Great comment by Christine…
Although I didn’t appreciate it when I was younger, I now realize the tremendously positive influence my parents and especially my grandparents have had on my life and my finances. Heavily impacted by the Great Depression, my grandparents inculcated the following values into our bloodstreams at a very early age:
1) 30 year Fixed. Period. If you can’t buy the house with this structure, you can’t afford it. End Of Story.
2) Don’t go into debt for your living expenses. Live within your means.
3) Save at least 10% of your money every paycheck.
4) Have an emergency fund to provide you with at least a 6 month cushion.
5) Buy the best quality you can afford, take care of it and replace it only when it wears out.
Is this glamorous? No. Do I drive a 7 series leased BMW? No. Do I buy nice things? Absolutely; however, our 401-ks are fully funded, we have 6 months of expenses covered and a growing investment portfolio that will provide for our security later in life…at least until Hillary decides that it isn’t fair that I have so much and confiscates my wealth with her ravenous appetite for taxation and redistributes it to make things fairer for those who “deserve our helpâ€.
via Herb Greenberg, who I just watched on CNBC.
2 comments ↓
[...] How to Live Cheaply Live beneath your means. [...]
Can’t argue with any of the 5 points for maximum safety.
For #1, the impact of the subprime loans that people used to buy homes, when they can only barely afford the teaser rates, is the major financial problem you see today. There is a place for adjustables mortgages when interest rates were on their way down or when your income was “most likely” on its way up.
For #4, that emergency fund doesn’t always have to be cash sitting around. It could be an home equity line or a high credit card line with low interest that is ready to be tapped as needed. This frees up your cash to be fully invested in high return investments.
But in the end, these are enduring principles for handling your personal finances.
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