The Top 5 Financial Moves I’ve Made so Far

top 5 financial movesI’m really not trying to brag. But hey, I write about money. What better way to learn about the do’s and don’ts than to hear the specifics that people like me have done well? Don’t worry, I’ll have moments of money remorse that you can learn from as well, but here are the top five most beneficial money moves I have made so far at the ripe old age of 29.

 1. Investing early – Contributing to a retirement account early and often is the BEST way to get started on the “I don’t want to work until I die” track. I have made it a priority to put 12% of my income since age 22 into mutual fund accounts that are helping to make sure I get there. Choosing low cost companies so that your money is really working for you as opposed to paying some guy in an overpriced suit’s bloated salary is key. There might be some of you saying, 12%? That’s all? I know there are some folks that definitely contribute more than that in order to meet their retirement goals more quickly. BUT, I prefer diversification, which is why I have also made a diligent effort to save for…

 2. Buying a rental property – My wife and I bought our second property in November of last year. We then rented out the home we had been living in. Don’t let anyone fool you, rental properties take work. They do, however, reap substantial rewards. I have an upcoming post dishing all the ins and outs of rental properties for those of you who are interested, but for now, suffice it to say that I am making hundreds of dollars every month with just a few hours of work. The reason that I only invest 12% of my income in retirement accounts is to save up to purchase more properties (I’m looking at another now). I truly think this is one of the best investments you can make over time, especially now, although it certainly isn’t the easiest.

 3. Giving money away – Money isn’t everything. It honestly isn’t even most things. Money can grant freedom from work or want but it can’t satisfy your heart. Giving your money away is one of the best things you can do for your attitude and the way you think about your assets. You’ll never miss what you give away and doing so will actually help you better appreciate what you do have. So make a commitment to find great places to give away out of your excess.

 4. Never having a car payment – I don’t think I can pick any one thing out of these five as being the most important, but if I had to, it would be this. I honestly wouldn’t have a rental home and I wouldn’t have been able to invest at the level I have thus far if it weren’t for my staunch belief in not having a car payment and not allocating precious few monetary resources towards a vehicle. There was one point about five years ago that I strongly considered buying a new car. It would have totally changed my financial future. If I had taken the new car at a dealership route I would be making my last payment right about now. Wow. Refraining from that purchase has allowed me to save thousands and thousands of dollars in payments, interest, and taxes over the last 5 years. My beater car has changed the ballgame for me.

 5. Not accruing massive student loan debt – This one I stumbled into through blind luck. I wasn’t thinking about student loans and how they would impact my monetary future at 18. I don’t think there was much going through my head at that time besides girls and sports. That lack of consciousness about personal finance is part of the reason I strongly believe that schools should make personal finance classes a more important focus. In my college tips article I gave an example of a friend who has a student loan payment equivalent to a monthly luxury car note. How debilitating! My student loan bill is $70 a month. I’m really fortunate for that. College is awesome and important for your future, but don’t mortgage that future through astronomical amounts of school debt. There are some great educational institutions out there that won’t jeopardize your future through outrageous tuition costs.

 I hope my top 5 financial moves list has been of some help to you. It takes some sacrifice and planning, but you too can be well on your road to financial freedom with just a few important moves in the right direction. So get going!

What are some of the most important factors that have led to financial security in your life?

22 Comment responses

  1. Avatar
    May 09, 2013

    Joel,

    Good post. Student loans can hamper anyone. A friend advises high school students and part of her job is obvious what college to go to. In 5 years her advice has changed from going to Davidson or Vanderbilt is worth because of future income. She doesn’t tell students that anymore. Now her advice is go to community college for two years and then transfer. The debt just isn’t worth it.

    Reply

    • Avatar
      May 09, 2013

      Thanks Alex. I totally agree with your friend. 4 years of premium education costs a lot and severely limits your future flexibility. The two year community college advice is golden.

      Reply

  2. Avatar
    May 09, 2013

    What low cost company are you using for your investments?

    Reply

    • Avatar
      May 09, 2013

      I use Vanguard almost exclusively. I like Fidelity and Schwab as well.

      Reply

  3. Avatar
    May 09, 2013

    Norhing wrong with crowing about good habits. All it can do is encourage others to do the same.

    Reply

  4. Avatar
    May 10, 2013

    ~3.5 / 5 ain’t bad! closing on second home Monday (and and will rent first). never had car payment (drive it till it dies method and do most repairs myself). student loans are a couple hundred a month but will be paid off soon (small percentage of income), been investing for several years now, but not quite there yet to give away (but maybe that’s just an excuse). I really appreciate the advice and wisdom of the great Clark Howard on getting me started in all this

    Reply

    • Avatar
      May 10, 2013

      Not bad at all W. Congratulations! And I recommend starting small in giving your money away. $20 here or there can go a long way for certain organizations. You don’t have to give in giant lump sums. Giving some of your money away helps us to think about it properly in my opinion. It helps us to understand that money isn’t really all satisfying and that there are others that lack the basic necessities that we take for granted. But good luck on getting started with that as well. Thanks for stopping by.

      Reply

  5. Avatar
    May 10, 2013

    Good suggestions Joel. I am 29 as well and have applied 1, 3, 4 & 5 only after making many financial mistakes early on. Too bad I didn’t find you and Howard earlier on when I first started investing. Since I have applied these steps they have allowed me to live below my means and save more. I hope one day to own a rental property however for now it will not mesh well with my career. The first thing I ask a young person I meet is “do you have a ROTH IRA?” if not and they are willing I almost immediately help them set one up with vanguard.

    Taylor from Rochester MN

    Reply

    • Avatar
      May 10, 2013

      Oops once again I called Clark by his last name again even after there was a whole segment on it.

      Reply

    • Avatar
      May 10, 2013

      Sounds like you are on the right track Taylor. At 29 you are still young enough to really take advantage of the time value of money. So keep going and try to bump up your retirement by 1% every year. It will make such a difference for you in the long run. And owning rental properties isn’t for everyone. I really like it but I wouldn’t assume that everyone should get into it or even most people. And keep plugging those Vanguard Roth IRA’s. They are the best!

      Reply

  6. Avatar
    May 10, 2013

    Good points! I really believe in rental property as a basic method to wealth. The absolute best fiancial move I use is making savings a priority.

    Reply

  7. Avatar
    May 10, 2013

    Thanks Krantcents. Rental property is the best!

    Reply

  8. Avatar
    May 12, 2013

    I think number 1 is the most important and if I had to pick one out of the list that would be it. I think that if you save a lot and save early early in life, you will have financial freedom before retirement age (assuming you are somewhat wide with your money).

    Reply

    • Avatar
      May 12, 2013

      No doubt Jose. That is definitely a big one. I think I pinpoint my car as being the most important because it allowed me to save a large percentage of my pay early on. A big part of the reason that young people don’t start investing is because they are spending everything they make – or more. Learning to live within your means, maybe even drive a beater, frees you up to be able to invest for the long haul, which will eventually make you financially independent.

      Reply

  9. Avatar
    May 13, 2013

    Didn’t want kids, so spent income on rental property before I even owned my first home. That was in 1992. Twenty one years later and have six figure income from Bay Area apartments building. Rentals are a better investment in this economy.

    Reply

  10. Avatar
    May 14, 2013

    Nice Lisa! I hope to have a similar story to you in 20 years of owning rental properties.

    Reply

  11. Avatar
    May 14, 2013

    Some great points. I unfortunately didn’t avoid #5 but paid off my hefty student loan last May (debt free now!) which put a huge hold on doing everything you’ve been able to do thus far.

    Student loan is the number one thing dragging down my friends that I graduated with – many who never utilized their degree. I hope the younger generation will learn from ours (20-30 somethings). Straddling yourself with all sorts of debt before you start your career, is something to not take lightly. Financial education definitely be a required high school course!

    Reply

  12. Avatar
    May 15, 2013

    Joel, I think we could be friends. I’m 28, have two rental properties, no student debt, never had a car payment, donate money significantly, and invest heavily for retirement. You’re just lucky enough to hang around Clark all day.

    Reply

    • Avatar
      May 16, 2013

      Well done Ben. Sounds like you are on the path to early financial independence.

      And you are right. I’m lucky to get to hang with Clark every day.

      Reply

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