The Little Book of Bulletproof Investing: Do's and Don'ts to Protect Your Financial Life

Chapter 10. Save 'Til You Drop: Topping off Your Piggy Bank

Do you enjoy worrying about money? Lying in bed in the middle of the night, listening to the faucet drip, wondering where the money will come from to pay that big tax bill, cover that tuition check, meet that mortgage payment, keep American Express at bay? It seems like your authors spend an inordinate amount of time dwelling on such matters, when our minds should be devoted to philosophy and the fine arts. Looking back, it's easy to see how all this endless worry and anxiety about money might have been avoided, had we only been as smart as you are about to be.

Creating a low-profile, low-maintenance, low-overhead lifestyle is the key to a refreshing night's sleep. Yes, even in a crazy, gotta-have-a-gimmick world turbocharged by credit cards, you should not spend every dollar that comes your way. Charles Dickens expressed it succinctly in David Copperfield: "Annual income twenty pounds, annual expenditure nineteen and six, result happiness. Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery." This is a fundamental difference between people, and it becomes obvious who is whom once a recession hits. Those who live below their means continue with their lives. Those who don't have to dissolve their lives in order to pay back creditors.

Warren Buffett still lives in the same stucco house he bought in 1957 for $31,500. His sidekick, Charlie Munger, didn't splurge by buying a new car until ...