On Tuesday, I had a phone consultation with a Certified Financial Planner from Vanguard. It was an initial meeting, wherein we talked about each other, focusing on my goals. I tried to take into account many of my own suggestions for working with a financial adviser, but in preparing for the meeting, I realized — well, I’ve known this, but nothing brings an issue more to the front of the mind than being required to think about it — that I’m not sure about the next steps I’d like to take with my life.

I’ve been running Consumerism Commentary since 2003. While I started it as a hobby and an opportunity to learn how to manage my own finances, it has grown into a business of its own, allowing me to leave my unsatisfying day job and work for myself. I don’t see myself doing this forever. When looking at the long-term possibilities, there is a significant opportunity to grow this business, but I also need to ask myself if that’s the right direction for me in the long term. I’m not particularly interested in writing a book, like many other personal finance bloggers have done. I love writing and building communities, and that’s been the core of what I’ve been doing since the early 1990s; I was just lucky to apply these interests to personal finance at the right time — a time I needed it from a personal perspective and a time at which the world would suddenly show a growing interest in independent financial voices.

It’s important to know and understand life goals before talking with a financial planner in order to devise a plan that matches those goals. When I left the non-profit arts management world in 2001, my dream was to re-enter when I was in a better financial situation. And while I thought it was an impossibility at the time, I liked the thought of starting a foundation if I ever found myself in the position to do so, never thinking I would have that opportunity. Today, I’m not convinced that is the right path for me. For now, I plan on continuing what I’ve been doing, but working harder to identify where I’d like to see myself in twenty years.

Of course, people set goals all the time, only for life’s circumstances to move in a different direction. All the best planning in the world can’t take into account changing interests and desires. Regardless of my contemplation over goals, I met with Vanguard’s financial planner. I came away with a good strategy that I can use for my investments while mapping out my future. He also helped me understand why, given the option and a desire to have tax-efficient bonds in your portfolio, it’s better in the long term to have bonds in accounts like 401(k)s and any stock funds in taxable accounts, the opposite of what I thought would be a good tax strategy. This is an idea I’ll share in a future article. Update! Read more about the investing strategy I discussed with the Vanguard financial planner.

The financial planner I spoke with is not paid by commission. He understood I subscribe to the index fund philosophy, and recommended only index mutual funds — and only four specific funds for the right diversification and asset allocation that will allow me to likely perform better than a savings account, invest for the long-term, and give myself a cushion to think about the next steps in my life.

Here are some interesting articles I came across this week, including one of my own published elsewhere. Read the full article →

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People frequently ask me to share the best piece of financial advice I’ve ever received. Most recently, this was a common theme at the Financial Blogger Conference in Chicago. One company in attendance, creditcards.com, filmed and edited a video of various personal finance bloggers sharing their best piece of financial advice. I think it’s important for people to share what has worked for them, and their inspiration, as they succeeded in improving their financial conditions.

I find it difficult to remember my attitude towards money as a teenager. I just didn’t think about it often. I understood the importance of earning an income, I had a bank account, and I had occasional jobs as I was an older teenager, but I never placed any emphasis on money management. I didn’t think about budgeting, investing, or looking for income opportunities because I was mostly concerned with my extra-curricular activities first and academics second. I don’t recall my parents ever making money a real issue, and I’m fine with that; if kids can be protected from the added stress of financial management until they’re older, they’ll do a better job of making the most of their adolescence.

But I did sail through college and my first few jobs without thinking about my financial condition, and I eventually paid for it. I had student loan debt, credit card debt, and thanks to some other mistakes, unpaid speeding tickets, a suspended driver’s license, an auto insurance surcharge, and many other expenses and debts I could have avoided.

I didn’t always get along with my boss, but he was a leader whose primary responsibility included motivating a group of 128 talented teenagers and young adults through monthly weekend rehearsals during the fall, two-week camps during the spring, and a seven-week tour across the country during the summer. It was a music program, but it also presented the group of students with the opportunity to improve themselves and their approaches to life, with lessons that would stick with them and inform how they live each day in the future.

The advice that has stuck with me the most, although it didn’t sink in until years later and I didn’t recognize it at the time, isn’t a piece of financial advice. It’s advice about life, attitudes, and philosophy that can be applied to personal finance. While I don’t remember his exact words, it boils down to this: Every moment is a choice.

There’s nothing unique about this idea. The concept has been used by motivational speakers, like Patch Adams and Wayne Dyer who focus on making conscious life choices, and by others who see this idea as a call to connect better with a supreme being of some sort. I am not a big fan of motivational speakers or preachers, so I carefully select concepts that have meaning to me, allowing myself to think independently. I dismissed the idea that sleeping through an alarm clock was a choice. I dismissed the idea that arriving at the office late due to a traffic jam was a choice. I didn’t even stop to consider that my financial condition, thousands of dollars in debt, was a choice.

It wasn’t until I was out of a job and had no place to live that I started to reconsider my approach to life. I’m forever grateful to my father, who helped me re-start my life from a better position with financial assistance, and to his long-term girlfriend, who allowed me to reside in her house while I changed the direction of my life. My time there gave me the opportunity to look at the choices I made, accept responsibility, and move forward with a new approach. I took the idea that every moment is a choice and applied that to my finances.

• I started paying attention to my finances. There’s a moment in the film The Matrix where Neo, the main character, accepts that he is “The One” and finally sees the world around it for what it truly is. This is a powerful awakening. I saw that I was in control of my life, and in order for me to be in control of my finances, I needed to know where I stood and where I was going.
• I made decisions that improved my financial condition. Recognizing that without a car, my options were limited, I found a job that was accessible by train. It wasn’t an ideal job, but I eventually made it my own. With income, I was able to save, and I moved out as soon as I could to avoid being a further burden on family.
• I educated myself. I started reading more about managing money, particularly the Motley Fool discussion board that focused on living below your means. This eventually led to me creating Consumerism Commentary as a place to track my financial decisions — the choices I was making to improve my life.

When you don’t live as if every moment is a choice, you leave decision-making up to the world around you. You are subject to the whim of chance, and if the outcome isn’t what you’d like, there is always an excuse. There is always some way to blame your circumstances. Here are some of the excuses I’ve used to avert responsibility in the past:

• “The road was closed due to a car accident.”
• “I’m not feeling well today.”
• “I didn’t know about this bill.”
• “My car broke down.”

All of the above may have been true when I said it, but they are results of choices I made — the choice not to anticipate road closures or live closer to the destination, the choice to keep myself healthy, the choice to manage my finances and organize my bills, the choice to take care of my vehicle properly. Yes, sometimes there are forces beyond one’s control, but for the most part, the choices we make can make those external forces less relevant.

With this article, I have a choice. I could use my advice to deliver a direct motivational call for readers to take an active role in their lives my looking at every moment as a choice, or I could present the idea of every moment being a choice as a concept that worked well for me, and leaving the choice of whether to accept this approach up to the reader. I’m not a fan of motivational speakers, so I choose the latter.

This idea isn’t just about finances, it’s a philosophy that helps anyone become more involved in their life. Life is short, and taking ownership and responsibility adds to the reward you feel with each success and the drive to improve after every failure. It’s a life philosophy but it ties so well into personal finance. I wish I had come to this conclusion earlier in my life, but if my past experiences were to be any different than they are, I’d be a different person in some unknowable way today.

What’s the best financial advice you’ve ever received?

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