Finance Sessions - Post 5

[Lunar Mojito]

The art and science of budget​

Budget is considered the very basics of finance, the core of most finance functions within companies, used by the largest companies, small business and governments alike.

According to Investopedia a budget is “An estimation of revenue, expenses or changes in finances over a specified future period, usually compiled and re-evaluated in a periodic basis”.

In a practical sense, budgeting is estimating how much you will earn, how much you will spend, and comparing the real execution of these streams vs expectations, and course correcting as needed. This allows you to create awareness of how you are using your money.

Why is this so important in personal finance? Budget allows you to navigate complexity in finance, also let’s you assess your spending habits. Almost everyone can benefit from it.

What do you need to use a budget:

• A goal
• Basic arithmetic
• Pen and paper
• Discipline

I need to emphasize the last bullet point while introducing some of my experience in multiple financial functions: The hardest part of any budget is sticking to it.

Sharing some perspective, in large companies, governments institutions and other organizations there is a function (with names like “Budget,” “Financial Planning and Reporting”, “Corporate Finance”, “Planning”, etc.) whose sole job is to act like an ogre who hits with a club anyone who dares to fail budget goals. You underdeliver sales? You get the club. You overspend? You get the club. You underspend? You also get the club.

While this corporate perspective is be too restricting and impractical for most people, it shows that financial discipline does not come naturally for many, so it must be practiced and mastered. This is also why a goal is needed: control for the sake of control will turn you bitter and resentful, the budget is a tool to a goal, not a goal in itself.

First set up a financial goal, if you are new to this I recommend to use the SMART method. SMART is an acronym for Specific, Measurable, Achievable, Relevant and Time-bound.


Let’s go with an example, let’s say you are in a financial tough spot. Instead of using a generic and vague goal like “Stop being poor”, you use the framework.

S – Specific: Reduce credit card debt to zero

M – Measurable: Credit card debt is zero

A – Achievable: Credit card is zero within reasonable time frame

R – Relevant: The high level goal is to improve financial situation, so eliminating credit card debt is a relevant goal.

T – Time bound: 1 year. This point also connect with how achievable it is. If time constraint is too tight the goal stops being achievable. In this case, will depend on how large the debt is.

Now, pick your pen and paper, or any other tool of your liking. Use the tool best fit for you, some people use google sheets, Microsoft excel, some sophisticated personal finance app. Use whatever works for you. Only complex, large-scale budgets need sophisticated tools.

First, sum all of your sources of income. For most, there is only a monthly fixed salary.

Income: $5,500/month

Second, we sum and categorize all expenses. Categorization is another key element, as it will allow you to decide on any course correction.

Expense categorization is more art than science in my opinion, I will lay here some general categories that are almost universally used:

• Necessary expenses: This is the items you can’t afford to not pay. This includes rent, mortgage (for your first home only), groceries, utilities (electricity, water, natural gas, internet, phone bill), your children’s tuition, healthcare costs.
• Debt service: This is the amount you pay to honor any kind of debt, be either mortgages (for any other building that is not your first home), credit card, commercial credits and so on. I encourage you to separate debt service in both productive and unproductive, as they are treated in different way. For doubts on how to separate this, refer to finance sessions post 2.
• Short term savings: A portion of your income should go to a savings/liquid account up to a cap of at least 6x your necessary expenses. Refer to finance sessions post 3.
• Long term or other savings: This item exists for savings with an specific purpose, i.e. you are saving the downpayment of your first home, or you want to go on a lavish vacation.
• Investments: This should only exist once short term savings goals have been fulfilled. Don’t think about investing unless you have enough liquidity to cover up any unexpected expense (credit cards are NOT a way to cover emergencies, by the way).

There are a lot of other categories, like taxes. But for most part, you will find the above in all personal budgets.

Now, we sum all expenses:

Rent: $2,400/month

Social Security and taxes: $1,045/month

Credit card debt: $997/month

Utilities: $700/month

Cleaning service: $100/month

Eating out: $750/month

Others: $100/month

Total expenses: $6,092/month

Here is the first red flag, expenses are higher than income. This means the person in this example will have to either reduce it’s savings or go into debt.

Now we can calculate some ratios: 75% of Example guy’s income goes to necessary expenses!!! (rent, social security, utilities) This is way too high. If we zoom in we can see some trends:

• He does not buy groceries, only eats out.
• He lives in an expensive area, with rent eating 43% of his income.

Also, credit card debt is 18% of his income. If we consider credit card debt as unproductive debt, this is too high. And the worst part, necessary expenses and debt eat 93% of Example guy’s income!!! I would not be surprised if he viscerally hated his job (most grumpy and hateful employees are the ones who do not see their paychecks at month’s end).

By looking through a budget, the bad decisions are evident. But for Example guy’s point of view, he is only eating cheap meals outside, and saving the horrible commute in his city.

Now going back to the goal, he wants to pay his full $18,000 credit card debt in a year. His debt is currently deferred at 24 months using a 29% APR (annual interest). If he wants to pay the debt in only a year he needs to increase his monthly credit card payment from $997 to $1,728, this means we are short of $730 for credit card payment. We are also short of $592 given his expenses are higher than his income.

Some things Example guy can do:

• Move to a cheaper zone, with both lower rent and utilities. In this specific example this is the best option. And should only be discarded if:
• A.Example guy is using the time form short to no commute (he has no transportation costs, which means very likely he has no commute to work) into something productive like advancing himself, starting a side gig, investing time with his significant others. The most common error of “moving to an expensive area to save commute” is that this extra time is then used to watch Netflix or play videogames.
• B. The cheaper zones are crime ridden, in this case the high expense is a matter of safety.
• Stop eating out and paying cleaning services. He starts to cook his meals and clean himself, this is another way of using the extra time advantage of living in an expensive area.
• He increases his income. It’s preferrable most of the times, but in this case Example guy has some bad financial habits, which will probably be made worse if he gets himself a higher paying job.

Let’s say Example guy decided to move, and his new rent is $1,500/month and his new utilities are $400/month. He is now in $608/month surplus.

Here are some things he can do:

• Keep cutting expenses so he can achieve the $1,728/month payment in credit card, and be free of debt in a year.
• Rebalance his goals, he could increase the credit card payment to $1,500/month and he would still have an extra $108 every month for transportation expenses, save or buy himself something. With this option, he will pay his credit card fully in 15 months.

The difference between option 1 and 2 is mostly human, strict theory says that option 1 is the way to go, but if we into this example, this example guy could become discouraged the first months he has to commute to work. Here option 2 could allow him some extra cash flow to do something that can cheer him up.

Again, I must be redundant: the hardest part of the budget is sticking to it. Example guy could pay his credit card fully and then go in a spending spree, wasting all the effort.

As a side note, there a lot of budgeting methods that can be useful. One is my favorites is using a single credit card for "micro-expenses" like eating out, buying coffee, and so; an fully paying the balance at month's end. This helps you break the illusion of "low paying pain" for small expenses, raises your credit score and saves you the hassle of taking note of each expense. (Do NOT do this if you have credit card debt, you will be tempted to overspend).

Hope you can find this useful, may you succeed in all your financial goals.

 

[serpentwalker666]

What would your advice be to someone who has like.. Completely avoided all debt.. ?

I have strategically avoided ALL debt at this point in my life. I have also avoided college for now.

The problem is I don't live in a decent area, so while there's not much in terms of utilities, rent, ect. The jobs are low pay around here.

There's no opportunity unless I were to venture capital a remote business or work remotely in tech or finance.

But besides all this, I have paid cash for property repairs, cash for a vehicle, my house is inherited and cared for with repairs, and I have a beautiful wife and children.

It's like.. I feel like I've done everything backwards. I have everything.. but a decent paying job to propell myself financially lol.

It's funny, but it also is kind of not.

 

[616Taysha]

@serpentwalker666 "Noooooo! You big bad Nazi Goyim... ahem, you silly young White suprema... ahem, yes.

If you don't go to college (and incur a $60k debt so that Shekelbergersteins could milk you to death) you won't know what's right and wrong! How will you know of the gender queer theory, or or how women have been oppressed by the patriarchy!? Worst of all, how will you know various tricks on how to be oppressed and thus exercise your will (which isn't yours - you only have to regurgitate what you had been indoctrinated with) !?

Remember, college will save you from the oppressive patriarchy, and maybe even prevent you from becoming the worst criminal of all - Donald J. Trump!"

And on a serious note - if one manages to avoid college and live a decent life without being overly dependent - kudos to such a person. Knowledge is free, and unless one needs some B.Sc or M.A., one can steer clear of it.

 

[Henu the Great]

What would your advice be to someone who has like.. Completely avoided all debt.. ?

I have strategically avoided ALL debt at this point in my life. I have also avoided college for now.

The problem is I don't live in a decent area, so while there's not much in terms of utilities, rent, ect. The jobs are low pay around here.

There's no opportunity unless I were to venture capital a remote business or work remotely in tech or finance.

But besides all this, I have paid cash for property repairs, cash for a vehicle, my house is inherited and cared for with repairs, and I have a beautiful wife and children.

It's like.. I feel like I've done everything backwards. I have everything.. but a decent paying job to propell myself financially lol.

It's funny, but it also is kind of not.

Computer services, cleaning services, yard work services, maintenance and upkeep services, there are some rather easy services to offer to people. Going further, art can be monetized, astrology/divination services can be monetized, and what else?

 

[Lunar Mojito]

What would your advice be to someone who has like.. Completely avoided all debt.. ?

I have strategically avoided ALL debt at this point in my life. I have also avoided college for now.

The problem is I don't live in a decent area, so while there's not much in terms of utilities, rent, ect. The jobs are low pay around here.

There's no opportunity unless I were to venture capital a remote business or work remotely in tech or finance.

But besides all this, I have paid cash for property repairs, cash for a vehicle, my house is inherited and cared for with repairs, and I have a beautiful wife and children.

It's like.. I feel like I've done everything backwards. I have everything.. but a decent paying job to propell myself financially lol.

It's funny, but it also is kind of not.

If you are debt free, and have the blessing of owning a home, my main advice is to invest.

Now in what to invest, might become tricky. If your top financial priority is to increase your income the best you can do is invest in acquiring better paying skills, be it for either starting your own business or getting a better paying job.

Some tips I can give in both cases:

If you intend to get a better job, investigate the field in which you want said job. It's nearly impossible to get a job in certain fields without a college degree (excluding the fields where it's illegal to practice without a degree), and in some other fields is still very hard to get in if your college degree is not from an elite school like Ivy League.

Some fields, like software engineering, are bit easier. But a lot of companies will still lean towards college graduates. In the fields where is still possible to get a high paying job without a degree the #1 advice in my opinion is: Bypass HR (Human Resources)

The key thing here is that HR acts like a filter before the hiring manager (the person who actually decides to hire you) gets to know about you, and here is where problems start: Most HR proccesses range from disfunctional to totally broken. I've seen enoguh cases of managers growing so tired and angry at HR's incompetence that they start looking for the candidates themselves. If you are a team manager your job is NOT to be looking for appropiate team members whenever you are short on staff.

This gets so bad that in some companies HR departaments have completely antagonistic goals to the hiring managers. Usually, a hiring manager wants "quickly hire somebody who can get this job done", this means someone which already knows how to do whatever the role requires and can adapt to the company's specific way of working. HR departments then start to prioritize things like gender diversity or multiculturalism. I've personally felt the frustration of dealing with an HR recuiter telling you how important to have at leats 50% females in a field which is not attractive to girls (logistics, women outnumbered 8 to 1), so the recruiter would only share women CVs (again, in a field where there is little women to begin with) while the whole team was overworked.

How do you fix this? You reach out the hiring manager directly. You join circles where these manager are frequent and let know about you and what you know. This means you need a) get the required skill b) be able to prove QUICKLY you have said skill. This why also having a portfolio of projects is important, the porfolio is the evidence of your skill.

Bypassing HR will greatly boost your chance of getting a high paying job, just remember to be realistic: these jobs are few and highly demanded, you need to both get good in your field and get visible enough so the hiring managers can notice you.

If you intend to start a business, my #1 advice is to start small. There is a prevalent misconception that the main obstacle for starting a business is owning the required capital. This could be true if it where a business which required huge amounts of money just to start, and there is no way to do so in small scale. But this is rare and I can only think of examples like manufacturing airplanes.

The main obstacle in starting business is lack of experience, and experience can only be acquired via an specific insider or by doing. Most poeple don't have access to industry insiders, and those who advertise themselves as industry experts are usually scammers (the main reason being, if you are an industry insider you have little incentive to help future competitors, or don't have the time to do so if you have a business to run). The best and most reliable way to earn experience by starting small.

Let's say you want to start a restaurant, and you got to learn to cook, and you have no capital to afford the furniture, decoration, adverstisement and equipment a full restaurant demands. You can earn experience by starting a small food stall or a food truck during weekends, this will teach you about ingredient procurement, ingredient preservation, quality assurance, logistics, dealing with the public, etc. This will also let you have a better perspective on how to grow your business, or if said business is a good match for you.

This is also an excellent test to tell wheter to lend someone money for a business. i.e. if somebody reachs out to you asking for a loan to start a restaurant, you can ask them "have you ever owned a restaurant before, or at least a food stall?" If they answer no they are most likely asking for the loan out of pure ignorance, believing that capital is the obstacle there.

When you can get a small business up and running, you will also start to notice the investment opportunities to grow your business, this is the ideal moment to consider asking for loans. I don't recommend using loans to finance the start of a business, the fail when one is inexperienced can be high, and you will have to honor debt payments while learning on the go. Instead, when you can get your business up and running, start to think bigger and consider using loans to fuel this growth.

If we keep the restaurant example, let's assume your burger food truck is now up and running, now you can ask for a loan to go bigger. Get a better location, a full time restaurant, you can consider hiring personnel, adding new dishes, desserts or alcohol. In this case you already have a basic understading of the business. This scenario still has it's risk, but at least you as the owner have a better idea of how to the business operates.

 

[serpentwalker666]

Computer services, cleaning services, yard work services, maintenance and upkeep services, there are some rather easy services to offer to people. Going further, art can be monetized, astrology/divination services can be monetized, and what else?

I apreciate the pointers here, thank you.

 

[serpentwalker666]

If you are debt free, and have the blessing of owning a home, my main advice is to invest.

Now in what to invest, might become tricky. If your top financial priority is to increase your income the best you can do is invest in acquiring better paying skills, be it for either starting your own business or getting a better paying job.

Some tips I can give in both cases:

If you intend to get a better job, investigate the field in which you want said job. It's nearly impossible to get a job in certain fields without a college degree (excluding the fields where it's illegal to practice without a degree), and in some other fields is still very hard to get in if your college degree is not from an elite school like Ivy League.

Some fields, like software engineering, are bit easier. But a lot of companies will still lean towards college graduates. In the fields where is still possible to get a high paying job without a degree the #1 advice in my opinion is: Bypass HR (Human Resources)

The key thing here is that HR acts like a filter before the hiring manager (the person who actually decides to hire you) gets to know about you, and here is where problems start: Most HR proccesses range from disfunctional to totally broken. I've seen enoguh cases of managers growing so tired and angry at HR's incompetence that they start looking for the candidates themselves. If you are a team manager your job is NOT to be looking for appropiate team members whenever you are short on staff.

This gets so bad that in some companies HR departaments have completely antagonistic goals to the hiring managers. Usually, a hiring manager wants "quickly hire somebody who can get this job done", this means someone which already knows how to do whatever the role requires and can adapt to the company's specific way of working. HR departments then start to prioritize things like gender diversity or multiculturalism. I've personally felt the frustration of dealing with an HR recuiter telling you how important to have at leats 50% females in a field which is not attractive to girls (logistics, women outnumbered 8 to 1), so the recruiter would only share women CVs (again, in a field where there is little women to begin with) while the whole team was overworked.

How do you fix this? You reach out the hiring manager directly. You join circles where these manager are frequent and let know about you and what you know. This means you need a) get the required skill b) be able to prove QUICKLY you have said skill. This why also having a portfolio of projects is important, the porfolio is the evidence of your skill.

Bypassing HR will greatly boost your chance of getting a high paying job, just remember to be realistic: these jobs are few and highly demanded, you need to both get good in your field and get visible enough so the hiring managers can notice you.

If you intend to start a business, my #1 advice is to start small. There is a prevalent misconception that the main obstacle for starting a business is owning the required capital. This could be true if it where a business which required huge amounts of money just to start, and there is no way to do so in small scale. But this is rare and I can only think of examples like manufacturing airplanes.

The main obstacle in starting business is lack of experience, and experience can only be acquired via an specific insider or by doing. Most poeple don't have access to industry insiders, and those who advertise themselves as industry experts are usually scammers (the main reason being, if you are an industry insider you have little incentive to help future competitors, or don't have the time to do so if you have a business to run). The best and most reliable way to earn experience by starting small.

Let's say you want to start a restaurant, and you got to learn to cook, and you have no capital to afford the furniture, decoration, adverstisement and equipment a full restaurant demands. You can earn experience by starting a small food stall or a food truck during weekends, this will teach you about ingredient procurement, ingredient preservation, quality assurance, logistics, dealing with the public, etc. This will also let you have a better perspective on how to grow your business, or if said business is a good match for you.

This is also an excellent test to tell wheter to lend someone money for a business. i.e. if somebody reachs out to you asking for a loan to start a restaurant, you can ask them "have you ever owned a restaurant before, or at least a food stall?" If they answer no they are most likely asking for the loan out of pure ignorance, believing that capital is the obstacle there.

When you can get a small business up and running, you will also start to notice the investment opportunities to grow your business, this is the ideal moment to consider asking for loans. I don't recommend using loans to finance the start of a business, the fail when one is inexperienced can be high, and you will have to honor debt payments while learning on the go. Instead, when you can get your business up and running, start to think bigger and consider using loans to fuel this growth.

If we keep the restaurant example, let's assume your burger food truck is now up and running, now you can ask for a loan to go bigger. Get a better location, a full time restaurant, you can consider hiring personnel, adding new dishes, desserts or alcohol. In this case you already have a basic understading of the business. This scenario still has it's risk, but at least you as the owner have a better idea of how to the business operates.

Thank you, this is all very helpful. My ideal business path is growing into a large, fully remote tech company. For the time being, just to try to make more money I have looked towards the Series licenses with finance, and may enter that industry if I have to for the time being.

I have met some VIPs in the electronics manufacturing industry, but this sector does not seem conductive for a first business, but I thankfully overall have manufacturing knowledge if I ever wanted to walk that route in the future.

I deeply appreciate all of this information, as I was heavily leaning on venture capital as I want a rather cutting edge, and or very innovative and attractive to investor business or product with equity funding as a possible route, but this shows me that I should build up a business, then do this, not jump directly to this for obvious reasons.

 

[Nordicsupreme]

The art and science of budget​

Budget is considered the very basics of finance, the core of most finance functions within companies, used by the largest companies, small business and governments alike.

According to Investopedia a budget is “An estimation of revenue, expenses or changes in finances over a specified future period, usually compiled and re-evaluated in a periodic basis”.

In a practical sense, budgeting is estimating how much you will earn, how much you will spend, and comparing the real execution of these streams vs expectations, and course correcting as needed. This allows you to create awareness of how you are using your money.

Why is this so important in personal finance? Budget allows you to navigate complexity in finance, also let’s you assess your spending habits. Almost everyone can benefit from it.

What do you need to use a budget:

• A goal
• Basic arithmetic
• Pen and paper
• Discipline

I need to emphasize the last bullet point while introducing some of my experience in multiple financial functions: The hardest part of any budget is sticking to it.

Sharing some perspective, in large companies, governments institutions and other organizations there is a function (with names like “Budget,” “Financial Planning and Reporting”, “Corporate Finance”, “Planning”, etc.) whose sole job is to act like an ogre who hits with a club anyone who dares to fail budget goals. You underdeliver sales? You get the club. You overspend? You get the club. You underspend? You also get the club.

While this corporate perspective is be too restricting and impractical for most people, it shows that financial discipline does not come naturally for many, so it must be practiced and mastered. This is also why a goal is needed: control for the sake of control will turn you bitter and resentful, the budget is a tool to a goal, not a goal in itself.

First set up a financial goal, if you are new to this I recommend to use the SMART method. SMART is an acronym for Specific, Measurable, Achievable, Relevant and Time-bound.


Let’s go with an example, let’s say you are in a financial tough spot. Instead of using a generic and vague goal like “Stop being poor”, you use the framework.

S – Specific: Reduce credit card debt to zero

M – Measurable: Credit card debt is zero

A – Achievable: Credit card is zero within reasonable time frame

R – Relevant: The high level goal is to improve financial situation, so eliminating credit card debt is a relevant goal.

T – Time bound: 1 year. This point also connect with how achievable it is. If time constraint is too tight the goal stops being achievable. In this case, will depend on how large the debt is.

Now, pick your pen and paper, or any other tool of your liking. Use the tool best fit for you, some people use google sheets, Microsoft excel, some sophisticated personal finance app. Use whatever works for you. Only complex, large-scale budgets need sophisticated tools.

First, sum all of your sources of income. For most, there is only a monthly fixed salary.

Income: $5,500/month

Second, we sum and categorize all expenses. Categorization is another key element, as it will allow you to decide on any course correction.

Expense categorization is more art than science in my opinion, I will lay here some general categories that are almost universally used:

• Necessary expenses: This is the items you can’t afford to not pay. This includes rent, mortgage (for your first home only), groceries, utilities (electricity, water, natural gas, internet, phone bill), your children’s tuition, healthcare costs.
• Debt service: This is the amount you pay to honor any kind of debt, be either mortgages (for any other building that is not your first home), credit card, commercial credits and so on. I encourage you to separate debt service in both productive and unproductive, as they are treated in different way. For doubts on how to separate this, refer to finance sessions post 2.
• Short term savings: A portion of your income should go to a savings/liquid account up to a cap of at least 6x your necessary expenses. Refer to finance sessions post 3.
• Long term or other savings: This item exists for savings with an specific purpose, i.e. you are saving the downpayment of your first home, or you want to go on a lavish vacation.
• Investments: This should only exist once short term savings goals have been fulfilled. Don’t think about investing unless you have enough liquidity to cover up any unexpected expense (credit cards are NOT a way to cover emergencies, by the way).

There are a lot of other categories, like taxes. But for most part, you will find the above in all personal budgets.

Now, we sum all expenses:

Rent: $2,400/month

Social Security and taxes: $1,045/month

Credit card debt: $997/month

Utilities: $700/month

Cleaning service: $100/month

Eating out: $750/month

Others: $100/month

Total expenses: $6,092/month

Here is the first red flag, expenses are higher than income. This means the person in this example will have to either reduce it’s savings or go into debt.

Now we can calculate some ratios: 75% of Example guy’s income goes to necessary expenses!!! (rent, social security, utilities) This is way too high. If we zoom in we can see some trends:

• He does not buy groceries, only eats out.
• He lives in an expensive area, with rent eating 43% of his income.

Also, credit card debt is 18% of his income. If we consider credit card debt as unproductive debt, this is too high. And the worst part, necessary expenses and debt eat 93% of Example guy’s income!!! I would not be surprised if he viscerally hated his job (most grumpy and hateful employees are the ones who do not see their paychecks at month’s end).

By looking through a budget, the bad decisions are evident. But for Example guy’s point of view, he is only eating cheap meals outside, and saving the horrible commute in his city.

Now going back to the goal, he wants to pay his full $18,000 credit card debt in a year. His debt is currently deferred at 24 months using a 29% APR (annual interest). If he wants to pay the debt in only a year he needs to increase his monthly credit card payment from $997 to $1,728, this means we are short of $730 for credit card payment. We are also short of $592 given his expenses are higher than his income.

Some things Example guy can do:

• Move to a cheaper zone, with both lower rent and utilities. In this specific example this is the best option. And should only be discarded if:
• A.Example guy is using the time form short to no commute (he has no transportation costs, which means very likely he has no commute to work) into something productive like advancing himself, starting a side gig, investing time with his significant others. The most common error of “moving to an expensive area to save commute” is that this extra time is then used to watch Netflix or play videogames.
• B. The cheaper zones are crime ridden, in this case the high expense is a matter of safety.
• Stop eating out and paying cleaning services. He starts to cook his meals and clean himself, this is another way of using the extra time advantage of living in an expensive area.
• He increases his income. It’s preferrable most of the times, but in this case Example guy has some bad financial habits, which will probably be made worse if he gets himself a higher paying job.

Let’s say Example guy decided to move, and his new rent is $1,500/month and his new utilities are $400/month. He is now in $608/month surplus.

Here are some things he can do:

• Keep cutting expenses so he can achieve the $1,728/month payment in credit card, and be free of debt in a year.
• Rebalance his goals, he could increase the credit card payment to $1,500/month and he would still have an extra $108 every month for transportation expenses, save or buy himself something. With this option, he will pay his credit card fully in 15 months.

The difference between option 1 and 2 is mostly human, strict theory says that option 1 is the way to go, but if we into this example, this example guy could become discouraged the first months he has to commute to work. Here option 2 could allow him some extra cash flow to do something that can cheer him up.

Again, I must be redundant: the hardest part of the budget is sticking to it. Example guy could pay his credit card fully and then go in a spending spree, wasting all the effort.

As a side note, there a lot of budgeting methods that can be useful. One is my favorites is using a single credit card for "micro-expenses" like eating out, buying coffee, and so; an fully paying the balance at month's end. This helps you break the illusion of "low paying pain" for small expenses, raises your credit score and saves you the hassle of taking note of each expense. (Do NOT do this if you have credit card debt, you will be tempted to overspend).

Hope you can find this useful, may you succeed in all your financial goals.

Thank you for your contribution, I did not know you had posted this!
Thanks a lot Lunar Mojito!

 

[Nordicsupreme]

Thank you, this is all very helpful. My ideal business path is growing into a large, fully remote tech company. For the time being, just to try to make more money I have looked towards the Series licenses with finance, and may enter that industry if I have to for the time being.

I have met some VIPs in the electronics manufacturing industry, but this sector does not seem conductive for a first business, but I thankfully overall have manufacturing knowledge if I ever wanted to walk that route in the future.

I deeply appreciate all of this information, as I was heavily leaning on venture capital as I want a rather cutting edge, and or very innovative and attractive to investor business or product with equity funding as a possible route, but this shows me that I should build up a business, then do this, not jump directly to this for obvious reasons.

Hi brother!
Don't mind me from jumping in here
Apart from everything members have mentioned here, I will state here explicitly : I have stated this before also in some post of mine. NOT ALL DEBT IS BAD. If you are in debt of USD 70k for College but end up making USD 100k which is a reality if you are in fields of Computer Science, etc. this is not a bad investment.
You are the Product and are worthy of living a life of high standards where you grow in all ways be it Intellectually, Financially, or any other means.
In my line, I have seen many business owners be working only after they graduate high school and yet pay in millions to get others for their works. This however takes them decades . Degrees for the most part remove a great part of your struggle in "entering". Of course the money rituals like EFB are way higher and I am astounded to how strong they are. HOWEVER, get a degree if you can. You can do an online course "certification" instead of a full degree, this way you can continue working and not end up in debt which you wont be able to payback.
Even living in a low income neighborhood is not a bad thing, provided it is safe and you get opportunities for a good life. As Zevist, we need to extend our race further. many of the stresses we bear or need to suffer is for our next generation to have more opportunities that we got. The Internet is that sense is very beautiful because anyone from any part of the world can get access to education and certifications.
I don't mean to push you down a line of extensive credit use to the point that you work to keep paying your bills off but good debt is always required. The Gods too help us with energy because we can't do everything on our own for now. Similarly debt is needed in calculated measure to help propel you in the correct direction where you grow leaps and bounds. If you look at the real estate market, there has been an explosion in prices of houses, the enemy keeping push their filth of "own nothing and be happy" while BlackRock buys your entire neighborhood. You are here to GROW and EVOLVE. not suffer to survive. Why not keep the house you already own while you make investments of your savings in say equity funds or Index Funds and against this you take a mortgage and buy a house?
This way you might already have asset worth USD 300k (your present house), your investments ( USD 20-30k - though this is leveraged) AND an INVESTEMENT PROPERTY (worth low USD 70-110k in low income neighborhoods which are projected to grow).

I am sorry if my answer does not prove to be of value but I have been in a similar state where I decided to take no debt, live like a monk, *surviving*. Finance like War is pretty simple and has been worsened with the enemy intervention. You are here to GROW and LIVE and have a MEANINGFUL LIFE. I will share some experiences I had in relation to money, though the knowledge mentioned on ToZ is of higher substance and quality, this is something I have been doing for years: Before you make money decisions ask yourself these questions "Do I truly lack money or the resources to take on this endeavor?" " If I have the requsitire resources available for me, why am I not partaking in this acitivity?" "Is it because I am scared? Its normal to be scared with money since it is like God on Earth, are my fears justified or are they because of limitations in my experience in life that is stopping me from living my potential?" You get the gist. You decided to be a Zevist when the world was against true knowledge, an informed money decision even though it means you will be in debt for some years (which makes great financial sense) is worth partaking in!

Be Blessed Brother