Wise Bread (Philip Brewer)

Is Just Leaving Some Slack Better Than a Plan?

Philip Brewer — Thu, 04 Feb 2010 14:00:02 +0000

Are you as tired as I am of personal finance sites saying that you've got to have a plan? If you're a planner, it's unnecessary advice, because you've got a plan. If you're not a planner it's pointless advice, because you're not going to make a plan anyway. And that's okay, because just leaving some slack can be as good as making a plan.

Your natural planner has a plan for how he's going to spend his money. He knows how much money he's got. He knows what he wants to buy. So, he makes a plan for getting as much of what he wants as possible with the money available. (That particular sort of plan, by the way, is called a budget. It's a useful tool.)

Your play-it-by-ear guys, on the other hand, tend to have some slack in their non-budgets. (If they don't, they tend to find themselves at the end of the money before they run out of month. Let that happen a few times and they start leaving some slack.)

If things go just about as expected, your planner has a slight edge. He'll have planned to have a surplus and targeted that surplus to specific savings and investments. The guy who just leaves some slack tends to reach the end of the month with a little money left — but without a plan for that money, anything might happen. The money might get spent. (It was "extra" after all.) It might get saved or invested. Most likely, lacking any plan, it'll just hang around in the guy's checking account. That puts the planner ahead by whatever he can earn by getting his surplus into superior savings and investment vehicles sooner.

When things don't go as planned, though, your play-it-by-ear guy may have an advantage.

If you're a planner, and things don't go according to plan, you've got a problem. You've probably allocated every penny to some category or another, so, if some of those pennies don't show up, there's no slack to allow for a smooth adjustment. Unplanned expenses obviously screw up a plan, as do rising costs for any of the planned expenses. If you don't have any slack, you're stuck with a broken plan.

Now, the actual adjustment is about the same in either case. An unplanned expense can be covered with your emergency fund. Changing prices prompt the obvious adaptations — you substitute for things that have gotten more expensive with things that haven't gone up so much and, if necessary, you buy less over all. But your planner has to do all that plus come up with a new plan. When prices are shooting up every month, that can turn into a lot of extra work.

The guy who relied on slack can usually just adapt in place. Over a period of a few months, he finds that he has a lot less slack than he'd expected, so he cuts back, buys less of the stuff that seems to have gotten expensive, and gradually reestablishes a comfortable amount of slack. He makes about the same adaptations, but he does it without all the extra planning and re-planning.

My point isn't that plans are bad (or good), because you're either a planner or you're not. My point is that you're making pretty much the same adaptations either way.

If you're a natural planner, though, there is a way to keep the advantages of planning without losing the advantages of just leaving a little slack in your finances. It's called contingency planning. I'll talk about that in an upcoming post.

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Ruthless Frugality

Philip Brewer — Fri, 22 Jan 2010 14:00:04 +0000

By Philip Brewer

There are many strategies for frugality: Don't buy stuff you don't need. Stock up when you get a good price. Make smart decisions about when to pay up for quality and when to get the cheap stuff. Then there's what I call ruthless frugality: Always getting the best price.

I'm not talking about stupid frugality — buying the cheapest shoes you can find even though they hurt your feet. Nor am I talking about shopping around, using coupons, and so on. Rather, I'm talking about getting the best price you can without regard for what's behind the great price.

At the extreme, of course, there's criminal frugality — buying stolen goods and pretending to believe that they fell off the back of a truck. But short of that, there are all sorts of things that enter the general stream of commerce at prices that embed lots of bad practices — stuff made in sweatshops by children or prisoners or slaves, stuff made in ways that poison the workers or trash the environment.

Most people delegate to the government the job of policing how things are produced. There are, for example, laws about how farm animals have to be treated, and most people hope that those laws are strict enough that the food produced is safe and the animals' suffering is minimized.

But it's worth thinking about the costs of ruthless frugality. One good reason to pay more than you need to is to be a good neighbor, such as by buying locally. Patronizing local shops often costs more, but part of the reason the big box stores are cheaper is because they've got competition. Let all the local stores die and you can expect to see prices rise at the chain stores. More important, money spent in local stores tends to stay in town — possibly getting spent on stuff that you make or services that you provide. Perhaps more important yet, local production is often more ethical and more sustainable.

I talk about voluntary simplicity as being an essentially hedonistic lifestyle, because a high overall level of frugality frees up resources that can go to those specific areas of your life where paying more makes a difference that matters to you. The upside of frugality is more of what you care about.

I think a little hedonism is great, when it is enabled by thoughtful choices about priorities. But I think a similar amount of thinking ought to go into where really cheap stuff comes from — and whether your values can support the ruthlessness built into the price.

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Book Review: The Trap

Philip Brewer — Wed, 20 Jan 2010 14:00:05 +0000

By Philip Brewer

The Trap: Selling Out to Stay Afloat in Winner-Take-All America by Daniel Brook.

For more than two years now writing at Wise Bread, my whole thesis has been that frugality leads to freedom — if you can live cheaply enough, you can choose whatever work calls you, instead of whatever work pays the most. This book thoughtfully presents the case that my view is not just shortsighted but actually harmful.

I've always recognized that the lifestyle I advocate has its limits. All sorts of perfectly ordinary aspects of a normal life — whether positive, such as having kids, or negative, such as becoming seriously ill — make it a lot harder to live a very frugal life.

Brook talks a good bit about the limits of frugality as a way to do whatever work calls you. Many of the examples Brook uses are people whose work requires that they live in a big city:

Activists who need to live where there's a critical mass of others with the same vision.
Social workers or community organizers who need to live in the community that they serve.
Creative types of the sort who can't just do their work by themselves the way a writer can — filmmakers, dancers, actors.

It's possible to live frugally even in a big city, but living very frugally requires not only luck and flexibility but also a level of constant attention that makes it hard to focus on the work that was the whole point.

Sure, Brook says, it's possible to live frugally enough that you can do whatever you want — as long as what you want doesn't include expensive things like sending your kids to college or paying for your healthcare if you get sick or living in a big city.

But that's really Brook's secondary point. His central point is that the way we've organized society is harmful.

Low tax rates were supposed to be good and fair. Letting everybody keep what they earn seems only right, and in a growing economy it wasn't supposed to be harmful for some people to become extremely rich. After all, as long as the poor and middle-class are also making progress, does it matter if some people are super-rich? Brook's answer is that it does matter.

Perhaps it wouldn't matter if the super-rich were spending all their vast wealth on Old Master paintings and private islands — but they aren't. They're spending significant amounts on stuff like college for their kids and healthcare and apartments in the city. Stuff, in other words, that the rest of us need to buy too. And, since they have so much money, they end up bidding up the price of the ordinary necessities of middle-class life.

The result of that is that people are pressured into selling out. Even people who are strongly inclined toward service in government or a non-profit find that they just can't do it — not and pay off their student loans, get married, buy a house, and support a family.

The big reason I advocate frugality as the path to freedom is that it's entirely within your own grasp — it doesn't depend on the government nor on changes to the way society or the economy are structured. But that doesn't mean that society and the economy are structured perfectly. Whether you're with me on the advantages of frugality or disagree, The Trap provides a fascinating look at the issues.

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Frugality, Simplicity, and Sustainability

Philip Brewer — Wed, 13 Jan 2010 14:00:03 +0000

By Philip Brewer

The frugality blogosphere was buzzing last week with an article by Katherine Hibbert about how she was getting by in London spending just about nothing. People were arguing about whether her lifestyle was really frugal, simple, or sustainable.

You ought to read her article My free and easy life, which is excellent, but, very briefly, she gets by through a combination of living in vacant buildings (squatting) and dumpster diving (called "skipping" in the UK). The questions in the blogosphere, though, had to do with the extent to which her example can serve as a model for the rest of us.

(I should mention that the laws on squatting are different in the UK. The article goes into some detail on that topic.)

In all three spheres, the disconnect had to do with where you drew the line around the activity before deciding whether it was frugal, simple, or sustainable.

If you drew the line just around Katherine Hibbert, her lifestyle was obviously very frugal — she got by on less than £1 a day! It was simple, too — once she got past being stressed over knowing that she might be evicted at any time, her biggest problem was boredom, and she solved that by studying and doing volunteer work.

But if you drew the line a bit wider, the frugality and simplicity became a lot fuzzier. All over London people are maintaining vacant buildings; that's how she and her friends found places to squat. All over London people were pitching perfectly good stuff into dumpsters; that's how she and her friends found their food, their furnishings, and the stuff they sold to pay the bills that they needed cash for (such as her mobile phone contract). That's not simple and it's certainly not not frugal.

It's true that people were already doing that before she came along and made use of the buildings that were sitting idle and the stuff that was on its way to the landfill. In fact, part of her motivation is to draw attention to the fact that these resources are going to waste. (The results of her efforts are sometimes perverse, though — she points out that perfectly good food is being pitched into the dumpster and merchants respond by puncturing the containers so as to ruin the food, or by locking the dumpsters to keep people out.)

And here is where sustainability comes in. Some number of people can get by on the detritus of western consumer society. In fact, quite a few people. I have no doubt that the food, clothes, and consumer goods thrown away every month in the United States, if distributed among the very poor, could bring every American up to a decent standard of living. But that's only true because so many people are trying so very hard to live better than that.

If ordinary people decided to live the way I keep recommending — building a frugal lifestyle grounded in careful thought about what they really need — the cornucopia of surplus goods would dry up pretty quickly. Whether you call it dumpster diving or skipping, it doesn't scale.

Now, in one sense that's a theoretical point. I don't think we need to fear that millions of working-class and middle-class folks will suddenly abandon the rat race and decide to get by on what they can scavenge. But, I think it's more than a merely theoretical point, because there are a lot of pressures against the present model.

None of the people producing the excess stuff that ends up in the trash is doing so because they want to. In fact, they're all trying actively to waste less — and as they get better at reducing waste, the waste stream will tend to dry up. At the same time, social pressure to divert the waste stream to the truly needy will tend to dry it up as well, at least as far as people like Katherine Hibbert are concerned — the "surplus" food will end up at food banks instead of dumpsters. That's a good thing, but it'll be tough for people who used to get their food for free.

Of course, to the extent that people are choosing this lifestyle in order to make a point (rather than because they're lazy slackers), it's all to the good — it'll mean that their point has been heard. But to the extent that they've chosen this lifestyle because it appeals to them, I don't think it's got a long term future. It only works because cheap energy and cheap money have made us all temporarily rich; that's not going to last.

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How Debt Fools People

Philip Brewer — Mon, 11 Jan 2010 14:00:05 +0000

By Philip Brewer

People who have a natural aversion to debt often wonder how some people get themselves into such terrible problems with debt. Don't they know how much it costs? Don't they understand they can't just go on boosting their standard of living through ever-increasing levels of debt? But that's not really how it happens. As a public service, here's a worked example of how debt spirals get started.

Suppose: Two neighbors are debt-free. Both want a new TV that will cost $500. Money is a little tight — each one only has about $50 a month available in the budget.

One saves for a TV. He puts $49.76 into a high-yield savings account paying 1.3% interest. After 10 months he has $500 and buys a new TV.

The other borrows to buy the TV. He takes out a $500 loan at 11% interest, makes payments of $52.56 and pays off the loan in 10 months.

At the end of ten months both people have a TV. The guy who borrowed the money paid a total of $28 more than the guy who saved, but he got his TV 10 months earlier. You could look at it as if he paid $28 to rent a TV for 10 months. That's a nice boost in standard of living that someone could reasonably view as being well worth the money.

The debt-averse people suppose that a classic debt spiral starts when you extend this logic beyond a single time-limited purchase: A couple months after buying the TV you decide to buy a recliner — after all, now that you're spending so much time in front of your TV you want a nicer chair to sit in. In this scenario the foolish borrower encumbers every available dollar in the budget with payments on more and more stuff until he or she can no longer make the monthly payments.

I'm sure that happens to some people, but I don't think it's the most common scenario that gets people into trouble with debt.

The reality of debt spirals is more insidious. It results from the loss of flexibility when a household incurs a perfectly reasonable amount of debt — or even no debt at all, but some amount of fixed monthly expenses — and then suffers a negative economic event such as a large unplanned expense or a drop in income.

Because that's the way that debt really works its harm. It's not that it costs so much money (although it can), nor is it people obligating themselves beyond their means (although some do). It's that it makes the household finances so much less flexible. It's not the extra $28, it's the inability to adapt.

To the saver, a spike in fuel costs means cutting back on saving in order to put enough gas in tank to get to work every day. To the borrower it means either not being able to get to work or borrowing money he can't pay back.

The reason debt fools people is that even when the cost of the debt is perfectly reasonable, the lost flexibility means any little problem can kick off a debt spiral.

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Contributing to a Roth Versus Paying Down Debt

Philip Brewer — Thu, 07 Jan 2010 14:00:28 +0000

By Philip Brewer

This post was prompted by a reader question, but it's an issue that many people face — we see versions of it all the time in the forums. So, I thought I'd walk through what I think is the best way to approach any problem of this sort. It starts with comparing interest rates, but it ends with a comparison to lottery tickets.

The general solution to this kind of problem is to compare rates of return: Is the interest that you have to pay on your debts higher than the return that you can expect get on your investments? If it is (and it usually is), then pay down the debt.

In fact it's even stronger than that, because there's the asymmetry between the interest that you have to pay versus the return you're only expecting to receive. It wasn't long ago that lots of people were expecting to receive 12% (or more) on their stock market investments.

Based on that, here's my starting place on where your money ought to go, after you've covered your household expenses and the minimum payment on any debts:

fund 401(k) enough to capture any corporate match
accelerated payments on debts
max out your Roth
further fund 401(k) to the corporate (or IRS) limit
regular old (after-tax) investing

(Sometimes it makes sense to skip step 4 and go straight to step 5. I talk about that in my post When NOT to put money in your 401(k).)

The reader's question, though, has to do with partially skipping step 2 (accelerated payments on debt) in order to get to step 3. Here's what she asked:

Thanks to a recent promotion, my salary jumped to $100k. The one downside is that I may only be able to contribute to my Roth for 2009 and maybe 2010 (it's my understanding that the income limits to convert will be eliminated in 2010, but the limits to contribute will remain, and start at $105k for single filers). I'm aggressively paying down student loans and will finish by November, but since 2009 may be the last year I can contribute to a Roth, I'm thinking of stopping the extra loan payments for 3 months in order to contribute the $5k max to my Roth for 2009. I contribute 9% to my company 401k and receive an employer contribution of around 7%, my mortgage is my only other debt, and I'm late 20s. My overall retirement savings is lower than I'd like (the loans have been my priority), and I planned to max out contributions once the loans are gone.

My answer is: Yes, it makes perfect sense to fund the Roth under these circumstances, even though it means that the student loan will take a bit longer to pay off. In fact, it might well make sense even without the special circumstance of having only this narrow window within which to contribute to a Roth.

Usually it makes more sense to just get the debt paid off, which is why step 2 comes first. That's because the interest owed on debt is usually higher than you can reliably earn on your investments. But the Roth is a special case because of the tax advantages and the very long time-scale. Money invested in a Roth by a 20-something has the opportunity to grow tax-free for decades — and then you never have to pay taxes on the earnings.

With those advantages, your gain in the Roth is very likely to match the extra interest you end up paying. On top of that, there's a real chance that, over a few decades, it'll do much better yet. To my mind, that tips the scales: Your cost is low and predictable (the extra interest) and your gain can be reasonably expected to match it — with a substantial chance of an outsized win.

Here's another way to look at it. Investing instead of paying down debt is kind of like buying a lottery ticket. You pay $1 and can expect to win (on average) something like 50 cents — but with a small chance that you'll win thousands of dollars. Because of the unique advantages of a Roth, in this case it'd be like buying a ticket for $1 and expecting that your average return will be very close to $1 (the expected return on your Roth will be close to what you're paying on your student loan) — but you still keep the chance that you'll win thousands of dollars, because of the future decades during which your Roth has the opportunity to rack up tax-free gains.

I think it makes good sense.

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Guest Post: Living off Capital

Philip Brewer — Thu, 17 Dec 2009 21:16:31 +0000

By Philip Brewer

I have a guest post up on The Simple Dollar that talks about Living Off Capital.

People who come from wealthy families learn how to live off capital. The rules are taught along with all the other things they learn from their parents–how to dress, how to eat, how deal with bankers and trust officers. But even though most people don’t learn the rules, living off capital is just a skill, and it’s one that everybody should learn, because everybody lives off capital sometimes.

People usually think about living off capital in the context of retirement, but that’s just one (albeit important) example. Perfectly ordinary transitions, such as losing a job and having to find another, also amount to living off capital. There is also the broad swath in between: Living off capital for longer than just the length of time it takes you to run through your emergency fund, and doing so without the institutional support–social security, medicare, maybe even a pension–that comes along with retiring at an ordinary retirement age.

It goes on to talk about investing for income, reinvesting to preserve your capital, diversifying, and keeping your expenses flexible. If that sounds interesting, click on over to The Simple Dollar and check out Living Off Capital.

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The Best Way to Avoid the Worst Financial Problems

Philip Brewer — Mon, 14 Dec 2009 15:12:16 +0000

By Philip Brewer

Simple living should be about enjoying the good stuff. So, rather than go into a bunch of things you can do to head off possible problems, I'm going to give you just one tool for avoiding bad stuff. Happily, it's a tool so powerful that you just about don't need any others. Then we can get back to putting our focus on living large.

I can give it to you in once sentence: Keep the cost structure of your household flexible. That is, arrange your life so that you can react to a fall in your income by reducing your expenses.

Now, I just wrote a post that recommended the opposite — taking advantage of the sorts of deals you can get when you're willing to make a commitment — so I'm not trying to say that making a long-term commitment is automatically a bad idea. It's often a good idea. Just don't automatically take advantage of every opportunity to save money that way. Be strategic.

The cost structure of most people's household is terribly inflexible. They have debts, leases, and service contracts that require fixed dollar payments that don't vary with their income. This is so common that most people don't even imagine that there are other alternatives, but it's entirely possible to avoid doing so. As soon as you start being strategic about those commitments, you start building flexibility into your household cost structure — flexibility that can save your finances when your income takes a hit.

Only make long-term deals where you're buying something that you're determined to have for the long term. A home often falls into this category. I'm not so sure about a cell phone.

Only make a limited number of long-term deals. Since some things are only available with a contract of some sort, and some things are much, much cheaper if you make a long-term deal, sometimes you don't have much choice. Those have to be long-term deals. So in cases where you can get just as good (or almost as good) a deal without one, refrain from making a commitment.

Only make long-term deals where you're buying something that you could still afford, even if your income fell. Many people buy the most home they can afford. If you instead buy a house that's well within your means, your household cost structure is a little more flexible.

Here's a brief personal example. My cell phone battery recently quit holding a charge. I looked into getting a new phone, but I also priced a new battery. Getting the new smart phone that I wanted would entail not only a 2-year contract but also increasing my bill by at least $30 a month (for data service). By buying a $7 battery instead, I've kept the cost structure of my household a little more flexible. (It was an easier decision for me than for most people because although I'd like a smart phone, the phone I've got now is running software that I helped write, so I've got a personal attachment to it that most people wouldn't feel.)

It's not bad to have fixed costs; you can often get a better deal if you're willing to commit to an expense for a period of time. But each additional fixed cost makes your household budget a little less flexible. If you can keep the cost structure of your household flexible, you'll be okay even if something bad happens financially. And, once you've got that flexibility in place, you can quit worrying about money and put your focus on living large.

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Living Cheaply for the Long Term

Philip Brewer — Wed, 09 Dec 2009 14:00:07 +0000

By Philip Brewer

Frugality sites are full of advice for cutting your expenses right away. Everybody's got a list of unnecessary expenses, an exhortation not to buy stuff you don't need, and some ideas for how you can get the things you do need more cheaply. Living cheaply for the long term is different. Call it "strategic frugality."

Most people don't really have a goal to live cheaply. Rather, within the constraints of their income and their important long-term goals (like college for the kids and retirement), they want to live as well as they can. The problem is, boosting your living standard at each opportunity makes it impossible to take the strategic actions that let you live better for less. (And once you've got that down, funding your long-term goals gets a lot easier.)

Many of these strategies cost money, which means that they're not an option for someone who's in the midst of a financial emergency like a loss of income or a major unexpected expense. For that, see my emergency belt-tightening post with a bunch of ideas on how you can cut your expenses right now. Living cheaply on a non-emergency basis is different. Living cheaply for the long term sometimes involves spending more money now with an eye toward long-term savings. Many of the basic ideas are pretty obvious, but it's worth putting them all together and looking at the pattern they form.

Strategies

Buy stuff that lasts. This saves money, because you don't need to replace the item as often. It also raises your standard of living, because stuff that lasts is often higher quality.

Buy stuff that reduces future expenses. Things like weatherstripping, insulation, energy-star appliances, a fuel-efficient car, a small motorcycle, or a bicycle can all save on future fuel costs. Doing proper maintenance can save on future repair costs, and proper preventative care can save on future health costs. Tools, books, and classes that enable you to make (or repair) your own stuff can save on future expenses.

Stock up when things are cheap. This saves money, because you're getting the stuff at a better price. It also raises your standard of living, because you don't have to rush off to the store to get something (or else decide to make do without it). As a bonus, it produces huge tax-free investment returns.

Buy things that earn money. That is, invest in things like bonds and dividend-paying stocks. If you can handle the extra work of being a landlord, you can also invest in rental property.

Take care of your stuff. This goes along with buying things that last, but it's a concept that isn't well supported by society these days. It's tough to get things that are made to last — most things are made to break. Still, despite planned obsolescence, most things will last longer with gentle use and many things can be repaired (or kept in service, at least temporarily, despite not working as well as they did when new).

Best practices

When you want something, it's easy to fool yourself into imagining that whatever it is will somehow save money in the long run. (Such as thinking that a home theater will pay for itself in fewer movie tickets or that a fitness center membership will pay for itself in fewer heart bypass operations.) Avoiding that pitfall simply requires being honest with yourself. To that end, here are a few best practices.

Evaluate your budget against your needs. Even among people who have a budget, most simply assume that last year's spending is the benchmark against which they need to compare. Instead, start each budget category at zero. Then, evaluate what you actually need and investigate the cheapest way to fill that need.

Analyze fixed costs. The average household has a bunch of costs that are fixed for the medium term — a lease that runs for a year, a cell-phone contract that runs for two, a car loan that runs for several years, a mortgage that runs for a decade or three. You can often get a better deal if you commit to an expense for a longer term, and a collection of such deals is what adds up to living cheaply. Still, always think twice before buying things that come with monthly fees or that need to be insured, fed, or maintained (unless you can maintain them yourself). The more fixed costs you have, the less flexible your household cost structure becomes — and an inflexible cost structure makes it tough to handle a financial emergency.

Learn how to do things yourself. If your goal is the highest possible standard of living, you probably come out ahead by putting all your time into whatever is your main way to earn money. In the time it would take to change your oil you can earn more than enough to pay someone to change it for you. In the time it would take just to plant a garden you can earn enough to buy a whole summer's worth of vegetables. But if your goal is to live cheaply for the long term, learning how to do things yourself adds a whole category of cost saving options, while at the same time recovering some of the flexibility you'd otherwise lose to fixed costs.

Having said all that, a lot of keeping costs down is just spending less. If you don't do that, none of this other stuff is going to add up to much. Still, there are certain opportunities where spending a little more up-front, or committing to spending for a little longer, can save money. The key to living cheaply for the long term is cranking the numbers to figure out which option is cheapest — and then, of course, taking action in accordance with what you figure out.

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Find Your Passion

Philip Brewer — Wed, 02 Dec 2009 18:00:02 +0000

By Philip Brewer

I always knew what I wanted to do. What I wanted to do changed over time, and at any particular time I wanted to do more than one thing — and sometimes I wasn't sure if any particular thing that I wanted to do would turn out to be satisfying or remunerative. But there were always things I wanted to do. It turns out that this is not universal.

Some people really don't know what they want to do. Since I always did, I'm not sure that I'm really the person to ask about how to figure out one's passion in life. But when I talked recently about ways to arrange your life so you can follow your passion, more than one person asked in the comments about how to find your passion. I did some thinking about it, and decided that maybe I had an idea or two after all.

Editing too early

I used to think that the main reason people couldn't figure out what they wanted to do was not because they didn't have any ideas, but rather that they had ideas, but figured they were impractical. The things they wanted to do (playing video games, snowboarding, going backpacking) seemed to offer no hope of making a living.

In fact, of course, there are people making a living doing each of those things. There are admittedly few professional video game players, but there are plenty of jobs testing video games, as well as jobs designing them, coding them, writing the stories, and drawing the art. Likewise snowboarding and hiking support very few as professionals, but do offer opportunities for guides, instructors, writers, and so on.

There are many ways to follow any passion. If the problem is time, maybe you can start small and make incremental progress. If the problem is money, maybe you can barter for access to the expensive stuff you can't afford. If the problem is complexity, maybe you can follow a few narrow side branches now and work your way toward the main branch. The key is simply that you shouldn't assume your passion is impractical without giving some real thought to all the many ways you might follow it.

If this is what you're doing, the solution is easy: brainstorm. Make lists of things you want to do without editing. Don't paralyze yourself by trying to figure out your one true calling in life, just write down two or three dozen things that you want to do. Start with easy stuff. Maybe you want to visit your family or scuba dive off Grand Cayman or learn pottery. Then broaden your thinking: What do you do when you have control over your own schedule? What list of activities for the day makes you jump out of bed? If you had enough money that you didn't need to work, how would you choose to spend your time?

Go for quantity — this stuff is the raw material of what you want to do with your life. Get a day or two of distance from the list, then go through it and categorize the ideas. Some are just things you want to do once. Some will likely be things that you don't really want to do at all. But among the others are likely things that you have a passion for, even if you haven't realized it yet.

At some point, think about what you do that's of value to other people. That's important in two ways. First, it's something you might be able to get paid to do. Second, something that's important to others has a greater chance of being deeply satisfying.

What if your passion really is impractical?

Some passions are fundamentally impossible. We don't know how to go faster than the speed of light or backwards in time.

Other passions are simply beyond our capabilities. Most of us will never play major league baseball, no matter how strong our passion. I would argue, though, that this is simply a matter of being too specific. If playing baseball is truly your passion, then play baseball without worrying about what league you get to.

Most passions, though, are totally doable, they simply aren't adequately remunerative, which brings us back to where we started, choosing between a dream job or a day job.

What if you have no passions?

As I say, I used to assume that everybody had a passion. I eventually figured out that really wasn't true: Some people really can't think of anything they want to do. These people are often unhappy. In fact, they're often miserable.

Often the cause-and-effect goes the other way around. People who are severely depressed are unable to think of anything that would make them happy, but the underlying problem is a matter of brain chemistry, not lack of passions. Treat the depression and they will find their passions again.

For people who aren't clinically depressed, but simply can't think of anything they want to do, I'm not sure I have much help to offer except to suggest an incremental approach. Think about which aspects of your life are most satisfying and do more of that and less of the other stuff. On a smaller scale, do the same in each area of your life. Which parts of your job are most satisfying and which are boring or annoying? What would your job look like if you did more of the former and less of the latter? Could you talk to your boss about restructuring your job to look like that? I talk some about that in a post called find work worth doing and then I talk about other aspects of it in a post called how to get a job — learn the secret from a bad movie. (Both of those posts got some good comments, too.)

It's perfectly normal for your passion to change over time. The days of having just one career are almost as far gone as the days of having just one job — and that's okay. A couple years ago, several of the Wise Bread writers (including me) did a group post called what is your dream job. I talk about how my dream job changed from programming to writing.

There are a few other posts on Wise Bread on finding your passion. Here are the ones I could find:

I'd be really interested to hear from readers who had to struggle to find their passion. If you're one of the people who couldn't think of what they wanted to do, but then eventually figured it out, please comment below on how you did it.

Permalink | 20 comments | Philip Brewer's blog | Channel: Career and Income

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