|art by alice carroll|
j.d. roth posted today-putting first things first. laying out the financial basics he has learned over the years and drawing the parallel between his daily routine and his financial routine. i reorganized these in the order in which i'm tackling them...
"pay your bills as they arrive-in the olden days, i’d wait to pay my bills until the last minute. why pay them early? i figured waiting let me use my money longer. this just led me to live paycheck-to-paycheck, though. now I pay my bills when I get them (and sometimes I overpay!), which makes life easier. it relieves pressure." i do this every month. on payday, every two weeks, i sit down and pay everything i know i have due for the next two weeks. not only does this ensure that i pay everything-on time, but it also gives me a much more realistic idea of the money i have to work with for those two weeks.
"build your emergency fund as soon as possible. shit happens. people get sick, things break, and fate is fickle. an emergency fund is like self-insurance: It’s a way to ameliorate the bad stuff that happens around you. build your emergency savings as soon as possible, and when you can, build it bigger." we've talked about this here before-but i can't stress how important this is! even if you can only afford to put $20/month into a rainy day account, it is still imperative to your financial success. one flat tire and you're, as they say, royally...screwed. i'm keeping two months expenses (that's what i decided was right for me) and adding between $150 and $180/monthly to that number.
"get out of debt as soon as you can. i hope this one is obvious. debt drains your soul — and your bank account. when you eliminate debt, you eliminate burdensome interest payments, freeing that cash for other uses. i’m a fan of the debt snowball, which lets you pay off your smaller debts quickly so that you can use the increased cash flow to pay off even more debt." the meat and potatoes-get.out.of.debt. i'm doing it and you can too. even if you don't do a lock down or a fast like anna-every little bit helps. don't skip payments, don't only pay minimums, and do start taking your financial situation seriously. trust me, it sucks but it's awesome. :)
"invest as much as possible as early as possible. the single greatest factor in determining how much you’ll have saved for retirement is how much you save. and the earlier you start saving, the more the extraordinary power of compound interest can work for you." this is my plan after the debt is all gone. save at a max for another 6-9 months (with $0 debt) and then hire one of those suit wearing guys to tell me what to do next. ira's, 401k's, etc etc...won't that be fun!!!
knowledge is freedom.