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“Make the money. Don’t let the money make you." - Macklemore
This page lays out our personal finances. Enjoy!
Rules for Investing
Rules for Personal Debt
Personal Finance Toolkit
⚠️ - Informational Purposes Only - Not Personal Advice
Give 🫶🏻
The best rules for money I have come across are: Give-Save-Spend. So, I have decided to use it. I think I heard it first from Bo on The Money Guy Show. I feel like this puts money in its proper place.
Give first, Save second, Spend third.
We set aside a percentage of our after-tax income. If you are like Sarah and me, once we set the money aside, it’s almost like it’s not ours anymore, so it’s easier to let it go and be happy with sending it off.
— Originally Posted on 07/15/2026
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Being an Investor is a long term plan (time in the market), and being a speculator is a short term plan (timing the market) that more often than not leads to destroying your finances. Time in the market is the tried and true way to build wealth, not trying to time the market (a fool's game). The key is to automate your investing as much as possible and forget about it. Consistently invest through the ups and downs of the market (i.e., dollar cost average). Also, it’s good to not listen to the media about the market because they are just after a catchy headline to get your attention.
One of the main reasons to make an investing plan is to weather the storms that come. Earlier this year, my 401k was down 32% because of COVID-19. As gut-wrenching as it was, I didn’t panic because I had a plan in place. Sarah and I kept investing in the bear market. This was easy because all our investing automatically comes out of our paychecks and bank account every month. If we had rebalanced to be more conservative at the market bottom, we would have lost out on the market recovery. Those shares we bought when the market was 32% down, as of this post, have returned about 37%.
Market volatility is your friend when you are in the wealth accumulation phase. Buying shares when the market is down is basically buying shares at a discount.
Fun fact, this was the shortest bear market in history, which helped us not panic too much. If you struggled to not react during this last bear market, consider allocating more of your portfolio towards bonds to smooth out the volatility of the market. Your overall return, in the long run, will be less, but that is better than panicking and selling at the bottom and trying to time the market.
Keep this in mind; previous returns do not guarantee future returns. No one knows what the future holds.
Finally, I do think it’s fun to be speculative and extra risky from time to time, but only with fun money, you are willing and able to lose that’s above your 10-20% nest egg. Sarah and I currently own individual stocks from 3 companies.
Mortgage rule of thumb:
Follow the 25% rule if you want to avoid becoming house poor.
The 25% rule simply means not spending over 25% of your after-tax income on your mortgage payment. If you bring home $4,100 a month after taxes, you should spend no more than $1,025 on your mortgage.
If you want to be extra conservative (like me), add in your utilities as part of the 25%. Using the example from above, your mortgage plus utilities (city, electric, & gas) should not exceed $1,025.
Using this model will help you not drown in a house payment. This is also a good rule for renting.
One of the most common reasons for divorce is finances. Getting your finances in order helps relieve unneeded stress and leads to a happier, healthier life. It also makes it way easier to set money aside to be a cheerful giver. Studies show generous people are happier people - soapbox over.
Financing a vehicle rule of thumb:
It’s called the 20-3-8 rule
- 20% down.
- 3-year note.
- No more than 8% of total income.
If you need to finance multiple cars, make sure the total combined amount is no more than 8% of your total income.
One exception is if it’s a luxury car, the note should be no more than one year.
Obviously, if you can pay cash for a vehicle, do it! Reality is, not everyone can make this happen. Having some guidelines helps make the decision easier on what you can afford. It also helps with not overextending yourself.
I heard about this rule from “The Money Guy Show.” Check out their Podcast or YouTube channel! They are awesome!
Student loan debt rule of thumb:
Do not take out total student loan debt higher than what your projected starting annual salary will be.
I took out around $30k. My projected salary was 50k. My first job out of college as a tax accountant was $46k. I took a lot of courses at a community college to keep costs down.
Unfortunately, schools will let you take out a surplus of debt for degrees that are known for not having a career path. If your college is trying to talk you into more debt, you need to run for the hills. Remember, your college is a business, and they make money by you attending.
I worked every other year of my college journey and threw all our extra money towards loans (Yes, when I worked, my grades suffered). I have always been terrified of debt. I don’t regret paying off the low interest 3.875% loans fast for one second.
If you can pay cash for college, you should. If you are like me, I wanted to get through college as fast as possible, and I wouldn’t be able to do so without taking out loans. I was able to finish 150 hours (needed to sit for the CPA exams) in 3 1/2 years due to being able to take out loans. Then we went HAM on paying them off.
If you don’t have anyone depending on your income (e.g., you are single), you don’t need life insurance. You would be better served by investing the cost of life insurance.
If you have people counting on your income (e.g., spouse or children), it’s a good idea to get life insurance to supplement your income in the case of your death.
I recommend Term Life Insurance for its low cost & simplicity. Term Insurance gives you coverage for a certain period of time. For example, Sarah and I have a 20-year term policy for each of us. This means our premiums are locked in for 20 years. We have about 15 years left on our policy. Our goal is to have enough invested at the end of 15 years to not need life insurance at all.
A good rule of thumb to use when deciding how much insurance to take out is 10 times your annual salary plus any outstanding debt.
I went a little overboard on my policy, doing about 15 times my salary plus enough to pay our house off. Sarah will get close to $1,150,000 if a die tomorrow. She should have about $1 million after paying our house off. If she invests that amount, she should be able to withdraw $40,000 a year for forever without ever running out of money. Her initial $1 million investment will grow even though she is taking a $40,000 a year distribution. That’s the beauty of compound interest working for you.
The point of insurance is to protect your financial life if disaster strikes. You need a reasonable amount of coverage to protect you, but you don’t want to go overboard, preventing you from being able to invest your money.
Remember to have at least enough in your emergency fund to cover your deductibles. Save this amount before paying off high-interest debt or investing above your company match. It’s essential to have some level of cash on hand to keep you from taking on debt in an incident.
Below are the primary purposes of Vehicle & Homeowners/Renters Insurance.
Vehicle Insurance - Protects you in the event you damage someone else’s property or injure or kill someone in a vehicle incident.
Homeowners Insurance - Protects you if someone is injured on your property and also helps pay for repairs or replacement of your home and personal belongings if they are damaged or destroyed from things like hail, fire, or theft.
Renters Insurance - Helps pay for repairs or replacement of personal belongings after theft or certain types of damage.
I used to get so confused about what insurance policy to get. It helps me to remember the basics of what insurance is.
Umbrella Insurance is extra liability protection above your vehicle & homeowners insurance. It’s the umbrella that covers your vehicle & home during a financial storm.
Its purpose is to protect you from incidents you have caused and protect your future income from being garnished. Umbrella Insurance kicks in after your vehicle or homeowner's policies have been exhausted or if the incident is excluded from your vehicle & homeowner's policies.
Umbrella insurance covers costs related to damage to someone else’s possessions or injury to someone else. Umbrella Insurance does not protect your (the policyholder’s) property.
Umbrella Insurance is among the most affordable insurance out there. A $1 Million policy is between $150-$300 per year. Remember, Umbrella Insurance is a separate policy from your vehicle & homeowners insurance.
What health insurance plan to get?
If you are healthy and don’t have a medical condition requiring a lot of medical treatment, a “High Deductible” health plan may be a good idea. A high deductible plan equals lower premiums and qualifies you to open a Health Savings Account. You can contribute the money you save on premiums to your Health Savings Account. A Health Savings Account is a fantastic tool used for paying qualified medical expenses.
A Health Savings Account (HSA) is a triple tax-advantaged account. You get a Tax deduction when you contribute. You can invest the money within your HSA to grow tax-free. If you use the money to pay for qualified medical expenses, you do not pay income tax on the distribution. Plus, you can take distributions from it penalty-free at the age of 65 or older and use the money for whatever you want. You will pay ordinary income taxes on the money just like your traditional 401k or IRA, making health savings account’s an additional tax-advantaged retirement account.
If you usually have many medical expenses or have a medical condition requiring a lot of medical treatment, a “Low Deductible” plan might be the way to go. Your premiums will be higher but could end up saving you money in the end. One drawback of a low deductible plan is you do not qualify for a Health Savings Account.
Remember, try and have enough money in your emergency fund or Health Savings Account to cover your deductible. It’s a good idea to try and have your maximum out-of-pocket from your medical plan in savings. Sarah and my maximum out-of-pocket is $7,500, so this is what we need to have either in cash or our health savings account. This is a good rule of thumb to have even while aggressively paying down debt to avoid going into more debt when an emergency comes.
Long-Term Disability Insurance can protect your financial well-being in the event of a non-work-related injury impairing your ability to work. It is a type of income protection. It replaces between 40%-70% of your income, depending on your policy. If you have an illness or severe injury that prevents you from working 3-6 months or longer, Long-Term Disability Insurance can save the day. It covers permanent disabilities too.
If you get in a vehicle accident and incur injuries that prevent you from working the rest of your life, Long-Term Disability Insurance will pay 40%-70% of your current salary for the rest of your life. It also covers cancer, heart attacks, etc., that prevent you from working for an extended period. It typically kicks in around 3-6 months.
The price for Long-Term Disability Insurance usually varies between 1%-3% of your yearly salary. If you work for a good employer, it can be cheaper, and some employers cover the cost. If you don’t have Long-Term Disability Insurance, start by asking your current employer if they offer it.
My Long-Term Disability Insurance at the time of this post is $10 a month, and Sarah’s is covered by her employer.
Long-Term Care Insurance is separate from health insurance and covers services like dressing yourself or bathing as one becomes ill or due to age. Think nursing home or assisted living when thinking about Long-Term Care Insurance.
Don’t confuse Long-Term “Care” Insurance with Long-Term “Disability” Insurance. Long-Term “Disability” Insurance has to do with replacing your “income” if you are impaired from being able to work. Long-Term “Care” Insurance is when you need to bring in help to take care of yourself (e.g., bathing or dressing).
Traditionally, in your 50s is when you want to consider purchasing Long-Term “Care” Insurance. The chance of you needing it before age 60 is meager. Keep in mind; premiums get higher the older you become.
I would rather wait to purchase Long-Term Care Insurance and invest the money I save in premiums in hopes of not needing ever to purchase it. If it gives you peace of mind having it and you can afford it, then purchase it in your 50s.
The reason to purchase Long-Term Care Insurance is to have protection for taking care of yourself and protection for your financial assets if you want to leave an inheritance. Consider getting rid of or forgoing Long-Term Care Insurance if you are financially independent or have enough assets to cover yourself.
Rule of Thumb to consider when purchasing Long Term Care Insurance:
If you have less than $1 million in assets, you might think about not purchasing Long-Term Care Insurance because the premiums aren’t the most affordable. Don’t forget there are things like Medicaid to help if you fall into this category.
If you have $1-$3 million in assets, you may want to purchase Long-Term Care Insurance for extra protection.
If you have over $3 million in assets, you can most likely self insure and forgo purchasing Long-Term Care Insurance.
These numbers are just an estimate and will change with inflation or if premium amounts change.
Remember to do your research before purchasing Long-Term Care Insurance.
Do you need a Last Will & Testament?
If you have very few Assets, no kids, and don’t care where your belongings/pets go after you die, then chances are you don’t need one.
Financial Assets like your 401k, Roth IRA, & Life Insurance Policies allow you to designate a beneficiary and co-beneficiaries. To my knowledge, these designations trump what’s in your Will.
A Beneficiary is the first person(s) in line to receive your assets.
A Co-Beneficiary is the person(s) that receive your assets if your beneficiary is no longer living at the time of your death.
Sarah and I didn’t put together a Will until we had children. We most likely still wouldn’t have one if we didn’t have children. We wanted to designate who would be the caretaker of them in the event we both passed away. The last thing we would want for them is a custody battle. A Will solves this problem.
If you want a free template from doyourownwill.com click here. This is the service we use. I am not affiliated with them; I just like their free service.
Main Takeaways:
1. A Last Will & Testament is a legal document that conveys your wishes for your children and assets after your death.
2. Failure to prepare a Last Will & Testament usually leaves your estate in the hands of state officials or judges.
Identity Theft Protection or Identity Theft Insurance is simply a service aimed at giving you protection against identity theft and fraud.
These companies usually provide 3 primary services:
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Credit Monitoring
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Alerts - You receive alerts if an account is opened in your name.
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Recovery - Help you recover lost money and fix credit in the event your identity is stolen. Most companies offer insurance up to $1 million in “recovery fees,” not damages.
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Bonus - Some companies monitor your personal information (i.e., email, driver’s license, & passport) and send you updates of any data breaches.
Usually, Identity Theft Protection costs around $20-$40 a month.
Identify Theft Protection is not 100% necessary. They usually DO NOT pay you for money stolen. Usually, they will reimburse out-of-pocket expenses you pay to recover your identity (e.g., lost wages, travel, postage, copying, and notary fees). When choosing Identity Theft Protection, look for the “Service Guarantee” or the fine print to see what you are paying for.
These are some ways you can help protect yourself from Identity Theft:
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Monitor your credit yourself with companies like Nerd Wallet or Credit Karma. Most credit card companies offer free credit monitoring as a perk.
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Freeze your credit. You can freeze your credit for free with all three credit bureaus (Equifax, Experian, & TransUnion). Some Identity Theft Protection services offer the ability to freeze some of the credit bureaus. You need to remember to unfreeze your credit if you need to use it.
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Use strong passwords and set up “2-factor authentication” for any account that allows you to.
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Apps like “1Password” monitor website vulnerability information and alert you if you need to change your login information. Click Here for 1Password.
If you choose to purchase Identity Theft Protection, check to see if your credit card company offers it as a perk. Also, you may have it included with your homeowner's insurance.
Also remember, to check with your employer to see if they partner with a company for a discounted rate. My employer's discounted rate is $17 a month for Sarah and me.
Not sure what this beautiful bat has to do with “Data Removal,” but I wanted to post this pic anyways.
Our personal data is everywhere these days, and the most advantageous way to protect ones-self from attackers is to be less visible. Removing your sensitive information from the internet can be complicated and time-consuming.
Thankfully, there are companies that offer services to remove your private records from the internet. Personal Records like: Your birthday, personal email, personal mobile phone number, and childrens' names.
Paying for these services can save you a lot of time and frustration. They work in the background deleting your data keeping your data from reaching people with malicious intent. Kind of how bats fly around eating their weight in mosquitoes every night.
Sorry, I had to try and make an analogy with this bat.
If you are interested in paying for a “Data Removal” service, I would check with your employer to see if they offer this as an employee benefit. My employer provides it as a free employer benefit. Employers want to keep their employees safe because, in turn, it keeps the company safe.
I wouldn’t put your finances in jeopardy paying for a “Data Removal” service. We wouldn’t have this service if it weren’t free from my employer.
A couple of ways you can help protect your data from leaking out:
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Use a Search Engine Like DuckDuckGo
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Use Browser Blockers
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Use a VPN
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Never Click on Sketchy Links
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Use Apple products
I know the last one makes me a fanboy, but I don’t care. They make great products. I have been an Apple user since 2004. Apple is cracking down on privacy. They always have been privacy-focused, but lately, they are taking it to the next level. They are always adding safeguards to keep your data private.
Apple doesn’t subsidize their products by selling your personal data. That’s why you may pay more for an Apple product compared to their competitors. But honestly, this really isn’t the case anymore. They have started offering more reasonably priced products since about 2016.
Disclaimer - If you do not pay off your credit card balance in full monthly, do not use credit cards!
A credit card can be a valuable tool in your personal finance toolkit. They can serve you if used correctly. I have three rules I follow when choosing a credit card.
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No Annual Fee
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Cash Back Rewards
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Additional Perks
I’m not too fond of an annual fee because you have to spend too much before seeing any benefit from the card. If you get 2% cashback with an annual credit card fee of $100, you have to spend $5,000 to make up for this fee.
Cashback rewards are the only way to go. I wouldn't say I like airline miles nor obscure point systems. When you dig into these schemes, you realize they are overly complicated and confuse you to make you think you are getting a good deal. Plus, cashback cards you can spend on whatever you want, including airlines. An additional bonus is Cash Back is considered by the IRS as a discount (aka tax-free cash).
You should pick a credit card with additional benefits, such as no foreign transaction fees or extended warranty protection.
One card checks all the boxes for us, and it’s the Amazon Chase Card. We have prime, so the benefits are even better. This is the best all-around card I have found, and it’s the one card to rule them all. I used to have serval cards that would get higher cashback at certain places, but that’s too much work to save only a few dollars.
Prime Card Perks (as of 09/21):
1) No Annual Fee
2) Cash Back
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5% Amazon & Whole Foods
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2% restaurants, gas stations, drugstores
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1% all other purchases Benefits
3) Additional Benefits
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No foreign transaction fees
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Lost Luggage Reimbursement
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Baggage Delay Insurance
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Travel Accident Insurance
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Auto Rental Collision Damage Waiver
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Extended Warranty Protection (Extends US Manufacturer’s warranty by one year)
We also have a Target Debit card linked to our bank account for our groceries. It’s free and saves 5% at Target.
Sarah and I only use our credit card when we have money in the bank to pay for the purchase. The last thing we want is to pay interest on a credit card balance.