I recently finished reading The Little Book of Common Sense Investing by Mr. Bogle. I absolutely loved it. It really made me reflect on how I can apply this common sense advice to real world use–and why I should apply this common sense advice to real world problems.
“When there are multiple solutions to a problem, choose the simplest one.”
-John Bogle
Isn’t that the truth, so often we over complicate things–our finances, our budget, our relationships–but why? Why do we make things complicated? Why not let them be simple?
More often than not, life would be easier if we just kept stuff simple.
Below is a list of Mr. Bogle’s Investment tips:
1. Stay the course (another one of his great books)
2. Beware the experts
3. Keep cost down
4. Don’t get emotional
5. Own the entire stock market
Now let’s take these investment tips and apply them to a plan for becoming debt free.
To become debt free is scary. It is really really scary. We have been going about our lives in one way, and now we want to change course. Not easy! It is like being face to face with a giant lion that hasn’t eaten in days.
And I get it. My wife went to medical school; she graduated with about $100,000 in school loan debt (which is small compared to some). During residency and her chief residency year, we were able to place the loans in forbearance, probably not our best idea, but we did it, and traveled. When we were finally ready to start paying the loans back we were at $116,000. Believe it or not, we paid that money off in 22 months. Pay down those high interest credit cards and student loan–be relentless and aggressive. Maintain that Financial Warrior Mindset!
Beware the experts.
It is hard for me to pay someone else to do something for me when I live in the age of the internet. You can do just about anything nowadays if you are willing to learn and have access to ‘YouTube’.
In law enforcement, laws are always changing, and tactics are improving. We must be lifetime learners. If we stop learning then we could get ourselves or someone else seriously injured or heaven forbid killed. Be a do-it-yourselfer (DIY). Why? It’s fun to learn something new, and it’s so rewarding when you’re done!
My wife and I remodeled on our house ourselves and you know how we felt when we were done, tired and PROUD! Shout out to my father-in-law because he helped us a ton! But yes, proud, accomplished and we saved a ton of money.
You can teach yourself just about anything including finance. There are free financial calculators, free budgeting apps, low-priced tax applications like Turbo Tax, and great educational blogs like mine! Take the time, get started and believe in yourself. I know you can do it.
Keep costs down.
Being willing to learn and DIY will inherently keep your costs down considerably low, if not all the way down to zero. Be constantly checking rates if you own a home because sometimes you can refinance and save on interest. Heck, you may even lower your monthly payment so you can SAVE more. Do the work so that you can save money here and there. It will add up in the end. Use all the free resources available to improve your ability to track expenses. Find a savings account that is liquid and pays you money to keep your money in their account, I like HSBC Bank USA. They are currently offering 1.3% and no annual fees and no maintenance fees. Always be on the lookout to reduce a cost here, so you can save a dollar there.
Don’t get emotional.
We are all emotional people, so it is very tough to not get emotional. My wife would probably disagree with me on this statement, but we’ll go with it. I can be emotional sometimes. We want to buy something when we are sad so it will make us feel better. Or maybe when we hurt someone, we think buying them something will change the situation, but it’s not the answer.
Tracking and staying in line with our plan is the answer. In the long run when you focus on the outcome with a wide lens rather than a narrow scope, you will see the improvement in your financial wellness. It will not be easy, and you will make mistakes, like me, but if, during the majority of your adventure you stick to the plan, you will succeed.
Own the entire stock market.
Own your mistakes and learn from everyone else’s mistakes. We have to be continually learning and trying to sharpen the saw! Mr. Bogle wants us to invest in funds that own little pieces of the best companies in the stock market. This is a great reminder to be diverse in a spending and budgeting plan. Owning more than one company will be the best course of action. I don’t know about you but I would never want to go to a buffet and have to eat only lettuce. I like to eat a little of everything from the buffet, don’t you? So make sure you invest in funds which allow you to eat a little bit of each company. It’s truly some of the most important advice. A good place to start: low cost exchange-traded funds or mutual funds. And I have to say some of the best are at Vanguard.
But as always, please do your own research before making investment decisions. The articles I write are meant to provide you with information and encouragement towards being a great steward of money.
Your Assignment.
Not in a relationship—Decide which of these areas above is a challenge, and consider ways to improve it. Read a book on this, journal, brain storm, track.
In a relationship—With your significant other, decide which of these areas above is a challenge, and consider ways to improve it. Read a book on this, journal, brain storm, track.