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"Old" Financial Maxims?

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    "Old" Financial Maxims?

    I was talking with an older colleague recently who said she was taught in school to never spend more than 1% of the cost of a house for the monthly payment (ie. 1% of a $200,000 house = $2,000 per month payment).

    Along the same lines, she was taught to never spend more than 1 weeks salary on housing per month (ie. if you make $8,000/month, you'd pay $2,000 toward housing).

    This seems like pretty sound advice; so my question is: Does anyone know of other "old" financial maxims such as these that people either 1) don't remember or 2) consider out of date or not with the times.

    I wonder if we might be able to compile a list and then compare our situations to see if they fall in line with what used to be common sense.

    Thanks!

    #2
    Not really a maxim, but...

    "A penny saved is a penny earned" - when you take into account taxes, the cost of the job (clothing, commute, etc) a penny saved is really closer to 2 pennies earned

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      #3
      People at one point were supposed to put a 20% down payment down when buying a house, but I don't think anyone does that anymore

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        #4
        terry beat me to it.

        Put down at least 20% when buying a house.
        Housing costs should be no more than 28% of income.
        Total debt, including housing, shouldn't exceed 36% of income.
        Never finance a car for more than 3 years.
        Save at least 10% of your annual income (gross) for retirement.
        Pay credit card bills in full every month. Never carry a balance.
        Steve

        * Despite the high cost of living, it remains very popular.
        * Why should I pay for my daughter's education when she already knows everything?
        * There are no shortcuts to anywhere worth going.

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          #5
          pay yourself first
          spend less than you earn

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