Dollars & Decisions — The money choice in front of you

Where money actually goes, and which cuts are worth making.

1. Where a household’s money actually goes, and why three categories dominate
2. Cost per use is the number that decides whether something was expensive
3. A subscription renews by silence, and that changes the whole calculation
4. A budget is a forecast, and forecasts are supposed to be wrong
5. Lifestyle inflation is a ratchet, which is exactly what makes it expensive
6. A price is set by one side of the transaction and the value by the other

Emergency funds, goals and the accounts that hold them.

1. An emergency fund is insurance you underwrite yourself
2. In the early years the amount saved does more work than the rate earned
3. A savings goal without a date attached is not yet arithmetic
4. Inflation is the reason cash needs a job description
5. Access and return are two separate questions about the same money
6. A household absorbs an income shock in a fairly predictable order

Interest, order of repayment, and the difference between kinds of borrowing.

1. A minimum payment is calculated to move the balance slowly
2. The two orders of clearing debts optimise different things
3. Stretching a loan lowers the payment and raises the total
4. Secured and unsecured borrowing are different products, not different prices
5. Clearing a debt returns a known number, and that is what makes the choice hard
6. Consolidation moves a debt into one place without making it smaller

The first principles, with the risks stated as plainly as the returns.

1. Compound growth rewards time more steeply than it rewards rate
2. An index fund follows a rule rather than making a forecast
3. Charges are deducted whether or not anything was earned
4. Diversification removes one kind of risk and leaves another standing
5. A fall and its recovery are not the same size
6. Risk means one thing to a saver and something else to an investor

Why sensible people make predictable mistakes with their own money.

1. A loss weighs more than a gain of exactly the same size
2. Money is interchangeable and almost nobody treats it that way
3. What has already been spent cannot be recovered by spending more
4. A price only means anything next to another number
5. The future self keeps losing arguments it was never present for
6. Two people sharing a household need a rule, and the three common ones trade…