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Money Guidelines to Consider

As many of you know, Dan and I are both big readers. I recently read the book “The Simple Path to Wealth” by JL Collins. At the very beginning of his book he shares a few key guidelines to consider and I love how concise it is. So for all of you who may not read an entire book but are looking for a quick summary, I thought I would share a few from the list with you!

  1. Spend less than you earn– invest the surplus–avoid all debt.
  2. Do simply this and you will wind up rich– not just in money.
  3. Carrying debt is as appealing as being covered with leeches and has much of the same effect.
  4. Take out your sharpest knife and start scraping them off.
  5. If your lifestyle matches — or worse exceeds– your income, you are no more than a guided slave.
  6. Avoid investment advisors. Too many have only their own interests at heart. By the time you know enough to pick a good one, you know enough to handle your finances yourself. It’s your money and no one will care for it better than you.
  7. You own the things you own and they in turn owe you.
  8. Money can buy many things, but nothing more valuable than your freedom.
  9. Life choices are not always about money, but you should always be clear about the financial impact of the choices you make.
  10. Sound investing is not complicated.
  11. Save a portion of every dollar you earn or that otherwise comes your way.
  12. The greater percent of your income you save and invest, the sooner you’ll have F- money.
  13. Try saving and investing 50% of your income. With no debt, this is perfectly doable.
  14. The beauty of a high savings rate is twofold: You learn to live on less even as you have more to invest.
  15. The stock market is a powerful wealth building tool and you should be investing in it. But realize the market and the value of your shares will sometimes drop dramatically. This is absolutely normal and to be expected. When it happens, ignore the drops.
  16. This will be much, much harder than you think. People around you will panic. The news will be screaming Sell, Sell, Sell!
  17. Nobody can predict when these drops will happen, even though the media is filled with those who claim they can. They are delusional, trying to sell you something, or both. Ignore them.
  18. When you can live off 4% of your investments per year, you are financially independent.

**Exert from The Simple Path to Wealth by: JL Collins

I love how blunt and simple he talks about everything and his tone is very similar in the rest of his book! I feel like we need more of this out there!

I bolded some of the bullet points that really stood out to me but I really liked his idea of F-money. Basically it is the idea of the freedom money can buy throughout life (not just at the end like a lot of FIRE people advocate for). For example, you could save enough F-money so that one spouse can be a stay at home parent or that you could quit your job for a time to travel or to start a business or take a pay cut to work a job you enjoy more. He gives countless examples he has had in his life– the first, at age 22, was advocating for a 6 week leave from work for travel.

It is amazing how many more options open up for you when you view money this way! Dan and I have decided to take our own 6 month version of F-money to pursue business. We feel so grateful to be in a financial situation to be able to do that.

What would you use your F-money for?