Four Personal Finance Rules We Ignored (And Maybe You Should Too)

This is the first in a series about how we’ve disregarded the advice of popular personal finance personalities to forge our own path to debt freedom and financial independence. 

Personal finance is just that:  Personal.  Your interests, values and dreams may be different than mine, and that’s how it should be.  In How Our Home Is Helping Us Achieve Financial Success, I talk about how we’ve chosen to “live little” in order to prioritize spending on things more important to us, like travel and sampling every bottomless Bloody Mary brunch in the greater metropolitan area.  But if you prefer mimosas at home in your McMansion, there is nothing wrong with that!  So when it comes to charting your course for financial success, it’s important you customize a plan that aligns with your individual goals and timelines, as well as how you personally manage money.

Here are just a few ways we tailored (or ignored completely!) the advice administered by today’s most well known personal finance experts, and took a road less traveled:

1.  Plastic is fantastic

There are popular personal finance personalities who will tell you to cancel your credit cards and only carry cash.  This is fabulous advice if you struggle with charging things you can’t afford.  But, that’s. not. everyone.  Since our written budget is what holds us accountable, we use credit cards as a tool, utilizing the consumer protection that comes with using plastic and leveraging them for free travel (right now we’re working toward the coveted Companion Pass thanks to our Southwest-branded Chase card).  We pay off any balance weekly to hold ourselves accountable and avoid paying interest.

2.  We’re all special snowflakes

The most popular strategy for paying off debt is the snowball method.  This philosophy recommends you pay off your debts in the order of the amount owed.  Continue to make the minimum payments, except on the debt with the lowest balance.  Once you’ve paid off that first debt, you move to the next debt with the lowest balance.  This method assumes you’ll find it easier to stay motivated when you’re rewarded more quickly with the elimination of individual debts.

In lieu of snowballing our debts, we choose the avalanche method, saving us time and money.  Instead of listing debts by amount owed, this philosophy had us prioritizing debts by interest rate, starting from highest to lowest.  You will end up paying less interest and eliminating your debt-load more quickly by tackling your debts by interest rate, so long as you can remain committed without the psychological boost the snowball method offers.

3.  Not all debt is equal

The same personal finance gurus often recommend stopping any retirement savings while you’re getting out of debt.  Sure, if you’re buried in high-interest credit card debt, stopping your contributions may be a smart idea.  But, if you receive a tax benefit from your interest payments (including interest paid on a qualifying student loan or mortgage), or your debts are no-interest or low-interest (like your Prius payment or the mid-century modern living room set you just bought on a store charge card), you may come out ahead in the long run to keep contributing while still paying off debt.

4.  Capitalize on compound interest

Compound interest is when an original deposit or investment earns interest which is then added to the principal amount and reinvested, earning more and more each period as the account balance grows larger from interest earned.  Compound interest means the balance of an account will continue to grow because of interest earned, even if the account owner doesn’t make another deposit.

Even though we were committed to becoming debt free, instead of stopping our retirement contributions while aggressively paying off our $85,000 in student loans, we kept saving.  We understood that the greatest financial advantage we have at this point in our lives is time.  Traditional retirement age is more than thirty years away, meaning anything we contribute now has decades to double.  We also knew most accounts have a minimum annual contribution limit, so in the future we wouldn’t be able to contribute more than the max to make-up for lost years.

Before we dedicated every spare dime in our budget to settle-up with Sallie Mae, we contributed the minimum to get the match in our respective employer-sponsored retirement accounts.  In addition to taking advantage of free money from our employers, we also made sure to fully fund our individual ROTH IRAs.  The distinction of a ROTH is that it maximizes the principle of compound interest by offering tax free growth, meaning that since income tax has already been paid on those dollars before they’re deposited, at the time of withdrawal, those monies will be tax free.

There are hundreds of television and radio shows, books and blogs that dictate a detailed plan for getting out of debt.  It’s great to learn from a variety of sources and smart perspectives, but it’s important for you to discern which parts and pieces will help you achieve YOUR definition of financial success.

Next in the Series:  Our Shocking (Yet Successful) Investment Strategy… Individual Stocks!


  1. I totally agree that it’s important to tailor all the advice that’s out there to your own situation. I never understood the freezing or cutting up your credit cards thing that is all over personal finance books. If you have a lot of consumer debt, that’s one thing, but I agree that plastic is fantastic. The points we earn on regular purchases have paid for plane tickets, rental cars, and gift cards. We pay off our credit cards every month, and have never had a problem.

  2. I definitely agree that personal finance is personal for a reason. Most of the rules of thumb are good for the general public. But if you have some discipline you can easily bypass some of the rules to better meet the needs of your financial situation.

    We love to use our credit card for the convenience, safety and cash back 🙂 Plus Personal Capital quickly organizes our expenses through our credit card.

  3. Dead on. Everyone is different, there is no one size fits all. We have in common a lot of the same decisions you’ve listed though I’m sure we differ a lot on many other items. It’s all about the choices and the person we are.

  4. Yes. Yes. Yes. Yes for an approach that varies from the Snowball. Yes for credit card rewards (we’re getting 5% back on all groceries this quarter, and we pay off all new credit card charges weekly as well as making large payments toward the accumulated credit card debt). Yes for personalizing based on individual preferences and needs.

    As we pay off our consumer debt and shift to student loans, I found this advice especially helpful: “Before we dedicated every spare dime in our budget to settle-up with Sallie Mae, we contributed the minimum to get the match in our respective employer-sponsored retirement accounts. In addition to taking advantage of free money from our employers, we also made sure to fully fund our individual ROTH IRAs.” Our loan balances will be written off at ten years regardless of what’s left due to my husband and I both being in public service, and not having any retirement savings would create a huge lack of peace of mind. We both have employer retirement plans, but I think we will be looking at funding ROTH IRAs before we get more aggressive with our student loan debt.

    1. Thanks for commenting, Melanie! And thanks to you and your spouse for dedicating your professional lives to serving others. You definitely deserve to be rewarded for choosing a career that makes a difference! I look forward to following your personal finance journey.

  5. I am still a fan of the snow ball method. I like seeing the number of debts go down even if it does not lead to the most savings. In reality I did a mixture of debt amount versus interest amount!

    Plastic is fantastic. I am flying my wife for free this year because of our Southwest airline points!

    1. Personal finance is Personal. Glad you found a way that you could stick to and provided personal satisfaction along the way!! Thanks for reading and commenting!

  6. Completely agree that plastic is fantastic! I get so frustrated when my husband uses cash because it makes it so much harder to track in the budget! We have our credit card on autopay monthly to avoid interest and love the purchase protection, points, and accountability it provides. Cash systems are great to get a handle on things for a few months if you are an overspender, but in the long term, cash systems are for the birds.

    Great post! Look forward to the next in the series!

  7. “it’s important for you to discern which parts and pieces will help you achieve YOUR definition of financial success” – I couldn’t agree more! Good for you on figuring out your own path. Thanks for sharing, I look forward to the next post in the series!

    1. Thanks for stopping by, Amy! And yes what works for me may not be the best fit for you, and vice versa. We’ll all complex people with differing strengths, weaknesses and experiences. And thanks for swinging back by when I talk about our stocks!!

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