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9 Resolutions to Help You Achieve Financial Freedom in the New Year



A new year and a new chance to improve your financial situation. We have seven resolutions to help you achieve financial freedom in 2020.

Table of Contents

As we move into the new year, it’s important to reflect on our lives over the past year and find ways we can improve it in the coming year. For many of us, January seems like a reboot-a way to look at our lives with renewed energy and focus.

We all have different lifestyles, different income levels, and various financial goals. But nearly everyone reading this article can share some common resolutions. Building financial freedom is a long process; it’s a marathon, not a sprint. So, while the concept of New Year’s resolutions can be exhilarating, understand that these resolutions must turn into habits if they’re to have any sort of lasting impact on your future.

With that said, here are seven financial New Year’s resolutions for this year.

1. Create Actionable Financial Goals

According to the University of Scranton, about 92% of people who set goals for the new year don’t actually achieve them. To further this, 40% of people who write their goals down don’t even check whether they’ve achieved them.

It’s safe to say we have an issue when it comes to meeting our goals. So what can we do?

First, you need to be realistic about the goals you set. If you have $100,000 in debt and only make $30,000 a year, it’s not realistic to say you are going to pay off all of that debt in a year. It just doesn’t make sense.

Instead, I would suggest developing S.M.A.R.T. financial goals-goals that are specific, measurable, action-oriented, realistic, and time-bound.

After that, let your friends and family members know about your commitments. One study showed that we tend to achieve more when we send commitments to friends versus just writing them down.

Finally, use the power of visualization to help you meet your goals. You can create something called a prosperity picture to help you visually track and achieve your goals. There’s science behind it-it’s crazy. There’s even a full book about it-Picture Your Prosperity.

Once you’ve developed realistic goals and shared them with others, step up your game by visualizing. These actions will help you stay on track the entire year. You may even have a little fun doing it.

2. Develop a (Realistic) Budget

Along the same lines as developing realistic goals comes developing a realistic budget. Too many times we open an Excel document and type out all of our expenses, then figure out exactly how much we’re going to spend in each category.

It’s okay, we’ve all done it. The problem with these types of budgets is that they’re not budgeting at all. They’re forecasting. And the moment we blow a category out of the water by spending too much, we quit.

Then there are the categories. Oh, the categories. So many of us are perfectionists and we try to map out every possible category in which we could possibly spend money. Then sub-categories upon sub-categories. By the time you get to actually tracking expenses, you’re exhausted because you don’t know where to categorize. It’s exhausting.

Like YNAB founder Jesse Mecham says in his book, You Need a Budget, we need to keep things simple and budget only the money that we have. And when we screw up-it’s okay. We just need to roll with the punches.

So instead of crafting a giant forecast of what you may or may not spend each month for the year, create a real budget. Only budget the money you have right now.

When new money comes in, assign it to a category. Keep your categories simple.

Be realistic about it, too. If you value eating fresh, organic produce, you can’t expect to skate by on $50 a week in groceries. You may need to beef up that food budget (yes, pun intended) for the month.

Also, make sure you’re including a savings category in your budget. I’ll talk about automating below, but you won’t be able to achieve any real long-term financial success without the addition of a savings plan.

3. Do a Complete Credit Review

As a consumer, you’re entitled to a free copy of your credit report, from each of the three major credit reporting agencies, every year.

So if you plan it right, you can get a free copy of your credit report from TransUnion, Equifax, and Experian over the course of the year. Space it out and get one every four months or so, that way you’ll always have a free update on your credit multiple times throughout the year.

An easier way of doing this is by using tools like Credit Karma or Credit Sesame. You can monitor your credit report for free using these tools. (Read more about Quizzle vs. Credit Karma vs. Credit Sesame)

The point here is to get a full run-down of what you owe and where your debt is at. You also want to check in on your credit score and see if you have any negative marks you’re unaware of on your credit report.

Once you do this and have a clear understanding of where your credit stands, you can create a plan (or a goal) around improving or maintaining your credit score.

4. Try a Spending Fast

The first time I ever heard about a spending fast was through Anna Newell Jones and her blog, And Then We Saved. Basically, she stopped spending on unnecessary things for an entire year.

While that may not be possible for you, it’s worth a shot to try your own version of a spending fast. Here’s what to do:

  1. Create a list of needs. List out things you absolutely cannot live without. Think rent, clothes, food, and other necessities.
  2. Double check your needs. Odds are you listed a few “needs” in step 1 that are more like wants-or at least needs you can live without. Try to get rid of at least one of them.
  3. List out any extras that you want, but aren’t needs. Consider these “bonuses.”
  4. Set a goal for what you’ll do with the extra money. Will it be paying off debt? Saving for a home? Whatever it is, write it down.
  5. Only spend money on things that are listed as needs. You’re entitled to one “want” per month-within reason (i.e., don’t spend $300 on a want-keep it cheap).
  6. Everything else, dump toward your goal. Whether it’s savings or paying off debt-put every extra dollar you have toward that goal.

This is just an example of how you can do a spending fast. You can modify the “rules” of the game however you want, and for whatever works for you.

The point is-you cut out unnecessary spending and you make it really hard to do. You can do this for a week, a month, or a year. Try something out and see what fits.

5. Improve Your Net Worth

Many of you will receive a pay raise this year. Think very critically about how you set aside that money. If you’re fiscally irresponsible and have a tendency to spend, consider an increase in a paycheck withdrawal into a 401(k), health savings account, or IRA.

Up Your Retirement Savings Contribution

According to CNBC, the median savings for all working-age families in the U.S. is only $5,000. It’s time to start increasing your retirement contributions, as much as you might think it’s painful to do. Even if you increase your contributions by 2 or 3 percent, it could mean a big change.

Excluding any type of company match (since I’m assuming you’ve already contributed enough to at least get the match), a 2% increase on a $50,000 salary is an extra $1,000 per year. Over 30 years at a 6% average rate of return, that extra 2% equals about $89,000 down the road. That’s significant for just a $38 addition each bi-weekly paycheck.

Speaking of matching, you should be taking full advantage of your employer’s retirement matching, if they have one. If your employer will match up to a certain percentage of your earnings contributed to your retirement account, make sure you contribute that amount. To do otherwise is basically to short-change yourself out of free money that will be a huge benefit during retirement.

Fully Fund Your IRA

This one is a bigger deal than many folks think. This year, the maximum contribution for those under age 50 is $6,000. Those 50 and over are able to contribute up to $7,000 per year.

Younger readers take note: the dollars you invest today can multiply into thousands thanks to the power of compounded earnings. Experts agree that waiting to start saving for retirement means saving much more in later years to make up for opportunities lost when you were young, so open an IRA account and start saving today.

Increase Other Assets and Cash Flow

Consider other avenues to increase your net worth as well. This might be a time when you need to be proactive about things like a career change, a move to an area with a better cost of living, or looking into side projects that can earn you money.
A lifestyle change might even be in order. Maybe you trade in your luxury car for a cheaper, more reliable vehicle. Perhaps you consider eating out less, or any of the other popular (and sometimes cliché) resolutions. Again, be consistent and deliberate with how you go about this.

These two resolutions can combine into one simple one: increase your net worth this year. The combination of debt and cash flow make up your net worth. While it’s possible to both reduce debt and increase cash flow, if it makes things easier for you, just pick one and focus on that.

If you change nothing with your income but cut your grocery and restaurant bill in half each month, you’ll still be increasing your net worth. And once you feel consistent and in control of that one resolution, you can add more, understanding that you have the willpower and capability to check them off.

6. Build a Plan to Pay Off Debt

This may seem common-sense, but it really is number one: work on reducing or eliminating your debts.

Debt comes in many forms, be that student loans, credit card balances, car payments, or a home mortgage. Conventional wisdom would dictate you focus your efforts on the most damaging debts, like high-interest credit card balances or private student loans. It’s important to understand the massive psychological impacts of carrying debt and the corresponding benefits of reducing it.

Maybe you have a small bill that you’re paying off monthly. It’s not a particularly high-interest rate, and it’s not a large balance, but it annoys you. The satisfaction of having that struck from your balance sheet can have a significant impact on developing healthy financial habits.

No matter how you do it, be consistent about paying down debt. Set up automatic transfers from a checking account, or schedule payments as soon as income hits your wallet. Making one-off payments here and there can be mentally draining and easy to forget or ignore. A consistent cadence, however, can bring peace of mind and a sense of organization and purpose.

7. Research Major Expenses, Then Automate as Much as Possible

David Bach, the author of The Automatic Millionaire, has a simple philosophy for getting rich: Automate.

His basic advice is to automate your savings and live off of everything else. His book supports this philosophy with stories and data, too. He’s the one who originally talked about the “Latte Factor”-meaning a latte every day will add up to a huge amount over time.

But it goes beyond this.

You should be researching major expenses first. Some of these big expenses can be automatic already-and you need to break that habit first.

Everyone thinks of savings as little things we need to go without. “Skip the latte,” conventional wisdom says. If you’re spending $5 each day on a mocha skim frappe, then you might be sabotaging your financial goals.

But, you may be sending more dollars out needlessly each month on larger expenses. This year, make it a point to review what you’re spending on phone, internet, car insurance, life insurance, and other big-ticket items. If you’ve thought about refinancing for a lower interest rate on your home, make this the year you research refinancing to see if it can save you money.

Once you’ve done this, it’s time to automate.

I’m with David Bach in saying you should automate any and everywhere possible. Automate your savings before your bank account even sees it. Set up a direct deposit to a savings account so it’s taken out of your paycheck before it hits your checking.

You should also automate all of your bills. If you’re still paying bills manually online or (I can’t even believe I’m going to say this) still using checks-stop. Automate, automate, automate.

You’ll save time, money, and headaches. And you’ll get rich much quicker.

8. Learn to Invest

Learning how to properly invest is a critical skill for financial success. Even if you’re using a robo-advisor that does it for you, you should still have a basic understanding of how the market works and how to look for a particular fund or investment.

But while I’m a huge advocate for robo-advisors (I use one myself), I think a great resolution for 2020 should be to learn how to invest on your own. That way, you’ll at least have the option of choosing an online brokerage and doing some self-guided investing if you want to. If you still want to use a robo-advisor, consider using one in the list below:

Robo-advisor Best For SRI protfolio Review
Personal Capital High net-worth, access to human advisors Yes Personal Capital Review
Betterment Simple platform, competitive pricing Yes Betterment Review
Wealthsimple ETF investors Yes Wealthsimple Review

I can’t teach you how to invest in just a short paragraph here, so for starters, check out our guide on how to start investing. It’s a great way to begin to understand the basics. Beyond that, here are a few considerations:

Focus on the Mix of Investments You Have

If you’re just learning to invest, the bulk of your portfolio should be index funds, ETFs, or mutual funds of some sort. If you want to start investing in individual stocks, great, but make sure you have a broad mix of investments first so you’re not putting all your eggs in one basket.

Have an Asset Allocation That Suits You

Going with the point above, not only should you have the right mix of assets, but you should be breaking them up into an asset allocation that makes sense for your level of risk tolerance and your investment horizon. Meaning, if you’re not retiring for 30-40 years, it’s okay to be heavier in stocks, whereas someone who’s five years away from retiring better have a good share of stable investments like bonds.

Start with Tax-Advantaged Accounts

Tax-advantaged accounts include things like a 401k, IRA, 529, HSA, or other retirement accounts. You should consider opening and funding those types of accounts before dumping tons of money into a taxable investment account. Why? Because you’ll not only lower your taxable income (in the case of a 401k or Traditional IRA), but you’ll significantly cut your tax bill and set yourself up for future success (like using a Roth IRA, where you’ll pay no taxes on earnings or withdrawals at retirement time).

9. Prepare for Life’s Unexpected Situations

Look, it’s not great to think about dying or something else incredibly horrible happening, but that doesn’t mean you shouldn’t prepare for unexpected situations. Here are a few things you should be thinking about:

Health Insurance

Select a health insurance plan that matches your needs within areas such as insurance deductibles, coverage, and copays, together with a choice on who your medical providers can be. If you’re in decent health and usually do not go to the doctor (though I’d encourage you to think about changing that mindset!), consider a high-deductible insurance policy to cover against the risk of a serious ailment or even unforeseen health problems.

Find the Cheapest Insurance Quotes in Your Area

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Life Insurance

Always utilize a group term life insurance plan, whenever it’s provided through your company. These particular plans usually do not require a health care exam and tend to be an affordable way of providing income replacement for your dependents. Beyond that (like if you have sizable obligations that will continue after you die and you can’t self-insure) you may need to have additional life insurance. Unless you have a specific need for a permanent life insurance policy or you have extremely specific requirements, start off with a low-cost term life policy prior to a whole life policy.

Compare Life Insurance: Find the best life insurance rates with Policygenius 

Create a Trust and/or Will

If you haven’t already, now is a good time to set up a trust or a will. Again, while we don’t like to think about having to use one, it’s always best to be prepared. These types of documents will protect your family in case something does happen to you. I would recommend looking into Trust & Will-a company that puts together these documents, among many others, on your behalf at a super-low cost.

Read More: Best Online Will Maker

Bonus: Tools to Help You Track Your New Year’s Goals

Now that you’ve started to think about your financial resolutions for the new year, it’s time to accelerate the process by using some tools to help you along the way. Here are our favorites:

1. Mint

If your resolution involves anything about money, then Mint should be your number one tool. Mint is a free online money management tool that brings together all your financial accounts in one place. With Mint, you can monitor multiple accounts like checking, savings, investments, retirement, and credit cards. You can also set and track goals (perfect for a New Year’s resolution) about everything from paying off that balance transfer credit card to buying a home.

With Mint, you can quickly view your entire financial portfolio with just a few clicks. You can see all your balances and transactions from your computer or from your smartphone. All your accounts will be pulled into Mint and updated automatically. You can set up a budget, elect to receive bill reminders, make goals, and receive free savings advice.

And while we’re on the subject of money, you can also automate your investing with a tool like Betterment. Ideal for those wanting to invest money each month, Betterment gives you access to an array of ETFs that instantly diversifies your portfolio. Betterment is extremely easy to use (I have an account), and you can track your Betterment investments from Mint.

2. Joe’s Goals

Joe’s Goals is an online goal tracker that helps users develop good habits. This is a simple tool to use and is designed like a calendar. You just set up your goals and then track them on a daily basis. A daily score is automatically calculated for you so you know how you are doing.

With this tool you don’t just track the positive, you also track the negatives that are keeping you from accomplishing your goals. The negative goals are things you want to get rid of or habits you want to break. For example, if you have a goal of eating out less, but you give in and you eat out, you track this with a negative mark. Your negative marks are visible along with your positive marks and are calculated into your daily score giving you an overall picture of how you did on any given day.

3. has two features that will help you develop new habits and keep your goals. The first is their app. It’s pretty straightforward in that you create a habit or a goal and track it every day (or whatever frequency you choose). Each time you meet your milestones, you can get “high fives” from friends, family, or the broader community. One user said the following about the app:

“ helps me change my life, step by step. Every release gets me more excited about how good it is at providing accountability, community, and motivation for my goals. It helps me to consciously learn and grow every single day.”

You can also get habit coaching for as little as $15 per week. According to their website, “over 700 coaches are ready to help,” and you can “message your coach through our app or arrange a phone consultation.”

4. Strides

Earlier, I mentioned the benefit of using S.M.A.R.T. goals for your financial resolutions. Strides is an app that uses that methodology and lets you track goals as well as habits you want to form. One of the things I love is the ability to break your goals down into smaller pieces. Sometimes our goals (i.e., paying off $100,000 in debt) are a little lofty-so it’s nice to break it up into smaller chunks.

Conclusion: Now What?

Financial planning isn’t particularly difficult on a personal level. A budget can be drawn up with little effort, and you can gather a snapshot of your financial state reasonably quickly. Taking a look at credit card statements, paycheck stubs, and receipts can help you understand the money you’re bringing in and where it’s going. At its most basic level, a financial plan can merely be a budget, so long as you stick to it.

So, if you don’t have a budget, start there. Define as many categories as you feel necessary to portray where you spend your money accurately. Then, understand how much money you pocket each month, and where that money ends up going. Finally, establish your spending limits in each of those categories, so that the amount of income you earn each month is less than what you spend. Now comes the hard part: sticking to those numbers over the next week, month, year, and decade.

Inevitably, the hope is that your budget evolves, enabling you to direct your income to other areas. Your plan will regularly need refining. The worst thing you can do is to make lifestyle changes that increase frivolous spending.

Look at, and really evaluate, the resolutions above: to reduce your debt and increase your assets. Are you debt-free? Are you maxing out a 401(k)? How about an IRA, or maybe an HSA if you’ve got one? If you have kids, are you contributing to a college savings plan, or are you otherwise setting aside money for their future?

No, this year might not be the year that you reach the summit, achieving “financial freedom.” Building wealth takes time, patience, and effort. It starts with laying the proper foundation, taking those first steps, and then following through.

At face value, these resolutions seem simple… perhaps even too easy. However, the most straightforward resolutions can often be the most difficult to achieve. Start here, building the basic habits that will follow you throughout the years. You’ll be glad you did. I hope you’ll join me and many others who are looking to lead a fulfilling life, financially and personally. Here’s to health, wealth, and happiness in the new year!

What other financial resolutions will you shoot for this year?

Topics: debtfinancial planningMoney and LifeMoney ManagementPersonal Finance

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PenFed Checking And Savings Review: Full Service And Solid Rates



If you’ve been looking to join a credit union instead of a bank or want to add a credit union account for your checking and savings, PenFed is worth checking out. 

While they don’t have the highest checking and savings APYs, they are reasonable and competitive for a full-service credit union. In fact, PenFed made our list of the top 5 credit unions nationwide of 2020.

PenFed’s mobile app allows you to do all of your banking online or on the go through their mobile app, no matter where you are in the U.S. and even some locations outside of the U.S. In this article, we’ll review PenFed’s checking and savings products.

PenFed Logo

Quick Summary

  • Competive interest rates
  • Large nationwide ATM network
  • Minimum balance required to avoid checking account fees

PenFed Checking And Savings Details

Product Name

PenFed Credit Union

Account Types

Checking, Savings, Money Market, Certificates


0.05% to 0.90% APY

Min Deposit




Who Is PenFed?

Pentagon Federal Credit Union is a full-service credit union. They were created in 1935 and have $25 billion in assets. PenFed is headquartered in McLean, Virginia. They used to restrict membership to a relationship with the military or federal government but have recently opened up to everyone. 

PenFed services all 50 states, including the District of Columbia, Guam, Puerto Rico, and Okinawa (Japan). They are federally insured by NCUA and are an Equal Opportunity Lender. In addition to PenFed checking and savings accounts, members can also access home, car, credit card, and student loan products.

See our review of PendFed’s student loan refinancing product.

What Do They Offer?

PenFed has one checking account and four savings products. They have a network of 68,000+ ATMs. You can bank online or through their mobile app. PenFed has nearly 50 branches across 16 states and the District of Columbia, Guam, Puerto Rico, and Okinawa.

The PenFed website shows its accounts earn interest (APY) and dividends. The terminology can make it sound as though you get the APY plus dividends. That isn’t the case. Dividends are simply being used interchangeably with interest (APY).

Access America Checking Account

You’ll need to deposit $25 to open a checking account with PenFed. PenFed checking accounts do earn a little interest — 0.20% to 0.50% depending on account size as shown below.

  • 0.20% APY on a daily balance of less than $20K
  • 0.50% APY on a daily balance of $20K or more up to $50K

In addition to the listed APYs, you can also earn dividends with a monthly direct deposit of $500 or more. As well, to avoid the $10 monthly fee, you’ll need a daily balance or monthly direct deposit of $500 or more. Overdraft protection is available but is subject to approval.

Premium Online Savings Account

The Premium Online Savings Account pays 0.90% APY on balances up to $250,000 and only requires a $5 deposit. There are no monthly fees. However, there also is no ATM access.

Be aware that savings accounts have more restrictions than checking accounts. Due to federal law, you can only withdraw money from your account up to six times per month. You’re allowed up to $10,000 per day in deposits and a total of $50,000 for the month.

Regular Savings Account

The Regular Savings Account pays only 0.05% APY on all balances. But in exchange for giving up that interest, you gain ATM access. However, if you can get by with transferring money to your checking account before making a withdrawal, the Premium Savings Account is clearly the way to go.

Money Market Savings Account

The Money Market Savings Account requires $25 to open and doesn’t lose ATM access. There are no monthly fees and you get free checks upon request. The account pays interest through several tiers that are dependent on your balance:

  • 0.05% APY — $10,000 or less
  • 0.10% APY — between $10,000 and $99,999
  • 0.15% APY — $100,000 or more

See how this compares to the top money market accounts here >>

Money Market Certificates

You’ve probably heard of a certificate of deposit (CD). Credit unions call these simply “certificates,” but they are basically the same. 

PenFed has several certificates to choose from. All require a $1,000 deposit to open. Just like a CD, your money must remain in the certificate until maturity or you’ll pay an early withdrawal penalty. Dividends are compounded daily and paid monthly.

The following certificates are available:

  • 6 Month — 0.40%
  • 12 Month — 0.70%
  • 15 Month — 0.70%
  • 18 Month — 0.70%
  • 2 Year — 0.75%
  • 3 Year — 0.80%
  • 4 Year — 0.85%
  • 5 Year — 1.00%
  • 7 Year — 1.05%

Mobile App

The mobile app for PenFed checking and savings includes all of the features you’d expect from full-service credit unions. You get instant check deposits, bill pay, ability to send money to almost anyone, account management, and the ability to transfer funds between your PenFed accounts.

Are There Any Fees?

The majority of PenFed’s accounts don’t come with fees. However, its Access America Checking Account has a $10 month fee if certain minimums are not met. To avoid the fee, you’ll need to keep a minimum balance of $500 or set up a $500 monthly direct deposit.

How Do I Open An Account?

You can visit or a local branch if you have one near you to apply for membership. If approved, you’ll need to deposit at least $5 to open an account.

Is My Money Safe?

Yes, money deposited with PenFed is federally insured by the NCUA. Like FDIC insurance for banks, NCAU insurance protects up to $250,000 of credit union member deposits per account.

Is It Worth It?

If you’re looking to open a checking or savings account with a credit union, PenFed is a full-service credit union that pays up to 0.50% on checking account deposits and up to 1.00% on savings. It has about 50 branches in 13 states, plus a few outside of the U.S. and includes NCUA protection. For those reasons, PenFed checking and savings is certainly worth considering.

But if you won’t be able to meet the requirements for waiving PenFed’s monthly checking account fees, you might want to look at these free checking accounts instead. And if you’re comfortable with managing your checking or savings accounts with minimal support, you might be able to earn higher rates with an online bank. These are our favorite online banks for 2020.

PenFed Checking And Savings Features

Account Types

Checking, Savings, Money Market, Certificates

Minimum Deposit

  • Checking: $25
  • Savings: $5
  • Money Market: $25



  • 0.20% APY on a daily balance of less than $20K
  • 0.50% APY on a daily balance of $20K or more up to $50K

Regular Savings: 0.05% APY

Premium Online Savings: 1.00% APY

Money Market Savings

  • 0.05% APY — $10,000 or less
  • 0.10% APY — between $10,000 and $99,999
  • 0.15% APY — $100,000 or more


  • 6 Month — 0.40%
  • 12 Month — 0.70%
  • 15 Month — 0.70%
  • 18 Month — 0.70%
  • 2 Year — 0.75%
  • 3 Year — 0.80%
  • 4 Year — 0.85%
  • 5 Year — 1.00%
  • 7 Year — 1.05%

Maintenance Fees

  • Checking: $10 (waived with $500 minimum balance or $500 monthly direct deposit
  • Savings: None
  • Money market: None
  • Certificates: None


~50 across 13 states

ATM Availability

68,000+ fee-free ATM network

Customer Service Number


Customer Service Hours

  • Mon-Fri: 7:00 am-11:00 pm (EST)
  • Saturday: 8:00 am-1:00 pm (EST) Saturday
  • Sunday: 9:00 am-5:30 pm (EST)

Mobile App Availability

iOS and Android

Bill Pay


NCUA Charter Number




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The Sweet Spot



“Success can get you to the top of a beautiful cliff,

but then propel you right over the edge of it.”

As a Mustachian, there’s a good chance that you are a bit of an overachiever. 

Maybe you fought hard to get exceptional grades in school, or perhaps you have always dominated in your career or your Ultramarathon habit or your hobbies - or maybe all of the above. 

In the big picture, this usually leads to having a “successful” life, because of this basic math:

Traditional Success
How much work you do
How much society happens to value your work

The Nitty Gritty of Traditional Success

Now, lest the Internet Privilege Police head straight to Twitter to start writing out citations, Traditional Success is not a measure of your worthiness as a human being. We’re just talking about the old-fashioned, Smiling 1950s Man definition of success.

 And since we’re all scientists here, we could break the “Work” side of it down a bit further:

And thus, you could say that on average, doing more stuff produces more traditional success. 

But then what?

This is the point where a lot of  smart, driven, born-lucky people drive themselves up the Winding Road of Challenge and then right off the edge of the Cliff of Success. 

If you’re still on the way up, or stuck at the bottom, it is difficult to even imagine the idea of “too much success”. But it’s a real thing, and it happens much more quickly than the modern overachiever would like to admit. Observe the following cautionary tale:

Diana is the director of engineering in a Silicon Valley tech startup. The work is intense, but they are almost over the hump - the company went public last month, and she owns shares that are worth over $10 million at today’s share price. They will vest over the next five years, so she just needs to grind this out and then she will be set for life.

Sounds great, right?

Except this is Diana’s third smashing success. She was already set for life after the second company was acquired, and even before that, her first decade as a rising star at a large company had already left her with over $2 million of investments and a paid-off house in hella expensive Cupertino, California. She had more than enough to retire, twenty years ago!

To many people who are less fortunate, the present situation would still sound like great fortune, and in some ways, it is. Becoming a Director of Engineering is (usually) far better than a punch in the face.

But Diana is now 52 years old, with a collection of increasingly severe back and neck problems and a few medical prescriptions piling up. She has two grown children in their twenties, but wishes she had been able to spend more time with them as they grew up. She has all the money in the world, but still almost no free time, and this next five years is starting to look like an eternity.

What happened here?

Diana is in good company, because many of our hardest-working people fall into this same trap. They have the talent and the great work habits figured out, but they are still missing one last concept - the idea of the sweet spot.

Fig. 1: What is the ideal length of a high-end career?

Diana could have stopped after the first company, or the second, but her career success took on a momentum of its own, so she kept doubling down without stopping to consider why she was doing it - and what she was giving up in exchange.

Once you learn to see the phenomenon of the sweet spot, you will start noticing it everywhere. And it is an amazingly useful thing to start watching and fine-tuning to get the most out of your own life.

Fig.2: What is the ideal amount of Anything?

The Sweet Spot of Physical Training

When a non-runner starts running, they will see immediate benefits. In the process of going from being unable to jog across a parking lot, to being able to easily jog a brisk mile, your entire body will transform for the better. Muscles and bones get stronger, heart and lungs expand and reach out to give your body a healthy embrace, brain functioning and mood and hormones smooth out and normalize. 

Training your way up to become a two mile runner still brings great benefits - just slightly smaller. The fifth through twentieth mile turn you into a hyper efficient machine, but some people start seeing joint injuries as they rise through the ranks.

And by the time you reach the fringe world of 100-mile runners, serious injuries and surgeries are completely normal - as well as unexpected organ failures in otherwise young, healthy people. The sweet spot for daily running for maximum health is somewhere the middle.

All around us, seemingly unrelated things follow this same pattern, from career work to physical exertion to parenting strategy.

Fame and Fortune - be careful what you wish for

Fame definitely has a sweet spot. Building up a good reputation in your community can open the door to better friendships, jobs, relationships, and more fun in general.

But as that reputation expands outwards to become fame, you get the “reward” of constant coverage in gossip magazines and waking up to find photographers and news reporters on your front lawn. At the extreme end, you need to mobilize a team of armored vehicles and line your route with snipers every time you leave your well-guarded compound.

Even money, our humble and ever-willing servant is subject to this phenomenon. It certainly helps us meet our basic needs, but there is a certain point at which Mo Money can become Mo Problems. 

The first bit of monetary surplus can be fun as you can afford a nice house and good food. Then the next chunk seems fun but also causes distractions as you rack up second and third houses and ever-more elaborate possessions and vacations that take a lot of energy to keep track of.

And from there it goes downhill as tabloids start keeping track of your wealth and scrutinizing your choices, hundreds of people mail in pleas for your generosity, and you end up with a full-time job just making sure that the surplus goes to good use. This life arrangement can still be enjoyable for some people, but I would definitely not wish it upon myself.

On and on this pattern goes. A curve with a sweet spot in the middle. The optimal amount of calories to consume in a day. The volume at which you will enjoy your music most. The right brightness of light to illuminate a room. The number of friends with whom you can have a meaningful relationship.

 Why does it occur in so many places? I believe it is because this is how our brains are wired in the first place

Humans are a ridiculously adaptable creature, but we do still come with limits.

And when you respect those limits and fine-tune your life within the sweet spot for all of the main pillars for happy living, you end up with the best possible chance at living a happy, prosperous life.

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The Curse Of the Overachievers - Revisited

So now you see the problem - overachievers like us tend to get really good at a few things like a career or an athletic pursuit often specializing so much that we neglect other things like overall health or personal relationships.

And our society notices and rewards us for the success, which just reinforces the behavior, so we take things to even higher extremes, often without stopping to think about the reason behind it.

Okay, So What Now?

Once you see the pattern of the sweet spot,  it is impossible to un-see it. So it becomes pretty easy to float up and look at your entire life from above, like an outside observer.

And from up there, you can see the areas where you have enough, and places where you may have already gone overboard, and the corresponding things that you have left neglected as the price of that success. 

Over the past year I’ve been looking at my own life from this perspective, coming up with quite a few of my own diagnoses:

Money: enough. Additional windfalls don’t seem to bring me any lasting joy, but I also don’t have so much money that it makes me nervous. It’s enough to feel safe and empowered, and that’s all I need. Meanwhile, giving away money has brought me lasting happiness, without creating a feeling of shortage or regret.

Career Success (blog): It Varies. When I was really working on this MMM job in the mid-2010s, it started to take over too much of my life. Emails, opportunities, travel and public attention all reached levels where I actually started to have less fun. So I tried dialing it back, as any long-term readers will have noticed. And sure enough, life improved. But then I went too far and started feeling a loss from letting this valued hobby slip away. I’ve been trying to get back into the groove, which revealed another problem - detailed at the end of this list.

Friendships: Not Enough. I have found myself not being able to keep up with close friends, and had difficulty making or keeping plans, partly out of  feeling overwhelmed with life details in general. Still, the opportunities abound here in my local community, and the people are wonderful. So I have the opportunity to keep working at this.

Health and Fitness: Enough. Since I was about fourteen years old, eating well and getting a lot of varied exercise has always been a kind of non-negotiable pillar for me. Nothing extreme, but just very consistent. I think this has been paying off as I feel healthy every day and have never had any physical or health problems in these 30+ years since.

Parenting and Kids: Enough (an A+!) Since 2005 I made “being a Dad” my primary goal in life, quitting my career to do so. It’s the only thing I can truly say I have done the best I could at, and I’m really proud of that. But part of this success came from only having one kid - both of us parents knew we couldn’t handle any more, given the overall conditions of life back then. So for us, the sweet spot was One Child - and absolutely no regrets in that department.

Personal Projects and Daily Habits: Not Enough. I get great satisfaction from working on challenging things and making progress. But far too often, I just can’t get it together and I squander entire days on accidental distractions. Planning to go out for a day of work can lead to searching for lost sunglasses which can lead to finding a lost to-do list which can lead to opening the computer to look something up and several hours disappearing. On and on these tangents can go, often leading to me not getting my primary, happiness-creating goals for the day accomplished. 

I discovered that I have a pretty severe and textbook case of Adult Attention Deficit Disorder, which gets magnified if there are any sources of stress in my life. So I’m working on that (keeping stress down and also targeting habits, diet, exercise and even trying some medication), which will hopefully improve all other areas of life as well.

What am I missing? I’m still working on thinking it all through, so this list will surely grow.

Your Turn

Your life surely has a completely different array of surpluses, shortages and sweet spots than mine. Your assignment is therefore to write them all out tonight, and see where you stand in each area, and decide what to change. Many of the changes are quite easy to make, and yet the results are nothing short of life-changing.

In the comments: what are your own areas of surplus and shortage? And what’s your plan to help restore balance to your life?

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Woman in TFSA overcontribution fight with CRA has penalties cut from $17,000 to just $300



While most of us use our TFSAs as general purpose, tax-free savings or investment vehicles, the

Canada Revenue Agency has been cracking down

on perceived misuse of the accounts by assessing some taxpayers with an overcontribution tax, and others

for falling afoul of the “advantage rules” for registered plans

. Two separate tax cases, out last month, dealt with TFSA penalty taxes.

Non-resident TFSA contributions

The first case involved TFSA overcontributions. If you overcontribute, the penalty tax is one per cent per month for each month your TFSA is in an overcontribution position. But there’s a separate, additional penalty tax of one per cent per month if a non-resident contributes to their TFSA, which is what happened in the first case.

In August 2006, the taxpayer left Canada to begin her medical studies in the U.K. While in the U.K. as a student, and, on the advice her Canadian investment adviser, she made contributions to her TFSA in 2009 ($5,000), 2010 ($1,500) and 2012 ($494). She completed her studies in June 2011 and then commenced two years of residency training in family medicine. In November 2012, she registered with the Canadian Residency Matching Service as a fully licensed U.K. doctor, to obtain a residency position in Canada. Finally, in April 2016, she obtained a residency position at a Vancouver hospital and in June 2016, returned back to Canada.

Much to her surprise, in 2018 the taxpayer received Notices of Reassessment from the CRA for 2009 to 2016, assessing her a total of $17,006 of TFSA penalty tax and arrears interest, asserting that she was a non-resident of Canada when she contributed to her TFSA. Indeed, to be able to contribute to a TFSA (and to accumulate the annual TFSA contribution room), you must be a resident of Canada for tax purposes.

An individual’s residency status is determined on a case-by-case basis, taking into account many factors. The most important consideration is whether or not the individual maintains residential ties with Canada. Significant residential ties to Canada include: a home in Canada, a spouse or common-law partner in Canada and dependants in Canada. Secondary residential ties include: personal property, such as a car or furniture, in Canada; social ties in Canada, such as memberships in Canadian recreational or religious organizations; economic ties in Canada, such as Canadian bank accounts or credit cards; a Canadian driver’s license, a Canadian passport, and provincial health insurance.

The taxpayer argued that during the period that she was in the UK, she maintained a room in her parents’ home and always regarded the space in her parents’ home as her permanent home. She kept many of her possessions there until August 2016, when she moved to Vancouver.

While studying in the U.K., she kept strong secondary ties to Canada, including funding her medical school fees and expenses with annual loans from a student line of credit from a Canadian bank, as well as through various federal and Ontario student loan programs. She retained and renewed her Canadian passport, and obtained Canadian citizenship for her two daughters who were born abroad. She kept and renewed her Ontario Driver’s licence, her Canadian bank accounts and credit cards, and maintained her Ontario Health Insurance as an overseas student. She continued to be listed as an occasional driver on her parents’ vehicle insurance and returned to Canada nearly every year from 2006 to 2012 to maintain her ties to Canada. Lastly, she filed Canadian income-tax returns as a resident of Canada that were always assessed as filed.

In other words, although the taxpayer was physically absent from Canada during her years abroad, she argued that she maintained significant ties to Canada during her period of her absence and “intended to return to Canada upon completion of her medical studies and has, in fact, returned to Canada.”

In a consent to judgment issued last month, the CRA conceded that the taxpayer was a resident of Canada until June 30, 2020. This was a negotiated date that was selected by the CRA, as it was the date the taxpayer had completed her medical degree and could have returned to Canada, in theory, to complete her residency/licensing training. The taxpayer became a non-resident on July 1, 2020 and resumed Canadian residence on June 6, 2020, when she began her medical residency position in Canada.

The result, therefore, was that only the 2012 TFSA contribution of $494 was subject to non-resident penalty tax and interest, which totalled approximately $300, a far cry from the initial TFSA reassessments totaling over $17,000.


Advantage rules 100 per cent penalty tax

The second recent case involving TFSA penalty tax was at the Federal Court of Appeal and concerned the

“advantage rules,” which are a series of anti-avoidance rules

in the

Income Tax Act

designed to prevent abuse and manipulation of all registered plans, including TFSAs. If you find yourself offside these rules, you could face a 100 per cent penalty tax on the fair market value of any “advantage” that you receive that is related to a registered plan.

The taxpayer was appealing a 2018 decision of the Tax Court in which he was reassessed nearly $125,000 in penalty tax applicable to the advantage the CRA says he received in connection with the transfer of private company shares to his TFSA.

The taxpayer went to court to challenge the constitutionality of the 100 per cent advantage tax. He argued that since the CRA has the discretion to reduce the 100 per cent advantage tax to zero, Parliament “improperly delegated the rate-setting element of (tax) … to the (CRA)” in contravention of the Constitution Act.”

Not surprisingly, the Tax Court, and now, the appellate court, dismissed the taxpayer’s appeal, concluding that Parliament, via the explicit wording found in the Income Tax Act, “has prescribed the liability for the tax, the persons on whom it is imposed, the conditions on which a person becomes liable for it, and criteria by which the amount of tax can be determined. (It) delegates nothing to the (CRA).”

The Court did find that there was a wider issue to be considered as to whether the CRA’s power granted under the Income Tax Act to reduce or cancel the tax constitutes “an invalid delegation of taxation power to the (CRA).” But, due to a “lack (of) adequate submissions and fully developed reasons from the Tax Court,” the appellate court refused to weigh in, concluding: “We should leave the broader issue for another day.”

[email protected]

Jamie Golombek, CPA, CA, CFP, CLU, TEP is the Managing Director, Tax & Estate Planning with CIBC Private Wealth Management in Toronto.

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