The 10 Commandments of Wealth and Happiness

One of the stupidest expressions ever coined was “The one who dies with the most toys wins.” When you’re on your death bed, you won’t be thinking about the things you had – you’ll be thinking about the times you had.

So here goes: the 10 commandments of achieving financial independence and being happier while you do it …
1. Thou shalt live like you’re going to die tomorrow, but invest like you’re going to live forever.

The ease of making money in stocks, real estate, or other risk-based assets is inversely proportional to your time horizon. In other words, making money over long periods of time is easy – making money overnight is the flip of a coin.

Money is like a tree: Plant it properly, care for it every so often, then wait patiently. Stare at a newly planted tree for 24 hours, and you’ll be convinced it’s not growing. Fixate on your investments the same way, and you could miss out on a game-changer.

The biggest winner in my IRA is Apple stock. I don’t remember exactly when I bought it, but I’m guessing it was in 2002 or 2003. My split adjusted price is around $8/share: As I write this, Apple’s trading at around $300/share, for a gain of 3,800 percent. Had I been listening to CNBC or some other “news” outlet that promotes constant trading, I almost certainly wouldn’t still own it.


Patience is certainly a virtue when it comes to investing. I invested a bunch of money and built my online portfolio when the Dow was hitting generational lows back in spring 2009. I had no idea where the market was going next. I was every bit as scared as the next guy.

But having lived through similar times before – I was a stockbroker during the market crash of 1987 – and since I’m only in my mid-50s, I was confident the economy would rebound sometime before I died. While the stock market has come back quite nicely since then, in many parts of the country, housing prices haven’t. That’s why I’m now looking for real estate investments. Are you?

In short, enjoy your life to the fullest every day – live like you’re going to die tomorrow. But since you’re probably not going to die tomorrow, plant part of your money in quality stocks, real estate or other investments; then hold onto them. Don’t ignore your investments entirely – sometimes fundamental things change that indicate it’s time to move on – but don’t act rashly. Patience pays.
2. Thou shalt listen to thine own voice above all others.

My job as a consumer reporter has included listening to countless sad stories about nice people being separated from their money by people who weren’t so nice. While these stories run the gamut from real estate deals to working at home, they all start the same way: with a promise of something that seems too good to be true.

And they all end the same way: It is. Just last week, I helped someone who was about to lose money by applying for a government grant.

If someone promises they can make you 3,000 percent in the stock market, they’re either a fool for sharing that information or a liar. Why would you send money to either one? When you hear someone promising a simple solution to a complex problem, stop listening to them and start listening to your own inner voice. You know there’s no pill that’s going to make you skinny. You know the government’s not handing out free money for your small business. You know you can’t buy a house for $300. Stop listening to commercials and start listening to yourself.
3. Thou shalt covet bad economic times.

Wealth is realized when the economy is booming, but that’s not when it’s created. Wealth is created when times are bad, unemployment is high, problems are massive, everybody’s freaking out, and there’s nothing but economic misery on the horizon.

Would you rather buy a house for $400,000, or $200,000? Would you rather invest in stocks when the Dow is at 12,000 or 7,000?

Obviously, nobody wants one in 10 Americans to be out of work. But the cyclical nature of our economy all but assures that this will happen periodically. If you’re one of the 90 percent who still has a job, this is the time you’ve been saving for. Stop listening to all the Chicken Littles in the media: The sky isn’t falling. Get busy – put your cash to work and create some wealth.
4. Thou shalt not work.

MSN Money’s Liz Pulliam Weston recently wrote a great story called Pretend You Won the Lottery. She asked her Facebook fans to describe what they would do if they won the lottery. From that article:

Most of the responses had a lot in common. People overwhelmingly wanted to:
Pay off all their debts.
Help their families.
Donate more to charity.
Pursue their passions, including travel.

Note that these goals are largely achievable without winning the lottery. And that was her point: Listing what you’d like to do if money were no object puts you in touch with the way you’d really like to spend your life.

My philosophy takes this concept a step further: When it comes to work, you should try to do something that you regard as so fulfilling that you’d do it even if it didn’t pay anything. In other words, the word “work” implies doing something you have to do, not something you want to do. You should never “work.”

I’ve chosen to spend nearly all of my adult life in warm climates – I lived in Arizona for 10 years and have now lived in Fort Lauderdale for nearly that long. Why? Here’s what I’ve always said: “You already spend a third of your life sleeping. Why spend another third of it freezing your tail off?”

No offense to you Northerners. I realize some people enjoy the cold. The point is that if you’re going to spend a huge part of your life working, don’t fill that time with what makes you the most money. Fill it with what makes you the most fulfilled. I made more money in 1990 managing a branch office for a Wall Street investment firm than I will this year. But I feel a lot less slimy (no offense to stockbrokers) and lot more fulfilled. You can’t put a price tag on that.
5. Thou shalt not create debt.

I’m always getting questions about debt. “Should I borrow for this, that, or the other?” “What’s an acceptable debt level?” “Is there such a thing as good debt?”

There’s way too much analysis and mystery around something that isn’t at all mysterious. Paying interest is nothing more or less than giving someone else your money in exchange for using theirs. Rule of thumb: To have as much money as possible, avoid giving yours to other people.

Don’t ever borrow money because you want something you can’t afford. Borrow money in only two circumstances: when your back is against the wall, or when what you’re buying will increase in value by more than what you’re paying in interest.

Debt also affects you on a level that can’t be defined in dollars. When you owe money, in a very real way you’re a slave to that lender until you pay it back. When you don’t, you’re much more the master of your own destiny.

There are two ways to achieve financial freedom: Have so much money that you can’t possibly spend it all (something exceedingly difficult to do) or don’t owe anybody anything. Granted, since you still have to eat and put a roof over your head, living debt-free doesn’t offer the same level of freedom as having more money than you can possibly spend. But living debt-free isn’t a matter of luck or even hard work. It’s a simple choice, available to everyone.
6. Thou shalt be frugal – but not miserly.

The key to accumulating more savings isn’t to spend less – it’s to spend less without sacrificing your quality of life. If going out to dinner with your significant other is something that you enjoy, not doing it may create a happier bank balance, but an unhappier you – a trade-off that is neither worthwhile nor sustainable. Eating an appetizer at home, then splitting an entree at the restaurant, however, maintains your quality of life and fattens your bank account.

Finding ways to save is important, but avoiding deprivation is just as important. In short, diets suck.

Whether they’re food-related or money-related, if they leave you feeling deprived and unhappy, they’re not going to work. But there’s a difference between food diets and dollar diets: It’s hard to lose weight without depriving yourself of the foods you love, but it’s easy to reduce spending without depriving yourself of the things you love.

Cottage cheese isn’t a suitable substitute for steak, but a used car is a perfectly acceptable substitute for a new one. And the list goes on: watching TV online rather than paying for cable, buying generics when they’re just as good as name brands, using house-swapping to get free lodging, downloading books from the library instead of Amazon… No matter what you love, from physical possessions to travel, there are ways to save without reducing your quality of life.
7. Thou shalt not regard possessions in terms of money, but time.

You go to the mall and spend $150 on clothes. But what you spent isn’t just $150. If you earn $150 a day, you just spent a day of your life.

Almost every resource you have, from physical possessions to money, is renewable. The amount of time you have on this planet, however, is finite. Once used, it can never be replaced. So when you spend money – especially if you earned that money by doing something you had to do instead of what you wanted to do – you’re spending your life.

This doesn’t mean that you should never spend money. If those clothes are all that important to you, by all means, buy them. But if it’s really not going to make you that much happier, don’t. Think of it this way: If you can live on $150 a day, every time you forgo spending $150, you just get one day closer to financial independence.
8. Thou shalt consider opportunity cost.

This is related to the commandment above. Opportunity cost is an accounting term that describes the cost of missing out on alternative uses for that money. For example, when I said above that not spending $150 on clothes puts you $150 closer to independence, that was a gross understatement. Because when you save $150, investing those savings gives you the opportunity to have more savings. If you’re earning 10 percent, $150 invested for 20 years will ultimately make you $1,000 richer. If you can live on $150 a day, ignoring inflation, you can now retire nearly a week sooner, not just a day.

One of the exercises in my most recent book, Life or Debt, is to go around your house and identify things you bought but probably didn’t want or need. A quick way to do this is to find things you haven’t touched in months. These were probably impulse buys. Add up the cost of these things, multiply them by 7, and you’ll arrive at the amount of money you could have had if you’d invested that money at 10 percent for 20 years rather than wasting it.

And when you do this, consider the stuff in your closet, the stuff in your garage, the rooms of your house that you heat and cool but don’t use, the new cars you’ve bought when used would have worked. The truth is that most of us have already blown the opportunity to achieve financial independence much sooner. Maybe now’s the time to stop.
9. Thou shalt not put off till tomorrow what thou can save today.

Shortly after I began my television career in 1988, I went on set with a pack of smokes, a can of soda, and a candy bar. I explained that these things represented the kind of money most of us throw away every day without thinking about it – at the time, about $5. But compound $5 at 10 percent for 30 years, and you’ll end up with about $340,000. That’s why learning to save a few bucks here and there and investing it is so important.

Fortunes are rarely made by investing big bucks, nor are they often made late in life. Wealth most often comes from starting small and early.

In short, there are limited ways to get rich. You can inherit, marry well, build a valuable business, successfully capitalize on exceptional talent, get exceedingly lucky – or spend less than you make and consistently invest your savings over time. Even if you’re on the road to any of the former, why not do the latter?
10. Thou shalt not covet thy neighbor’s stuff.

If this commandment sounds familiar, that’s because it resembles the Biblical 10th commandment:

Thou shalt not covet thy neighbor’s house, thou shalt not covet thy neighbor’s wife, nor his manservant, nor his maidservant, nor his ox, nor his ass, nor any thing that is thy neighbor’s. (Exodus 20:17)

Envy may not be the root of all evil, but it is the root of much wasted money. As I’m fond of saying, you can either look rich or be rich, but you probably won’t live long enough to accomplish both. I’ve lived both ways, and trust me: Being rich is way better than using debt to look rich.

We’ll all admit that when on the verge of making a purchase decision, we’re often thinking of what our friends will say when they see it. Normal human behavior? Sure, but it’s not in your best interest, or theirs. Making your friends feel jealous isn’t nice, and feeling envy for other people’s possessions is silly. Possessions have never made anyone happy, nor will they.

Decide what really makes you happy, then spend – or not – accordingly. When your friends make an impressive addition to their collection of material possessions, be happy for them. One of the stupidest expressions ever coined was: “The one who dies with the most toys wins.” When you’re on your death bed, you won’t be thinking about the things you had – you’ll be thinking about the times you had.

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