection of your family finances (5-10 years) is useful to figure out what dollar amount it makes sense to invest. Consider if you want to retain cash for opportunistic investments: examples might be starting a company; buying investments in a crash; or buying real estate in a recession. In my own life, a handful of opportunistic deals have been what made a difference to my portfolio. These deals were made possible by the ability to deploy cash quickly.

Consider a cash reserve to cover unexpected illness or unemployment. Here’s my post on Lifestyle Insurance. Over and above insurance products, I feel better when I have at least one year’s gross expenses held as a cash reserve. In terms of life changing financial security, here’s my post on Taking Money Off The Table.

I’ve yet to regret selling early – I’m easily frightened by bull markets. A recent trip to the Bay Area set off all kinds of warning bells!

What I’ve described is more generally known as “dollar cost averaging.” John Bogle’s book explains how to use this strategy to give yourself financial security. Highly paid professionals (dentists, doctors and lawyers, particularly) are prone to exploitation by my peers in the financial services industry. Read the book.

A bull market is an ideal time to pause, take stock and ponder long term positions. Right now is when it’s most easy to adjust portfolio strategy.

Letter To My Kids

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Sitting here at 45 years old, I realize that my kids (5, 2.5 and 1.25 yrs old) will never know the man that I am today.

What can I pass along today that might be useful to them tomorrow?

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Choices

Don’t waste energy worrying about decisions. Most of the choices that you will face are win-win in nature.

  • The school you attend.
  • The major you choose.
  • The clothes you wear.
  • The company where you work.
  • The city where you live.

The above influence our lives but they aren’t mission critical.

What’s mission critical? Well, there are some choices that have life changing properties.

Choices that move us away from severely negative outcomes.

An obvious example is “stay out of prison” – drunk driving, chronic speeding and theft have a high risk of a felony conviction.

More subtlety, the best decision that I made in my 20s/30s was replacing drinking with exercise. At the time, I replaced one excess (drinking) with another (elite endurance sport). If you find that you’re obsessive (and many people in our family are) then replace your negative habit (promiscuity, alcohol, addiction, anger) with something less toxic (meditation, nutrition, exercise, yoga, work).

You’re unlikely to be able to transcend your drive. That’s OK. If you can get yourself into your 40s without too many mistakes then your body will naturally slow and you’ll find it much easier to live in your skin.

In our family, moving away from abuse, addition and promiscuity has been a way for us to improve life for everyone that follows us.

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Your Relationship With The Truth

I can catch myself wishing that you’ll be doctors, leaders and externally successful. To the extent that I lay any of that on you know that I’m projecting my own values.

What’s most important?

Remember that truth is relative and pay attention to:

  1. How do the people around you make you feel?
  2. Are you tempted to lie because of your actions, your friends or your work?

Who, and what, ever your become, I promise that you’ll see the world differently at 30, 45, 60, 75 and 90 years old.

So what endures across time?

  • Taking action for what you believe in.
  • The internal peace that comes from living truly, inside ourselves.

Be aware the certain fields have a high risk for poor decisions. I’ve worked in a couple (finance and elite sport).

How will you know if there are risks? Pay attention to the lies. You will see lies in others before you start telling them to yourself. Small lies matter because they can be a symptom of corruption that you’re unable to see.

It will be a huge hassle to change direction when you discover lies – it always was for me. However, it’s the right thing for you to do. Ask me for stories and I’ll share.

Move away from people and situations where you can’t speak openly about the truth.

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Exercise Is Medicine

You have a body that is a high-responder to exercise.

Do something active every day of your life and stop doing whatever prevents you from achieving a daily streak of exercise.

Taking my advice from the start of the letter… Don’t worry about what you do.

Remember that the benefit comes from the doing.

Five Questions from Hospice Training

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As part of my hospice training, we were asked to consider five questions. Considering the questions made me realize that I had done a lot of death awareness work while managing the end of my grandmother’s life.

The hospice training was rich in observations. Two that stuck with me:

  • In response to “when are you going to get over it?” I’m still in pain because my loved one is still dead.
  • We never know the first day of the last year of our life.

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The questions…

What will cause my death and why will this be true?

An interesting one for me – my physical self will die from heart failure, my mental self may die from Alzheimer’s/Progressive Dementia and my spiritual self will live on through my wife, children and writing.

I’m not sure of my cause of death, simply looking at my family tree and guessing.

In terms of life after death, it seems obvious that I’ll continue via every interaction I’ve ever had as well as my writing.

While I can’t touch them, my dead friends and family continue to influence and live inside me. It will always be that way.

Who will be impacted by my death?

I suspect that the longer I live, the greater my circle. However, there is a paradox in that sudden (and unexpected) death can have great impact. I continue to think about my good friend, Stu McGavin.

My friends and family will be impacted – I seek to make their grieving more bearable by letting them know that, notwithstanding how I die, I had a fantastic life.

What do you want your funeral, or memorial, to be like?

I wrote a previous article – invite my friends and family to a memorial service that is set up as a memorial weekend, rather than a funeral. Focus on helping the living process my death and create a schedule of support to my spouse and kids (for two years after my death).

Use the opportunity of my memorial weekend to plan ongoing grieving support for the living.

Start a letter to say goodbye to one of the special people in your life.

Monsy,

I love you very much, thank you for your love and sorry I was grumpy at times, you were perfect for me.

To honor the memory of our love, take one aspect of our relationship… teach it, live it and pass it on.

What is the most important thing for me to do or complete before I die?

Ideally, live long enough to have a positive impact on my kids in a manner that they will remember into adulthood.

If that’s not going to be possible then I’ve left enough writing to point them in the right direction.

Above all else, be kind.

Ten Hour Transformations

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A practical example of why the only way to change everything is to focus on changing one thing.

Thinking through my relationship with my daughter, I came up with the following for a minimum commitment to see results…

Ten hours per week:

  • An hour per day as 30 minutes AM/PM;
  • Twice a week do a trip together for 90-minutes (go swimming, ride bikes, trailer ride or park visit)

This structure has me focus on making the small interactions (first each morning, last each night) quality.

With my kids, where I fall short is working on the quality of the little things. I didn’t notice this until last month when we suspended TV, iPad, electronics. To stick to my guns with the electronics ban, I had to interact with my daughter and she had to learn other ways to fill her time (drawing, stacking blocks and playing house).

I learned a lot from the process. Our daughter’s behavior improved and I was forced to face my laziness with engaging with her.

Just like bedtime routines, maybe acting out was driven by a need to get my attention.

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Another area for applying ten-hour commitment might be improving health. You might apply as:

  • An hour per day as 40 minutes walking/cycling in the AM and 20 minutes eating a mixing bowl of salad in the PM;
  • Twice a week – stock the house with healthy options – an hour each time
  • Twice a week – strength training – 20-30 minutes each time

That’s going to capture nearly all of the health benefit from my current lifestyle. I like to exercise more than an hour per day but that’s for mental wellbeing, rather than physical health.

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The above makes it clear, at least to me, why I can only work on one thing at a time.

  • Wife
  • Three kids
  • Amateur sport
  • Job
  • Reading
  • Writing
  • Yoga
  • Spiritual Development

If I seek to change everything (~100 hours per week) then I’ll become overwhelmed and lose the consistency required to achieve anything!

Choose Wisely.

Changing Everything

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A favorite question:

What one thing, if it happened, would change everything?

It can be uncomfortable to acknowledge that our current life experience is a result of the (mostly mental) habits that we’ve created to date.

When I ask myself the above question, I compare my answer to where I spent my time over the last week. I often find myself lacking focus.

Creation of Habits + Time = Life Situation

With the above equation, I consider my habits of thought, action and speech. Listen quietly to any person and they will tell you what they think of themselves (by the humor they share about others).

Because we are mostly operating on autopilot, Free Will is found at the margin of our lives. So, to change EVERYTHING, we need to figure out our ONE THING and focus our Free Will.

Some things:

  • Getting fit
  • Family income and expense balance
  • Gaining control of my schedule
  • Losing weight
  • Being able to ride outside in good weather
  • Being able to eat and drink as much as I want
  • Finding love
  • Publishing a book
  • Winning a special race
  • Finding a sexual partner

I’ve had many “one things.”

So many that I joke with my wife, “Honey, I think I’ve finally found THE answer.”

I joke but there have been several things that have proved transformative:

  • A kind spouse that motivates self-improvement
  • Capital to support freedom of occupation and location
  • Weight loss and exercise leading to wellness
  • Shedding disharmony – in my own mind and in my choice of peers
  • A willingness to own, and share, my errors
  • Living in a beautiful place where I enjoy an outdoor life

Right now, I have two things:

  • Reducing the fatigue that I experience from parenting
  • Achieving income/expense balance

What’s your thing?

Awareness is the first step towards transformation.

Sustainable action consists of building the habit of one small action, done first each day.

Less Misery, More Efficiency

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It’s been over 1,000 days since I realized that my relationship with email had to change. Not only was my inbox making me miserable, it was consuming my life.

What follows is a summary of how I spent three years changing my workflow and improving my life.

#1 – Reduce the fire hose of inbound flow by:

  • Using inbox-zero techniques
  • Making your default reply not more than two words long. For example, “got it” or “ok” work well. What works even better is my preferred response – “can I delete this message now.” Delete, delete, delete, delete, delete
  • If you’re in management at company that doesn’t use a threaded email client then you should be fired. If you don’t know what I’m talking about then switch yourself, and your company, to gmail.
  • Let others reply for you – wait a day before you dive into mass email threads.
  • Unsubscribe as much as possible – if it’s important then you’ll track it down. Once you unsubscribe to everything, you’ll realized that most of the internet is waste and noise.

Recognize that your subconscious mind is terrified of being out of the loop!

Until you remove it, you won’t see how the noise in your life is ruining your capacity for effective thought AND making you miserable.

If you can’t see it in yourself then look around. Most people are not informed – they are filled with useless, and ever changing, noise.

If you find that describes everyone around you then what makes you think you’re different? This was a powerful, and painful, realization for me. Email, social networks and constant connectivity were making me miserable AND clueless.

Once you’ve created the space to think…

2 – Improve your ability to retain information by:

  • Take one slow breath (in and out) before reading any email that you can’t delete, or unsubscribe.
  • Take two slow breaths before any reply that will extend beyond one line – you’ll find your composition is better.
  • Give the sender what they need and no more.
  • Take one slow breath and re-read every reply before you send it. You’ll be amazed at the number of type-os you catch.
  • Take an honest inventory of your productivity across an entire week. At best, you’ll be productive for three hours per day (broken up into 2-4 segments). Once you realize that you’re spinning your wheels go for a walk.

If you think the above sounds hokey then pay attention to how much you hold your breath when working, driving and waiting in line.

Walking is useful to consider, and compose, your best work.

3 – When you must do your best work:

  • Exercise early
  • Eat a healthy meal
  • Wear earplugs
  • Close the door
  • Shut the internet browser
  • Write it out by hand
  • Review when you transcribe it into your computer

Let’s review…

A – reduce the fire hose of inbound to create space for thoughts that matter and reduce the misery you’re experiencing with email

B – stop holding your breath and triggering irritation with your current habits

C – with a less cluttered mind, create a routine for producing high-quality work

The above will make you FAR more happy with your work life and this will make you a better employee, spouse, parent and person.

Living behind a screen, and the back-and-forth nature of email, reinforces habits of inefficiency. Once you start to increase your own free time, be proactive about not wasting other people’s time.

  • Schedule a telephone call for any email that will require more than three replies
  • When you set a call, specify two choices and a preference
  • In advance, send a written agenda
  • Take notes
  • Write (or review) a summary of the call

What I tell myself:

  • It’s incredibly hard to say no and reduce the background noise in our lives.
  • Keep chipping away.
  • Change is difficult but worth it.

Start to pay attention how your current work habits are making you feel.

Even if you are the only person that changes, it’s still worth it.

Be grateful that you had the courage to change!