17 Rules to Grow Rich By
Rule 1: For return on investment, using quality materials and a cohesive design provide the best returns on a home upgrade. Bathroom and kitchen upgrades add the most equity.
Rule 2: It’s worth refinancing your home only if you can reduce your overall costs including the added refinancing costs.
Rule 3: Your total housing payment should not exceed 30% of your net income. Total debt payments should not exceed 40% of your net income.
Rule 4: All else being equal, the best place to invest is in an investment plan through your work benefits up to the full company match. After this, invest in a Roth IRA. Still have money to invest? Put it in a place that you can easily access in ten or fifteen years, like an index fund.
Rule 5: To figure out what percentage of your money should not be in stocks, sutract 30 from your age and then double that number.
Rule 6: The only way you should compare mutual fund returns is by first subtracting the fees off the top of any fund; this will expose the true value of the fund.
Rule 7: If you don’t understand how an investment works, do some research before you invest; don’t just write it off.
Rule 8: If you’re not saving 20% of all of your income in excess of $20,000, you aren’t saving enough.
Rule 9: Keep two months’ worth of living expenses in a bank savings account or a money market account for each person in your household. So, if four people live in your household, have eight months’ worth of living expenses.
Rule 10: Aim to accumulate enough money to pay for what four years of undergraduate tuition would cost for your child at the institute of your choice on the day he or she was born. The rest can be borrowed or covered when the time comes.
Rule 11: When you buy insurance, compare the packages at multiple insurance providers with the highest deductible you can afford. It’s the easiest way to lower your premium.
Rule 12: The best credit card is a no-fee rewards card that can earn you at least 1.5% in return that you pay in full every month. But if you carry a balance, high interest rates will wipe out the benefits.
Rule 13: The best ways to improve your credit score is to pay bills on time, to reduce the balance on your credit cards, and to not cancel old cards when you’ve paid off their balance.
Rule 14: The best way to save money on a car is to pay cash for a late-model used car and drive it until it’s junk. A car loses 30% of its value in the first year.
Rule 15: When a new gadget or computer comes out, select the model you would like to buy, then wait three months for the price to lower. If you still want that model, buy it; if not, move on or select a new model and start a new three month wait.
Rule 16: Save money on airline tickets by buying early, comparing rates, and being flexible when it comes to carriers and options.
Rule 17: When you shop for electronics, don’t pay for an extended warranty.
