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”. Unless…you are assured your investment (primary residence, rental property, other) will increase substantially in value over time. Lucky you Toronto and Vancouver. Not everyone owns a million dollar home that appreciates 15-20% more every single year. #unsustainable.
- We don’t have this confidence in our home. So, we’re trying to kill our mortgage debt. The other benefit of not having any mortgage debt is I don’t have to think (or write) about mortgage debt anymore.
- All credit card debt is “bad debt”.
- We try and avoid credit card debt as much as possible.
- Lines of credit debt should be discouraged.
- We feel borrowing money makes other people wealthy.
- Borrowing lots of money to buy a depreciating asset (e.g., a car) is unwise.
We strive (and have done so in the past) to reduce all forms of high-interest debt before focusing on any savings for investment purposes. I would encourage you to do the same.
- 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.
- We believe money invested should not be touched.
- Consider keeping cash savings for all upcoming, short-term expenses.
- We try and save for expenses in advance as much as possible.
- 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 10% net income if we can and then spend the rest. This is our favourite budgeting rule of thumb.
- Consider cash savings for investment purposes as a long-term endeavour.
- We try to avoid withdrawing money from our investments for short-term expenses.
- 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 around 10 to 15 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?