I read an incredible financial management book: Buy This, Not That from Sam Dogen, aka the Financial Samurai.

His goal is to “slice through money’s mysteries,” and I found so many interesting tidbits. Here are some of my favorites:

• Make 70/30 decisions. Think of life in probabilities vs binaries. There are never 100% decisions. The 70/30 philosophy states that you should seek to make a decision only if you have at least a 70% probability of making an optimal decision. Focus decisions in this range of comfort.

• Focus on the FI in FIRE. Your goal is to work because you want to, not because you have to. Nobody yearns to retire from work they enjoy doing. To be truly financially independent, you need 20X your gross income in net worth. Think of yourself as the chief investment officer and chief risk officer of your own finances.

• Car Buying: 1/10 Rule. Spend no more than 10% of your annual gross income on a car. That’s the safest way never to buy too much “car” that you can’t afford.

• House Buying: 30/30/3 Rule. Aim to own the place you live, especially in a low-cost living area where you plan to stay long-term. Follow three tips to avoid stress:

  • Rule 1: Spend no more than 30% of your gross income on a monthly mortgage payment

  • Rule 2: Have at least 30% of home value saved up in cash assets. (20% down payment + 10% in cash for furniture, repairs, and insurance).

  • Rule 3: Limit the value of your home to no more than 3X your annual household gross income.

• Career: Don’t quit, ask to be laid off. High-performing individuals may want to request a layoff instead of quitting. By offering to hire your replacement and giving a 3-month notice (versus 2 weeks), you can ask to receive severance, extend benefits, and continue deferred compensation like stock.

It’s always refreshing to learn new thinking about money. What other tips do you have for building your financial house? 💰