Almost a month ago, J.D. Roth over at Get Rich Slowly started sponsoring a video contest asking readers to turn in a tip or a financial success story. When I revived this blog last week, I mentioned that I had been able to save up for a ring and I would be sharing the story of how it happened. Well, here is the first part of that story condensed into a 2 minute video.

Confession #1: I have never done a video blog before this

Confession #2: I have never saved this amount of money at one time before

Confession #3: I wondered if sharing this would ruin the surprise of the actual moment

With that being said, I hope you enjoy the video. It will be the first time some of you are hearing or seeing me and I must say that the still picture here doesn’t create a great first impression .

[There is a video that cannot be displayed in this feed. Visit the blog entry to see the video.]

Next week, I will provide a detailed article explaining the products I used in this video and why I went the route I did.

After today we will be in the month of October. OCTOBER . . .  2009!?!

I’m literally taking a moment to digest how nine whole months have flown by . . . . . OK! Moment Over.

With about 90 days (92 days to be exact) left in 2009, I want to mention 6 steps using the Achievers Focusing System (click image below to enlarge) from Success Principles to make the latter part of 2009 your best yet.

Step 1 – FOCUS AREA: In what aspect of your life do you want to make the most impact?

The Achievers Focusing System has divided areas of life into seven

• Finance & Wealth
• Career
• Free Time
• Health and Appearance
• Relationship
• Personal Development
• Community & Charity

When the year began, you probably thought about making a change in 1 or more of these categories and somewhere along the way that got lost in translation (9 months wheezing by can do that). No matter, a lot can still be done in 90 days by making minute and incremental changes.

By the yard it’s hard, but inch by inch anything’s a cinch – Brian Tracy

Instead of trying to cover all these areas at once, start by selecting the most important area where you want change and then select the next most important area and so on.  Consequently, you will be creating a ranking system for the next three months.

Step 2 – GOALS: What are your goals for the rest of the year?

Write down one goal in the area(s) that you have chosen previously. Using the document, this can be written in the boxes provided.

This is where problems arise. In defining goals, they have to be measurable i.e. there has to be some sort of finish-line related to  an accomplishment and/or  time frame. The lack of a time frame usually results in complacency. The lack of defined accomplishments usually results in a loss of interest and boredom. Using goal #1 above, I will have to pay off $1,000 in the next 3 months. With this, I have defined the accomplishment and the time-frame. How can you measure the goal you want to attain? Is it a series of accomplishments or is it one you can measure with time?

Step 3 – ACTIVITIES: What steps need to be taken to accomplish this goal?

Outline the necessary steps to completing this goal. This can be done using the time-frame or accomplishments as a guide. The point of doing this is breaking down the goal into manageable chunks. By so doing, the viability of the goal is maintained and it would seem neither large nor looming.

For my goal, here’s what I’m thinking:

In addition, list some non-activities as well i.e. activities you shouldn’t engage in which will also help with accomplishing your goals.

• Leave credit cards at home ALWAYS
• Pay for purchases using checking account

Using the Achievers Focusing System, these activities are then spread out over 12 weeks. This allows for looking at the overall picture while keeping track of the activities spread out over the 90 days.

Step 4 – SMALL VICTORIES: What happens when you complete an activity?

Sometime ago I mentioned how celebrating small victories are essential to boosting morale. As you slowly advance towards your goal week by week, remember to take a moment to digest how far you have come. This moment of reflection can be used:

• to further fine-tune future activities
• to ensure that the pace is still being kept
• to rest before going on to the next task

Once each activity is completed, take a breath and congratulate yourself on making it this far. For me I will take great joy in seeing Balance: $0.00 and I will also update my account at NetworthIQ at the end of every month because seeing that bump provides additional motivation. Then keep pressing on knowing that you are closer than when you first started.

Step 5 – ACCOUNTABILITY: Should I involve others in my goal?

The Achievers Focusing System includes a section for an Accountability Partner. This is the person who you have shared your goals with and you know will be a willing motivator in your cause to improve. Sometimes goals are like a new toy: you play with it for a few days excitedly; then over time, the excitement fades and the toy starts to collect dust. This is when your partner(s) can help to dust off some of that dust and remind you of what you set out to do.

Therefore, since we are surrounded by such a great cloud of witnesses, let us throw everything that hinders . . . . and let us run with perseverance the race set out for us. Hebrews 12:1

Your accountability partner serves as that witness to your commitment to yourself in that area of your life.

Step 6 – FINISH LINE: When does my goal end?

As mentioned in the beginning, this goal(s) should be tailored to cover the remaining 3 months/12 weeks/92 days of the year. Therefore while striving to complete each activity always keep in mind your finish line by:

• Tick off the days on the calendar
• Cross out your to-do list each week
• Little steps will yield great results

By so doing, you are constantly reminded of where you are trying to go

Image courtesy of Mr. Mystery

What do you do when:

• your source of income suddenly stops?
• you’re suddenly ill and insurance can’t cover all the costs?
• you have to travel immediately due to a close relative’s passing away?
• your car breaks down and you realize you have to spend $700 or more on repairs?

Sure you can use credit cards to cover some of these expenses, but how long can you do that for especially if the first situation is also true. This is when the Emergency Reserve comes into play. It sounds basic and like common sense, but this is the most important account for any independent person (and often the most overlooked). In discussing this, we can focus on the What, Why, Who, Where, When and How?

What: What is an Emergency Reserve?

According to the Merriam-Webster Dictionary Online, an emergency is

An unforeseen combination of circumstances or the resulting state that calls for immediate action

Two words stick out clearly here: unforeseen and immediate. Consequently,

An emergency reserve is money kept aside for unforeseen situations that call for immediate attention and action

This means that this money should only be used for things that are unplanned. Consequently, emergency reserve should be separate from your savings. Usually when we save, we are saving for a goal e.g. a vacation, new gadget, textbooks, accessories etc. As such, while savings is usually money for planned activities, an emergency reserve is money for unplanned activities. In a way, you can call your Emergency Reserve your financial Red Cross because it arrives on the scene when emergency rears its head.

Why: Why should I care about an Emergency Reserve?

As mentioned above, this money is for unforeseen circumstances which can (and does) happen to anyone. Thus the prime reason for having this reserve is simply: peace of mind. Rather than worry about money in a time of crisis, you know there is money somewhere and that helps to focus on the crisis itself. Besides, if you already insure your car and health, shouldn’t you also be insuring your finances as most emergencies hit the pockets first?

Who: Who should have an Emergency Reserve?

An emergency reserve is necessary for anyone who is (or wants to be) dependent on themselves for financial resources. Therefore, this person has some sort of regular income which pays their bills and they are not necessarily dependent on their parents or family members. This reserve is also important for those who have dependents.

When: When should I start an Emergency Reserve?

As soon as possible! Right after reading this article!! I’m kidding. Well kinda. In all seriousness, you never know when you will need this, so it’s best to start as soon as you can.

Where: Where should I keep my Emergency Reserve?

Since this money is required for immediate action, it should be kept in a savings account that is linked to a checking account. This way, the money can be easily transferred when it is needed. I would stress here that it shouldn’t be in a checking account simply because just as much as this money should be accessible, it should also be untouched. With an emergency fund tied into a checking account this is very prone to happen.  In addition, the advantage is that it generates interest while sitting in the savings account when untouched.

How: How much should an emergency fund have?

For this question there isn’t always a straightforward answer. I have heard of 1 month, 3 months or even 6 months worth of expenses saved. I have also heard of using figures like $1,000 – $5,000. I personally keep set my goal at $1,000 just because it’s a nice round figure and also because it covers a month worth of expenses at the moment. When I leave graduate school and start a family, I am sure that number will go up. The most important factor here is that you set a minimum that will give you peace of mind.

I’m hoping that I have somehow convinced you about the relevance of this very important financial tool or at least initiated some thoughts into starting your own emergency reserve. When crisis happens, you will have your own Red Cross to lean on.

Do you ever find yourself wondering where the time has gone at the end of the day? It starts out bright and you perform the required tasks for the day, but the rest of the time has flown by before you realize it? This is often also the case with money.

In his book The Six-Day Financial Makeover, Robert Pagliarini warns that when spending isn’t planned, it often follows this pyramid with money flowing from the top to bottom and reducing in quantity as it trickles down.

Like required tasks of the day, Basic Living Expenses are the first things that normally come out of a paycheck. You pay rent, water and electricity bills, insurance, buy groceries etc. However, if there is no plan in place for the rest of the money, whatever is left over often gets spent on Miscellaneous Expenses such as shopping, entertainment and the occasional dining out. Before you know it, there’s very little left over and this little is stretched into the remaining part of the pyramid. This is the kind of lifestyle that tends to lead to living paycheck to paycheck and a continuous cycling of debt.

Robert then suggested a different sort of pyramid which he termed the “Optimized Spending Pyramid”

The top part of the pyramid is still Basic Living Expenses while the Miscellaneous Expenses lie at the bottom. Everyone in the finance field will agree that this should always be the case i.e. Pay bills first and then spend chump change on wants. The disagreements arise in the middle portion of the pyramid and the order in which those items should occur. Should Debt be paid off first before establishing Emergency Reserve? Should I give to Charity or the Church when I have debt piling up? Should I be saving for Retirement when I don’t have an Emergency Fund established? And so on and so forth.

The fact is there is not one correct answer. Even when there is an answer that makes sense mathematically, it can be hard to tailor emotions to the arithmetic. This is where personal values come into play. A bible verse says

“Where your treasure is, there your heart will be also.” (Luke 12:34)

The order of priority simply depends on how much value you place on each area of the pyramid. If it’s more important to you not to owe anyone anything, you will find yourself focused on Debt Reduction. If you care a lot more about things going on with the less-privileged in your community, Charity will rank higher in that pyramid. If you care a lot more about developing your skills e.g. learning new software for your job or improving your reading skills, Personal Improvement will rank higher on the list. Whatever the case may be, this portion of the pyramid will be ordered entirely on the things you value most.

Money, like time, if not planned wisely often trickles into the areas of life which don’t rank high on the priority list. Therefore establishing a plan is important, but more important is that it should be your own plan. When the created plan is yours and based on your values, you’re more prone or at least have a stronger desire to follow it.

As a follow-up to this article, tomorrow I will connect Dan Pink’s talk about the three aspects of motivation and relate it to how you can begin to arrange the middle portion of this pyramid to fit you.

Note: I found out this morning through Get Rich Slowly that Robert Pagliarini is offering his E-Book Plan Z: How to Survive the Financial Crisis as a free download. I haven’t checked it out but his Six-Day Financial Makeover was easy to read and comprehend and I expect this book to be the same.

I’ve heard the phrase “Treat your life as a business” many times and it got me thinking of how this could be possible. How does the way businesses are started and operated translate to life itself?

Establish a Niche

One of the first things businesses do is establish their niche. Sometimes this could be a previously non-existent niche e.g. Twitter and Facebook in social media or continuing an already profitable niche e.g. Operating a Burger King Franchise. Either way, the business defines its niche prior to establishment.

To truly live, we have to establish a purpose. It’s the reason why most success books start by asking what your desire is. Chris Guillebeau in his World Domination Manifesto asked “What can you offer the world that no one else can?” Stephen Covey in 7 habits calls it “Beginning with the end in mind.” This  search for a purpose It’s the reason why The Purpose-Driven Life was on the New York best Seller list for a long time. The answer to this question is the first step to living your life to your fullest capacity. Sometimes purpose is established through the divine, other times it’s wrought through passion, but there’s no denying that this is the first step in living life.

Compose a Business Plan

All businesses need some form of capital to take off. This usually comes in form of a loan, angel investors, family etc. However before this happens, the entrepreneur will be asked to come up with a feasible plan. This detailed plan shows the expected profits, expenses, gains and pitfalls of the business and illustrates what the bank and the investors are getting themselves into.

In the same vein, once your purpose is defined, the next step is a detailed plan on getting there. This is essentially your written GPS with purpose being the destination. I remember stumbling on this guy’s twitter and his description said: “Working on my life, it’s gonna be flippin’ awesome when it’s complete.” It made me think about how our lives are a work of art. Every day we spend on earth is a day in crafting that work and every day that passes without making a dent on that craft is a waste. Your plans at 20 will differ from your plans at 30 or 40, but the plans you make at 20 will get you to 30 while remaining on the right path. It’s even more fun to look at how plans change from year to year with the big picture intact.

Dominate the Niche

Once the niche and plan has been formulated, the next thing the business tries to do is make their name known through focus on quality, great customer service and advertising. All this is done to fill in the niche that has been previously chosen. One of the greatest disappointments is when we live mediocre lives. It’s disappointing because the world is blessed by the achievements of individuals like you and I, and mediocrity erases our ability to share those blessing with others. History is littered with the achievements of great men and women who worked every day to quench their burning purposes as should we. When we live the best lives possible, we satisfy that desire and simultaneously give the world something that no one else can.

Make Profit

The primary purpose of a business is not just to make money, but to make a profit. Souns simple enough, but it’s the reason why business go broke and eventually fail. Essentially resources will be spent, but more has to be made than is spent or this leads to bankruptcy. To do this, the business attempts to reduce costs and maximize sales. Some businesses have taken this too far and have done this as a detriment to their purpose (Enron as a classic example). The businesses that endure realize that reducing costs also involves maximizing resources and not cutting corners.

The most important resource we have is time. It’s the one thing we cannot get more of out of in a day, so we have to ensure that it is well spent while achieving the optimum results. Setting goals and timeframes is one of the ways to do this. This helps ensure that time is being spent well even if means taking a break to refresh the mind and body. When time isn’t operated on the principle of profit, we consistently play the game of catch-up.

Involvement in the Community

Finally, most businesses understand the importance of being involved in the community they are a part of. Pizza places on college campuses sponsor student organizations; department stores perform highway cleanups and so on. Good businesses understand that the people who live around them are their customers and essentially factor in community effort as part of their expenditure. In the same manner, no man is an island. It is important that while attempting to be the best we can be, that we not forget people around us. The principle that “We get what we want by helping others get what they want” is founded on the belief that as we work together with other people, we fill in their weaknesses and they in turn do the same for us. Napoleon Hill calls it the “Master Mind Principle.” Dependent people fail, Independent people partially prosper but the interdependent individual uses personal resources and the resources of others to prosper.

The business of life is a tricky one and can be overwhelming when one has no idea where they are headed. As we make strides in forward progress, we create a life that is worth emulating.

Image 1 courtesy of Arborlawn United Methodist

Image 2 courtesy of Queen’s School of Medicine

Image 3 courtesy of Word Constructions

It’s the first of September today and as with the beginning of a new day, new month or a new year we are often inclined to set new goals/resolutions. I think it’s like having a clean slate, so like kids in a candy store we excited to just get home and start writing on the slate.  I’m excited about the new month too, so I decided to look back at the goals I set at the beginning of the year and see how far I have come.

When 2009 began, I made 10 resolutions and I sent them to my girlfriend to look over to hold me accountable to them. This is exactly what I sent:

1. Eliminate 1.5 credit cards (Completed and Retooled)
2. Save $1000 and put in a mutual fund or CD (Completed and Retooled)
3. Write two papers (On-going)
4. Cardio (Run or Bike) 3 times a week (Retooled)
5. Don’t drink soda (On-going)
6. Lift twice a week (Retooled)
7. Sleep 6 hours (On-going)
8. Read 1 book per month (4 non-fiction books read so far)
9. Listen to 1 motivational tape per month (5 series completed)
10. Graduate or at least be close to it i.e. proposal done and defended, comprehensive exam passed, experiments completed and in the process of writing dissertation at the minimum (Retooled)

This email was dated January 9^th 2009, and I’m not even sure she remembers the contents of this email. It was the first time I had made resolutions and actually documented them and sent them to someone and not just chucked it away in my head.  All the books and tapes I have read and listened to always stress the importance of attaching activities to your goals essentially breaking down these goals to manageable chunks. Fortunately, I stumbled on resources from Success Principles (a book by Jack Canfield co-author of the Chicken Soup Series), specifically the Achievers Focusing System (Quarterly Breakdown) and Daily Success Focus Journal (Daily Breakdown). I also created a weekly sheet for myself too (Download here). Now I know that’s a lot of writing and a lot of paper, but at the time I wasn’t sure what method worked the best for me. Should I break down activities on a daily basis? Weekly? Monthly? Quarterly? Biennially? It was all so confusing and I decided to try as many as I could and see what worked best for me. Currently, my system has been boiled down to a Quarterly Tracking and a spiral notebook for the daily to-do list. I especially like the Achievers Focusing System I mentioned above because it splits down goals into 7 areas (same concept I used in the weekly system):

• Financial & Wealth
• Career
• Free Time
• Health & Appearance
• Relationship
• Personal Development
• Community & Charity

These resources aren’t anything fancy, but they have helped to keep me on my toes and aware of my progress.

9 months have passed since those resolutions were made. It’s a new month (new school year for some),  and there’s no need to wait for 2010 to renew this commitment and neither should you. Hopefully these resources here are useful or just type “goal organizer” (or something) into Google and I am sure there’s something out there.

As long as those goals are written somewhere, you have a reminder to check back on. As Tony Horton (of P90X fame) always says “Write it down. How can you know what to do if you don’t know what you did?”

If you’re wondering how I am doing on my resolutions, I have details on my Goal Report and yea . . . there’s a lot left to be done.

Picture courtesy of http://internetmedianews.files.wordpress.com