Automate Your Finances
Paying bills isn’t an enjoyable activity for me. And since most of them are due on a monthly basis, I’m prone to forgetting when payment is required.
So, I put a system in place that doesn’t rely on my memory. Resultantly, I avoid late fees as well as disruption in services.
The system is called automation.
My credit card balances are the only bills for which I haven’t fully automated payment. But even the minimum on those credit card balances is deducted from my checking account at the same time every month. Should I fail to remember to pay my balance off in full, I’ll get hit with finance charges, but at least I don’t have to pay late fees.
But spending money isn’t the only way to automate.
The system is most powerful when applied to saving.
When I had a regular job, my paycheck was split among my savings, my retirement (401k or IRA), and my checking accounts.
But wait, there’s more. Where possible, I have my investment portfolio rebalanced automatically.
To the extent an action that’s essential to my financial well-being can happen without my continual involvement, I’m doing it.
Build a Good Credit History
Don’t interpret this as an endorsement of debt. It’s not. With the exception of taking out a mortgage to buy your primary residence (and I don’t think it’s necessary then), there are few reasons I can think of for borrowing money.
But having good credit doesn’t hurt. If you decide to borrow money to expand a business or buy a house, you’ll be able to do so at favorable interest rates. Think of the money you’ll save in interest. You’ll have more cash to either spend or invest.
If you refuse to build a good credit history, don’t bother building one at all. Bad credit can cost you a job, a security clearance, and insurance coverage.
You can complain about the injustice of using credit history to make decisions other than those related to borrowing money, but for now, that’s how it is.
Deal with it.
Learn the Difference Between a Need and a Want
I’m not sure if people are too stupid to tell the difference between a need and a want, or if they use their ignorance as a crutch to waste money and hide their lack of discipline.
You know what you need: food, water, shelter, transportation, health care, self actualization and whatnot.
The aforementioned items can be obtained with varying degrees of extravagance, but you only need them at their most basic level in order to survive.
City water is safe in most areas of the country.
On average, Americans are quite large. Primarily because food is cheap and plentiful in the United States. We really don’t need as much as we consume.
You need transportation to get too and from work in addition to carrying out other duties that are necessary for your survival. A modest, used vehicle usually gets the job done. A brand new luxury vehicle is superflous. I don’t care how many airbags it has. Or, and I know this is blasphemous to some, your household could manage with one vehicle OR you could carpool OR you could take the bus.
There. I said it. Be mad.
Ugh! The last five posts have been the most emotionally draining articles I’ve ever written. Why? Because they suck. Now I know why I’ve avoided these topics in the pass. They’re super boring. I just hope they’re helpful to someone.