The paradox of choice.

If you live in The States you’ve probably been to Costco. While the store is practically busting at the seams with stuff, Costco typically only carries about 4,000 unique products behind its walls. Your much smaller local grocery store, however, carries ten times that amount. So what’s the deal? 

Costco understands psychology and the paradox of choice.

If you’re like me, you’ve gone to Costco to get a box of cereal and some chicken, but an hour later you walk out $200 poorer with a cart full of Paydays (best candy bar EVER), pretzels you didn’t even want, and a three-gallon tub of mayonnaise that will expire before you finish it.

I’ve blogged for over a year now about how I am going to start investing for the short term. Wanna know how much effort I’ve put towards said goal? Not one freakin’ ounce. I don’t consider myself a lazy person, but when it comes to investing outside of retirement, I shut down.

There are too many different avenues to explore. Which stocks, bonds, or mutual funds should I buy? Is real estate going to appreciate over the next 8 years? Should I invest in gold, silver, or other precious metals?

Instead of answer the questions above, I do nothing.

Research indicates 401k plans that offer dozens of different investment options, on average, have fewer people contributing to them than 401k plans with only a handful of choices.

I bet some of you are guilty of this in one way or another, aren’t you? Maybe you haven’t started paying down your debt aggressively because you feel like you don’t know where to start. Maybe you haven’t contributed a dime to retirement because you can’t figure out which fund you should buy. Maybe you changed your major in college 87 times because you kept re-discovering what you wanted to do with your life.

I’m sick of being paralyzed. I met with a Financial Planner over the weekend and I’m ready to punch my short-term investing goal in the face. It’s about freaking time.

Has the paradox of choice ever affected you?  If so, in what ways?

p.s. I am working on getting a link to our TV interview from the producers for those that couldn’t catch it yesterday. As soon as I have that, I’ll post it up here and give you my two cents on the thing.

Get your $h!t together.

At first glance I likely appear to be obsessed with making money and growing our wealth. That’s half-true. While there is no denying I enjoy projectile vomiting money in to our savings account each month, I don’t do it for the reason you may think.

I don’t need, or want, to be rich. Then why are we saving/investing over 50% of our income each month you ask? Check it…

We don’t want money to hinder us from being awesome at life.

This is no different from the reason we eat relatively healthy and exercise frequently; we don’t want our health to limit our quality of life.

You ever heard of a morbidly obese person climbing Mt. Everest? Have you seen someone with maxed out credit cards and a low-income purchase a $20,000 used car with cash? No, you haven’t.

I could care less how much debt you have or how much you make. I only care about how you answer this question; Are you happy?

It’s taken five years, but I can say without a shadow of doubt, I am. My worth is not wrapped up in how much I have, but in how I live my life. Do you think people will remember me for owning a huge house or dying with a few million in the bank? Heck no. But they might remember me for sending some high school kids to summer camp. Or perhaps for creating a silly blog that inspired a person or two to get their finances in order.

I don’t suspect my grandchildren will recognize the name Warren Buffet when they are adults, but they will likely know the name Martin Luther King Jr.

Are you happy? Is your financial situation preventing you from achieving your goals?

p.s. We will be on NBC today (Steve Harvey Show). You can check here for local listing times. I’ll try to post video of it in the next few days for those that can’t record it.

If we didn’t want a house.

I was doing some driving today, and like I often do, I started thinking about our finances. Today, I was contemplating our savings goals. If you aren’t already aware, Girl Ninja and I kind of want to buy a house one day in the future. So to prepare for said house, we have spent the past two years being diligent little savers.

But what if we have a change of heart and decide we don’t want to buy a house anytime soon (meaning in the next five or so years)? This isn’t a rhetorical question. Seriously, what the frick would we do?

Or another way of phrasing the question (and probably a much more realistic hypothetical situation) is this: What do we do if we reach our $100,000 goal, but aren’t ready to buy yet? We’d still have discretionary income coming in, but do we really need $120,000 or $150,000 in the bank? At what point would our savings just become awkwardly excessive?

I mean, I don’t want to be the cat lady that dies with millions in the bank. So if we reach our $100,000 goal before we even want to buy a house, I guess the only solution is to spend more of our money. Maybe we’d take a few big vacations each year. Perhaps we’d buy a new couch. We’d give more money to charity. I’d up our retirement contribution to 30% (yawn). Girl Ninja would overhaul her wardrobe and I could buy myself some expensive gadgets I don’t really need. But even then, we’d eventually run out of things we want. Where does your money go, when you have no where to put it?

I’m extremely grateful we are in a position where we can save the majority of our income, but for the last two years I’ve put my focus and energy on reaching this $100,000 goal. Which in turn means I’ve put absolutely no focus or thought in to what we’d do once we reach that goal. Help.

Houston, we have a failure.

So once a year I like to open up my Excel spreadsheet and make some assumptions as to how the calendar year will play out for the Ninja household….financially speaking that is. I’ve done this years past, and every single year I seemed to unintentionally underestimate our ability to save. Often meeting our annual goals three to five months earlier than planned. While that is definitely a good problem to have, it’s still a problem. I want my goals to be challenging. Something that would take a full twelve months to reach. Heck, maybe I shouldn’t even be able to reach my goal at all.

Well folks, it looks like my wildest dreams are coming true. We are on course to epically fail at reaching our 2012 personal finance goals. According to our budget, our accounts are supposed to have the following balances by years end:

    • Checking Account: $1,000
    • Savings Account: $100,000
    • Roth IRA: $31,500
    • 401K: $37,500
    • Total Assets: $170,000

We started the year out with $114,622 in assets, meaning we had to move up $55,378 this year to achieve our $170k goal. For those that like things broken down, that would require an increase of $4,614 every month. A quick glance at the handy-dandy savings/net-worth meters on the side of my blog show that our current assets total up to about $135,000. Meaning we are 36% of the way to reaching our goals, but we are 58% of the way through the year.

Frick. 

While I’m extremely tempted to go in to my spreadsheet and make our 2012 goal be a $150,000 net worth, I know that would only cheat myself.

Think about it like this. Would you rather set a goal to run a mile in 6 minutes and run it in 5:45, or set a goal to run a mile in 5 minutes. but run it in 5:15? If you said 5:45, you are a) an idiot, b) lazy, or c) a lazy idiot.

I’m learning it’s not so much the goal that matters, but more so one’s desire to push themselves farther than they ever thought they could. That is what I want to do with our personal finances; Push ourselves to be responsible, to take risks, to have fun, and to be diligent. Ambitious goals promote these types of qualities. Easy goals promote a false sense of accomplishment.

Shut the Flock up.

So last night after youth group, Girl Ninja took a bunch of her high school girls Flocking. What’s flocking you ask? Well, let me tell you. We  take about 25 of those stupid Flamingo Yard Ornaments (the ones that old people tend to have in front of their mobile homes) and put them in an unsuspecting victim’s front yard. We leave a sign saying “You’ve been flocked by Young Life. For $25 we will remove the Flamingos from your yard or for $50 you can tell us who to flock next.”  It’s a clever and fun way to raise financial support for our kids to go to camp this summer, not to mention the victims seem to really enjoy being able to “flock” their friends.

This summer, Girl Ninja and I will be responsible for taking 25 freshmen to summer camp so they can have the best week of their lives. It’s going to be epic. Unfortunately, an epic week isn’t cheap. Many of our Young Life kids come from families that can pay the full camp fee, but some don’t. Girl Ninja and I have taken it upon ourselves to help these kids fundraise, flocking being one example.

While car washes are fun and all, let’s get real, they aren’t huge money makers. On a good day we could maybe make $500 at a car wash. Divide that up over the 15 or so kids working it, and suddenly each kid is only walking away with $33 towards their camp fee. Minimal return on investment, and a crappy hourly wage if each kid is there for about 5 hours.

That said, I am a big believer in making these kids work hard to raise money, not just going door to door asking for a handout. That’s why Girl Ninja and I have reached out to our parents and some other close friends, asking them if they would like to “Hire a few high school kids for a day.”

Girl Ninja’s parents put in an order for about four guys to come help build a fence they’ve been meaning to put in. My parents are hiring a group of boys/girls to refinish their basement (rip out the carpet and paint all of the walls). Another local community member has a slew of yard work he doesn’t want to do, and is pumped to hire six or so kids for a days work of manual labor. These type of projects pay handsomely and will go a long way in helping the kids in need to pay their way to camp.

But now I need your help (no I’m not asking you to give me money). Aside from flocking and service projects, we really are scratching our heads on ways to help these kids make more money. We will go the car wash route and selling crappy candy bars if need be, but I’d like to be much more creative and think outside the box.

Help a Ninja out! What other ways can we raise funds for these kids without just being like “Yo, can we have some money?Have you seen any cool fundraising tactics? If you got flocked would you be pissed?

p.s. in case you are wondering, the bottom of the note indicates a flocking victim can simply give us a call and we will remove them for free if they don’t feel like participating. We typically only flock people we know or are already active in supporting Young Life. Not like we just pick random people who might shoot us in the face for stepping foot on their property. 

 p.p.s. here is a picture of me being blobbed at young life camp when I was in high school. 

Eleven months later.

Every January I open an excel spreadsheet and make estimations as to how I think the year will play out financially for the Ninja household. Although the year isn’t quite over, it’s time to check in and see how we’re doing. Here is a screenshot of our goals for 2011

In the past, I’ve set the bar low and made my/our goals too easy. One year I reached them by July. It’s embarrassing to set low standards, so I made sure to really step up our game in 2011. You’ll notice in the chart above, we had a goal to increase our net worth by $3,000 a month, for a total gain of $36,000.

I knew we could reach said goal if we buckled down and made wise decisions throughout the year. We went through some significant life changes: like a 1,200 mile move and Girl Ninja looking for work, but overall we have had a really incredible year and pretty much punched our goals in the face. Here’s where we stand…

I guess you can look at our results two ways…

  1. We kicked serious booty and were able to blow our “savings” goal out of the water and increase our liquidity by $40,000 in a single year. We also surpassed our $96,000 net worth goal by an additional $15,000.
  2. We are epic failures because we were wrong on two of the five categories. Which means we are 60% awesome, and 40% fail. Sad.

Although I didn’t set my standards high for the markets this year, they still managed to do worse than I predicted. I only needed a $700 gain in my Roth IRA (after my $5,000 2011 contribution) to meet my goal. Sadly, I haven’t gotten it yet. It’s the same sad story with my TSP :(. I’m holding out hope though, we still have six weeks before the end of the year and I’m praying for a last-minute rally. I need a 3% rally to hit ALL of our goals. Think it will happen?

I was hesitant to write this post because I don’t want to come across as arrogant or bragging. I hope you know I’m an open book. I blog about the good, the bad, and the ugly in the Ninja household. We were fortunate to have a pretty stellar year, and we try our best to be responsible with what we’ve been given. Sometimes that means having fun and going on a random vacation to San Francisco, other times it means buckling down and contributing to our retirement, and sometimes it means giving a bunch of money away. Twenty-eleven was great to us, and we plan to do everything we can to make sure 2012 is equally awesome.

How has 2011 treated you (the good and the bad)? What were some of your financial (or personal) goals this year? Which ones have you met? Which ones did you fail?

Punch 2011 in the face

Girl Ninja and I have a plan to punch 2011 in the face as hard as we can. On January first of each year, I like to open up my annual budgeting spreadsheet and see what the Excel gods tell me. After some serious number crunching, and some even more serious random number guessing, we have something to work towards, and that my friends is a net worth of $96,000. Here’s the breakdown…

2010 was the year of the non-budget budget as I didn’t have a clue how to prepare for dual income. I knew our income could vary greatly depending on how many days Girl Ninja was able to substitute teach. Last year was crazy, and this year things are no different.

We are almost sure to face some significant financial changes over the next year. That’s right, we’re pregnant…no not with babies (sorry mom)…but with job opportunities. And as you can expect, with a change in job, a change in salary often follows. There are really three potential outcomes for us.

1) We stay in San Diego. This would be the easiest situation to budget for as it would mean nothing really changed for us.

2) We move to Seattle. We are both originally from Washington and would love to be near our parents and our friends from high school. If we moved up north I would likely either A) transfer in my current position to the Seattle office (same pay) or B) I would look for something more lucrative in the Seattle area. We would likely meet, or exceed, our $96,000 goal if we moved up north.

3) Move wherever the heck the government tells us. You remember that “dream job” I’ve blogged about over the last two years. The one I applied for in February 2009? Well, I was called over Xmas break and told to expect to start March 28th. That is, if I re-pass the physical fitness test and accept the final offer. In the long run, this position would pay quite a bit more than my current position can, but it would DEFINITELY mean a short term pay cut (for about two years). One of the requirements of this position is a willingness to relocate at the needs of the agency. Since we don’t know how much my starting salary will be (should know in about 45 days) and we won’t know where we will be living (until after we’ve accepted the offer), I pretty much have no clue what this would mean for our net worth. The $96,000 goal would probably decrease to like $80,000 (after my pay cut and the time it would take for Girl Ninja to find a teaching job).

It’s crazy to think Girl Ninja and I will be determining the next five years of our life over the next five weeks. Heck, it’s probably pointless to make any goals since when we have no clue where we will be living or working. I guess it’s better than not thinking things through though…right? As always, I’ll be updating you all as Girl Ninja and I face some pretty significant life decisions, and I will definitely be blogging about our financial journey throughout this process.

What’s the most significant decision you and your significant other have had to make? How much of a pay cut would you stomach for your dream job? Do you set annual financial goals for yourself?