Looking back at my decade of blogging, I’ve learned quite a few things about personal finance myself, and I hope that you’ve learned some too. One of the big reasons I enjoy this blog is that it’s a great excuse for me to continue researching and learning. Throughout my journey I’ve had some real eye opening moments even for a personal finance blogger that thinks a lot about this stuff. In no particular order, here are some of the top things that I didn’t know about personal finance and I’m guessing some of these might be new to you as well!

Mortgage Deductions are pretty awesome

Buying a house both feels like a very adult thing to do but also a very daunting thing to do. The real estate market over the past few years has been pretty nuts with buyers having to pay over asking price to get the house. Interest rates are on the rise (6%?!?) and the thought of paying a mortgage every month for the next 30 years may feel intimidating. Oh and of course all the maintenance that comes along with owning a house!

However, the government really wants to encourage home ownership and as such gives a lot of great tax breaks to homeowners – particularly with the mortgage interest deduction. Depending on the type of house you own, you are likely paying several hundred if not several thousands of dollars in interest on your mortgage each year. That interest is deductible when it comes tax time, so that means your taxes go down because you own a home. Just like that!

So of course don’t go buying a bigger or pricier house than you can afford just to get a break on taxes (it wouldn’t be worth it) but do remember that you get a tax break on your home!

HSA might be the best-kept secret

Early on in my career I didn’t pay that much attention to health insurance, much less thinking of ways that I could maximize it. I was a young invincible and thankfully quite healthy. I loosely knew of FSAs but the ‘use it or lose it’ really worried me. It was only a few years ago that I got on a high deductible plan that gave me access to a HSA account when my mind was blown.

As I’ve mentioned on this blog before, the government will incentivize its citizens to make smart financial decisions through the use of tax credits or tax deductions. Healthcare is quite expensive here in the US and so the government offers a tax break for you to save for healthcare costs. A HSA (health savings account) is a mechanism whereby you can do that. Deductions made to a HSA account (up to $3,850 for singles or $7,750 for a family) are excluded from your taxable income. Then that money can be spent on healthcare expenses using those tax-free dollars. Even better, a HSA is yours forever, it’s not subject to the use it or lose it nature of a FSA. Even even better, many HSA plans allow you to invest that money and/or will pay interest in your balance, and the growth there is also tax free!

If I could do it again, I would have gotten on board with a high deductible health plan and therefore the HSA accounts (some employers will give you a match or free money into it) and I also would have put more into it. For the past few years I’ve been putting a small-ish amount – essentially the amount I thought we would spend that year. How I wish I had put more in and then have been able to let that money start growing over time!

So, all that to say, healthcare is expensive, HSAs help and HSAs can be pretty awesome.

Photo by Zhen H on Unsplash

As cool as stocks are, individual stocks are for suckers

At any given point in time, there are always the famed stock pickers of our day and they make all sorts of headlines as we follow their every stock picking move and praise their ability to outperform the market. Some common examples have been: Warren Buffet (the GOAT), Chamath Palihapitiya, Jim Cramer and Cathie Woods are some of the ones that I remember seeing the headlines for as of late. There’s just something so magical and cool about picking stocks, and it’s something that many of us (myself included) have tried to do. We read books, blogs, tweets, articles and take advice from friends/family/random people on the internet all in the hopes of picking a winning stock.

The reality is that most of us (even the famous stock pickers) aren’t very good at picking individual stocks over a long period of time. Sure you might get lucky a few times, but sooner or later your average reverts back to the mean and your losers start catching up with your winners. One year I got serious about stock picking and at the end of the year was all proud of my (positive!) return until I compared it to my preferred index fund – $VTI (Vanguard Total Stock Market Index Fund) when I realized that I hadn’t even beaten a generic index fund that just bought most of the stocks in the stock market. Time and time again this has proven true and I’ve become convinced it’s just not worth the time, effort, cost or risk of picking individual stocks.

So, all that to say; I like sticking with index funds. It’s tough to beat the market over a long period of time, so don’t even try.

Subscriptions add up

Basically everything is a subscription these days. Whether it’s your streaming services, your Uber/Lyft membership, your grocery delivery, your food prep delivery, your Apple or Google or Microsoft storage, your software, your video games, your gym or workout regime, your music, your car wash…it seems that everything has become something we just pay for every month. Companies have transitioned to this for a reason – they know that you are more likely to underutilize a subscription and also that you are unlikely to cancel it – even with a free trial! I found this article which shares that we on average underestimate our monthly total subscriptions by $133…and we spend $219 on average.

Subscriptions aren’t bad – they are a fact of life and in many ways quite good. I have a number of subscriptions and benefit greatly from them. However, I try to be as vigilant as I can about signing up (knowing it’s tough to cancel – either physically the company makes it hard or it’s mentally tough) and periodically I review my subscriptions to make sure I’m still getting the value out of them.

Nine times out of Ten you shouldn’t be paying financial fees

I’ve become convinced that there is really not a reason to pay financial fees anymore. There are so many options out there to make most financial operations free. With a little research and maybe making a change, you too can avoid paying these fees. Similar to a subscription, bank or financial fees can really start adding up – and it’s especially frustrating knowing that there is another way – a way that involves you not paying.

This includes: paying a monthly maintenance fee on a bank account, paying ATM fees, paying for checks (if people still use them), paying for credit card fees (unless you want to – which I do and I love playing the credit card game), paying a fee for international transactions, paying for stock trades, and paying a credit card service charge (write a check!). If your bank or financial institution is charging you any of those fees – do a little research and find a way out of it. Most of the time there is a free way, and don’t spend your hard earned money on fees that you don’t have to!

Summary

There’s a ton to know about personal finance and there’s always more to be learned! I hope my top list of things that blew my mind over the past few years are helpful to you!