Personal finance resources

I've just started a job that pays well enough that I can finally, for the first time in my adult life, become debt free and start thinking about things like saving for retirement and investing. Ironically one of the trending tags on Twitter at the moment is the dark-humored #MillennialRetirementPlans ("I'll die at 50 so I'm not worried about saving")

I've started some initial research into personal finance. Naturally, I'd like to start with resources which will at least entertain the idea of energy descent. I'd also like to avoid those that are on the opposite, paranoid prepper, end of the spectrum. That leaves a very small number of resources.

So far I've only found Peak Prosperity ( and some titles in the New Society publishers catalog that fit the bill. Are there any other relevant books, blogs, or podcasts out there?

Hi Ethan,

Get a copy of 'The Complete Tightwad Gazette' by Amy Dacyczyn. It compiles all three of her books (I, II, and III) into one volume along with her last newsletter full of reader success stories. Your library may have a copy but it's really best to have your own copy on your shelf to reread on a regular basis. I use ABE Books when I buy used copies.

She published the book in 1996 so it is dated (check out those Clinton era prices!) but I have never found anything better to make you think, every day, about WHY you are spending money and how to spend less.

She doesn't talk about energy descent. However, any kind of thrifty living addresses energy descent in a roundabout way because if you use less, you spend less.

It's a very idiosyncratic book, written by her and her thousands of newsletter subscribers. Material is all over the place. Again, a reason to have your own copy so you can attach post-it notes to the sections that matter right now.

Otherwise, use this formula (loosely cribbed from the Economides):

Pay off all consumer debt (credit cards, personal loans, vehicles, etc)
Build an emergency savings account
Pay off your house
Build up six months of living expenses
Then and only then consider investing in matching index funds. The only exception is if your company contributes matching funds to your 401k plan or IRA. If they do, contribute enough to get the maximum benefit your company will kick in. Do this while paying off all debt and building up your six months worth of living expenses.

Dave Ramsey is also very good.

The thing is, your salary is the income you will receive over your lifetime. You probably won't win the lottery or inherit big bucks. You don't have that much control on what you earn. But you do have control on what you spend.

Say no a lot!

Hope that helps.

Teresa from Hershey

David Trammel's picture

Ethan you've found the most important skill to learn whether you are a Green Wizard or just a mundane, "personal financial management". Its something I plan on addressing in a series of tutorials over the next few months but let me give you a quick and simple outline.

Its all well and good for me to tell you to learn how to grow your own food, but if you don't have spare cash then how do you know if that's a good suggestion? If you are poor, it makes more sense to learn how to preserve and store food and buy vegetables and produce when it is in season and cheap, or locally at farmer's markets, than to spend hundreds of dollars you don't have on a garden.

There is no sin in doing what makes sense in your own personal life.

I always recommend people first do a "financial audit" of their monthly expenses. This consists of simply writing down all of the things you spend money on for a month. From the rent and car payment to the morning coffee at Starbuck's and a pack of gum. And importantly, don't try and be a saver that month. I mean if you get a cup of Starbuck's coffee every morning before work, don't stop because you know you're looking at your finances.

Once you have the monthly ledger, break them down into some general categories like Rent, Food, Transportation, Utilities, Clothing. They don't need to be more than about a dozen. Also account for your Income. Write down how much your paycheck was, and any additional income you might have.

Now, go get a three ring binder and about 18 of those plastic pouches that we used as kids for school that held pencils and stuff. In each one put a label of the categories you decided on. For a target, divide the amount you spent in your audit by 4 and write that too.

Also label two pouches for these new categories, first "Emergency Fund" and secondly "Fun Money". We'll get back to these in a minute...

What you want to do is get away from the "This bill is now due, I need to pay it with this paycheck" and into the mindset that a portion of all of your bills must be paid each week. That is, if your rent is $500 a month, then each week you need to be putting $125 into the Rent pouch. Once you have paid all your bill's weekly amount, then you can start to use your excess (and you do have an excess, don't you?), to fund savings and collapse prep.

Your audit will also show where you are wasting money.

Are you using the convenience of Starbuck's instead of brewing a cup while you take a shower in the morning? Are you splurging on a movie rental because you are bored when you could be reading a book? Did you let your friends convince you to go out last Friday after work even though you didn't have the money for it?

The true is that we can't all be frugal monks, and people who teach personal financial management often fail when the come off as "You must cut out all the frivolous expenses NOW!!!!"

Life is meant to be enjoyed, and working hard means sometimes buying something that makes you happy and lets you have some fun BUT you need to learn to factor that into your budget too.

When I worked in movie special effects (from 1995 to 2004) I was often paid at the end of a multi-week job in one check at its end. That meant I might get a paycheck of several thousand dollars. With that much money suddenly in my hands it was tempting to splurge on unneeded things.

The habit I got into was to take 5% of my paycheck and spend it on personal fun without worrying about it. I will admit, as a single guy in a crazy town, sometimes that meant strippers and beer with friends, lol.

What I found was spending that 5% on silly things, made me more frugal with the other 95%. So label one pouch "Fun Money" with a target equal to 5% of your weekly paycheck.

That's the first of several areas where you must plan for additional expense not identified in your audit.

The second is "Equipment Replacement/Yearly Expenses".

I expect you have a car Ethan. If you do, its going to need tires sometime over the next few years. There is also the expense of car insurance, which typically is ever six months. Then there is repairs and breakdowns which must be planned for too.

Your monthly audit for the category "Transportation" probably only dealt with fuel. What you need to do for your insurance is divide your car insurance payment by 24 (6 months x 4 weeks) and add that to the amount you allocate for fuel. I get mine through AAA, and its about $250 for both my cars, so on top of the $20 or so I spend a week on gas, I need to add $11 for insurance.

Depending on your mileage you might have to replace your tires once every 4 years. A typical used or cheap set will probably cost you $500. So add another $10 a week. Repairs are one of those unknowns. You don't know if its going to be small or large. Let's just add $9 a week for a repair fund.

Now you are at $50 a week to pay for your transportation. Isn't that a shock? But it is true and how you need to begin to view your finances.

I own a washer and dryer, though the dryer is broken. Something in the control panel won't let it start. I haven't had it fixed yet but what I did a long time ago is play like those two appliance were not in my basement but at a laundry mat. There is a five pound coffee can on a shelf next to them. Each time I wash a load of clothing, I put a dollar's worth of coins in it. Drying is another dollar. Right now that can is almost full and when I do get that dryer fixed, the money in that can should be enough to pay for it.

You can do this for most of your major appliances too.

What I'm getting at is to realize that you have to plan for the Future, not react to the Present.

Now there is one final pouch to label and that is your "Emergency Fund".

It's a sad fact but a big percentage of American families would be hard pressed to pay a unexpected expense of $400. You need to be one of those who can.

Label on of your pouches "Emergency Fund" and begin putting 10% of your weekly paycheck into it.

You are going to find at some point that these weekly payments add up, and you can't pay them. The begin to look at where you can cut back.

Instead of a meal out for lunch, can you cook something at home and take it to work? Instead of new clothes, can you hit the thrift store. Instead of going to the grocery store for minor things, can you make a list and shop on the way home (saving gas)?

You want to build up that emergency fund to equal at least three months of expenses.

Taking charge of your personal finances is hard. It means forgoing immediate pleasures for future security but its something we all can do if we make it a priority in our Life.

The Long Descent doesn't care if you are prepared for it or not.

This is an excellent book and was very influential in my life. Some information is a bit dated but it still is very valuable. I found a pretty good summary here:

I'll echo David's suggestion about keeping track of your finances. I enter all expenses on Quicken but don't use all the bells and whistles. It's just an easy way to categorize your expenses. Categories are already set up but I mostly make up my own. We have separate accounts for checking account, cash expenditures and credit cards. Once you get into the habit of entering expenses on a regular basis ( I do it about once a week) it's pretty easy. I've suggested this method to several family members but so far no one else has done it :(.

Justin Patrick Moore's picture

Hi Ethan (& all). There are some great tips on here already from Teresa & David & margfh... but I thought I'd plant one more book seed into the soil that is being prepared.

I just saw this book at work... it has a great title, so I'm going to read it myself. "The Wealthy Gardener: life lessons on prosperity between Father and Son" by John Soforic. It says this about the author on the back:

"They dubbed him "the wealthy gardener" due to his passion for backyard gardening. The silly nickname stuck, and he didn't object to it. Instead, within a year he renamed his vineyards The Wealthy Gardens. He enjoyed the name because it reminded him of a metaphor comparing life to a plot of land. Gardeners are not afraid of working hard to shape their landscape, but they are also aware of a mysterious Unseen Force that operates behind the scenes to make the plants grow. "

I think that same Unseen Force can be tapped in other areas of our lives to help us be resilient during the times ahead.

On another note: Credit Unions. Some of us prefer Credit Unions because they are bit more likable than the big guys. They may be an institution you would want to use for your finances instead of some other type of banks.