By Dale Miller
- Save like a maniac—at least 15% of your gross pay. Save more than 15% as your income increases.
- Avoid debt like the plague. Aside from a fixed-rate, 15-year mortgage costing no more than 25% of your take-home pay, adopt the following philosophy: If I can’t pay cash for something, I can’t afford it. Consistent with that, pay your credit card off in full every month—no amount of frequent-flier points, or cash back, is worth paying 18–20+% interest. If you can’t discipline yourself to do that, cancel your card, cut it up and only use a debit card/cash.
- Invest sensibly in low-cost, well-diversified equity index mutual funds. You can learn all about doing so on Vanguard’s website.
- Understand the difference between needs and wants. Buy your needs, and only the wants you can afford. (See #2 above.)
Simple rules, really. Now all you have to do is follow them. Good luck!