Wealth 2.0: Wealth in the Information Age

There is nothing more demoralizing than a small but adequate income.
– Edmund Wilson

With the world still recovering from what some are calling an economic meltdown, personal finance has never been more important. Only 1 in 20 people will retire financially free. The other 95% will depend on their family or the government.

But with government debt fast approaching £1 trillion in the UK and $14 trillion in the US, is that a safe bet? It’s time we took control of our lives. Fortunately, Rich Dad is here to show us how.
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Save Money on Your Home Loan

Possibly one of the biggest accomplishments anyone experiences is the day a home is purchased. Once you have built up your finances and are ready to put a down payment and settle into a homeowner’s lifestyle, the next steps are critical in actually obtaining that excellent property.

To assist you in making the best choice, here are a few steps to follow that should guide you through the process and make you aware of what to look for.
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Good Debt Bad Debt – What’s the Difference?

Debt can be classified as either good or bad, but that doesn’t always mean that one form of debt is any worse for you than another. It is the way you use and manage debt which often defines whether it is a good idea or a bad idea for you to borrow more money.

The true definitions of good and bad debt can differ greatly depending on who you talk to and who you want to believe, for example good debt can be as narrowly defined as a loan you repay with your pre-tax dollars such as a margin loan, or as broadly as a loan with a low interest rate.
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Teaching Kids the Right Financial Mindset

The following is a guest post from Steven Stanich of Financial Planning Tips

I know that many of the great money management skills I have came from my parents, especially when it comes to saving money. And there are definitely certain things I’ve had to learn on my own, and certainly some things I could improve on.

But what if you could teach your kiddos from early on how to be personal financial planning superstars—such that you’d never have to worry about their financial health?
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Financial Stress Does Affect Your Health

You probably already know that your financial difficulties are making you stressed, but have you really stopped to consider what that means for your health?

When something affects our health in a tangible way we are usually proactive about fixing it—when we have a cold we take vitamins and go to bed, when we start putting on a little weight we cut back on the chocolate and start exercising (hopefully you do).

However, when you are struggling with financial difficulties it becomes second nature to ignore the consequences and affect it’s having on your health because we think there is nothing that can be done, it’s just a part of life.

Instead, identify the ways in which your finances are affecting your health and you can then take steps to get healthier, financially and physically, and you don’t have to wait for a miracle cure for either.
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Wealth and Stock Market Predicting

A couple of interesting items popped on the scope today. First, is it possible to predict longevity? Well apparently you can when you correlate longevity, wealth, and health. According to one recent study,

[S]cientists have gone a step further, finding a specific hormone that links wealth with a longer life. The hormone is called DHEAS–or dehydroepiandrosterone sulfate–a natural steroid produced by the brain, adrenal glands and sexual organs.

Those with higher levels of DHEAS tend to exercise more, have more hobbies and have closer relationships with friends and family. They also tend to live longer.

I think this is one of those chicken before the egg scenarios. Did the wealth, and time to take care of oneself, cause the hormone or did the hormone cause the good health which caused the wealth? Or something like that.

And speaking of predictive models, did you know that Twitter has a “mood” and that it may be able to predict stock market swings?

Researchers are busy mashing together algorithms to take advantage of the Twitterverse’s stock market predictability.

One algorithm, called the Google-Profile of Mood States (GPOMS), records the level of six states: happiness, kindness, alertness, sureness, vitality and calmness.

So these guys [smart, nerdy guys wearing glasses] took 9.7 million tweets posted by 2.7 million tweeters between March and December 2008 and looked for correlations between the GPOMS indices and whether Dow Jones Industrial Average rose of fell each day.

Their extraordinary conclusion is that there really is a correlation between the Dow Jones Industrial Average and one of the GPOMS indices–calmness.

Unfortunately, there’s no definition of calmness though, apparently, there are degrees of calmness.

Read more about the wealth hormone or Twitter and stock market swings.

Tired of Being Frugal?

My wife and I have been transitioning to a primarily cash based budget. It’s been easy in some respects and harder in others. That’s why this resonated with me.

If you are getting a little frugal fatigue, you might consider treating yourself with a little spending splurge, just to take the edge off.

Problem is, I probably splurge too much! Keeping it small is the way to go.

Taking the time to provide yourself with a small treat, something out of the ordinary, can have an amazing effect on your mood. Think about what you enjoy, and what might provide a pick-me-up.

And, of course, you don’t necessarily have to spend money to get a quick lift me up.

Some activities that I enjoy that don’t require spending extra money include:

  • Going for a walk.
  • Riding bikes.
  • Popping corn on the stove top to watch a movie with my family.
  • Visiting the local zoo.
  • Window shopping in the downtown historical district.

How do you like to splurge? Big ticket or small? Spending or not?

Reference: MoneyNing.com

Creating a Lifestyle Business

Did you know it doesn’t take a million bucks to live like you have a million bucks? That’s what Sean Ogle writes over at GetRichSlowly. So why don’t more people live like millionaires?

It isn’t the money, the job, or one’s personal situation that keeps people from living a more exciting life. It’s the fear of making a change.

Ah,yes, the “C” word. More like the battle of the “C” words—we’re too comfortable to make change. To his credit, he’s not talking about living beyond your means or racking up a mass of debt. He’s referring to the one thing people who have more money typically have…time. He did that by purposely moving to a low cost of living place and building a lifestyle business.

Creating a lifestyle business was one of the best decisions I could have made in order to bring about the change I was looking for. This was a core component in my ability to free up time and live like a millionaire.

The best part about creating a lifestyle biz?

You don’t need a million dollar idea — you just have to be able to improve upon one that’s already out there.

What can you improve upon that’s already in the marketplace? It could be the way something is delivered. Customer service is so shoddy that taking care of each customer could be a differentiator.

Visit Sean Ogle and GetRichSlowly for more inspiration.

Do Kids Really Cost $200,000?

what a cryin shame

I’m always slightly amused when I read about how much kids cost. I suppose it’s a valid question because kids are so…permanent.

If it really costs more than $200,000 to raise a child, can you even afford to have one?

From a financial/cost standpoint, we should give long pause before having kids. But is that all there is to this decision?

Many of us decided to buy a house the last few years and probably didn’t take into account all the hidden costs of home ownership. I know I didn’t. And what about animals? Think your poopsie poo doesn’t cost that much? Maybe you should find out.

Having kids is a big part of having a family. Money and responsibility wise. Thankfully that $200,000 is spread out over several decades…at least I hope.

What say you? Do you think about how much your kids cost?

Reference: Does my son really cost $26,000 per year?

When There’s Movement – Stuff Happens

Goals

I had a whiny, way below my age breakdown yesterday. I’ve been putting in a lot of time with BudgetSnob but I haven’t seen the results I had planned by this point. So, I was a little lot down. I felt like I was staring at the Himalayas standing at the bottom of a dry lake bed in Death Valley

Then I read something that profoundly changed my outlook. It was a newspaper article about a little (or maybe not so little) obscure blog called TheAwl. I knew the rest of the article would be good after reading this…

If you were going to assemble a business plan for a Web site, you would look closely at everything The Awl (theawl.com) did and then head in precisely the opposite direction.

Why? Because the three co-founders, newly laid off, started a blog they wanted to read. Meaning, they didn’t try to find an audience. There were the audience. TheAwl’s posts are mostly short, punchy, and (in many cases) complete nonsense.

I found myself wondering if reading these posts was like hearing someone’s thoughts. Thoughts make perfect sense to the thinker. Not so much for anyone else. Obviously, I was not the audience there were trying to reach.

After a few months of massive content generation, TheAwl founders sold out to Yahoo! for $30 million dollars. There’s only one problem. That’s not the truth. Not. Even. Close.

By August 2009, they had chewed through their savings..when an anonymous donor sent in a few hundred dollars at one particularly stretched-thin moment…which they used to buy food.

They started in September 2008. Then spent a year—full-time by the way—hammering out content. A lot of content. When I checked yesterday, they had 20 posts up.

So, after a year of posting, they barely had enough to live on. When a donor shows up with two hundred bucks and they buy food. Why? So they can quit while they’re ahead? And go find real jobs?

Nope. They do it because they have to keep posting. And that would require staying alive. By eating food.

The Awl is attempting to build a low-cost site that delivers a certain kind of content for a certain kind of audience. And the owners don’t have to get rich — The Awl has no investors — they just have to eat.

Mr Sicha, one of the founders and interviewee throughout the article, sums it up in a breathtakingly, honest manner.

“My friends keep talking to me about how they want to start a Web site, but they need to get some backing, and I look at them and ask them what they are waiting for,” Mr. Sicha said. “All it takes is some WordPress and a lot of typing. Sure, I went broke trying to start it, it trashed my life and I work all the time, but other than that, it wasn’t that hard to figure out.”

That was the end of my whining.

I don’t know where you are today. But I do know that you’re more than likely not satisfied with some part of your life that just hasn’t materialized like you thought. Maybe you’re thinking about quitting. And what makes it worse is that you’ve been doing the right things, maybe for months or even years.

It’s one thing to simply be lazy and make excuses when nothing happens. I think we all know deep down when we’re lazy. But it’s an entirely different matter when you’ve been busting your butt…and nothing happens.

But I challenge you (myself too) to keep moving. Because breakthrough is just around the corner. The activity you’ve been doing. Those seeds you’ve been planting. Neither will come back empty.

Some amazing things happened to me today. Subtle but very powerful. All because I made the decision to keep moving forward. I hope you make the same decision.

TheAwl founders were interviewed for an article in the NYTimes.

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