THE MIDDLE CLASS MINDSET

Avoid at all costs!

STUPID RULE #1

“Buy as much house as you can afford.”

WHY THIS ADVICE STINKS

Having a bigger home does not mean living a happier life.

• It means having to spend more time cleaning and maintaining.

• It means taking years away from the possibility of early retirement because of bigger mortgage payments.

• It means more space between you and your loved ones.

• It means spending more on heating and cooling.

A BETTER RULE OF THUMB

“Buy as much house as you need, and nothing more.”

STUPID RULE #2

“Now that you’ve gotten a raise, it’s time to upgrade.”

WHY THIS ADVICE STINKS

Of course, some people might genuinely need to upgrade certain things, but on the whole, this might be the most insidious part of the middle class mindset. It is the very definition of the hedonic treadmill:

More is always better. It discounts any previous happiness you’ve

experienced as less than you could possibly have now.

It ignores tons of research showing that “up-grading” has a short-term effect at best.

A BETTER RULE OF THUMB

“Now that you’ve gotten a raise, your early retirement can start even

sooner.”

STUPID RULE #3

“Save 10% of your income”

WHY THIS ADVICE STINKS

Of course, saving 10% of your salary isn’t a bad thing. In fact, it puts you ahead of the average American. But once you know what “enough” is for you, why not save as much as you can beyond that? Save 20% of your salary, and you can retire in

30 years. Save 40% of your salary, and you can retire in

20 years. Save 65% of your salary, and you can retire in

10 years.

A BETTER RULE OF THUMB

“Save everything beyond what your ‘enough’ level is.”

STUPID RULE #4

“Commuting is just a part of modern life.”

WHY THIS ADVICE STINKS

We chronically underestimate the true costs of commuting. The government estimates that it costs us $0.56 to

drive one mile.

The average commute is 32 miles and 52 minutes, round-trip.

That equates to $4,500 and 215 hours of time lost per year.

A BETTER RULE OF THUMB

“Commuting is an activity with high financial, emotional, and social costs.”

STUPID RULE #5

“We’ll make huge sacrifices so our kids can go to the college of their choice.”

WHY THIS ADVICE STINKS

There’s little debate about the financial value of a college education, but the price of the education varies wildly. Four years of private school averages about

$180,000 Four years of public school averages about

$90,000 Four years following the Morgan Housel college

plan (read more here) averages about $25,000.

A BETTER RULE OF THUMB

“We’ll contribute what we can so our child can go to a school that makes

reasonable sense for his/her life situation.”

DON’T FORGET ABOUT SOCIAL SECURITY

Though you won’t be able to draw benefits right away in early retirement, it’s important to figure out what role it will play. To help you get a head start, check out the Motley Fool’s special free report:

How to Get Even More Income During Retirement