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9 Tips to Simplify Your Finances

by J. Money on Monday, November 4, 2013

simplify your life

As many of you know, I’m all about simplifying, simplifying, simplifying. We’ve done it with 99% of our bank accounts/retirement accounts – having everything under one roof – and I continue to work on mastering it across other ares of our lives too. Even when it backfires on me like it does every now and then (dang you wardrobe!).

So when I was reading one of my favorite blogs the other day (My Money Blog – the one that inspired me to start THIS blog 5 years ago!) and saw Jonathan posted about even more ways to simplify your finances, I was ’bout it ’bout it. You can never read too many tips on bettering your financial set up,  and at the very least you walk away with some more pats on the back if you’ve already happened to implement them :) Which in this case happened to be for 6 of the 9 tips listed – woo!

I’m not sure I’d agree with *all* of them exactly, but they’re definitely all good things to consider. And I share my thoughts on each of them below.

Here are the 9 tips to simpledom:

(I should point out these tips actually came from Time online which Jonathan borrowed for his post. So you can blame them if you feel these are stupid :))

  1. Get down to one mutual fund [FAIL]. Time recommends latching on to only one target-gate fund, which is definitely simple. And while I have wayyyyyy more than I need myself at probably around 20+ (gasp!), I don’t think just one is the answer either.  I feel like my trusty vlogger friend, Kathryn, has it right who recommends people only need about 4-5 funds in total, but I’m in no position to argue. I just know I don’t need over 20 of them and have to combine at some point in the near future :)
  2. Keep two credit cards [WIN!]. I LOVE LOVE LOVE this one. One of my favorite ways to simplify cuz it just makes life so much easier in my opinion. I give props to those who rate chase and get all kinds of free miles and rewards for signing up to dozens of cards a year, but to me it just muddles everything and adds more pollution to the game plan. So I stick with my two credit cards (one for personal (USAA World Mastercard) and one for business (AMEX Blue for Business) and continue on my merry way.
  3. Pay bills online [WIN!]. Makes life much, much easier. I don’t know how we survived without it! Though I do remember whipping out the ol’ check book to pay bills at the last minute and invariably getting hit with late fees all the time, ugh…
  4. Choose one financial institution [WIN!]. My favorite of them all!! I can’t tell you how much of a difference this has made over the years… No more signing into multiple accounts to find everything and remembering/losing passwords left and right too. This was by far one of the best things we’ve done since combining our money (another reason to choose just one bank – makes it easier when merging two live’s worth of accounts!), and I’ll never go back to multiple accounts again… Even if you get a free $50 or whatever in doing so.
  5. Automate everything [FAIL/WIN!]. I’m a strong believer in automating as much of the recurring bills as possible, especially those that are roughly the same all the time, but I DON’T like automating big things like mortgages or credit card bills in case something funky happens that month. Plus I like to feel the “sting” of them both when manually doing it so it’s a constant reminder of how “real” and annoying it is, haha… More motivation to find ways to nix them ;)
  6. Get overdraft protection [WIN!]. If I ever bounce anything in my checking account, it’ll go directly to my savings account and pull all remaining money. Thereby avoiding any ridiculous fees for, well, doing something ridiculous myself and not managing it all correctly!
  7. Create an emergency fund [WIN!]. Ours has fluctuated over time, but I always ALWAYS have back up money in case the $hit hits the fan… I’m terrified about not having cash on me at any given point in time, and my wife even more so. (10x more if I were to guess ;))
  8. Pay yourself first [WIN?]. I can never tell if this is meant literally or figuratively, but if it’s the former then no – I like to have all my bills paid first so I can make sure my family has a roof over their heads and food in their bellies – call my crazy ;) But yes, I also make sure we’re “paying ourselves” every year by maxing out our retirement accounts too. Which I also think is super important (just not as much as having shelter and food).
  9. Get organized through new technologies [FAIL]. Unless you count credit card budgeting using technology? But we don’t use Mint.com or YNAB or any of the other services/products out there really cuz again I like to manually do stuff to stay on top of exactly what’s going on. And I find I get lazy when things are automated (and not in a good way). For the majority of people that suck at dealing with money, I would probably advise automating as much as possible though.

I like these a bit better than that “everything you need to know about money” index card that was being passed around all last month too. Though it didn’t really have to do with simpleness I guess, haha… it was just simply *said* on one simple note card ;)

Anyways, hopefully some of these help you out. Let us know how many you can check off yourself in the comments below. Or how many you think are asinine, if you’d rather, haha… But I’m sure you’d agree that simplifying DOES work in general – finances or not. It’s done wonders for us since committing to it earlier this year when we named our new year’s resolution after it – The Year of The Simple! - and I reckon it’ll continue doing so as well.

Speaking of resolutions, how many of you are still working on those???? ;)

——-
Photo cred: Robert Benner Sr.


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{ 58 comments… read them below or add one }

1 Ashley November 4, 2013 at 6:42 am

Still working on those…

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2 Well Heeled Blog November 4, 2013 at 7:34 am

I am on a journey to simplify my finances – still have more than 1 credit card, but I only use 1 (1.5?) on a regular basis. I recently canceled a card I don’t use (not my oldest card so credit scores largely unaffected).

I have checking/saving accounts at 3 financial institutions, but all of my retirement is at one place. I’ve already automated my credit card payments, and I have no major bills because I live in a house share and just write checks / give cash for my share of the bills.

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3 J. Money November 4, 2013 at 2:39 pm

I’m liking the sound of that “house share” :) I’m afraid I won’t ever be able to get back to that now that we have a kid(s)… I miss living in smaller, shared, spaces!

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4 John S @ Frugal Rules November 4, 2013 at 8:00 am

It looks like we’re in a similar boat. Overall, I’d say we’re doing well with most of these – though I would say going to one fund is definitely a bit on the simplistic side. I should probably make that part of my life more simple, and just need to make the time to do it. We don’t use anything like Mint or YNAB – I am amn Excel guy myself – plain and simple. ;)

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5 J. Money November 4, 2013 at 2:41 pm

Same here :) I’ve been using the same spreadsheet for budgeting/net worth calculations for the past 6 years… I probably will try out YNAB here in the future just to see what the fuss is about it (“good” fuss, btw), but I’m def. njoying the way things are working via spreadsheet for sure.

Here it is if you or anyone else wanna check it out:
http://www.budgetsaresexy.com/budgets/j_budget_template.xls

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6 Aimee November 4, 2013 at 7:17 pm

Excel all the way for me too! I think for those that are comfortable with Excel and like to be involved in every little part of their budgeting then it’s the best tool. I can make Excel do what ever I want it to do.

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7 J. Money November 5, 2013 at 2:07 pm

(that sounds dirty ;))

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8 Holly@ClubThrifty November 4, 2013 at 8:10 am

We’ve simplified our finances in some ways and made them more complicated in others. But, it works over all. I guess that’s all that matters.

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9 Melissa Wiley November 4, 2013 at 8:23 am

I have a Checking and Savings account at a brick and mortar bank, and 2 ally savings accounts. The rarely keep more than $1000 in the savings account at my B&M bank, it’s just there in the event I need IMMEDIATE access to a larger than average of cash. My two accounts with Ally are my World Cup Fund, and then the EF and everything else fund. There interest is better with Ally than my B&M bank, otherwise I’d totally keep everything in house.

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10 J. Money November 4, 2013 at 2:42 pm

World Cup fund, as in – you’ll be going to the next one???? On vacation?? I am jealous if so!!! :)

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11 Brian@ Debt Discipline November 4, 2013 at 8:59 am

Not a big fan of #5. I don’t want to fall asleep at the wheel and I find just throwing things on auto pilot you can lose track of them.

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12 J. Money November 4, 2013 at 2:43 pm

(AGREED)

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13 Terry November 4, 2013 at 9:01 am

I have everything but the new technologies one. I’ve tried pretty much all them out there (except YNAB because I’m cheap and like free) and they just don’t work for me.

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14 J. Money November 4, 2013 at 2:45 pm

You can try YNAB for free for 30 days, if that matters :)

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15 Tiffany November 4, 2013 at 9:27 am

I am all about some simplifying. Actually, one of my favorite singer/songwriters Brendan James is all about this message, and he’s been the inspiration behind many of my own blog posts about simplification (in finance, and all other aspects of life).

I will say though, having two checking accounts with different institutions has been beneficial in a few instances. My main account is with a local credit union which offers a phenomenal 2% – so I try to keep the majority of my cash in there (EF included). However, I’ve run into problems when the card hasn’t been accepted – mostly abroad – even though I cleared travel with the bank. So, I was able to withdraw from my “back up” – Wells Fargo. I just keep a little in there to cover emergency withdrawals. It’s saved my butt a few times. Maybe when I stop traveling the world I’ll get rid of it, but I don’t foresee that happening anytime soon.

I also don’t use new technologies. Yes, it is easier but I actually like doing it myself every month. Plus, call me paranoid but I don’t like having all my information online one easily accessible spot.

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16 J. Money November 4, 2013 at 2:47 pm

Haha no shame in that – good things to consider :) I’d def. be in some trouble if my account got frozen or something scary! Maybe that’s why I have a stash of $500 in my safe?

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17 Jane Savers @ Solving The Money Puzzle November 4, 2013 at 9:54 am

I disagree with #4 about dealing with one financial institution. I have recently started a small savings account at a bank separate from my regular bank so that I can access cash is my debit card or my bank are compromised in any way.

My goal is to have $2,000 in that account because you just never know.

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18 Amber November 4, 2013 at 12:59 pm

I disagree with that one as well.

I personally prefer to use cash, rather than a debit card for purchases, and when I moved to my new city, I rapidly discovered that the four blocks I had to walk from my office to my bank to get my “allowance” was too far to be convenient.

I’d end up just using my debit card, and it got me in trouble with my saving, because I would overspend from my budget (but within my cushion). I opened an account with the financial institution in my office building, had a set amount direct deposited there, and now pull my allowance from there. I also maintain a small savings account with that one, and it all works out smashingly.

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19 J. Money November 4, 2013 at 2:49 pm

Gotta stick with what’s best for ya :)

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20 Erin @ Red Debted Stepchild November 4, 2013 at 10:41 am

Wow, I thought I was simplified, but apparently not. I have Chase checking (everyday expenses), but then I have Capital One 360 checking (bills) and savings accounts. And my IRA is through Betterment. And my husband has two debit cards from work that he gets his bonuses on (one for selling Hyundais, one for selling Volkswagens). Yikes!

Oh well, it works for me. Gotta make things as confusing as possible :).

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21 This Life On Purpose November 4, 2013 at 10:47 am

I think I’d have about 7 out of the 9. But not sure if I’d change anything, what I have works for me and is about as simple as it gets!

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22 Broke Millennial November 4, 2013 at 10:59 am

I feel pretty good with this list! I automate some bills, not all because I’ve had a nasty experience with ConEd (electricity) reading a broken meter and trying to charge us $1,000 for a $45 bill. I do automate bills that stay consistent like Hulu Plus and my internet service.

Check for one financial institution, one mutual fund, paying myself first, emergency fund and paying bills online!

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23 J. Money November 4, 2013 at 2:50 pm

YES!! Exactly why automating can get you in trouble if you’re not paying attention! Scary stuff, ugh…

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24 Brian @ Stocks and Cents November 4, 2013 at 11:16 am

Did you say 20+ mutual funds??? J Money I….I just….I don’t even know what to say.

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25 J. Money November 4, 2013 at 2:50 pm

Haha… well, that’s probably an exaggeration… I probably have 19 ;)

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26 Brian @ Stocks and Cents November 4, 2013 at 6:49 pm

Yikes, even then, that’s a lot. I’m hoping that you’re only actually contributing to a couple (maybe four or so) and not trying to manage all of them. Good luck with it J Money :)

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27 J. Money November 5, 2013 at 2:12 pm

I don’t manage any of them really – they’re mostly in my managed-accounts through USAA ;) Or some that I just set up and now letting ride… But I should *def* do a check in and fix stuff for sure, no doubt about it.

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28 Stefanie @ The Broke and Beautiful Life November 4, 2013 at 11:39 am

I haven’t used any of the online technologies like mint or ynab as I have my own handcrafted spreadsheet custom made for my savings goals and asset allocation. But I’m considering using those online resources to supplement my current system. They allow you to examine your finances in so many more visual ways than I can keep up with on my own.

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29 EL @ MoneyWatch101 November 4, 2013 at 12:01 pm

I have about ten mutual funds, and in the future will add about 10-12 dividend stocks. I like to diversification of investing. If you have a long term position and just let things reinvest, I do not foresee too much wasted time with having these many funds. PLus I get a mood boost everytime a fund hits me with a dividend bonus. As long as you are not getting killed with fees for each fund and or stock then its all good.

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30 J. Money November 4, 2013 at 2:51 pm

“Mood boost” – Hah! I like that :)

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31 Retire By 40 November 4, 2013 at 12:13 pm

I have way too many stocks/funds too. I consolidated a couple of years ago, but it got out of control again. :(

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32 Debt BLAG November 4, 2013 at 12:51 pm

Great list! Yes, time is money, but not being overloaded mentally is also money. I know I make worse decisions when my brain feels overwhelmed :)

Some thoughts:

1. I personally think three is the number I’d be happiest with. My account is tiny so I’m stuck with two until I hit minimums to open a 3rd
2. This makes sense. You might want two personal just so that you can shut off spending a week before your statement date and not get charged any finance fees.
4. Maybe, although Mint makes it easier. I use USAA for almost everything, but like having a bank with local branches when I want to make deposits :)
3, 5-9. All good ideas :)

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33 Kyle | Rather-Be-Shopping.com November 4, 2013 at 2:05 pm

I can’t remember life before online bill pay. It must have really sucked out loud. Such a great time/money saver.

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34 J. Money November 4, 2013 at 2:52 pm

You don’t miss writing checks?? I don’t know if I can be your friend anymore ;)

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35 Rebecca @ Stapler Confessions November 4, 2013 at 2:52 pm

We have a bunch of credit cards and too many financial institutions — at least 5 of them :( But I think we’re good on all the rest of the items, except the overdraft protection. I don’t think it’s worth the money, and our checking account company doesn’t bounce checks — it either doesn’t issue them (if there isn’t enough money), or loans us the amount of any overage.

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36 J. Money November 4, 2013 at 2:54 pm

Does overdraft protection cost money? I swear it’s free with USAA, but I could be wrong… It’s weird that it would cost if you’re connecting it with another account at the same institution, but what do I know :)

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37 Debt and the Girl November 4, 2013 at 3:13 pm

Paying bills online is awesome! I love being able to do this and it saves so much on postage. How did we ever go without it?

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38 Jacob November 4, 2013 at 4:15 pm

I’m a budget nerd, and have created many spreadsheets over the years. Over the past few months, I left the spreadsheet behind and created and VERY THOROUGH budget on Mint.com

No, it’s no perfect, but I’m VERY aware of where all our money is going, and can show my wife nice charts to help get her up to speed and exactly where we stand at all times. She also gets emails when we go over food budget and other spending.

So, I hear you on manual management of your finances, but it does take some of the daily stress off having Mint.com take care of some of the details.

That being said, I’m going to be trying out YNAB soon, so I may change my tune in the future :)

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39 J. Money November 5, 2013 at 2:20 pm

We’ll have to compare notes on it later, and then tell Jesse what we think ;)

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40 Deacon November 4, 2013 at 5:10 pm

6 out of 9 ain’t bad J. Money, there are still 2 months left in 2013 to cross off the rest. My one goal is for my self-employed income to replace my previous income working for someone else. Got a ways to go!

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41 J. Money November 5, 2013 at 2:21 pm

It’s a damn good goal to have though :) Make sure to work in insurance costs and other self-employed ones though – I avoided it on purpose as to not distract me from it, but boy does it come into play!

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42 Micro November 4, 2013 at 6:07 pm

I’m in a similiar boat you are when it comes to paying bills. I like the task of sitting through and manually sending in the payments. I have to say the biggest advantage this gives me is banking freedom. I’m not tied to a bank because all my bills are automated to that account. I can freely close an account if a bank tries to hit me with bogus maintanence fees. The other thing is it’s much easier to churn credit cards when you don’t automate bills.

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43 Aimee November 4, 2013 at 7:40 pm

1. I don’t believe in those retirement-ready target funds. I think they’re great for people to not pay brokers/advisers to manage their funds, but it still puts your eggs all in one basket. I have 2 funds in my regular IRA in the riskiest funds available at that investment firm (this one does VERY well), and 3 in my Simple IRA also risky (this one does not do well). I like living on the edge.

2. I have 1 regular credit card that gets me rewards at REI and a stupid Best Buy one I need to cancel. I used it to get my laptop and an iPod I promised to my sister with 0% interest and now it just sits in my wallet because nothing at Best Buy is in my budget.

3. I pay EVERYTHING online except my rent that I tape to my door.

4. I use 2 local banks. At 1 bank I have a checking and savings I opened in high school with absolutely no fees and a relatively good interest rate on the savings, and the other is just convenient. I don’t do much with the older accounts so I will keep them to deposit untouchable money,

5. I am an auto-pay queen! Everything except my cell phone and rent is on auto pay.

6. I do not have overdraft protection, but I do have my accounts set up to reject purchases that make me go negative, which I prefer. They do honor written checks, but debit and online transactions would be rejected.

7. I’m bad at emergency funds. I’ve always put substantially all of my extra money on student loans, but when I moved out of my parent’s house a couple years ago I forced myself to build up a $2k minimum cash balance between all 3 bank accounts. I rarely dip below $2k. I know that’s not enough, but I’m OK with it.

8. Ahh paying myself first…. I have done that in the form of student loans. I always contribute up to what my employer will match when I’ve had that available to me, but I don’t max anything out.

9. As I mentioned on a reply above… Excel baby!!

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44 J. Money November 5, 2013 at 2:26 pm

I’m glad you got that $2k E-Fund set up :) It’s def. annoying, but it’s soooooo good to have! The thing with debt is that once you send over payment you can never get it back which is frustrating. Whereas the money in your accounts can always be tapped which is cool. (as long as you don’t touch unless a true emergency is there a knockin’)

Also, I agree with “living on the edge” with retirement accounts while we’re young and have plenty of time to make up for losses. Though it’s hard to be REALLY risky with mutual funds since they contain so many companies, haha, but I get what you’re saying ;) They’re not the more conservative ones.

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45 Aimee November 5, 2013 at 6:44 pm

I think of my E-Fund in the wrong way. I consider it available for unexpected big costs (car repairs) only. The problem is it’s not nearly enough to cover me if I lost my job. I’m assuming I’d qualify for unemployment and that unemployment would be enough. Very bad. I don’t expect to lose my job, but then again most people who have lost their job didn’t expect it.

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46 J. Money November 6, 2013 at 10:41 am

Hey, you gotta start somewhere, right? A lot of people don’t even have $2,000 saved up. Once you’re able to, you can start filling it up to cover you for X # of months if you were to ever get laid off. But baby steps :)

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47 Cat Alford (@BudgetBlonde) November 4, 2013 at 7:53 pm

I love these!! I do have more than one bank though. During Hurricane Katrina, my parents had a local bank and they couldn’t get access to their money for a few weeks. It really sucked. So, for me, I have 2 different banks that we use so if some glitch happens to one, I can get money out of the other. :) Oh snap, I have 3 if you count smarty pig which I guess you should. :)

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48 J. Money November 5, 2013 at 2:27 pm

I actually never thought about not having access to our bank if something went wrong until today, haha… (or maybe I did in the past but just can’t remember :)). Def. smart in that regard, I’ll agree.

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49 Ragnar November 4, 2013 at 9:35 pm

Disclaimer: I am the world’s biggest investing noob.

As to number one and number nine, I moved away from target retirement founds because when the investment returns showed up on Mint.com, they were calculated incorrectly. See, Mint.com doesn’t track mutual fund gains or losses, but instead says the value never changes (by ‘forgetting’ the previous value), so it shows your account as never gaining any value. It made my target retirement fund look so bad, I went running to the hills.

That said, because of the high fees that are charged in 401k’s on target retirement funds (typically around 1%) and because they’re actively managed baskets of other mutual funds, these funds seem to provide plenty of the downside of mutual fund investment but be short on upside. I have two accounts I track, one with a target fund, one with an index fund and for the last 7 years, the index fund has out performed the target retirement fund in all but a couple of months. In the months where the target retirement fund did better, it was by a very disappointing amount.

I still use Mint, specifically because it’s part of my simplification process. I know where my money and budgets are at any time, no matter what has happened in the last few weeks or what my wife has had to purchase but forgot to mention to me. Their investing feature is … ‘dysfunctional,’ so try to ignore it.

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50 J. Money November 5, 2013 at 2:34 pm

Oh wow, I had no idea! That seems like a MAJOR issue – I’m surprised they haven’t done anything about that?? Man… yuck.

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51 Ragnar November 10, 2013 at 4:57 pm

If being able to predict which way the market was going was easy, then actively managed portfolios would be the way to go, and index funds would be a fools investment tool. That, however, is not the currently ‘in vogue’ logic after the last two boom-bust cycles where actively managed funds got torn to shreds for lacking diversification and still not being able to move fast enough to get out before the markets cratered and getting back in before the markets took off.

Again, I’m just an investing noob and I could make all sorts of guesses as to why Target Retirement funds performed so poorly during the bust of 2007-2009, but the truth is I don’t know. We still use one for a sizable portion of our portfolio as it still (in theory) provides asset class diversification that would require research i just don’t have time for.

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52 J. Money November 11, 2013 at 10:51 am

Exactly – if we don’t have the time/care to do our own research, then we have to go with what’s second best for now. And who knows, maybe that really is 1st best had we done the research and learned so ;)

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53 Christine @ ThePursuitofGreen November 4, 2013 at 10:32 pm

1. Get down to one mutual fund
Nope…have 4 different ones currently…I guess that’s not too much. Don’t like having all my eggs in one basket!

2. Keep two credit cards
Nope again! I have multiple ones that I keep track of to get the max cashback possible.

3. Pay bills online
Yes! Well except rent check but there is no possible way to do that via the internet.

4. Choose one financial institution
Nope. I’ve got several. Later on I might try to simplify…but for now it works for me.

5. Automate everything
Nope. I only automate bills that are a steady amount every month. Or very small amounts. I’m too cautious about the ones that change.

6. Get overdraft protection
No. Need to look into this one!

7. Create an emergency fund
Yes!

8. Pay yourself first
Kinda…haha need to be better on this.

9. Get organized through new technologies
Yes! I love mint! It’s so helpful!

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54 J. Money November 5, 2013 at 2:38 pm

You can pay your rent bill online! You can pay *any* bill online for that matter – all it is is adding the company and address into your “payee” sections at your bank, and then cut them a check manually through the site :) So basically you can just log in and then drop in the amounts and hit “send” instead of writing it out manually and putting it in the mail. Or walking it over to the drop box (which would def. be easier, but you could still have your bank mail it in for you too).

I pay a handful of individual people through online bill pay every month. You just set it up once and then login and click buttons :) Then your bank manually sends them a check on your behalf!

Now if your bank doesn’t have online bill pay, then yeah – out of luck. But most these days do.

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55 SuburbanFinance November 4, 2013 at 10:35 pm

I love making money simple. Money is made out to be so complicated, so why not just keep it simple? The only one I don’t hit on your list is the Overdraft Protection. I don’t want to waste money on it- I don’t write checks and we keep a big cushion in our checking accounts for any incidentals.

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56 charles@gettingarichlife November 5, 2013 at 5:21 am

J you forgot the most important one subscribe or follow your favorite PF bloggers that will help your finances. Shameless shameless plug.

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57 J. Money November 5, 2013 at 2:38 pm

Haha…

HEY EVERYONE! Make sure to follow http://gettingarichlife.com/!! ;)

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58 Mike Carlson November 7, 2013 at 1:30 am

Now that we are living on our own and do not live with my in-laws anymore, we are trying our best simplify our finances and be frugal so we can start saving for our own home. f

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