Community Challenge 9: Share your own Money Management tips

#1

Last month @cstudwell wrote about JL Collins and the concept of Financial Independence, sharing three of his principles of money management. Several members chimed in with powerful advice built from their own strategies.

This month, we’re challenging our Community to share your own money management tips. Tell us your investment wisdom, budgeting guidance, or even your own savings motivators for a chance to win one of five autographed copies of JL Collins’ book The Simple Path to Wealth paired with a little bit of wealth - a $20 Amazon gift card.

To eligible for the drawing you must:

  • Reply below from an active Republic Wireless account
  • Write at least one meaningful financial tip of no less than 100 words (yes, I’ll count them) in your own words
  • Post your reply by 11:59 p.m. ET Sunday, April 28, 2019.

Only one entry per person will be eligible for the drawing. Sorry, staff and @Ambassadors are not eligible to win this challenge, though they are welcome to participate.

We’ll have the drawing and announce the winners on Monday, April 29, 2019.

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#2

Save 10%.
Give away 10%.
Live on the remaining 80%.

It’s not 100 words, but it works if you start early enough.

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#3

Money Management Method: The Filibuster
I use a method that I like to call The Filibuster. Basically, I never buy anything on impulse. Everything that I want goes on a list, and when I get home, the debate begins. For every item, I do a lengthy debate over whether it provides about meaningful value, how many units per dollar, and if I actually need it. The whole debate is done under the presumption of no value, so that I have to prove to myself that the item is actually a good choice to buy.
Then, if I do decide that the item is a good choice to buy, I wait a few days and revisit my argument, to make sure I’m not fooling myself because I irrationally want something. If, finally, I decide both times that the thing is a good choice to buy, I wait for a sale. And then maybe I buy it. Depends on how much I’ve already spent (as I limit that per month too).

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#4

Always get rewards, credit card, debit cards and points…they do add up. Stash debit card with stock back rewards.

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#5

Read JL Collins Simple Path to Wealth and the Top10 articles on the Mr. Money Mustache website and you’ll be set!

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#6

The biggest thing is to start saving early (or start if you haven’t already). The power of compound interest only works with time. Investing in options with fixed or variable rates of return will need time to grow. I like to think of saving like growing a tree. In the first years, it takes a lot of management, watering and feeding it. It won’t look very impressive in those years, but you know that if you continue to work on it, it will become something worthwhile and lasting. As it matures, you have less work to do, though you may have to prune it every now and then. After many years, your waiting pays off and you have a lovely, sturdy tree that will have lasting impacts.

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#7

My wife and I just don’t increase our standard of living whenever our income increases. Our budget for groceries and entertainment and only almost the same as a couple of years ago when we were in college (and we make a lot more money now). Whenever I get a raise I just increase the amount going into our savings. Another big thing that has helped us is doing meal planning. When we take time and plan out our meals in advance we are able to eat more affordably, waste less food, and eat better because we don’t eat out as often. It also makes our lives less stressful because we don’t have to decide on the fly what we’re having for dinner.

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#8

I’m basically cheap. I don’t buy clothes at full price. I don’t buy shoes at full price. Heck, I hardly ever buy anything at full price. I rarely impulse buy – even to the level of a candy bar or a bag of chips. As a household, we plan a menu and shop for a two week period. We visit multiple stores to save money on different parts of the grocery budget – produce from one store, bulk items from another, etc. I can still hear my mother’s words ringing in my ears: “Money only spends once, son…are you sure you want that thing?” Yes, I’ve grown up mildly to moderately traumatized over spending money…but I don’t waste a lot of money.

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#9

Pay yourself first! preferably 15% or more (increase when given a raise). Invest in low cost broad based index funds, Total US / Total Intl / S&P 500 for example. Get out of debt as soon as possible and then stay out of debt, use the savings to increase your investing and resist lifestyle inflation. The sooner you start saving & investing the better but you also need to limit your financial mistakes (like borrowing from your 401K). As you get a bigger nest egg and open a taxable / brokerage account be aware of taxes, for example: put bonds in retirement accounts and index funds in taxable accounts. Don’t stop investing and keep it simple and you will be amazed at your nest egg come retirement age!
Check out Jim’s great stock series at https://jlcollinsnh.com/

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#10

Track every penny in and out of your bank account for at least 3 months. Its impossible to optimize your financial life if you don’t first know where your money is going. You also need to get a good understanding of your debts if you have any. Get them all written down in one place with the amount owed and the interest rate. Once this is established you are setup to start making improvements. It all boils down to reducing expenses and increasing savings. Financial independence stems from being able to grow that savings exponentially by investing it well. I personally recommend low cost index funds such as VTSAX.

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#11

Make financial literacy and independence a game, if you can. I challenge myself to save what I can, make as much of my food at home as possible, and find the absolute best deals. I love a good deal and feel empowered when I spend under my paycheck or budget. I also love irritating loan and credit card companies by paying everything off really early.

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#12

I use what I call the $5 plan. Anytime I receive a $5 bill, it goes in an envelope in my wallet. The envelope is open side down to prevent me from just grabbing one without thinking. I then use this money for something I want, but do not need. I have had as much as $145 in this stash!

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#13

Decide that you have enough stuff. If you want to buy something new, you must get rid of something old. Sit back and decide do you want that new thing badly enough that you will sell, donate or dispose of something else you already have. If you do get the new thing, follow your rule and get rid of something. This rule should make sure you really want and need what you buy.

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#14

A game changer for me was to setup two checking accounts. The first is my bill account. I added all of my monthly bills and then divided it by the amount of pay periods I have per month. Since my husband and I get paid on different weeks we average 4 per month. I then divided all of my bills in the same manner. Each week we have a direct deposit of the weekly bills go in and have the bank send out weekly payments. I am paying less interest this way in the long term too. Months when there are 5 pay periods, I still send out installment payments but stop the utility and other fixed payments and let them ride. Now we have savings for emergencies, and no missed payments!

The remainder of our checks goes into separate accounts for spending money. He has his and I have mine. If either of us want to purchase a big ticket item, we have our own accounts to do so. No fights!

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#15

I only take enough cash when I go grocery shopping so that I stay within my budget. I do not use a credit card for this because then I would have the tendency to spend more.

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#16

(1) I use debit card or cash for purchases whenever I can. If I have to use credit card, I pay off immediately.

(2) I set up an automatic transfer to savings account each month.

(3) For existing debt, I use snowball effect (paying off smallest debt balance and moving up to the next)

(4) Wait for sale on things I need/want to purchase or find some promotion

(5) I donate unused / unnecessary items to local charity and do not replace the donated items (whenever there is too much stuff, I can’t find things and end up spending more!) and am on the way to uncluttered living. I try to buy only consumables (food and others) and limit durable goods.

(6) My family saves any loose change for special occasions such as a lunch date (we saved over $100 throughout the year!)

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#17

Simply put, I live below my means. Yes, I can afford to drive a nicer car, and have a larger thus more expensive house, and eat all the time but I don’t. Choosing to live below your means is a conscious effort. Time with friends and family are more important to me that things. Things will come and go but great relationships go on for a lifetime.

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#18

Podcasts, podcasts, podcasts! At times it can feel quite lonely on this journey to financial freedom. As the majority of my friends (ages 22-25) are all spending their cash at restaurants, and buying new cars, I choose to focus on VTSAX and saving for a house hack. It can start to feel like you are the odd one out. Although we all know frugality is a positive trait, at times it can feel negative.
My biggest tip is to find a financial podcast that interviews other people who are on same journey to financial freedom. My main one is ChooseFI (how I learned about Republic Wireless and JL Collins) and they interview different guests every week who detail their own story about how they became financially savvy. It starts to feel like you’re apart of a community, which will then make the ride to freedom smoother.

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#19

Frugality is the new fancy. True frugality is not a synonym for cheap; you can be both cheap and frugal, but they are not correlated. By quality goods and services that will last you a lifetime (there is a sub-reddit that can help with that). Don’t buy things that you can’t invest the time into. The less you use something, the more you pay per use. Fill your life up with value, not with stuff. The more purchases that you say no to, the more money you will have to buy the things that really matter and to buy quality products that will cost you less in the long run.

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#20

One of the best financial advice I can give is to minimize lifestyle creep. It can be easy when you get a new job, promotion, raise, or bonus to go out and spend it. Saving the majority of your pay increases in retirement accounts or other investments, helps to set you up nicely for the future. A lot of the things that you would spend money on only provide temporary happiness. Most people were able to live fairly content as a student, so try to continue that lifestyle as long as you can and only slowly improvement at a slower rate than your pay increases. You’ll be happier since you’ll have less junk, less debt, fewer bills, and have better control over your financial situation.

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