Peace, Love & Spreadsheets

 High-yield savings accounts (HYSAs) are all the rage these days, with interest rates above 5%. They haven't always been this good! But I wanted to show some numbers about why an HYSA can't take the place of investing in an index fund that follows the market. If you KNOW you'll need some money in a year or two then sure, you don't have time to risk it in the market. The stock market goes up and down. About 75% of the time, it goes up, but we have no way of knowing what's going to happen in the next year. For example, let's compare a fabulous HYSA with a 5.5% interest rate to the 2008 stock market: It's sad. If you invested in 2008, the market would have crashed and your investments would be worth only $862. If you needed that money right at the end of 2008 and had to sell, you would only get $862 back even though you'd put away $1200 ($100 a month for 12 months) in cash. That's why we say if you need the money in a year - don't invest it. It'...

 "Automate everything!"  That's the typical advice from financial planners about budgeting, and I love it. Program your direct deposit to split off a bit into retirement and savings. Sign up for automatic billing so you don't miss utilities. All good. But if you're like most people, the bulk of your money in and out can't be automated. The cash envelope method is one way to get around this. I kind of did this when I was in my 20s... every week, I'd take out my budgeted cash for spending on groceries, lunches, coffees, and nights out with my friends. I was young and single and didn't have many complicated expenses so this worked for me. It was also a million years ago, because I am old. Years later two things changed: First, I had a family. I couldn't feed four of us on a few dollars a day, taking cash out for the week felt like a heavy pile of cash. It was never traceable, it was bulky to carry around, and the system depended on physically going to...

 I'm always on the lookout for simple steps that beginners can look at to get started, and ran across The Money Guys Financial Order of Operations (FOO). I like it a lot more than the baby steps, and it rhymes with the popular S&P 500 index fund VOO!  You can read all about it here but here are my thoughts. They start off with some ground rules... like a preface. First, their big goal is having you save 25% of your gross income, so if you like thinking long term you might figure up what that is now. Second, they state why they left out giving and charities... because that's not a step. It's part of everything. I agree! We shouldn't WAIT to make the world a better place, our help is needed now, so always find a way to give. But let's get into the steps.  1) Deductibles Covered Look at your insurance deductibles (health, home, car) and save up enough to cover your highest one - you're probably not going to blow out every deductible at once. 2) Save for retire...

 The idea of FIRE (Financially independent, retire early) started up in 2018. From what I can tell it was started by bloggers who worked a lot, saved money, lived very frugally with the goal to stop working. I've learned a lot from some of them... Mr. Money Mustache, The Frugalwoods, but I've also decided FIRE isn't for me. The frugal living ideas can't be beat. The Frugalwoods book is full of them, they really spend a lot of their lives making a game out of spending as LITTLE as possible. I love the ideas, and I think it's a responsible thing to do. When we consume less, we leave a smaller footprint on the world. We take less, waste less, we can give more. But that reasoning is a footnote in a lot of these stories, the main driver behind their decision is their hatred of their jobs and eagerness to GET OUT of the corporate life as soon as possible. It's the "work won't love you back" mantra. And that's where I look the other way. I think it is...