Automate your finances – Perspectives from the Fool and Ramit Sethi

Below is a good summary of the automations you can make to simplify and improve your finances, courtesy of the Motley Fool:

Use the tips in this article and automate:

1) Your savings via direct deposit of your paycheck to your checking or savings accounts.  Depending on what your employer allows (ask HR), you can break up your direct deposit by placing some of your money in a checking account and some in a savings or brokerage account.

2) Your retirement via 401k contributions straight from your paycheck.

3) Your credit card bill by automatic payment of at least the monthly minimum plus whatever else you can afford (if you have a revolving balance) or the whole amount each month (the preferable choice.)

4) Your other bills by signing up for automatic payment on utilities, student loan, car payment, and even your rent or mortage (using your bank’s online bill payer if the company you’re paying doesn’t have an online payment option.)

5) Take a page out of Ramit Sethi’s book by opening high-interest savings accounts to auto-save for large purchases like weddings, cars and houses, or smaller things like a plasma TV or that $500 pair of Jimmy Choo heels.  (A really fantastic article on finance automation by Sethi is link here.  The article gets into the nuts and bolts of how to picture and implement the above.  I highly recommend reading it.)

Automate your finances to save time, money and peace of mind!

How to get off paper mail, email and telemarketing lists

As part of my campaign to help people simplify their lives, I’ve provided some links below for an important and easy-to-complete step:  Removing yourself from junk (e)mail and telemarketing lists that the post office sends us.

This helps cut way down the amount of time-consuming junk we have to sift through and phone calls we have to answer and patiently explain that “no,” in fact, we’re quite happy with our long-distance telephone service.  As a side benefit, this also keeps us from getting sidetracked by things that we might be tempted to buy, despite the fact that until received a “free” catalog in the mail, we had no desire to purchase them.  (Reducing your junk mail is also better for the environment.)

Step 1) To get off ~80% of direct mail marketing lists, go to https://www.dmachoice.org/ and register for an account.  Then, go through the 4 categories of direct mail and request that all mail be STOPPED.  (For credit offers, you’ll have to follow a link on DMA Choice to a separate site (OptOutPreScreen.com), and either electronically remove yourself for 5 years, or (my recommendation) print out and mail in the paper form to be removed PERMANENTLY.)

Step 2) From the same folks that brought you the above link, go to http://www.ims-dm.com/cgi/optoutemps.php to remove up to 3 emails at a time from commercial emailing lists.  (You’ll still get spam email from other sources outside of the DMA’s control, but this should help reduce the total burden.)

Step 3) Go to https://www.donotcall.gov/register/reg.aspx to register up to 3 phone numbers at a time (including cell phones) with the federal governments National Do Not Call list.

Each of these registrations is free, and with the exception of the mail-in credit offer removal in step 1, can be done in about 5 minutes online (with a valid email account for activating some links they’ll send you to confirm removal.)  If at any time you decide you actually WANT to receive junk mail/telemarketing calls etc, you can change your preferences with each organization.

Just follow the instructions for each removal link, and in the time period that it takes for your name to be removed from each list, you should be on your way to lessening your burden of everyday time-wasters and consumption encouragers.  After completing steps 1-3, complete step 4: grab a beer and reward yourself with a little of the future time you’ve saved.

The two most important books you’ll ever read on becoming (and staying) wealthy

If I had to choose any two books to recommend to people who want to become financially independent, what do you think they would be?  Maybe Warren Buffet’s excellent biography Buffett: The Making of an American Capitalist by Roger Lowenstein?  Perhaps Buffet’s compilation of Berkshire Hathaway letters to shareholders?

Surely at least ONE of the books would be written by or about a famous investor, or contain at least for key insights into stock-picking, real estate, how to be successful in business or another get rich plan?  Judging from the tone of this article, you can probably guess that the answer is “no” — and you would be right.

The first book that I believe gives the best advice on how to be successful in your financial life (and how to make your children successful as well) was written by two professors who set out to study millionaires.  What they found surprised them.  In “The Millionaire Next Door”, the authors discovered that those with over a million in assets were NOT the people driving expensive vehicles, renting high-priced downtown apartments or drinking Dom Peringnon.

Instead, many of the millionaires they studied had the following seven traits, which the authors flesh out further in the book:

1. They live well below their means.

2. They spend their time, energy, and money in ways leading to wealth.

3. They do not worry about social status, preferring financial independence.

4. They did not receive a lot of financial help from their parents.

5. Their own adult children are not financially dependent upon them.

6. They target opportunities that benefit from large amounts of spending.

7. They work in the right jobs, often for themselves.

I believe, as do many others, that the most important of these commonalities is number 1 – living well below your means.  I think the authors might agree with that priority when they write: “Being frugal is the cornerstone of wealth building. … [F]ew could have ever supported a high-consumption lifestyle and become millionaires in the same lifetime.”

After reading “The Millionaire Next Door,” you will have seen the blue print for attaining wealth. However, implementing that plan is the hard part. Living below your means, regularly investing (and rarely taking capital back out), and foregoing some of the perks that TV commercials and rap songs have convinced us we “deserve” takes discipline, faith, and hard work.  This difficulty is why I believe the second most important book to read with respect to wealth building is Elaine St. James’ “Simplify your life”.

St. James’ lays out 100 ways to simplify your life.  The idea is that as Americans in our modern world we’ve become to obsessed with “keeping up with the Jones’s”, buying bigger houses, flashier cars, and working longer hours to pay for it (while starving our retirement funds, I might add.)  Her goal is to show people the way to reduce their consumption while simultaneously increasing their happiness.  She recommends “selling the damn boat” and consolidating your investments to help reduce the time, money and worry in one’s life.

While St. James’ book is not dedicated solely to reducing your expenses and making you wealthy, it gives the proper framework to get the most out of life without rampant consumerism.

Taken together, I believe “The Millionaire Next Door” and “Simplify your Life” will show you the plan to wealth, and then help you execute it.  Start living cheaply right now and check ‘em out from your local library for free!