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<p>Regular readers may get tired of hearing about index cards, but the basic idea is back again this week as it applies to the more general process of money management and financial planning.</p><p>Thanks to a recent article in The New York Times, I learned about the extent to which the basics of money management can be confined to a single 4-by-6-inch index card. Several well-known authors of financial advice books had met the challenge including one whose own book is titled "The Index Card: Why Personal Finance Doesn't Need to be Complicated." Amen.</p><p>To me, having written this weekly financial column for 16 years, it was a little dispiriting to think that my 800 columns' worth of information could have been distilled into one 4-by-6-inch card and just repeated from week to week. However, a jaundiced view of financial journalism says that there are only about eight major fundamentals and that new wine is just being poured into those old bottles. Unlike the biblical reference that cautions against refilling old wineskins, the financial analogy holds up well. A constant regurgitation of the same advice acts like the steady drip of water torture and the basics sink in for us sooner or later -- often reinforced by both good and bad personal experience.</p><p>In the Times article, four financial authors weighed in with their versions of what the index card should include and the information overlapped to a large degree. Most encouraged people to first "know themselves" and be clear about what makes them happy. That's probably Step 1 of successful money management if we consider how excess spending is prompted by the misplaced need for immediate gratification. The classic "Millionaire Next Door" phenomenon is one of the best illustrations of how the smug satisfaction of financial security created by fiscal self-discipline and modest living leads to a higher sense of well-being than a life dominated by materialism. However, the devil on the shoulder is repeatedly saying, "You only live once," and this prompts many to take the stress-inducing path at the fork in the road.</p><p>Next up is the advice to invest in just low-priced index funds and give up any illusions that you can beat the market. This is good advice, but what doesn't fit on the index card is the advice I have to offer, which suggests that people can beat the index if they use several different indexes and rebalance them from time to time. On one card, there's just not room to explain that process in sufficient detail.</p><p>Buy a home as soon as you can afford it, but choose one that is less expensive than what today's income would allow. Never buy a home you have to stretch to afford. Based on advice in Elizabeth Warren's book "The Two-Income Trap," I would suggest not buying a home that requires the continuation of two family incomes unless there is a significant emergency fund.</p><p>Max out your retirement savings plans such as 401(k)s, IRAs and other retirement accounts. Every year when less than the max has been contributed represents an opportunity cost equal to what those overlooked dollars could have compounded to by retirement. As an example, for someone 30 years from retirement, $5,000 today that might otherwise have been contributed to earn 7 percent per year would have compounded to $40,000 in 30 years just by doubling every 10 years. At 10 percent, the long-term average for stock market returns, the money doubles every 7.2 years accumulating to $80,000 in the same time period. For most people, the $5,000 costs just $3,500 in take-home pay. Each year's missed opportunity is gone forever.</p><p>Pay off credit cards every month and buy inexpensive term life insurance to protect your family in the event of either breadwinner's death. Keep fixed monthly expenses like mortgages, car payments and other obligations at less than 50 percent of income. Use software to effortlessly track spending so you can control outlays based on what's important and so that you can live within a meaningful budget.</p><p>So, this short column summarizes most of what people need to know to manage money effectively. Getting rich slowly is not about avoiding taxes or agonizing over when to buy or sell Apple stock. It's a process simple enough to be held in place by a refrigerator magnet.</p>

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