Rich’s Money Order of Operations

I get a lot of questions about how I handle my finances. Here is a quick summary.

Rich’s Money Order of Operations

#1 - Save 6-8 months of expenses.

#2 - Contribute to the 403(b) / 401k up to the company match. (Rush matches 50% up to 6%)

#3 - Contribute to a Roth IRA up to the max. (Max is $6,000/year per person)

#4 - Open and contribute to a Health Savings Account (HSA). (Max is $5,700 + $1,500 employer contribution = $7,200).

#5 - Contribute to your 403(b) / 401k up to the max. (Max is $20,500/year per person)

* Assuming you are healthy and don’t expect to have a lot of medical expenses.

* This money is carried forward every year.

* You can choose mutual funds to invest in.

* The trick is to pay for medical expenses out of your own pocket and not claim it from the HSA. This allows it to keep growing tax free

* Save your medical bill receipts forever. You will need them to take money out of the HSA tax and penalty free.

* When you hit 65, you are allowed to take the money out like a normal retirement account.

#6 - Invest money in a taxable account.

Credit Card Debt:

First and foremost DO NOT have credit card debt. If you have credit card debt treat it like an emergency and try to pay it down as fast as possible. Credit cards average about 18% interest and makes building wealth next to impossible.

Credit Card Pay Down Strategies: These are some strategies to pay down credit card debt if you have them.

#1 - Pay down your highest interest credit card first (most efficient method)

#2 - Pay down your credit cards based on lowest balances first (not efficient, more for psychological win)

#3 - Consolidate credit card debt to lower interest loan.

I personally don’t agree with borrowing to buy a car either. Buy a used car you can afford in cash.