Honor Your Financial Commitments
Even in the worst case scenario, where all you have is debt and no money to pay it, make your word count and honor your commitments.
What is your word worth when things haven’t gone according to plan? What are you willing to do when you are in jeopardy of not being able to fulfill a promise that you made?
You have very likely already experienced a situation that developed in an unforeseen or negative way despite what you felt were your best efforts to achieve your desired result. I am sure it is safe to say that virtually every one of you has been impacted negatively in some way by the economic events of the last several years. Although many aspects of our economy have improved during that time, our economy and that of the world are facing more challenges and there are clearly more questions than there are answers.
As a result, you are probably inundated with an extreme amount of publicity and advertising focused on the negativity surrounding you. You may even feel bombarded, at times, with ideas ranging from the need to enact changes in government policy to the benefits of filing for bankruptcy protection. So much so, that it could be easy for you to believe that the challenges you are facing are insurmountable and that none of your troubles are your responsibility. If you reach that threshold, then it isn’t much of a leap to begin believing that your best, and perhaps only, option is to give up and walk away.
Undoubtedly, the easiest way out of debt is to walk away from it; to file for bankruptcy protection or to simply throw your hands up in the air and let your creditors systematically remove all of your possessions such as your house and your car. While giving up may be the easiest first step, it is hardly ever the best step to take and it should never be considered as anything other than the absolute last resort. Even in the worst case scenario, where all you have is debt and no money to pay it, make your word count and honor your commitments. Your promise has to maintain its value. Because once it doesn’t, you truly have nothing.
Fortunately, there are many things that you can do to avoid making your financial responsibilities somebody else’s problem and it all starts with holding yourself accountable for being educated about the obligations that you take on from the beginning.
If you are signing your name as an indication that you accept the terms and conditions of the purchase you are making, then make sure you fully understand those terms and conditions. If you obtain a mortgage, make it a point to understand everything about that mortgage that has an impact on your financial situation, such as the payment amount, the interest rate, the due date, and anything and everything that could cause any change whatsoever to the terms and conditions to which you initially agree. The same personal accountability applies to an auto loan, a credit card, and a personal loan. Understand what you are agreeing to and make sure that you are prepared to handle the responsibility that comes along with that agreement. With anything you ever take on, it is essential to establish the proper mindset at the onset. While the right mindset will not eliminate the potential for something to go wrong, it will properly prepare you to handle the challenges you will face when something does go wrong.
In addition to understanding all aspects of the agreement you are making when you take out a loan, it is crucial that you fully consider the amount of debt you are taking on relative to your income. Typically, your total debt level should not exceed 50% of your income. More specifically, the total amount of your monthly debt payments should not exceed 50% of your gross (before taxes) monthly income and the amount of your mortgage payment should not exceed 40% of your gross monthly income.
It is never a good idea to stretch beyond these limits, especially if you do not have a contingency plan if something goes wrong, because there will always be something that does not go according to plan.
During your lifetime, something will inevitably occur that will negatively impact your personal finances. You will undoubtedly face circumstances that you did not expect or even create. The real question is how you will handle those circumstances when they arise. The only answer that is consistent with honoring your commitments is to stand up and take an active role in a solution that remains true to your word.
When the day comes that you lose your job or you do not receive income you were counting on or an unexpected expense arises, do not focus on what you can’t do, focus on what you can do. Understand the reality of your financial situation and then craft a plan to address your immediate needs. Itemize your debts and sources, or potential sources, of income. Once you have done this, you will be in position to develop a timeline and answer questions such as how long you will be able to meet your obligations given the current situation.
Once you have your information together, make contact with your creditors and ensure that the communication lines are open. Particularly during recessions and other tough economic times, creditors are acutely aware of the risks involved in lending money and every reputable creditor will respond favorably to a debtor who contacts them as soon as trouble arises and expresses interest in working out a mutually beneficial solution to a potential problem.
Creditors have several remedies available that can have an immediate positive impact on the payments for which you are responsible. Depending on factors such as your ability to pay, the type and term of the loan, and the expected time frame for finding a more permanent solution, remedies can include a temporary suspension of principle payment, an extension of due dates, and in some cases a short term payment moratorium. If you are sincere in your willingness to work with your creditors and you don’t make promises that you do not intend to keep, most creditors will work with you.
While you are assessing your situation and weighing options, it is also important to make sure that you are utilizing all available resources. If you have lost your job, you will most likely qualify for unemployment benefits and it is essential that you understand how those benefits are determined and what you need to do to maximize them given your individual situation. Another resource may be previously untapped savings reserves, such as deferred compensation amounts or 401(k) balances. These options will require some research on your part, but you may have the ability to access these funds under a hardship provision. Researching your entire financial picture so that you can best understand what you can do about the circumstances you are facing is always a worthwhile venture.
It is also important not to allow yourself to have tunnel vision when you are considering your options, especially when it comes to earning income in order to meet your obligations. If you had a full-time job and you lost it for whatever reason, don’t fool yourself into thinking that the only way to replace that job is with another full-time job doing the same thing. If your situation calls for it, be open to getting two part-time jobs or consider changing professions to better adapt to the job market.
Lastly, do not believe those that will extol the virtues of bankruptcy as if it is anything other than a last ditch, no other option course of action. Access to credit is what makes the economic world go around and when you take the step of asking for protection from your creditors via bankruptcy court, you give up that access. Worse, you bring your own credibility into serious doubt. Every action you ever take has a price and if that price is that your word is no longer worth anything, it is in your best interest to do everything you can to avoid that situation.
This article is part of Scott Arney's educational series, entitled The Serial Decision Maker.
We cannot choose all of our circumstances, but we can choose how we deal with our circumstances
What do you expect of yourself? What do you expect from life? What do you expect to accomplish? Do you ask yourself these questions and if you don’t, why don’t you?
Whether you have taken the time to ask yourself these questions and develop answers directly relates to the quality of life you will lead and whether or not you will attain your goals and live a purposeful life.
It never ceases to amaze me how many people meander through life without any direction or without ever giving any thought to why they are here or where they are going. In fact, it would be hard to imagine a greater tragedy than a life unfulfilled simply because the person living it did not take the time to ask a few questions, commit to some thought, and expect something from themselves.
Whether we apply them to our own direction or not, expectations exist everywhere everyday. Your boss expects you to show up for work. Your spouse expects you to be home for dinner. The cashier expects you to pay for the groceries you buy. Expectations actually form the basis for our daily lives. Without any expectations, we would all be struggling against random chaos in an order less world.
With expectation, however, comes responsibility and with responsibility comes the possibility of failure. Perhaps that is why more people don’t take the time to develop their own expectations. For some, it might be easier to live a life devoid of challenge and responsibility than it would be to live a life in which you risk failing.
I think that the only real failure you can experience is that of not trying. Failure of any other kind can actually be a motivator and a learning experience.
Those who have taken the time to set an expectation, accept a challenge, and get into the arena know that the disappointment of not achieving an expected outcome is often times more than offset by the thrill of the pursuit. Participating in the game is always more exciting and fulfilling than sitting on the sideline.
If you don’t expect anything from yourself, you not only ever have a chance of winning or achieving; you don’t even get to get into the game. Some could argue that an expectation less life is safer, but no one can argue that it is more fun.
You are probably aware of the importance of setting personal goals for yourself, but setting goals without first forming valid expectations can lead to discouragement and frustration. Much like your basement forms the foundation for your house, expectations are the foundation on which your goals are built upon.
Convincing yourself of the importance of setting expectations for your life will open many doors for you especially if you understand that without committing to doing it, you will not ever get to where you are going. If you are not happy where you are and you aren’t clear on where you are headed, it is because you have not developed any expectations. This is the difference between living a life that relies solely on luck that may never materialize and living your life, the one that you and only you were destined to live.
Creating expectations of yourself will help you to grow exponentially. If you do not know what you expect from yourself, it is impossible to know what you expect from others. If you do not know what to expect from others, you will likely be unable to ever enjoy a fulfilling relationship with anyone. You will not be able to determine the qualities of a good friend if you don’t even know what you are looking for from a friend. It is also nearly impossible to enjoy a happy marriage if you don’t even know why you are getting married in the first place.
Conversely, the process of expecting things of yourself will lead to expectations of others. While it is true that you cannot experience disappointment or hurt if you never knew what to expect anyway, it is equally true that you will also never experience true love or unbridled joy and once you have experienced these things, you will immediately know that the risk is totally worth it.
Expectations are yours and yours alone. They are personal to you and can be adjusted by you at any time. It isn’t even that important that you set them properly, at least not at first. Over time, primarily through trial and error, you will become very skilled at developing them and the process will get easier. You just have to take the time to understand yourself and your surroundings, and then to figure out what all of it means to you and what you are going to do about it.
Through honest reflection and self-realization, every single one of us has the power to be great and to do great things. We have 100% control over how much thought we will put forth and the actions that will originate out of those thoughts. We have absolute power over the life we lead and whether that life will lead us to laughter or reduce us to tears.
Having a dream is an important part of living a rewarding life, but simply dreaming about something won’t make it happen. You must actually take the step of turning your dream into an expectation before you will ever achieve anything worth dreaming about. Once you have done that, the work begins so you might as well make sure that you arrive at a meaningful and significant expectation for yourself if you are going to be working hard toward achieving it.
We cannot choose all of our circumstances, but we can make it a point to choose how we will deal with whatever our circumstances are so no matter what, make it a point to have your answer ready the next time someone asks you, “Well, what did you expect?”
If you are setting expectations for yourself and leading a fulfilling life, than I expect that your answer will be…greatness!
This article is part of Scott Arney's educational series, entitled The Serial Decision Maker.
The Guiltless Wonder
(This is the second chapter of Scott Arney's Super Hero Series, which starts with Fear is Our Enemy)
On the pages of a comic book and on screen in the movies, super heroes often have the power to do extraordinary things.
Super heroes come in all different shapes and sizes and they employ a varying degree of different specialties. Those that are immortalized in print and film tend to be able to save or change the world with their abilities and, generally speaking, we, as mere mortals, are unable to learn how to do what they do or even fully comprehend their greatness.
I happen to be more interested in the super heroes among us who have faced fears and conquered obstacles and, in the process, have become experts in mastering the challenges of everyday life. These super heroes are otherwise completely ordinary, except that they have developed powerful skills that help them effectively stare down the same fears and obstacles that deter and derail others.
The Guiltless Wonder is an example of one such super hero. She has effectively eliminated guilt from her life and her thought processes and, therefore, lives with a clear conscience and a powerful ability to assess situations and events for what they really are. Her judgment is never clouded by second guesses and, because her mind is clear of guilt, she enjoys every new day for what it is and gets the most out of it.
You may ask how the Guiltless Wonder has achieved such an admirable skill. I asked her that very question and she was very happy to share her process and very confident that anyone who follows his process can learn to do what she does and eliminate guilt from their life.
The Guiltless Wonder told me that she employs a three-step process as part of every decision she makes.
1. She pays attention to her instincts.
2. She sets out to be understood rather than liked.
3. She carefully deliberates before she finalizes her decision and takes action.
The success that the Guiltless Wonder has had in eliminating guilt is especially remarkable given the destructive nature of this formidable foe. As you may know all too well, guilt can be one of the biggest detractors you will face in your attempt to make good decisions on a consistent basis. When guilt is present, it can dampen your joy, subtract from your peace of mind, and rob you of the confidence that is essential as you move forward through life.
At its core, guilt is something that you feel when you regret an action or an event that has already taken place and cannot be changed. By the time you experience guilt, there is rarely anything that you can do about what has already occurred. Guilt is a harmful additive that is likely to have clouded your thoughts and created unnecessary anxiety for you at some point, if not on a regular basis.
A feeling of guilt can also compound whatever negative emotions you have about a prior event or decision by influencing decisions you try to make going forward. Now, instead of the event being an isolated case that is addressed and dealt with, guilt pervades other thoughts and actions and may project onto other people and situations that otherwise have nothing to do with the original event that gave rise to the guilt to begin with. This is the definition of taking a bad situation and making it much worse.
So, let’s take a cue from the Guiltless Wonder and minimize the damage your feelings of guilt have already caused you by setting a course that will effectively block it from ever having undue influence over you again.
The first step that the Guiltless Wonder takes to steer clear of guilt is to be in tune with her instincts. She incorporated this idea into her decision making early on when one of her elementary school teachers instructed her not to change her answer on a test she was taking. Her teacher cited some source or data that indicated that your first answer is usually the right answer. The Guiltless Wonder interpreted this suggestion as another way of saying that she should pay attention to her instincts and her instinctual answer is often the first one that comes to her mind.
While she always reserves the right to change her mind if new or more detailed information comes to light, she now knows that her first response is typically the one that is most natural and the one she arrives at before she may start to over think anything. If she has a natural or “gut” feeling for a direction that she may want to take or a decision that she needs to make, she takes a positive step toward avoiding guilt because she is following the course of action that came to her naturally and instinctively. There is no need to second-guess her actions if she simply is true to her instincts.
This is not to suggest that she simply gives way to her primal drive when it comes time to make a decision. Her moral compass and her own will power also play a vital role.
The Guiltless Wonder never worries unnecessarily about what someone may think about her or the action that she takes. She realized long ago that whether she was liked or people liked what decisions she made was a highly subjective thing. If she based the validity of her decisions on what other people thought, she would face a constantly moving target and probably set herself up to always feel guilty.
Instead, and to the extent that other people can influence her desired outcomes, she determined that it would be far more worthwhile to focus on being understood. If her actions are understood, she stands a far better chance of avoiding a guilty feeling after having decided.
Developing an understanding of a situation, a circumstance, or a decision also helps her to clarify motives and reasoning. Even if someone doesn’t agree with her, they will not be left to wonder why she ultimately did what she did. An understanding builds some common ground and, if that exists amongst people, there is much less room for guilt to develop.
The Guiltless Wonder develops an understanding with others simply by being able to articulate her thought process and explain what factors she considered and didn’t consider. To do this effectively, she always takes care to carefully consider her options and the ramifications of her decisions prior to making them. Careful and considerate deliberation is yet another way for her to avoid feelings of guilt after the fact.
If she has done her homework up front and she is comfortable with the process that she went through to arrive at her decision, there just isn’t much of an opportunity for guilt to develop. Once she has the confidence that she has taken all of the steps necessary to make a good and informed decision, there is no reason to worry about the course she has taken.
If there is an art to her decision-making it is that she makes choices with all of the passion and personalization that she can summon without letting her personal tie to the situation at hand cloud her judgment or dilute her conviction.
By being alert to and acting in concert with her instincts, setting out to be understood rather than liked, and employing careful deliberation when considering her options, the Guiltless Wonder has accomplished an extraordinary feat. She lives peacefully and guilt free and you can too if you follow her example.
This is the second chapter of Scott Arney's Super Hero Series.
Be sure to check Scott's Spot on Patrolmen's Dispatch for each chapter of his Super Hero Series, which starts with Fear is Our Enemy; and his ongoing Serial Decision Maker series.
Assets, Liabilities, and Cash Flow
Assets, liabilities, and cash flow are the aspects of your personal finances that you must understand if you are going to be able to develop a realistic budget and set achievable financial goals
Assets, liabilities, and cash flow…what are these things and why are they important to you? Simply put, these are the aspects of your personal finances that you must understand if you are going to be able to develop a realistic budget and set achievable financial goals.
Identifying these elements of your personal finances will help you to determine your individual net worth as well as the amount of money you have coming in and going out, which in turn will help you to establish an effective budget for yourself and your family.
Let’s start by identifying and assigning a value to your assets. Assets are defined simply as anything that you own that has an exchange value. Common personal assets include your home, your car, savings account balances, savings bonds, deferred compensation (457b, 401k) plan balances, IRA’s, insurance, annuities, other investments, and personal items such as jewelry and household belongings.
Your most recent statements will clearly indicate the balance that you have accumulated in your savings, deferred compensation, and investment accounts and you should use these figures to assign a monetary value to these assets.
If you recently purchased a home, the purchase price is the value that you should use. If you have lived in your home for awhile or you simply want to figure the value of your home more precisely, contact a local realtor and ask him or her to run a comparative market analysis for you. This analysis will indicate what similar homes in your area have sold for in recent months. This information is easy for realtors to obtain and they will typically provide the report to you at no cost. If you happen to own additional property (2nd home, rental property, vacant lot), the same evaluation process applies.
Use the blue book or an equivalent guide in order to determine the value of your car. Each guide will reference a few evaluations and ranges for each car. For the purpose of this exercise, use the average trade-in value and be sure to properly account for the mileage and any options on the vehicle.
Assigning a value to certain insurance policies and annuities can be tricky because they are typically designed to be of value at some point in the future when a particular event occurs or a specified age is reached. Some have what is referred to as a Cash Surrender Value, which is the amount of money the policy is worth today should you decide to cash it in prior to the designated maturity date. If you have a policy with a Cash Surrender Value, use that number to determine the value of the policy in present day terms. If a Cash Surrender value does not apply to the policy you carry, then you should not include the policy in your current asset valuation for the purpose of this exercise.
With regard to your personal belongings, it is generally acceptable to use a number between 25% and 50% of the original purchase price or value of the items. These items are subject to depreciation in value not only because you and your family are using them, but also because they will only have an exchange value during a private sale or auction. Potential buyers are typically only attracted to these types of sales when sale items are being offered at a significant discount.
If, however, you happen to own something that is subject to an appreciating value, such as certain artwork, unique jewelry, or a vintage car, the most recent appraised value is applicable.
Once you have gathered all of the information relating to your assets and completed the list of values, add them up. The result is the total current value of your assets.
Liabilities refer to your debts or obligations. Common liabilities include mortgages, home equity loans (sometimes referred to as 2nd mortgages), car loans, credit card balances, other personal loans, and tuition or student related loans.
Most loan statements will clearly indicate the current balance owed, but the loan type dictates the actual amount of your current liability.
Many term loan statements, such as the ones that you receive for your mortgage, car loans, student loans, etc. include a payoff figure, which is the amount you would need to pay if you decided you wanted to pay the loan off in full during the current pay period. The payoff figure is what you should use to assign as a value to these liabilities because it is the current amount owed that determines the amount of your current liability. In many cases, the payoff figure will be significantly less than the amount you would owe if you simply paid the loan off in accordance with the original term of the loan.
The total amount due and owing on your credit card statement, however, equals the exact amount of your current liability.
Another key factor to consider is that your liability begins at the point of purchase. Many consumers take advantage of promotions that involve deferred and/or interest free payments on their larger purchases. If you have made a purchase under these terms, you must include the amount you will owe on the payment due date in your current liabilities. For the purpose of determining cash flow, however, you can exclude the amount owed from your cash outflow until the due date.
Some loans have either an early pay discount or penalty attached to them. While it is necessary for you to be aware of these terms if they exist, they do not impact your current liability evaluation.
Once you have gathered all of the information on what you owe and completed the list of the related amounts, add them up. The result is the total current value of your liabilities.
You are now in a position to determine your financial net worth. Subtract your liability total from your asset total and the result is your net worth. The criteria we have used to determine your asset and liability values will help to ensure that your resulting net worth calculation is tangible and realistic.
Whether your net worth is negative or simply smaller than you would like it to be, you have likely reached a point where you have identified specific contributors to your net worth and some areas in need of additional focus and improvement. You are now in a position to set some achievable and applicable goals for yourself in order to increase your net worth. A realistic, personalized budget will provide you with a map for achieving your financial goals.
There are two aspects of a budget, income (cash in) and cost (cash out). Many people make the mistake of concentrating solely on the cost side of a budget. In so doing, they emphasize costs for the general purpose of fitting their costs into their income. The reality of cash flow is that it must flow in before it flows out. It is, therefore, essential to first concentrate your efforts on understanding and maximizing your income.
While the art of maximizing your income is a detailed topic of its own, you can cover the basics just by being informed and making good, common sense decisions about what to do with your money. Understanding your income involves developing an awareness of your income sources. For most of the working world, there is only one source for any meaningful income that you earn and that is your job(s). You can maximize the cash flow created by your employment income by developing a better understanding of the tax system, overtime laws, and issues that are unique to your line of work such as peak busy times or the seasonality of the product or service that your provide. When you understand all of these factors, you will maximize your paycheck.
Once you have taken the steps necessary to ensure that you have as much cash inflow as possible, it is time to identify all of the cash outflows. Unfortunately, there are many. Cash outflows or costs consist of mortgage payments, car payments, credit card payments, other loan payments, insurance costs, property taxes, utility bills, groceries and household supplies, clothing costs, and any miscellaneous spending money you need. Look at a specific period of time, preferably a typical month, and itemize the cost associated with each of the above.
Compare your monthly net income, the amount that you actually take home during the course of the month, to your monthly expenses. These numbers set the parameters and key components of what will become your household budget.
Ideally, the total of your monthly loan payments should not exceed 28% of your net income and your savings target should be around 10% of each paycheck. These amounts vary from household to household depending on factors ranging from the number of dependents in the household to any alternative savings plans you have such as the amount you contribute to a 401k or 457b plan on a pretax basis.
If you think that you can realistically hit these targets, it may seem like the remaining 62% of your net income is yours to do what you want with, but don’t forget about the other expenses not already included in your loan payment calculation. Insurance costs, utility bills, and groceries add up and are probably more costly than you think especially if you have never itemized them before.
There is one last question to answer. What about the dreaded unforeseen circumstances life throws your way? Take at least some of the stress created by these situations and have a contingency plan. Put some money on the side for the blown furnace, the new transmission, and the flooded basement and bet that all of these things are lurking around the next corner. Once you have done that, stop worrying because you’ve accounted for everything and, for once, your finances are under control! The only thing left for you to do is remain disciplined and stick to your budget.
I hope that you find this information helpful, but if you have any questions or you need any further clarification, sit down with someone at your credit union. Chances are, whomever you choose will be happy to spend as much time with you as you need to answer any questions you might have. That’s why we’re here.
This article is part of Scott Arney's educational series, entitled The Serial Decision Maker.
I graduated from college many years ago, 30 to be exact. I was one of the fortunate few who knew exactly what I wanted to do for a career. In fact, I knew from the time that I was in middle school that I wanted to work in banking.
Upon graduation, I began the interview process. There was one interview, more so than any of the others, that I was particularly excited about and that was because it was with one of the largest banks in Chicago at the time. They brought me in to interview for one of their management training positions and their program was considered one of, if not the best of its kind in the area.
The interview process was pretty rigorous, and it included multiple meetings with several different people. This was understandable because the bank wanted to be absolutely certain that they hired the right people since they were going to be investing a few years of time, money, and resources into individuals who they were going to train to learn every aspect of the business and to eventually be managers and leaders of the bank.
The last round of the interview process was a full day of meetings with a variety of people at the bank who had completed that very same training program. I made it that far and then anxiously waited to hear from the Human Resources Manager. A few days later, he called me to let me know that I had not been chosen for the program. I was devastated.
I kept replaying the entire process over and over, especially the meetings on the last day. I just couldn’t figure out what I had done wrong or where I had fallen short. After about a week of torment, I called the Human Resources Manager backed and asked him if he wouldn’t mind sharing any more details with me so that I could use the information to be better prepared for interviews elsewhere and ensure that I would learn from the experience.
He told me that it had been a very difficult decision, but that it had ultimately come down to the answer I gave to one question out of the hundreds that I had been asked on that last day. One of the interviewers had asked me if I could sell. My answer was that if it was a product or service or cause that I really believed in, I could sell, but if it came to selling something like Fritos, I didn’t think I would be very good at it. (Short disclaimer: I like Fritos and did at that time as well. I remember giving that answer, but have no idea why I randomly selected Fritos.)
For a long time afterward, probably for years, I thought about that call. For a good part of that time, my thoughts centered on how unfair that outcome was. I had put everything I could into that process. I was fully prepared and left nothing to chance. At that time in my life, that job was all I really wanted, and I fell short because I said I didn’t think I could sell Fritos only after stating that I was confident I could sell something I believed in. For that statement to be the reason I didn’t get my dream job seemed unjust and unreasonable.
I don’t remember how long it took me to get over my disappointment, but I remember exactly what it was that helped get me over it. Not too long after I learned that I did not get the job with the bank, I did get a job with a Commercial Finance company. It was a great opportunity that led to many more great opportunities and it ended up being exactly the type of company and environment that I needed to get started and advance my career, but that isn’t what helped me get over the disappointment I had felt.
I finally got over it when I realized that the bank was right not to hire me for that training program. After I started to develop my skills and pursue my career, I realized that I was not a salesman. I understand sales and I very much appreciate its role in how business is done, but I cannot sell, and it does not matter how much I believe in the product or service that I am presenting. Selling is just not part of my skillset and I am okay with that because I eventually figured out who I am and who I am not.
The past participant of the bank’s training program who interviewed me that day and asked me the question about sales knew that I needed to be a strong salesperson if I was going to be successful in that program and he knew I wouldn’t be before I even knew it based on the answer I gave him.
I didn’t know he was right until I understood who I was, not just who I wanted to be.
That bank did me a tremendous favor by not hiring me. While I undoubtedly would have still gained tremendous knowledge, and had the opportunity to be part of a top-notch team, it would have been a costly lesson for me if I had somehow still gotten that job only to realize that I was not a fit and that I was going to have to start over someplace else.
Success in any career you pursue will largely depend on your own ability to identify your strong suits and highlight them repeatedly. Your success will also rely on your ability to identify your weaknesses, accept them, and find ways to work around them or collaborate with others who have the skills that you lack.
Trying to be who you think you want to be is okay when you are young and just starting out. The process can be a great learning experience if you are paying attention and building from what you learn. At some point, however, it is much more valuable to figure out who you really are.
Being you and continually trying to be a better you will ensure that you progress and move forward through your life and career.
This article is part of Scott Arney's educational series, entitled The Serial Decision Maker.
What is the Value of a Savings Account?
It is possible for you to save money even if you feel as though you live paycheck to paycheck and your wages are totally committed to paying your bills. Saving money is a matter of habit not finances.
The most basic form of saving is to establish a regular savings account at your local credit union or bank. Credit Unions will typically provide you with an easier route to a savings account because they very rarely charge fees or impose limitations, whereas most banks will require minimum balances and/or restrict your usage and charge you fees if you do not meet those requirements.
One way to start a savings account is to set up a direct deposit into the account straight from your paycheck. This simple step can, many times, mean the difference between being a saver and being a spender. While some of you may tend to spend money you do not have, most of you will find a way to live within your means. If your money is taken out of your check before you receive it, it is much easier not to spend it. While you will still have access to it, the mere fact that the money is not sitting in your checking account ensures that you will need to take additional action to use those funds. If you are not currently a saver, or if you are convinced that you need every cent of your wages to pay bills and cover your spending needs, start small. Take $10 out of your paycheck through a direct deposit to your new savings account and forget about it. You might be surprised how easy it is and because you are setting your own savings goal, there is no need to feel any pressure to increase the amount or reach a certain savings level. At this stage, it is important just to concentrate on the act of saving, no matter the amount you save.
This article is part of Scott Arney's educational series, entitled The Serial Decision Maker.
Freeze! (and then do a few other things)
As a victim of identity theft, you are guilty until you can prove your innocence
If you’ve never been a victim of an information security breach, or had your credit card data compromised, or even paid much attention to the importance of securing and protecting your personal information, chances are you may now have a different perspective.
You and your family are at risk of suffering a severe and significant impact on your daily lives when your personal information gets into the hands of criminals who have no regard for your credibility, your good name, or the work that you have put into building your reputation.
To make matters worse, as a victim of identity theft, you are guilty until you can prove your innocence. Think about that statement. As a victim of this crime, you must prove that you were not the perpetrator of the crime before you are absolved of responsibility!
This is serious stuff and, at this point, it has negatively impacted you either directly or indirectly. As a consumer, you now have less convenience, fewer choices, and higher costs of services.
I wish I could tell you that I have an answer that will keep your information safe no matter what and protect you and your family from the grief and damage that a future information security breach will cause you. I cannot.
Cybercrime is a crime of opportunity. Unfortunately, the bad guys will always have the advantage over the rest of us because they have a singular focus (stealing our information), while we are busy working on our careers, raising our families, and trying to make a positive contribution to our communities.
There are some things that you can do, however, to make it a little more difficult for the bad guys to achieve their objective. You may have heard one or two of the following suggestions before, but they are good recommendations and worth repeating. Here are my top five:
Freeze Your Credit
Freeze. Freeze your credit right now. Don’t simply hire a monitoring service. Don’t just place a fraud alert on your record. Freeze it. There are three credit bureaus in the United States that collect all of your information and, amongst other things, rate you on your credit worthiness. If you apply for or currently carry any form of standard credit (i.e., mortgage, auto loan, credit card, etc.), that information is recorded at these bureaus along with personal information such as your social security number, your birth date, your address, etc.
By freezing your credit at each of these bureaus, you will prevent anyone from opening credit in your name under false pretenses. Freezing your credit does not impact any of your current relationships with your credit union, bank, or credit card company.
When you freeze your credit, you will obtain a PIN number that you can use if you ever need to unfreeze your credit (the only time that you would need to do so would be if you were applying for a new loan.) It only takes a few minutes to either freeze or unfreeze your credit, but it has a lifetime of benefits as it effectively shuts down identity thieves from posing as you to create accounts and liabilities in your name for their own illicit purposes.
The three credit bureaus are Equifax, Experian, and TransUnion. Google these sites and follow the instructions for placing a freeze on your credit.
Don’t Store Personal Information Online
Don’t store your credit card information or any other personal information on any website that you visit or shop through. I know that it can be a pain in the neck to remember passwords and type in your credit card number when you want to purchase something online, but the more places you store your personal information, the more opportunities there are for thieves to steal it. Every site gives you an option that allows that site to store or remember your information. Please decline it.
Control Your Online Credit Card Use
Select one card for your online purchases and consistently use that one card when you shop online. Not all breaches occur online or through websites, but an awful lot of them do. By limiting the information that you make available over the internet, you will also be limiting your chance of suffering a breach. Plus, if the credit card used for your online purchases is ever breached, you will only need to temporarily close that one card rather than deactivating multiple cards.
Mix It Up and Use Cash
Be a little more selective when you use your cards, especially your debit card. Instead of using a credit or debit card for every single purchase you make at every store or restaurant you go to, think about paying cash for at least your smaller transactions. Every swipe of the card creates a transaction that travels through several electronic portals and outlets (retailers, payment processors, card issuers, banks, etc.). So, every time you use your card, you create multiple new opportunities for thieves to find and steal your information. Limit the transactions and you will also limit those opportunities.
Back to the debit card. If you claim that there is a fraudulent charge on your credit card and you catch it early enough, that charge can often be removed from your bill before you must pay for it, but that is not true with a debit card. If your debit card is subject to fraud, your actual funds begin to go missing before you know that you are a victim. I don’t know about you, but if I were given the choice, I would much rather discover a fraudulent charge on my credit card and go through the process of getting it removed than I would to discover a fraud that was created through the use of my debit card number and then try to get my money back.
Review Your Statements
Lastly, and this is the most important step of them all, take an active role in the management of your accounts. The best way to do that is extremely simple. Review your statements.
When you do, check your balances. Keep track of your transactions. Ensure the validity of the information that you are reviewing.
I am utterly amazed at the number of people who do not review their statements. Those statements are provided for a very important reason and that reason is to give you access to information that is, or at least should be, vitally important to you. How much money do you have? How much money do you owe? When is your bill due?
It is not acceptable to put the management of your personal finances on auto pilot, auto pay, or auto deduct, especially in the age of the information super highway when anything and everything that you ever wanted to know is within seconds of your brain. You want to avail yourself of the financial conveniences of online banking and electronic bill pay? Great, but you still need to review all of that information for accuracy and remain alert for anything that is out of place or unexpected.
No one will ever be a greater advocate for you than you! Oh, and while you are advocating, please advocate for stricter guidelines and tougher laws that will require the businesses that have access to our personal information treat it with the responsibility and care it deserves.
his article is part of Scott Arney's educational series, entitled The Serial Decision Maker.
Stay On Your Skis
There is a lot to be said for finding the right speed in your life and how you go about living it
I am not much of a skier, which is why I should’ve known better than to ride to the top of a black diamond run.
In the spirit of full disclosure, it was a Midwest version of a black diamond run, which is a far cry from an Alpine version or a Rocky Mountain version. Nevertheless, it was beyond my skill level and I knew it before I even hopped onto the lift.
At the top of the run, I had a few choices and they ranged from essentially sitting on my skis and scooching down the mountain a little bit at a time or simply all out going for it. I chose the middle option, which I often do with many choices that I consciously make. I decided to try to control my speed and do the best I could to reach the end of the run safely.
With the benefit of hindsight, I will tell you that I think I made the right decision given my options, but unfortunately I did not execute the plan very well. The end result, while not disastrous from the standpoint that I was able to stand up and live to tell the tale, was what I believe is referred to in the skiing world as a “yard sale”. That sale was conducted over what seemed like a one-hundred-foot stretch of mountain with gear strewn haphazardly throughout.
Even though I did not achieve my goal of staying upright throughout the run, it was pretty thrilling at the start. In fact, I reached the peak of excitement seconds before I began my tumble.
All of this left me thinking about the importance of staying on your skis, not just while skiing but metaphorically every time you face a new challenge. If you can stay on your skis the whole time, you will extract the best from the situation and minimize or eliminate any of the harm that could come from it.
In my example, I had other choices and could have dealt with my challenge in a different way. Many times, however, you won’t have much of a choice amongst the circumstances you face and since you often cannot choose the circumstances you will encounter ahead of time, your only choice is to develop the strength to handle whatever circumstances come your way.
Sometimes, your best option is also the safest option. Sometimes, it isn’t, but the goal remains the same. Stay on your skis and finish the job and, while you’re at it, find your pace and try to learn a few things along the path.
If you ski too slow, you probably won’t achieve much progress and you certainly won’t get your heartrate up. If you ski too fast, you are likely to miss a few things and you are much more likely to get hurt especially if you haven’t mastered the necessary fundamentals and skills of skiing along the way.
I think there is a lot to be said for finding the right speed in your life and how you go about living it and the idea of being on skis, as opposed to trekking or marching, helps to smooth out the vision.
How great would your life be if you could figure out how to glide smoothly through it, adjusting your speed as necessary, handling the hills and the valleys accordingly?
Maybe you have figured that out already, but if you haven’t, go find your mountain to conquer and remember to stay on your skis!
This article is part of Scott Arney's Serial Decision Maker educational series.
Beyond Bleu Cheese
We grow as human beings if we create our own experiences without bias
The preparation and enjoyment of food has long been one of the centerpieces of the family time that my family and I enjoy together.
Over the years, we have created our own recipes and discovered new favorites along the way. We have tried different foods and combinations that required small leaps of faith and have generally been rewarded for our adventurous spirit.
We have enjoyed a variety of restaurants and we have maintained our family dinner as an essential part of the day despite the many growing demands on our collective time and energy.
We have also travelled together and often built at least part of a trip around the culinary attraction of that area. So, on a recent trip, when I was asked the following question, I made sure to give my answer some considerable thought.
“Dad, why I am the only one of my friends who likes bleu cheese?”
My short answer was that you tried it without being told that you wouldn’t like it. You tasted it before you had developed a pre-conceived notion of what it might be like and, therefore, were open-minded when you took your first bite.
The longer answer is that we all grow as human beings if we create our own experiences without bias, especially if the tendency toward a bias is present in the color of something or the smell of something or just the unfamiliar nature of something.
Sticking with the food example, my wife and I have always enjoyed split pea soup, especially on a cold night. If you know anything about split pea soup, the color isn’t particularly appealing, and the mention of peas doesn’t necessarily whet your taste buds. There is something about the combination, however, of split peas, ham, and either potatoes or dumplings that really works.
You can imagine that the presentation of split pea soup to a kid, particularly a little kid, would be a hard sell. Being prepared for this, my wife came up with the brilliant idea of renaming it Halloween Soup. What kid doesn’t like Halloween? All of a sudden, the color was a little more appealing and the idea of tasting it was sounding pretty good!
That ended up being the first step, of what was to be many more, toward a now lifelong pursuit of trying new foods and the willingness to enjoy new experiences.
I certainly understand that food adventures aren’t for everyone, but I believe that when you are open to trying new things and creating new memories, you’re probably on track to maximize your overall enjoyment of life. Perhaps more importantly, you are on track to maximize that enjoyment without unnecessary bias or potential regret.
Generally speaking, I think that you only regret what you don’t try. You may try your hand at a sport or a career and determine that it is not for you, but at least you will know that is the case and not be left to wonder what would have happened if you just would have given that sport or career a try.
I am also certain that if you are open to try new things, food or otherwise, that open mindedness will lead you to experiences that you would not otherwise have had, and you will be richer for it.
Of course, there are some limits to this train of thought. I know, without having to ever try it, that I am not going to enjoy combing my hair with an ice pick or sleeping on a bed of nails. Short of the obvious, however, what things have you not tried? What conclusions have you jumped to in the past without having sufficient information on the topic? If you have not actually experienced something before determining that you wouldn’t like it, on what basis are you making that decision?
Either way, once you decide to go “beyond bleu cheese,” you win. You will either try something that doesn’t work for you or you will open a new door that otherwise would’ve remained closed to you. If it is not for you, cross it off your list and move on with the knowledge that at least you know for certain because it was your experience using your senses and processing it with your mind.
If you are fortunate enough to open a new door, what’s next? A new friend or a new career opportunity? A surprise or a different and enlightening perspective on a previously settled topic?
You won’t know unless you decide to go “beyond bleu cheese” and try something new.
This article is part of Scott Arney's educational series, entitled The Serial Decision Maker.
The Serial Decision Maker
Patrolmen's Dispatch is honored to feature the daily blog of Scott Arney, CEO, Chicago Patrolmen's Federal Credit Union.