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Here are my personal finance Ten Commandments that I have always abided by and it has worked very well for me. Feel free to share YOURS!
(1) Never use a credit card for purchases that you won't be able to payoff within 30 days. You should be using cold hard cash for those things. Your credit card should literally be only for improving your credit score or getting cash rewards.
(2) Keep things longer before replacing them. I only replace my electronics once every 10 years, to the extent they meet compatibility requirements and function well. I replace my computer once every 5 years. But when you buy a new one, buy a nice, high quality one.
(3) Keep your car for 10 years, but keep it in top notch condition. After the first several years, the car should be paid off. After that, you should accumulate and reserve the cash for your NEXT car purchase, which should be purchased outright. You will never have a car payment again. My car is 7 years old and I will keep it for 3 more years and then purchase outright. That will feel good. And it will allow you to earmark that $400 monthly car "payment" toward a nicer house or vacation. And NEVER lease a car.
(4) Always save at least 10% of your gross income in a savings account, reserved for special purchases such as a home, car, vacation or expensive item. Do not live paycheck to paycheck, even if it means sacrificing something, somehow.
(5) Always leave room in your budget for retirement contributions. Do not say, "oh, well I could always save for retirement later in life." Just settle for a decent enough apartment/house and take pleasure in saving for retirement so that you CAN actually retire.
(6) Always keep an emergency fund in an amount appropriate for your situation. It should be liquid cash literally just sitting in a regular savings account. Don't say, "oh, well I could just use my credit card or withdraw from my 401k, or collect unemployment in case of emergency." And do NOT touch it even if you want to do that home improvement project you've been dreaming of!
(7) When purchasing a house, DOT NOT put anything less than 20% down, ever. You're asking for an extra high monthly payment, PMI, higher interest, etc. Do not cut corners. Put the damn 20% down, even if it means waiting several more years. You will benefit from having much more instant equity and a lower monthly payment.
(8) Do not get all excited by coupons and deals. You need to view these things as the devil trying to get you just spend even MORE money than you would normally. ONLY use the coupons and deals if you actually need or want the item at that point in time. New coupons and deals are always coming right around the corner again.
(9) Student loan debt should be paid off before you ever purchase a home. You cannot sell a college degree like you can with other assets and have someone else assume the liability. It has to be paid off sooner or later, so might as well pay it off ASAP.
(10) NEVER include bonus/nonguaranteed income in your budget to cover monthly expenses that ARE guaranteed. Bonuses are often not guaranteed, and are highly variable. Just stash it away in accumulated savings for those future big purchases. Guaranteed, fixed expenses should be covered by guaranteed, fixed income.
I think 1 2 3 are a bit extreme. I wouldn't have a problem using a credit card with promo pricing for longer than 30 days, TVs are relatively cheap so I don't mind upgrading sooner than 10 years and I will turnover my cell phone every two years or so, I buy cars used and keep them many years but see no reason to make 10 years a rule. More than 20% down on a house is overkill too IMO but I do have a 5/1 io arm in full disclosure
I think 1 2 3 are a bit extreme. I wouldn't have a problem using a credit card with promo pricing for longer than 30 days, TVs are relatively cheap so I don't mind upgrading sooner than 10 years and I will turnover my cell phone every two years or so, I buy cars used and keep them many years but see no reason to make 10 years a rule. More than 20% down on a house is overkill too IMO but I do have a 5/1 io arm in full disclosure
lol. Living up to your screen name I see.
Nep321's list is good if you want to stay ahead of the game. I follow most of Nep's rules. The only one I may fudge on is cell phones. I upgrade about every three years.
Nep321's list is good if you want to stay ahead of the game. I follow most of Nep's rules. The only one I may fudge on is cell phones. I upgrade about every three years.
Yeah, for smartphones, I upgrade every 2 years. But for a TV, receiver, speakers, etc., I try to get 10 years out of them, unless my content (video games, movies, etc.) pushes the boundaries in such a way that it would be beneficial to upgrade sooner. Some people, however run out to Best Buy on Black Friday just to buy a stupid TV on a whim. I do NOT do crap like that. In fact, I avoid Black Friday altogether. Again, I was being quite general. My rules are rules of thumb. There will always be occasional exceptions to my ten commandments lol.
Here are my personal finance Ten Commandments that I have always abided by and it has worked very well for me. Feel free to share YOURS!
(1) Never use a credit card for purchases that you won't be able to payoff within 30 days. You should be using cold hard cash for those things. Your credit card should literally be only for improving your credit score or getting cash rewards.
(2) Keep things longer before replacing them. I only replace my electronics once every 10 years, to the extent they meet compatibility requirements and function well. I replace my computer once every 5 years. But when you buy a new one, buy a nice, high quality one.
(3) Keep your car for 10 years, but keep it in top notch condition. After the first several years, the car should be paid off. After that, you should accumulate and reserve the cash for your NEXT car purchase, which should be purchased outright. You will never have a car payment again. My car is 7 years old and I will keep it for 3 more years and then purchase outright. That will feel good. And it will allow you to earmark that $400 monthly car "payment" toward a nicer house or vacation. And NEVER lease a car.
(4) Always save at least 10% of your gross income in a savings account, reserved for special purchases such as a home, car, vacation or expensive item. Do not live paycheck to paycheck, even if it means sacrificing something, somehow.
(5) Always leave room in your budget for retirement contributions. Do not say, "oh, well I could always save for retirement later in life." Just settle for a decent enough apartment/house and take pleasure in saving for retirement so that you CAN actually retire.
(6) Always keep an emergency fund in an amount appropriate for your situation. It should be liquid cash literally just sitting in a regular savings account. Don't say, "oh, well I could just use my credit card or withdraw from my 401k, or collect unemployment in case of emergency." And do NOT touch it even if you want to do that home improvement project you've been dreaming of!
(7) When purchasing a house, DOT NOT put anything less than 20% down, ever. You're asking for an extra high monthly payment, PMI, higher interest, etc. Do not cut corners. Put the damn 20% down, even if it means waiting several more years. You will benefit from having much more instant equity and a lower monthly payment.
(8) Do not get all excited by coupons and deals. You need to view these things as the devil trying to get you just spend even MORE money than you would normally. ONLY use the coupons and deals if you actually need or want the item at that point in time. New coupons and deals are always coming right around the corner again.
(9) Student loan debt should be paid off before you ever purchase a home. You cannot sell a college degree like you can with other assets and have someone else assume the liability. It has to be paid off sooner or later, so might as well pay it off ASAP.
(10) NEVER include bonus/nonguaranteed income in your budget to cover monthly expenses that ARE guaranteed. Bonuses are often not guaranteed, and are highly variable. Just stash it away in accumulated savings for those future big purchases. Guaranteed, fixed expenses should be covered by guaranteed, fixed income.
While these are all desirable, they are unrealistic for someone living at poverty level unless they don't have to pay for a roof over their head.
While these are all desirable, they are unrealistic for someone living at poverty level unless they don't have to pay for a roof over their head.
Well, for most people these things should be doable. Even someone in poverty can follow most of these principles.
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