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This is one piece of advice that most everyone agrees with, but the second part is not talked about nearly as often. You’ve probably all heard about the importance of investing as soon as you can because of the power of compounding. Countless comparisons have drawn, scenarios calculated and information regurgitated regarding this topic.

We’ve all been told that $10,000 invested at age 25 will yield significantly more than the same amount invested at, say, age 40. This really isn’t anything new. Statements like this, however, tend to direct people more towards an infrequent lump sum investing style. This becomes problematic because most people’s finances are not lump sum oriented, and the only time they then “get around to investing” is when they receive a tax refund, a gift, or some other one time occurrence.

It is important to begin investing early, but we need to also invest more often and regularly. Investing should be an ongoing part of our finances. Most people receive paychecks on a bi-weekly, bi-monthly, or monthly basis. Investing should then be factored into your regular cash flows. It may help you to think of investing as another “bill” that you need to pay. Eventually, it’ll become a regular part of your financial routine.

As you begin to adopt a more regular investing schedule, it’ll become easier and eventually a normal part of your finances. You’ll find that you really can afford to invest if you’ll take a small part of each paycheck and get into the habit. Over time, you’ll find ways to increase how much you allocate for investing.

Bottom line: Begin investing early, but also often.

Everyday we have to make decisions. When to get up in the morning; what to eat for lunch; whether to buy that new TV or not. Not every decision is life changing, but it’s the sum of all these decisions that will determine our future. I’m not going to go into a long random spiel about decision making, but I want to mention one principle, the concept of sunk costs.

Sunk costs are those which have already been incurred and which can’t be recovered. These costs are in contrast to variable costs which will change from one proposed course of action to another.

This concept is important to understand because it helps to keep us rational when we’re dealing with financial decisions. Money that has already been spent should have no bearing on our future choices. It’s a matter of letting the past be the past and moving forward.

Suppose you’ve been taking music lessons for a couple of years, and you’ve more recently decided that music isn’t really your passion. You should choose whether or not to continue with the lessons based on your interests and desires. Many would reason that since you’ve “invested” so much time and money already you should continue taking lessons.

This concept should also be applied to investing. If you’ve bought an investment and it has unfortunately lost money, you shouldn’t stick with it just because you’ve already put the money in. The investment should be re-analyzed and either kept or sold based on whether it is still a good investment or not, not just because you’ve already spent so much on it.

Not every decision we make will, or even should be, rational; however, when it comes to our finances, the concept of sunk costs is an important one to understand and keep in mind.

This is a question that many people struggle with. As with many other things, we all want to get the best value or most bang for our buck. The problem is that there are multiple good things to do when you have a little extra cash. I think everyone would agree that all of these options would be beneficial.

Pay Down Debt

You’ve probably heard that paying down a debt at some interest rate is like earning an investment return of the same rate. For example, your car loan is at 8% and you pay off $100 of the balance. You have now saved yourself from paying $8 in interest over the next year. This is the same as investing that same $100 and earning an 8% rate of return, except the return is gauranteed.

This is all well and good except that not all debt is the same. Credit card debt is usually accompanied by very high interest rates, but that’s not always the case. Some have credit card debt held at 0% percent interest as part of a promotion. Some forms of debt are also tax deductible such as mortgages and student loan debt. Depending on the situation it may not always make sense to pay off debt first.

Save

Putting money into savings doesn’t usually earn a high rate of return, but there are other important factors to consider besides this. It’s always nice to some money stashed away in case of an emergency or other abrupt financial situation. Without anything in savings, you may be forced to take on even more debt, and even then, not everything can be paid for with a credit card (cash advances carry such high interest rates I don’t even care to consider them).

There is also a peace of mind that comes with money held in savings. This peace is worth different amounts to different people, but it is a factor worth considering.

Invest

Investing has the potential to yield great returns, but it remains just that, potential. Only you can determine your specific risk/reward scenario. Just as with savings though, there is a mental aspect of the equation. Having some form of investments will help take some of the weight off your shoulders that debt can load on you. It’s can be very hard emotionally to be in debt, and investments can help to counteract those negative feelings.

Also, tax advantaged retirement accounts have set limits of how much one may contribute in any given year. If you wait to invest until after you’ve paid off all your debts, you won’t be able to make extra contributions in later years for years past.

As with most decisions, there is no real clear answer because every situation is very different. You may choose to do all of these things in tandem. I would recommend that you keep at least a small reserve in savings at all times, but you have to ultimately decide what you feel most comfortable with. If you’ve got any questions regarding your specific situation, feel free to email me at fiscalmusings@gmail.com

With the Memorial Day weekend now over, many will be heading back to work (or the grind, as some may call it). If you’ve enjoyed having the time off to spend with family and friends and you’re like most, you’d probably enjoy having that type of freedom more often.

Maybe it’s time to start planning and making steps towards your future financial freedom. Most importantly, this financial freedom has the ability to give us time freedom, the freedom to do what we choose, when we choose to do it.

For most, this is considered an unattainable goal. This is also precisely why most will never achieve it. If you don’t think that it can ever happen for you, you’ll never make the steps and put things in order for it to happen.

It’s time to make your future a priority. Living in the here and now has its place, but it shouldn’t take priority over your future. If you haven’t already, start saving and then investing. The goal is to replace some (and eventually all) of your current income with investment income.

It’s never too late to start, but it’s also never too early. If you’re not sure where to begin, it’s time to start learning. The point is to begin making the effort and the rest will naturally follow. No matter what stage you’re at, how much, or how little progress you’ve made, resolve today to take the next step forward.

Getting a mortgage is an essential part of a home or other real estate purchase, and if you’re looking for a mortgage in the UK, the site 1MortgagesUK wants to help. It’s a mortgage advice introductory service. They provide information about mortgages and then assist in helping you find someone to provide you with more information tailored to your specific needs.

Many different financing options are discussed. There’s information on loans for first time home buyers, fixed rate mortgages, interest only mortgages, and bad credit mortgages. After looking through the provided information, you’re able to fill out a form and will be placed in contact with an independent mortgage advisor.

There is also a section of articles where you can find even more information about different loan products and subjects that relate to the mortgage and real estate financing industry.

Another section of interest is where you can get information on secured loans. These loans can be for whatever you’d like, but they’re secured by your home or other real estate.

Suggestions for the site

I’d prefer to see a little more consistency throughout the site. There are different font sizes used from one paragraph to another. There are also grammar and spelling errors that should be fixed in order to add another level of professionalism.

This is a sponsored review.

If you haven’t already stumbled across The Digerati Life, you ought to head over and check it out.

The site is frequently updated, and there’s always something new to read. It’s also been up and running since July of last year, so there’s a good amount of information in the archives as well. Here are a couple posts you might want to check out:

My Perfect Hobby
10 Ways to Organize and Simplify Your Finances

So take a few moments and check out The Digerati Life.