Gretchen Rubin wrote a book on forming habits called Better Than Before.
There are a few other good books on habits (I recommend Charles Duhigg’s The Power of Habit), but Rubin’s big innovation was identifying different personality types. Some habit-building techniques work for some people, but there are very few universal approaches that work for everyone. Rubin divides her readers into four groups and then provides tips specific to each group.
Under Rubin’s framework, I am a Questioner.
“Questioners question all expectations, and they respond to an expectation only if they conclude that it makes sense. They’re motivated by reason, logic, and fairness. They wake up and think, ‘What needs to get done today, and why?’ They decide for themselves whether a course of action is a good idea, and they resist doing anything that seems to lack sound purpose.”
Beyond habit-building, this is a pretty good view into my permanent mindset. I ask “Why?” about pretty much everything, and if the answer is any variation of “Because that’s how we’ve always done it” then I’m out.
Continue reading “Why You Should Ask Why”
You may have noticed that I have a strong interest in politics. Because of this I listen to a lot of political and policy-related podcasts.
One of those podcasts recently covered a topic that I found quite relevant to the personal finance and financial independence space. Continue reading “Platinum Cards and Status Symbols”
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”
Everybody knows that they need an emergency fund (despite the fact that not enough people have them). Nobody wants the stress of being unable to handle a medical emergency, the loss of a job, or a car that needs repairs. But what priority level should your emergency fund be compared to paying off debt or saving for retirement? How much do you actually need to save? And should it be in all cash or invested? These are the issues we’ll be looking at today.
When to Start Saving
The loudest voice in personal finance is Dave Ramsey. Ramsey tells his readers and listeners to first save $1,000 in an emergency fund, then pay off all non-mortgage debt, then build the emergency fund to 3-6 months of expenses. And all of this before contributing anything to retirement savings.
If you’ve been around here for any length of time, you know from my framing of the last paragraph that I am about to disagree. Continue reading “Your Emergency Fund”
Americans have a debt problem. The average American household has $90,336 in debt. ($5,517 of this is credit card debt, $7,871 is from auto loans, $9,153 from student loans, and $60,700 from mortgages). The average borrower owes 155% more than what they think they owe.
We also have a math problem. The average credit card interest rate is 17.55%. The average savings account interest rate is 0.06%. The expected return in the stock market is, depending on what time period you measure by, between 7% and 10%. Your credit card debt is costing you far more than your savings are earning you.
In addition to saving you money and giving you more cash flow and freedom to do what you want with your money, getting out of debt can help relieve stress and anxiety in your life.
Let’s take a look at the numbers and figure out the most efficient way to pay off your debt. Continue reading “How to Efficiently Pay Off Your Debt”