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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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44 Comments on "The first post of 2009 — How to dominate your personal finances"

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Eric S. Mueller
7 years 6 months ago

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.

Sam
Sam
7 years 6 months ago

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.

Writer's Coin
7 years 6 months ago

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

Adam
7 years 6 months ago

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

HAha lol

Joshua
Joshua
7 years 6 months ago
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… Read more »
Anne Good
7 years 6 months ago

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.

Jared Goralnick
7 years 6 months ago
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… Read more »
Bradly Fletchall
7 years 6 months ago
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… Read more »
Asmita
7 years 6 months ago

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.

JR
7 years 6 months ago

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.

stephanie
7 years 6 months ago

I’m glad you’ll be talking more about investing. I’m pretty good with saving, but don’t know much about investments. I have a 403(b) and a Roth IRA, but both contain simple mutual funds. I’d like to start saving in vehicles that I can withdraw from at any time (since I’d like to retire before 59 1/2), but I don’t know where to begin. I’m looking forward to your articles!

Trendy Indy
7 years 6 months ago

Good Post, I have paid off 12000 dollars in debt after I started reading your post and started saving at the same time, though in small amounts, I have 9000 dollars left to pay and I sure I will pay it down by April.

Thanks for your informational posts.

Happy New Year and YES, its going to be a great year.

Freddy
Freddy
7 years 6 months ago
Ramit, great writing, really! You’re raising my expectations! 🙂 I’ve always loved this blog, but I’ve never taken your domain name too seriously. Up till now. It seems like you’ve got really big plans for us! 😉 One question: when you speak of ‘automated income’, what do you have in mind? Not solely investment income, I hope? Because in that case I’d prefer more focus on entrepreneurship. It’s a very interesting topic where I feel I could learn a lot from you. We’re about the same age and when I see someone my age doing admirable things I don’t see… Read more »
Mike @ TheThriftyLife
7 years 6 months ago
My wedding cost less than $150. $45 for the marriage license, $45 for the justice of the peace and $60 for dinner. And it’s still the best $150 I’ve ever spent. I have to criticize something though. You say: Everything falls into place once you’re saving and spending towards something. It would be nice if everything fell into place, but it doesn’t. Things will go wrong, emergencies will happen and you need to be prepared for them and expect them. When they happen you need to stay level headed and deal with it as best you can. If you fall… Read more »
Jonathan
Jonathan
7 years 6 months ago

I agree with Freddy above, that the income automation bit is the most anticipated for me – particularly the business creation aspect – although investing instruments are always interesting as well.

mike
mike
7 years 6 months ago
I absolutely love the energy in your post. Can’t place my finger on why, but I’ve been feeling optimistic about this upcoming year too, despite the “doom and gloom” portrayed through all the mass media outlets these days. I’m not much on resolutions either, but I do make short- and long-term goals. As for 2009, I’m hoping to continue investing at my typical rate in my 401k throughout the year, while paying off the remaining $8500 balance on an auto loan by June 2009, while also trying to save $20,000 in short term savings for a future first home purchase… Read more »
Kyle
Kyle
7 years 6 months ago

2009 Goals :
Pay off debts in order:
$4k CC
$4k student loan
$12k car loan
Save:
$10k in 2 Roths
$12k for cash purchase of wife’s car
$15k emergency fund
To do all, have to live off just wife’s income or raise total income

Battra92
7 years 6 months ago

So I should start a wedding fund? What on earth for? I’m 26, single and happy to be so. I haven’t even been on a date since August and unless something changes in my life I don’t see it happening.

Besides, it’s the bride’s family who should pay for everything. 😉

2009 should be a good year for me. I’m working on figuring saving money on my car insurance and finally getting my own place.

I look forward to reading another rent vs. own argument. It;s a bit hard for me to justify either, I’m afraid.

Suparna
7 years 6 months ago

I am single in life and will be married by December 09 but i want to be independent financially. Although i have no source of income do you think investing in Stock market this year can earn me some good returns for my marriage ?

Sup

Studenomics
7 years 6 months ago
Ramit: I love how you deviate from most other pf bloggers by avoiding all the frugality tips. Honestly I know it’s important to save a few bucks here and there because it all adds up but some advice is just plain absurd. I love how your tips on saving money involve the bigger picture and not saving 10$ by cutting your own hair. When I started blogging about pf I decided that I would share similar view points with you in the sense that I feel a higher emphasis should be placed on earning money and setting goals, as opposed… Read more »
The Personal Finance Playbook
7 years 6 months ago

Glad to see you’re back to posting. I was coming here for no reason for days on end.

Sonia
Sonia
7 years 6 months ago

Hi Ramit,
I downloaded Suze’s books first thing this morning when I saw the email from TD Ameritrade. I love Suze’s advice especially to those of us who are starting out on our own.
I also downloaded Women and Money last year and now this year I will have an extra 100 dollars in my ameritade account. I am so happy!

Ruth
Ruth
7 years 6 months ago

Yay you’re back!
2 things:
1. THANK YOU for the time and work you put into your blog. I like that your posts are relevant and applicable and that you inject humor into them as well.
2. Regarding today’s post, I think creating a firm financial foundation is actually pretty damn sexy. 🙂

Barbara Saunders
Barbara Saunders
7 years 6 months ago
I downloaded Suze’s advice and have had an experience to share which contradicts a small point she writes. She recommended paying off all credit cards and not using them so as not to have to worry about interest rate jumps, etc. I am sure this is happening to other people as well. I keep several credit cards with no balances for emergencies. (Of 6 cards, I use one for day-to-day purchases, earn a rebate, and pay it off each month; one for business expenses, also paid off each month; and one for special purchases, such as all expenses for a… Read more »
Battra92
7 years 6 months ago

Ramit: I guess I see what you are saying. I still don’t see marriage in my future (I don’t want to get married) but I suppose I do see what you mean about the whole planning ahead. I do that in that I have a savings account just for my housing which I know is coming this year and automatic payroll deductions.

K
7 years 6 months ago

Do you want to save money on your wedding?
That’s the first question to ask.

Our wedding was one of the best networking events
I have ever helped organize.
Our guest list of 300 all cared about us,
all wanted the best for us,
all wanted us to succeed.
And on that one day,
they were all focused on the two of us.
That doesn’t happen very often, folks.

I’m dang frugal
(and yes, I wore a resale wedding dress
and we negotiated with vendors
and…)
but even I could see the opportunities,
simply by looking at our guest list.

Thanks for the link love, Ramit!

Hannah
7 years 6 months ago

I am a new reader to your site and I must say that I love it and will be a lifelong reader. I am looking forward to your advice on investing — I am a college student with some money to spare (due to a job) and I want to put it away before I spend it on stupid stuff. I would love advice on stuff like this! Thanks for your inspiration.

Grey
7 years 6 months ago

I’ll join the others saying that my wedding did actually come very cheap and simple. My wife and I made a decision and we stuck to it. All it all it was only 10 people. People break their new years resolutions because they don’t really intend to keep them.

mike
mike
7 years 6 months ago

@ Barbara Saunders –

None of my business, I know, but why on earth do you care if your seldom used cards get cancelled?

If you build up a decent emergency fund and maintain one or maybe two (one business, one personal) credit cards… you don’t need those other ones.

Margo
Margo
7 years 6 months ago
Paying for graduate school, after you’ve been working for awhile and have some assets…do you cash in retirement assets or not? I’ve already done the cost/benefit analysis to support pursuing an elite program, and it is completely worth it. Given that the upfront cost is something like $60-70k per year for two years, is it worth cashing in retirement assets to cut down loans? Is it better to retain liquidity? The first $20.5K in Stafford loans per year comes at 6.8%, remainder at 8.5%. It’d be interesting to know the break-even points, esp. if you work up the numbers for… Read more »
Elizabeth
7 years 6 months ago

For the record, my husband and I did our wedding and honeymoon for less than $4000: we eloped to Las Vegas (spent a week on a hotel on the strip, which was most of the expense) and hired a decent photographer so we’d have photos to show the folks.

Sam
Sam
7 years 6 months ago
Joshua – I had the most perfect wedding (in my opinion) this summer for $10,000 (including rings, dress, venue, honeymoon, etc.). We put a lot of thought into what parts were most important to us and spent more time (iPod of music playlists, wrote our own ceremony) and money (a great venue, good food and drink = half our budget) on them. We aren’t religious so we did the short ceremony and reception in the same place, had friends help by being the dj, ushers, officiant, hair/makeup artist and photographer. Everything turned out really well because we took the time… Read more »
malia
malia
7 years 6 months ago
I got married in Los Gatos CA a couple of years ago for just under 10,000. It was a beautiful wedding. Pretty stress free. It was a great start to my new life. We paid for it all in cash. Went hardcore saving about 13 months before the wedding. Made a budget and seperated out grocery, entertainment, gas money in cash. Paid our bills saved every bit of what was left for wedding. My wedding was part of a package deal through Los Gatos History Club. Go Ceremony and reception site, tables, linens,china, food, all beer, wine and soda you… Read more »
Danielle
7 years 6 months ago
In the last month I lost my job. My 2009 goal would have been to payoff 50% of our consumer credit card debt. But now its going to be more like… Find a better paying job and scrimp on everything else to make my emergency fund stretch as long as I can. I strongly agree with your “no new years resolutions”! I started a resolution about mid year last year of “no diets ever”. I also am on the “no budgets ever” bandwagon too! I try to do a quarterly evaluation of my life including finances, fitness, career, family etc.… Read more »
Cointreau
Cointreau
7 years 6 months ago
I have a couple of questions that are never addressed in this type of discussion, and are especially relevant in this economic environment. First, wrt safety net savings, should it be larger now than before? Previously, I thought of my CC credit limit as part of my emergency plan. Now that seems foolish, since some CC companies are chasing balances downward as the account is paid down (lowering limits as balances drop, cancelling cards-see above). This defeats the “limit-as-buffer” approach. Since CC companies are scum and not worthy of trust, should one hold back more emergency cash rather than paying… Read more »
Debt Relief Geek
7 years 6 months ago

I agree with you. Some New Year’s Resolution never really happened and we should be honest on that.

Anyways, I love your post about the $1000 30 day challenge and I’ve read some of the tips they are really interesting.

AJC
7 years 6 months ago

On the ‘should I buy or rent” one, I am definitely in favor of buying, and have come up with a formula to tell you how much you can afford:

http://7million7years.com/2009/01/12/how-much-house-can-you-afford/

… I’d LOVE some feedback!

mike
7 years 6 months ago

thanks for your publication you sent to me over the years.This have help me made impact in peoples lives in Ghana where i live in Africa. I hope you can send me mini articles on how to save and when to save.thank you.

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[…] Ramit’s New Year post prompted a discussion on weddings. Many people talked about how weddings were a waste of money. […]

pickeju
pickeju
7 years 5 months ago
Weddings as a sacred cow really crack me up. We had 150 guests and spent $2k, which was spread out over about 6 months. My painfully obvious suggestions: set a food theme (we did a dessert buffet that was nice and cheap), start your DIY stuff early (flowers, tablecloths, etc), have a small wedding party (try just sticking to MOH and BM), stop freaking out about what sits on the table (we did cupcake trees covered in yet more desserts along with candy dishes for mints, nuts, etc), and take advantage of the time of year (we used pumpkins and… Read more »
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[…] though the Costco membership has saved us almost $800 in a year, you have to figure out for yourself and your family if warehouse membership will pay […]

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[…] 2009 New Year Resolutions – Ongoing. […]

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