Some Good Basic Finance Moves To Make

[james.hendrickson]

Guys,

This is for all the lurkers on the forums, as well as for folks who are just starting out.

Here are some good basic moves you can make that will help improve your finances:

1. Start budgeting
2. Track your net worth
3. Debt snowball or debt avalanche your debts
4. Stop spending on so many wants
5. Build your taxable brokerage account to 10k (use VOO or VTI)
6. Automate your investments in index funds
7. Open up a Roth and max it yearly
8. Budget every money to gain control
9. Plan a vacation in advance
10. Lower credit cards to 2 - 3
11. Make all payments on time
12. Envision what retirement looks like and reverse engineer
13. Build a side business or get a part time job.

Make this a year or a decade you transform.

Everyone - if you have anything to add to this, please a comment below!

[EasyMoney00]

If you are to marry, marry a like minded person who shares the same financial goals you do.

[james.hendrickson]

If you are to marry, marry a like minded person who shares the same financial goals you do.

So very true.

[bjl584]

It seems so simple.
Just like Dave Ramsey's plan.
Definitely not rocket science, but so many people struggle to do it.

[myrdale]

I like it!

Having make a budget as #1 makes so much sense. You can't control what you can't measure. Knowing how much is coming and going gives you the levers to control your finance.

I scratch my head with tracking your net worth at #2. It's good information, and a full financial review would produce this information, but on the front end I think most people starting off will find they are well in the negative range. That's probably provides a good metric for measuring your financial progress.

Absolutely on the debt snowball for those seeking to get out of debt at #3.

#4 Stop spending on wants definitely comes out of #1 budgeting. I want Taco Bell vs I want a new TV when the old one works vs I want a new car. All different levels and all may or may not be appropriate based on #1.

#5 has be a bit confused. I personally don't have a brokerage account, only my Roth IRA and 401(k). I think this belongs on the list but would be after everything else is done. The $10k amount is a big hurdle to get over. I'd say more just start one vs shot for this $xxx.

#6 automate investments in index funds has be scratching my head also. 401(k) comes out of my paycheck each month. The Roth IRA I manually do in the first few months of the year as my budget allows.

#7 Open a Roth and max it yearly I'd argue should be at both the top and bottom of the list because it really is two different things. Anyone over 18 needs a Roth even if it only has $1000 in it. Maxing it out each year is huge! I still haven't decided if I did right paying the house off before starting my Roth, but i wish I knew then what I know now.

#8 budget every money to gain control (AI?) is a repeat of #1, or maybe it is an even more detailed, granular version of #1.

#9 plan vacations in advance I can agree with. This gives you time to find the best deals on travel & hotels.

#10 Reduce number of credit cards and #11 Make payments on time are probably substeps of #3.

#12 to me envisioning retirement falls more into the category of retirement planning. Necessary and should be on the list.

#13 build the side business is sort of above and beyond. I don't know this should be a goal for everyone, but maybe seeking alternative sources of income should be.

[Fishindude77]

Don't eat out, or limit dining out should probably be on the list somewhere.
Pretty easy for one person to spend $20 per day if you eat lunch out and get a coffee, etc.

[ua_guy]

The two things I'd add:

1. Make sure you have an adequate "emergency fund" (savings). There are many rules of thumb on this, but the one I like is at least 6 months of expenses should you unexpectedly lose a job or encounter some rough times for whatever reason. You can invest this in CD's if the risk of needing it is low, and a good option can be CD's where there is no penalty for withdrawing the money (other than forfeiting the interest earned). Having a cash reserve available gives you choices and power when faced with tough decisions that might require money.

2. If you think you need a second income, first focus on your first. How can you level-up to make more money at your day job? Should you invest in education, training, or tuning up your resume and targeting a position which puts YOU in a better financial position and on a better career trajectory?

[LivingAlmostLarge]

https://www.yourtango.com/self/woman-who-never-eats-home-has-high-debt-from-food

This is an insane article. And yes she said she has debt because she never eats at home.

[james.hendrickson]

https://www.yourtango.com/self/woman...debt-from-food

This is an insane article. And yes she said she has debt because she never eats at home.

I don't understand why some people make obviously bad choices - there must be some psychological payoff there.

[Ralph]

I don't understand why some people make obviously bad choices - there must be some psychological payoff there.

I really think sometimes it is because procrastination pays off NOW, but advanced planning and smart action pays off later.

One thing I have found that helps is instead of cleaning your house or watching tv to procrastinate, do small financial things like review your saving, etc, even if it is just coming here to kill time instead of somewhere that has no financial benefit. The satisfaction of tasks done would then hopefully carry you on.

And a great book I just plugged in my financial advisor thread is The Psychology of Money.

[myrdale]

And a great book I just plugged in my financial advisor thread is The Psychology of Money.

I'll add this to my list. Thank you!

[Fishindude77]

If you don't have adequate income, most of the other advice isn't applicable. There are 7 days in a week and 24 hours in a day and you only need to sleep 8. Most of us could work a whole lot more than we do.
If your job income isn't cutting it, get a second job. An added benefit to this is you won't be spending much money if you're working all the time.

[srblanco7]

Guys,

This is for all the lurkers on the forums, as well as for folks who are just starting out.

Here are some good basic moves you can make that will help improve your finances:

1. Start budgeting
2. Track your net worth
3. Debt snowball or debt avalanche your debts
4. Stop spending on so many wants
5. Build your taxable brokerage account to 10k (use VOO or VTI)
6. Automate your investments in index funds
7. Open up a Roth and max it yearly
8. Budget every money to gain control
9. Plan a vacation in advance
10. Lower credit cards to 2 - 3
11. Make all payments on time
12. Envision what retirement looks like and reverse engineer
13. Build a side business or get a part time job.

Make this a year or a decade you transform.

Everyone - if you have anything to add to this, please a comment below!

Certainly appreciate the intent of this list. Learning how to manage money and live below/within your means is a critical life skill that far too many seem to lack.

That being said, I'm intrigued as to why the first investing step on this list is $10k to a brokerage. Certainly not what I'd recommend nor aligned with "conventional wisdom" which would tell you to invest enough in your employer sponsored retirement plan to take full advantage of any match. Hard to bypass a 50-100% return on your money.

[james.hendrickson]

Certainly appreciate the intent of this list. Learning how to manage money and live below/within your means is a critical life skill that far too many seem to lack.

That being said, I'm intrigued as to why the first investing step on this list is $10k to a brokerage. Certainly not what I'd recommend nor aligned with "conventional wisdom" which would tell you to invest enough in your employer sponsored retirement plan to take full advantage of any match. Hard to bypass a 50-100% return on your money.

Srblanco - it more a list of good ideas, I didn't mean to sequence it in any particular order. Yes, clearly, investors should maximize their tax deferred contributions first before contributing to a taxable account.

[LivingAlmostLarge]

Buy a car you can afford. Talking to people I've realized a lot of people spend a lot of money on cars.