Afford Anything - One Tweak a Week in 2019 -- Easy Improvements to Your Financial Life in 2019

Episode Date: December 31, 2018

#169: Happy New Years! To kickoff 2019, we've created a free book called One Tweak a Week, outlining 26 easy, actionable ways that you can improve your financial life. Today's podcast episode covers these 26 tweaks, so you can listen in audio format, in addition to reading the book. If you put these into action for the first six months of 2019, you'll be in a more stronger position in June than you started in January. Each tweak takes less than one hour (some are as quick as five minutes), and taken together, these tweaks can accumulate into a serious impact. Improve your money management and get closer to financial independence with our free book, One Tweak a Week. You can download it here: https://affordanything.com/2019  Learn more about your ad choices. Visit podcastchoices.com/adchoices

You can afford anything but not everything. Every decision that you make is a trade-off against something else, and that doesn't just apply to your money. It applies to your time, your focus, your energy, your attention. It applies to anything in your life that's a scarce or limited resource. And so the questions become twofold. Number one, what matters most to you? Not what does society say should matter most?

Not what have you been taught to matter most? But what actually, in your life, when you get very quiet and you think very deeply about this question, What is more important to you than anything else? And how do you align every decision that you make every moment of the day in accordance? The concept of afford anything is a concept of opportunity cost. And that is what this podcast is here to explore. My name is Paula Pan.

I'm the host of the Afford Anything podcast. And happy New Year's Eve. It has been a long and crazy 2018. Today we are going to do something different than we normally do. Today's episode is called One Tweak a Week, and I'm going to list 26 actionable things that you can do to kickstart your 2019. One tweak per week for the first six months of the new year. Now, we've created a free ebook called One Tweak a Week a Week. You can download it for free at Afford Anything.

dot com slash 2019. Again, that's afford anything.com slash 2019. Today in this episode, we're going to go through what those tweaks are. Now, here are a few things about them. First of all, most of these tweaks are one-time actions. They are not ongoing commitments. So it's a one and done deal. Each one will improve your financial life, one baby step at a time. Each one of these tweaks takes a very tiny amount of time to do. Some you can do in five or ten minutes. Others might take an hour. But each is something that you can do very quickly, just once. And the compounding effect of all 26 tweaks can make a really big impact on your wallet and your net worth. So if you start this at the beginning of January, then six months from then in July, your life can look totally different.

Now, here are some of the most effective ways to follow these tweaks. First of all, set aside one hour per week. And I recommend choosing the day and time in advance. So, for example, say on 7 p.m. every Sunday night and set a recurring reminder in your calendar. So if you use Google Calendar, for example, set a reminder there. And then listen to this podcast episode or open the free ebook, afford anything.com slash 2019. open the book to that week's tweak, and if the tweak applies to your life, and if it makes sense in your situation, spend that one hour a week putting that into action and do this regularly and watch your net worth improve. After six months, you'll have made more than two dozen small changes.

So, what are these tweaks? Let's get started. Tweek number one. Automate 1% Extra. So if you've been reading me for a while, you've heard this before, increase your savings rate by 1%, which is $10 for every $1,000 per month that you bring home. So for example, if you have a take-home income of $3,000 per month, then save an extra $30. If you have a take-home income of $5,000 a month, save an extra $50. You have a take-home income of $7,000 a month, save an extra $70. whatever it is that you bring home, save 1% of that per month.

Whether you're saving nothing or whether you're saving half your income, doesn't matter, no matter where you're starting from, save an additional 1%. Now here is how to do this. The easiest way is to set up an automatic monthly transfer from your checking account into a savings account, a retirement account, such as an IRA, or an extra principal payment towards an existing debt, such as a mortgage or a student loan. And I want to be very clear about that. When I say save, I'm using that word as a shorthand for anything that improves your net worth.

It could be literal savings in a savings account, sure, but additional payments towards a debt, in my view, also counts as savings. Anything that improves your net worth is what I mean when I use the word save. Now here's the thing. A lot of people, when you talk about savings, they say, oh, I just can't save anymore. I can't. I can't find the money in my budget. That's the beauty of automating just one percent more because anyone can find one percent. So that is tweak number one, automate one percent extra. Tweek number two. Track your spending and your net worth. You can't know where you're going until you know where you are right now. And to find out your current financial snapshot, figure out your net worth.

worth. And that is what you own minus what you owe. It's all of your assets minus all of your liabilities. In order to track that, you can use a free net worth tracker such as personal capital or mint. And what you'll do is you'll link your bank accounts, your investment accounts, your retirement accounts, you'll link everything to a dashboard so that you can see your whole financial life at a glance. Also, the thing that I enjoy doing, in addition to that, and this is optional because this is going to be a little bit more time consuming, but if you want extra credit, in addition to that, I also like to go through the practice of logging into every account and manually transcribing onto a spreadsheet what my balance in each account is. And because

it's so time consuming to do that, I do it only twice a year. I don't do it often, but it's a nice moving meditation in my experience. It's a way that you can slow down the process of And think about every account, think about every number as you're going through that practice of transcribing it from your account to your spreadsheet. But of course, that's more time consuming. So if you want to just get started, if you want the shortcut, just link your accounts to software to a network tracking free software like personal capital. And you will be able to know whether or not you're on track to reach your financial goals. you'll be able to see how your individual investments are performing. You'll see the impact of debt.

You'll just, you'll have a dashboard with this view at a glance of your whole financial life. So that's tweak number two. Track your net worth and your spending. Tweak number three. Check your credit report. I know, I know. That's as cliche as it gets, but you need to know what it says. Even if you don't have a credit score.

even if you are a Dave Ramsey follower and your ideal is to get to a credit score of nothing because you're never using any credit, you still need to check your report. Remember, there's a difference between a credit report and a credit score. A credit score is a three-digit number that summarizes how good or bad or non-existent your credit is. Your credit report is a report. it's a document with transactions and open dates and closed dates listed on that report. And so even if you never plan on borrowing a penny for the rest of your life, even if you plan on living a completely credit-free existence,

you still want to take a look at your report to make sure that there's no fraud, there's no identity theft, there's nothing funny or fishy about it. Here's how to do it. There are three major credit reporting bureaus, Experian, Equifax, and TransUnion. Each bureau allows you to check your credit report for free once a year. What you can do in order to space this out is set a calendar reminder to check your report at one bureau every four months. So that's January, May, and September, Experian Equifax TransUnion.

Now remember, these bureaus each have separate files on you, which is why it's important to check your report at all three places. And don't forget, your report is different from your score. The goal of reviewing the report is to make sure that the details are correct. Make sure there's nothing erroneous or fraudulent. So tweak number three is really twofold. Number one, it's to create a repeating calendar reminder every January, May, and September to check one report at each bureau once every four months. Set that calendar reminder. That's one actionable task.

And then kickstart that by checking one of the reports. That's the other actionable task. So those are your two tasks in week three. Tweek number four. Have a throwaway day. Now, to be clear, a throwaway day is not a day that you totally throw away by just hanging out in your pajamas watching the Simpsons all day. Although, actually, you know what? Maybe you should have one of those too.

But a throwaway day is a day in which you're not. you train yourself to hate clutter. Hates a strong word, but I'm going to say it, train yourself to hate clutter by getting rid of your junk. When I was going through my hyper, hyper frugality phase, the time in my life when I was just straight up cheap to the point where it was practically disordered, that was also my hoarder phase. It was a time in which I didn't want to get rid of anything because sunk cost fallacy

said, I already own it, I've already paid for it, or, you know, taking the time to get it for free out of some Craigslist free bin or whatever, I could not bear it apart with it because of the fact that either I had spent money on it or I could potentially use it in the future maybe or I could at least maybe sell it. To me, getting rid of something at that time in my life felt like the antithesis of frugality. Now I view it the other way around. Now, my view is that if you spend just one hour purging your closets or your basement or your garage or your attic, getting rid of the stuff that you don't need, getting rid of the clutter, you train yourself, you train your brain to dislike accumulating stuff because it's just junk anyway. You're just going to throw it away. You train yourself at that moment that you're at that yard sale or that thrift store or browsing Craig's list.

You train yourself to look at an item and think, is this just something that I'm going to get rid of six months from now? And the only way that you can train your mind to have that thought is by regularly going through the practice of getting rid of your junk. So if you've got stuff that's gathering dust in a corner of your basement, chances are it's not essential and it doesn't make you smile. It's fine to hold on to a few select items for sentimental reasons as long as you decide very consciously how you will limit those items. So, for example, you might decide to restrict your sentimental keepsakes to only whatever fits inside one box or whatever the limit is that you choose.

Choose the limit. Keep it to that. Everything else. Take a picture of it. The picture can be your keepsake. And everything else you get rid of. and you can separate your discarded items into two piles, one that you donate and one that you sell.

Take your donations to a nonprofit, to a thrift store, and as far as the items that are in your cell pile, don't put just anything in there. If you're like, ma, this can get me $2. Dude, your time is not worth it, get rid of it. But for the items that are in your cell pile that you can actually sell for real money, we're going to tackle those next week.

And that leads us to tweak number five. List one item for sale on a website like Craigslist, eBay, or Facebook marketplace. Sell just one item. More if you have the time. But remember, between photographing something, typing up a description, posting it, emailing with potential buyers, setting up a showing time with potential buyers, like all of that takes a lot of time. So don't get too ambitious or think that you have a huge amount of time to tackle this monster project. Start small.

Sell just one item. Last week's action, remember, was to spend an hour purging junk from your closet or your garage or your basement. And as a result, you now have these items that you can sell. And so pick one thing you can resell for at least $20 or more. Ideally, 30 or 40 or 50. Because remember, you're going to have to do a bunch of task management around the whole process of messaging with buyers and greeting the person who comes to your home to pick up the item. You're going to have to deal with all of that. So make sure you're only selling stuff that's worth your time.

But that is your tweak for this week. And this really does two things. Yeah, it brings you a little bit of extra pocket cash. Whoop-de-do. But really, really the benefit of it, again, is that you train your brain to stop buying. You train your brain to think this is just going to be another item that I'm going to have to deal with. And you're busy and your desire for simplicity will eventually lead you to stop buying more stuff so that you don't have to get rid of that stuff. That is the real benefit.

It's not the 30 bucks that you make by selling the thing. It's in some ways you are embracing the hassle. surrounding getting rid of this and you're embracing that hassle in order to remind yourself why you just shouldn't buy a whole bunch of junk in the first place. That's the true purpose of this exercise. And that leads us to tweak number six.

Write your why. Tweek number six is a challenge. In fewer than 100 words, I want you to describe why you're motivated to improve your financial life. Why? Why are you listening to a podcast about personal finance? You could be listening to Kim Kardashian's life story, but you're listening to this instead. Why? Write the answer in a hundred words or less and post this somewhere that you'll see regularly. So for example, make this the wallpaper on your phone so that every time you turn on your phone screen, you see your why. Oh, and by the way, if you do that, take a screenshot and share it with me on Instagram at Paula P-A-U-L-A-P-A-N-T.

So why are you writing the why? I mean, that is literally the million-dollar question. And I'm not saying that casually or flippantly, that question, a deep internalization of the answer to that question can bring you the motivation and the dedication that leads to a million-dollar net worth. That's what I mean when I say that that is the million dollar question. Why are you willing to live like no one else so that later you can live like no one else? What is it? Do you want to create a stronger safety net for yourself and your family in case of an emergency or a job layoff? Is that your reason? Is it freedom? Is it that you want to quit your job and go into a more fulfilling but lower paying or more volatile career? Is it that you want to travel the world? Is it that you want to break?

the cycle of poverty or a cycle of low income that your family comes from? Like, what is it that's driving you to better yourself? Articulate your answer and remind yourself of this every single day. Post this somewhere where you can see it. That is tweak number six. Write your why. We'll come back to this episode after this word from our sponsors. If you've been reading my blog for a while, you see that I pretty much always wear yoga pants because they're comfortable.

But the problem is that when you go to a conference or you make a speech or for those of you with jobs when you go to work, you have to wear workplace-appropriate pants. And they're just not as comfortable as yoga pants are. That's why this company called Beta Brand has dress pant yoga pants. They're workplace-appropriate pants. They have faux zippers, pockets, front buttons. They have a variety of shapes like boot cut, straight-leg, cross. a variety of colors like gray, navy, khaki, even seasonal colors. So they have everything that you would want in office, place, appropriate pants,

but they're super comfortable. I've got this pair that's boot cut in gray. It looks professional. Anyone who sees me wearing it would think that I'm wearing any pair of dress pants. They're stretchy and they're comfy, and I wear them around the house because they're that comfortable. And so what I like about them is that they feel good to wear. They're comfy.

That's why I started wearing beta brands dress pant yoga pants. visit Betabrand.com slash Paula, all lowercase, to get 20% off yours. Millions of women agree that these are the most comfortable pants you'll ever wear to work. That's Betabrand.com, B-E-T-A-B-R-A-B-R-A-N-D, dot com slash Paula, all lowercase, to get 20% off your dress-pant yoga pants. Betabrand.com slash Paula. Do you want to feel good about the shoes that you're wearing? If so, check out Rothies.

Rothies makes shoes from recycled water bottles. In fact, they've recycled almost 200 million water bottles. So their shoes are good for the environment. They're eco-friendly. They're super comfortable. You can wear them all day. If you saw me at FinCon, the conference that the personal finance podcasters attend, I wore them the entire time that I was there.

So if you met me there, you saw me wear them. I had a pair of flats on that are totally machine-washable. They're comfortable. And they're great for the environment. They've got the loafer and the sneaker, lots of different styles. They look great. I love my Rothies, and I know you will too. And right now, Rothies has an amazing deal for my listeners.

Use code Paula to get free shipping with no minimum. That's free shipping and free returns and exchanges on your Rothies shoe. And trust me, you won't return them. Go to rothies.com, R-O-T-H-Y-S dot com and enter Paula to get your new favorite flats and free shipping. So it's a no-brainer, shoes that are comfortable, stylish, stylish, and sustainable. and free shipping. Go get yourself a pair today. Rothes.com promo Paula. Get this deal while it lasts.

Rothies.com, R-O-T-H-Y-S dot com promo Paula. Now, hey, remember when this started, and the very first tweak in week one was to automate saving 1%. Well, now, we're at tweak number 7. And guess what's happening next? We're going to automate one more percent. It has been, at this point, if you're following this as a weekly, a one-week-a-week thing, it has been seven weeks since you boosted your savings rate by 1%. And remember, that means that for every $1,000 per month that you bring home,

you boost your savings rate by an extra $10. So if you bring home $5,000 a month, you boost your savings rate by $50. Now you did that in week one, which if you're following this as a weekly schedule, that would have been seven weeks ago. now it's time to boost your savings rate by 1% more. And you're going to do this in week seven the same way that you did it in week one. You're going to increase your automatic contributions from your checking account into a savings account, a retirement account, an investment account. You could put it into automatically scheduled debt repayments, such as making extra principal payments towards your mortgage.

Now, as you might guess, we're going to keep repeating. this exercise every two months. Because if you save an extra 1% every two months, then by the end of the year, by the end of 2019, you will be saving 6% more than you were at the beginning of the year. You'll be saving 6% extra. So if you started 2019 with a savings rate of zero, then by following the strategy, you'll end 2019 with a savings rate of 6%. Or if you started 2019 with a savings rate of 50%, you'll end it with a savings rate of 56%. And because we're stepping this up so gradually, you might not even feel the pinch. So that is tweak number seven. Automate one more percent. Tweek number eight. Ooh, I'm going to raise some eyebrows with this.

Research your salary. Find out if what you are earning is consistent with your industry. and with your career peers. How do you do this? Check at least three websites to find the average total compensation of people who are in your industry and your position. Some of these websites are glassdoor.com,

salary.com, and the Bureau of Labor Statistics. Remember, all of this is written down in our free ebook, which you can download at Affordainthing.com slash 2019. So what is the point of this? well, knowledge is power. So this information is going to come in handy the next time that you're ready to negotiate.

You can go to your boss and say, hey, you know what? Average compensation in my position is this much, and I'm only making this much. Or if your employer won't budge, you can start looking for parallel or lateral moves at other companies. Sometimes switching from one company to another is a very good way of giving yourself a raise.

Now, don't forget, your compensation is more than just your salary. If you like your organization but your boss doesn't have room in the budget to boost your paycheck, maybe you work for a small company, your boss might still be able to improve your compensation in other ways, such as extra vacation days. Such is the power of researching your salary. So that is your action item for week number eight. Spend one hour doing online research to find out how well your compensation stacks up. Tweek number nine, create a catchphrase.

So here you are going to develop a catchphrase that you'll ask yourself whenever you're about to spend money. So for example, you might ask yourself, would I rather have X? Or would I rather put this money towards a plane ticket to Bali? And I know that that doesn't sound like a catchphrase, catchphrase, right? But if that is the question, if that's a mantra that you ask yourself every time that you're about to make a purchase, it's going to reframe the type of purchases you make. Would I rather have this cocktail or would I rather put the same $12 towards my travel to Bali fund? Would I rather get a new blender? Or am I okay sticking with the blender that I have and then taking that $100 difference and putting it in my?

travel to Bali fund, when you develop this catchphrase, when you develop this really barometer of a question against which every purchasing decision is held, you're just going to think about your purchases differently. So here's a formula that can help you as you're developing this catchphrase. Step one, choose a short-term goal, like a trip to Bali or Hawaii. If you choose something that's a little bit too far into the future, like, you know, would I rather have this blender or would I rather have $100 compounding in an 8% interest rate over the course of the next 40 years so that when I'm 65 I can, you know what? That's just, it's not motivating.

It's too far into the future. It's not something that you can visualize. That's why choosing a short-term goal can be more effective, right? So choose that short-term goal and then estimate the cost. That's step two. Don't worry, by the way, about getting an accurate estimate. just take a reasonable ballpark amount. So for example, you might estimate that a trip to Hawaii for two people for one week,

assuming that you stay in Airbnb's and you eat food from grocery stores and you fly there with airline miles, you might assume that that might cost you a total of $1,500. And that is your ballpark estimate. Then you take that and you use that in a catchphrase, right? Would I rather buy these Apple AirPods or would I rather put that same $150 towards my trip to Hawaii? And if you know as a rough idea what the total amount might be, that 150 is now 10% of that trip to Hawaii that you're saving for. So if you decide against buying the AirPods, if you decide that living like a caveman listening to earbuds attached to a cord, heaven forbid, is sufficient, then you have now reframed that. purchase as 10% of the cost of your trip.

Right? You're not just looking at the AirPods in a vacuum anymore. You're looking at 10% of the cost of this trip that you really want to take. That is the power of creating a catchphrase and really beyond that, creating a barometer. This is a practice that helps you align your spending with your goals because it frames every decision into a larger context. And so that is your action item in week number nine. It's to create that catchphrase. Now, because week's nine action item was so lofty and esoteric and kind of conceptual,

in week 10, we get extremely practical, boringly practical. In week 10, tweak number 10, adjust your thermostat by one degree. If you normally heat your home to 68 degrees during the winter, adjust it to 67 degrees. And if you normally cool your home to 75 degrees during the summer, adjust it to 76 degrees. maintain this one degree change for one month and then adjust your thermostat one more degree. The benefit is that you'll start saving money immediately. It's better for the environment and you will barely notice a difference. It's one degree.

Oh, and the time commitment is nothing. It's less than five minutes. So it's good for your wallet, good for the earth, and doesn't require time or energy from you. Total win. Tweek number 11. And this is also extremely practical and extremely actionable. Check your tire pressure and inflate your tires to recommended levels. This will improve your gas mileage. Now how to do this? Buy a handheld tire pressure gauge or get an air compressor pump that has a digital pressure reader. You can get any of those on Amazon or you might have one floating around your garage already or you might have a neighbor or a colleague who has one. But use this to check the air in your tires. And you can compare that

against your ideal tire pressure levels, which are printed on the side of your tire. If your tire pressure is too low, take your car to a gas station for a refill or use an air compressor pump. This little thing, it'll take you 20 minutes and it can save you hundreds of dollars over time. So that is tweak number 11. Tweek 12. Hold online items in your cart for one week. So remember, we're styling this as one tweak per week, right? This is one thing that you can do each week. So week number 12, tweak number 12, I'm going to challenge you that anything that you put into an online shopping cart this particular week, just hold it there. Hold it there for the full week. You don't need to do this always. Just see what it feels like

to do it one week. And if you're a member of Amazon Prime or if you tend to buy normal household items online like staples like groceries or toilet paper or toothpaste. Put those items in your online shopping cart, but don't check out right away. Wait to the end of the week. And by doing so, you might be kick-starting a new habit. This habit doesn't just apply to expensive items. It applies to everything that's in your cart, from salad dressing to diapers to dog toys, every single thing that's in your cart.

And the reason that you're doing it is because you might be surprised at how many items you remove from your cart at the end of the week. What's cool about this as well is that it requires almost zero time commitment. You're still loading things into an online cart. You're still shopping in a convenient way. All you're doing is just waiting for a few days before you check out. That's it. So that is tweak number 12.

Tweak 13. Switch your mortgage to biweekly payments rather than monthly payments. Now, the reason for this is because you will make an extra payment without noticing. Here's how it works. Let's assume, for the sake of example, that your mortgage payment is $2,000 per month. This means that you can either pay $2,000 per month or you can pay $1,000 every two weeks. So what's the outcome of both of those options? scenario A, you pay $2,000 per month, and there are 12 months a year, so by the end of the year, you pay $24,000.

Scenario B, you pay $1,000 every two weeks, and there are 26 bi-weekly pay periods per year. There are 52 weeks a year. So if you pay $1,000 every two weeks, you end up paying $26,000 per year. In other words, by paying half of your mortgage every two weeks, you will automate an extra two weeks payment annually. And again, this will happen without you really feeling it. It will feel invisible. So you can trick yourself into repaying your mortgage faster

without noticing that you're making extra payments. That is your tweak for week 13. Week number 14, embrace some old school energy efficiency. Here's the thing. Renewable energy is all the rage. But if you really want to become energy efficient, just seal the drafts around your home. Start with that. Apply weather stripping around the drafty doors and the windows.

Use cork to seal the air leaks through cracks or gaps that are less than a quote, of an inch thick. As a general rule, weather stripping is better for home components that move, like around doors and windows, and caulk is better for home components that are stationary, like the outside edge of outlet cover plates. This is one of the most important and cheapest ways that you can make your home and your wallet energy efficient. Because the thing about energy efficiency is that people love new technology, people love smart thermostats. And, you know, I love it when my thermostat is smarter than me. I really do. These are great.

But there's no point in dropping thousands of dollars on the latest technology. If you have not first completed the basic tasks of weather stripping, caulking drafts, and applying spray foam insulation in the places that need it. So do that first. Go old school first before you go high tech. So that's tweak number 14. Tweek number 15. Choose a good enough savings account.

Here's what you're going to do. You're going to open an account at an institution that has a history of free checking and savings accounts and solid, good market competitive interest rates. You can go to your local credit union. You can go to Radius Bank, of course. They're a podcast sponsor. If you're in the military, USAA is good for military personnel and their families. So you're going to keep your emergency fund in an account that will pay you an interest rate that's good enough. And then you're going to leave it alone. And the reason that you hear this tone of being a little adamant in my voice is because learned from my mistakes, I used to be one of those people that would, I would account hop. I would open a new account at this bank and then that bank and then the other bank. And I would chase interest rates that were a fraction of a percent higher than my current bank.

And I never paused to crunch the numbers. I only saw the percentages, not the raw dollar amounts. And because I never paused to do that math, it took me years to figure out that I was wasting hours of my life chasing down an extra 50 bucks. I could have sold something on Craigslist, right? So choose an account that is good enough and then leave good enough alone. Put your emergency fund in an account that pays you an awesome interest rate and then move on with your life. That's what you're going to do in week 15. Week number 16 Create an estate plan

I know We don't like to think about the fact that we will not always be here But we will not always be here And creating an estate plan Is that piece of personal finance That nobody wants to talk about I saw this funny meme on Instagram the other day

And they were like You know what's one of the weird things about adulthood Having a favorite stove burner but never talking about it. And I was like, I know exactly what you mean. I totally have a favorite stove burner. And nobody ever talks about it. But that's totally one of those truths of adulthood and the other truth.

Another thing that nobody ever talks about is that we need to create an estate plan. We need to figure out what's going to happen with our assets after we're no longer here. Set things up now so that there aren't questions later. So you've got a couple of options in terms of how to create an estate plan. You can use a free service like Tomorrow.me slash Paula. They're a podcast sponsor. They're totally free. You can, if you want to use a paid option, there's a website called NOLO that sells templates

or there are other websites that also sell, fill in the blank legal documents. Or if you want to take the most expensive option, you can hire an estate planning attorney, expensive but worth it. Because we are talking about the fate of everything. everything you've ever worked for in your life. So those are many options ranging from free to expensive. That is the task that in week 16 I want you to get started. At a minimum, think about which option you want to go with.

Spend one hour in week 16 looking into it. So that's tweak number 16. Tweak 17. Create a giving plan. Make a plan for your charitable giving. And here are three guidelines. steps for that. Step one, decide how much you want to give. Choose either a percentage of your income or a specific raw dollar amount. So you might decide, for example, that in 2019,

you want to give 5% of your income or maybe you want to give $10,000. It doesn't matter what you choose. Choose what feels right for you. But step one is to decide either as a percentage or as a amount how much you want to give this year. That's step one. Step two is to then pick which charities and nonprofits you would like to donate to. There are several websites in which you can research the efficacy of various nonprofits. So some of those websites include Give Well, Charity Navigator, Charity Watch, and the Better Business Bureau Wisegiving Alliance. All of these, again, are written in our free ebook, which you can download it toffordanithing.com slash 2019. So those are, and this is a little bit meta, but they are nonprofits whose role is to

look at the effectiveness of other nonprofits. And so that's what they do. And they're a great resource for researching effective nonprofits in a huge variety of causes and fields, ranging from animals to the environment, to health, to children, to the elderly. So step two is to research those nonprofit organizations and then, Step three is to create a plan for how you're going to distribute these funds. So, for example, are you going to give everything in one big lump sum? Or do you want to give over time? Maybe you want to give $500 a month.

Are you going to give to the same charities every year? Or are you going to switch it up year by year? These are the questions that I want you to sit down and ask yourself and talk to your spouse and your family. create an overall vision that guides you through your giving. That is your giving plan. And it allows you to manage your money and manage your giving with conscious intention. That is your action item for week 17. Week number 18.

Take your pets to the vet. This is something that I don't think we talk about in personal finance enough. Prevention and preventative maintenance. People sometimes will talk about preventative maintenance with regard to your home or your car. But taking your pets to the vet for routine checkups and preventative health care, that's important, not just for the health of your pets, but also for your wallet. It's important. It has benefits in multiple dimensions of your life and your pet's life. Remember, prevention is cheaper than treatment.

And that same advice goes not just for your pets, but also for your pets. your own health as well. That prevention and routine maintenance for your health, for your pets' health, for your home, for your car, these things are essential for your financial life. And it's very tempting to think that you can, quote-unquote, save money by skimping on this. But spending a few hundred on prevention might spare you from needing to spend thousands or more down the road. So that is your action item for week number 18. take your pets to the vet, and in doing so, pause and think more broadly about what prevention tasks or preventative maintenance tasks you have been neglecting.

Really, if I could apply this lesson a little bit more broadly, it's think of one area of prevention that you may have been neglecting. And in this week, I want you to focus on that. That is your tweak of the week for week number 18. We'll come back to this episode in just a minute, but first, are you looking for a free checking account that pays a super high interest rate? Yeah, who's not? So check out Radius hybrid checking. Radius hybrid checking, as the name implies, is a hybrid between the flexibility of a checking account

with the high interest earnings that you could get in a savings account. This is a checking account in which you get 1% APY on balances over 2,500 and 1.1.4.2.2. 2% APY on balances of 100,000 and up. Now, that's a heck of a lot more than what you're going to find in the average checking account. Like, that's a really good interest rate for a checking account. Also, there's no monthly maintenance fees. There are free ATMs worldwide, which means they'll reimburse your ATM fee that's charged

by another bank so you can use any ATM you want. Your first order of checks is free, and you can open an account online in five minutes or less. To open an account, go to radiusbank.com slash Paula. That's R-A-D-I-U-S bank.com slash Paula. Radiusbank.com slash Paula. Afford Anything is brought to you by Skillshare. Skillshare is an online learning community that has more than 20,000 classes in a huge range of topics, everything from data science to mobile photography to creative writing.

And these classes can be as short as far as. 45 minutes or an hour, an hour and a half. So it's something that you can watch in one evening after dinner but before bed in order to learn a new skill or start a side hustle. Do you remember Rand Fishkin? He was a previous guest on this podcast. He teaches Skillshare classes on search engine optimization or SEO. So one evening, after dinner but before bed, you can learn SEO from Rand Fishkin. That's just one example.

You can join millions of students already learning on Skillshare with this special offer, which is that you can get Skillshare for 99 cents. That's right. Skillshare is offering afford anything listeners two months of unlimited access to more than 20,000 classes for 99 cents. That's a pretty awesome deal. So to sign up, go to Skillshare.com slash Paula. Again, go to Skillshare.com slash Paula to start your two months now. That's Skillshare.com slash Paula. Week 19. Choose a metric and track it.

I want you to choose just one metric. It can be anything that you choose. It can be your debt payoff rate or your weekly side hustle income or your overall net worth. It can be any financial metric. Choose just one and start tracking this number if you're not doing so already. Actually, it doesn't even need to be a high level. financial metric. It can be anything that improves your life. It can be the number of calories you eat. It can be the number of steps you take. It can be the amount of money that you contribute into investment accounts every month. But this week, I want you to, number one, decide what metric you want to track. Number two, view what this number is today. And number three, create a calendar reminder to check back at some regular interval. It could be daily or weekly or monthly. Now, don't. Don't. Don't track too many metrics because if you track everything, then you track nothing.

Start with just one. Focus on one metric. You can always add more later if you feel that's necessary, but oftentimes it isn't. Oftentimes by tracking one and centering your focus around it, everything else falls into place. So that is your action item for week number 19. Choose one metric and begin tracking it. What gets measured gets improved. Week number 20

Make a list of your annual expenses I want you to double check that you're setting aside enough money for annual expenses So write down a list of occasional expenses Like things that happen every 6 to 12 months For example, holiday travel, birthdays, weddings, family reunions, summer camps summer classes, seasonal expenses like getting snow chains for your tires Or gutter cleaning

Or snow and ice removal Make a list of all of these annual or semi-annual expenses. Estimate how much each of these will cost, add them all up, and then divide that number by 12, and set aside this amount every month. That is how you plan for annual expenses. Or if that's not your style, if that feels a little bit too formal or too stodgy, then just say screw it and practice the anti-budget, which is the practice of living so drastically below your means that you have ample savings so that whenever these types of things pop up, you've got plenty of cash. When you practice the anti-budget, you choose how much money you want to save, you pull that off the top, and you spend the rest. But in order to make that

work, you need to save a fairly aggressive amount. That way, there's enough wiggle room for things like getting snow chains on your tires, which you didn't plan for, but guess what? Now it's winter and you need them. Because the thing is, a lot of people plan for monthly costs like your rent or mortgage or your groceries or your utility bills. And a lot of people also have an emergency fund set aside for rare occurrences that you can't reasonably predict, like a job loss or a sudden illness, right? But you also want to make sure that you have enough money set aside for annual expenses

that you can predict, but you just might not be thinking about it. things like holidays, vacations, family reunions. Every January, I end up seeing one or two Facebook posts that make some type of comment about like, oh, flying home for Christmas was so expensive this year. How am I going to pay off my credit card? And I think, like, this is your chance to get a head start for next Christmas, right? You start in January. You have 11 months to plan ahead.

So that's what I want you to do in this week. This is tweak number 20, make a list of those annual expenses, add them up, Divide by 12. Get a sense of what this is going to cost, and that's how much you'll need to set aside. Tweek number 21. Be honest with yourself about can't versus choose. This is more of a conceptual action item. It's a little bit more high level, but what I want you to do this week is to pay very close attention to your words.

That's your practice for the week. whenever you think or say the words, I can't, ask yourself if you can replace this with the phrase, I choose. So, for example, instead of saying, I can't afford it, can you replace that with, you know, I choose not to spend in this way? The action item for this week is to write down every instance in which you notice yourself either saying or thinking. the words, I can't. So create a list in Google Docs or an Evernote or in any other writing or note-taking program and write down every time that that phrase pops into your mind or out of your mouth. Because the thing is, whenever you say, I can't, you have an opportunity to remind yourself that there are millions of people who are doing the thing that you believe that you can't. So the way to both remain honest with yourself and also stay empowered about your own life is to replace the phrase I can't with the phrase, I don't want to, or I would prefer not to,

or, nah, I choose not to. Because that, for most things, is the truth of the matter. You can. You just choose not to. Tweek number 22 enjoy one free activity this week. This week's action item is to train yourself to stop associating enjoyment with spending. This is something I think is really interesting. When people talk about savings, one of the objections to savings that I hear is the objection, like, but don't you want to enjoy your money?

Which is funny because implicit within that objection is that enjoyment and spending money are used synonymously. They're used interchangeably. I want you to participate in the practice of breaking that mental association. It's an association that we are taught by society. To some extent or another, that is ingrained in all of us because those are the social messages that we receive. Enjoyment is spending and spending is enjoyment. And those two words can be used interchangeably. So this week, in order to get yourself into the habit of breaking that association, try enjoying one free action.

It could be anything. Go for a walk, ride a bike, go for a jog, take photos with your smartphone, go to the library, visit an animal shelter, invite a friend over for a cup of tea. You know, most people assume that frugal is a synonym for delayed gratification, but you know what? I'm frugal, and I'm not delaying Jack. I enjoy my life. It just happens that I enjoy things that are free or cheap. I love camping, for example. And granted, in order to get started camping, you do need to spend money. You need a tent. You need a sleeping bag.

You need boots. You need a car that's going to get you to a campground. There's a lot of spending up front in order to get there. But once you have that stuff, a weekend camping trip is about as close to being free as reasonably possible. And there are some people who would argue that I'm delaying gratification because I'm not staying at some fancy luxury hotel, but I disagree. I'm having a great time. I enjoy it.

So this week's exercise is geared towards helping you get over the idea that spending money equates to happiness. Pick one free activity and do it. Tweek number 23. This week's action item is to check the expense ratio on your investment funds, such as any mutual funds or index funds that are in your investment accounts. By the way, if you're invested with Vanguard, you can skip this step because I can tell you right now, if you're in Vanguard funds, you're fine. Don't even worry about it. Also, if you're in Schwab funds or most fidelity funds, also, you're fine. Don't worry about it. But if you're not, if you've got index funds or mutual

funds that are associated with some other broker, check to see what the expense ratio is. And if that expense ratio is higher than 0.5%, I'm not going to tell you what to do, but you might want to seriously rethink your choices. Now, if you don't know how to do this, it's very simple. Just search for the name and the ticker symbol of your fund. Just search it on Google. And then right there, in the information that you will see a line item called expense ratio. Now, the thing about expense ratios is that if you're paying a high percentage on your investments, then you are burning hundreds, if not thousands of dollars every year. And what's particularly insidious about it is that you don't feel it because you're not physically writing a check. You're not

physically swiping your credit card. You don't feel the money disappearing. But it is your money and you are paying it. And these fees have a compounding effect over time. And that's That can really burn you 20 years down the road. So spend an hour this week looking up the expense ratios on your funds. And if they are high, think about what you might want to do. Tweek number 24. Negotiate your interest rates. If you are carrying credit card debt, I hope you're not.

But if you are, negotiate your interest rate or transfer your balance to a lower rate card. and I'm going to put a big asterisk there because I don't want to encourage endless balance transfer hopping where you just go from teaser introductory rate to teaser introductory rate chasing 0%, never actually making any progress towards your balance. I don't want to encourage that type of behavior. So there's a huge asterisk when I say transfer your balance only if it is one of many steps that you're taking to wipe them out. But whether or not you transfer your balance, absolutely, you can negotiate your interest rate. Just call your credit card company. You can call the phone number that's printed on the back of your card

and tell the customer service rep that you are thinking about transferring your balance to a card with a lower rate and ask them if they would be willing to lower your interest rate. If they say yes, then awesome. Congratulations. You are now paying a lower rate. That's what negotiation is. And if they say no, then you know that it's time to then make that balance transfer. credit card debt is one of the most expensive types of debt that the average person carries.

So lowering your interest rate can save you hundreds or thousands of dollars and it can help you pay off that balance a lot faster. So that, for those of you whom this applies to, is your tweak in Week 24. It's to negotiate your interest rates on your revolving debt. Tweak number 25. Strengthen your passwords. This is another thing that people don't often associate with personal finance, but it's incredible. incredibly important. Create strong passwords for your financial accounts. All the basic password hygiene, right? Combination of capital and lowercase letters and symbols and numbers and don't repeat the

same password on multiple accounts and don't make it something super easily guessable like password one, two, three. Your username admin, password password, right? Preventing identity fraud and preventing online theft is an important and often overlooked aspect of good financial hygiene. So that is your action item in week number 25. And you can do this in 10, 15, 20 minutes. Finally, week number 26. Cut the cord. If you have a cable package, please cut it.

I don't like telling you what you should or should not spend on, but for most people, get rid of that thing. That will save you between 50 to 100 bucks a month or more. and in the era of Netflix, HBO Now, YouTube, Amazon Prime, in the era of all of that, there's no reason to pay for cable unless there's something extremely specific that you want to watch. I know I'm going to get tweets from people who are like, well, I'm a special snowflake. Okay, cool, fine. But for the vast majority of people who are listening, you can cut the cord and save a bunch of money. And by the way, remember, it's time to boost your savings rate by another 1%.

So cut the cable, put it into a savings account. Boom, you've taken care of that next 1% savings boost. Those are 26 action items. One tweak a week, every week for the first six months of 2019. If you follow this, just one simple action item per week, each one. taking less than an hour, with the exception of the estate plan, that's going to take a little bit more. But most of them taking less than an hour, some of them taking less than 10 minutes, if you follow all of these at a pace of one a week, then six months from now,

you will be in a much stronger position than you're in today. Don't forget if you would like a written copy of all of these, the tweak of the weeks, head to afford anything.com slash 2019 where you can download this free ebook and you'll also get an email once a week with that week's tweak. We also have a Facebook community. Just search for the Afford Anything community on Facebook

where we will be encouraging people to post about their tweak of the week every week for the first six months of 2019. That is our show for today. It is a special New Year's Eve episode. Thank you for spending. your last day of 2018 with me. I would love to share some numbers with you guys.

So 2018 year in review by the numbers. First of all, our charity water campaign, as you know if you're a long time listener, we through this podcast and through the blog through Afford Anything, the community, we have been raising enough money to build a water project in some part of the world

where people die from diseases caused by unsafe drinking water and poor sanitation diseases like cholera and typhoid. Through the Afford Anything community, through you, in the year 2018, we have raised officially $21,653. Wow. My goal was $12,000, and we've raised $21,653.

So thank you. Thank you so much to everyone. who has donated to this campaign or who has bought a t-shirt to support the campaign or who has or who is listening to this. Thank you to everybody who is part of the Afford Anything community because it's the fact that this community is so strong. The fact that you subscribe to this show that you've left a review, that you've shared this show with your family and friends, the strength of Afford Anything is what has allowed us to raise 21,653,000. to put towards clean drinking water. What an incredible 2018. Thank you so much.

With that being said, let me share with you some of the other metrics around the Afford Anything community from this year. At the beginning of this year, this podcast had 2 million downloads. We are ending this year with 4.6 million downloads for this podcast. This community is growing. We're getting bigger. We're getting stronger. Thank you so much for being a part of it.

I distinctly remember being on an airplane at the beginning of the year. And I was seated next to some guy. We were talking about the podcast. And I remember telling him, this is the reason that I remember that we had 2 million downloads at the start of the year. I remember telling him, we've had 2 million so far. By the end of this year, I'd like to hit 5 million. And I remember him saying, well, geez, that sounds like a lot. He said, Your podcast has existed for two years. It's received 2 million downloads over the course of two years. So it's received, on average, a million a year over the course of two years. And then in year three, you want to triple that? You want to try to get from 2 million to 5 million in that third year. And I was like, well, yeah. Yeah, I did.

Yes, I do. And I remember he was very doubtful about it, this random airplane seatmate. But I was not. I was feeling confident. I didn't quite know how it was going to happen, but I just had the sense that it might. And here we are right on the cusp of 5 million downloads, 4.6 million downloads. And also right on the cusp of celebrating our three-year birthday anniversary, birth-aversary. So in January, this podcast turns three.

And based on our download numbers, in January or February the latest, we will cross the official 5 million mark. Thank you so much to everyone who has subscribed to this show, who has shared this with your family, your friends, who has recommended this show. Thank you to everyone who's taken part in the community on Instagram and on Facebook. At the beginning of 2018, there were 4,000 people who followed this community, afford anything on Instagram. And now we are ending 2018 with 11,500 Instagram followers. So we grew from 4,000 to 115. We nearly tripled on Instagram in 2018.

The YouTube channel quadrupled in size. At the beginning of 2018, we had 3,000 subscribers on YouTube. Now at the end of 2018, we have about 12,000. So we 3xed the podcast. We 3xed Instagram. We 4xed YouTube. Interestingly, email subscribers to the blog has stayed almost exactly the same. We started 2018 with 49,000 subscribers.

At our peak, we hit 55,000. But then I called a bunch of cold subscribers off the list, people who weren't opening the emails anymore. I knocked a solid 5,000 people off the list. So now we're ending the year exactly where we started with 50,000 people on the email list. The Facebook page has grown by about 3,000 people this year from 11-5 at the start of the year. to about 14.5 now. But zooming out, why does any of this matter? I mean, to a certain extent, it doesn't. To a certain extent, these are vanity metrics. I could sit here and say, this speaks to the strength of the community. And that is true. It does speak to the strength of

the community. But remember what I said earlier in this episode about metrics. If you track everything, you track nothing. And it can be tempting, especially in an industry where all of your metrics are so public-facing to constantly obsess over Facebook likes, Twitter followers, Instagram followers, podcast downloads, blog page views, email subscribers, all of those metrics that, yes, they speak to the movement and the community, the interest in financial independence, the fact that, as I said in an earlier episode, I am more on fire for fire than I ever have been before and the fire movement is growing and the growth of these platforms show that. Sure, to that extent it matters, but also I fully acknowledge at the end of the day what really matters.

The soul behind the numbers was expressed very well by a review that came from somebody with the username Swedish timid chef who left a review on our iTunes page on December 8th that said. Before this podcast, the idea of savings seemed foreign to me. I believed one made money to spend it, so therefore, the more you make, the more you can spend. It wasn't until I started subscribing to this podcast, and the idea is put forth by Paula and Jay Money, my former podcast co-host, that I was finally able to pay off some debts and actually have a savings account with four figures in it. This is huge to me since at the moment my family's income is approximately $50,000 in California, which I think most know is not sufficient for a family of three in one of the

most expensive states. I've reduced poor spending habits, aggressively saving 20% or more of my income. I've paid down debt, and I'm getting to a place where I can finally start seeing the light at the end of the tunnel. I'm in my 30s, so I still have time on my side to work towards retirement and possibly even fire. But for now,

I'm relieved to say that money isn't my main stressor. It's something I look forward to working with every day, budgeting, spreadsheets, tracking how my debt is slowly decreasing from a five-figure number down to a four-figure one,

and how my savings is growing. Thank you, Paula. keep up the excellent work hashtag I can see the light That's why this matters And so if you ask me what we did in 2018 It was this If every single thing that we did

Every minute of all of this effort Was for this person Swedish timid chef A member of a family of three in California Making 50,000 a year Then drop the mic I'm happy It's been a good year.

So, Cheers. Here is to a bright 2019. My name is Paula Pant. This is the Afford Anything podcast. I'll catch you next year.