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Personal Finance

1. Plan for your future major expenses

Boy did I fail hard on this! I was too caught up with living in the moment. I think a lot of us can be like this when we are in our twenties and it is something we should keep an eye out.

Boy did I fail hard on this! I was too caught up with living in the moment. I think a lot of us can be like this when we are in our twenties and it is something we should keep an eye out.

Why did this hurt me? Prices shot up like a rocket in Denver. We could have bought our dream home five or six years ago. In the long run, this didn’t kill us but it did set behind. We ended up buying a good starter home. Which we recently we sold, making $90,000 off of it and were able to buy our dream home with that money. If we planned better we wouldn’t have had to pay the premium we did on our dream house.

If I could do it all over again, I would create a roadmap for myself with those major expenses we had coming up. For yourself, those purchases could be anything you know is coming for you such as home, car, masters degree, trips overseas, and so on.

With the roadmap, you should lay out how many years out you want to make the purchase and how much you need for each purchase. These measures will allow you to make a priority list as well as how much you need to put away each month for these. We just recently did this so we can buy a new car with cash in a couple of years.

2. Budget Personal Finance

Budgeting has become so easy with amazing apps such as Mint or Personal Capital. There really is no excuse for you not to be keeping a budget.

Setting up a proper budget will require way more time than what we have but we can take a 30,000-foot overview of it today. Basically, the goal is not to spend more money compared to what you make each month. You will want to layout your net income along with your monthly expenses and savings goals. Those savings goals along with any concrete monthly expenses that you cannot skip out on such as mortgage or utilities are the highest priority. From there you need to adjust those other expenses so your total does not go above your net income.

The difficult part, at least for me, is to stick to that budget (we will talk about this next). I am a foodie that lives in a foodie city so it is very easy to lose focus and go over budget on the ‘Eating Out’ budget line.

I need to follow Andrew’s Peanut Butter & Jelly Theory when I am feeling the need to eat out.

3. Invest Personal Finance

Speaking of the long game, I have started investing again with the Robinhood App. This investing is on top of our retirement fund. This is intended to earn extra money through dividend investing.

The goal is to start earning a significant amount of income off of dividends.

My personal goal is to eventually make $1,000 or more a month just off of dividends. As you can imagine, this goal will take a while to achieve because it will take a lot of dividend stock ownership to make a large impact but eventually things should start snowballing very well.

I wish I had started this back in my twenties. Just the Apple stock that I should’ve would’ve could’ve bought in college would be worth over $200,000 today.

4. Build up that credit score Personal Finance

This is an area that I excelled at. I was able to start building up credit back in college with student loans as well as an emergency credit card. Then when my wife and I moved out to Colorado, I was able to continue to build on top of this foundation. Over the last 12 years since starting my credit building I have only missed a handful of payments and now carry no credit card debt or car debt. All of this has led me to have an exceptional score!

There are some people who argue that a credit score is pointless if you shoot to be debt-free. This is a statement I can agree with if you either plan to never own a home or you have enough cash to buy a home outright. For most of us though, our credit score will be very important for us to buy that home. My wife and I both have excellent credit scores. Because of this, we were able to lock in a 3.25% interest rate for our latest home. This will save us thousands in the long run.

5. Start paying off those student loans

I put off paying my student loans as long as I could. Big mistake. After almost seven years, I still had that original debt plus interest. I keep seeing friends on Facebook posting about how they just paid off the last bit of their student loans. Boy, do I envy them.

Get those student loans paid off as soon as possible to free up all of that interest money you are sinking into them. That interest money you save could go towards your retirement, your financial freedom.


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