50 Plus Finance

Monday, January 17, 2011

Social Security Can't Be Eliminated and Here's Why

Roosevelt Signs The Social Security Act: Presi...

Image via WikipediaSocial Security is necessary part of any modern civilization. Without it a portion of the population would live below the poverty line and worse.

The standard rhetoric is that you should be responsible for your own retirement years by saving and preparing. I agree with this premise because through your working lifetime you should live within your means. Setting aside the necessary money in IRAs and other saving instruments. In a perfect world this should be the goal.

We don't live in a perfect world. We have members of our society that will never save a dime. Never prepare or give a thought of what would happen if they became disabled. They may never have the income to save. What should we do, let them live in poverty? No, that's where Social Security comes in.

We know where Social Security gets it's money, us. But do you know who the money goes to.

The facts are that without Social Security many retirees would be living below the poverty line. Under the current circumstances that is not going to change. The policy makers in Washington must remember these issues.

• Social Security benefits are quite modest.

• The majority of beneficiaries have little significant income from other sources.

• For most seniors, Social Security is the only income they will receive that is guaranteed to last as long as they live and to provide full inflation protection.

• Social Security benefits in the United States are low compared with other advanced countries.

• Future retirees already face lower benefits (relative to their past earnings) than current retirees as a result of a rising Social Security retirement age and escalating Medicare premiums.

In the United States Social Security benefits as a percentage of income are quite low.

The facts are that Americans 65+ live richer lives thanks to Social Security. According to AARP 54.8% of retirees are in no danger of poverty because of Social Security and retirement savings. There are 35.5% of retirees not living in poverty because of Social Security. Sadly, 9.7% of retirees taking social security are still living below the poverty line.

When Franklin Roosevelt enacted the Social Security Act in 1935 he called it" a law that will take care of human needs". For 75 years, starting from the Great Depression when more than half of American elderly couldn't support themselves this coverage has provided a economic safety net for retired and disabled workers and their dependents. Today Social Security puts out 50 million checks every month. If it wasn't for those checks at least a third would live in poverty.

To fix Social Security doesn't just require acquiring more funding. We have to address the great need that requires it's existence.

Saturday, January 15, 2011

7 Things to do Before I Retire.

Shuffleboard Is Popular at the Century Village...

Image by The U.S. National Archives via Flickr
Because my nest egg will never be as big as it should be to retire on, I have made myself a list of the things I must accomplish before the big day. Yes I am talking about the day when I go to work for the last time. When that day comes I will be ready because I have eliminated money drains from my budget.

Mortgage. This is my biggest item on the list. To finally pay off the monthly principle and interest payments eliminates a huge expense from my retirement budget. I know I will still have to pay insurance, maintenance, and property tax. But that can be budgeted and made affordable.If these costs are high in your area, you'll have a hard time affording them in retirement. You may consider downsizing if this will save you money.

Credit Card Debt. You don't want to use your savings to pay for expenses you incurred while working. I don't like to have credit card debt now and when I retire,too. I am still paying of some balances today, but will be done well ahead of retirement and I'll keep it that way.

Second Car. With my wife and self not working anymore a need for a second car is eliminated. Going to one car saves money in fuel, insurance and repairs. Sure you lose some convenience, but you save the cash. It will work for me. But if you have to have a second car, make it a used, low mileage model. And remember no payments.

Home Repairs. Get all your home repairs done while your still working. Whether it's a new roof, carpet or washing machine get these thing taken care of before retirement. Also try to anticipate things that will need attention late, take care of them before time or set aside the money to be used later.

Expensive Investments. Make sure all your investments are in accounts that have the lowest possible fees. Even a one percent difference in fees will make a big difference over the years. This is something that should of already been done.

Unnecessary Services and Utilities. If you have a cell phone and a land line why not consider closing the land line. If you have Internet and cable, why not consider canceling the cable and watching TV online. There may be other unnecessary items you don't really need, so why not cut them off and save some money.

Taxes. If you have some taxes to pay when withdrawing money during retirement, it may pay to hire a financial planner, accountant, or estate planner to help you tap your investment accounts in the correct way to minimum the tax implications.

I am planning ahead today so I can do the right things later. Also consider preparing for insurance, health care, long-term care, and estate planning in you retirement. Take care of these thing today and get organized.

Friday, January 14, 2011

A Freezing Friday Round-up

Image via Wikipedia

It's been a cold week here. We had to put a few logs on the fire to keep warm. So with a nice cup of coffee and a list of links to some fantastic blogs, we are staying warm. I hope you are too. Here are a few of my favorite for the week.

Don’t Get Rich Any Slower Than You Have To at Get Rich Slowly

Our Identity Theft Experience at Personal Finance By The Book

Ignite Video: Tips For Buying A New Car at My Money Blog

How to Pay a Tax Bill You Can’t Afford at Consumerism Commentary

MBA CLASS 2011; Risk vs. Reward at Barbara Friedberg Personal Finance

New Year’s Predictions And Why Bernanke Sports A Beard at Living Off Dividends

Scholarships Can Be Found for Almost Anything at Free Money Finance

Why Your Tax Withholding Went Up at Bargaineering

Learning to Live on One Income (By Choice) at Five Cent Nickel

The Difference Between Metaphor and Action at The Biz of Life

Americans do NOT spend 6 Billion Hours on their Taxes at Free by 50

What is Groupon? at DINKS Finance

The Top 15 Cheapest New Cars of 2011 at 20 Something Finance

5 Lessons Dave Ramsey Taught Me About Healthy Living at Frugal Dad

How to Invest in Vanguard Funds Using ETFs — and Save Money While You’re at It at Invest It wisely

Financial Fast: Week One at Canadian Finance Blog

Carnivals I have participated in:

Carnival of Wealth #20 – Jan 9 2010 Edition

Festival of Frugality – Craigslist Edition

My Twitter Newspaper

The finance-is-personal Daily

Thursday, January 13, 2011

Why UPS Trucks Never Turn Left

Image via Wikipedia
Efficiency is the bread and butter of UPS. Deliver the package on time while saving time, space and money. At UPS, computer sorted packages are marked with a proprietary bar-code. Computers design optimal routes and state of the art package facilities guide your deliveries with computer precision. But with all the billions spent on these systems, the biggest secret to their success is don't make left turns.

UPS plots it's delivery route to make as many right turns as possible. Where half the turns are left ones, they avoid turning left. And how much of the time are UPS trucks turning right? Tasha Hovland, an industrial engineering manager, said, "A guesstimate, I would probably say 90 percent. I mean we really, really we hate left turns at UPS."

Efficiency is so much a part of UPS that it should be called "United Efficient Parcel Service". So much, even the trucks are parked 5 inches apart in the dispatch center.

Making right turns is nothing new, it was the norm way back before anyone can remember. Managers would go out on the trucks and drive the routes, plotting on map how the right turns could be more efficient.

UPS trucks drive 2.5 billion miles every year. With its package flow technology and right turns they saved 28,541,472 million miles and 3 million gallons of fuel last year. The company puts almost 92,000 trucks on the road every day. But without its efficiency and right-turn routes, it would have to send out an additional 1,100 trucks.

This is why you never here of a recession with companies like UPS. Constant innovation and increased efficiency keeps companies vibrant.

I think I will try this right turn only stuff when I go to work tomorrow.

Wednesday, January 12, 2011

How Do You Stick Your Nose into Someone Else's Money?

We have all been there, seeing a good friend or acquaintance continually struggling with money. Why is it so difficult to talk to them about it. Most of us usually don't go around doling out financial advice. People take it as an insult to be lectured on money. But because I write about it, it's in the forefront for me. I don't make it a habit to to offer my opinion on money. I have found out it usually a waste of time because the advice falls on deaf ears.

There have been times I have mentioned the work of Dave Ramsey, because he is in the main stream media. He can be seen on Good Morning America and other network programs. Most everyone has seen him so it's a good lead in to start the conversation.

I have found talking to someone about money is as hard as talking to someone about God and religion. It's an extremely personal and private thing. You can't tell some one they are doing their money wrong, it's embarrassing. It's easier talking to a stranger about money than someone your close to.

Related Post: Do You Have Financial Etiquette?

An alternative to beating them on the head with a Dave Ramsey book is to find out why the person is behaving the way they are. Only by understanding how the other person thinks can you help the person find the right path. With that in mind why not say "I see your upset. How can I most help you?" With that statement you are letting your friend know you are worried about them and how they are handling this rough patch they are going through.

It's tough enough to talk to a friend about bad money behavior, what if your spouse needs some help. Here we have an even more delicate situation. If your spouse is aware of their money problems and you can't just seem to knock some sense into them, here's something to try. Talk to your spouse about going down to see a financial planner. Here the dirty work is off of you and your spouse will probably listen to a third party. If there is something special you want the financial planner to emphasize, stack the deck, call ahead and mention the troubling item you want to cover.

How would a friend take it that you want to set up a financial planner for them. We your friend see it as real concern or complete arrogance on your part.

If any financial planners are reading this, please tell me how you can help in this situation.

Tuesday, January 11, 2011

Best Buy Wants to Buy Back Your Old Gadgets

Image via Wikipedia
Electronic retailer Best Buy wants your old electronics. As long as you bought them from them. Starting last week the program is aimed at consumers that love to get the latest new electronic gadgets. By paying up to $59.99 when purchasing the new device, Best Buy will buy back the gadget for up to 2 years. But remember your not getting back full price, just a percentage of full price depending on how old the unit is.

It seems like technology changes every six months. The newest phone or gadgets can change many times per year. That's where Best Buy comes in. Here's how it works. If you bring back your device within 6 months Best Buy will give you 50 % of the purchase price. If the gadget is 6 to 12 months old then you will get 40% back. If it's 12 to 18 months old then you will receive 30% back and if it is 18 to 24 months old you get 10% back.

The Best Buy Back Program is said to include phones, computers, laptops, netbooks, tablets and most TVs.

For those that frequently upgrade this is good news. If you don't have time to resell your items when you upgrade, then this is for you. But maybe it would be better to sell your electronics on Ebay or Craigslist.

From practical standpoint are you really going to trade your phone or TV in after 6 months. Why would you? After laying down $600 for the latest laptop, would you bring it back to Best Buy in 6 months and receive $300 back. To buy another $600 laptop. You know the money back you are getting will probably be in Best Buy gift cards and not cash. Don't forget the $59.99 charge for this service.

What if it were a year later you brought back your laptop. Then you would receive $240 for that 1 year old laptop. I believe you could get more for it on Ebay or craigslist. What if you bought a Ipad and at the end of 2 years they would give you back $50 dollars. I think you could sell it for more than that.

Best Buy had to come up with something new to keep in the forefront of being the largest brick and mortar electronic retailer. They state they will have a huge presence on the forth coming Super Bowl TV advertising. With all the online competition, they must be struggling. They could be following in the footsteps of Circuit City. But for the compulsive gadget buyer this could make sense.

Monday, January 10, 2011

Should Couples Have Separate or Joint Accounts; Revisited

Back in Sept. I wrote a post concerning my views on a couple having separate or joint financial accounts. I stated that is what my wife and I had done and why. I always felt a little guilty that we were doing that. I was brought up that, for better or worse you combined your finances. All my friends and family have combined accounts, I am the only one with separate finances.

I was reading a post over at GetRichSlowly.com and read how top-notch blogger J.D. Roth has his finances separate form his wifes. I thought if it makes sense to him why am I so concerned.

Without all the cultural pressure of combining accounts and considering the relational pluses of having separate accounts, it makes sense in my life to have them separate. If you are someone who follows the work of Dave Ramsey, you know he says separate accounts are wrong. His reason for this is that if your keeping your account separate then your short circuiting a big part of the relationship. Having combined accounts gives you more ways to plan your lives together and foster more communication, resulting in a closer relationship.

For me in my first marriage, we combined are accounts. We were both in our early 20's, didn't have anything to lose, and we were fresh faced kids starting out in life. Little did we know someday all of it would be over. Fast forward to second wife. With remarriage, both parties already had established lives financially. Already established bank accounts, investments, and habits that were well entrenched. At that point combining financial styles and habits would be hard.

The choice of having separate accounts, over a decade, has convinced me it was the right move. Having things separate reaps benefits everyday in the avoidance of disagreements. We both have strong opinions when it comes to finances. Also being a combined family, with children from previous marriages, it's only another reason we are doing the right thing.

If you are at the point where you must consider having your finances combined or separate, here's a list of things to think about.

The arguments for combining finances are:

If there is only one income, it doesn't make sense to have anything separate
One person is financially inept at handling money. Combining money would only be the practical thing to do.
You believe that joint finances are easier and economically make sense
It's morally wrong to keep them separate and it shows a distrust of your spouse.

The arguments against combining finances are:

You believe that with all the best intentions marriages fail, so whats the point.
You both make the same amount of money. Then it's OK.
Your family has a tradition of separate finances.
It keeps the level of money fights to a minimum.

I can say I love my wife and I would trust her with everything I have. But I think keeping our finances separate has removed a point of contention and helped our marriage grow. Again it comes down to what's comfortable and right for you. When I want to give good advice to someone I think what would I tell my own children in the same situation. I would say be honest with your spouse and be honest with yourself in your feelings about money.

Sunday, January 9, 2011

Best of the Best Weekend Round-Up

This is clicked at sunrise in pondicherry

Image via Wikipedia
The first week of the new year is now behind us. Getting back to the normal non-holiday work week and it feels great. The new year got off to a good start. I hope yours did to. Here are a few of my picks for the best of the weeks posts.

What Does a Trillion Dollars Look Like? at The Biz of Life

Old Habits for a New Year at Get Rich Slowly

The Myth of Ownership at Consumerism Commentary

An Example of How to Retire Early at Free Money Finance

The Power of Passive Investing by Richard Ferri at Bargaineering

Financial Tips for Couples in 2011 at Five Cent Nickel

$5 Gas is Coming... Eventually.... at Free by 50

It’s Friday…And Time for a Book Giveaway! at DINKS Finance

Get it On. Child Tax Credit Extended through 2012 at 20 Something Finance

The Big Fat Guide to Kicking Debt’s A** at Money Under 30

Why I’m Happy with a $500 Car Repair Bill at Barbara Friedberg Personal Finance

Online Banking: Depositing A Check From Home at MoneyCone

The Importance of Sleep for Wealth Creation at Squirrelers

Can Rich People Get to Heaven? at Personal Finance By The Book

Financial Resolutions at Canadian Finance Blog

I was mentioned this week at:

DINKS Finance

Personal Finance By The Book

Blog Carnivals I participated in:

Baby Boomers Blog Carnival Seventy-third Edition

Carnival of Financial Planning - Edition #169

Carnival of Money Stories

Carnival of Wealth #19 – The New Year Edition

Festival of Frugality: Cheapest Man Alive Edition

I could of mention at least 25 more posts that were so well done and informative this week. The quality of articles in the personal finance blogosphere were outstanding. Must be all that holiday cheer washing of in to the new year.

Saturday, January 8, 2011

Is it Better to Pay Down Credit Card Debt or Build Up Savings?

If you were one of the lucky ones and received a end of year bonus, congratulations. You have the happy task of deciding what to do with it. Do you blow it on a new 50" 3D LCD TV or do you use it for a more responsible objective. Do you have credit card debt, why not use it to pay it down. What about putting it in a nice Roth IRA?

You have decided to put off the big screen TV purchase for the time being and use that windfall for more financially responsible goals. Where do you put it, on your debt or in savings?

The answer depends on your own personal situation. What would boost your bottom line the most? If you go purely by the math, paying down the credit cards makes the most sense. If you consider the interest rate your paying and what it's costing you and how little you will earn in a savings account, paying down the debt seems like a good plan.

If one of your goals is to give up credit cards permanently, a nice savings account is necessary. It's hard to make progress when every time an emergency comes along you have to reach for the credit card.

So building up a nice emergency fund of $1000 to $3000 is the way to start. Once you have an amount of cash put away for the rainy day thats coming, then go back to paying off the debt.

If you are anxious to pay off debt faster, then do a little of both. Pay a little extra to the debt and also still put some into savings. Also it's time to get a little creative with your budget. Try for six months to squeeze a little more of your cash toward your goals. Try cutting some items from the budget to arrive at your goals a little faster. Make it a project to sacrifice some of your extra expenses, like cable or dining out, but for only six months to get the job done quicker.

Friday, January 7, 2011

5 Ways to Mess Up Your Retirement Plan

Like most people, thoughts of retirement cross your mind every time you dread going to work. Sitting on a sandy beach, looking out at the surf, without a care in the world, is my retirement dream. Maybe it's yours. It's not going to happen for me.

According to statistics, only 25% of baby boomers are able to make that dream come true. I'm not in that 25%. That 25% have assets and savings lined up to live the dream. Even though the boomers have decent assets, they're not enough. The result is, there will be some full or part time working occurring well into their retirement.

You may ask how I got into the statistic of the 75% of who aren't ready or able to retire someday. It' was easy, I just followed these simple rules:

Don't be on a budget. Spend all the money you earn.

Don't save your money in Mutual Funds, IRAs, 401ks, or investments of any kind.

Don't live on what you make. Use credit cards irresponsibly. Run up their balances and only pay the minimum.

Don't have a car you can afford. Buy, lease, or rent an expensive car. Have a payment until you old and gray.

Don't live in a house that's affordable. Buy a house where the payments are half your monthly income.

If you follow these five rules you will be on your way to financial ruin in no time. These things, if done correctly, will keep you poor, your whole life. I will attest to the fact that the rules do work. Because I have done them all.

For me I'll be working well into the future. My investments are meager at most. Social security is not enough and can we really count on it in to days atmosphere, forget about it in 20 years.

What does the future hold for me? When I reached 65, I was going to sell the house and downsize. My original plan was to count on the house value appreciating, so when I sold it, I would have enough cash to generate an income and a comfortable life. That's out the window.

My plan 'B' is to keep working. My business generates a good income. A lot of the work is done by me. As I get older and can't do as much, I would hire more help. That plan would work well. I would be able to work well into my 80's. It's hard to imagine myself that old.

Trying to plan events over the next 25 years is presumptuous at best. Planning ones future with a wife and 6 childrens' needs can be hazardous. Financially, even in a bad economy, I'm still heading in a positive direction. Things can completely change in the next 5 to 10 years and I still may be able to make it to that beach. I'm exploring new directions to increase business, who knows where they may lead.

Related articles

Wednesday, January 5, 2011

She's Buying a Car, What's Better a Rebate or Low Interest? Help Dad.

My daughters car finally went to heaven. After 10 years of life, 200,000 miles and puddles of oil on the driveway, she needs a new car. I advised her to use the $5,000 dollars she has saved and buy used. But no. She wants a new one. She's just not going to listen to the old man.

She's been looking around for a while because her car has been on life support for the last 3 months. I went with her down to the dealer for technical and moral support.

Now if you know me, you would know of my absolute love of going down to the dealer to talk to car salesmen. Talking to car salesmen or getting root canal, which would I rather do, I think the later. Our salesmen was an elderly gentleman, his fire had long gone out, but he was interesting to talk to. Everything went well for a while until he had to throw a curve ball. He advised us there was a rebate. Then he said instead of the rebate she could have 0% interest. What to do?

When buying a car you have a choice between low or no interest and a rebate. How do you know which is better. It's a matter of doing the math. Huh! Do math? I know. Why not get some online help!

Several websites have online calculators that will help you decide. AutoTrader.com and Cars.com each have one, as does Bankrate.com . It's simple, just enter the loan amount, the rebate amount, and the interest rate if you take the rebate, and the interest rate if you don't take the rebate.

Lets put in some numbers and try it out. Say you have a 48 month loan for $25,000; the rebate is $3,000, and if you take the rebate the interest is 6%. If you leave the rebate you get zero percent financing. The answer: "It's a Wash", the calculator tells us. But if the interest rate was 8% instead of 6, you would come out $1,000 better by taking the zero percent loan and no rebate. One other deciding factor is if you are short on a down payment, you can use the rebate to help with that.

Now we had the facts to make an informed decision. I thought finally we were going to be done with this car hunt. Yet it was not to be. My daughter was starting to get cold feet, thinking about that long commitment of payments every month. We went home to think it over. To be continued........

Tuesday, January 4, 2011

Before You Marry It's Time To Get Financially Naked

With the statistics of divorce in this country, more than ever we must better prepare for the big step of marriage. There is a lot to do before the big day. The list is long with all the things that need to be arranged. The preacher, the hall the church, the caterer and on and on. Lots of time is needed to get all this done. We can't forget to be sure we are preparing our financial lives together, also.

With all the rushing around be sure you give yourself the time and space to talk frankly about your financial philosophies. With financial conflicts still among the chief reasons for divorce, it's critical.

You need to talk over all the obvious questions like, How are we paying for the wedding? Should we combine our accounts? What if one of us gets laid off? Those are the easy questions to ask. You need to dig deeper into philosophical questions. Is your future wife a clothes maven with a hundred pairs of shoes? Is the husband a car freak that will only drive a BMW? These things are cute when your dating your future spouse. But if your future love has spending problems, you need to know before the big day.

A thorough pre-marital counseling is imperative to work all the bugs out. You owe it to your future spouse to expose all your crazy spending habits, turn over all the cards and get financially naked.

There are so many facets of life to touch on during counseling you will only be able to touch on the very important ones. One of them being your future home together. Does one person want a small 3 bedroom house and the other want a lavish 2 story McMansion. When the kids arrive is it public or private school. Religious school or home school. What about vacations? will it be Hawaii or North Carolina?

Counselors ask piercing questions to get an answer from your soul, for example:

Imagine the Best. You have enough money to take care of your needs, now and in the future. How would you live your life? Would you change anything?

Life Cut Short. Now the doctor says you have only 5 to 10 years to live. You won't feel sick, but you'll never know when death will come. What will you do? Will you change your life? How?

Regrets. Now imagine that your doctor says you only have one day to live. Ask yourself: What did I miss? What did I not get to be or do?

With these sample questions, your philosophy comes out. You really get to know how your future spouse ticks. Today people are more careful with their money. If they don't know their future spouse well enough an anxiety about their future behavior arises. This leads to mistrust. A sign of this mistrust is the use of Pre-nup agreements. They are used to protect assets in case of divorce. This is a big red flag that your marrying someone you don't trust.

The action that needs to be taken is, if your engaged to marry, get a good financial marriage counselor to help you better prepare for the big step your about to take.

Monday, January 3, 2011

Small Businesses Don’t Create Jobs – New Businesses Do!

Mark Zuckerberg at South by Southwest in 2008.

Image via Wikipedia
How many times have you heard that small business creates the largest amount of jobs? You hear this all the time in the media. I am finding out that proposal is not really accurate. Even though the government thinks it can create jobs. More on that subject later.

According to entrepreneur Peter Thiel, it's really new small business that creates jobs. Who is Peter Thiel? He happens to be the smart investor who in 2004 put up $500,000 dollars to finance a small business, run by Mark Zuckerberg, called "Facebook".

Thiel says the misconception is only a urban legend and doesn't hold water. I am finding out that proposal is accurate. The real indication of whether a business is likely to create jobs is not how large a business it, but how old it is.

This sort of make sense. New companies, by definition, tend to experience growth as they find their optimal, ongoing size. Once they reach maturity, whether it’s 20 employees or 20,000, they stop adding jobs so fast. And the smaller that number, the sooner the company is likely to reach it and quit hiring. And mature firms seldom enjoy significant bouts of growth. On the other hand, new companies also fail much more often than mature ones.

Conditional on survival, young firms grow more rapidly than their more mature counterparts. However, young firms have a much higher likelihood of exit so that the job destruction from exit is disproportionately high among young firms. More generally, young firms exhibit much more churning of jobs as evidenced by high rates of gross job creation and destruction.

Still, though, the study says young firms deliver more gross and net new jobs than older firms.

Obviously, this is a very big deal from a policy perspective. If we want to fight unemployment, it’s not very helpful to help small businesses in general. Instead, we should be promoting entrepreneurship and the birth of new businesses.

Recession Lessons Learned In 2010

Marty Allen, American comedian, holding wallet...

Image via Wikipedia
The last few years we all have been going through tough financial times. Expenses have been going up and incomes have been going down. We have been forced to do a reset on our financial lives. We don't spend money the way we used to, we can't, we don't have it to spend. The smart ones that haven't been effected, our cutting back for fear of things getting worse. They are saving more and spending less; they are reusing, reselling and recycling. The best lessons are learned in the tough times and hopefully they are integrated into our lives and endure.

I have listed a few of the lessons learned, I hoped you learned them to.

Savings Accounts. If you are already saving your income every month your way ahead of most people. If your not, it's time to start. Make this your top goal for the coming year. Start small and as you begin to see that balance rise you'll be encouraged to increase the amount. Be sure to put it somewhere it's not easily accessed, so you won't be able to get to it easily when your tempted. And you will be tempted.

Your home is not your piggy bank or a retirement account. What I have learned and most of America to is that home equity is not guaranteed. I have owned 2 homes in my life and always thought their price would always rise, it never occurred to me their value could be cut in half. My retirement plan was partially dependent on selling my house in ten years and retiring, using the proceeds to setup income producing investments. The idea of producing equity out of home appreciation, may be a thing of the past. The lesson to learn is, your home is not an investment.

Home Equity Lines of Credit (HELOC) are another thing to be avoided. They are a foolish way to borrow money. You putting your home in jeopardy, when you can't pay it back. That new kitchen or bath you borrowed the money for, will sink you when you lose your job or can't work due to illness. Do it the old fashion way, save for it, pay cash or don't do it.

Living within your means. Americans are blasted everyday from the media that we need to buy things to make us happy. It's not true. Only buy what you need with cash that you save. Rule #1: If you don' have the money, you don't buy it. Rule #2: If you need to buy it, save ahead of time for it. Rule #3: Setup and maintain an emergency fund for those unexpected emergencies.

Credit Cards are not our friends. The main purpose of a credit card is to get you to use credit for your purchases and ask for only a small payment every month in result you pay interest to them. This interest is their way to make money on you. If you pay back your balance every month they make no money and actually lose money on your use of the card. Their goal and only reason to be in existence is to keep you in debt. Some debt always grows into massive debt. Your best move is to avoid credit cards altogether. They are built to keep you in debt.

Car Loans will keep you poor. Keeping up with the Joneses is a trap you will never satisfy. If you think you have to be defined by what you drive your deluded. If you have a car loan, pay it off. If you need a car, buy a used car let someone else take the depreciation hit. Here's a plan, save for that car purchase and live within your means.

Job security is an illusion. Don't fool yourself. We are all self-employed. Your only as good as what you can do for the boss today. I don't care how many years you work for a company, your an asset on their books until your not needed anymore and then you will be put out.

Frugality is a must. What we have must be used longer. Our money must be spent in the most economical way. We can't just go in a store and put down our money. We have to shop sales, deals and always get a bargain. Coupons and coupon codes are a must. Ask for discounts everywhere. Nowadays, it's become perfectly permissible to ask for discounts from your dentist, doctor, plumber and kids' tutor. Don't forget to ask for drug samples whenever your doctor writes you a prescription.

The recession has taught us many things we already should of known. Making your hard earned dollars do that much more is not a option anymore, its a necessity.

Pages