MoneyMedicine In US

Money

My son once told me that money is just a tool. If it stays in the bank and is not used to change your health, wellbeing and lifestyle, it is a worthless tool. I can not dispute this. The more tools you have, however, can make life much easier.

Savings are a poor man's way of breaking even with inflation. Investment is a rich man's way of making money. For most of us, there is something in between. Savings are necessary for rainy day spending. Investments with discretionary money should be used to increase ones wealth.

Most people misunderstand savings. Some even think they are making money in a savings account or interest bearing checking account. The truth is that, with the interest paid on these types of accounts you are barely breaking even with inflation. After you pay your taxes on this income, you are probably not even breaking even.

I see people with hundreds of thousands of dollars in savings accounts, interest bearing checking accounts, certificates of deposits (CDs) and money market accounts that have their cars financed, their credit cards maximized out and high interest mortgages on their homes. It just doesn't make since. Let us say that they are making 6% on their money, which after taxed is probably closer to 4%. They are probably paying a much higher interest rate on their home and car loans, and as much as 18% on some credit card debt. . The truth is, if they just paid off their high interest loans they would be making almost twice as much in doing so and that money is not taxable. As the old saying goes, money saved is never taxed.

There are all kinds of investments and I am surely no expert on any of them. I have, however, paid my dues, so to speak, and dabbled in most. I know that when the stock market is hot some discretionary money should be invested in it. A good no-load mutual fund, taking into consideration the risk factors one wants to take, can satisfy this need for most. If you are a gambler and wish to manage your own investments, discount brokers will be glad to help you for a small fee. Managing your own investments is not for the timid, though. Many successful investors pay for their success with sleepless nights. There is also the theory that if you are not an inside trader, then you are an outside trader. What this means is that if you don't know something that you are not supposed to know, you are just gambling. While this is not completely true, much money is made in the stock market today by illegal inside traders at the expense of the legitimate traders.

There are many other great investments outside of the stock market that one should consider.. Real Estate has little downside and almost always beats inflation. I had good success buying rural acreage and turning it as fast as possible. Acreage is easy to move fast. Without structures on the acreage there are almost no taxes and closing is cheep and fast.

Debt is the poor man's way of accruing necessities and the rich mans way of making capital purchases. Again, for most of us, there is something in between. Today In this United State we carry more personal debt than any other nation in the world, and possibly more than all others countries combined. This is surely not to our credit. In so doing the average American's net worth dwindles while the net worth of the financiers. We have to learn that boats, planes and other things are necessities and, in most cases should not be financed. In today's economy and job market the average American should have no more than one house and one car financed. All other dealings should be cash.

Credit card debts are the sin of the young, the poor and some of the middle class. It amounts to nothing more than throwing way significant amounts of money to acquire that which could be purchased for cash with a little restraint and money management. Credit cards are convenient, nothing more. They have no other value. I have limited myself to one no-fee card that I pay off every month. It is accepted virtually everywhere and cost me absolutely nothing to use. I don't even know what the interest rate or limit is. These numbers are not important to me.

AUTOMATED TELER MACHINES (ATMs)

Using no charge ATMs at your bank is a convenience. It even makes money for your bank because the machine is less costly to maintain than a live teller. That is the limit to which you should use an ATM, though. When you retrieve money from an ATM not associated with your bank there are usually two charges. One is the transaction fee from your bank for using a our of system ATM. The other is a transaction fee from the bank that owns the ATM you used. Let us say you withdraw $50.00 (Fast Cash) form one of these machines and pay each bank a $1.00 charge. That is an instant 4% charge for using your own money. Banking institutions make billions of dollars on these transaction charges. The only difference between them and an armed robber is a gun.

PUIRCHASING POWER.

Purchase wisely. Everything is negotiable in any money transaction. Any car can be purchased for $500.00 above invoice somewhere. All real estate is priced to negotiate. Do your homework. I price everything I buy on the Internet at the lowest price. I may not get it at that price when I go shopping in the real world, but at least I have an idea of the price I will work towards. Always remember that quality usually pays for itself in reliability, satisfaction and re-sell value. Any good car salesman knows that if he can put you in a slightly better car than you came in to buy, you will leave happier and he will leave with a better profit.

In summary, when dealing with money, your prime objective should always be to keep as much of your money in your pocket as possible and making it grow at the best possible rate. Money is not everything, but it sure is convenient when trying to buy something. Willie Nelson once said after loosing most of his money to the IRS in back taxes, " being broke doesn't bother me much, but I sure seems to bothers my creditors.