Automate your finances now

It has been a moment since I wrote my last post. So I am happy to be back connecting with you. I have been on a mission to automate my personal financial system and it has totally changed the way that I think about money. I want everything to work seamlessly. Right now I work for a company and get paid 2 times a month and I want all of my finances to be taken care of without lifting a finger. But it has been hard work to get to that point.

I had to change almost every account I was using. I moved my checking from Wells Fargo to Schwab. My Roth IRA from TDAmeritrade to M1. I set up all kind of tools to monitor how my finances are growing and send me reports.

I read Ramit Sethi’s book: I will teach you to be rich and it inspired me to take a look at my investments. The Simple Path to Wealth book and blog made me start thinking about index investing. Previously I had been purchasing individual stocks manually. But I now believe that index investing is a better way to go for the bulk of your investments. Invest a set amount each month and automate so you don’t even think about it. Time and the market will do the rest.

But I have to be honest, opening, transferring and closing accounts is time consuming. These financial institutions don’t make it easy and don’t want to let you go.

The most difficult was my HSA. I am a totally believer in having an HSA – Health Savings Account. But my company recently changed benefit providers and moved to a new HSA provider. So any individual can have multiple HSA accounts, but your old one will still charge fees. So if you don’t use the funds for medical expenses your funds are essentially bled dry.

Rule: Reduce investing fees ruthlessly. Or be satisfied with working yourself to death.

So I went on a mission to consolidate my old HSA into my new account. Not convenient to say the least. Literally had to send a letter in the mail to a PO Box to get them to close the account. And then of course it’s going to take several weeks to move the funds.

So the flow of my money now looks like this:

  1. 401k and HSA before I even receive check
  2. Direct deposit paycheck and income to checking account.
  3. % to Savings
  4. % to IRA
  5. % to Stock account

6. Stock funds automatically invested between total stock market index and dividend appreciation index

So far I have received 2 raises at my current job and have increased the percentage I contribute to these accounts accordingly.

Your mission first be to max out your 401k and Roth IRA before investing more into your stock account. But remember the rule. 401ks can have tons of fees killing your long term gains.

Even though it can take a bit of work to get your automation set up, once you have it in place it is amazing. I feel like it has given me more mental freedom.

Automation also creates dollar cost averaging which can help diversify your portfolio.

Let me know what you think. Leave a comment. Or email me:

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