Rules for Financial Success

Show Notes

• Live on less than you earn. If you don’t there’s no way to save and you’ll almost always run up debt.
• Buy term life insurance to protect your loved ones should something happen to you. Avoid mixing insurance with investments, as you do with whole life policies. Take the difference between term and whole life premiums and invest it separately.
• Make it a point, at least once a year, to request rate reductions if you’re carrying debt. You can sometimes have your credit card interest rate lowered by making a simple phone call.
• Ignore investing “experts” on TV, especially if they sing the praises of an individual stock. But at the same time keep most of your investments in stocks until you’re within 10 years of retirement. But not individual stocks … instead, invest in mutual or index funds that cover the market as a whole. Assessing the profitability of single companies is too complicated for the average investor.
• Buy cars for the right reason, reliability and fuel efficiency, not to show off to the neighbors.
• Don’t touch your retirement savings. Throughout your working years, there will be countless times when it seems like a good idea to tap into your 401k or IRA. It almost never is. Instead, work as hard as you can to build an emergency fund of 3 to 6 months living expenses.
• he more you can avoid advertising the less likely you’ll be to make impulse purchases. Most of it is designed to make you buy things you don’t need with money you don’t have.
• Look for hobbies that have little or no ongoing costs. An example might be teaching yourself how to play a musical instrument or taking a class on building a website or cooking.
• Don’t gamble. That means not playing the lottery. You have better odds of being hit by lightning twice than having your picture taken with that big check.

Here are some questions we answered from our callers on this program:

• I have a credit card that has 85K debt. I have 4K in savings and I am unemployed. Should I take money from my savings and try to start paying off the debt?
• What is the real advantage of a savings account specifically for college?
• Is there any way to hold property in a 401K status?
  I have a 20-year mortgage that I pay biweekly. They told me I might save a year if I continue doing this. What is the best way to pay it off quickly?