The Fool Makes Me Happy Sometimes

It’s not very often that I agree with The Motley Fool, but yesterday they published some advice they gleaned from Scott Adams, creator of Dilbert, and put it in a nice little piece called 9 Things You Should Do Instead of Buying Stocks, and they are:

1. Make a will.
2. Pay off your credit cards.
3. Get term life insurance if you have a family to support.
4. Fund your 401(k) 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.
7. Put six months’ worth of expenses in a money market account.
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.
9. If any of this confuses you, or if you have something special going on (retirement, college planning, tax issues), hire a fee-based financial planner.

This is a good general list, but I’d add these to it:

1. Fund your childrens’ college (if applicable).
2. Start a basic emergency fund. (Do this first to cover emergency expenses so you don’t have to rely on credit cards when you need new tires or whatnot.)
3. Share the wealth. (Tithe to your church, donate to a worthy cause, or do some combination of both.)

I’d also change some of the verbage like this:

1. Make a will.
2. Pay off all your credit cards debts.
3. Get term life insurance if you have a family to support.
4. Fund your 401(k) to the maximum employer’s match.
5. Fund your IRA to the maximum.
6. Buy a Completely pay off your house if you want to live in a house and can afford it.
7. Put six months’ worth of expenses in a money market account.
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.
9. If any of this confuses you, or if you have something special going on (retirement, college planning, tax issues), hire a fee-based financial planner.

Combine my additions to the edits I made to Adam’s original list and it starts to look very similar to Dave Ramsey’s Baby Steps. I guess that’s because it works!

What about you? What do you think of Adam’s advice? What’s your approach to finances?

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