“An investment in knowledge pays the best interest.” – Ben Franklin. Come read Jesse’s interview about the blog, Best Interest.
My name is Jesse Cramer, and I write at Best Interest – as in, “an investment in knowledge pays the best interest.” Ben Franklin’s quote inspired me to help others invest in their own financial knowledge. The Best Interest focuses on simplifying complex ideas so readers can truly build their knowledge base. Sometimes that involves long articles (4000+ words) or complex analysis (e.g. using MATLAB software)…but the explanations are always straightforward and entertaining.
I try to keep the Best Interest neatly balanced between technical complexity and easy reading. My mom is a retired English teacher, so reading and writing have always been a big part of my life. I appreciate good writing and try to practice it myself.
But I work full-time as a mechanical engineer. I think in terms of numbers and systems and cause-effect relationships. That technical background comes out in my writing. I think it’s necessary to explain the many different mathematically concepts in personal finance and investing.
I think it’s important to practice what I preach. So these two questions have, essentially, the same answers.
Being good with personal finances means having knowledge—past, present, and future—of how money will interact with your life.
Measurement is key for the present and past portions. In the short-term, this means having a detailed budget that tracks your earning and spending.
For the future, and longer-term, good personal finance requires a few different parallel tasks. It means planning for upcoming purchases. It means running “trades” like the common rent vs. buy comparison. It means understanding how choices today will affect your retirement, your children’s education, or your ability to eventual buy that dream home.
The three articles you should read to better know Best Interest are:
For someone looking to improve their financial situation, what’s your best advice?
The best short-term task to improve your personal finance is to get gather complete knowledge of where you stand. If you want to move forward, you first have to understand where you are and what direction you’re pointing.
You need to understand what you’re earning, what you’re spending, and what you’re saving. In my opinion, that means tracking every single dollar that passes through your hands. While it might seem like overkill, I saw a huge change in my personal finances after I incorporated 100% tracking into my personal finance.
Over the medium-term, I encourage people to follow the “personal finance order of operations.” Different versions exist depending on your source. But most start with the same basic tasks: build an emergency fund, maximize any “free” money from your employer’s retirement plan, and pay off any high-interest debt.
And then long-term, I like to put together a tentative 5-, 10-, and 20+ year plan. Nothing too serious—a lot of changes can happen in a few short years. But it helps to know things like:
- Will you need a new car at some point?
- Do you plan on buying a house?
- Will you have (more) children?
- Will you move? How could you cost of living change?
- Are you going to retire? How much do you need to save?
What are your favorite personal finance books?
Whenever someone asks me, “What’s the first personal finance book I should read?,” I point them to I Will Teach You To Be Rich, by Ramit Sethi.
This funny book could easily be titled, “My First Book of Real Personal Finance.” It doesn’t get into the gritty details, but it does a terrific job explaining some simple concepts that every adult ought to know.
- Why credit cards can be your worst enemy
- How to properly set up various bank accounts
- What’s a 401(k)? What’s a Roth IRA? And should you use them?
…And a few more concepts. If you already know answers to the questions above, then this book probably won’t add too much new knowledge. But if you don’t know the different between a Savings account and a Checking account, this would be a great way to learn some personal finance basics.
A Random Walk Down Walk Street, by Burton Malkiel is my pick for the best book on investing ever written. The book was first printed in 1973, two years before John Bogle started Vanguard. Yet, what did Random Walk presciently tout? Practices like passive investing, index funds, and the best methods for laymen to make money in the market. The very same practices that Bogle would use to revolutionize the financial services industry.
That’s why Random Walk is a cut above. It’s a book that aimed to teach the most good to the most people. And over it’s 47-year life and multiple re-printings, Random Walk keeps on proving Burton Malkiel and John Bogle right.
What is your favorite investment class and why? (stocks, private business, bonds, real estate, crypto, precious metals, etc.)
I’m a big fan of stocks—specifically, stock index funds. In my opinion, index funds provide the single best “success-to-stress” ratio of any investment out there. They keep fees to a minimum while attaining average returns. They are designed for the layperson to use and prosper from.
But beyond true investment classes, I’m a huge proponent of these (unfortunately overused) clichés: invest in yourself and learning is a lifelong process.
I use my 401(k) and Roth IRA to invest in stock index funds. But I make sure to use other money to invest in learning, to try to grow my side projects (e.g. my blog), or to take courses and classes. The return on investment (ROI) for investing in yourself can be monumental.
I feel that our society preaches “invest in yourself” throughout childhood—“try new things” and “make sure you do well at school!”. But that encouragement slows down in adulthood. It takes focused effort to continue learning, but it’s so worthwhile.
Do you have any financial mistakes you’d like to share, and how have you grown from these mistakes to improve your personal finances?
I love telling this story from my article about the “Buy that!” brain
In short, I learned that I can be a sucker for a salesman. A little part of my brain was wild for the idea that a hot tub was the ultimate value-added item for my new house in snowy Rochester, NY. I mean, what else are you going to do on all those cold winter nights? I let my enthusiasm drag me in front of a hot tub salesman—you know, just to see what the options are. And, naturally, I walked away having bought a hot tub.
I learned some pretty important lessons about how my brain works. And I’ve taken some important steps in mitigating those monkey-brain mental shortcomings.
I know what kind of items make my brain scream “BUY THAT!!!” Usually it has to do with hiking/camping or an interesting non-fiction book. Other times, it’s as simple as a crunchy & salty snack when by stomach is rumbling. The important point is that I recognize my triggers. And because of that, I can fight them before they overwhelm my rational decision-making.
What’s a non-money related interest you have and what do you love about it?
I really love the sport of squash. I only picked it up after going to college, and it’s now my favorite form of fitness and recreation.
Squash is a racket sport played indoors. It’s a bit like racketball. But squash also has elements of chess. Sound crazy?
Chess can be played a couple different ways. Some chess players look for safe strategies that provide small advantages. They play it safe and wait for their opponent to make a bad move. It’s a grindy style. Other chess players are more dynamic. They play risky moves, attacking styles, and hope that their opponent will leave themselves open to a checkmate.
Squash is the same way. Some players hit low-risk shots, play long rallies, and do their best to keep the rallies steady and calm. But other players hit shots from wild angles or try to hit “kills” or “nicks” that win the rallies outright.
The best players, in my opinion, understand that there’s a time and place for both.
And while there’s a mental battle going on—what’s my opponent doing, and how do I counter it?—there’s also an extreme physical battle. Squash is one of the most aerobic sports and best workouts out there. It involves sprinting and lunging and, of course, hitting the ball.
Why do you believe learning about money and caring about personal finance is important?
Great question. And my answer is kind of funny. When I pare down my motivations, I don’t care about money. I care about time. Time is truly the most limited resource.
Money, it just so happens, is the preferred method to place a value on time. In the long run, I want to try to maximize my time. In fact, I’ve got some interesting theories about the value of time, or the time vs. money debate
. Since we measure the value of time using money, it means that we should place priority on being smart with our money.
Need more to ponder? After taxes, the median American earns about $160 per day. So if my budgeting method saves me $1000 per year, I could think of that as saving about 6 days of working time. Or, I could say that a person not using a budget might we wasting $1000, or wasting 6 days, per year.
That time will never come back. It’s gone. And I want to minimize that wasted time.
How You Can Contact Best Interest for More Information
You can learn more about Best Interest at https://www.bestinterest.blog
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Thank you for reading this interview, and thank you, Best Interest, for providing us with some great personal finance tips!