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The Purpose and the Pessimism of No

Kim Petch — Tue, 08 May 2012 09:48:42 +0000

No. It’s amazing how this simple two-letter word has spawned so many articles, studies and blog posts. How do you feel when you hear or read those two letters? Should we say NO more often, or less often – to our kids, to our boss, to our customers, to the never-ending stream of information available to us today?

Depending on your perspective at any given moment, “no” can have positive or negative connotations. Inherently, the word is negative. But what about all those articles on “The Power of No”? Sometimes it feels great to say no. In other cases, saying no can mean missing a wonderful opportunity. How can we balance the purpose and the pessimism of no?

The Purpose of No

No gives us a sense of control. It defines limits and boundaries. Whether you’re talking about spending, investing, parenting or productivity, limits are essential. We simply can’t say yes to everything and everyone or we will inevitably burn out. (Incidentally, April was Stress Awareness Month. )

Here are a few of the ways limits can help with different parts of our lives:

Spending: Obviously, we need to limit our expenses to an amount that is well below our income. Build savings, not debt. That requires restraint.

Investing: When investing our hard-earned savings, we need to limit our risk and maximize our reward potential. This is much easier said than done, and will mean different things to different people depending on their risk profile. Still, investment boundaries are essential. Consider stop loss levels, tactical asset allocation and rebalancing as risk management options.

Parenting: One of the best books I ever read on parenting was Barbara Coloroso’s Kids Are Worth It. In it, she draws a distinction between “brick wall” and “jellyfish” parenting. Brick wall parents have too many boundaries, and jellyfish parents, few or none. Rather, she advocates “backbone” parenting: lots of logical limits combined with plenty of flexibility.

Productivity: In order to be more productive, we need to place strict limits on how we spend our attention. Multitasking doesn’t work. Neither does overtasking. There are only so many minutes in your day, and days in your life. Spend them wisely.

The Pessimism of No

Seth Godin had an excellent blog post a couple of weeks back on The Coalition of No. It was a great reminder that, while “no” is essential in some of the ways we described above, it can become a negative influence (literally) if we use it too often. Here’s Seth on the dangers of the coalition of no:

It’s easy to join.

There are a million reasons to say no, but few reasons to stand up and say yes.

No requires just one objection, one defensible reason to avoid change. No has many allies–anyone who fears the future or stands to benefit from the status quo. And no is easy to say, because you actually don’t even need a reason.

Limits can be very useful, but they’re also – well – limiting. Used in excess, they prevent us from moving forward, setting goals, learning new things, and reaching for our dreams. These are the things that engage us, give our lives meaning, and enrich us in ways that money just can’t. (If we do them just right, by the way, they can bring in money too – see Apple.)

Pushing Boundaries Without Chaos

How about a few ideas on how pushing boundaries can help rather than hurt? We can embrace change and flex boundaries without breaking them. That’s the idea behind backbone parenting and it can apply to all sorts of things. Try these corollaries to our list of purposeful limits:

Spending: Can you save a little extra in order to realize a long-time dream like starting your own business, going back to school or taking that vacation you thought you could never afford? What are you willing to risk or give up to get there?

Investing: Are you willing to invest a little in yourself? What habits are you willing to break to do it? How about learning a little more about investing and risk management so that you can understand investing better? Even if you want to use an advisor, at least you’ll have an idea whether they’re worth their fees or not.

Parenting: I can vouch for the idea that letting go can be quite unnerving for a parent. We want to protect our kids, to keep them safe at all costs. Not only is it our desire, it’s our duty. But saying no too much can be just as harmful as saying yes to everything. I like to say yes as often as I realistically can so that I can utter a firm no when I need to. I’ve found that you have to know your own kids too. What’s perfectly safe for one may be a risky proposition for another.

Productivity: Could you grow your business faster or snag that promotion at work if you pushed a few boundaries? What if you came up with a creative idea to solve a problem – and actually told somebody about it? What if you stopped just mailing it in like a lot of your competitors or coworkers? What if you cared, took that extra step, and went above and beyond the call of duty?

The Bottom Line

There you go. “The bottom line” is itself another kind of boundary. It signals a moment to pause and tabulate where we stand. What’s the bottom line on those two little letters? N-O. No is simultaneously essential and poisonous. Like any other tool, it can help a lot, but only if we know how to use it properly.

How do you balance the power of no?

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Are You Ready for a Change?

Kim Petch — Tue, 27 Mar 2012 09:48:14 +0000

They must often change, who would be constant in happiness or wisdom.

~ Confucius

To a great extent, Balance Junkie is about getting things right in your life – financially and otherwise – whatever right means for you. What’s right for you financially, psychologically, interpersonally, and physically? The answers aren’t always so obvious, and it’s easy to get off track or fall into unhealthy habits without realizing it. Before you know it, you’re feeling kind of restless and your life balance sheet is out of whack.

I often wrestle with these issues, but I’ve learned a lot over the years and I’m a little better at recognizing when I need to make a change. Following a few basic principles has gotten me through some challenging times. Taking control of your life and your future is very empowering. I’ve learned that only I can make myself happy, healthy and wealthy. Others can help me along and enrich my life, but the ultimate responsibility for my well-being rests with me.

If you’re feeling restless or unhappy, sometimes trying something new can be just the thing to help get you out of a rut and put yourself in a more positive position. If you’re not quite sure what’s bugging you or which itch to scratch, make the best guess you can and try a small change. If that doesn’t work, try another – or maybe a bigger change.

From Can’t & Won’t to Can & Will

Any true change begins with a real determination to do whatever it takes to make it happen. Telling yourself you can’t is just another way of saying you won’t. Once you shift to the idea that you can, it’s a lot easier to make the jump to I will. If you believe you can, you will. If you say you can’t, you won’t. Sometimes happiness is just a decision.

Needs vs. Wants

Whether you’re allocating time, energy, food or money, it’s always wise to distinguish between what’s truly essential and what you can really do without. Putting too much in the wants category means you may be neglecting true needs, or that the resources for those needs won’t be there when you really need them.

Budget

Whether it’s money, time or calories, some type of budget is indispensable – especially when you’re trying to break entrenched habits. Spell out what you spend and what you take in. Saving is a must. Having an emergency fund set aside for maintenance and repairs means no stress when problems inevitably pop up. Many repairs can be forecast in advance, so you can start saving early when you see that aging parts of your home or appliances or vehicles will need attention and money.

If the spending number is greater than the income number, or if you’re not saving enough, cutting wants is a must, no matter what it takes. It actually feels great once you get the hang of it. You’d be amazed at what you won’t miss.

Enjoy!

Once you commit to making change your mission, it can really snowball. Just like all of that negative energy causes us to spiral lower, a positive outlook and attitude can multiply too. It feeds on itself, and eventually becomes self-sustaining. All it takes is one step to start. And then another. And then another. Before you know it, you’re there.

Your life is what you make of it. If you’re tired of feeling helpless and unhappy, change and action are required. Don’t be afraid to take that first step. You never know where it might lead!

Have you ever felt like you needed some kind of change but weren’t quite sure what changes to make?

(Photo Credit: Shutterstock)

Why Can’t We Have Our Cake and Eat It Too?

Kim Petch — Mon, 21 Nov 2011 17:42:06 +0000

We’re not talking about mere balance here . . . A visionary company doesn’t simply balance between idealism and profitability; it seeks to be highly idealistic and highly profitable . . . a highly visionary company doesn’t want to blend yin and yang into a gray, indistinguishable circle that is neither highly yin nor highly yang; it aims to be . . . both at the same time, all the time.

~ James Collins & Jerry Porras, Built to Last

The English proverb tells us that we can’t have our cake and eat it too. I’ve often struggled to understand exactly what that means. I guess it’s supposed to imply that we can’t have it both ways. How can we preserve something of value if we continue to consume it?

Today’s quote comes from a book I’ve been reading on visionary companies: the ones that stand the test of time and continue to evolve while remaining true to a set of core principles. Principles you say? How can you have principles and profits? Aren’t they mutually exclusive? Far from it, according to the research performed by the authors.

[Side Note: The book came out in 1994, so some of the companies we might think of as visionary (Apple) are not included. Interestingly, the research shows that a charismatic, "visionary" leader (like Steve Jobs) is not only unnecessary for a company to endure, but it can actually be detrimental. A visionary company does not always have a high-profile CEO, but one that puts systems and values into place that persist far beyond his or her tenure at the helm of the company.]

How to Have Your Cake and Eat It Too

Not only is it possible to support seemingly opposite principles at the same time, it’s actually a common characteristic of the most successful corporations. According to the authors, these visionary businesses shun “the tyranny of the OR” while embracing “the genius of the AND.” They are simultaneously profitable and principled. They endorse autonomy and adherence to core values. They embrace larger, long term goals while they execute the daily details as flawlessly as humanly possible.

Can we juggle opposing values in our business and personal finances? Can we save enough for retirement and our children’s education while we enjoy a reasonably prosperous existence? Can we reap profits without compromising our ethical principles? Why not?

Usually, the answer to “Why not?” is something like “I don’t know how”, “my situation is different” or “I don’t have time.” Perhaps that’s why the list of visionary corporations is not all that long. I know that these are some of the reasons my personal finances aren’t where I’d like them to be. It’s hard. It takes, time, effort and focus, three things that seem to be in short supply these days as we become lost in the daily cacophony of media messages.

Here’s what I’m going to do to cut through the noise and achieve a more integrated balance among conflicting priorities:

Time: I’m going to cut out any activities – mental or physical – that don’t advance my goals or enrich my quality of life. While I may spend less time reading articles or interacting online, I’m also going to try to increase the amount of time I have to recharge so that I can be more effective in achieving my primary goals.

Effort: I usually do OK in this area, but I am often guilty of putting too much effort into projects with too little yield.

Focus: My attention has become divided of late among too many projects, to the extent that I feel like I’m not performing as well as I’d like at any of them. I’m narrowing my focus.

You can call these some of my larger goals for 2012, but I’m not waiting until January 1st to start. I’m starting now. Today.

Until We Meet Again

I’ve written many articles over the past 2 years on how far we’ve strayed from the principles of free market capitalism. We’ve socialized losses for large institutions and expected smaller businesses to live (and too often, die) by the strict capitalist code that says failures must fail. Cheaters have prospered. Our core values have become bifurcated, diluted, and unrecognizably grey.

I started Balance Junkie to try to help people understand that we are in the midst of a transformational period – one that will have a significant impact on our finances and perhaps our quality of life. Not wanting to see folks hurt financially as they were in the crisis of 2008, I hoped to shed some light on the fact that the neither the crisis nor the secular bear market ended with the March 9, 2009 market bottom.

I’m not sure I’ve made any measurable difference. I still see a lot of complacency and can-kicking. Many are still following the models that contributed to the crisis and listening to the same gurus and bloggers who failed to steer them around the 2008 debacle. Is it worth my time, effort and focus to continue to write about economics and personal finance?

That’s a question I hope to sort through over the fading weeks of 2011. At the same time, I’ll be turning my focus to helping Mr. Cents get a business off the ground in our region. Right now, that feels like the right place to direct my focus. Rather than simply writing about the economy and idealistic capitalism, I’m going to become a more active participant. If you’re thinking this sounds like a farewell article, you may be right – and it hasn’t been an easy one for me to compose.

I’m putting Balance Junkie on sabbatical until January. I may write something in the interim if I have the time, but I will certainly return in January with some kind of answer to my question. In the meantime, I wish all of you peace, prosperity and balance and I sincerely thank you for reading Balance Junkie over the past couple of years. My email box will remain open during the sabbatical, so please don’t hesitate to say hello.

Can we have our cake and eat it too?

Thanksgiving Thoughts for 2011

Kim Petch — Mon, 10 Oct 2011 09:45:23 +0000

It is literally true, as the thankless say, that they have nothing to be thankful for. He who sits by the fire, thankless for the fire, is just as if he had no fire. Nothing is possessed save in appreciation, of which thankfulness is the indispensable ingredient. But a thankful heart hath a continual feast.

~W.J. Cameron

It seems the older I get the smaller the things for which I’m truly thankful become. When I was a child, I was thankful for obvious things like my family and my home and my favourite possessions. Once I had children, they kind of moved up to number one on my list.

Now, I’m still thankful for all of those things, but I notice that the things that really make me feel grateful are a little more subtle – and there are a lot more of them. Here’s a list of some of the little things I’m thankful for this Thanksgiving Day:

I love the view from our back window each morning. I’m not at all a morning person, so that’s really saying something.
I’m thankful for the good morning hug I get from my youngest son to start each day.
I’m still surprised when my two older boys say “Thanks for dinner Mom” – even on the evenings when I know they didn’t really like what I made.
I can’t help but laugh when I watch my 16-year-old son explaining something to me with great vigour. All I can see is his 4-year-old incarnation doing the same.
The smell of home-cooking in my Mom’s kitchen is something I enjoy endlessly.
I love the crack of a baseball hitting the sweet spot on the bat as well as the sound of it smacking safely in the glove.
I’m so thankful for every smile or kind word from a stranger. It reminds me that there’s good in this world in spite of the daily news flow.
I’m thankful for a cold drink on a hot day and a warm fire on a cool night.
I’m always grateful for daisies. It doesn’t matter what colour.
I look forward to the same breakfast I’ve been eating every morning for over a decade now. It helps ease the trauma of daybreak for me.

Happy Thanksgiving to my fellow Canadians – and to anyone else who’s appreciating the small stuff today!

What are some of the little things you’re thankful for today?

Moving Stinks! And I Never Want to Do It Again!

Guest Post — Thu, 22 Sep 2011 09:45:51 +0000

The following is a guest post from Barbara Friedberg. She endured a much more arduous moving ordeal than I did this summer. Check out the 5 lessons she learned and then head over to Barbara Friedberg Personal Finance to read more. While you’re there, download her free 20 Minute Guide to Investing. Thanks Barb!

5 Things I Learned From My Cross Country Move

As Kim from Balance Junkie and I each moved this summer, we decided to share our “lessons learned”. Although she moved 3 hours away, and I moved about 10 times that, the process is the same! Please check out her 5 Lessons Learned from Moving at my site after you’re done reading.

Graduate school and job changes have led to 6 moves during our married life. Initially, I’m nervous and scared about moving. After getting used to the idea, I get excited and pumped about the change. This time was no different.

Before writing this article, I went through all of my related “moving” blog posts. What struck me the most was that my first one was published mid-March. And we actually moved into our home mid-August. That means the entire process went on for over 5 months. On the positive side, it makes me feel less awful that after a month in the new condo I am still not “caught up.” I’ve got boxes to unpack and work left over from the summer to complete.

So, what did I learn from the ordeal that will be helpful for you?

Moving stinks-In the hierarchy of life stressors, moving is near the top. So, don’t expect it to be stress free. In fact, accept that in the months preceding and those following the big day, you are going to experience inordinate stress. Take some time for fun and pampering in order to modulate the stress. And remember, that like everything else in life, these stressors are time limited.
Build up as big a savings cushion as possible-I knew we would need to paint the house, purchase porch furniture, window coverings, and pay for a multitude of inspections. So….. we began saving for these various and sundry expenses several years in advance as my hubby looked for a new job. What I didn’t expect was the extra $3,000.00 cost of replacing the carpet that was ruined by the sellers peeing cat! That was a real unpleasant surprise, but fortunately, we had the resources to handle it.
Prioritize, you can’t do everything-Although I’m paying the price now, I put off what I could during the transition time. Realistically it would have been impossible to keep up with all of our family’s financial recordkeeping and some of my more minimal job duties while readying the house for sale packing. This deliberate procrastination cut down on moving stress. Although not a perfect solution, it allows extra time for moving related activities.
Sell and donate as much as you can-Although this one is just common sense, it’s one I would encourage you to take to the max. We had a huge garage sale and I began getting rid of stuff months before the move. In spite of this prudence, we still had way too much stuff, and I’m embarrassed to say, had to rent a storage unit for the excess. (Please don’t tell anyone this, it’s embarrassing.)
Don’t expect to sell your current home and move into the new one the next day -During each of our last 3 moves we had to store our belongings and live in temporary quarters. In spite of this, I believed that I could perfectly coordinate a cross country move and avoid storage and a temporary living situation. Boy was I wrong! In fact, 5 weeks living with the folks and storing our stuff, smacked me upside the head!

Looking back over the past 5-6 months, I’m beginning to see the light at the end of the tunnel. My work desk is almost visible from underneath the rubble. I have the inside clutter confined to one room. And we are loving our new home and town! In moving and life, cut yourself a break and realize perfection is unattainable. Enjoy the process, in whatever you are doing, and your life will be richer.

Barbara Friedberg, MBA, MS is editor-in-chief of Barbara Friedberg Personal Finance.com where she writes to educate, inspire, and motivate for wealth in money and life. Learn about personal finance from a real life Portfolio Manager & MBA professor! Stop by the website and download a valuable free eBook, 20 Minute Guide to Investing.

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Climate Change Can Be Positive for Your Life

Kim Petch — Mon, 12 Sep 2011 09:45:59 +0000

Oh, would that my mind could let fall its dead ideas, as the tree does its withered leaves!

~Andre Gide

Have you ever felt like you were in a rut? No matter how hard you try to shake things up, start fresh or come up with innovative solutions to what’s bugging you, you just seem to end up right back where you started. I’m sure most of us have felt this way at one time or another about one or more parts of our lives.

In my experience, it’s hard to engineer an epiphany. It’s like trying to catch a pesky fly. Just when you’re certain you’ve got it in your sights it flits away, eluding your grasp anew. Sometimes new perspectives incubate best at a simmering pace rather than a pressure cooker intensity.

To instigate behavioural, intellectual or emotional change we sometimes need to make some physical changes. I’m not sure why, but it works. How many times have you found yourself on vacation or visiting another locale and wondered: Why can’t I relax and enjoy life like this at home? Why does food taste better here? Why do colours look more vibrant? Why do I feel more engaged?

Do you ever find that you’re a lot more productive after a vacation or even a short break? How many times do we skip our breaks and put off vacations with the idea that we’ll somehow accomplish or earn more if we just push it a little harder a little longer? I do it all the time. I fritter away minutes with unproductive activities because I really don’t want to do the work at hand. Then I become stressed because I’ve wasted time by neither working nor relaxing. Then I’m even less productive the following day because I’m burnt out. It becomes a vicious cycle.

Climate Change for Life

While climate change has come to have negative connotations – and rightly so – it can actually be very beneficial for us in the context of changing unproductive habits. We can change a seemingly immutable vicious cycle into a dynamic virtuous circle by simply changing our environment. We can start by identifying any toxins in our environment – both internal and external – that are keeping us from the change we need:

Toxic Thought Patterns: Do you have recurring thoughts that are keeping you in your rut? The amazing thing about these unproductive thought patterns is that there’s usually just enough truth in them to make it hard for us to let them go.
Toxic People: There are some folks who tend to be perpetually negative, supporting our toxic thought patterns. Like it or not, they can influence our perspectives and our behaviours. When we cultivate relationships with healthy people, we choke out toxic thought patterns. Another, perhaps more uncomfortable question to ask ourselves is whether we might actually be a toxic force in our own life and possibly the lives of those around us. Even if the answer is yes, that doesn’t mean we can’t change it.
Toxic Geography: Do you find that the general attitudes in your city, neighbourhood or workplace encourage healthy thought patterns, or do they sap your energy and discourage you from making the changes that will improve your life? If so, consider a change. You might be surprised at how much a change in venue can effect a change in your outlook and behaviour.
Toxic Environment: Our physical environment can become toxic if we allow our surroundings to become too disorganized. My desk, for example, is a constant source of aggravation for me. Somehow I never manage to keep it tidy for more than a few hours at a time. That can make it very time-consuming to find the things I need and be as productive as I’d like. While the move was a great reason to get closets, drawers and other parts of our new home organized, my desk, as usual, has been the last to receive my attention. Maybe this week I’ll finally get to it.

This type of regular assessment and maintenance can lead to positive outcomes for all four quadrants of your life balance sheet. Just as you will pull weeds and fertilize your lawn, it’s important to cultivate a positive environment in life. When you have a healthy lawn, it’s very difficult for weeds to take root.

Financial Climate Change

As with every other area of life, it’s easy to fall into bad habits with our finances or simply fail to create healthy habits. Over time, these poor habits can become so comfortable that we come to assume they are unchangeable. That’s when things can get really toxic.

We can start to feel like we don’t have any control over our lot in life or that change is hopelessly unattainable. While we may not be able to turn things around in a day or a month, we can always begin by making small changes that gradually add up to big ones. The key is to start. Do something. Move. Change.

That kind of sounds like the opposite of what I was saying with my fly analogy. If we try to aggressively swipe at the fly, we’ll often miss it. My tactic for getting rid of flies in the house is a little different. When I see the fly, I move to the nearest door and open it slightly. Then I just gently shepherd the fly out the door by standing in its way and keeping it from leaving the area. In the end, it’s probably better off outside anyway.

I know that sounds unbelievable, but it usually works. It keeps my son happy because he gets upset when we kill bugs in the house, and I don’t have to deal with the mess created by a squished fly. So, while taking aggressive action may not bring about the desired change, taking no action won’t work either.

If we approach entrenched problems with the same old canned solutions, it’s unlikely we’ll achieve the change we so desperately need. Gradual changes combined with patience and perseverence can sometimes lead to the epiphany that finally snaps us out of our stupor. Making some simple changes to your environment can be the first step to triggering this process.

Have you ever found that a change of scenery has had a profound effect on the way you look at things?

How We Sold Our House in 5 Days

Kim Petch — Tue, 14 Jun 2011 09:45:42 +0000

He didn’t tell me how to live; he lived, and let me watch him do it.

~Clarence Budington Kelland

If you’ve been following the story of our recent life changes, you know that we just bought a home about two and a half hours from where we live now in order to take advantage of a new opportunity even though it meant taking out a much larger home loan. When I last updated you, we still needed to sell our current home. We put the house on the market a couple of days after that post and sold it 5 days later.

Since this is a time of year when a lot of folks are looking to buy and/or sell a home, I thought some of you might be interested in how and why we sold our home so quickly. This is also the time of year when we think about the fathers in our lives, and there are a couple of fathers in my life who helped make selling our home a lot easier. Here’s the story:

First Impressions & Fascism

The real estate agent who helped us sell our home happens to be my Dad. He’s helped us out with all of our real estate transactions over the years and, like most Dads, he’s not short on catch phrases or clichés. And, like most clichés, the ones he shared with us are still around because they reflect tried and true wisdom. Two of them stand out to me:

1. “You never get a second chance to make a great first impression.”

2. “When people walk through your house, they’re not looking for a reason to buy it. They’re looking for a reason not to buy it.”

The implications, of course, are clear: Don’t give them any reason not to buy your house.

Well, fortunately (or unfortunately) Mr. Cents took these pearls of wisdom to heart. He was nothing short of dictatorial in his determination to polish and present our home as the jewel we all know it is. No crumb was left on the carpets, no faucet left unpolished, and absolutely no superfluous objects were permitted to appear on any surface. With three boys aged 16 and 12 in the house, you can imagine the “challenges” this presented.

Fortunately for my sons and me, my husband’s fascist regime was short-lived – unless you include the weeks we spent painting, washing walls and repairing the most minute faults imaginable before we put our home on the market. But guess what? It worked. Within 5 days, our house was sold.

Waiting for a Better Offer

During the course of the 5 days our home was on the market, we had about 7 formal showings as well as an open house that garnered quite a bit of traffic, especially considering that the weather was awful that day. But the couple who bought our home in the end was the first to go through it.

A lot of people have asked us “Why didn’t you wait for a better price?” I’ll give a few details below, but the real answer is just another one of my Dad’s stock sayings:

“Your first offer is often your best offer.”

Now don’t get me wrong. If the purchasers had offered only 75% of our asking price, we would not have accepted the offer. After a couple of counter-offers lobbed back and forth, we settled on a price that was a little more than 94% of our asking price. My Dad had told us that houses in our region had been selling for about 95% of the asking price on average, so we felt like we got a fair deal.

The offer we accepted had no conditions attached to it, so it carried some pretty sweet bonuses:

We wouldn’t be stuck waiting around to see if the buyers sold their current home.
The buyers didn’t need to get financing approval.
No more house showings.
We could immediately move ahead with plans for moving, preparing the new house and getting set up in the new city.
The end of Mr. Cents’ Reign of Terror.

How to Sell Your Home in 5 Days or Less

OK. I couldn’t resist the cheesy subtitle. But seriously, selling our home this quickly was probably only partly based on luck. Regular readers know that I don’t believe in luck. I think we make our own luck.

In this case, Mr. Cents the Terrible made our luck. He forced us all to clean up our rooms, our closets and perhaps serendipitously, our acts. And he worked harder than any of us.

We learned that there really is a place for everything – even if it’s in the garbage. Just when we thought we had everything looking ship-shape, we were sent back to make it even better. Kicking it up a notch is my husband’s specialty. Here’s how you do it:

Price your house right: Know your market. What are comparable homes selling for? What percentage of the asking price do they sell at?
Every surface must be dust-free and shiny clean
No cracks, dimples, or paint chips on the walls.
No clutter – anywhere.
Floors – clean, shiny, debris-free
If you have an asphalt, stamped, or specialty concrete driveway, seal it
Landscaping and lawn freshly manicured
Kitchen – toaster, sinks and faucets shined; no dishes in sink or drying tray; counters wiped
Freshly vacuumed floors/carpets/stairs
Aged, marked, or damaged furniture is either tossed, repaired or temporarily exiled to a friend’s garage/basement
Make sure your rooms look as spacious as possible. Temporarily relocating some items may be necessary.

If you still want to sell your home once you’ve got it looking this pristine, you’re ready to go.

Where’s the Champagne?

Leaving aside the fact that I don’t like champagne, we didn’t exactly celebrate the sale of our home. We thought we would. We had a bottle of “better” red wine tucked away for the occasion. Why no cork-popping?

For one thing, we were absolutely exhausted. In fact, I couldn’t even bring myself to write a single word about the experience until a few weeks after the fact. For another, Mr. Cents’ uncle lost his short battle with cancer around the same time. For another, we were also really grieving the loss of this house.

We chose every tile, fixture and paint colour in it. We designed our unique driveway and landscaping. Our sons went from ages 8 and 4 to 16 and 12 while we lived here. This is home.

On the financial side the house we bought, which is (at least to us) inferior, will end up costing us about 40% more because of the area it’s in. After coming within a hair of paying off our mortgage, that’s a tough pill to swallow. And yet, the new city offers the potential for much higher income. [Sigh.]

That leaves me wondering about home. What makes a home? While I love the look, layout, and feel of our current home, I know that when I was out of town looking at other homes, it wasn’t the brick colour I missed. It was one son’s latest hippie rant. It was another’s hilarious (if slightly nihilistic) life observations. It was the third’s smiling face and breathless stream of news. It was sharing a meal and some music. It was family. I guess that’s home.

To all of you: I hope you get a chance to ponder the unique gifts the fathers in your lives have given you.

To Dad and to Mr. Cents: Thanks for letting me watch you work. Happy Father’s Day.

Comments on real estate, home, and fathers are welcome.

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Putting Money In Its Place

Kim Petch — Tue, 07 Jun 2011 09:45:20 +0000

Tell your money where to go. Don’t ask where it went.

~ Unknown

We spend a lot of time here kicking around different ideas on how to manage your money. What’s the best way to spend it, save it, and invest it? It’s all about controlling your money rather than letting it control you.

From the beginning, I intended the “balance” part of Balance Junkie to be a bit of a double entendre. It refers to the quest for a healthy financial balance sheet as well as a well-rounded life balance sheet. Putting money in its place means paying enough attention to it to manage it wisely, but not enough to let it become more important than it is. Today we take a look at how to balance these dueling propositions.

Your Money: Micro Management

The term micro management usually has negative connotations. It implies that we’re paying too much attention to details. That can definitely be a problem in personal finance. Sometimes we get so determined to do the right thing with our money that we forget the reasons we took up the challenge in the first place.

Still, letting the pendulum swing too far in the other direction isn’t such a great idea either. Just like letting our closets, desks, or kitchens become too messy can impair our quality of life, neglecting basic financial maintenance can allow problems to needlessly creep into other areas of our lives. Financial maintenance at the micro level can include the following:

Track Spending: use a pen and paper, spreadsheet or software program. It doesn’t matter. Just know where your money is going. Whether you track it to the nearest dollar or hundred dollars isn’t as important as just doing it.
Budget: Once you understand where your money is going, it’s time to control the flow. Can you increase your income? Can you cut back spending in some areas and redirect that capital to something you value more?
Saving: Paying yourself first has almost become a cliché in the personal finance realm, but it’s still one of the best ways to reduce money stress.
Investing: Now that you’ve saved some money, why not put it to work for you? We debate here all the time on the best way to do that. Regular readers know that I think there are lots of ways to create a balanced portfolio. Your way is the best way, whether you’re invested in a Bank CD or a growth stock. As long as your net worth chart is more or less headed higher, the rest is irrelevant. There’s a great asset allocation plan out there somewhere for every personality type you can imagine.
Retirement Planning: One of the main reasons to keep on top of your financial progress is to make sure you’ll have enough money saved to support yourself once you decide to stop working – or are no long able to work – for income. As my friend Jim Yih says, saving for retirement is simple, not easy. Most people who are close to, or in retirement say that the one thing they regret in terms of retirement savings is not starting sooner. If you haven’t started planning for your future already, now is the best time. If you’re Canadian, look into RRSPs, TFSAs and any pension plans your employer might offer.

Strategies for spending, saving, budgeting and investing are a dime a dozen, especially since the dawn of the internet. The hardest part can be finding the one that works for you and making it into a habit. You’ll know you’ve found it when you realize you’re thinking a lot less about money and a lot more about the people and pursuits you value more than money.

Should you learn as much as you can about your money options? Sure. Read all the good books. But once you’ve learned what you can, don’t be afraid to toss out the rule books and write your own.

Your Money: Macro Management

So you’ve basically automated a few strategies for looking after the important minutiae of your financial life. Don’t forget to pull back and look at the BIG picture now and then. Money isn’t everything. If it wasn’t required to buy food and shelter, it wouldn’t be anything. Like everything else, it carries only the value we ascribe to it.

Money has no intrinsic value. It’s just the tool we use to gain some of the things that do. While it’s really important to put money in it’s place in terms of allocating it to the goals we value the most, it’s also important to put money in it’s place in the context of our overall lifestyle. Where does money fit into your life? Do you think it takes up too much space, not enough, or just the right amount?

Here are a few signs you may have let the balance swing too far in favour of micro managing your money:

You’re forgetting important dates like birthdays, anniversaries, and holidays.
You’re always thinking about money and how to get more of it.
You think that if you just tweak your portfolio one more time, you’ll be set.
You’re exhausted from putting in extra time at work to earn more money.
You haven’t enjoyed one of your favourite pastimes in over a month.
You’re not happy.

Of course, the list above is only slightly tongue-in-cheek. I’ll just offer a quote I’ve used before. It’s one of my favourites and it always reminds me that if I’m not happy with the way things are, I can take action to change them:

You’ve got a lot of choices. If getting out of bed in the morning is a chore and you’re not smiling on a regular basis, try another choice.
~Steven D. Woodhull

I write about money every week. It’s easy for me to become too focused on the micro picture. I have to make a regular and very conscious effort to remind myself that I started writing about money to help people master it enough to forget about it for awhile.

Do you ever find yourself micromanaging your finances? How do you get yourself to put things in perspective and take a more macro view?

(By the way, I found today’s opening quote via Natalie MacLellan, who tweets for the Nova Scotia Securities Commission @B4UInvest. I’m not sure where the quote originated so if anyone knows, please send me a note so I can give it proper attribution. Thanks Natalie! )

Photo Credit: Shutterstock

Opportunity Cost and Opportunity Lost

Kim Petch — Tue, 10 May 2011 09:45:38 +0000

Opportunities fly by while we sit regretting the chances we have lost, and the happiness that comes to us we heed not, because of the happiness that is gone.

~Jerome K. Jerome, The Idle Thoughts of an Idle Fellow, 1889

Whether you’re talking about your investments, your view on the economy, or your approach to life in general, your conclusions, actions and results usually hinge on your perspective. I’m often amazed at how different people view the same situation in very different ways. I’m even more amazed by how slight changes in how we look at things can literally change the course and quality of our lives.

Last week I promised to fill you in on what’s been happening with our life changes. (If you’re not familiar with the background story, take a look at Risk Is Relative.) We bought a home in a new city last week. We’ve spent a lot of time over the past two months looking at houses and weighing options, but this transaction happened really fast.

We were originally going to move to a very small town about 2½ hours away from here. Gradually, we came to realize that this probably wouldn’t suit us as well as we thought. We liked the idea of a simpler life, but couldn’t fathom the thought of driving 30 minutes or more to reach major shopping areas. Apparently, we’re city slickers at heart.

The home we bought is only about 2 years old. It’s pretty nice, but the truth is that we had to act on it so quickly in order to secure it that we didn’t have much time to scout out the area. We know that the city is centrally located in Ontario, so that will be great for the new business. Other than that, we’re kind of going in blind.

We don’t take possession, however, until mid-August (the closing date is actually on our 19th wedding anniversary!) so we’ll have plenty of time to investigate. Now we need to concentrate on selling our existing home.

Opportunity Cost

According to Wikipedia, opportunity cost is “the cost of any activity measured in terms of the best alternative forgone.” It’s a key concept in economics and investing, but it can also play an important role in just about any life decision. When we decided to move in order to have the opportunity to maximize the potential benefits of my husband’s new job, we had to weigh some pretty serious opportunity costs:

Housing Cost: Our current home is located in an area where housing is relatively inexpensive, whereas our new home is in an area where housing is more costly. Our current home would probably be worth about $175,00 more if it were located in the city to which we’re moving. We love our current home, so it definitely hurts, both emotionally and financially to pay more for less in order to make this move.
Emotional Cost: Because we chose every aspect of our current home and we’ve lived here longer than any place we’ve been before, it’s really hard to let go. This house is truly home. In addition, we will be leaving the city where both of our parents live. We had hoped to be close by as they age. The boys will be leaving long-time friends and starting at new schools as well.
Financial Cost: As mentioned above, the new home will cost significantly more than our current home, and we will still have to finish the basement to bring it even close to our current home in terms of space and comfort. Our existing home is almost paid off, and the new home will mean that my mortgage vendetta will be extended. This will also have implications for our budgeting and retirement planning as paying off the mortgage was going to accelerate our retirement savings significantly.

Wow. After writing that, I’m starting to wonder if we’ve made the right choice. But let’s look at the potential benefits of the move in terms of the opportunity cost of NOT moving.

Opportunity Lost

“Opportunity is missed by most people because it is dressed in overalls and looks like work.”
~Thomas Edison

Change is at least a little scary for most people. For some – myself included – it can be downright paralyzing. I tend to play it extra-safe, but I’m married to someone who’s always pushing me to at least look at the benefits of taking the occasional leap. I’m not afraid to leap either, but I usually like to think about it a lot longer first.

My arguments for staying here are outlined above in the section on the opportunity costs of moving. However, I can also make a pretty good case for the opportunity costs of staying put:

Financial Cost: If we choose to stay in our current city, the new business would be much more difficult to run. Mr. Cents is responsible for getting a new division of the company off the ground in Ontario. It’s essential that we’re more centrally located to do that. If we do this right, we could easily make this thing a huge success and benefit from the income that goes with it as well. The new mortgage could then be dispatched very quickly, and our retirement plan, turbo charged.
Emotional Cost: Aside from the proximity of family and friends, we don’t exactly enjoy the city we live in right now. The new city is closer to some of the cultural and intellectual action in Ontario and we think this could be a good thing for our two musically inclined sons. There are plenty of post-secondary opportunities in the area if they choose to go that route. In addition, one of my sisters lives just a half-hour drive away, so our youngest son will get to visit with his cousins (who are closer to his age) a lot more often.
Lifestyle Cost: We’ve been so preoccupied with finding a new city/house that we haven’t devoted as much time to getting the business off the ground as we’d like. Having said that, Mr. Cents is loving the work so far. This is basically the ideal job we’ve been hoping for since he left his other position in 2008. We can both work on the business, but I have the freedom to concentrate on home (and Balance Junkie!) as well.

Perception is Nine Tenths of Reality

Every exit is an entrance somewhere else.
~Tom Stoppard

Doors are funny. Do they keep stuff out, or keep you in? Is a door an entrance or an exit? It all depends on where you’re standing and where you want to be. Do you want in or out? Perception is everything.

Obviously, we have decided, somewhat reluctantly, that we want out of our current life and are hoping that the new life we’re entering is to our liking. We understand that there are opportunity costs whether we decide to stay or go, but we’re willing to take the chance that the risks outweigh the rewards. We’re choosing to risk some opportunity costs to avoid an opportunity lost. There are no guarantees either way, but we think we can make this work for our family.

Do you weigh the opportunity costs when you’ve got a choice to make? Do you ever find that the prospect of change keeps you from making a choice?

(Photo Credit: Norma Cornes/Shutterstock.com)

5 Ways to Clear Financial Obstacles

Kim Petch — Wed, 27 Apr 2011 09:45:13 +0000

Obstacles are like wild animals. They are cowards but they will bluff you if they can. If they see you are afraid of them… they are liable to spring upon you; but if you look them squarely in the eye, they will slink out of sight.

~ Orison Swett Marden

Do you have financial goals that you just haven’t been able to achieve? Maybe you’ve always wanted to set up a budget, but you just haven’t found the time. Maybe you want to learn more about investing or economics, but you just don’t know where to start. Before you know it years pass by, you’re no closer to your goals and you’re left wondering why.

All of us face different financial obstacles. Some of us have a hard time figuring out how to earn more income. Others have plenty of income, but struggle to save it for the future. No matter what financial obstacles I’ve ever faced, I usually find the causes for them – and the keys to hurdling them – in the mirror.

Mirror, Mirror . . .

If you’re anything like me, you have a few nagging concerns that flare up once in a while. You acknowledge that something has to be done about them, but somehow nothing ever happens. Why?

Financial concerns can sometimes take a back seat to the everyday problems that crop up. I need to plan and prepare meals for my family every day, but there’s no immediate pressure to figure out the best investment or retirement strategy for the future. After all, retirement is decades away, and dinner is hours away. And by the time dinner has been planned, prepared and put away, there are plenty of other tasks to occupy my time. So it’s easy to put off financial planning.

It’s even easier to repeat the pattern above over and over until years pass without any progress toward my financial goals. I can see that the problem here is me. If I want these patterns of behaviour to change, I have to change them.

I’m no expert at listening to the mirror on the wall, but I’ve gotten a little better at it over the years and I’ve found that facing obstacles head-on is the only way to overcome them. Half-hearted efforts always yield half-hearted results. An honest, realistic appraisal of your goals and your efforts to achieve them is critical to your success.

5 Steps to Hurdling Financial Obstacles

The follow 5 steps can provide a framework for how to overcome the financial inertia that besets all of us from time to time. But it’s important to realize that, like any good athlete, we need to make sure that we’ve got the basics covered first: You can’t jump all those hurdles and win the race if you haven’t taken care of your basic health needs first.

It’s the same with your financial health. Take a look at Your Financial Hierarchy of Needs and figure out which part of the pyramid you need to focus on before you try to clear all of your financial hurdles. You can follow these 5 steps for each hurdle and hopefully they will eventually become second nature.

1. Name It

This may sound too simple or obvious, but I’ve often found that I’m a lot less successful when I skip the most fundamental aspects of problem solving. When you name your obstacle, you provide a focal point for your efforts. Try to be specific, yet fairly general with your name. You may want to name your obstacle “budgeting”, but it may help you focus better if you call it “designing a useful budget spreadsheet” or “sticking to my budget.”

2. Source It

The next step is to identify the source of your obstacle. Do you need more information to clear your obstacle, or is it more a matter of motivation and consistency? Maybe it’s a little of both. Either way, identifying the root of your problem allows you to focus your actions where they’ll be most effective.

3. Size It Up

This is where you can go into a little more detail on your obstacle analysis. You’ve named it and estimated some of its sources and now you need to decide just how big that hurdle is. Do you need to break it down into smaller pieces in order to clear it effectively, or can you get over it in one big jump? If you’ve never designed a budget before, you definitely want to break the process into smaller steps like researching different types of budgets, tracking your spending, and monitoring your progress.

4. Face It

This is where the running shoe meets the track. It’s time to come up with a concrete plan of action for hurdling your obstacle. Staying with our budgeting example, you may want to set aside a specific time on a weekend to do some research or go through your bills and financial statements. Give yourself a firm but flexible deadline like the end of a month or week. Set your own pace, but make sure you have a clear end in sight.

5. Jump It

This is the best part. Once you follow through with your plan of action, you can take a long drink of water (or another beverage of your choice ) and savour your victory. It’s important to realize, however, that we don’t get over every hurdle on the first try. Don’t quit. Go back to the starting gate and go at it again. You may need to modify your preparation and approach, but you’ll get over that obstacle eventually.

Do you have any financial obstacles you just can’t seem to clear? How do you approach them?