We’re all humans, right? We have these incredible senses of touch and sight and hearing and tasting (is there one more?). We also thrive in community, when we talk to other people and interact with each other. What better way to combine all of these human things than to sit down with some friends or family in front of a board and some little pieces of plastic?
One of our greatest temptations today is to turn to our technology instead of engaging with other people. Our phones are some of the most helpful and useful pieces of technology ever invented, but unfortunately, they can also inhibit the things that make us human.
A helpful category for thinking about this is to distinguish between rest and leisure (which I have shamelessly hacked from The Tech-Wise Family by Andy Crouch, a really helpful read). Leisure is mindlessly scrolling through social media or news on your phone, playing some kind of video game by yourself, or maybe worst of all, watching reality TV. Leisure is fine, but ultimately not all that helpful. It puts you into a sort of trance, you lose track of time, you’re probably more stressed when you quit, and you haven’t achieved anything except to waste some time and feel more harried. Rest, on the other hand, is restorative. Restful activities typically engage your mind instead of putting you into a coma. They include things like reading a book, conversing with close friends and family, playing an instrument, fishing (obviously), working out (it might take a few weeks, but once it becomes a habit it’s the best), building Legos, or playing a board game. An interesting note here, leisure activities often involve screens, restful activities often don’t.
As I write this we’re in the thick of the holiday season, Christmas hits this week, we’ll celebrate the New Year next week. Most of us will be spending at least some amount of time away from work and with family. Take the opportunity to enjoy a board game together. Engage your mind, indulge in some conversation, enjoy the people in your life. If my reasoning holds up, you’ll feel much better having done that than to have entered your trace space. We’re humans after all.
I’ll be completely honest with you, my audience. I love my iPad Pro, it’s what I’m using to write this very post. But, in the two months I’ve been using it my commitment hasn’t been 100% unwavering. I’ve checked Apple’s refurbished website (maybe the best place to buy a laptop, full stop) for MacBook Pro options more than once. I’ve read several reviews of the new 16 inch MacBook Pro, and I questioned my friend about his with a noticeable uptick in enthusiasm. I’ve even used my iMac more than I expected, although with lackluster results (have I mentioned how distracting those things are?). The point is, working from an iPad Pro is a large adjustment, and sometimes I just want to go back to my comfortable place wasting time on a MacBook Pro. Here’s what I’ve realized, the feelings aren’t bad and it doesn’t mean I’m going to buy a MacBook Pro.
It’s normal to feel a little nostalgic for the old way of doing things. And it takes time, more than a week or two, or maybe even a month or two, to get comfortable with a new setup. But I’ll say this, after a while, it does get more comfortable. The question of whether my feelings of nostalgia are rooted in some flaw in the iPad Pro or in my own addiction to familiarity is slowly being revealed as the latter. All that stuff I wrote about the focusing power of the iPad Pro? It still rings true. All the capability and portability are still there. I still get more of my most important things done on my iPad Pro, it has forced me to work more intentionally.
So I guess this is my thought: when you commit to something, you probably have to commit to it for more than a few weeks. Change isn’t easy but it’s often better. My iPad Pro experience falls right in line with other good change initiatives, not always comfortable, but ultimately moving me in a better direction.
401k accounts good and bad. They’re mostly good because they provide an avenue for people to save and invest money for their future, but there are some things to watch out for.
- The main benefit of a 401k is that it allows you to invest qualified money. You could just invest money on your own, but investing in your 401k accounts means that you get some significant tax advantages (no capital gains on the growth of your investments and an income tax break). The same advantages apply to IRA accounts, but 401ks include two other significant advantages.
- Many employers offer a matching contribution. For example, if you contribute a certain small percentage of your income (say 5%), the employer may kick in an additional small percentage into your 401k account (say 4%). That’s free money, and you should definitely take it.
- 401k contributions are capped at $19,000 per year by the employee, employer contributions can exceed that. IRA contributions are capped at $6,000 per year. Not all of us are maxing out our qualified retirement accounts, but the larger cap offered by 401k accounts is certainly an advantage.
- 401k accounts offer a limited number of investing options, and they’re almost never great. 401k Plan sponsors (employers) are typically concerned with one thing when choosing a plan: cost. If the plan seems expensive it will be harder to explain to the board, regardless of the value or benefits of the portfolio and the advisor.
- Your money is locked up for as long as you work at the company. You’re stuck with the options available and you can’t move the money elsewhere unless you leave or retire.
- Investors have little to no help deciding which funds or options to use within the 401k so they end up in default options, which are usually target dated funds. You may have seen these funds that end with a future year, like 2045, which you’d be in if you were expected to retire sometime around 2045. A target dated fund is not the worst investment you could be in (which isn’t saying much) but it’s far from ideal. A target dated fund will load you up in U.S. large growth companies (essentially the S&P 500), sprinkle in some international large growth companies, and decide what percentage of your money should be in bonds based on the target year. Unfortunately, in the history of the market, large growth company asset classes are among the lowest-performing of any asset classes over time. A target dated fund is usually made up of index funds (along with their inherent problems) so at least it’s not active, but it will sacrifice large amounts of return over time because of its poor diversification.
Don’t be afraid to use your 401k account, especially if your employer offers a matching contribution (again, free money). But if you’ve obtained the maximum matching contribution, think about investing additional money into a better portfolio through an IRA. Unfortunately, your 401k is probably loaded up in the wrong asset class.
I ran into a super interesting study the other day in an almost as interesting book called Originals by Adam Grant. That’s not a subtle dig, the book is really good, but the study is incredibly interesting. It was published in 1992 as The Altruistic Personality by Samuel and Pearl Oliner.
The Oliners wanted to find out what drove non-Jews to risk their lives to aid and hide Jews during the Nazi rein in Europe. What was the difference between those who stuck out their necks and those who sat passively by? These people shared similar careers, lived in the same neighborhoods, attended the same schools, etc. They shared much in common, but one of the most significant differences the Oliners found involved how they were raised. The rescuers often used the word ‘explained’ to characterize their parent’s method of parenting. When they were disciplined or reprimanded, their parents tended to explain why what they did was wrong and how their actions affected other people. The explanations were good for a few things: 1) The explanations fostered values. An explanation can tie behavior to identity, a good person can’t steal toys and make other kids feel bad. Instead of a focus on rote compliance, the focus is on forming identities. 2) Explanations treat children as rational people with the ability to make choices and changes. Instead of demanding obedience, explanations help children see their need and ability to take responsibility for their own actions.
For those who risked their lives to save others during the Nazzi occupation, explanations from their parents had shifted their risk calculation from one of cost versus benefits to one of weighing values. If the cost versus benefit equation was utmost, there’s no question it would have made more sense to stay on the sidelines during the Nazi occupation. The risk was literally death. But if the calculation was one of personal values and identity, it becomes nearly impossible to sit idly by while fellow humans suffer injustice.
So next time your child makes a mistake or acts out or generally struggles with disobedience, talk to them when you discipline them. Help them see how their actions affect other people. Use language that addresses their identity (who they want to be) instead of purely focusing on the act (what they did). Turns out parenting is pretty important, and an explanation from a parent can go a long way.
It’s not a math problem. The numbers on debt consolidation actually sometimes make sense. Credit cards (for instance) offer high interest rates because they’re unsecured, personal lines of credit. The most popular consolidation loans are home equity loans which offer much lower interest rates because they’re secured against your home. If you stop paying a credit card, the debt goes to collections and the credit card company receives pennies on the dollars that you owe them, their risk is high and you pay for it. If you stop paying a home equity loan, the bank has a stake in your house and they can sell it to get their money back (foreclosure), their risk is much lower and you pay less for it. So that all makes sense, isn’t it an obviously beneficial move to slide the debt from unsecured credit cards with high interest rates into a secured home equity line with a low interest rate?
Like I said, the math may sometimes make sense on paper (may, although there are some serious issues with home equity loans which offset the juicy interest rates), but the math was never the issue. We need to consider the root of the problem. If the root of the problem is that you’ve got high interest rates on credit card debt then a consolidation loan solves the problem; done, easy. Unfortunately, that’s not the root problem. The root of the problem is that you’ve got a broken relationship with money and things. You buy things because you want them and you worry about where the money will come from later. You use credit cards because, points (obviously), and they make you feel like lots of little purchases are no big deal. Your financial life lacks intention, there’s a disconnect between your purpose/values, and your money/spending. A consolidation loan is appealing for the momentary relief it could provide, your monthly debt payments might be cut in half, but it’s only a bandaid. Without a more fundamental change to your relationship with money and your spending habits, the consolidation loan will actually only end up causing more debt and more pain in the future.
Home equity loans (again, the most common type of consolidation loan) are usually interest-only loans, which means if you make the minimum (interest-only) payment each month, the debt could continue on into eternity. The lower interest rate is not helpful if the debt isn’t going down. People often end up paying far more interest on a low-rate equity loan than they would have by aggressively paying off a credit card.
A debt consolidation loan will wipe out your credit card balances leaving lots more room to spend. Without a change in the deeper issue (your relationship to money), you’ll just end up with the old credit card debt in the consolidation loan and new credit card debt on the credit cards. It’s a wicked spiral.
So don’t play the debt games. Credit cards aren’t necessarily the enemy, but using them without having the cash to back your purchases, that’s a problem, a problem that the best consolidation program in the world can’t solve.