Adam Goodman

No TV and No Beer Make Homer Something Something…

One of the more important activities in effectively managing your finances is creating financial goals.  From here, you need to create budgets to meet your goals, but sometimes this can be challenging, especially with all of the other stresses in your life.  How can you follow your budget and meet your goals if you are burned out, unhappy, or just plain feeling the blahs?

The answer is you can’t!  Now I know some of you might say to suck it up, and deprive yourself for the short term in order to reap long term payoffs.  The problem is that humans can’t do this forever, and even a short-term deprivation can be challenging – you need to enjoy life and be happy in order to find the energy to make it through the rough patches.  The saying  all work and no play makes Jack a dull boy definitely comes to mind here.

So what are you to do if you find yourself in this situation?  Well, I was recently in this exact situation and had to make a tough decision.  I was feeling pretty burned out and unhappy, and it was negatively affecting my relationships at work and at home.  I quickly realized that I needed to take a break.  The problem was that I was having problems rationalizing spending money on a vacation when I should be spending money on my debt.  Luckily I spoke to a friend who made a simple point – in the grand scheme of things, how much time will a few hundred dollars set you back?  The answer of course is very little!

Over the course of your life, will $200 make a difference?  Will $500 make a difference?  Chances are that it won’t, but sometimes in the heat of the moment it will feel like it will.  I thought if I didn’t go on vacation and put that $500 towards my debt, I would be better off than if I went on vacation.  Luckily I listened to my friend and realized that $500 will not significantly affect my life – at worst, it would delay my debt repayment by two weeks.

So I booked a trip to San Francisco and came back feeling re-energized!  It was the best investment I could have made with that $500.  My message to you is, regardless of what your situation is, never forget that an occasional small investment in yourself will provide long lasting returns that your budget can’t anticipate or plan for.

And just to brighten your day, this clip from the Simpsons should help you remember this very point.

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Free Book Contest at

Jesse Michelsen over at recently reviewed my book and is running a contest to give away two free copies of Following The Goods: Financial Management for the Young and Ambitious.  Go read the review and check out the contest!

The Conclusion

I think the book is great. The author writes with a breezy sense of humor about his past, his experiences and his mistakes. The book is a great window into the intricacies of personal finance. The book is easy to read and and will leave you with a good foundation to build on when dealing with your own finances. There are definitely some people that I know that I would recommend reading this book.

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Following The Goods on Sympatico MSN Finance –

I was recently featured on the Sympatico MSN Finance website,  Go check it out!

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Why Don’t Young People Care About Finances?

I wrote the following post for Five Cent Nickel a month ago, but thought I would post it here as well.

It’s unfortunate, but my story isn’t original.  I’m 29, educated, and up until 4 years ago, I never saw the need to understand how to manage my finances; for some reason, I always assumed my finances would magically manage itself.  That’s how I ended up owing the bank a huge student loan, having no savings, and living in my mom’s basement, wishing I had done things differently when I was younger.

Many young people aren’t interested in financial management, and who can blame them – the name alone must scare people away – it sounds intimidating, but it’s an important topic that needs to be taught at an early age.  And herein lies the problem, it needs to be taught, but often it gets left at the sidelines until it’s much too late.  Many parents don’t include this topic at the dinner table, and most K-12 education systems don’t mandate learning how to manage your finances – which is somewhat ironic, because people use financial management every day, whether they know it or not (remember, bad financial management is still financial management, it’s just ineffective).  I should point out that there are some great programs out there to help teach young people about finances.

Without a burning platform, people aren’t motivated to learn.  If your parents are always helping you out financially, you’ll never know why compound interest is important.  If your spouse is always paying the bills, you’ll never know why you need to pay off high-interest debt first.  If you’re always living pay check to pay check, you’ll never know why a budget is important.  If you don’t understand how budgeting works, you’ll never know why you need to start saving for retirement as soon as possible.

It’s never too late to learn and change your habits, but imagine if you could start following sound financial management advice when you were 15, as opposed to 30.  That’s 15 years of doing things right, and no matter how much money you make, the earlier you start budgeting and saving, the better off you’ll be.  As a side note, if you don’t know what compound interest is, now would be an excellent time to look it up.

So what does a person need to do?  We’ll there is a ton of great information out there, but you have to look for it, and more importantly, you have to want to learn about it.  I’m sure you’re asking yourself, “Where do I start?” At a minimum, you need to understand the basics of financial management, including (in no specific order):

  1. Understanding what the equation Income – Expenses = Savings means.
  2. Knowing where you spend your money (what is an expense?)
  3. The difference between things you want and things you need, and knowing how to prioritize these
  4. The future cost of living – how much will that 4 bedroom house really cost you?
  5. Setting financial goals and making budgets to meet them
  6. How compound interest works both for and against you
  7. When is credit good, and when is it bad?
  8. The basics of investing
  9. Why you need to start saving for retirement today
  10. How to maintain your education (and don’t forget to share what you learn with others)

Remember, personal financial management might sound scary and complex, but it’s really not that hard, and definitely not as scary as meeting your in-laws for the first time.  Financial management is not something that you’ll learn overnight, it takes time, but the payoff is worth it. Take ownership of your finances and start your education today.

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A Wedding Built on Debt

Day 4 - Paying off debt

When it comes to managing expenses, you have to be able to understand both your current and future expenses – if you don’t understand what your future expenses will look like, how can you ever create a budget to meet them? If you dream of moving out of your mom’s basement, but have no idea how much living on your own costs, how will you afford it?  You need to understand what your future costs will look like so you can start saving today.

One of the areas that people tend to overlook is dating – no, I don’t mean the actual act of dating, but what dating someone with debt looks like.  There’s a good article over at MarketWatch which looks at just this – what happens when two people with debt decide to get married?

Being in love and in hock is no way to go through a marriage, because being in hock might just put the kibosh on the love, particularly in the early years. Debt, it turns out, is a leading cause of family strife during the first few years of marriage, according to Creighton University’s Center for Marriage and Family.

That doesn’t mean debt will necessarily send you to divorce court, but it does mean the accumulation of debt can undermine your marriage and cause the type of discord that can dissolve a marriage.

The article is a little long but makes a good point when it says that couples need to discuss and agree on these two things:

  1. Debt philosophy – what is each person’s view on debt, and how do they handle debt?
  2. How debt will be used – when you will and will not use debt

Managing your own debt can be challenging enough, so you shouldn’t have to manage someone elses.  Before you decide to make a serious committment to your partner, make sure that you both understand what debt is, and when you should and should not use it.

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Talking Money at Dinner Time

CNN has a story where they profile two multi-generation families.  The story contrasts the different views each generation has about money and makes two good points about budgets and financial education.

The recession has “made everyone realize you have to live on a budget all the time, even when times are good,”

…children should be involved in financial planning from an early age. At about age 8, they should be able to understand if the family is under financial stress, so it’s best to see what they can contribute.

The artile also mentions frugality, but remember, Frugality is not Budgeting.

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Don’t Get Caught Up in The Past

The video below isn’t necessarily about financial management, but it’s a good lesson for life – don’t worry about the decisions you made, you made the best decision you could have at the time and it led you to where you are today.  Focus on the future, don’t dwell on the decisions of the past….

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Have You Missed a Credit Payment Lately?

I just read a short article on why it’s important to always make  your credit payments (regardless of your age).  The story takes place for someone living in the US, so the outcome may differ if you live elsewhere, but don’t let that fool you – missing a credit payment is serious business!

as soon as you missed a payment on your condo loan, you credit went south. Even though you are continuing to meet your other obligations, a delinquent mortgage payment results in a substantial hit on your credit score. Miss one or two more and you move into serious default territory. However, as you said, at 83, what do you need good credit for, anyway? Depending on your contracts with your credit-card companies, the rates you pay could be ratcheted up if your credit score falls

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Can You Teach Financial Management Through Financial Rewards?

Budget Meeting
Image by Mike Tigas via Flickr

How do you reward someone for learning a new subject?  Usually it’s the satisfaction of knowing you learned something new, or in the case of financial management, it’s the knowledge of knowing that you have a strong foundation to keep you financially healthy for years to come.  But not everyone thinks this way, and sometimes there are new ideas out there.

I was recently reading about how Citibank is offering a new card called the Citi Forward Credit Card, which rewards cardholders for paying your bill on time and staying within your credit limit.  The card is being marketed towards teenagers and Gen Y’ers and offers benefits such as:

100 points for paying on time and staying within your credit limit each month, 5 points for each $1 spent in “responsible” categories such as books, movies, music, and restaurants, 1 point per $1 for all other purchases, and 5,000 bonus points for signing up for paperless statements.

Citi decided to pursue this new credit card offering after conducting a survey and finding out that:

76% of [survey respondents] said they would rather learn by being rewarded for the right things they do, rather than learning from their mistakes.

Interesting concept, but is it really teaching you sound financial management, or is it giving you a false sense of learning?  The rewards program doesn’t advocate paying off your credit card bill in full, and there are hefty interest fees (29.9%).  It’s a good start, but I’d like to see something which teaches you how to set financial goals and create budgets to meet those goals!

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Why A High Un-employment Rate Might Not Be Bad

newspapersI like to read, in fact, I like to read a lot. I’m always reading newspapers, magazines, books, and blogs, but how do you know if what your reading is accurate, honest, and trustworthy? How do you know if the point of view you are reading is the right point of view? The reality is, there isn’t a right point of view and there isn’t a wrong point of view, but there is always more than one points of view.

Recently Jon Stewart interviewed Jim Cramer on The Daily Show, citing that their recent tiff is because of:

The gap between what CNBC advertises itself as, and what it is, and the help that people need to discern this

In fact, Stewart goes on to say that that the real problem is that the financial news media is not reporting on the markets in an ethical manner:

When you talk about the regulators, why not the financial news network? That’s the whole point of this. CNBC could be an incredibly powerful tool of illumination, for people who believe there are two markets.

Now to pretend that this was a crazy once in a lifetime tsunami is disingenuous at best, criminal at worst.. A CEO lied to you, but isn’t that financial reporting?…[Financial Reporting is when] you don’t just take their word at face value, you actually go around and try to figure it out

There are many times in life when you only hear one side of the story. For example, when the dollar drops in value, do you hear stories about how companies who export products to other countries are happy because they are making more money, or do you hear stories about companies that import products into the country who are unhappy because it costs more for them to do business? You should be hearing both stories, because both stories are relevant and true.

When you hear about Canada having an unemployment rate of 7.7%, what are your first thoughts – probably that this is a bad thing right? I was listening to an alternative music station today, and they ran a public service announcement that went something like this:

Now that the unemployment rate is 7%, the markets will crash, or will they? Did you know that in the past year we have added over one million jobs to the economy? What if an unemployment rate of 7% really meant that 93% of the population is employed?

So what am I getting at?  It’s important for you to continue to read the news, but at the same time you have to remember that there is always more than one point of view, and as a person educated in financial management you have to remember that.

pig-thumbThis post reminds me of something I learned in business school, called “The Pig”. When you see the image of this pig, what do you think? A child might think the pig is cute, a parent might think this is dinner, a farmer might see the pig as money, and a butcher might see it as a product. At the end of the day, everyone will see the pig differently and every view is right – different people have different points of view, and just because you hear one view, doesn’t mean that is the only view.  So next time you are reading an article in a magazine, think to yourself, “How do I see the pig?”

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Budget is not a four letter word

What does the word budget mean to you? If you ask, it will tell you that a budget is

an estimate, often itemized, of expected income and expense for a given period in the future

Sounds scary doesn’t it?  Well lucky for you, a budget doesn’t have to be scary, and it doesn’t have to be a four letter word.  Everyone will tell you it’s important to create a budget and stick to it if you want to have control over your finances, but I bet that many people won’t tell you that you don’t always need a formal budget written down on paper.too_young_to_save

In fact, you can get by with a basic informal budget by just knowing how much you can approximately spend each week on certain items.  For example, if you know that each week you make $500, you should not be spending more than $500 each week. In reality, you should be spending much less because you want to you make sure you are:

  1. paying yourself at least 10% of your salary to put into savings
  2. putting aside additional money to meet your financial goals

So how does this work? Well, first off, let’s take that 10% off right away, so of the initial $500, you now have $450 left. From there, let’s say that each week $200 has to go to rent to make your monthly rent payment of $800. This leaves you with $250, let’s take off another $150 each week for other expenses including cable, internet, cell phone, and miscellaneous, leaving you with $100 each week to spend. Finally, let’s subtract another $50 because every month you want to put $200 towards the purchase of a new TV.

Now that you know that you have roughly $50 to spend a week, how do you want to spend it? I like to buy my lunch once in a while, so I know that $10 a week I spend buying food, leaving me with $40 to either put into my savings, or spend on whatever I want. For those of you who are visual, here is a simple diagram.


And there you have it, we were able to make a simple budget in under five minutes, and you don’t have to write anything down in a formal budget , because each week you know you only have $40 which is not allocated to something. So the real question is, will you spend or save that $40 each month?

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Following The Goods in the Press

Check out my recent interview on

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