Dave Ramsey’s Baby Steps (and Why I Ignore Them)

Believe it or not, I have had multiple conversations about Dave Ramsey over the past couple weeks.

Dave Ramsey appears to be the introduction to personal finance for a lot of people out in the real world. While there are hundreds of great personal finance blogs, people are much more likely to stumble across the best selling personal finance book or the radio host that wrote it. Continue reading “Dave Ramsey’s Baby Steps (and Why I Ignore Them)”

One Tax Season Tip to Save $9,000

I spend a good deal of time preparing taxes this time of year.

My own, sure, but also lots of other people’s. I prepare taxes as a side hustle.

As far as side hustles go, it’s pretty good. The money is solid for a side gig. I can work as much or as little as I want. I get to work with numbers, which is something that I miss in my current day job.

And yes, I recognize that that last line may not be a selling point for most people.

I have learned a lot through this job, but there is one lesson in particular that I want to talk about today.

Nobody is putting enough money in their 401(k)! Continue reading “One Tax Season Tip to Save $9,000”

Are Your Neighbors Making You Poor?

In October 2016, a study was published with the title “Does Keeping Up with the Joneses Cause Financial Distress? Evidence from Lottery Winners and Neighboring Bankruptcies.”

I suppose that’s a relatively exciting name for an academic paper, but a bit underwhelming given how interesting the findings are.

The media went in the complete opposite direction. The study was covered in articles like “Why lottery winners make their neighbors go broke,” “Living Near a Lottery Winner Has A Surprising Downside,” and “Why You Might Go Bankrupt If Your Next-Door Neighbor Wins the Lottery.” Continue reading “Are Your Neighbors Making You Poor?”

When Buying Happiness, Pay Up Front

Last week we learned that one of the best ways to buy happiness is to spend money on experiences rather than things. Today, I want to explore a trick to squeeze a little extra happiness out of those same purchases.

The trick is paying in advance for as much of your experience as you can.

This helps increase the happiness you get from your experience in a few ways. First, it separates the event itself from the pain of paying. Next, the anticipation and delayed gratification will make you happier. Finally, in looking forward to your experience, the uncertainty of what is to come will bring you some extra happiness, as well. Continue reading “When Buying Happiness, Pay Up Front”

How to Buy Happiness

I apologize in advance for the inherent humblebraginess of vacation pictures. I did warn you, though.

I am generally a pretty frugal person. Three of my last four posts have been about saving money. I’ve written about cognitive biases that get in the way of saving money. I’ve written about the best way to hit savings goals.

And yet, I just spent a whole bunch of money on a three-week vacation to South Africa and Spain. This came thirteen months after a trip to Peru. Which itself came eight months after a honeymoon in the Bahamas (which, to be fair, was paid for with hotel points).

The sun setting over the Atlantic from Cape Town

This may seem out of character or incongruent with my savings focus. But I don’t save money for the sake of saving money. I don’t intend to be the richest man in the cemetery. And while I would love to reach financial independence, I am not aiming to get there as soon as possible by any means necessary. Instead, I want to live my best (and happiest) life with as little waste as possible. Continue reading “How to Buy Happiness”

Actually Saving Money

Recently I’ve spent some time here discussing the most optimal ways to save money. First, focus on the big wins and then take a look at your recurring expenses.

This is a great start, but it doesn’t mean anything if you don’t actually put that money away. Instead, our natural tendency towards mental accounting may be eating into, or completely negating, our savings.

Continue reading “Actually Saving Money”

Saving Money Better – Recurring Expenses

As a preliminary note: Thank you all for the well-wishes in response to my last post! I had a lovely month out of the country (although everyone everywhere wanted to talk about Trump and the American election). If you’d like to see some pictures from Johannesburg, Kruger National Park, Durban, Cape Town, and Barcelona, feel free to check out my wife’s Instagram page. I also have some articles on vacation and travel coming up, in which I will include some photos from the trip.

And now back to your regularly scheduled programming…

I recently wrote about how to save money better. I argued that you should focus first on housing, transportation, food, and taxes. My explanation was that these are the areas where we spend the largest amounts of money, and so they are also the areas where we could save the largest amounts of money. Continue reading “Saving Money Better – Recurring Expenses”

Saving Money Better – Focus on the Big Wins First

A lot of people set resolutions to save more money. In fact, it was the third most popular resolution for 2015, behind only “lose weight” and “get organized.” But as we’ve noted before, only 8% of people successfully achieved their resolutions. So how do we go about making sure that we are the select few who actually do save more money?

Do you focus on the Latte Factor and cut out your daily coffee? Do you drive around in search of the best deals or spend your Sundays clipping coupons?

I would argue that if you want to save the most money, you need to first look at the areas where you spend the most money. Continue reading “Saving Money Better – Focus on the Big Wins First”

The Ostrich Effect

You may be familiar with the term “burying your head in the sand.”

The image comes from the myth that ostriches avoid danger by sticking their heads in the sand and pretending it doesn’t exist.

When we are accused of burying our heads in the sand, it means that we are ignoring bad things in the hopes that they will go away. This is usually not a useful strategy. Continue reading “The Ostrich Effect”