Best advice ever. Hope a lot of your "adult" subscribers read and take heed. I was extremely fortunate to have "Depression Era" parents who taught me sound money lessons. Unfortunately, 401k's were not something they had knowledge of and neither did I as they were new to us in the late 80's and we were thrown to the wolves in the sense of "Hey...here's your new 401K and it's up to you to learn how to make the best investment choices" with absolutely no knowledge of how to invest whatsoever. My generation was the "learning curve" for the 401k! But, my folks did teach me that we don't spend large chunks of money from your savings or lottery winnings or inheritance. You invest that money and use the interest they earn to make the payments on that new car or the European vacation. Or if you take out a bank loan for something, you not only make the scheduled payment, but you also make additional payments to the "Principal Only" so that it's paid off sooner and in the end, you've paid a little interest (but not a lot) and you still have your initial money in the bank. These loans are not to be mistaken with borrowing from your 401k....but as a regular bank loan. It's seldom a good idea to borrow money from yourself as you are essentially taking money from your account that should be earning you more but can't because you've borrowed it and the interest you pay back to yourself is rarely equal to what you would have earned on it had you never borrowed it in the first place. Anyway...I digress. You advice to your kids is Steller and I so hope they heed it.
Best advice ever. Hope a lot of your "adult" subscribers read and take heed. I was extremely fortunate to have "Depression Era" parents who taught me sound money lessons. Unfortunately, 401k's were not something they had knowledge of and neither did I as they were new to us in the late 80's and we were thrown to the wolves in the sense of "Hey...here's your new 401K and it's up to you to learn how to make the best investment choices" with absolutely no knowledge of how to invest whatsoever. My generation was the "learning curve" for the 401k! But, my folks did teach me that we don't spend large chunks of money from your savings or lottery winnings or inheritance. You invest that money and use the interest they earn to make the payments on that new car or the European vacation. Or if you take out a bank loan for something, you not only make the scheduled payment, but you also make additional payments to the "Principal Only" so that it's paid off sooner and in the end, you've paid a little interest (but not a lot) and you still have your initial money in the bank. These loans are not to be mistaken with borrowing from your 401k....but as a regular bank loan. It's seldom a good idea to borrow money from yourself as you are essentially taking money from your account that should be earning you more but can't because you've borrowed it and the interest you pay back to yourself is rarely equal to what you would have earned on it had you never borrowed it in the first place. Anyway...I digress. You advice to your kids is Steller and I so hope they heed it.