The best financial advice ever

"Don't co-sign a loan."

Co-signing puts your good credit in the hands of someone else -- who could trash it with a single late payment.

Poster "bookladyfdl" said her parents refused to co-sign a car loan for her after she graduated college, and today she's grateful.

"They lovingly explained that their credit report would show this loan, which could affect any loans they might need. They also explained to me that their rule of thumb was not to co-sign for any amounts they could not personally loan. If you can't afford to give it, you can't afford to pay the loan back, should you have to do so.

"This credo saved me early in my marriage. Without my knowledge, my husband agreed that we would co-sign on a loan his brother was taking out. The papers came and I discovered that we were co-signing on a large loan at 32% interest, and that the reason he was being forced to take it out was that his brother had defaulted on a credit card and this was the last step before court. . . . Out of love for his brother, my husband wanted to help out. However, I relied upon my parents' advice, put my foot down and refused to let either of us sign on the loan. Less than five years down the road, BIL and his new wife have a terrible financial situation, raiding 401(k) funds for car repairs, etc.

"If we'd have co-signed, I know we'd have been forced to pay off that loan to preserve our own credit. Not only would we not have been able to afford it, but it would have put an irreparable rift in family relations. Mom and Dad taught me that sometimes you have to take care of yourself and secure your future, even if it means friends or family members may have a more difficult time."

Advice on building wealth

"If you need more money, then go out and make more money."

There are limits to how far you can scrimp and save. Often the fastest way out of debt and into wealth is generating more income.

Poster "Avalon_2" learned this from parents whose educations stopped by the sixth grade.

"Neither (was) afraid of hard work and we never lacked for anything as I was growing up," Avalon_2 wrote. "They taught me that as long as there is health, anything else can be worked for. To them the word 'retirement' didn't exist. You work until you can't work anymore.

"I've worked 2 and 3 jobs at a time and often while going to school. To this day, I have a hard time not doing more than one thing at a time."

"You pay in advance for capacity."

Dr. Lois Frankel, a career coach and author of the New York Times best seller "Nice Girls Don't Get the Corner Office," heard this bit of advice from a small-business adviser at the University of Southern California.

"As the owner of what was at the time a small business . . . this meant I had to invest more than just hard work in the business to make it grow. I was trying to keep my overhead down and was doing everything myself and driving myself crazy. So when I could least afford it, I invested in hiring an assistant. (The adviser) was right -- this freed me up to do more marketing and sales calls which in turn led to landing more contracts. I've never forgotten this piece of advice and each time I've followed it it's resulted in another growth period for my company, Corporate Coaching International."

(Frankel is also the author of "Nice Girls Don't Get Rich" and the soon-to-be-released "See Jane Lead.")

"Own your own business -- including the building it's in."

David Bach learned this lesson as a money manager for Morgan Stanley before becoming the author of the New York Times best sellers "Start Late, Finish Rich" and "The Automatic Millionaire."

"My wealthiest clients were clients who owned their own business. The most important financial decision they made (that really made them rich) was they bought the building their business was in. In almost every case the building was ultimately worth more than the business at the end of their career.

"Today I own the building (commercial condo) that my company FinishRich Media is in. My building has appreciated more in two years than I earned on my first four bestselling books in royalties."

"Don't gamble more than you can afford to lose."

My colleague, MSN investment writer Jim Jubak, explains:

"When I was a kid, our big extended family would gather on Christmas Eve for a big dinner of fish and my grandmother's pierogi, followed by drinking, followed by singing off-key with my Uncle Eddie, followed by more drinking. The evening always ended with the oldest kid, yours truly, settled around a card table battling three adults in a game of 25-cents a hand pinochle. I almost always came out a big winner -- $4 or so -- mainly because by that time in the evening I was the only one who could accurately count the pips on the cards. One year, having puzzled it over in my head, I asked my Aunt Millie the logical question: Why do you play cards with me every year when you know you're going to lose? Swirling her vodka in her glass, she said to me: Because I never gamble more than I can afford to lose. And then she pinched my cheek.

"Hated the pinch. Appreciated the advice.

"Wall Street has developed lots of way more sophisticated methods for controlling risk. But I think my Aunt's has one very real virtue -- it keeps you focused on the real aim of the game, which isn't making money for its own sake, but to have enough of the stuff to get you where you want to go. It's helped me get over losses in bear markets and in individual stocks. And reminded me that I can occasionally take a flier, as long as the game in itself is fun and I'm not gambling more than I can afford to lose."

"Prince Charming isn't coming."

Barbara Stanny came from a wealthy family (her father was the "R" of the H&R Block tax preparation chain) and never learned much about handling money. After her first husband lost a good portion of her fortune and left her with a tax bill of more than $1 million, Stanny asked her dad to lend her the money to pay the IRS. He said no.

"That was the best thing he could've done," Stanny said. Though he never said these exact words, the message was loud and clear: 'Prince Charming isn't coming. To truly achieve financial security, your only protection is you.' That moment was the turning point for me. I not only got smart enough to manage my own money (in less time than I ever imagined possible), but I've written three books empowering women to do the same."

"Prince Charmings leave, Prince Charmings die, Prince Charmings aren't always such great money managers," said Stanny, whose books include "Prince Charming Isn't Coming," to be re-released May 2007, "Secrets of Six-Figure Women" and "Overcoming Underearning."

"Your job is to participate in financial decisions from a place of knowledge, not fear, ignorance or habit."

This advice isn't just for women, by the way. Anyone who's expecting a lottery ticket, stock picker or other outside force to bail them out is guilty of the Prince Charming syndrome. It's time to quit dreaming and start taking charge.

Liz Pulliam Weston's new book, "Easy Money: How to Simplify Your Finances and Get What You Want Out of Life," is now available. Columns by Weston, the Web's most-read personal-finance writer and winner of the 2007 Clarion Award for online journalism, appear every Monday and Thursday, exclusively on MSN Money. She also answers reader questions on the Your Money message board.

Updated Dec. 21, 2007

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