Skip to main content

Why I hate budgeting by categories: how to budget the right way


If you want to be wealthy, retire early or just get a better handle on your finances, you’re going to need a budget.


There are only 3 steps to becoming wealthy:
  1. Save more money.
  2. Make more money.
  3. Invest the difference between how much you make and save.


That’s it! It’s actually that simple.


So, in order to crush the game of money, we need to develop good habits around saving more money.


Later, as you get raises and have more money to spend, these habits will (hopefully) remain strong and instead of inflating your lifestyle (spending more as you make more), you’ll instead invest the extra money you make and be closer to financial freedom.


My budgeting philosophy:

Many people have an elaborate budget. They give money to each category or type of expense they want to spend each month. I used to do this, too.


But for me, I think it’s the wrong way to look at budgeting.


Budgeting by category means that I give each category a specific amount to spend each month. So rent gets $1,400, restaurants get $300, clothing gets $50, etc…


Main Problem #1: First off, there’s no flexibility.

Sometimes, gas will be $120 vs your budgeted $80 because you took a road trip.


Or, you will have an unexpected $300 car repair.


All of the sudden, your category budgets are all out of whack and the next thing you know, you’re saying, “well, this is a throwaway month, I should just spend whatever and try harder next month.”


Main Problem #2: You take small wins and spend the money elsewhere.

The month is coming to a close and I see that I have spent $10 on clothing when I set a budget of $50. Sweet! I have $40 to spend on iPhone games.


So, now I’ve just taken a budgeting win and then lost it because I spended money I otherwise would not have spent.


When I used to budget by category, I found myself doing this all the time. Ultimately, it didn’t get me any closer to financial freedom each month.


Here’s how I budget instead.

I used to budget by categories. But I discovered these mistakes and ultimately lost sight of the main objective. Which is…”saving as much money as you can each month.”


Budgeting should not be like dieting, instead, it should become your lifestyle. When spending as little as possible each month becomes your habit, you no longer need to budget by categories because you try to keep all spending to a minimum.


For me, Instead of budgeting by categories, I budget by month. Each month, I give myself a target number to hit. The general rule that I’ve been using is “rent + $1,200.” Then I set a stretch goal of “rent + $1,000.”


So, because my rent and utilities comes out around $1,400 a month, my monthly budget goal is $2,600 and stretch goal is $2,400.


Why this is better for me:

When you are trying to create a habit or lifestyle, making the task as easy as possible is really important. I budget for the whole month because it’s easy to keep track of. I log onto Personal Capital a couple times a week and check one number – how much I’ve spent this month.


Let’s say it’s the middle of the month and I’ve already spent $2,200. Yikes, I need to slow down and not go out to eat too much for the remainder of the month. Yes, I do check my spending many times throughout the month, but that is another habit I’ve created for myself because I check all my finance info multiple times per month (spending, income, net worth, investments)..


I still look at each expense and category. But I don’t assign a target number to each category. I know I usually spend $200-250 on restaurants each month. If I want to spend $350, that’s fine, but I know I have to sacrifice somewhere else, because there’s only one number that matters, the total amount spent at the end of the month.


The potential downside:

All budgeting takes discipline. With more flexibility and less structure, this type of budgeting may require even more discipline. That said, I think a person is more likely to stick with it because it is less restrictive.


Ultimately, it takes the understanding that you are trying maximize your savings each month.


There is never the thought, “Oh, I’m $300 under budget this month, let’s go shopping!” You must approach spending consistently across the board. Splurge and treat yourself every once in awhile and on stuff that brings you happiness. But don’t go too crazy.


Start small and try to reduce your monthly budget by $100 every couple of months until you’ve really minimized your spending.

How I Paid Off $26,000 in Student Loans by 26


I graduated University of Southern California (USC) with $26,000 in student loans.

However, in my senior year of college I took out an extra loan in order to invest in the stock market. Read more of the backstory.

This was extremely risky and dumb, but I did get lucky and made a couple grand (please don’t do this).

So, right before my loans went into repayment status, I returned the extra loan and a bit extra to lower my student loan balance to $16,000.


Graduated to Reality

In the beginning, paying off student loans was not a priority.

I figured I’d pay the minimum and they’d be gone after 10 years.

I was making about $3,200 a month after taxes at Fandango in digital marketing. Thinking I was grown up now that I had a real job, I upgraded my lifestyle with a new leased car and one bedroom apartment.

My monthly expenses in Los Angeles were usually $3,000 – $3,500. So, often I was losing money each month.

That’s when I discovered personal finance blogs and books.

After a year of making changes to my life (eating out less, buying an old used car, selling extra things, etc) my monthly expenses averaged closer to $2,800.

Still, I was not thinking about student loans.

Instead, I was focusing on saving as much money and investing in index funds.


Investing in Stock Market versus Paying Off Student Loans

This is a hot topic and deserves its own post, so I’ll just touch on this briefly and then jump back into the story.

I am definitely one who looks to maximize my returns.

But, now that I know what it feels like to have no debt, I know paying off student loans was the right decision versus sticking that money in an index fund.

Reducing your risk and freeing up your mental energy beats a higher investment return, especially when it’s a relatively small amount like $16K.


From Fandango to Facebook

A couple years passed, I kept working at Fandango and paying the minimum on my student loans.

I believe I was at $13,000 when I got hired at Facebook.

I moved up to San Francisco to take the higher paying job.

In conjunction with raising my salary, I lowered my expenses by living with roommates and taking advantage of the free food at Facebook.

At this point, because I didn’t inflate my lifestyle (actually deflated it), I was able save more than 50% of my income most months.

This allowed me to quickly build up my investments and cash reserves.

Meanwhile, I started listening to Dave Ramsey and got inspired to look at my debt differently. Fortunately, I never had credit card debt, and I had bought an old car in cash the year before.

The only thing left was my student loans.

So, I stopped contributing large amounts to my 401K and instead stockpiled cash.

It took a few months, but I paid off the student loans in two payments of $6K each.

And then it was done!


The Aftermath

In reality, my first emotion was that I felt cash poor.

Cash makes us feel safe and insulated.

But, the next day I felt amazing. Like an invisible weight had been lifted off my back.

I really never thought my student loans had much control or power over my emotions, but I was wrong.

Knowing that you owe no one, nothing, is a freeing feeling.


So, get out there, save more money, make more money and pay off those student loans!




How I Got Into USC and Escaped With Only $26K of Student Loans

This article recounts my college history and how I was able to attend a good school without going into a crazy amount of debt.

A couple years later at 26 years old, I was able to pay off my student loans.

Accompanying video at the bottom.


Student Loans…eh, who cares

When I was in college, I didn’t think much about student loans.


I figured they would somehow get paid off because I was going to make a bunch of money right out of college.


When I got my first job out of college, my expenses were between $3,000 – $3,500 a month living in Los Angeles. I was making about $3,200 a month.




But let me backup for a moment.


School #1: University of Colorado – Boulder

I initially went to University of Colorado at Boulder. That lasted one semester. I got bad grades and left. I went home to St. Louis and took a semester off.


I accumulated around $8,000 in loans from that one semester.


School #2: Community College in St. Louis

I enrolled in Community College in St. Louis. I come from a low-income family so FAFSA gave me $5,500 a year for school. After tuition and books, I usually had around $1,000 leftover each semester.


Being paid to go to school!? Pretty awesome.


I was also working part-time and living at home, so I was able to pay off some of those loans from Boulder.


School #3: University of Southern California (USC)

After a year and getting a 4.0 GPA in Community College, I was able to transfer to University of Southern California (USC). This was my dream school and I was ready to take out as many loans as needed (not smart).


However, because USC is a private school with good funding and my family had low-income, USC and FAFSA paid for 95% of my tuition.


Looking back now, I can’t believe how much money this saved me.


Instead of $26,000 in student loans, I would’ve had $150,000+.


Living in L.A. was still not cheap despite living as a student. Going into my senior year in college I had about $18,000 in student loans.


My (Almost) Terrible Mistake:

In the summer of my junior year, I landed a high-paying internship in digital marketing. I made enough money to cover a good amount of expenses for my senior year (~$10K).


At this point I had started investing and playing around in the stock market. I had done pretty well so far and had made money from all my investments (#dangerous).


So, I got this little idea that since I had most of the cash to cover my expenses for the year, I could take out a subsidized loan and use it to invest and make money off it.


This is about the worst idea you can have.


Well, anyway, I did that.


In my senior year, I had about $26,000 in student loans.


Mistake Averted:

Fortunately, after risking my student loan money in the market, I made ~$2,000, sold and banked the money.


I was still working part-time at the digital marketing agency and had a few freelance projects so I made an extra few thousand throughout the year.


I graduated college and paid off $10,000 of the loan balance immediately. This was mostly just returning the money that I risked in the stock market plus some extra from working in my senior year.


So, I got my first job at Fandango in digital marketing with about $16,000 in student loans remaining.


Key Takeaways: how I was able to get into a top school
  • I went to Community College and had a 4.0 GPA.
    • Colleges love transfer students with high GPAs from other colleges. It is the single best indicator that you will succeed at their school.
    • Spent a lot of time crafting an amazing college essay.
    • Stellar referral letters.


Key Takeaways: how I escaped college without crazy student loan amounts:
  • Ultimately, I was in a good position because my family had low-income status.
    • Community College paid me over $2,000 to attend.
      • Also, lived at home and worked so I banked most of the money I made.
  • At USC, most of my tuition was paid for so I had to work and take out loans for LA living expenses.
    • Had multiple internships, including a high-paying one that I worked in the summer and then part-time during the year.
    • Always was working some job or side gig.
    • Got lucky to not lose my shirt when I risked loan money in the stock market.
      • So bad, do not repeat this.


In the next article, I’ll discuss how I was about to pay the remaining student loans off by 26.


Working at Facebook: How I Got Hired in Digital Marketing

Check out the accompanying video at the bottom of the post.


I currently work at Facebook in digital marketing. I’m nearing my first year and I wanted to talk about my journey that led me here and hopefully provide some insight that might be helpful for your own career.


The main bulk of my job is running digital marketing campaigns for Facebook Business. I build the marketing campaigns, launch and optimize them and provide reporting during and after they’re finished.


But let me start from the beginning.


I became interested in digital marketing back in high school when I started reading about people making a bunch of money online. I tried to start a few websites and blogs in order to make money. They all failed, by the way.


But I did get pretty good at building websites. And I learned about Google Adsense, which led me to learning about Google Ads.


Fast forward a few years and I’m in college at USC. I originally went to Boulder, dropped out after one semester, and took the next semester off. My family thought I was dumb and they were scared I’d never finish college. But I enrolled in community college for a year in St. Louis (my hometown), got a 4.0 and transferred to USC.


So here’s a good tip. Community college is not only amazing for saving money, but getting a 4.0 is very doable. When you go to transfer, a college sees a 4.0 from another college and says, “Wow, they will succeed here too.” This is particularly helpful if you didn’t have the highest ACT and SAT scores, because they weight your college GPA higher.


At USC, I originally wanted to go for film, but I ended up getting a Narrative Studies degree and a business minor. But my major and minor never really meant anything. Internships were everything.


I’ll repeat that: internships are everything!


In the summer of my sophomore year in college, I got my first internship through a friend at NCompass International, which put on marketing events for big companies. It was a good experience, but I distinctly remember thinking how that type of marketing was not as measurable as my experience with digital marketing.


So, I made it a point to get my next internship in digital marketing.


My next internship was with a digital marketing agency, where I learned all things Google Ads for Search. After the summer, I continued working part-time throughout my senior year of college.


I later learned that this internship was the main reason I got hired at Fandango the following year. Fandango was my first job out of college and was an amazing place to learn because I worked on nearly every digital marketing platform there is.


Note: a recruiter found me on LinkedIn for this job.


Initially, Google Ads got me in the door, but after some time I was running Facebook Ads, Amazon Ads, custom audience management, and doing projects with Email and Affiliate Marketing.


After two years though, a recruiter once again reached out to me on LinkedIn. This time it was for Facebook. Although I was living in Los Angeles, it made sense for me to move up to San Francisco and take the job. And here we are.


My role was tough at first because while I had a good amount of experience with Facebook Ads at Fandango, we’re weren’t spending anywhere near the amount of money nor running the huge campaigns that Facebook runs.


But after the first few months, I started feeling comfortable. And now, I feel like I can do anything.


So, if I had to think of some general tips:
  • Getting into a good college definitely helps, but perhaps look into community college first to save money and get good grades in order to transfer easier.
  • In most cases, internships are the most important factor in getting you a job after you graduate.
  • Learn great resume writing skills.
  • Make sure your LinkedIn is just as polished as your resume. I got both of my post-college jobs from recruiters reaching out to me on LinkedIn.
  • Always be learning and improving your skills. Skills make you employable.
  • And build your network. You never know where leads for new jobs can come from. I’ve had people refer me who I only met and worked with on a couple projects.


Expense Report: September 2018

Welcome to my expense report for September 2018.

I keep track of all my income, expenses and net worth data through Personal Capital. I also use a simple spreadsheet as a backup just in case my Personal Capital data gets lost.

I like to share my expense report each month to keep my spending accountable as well as share my thoughts and philosophies on how I choose to spend the money I earn.



I try to spend less than $2,400 each month, so as you can see I went a little over budget this month.


Here are the big ticket items, check out the video for more details.


  • $1350 + $21 for utilities
  • This will stay fairly consistent until I move. Utilities may fluctuate but are very low because we have solar panels on the roof, don’t use too much water and most of the roommates don’t cook much.
  • $520
  • This is all from my Epic Tahoe Local Ski Pass. I paid $49 to lock in the lower price awhile back and now this $520 is the remainder. All set for the snowboard season!
  • $233
  • Usually around $200-250, so not bad. Discovered a couple cool ramen places this month.
  • $83
  • Paid for this blog for a year! Not too expensive for a year of blogging.


My total for the month was $2552 which is $152 over what I try to spend in a given month. Also, I was about $400 over from last month. That said, I knew September was likely to go over due to the ski pass. So I did pretty well and would’ve been well under budget without the ski pass.

I’ll try to have a good October and hopefully stay a couple hundred under budget.

Looking forward to this winter in Tahoe, despite snowboarding being a pricey sport. But I like spending money on things that bring me enjoyment. Buying dumb stuff that doesn’t bring me happiness is a waste of money.

Have a great October!


How to Retire Early and Never Have to Work Again

Your Life Laid Out

You graduate in your twenties. You work 40 years until you retire in your 60’s. Hopefully you’ve been saving enough to make retiring a possibility. Now that you’re retired, is your health and energy level high enough to enjoy your retirement?

Money is a chain that keeps us slaves to our jobs and career. To those of us who want to retire early, money is a tool to free up our time and live a life we choose.


The Discovery of An Alternative

When I got my first job out of college, it was eye-opening because the thought of working for another 40 years made me shiver. I wanted better control of my future.

I started looking into alternatives. How could I start a business that made me rich, side hustles, blogging, new career paths that made more money, etc… I researched everything.

Eventually, I stumbled upon articles recommending finance books to read.

One of the classic personal finance books is called Rich Dad Poor Dad and I read that first.

Then I read it again.

Books and blogs slowly started to shape my thoughts about work and money, saving and investing.

After consuming so much content for a year, I looked back and saw my spending had been slashed and my investment contributions were much higher.

The idea of retiring early was fueling this change in my habit.


The 4% Withdrawal Rate

Retiring early is the concept of having enough assets that you do not need to work because the growth from your investments covers your expenses. The rule of thumb is that you can withdraw 4% of your investments each year because over a long period of time the stock market has returned higher than 4% + inflation.

Basically, we have to understand how much money we’ll spend per year and than multiply that number by 25.

So, if you want to spend $40K per year in retirement, you need $1M. Want to spend $80K? You’ll need $2M in assets.

If you can spend less, you need less of a nest egg.


Retiring Early = Freedom

The idea of retiring early is a concept in freedom. Currently, I am a slave to my paycheck. I trade my time in order to gain money.

When I talk about retiring early, I don’t necessarily want to retire early and do nothing, but rather have the option to work on projects that provide more life satisfaction by not having to work 9-5.

Accumulating enough assets will allow me to not work again if I choose. Instead, my money is working for me by increasing in worth over time.

This was an overview of the concept, getting to that point is the hard part. However, knowing there is an alternative to working 40 years is motivating.

You need to earn more, save more, and invest the difference.


Charlie Munger: Why the First $100K is the Toughest

The Wise Charlie Munger:


At a Berkshire Hathaway shareholder meeting in the 90’s, a young guy asked Charlie Munger his advice on creating wealth. He said his net worth was not increasing as fast as he’d like.

Charlie Munger responded, “The first 100,000 is tough, but you gotta do it.”

Then he goes on to say, “I don’t care what you have to do—if it means walking everywhere and not eating anything that wasn’t purchased with a coupon, find a way to get your hands on $100,000. After that, you can ease off the gas a little bit.”


Chasing Your First $100K:


I’m also chasing my first $100K and can definitely say it’s tough. I say it’s tough, but in reality it’s probably tougher because of my lack of patience rather than the actual difficulty. Especially after developing good habits around saving, earning and investing.

So why does $100K feel so far away? Why does it feel like it’ll take forever?

Because when you don’t have much money, the majority of increases in your net worth come from your savings rate, not investment returns, so your money isn’t working for you as much.


Here’s an example to help explain the numbers:


Let’s say your net worth is $10,000, and it’s all invested in the stock market. If you have a healthy return of 10% that year,  you’ve gained $1,000 increase in net worth.

Ultimately, $1,000 gain is not much.

However, if you get a roommate and your rent lowers by $300 a month, you’ll save $3,600 a year.

$3,600 savings is a 36% increase in your net worth.

And if you can get a $5K raise, that’s a 50% increase in net worth.


Savings Rate > Investment Returns (In the Beginning):


In the beginning, when you’re trying to reach $100K quickly, you need to do whatever you can to spend less and earn more, because your savings rate is much more important than investment returns.

While a lot of people focus on their investment returns, this effort usually doesn’t pay off until you’ve accumulated a good amount of wealth.

In the meantime, saving a few hundred a month on rent or buying a used car with cash, can mean huge relative increases to your net worth that will beat the market every time.

While reaching $100K seems difficult, the journey will teach you good saving habits that will propel you through the next tough challenge – taking $100K to $1M.


7 Financial Goals to Achieve Before Turning 27

1. You have no credit card debt.

There’s no getting around this one. You should never hold a credit card balance. EVER! If you have a balance on your credit card, paying it off should be your first and only goal in the next few months.

If that means eating rice, beans and ramen packets for the next month then so be it. With credit cards charging more than 20% interest, each month you hold a balance you will go further into debt. This is truly an emergency and should be treated as such.

If you have no credit card debt and pay off your balance each month, you’re doing well, keep it up. This is a prerequisite for becoming financially stable.


2. You have a plan of action for paying off student loans.

In many cases, paying off your student loans by 27 years old is not realistic. That said, you should be paying off the minimum balance each month and have no plans to change that. Set it and forget it. Most payoff plans are 10 years long, so at the end of ten years, you should be free of your student loans.


3. You have an emergency fund of at least 3 months expenses.

At this point you should be starting to save (and keep saved) a little bit of cash for emergencies. 3 months is good, 6 months is great.

I personally love having six months of expenses in a bank account easily accessible. If my car breaks down or I get fired from my job, I have a level of security and confidence knowing I won’t be living on the street with no food to eat. In the case of losing your job, having cash on hand allows you to take your time in choosing a new job, rather than taking the first offer you get because you’ve run out of funds. Having cash on hand allows you to live from a position of power (more on this in future articles).


4. You have a monthly budget.

You’ve decided how you want to spend your money and you’re intentional about spending money on things that you care about and not spending money on things that don’t bring you happiness.

It seems simple, but this is harder done than said. I personally try to buy less things and instead money on activities that I enjoy. For example, this month I bought an expensive ski pass for $520, but I know I’ll get a lot of enjoyment from that purchase in the upcoming season.


5. You understand that having fun doesn’t have to mean spending a bunch of money.

Maybe you like to go hiking, or running, or play board games with friends. Many fun, social things don’t have to cost much money.

Of course, some social things definitely do cost money, but there may be a better way to have fun and save a little money at the same time. For example, instead of going out for drinks the whole night at bars, start at a friend’s house and make your own drinks to save some cash.


6. You’re tracking your net worth.

Net Worth equals Assets minus Liabilities. You might currently have a negative net worth, but that’s okay. The first step is to track it. Improvement will come. The things you track are the things you improve. For me, this has had one of the biggest impact on the improvement of my finances. I use Personal Capital and a spreadsheet for backup.


7. You’re thinking about how you want to retire.

You don’t have to have all the details figured out, but start thinking about it. Maybe you want to retire early at 40 or semi-retire at 45 and work 15 hours a week. Maybe at 55 you want to fully retire and sit on a beach. The key is to start thinking about how you envision your life. Long term thinking will help you make better decisions in the short term.


3 Huge Money Mistakes to Avoid

When I got my first job out of college, making more money in one year than I had my whole life (~$55K), I felt like I had money to burn.

This is called lifestyle inflation, or lifestyle creep. When you make more money, you naturally spend more because you feel like you can (or should). In this article, I discuss three money mistakes I made after landing my first job and what I should’ve done instead.

Accompanying video at the bottom.


Credit Card Debt:

Before we dive into the three huge money mistakes, I’d like to take a second to call out one of the most foundational rules in personal finance: no credit card debt!

Credit card debt is a killer. If you have credit card debt, you need to get rid of it as quickly as possible and either pay off your credit card debt each month or chop up those credit cards.

I personally didn’t make this money mistake, but if I had, you bet this would’ve been #1 for worst money mistakes to make.


Money Mistake #1: Leasing a New Car

What I did:

Growing up, my family leased cars every three years. That was normal to me. So, I leased an entry level car throughout college.

After a month or two of working in my new job, my leased car from college had to be returned. Since I was making more money, I ended up leasing a $25K Subaru Crosstrek.

Truth is: I really loved that car. But, it was too expensive.

Now, I negotiated hard and got a decent deal, but the payment was still $230 a month. The insurance was also pricey being in Los Angeles – that was another $150 (went up to $160 later). Gas was usually around $100 per month.

On a $55K salary, after taxes, and all other expenses, paying nearly $500 per month for a car is just too much.

What I should’ve done:

I had the Crosstrek for about six months before I started really becoming serious about financial freedom. I was reading Scott Trench’s book, Set For Life, when it became clear that I needed to get out of my lease and buy an older, used car with cash.

And that’s what I did.

I look back on that moment as the true starting point in my financial independence journey. I sacrificed something I really enjoyed for a better future. #corny…

But yeah, I was able to sell the Crosstrek to CarMax for more than I owed on it because it was in such high demand. I banked $400 or so, and uber-ed back to my apartment.

I went carless for two months before finding a 2006 Toyota Corolla for $5,500 that had only 63,000 miles on it.

It wasn’t sexy, but it was cheap, reliable and had low miles.

That’s my advice: buy an older (5-10 years) car with low miles and a history of being very reliable. Buy with cash and be done with a car payment.

Not only did I get rid of a car payment, my insurance dropped dramatically because I didn’t need as much coverage. I now pay around $35 a month.


Money Mistake #2: Getting my Own Apartment

What I did:

Well, I went out a got a one-bedroom apartment. In the first couple months at the new job, I was living with a friend but the commute sucked and I thought I deserved my own place now that I had a career (lol).

Rent was $1525 (then raised to $1570), and after utilities and wifi, I was probably spending around $1700 for the place. That was just way too much.

On $55K salary a year, after taxes, insurance, etc., I was taking home around $3,200 a month. $1700 is more than half my take home pay!

Between just the apartment and car, I had $1K to spend on food and fun, which went quick in Los Angeles.

What I should’ve done:

The one mistake I didn’t make, was my apartment was close to work. I did this because I hate a long commute. I was only two miles from work and rode my bike most of the time.

Instead of getting my own place, I should’ve rented a room from a friend, co-worker or on Craigslist in a similar location. I would’ve paid around $1,100 and saved $600 a month ($7,200 a year). I could’ve kept riding my bike to work and enjoyed a minimal commute while also saving more money.


Money Mistake #3: Eating Out Too Much

What I did:

Getting my first job I thought, “I’m adulting, I can afford some fancy restaurants; and I can go out for work lunches.”

That was dumb.

I wasted so much money on fancy dinners in the beginning. In LA, $150 for a dinner is not even top-tier, especially if you’re drinking. It’s a waste.

And another waste, where you don’t even get an experience, is eating cheap work lunches for $10-15 each day. Nothing to remember, but when you look back at your expenses, work lunches might be a couple hundred alone.

What I should’ve done:

Eventually, I came to my senses and started meal prepping for the week. I brought my lunch to work almost every day and ate dinner at home much more.

I still went out with friends and enjoyed a nice dinner here and there, but lowered the frequency. Eating dinners out with friends also became more special and felt more like a treat than before.