There have been over 10,000 books written on personal finance. This video summarized the main points into three major areas of personal finance. The CEO of Mint.com talks about making smart decisions that have greater impact in the long run. Things like renting instead of buying, investing early in life, having a credit card that pays out rewards, and other personal finance tips are discussed.

In this video a couple are having a hard time making ends meet. They continue to get more bills and have tried a number of things like pulling out loans to make payments on their existing debt. The author of a new system teaches them a sure fire way to get out of debt. The ideas are strange to the couple but the author helps them understand tips like: “If you don’t have money, don’t buy stuff.” and “You make sure you have money, then you buy stuff.”

In speaking to an MBA class Warren Buffet provides great words of wisdom. He talks about what makes a wise investing decisions. In this video talks about the idea of investing in a person you know. Would you pick the smartest? The most social? What qualities do you look for? Hopefully you become the type of person that you would like to invest in.

Words of Wisdom

• “Japanese companies earn very low returns on equity.”
• “Time is the friend of a good business and the enemy of a bad business.”
• “If you risk something that is important to you for something that is unimportant to you, it just does not make any sense – and the odds don’t matter.”
• “I was going to do the same things when I had a lot a money as when I had very little money.”
• “You are out of your mind if you keep taking jobs you don’t like because you think it will look good on your resume.”
• “The beta of a stock doesn’t tell you the risk of a stock. It doesn’t tell you a damned thing about the stock.”
• “Taking a job you don’t like is a little like saving up sex for your old age.”

The “Money as Debt” video describes what money actually is. The video explains how money is being created through debt. The video provides a history of money and how bankers have created money. Modern financial policy and fiat money principles are not sound or logical. This video goes in depth about how the current financial system works.

The difference between being financially independent and being a financial slave is due to one thing: we make new bills instead of treating ourselves like a bill. When we graduate from college we buy a big house, a nice car, and eat at nice restaurants. We buy nice toys and new bills show up in our mailbox. The more money we make the more bills we create. The cycle continues until we can’t keep up, crisis strikes, or we wise up.

If you treated yourself like a bill you’d being doing pretty good. You’d be on your way to a great retirement. Your kids would have enough money to go to college. You’d likely be out of debt and you’d sleep better at night.

There are many ways to pay yourself like a bill. Setting up an online savings account or an online brokerage account is fast and easy. Making a goal and to max out a ROTH IRA is a great way to start. To do that you’ll need to automatically pay yourself $100 a week. Can you afford to pay yourself $400 a month for your retirement? If not, try killing off some bills and/or paying down debt. When a new shinny toy demands your money, tell it to go to hell because you’re paying yourself first.

Automotive
Check your tires’ air pressure. This can increase your gas mileage by more than 10% depending on how bad they are. Make sure you do it at least each time the temperature changes.

Maintain your car. This is really hard for me to do. It seems like I’m flushing money down the toilet when I have to pay for repairs on my car. But maintenance is different than repairs. Getting regular oil changes, changing the air filter, and getting the wheels balanced will prevent major repairs and save you in gas money too.

Consolidate your trips. To save money on gas try making lists and only going places once. As the lists fill up make a single trip to the store. You’ll save time, money, and gas by cutting your little trips to the store for the occasional food item. A list at the grocery store will prevent impulse purchases as well.

In addition to making a list try planning your route. If you are coming past the hardware or the dry cleaner on the way home stop off then instead of making a special trip.

Home
Change the filter in your furnace. My dad is a professional heating and A/C man. Do you know the single biggest thing that makes him money? People not changing filters regularly. Dirty filters break more machines than any other factor combined. A new filter costs less than a dollar and is easy to replace. A dirty filter will drive up you’re A/C bill because your furnace is working overtime trying to move enough air through your house to get it to temperature. Changing the filter every 3 months is best but every six weeks would be better. You’ll be healthier and your utility bill will be lower.

Lower the thermostat in the winter and make it higher in the summer. Leaving your thermostat on 68 is a great way to cut your gas and electric bills down. The same goes for keeping the thermostat at 72 in the summer months. If you just can’t get warm at 68 degrees try a long sleeve shirt, slippers, and avoid lounging in your underwear. To feel nice a toasty try jumping on your treadmill or sipping some hot chocolate.

Make the switch to florescent light bulbs. As your incandescent light bulbs blow out replace them with the new florescent light bulbs. Each bulb you replace will save you up to 8 times the electricity usage. And if you’re wondering, yes, they are worth the investment. Depending on your electric bill the payoff time will vary. Not only do these new bulbs use less energy but they last longer, much longer. One word of warning, don’t buy the cheap ones. I did and I regret the decision. The no name cheap bulbs work fine at first but their life expectancy is very short. Buy the name brand bulbs and you’ll be happy you did.

Personal Finance
Take the credit cards out of your wallet. Consumers will spend billions of dollars in interest payments this year on consumer debt. Switching to an all cash way of life will save you from paying interest. While credit cards are convenient they can eat you alive without you even knowing it. The best thing to do is to cut up your cards. The next best thing is to take them out of your purse or wallet.

Limit your exposure to advertising. You’d be surprised how well marketers can make a ‘want’ become a ‘need’. Cutting the advertisements from your life can be difficult but there are some ways that work. For starters try renting a movie instead of watching one on cable. If you have a local library you can rent many of the TV shows running on prime time after the DVDs are released. Try to avoid shopping malls and new car lots. The less you know about a new product the less likely you are to think about it.

Make a budget. Budgets don’t have to be extravagant. Try something simple. If you know you spend a lot of money eating out every week try setting your budget to 20 dollars or less. Many bills that come in the mail just need to be paid but try paying yourself first. Setting little rules up like “I will pay myself 10% of each paycheck” is a great rule to live by. Once you pay yourself put that money into investments.

Make your meals at home. I am always blown away at how much money I spend on restaurants. It doesn’t take long for the money to add up. Make eating out a treat and only go with friends and family. Making food at home can be enjoyable. Recently my wife and I have been experimenting with making the perfect pizza. We try different dough recipes and use different sauces. We’ve also bought this cookbook: The New Best Recipe Book. I’ve found that the quality of the food I eat is much higher. It’s also healthier and cheaper too.

Free Entertainment. Libraries are full of great free entertainment. I’m not just talking about books either. As mentioned earlier libraries have a lot of audio books, DVDs, and videocassettes of new popular media. If you haven’t been there in awhile you might be surprised at what you’ll find. There are also a lot of free things to do in most cities. Museums, live shows, and art galleries can have a lot of hidden gems of fun. The other place to find a lot of free entertainment is the internet. No, I’m not talking about naughty pictures either. There are hours of great content to be found on podcasts, youtube, and blogs. Lastly spending time with the ones you love is always free. Play board games, cuddle, or tell each other stories.

The Final All Encompassing Tip
Plan Ahead. If there is one financial tip that will save you thousands it’s to plan ahead. Plan your grocery list, your budget, and your financial goals. The less planning you do the more you’ll be hit with a ‘poor-planning-premium’. Cell phone companies, grocerie stores, gas companies, and everyone else in the market charges a lot for people that prefer not to plan. Beat the curve and think everyday life through once a week.

In all my research these are the five steps that come up again and again. If there are any steps missing or things that need to be added please leave a comment below.

1 – Reprogram your brain. This involves learning the truth about debt, compound interest, consumerism, and identifying harmful behaviors. Once you know the truth about money and how it works your actions will fall in line. Trying to do the next steps without first reprogramming your brain will complicate the whole process. Be sure to involve your spouse or significant other on this first step. If you don’t, misunderstandings and conflict will surely arise. When you both understand the “why” of money theory applying the “what”, or the specifics, becomes much easier.

2 – Make a budget. This is the framework that you’re financial success will be built on. Your budget can be simple and straightforward. The more you use it the more it will help you will all of your goals.

3 – Pay Down debt. Develop a plan to pay down and consolidate your debt. Call your creditors and ask for lower interest rates, special payment plans, and other perks to help you achieve your goal. Now, pay off those creditors that are charging the highest interest. After you’ve paid off the big offenders use that same money to carve down your other debts. For example, Let’s say you were paying the first creditor in line $100 a month and the second creditor in line $20. After you’ve paid off the first creditor pay the second creditor both the $100 and the $20 a month instead of only paying the minimum of $20. Follow this principle until you’ve paid everyone off. If you’ve truly reprogrammed your brain the idea of paying off your debt should be very exciting to you.

4 – Get an emergency fund. You could be working on this step at the same time as the third step. If all you can afford to put into your emergency fund is $10 a paycheck then do it. Over time you’ll soon have a nice safety net to rely on. Whatever you do don’t spend your emergency money on anything except for a true emergency. There are a lot of opinions on how much you should have in your fund. Some people say to have enough for 90 days without work, others say $1000. Whatever you decide on work until you’ve achieved your goal.

5 – Open a Roth IRA. You should plan on keeping your money here for a very long time. Don’t invest your grocery money or your emergency fund. In other words, this is money you don’t need right now. Opening an IRA requires some research but the signup process is fairly easy. Once everything is set up you can start learning about investment strategies. There are many opinions on investment strategies but it really comes down to what works best for you. Luckily, there are many low risk investment options available for the beginner.

Hopefully these steps will help you see the steps required to get your financial feet underneath you. This list doesn’t even scratch the surface on most of these subjects. There are literally millions of pages written about these topics. But as a starter list this is a good way to map out your future plans.