Continuing from yesterday's post, here are the top 4 finance lessons I learned since my first blog post:
4. You've got to do the math.
Any decision you make ought to have a balance sheet attached. This would have been an especially useful thing for me to know when I bought my first car or decided to charge items that were on sale.
Use the ubiquitous calculators on the Internet to help you. Or just sit down with pencil, paper and a calculator (or Excel worksheet) to determine how much things will really cost you.
Thinking about moving? Use the Internet to figure out the overall cost of living in your new location. Call your car insurance company and get a quote for the new zip code. How much longer will your commute to work be and how much will that cost you in gas? What's the sales tax in that new place? It may turn out that the extra money you'd make at the new job is going to be spent on rent anyway. It may be cheaper to stay put.
Transferring a credit card balance from a high rate card to a temporary 0% card? Calculate the balance transfer fee first! If the fee is the same (or higher) than the interest you'd pay on the card anyway, then don't bother opening a new credit card to transfer the balance. It will ding your credit score and you won't save any money.
Buying a new car? Want to negotiate a raise? Figuring out whether to keep renting or buy a home?
You get the idea.
3. Take advantage of opportunities to learn more about finances.
If your church or local community development agency is offering a free (or very cheap) homebuyer course, take it even it you don't plan to buy a home. These classes teach budgeting, credit repair and deal negotiations you can apply to any situation.
Read popular finance books, but get them from the library! Read a few to gather the tips that will be most useful for you. If you really love one and frequently reference it, then buy it used.
Read the Wall Street Journal or watch CNNfn or whatever to get over your fear of money talk. You may come away with some good savings or investment ideas too.
If there's a retirement planning or 401k talk at work, go! Ask lots of questions, no matter how stupid they may sound to you. Ask questions until everyone gets tired of you asking.
2. Each one, teach one.
I am not a financial professional. I make mistakes. But I always share what I learn.
I started blogging to give myself a record of my financial steps and missteps, to motivate myself and to learn from other people. Reading other blogs was an education and I wanted visitors to my blog to walk away feeling like they learned something... or at least that someone out there understood where they were coming from.
I try to talk to my friends who are still in debt denial about what I'm doing and how it's working. They might not get on board yet, but when they do I will cheer them on and share every tip, trick and tactic I've gathered. It's selfish to keep this kind of knowledge to yourself. No one wants to be broke, so help anyone who's willing to listen.
And my NUMBER #1 lesson learned in 2006 (drum roll please):
1. You'll fall down, but you must get up.
The markets don't always do what you expect. You may find out you owe more than you thought. Maybe it was a mistake to use that windfall for this instead of that. Maybe you shouldn't have loaned that money to your brother. You should have waited to buy that DVD player. Maybe you shouldn't have taken that job.
It happens. Life happens. You'll screw up or you'll get screwed.
This whole debt repayment thing looked so easy when I made my first Excel sheet and saw the debt melting away. But then things happened, some of them my fault, others I just couldn't predict or avoid. Over the last year, I reduced my debt by $4,000 only to charge back $3,000 a month later when I moved. I got sick and had no health insurance. The power bill was super high sometimes. I could have chucked it and said forget it, I can spend this money on more fun things. I'll pay the minimums for the rest of my life. Who cares!
No, no, no. I made adjustments. I built a $1,000 emergency fund. I kept the heat off when I was out. I cut off the digital cable. I told friends I couldn't go on vacation. I made the clothes I had work a little longer.
And it's not over. As I mentioned before, my financial situation is going to get shakier before it gets stable. But so be it, I'm still paying off this debt come hell or highwater. And I'm going to build wealth. I just will. Because I want to.
I hope you all can learn something from me (like, don't do any of the dumb things I did, ok!?) just as I've learned a ton from you. Thanks and God bless!