Mastering your money: 12 steps to financial freedom
We discuss many aspects of personal finance at Get Rich Slowly. We explore ways to earn more money, get out of debt, and build an emergency fund. We talk about the psychology of money management, and we share tips and tricks for making the most of your savings and your career. Basically, we do our best to help readers take control of their financial lives.
Sometimes it’s easy to get lost in the little details of money management. Sometimes we forget the Big Picture. If you’ve resolved to take control of your finances, this article is the place to start. It’s packed with tips and resources for making the most of your money.
Here then are twelve simple but effective steps to take control of your finances.
Step #1: Set Financial Goals
The road to wealth is paved with goals. If you don’t know why you’re doing this — why you’re making sacrifices, why you’re working so hard — it’s too easy to fail. But if you set goals, they can help guide you even when things get tough. When you have to make decision, your goals can help you stay focused on what’s important.
For your goals to be effective, they have to be personal. They have to mean something to you. Right now, one of my goals is to save money for travel. A couple of years ago, my goal was to save for a Mini Cooper. Before that, my goal was to get rid of 20 years of debt.
To keep your focus front and center, you might use web-based tools like Joe’s Goals, StickK, or 43 Things. You might find an accountability partner. Or you might advertise to yourself. And be prepared for setbacks. You’re not going to meet your goals without mistakes. Stuff happens. The best way to deal with problems is to have a plan before they occur.
Step #2: Track Every Penny You Spend
The authors of Your Money or Your Life urge readers to “keep track of every cent that comes into or goes out of your life.”
[This is] the best way to become conscious of how money actually comes and goes in your life as opposed to how you think it comes and goes…This is the step that somehow makes the biggest impact.
Last year, I stopped tracking my spending. I was spending less than I earned, and I figured it was too much work. I regretted that. In fact, I’ve vowed to resume tracking my spending again. I’m glad I did. I was able to see some trouble spots (comic books!) and make corrections.
It doesn’t matter how you track your spending — the most important thing is to do it.
- You can use a cash notebook.
- You can use an online tool such as Mint.
- You can use a piece of software like Quicken. (Here’s a list of 16 powerful personal finance programs.)
Whichever method you choose, stick with it. Make it a habit. Don’t fudge the numbers. Record your transactions as soon as possible. Most of all, don’t judge yourself. Tracking your spending is an exercise in data collection; it’s not the appropriate time to change your habits.
Step #3: Develop a Budget
After you’ve tracked your spending for a few weeks (or months), use the data you’ve collected to develop a budget. According to The Millionaire Next Door, budgeting is one thing that sets the wealthy apart from the rest of us — 55% of millionaires keep a budget.
Many people — myself included — fail to budget for a variety of reasons: it’s boring, we don’t think we need it, or we don’t know how. But this simple act can provide a roadmap for your money.
There are a variety of budgeting methods you can choose, from Andrew Tobias’ three-step budget to the 60% budget. My recent favorite (and a favorite of GRS readers) is Elizabeth Warren’s balanced money formula: 50% to Needs, 20% to Savings, and everything else to Wants. Simple but effective.
Crave more budgeting tips? Check out this article highlighting 13 tools for building a better budget. Hate the idea of budgeting? Consider the spending plan, a budgeting method for non-budgeters.
Tip! Spend less than you earn. This is the fundamental money skill. It’s common sense, yet many people never learn to do it. Only by spending less than you earn can you hope to build wealth. This is easier to do if you track your spending and develop a budget, but those steps aren’t completely necessary. Even if you do nothing else in this list, spending less than you earn can put you ahead of your peers.
Step #4: Review Your Bills (and Ask for Discounts)
At least once each year, you should review the contracts and agreements you have with various banks and service providers. This is also a great time to review your financial accounts to be sure everything still matches your needs.
- Read your credit-card agreements and make sure you understand everything. (If you don’t, then ask questions.) When I read my own agreements, I dial the customer service line and ask for clarification.
- Check your service levels. We have a tendency to keep paying for the same service we’ve always had, whether it’s with our phone, our electricity, or our gym membership. Now’s a good time to make a quick check to be sure you’re only paying for what you need.
- Ask for lower rates. All the way back in 2009, G.E. Miller shared how he cut his cable bill by 33% without losing any service. Many GRS readers reported similar success. Look through your monthly bills to see if there are any you could call to ask for a reduction on. If you are paying for channels you never use, think about switching to a streaming service you will actually use.
- If you rent, review your lease or rental agreement to be sure you’re clear on all of the policies. While you’re at it, consider asking for a rent reduction. Sound crazy? If you’re a good tenant and regularly pay on time, it’s not so far-fetched.
- Review your insurance. Are you carrying policies with three different companies? Consolidate them at one place. Check the deductibles on your auto and homeowners insurance. Are they too low? Could you afford to raise them and “self-insure” the first $1,000 of damage? And is your liability coverage high enough?
- Go over your investment accounts. Check your balances and asset allocation. Are you too heavy in stocks for your risk tolerance? Should you own more stocks? If so, shift things around to get to your target allocation.
This step may be boring, but it’s important. Terms change all the time. Your financial situation changes. Spending one afternoon a year to review your agreements (and ask for discounts) can keep you from getting trapped in contracts you don’t want and save you money in the process.
Remember: You always have the right to ask for a discount, but it’s not your right to receive one. It never hurts to ask, but if the answer is “no”, don’t be a jerk. Thank the person who helped you and move on.
Step #5: Optimize Your Accounts
For seventeen years, I was an account holder at a large national bank. I paid an $8 “service charge” every month, as well as many other fees. I received terrible service and earned no interest. Over the last couple of years, I’ve finally begun to optimize my accounts. If you haven’t already done so, consider the following:
- Open an online high-yield savings account. Interest rates are about as low as they can go, and should increase in the months and years ahead.
- Choose a rewards checking account. Believe it or not, it’s possible to find checking accounts that pay interest. The best online checking accounts are paying about 1% right now, depending on your balance. But you can usually find an even better deal through your local bank or credit union. Check out this list of rewards checking accounts for rates of up to 5%.
- Use a rewards credit card. If you have trouble with credit, it’s best to avoid plastic altogether. If you can use credit responsibly, be sure to choose a credit card that pays you. Avoid cards that carry an annual fee. Find a rewards program that matches your lifestyle. But don’t choose a card just because it offers a signup bonus or because it gives you a discount at your favorite store. Remember: your goal is to find a useful tool. Look for a long-term relationship you can live with.
It’s important to choose accounts and systems that work for you. I signed up for a rewards checking account at a local credit union, but the nearest branch is fifteen minutes out of my way. I never used it, so the credit union closed the account. I compromised by opening on online checking account instead. I earn a lower rate, but it’s an account I’ll actually use.
Tip! When optimizing your banks and credit cards, consider using multiple accounts at each institution. For example, I have ING Direct subaccounts that allow me to target my savings. I save for vacation in one account, for a car in another, and I use a third account for emergency savings.
Step #6: Start an Emergency Fund
For years I lived paycheck-to-paycheck. I spent everything I earned. This worked well until something went wrong. Suddenly I’d find myself without money to pay for a car repair, or facing an expensive doctor’s bill. I financed emergencies with credit cards. Eventually I saw the light and built up a rainy-day fund.
After you’ve optimized your accounts, make it a priority to save for emergencies. In The Total Money Makeover, Dave Ramsey explains why he believes an emergency fund should come before anything else:
Since I hate debt so much, people often ask why we don’t start with the debt. I used to do that when I first started teaching and counseling, but I discovered that people would stop their whole Total Money Makeover because of an emergency — they felt guilty that they had to stop debt-reducing to survive.
Open an online high-yield savings account and add $20 or $50 to your account ever time you get paid.
Two years ago, I opened an account at ING Direct, where it’s simple to schedule automatic deposits. After you’ve saved $1000, then you can attack your debt.
Related >> Learning to love the emergency fund.
Step #7: Get Out of Debt
Are you struggling under a heavy debt load from credit cards or student loans? Make it a priority to unload some of this burden in 2012. At the end of 2007, I said good-bye to 20 years of debt — it feels fantastic to have that weight off my shoulders.
If you have the mental discipline, you’ll save money by paying down your high-interest debt first. But if you’ve tried that method before and failed, consider using a debt snowball. Pay your debts starting with the smallest balance first. Here’s how:
- Order your debts from lowest balance to highest balance.
- Designate a certain amount of money to pay toward debts each month.
- Pay the minimum payment on all debts except the one with the lowest balance.
- Throw every other penny at the debt with the lowest balance.
- When that debt is gone, do not alter the monthly amount used to pay debts, but throw all you can at the debt with the next-lowest balance.
The debt snowball can give you awesome psychological payoffs, keeping you motivated to stay in the game. It’s not mathematically ideal, but it worked for me (and for many others besides). However you choose to get out of debt, stick with it. Don’t give up.
Tip! The perfect is the enemy of the good. When you spend so much time looking for the “best” choice that you never actually do anything, you’re sabotaging yourself. And an ideal solution that you don’t follow through with is worse than a good solution that you’ll actually use. Choose a good option and act.
Step #8: Fund Your Retirement
If you’re young, you probably don’t think you need to start a retirement account. You’re wrong. No matter how old you are, now is the time to begin saving for retirement. The extraordinary power of compound interest favors the young — and in a big way! In The Automatic Millionaire, David Bach writes:
The single biggest investment mistake you can make [is] not using your [retirement] plan and not maxing it out.
If your employer offers any sort of retirement-contribution matching, such as a 401(k), be sure to take advantage of it. It may not be “free” money, but it’s darn close. Also consider starting a Roth IRA.
After reading The Automatic Millionaire a couple years ago, I opened a Roth IRA at Sharebuilder. It was easier than opening a checking account. I’ve managed to make the maximum contribution since 2006. In 2008 and 2009, I maxed out my 401(k).
Step #9: Automate Your Finances
Over the past few years, I’ve been moving toward a system of paperless personal finance. Along the way, I’m learning the value of automating routine transactions. When you make things automatic, you remove the human element, making it more difficult for you to mess things up.
The classic example is overdraft protection. By tying your checking account to your savings account, you have a safety net if you bounce a check. But there are other ways this can work for you. For example, I’ve set up automatic payments with the gas company, the cable company, and my auto insurance company. I also make automatic deposits to my online savings account.
One terrific advantage to automation: when you pay your bills and do your saving and investing automatically, it’s easy to tell how much you have left over to spend at the end of each month!
Tip! Do what works for you. There are few hard-and-fast rules in the world of personal finance. I can suggest methods that have worked for me (and for others), but only you can determine if these methods are appropriate for your own circumstances.
Step #10: Earn Extra Money
You can meet a lot of your financial goals by reducing your spending and using the right tools. But nothing supercharges your progress like a boost in income. How can you earn extra money?
- Ask for a raise. Several readers have written to tell me how they’ve given themselves a raise through ambition and ingenuity. How to negotiate your salary, either before or after you’re hired.
- Switch employers. Not every employer is able or willing to offer raises, even when they’re merited. If you’re in a position where a raise isn’t possible, consider finding a new employer.
- Take a second job. Many people find that the best way to get out of a financial hole is to temporarily take a second job. Nobody wants to work more than 40 hours per week, but sometimes that’s what’s needed to get out of debt or to save for a house. Just remind yourself that you’re doing this for a short time.
- Use your hobbies. Yes, it’s possible to have money-making hobbies. You’re not going to get rich playing World of Warcraft, but many people use productive hobbies to earn a little extra income.
- Sell things. When I decided to get out of debt, one of my first steps was to sell a bunch of the stuff I’d bought with that $35,000. I used eBay, Craigslist, garage sales, and the Amazon Marketplace to sell the things I no longer needed or wanted. The money I earned jump-started my debt reduction.
Another effective way to increase your income is to pursue entrepreneurship. While working to defeat my debt, I started a small computer consulting business. It didn’t generate a lot of income, but it did provide $2,000 a year that I wouldn’t have had otherwise!
Step #11: Learn the Art of Conscious Spending
Being frugal doesn’t mean you have to deprive yourself. You’re not giving up the good stuff for the rest of your life. Instead, frugality is about choosing to spend it on the things that are important to you while cutting back ruthlessly on the things that aren’t. Ramit Sethi calls this conscious spending, which is a fantastic way to describe it. Conscious spending implies that you’re actively choosing to spend on some things and not on others.
Contrast this with how most people spend. We tend to spend on reflex. We buy things because we’re expected to, because everyone else does. We spend to have what other people have. We sign up for gym memberships that we never use, subscribe to magazines we never read, and pay for golf clubs that get buried in the garage. We make impulse purchases at the grocery store — or even on large items, like computers and cars. Most of the time, people spend without thinking.
But with conscious spending, you evaluate every purchase. You ask yourself: “Will buying this help me meet my goals? Will it make me happier? Is it congruent with who I am and what I want to do?” I know this sounds like New Age mumbo-jumbo, but it’s not. These questions can have a powerful positive effect on how you spend and save.
Conscious spending isn’t restrictive; it’s liberating. It lets you cut back on the things that aren’t important to you so that you can spend on the things that do matter. Learning to practice conscious spending is a sure way to improve your quality of life.
Related >> Conscious spending in action.
Step #12: Educate Yourself
Knowledge is power. Personal finance doesn’t have to be a mystery. Subscribe to this site. Read other personal finance sites. Visit your public library. Borrow money books and self-development manuals. Here are four of my favorites:
- If you’re in debt and can’t seem to find a way out: How to Get Out of Debt and Live Prosperously
- If you’d like to know more about investing: The Random Walk Guide to Investing
- If things are tight and you need to find creative ways to make ends meet: The Complete Tightwad Gazette
- If you want a motivational manual to prompt you to pursue your goals: The Magic of Thinking Big
You don’t have to agree with everything in a book to get something out of it. I read a lot of personal finance books — some are good, but many are not. Even the worst books usually have one or two things I can pull from them. Learn how to read a personal finance book so that you can pick and choose those pieces appropriate for your life.
Blatant self-promotion! I wrote my own book precisely to help people who are struggling with money. Your Money: The Missing Manual contains all of the advice I wish I’d had when I was digging out of debt and learning to boost my income. If you like what you read here at Get Rich Slowly, you should like this book. It has tons of new stuff (as well as a few favorite nuggets from the past).
Final Thoughts
Taking control of your finances can be intimidating — there’s so much to do! — but it doesn’t have to be that way. One effective solution is to take a vacation day from work: designate one specific date as your personal “Money Day”. Use this day to finally set up Quicken on your computer, to open a retirement account, and to call around for a better deal on your insurance.
The good news is that you can get out of debt. You can save for retirement. If I can do it, so can you.
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There are 298 comments to "Mastering your money: 12 steps to financial freedom".
What a great way to start out the new year with your blog! Good advice. My experience has been that many people struggle with their financial goals and plans because they have so strongly tied their sense of self-worth (image) with a level of consumption that is beyond their means. I think a critical step toward success is to recognize this fact, and then actively seek ways of separating your image of yourself from a high level of consumption. If you do so, you will be surprised at how much easier good financial habits are to practice. If you cannot control your desire to buy things that you feel you “deserve” but cannot afford, you will not get there. Like dieting, good financial practices are simple but not easy. You must face the psychological barriers before you can successfully practice good financial behaviors.
What’s the point of tracking every penny if you then go on to waste some of those pennies with the snowball debt reduction? I’m all for doing what works best for each person and tracking spending, but I think this blog undersells the benefits of paying off high interest debt first. The good feelings from making debts disappear is great and all, but I personally feel much better when I know I am making the best financial decisions for the long term.
J.D. has always made it clear, I think, that a plan that starts with the high interest rather than the high balance debt will save you money. The point it, that savings is assuming you stick to the plan, come hell or high water. Ignoring one’s own psychology is the pitfall of any life improvement; and you’ll save a lot more money with a debt snowball plan that you’re able to stick with until everything’s paid off than with a standard debt reduction plan that you quit in frustration after a few months. If you’re sure you can stick to the schedule paying off the high-interest debt, do it! But if you find that you have problems persevering with that, try the snowball, which others who have that problem have been successful with.
Ah — that’s why you should choose to DO WHAT WORKS FOR YOU. There’s no doubt that you can save money by paying high-interest debt first. For some people, this is a good choice. But I contend that most people who struggle with debt aren’t going to be swayed by mathematical arguments. If they were, the wouldn’t be in debt in the first place. Most people who are in debt are dealing with psychological barriers, and the debt snowball method is a fantastic tool for them. Don’t sell it short. I tried for years to get out of debt by paying high-interest debt first, but it never worked. On the other hand, the debt snowball turned my life around. DO WHAT WORKS FOR YOU. And remember that money is more about mind than it is about math.
Budgeting is the thing that has never worked for me, and I’ve tried quite a few different approaches. I’m actually not convinced that it’s all that helpful except for people who are very disciplined and self-accountable (which rules out me). These days, the only things I set a budget for are items like contributions to charity (which I base on a percentage of my income), contributions to my retirement account, and expenses that I’ve learned from past experience will get out of hand unless I put a cap on them.
In order for a budget to work, you need a “dashboard” that lets you monitor your performance against budget on a regular (at least monthly) basis. It does no good to wait until the end of the year to do a report and discover that you exceeded your budget in key areas; you need to be able to see it while it’s happening so you can take corrective action. Quicken and MS Money provide budget dashboards but I haven’t found them very useful because setting up detailed budgets in Quicken is too tedious for me, and something unforeseen always comes up to blow my careful budget out of the water anyway. So I don’t bother.
I found this site a couple of weeks ago via Google add-ins for customizing your home page. I have read a lot of info and have found it to be good info as is this subject. I read the Wealthy Barber years ago and was floored with the simple concepts and much needed advise. I have read the RD/PD books and listen to Dave Ramsey from time to time but as with Dave and a lot of “money” sites they seem to be speaking to the same people but not me. Maybe I don’t need it or it’s more of they wrote it for the masses which just is not me.?? What is for me? I am 40 married w/ kids a good job with a 401K that I have done for almost 15yrs. My wife also does 401k and we have a seperate mutual fund that we have been dollar cost averaging (200.00) per month for 5+ years. I pay off CC debt monthly and currently have a car payment and house payment and that is all. I am looking to do more so I increased my 401k last year to 8% and will increase it this year to 12% if all goes well. My question is I want to “have money work for me” and not just the usual increase your 401k and do a Roth answers…. What books or sites look to maximizing my money/potential?? Are there others that feel the same as I? Or should I just shut up? 🙂 What would/are you doing? I have considered buying a rental once my house is payed off or sooner if I can talk my wife into it.
Great post JD.
For those of you who don’t like the budget, you should give ms money a shot. Yes, i read some comments on how ms money can tedious, but once you get it setup, it runs smooth. A feature that I really like is that it can estimate your cashflows in the near future based on hypethetical spending.
It’s a great way to “tweak” your finances.
FT
http://www.milliondollarjourney.com
JD, right on! Excellent post. Interestingly, “Your Money or Your Life” actually does not recommend budgeting, but instead focuses on daily awareness of your “life energy” … which is not some frou-frou, hokey supernatural crap. It’s their way of explaining that money is what you trade your life/hours for (assuming you work for a living).
Thus, a real effort in reducing your expenses (or getting rich, for that matter) starts with tracking every single penny that comes in an out of your life and evaluating if a) what was “spent” was worth it and b) if you’d want more/less of that in your life. Get Rich Slowly is now my favorite blog! ;~)
I agree that money is more about perceptions then the raw math. You shouldn’t sell yourselves short though. A lot of being successful is believing in yourself while also not letting yourself down. The snowball system is a great place to start building confidence in one’s ability to stick to a financial plan.
I have recently had a chance of using a Personal Finance Software package by Australian business Parcus Group – Personal Finance Associate.
The product is very good. For the AU$29 it costs, you get budgeting, financial planning templates as well as advanced features that typically cost loads more as separate software packages such as investment real estate calculations (mainly based on rental cash-flow analysis) as well as some value based shares valuations (based on Warren Buffet’s stock valuation methodology)
Their website is http://www.parcusgroup.com
For anyone interested in their own wealth creation this product is definitely worth looking at.
Brad, it sounds like you’re already doing all the budgeting you need except in the “unforseen budget blower” category. If you don’t have these every month, you can save for them in the months you don’t have them. Pick another percentage of your income (start small and work you way up if necessary) and then next time one of these things comes along (unless it’s this month), you can fight back.
I think the most important category is what you refer to as “expenses that I’ve learned from past experience will get out of hand unless I put a cap on them,” and you’re already addressing that.
I just thought of another category you might like to work on. If you have any other long-term goals besides retirement (or wish it was a goal, but you know you could never afford it). Like a trip to Paris, or braces, or oil paints and painting lessons, or anything you dream about.
Great post, the fact of the matter is that getting your finances in order is a fairly simple task when you really it down. Understandably for a lot of people it’s daunting because they’ve never done anything of the sort.
I’m in the process of doing all of the steps you’ve mentioned above but the biggest one that really hit me was when I took a good hard look at what I was spending my money on and realized just how much I was spending on all sorts of various things that I didn’t need to. Smokes were costing me about 100-150$ a month which just gave me more motivation to quit. Little things like seeing your eating out costs for lunch all lined up paints a very detailed picture on what you can do to live below your means without suffering very much.
“After reading The Automatic Millionaire last Christmas, I opened a Roth IRA at Sharebuilder. [disclosure] It was easier than opening a checking account. I didn’t fully fund the account in 2006, but you can bet I will in 2007!”
I believe you have until April 2007 to contribute to your 2006 Roth IRA.
I strongly recommend an online application to track your finances in a easy way: http://mo.neytrack.in
Check out complete features here: http://mo.neytrack.in/features
And the best: it’s free!
Pay off the lowest balance loan first, huh?
At first glance I thought this could be a foolish idea. For example, if the interest on one loan was tax deducable it could be argued whether or not to pay that off first. Or what about higher interest loans (even the difference of 1 percent)?
Well if you never pay off any of your loans then you will never lower your need on debt, so just pay one off already!
I have been using a budget I heard about a while ago. The 10/20/70 system. You put 10% into retirement savings, 20% into unexpected/mid term things like car repairs, vacations, insurance or a new roof. You spend the remaining 70% on all your fixed and discretionary expenses. As long as you don’t spend more than the 70%, you will be covered for long term savings and emergencies.
Right now I am broke as hell ( I have like 10 bucks in my possesion) and if it wasn’t for my wife I’d be far worse. I really apreciate your “guidelines” because I’ve had a problem with managing money for a long time, yet never really saw it as a problem. Until now…that I’m broke (and have over 10k in debt). I really hope your tips can turn me around so I can post a sucess story commment!!
Again, thank you!
A correction: The Millionaire Next Door was written by Thomas Stanley and William Danko NOT David Bach as you noted. Bach is the author of the much inferior book, The Automatic Millionaire.
One interesting thing to note is that if 55% of millionaires keep a budget, that means that 45% don’t budget.
spend less then you earn! that’s great advice. I keep track of every last dollar I spend. I only buy absolute necessities: food, gas, and cell phone (needed for emergencies, job interviews, business, etc). For gas, I always take the shortest route and seek to minimize the driving, using gasbuddy.com. For food, I almost always use groceries. Typically before I buy any food item, I calculate the per day cost of that item, normalized for a 1800 calorie diet (i eat less, since it costs less and keeps me lighter). Here are the cheapest: Rice (22cents/day, sphagetti 65cents/day, etc, etc). I usually stick to the 1 or 2 dollar a day items, except for the meat, which can be expensive.
Good article! The one thing to remember is, after you have paid off your debt, extend your emergency fund. One month’s of expenses should be available in a local savings account and another 2-3 months of expenses in a higher-yield savings program. That way, even if you become unemployed, you have enough to pay the bills until you get that first unemployment check and still have reserves to cover what that smaller check doesn’t cover.
I am still a strong believer of “Pay yourself first”, which means savings comes out of the check first, not last. If you can’t make it that way, then save a little less while you are cutting expenses, but deposit the savings on payday. In time, you will not miss the money and will be supprised how fast it adds up. Even if you don’t need the savings for now, you can still move it to a 401(k), IRA, or investment fund. If all else fails, you can use some of it for that vacation you have dreamed of, but could never before afford.
Many people said it before, whatever works for you, but I think saving first instead of last works better.
Order your debts from lowest balance to highest balance.
Sorry, can’t agree here.
This is analogous to doing all those little urgent, but relatively unimportant tasks first, then attacking the big tasks. The thing is the little tasks keep coming, so the big ones never get worked on.
It may feel good to pay the little bills, but they lack the significance of the big ones. Need proof? Just look at the Interest portion of your credit card statement. What psychological boost is there in saying “Gee — I’m now current with the gas bill, but my credit card balance went up $100”?
I’m sure there are some little games that help with debt, but this is just denying cold hard reality that will extend, not shorten indebtedness.
For UK freelancers wanting to take charge of their finances, there’s a new online application that integrates with your existing bank accounts and can track money in/out as well as calculate taxes.
http://www.freeagentcentral.co.uk
I enjoyed this read, I have struggled with debt, while not overall big, big enough to put pressure on me and fiance.
Thanks for some simple and effective ideas..
Automating my finances is the only reason that I don’t pay late fees, and is probably the best thing that I ever did for my finances. I do all my saving and investing this way, as well as as many of my bills as I can. A bonus is that all my utility suppliers offer discounts for direct debt (auto bill-pay).
I track every penny I spend and log it daily into Money software. It is a bit of a hassle sometimes but it sure does help to see exactly where my money is going.
A great primer for someone feeling overwhelmed! And props to you for including “Do what works for you,” since so many people get caught up doing exactly what works for someone else and then quitting when they can’t keep it up. It’s so important to find something you can stick with, regardless of how efficient or not it may be.
The thing is to take control of your finances.
A spending plan is the most useful tool we have in our financial planning. We spend all our money on paper every month. This allows us to make adjustments as the month goes on.
Thanks for the great tips. I know a lot of these tips you have listed in the past and has helped me start a financial plan for 2008. Let’s just hope I can stick with it and get on the path to debt freedom.
It will definitely be huge for me to continue reading this blog and keeping up with my blog to keep myself in check. Thanks again.
Hey J.D., I’m shocked to see that you aren’t on a budget. How do you know where your money is going? 🙂
Personally, I love my budget. It was like getting an instant raise and I’ve never felt so in control of my money. I hope PearBudget will work for you.
J.D.,
Thank you for your continued excellent personal finance observations. My wife and I read your blog daily and find it to be a treasure trove of knowledge and first hand experience. We have literally tried all the budget programs out there from Mint, Buddi, Grisbi, Moneydance, Quicken, and MS Money. We have found You Need a Budget ($39.99) http://www.youneedabudget.com , BudgetSimple ($19.99) http://www.budgetsimple.com/, and Money Manager EX (Free, Open Source) http://www.thezeal.com/software/index.php?Money_Manager_Ex to be among the best. We have been using YNAB Pro for six months now with great success. We have been using BudgetSimple now for almost a month and it is also very promising. Finally, we use Money Manager EX to balance our checkbook. I do not get paid to say this but what I find to be most refreshing about these applications is their simplicity.
I have to say that automating my payments has been the best form of disipline for me, my electric, cable, gas, cell phone, insurance ect….. all goes in to a separate savings account where I figured how much I needed out of each paycheck
to cover these expenses. I never really figured out what I saved in late fees but I am sure it is substantial. Really sloppy I know! But it gives me alot of peace of mind knowing all of these are paid. As far as budgeting I am still learning! Looking for any suggestions.
Excellent “to do” list. Young and I are working on several of those right now. Of course, the thing that would help us the most at the moment is income, but slowing the outflow is good too.
I would like to say I used to use quicken, but as a Mac user it leaves something to be desires. I have tried Mint and also the “My Portfolio” option through Bank of America. This past week, however, I switched to moneycenter.yodlee.com and think it is terrific. You can add just about any sort of account you want (banking, retirement, mortgage, credit card, even utilities, etc.) and it does a fairly sophisticated job of categorizing transactions automatically. It provides the right amount of granularity in budgeting, etc, and you can look at the data in multiple different ways.
I found that focusing on one goal (getting rid of all unsecured debt) helped us stay focused and energized. While we also tracked our spending in Quicken, maxed our our 401ks and added to our emergency fund our one and only goal was debt reduction. If the other goals (like creating a 0 based budget) didn’t happen (which it didn’t) or if I got behind on other goals (like keeping my Quicken data up to date or reaching our e/r fund goal) I wasn’t bummed out at all.
My one and only goal in 2007 was paying down all unsecured debt and while we missed our goal (we still have @$1700 to go, should be gone by the end of this mo.) being really focused is what got us so close.
I finally read The Total Money Makeover by Dave Ramsey over the weekend (took me two days; I couldn’t put it down). I’ve read Orman, Bach, and Warren, but Ramsey was some pretty good, in-your-face,I-know-your-tricks, stuff. Great entry!
I can’t recomend having the Emergency Fund first enough!
If you want to break the shackles of debt you have to stop using debt devices. Cut up the cards! If something really huge came up where you had to have the card, most companies can authorize a charge without it, or replace within 24 hours. It just stops the knee-jerk use.
@RacerX
Not really a fan of cutting up the cards. I took the approach of taking them out of the wallet, putting them in an envelop and then storing them in the closet. If there was a super need for them I can still go and dig for them, but other than that they are out of sight out of mind.
I’m a big fan of automating, budgeting and tracking. One reason is because it helps you visualize those long term goals.
I’ve made it a goal of mine to increase my net worth $100k every year. I do this by planing out all my major expenses for the year, forecasting my investment returns, and determining how much to put away in retirement and emergency savings.
Because I’ve been doing this for a couple of years, I can usually expect 40k to come from investments, 30k to come from house appreciation, 15k goes from my paycheck into my automatic deductions for my 401k, and my wife and I both automatically contribute to Iras which gives us an additional 8k boost, so if everything goes according to plan, that’s 93k every year without having to think about it. The 7k extra comes from trying to squirrel away $500-$600 a month into an emergency fund. Some months I’m on track, some months I’m not, but I know that if i stick to the plan and use the Quicken forecast feature I can visualize my goal at year end and 5 and 10 years from now.
Quicken has been great, it has it’s problems of course, but supplemented with Pocket quicken for the PDA, the ability to enter transaction information via their website, and having my daily credit card transactions imported into the computer at home, I can also quickly and easily track every penny in almost real time.
This is one of the reasons that I’ve switched almost exclusively to using credit cards that have a quicken daily download – because then I know where I am each day, no fudging the numbers, and I know exactly where I stand before month end and that bill arrives.
Speaking of hiding credit cards for those of you that do…
A friend of mine who had problems with credit cards had a great way of combating those impulse buys. He would take his credit card and put it in a zip lock bag, fill the bag with water and put it in the freezer. When we wanted to make a purchase with the credit card he would have to take it out of the freezer and let it thaw – giving him a built in 12-24 hour cooling period before he went to make that purchase.
Excellent advice! I was pleased to see that we are doing almost everything on your list and attacking debt in the same way. We have about $1K left on our credit cards and we will finally be credit card free. My husband was unemployed for almost a year and, although we had a substantial savings, we ate through all of that with him being unemployed. Looking back I know that there were things we could have done differently, but my husband says at least we did that well. He thought we would probably would have had to file bankruptcy if he was in charge 🙂
Thanks for the great tips!
Ok, I’m not the same Tim with the blog link in the name.
This is a nice posting. I would only caveat that people shouldn’t correlate automating your finances with not actively managing your finances. Although you have set things on auto pilot, you still need to monitor what is going on just to ensure things like billpay actually goes through.
I’m also a big fan of saving while you are paying off debt. Behavior is a key element of getting out of debt. You want to establish a good overall financial habit rather than just paying off debt. It is mathematically inefficient to save while paying off debt, especially if you have high interest debt. Are you going to pay more interest in the long run? Yes, but you will have established a solid basis for when you are out of debt. The worst thing to do when you get out of debt is to get back into debt, because you forgot about the saving portion of your financial habit while focusing on the paying off portion.
Good list. For tracking expenses I’ve been using http://xpenser.com/ , SMSing as soon as I spend the money, sometimes Jotting it.
I’ve been tracking my save vs income percentage as the main number I try to beat each month. Gives me something easy to track and a monthly goal.
Great tips! I appreciate the value of consolidating a conglomerate of information, and putting into simple terms for those working on their personal finances.
I’m a Dave Ramsey fan, but I definitely benefit from the entries here at GRS!
Automating is convenient when it works, but can be a real pain when it doesn’t. I’m in the middle of dealing with an issue where one of my automatic withdrawals was switching over how they do the transaction, and as a result I was double-billed this month. Luckily this is my church, so it shouldn’t be particularly acrimonious, although it’s still a hassle.
I’ve had issues in the past where my phone bill payment was not recorded and they then wanted to charge me late fees. If I was using automatic payment at that time they probably would’ve just billed me twice. It took several months to clear it up then, who knows how much harder it would’ve been if I was trying to get money back? It’s virtually guaranteed that even once the issue is resolved you’ll get screwed out of any interest you would’ve earned.
Despite that, I do currently have all my bills automated.
Great post! I’m working toward being in charge of my finances, but I’m not totally there!
What works for me is my excel spreadsheet. I keep in online on google docs, so I can update it either when I am at lunch break or at home. I find it works well for me and it is simple to use (since I created it). I tried Quiken and Money before,but somehow it was making budgeting and saving overwhelming. I use credit card for all my purchases and thus easy to keep track of my expenses. I always have 50 dollars in my wallet that I never use unless noone accepts credit card ( which is hardly!). This keeps me away from vending machines etc.
Credit card works well for me for I always pay off at the end of the month. It also gives me cashback. My fav is getting gift cards for starbuck coffee which taste so much better when you receive it from the credit card company. I never allow them to increase my limit, for I always can tap my savings if I need more than 3,000.
A friend asked me for advice on saving and controlling his 10,000 credit card debt. Thanks to J.D, I showed him how it can be done and he managed within 10 months. It was a struggle but he did it. Unfortunately he still thinks budgeting is so uncool and that he knows where his money is going…( I have a feeling he is going to rake up his debts again!).
From someone who never had a budget but just an estimate, trust me…you can go off far on what you are actually spending on. I am on my 5th month of having a daily budget and I managed to save so much just by studying my spending pattern.
About automation, I don’t do that. I feel like I loose control or the value of money gets lost in all that automation. I still prefer to know where everything is going by paying it myself every month. I feel a sense of control over money and only at that emotion I feel I can handle my money.
I use my interpretation of Dave Ramsey’s Zero-based budget, and I actively manage most of my expenses through my credit union’s Bill Pay service.
I don’t do anything fancy to track my budget — I just scribble it out on a small note pad and adjust as needed.
I have a couple of things on Auto-Pay, only because it’s either that or dealing with a check. I much prefer using Bill Pay to Auto-Pay because I can log on and control the amount from month to month, and I can also choose the day that it’s initiated from my account.
My “interpretation” of DR’s Zero-Based Budget is such that I do a new budget for every paycheck based on what billing cycles are rolling over during the two week period until I get another paycheck. I know the dates my bills are due and the day that they “roll over” from the previous month to the current month. The important thing here is I don’t wait until the day it’s due to pay the bill — I initiate the payment of the bill to occur on the first business day after the due date resets itself so it’s always paid the first week of the billing cycle (I hope that made sense — basically I’m paying at the earliest possible moment during the billing cycle. This has ensured that I have plenty of time to catch any snafus and make sure the payment is credited before the due date.)
I do differ in one way from Dave — I am not comfortable taking my account all the way to zero so I retain a small cushion in the account at all times. (In my misspent 20s I was a frequent check-bouncer — this discipline to me is sort of like a drunk not taking a drink.)
Those are some good times, here is one that I really liked after reading about it in Entrepreneur Magazine this month.
The best thing that they talk about is the useful services of a virtual concierge / assistant service called Red Butler. A co worker of mine just joined and raved about it so I joined as well.
They take excellent care of me, calls, appointments, wake up calls, flights, reservations, gifts and I pay 36 dollars a month. Great service and value, although I wish they also offered errand type services.
http://www.RedButler.com
I like to keep it simple. The 60% is for me.
I just take 10% of my money out from bank and use that for fun. 10% goes to retirement (probably too much because I’m only 23), 10% to long term (min 10 year), and 10% goes to shortterm savings.
Another nice free online money tracking application is http://zenbudget.com
I forget where I first heard of this, but clearcheckbook.com has probably been one of the best things for me so far (I’m new to site so forgive me if this has been talked about before). It’s like other free online finance trackers but with one indispensable feature, updates via sms. Just as an example I sent one this morning (you send it to AIM short code so you need the screen name in front of it): “clearcheckbot: w 40.00 ck a ATM” that instantly (w)ithdrew $40 from my checking(ck) account, placed in the category atm (a) with description atm. No writing it down on paper to enter later.
They way I’ve been handling debt payoff works well for me because I just have 2 credit cards to pay off (a third credit card is my “active” card and I pay that off, in full, automatically, every month (nice mental check knowing that what I charge WILL be paid off the next month, so don’t go crazy)). Both credit cards with balances I pay over the minimum balance with more money going towards the higher interest one. May not give the same warm cozy “look I paid off a bill” but I only have two CCs with both about the same amount. The debt snowball would probably work better for someone that has several small bills instead of just a couple large ones.
One last tip is to set yourself a reasonable, but high goal on where you want to be financially. My goal this year is to have a net worth (checking and savings minus CCs not including car payments or student loans) that isn’t in the negative. It’s a big goal for me, but attainable.
@Hannes:
Actually, it’s really great that you are putting away 10% towards retirement at age 23 — you are virtually guaranteeing yourself a freedom of choice to retire early if you want, and to retire in comfort.
Keep up the good work! Your entire plan is one I wish I’d done when I was 23.
Tracking expenses is an eye-opener, for SURE! After a year of meticulously recording every penny, we are MUCH more careful with our money. It has really paid off!!
Don’t throw every penny at the lowest balance, throw it at the balance with the highest interest.
Decent enough list. One major issue – saving for retirement.
It needs qualifying further than just to say that compound interest/investments require less input the longer years they run for, every year counts hugely for investment.
Sound financial advice will balance your needs for tomorrow with your needs for today. People can often be better off maximising the money they take out of their casual debt (credit cards etc.) and long-term debts (mortgage/long-term loan) when they are younger, and then as they mature in their career and age they may be best moving that money into financial investments.
The best financial people are not those who plan ahead by placing money aside, but by utilising their money in its strongest manner for the circumstances they are. This will often mean placing some in long-term savings, but the newly-graduated will often be better off long-term spending that money on reducing high-interest debts and providing a larger downpayment on a mortgage than saving for a retirement.
It is more complex, but it is not always best to put money away that will not be seen for 30/40 years when you are on an extremely tight budget (as many are in the early years of their career/adult life).
Though to be fair as a basic rule it ain’t bad to get people thinking about the future
Great advice overall, but I have one recommendation regarding getting out of debt… Instead of paying your debt off by the amount owed (balances) order them by interest rate (highest first of course). It could end up saving you hundreds or even thousands of dollars in interest by the time you’ve got everything paid off.
Unfortunately most people will not follow your good advice.
Forget trying to practice more than one of these a month. If you do not have the discipline to do one right now what makes you think you can do all 8?
I suggest that you attempt to adopt each one of these in the next 8 months. Start with tracking first. You never know how good or bad you are doing without the tracking.
Hi,
I run a website that might be useful.
Concepts are the same but we have a ready-made spreadsheet for your family budget use.
http://www.howtofixfamilyfinances.com/
Perhaps it’s time to start using moneytrackin.com, a very easy way to track your spending from any way
Thanks for the advice, although I do wish to offer a slight revision on the ‘debt snowball’. I would recommend focusing on the debt with the highest interest rate, not the lowest balance. The card (or loan) with the highest rate will create further income for the credit card companies. Kill the balances in order of APR.
Hey J.D.
very good article, but I have to disagree with point “Get out of debt”
Like Matt (35), Brandon (38) and Austin (40)
I understand, that it’s always a motivating feeling if you pay debts off, and the easiest way is to pay off the smallest one. But financially it’s better to pay the debts with the highest interest first.
One of the major things I’ve realized is making sure I have an emergency fund for those situations that you don’t expect. If you have an emergency fund and something unexpted happens it won’t derail your savings goals. ING Direct offers a way to split your account into “defined” segments. I have “emergency” “down payment” “savings 1” and “vacation” I can allocate how much each section get whenever I want. If you want a referral link to get a $25 kickstart (only if you begin with at least $250) that is automatically deposited to your account, shoot me an e-mail at z3trkrnr@ gmail.com
Great suggestions. I may have to take a “Money Day” even when things are rolling — tracking, budgeting, saving paperwork builds up. I could use some time to organize to the point of making them more manageable for us.
Wow awesome tips!
#10. When you need to buy, buy frugal?
All of these tips are in one way or another helpful to anyone. Thanks for the megapost!
Yea I think automation is key…
once things like saving and investing are on autopilot, its easier to get rich..
Nice review!
Totally agree with Trevor that this could use Method #10 about mindful spending.
Happy New Year!
Thanks for this post. I’m at the bottom of messy debt right now, slowly trudging my way out, and posts like this are encouraging and motivating. There’s a reason I subscribe to this blog 🙂
Well I’m 6/10 for now.
I need to work on 1-3-4-5 for 2009! A lot of work!!
I guess 1-3-4 can be an good objective for 2009.
One question… Does my morgate count for a debt? I know is a debt but if an objective is to get debt free for 2009…humm… it’s going to be very difficult:) Except my house, I only have a car loan.
thanks
I would put get out of debt on #3 and optimize towards the end. But very complete list.
What is unusual is that i got a higher interest rate on a new checking account last week (3.45%) than on my eSavings account with HSBC (3.0%). There are a few thing I must do each month (Paperless Statement, 2 BillPays and 12 transactions on Debit Card).
I just want to thank you for your helpful and simple ideas about money. I began reading your site this summer and this post seems to sum up everything you are about. Nice job and thanks again.
That’s a fantastic post to start the New Year with, incredibly inspiring. I’m at the planning the budget stage, you just gave me a dose of rocket fuel! Thanks so much for a consistently great, sensible blog. More power to your elbow!
I still refuse to automate finances. After a bad experience where my employer took back part of my bonus and I bounced an automated payment. Overdraft protection would be great, but I keep most of my cash with ING Direct.
If you have trouble making payments, perhaps automating is the best thing you can do. Great post JD.
Just to clarify: Microsoft Money is no longer published in the “boxed” format but will continue to be developed and offered for sale online.
Thanks, tosz. I’ve updated the text and added a link. I appreciate the clarification.
JD–isn’t the gears an image you would only use when illustrating something that doesn’t work? Look a little closer:
http://farm4.static.flickr.com/3149/2588347668_a1006846fa_m.jpg
I like the sequence you laid out. Budgeting is indeed the first (and also most boring and tedious) step to better finances.
Nice post, but of course none of it applies to me since we’re a young couple who just lost half of our income when my husband got laid off…I’m feeling pretty despondent wondering how we are going to survive let alone pay off debt! And the funny thing is that we were following your advice- we had just saved up a bit more than $1000 and were preparing to tackle our debt once and for all when the layoff hit. And we’re looking at 4 months of being able to pay our bills and then a big black hole. Of course the hope is that my husband will get a job, but in this economy…
Sorry, I’m just frustrated- it’s been one setback after another for us, going on for almost two years now. It’s all well and good to resolve to tackle your debts, but when life won’t give you a break (or worse, gives you a break for just enough time that you can see the light at the end of the tunnel and then the tunnel collapses in on you) and you can barely pay the bills, what do you do when crisis mode becomes the new normal?
The advice that I agree with the most here is that you should educate yourself. Constant research and education will enable you to make better decisions that will benefit you long term. 2008 was my best year in terms of personal finance, it was also the first year I started reading books/blogs on the subject. I learned interesting ways on how I can better manage my money and effective methods for earning more money. The fudamentals of personal finance are pretty simple, it’s the unique tips and personal stories that make it fun.
JD – from your own link MS Money is still being published – just not in retail form.
I personally prefer it to everything else out there though sites like Mint are catching up.
Good tips. The only thing that I disagree with is your first sentence. The metrics that you list – the stock market return, the state of the housing market, and the unemployment rate are all things outside of my control. If one followed all of the advice that you list in the rest of the post, wouldn’t it have been a great year for their money?
After all which is the more significant accomplishment – paying off a big chunk of your mortgage or having the value of your house rise? Contributing the amount that you need to to your retirment plan and losing money or seeing a small contribution go way up in value?
Any year that I am in control of my finances and making smart choices about my money is a good money year for me.
What a great post! My wife and I are following many of these principles and are in the process of fixing our financial mess. Keep up the great work. This post was so helpful!
Annie #14:
I disagree that none of the post applies to you because your husband lost his job. That is all the more reason to pay heed to this post.
An event like that makes it crucial to do things like budget and optimize your accounts, and look at ways to increase your income. All those are addressed in the post.
I can honestly say that over the course of the last year, I’ve done (and continue to do, with varying levels of success) each of the nine methods you’ve listed in this post!
After finally paying off my credit card debt at the end of 2008, I’m now looking forward to starting on the $56,000 in student loan debt I carry—although that will need to wait until I’m out of school. Meanwhile, I’m practicing frugal habits (and learning new ones along the way) and trying to reduce my spending even more so my savings will grow.
JD – maybe just a Freudian slip but the link to The Random Walk Guide to Investing takes you to The 4 Pillars of Investing. Either way, they are both on my need to read list.
An essential mantra not just for 2009, but for life. Great lists for people to follow!
Love this post. I plan on receiving an iPhone very shortly and I know there is a budget app that tracks all of your expenses. I know I’ll always have it on me too! Can’t wait.
You can use Mint.com on the iPhone, too. It’s one of the apps. I have been using mint and am very pleased with it. Very easy to use.
Please don’t forget the best emergency fund available – sick time and vacation time. I worked at a job for 18 yrs where we could save and rollover sick and vacation time. I always made sure that I had at least six months saved on the books for an emergency. Other employees would use every day that they earned. Fourteen months ago, I became physically disabled due to pain. I had enough time saved to pay me for 8 months. I ran out of time 3 months ago and am now using my cash emergency fund. I’m have been referred to a third doctor who is very aggressive and has been able to eliminate my pain down to two different causes, one curable and the other chronic. I will either be cured and able to return to work in 3-6 months or I will have the medical documentation to apply for permanent disability. Remember unused sick and vacation time is money in the bank with benefits – health insurance.
Fantastic post! There are a few things that I need to work on here such as determining whether now is the right time to open a Roth IRA or to get a rewards credit card. Very informative!
Nice compilation of great ways to get a handle of your money. This will be very important as this recession moves along.
Lesley i wish i could do that at my job.. but we’re forced to use up our vacation time every year
good idea though if you have that option
There are a lot of great online budgeting tools that people can use. Setting out a plan and being structure is key like you have addressed. It’s all about the planning involved.
Tip #9 Educate Yourself! All of them are good, but #9 jumps out for me. Too many of the clients I see really don’t know what they are doing with their finances. They don’t know how to get out of debt or how to find extra money each month.
With that said another option for #9 is to speak with a financial professional. We can learn a lot from books and blogs but some people don’t understand how they can transalte that into reality, which is what I attempt to do on a daily basis for my clients.
you need to have 12 months of emergency fund simply because the standard 6 months advice no longer apply.
in this recession(depresion), you can easily be unemployed for a whole year or longer.
This article starts with an ambiguous premise:
“If one of your goals for 2009 is to take control of your money (instead of letting it keep control of you)…”
What does this mean? What are signs that would indicate that my money is controlling me, or vice versa? What is the implication of being controlled by my money? If my money isn’t controlling me, does that imply that I don’t need to worry about the list that follows?
I realize that this isn’t the intention of the article, and that regardless of the meaning of the quoted statement, some of these things would still be useful. I just find it a bit perplexing that this post is organized like this:
“Here are 9 ways to better accomplish X”, where X is vague and mostly undefined.
I do some of these things, and don’t do others, but the main thing I’ve gotten from the article is that now I’m curious what situation in which, “your money is controlling you,” you we re thinking of when you wrote the post.
To Rubin,
If I was ever unemployed for 6 months, I would get off of my butt and take whatever job I could. I would never let myself be UNEMPLOYED that long. Lazy.
I’m always surprised that nobody mentions GNUCash with all the other money tracking programs. It’s an Open Source project, so it’s free like speech, but most importantly for the frugal people, it’s free like beer.
It easily meets all my needs for a money tracking software. There’s even a portable version you can take with you on a USB key. Runs on Windows, Linux, and Mac. Upgrades are always free. It even has lots of advanced business features, although I don’t use them.
http://www.gnucash.org
Good stuff, but I would be very cautious on volunteering for paid research. Some of it is very safe and some of it isn’t. Anything related to pharmaceutical testing, I would cross off my list.
If you live near a university, many schools need volunteer “patients” or research subjects. In college I got paid very handsomely for being what the OB/gyn students called a “talking pelvis”. And you get to help educate doctors in handling patients, rather than just diseases.
Nice Post. i would definetely reccomend “Magic of Thinking Big” for motivation. I am reading it now and it’s doing wonders by giving me a second perspective. I also followed the snow ball method for debt reduction, knocked off 13,000 dollars in debt frm June-08 till date and I started debt reduction by first opening an emergency account.
Every tip that you have mentioned in your post -works. I am living it.
Thanks JD.
So this is unrelated to topic, but I figured I’d throw it up here now anyway.
I’ve stopped reading this blog. I’m actually going to unsubscribe my RSS feed soon as well.
It’s not because of the content, or any vendetta I have. It’s because I followed the advice and I didn’t like what my life became. Let me explain.
When you watch every penny you make and cut your spending so that you can save every dollar, your whole perspective on life changes. Everything becomes about, what am I giving up in order to buy this or do that? I slowly cut out all but the essentials. I saved a good amount of money, which I then prudently invested in stocks (a little early…) and am now stuck with unrealized losses until the market picks back up.
The problem with this is all that I missed out on. Sure you end up with more money, but I’d rather exchange the money on something of value, something that will improve myself, help me to relate to others and end up being an investment in myself to make it easier for me to make more money in the future.
After I decided to change my ways and loosen my spending, I started learning how to make more money. I go out and live life now, make new friends, increase my network and create more worth. I’m kicking off my own business and with the network I have I’ll become a great success by delivering more value to the people I help. I would never have been able to make the decision to make this kind of investment if I had kept watching every penny and weighing every purchasing decision with some guilt trip with the imaginary alternatives.
So, it’s up to all of you what you want. I still track my finances. I still don’t spend in excess or run up debt. But I do live my life, and I do invest in myself and my future and make sure my value continues to grow, as well as the value I can offer others.
Thank you JD for all your advice, I appreciate it but, I’m moving on.
Annie #14
Most people stay unemployed until they find the “perfect” job making what they used to make or more. We found ourselves in the same position a few years ago (newly relocated to a new state without jobs). There was no question about jobs as we had already planned to take the FIRST available jobs (within reason). We are both Tech professionals but within a week, I landed a retail job at the mall while my husband delivered pizzas. I found a professional job 3 months later.
You must be willing to work with what is available. Good Luck!
-Charlotte
@John, post 37:
I understand where John is coming from. I don’t echo his sentiments exactly, but I understand why he feels the way he does. I’ve thought about similar issues before, and thought about writing about them myself, although I don’t know where I’d share that writing. Email it directly to J.D. and see if he was interested in posting about it, maybe?
The main point I’ve thought about is that the mechanics of saving money are pretty easy — you lean a bit about interest rates and compounding and average return and such, and then with some basic math skills, it becomes pretty easy to determine how much money to put where such that you’ll probably have certain amounts on certain dates.
So, that’s why there’s so much repetition about these subjects on the internet. Every finance site and blog has done at least one article on these topics, and with Google, you can find all you need to know about calculating interest such that you can minimize the amount you need to pay. At this point, you no longer really need to read about this sort of thing every day, because you’ve got it figured out. It’s like your high school algebra class. It may have been challenging while you were doing it, but once you’ve figured it out and passed the class, you no longer need to read the textbook every day. This is sort of the “first stage” of getting your financial life in order.
Once you move past that stage of personal finance, and know what you’re trying to accomplish, the challenge becomes, “how do I make myself want to accomplish this goal that I’ve set more than I want to (for instance) buy a new TV, or go out to eat every night?” This brings up some interesting questions about psychology and our consumer culture. Can you convince yourself that you’re not missing out on life without having a new TV? How? What are traps that will drive you back towards wanting a new TV and how do you avoid them?
This is a difficult topic, and there is *always* going to be ways to improve in this area, and new challenges to overcome. That doesn’t matter though, in the end. The reason for this is something I’ve found out during the last year — once you get to a point where your financial situation is sufficiently stable and productive, it doesn’t matter if you’re doing perfectly at avoiding indulgences, only that you’re doing “well enough”. Use this as an example situation:
You’re doing fairly well. You’ve paid off all your debts. You max out retirement accounts. You’ve saved a (for instance) $10,000 emergency fund. You still spend less than you earn. You watch your account balances continue to increase. You’ve done “well enough”. You’ve covered all the basics and are still bringing in more than you spend. You’ve succeeded in the “second stage” of your personal finance.
Now you start to enter the “third stage” which is where I think John is at, and why he may no longer be finding GRS to be useful to him. The question now becomes “why”? Why do you continue to save after all your needs are met? Not to pay off debts, that’s done. Not to buy a nicer house, you’ve determined that was superfluous in the previous stage of your financial development. Not for retirement, you have a separate account just for that. Not for emergencies, you have enough saved for those already to cover any realistic emergency with any likelihood of actually happening.
Yet still, you watch your account balances creep up over time. First $10,000, then $11,000, at the end of the year maybe you pass $20,000. You begin to wonder — what am I doing this for? Bigger numbers in my bank account don’t make me happier. I passed the point where I improved my quality of life by eliminating stress caused by finances a while ago, yet here I am, still toiling away for no real benefit other than to increase numbers in a bank account.
You start to think, “Am I working harder than I should? Should I be taking more vacations? Maybe I *can* afford that new TV I wanted — but will it improve my life at all?”
After you get to this point you stop worrying so much about “how can I save money”, from either a technical or psychological standpoint, and you start to think:
“Why? Why am I saving all this money? What is it that I really want to be expending this energy *for*?”
I realize that many people haven’t gotten to this stage in their finances yet, and also that it really is one of those problems that’s good to have. But still, I’ve found myself hitting this point recently. I’ve watched J.D. report on his financial state recently, and wondered if he may be hitting it as well. It also seems to be a point that John has hit recently, and he seems to have found some of his answers, and as such, he’s been able to move beyond what GRS is offering him, because it’s a topic that GRS hasn’t really spent much time covering so far.
If in fact J.D. is getting to this same point that John seems to have reached, and that I’m personally reaching, I wonder if he’ll start to write more from that perspective. He may not need to cover the earlier stages in his financial development as much — after all, he has several years worth of posts covering all that material already, and anyone just starting on this financial path will still be able to look up those archived articles.
I don’t mean to be presumptuous about what J.D. should write about on his own site, or to pretend that I have any right to dictate where he should direct his attention in the future. I just see this emerging group of people — well, a group that I’m sure has always existed, but I just recently discovered because I’ve come to be a part of it over the last year — who have gotten the basics of their finances in order such that they’re no longer a burden, but potentially an opportunity, and I’m finding myself a little without direction. I try to come up with it on my own, and the nice thing is that I can afford now to experiment a bit, but I don’t find much of a community centered around this, not nearly so much as I find for the earlier stages I talked about, which is what GRS and most other personal finance sites seem to focus on.
It’s a difficult question, or maybe even a feeling, to convey, which is why I’ve had difficulty bringing it up in the past, but now that John’s talked about it here, it seems to have acted as a catalyst for me to put down some of what I’ve been thinking on the subject for a while.
What a fascinating turn this conversation has taken.
@John (#37)
Believe it or not, John, I understand where you’re coming from. Maybe it’s not as apparent as it could be, but I’ve been undergoing a similar crisis of conscience lately. I’ve become aware that while thrift and industrious helped me to overcome my debt and to start the progress toward financial wealth, I’ve been neglecting other aspects of my life.
It’s for that reason that I’ve been so interested lately in finding Balance. I don’t want to return to my profligate ways, but having made smart choices, I can now afford to spend a little bit of my money. For the past three years, I’ve been so focused on my financial life, that the other parts of my life are in need of attention — particularly friendships.
Here’s a simple example: I used to be a big reader. I read a lot. For a long time, I read 100+ books every year. In 2007 and 2008, I read some books, but they were mostly books about money. It’s only in the past two months that I’ve begun to read for pleasure again, and what a joy that is. I can’t wait to read more tonight, in fact.
What this comes down to, I think, is that wealth does not bring happiness. Debt can be a burden. And nobody wants to reach old age a pauper. But so long as you avoid debt and set aside enough money for retirement, it’s important to live life.
I was talking with Kris yesterday about the two topics that I wish I covered more at Get Rich Slowly: entrepreneurship and social capital. It actually sounds to me as if John has discovered the value of both of these things. He’s starting a business. He’s developed a social network. Maybe I should spend less time on the nuts-and-bolts of finance, and more on the broader view of wealth. That was my goal when I started Get Rich Slowly, but I feel like I’ve lost sight of that over the past year or so.
I believe that entrepreneurship is one of the best ways to not only boost income, but to derive job satisfaction. I also believe that social capital is as important — or more important — that financial capital. I’ve been reading the Autobiography of Benjamin Franklin lately, and I’m struck by how many times a kindness that Franklin pays to somebody when he’s 20 develops into a friendship that repays him (and the community) later in life. This is social capital, and it’s not talked about enough in our society.
So, I guess what I’m saying, John, is that while I’m sorry to see you go, I understand the need to move on. Get Rich Slowly cannot be all things to all people, and right now it’s not suited to your needs. But in a way, it hasn’t been suited to mine recently, either. It took your comment to make me think about this, but it’s time for me to expand the notion of wealth, and to explore non-monetary aspects of happiness and good living.
@Tyler (#39)
You make an interesting delineation of the “stages” of personal finance. I like it. I’d argue that it’s not just John who has reached the “third stage” of personal finance — that’s where I am, too. I’ve done “well enough” and am now looking for an answer to the question “why?”
In particular, Tyler, this part really hit home for me:
You start to think, “Am I working harder than I should? Should I be taking more vacations? Maybe I *can* afford that new TV I wanted – but will it improve my life at all?” After you get to this point you stop worrying so much about “how can I save money”, from either a technical or psychological standpoint, and you start to think: “Why? Why am I saving all this money? What is it that I really want to be expending this energy *for*?”
This is exactly where I am, especially with the “Am I working harder than I should?” question. I’ve actually reduced my posting frequency at GRS because I’ve come to realize that my free time is more valuable than I had given it credit. That doesn’t mean I’m slacking. I still work hard. But I’m coming to see that life is more about work and earning money. After a certain point, it’s time to say “enough”.
The hard part for me, running GRS, is balancing the need to write about this “third stage”, writing about the “why”, writing about the next steps without leaving the basics behind. I’m under the impression that many GRS readers still want and need information on debt reduction and on frugality. But maybe I’m wrong. Maybe most of the audience is ready to look at some of the next steps, ready to think about the relationship between meaning and money.
So I guess what would be useful to me, John and Tyler, is a list or discussion of the questions you now face at this stage, of the ideas you’re considering, of the things that you’re finding valuable in your own life, of the books or articles that you’re finding relevant to your situation.
Thanks to both of you for your thoughtful comments.
You know, one thing that would help me move beyond the basics, and to focus on meaning, is to have a way for new readers to more effectively find the core content of this site. If the information on saving and frugality and debt reduction was easily accessible, I’d feel more comfortable spending my time on other subjects.
This is mainly just a note to myself to do something about this problem.
To: John and Tyler (37 & 39)
Subject: Why I read this blog
(and it’s not to get out of debt…)
What I personally find great about this blog is that it is a collection of people who actually think about their finances. We are all a different points in our financial lives but the thing we have in common is that we are all putting some thought into it. Very few of my friends and family really want to talk about thier personal finances. I find it great to be able to discuss personal finance with a great group of people.
That said I do not always agree with all of you. Saving a few cents on hot chocolate is not a concern of mine. I think the bigger picture issues of money is to spend in a way that is meaningful to you. If you haven’t figured that out yet it is fine but once you do you will know what you’re saving for.
I really like the balanced money concept from All Your Worth. It gives people who need to save more a goal point to look to and gives people who have been overly focused on saving permission to spend. (permission to spend might be the point you’re at – if so let go of the guilt and spend with the knowledge that everything else is covered – it’s so much more fun that way) Just make sure you’re really at that point (we all have a tendency to kid ourselves…)
Regarding #4 (start an emergency account). Is that not quite your style? You don’t want to plan for an emergency?
Bust Magazine had a great variation on this. They talked about creating a “f**** you” account in case you want to tell you boss to take a hike. Same principle, same fund, but it covers both things you do to your boss or that your boss does to you.
For us, finding ways to earn more/ extra money has been really important.
While we’re not “there” yet, I would be interested in posts taking the direction you talk about in the above comments, J.D., about wealth and worth and the like. I hope and plant o build up residual income now while I am young.
I want my family to be able to live without constant worry about money and bills.
I started reading PF blogs two years ago, and I also have grown to the state where articles about how to get out of debt bore me. Seems to me way too many PF blogs are trying to hit the lucrative “how to get out of credit card debt” search engine page and not documenting their own personal growth, but instead still targeting mainly the lowest common denominator.
GRS has done a better idea job of ‘growing up’ along with its readers, than some PF blogs have, and the reason I find it so interesting still is the more philosophical topics about money. Even if you look at advanced investing blogs they will have not have these types of discussions, as far as I know they are not there. Some other blogs have also similarly grown, others haven’t.
If you look at Money magazine they have had the same formula for 30 years and are still at the top, so there is no question this type of formula is a very important market from journalistic point of view (more so than targeting ‘advanced’ individuals). However, the internet should be good at catering to more niche topics, more than print magazine can, so the opportunity is probably there.
There are plenty of topics I would like to see on PF blogs such as:
– stocks (something more advanced than US index funds in tax advantaged accounts)
– investing in stocks outside the US
– foreign currency investing
– commodity investing
– working abroad
– what money is and how it works around the world, the history of it, the future of it, etc.
– how to take off 10 years and ride a motorcycle around the planet 🙂
I believe John and JD have put into words what I have spent hours searching for in various pf blogs. I don’t need to be told the basics, have them covered, but what to do next. I opened a 10k CD because I didn’t want to put the money towards retirement and wasn’t ready to tackle the kitchen remodel, but did I have other options? I will admit some of the next steps confuse me. Opening a money market – got that, buying bonds or anything else really…hrm, not so comfortable.
I think people who have decided to unsubscribe to this blog have been missing something here. I have not felt that this blog is all about simply scrounging to save pennies and not having a full, happy life. There have been many posts that have addressed this point. I’d even go so far as to say it comes up nearly every week. I agree that I know the basics and would be happy to see more about life enrichment in non-monetary ways, but I disagree that this site encourages you to be a miserly cash hoarder.
I liked the infamous hot chocolate post. I like little hacks about saving pennies, even though I have a great income and plenty of money to spare. It makes me happy to know that I am preventing waste in the universe in some way. I reuse sandwich bags. That being said, I don’t hesitate to spend money for fun. I spent $250 a ticket to go to a gourmet food exposition for a day. What the heck, you only live once. Reusing plastic bags and stretching hot chocolate mix is a fun game for some of us. If it makes you unhappy, why would you do it? The motto of this site is ‘do what works for you’, not ‘save money even when it’s emotionally draining you’. It’s about the joy of getting out of debt, not the misery of sitting on top of wealth. That’s my take anyway. so cheers to JD.
@John and @Tyler:
I think you both raise up a great point and I’ve enjoyed following the discussion your posts created. A lot has already been said but to add my 2 cents, I think we’re starting to see J.D. already move to the next stage. Look at this NY’s goals – one of them is to start saving for Mini Cooper that he always wanted. So yes, once you learn the basics, pay off your debt, have emergency fund, etc., you naturally start turning toward pursuing the things that you want or those that fulfill you and bring you contentment/happiness. The whole point of getting rid of debt and providing for your future financial security is to be free — free from the burden of debt to pursue what your heart desires. I paid off my debt 14 months ago and about 4 months ago completed my emergency fund and began making regular contributions toward retirement. Now, I am free to pursue what our family always wanted to do more of — skiing and travel. Thanks to the better financial habits we’ve learned, our family will visit 2 or maybe even 3 new countries this year and we will make at least one trip every year after that. And then there’s the “social capital” that JD is talking about – that’s something we’ve always wanted to do too and the new financial freedom is now allowing us to. Our motivation for this comes from our religious background (“You’ve been given more than you need to share with those in need”) but even if you are not religious, you can find much fulfillment in using your funds to help others / your community (as JD points out). Now that JD is moving to this next “stage” as well, I think we’ll see his blog reflect that but even when you’re sitting on the boatload of wealth, it is good to be reminded of the basics.
This is a great post and a great blog in general. One thing I struggle with is the concept you touch on repeatedly in terms of not being a slave to your money. Agree 100%.
The thing I’ve found, though, when totally focused on spending habits as you recommend, I’ve become the same slave. My money (or my focus on the money) has preoccupied my life in the same way.
Any advice?
I’m still at the emergency fund step, but have no other debt besides the mortgage. Still, I like that J.D. and some of the readers and commenters are farther along the path than I am. For one thing, they are proof that success is possible and also an example of what to consider next. I dig through the archives on how to get out of debt, even though I don’t have consumer debt, just because it’s interesting and J.D.’s a good writer. It’s a quality read, and I’m still learning. Thanks, J.D.!
I’m pleased to see #37/39 because I’m also at that stage: now what? Being debt-free with a large-ish amount banked and earning for me has opened up vistas I’d never considered before. My only expense now is food and rent, plus utilities and gas for my old beater. Maybe I should move somewhere cheaper and quit my stupid job? Maybe I should get rid of everything and go on a 1-year sabbatical to SE Asia like the guy at agonist.com is doing? I could buy a house under $50,000 in some parts of the US, should I do that and semi-retire, taking whatever job I’d need to pay that piddly mortgage?
This is an excellent if broad topic on which to expand. I know yesterday I replied in the negative to your tweet about expanding GRS content, but this is one area that would be really helpful.
I guess the best thing about getting where I am, after two years of intense effort, is that I could be laid off tomorrow and I wouldn’t care. I really dislike my job but it pays well and furthers my goals so I am going to stick with it until it ends; in fact I am counting on being laid off this year, with a nice severance then unemployment benefits, which I won’t get if I quit.
I’m not “there” yet, but because everything has sort of become a habit, I am interested in what happens next. I sort of feel like J.D. is a couple of years ahead of me in the get out of debt journey, and so I too would be interested in reading about what happens once all of your finances become stable. (Now that I’ve learned things the hard way, I’m trying to learn the easy way – from other people’s experiences).
J.D.,
I look forward to your easily accessible “archive” project.
The first step towards taking control of ones financial life is the hardest. And it is easy to get overwhelmed with everything you don’t know.
Creating a database of accurate and comprehensive personal finance information will not only give J.D. the freedom to write about other dimensions of people’s financial lives, but it will provide a much needed resource.
What an interesting discussion! I get just as much out of the discussion as I do the blog. Count me as another one who is debt-free (except for the mortgage), maxes out retirement accountas, has a large emergency fund and wonders what next? My father had a sizable chunk of money in his later years. But I couldn’t get him to buy new clothing or get a bigger room at his assisted-living facility to accommodate his furniture. When he developed a plumbing problem at his home, his solution was to boil hot water on the stove rather than to get the kitchen faucet fixed so that he could get hot water–all because he just couldn’t part with his money. I think he got pleasure watching his bank balances increase each month–at least I hope so. I certainly don’t want to live like that, but I do want to make sure we have enough money to meet our needs in the future. How will I know how much is enough? Will my husband’s company quit contributing to his 401(k)? How much will we need for health care? The uncertainty of the future is what makes me nervous.
I’ve always been interested in participating in a medical research trial, but I’m worried about how safe it is. Besides Craigslist, how do you find out about those opportunities? Did you contact the university directly?
Wow, it’s amazing to find my current financial status is right here and I share it with many others. I will say I understand JD’s dilemma of keeping the site interesting to an audience across many stages of personal finance. This is also a business for him and he has to keep drawing readers. I like the idea of finding someway to keep the starting off/get out of debt info easily available and yet tackle that “stage 3” as Tyler mentioned. The idea that comes to mind for me is posting about Stage 1 on Monday, Stage 3 on Friday, etc.
My husband and I will pay off the last of our debt this year, have an emergency fund, and are comfortable we are saving enough for retirement. I’m wondering about how to make the transition into investing. I’ve got a Money Market Account and now our Emergency Fund is in laddered CDs. I think the next step is to look at investment vehicles for this money that was previously allocated to debt repayment, but what those are I am not sure. There’s a topic idea for you JD 🙂
Lauren @55 – check out the university’s web site and ‘help wanted’ postings. Back before the Web these opportunities were often listed in the staff-oriented free newspaper that was distributed on campus. You can also call up the medical school, psychology department, etc. and just ask them.
re John’s post – it’s pretty bad netitquette, I think, to pop in and say “I’m going to say this and then I’m not coming back/reading here anymore.” It’s getting the last word in and then shrieking NO TAGBACKS!
That said, one of the things I like very much about this blog is that the attitude here is the opposite of the mentality of many other frugal blogs and ‘gurus’; there is no undertone of frugality being a marker of one’s worth as a human being. I think John is kind of making that same mistake. When you pinch every penny, when your life revolves around savings and giving up things you care about, you are still a slave to your money, just as much as the guy who works 50-hour weeks purely to keep up with the amount he spends on gizmos that he really doesn’t have time to enjoy.
Rubin #31
what if 12 months is not enough. the trick is to be debt free, because when you’re not paying master card, and car payment and other consumer debt, you’re paying yourself and when you’re paying yourself you can build an emergency fund as big as you wish.
I don’t know if I would go as far as taking myself out of a virtual community such as GRS, if the blog is no longer conducive to my lifestyle. but I personally understand the feeling.
I was listening to Dave Ramsey and other personal finance Podcast daily as well as frequented various PF blogs and the GRS forum they kept me focused while getting out of debt, but once I completed the task of getting out of debt I’ve become less involved. I don’t even jump at my Kiplinger magazine anymore instead I’m looking to get into the Economist and Forbes
I don’t think to look at any PF blogs for what my next goals should be. (I just don’t take well to others telling how to live my life) I rather seek to find how others have accomplished what I’m looking to do for my family.
Great tips 😀 I can’t wait to see where my money takes me this year. It’s so exicitng since I finally have some freedom! 😀
Excellent post.
Can you provide some details on what kind of services do you provide on your computer consulting business and how much time do you dedicate to this.
I’ve put in practice some of the tips since last year, mmost of them are just common sense, and they’ve been working for me.
I have a suggestion for the Method #1, instead of using paid software or paid sites, you can use free software that do the same, like GNU Cash (www.gnucash.org) and save some extra bucks in the way.
Regards
Who else noticed the clipart illustrating the utter futility of three gears meshed such that none of the three can ever turn?
Are these in order of importance? Should I pay off my debt before I pay back my IRA?
I just opened a Quicken Online and ING Direct account because of this post. I tracked ALL of my cash flow for 60 days a few years ago and got out of the habit. It’s stunning what you can spend on lunch alone when you are unaware. Looking forward to Quicken Online.
Thanks JD!
Hi J.D.,
First, thanks for mentioning both Quicken desktop and Quicken Online as ways to get on top of finances in 2009. Your tips are always really helpful, so to be included among them is flattering!
@Glenn, I’ve personally started enforcing the “take my lunch” rule. It is amazing how much I was spending unnecessarily. One trick that makes it easier for me is packing up a bunch of lunches in advance on Sundays, and bringing them all in Monday. Keeps me from slipping when I run short on time!
Let me know how your Quicken Online experience goes!
– Chelsea, Quicken Online
J.D.,
I mentioned your tips in the Quicken blog post on the Money Guide we launched last month in partnership with Kiplinger. Check it out:
http://www.quickencommunity.com/quickenOnlineBlog/Announcing-the-launch-of-Money-Guide-on-Quicken-com
Any feedback you have is great, we’re going to add more articles later.
– Chelsea, Quicken Online
I have tried MyBudget-Online and it’s very usefull to controle my finances.
It’s Free and anonymous.
Here is the link: http://www.mybudget-online.com
I love this site just found it by accident but have learned so much im proud to say i do many of the tips giving but i did get in that watching every penny stage and feeling guilty for spending any money then i felt like i was missing out on life now. i was saving for a time that might not ever come and not living life now so i started slacking off and got more credit card debit not to much but enough. when i came across this site i was getting to the point to get serious again because of the economy and the fact that i have 2 children now. my biggest obstacle right now is gettin my husband involved. any suggestions we have seperate accounts i have about 4 different accts 3 online and one home base with 4 different accts in that one it helps me to keep everything seperate. right now we split bills i was just wondering what are other married couples doing. i worried this system is not the best the seperate accts i have no problem with but i have an emergency fund if im off for 6 months but what if we are both off or he is off my fund doesn cover that i just want to hear others opinions on this matter thanks
Great tips, don’t underestimate tip #8, a lot of wounderful things can happen when you start to look for more opportunities.
I hope this is the year a lot of people wake up and take control of their finances. If the economy gets better this year, I have a feeling people will become more lax as the year goes on. Here’s to a year of paying off debt and saving as much as we can! 🙂
Super list, need to work on #3, its been a while since I called around for discounts.
Also need to prepare our 2010 annual spending plan (#2 on the list).
Awesome steps! Perhaps a hidden step is – Just Do Something! I think a lot of people get overwhelmed and get stuck in some sort of analysis paralysis and don’t know where to start. Grab a step and get working, then move on the the others.
Wow – what a great list J.D. Once we had paid our debt off and automated a lot of our bill-paying, our financial life became a bit ho hum boring. But you’ve shown me that there’s plenty more we could do to MAKE things happen. Thanks for the reading list and site suggestions.
Don’t forget to check your financial health to see where you are.
http://www.broadcastthoughts.net/2010/01/time-to-check-your-financial-health.html
Goals are a lot easier to attain if you know where you are starting from.
Wow. Really great advice. One thing I would add is to find ways of sticking to the new plans. Everyone makes New Year resolutions, but by February 95% of people have abandoned them. So we need to find ways of staying motivated and continuing to work on them.
The other big point I would add is to start your own business. Personally, I focus my mental energy into making the business succeed. Because once that happens, it makes all the above financial points much easier faster. They are still critical, but they are much easier to achieve once the business consistently makes money.
It is so easy to just focus on the spending and saving part of finances, but I think finding ways to increase our income is just as important.
I have been doing these steps in some form or fashion so here’s towards a more financially fit 2010 for me.
One of my goals now is to try to earn more by selling but so far I have not been very successful with that.
Excellent post, J.D. – I bookmarked it, it will certainly be a reference guide throughout the year. I have spent the better part of this past weekend and this morning on #1, tracking spending for 2009. I even put together a pie chart to get a visual of where our dollars go. I have 22 sub-categories. This was incredibly labor itensive but quite worth it. In married households, one person is typically the Money Manager, that’s my role and I know from personal experience that it can often seem to the other spouse that some of the financial guidelines are overly restrictive. When you have hard numbers, it sets the stage for cooperation. My husband voluntairly skipped ordering dinner out last night, and took both his breakfast and lunch this morning to work. It is important to me that we leverage every dollar, this honors the hard work and sacrifice that it took to earn each one. Best wishes for a prosperous New Year to everyone!
JD, I think if you’re going to use the word ‘budget’ like that you need to define it more fully. I don’t know many people who think of the Balanced Money Formula as a budget. It is more of a sanity check than an actual budget. You might call it a budgeting TOOL that you would use to evaluate your spending.
But if you are going to call it your actual budget you need to do so once you have a lot more knowledge and control of your money, which someone going through these steps likely wouldn’t have.
I like this list! I have been tracking every penny of spending for a few years now – now that I have a system that I like, it really isn’t that hard. (DH likes the “state of the union” report that I give every month, too!)
Tracking every penny is like keeping a diet journal – after a while, you realize “gee, I’m spending a LOT on dinner out/groceries/something else that can be cut.” And then you start spending less in that category. We were able to save in a few categories because we realized we were spending a LOT.
“Automate your finances” is the step I haven’t done. I’ve even turned down offers like “$1.00 less each month if you sign up for automatic payment. I want to see each bill, and I want to be sure there aren’t mistakes etc — before the money leaves my account!
This is not only a great list for personal finance newbies but also as a reminder to the rest of us who have been working at it for awhile.
I just wanted to say that I’ve been reading Get Rich Slowly for 2 years now and it’s really helped me turn my financial life around. Thanks to J.D., the folks who have contributed articles and the commentators who share their experiences and advice. Here’s to a prosperous year for us all!
In most cases, banks charge when overdraft protection is used, so you can set up a $100 cushion by subtracting the amount off your register. That way if you accidentally dip over, you aren’t charged for using your own money. Sadly, some bank’s overdraft protection fees are becoming more excessive, but they justify it by charging even more for overdraft fees. If you dip into your own money (the $100), charge yourself and expand your own overdraft protection without every paying the bank.
If your bank doesn’t charge you, then by all means, use overdraft protection.
make sure to read anything you get in the mail from your credit card company. all they have to do is send a letter to alter your account.
#5 Start and Emergency Fund.
This should really be #3, because an emergency fund is so important. People that live paycheck-to-paycheck are playing Russian roulette with their finances. If you live paycheck-to-paycheck, a true financial emergency would leave you homeless in a matter of weeks. What would you do if faced with a $5,000.00 car repair, or a month without pay?
-Dan Malone-
Great list. For me tracking my spending started my financial turnaround. It’s funny how just making one small change can snowball into an entirely new way of life.
I’m working on the emergency fund this year. I set up an automatic transfer to put a little in there every month, and any extra money this year will go there as well. 🙂 My first goal for the account is $6000; I may get halfway this year, if things go really well.
All solid advice, whether paying down debt or staying out of it. Great article!
Such a great post! I love budgeting, so that’s never been a problem for me to sit down and create a budget. I enjoy looking at my graphs and pie charts in Quickbooks and figuring out where I can save money.
The more intimidating task I always put off is reconciling my checkbook register. I enter the majority of debits and deposits, but reconciling at the end of the month is such a pain. I wait until months have piled up. Any suggestions? I haven’t been able to figure out a way to auto-reconcile between my online banking and Quickbooks. Does anyone know how to do this?
I must say that my family has read the Dave Ramsey books and doing what he says has worked wonders for us. We were able to pay off every single bill, including our mortgage and now we are freely able to build wealth. If you haven’t read his books, I urge you to do so!
Tyler’s Two Step Version of This List:
1) Spend Less Money
2) Make More Money
All the rest is just “tips” to help with these things. For any given person, 95% of “tips” in any field will be worthless, but occasionally you’ll find one that’s useful. A bit of an aside, but this is why (I think) sites like lifehacker do more harm than good. For every 20 “tips” you read, only one might be helpful, and the utility you get from it will almost never make up for the time you spend reading useless tips.
I hardly follow J.D.’s list at all. Half these things just seem like a waste of time to me (better record the cost of the donut I ate for breakfast in my financial ledger… yeah, that’s useful), and many of the rest I follow in an unconventional way.
That’s not to say J.D.’s list isn’t useful, just that not every item on the list will be useful to every person reading it. Don’t feel like a failure if you only do one or two of these things, especially if your finances are improving or in good shape — you’re obviously doing something right. The goal is financial security, not bullet-list parity with internet tips.
Oh, and I don’t think I’ve ever balanced a checkbook in my life — trying to see why reality disagrees with my view of how reality should be has never seemed useful to me. Actually, maybe I did it once, and that’s where this viewpoint cam from: “But it looks like I should have $13 more than I do!” Oh well. I don’t.
About a year ago, I finally started to take responsibilities for my finances. It has been a great to see the improvement I have made since 2008. This is a great article because I have actually utilized many of the things on the list. I am putting 10% in my 401k and my employer will match up to a certain point. I put a set amount into a savings account with a credit union every month and while I have had some set back and had to use the money – I had it there to use instead of credit cards. Also, I am currently in a 6 month intro offer for my cable, at the end of the 6 months I will be calling to see if I can’t get the current promotion. Not to mention that I am a HUGE fan of the public library!
Re this comment on spending less than you earn: It’s common sense, yet many people never learn to do it.
It’s a complex skill that includes a bunch of little ones:
1) Planning, either mentally on or paper/computer. Many plan mentally and don’t quite remember everything…
2) Follow through. Keeping to the plan. Again, mental planning can trip you up.
3) Accounting for the unexpected/non-monthly expenses. This is a biggie. I don’t necessarily mean emergencies, either; this can be things like birthday gifts or a chance to buy a side of beef for the freezer at a cheap price. If you’ve already allocated all your money, you can’t afford this – yet often people will do it anyway.
I know for me one of the biggies was just getting used to NOT planning on spending all of my money every month. 🙂
All of these steps working in conjunction can produce a successful 2010. I’m focusing on my investment this year, but I have review my budget and sources of income to bring all of them in line with my 2010 financial goals.
Great list! I have a tip for the renters – if your rent is automatically increased every year, and if you live in an area with rent control, take a minute to see if the increase was in line with the rules. My apartment owners accidentally bumped me up by the previous year’s allowable amount – they raised my rent by 3% instead of .7%, and I didn’t notice. Fortunately they figured it out and it’s being resolved in my favor, by refunding all of the increase, and then starting me with the new amount this month, instead of trying to backdate the raised rent.
Also, I highly recommend using credit unions. I feel smug every time I read about the evil activity of the big-name banks & credit cards.
I can’t even begin to tell you how excellent it is that you mentioned getting books at the library. In addition to the financial advice books, there’s a wealth (pardon the pun) of information and entertainment to be had there for the low, low price of FREE. Books, CDs, DVDs, books ON CD, digital downloads, access to research databases, programming for adults and children…the list goes on and on. 🙂
Here’s to everybody meeting their financial goals in 2010!
@Tyler
You have a point. I am an obsessive budgeter but the couple times I have tried to record every single transaction my brain has quickly gone numb, and in fact I have found myself in more trouble with larger purchases with no breakdown. Some people have the latte factor, but for others it’s easy to throw $50 in steak in the cart every trip to the grocery store and not understand how their spending is out of control.
Therefore I think the idea of recording every transaction can be a huge hurdle because of the effort involved and potential for little return on that time investment.
With that being said I also understand the point. Tyler, you have things under control, but what if you didn’t? Where would you start to GET it under control? How would you spend less if you had no idea what you were spending on?
JD, this is where the “do what works for you” mantra breaks down. You just gave people a set of steps in the traditional “do it like this” voice (even with your caveats) but some people need that, especially when they get started because paralysis of choice, or the dreaded ‘I don’t know enough to know where to start’ kicks in. It’s the plethora of suggestions and tips that get people thinking down the right track.
Personally I think a good idea is to reword that step to “know where your money is going”. A ledger is fine. But there are a few other ideas that will help people get a handle on their spending.
I sometimes wonder how rich I’d be at 45 if I had the information I’ve learned on your website when I was 25. I’d be a millionaire, 2 times over. Alas, all this info is 20 years too late to be a millionaire (for me). But I still read it faithfully and abide by the many thoughts and ideas you have.
My sister is doing the $5 savings route this year. For every $5 she gets, she’s going to put it in a savings account and see how much she has at the end of the year.
I am doing the allocating route this year. 50% needs, 20% savings, 30% wants. However, I am at 56% needs so my wants are at 24%.
I am going to try to make more money this year. At my job it will be impossible (work for a non-profit). So I will have to think of some other way to make more money.
I am so excited for your book to come out! I can’t get enough of personal finance books. Ugh…to be 20 again!
Thank you for #4. I’m planning to renew a CD, and I went to check my credit union for their rates, and they’re just as good as anything I found on bankrate.com!
@Tyler,
We found the whole keep track of all spending very helpful when we were beginning to change our spending/debt habits and trying to find more money to put towards debt. Keeping track of spending doesn’t have to be that difficult, we only use debit and we can download our spending directly from our bank into Quicken and then Quicken gives us these great or scary charts that show us just how much we were spending, to use your example, on donuts.
Tracking spending is a great way to get day to day spending under control and to figure out how, where, and why one spends money. We still use Quicken to track our spending but once we got our debt paid off and our habits changed, our spending was controlled by other forces.
We found the tracking what we spent more than invaluable when our apartment flooded in October. We were able to show our normal living expenses going six months back which made it much easier for our personal property insurance company to pay our out of pocket living expenses that went over our normal amounts.
Great post,, alot good tips.
I use Mint and I am very happy with it. Makes budgeting alot easier and semi automatic.
What a great way to start off 2010 with! There’s no better way than truly tackling your finances! Best of luck to everyone and budgeting money this year and for years to come.
Picking one item and getting it handled, like tracking your spending with a cash notebook, that is a great idea.
John DeFlumeri Jr
I would add item #11: Get a better paying job or start your own business.
Fudging with costs will help a little here and there, but improving your salary or top-line will have a much more dramatic impact on your savings and quality of life.
@Tyler Karaszewski
Well, one doesn’t necessarily have to balance the bank statement but it is important to check deposits and checks, not necessarily every month.
This is how we found someone who had stolen our checking account number from a break-in (not us, a vendor of ours) and proceeded to print their own checks using software and passing very small checks, like $80 here and $60 there. Those are very small numbers which would have been ignored by me if I didn’t do a quick check against my own ledger.
Turns out they were running a large check printing scam and got away with hundreds of thousands because they used such small amounts…
This is a great list! I am at the point where I actually enjoy tracking ever penny and budgeting. I think of it as a hobby, a numbers game. If I didn’t enjoy it, it would be very hard (as it was in the past) for me to stick with it.
I just installed GNUCash to track every penny, and I think it will work for me. Previously I had been tracking everything in a confusing spreadsheet. Nothing really added up, and it was hard to see how much I actually had.
Before I installed GNUCash, I read the concepts/getting started guide on their website. It explains the basics of accounting and how to use the program.
I set up the program with the most common accounts, and added some accounts relevant to me. Most notably, I added a Accounts Receivable account for money people owe me, because that always got lost in some corner of my spreadsheet.
The program is a bit buggy on my Mac, but it is open source and actively being developed, so there is a good chance any bugs will be fixed in the next update. GNUCash is free and runs on Windows, Mac, and Linux. It might not be the best money management software out there, but it is completely free, and it’s definitely better than nothing.
http://www.gnucash.org/
Another great way to start is to read something like “Daily Money Tips”. Easy bite-sized bits of information to help you get started.
http://daily-money-tips.tumblr.com/
There is a post every day and many more are already in the queue to be published.
I like your simple and prescriptive advice. The little things add up over time and getting smart is the way to go.
My Aunt always taught me, save your pennies and the dollars will take care of themselves.
“Track every penny” sounds over-reaching on its face, but its true.
To get your financial life in order, you need to do this, at least until you realize where all of your money is going.
Great post
Great reminder to get back on track!
I just set my 2010 financial goals for the year, which is another step of accountability for me.
I held my own “personal money day” last year and it was a very useful day, so it’s now a yearly tradition. One task I would add to JD’s list is really important: get your credit reports! For whatever reason I tend to put this off, but when I sit down to request them it doesn’t take long, and every year I’ve discovered (and corrected) mistakes.
I managed to “track every penny” for one month, but it was seriously annoying and provided very little benefit. Instead I use my debit card for most purchases, and keep very little cash; cash runs like water through my hands.
I also am terrible at budgeting; I just don’t have the patience. I think I finally have a system down for that though. At the beginning of the month, when my paycheck is (direct) deposited, I subtract out savings, retirement, and all my bills, including a small amount for once a year things like insurance. Whatever’s left is all I have to spend. It seems to be working ok for the moment.
I do keep my checkbook balanced, at least a couple of times a month. I check my accounts online several times a week. I have caught fraud this way before, as well as math errors (mine), so I will continue to do that.
@E:
That’s called a Zero Based Budget! It’s pretty well known and it’s a great way to figure out what you’re spending your money on (apart from the ‘spends’ part, which you might not care much about anyway).
In fact, I do exactly the same thing 🙂
This year, thanks to GRS (and Google Reader, for that matter) I’m going to switch from Quicken to YNAB 3. I LOVE the idea of allocating money to next month’s income instead of the big “slush fund” that is my current financial state.
I have to go out of town for work this week, which is disrupting my financial plans, but the first financial move(s) of the year for me will be this:
Took $120 out of an online savings account I practically forgot about.
Sold 2 things gathering dust in the closet on eBay for ~$250.
Received overdue reimbursement check from work for ~$95.
Taking that $465 on my trip, out of which almost all will be reimbursed.
When I get back I’m putting anything left over back into the online savings and allocating to “Next Month’s Income” in YNAB. When I get the reimbursement check for the remainder it’s also going into savings and “Next Month’s Income”. Just like that I’ll have about $500 towards my 1 month’s “buffer”!
Very exciting when you consider that only a month ago I sold over $1500 worth of “stuff” on eBay and all it bought us was Christmas presents, food, and the rest just disappeared…
Thanks GRS! Have a great 2010, all!
Great post GRS!
One more thing that get people back where they started is lack of emmergency fund. No matter what life will still happen! Tires will blow, transmissions will quit, pipes will block or roofs will leak. Emmergency fund is your life jacket.
Joe
Wow, I feel so guilty upon reading this article. I think I should consider tip#6 and #9, get out of debt & earn extra money respectively. I’m now on my journey to my financial freedom. Whoa!
Great post! I would say though that these 10 steps are useful beyond 2010. I mention most of them in my website: http://www.growingrich.net.
I also mention how to invest intelligently in the stock market.
Congratulations for the post!
I know I’m way behind commenting on this down as I clear out my finance reading que, but this post was incredibly encouraging! I could optimize my accounts a bit more or tweak my budget, but I’m doing everything on this list! I’m psyched!!
i have just recently started my ’emergency fund’. cant wait to have the credit card paid off and torn up!
This is a great post! I’ve been living check to check for so long and spending irresponsibly. This change is definitely one that has to start mentally.
My wife and I are getting out of debt in 2011! We’re sick of debt and have made an aggressive plan to be debt free by the end of March! Click my name to follow our progress on my website! 🙂
We’ve been systematically eliminating debt and reducing spending for the past two years and have our sights on knocking out our mortgage in the next two years or sooner. It is a good feeling and nice to see the finish line for going debt-free in sight. But would not have gotten there without all this great advice from GRS.
I think I will take a crack at tracking my spending. We’ll see how that goes. Thanks. You’ve finally convinced me to take that plunge.
I’m adding to your list. Declutter, simplify and minimize.
It’s amazing when I go through all the crap I have, some things with tags still on. Supplies for projects uncompleted. Duplicates of small and large items. Three nail clippers, two sets of gardening gloves etc… My overspending is sitting in over 20 boxes in the shed waiting to be sent to goodwill.
I’m not in debt and some of that is stuff I should have pitched years ago, but I realize I have spent too much in the past. It is quite humbling and I’m ashamed.
I would add to put any goal setting through the SMART filter. Make sure it’s specific, measurable, attainable, relevant, and time bound.
This is a collection of probably one of the most useful tips collated in an article. What i feel, however, is most people who are careless with their money lacks basic organizing skills. In order to follow the above mentioned tips, the most important thing is to get organized and being responsible. People with these skills with find the article extremely useful. For others, it’s simply another year of debt.
As I had in my reader story a month or so back, our goal for 2011 is to get that year of salary socked away in the bank. As of right now, we’re about 4 months away from hitting it.
The major financial goal beyond that is to find out what the “pain” point is for savings for us. Currently, we save my wife’s paychecks every month 100%. But before she got this job, we were living entirely off of my salary and still saving about $900 per month. Since she became more fully employed, we stopped saving out of my paycheck altogether.
So every month, I’m increasing the automatic savings plan by $100 per paycheck (so an extra $200/mo)until we hit the “Ooof, we don’t have enough money” point, and then scale it back to the month previous and set that as our regular savings rate. Starting in January, we’ll be putting away $2k into savings every month. I figure if we are smarter about our spending, we can get that rate up to $2600 – $2800/mo.
I just started blogging last year, and one of the best things that came of it was the learning. I started created separate savings accounts for vacation and such using Smarty Pig from the advice of others. (I switched to a credit union 23 years ago when Comerica was killing me with their constant fees, at least I did that right!)
I made goals for the first time this year, and I am curious to see how it goes. I realized that I need to frequently revisit my goals, or they will drop by the wayside real fast.
Great post.
I think, for a lot of people who find themselves in debt, a fundamental philosophical change is in order. A lot of these suggestions, while incredibly helpful to those just starting out, treat the symptoms rather than the disease. Step #11 in JD’s list should be step #1 — educating yourself on what lead you astray is the key to taking charge of your time and freedom.
It’s no accident that a lot of the personal finance blogs double as blogs about minimalism and mindfulness; it’s a philosophy that drives the real change. Debt just means you’ve sold your future hours. When you realize that true wealth is the ability to dictate how you spend your own time and not just a fat bank account, that’s when you see how detrimental all debt is to your life. Yes, all debt. Even a mortgage, which many finance pundits say is “good” debt, still monopolizes your future time. When you owe money to someone else, you owe them your time.
Once you start evaluating how you got into debt, what debt means to your life and your future, and you see why getting out of all debt is integral to living a fully aware and present life, the rest of it comes naturally. You won’t need to be told to make a budget or track every penny because you will live the philosophy and not just live a check list or a how-to manual. Start right now.
There are so many financial tips and advices out there but GRS consistently possesses the most practical, down to earth tips I have ever come across. Thanks!
“Choose a rewards checking account”
While Moneyrate.com is good, I find that you really have to do someleg work to find a bank with an AWESOME rate that will accept out of state customers. I think Kasasa.com is the best place for finding great checking accounts with excellent customer service. I used it to help me find a bank with 4.11% interest on checking, and the usual concessions of free Visa debit card, bill pay, etc.
Of course – make sure you exercise due dilligence and check to see if the bank you’re switching to is troubled.
Step 10 : # Earn Extra Money… I wish this to be in top most point.
If you wish to earn little extra and make an execution plan for that, it will automatically reflect in all other points. You will be more organized, more planning & less spending. Every person should have an entrepreneurial venture in their inner mind, so they can work perfectly in full time business also.
Last night I was reviewing some old journals and realized I don’t make frantic budget lists in my journal anymore because I have an actual budgeting system thanks to GRS. It’s true what was said in a recent post about how money in the bank is the best pillow to sleep on! I also know our household net worth now. True, it’s a “large” negative number, but it’s a life change for me to even know what that number is or to believe that it can change. Happy New Year!
I do most of the above, but Budgeting is the big exception.
I don’t budget, but if I were to do so, it would be to increase my spending. I say this because I would like to use a budget to set an amount to spend for entertainment each month and then stick to it. So I flirt with the idea of budgeting just for that alone!
I would like some more side income opportunities too!
“The single biggest investment mistake you can make [is] not using your [retirement] plan and not maxing it out.”
I am always a little bit confused when someone throws this one out.
“Maxing” out a 401(k) technically means putting $16,500 (or whatever the inflation adjusted amount is now) into the account each year. Now…I put away a healthy amount (roughly 2/3 of that) but am I really making a mistake by not saving another $6K per year? That would entail sacrificing some of my liquidity in the short term (i.e. savings) for some more long term investments.
So do they really mean maxing out 401(k) or at least maxing out up to what your employer matches? I can never tell the true intent of that comment…
Excellent tips, there’s little I can add to this. (I’m going to link to it in today’s blog post.) Perhaps a little something about making the IRS a priority would be good to add? (I can’t help thinking about it, I work with people who owe every day).
It’s a new year to start fresh with the IRS. Resolve debts, claim all the best deductions to reduce taxable income when you file this year. Paying tax debt is paramount to other debts. Normal creditors won’t seize funds from your paycheck/bank account like the IRS can and will.
JD – I’m curious to know about the problems you had with Mint.
My husband and I sat down over the weekend and as usual made a list of goals for the coming year: a list of things to buy (starting with a new mattress) and a list of things to fix around the house (starting with the sidewalk). He understands goals but hates to talk about money. At the very end, I slipped in that we were also paying off the car and two education loans this year. He survived the sneak attack!
Thanks for the reminder. I am one of the back sliders when it comes to tracking my expenses. Like you, I felt I had my expenses will under my income, so why bother.
I will jump right back on the horse this year!
Thanks again!
Mint just did not work for me rither. Quicken Deluxe is on sale for 1/2 price and includes willmaker.
jd
All good thoughts, but a lot of thoughts for someone just getting going. Even if you just focus on #1, write down your goals and stick with them, you’ll be better off.
I’m SOOO disappointed that you would share viewing porn as a way to earn extra money. With all the problems porn addiction causes to families and our society in general (every sex offender starts with porn), any money earned that way is ultimately a loss.
I personally feel overwhelmed by online programs to track finances. They may be simple to learn, but I like to stick with what I already know, so I just created a standard spreadsheet in Excel to track my finances, and use that each month.
I was going to pay down some debt, but now I am having second thoughts with that money with all the predictions about the booming economy this year… All my interest rates are dirt cheap, so my compromise will be no debt accumulation this year and invest the rest!
Oh wow, huge huge post. Too many things to comment on so I’ll just focus on what I like most.
– spend less than you earn. This is the most important early step toward building wealth. You should already be doing this, but if not do what ever it takes to achieve this goal.
– fund your retirement. The earlier you start the better off you’ll be. This is extremely important.
Great post today. I think it’s key to work in manageable chunks. One of my goals for my week-long winter break was to get a handle on our money situation. I say this every year but a big reason to actually do it this time was facing the fact that we’ll have to start payments on my husband’s grad school loans this month. I was very interested to see how the amount we paid monthly would impact the loan over time. Besides our mortgage we have no other debt and I’m not comfortable having this one hanging over us. (In typical fashion I put this off until Sunday night…)
I started by dusting off an old Excel budget spreadsheet that I had started in 2010 but hadn’t kept up with. It’s simple, basically tracks income and expenses in general categories. I used my account activity statement from my bank to track the past three months to get a feeling of where we stood and just how much ‘extra’ we had that we could put towards the loan. Happily, I discovered that we should be able to pay more than our minimum and with a little push at the beginning (taking a bit out of savings to reduce the principal up front) will be able to pay the loan off in about 4 years instead of 10, and save thousands of dollars overall. It only took a couple of hours to do this and I instantly felt in control of the situation, instead of controlled by it. So we’ll strive to pay as much as we can each month, and knowing the benefit of that will help in those moments when you catch yourself saying ‘do I really need to spend this money right now?’
This kind of goes along with comment #12 about budgeting to actually increase spending. Our situation is similar — taking the excess we fortunately have and putting it to good use. In our case we’ll make a good effort to ‘spend’ now to actually save money down the road, if that makes sense.
I’ve also decided to make the rather nebulous goal of ‘managing our money’ a little more concrete and manageable by modifying it to be ‘update our budget spreadsheet’ just one a month. I’m not a nickel and dimer at all but this exercise showed me it’s not that hard to just take a little time now and then to make sure things are still on track. And I admit I got kind of nerdy about seeing the numbers work out. Once you have data it’s kind of fun to analyze it…
Even though I like most of these items (especially “have goals”), I still don’t track my spending nor set an explicit budget. Maybe because none of my goals are focused around much I *don’t* have, which is what these (especially tracking spending) focus on. Tracking spending seems a bit like building a house, and keeping very detailed records not of what you still need, but of all the materials you’ve previously used. Will this help you build another house more efficiently in the future? Maybe, but I still think it serves me, personally, better to focus on things like “we need shingles for the roof” rather than “we used 385 2x4s in the walls”.
And on a less critical note – I agree with J.D., goals are key. Without goals, none of the other stuff is going to matter because eventually you just find yourself thinking, “But why bother?” and losing your motivation.
And “automate your finances” is a real headache-saver. It frees up so much of your attention if you don’t have to worry about actually paying your bills (as opposed to earning money to pay them with). Just knowing they pay themselves and no one will come calling that they’re late because you forgot, or because you were on vacation while they were due, etc.
I was also shocked that you shared watching porn as a means to add extra income. I won’t be following Get Rich Slowly anymore. For those who wants to be debt free I suggest reading Dave Ramsey book or Howard Dayton’s book Free and Clear.
@21 Esther and @27 … Read Donna’s article before passing judgment. She was watching porn for science. Not a job available on a regular basis and not a job for marketers. The article is about being a research subject, not about porn specifically. I believe she also got an MRI. I’ve done stuff like put my hand in ice cold water and spit into a test tube for science (and money).
Reward Credit Cards
I’ve been on the lookout for a good rewards credit card couple of years now. The offers I get sent in the mail always have the annual fee. I tried signing up for one that I found online, but they told me that I already had “sufficient credit.”
Because I have been good about paying my credit cards off each month, the credit card companies have raised my credit limits beyond what I need. Will it hurt my credit score to ask them to lower my limit or to get rid of some of my cards so that my credit limit is low enough that I can get a good rewards card?
I really want to track my spending this year. It all seems to trickle away through the little things, so I want to know where it all goes to see where I can make savings and where it’s OK to stay at my current spending level. I’m hoping to spend much less on clothes this year, but more on accessories, so I need to make sure it balances out.
Did I miss a post on why you stopped using Mint? Are you going to do a follow up?
I’ll do a follow-up on Mint when I’m certain what I’ll replace it with. I’m trying Yodlee now (and, in fact, need to finish setting it up when I’m done with lunch). The biggest problem I had with Mint was that I couldn’t track my investment accounts. It simply refused to connect with Fidelity. Yodlee connected immediately.
I still may wan to go back to Quicken, though. Time will tell.
One thing I’ve noticed is that a number of the checking accounts I opened in 2010 for the $X bonus of opening the account are now sending me “we’re going to start charging you fees unless…” letters. And the hoops for me to jump through that they list in the unless part are beyond anything I want to bother with. So I’m closing those accounts. It’s time to get things under control anyway and consolidate, so what better motivation than to avoid new bank fees. It goes along with my simplify and declutter goals for 2011 🙂
Thanks for the great post. On the topic of budgeting – one of my favorite quotes is “A budget tells us what we can’t afford, but it doesn’t keep us from buying it” – How true!
One of my new financial goals is to be out of debt by the time I’m 30 (I turn 25 this March). My partner and I have about 44 000 in student debt between us (consumer debt has never been an issue). A few days ago, I copied a tip from one of the reader’s stories a while ago. I made a paper chain where each link represents $500. As we pay off our debt, we’ll cut the links. Right now, I’m a grad student and my partner is waiting for his provincial license to start work. Once he gets it, we’re going to seriously start tackling our debt. Our ultimate dream right now is to get out of debt and save up for a small farm.
I think a lot of these tips are really useful, and are good ways to figure out where one is on the financial journey. Looking forward to reading more tips throughout 2011!
I kept expecting JD to mention YNAB (You Need A Budget) in #2 or certainly #3.
I’ve used personal & business financial software for 20 years and it is THE best thing I’ve ever come across for getting a handle on your money.
If you want to track every penny, and develop a budget, take a look at YNAB. You can try it free for 7 days, then there’s a 30 day money back guarantee. http://www.youneedabudget.com/download/
Don’t forget that lots of folks don’t have the 401k option. Teachers, like myself, do have the Roth IRA option but also the 403b. My school district doesn’t offer a match, although I have heard that such districts do exist (but perhaps they are just mythical).
A note on the “automate your finances” tip. I’ve historically been hesitate to do this because of a concern that someone may well withdraw they aren’t supposed to. Unfortunately, this sort of eventually came true.
We moved, and switched car insurance offices to one in a new state. Word never got back to the old office (despite it being the same company) and they went ahead and auto-renewed, without letting me know ahead of time, and using an older checking account I only keep a couple hundre dollers in. $40 in overdraft fees later, I’m still sorting out the whole mess. And it wasn’t even my intention to set that bill up to automatically withdraw.
I reserve auto-pay to small bills, like utilities, that have no risk of ever causing too much harm (or time-wasting). Just something to keep in mind.
Great list!
My wife and I are writing our plan for 2011 and the years to come. Hopefully we’ll concentrate on building up our Roth IRA, which we seem to neglect.
Great post, thanks! One question regarding budgets. When it says to save x percent, does this include 401k/IRA type saving, or is it more saying cash on hand? What are you guy’s opinion?
I am 27, I invest the maximum that my company matches (6%)into 401k and I save 15% of my net paycheck into a separate savings account.
Thanks again!
Josh
JD this was just what I needed, and therefore, bookmarked. I feel like with some of these things, I’m definitely on the right track, but for the others, I opened up your links which I’m about to read in a minute. Thanks so much!
To cancel out the one person who said they would no longer read GRS because of J.D.’s suggestion link to the “watching porn” post, I’ll have to tell one more friend about GRS now.
Wanted to say thank you so much for writing this blog. You’re helping so many of us take control of our money, of our finances in general, instead of letting it control us.
JD,
I’ve been reading your blog for awhile, but this is my first comment.
I love all the posts, but I love the comments even more. I had read personal finance books before, but it wasn’t until I read all the comments on some of your posts that I realized that there are many ways to set up your budget.
So I’ve done that for 2011. Our goal is to pay off our cars and have a 2 mth emergency fund by the end of the year. We just paid off the credit card in Dec.
And I’m am living proof that it isn’t about the math: I teach math at the college level!! I can do the math, I just couldn’t figure out how to make it work for me. The comments helped me do that.
I’m curious to hear a few more of your thoughts on Mint and why it didn’t work for you. Thanks so much for all you do!
I’m not so sure about #9 (Automate your finances). Automatic payments can make you lazy and less likely to review and optimize your expenses (#3 and #4). I think you should always be aware for what exactly you are paying for and how much. Bills and payments should be electronic, of course, but not automatic.
JD
This article may be an annual one, but it’s a perennial favourite and worth reading – and acting on – every time. Happy new year to you.
Hi JD,
I became debt-free about six months ago and I can’t even begin to tell you how freeing the experience has been. It has made such an impact on my life. I no longer worry about money and having ‘enough’. I’m fortunate to have a good salary, but retail therapy was my downfall, especially after a stressful day at the office. I think there’s a mindshift that has to be made to get a handle on your finances and that many ways will get you to that goal. If one thing isn’t working, try another. No one gets out of debt in one-day, so the process is really important and you need to have faith, especially when you see the debt go down each month.
You’ve given some fantastic ways to decrease your debt and at the same time, increase your money to pay off that debt. Now that I’m debt-free, I know that I will never go back into that trap.
Thanks so much for sharing,
Karen
I read the entries for yesterday and today and was inspired to open an ING savings account with higher interest.
The other day I realized my savings account of $3000 was earning me only .10 to .13 cents a month. ING will do a bit better than that.
Thank you for the encouragement!
Last month, my husband and I paid off the last of our debts except for the money we still owe to a line of equity. We’ve also set aside money to use for the inevitable car and home repairs. Best of all, we’ve set aside money for monthly date nights.
Your article is inspiring me to set paying off the line of equity as our goal for 2011. I look forward to writing you in a year to tell you that we did it and are completely debt-free. Then we can have real fun building wealth, giving more to charity and more $$ for travel. I have your book on my bookshelf and look forward to reading and using its suggestions soon.
Thanks, J.D.!
To spend less than you earn should be the basic idea for everybody. Well every reasonable person, I hope, realise that… Anyway thanks for all useful tips they are perfectly ordered that should suits for everyone. To take control of personal finances should become a routine for us not just like a resolution for New Year. Wish you all the best!
Happy New Year, J.D.! Discovering your column in 2010 has changed my financial life and outlook in more ways than I can list, and it has had a positive ripple effect to my grown children. Thank you!!
A second job, side job, freelance gig, consulting, contract work or temp work can be a great way to get ahead. When I was starting out in my career, I often picked up side jobs like freelancing and consulting, so that I could top up my emergency fund, have a car, save for a downpayment on a home and so on. I think, though, that these sorts of projects can also be great for building self esteem, a sense of independence, a portfolio and a better work history. For example, if you’re stuck doing lower end stuff at work or stuck in a job where you’re not getting a chance to do the stuff you like, you can use side jobs and side businesses to build up your work history in other areas. In my case, I was able to build up a really great portfolio and move into a management position when I was still very young.
This is a really good post. You’re touching on many major areas of personal finance here, and what I really like is your focus on learning and continuing financial education.
One thing that might be good is to schedule some of the tasks. Set goals, make them actionable, and put a timeframe around them. Example: Find highest yield checking account by 2/25.
Making a personal finance calendar out of these steps can go a long way to successfully following through. Anyway, good post!
I’m glad you posted this! It’s a good way to start off 2011, and for me it was actually a morale booster. I’ve accomplished most of the things on the list already, less than a week into the new year!
You should post a follow up a few months into the year, to remind people to keep up the good work 🙂 I know my determination to stop the slow leaks in our finances (coffee, buying lunch, etc) will wane, and it’s always good to have encouragement! I do get frustrated sometimes when we seem to have trouble making ends meet month to month, but then I realize that it is because we are saving and investing so much that we have less to spend on frivolous things. Once I remember this, my anxiety turns to enthusiasm to save as much as possible!
Because I’m proud that I’ve got most of these done already, I’m going to run through them below.
1. Set goals
– already done! (top goal is to pay off smallest student loan this year, second goal is to bring the emergency fund up to $10k)
2. Track spending
– already done! (using Mint)
3. Develop a budget
– already done! (updated it a few days ago)
4. Review accounts
– already done! (my car insurance company wanted to raise my rate 150% after an expensive accident, I found another company yesterday that would insure me, even with accidents, for the same amount I’m paying now, with better coverage!)
5. Optimize accounts
– already done! (a few targeted ING accounts for savings and a rewards credit card that we use to pay for flights)
6. Emergency fund
– already done! (sitting around $6,000 right now, but we want to get it up to $10k by the end of the year)
7. Get out of debt
– long work in progress (~$100k in student loans, have a plan in place to pay it off in the next 10 years)
8. Fund retirement
– already done! (contributing ~15% plus a 3% company match to a Roth IRA and Roth 401k, my husband contributes about 10% to his plans)
9. Automate finances
– already done! (minimum payments are all automated so I don’t miss any, then I pay any extra I can in a separate payment)
10. Earn extra money
– already done! (got a part time job tutoring for SAT/ACT prep, I make ~$70 to proctor a practice SAT on a Saturday morning during which I can do homework or read a book, and all extra income goes toward student loan repayment)
11. Educate yourself
– already done! (get books from the library and read finance blogs – especially this one! – every week)
@21 Esther: Statements like “all sex offenders start with porn” cannot possibly be substantiated.
Yes, some adult-related films and books subjugate and depersonalize women (and men!). But not all of it does. In fact, the short film I watched was written and directed by women, for women.
Great list J.D.! We think that 2011 will definitely be a year where consumers “open their eyes” to the way their finances have been treating them. It’s time to be MAKING SOME MONEY when you trust it to a bank or credit union. Rewards are out there, and people will be doing their due diligence to find them in 2011.
Big thanks to Joelle in the comments for plugging Kasasa.com — high interest with a focus on local resources is a win-win for a stronger and healthier financial future for all. ☺
utterly exhaustive and amazing list of resources!
Starting late last year, my wife and I made that resolution. No more stupid shit until our debt was paid off. Well, we paid off our wedding in 4 months, and as of today, we are credit card debt free, moving from CA to NY and are SAVING money on the whole thing.
Financial Freedom is a great feeling. Now just to pay off the 2 cars and 2 houses!
Thank you for the awesome year! I can’t wait to see what is installed for this year!
The only resolution I’ve made for 2012 is to return to recording every penny I spend. I’ve gotten lazy in recent years because we were easily living below our means. Now with a kid in college, and wanting to pay his expenses out of current income and leave savings untouched, we’re a lot closer to the line. I know if I keep track, I’ll find some unnecessary leaks I can fill.
Happy New Year JD. I wish you all the best. This site was the first one I found back in 2007 when I was financially ruined and it has helped me to turn my financial life around. Today, I implement most of the steps you outline in this excellent article and life here has most certainly improved. I’ll be forwarding this article on to some people who I know can use it.
Great points! I review my expenses monthly and constantly look for ways to reduce them. Happy New Year.
I feel the same way. Its pretty comprehensive knowledge of personal finance on a single page.
Spending less than you earn, and turning off the bloody TV can work wonders!
For most people , saving isn’t “sexy”, but buying new shiny stuff you’ll tire of next month is.
Personally I’d rather have the rush of watching my savings grow, than a bunch of crap sitting around collecting dust.
Have a great 2012!
Great post 🙂 Feeling very inspired! 2011 was my get out of debt year. Mission accomplished, but now I have no debt, steady income and quite a bit of disposable income. I’m 24, just about to move out of home and I know I want to save, but I don’t have any direction. Your blog is helpful mostly, but when it comes to investment/super, I am in Australia. Do you have any suggestions for books or blogs for someone in Australia? As all the talk of 401k and IRA means little to me, as we have compulsory superannuation, and government co-contribution schemes and such.
Hi Dawn,
as a fellow Aussie I find the Barefoot Investor useful – http://www.barefootinvestor.com/.
This is a great article! TFS! I found your site back in ’09 when I lost my job. You turned me on to Dave Ramsey which my DH & I have followed pretty closely & now are 90% debt free!!! I appreciate your advice and wisdom, and I’m ready to start earning some extra moola with my hobby! Have a great 2012!
Excellent article. One quibble: the stock market didn’t exactly soar last year. Dow was up 5%, NASDAQ down 2%, S&P 500 even. Still a good idea to rebalance annually.
Oops. Thanks, Doug. That’s the hazard of having an article I post annually…sometimes the edits I make for one year don’t apply to the next…but I don’t catch the change. 🙁
Great points! We are on the same page. I used this strategy to pay down over $100k in debt over the past two years.
You are so right–goals are so important. My system is to post one big annual goal on the white board in my kitchen. I see it every day. As in 2010 and 1011, my 2012 goal is a specific dollar amount of debt I want to reduce. It’s funny how goals are because often if you commit them to paper (or dry erase or whatever) and just remind yourself of them regularly, you wind up achieving them. As it turns out, I exceeded my 2011 debt reduction goal by $3, 575.
I definitely agree with tracking every dollar you spend. it’s amazing to see where exactly all of your money goes. Fascinating really.
I thought this looked familiar when I started reading it.
It just proves that when it comes to handling money well – sticking to the basics is what works.
I’ve fallen off the Mint.com wagon this past year and plan on getting back on it starting today…now. It has made a huge difference. Finding ways to earn more money is another goal of mine. I started months ago, but I just have to keep at it.
Great post, read it yesterday, was equally mystified about the “soaring” stock market, but now I see that’s been fixed… Regardless, I’ve bookmarked this post as my game plan for the year. Very well put together. Thanks JD, and a happy new year to you & all of the GRS community.
This was a pretty long post but very interesting. Mint.com is a really cool app that i’ve been using for a while to monitor my expenses. Also, I’ve turned into couponing alot lately. I’ve found that I’m able to save $20 dollars a week just by couponing.
You know what’s better than StickK? Beeminder. It’s got pretty graphs and it gives you a little more leeway for when life interferes with your goals, without letting you sabotage yourself long-term.
from beeminder.com:
“Beeminder is like StickK.com for data nerds. It’s a goal-tracking tool with teeth. Report your progress every day and make sure to keep all your data points on a Yellow Brick Road to your goal. If you fail to do so your graph will be frozen and you can pledge (by which we mean pledge actual money) to stay on track on your next attempt. “
Great read and information! I’m relatively new to this blog but I find it so helpful and gives me great ideas on how to get my finances together.
One quick note on tracking every penny you spend. I definitely do not do this, and I noticed that you mentioned you recently started doing this (again). My method is to just withdrawl cash each month that covers my necessary expenses. This helps me not spend so much on credit and helps me budget at the same time! Thanks for letting me share this, I look forward to a great year in 2012
Happy New Years to you all. I just finished reconciling my December bank statement and 2011 cash flow statement. I am proud to announce that I have saved up 20% of my take home pay last year. I am currently in grad school and will be getting married in November.
2012 will be the year to save more money for my wedding and to pay back my student loans. Unlike some of my other friends who are also 20+ years old, I refuse to take out loans or use credit cards for my wedding fund. I am ready to track every penny that comes in and out of my life this year. Bring it on!
I would add one more thing to the list.
Share your knowledge and wisdom with others by writing a book.
A book can provide you with a stream of income, and establish you as an expert in your field.
A book can also provied a strong sense of satisfaction from knowing that the information that you share, in your book and through promotional activities, is useful to others.
Excellent detailed post..
I think also you need good people around you when you are going through this..
“dont focus on what youre going through, focus on what youre going to”
Also agree with you about saving before eliminating debt..
I believe its better to do both.., it keeps you motivated..
I agree with every step as well as your order. I would also add under your automating section- establishing a systematic (and automated) investment account option to direct money from your paycheck to the investment of your choice (not just to your bank account). This was a huge factor in my success.
Great article, but do a lot of people not know these tips already?
They seem very basic to me so that’s why i ask?
How bout the other readers here…do you already know these tips, or are they new to you?
There are always new readers who come across the Get Rich Slowly blog, and many of them have (sadly) never heard of the basics. Personal finance is still mostly taught at home rather than in schools, and many families don’t have a clue.
To answer: I already know these tips after almost a year here (I think it’s been that long), but it’s nice to find them all organized in one place like an ultra-convenient cheat sheet & reminder.
Hearing something once is a poor way for me to learn something.
I need it pounded into my head over, and over, and over… I don’t think I’m alone, either.
I used many of these tips when I first graduated from college and had to pay off college debt. What are your thoughts on the up and coming social media games that help people save (i.e. SaveUp.com)?
Today is Money Day, Part I at my house:closing up 2011, 2012 yearly budgeting, getting the filing system set up again, changing/setting any automated accounts, writing down goals & tasks. Money Day Part II will be later this month (time on the phone): bank accounts, investments, insurance, retirement accounts, tax information ready.
Excellent post, you really help me out here.
@ELENA
thanks for posting your comment about having a money day at the beginning of the year. I will pick up this idea and have one next weekend (14/15th). Managing this stuff is sometimes very boring and when you do a bit here and a bit there many things get delayed and/or forgotten.
With assigning these tasks to a special day (work it like a project) it seems easier to do and foucs on all money related issues.
2012 is the year I become debt free! According to my calculations it looks like in June 2012 after 15 months I’ll have paid off all $25k of my debt.
June can’t come any sooner!
Here’s a true story about reducing your regular bills: We recently received a flyer in the mail advertising a trash and recyclables pick-up for half of what we had been paying. So we called our company and told them we were going with a new trash provider… and why. They offered to give us the same price per month to stay with them, and we accepted. It’s worth it to bargain!
I started to list my financial goals last night. I was writing my goals on a notebook and plan to write my expenses for the whole year. Good thing I found article since you mentioned different tools that are useful.
Great post and advice here. 2012 should be an exciting year. I’ll be debt free come June thanks to my personal financial plan of 2012. I will be with no payments and will know exactly where to put my money for investments. 401 K plan is good but it’s always good to diversify outside of that as well.
I’ve got a piece of advice to go along with medical studies: Food Studies! If you live near a college or university, check out their website for these awesome studies
In food studies you are provided with food (no grocery bills!) and paid for your time at the end. To get into and stay in these studies, you need to stay on diet for the duration and keep a log of any food you eat outside of the program. The better you do for one study, the more studies will be opened up to you.
Hi,
This is quite probably the best post on this website. The advice is simple, yet from what I can tell, top notch.
Now I just need to start following it myself. Which is easier said than done. 🙂
Kind regards,
Victor
I was wondering if I should pay off all my debt before opening a supplemental retirement account…I currently work for State government, and they match my state pension plan, but not a 401K.
(I still have about $40,000 in student loan debt to go…yargh.)
Wow What great information. Thank you for the time you spent on this post.
This is one of the most complete articles I’ve ever read on financial freedom.
I’m on my way off debts, the day I’ll be debts free comes closer 🙂
Besides your 12 steps I am also getting rid of many unnecesary things and I am also selling some things that I do not use anymore and that way I can get some money back from old expenses that I can save or invest.
You website is fantastic I’ll be coming back often to read more.
I would say the best way to control and track finances is by using Replicon time and expense software.
I just rady “How to get control of your finances in 2011.” Someone mentioned it was an annual article, so I searched for the 2012 version and found this. I am very disappointed that no time was taken to do the work to actually write a new particle and that only a few minor changes were made instead.
I think these articles are very helpful for those just getting started (or just as a reminder for people like me working on following their plan), but this was even worse than seeing the same ideas in different articles. This was pretty much a copy and paste job. Very disappointed.
I like the simple step by step process. It’s simple and it gives you tangible items to follow. This is exactly what I first did to get out of debt and on the right track.
Good work!
Great article. I recommend taking a look at The FI Metric. Just go on Amazon and do a search for it. It shows you how to track your financial independence through mathematical application. Great buy.
great insight, of maintaining and balancing
also i liked the part on concious spending, many people spend unconciously by not figuring out what is their neccessity and what is their want
Financial Freedom starts with having fair currency and financial system. Without that it’s fraud.
This article seems like a timely intervention. am currently sinking in debt and i find this to be just what i needed. so my first goal is already defined for me. getting out of debt first.
Thanks guys for all your comments
These strategies are all OK and valuable, but for someone in a bad place to begin with, many of them are just out of reach!
The first problem to resolve, in my opinion, is the one that created the issues in the first place. Financial success and financial freedom are the result of good financial habits. Sure, bad luck happens, but if you have had a lifetime of good financial habits, whatever age you are, you will be prepared for some bad luck and the occasional financial hassle.
The main thing is to have financial success habits as part of your daily life, regardless of the amount of money. These are the little things, like knowing exactly how much money you have, where you spend it and what you have coming up that needs money. Many of these have been mentioned above in your blog. It’s also feeling good about yourself, not needing to undertake ‘retail therapy’ to get through the day, and having at least one good, reliable source of income, and preferably more than one income stream.
These are success habits, and you can learn more about them here at http://www.lifechange90.com/financial-freedom/
These strategies have been setting people up for a VERY long time so that the other strategies, like what is suggested above, can come into play.
Unless you have the success habits in place, none of the others make any difference because the bad habits wipe out any progress you make. But it’s easy to change – take a look!
Awesome post! My favorite tip however is setting financial goals, a lot of people never really realize how important it is to set financial goals. This tip has proven to be one of the most effective steps in obtaining my financial freedom.
This is one of the best posts I’ve ever seen on money management. Five years old and still relevant today.
I think the “account optimization” note is one of the most important (and overlooked). Remember, banks and credit card companies are making a ton of money off of having you as a customer. They WANT to keep you happy! So make them give you back some of what they earn.
I also think tracking your expenses vs revenue – just like a business – is absolutely critical – and the most important thing is to have a solid system in place. It doesn’t have to be complicated, but you need to use it consistently.
I think these are very good tips, but on another hand the incorrect thing to do at certain times is to remain small and close the hatches. For example, if during the housing crisis of 2008 if you had waited until there was blood in the streets and then started to buy, when the market bounced back three years later you would have seen your investement jump 2 times+. This is what Contrarian Traders do in the stock market, trade against the crowd because the crowd is often wrong. Buy when everyone is selling. Sell when everyone is buying. Watch the end of the 80’s movie Trading Places when Akroyd and Murphy corner the market on the trading floor! That’s how its done! There is a time to save, and a time to spend…
I think tip #9 works for me….make more money. Who wouldn’t want to? Thanks for the tips.
Postings are very useful and interesting. This is a way in shaping the articles of association, either for personal or organization. Financial management is an action that requires discipline and rigor. and this requires a technique and method that should be known by all parties concerned. nice post. thanks.
So inspiring
All of them are correct. I think it all depends on how you are going to manage your ways in achieving financial freedom. In my point of view, I’d prioritize getting out of debt and focus in creating emergency funds, more and more savings.