How DIME Theory can help Organize (and reorganize) your Financial Health
Using JA knowledge to help flesh this out further as I am self-administering a DIME check-up as I begin planning what's next.
1. DIME = Debt / Income / Maturity / Expenses
How to tell if you are in good financial health or not.
2. Debt
If your debt is higher than your income, you are living beyond your means.
3. Income
You should have more money coming in than going out.
4. Maturity
The maturity of your investments should be longer than the maturity of your debts. In other words, don't borrow money to invest in things that will mature before you pay off the loan. Maturity in some investments is clear cut. In other types of investments, the maturity is much harder to determine. If it can be at all.
5. Expenses
You should be able to reduce expenses without reducing quality of life (or happiness).
6. DIME is an acronym for "Debt", "Income", "Maturity", and "Expenses"
But it's also a mnemonic device so we can remember the various aspects of personal finance or how we can organize our finances to reach Financial Independence (FI). Or even just live within our means and not get into debt It's easy to forget these things when we are swept up in the euphoria of spending or investing or getting a raise at work
7. The 4 Cs + 1 (not a D) = Personal Finance Organizing and Reorganizing for FI and Minimalism (or whatever you want)
The 4 Cs: Cash, Convertibility, Clarity, and Complexity + 1 (not a D): Creativity is important because it's often what allows us to make money without having a job or increasing our income from a job. Creatives can make money on their own time with their own skills using technology that lowers costs and increases access via the internet. [I don't fully grasp this one yet, but I left it in because it sounds right and will hopefully prompt more discussion and investigation.
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