Fundamentals of Finance
- POINT 1: $20,000 = the average annual income of a high school grad
- POINT 2: $50,000 = the annual combined household income necessary for a family of four, buying their house. Used car(s). Spartan lifestyle.
- IMPLICATION 1: At some point, you're gonna need more than the $20,000 a high school diploma offers.
- CONCLUSION: Here's the "more" that you will need, choose one or more: College degree, Specialty School, Longevity, become a student of finance, start your own business.
- IMPLICATION 3: We must choose contentment; we must choose to live with less. This is the message of every sage from every culture throughout human history. Addendum to this implication: poverty is not inherently bad.
- PRINCIPLE 1: Your monthly mortgage payment should = 2% of your annual income. Your monthly car payment should = .2% of your annual income. Example: $50,000/year = $1,000 monthly mortgage payment and $100 monthly car payment.
- RATIONALE: Anything greater than those percentages is only to feed your ego, and, more importantly, it keeps you from living, meaning: it keeps you from making good financial decision (investing, paying with cash, etc); it keeps you from doing things that matter (vacations, travel, hobbies, giving, family)
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