“Many high-net-worth investors ignore one of the most powerful financial-planning tools available to them: Social Security,” writes Ash Ashluwalia in this past Monday’s Wall Street Journal.
He caught my attention. I’ve been assuming the system’s demise–and seeking to make alternative plans–since the mid-1980s, when I first learned from Dr. Gary North about how the program is really a Ponzi scheme and is going to fail, one way or another.
Dr. North pointed to comments by then-Sen. William Proxmire during a 1976 hearing. I have bolded the most relevant part: (more…)
How do interest and percentages stack up?
Over the last couple of years, I have come to realize how important it is for us to think strategically—and very differently than most of us were taught in school—about interest and percentages.
I think the first time someone brought this to my attention was when one of my advisors asked, “What does your bank pay to borrow money from you right now?”
At the time, I think I was receiving about 0.1% interest on (some of) my deposits. (Many pay nothing at all. And if I were living in Europe or Japan, they would be charging me interest for parking my money with them.) So I said, “Let’s say 0.1%.”
“Okay,” said my advisor. “And how much are they charging in interest if you want to borrow from them?” (more…)
Look at your family’s financial resources as a “family bank,” a family finance company. What a great way to approach funding college! (more…)
Fail to recognize the difference between assets and cash flow or between principal and interest, and you could wind up learning painful lessons.
Two stories that illustrate why it is so important to pay attention to and distinguish principal from interest and assets from cash flow. (more…)
Better quality counsel should put a bigger smile on Liza’s face . . . without risk it might suddenly disappear.
Tim Cardon, a professional financial counselor, told Liza, “The Girl with the Three Loans,” to clear out her IRA in order to pay off her car loan. I thought that was terrible advice. Here’s what I believe would have been better. (more…)
Cash Flow Index says, “Pay off the car loan.” Good idea? Or bad?
A critical look at the “Cash Flow Index”-based advice a financial counselor gave to a woman who felt like she was slowly drowning in debt.
Last time, I summarized the advice Tim Cardon, an advocate for Dale Clarke’s “Cash Flow Index,” 1 gave to Liza, The Girl with Three Loans. He told her to use her IRA to pay off her car loan. It would give her much-needed cash flow. When she heard his advice, Liza was thrilled.
Today, I want to critique Mr. Cardon’s advice. (more…)