All right.

Let’s see if I can sum all of this up as efficiently as possible:

There are two kinds of systems in the world: the kind that are difficult to leave and the kind that are difficult to stick to.

(There are probably more than two kinds of systems in the world, but for the purposes of this very efficient blog post I am only focusing on these two.)

Personal finance, when approached systematically, is difficult to stick to. Not only does personal finance require you to develop habits like “regularly checking your expenses against your budget,” but it also requires you to evaluate multiple other systems, often at a level that takes some background knowledge or expertise, on the basis of “will this get me closer to my financial goals or take me further away from them?”

It’s a lot easier to just, like, spend money and hope it all works out.

And, in a lot of cases, it does work out! Having credit card debt, for example, does not necessarily get in the way of living a good life. Certain levels of debt, combined with credit-damaging factors like missed payments, could make your life a lot harder — but if you’re carrying around $5K in credit card debt like the average American, it’s not going to preclude you from buying a house or starting a family or taking a vacation or nearly anything else you want to do.

It certainly won’t keep you from, like, being a good person.

Of course, you’re going to need to keep making those monthly credit card payments. A little extra money, every month, going towards interest on the debt you can’t yet pay off in full — and, again, that’s fine, a lot of people are happy to pay a little extra money to maintain both their debt and their credit score, and if you’re carrying $5K in debt on a credit card with a 20% APR, that’s only $80 a month (or so) in interest charges.

I mean, you could probably think of a lot of other things you’d rather do with an extra $80 every month (or $960 per year), but the purchases you made on those credit cards also got you stuff you wanted and/or needed, so… like I said, it generally works out, and people are either willing to make those tradeoffs or they don’t really think about what they’re trading.

If you’re in the former situation, you’re probably well aware of it. You might not want to be in credit card debt, but you weighed the pros and cons and decided the debt was worth it (or, in some cases, “your only option”). Maybe you needed to cover a medical expense. Maybe you wanted to start a business. Maybe your family hadn’t been on vacation in two years.

It’s where people stop thinking about what they’re trading that they get stuck.

Because debt is a system that is designed to be very, very difficult to leave.


I’m not trying to argue that debt is bad.

I’m in debt right now, for example, because L and I bought a house together last August. (We have this little running gag going where L says “we can do anything we want, we own this house,” and I reply “we don’t own this house yet.”)

I also got myself into $14K worth of credit card debt ten years ago, when I was trying to make it as a singer-songwriter in Los Angeles.

In both cases, I knew exactly what I was trading my money for — and why I thought the trade was worth it.

And, in both cases, I was also playing a longer game.

I allowed myself to go into credit card debt — my first debt ever, since I went to college on a full scholarship — to give me the time to figure out if I could earn money “from my art.” It turned out that I could; I just had to chop the “singer-song” part off of “writer” before I was successful. Once I knew that the freelance writer thing was going to work, I began pouring everything I could into “earning as much freelance income as possible,” and my current projections suggest that this will be my third year as a six-figure freelancer.

The mortgage is now my second debt ever — but L and I agree that it’s the stronger financial move to pay for this house in installments instead of paying it off all at once (which we could, if we really wanted to). Interest rates, when we purchased, were at historic lows; combine that with our credit scores, and we’re paying just over a hundred bucks each, per month, for the privilege of keeping the rest of our money in our various savings and investment accounts.

Both of those debts feel “worth it” to me.

Your debt may also feel “worth it” to you.

But the point is — what I am trying to emphasize here — is that you have to know, not guess. Your personal finance system, which is going to be very hard to stick to (especially at the beginning, when your income/expense ratio might be very small), has to be robust enough to counterbalance all of the professionally-designed, difficult-to-leave systems that are built to take your money before you get the chance to consider whether that’s really how you want to spend it.


I’ve told this story a hundred times, but the best thing that ever happened to me financially took place roughly one month after I graduated from college, when I discovered an old copy of Your Money or Your Life at the public library.

Of course, I write “discovered” like I wasn’t specifically looking in the finance section; like I hadn’t already set out to solve the problem of earning and spending money, since I knew I would be responsible for doing both, on my own, from that point forward.

That book gave me the courage to create a financial system that was strong enough to stand up against all of the other systems that might have tried to undermine it.

In many ways, it launched my current career — not just the part where I make the majority of my income writing about personal finance, but the part where I get to choose how I spend both my money and my time.

Because I started making those choices, strategically and specifically, as soon as I finished the book.

And yes, I had some advantages (the college scholarship, for example, which prevented me from signing up for hundreds of thousands of dollars of debt before I had the chance to consider what I was doing), but plenty of people start out with advantages and still get caught up in systems that are difficult to leave.


I promised you an efficient blog post and I’m not sure I achieved it.

The most efficient conclusion would be to say “do exactly what I wrote about yesterday, avoid systems that benefit major corporations and invest in systems that benefit you and the people you care about,” but it’s not that simple.

If I were avoiding systems that benefit banks, for example, I would never have been able to buy a house. I probably wouldn’t even have taken out a credit card, which would have been a terrible decision because it is very difficult to navigate the world without a credit history (preferably a positive one).

The real conclusion is something along the lines of “you have to create your own personal finance system that supports your values and helps you evaluate financial decisions along a specific set of metrics or goals,” and part of me thinks that the real, real conclusion is “and I can help you create that kind of system.”

Because I think I can.

Especially if you let me write a few more blog posts on the subject (interspersed with book reviews, piano updates, and so on, I contain multitudes and so will this blog).

Let me know what you would like my personal finance posts to address, and I’ll get started. ❤️

3 thoughts on “You Have to Create Your Own Personal Finance System

  1. Thanks, Nicole
    This was a good read – I think your finance system should suit you the way a diet or exercise regimen should.

    I have my debt under control – I am overpaying my mortgage on a schedule that works for me.

    The only grey area for me is investment/retirement income. I am just putting 15% away in a mix of 401 and ROth – because I guessed, not knew.

    What I would be interested in reading about is strategies on how to minimise taxes on 401k income – if I pay off the house early and decide to quit my job at 60, can I withdraw a yearly sum that is below my tax threshold?

    Anyway, thank you again for the good read.

    –Sean

    1. You might want to read The Power of Zero, Revised and Updated: How to Get to the 0% Tax Bracket and Transform Your Retirement (by David McKnight)…

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