Smart Finance

I'm not an expert at this by any means. But this is definitely an area that I am very interested in. This interest was probably sparked by the fact that I spent two years working for a financial advisor. If nothing else, it has placed me at a comparatively good place for a year-and-a-half out of college, and living in a city considered one of the most expensive in terms of income to cost-of-living ratio. This post will probably be nothing new, other than a person in her early twenties actually following certain guidelines which WORK. Here they are.

1. Pay off credit card debt.
 Duh. Easy. Done. I actually have nothing more to say about this line other than I don't understand why people keep dept on their cards. It makes me personally VERY uncomfortable and I strive to always have the balance paid off in full. What can you POSSIBLY need in your twenties that would be worth the headache of debt?

2. Don't charge stuff to your credit card.
This one I actually struggle with. And technically charging less than 1/3 or your total credit to a card is O.K., and even good for your credit history, so no biggie. But for me it's a matter of personal discipline and living within my means. Since I'm not about to purchase a house or anything else that would require a stellar credit score, I can afford not to charge stuff right now.

3. Pay off your loans.
My family helped a lot. But I allocated a HUGE chunk of money to paying off my student loans before interest rates kicked in. That was the reason I chose to live at home and commute for an hour and a half each way for a year instead of moving to Seattle right away. Some would think that's a waste of life. But the lack of "freedom to do whatever I want" for a year now allows me to REALLY have that freedom. Without being obligated to a bank and without the load of a loan on my shoulders. It required iron discipline, but the result is priceless!

4. Keep your old car.
Unless your job requires you to look rich (consider switching jobs then by the way.) But if you're fresh out of college, and your car gets you from point A to point B, stop trying to live a life you can't afford. That car is good enough to get you to work, is probably really efficient in terms of gas and mileage, and is probably not even that needed if you live in a city with public transportation. If you're trying to impress people... you know what's impressive? Wisdom and genuineness. Eventually people will find out that that you're really head over heels in debt because of that BMW. And that just comes off really really immature.

5. Live in a place that you can afford.
I WOULD advise to get a roommate, but that'd be somewhat hypocritical since I don't have one. What i DO have is a small (but happy) one bedroom that I pay just a little over 1/3 of my total gross monthly income for. I practically don't feel the pinch on my paycheck. It's great! If you have the opportunity, take the time to look around, because you CAN find a good place in your price range. Mine doesn't stink with that old-apartment-building scent, and is otherwise an excellent combination of new renovation and old-world charm. It's small, but has a killer view of sunsets and the Puget sound. (Can you tell I'm in love with my place? :)

6. You DON'T need everything at once.
As much as my mattress annoys mom, I will wait until I have money saved up to buy a bed, instead of charging it. I already got a couch. Everything else was jacked from parents. If you're moving out for the first time, see how much stuff you can get for free from loving relatives and friends. Then go on craigslist.com and find the "free" section. True, it has a bunch of junk there, but you can also find some really cool stuff! Then invite your friends for a housewarming party. (If your place is small, invite them one-by-one.) See what they get you. THEN buy stuff you still need. (At TJ Maxx and Ross, mind you, not Bed, Bath and Beyond and Pottery Barn.) Buy as you can afford. Makes stuff more valuable.

7. Know your prices.
Before I knew them only on clothes. Now I'm starting to learn about food. It's important to know how cheap you can get things and where they are sold. It's important to shop around and figure out where good deals are. If you live in a city, take the time to walk into private shops and international supermarkets. Not only do they have cool food, but they also often carry things cheaper than the American chains. Knowing prices applies to services as well. Regularly check what cell-phone companies offer. Bargain to lover your bills. Mention competitors' rates. Dispute questionable fees. Cancel items you don't use. Take the time. It's well worth it.

8. SAVE
I don't have this one down yet. My savings account is unimpressive. But it makes me uncomfortable to be locked into a year-long lease with nothing to back up my promise to pay up on a monthly basis. So I'm striving to build up my savings to have at least the amount of rent, gas, and electricity until the end of my lease. I wish I could just put the money away all at once, but unfortunately I have to make baby steps. For now I'm disciplining myself to avoid certain things I'd like to do that would be unwise. What I would've spent on those, I put on my savings instead. My account isn't growing fast, but it's definitely growing. Hopefully I'll be able to allocate a set sum to put away into savings every month in addition to these little drops of cash.

9. Plan ahead and shop ahead.
Christmas usually a difficult time? Buy presents throughout the year! Most likely you'll find a better deal and a better present as well! This way, you won't have a big chunk of money missing right away, and Christmas time will be joyous instead of spiteful. Same goes for birthdays. I buy presents for all my girls at Victorias' Secret semi-annual sales. I pay less than if I would've gotten it right on the date of their day. But I can get them MORE stuff this way, and I save the time it requires to drive to a store and find a good gift.

10. Tithe
(Please note my strategic placement of this one under number 10 :)
Sounds redundant? Religious? Weird? Backward? It works wonders! It's not your money anyways. It's God's money, and He was gracious enough to give some to you. I will admit, sometimes I delay my tithing, but this one I feel most guilty about, because this one actually brings me the most blessings and the most income! I always pay off what I owe God, and I strive to pay Him back first. Why? Because I practically see that it works! Because whenever I've talked to people who are clearly wise about their money, successful in their business, and abundantly blessed, they all told me the same thing. Tithe. And give over that, if possible! Don't make enough to give extra? Give the stuff you have instead of money! You probably won't even miss it. And the person will be blessed like sometimes you don't even know. This paragraph is getting long, so I feel like I will have to make a separate post on giving. :)

These are my general guidelines for smart finance. What they offer you is peace of mind. And that's worth all the small financial sacrifices in the world! (I'm sure that an even wiser person would add investing to this, but I'm not at a point where I'm comfortable enough to try it yet.)