Even with the knowledge I’ve gained working as a consumer advocate for several years, getting my finances in order has been a work in progress.
I started by tackling credit card debt, paying off my car loan and building an emergency fund. After clearing those hurdles, I set more defined financial goals and plans in motion that have improved my financial well-being.
There is no shortage of tips, listicles and explanations about different financial products on the Internet. It’s not my intention to recreate or rehash what’s already out there. Instead, this is a recap of what I found most useful and what I decided to do after researching my options.
Tackle your debt
I eliminated my credit card debt by making aggressive monthly payments, applying for a 0 percent balance transfer credit card, and reducing costs by canceling monthly subscriptions and signing up for a much cheaper cell phone service. Like many people, even with the best of intentions, I wasn’t always able to pay off as big a chunk of my debt as I would have liked to some months. There’s no shame in that. Just keep plugging away.
Keep track of bills and spending with a budget
I prefer using a spreadsheet over a budget app for keeping track of my fixed expenses, weekly grocery spending and all discretionary purchases. It’s a good way to separate wants from needs.
To help with that distinction, these questions paraphrased from Your Money or Your Life are worth asking yourself:
Is this purchase or expense fulfilling in proportion to my time spent working for it?
Is it in line with my values or life purpose?
Is it sustainable in a just and compassionate world?
Build an emergency fund
Advice on how much you should have in liquid savings is varied. For the most part, experts suggest from three to 12 months’ worth of basic living expenses.
I opened an online high-yield savings account, which yields a much higher interest rate than typical savings accounts. My account currently yields about six times the average interest rate for standard savings accounts.
Consider socially responsible investments
I wasn’t too keen on the idea of supporting rampant consumerism by investing more in the stock market and companies that I don’t really believe in.
After weighing my options, I ultimately decided on investing with a robo-advisor that provides Socially Responsible Investing (SRI) options because of its simplicity, low cost and its fiduciary status, which legally requires it to act in my best interest.
Check out this other post I wrote for more details and links to resources about Socially Responsible Investing.
A lot of advisors suggest getting life insurance if you have a family or people who depend on you for income, neither of which I currently have in my life.
But I ultimately decided to take out a term life policy anyway.
I figured that I might have such people in my life at some point, so I could lock in a lower premium while I’m younger.
I also calculated that the amount of money I’d spend on premiums over several years is less than the cost of a green burial (yes, it’s a thing), which could be taken care of by my policy’s death benefit if I was to die during that time. I’d also be able to leave money from my death benefit for people and non-profits I care about. And I could always cancel my policy in the future, depending on my situation.
Talking to my colleague at work about shopping for insurance is how I accidentally learned that I already have long-term disability coverage through work that will pay me a portion of my monthly income should I ever become unable to work due to an extended illness or injury. I decided to purchase supplemental coverage that will provide me with even more of my monthly income should I ever need it.
Long-Term Care insurance
Before listening to In Case You Get Hit By a Bus, I didn’t know any insurance covered the costs of long-term care, such as home health care or nursing home care, for people who need assistance with daily living activities.
After shopping around, I decided against a stand-alone LTC insurance policy and instead bought a life insurance policy with a “long-term care rider” that will allow me to use my death benefit towards LTC services.
Check out another post I wrote about why I wanted to insure against long-term care costs in the first place.
You might also be interested in my post about how I started my estate and end of life planning.
U.S. PIRG is not a registered investment adviser. U.S. PIRG is not providing any investment advice to any recipient of this communication.
Director, Consumer Campaign, U.S. PIRG Education Fund
Mike directs U.S. PIRG’s national campaign to protect consumers on Wall Street and in the financial marketplace by defending the Consumer Financial Protection Bureau, and works for stronger privacy protections and corporate accountability in the wake of the Equifax data breach. Mike lives in Washington, D.C.