Comments on: Money’s 25 Rules To Grow To Rich By

By: Matt

Matt — Tue, 24 Oct 2006 08:17:35 +0000

I’d say the 2.5 times income rule is way too restrictive. If you have the means (within the 28/35 rule, and frankly I think making even that one absolute is a mistake…if you have no _other_ debt, it’s fine to spend more than 28% on servicing a mortgage), then go ahead and buy the house.

Thanks to my fiancee’s inheritance, we put down 60% of the purchase price of our house, and I don’t consider it a remotely bad purchase, despite the fact that it costs way more than 2.5 times my annual income (and indeed the payments are more than 28% of my monthly income…but it’s my only debt, and well below 35%).

By: Greg

Greg — Mon, 23 Oct 2006 15:20:48 +0000

I have to disagree with 25. On flat-panel TVs, the best thing you can do is to buy an extended service plan (ESP). Even Consumer Reports thinks so. The high cost of repairing these items alone makes it worth the extra $100-$300 or so.

If you have an LCD tv, and something goes wrong with the pixels 13 months after you buy it, you’re screwed because it requires replacing the entire screen.

I work for a regional electronics retailer, and I have seen case after case of people who get angry because their new tv doesn’t work and the manufacturer’s warranty expired a few months ago.

Always, always, buy the ESP on a new flat panel tv.

By: Chris Gribble

Chris Gribble — Sun, 22 Oct 2006 04:55:49 +0000

Great Advice for the rest of us. Most of us will be able to follow at least some of these rules some of the time. Especially relevant for me is 15, 16 because I have a young family and I am a bit older. Their welfare is very important to me so I need to be mindful of how I look after them.

By: Chris Gribble

Chris Gribble — Sun, 22 Oct 2006 04:49:53 +0000

What an excellent resource. I need to follow more of them. One of my main concerns if the future of my family so I will need to look closer at the 15 and 16. I also realise that it is so important to have a safety net. Just in case. The 6 months is an excellent buffer.

By: Steve

Steve — Sat, 21 Oct 2006 03:03:15 +0000

The rule on saving is key!!!

By: prlinkbiz

prlinkbiz — Fri, 20 Oct 2006 15:19:21 +0000

Rule 26. These rules were made up by people who are not rich, so break them all. When everyone goes right, go left.

By: jim

jim — Fri, 20 Oct 2006 13:28:44 +0000

I saw that too (plus the fact that the 2.5 times income rule is unreasonable in most metropolitan areas, I own a house that far exceeds 2.5 times my income) and I think that’s because all those rules are more like “rules of thumb” to be taken independently, not necessarily simultaneously.

Rules 20 and 21 are a little incongruous in that one recommends buying a junker and the other says that you should lease if you plan to own a new car fewer than three years – which would be choices made by individuals with very different financial mentalities.

That’s how I approached this list anyway…

By: Paul

Paul — Fri, 20 Oct 2006 13:00:14 +0000

Rules 3 and 4 do not appear to be consistent to me. Consider someone making $80,000 a year. The 2.5 times income rule suggests that he should not purchase a home greater than $200,000. The 28% of gross income suggests that he can spend on Principle, interest, taxes and insurance up to $1866 a month. Depending on local tax and insurance rates, the 28% rule would allow someone to purchase a home more significantly more expensive than $200,000 at a mortgage rate of approximately 6.0%.
It is worth doing the math in any event as I do not think that 2.5 x rule is helpful.