Apr 082016
 

Before upsetting anyone let’s define cheap:

CHEAP — Buying inexpensive or low quality despite being able to pay for the higher quality item.

Cheapness can be good or evil. The latter can damage reputations, friendships, the economy, and/or personal health. Good cheapness can lead to financial freedom.

Examples of evil cheapness:

  • Postponing preventative medical care
  • Eating low quality food
  • Wearing poor-fitting clothes
  • Bailing on social situations
  • Foregoing international travel

Examples of good cheapness:

  • Fixing things that break
  • Bringing bag lunches
  • Biking/walking instead of driving
  • Drinking water (instead of sugar drinks)
  • Using the library

You’ll notice that all the good cheapness examples have secondary benefits related mostly to health and/or personal satisfaction.  Now that we’ve defined cheapness let’s call it frugality. But why bother with it?

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Feb 062016
 

 

Ok this gravy train of travel posts is over. It’s back to money stuff! But before that lets tally up the cost of travelling through Asia for one month! First, here are the pre-departure expenses, as seen in my previous post.

 

Pre-departure Expense Cost (CAD)
Flight – Chicago to Istanbul $796
Flight – Istanbul to Bishkek $180
Flight – Bishkek to Urumqi $358
Flight – Beijing to Chicago $730
Hotel – Istanbul, 4 nights $80
Hostel deposits, Urumqi/Beijing $15
Train – Lanzhou to Beijing $73
Chinese Visa $106
Travel backpack $144
Travel clothing $265
TOTAL $2,891

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Sep 272015
 

A common fear for beginners is “what if I lose all my money?” Well friends, if you lose everything it’s entirely your own fault for betting it all on a single stock! With even a little diversification you’ll never lose ALL your money. You are more likely to lose “a lot” of money. And don’t forget that you haven’t lost a dime until you actually SELL. You can live in denial the rest of your life!

Here are a few creative ways to lose “a lot” of money:

 

1. Short Selling

Short selling is borrowing shares, selling them, and buying more to cover what you borrowed at a future date. It’s used to make money on a falling stock price. Unfortunately stocks tend to go up 70% of the time. If you buy stock, the worst that happens is that the company goes bankrupt and you lose everything. But what happens if you short the stock and the company does exceedingly well? Lets check a quick example:

  1. Short 100 shares at $10 – You put $1000 in your pocket
  2. Company discovers elixir of eternal life, stock price jumps to $100,000/share
  3. To cover those 100 borrowed shares, you now owe $10,000,000 (100 x 100,000)
  4. Total loss -$99,999,000

As you can see the loss is theoretically infinite, instead of only losing your initial investment in the case of stocks. In the case above a good scenario would be the stock dropping to $5 in step 3. You’d get to keep $500.

How to avoid: Don’t short sell. Remember that stocks go up 70% of the time.

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Sep 132015
 

Imagine that instead of buying that expensive thing that you can probably live without, you took your money and invested it instead. Depending on your age and investment skills I’d say over a lifetime that money could easily triple. For example:

$10 invested for 25 years at 7% return = (10*1.07^25) = $54.27

Which in today’s dollars is $36.81. Lets round it down to a conservative $30.

This means that a dollar saved today will became three dollars in 25 years with proper investing. This isn’t anything new, we all realize that compound interest multiplies your cash like rabbits. So I’m going to draw the opposite parallel. Spending money is like murdering those rabbits. Not only do you murder that rabbit, but you murder all future offspring of said rabbit. This is the part most people choose to ignore (the spending part, not rabbit murdering. I don’t condone murdering rabbits unless you are really hungry). Every spent dollar is one that can’t be put to work making more dollars. Continue reading »

Aug 292015
 

Coins
FreeImages.com Jerzy Müller
Poor people tend to believe that money is meant to be spent. This is why they tend to remain poor. This is why so many lottery winners are broke. If you want to build wealth you need to save money. I can summarize my entire financial mantra into one sentence:

Spend less than you earn

I’ve come across this time and time again in books, seminars, audio programs, and financial guides. It’s also called living below your means, and sometimes pay yourself first. But before I go on lets define what I mean by “rich”

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