This boring money advice never goes out of style
I’ve read countless personal finance and investing books and articles. I’m sure I’ll read many more. Most books and articles all say similar things just differently – maybe you don’t need any more money advice at all!
Here is a collection of some ultra-boring yet time-tested money advice that never seems to go out of style. For kicks, I’ll include our efforts that take this advice to heart.
- Holding long-term mortgage debt, in general, is not considered “good debt”. The only condition on this is…unless you are assured your investment (primary residence, rental property, other) will increase substantially in value over time. In general then, killing mortgage debt and all other debt quickly is a good idea.
- All credit card debt is “bad debt”. There is no debate here. Pay off all your credit debt, in full, every month.
- Lines of credit debt should be discouraged. Lines of credit are for temporary, short-term use, as in months not years. A reminder that borrowing lots of money makes other people wealthy.
- Borrowing lots of money to buy a depreciating asset (e.g., a car) is unwise.
- Access to some money, on demand, in an emergency, is usually a good thing.
- We needed our emergency fund in 2016. I’m glad we had it. We now keep our emergency fund at this value.
- Avoid borrowing money, long-term, for emergencies. See “Debt”.
- Try to keep many weeks of cash savings available. We believe some cash savings helps us sleep at night. Otherwise, I do stress over it.
- Consider cash savings as something different than money invested. Savings are for near-term expenses. Investing is a long-term endeavour.
- To save money, you must earn more than you spend.
- We’ve made this one of our primary financial rules. We pay ourselves first, every month, more than the 10% net income that some experts suggest. This is our favourite budgeting rule of thumb.
- Consider cash savings for investment purposes as a long-term endeavour. Avoid withdrawing money from your investments for as long as possible prior to any retirement.
- Diversify your investments.
- We own some low-cost Exchange Traded Funds (ETFs) for this. Consider the same for your portfolio – this is what makes a great ETF here.
- Keep your investing costs low. We buy new investments a few times per year. We don’t trade stocks – so we keep our transaction costs low.
We try and apply this above advice but we’re not always successful. We’re far from perfect and we overspend now and again. Maybe the same goes for you. This blog however helps keep me honest so whenever things go awry I’ll try and remember what I wrote here to get back on track. I hope this post helps you too.
What boring money advice do you try and follow for success? Who did you learn that from?