I suspect I am late to the game on my three facts of today. How did I miss these? They seem like I somehow should have learned them through the osmosis of adulting but that is not the case. Not at all. The Rule of 72 [calculator] “The rule says that to find the number of years required to double your money at a given interest rate, you just divide the interest rate into 72. For example, if you want to know how long it will take to double your money at eight percent interest, divide 8 into 72 and get 9 years.” (MoneyChimp) Or the way my mind works: 7.2% interest = 10 years to double money 10% interest = 7.2 years to double money Neither of these is possible with any savings or checking account that I know of, but, even with a moderate or conservative investment strategy, these results over time are typically attainable. Money makes money strikes again. When I have money, this fact makes me happy. When I don't, it makes me mad. So, yes, I knew that higher the interest, the more money you make (or spend if it is debt interest). But I did not know about the rule of 72. Back to the drawing board to see if I have any money that might be sitting around looking to be doubled. Much better potential returns than most people get when they play the lottery. Getting a good credit score which is necessary for things like a mortgage means you need to buy on credit. [Improving Credit Score] I kind of knew this one but the more I think about it, the more ridiculous it seems. If I open a credit card and don’t use it much, I am building credit. But, if I never open a credit card and have the same spending habits, I am not building credit. (No favorable loan for me!) If I save enough money to buy my car with cash rather than take a loan, I am not building credit, potentially hurting my credit score (assuming I would make the loan payments on time). This does not mean you can’t spend within your limits and avoid debt while still building credit. It does mean that you probably need a credit card that you pay off monthly to make this happen. Did a man invent this system? My brain hurts. Budget the money you have in savings. What? How did I miss this? Game changing for me. Rather than have (hopefully) a chunk of money in savings, decide what you are saving for and mentally put each of those savings dollars in an appropriate envelope. Say I have $5000 in savings. Rather than seeing it as one big number, I now divide it up. Perhaps $2000 is towards my next car, $500 towards insurance, etc. Some amount will need to be an emergency fund. Here's the hard part about the emergency fund - I only should break the glass when there is a true emergency. I hate that part. This way I am less tempted to spend the money only to realize a few months later that I don’t have it for the thing I need. Until recently, I thought this is what I was doing, but I was not and every car repair, medical bill, pretty much every non-monthly bill came as a surprise. You'd think after all this time, I'd stop being surprised. This year I adulted much better on this front. In the past I would have already spent saved money 2-3 times in my head and maybe have already spent it on a perceived need to then wonder where it had gone when the inevitable non-monthly but knowable bill showed up. Surprise!?
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