My 4 Favorite Pieces of Financial Advice E-V-E-R.

Every now and then a bloke or two will ask me for my best financial advice, and while I wished I could refer them to a single post of mine, unfortunately I never could....until today!

This post encapsulates my all-time favorite "words of wisdom", jotted down in one simple place.

There's a bazillian of things I'd love to share with everyone, but there are 4 main biggies I repeat over and over again - whether on this blog, or when talking to friends, family, or strangers. They aren't new, but they sure do work! And I follow each and every one of them personally, even if I do slip at times ;)

I truly believe that these will improve anyone's finances, regardless of age, occupation, or net worth. Your wallet will thank you, your peace of mind will thank you, and you'll find yourself feeling sexier than ever! So here they are - my all-time favorite pieces of advice:

1. Pump up your 401(k)
If your company offers it, jump in as hard and as fast as you can! Contribute AT LEAST as much as your employer matches. if they match 100% of 6% invested, invest 6%. If they match 25% of 3%, invest 3%. Whatever the case may be, their portion is FREE money baby! Aka 100% guaranteed profit before it even gets invested! And if you have the means to put even more in? Then you, my friend, qualify for the Bad A$$ of the year award ;)

Not only that, but Uncle Sam will hate you for it... at least for now (that's a good thing). The more you invest, the mess taxes you pay out that year. Say your annual gross income is $50k. Well, if you don't put anything in at all, you pay taxes on that $50k. BUT, say you contribute $10k towards your 401(k) in that year, well now you're only taxed on $40k! (you pay the taxes later) So yeah it may suck initially "being out" of a little money each paycheck, but over time you'll get used to it and maybe even forget since it's all automated. Either way, those amounts pile up BIG time over the years, and you'll be thankful you jumped on this money train when you did!

2. Track your spending for 3 months
This is the one thing you can do to learn EXACTLY where your hard-earned money goes to. Think of it as an E-True Hollywood Story based on Your Financial Life - you think you know, but you have noooo idea! haha...okay, well maybe it's not that drastic, but you'd be amazed at the things you'd find if you actually sat down and sorted through it all. Even if you do it just one time, and one time only, it'll give you a better over all picture of your finances.

Once you know EXACTLY how much you spend, you can then figure out how to move forward - whether it's to remain on the same route you're currently taking, or move to a newer one. I went back through 3 months of checking and credit card statements to figure out my habits, and boy was i surprised! It wasn't so much in seeing the items purchased, as I remembered them all, but it was the grand total of the expenditures that hit me. I had a guestimated a budget of $500 for my credit card each month, but in reality i was spending between $800-$1200! Woops. I then created a more realistic budget ;)

3. Create an Emergency Fund
Simply for a great peace of mind! There's something to be said in having a pile of cash in your account for whatever it is you'll need it for. I really don't know what constitutes an emergency, exactly, but for me it's more of a stash to keep myself out of trouble ;) As for how much to put in there, I personally shoot for 3 months, but it really depends on what you're comfortable with. It can be 2, 3, even 6 months, whatever you feel would make you sleep better at night. Once you reach that point, you're all set! You can then go about using your money as you wish, knowing you have that safety net.

4. Pay off all Bad Debt
Get rid of it! Whether it's credit cards, outstanding loans to friends or family, or whatever - it's not great to have. This is much easier said than done, of course, but my goodness if it's not true. It effects everything from credit scores, mortgage rates, car loans, and even worst - your overall happiness :( What would you do if you had $0.00 in debt?! How insanely awesome would you feel! It's not gonna happen overnight, and it certainly won't be easy, but it's definitely imperative to work it all out. Whatever you need to get rid of it, just start.

And that's it! Those are my Top 4 all-time favorite pieces of advice I give out. Some are easier to follow than others, but they all work magic on your financial health!

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Emergency Funds are not Fun...but they're important!

It seems like every time I get close to reaching my goal of 5k, something happens and I get thrown back a bit. This time around my emergency fund got frozen* inside my HELOC, basically leaving me with zero now.

Since it was used to pay part of the 2nd mortgage (the heloc), it's not like i really "lost" the money, but I still can't tap it in case of an emergency. In reality, an emergency wiped out my emergency fund!

There IS a lesson to be learned here: Emergency Funds should be totally liquid, and accessible 24/7!

Lucky for me i'm a pretty positive guy, so as frustrating as it is, at least i am learning something :) There's also something to be said from starting with a clean slate. Before this happened, I had accumulated $4,800, but slowly kept chipping away at it until it reached around $3,000. Then I had my "aha!" moment and started adding back to it. At this point, however, I kept thinking i was down 2k and couldn't feel content until i was back at 5k. Thus, every time i added $ into it I couldn't feel at all happy about it as I was just making up for it.

This time around, however, I will leave it alone 100% and watch it grow. So each time I add a little into it, I'll be proud every time knowing that i'm that much closer to reaching my goal. Now I'll be saving up, instead of catching up.

• This year's goal: To reach $5,250 (yahoo!) I'm fairly confident i can make this happen.
  
• My ultimate goal: To reach $10,500, which is what i'd need to survive for 3 months. (scary huh? I am working on lowering this, believe me.)

You can track my progress on the status bars to the right which i update monthly. Let's hope i keep pumping it up and reach my goal! Lord knows it won't be easy...

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*To read more on our heloc freezing up, read my operation heloc: the bad :( posting.
*To read more on why helocs freeze up to begin with, as well as some awesome commentary from users and how it affected them, read this article from The North County Times.

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Operation Tax Rebate - SUCCESS!

I salute you, Government, and take back all those dirty little words I've said about you. And as soon as this bad boy clears, it's off to the race tracks i go! haha...j/k. you know very well i am MUCH too frugal/nerdy to do something as exhilarating as that.

It'll be partying with the other greenbacks in my Emergency Fund.

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Why USAA is my very best friend, and I heart them like Woah!

Ever since I was a teen I can remember having a USAA account for car insurance. I never really cared all too much back then, (i wasn't even paying the bills!) but NOW's a whole different story. I am completely proud to use USAA today, and thankful beyond words to my parents for hooking me up.

Why do I heart them so much? Well, they have mad offerings from almost every account imaginable! AND they're a credit union, so their rates are always up in the top.

Do you wanna guess how many accounts I have w/ them now? 12!

Here's all that I have through them:
- Auto Insurance
- Personal Property Insurance
- Life Insurance
- Personal Checking account
- Personal Savings account
- House Checking account *new!
- House Savings account *new!
- Credit card #1 (for personal stuff)
- Credit card #2 (for house stuff)
- Roth IRA
- Home Equity Line of Credit (heloc)
- Money Market account! Newest one as of Monday, to be used as my Emergency Fund.

At this rate, i might as well WORK for them :) The best thing about it all, is that I can log into my online account and see all accounts on one page! This may not sound like a big thing, but i gotta tell you it has helped me tackle my budget a lot easier.

Then we have my favorite aspect, their Customer Service. I've been, and worked, around the block a few times to know when the service is a plus, or a big fat disgrace. USAA's service is A+, and they have plenty of awards to prove it. You rarely have to wait long to get a real live person on the phone (what a concept!), and once you do they are super friendly and actually ON YOUR SIDE. I can't tell you the number of times i've called w/ questions or for general advice, and they've been nothing but professional and competent.

I recently rang them up to check on a pending transaction, and not only did they give me clear and concise answers, but they looked at my accounts and hooked me up w/ a little financial advice that i cold actually use! Remember how i'm trying to get my Emergency Fund back up and running? Well...I have been putting the $ into my savings account and was planning on hosting it there, but USAA recommended using a Money Market account for my Emergency Fund. They have a "Financial Advice" dept. which advised me of the easy online deposits, unlimited withdrawals (unlike savings), and currently the 3.35% yield (also unlike savings). How awesome is that?

They very well could have answered my original question and quickly got me off the phone like any other place...cough cough COMCAST..cough cough...DMV...haha... but they didn't. Their service reps are knowledgeable and intuitive when "selling" their other services. But more importantly, they make my life easier.

USAA, will you marry me?

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