One Small Step

by Ryan H. Law

When we decide we want to achieve a goal we usually get excited and want to jump in the deep end. For some people, this might work, but the majority of people are going to sink. Research has shown that taking really small steps can be the best way to achieve a goal.

Robert Maurer, author of “One Small Step Can Change Your Life” tells a story about a girl named Julie who needed to lose weight and get her blood pressure down. He was tempted to tell her to exercise aerobically for 30 minutes every day, but he knew from experience that while the advice was good, she was unlikely to do it and would just feel misunderstood and guilty.

Maurer decided to try something different. “How about if you just march in place in front of the television, each day, for one minute?” Julie responded that of course she could do that. After all, there was no way she couldn’t succeed.

Was she going to get healthier exercising for a minute a day? Probably not. What happened the next week, though, was that Julie came back excited that she had achieved her goal. Together they built up the exercise habit, minute by minute, for a few months, until she started exercising for 30 minutes each day.

If you set really small steps towards your goal you will achieve success over time. The steps should be so small that you are guaranteed success.

You should be setting goals in seven areas of your life:

  • Work/career
  • Mind/intellect
  • Spiritual
  • Physical/health
  • Personal/social
  • Family
  • Financial

What is one small step (so small that you can’t fail) that will begin to move you forward? Here are a few ideas:

  • I will march in place during one commercial
  • At noon I will go on a five-minute walk
  • At 8:00 in the morning I will read one verse in the Bible
  • When I get home from work I will spend five minutes connecting with my spouse
  • After dinner I will play with my children for three minutes

This process works the same for financial goals. We all hear the advice that we should pay ourselves (save) 10% first, but few people do it. If you aren’t saving any money right now, can you save just 1%? If that is too much, how about .5% (one-half of one percent)? Can you add .5% more to your 401(k)? Can you pay an extra $5 this month towards your debt?

Again, these steps seem so small that it seems they won’t make any difference. Starting small, then moving up from there, works!

Here’s an example. About 2.5 months ago I decided to start jogging 3 days a week. I haven’t been jogging in at least 10 years. I started a program where the first week looked like this:

  • 60 seconds jogging
  • 90 seconds walking
  • Alternate for 20 minutes

Almost anyone can do that, right? If that sounds too hard you can decrease the jogging and increase the walking. The point is to increase, over time, the amount of time jogging and decrease the amount of time walking.

I’m on to a different program now where I run for four minutes then walk for one. My endurance and strength have built up and now I am running four miles in about 40 minutes, and that includes 10 minutes of warm-up and cool-down time.

Am I where I want to be, fitness-wise? Not quite, but I’m making progress. The name of the game is improvement, not perfection, and that applies to your money, your fitness, your family, and every other area.

Here’s my challenge to you:

  • Pick one area from the seven areas of your life.
  • Set a small goal – one you know you can’t fail at.
  • Let me know what your goal is in the comments below or on Facebook or Linkedin.

If you found this helpful, I would appreciate it if you would share it with others using the links below!

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How We Almost Lost a Home

by Ryan H. Law

About 15 years ago my wife and I moved to Indiana, excited to start a new adventure far from where we both grew up. We rented a great apartment that fit our needs and expenses. It was close to the library and shopping, not too far from my work and it had a nice pool. It was perfect.

build a homeHowever, after a while, we got restless. We wanted to own a home. After all, that is the American Dream, right? So we started looking for homes. We found a brand new community that was being built, and they offered 100% financing. We picked out a home we liked and put down some earnest money, then they started building it. What an exciting time!

There were some red flags, though. The first one was that we couldn’t actually qualify for the loan on our own. We didn’t have enough income or credit history. The sellers used some “creative financing strategies” to get us qualified, which involved using a tax credit that would bring our income up. We also had to get a co-signer.

Red-FlagAnother red flag was that we had no money for a down payment or closing costs. Of course, to the seller, that was no problem. They could just roll it all in to the loan.

We really couldn’t afford the payment, either, but we were excited about the home and figured if we qualified, that things would work out. We drove out nearly every day to see the progress on our home.

At some point, though, reality set in. We really couldn’t afford this home. We panicked and contacted the seller, asking to be released from our contract. Of course, they said no. We were committed. We explained that we couldn’t really afford it, but that didn’t deter them. We had a real estate lawyer look over our contract. He said he couldn’t see a way out. We weren’t sure what to do.

We got lucky, though. They had committed to have it done by a certain date, but they got behind on construction. We were able to argue that they had broken the contract, and we were therefore no longer bound by it.  They let us get out of the contract and sent our earnest money back.

Perhaps they also realized that if they had forced us to follow through, we might have lost the home in a foreclosure or short sale, which would have looked bad in this brand new community.

We ended up moving shortly after that, and have been very cautious about home buying since that time. In fact, we waited more than 7 years before we actually purchased our first home.

Along the way we have learned some important lessons. Before you buy a home, I recommend you consider the following:

  1. Make sure your income is stable.
  2. Have 3-6 months’ worth of expenses in an emergency funds in the bank.
  3. Pay off ALL high interest debt (credit cards, vehicles, student loans, etc).
  4. Save up 20% for a down payment. If you put down at least 20%, you don’t have to pay Private Mortgage Insurance (PMI). PMI is generally 1% of the loan annually. On a $200,000 home that will be $2,000 per year, or $166 a month. That’s a lot to be adding to a mortgage payment each month.
  5. Make sure your TOTAL home cost (Principal, Interest, Taxes, Insurance, HOA fees) is no more than 25% of your take home pay. The lender will likely qualify you for much more than you can afford, but stick with your price range. Let your Real Estate agent know exactly the price range you are looking at, and stick with it. We were fortunate to find a great Realtor® in Missouri[1] who helped us find exactly what we were looking for in the price range we were comfortable with. Find someone you trust who will help you do what is best for you, not their commission.
  6. Remember that homes come with extra expenses. For example, if the water heater goes out in your home, you have to pay for a new one. Experts recommend that you save anywhere from 1-4% of your home’s value per year for maintenance and repairs. On a $200,000 home that is $2,000 – $8,000. While $8,000 is probably a bit high, the reality is that you will have to pay for repairs.
  7. I recommend that, on top of repair money, you have enough saved up to pay your insurance deductible. After all, if the roof gets destroyed in a hail storm, the insurance company will pay most of the repairs, but you have to pay your deductible first. That can be anywhere from $1,000 – $5,000.

Buying a home can be a great decision. In general, homes appreciate in value, meaning that you should be able to sell it in the future for more than you bought it for. Even that isn’t always true, though. Remember 2008? Some markets have yet to fully recover from that housing crash. Go slowly and buy what you can afford when you are ready.


 

[1] A shout-out to our friend and Realtor® Ted Webber: http://www.tedwebber.com/.

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Buy Experiences, Not Stuff

by Ryan H. Law

For most of us Summer is about half-way over. My question for you is this: What have you done this Summer to build lifelong memories with your family?

I want you to think back to your childhood for a minute and think about some of the gifts you received. How many can you remember? You probably remember a few. I remember getting a stereo one year, and a skateboard a different year. I can remember a few other items as well.

Now think back instead to some fun experiences your family had. For me that brings up many memories of camping or hiking as a family, trips to Disneyland and Sea World, family reunions and others.

Which of the two memories triggers happier thoughts? For most of us, it is the experiences. In fact, research by Thomas Gilovich of Cornell University has shown that we get greater pleasure from experiences than we do from “stuff.”

I’ll share one recent example from our family. We were up at Bear Lake in northern Utah enjoying a day on the beach with some extended family. We decided to rent a boat for an hour, and we had a blast. It was definitely worth the money we spent on it. We could have bought cheap souvenirs for the kids instead that would have been lost or broken in a week or two, but instead they built wonderful memories on the boat.

Here is how my friend and colleague Carl Richards expressed it in a great image:

DD_MoneyHappiness

 

 

 

 

 

 

 

 

 

So with just over a month of Summer left, what are you going to do to build some memories with your family?

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