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Tuesday, December 7, 2010
Market Update: A Book You MUST Read This Month!
Feature Article: Short-Term Thinking Destroys Long-Term Results
Critical Reads: Mortgage Interest Rates Increase 3 Weeks in a Row
The Funnies: Funny Answers from Last Years GED Examination
A Book You MUST Read This Month!
In early 2009, two friends suggested I read a book titled, "Guide to Investing Into Gold & Silver" by Michael Maloney. Based on their advice, I immediately ordered the book and spent the next few days reading every page. I'm very thankful for their recommendation!
This book highlights the history of gold and silver and explains why we should consider adding these assets to our investment portfolios. When I read this book, gold was priced around $950 an ounce. Today it's valued at over $1,400. The numbers are even better for silver. Silver was priced at $12.50 in early 2009 and this week it crossed over $30 an ounce.
There are many reasons why gold and silver are increasing in value and these reasons are critical for you to understand to protect your financial well-being.
Short-Term Thinking Destroys Long-Term Results
Last year, we rented a lovely home on Lake Norman for 3 weeks. I wrote about how I paid for this home, which is rather expensive, in one of our monthly Income for Life newsletters. You can test-drive the Income for Life membership for just 1 buck at this link.
We enjoyed the home so much that we reserved the home for 3 again for next year. Because we reserved so far in advance and we were repeat customers, the owner didn't require us to pay a deposit. We signed the rental contract and planned to send the deposit this month for the next vacation.
The owner received a request from another vacationer to rent the home during one of our weeks. Because we hadn't sent the deposit, the owner had decided to cancel our agreement and rent to the new vacationer. This isn't the end of the world, because there are many other homes available for rent. We would have simply found another home.
However, we would have never gone back to this owner and their home again.
Does it make sense to cancel a 3 week rental with a previous renter, to get a one week rental from somone else?
Not really.
The bad decision was magnified when you consider that we were repeat customers who took very good care of the home and paid as agreed. Even worse, we probably would have continued to rent this same home each summer going forward. This one short-term decision may have this owner 3 week rentals for years to come.
Why do so many people make short-term choices without thinking about long-term consequences?
If you stop and think about things for a minute, you'll see limited short-term thinking is the main reason so many people are struggling financially right now. Here are a few examples to show you what I mean:
- Do I buy the $3,000 flat screen TV on my credit card now, or save up and pay cash? Short-term thinking kicks in and we want instant gratification. What happens when the credit card bill comes in next month?
- Do I lease a new car because the monthly payment is lower, when I could buy the car and actually own it someday without having a monthly payment? Short-term thinking is going for the lower monthly car payment, instead of owning the same car long-term.
- Do I postpone saving for my retirement now because times are tough economically, or go make some extra income so I can continue to save? A significant number of people have decided to stop saving for retirement now.
- Do I stop investing in real estate today because the market is flat, or do I think long-term and buy as many properties at discounted prices to maximize my long-term wealth?
If everyone would think long-term before making any financial decisions, they would be much better off. The best short-term decisions usually have the worst long-term outcomes.
Interest Rates Increase 3 Weeks in a Row
The Wall Street journal recently reported that mortgage interest rates have increased 3 weeks in a row. These rate increases were noted in fixed rate mortgages and adjustable rate mortgages making new homes a little more expensive. You can read the article by clicking here.
For Home Buyers, A Season for Deep Discounts
According to the New York Times, home buyers and investors can lock in some great discounts during the holidays. Historiically, December has always been a great month to buy a home. This is because there are fewer buyers looking and sellers tend to be more motivated. If you're thinking of buying a home or grabbing a great investment, now may be the time! You can read the article at this link.
New Rules Require Rental Property Owners to File 1099s
On December 31, new rules kick in requiring rental property owners to issue 1099 forms to service providers for payments of $600 or more during the year. These rules will now require you to issue 1099 forms at the end of 2011 for any repairs or improvements to your properties over $600. And as to be expected, there are penalties for not following the new rules. You can read the story at this link.
GED EXAMINATION
Funny answers from last year's GED examination:
Q. Name the four seasons.
A. Salt, pepper, mustard, and vinegar.
Q. Explain one of the processes by which water can be made safe to drink.
A. Flirtation makes water safe to drink because it removes large pollutants like grit, sand, dead sheep, and canoeists.
Q. How is dew formed?
A. The sun shines down on the leaves and makes them perspire.
Q. What causes the tides in the oceans?
A. The tides are a fight between the earth and the moon. All water tends to flow towards the moon, because there is no water on the moon, and nature abhors a vacuum. I forget where the sun joins the fight.
Q. What guarantees may a mortgage company insist on?
A. If you are buying a house, they will insist that you are well endowed.
Q. In a democratic society, how important are elections?
A. Very important. Sex can only happen when a male gets an election.
Q. What are steroids?
A. Things for keeping carpets still on the stairs.
Q. What happens to your body as you age?
A. When you get old, so do your bowels and you get intercontinental.
Q. What happens to a boy when he reaches puberty?
A. He says goodbye to his boyhood and looks forward to his adultery.
Q. Name a major disease associated with cigarettes.
A. Premature death.
Q. What is artificial insemination?
A. When the farmer does it to the bull instead of the cow.
Q. How can you delay milk turning sour?
A. Keep it in the cow.
Q. How are the main 20 parts of the body categorized (e.g. the abdomen)?
A. The body is consisted into 3 parts - the brainium, the borax, and the abdominal cavity. The brainium contains the brain, the borax contains the heart and lungs, and the abdominal cavity contains the five bowels: A, E, I,O,U.
Q. What is the fibula?
A. A small lie.
Q. What does "varicose" mean?
A. Nearby.
Q. What is the most common form of birth control?
A. Most people prevent contraception by wearing a condominium.
Q. Give the meaning of the term "Caesarean section."
A. The caesarean section is a district in Rome.
Q. What is a seizure?
A. A Roman Emperor.
Q. What is a terminal illness?
A. When you are sick at the airport.
Q. Give an example of a fungus. What is a characteristic feature?
A. Mushrooms. They always grow in damp places and they look like umbrellas.
Q. Use the word "judicious" in a sentence to show you understand its meaning.
A. Hands that judicious can be soft as your face.
Q. What does the word "benign" mean?
A. Benign is what you will be after you be eight.
Q. What is a turbine?
A. Something an Arab or Shreik wears on his head.
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