Category Archives: Rant

Inheriting poor financial skills is a real problem

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Our parents and grandparents didn’t face all the problems we do today as we try establish a financial foundation. The funny thing is that we brought these problems on ourselves by trying to simplify our lives. Our predecessors didn’t have debit cards, lengthy credit terms, and interest-only loans. Rather, most of our grandparents (when they were our age) cashed their paychecks and put the household cash into different envelopes representing different budget categories. They’d pay bills out of those envelopes and always have enough money to cover the expense. It was hard for them to go backwards financially because they relied on cash. They couldn’t, for example, buy fifty dollars of groceries with thirty dollars in cash.

What do we do now? We log onto our online banking accounts to see if we have enough money to cover the purchase we made earlier in the day. We spend first and worry about the consequences second. With this mentality, it doesn’t matter if you are in the 1950s or 2050s, you’re going to go broke.

Yes, managing your financial life is harder nowadays. Yes, peer pressure is worse than ever. And yes, some people make a lot more money than you. But if you are truly focused on bettering your life, you will ignore what’s irrelevant. More money doesn’t solve maladies caused by meager money management; more money only magnifies these money maladies. Mm-hmm!

Despite these money differences among generations, most of the skills that you need to function financially were instilled in you by your parents. And sadly enough, this is the root of several problems . If your parents didn’t know what they were doing, then your chances of innately knowing what you are doing are slim. And the problem gets worse when you factor in your parents’ level of financial confidence. Your parents’ financial aptitude can be classified into a few categories:

  1. They knew what they were doing and passed it on. This is the best-case scenario. They had solid financial habits, they led by example, and they educated you along the way. In addition, they cut you off when they should have. They also saved money for you, taught you how to save money, and showed you exactly what to do with it.
  2. They knew what they were doing but didn’t bother or didn’t have the time (for whatever reason) to teach you any of it. This is a pretty rare scenario, but definitely one worth mentioning.
  3. They had no clue about how to manage money properly, and they set a bad financial example for you. You still love them. They still love you. We aren’t voting them off the island. We’re just agreeing that they didn’t teach you many good financial habits.
  4. They had no clue what they were doing, but they thought they did. This is a flat-out dangerous situation for everyone. If you inherited a get-rich-quick mentality, a blame-other-people-for-your-financial-problems mentality, or a game-the-bankruptcy-laws mentality, then we have some serious work to do.

Not only do you need to learn how to budget, but how, in some cases, to reverse years of financial socialization. It’s time to face the facts of your financial upbringing. Bluntly, it may have sucked. That’s okay. But that doesn’t mean that you have to perpetuate the suckiness of the past. Standup for your present. Standup for your future.

And even more is at stake. If you are a parent, your children may already be picking up some of these bad habits. Your problem may have become multi-generational. Therefore, as you sharpen your skills as an adult, realize that your own children are watching you now—and they’re making mental notes.

If you have a bad relationship with money, then your children will have a bad relationship with money. If you give your kids all the luxuries in life—but don’t show them that luxuries come through hard work and wise investing—then they won’t understand the value of a dollar.

Tomorrow I plan on making a gigantic announcement here at PeteThePlanner.com. I encourage you to come back tomorrow at 8am to see what has me so excited. Here’s your hint: There’s been something bothering me for a very long time, and tomorrow I am  going to scream about it very loud, for a very long time, to as many people that will listen. Tomorrow is the true beginning of an insane 2012 for me. I hope you can be part of it.

This post is an excerpt from What Your Dad Never Taught You About Budgeting (due to be released March 6th 2012).

The 5 biggest financial mistakes of the part-time entrepreneur

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My sister was a high school senior when I was a freshmen. Prior to one hour into the first day of school, I thought this was awesome. She would drive me to school. She would help me make friends (via her friends), and she would make sure that no one messed with me. Boy, was I mistaken. The experience was nothing like I had imagined. The highlight of my first 60 minutes of high school? Her friend, Jon, helping me find my next class. “Go to the end of that hall, out the door, and take a left into the corridor.” Great advice, Jon. I went out an outside door, the door shut behind me, and I had to walk to the front doors of the school. School security almost didn’t let me back in, and I was 10 minutes tardy to my second high school class.

Whereas this mistake was comical and most likely unavoidable, common errors of new entrepreneurs are never comical and always avoidable. Don’t be a noob. Learn from the mistakes of so many part-time entrepreneurs.

Oh, wait. We should probably identify the group of people that I’m talking about and to. I’m talking about that awesome mom with the awesome camera who knows her way around Photoshop. I’m talking about that brainy computer guy that can navigate all things tech. I’m talking about that talented designer who can breathe life into a dying project. And I’m talking about the hard working account manager who doubles as a club promoter on the weekends. Yes, everyone who earns money outside the realm of normal employment with the hope of that income turning into normal employment. That’s who I’m talking to.

Avoid the following mistakes and your chances of turning your part-time gig into your full-time gig will increase exponentially.

  1. Bad Banking- My biggest entrepreneur pet-peeve on the planet is the commingling of personal banking and business banking. Alright, I’m puttin the smack down. If you don’t have a business account, then you don’t have a business. Go to a credit union or small bank, and get a business checking account. Yes, this requires you registering as a business in your state. Yes, this SLIGHTLY complicates things. But it’s a business, dammit! Treat it like one. Get a freaking bank account. Plus, you get the added bonus of naming your business. Don’t name it something lame like I named my first business (Advanced Planning Solutions).
  2. Wrong mix of free work- While you are honing your skills, you will probably agree to work for free for a friend or family member. That’s fine. Just don’t do it too much. Don’t get taken advantage of. Do a couple of projects for free in order to have examples of your work, and then move on. Charge your friends. Charge your family. My uncle is my dentist. He charges me. One of my good friends is my doctor. He charges me. My best friend on the planet is my lawyer. He charges me.
  3. No business budget- How much does it cost to run your part-time business? What’s that? You don’t know? Come on, man. You HAVE TO know what it costs to be in business. I know exactly how much it costs to run my business. This is because I have a business budget. How will you know if you need a new piece of equipment, if you don’t have a budget? You won’t. So you will either buy something you can’t afford, or you will not buy something that will help your business grow. Create a budget.
  4. Treating your business like a hobby- Are you treating your business like a hobby because you don’t want to stop enjoying it? Big mistake. The quickest way for the fun to run away from your business is to treat it like a hobby. I LOVE my business. It is perpetually fun. Your side-business, or full time business for that matter, is most likely something you are passionate about. That means that it’s easier to have fun with it. Have fun. Just don’t treat it like a hobby. Don’t have a stupid email address. Don’t have crappy business cards. And have a website. It’s a business, not a hobby.
  5. Calling your revenue, income- When your business earns money, that money is called revenue, not income. It’s a very small difference, but when you call the money, income, then you tend to forget about things like taxes and expenses. In addition, when you call the money, income, you tend to just deposit the whole damn check, and spend it freely. No real business would do that. The money that your business earns is called revenue. Repeat after me: revenue.

I love owning a business (several actually), and I hope that you will enjoy owning your own business some day too. If you follow these 5 tips, then you will avoid many of the pitfalls that so many part-time entrepreneurs face. Want to read a good book on part-time entrepreneurship? Check out my friend Erin Albert’s book Plan C: The Full-Time Employee and The Part-Time Entrepreneur. Not only is it a great book, but Erin embodies this philosophy. She is an amazing person.

Have a mistake that you would like to share. Leave a comment below. Thanks!!!

Misinterpreting generosity

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Who wants to get uncomfortable? Me too!

On Monday I had a chance to have lunch with a friend. While I was waiting for him to arrive, I noticed a group of ladies lunching at the table next to me. I, too, am dismayed by my use of ‘lunch’ as a verb. Just as I looked over towards the table, the 3rd member of their lunch party had arrived. She was carrying two small gift bags. She handed them to the ladies, and the ladies tore into them like 8 year olds on Christmas morning. They were candles. First off, as a guy, if you ever buy me a candle, I will promptly throw it at you and call you a derogatory name. But this isn’t about gender. This is about the comment that followed the exchange of gifts.

“Margaret, you’re always so generous!” said one of the ladies.

Bullshit.

Margaret may be thoughtful, but that doesn’t make her generous. Upper-middle class ladies giving each other gifts during a $50 lunch doesn’t make them generous. Generous is when you are giving something to someone that needs something. Giving modest, or even extravagant, gifts to your friends is often misconstrued as generous. I know that it seems like I’m splitting hairs here, but I’m not.

When gifts exchanged amongst family members and friends are misconstrued for generosity, something REALLY bad happens. People who really need others’ generosity, miss out. And it’s especially bad if the giver deems their give to be generous. I believe that most people innately want to help others. This “want” is satisfied when you feel that you have helped others. When you do something generous, or what you perceive to be generous, then this desire is satisfied. An extravagant gift to your friend for her baby shower isn’t generous. It’s thoughtful. The diamond earrings that you give to your wife, girlfriend, and/or mistress isn’t generous. It’s thoughtful. Yet, if we perceive these gifts to be generous, then everyone loses.

This is a HUGE problem around the holidays. Several American families are about to exercise their generosity…in the wrong way. The exchange of gifts amongst the fortunate steals the satisfying act that comes with truly being generous. This makes me very sad.

Yes, I realize that people are allowed to give gifts to each other. Yes, I realize that there is nothing wrong with that. But when you have sifted through the thousands of household budgets that I have, and when you have seen that “gifts” account for a major amount of spending, while “charity” does not, you would feel as jaded as I do. We MUST listen to our instincts. Our instincts are telling us that generosity is very important. But something different is telling us to share that generosity amongst your friends, who happen to be in the exact same socio-economic situation as you.

Gift away. Give. Give. Give. Just realize that you aren’t helping ANYONE by giving your loved one a gift. Harsh? Absolutely. But, I’m in the same boat as you. If I give my daughter a motorized child’s size Barbie Cadillac Escalade (which there is no way in hell I would ever do), then I’m not being generous.

When you truly are generous, you will feel the difference. You will want to repeat the process over and over and over.

Agree? Disagree? Let me know.

Where’s Thanksgiving?

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Thanksgiving is far and away my favorite day of the year. I love food. I love family. I love football. And I love reflection. What I don’t love is what Thanksgiving has become. It has become the “official start of the holiday shopping season.”

I love that Thanksgiving exists to remind us that we should be thankful for the things that we have, but I feel sick that we spend the other 364 days lamenting the things that we don’t have. And in recent years we have kicked this off with the most horrific display of American greed that exists in modern society today: Black Friday. I know that “black” is meant to describe retailers moving “into the black” (becoming profitable), but I think it signifies the beginning of the blackening of our hearts until the next Thanksgiving. The formerly most grounded day in America is now followed by the shallowest display of mindless spending, greed, and excess that is Black Friday. Retailers want us to do stupid irrational things, and we gladly do them. We camp out to buy consumer electronics that we don’t need. We trample our fellow humans in order to get the latest Crap My Pants Elmo or whatever the PR machine spins. Black Friday shopping has even under-classed itself. Instead of fighting each other for gifts for each other, we are now fighting each other for gifts for ourselves. The crowds are thick with self-givers and farcical units which perpetuate the thoughtless gift-fest that is American Christmas. The beast is hungry. We feed the beast. The beast eats us.

Thanksgiving was the day that we used to stop, find and then give thanks. But the crazier that consumerism gets, the harder it is to find true gratitude and humility. Thanksgiving has become Waldo. We can hardly locate sincere thanks when our actions are those of the unappreciative. If you were truly thankful for your income, would you treat it like you do? If you were truly thankful for your job, would you try harder than you do? If you were truly thankful for the freedom that we enjoy in American, would you still help destroy the fabric of this country via cancerous consumerism? If you aren’t part of the solution, then you are part of the problem. The corporate greed that deadens our holiday celebrations was seeded by our thoughtlessness. We have married ourselves to this by our yearnings for more, our discontentment in what we have, and our refusal to buck popular culture in order to change popular culture.

The prophetic words of Langston Hughes have never rang more true. He writes in 1935′s Let America be America Again:

I am the poor white, fooled and pushed apart,
I am the Negro bearing slavery’s scars.
I am the red man driven from the land,
I am the immigrant clutching the hope I seek–
And finding only the same old stupid plan
Of dog eat dog, of mighty crush the weak.

I am the young man, full of strength and hope,
Tangled in that ancient endless chain
Of profit, power, gain, of grab the land!
Of grab the gold! Of grab the ways of satisfying need!
Of work the men! Of take the pay!
Of owning everything for one’s own greed!

Recently, a friend of mine in Georgia lost everything. Everything. He lost his wife. He lost his business. He lost his wealth. He lost his status and credibility. If he gives thanks this Thursday, then I know it will be sincere. For when you have nothing, then you can see what you really have. The noise will be turned down. He can’t be thankful for his money. He doesn’t have any. He can’t be thankful for his wife. He doesn’t have one. He can’t be thankful for his business. He doesn’t have one. He can’t be thankful for his status and credibility. He has none. What will he see this Thursday? Will he see what he has lost, or will he see what he has? If he had ever been truly thankful for all that he had, then would he still be in this position today? These questions keep me up at night.

I wish the best for you. I just hope that we both are on the same page on what “best” means. I hope that the aspects of your life that you can make simple, are simple. The rest is complex. I know this. Just don’t make the rest of your life harder than it needs to be. To me, this means being thankful everyday for the life that you have…and not missing out on it by focusing on the things that you don’t have. Happy Thanksgiving.

Your kid deserves the best. Give it to them, for once

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Would you rather listen to this post? Here is the audio of me reading it to you. Your kid deserves the best as read by Pete the Planner

 

At some point in the last 5 years I have found that I feel responsible to say things that no one else really wants to say or hear. This is mainly because the truth hurts. I feel like we are letting social pressures ruin our kids. We aren’t standing up for their futures because we are too caught up trying to appease them in the now.

***Disclaimer of the day*** If you do any of the things listed below, then that doesn’t make you a bad person. I don’t think you are a bad parent. I’m not the judge of you, nor am I trying to be. I simply believe that we have socialized ourselves into a corner. We have allowed really strange things to become okay. Just allow the following text to enter your brain objectively. If you still disagree, great. And yes, I will most likely be guilty of one of things too someday. But I sure as hell hope not.

If you are anything like me, then you believe entitlement issues are getting worse as the generations progress. It is increasingly common for younger Americans to feel like the world owes them something, when in fact, we are owed NOTHING. I have more of an entitlement issue than someone in their 40s. Someone in their 20s is worse than me. And the 10 year olds are really jacked up. This is because every generation is loosening their grip on sensibility. It’s getting worse. We have to start asking uncomfortable questions in order to stop this awful problem. So you gotta start asking yourself why. Why does a 12 year old think it’s their God given right to have an iPhone? Why does an 8 year old enter you into a Worst Parent of the Year contest if you don’t buy them a Nintendo DS? But what is worse is, why do people think that banks are obligated to give them a mortgage that they can’t afford? Or why do people think that their parents should financially assist them deep into their 20s?

I have identified a few random pop culture occurrences that are ruining the financial sensibilities of our youth. There are thousands of these things, but here are the first four that came to my mind.

  1. High end doll company- I’m angry, but not stupid. I’m not going to name the line of AMERICAN made GIRL dolls that are at the heart of pre-adolescent opulence. Why does a child of any age need a $100 doll? Seriously, just evacuate your mind and ask yourself “what good can a child learn from owning a $100 doll that has $14 shoes and a $50 coat?” People keep telling me that I, too, will eventually buy my daughter this type of doll. “She’ll want one, and you’ll want to make her happy.” Man, I hope I’m better than that. Yes, we all want to make our kids happy, but why does that mean that we have to buy a $100 doll? Why is that socially acceptable? Well, because we allowed it to be. Are you a bad person if you have done this? Not at all. But I believe that you are helping to perpetuate an unnecessary reality: buying luxury items even brings status to 8 year olds. Step back, what are we saying to our kids when we buy them something that is this ridiculously priced? We may be trying to say I love you, but I believe that the heinous financial decision casts a cloud over our expression of love. This cloud will rain over their brains longer than your “I love you” will. In retrospect, I’m now more appreciative of my parents for the things that they DIDN’T buy me versus the things they DID buy me.
  2. Electric lunch money- ”Here Billy, take this lunch money,” I hypothetically say. “I don’t need it. Just fill up my cafeteria card and the balance is deducted from the account that you fill up electronically,” Billy says with 21st century sass. Nope, that won’t give then a skewed concept of money at all. Yes American education establishment, let’s teach our children about money by giving them mock credit cards. Let’s COMPLETELY desensitize them to money. Save all of your “convenience talk” and “safety issues” BS for someone else. I’ve been a Nancy-ass my entire life, and no one ever took my lunch money. Okay, so there’s an opportunity for our kids to make a purchase up to five times per week using real money, and we choose to squash this opportunity and instead teach them how to use plastic? Really? Come on. This stuff happens because we let it happen.
  3. Endless activities- Taking your child to 15 different activities per week isn’t a sign of your love and devotion. It’s a sign that you can’t say no. It’s also a sign that your kids have found themselves to be the puppet master of your world. The higher we lift our children onto pedestals, the farther they will fall when they aren’t the center of the universe anymore. Should you leave them at home in a drawer? No. But when did spending 20 hours a week on your children’s activities start making sense? The reality is that it has never made sense, but we did it anyway. Why did it ever seem sensible to drive three hours to play another 10 year old basketball team? At what point did spending hundreds of dollars per family in travel, food, and hotel rooms to play a “tournament game” against a random group of kids that is 300 miles away make sense? Does your 10 year old really need travel experience? My hand to the sky, I have seen countless middle class families put themselves in terrible financial decisions in order to “be on the travel team.” Not only is that a bad financial decision, but it offers up a terrible decision-making matrix for the impressionable children. If you are trying to support your kids’ dreams, just make sure you aren’t doing it at the cost of their financial future.
  4. Don’t lie to yourself, video games do absolutely nothing positive for your kids- ”It improves their dexterity.” “It keeps them off the street.” “It’s their passion!” Just stop. Stop it. I can’t think of a single item more responsible (in the year 2011) for preventing children from learning the value of dollar than video games. How is it that not only do children have several $40-$50 video games, but in many cases they have several $200-$500 gaming systems. How does this make sense to anyone? Really? Answer me out loud, right now. Ignore your coworker, and answer the damn question. What are we doing? Sure, it’s wasteful. But the damage it does to your kids’ sense of money is worse. And don’t start with the “they save their own money for the game” stuff. Your job is to prevent you kids from wasting money on stupid stuff. If you let them spend their money on whatever they want, then they will do that FOREVER. Forever ever? Forever ever.

I’m am NOT a parenting expert. I am a financial expert. I fix the poor financial parenting that can be traced to the behavior above. Your kid deserves the best. Give it to them. Don’t give them things. Give them parenting.

My goal is to make this post a discussion. Do you have a different perspective on this? Please leave a comment below, and let’s have some intelligent discourse.

An Open Letter to Husbands

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Hey Fellas,

Please send your lady-friends out of the room for this one (although it’s quite likely your wife is forcing you to read this). I know that guys don’t traditionally talk to each other about their marriages. And for that matter, we certainly don’t talk about the financial stresses of our marriages, many of which (the stresses) are self-induced. So I thought I’d bring it up in this forum, and share my thoughts with you.

I think we (men-types) need to take some time to explore the current status of the financial relationships we share with our spouses. Some of us do a great job, some of us do a terrible job, and some of us could do a lot better by allowing ourselves to be a bit more vulnerable.

To me, it all starts with socialization. As a child, what did you learn about being a man? The fact of the matter is that many of the gender assigned roles that existed when we were kids have now been turned on their head. Women are no longer “tied to” domestic duties, nor should they have been. The man is no longer always the primary breadwinner, nor do they always have the aptitude to be. Stay at home dads are increasingly more common than they were 25 years ago. This is all great. We love our fathers and grandfathers, but they didn’t do that great of a job (generally speaking) of having gender open-mindedness. Believe me, I’m not hating on them. I’m just being honest.

All of that being said, there is still one old school socialization that remains, and it can be very harmful to your marriage. What is this divisive idiom? Men call the financial shots and shouldn’t be held accountable to their actions. This is just stupid. But unfortunately, after doing my job for 12 years, and after meeting with thousands of married couples, I can tell you with great certainty that this attitude not only exists, but is PREVALENT. And if you are experiencing marital strife that has financial ties, then my guess is that you may be guilty of this last remaining caveman tendency.

I don’t think we put enough effort into trying to be better husbands. Arguably, our marriages are the most important things in our lives. Yet we really don’t “work at them” the way we should. The reason for this is simple: we don’t know what it means to “work on” our marriages. Well, I can help you with that from a financial perspective. Here are three things to consider as you try to improve the most important relationship you have.

  1. Pride- Pride is really strange. You need enough pride to motivate you to do the right things at times. But often times pride is the cause of our marital/financial problems. I find that men don’t communicate as well as they should in regards to money because of pride. Did you do something stupid financially (we all do, men and women)? That’s okay, but don’t make the problem ten times worse by hiding the mistake, and trying to rectify the situation on your own. Believe it or not, sometimes I really hate talking about money with my wife. I mean really hate it. The cause for this occasional disdain? Pride. I don’t want Mrs. Planner to see how stressed-out I am over some trivial matter. I’m afraid that she might think that I’m weak-sauce. Here’s the thing though: if I force myself to have the conversation that I don’t want to have, then I feel better 95% of the time. Pride can also coax you into taking vacations you can’t afford, or buying gifts that you shouldn’t buy. You aren’t proving your manhood by buying your wife a gift that puts you in a bad situation. What’s a good use of pride used the proper way? Getting a second job when you have dug yourself a hole.
  2. Leadership- I feel like I’m on the verge of pissing some people off with this particular point. Are you the leader of your household? Is it out of respect, or out of merciful appeasement? Is your wife allowing you to set the financial tone of the household because you have an eye to the future? Or have you bullied your way into the financial leadership role? If your wife runs the day-to-day finances of your home because “it stresses you out”, yet you ultimately still call the shots, then this is a warning sign that you need to do a better job. In this instance, your wife is trying to save your financial lives, and you are nowhere to be found. Is that leadership? Don’t mistake this for splitting duties. My wife pays most of the bills, not because it stresses me out, but because that’s what we have decided to do. If your reluctance has led you away from this process, then you need to examine why.
  3. Fighting what is healthy- If you are what is causing the financial problems in your house, then you can be the person that leads the change. If you hate talking about money with your wife, then talk about money. You may be fighting for the wrong outcome. Your ignorance, to what is financially sensible, is actually making your life harder. In 12 years, I have never ever had a husband regret pulling his head out of his ass. Ever. Are you in debt, yet you keep hammering away with your old financial habits? If so, why? You are only hurting yourself. If you bucked up and did the right thing now, then your financial life would get better in the future. If you don’t, then it gets worse. Don’t fight what makes sense.

As you may or may not know by reading this, I love marriage. I think it’s the greatest thing in the world. And no, I’m not trying to impress my wife by saying this publicly. Besides, she doesn’t read my blog. I think a great marriage is one of the truly wonderful pleasures in life. Even great marriages suck at times, but it’s your commitment to this marriage that gets you through the tough times. And if for some reason this blog post strikes you as “soapboxish”, then I’m sorry. I do not have a perfect marriage. But I want to. And I’m willing to put in the work to get that done.

Please allow me to hammer one final point home. If this is a problem for you, don’t fight the solution. Fight for your life. Fight for your marriage. But don’t fight the solution. If you are living a personal hell right now, then get out of hell. Don’t give up. Work. What’s waiting for you on the other side of financial hell is wonderful, and you can’t get there by digging deeper. You have to step up.

 

***DISCLAIMER*** I am not the manliness guy in the world- I’ve never personally changed the oil in my car. I carry a man-purse. I have makeup in that man-purse (for TV). I cried when watching The Devil Wears Prada. I’ve never been in a fist fight. If forced to be in one, I would slap, tickle, and run. What I’m trying to say is that you, the person reading this, are much more of a man than I am.