A Short Personal Finance Guide

I’m one of the most financially savvy people I know. I taught myself by reading experts over ten years. I learned how to handle wealth because I needed the skillset. I paid for my first car with my own hard earned money of $1,600. I paid for my first cellphone. I worked throughout high school. I worked throughout college starting my first week on campus. I’ve been completely financially free since my 21st birthday.

Before joining the monastery, my net worth increased every year since I was 18. I’ve never had a net loss year in my investments. I paid for my RV in full cash. I’ve never been in debt. And apart from a year living with my folks, I’ve always been traveling or living in different places in the country. I started college with about $2,000 I saved up over my high school years from working. By the time I graduated college, I had $20,000 by working and being a student full time.

It’s amazing to me that most people are terrible with personal finances. Most people spend no time at all teaching themselves or improving their finances. Money does not proivide happiness. But, money does provide freedom and power. The power to choose from more options. The freedom to wait for better opportunities.

One day, I will write a more complete guide. But, here’s a simplified version to get started today. I broke it down into topics.

Spending Money

– Spend less money than you earn.

– Don’t make large, impulse purchases.

– Don’t rely on retail therapy to make you happier.

– Buy used and refurbished.

– Wait to buy things on sale (for example, I used forum alerts on Slickdeals or http://reddit.com/r/frugalmalefashion).

– It’s better to invest in quality, durable, more expensive pieces that are made to last vs cheap crap. [more].

Saving Money

– Track all of your expenses. Review them weekly and monthly.

– Don’t get into debt. If you’re in debt, get out by focusing on debt repayment.

– Cut out fees as much as possible.

– Learn how to cook from scratch. (investing in a pressure cooker is money).

– Get a cheaper cellphone plan by doing family plan or cheaper NVMO provder like Republic Wireless (cheapest plan is $10/month) or Google Fi (cheapest plan is $20/month).

Mindset

– Invest in yourself

– Don’t believe anyone that offers guaranteed returns

– Learn and understand the magic of compound interest.

– Have a long view of your finances. Think years and decades vs days and weeks.

Steps

0) Cut down your expenses (television, phone, etc). Don’t buy things you can’t afford.

1) Build up an emergency fund to cover a minimum six months’ minimum expenses in case of unexpected surprises (job loss, health bill, car repairs, etc). Keep these funds in a safe place like a savings account. (Not stocks, not retirement account).

2) Pay down your debts. Focus on the ones that have higher interest.

3) Begin investing in your retirement account ASAP.

4) Learn about different retirement account types.

5) Once you have a healthy emergency fund, zero debt, and maxed out your retirement accounts then you can have long term growth investment accounts.

6) Invest in yourself (again).
6a) Create new income streams (sell your old junk, freelance your services, start a business, etc)
6b) Become more self-reliant (learn plumbing, sewing, invest in your health, etc).

Accounts

– For checking accounts, switch to Charles Schwab. They refund all ATM fees with no monthly fee or minimum balance necessary. They also are an ethical banking company as far as banks go. I actually have two checking accounts. I also have a local bank with zero fees. I used them to deposit my checks. But, now, most banks including Charles Schwab have apps to do remote check deposit.

– For retirement accounts, switch to Vanguard. I advise using a target fund for your retirement accounts as they are automated and have the lowest fees.

– Don’t buy individual stocks. It’s pure speculation.

– But, if you do buy stocks, be fine with losing all of your money. Use Robinhood for your account. It’s no commission stock trading. Don’t use Robinhood Gold. Robinhood only works on iPhones and Android smartphones.

– Use a free service like Stronghold or Personal Capital to get an overview and analysis for your current accounts & investments. They give you 2nd informed perspective on how to do better. You can choose to use them to manage your accounts too.

– Use a free service like Yodlee or Mint to keep track of all your accounts, expenses, and net worth.

– Use the right credit card and/or sites to maximize cash back on purchases like Fatwallet or Discover Rewards.

Credit Cards

– Learn travel hacking for an easy way to fly for free forever. (resource).

– Always pay off your balance in full.

Investing

– The house you live in is not an investment.

– The car you live in is not an investment.

– Don’t invest in managed mutual funds. Be especially wary in your 401K, most times it’s full of managed funds and only one automated fund.

Read Books

– Read Tony Robbins’ Money

– Read I will teach you how to be rich

– Read Early Retirement Extreme

– Mindset books: The Millionaire Next Door, Rich Dad Poor Dad

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