“Nice fish, Ken. You know what Nietzsche said about animals? They were God’s second blunder.” – A Fish Called Wanda
Kids are very expensive, much more so than the tax deduction you get for them. But I’m hoping mine pay back in dividends if I ever need a kidney or four. Don’t think of them as your offspring, think of them as living replacement organ storage.
Back over a decade ago in 2003, he wrote about his financial advice for, well, everyone. He thought that life was pretty simple, and the rules to not screwing up were likewise simple. And, in general he followed his own advice. His list is in bold. My comments follow without the bold.
- Make a will. I haven’t done this. I understand that it would solve a lot of problems if I died, but I won’t be around to watch. Unless I become a WilderGhost®. And then I could haunt them as they bickered over who got my circa 1995 mechanical pencil. This is just asking me to take time out of my day and money out of my pocket now so people won’t have bicker in the future. Well, they’re gonna bicker regardless.
- Pay off your credit cards. January 15, 2001. That day I paid off my credit cards. For good. The reason I had the balances in the first place was to pay for a divorce, which was quite expensive. Divorces are expensive because they’re worth it. I kid. But not really. Credit card interest rates are high, really high. Whatever it takes to pay off your credit card debt (outside of an overly complicated heist involving George Clooney and a group of tanned Hollywood sex criminals actors and a French goat) it’s worth it.
- Get term life insurance if you have a family to support. I’ve always had this, but as I get older the amounts are less – The Boy and Pugsley have less time at home every year, and The Mrs. is getting older, so will have a day less of need for cash . . . each day. Again, Mr. Adams is asking me to fork over cash for things that only are beneficial after I’m dead. Not a great sales pitch.
- Fund your 401k to the maximum. It’s now in a comfortable, identified place for the government to eventually raid so they can buy fighter jets, healthcare for people without jobs, and PEZ® for Albanian albinos with alopecia. You’re welcome. I guess I don’t need heat after I retire.
- Fund your IRA to the maximum. I’ve never had an IRA. Again, time off from work to go set one up. And I’m confused as to what I would do with an Irish Army anyway.
- Buy a house if you want to live in a house and can afford it. Nice, simple language. I’ve owned five houses (on the fifth now) and I think that they’re net neutral as far as investments (I came out well because I negotiated a clause in my offer for my last job. Without that, I’d only be up $10,000. But I’m not really up $10,000, since I’ve had to pay much more than that in upkeep over the years. I don’t expect to make money on my current house when I finally sell it. Don’t live like you have to make money on the house – houses can be really crappy investments and can also kill your financial soul (LINK).
- Put six months’ worth of expenses in a money-market account. This simple measure means that emergencies are not as threatening. If you have six months – you can get rid of stuff, change your financial structure, and find a new source of income. If you’re waiting on next week’s check to pay your (late) power bill? You’ve got no maneuvering room. Money is stored freedom. Have some hanging around. Corollary? It’s easier to get that level of cash if your expenses are low.
- Take whatever money is left over and invest 70% in a stock index fund and 30% in a bond fund through any discount broker and never touch it until retirement. Great advice. Wish I would have done it. But my money mainly showed up in lumps. So, I need to (gradually) get it into the stock index funds. The last thing I want to do is dump all my cash into a market near an all-time high. As a side note: almost every single stock I’ve ever bought has been a poor decision, since I was just picking randomly, not with a value investment strategy like Warren Buffett uses. Thankfully, I’ve not hurt our family, since my stock picks have been limited in size to the point I only care marginally.
- If any of this confuses you, or you have something special going on (retirement, college planning, or tax issues), hire a fee-based financial planner, not one who charges a percentage of your portfolio. Never trust a person whose income is decided based upon their choices with your money. Pay them upfront.
Things I would add:
- If you’re a guy, don’t marry early. Thirty might be a good number. Have some really lousy relationships before you select “the one”. Because the wrong “one” will mess your finances up for years. But you might walk away with good stories.
- If you’re a girl, find the best guy you can. Early (20?) marriage is okay for you, provided he’s on his way in his career and can afford stuff. It’s probably preferable to marry early. (Uncomfortable Truth) Oh, and girls? It appears the stereotypes are true. Don’t sleep around before you get married – the number of guys a girl has slept with is directly correlated with probability of divorce. It doesn’t work the other way around, the ability of a guy to be faithful seem to be unaffected by the number of partners they had. Don’t shoot the messenger – the facts are the facts.
- Don’t have kids. I’m joking. If you’re reading this blog, you should have a dozen or more, because you’re smart, handsome, and the world needs more of your type. (I’m not kidding.)
- Don’t have kids outside of marriage. You’re just as financially entangled, but no snuggle time.
- Don’t marry someone you’ll divorce. How would you know? You followed my steps one and two.
- Don’t have kids with someone you’ll divorce. Kids rarely make a relationship better. And they certainly won’t make the house smell better.
- Don’t buy a new car. Unless you have a million dollars. And probably not then. (LINK)
- Find a good job (LINK).
Nietzsche, circa 1875. He was 31 in this picture. His mustache was 44. I wonder if when his neighbors were loud and he was trying to sleep if he twirled that thing up and used it to plug his ears?
Now don’t go asking me how many of my adders that I’ve broken. Okay, I’ve broken 1., 3., 5., 6., and 7. That’s how I knew to add these to the list . . . experience, like a divorce, is expensive. And worth it.
Remember what Nietzsche said: “That which does not kill me makes me stronger, but it does make me unable to retire at age 45.”