Getting Started

Ah, So you want to get your finances in order? High five! Let’s do it.

Alright, so from the first post, you know I like love money. I also shared that most people think I’m a cheap ass, but I prefer the term frugal.

I don’t avoid spending money simply to reach a goal, you see, frugality/minimalism/essentialism whatever you want to call it, is my goal. I love the stuff. I am constantly trying to find out how little I can live on while earning the most I possibly can. Even if someone gave me a million bucks right now, I would still be riding my bike to work or hitching a ride with my wife.

Note — We only have one car currently because I don’t want to give up the potential opportunity that we can take in an economic downturn.

I’ve found out that most people think I’m crazy and find lifestyle changes difficult. However, I think we can look at it a bit different to find out how possible and practical it really is.

I know what you’re probably thinking : “Lord no, not another ‘get a budget’ post.”

I encourage you to stop and think though, how could you possibly start a budget when you don’t even really know where your money goes?

I see starting a budget as a mistake for the simple fact when you sit down and chalk one out, you think of your mortgage/rent payments, utilities, car payments, insurance, cable & internet, etc. The problem is — You’re thinking of things that are at the top of mind, most of these are always the same amount month to month, and oftentimes can’t be changed, only can be cut. The good news is, if you have an internet connection, a computer, a smartphone or other luxuries, chances are these categories aren’t where your money is spent. It’s falling through the cracks in other activities and habits you have where you don’t even know where your money is going.

You’ll soon learn as you begin to cut some purchases, you can get some dollars building up in your bank account. You keep getting paychecks, maybe you sell something on Facebook Marketplace and place it straight in the bank.

The goal is to be able to count up all your cash, figure out how much you need for upcoming bills and immediately place the remainder somewhere useful. You want something that pays you interest or reduces the interest that you pay. You want these dollars active. Working for you, as employees. They will work 24 hours a day for as long as you can keep ’em. Make sure your employees are dicking off or taking smoking breaks in zero-interest accounts. Things you can do to begin putting your money to work are — paying off credit cards or anything that has high interest. Maxing out your 401k plans to take advantage of employer matching (I’ll get more into 401k’s later on). Moving from high-interest loans to all loans like your car. Paying off your home loan. Once you have loans paid off, putting the money to work within investment vehicles such as broad market index funds / ETF’s (look to Vanguard or look up ticker SPY or SSO) or even cash accounts that pay the highest level of interest you can find at a given time. Ally Bank is a good place to start.

I have multiple accounts for this reason specifically. I have an account through two credit unions that each has a checking and savings account. I have a Robinhood account, an eTrade account and a joint bank account with my wife, along with an envelope of cash. I use only one account for spending, and all of the others act as savings for various things. I do this because, for me, it’s a powerful psychological trick — All of my accounts (outside of investing and savings I can’t touch) are kept very low, which in turn makes me rethink every single purchase. They make me feel ‘broke.’

You can go read the thousands of books on investing and chances are, you’ll probably end up at a similar place, with the same advice. The main idea is to keep your employees working for you. And following these simple techniques, you can expect to earn 5–12% per year. Simply take the average of that at 7%, and that means every $100,000 you can put to work, it will kick back $7,000 to you per year forever.

Once you get up to 700,000 of these little green employees, you can earn $49,000 per year, forever. No thought or effort.

I know, it probably seems daunting and impossible, but together we’ll learn it’s not so tough and small amounts add up quickly.