“ Never in the history of America has there been so great an opportunity for practical dreamers as now exists. The six-year economic collapse has reduced all men, substantially, to the same level. A new race is about to be run. The stakes represent huge fortunes which will be accumulated within the next ten years. The rules of the race have changed, because we now live in a changed world that definitely favors the masses, those who had but little or no opportunity to win under the conditions existing during the Depression, when fear paralyzed growth and development. ”
Napoleon Hill, Think and Grow Rich, 1937.
In a recent reader poll conducted by Kiplinger’s, 87% responded with “Somewhat” or “Never” to the question, “Do ethical, moral, or social factors influence your investing?” What about you?
Bizarro is that reverse Superman villain. He is the exact opposite of everything Superman represents.
Let’s review the principles from the last post:
1. Money is never stagnant (it’s always moving, growing, or shrinking).
2. Money earns money on money (the power of compound interest).
3. More time = more money (exponentially so!).
Using credit cards is Bizarro Investing. Rather than the power of compound interest working for you, it works against you in the exact same way. If you put $5000 on a credit card, even at 10% interest, it’s going to cost you quite a bit more than that. If you never touched that debt again, it would be up to around $8000. If you decided you want to pay it off in 5 years at $100/month, you’d end up paying about $6500 - that’s $1500 in interest.
Want to know the true cost of your credit? There are some tools to help. Here’s a little calculator for you.
Want to know a secret? A credit calculator is the same as a mortgage calculator. Just think of debts as little mortgages. Go ahead, put the same numbers in the credit calculator and this mortgage calculator to see.
That’s all for now. You can also watch my video about debt to hear more.
Yours,
Sam
P.S. As I say in the video, I don’t pass on any of this information to be judgmental. We’ve all been there — I just to want to help!
Welcome to the new Humble Beginnings series of posts and/or videos about finance.
I was originally going to title this post “The Biggest Mistake Young People Make with Money,” but I thought that sounded too negative. Oh, and please note: “young people” includes myself, and can really include anyone with 20+ years before retirement.
Tips to fix your finances in less than 15 minutes each - from the latest issue of Kiplinger’s Personal Finance.
I’ve been seeing a lot of articles on annuities lately. Here’s one from Kiplinger.
