How many financial accounts do you have? Savings, checking, investment, and retirement accounts. I bet you have at least 5, but why so many? I'm sure every account you have doesn't have a purpose too. Having 3 savings accounts probably isn't much different than having just 2 or 1, so why keep them? I don't think you should. 

An enormous part of personal finances is the psychological side and that's important to understand. Consolidating down to just the accounts that have a purpose will be a psychological action that will improve your finances. Consolidating down to just the accounts you need might not put you in a better position financially, but it will help your finances be less overwhelming and easier to manage. Of course, these outcomes may lead to financial gain, but that's not the point. We want our psychological side of our personal finances to improve. 

Follow these steps to consolidating your accounts
There are two ways you can consolidate. First, you can consolidate down to have less accounts (e.g. having 1 checking account, instead of two). Second, you can consolidate down to one platform (e.g. having a savings account and an investment account at the same bank, instead of at different banks). For you, it will be a combination. The goal isn't to consolidate down to one account. The goal also isn't to get all your accounts on the same platform. The goal is to simplify your finances. 

1. List all your checking, savings, investment, and retirement accounts. List the platform for each (e.g. Wells Fargo, E Trade, Bank of America, etc.).
2. For each account, write the purpose for it. If you can't come up with one, that's okay, just leave it blank!
3. Consolidate! Look at your account list from number 1 and figure out where you could consolidate down to 1 platform. Look at your account list from number 2 and figure out accounts that don't serve a purpose anymore.
4. Perform your plan! Now that you know how you want to consolidate, execute your plan. Call banks, close accounts, open accounts, or do whatever you need to do. It may be overwhelming in the process, but if you stick with it, it'll have a great benefit.
5. Improve your purpose. For each account, now consider another option. See if there's a better product out there that would serve your purpose better. If you're savings at a 1% interest rate, maybe there's a savings account that could offer you a 2% interest rate. This is where you actually start making a financial gain and not just a psychological. 

My consolidation
Below you'll find my consolidation as an example. I haven't completed the entire process yet, but I'm working on it now. I wanted to share it to help you understand how to consolidate your own finances.

1. List of accounts and their platforms

• Checking 1 - Wells Fargo
• Checking 2 - Wells Fargo
• Savings 1 - Wells Fargo
• Savings 2 - Wells Fargo
• Credit 1 - Wells Fargo
• Credit 2 - Amazon (Synchrony Bank)
• Individual Brokerage Account 1 - Wells Fargo
• Individual Brokerage Account 2 - Acorns

• Roth IRA - Wells Fargo

• Roth 401k - Fidelity
• 401k - Vanguard

2. For each account, write the purpose for it. Okay to leave blank.

• Checking 1 - Main checking...accessible via ATM in most cities
• Checking 2 - Old checking
• Savings 1 - Main Savings
• Savings 2 - Emergency Fund
• Credit 1 - Main credit card, barely used 
• Credit 2 - Amazon credit card, used often
• Individual Brokerage Account - Regular investing
• Individual Brokerage Account 2 - Was used for saving for my wife's engagement ring

• Roth IRA - Retirement Account

• Roth 401k - Current employer retirement plan
• 401k - Old employer retirement plan.

3, 4, and 5. Consolidate, Perform, Improve.

• Checking - Wells Fargo - Main checking....accessible via ATM/Bank in most cities
• Savings - Betterment - Main savings. 2.68% interest rate
• Credit 1 - TBD - Main credit card with a good cash-back program
• Credit 2 - Amazon (Synchrony Bank) - 5% off all Amazon purchases
• Individual Brokerage Account1 - Webull - Individual brokerage account with no trades. My first choice was Robinhood, but it didn't work for me. 
• Individual Brokerage Account 2 - Fidelity -  Emergency Fund, invested in low-risk mutual funds to keep up with inflation.
• Roth IRA - Fidelity - Personal retirement account
• Roth 401k - Fidelity - Current employer retirement account (rolled old employer 401k into this).

In steps 3, 4, and 5, you can see I consolidated to what I needed and then changed some of the accounts to get the maximum benefit for the purpose I have. For example, switching from Wells Fargo Savings to Betterment increased my yearly interest from <.01% to 2.68%, which is pretty close to inflation. I switched my individual brokerage account from Wells Fargo (who had a trade fee) to a company that doesn't have trade fees. Then finally, I consolidated my retirement accounts onto one platform, Fidelity. Then, I closed accounts I just don't use anymore, like my old checking account and Acorns. They served a purpose at one time, but they don't anymore.

I consolidated down from 11 different accounts to 8. My platform count (5) stayed the same, but I improved many of my accounts by changing platforms, whether they offer lower fees or higher interest rates. Overall, it's less overwhelming, easier to manage, and more financially beneficial.

Your plan will probably look totally different then mine. The important part is that you choose a consolidation plan that fits your finances the best. Determining the best plan for your consolidation might be hard, so please reach out to me. I'll help for free. 

I do have one announcement. We're starting to create social media accounts for Better Budget. The first is @BetterBudgetCo on Instagram, so please follow! More social media accounts to come. I hope you enjoyed reading Better Budget and that it helped improve your personal finances!

If you Google "First time home-buyers help", you'll be swarmed by articles and advertisements claiming to have the answer. They fight for your attention, like two dogs playing tug-of-war with a rope and you're the rope. You feel pulled between a lot of different "answers" and "solutions". They're not all bad, but they often don't cover the entire process. You get served a meal, without an appetizer. I'm going to serve you the appetizer and explain today how you can prepare to buy a home. In this post, you'll learn about what you can afford, how to save for for a home, and how long it will take.

I broke down the process into 4 simple steps. If two people went through these 4 steps individually, they both would come out with different answers. My point being, these steps are tailored for you and your situation. They're not hard-rules, like a lot of financial-guru's preach. I like to keep things dynamic and adjust to your situation. So, let's get started!

Step 1: How much can you afford? 
I want you to head over to Chase's mortgage calculator. Then, fill out the form like this:

• Loan term - 15 Years
• Monthly Income - You (and your spouse's) combined monthly income, before taxes. If you know your annual income, just divide it by 12.
• Monthly Expenses - Only include your debt here. Don't include things like, rent, utilities, cell phone bill, etc. If you don't have any debt, place $10 in this box (Chase doesn't let you put in 0).
• Down Payment - I recommend using 5% or higher. Using just 5% is fine too.
• Interest rate - Use 3.13%. If you want something super accurate, just Google "15 year mortgage rates"
• Property Taxes/Fees - Use 5%
• Property Insurance - Use 3%

I filled out this form for a hypothetical couple that makes a combined $90,000 per year ($7,500 per month before taxes). This couple pays $300 to debt each month. They chose to have a 5% down payment.

Don't worry about the results yet, just fill out the form :)

Step 2: What's your timeline? 
Next, what's your timeline? Your timeline isn't when you want to move into your home. Rather, it's when you want to have the available funds. Most likely, you'll move into your home 1-3 months after you save the enough funds.

I recommend choosing a time span, i.e. not a target date. It makes the math easier. So, for our hypothetical couple, let's say their time span is 2 years. If you want to, you can choose a target date. For example, "I want to save enough for a home by January 1, 2021."

Step 3: Calculate!
Alright, now for the fun part! There may seem like a lot of steps, but I purposefully broke it out to keep things simple. I'll first summarize the steps, then show you how our hypothetical couple would calculate it. If you're not the greatest at math, I'll help you out. Just message me.

1. Figure out your budget cycle. You don't have to actually be budgeting yet to have a budget cycle. Most people just match their budget cycle to how frequently they get paid. If you have a spouse, typically it's matched to the spouse with the greater income (if the spouses aren't paid at the same time intervals).
2. From "Step 2: What's your timeline", how many budget cycles would you go through? So, if you get paid monthly (i.e. your budget cycle is monthly) and your timeline is 2 years, then you would go through 24 budget cycles. 2 years = 24 months. 24 months = 24 paychecks = 24 budget cycles. 
3. Do you have any funds already saved for a down payment? If so, figure out that number and write it down.
4. Now, we'll calculate the amount of money you have to save per budget cycle. Take the down payment amount from the Chase mortgage calculator (shown on the right side under "down payment"). Take this number and minus your funds for your down payment. Then, divide it by the amount of budget cycles you would go through.
   Savings Per Budget Cycle = (Down Payment - Saved Down Payment) / Total Budget Cycles.
5. Add estimated closing costs. To estimate your closing costs, take your estimated home price from the calculator and multiply it by .035, then divide it by your total budget cycles.
   Monthly Savings = Savings Per Budget Cycle + (Estimated Home Price * .035) / Total Budget Cycles.
6. Save your money in an account that would keep it aligned with inflation and more importantly average home growth. You can read this post about where to put your emergency fund for an idea of how to get started and different options you have. You can follow a similar strategy. You can take a little more risk with this money than an emergency fund, so I would say investing in mutual funds is fine and something I would recommend.

The Monthly Savings is the amount you'll need to save per budget cycle. This number might be a lot higher than you expect. I want to encourage you to not feel fearful. It will be overwhelming, but you have full control over your finances. You can figure out how to make that number work. I can help too. Reach out to me and we can figure out how we can make it work.

Now, let's go through these steps for our hypothetical couple. Remember, our couple makes a combined $90,000 per year, with $300 debt payments per month. 

1. Our couple gets paid biweekly, i.e. 26 times per year.
2. Our couple has a goal to have the funds for a home in 2 years. So, our couple would go through 52 budget cycles (26 budget cycles per year * 2 years = 52 budget cycles).
3. Our couple hasn't started saving yet, so this is $0. 
4. Our couple's estimated down payment needs to be $10,585. We divide that by 52. So, our couple starts with $203 per budget cycle. ($10,585 down payment / 52 budget cycles = $203 per budget cycle).
5. Now, our couple needs to add in estimated closing costs. Their estimated home is $211,693. They multiply that by .035 to get $7,409. Then, they divide it by their total budget cycles to get $142. They add this to their savings per budget cycle to get a final Monthly Savings of $345. In other words, our couple would need to save $345 per budget cycle to afford their home.
6. Our couple decides to save their money in a low cost mutual fund. They reached out to me to help them choose one that best fit their risk tolerance :)

Step 4: Make adjustments
We're finally ready to make some adjustments if needed! If your Monthly Savings is way too high, you can make adjustments in a number of ways. You can make your debt lower (i.e. lower your Monthly Expenses in the calculator) and it will lower your Monthly Savings. You could do a 20 year mortgage, or 30 year mortgage, and it would lower your amount. If you changed this, you would also have to change your interest rate to something higher. You would also be have to buy a home less than the new estimate. 

Really, you probably don't need many adjustments. You will be in a very good spot financially if you just generally follow steps 1-3. They'll already be customized for you, since everyone has different numbers and goals.

I'd be happy to help you go through these steps. Just message me the numbers for the Chase calculator and I'll go through all the steps for you and message you the results. I hope this helps with your first home. Thanks for reading Better Budget!

...financial freedom.

Well, that's what Rob Berger believes, creator of the Dough Money Roller podcast, a podcast I listen to often. I don't necessarily disagree either, but I think the end to this statement could be different for everyone.

For me, I think the best thing money can buy is time. You could probably argue that time=financial freedom, but I like to be a little more explicit. You have probably heard the saying, "Time is money" and it's true. I explained in a previous post how you can calculate your wages per hour. I want to look at this from two perspectives: 1) How money can buy you time, and 2) Why I think buying time is the best use of money.

How money can buy you time
The other day I was driving home from the beach. I usually use Google Maps as my GPS because it has an option to avoid tolls. Most times, the time difference between taking a toll route vs a non-toll route is only 10 minutes or so. However, this route would double the trip from an hour and a half, to a three hour trip, if I took the non-toll route. The tolls would only cost about $16 total. Paying $16 to save an hour and a half of driving is more than worth it. That's just one example of how you can buy time.

Why I think buying time is the best use of money
Time is the only resource that you can't get more of. So, it's very important to use your time wisely and make the most of it. Therefore, this is the primary reason that I say buying time is the best use of money. 

Your money
The way you end "The best thing money can buy is..." is different for everyone. Some people have very wrong answers too, morally or just not the best thought out. I also think many people would have an asterix next to their statement too. For me, "The best thing money can buy is time*" (*the money must be spent according to good financial principles and time can be bought indirectly). Even then, it's a little vague because "good financial principles" differ from person to person. For instance, I wouldn't recommend going into debt to save time. Thinking more about it too, I'm not sure how strongly I would hold my stance that buying time is the best use of money. It's not exactly a hard rule.

Let's try this exercise. Finish the statement, "The best thing money can buy is...". Once you finish this statement, ask yourself if you're following it. If you follow it in some cases, but not others, that might indicate that you should have a different ending.​

Thanks for reading the Better Budget blog. I hope you enjoyed it! If you have any questions or want some financial help, please reach out to me. I'd be happy to help.

Things are looking a lot better for my refinancing. I'll explain the story in a future post once I get through the end. I expect the end to occur within a week and hopefully it's a happy one, but it got me thinking. A lot of people make a financial decision they're not proud of. Actually, I would say we all have at one point and most of us are probably living in one. Also, sometimes you can't undo that financial decision. 

I am in that situation now. I teach the 25% mortgage payment method. In other words, your mortgage payment should be no more than 25% of you take home pay (this rule can and should be applied to rent). Though I teach it, I didn't follow it. My mortgage payment is well above 25% of my take home pay. Nobody is going to perform their financial journey perfectly and I'm no exception. So, what can I do to fix the mistake?  

I first considered reversing the mistake I made, but I based it purely off the numbers. My home value was about the same. I could maybe make $5000-$10000 more off it. Assuming average case (about $5000), I ran the numbers and considered new closing costs for selling this home and getting a different one. The numbers did not go well and they clearly showed I should not sell the home.

My next consideration is what I would recommend to a lot of people. If you can't reverse your financial mistake, make it the best wrong decision you've ever made. This is how I and my wife are approaching our home. The home was is a great house, but the price was not as good. We're making it right by refinancing, which increases the mortgage just a little bit, but it keeps so much more money in our pocket, which can be seen month-to-month when we calculate our net worth. It's also likely that our salaries will increase, which would get us closer to the 25% rule. Once the PMI drops off, we'll get even closer.

Our situation will naturally improve over time, but yours might not. If you don't expect your situation to improve, still make it the best wrong decision you've ever made. Just use this best wrong decision as a bridge. A bridge to what? A bridge to reversing the decision. If it's not going to naturally improve, you'll have to eventually undo the decision. It's a hard decision for some, but it needs to be done. 

The most important thing for us all though, is learn. Learn from the financial mistake and don't make it again. For me, I need to follow the 25% mortgage payment method. It requires sacrifices, but they pay off. Every financial sacrifice you make will pay off later and even better. I promise you, with a little patience, you'll never regret the sacrifices you make.

Thanks for reading Better Budget! I hope if improves your personal finances become better. If you have any questions at all, please reach out to me. I'll be happy to answer any you may have. Have a great weekend!