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MONEY ADVICE
Dave Ramsey Show CNN/Money WWW.BANKRATE.COM www.kiplinger.com
1) Do Not Lease a vehicle - it is not wise even under certain circumstances despite what
uninformed financial magazines might say. Don’t even think that troubles among the
automakers will force them to make giveaway lease deals. Leases will remain their most likely
way to generate money in hard times.
2) Do Not take Adjustable Rate Mortgages or Interest Only Mortgages.
3) Do Not take Home Equity Loans unless you are desperate.
This is not a wise way to finance almost anything.
Low interest and a tax break isn’t worth losing your home.
4) Do Not take a Car Loan beyond 2 years. If you cannot do this, you probably cannot afford the car.
Five year loans create “upside down” loans (owe more than the value of car through much of the loan).
Better: pay cash for a car.
Best: pay cash for a used car. Typical millionaires buy 2-year old used cars.
(see Millionaire Next Door, Dave Ramsey)
5) Do Not listen to anyone who thinks maintaining a Home Mortgage (rather than paying it off)
for the “Tax Deduction” is a smart idea.
This person has fallen for the greatest myth in American personal finance.
A typical “tax deduction” could be just 25% of what you pay in interest on your mortgage -
you don’t get the other 75% back! (see Dave Ramsey)
6) Do Not listen to financial advisors who base advice on “Good Debt-Bad Debt” terms
(common in many popular financial magazines and web sites). Ask them to show you proof of
their NET financial worth. People who maintain debt are less likely to have greater net
financial worth. see “The Millionaire Next Door”
7) Do Not believe that a new vehicle is always more reliable. Most 3 year old Toyotas and Hondas
made in the U.S. are far more reliable than any brand new Mercedes
(one of the least reliable makes sold in the U.S., source Consumer Reports)
8) Do Not rely on Social Security or Medicare. Medicare is an a far worse crisis than
Social Security. Benefits will be reduced no matter what politicians promise.
(see America the Broke, Running on Empty)
9) Do Not put cable TV or high-speed internet above your child’s college fund.
Calculate what $80 - $120 per month at 9% growth per year in highly rated mutual funds
for 20 years will yield.
Simple Savings Calculator
Answer: $53,430 - $80,146**
10) Do Not put an SUV above your retirement. Calculate what $400 per month at 9% per year
for 43 years (from age 22 to 65) will yield. Simple Savings Calculator
Answer $2.46 million**. Also consider much smaller growth if there is an extended market
crash of possibly 10 years or greater.
Consider calculating numbers based on current FDIC insured CD rates (i.e., 4%).
11) Do Not take a Reverse Mortgage unless you are absolutely desperate.
12) ** Do Not have too much faith in the U.S. Stock Market - “expected” yields should not be expected
if we enter another crash like the Great Depression. (see “Crash Proof” 2006 and www.hsdent.com )
Last updated Aug 10, 2008.
MONEY CALCULATORS
Bank Rate Money Calculators
Simple Savings Calculator
SOCIAL SECURITY BENEFITS CALCULATOR: http://www.ssa.gov/estimator/
BUSINESS-MARKET NEWS
WWW.BANKRATE.COM
www.kiplinger.com
USA Today Markets
Wall Street Journal
Yahoo Finance:http://finance.yahoo.com/
TOP RATED MUTUAL FUNDS
T. Rowe Price
FIDELITY
Vanguard
Dodge & Cox
MONEY Top 70 Mutual Funds 2007
Fortune 7 Funds That Mint Money 2006
Kiplinger 2007 35 Funds that Win Over and Over http://www.kiplinger.com/magazine/archives/2007/09/consistentfunds.html
Kiplinger 25 (25 Best Mutual Funds June 2007) http://www.kiplinger.com/magazine/archives/2007/06/kip25.html
HIGH YIELD MONEY MARKET ACCOUNTS (>3.0 % APR)
Capital One Money Market HSBC High Yield Savings
COLLEGE SAVINGS
ESA / 529 PLANS
Saving For College.com
www.529solutions.com
Fidelity 529 College Plans
T Rowe Price College ESA
T Rowe Price U of Alaska 529
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