The second is much better than the first. Here are several reasons why:
1) 'realistic to live by' in the first sentence just sounds odd to me. Perhaps if you put some sort of degree adverb there it would be better; for example, 'realistic enough to live by' might improve the sense.
2) by moving the 'live by' next to 'rules', the second sentence becomes much clearer. The first sentence chops the phrase 'rule to live by' in half, making it hard to figure out what sort of rule you are talking about.
3) The first sentence seems to be talking about two different things; 'rules' in general for 'clear', and 'rules to live by' that should be realistic. This lack of coordination can be very puzzling. The second sentence makes clear that you are talking about one subject: 'rules to live by', and that these rules should have two qualities: clarity and realism.
A final nitpick: I would avoid talking about 'making' rules to live by, and say something like 'choosing' rules to live by. 'Rules to live by' are not really rules that can be made or broken. They are truisms that fit or don't fit one's philosophy of life.