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Best Personal Finance Practices of 2009

Two years ago, I asked readers and friends to share with their best PF practice of the year. The best practice is not just the coolest idea but is what made the most difference in our financial lives this year.

At that time, the best practice was debt snowflaking. We were living on Micah’s stipend, I was working two part-time jobs (at that point I was actually on the verge of getting the second job) and doing various online work. We couldn’t be sure exactly how much money we’d make every month, so we used debt snowflaking to pick up extra bits and pieces of our unused income and put it toward debt.

Looking back at the past year, however, I’ve realized that we’ve shifted to another main practice (though we still snowflake) which has been great for our finances. We’re living primarily on one income.

It’s been a year and a week since I started working at my current job, which has given me a reliable source of income. We started living entirely on my income and began putting away Micah’s + whatever I earned form blogging and consulting for debt repayment, retirement, and my future grad school goals.

Not only does this help us move faster toward our goals, but it has prepared us for keeping our living expenses low in case either of us loses our jobs and helped last summer, when Micah took a semester off teaching to make progress on his dissertation.

Want to share the personal finance practice that has made the biggest difference to you in your day-to-day life and your year’s financial goals? You can e-mail me here or leave a comment below. I’ll add them (at my discretion and as I’m able) to the post. You can include a link to one relevant blog post if you like.

Other Best Personal Finance Practices

Rainy Day Saver says:

Creating extra income (freelance writing, selling stuff) and using it to pad our savings account after buying our home.

Matt from SteadFast Finances says:

Would have to be learning how to cook well at home. Cost effective, (can be) healthy, friends love it, etc. – Restaurant Meals You Can Make At Home for Half the Price

Cybele:

Round up when you subtract your cheque/bank entries. you end up with more than you thought.

Go shopping, don’t buy anything. if you feel compelled to go back later, do it, but don’t feel compelled to buy at the time. Often not what you wanted anyway. Time will show. Chances are you won’t regret the “lack” (which was only Perceived, not Real) of the thing(s).

Jason, a.k.a. Frugal Dad says:

For us, the best practice was to use sinking funds to start saving for big, annual expenses. We’ve talked about doing this for a couple years, but finally but it into practice, and it has made these annual events a non-event, financially.

Jeff Rose of Good Financial Cents:

This year saw us implementing a strategy that was totally outside of our usual comfort zone. We decided to start using a credit card to run all our monthly living expenses through to take advantage of reward points. We both get squeamish at the thought of having any credit card debt but are plan is to pay it off each month. We began charging everything- groceries, gas, eating out, cell phone bills, satellite bill. If we can charge it….we do. We were even going to do our mortgage except our lender had some silly $75 per month charge to do so.

What was the end result? It’s been much easier to track our finances having to use the one card (instead of trying to track down ever receipt we used for our debit cards) and thus far this year we got back $600 cash just for buying the stuff that we always bought anyway. We still don’t carry a balance and make sure to pay it off each month.

SVB at The Digerati Life:

“My best PF practice for the year is to shop online. I discovered online coupons and rewards sites such as Ebates and now I am saving more money by receiving cash back for purchases, by using coupon codes or by finding deals online. I’m much more familiar with the use of coupon codes now than I used to, so I first check if there’s something out there I can get on discount before opening the wallet to pay for stuff. For more on such sites, here’s my Ebates review.”

From Free From Broke:

One nice thing we did was to start entering in our bill’s due dates into Google Calendar to remind us to pay bills on time. It also helps us track which bills are coming up.

From Ben at Money Smart Life:

Ours isn’t a new practice and nothing original or creative but maintaining a solid emergency fund has really helped from a career standpoint.

In the fall of last year I had the chance to take a better job. My wife was worried about me making the move in the middle of the horrible economy but the fact that we had a solid emergency fund made me comfortable pulling the trigger and the new job is much better. Then this spring when they canceled the product I was working on and I was worried about being laid off, the emergency fund kept me from staying up all night and worrying

PT Money says:

Our best practice, which reaped the greatest benefit, has been opening a Roth IRA for each of us when the stock market was down. Of course, we’re long term investors but it didn’t hurt to invest in the Roth (using index funds) when the prices were cheap.

Patrick, of Cash Money Life writes:

Our best practice this year was to see how much interest we are paying each month. We ran a simple exercise and were amazed at how much money we send the bank each month – just for the privilege of borrowing money. This is a great exercise to motivate you to get out of debt!

Baker of Man vs. Debt:

Our by far was making the decision to “Simplify our Financial Life.”

This technically includes several steps, but the point of the decision was really big turning point! :-)

JT from The Smarter Wallet writes:

Automating one’s savings programs is a great way to build up one’s savings. You can set up direct deposit, then have your bank move a certain amount from your checking account to your savings or investment accounts on a regular basis, usually once a month. I’ve done this both for short-term and long term savings plans and have been successful. I wrote about some examples of savings programs in this article on how banks pay you to save.

Mike, a.k.a Oblivious Investor says:

Find a question (or set of related questions) that people are asking to which you already know the answers.

Write those answers down in a book. Sell that book.

From Lin at Tellin It Like It Is:

We’ve been working very hard to pay off debt (smaller balances first), and each time we pay off a credit card in full with no lingering balance, it feels sooooo good. In order to make sure we could really push hard with our goals to get out of debt, we cut waaay back on Christmas gifts (and who gets gifts) this year, and we’re both very excited about lowering/reducing and eliminating our debt altogether. New Year’s Resolution for 2010 is to knock out as much debt as possible.., and lose a few pounds. :)

Jacob at Early Retirement Extreme says:

Getting out of the rat race. Not worrying about being employed, promoted, raised, and by George, not worrying about being productive on someone else’s terms as if that was something to strive for. It has made me a happy man.

Funny About Money writes:

Incorporating my various freelance enterprises in a single S-corporation. My tax lawyer believes the “wages” I will have to pay myself can be limited to $500, neatly getting around the privation posed by next year’s Social Security earnings limitation.

An S-corp’s revenues are not taxable to the corporation. The owner has to draw down a “reasonable” wage as the corporation’s director. The remaining revenues may be paid out as “dividends.” Because they’re taxed as dividend income, Social Security doesn’t view the money as earned income, and so it doesn’t count as part of the piddling $14,160 you’re allowed to earn if you’re canned from your job (as I was) before reaching “full” retirement age.

This year the side business earned over $6,000 after it was incorporated in June. Even after start-up costs and the purchase of a MacBook (paid for with untaxable money as the corporation’s business expense), it still will provide several thousand dollars in dividends to pad next year’s unemployment survival fund.

If it earns at a comparable rate next year – and it may, since funny about money is beginning to earn a few shekels – it will go a long way toward making “retirement” a comfortable state of being.

Meg says:

So, for 2009, my best practice was definitely to open my 401(k). I already had a Roth IRA because I didn’t have enough info on the 401(k) to make a truly informed decision. Once I found out that I got a full dollar-for-dollar match up to 4% with immediate vesting, I didn’t hesitate to sign up. It’s been accumulating money ever since, and completely painless too! (Plus, the match is free money, so it feels like I’m getting paid extra. Always cool.)

J. Money of Budgets Are Sexy says:

Maxing out my retirement accounts! For the first time ever I maxed out both the 401k and Roth IRA and it was worth every penny ;) Well, at least I’m hoping! haha…

My goal is to continue doing this for at least 10 years and keep building it up NOW so that I can relax and watch it work in its own down the line…kinda like that saying “have your money work for YOU”, right?

Jim from Bargaineering writes:

For us, it was cooking more at home. You get to knock out two birds with one stone – you entertain yourself by trying to cook something new and you feed yourself. We started it as a way to trim our expenses, we were eating out way too much, because of the recession and we’ve really reduced our “dining” out budget category. Here are a few tips on how to cook more and eat out less, including a retort to the common “but I don’t cook” excuse.

Revanche of the Gai Shan Life:

Considering all income, after basic expenses were covered, fair game for saving, and making sure every dollar has a job. I have multiple savings accounts and they all have a purpose and name which makes it much easier to stay focused on the goal and protects them from frivolous raiding

Lynnae at Being Frugal:

My best financial practice is no new debt. No new debt

ThriftyGal writes:

I’d say the one major thing we did that contributed the most financially was renewing our lease on our old apartment rather than upgrading to a bigger/better one like we had intended. I would have loved covered parking in the winter, modern amenities like elevators, more storage and space for the little one to crawl around, but doing without those little luxuries has padded our savings account quite nicely.

From Viviana of The Lean Times:

For me the best and easiest thing was to really track my spending to find any black holes. I am now using an app to track because I would forget to write items down in my notebook. I use iXpenseit which give me a monthly report. Also when you are committed to tracking your spending, you think a bit more before opening your wallet.

From Financial Samurai

For me it’s been getting as educated as I can, both formally and on my own. Never stop learning. Never stop reading. Keep learning about your own finances, about the difference between a Roth IRA & 401(k) or between two funds you’re thinking about investing in. Don’t assume you can know it all.

Want to add your two cents? Leave a comment or contact me.



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{ 14 comments… read them below or add one }

FFB December 14, 2009 at 8:14 am

Thanks for listing these out! It’s great to see what PF bloggers see as their best PF moves. I think it helps us all to see what practices we can try out and what ideas are out there we may not be looking at yet.
.-= FFB´s last blog ..Tax Tips For Parents =-.

Mike Piper December 14, 2009 at 8:23 am

The thing that’s made the biggest impact in my financial life over the last two years: Find a question (or set of related questions) that people are asking to which you already know the answers.

Write those answers down in a book. Sell that book.
.-= Mike Piper´s last blog ..Paul Samuelson, and What We Owe Him =-.

Lin December 14, 2009 at 8:33 am

Mrs. Micah,

Thank you for doing this list! We’ve been working very hard to pay off debt (smaller balances first), and each time we pay off a credit card in full with no lingering balance, it feels sooooo good. In order to make sure we could really push hard with our goals to get out of debt, we cut waaay back on Christmas gifts (and who gets gifts) this year, and we’re both very excited about lowering/reducing and eliminating our debt altogether. New Year’s Resolution for 2010 is to knock out as much debt as possible.., and lose a few pounds. :)
.-= Lin´s last blog ..Zhu Zhu Pets Toxic? Zhu Zhu Pets Investigation by CPSC for Antimony =-.

Patrick December 14, 2009 at 10:33 am

Great tips! Thanks for including the link to my article. :)
.-= Patrick´s last blog ..Best Credit Cards: Cash Back and Rewards Points =-.

Early Retirement Extreme December 14, 2009 at 11:12 am

Getting out of the rat race. Not worrying about being employed, promoted, raised, and by George, not worrying about being productive on someone else’s terms as if that was something to strive for. It has made me a happy man.
.-= Early Retirement Extreme´s last blog ..Driving towards financial independence: Reducing media costs =-.

Funny about Money December 14, 2009 at 11:51 am

Incorporating my various freelance enterprises in a single S-corporation. My tax lawyer believes the “wages” I will have to pay myself can be limited to $500, neatly getting around the privation posed by next year’s Social Security earnings limitation.

An S-corp’s revenues are not taxable to the corporation. The owner has to draw down a “reasonable” wage as the corporation’s director. The remaining revenues may be paid out as “dividends.” Because they’re taxed as dividend income, Social Security doesn’t view the money as earned income, and so it doesn’t count as part of the piddling $14,160 you’re allowed to earn if you’re canned from your job (as I was) before reaching “full” retirement age.

This year the side business earned over $6,000 after it was incorporated in June. Even after start-up costs and the purchase of a MacBook (paid for with untaxable money as the corporation’s business expense), it still will provide several thousand dollars in dividends to pad next year’s unemployment survival fund.

If it earns at a comparable rate next year — and it may, since funny about money is beginning to earn a few shekels — it will go a long way toward making “retirement” a comfortable state of being.
.-= Funny about Money´s last blog ..Freedom! =-.

Meg December 14, 2009 at 11:54 am

I’m not a PF blogger, but I used to write about it, still read a lot of blogs about it and still think about it a lot. ;)

So, for 2009, my best practice was definitely to open my 401(k). I already had a Roth IRA because I didn’t have enough info on the 401(k) to make a truly informed decision. Once I found out that I got a full dollar-for-dollar match up to 4% with immediate vesting, I didn’t hesitate to sign up. It’s been accumulating money ever since, and completely painless too! (Plus, the match is free money, so it feels like I’m getting paid extra. Always cool.)

As an aside, I had no idea you did consulting, Mrs. Micah. Bookmarked that, and you might be hearing from me sometime soon. I could use the help and expertise. ;)
.-= Meg´s last blog ..The Sunday News: Sick-y Edition =-.

J. Money December 14, 2009 at 12:11 pm

Great list going my girl!! I’ll add another:

Maxing out my retirement accounts! For the first time ever I maxed out both the 401k and Roth IRA and it was worth every penny ;) Well, at least I’m hoping! haha…

My goal is to continue doing this for at least 10 years and keep building it up NOW so that I can relax and watch it work in its own down the line…kinda like that saying “have your money work for YOU”, right?

Here’s to a most wonderful 2010!
.-= J. Money´s last blog ..Why throw things out just because they’re old? =-.

thriftygal December 14, 2009 at 2:48 pm

I’d say the one major thing we did that contributed the most financially was renewing our lease on our old apartment rather than upgrading to a bigger/better one like we had intended. I would have loved covered parking in the winter, modern amenities like elavators, more storage and space for the little one to crawl around, but doing without those little luxuries has padded our savings acount quite nicely.

Ben December 15, 2009 at 12:02 am

Nice collection of tips! Thanks for putting them together and including mine!
.-= Ben´s last blog ..Christmas Shopping Deals on Name Brand Goods =-.

Financial Samurai December 15, 2009 at 8:21 am

Cool list!

I think the most important thing that’s not mentioned, which quite frankly could trump everything is education.

The more educated one is about personal finance, the more one will be able to achieve financial freedom sooner, rather than later.
.-= Financial Samurai´s last blog ..The Katana 12/14: What’s Your ONE Word Definition of Happiness? =-.

The Digerati Life December 15, 2009 at 8:55 pm

Thanks for this awesome list Mrs. Micah! I am honored to have been part of it. :) Great list. I had a bunch of other great pf realizations over the last year and have found out that I’ve changed some of views on things altogether. Like the idea that pure passive investing wins out in the end. Well it only does if you do regular reallocations!

Thanks again for the insights.
.-= The Digerati Life´s last blog ..Zhu Zhu Pets: Top Toy For Your Christmas Stocking =-.

Mikki December 28, 2009 at 8:23 am

Thanks for sharing love this blog!
.-= Mikki´s last blog ..The Nguzo Saba #3 Ujima-Collective Work and Responsibility =-.

Jim @ ChangeJarSavings.com December 28, 2009 at 5:43 pm

I made three steps this year that improved our finances.

1) Created a spending plan instead of a budget. By planning each dollars use I know where it is going instead of looking at were it went via a budget.

2) Started using cash instead of a debit or credit card. Cash means trips to the bank but my bank has some pretty nice people working there. And the cash is a motivator to watch what is spent.

3) Added a second job. I now work for two divisions of my employer. Since they are seperate LLCs I get two paychecks. The second check goes directly to the emergency fund/debt reduction plan.

Just my two cents. Jim @ ChangeJarSavings.com
.-= Jim @ ChangeJarSavings.com´s last blog ..Walgreen’s Photo 9 Cent Prints till 1/2/2010 =-.

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