5 Incredibly Boring Ways to Better Your Finances in 2009

by Cameron Schaefer on January 19, 2009

Photo by DavidDMuirNo doubt about it, last year was atrocious when it came to the world of finance.  If you’re like me you watched your investments magically get cut in half like a Ginsu knife commercial.  It was a year that brought high costs, pay cuts, slow business and even layoffs.  So what can the average guy do to turn things around in 2009?  What new strategy can be implemented to see rapid gains and a replenishing of one’s finances?

Unfortunately, nothing too sexy, just the same dusty principles that many great men of finance have taught for ages — principles that all revolve around one grand idea: make less money go out and/or more money come in.

The reality is there’s no secret or magical formula when it comes to personal finance…it’s boring! No one knows the next hot stock, no matter how many degrees they hold or how many times they’ve appeared on CNBC.  No one knows where the bottom of the market is or when the economy will turn around.  And although many young brokers on Wall Street have tried (credit-default swaps), no one has figured out how to make money appear out of thin air.

Sure people catch a lucky break every now and then, people also win the lottery and get struck by lightening, it doesn’t mean anything.  What people have lost sight of, and what helped lead to our current mess, is that making money on a consistent basis takes self-control and discipline. It means making lots of small, but good decisions over a long period of time.

But, that message doesn’t sell books or DVD sets.  So, most people brush it off as old-fashioned and set off on their next get-rich-quick scheme only to find the pot of gold at the end of the rainbow is actually full of red ink.

The following points are probably ones you’ve heard a thousand times, but maybe it’s time you took them seriously.

1)  Live Within Your Means – Just because you can buy something, doesn’t mean you should.  All of us have something inside us that leaps with excitement when we buy something shiny and new, but within a few days, weeks or months, that feeling is gone and all we’re left with is less closet space.  I’m not saying you should stop buying new things altogether, I’m simply asking that we recognize our weakness and tendencies to justify buying things we don’t really need.

One must decide on a daily basis how much short-term comfort and pleasure they would like to sacrifice for long-term prosperity. There are a million factors that go into these decisions, but in the end life is about choices.  Each person must decide for themselves how much they are willing to sacrifice and plan their finances accordingly.  If you buy the brand new Land Rover now that’s fine, just don’t be surprised if your neighbor who bought the used Honda is doing a little better financially in five years.

2)  Create and Stick to a Budget - Two words: Wesabe and Mint.  These two completely-free online budgeting services are incredibly useful in helping one set up a detailed budget.  Not only do they automatically upload the information from your various bank and credit card accounts, they also allow you to tag purchases (groceries, entertainment, bills, etc.) and set spending limits for each.

If a person wanting to better their finances is not using one of these free and easy services they are missing out on a great opportunity.  The trick after setting up the account is checking it at regular intervals to monitor one’s progress.  This is the only way to consistently adjust your living habits to your budget (the purpose of making a budget in the first place).  If I know that I only have $100 left for the month to spend on groceries it will make the decision between filet mignon and chicken breast a much easier one.  Just like a business cannot begin to make progress without great accounting, an individual has no hope navigating the world of personal finance without a budget and an understanding of where they stand in comparison.

3)  Be Aggressive With Debt – The problem with debt is that you become a slave to another person or institution.  The whole point of money is to give one freedom, not bondage. There are times where taking on debt is necessary, maybe even advisable (student loans, exceptionally low interest rates, etc.), but for the most part it should be avoided like the plague.  Unfortunately, credit cards make taking on debt seem acceptable, even exciting.  When one finds himself in debt, the best tactic is to be incredibly aggressive in paying it down.  Everyone has seen the charts showing how expensive a purchase can become if one makes only the minimum payments, if you haven’t see here.

Pay down the debts with the highest interest rates first.  Also, don’t be afraid to call your credit card company and ask for a lower interest rate, in many cases they will help you out if you are adamant enough.  See hereDebt is a dangerous thing for one’s finances because it always costs more than you want to pay. Most people understand this and struggle with more complex debt-related questions like whether to pay-off debt completely before investing, buying a house or renting, to consolidate or not.  Theses questions are highly dependent on the specific circumstances the person asking them, so I would be silly to offer any sweeping conclusions.  Do your homework, ask lots of questions and make a good decision.

4)  Max Out Your Roth IRA – Whenever one of my friends asks me what they should do with their extra income I always have the same question two questions for them: 1)  Have you started a Roth IRA  2)  If so, have you maxed out your contributions for the year?  If they answer no to either of these the answer is simple, get it done.  There are millions of different investment options available, but if you’re young and don’t make a significantly large income (more than $105,000 single filer) it is almost always the best option for you.

Exception*** If you’re employer offers to match your 401k, then max that out first and use whatever you have left to contribute to your Roth.

As I explained in a previous post,

A Roth IRA is different because while you get no tax break up front, your money grows tax-free in your account and when you take it out come retirement time, YOU PAY NO TAXES, not even on the earnings. Another way of saying it, traditional IRAs are “tax-deferred” and Roth IRAs are “tax-exempt” savings. American Funds has a great comparison chart comparing the two types.

For a good summary of the Roth IRA rules for 2009 see here.

5)  Educate Yourself – How much time do you invest in your financial education?  Chances are it is very little…probably less than the time you spend watching “The Office” each week.  It’s funny that for such an important aspect of our lives so many of us spend startlingly little time trying to educate ourselves.  It’s not surprising since much of the industry seems to thrive on making itself seem overly complicated – not to be understood by mere mortals.  Liars!  It’s not rocket science, even basic science for that matter.  It just takes some time and effort.

There are a lot of great books, blogs and classes out there to help you understand finance, but I’ll keep it simple and recommend two for 2009:

1)  A Random Walk Down Wall Street by Burton G Malkiel

2) I Will Teach You to Be Rich – Ramit Sethi’s Blog

{ 16 comments… read them below or add one }

Neil at Debt Advice For Free January 20, 2009 at 2:41 am


Agree that debt is toxic stuff that ruins your future.

If you have trouble with spending too much try and think why it is that you want to buy things? Are you trying to compensate for any negative feelings you have about yourself, trying to make yourself more popular, or trying to keep up with others? It won’t do any of these things. Try investing in yourself as a person instead – learn a new skill or activity or just spend more time with your friends and family enjoying their company. People make you happy, things never do (for long).


Jeff Rose January 20, 2009 at 7:41 am

Good post and thanks for the mention! And you are right, boring is usually the most effective.

Cameron Schaefer January 20, 2009 at 10:36 am

@ Neil,

I think you are right on the mark with your comment. Investing yourself as a person will always reap great rewards, ones that will last far longer than any material object.

@ Jeff,

No problem, thanks for reading. Boring is usually the most effective – and normally the most legal :).

Sara January 20, 2009 at 2:41 pm

I have a question about a Roth IRA vs. a Roth 401K – my employer offers a Roth 401K, and I contributed to that. Now that I am a part-time worker, I don’t get employer contributions, but whatever I contribute it still Roth, just a 401K instead of IRA. Any thoughts on this?

Cameron Schaefer January 20, 2009 at 2:59 pm

@ Sara,

I admit, until you asked this question I had only heard of Roth 401K’s, but never done any research on them. So take what I saw with a grain of salt.

It appears that a Roth 401K basically combines that best aspects of a traditional 401K and a Roth IRA. Meaning, you get the to contribute more ($15,500 per year) than you would with a Roth IRA ($5,000 per year) and you get the tax benefits of a Roth IRA – using after-tax money to fund it making it so you don’t have to pay taxes upon withdrawal.

Roth 401k’s seem best suited for young workers in a low tax bracket, so if that’s you I would venture to guess you’re on the right track.

Here’s a good resource to check out:

J.D. Meier January 21, 2009 at 1:35 am

Boring but effective beats exciting but bad!

I was never a fan of get rich slowly until I saw time and again it was the one pattern that worked reliably over others.

Akshay Kapur January 21, 2009 at 1:53 pm


This is an incredible post; simplicity, content, fundamentals, its got it all. There’ll always be too many people giving us financial advice since we’re all curious to make a quick buck. The time it takes us to read about saving money we could have most likely used making it. Thanks for keeping it short and simple!


Cameron Schaefer January 21, 2009 at 2:01 pm

@ J.D.,

Get rich slowly is hard to be a fan of sometimes because it doesn’t pack the exciting punch that instant wealth does. But, you’re right of course – it’s the only method that consistently beats the competition.

@ Akshay,

You are too kind my friend! I know you are taking a sabbatical from blogging, any thoughts of returning anytime soon? I miss my health care education!

Akshay Kapur January 21, 2009 at 3:03 pm

Between Twitter & Posterous, I’ve been pretty content with micro-blogging. It fits in with my lifestyle.

Although, that isn’t to say I haven’t been working on something in the background. I hope to be back on the scene soon!

Collin O'Bryant January 25, 2009 at 12:22 pm

Haha, I like the title. Good advise, Cam. Being the son of an Edward Jones broker, I was raised talking about this stuff. Some of my friends who are struggling a bit financially can hardly believe me when I try to explain that financial success is really about following just a few simple principles. You are the man. I start upt tomorrow…wish me luck!!!!!

Alik Levin | PracticeThis.com January 26, 2009 at 12:37 pm

Recently I’ve read in local news this – “pay in cash. it is extremely hard to kiss the bills goodbye”.
Is not it true? It is much easier to swipe your credit card than give away the banknotes, eh? ;)

Brian Reese January 26, 2009 at 7:45 pm


Great post! Finance is incredibly boring…the long term results are anything but! Take care!


Mack jackson July 14, 2009 at 10:46 pm

Ya i agree that budgeting is most important point to better you finance.

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