Well it certainly has been some time. As the Nationwide commercials say - "Life comes at you fast."
Politics are still a major interest of mine, but the economy, both personally and for that of the country have far surpassed the petty political jabs lobbed back between the two parties. The two parties, which I might add have worked in conjunction to bring us to the brink of collapse we are at today. In any event, I've shifted from politics to economic matters. My core beliefs have not changed, but the intricacies have been refined and have evolved.
From a personal standpoint, I've fully embraced the financial planning of Dave Ramsey. He is the quintessential guide to personal finance and getting out of debt. Ironically, much of the criticism levied against him is that his solutions to complex problems are often too simplistic. But isn't that the case most of the time? We overcomplicate everything as a way to justify our own action, or to place the blame on others. The first tenant that Ramsey speaks of is the "Baby Steps" to get out of debt.
- $1000 Emergency Fund
- Pay off all debt using the "debt snowball"
- Expand the Emergency Fund to include 3-6 months of expenses
- Invest 15% of household income into Roth IRAs and Pre-Tax retirement
- College funding for children
- Pay off home early
- Build wealth and give - invest in mutual funds and real estate
In addition to the Baby steps listed above, there are a couple ideas that I consider to be core principles. The first is in relation to home mortgages and of buying "too much house." Dave's rule of thumb is to get a 15 year mortgage that is no more than 25% of your take home pay. This succeeds in doing two things - First, you aren't burdened with a 30 year mortgage that will cost excessive amounts of interest over the term of the loan. Second, the payments are low enough that you have the ability to save money for the future, be it retirement, college funds etc...
The other core principle is one which hits close to the heart of my fellow Michiganders and is in relation to the automotive industry and that is to avoid buying new cars, and more importantly - leasing cars, or as Dave refers to them - "fleecing" cars. I'll quote Dave's book directly on this to put car payments into perspective:
Taking on a car payment is one of the dumbest things people do to destroy their chances of building wealth. The car payment is most folks' largest payment except for their home mortgage, so it steals more money from the income than virtually anything else. USA Today notes that the average car payment is $464 over sixty-four months. Most people get a car payment and keep it throughout their lives. As soon as a car is paid off, they get another payment because they "need" a new car. If you keep a $464 car payment throughout your life, which is "normal," you miss the opportunity to save that money. If you invested $464 per month from age 25 to age 65, a normal working lifetime, in the average mutual fund averaging 12 percent (the seventy-year stock market average), you would have $5,458,854,45 at age sixty-five. Hope you like the car!
So while I come off as boring to many, I'm simply using logic and looking to the future. It is human nature to want it and want it now; it is also a sign of immaturity. Being willing to delay pleasure for a greater result is a sign of maturity. However, our culture teaches us to live for the now. Don't live for the now, but rather, the future.
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