Dilbert’s 9-point secret to financial happiness

Article at Marketwatch. Here are Dilbert’s 9 secrets to financial happiness

  1. Make a will
  2. Pay off your credit cards
  3. Get term life insurance if you have a family to support
  4. Fund your 401k to the maximum
  5. Fund your IRA to the maximum
  6. Buy a house if you want to live in a house and can afford it
  7. Put six months worth of expenses in a money-market account
  8. Take whatever money is left over and invest 70% in a stock index fund and 30% in a bond fund through any discount broker and never touch it until retirement
  9. If any of this confuses you, or you have something special going on (retirement, college planning, tax issues), hire a fee-based financial planner, not one who charges a percentage of your portfolio

here are my comments on each of the points:

  1. Very important — it is also important to have a living will, and if you have significant assets (particularly real estate), a revocable living trust with most of your assets in that living trust. This avoids probate if you die.
  2. Duh. But most people don’t.
  3. Duh. It is cheap.
  4. Especially if you have a company match.
  5. And fund your IRA at the beginning of each year rather than at the end.
  6. Houses are great forced-savings devices. They are also great to live in.
  7. Most bankruptcies are from unforeseen medical or other temporary emergencies. A rainy day fund is very useful.
  8. Unless you are 100% sure you know what you are doing, this is great advice. My advice to go with a target-date index fund from Vanguard is even better, though.
  9. Excellent advice

I would also add to buy a cheap car, either used or new, take care of it, and use it until it dies. Many monthly expenses are unnecessary and do not add to happiness–is Applebee’s really that much better than what you can do yourself?

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