Personal Finance

Back in 2008, I graduated with twenty-seven thousand dollars in student debt, bought a brand new car, and some little cash for house rent. If it's any consolation, the car was a key.

So even when I'm reckless, I'm still fiscally responsible. I didn't know much about personal finance back then, but as I got more interested in self-development, I started to learn more about how to effectively manage my own money. I eventually built a profitable business, hoping my first retirement account and became 100 percent debt-free. The latter, I consider, one of my greatest accomplishments.

And so today, 12 years since I graduated college, I want to talk about how I manage my money, specifically the accounts that I use, why I use those accounts and some of the lessons that I've learned about personal finance over the past decade.

Okay, let's start by getting a bird's eye view to see how I manage my money and which accounts I use. And then we'll break things down even further.
I have a personal checking account, a personal credit card, an Investment account, and an individual 401(k). All of my money goes through one of these four accounts.

The one thing you'll notice that's missing from this equation is a savings account.
At this point, I haven't seen the need to open one because the interest rates are so low that opening an account for maybe getting 100, 200 bucks over the course of the year isn't really worth it for me.

I'm not always simply trying to get the greatest return possible. I'm trying to manage my time and prioritize my energy in a way that makes sense for me, and that gives me the best return on both my happiness and my finances. So I choose to grow my business versus running around from bank to bank, trying to find the best interest rate possible.
So I pay myself through my business like anyone would get paid by any employer. That money goes directly into my personal checking account. So this personal checking account is a joint account that I share with my wife. We use it to pay for rent, utilities, and a few other items that can't be paid with credit.

The main reason that we rent an apartment versus buy a home is that we can't afford a home. It's really, expensive. It costs a fortune to find a decent home in a decent neighborhood. And so right now, even though we're not ready to buy a home, we are starting to look into the real estate industry. We're looking into what it takes to buy a home, what you should be thinking about, because once the two factors align our income and then the market, once they align in a way that makes sense to make that investment, then that's when we'll likely go through with it.
But when it comes to any major purchase, I think it's really important to be cautious and careful and not get too starry-eyed and too eager to go into a deal that you might eventually regret everything else.

How I use my credit card,

I use it for small things like coffee, groceries and books, and big purchases like electronics.
I chose a credit card because it's really good for both travel and eating out, which are two things that I used to do a lot before moving on. I think it's important to talk about the inherent risks and rewards of having credit. Now, when it comes to personal finance, experts are often split on this. There are those that say it is an amazing idea and you should get the rewards from it. And those that say credit is the worst thing in the world and you should avoid it at all costs.
Now, I fall somewhere in the middle. I understand the apprehension.

The reason that somebody would say do not get a credit card, because there are so many people, especially in America, who suffer from really bad consumer credit.
According to the bank rate, the average credit card debt for millennials is four thousand eight hundred eighty-nine dollars ($4889). Since there is such widespread abuse of consumer credit in the United States, and since I personally have a past of poor decision making when it comes to money, I made a rule to myself when I first got a credit card.
I will never, ever pay for something on my credit card when I don't have the money and my debit account.
Now, this is a rule that I am incredibly strict with most people. When they take out a credit card, they use it to buy things that they don't have the money for. And this is the absolute worst way to use a credit card because eventually, you'll pile on the debt, you'll have higher interest rates.
You're going to be paying so much extra money for things when you don't need them. The most simple rule when it comes up for personal finance is to save more money than you spend. And you can't do that if you're spending money that you don't have

.
The very first retirement account that I opened after I paid off my debt was a Vanguard Roth IRA.
The decision to go with Vanguard came about in the same way that I make every decision when it comes to personal finances. I do as much research as I can without passing out. I listen to the experts that I trust that are already in the industry and I make the best decision as it relates to my own lifestyle and the risks that I'm willing to tolerate. And so I. Learn that Vanguard is a trusted investment company that has really low fees, lower fees in the industry average.
And I decided to go with them. One of the biggest selling points for going with a Roth IRA versus a traditional IRA is that I pay taxes on all the money I invest in the account now. But then when I take it out at retirement, it's tax-free. Now, if any of this is putting you to sleep and trust me, it did when I first looked into it.

All you need to do is look up a traditional IRA versus Roth IRA. Do a little bit more research on your own. But honestly, for me, the Roth has been a great investment. Some of the safest investments you can make are in low-cost mutual funds. If you go with funds that mirror the stock market, your returns will likely average around 10 percent over a 30 plus year period. You may be wondering how my investment strategy has changed with a given downturn of the economy over the past month or two.

And the truth is that nothing has changed. And that's not because I haven't lost money. I have just like everybody else who's investing in stocks. My profits have gone down quite a bit. But for me, it's all about having the right mindset, knowing that there is going to be short term losses and big gains in the future. Just sticking it out for the long run is so important. And pulling out your money too soon is you trying to time the market and not even the greatest experts in the world are able to do that consistently.

So keep your money in there, invest in the long run, and eventually, you will likely see the return that you need to retire with dignity. There is around a six thousand dollar contribution limit for your Roth IRA in the United States. Early on, when I got started out, I would barely reach that. And then as my income started to grow, I wanted to invest beyond that. And that's when I opened up my individual 401 (K) for this.

I opened up a vanguard individual 401(k) account with my business. By investment, diversification is similar to my Roth IRA account, largely low-cost mutual funds, highly invested in the stock. How I balance my investments is going to change as I near retirement age where I'll begin to move most of my stocks into more secure bonds.

If you're new to this stuff, it can be both intimidating and overwhelming. But just know that if you start to invest now if you invest when you're young, you can see a massive amount of growth in compound interest over the course of 30 to 40 years.
Let's say you're able to invest $4,000 a year for the next 35 years at a 10 percent return, you'll have nearly one point two million dollars. If you didn't invest your money at all and simply save four thousand dollars a year. You would only have one hundred and forty thousand dollars invest now in your future self.
Well, thank you. So in order to be able to contribute to something like a 401(K), you need to be able to make income. And one of the ways that I do that is through sponsors.

Sponsors like Squarespace. I've partnered with them all year because I've gotten a tremendous amount of value from their platform over the past few years. Whether you're building a personal brand, starting a podcast, or creating a blog or business, they make it effortless to create a beautiful and professionally designed Web site. And they have so many tools that are helpful, from blogging to analytics, so much more. I have benefited so much by using Squarespace over the past few years.

And if you're in the market to build a Web site, I highly recommend that you check them out. Squarespace.com for a free trial.
I don't consider myself a personal finance expert. I consider myself an expert in my own personal finance. And that's why I feel comfortable talking about my own strategy. But I know with that comes inherent risks.
and I understand it, and that's OK. But I also think that part of that reaction is why people don't really take an interest in personal finance to begin with. Because there are so many conflicting opinions. There are so many people out there telling you the right thing to do.

And really, when it comes down to it, there are so many different options that could be right for you.
And so being honest with yourself. Doing the research. Taking a look at your personal finances and figuring out how to get out of those financial holes that you currently find yourself in, it's going to give you so much of a return. Much more of a return than money can provide.

When I got out of debt, like when I'd paid off that final student loan, I cannot tell you the weight that was removed from my shoulder.
How much freedom I had. I now had the ability to take greater risks to start a YouTube channel, to maybe slow down my income streams. Because I wanted to pursue my passions and this is something that you can do. You have to do with confidence and having a solid financial ground to make those decisions on is just paramount.
And so no matter what. Don't let the fear of doing the wrong thing prevent you from doing anything.
And so do your best. Do your research. But no matter what, just make a decision and move forward. Investing in your personal finance is an investment in yourself.

All images on this post are credited to pixabay.com