My additions in red.

Originally Posted By: LeeG

Summarized:
1. Make a will and a living will.
2. Pay off your credit cards

3. Get term life insurance if you have a family to support

4. Fund your 401k to the maximum, but don't over-deduct - there are limits to total max contribution, so adjust the percentage so you don't short yourself on take-home.

5. Fund your IRA to the maximum and make sure it's a ROTH IRA, and make sure you're 401(k) does not disqualify you from participation.

6. Buy a house if you want to live in a house and can afford it, that means no more than 25% of your take home to house payments.

7. Put six months worth of expenses in a money-market account

8. Take whatever money is left over and invest 70% in a stock index fund and 30% in a bond fund through any discount broker and never touch it until retirement

9. If any of this confuses you, or you have something special going on (retirement, college planning, tax issues), hire a fee-based financial planner, not one who charges a percentage of your portfolio


To point #9 - I disagree slightly, as the "percentage of portfolio" folks can be highly motivated to make you money, and the investment advisor I'm using for some of my interests has made some moves in the last 8 weeks that have kept his fees up, because he's managed to hold a defensive position that's been holding up way better than the market on the whole.

But all in all, solid, tough advice, especially #2, but in fact last month was the biggest "pay down" month in 20 years - people paid more debt off than they charged! That's incredibly rare.