As detailed in the accompanying article, Sure-Fire Results: How Old Sensibilities Are Proving a Potent Balm for Modern Personal Finance Ailments,Tim Austin is one of the nation’s most-respected and leading proponents of revisiting the financial playbooks of our grandparents and great-grandparents.
Using the following core principles, Austin’s clients have reversed years of debt accumulation and money struggles, allowing them to pay for their children’s college educations, repay all bank and credit card loans, and save safely and effectively for retirement.
Here in a nutshell is what Austin advises:
- Whole life insurance consistent with the Bank on Yourself strategy should be a cornerstone of every family’s financial planning
- Save at least two years’ worth of anticipated expenses before investing a single dime in risk-bearing instruments
- Set aside 30% of gross income, then budget your lifestyle around the remaining 70%. Ideally, keeping spending to only 50%, or even 40%, of gross income
- Put 20% of gross income into short-term and mid-term instruments, including whole life policies, certificates of deposit, money market funds and savings accounts. Save 10% of gross income for retirement in multiple whole life policies, added strategically over time, and designed for income replacement
Avoid all bank, credit card and installment credit. When possible, buy cars, major appliances and even pay for your mortgage with cash, or by self-financing through a Bank on Yourself-compliant whole life insurance policy
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- When you buy a car, hold onto it as long as it remains mechanically sound. Only purchase a new car when you are left with no choice. The same approach should apply to other major capital expenses
- Stop thinking of a home as an asset. Moreover, stay longer in fewer homes – or even a single home, thereby greatly reducing total interest spent on mortgages
- Teach your children, even at an early age, about the wisdom of saving, spending and investing with a 1940s and 1950s sensibility