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https://github.com/jch/personal-finance

Guide and notes for personal finance
https://github.com/jch/personal-finance

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Guide and notes for personal finance

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README 

        
# Personal Finance [![Creative Commons](http://i.creativecommons.org/l/by/4.0/88x31.png)](http://creativecommons.org/licenses/by/4.0/deed.en_US)



This is an outline of our personal finance plan. Feel free to fork it and make your own!



## Debt



* Pay off highest interest loans first, keep loans with rates lower than inflation

* Auto pay credit cards

* Carry less than 1/3 of credit limit in credit card balance. Ask for credit limit increases if needed.

* [Check credit score](https://www.annualcreditreport.com) once a year. [CreditKarma](https://www.creditkarma.com) has a better interface and suggestions for improving credit score.

* Refinance for a lower interest rate on mortgages or large loans



## Loans



* Ask mortgage lender for a half dozen pre-approval letters in 25k increments up to the max. Prevents seller from seeing your max purchase power.

* Consider [401k](https://www.irs.gov/retirement-plans/plan-participant-employee/retirement-topics-loans) loans. Up to $50k, prime rate, and interest and principal are both paid back into the account

* Consider personal loans or personal line of credit for debt consolidation. Example "First Republic Personal Line of Credit" 2.25 - 3.5%, interest only first 2 years, then amortized for remainder of the loan. Total terms from 5 - 10 years.

* Consider using a "box spread" for borrow cash quickly without underwriting.



## Liquidity



* 12 months of expenses in a high interest savings account

* Consider tax-exempt treasury funds like FDLXX if in a high tax state. [The Finance Buff](https://thefinancebuff.com/state-tax-exempt-treasury-fund-etf.html)

* Budget out large purchases into monthly amounts to save. e.g. car, wedding, vacation

* "Liquidity access lines" to borrow against your portfolio



## Equity compensation



* [The Open Guide to Equity Compensation](https://github.com/jlevy/og-equity-compensation)

* [Consider Your Options](http://www.amazon.com/Consider-Your-Options-Equity-Compensation/dp/1938797027/ref=dp_ob_title_bk)



## Medical



* Health Savings Account (HSA). Maximize employer contributions.

  * Do not invest until balance would exceed minimum to avoid fees

  * Choose a plan that allows investment in index funds like Wells Fargo or Health Savings Administrators

  * Continue to pay medical expenses out of pocket when possible to maximize tax deferred growth

  * No penalties for non-medical withdrawals after 65. Can use as [another retirement account](https://www.investopedia.com/articles/personal-finance/091615/how-use-your-hsa-retirement.asp).



## Retirement



* [Pay less taxes](docs/taxes.md) - guide to tax advantaged accounts

* [Choose a Retirement Plan](https://www.irs.gov/pub/irs-pdf/p4484.pdf) IRS overview of different plan types. Highlights the benefits of each.

* [IRS Rollover Chart](https://www.irs.gov/pub/irs-tege/rollover_chart.pdf) shows what retirement plans can be rolled over.

* Calculate whether Traditional or Roth contribution makes sense for your tax bracket. [calculator](http://www.reddit.com/r/financialindependence/comments/2qua49/roth_vs_traditional_calculator/cn9l3x2). Typically, high income/high tax rate => traditional, low income/low tax rate => roth. Save on taxes now vs save on taxes later.

* Maximize contributions to tax advantaged accounts: 401k, IRA, HSA.

* [Backdoor Roth IRA](http://www.bogleheads.org/wiki/Backdoor_Roth_IRA). Pay special attention to [IRA aggregation rule and pro-rata distributions](https://www.kitces.com/blog/the-impact-of-the-ira-aggregation-rule-on-after-tax-distributions-roth-conversions-60-day-rollovers-rmds-and-72t-payments/), and the [consequences of 'step doctrine' for audits](https://www.kitces.com/blog/how-to-do-a-backdoor-roth-ira-contribution-while-avoiding-the-ira-aggregation-rule-and-the-step-transaction-doctrine/)

* [After-tax 401k contributions](https://www.kitces.com/blog/irs-notice-2014-54-acquiesces-on-splitting-after-tax-401k-contributions-for-roth-conversion/) and [rollovers](https://www.irs.gov/Retirement-Plans/Rollovers-of-After-Tax-Contributions-in-Retirement-Plans)

* Choose low cost index funds.

* Charitable giving. Contributions to eligible organizations can be itemized as a deduction. Donor Advised Funds (DAF) can deduct from high tax years and defer gifts until later.

* [EarlyRetirementNow: Safe Withdrawal Rate series](https://earlyretirementnow.com/safe-withdrawal-rate-series/)



## Children



* [529 plan](http://en.wikipedia.org/wiki/529_plan). For non-qualified expenses, principal can be withdrawn without penalty, but withdrawals will be proportional principal and earnings. [source](https://www.kiplinger.com/article/college/T002-C001-S003-spending-leftover-money-529-college-savings-plan.html)

* [Vanguard 529](https://personal.vanguard.com/us/whatweoffer/college/vanguard529)

  * $3,000 minimum

  * Age based options. I'm using the "moderate" option: starts at 75/25 stock/bond allocation

* Dependent care FSA. [IRS publication 503](https://www.irs.gov/pub/irs-pdf/p503.pdf)



## Tools



* [jch.app](https://jch.app) investment, networth, dividend tracking

* Review of spending with [Personal Capital](https://pcap.rocks/j75869) or Fidelity Full View. Categorize spending, note any large differences in monthly trends. Link all accounts.

* [ProjectionLab](https://projectionlab.com) retirement plans, draw down visualizer.



## Brokerages



- Merril: Integrates well with Bank of America for retail banking, Preferred Rewards program good for credit cards, loan discounts. Money market funds don't pay interest by default

- Morgan Stanley: Felt harder to self service. Amex Platinum paired card.

- Fidelity: Great phone support, free wires, 2% cashback card.

- Vanguard: I like the simplicity of their website, and mobile app. I use it for our IRA, Roth IRAs, and 529.



## Resources



* [r/financialindependence](https://www.reddit.com/r/financialindependence/)

* [Personal Finance reddit commontopics](http://www.reddit.com/r/personalfinance/wiki/commontopics) - good guide for the order one should save in.

* Reddit guidelines for each age group

  * [ELI18: Personal finance tips for young adults (US)](https://www.reddit.com/r/personalfinance/comments/4tfc76/eli18_personal_finance_tips_for_young_adults_us/)

  * [ELI22: Personal finance tips for older young adults (US)](https://www.reddit.com/r/personalfinance/comments/4tlqsd/eli22_personal_finance_tips_for_older_young/)

  * [ELI30: Personal finance tips for thirty-something adults (US)](https://www.reddit.com/r/personalfinance/comments/4uoycd/eli30_personal_finance_tips_for_thirtysomething/)

  * [ELI40: personal finance tips to make best use of your assets (US)](https://www.reddit.com/r/personalfinance/comments/4uuejg/eli40_personal_finance_tips_to_make_best_use_of/)

* [Bogleheads: Lazy portfolios](http://www.bogleheads.org/wiki/Lazy_portfolios)

* [I Will Teach You to be Rich](http://www.amazon.com/gp/product/0761147489/ref=as_li_qf_sp_asin_tl?ie=UTF8&camp=1789&creative=9325&creativeASIN=0761147489&linkCode=as2&tag=what0d-20) - short, friendly, casual introduction to debit, savings, and retirement

* [Random Walk Down Wall Street](http://www.amazon.com/Random-Walk-Down-Wall-Street/dp/0393330338)

* [Lifecycle investing](https://www.lifecycleinvesting.net) using mild leverage for temporal diversification

* [Mr. Money Mustache](http://www.mrmoneymustache.com) - personal finance and early retirement blog



## Entertainment



* [Money stuff](https://www.bloomberg.com/opinion/authors/ARbTQlRLRjE/matthew-s-levine) regular column by ex-Goldman Sachs trader

* [Planet Money](https://www.npr.org/sections/money/) podcast

* [FI planning tool](http://www.reddit.com/r/financialindependence/comments/2zhw7t/heres_an_fi_planning_tool_i_made_that_might_help/). Interesting to play with, but no longer using it.



## Not recommended



* [You Need a Budget - YNAB](https://www.youneedabudget.com/) too much work, prefer to look back at spending than project forward

* [Quora Personal Finance](http://www.quora.com/Personal-Finance) - stopped using this