Settling Personal Finances
The Fool FAQ
All right, I'm convinced by the Foolish philosophy of investing. I want to begin increasing my wealth the Foolish way. What must I do first?
There are several things you want to look at first. First, consider how much money you are socking away out of each paycheck. What? You say you have no firm commitment to paying yourself out of your paychecks? Hmm, not good. You should pick a percentage of your salary that you can comfortably put away out of each check and stick to it! If your left hand spends whatever your right hand earns, it's hard to see how you'll get ahead.
Next, you should be sure you are maximizing all the ways you can defer taxes. Take advantage of your company's retirement plans. Contribute to an IRA. Identify all the ways you personally (it differs from person to person) can shelter income and do it! Money sheltered from taxation can grow much more quickly than taxable funds.
Finally, before you invest a dime, be sure to pay off all your credit card debt. In a world that heaps praise on folks who achieve an annual investment return of 10%, that 18% interest rate on your credit card debt is going to be one heck of an albatross around your neck. Get rid of it first.