NET/MAX Personal Financial Plan: Going from $0 to over $30,000 of Savings Per Year
Move over Dave Ramsey, Financial Literacy “Guru”. Here’s the Net/Max Plan! A way to make Personal Finances, Personal again.
*Note — This plan is tailored for a Single Individual with no kids, however, the core information is Universal.
I guess everyone needs an intro. Hi, my name is Lawrence. Scroll passed my mugshot to skip the intro (Options!).
I didn’t know that I was super poor. Yeah, I had a quasi-Business/Accounting/Taxation degree ($110k in Student Loans) and with grades like mine… It was rough. After struggling to find a job (which is a story for another time). I asked a recruiter to be honest with me at the end of FSU Seminole Futures (College Job Hunting) and was told that my resume was garbage. Hence the picture above.
After crying on my way home (exaggeration). That knowledge was way more powerful.
Armed with this revelation, I did what most Millennials or Xennials do. I googled and watched youtube videos. Next, to Wikipedia, I heart these a ton. Stop sleeping on Wiki, It’s a great source. Yep, I said it.
MINT.COM was more revealing than an early 2000s Ctrl+H.
I found out that my three roommates and I (college life) were paying on avg. $400+ in food costs a month. Let me clarify; that’s $400+ each. That’s at least $1,600 per month on food!!! Yep Publix (aka FSU’s Club Pub) and College life. It was insane. I was paying fees upward to $1,250 a year. Shopping for $2,225 (circa 2012). I saved all of this stuff on excel (←- see 2nd article, transparent AF!).
I don’t even know what I was buying. I was just spending money like everyone else. And I was the cheap one… TF…
I adapted like I was Tyrion in Game of Thrones, or better yet Little Finger aka Master of Coins. I swallowed my pride and got a job making about $21k a year as an Administrative Secretary Lvl 2 [$18k after taxes] as of September 2012, for the Florida (FL) Department of Agriculture and something else.
I worked with the FL Department of Financial Services (sounding fancy already) on occasion and continued to apply for jobs. Six months later; I leveraged the moment and got a job for the FL Department of Revenue (see the financial correlation) as a Tax Auditor II. I boosted up to about $32k annually which is about $27k. Ha! I was practically rolling in the money at this rate. Note: I’m a quick study of my environment. And I’m cool AF under pressure.
Six-Seven months later after being told that I couldn’t get promoted to Tax Auditor III (required at least 1-year exp). I applied for another job which led me to DC making $64k a year as an Auditor for the Department of the Treasury. Yep in about 12 months, I jumped up in the rank of life to working class, and living paycheck to paycheck to survive in DC. And once I got to this level all the stuff that I learned in Tax classes, started to make sense.
From January 1, 2014 to December 31, 2017, I went from $-110k to $100k in Net Worth. I went from making $0 to $100k in 5 years. What seemed to be a Miracle of choices. One time for God on that one. Ask and the doors will open but if you are picky, you will miss out on every opportunity. I present to you, a better plan for personal finances for the young professional. After a picture of me smiling and stuff. Note that hyperlinks are there to help you. They reinforce the fundamentals and provide resources to other great blogs and bloggers that I follow.
Here is my NET/MAX PLAN:
1. Know your Net Worth
Assess Your Issues and Understand Your Numbers. Check out free Financial Apps like MINT, PERSONAL CAPITAL are the best. Check this video out, Average Net Worth by Age. These guys are nerdy but they offer cool biking, running, or carpooling dialogue. Essentially, money is a metaphor for control. If you don’t have a good grasp on money, it reveals itself in multiple ways. Poor Diet, Lack of Self Confident, “Status Propping”, Staying up late, Overstressed, Inability to sleep, Anxiety, Substance Abuse, People Abuse (or vice-versa), and etc… So let’s get you back in CONTROL.
Free resource: Money Management estimator
2. Develop a Personal Budget
Engage in a Discipline and Balanced Lifestyle. Connect to What Makes You Happy. Listen to this podcast for inspiration, His and Her Money: How Naseema (Single Mom) Paid off $270k of Debt in 20 Months.
The people in the pic are always concerned? Who does this?
- Making a Budget that works for you, takes the hard work out of things upfront.
- It’s all about Stress Reduction, Having a Plan and Generating Goals. Let’s get to the “funds” part. Pun intended.
3. Save $1k in a Starter Emergency Savings Fund
(aka Bank Savings at 0.001% are not Bueno) *Adjust annually — Ally Bank has 2.00% as of 12.2018. Yep just throwing money to the side just in case. Experts say to save 3x Months but you need your money to work as soon as possible. You are burning cash, you need your money ASAP. The recent partial Govt. Shutdown revealed that most people are not even one paycheck away from failure. It was day #3–4 when people started talking to the media about their financial issues. The paycheck wasn’t slated to pop up until day #15. “It was Day #3, people TF ← Day #3”
Updated 1.9.19, American Express Personal Savings is now 2.10% APY vs 0.09% APY National Average. Over 18x more bang for your bucks. No minimum deposits. No Fees.
4. Find Healthy Hobbies and Goals that foster better a. Mental, b. Spiritual, c. Physical, or d. Social Health.
*2–3x Combinations can become side hustles. Listen to great podcasts such as Paychecks and Balances.
Join a running group. Dance salsa or better yet learn to dance anything. Do what you love.
Stop trying to do what you think is prescribed for you. Turns out, I didn’t think happy hour made me that happy. I rather learn how to make drinks.
5. Focus on paying down Debts naturally, and become Solvent
Check out this article, 2018 American Household Credit card debt study.
- Credit Card (CC) debt is the 1st to go. CCs tend to range avg. 17%+ Interest Rate
- *CC Strategy -> Pay off 3 months. Don’t do the hard inquiries. Request Credit limit Increases (Periodically) and/or Lower variable interest rates. Use CreditKarma.com. Payoff student loans normally. Avg. low-interest rate of 6% or less.
- Research repayment programs like the Public Service Loan Forgiveness (PSLF). The PSLF Program forgives the remaining balance on your Direct Loans after you have made 120 qualifying monthly payments under a qualifying repayment plan while working full-time for a qualifying employer. Basically, work/pay for 10 years and voila, you will be free.
- Pay up to $2.5k in Student Loan interest fee (annually) to take full advantage of the Tax Credit. ←- Video Note: It phases out generally once you start making more than $65k Salary. You will have to drop that AGI and you can skim by with around $80k salary.
6. Match 401K or 403B investments rate at work. *Increase the rate until it hurts
You can ultimately save $19k a year at 5% matching, you are making bank. Lowers your taxes so you get more money back. Adjust over time. It takes a bit of work to get up to that max. (Save More: It was $18.5k in 2018)
7. Pay up to $3.5k annually in a Health Savings Account (HSA)
Benefits — Lowers taxes per pay period so you get more money back, and while filing.
Great for Medical/Dental emergencies in the short/long run. Some offer internal investment opportunities as well.
Great in your 20s. Useful in your late 30s. Check your plan and see what works for you. Time to Adult up. Not to be confused with Adultery.
8. Put up to $6k in Traditional IRA and/or ROTH
*If you are making over $70k (adjust over time). You can throw up to $6k annually in either or even have a combo but you can’t cross $6k. It was $5.5k until 2018 so fellow financial literacy nerds; don’t come for me. I got that heat or all that smoke. Check this video for more information, Traditional vs Roth IRA -Which should YOU choose?
9. Utilize Kick/Flip Tax method of tax avoidance and accelerate retirement investments
I’ll have to explain that later. The basis is to use your tax refund to fund your HSA or IRA before the tax filing deadline. It will help to boost your tax refund by a bit.
10. Buy a Condo. Hold up, big spender. You don’t even have enough you for all those rooms that you want for the guests that you want. Think of it as a temporary spot
No more than 30% of your take-home should go to housing expenses *Buy 2/2 if single and rent the second room (if possible). Try to curb your appetite for open concept and natural lighting.
For the record, I watch too much House Hunters International. Judge me.
11. Put 3x Months of Expenses in High-Interest Savings (adjust annually)
Bankrate seems to be the one-stop-shop to seeing which rates are best, check them out here.
Yep, the moment has come to save. By this point, you are feeling pretty good and will likely spend the money but don’t just wait. You are walking like you don’t need this job but you still do for another 20 years. Something has to fund your venti morning coffee fetish.
12. Invest in Stocks. EasyStart by Navy Federal Credit Union is dope
The key idea is to *Diversify the Portfolio, Buy in bulk. Watch out for fees.
- Please don’t ask about stocks if you have mountains of credit card debt, no savings, and none of the above-mentioned. Look at the pick, look!!!
- Why? Stocks are a crapshoot especially in 2019. You could lose more money than you think. I lost $10k in 2018. I cried on the inside. lol
13. Save for your Children’s college education using tax-favored plans
*better yet, buy investment prop near a college town. Short/Long term income. 529 plans and the likes! If you don’t have kids, help the nephews and the nieces. It takes like a group of people or something.
14. Pay off investment property
Use excess to pay off the original home loan.
Get equity loan on investment property, buy a 2nd investment property (All Cash). Make double payments. Repeat. Make triple payments. Etc.
15. Pay down Student loans at an accelerated rate (if need be)
At this point in the game, you will be well on your way to financial success. You will likely never remember reading this and won’t give me a shout out on your blog or something. I see how it is future you, I see…
At this point, you travel, enjoy, start a family, get a dog and live like you want to. Seize the moment. Pay off debt and earn Financial Freedom.
16. Build Wealth — write a blog, do a vlog, do public speaking, write a book, Podcast. Have fun and leave a Legacy
17. Enjoy the process. You will be able to travel, see concerts and etc…
See the print-friendly and obvious question driver (below). I’m sure it has a typo somewhere. There is always a typo somewhere…
***This stuff works. I hope you use it and see the value yourself. 2019 is a great year. Start ASAP.
