My One Money Advice (MOMA)

by Mike Holman

I got tagged by BripBlap to give my MOMA or “my one money advice” which is supposed to be the one piece of advice you would give if you could only give one piece…luckily I’m not normally so constrained!

First of all, I wanted to say a few things about BripBlap which is one of my favourite blogs. It’s written by a New Yorker and covers all sorts of topics, some of which are financial, some not. This post totally changed how I read to my son and the choice of reading material.

That said – on with the advice! My advice is to make sure that when you are making a financial decision of some sort ie buying something, entering into a service agreement etc that you spend an appropriate amount of time researching and thinking about it. Some people will spend incredible amounts of time trying to get the best phone plan on their cell phones which might save them a few hundred dollars at best per year but they won’t spend any time researching the best ways to buy a new car. If you know what you are doing then you can potentially save thousands on a new car compared to if you went into the dealership cold.I’m not saying you shouldn’t worry about the cost of your daily latte or the price of bananas but things like houses, renovations, cars, investment costs etc are the big things that will affect you the most so you should spend the most time on those items trying to get the best deal. Cell phone plans do fit on the financial priority list but just make sure you know where it is on the list and how much time to spend on it.


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{ 12 comments… read them below or add one }

1 moneygardener

Thanks for the link about reading…I’ll have to start soon.

2 FourPillars

MG – it’s never too early!

Mike

3 telly

I thought Baby Week was over?! ;)

This is a good bit of advice. Along the same lines, my MOMA would be to buy a much smaller, less expensive house than you can afford. This isn’t always possible depending on your income and where you live but can make the biggest difference on your bottom line if you can do it.

I’ve been noticing lately that the criteria used to determine how much house you can afford is a bit scary. The rule to remember when purchasing a new car is to make sure that you negotiate total price, NOT monthly payment (most of us know how easy that is to tweak). Yet, today people are determining how much house they can afford based on % of gross monthly pay rather than the rule of 2.5 times annual salary that used to be the norm.

With varying downpayments and up to 40 year amortizations, I think it’s wise to use yearly income to determine total home purchase price.

4 telly

Mr. Cheap – You’re talking about investment properties at least. Imagine taking every dime the banks will give you based on a 40-yr amort. with NO cash flow (primary residence)? This is happening at an alraming rate if you ask me. No wonder RE markets are sky-rocketing!

5 moneygardener

Automatically buying a house for your maximum pre-approval amount is taken by some people to be the norm….scary…

6 FourPillars

Telly – that’s a good one. Some people buy houses based on the here and now critera ie can we make the payments, and don’t think about the future so much – ie vacations, early retirements etc.

Mike

7 FrugalTrader

Hey Mike,

Didn’t realize that you weren’t on my blog roll, added you today. Keep up the great work.

8 FourPillars

FT – thanks, I didn’t realize I wasn’t on your blogroll either! :)

Mike

9 Brip Blap

Well, obviously I’m very flattered by all of the nice things Mike said about my blog. I’m a big fan of his blog, too, and if you’re just visiting here keep coming back, I haven’t been disappointed yet! See, there can be friendship between our nations, despite all of the differences. :)

You are dead on about your advice, by the way, and I am guilty about that. I put a huge amount of effort into researching digital cameras – more than I probably put into my last car purchase, frankly because it was more FUN to research cameras. I am not a car person… but you’re right, if you aren’t ready to put the time into it, you should think twice about doing it.

10 FourPillars

Thanks BB – you’re right that we tend to spend more time on things that we are interested in like cameras, tvs, surround-sound systems, golf clubs etc.

I guess from a financial perspective we have to bite the bullet sometime and spend more time on things we don’t necessarily like – we can treat it like work as it were.

Mike

11 SavingDiva

Great advice! I frequnetly spend time researching things that I know more about…or have some idea of how to look into…

I also love to red Brip Blap’s blog.

12 FourPillars

Good point SD, it’s hard to research something you are unfamiliar with (or uninterested in).

Mike

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