It’s almost impossible to get rich overnight, but surprisingly easy to get rich over time.
NO. 20: FRUGALITY isn’t just the key to financial success. It’s also no great sacrifice, because spending often brings only fleeting happiness—and sometimes even pangs of regret.
NO. 21: IF WE'VE been good savers, it’s hard to become happy spenders. The key to building wealth is no great secret: We need to be committed savers. Yet saving can become too good a habit, one that folks struggle to shake once they retire. Remember, we save money not for the sake of saving money, but so we—or our heirs—can later spend.
COMPOUNDING. Each year, we earn returns not only on our original investment, but also on gains clocked in earlier years that we reinvested. Let’s say we started with $10,000 and made 7% a year. Without compounding, we’d earn $700 a year, leaving us with $24,000 after 20 years. But thanks to compounding, the final sum is much larger: $38,697.
TAKE ADVANTAGE of your growing wealth. You might avoid interest charges by paying cash for your next car, rather than borrowing. You could minimize financial account fees by always keeping the required minimum balance. You might trim insurance premiums by raising deductibles and lengthening elimination periods, and perhaps even opting to self-insure.
NO. 20: FRUGALITY isn’t just the key to financial success. It’s also no great sacrifice, because spending often brings only fleeting happiness—and sometimes even pangs of regret.
LONG-TERM-CARE insurance and disability insurance can both be part of a comprehensive financial plan. But is it a good idea to have both coverages at the same time, or could one substitute for the other? After all, both policies are designed to help those who are, in some way, infirm.
To answer this question, let’s start with another one: What’s the purpose of insurance? The best use of any type of insurance is to guard against financial disaster.
Many HumbleDollar readers have saved and invested regularly over their working years and were able to retire comfortably. Unfortunately, a lawsuit could threaten that financial security.
One possible scenario: If, heaven forbid, you are involved in a traffic accident resulting in severe bodily injury or loss of life, a legal judgement against you could destroy your nest egg.
The liability coverage on a home or auto policy may not offer enough protection. For this reason,
TERM LIFE INSURANCE is best for most people: It’s affordable, simple to understand and provides the two or three decades of coverage they need. But that doesn’t mean that permanent “cash value” life insurance is always bad.
The most obvious situation: You actually need insurance permanently. Suppose you’re a business owner and you want to provide money for your family to pay inheritance taxes. By buying life insurance, you’d make sure your family receives a pool of income-tax-free money upon your death,
ON FEB. 27, 1992, Stella Liebeck ordered a cup of coffee from a McDonald’s drive-through. Moments later, as she attempted to open the lid, the cup spilled, causing a burn that sent her to the hospital. Her injury was serious but self-inflicted and not life-threatening. Nonetheless, she sued McDonald’s, and a jury awarded her almost $3 million. That award was reduced upon appeal, but this case is often cited as an example of an out-of-control legal system exploited by personal injury lawyers.
BE HONEST: WHEN WAS the last time you thought about disability insurance? As co-founder of a website that sells insurance, it’s a topic I think about every day, but I realize most folks have other things on their mind. Yet becoming disabled is one of the biggest financial risks that working people face.
Disability can result from accidents or sickness and can impact people of all ages. According to the Social Security Administration, a 20-year-old entering the workforce has a one-in-four chance of becoming disabled for a year or more before retirement.
SOMETIMES, I’M embarrassed to live in Florida.
Late-night talk show hosts have plenty of fodder for their jokes given the behavior of residents, visitors and our politicians. Fortunately, I don’t know anyone who fits the stereotype of “Florida Man,” but such folks clearly exist, or so these memes suggest.
We also endure hurricanes, scorching summers, soaring homeowner’s insurance rates and all kinds of odd creatures, from the native alligator to invasive species such as the green iguana and the giant African snail.
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