In today’s job market, professional development can mean the difference between having a thriving career and struggling to make ends meet. If you’re going to develop your skills and knowledge within your industry, you’ll have to take some purposeful steps towards doing so. The following five steps can lead to substantive professional development in your career.
Be realistic. No matter how much you would want to keep within your budget and avoid spending on unnecessary things, you are bound to give in to the temptations and splurge it some time. Having already set aside specific amount for your daily financial obligations, one expense that is not included in the budget can leave it all in shambles. But if you have an allotted budget for the expected ‘unexpected’ splurges, you can feel at ease about spending a bit for yourself, because you know that your other funds will not be affected.« Continue »
I’ve seen a lot of talk in the blogosphere and elsewhere lately about following your dreams. Most is good solid advice about doing what you love or working in a field that you love. I have to ask myself, what would happen if everyone did this? There would be very few people working at restaurants, in construction, or really in a vast majority of the jobs out there. So why doesn’t everyone follow their dreams? I have a couple of theories. Lack of ambition and drive. Lack of dream job availability. Or, the one that applies to me, opportunity cost.
Every choice in this world has an opportunity cost. Dictionary.com defines opportunity cost as “The cost of an alternative that must be forgone in order to pursue a certain action.” This applies from the small dreams and goals like my dream of owning a Wii. Sure, they aren’t really that expensive, but what alternatives would be given up for that $300 spent on a gaming console? For $300 my wife, daughter, and I could go to the movies 10 times. We could spend a couple of nights in a hotel at the beach. I could buy something cool for my Jeep. I could upgrade my kayak. I can think of a lot of other uses for $300. Since I don’t have an unlimited supply of 300 dollar bills, the opportunity cost of purchasing a Wii is the other things I would miss out on.
I usually try to perform a little check in my head anytime I make a purchase that is a want rather than a need. I think of the other things that could be done with my money, and if I still want the item, then I proceed with the purchase. This is a particularly useful method when I get the itch for something new and expensive. Something like a $2000 TV or a $1000 winch for the Jeep. I usually do the mental check of opportunity costs and typically talk myself out of the impulse buys.
Of course the bigger the dream, the bigger the opportunity cost. I have a dream to travel the country in an RV. I could quit my job and sell my house and everything I own, and make this dream happen today. But that is too high an opportunity cost for me. I’m not willing to give up a good paying job and my house in order to follow this dream. In some cases, I must decide which dreams are best fulfilled now, and which should be put off for later or possibly forgone altogether.
I also have a dream to write. As you can see, I’m doing this already, but even this simple blog has opportunity cost. I have to give up some video game time to spend some time writing.
What should we do when all the opportunity costs seem so high? Possibly we are right where we should be. But, if we are not, then we compromise. Instead of buying the Wii this year, I bought Buzz Quiz World for my PlayStation, so I have a game to share with family and friends on a game system that I already own. I’ll save the 300 bucks until I decide how to best spend it. For my dream of traveling the country, I’ll instead take short vacations. I’ll also plan for RV travel to be a future possibility. As for writing, it’s worth the small amount of gaming time I give up. I get to release some creativity, share some wisdom, and make friends with my readers and commenters.
What are the opportunity costs to your dreams?
I am having a great week and I am having a horrible week.
I’ll start with the good.
On the great week side, I have recently accepted a new job offer, and we hired my replacement yesterday. My new job will be in software deployment, which is a niche in the IT world that I find to be rather enjoyable. Hiring my replacement means I have time to pass off all my knowledge of my current work environment, leaving my current employer (and the new guy) in a better position than when I arrived.
Also on the great side, we are looking forward to our annual cookie swap party on Saturday. Every year we host this party in our home, and we invite family, friends, and coworkers. We require no RSVP. If folks have time to bake a couple batches of cookies and stop by, then we are happy to have them. We figure there is enough stress at Christmas time; we don’t need to add to it by making folks feel like they must attend or must commit to attending in advance. It’s going to be a great time. With tons of fantastic cookies, all of our best friends, and our family, it’s guaranteed to be fun, and I’m really looking forward to it.
On the horrible week side, it’s mostly financial. The fuel pump on my truck died on my way to work on Monday. That’ll be about a $600 repair. Then on Tuesday, my wife’s car decides to flip on the check engine light. A code scan revealed a problem with the evap canister. (Something to do with the venting of the gas tank.) I haven’t taken it into the shop yet, but from what I’ve read on the Internet, I’m figuring about $500. Pretty sucky week so far huh. So guess what happens on Wednesday night. The A/C in the house stopped working. The outside unit kept tripping the circuit breaker. We called the A/C repair folks and are waiting for them to come out. No idea what this will cost. For those attending the party on Saturday, we really really hope it will be fixed by then. Merry Christmas to me, I get car repairs and A/C repair for Christmas.
I hope you don’t mind me sharing the bad with the good. I suppose we can just file this under “bloggers are human too.” We all seem to have good times and bad times, and I’m no different. I live in a normal house, have normal cars, and also have normal problems.
I do like to end on a good note, so let’s bring it back around. Several years ago, we read a book called “The Total Money Makeover” by Dave Ramsey. This is a personal finance book that really makes sense (one of the few I found that has good solid financial advice for normal people.) We followed Dave’s plan to get out of debt, pay off our cars, and live on less than we earn. Part of this plan, after getting out of debt, is to save up 3 to 6 months of expenses as an emergency fund. So, the good news… we have money to cover these unexpected repairs. This wouldn’t have been the case just a few years ago. I will have to rebuild a portion of my emergency fund, but I feel very fortunate to be in the position to pay for my repairs and to not need credit cards to cover it. I am grateful for Dave Ramsey and the wisdom he teaches in his book. Thanks Dave!
I’ve had a few posts about worry, and now I’d like to talk about one of the most common worries, at least in my book. Money! Who hasn’t worried about money? I think we’re on pretty common ground to have money worries. So how do we avoid them? Well, if you recall my steps to get over worry, the very first one is to develop a plan. Let me tell you about my story, about my financial situation and how I developed a plan to rid myself of money worries.
Rewind the clock about six years. My wife and I were both working full time jobs. We were making decent money. (We’re not talking 6 figures or anything close, but it was enough that we thought we should be pretty comfortable. ) So, why weren’t we? Once we actually took the time to sit down and look at it, it was pretty easy to see why. We had a mountain of debt, and we were spending more than we earned. We had a lot of wants, and most of those wants went on a good ole’ credit card. That good ole’ card, and the good ole’ payments that went with it were like a noose around our financial freedom. It was dragging us down. Our ship was slowly sinking, and we could hardly bail fast enough to keep it afloat. You get the idea.
Numbers probably help you get a better picture. Most people won’t share this info, as it is a little embarrassing, but I feel it’s important for the demonstration. I’m sure some of you are going to say wow, I had no idea. We had $15,000 on credit cards and probably another $20,000 in vehicle loans. I can hear some of you already; “car loans… everyone has those.” Well not everyone, but it is pretty normal, and unfortunately normal is often losing financially. But we’ll talk more about car loans in a later article. For now, let’s focus on the debt as a whole.
The very first thing we did was to make a written budget. (Actually it was in a spreadsheet on the computer.) We wrote down our income, and then wrote down every expense, from groceries to rent and utilities to entertainment. We quickly found out that we didn’t have as much money for entertainment as we thought we did. Getting our expenses written down allowed us to see this. It also allowed us to see how much we actually needed to live on. With the bare essentials as a base line, we found out how much we had available for paying down our debt. Bare essentials being: Rent, Utilities, Food, and Gas to get to work. The bare essentials, the car payments, and the minimum payments on the credit cards didn’t leave much room for anything else. So… everything else had to be cut.
With our written budget, we are able to see that we couldn’t afford to be buying “stuff.” We also couldn’t afford the weekend entertainment, which usually involved eating out and going to movies. And, we couldn’t afford eating out during the week, as we often did. Our typical entertainment expenses for a weekend had been around $80, our mid week dining another $50, and our buying “stuff,” who knows.
We made a conscious decision to start living within our means. Furthermore, to get out of this mess of debt, it actually meant living well below our means. For us, this meant no more eating out mid week, a strict $20 budget for weekend entertainment, and absolutely no more buying “stuff.” This freed up enough money in our monthly budget to increase our monthly payments to our credit cards. From the numbers above, you can see we had at least an extra $110 each month just by cutting our dining out and weekend expenses. Every month we would see our debt decrease ever so slightly. It actually took more than this, and we looked for ways to cut expenses any way we could, even including ditching cable TV.
So, how’d it go?
It was HARD! It was very hard to eat at home, to not go out to the movies, to not buy everything our hearts desired. But it was harder on our happiness to remain in debt. We were driven with a purpose; to be debt free. We ate at home, and prepared many simple and inexpensive meals. Each weekend we made a choice; we could either eat out once at an inexpensive restaurant, or rent some movies. And, every extra penny we saved went to pay off debt.
We stuck with it though, and paid off all that debt. Let me tell you, it was worth the sacrifices to be free from all those monthly payments, and free from the worry and stress of debt. We paid off the last of the debt, just after our daughter was born. What a great way to start a family!
Are you ready to start thinking about your debt? Are you ready to get rid of your money worries? Then my challenge to you is to start the plan. Make a written budget.
Photo by Andres Rueda