It is 2017 Resolutions week on Industry Focus, and in this episode, the consumer and retail team share their own goals for the new year. Hear about budgeting and decluttering from Motley Fool analysts Vincent Shen and Sarah Priestley, before they move on to discuss some surprising numbers behind resolutions in this country and the often challenging road to success,
A full transcript follows the video.
This episode was recorded on Jan. 10, 2017.
Vincent Shen: Welcome to Industry Focus, the podcast that dives into a different sector of the stock market every day. I'm your host, Vincent Shen, and it is Tuesday, January 10th. If you've been following along with Industry Focus the past week or so, you probably heard Gaby's wonderful episode yesterday, you'll know that we're in the middle of a theme week. This time, we can kick off 2017 properly. We're talking about our resolutions for the year, the whole cast is. Joining me today in studio is fellow Motley Fool analyst, Sarah Priestley. How are you, Sarah?
Sarah Priestley: I'm good, thank you very much for having me.
Shen: Are you ready to riff on resolutions for this year? Disappointments, really?
Priestley: Yeah, disappointments, (laughs) mostly disappointments.
Shen: A few things -- is this your first podcast experience for the year?
Priestley: It is. Yes.
Shen: Score one for me. And, before we get into what our new resolutions are for 2017, I think it's only fair if we revisit our goals from 2016, and do a quick audit to see how well we fared, just to clear the air with our listeners. Mine are permanently recorded in the annals of Foolish history with the article we wrote when, I think it was Sean and I, we talked about it last year around this time. You had not joined The Motley Fool yet, so what were your 2016 resolutions and how did you do?
Priestley: In 2015, I moved from the U.K. to here and I got married. So, 2015 was a bit of a mess.
Shen: Sure, fair enough.
Priestley: 2016, I resolved to declutter and organize my life. Our apartment is not huge, and when you bring together two people's amount of things, it creates a lot of stuff. The result of that was that I got a storage unit. The problem is, now, my apartment is really decluttered, but the storage unit, you open the door and you can't get in there. So, that will also be added to one of my resolutions for this year -- declutter the storage unit.
Shen: OK. When you came to the U.S. from the U.K., are you the kind of person who, when you pack, you bring the kitchen sink? Or were you more organized and minimalist in your approach?
Priestley: No, I did throw away a lot of stuff, because I do have hoarder tendencies. But, I brought everything. I was actually talking to somebody before doing this podcast, I'm a bad packer with everything. We went to a wedding just before Christmas, and I took a carry on case, but it was so heavy that I couldn't pick it up, and my husband had to carry it. So, you can see, I do have multiple issues.
Shen: (laughs) OK. So, let's get into our new goals for 2017. What do you have in mind? You mentioned getting the storage unit cleaned up, but what about more finance, investing, or Foolishly related, what do you have envisioned for the year?
Priestley: For me, it's definitely budgeting. I think that's an area where, as a household, we can probably be better. We're not bad. We don't spend more than we make, which is the principle of budgeting. We contribute to our 401(k)s, we have a retirement savings plan, all those kinds of things. But I do think -- and I think this is something that a lot of people can learn from -- when you have a degree of disposable income, without too much planning, things slip by the wayside.
Shen: Oh, absolutely.
Priestley: And it snowballs. I noticed, for ours, eating out and the treats, the occasional coffee, the occasional trip to the mall or the movies, they add up, the accumulate. For me, I really want to get a handle on what I'm spending my money on and where we can improve. And hopefully, by making incremental improvements, then we can generate a lot more savings.
Shen: Sure. I'm curious if there's anything in particular that inspired you to want to tackle this issue. Was it something you noticed, like, "Wow, I had eight Starbucks coffees this week?"
Priestley: That would not be unusual. (laughs) Actually, it was Maurie Backman, a Fool contributor wrote an article called something like You Can Have Your Latte and Retire Comfortably or something. She was basically talking about how saving on, just like you just said, your daily coffee, won't help you if you're spending $500 too much on your rent.
Shen: Yes, absolutely.
Priestley: Which is 100% true. And we went through our finances, and honestly I don't think that's an issue for us. I mean, D.C. metro rent is expensive, but you have to compare it to what everybody else is paying. I think we're paying a decent amount. So, we went through our big expenses. Then you get to all of the other stuff.
Shen: Yeah, you whittle down everything else.
Priestley: Exactly. So, for me and my husband, where our problem area is is eating out and all those fun things that add up.
Shen: So, let's say you're approaching the summer or the fall, getting through 2017, is there anything you have in terms of hard metrics or numbers that you'll be using to gauge or benchmark your success?
Priestley: Yeah, absolutely. I have until the end of this month, this is my tracking period. I'm using an Intuit app called Mint. You link it to your bank. It solves a big problem for me, because previously, I'd tried to track spending using my beloved Excel spreadsheets, and you end up with all these sub-charts and extra pages, sub-categories of clothing, gifts, all that stupid stuff. What this does is, the app links up to your bank account, and it breaks down your spending for you, so you can really see, easily -- it's an incredibly user-friendly interface -- what you're spending your money on.
Shen: Mint has been around for quite some time now. I remember hearing about it when I was still back in school. For anybody who's not aware, I have not had experience with it, but I've heard a lot of good testimonials from people, they generally say it eases that process, instead of checking your statement, tracking it down yourself in a spreadsheet or by hand, whatever you use, you give it access to the account information and it pools all that together. And it gives you, from what I remember and checking out the site, it has a lot of great visuals, charts, things that help you track this along the way, right?
Priestley: Absolutely. And there's a lot of those out there, this isn't the only app available. But I like it because, as I said, I think it breaks it down really well, it's very easy to use. You can set a budget in there, and it gives you a monthly tracker of how close you are to your budget, which I think is excellent. Then, the other thing I think is great is that they obviously have access to a huge amount of people's financial information. From that, they have a lot of learnings, so they send you tips on, "This credit card may be better for you and your spending," things like that. Some people may not like that. I personally appreciate it. Even if you don't use it, it's good insight.
For me, it's exactly as you commented, it's really reducing friction between creating a budget, monitoring that, do you do it monthly, that's a huge amount of information to go through. That's what we were doing. I was downloading our financial statement, putting it into an Excel spreadsheet, going through. It's a very time-consuming exercise. And for some people, that's a very stressful exercise, too. So, for me, this really helps to make that process so much easier. I joke with people about the fact that I'm always on my phone looking at social media or news anyway. This is just another app on my phone that I can look at.
Shen: Sure. I will say, being someone that used to track it manually on a weekly or bi-weekly basis, if you miss one or two of those sessions, whatever time period you do, it becomes very daunting. If you were to miss a month, and you suddenly have two months to go back on, you can lose momentum very quickly that way. Last question: How much is your husband involved in this process? And does he share your view of this resolution, or does he have some of his own things to work on?
Priestley: He definitely shares in the view that we need to budget. January is our testing month. We've both committed to each other that we're not going to spend $X on eating out. I bring my lunch to work but he doesn't, and I think his lunch budget was something ridiculous like $5 a day, so I'm interested in seeing if he can stick to it.
Shen: That's tough, especially if you're eating out.
Priestley: Absolutely. But yes, we're both in line with it. I know, after reading your article on your resolutions, that's an important thing, to make sure you're both aligned.
Shen: Yeah. For myself for 2017, I think our resolutions are actually very similar. It comes down to focus, and where we're focusing our efforts. You mentioned decluttering. That's pretty much exactly how I would describe mine. I'm going to be trying to, at least for the first stage, clean the house. I've been describing to people decluttering my life, essentially. There's some different parts to that. I've moved around a lot in the last 10 years. When I actually thought about this, I realize I moved around almost once per year. I think, for some people, that's a really easy way for them to get rid of a lot of junk or stuff that they have around, because when you're packing up, it's easy to say, "I really don't need this anymore." I maybe was not quite so good about doing that. I may have organized a little bit better and called that an improvement, but in the end, I have a habit of saving receipts, packaging, tags for returns and warranty reasons. And the thing is, when it comes down to it, I don't end up using even 1% of what I save. It makes no sense at all, my wife complains about it quite often. I have gotten better about it, but I think one person who really inspired me to pursue this resolution was actually my brother. He has what I describe as a minimalist approach to things, especially with his wardrobe. We're about the same height and build, and a lot of times I'll say, "Hey, I have some clothes, are you interested? Otherwise I'm going to donate it," and every single time, he'll look at it and really think about, is this something I'm going to take? He doesn't just take it because it's there. He has a set number of clothing items that he can combine in different variations to build different outfits, but it's as small as it can be. I'm pretty sure he could pack his entire wardrobe into one OK-sized suitcase, which blows me away.
So, I started to pack up a lot of things that are going to either the trash, donation bin, or putting them for sale. The donation bin, obviously, I would like to be as sustainable as possible, let this stuff keep getting used. There's some tax benefits to it, too. You don't even really get into much paperwork or filing needs unless it's more than $500. But on the selling side, I was really surprised because I was letting some things sit around like an old bike, outdoor gear I had, some photography equipment. And when I tallied it all up, it was actually way more than I was expecting. The best part is, between things like Facebook, Craigslist, eBay, you basically have it, as a seller, easier than ever to match the supply and demand for this stuff. I have and old daypack. It's in very good condition. I may have gotten $20 to $30 for it at a garage sale if I'd had it out, but going online, you can put it in front of millions of people in these various marketplaces, and I'll probably get at least two or three times that. So, little things like that add up. I plan on putting a lot of that toward savings and longer-term goals. That is the first phase for me for 2017. I'm trying to approach this on a quarterly basis so I can keep myself accountable, and also realistically gauge my progress.
I think the problem I had last year in terms of 2016 resolutions, the big thing was getting married and staying on our budget, which we very happily did, but at the same time, that took up so much of our energy and time during the planning process. You were a very sympathetic ear last year for me when I was talking about this stuff. My partner and I kind of gave up on some of the other resolutions we had in terms of investing together, and me educating her more about stocks, investing, and what's out there. Taking this more phased approach is important for us to hold each other accountable, and also approach things a little bit more independently we're not tied to each other, so it's easier to plan around some of the complexities with our schedules and things like that.
Wrapping things up, we got through some of our personal experience from last year, what we are looking forward to this year. I also thought it would be interesting to talk broadly for Americans about how they approach resolutions, and how successful, in general, they tend to be, what they tend to focus on. The numbers I have here from this survey says "Top 10 New Year's resolutions for 2017." The biggest category, about one in five people, is lose weight and healthier eating. Then, there's a second related category, which is work out more often, which is #7 at 5%. So, about one in four people are focused on health and wellness. No. 2 is very broad life self-improvements. Maybe that's where we would be categorized with ours. No. 3, better financial decisions, again somewhere where we fall. But, the health and wellness is obviously a very popular one.
Not to discourage people who have resolutions, but to look at what some of the results look like -- percentage of Americans who usually make New Year's resolutions, only 40%. I was surprised. I thought that was something that most people did. But the survey says 40%. Then, the percentage of people who do it on occasion is about 17%. And the rest, who never do it, like our man behind the glass, Austin, not interested at all when we asked him before the show, he's part of the 42% or so from the survey that never makes any resolutions. The thing that really makes this process seem more daunting is that the percentage of people who felt they were successful in achieving their resolution was only 9.2%. So, that can be rough. But the percentage who have infrequent success, about 50%. The percentage who never succeed, and fail every year, 42%. But, I think some of the things we talked about, in terms of holding yourself accountable, having a system in place, using resources, whether it's an app or something else can definitely help with that.
You shared some really interesting information with me earlier, especially on the health and wellness front. I think both of us are pursuing that on the side, not as Fool-related, but we want to be healthier and work out more. What numbers did you pull about people and gym memberships in January?
Priestley: It's such a cliché, but there are obviously millions of people who resolve to get to fit and lose weight, and I'm one of them. I found that 12% of gym members join in January, and what's more depressing from that is that 80% of people who join a gym quit within five months. Honestly, if you're a regular gym attender, you've already beat 80% of people who are joining in January. I think the takeaway from this is, you should really think about starting a gym membership before you do it. That's the position I'm in now. I'm trying a few classes, I'm trying to work out by myself and see if that will help me avoid falling into this trap.
Shen: That is not surprising, that 12%. The way it should break out on a monthly basis, if every month were equal, it's like 8%. So, the 12% in January, I can't say I'm surprised. In terms of how your success goes, you mentioned that most people quit within five months, that survey had an interesting question with the length of your resolution -- how many people are able to maintain them throughout time. About three out of four people can maintain them through the first week. (laughs) About 60% of people manage to maintain them past the first month. But the good news is, that first month gauge is actually pretty solid. The drop off from one month at 60% to past six months, it drops off after six months to about 45%. So if you can make it past that first month, you are in great shape at potentially keeping this up. I do think that regarding the five-month gym membership thing, the people who can't make it, they might make it the first couple weeks, then stop, and after months of donating to the local gym, they realize that there might be better uses. Is there anything else that you'd like to share, Sarah, in terms of your approach, or any other lessons that you've learned in prior years with resolutions, before we wrap up here?
Priestley: There was actually one sentence in your article that I thought was really insightful and good for people to learn. "Ultimately, when you have just months to coordinate your wedding and a few decades to worry about retirement, the near-term commitment takes priority." And, obviously, in your case, it was the wedding. But for everybody, we always have a near-term commitment that's coming up. For me, often, it's visiting family, going back home, which breaks up my year quite a lot, and often interrupts my best efforts with both financial planning and fitness goals. So, I think that everybody needs to keep this in mind. We really need to plan for both the near-term commitments and the long-term.
Shen: Yeah. You brought up something for my article and I wanted to do the same thing from yours. I really like the way that you described prioritizing properly and staying busy. I think for me as well, during 2016, I was able to say, "Hey, I'm still needing meeting my goals," because I was busying myself with wedding planning stuff or something along those lines. But it really wasn't a very substantive step toward my actual end goal. For this year, I want to be a lot better in this decluttering my life process to make sure that whatever I'm doing is not just me filling my time trying to make me feel better about it, saying, "Oh, I spent a little bit of time on resolutions," but actually something substantive enough that's pushing me to progress forward. So, that was something that I'm probably guilty of quite often, so it really hit a nerve, when I read your article.
Thanks a lot for joining the show. I hope Fools aren't too discouraged. I think 2017 is looking to be a good year for a lot of us, and despite what some of the stats might say it's up to you. Keep it up, hold yourself accountable. That wraps up our discussion for resolutions in 2017. You can reach out to any of us and the rest of the Industry Focus crew via Twitter @MFIndustryFocus, or send us any questions via email at email@example.com. People on the program may own companies discussed on the show, and The Motley Fool may have formal recommendations for or against stocks mentioned, so don't buy or sell anything based solely on what you hear during the program. Thanks for listening and Fool on!
Sarah Priestley has no position in any stocks mentioned. Vincent Shen has no position in any stocks mentioned. The Motley Fool owns shares of and recommends eBay, Facebook, Intuit, and Starbucks. The Motley Fool has a disclosure policy.