The Best Ways to Stretch your Retirement Savings

It’s really not all that difficult to start saving for retirement, even though many American consumers don’t. Simply take part of your weekly paycheck and put it into either a retirement plan like a 401(k) sponsored by your employer or, conversely, set up your own IRA.

As consumers get older however, they start looking at their retirement savings and wondering what measures they can take to increase their “nest egg” as much as possible so that will last as long as possible during retirement.

Below are a number of ways to do just that, and stretch those retirement savings as far as possible. Enjoy.

The first is simply to start. In fact, that’s the hardest part for most people, starting a retirement plan of any kind. Your best bet is to have the funds automatically withdrawn from your weekly check and put into your retirement plan automatically so that you don’t ever see that money or get a chance to spend it.

Another excellent method is to start using the “catch-up” contribution that the IRS allows you to put in your 401(k), which is $5500. In an IRA it’s another $1000  and, if a person starts using this contribution at 50 years of age, putting in the maximum $23,000 in 2014 (the $17,500 regular contribution plus the $5500. catch up contribution), that will grow to over $56,000 by the time they reach 65.

Consumers who expect that their tax rate will increase in the future as their income increases should consider contributing after-tax money into their Roth IRA or Roth 401(k). For consumers who are eligible, both will provide a tax free stream of retirement income.

You might also want to consider taking money from a traditional IRA and converting it into a Roth IRA. Yes, you will have to pay taxes now but you won’t have to pay later and, because of that fact, you will more than likely end up saving money, especially if you end up in a higher tax bracket in the future.

Of course one of the best ways to increase your retirement income is simply to work longer, which means that rather than taking money out of your retirement plans, you will be able to keep putting money into them.

For example, retiring the age of 68 rather than 62 will give you 6 more years of paychecks to pay your bills and other expenses as well as allowing you to put more money into all of your retirement accounts. Working longer doesn’t mean that you need to say the same job either. Many American consumers go into “encore” careers and use skills that they picked up during their first career in order to keep making money but also enjoy themselves, and their work, more.

Moving to a more tax-friendly state is also one of the best ways to stretch your retirement funds. For example, there are 7 states that have no income taxes at all, and many have exemptions from retirement income.  Kiplinger’s puts out a list of tax-friendly states every year so, if you’re considering moving to another state to save money, that’s a great place to start.

Those are some of the best ways to increase and stretch your retirement savings.  If you have questions about retirement please drop us an email or leave a comment and we’ll get back to you with answers and advice.

Top 5 Tips to Easily Cut Down on Daily Expenses

Most consumers today are consumed with cutting down on expenses (probably due to their also being consumed by enormous debt).  The fact is however that most of us are wasting money every single day on things that we absolutely don’t need and, because we don’t think about them, we keep wasting more.

Today’s blog will give you 5 excellent tips to quickly cut daily expenses starting today. Enjoy.

Tip 1: Bring lunch from home. If there was a way that you could save $50,000 over the typical 40 year career, would you do it? By bringing your own lunch from home you could save $25 a week (at least), which equals $1300 a year or, over 40 years, 50 Large.

Tip 2: Stop buying premium gasoline.  Unless you’re driving a seriously high-end automobile like a Lamborghini, you don’t need premium gas. Depending on how much you drive you can save between $250 and and $500 dollars a year just by using regular gas.

Tip 3: Drink water when you go to restaurants. It’s well-known that restaurants markup the cost of their beverages, sometimes to ridiculous levels. On the other hand, they all give water for free and, for the typical American family, that amounts to about $800 in savings a year as opposed to drinking soda, juice, milk, alcohol and other beverages.

Tip 4: Use your local library. If you read a lot of books, purchase a lot of movies on DVD, have a lot of magazine subscriptions or all of the above, you can save between $200 and $500 a year by simply going to your local library and renting them for free.

Tip 5: Stop purchasing food and other items at a convenience store. Let’s be honest, unless you live really far out in the sticks, there’s probably a grocery store just as close to you as a convenience store. The fact that the latter charges nearly 45% more for the same items is a compelling reason to never buy anything there.

Just using these 5 tips alone couldn’t save the typical family between $2000 and $4000 a year. If you take that money and invest it, you could practically fund your retirement with the proceeds!  If that isn’t enough of an incentive to keep these tips in mind, and start using them today, then truly nothing is.

7 Excellent Tips to Save Money

Looking for some easy to implement saving techniques? If you are, you’re in luck, because today’s blog is all about how to save every day and stick to your budget. Enjoy!

Tip1) Clip coupons at the Library. If you buy the newspaper every week just to get the coupons, you’re wasting money. You can usually get them at the library for free (and they usually don’t mind).

Tip 2) Find the lowest priced grocery store in town and make it yours. Think Walmart has the lowest prices on food and sundry items? Think again. Dollar stores have excellent prices on things like detergent, decorations, light bulbs and more. Aldi, a smaller supermarket chain, has amazing prices on their own brands of many different things, and also sells produce at phenomenally low prices.

Tip 3) Stop washing most clothes after only one use. Unless you’re talking about underwear or socks, or clothes that are extremely dirty or sweaty, there’s really no need to wash them after only one usage. In fact, you can let jeans go for months without washing them and, depending on what they were used for, many shirts can simply be thrown in the dryer with the rest of the wash rather than washed and dried, to freshen them up.

Tip 4) Use a list when shopping and stick to it. Impulse buying is a big problem for many consumers. If you make a list before you go shopping, whether it’s for groceries, clothing or what have you, and stick to that list, you’ll spend a lot less almost every time.

Tip 5) Turn off the lights. This one is huge! So many people leave lights on around the house all day long, even when they aren’t there. You and your family need to get in the habit of turning lights off when you leave the room, even if it’s only for a few minutes. Those extra few minutes every day add up and amount to quite a bit of savings on your electric bill.

Tip 6) Make one big trip instead of several smaller trips. This is a great way to save gasoline and time. Every morning you should make a list of all of the things you need to do that day and, if possible, arrange them around picking up the kids, work and whatever else you have going on. That way, rather than making several different smaller trips, you make one big trip and save gas.

Tip 7) Take a long, hard look at your insurance. Today there are a ton of insurance companies vying for your business. If you haven’t looked at your insurance, for your home, car and health, and done some comparisons lately, it’s time you did. There’s a very good chance that you’ll save a lot of money by switching Insurance companies and, if you combine your insurance and get everything covered by one company and one plan, possibly save even more.

3 Money Saving Rules to Follow

When it comes to money it seems that very few people have the ability to do one thing: take good advice. Let’s face it, most people see saving as being “boring” and spending as being “fun”, which is one of the reasons that millions of Americans are up to their eyeballs in debt.

Below are 3 extremely basic but excellent rules about money that experts have been giving out for years but, unfortunately, nobody seems to be following. If you want to keep your finances looking good, keep your debt extremely low and retire with a lot of extra money, you would do well to follow the next 3 bits of advice. Enjoy.

Rule #1) Treat your finances like you would treat your own business

If the typical consumer treated their finances the way they treated either their business or their work, they would realize that there’s only one thing that matters; the bottom line. Indeed, the same principles that are used by business owners everywhere can also be used to run your personal finances, including prioritizing, assessing and restraint.

If you prioritize your spending, regularly assess both the amount of money coming in (your profits) and the money going out (your losses), and you show some restraint when it comes to purchasing things that you don’t need, your financial affairs will stay quite healthy.

Rule #2) Make savings habitual

As we mentioned above, it’s difficult for many consumers to save money. Not only that but, many people start and then give up in discouragement. The fact is however that, like maintaining an exercise routine and watching your weight, saving money takes a lot of diligence, patients and persistence. If you can make it something habitual you’ll find that it turns into one of the best habits you’ve ever had.

Let’s look at it this way; if you saved just $20 a week on your grocery bill, that’s almost $1600 a year! Now think about all the other places where you could make small cutbacks in your lifestyle, and do it regularly. Once you start and get into the habit, chances are you won’t even notice the difference except for one place; your bank account.

Rule #3) Every time you save money, save the difference as well 

Many consumers make the mistake of thinking that they have “saved” money on something when, in fact, they simply used that money to purchase something else. Let’s say, for example, that you saved $50 a month on your cell phone bill but, instead of taking at $50 and putting it into a savings account, investing it or putting it in your IRA, you simply spend it on something else. Is that money really “saved”? No, not at all !

Every time you save money you should take that money and put it into any type of account where you won’t spend it. While we don’t necessarily recommend a savings account (because the interest is just ridiculously low), even that is better than spending the money. You would be better off putting it into your 401(k), an IRA or investing in bonds however.

Those 3 Rules above, while extremely basic, are extremely potent as well. If you put them to work for you, and make a habit out of all three, you’ll find that your finances start to get much healthier and make your Roth and Educational IRAs,  401(k)s, bank accounts and retirement accounts much fatter.

6 Hurdles Keeping you from Being Wealthy

If you’re like many consumers in America today, you’re probably having trouble keeping your financial head above water. No matter how many hours you work and how much money comes in, by the end of the month it’s all gone and you sit there wondering how it happened and where it went.

Thinking about becoming wealthy is likely the furthest thing from your mind, and rightfully so. The fact is, most American consumers have at least one major hurdle that they have to get over in order to become wealthy, and many people have several. Six of those hurdles are below and, if you can identify yours, that’s the first step in getting over it and getting on your way to creating wealth. Enjoy.

Hurdle #1: Debt

One of the worst drains on any consumer’s financial success is debt. Unfortunately, it’s incredibly easy to get into debt but very difficult to get that debt paid off. In fact, it can take decades and cost you tens of thousands of dollars, money that could be growing in an IRA, 401(k) or other interests making device.

Hurdle #2: No Budget

Without a budget, even a basic one, in place to guide you financially, becoming wealthy is incredibly difficult. The reason is that, without a budget, you’ll have no idea of where your money is going and, without one, you won’t know where you’re wasting it.

Hurdle #3: You don’t Save

Saving money is a habit that very few American consumers have, unfortunately. At the very least you should have six months’ worth of income in an emergency savings account. Saving for your new home, college tuition for your children and retirement is also vitally important if you want to one day be wealthy.

Hurdle #4: You purchase things on Impulse

We’ve already spoken about debt and the reason that many people are in debt is because they purchase regularly things on impulse. If you grocery shop without a list, buy things you simply don’t need and don’t know how to negotiate the price of major purchases like a home or automobile, you’re probably spending much more money than necessary and definitely increasing your debt hurdle.

Hurdle #5: You live a wealthy person’s Lifestyle

If you always purchase the newest gadgets, automobiles, clothing and furniture, go on expensive vacations and spoil yourself silly, you simply won’t ever become wealthy because you won’t have any money left over. While it might give you some pleasure in the short run, in the long run wealth will elude you and you may end up living your retirement years in abject poverty. That might not be very much fun.

Hurdle #6: You don’t purchase Insurance

If you don’t have insurance for your health, your home or your life, or if you’re severely underinsured, you’re playing a dangerous game with your financial health and the financial health of your family too. Yes, it stinks to have to spend that money every month in for what basically amounts to nothing but, on the day that you actually need that insurance, you’ll be extremely glad you have it. If you suddenly passed away it won’t help you very much but, if you have a spouse and/or children, it will certainly help them.

It’s possible that you’re facing one or more of these 6 hurdles. If you are, and you don’t know how to get over them, send us an email or leave a comment and we’ll get back to you with answers and advice.

What Should Your Net Worth Be?

scrooge-mcduck-wealthA problem I struggle with, especially as someone that’s a long way from retirement. I’m sure I’m doing better than most people at my age. I have no debt and have a decent amount invested, too. But comparing myself to others seems like such a poor yardstick to use, especially when so many people aren’t ready or on track to retire with enough money.

So what should I have saved? And how do I stay on track? Here’s some of what I dug up.

Benchmarks

A general rule I’ve heard a few places is this one, which I found published on The Simple Dollar:

Multiple your age times your realized pretax annual household income from all sources except inheritances. Divide by 10. This, less any inherited wealth, is what your net worth should be.

According to this calculation, I’m actually pretty far behind. But looking at the number, I’d be surprised if many people my age have actually hit this goal.

Other goals

As I wrote about before, investing in retirement isn’t my top goal right now. If I was, I’d probably have an engineering job where I could sock away half my salary or so.

It sounds crazy, but I’m more focused on building a business. I know this will have to change at some point, but I feel like I’m doing well enough right now that it’s okay.

While this may sound irresponsible, I’m always focused on living a good life now AND in the future. I don’t really believe in big sacrifices just to be happy later. Don’t get me wrong, I’m far from a “YOLO”-type and I don’t make dumb decisions. I’m just trying to stay balanced.

I’m still depending on this paying off in the long run. Of course, I’m hoping to see changes come sooner rather than later.

Key areas of focus

I know some action needs to be taken. This problem isn’t going to solve itself on its own. Here are some areas I’m going to start working on:

  • Save some money, no matter what. There’s really just no substitute to saving and investing money for retirement. Even if I just put aside $1 a day, that’s much better than nothing, especially if my investments can grow for close to 40 years.
  • Check back on investments. I look at the bottom line on my investments a lot, but I don’t do much when it comes to adjusting my portfolio. I know I need to check in more often. Perhaps I need to move more money to lifecycle funds if I don’t want to actively manage my money.
  • Keep going. It’s a little disconcerting to feel like I’m so far behind. But rather than throw in the towel, I know I just need to keep going.It’s certainly possible for me to make it, I just need to put in the effort to make it happen.
  • Get help. I don’t really use any professional help yet other than an accountant, which is mostly because I run a business. Listen to the experts from time to time – Michael Derin from Azure Group regularly gives out genuinely insightful tips for entrepreneurs and people like myself to plan their finances better.

Aside from what I’m focusing on, I’m also wondering if net worth is the best metric I should be using. Should I consider something else instead?

Do you look at your net worth? How do you feel about it?

(image: Sam Howzit)

Time and Money Goals, Aligned

There are productive things I could be doing instead of _____.  Many things fit in that blank: watching sports, Facebook, sleeping.  But there are also things that might not be a productive use of my time, and they cost money, too.  I’m talking about going out to bars or restaurants, taking trips on the weekends, or other things of similar nature.  I definitely wouldn’t characterize these as time wasters – I like doing all of these things and spending time socializing.  But they can also get expensive and detract not only from my bank account but also from my future goals.

I enjoyed my trip to the Berkshires last weekend, and I’m sure I’ll have fun in NYC this weekend.  But I’m still longing for more time to develop my personal skills and projects that align with my long-term goals.  There needs to be balance.

Strategy: Minimize social activity during the most productive times, but maximize fun when least productive.

Lately, I’ve really buckled down with my time management and started saying “no” to activities that suck up otherwise-productive time. I could easily be talked into going out for drinks on a Wednesday night if I have nothing important to do.  But the fact is, I have things I want to do.  My goals and ambitions to launch an empire based on this blog and freelancing is going to take a lot of time.  In Karol Gajda‘s How to Live Anywhere, he says to get rid of all distractions during periods of intense work.  I’m not talking about skipping my mom’s birthday here.  But partying it up on a Wednesday is a small sacrifice, especially considering I do fun things almost every Friday and Saturday night. The weekend nights are when I know I have the smallest chance of getting work done.  Unless I have something super-important to do, I’ll happily concede Friday and Saturday nights to fun.

I’ve realized that my time goals also keep my financial goals in balance.  By passing on Wednesday night beers, I’ve not only banked the time, but I’ve also saved $20.  Even more importantly, I can even add a third degree of greatness to the equation: with the saved time, I’ve advanced towards a better financial future, even if it’s only in the slightest degree.

I don’t think anyone should give up their entire social life for any kind of financial gain (that’s miserable).  But I think just about everyone could use a little more balance.

What could you do if you converted 10 hours a week from areas that don’t really improve your life and instead focused on making money or other financial goals?  Could you start a side business like freelance writing or web design? Could you improve your personal budget and spending habits by reading Dave Ramsey or Get Rich Slowly? I know we’re all “busy” but 10 hours is nothing – it’s one hour each weekday and then five hours over the whole weekend.  I’m convinced it’s going to take at least this much time to get out of the rat-race world and live a life that I find fulfilling.

Next time you’re invited out for a midweek adventure, think about how much it’s really worth to you.  Success in your long-term goals might just be dependent on these choices.

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photo by: gogoloopie

Famous Money Movie Moments and Lessons (with Video!)

I’ll admit: I’ve had a bit of a financial reading overload lately, so I’ve pared back my writing and reading a bit. Quitting day is coming up soon, too, and I’ve been focused on the SEO with a lot of my time, too.

How do I get past the burnout? Watch money movie clips instead! Sure, most of them are fiction, but there’s still some important lessons to be found as always.

I had a little fun with a few movie clips that I think of when I think of money advice.

Making sure to get the money, not just save it

The classic “money” movie line from Jerry McGuire that we all think of when we want the money:

Lesson: Go for the money instead of simply trying to cut back. Eventually you just gotta say it!

Excessive greed and cheapness will burn you

Trading Spaces is definitely one of the funniest money movies of all time. Here’s a clip towards the end of the movie (spoiler alert if you haven’t seen it before):

Lesson: Greed will only come back to get you. Don’t be cheap, especially when you can afford to be generous.

Moving to the world of smartphones

Not exactly a money-related quote, but I just made it one. Billy Madison says it best for me:

 

Lesson: “Stay” with a cheap phone as long as you can. You’ll save a bundle, and the other side might not be so awesome anyway.

Spending money to make money isn’t always the worst thing

Ah, the original classic movie about big business and greed: Citizen Kane!

http://youtu.be/tzhb3U2cONs?t=2m5s (sorry, you have to go to YouTube to see this one)

Lesson: Not every business move you make will be profitable, and you sometimes need to spend money to make money. You don’t have to go broke, but you do need a strategy.

Smarter than the next guy

The Sting is one of my favorite movies, period. Newman + Redford = legendary.

This clip is one of their many cons throughout the movie. Damn are these guys smart.

Lesson: You don’t have to be the only one in business. You just have to be willing to do what it takes to “out-hustle” the others in your pack.

Big Corporations can be “lose-lose”

I love Jimmy Stewart, and I’m sure everyone is familiar with his role as George Bailey, President of the Savings and Loan in It’s a Wonderful Life.

Lesson: The “big guys” aren’t always bad news, but often the small, local companies can relate to your better. Seek to do business with those who care about your community and even you, rather than those that just seem to give the best deal on the surface.

Awful jobs

Who can forget the miserable cubicle workers on the cult classic Office Space. Watching Peter live a miserable life from corporate desk is enough to make anyone sick to their stomach:


Lesson: No one wants to deal with “TPS reports” every day. Find a job that you can love rather than one where you merely exist.

Hope you enjoyed the clips!

Are there any other money movie moments you would add?

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Can We Stop Gushing Over Our Self-Affirming Financial Bullshit?

Did the title make you uncomfortable or defensive? Good.

It’s probably not new news to you that everything likes to read things that simply back up what they already think and do. Finances are no different. We like to confirm we have all the answers, and we like to be on the right track. Sure, there are little tweaks here and there to our lives but not too much to really shake things up.

But here’s the problem: reading more about what you already know and believe in won’t do you any good. In fact, it’s a waste of your time. What’s the point of simply listen to someone agree with you for 1,000 words? So you can use it to defend yourself against others that disagree with you?

An Example from Get Rich Slowly

A little over a week ago, Joe from Retire by 40 wrote a post (we’ll call it Post #1) about leaving his six-figure corporate job to pursue something else. Joe sorta framed his post to make it sound like he was following a problogger pipe dream, but I don’t think that’s how he intended it. Joe also left out important details about how his wife works and will continue to do so by her own choice and desire, which you can read about on his blog. The way I read his GRS post: he’s excited to do quit his job and leave his boring corporate life behind him.

But the overal feedback: incredible disdain from the GRS community. Some people hated this post and seemed to disagree with everything Joe mentioned, too. Just take a look at some of the comments. I have to wonder what extreme comments were filtered out beyond what’s shown.

Flash forward to one week later – Post #2: A reader named “Knot Theory” had his (I’m assuming it’s a he, but not sure) story published, which is essentially a post about how he quit a job that he hated, took a boring job instead, and has never been happier since.

And the commenters? Couldn’t love it enough! People were singing the praises in the comments, with one reader calling it “one the bests posts read til date.”

Okay, I’ll give you that the two posts had slightly different tones and were written in different ways, but did each really deserve the comments that they got?

Why the lovefest for Post #2 but not #1?

Post #2 had a feel-good tone for how you don’t have to love your job to be happy in life. I’m cool with that (although I have a hard time feeling as awesome about it as some of the commenters do).

But I think post #1 is as much of a feel-good story to me as is post #2. They were both about giving up something the writer hates and moving on to a life that’s happier and hopefully more fruitful.

What it looks like to me: readers love the second post SO much more because it’s what they identify with. These commenters are plugging along at the 9-5 (and either are or are hoping to make six figures), and it doesn’t fly in the face of their plan in life.

To me, it’s simple why it came out this way: we love hearing that the path we’ve chosen is the right one and the best one. We love these little stories that we can point to and say “I knew I was doing the right thing!” It’s music to the ears.

At the same time, it’s often frustrating and even annoying to hear about people that disagree with how you approach things.

You can look at both ends of any two-sided debate and find plenty of support that you can read and just agree with. If we’re talking the nine-to-fiver vs. the entrepreneur, there’s plenty of material out there to tell you that you can be happy and successful on either path.

For the worker-bees, their life and belief is some variation of “Just show up for work, put in your time, invest in a retirement plan, and you’ll have it made when the time comes. Being an entrepreneur is very risky, and most people fail and go bankrupt.”

For the entrepreneurial-minded, there are plenty of people, blogs, and books that will go the other way and say “Showing up at a 9-5 every day until your 65 is no way to live. It’s a boring life. There’s so much more potential for both happiness and wealth if you strike on your own.”

We can find support and successes on both sides within the blogosphere, not to mention in stories throughout the media. Neither is right and neither is wrong.

A Lesson: Be willing to listen to the other side without calling them wrong

Look, I feel just as uncomfortable and annoyed watching Fox News as every left-winger does. But does that mean I should just spend my whole life criticizing Fox News and just watching the Daily Show? I’m not that close-minded, and I hope others aren’t, either.

From reading this blog, you can probably guess that I align more with Joe and post #1. It’s certainly motivational to read articles like these to get me moving in the direction I want to go. But I don’t think that post #2 is stupid, and I can get a lot out of reading that as well.

Does quitting my job and giving up on finding a career I might like make me nervous? Hell yes!! Because of that, it’s interesting and informative to listen to both sides.

Sometimes the “other” side can make solid points and even be right from time to time. Just accept it.

Do you find yourself reading a lot of articles and posts that simply agree with what you already believe?

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photo from:  thivierr

Five Reasons to Give Up Goal Setting

without-goalsGoal setting is deeply ingrained in our lives, or at least our idea of what it takes to succeed.

It shows up at job interviews, relationships when searching for a mate, and in our finances (as evidenced by the abundance of posts on goals published in early 2012).

If you don’t have goals, you’re likely to be labeled as lazy, unambitious, and lacking direction in life.

But is that fair? And is it true?

I was recently heard of the “no goals” concept on the Man vs. Debt Podcast, and now it’s really got me thinking. Baker interviewed Leo Babauta from Zen Habits fame about his stance on not setting goals.

Here’s Leo’s take on his problem with goals. (note that while this isn’t plagiarism anyway, I think it’s way cool that Zen Habits is uncopyrighted)

“In the past, I’d set a goal or three for the year, and then sub-goals for each month. Then I’d figure out what action steps to take each week and each day, and try to focus my day on those steps.

Unfortunately, it never, ever works out this neatly. You all know this. You know you need to work on an action step, and you try to keep the end goal in mind to motivate yourself. But this action step might be something you dread, and so you procrastinate. You do other work, or you check email or Facebook, or you goof off.

And so your weekly goals and monthly goals get pushed back or side-tracked, and you get discouraged because you have no discipline. And goals are too hard to achieve. So now what? Well, you review your goals and reset them. You create a new set of sub-goals and action plans. You know where you’re going, because you have goals!

Of course, you don’t actually end up getting there. Sometimes you achieve the goal and then you feel amazing. But most of the time you don’t achieve them and you blame it on yourself.

Here’s the secret: the problem isn’t you, it’s the system! Goals as a system are set up for failure.

Even when you do things exactly right, it’s not ideal. Here’s why: you are extremely limited in your actions. When you don’t feel like doing something, you have to force yourself to do it. Your path is chosen, so you don’t have room to explore new territory. You have to follow the plan, even when you’re passionate about something else.

Some goal systems are more flexible, but nothing is as flexible as having no goals.”

I don’t know about you, but this definitely describes some of the situations in my life. Getting sidetracked, getting discouraged, and things just not working out as planned are all goal-related letdowns I’ve felt.

But as someone who considers themselves an ambitious person, the idea of having zero goals is a hard one to grasp for me. I’m not ready to give up yet, and I do think that I’m more successful when I have something to shoot for. I was pretty successful when I set up monthly money goals last year, too.

But I do see some merit in letting go of goals. I hate when I’m asked what my “5-year plan” is. There’s no way I can give a real answer for that (I usually just refuse anyway). Besides, how many people hit their 5-year goals anyway?

Here are five reasons why giving up on goals could be a good idea.

Let go of what you’re not enthusiastic about. This is the comment by Leo from the podcast that stuck with me the most. Once we set goals, we become very attached to them. But sometimes adaptability is better when we lose interest in something we were once excited about.

Don’t waste your time setting up goals. Setting goals can be a long and time-consuming process. You might create goals for many aspects of life, like money, health, travel, etc. Then you might set monthly, quarterly, yearly, and multi-year goals. Once you set them, you ideally check in on your progress. While it may be a good thing to take all these steps, it’s definitely something that takes time. Could this time be better spent on other tasks? In some cases, I think so.

Don’t set yourself up to be let down. No one hits 100% of what they set out to do all of the time. When we come up short, even if it’s not our fault, there’s often a sense of failure and letdown. Goals shouldn’t be about getting upset when you don’t accomplish what you hoped.

Concentrate on what’s most important. Goals may clash with what you want to do or need to do. What if a new opportunity comes up, and you have to make a choice between that and your goals?

Discover new things. Goals are somewhat limiting. The more specific you get, the less room there may be to expand beyond or outside the limits you’ve set. Without them, you don’t have to worry about screwing up your plans. You’re free to move in any direction you’d like.

I’m going to stick with some of my goals for now, and I’ll still take them seriously. But I’m not going to worry about changing or failing to meet my them. Either way, I think this is a good discussion to have.

Going forward, I think the most effective goal setting will be short-term, where I can have a reasonable chance of success for hitting them.

Do you feel goals give you the best chance to succeed?

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photo by: lululemon athletica