Trying out the new blog.

Well, someone had to do it.

Having written on poker bankroll management before, let me take a few moments to write about finical management in general.

I go to the school of thought that says debt is bad. One of the reasons I believe this is the evidence of first generation millionaires. They tend to buy things in cash, like: used cars. The income they get from working isn't tied up in payments, instead they have plenty of cash in savings. I have yet to hear a millionaire say that cash back rewards on credit cards was how they made all their money.

Here are some simple finical rules:
1)Live on a budget. Start with a blank piece of paper that has your income month by month. Then write out a list of everything you need to pay for in a month such as the house payment and utilities. Once the list is finished, order them in priority until you run out of money.

2)Get out of debt and save. Just for kicks, take the total amount you pay for a car each year. Put that number in a calculator. You could easily earn 6% or more on that in a money market account, so let's see how that would work out. $x *1.06 Do this 20 times. So $150*12 = 1800 a year. 1 year of interest would make it $1908. In 5 years it's 2,408.81. In 10 years it's 3,223.53. In 15 years it's 4,313.80. in 20 years it's 5,772.84. Oh but wait a minute, you also have the car payment for the 19 other years to save... make that 20 year total $75,959.75. Put it in mutual funds at 12% and it's 162,621.05.

3)Have an emergency fund. Grandma called this a rainy day fund. And when a tire blows out on your car, it's nice to be able to pay cash to have it fixed and not worry about paying interest on a stupid tire for 15 years on a credit card.

There is a lot more you can do (like, max out a RothIRA each year) but I want to get this entry brief. Just let me throw out one more example of saving and compounding interest.

$4000 in a RothIRA (max contribution, growing tax free) at age 23. At 40 years until retirement, adding $1,000 a year at 12% is 1,231,346.27. At retirement, you would have more then $80,000 a year to live on in just the interest payments, always growing faster then inflation.