February 5, 2012

Is It A Good Idea to Take Out a Home Equity Loan to Pay Off Credit Card Debt?

Home Equity Debt Consolidation Loan Thoughts

You may hear a lot of financial commentators mention that it is a good idea, in their opinion, to take out a home equity loan or a home equity line of credit to pay off credit card debt.  The benefits of using one of these two types of consolidation methods to reduce your credit card debt are: You can drastically cut your interest rate, sometimes from a whopping 30% down to as low as 4% or less The home equity line of credit or home equity loan interest expense may be tax deductible, … [Read more...]

The Price of Happiness? Science Confirms It Is $75,000 Per Year

Money Can Buy Happiness - It Costs $75,000 Per Year

In a major peer-reviewed study from Daniel Kahneman and Angus Deaton from the Center for Health and Well-being at Princeton University, the great debate of psychology - can money buy happiness? - has finally been answered.  It turns out, it can up to a point.  This isn't some quick news poll either, it is a serious scientific finding resulting from analysis of 450,000 responses, providing a significant sample size. Defining the Two Types of Happiness The study begins by defining two types of … [Read more...]

How to Avoid Financial Stress

How to Avoid Financial Stress

I was reading through the comments on an article about investing over at Yahoo Finance and a lot of people were whining about the fact that it is impossible to save money.  Only those who inherit their money can be rich (which you all already know is false based on the evidence). A gentleman named Frank replied to the commentators: It is absolutely, positively true.  Pay cash.  Eliminate all debt.  No mortgage.  Save as much as you can.  For a vast majority of people, that is the … [Read more...]

Part I of the Next Book Is Almost Done …

Joshua Kennon Intrinsic Value Book Manuscript

Today, I should wrap up the quasi-final draft of Part I of the book, which covers somewhere between 110 and 130 pages and provides a list of virtually all of the time value of money equations that are important to new investors.  (I think the final book will end up being roughly 300 to 400 pages but I reserve the right to change that.)  It teaches: How to calculate your compound annual rate of return (e.g., "I had $10,000 five years ago and now the account is worth $31,500.  What rate of … [Read more...]

People Who Are Drowning in Student Loan Debt

Student Loan Debt information

Victims of the Student Loan Industry or Irresponsible Borrowers? I was reading a site called Student Loan Justice as well as a piece at the Huffington Post where people are talking about their "overwhelming" student loan debt that is - wait for it - $15,000 or $30,000.  Basically, less than the value of a car.  Or a couple both of whom smoke a pack of cigarettes each day for five to ten years. Or 4 to 8 months of pre-tax income for the average American household. Rational, full-grown legal … [Read more...]

How One of My Family Members Used Shares of U.S. Bancorp to Build Substantial Wealth

U.S. Bancorp Stock

A member of my close family has been using a technique to build substantial wealth that doesn't require a high income or any specialized knowledge, extra work, or effort.  I was so impressed by the way he implemented this program, I thought I would share it with my other family and friends (as well as anyone else who reads my blog) without giving away who it is. Each month, he has a house payment of approximately $1,500, payable to U.S. Bank.  He decided that instead of making an extra $300 … [Read more...]

Using Cash to Increase Your Value Investing Returns

Cash In Your Value Investing Portfolio

One of the least discussed secrets of great practitioners of the value investing strategy is the use of cash, cash equivalents, and bonds to augment returns.  From Benjamin Graham and Warren Buffett to Wallace Weitz and Marty Whitman, intelligent use of excess funds has as much to do with growing your capital over the long run as does selecting individual common stocks.  We're going to look at some of the techniques that have been used by value investors to manage their reserves, and the role … [Read more...]

Paying for Your House with Dollar Cost Averaging

Dollar Cost Averaging Paying Off House

A close family member recently used dollar cost averaging and the power of compounding in such a creative way, that I thought it would be useful to share it.  This technique, which he developed after studying the various returns available on different asset classes, was designed to show that two factory workers, both earning the same salary, paying the same taxes, and having the same expenses, could end up with vastly different levels of wealth based on what they did with their surplus cash … [Read more...]

Real Estate Asset Allocation 101

Real Estate Investing Asset Allocation Model

When you're ready to add the real estate asset class to your investing portfolio, your asset allocation decisions aren't done.  You have a smorgasbord of options, including REITs, apartment buildings, storage units, parking garages, farm land, strip malls, office buildings, and rental houses, just to name a few.  You can even invest in mixed asset classes such as car washes, which are a combination of real estate and business. Each type of real estate asset has its own unique benefits, … [Read more...]

What Asset Classes Should I Consider for My Asset Allocation Portfolio?

Asset Classes for Asset Allocation

When you are ready to begin investing with a disciplined asset allocation plan, you may wonder which asset classes are appropriate for your strategy.  According to the Securities and Exchange Commission, the best way to determine the best asset class is to consider two factors - your time horizon and your risk profile. Your Time Horizon: Certain investments and asset classes are only appropriate if you have a long-time horizon of 10 years or more.  Others are only rational if you want to … [Read more...]