We’ve compiled a list of some rules of thumb that you might hold up against your budget, debt, savings, life insurance and net worth.
This article paraphrases most books on personal finance, and manages to do so in just a few short paragraphs. I can do one step better: I’ll now paraphrase the article into just a few points:
- Save more than 10% of your take-home salary.
- Don’t buy a house priced more than two-and-a-half times your gross yearly income.
- Keep your payments to creditors (including mortgage) less than one third of your gross monthly income.
- Your net worth should equal your age times your gross income divided by 10.
- Your retirement “nest egg” should be 20 times your annual expenses.
I generally agree with the article, though I would stress saving more (20% if possible), owing less, and purchasing a house about twice your yearly salary. And working through some calculations, it seems to me that the net worth formula above makes the most sense for someone who has been in the work force for several years, not someone in the first several years of making their own living.
When parents decide to have children, one of the issues they must consider is the option of one parent staying home to watch the kids until they are school age or continuing to work and pay for day care. Sometimes the cost of day care can be more than what the second salary brings in. In such cases, the kids will benefit by having a parent home; they will have more personal attention from one of their parents instead of strangers, and depending on the cost of the alternative, money could be saved.
More and more, men are the ones staying at home with the children. Women are catching up to men in terms of pay for similar jobs, and in many cases, women are earning more than their husbands.
Here are some more articles that touch the topic of the worthiness of dual incomes.
Article 2: If you have children and a well-paid spouse, consider the costs of any job before you take one. This is not to say you shouldn’t work. But why take a job unless you know what it really pays? When you discover that it pays nothing, you might decide to take a different one that is more fun or rewarding. Or you might decide not to take one at all.
Article 3: Can you scrimp and save enough to cover that cost? It won’t be easy, but there’s a lot of help available for those who try. Here are 5 tips to get you started.
This hasn’t been an issue I’ve had to tackle recently, but more and more of my friends and friends’ friends seem to be in the marriage-beginningcareer-children stage. I’m trying to decide if I can afford to take care of kittens on my own.
In real estate investing, the mantra is location, location, location. In retirement planning, it’s save, save, save!
People are getting older and older before they die. That seems like an obvious statement if you read it one way, but also, the average human life span keeps increasing. The more you live, the more money you’ll need in retirement.
Once upon a time, people were expected to live only five years after retirement age. As the average expected age of death got higher, retirement age remained the same. Some people will simply keep working through their retirement in order to maintain an income. I will probably be one of those people.
Rising interest rates make houses less affordable, and thus depress their prices. Homeowners who find themselves overextended may be heading for trouble.
There are some dangers that come into play when buying a house right now. Many people tell me that there is no housing bubble. They say that since housing values have always gone up, they will always go up. I just can’t buy into that theory. Also, it’s not correct to say that housing values have always gone up. On a national level they have, but when you own a house, you don’t own it on a national level. You own it in its immediate community. There are fewer chances of variables evening out.
Don’t forget what happened to tech stocks. No one thought they were going to go down; after all, they never really had before.
12 keys to a good deal on a rental car
The last time I traveled, I was able to get a good deal by comparing prices and having one company match—and finally better—another company’s offer. Renting a car infrequently is great for people who aren’t normally required to drive.
In my area, there is a company called ZipCar that allows you to own a time-share on a vehicle. You share a car with other members of the organization and reserve it for the time period you will need it in advance. This seems like it would a more cost-effective solution than renting if it weren’t for the monthly fee.
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