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10 steps to run your personal life like a business
1 Emergency Fund
2 Max Employer Retirement Plans
3 Eliminate High-Interest Debt
4 ESOP Participation
5 Health Savings Account
6 Taxable Investment Account
7 Roth IRA
8 Manage Medium Term Debt
9 Mega Backdoor Roth
10 Alternative Investments
Applying these steps can holistically contribute to your long-term financial health. This approach works because each layer addresses immediate needs (emergencies), tactical growth (debt/retirement), and strategic wealth (investments).
Together, they create stability to weather storms while accelerating the growth of your net worth.
and remember: you only have to do these things once.
set them up and be on your way
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What: Cash reserve covering basic living expenses.
Why: Acts as a financial airbag for job loss, medical emergencies, or car repairs. 3-month minimum for renters and 6 months for homeowners with dependents or self-employed.
How It Helps: Prevents credit card debt crisis, maintains credit score by avoiding missed payments, and protects retirement savings from being tapped and incurring penalties.
Tip: Keep these monies in a high-yield savings or money market account - accessible but separate from daily spending accounts. If you are in a high-income state, using a Treasury money market mutual fund - like the Vanguard Federal Money Market Fund (VMFXX) - which is exempt from taxes at the state and local level. If the account is relatively large like greater than $75k then you can pick up an additional 10-15 bps more by utilizing a ladder of short dated U.S. T-bills as they are not taxed at the state level and over the long term this rolling fund will accrue at a higher after tax rate. Invest in a portfolio of 1-month U.S. T-Bills and 3-month U.S. T-Bills.
EMERGENCY FUND
Step 1
create an
invest
What: Pre-tax contributions in 401k/403b (up to $23k in 2025) with possible employer matches.
Why: A $500/month contribution at 7% growth becomes $1.1M in 40 years. Employer matches are free money – most plans offer matching.
Tax Benefit: Reduces taxable income now (saves ~20-30% depending on your income).
Synergy: Builds while emergency fund protects against early withdrawals.
WORK RETIREMENT PLANS
max out
Step 2
What: Credit cards (~15-20% APR), payday loans.
Why: Paying a 20% debt means you are giving up a 20% risk-free return to your creditors - which widely beats long term stock market averages (you can't 'trade' ahead returns against these losses).
Strategy: Avalanche method targets the highest – most costly - rates first.
Long-Term Impact: Every $1,000 paid off could save you ~$150-$200/year – and that money can be redirected to long term investing which can grow at ~6-10% per year. Money that was going out every year is now coming in every year.
HIGH INTEREST DEBT
Step 3
eliminate
What: Buy company stock at discount (often as high as 15% lower than current market price).
Why: Immediate profit (sell at market price as soon as you can), aligns with company success.
Caution: Don’t over-concentrate - diversify once shares vest.
Example: 15% discount on $10k stock = $1,500 instant gain (taxed as income).
ESOP
Step 4
participate in your company's
What: Triple tax-advantaged: pre-tax contributions, tax-free growth, tax-free withdrawals for medical costs but you don’t have to pay for medical expense out of the account (leaving more money to compound tax tree).
Maximize: 2025 limits: $4,300 individual/$8,600 family.
Hidden Benefit: After 65, acts like IRA (penalty-free non-medical withdrawals).
Options: If you are enrolled in a high deductible plan at work ($1,650 for self-only coverage or $3,300 for family coverage) or not covered by your spouse's plan and if you are not on Medicare then you can open an HSA for yourself.
Priority: Better than IRA - contributes $1,000 here vs $780 in taxable account.
HEALTH SAVINGS ACCOUNT
Step 5
start a
save
Why: You are not Gorden Gecko, so stay away from the meme stocks, say NO to your broker nephew's 'hot picks' and just use low fee ETFs becuase they have lower fees and are generally more tax-efficient with less capital gains than mutual funds.
Dollar cost averaging versus lump sum investing: Its not timing the market - its time in the market, and remember, life is full of liquidity events, so you will naturally be dollar cost averaging over time. Put your money to work and let the power of compounding work for you.
Low-Cost Options: VTI (0.03% fee), SCHB (0.03%), etc.
Strategy: "Set and forget" broad index funds (80% stocks/20% bonds) is the poor man's hedge fund and best to avoid concentrated sector specific allocations (do not put 80% of your funds into a biotech ETF, or 80% into a gold mining ETF, etc.). This account can also serve as a secondary buffer to your emergency fund and also a compounding vehicle for excess savings that can allow you to save for a home downpayment or other capital intensive investments.
TAXABLE INVESTMENT ACCOUNT
Step 6
open a
What: Post-tax contributions (up to $7k in 2025), tax-free growth.
Ideal For: Younger investors in lower tax brackets because their typically lower incomes allow them to qualify to open and contribute to these accounts.
Income Limits: Phase out at $230k (married)/$146k (single).
Flexibility: Withdraw contributions (not gains) anytime penalty-free. Can use the money you put in at any time for a home purchase, college, or whatever you need.
Beware: The account must be opened for at least 5 years to withdrawal any earnings (investment gains) or to convert funds from traditional IRAs to Roth IRAs.
ROTH IRA
Step 7
if you can - open a
refi
Rule: If debt rate is greater than potential long-term market returns (~7-10%), pay off the debt.
Student Loans: $75k at 8% Pay down. $50k at 6%? Pay extra. $30k at 3%? Invest.
Mortgages: Keep fixed-rate loans - inflation erodes real cost, and costless refinance as soon as possible and as frequently as possible. There are a lot of mortgages brokers out there that want to refinance your home, make sure you refinance only if it saves you money as doesn’t cost you anything to do it. Beware of features that may impede your flexibility to refinance your home again in the future or that have interest rate reset features exposing you to higher costs if rates rise.
MEDIUM TERM INTEREST DEBT
Step 8
tactically tackle your
What: Convert after-tax 401k contributions to Roth IRA.
Who Benefits: Earners >$150k needing extra Roth 'space'.
Why: The strategy leverages after-tax 401k contributions to bypass Roth IRA income limits (2025: $161k single / $240k married). It enables up to $46,000+ in extra Roth savings annually (vs. $7k Roth IRA limit).
Requires: if your employer’s plan allows for after-tax contributions into your 401k or if the 401k allows for ‘in-plan’ Roth conversions then max out your after-tax 401k 'space' after contributing $23,000 (2025) to traditional or Roth 401k, and then convert after-tax funds to a Roth IRA/401k immediately to avoid taxable growth.
Help: This is a bit complex, but there are a lot of resources out there to help so call for a pro if you need help with this.
What is 'Space': The IRS lets you put up to $70k total (2025) into your 401k retirement bucket each year. The 'space' in this bucket is filled with 3 things:
• Your normal contributions (pre-tax/Roth) → max $23.5k
• Employer match → varies by company
• Leftover space → whatever’s unused = after-tax money you can add
Why it matters
This leftover space lets high earners sneak extra money into Roth accounts (tax-free growth), even if they’re “too rich” for normal Roth IRAs. You just convert the after-tax dollars to Roth ASAP.
MEGA BACKDOOR ROTH IRA
Step 9
open a
Step 10 if you have all the 9 steps above checked off then now is the time for ALTERNATIVE INVESTMENTS
Bitcoin/Crypto High volatility; however, depending on the protocol can possibly be a hedge against inflation or even protection against dollar destruction/currency collapse.
Gold, Precious Stones, Collectibles or Art No cash flow, limited secondary sales market, appraisal costs, insurance costs, possible storage costs; however, can be a low cost/high impact investment as well as a hedge to hyper inflationary scenarios.
Variable Annuities Offers a mix of investment growth potential and retirement income features, but come with significant costs and risks. Variable annuities may suit investors who have maxed out other tax-advantaged accounts and that value lifetime income guarantees over liquidity as well as can tolerate market risk with a 10+ year horizon.
Real Estate like any ivestment you mostly make money on the buy price so be tough on the purchase price, squeezing real estate agent commissions, asking for inspection repair credits, shopping loans for the best terms, taking advantage of FHA programs (VA and public service loans if you can), location, location, location (focus on communities with high quality schools, premier shopping districts, walkable charming neighborhoods), refi, refi, refi as often as economically makes sense, and putting your own sweat to work is a great way to build equity.
Home Ownership By owning your own home you can build equity as you pay down the mortgage and the home value appreciates. There are tax benefits, including deductions for mortgage interest and property taxes, freedom to customize and modify your home, and potential for long-term financial gains through appreciation. However, there can be high upfront costs (down payment, closing costs), you will be responsible for all repairs, maintenance, and property taxes, there is less flexibility to move, and there is the risk of property value depreciation.
Urban vs. Non-Urban Areas
Housing costs (both buying and renting) are generally lower in rural areas compared to urban areas. Also, homeownership rates are higher in rural areas (81.1%) compared to urban areas (59.8%), and rural homeowners have lower monthly housing costs and are more likely to own their homes outright.
Appreciation and Taxes
Home appreciation can significantly impact the rent vs. buy decision; in some markets, appreciation has made owning more financially advantageous than renting. Homeowners benefit from tax deductions on mortgage interest and property taxes, which are not available to renters. However, recent tax law changes have reduced the impact of these deductions for some homeowners.
As of 2025, renting is generally more affordable than buying in most major U.S. metropolitan areas, largely due to high interest rates and home prices. However, the decision between renting and buying should consider personal financial circumstances, long-term goals, and local market conditions.
Investment Properties Purchasing or developing a property to earn income through renting or leasing offers an alternative to traditional investments like stocks and bonds. It provides the security of real property with diversification benefits. Investors can build equity as property values appreciate over time and generate steady rental income. There are tax advantages, including deductions for mortgage interest, property taxes, maintenance expenses, and depreciation. Income properties can be both commercial and residential, offering flexibility in investment options.
However, income property investing comes with challenges. It requires significant upfront costs, including down payments and closing expenses. Ongoing responsibilities include property maintenance, repairs, and tenant management, which can be time-consuming and potentially stressful. Market volatility can affect property values and rental income, and real estate is generally less liquid than other investments. Dealing with difficult tenants or neighborhood decline can also impact returns.
Urban vs. Non-Urban Areas
Investment opportunities and returns can vary significantly between urban and rural areas. Urban properties may offer higher rental income potential but often come with higher purchase prices and operating costs. Rural properties may be more affordable but could have a smaller pool of potential tenants.
Appreciation and Taxes
Property appreciation can greatly enhance overall returns, but it's not guaranteed and can fluctuate with market conditions. Tax benefits are a significant advantage, allowing investors to deduct various expenses and potentially reduce their tax burden. However, tax laws can change, and investors should consult with tax professionals to fully understand current regulations and their impact on investment returns.
As of 2025, the decision to invest in income properties should be based on thorough market analysis, personal financial goals, and risk tolerance. While income properties can provide steady cash flow and long-term wealth accumulation, they also require careful management and consideration of ongoing costs and market trends.
ADDITIONAL TIPS
Term Life Insurance Cover 10xs your income for dependents’ needs – make $100k then get a $1mm in coverage until your youngest child turns 18 (covering mortgage, childcare, college, etc.), and policies with cash value can supplement retirement income.
Estate Planning Basics Will/trust ensures assets go to intended heirs without the time, complexity and cost of probate court (even if you have modest assets). Create a durable power of attorney for financial/health decision directive (if incapacitated).
Annual Financial Checkups update beneficiaries in IRAs, add a trusted contact (someone over 18) for all your brokerage accounts, review insurance coverage increase as you add dependents and add expenses like higher mortgage payments, or higher lifestyle expenses.
Negotiating down your Credit Card interest rate could save you thousands of dollars over time, can accelerate your debt payoff journey, and really only requires trying. Just one phone call to your Credit Card provider with the right attitude and a little preparation could make all the difference.
Use Cash Back and Reward Credit Cards purchase everything you can on these cards and get money back on most of what you purchase. Just make sure to pay your monthly balance off every month and on time to avoid interests and fees.
Ask for Discounts you will be amazed how many places will give you 5, 10 or even 15% off just for asking. Most things in life are negotiable: your rent, auto mechanics, car dealerships, jewelers, insurance agents, real estate agents, handymen, plumbers, etc. - often times if there is a self-employed service provider helping you with something, more often than not: you will get some kind of discount if you ask for it, and over years this will add up to substantial savings.
Stretching the useful life out of Automobiles cars represent a top expense item for most households. By stretching the useful life of automobiles across the household and over lifetimes will represent a tremendous savings of funds that can be redirected into investment savings.
Subscription Services can slowly eat away at your savings. Death by a thousand cuts from unused subscriptions to mobile apps, gaming services, gym memberships, streaming services, meal kits/specialty food clubs, pet subscription boxes, book clubs, appliance warranties, etc. - these add up to extraordinary amounts over the years and that is money that can and should be used for compounding your long term savings. Clean house, take control and don't hestitate another moment to cancel!
First-Time Homebuyer Hacks
For everyone: FHA Loan Strategies
1. 3.5% down payment (580+ credit score)
2. Higher debt-to-income (DTI) allowance (up to 50% DTI)
3. Multi-unit house hacking: Buy 2-4 unit properties, live in 1 unit while renting others. Loan money allowed for renovation costs.
For veterans: VA Loan Power Plays
1. 0% down payment + no PMI
2. Assumable loans: Future buyers can inherit your low interest rate
3. Multi-family advantage: Buy 4-unit properties as primary residence
For Public Servants:
1. $8k non-repayable grants + $15k down payment assistance
2. Fresh Start Credit Repair: Boost scores 50-100 points in 3-6 months
3. State-specific bonuses, e.g., Ohio offers $23k in total assistance and CA/TX offer up to $25k in forgivable loans
529 Home Downpayment: Withdraw $10k from 529s penalty-free for a child’s home down payment
Holistic College Savings Strategy by pairing a UGMA with a 529 plan. Use 529s for tuition/books and UGMAs for laptops, travel, gap year costs or as a toehold pool of funds to help the child into adulthood.
529 Plan “Superfunding” Contribute $85k upfront (5 years’ gift tax exclusion) to maximize compounding
UGMA accounts offer flexible savings by invest investing gift assets for a minor’s future; especially if child pursues non-college paths (trade school, entrepreneurship, home down payment); however, these accoutns since they are the minor's assets could hurt financial aid (reduces aid eligibility by 20% vs. 5.64% for 529s).
