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Future Shock! Why You Over-commit

shock You’re backed up with work. There’s no time to spare. You’re busy, busy, busy. You eat your lunch at your desk and keep plugging away. An hour passes, then another. It looks like another late night at the office. And it’s Friday. Guess you’ll be working this weekend. As evening approaches, you get a call from a friend who is chairing the fundraising committee this year for his favorite charity. He asks if you’d help raise money this year. The campaign kicks off in a month. Oh, what the heck you say – it’s over a month away. No problem!

You don’t think anymore about it. The weeks turn into a month. You get an e-mail reminding you of the first committee meeting. You’re just as busy now as you were when you committed to it. But now you have yet another obligation – you have to serve on this committee.

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The future becomes the present

A study done a while back showed that we do have a tendency to think we will miraculously be less busy in the future than we are today. So we say “yes” to requests for our time in the future. Then we’re shocked when the future becomes the present and we have even less time than we had before.

We’ve overcommitted ourselves … again!

5 questions to ask before committing yourself

The first question is simply a check. It may be obvious, but we didn’t feel we could leave it out.

  • How will this request advance me toward my goals? If it doesn’t, why say yes.

The next four questions aren’t sequential. They should be answered simultaneously.

  • If you had to do this tomorrow or next week, would you still say yes? If you can’t say yes to this question without hesitation, why commit yourself? But consider the next question before saying “no”.

  • How significant would the impact be on your life if you say yes? You may be willing to pay the price of overextending yourself if the pay off is high enough. If that’s the case, look at the next question.

  • How much time will it realistically take? You can only operate in a state of hyper-activity for a short period of time. If it will take a year, you can’t push yourself that hard. So if it’s a long-term project you may have to say no. If it’s short-term you may be able to say yes. In either case, consider the next question.

  • What am I willing to say “no” to or put “on hold” in order to do this? You only have 24 hours in your day just like any human. Will you sleep less? Spend less time with your family? Skip your next vacation? Be realistic about what you have to give up. Is it worth the price? 

Once you’ve answered these questions, you’re ready to commit (or not commit) your time in the future. You understand that you won’t have more time then. So you’ll be careful to only commit to those things which will make you a bigg success!

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We greatly appreciate you reading our post today. Join us next time as we look at the difference between being battle-scarred and battle-scared. Until then, here’s to your bigg success!

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I Need Money! Should I Cut Back on My Retirement Plan Contributions?

graph_barThe phrase “perfect storm” has been used more recently than when the movie was out! Here in the United States, we’re being hit with rising costs, falling home prices, volatile stock prices, the subcrime (oops, make that subprime) mortgage crisis, and talk of a possible recession.

Recently, we discussed why cashing out a 401(k) is one of the worst things to do in response to these tough times.

Today, we want to discuss cutting back on contributions to a retirement plan. Two to three months ago, the word was that people weren’t reducing the investments they make for their golden years.

Even now, the overwhelming majority of people aren’t making any changes. However, there is evidence that more people are considering (or are) cutting back.

It’s certainly understandable – insurance, groceries, gas, taxes all keep going up. Investing less in a 401(k) is a way to put more dollars into a paycheck now.

3 reasons not to cut back on your 401(k)

#1 – Contributions are made with pre-tax dollars – Assume you’ve been contributing $1,000 a year to your 401(k). You stop making contributions so one would think that would mean $1,000 more in your paychecks over the course of the year. But you have to account for taxes – if you’re in the 30% tax bracket, you’ll owe $300 in taxes on this $1,000. So you’ll only net $700 by stopping your contributions.

#2 – Money accumulates tax-deferred
– With your retirement plan, money is compounding on money on top of more money. And since you don’t pay any taxes on it until you take it out, all of your money keeps working for you, rather than paying a part of it every year in taxes (and therefore having less money to accumulate on top of).

#3 – Employer match – Employers match as much as 100%, up to some limit. So say, for example, you contribute 3% of your salary and your employer matches that. It’s like found money … your employer is guaranteeing you a 100% return on your initial investment.

Now granted, this is part of your overall compensation. However, we often look at our tax refunds as found money, when it is just a return of an overpayment. This is truly found money – the employer is giving you money as long as you invest up to the maximum. It’s your choice.

Cutting back could cost you $53,551

Consider a fictional 30-year old woman who has been investing 3% of her $50,000 salary, with her employer matching it 100%. Money is tight, so she decides that she will stop investing for three years. This $125 invested for just three years, and then left alone until she retired (at age 62) would have grown to $53,551, if she earned just 6% on her money.

So if she invested just 3% of her salary for the next 3 years, it would grow to 108% of her salary when she retires.

A small amount of money now makes a huge difference in the long term. So at least try to keep investing as much as your employer matches because you get a huge boost in your portfolio by hitting that target.

Until next time, here’s to your bigg success!

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Customer Disservice: Policies That Repel Customers

We've been thinking about customer service lately, inspired by a trip and a book.

 

I was in Chicago recently and I had to use the restroom. I saw this little hot dog place. I thought that I could grab a dog for lunch and use their bathroom. As I approached the door, I saw a sign. The sign said, “No Public Restrooms.” So I stopped, looked around, and noticed a McDonald’s down the street. So I went to McDonald’s.

 

I could see a business limiting the use of their facilities to patrons, because some people will just use the bathroom and leave. But to not even let your customers use it … that seems a little extreme to me.

 

I learned this lesson the hard way. One of my earliest businesses was a Ben Franklin store – the old “five and dime.” We didn’t let the public use our bathrooms. There was one particular day every year when the town held a huge community sale. We got tons of traffic on that day, many needing to use the bathroom. People would come in and walk out because we said, “No”. Why wouldn’t they? We hadn’t served their immediate need. So we changed our policy – and most people who used the restroom did buy something.

 

This makes me think of the book, Our Toilets are Not for Customers by Floyd Coates. He tells the story about shopping for light fixtures. His house had been severely damaged by a tornado. He had to buy lights for his new house, so he went to a lighting store. He was about half done with his list – having already selected about $2,000 worth of merchandise – when he got the call of nature. He asked a clerk where their bathroom was. She said, “Our toilets are not for customers.” She went on, “There’s a place a couple of blocks down the street.” So he left … and he didn’t return – they didn’t get a dime out of him.

 

One of my professors, who became one of my mentors, said that most policies are created for 3% of the people – the exceptions – rather than the 97% who are responsible for the success of the business.

 

The #1 … and #2 … ways businesses flush money down the toilet

#1 – Create policies for 3% of their customers
The hot dog place in Chicago is the perfect example of this. Would more than 3% of the people who walk through the restaurant’s doors do their business without doing business with the restaurant? Yet all of their customers are affected by this policy.

#2 – Create policies for 3% of their employees
The renegades, you might call this 3% of employees. But the other 97% suffer for it. This results in lower morale among all the employees – especially the ones who did nothing wrong. Lower morale leads to lower productivity.

What’s that sound? Oh, that’s the sound of money getting flushed down the toilet!

This 3% rule is a good thing to think about before making any policy decision that affects customers or employees.

We’ve given one example, but there are so many more. What have you seen – as a customer or an employee? How do businesses flush money down the toilet?

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