Finance Hacker
Phase 0: Budget & Reduce Expenses
Create Budget

Fundamental to a sound financial footing is knowing where your money is going, budgeting helps you see your sources of income less your expenses.

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    Phase 0: Budget & Reduce Expenses
    Pay Rent/Mortgage

    Including renters or homeowners insurance, if required

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      Phase 0: Budget & Reduce Expenses
      Buy Food/Groceries

      Depending on the severity of your situation and needs, you may wish to prioritize utilities before this node.

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        Phase 0: Budget & Reduce Expenses
        Pay Essential Items

        Power, water, heat, toiletries, etc.

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          Phase 0: Budget & Reduce Expenses
          Pay Income Earning Expenses

          Necessary transportation expenses, possibly Internet/phone, anything required to continue earning income

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            Phase 0: Budget & Reduce Expenses
            Pay Health Care

            Health insurance and health care expenses

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              Phase 0: Budget & Reduce Expenses
              Make Minimum Payments On All Debts & Loans

              Student loans, credit cards, etc.

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                Phase 1: Build an emergency fund
                Build Small Emergency Fund

                Either $1000 or one months' worth of expenses, whichever is greater; use a savings or checking account.

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                  Phase 1: Build an emergency fund
                  Pay Any Non-Essential Bills in Full

                  Cable, Internet, phone, etc.

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                    Phase 2: Employer-sponsored matching funds
                    Does your employer offer a retirement account with an employer match?

                    If employer offers an employer matching retirement account, contribute the amount needed to get the full employment match, but nothing above that amount.

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                      Phase 3: Pay down high/moderate interest debts
                      Do you have any high interest debt? (i.e. debt with an interest rate of 10% or higher)

                      If yes, pay any high interest debt (Debt with an interest rate of 10% or higher)

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                        Phase 3: Pay down high/moderate interest debts
                        "Avalanche" and "Snowball"

                        Evaluate the merits of the "Avalanche" and "Snowball" methods and their advantages in your personal financial/psychological situation and apply accordingly to pay off these debts

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                          Phase 4: Savings for retirement in an IRA & higher education expenses
                          Are you planning for a large required expense (college, etc.)?

                          If yes, then start saving up by using a checking or expenses account

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                            Phase 4: Savings for retirement in an IRA & higher education expenses
                            Evaluate the differences between a Roth vs Traditional IRA

                            After evaluating, max out your contributions to whichever one you decide on (hover for more info)

                            Roth IRA = taxed before, Traditional = taxed after

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                              Phase 5: Save more for retirement
                              Are you currently saving at least 15% of your pre-tax income for retirement?

                              If yes: Do you have a qualified high deductible health plan and are thus eligible for an investment HSA? (Yes/No) (hover for more info)

                              HSA = health savings account

                              If no: Does your employer offer a 401(k), 403(b), or similar retirement plan into which you could save more money?

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                                Phase 5: Save more for retirement
                                Does your employer offer a 401(k), 403(b), or similar retirement plan into which you could save more money?

                                If yes: Increase contributions until you have reached 15% pre-tax income being saved for retirement

                                If no: If self employed, contribute to an Individual 401(k), SEP-IRA, or SIMPLE IRA to reach 15% pre-tax income saved; if not self-employed, contribute to a taxable account to reach this goal.

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                                  Phase 6: Save for other goals and advanced methods
                                  Do you have a qualified high deductible health plan and are thus eligible for an investment HSA?

                                  If yes: Max Yearly HSA Contribution

                                  If no: Do you have children and wish to help pay for some or all of their college expenses? (Yes/No)

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                                    Phase 6: Save for other goals and advanced methods
                                    Do you have children and wish to help pay for some or all of their college expenses?

                                    If yes: Evaluate available savings/investment options, such as 529 plan, and contribute accordingly

                                    If no: At this point you have some options on how to proceed, and it is completely up to you and your goals and desires

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                                      Phase 6: Save for other goals and advanced methods
                                      Would you like to retire early? (Yes/No)

                                      If yes, max out 401(k), 403(b), or other employer sponsored account, consider the "mega backdoor Roth IRA", then use a taxable account

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                                        Phase 6: Save for other goals and advanced methods
                                        Do you have more immediate goals?

                                        If yes, use savings for goals sooner than 3-5 years, a conservative mix of stocks and bonds for goals more than 3-5 years away (hover for more info)

                                        Stocks are riskier, while bonds are a safer investment

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