A billionaire’s perspective on working: a three day work week?…

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AJ: Irrefutable fact: Carlos Slim knows things about making money. His estimated net worth at $83 billion pretty much speaks for itself, and it makes him one of the wealthiest individuals in the world. Carlos Slim has an interesting take on the future of the working people – 3 day work weeks that span 11 hours each up until age 75. In our house we call an 11 hour day a Monday, or a Tuesday, or a Wednesday, take your pick, but 11 hour days aren’t something that gains attention in our household. I couldn’t physically do my job in 3 11-hour workdays currently, but maybe if I had until I was 75 it’d be a whole different story.

Live life at every stage
So what of it? Carlos thinks that life should be lived at every age and at every stage as though you’d earned the beauty of retirement day in and day out. I LOVE the idea of shorter work weeks, but my shorter work week would be 4 12-hour days, not 3 11-hour days, and I’m betting I’d still wind up working some evenings and weekends. I don’t think I’m special or unique, I think that’s just become more the standard of what we’re all accustomed to working in order to get our jobs done. Our generation is waiting longer to start families, is climbing the professional ladder faster than the previous generation and is working in a fully connected universe, so it’s impossible to imagine a world in which we work less than we do today, but maybe Slim’s onto something.

KJ: This is one of the daily conundrums of saving money. How much do you want to sacrifice or withhold consumption today only for some uncertain point in time in the future? Why push yourself so hard today and miss out on all the together time, family time, travel, whatever suits your fancy in the meantime? If there’s one thing we can glean from Carlos’ perspective now it’s that life is about balance – across all ages and stages and to not just continuously push for a brighter future. Relax, and learn to enjoy the scenery along the way!

75 isn’t so old
KJ:Standards of living have continued to rise over the last 30+ years, making the new 75 much more cozy than the previous generation’s life at age 75. And if that’s the case, maybe we won’t have all that much reservation to working to age 75, 80, 85. It all just depends on WHAT we are doing at that point and finding something along the way that we really enjoy that we could see ourselves doing for decades.

AJ: Slim votes for machines and services working 24 hours a day and people enjoying life more and spending more time in training. It’s truly revolutionary thinking and other richy rich people don’t love Carlos for his perspective which is why I find it so interesting.

Fascinatingly, the 5 day, 40 hour work week has only been in existence since 1938. I literally have jewelry that’s older than that. So is it really all that strange to think that we could be in a remarkably different working environment 20 years from now? I would love to see what a difference that kind of thinking would have on the quality of life for future generations.

What would three days of work change for you?
How would that change your overall quality of life?
What would you do with the extra time each week?

Read more about Carlos Slim’s perspectives from CNN Money on his work week thoughts from July 2014, and Carlos’ thoughts on a three day work week from October 2014.

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When was the last time you reassessed your budget?

Man And Tap Water With U.S. Dollar Banknotes
KJ: Sometimes, it seems like money pours out of the bank account, so what better time to see if your current plan is really what is right for you at this stage in your life? It’s easy to keep coasting as is, but address it before it really gets out of hand, so you don’t keep saying, “it will get better” or “this is temporary.” How many times have you heard yourself speak those words only to realize that your “temporary” had actually become your new normal? What better time than now to take a step back from your regular budget and assess if your budget and goals you have set for you and your family are realistic? Life happens, life is always changing and I have built SO many spreadsheets over the years with projection after projection of how much we need to save for different goals we have. It never ceases to amaze me how much things can change over even short periods of time like six months or a year.

An appliance breaks and you suddenly need to replace it. A windfall comes your way from the lotto (er, not quite, but wishful thinking, right?). The budgeting and goal-setting process should be fluid with lots of feedback loops. Something changes (unexpectedly or expectedly), so it’s time to work on a new plan and reassess. Did your expenses creep up and now you have a higher emergency fund need (the double-edged sword of expenses where the more you spend, the more you need to save for your emergency fund for that 3-6 months living expense goal)? Yet, the less ability you have TO save to that goal by nature of spending more…sheesh…enough to make your head spin sometimes!

Here are a couple of trigger events for when you might consider adopting a new budget.

Did you reset your budget if you had a change in income?
Maybe you got a raise that allows you just a little more wiggle room each month or maybe quite the opposite happened – you got a pay cut. Sometimes you can’t plan around either one of these, particularly if your company goes through some tough times. While other times the pay cut may be voluntary, through one person deciding to stay home for the family, reducing hours to allow for more home/family/vacation time, etc.

A change in income is most certainly a great time to look at your budget, and in most instances, is best if you reassess your budget BEFORE you take that leap, as is the case in a voluntary change of circumstances.

Have you continued to find it difficult to meet your budget each month? Did you need to reset your budget because it wasn’t realistic?
Maybe your expenses just aren’t all that realistic. Budgeting is about forecasting what you think your expenses will be, and at times that means you’re just flat out wrong. You could be way over budget or way under budget in certain areas.

When we moved to our existing house after having lived in a town home previously that had residents on either side, we weren’t quiet sure what to budget for the cost of electricity for a single family home let alone what the lawn watering costs were going to be. Fortunately, we WAY over budgeted for those expenses assuming a worst case scenario increase in costs, and we have been pleasantly surprised that our bills weren’t quite as high as we thought they would be – even in the cold of the winter or the heat of the summer. What this has meant though is we often take the “under” on this area and reassign to other areas that need increases for those one-off items like birthdays, pet food every few months, etc. Maybe it’s time to give up some of the “over” in this category and permanently reassign to somewhere else once and for all.

The other component of this too is your costs may rise. Gas prices may shoot up, your electricity contract renews – yet the only options now are more expensive, your insurance costs go up, the costs of your regular groceries go up. Any of this sound familiar? Don’t just assume you have to immediately increase your total budget though – as it may be an opportunity to cut back elsewhere to keep your expenses in check. Gas prices rising may simply mean being more creative in the kitchen and eating out one to two less meals a month.

AJ For me, reassessing the budget feels like a massive undertaking. I’m awesome at maintenance and upkeep, but change is a major speed bump in my budgeting world. For my tracking purposes the last year has been a major challenge. When we bought our first house (the town house) we had major buckets and few fixed expenses with no maintenance or updates to make, so there was more breathing room in our budget. We used to regularly save more than planned in a year because we just didn’t need to spend it. These days our unexpecteds in life seem to cost a whole lot more and sometimes they don’t fit quite as nicely into my monthly plans. However, when we sat down to talk about whether we needed to increase our budgets in some areas to allow for increased expenses, we ultimately decided that these overages were temporary and we’re budgeted appropriately for the foreseeable future, so I get to rest easy and continue resisting change – at least until next month!

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Personal umbrella liability insurance: what you need to know

Dollar Bag Under Umbrella
KJ: If you are like us, you’re working toward your goals. And working toward your goals (be it children’s education, retirement, or just financial independence) means saving money. Over time, you want to see that your money is protected in the event something happens. Most of the time, you have insurance for that – health insurance, disability insurance, etc. All of this to say that there’s a lesser known type of insurance that can help cover pesonal liability above and beyond what’s already on your home or auto insurance (plus some additional coverages), and it’s called umbrella insurance. Umbrella insurance isn’t as the name implies. It’s not coverage for when it rains – though it may be thought of as a protector for a very rainy day personally!

As you build your wealth (or maybe you’re already there!), this can be a critical component of your overall financial well-being. Personal umbrella coverage basically serves as an umbrella over your homeowner’s insurance and car insurance, kicking in extra coverage amounts above and beyond your homeowner’s and car policies. Plus, liability coverage amounts are significantly higher than under your existing policies (i.e. with coverage amounts $1 million and greater).

How it works
So, let’s say you have $300,000 worth of liability coverage on your homeowner policy and $1 million of coverage with your umbrella policy. If someone trips and falls on your property and has a massive claim against you (yes, it was that bad of a fall!…who knows!) for $500,000, then generally the homeowner policy would pay the first $300,000, then the umbrella policy will step in to kick in the other $200,000.

It’s cheap
Relatively speaking, it is a very cheap insurance to have for significant amounts of coverage. As with all insurance policies (and companies), there are a few things that could impact your coverage costs – pool, lots of land, and potentially other factors – but for around a couple hundred dollars per year, you can obtain $1 million in coverage. So, why not cover your family in the event of a catastrophe for such a cheap insurance?

It provides additional coverage
Additionally, umbrella insurance actually covers several scenarios that are NOT part of your standard homeowners or auto policies. In fact, they often cover slander, libel, false arrest, and many other personal liability scenarios (note: not business liability).

Some assets may be protected
Keep in mind that all states vary based on what is considered protected in the event of a bankrupty, but generally, some (or all) of your house can be protected and your retirement assets may be protected too. However, for a lot of your other assets, you may need some additional protections.

So, call your financial advisor and/or your insurance agent to discuss the coverage to see if you may need additional protection.

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Adapting to a better life

Change Ahead Sign Refers To A Different And Changing FutureAJ: I don’t often read Oprah’s magazine, but I read the September 2014 issue and felt a strong connection to a point she drove home in her final thoughts. From her article entitled Best Advice Taking Care of Yourself she writes:

    “We live in a state of constant change. Whether or not we’re paying attention, the process is always happening. Even people who can’t see it in themselves witness change daily in their children or in others around them.

    Life is about recalibrating. About continually asking yourself: What do I have to do to get where I need to be? How do I create the life I want?

    …We have to make ourselves over daily, consistently, in order to keep moving forward. We are not meant to stagnate.

    If change is the one thing you can be sure of, the goal is to figure out how you can use that certainty to your advantage, to modify, transfigure, refashion, and transform your day-to-day being.”

My first reaction was “that’s SO true!” I do feel like I’m in a constant state of change and evolution, and I feel like if I’m not daily asking myself where I’m going I’m already behind. Rarely do we take the opportunity to just be. In such a forward-focused, fast-paced world it often seems impossible to take enough time to slow down and recenter. I very much live in the moment, but the future is never far from the forefront of my thoughts. The place I most often seek balance is in that constant battle of living life fully and saving for our future. Surely you can’t do both with equal finesse, right?

Maybe not. Taking the time to live AND enjoy AND spend are equally important to the constant pace of saving and planning. Planning for retirement isn’t just a marathon, it’s a freaking triathlon, and it’s not sustainable to never reap the fruits of your labors. Sometimes you just have to spend more than you planned, you have to take an unplanned, unbudgeted-for vacation because if you don’t you’re going to quit your job and live in a box on the side of the road. Give yourself room to make decisions without constantly living in fear of the long-term repercussions.

KJ: When you’re in the thick of whatever it is – be it a project, your job, chores, saving for a goal – it’s very easy to lose sight of the end goal by getting caught up in the day-to-day. Whether you are intending to change or not, it’s something that just sort of happens and it’s seldom something within your control. But you can control how you react and process the new information. Your goals may shift at any point – your kid wants an expensive camp, private school where their friends are going, your job prospects may suddenly change and your retirement goal gets pushed back just a little, a sudden windfall suddenly brings some of your goals to the forefront. Look at the change as a way to see if you’re still on track, but don’t lose sight of what you’re doing today. It really is a balance between the here and now and the uncertain future, but don’t be afraid to live a little. Just don’t use it as an excuse for always saying you’ll get to it “tomorrow.”

AJ: Drink the extra glass of wine, buy the piece of art, take the extra day off. It will all still be there tomorrow changing as quickly as it always does.

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Seven money mistakes you shouldn’t make in your 30s

Scissors Cutting Dollar BillAJ: KJ and I eat, sleep and breathe money talk. KJ works in finance, I manage a really large budget as part of my job, and we’re budgeting and planning obsessed. So when I come across an article that gives me pause (an article from Yahoo! Finance about 7 money mistakes you shouldn’t make in your 30s), I’m always surprised. We’ve ticked some of these boxes but the older we get the more it seems like we can use reminding.

1. Getting married before you talk about the “F” word — finances.
Again, KJ and I have never been in a place where we didn’t talk about finances but we have happily married friends that STILL don’t talk about finances. This is happiness suicide, don’t do this to yourselves. Even if one of you is an extreme spender and one is an extreme saver, don’t hide that from one another. Eventually the truth always reveals itself and it’s selfish not to be open about what’s coming in and going out.

2. Letting your student debt take care of itself.
Letting anything “take care of itself” is a little bit of a joke. There are all kinds of resources to help you manage through paying off student debt. Many companies now even offer services to help burn through that student debt. Don’t hold onto this while socking away money in a retirement fund. That’s counterproductive to the big picture!

3. Not saving for retirement.
When I was first employed out of college retirement was pretty much all I thought about. Working full-time is ROUGH in comparison to college and working forever seemed like a dreadful existence. Somehow though, the longer I work, the less I seem to focus on retirement. Something about time healing all wounds and growing up and yada yada yada. Regardless, saving for a time in which all you do is live as you choose should be the driving force behind a lot of the decisions you make – through the earning and the spending of your future opportunities.

4. Using graduate school as an excuse to avoid the job markets.
I can’t even sort of relate to this. Going back to school seems like the most stressful thought of all time and going back to school in lieu of having a job and MAKING money just seems like crazy talk. HOWEVER, there are so many professions that require a graduate-level degree in order to move forward through the food chain so you have to manage through both having a job and going to school.

5. Buying a house you can’t afford.
To me, this is the most relate-able of all of these pieces based on our current situation. We’ve talked at length about the house we bought last year and all that we’ve done to it but there are days where it certainly feels like money is flying out the windows that still need window treatments and into things like the sprinkler system and landscaping. Part of being able to afford a house includes being able to afford the bills, the repairs, the taxes, the HOA, essentially, WAY MORE than just the mortgage. If you can afford the car but not the gas, what good is it? Look at all considerations associated with owning a home before diving into this 30-year-mortgage-carrying project.

6. Neglecting your children’s education.
This is always a point of contention when we talk about money with other families. How do you plan to address education for your children? Not just college, but private vs. public schools, short-term vs. long-term. There are so many options and choices for parents today regarding the education of their children that you need to know all of your options so you can budget for them now. People are spending college-level amounts on high school-level private school, so don’t think you have all the time in the world to pick a stance on this and be able to afford it.

7. Ignoring your will.
We just finally stopped ignoring our will, three cheers! Now my mother can rest easy at night and we have a solid plan in place for the unexpected. If you own absolutely anything, you need a will. If anyone at all is dependent upon you, you need a will. If you make money at all, you need a will. Generally speaking, you need a will. It’s not all that costly or time consuming in comparison to the amount of effort it will take your loved ones to try to figure out your wishes if you don’t have one so do them a favor and get a will written up ASAP.

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Some of the links in the post above may be affiliate links. This means if you click on the link and purchase the item, we will receive an affiliate commission. We feel strongly about only recommending products or services we use personally and/or believe will add value to you, our readers. Read more about our commitment to providing quality product recommendations.