As Didi says in the novel (Findependence Day), “There’s no point climbing the Tower of Wealth when you’re still mired in the basement of debt.” If you owe credit-card debt still charging an usurous 20% per annum, forget about building wealth: focus on eliminating that debt. And once done, focus on paying off your mortgage. As Theo says in the novel, “The foundation of financial independence is a paid-for house.”
You may not give much thought to the investment fees you pay. That’s because they seem so small. Right?
According to an October, 2014 survey by investment management firm Rebalance IRA, many Americans incorrectly believe they pay no fees in their retirement accounts. Among baby boomers between ages 50 and 68, all with full-time jobs, “forty-six per cent believed they paid nothing, and 19 per cent were under the impression that their fees totaled less than 0.5 per cent.” (In fact, research reveals that actual expenses average 1.5 per cent of their assets per year every year.)
Chances are that fees are costing you much more than you realize! Why?
Because the fee itself isn’t the real culprit. The real killer is the opportunity cost of not investing the money you’re spending on fees. That’s why John Bogle, founder of Vanguard, calls investment fees the “tyranny of compounding costs” in a recent Forbes interview.
The real cost of investment fees is the value of the shares you never bought, and how much those shares would have increased your wealth over the long term. That is, you’ve lost the compounding effect of owning those shares: the dividends that would have been paid to you on the shares and the compounding effect on those dividends. Continue Reading…
The most important definitions are not found in the dictionary; they are the ones you make for yourself to serve your purposes.
You first encountered this idea when your mother told you to clean your room. When you thought you were done she made you clean it some more. The problem was not with the room; the problem was she had a different idea of what a clean room meant (it didn’t mean shove everything under the bed or into the closet and close the door). Besides, you wanted to get outside to play and she wanted the room tidy.
In a posting titled How Findependence differs from Retirement, Jonathan Chevreau makes a case for how he believes the two words are different and why. He argues that you might be financially independent before you retire because you no longer work for a salary. Some who retire need to continue to work because their income doesn’t meet their needs. His definitions for the words are his own.
Your palms are sweaty, your mind is racing! Are you ready for such a commitment? It is the next step in your relationship, isn’t it? Even if the odds are against you, but your love is different … stronger!
Right? If you have been in a serious relationship or are planning to, you will relate to the thoughts and concerns mentioned above. However, I am not talking about marriage; I am referring to joint credit.
How it can hurt
Having joint credit won’t automatically lower your score; however, it does increase your risk. As soon as you put your name on and sign an application, you are fully responsible for the complete balance and paying the minimum payment. The banks and lenders don’t care who spent the money, what it was spent on, who has it now, or what it is now worth. If they don’t get their money back as outlined in the contract you are both on the hook for everything. Even if everything on your credit is great, one collection or one bad account will cost you thousands in high interest and fees. You may even be declined.
The odds are not in your favour!
What are the chances of your relationship ending? I’m not generally a big fan of “what if?” questions but it’s important to weigh risk when it comes to personal finance. It doesn’t matter whether your relationship status is boyfriend, girlfriend, common law, partners, or even married. What are the chances of your relationship ending? Most stats give you around a 50/50 chance. If you are a hopeless romantic or really in love then I’m sure you will give yourself a higher chance of success.
Here is the hard cold truth. There is a 100% chance of your relationship changing. When I talk about joint credit most people assume I am talking just about separation or divorce but there is another “D” word that most people don’t want to think about.
The other “D” word
It doesn’t matter if you are in a relationship with your soul mate — death is still guaranteed. You cannot have a joint account with someone who has passed on. As soon as the bank finds out that one of the applicants is deceased you now have to close that account and apply for a new credit card, line of credit, or loan. If all your established credit is held jointly, you will have to start rebuilding your credit all over again if your spouse passes away.
Joint credit alone doesn’t hurt your credit but you need to know how the scoring system works so you don’t end up in trouble. My advice is to make sure you have built individual accounts if possible to limit your risk and protect yourself from having to start rebuilding your credit later on in life. For more free tips on credit you can visit my blog, www.eCreditFix.ca. If you would like to attend a free event to learn more about the other rules of credit visit our events page.
Richard Moxley is the Author of the book, The Nine Rules of Credit – How to Start, Rebuild, and Always Maintain Great Credit. He is also the founder of eCreditFix.ca. Richard has shared his credit expertise with financial professionals and the Average Joes across Canada and the U.S. His vision is too teach all Canadians the rules of the “Credit Game” so they can play the game to win!
“Advertising is the art of convincing people to spend money they don’t have on things they don’t need.”
— Will Rogers
Recently the Contessa (my wife) and I went to see the Bette Midler show and at the unbelievable age of 69 she put on one heck of a performance. She still has it and had us laughing when she was poking fun at herself singing I Look Good and I Still Have my Health.
This was followed by a standup comedy routine in which she threw her usual zingers into the crowd. “I still look good, but I don’t know what happened to some of you,” she teased. “It’s 50 shades of grey in this section right here. I don’t know whether to sing to you or tell you something about reverse mortgages.”
At one point in the performance she came out dressed as the witch character from her 1993 film Hocus Pocus and sang one of my favourite songs, I Put a Spell on You.
Which brings me back to the subject of this article.
I’ve personally never travelled to southeast Asia, although my family has and my daughter currently is posted in Hong Kong for a one-year teaching gig. As a result, I was more than usually interested when a review copy came in the mail titled Planet Boomer: Retire now for less in Southeast Asia.
It’s written by a boomer Canadian couple, Jim Herrier and Ellen Ma, who left marketing and advertising positions in 2006 to move to Singapore and Shanghai, then researched a bunch of other locations to help them write the book.
The book is slated for release in mid-August.
Asia 50% more affordable than North America
The pair argue that the financial crisis of 2008-2009 battered the investment portfolios of many Canadian boomers, and that “the math of a comfortable retirement for many of the nearly 10 million Canadians between 44 and 64 is not working anymore.” On average, those boomers are $400,000 short of their ideal retirement savings goal. Most of the 15 destinations in five Southeast Asian countries are at least 50% more affordable than Canada or the United States.Continue Reading…
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