The Financial Advantages of Blogging About Personal Finance
If you’re reading this post expecting to learn how to make unimaginable riches on the Internet, my deepest apologies, but you are in the wrong place.
I have only been blogging for three months.
Retiring On My Terms has not generated one cent of income, while costing hundreds of hours of my time, in addition to expenses for web hosting.
And I still have no clue how to effectively use Pinterest, even though I have heard it can be an incredible social networking tool.
That said, the discipline required to think and write about our finances on a regular basis has already paid great dividends to the ROMT family. I’ll highlight a few of the ways our finances have improved as a result of the time I’ve spent blogging.
What Gets Measured Gets Managed
I have set out some fairly specific goals for our family’s finances on our path to financial independence, involving our net worth, 529 account funding, and passive income, as well as a timeframe for achieving those goals. Each quarter I’m reporting on how we have done.
Simply by identifying these goals, and knowing I need to report on my progress every three months, I am paying a lot more attention to our personal finances.
Why let lazy money sit in a checking account, when it could be generating more passive income if it was invested in a dividend stock, or get us one step closer to funding our children’s education if we put it into their 529 accounts instead? Thinking about the report card I will be facing each quarter encourages me to make sure the majority of our investable assets are working as hard for us as possible.
Back To The Basics
Doing research while working on my Investing 101 series for newer investors got me thinking again about bank products, specifically certificates of deposit (CDs). I haven’t owned a CD in over a decade, but the rates being offered by some online banks are higher than what we’re earning from the credit union where we currently hold the majority of our cash.
I want to maintain liquidity so we can put additional funds into stocks whenever we have a market correction, but I’ve still recently invested a portion of our savings into a CD ladder with scheduled maturities of 11 to 24 months. We’ll earn a bit more on our money than we were getting from the credit union, and still have the option to invest those funds in the stock market (or something else) as our CDs mature over time.
Thinking About The Long Term
I’ve written several times about our decision to install solar panels on the roof of our home. The true payback on our home solar energy system will probably be around a decade, despite the calculations from our solar provider indicating it could be a couple of years faster than that. Even though the payback period was not as compelling as I had hoped, we still made the decision to move forward with the project.
The installation of solar panels likely increased the value of our home, which we should be able to unlock whenever we sell. Some readers may remember my use of the 4% rule when I described our decision-making process. Although the payback period on our system was longer than I wanted it to be, the net cost of our system was less than 40% of the amount we would have had to put away today to finance our electric bill for the long term. Since we were already thinking about FIRE, the opportunity to significantly reduce a monthly expense that accounted for around 2% of our annual spending was something to seriously consider.
If we hadn’t been contemplating the possibility of earning less money in the future, we may not have decided to have the solar panels installed. But by thinking about the long term, the opportunity to permanently reduce one of our larger recurring monthly expenses was something we decided made sense for our financial situation.
Blogging about personal finance, and thinking about what our lives may look like many years into the future, has also encouraged me to start taking better care of myself. What’s the point of working hard to achieve financial independence if by the time I get there I’m not able to enjoy it?
Paying Attention To The Little Things
Over my lifetime, I’ve tended to focus on trying to get the big financial decisions right. It has generally served me well, but as someone who lives a relatively frugal (some might say boring!) lifestyle, those major financial decisions just don’t come up all that often.
Thinking, and writing, about our family finances on a regular basis has encouraged me to reconsider the smaller financial decisions we make every day. In many cases, those decisions can turn into habits over time, some of which may not be the right financial decisions for a family attempting to navigate our path towards financial independence and early retirement.
Specifically, since I started blogging, I’ve been bringing my lunch to work much more often, to save some money relative to purchasing lunch every day. We’ve also done research to optimize the credit card rewards generated by our normal spending habits. Writing about our finances has also encouraged me to think more frugally about some of the tiniest decisions we all make on a daily basis.
Trying Something New
Attempting to find something interesting to write about for Retiring On My Terms encourages me to try new things financially.
A few months ago I wrote about participating in our annual neighborhood garage sale. This was something we had avoided for the first five years we had been in our home, and if I didn’t think participating might provide some material for an entertaining blog post, we probably wouldn’t have participated this year. We didn’t make much money – you’ll have to read the post to find out just how little we earned! – but at least we tried something new that might have helped our finances, and the story of our garage sale is at this point the most-read post in the short history of this blog!
How has reading – or writing – about personal finance helped you improve your financial situation?
StevearkSeptember 5, 2017
I think the decision to add solar would be like any other investment. If you aren’t drowning in excess money then you would compare it to the rate of return for investing in your best other option. If your favorite Vanguard fund averages 8% annually then solar would need to beat that price or you are losing opportunity income from picking a less profitable investment. Of course you’d need to account for taxes and risk which is very difficult. The risks of an index fund have some history you can evaluate while whether those panels will all die the day after the warranty expires is completely unknown. The price you receive from the utility for excess power you sell back to them is also uncertain and subject to regulatory change. However if you are doing it partly or largely for symbolic or “feel good” reasons then none of that may matter. Sorry, I’m an engineer and have spent my life trying to compare apples to oranges and it just is never as easy as it sounds.
ROMTSeptember 5, 2017
We definitely made the decision to install solar based on the numbers, rather than feeling good, but to your point, the numbers were not as clear as we might have hoped. Because the panels could fail after warranty, the price paid by the utility could change, some newer and better technology could emerge, insurance and maintenance costs could be higher than anticipated, etc. I don’t think there is necessarily an obvious answer. We did our best comparing the apples to the oranges, and then made what we thought was the right decision for us.
Whether it was right or wrong will be determined by the weather – and dozens of other factors – over the coming years. Of course, it is also a sunk cost now, so even if it was the wrong decision in hindsight, we’ll do our best to extract whatever value we can and make future decisions based on the facts as we know them, not what we spent on the system in the past.
Thanks for stopping by and taking the time to comment!
Dividend DiplomatsSeptember 10, 2017
You found and discussed one of the best, unknown benefits of a personal finance blog. Through reading other websites, interacting with others, and sharing your story, you learn all these little tips and tricks to help you save. You may learn about a new rewards website, how to credit card hack, how to extract the most value out of a rewards program, etc. Heck, or even how to negotiate a bill better, how to save on a water bill without changing your activity….you catch my drift. You learn so much and can instantly apply the lessons to your finances. That, in my opinion, is the best part of having a PF blog.
Welcome to the community and I look forward to many more interactions with you going forward.
ROMTSeptember 11, 2017
Thanks for the comment and for stopping by Bert! You are right about the amount of things you learn about when you force yourself to think and write for a personal finance blog. I look forward to getting more engaged in the community as I continue to build out Retiring On My Terms.