Everything You Ever Really Needed to Know About Personal Finance on Just One Page

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Everything You Ever Really Needed to Know About Personal Finance On Just One Page
by Trent Hamm - The Simple Dollar - http://www.thesimpledollar.com/
Introduction
The cover of this document tells you the whole story. Everything you really need to know abut personal ﬁnance can be summarized in just one page. Spend less than you earn. Earn more. Live frugal. Do something sensible with the difference. Control your own destiny. All of the other writing out there on personal ﬁnance is just details. In fact, the rest of this document is just details. What youʼll ﬁnd in the rest of this document is a lot of additional detail about the points made on the cover. Beyond that, this document is heavily footnoted. If youʼre reading this document on a computer, you can click on those footnote numbers and immediately jump to online resources that expand upon that point. The hardest part of personal ﬁnance is just having the courage to take that ﬁrst step. Sharing This Document This document is being freely distributed under the Creative Commons Attribution-Share Alike 3.0 United States License. What does that mean? It means that this document is free - you can send it to your friends, put it up on your website, or print it out. You can also use if for commercial purposes - if you want to format it as a book and sell it, feel free. You can also modify the contents to your heartʼs desire as long as itʼs shared in the same way - any derivative works must also be shared under the ...

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Publié par	seam
Publié le	11 janvier 2011
Nombre de lectures	75
Langue	English
Poids de l'ouvrage	4 Mo

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Everything You Ever Really Needed to Know About Personal FinanceOn Just One Pageby Trent Hamm - The Simple Dollar - http://www.thesimpledollar.com/

IntroductionThe cover of this document tells you the whole story. Everything you really need to know abut personal ﬁnance can be summarized in just one page. Spend less than you earn. Earn more. Live frugal. Do something sensible with the difference. Control your own destiny. All of the other writing out there on personal ﬁnance is just details.In fact, the rest of this document is just details. What youʼll ﬁnd in the rest of this document is a lot of additional detail about the points made on the cover. Beyond that, this document is heavily footnoted. If youʼre reading this document on a computer, you can click on those footnote numbers and immediately jump to online resources that expand upon that point.The hardest part of personal ﬁnance is just having the courage to take that ﬁrst step.Sharing This DocumentThis document is being freely distributed under the Creative Commons Attribution-Share Alike 3.0 United States License. What does that mean? It means that this document is free - you can send it to your friends, put it up on your website, or print it out. You can also use if for commercial purposes - if you want to format it as a book and sell it, feel free. You can also modify the contents to your heartʼs desire as long as itʼs shared in the same way - any derivative works must also be shared under the Creative Commons Attribution-Share Alike 3.0 License.I only have two requests. One, if you write about this on your website, include a link back to the original source of the document - http://www.thesimpledollar.com/onepage/. Doing this enables new readers to always be able to retrieve the latest version of the document. Two, if you do something interesting with this document (creating something new and compelling with it, use it in a classroom, use it in a major media source), please let me know by dropping me an email at trent@thesimpledollar.com.All uncredited art was produced by me and is also shared under the Creative Commons Attribution-Share Alike 3.0 United States License.Everything PF http://www.thesimpledollar.com 2/49

My StoryI was born in raised in downstate rural Illinois. Growing up, my family didnʼt have a lot of money [1], but they did have a lot of love. They taught me the value of living frugally [2], but it wasnʼt always coupled with great ﬁnancial lessons. In short, I had little idea how to manage my own money, and when I left home for college, I made a long sequence of ﬁnancial mistakes. [3] Flash forward to April 2006. I had a good job, was married, and had an infant son, but I still hadnʼt learned the value of managing my money. To put it simply, I had a ﬁnancial meltdown [4], capped off by a long night of soul searching while facing a pile of bills that I simply couldnʼt afford to pay [5].That experience woke me up. I dove into personal ﬁnance books, reading them by the hundreds [6]. I started throwing the book at our terrible ﬁnancial state, trying every tactic that I read about. And it worked. Over the course of two years, we paid off two car loans, ﬁve ﬁguresʼ worth of credit card debt, ﬁve ﬁguresʼ worth of student loan debt, and several personal loans. This turnaround laid the foundation for many things we had only dreamed about to that point - we bought a home, had another child, built a strong emergency fund, and, eventually, I was able to change careers and become a writer, taking a pay drop but living out a dream Iʼd had since I was a child.How did I do it? The cover of this document tells the truth of the matter. Itʼs the blueprint for all of these great changes in my life.Want to know more? Letʼs go.Everything PF http://www.thesimpledollar.com 3/49

Idea #1: Spend Less Than You Earn!Annual income twenty pounds, annual expenditure nineteen nineteen and six, result happiness. Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery.Charles Dickens, David CopperﬁeldIn the end, this is the fundamental rule of personal ﬁnance: spend less than you earn [7]. Itʼs the one point that comes up time and time again in almost every personal ﬁnance book you read [8] or talk that you hear.Itʼs easy to see it when you look at each side of the coin. Letʼs say you earn $30,000 a year and you spend $31,000 a year. That extra $1,000 has to be borrowed, often from sources like credit cards. The following year, in order to maintain your lifestyle, you still spend $1,000 a year more than you make, plus you spend $300 more than that just making the minimum payments on your debt, leaving you a total of $2,200 in the hole (the $1,000 extra you spent the ﬁrst year plus the $1,000 extra you spent the second year plus the $300 extra you spent repaying that debt minus the $100 you actually managed to pay off). The debt builds - after the third year, youʼre $3,600 in debt. It Everything PF http://www.thesimpledollar.com 4/49

keeps growing and growing and growing until that debt is eating up all of your income, leaving you in misery.On the other hand, letʼs say you only spend $29,000 a year - only $2,000 less in spending. That extra $1,000 goes into your savings account and earns 3%. The next year, you drop another $1,000 in the account and now you have $2,030 in there. The next year, another $1,000, bringing you to $3,060.90. That money builds up and soon you have a house down payment or the seed money to start the small business of your dreams - or even something as simple as the ability to easily pay for a car repair without your heart skipping a beat.The difference between these two stories is only $2,000 a year. There are two avenues to achieving this goal: spending less and earning more. By working on either (or both) of these areas, you can increase the gap between those two numbers - and that gap is your ticket to freedom [9]. The harder you work on either spending less or earning more, the bigger that gap will become and the quicker that train to your dreams will arrive at the station.Letʼs look at each side of that coin.Everything PF http://www.thesimpledollar.com 5/49

Idea #2: Earn More!It's better to hang out with people better than you. Pick out associates whose behavior is better than yours and you'll drift in that direction. Warren BuffettSo how does one earn more? Many people will argue that there is no universal way for people to earn more money, and theyʼre right: some people are born entrepreneurs, others function much better in an ofﬁce environment. Some people are endlessly creative, others are masters at completing long lists of tasks.Once you dig past that, though, there are some common things that anyone can do, regardless of their ﬁnancial state, to earn more money.Get Started Now! The best way to get started is found in your own workplace. Everything PF http://www.thesimpledollar.com 6/49

Go to work well-rested and presentable. Never show up to work looking like you just rolled out of bed. Take a shower, wear clean clothes, use deodorant, brush your teeth, and do your best to look presentable [10]. Also, get a good night of sleep before work so that you can be as mentally and physically fresh as possible. Every interaction you have in the workplace will reﬂect either positively or negatively upon you, and you can very easily increase the positive-ness of those interactions by just taking a half an hour to make yourself presentable.Minimize negative comments. Every work environment provides ample opportunities for negativity, whether itʼs just workplace gossip or your manager is asking questions. While it might feel good to participate in the negativity of gossip, donʼt (feel free to listen, but donʼt jump in with the negativity). Even when supervisors are seeking comments on other workers, hold back Women workers in ordnance shops, Midval Steel and Ordnance Co., on the negativity and look for what CNriceedtito: wNna, tiPoan. alH Aarncdh icvheisp painndg Rwiethc oprndes uAmdamtiicn ihstaramtimoners. 1918. Lt. Lubbe. positives you can ﬁnd. Negativity in the workplace drags everyone down and positivity lifts everyone, so stick with the positive.Donʼt “backstab” anyone. Along those same lines, youʼll have many opportunities to “sell out” others in the workplace. Avoid it at all costs. If you have an opportunity to discuss other workers or particular situations, you might perceive that piling on those workers or those situations will beneﬁt you - rarely is that actually true. Instead, look for the positives you can outline about anyone or anything.If you have downtime, ﬁnd something useful to do. Many workplaces have times where there is simply downtime - youʼre waiting on new customers, youʼve ﬁnished your current project, and so on. That downtime is key in separating the people who get ahead from the people who get left behind. Find things to do with that time thatʼs useful. Clean up your workspace. Clean up the store. Work on a low-priority project. Improve your skills. There are always things that can be done - donʼt just sit or stand around to be told what to do.Everything PF http://www.thesimpledollar.com 7/49

Do every task youʼre given as well as you can. When youʼre given a minor, menial task, itʼs often very tempting to do it with minimal effort just to get it done. Youʼre supposed to sweep the ﬂoor, so you do it mindlessly and do a mediocre job. Youʼre given something to type up, but you donʼt bother to check it for typos. Youʼre given a mundane system administration task, so you overlook a basic step. Instead of falling into that trap, try to give your complete focus to the task at hand and do it as best you .nacLearn from (and emulate) the people who do their job well. In most workplaces, itʼs easy to identify the top workers. Theyʼre the ones that managers defer to and ask for advice. Theyʼre the ones who always seem to come through with the things that need to be done. As a result, they have job stability, plenty of options, and likely a very solid salary. Learn from these people. Ask them plenty of questions about how they get things done. Watch what they do, particularly with their downtime. In some situations, it might even be appropriate to ask them to be your mentor [11].Build positive relationships with everyone in the workplace. You do nothing but gain from building a positive relationship with everyone in your workplace, from the highest level of management that you can easily interact with to the person who empties the trash cans. Be friendly to everyone. Ask how their day is going. Find some common interests and talk about them. The more people you develop positive relationships iSnetoc rveotacraiteiso,n halo sucsheowoilvse tso, lweoarmne nw afrr owmo rakll. oTvyepri ccael natrrea l thFelosrei dian tahree getting with (both up and down the hierarchy), 1D9a4y2t.o nCa reBdeiat:c hN abtrioanncalh Aorfc thhive eVs oalunsdi aR ceocuonrtdrsy Avdocmaitniiosntraal tisocnhool. April the better off youʼll be.Ignore poisonous people. Every workplace seems to have a poisonous person or two. I know Iʼve interacted with plenty of such people in my years - and in a few cases, theyʼve really reduced the quality of the work environment and made me more negative. If youʼre stuck with a poisonous person, just minimize all interaction with that person. Everything PF http://www.thesimpledollar.com 8/49

When you do have to interact, stick with the facts and get back to your own tasks. That person might spew some poison about you, but most workplaces have pretty clearly identiﬁed the poisonous people and take what they say with a grain of salt, so donʼt let their responses or backstabbing bother you. Get your work done and move on with life.Never use your sick leave as “extra vacation.” In one environment where I worked, this problem was endemic. As soon as a person had enough sick leave built up to take even a single day off, that person called in “sick” like clockwork - with one exception. Want to guess who the one person was that received a raise and then, later, a promotion was? Itʼs ﬁne to use your sick leave when youʼre actually ill, but consistent and reliable presence in the workplace is a huge beneﬁt for your long-term career goals.Improve yourself in your spare time. The simplest way to do this is to work on getting in better shape. Get some exercise [12] and eat a healthy diet [13]. Doing this will improve both your energy and your appearance, things that are purely beneﬁcial in any work environment. If you have a job that requires some speciﬁc skills, ﬁnd ways to improve those in your spare time as well. Keep up to date on your speciﬁc area of knowledge. Learn what you would need to know to take the next step in your career.Step up to challenges when they present themselves. When a challenging situation comes up, donʼt shy away from it. Step up to the plate and give it your best shot. If you think it might be over your head, ask for help when you need it. If you show yourself able to handle challenging tasks, youʼll become a more valuable employee, and a more valuable employee gets more perks.Be a leader when itʼs needed. When difﬁcult situations occur, every workplace beneﬁts from having someone they can rely on as a leader. Be the person that speaks for the workers during a meeting. Be the person who helps people out when theyʼre going through a crisis. Eventually, youʼll ﬁnd that people simply come to you by default - and that includes management.Own up to your own mistakes. If you mess up (and you inevitably will), admit to the mistake and do what you can to rectify it. Donʼt try to hide it. Donʼt try to pass the blame to others. Apologize well - not facetiously [14]. Everyone makes mistakes. The winners Everything PF http://www.thesimpledollar.com 9/49

are the people who own up to those mistakes and then go the extra mile to ﬁx the created problem.Stand up for yourself when you want a raise or promotion. If you want a raise or a promotion, be clear about it. Ask your supervisor directly for what you want - and be able to make a good case for it. If you get a “no,” ask what you need to do to put yourself in position for it and do just that. If you donʼt stand up for yourself, no one will.Get Educated This doesnʼt mean drop out and go back to school. It merely means to keep learning new things. If something interests you, read a book about it [15]. Take evening classes to get certiﬁcation in a certain area or get a mastersʼ degree. No matter what youʼre doing, thereʼs some way you can learn more and improve yourself.Develop More Income Streams Always be on the lookout for ways to have money rolling into your pocket from a lot of different places [16]. Maybe youʼre a good writer and can sell a short story or an online ebook. Maybe youʼve got a little piece of land somewhere that you can lease to a farmer or a developer. Maybe you spend your free time managing a ﬂower bed in the park - pPuomwpe.r Bhyo uLseew ims eHcihnaen, ic1 9w2o0r. k inCrg eodint : a steam National Archives and Records why not put a little wooden freewill donation box out there Administrationfor people to drop a coin in? Maybe you have some extra cash laying around with which you can buy a long-term treasury note that will keep issuing you a check every six months [17]. Having more income streams merely means that losing one of them (like your job) is less devastating in your life and it also means your overall income for now will go up.Start a Side BusinessInstead of burning a few hours in front of the television each evening [18], how about investing at least part of that time into starting a side business [19]? You can try starting a blog with a few ads on it, or maybe youʼre good with woodworking and can make deck furniture. Maybe youʼre good at baking bread and can take loaves to the farmerʼs Everything PF http://www.thesimpledollar.com 10/49

market, or maybe you deeply enjoy gardening and can sell vegetables. There are lots of possibilities out there for starting a business that will supplement your current income and perhaps eventually grow into your main income [20].Move Towards Your PassionsWhenever the opportunity presents itself, gravitate towards the things that really excite you, because passion is what will make you successful [21]. For me, my passion is writing, so Iʼve made an effort to gravitate towards it by working on The Simple Dollar in my spare time. For others, it could be anything - maybe itʼs leading a team, or perhaps itʼs writing beautiful computer code. Whatever really excites you and makes you want to do more and more and more and better and better and better, thatʼs what you need to move towards at all times [22].Donʼt Burn BridgesYou never know when a relationship youʼve forged in your past might come in handy later on, even the ones you completely donʼt expect. Thus, even if you feel wronged in a situation or want “revenge” on some people - or even if you just feel an urge to spread negative gossip - resist it. As you get older, youʼll ﬁnd yourself time and time again bumping into people that you forged relationships with earlier on - if you burned those bridges, youʼll ﬁnd that eventually youʼll have burnt that very bridge that you need to cross to get ahead. My advice? Never spread a negative word about anyone, because it never helps.Keep in TouchWhen you do build a bridge with someone, donʼt let it get old and worn out - spend the time to keep in touch with that person. Shoot them an email or a phone call every once in a while just to see what theyʼre up to. When itʼs clear they need help and you can easily provide it, always provide it. I found the book Never Eat Alone by Keith Ferrazzi [23] to be particularly powerful in this regard. Iʼm rather introverted, and itʼs often a challenge for me to initiate and then keep communication going with someone, and this book provided tons of tips on how (and why) to keep contact with people.Everything PF http://www.thesimpledollar.com 11/49