Day 29: Don’t Feel Bad For Keeping Things Simple
Here’s what I think – If you spend enough time reading about personal finance, watching CNBC, and visiting financial websites – your head might explode. With all of the information that is available, you would think that everyone in America would be financially secure, out of debt, well-diversified, and on the way to enjoyable retirements. But, as you well know, most folks are living paycheck-to-paycheck, in debt, poorly invested, and worried about their retirement plans.
Is it reasonable to ask – “What’s wrong”? With so much information – so many ways to “get” educated and “take control” – why are so many people still struggling financially?
I think I know. Taking control appears to be “too complex” – so most people throw up their hands and settle. Most people don’t have (won’t take) the time to sit down and create a budget – because they don’t really know where to begin or how to begin. Lots of folks (contrary to what most personal finance bloggers might think) don’t pay off their credit cards each month – even though they know they should. I have seen statistics that over 50% of married couples don’t have wills, that more than 35% of workers don’t contribute to 401ks and that more than 30% of workers have borrowed from their retirement plans to pay off debt.
Why? If you talk to people, they will quickly admit that they worry about their money – but that’s about as far as it goes. Clearly, there is a huge gap between where folks wish they were and where they actually are. Pick up any personal finance and you’ll see dozens of ‘how to’ articles. Surf through my site (or those listed in my blog roll) and you’ll pick up tip after tip after tip – idea upon idea – for saving money, getting out of debt, and retiring with dignity. But (and this isn’t a sentence I will enjoy typing) most of the folks I know in real life are still confused, still in debt, still afraid, and still worried about their finances.
I cannot put this off to the standard – “their lazy, they don’t care”. So, I think that the problem is deeper – rooted in the fact that most folks are confused by financial jargon.
My goal, besides sharing my own story, is to create a place for “regular folks”. There are thousands of websites and dozens of magazines dedicated to the “insiders” – and I’m glad those websites and magazines exist. But, the truth is, I am quickly off-put by the “you should know our language” attitude of so many in the personal finance media.
Would you like to see my plans for 2008? Here they are:
- Each month, sit down for 20 minutes and create a budget
- Spend as little as I can – save as much as a I can – give as much as I can
- Fully fund my 403b ($15,500) – pre-tax – invested in an S&P 500 Index Fund
- Fully fund my Roth IRA ($5000) – after-tax – invested in VTI (Total Market ETF)
- Fully fund my Wife’s Roth IRA ($5000) – this money is after-tax – invested in RFG (Mid Cap ETF)
- Fully fund my Daughter’s ESA ($2000) – after-tax – invested in RSP (S&P Equal Weight ETF)
- Fully fund my Son’s ESA ($2000) – after-tax – invested in RSP (S&P Equal Weight ETF)
- Deposit all extra money into my savings account – use savings for major purchases
- Pay cash and avoid credit cards
Now, of course, as “life happens”, I might have to modify my plans (adding to them or creating new ones) – but the reality is, I like to keep things very, very simple. My goal is to create plans that are simple, straight-forward, and “what I’ll actually do”.
The real keys are:
- Have a plan that you understand
- Have a plan that you will implement
- Only change the plan if YOU are convinced that changing the plan is beneficial
I’d love to read your comments… Have you developed a simple system for managing your finances?
Observant readers will note that this series has taken much longer than 33 days. I can assure you, I am blogging as often as life permits.