Day 185: Money

There's just something about the feeling of money in your hand let alone a stack of bills totaling 100,000! Well, 100,000 Afghani which is about 2000 US dollars. Today, I assisted Major Probus our "FOO" (Field Ordering Officer) in paying all the local contracting jobs on the base. Every month the "FOO" is allotted a set amount of money which can be used to purchase items, services, or improvements to the base, within certain parameters of course. It sounds like a fun job, but it is actually stressful and very time consuming. Anyways, my point in bringing up this experience is because it reminded me of how much time I have spent attempting to understand and manage money. I figure in strained economic times such as ours, a brief discussion about money would be timely.

I pity the FOO!

Back in college I was a very, very impulsive spender. I had 5 credit cards in my wallet, and I just had to have the video game systems, electronic gadgets, and name-brand clothes. I also figured that every month the only attention that my growing credit card debt deserved was the minimum payment. Several years later, I was sitting on 3000 dollars of frivolous credit card debt. Man, what happened?!?

That's when I realized how clueless I was when it came to the value of money. After staring at my Visa, Mastercard, and department store bills, I then made the conscious decision to fix it. I started financially decontaminating myself by first cutting my credit cards and turning my debt over to a debt management agency who lowered my interest rate. I put any extra money I had into paying off the credit card debt...a couple of years later I was credit debt free!

To make a potentially long blog story short, I started reading up on budgeting, investing, debt management, and financial planning. I subscribed to Kiplinger's Personal Finance, Money Magazine, and started reading books such as "The Millionaire Next Door" and "Smart Couples Finish Rich." After reading dozens of books and magazines I started to find common themes for financial success which I've basically broken down into the simple list below.

1. Pay Yourself First! - The hardest thing about saving money is getting yourself to do it! We as consumer-driven Americans are horrible savers. The best way to get started is to have it automatically taken out of your paycheck. Start small then work to a goal of saving at least 10% of your pay.

2. Pay Off "Bad" Debt - When I refer to "bad" debt, I mean consumer debt such as credit card bills, car payments, or any debt in things that have no potential to increase in value or pay dividends in the future. "Good" debt would be education debt or mortgage payments.

3. Set aside an Emergency Fund - Losing a job is always a possibility - getting laid off or injured are all too common reasons for suddenly being unemployed. Saving 3-6 months of your current monthly debt is a great rule of thumb when deciding on the amount of money to place in your emergency fund. The fund should be easily accessible and should not be touched for any other reason than financial emergencies (health care bills, sudden car repairs...NOT for an emergent need to have a Playstation 3)

4. Maximize your 401K contributions up to your employer's match - find out what your employer matches and contribute, at a minimum, that amount. It's a no brainer...free money.

5. Maximize Roth IRA Contributions - read up on tax advantaged individual retirement accounts such as a ROTH IRA. A Roth account can consist of any combination of investments. The money placed in a Roth are "after tax dollars", in other words this money is from your net pay after Uncle Sam has taken his share. The great thing is that all the investment income and potential growth inside the Roth IRA will be able to withdrawn tax free! There are rules such as maximum contribution limits per year, and a minimum retirement age indicating when money can start be withdrawn.

6. Give Generously - Don't forget that the blessing of money is not just in the accumulating of it, but also in having the opportunity to give it away for the benefit of others.

"A good name is to be chosen rather than great riches, loving favor rather than silver and gold." Proverbs 22:1 NKJV