vasily's tidbits

life


financial


creative

This article is a compilation of a wide variety of personal finance topics. The goal is to put together a ton of low-hanging fruit for people starting out their personal finance journey or just looking for quick refreshers.

DISCLAIMER: I am not a CPA and the contents of this article should not be considered financial advice. The claims within are purely my own opinion. You should always do your own research.

Note: although this article is meant to make sense as standalone content, I strongly suggest first reading my article about financial meta-learning. Whereas here I just give you the fish, that article will teach you how to fish.

This is not meant to be an exhaustive guide nor do I vouch for 100% accuracy in the values quoted here. However, it should give you a good start with a lot of low-hanging financial fruit. I link to articles when possible, but you should have enough to know what to Google from here. I recommend reading through all the Basic tips first before moving on the the Advanced ones, roughly in the order that they’re presented here, but everybody’s situation is different so a different order of execution might be better for you.

The Financial Index

Table of Contents

• Cash
• Savings
• Credit
• Investing
• Tax
• Real Estate
• Making More Money
• Retirement

Cash

Basic

• Are you still depositing checks at the bank? Sign up for Direct Deposit with your employer and your other sources of income to save time and not worry about trips to the bank.
• Are you paying monthly fees for your checking account(s)? Most of the time, they have simple requirements like maintaining a minimum balance or making X direct deposits to avoid the monthly fee. Figure that out and close/consolidate your accounts appropriately.
• Set aside 1+ month worth of living expenses in an emergency fund.
• Avoid payday loans at all costs. They charge exorbitant fees, especially so if you don’t pay back on time. Use your emergency fund if needed.
• If you accidentally overdrafted your account and got a $30-40 penalty, you can usually call the bank to have that waived the first time if you have a reasonable explanation.
• A ripped bill can usually be exchanged for a new one at any major bank.

Advanced

• Upgrade your 1 month emergency fund to 6 months worth of liquid cash. If you have business ventures, then also include 6 months of business expenses in case those businesses fail or yield no income.
• When you have a decent amount in your emergency fund ($10k+), make that money earn you more money by transferring it into a high-yield savings account with an online bank like Ally.com or one from this list. A simple savings account at your bank is a good start, but the interest rates at banks on this list will be much more competitive.

• Many services offer some type of free trial or discount these days, including streaming services, apps, meal delivery services, etc.

  • For example, I often cycle between discounts with meal delivery services like Green Chef, Blue Apron and the like, because by the time I finish using a 2-4 week discount on one service, the next one would have sent me a “come back” discount and I can restart the cycle. Do your own math on the cost per meal. For me, when the meals were $10 or less, I considered it worth my time and money.
  • Another example is when I was missing 2 books in a series I like and didn’t want to pay for it, so I signed up for Kindle Unlimited, got the books I wanted for free, and immediately cancelled my membership. Be careful: while some services will let you use the full duration of your free trial after you cancel, some will take away your benefits right away. In the case of the latter, I set up a calendar reminder on the last day of my trial to unsubscribe from the service.
  • Note: I added these in Advanced section because you have to be pretty organized and methodical to pull this off. These companies bank on you forgetting to cancel your subscription on time, so if you forget or mismanage this, you might end up pay for something you don’t want and lose money in the long run.

Figure 2. My current setup with financial instutions, as of May 2021. Hopefully, this will provide visual support as I provide personal examples in multiple sections.

Savings

Basic

• In addition to your credit card points, try to earn points through reward programs offered by businesses you use. Most grocery stores have a reward program that will often even include discounts in-store when you enter your number. Many coffee shops have stamp cards. It all adds up, but you have to remember to check their website from time to time and plan your redemptions.
• If you frequently place take-out/delivery orders from a restaurant, know that doordash and the like will often charge more than the restaurant’s own ordering website, which you can often find on Google Maps. Worst case, placing the order by phone might still be cheaper if you have their menu handy.
• If you must eat out, get take-out for which you’re not generally expected to add a tip. Consider paying for bigger portions if it will be enough for multiple meals at a lower price per meal.
• Cooking at home isn’t always cheaper than take-out or frozen food, but it’s pretty much always healthier. You might be saving money in the short term, but you’ll pay it back in the form of health and medical bills down the line.
• Organize coupons by priority and expiration date and put them in a visible place so you don’t forget to use them. For example, I’ll throw my grocery store coupons inside my shopping bag so that there’s no chance to forget it. I also keep a bunch of fast-food coupons on my fridge for when it’s empty and I’m hungry and lazy.
• If you consume a lot of something, think about how you can save by getting it in bulk. For example, as a coffee lover, I invested in a $150 Keurig machine and buy pods by the box, resulting in around $1 per coffee, which is much cheaper than buying $5 coffee every morning. Another example is when I stack multiple coupons at e.g. https://www.omahasteaks.com/ and order enough meat for 2 months. Then, I just remember to take some out of the freezer the day before, and it often tastes much better too. Make sure to do the math at least once to be sure that the price per pound is competitive compared to a grocery store.
• Everything is negotiable, including mortgage loan fees, car dealership fees, even medical bills. When my heating furnace broke, I used Yelp to reach out to multiple HVAC specialists and had them basically compete for the most competitive quote. Instead of paying $6000 that the first company offered me, I found one that did the work for $2100. Another time, I got my plumber to reduce a repair quote from $1600 to $1300 because he told his boss about a positive review I left for a previous job well done. All I had to do was ask.
• Reduce your insurance costs by either shopping around for other insurers and going back to your current insurer with a competing quote, or consolidating e.g. putting house and car insurance under one insurer. Make sure to get a quote in writing for it to be considered valid before bouncing it off a competing insurer’s agent. By looking at the quote document they will also keep you honest and make sure you’re comparing apples-to-apples.
• When grocery shopping, plan to get specific items, like for a recipe. Impulsive shopping will not only end up with you buying junk food, but could also lead to buying too much food, resulting in waste if it goes bad.
• Save your time, not just your money. Automate everything you can. Use your calendar and check-lists heavily.

Advanced

• If you must buy luxury clothes, consider websites like TheRealReal where you can buy stuff in great condition for a fraction of the original price. I recently bought Bottega Veneta shoes that MSRP for $1200 for only $400, and they were literally good as new.
• Book hotels in advance using your credit card rewards points when possible. Otherwise, you can use Hotels.com for their 10th free night bonus. That’s effectively a 9% discount on all your hotel stays that you redeem after 11 stays.
• If you’re trying to book a hotel room in person, especially on a random day with few guests, you can simply ask for a better rate and they might give you a special rate just for asking.

Credit

Basic

• You won’t pay any credit card interest (except for cash advances) if you pay off your card statement in full every month, which you should plan to do as much as possible. Those interest fees are the silent killers of Americans’ wallets these days.
• If you cannot pay off your cards anytime soon or are just overwhelmed by the fees, consider opening a personal Line of Credit to pay them off. A Line of Credit will generally have interest rates less than half of what most credit cards offer and will simplify your finances. Set up an appointment with a bank teller for this, but be wary of being upsold an expensive product — get the most basic one to begin.
• Reduce paper clutter and risk of forgetting to pay your credit card bills by signing up for automatic payments. You can set them to the minimal amount and later make additional payments, if you want to.
• Understand what your credit score is, how it’s calculated and how you can improve it. Aim to get it to 700+ at least in order to qualify for most big ticket items in life. Many services offer free approximations of your score and in some cases the actual score itself. See CreditKarma, Experian (only for the experian score), and Chase or CapitalOne if you have any accounts with them. If you find a bad note in your credit history that you believe was in error, you can reach out to the bureau in question to get it removed.
• Freeze your credit score if you believe to be a victim of fraud. This will prevent your score from being accessible and likely reject fraudulent applications in your name.
• Downgrade cards which have annual fees that you’re not taking advantage of to a $0 annual fee version, if available. Else, simply cancel it and ask for an annual fee refund. Don’t cancel cards unless you have to because they help extend your average credit card history, a factor used in calculating your credit score.

Advanced

• If you have a house, you also have the option of getting a HELOC, a specialized Line of Credit backed by your house. It will likely have a better interest rate than a personal Line of Credit, but be careful since in this case, your house is on the line (literally). It can be a great source of liquidity for renovations and business expenses, but should not be used as a crutch for too long. Only get one if you have a solid plan to repay it.
• Put all your spending on credit cards in order to maximize point earning, assuming you pay off your balance every month already. If a card balance goes above 50% of your limit, pre-pay it early to avoid hurting your credit score.

• Assuming your credit score is healthy, visit Doctor of Credit’s list of best credit cards and research some new cards that meet your spending profile and give a good bonus.

  • If you like Chase cards, start with them because of their 5/24 rule, making it harder to get approved if you opened other accounts recently. Chase Sapphire Preferred/Reserve are great and always have great sign-on bonuses.
  • It’s ok to have multiple cards, as long as you use them responsibly and smartly. To be safe, limit yourself to one new card per 6 months.
  • If you get rejected, or even not immediately approved, not all is lost. Call the Reconsideration Line of the relevant bank and they will often ask a few questions and approve you on the spot. Just be prepared to have a good story.
  • Repeat this process until you have enough cards to get 2x points in all your major spending categories.^* Here’s my list: Chase Sapphire Reserve for dining/travel, Chase IHG Premier for IHG hotels, Chase Amazon Prime Rewards for Amazon and Whole Foods, AMEX Blue Cash Everyday for other grocery stores, Chase Freedom Flex for some rotating categories and Chase Freedom Unlimited for everything else, plus other cards for more niche categories.
  • Maintain a spreadsheet of your net gain from each of your credit cards. This will help you decide whether you’re making the best of your card and whether to keep or downgrade it. See screenshot below for an example.
• Redeem your points/cashback occasionally. Don’t just let them sit there unless you need to meet a certain threshold for redemption. Something like https://awardwallet.com/ can help you keep track of all your points in one place.
• Occasionally check your credit card reward portals for discounts. Chase and Amex in particular often give random discounts at major businesses like Starbucks.

Figure 1. Final accounting for my Chase IHG Premier usage in 2020. The approximate point values can be difficult to gauge, but I use whatever ThePointsGuy says. Most other perks, like the free night stay, have exact values assigned to them (assuming you used them), so overall this calculation is pretty accurate. The 140k point bonus is not available as of May 2021 but they currently are offering a similar one for 125k instead. Overall, this is an amazing card in the first year due to the bonus, but I plan to keep it going forward for the free anniversary night which will definitely be worth more than $89.

^{* Some people turn this into a hobby, mainly for the initial credit card bonuses and getting cheaper hotel stays. This is called ”Churning” and a has a whole community around it, but you definitely start getting diminishing returns after a few low hanging fruit and it takes more and more time to find juicy credit card bonuses. In my opinion, the required time investment at that point is not really worth it.}

Investing

Basic

• Resist the temptation to be sucked into various stock market or crypto frenzies. If you have high-interest rate debt, like credit cards or student debt, you don’t have the money to spare on speculative trading. Those must be paid off first.
• Rather than investing in individual stocks, start by investing in low expense ratio mutual funds or ETFs. They are much more stable, generally have a smaller expense ratio (a cost that is absorbed into the stock price itself), and you will rarely lose sleep over them. You can start with the Bogleheads 3-fund portfolio, which is as simple as it gets, and you can add more complexity to it down the line.
• If you decide to open a Robinhood account, use my invite code so we both get a free stock: https://join.robinhood.com/vasilyr1

Advanced

• If your employer offers it, consider opening an HSA account for your health insurance. It will require a high-deductible plan, but it effectively gives you a completely untaxed investment account. Do make sure it is better for you than the alternatives, like an FSA, which might better meet your financial needs in the short term.
• If you have kids or plan a PhD in your future, consider opening a 529 plan.

Tax

Basic

• If you have the time and resources, learn how to fill out your own tax return using a Tax filing software like TurboTax. In fact, when you are below a certain income level, you will often be able to file for free, depending on the software. Not only will this cost you less than an accountant, but you will learn a lot and gain insights and have a better idea of how optimize your next returns. Be patient and give yourself a few days to do it properly.
• Getting a big tax refund should not be your primary goal. This means that you overpaid tax and the government effectively had a free loan on money that belongs to you. Instead, aim to have your tax deducted as accurately as possible or even slightly underpaid so that you can put that money to use immediately instead of when you get it back at tax time. The W-4 form is used to adjust tax withholdings by your employer, although your withholding will never be 100% accurate. Be careful not to swing too far the other way however, since ending up with a large tax bill could be a big hit to your finances and is easy to mismanage.
• Understand the difference between filing your taxes through itemizing or taking the standard deduction. A lot of tax benefits can only be used by doing the former (like mortgage interest and large medical expenses), and the latter will actually cover most low to middle income family tax situations.
• If you earn less than $57k, you might be eligible for Earned Income Tax Credit (EITC). Look into this NerdWallet article about it.

Advanced

• Consider batching multiple large expenses eligible for itemized filing in a single year. For example, you could plan to have a major non-urgent surgery, a house purchase and charity donations all in one year, such that doing an itemized deduction actually beats the standard deduction at tax time. Be careful however: take opportunity loss into account and don’t increase your overall expenses just for the sake of this strategy. Talk through a few scenarios with your CPA.
• If you have investments with particularly bad performance that you don’t plan to keep anyway, consider locking in your capital losses. “If your losses exceed your gains, you can deduct the difference on your tax return, up to $3,000 per year ($1,500 for those married filing separately).” -NerdWallet. Full article here.

Real Estate

Basic

• It’s not always better to buy vs rent. As a general rule, if you need to move within the next 5-10 years, you should probably rent. As a tenant, you also don’t need to deal with many hassles that come with being a homeowner, so you want to make sure your life situation can accommodate your new responsibilities. The NYT has a good calculator for this.

• When negotiating a mortgage with your loan officer, make sure to explore options to pay down your interest rate (also called “points”). You pay a bit up front but end up paying much less in the long run in your monthly payments, assuming you stay long enough in your property. Your loan officer should be able to provide you with a break-even date that you can weigh against your life plans.

  • If you plan to hold on the property for many years, like most people, it’s almost a no-brainer to do this, assuming you have the extra cash for it.
  • In my example, I was able to pay down my interest rate from something like 2.85% to 2.5% for $14k, resulting in a monthly payment savings of around $200, which is great all things considered. Because the break-even point was somewhere around 4 years, it was an obvious decision because I plan to hold my property for many more years than that.
  • Finally, keep in mind that the price of the “points” is in fact negotiable, so if you have a competing quote from another loan officer, this one might be more likely to give you a discount since most other mortgage fees have little wiggle room.

• Understand the difference between fixed and variable rate loans. Don’t just take it at face value which one your loan officer recommends — do your own research.

  • Bookmark this Freddie Mac page, understand it and consult it from time to time.
  • Right now in 2021, interest rates are at historically low levels, and if you believe (like me) that they will bounce back up, then locking in a fixed rate mortgage should in theory save you money in the long-term. However, variable rate loans can be a good choice for people planning to sell their home or refinance within a few years of purchase.

Advanced

• Avoid using an FHA loan unless you absolutely can’t buy a house without it. Not only does it have more requirements and costs more in the long run, but it’s less attractive to sellers due to the extra hoops you both have to jump through. Some downsides include a stricter FHA appraisal process and higher insurance costs.
• If you own a few properties and want to sell one or more of them, look into 1031 exchanges. This will allow you to defer paying your capital gains taxes on a property sale if you meet certain conditions, mainly to buy a similar property to “swap” for the one you’re selling within a certain timeframe. As they say about this, “swap till you drop,” so you can use this strategy to defer capital gains indefinitely.

Making More Money

Basic

• If you don’t use it, sell it. Likewise, if you need something that doesn’t need to be new, buy it used. Facebook marketplace and apps like OfferUp are great for this.

• When starting a new job, especially if it’s a white collar job, always negotiate.

  • Provide specific arguments like “I had the best employee rating on my last job” or “the average salary on Glassdoor for this position is higher than what you offered”. Even if you don’t have something concrete like that, soft arguments including your experience and tenure can do the trick. Worst case they say no, and I’ve never seen anyone’s offer reneged when they negotiated.
  • In my two major job changes, I was able to negotiate my salary up by 9% and 13% for my first year, respectively. That’s such a big difference, and you do NOT get many chances to increase your income so much from what usually amounts to a ~20 minute call.
  • Finally, if you’re not switching jobs, do some research about your current title and if you’re on good terms with your coworkers, ask them to share their salary. If you earn significantly less than either, make a case with your boss that you’re being unfairly underpaid. Make sure you’re already in good standing when you do this.
• If your hobby involves creativity of any kind, think about how you an monetize it. For example, if you like painting, just record yourself painting and put it up on a youtube channel for some potential ad revenue. You would have been engaging in your hobby anyway, so why not record it for some cash? Same thing goes for things like renovations. People like watching this stuff.
• Research less common ways to earn some cash. Things like being an Uber driver are overhyped and are not nearly as good as they used to be. Be creative. For example, I hear that taking 3D pictures of real estate for landlords can be pretty lucrative. You can get an entry-level 3D camera for as low as $300. Here’s a YouTube video that reviews cameras for this specific purpose.

Advanced

• Learn about house-hacking strategies. Some examples:

  • If you have an extra room in your house with its own bathroom, consider putting it up on AirBnB.
  • Buy a duplex and live in one half while renting out the other half. The magic here is that, as long as you stay in the property for at least a year, you can get get an “owner-occupied” mortgage while still making rental income, whereas if you don’t live in the property, it is considered an investment property and both rates and downpayment requirements can go up.
  • If you’re more comfortable with putting in more work, consider buying a single family house that can be easily turned into a house-hack. The more bedrooms/bathrooms the better, and the more tenants you can safely house in there, the more money you can make. Be careful as the bigger the renovation, the more it’s likely you’ll be overbudget, even if you’re experienced.
• Level up your current side hustles by automating and/or outsourcing them, whatever allows you to either scale up your operation or free up your time to turn your gig into more of a passive income, whatever is more important for you.

Retirement

Basic

• If your employer offers 401k matching, start by contributing the minimal amount to get the match. Otherwise, you’re just leaving money on the table.
• If you change employers and have over $1k in your 401k, check what the new employer’s 401k offers. It’s possible that your old employer’s 401k will be better, in which case you might want to keep it if you’re allowed. You should also consider rolling it over into IRA accounts, which might be advantageous. This video covers the IRA rollover pretty well.

Advanced

• Max out your 401k, unless you are saving up for a house. Not only do the pre-tax contributions reduce your cash on hand, but they also reduce your income in the eyes of loan officers. This means you can afford less house and will potentially get a worse rate.
• If your salary is over $100k, you aren’t eligible for the ROTH IRA (one of the best retirement accounts in my opinion), so consider doing a post-tax Traditional IRA contribution followed by an immediate conversion into a ROTH IRA, aka the “Backdoor ROTH IRA.”
• When your financial situation is stable, you can allow yourself something like a 5% investment gambling portfolio amount. Then, raise it to 10% if it’s going well. For me, 10% of my portfolio is in crypto for this specific reason, but no more.
• If your cash reserves allow it, ramp up 401k deduction of your paycheck all the way up to like 50% in Jan and Feb in order to get into the market earlier, and then reduce it for the following months to meet your target for the year. This is called front-loading and it can actually be applied to most investment accounts. Be careful: your employer might only provide matching when you contribute every month, so if you set your contribution to 0% for the latter months, you might get your match delayed or worse, not get it at all.
• Look into whether your company 401k supports ”Mega backdoor ROTHs” It would allow you to contribute even more than the maximum amount ($19.5k as of 2021), capped at $58k as of 2021.
• Did you know that you can borrow a loan from your 401k to buy a house or pay student debt? It should not be your first choice to get liquidity, but if you’re getting a loan anyway, it’s likely you’ll get a better deal taking one against your 401k.

Change Notes

1. 2020-12-21: Initial version of article was published; index left unfinished.
2. 2021-05-11: V1 of Index added to the article; reworded some things in the introduction to be less obnoxious and fixed typos; moved intro to separate article