Is Leasing Your Next Car a Good Idea?

January 5th, 2012 admin

Have you ever heard someone say that a car, or a truck, is a big investment?  I disagree.  Yes, it can be a big outlay.  But a vehicle isn’t an investment, because investments are supposed to appreciate, or increase in value.  Vehicles definitely don’t do that.  Instead they depreciate, or lose value.  And they do so very quickly.

A better way to think of a vehicle is as an expense, not an investment.  And if you fall for (or into) the lease trap, this expense can become even more costly, slowing your progress towards financial independence. Read more »

How Do You Distinguish Good Assets From Bad Assets? (Hint: It’s About the Cash Flow)

December 19th, 2011 admin

At the height of the 1980s real estate bubble I watched a TV news interview with a new homeowner.  She said her parents always told her: “Buy the biggest house you can afford.”   And that’s exactly what she did.  She was beaming.  It did seem to make sense, at least at the time.  After all, homes were appreciating (increasing in value) on average over 5% per year in the 1980s and over 10% per year the previous decade.

I, too, found the advice compelling so I followed it and bought a house much larger than our  family needed.

Read more »

Net Worth is Good, but Cash Flow is Better

December 14th, 2011 admin

You might have seen some TV ads recently where people literally carry their retirement “number” with them.   Each person’s number varies, but it’s usually in the $1-2 million range.

I like these ads because they reinforce the importance of setting a measurable retirement goal.  But merely having a “number” like the ones in these commercials isn’t enough.  Why not?  Well, in the first place we don’t know what the number represents.  Is it net worth? Is it investable assets? Read more »

Should Your Retirement Goal be Measured Only by Net Worth?

November 21st, 2011 admin
Recently our family went out to eat, and while waiting for our entrées one of our sons asked us what we’d like to do when we retire. A good question…one that was fun to answer. My wife said travel and dine out. I agreed, but added that since I am a boy and boys like their toys I absolutely need to a retirement house (not retirement home – not yet anyway) with a play room. Of course any respectable play room requires a pool table, audio-visual gadgets, the obligatory big screen TV, and so on. Read more »

To Manage Your Finances You Need to Measure Them. But What Are the Measures?

November 10th, 2011 admin
Have you noticed that our schools taught us about writing, math, history, arts and science but surprisingly little about managing our finances? Yet in the life we live after our formal education ends, financial management becomes one of our highest priorities. Read more »
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