My Top Ten

Top ten pieces of advice I would give my younger self.

1) Emergency Fund

-This is so critical to avoiding financial disaster. I can not stress this enough. With rising medical costs and high deductible insurance, your life can alter in the blink of an eye. Some people suggest 3-6 months of expenses. I say 12 minimum.

2) Max Out 401k

– Tools like paycheck city will let you know what your take home pay will be based on pre-tax 401k contribution. When I played around with this, I felt the magic number was 6%. Investing 6% in your 401k would not alter the after tax take home amount very much. Increase your 401k yearly until your maxed out.

3) Max out Roth IRA

– Deciding how which one to max out first or how to split between a 401k and a Roth is always up for debate. If you have an emergency find, maxed out 401k, and no debt to pay off, then max out the Roth.

4) Bad Debt

– Bad debt is taking out loans for items you can’t afford. Nobody making 50K a year needs a 45k car. It’s a wants versus needs thing. Don’t take out loans to go on vacation, buy clothes, or use max out credit cards. If you can’t pay it off by the statement balance date, you probably shouldn’t have bought it.

4) Good Debt

– Majority of us will take out a mortgage before we can pay cash for a home. Not a bad thing, but stick within your means and don’t buy too much house. Rent out a room to cover the interest. School loans are decent debt as long as you plan your education. I’m sorry but taking out 100k in loans to major in figure drawing has a low ROI (Return on investment).

5) Learn

– Learn about the economy, banking system, taxes, and investing. You don’t need to become an expert, but this will prevent you from being scammed by get rich quick schemes.

6) Earn

– Keep on earning. Never settle. If your current position has a ceiling, find another one that is higher. If you love your job and refuse to leave for more money, get a side hustle.

7) Track All Expenses

– I have touched in this in previous blog posts. It’s imperative that you track all expenses every day. This allows you to trim the excess and look for ways to reduce costs and save more.

8) The Intelligent Investor

– I wish I read this legendary book when I was 18. I was 15 years too late. Trust me, read this book.

9) Travel Hacks

– We have to spend money on expenses and items we can afford. Best thing to do if you are responsible, is to use a travel rewards card. Pay the statement balance monthly and watch airline miles just stack up.

10) Index Funds

– Warren Buffet devotes his entire life to studying companies. Most of us don’t have that passion, desire, or knowledge. Research good index Funds and keep investing. Studies have shown people who consistently do that can do just as well or better than people who pick their own stocks. You need to do research regardless.

Good luck!

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