My Ten Basic Rules (Version 3)

It has been a year since I last put up my ten basic rules for young couples. I would guess that it has been over six years since I drafted the first version. In the following years I have only changed 1c. I am going to change it again. In the last three years I have personally seen the crippling impact of student loans on young lives. On the national level it appears that the parabolic growth in student loans is likely to be our next trillion dollar disaster.

It is not that I am not a friend of higher education. I have two bachelor’s degrees and a master’s degree. I still believe an extremely judicious and limited use of student loans can be justified to obtain degrees that come close to guaranteeing a job such as MD, BSRN, or MSCE. Otherwise student loans are just too dangerous. I will expand on this subject soon.

Basic Financial Rules for Young Couples.

1)Stay out of debt unless absolutely necessary (four exceptions)
a)Just about no one can pay cash for a house
b)Medical bills come whether you have money or not
c)Borrowing for school even with a realistic goal is dangerous. Scholarships and work study grants or even a part time job are better.
d)Starting a new business or expanding an existing business. Keep that cash flow positive.

2)Pay off your debts as rapidly as possible. Pay off the debt with the highest interest rate first and the debt with the lowest interest rate last.

3)Don’t use a Credit Card unless you can pay it off every month.

4)When your money stash is declining (and it will) find out where your money is going. Keep detailed records (every penny) of your expenditures if necessary. My wife and I did this twice during the early years of our marriage. It proved a very enlightening exercise.

5)Many people recommend a budget. We have never had a budget except the one in my head. That worked pretty well for us but I think a formal budget would be even better.

6)No secrets. If you or your spouse spend more than the cost of a CD or a paperback book on something, decide on that expense together, as a couple. There are exceptions. My wife does not want to know about the power bill, tires on her car, or specialized tools she does not understand. Set your own rules and limits for your own marriage and stick to them.

7)Start a “rainy day” fund in a bank or a money market fund. The goal here is six months cash reserve (six months take home, both salaries). It will take some time to reach this goal. Don’t beat yourselves up about this but keep putting a little something aside every month.

8)When you have a little extra cash beyond the six months fund or maybe even as a part of the six months fund, begin to experiment on a small basis with stocks, bonds, mutual funds, or even real estate.

9)Start thinking about retirement when you are young. Take advantage of anything offered by your employer. This was not a problem or an issue 50 years ago, but my retirement picture is not all that good. Your retirement picture is positively scary. This is a very low priority with so many other demands at this time in your life but don’t forget retirement is sitting out there if you are lucky enough to live that long.

10)Give something to God without expectation of return. It is good for your heart.