Awhile back, somebody asked me to summarize my personal finance “playbook” in a blog post. Well … Here it is:
- Debt is a form of indentured servitude where people agree to sacrifice a portion of their future earnings in exchange for instant gratification.
- ATM machines are the Achilles’ heel of impulsive spenders.
- History tells us that all fiat money eventually returns to its intrinsic value: zero. The US dollar is fiat money.
- Given a choice, it’s always better to live your life anonymously rich, rather than deceptively poor.
- If you have to ask your boss for a raise, then you need to find a new employer.
- When in doubt, always choose credit over debit.
- It’s almost impossible to effectively manage your personal finances if you don’t track your income and outgo.
- Only suckers play the lottery.
- People who properly manage their finances don’t fear credit cards. In fact, they embrace them.
- Credit card “convenience” checks are anything but.
- Frugality has its limits. The most effective way to stretch your income is by finding ways to earn more money.
- Treat your household like a business; actively manage your finances and continuously look for ways to maximize your income.
- Not everyone requires a budget to effectively manage their personal finances.
- When it comes to saving money, patience is a virtue.
- Nobody should pursue a non-technical college degree until they’ve calculated their projected payoff point and return on investment.
- Precious metals such as gold and silver are for insuring wealth; not investing.
- Money does not buy happiness. If you’re looking for nirvana, you need to focus on attaining financial freedom.
- Only fools and the financially naive believe that everyone who drives an expensive luxury car is financially well-off.
- Only fools and the financially naive believe that everyone who drives a beater is broke.
- No matter how nice your financial adviser is, nobody will ever care about your retirement nest egg and investments more than you.
- When it comes to managing personal finances, those who fail to plan are planning to fail.
- Keeping up with the Joneses is a fools’ errand. Besides, the Joneses are broke.
- Personal finance management is not rocket science.
- Achieving financial freedom becomes extremely difficult if life’s major milestones aren’t accomplished in this order: 1) education, 2) career, 3) marriage, 4) kids.
- Buy low, sell high, and have an exit strategy for every investment.
- It’s sometimes better to rent a home than own one.
- People who believe in personal responsibility, and strive to be self-reliant, control their own destiny.
- A spreadsheet can help even the most disorganized person successfully manage her personal finances.
- It’s more important to save for your retirement than your kids’ college education.
- Americans under 50 who are counting on Social Security to provide for them in retirement will be working until the day they die.
- If you can’t live on $50,000 per year, it’s your own fault.
- Failing to save and being financially dependent on friends, family or the government severely limits one’s choices in life.
- You can achieve financial freedom regardless of how much money you make.
- He who dies with the most toys, doesn’t win.
- Actions have consequences, which is why it’s important to always spend less than you earn.
- You can be financially successful without a college degree; and a college degree does not guarantee financial success.
- Sometimes it makes sense to splurge, especially when it comes to vacations.
- The harder you work, the luckier you’ll be.
Photo Credit: Rene Mensen
Jen from Virginia says
Hey Len. Great list! However, numbers 9 & 23 are the same.
Len Penzo says
Oops. Fixed it. Thanks, Jen! 🙂
(That’s what happens when I edit these pieces too close to my bedtime.)
David C. says
Great post and words to live by. I would have to add, “Marry someone with similar viewpoints on managing money.” Divorce profits few, but the lawyers.
Len Penzo says
Great input, David. Absolutely spot on.
David C. says
Thanks. Been there, done that and the lawyers got the T shirt. LOL.
Older and wiser these days…
Marie @ My Personal Finance Journey says
“The harder you work, the luckier you
I like #24. My cousin got pregnant at 16. I have to say that I’m very impressed, though, that she did #4, #3, #1, and #2 in that order, and has done pretty well.
(Ended up with a PhD in physics).
David @ VapeHabitat says
the 1st one is my everyday mantra. Hate to admit, but I tend to get affected by this one now and then
#31- I thought it was the $40k challenge?
Len Penzo says
It is … but I’m cutting some slack for inflation.
I originally wrote that $40k post back in 2009.
I think $40k is still pretty generous, at least for the area that I live in. As you said, you can achieve financial freedom regardless of how much money you make. It’s a function of spending, not earning.
Brian @ Luke1428 says
Great stuff Len! I’d wholeheartedly agree with #24. We did follow that pattern initially. However, later in life my wife decided to add #5) more education, and #6) a new career as a CPA. Making that transition was extremely difficult…three of the toughest years of our lives. But the entire family pitched in to help and we made it through. Now she is making double what she used to as a teacher and I’ve been able to become a stay at home dad and manage family affairs. So financial freedom can come with an alternative pattern, but like you said it’s much more difficult.
Zee @ Work To Not Work says
I occasionally play the lottery, I don’t expect to win anything, but it lets me dream. For the few days where there is the 0.0000001% chance of winning I get to plan how I will quit my job and plan vacations. Actually at that point it’s no longer vacation, it’s just life.
For those few days of letting my imagination run wild, it’s worth the buck.
Great stuff. ATM machine… From the department of redundancy department… 🙂
Great advice. A friend told be about your website. I find it very informative. Thanks.
Vangile Makwakwa says
Thanks for sharing this. The amount of times I said Amen when I read this post was ridiculous. I love it. It summarizes so much of what I believe especially this point: “Frugality has its limits. The most effective way to stretch your income is by finding ways to earn more money.”
Jon @ Money Smart Guides says
Awesome post! I personally love #4 the most: I see some people in my neighborhood that just looking at them, most would think that they are just getting by. But if you really pay attention, they are the ones with all of the money while the guy with the new car ever couple of years is the fool.
BARBARA FRIEDBERG says
I really liked reading through the entire list. I liked most of them and have lived by them as well. I don’t know how to influence others who aren’t reading this! And, very cool site redesign:)
Real Money says
“The Joneses are broke anyways.” Hah, there are some great and surprising nuggets in here!
Edward Lapinski says
Last year my return on Lotto tickets was 8.5% , not much but better then nothing. My idea is someone will win sometime. For less then the price of a fancy coffee and donut, each week (1-5$) I could become richer then I’ve thought of. Also consider this volunteer taxation which is better then mandatory.
If those in Washington, DC had some agates they would start a state and national lottery with prizes tax free. Consider each city would have a new tax source, county, state and federal would receive their share at time of sales. Every person could use an extra 1 or 5-10- 15-20-25 or 50K tax free?
The only problem I see is who would manage it. We already see the problems of super sized gov’t agencies. Thanks Len.
Jonathan Craig says
ATM machines? What about debit cards? You don’t even see the money you are spending!
Len Penzo says
Bram Scolnick says
One of the best “articles” I’ve ever read. Really awesome, insightful and energizing. I suppose it helps that all of these ring true to my beliefs, so either it’s re-enforcing what I believe, or teaching me a few new things. Either way, thank you.
Len Penzo says
You’re very welcome, Bram. I’m glad you enjoyed it.
Henry Jacob says
A interesting article to read. Thanks a lot for sharing this. Good Work. Keep it Up.
What an amazing list!. I adore you for making all these practices in reality. As for me, I have been suffering financial distress because of lack of financial management. Sometimes I use my credit card as an alternative when I want to shop or eat in a fine dining restaurant. Then when the date of payment arrives, all my salaries will only go there. I have no idea why I cannot control my expenses. It breaks my heart.
Nice article here. Very clever and it was fun to read. Thanks for taking the time to put it together.
These ideas will definitely help us to grow our business. Satisfy with your answer because this is what I am looking for.
RD Blakeslee says
“Debt is a form of indentured servitude where people agree to sacrifice a portion of their future earnings in exchange for instant gratification.”
Debt is a means for buying capital that has a purchase price higher than the purchaser can pay for 100% up front.
Lauren P says
Great list, Len. To any Star Trek Deep Space Nine fan, your list reads like a counterpart to the Ferengi’s “Rules of Acquisition”! :o)
Len Penzo says
Thanks, Lauren! 😃