Ten tips for financial independence and the good life

This was written by Mark Gallagher and makes a lot of sense.

1. Keep your life as simple as possible.

How do you do that ? Take a lot of time on the big decisions – who you marry, buying a house, and where you work.

2. Learning what is most valuable. What brings happiness?

Most people don’t learn this one until they are 65 years old. If you figure this out when you are 30, the good life is guaranteed. Ok, this is it – the most valuable and enjoyable things in life are your health, time with family and friends, and a job that you enjoy. Buying expensive things brings less and less satisfaction. Buying an expensive car, vacation home, or latest large-screen TV will bring fleeting moments of happiness. Skip the expensive stuff when you are young, build your savings, and later in life you will have the financial freedom to spend time with your friends and family and a job you enjoy.

A related point is to keep your life and your possessions in balance. Here is how you do it-

Every time you acquire something new, take the time to give something away. Buy a new car, think about selling your old car (at a below market price) to a relative or neighbor that needs a good used car at a low price. Buy a new TV or computer, give your old one away for free through web sites like freecycle.

3. Buying a home.

One of your biggest decisions. Take a lot of time. Never rush.

Rent and save money until you can afford a nice, new construction home in a new and growing neighborhood. Sell this house in 5 years and buy a home in the best neighborhood you can afford and stay in this house for many years.Take a lot of time. Look at a lot of houses and when you narrow it down to one house, walk around the neighborhood on a Saturday morning before you make any decision.

4. Buying a car.

Buy a affordable car, take care of it, and own it for 8 years. Then sell it and buy a new one. Never lease a car.

5. Vacation home/hobbies

Never buy a vacation home, but spend money on nice vacations each year. Never buy a time-share of any kind. Take an interest in low cost hobbies

6. Monthly Services – cell phones, cable TV, internet access, lawn service.

Never, I repeat never, buy anything from a phone solicitation, someone that knocks at your door, a TV infomercial or a street salesman when on vacation. Be careful buying anything with a monthly service fee. Sweat the details to keep these costs as low as possible. Never sign long term contracts.

7. Debt.

You should never carry a balance on a credit card when you are over 30 years old.
You should have no debt (other than the mortgage on your house) by the time you are 40 years old.
You should have no debt (owe nothing on your mortgage, no car payments) when you are 50 years old.

8. Cost of Sending Kids to College

It may not be realistic to pay for college and be debt-free by the time you are 50. So if you have big college costs in your late 40’s or 50’s you should try to be free of all debt by the age of 60. But, the most important thing about paying for college is selecting the college for your children. You can’t let your kids decide where they want to go. If you let the kids decide, you may compromise your financial security for your retirement. The parents must select the school they can afford. This is a huge financial decision. Also, attending a community college the first two years of college and a state university for the junior and senior years results in huge savings for the cost of a good college education.

8. Save, save, save.

Save a lot of money in your 30’s and 40’s. Invest it in index stock and bond funds.At about age 50, shift about 80 percent of your savings into safe, income producing bonds

9. Job downshifting / Fun up shifting.

Now you are in your early 50’s, you have no debt, you have a large nest egg that generates good interest income, and you have a lot of flexibility.Find that job that you really enjoy – something low-pressure and rewarding.Spend more time with your family and friends. Pick up tennis or swimming.Continue to work at this fun job into your early 60’s. Retire if you like and continue to live off the interest generated from your nest egg of income producing bonds.

10. How To Avoid the Complications of Divorce

1. Don’t rush any decision. You need enough time to get to know the “real personality”.

2. Related to #1, the real personality is exposed by how someone reacts to something that goes wrong when interacting with a stranger (waiter in a restaurant or driver on the road). If someone is nice to you, but rude to a waiter…. you will be treated like the waiter after you are married. Also, if someone has a poor long-term relationship with more than one parent or brother or sister, this is a clear warning sign.

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