HUNT VALLEY, Md. (TheStreet) -- In this special guest series of guest posts from four noted authors and bloggers on money and life, you're in for yet another treat.
is an accidental personal finance expert. For more than five years he's been writing about smart money management at
. He's too humble to tell you himself, but his blog was chosen by
as one of "The Best Blogs of 2011."
The author of Your Money: The Missing Manual admits to starting out with plenty of money troubles of his own.
He's the author of
(O'Reilly Media, 2010), a personal finance columnist
and a regular contributor to
. Really, though, he just wants to
-- but he's been kind enough to give us a synopsis anyway of the most potent lessons he's learned as a personal finance blogger.
J.D. Roth writes:
Last weekend, I attended
. In 1991, I graduated from Willamette University with a degree in psychology (and a minor in writing). I also graduated with debt. Not student loans -- I was fortunate enough to have earned scholarships to pay my tuition -- but something far worse: credit card debt. Yes, it's true. I was one of those college students suckered into a life of debt by credit card offers in the student center. By the time I graduated from college, I had
credit cards and was desperate for a job to make my payments on them.
And so it began. For the next five years, I accumulated more and more credit card debt, topping out at more than $20,000 before I got fed up and cut up my cards. Even that wasn't enough to stop me from spending, though. I borrowed from family and friends. I took out personal loans. By 2004, I'd acquired more than $35,000 in consumer debt. It wouldn't have seemed so bad if I'd used this $35,000 to pay for medical bills or to start a business. But I didn't. I used the money to buy computers and comic books and other crazy stuff.
Getting smart about money
My story isn't unique, and I know that. Lots of people make dumb mistakes. But when you're
the dumb mistake, you feel all alone. You feel helpless. When you're in debt, it feels like you're drowning, like you'll never make it to shore. Here we are in 2011, though, and things have changed. Seven years ago, I had more than $35,000 in debt and was falling further behind every year. Today I have more than $35,000 in savings -- and I pull further ahead every year.
How'd I do it? Well, I didn't win the lottery, and I didn't rob a bank. Instead, I spent several years making small, subtle changes. I learned how to live a frugal lifestyle, cutting back on the things I didn't really need (like cable television). I discovered the
, a sort of mind game that allows people like me to finally pay off their debt instead of just wishing they had. I started to save for emergencies, for retirement and for fun. I worked long hours to bring in extra income. All of this was hard work, but it paid off. In December 2007, I became debt free and I've remained so ever since.
Along the way, I've written about my progress at Get Rich Slowly, my personal-finance blog. I've shared my triumphs and my failures. Because let's be very clear: I've made many mistakes over the past few years. Even today,
. These mistakes used to get me down, but that's not true anymore. Now I know that the mistakes actually help me learn.
After more than five years writing about money, I've learned quite a bit just from personal experience. I've also learned by talking with my friends and neighbors, and from exchanging email with thousands of readers.
What have I learned? Here are some of the most valuable lessons:
- Money is more about mind than it is about math. Financial success is more about mastering the mental game of money than about understanding the numbers. The math of personal finance is simple -- spend less than you earn; it's controlling your habits and emotions that's difficult.
- The perfect is the enemy of the good. Too many people never get started putting their finances in order because they don't know what the "best" first step is. Don't worry about getting things exactly right -- just choose a good option and do something to get started.
- Do what works for you. Each of us is different. We have different goals, personalities and experiences. We each need to find the tools and techniques that are effective for our own situations. There's no one right way to save, invest, pay off debt or buy a house -- and don't believe anyone who tells you there is. Experiment until you find methods that are effective for you.
- You can have anything you want -- but you can't have everything you want. Being smart with money isn't about giving up your plasma TV or your daily latte. It's about setting priorities and managing expectations, about choosing to spend only on the things that matter to you, while cutting costs on the things that don't.
- Nobody cares more about your money than you do. The advice others give you is almost always in their best interest, which may or may not be the same as your best interest. Don't do what others tell you just because they hold a position of authority or seem to have a persuasive argument. Do your own research, get advice from a variety of sources and, in the end, make your own decisions based on your own goals and values.
What makes personal finance interesting to me is the
side of it. We're not robots. We're not computers. We don't make financial decisions based solely on logic. Instead, we allow passion and emotion to sway our decisions.
Don't believe me? What are your hobbies? How much do you spend on them? How is that logical? Do you have pets? Children? Do either of those make much financial sense? And have you ever loaned (or borrowed) money from a friend or family member? How did that work out? Was that a situation you evaluated solely with logic?
I feel fortunate to be debt free today. I intend to remain that way for the rest of my life. But that's not enough for me anymore. I want to help others become (or stay) debt free. To that end, I'll continue to write about money at Get Rich Slowly (and various other places around the Web). There's a lot of practical information out there about the nuts and bolts of personal finance, but I feel like there isn't much written about the mental game of money. That's too bad. Because ultimately, it's mastering this mental game that's most important.
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Tim Maurer, CFP, is vice president of
, based in Hunt Valley, Md., and a member of NAPFA, the National Association of Personal Financial Advisors. He can also be found at
This commentary comes from an independent investor or market observer as part of TheStreet guest contributor program. The views expressed are those of the author and do not necessarily represent the views of TheStreet or its management.