All Assets are Worth Considering (and Owning) for Financial Success

Should you buy stocks for your investments? What about rest estate? Which assets should you own in your investment portfolio?

When putting together an investment portfolio for personal finance success, it’s important to consider all assets.

While stocks and real estate are currently the hottest asset classes on the block, there are many other asset classes which might make sense for you to consider.

In this post, you will learn why you should consider all assets for your investment portfolio.

First, Personal Finance is Personal

Something which is constantly talked about in the personal finance space, but ignored when giving recommendations, is the thought that personal finance is personal.

Personal finance is not about what your friends are doing with their money, what your parents are doing their money, or what some celebrity is doing with their money.

Personal finance is the science and application of how you earn, spend, save, track, invest, and build your wealth over time. It’s personal – taking control of your finances and doing what is necessary is on you.

When thinking about personal finance, thousands of questions come up:

How much should I save, how much should I invest, what should I be investing in, what companies or assets could give me the best return on my investments, what banks or credit cards should I be using, who can I turn to for advice with my finances?

Before asking any of these questions, we should first turn inwards and realize it’s crucial to realize that personal finance is personal. We must first ask ourselves the right questions and figure out what our goals are. Some possible questions are:

  • What kind of lifestyle do you want to live?
  • What do you love to do?  
  • Do you want to travel around the world? 
  • What about spending more time with your family?
  • Would you want to eat out every week?  
  • Do you want to start your own business? 
  • Would you be interested in retiring at 45, 55, or 65?  
  • Do you want to pay for your children’s college?
  • What is you relationship to money?

Once you’ve figured out where you want to go in life, then you can start crafting a plan and starting on your journey to living the life you dream to live.

My Problem with Traditional (and more recent) Investment Advice

When reading about personal finance, “financial independence plans”, and investing, I’m constantly running into the same “return projections”. To be specific, if I invest $10,000 a year for 30 years in something, then assuming the typical 7% market return, I’ll be a millionaire!

First, check your investing privilege.

Second, this automatically pushes people towards stocks, as over the last 100+ years, the stock market has averaged roughly 7% per year!

Now, personally, I don’t have any problem with investing in stocks, and have a good chunk of my retirement accounts invested in stock market index funds.

The problem I have recently is about some of the advice regarding investing in stocks. Namely, when you are younger, you should overweight your portfolio with stocks (like 100% to 0% anything else) for a few reasons:

  1. By investing in riskier assets, you can hopefully get lucky and speed up the time to financial independence with bull market tailwinds.
  2. Even if there’s a market correction, you will have time to “recover” because the stock market always goes up (except the world is a closed system)
  3. and FOMO (I’m going to have to explain this one a little more…)

The FOMO is Real in 2018

track your income and expensesI hate to say it, but the FOMO (fear of missing out) is real in 2018.

I’m 26. I started getting into finances around the time I was 20, and didn’t invest my first dollar until 2015.

I’ve never seen a 2008, a 2001, or a 1987. I have no idea what it’s like to go through a crash; I was in 10th grade in 2008.

Why do I bring this up?

There are thousands of individuals who are between the ages of 22 and 30 who have never seen a recession. While it’s true that some of those people came out of college in a recession, they didn’t experience it in their investment portfolios.

For young people who are looking to improve their financial situation and build wealth, the push is to get into stocks because that’s what they are finding with a simple Google search.

This push is driven by #1 and #2 from above, but also the gambler’s fallacy of the last 10 years: we have experienced the longest bull market in history. This means we can’t lose (sarcasm)! 10 years is a long time, and now, people have forgotten the pain. There are seasoned investors pushing the stock narrative and everyone is rich.

The FOMO is real here.

Compounding on this (pun not intended), you have an investing environment which does not provide any yield in the fixed income market. Real estate investing has been tough to get into with downward pressure from student loans, and upward price pressure from low interest rates. Precious metals have been smashed since 2011, and cryptocurrencies are a gamble.

You can get into index funds for a few bucks. $10 a day times 7% times 30 years is mega dollars, right?

The FOMO is real and many people are piling into stocks without considering the advantages of putting cash in other investment classes.

Stocks are seemingly safe, always up and to the right, and are going to get me to financial independence in a few years. Why change? Why consider anything else?

The World is More Complex than This or That

The usual caveat applies in most cases: if it seems too good to be true, it probably is.

In the last section, I went on a little bit of a rant and I’ll admit that while it was fun to write, I left it opened ended.

One of my goals on this blog is to provoke new thoughts in your head to hopefully help improve your situation. Remember, this blog is called “The Mastermind Within” and within all of us is a mastermind which has the ability to think critically, make difficult decisions, and create a life for the better. 

The main point of this article is not to bash stocks and say it’s a bad investment.

If you live in a country with a great economy (the United States for example), investing in stocks is a fantastic way to build wealth.

That being said, just because stocks has been one of the best ways to build wealth in the past, this does not mean that it will be going forward. (The adage past performance does not guarantee future results)

What I want to get across in this post is to argue that all assets are worth considering (and owning).

Yes, that means you probably should own some real estate, own some bonds, own some precious metals, own some digital assets, and also work on yourself for the better. (yes, you are an asset too!)

True financial independence includes defensive positions as well as offensive positions. Financial independence is the goal, but if you are over exposed to one asset class, then a turn for the worse will create stress and headaches.

Financial Independence Redefined

In my opinion, financial freedom and financial independence is the ability to do what you want with your time and money because you don’t have to work for your money anymore. Being financially free means having “enough” savings, money, and income to live how you want to live.

But going a step further, I’d argue that true financial independence is being able to weather any financial storm and still be able to live your life the way you want.

If you are 80-100% invested in equities (even if you are diversified across sectors, across borders, and across company size), there’s certainly a possible of running out of money due to sequence of returns risk (if things go south way in the future, your lifestyle could take a hit in a big way.)

True financial independence would be protecting yourself and your wealth from these storms. What I mean then is to consider (and own) other assets which may or may not be thought of as your traditional wealth building assets.

Look, it’s great to go for $1,000,000, $2,000,000, $5,000,000 in net worth, but I’d rather have some money left over than $0 if a certain asset class went kaput.

Let’s talk about some assets worth considering other than stocks to become truly financial independent.

All Investment Assets to Consider for Your Portfolio

I want to stress this again, investing in stocks, especially in low fee index funds, has been a tried and true method for building wealth. Over time, investing in companies which are successful should give a solid return.

That being said, there are a number of other assets which make sense to own to bullet proof your finances:

  • Bonds and Cash
  • Real Estate
  • Insurance Policies
  • Precious Metals
  • Digital Assets

Bonds and Cash

the guide to banking for non-bankersBonds and cash have a place in everyone’s portfolio. In recent times, owning bonds and having cash has under-performed the stock market.

However, these assets are typically less volatile and should be uncorrelated to the stock market (when stocks goes down, bonds go up and vice versa).

Having short term maturity cash positions (either in an emergency fund or in a CD type product), will help in times of trouble because if you get laid off, lose your job, need cash fast, you’ll be able to access these funds.

This will ensure you don’t need to sell your future financial investments (long term investments such as bonds, stocks or real estate).

While it is true the returns are typically lower than stocks, there is still a case to be made for owning bonds and having cash on hand.

Real Estate

Real estate, both housing and land, will always have value. Shelter and a place to live is one of the basic necessities of life.

In countries which respect property laws, owning real estate will protect your wealth from inflation, give you a place to live, and allows for the potential of income (through rentals).

Going a little bit bigger, commercial real estate can provide solid returns as well (either through REITs or by buying a larger property and renting it out).

Insurance Policies

This one is pretty obvious for any one who owns a home, a car, or has a business. Having insurance is very important in case of disaster.

Insuring your house, car and life are all things which make sense for certain people, but I’d even include getting insurance above and beyond that with an umbrella policy.

Wealth preservation is as important as wealth creation and growth. One mistake or string of bad luck could lead to financial ruin.

Having the right protection in place can help if this were to occur.

Precious Metals

all assets are worth consideringMany people in the personal finance space hate on precious metals, but I do believe that these do have a place in a person’s financial situation.

Thinking along the lines of capital preservation and protection, owning precious metals could be your saving grace in the event of civil unrest or some other crazy event.

If you have to leave the country, these metals would be transportable (in theory), but also, over time, the use in industrial production has grown – leading to an increase in price.

Think about it this way: if the internet were to go away (highly unlikely but possible), would you have any wealth?

Digital Assets

The reasons why I started this blog were twofold:

  • To look to build a following and at some point, put advertising on the website to create a stream of income for myself.
  • To secure a place on the internet which I own and can do whatever I want with it.

Similar to real estate, by owning a website, you can potentially create income and value which isn’t in traditional investments.

Why do digital assets make sense to own? If in some crazy scenario you have to leave the country or have to transfer wealth across borders, all you need to do is remember your passwords and you can access your websites. The internet does not have a border.

I would also put cryptocurrencies in the digital assets category. Even if you think they are the biggest bubble in the world and a joke, they still is worth considering.

At the end of the day, remember: wealth preservation is as important as wealth creation. If things goes south and you need to flee the country, or think having exposure to things unrelated to traditional assets makes sense, then owning digital assets could be a great choice for you.

All Assets are Worth Considering for Financial Success

True financial independence is being able to do what you want with your time, but also being able to protect yourself and your wealth in all financial situations.

Stocks are great, but if you want to be completely financial independent, I believe that it’s crucial to consider all assets for your portfolio.

First, remember that personal finance is personal and your portfolio should reflect these personal preferences and thoughts.

Second, look to understand the current economic environment and look at which asset classes make sense for you.

Finally, put your plans into action and look to continue to build wealth in the long run with additional learning and consistency.

Again, I hope this post has been enjoyable and thought provoking.

Investing tips. How to invest without stocks. Real estate investing. Investing in precious metals.
Best assets to invest in. Investing tips. How to invest without stocks. Real estate investing. Investing in precious metals.
Investing tips. How to invest without stocks. Real estate investing. Investing in precious metals.
Investing tips. How to invest without stocks. Real estate investing. Investing in precious metals.
Investing tips. How to invest without stocks. Real estate investing. Investing in precious metals.
Investing tips. How to invest without stocks. Real estate investing. Investing in precious metals.

Assest You Should Consider To Build Your Wealth


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Why the Stock Market Cannot Always Go Up

“The stock market always goes up! It’s a sure thing! There’s 90 years of data backing me up, and look, just in 2008 when it seemed all was lost, the stock market came roaring back! The stock market is always up and to the right!”

I want to throw up.

Here’s the only issue with saying the stock market will always trend up: the earth is a closed system. 

I could end the post there, but that’s not interesting, productive, or informative for you to understand the underlying and fundamental reasons of how my statement proves why the stock market cannot always go up.

Saying the stock market will always go up ignores physics and biology. It’s not too difficult to reason the conclusion when presented with the following case, but I’m sure there will be push back 🙂

In this post, I’m going to be sharing with you why the stock market cannot always go up.

What My Argument is Not About

First, I need to clarify what I’m talking about when I say “the stock market cannot always go up.”

Here’s a simple picture to visually explain what I have an issue with: (picture of the stock market always going up)

stock market goes up over time

My problem is the comment that it assumes infinite growth in a finite system.

I have no problem with the argument, “the stock market will always come back to its previous high, and possibly go above that previous high, because humans are resilient and will come up with better technology” because this is true. Over time, technology does improve, processes become more efficient, and businesses become more profitable (in a capitalist society).

However, this statement is a completely different picture:stock market doesn't go up over time

I have no problem with this picture and the statement behind this picture. A boom followed by a bust, followed by a boom, is nature.

I have no problem with investing in the stock market, and have a fair amount of my net worth in equities and index funds.

It’s the first picture here, which has infinite growth baked into it that gets my blood boiling.

The Problem with Infinite Growth

stock market cannot always go upThe statement, “The stock market always goes up” assumes infinite growth.

Saying, I’m at $200,000 in investments today, and in 30 years, I’ll have $2,000,000 assuming 10% growth is an exercise in absurdity. (While yes, it’s possible that with wonky money printing techniques we will all be millionaires and billionaires, what do you think the dollar will actually be worth?)

Here’s the thing with infinite growth of stock market trends: it assumes a number of things which are not consistent with what we experience on a day to day basis here on Earth.

What do I mean?

First, let’s remember why stocks have value. A stock has value ONLY because the underlying company is PROFITABLE and PRODUCTIVE.

To be profitable and productive, that company needs to use energy and other materials to produce value. There are a number of finite inputs to this process (seemingly ignored by economists).

First, energy is finite. Second, the materials are finite. Third, the customers are finite. To assume infinite growth is to assume one of these is infinite.

It’s that simple, but I need to say a few more things.

Your Data Driven Argument is Flawed

Again, I need to make this point: I think equities are a solid investment in most economic environments. In a growing economy, by definition, the stock market will go up.

Over the last 100 years, the United States stock market has trended upward and has stayed up:

dow jones over time

I’m going to make the joke again… is that the chart of Bitcoin?

The United States has had the world’s number one economy for the last 50 years, so yes, the economic growth of the general stock market should be up and to the right.

What’s interesting though, to say, “In the future, I’m going to project economic growth at 7-10% annually” is to mistakenly go against one of the fundamental pieces of statistics and econometrics: past performance doesn’t guarantee future results.

To say “the stock market always trends up”, is to make this mistake.

In addition, this ignores many of the limits which we talked about in the previous section, namely customer base, materials, and energy.

These cannot be ignored as money is a claim on energy, and debt is a future claim on energy.

Again, it’s a systemic issue rather than a financial issue. The economy is a subset of the environment (the Earth), not the other way around.

An Example of Growth Gone Wrong: Cancer

We all know about unrestrained and infinite growth in a finite system gone wrong – its name is cancer. Unfortunately, there are many things that cause it, and doctor’s haven’t quite found a cure for it.

Cancer happens when certain cells go rogue and stop functioning the way they are supposed to:

  • Normal cells know when to stop growing; cancer cells grow with abandon with no regard to the space around them.
  • Normal cells kill themselves when their duties are done, a process called apoptosis; cancer cells ignore signals to die and, without treatment, may divide indefinitely and become virtually immortal.
  • Normal cells communicate to help their host survive and thrive; cancer cells communicate only to deceive the body’s defenses.

If not treated (and even if it is treated), these rogue cells can overtake the human body and can lead to death.

I hate that I just had to write that sentence, and I hate that this is an example on my blog, but the point is true: infinite growth in a finite body is NOT sustainable.

A Case Study of Wall Street Analysts Not Understanding Biology and Physics from 7/25/2018: Facebook

In July 2018, the market had quite the shock. After hours, Facebook had their 2nd quarter earnings call and talked about headwinds for future financial performance.

Facebook’s stock dropped 23%. Factors leading to this were a number of things, but most prominently was a comment about how user growth had slowed.

facebooks users over timeThere are two things which are funny here:

First, 44 of 48 market analysts had Facebook rated a buy for recommendation.

Second, I don’t see how the “slowing user growth” narrative wasn’t sniffed out earlier looking at the above chart. (Oh wait, Mark Zuckerberg made that comment 3 months ago) Maybe those analysts should read my blog, because they obviously are ignoring one of the fundamental pieces to biology and population growth: carrying capacity.

There are only 7 billion people on this Earth, and about half of those people don’t have internet.

Population growth, user growth, really any growth in a finite system follows the following shape:

population growth picture

It’s not rocket science. But for whatever reason, in the name of infinite growth, it’s ignored time and time again.

How to Think About the Stock Market

At this point, maybe you agree with my argument now, and maybe you don’t.

The goal of my work here on The Mastermind Within is to inspire new thoughts and perspectives to challenge you and help you become better in your life.

If I can succeed in doing that then I’m happy.

Let’s change the perspective I’d ask you to view this post through here and shift it to one of sustainability.

Here’s what I want you to take away from this post:

  1. When using statistical arguments, look to understand the underlying assumptions and consequences of those assumptions to ensure your argument is sound
  2. Look to promote sustainability (and work to become more sustainable in your ways) where possible, and understand that there are limits to our world (there are limits we need to acknowledge unfortunately even if we live with an abundance mindset)
  3. Realize things can be different than they appear. We all come from different perspectives and experiences, and have different biases and opinions. I’m not an expert and could be completely wrong here. At the end of the day though, I’m challenging myself and hopefully challenging you.
  4. Challenge yourself on your portfolio and asset allocation. It’s okay (and probably a good thing) to own a basket of assets and become more financially resilient.

Concluding Thoughts on the Stock Market

I’m going to get some heat for this one, but I don’t really care. The conclusion is obvious when you dive in and think about it.

I’ve been searching for the truth – looking inward to who I am as a person, looking outward to examine the world around me, and drawing conclusions based on my observations.

I’m not an expert. I’m not a guru or a financial expert. The only thing I know is that I know nothing at all. Being eternally curious is how the mind grows. I’ve been all over the map and learned a ton from writing this series. I hope you have as well through reading it.

Here’s the thing: we live in a closed, finite system. The Earth has limited carrying capacity. There is no infinity here on Earth. It’s physics. It’s biology. These points can’t be ignored. The stock market cannot always go up.


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Should you Pay Down Debt Fast or Invest Your Money?

The Million Dollar Question of Personal Finance: Should I pay down debt or invest? What if you could do both?

Traditional personal finance tells us to choose between paying down debt or saving and investing. The conversation usually goes like this, “Does the interest rate on your debt exceed the returns you could get investing in the market?”

For example, if you have a credit card at 20% interest, it would be in your best interest, no pun intended, to pay off your credit card because there are not many investments which will return 20% or more.

In another example, if you have an auto loan at 4%, it might be better to invest your cash in the stock market or other investments because you can earn higher returns than 4%. The stock market has historically returned 7-8% on average over the last century.

By investing in the stock market, you can theoretically grow your wealth 3-4% more than by paying off debt.

To pay off debt or save and invest is the million dollar question of personal finance. What can I do to prudently grow my wealth?

“Wealth is the ability to fully experience life.” – Henry David Thoreau

Benefits of Paying Down Debt

First, let’s start this section off by talking about mortgages: The word mortgage is derived from a “Law French” term used by English lawyers in the Middle Ages meaning “death pledge“, and refers to the pledge ending when either the obligation is fulfilled or the property is taken through foreclosure.

Literally, mortgage = death pledge.

“A man in debt is so far a slave.” – Ralph Waldo Emerson

Debt is mentally draining, financially draining, and affects your entire life if you are weighed down by the large barbell of debt.

The main benefit to paying down debt is increased cash flow. No more giving your hard earned cash to those pesky lenders!

If you choose to pay down debt, you will want to put extra cash towards your debt each month. This will increase the speed at which you pay down your debt.

By sacrificing short term and putting extra cash towards your debt, you can eliminate those debts in a much shorter time frame and pay off your debt fast. In addition, by paying off your debt faster, you will save money on interest!

Let’s do an example together.

Let’s say you have a $20,000 loan with a 6% interest rate and a 10 year term. Using an online calculator, your monthly payment will be $222.04.

Over 10 years (120 months), this will cost you $6,867.01 in interest. If you pay $100 extra a month, you can cut the time you are paying off your debt to 6.25 years (75 months) and you will pay $4,008.09 in interest. By paying an extra $100 a month, you will save yourself $2,858.92 and will be debt-free 3.75 years ahead of schedule!

As shown above, by paying extra each month, you can save money and reduce the amount of time you are paying off your debt. In addition, once the debt is gone you effectively give yourself a raise; you have more money falling to the bottom line each month for you to save, invest, donate, spend, etc.

Benefits of Investing

“Risk comes from not knowing what you’re doing.” – Warren Buffett

To the average person, investing seems to be complicated. Just look at the list of financial terms: 

Really, investing can be as simple as you want it to be. Investing is not gambling. Investing consists of buying assets which have value and have the potential to appreciate in value over time.

Financial Markets

If you are interested in investing in the stock market, you have the capability to invest in low cost index funds. These index funds will “mirror” the market. As I mentioned above, the stock market has historically returned 7-8% on average over the last century. If you invest $10,000 a year in index funds for 30 years and get 8% returns, you will have a portfolio worth $1.2 million!

Vanguard has many excellent options if you want to diversify index funds (domestic stocks and bonds, dividend growth stocks, international stocks and bonds, etc.).

Real Estate

If you don’t want to invest in the stock market, and would prefer to invest in real estate through rental properties, you can do that. There are many advantages to investing in real estate. Why do I love real estate as an investment class? Real estate is:

Other Investment Options

Or if you don’t want to invest in either the stock or rental market, you could start a blog and look to build a business online! There are 7 billion people in the world, do you think you can carve out a niche for yourself and your business?

Again, there are many investment strategies out there. Personally, I believe rental properties offer many long term wealth building benefits. I also believe there are many benefits from holding low cost index funds.

If you want to read more on investing, please take a look at the following books:

Should You Pay Down Debt or Invest?

There are many questions to ask when thinking about making decisions related to personal finance.

Before asking yourself the million dollar question of personal finance, should you pay off debt or invest, you should ask yourself the following questions:

Once you are able to answer the questions above, it will be easier to decide whether to pay off debt fast or to invest.

Remember the golden rule: the person who has the gold makes the rules. – Unknown

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How Can You Set, Prioritize and Track Financial Goals Like a Pro?

How can you set financial goals that you are going to keep? How can you make a budget that you’ll stick to? Let’s talk about the answers to these questions and give you what you need to become a financial success.

Some people think worrying about tomorrow will spoil the goodness of today. But, the reality is, financial planning is as important as eating food. If you want to enjoy a stable and healthy financial life, then you need to plan for your financial future.

The problem is, when it comes to planning for the financial future, many people fail to understand where to start. A major part of Americans set up financial goals in the beginning of the year, but just 8% of them can achieve their goal successfully. What is the reason behind this poor result? The reason is, many people don’t know which goal to prioritize and how to achieve it.

How can you set financial goals?prioritize and track financial goals

The golden rule is – set a plan and follow that plan.

Here are 9 basic plans you can follow to improve your financial situation:

1. Formulate a budget and stick to it

Most experts agree that budgeting is useful and a great first step when it comes to setting and reaching your financial goals.

It helps to track your expenses and to get a clear understanding where your money is going. By planning a budget, you can meet your necessary expenses while saving a certain portion of your income regularly.

However, you have to create a realistic budget, stick to it, and revise it from time to time.

2. Pay off financial obligations

This is considered one of the top financial goals. Interest charges on credit cards or other debt accounts can eat up so much of your cash flow that could be put toward other objectives and financial goals. So paying off debt should be your first priority.

At a bare minimum, make sure you pay off the owed amount on time every month. Consider lifestyle changes to save more money to use it for paying off your debts. Once you pay off the debt, you can easily manage your financial situation effortlessly. However, if you feel your debt burden is unmanageable, then it is advisable to seek professional help.

3. Putting money into a savings account

Saving money in a savings account should be a given as part of planning for your financial future. When you are planning, make sure you start contributing a stipulated amount each month into the savings account.

The experts always recommend to save at least 10% of what you make in a month to build a savings fund. Irrespective of the amount you make in a month, you should save at least this amount to secure your financial future.

Having money in a savings account will provide you with a sense of confidence to achieve bigger financial goals.

4. Spend less than what you earn in a month

Make a list of the income that you make in a month from your day job and any other sources of income, and any investment assets. Then make another list of what you spend in a particular month on all your needs and wants.

Check whether or not your expenses are more than your income. If they are, you need to take some solid steps to curb your expenses and always keep them less than what you make in a month; lest you fall in a deep financial mess.

To do this successfully, you need to fill your wallet with cash instead of credit cards. Thus, you can avoid pushing yourself further into the credit card debt hole. When you can’t afford to buy something with cash today, you should postpone purchasing that thing.

5. Build an emergency fund

When you have an emergency fund, you can avoid taking out a loan during a financial crisis. You can use your emergency fund to paying off any unexpected expenses without having to go into debt. In a fragile job market or during an economic crisis, an emergency fund is a life saver.

So, saving a considerable amount in an emergency fund should be one of your financial goals. It is recommended by most experts to save at least 3-6 months’ worth of expenses in an emergency fund, with some suggesting saving up to a year or more of expenses. 

6. Prepare for retirement

You should prepare for your life during retirement, therefore, you need to have a proper investment plan so that you have a smooth financial life after retirement. Is your workplace providing you with a retirement account?

If so, are you contributing a portion of your monthly income? You should be contributing at least up to your employer’s match, if they offer one, otherwise you are literally missing out on free money!

Though a matched contribution from the employer is a boost, you also shouldn’t delay making contributions just because you’re not getting a matched contribution if that is not something your workplace offers. This should act as an untouchable fund and you shouldn’t withdraw money before your retirement age so as to avoid any kind of unnecessary fees.

7. Review your insurance policies

If you don’t regularly review your insurance policies, you may pay more on insurance coverage by unknowingly paying for coverage that you don’t need. You should review your auto insurance policy and your health insurance policy periodically and check whether or not you need all the coverage that you’ve taken on.

For example, you may have chosen a full coverage auto policy when you first bought your car, but now it’s several years old and you don’t need coverage to be as comprehensive. It’s also a good idea in general to shop around for different insurance policies because you could save by switching to a new company or plan. 

Prioritizing your Financial Goals

The golden rule is – categorize and prioritize.

Not every goals is the same. Some are more far reaching while others are easier to achieve. So it’s important to to categorize and prioritize your financial goals.

Renovating the home, replacing the thermostat, or planning a vacation are all examples of short-term financial goals, whereas, buying your dream home, building a fat retirement fund, investing money, or saving money for child’s education fall under the category of long-term financial goals. These financial goals usually take much longer to achieve.

Things like purchasing a car or paying off debts (credit card debts, student loan debts, payday loans) might be called mid-term financial goals, depending on the amounts owed

How can you be more focused on your financial goals?

Many people set financial goals, but few remain focused on achieving them. Most people fail to achieve their financial goals because they lose interest soon.

To remain focused on your financial goal, you can:

  1. Write down one goal at a time in detail. The goal should be realistic, achievable.
  2. Set a timeline for the goal and decide if it is a short term, a long term, or a mid term goal.
  3. Revise your budget and make necessary changes as per your planning to achieve the goal.
  4. Consider some room for fun. Self rewarding is very important to remain inspired.
  5. It may be helpful to set easy and short-term goals first. Accomplishing the easiest goals can boost a sense of confidence and give you the push you need to keep working toward the bigger goals.
  6. If achieving your financial goals requires some lifestyle changes, take note and plan accordingly. You may need to cut unnecessary expenses, save aggressively, or earn some extra money. Think positively, otherwise you may not be able to stick to your plan. All these may sound daunting, but not impossible.

Tips to Set Financial Goals Smoothly

Keeping track of your goal is very important. If you set a number of goals and don’t keep track, you will be stuck in the middle. Plus, you can celebrate when you meet your goals!

  1. Affix a note of your goal to the door or wall for a visual reminder.
  2. Mark a calendar with goal milestones as you achieve them.
  3. Take advantage of apps that make tracking goals much easier.


Lastly, there is no other option but to set monetary goals when you want to lead a peaceful financial life. If you don’t know the right path, walking randomly will not help you to reach the right destination.

By planning for your financial future, you’ll set yourself up for success in reaching your financial goals.


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What a 25 Year Old’s Financial Situation Looks Like

Many personal finance bloggers provide net worth, income and expense, and goal updates each month for their financial situation. Some of these bloggers go in-depth into the details and are fully transparent, while others will tell you at a high level their net worth and how it changed during the month. I’m a fan of being fully transparent with my life and I also believe you, my reader, appreciate it as well.

In this post, I want to lay it all on the line: I’m going to give you an in-depth look at my personal balance sheet, income statement, and talk a little bit about areas for improvement going forward. First, I will give you a high level overview of my assets and liabilities, my income, expenses, and taxes over time, and my savings rate for the first 6 months. Then, I will dive deeper into the details for my income and expenses and discuss my goals for the next 6 months.

My sincere hope is that you look at my transparency around my finances and look to take steps to make your financial situation better. I truly believe that everyone can get their financial situation in order and can be successful with money. It doesn’t matter how much you make, it doesn’t matter how much you have currently. By taking steps each and every month to earn money, save money, and invest money, you will be on the road to wealth.

Wealth is the ability to fully experience life.” – Henry David Thoreau

Erik’s Financials at a High Level at Age 25

This is a snapshot of where my finances were at age 25, in 2017. Personal finance is personal, so this will look different for everyone, but hopefully it gives you an idea of what one 25-year-old millennial’s personal finances look like.

First, I want to show you a high level view of my personal balance sheet and income statement. At the beginning of 2017, I had a net worth of $68,919. At the end of June 2017, my net worth was $96,073. This number is my assets minus my liabilities. The assets include my cash in my checking and savings accounts, my house and car, my 401k, IRA, HSA, and any other investments. The liabilities includes my credit cards, my mortgage, and my security deposits.

I was lucky to graduate college with only $8k in student debt, which I paid off in 2015, and while I did take out a loan on my car, I paid it off promptly in the few months after to keep my financial situation liquid. I’ve missed out on some market gains, but still did pretty well for 25.

2017 Balance Sheet over time
2017 Balance Sheet Over First 6 Months

In 6 months time, I was able to increase my net worth by nearly $30k through a combination of building my investments, and paying down my mortgage. I will go into more detail later in this post.

For my income, investments, expenses, and taxes, I break them out below. By June 2017, I’d made $56,178, invested $16,002, paid down my mortgage $9,934, spent $16,590 on various things, and paid $12,333 in taxes.

2017 erik's income statement over first 6 months
2017 Income Statement Over First 6 Months

I really like looking at this table because it tells me the story of each month. In February, I received a nice bonus from work and was able to put $5,500 into my Roth IRA, and paid off an extra $2,800 in mortgage principal. Also, I break out taxes, because it’s interesting to see how taxes affects my savings rate.

Now, I will go into the details for each line item.

An Examination of a 25-Year-Old Millennial’s Balance Sheet

I break up my assets and liabilities into high level categories: cash, property, investments, credit card debt, mortgage debt, and miscellaneous debt. Each of these categories includes multiple accounts. Becoming wealthy is about increasing the quality and quantity of assets you have, and decreasing the liabilities you have.


As mentioned above, my assets includes my cash in various checking and savings accounts, my house and car, and my investments in various accounts (401k, IRA, HSA, taxable, and business accounts).

2017 erik's balance sheet assets


I could be a little more aggressive with my investments given my cash situation, but I like having at least $5-7k in cash from a psychological standpoint. I never know what will happen to my house, my body, or my life. Therefore, I treat my savings account as my emergency fund. As you can see below, my total cash has been relatively constant between $5k and $12k.

erik's balance sheet cash balance over time

I’m fairly comfortable where I’m at right now with cash, but wouldn’t mind having at least $15k in cash when I’m done hitting my debt paydown and investment goals (more on this later).


For property, I have a 2014 Volkswagen Jetta which I bought last February, and a house, which I bought July 2015.

Erik's balance sheet property 2017

For my car, I reduce the value by multiplying each month by 98% to simulate depreciation. This is not a scientific method, but it works for now.

For my house, I’m taking the most recent appraisal value (August 2016). I’m skeptical of Zillow’s Zestimate because earlier this year, my Zestimate was $360k, but then dropped to $315k, and now is back to $340k. I would rather not see big peaks and valleys in my net worth, and as a result, I’m keeping the house value at the appraisal value.

Overall, I’m happy with my property valuations and these numbers will be staying relatively the same over the next few months as I’m not planning on buying another car or another house!


I have a few investment accounts, some tax advantaged, some taxable, and one business line item. For the tax advantaged accounts, a 401k account, a Roth IRA, and my HSA. For taxable line items, I have a taxable account with some shares from the company I work for, and RSU’s from the same company. I’m happy my 401k balance has nearly doubled, but this is far from being satisfactory if I’m going to have a fat tax-advantaged retirement account 🙂

2017 erik's balance sheet investments

2017 was the first year I contributed to an IRA. Technically, I contributed the max for 2016 and haven’t contributed anything in 2017. I want to change this soon, and will look to max out my 2017 contributions in the next month or so.

My 401k account is a Roth 401k and I’m contributing about $800 a month. I’ve upped this contribution a little bit more to 10% of my salary, but am always tinkering with this number. I’m also thinking of switching to traditional because I was recently promoted and got a decent raise.

I’m maxing out my HSA account since this is almost free money… I put pre-tax dollars in and can spend those dollars without paying any tax – such a good deal!

Overall, I’m generally pleased with my investment growth, but will have to stay consistent with my contributions.


For liabilities, I have 4 credit cards, a mortgage, and security deposits for my roommates. My one roommate never gave me a security deposit, which I’m a little upset about, but haven’t (and won’t) taken action.

2017 balance sheet liabilities

For my credit card debts, these are generally below $1,500 a month. I put all of my purchases on my credit cards and average 2% cash back. I pay off my balance each and every month.

My mortgage is a 5/1 ARM at a 2.625% rate. So far, I’ve paid off $9,934 in mortgage principal – a combination of regular and prepayments. I’m currently at roughly 85% LTV and have PMI to pay each month. To get rid of PMI, I will need to pre-pay roughly $20k of principal. I want to address this in the next 6 months, by either accomplishing it, or getting a solid start on it for 2018.

Net Worth: Up $27,154 From Beginning of Year

For the year, my net worth is up $27,154, mainly driven by an increase in investments of $16,002, and a decrease in mortgage of $9,934.

2017 balance sheet net worth over time

In the second half of 2017, I expect my net worth to hit $100k, and my investments to increase at least $15k, and my mortgage to decrease $10-20k.

One area of improvement that I see is increasing the distribution of my net worth to investments. Right now, my house makes up roughly 50% of my net worth (roughly $48k of $96k). I’m not sure if I want to address this concern this year given my goal of getting rid of PMI.

An Examination of Erik’s Personal Income Statement

To get to the balance sheet, we must examine what happens behind the scenes: what is my income and what are my expenses each month? Tracking your income and expenses is incredibly important in personal finance. What gets measured gets managed!


Currently, I have 3 streams of income – 2 active and 1 passive. I work a 9 to 5 doing statistical analysis for a regional bank, and I have a few hours of statistical consulting work a month. My two roommates pay me $1,300 a month in rent, and this has allowed me to increase my income by roughly $8k per 6 months. I also include my utility income (which is technically income but is offset by when I actually pay the utilities), and any other income.

2017 income statement income


It doesn’t matter how much you make, it matters how much you keep. It is important to live within your means – spend less than you make! I track expenses to make sure I’m living within my means!

The main expense categories are discretionary spending (Food and drink, shopping, recreation, travel, home improvement, donation, etc.), utilities and mortgage, auto insurance and gas, other expenses (investment contributions), and paycheck items (taxes and investments).

Discretionary Spending

My main expense each month is food and drink. I’ve definitely became a little more loose with food and drink as my income has increased (lifestyle inflation at its finest).

2017 income statement discretionary spending

I’m averaging about $450 a month in food and drink, most of which comes from eating a $5-10 lunch at work. I don’t buy drinks or go out for dinner too much any more, but lunches add up!

Also, at the end of June, I booked a flight to Vegas to hang out for the 4th of July weekend. I haven’t done too much traveling, but realize if I want to widen my perspective on the world, it’s essential to get out there and see new things!

las vegas downtown

Recreation is another one that I think can get out of hand quick: this one is gym membership fees, golf greens fees, and other fun expenses, etc.

Utilities and Mortgage

Each month, my mortgage payment (principal and interest) is $1,104, insurance is $114, PMI is $144, and property taxes is $339. Utilities run about $300 a month, and this is split 3 ways.

2017 income statement utilities mortgage

As mentioned above, paying down the mortgage principal by roughly $20k will get rid of the PMI payment of $144 a month. Without any extra payments towards principal, my wealth grows roughly $530 a month through equity build.

Auto Insurance and Gas and Other Expenses

I usually fill up my gas tank one time a month because I don’t drive too much. In May and November, I have my car insurance payment of about $800. Car insurance is expensive!

For investment contributions, you will see in February, I contributed $5,500 to my Roth IRA, and in May, I put $6,000 to work in my business endeavors. Investment contributions aren’t technically aren’t expenses, they are a balance sheet transfer, but since cash is going out, I treat it as an expense.

These expenses are not a concern for me.

Day Job Paycheck Taxes and Investments

Everyone needs to pay taxes, and I’m no exception. With each bi-weekly paycheck, there are a number of things taken out, both pre-tax or post-tax. The main items I’d like to call attention to are the 401k and HSA line items. I’ve recently increased my 401k contributions and am maxing out my HSA account.

Overall Takeaways From My Personal Income Statement

Overall, I’m saving a good amount of money each month, and I’m able to put that money to work in a variety of ways. A savings rate of 49% post-tax is very good, but can always be improved upon.

One thing I’m hoping to do is travel a little bit more in the second half of 2017. Like I mentioned above, this past weekend, I went to Vegas on a whim and had an amazing time 🙂 I’m looking to continue to travel around the Midwest and continue to widen my perspective on the world.

bellagio fountain show

What did you think of this detailed breakdown of my personal balance sheet and income statement as a 25-year-old millennial? I hope it inspires you to track your own finances, including income, expenses, assets, and liabilities, to ultimately have an idea of your net worth. As I’ve said earlier – what gets measured gets managed!

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How to Set Goals You Can Actually Achieve

Have you ever set goals, and not achieved them? What went wrong with these goals? What steps can you take to succeed in life? How can you set goals you will actually achieve?

Setting goals is critical for reaching your dream life, and living the life you WANT and DESERVE.

Throughout childhood, and even into adulthood, we are always told how goals will change our life, and the importance of setting good goals.

How can you set goals you will reach? Is there a goal setting framework for success? Many people don’t know how to set goals, or don’t have the consistency to achieve their goals.

For example, a recent study by the University of Scranton found that over 92% of people who make New Year’s resolutions will fail to complete them.

Even if you’ve never tried to set concrete goals for yourself there are a number of steps you can take that will significantly increase your odds.

In this post, you’ll learn how to set goals for success, learn about S.M.A.R.T. goals, and learn a framework for setting goals you will actually achieve.

How to Set Goals for a Successful Life

The process of setting goals is not too hard.

However, the process of setting goals which you will actually achieve is a little tricky.

Make no mistake though, you can definitely learn the steps to setting good goals, and get in an action based mindset to achieve your goals.

When creating goals for your life, career, health, money, etc., there are a few things you need to do:

Let’s get into each of these goal setting techniques so you can get on to setting goals you will actually achieve.

Deconstruct Your Goals into Smaller Sub-Goals

What is deconstruction?

Essentially, deconstruction is exploration.  To deconstruct something is to dig around, get the lay of the land, and understand what there is to do to reach your goals.

After getting a feel for what is out there, the next step is to try to figure how the smallest steps which you will be completing.

How can you find these steps?

Some of these goal setting methods will be better than others. Think critically about which one makes the most sense for you, and figure out what the best path is for your hopes, wants and dreams.

Set Both Short and Long-Term Goals to Achieve Your Goals

reaching goals through actionsWhen setting goals, it’s important to distinguish between short term and long term goals.

I want to become a millionaire during my lifetime, and realistically, I realize that this probably won’t happen in the next day or week.

However, if I make it a goal of mine 10 years down the road, and set short term goals which can build up to the long term goal, then I will be successful.

For you, as we talked about when deconstructing your goals, if you can find the smaller steps, you can make these your short term goals. For the long term goals, this is your dream.

Short term goals include things like cleaning your room, paying the bills, and things that are on a week to week basis. This could even be something like not spending money during the week so that you can go out during the weekend.

Long term goals include things like saving money for a car or house, losing weight, and learning a skill.

By chipping away at the short term and long-term goals, you will be able to get more done and get closer to your dream at the end of the road.

The Power and Potential of Using S.M.A.R.T. Goals

When learning about goal setting, a very popular goal setting framework and template are S.M.A.R.T. goals.

Setting S.M.A.R.T. goals allows you can clarify your ideas, focus your efforts, use your time and resources productively, and increase your chances of achieving what you want in life.

S.M.A.R.T. stands for Specific, Measurable, Achievable, Realistic, and Time-Bound.

Creating your goals using the S.M.A.R.T. framework is one of the highest impact ways you can set yourself up for success.

Which do you think you would be more likely to follow through with:

“I am going to lose weight”


“I am going to lose ten pounds in two months by eliminating sweets and fast food and exercising for a minimum of twenty minutes per day”?

The first goal is too vague, and vague goals will most likely never be achieved.

The second goal is much better because it gets captures exactly what the final result is (lose ten pounds), specifies when it will happen (two months), and lays out the precise actions necessary to achieve it (eliminate junk food and get exercise).

By using S.M.A.R.T. goals, you will be able to create goals which can help focus your thoughts and actions.

The Power of Writing Goals Down on Paper

Setting goals is straightforward, but the real power comes from making them REAL. When setting goals, it should be more than just thinking about them.

To be successful with setting goals, write them down on a piece of paper and hang that piece of paper on the wall.

By writing your goals down on paper, you will keep your goals front and center. You will allow yourself to have them in the front of your mind every time you see that piece of paper.

To quote Aristotle, “We are what we repeatedly do”.

You’ll be much more likely to keep doing whatever action is necessary to reach your goal if you have a constant reminder.

By writing down your goals on paper, you make our goals REAL. When you put your goals out into the world, this makes them that much more tangible and powerful.

Share Your Goals with Friends and Family to Have Accountability

Do you know any people who constantly are setting goals and talking a big game, but never go anywhere in life?

What do you think of those people?

Instead of telling people about your goals and not following through, telling others about your goals can be a powerful tool.

You can keep yourself accountable by sharing your goals with friends and family.

Any goal becomes much more achievable with the right support network! 

If you want to lose weight, then say to your friends, “I am going to lose 10 pounds in the next two months.”

As time progresses, your friends and family will ask about how you are doing on your goals and want to help. With this support, the grind becomes a little easier.

Writing down your goals on a piece of paper will make them feel real, while sharing your goals with others will keep you accountable and motivated.

Now, let’s talk about the importance of action when setting your goals.

Focus on the Action, Not the Result When Creating Goals

What are your goals? What do you want to achieve?

When I read those questions and think about my answers, I generally will go straight to the result.

What are my goals?

All of these thoughts are fantastic, but how am I going to do any of this?

Let’s talk about becoming debt free for example.

It’s a great thought to have that you want to be debt free, but if you are just putting the minimum payment towards your debt and hoping it goes away, do you think you’ll get there?

Instead, we need to focus on the actions: pay off an extra $200 a month. Pay off an extra $600 a quarter. Pay off $2,500 this year.

YOU CAN CONTROL YOUR ACTIONS. You cannot always control the result.

This is why it’s so critical to focus on actions for achieving your goals this year.

Focus on actions, you cannot always control the result.

A 3 Step Framework to Setting Goals for Work and Life

Here are 3 simple steps for setting goals for your work and life.

As we discussed above, it’s first about asking yourself the right questions and understanding what you want in life, and then working backwards to find the actions that make sense.

  1. Identify your goals and dreams
    • Split your goals and dreams into multiple buckets: social, financial, spiritual, physical, emotional, work, fun.
    • Ask yourself: where do you want to be in 1 year? In 5 years? In 10 years?
    • Do you want to get a promotion at work?  Do you want to increase your savings rate? Are you looking to retire early? Do you want more friends? Are you happy with your job? What things stress you out? Do you want to lose 10 pounds?
  2. Figure out which actions you must take to reach those goals and dreams
    • You have your dream, now what do you have to do to make it happen? GO DOWN THE RABBIT HOLE!
    • Do you want to retire early? Ask yourself, what’s your savings rate? What is your retirement income goal? Are you currently saving enough to allow yourself to retire at age X?
    • Are you looking to get a promotion at work? Who are the key influences of your career? What skills are necessary to be successful at the next level? Should you be networking X times a week?
    • Do you want to lose 10 pounds? What are you eating each day? Are you exercising enough to get your body in a calorie deficit?
  3. Make a Plan and Take action
    • If you goal is to lose weight, decide to cook your own food 5 times a week. If your goal is to save money, pursue money saving options in your housing, transportation and eating. The possibilities are endless!
    • It’s great to know what you have to do, but if you never take action, you will never achieve your goals and dreams.

Through using this framework for setting goals for work and life, you can create a plan for your success. There are so many ways to reach your dreams, and through effective goal setting, you can get there.

The Importance of Taking Action for Achieving Your Goals

“An ounce of action is worth a ton of theory.” – Ralph Waldo Emerson

Ideas, goals, and dreams are worthless without action.

Humans underestimate how much they can accomplish in a year, but overestimate what they can accomplish in a day.

Everyone on this Earth has 24 hours in a day, 168 hours in a week, 720 hours in a month, and 8,760 hours in a year.

What’s your idea? Where do you want to be in a year? What about 3 years? 5 years? What’s your goal?

Successfully setting goals is possible and doable. Now, that you have a framework for setting goals you will actually achieve, it’s time to get out into the world and achieve those goals.

Readers: what are your goals? What are you looking to achieve? How do you set goals?

How to set goals you can actually achieve

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Interviewing 101: How to Get The Job You Want

Effective interviewing is possible if you have the right strategy for a winning interview. When starting off your career after college, or making a job change later in life, having interview skills is essential for getting the job you want.

Luckily, there are a number of job interviewing strategies you can practice and hone to impress hiring managers, and improve the chances of getting the job.

Are you looking to become a better interviewer? I want to help you improve your interview skills and get the job you want.

In this post, I will be sharing with you tips to perform successful interviews. I’m going to look to answer you interviewing questions, and provide answers on the following topics:

Let’s get started with a discussion on what your job is as an interviewer is, and how you can set yourself up for interview success.

job interviewing 101

Your Job as an Interviewee: Show Value

When going for an interview, the sole purpose you should be focused on is showing your worth and value to the interviewers.

What is value?

For your career, value is the assessed worth of a service.

If you can show the interviewer that you are worthy of the job, and will be a good investment in the businesses’ time and money, you can secure the job offer.

Showing value while interviewing can be accomplished through the following:

In addition to showing your worth and value through the tactics above, there are a few interviewing skills that will increase your chance of getting the job offer.

Interviewing Skills to Practice to Get a Job

To capitalize fully on the opportunity to interview, there are a few interviewing skills to practice to help impress the interviewers.

Through my experience, both as an interviewee and interviewer, there are 5 important interviewing skills. These interviewing skills are general, and can be applied to all disciplines and fields of work:

Why are each of these skills important? Below is a description of each skill necessary for helping you during the interview process.


Communication is arguably the most important skill to have and focus on growing in a person’s life and career.

In every day life, we interact with many different people. If you can’t communicate your thoughts and feelings in a coherent way, you will struggle.

Similarly for your career, written and verbal communication is so critical.

For improving your communication, seeking to understand, and then be understood, is the first step to succeeding with people.

Once you understand the question and perspective of the interviewer, then you will be able to answer in such way which satisfies the interviewer.

I’m a natural introvert, but through practice, I’ve improved my communication over time.

A few ways to improve your communication include:

Communication is so critical, and it’s essential for interviewing success.

Big Picture Thinking

Big picture thinking is a rare skill. If you want to connect with the interviewer, big picture thinking is a must.

Big picture thinking is the ability to take in many different pieces of information, understand how all of the pieces of information work together, and then provide a strategy to produce a favorable outcome.

Hiring managers are tasked with a lot on a daily basis. They have to manage their staff, manage a profit and loss statement, keep up with industry best practices and regulations, and the list goes on and on.

If you can connect with the hiring manager at a higher level, this will instantly differentiate you from other potential candidates who are too focused or close minded.

For me, I improved my big picture thinking through reading books about broad topics, playing strategy games, learning about strategy, and taking a step back from the detailed processes to think critically.

It took a while, and I’m still not a great big picture thinker, but I’ve improved from where I was before.

Big thinking can bring big results!

Customer Service

What do businesses do to make money? Businesses provide individuals or other businesses value through products or services.

Typically, the buyers and consumers of the businesses’ product or service will have questions or comments. If you can reliably be respectful and helpful to the businesses’ customers, you’ll have a higher value in the eyes of the hiring manager.

Think about it, when you walk into a store, how do you like to be treated?

I’m guessing you’d like to be treated with respect, to have your questions answered in a clear and concise manner, and get on with your day stress-free.

Again, this isn’t rocket science, but if you don’t have much experience, start trying to become more friendly to people around you. Once you are on the job, you can continue these practices.

Likability is a huge component in raising your value as job candidate. Working on your customer service skills will lead to increased likability, and will help with getting the job offer.

Problem Solving

A skill listed on many job listings is problem solving.

In jobs which are straightforward and grunt-ish, it’s very difficult to work on problem solving on the job.

However, for business owners and managers, thinking outside the box is a must. If someone can help solve a problem, they are instantly more valuable to you.

A few pieces of problem solving include creativity and designing a solution for the situation at hand.

Learning how to problem solve can come through playing games, doing puzzles, and studying strategies for problem solving.

Whenever I come across a problem, I always take a step back, take a deep breath, and apply the following steps to maximize my efficiency. By practicing this process, you will be able to tackle much more difficult problems and be able to successfully apply what skills and tools you have.

  1. Examine the problem and understand what the problem is asking
  2. Figure out what tools you can use to solve it
  3. Map out a high-level plan to the solution
  4. Follow your plan from #3 and solve the problem

Becoming a better problem solver will help with interviewing.


Even if you aren’t applying for a sales based job, knowing sales and marketing can help with interviewing.

When interviewing, you are selling YOURSELF and your skills and knowledge to the business in exchange for a job.

By applying the principles of establishing authority, trust, and scarcity, you can improve your value in the eyes of the hiring manager and improve the chances of getting the job offer.

Learning sales and marketing can be done through reading different books, watching videos, or trying to sell a product yourself!

Before getting into the nuts and bolts of the interview process, I want to cover one more thing: gaining real world experience and learning job specific knowledge.

How to Gain Job Specific Knowledge and Technical Skills

qualification worth itAll of the skills I mentioned above are great in general, but most jobs are specialized.

As you progress in your career, the jobs get even more specialized, and specific knowledge will be required.

For example, in my line of work as a programmer and statistician, I’m required to know the SAS programming language, and also understand regressions and statistical analysis.

If I didn’t know these pieces of information and possess these skills, I wouldn’t be qualified for this job.

With some jobs, you can learn this information on the job, but to succeed with your interviews, gaining relevant experience before the interview will be beneficial.

Gaining the proper training, education and experience can be straightforward for some industries with college, apprenticeships or certifications.

If you are looking for a job in an industry where the path is a little less straightforward, freelancing and doing self-directed projects can lead to impressive items on your resume.

Just the other week, I interviewed someone who ran a children’s book company in college! While that had no relevancy directly for programming and statistics, it showed entrepreneurial ability and big picture thinking.

Getting off the couch and getting into the real world will help round you out as a job candidate.

We have touched on the necessary skills for interviewing success. Now, let’s dive into the interview process and how you can create an effective interview environment for yourself to get the job.

What to Do in Preparation for an Interview

Congratulations! You’ve successfully navigated the human resources gauntlet and have finally secured an interview with the hiring manager.

Now what?

It’s time to prepare for your interview. It can sometimes seem intimidating going for an interview, but with the right preparation, you can succeed.

There are a few interview preparation strategies and tips to know before going for an interview. With these interview preparation tips, you will help your chances of acing your interview and being offered a position.

After we discuss these interview preparation strategies, I’ll discuss how to answer questions to impress the hiring manager. After you learn how to answer interview questions the right way, we will talk about interview day and impressing the hiring manager.

3 Things You Need to Know When Preparing for an Interview

When preparing for an interview, there are so many things to consider and think about.

Do I have the right skills and experience for the role? Will the company be a good fit? Who will I talk to? What if they hate me? What will I wear?

Getting ready for an interview comes down to preparing the following 3 things:

Interview preparation is all about knowing your story, and having the confidence to sell your potential to the hiring manager.

Knowing your story means knowing your abilities, education and experiences. 

If you don’t know your story, you’ll stumble during your interview and not get the job offer.

I’m sure you know someone when someone is making up a story or speaking about something you can tell they don’t understand. Don’t be that person during an interview. You are just wasting your time, and also wasting the interviewer’s time (and they are very busy).

The second part to interview preparation is having some understanding the job position and company. If you can have a basic understanding of the job position, you’ll be able to tailor your interview questions and answers towards the hiring manager goals.

Make no mistake, this is intimidating (especially if the company is small). However, with informational interviews and doing research online, you can get a feel for what a company stands for and how you could fit in as an employee.

Once you have an understanding of these few pieces of information, it’s time to practice your interview question responses.

Many people are smart and dedicated enough to receive a job offer. However, the ones who will get the job will be able to answer questions clearly, concisely and confidently.

Examples of How to Answer Common Interview Questions

When preparing for your interview, coming up with answers for common interview questions will be very beneficial for your interview.

When I was job searching, I had a 5-page document with questions and answers which certainly helped me feel more confident when interview day arrived.

As we discussed in the previous section, it is essential to be able to answers in a calm and concise manner.

Brainstorming good and complete interview answers, mock interviewing, and practice, you will become more confident over time.

Mock interviewing is especially important. The more that you interview and practice, the more familiar you will be with your story.

By performing many interviews, you will become more comfortable with discussing your past. Your level of comfort and confidence will be appealing to employers. This will lead to interview success and hopefully, a job offer.

How can you impress with your interview answers? Below, I provide an effective interview answer strategy for you to use when answering the interview questions.

Remember, the goal of your interview is to show you can be a valuable asset to the hiring manager and company.

How to Impress with Your Interview Answers

There are hundreds of common interview questions (which I’ll provide a list a little later on in the post), but for examples of answers, I’ve prepared four interview questions for us.

  1. What are are your strengths?
  2. Do you have any weaknesses?
  3. Why do you want to work for this company?
  4. Why do you want to leave your current job?

When preparing for an interview, it’s important to rehearse answers to the interview questions that you will be asked.

Before coming up with your answers, it’s critical to have a strategy for success. In the next section, I’m going to discuss a strategy for answering interview questions the right way.

You will see that by applying the strategy, you will hopefully paint a positive picture of a successful, confident, young adult full of potential.

By doing this, the hiring manager will have to offer you the job.

A Winning Strategy for Answering Interview Questions

Coming up with responses for your interview isn’t rocket science. While the thought of having to interview with a stranger can be scary, you can overcome it.

Here is my 4 step winning strategy for answering interview questions:

  1. Start off by relating the question to some life experience of yours.
  2. Tell the interviewer about your actions during the experience and how your actions affected the outcome.
  3. Share the result with the interviewer and then reflect on the experience.
  4. Examine ways how this experience will affect your work in the role you are interviewing for.
    • Use this time to describe how you’ve grown from this experience and will be able to tackle bigger and more complex problems.

If you can, try to always relate it back to the job description.

By following this 4-step process, you can successfully answer any interview question that comes your way.

Another tip is to use the power of 3’s. Our generation was conditioned into thinking in terms of three ever since elementary school.

For example, every paper needs an intro, three body paragraphs, and a conclusion. In your paper’s thesis statement, it’s important to have three topics that are relevant and powerful to give the reader a reason to continue reading.

When describing your story and what you have accomplished, focus on the power of 3‘s.

Finally, (this should apply to everything in your life) it’s especially important, to be honest!

An employer will find out if you are lying about something in your life.

People are not dumb and can pick up on even when you are telling a small lie about the time you saved a couple cats from a burning building (if you have done that, that is amazing!).

However, with preparation, everyone has enough stories and experiences to be able to answer the following questions successfully and ensure that they have a strong chance at getting the job offer.

Now, I’m going to provide a few examples of common interview questions and answers.

How to Answer “What are your strengths?”

Before answering any interview question, it’s important to take a deep breath and remember the strategy.

When answering “What are your strengths?”, the first step is knowing your strengths and how you could apply those on the job.

For example, if you are applying for an analyst position, your answer could be the following:

I’m a strong problem solver. I’m able to think big picture to come up with a solution, but also am detail oriented and can dig deep to resolve any nuances and smaller issues. Problem solving requires looking at a problem from multiple angles, coming up with a strategy, and executing on that strategy.

My problem-solving skills have allowed me to complete [insert previous relevant project or work experience here]. Through reading and learning about my industry, I have a broad view of what techniques I can apply to a given problem.

This job needs a strong problem solver, so I believe that I will be able to come in and make an impact immediately.

Everyone has strengths and it’s important to expand on what your strengths are.

Go into the details of how you received those grades and what were your strategies for success.

By going into the details, the interviewer will be able to obtain more information on how you will identify and attack problems, and what your plans for solving those issues are.

The Power of Story Telling when Interviewing

telling stories during interviewTying each of the interview questions to you and your situation will be critical for differentiating yourself from other candidates. Also, you have to take into consideration the job position.

If the position is based off communicating with customers and other teammates, make sure to include in your response that you have exceptional communication skills and that you have experience working with teams.

After saying this, talk about an experience when you were in a team; describe what happened, the result of the issue, and how you and your team resolved this problem.

Including a story about your experience will further strengthen your answer. Storytelling is incredibly powerful and can leave a memorable impression for the interviewer.

This will show the hiring manager that you are not just saying words, but can back it up.

Again, make sure to look at the job description to make sure that you are portraying yourself as someone who the interviewer is looking to hire.

Go into detail about the strengths that are relevant to the position and that will enable you to succeed in your next job.

How to answer “Do you have any weaknesses?”

Answering “Do you have any weaknesses” can be a tricky interview question for many young adults.

When answering “Do you have any weaknesses”, it is important to spin the answer to discuss something you are working on.

Self awareness is an incredibly important skill for success in this world. By showing the interviewer you are self aware of a problem, but are working towards improving will lead to successfully answering this question.

An example answer to “Do you have any weaknesses” could be:

One of my weaknesses is communicating my ideas and thoughts clearly and confidently.

However, I’m currently working on this by attending Toastmasters, and working each day in my current role to be clear in my writing and speaking. I try to capitalize on every opportunity to present to my team for practice.

Growing up, I was naturally quiet and didn’t practice writing or speaking as much as I should have. Communication is one of the most important skills for success in life and career, and over time, I know I can improve on it.

For this question, be authentic. Do not say, “I’m a perfectionist”, or “I work too hard.”


You want to distinguish yourself from the other potential hires.

Be original and speak to something that you are improving on. This will show that you are aware of your shortcomings but have been working to overcome the hand you were dealt. This shows resiliency and the ability to adapt in a professional way.

No one is perfect, but if you are working at your imperfections, this will show that you are successful and an asset that they need to hire.

How to Answer “Why do you want to work for this company?”

Answering the question “Why do you want to work for this company?” is straightforward, but can be a little tricky.

Having a solid answer for why you want to work for the company you’ve applied for is very important.

With a bad answer, the interviewer will be turned off.

If you don’t want to work for a company, why are you interviewing? If you don’t know why you want o work for a company, then what are you doing with your time?

However, with some research on the company, you can successfully answer this interview question.

Here is an example response for “why do you want to work for this company?”:

I genuinely believe that I can grow and achieve greatness at your company. You seem to have the tools and programs in place where I could prosper in the workplace.

I read [insert company] has won multiple awards for being a great employer in the region and I applaud that and want to be a part of this success.

I read about your new product and believe it working on it would be a very beneficial experience for both of us. By coming to work here, I hope that I can help improve the processes of producing that product.

Mentioning some of their successes and what they are working on is a good strategy.

This is an important question in the sense that if you say, “I don’t know anything about the company, I just applied and got an interview”, you will not look too good in the eyes of the hiring manager.

How to Research a Company Before Your Interview

For you, try to research and pick one product that the hiring manager’s group works with. Try to understand how the product works, and be excited with comments and questions on this product.

This research can be accomplished through informational interviews or searching online on the company’s website.

By doing this research, after you answer the question, you can go into a discussion on the product and what you will be doing to improve it.

These additional talking points will speak volumes about your ability to think ahead  on building a better solution. With this question, you can build up your reputation as someone who is eager to learn and wants a better understanding of what the company.

“Why do you want to work for this company” provides a great opportunity to show your value as a candidate, and is critical for establishing a solid impression.

How to Answer “Why do you want to leave your current job?”

Another tricky interview question is “why do you want to leave your current job?”.

The key to successfully answering this common interview question is to not talk bad about your current employer, but instead focus on the opportunity in job you are applying for.

An example answer for “why do you want to leave your current job” could be:

I’m looking to leave my current job because I’m not getting as much responsibility or opportunity as I’d like at this point in my career.

Coming to work for [insert company here] will allow me to grow as an individual and provide opportunity for me to improve my communication, learn new analytical skills, and show my leadership abilities.

There are many reasons why someone would want to leave their current role. The key to answering this question is showing the hiring manager that you are excited to come to the new job.

Again, do NOT trash talk your former employer.

Say that you enjoyed working for that company, but the growth and development potential that you experienced was not enough for you to want to stay.

A hiring manager will notice the fact that you want to learn and expand on your mental abilities and want to achieve remarkable things.

Growth and development are two skills are employers really want to hear about. A driven person will be thinking about these ideas and will be more attractive to companies.

30+ Sample Practice Interview Questions

We covered 4 example common interviewing questions above, but there are potentially 100s you could practice for your interview.

Below is a list of interview questions which will help you prepare for an interview. I’ve split them up into the following sections:

Not all of these interview questions will apply to you or the job position you are looking to get an offer on, but should be a solid list to help you become prepared for your interview.

Common Interview Questions about You and Your Story

Below are sample interview questions about you, your story, and your goals. Brainstorming and creating answers for these questions will help get you prepared for you interview.

Finally, another commonly forgotten question is how much money do you want? What is are your salary expectations? Understanding your worth through market research will be important so you don’t leave money on the table.

Common Interview Questions About Your Previous Work and Education

Below are sample interview questions about your previous work experience and education. Brainstorming and creating answers for these questions will help get you prepared for you interview.

Other Common Interview Questions

Below are other sample interview questions about different work topics. Brainstorming and creating answers for these questions will help get you prepared for you interview.

Some of these practice interview questions might seem tough or unreasonable. However, it’s certainly possible that a hiring manager might want to know about a certain piece of information.

If you’ve done your research, prepared appropriately, and have great responses ready to go, then you’ll be able to crush your interview and improve your chance of getting the job offer you want.

Follow-Up Questions to Ask the Interviewer

The last step for preparing for a successful interview is preparing questions to ask the interviewer.

At some point during your interview, you will be asked if you have any questions about the job and company.

It is a best practice to have a list or script of questions to ask so that you can learn as much about the position and what your work will entail when you are hired.

Preparing for this part of the interview by having great questions to ask the interviewer is an excellent way to leave a fantastic impression.

Interviews are all about making the interviewer realize that the company needs to have you as an employee because it is an opportunity for them to grow!

Below is a list of questions which will leave an impression and will have the interviewer wanting to hire you. I’ve split them into 3 sections:

Don’t ignore this step! Preparing questions for the interviewer is equally as important as preparing your answers to the main interview questions!

Questions To Ask About the Interviewer

Below are a few questions you could ask the interviewer about themselves.

Getting to know your future manager and work is important. It won’t be fun if you work for someone you don’t like!

By getting answers to these questions, you can get a better handle on your future work, and also how your manager operates.

Questions To Ask About the Industry

Below are a few questions you could ask the interviewer about the industry that the company is in.

By asking about the industry, you can get a feel for how the hiring manager feels about the coming years for the company.

Questions About the Company and Your Fit

Below are a few more questions about the company and how you could potentially fit in with the team and culture.

By asking about the industry, you can get a feel for how the hiring manager feels about the coming years for the company.

Things to Remember When Asking the Interviewer Questions

There are a few more tips to remember when asking an interviewer follow-up questions.

Do not start the question with, “If I get the job…”.

Instead, say, ” When I start…” or “When I come to work for you…”. This shows much more confidence and does not put the interviewer in an awkward spot.

“If I get the job” puts unnecessary pressure on the interviewer. “When I start” makes it sound like you already got the job and want to learn how to increase productivity.

Also, doing research on the interviewer before the interview so that you have an understanding of what the person’s past is. Researching will help you direct your questions better; use LinkedIn and Google to look them up.

By asking these questions, you will be viewed as a competent and confident professional with loads of promise and ability. The hiring manager will have no choice but to hire you because they will see that you have an active mind and are working towards learning as much as possible.

How to Perform a Great Interview to Get a Job

I’ll admit, interviewing can be really scary. However, you’ve spent the last few days preparing and practicing your interviewing skills.

You’re confident and have finished your preparation for your dream job interview.

Now, it’s time to talk about what to expect during an interview. In the next section of this post, I’ll share with you how to act and what to say to ensure you can secure the job offer.

The sections below include:

After this section, to finish out the post, I’ll discuss what to do after the interview and how you can follow-up with the company and hiring manager.

What to Bring to an Interview

On the day of your interview, make sure you will arrive to our interview on time. If you are late, the chances of getting the job will drastically decrease.

Try to arrive at the building at least 10 minutes early.

There are a few things to bring to your interview:

After arriving, take a few deep breaths.

Trust your preparation: you have practiced and have honed my skills so you can effectively communicate your worth to the interviewer.

When the hiring manager or HR person comes to get you, greet them with a smile and thank them when they drop you off in the interviewing room.

It’s common courtesy to thank everyone. Make sure you don’t get in the way of anyone or anything, and be a decent person.

Relax, it’s just an interview. You have prepared for these for the past few weeks. Trust your preparation.

How to Sit During an Interview

successful interviewingWhen you meet the interviewer and go into the meeting room, relax, and take a few more deep breaths.

Stressing over your interview will be counterproductive.

Confidence is key for success in this world.

During your interview, sit back in your chair and keep your hands in your lap. There are a number of body language hacks you can use to show confidence. Bring your shoulders back, and don’t try to slouch.

Slouching is not advised during interviews because this will automatically make you less attractive of a person because your head will angle forward. When your head angles forward, there will be more shadows from the top of your head and your face will not look as bright. By sitting back in your chair, you will appear more attractive and confident.

Also, when you are in the middle of the interview, you might start to sweat a little bit.

By keeping your head up and shoulders back, this will naturally open your lungs for increased breathing. The combination of more effective breathing, attractiveness, and the belief that you will succeed will enable you to answer questions in an effective and successful manner.

Sit up straight and lean back in your chair. This will help you will look confident and ready to go.

The Importance of Listening Carefully During an Interview

One of Steven Covey’s 7 Habits of Highly Effective People is “Seek First to Understand, Then to Be Understood”.

It’s absolutely critical to listen before you speak.

This is a key step to a successful interview: everyone likes talking about themselves and no one likes interruptions. By being an active and effective listener, you will be instantly more valuable to the employer.

Eye contact is critical when listening.


By listening with both your eyes and ears, this shows that you are not afraid to communicate and puts you on the same level as the interviewer.

During the interview remember to sit back in your chair, use good eye contact, and take in everything that the hiring manager has to say.

By doing this, you will be able to have a clear picture in your mind of what words need to come out of your mouth to provide a concise answer.

By listening, you can set yourself up to answer the interview questions successfully.

After the interviewer finishes asking their question, use the 3-second rule of interviewing. The 3-second rule of interviewing is allowing 3 seconds to pass between the time that the interviewer stops their question and the time that you begin your answer.

By following the 3-second rule of interviewing, you allow the interviewer time to switch their attention from reading to listening. Also, if you start talking too soon, you will catch them off guard which can affect their ability to understand your answer.

Remember to allow the interviewer to finish their question and then don’t forget the 3-second rule of interviewing!

How to Speaking Confidently and Slowly During an Interview

After you have listened to the interviewer’s question and have taken 3 seconds to carefully gather your thoughts and prepare an answer, you may begin speaking.

I believe that the best way to convey your answer is to speak slowly and confidently.

Don’t talk like a mouse; speak with a purpose that you have and do not doubt your answers. Since you have prepared so well and you understand the industry, you shouldn’t have a worry in the world!

However, it’s crucial to speak slowly and make sure that the interviewer understands everything that you’re trying to communicate. Practice makes perfect!

Also, people who talk slowly are easier to understand because other people’s brains can comprehend slower speech more easily. The listener doesn’t need to try and keep up because you are speaking at a pace which is compatible with the interviewer’s level of comprehension.

Another reason why it’s important to speak slowly is it is easier to think and talk at the same time. You can be saying one thing and since you aren’t in a race to finish the sentence, you can think about what words you are going to say next to not misspeak.

Practice speaking slowly: this will help the interviewer understand everything you are trying to say as well as help you stay calm and cool.

How to Ask Questions During an Interview

As we discussed above, having questions ready to ask the interviewer will be critical for a successful interview.

You should always ask questions during the interview to grow your understanding of the interviewer’s job and the company’s product(s).

I like to think of it this way: even if you don’t get the job, the interview will be a learning experience. Consider it an informational interview, so you can learn more about the company and the interviewer for the future. The interviewer will be extremely impressed when you ask them specific questions about their work.

Asking them what they enjoy about the company or their job is a safe way to have the interview be more conversational.

Asking them their advice on certain topics could be interesting as well. Something like, “Based on my background, what do you think I should look for in a job in this industry?”. This plays to their expertise and their ego; it’s an indirect compliment.

Make the interview a conversation.

Your chances of getting hired will skyrocket when the interviewer views you as a peer!

Ending an Interview to Improve the Chances of Getting the Job

After you’ve successfully answered all of the interviewer’s questions, impressed the interviewer with your professionalism, and showed your value, it’s time to leave a lasting impression.

You’ve trusted your preparation and knew with the proper execution you could get the job. By acting with confidence and poise, you’ve impressed the hiring manager and the company.

Your job isn’t over quite yet though.

At the end of the interview, ask them about the timeline for getting a response and what you can expect.

Ask follow-on questions like “What should I look into before I start?”. Or, “Is there anything else I should become familiar with that to be more successful at this company?”.

By asking questions like these, you can play to the interviewer’s ego and expertise while also painting a positive picture of your motivation and drive.

After asking these questions, thank them for their time and get on your way.

The next step is to send the people that you talked with a thank you email and then sit back and wait for the offer.

Steps to Take After an Interview

Whew, that was a rough one! You finished your interview! Now starts the waiting game.

A lot of questions fill your mind while leaving the company’s building: when will they call me? What did I do well? What did I screw up on? WILL THEY GIVE ME A JOB OFFER?!?!?

At this point, there are a few things you can do to continue to build up your value and reputation.

Many people don’t think to do anything after the interview aside from waiting for a phone call or email.

While taking this approach won’t necessarily hurt you, it also won’t win you any brownie points.

Here are the next steps I recommend you take after every interview instead of simply sitting in suspense:

Send a “Thank You” Letter After an Interview

Nothing says, “I care and this is important to me” like a thank you letter!

Wait a day or two, and then send a thank you letter. Personal touch goes along way in this digital world.

After your interview, it is important to send a thank you email to all the people who interviewed you at the company.

When sending your thank you letter, you should include the following topics:

Below is a sample interview thank you letter.  Some people get a little more fancy with the thank you but keeping it simple and business is a good strategy.

Dear Mr./Mrs. (Hiring Manager’s last name),

Thank you for the opportunity to interview with you.

I am excited to say that I would like to work with you and your team for these reasons:

  • Making an impact within the company
  • Working with customers
  • Working products that you really care about

When I come to work, I will do my best to improve the processes in place that we discussed during the interview. I am looking forward to showing my abilities in analyzing data in Microsoft Excel, and automating reporting to be more efficient.

Thank you again for your time and I look forward to speaking with you again. Have a wonderful day!


Your name

Make sure to customize the email or note above to fit your interview experience

A few other thank you letter tips include:

After writing your “thank you” email, relax, and wait for the manager’s response!

Pausing and Reflect After an Interview

When in doubt, WAIT! 

If they want you, they will not forget about you.

I cannot stress this enough. I received two job offers during my job search and on both jobs, I did not speak to the hiring manager a single time between my phone interviews, in-person interview, and the job offer phone call.

The complete process took over 4 weeks. Sometimes, the offer will come faster, but other times, there might be problems with human resources, budgeting, or hiring on the companies’ side which you can’t control.

Now that I am working, I understand this: the hiring manager is under a tremendous amount of stress to make the correct decision. By pestering them with phone calls and emails, all you’re doing is taking their valuable time away from their other responsibilities.

You should be confident in the fact that if they want you, they will offer you the job!

The Importance of Leveraging Your Network after an Interview

After the interview, it’s important to keep hustling and seeing what other jobs are out there.

Leveraging our network, and keeping a pulse on the job market will allow to you make sure you aren’t missing any amazing opportunities.

Keep learning about other job postings, keep networking and keep working towards your goals.

It’s never a good idea to put all of your eggs into one basket. Instead of taking your job search one interview at a time, keep pursuing other opportunities in case the current one falls through. Always have a backup plan.

If the position you just interviewed for is the only one on your radar at the moment, now is a perfect time to ping your network to see if any new opportunities have emerged.

Or, if you have any connections at your prospective employer, see if they can give you information on things like the company culture or management’s likes and dislikes in the event you’re called back for a second interview (or get hired).

Relaxing After an Interview

The interviewing process can be stressful and a lot of work.

Balancing work and life is crucial for success in life. After your interview, it’s okay to breath and relax.

If you get the job offer, it could be the last time where you don’t have a working obligation for a while.

Take advantage and have some fun! Relaxation is key so that once you start working, you will be able to make an impact on the workplace and increase productivity.

Burning yourself out with stress and anxiety right before starting your new job will only make the on boarding process that much more difficult.

Some people like to disconnect completely and zone out with no phone, internet, or TV. Others enjoy staying engaged with hobbies.

Remember, there’s a lot more to life than work!

Get the Job With Effective Interviewing

In this post, we discussed everything you need to know about interviewing. We touched on interview skills, common interview questions and answers, how to act during an interview, and how to follow-up after an interview.

With this information, you should have everything you need to know about the interview process.

By applying these interviewing techniques and strategies, you’ll be on your way to getting the job, and also hopefully increasing your income.

Hopefully this post has been beneficial for you during your interview preparations.

Readers: do you have any tips on interviewing I missed? What questions do you have about interviewing? Do you have some interview success stories to tell? I’d love to hear about these successful interviews!

Interview 101: How to get the job you want

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Is Money Actually Important and Does Money Matter?

Would you ever consider taking a pay cut in your day job if it meant more balance in your life, more time to do the things you enjoy, less stress, or more happiness in general? Would you ever consider leaving your day job altogether? Or would you always rather just keep grinding at your current day job, suck it up and save for the future? What if money didn’t matter? What route would you take? In this post, I want to explore the question, does money really matter?

Questioning the Default

In the book, Originals, the author Adam Grant advocates for individuals to question the default when going through life. Why is it that we peel bananas from the top? What if you peeled bananas from the bottom? Why are my habits the way they are? What if I changed some of my habits to live a better life?

As a personal finance blogger, I care a lot about money. I love seeing my savings rise every month, I love talking with other people about money and I’m always looking for new ways to build wealth. To question the default, what if money didn’t matter? What if I didn’t care about money at all? Would my daily habits change? Would I spend more, or would I save more?

If Money Didn’t Matterpay cut before reaching financial independence

If money didn’t matter, I would do a number of things differently. First, I’d explore taking more risk in terms of leverage and investment allocation. I’d start to treat making money more like a game, rather than a restriction on my lifestyle. Look at how many businesses are run these days: get into debt, try to extract as much profit out of as many units as possible, hope to not fail, rinse and repeat.

Could I amass $1,000,000 in the next 3 years by using leverage and taking extreme risk? Possibly. Could I lose everything by not being careful? That’s also possible. I try to map out all possibilities and scenarios, and even if money didn’t matter, my target would be somewhere in the middle, at the appropriate risk/return level.

If money didn’t matter, I’d spend more money on education and look to continue to gain more experiences. I’d spend more time with the people who matter to me, and help others with their goals. Being a mentor and seeing people make connections is something I love. I wouldn’t worry about needing to hit a promotion, get a bigger bonus at work, or even work those extra 2-3 hours a week.

My mindset toward finances wouldn’t change drastically, but instead of putting my money into the bank, I’d be putting it to work – to improve myself and my current situation. I’m looking to build a future of abundance for my future family members, and by using my knowledge and abilities, I’ll be able to do so.

As you can see, the importance of money can dictate a lot of choices in life as we know it. But I don’t want to let the importance of money be the reason why I don’t accomplish all those things listed above. So what’s the solution? Live like money doesn’t matter? Continue living the same was because money does actually matter? Where is the balance?

Would Treating Money as if it Didn’t Matter Be Reckless Behavior or the Right Behavior?

To anyone reading this post, the world is our oyster. There is so much opportunity in our world right now and we are just starting to see the effects of globalization. I have a virtual assistant in Africa that I’m paying $40 a week to help perform different graphic design tasks for my business. $40 a week puts him in the top 25% of earners in his country. Can you imagine the impact I’m making on him just by giving him work? $160 a month is scraps compared to what many people make in the U.S.A. and yet I get messages like, “Thank you Erik for payment. I’m very grateful and I appreciate.” I love doing things like this because I’m actually affecting other’s lives.

If money didn’t matter, why wouldn’t I go with friends to Vegas on a whim? Why not go travel the globe for a few years? What’s the risk in taking out a personal loan to increase my investments? I’m throwing around a lot of questions and thoughts in my head, and trying to be remarkable. I’m excited to see what the future holds.

Seeking Peacedoes money really matter?

Appointment at 9 am, meeting at 10:30 am, lunch plans with a friend at 12 pm, another meeting at 2 pm, hit the gym around 6 pm, and work for a few hours until bed. Life escapes the busy worker.

Mediation and visualization are two helpful ways to find peace with yourself and situation. I’m seeking peace and by writing and visualizing, I’ve become accepting of my situation and am excited for the next steps in my life.

Every day is a new day – a day to learn, a day to experience the wealth of the earth, a day to help other people. Saving at least 20% of your income a month will set you up for financial success. Become debt-free and build an emergency fund of 3-6 months of expenses and you’ll be on your way. At a certain point, money won’t matter. At the end of the day, our relationships, how we interact with others, and our experiences will be the only things that matter.

Does Money Really Matter?

After a certain point, money doesn’t really matter. If you have the income in place for your lifestyle, and have goals to increase your income and savings in other ways, money shouldn’t matter. Until you are debt free and have an emergency fund, money matters. Financial freedom is just that: freedom from finances – money doesn’t matter anymore, and now you can enjoy each day the way you want to enjoy it. I can’t wait to get there.

Readers: do you care too much about money? What would life look like if money didn’t matter? How much would you have to have in the bank for money not to matter?


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What is Capitalism, Marxism, and Post-Capitalism?

What does Capitalism actually mean? What is Marxism? Where could society and the economy go after Capitalism, and what is Post-Capitalism?

When searching for the truth, there’s a lot of information to read, consider, explore, and examine. When talking about money, the environment and economy, and other big picture thoughts, a lot of diving deep is required.

During high school, we are taught very briefly about the different economic systems of Capitalism, Socialism, and Communism. However, these are big ideas which are tough to comprehend (and admittedly, probably pretty boring for the typical high school student).

Today, let’s learn about these different economic systems.

In this post, we will explore (at a high level), the economic systems and theories of capitalism and Marxism, discuss the current economic and political environment through the lens of these theories, and talk about potential solutions for a sustainable future (guided by a book I read called Post-Capitalism).

An Overview of the Modern Economic System

Before talking about the current economic environment, let’s talk about the economic system we currently live in. Let’s dive into 2 systems (of many… think feudalism, slavery, socialism, communism, etc.) and thoughts which have influenced and formed the current economic system: capitalism and Marxism.

What is Capitalism?

Capitalism is an economic system where private entities own the factors of production. There are four factors of production:

The owners of capital goods, natural resources, and entrepreneurship exercise control through companies. An individual owns his or her labor.

The economic system employed in the United States is capitalism.

In a capitalist society, owners look to maximize their profit for their companies, and derive their income from ownership. Individuals work for the owners and are paid an hourly wage or salary.

For Capitalism to work, it requires a free market economy where goods and services are subject to the economic laws of supply and demand: as demand and price have a positively correlated relationship (demand up means prices go up), and supply and price have a negatively correlated relationship (more supply means lower prices).

Capitalism works in this environment because, in theory, multiple companies will compete for profits which will lead to increased efficiency, moderate prices, and efficient production.

In addition to a free market economy, robust capital markets should allow participants to issue, buy and sell stocks, bonds, derivatives, currencies and other commodities.

What are the Political Implications of Capitalism?

overview of economic systemsCapitalism is an economic system, but also has political and government implications.

Depending on the situation, government involvement can vary from very hands on to very hands off. There are different schools of thought here, but I’m going to focus on Laissez-faire economic theory.

The role of the government which employs Laissez-faire economics involves a government which protects a free market and the conditions necessary for capitalism.

The government only steps in to prevent monopolies or oligarchies, and also prevents manipulation of information between parties and within markets.

To keep order in the economy and environment, the government should provide a strong national defense and maintain infrastructure.

What works so well in Capitalism is there is an intrinsic reward for innovation and growth: more money and profits for the owners. While Capitalism has seemingly worked for the past 200 years, but that doesn’t mean it doesn’t have it’s flaws or disadvantages.

What is Marxism and Marxist Thought?

In the 1800s, a man by the name of Karl Marx was coming up with his own economic system and theory while studying Capitalism and the economy: Marxism.

I’d like to preface this section by saying something I didn’t realize until after my research.

Back in high school when I was learning about economics and world history, we touched on Marxism a little bit, but didn’t dive in. For my learning, it seemed the teacher and classmates had the thought that Marxism was horrible and the same thing as communism.

Since that was the case, my logic was I didn’t need to study the theory because it was horrible and therefore probably misguided or wrong.

What I learned in my research is that Marx had some very interesting thoughts and points which had an influence on my thoughts.

A lot of Marxist thought surrounds challenging where Capitalism goes wrong -how it ignores social dynamics of a class struggle between workers and owners. It was very interesting to read about Marxism, since Capitalist thought doesn’t talk about this “class struggle”.

While there are quite a few logical fallacies and pieces which turned out to false in Marx’s thoughts, Marxism is a valuable system to study and I’m going to dive in below for us here.

The Issues of Capitalism from Marxist Thought

There are a main points that Marx talked about:

These points came about through a few questions posed by Marx. In his eyes, it wasn’t enough just to hypothesize about the workers and owners in general, but to try to look through the eyes of those individuals and work his way up.

The questions were as follows (and with respect to the order above):

Let’s dive in.

Marx’s Theory of Alienation

Let’s talk about the Theory of Alienation.

From Marxist thought, alienation of the worker occurs in a Capitalist society in a few ways:

Through Capitalism, Marx argues, that when looking at The Theory of Alienation, a worker ends up being seriously diminished who is physically weakened, confused, isolated, and virtually without power. The products they produce are outside of their control, and the distribution is largely unknown as well.

Through this, the world ends up with a weakened working class which was enabled through the workers: they needed a wage, and exchanged their time for money.

Marx’s Labor Theory of Value

Now, let’s talk about another point Marx talked about: the labor theory of value.

In particular, Marx was concerned with the value of the products produced with regards to the “class struggle” and economy. Marx agreed with traditional economists that the value of any commodity is the result of the amount of labor time that goes into its production.

What is interesting about capitalism is that since the worker exchanges his labor for money, and is separated from the product he or she is producing, then as a result, at the end of the day, the worker cannot buy the same amount of product.

Stated a little more clearly, a worker to survive will sell their labor power, but as an after effect of alienation, will end up being able to buy back only a portion of what they’ve created in the marketplace.

Over time though, as efficiencies are found and implemented, a surplus of value is created through the use of machines and other methods. Through these efficiencies, less workers are needed, the profits increase for the owners, and the class divide increases.

Paradoxically, this surplus is also a weakness, as to sustain growth, the workers need money to continue to buy up the products. Under pressure from the constant growth of the total product, the capitalists periodically fail to find new markets to take up the slack. This leads to crises of “overproduction”, capitalism’s classic contradiction, in which people are forced to live on too little because they produce too much – and crisis occurs.

The Materialist Conception of History

capitalism and marxism

The final question we are going to examine is “How did Capitalism originate and where is it leading?”

When looking at this question, Marx sees some contradictions to the general theory of Capitalism with itself.

How did Capitalism originate?

Out of the feudalism system, the lords and feudal rights were not beneficial for production and growth, and out of many political battles and uprising of the serfs, capitalism originated.

Now, capitalists had the freedom to pursue and maximize profits, and workers equally as “free” had the freedom to exchange their time for a wage. With these freedoms, technology, productivity and science (in addition to many other things) were able to grow without bound (in theory).

A few things come out of these freedoms which are not obvious to people who study capitalism:

As these contradictions become more prevalent and intense, neither the state or owners can restrain the mass of workers who want more and will act upon their interests to get their fair share of the pie. The process of overthrowing capitalism would lead to a socialist society which would be constructed through democratic planning with the thought to serve social needs instead of maximizing profit.

Eventually, Marx believed that Capitalism would lead to socialism, and if fully actualized, communism.

While the application of Marxism in various European countries has not worked, I do find value from considering his thoughts and looking to see how we can build upon them for a better society.

Capitalism over the past 175 years and Today

The last 150 years, from the 1830s to 2018, the world, and in particular, the United States has seen incredible growth in technology, products and goods, and the average person’s standard of living.

From reading textbooks, you would have thought this has been the greatest period in history, though I’m going to take a little more skeptical position.

Hindsight is 20/20, and I’m going to get into some more of the things which have lead to this in the next post (monetary policy and the economic environment are intimately connected), but looking at present day conditions, there is much to be wanted from many of the “working” class.

In the 1800s and early 1900s, union and organized labor were big pieces in the workplace which kept owners from exploiting the workers for the maximization of profits.

Starting in the 1950s, unions started to decline and as globalization started to occur, a drastic decoupling of wages and productivity occurred (there’s a piece here that is related to monetary policy as well, but again, that’s for a later post).

productivity vs wages graph

Fast forward to today, in the United States, you have a number of people who are not pleased with these statistics and struggling to make ends meet. Many corporations spend thousands and millions of dollars to get laws passed to help profits and instead of passing these profits on to the workers, they instead use them for their shareholders (which is fine, just not good in terms of inequality of the population).

(a slight tangent, it’s important to remember the Pareto principle in terms of the distribution of wealth. Regardless of where the starting point is, 20% of people eventually will have 80% of the wealth)

This post is a discussion about the economic systems in place and I will not take an opinion on the graph above because that’s not the purpose of this post. I’m not going to say, “I’m pissed at this and give me money”, and likewise, I’m not going to say, “Well, those people who can’t get money need better education and to work harder”.

We live in a complex society where there are 100s of different variables at play.

My point here is that for the majority of people in the United States, capitalism isn’t optimal – as seemingly predicted by Marxist thought and taken advantage of through the owners and state.

Let’s not ignore what has happened in the last few years in America: there has been unrest of many people as the stresses of every day life has gotten to them. You see it in the rise of radical leaders all over the world and the protests which seemingly happen weekly.

I’m fortunate to have been blessed into a situation where I can write about this and not have to worry about a solid paycheck – but many are not in this position.

What is Post-Capitalism?

At this point, a question comes into my mind: is capitalism working in 2018? What are the alternatives? Could there be a sustainable way to promote growth, achieve prosperity, and share wealth while also having incentives for innovation?

Enter a potential way to fix the problems of today’s world: post-capitalism.

Post-Capitalism is a school of thought which is gaining some traction in the economic community, and also a thought that many people (think Democratic socialists) are going towards but don’t have the entire picture or a rational thought of what it would actually look like.

Post-Capitalism is a theory that I was exposed to through Paul Mason’s book, Postcapitalism. The book was very well received in the media.

For me, it was very interesting to see how Mason took Marxist thoughts and ideas, and looked to see how he could balance Capitalist and Marxist thoughts for a better society and economy.

What are the goals of Post-Capitalism?

Mason argues the following should be goals of a post-capitalistic society focused on social good rather than maximizing profits:

  1. Rapidly reduce carbon emissions to stay below 2 °C warming by 2050.
  2. Stabilize and socialize the global finance system.
  3. Prioritize information-rich technologies to deliver material prosperity and solve social challenges such as ill health and welfare dependency.
  4. Gear technology towards minimizing necessary work, until work becomes voluntary and economic management can focus on energy and resources rather than capital and labor.

The Post-Capitalism Framework

Mason proposes that these goals could be accomplished:

The traditional personal finance and economic conservative inside me is struggling to see how this would be paid for, but after deeper thought, it makes sense to me. I’m someone who tries to consider all sides of a situation and not be tied to my position.

While this has been taken as a Utopian thought by some, there probably is some value in examining this theory in the coming years as things continue to transpire in the United States and abroad in the 21st century.

Which Economic System is Best?

Capitalism is cheered in the United States, as well in many markets around the world, but there are still flaws which are exposed over time.

I’ve touched on a lot here, and there’s a lot more I have to learn, but I hope this has given you some food for thought. Critical thinking is something I value and a principle of mine for personal development and growth.

I don’t know if the thoughts of any of the systems Capitalism, Marxism, or Post-Capitalism are the answer and key to a successful economy for all.

All I can do is continue to learn, present information on this blog, and look to inspire deep conversations to spur connected thoughts and actions.

I swear that each and every day as I dive deeper and deeper into my research and analysis, I sit here today in some mental state between confusion, enlightenment, clarity and peace, and hunger for more. I’m not an expert (not even close), but am learning more and more and loving my progress.

After learning about economic systems, I’d recommended reading about the banking system, and how the economy works. 

What is Capitalism, Marxism, and Post-Capitalism?

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