6 Money rules that will make you a Millionaire..
this post was inspired by thinkglink
#1 Save 10%
On top of you 401(k) and 403(b) maximums. This money will be tax free forever. So make sure you maximize it. And make sure you get the maximum employer contribution too. But, otherwise you should be saving at least 10% and more like 30% in your 40s and 50s to catch up. In retirement $1M will give you approx. $40k per year to live, on top of social security.
#2 Do not overbuy
Even though rates are 3-4% and most brokers will tell you it is fine to borrow 3-4 times your salary, keep you debt level low, around 2-2.5 times your salary gives you that much more to put into your savings/investments. You will be amazed how quickly it starts to add up.
#3 Buy late model used cars and keep them for 10 years
Cars usually lose 30% of their value in the first 12months, and it is cheaper to keep an old car running than to buy a new one.
#4 Pay off the highest, non-deductible debt first, and always pay off your credit card
The interest on your mortgage is deductible. And credit cards will always drag you down if you do not pay off the balance at the end of every month. You could be paying 19% on your balance, and 30% on late payments. Which will pretty quickly start eroding your savings. So, get into the habit of paying it off early. Then you will be able to reap the rewards bonuses, without paying the penalty of high interest bills.
#5 Invest in index funds
These are funds based on S&P 500, and in almost all cases will outperform mutual funds.
#6 Study
Put some time aside each week to study your finances. Read blogs, books and other resources (there are plenty of great free resources) to build your financial vocabulary and knowledge. The more information you have at your disposal the stronger will be your ability to plan for your financial moves.
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