Specific occupations

• You’re a writer who makes over $900 per month. Click here.
• You’re a programmer/developer who makes over $900 per month. Click here.
• You’re a designer (web, print, etc) who makes over $900 per month. Click here.
• You’re a business/marketing consulant who makes over $900 per month. Click here.
• You do something unusual (like training pets, babysitting) and make over $900 per month. Click here.

Random questions on side jobs

• You earn over $100,000/year doing independent consulting/freelancing. Click here.
• You’re an independent consultant interested in doing a “Freelancer Diaries” entry similar to the Money Diaries. Click here.
• You earn money on the side to support a lifestyle (i.e., you could make more, but you spend your time traveling, doing yoga, being with your family). Click here.
• You started out with a job that doesn’t typically translate to freelance work (e.g. a physicist, cardiac surgeon, middle manager) but figured out a way to earn money on the side. Click here.
• You overcame a limiting belief to become a successful freelancer (”Nobody will pay for this,” “Freelancers never make any money”). Click here.

For everyone

• For anyone (not just independent consultants): You spent over $1,500 on personal development in 2009 (courses, business travel, books, Spanish lessons, etc). Click here.

1. “I want to make passive income”

I love when people say this because you can tell they have no idea what they’re talking about. It’s kind of like trying to identify people with bad taste: Just go to the local Hometown Buffett. They’re all there.

I hate to say it but most of us don’t need to focus on passive income, we need to focus on improving our active income — our jobs. How? By becoming more skilled, solving more problems for our bosses, and basically out-hustling co-workers.

A lot of people don’t like to hear this because it means that instead of reaching for some dream of $500/day in passive income, they actually have to do some work right now at their jobs. But your job is the most likely place you can significantly increase your income.

Solution: Get better at your job and negotiate your salary. Here’s how:

2. “If I just try harder, I can save more.”

This is like a fat man swearing off sugar and delicious Taco Bell. Not even swearing it off, just saying he can swear it off “some day.” The truth is, we all know we need to save money, exercise more, call our family regularly…but there are serious barriers to doing all of these.

There is significant research indicating that simply trying harder will not help you get started investing.

Solution: Automate your finances so you’re not dependent on your willpower.

• Personal finance is not about more willpower, including specific details on my automation system for your finances & a 12-minute tactical video
• The psychology of passive barriers (why we can’t seem to do things we “know” we need to do)

3. “I’m going to start keeping a budget”

Do you guys remember when I made fun of stupid frat-boy business ideas, the worst one being when a bunch of dudes get together and decide to start a t-shirt company?

This is like that, only for grownups. At some point in our lives, each one of us will get motivated and decide, “Yes! I’m going to track my spending.” This will last about 10 minutes until we realize it’s (1) really hard, (2) we don’t like ourselves when we objectively analyze our spending, and (3) it’s much easier to do nothing than to subject ourselves to the pain of budgeting.

In fact, I am going to quote a very wise man on this one: myself. Here, directly from my book, are my thoughts on budgeting:

“Create a budget!” is the sort of worthless advice that personal-finance pundits feel good prescribing…Who wants to track their spending? The few people who actually try it find that their budgets completely fail after two days because tracking every penny is overwhelming. Amusingly, in a 2007 survey by bankrate.com, 75 percent of Americans said they have a budget—which is complete nonsense. “There’s probably a lot of wishful thinking in this response,” says Jared Bernstein, director of the Living Standards Program of the Economic Policy Institute. “It’s probably more accurate to say that three-quarters think they should work on a monthly budget.” My kind of man: exposing the delusions of people everywhere!”

Solution: Create a Conscious Spending Plan that will let you spend extravagantly on the things you love, as long as you cut costs mercilessly on the things you don’t.

• Conscious Spending: How my friend spends $21,000/year going out
• Full Conscious Spending Plan (with specific recommendations on percentages for each category) is available in my book

4. “My friend goes on vacation 4x a year and he makes less than me!”

Your friend is either a highly skilled practitioner of Conscious Spending, or an idiot. What’s funny is this becomes more true as you get older, yet we get even more jealous. Think about it: How many times have you heard one of your parents ask the other one, “Why can’t we go on vacation like they do?” without understanding how their spending breaks down?

Odds are, they’re not conscious spenders, but rather overspenders.

The single-best book on this is the Millionaire Next Door, where we learn surprising facts about the average millionaire: 80% are first-generation affluent, invest 15%-20% of household income, buy used cars, and rarely buy expensive watches or suits. They’re the ordinary neighbors who are saving money instead of spending it on a new Mercedes.

Solution: Would you look at a bunch of blue whales for advice on losing weight? Then why would you look at your ordinary friends, who are making ordinary money decisions, and will end up with ordinary results — not having enough money — as role models? Refocus your financial aspirations to people you value and their conscious decisions, not showy displays of wealth from people who are poor role models. If you suspect they can’t afford it, they probably can’t.

5. “I’m different than everyone else…I don’t need to save up for a wedding/kids/car/life insurance”

This is also known as, “Ugh, Ramit, I’ve already done all the stuff you’ve told me…now what?”

People are delusional about what will happen in the next 10 years. For example, if you’re in your 20s, the next 10 years will bring kids, a new car, a mortgage, taxes, insurance, maintenance, travel, life insurance, medical insurance….etc.

Every day I get frustrated people who tell me they’ve implemented all my strategies, yet when I tell them the next step is to implement the Ten Year Savings Strategy — where they save for the most likely things they’ll encounter within ten years — they become oddly dismissive.

Why? Because it’s not sexy. They want advanced “tips” and “tactics” to do something cool…even though saving money for the things they will almost certainly need is the most pragmatic thing to do. They actually say things like this (a real comment):

“First of all, I’m not getting married. No, this isn’t just the talk of someone who can’t see far enough into the future. We all know the only benefit of getting married is in avoiding divorce.”

Solution: If you think you’ve already optimized your finances 100%, use my Ten Year Savings Strategy and ask a few people 10 years older than you what they wish they’d saved for. Then do it. Oh yeah, and if you’re “sure” you’re not going to have kids or get married because it always ends in divorce, just go hang out with your 14-year-old friends and come back here in 10 years.

• The Ten Year Savings Strategy: Saving money after you’ve already handled the basics
• Why do delusional people think their spending will be different than other people’s?

6. “I’m going to invest in stocks”

I am getting so mad typing this that I don’t even know where to start. First of all, let me acknowledge that fewer than 5% of people will probably ever say this, since most people don’t invest at all, then turn 40 and get scared, call their HR rep, set up some kind of mis-allocated 401(k) plan, and then go on their merry way whistling and eating walnuts.

So if you’re thinking about this, it’s actually a good thing — it means you’re probably thinking about investing far sooner than others.

Unfortunately, “investing” does not mean picking stocks. It also does not mean buying a house, but that’s another story.

Even the fanciest portfolio managers fail to beat the market most of the time, which is why I argue for target-date funds, where you simply pick a fund determined by your age, set up automated payments, and get on with your life.

It’s also critically important to note that your asset allocation is more important than the individual investments you make. Think about it like this: If you write a book, your Table of Contents is more important than any individual word you write. Yet people obsess about the words instead of spending the bulk of their time on the TOC.

Solution: Stop trying to pick stocks. Instead, automate your investments with target-date funds or, if you really want to control your investments, a group of low-cost index funds.

• Behavioral psychology/economics on why you are not a good stock-picker
• Full chapter on why investment “experts” are overrated and hilariously wrong in my book, along with another chapter on specific ways to automate your investments with sensible, long-term investments

7. “Money is just for greedy people…I don’t need to worry about this stuff”

No it’s not. This is the excuse of lazy people who don’t want to spend a weekend learning about money, but instead worry and complain about it for the rest of their lives. I’ve said it since this site came out: “Rich” isn’t just about money, it’s living a rich life, whether it’s buying nice clothes, traveling around the world, spending extravagantly on your hobbies, or spending as much time with your friends/family as possible.

But part of that is money. If you haven’t optimized your money — whether you earn $35,000 or $350,000 per year — it doesn’t mean you’ve taken a principled stand against consumerism. It means you’re lazy.

Solution: Take one weekend to learn about your personal finances. Once you automate your money, you’ll never worry about it again.

• Automate your money
• Some of my favorite books on money
• My Scrooge Strategy premium tips, which will save you hundreds of dollars per year

Save hundreds and get a last-minute holiday gift. I’ve recently added new premium tips to The Scrooge Strategy to help you save money, including:

• How to save $940 on domestic flights
• Using cognitive dissonance to force yourself to save money,
• Specific phone calls to make once/year to save hundreds

…and lots more. Sign up for a 1-month free trial at The Scrooge Strategy.

Once-a-year gift: Sign up by December 24th, 2009, and you’ll get a free gift Scrooge Strategy subscription to give to a friend, including proven tips to save, earn more, and optimize spending on day-to-day purchases.

1. Sign up for Scrooge Strategy
2. You’ll receive an email with instructions on adding a complimentary subscription for a friend. As long as you’re a member, they’ll stay a complimentary member. They’ll receive their subscription on Christmas day.

Since then, Tim Ferriss has become a good friend of mine and we’ve traded strategies on writing, testing, and automation.

The updated & expanded edition of his book, The Four Hour Workweek, comes out today. I convinced him to run the preface here — where he explains what’s new, including detailed case studies and updated resources for virtual assistants and automation. This is the first time you’ll see it anywhere.

If you haven’t already read the book — or even if you have — this version contains all-new material to help you focus on the things that matter, and ruthlessly eliminate the unnecessary obligations from your life. I’ve read the new edition and it’s very good.

Below, see an invitation to get a private hour with Tim and me to answer any question you want – about virtual assistants, international traveling, automating your finances, marketing, or your own career questions.

Tim, take it away.

Tim Ferriss: Preface to the Updated and Expanded Edition

The 4-Hour Workweek was turned down by 26 out of 27 publishers.

After it was sold, the president of one potential marketing partner, a large bookseller, e-mailed me historical bestseller statistics to make it clear—this wouldn’t be a mainstream success.

So I did all I knew how to do. I wrote it with two of my closest friends in mind, speaking directly to them and their problems – problems I long had – and I focused on the unusual options that had worked for me around the world.

I certainly tried to set the conditions for making a sleeper hit possible, but I knew it wasn’t likely. I hoped for the best and planned for the worst.

May 2nd, 2007, I receive a call on my cell phone from my editor.

“Tim, you hit the list.”

It was just past 5pm in NYC, and I was exhausted. The book had launched 5 days before, and I had just finished a series of more than 20 radio interviews in succession, beginning at 6am that morning. I never planned a book tour, preferring instead to “batch” radio satellite tours into 48 hours.

“Heather, I love you, but please don’t $#%* with me.”

“No, you really hit the list. Congratulations, Mr. New York Times bestselling author!”

I leaned against the wall and slid down until I was sitting on the floor. I closed my eyes, smiled, and took a deep breath. Things were about to change.

Everything was about to change.

Lifestyle Design from Dubai to Berlin

The 4-Hour Workweek has now been sold into 35 languages. It’s been on the bestseller lists for more than two years, and every month brings a new story and a new discovery.

From The Economist to the cover of the New York Times Style section, from the streets of Dubai to the cafes of Berlin, “lifestyle design” has cut across cultures to become a worldwide movement. The original ideas of the book have been broken apart, improved, and tested in environments and ways I never could have imagined.

So why the new edition if things are working so well? Because I knew it could be better, and there was a missing ingredient: you.

This expanded and updated edition contains more than 60 pages of new content, including the latest cutting-edge technologies, field-tested resources, and—most important—real-world success stories chosen from more than 400 pages of case studies submitted by readers.

Families and students? CEOs and professional vagabonds? Take your pick. There should be someone whose results you can duplicate. Need a template to negotiate remote work, a paid year in Argentina, perhaps? This time, it’s in here.

The Experiments in Lifestyle Design blog (www.fourhourblog.com) was launched alongside the book, and within 6 months, it became one of top 1000 blogs in the world, out of more than 120 million. Thousands of readers began to share their own amazing tools and tricks, producing phenomenal and unexpected results. The blog became the laboratory I’d always wanted, and I encourage you to join us there.

The new “Best of the Blog” section includes several of the most popular posts from the Experiments in Lifestyle Design blog. On the blog itself, you can also find recommendations from everyone from Warren Buffett (seriously, I tracked him down and show you how I did it) to Mike Shinoda of Linkin Park and chess prodigy Josh Waitzkin. It’s a experimental playground for those who want better results is less time.

Not “Revised”

This is not a “revised” edition in the sense that the original no longer works. The typos and small mistakes have been fixed over more than 40 printings in the US. This is the first major overhaul, but not for the reason you’d expect.

Things have changed dramatically since April 2007. Banks are failing, retirement and pension funds are evaporating, and jobs are being lost at record rates. Readers and skeptics alike have asked: can the principles and techniques in the book really still work in an economic recession or depression?

Yes and yes.

In fact, questions I posed during pre-crash lectures, including “how would your priorities and decisions change if you could never retire?”, are no longer hypothetical. Millions of people have seen their savings portfolios fall as much as 40% or more in value and are now looking for options C and D. Can they redistribute retirement throughout life to make it more affordable? Can they relocate a few months per year to a place like Costa Rica or Thailand to multiply the lifestyle output of their decreased savings? Sell their services to companies in the UK to earn in a stronger currency? The answer to all of them is, more than ever, yes.

The concept of lifestyle design as a replacement for multi-staged career planning is sound. It’s more flexible and allows you to test different lifestyles without committing to a 10- or 20-year retirement plan that can fail due to market fluctuations outside of your control. People are open to exploring alternatives (and more forgiving of others who do the same), as many of the other options –- the once “safe” options — have failed.

When everything and everyone is failing, what is the resume cost of a little experimentation outside of the norm? Most often, nothing. Flash forward to 2011; is a job interviewer asking about that unusual gap year? “Everyone was getting laid off and I had a once-in-a-lifetime chance to travel around the world. It was incredible.” If anything, they’ll ask you how to do the same. The scripts in this book still work.

Facebook and LinkedIn launched in the post-2000 dot-com “depression”. Other recession-born babies include Monopoly, Apple, Facebook, Clif Bar, Scrabble, KFC, Domino’s Pizza, FedEx, and Microsoft. This is no coincidence, as economic downturns produce discounted infrastructure, outstanding freelancers at bargain prices, and rock-bottom advertising deals—all impossible when everyone is optimistic.

Whether a year-long sabbatical, a new business idea, re-engineering your life within the corporate beast, or dreams you’ve postponed for “some day”, there has never been a better time for testing the uncommon.

What’s the worst that could happen?

I encourage you to remember this often-neglected question as you begin to see the infinite possibilities outside of your current comfort zone. This period of collective panic is your big chance to dabble.

It’s been an honor to share the last two years with incredible readers around the world, and I hope you enjoy this new edition as much as I enjoyed putting it together.

I am, and will continue to be, a humble student of you all.

Un abrazo fuerte,

Tim

April 21th, 2009

San Francisco, California

Get a free, private hour with Tim Ferriss and Ramit Sethi.

Buy the new edition in the next 24 hours and you’ll get access to a special live 1-hour webcast where Tim and I will answer any question you can throw at us, including questions about finances, starting a business, writing a book, using virtual assistants, optimizing lifestyle design…or whatever you can come up with.

1. Buy The Four Hour Workweek expanded & updated edition today, December 15th, 2009
2. Forward your receipt to 4hww@iwillteachyoutoberich.com and I’ll send you instructions on attending the private webcast

Five years ago, when I started this site, I never thought I’d be able to fly in a team to spend a week basically doing cool things. But with the help of Charlie, Jeff, Matt, and Susan (and others), you’re going to see amazing things next year.

In January, we’ll show you a glimpse of what we’re working on, so stay tuned.

P.S. Here’s a Seth Godin project I collaborated on with people like Gary Vaynerchuk, Elizabeth Gilbert, Merlin Mann, Arianna Huffington, Jason Fried, Dan Ariely, and Tony Hsieh. Enjoy.

Today’s post is by a 27-year-old woman who lives in San Francisco without a car, and commutes by train to work. She tracks her spending extremely well. But does she ignore the Big Wins to focus on smaller savings?

* * *

Day 1
7:30 a.m.: Saturday. Wake up around the time I get up for work. A little annoyed but I can’t fall back asleep so I get up and get coffee at the specialty coffee shop down the street. They are a little expensive, but really good so I try to limit myself to one a week. Spent $3. On my way out I pick up a check at the front desk. I rent out my parking space and it’s the beginning of the month. Gain $250.
10:20 a.m.: Resisted the urge to buy breakfast while I was out, thinking I could whip up something at home. I have bacon but don’t have eggs. I don’t have anything to make for lunch next week either…so I decide it’s time to go grocery shopping. I get some ham, eggs and hotdogs and the rest is all frozen pre-made food, which I know is bad but I promise myself I will try to eat some fruits and veg this week as well. $2 for the bus, $47.21 at Trader Joe’s.
12:30 p.m.: No plans today so I’m just staying home and cleaning up my apartment and other tasks that I’ve put off all week. I get on my computer and check email and various blogs, and then the I tally up what I’ve spent this week and enter it into a Google spreadsheet. I track every penny I spend. It sounds a bit weird to most people but I really rather enjoy it and finding out how much I spend on stuff. I usually try to enter it as soon as I get to a computer, but sometimes receipts just pile up. For purchases without a receipt I make a note on my iphone. It’s really just informational for me since I make enough now to cover anything I could want to buy, but I started doing it when I was a poor grad student to make sure I wasn’t spending more than I brought home. Since the beginning of the month I add up my expenses for last month. Without counting rent, I’ve spent a total of $1967.30 for the month of September and it breaks down as follows: $117.75 for transportation; $235 for health care; $140.29 eating out; $153.18 for alcohol/wine; $757.83 for household things (including a couch off craigslist for $680); $12.05 for toiletries; $134.76 for electronics (bought a GPS); $34.97 in entertainment (tickets to museums, movies, shows etc; Netflix subscription) and $32.94 in misc stuff. Some of the things I split with my boyfriend, like the couch and the Netflix subscription. For those curious, my rent is $2,020 a month for a one-bedroom in San Francisco which I split with my boyfriend. I also look up how much I’ve spent on my phone minutes. I don’t talk on the phone a lot so I’m on a T-mobile pay-as-you-go plan on an jailbroken iPhone. September’s phone minutes cost $14.03. I get data from wherever there is open wifi access. I get the mail and Wired mag has sent me yet another renewal notice. It’s actually close to renewal time so I decide to finally do it. $20 for a 2-year subscription.
2 p.m.: I get a couple of emails from various financial intuitions about successful money transfers. I schedule nominal amounts (~$150) of money to be pulled out of my checking to my savings and an index fund after every paycheck, just so I’m saving and investing but I don’t have to think about it. The start of a new month is always an interesting time for my finances, but now everything is in order and I can get off the computer. Phew!
4 p.m.: For the rest of the day I putter around the apartment while streaming Netflix. Total spent today: $72.21. Total gained: $250

Day 2
9:30 a.m.: Sunday. Get up, shower and make myself a nice breakfast of eggs, ham and toast and a cup of Earl Grey tea. I park myself in front of the computer while I eat and read the news. Unemployment is at 9.8% now. Thankfully we both still have our jobs. I chat with boyfriend on skype. He’s out of the country and coming back on Wednesday.
12:20 p.m.: I take the bus to meet up a couple of friends for snacks and drinks. We’re going to the premiere of an indie film that we all worked on, and then having dinner afterwards. Bus fare there $2, Snack and drinks pre-show $25, Tacos afterwards $14. I bought 2 tickets for the event last week for $20, so I’m not sure if I’m supposed to count it for today.
9:15 p.m.: Bus Fare Home: $2. Total spent today: $43 (doesn’t include the tickets I paid for last week.)

Day 3
7:30 a.m.: Monday. Get up, get ready for work and make a cup of tea. I walk 5 minutes to the train station, grab a free newspaper and enjoy the ride. I have a monthly pass that is taken out of my pay pre-tax. A free shuttle connects the train station to the building where I work. Recent layoffs at work has increased my workload a bit, so I have a busy day ahead.
11:15 a.m.: Get bored with work so I decide to check my bank account for suspicious activity. Everything looks normal, as it does most of the time. I have about $1,750 in my checking account and $36 in credit card charges. The $1,750 is my budget for this month (not including rent), which equals about one paycheck. Every month I “zero out” my checking account by moving any money left to an ING savings account and only spend what I earn that month. It sounds nutty but that’s how I keep a budget. If I spend over that amount I have to really think if it is worth the hassle of pulling it back out of my ING account. I’ve tracked my spending for long enough to know that’s more than enough for most months – so I tend to spend my money freely.
12 a.m.: Lunch time! I have some pre-packaged Indian food from my Trader Joe’s run on Saturday.
4 p.m.: Around this time I start to zone out and think about dinner. I poke around epicurious for delicious looking recipes. Something baked would be nice….
6:44 p.m.: I arrive back in the city. I was interrupted with work while on my recipe search so I won’t be cooking tonight. I come home and bake a goat cheese pizza I got on Saturday and pour myself a glass of wine.
7 p.m.: I eat in front of the TV, putting in the Netflix DVD I got in the mail today and relax for the rest of the evening. Total spent today: $0

Day 4
7:30 a.m.: Tuesday. Same routine as yesterday. My weekdays pretty much all look the same, but this week is interesting because I’m taking Wednesday to Friday off!
9 a.m.: UGH. Arrive at work. Since I’m gone the rest of the week I have a bunch of meetings crammed into today, plus there is work I need to hand off before I run off on vacation.
11:40 a.m.: Coworker’s farewell lunch. A very delicious $20.
5:50 p.m.: Train arrives back in the city. I decide to eat something fresh tonight so I go to the grocery store across the street from the train station. I pick up an Ahi tuna steak, some yogurt and a pineapple. I live so close to the grocery store that when I buy fresh stuff I only buy for one meal. Spent $10.30
6:15 p.m.: Come home, pour a glass of wine, and make some rice. I sear the tuna and enjoy my dinner in front of the TV. Snack on pineapple the rest of the evening.
8:36 p.m.: Get kind of bored and surf Target.com. There’s a ring I’ve been eyeing but last time I checked it was sold out. OH WOW I CAN’T BELIEVE IT it’s back in stock.You get free shipping if you spend $50, so I look around and find some shoes and sweater that is suitable for work. Total for my order is $67.86. Total Spent today: $98.16

Day 5
7:30 a.m.: Wednesday. OMG vacation! Why am I up? Stupid alarm clock… I stay in bed reading the news on my iPhone out of principle.
9 a.m.: Boyfriend’s plane arrives around 1 p.m. I pace around and decide to go downtown to watch tourists. I get a latte at Starbucks ($2.90) and buy some eye cream at Sephora ($43.80), plus bus fare for $2
11:25 a.m.: Come back home and check plane status — estimated arrival is 20 minutes early. I log on to Zipcar and book a car. WTF! the car that’s parked in my building is already booked! I guess I should have done it earlier….Instead, I book a car that’s a block away. Current estimate for Zipcar charges is $28.74 for a 3 hour reservation. Boyfriend will expense that as part of his trip so I won’t be paying for it.
1:30 p.m.: Pick up boyfriend at the airport. Since we don’t have a car, often we decide to go shopping for heavy things when we get a Zipcar. We get a bag of rice and a case of my favorite wine plus some other groceries while we’re at it. Total grocery: 169.06
5 p.m.: We unpack for a bit and then head down to happy hour at the sushi place down the street. 4 rolls, 3 cocktails and 1 beer later, we are out $45.22 Total Spent today: 262.98. A bit much for one day but that bag of rice and case of wine will last for a while.

Day 6
8 a.m.: Thursday. I make breakfast while boyfriend makes coffee. We both have the rest of the week off, which is nice.
12:30 p.m.: We decide to have a day of unpacking at home, but for lunch we make a trek to our favorite taco truck. Their burritos are huge so we split one ($7.50). The truck is halfway to Trader Joe’s so we go check it out. We have plenty of food at home already so we didn’t buy much – just some more ham for breakfast and some ground beef and chicken stock. Total $16.31 + $4 bus fare.
2 p.m.: My body lotion stopped pumping this morning so I take a knife and cut open the bottle. I can get another several weeks of lotion just digging out what’s left on the bottom. Since I’m writing this diary I can imagine Ramit mocking my “frugal” habits while throwing a cup of pennies over his head – LOL. To each his own, I guess, but I don’t get the attitude that I should be wasteful just because I can afford to be. I also reuse my ziplock bags depending on what was in it and save medium to large cottage cheese or yogurt containers, but that’s another story for another day. I am a firm believer in the saying “waste not, want not.” It wasn’t until recently that I became this affluent (and by affluent I mean thoroughly middle class), and I’m not going to take it for granted. Total spent today: $27.81

Day 7
8:30 a.m.: Friday. I have to say, my ham breakfast is delicious.
11:30 a.m.: I feel like a shopping trip today so we take the car out to Ikea, Target and Petsmart. Zipcar for 3.5 hours ($33.54); Bridge Toll ($4); Target (clothes hangers and cleaning supplies – $4.68); Ikea (plant, cushion, pet toy and a soft serve – $21.83); Petsmart – Forty some odd dollars, but I have a $100 gift card from my credit card rewards.
3 p.m.: I check my email and PG&E has sent me a bill. $22.99 for last month that I pay right away.
5:15 p.m.: Happy hour! There’s a place nearby that is doing 50c oysters and I love oysters. Total $38.00 for the oysters and drinks. Afterward, we take a walk up the Embarcadero (the waterfront) and watch tourists at Fisherman’s Wharf.
9 p.m.: $4 bus fare back home. Total spent today: 129.04

In Sum
Total for the week: $633.20. It’s a bit much for a typical week, but I was on vacation for a good chunk of it. Most of the spending was on food, either eating out or grocery and I also stocked up staples (as much as wine is a “staple”). It’s still early in the month but I’m well within my budget so I should be fine the rest of the month. I am perfectly at ease with my spending this week.

My thoughts

• I love that she rents out her parking space to earn $250/month. If you’re interested in earning more, I’ll be announcing something next month…sign up here to get details first.
• I don’t know how long she’s been tracking her money, but she’s skilled at managing costs and monitoring her spending.
• She understands her own behavior and how to strategically apply barriers to control her behavior. Here’s a good sign of someone who’s expert at self-awareness: “If I spend over that amount I have to really think if it is worth the hassle of pulling it back out of my ING account. I’ve tracked my spending for long enough to know that’s more than enough for most months – so I tend to spend my money freely.”
• This is a move right out of my parents’ handbook: “My body lotion stopped pumping this morning so I take a knife and cut open the bottle.” I laughed out loud. My parents add water to the shampoo bottles.
• I’m a huge fan of how she takes vacation and enjoys it without guilt. That’s Conscious Spending at its best.
• Overall, I’m impressed with her self-awareness and control. This is someone who has a smooth financial system. Next steps include earning more (at work and on the side), investing more, double-checking her asset allocation, and planning for longer-term events. But these are natural and completely manageable from her current level.

Save hundreds per month. I’ve recently added new premium tips to The Scrooge Strategy to help you save money, including:

• How to save 20% on restaurants (this alone saves me hundreds per year)
• How to travel to the 10th-most expensive city in the world
• How to cut your cable costs and get them to pay YOU

…and lots more. Sign up for a 1-month free trial at The Scrooge Strategy.

I’m fascinated with the differences in how people around the world spend and save money. Having grown up around a lot of immigrants, I can tell you that their spending patterns are wildly different than people who were born and raised in America.

I was reminded of this a few days ago, when I got this email from an immigrant — let’s call him “Raj” — who’s been in the USA for 10 years.

“I live here in Fremont now and I have about $150K with me in my bank, most of it stored away like that for more than 1 year now because I needed it to buy a house. Now I have stopped thinking hard about the house, since I still dont know where I will settle down, especially after reading your book to avoid buying a house as an investment. I have started diverting most of the money to LifeCycle funds and I also opened an IRA.

In my case , as a Immigrant I still send a lot of money to India where somehow I have good contacts and usually earn much much more than 8% on my money. That is a strong reason I never bothered to learn about investing here. But now I am diversifying and investing both in the US and in India.”

This is extremely common, especially in the Bay Area: You get a single, highly skilled guy who moves from India to a well-paying job in the US. He works his ass off, lives in a small apartment, and sends some of his income back to his family in India. In a few years, he’s saved well into the 6 figures, at which point he either (1) goes back to India to find a bride and returns to continue working, or, less commonly, (2) moves back to India with a nice bit of cash.

This got me thinking. Why do immigrants save so much?

A few easy reasons come to mind:

• They’re more educated (see the Wikipedia entry on Indian Americans)
• They earn more (another Wikipedia link)
• Their culture encourages higher savings rates (see this Atlantic Monthly article). Culture is also why some immigrants are stereotyped as being poor tippers…which is often very true.

I’m especially interested in the cultural factors that affect financial habits. Here’s a fascinating one I didn’t know about from University of Michigan Retirement Research Center (PDF link).

Data from the EBRI Retirement Confidence Survey indicate that Hispanic-Americans who immigrate to the U.S. exhibit different savings behavior than other Americans.

They tend to save more for short-term goals such as education or a home purchase rather than retirement, and are extremely risk averse, placing greater importance on safety than rate of return on investments, relative to others (Kamasaki and Arce, 2000). In addition, they are more than twice as likely as natives to have provided financial assistance to family members (both in and out of the U.S.) and they are more likely to expect their retirement years to be financed by income of other family members (Kamasaki and Arce, 2000)…for many households these intergenerational transfers may be a major component of retirement saving and planning.

If you can’t understand those words, please go find an immigrant and ask him to translate for you.

I’m sure there are several other reasons that are far more complex. We’ve read the New York Times article on how obesity can be contagious, and I’ve long since argued that personal-finance behaviors are contagious, too — suggesting that maybe you should spend time around immigrants so their financial habits rub off.

In your experience, how do spending patterns differ between immigrants and (native) Americans?

Personally, I remember growing up and taking roadtrips to LA. With six of us, lunch at even a fast-food place would be expensive, so my mom packed lunch and we’d stop somewhere to eat it. We never had a summer home — the whole concept was foreign to us. We never had the most fashionable clothes, but my parents would spend a LOT of money on activities for my siblings and me, and didn’t bat an eye at an SAT prep course that cost thousands of dollars.

Like I said, immigrants have incredibly different spending patterns than most of us. What’s your best example of the difference in financial behavior between immigrants and (native) Americans?

Last month, I launched the 6-week I Will Teach You To Be Rich Boot Camp, which is currently happening on a private site.

I was tired of people reading and reading but not actually taking DOING the necessary steps to dominate their finances, so I put together a six-week Boot Camp to power through the logistics and help people start of 2010 with a fully automated system.

It doesn’t matter how many blogs or books or magazines you read — ultimately, results matter.

A few hundred people decided to invest in themselves to take action.

Let’s see what some of them have done in the first week alone.

She saved $75,000+ on her mortgage

“Refinanced my mortgage from a 5/1 interest only ARM at 6.375% to a 30 year fixed at 5.25%. This will cost me ~$100 more a month, but I am paying ~$120/mo on equity in my house instead of it ALL being interest to the bank. Assuming that my ARM interest rate would have stayed the same (almost certainly would rise with inflationary pressures I see coming) at 6.25%, refinancing to a fixed @ 5.25% will save me $75,106.47 over the life of the loan. This is a CONSERVATIVE estimate!

Thanks, Ramit, for the bootcamp. It made me take ACTION!”
–T. Munroe

Raised credit score

“With a single phone call, I raised my credit limit from $9,000 to $15,300 (even though I asked for $11,000).”
–E. Yee

Uncovered $200 in free gift cards

“I checked my rewards points on my credit card and found out I could redeem $200 dollars worth of gift cards, which could’ve gone without notice.”
–S. Shin

Saved $600/year on car payments

“OK, good one. I refinanced my car to both lower the interest and the monthly. Now I will own the car and have $53 less per month to pay. I can use this to ’snowball’ the payments on my credit cards. yes!”
–E. Friedman

Started paying off debt

“I have 3 credit cards with 5K spread across them. This week I have finally paid off one credit card (1K) off after having had a balance on it for 3 years. I was grinning with glee as I paid it off on Thursday!! 1 down two more to go. I plan to use the snowball effect to get the next one paid off in the next 6 weeks, making payments every two weeks. This will increase my credit utilization ratio and increase my Fico score. This will help me leaps in bounds as I have learned that my Fico score can save me thousands in interest rates as I prepare to take out student loans to go back to school!! Talk about big picture savings. Andy’s chart really struck home.”
–C. Dewey

This week’s material included:

• A live mini-talk from me on productivity & time-management tactics — with tactics I’ve never released
• A private webcast from ex-MyFico executive Andy Jolls of videocreditscore.com

The Boot Camp is closed, but if you want to get notified when the next one launches in 2010, click here.

So when a Wharton professor wrote a Washington Post column pointing out common myths of homeownership, I laughed at some of the comments.

• “Wow is this a poorly written and intentionally misleading piece of b.s. I wasted countless thousands renting apartments before wising up and buying a house. The author would rather have us all in housing collectives or government owned communes. Home ownership is still the American dream; don’t let this joker fool you.”
• “…Housing is a great long-term investment. Yes, it is. Because what the author doesn’t mention is that you have to have a place to live. If you rent, you have a place to live but the return on your ‘investment’ when you pay rent is 0.”
• “this guy gets paid for this s^^t?”

Newspaper sites have the worst commenters in the world.

But there was a comment that made my jaw drop. Can anyone spot the multiple problems with this comment?

“Another story: My father bought our family house in NJ for about $27k in 1964; sold it for $350k in 2000. Home ownership is terrific long-term investment.”

(Need a hint? This and this will help.)

Aww yeah.

Below, I’ve embedded the article itself. But this isn’t just to point out how Scarlett and I are destined to be together.

Notice how my content has been translated for a female audience. Same material, but it’s completely different than the way I write. It reminds me of some of my previous articles on prior guest post on women and money, specifically an article on how women’s magazines and men’s magazines write about money.

Below, click “Fullscreen” to read this:

More reading

• See my other press appearances
• See an extremely detailed interview on how I get press coverage

Today, I asked my friend Cal Newport to illustrate how he completely dominates as a post-doc at MIT, author of multiple books, and popular blogger. How does he do it all?

Cal writes one of the best blogs on the Internet: Study Hacks. His guest post shows how you can take I Will Teach You To Be Rich principles — plus many others — and integrate them into a way to use your time effectively.

Below, you’ll learn:

• How to use fixed-schedule productivity — similar to the Think, Want, Do Technique — to consciously choose what you want to work on and ignore worthless busywork
• When to say no — and how to do it
• How a $60,000-a-speech professional manages his time
• Case study: How to use email for maximum time productivity

Read on.

From Cal:

I recently conducted a simple experiment: I recorded the timestamps of the last 50 e-mails in my sent messages folder. These timestamps covered one week of my e-mail behavior, starting on Thursday, October 22nd and ending Thursday, October 29th.

My interest was to measure when during the day I spent time on e-mail. Here’s what I found:

Notice that over this week-long period, I didn’t send any e-mail after 7:00 pm, and only one e-mail after 6:00 pm. There’s a good explanation for this discipline: I end all work around 5:30 every day. No Internet. No computer. No to-do lists. Once I shutdown my day, it’s time to relax.

I must emphasize that I’m not some laid-back lifestyle entrepreneur who monitors an automated business from a hammock in Aruba. I have a normal job (I’m a postdoc) and a lot on my plate.

This past summer, for example, I completed my PhD in computer science at MIT. Simultaneous with writing my dissertation I finished the manuscript for my third book, which was handed in a month after my PhD defense and will be published by Random House in the summer of 2010. During this past year, I also managed to maintain my blog, Study Hacks, which enjoys over 50,000 unique visitors a month, and publish over a half-dozen peer-reviewed academic papers.

Put another way: I’m no slacker. But with only a few exceptions, all of this work took place between 8:30 and 5:30, only on weekdays. (My exercise, which I do every day, is also included in this block, as is an hour of dog walking. I really like my post-5:30 free time to be completely free.)

I call this approach fixed-scheduled productivity, and it’s something I’ve been following and preaching since early 2008. The idea is simple:

• Fix your ideal schedule, then work backwards to make everything fit — ruthlessly culling obligations, turning people down, becoming hard to reach, and shedding marginally useful tasks along the way.

The beneficial effects of this strategy on your sense of control, stress levels, and amount of important work accomplished, is profound.

The notion is not new. Tim Ferriss famously recommend strict time constraints in The 4-Hour Work Week. He argued that much of the work we do is of questionable importance and conducted at low efficiency. (He made a popular — if not somewhat dubious — appeal to Parkinson’s Law to support the point that more time does not necessarily lead to more results.) If we instead identify only the most important tasks, he said, and tackle them under severe constraints, we’d be surprised by how little time we actually require.

In this article, I want to tell the stories of real people who successfully implemented this strategy – radically improving the quality of their lives without scuttling their professional success.

Jim Collins’ Whiteboard

Jim Collins has sold over seven million copies of his canonical business guides, Good to Great and Built to Last. He attributes the success of these books to his research discipline. As he revealed in a New York Times profile from last May, he leads teams of up to a dozen undergraduates in the process of information gathering. His books require, on average, a half-decade of time and a half-million dollars of expenses to get from their initial premise to the polished ideas. When he enters his “monk” mode to covert this research into a manuscript, he produces, at best, a page a day.

In other words, Collins is a hardworking guy. You would expect, therefore, that like many hard-charging business-world types he would be a blackberry-by-the-bedside workaholic.

But he’s not.

Scrawled on a whiteboard in the conference room of Collins’ Boulder, Colorado office is a simple formula:

Creative 53%
Teaching 28%
Other 19%

Collins decided years ago that a “big goal” in his life was to spend half of his working time on creative work — thinking, researching, and writing — a third of his time on teaching, and then cram everything else into the last 20%. The numbers on the whiteboard are a snapshot of his current distribution. (He tracks his time with a stop watch and monitors his progress in a spreadsheet.)

Collins is a pristine example of fixed-schedule productivity in action. An author with his level of success could easily fall into an overwork trap: long nights spent updating twitter, signing partnerships, building elaborate web sites and launching product lines, speaking at every possible venue. But he avoids this fate.

Even though Collins demands over $60,000 per speech, for example, he gives fewer than 18 per year, and a third of these are donated for free to non-profit groups. He doesn’t do book tours. His web site is mediocre. He keeps his living expenses in check so that he’s not dependent on drumming up income (he and his wife have lived in the same California bungalow for the past 14 years), and he keeps only a small staff, preferring to bring on volunteers as needed.

“Mr. Collins…is quite practiced at saying ‘no,’” is how The Times described him. (He once wrote an article for USA Today titled: “Best New Years Resolution? A ‘Stop-Doing’ list.”)

His fixed-schedule approach to life comes from his simple conviction “to produce a lasting and distinctive body of work,” and his “willingness…to focus on what not to do as much as what to do” has made that possible.

He’s not alone in reaping the benefits of the fixed-schedule approach…

Elizabeth’s Conversion

When Elizabeth Grace Saunders started her first business, a professional copy-writing service, her schedule has “hazardous.”

“I would answer e-mails after going out with friends,” she told me, “and stay up until 2 a.m. finishing projects.”

At some point, she snapped. “I’m not a secretary,” she declared. “I’m not required to jump to respond to everything that crosses my path.”

Saunders adopted a 40-hour a week schedule. This new structure had two immediate impacts. First, she found herself focusing only on the most important tasks. With only a few hours to spare on business development, for example, she couldn’t justify wasting time with the small, ineffectual website tweaks and exploratory e-mails that used to keep her up late into the night. Instead she focused on the core activities that produced results, such as sales calls or the development of new products. The focus generated by this constraint ended up generating more results than her previous schedule, which was more expansive, but also more scattered.

The second impact was her discovery that she could teach her clients how to treat her.

“I’ll answer your e-mail within 24 hours (not 24 minutes), I need notice before starting a project, I will say ‘no’ if my schedule for the near future is already full, and I might schedule meetings up to a month in advance.”

“Choosing how and when I respond to requests has had a dramatic impact,” Saunders notes.

Friends and clients were impressed enough with Saunders’ lifestyle that she eventually left copywriting to become a “time coach” that works with other women in business to achieve similar results. (Her flagship service is called a Schedule Makeover.)

Here’s a typical day in Saunders’ life:

• She’s up at 6 and by 8:30 she’s at the computer.
• The first 1 – 2 hours of her work day are spent doing what she calls “routine processing,” which includes checking calendars, clearing e-mail inboxes, and cementing a plan to follow for the rest of the day. As Saunders describes it, this morning routine prevents her from wasting time deciding how to start, and it frees her of the “compulsion” to be checking e-mail throughout the day.
• She continues with an hour of sales calls. This is often the most dreaded activity for the solo entrepreneur. But by having a regular place in her constrained schedule, she avoids pushing it aside.
• The rest of the day follows the schedule she fixed in the morning: usually a mix of client assignments and at least one business development activity.
• By 5:30 she’s done.

Most entrepreneurs work well past 5:30 (and claim that this is absolutely unavoidable), but Saunders’ business is thriving. The reason is clear: her fixed schedule forces her to do the work that produces results (sales calls, client assignments, major business development activities) and eliminates the hours of pseudowork that many use to fill their day in an effort to feel “busy” (tweaking websites, compulsive e-mail checking, chasing down small business development opportunities).

Saunders is not the only young entrepreneur I’ve met who was surprised to discover that doing less helped the bottom line…

The Baby Factor

Michael Simmons, a good friend of mine, reported a similar story. His company, the Extreme Entrepreneurship Education Corporation, expanded quickly in the years following college graduation. Around the time I was reading The 4-Hour Work Week, I started to discuss the possibility that Simmons tone down the hours. It was his company, I argued, so why not take advantage of this fact to craft an awesome life.

Among the specific topics we discussed, I remember suggesting that Simmons cut down the time spent on e-mail and social networks.

“This isn’t optional for me,” he explained. “Any of these contacts could turn into a important partner or sale.”

But then Simmons’ daughter, Halle, was born.

Simmons’ work schedule reduced from 10 to 12 hours days to 3 to 5 hour days. He took care of the baby in the morning, then worked in the afternoon while his wife, and company co-founder, took over the childcare responsibilities. Evenings were family together time.

Halle forced Simmons into the type of constrained schedule that he had previously declared impossible. And yet the business didn’t flounder.

“The baby turns ’shoulds’ into ‘musts’,” Simmons explained to me. “In the past I used to put off key decisions, or saying ‘no’, because I didn’t want to deal with the discomfort. Now I have no choice. I have to make the decisions because my time has been slashed in half.”

“Since out daughter was born about a year ago, our business has more than doubled.”

The Fixed-Schedule Effect

Collins, Saunders, and Simmons all share a similar discovery. When they constrained their schedule to the point where non-essential work was eliminated and colleagues and clients had to retrain their expectations, they discovered two surprising results.

First, the essentials — be it making sales calls, or focusing on the core research behind a book — are what really matter, and the non-essentials — be it random e-mail conversations, or managing an overhaul to your blog template — are more disposable than many believe.

Second, by focusing only the essentials, they’ll receive more attention than when your schedule was unbounded. The paradoxic effect, as with Collins’ bestsellers, or Saunders and Simmons’ fast-growing businesses, you achieve more results.

Living the Fixed-Scheduled Lifestyle

The steps to adopting fixed-schedule productivity are straightforward:

1. Choose a work schedule that you think provides the ideal balance of effort and relaxation.
2. Do whatever it takes to avoid violating this schedule.

This sounds simple. But of course it’s not. Satisfying rule 2 is non-trivial. If you took your current projects, obligations, and work habits, you’d probably fall well short of satisfying your ideal schedule.

Here’s a simple truth that you must confront when considering fixed-schedule productivity: sticking to your ideal schedule will require drastic actions. For example, you may have to:

• Dramatically cut back on the number of projects you are working on.
• Ruthlessly cull inefficient habits from your daily schedule.
• Risk mildly annoying or upsetting some people in exchange for large gains in time freedom.
• Stop procrastinating.

In the abstract, these are all hard goals to accomplish. But when you’re focused on a specific goal — “I refuse to work past 5:30 on weekdays!” — you’d be surprised by how much easier it becomes to deploy these strategies in your daily life.

Let’s look at one more example…

Case Study: My Schedule

My schedule from my time as a grad student provides a good case study. To reach my relatively small work hour limit, I had to be careful about how I approached my day. I saw enough bleary-eyed insomniacs around here to know how easy it is to slip into a noon to 3 a.m. routine (the infamous “MIT cycle.”)

Here are some of the techniques I regularly used to remain within the confines of my fixed schedule:

• I’m ruthlessly results oriented. What’s the ultimate goal of a graduate student? To produce good research that answers important questions. Nothing else really matters. For some of my peers, however, their answer to this metaphysical prompt was: “work really long hours to prove that you belong.” It was as if some future arbiter of their future was going to look back at their time clock punch card and declare whether they sufficiently paid their dues. Nonsense! I wanted to produce a few good papers a year. Anything that got in the way of this goal was treated with suspicion. This results-oriented vision made it easy to keep the middling crap from crowding my schedule.
• I’m ultra-clear about when to expect results from me. And it’s not always soon. If someone slips something onto my queue, I make an honest evaluation of when it will percolate to the top. I communicate this date. Then I make it happen when the time comes. You can get away with telling people to expect a result a long time in the future, if — and this is a big if — you actually deliver when promised. Long lead times allow to you to side step the pile-ups (which will bust a fixed-schedule) that accrue when you insist on an immature, “do things only when the deadline looms” attitude.
• I refuse. If my queue is too crowded for a potential project to get done in time, I turn it down.
• I drop projects and quit. If a project gets out of control and starts to sap too much time from my schedule, or strays from my results-oriented vision: I drop it. If something demonstrably more important comes along, and it conflicts with something else in my queue, I drop the less important project. Here’s a secret: no one really cares what you do on the small scale, or what things you quit. In the end you’re judged on your results. If something is hindering your production of the important results in your field, you have to ask why you’re keeping it around.
• I’m not available. I often work in hidden nooks of the various libraries on campus, or from my apartment. I check and respond to work e-mail only a couple times a day, and never at night or on weekends. People have to wait for responses from me. It’s often hard to find me. Sometimes people get upset when they send me something urgent on Friday night that need done by Saturday morning. But eventually they get over it. Just as important, I’m not a jerk about it. I don’t have sanctimonious auto-responders about my e-mail habits. I just do what I do, and people adapt.
• I batch and habitatize. Any regularly occurring work gets turned into a habit — something I do at a fixed time on a fixed date. For example, I work on my blog in the afternoon after lunch. I write first thing in the morning. When I was taking classes, I had reoccuring blocks set aside during the week for tackling their assignments. Habit-based schedules for regular work makes it easier to tackle the non-regular projects. It also prevents schedule-busting pile-ups.
• I start early. Sometimes real early. On certain projects that I know are important, I don’t tolerate procrastination. It doesn’t interest me. If I need to start something 2 or 3 weeks in advance so that my queue proceeds as needed, I do so.
• I don’t ask permission. I think it’s wrong to assume that you automatically have the right to work whatever schedule you want. It’s a valuable prize that most be earned. And results are the currency you must spend to buy it. So long as I’m actually accomplishing the big picture goals I’m paid to accomplish, I feel comfortable to handle my schedule my own way. If I was producing mediocre crap, people would have a right to demand more access.

Conclusion

You could fill any arbitrary number of hours with what feels to be productive work. Between e-mail, and crucial web surfing, and to-do lists that, in the age of David Allen, grow to lengths that rival the bible, there is always something you could be doing. At some point, however, you have to put a stake in the ground and say: I know I have a never-ending stream of work, but this is when I’m going to face it. If you don’t, you’ll let this work push you around like a bully. It will force you into tiring, inefficient schedules, and you’ll end up more stressed and no more accomplished.

Fix the schedule you want. Then make everything else fit around your needs. Be flexible. Be efficient. If you can’t make it fit: change your work. But in the end, don’t compromise.

Cal Newport is an MIT postdoc, author, and founder of Study Hacks, the Internet’s most popular student advice blog.

1. Get proven, tactical tips on saving money. Check out my premium program, Scrooge Strategy, and get detailed tips to save hundreds of dollars each month.

2. Get more in-depth productivity tips. Cal and I recorded a 1+ hour interview together where we cover extremely detailed optimization and productivity strategies.

To get access — as well as select time-management and productivity tips — sign up below.