Youngdough.com

Big Change

2009-04-29T14:57:16Z

Last week I wrote that I was going to reveal a big change on this blog. Here it is.

Jonathon Mead’s ‘Reclaim Your Dreams’

2009-04-22T15:55:33Z

I’m a huge fan of quality personal development blogs, and for a long while the only ones I followed intently were Steve Pavlina, Scott Young, and Zen Habits. Fairly recently, I stumbled upon Illuminated Mind, the work of Jonathon Mead, and I’m thrilled that I did. For such a young newcomer, he has been immensely successful thus far, and I’m just one of many who have been genuinely impressed with his writing (Leo from Zen Habits apparently was- Jonathon is a regular contributor on his blog).

By means of Illuminated Mind, Jonathon freely challenges social norms in pursuit of no-holds-barred personal growth, and he makes his readers question deeply rooted beliefs that often go unquestioned. It’s really good stuff, and if you haven’t already, you should definitely check out his site.

Jonathon recently released his first e-book, ‘Reclaim Your Dreams‘, which makes a bold claim. In his own words- “In Reclaim Your Dreams you’ll learn how to resurrect your dreams from the grave of practicality and start making them a reality.’

I acquired a copy of this e-book, and it surpassed my already elevated expectations. This is truly a quality piece of work, and without giving away too much, I’d like to provide a strong case for why you should give it a shot.

The book is divided into two large sections. Part 1 is about removing the obstacles standing between you and your dreams. We (both personally and society as a whole) have ingrained many needless hurdles in our minds that prevent us from pursuing our biggest dreams. Jonathon identifies the most common among these, and provides explicit instructions on how to remove them.

The first part of the book is similar to de-bugging a piece of software, then reprogramming portions to fit a new purpose. We are ridding our mind of the irrationalities holding us back, then constructing the foundation from which we can successfully chase our dreams.

A lot of material out there immediately dives into how we can achieve our goals, but without acknowledging the mental roadblocks, our dreams are far less likely to manifest.

The rubber meets the road in the latter half of the book; Jonathon explains how to identify what one’s dreams are and how to begin taking the concrete actions to make them a reality.

I particularly found an enormous amount of value from the first section in part two, where three simple, yet deep, questions are posed:

1.) What are your dreams?

2.) What are your values?

3.) What is your purpose?

The percentage of people who could quickly and easily answer all three of these questions is probably extremely low, which is unfortunate. A lack of clarity on these issues likely means that we are spinning our wheels, completely unsure of where we’re going. This thought-provoking section alone is well-worth the price of the book.

I’ll leave my little summary at that, which just barely scratches the surface of what’s included in this e-book’s 85 pages. As if you can’t tell already, I easily feel that it’s worthy of a small investment. Unless you are perfectly content with where your life is now, or you’re 100% certain that you’re on the fast track to achieving all you life goals, than this book will provide genuine value.

One week from now, I’m going to reveal a big, big change with regards to the future of this blog. Stay tuned!

How to Hedge Against a Volatile Economy:

2009-04-15T12:34:13Z

Just as a farmer can hedge against changing crop prices, you and I can hedge against forces beyond our control; things like gas prices, interest rates, food expenses, and the housing market for instance. While many people assume such a role by default, we don’t have to be a victim to volatile changes in macroeconomic variables such as these. Here are a few ways you can effectively shield yourself (and potentially even profit) while everyone else is griping and complaining:

Energy Prices:

Remember how much press skyrocketing energy prices were getting last summer? It would be pretty naïve to doubt that we could see prices like that again in the near future; just wait until the global economy comes roaring back to life. That said, there’s absolutely no reason why we should simply wait for it to hit. In fact, now is the perfect time to set up hedges against this imminent happening.

We can conserve and cut back to an extent, but we all still feel the effects of rising energy prices on our finances. The extremely easy, yet effective, way to build a hedge is to invest in energy companies who directly benefit from higher prices. No time or skill to hand-pick a couple of strong investments? No biggie- just go with an ETF. With a single transaction, you get instant diversification among hundreds of energy companies. My weapon of choice is Vanguard Energy (VDE), although there are plenty of similar funds to choose from. When oil blows past $100 again, the higher cost of filling up the ride and powering your home will be offset by the gains realized through these energy holdings.

Food Prices:

Obviously we cannot stop eating, so we’re largely powerless to avoid rising food prices. However, there are some options here as well.

You could always try your hand in the futures market, but unless you have significant trading experience under your belt, you’ll likely be supplying the big players in the game with their consistent supply of newbie’s capital.

Just like the energy market, there are funds offering exposure to the agricultural commodities market for even the smallest of investors. This article lists some of the options. With a small investment, you can be in a conservative position to profit from rising agricultural prices.

There are also individual companies who stand to benefit from continued tightening of world food supplies. The Monsanto’s of the world have plenty of haters, but they are definitely here to stay. They’ll have a prosperous future as we must continue to feed more and more mouths with a fixed supply of land.

House Prices:

If you have recently had the opportunity to acquire a home during this incredible buying market (Joe), congrats. For many of us though, we aren’t currently in a position where we can directly invest in a house for ourselves. I’m probably 3-5 years away from seriously considering home ownership, and by that time prices will have rebounded sharply and mortgage rates will likely be far higher than they are now. This doesn’t automatically mean that people like me must miss this once-in-a-lifetime buyer’s market altogether though.

Once again, we can turn to recent financial innovations to obtain exposure to the broad housing market. Like the energy and food sectors, there are ETFs available that track the real estate market (IYR is one). As for individual companies, Lowe’s and Home Depot offer some rebound potential that should coincide with that of the housing market.

These ideas are by no means exhaustive; there are a million ways to take action. The point is that we are not completely at the mercy of what the economy does. You can either sit around and take whatever is dished up, or be proactive and take the reins. I’ll choose the latter.

This probably makes for a good time to link to my disclaimer.

No Private Student Loan Goal- an Update.

2009-04-08T12:12:08Z

Early last semester, I outlined an extremely ambitious financial goal for myself. With just under one year to work with, my goal was to not have to take out a private loan for the 2009-2010 school year. Nearly 7 months later, I figured I should give an update on how it’s progressing.

I’m managed to make some significant progress over the past half-year, closely following the plan I drew up last September. My small income while in school hindered me somewhat, but consistently saving seemingly small amounts adds up surprisingly fast. Pursuing this goal has only reinforced my fanatical obsession with funneling money into highly defined savings accounts on a regular basis.

Unfortunately, barring an unforeseen inheritance of other windfall between now and August, I will need private financing next year. As of now, I’ve saved about 35% of what I would need to completely forget about private loans. Given the price-tag of attending private college though, I don’t think that figure is too shabby.

Although I’m not technically going to succeed in achieving my goal, I certainly won’t consider it a failure. Had I not defined my desire to lessen the burden of college debt next year, I’d simply be waiting for the bill to arrive, complaining about the outrageous cost rather than proactively doing something about it. Now when my junior year’s tuition is due, it’ll be a huge relief to pay a good deal of it up front rather than financing my education almost entirely with borrowed money.

Think and Grow Rich: Initial Reaction.

2009-04-01T15:56:05Z

I bought this book several months ago, and after breezing through the first few chapters, I’ve struggled to make the time to read more. So I figured if I made it the subject of my post, that’d get me in gear. I’ve since started it over again, this time with a much more focused mind and a highlighter in hand.

It’s impossible to spend much time in the blogosphere and not hear mention of this book. After seeing it mentioned numerous times by various bloggers, then reading through the overwhelmingly positive reviews on Amazon, I figured it was worth about $8 to invest in a paperback version for myself.

The story behind the writing of this book is pretty incredible in itself. After interviewing the billionaire Andrew Carnegie and hearing his firsthand take on the ’secret’ of success, Hill went on to interview hundreds of the most successful people in the world (Edison, Ford, Rockefeller, Schwab, Roosevelt, Wrigley…). Over 20 years after his first meeting with Carnegie, Hill published Think and Grow Rich in 1937, which is a summation of what he learned from all those incredible people.

“Truly, ‘thoughts are things’, and powerful things at that, when they are mixed with definiteness of purpose, persistence, and a burning desire for their translation into riches, or other material wants.”

That opening line of chapter 1, ‘Thoughts are Things’, is a powerful one and it sets the tone for a quality opening chapter. I won’t give much away, but it reminds me a great deal of the law of attraction, which basically states that we attract into our lives whatever dominates our minds- whether it’s for better or for worse (hence, why optimism and pessimism are quite often self-fulfilling prophecies).

Of course, thoughts on their own don’t do squat. The world is full of people who dream big things but fail to accomplish anything worthwhile. Thoughts, however, are the first step to getting somewhere though- if you don’t consciously think about what you want, chances are you won’t get it. To get from A to B, you’ve got to constantly immerse your mind with thoughts of B and how you’re going to get there. Otherwise, you’ll most definitely stay stuck at A.

I was not disappointed in the slightest by the first chapter. I can already tell that this book is about far more than money and material success- or at least it can be applied well beyond those subjects. It should be a great book on achieving success of any kind, and I’m looking forward to continuing further. I’ll definitely be giving updates in the near future as I get deeper into Hill’s masterpiece.

A Simple Way to Boost Motivation

2009-03-25T13:05:57Z

In any long-term pursuit worth accomplishing, it’s often difficult to maintain a significant level of motivation for long. The first few days after outlining a big goal or starting a new habit are always easy, and it feels as if we’ll get to where we want to go easily.

The initial strong burst of motivation is usually pretty strong, but it’s almost always unsustainable. After it begins to subside, we must turn to self-discipline and willpower to keep on track. While strengthening your self-discipline muscles is extremely vital, the process can be frustrating and we can sometimes lose focus.

There’s a simple, yet highly effective, way to boost your motivation and help stay on course- don’t go at it alone. By including others, you can give yourself a huge advantage over flying a solo mission.

There are several ways to incorporate the support of friends and/or family.

1.) Make it a competition: Grab a buddy, decide on the what the terms are, develop a friendly wager, and get to work trying to outdo each other. The will to achieve is strengthened greatly with the element of competition.

2.) Be accountable to someone: Kind of like a ‘life-coach’ scenario. Give somebody the right to keep tabs on your performance and give a kick in the rear if you start slacking off.

3.) Tell everyone: The more people you tell, the more support you will get. Also, you’ll be far less likely to lose sight of your goals knowing that many others will know.

4.) Join a group: Whether in person or on the net, there’s probably a group dedicated to your pursuit.

My roommate and I recently began a fitness challenge- whoever’s abdominals are more defined by the last day of this semester wins. The loser has to pay $5. It may not seem like much, but there’s a significant psychological boost. My fitness level has been fairly stagnant for a while; I’ve been working pretty hard but haven’t been improving all that much . Hopefully this helps me break through to the next level.

We’re also thinking about adding another competition that involves more of our friends. It would include many different events, testing to find the most well-rounded physically. I hope we come up with something soon- it’d be all but guaranteed to help us achieve more.

I think it would be cool to develop some sort of a ‘financial challenge’ thing. This probably wouldn’t be as fun to the typical college student as a physical challenge, but it could be immensely beneficial.

Things Not to Cut

2009-03-18T13:15:21Z

In response to the recent economic conditions, people are cutting back in many, many ways. For the most part, this is good; America desperately needed to examine our spending ways and trim the fat.

Expenses that drain the bank without giving us much real value should automatically get the boot when tightening the reins. We can give up Starbucks lattes, cable TV packages, magazine subscriptions, and fast food runs without sacrificing too terribly much. In fact, we are probably better off without such trivialities- it feels good to shed them.

However, there are other expenses that, while not necessary to life like food or shelter, play an important role in our well-being. We can definitely scale back on such expenditures, but we lose a lot of benefits when we do. I’m talking about things like…

-Gym memberships or other fitness costs.

-Healthy eating habits.

-Things that improve productivity (cell phone, internet, etc…)

-Reasonable fun/recreation expenses.

Unless absolutely necessary, we shouldn’t cut things that add significant value to our lives. We essentially have to weigh the financial cost with the benefits received from the expenditure in trying to determine whether it is justifiable.

By eliminating too many sources of value, it’s likely you’ll at least temporarily improve your financial situation, but it probably won’t be worth it. Whereas it’s almost a relief to dump a lot of junk from our lives, cutting goods or services of genuine value is not pleasant. The feelings of despair that are already difficult to avoid only intensify when we remove important inputs from our lives.

When times are tough, one needs to be optimistic and operating at full mental capacity to break out of the rut. Living a deprived lifestyle is certainly a barrier to this recovery.

Spring Break on the Cheap

2009-03-12T18:11:29Z

Simpson’s spring break is this week, and my roommate and I just got back from our trip. Rather than going to Cancun or Florida to kill some brain cells, we opted to head west, driving through Nebraska, Colorado, Utah, Idaho, Wyoming, and South Dakota before arriving back in Iowa. We were definitely in the small minority of college students who headed for colder climates over spring break, but it was well worth it.

I used my ING ‘trips’ account to fund the adventure. I’ve said it many times before, but it’s so incredibly beneficial to save for specific purposes this way. I transferred the money out of ING a few days before we left, then I knew exactly how much I had to spend. I had absolutely no worries in the back of mind about the financial effects of the trip; as long as I stayed under-budget, I could spend 100% worry-free.

The trip itself was extremely cheap. We stayed in discount motels, ate mostly from food we brought with us, and benefited from gas under $2.00 and a Civic that averaged between 35-40 MPG. I ended well under my budgeted dollar-figure, so I’m simply putting the extra money back in ING.

The picture up above is me in front of Mt. Rushmore. Although it was really cold at times, it was awesome to see everything blanketed in fresh powder. Plus, it was really neat to travel through the mountain passes, Grand Teton National Park, and the Black Hills area when tourists are few and far between.

It felt really good to get back after putting 2,900 miles on the car in under 5 days, but now I’m already trying to think of what I’ll do next year.

SNL Tried to Warn Us…

2009-03-04T16:24:10Z

Who needs Suze Orman and Dave Ramsey to preach financial responsibility? I recently saw a hilarious Saturday Night Live skit that, in a little over two minutes, largely sums up why we are in such a financial mess right now. ‘Don’t Buy Stuff You Cannot Afford’, which originally aired in February of 2006, is a hilarious portrayal of the serious lack of financial common sense demonstrated by Americans.

I was really surprised that this skit is over three years old, airing before our credit-addicted economy began its inevitable cleansing process. If only America as a whole would have heeded the dire message behind the comedy, we could have mitigated the onslaught of destruction that we set ourselves up for. Instead, we ignored the signs of danger and continued to live our lives as the joke of a late night comedy segment, only reconsidering our ways when the party was clearly over.

We were completely ignorant to the imminent dangers from living beyond our means, preferring the short-lived highs from pursuing instant satisfaction. It was all fun and games before the bill arrived, but now we’re experiencing our self-inflicted punishment.

Anyways, enough ranting for right now. If you hadn’t already seen this, I hope you enjoyed it!

The State of The Housing Sector

2009-02-25T16:08:06Z

The housing market is in shambles, plain and simple. In communities across the country, thousands of once-vacated houses now sit empty, remnants of a burst bubble. The residential market has been unraveling for some time now, and every day it continues to deepen. At some point though a trough will form, leaving the market with nowhere to go but back up. Whether this point comes tomorrow or 18 months from now is really anyone’s guess, but it does have important implications for many.

At Debit vs. Credit, Joe recently wrote a post outlining a reason why he believes the housing market may have further to fall. This provoked me to gather my thoughts about the market and make a prediction for myself.

From this day forward, there are basically two possibilities…

Scenario 1.) The housing market will fall further:

There are no definite signs that the economic carnage is anywhere close to over. More job losses and lower income levels will equate to more foreclosures, flooding the housing market with an even greater supply glut while continuing to put downward pressure on prices.

The last few days on Wall-Street, in which stocks plunged to levels not seen in over a decade, indicate that the turmoil is still deepening. The housing market has taken an absolute beating over the past few years, but if the recession continues to worsen, it may be in for an even deeper slide.

Even if the market was ridded of the remainder of still-existing subprime mortgages, an ongoing recession would continue to wreak havoc on the housing market. As it stands though, we may be in for another round of foreclosures and bank losses due to outrageous lending practices. This segment from 60 Minutes, although a few months old now (it aired on 12/14), explains why another catastrophic wave of defaults could be bearing down (essentially from another round of subprime loans due to reset this year and into 2010- ‘Alt-A’ and ‘Option ARMs’).

Scenario 2.) The housing market is near a bottom.

Keynesian-style economics is on full-throttle now, as our government is racking up unprecedented deficits in a desperate attempt to spend our way out of this mess. President Obama’s recent announced housing plan is one such illustration, and it’s the biggest piece of news the real estate sector has received in quite some time.

The $275 billion dollar plan attempts to fight the problem in two ways. First, it directly spends $75 billion trying to keep people in their homes, hoping to slow the onslaught of foreclosures. The rest would likely go to financial backing for Fannie and Freddie. President Obama acknowledges that it won’t be a cure-all fix, but he believes it will save a great number of people from the possibility of losing their homes. In his own words- “It will prevent the worst consequences of this crisis from wreaking even greater havoc on the economy. And by bringing down the foreclosure rate, it will help to shore up housing prices for everyone.”

It’s a tough call to predict how Obama’s plan will pan out. Nobody, not even the president himself, believes it can successfully end the tidal wave of foreclosures, but it will hopefully provide at least some stability for the time being.

The Wild-card: Interest Rates:

For the prospective homebuyer, home prices are definitely a major concern. If the aggregate price level of homes has another 10-15% to fall, then it likely would make sense to hold off on the buying until that point, but not necessarily.

If you are considering home ownership now, and you have the financial stability to receive a bank’s business, I would seriously consider looking for a home right now. Interest rates are basically at a floor; there’s literally no way they can go much lower. They can, however, go back up- big time. With all the money being created out of thin air to throw at our economic problems, it’s virtually a given.

If you have the option to get into a home right now (or refinancing) at an attractive fixed rate, say 5%, I wouldn’t hesitate for a second. Your outlook on the industry should be mostly irrelevant compared to the available financing options you have. Even if the value of the home sags slightly for the next year or two, the dirt-cheap credit you locked in makes it well worth it. Six months to a year from now, these opportunities might be long gone (dare I say double-digit inflation and interest rates?), and many prospective buyers will be kicking themselves for hesitating.