Categories
Personal Finance

Putting Your Finances on Autopilot

One of the biggest tricks of personal finance is automating everything so you don’t need to think about it!  You set the goals, implement the strategy, and then sit back and let the automation take care of everything.  Here is a run down of how we execute our personal finance “system”.

Paycheck

Let’s start with the easy stuff like your paycheck.  Most companies will offer (or even require) direct deposit so you are not having to deal with paper checks.  Set your deductions like your 401k, HSA, FSA, according to where you are in the investment walk.  By doing this you are “paying yourself first” which is a great concept to achieve financial independence.  Some people will get fancy and separate their paycheck between different accounts but I like the simple approach of having it all deposited in a single account.

Banking: Checking and Online Savings

I opened my first online bank account in 2000 and have been doing my banking online for the last twenty years. In 2016, we moved to Ally Bank for our primary checking and savings accounts and love working with them. Customer service is great, they reimburse ATM fees, have competitive savings account rates, and a great app for mobile check deposits. Another feature I highly value is that our checking account is automatically linked to our savings account.  If we ever overdraw our checking account, Ally will grab the required funds from our savings account so we never have to pay overdraft fees.

In addition to Ally, we also have a no fee checking account with Chase so we have access to a local ATM to make cash deposits.  The Chase and Ally accounts are linked so transfers between them are easy. We don’t use this account much but have found it helpful when we needed it.

Credit Cards

We use credit cards to help with automation and we get the benefit of earning rewards each month.  All the credit cards we use are setup for automatic payment of balance in full from our Ally Checking account each month. We currently have three active cards:

  1. Costco Visa: This is our primary card for 99% of our spending
  2. Amex Blue Delta Skymiles: Delta offered me 75,000 bonus miles last year to signup for this card so I got it. We now only put Delta purchases on this card.
  3. Amex BlueCash Everyday: Backup card with no annual fee we charge one small bill a month on this card to keep it active

I switched to using the Costco Visa Card a few years ago as I decided the cash was more valuable given that I earn so many Delta flight miles traveling for work each year.  However, I am rethinking that strategy and might do some travel hacking and take some flexible points instead of the cash.  More to come on this!

2019 spending by category on the Costco card:
DescriptionSpend %
4% On Eligible Gas Worldwide1.4%
3% On Restaurant Purchases Worldwide5.9%
3% On Eligible Travel Purchases Worldwide0.9%
2% On Costco & Costco.com Purchases13.0%
1% On All Other Purchases77.7%
2019 Cash Rebate Earnings1.30%

In 2019, we averaged a 1.3% cash rebate on the Costco card.  That is ok, it is just not great.  In looking at the numbers, I should probably only be putting the Costco purchases on the Costco Visa as I should be able to do much better than 1% via another card.

If a bill allows payment via a credit card we use it!  Here are the kinds of items that all get paid automatically each month or billing period with the credit card: Electricity, Mobile Phone, Internet, Online Services, Home Security, Garbage, and Natural Gas.

Online Bill Pay

There are a few companies that don’t allow credit cards, so this is where online bill pay comes in handy.  Some bills can get setup as direct ACH bank transfers but there are others that will require a physical paper check to be mailed. What is this 1980? Ally handles both of these scenarios well and we use online bill pay for things like our HOA dues, homeowners insurance, and life insurance payments.  All of these are setup to be automatically sent

Don’t Get Your Water Turned Off!

All of our bills are setup to be paid automatically via one of the above methods except one:  the water bill.  The problem with our water bill is that it is a variable amount each month and the water company does not have a mechanism to do an automatic draft from a credit card or a bank account.  This is super annoying as I now have one bill that I need to remember to pay each month!  And guess what, a few years ago I forgot about it.  I was sitting at work around 4pm and I got a call from Crystal that our water had been turned off!  DOH!  This did not go well for me as it took the water company 2 days to get the water turned back on!

After this happened, I came up with a trick to make sure the water never got shut off again. The first thing I did was I overpaid the next water bill by $100 so we had a positive balance.  The next thing I did was I setup an automatic check to be mailed each month for a fixed amount of our average monthly usage.  Problem solved!  The water bill now gets paid automatically each month!

Automated Investments

Now that we have the income and bills accounted for, the final part of the automation system are the investments.  We have four investments that are automatically pulled out of our checking account each month:

  1. Vanguard VTSAX investment on the 1st and the 15th
  2. TIAA-CREF Equity Index Fund on the 1st of the month into both Brielle and Brendan’s GA 529 college savings accounts.

The above system works well for us.  We keep a small buffer in the checking account to account for any variances in the month and if we have a big purchase or unexpected expense we will instantly transfer money from the online savings account to the checking account.  With this system, combined with the visibility that Mint provides on the transactions, there is very little maintenance to do each month.  Just sit back and let the system work for you!

 

 

Categories
Photography

Photography Tip: #5 Use a Color Calibrated and Profiled Monitor

Photographers spend a lot of time thinking about color they even refer to things like “color science” when talking about how certain camera brands recreate the broad spectrum of colors in a digital image. When thinking about color, you want accuracy and consistency in your workflow to achieve the best results.

A key aspects of making sure you are getting accurate colors is to make sure you are using a color calibrated monitor.  I was late to the game on this in my photography journey and I really wished I had done this earlier.  It really makes a big difference in the quality and accuracy of the output. Why is color calibration so important?  When you are editing a file your display or monitor is the device that is taking the digital data from the sensor and translating it to the image that you see on the screen.  If your monitor is doing a poor job in his transformation you are editing from an incorrect baseline.  This will make it difficult to get accurate colors when you publish online or go to print your images.  Before I calibrated my monitor I would consistently see differences in output when looking at my photos on my iPad and iPhone or when printing them,  Those issues all went away once I was shooting RAW and editing on a calibrated monitor.

Using  a Calibration Device

So how do you calibrate a monitor?  It is actually really easy.  Most monitors today can support using 3rd party color calibration devices.  These small optical devices can be placed on your monitor and will read and calibrate the output.  I purchased an X-Rite ColorMunki that they don’t make any more but it was replaced by the X-Rite i1 Display Studio.

From the X-Rite Site:

Color Perfectionists know that a calibrated and profiled display is a critical element in an efficient digital workflow. Nobody wants to spend hours at their screen perfecting images only to find that their display wasn’t accurately representing their digital files. What you see on your monitor (or projector) has to match your digital file or you will never be happy with the result, no matter how much time you devote to perfecting it.

 

With its easy-to-use, wizard-driven software, X-Rite ColorMunki Display offers everything you could possibly need to get you to a brilliantly-calibrated display or projector while helping you stay focused on doing what you love. Plus, with X-Rite ColorTRUE, a free mobile app, you can even calibrate your iOS and Android mobile devices. For Color Perfectionists seeking simplicity, the ColorMunki Display will absolutely amaze you. And you don’t need to be a color expert to benefit from ColorMunki Display.

So if you have not stated using a color corrected monitor I highly recommend starting soon

Categories
Personal Finance

Book Review: The Total Money Makeover by Dave Ramsey

The Total Money Makeover: A Proven Plan for Financial Fitness

Author: Dave Ramsey
ISBN: 159555078X
Amazon Link: 
https://www.amazon.com/gp/product/0785263268
Table of Contents:

Chapter 1: The Total Money Makeover Challenge
Chapter 2: Denial: I’m Not That Out of Shape
Chapter 3: Debt Myths: Debt Is (Not) a Tool
Chapter 4: Money Myths: The (Non)Secrets of the Rich
Chapter 5: Two More Hurdles: Ignorance and Keeping Up with the Joneses
Chapter 6: Save $1,000 Fast: Walk Before You Run
Chapter 7: The Debt Snowball: Lose Weight Fast Really
Chapter 8: Finish the Emergency Fund: Kick Murphy Out
Chapter 9: Maximize Retirement Investing: Be Financially Healthy for life
Chapter 10: College Funding: Make Sure the Kids Are Fit Too
Chapter 11: Pay Off the Home Mortgage: Be Ultra-Fit
Chapter 12: Build Wealth Like Crazy: Become the Mr. Universe of Money
Chapter 13: Live Like No One Else

An influential voice in my personal finance journey

Dave Ramsey played a key role in my personal finance journey so I decided I had to publish a review of his best selling The Total Money Makeover which I first read back in 2006! While some of Dave Ramsey’s methods and advice are debated, there is no denying that he is the most popular figure in America when it comes to personal finance and money.  He has just published his 3rd edition of this book which has sold more than 5 million copies! The Amazon stats on the 2nd edition are impressive:

Average Customer Review: 4.7 out of 5 stars 4,071 customer reviews
Amazon Best Sellers Rank: #24 in Books (See Top 100 in Books)
#2 in Education Funding (Books)
#1 in Christian Stewardship (Books)
#1 in Education Workbooks (Books)

Here is his complete Biography:

Dave Ramsey is America’s trusted voice on money and business. He’s authored five New York Times best-selling books: Financial Peace, More Than Enough, The Total Money Makeover, EntreLeadership and Smart Money Smart Kids. And check out his new products: Financial Peace Junior and Junior’s Adventures Storytime Book Set! “The Dave Ramsey Show” is heard by more than 8.5 million listeners each week on more than 550 radio stations, “The Dave Ramsey Show” channel on iHeartRadio, and a 24-hour online streaming video channel. Ramsey Solutions offers a suite of products and services to help people get control of their finances and other aspects of their lives. Follow Ramsey on Twitter at @DaveRamsey and on the web at daveramsey.com.

How I stumbled on Dave Ramsey

Here is a little background on how I discovered Dave Ramsey and the principles that he teaches. In 2008, I moved to Atlanta to work for The Home Depot. I was just starting to learn some of the radio stations on my way home from work and I stumbled on the Dave Ramsey show and became a regular listener.

I view Dave Ramsey as a great start on your path to financial independence. Sort of like Personal Finance 101 class. If you are living beyond your means racking up all kinds of debt and have really no clue on how to manage your finances Dave is great for this type of person which I might add is most of the country. I think this is why Dave resonates with such a broad audience. If you are looking for advanced classes on personal finance Dave is not going to be the right resource for you.

So let’s look at the actual book now.  The first 5 chapters lay the foundation for how so many peoples finances are a disaster: over spending, maxing credit cards, and ridiculous car payments.  Dave nails the keeping up with the Jones mentality and how if you want to be broke your entire life keep doing what everybody else is doing.  After Chapter 5 Dave lays out his 7 baby steps which provide an alternative lifestyle to looking wealthy but being broke. Let’s look at each of the baby steps:

BABY STEP 1: Save $1,000 for your starter emergency fund.

I like this first step. You need to have a small cushion in your life so that when your water heater blows a leak your life is not thrown upside down!

BABY STEP 2: Pay off all debt (except the house) using the debt snowball.

This is one of Dave’s most controversial topics. Most finance gurus will tell you to pay off debt with the highest interest. And mathematically that is absolutely the right approach. The problem is personal finance is not all about math, human behavior is at play. I like what Dave advocates here as the momentum you can gain from paying off the small debts is powerful.

BABY STEP 3: Save 3–6 months of expenses in a fully funded emergency fund.

100% agree with this step. It is the first step in my own investment walk as well.

BABY STEP 4: Invest 15% of your household income in retirement.

I disagree with this. 15% is too low! You need to be maxing out your retirement accounts as early as possible to get the incredible long term benefits of compounding! Read my investment walk

BABY STEP 5: Save for your children’s college fund.

I like this advice. My parents paid for my education and we want to do the same for our children. We make deposits in both of our kids 529 plans every month as part of having our finances on Autopilot.

BABY STEP 6: Pay off your home early.

This is another of Dave Ramsey’s very controversial recommendations. This topic could take up an entire post but here is the short version! The finance gurus say you should never pay off your mortgage since you can get better returns in the market. Again, the math might say so but the freedom that being debt free is incredibly powerful.

BABY STEP 7: Build wealth and give.

I have a lot of disagreement with Dave Ramsey on this step.  While the premise is good, I don’t like the way in which he advocates for building wealth.   He recommends mutual funds via his advisor network which will just result in excessive sales commisions and fees.  As a strong beliver in index funds and being a 100% VTSAX investor this is just bad advice!

His message that “if you live like no one else you can live like no one else” at this stage absolutely resonates but there is a lot more to this step than Dave details out. Again, a good start, but there are much better guides out there for the more advanced saver and investor like JL Collins outstanding The Simple Path to Wealth.

I have given this book to family members and as wedding presents as I think the overall message is pretty solid advice. Especially against the backdrop of the typical American train wreck of negative savings rates and maxed out credit card debt.  Just skip his investing recommendations!

My Rating: 3.5 Stars