💵 Personal Finance Checklist

This year I’ve went through many personal finance resources. The best book I found is Ramit Sethi’s.

Here is all the advice I’ve taken and distilled into a simple checklist:

Pay Down High-Interest Debts, First

Credit Card debt is super evil. Get rid of it before everything else — you can’t make more money in the stock market than credit card interest rates.

Maximize Tax Advantaged Accounts

The most important thing for your future is to take advantage of money growing in the stock market in a tax-advantaged way.

1. 401k is a tax-deferred account, your money grows tax-free until you take it out after you retire.

   There’s currently a $19,000 limit to how much you can defer from your paycheck throughout the year. Then with employer matching and profit-sharing can get you up to $56,000 per year…ask your employer what is possible here to maximize your benefits!

2. Roth IRA is the reverse of the 401k, you get taxed before you put into the account, but the total grows tax-free. If you’re over a certain income level, you can’t use this directly, but you still can contribute up to $6k/year through what’s called a “backdoor Roth IRA” conversion.

3. 529 is an education savings account similar to the Roth IRA in that the money grows tax-free, but you can only use the money for approved education expenses.

   Minnesota also has a tax incentive for putting money into your 529 account.

4. HSA is a health savings account for if you are on a high-deductable health plan. It’s tax-free to defer the money into this account and you can use this money for your deductable or any other approved medical expenses.

Optimize Checking & Savings

1. Find a checking account with no minimums and no fees. I picked Charles Schwab because it’s online-only and convinient, and has all the services I could ask for without the fees. They will even reimburse ATM fees!

2. Find a savings account with no fees. I chose the Capital One 360 Savings account. It only has 1% interest compared to their Money Market Savings which has 2%, but there’s no fees.

Maximize Credit Card Rewards

As long as you setup your credit card to auto-pay the entire balance every month, there’s no reason not to use credit cards for every purchase. They’re much safer to use than Debit cards, since if you get your card stolen you just call them up to get your money back and they’ll send you a new card.

1. For daily purchases, use a cash-back card. I use the Alliant Cashback Card which currently gives you back 2.5% of every purchase with no limits.

2. If you travel a lot, many people recommend either the American Express Platinum or the Chase Sapphire Reserve to get more points. I use one for business and one for personal to keep expenses separate. This is a game changer, since I collect a ton of points and book my family’s flights on points.

Negotiate Monthly Bills

All of these can be negotiated or find lower rates:

• Car insurance
• Home insurance
• Cable bill
• Phone bill
• Student loan rates

You can use a tool like Truebill to gain insights and they can even negotiate many bills for you for a fee if you don’t want to do it yourself.

I saved over $2k/year just by making a few phone calls!

Grow Your Money

If you manage to have excess money beyond a savings and tax-advantaged accounts, then your next option is the stock market (or crypto, lol).

I am not good at stocks, so there’s an “85% solution” called a Target Date Fund. I put my money into the Vangaurd 2055 Target Date Fund, which rebalances your money for you in exchange for the mutual fund fee.

I’m also looking into working with a Vanguard financial advisor, which charges a small percentage in order to better manage your money. Also, note that if you’re going to work with a financial advisor, they charge you a wide range of 0.5-2% fee of all your assets to manage them. My current financial advisor charges 0.5% for 401k and IRA…make sure you avoid the ones that charge 1-2%.

Monitor Your Credit

I use Transunion credit monitoring for ongoing monitoring. You can also use Annual Credit Report, but I’ve read MyFico is better (though not free).

Avoid Mortgage Insurance When Buying a House

If you don’t pay at least 20% down on a mortgage, they’ll stick you with mortgage insurance (PMI). This is throwing money away in porportion to the size of your mortgage. And even if you pay down the principle faster, many mortgages won’t let you remove PMI before 2 years. They can also charge you early PMI removal fees depending on your mortgage agreement.

Keep Your Money Safe

Use a password manager like LastPass or 1Password so that you aren’t reusing passwords across financial sites.

I’m still learning everything I can on this topic… so please let me know on Twitter if you have any other tips!