I believe the way to achieve financial success can be summed up in two points.

1. Have a financial plan that you use
2. Live on less than you make within that plan

Okay, I realize that you could probably sum it up with just “have a plan” but I split it out for a couple of reasons.  First, it doesn’t matter how much planning you do if you never execute the plan.  Second, if the plan doesn’t include living on less than you make then you’re not on a good financial plan.

Some MBA’s and finance guys will probably want to argue that point.  Many of them like leverage and would say that some level of debt is quite alright.  Here’s what they can’t argue with.  Debt increases risk.  Anytime you borrow money you are adding risk to your life.  I prefer to keep my risk low and only have a mortgage.

Oh, and for the record.  I have an MBA and can crank the numbers to.  If you have an MBA then you should know about the formula that can be used to calculate risk.  How come no one ever calculates their own personal beta (risk factor) when borrowing money? 

Get rid of debt in your life and you will get rid of risk.  I personally sleep much better at night knowing that if, for some reason, I lost my job tomorrow I could cover basic living expenses and not have to worry about making a car payment.  How would it feel to be in that position?