The Only Financial advice you'll ever need.

I've been thinking for a while about posting something on finance. I can't really advise anyone on how to get rich, not ever having been rich myself, but I can tell you how to eliminate debt, and how to avoid poverty, spending some 60 odd hours a week working in a bankruptcy firm. I was going to write up my own list, but I found that Scott Adams, writer of the popular Dilbert Comic Strip (and author of one of the greatest blogs ever) has written everything that I could possibly tell you. Here is the only financial advice you will ever need, with some additional commentary. None of it is complicated and if you follow it you will be fine.

1. Make a will

Trust me, just do it. You can do it yourself or have an attorney do it relatively cheaply. I've gone over this before but everyone, even if you are not married, should have a will. If you have children and you do not have a will, then you are being irresponsible and there is just no other way to say it. Hit legalzoom.com and get your stuff in order.

2. Pay off your credit cards

Nothing kills wealth better or enslaves you faster than debt. Nothing gets you into debt faster and keeps you there longer than credit cards. It is a proven fact that if you have a credit card you will almost certainly carry a balance on that card at some point. THe average american family has $8000 dollars of credit card debt. At 30% interest, that's $2400 a year the average American family pays for the privilege of being enslaved to a credit card company. That is money that could go to a variety of other worthy causes and instead goes to a creepy souless credit corporation who did nothing to deserve it. Pay these things off and cancel them. You do not need them. Online purchases can be made by debit card. Any discounts, points, mileage, etc. you get will be far less than the money you will save by not having a credit card. It is a proven fact you buy less when you pay cash for things, and a proven fact that if you have a credit card you will at some point carry a balance on it. As far as establishing credit, a car payment, cell phone, and house payment do far more to establish credit than your "American Depressed" card ever will. Get rid of them, they are a temptation you do not need.

3. Get term life insurance if you have a family to support.

Whole life insurance is a scam. Cash value insurance is a garbage product. Period. Have 10X your annual salary in term insurance on the bread winner. If you need this explained further feel free to talk to me off line.

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.

There's no magic formula for house buying, but whatever mortgage you have, pay it off as fast as you can. If at all possible, try and get a fixed rate 15 year mortgage where the payment is one fourth your monthly take home. That might not be an option where you live, but if you are smart and save up a good down-payment (10-20%) you can probably manage a good mortgage. Don't touch adjustable rate mortgages. Don't go anywhere near them. Those things cause more bankruptcies these days than credit cards. Also, Never get a second mortgage. If you need a second mortgage it means you can't afford your house. Sell it. It's dry wall and concrete; it's not special. Too many people get attached to their houses and throw everything they can into trying to keep the house. It's dumb. I have to restrain myself every time a client says "I just can't bear to let go of the house." It is one of the single dumbest things you can think or say. If you find yourself sayin it, then you are not thinking rationally. Also, don't go near home equity lines of credit, they're just second mortgages. Never borrow against your home for anything. Ever.

7. Put six months worth of expenses in a money-market account.

Start by saving $1000 for emergencies then let that grow. Again, bankruptcy office is full, FULL of people who thought they would never get sick, never lose jobs, and that everything would be fine. Guess what, life happens. You need to make your plans with the idea in mind that the universe will probably screw with you at some point. You'll meet a guy named Murphy, who's law is that everything that can go wrong will go wrong. After you meet Murphy, he may decide to hang around you for a while. Be prepared for him. Remember that if ye are prepared, ye shall not fear. I had a client this week who's husband passed away a few years ago, did not leave enough to take care of her, her pension has had problems, and she was in a car accident on the way to visit the bankruptcy lawyer. Bad things happen and they usually don't happen alone.

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

An investment is not something you buy one day and sell the next. When you buy any kind of stock, bond, real-estate, etc, you need to plan on having it for a LONG time. The stock market changes day to day, but over time it always goes up.

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.

Self explanatory, and watch out, some of those financial consultants are hucksters who try and sell you special financial products (like whole life insurance) that are designed only to separate you from your money.

Follow these steps and assuming you are earning a decent wage you will avoid poverty.