The Sixteen Absolute Principles of Personal Finance

Dr. One BananaTwo

1. If you don’t want to mow a lawn, don’t buy a house. (There are other costs of home ownership.)
2. If you buy a house for investment purposes, consider all of the costs beyond the cost of mowing your yard. Property taxes, insurance, the new roof, the furnace and air conditioner, rotor-rooter man, plumber, interest on the mortgage, and closing costs when you bought the house. Oh yes, if it is an investment, you will need to reduce your return by the amount of the realtor’s commission and closing costs when you sell the house to realize the gain. Don’t forget the realtor’s list of things you have to do to make the house presentable, like paint, wallpaper and the cement needed for the broken sidewalk. And finally, the most overlooked cost in housing investment: the money you would have made, but didn’t, when you made the down payment in the beginning.
3. Don’t have your barber do your brain surgery, and don’t have your insurance agent invest your money for you. If the agent mentions the words “variable annuity,” visualize a large scalpel designed to carve out his retirement, not yours. (Buy term life when you need it.)
4. Never lease a car. (It’s just like a bad loan, only worse.)
5. Never borrow money to buy things that depreciate. That eliminates all items that can be purchased at Quik-Trip. It also excludes everything else that you buy, except for a house, maybe. (See number two above.)
6. If you think that everyone has a car payment, and you will always have a car payment, so what if you buy a new car every three or four years? Just do this calculation: what is $350 per month from the time you were 25 until you are 60? In the first case, you will have a 2018 Chevrolet Malibu and a car payment; in the second case you would have 1,200,000. Hope you enjoyed the new Chevys!
7. Don’t work for someone who didn’t take much time to hire you. (It’s their most important job. You really don’t want to work for someone who’s is incompetent, even though that quality got you the job.)
8. Always have health insurance. (Always have health insurance.)
9. Always buy an extended warranty on cars and appliances. (Our world has too many un-filled rat holes.)
10. Budgets are for rich people, too.
11. Write down what you own and what you owe. Subtract them. That’s what you’re worth. Try it, you may be surprised.
12. Write down what you make and what you spend. Subtract them. The result is what you make. It’s what makes number eleven above go up or down.
13. Don’t buy a used car that has McDonald’s wrappers in the back seat. “Dust on the hood, dirt in the engine.” – Thoreau
14. A killer stock tip is great whenever you want to buy a stock that has already soared through the roof.
15. Keep it simple. (Don’t buy a life insurance policy from a car dealer in order to insure that your loan gets paid off if you die.)
16. There are more than sixteen principles. Look for them.

  • sallyjadlow

    Good advice, Dr.!

    • Dane Zeller

      Thank you, Sally!

  • Theresa Hupp

    On #8: I told my kids to always have health insurance, and they have always had health insurance. Even when I had to pay for it.

    • Dane Zeller

      Theresa, you’re following rule #8.5. Never believe your children when they say, “aw, mom, that’ll never happen to me”.

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