Archives For Psychology

       The Silicon Valley Blogger (SVB) had a post up Friday about MonaVie and the ongoing drama that Lazy Man and Money faces as he tries to expose it for what it really is. If you’ve been approached by someone selling MonaVie’s miracle juice, I strongly encourage you to read what Lazy Man has written about them.

       I left a comment on SVB’s post that I wanted to share with you all. She asked for thoughts on MLM, MonaVie, and the like. Here’s what I had to say:

My thoughts on MLM? I HATE IT!

I hate that people relentlessly pursue their family and friends (and their family and friends) just to try to make a quick buck (with a shoddy or overpriced product).

I hate the social obligation that we often feel to support people doing the above.

I hate that people get sucked in to what they think is a “real” business when all it really does is suck up their money and pass it up the line.

I hate the brainwashing that makes it impossible to talk any sense into your family and friends.

I hate all the wasted time and resources that go into these things when people could do so much more on their own or even just with a reputable company.

I say more power to Lazy Man! If he gets only one person to turn away from MonaVie (or any other MLM), he’s done the world a favor!!!

(Side Note: I think Primerica is another terrible offender in this arena because of the damage they and their products can do to unsuspecting consumers. I’ve seen this first-hand with my own mother.)

Now let’s see how many of your readers have already joined the MLM cults. :)

       Maybe I’m being harsh, but I just don’t have much tolerance for these shams – I mean, wonderful opportunities to become your own boss…

       What do YOU think about MLMs (any of them)? Let me know in the comments below! I’ll be happy to discuss this with anyone who wants to talk about it.

       P.S. If you’re considering getting involved in a MLM or buying from someone who is, I’d be glad to talk with you for free. Maybe we could find a better business model for you or look at the true value of what you’re about to buy.

       Last week, I talked about the identifying your values. The next step is to examine and evaluate your values. You’ll want to make sure the list you’ve come up with reflects your true values. Then you can start to evaluate your life and begin living according to your values.

Examine Your Values

       Now that you have your prioritized list of personal values, it’s time to examine these values closely. Are there any that you feel do not fit? Are there any you’d like to change? This can mean dropping a value, adding a value, or tweaking your priorities. Your values may change over time, so feel free to reexamine this list as needed.

       After examining my prioritized list of values, I decided to drop 3 of the values I had listed leaving me with 10. Here’s the list of my top ten values in order of importance:

      Paul’s Top 10 Values

  1. Faith & Relationship with God
  2. Devotion to Family
  3. Compassion & Love
  4. Giving
  5. Integrity
  6. Curiosity & Wonder
  7. Contentment & Simplicity
  8. Fun & Youthfulness
  9. Prudence & Wisdom
  10. Balance

Evaluate How Your Values Should Affect Your Life

       Finally, it’s time to consider how your specific list of values should affect your life. If these are the things that are most important to you, how should they guide your decisions? You might feel like you’re not following your values very well at this point in your life, but you have the ability to change that starting now.

       With your list of values in hand, you can evaluate each decision with intelligence and confidence. You just have to ask yourself: What should I do in this situation if these are my guiding principles in life? Apply this method to every area of your life, and you’ll see your actions becoming more aligned with your values. As your situation changes, you might need to revise your values. Adapting to changes in your life will be crucial to your success in accomplishing your goals and living with integrity.

       Now that you have your list of personal values, you can proceed with evaluating and planning your personal finances. These values should help you in making the necessary decisions about your goals, priorities, necessities, and the things you’re willing to sacrifice. All of these are important in reaching a financial future that aligns with your values.

       This entire process is especially important for Christians. We must strive to live according to the example we have in Jesus. Our values should reflect that fact – and our lives should reflect Godly values. From my list of values, I can see some areas where I am following God closely and others where I need to make improvements.

       Life as a Christian is about denying yourself – your wants and desires – and following God’s will instead of your own. How do your values align with God’s will for your life? And are you living out those values in your day-to-day actions? Remember that becoming like Christ does not happen overnight. It’s a process – a lifelong process. And we won’t fully attain the goal until we are reunited with Him in Heaven.

Your Take

       Now it’s time for you to share your thoughts on this process of identifying and examining your values. Did you find the process helpful? How would you improve it? Did writing down your values open your eyes to areas of your life that are not congruent with your values? Share your thoughts and stories in the comments and let us know!

Identifying Your Values

Corey —  May 31, 2010

       Last week, I talked about the importance of values. Now it’s time to identify your personal values. If you are married, have a partner, or your finances somehow involve other people, then you may want to do this exercise with the other people involved. This will elicit an important discussion and ensure you are in agreement or at least have an understanding about your guiding principles.

Identify Your Values

       To start this process, you will want to make sure you have time to focus. Sit down with some paper, and ask yourself this question: What is most important to me in life? Write down your values to answer this question. Try to make these one or two word phrases, and don’t worry about the order yet. I was able to get the major ones for me (Faith in God, Family, and Love) but I hit a road block trying to think of everything that’s actually important to me.

       If you’re like me and are having trouble listing specific values, you can try using a list of values as a starting point. Go through the list and find the values that you feel are most important. Try not to choose the values you think you should have, but choose the ones you find truly important in your life.

       To make it easy, I have included a link to a list of values in a Microsoft Word Document so you can edit it on the computer. Feel free to add other values or put them in your own words.

Prioritize Your Values

       Now try to narrow down this list by combining similar values into a single value (or two if you need to). You want to get this list down to no more than 10-15 values. Using the list of values mentioned above, I ended up with 59 on my list. I had a lot of cutting down to do! I eliminated the overlapping values to get it down to the phrases I thought summed up that particular group the best. For example, I eliminated ‘Education’ and ‘Knowledge’ and used ‘Learning’ instead. It took me a while, but I got my list down to 13 values.

       Then you need to prioritize your list of values. You can do this by listing your top value first, then your second highest value, and so on until you’ve prioritized your entire list. If you are having difficulty prioritizing this list, then you might want to try CNN Money’s “The Prioritizer” calculator. The Prioritizer allows you to list up to 15 items and then asks you a series of questions that forces you to choose between each possible pair of goals. Once you’re finished, the calculator will give you a list of your values in priority order according to your choices.

The Next Step: Examine & Evaluate

       Now you should have a list that reflects your personal values in order from most important to less important. The next step is to examine and evaluate these values. Make sure you’re here next week as I talk about how to examine and evaluate your values in light of your actions and goals in life. To make sure you don’t miss that article, sign up for free updates to Provident Planning. You can also enter your email address below to get updates sent directly to your inbox.

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The Importance of Values

Corey —  May 25, 2010

What Are Values, and Why Are They Important?

       Why do you do what you do? What motivates you? Why is it important to plan for the future? What are you planning for and why? These are just some of the questions I start asking myself when I begin thinking about my goals and my future. Figuring out my goals isn’t very important if I don’t know why they are my goals in the first place.

       These are questions we often fail to ask ourselves when we’re rushing around to keep up with the day-to-day of life. But the answers to these questions are quite important, and we need to know our own personal answers by heart. The key is to identify your values.

       Values are principles, standards, or qualities you consider worthwhile or desirable. Values will vary greatly from person to person. Your values will depend on your personal judgment, outlook, upbringing, and a variety of other factors. What principles, standards, or qualities do you consider worthwhile or desirable? In other words, what are your personal values?

       If you cannot answer this question confidently, keep reading. Knowing your personal values is extremely important. If your relationships, behavior, choices, and personal identity do not align with your values, you’re going to continue feeling like something isn’t quite right in your life.

Compass by seany @ flickr        We are easily distracted with all of the busyness and media in our lives today. It’s far too easy to get sidetracked and led away from your values. This is why it’s vitally important to know your personal values. Those values can serve as your compass for the decisions you must continually make. They help you find your place on the map of life.

       As Christians, identifying our values and making sure we live them out is doubly important. We must compare our values with God’s values. Wherever they differ, we must seek God’s help in gaining His values and letting them guide our decisions. Then, to truly follow Christ and honor God, we have to actually use those values in everyday life. Simply saying that we value compassion means absolutely nothing if we are not willing to help people in need.

The Role of Values in Personal Finance

       Now why would I be discussing values on a personal finance website? Isn’t that more of a personal development topic? Well, yes – it is. But the truth is that your values will have an impact on your financial decisions. There is no use in looking at numbers, giving you advice, or talking about investments until you can list your personal values. That would be like going on a great journey to some unknown land without a compass or any sense of direction. How will you know you got to the place you wanted to arrive?

       For a lot of people retirement is a goal. The question I ask is: Why? Why do you want to retire? Well, someday you won’t be able to work because you’ll be older and your health could be declining. You don’t want to be a burden on your family, so you want to plan ahead for retirement. You would also like a time of rest from paid work, when you no longer have to work for money. That’s not to say you won’t be working. On the contrary, you may spend a lot of time volunteering or working for charities. Which gets into another important question. What are you going to do when you retire? And why do you need to wait until retirement to do those things? The answers that align with your values will lead you to a more fulfilling retirement than blindly forging ahead.

       As I mentioned above, your values need to shape everything about you if you want to live your life and not the life someone else is telling you to live. Your values must affect your behavior and choices. And your behavior and choices affect your personal finances. Therefore, you must recognize and understand your values before you can really start to work on your personal finances.

       For example, let’s say you want to start using a budget to track your spending and find ways to save money. If your values include frugality, thrift, and organization, then this will probably be an easy goal. But if your top values include extravagance and liberation, you’re probably going to run into some problems trying to stick to a budget.

       So before you spend any more time reading about personal finance, take some time to identify your personal values. There are a variety of ways to do this. But if you come back next week, I’ll share the method I’ve used. To make sure you don’t miss that article, sign up for free updates to Provident Planning. You can also enter your email address below to get updates sent directly to your inbox.

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       Negotiation skills are a powerful asset in life. Understanding how to negotiate will help you get raises and promotions, get a better deal, and get out of paying stupid fees. These five steps will help you learn how to negotiate better and smarter.

1. Prepare

       Before you begin negotiating (meeting with your boss or calling a company), take time to prepare for the negotiation. Think about what you want to accomplish and make it a concrete goal. “I want a 10% raise” is better than “I want more money”.

       Then, take some time to look at it from the other person’s point of view. Why should they be willing to give you what you want? In the case of getting a raise, have you proven yourself to be a valuable asset to the company? If you’re dealing with a business you buy from, have you been a customer for a long time or is it difficult to get new customers?

       The key is to list your accomplishments and reasons why you should get what you want. If you’ve saved your company money or taken on new responsibilities, write down exactly what you have done. Good examples would be “saved the company $20,000 a year by reducing waste in …” or “supervising ten more employees than last year”. Be ready to justify your request with reasons that will appeal to the other person.

       If you’ve been hit with a bogus fee, review your situation and be ready to explain what happened and why you don’t think you should be charged. If you were misinformed by an employee of the company, make that clear when you call. This is also why it’s smart to keep a record of when and to whom you speak when you call a company. You can easily reference the conversation and the person if a problem arises in the future.

2. Choose the Right Time

       Timing can greatly help your changes of negotiating successfully. If you’re asking for a raise, try to do it right after you finished a major accomplishment or as you take on new responsibilities. Your boss will have a difficult time overlooking the current circumstances – making it easier to give you a raise.

       Trying to get a better deal on your cell phone? Wait until your contract is just about to expire. (This works for other bills, too.) Businesses often spend quite a bit of money to get customers, so they’ll often do what they can to keep you. Negotiating when you’ll have the option to cancel gives you more power.

3. Be Firm & Confident but Polite

       Even if you are nervous or unsure, act confident and be firm as you negotiate. Weakness (real or perceived) puts the negotiating power back in the other person’s hands, so avoid it at all costs. This simply means you should not act timid when making your request. If you know you deserve a raise, act like it!

       However, this doesn’t mean you should be rude. Nobody likes a jerk. If you become hostile or impolite, people may refuse your request simply because they don’t like you. Be pleasant, kind, and patient and you will be rewarded.

       Another strategy is to use praise to your advantage. When negotiating a raise, show that you enjoy working there and are aligned with the company’s interest. If you’re trying to get a good deal with a company, comment on how you’ve enjoyed using their product in the past. Let people know you appreciate their time and help and they’ll be happy to help you again.

4. Be Ready to Respond

       You should be ready to respond to any number of reactions you get. If the answer is yes, then express your thanks. If the person needs to get someone else’s approval, let them know you appreciate their support. If the answer is no, things get a little trickier.

       If you’re trying to lower your bills or get rid of bogus fees, don’t give up at the first “no”. Restate one of your reasons for why you should get what you’re asking and follow that up with a leading question. Here’s an example: “Well, I’ve been a customer for 3 years and I’d hate to have to switch to [competitor]. What can you do to help me lower my bill (or get this fee waived)?” Do not follow up with a question that can be easily answered with a “yes” or “no”. Push for a “what else” or “how” type question rather than simply saying “Are you sure?” or “OK”.

       Dealing with your employer is a bit different because you don’t want to be so pushy you lose your job. If you think your boss is being unreasonable in denying your raise (i.e., you actually do deserve it), don’t be afraid to ask for more details and insist on your accomplishments once again. Be polite but firm. “After saving the company $25,000/year and increasing efficiency by 15%, a 10% raise is a reasonable award. In addition, comparable positions pay 20% more than my current salary so it is still good for the company.”

       If your boss still won’t (or can’t) budge, offer some alternatives that might not cost more money but are still beneficial to you. Increased vacation time, flexible hours, or the option to telecommute one day a week are a few examples. If these don’t go over well, ask for concrete goals you can achieve to earn a raise and get an appointment to renegotiate in a few months.

5. Be Ready to Walk Away

       Finally, you must be prepared to walk away if necessary. If a company won’t offer you a discount, let them know you can get a better deal elsewhere (be specific) and thank them for their time. That’s often enough to get what you ask for right away (but you shouldn’t abuse it).

       If you are significantly underpaid, work very hard, and have not been able to get a raise, be ready to leave your employer and go elsewhere. I wouldn’t use this as a negotiation tactic though. Even if your current employer offers to increase your salary, they’ll know you aren’t loyal to the company and they may look to replace you. Your best bet is to start looking for a new job without letting your current boss know. Turn in your resignation after you have a firm offer from a new employer and move on.

These Tips Do Work!

       If you think these tips don’t work, I’m proof that they do. Using these strategies, I’ve gotten 10% raises, lowered several of my bills, and had bogus fees waived several times. Again, preparation and confidence are key. You must know why you deserve to get what you’re asking for and be willing to push for it if necessary. Many times, simply asking will get what you want because so many people fail to take that step.

       Have you successfully negotiated a raise, lower bills, or fee waivers? Share your tips and stories in the comments!

Why Budgeting Fails

Corey —  May 17, 2010

       I recently watched a series of interesting videos on TED.com about the psychology of motivation and decisions. One in particular got me to thinking about why budgeting fails. Dan Ariely, author of Predictably Irrational, talked about his experience as a burn victim and the research he later did on pain. His question was whether it’s better to rip off bandages faster (high intensity of pain, short duration) or take them off slower (lower intensity, longer duration).

       What he found after extensive experimentation was that our brains don’t seem to register or remember duration as much as intensity. In other words, slower removal of bandages is better. You can hear him talk about this in the first few minutes of his talk. I’ve included the video below if you want to watch right now.

How Does This Relate to Budgeting?

       In thinking about Dan’s findings, I wondered if this could be why budgeting fails. Generally, we approach budgeting like ripping off a bandage. We go through every category of our budget ripping a little (or a lot) off of each area all at once. Effectively, we’re making our budgets extremely intense in terms of the pain we experience. Since we seek to avoid pain, we often abandon our attempt at budgeting and proclaim that it doesn’t work.

An Alternative Approach

       What if we made budgeting a bit more like slowly taking off the bandage? What if we kept the pain low (or at least a bit lower) but extended the time it takes? Here’s an example of how this would work.

       First, you’d need to track your spending so you know exactly where your money is going. I’m not talking to the penny – rounded to the nearest dollar is good enough. (I’ve written in the past about tracking your spending.)

       Next, take a look over your spending for the past month (or 3 months). Pick one or two areas you want to focus on saving money (or earning more). You can find ways to cut back, get a better deal, or replace it with something else that costs less. The key is that you keep the pain level low by only focusing on a little bit of “deprivation” at a time. The same approach can be used for increasing your earnings. Rather than going from 40 hours a week to 60, you can find incremental ways to improve your income.

       Then, you repeat this process over and over. Track your spending, review it, pick a couple areas to cut back on, and repeat. It will take you longer to get to your final destination (that unrealistic budget you tried but failed at), but you’ll actually get there rather than giving up.

       I don’t think this would be a smart method for someone in crisis mode. If your spending significantly exceeds your income, you obviously need to take drastic measures right away (cutting back or earning more). But for many people who aren’t in crisis mode, this approach may be much more effective and successful than the all-at-once, cut-back-everywhere budgeting method.

       I don’t think this is the only reason traditional budgeting fails. Wojciech at Fiscal Fizzle talked about ten reasons why budgets fail and highlights some other pitfalls you may have to consider.

Your Take

       What do you think about this idea? Have you used this model for improving your financial situation? Did it work for you? Do you think it’s too idealistic or foolish? What am I missing? Can it be improved? Share your thoughts in the comments and let me know.