Assets vs. Liabilities

Do you know the difference between assets and liabilities? Or, to rephrase, do you know the difference in how you should view them while building wealth?

For most people, assets are those THINGS that could become money one day. This can include items like your house, your car, or jewelry.

For most people, liabilities are those THINGS that you’re still paying for. This can include things like credit card debt and student loans.

But when accumulating wealth – and really you can view these terms in this way for most of your life – assets bring in money.

Liabilities take away money.

How does that change your financial outlook?

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The Power of 1

Think small changes can’t make a difference in your finances? Then think about the power that the lowly number 1 has in building your wealth.

By upping your savings rate by just 1% a year, you can increase it from 10% to 20% in ten years, vastly improving the probability you can safely retire one day.

Saving $1 more per day can save you $30 more a month, and $365 more a year.

Having one car versus two can save you over $800 a month, on average, or nearly $10,000 a year.

A difference of 1% in investment fees can result in a difference of hundreds of thousands of dollars by the time you retire.

Imagine…

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Meddling With Your Finances

We’re natural meddlers. We want to tinker. We see something that doesn’t quite work right, and we want to find a way to do it better.

It’s what created self-help. We see people tired of their jobs, sick of low pay, need new outlets for creativity and an entire industry has grown from advice.

It’s inherent in being human, engrained from childhood. If something doesn’t work this immediate moment, how can you do it better? It’s a natural impulse.

This tinkering has led to technological innovation, allowed us to reach the moon, and cure cancers. It’s a human marvel!

Except when it comes to finances

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Market Volatility

When the market falls, rejoice.

When the market climbs, yawn.

Why?

If you keep buying when the market falls, then you will own more of the market.

If you fail to buy when the market falls…

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Get Rid of the Want

Searching for the secret to financial success or even financial freedom?

Ignore the want.

It’s what forces you to overspend. It’s what keeps you from saving. It’s what prevents you from investing. It’s what creates debt.

Want proof?

Stories abound about people making less than $50,000 a year repaying…

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Experts & Speculators

Be cautious of anyone claiming they know exactly what will happen.

When bitcoin hit $20,000, there were “experts” claiming the rise would continue.

When stocks stumble, “experts” claim you should immediately sell.

When the Federal Reserve moves interest rates, “experts” claim it will upend the economy.

If these “experts” actually believe what they’re saying…

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Doing Well, If You're Unsure

Want to know if you’re doing well?

To judge, don’t look at your income line.

Instead, evaluate your expenses.

What do you feel when you do? Are you embarrassed? Surprised? Proud?

Doing well isn’t about making every extra penny you can…

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Money Secrets

If you’re whispering under your breath about your spouse’s spending, something is wrong.

If you’re afraid to talk to your spouse about a your growing credit card debt, something is wrong.

If you don’t know, generally, how much your spouse makes in a year, something is wrong.

If you don’t know, generally, how much your spouse spends in a year, something is wrong.

If you don’t explain your money qualms…

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Market Troubles

“Did you see the news today? The market plummeted.”

Oh, well that happens. Take a walk and ponder real concerns.

“But it fell 10%!”

Eh, it’ll rise tomorrow. Take a walk and ponder real concerns.

“Shouldn’t I pull my money out…

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Beating Your Neighbor

Want to do at least as well as your neighbor?

It’s not a riddle, a secret or even that difficult:

15% of your income + broad based index funds = Market Returns

If you stick with that formula when investing then, overtime, your money will grow faster than inflation. And if your neighbor does the same, then your money will grow in lock step with his.

If you want to outperform your neighbor…

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