Nine Rules, One Index Card

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After you complete let me know if any of your favorites are missing from the list.

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Quote

”By working faithfully 8 hours a day, you may eventually get to be the boss and work 12 hours a day.” ~ Robert Frost

Nine Rules, One Index Card

Once upon a time (well only 2013) a science professor named Harold Pollack was quoted saying:

Of course, his audience wanted an example so Harold broke out his pen, pulled a dusty index card from the drawer, and wrote down the nine points shown below.

Let’s quickly break down each of them 👇️ 

“Max Your 401k or equivalent employee contribution.”

My take on this one is to make sure you take advantage of any 401k matches, company stock discounts, etc. Often times this will essentially be free money.

For example, my employer matches 5% when you contribute 6% of your salary. In this case if you earned $100k, and contributed $6,000, the employer would contribute another $5,000 on top of that.

At MINIMUM you should be contributing enough to get the full match from your employer.

If you need more info on setting up your 401k here is a recent post:

“Buy inexpensive, well-diversified mutual funds such as Vanguard Target 20XX funds.”

Low fee index investing works. If you want to get even more passive then target date funds are a great choice as they will automatically adjust your exposure to stocks, bonds, and international equities as you approach retirement.

“Never buy or sell an individual security. The person on the other side of the table knows more than you do about that stuff.”

Won’t lie, I do enjoy having a small amount of exposure to individual stocks. But let’s be real. Picking individual stocks is hard and less than 1% of retail investors will beat the market long term.

Low cost index funds/ETFs for the win (;

“Save 20% of your money.”

This is an all around good rule. Shoot to save 20% of your income and you’ll be setting yourself up for financial success.

Though, I talked about why I think 30% should be the goal in this write up.

“Pay your credit card balance in full every month.”

One of the golden rules of finance is to always pay off your credit card in full. The last thing you want to do is have the interest rate on credit card debt work against you.

“Maximize tax-advantaged savings vehicles like Roth, SEP, and 529 accounts.”

No ones like taxes. Make sure you are taking advantage of any accounts that give you a break from Uncle Sam.

If you are a long time Chump Change reader you know how much I stress Roth IRAs. Another great one that is not mentioned much is an HSA (health savings account).

Read how 91% use their HSA wrong in this post.

“Pay attention to fees. Avoid actively managed funds.”

Fees will eat your lunch. Actively managed funds often charge fees close to 1%. Compared to low cost ETFs like $VTI which charge 0.03% this can add up…QUICK.

“Make financial advisors commit to a fiduciary standard.”

In short this means your financial advisor will put your best interests ahead of their own or the firm’s (should be like this anyways *cough cough). Ideally, this means your investments will lean towards vehicles with lower fees

“Promote social insurance programs to help people when things go wrong.”

This one often stirs up controversy as it refers to programs like Medicare, Social Security, and unemployment insurance. Politics aside, you’ll see these deductions come out of your pay check as they serve as a safety net for US citizens.

Conclusion

Personal finance is one of those things you can make as hard as you want or as simple as you’d like. Mr. Pollach’s rules are a great place to start.

Long story short. Don’t make things too complicated.

Do the big things right, and your finances will show it.

Remember the index card. ~ Cade

Chump Change Picks

How To Get Rich Without Getting Lucky: Nick Huber shared a cool thread on the quickest way to build a small business and earn a substantial income.

Money Market Account vs Money Market Fund: What is the difference? The Money Guy Show posted a short six minute video explaining the similarities and differences of each.

Best Memes

Not the best move there young buck.

Who else is watching from the sidelines? 🙋 

Nothing in this email is intended to serve as financial advice. Do your own research. Thanks for reading, if you have any questions, comments, suggestions, etc. about the email don’t hesitate to send me a reply.