Finding Inspiration

You can’t wait for inspiration. You have to go after it with a club.

— Jack London

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Week 10 Homework

This lesson is titled ‘Real Estate and Mortgages’, which talks in great detail about how to win with real estate, both as a homeowner and an investor.

The homework for this week is:

  1. Read Chapter 13 in Financial Peace Revisited, specifically the section titled ‘Real Estate Bargains and Owner Financing Bonanza’.

Lastly, we have some additional reading on this subject, if you are interested.

A Great Trend — Colleges Refusing Student Loans

I feel one of the real short-sighted decisions that we have made as a society is the decision to saddle students with debt (often a great deal of it) in order to complete their graduation. Now, I know that if you approach education with your eyes open it is entirely possible to make it happen without debt. However, it still is the case that when a student is evaluated for financial aid, it is assumed that they can and will go into debt in order to get an education.

It gave me great hope to read that Davidson College (alma matter of one of my nieces) has decided to go a different direction. MSNBC is reporting that Davidson has decided to replace student loans with grants and work-study programs. This is especially heartening, as this is a small, private, liberal arts school, where prices are often highest. The ability to graduate without debt makes this a great college value in my book!

Quote for the Week of 03/20/2007

Success is how high you bounce when you hit bottom.

— George S. Patton

Why I Don’t Use Credit Cards

The issue of credit cards comes up a lot when I teach FPU, and there is always someone who doesn’t see the problem with using them. Personally, I think credit cards are at best dangerous and at worst usurious. There is absolutely no upside to credit card debt, whatsoever.

Here are several reasons why I don’t use credit cards for my finances:

  • On average, people spend 12-18% more when they use credit cards vs cash.
  • Credit card companies don’t have any loyalty.
  • Perks and rewards come at a very high cost.
  • Credit Cards make it difficult to track your purchases day-to-day and easy to buy things you can’t afford. I don’t want to use any tool or service that has a vested interest in damaging my long-term future.

Here are some reasons why I don’t do business with these companies:

Dabbling with credit cards is like playing with snakes. Don’t be surprised if you get bit!

FPU Progress Check

At this point in the course we would like to take a progress check to see how the class is progressing, and to report back to the congregation at Oak Hill UMC on how we are doing. Absolutely no individual information will be shared, everything will be aggregated and made completely anonymous. If you could, please answer the following questions for next week’s class, or send them to me via email.

Questions

  1. How many loan offers have you turned down? (in dollars and/or number of offers)
  2. How much debt have you paid off? (in dollars)
  3. How much have you set aside in emergency funds? (in dollars)
  4. How much have you put into savings or set aside for planned purchases? (in dollars)
  5. How many credit cards have you cut up?
  6. Is there anything about your FPU experience that you would like to share with people who haven’t been through the class?
  7. Is there anything about your FPU experience that you would like to share with your instructor(s)?

Investing Strategy — From the Mouths of Babes

Is investing easy enough for children to do? Evidently so! Paul B. Farrell, author of ‘The Lazy Person’s Guide to Investing‘ wrote about how an 8-year-old crafted a portfolio that not only outperformed the S&P 500, but also his own professionally managed pick.

How did he do it? Well, primarily by investing in low-cost, well diversified mutual funds that cover the entire market. Sound familiar to all the FPU people out there?