How to prepare for the big change....Financial

I had a discussion with a young Marine yesterday. He is a year away from his own transition to the "real world". Talking with him I realized the most important, or "One Thing" that he could do to prepare himself is to gain control over his finances.

That was and is the one thing I was able to do so that all other things became easier or unnecessary. (#GaryKeller). I did this through 3 stages of financial awakening.

1. Learn: The most important step to achieving my One Thing. This began with Youtube University, Dave Ramsey and his baby steps and lead to books like "Dollars and Sense" By Dan Ariely and "The Millionaire Next Door" by Thomas J. Stanley. Finally, it led to the world of podcasts where I listened to industry leaders like Brandon and Josh on "BiggerPockets", the guys on "ChooseFI" and "Listen Money Matters". 

2. Track: This started with Excel but I was too lazy. I rarely updated my spreadsheet and my financial choices were reactive and not proactive. Introduce MINT.com, the single greatest tool in my financial toolbox. With Mint I track my spending in real-time, I set spending and savings goals, I can even track my net worth.  

3. Control: Tracking is good, however, controlling provides meaning to your actions. Now that I can see my spending with Mint I can determine if my spending is aligned with my values and providing value to my life. I can look back at a year's worth of spending, highlight months where I "overspent" and determine if it was worth it. I can tighten my restaurant budget, control lunch expenses by meal preping, minimize trips to my favorite toy store (Lowes). Most importantly I was able to progressively add to the savings (IE profit) side of my personal profit and loss statement. 

So what does this look like for me and my wife now as we're on the doorstep of our transition away from a regular paycheck...

1. Credit Card: because points are awesome, I use my Chase Sapphire for all my monthly expenses.

2. Checking Account: All income is deposited into this account where I then make monthly distributions to my other accounts and pay off my credit card.

3. Short term savings: this lovely account gets me in front of large annual spending and provides a little buffer for unexpected expenses. This covers vacations, gifts, and larger purchases like new tires for the car.

4. Emergency Account: I aggressively grew this account to the point were it has 4-6 months of spending stashed away as a last resort. For this, I use a high-interest savings account (Marcus by Goldman Sachs). 

5. TSP and wife's Roth IRA: I make calculated contributions to these accounts based on a "traditional" retirement savings goal. 

6. Car Savings: This is a taxable brokerage account with ETrade that I "pay" a car payment into every month so that I can pay cash for my next car. 

7. Investment: My favorite account, this is where the large majority of my savings gets stashed. This is the seed money for my jump into multifamily investing. 

So now, as Scott Trench says, we are making this transition from a position of financial strength not a position of struggle.