All you need to know about personal finance is right there, according to Harold Pollack. Now, Pollack is not an investment manager or financial planner; he’s a professor of social sciences at the University of Chicago. But his index card (that’s it, above) was so popular he wrote a book, The Index Card: Why Personal Finance Doesn’t Have to Be Complicated, with Helaine Olen.
In an interview on Minnesota Public Radio, Pollack identified the most important thing on the index card:
The most important of the index card guidelines is the one many Americans do not follow: “Pay your credit card balance in full every month.”
“Credit card debt is so deadly,” Pollack said.
Like the rest of the advice on the index card, that’s solid advice everyone should follow. [Minnesota Public Radio]
Edit: If you like short-form financial advice, the New York Times asked eight financial writers to squeeze their best tips onto index cards, too.
Whether it’s skipping checkups with your doctor, doing your own taxes, or buying in bulk, chances are good some of your attempts to save money are really just costing your more, in the long run. I’d add “going to the grocery store.” My wife and I started saving a ton on groceries when we started getting them delivered, because there are fewer opportunities to make an impulse purchase on an empty stomach when shopping online. Plus, we save gas, family time, etc.
Did you know that members of Congress are allowed to trade on insider information? Insider trading may get non-legislators tossed in jail, but according to 60 Minutes, our representatives prove “particularly adept at buying and selling stocks.” Democrats consistently beat the market by as much as 9%, and Republicans do pretty well, too. In fact, the Senate as a whole beats the market by 12%!
Warren Buffett paid a 17.4% tax on his income last year. You probably paid about 35%. Buffett makes most of his money by moving money around. You probably make most of your money by working. So why does Warren Buffett get a tax break, and not you?
Because the capital gains tax applies to investments, which is where the rich make most of their money.
One of the first things you should do when you have a child—or even before—is to set up a 529 college savings account. Earnings from money in a 529 plan are not taxed as long as they go towards qualified education expenses. But the maintenance fees can add up over time. You can expect to pay .25-1.04% over ten years for Fidelity plans, for example.
The following tools can help you pick the lowest-cost plan for your child:
How to Find the Right 529 Plan With the Lowest Fees | New York Times
How Much Does the Stock Market Actually Return? | Get Rich Slowly
Joseph W. Hughes was a financial services rep for AXA Advisors, and represented an elderly couple. The husband suffered a stroke in 2005, which Hughes took as his cue to start pillaging their account. Instead of investing their money, he spent it on jewels, country club fees, and a 1969 Chevy Nova.
And now he faces up to 25 years in prison for mail fraud and tax evasion.