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You are here: Home / Summary Sundays / Summary Sunday for June 4th, 2017

Summary Sunday for June 4th, 2017

June 4, 2017 MilitaryDollar Leave a Comment

Summary Sunday

SUMMARY SUNDAY IS A WEEKLY POST WHERE I PUT OUT A SHORT LIST OF THE PERSONAL FINANCE BLOG POSTS AND ARTICLES I LIKED THE MOST THROUGHOUT THE PREVIOUS WEEK. LINKS TO EACH POST ARE IN THE HEADERS. I HOPE YOU ENJOY THEM TOO!

The Debt Avalanche Method Explained

Jackie Beck – June 3, 2017

It’s not critical that you pick the “right” or “best” method of getting out of debt. It’s critical that you stop borrowing and don’t give up as you work to repay what you owe already. So go forth and get started!”

What I love about this post is that Jackie goes through both the debt avalanche and the debt snowball methods. If you haven’t heard of these before, the avalanche and the snowball are methods of paying off your debt. Hopefully, paying it off fast! As a former Dave Ramsey Financial Peace University coordinator, I’ve seen a lot of people use the snowball method successfully. In fact, it’s what I started with when I began to pay off my debts 13 years ago. Eventually I moved to the debt avalanche method. Both have pros and cons, and I appreciate Jackie acknowledging that.

If you are looking to pay off debts, check out this article. Whichever method you choose, keep in mind Jackie’s point. The important part is to stop borrowing and not give up as you dig out of debt!

1% EARLY RETIREMENT STRATEGY

Millennial Money – June 1, 2017

In fact, 1% can actually make a massive difference and simply increasing your investing/savings rate by 1% can help you retire up to 2 years earlier. And if you push this further, saving 5% more when you are young, due to compounding, can result in retiring up to 10 years earlier.”

Okay. This post isn’t going to be for everybody, I recognize that. But I think it’s compelling, and here is why. A lot of people don’t realize how big a difference a small reduction in spending, or a small increase in saving, can make in their finances. There is a cumulative effect over time that people tend to forget about. I mentioned it in my post about lifestyle inflation. By reducing spend/increasing savings, you are also having the long term effect of needing less money in retirement. So the amount you are saving goes up while they amount you need to save goes down simultaneously. Pretty cool, huh?

People who aren’t going to like this post: those who despise math and want no part in it, and those who think early retirement sounds terrible. For the math piece, Grant asks you to think in percentages about every monetary transaction. That’s not going to be easy for everybody to do!  And if you think early retirement sounds so boring your eyes roll back into your head, well, you probably aren’t going to want to read about somebody encouraging you to save 25%+ of your paycheck. Just…keep in mind that Military Dollar likes to talk about it because it’s smart and awesome. Eventually, it will sound a little more palatable 😀

Note: There is a part in the post (“4. Make More Money”) that won’t apply to many of the readers of Military Dollar. If your eyes start to glaze over, just skip to the heading “THE IMPACT OF 1% SAVING/INVESTING INCREASES.” Or read it and prepare yourself for the day when your promotion process isn’t dictated by Congress.

Half Marathons and Mortgages

Adventure Rich – May 31, 2017

Weeeell, it typically takes more that just a goal to cross the half marathon finish line or send that last mortgage payment over to the bank (unless you are a rockstar and can effortlessly run 13.1 on a whim or pay cash for your house… for the purposes of this blog post, I am ignoring these scenarios!).  The next major component after the goal is the plan.  And here is where I find quite a few parallels between a half marathon and a mortgage!”

Now, I hate running. I’m very happy for all of you that like running, and given the target audience of this blog there are probably a few of you. But I hate it. I HATE RUNNING. And I think all of you that like running are crazy. But….in the military, we gotta run sometimes. So I do it regularly, and it’s good for me.

It’s the same for my mortgage. Right now I have a mortgage on my rental property, and I previously had a mortgage on a primary residence. For both mortgages, I had good interest rates for the time I got the mortgage. Because my rates were low, and the stock market was doing well, it made sense to “pace myself” in paying off the mortgage. I’d throw a little extra to the principal occasionally, but it was more to calm the debt-hating voice inside my head than because it was the best financial decision. I do sometimes want to throw big chunks of money at the rental property, which has a not-stupendous-anymore rate, but it’s still significantly less than what I’m getting from my investments. Decisions, decisions!

Anyway, Mrs. Adventure Rich breaks down her thinking in why you need to stick to your pre-decided pace in both long runs and mortgage payoff, instead of just sprinting to the end. It’s what I need to hear, and remember, every time I see that stupid mortgage payment go through each month.

Did you see a great personal finance-related article or blog post this week? If so, share it in the comments!

 

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