Archive for January, 2009

Life of Pookah Finances 101 Page Is Up

Tuesday, January 6th, 2009

If you check the pages to the right, you’ll see a new addition – Life of Pookah Finances 101.

Enjoy!

Financial Planning At Home – An Overview

Thursday, January 1st, 2009

I’ve been doing a lot of thinking and planning for this blog. This also, coincidentally, involves some thinking and planning about our own financial status and planning. At the end of every year, I start reviewing my financial records and summaries from years past. It helps me put things into perspective, and gives me a general idea of whether we’re doing better, the same, or worse. I’ve slowly developed ideas, strategies, and inspirations for dealing with finances. Here is a brief overview of what I’ve come up with:

Life of Pookah Finances 101
This is the beginner stage – where budgeting, frugality, and tightwadery all start. Here is the point where you may be seriously in debt (the money you owe in the next 30 days exceeds what you can pay in the next 30 days). This stage focuses mainly on getting control over your expenses – AND your income. Here is where you will find the little daily, weekly, and monthly tips for living life like Pookah.

Life of Pookah Finances 201
This is the intermediate stage – where your expenses and income are under control, you have a 3-6 month emergency fund set up, and you are not in debt (excluding a mortgage). More accurately, the definition of “not in debt” means that the money you owe in the next 6 months does not exceed what you can pay in the next 6 months. At this point, you focus on reducing interest-bearing debts, increasing income, and start learning tricks for squeezing some of that blood you’ve been giving the financial industry back out of them. You’ll also start to learn more about investing in yourself through skill training and education.

Life of Pookah Finances 301
This is the advanced stage – where your expenses and income are regularly predictable, you have up to a year of readily available cash to handle emergencies and unemployment, you are not in debt at all (excluding a mortgage), your credit score is solidly at the high end, and your retirement is automatically funded. Here is where you start making decisions about Financial Planners, CPA’s, and attorneys. I know: Three very scary terms all in one sentence. Don’t worry. By the time you reach 301, you’ll understand how and why you need to hire professionals like these to provide you with the expert advice you’ll need. Reaching this stage may require some changes in the way you think or in your attitude towards certain social/financial constructs here in the U.S.A.

By these standards, my S.O. and I are graduating from Finances 201 to 301. We’re not completely out of 201 yet, but we are close. We have already started some of 301.

I’m setting up posts for each of these Life of Pookah Finances so that you’ll have a quick summary of this post, as well as quick links to the relevant posts.

Let me close this post with this last point: Your financial journey is going to be different from Pookah’s, my S.O.’s, or mine. It will be different from everyone else’s, too. Your full, exact situation IS unique. So don’t think that you have to complete all of 101 before you can move on to 201 or even 301. That isn’t the way it works because that isn’t the way that people work. Read ahead. Plan ahead. Opportunities will come knocking, but you’ll miss them if you don’t recognize them. The way your mind works in relation to how your life is going will determine a lot of your specific approach to finances. If you can grok this, learn self-discipline, and grow beyond what you are now, then you can live life like Pookah.