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Start Here: “The Ultimate Guide to Personal Finance”

The first post of 2009 — How to dominate your personal finances

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This year is going to be awesome. I can tell you this for sure, because this year we’re going to:

  • Learn how to automate your money — one of the most important parts of making sure you hit your money goals consistently

  • Have crystal-clear answers for the most common personal-finance questions: “Should I buy or rent?” “Should I pay off my debt or invest?” “How do I invest?” “How do I save more money each month?” — and be able to explain them to others.
  • Learn how to avoid crackpot prognosticators that try to predict which way oil, stocks, and real estate prices will go…and nearly always get it wrong.
  • Learn more frugality tips that really work, as well as tactical tips for easier investing, negotiating, and tracking your money

I’ll do this through more detailed blog posts, videos, Money Diaries, interviews, and my new book (coming out in April 2009).

I know first posts of the year are supposed to cover resolutions, but I think these three posts do a better job than I could:

Jared Goralnick points out that one of the best things you can do is know what you want.

K notes how New Year’s resolutions must fit into your lifestyle

And the New York Times illustrates how almost all New Year’s resolutions fail

The truth is, I don’t believe in New Year’s resolutions. If you have to be really honest with yourself, did you actually achieve last year’s resolutions? Do we even remember what they were?

It’s time to get brutally honest
Few of us are honest with ourselves. I wrote about in The $28,000 Question: Why Are We All Hypocrites About Our Wedding?, where I pointed out how we all love to say “My wedding will be simple, but it never really is. If we acknowledged that our wedding would be over $20,000, we could start saving for it. And when I pointed out how much you need to save for a wedding, people’s jaws dropped.

Let’s get real.

When 90%+ of people consistently get the same result (failure for New Year’s resolutions), I start to believe that the real answer is, “forget it and acknowledge the truth.”

For example, when I constantly tell myself I’m going to take work home when I go to visit my parents — yet I’ve never actually done any work there — it’s time to be honest and acknowledge that I’m never going to work while hanging out with my parents. Now, I leave my work at home and enjoy my vacation.

When you constantly berate yourself for not keeping a budget, even though everyone says you should, it’s time to forget it and find something that works. (I’ll show you how in a future post.)

Consistency, not magical moments
Success is not about some special moment in time, like the first of the year. If you haven’t been able to do something all year, there’s very little chance that a New Year’s resolution is going to change that.

This year, like every year, is about sensible changes. They may not be as sexy as announcing to your friends that you have a new resolution to lose 50lbs or you’re going to cut your spending by 50% in 1 month, but systematic changes work. Make your money flow automatic. Understand where your money should be going (debt vs. investing?). Figure out how to run the numbers so you can see if one decision is better than another.

It’s not as sexy as “15 stocks you must buy!” or “18 banks with better interest rates than yours,” but it actually works. I’ve written about why sensible goals impress your friends, get you girls, and help you lose weight. As I always say, would you rather be sexy or rich?

I need your help, though. You need to decide what you want to accomplish this year. If you’re looking for quick tips that will be silver bullets, this isn’t the right blog for you. If you want someone to help you save money using extreme frugality tips to save an extra few bucks here and there, I’m not your guy (there are better frugality bloggers out there). And if you have no idea why you’re earning, spending, saving, investing, and automating your money — or if it’s just to keep up with your friends — this is definitely not the site for you. I need you to decide why you want to be rich — and what rich means to you. Do you want to pay off your debt this year? Or be investing $500/month by June? Or save up for a vacation to China?

Once you know where you want to get, you can take my tips and apply them to your life. Everything falls into place once you’re saving and spending towards something.

I’ll help with the best tips I can write for you. For an example of some of my favorite tips, please check out my Save $1,000 in 30 Days Challenge (scroll down for the tips). I spent over 150 hours writing those tips, and they saved people hundreds of thousands of dollars. Expect more highly tactical tips like that, but directed towards topics like investing, negotiating, and more.

Later this week, I’ll post my 30th tip of the 30 Day Challenge.

Then we’ll get on to the new stuff.

It’s going to be a great year.

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  1. For the record, my wife and I did our wedding for under $4000, which includes all parties involved. That figure includes her dress, our honeymoon, and a luxury rental car for a week, my parents’ and grandmother’s flight and hotel stay, and food. When I found that the same $300 would either get me 3 hours of a Rolls Royce or 1 week in an Oldsmobile, I went with the Olds.

    I’m looking forward to a great year.

  2. Interesting, my wedding was right around $10,000 this past spring in the Northern Virginia area. It has inspired friends of ours to tone down their weddings some simply because ours was so enjoyable.

  3. After that post, I’m pumped myself! Let’s rock it.

  4. I hate you now., I want a quick easy fix!!!

    HAha lol

  5. You know Ramit, I’m actually wondering how I (we) can save money on our wedding? I’m 24, without a girlfriend, but my jar dropped when I saw the average cost. In 2009, I’m starting a wedding fund and will save bit by bit each month (via ING subaccount). Maybe you could write a post on HOW we all can save money for our wedding, such as areas of costs to cut, ways to involve our friends/relative for roles, do-it-yourself invitations, etc. I’m all up for frugal wedding but doesn’t want to disappoint my future wife by having a hosting a bad wedding either. Although it’s impossible to predict when you’re going to get hitched, but I’d like to assume that I’ll get marry by 30 (so 6 years from today).

  6. Great stuff as always, Ramit. I’m looking forward to your new content. Too bad the mainstream financial media doesn’t pay more attention to you and other similar voices.

  7. 2009 really is going to rock. I look forward to your, as always, tactical but thoughtful recommendations. (I even went ahead and bought an Entertainment book after your recommendation, though I hadn’t seen one of those things since like 1992.)

    I do believe in goal-setting (not so much “resolutions”) and leading up to a New Year is a good time for me to reflect on the past year. It’s kind of like a Status of My Life time, where I get to re-plot my path. And those goals I set do end up guiding much of the rest of the year. But maybe I’m atypical–I guess the thing is that most people who come up with resolutions think of them for about 15 minutes and throw down unreachable or intangible things. I mention all this not as a critique of your approach, but because I would someday be curious to hear what (if any) high expectations you have for yourself in the new year :-).

    Anyhow, thanks for the link over to Technotheory, and have a rockin ’09.

  8. My fiance and I had a hard conversation last night about our wedding budget. We had totally blown it and now we are cutting back. We had hit $29,000.00 and simply don’t have time to come up with that much money by June of this year.

    We are now going with the white linens that are included with the ballroom instead of the $4.50 per table linens that match her colors. No chair covers ($4.00 x 180). The chairs look fine really. Oh and we cut out the photo booth. It would have been cool but it was $1000.00. With other cuts we got the cost down to around $23,000.00 which puts us back in range.

  9. Seriously, it’s great to see you in my Reader. My “new year’s “resolution is to stop procrastinating. Believe it or not, this blog helps me do that. I am already feeling energetic.

  10. You’re spot on with new year resolutions. It feels good when you’re writing them down, you imagine how good it’ll be when you finally achieve them, and three months later you don’t even remember what they were.

    I’m looking forward to your articles on investment strategies and automating money flow.