I was asked, "What is the single most effective piece of financial advice you've ever received?"
We were newlyweds. My wife moved into my rented apartment because the rent was cheap. Months later, a new landlord doubled our rent. Of course, both of us made very little money at the time. So we planned to save our money, and someday… maybe in 10 or 20 years… we would have a reasonable down payment to put on our own house.
While spending the weekend with older and more successful friends, we mentioned our plan. Our friend said, “No! By the time you save for that huge down payment, house prices will have skyrocketed! Get your hands on every penny you can. Cash in insurance policies if you have to. But figure out where you want to live and buy now!”
We decided on where we wanted to live. We hadn’t spent our “wedding money” yet, so we added every dollar we could afford to put aside… and bought a lovely 5-room house a few blocks from the ocean for $35,000. (1984). A year later, it was valued at more than $100,000. because AT&T built an office building in our town, its executives wanted to live near the ocean. Twenty years later, we sold it for $250,000, which bought our home in Maine. Ten years later, we sold our house in Maine, which paid for our present home in Santa Fe, NM.
…all because we trusted a friend’s advice and bought a $35,000 house in 1984.