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Here Is the Difference Between Spending and Investing

April 30, 2021 By Justin Weinger Leave a Comment

Big investors are not always big spenders. They tend to cultivate more careful and measured spending habits. No one ever got rich by wildly spending money. One of the secrets to remaining wealthy is not to blow your wealth on things that don’t increase your wealth. Some of the wealthiest people in the world are also some of the cheapest cheapskates. But don’t judge them too harshly. There is a method to their madness that often whizzes right over the head of people who have been broke all their lives. It is a lot easier to go from rich to broke than it is from broke to rich. The rich are all too aware of that.

One of the reasons the poor stay poor is in many cases, they cannot differentiate between spending and investing. This is more than mere semantics. The poor work for money. The rich have their money work for them. It is not a magic trick. One of the reasons the rich get richer is because they put their money to work the moment it comes into their possession. Everyone can invest. Here is how to know when you are spending rather than investing:

Nothing You Have Appreciates in Value

It is a well established fact that Macs hold their resale value a lot better than Windows PCs. However, they will almost never increase in value unless they were signed by Steve Jobs. You might consider a computer an investment if used to make money. But typically, computers are not investments. They don’t appreciate in value.

You know you are spending if your home is cluttered with things that depreciate rather than appreciate. Instead of looking to pour thousands into more gadgets you don’t need, why not seek out original art for sale? Not only will you be able to add timeless beauty to your home, you will have an asset that traditionally increases in value over time.

As a collector of art, you might have some pieces that have middling value right now. Perhaps you spent a little at a yard sale and got lucky. Here is where you need to be careful not to think like a spender. If you have something of value right now, hang onto it while it gains real value for later. Try to maintain at least one thing that tends to increase in value.

You Buy Expensive Things on Impulse

If you really want to go broke, continue making expensive purchases on impulse rather than taking the time to do some proper research and soul-searching. Good investments aren’t made lightly or quickly. Bad spending happens in the blink of an eye.

Emotional spending is the death of a good budget. You are cold sober when making your budget. But spending can be like a drunken high. At the moment of decision, you can come up with all kinds of reasons why your budget was overly conservative and why you really can afford that thing you suddenly want so much. Investors keep a level head when forking over large amounts of cash.

You Don’t Know Where All Your Money Is Going

Everyone has had that moment near the end of the month when they could have sworn they had more money in the bank than their balance suggests. This happens to some people every month. They blame the spouse, the bank, and even the dog. They are spenders not investors.

An investor knows where every penny is going at all times. They know, or can quickly determine how every investment is doing, which are performing as expected, and which are underperforming. They are not confused about their money even when an investment fails to pay off. And they never blame their spouse for decisions they made in the heat of the moment.

Which type of person are you? Do you have items that tend to increase or decrease in value? Do you make quick decisions on big-ticket items or take the time to get some perspective? Finally, are you confused about where your money is going or do you have a clear picture of your finances? It is never too late to transform yourself from a spender into an investor. Start taking on that investor mindset today.

Filed Under: Financial Truths

What to Know About Filing for Bankruptcy

April 30, 2021 By Justin Weinger Leave a Comment

Businesses work hard to avoid bankruptcy, but it’s a reality many business owners have to face. If you feel there’s no other route for you but bankruptcy, then pause for a moment. The following are a few things you should know before you file.

Look for Legal Help

The first thing you want to do is find a good lawyer. Many law firms use clever bankruptcy lawyer marketing techniques to generate business, so do your research before deciding who to hire. As they say, “The choice of a lawyer is an important one and should not be based solely on advertisement.” You want someone on your side who understands what your business is going through and understands bankruptcy. You can try to do all of this on your own, but the chances of making errors are high. This is not a time to make mistakes, so just keep that in mind.

Is it Necessary?

Once you’ve hired a lawyer, you can move on to the next step, which is finding out if the filing is even necessary. Your lawyer can look over your situation and see if it’s something you can avoid or something you have to face. A good bankruptcy lawyer might be able to reach out to your creditors and work out a deal on your behalf. The deal might not be great, but it might prevent bankruptcy.

Are You Closing the Business?

A big question you’ll have to answer before you file is if you want to save your business or not. There are a few bankruptcy options, and the way you answer this question determines the options your lawyer presents to you. Decide if there’s a way to dig yourself out of this hole, or are you done with this endeavor? Figure out if the business can still be profitable in the future. Answer these questions honestly before you move on.

Consider the Budget

Filing is expensive, and things get even more costly if you’re thinking of keeping your business going. It’s important to talk candidly with your lawyer about all of your expenses and any immediate financial issues, like if you’re facing foreclosure. The lawyer you hire needs to fit into your budget. If this doesn’t happen, you might deal with more financial stress than needed. The right lawyer should help you work out a plan that’ll benefit everyone.

Accepting Compliance

If you are thinking of keeping your business going, then accept that you won’t have control over your business as you usually would. When you file for bankruptcy, you’re letting the courts control your business. Many of the decisions you could make on your own will have to go through the courts. Some business owners have a hard time accepting this because they’re used to being their own boss, so this feels alien. Be sure you’re ready for a change like this one.

The Privacy Issue

As business owners, you’re entitled to your privacy. That’s no longer the case if you file. The courts, your creditors, and other people can see everything you do. The way you conduct your business, the mistakes you’ve made, and any additional detail in your business dealings will be reviewed by strangers. Sometimes, you’ll be questioned about decisions you made, and that’s going to feel strange. Be sure that you’re ready to go through this.

Now, you have some things to keep in mind as you consider filing for bankruptcy. If you feel confident about this step, then go ahead and take it.

Filed Under: Financial Mistakes

Tips for Avoiding Student Loan Debt

April 28, 2021 By Justin Weinger Leave a Comment

As a college student, there’s very little doubt that you’ll end up with some sort of student debt. While college is a big and exciting step in your life, nothing ruins it faster than graduating only to find you owe years and years of money to student loans.

That’s why it’s so important for students to get a financial education before they even head off to college. As a college student, you should already know how to budget, save money, and know the importance of paying bills on time, every time, to build and maintain your credit. That’s also why you should work hard to avoid student debt as much as possible. In this blog post, you’ll find a few tips for doing just that.

Start Saving in High School

While your parents have probably been saving for quite a bit to help fund your college days, it can’t hurt for you to start saving as well. If you have a part-time job in high school, save part of every paycheck up for your college tuition and the expenses you’ll have there.

If you do get in a fix with your student loans after you graduate, search for debt relief through a strategic debt consulting company as soon as possible, instead of just letting the late fees and interest pile up. Look up local loan places to schedule a meeting or consultation with a professional who can explain all the angles and plans available when it comes to restructuring debt.

Make Good Grades in High School

One way to avoid a ton of student debt is by making good grades all through high school. There are quite a few academic scholarships offered for those who excel in school, and you could get one of them. Of course, there are also athletic and other types of scholarships available to those who qualify.

Fill out the FAFSA

FAFSA stands for a Free Application for Federal Student Aid and it’s just that, free aid. It’s money that you don’t have to pay back, if you qualify for it, and helps with things such as tuition, books, and other school-related stuff. While it may not cover everything, this will cover quite a bit. The rest you can make by working part-time or applying for a very small amount of student aid that will need to be paid back after you graduate.

Live at Home 

While many college students don’t want to hear this, sometimes living at home is the best way to avoid student debt. You don’t have to pay for room and board, your parents will feed you, and many times you don’t even have to work until you graduate. Living at home while you go to college is a major money saver.

Stay Away From Credit Cards

Credit card companies often prey on college students knowing that they’ve never had a credit card before and that many don’t understand how they work. It’s best to avoid credit cards while you’re in college, and even when you get out of college if at all possible. The interest rates are high, and once you miss a payment it’s almost impossible to catch up.

Explore All Your Options

While there’s no surefire way to pay for your college out there, there are quite a lot of options to consider. Don’t decide that a student loan and getting into debt is the only way to go until you see what else is available and what you qualify for. From AP classes to scholarships and from financial aid to living at home, there are things you can do, so don’t give up.

These are just a few ways that you can avoid student debt when it’s time for college. Remember, start saving early so you can get the education you deserve without getting into debt you can’t pay off.

Filed Under: Debt Reduction

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