Peter's Digital Garden

I’m not a financial advisor, but these are the rules I follow.

1. Until you hit the end of this list, keep things simple. That means get a checking account at a bank, and a credit card offered by that same bank. Make sure the credit card doesn’t have a service fee. You are better off asking your existing credit card for a higher balance than getting a new credit card.
2. Setup auto-payment for everything.
3. Your paycheck should automatically deposit to your checking account because that will waive most monthly service fees.
4. Your credit card balance should be automatically paid from your checking account each month to avoid dealing with the credit card’s APR. (I honestly have no idea what my credit card’s APR is, I have never left a balance on it.)
5. Same for other expenses, rent, auto, …
6. Avoid the debt traps. Never use a payday loan. Never leave a balance on a credit card, that is why you use autopay. The only debts you should have are fixed rate loans issued by a bank because it will only lend money it thinks you can repay.
   Unless a “payment plan” system is interest free, then don’t bother. Either pay the amount up front, or get a loan through a bank. Most Auto loans are actually through banks.
7. Accept free money. Some deals will waive fees for the first year or match your money.
8. If you have the option for a 401k, take it! Especially if the employer offers any kind of matching. Allocate at least enough to take advantage of any matching your employer offers.
9. If your company offers a share purchase plan with matching, take advantage of it! That is matching money the company is giving you. Depending on the “vestment” period, you can sell those stocks off later.
10. If you get a deal that waives fees for the first year, great. Just make sure you can afford the fees once that trial period is over. Because each time you start or cancel an account, that impacts your credit rating.
11. Gambling is not investing, any money you use for gambling is actually paying for entertainment. If you manage to get any money out, great, that is a bonus. I also consider cryptocurrencies like Bitcoin, foreign currencies, commodities like gold, and the stock market like gambling. Dealing with those deserves being a full time job.
12. Wait until you have about 2 months worth of expenses in your checking account before continuing down the list. Decide what your safe balance is in your checking account (2 months worth of expenses is a good default). Each month, move anything extra into one of the investment methods.
13. Certificates of Deposit (CD) are safe, but have a very low rate of return. You give the bank either $5000 or $10,000 for 1 to 5 years, and they guarantee you get more money back. But, you can’t get access to that money until the CD finishes.
14. Money market accounts are basically like a savings account, but require a higher balance, and have fees for withdrawals.
15. Money market accounts are slightly less safe, but are easier to get the money into and out of. With a money market you could loose money over a month, but you mostly gain money over a year. You can generally move money in and out with 3-4 days notice.
16. Mutual funds are where you start dealing with actual investing. In a mutual fund, someone else is managing which stocks, bonds, etc to purchase or sell, and when. All that you do is add your money to the pool they are working with and gain some of the benefits. Note that you can and probably will lose money occasionally. But year over year mutual funds do well.
17. Don’t bother with most other investment opportunities until you talk with an actual financial advisor.