10 Rules

Personal Finance Rules to Eliminate Your Debt and Change Your Life

This site is about rewriting the rules of conventional wisdom to get you focused on a true path to your goals. If you love to work hard and want to do so until you are 65, the following 10 Rules will help you get ahead.

But if you feel like rejecting the pressure to work until you are too old to enjoy life, these 10 Rules will help you move beyond.

Check back every week or two as we explore each Rule in further depth.


1. Combine Incomes, Finances and Efforts  

If you are married or a serious, cohabitating couple who are in it for the long-term, it is probably time to join bank accounts and develop a cohesive strategy for debt elimination and retirement. Being married with debt is about sharing the sacrifice and the reward.

2. Spend Less than You Earn

This is the easiest to understand, yet the hardest to follow. It is the cornerstone to debt freedom and financial Independence. Everything starts here. Just pay the minimums on your debt for the first month and focus on finding areas to cut.

3. Make a Monthly Debt Budget and Live by It

Once you’ve figured out how to live on less than you make, let’s compile all your debts in once place, preferably a spreadsheet. We will use this to determine how bad it looks, and how we should proceed with paying off the debt.

4. Pay Off Debts Smallest to Largest, Regardless of Interest Rates

This goes counter to math (if you pay off highest interest rate, you will pay off debt faster), but as Dave Ramsey says, if this were about math, you wouldn’t be in debt in the first place. Paying off small balances gives you quick wins that inspire you to keep going.

5. Make Big Changes for Big Results

Experts like Ramit Sethi urge you to forget about cutting from $4 to $2 coffees and focus spending cuts in large areas. For most families, this would be car payments and groceries. Other big changes include selling your new car, canceling cable, etc.

6. If You Don’t Need It, Sell It

The things we waste money on keep us from retirement. If you don’t need it, sell it, even if you bought it recently. If you are deep in debt, sell your cars, if possible. Have a garage sale or post items on Craigslist.

7. Save Monthly for Large, Anticipated Expenses

If you have an annual expense that is more than $1000, start saving a little each month so you are not left scrambling to come up with the money. Bonus points for doing this with an automatic transfer to a dedicated savings account like SmartyPig or ING Direct Orange.

8. Set Aside Some Money for Fun

If you are deep in debt, you probably aren’t ready for this step. But if you are well on your way with your debt payoff plan, maybe it’s time to begin budgeting for that vacation you want, or to attend that convention you’ve been thinking about every year.

9. Pay Off Debts Before Investing

Having debt is like having a negative investment. With interest rates of return so low, you’d be better off investing in yourself by paying off debt. The only exception would be a ridiculously high interest rate or return, which are rare anyway.

10. The Goal of Work is Retirement

If you don’t agree with this statement, then chances are you aren’t too concerned about debt or your financial future. Work should not be viewed as a tool to get more Stuff, but as a means to an end. What is your exit strategy?

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