There isn’t a “One Size Fits All” model for financial planning.
I love credit cards, no wait, I love reward credit cards! But this is my one exception where I deviate from the norm with respect to my friends and their spending habits.
I have a few friends that have gone bankrupt (in 1 case a few times) and so I will never say “I love credit cards” to them. I don’t want them to think that it’s okay to spend so easily. We have to know our limitations and weaknesses.
However, for me, credit cards are a wonderful discount on my purchases. Sometimes, I use the reward points to splurge and buy a nice gift that I would have had to spend money on.
I took a path that I know isn’t considered the best for most, but it was the best for me. You see, I pre-paid and them totally paid off my mortgage early. I know that from a mathematical perspective it makes more sense to put that extra money in investments. But I couldn’t stand the debt hanging over my head, and I doubt I would have consistently put the extra money into investments, thus defeating the plan.
I very proud of my accomplishment with my house, and if I had to do it all over, I’m pretty sure I would have done it exactly the same. I especially like that fact that the money that I don’t have to pay anymore is like getting a 2nd job in many ways, especially with respect to cash flow!
While mathematically it makes sense to put the extra money into investments, missing in the formula is the human element. The equation is mathematical but the human element takes away some of the straight math properties and adds emotion and impulse buying elements. Shoot, I consider myself good with money, and even I sometimes have problems controlling my spending, especially when it some to my kids!
I tend to invest in stocks, but most of my money is in the mutual funds that are included within my 401(k) plan at work.
In my stock dividend “Lunch Experiment“, I run a high beta investment portfolio. This isn’t advisable and I’m only running such a portfolio because the money was money that I would have spent. I don’t advise anyone to follow such a risky portfolio, but it’s still fun to play with!
So what I’m really trying to convey is that there isn’t a single generic “one size fits all” type of model to follow when it comes to financial planning or advice. Perhaps start with one of the three financial advisors and then customize it after you find one that mostly fits your goals. Personally, I’ve always liked David Bach with just a slight hint of Robert Kiyosaki.
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