A couple of years ago, we received a lot of money as a Christmas gift from our parents. That gift shocked us because we weren’t expecting that extra income. Adrenaline started running through my body as I thought of what we could do with this money. We were saving for a car, so that’s where we used it. Having a goal helped me calm down. It was great to know where to spend the money so we didn’t regret how we spent it. Even though the timing of bonuses, gifts, or inheritances is often unexpected, you can plan how to spend the extra income when you receive it.
I think all of us would like extra income, but do you know how you would spent it? Would you save it for retirement? Would you spend it on a vacation or a purchase? Would you pay down debt? It’s good to think about this ahead of time so that you know how you would spend extra income.
When Ty changed jobs in November, all of his accrued vacation pay was paid out to him from his previous employer. We didn’t expect that he would change jobs and receive all that money at once. We hadn’t been able to save for Christmas throughout the year, and we were considering using some of our emergency fund for Christmas. When he received that extra income, we paid for Christmas. I was glad that we didn’t have to use emergency fund money because I don’t consider Christmas an emergency, but we weren’t sure how we were going to pay for it.
I have noticed that unexpected income is often followed by an expense. Have you noticed this? Maybe you received a gift and then the washer broke. I have seen this happen enough times in my life and in the lives of others to see a correlation. A few years ago, my friend and I discussed this and how it can feel discouraging. She had learned to appreciate that money comes when you need it. I decided that I wouldn’t let myself be discouraged anymore when this happened. She helped me to learn to be grateful for extra income even if it needs to be used for bills.
After my family had saved an emergency fund, the unexpected repair expenses didn’t use the extra income anymore. I really don’t like to spend our emergency fund - just ask my husband. He teases me about having an emergency fund that I "won’t use even for an emergency.” I reply, “If I spend it, I won’t have it for an emergency!” Anyway, I might still choose to use extra income for an unexpected expense, but having an emergency fund gives me options to pick which money to use.
The purpose of this blog is to help you reach your financial peak. Each week I’ll give you a financial exercise to do. This week’s exercise was fun for me. I hope you will do it! And, I hope you enjoy it. I want you to make a wish list. Prioritize from the most important or most urgent financial goal down to the least urgent goal.
Here is my Extra Income Wish-List:
I often say that we can’t buy everything that we want, but we can do anything. Staying focused is challenging for me. This exercise helped me define what I would do with extra income. Now, I’m ready for unexpected and extra income. It’s welcome anytime!
Last week I went to yoga, and the instructor told our class to “embrace the warming feeling in your muscles.” Embrace that burn? I didn’t want to embrace it because it felt so uncomfortable. I don’t naturally enjoy exercising. In fact, I almost didn’t graduate high school because I didn’t have enough gym credits.
So, why do I exercise regularly? Those burning yoga stretches take my mind off the worries of life. As I fight for each pose, I become stronger. Going to the gym gets me out of the house and around inspiring people. The music playing in the gym inspires me. I exercise so that I can feel good afterwards.
My dad was in his mid-40’s when he started breathing heavily going up and down stairs. This was strange because he had been active and healthy. Doctors found that his heart’s mitral valve wasn’t closing correctly. He went through open heart surgery. Although it wasn’t his fault, his health gradually declined from that point, and he died a little over a decade later. That experience really impacted me. I decided that I would do all I could to be healthy. This is a strong enough reason to motivate me to leave the house in the wee hours of the morning to dive into a cool pool and swim.
Consistently doing anything is challenging. I have to have a strong enough reason for doing it, so I can overcome the challenge. It’s uncomfortable and even painful to do financial exercises like living within your means, using a budget, and saving an emergency fund. But, it feels so good to be financially strong. Find and define your reason! During the recession, I saw the stress of finances on my dad. When my dad died, I understood firsthand the importance of having life insurance and being financially prepared. This is my reason for living financial principles and having financial health. That keeps me motivated to budget and save especially when I make mistakes. I want my family to have financial freedom and avoid pain that financial stress causes.
Consistent effort doesn’t mean that you are perfect. It means that you keep trying. We have a framed poster on our wall of our turtle that says, “Slow and steady wins the race.” I’ve read the story of the Turtle and the Hare over and over to my kids, and we talk about it a lot. I’m not sure that they are convinced yet. Recently my daughter told me that she could beat that turtle. They don’t understand how a turtle who travels at walking speed could win. A couple of friends and I did a mini triathlon this month, and I was the fastest of the three of us. This shocked me because they both run better than I do. One is a better swimmer and is more experienced. I expected them both to be faster than me. Afterwards, my friend told me that I had been the most consistent at training. Her comment really impacted me and made me realize the importance of being consistent in whatever you are doing.
There are some factors of our finances that we can’t control. I am a recovering control-aholic. I’ve realized that I can’t control the weather, the economy, or others, and I'm okay with that. I can’t prevent a financial storm, but I can commit to living financial principles. The storms still hit my family, but we’ve had financial umbrellas that have protected us. That feels so good. One of my friends has been really consistent at saving and investing. She is only forty and her dad told her that she didn’t need to be worrying about retirement, but should enjoy life more. I felt shocked that he was trying to discourage her from living her financial habits. Slowly and steadily living financial principles isn’t popular, so the only way I can do it is to have a strong enough reason for doing it. When you feel the pain that comes from financial exercise, remember how good it is going to feel later and remember your motivation for doing it.
I hope you enjoyed the President’s Day holiday. Our kids were out of school on Friday & Monday, so we had a long weekend full of fun times. President’s Day reminds me of tax season. Although IRS technically started accepting tax returns on January 23rd, most of us have not filed because we were waiting for information. Also, some returns weren’t being processed at that time. For example, if you are claiming the refundable portion of the Child Tax Credit or if you are claiming the Earned Income Tax Credit and were receiving a refund, it wouldn’t be paid before February 15th. Now, tax season is definitely here. Unless you are waiting on some K-1s or 1099s, you probably have the forms that you need in order to file your taxes.
I recently attended an 8 hour seminar highlighting the updates for taxes - by the way, that was the short class. The long one was 2 days. Some things in life never change, but tax law isn’t one of those unchangeable things. For this post I’ll mention some of the tax topics that I think the readers here will appreciate. Apply each topic to your situation.
Partnership returns are due on March 15th now, which falls on a Wednesday this year. By the way, whenever a tax filing deadline falls on a weekend, taxes are due on the following Monday. Because April 15th falls on a Saturday and Emancipation day is observed on Monday, April 17th, the tax filing deadline is April 18th this year for individual filers and businesses filing an 1120. (See IRS for more information.)
Tip: If you have some investment accounts, you will want to wait until the final 1099s are sent out. Last year I worked on several tax returns that we thought had the final 1099s, but a few weeks after they were filed, another 1099 was received. Some of these 1099s were not received until mid-March. It is easier, cheaper, and better to wait to file than to amend a return, but returns can be amended. Regardless of when you file, I recommend you prepare the information you’ll need for your return now!
You have until your tax return filing deadline to contribute to your IRA accounts! For most of us, that is April 18th. Each year my husband and I try to reach our $5,500 limit for IRA contributions. Some years we do and some years we don’t even get close, but we aim for it. Having a few extra months helps me. If you haven’t started contributing to an IRA, I recommend you start with a small amount. That’s how we started. How much do you want to contribute before the tax deadline? You need to know this in order to file your taxes. For specifics, check here.
Tip: Always be aware of phase-out amounts. This means that if you earn over certain amounts, the credit or deduction “phases” out until you aren’t allowed any of that benefit. You can look up the specific phase-out amounts for the deduction or credit you may be wondering about. Just because a deduction is generally allowed, doesn’t mean it will be allowed for you. For example, if you are married, the phase-out range for the American Opportunity Tax credit is $160,000-$180,000. This means that as your income reaches $160,000, the credit will ratably be reduced, and if you make over $180,000, it will be gone. I often hear someone say “that is tax deductible” in conversation. I think to myself that it depends on the taxpayer’s income. Student loan interest is tax deductible unless you earn over the phase-out amount. I won’t list all of them here, but you can easily check them on IRS’s website for any deduction or credit that you are considering.
Will you be receiving a huge refund? Emotionally, it feels great to get a large refund. I understand this! I know I’m swimming upstream to suggest that you adjust your withholding, but a large refund means that you are letting the government hold your money. I try to withhold just enough to get a small refund.
Some people tell me that they don’t have the self discipline to save throughout the year so at least that forces them to save. I get that. However, USING your budget will solve this problem, and you can get off that wagon. I’ll get off my budgeting “soapbox” now.
IRS is trying to protect against this. If you want to read more information about possible fraud, click here.
Identity theft is a big problem right now. I personally have a friend who wasn’t able to file her taxes electronically because someone had fraudulently used her social security to file taxes.
This was an important law passed at the end of 2015. Some tax provisions were made permanentsuch as Child Tax Credit, AOTC - American Opportunity Tax Credit, & Tax Free transfer from IRA to charity.
Other tax provisions were extended. For example, the deduction of mortgage insurance premiums was extended through 2016. This is a nice deduction if it applies to you.
The IRS website is a great resource for tax topics. I hope your tax season goes well!
According to ycharts, the average personal savings rate in the U.S. at the end of 2016 was 5.5%.
That is what my family was saving, so we are average savers right now. Savings doesn’t happen without strategy, so this statistic shows we are prioritizing savings, but we can improve this percentage.
Eight years ago, my family had a savings account with a few thousands of dollars in it. We emptied the account in order to pay for a new roof. We saved for a couple more years and then we emptied it again to pay for a fence in the backyard, which we justified as an “emergency.” It felt like we couldn’t get ahead because we were filling and emptying our savings and couldn’t ever move on.
At the same time, I was feeling pressure to save for retirement, vacations, and my childrens' future college and marriages. I wanted the time value of money to be working for us in all of these areas. That resulted in me using that marriage fund for another expense. We only saved a couple of hundred dollars for college, and our retirement savings was minimal.
In 2010, we decided to focus on one savings goal and invest 3% towards retirement. We decided that our first goal would be to fully fund an emergency fund, which we would only use for emergencies. (Home improvements didn’t count as emergencies for us anymore!) About a year and a half into the goal, we had saved ¾ of our goal amount. I felt tired as we hit a savings wall. I started to justify that we had enough saved, but our commitment to this goal helped us to stay focused on it and climb over the savings wall. About a month after hitting that wall, Ty received a promotion and large raise from his employer. This raise was 5X bigger than any raise he had ever received in the past, and it allowed us to reach our savings goal within a few months.
I remember the Magic Eye 3-D images that required me to relax, focus, and disregard all of the distracting images in order to see the 3-D image through the busyness. You have to be committed to finding that 3-D hidden image. That’s what happened when we focused on one savings goal. We were able to ignore all of the busy distractions. We relaxed and focused in order to see the goal realized.
I don’t know who to give credit for the term “savings snowball.” When we were going through our Savings Attention Deficit Phase, I knew about the debt snowball. This focused on paying one debt off at a time while paying the minimums on everything else, and I thought it would be great to do that on the savings side so that we could avoid debt. I googled “savings snowball,” and found the phrase several times, so I wasn’t the first to coin it.
Think about how we make snowballs. My kids have been making a lot of snowballs. They can make a lot of little ones for a snowball fight, but to make a snowman, they have to focus on one and roll it until that snowball gets bigger and bigger. Pretty soon, we have a large snowball to use to build the base of a snowman. Once the snowball is big enough, we can move to the next snowball, which doesn’t need to be the same size as the first. We decide how big it needs to be, and then we roll it until it gets to be that size.
We started doing this with our savings. After saving for an Emergency Fund, we saved for a trip to Disneyland, which was a much smaller goal that we reached quickly. Then we saved for a minivan. Now we are saving for an SUV to replace my husband’s SUV. The savings snowball has worked well for us because we see progress in reaching our goals in a relatively short amount of time.
This method also helped me relax and focus. I don’t goal hop anymore or try to do everything. The percentage of our income that we saved has changed. We started with about 5%, and each time we got a raise, we put it towards savings until we were saving 20%. Then, with our job loss, we weren’t saving at all for a short time. Then, once again, we started saving 5%, which is where we are now.
Look at your budget to determine what percentage number is right. As you free up money by reaching your savings goal or increasing your income, you can add to that. What other savings strategies have helped you?
You know that it’s January when ... you drive around the gym parking lot for 10 minutes without finding a parking space!! That happened to me last week. Finally, I stopped, waited for someone to come out of the gym, and I followed her to her car so that I could get a parking spot. My friend and I call this the January Gym Crowd. After January, the crowd usually shrinks. The gym was so packed one night that I couldn’t even park in the parking lot!
Ever since that night, I’ve been thinking about the resolutions we make. The resolutions that don’t last are the ones that I'm not really resolved to do. The resolutions that stick are the ones that help me to become something, rather than to do something. When I resolve to change who I am in order to become healthier, it doesn’t matter if I miss a workout or overeat one day. My commitment helps me to try again the next day. I have written many blog posts about how to do something related to finance. I am not talking about how to make or do anything today. This is all about how to become financially fit by committing to financial fitness.
I struggle with consistency. A friend told me that there are different seasons of our lives. She helped me realize that I can’t be consistent in everything all the time. When it comes to finances, we don’t always have the same level of consistency, but we can be consistent in our commitment to our financial health. Our effort doesn’t always have to be equal. There are seasons when we spend more time on our than other seasons. That is okay.
My commitment to personal finances has developed over time and with different experiences: my dad’s death, my friends retiring early, and experiencing unemployment. No one can give this commitment to you, you have to find the reason for your commitment. I’m committed to financial fitness because I want to have financial freedom. If my commitment isn’t strong enough, I won’t stick with it.
Once you’ve make a commitment to financial fitness, you can expect it to be tested. My commitment is often tested. Here are a few suggestions that help to stay committed.
It takes a lot of inner strength in order to avoid comparison. Last October, I realized that comparing was a weakness of mine, and since then I have been practicing eliminating comparisons in my life. The effects of comparison are really damaging. Either I feel better than or worse than someone else. I don’t like that feeling. Plus, comparison can kill commitment if I let it. Comparison is a bad habit that is tough to break. Here are a few exercises I’m doing to help break the comparison.
Yesterday I told my friend that we aren’t able to meet our retirement goals, but we’re doing more than others so if we are not okay financially in retirement, no one else will be okay. I thought about the comparison I made and realized I was trying to justify not reaching our goals. I thought about how I can change what I said next time.
I’ve been journaling and call it my journal “JOYrnal.” I try to live with childlike joy. On Friday night, I bought pizza for my kids. My son’s eyes lit up and he screamed, “We’re having pizza!” It amazed me how much joy he found in a $5 pizza. To help me remember to journal, I write before I eat dinner. I learned that from a musician, Lindsey Stirling. In an interview, she said that she never forgets to eat so she ties important things that she wants to do with eating. I never forget to eat so that has helped me!
The past few months I have exercised with an awesome friend. She is always encouraging me to be my best. I hadn’t lifted weights for a long time, and I started out with small amounts. She told me “Good job!" when I completed a set. She strives to be her best and doesn’t compare or compete against me. My husband also does this. He encourages me. One day after taking a cycling class, Ty asked how it went. I told him that it was rough and I didn’t do very good. He said, “You made it there. That’s good!" Last week, it was a struggle for me to get out of bed and get to the pool. After I swam, I encouraged myself.
Even though my husband and I are not maxing out our retirement plans, we are contributing! We are teaching our kids to save and invest! I encouraged myself to keep investing. We are meeting with an investment adviser this week. That is good!
I make mistakes all the time, in every area of my life. Forgiving myself allows me to stick with the commitment. This weekend I watched a talk by J.K. Rowling, who is super successful writer, and she talked about how she had failed in so many ways that it helped her to focus on the one area she had left. Her talk actually inspired me to fail! She said that a benefit of failure is that it allows you the chance to rebuild and commit.
Focusing on one goal helps me stick to my commitment to be financially fit. Looking back, in 2010, I was trying to do everything financially. Each time that I would hear a new suggestion, I would add it to my list. I was saving for retirement and paying down our mortgage. I was also saving for my kids marriage, mission service, and college as soon as they were born. I actually TOOK my newborn and my young kids to the credit union to set up an account for the baby. This is really comical to me now. I LOL at myself!
I had to learn an important lesson about focusing. By trying to do everything financially, I didn’t see progress. I only saved a few hundred dollars towards college. I ended up having to use the kids marriage funds for something else. So, I stopped doing everything, and in 2010, I focused on saving an emergency fund. It took two years to build it. Then, I focused on increasing our retirement. By focusing on one financial goal, it has allowed me to relax and experience grace with my finances. I don’t feel bad that I’m not saving for my kid’s marriages. In a few years, that will be my focus. Right now I just want them to stay little!
Committing to financial fitness is so important. It will help you avoid comparisons and distractions. It may be the most important resolution you make!!
The New Year is a great time of renewal. That makes it a good time to make bold, decisive changes in your life. Leave behind the baggage that was 2016 and start fresh with a blank slate in 2017. If you’re looking for some resolutions to improve your personal finances, we’re pleased to offer seven ways to make 2017 the year of the dollar!
If you’re looking to take your first steps toward financial literacy, figuring out where your money goes should be at the top of your list. If you don’t know where your money goes, it’s going to be tough to follow through with any other money plans. You may have a general sense of how much you spend, but after a month where you’ve recorded every dollar, you’ll have a much better picture. Using Peaks Money Manager™ can automate the process. You might even find that keeping track of what you do with your money encourages you to spend a little more judiciously.
About 70% of Americans live financially spontaneous lives. They don’t make a plan for spending or saving. When asked why they chose not to do so, the most common response was that the family spent all the money anyway. This is a circular problem. If you don’t have a budget that includes setting aside money for long-term expenses and savings, you’ll end up spending all your money on unplanned things and events. The best way to stop the cycle is to sit down and make a budget that modifies your spending to be more in line with your priorities.
Easier said than done, right? However, there’s no bigger stumbling block to financial security and wealth building than debt. It’s hard to save for long-term goals when so much of your monthly income gets eaten up by interest and fees. There are a variety of methods you can use to help accelerate your payoffs. For instance, you can add an extra $50 or $100 to your credit card payments. Or, you can focus all your payment resources on the highest interest debt until it’s paid off and then move it all to the next highest for snowballing your way to freedom from debt.
The best way to avoid going into debt is to have some money on hand to handle the occasional, yet inevitable, emergency. Most Americans, though, can’t come up with $500 in such instances. Set a specific goal, like adding $10 per month to a savings account. At the end of the year, you’ll have more than $100 available in case something goes wrong.
You can’t save for what you don’t think about. When retirement is years or decades away, it’s difficult to incorporate thinking about it into your daily routine. If you have a retirement account open, you’ll get monthly statements, which serve as reminders. The challenge, though, is taking that first step. Don’t let perfect be the enemy of good. While there are important differences between Roth and Traditional IRA accounts, either one is better than no retirement savings at all. If your job offers a 401(k) matching program, sign up to get at least the full matching funds amount – it’s free money. Do a little bit of research, then open the account that seems like the best idea.
Saving money takes willpower. Because it’s hard to practice self-denial on a constant basis, that extra $5 you’ve earmarked for savings can very easily turn into a mid-morning coffee. Fighting that impulse is a constant struggle. That’s why it’s easiest to avoid the decision altogether. Change your direct deposit to put some of your paycheck directly into a savings account, where you won’t even think of spending it impulsively.
Knowledge is power, and that’s especially true in the world of personal finance. What you know about your money goes a long way toward determining how much of it you get to keep. There’s a lot to learn, but you’ve got a wealth of information at your fingertips. Resolve to read one personal finance article a week. Not only will this give you good ideas for improving your personal financial situation; you’ll also spend more time thinking about your money. That’ll lead to positive results down the line!
Happy New Year from all of us at Wasatch Peaks Credit Union. We hope you have a safe, happy and prosperous 2017!
What resolutions are you making this year? Will 2017 be the year you join a book club, quit smoking or spend more time with your family? Let us know in the comments!
I am not ready for Christmas, so why am I thinking and writing about retirement? Our parents are both retired, and it came fast. I remember when my parents were my age. Even though it’s Christmastime, I’ve been thinking about retirement.
Over the years, I’ve tried every retirement calculator tool available. I’ve estimated my family’s expenses. We have met with financial planners. I have concluded that there are a lot of unknown factors about retirement and have accepted this.
According to the Social Security website, currently full retirement age is 67, which is close to the age of our parents. I’m fascinated with young retirees I’ve heard about. Retirement doesn’t have to mean “age 67.” I understand it to mean the time when we are not actively earning money and living off passive or saved income. This could be any age.
My husband plans to work as long as he physically can. He loves to work so he will probably work during retirement, but it will be a different kind of work. He worked construction for his first job, which was very physical. His current production job requires physical labor, but not at much as construction required. I assume that he will do less physical labor but still work as much as he does now.
During retirement, some passive income will come from investments that you made earlier. So, we need to decide what type of investments we will make.
What kinds of expenses will you have? The best way I know to estimate retirement expenses and income is to look at those who are retired. My parents and inlaws have these expenses:
I realized that our parent's expenses are pretty similar to ours but the amounts are different. These amounts can range from a little to a lot, which is why it’s important to think about your personal plans.
This Wasatch Peaks Retirement Calculator was a great tool to use after I figured out what I think our expenses will be. The calculator said our investments need to be $300,000 to $400,000. This number depends on interest rates. Also, I didn’t calculate in social security benefits. So, it might not be an accurate number, but that is ok. Just figuring an estimate helps our family prioritize saving now. We are relatively young and there are a lot of urgent expenses we have in raising our family like clothes, braces, and Christmas to name a few. Retirement savings can easily be put on the back burner, which I have done plenty of times. Knowing this number helps me prioritize saving now in order to build to the necessary nest egg we need for the time when we don’t actively work and earn money.
A financial planner once told me that planning for retirement at my age will open up options. I want you to have a lot of options in retirement. Please join me in spending a few minutes planning for retirement.
Whether your retirement unfolds as a beautiful dream or a scary nightmare depends largely on the financial decisions you make today. But if retirement planning is brand-new to you, you're not alone. The average working household has very little cash saved for retirement and about 45% of working-age households have no retirement savings at all, according to the National Institute on Retirement Security. However, you still have time this year to start building a retirement fund and gain a tax advantage in the process.
How much will you actually need for retirement? Chances are, quite a lot. Retirement may last anywhere from 15 to 20 years or more, and you'll need somewhere between 70% and 90% of your pre-retirement income annually to live comfortably.
Don't count on Social Security to cover this; many people experience some shortfall. To determine yours, contact the Social Security Administration online or call 1-800-772-1213 for a benefit estimate. Factor in retirement accounts you already have, as well as how expenses might change after retirement. To close your gap, you'll need to save $15 to $20 for each annual shortfall dollar. So an annual shortfall of $25,000 means you'll need to save between $375,000 and $500,000 before retirement.
There are various types of savings plans that let you save on your taxes while you get ready for retirement.
IRAs: Individual retirement accounts come in many forms, including CDs and mutual funds. In any case, two basic structures apply:
Both IRA types have a basic contribution limit of $5,500 annually (with the exception of qualified reservist repayments and rollover contributions). If you're 50 or older, however, you're allowed to make additional catch-up contributions of $1,000 each year.
401(k) plans: These employer-managed plans often match employee contributions up to a set limit, which translates to free retirement money for you. Unless your plan is specifically a Roth 401(k), your contributions are deducted from your federal income, resulting in a nice immediate tax break. Like traditional IRAs, when you make retirement withdrawals, the money is taxed as income. When planning your retirement savings, make sure to take full advantage of any employer 401(k) match that's available before putting money into other types of plans.
Health savings accounts: HSAs don't generally come to mind during retirement planning, which is a shame because if you're enrolled in a high-deductible health insurance plan, they can provide a tax break today and help to make retirement more comfortable down the road. Payroll deductions for HSAs are pretax, and individual contributions are tax-deductible, up to the annual limits of $3,350 for individuals and $6,750 for families. Then, to sweeten the deal, any interest earned on these accounts is tax-free, and you can make tax-free withdrawals anytime for qualified medical expenses.
If you're wondering what this all has to do with retirement, there's no limit on carry-overs or when you have to withdraw funds. This means you can invest annually in an HSA, receive a tax break right away, and reserve the funds to use tax-free for medical expenses during retirement.
Once you've reached the contribution limits for tax-advantaged retirement investment options, you can explore alternative retirement savings options, including money market accounts, CDs and cash-value life insurance, to make sure your shortfall is covered. With the right planning and discipline on your part, you can achieve your best possible tax outcome this year while ensuring a comfortable tomorrow.
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My husband and I have a goal to “Bike the Bear” at the end of each summer. This route is a 52 mile bike ride around Bear Lake. This is our 4th year riding it, but we hadn’t trained. By the end of July, I started thinking that we were not going to be able to do it. It seemed to bit too late in the season to start training. However, we figured that it wouldn’t hurt to train for it. We started by using the schedule that Ty used in Boy Scouts when they earned their cycling merit badge that requires a 50 mile bike ride. The first ride was 5 miles, and we felt sore. We worked up to 14 miles, which isn’t as far as the scouts usually train.
Last Saturday, we biked the bear. The ride challenged us with hills, winds, and leg cramps. However, it was a gorgeous fall day with breathtaking views of the lake and the mountains. When we returned, my son said, “Mom, you biked 50 miles!” I told him that we actually biked 52 miles. That’s when it sunk it that we had done it! I wasn’t sure that we would.
Have you ever felt like it’s too late financially to reach your goals? Maybe you wish you had started earlier to save for retirement, to start a business, or to save for a dream trip. I have felt this way; but, we can defeat these feelings. We can change, and start to work towards our goals. Here’s a few things I learned through our experience biking the bear:
We had to start with a goal. Achieving goals is often a pain. I experienced a lot of pain while biking the bear. It was so important to have this goal set. If we hadn’t, we wouldn’t have tried. Achieving goals isn’t glamorous. The finish line is great, but the journey there is a tough one filled with personal sacrifice and struggles. As I pedaled, I thought about all the things I say to my kids, “This is a good hurt. It’s making you stronger, the faster you hike, the faster you’ll be done.” Now I know why they are seem annoyed when I say that. The goal kept us going. Even if we hadn’t reached the goal, having a goal was vital.
My husband encouraged me, waited for me, and carried all of extra clothes that I had layered on so that I wouldn’t be cold. My father-in-law supported us by watching our kids. There were quite a few people riding around the lake. It was great to know that we were not alone. At one of the aid stations set up for the race, a man gave me two thumbs up. While we weren’t a part of their race, we just happened to be riding at the same time. Every time I saw someone else along the way, I felt encouraged to keep pedaling. Financially, it helps me to have a support group that is also working towards their financial goals. They encourage me to keep going.
By the time we reached our 30 mile mark, my legs were really hurting. I had taken some pain reliever at the halfway point, but it hadn’t started working. We were on the south side of the lake, which has a narrow shoulder, and the wind picked up. I had to fight off the discouraging feelings. I felt like calling for a ride. So, I made little goals. The first one that I made was to ride to a barn up ahead. Before long, I realized that we had passed it, and I moved to the next landmark. I kept finding landmarks and riding to that spot until I had pushed through that discouraging section.
When I felt discouraged, I didn’t let myself think about having 20 more miles to go. That was too overwhelming. I picked an object that I could see, and I went that far and then picked another landmark to make small progress. By the time we reached mile 40, the pain reliever was working, and we took one more break before the home stretch. What if we hadn’t accomplished our goal? Was the training a waste? No. It was time spent making memories. The exercise helped us become stronger. The training also humbled us to realize that we needed to eat better and exercise more. We all are making progress along the way to our goals. We have big financial goals that take decades to accomplish. The other day, I looked at the progress we have made in the past decade. That encourages me not to quit.
Believe that you can accomplish your goal. Sometimes I don’t want to try because I feel that I can’t do it. On my ride, I listened to the Stephen Covey’s audio tape 7 Habits of Highly Effective People. He taught that we are not our feelings: we don’t have to let them be in charge. We don’t have to be defined by what we feel. This has become a very powerful concept to me. Financially, we also need to believe that we will be able to achieve our goals.
Have you ever felt like it’s too late to do something? I often have feelings of being too late. Recently, I heard someone mention about their life being over because they are in their 30s. I’m sure they were teasing, but that was a depressing thought to me. I still have a lot of life to live—even though I’m in my 30’s. Do you ever feel like it’s too late in your financial season to try? Please share your financial goals. Wasatch Peaks Credit Union is cheering you on as you work towards financial goals!
My kids just received their report cards and at their school, they get a number rating for each subject they are learning. I was a good student. When I was In junior high I became friends with a group of kids who liked to get good grades, and they gave me good peer pressure to do well. I focused a lot on getting good grades. In Utah State University, I took an investing class taught by Professor Jean Lown. She said, “If you get an A in my class, but you don’t do what I’ve taught you, then you’ve failed.” I’ve never forgotten that, and it helps me evaluate if I am doing what I know.
Today I’ve got a short quiz for you. This test is about your financial actions not your knowledge.
1. Do you have a will & estate plan?
Yes, I reviewed it in the last year and made needed changes.
Yes, but I haven’t looked at it in the last decade.
I have a handwritten will I wrote last time I went on a trip out of the country.
No. I don’t have an estate plan.
2. Do you have life insurance equal to at least 10x your annual income?
Yes, and I’ve reviewed it in the last year to make sure that it the right policy for me.
Yes, but I haven’t reviewed it in the last decade.
Yes, I have whatever my company offered me.
No, I don’t have any life insurance.
3. Have you checked your credit report for accuracy?
Yes, I’ve reviewed it in the last year to make sure that it is accurate.
Yes, the last time I borrowed money I checked my score but didn’t review the report.
No, I’ve never checked my credit report.
What is a credit score?
4. Are you working toward retirement goals?
Yes, I’m saving 10-20% of my income for retirement.
Yes, I save 3% of my income.
No, I don’t save anything towards my retirement goals.
No, I don’t have retirement goals. I’m not ever going to retire.
5. Do you track your spending and plan where it will go every time you are paid?
Yes, I budget on a monthly basis and track my spending to follow that plan.
Yes I have a budget, but I don’t look at it during the month.
No, I just look at my bank balance and if there is money I spend it.
No, I just buy whatever I need.
Are you getting As, Bs, or Cs? This simple quiz can help you to evaluate if you are using your financial knowledge. There are a lot of things that we learn in school just so we can pass the test, and then we forget it. Finances should not be one of those things.
Yesterday I saw my friends who have been snowbirding in warm places for the winter and are back to visit. Last year they were able to retire from their full-time employment. They are examples to me of living financial principles over long periods of time. They had plans and goals, then they worked, saved, invested, and now they are free to work when they want to work and free to spend their time enjoying each other and enjoying traveling. Their friendship has encouraged me and helped motivate and mentor us.