Best economic lessons I ever learned

I was thinking today about the idea of sticking all of the most important financial advice onto a 3×5 note card. A few ideas came to mind.

  • Pay off high interest debt as soon as possible (high interest > 8%) but not low interest debt if the alternative is investing in higher interest assets
  • Take employer matching IRA contributions as much as you can, they’re tax free and can be quite large.
  • HELOCs can save you hundreds of thousands of dollars compared to mortgages and you can own your home 20 years earlier with the right strategy.
  • Take rewards with your purchases whenever you can (just pay your credit card off at the end of the month), it can pay up to 4% cash back on every purchase. Free money.

This is true, these are the best pieces of advice I have ever received… some of them from school, some from friends, some from life… But when you get down to it, all four of these are really the same thing…

  • Cost benefit analysis

Cost benefit analysis, look at the costs and benefits of every decision you make, and make the decision which is the best.

That is the most important lesson I ever learned in an economic class.

Leave a comment

Your email address will not be published. Required fields are marked *