The Ten Most Important Things I’ve Learned About Money and Life In The Last Year

A year ago today, The Simple Dollar began. At that time, I had figured out that I needed to always spend less than I make, but I still had some credit card debt and a truck loan to get rid of (on top of my other debts) and almost nothing in the bank. I also had no idea how to manage the responsibilities of a website like The Simple Dollar. Today, my only debts are student loans and a home mortgage, I’ve built The Simple Dollar into a thriving community, and I’ve got a very comfortable emergency fund and the beginnings of an investment plan.

It wasn’t easy. It took a lot of work and I spent a lot of late nights getting things in order. Here are the ten things I’ve learned over the past year from the experience of starting and building The Simple Dollar, learning how to manage my finances and my own mental traps, and build a stronger future for myself.

Time is the one thing you can’t ever get more of. There will always be opportunities to earn more money, but there will never again be an opportunity to read your son a book when he’s a toddler. Don’t let a day pass without enjoying the great things already in your life, even if it means you miss a meeting or fall a bit behind on your projects. What’s really important, after all?

Every time you spend a dollar, you sacrifice a bit of your future. If you sit around and dream about financial freedom while dumping $30 a week at the coffee shop or buying a new DVD each week or going out for $20 worth of drinks with the guys on a regular basis, you’re just tossing that dream into the gutter. Getting ahead takes commitment and sacrifice – if you want to live the dream, you have to work for it, and that work means sometimes not buying everything you want.

The simpler you make your investments, the better. I used to believe that investing was complicated. In truth, it’s scarcely more difficult than a savings account if you do it right. Just buy low-cost index funds, hold onto them for a long time, and let them do the work. When you’re ready to do something with the cash, start selling the funds. That’s it – and the online services offered by most providers of index funds, like Vanguard, make it about as easy as putting cash in a savings account.

Finding ways to better manage your time is always worthwhile, but don’t make it an obsession. I have a friend who has an elaborate time management scheme he uses. He often tells me how much time it saves him, but I regularly see him devoting significant time just to the system. For me, the core of it is that I just keep an idea notebook with me, jot down ideas when I have them, then go through them all once or twice a day. It’s simple, doesn’t take much time, and really keeps me on the ball.

Automate as much as you possibly can. I have all but two of my bills on autopilot. I have dumps into my savings accounts on autopilot. I have my investing largely on autopilot. In effect, except for irregular things, I basically don’t have to touch my personal finances, which means that I don’t have to spend much time worrying about it. One big caveat – for this to work, you need to consistently be spending less than you earn, otherwise you run into some serious overdrafting problems. Yet another reason to become financially responsible.

Find time to recharge. There are days where I just keep going without cease from before dawn to well after dusk, but if I do that too much, I start to wear down and no matter how much time I devote, I’m simply not as productive. I’ve found that taking regular time outs to do stuff that really deeply fulfills me works wonders. In fact, over a weekend, I’ve found I get more done if I spend one day doing my tasks and the other day just taking my kids to the park and reading than if I spent both days working from daylight to dusk.

The best way I’ve found to save money is to prepare all my food at home. This is an incredible money saver. It’s not too hard to prepare a meal at home that costs less than a dollar a head and contains all of the nutrients my family needs. Do that over and over again, especially compared to the prices on take-out foods, and it isn’t long before you’re saving a lot of money – and likely eating much more healthy as well.

Keep track of things. Make yourself look at your financial situation at least once a month, if not once a week. Tabulate up all your debts and assets and see whether or not you’re making progress. The numbers don’t lie – it’s a constant reality check that keeps you from living in the clouds and spending money on a whim.

Connect with as many people as you can. It’s always useful to forge connections with as many people as possible. Take the time to get to know everyone around you – your coworkers, your professional acquaintances, your neighbors, people in your church, and people who participate in community events. Get to know as many of them as you can – learn their names and some things about them, and keep in touch with them. When you know two people who could really use each other’s help, connect the two of them. Doing this and being genuine about it pays more dividends than you can even imagine.

Forget the paycheck – do what you’re passionate about. Time in and time out, I’ve seen that people will pay very well for passion – that’s the truly valuable thing on this planet. Whatever you’re passionate about, do it and the money will follow if you open the doors to it. I believe this from the bottom of my heart and I’ve reached a point where I’m passionate about everything in my life. My choices are merely determinations about which passion to follow at the moment.

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24 thoughts on “The Ten Most Important Things I’ve Learned About Money and Life In The Last Year

  1. Mark says:

    Great thoughts. I am in a similar situation to yours (2 kids under 2), but I have just had my financial “Armageddon” and I am trying to dig myself out, but it seems to be a struggle. Your blog has been of great inspiration and keeps me focused on the important things. Thanks.

  2. Trent,

    You continue to provide excellent content. I am always inspired and excited to read your blog.

    Thanks,

    Matt Sullivan, CEO
    Credit Dusters, Inc.
    matt@creditdusters.com
    blog: http://creditdusters.wordpress.com

  3. ZenniHill says:

    Trent (TSD)
    Happy Birthday. Keep up the great work!

    I’ve made your site my Daily Read since June.

    Zenni

  4. MoreCents says:

    Happy Anniversary!

    Thanks for sharing your journey. It takes a lot of guts not only to do it but share it with the whole world. What a gift!

  5. Dawn says:

    You really grew up this past year and you should be proud of the accomplishments you have realized.
    I come from a background of early childhood education and I am most proud of your dedication to your children’s childhood.
    It goes by so quickly and you can never reclaim those moments.
    My boys are now in their twenties and it seems like yesterday they were your children’s age.
    It really does boil down to finding the balance that works for our individual families.

  6. Jeremy says:

    Trent, your last comment really hits home – doing what you are passionate about is important for so many reasons, including the simple one of really living your life =)

  7. kristin says:

    Congratulations on having the Simple Dollar for a year! It was recently listed in the Seattle PI as a website to check out! You have learned a lot this year as have I through reading your posts and the reader comments. Keep up the good work.

  8. You’ve only been at this a year? I always figured your blog was one of those that had been around for much longer! You’ve accomplished a lot in the last year. Congratulations!!!

    This post has given me a lot to think about. Thanks!

  9. Pinyo says:

    Trent, great reflection. You certainly have done an amazing job with The Simple Dollar.

  10. KMC says:

    Congratulations Trent. I’m with Lynnae – it seems like more than a year.

  11. Jeni says:

    “Do what you love and the money will follow” is my favorite quote. I have been trying to follow this quote my entire life, but have yet to make a real living at what I love, but I keep trying.

  12. wealthy_1 says:

    Congratulations and Happy Anniversary!

    Yours was the first blog I had ever read. Your story is amazing. Your blog led me to so many others and inspired me to focus on my finances through blogging. It really helps to share my experiences with others. I feel as though I’m being held accountable.

    Continued success!

  13. Happy Blogoversary! Wishing you even greater success in the years to come :D

  14. Issac'sBride says:

    Your website has been of great inspiration to me.
    I’m in my early twenties, have a small credit card debit and then on top of that I recently bought tickets to go back home (home=australia) to visit on credit. Paying it back before I leave has put in me in a reality check, that next time I need to plan, save and to not spend in the ‘good’ times.
    So coming across this site has come at a timely matter, where I have started to put my finances back into perspective – to help plan for my future.
    So homemade lunches have become a favourite of mine, going to the grocery store once a fortnight and shopping around for doing price checks on top grocery items and checking the internet for deals/coupons.

    One thing I would like you to cover and prehaps you have and I have not come across it yet – Buying individual stocks, I have a few that am I watching but how doi go about making the purchases for them?

    Thank you, for your writing and not acting as a know it all – attitude is everything in commucating your ideas. I really have enjoyed reading your learning progress, it has been great encouragment

  15. Mrs. Micah says:

    Happy anniversary!

    That last point really resonated with me.

  16. I love all these points. The last one really hit home for me as well. I’ve been going back and forth (and it’s been excruciating at times) about moving into a new chapter of my “work” life where I decide to choose the type of work I do rather than be driven by a job that only puts food on our table. What you say about passion is very assuring to me. Your other points: (1) you can’t get back time (which I also think of as “life is short”), (2) keep your investments simple and (3) find time to recharge are also some of my favorite truisms.

  17. vandana arora says:

    Highly motivating,

    Well this is my first visit to your site and that’s what i was looking for,from years.

    There should always be a person with whom you can discuss and share things like money.Which in real life we miss.

    Articles like this always motivate us.

    Thanks a lot

  18. Rebecca says:

    Happy Birthday! What a wonderful job you do. I especially like that you share your life with us in relation to what you’re learning. I, too, feel like I’ve known you for more than a year. I was so curious about everything related to the new house you bought and the birth of your daughter. Best wishes for your future and dreams, you deserve the best!

    I don’t know if you are aware of the website mint.com. I just learned of it a few hours ago. And when I read just now your comment, “Make yourself look at your financial situation at least once a month, if not once a week.” I remembered what a pain that can be. Checking the various websites for checking and charge accounts. It made me realize what a valuable tool this new website could be.

    It is partnered with many bank and credit card companies and, when you put in all of your information – which I’ve read can be done in just minutes – you are able to instantly see where your money is going. The website downloads all of your account information from each institution every night and categorizes all of the expenditures. The only thing, from what I’ve read so far, that it doesn’t cover is investment accounts.

    Anyway, I thought this might be something you would be interested in. I know you that use a spreadsheet for most things instead of Quicken or other financial software, but this is a free service and you don’t seem to need to do anything except enter in your account information one time. You can even set alerts for it to remind you when things are coming due.

    I’d really like to get your opinion about this website, so please take a look at it when you get the chance and let us know what you think.

    Again, thanks for all you’ve done for us and the very best of luck to you in the future.

  19. Doing what one is passionate about and forgetting the paycheck can be risky! But what a ride! One thing that all of the sucessful entreprenurs (sp) have said emphatically is that you should LOVE WHAT YOU DO! I agree!

    Best wishes for the next years!

  20. Elizabeth says:

    Trent, I was floored to see you’ve only been going for a year. I think I discovered this site around February and have been checking in periodically ever since — really the only blog that I regularly read. Good work, and happy anniversary!

  21. Jeff says:

    I’ve got to say that I’m similar to you. I recently woke up to the fact that my financial situation is/was in total shambles. I had no direction and no idea of what to do with money. Part of it may have been due to the fact that I am afraid of dealing with money matters. I’ve subconsciously always thought such things are beneath me.

    Well, I’ve been regularly reading this blog and the “Get Rich Slowly” blog and I’ve gotten a lot of inspiration to turn things around. My wife and I have now built up a small emergency fund, an even smaller (but growing!) long-term savings fund and last month we bought our first home! I actually have a plan for my financial future instead of simply shuffling that “unpleasant” part of life under the ol’ rug.

    Thank you more than I can say. And happy anniversary!

  22. Maura says:

    Every time you spend a dollar, you sacrifice a bit of your future

    My husband and I recently kicked the daily Starbucks habit and saved $230 last month. $230!

    It was time to get real with ourselves and calculate how much we were wasting…and how much we could be investing.

    Happy Birthday!

  23. Money says:

    Its really important to track your expenses and make sure you dont over spend

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