Financial Order of Operations

You may remember the term 'order of operations' from algebra class.  In a mathematical expression such as:

the algebraic order of operations defines the correct sequence in which you must evaluate the components of the expression in order to arrive at the correct answer.

In personal finance too, there is a proper order of operations.  While it's obvious that you shouldn't be researching investment properties while you're deep in credit card debt, the details of the correct order in which to go about improving your financial situation aren't necessarily trivial.  When the way forward isn't obvious, a common reaction is inaction.  This article seeks to summarize a lot of what's out there into a straightforward roadmap toward solvency, stability, and ultimately, financial independence.


Beautiful Math On Your Website

A bit of a departure from Our Regularly Scheduled Program.  I know a lot of my readers aren't scientists and engineers, but who knows when this might come in handy!

This is a post of interest to anyone who wants to use nice-looking math on your blog or website.


Must-Read: Raptitude

Very, very, very occasionally I find a blogger that's so good, by the end of an article or two, I:
  1. consider my life materially improved
  2. subscribe to the RSS feed
  3. schedule a time to dig into the article backlog
  4. definitely want to meet this person.
The last time this happened was with Mr. Money Mustache, whose articles worked miracles to help me crystallize my as-of-yet dilute solution of thoughts on personal finance, financial independence, and lifestyle engineering.

Well folks, it's happened again.

The subtitle is "getting better at being human".  You should already be interested.

David Cain, the Raptitude guy


Nontraditional Investments

While I've spent a lot of time discussing the finer points of choosing the right types of investment accounts and allocating your investment contributions to minimize the taxes you pay, my conclusions concerning what to invest in have been pretty boring.  Whether the money is in a Roth IRA retirement plan or a 529 college savings plan or a military Thrift Savings Plan or any other investing world account acronym, the story is the same: you are best off investing in broad-based, passively-managed index mutual funds.  While the historical context and ultimate triumph of the index mutual fund deserves an article of its own, suffice it to say that any financial expert with an honest, undivided interest in the investor's well-being will give exactly this advice.

To be crystal-clear: that is definitely all you need to know.  From your first investment order all the way through retirement, index mutual funds are by far the surest and most straightforward path to accomplishing your financial goals.

That being said, technology is allowing the proliferation of all manner of new and interesting investment opportunities.  This article focuses on opportunities that meet my definition of the optimal investment:  a low barrier-to-entry, a small minimum investment requirement, limited input of time, energy, and expertise, and minimal fees — plenty has been written elsewhere about effort- and expertise-intensive investments such as real estate, so I won't go into them here.