Don’t Just "Tell" Your Kid the Way to Financial Freedom

Don’t Just "Tell" Your Kid the Way to Financial Freedom

Among the discussions of Legos, parkour and throwing the football, I do my best to slip in discussions with our 10-year-old about ‘needs and wants’. 

He’ll say something like, “I need that Nerf gun auto-repeater with the doomsday grenade launcher,” after seeing an advertisement on YouTube.  Commercials are still effective in the age of content-on-demand.

“Do you need it or do you want it?” I’ll ask.

He’ll think for a minute before saying, “I want it.  Then he'll grin and add, "But I really want it,” making his sales pitch dependent on a big smile and some funny antics.

“Enough to spend your own money on it?”

The smile fades quickly as he shakes his head.  “I don’t want it that much.”

He’s a good kid who, because of the age difference with his sister, sometimes gets spoiled like an only child.  However, when he’s forced to consider spending his own money, earned and saved through various chores and birthday gifts, he rarely gives into his own boyish greed.

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How Drinking Cheap Beer Can Remind You of What is Important in Life

How Drinking Cheap Beer Can Remind You of What is Important in Life

“Life is too short to drink cheap beer.”

That was my mantra for a lot of years.  I’d proudly say that while ordering one of the latest craft beers that my favorite joints would have on tap.  Each time I’d visit I’d peruse the beer menu and take my time selecting.

No Hefeweizens for me, thank you.  I’d had more than my share while in the Army and haven’t really enjoyed them since.

And while I love Guinness, I’m not a fan of the craft versions of stout beer which are often overly heavy and just downright nasty.

Nope, my enjoyment rested with the Pales, the Reds and the IPAs.  I’d pick one, drink it and enjoy the hell out of it.  I wasn’t one of the ding-dongs who would drone on about the IBUs (International Bitterness Units) of the beer or if I knew where the hops were grown.  No, I really didn’t care that much.

I just wanted to drink a fancy beer and get a nice, hefty buzz out of it.

This behavior continued into my financial awakening.  Even when I would sit with a table of wine snobs for some event, cringing at their extreme douchiness, I would have a fancy beer in my hand.  I was half a step away from imitating their self-importance.  Had I uttered one IBU rating you could have handed me a membership into that overly-indulgent beer snob mob, the group that is as obnoxious as the wine crowd, but twice as loud.

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I am Deeply in Debt and I Feel Fine

I am Deeply in Debt and I Feel Fine

I read an article recently wherein the writer stated that all debt is bad.  I paused on his stance and reflected for a bit.  It seemed extremely militant.  I’m not saying the author can’t take that position, it’s just that I don’t agree with him.

I battled consumer debt for many years before I finally cleaned up my act.  I’m not perfect now by any stretch of the imagination, but I’m doing a heck of a lot better.

Part of my growth was getting a better understanding of debt - on how to use it and when to avoid it.

I don’t hate, nor do I love, debt.  It took me some time to get comfortable with what debt is and how I could use it properly.

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Amortization 101 - #3 - The Greatest Trick Ever Pulled

Amortization 101 - #3 - The Greatest Trick Ever Pulled

The Difference Between Residential and Commercial Loans

The majority of my previous two posts have focused on home loans and how the game isn't in our favor while most of the population is tuned out.

Guess what?   It's the same in the commercial arena and no one notices it there either. 

Here's the main difference between the two loan categories:  Commercial loans will be amortized over a certain period, 20 or 25 years, for example.   However, they typically require a balloon payment at some fixed point, way before the end of the amortization period.  10 years, for example.

Take that in to consideration for a moment.

In ten years, you either need to come up with all the money owed to the bank or refinance.  At 10 years, you will have paid roughly 70% of the total interest owned on a 20 year loan.  Time to refinance.  

Do you see the scam?

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Amortization 101 - #2 - Your Friendly Neighborhood Bank Isn't So Friendly

Amortization 101 - #2 - Your Friendly Neighborhood Bank Isn't So Friendly

At the end of my last post, I asked the question:

If so much less interest is paid on a 15-year term versus a 30-year, why would the banks ever encourage you to take out that loan?

Let’s compare two loans, all things being equal except the term.

(click the links to download the pdf's of the amortization schedules)

$200,000 initial loan @ 4.5% interest

(Please note - I realize that you will normally get a better interest rate for a shorter term loan, but for this discussion we need to control all variables except one.)

On a 30 year loan, the total interest paid will be $164,813.42.

On a 15 year loan, the total interest paid will be $75,397.58.

That’s a difference of $89,415.85.

You would think the banks would hide a 15-year loan from consumers, wouldn’t you?  Wouldn't they prefer you pay that huge interest amount on the thirty year loan? 

Why don’t they?

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Amortization 101 - #1 - Where Does Your Interest Lie?

Amortization 101 - #1 - Where Does Your Interest Lie?

Smart People Saying Dumb Things

We’ve currently experienced the longest run of low interest rates in history.  It’s got many smart folks saying dumb things.  A college educated friend of mine says the current rates equate to “cheap money.” 

While I agree that low interest rates are great for purchasing investment properties and spurring development, is it really “cheap money?”

Do you think banks would really loan “cheap money?”  Before you answer, considered which entities usually have the largest buildings around: government, casinos and banks

What is that telling you?

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The King of My Castle

The King of My Castle

I’ve gotten a good handle on my personal debt.  For years after I climbed out of my debt hole, I didn’t use a credit card at all.  I really didn’t want one, again.  I no longer liked them.

When I became an independent contractor, however, I saw how a credit card might make my life easier.  Could I operate without one?  Yes.  It’s inconvenient, but it can be done.  However, I’m more disciplined now.  I use a credit card for my expenses and pay the bill in full at the end of every month.

There’s a level of satisfaction with having mastery over my credit card when previously I didn’t.  I usually abstain from silly purchases, those caused by emotion when my higher self is not in control.  I pass on those purchases that put me into a worse financial position due to forgetting the concept of “need versus want” and letting myself become overwhelmed by some desire. 

This is not one of those stories...

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Why I Quit Golf

Why I Quit Golf

When I tell folks that I quit playing golf, there’s often a look of confusion followed by an exasperated, “Why?”  It’s not like I’m walking around, declaring, “I quit golfing.  Hear ye, hear ye, I’ve quit the game of golf.”  I’ve been quiet about so it’s taken some time for most of my friends and clients to discover that I’ve tossed this game to the proverbial curb.

Before I tell you the why, you need to know what kind of golfer I was. 

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