It’s often said that a house is our biggest investment, yet the primary function of any house is to simply provide us with a place to live. Yes, handsome gains can be had for those with good timing. However, as investments go, houses rarely match the long-term returns of stocks. And most people forget that property taxes, maintenance costs, insurance, and even real estate agent fees eat into those returns.
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Taking on excessive debt — and continuously spending more than you earn — greatly reduces the wealth you can accumulate down the road. As a result, your options in the future become greatly diminished because you are essentially spending tomorrow’s wages today. In short, accruing excessive debt can severely limit your choices in life as you get older, thereby making you an indentured servant to your lenders.
The bottom line: By
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Not all debt is bad. Debt is generally okay whenever it is used to buy something that may increase in value. For example, going into debt can make perfect sense when you’re trying to start a business, or expand an existing one. Very few people can save enough cash to buy a home in a realistic amount of time without a home loan either. And an education loan can be
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Fiat-based paper currencies facilitate commerce by acting as a medium of exchange that’s far preferable to bartering. Unfortunately, governments that wish to spend beyond their means can — and do — print fiat with impunity, thereby leading to chronic monetary debasement that can wipe out savings and even disrupt societies. On the other hand, gold and silver pay no interest, but they have no counterparty risks either; that makes them
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It’s been said that failing to plan is planning to fail — especially with respect to personal finances. And although you may be prepared, one of the biggest mistakes any household CEO can make is to abandon their financial plan during extended periods of good or bad fortune. Why? Because, for those who lack the discipline to stay the course, raw emotion may erroneously trump the sound reasoning that was
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There are plenty of food snobs out there who insist that it is sacrilegious to put ketchup on a hot dog. That assessment is echoed by The National Hot Dog Council which proclaims that ketchup should never be put on a hot dog by any one over the age of 18. I find it deliciously ironic when people insist that something as gastronomically unsophisticated as the common hot dog can
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Although you’d never know it based upon the ways people treat time and money, the former is significantly more valuable than the latter because our life here on earth is finite. Yes, time is free; ironically, it’s also priceless. That’s because we can always make more money — but there’s nothing we can do to buy more time.
The bottom line: Treat your time with the same care and consideration you
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Everybody would love to have a new car every couple of years but, for most, that’s an extremely expensive proposition — nor does it make much sense. The reality is you can’t beat a used vehicle purchased from a private owner; late model vehicles provide the biggest savings. This is primarily because most new cars lose upwards of 50% of their value in the first three years.
The bottom line: Folks
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I think it was the Quaker Oats guy who famously declared that a penny saved is a penny earned. However, because of taxes, a penny saved is actually worth more than a penny earned. To illustrate, if you happen to be in the 10% tax bracket, every taxed dollar you earn is worth only $0.90; tack on FICA, state and other taxes and it’s worth even less.
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Risk and reward are inextricably intertwined. Of course, the richest rewards come to those who are willing to take the biggest risks. The oft-forgotten corollary to that strategy is that, by its very nature, high risk endeavors also have a greater chance of failure. That’s why most successful entrepreneurs and investors carefully evaluate risks and identify corresponding contingency plans before making a big decision.
The bottom line: Whether it’s a significant
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