This week I am happy to have an oldie but goodie with us. I am not sure if Jim will like me calling him old because he is not. But he has blogged for a long time and some consider him one of the godfathers in personal finance.
I am sure many of you know Jim Wang. He started Bargineering and is creating a new site Wallethacks.com. The new site is a personal finance blog focused on helping readers navigate major life events, overcome financial challenges, and do it all with as little wasted effort as possible. For example, you won’t just learn what’s in your credit score but the exact steps you take to improve it so you can qualify for a lower mortgage interest rate. We all have goals, he will help you reach them as quickly and with minimal wasted effort.
Let’s see what Jim has been up to and his tips to help you simplify your finances:
What event lead you to start Bargaineering?
If I had to pick, it was probably starting my first job. I suddenly had a great appreciation for how complicated money management was and now the stakes were much greater. Up until then, I had summer jobs and internships but never earned as much as I did working full-time. That was the biggest push.
How did creating this site help you with your finances?
It helped keep me accountable and it helped me learn. As I wrote about topics, readers would point out mistakes or misinterpretations, which taught me a lot. They also showed me how there were a lot of different points of view and that personal finance was more emotion than math. It helped me understand my own behavior within that framework.
What area of your financial life needed the most help?
Like many young professionals, planning for the future. As a kid, long term planning meant a single year. If you were really far looking, it was four years – the time it takes to graduate high school or college. Planning for 40 years and trying to see what life would be like with kids, with a new house, and other life changes was a very big challenge.
Describe your financial life 5 years ago to compare to now?
The biggest difference was in our family, we now have two kids compared to zero. That’s a big change all around. Outside of that, the numbers are bigger.
What steps have you taking to improve your financial life?
Spending more time planning and preparing, less time reacting and taking action. As you get older, you realize that it’s far better to be deliberate than it is to be fast. When you’re young, faster is almost always better; not so as you get older!
What was your biggest financial challenge or roadblock?
I was fortunate that I didn’t get into credit card debt as a young person, too many people fall into the trap of thinking they can buy now and pay for it later. It’s hard enough working for a boss, it’s even harder when you have no choice because you owe a bank some money. That said, I had significant student loan debt that I had to pay off early on in my professional career. It was low interest, under 3%, but it was a sizable sum.
How did you overcome this challenge or roadblock?
When you have an anchor around your neck, you sacrifice as much as you can to get rid of it. Like every other “I paid off $XX,XXX in debt” story, I spent the first few years of working living like I was still in college, saving the minimum for retirement, and paying down that loan.
How much of your personal finances have you automated?
As much as I can, credit cards and bills are automatically paid, I just get the bill notifications so I can tell if anything is amiss. When I get the notifications, I scan my statements to see if there’s anything I don’t recognize.
What percentage of your income are you saving?
I don’t know exactly, I focus more on making more money and being smart about where I spend it.
What’s your best savings tip?
Always have a savings goal in mind and use it to make decisions. Do you want to buy X or be closer to achieving that goal? Without tradeoffs, you’re just restricting yourself and that’s not sustainable, especially when your willpower is weakest.
What advice or tips would you give to others who want to simplify their financial life?
Just start cutting things out. Start with things you haven’t used in a year, then things you haven’t used in six months, etc. You’d be surprised how much stuff you accumulate because you “might” need it.
Here’s one very simple step – carry a smaller wallet or purse. I went from a regular wallet to a money clip. I got rid of half the stuff inside, those loyalty cards and all that other junk. I thought maybe I’d miss it so I made sure I left those all in the car, which is close enough that I’d be able to get to it if I needed it. I never did. Not once.
What book, blog, or podcast would you suggest to someone who is looking to simplify or improve their finances?
Ramit Sethi’s I Will Teach You To Be Rich – it’s actionable and uses your own psychology to benefit you. There’s a reason it’s a NY Times bestseller and it’s not because I contributed to it. J
If money was not a concern, what would you do for fun?
Exactly what I’m doing now.
Do you have an emergency fund established, if so how did you determine the amount needed to fund it?
Yes, six months of expenses. It’s actually a holdover from when I was working in the defense industry, I tried to figure out how much I would need if I was fired and settled on six months. Since then, I kept it at that multiple but my expenses increased so the dollar amount is greater.
What app or tool helped you the most when it came to simplifying?
I drew a financial map and it helped me understand exactly how complicated my financial accounts were. Then I slowly pared it back, starting with accounts I rarely touched all the way until I only have a few today.
What are your current financial goals?
I don’t have strictly financial goals, they’re all associated with business goals I’d like to achieve.
Are you on track to reach your financial goals you set for this year?
My goals aren’t confined to a single year but they’re on pace.
Any other thoughts you would like to share with others who are looking to simplify?
There’s something in software known as technical debt. It’s when software gets so complicated that it’s much more complicated and expensive to make changes.
If your financial system is too complicated, it becomes expensive to make changes. That expense could be time, stress, or actual money – but it all stems from being too complicated. Simple things are easier to understand, easier to maintain, and often work better.
Jim thanks for your tips and thoughts on how to simplify.
Jim always provides good content so check out his new site Wallet Hacks. I am sure there will be many tips and ideas to help you with your finances.
You can also follow him on twitter @wangafific.
To read previous interviews in the series click below
If you are interested in sharing how you have simplified your financial life, send me an email and I will follow up with you. Enjoy the rest of your week. Til next time, take one step at a time to simplify.