A friend of mine shared this link with me, and I’m really appreciating it right now.
I’m always looking for new ways of thinking about money, and this post highlights one of my own weaknesses: I always tend to go for a mathematical solution, rather than looking at the root emotional causes of what I’m doing. So thinking about what it is I want to be able to do with my money is an important thing for me to step back and contemplate.
Along with that, though, her second point about creating a Descriptive Budget first is something I already love. The first step (or, in her list here, the second step) to taking control of your money is knowing where it all is going.
Steps 3 and 4, emergency fund and employer matching, are also good; though from the title I had expected 4 to be about Lifecycle funds. But I guess that comes later!
Step 5 is interesting. She calls it “pay off then highest interest rates first,” but also talks about the snowball method (pay off lowest balances first). Fortunately, those two things often run together – a credit card balance is likely to be smaller than a car, house, or student loan, and it’s likely to have the lowest rate. So that makes sense.
Steps 6 and 7 are emergency fund and retirement, again. I approve. Then step 9 is about aggressively paying off debts. I like that this comes after establishing baseline financial security first; debt is not a great thing to have, especially if it has high interest, but it’s not evil.
Steps 8 and 10 relate back to Step 1: thinking about what you want again, and then making it happen. Most things in the world come with a concrete price that you can look at and save up for, even if that price is not immediately visible. And prioritizing your dreams and placing them within the context of what you want to do is a great way to make them much more accessible.
In short: I like this financial writer!
Emilybook 