I know alot of this stuff may be realistically hard to do when you're just starting out in life. However, these are the guidelines I follow and I have done pretty well by them. I hope these notes help some of you guys.


1. You always need to have enough assessable liquid assets that will pay your normal bills for 6 months MINIMUM (1 year preferably). You never want to get into a situation where you lose your job and have to sell your house, cars or investments out of desperation. First off, it takes alot of time to sell a house and move into a new place etc, time that you could be spending looking for a new job. Second, if you have to sell a house or investments under those conditions, you'll certainly take much less than you normally could get if you weren't under pressure to sell. Third, selling a house and/or moving costs big money in commissions, deposits, paying movers etc....money that you don't need to be spending/wasting if you're having financial problems.

2. NEVER charge anymore on your credit cards than what you can pay-off in full each month. NO EXCEPTIONS!

3. Never feel like you are in competition with others to own things. This is a certain recipe for disaster.

4. DO NOT go shopping to pass the time. People that do this are like crack-heads. This will fook you up financially down the road.

5. Never live above your means. If you're not saving 20% of what you make each year, you're spending too much. Every few years, take some of that money that you save and spend a little of it on buying parcels of land.

6. Don't invest in anything risky (like the stock market) unless you're an expert at it. Stick with the low risk stuff. In the long run, you'll come out far ahead.

7. No matter what the jewelry industry wants you to think, most jewelry is not an investment and in MOST TYPICAL CASES you'll lose big if you need to sell it.

8. Don't over-insure yourself w/ large life insurance policies or other insurance. The odds are you'll never need it. Never buy the extended warranty.

9. Only buy cars that you can pay cash for. Buy a Honda or a Toyota if you are having a hard time making ends meet. They will cost you far less in years of ownership. NEVER lease a car unless it's for business purposes. The only thing you should be financing is your house or some land that you buy.

10. Hire a great accountant. They can save you thousands every year in income taxes. It's not expensive. I pay maybe $300 a year for that service. The govt is gonna use every friggin law they can to legally fook you out of all the tax money they can. Your accountant can use every legal means to keep them from getting it.

11. If your place of employment matches your 401K deductions, put at least the maximum in that you can get matched. Put in more if you can afford it.

12. The world is filled with companies that want to make you think that you need what they are selling. In most cases, you don't need it.

13. Be very careful who you marry. NOTHING will ruin your financial future quicker than marrying and/or divorcing the woman you should have never married. When you marry, a prenup is a very wise thing. Also, try to limit your community property to your house and nothing else. Put your car in your name, her car in her name. You each should have your own savings accounts and a community account that just keeps enough in it to pay bills. This minimizes your risks if the worst ever were to happen. Also get a post-nup to protect your personal 401K retirement accounts.

14. NEVER gamble. You will lose in the long run. Do you think those billions/trillions of dollars in hotels in Vegas were built with all the money they lost paying off the winners?


If you forget everything I've written, remember this: Whatever your life happens to be at any given point in time, it is for the most part, the result of the sum total of all the decisions that you've made to that point. Make smart decisions every step of the way, and before you know it your life will be what you want it to be.

Well at least i will never marry,one less thing to worry about.

Quoted: 6. Don't invest in anything risky (like the stock market) unless you're an expert at it. Stick with the low risk stuff. In the long run, you'll come out far ahead.

Gotta disagree with this one.  Investing in individual stocks involves greater risk, but investing in index funds doesn't require any expertise.  In fact, index funds have historically outperformed many "hand picked" mutual funds, and they typically have very low fees since they don't trade much.  If you rule out the stock market completely, you are constraining yourself to bonds and real estate as your ownly investment vehicles.  Both of these require substantially more expertise to do well than investing in index funds.

Quoted: Quoted: 6. Don't invest in anything risky (like the stock market) unless you're an expert at it. Stick with the low risk stuff. In the long run, you'll come out far ahead. Gotta disagree with this one.  Investing in individual stocks involves greater risk, but investing in index funds doesn't require any expertise.  In fact, index funds have historically outperformed many "hand picked" mutual funds, and they typically have very low fees since they don't trade much.  If you rule out the stock market completely, you are constraining yourself to bonds and real estate as your ownly investment vehicles.  Both of these require substantially more expertise to do well than investing in index funds.

If it's low risk, then go for it. I guess the bottom-line is don't take a substantial portion of your savings and put them into anything medium or high risk.  Because if you start having financial problems and need that money, it's gonna be likely that you could be selling those investments at a loss. Just because the S&P500 is up on average 12% a year, doesn't mean it won't be down at the time you need to sell. When the economy is bad, and major layoffs are happening, people will be pulling out their savings from the market, and the odds are the market will be down and you'll be selling at a loss.

We could discuss the finer points of investing, but the point is... unless you're an expert, put your money into low risk investments, and over the long haul, you'll come out far ahead.

Have a small amount of Vegas money. Use that to invest in energy ETF's during hurricane season.

Quoted: Have a small amount of Vegas money. Use that to invest in energy ETF's during hurricane season.

That made me remember number 14:

14. NEVER gamble. You will lose in the long run. Do you think those billions/trillions of dollars in hotels in Vegas were built with all the money they lost paying off the winners?

TacticalStrat- How did you come to own your chain of clothing stores?

Some good points Tactical.

In some cases, it's pretty damn hard to "buy" a car or a house and have anything left over for savings.  Yeah, I know - then someone shouldn't be buying a house or a car.  

I'm in a tough position now sort of: Been renting for many years and it's time to stop pissing money down the drain (getting no equity) and buy a house.   Problem is that to buy a house in a neighborhood that isn't a "hood" it would strap me tight financially.  I would not really be able to put money in savings, which is not an option.   Sucks to be a hard worker, financially smart, and still not be able to get "ahead" a little.  

CMOS

Quoted: TacticalStrat- How did you come to own your chain of clothing stores?

I bought them in 1986. There were 8 stores then. I opened 5 more, then sold them in 94.

Quoted: Some good points Tactical. In some cases, it's pretty damn hard to "buy" a car or a house and have anything left over for savings.  Yeah, I know - then someone shouldn't be buying a house or a car.   I'm in a tough position now sort of: Been renting for many years and it's time to stop pissing money down the drain (getting no equity) and buy a house.   Problem is that to buy a house in a neighborhood that isn't a "hood" it would strap me tight financially.  I would not really be able to put money in savings, which is not an option.   Sucks to be a hard worker, financially smart, and still not be able to get "ahead" a little.   CMOS

Keep plugging away and making smart decisions, it will pay-off.

Quoted: Some good points Tactical. In some cases, it's pretty damn hard to "buy" a car or a house and have anything left over for savings.  Yeah, I know - then someone shouldn't be buying a house or a car.   I'm in a tough position now sort of: Been renting for many years and it's time to stop pissing money down the drain (getting no equity) and buy a house.   Problem is that to buy a house in a neighborhood that isn't a "hood" it would strap me tight financially.  I would not really be able to put money in savings, which is not an option.   Sucks to be a hard worker, financially smart, and still not be able to get "ahead" a little.   CMOS

First house I bought was out in the sticks. I had a long commute and it was in a lower working class neighborhood that was stable.  
I lived there for 10 years and then married. The wife didnt like it because of the size and commute so we moved. We didnt sell the house we rented it for years until we saw the market rise in that area then we sold. For what we sold the rental house for we could have paid off the new house we live in.

My point is everything is a compromise, get what you can afford where you can afford it.

Quoted: Some good points Tactical. In some cases, it's pretty damn hard to "buy" a car or a house and have anything left over for savings.  Yeah, I know - then someone shouldn't be buying a house or a car.   I'm in a tough position now sort of: Been renting for many years and it's time to stop pissing money down the drain (getting no equity) and buy a house.   Problem is that to buy a house in a neighborhood that isn't a "hood" it would strap me tight financially.  I would not really be able to put money in savings, which is not an option.   Sucks to be a hard worker, financially smart, and still not be able to get "ahead" a little.   CMOS

Thing is, when you are buying a home, you ARE putting money into "savings"...  it's just called "equity".

Listen to an expert

Robert Kiyosaki - Rich Dad, Poor Dad

Quoted: Well at least i will never marry,one less thing to worry about.

But when you get rich, you won't have any more problems finding women. They'll come to you, that is unless you counter with the Tactical Strat Haircut (one of the secrets not mentioned in the first post).

Quoted: Quoted: Well at least i will never marry,one less thing to worry about. But when you get rich, you won't have any more problems finding women. They'll come to you, that is unless you counter with the Tactical Strat Haircut (one of the secrets not mentioned in the first post).

LMAO!!!  

tag

Quoted: Thing is, when you are buying a home, you ARE putting money into "savings"...  it's just called "equity".

There are alot of good reasons to buy a house, but sometimes I think people stretch the truth a smidge, when justifying a home purchase. I'm NOT accusing you of this, btw.

In his example as a renter, owning a home really isn't much of a savings, because he will have to sell his residence to realize any gain. Equity does nothing for you until the home is sold. And then what? You'll simply turn around and put your "savings" right back into another house where it will sit until you sell it.

Not all areas of the country realize fast appreciation of real estate, either. Where I live, property values over the last 20 years have only outpaced inflation by a little. If you bought a house in 1976 for $35,000 and sold it today for $110,000 (this is a real example, btw) you haven't really made much of anything. A dollar in today doesn't have the same purchasing power it did in 1976.

If we are to call a home an investment, we must judge it's performance like we do our other investments.

Let's consider my home in California. At 19 years old, I financed a brand new two bedroom 900 sq ft house (my first home) for $87,000.  I sold the home two years and one month later for $120,500, which represents a 38.5% return on my investment and $33,500 in two years. WOW!

Or does it? Let's look at my investment in more detail. This investment, like many, has certain fees associated with it. There's no such thing as a free lunch, and a home used as a primary residence is no exception.

Heeding what is generally accepted as good advice, I used the services of a realtor to sell my investment for me. They earned their money, as my home sold in less than a month. Their effectiveness came at a price, however. I had to pay the buying and selling agents a combined 6% of my selling price, or $7,230. My $33,500 return is now $26,270.

As a first time buyer I managed to get away with about $5000 for down and closing (almost all of this was closing). The sum total of my financed amount and out of pocket closing costs were $92,000. Remember, I had to spend some actual cash ($5,000) to get this investment. So, my adjusted $26,270 return is now $21,270.

Remember, I had to borrow money for this investment, and I had to pay taxes and insurance while I owned it. For 25 months, principal, interest, taxes and insurance cost me $740 a month, or $18,500. So, my $21,270 earnings are now $2,770. Now, I was paying down the principal, but not by much. When I sold my investment, the financed amount was down to $85,000. So, we get to add $2000 to my earnings, which brings us to $4,770.

So all in all, my $87,000 investment made me $4,770, or about 5.5% TOTAL in two years. This isn't much to write home about. It wasn't even that high - While I owned that investment, I had to purchase a few odds and ends to maintain it. There's no sense in totalling them all up, but it doesn't take much to imagine that $4,770 being diminished further.

Still, $4,770 is $4,770. It's still money in the bank, right? Sure. It all went into my next house. See ya! Some investment. Lets also keep in mind that my home's value increased 38.5% in a mere two years. It would be irresponsible to expect this kind of performance as normal. In much of the country, it is unheard of.

Just some food for thought.

Quoted: Quoted: Thing is, when you are buying a home, you ARE putting money into "savings"...  it's just called "equity". There are alot of good reasons to buy a house, but sometimes I think people stretch the truth a smidge, when justifying a home purchase. I'm NOT accusing you of this, btw. In his example as a renter, owning a home really isn't much of a savings, because he will have to sell his residence to realize any gain. Equity does nothing for you until the home is sold. And then what? You'll simply turn around and put your "savings" right back into another house where it will sit until you sell it. Not all areas of the country realize fast appreciation of real estate, either. Where I live, property values over the last 20 years have only outpaced inflation by a little. If you bought a house in 1976 for $35,000 and sold it today for $110,000 (this is a real example, btw) you haven't really made much of anything. A dollar in today doesn't have the same purchasing power it did in 1976. If we are to call a home an investment, we must judge it's performance like we do our other investments. Let's consider my home in California. At 19 years old, I financed a brand new two bedroom 900 sq ft house (my first home) for $87,000.  I sold the home two years and one month later for $120,500, which represents a 38.5% return on my investment and $33,500 in two years. WOW! Or does it? Let's look at my investment in more detail. This investment, like many, has certain fees associated with it. There's no such thing as a free lunch, and a home used as a primary residence is no exception. Heeding what is generally accepted as good advice, I used the services of a realtor to sell my investment for me. They earned their money, as my home sold in less than a month. Their effectiveness came at a price, however. I had to pay the buying and selling agents a combined 6% of my selling price, or $7,230. My $33,500 return is now $26,270. As a first time buyer I managed to get away with about $5000 for down and closing (almost all of this was closing). The sum total of my financed amount and out of pocket closing costs were $92,000. Remember, I had to spend some actual cash ($5,000) to get this investment. So, my adjusted $26,270 return is now $21,270. Remember, I had to borrow money for this investment, and I had to pay taxes and insurance while I owned it. For 25 months, principal, interest, taxes and insurance cost me $740 a month, or $18,500. So, my $21,270 earnings are now $2,770. Now, I was paying down the principal, but not by much. When I sold my investment, the financed amount was down to $85,000. So, we get to add $2000 to my earnings, which brings us to $4,770. So all in all, my $87,000 investment made me $4,770, or about 5.5% TOTAL in two years. This isn't much to write home about. It wasn't even that high - While I owned that investment, I had to purchase a few odds and ends to maintain it. There's no sense in totalling them all up, but it doesn't take much to imagine that $4,770 being diminished further. Still, $4,770 is $4,770. It's still money in the bank, right? Sure. It all went into my next house. See ya! Some investment. Lets also keep in mind that my home's value increased 38.5% in a mere two years. It would be irresponsible to expect this kind of performance as normal. In much of the country, it is unheard of. Just some food for thought.

You made 5.5% over 2 years (more if you factor in the interest deduction), and got to live there. In those two years, a comparable apt would have cost you what....about $24,000???? Sounds like to me you came out about $30,000+ ahead by owning a house vs. renting an apt.

Quoted: [snip] 5. Never live above your means. If you're not saving 20% of what you make each year, you're spending too much. Every few years, take some of that money that you save and spend a little of it on buying parcels of land. 6. Don't invest in anything risky (like the stock market) unless you're an expert at it. Stick with the low risk stuff. In the long run, you'll come out far ahead. [snip] 8. Don't over-insure yourself w/ large life insurance policies or other insurance. The odds are you'll never need it. Never buy the extended warranty. 9. Only buy cars that you can pay cash for. Buy a Honda or a Toyota if you are having a hard time making ends meet. They will cost you far less in years of ownership. NEVER lease a car unless it's for business purposes. The only thing you should be financing is your house or some land that you buy. [snip] 11. If your place of employment matches your 401K deductions, put at least the maximum in that you can get matched. Put in more if you can afford it.

I agree with most of what you're written.  However, while I think your own home is a worth goal, and perhaps also some land, it isn't the best investment vehicle.  Just one of many.

As others said, index funds require little to no user intervention, and generally outperform the market.

Life insurance can be a waste, true, but those extended warranties can be quite reasonable if you've got a reliable company backing up the warrantee.  For instance, Costco generally has a no-questions-asked return policy for in-house warranteed products.   I feel comfortable spending the extra 5% when buying something big from them.

While new cars are certainly a luxury that you don't need, when buying low-end, the off-the-lot drop in value is quite mild, and with those 0% and 1% offers (read the fine print!) you aren't hurting yourself quite as bad as you make out.

While you should max out your 401k matching contributions, I wouldn't put extra in a 401k, you'd be better off with an independent roth, imho.

SubnetMask - I see what you are trying to say, and it's *technically* correct, but it's not all realistic.  Now, if you compared it to you renting a place that's the equivalent of the home you bought over the same period, I think that you'd see that you would have come out in the hole as TacticalStrat mentioned.  And not just a little bit, but you would have spent all the rent money with NOTHING to show.  By your math, you'd be in the hole for that much.

Buying a home, selling it and putting the equity into a new home is one of the best ways to increase personal wealth.

I bought my first home - a new construction - when I was 24 and paid $114K for it.  I bought the largest home I could afford and had to sacrifice to pay the mortgage (40% of my income).  Generally, they say to stay at 30% of your take home income for mortgage, but I figured I could stretch it.  I sold it 5 years later for $290K.  My real-estate fees were only 5% (hey, I knew the agent), but there were some associated costs (HOA selling fees, etc) that brought it up to ~5.75% in fees.  The new home I bought was another new construction and one of the builder's draws was that they covered the closing costs of the new build.  The new home cost me $400K, and I was able to roll all my equity into the new home.  It felt pretty good being 29 and being able to very comfortably afford a $400K+ home.

I'm doing pretty well now.  My only debt is my mortgage - no car payments, no credit card balances, no student loan debt...

Yes, buy a home if you can afford it.  It is a form of savings and is WORLDS better than renting for most people.

Quoted: You made 5.5% over 2 years (more if you factor in the interest deduction), and got to live there. In those two years, a comparable apt would have cost you what....about $24,000???? Sounds like to me you came out about $30,000+ ahead by owning a house vs. renting an apt.

About that interest deduction: Since the house was so inexpensive, I was only paying $6,200 a year in interest. As the only substantial tax deduction available to me at the time, I wasn't able to come up with enough to beat the standard deduction. So, there was no deduction to be factored in. I never took it.

And you can't say I came out ahead. This was my primary residence, so I had to turn right around and buy another house. I never saw any of that money. Not only did my house appreciate at a phenomenal rate, so did every other house around me. I really didn't make much money at all, even with the market conditions I was blessed with.

Owning a house is a wonderful thing, but I reject the blanket assumption that it is a wise investment. Sometimes it is, and sometimes it isn't. Note that a bad "investment" doesn't imply bad "purchase". My ammo doesn't appreciate at all, but I buy it all the time.

Judged as an investment, my house was a lousy one. I could have made more money in mutual funds. Compared to a renter, I made $4,770 in two years and had twice as many headaches. That same renter while "throwing his money away" could have socked away a mere $200 a month into a poor performing savings account and beat me. That same amount in a no-load index fund would have kicked my ass.

It's okay to refer to your primary residence as an "investment", but be honest when evaluating it's performance.

Quoted: Quoted: [snip] 5. Never live above your means. If you're not saving 20% of what you make each year, you're spending too much. Every few years, take some of that money that you save and spend a little of it on buying parcels of land. 6. Don't invest in anything risky (like the stock market) unless you're an expert at it. Stick with the low risk stuff. In the long run, you'll come out far ahead. [snip] 8. Don't over-insure yourself w/ large life insurance policies or other insurance. The odds are you'll never need it. Never buy the extended warranty. 9. Only buy cars that you can pay cash for. Buy a Honda or a Toyota if you are having a hard time making ends meet. They will cost you far less in years of ownership. NEVER lease a car unless it's for business purposes. The only thing you should be financing is your house or some land that you buy. [snip] 11. If your place of employment matches your 401K deductions, put at least the maximum in that you can get matched. Put in more if you can afford it. I agree with most of what you're written.  However, while I think your own home is a worth goal, and perhaps also some land, it isn't the best investment vehicle.  Just one of many. As others said, index funds require little to no user intervention, and generally outperform the market. Life insurance can be a waste, true, but those extended warranties can be quite reasonable if you've got a reliable company backing up the warrantee.  For instance, Costco generally has a no-questions-asked return policy for in-house warranteed products.   I feel comfortable spending the extra 5% when buying something big from them. While new cars are certainly a luxury that you don't need, when buying low-end, the off-the-lot drop in value is quite mild, and with those 0% and 1% offers (read the fine print!) you aren't hurting yourself quite as bad as you make out. While you should max out your 401k matching contributions, I wouldn't put extra in a 401k, you'd be better off with an independent roth, imho.

Index funds do outperfom the market and are generally a low risk. The key to cashing in on that historical average, is you have to leave the money in there for many years. You can see by the below S&P500 historical analysis that there are plenty of times where you can lose big. The longer you leave the money in, the lower your risk.


Below the returns to overlapping 12 month holding periods are presented. That is, one investment is from December 1925 to December 1926. The next investment is from January 1926 to January 1927 and so on. Notice that there are many more positive investment returns than negative ones. Nevertheless, there are periods of serious wealth erosion - especially during the Great Depression (notice that the "crash" of 1987 barely shows up on this graph!)




Next, the holding period is increased to five years. While there are still negative episodes, the maximum drawdown (negative return) is much more limited. In the post-1945 sample, there are only a handful of 5 year periods with a negative return (in the mid-1970s).



Finally, examine ten year holding periods. There are no instances in the post 1945 period where the average return has been negative. In the last 10 years, the average 10-year returns have been averaging about 13% per year.




The lesson here is that one must often look beyond the monthly statistics to get an appreciation for equity volatility. Over a longer holding period, the bad outcomes are often offset by good outcomes. This exercise shows why equity investment has been popular for the longer term investor.

Buying a home can be just as risky an investment as anything else. I have learned this first hand.

Quoted: Listen to an expert Robert Kiyosaki - Rich Dad, Poor Dad

He's not an expert financial person.  Google John T. Reed and Kiyosaki.   Kiyosaki is good at marketing.  

Warren Buffett is a financial expert.  

Quoted: Quoted: You made 5.5% over 2 years (more if you factor in the interest deduction), and got to live there. In those two years, a comparable apt would have cost you what....about $24,000???? Sounds like to me you came out about $30,000+ ahead by owning a house vs. renting an apt. About that interest deduction: Since the house was so inexpensive, I was only paying $6,200 a year in interest. As the only substantial tax deduction available to me at the time, I wasn't able to come up with enough to beat the standard deduction. So, there was no deduction to be factored in. I never took it. And you can't say I came out ahead. This was my primary residence, so I had to turn right around and buy another house. I never saw any of that money. Not only did my house appreciate at a phenomenal rate, so did every other house around me. I really didn't make much money at all, even with the market conditions I was blessed with. Owning a house is a wonderful thing, but I reject the blanket assumption that it is a wise investment. Sometimes it is, and sometimes it isn't. Note that a bad "investment" doesn't imply bad "purchase". My ammo doesn't appreciate at all, but I buy it all the time. Judged as an investment, my house was a lousy one. I could have made more money in mutual funds. Compared to a renter, I made $4,770 in two years and had twice as many headaches. That same renter while "throwing his money away" could have socked away a mere $200 a month into a poor performing savings account and beat me. That same amount in a no-load index fund would have kicked my ass. It's okay to refer to your primary residence as an "investment", but be honest when evaluating it's performance.

When your choice is investing your money in paying rent for an apt vs. buying a house, the house is in most cases, a much wiser investment. What other choice is there? You could always live at home with your parents until you're 50 years old.


My fiance bought a house in Austin in Jan 2004 for $395,000 (paid cash). She spent $13,000 on fixing it up after she bought it. She just sold it last month for $552,000. Her net profit after commisions and fees was over $114,000. Plus....she got to live in it for 2 years. If you deduct the $22,000 she paid in property taxes in those two years, she still cleared $92,000 before interest deductions.

13 is what is killing me
Downward spiral since I married

Quoted: Buying a home can be just as risky an investment as anything else. I have learned this first hand.

Not as risky as renting. There is a 100% chance that you won't achieve any gains or return on the money that you pay for rent.

Quoted: Buying a home can be just as risky an investment as anything else. I have learned this first hand.

Why did you edit that? That was some REALLY good information, as it shined some light on the subject.

Quoted: Quoted: Buying a home can be just as risky an investment as anything else. I have learned this first hand. Not as risky as renting. There is a 100% chance that you won't achieve any gains on the money that you pay for rent.

He edited it out, but the story he posted illustrated why renting would have been a better idea, in hindsight.

Quoted: Quoted: Buying a home can be just as risky an investment as anything else. I have learned this first hand. Why did you edit that? That was some REALLY good information, as it shined some light on the subject.

I decided afterwards that I don't want the intricate details of my financial situation on the internet for all to see.

Quoted: Quoted: Quoted: Buying a home can be just as risky an investment as anything else. I have learned this first hand. Not as risky as renting. There is a 100% chance that you won't achieve any gains on the money that you pay for rent. He edited it out, but the story he posted illustrated why renting would have been a better idea, in hindsight.

There are always situations and times where renting may be better than owning a home. One example is if you bought a home in Austin at the peak of the tech-boom housing market in 2000, and then got laid-off the next year. You'd be looking at a 20%+ loss if you had to sell in 2002. However, just like the S&P 500 historical average, if you average the risks over many years, you will certainly come out much better by owning a home for 60 years vs. renting for 60 years.

A big +1 on the saving part.

When I got my first real job, I was packing away 25% of my salary into savings.  Some into my 401K, some into my Roth IRA.  Right now I'm saving 26%.  I'm not rich yet, but I will get there one of these days.

tag

tag

Tag

Very good tips...

When I get out of this hole, I'll be doing my best not to get back into it.  Likely it will take a few more years... once the car is paid off, everything else will quickly be paid off, then I'm going to start saving and investing more.

The 401k tip is a good one, find out what the maximum your employer matches and put at LEAST that much into it.  It's FREE MONEY.  Get some.  

401k vs. a Roth IRA depends on everybody's individual circumstance...

do both if you can for sure.

for as much money I was socking away I was able to be bumped down to the next lower income tax bracket...

it is always smart to meet with a financial advisor


warren buffet is a genius, but he is a traitor...

I would edit two of them:

(2) add that the first month you can't pay off the balance, you cut them ALL up and close them as soon as they are paid off.

(11) Invest in 401(k)s to the max of the match only.  Then max the ROTH IRA to remove your money from .gov grips.  Then you can invest back in the 401(k) or any other vehicle.

add (15) Your first step in preparation for financial solvency is at least $1,000 in your hands.  Put it in an envelope, a lock box, a safe, or under your mattress - anywhere relatively safe.  This is not "fun" money.  It is not "investment" or "savings".  It is "stuff happens" money so you don't get knocked off plan by life's little surprises.

Quoted: You made 5.5% over 2 years (more if you factor in the interest deduction), and got to live there. In those two years, a comparable apt would have cost you what....about $24,000???? Sounds like to me you came out about $30,000+ ahead by owning a house vs. renting an apt.

Yep...but Real Estate is akin to any other investment...a gamble. We bought in '88 and shortly threreafter, the banking crisis hit Rhode Island (where we lived). When we sold in '97, the market was barely in the recovery stage. We lost thousands. We built this house in '97, re-fi'd to make it bigger in 02...the house is now worth more than triple its original price and we have about only a 1/3 of that mortgaged.

This house was a wise investment, last one, not so much...but like anything else, it's a crap shoot.

Strat, I agree with all the advice you give except on the credit cards...and the car financing. Responsible adults should be able to smartly finance these things...and will NEED to to build credit in order to qualify for those nice mortgages we all need to protect us from Uncle Sam every April 15th.

One thing I've noticed is that most "rich" people own their own business, although that's not everyone's thing. Some are just content to have a stable job at a large company, but I think you'll seldom get rich working for the man.


I do have a question though: If you live in a large major metropolitan area, you're constantly hearing about the housing bubble. If you have a lot of equity in your house (hundreds of thousands), does it make sense to sell your primary residence and rent for a few years to freeze your equity? Is there any chance house values might drop by 30-50% on the left and right coasts?

Quoted: One thing I've noticed is that most "rich" people own their own business, although that's not everyone's thing. Some are just content to have a stable job at a large company, but I think you'll seldom get rich working for the man.

Get rich slow is a time-honored pathway to financial independence, and can be done even working for the man. the trick is to spend less than you make, no matter how much or little that is. The other reason for living on less than you make (aside from saving money) is to stay acclimated to living on less. Once you retire, if you have been spending it all as fast as you make it, you will have a hard time living any other way.

I do have a question though: If you live in a large major metropolitan area, you're constantly hearing about the housing bubble. If you have a lot of equity in your house (hundreds of thousands), does it make sense to sell your primary residence and rent for a few years to freeze your equity? Is there any chance house values might drop by 30-50% on the left and right coasts?

This could happen (market crash). However, the problem is that to do well by sitting on the sidelines, you have to have a plan to get back in the market (true of housing or stocks). Suppose you take your money off the table and housing prices go down 50%. How eager will you be to get back into an investment that just tanked? In theory, if the fundamentals are good, it would make sense to get in at the bottom. Emotions come into play, though, and people will irrationally shy away from re-investing in real estate for a while, until the market improves. After that time, then the deals are no longer there.

#13 is redundant.  

6. Don't invest in anything risky (like the stock market) unless you're an expert at it. Stick with the low risk stuff. In the long run, you'll come out far ahead.

#6 eliminates marriage, as marriage is very risky for a man.  If you consider the odds of divorce/infidelity/false paternity,  the odds are probably ~80% that one or more of those will happen to you.  Not to mention the odds of getting cut off, or she's not in love anymore so you have to sleep on the couch (but you can still pay all the bills though).  

Only one I take issue with is #8.  My earning power is FAR in excess of my wife's, and if I die I want her to have a few million so I don't need to worry about her or my son.  I have recently bought quite a large policy, and the few hundred a month is well worth the peace of mind.

I am seeing a few common misconceptions show up in this thread, but not as bad as most people I speak to.  Arfcommers seem to be fairly financially savvy on the whole.

Keep one thing in mind - the 3 most popular ways to become wealthy in the US are:

1.  Inheritance
2.  Business Ownership
3.  Real Estate