When we talk about investing, most people think that there is only one way to do it. If you asked 100 people on the street what you need to be an investor, almost all of them would answer with money. While that is half correct, it is only one of the correct answers. The other one is less talked about. Time.

You can build your own website, write your own blog posts, do your own SEO and fix up your rehab houses yourself as I have done. This does save thousands of dollars but is a trade off of your time. For people that don't have a lot of money, time is a better investment or the only one they can really make. You sometimes hear it referred to as "sweat equity". Basically, if you don't have the time to pay people or enough to invest, you can "do it yourself". This requires a sacrifice of your time though. On the surface, this sounds great but remember the most important rule of time. You don't get it back. Once it's used up, it's gone forever. "At the end of the day your another day older" as the song goes. With money, you can make and lose fortunes over and over again. There are many examples of people who did this both living and dead. None of them got more time. None of them could buy an extra day with money. If that were possible, Steve Jobs would still be alive today. He was famous for saying he would pay any amount of money to have one more day.

It's true that you can get financially free and even very wealthy by subscribing to my site or even reading some of these posts and educating yourself in some of these areas. But isn't the point of financial freedom to gain the one thing we can't control? Time? Financial freedom means we choose how to utilize our time. We can be philanthropist or spend time with family. We can make the world a better place instead of taking orders from corporate executives who may or may not ask us to do things against our better judgment. Moreover, if you do get financially free or uber wealthy, don't say I didn't warn you. It can consume you. You can lose sight of what's important while focusing on every dollar, the next deal or power. You'll be in such a frenzy that you won't see time evaporating right in front of you. My goal is to help people achieve financial freedom but the best money advice I can give is to not lose yourself in the conquest. Don't forget to look down at your watch and remember the most important thing is living the best life you can. Money is only one part.

This topic is near and dear to my heart. I have been a cosigner on a loan before. Let me also state clearly that it didn't work out well for me. Although this article is about cosigning for a car loan, please understand that when you cosign for anything, the situation is the same. The difference lies in what the asset is and the extent of the guarantee. You can obviously also cosign for home loans and credit cards as well, so understand what I'm saying here and apply it to those types of guarantees too if someone asks you to cosign. In addition, you should always do a background check and get references if someone asks you to cosign for them. Just because they're family is no excuse to dismiss good judgement either. Have discernment!

First of all, when someone needs a cosigner it can mean two things.

1. They're young and haven't established credit and don't have stable income yet and are just starting out. This would apply to young graduates, etc.

2. This is the one you need to be very careful of. They are the type with very bad credit, no job, a history of stiffing creditors or some combination of these.

You need to understand that when you cosign for a car loan, you become another guarantor the car dealership or bank can look to for FULL payment in the event of a default by the originator of the loan. That means if your friend, family member, boyfriend, (fill in the blank) stops paying the bills, the dealership and/or bank will call the originator first and if they continue to not pay, they'll start calling you. By the way, their favorite time to call is 8:30am on Saturday morning! Imagine your surprise when you didn't even know the person you cosigned for wasn't paying the bill. They will do this every week at the same time. It's a psychological warfare strategy. You are also responsible if the asset is damaged from neglect or an accident. So that means if the dealership reposses the car due to neglect and there is significant value loss between the value of the car in it's present condition and the loan balance, you as the cosigner will be responsible for that too. If the car is totalled in an accident and the owner doesn't have insurance or insurance covers less than the balance of the loan, you are also responsible to pay the difference in the event the owner doesn't. In these cases, the cosigner typically has to take a hit. That's why the bank and/or dealership wants a cosigner in the first place. They're worried about the initial borrowers ability to pay and they're good at getting money. Depending on how aggressive the lender is, they can garnish wages and/or place liens on your house to recover payment. In some cases you may not share title in the car so make sure you negotiate that up front. It'll give you more leverage in case things go bad.

I'm not suggesting that cosigning is bad every time but many times it is very risky. Take it from me as someone who has done it and got burned. However, I knew what I was doing and the risks though and that is all I'm giving you here, an education on the topic so you can make an informed decision as well.

The most important thing an investor needs to understand is how to calculate their return on investment also known as their ROI. Even ROI can be computed differently and is sometimes broken down more specifically into the internal rate of return (IRR) or cash on cash return. I will briefly describe each and give very simple examples to help you grasp the concept. When calculating any of these, keep in mind every single expense you had while you were getting a return of your capital. This includes repairs, loan interest, insurance, commissions, fees, etc.

Your return on investment or ROI is the highest level calculation and is what I usually look at for a quick general view into what my investment returned. Keep in mind that ROI can also be negative. You can also compute your anticipated ROI when going into an investment based on your research and projections.

Example: Calculating ROI

Bought 100 shares of stock ABC at $10.00 per share. Sold 100 shares of ABC at $12.00 per share. The online broker's commission is $10 each time you buy or sell and you borrowed $1000 at 8% from another investor. This is known as a hard money loan. You held the investment for one year. Most people will simply see that they made $200 on $1000 and say they have a ROI of 20%. This is typically incorrect and too simplified. Here's the correct ROI calculation based on the example above:

Purchase                   $1000

Commission               $20

Loan Interest           $80

Total Investment    $1100

Sale                            $1200

ROI                             $1200-$1100 / $1100

So what on the surface looks like a 20% return, is actually a 9.1% return after you include the fees, interest and rebase your investment from $1000 to $1100.

Your IRR is also 9.1% since you held the investment for only one year. If you had held this investment longer, the IRR would be less. The IRR would be 4.6% over two years (9.1% divided by 2 years) if we pretend that you didn't accumulate more interest on the hard money loan you took out. We of course know this isn't the case in the real world and would have to re-compute the entire ROI.

My favorite part of investing is calculating the cash on cash return. This is where it can get fun! In the example above, you borrowed almost all the money for the investment. Your total cash invested is $20 in the form of the online broker's commission. At the end of the investment you have to repay the lender $1080 (the initial $1000 loan plus the 8% interest). This leaves you with $120. This means your cash on cash return is 500%! You multiplied your actual money five times!

Here's the calculation written out $120-$20 / $20.

Now that you understand ROI, IRR and cash on cash return, your investing will take on a new exciting life.

I'm sharing with you the most important lesson in becoming wealthy. By understanding these four principles, you can become very well off and very fast. Although these concepts are not "secret", they are not well understood by most people. Take time to understand them and you'll prosper.

Compound Interest

Although most people understand what compound interest is, they fail to grasp it fully. The rich understand this principle and seek to let it work for them as many times as possible and at higher returns than regular people (i.e. stocks, bonds and savings). To illustrate, if you invested $100 and made a 5% return on it, you would have $105 in one year. In 10 years however, you would have $162.89 and not $150 which would be simple interest ($5 per year). In compounding you earn interest on the interest. So in year 2, you earn 5% on the $105 not the $100. When you increase the investment amount and return, this formula produces astonishing results. This is the main secret of the rich. This and the fact that they invest in things you've never heard of that produce 15-20% returns.

Leverage

 Rich people know how to use leverage better than anyone else. They can borrow tons of money at a lower rate than they're making money on it to help them accumulate money faster. The power of leverage is one that is not understood by most people even though we use it commonly. Lots of people use leverage to buy a car or a home when they take out a loan. The difference is that these things are for personal use. The rich use leverage to buy investments that yield high returns or kick back cash flow to them in excess of the loan payment.

Velocity

Velocity of money refers to how fast you turn your money over. For most people this is annually or worse. In our compound interest example above we made 5% or $5 in one year. That may or may not be very fast velocity depending on the comparison. A wealthy person most likely makes 12% on their money several times in one year. This is faster velocity but others still could be faster. Let's say this wealthy person made 12% on his $100 3 times in one year which equals $140.49. That means average Joe has $105 and Rich Guy has $140.49. Not only is the return he made almost 3 times more but he did that 3 times in one year.

Tax Avoidance

The rich know how not to pay taxes better than anyone. They invest in programs that decrease their gross income, hire professionals to make sure they make lots of money in ways that decrease their tax base and do just about anything possible to decrease their overall tax rate. You see, they understand that if you can keep 20-30% more of your money, it makes a huge difference. This is why the antics in Washington make me laugh. You can raise the top tax bracket to 90% but if you still have deductions on certain things, the rich will still only pay 15% of their income in tax like Buffett. Most people are nowhere near as good at tax avoidance as the rich are.

Ben Bernanke has announced some pretty drastic measures recently with QE3 ($85 billion per month) in September and just last week QE4 ($45 billion per month). The Fed will buy a total of $130 billion per month in treasury bonds and mortgage backed securities under these programs which will now run indefinitely until unemployment goes below 6.5%, which begs the question what if unemployment doesn’t reach that level for many years. This is very possible under current market conditions. The economy is weakening again, only this time we’ve thrown everything at the problem only to admit these programs aren’t working. So instead of doing something different, we continue to implement the same programs repeatedly. The ECRI has already stated that the US economy entered a recession again in September. The problem with quantative easing is that to artificially keep rates low, we must create inflation. This is because we’re artificially buying the bonds and mortgage backed securities. The real worrisome part of this is we have to do this because there are not enough private buyers. This is because private buyers are worried about getting repaid on their investment. Yes, private buyers are starting to get worried about the US being able to pay them back! Not to mention our bond rating was recently cut and is likely to be downgraded again by the major ratings agencies. We’ve already seen the effects of QE1 and QE2 with rising food and gas prices. Other assets that have increased are oil, gold, silver and many other commodities and natural resources. This is driving the price of everything up. The recently announced QE3 and QE4 programs will eventually produce the same results. Expect more inflation in the next year. In fact, eventually we could see hyperinflation take hold. I really believe that 2013 will be another year that proves to be more financially difficult than the last. This has been the case since the start of the crisis in 2008. I personally don’t think the US economy will recover until 2022. There are just too many problems to overcome. The government is broke at a time when more and more people are requiring government assistance. Food stamps are at an all time high, unemployment benefits have expired for many and now they’re running out of money. The problem is that the Fed who runs our monetary policy is insane. They keep doing the same thing and expecting a different outcome. They have already thrown everything and the kitchen sink at the problem with no major improvement. Yes, they keep things moving but at what cost. Someone is footing the bill and it’s not the Fed, it’s us. Eventually taxes will have to increase to pay for all of this spending. More taxing at a time when we’re seeing major inflation in everyday items (food, gas, and energy) will be devastating for many. We’re on the brink of the greatest wealth transfer in history. For those that are prepared, lives will be transformed. I’m preparing my subscribers for this environment and teaching them how to profit from it. Sign up now so you don’t have to rely on the government to feed and house you.

The media is scaring the crap out of people about what would happen if we went over the cliff. I’m saying that’s exactly what we need to do. We should be sprinting towards the cliff to make sure we get a good jump. The sooner we default and reset the economy, the better. Deflation and defaults are natural occurrences in economies that are out of control with debt. For some reason in modern history, we’re taught it’s bad. In addition we have a Fed chairman who spent his whole academic career studying The Great Depression and came to the conclusion that the Fed didn’t use all of its tools to make it better faster. All this from a guy who lives in the fantasy land of academia with no real hands on experience. When an economy defaults and rebases its currency, there’s pain for a few years but eventually things get back to normal. Debt is cut and investors are able to move on. Savers are rewarded while people living on credit get a fresh start. Recent defaults include Argentina, Zimbabwe and Germany twice. All of these countries still exist today and made it through the default. The alternative is to create an unsustainable economy where the middle class disappears. The ultimate solution for the US will also be a default. The reason I say this is because politicians are not willing to do what it really takes which is massive spending cuts in government programs combined with heavy tax increases for at least a decade. Americans won’t even listen to this because we’re so spoiled. The problem is that we’re trading pain now for worse pain later. It’s like knowing you have cancer but refusing to treat it until later. The problem is simple; we are spending more than we’re bringing in. Many Americans are very familiar with this situation. There are three solutions:

1. Decrease spending so you have more income than expenses

2. Increase income over current expenses

3. A combination of 1 and 2

When you look at the solutions your heart sinks because this is what they’ve been debating for the last 2 to 3 years only to put it off for next year. It’s hard to tell what solution they will ultimately choose but the outcome will be the same. People will be forced to cut spending and cut debt while the economy resets. While most of the posts on this site a not rosy, there is a silver lining. We’re on the brink of the greatest wealth transfer in history. For those that are prepared, lives will be transformed. I’m preparing my subscribers for this environment and teaching them how to profit from it. Sign up and learn how to achieve financial freedom.

Remember when President Obama promised that he would not raise taxes on taxpayers making less that $250,000?  Here are 5 reasons why you can never trust a politician. President Bush helped the American taxpayer by enacting a series of tax cuts and deduction increases, that all of us were able to benefit from. As you have heard in the news, we are facing a financially significant issue coined the “fiscal cliff”. As the Bush tax cuts approach expiration (they were meant to be a temporary boost to the economy), Congress and the White House are at odds as to how to resolve this issue. Both sides agree that simply letting them expire could be disastrous to any hope of an economic recovery, and would lead to a certain recession next year.

Here are 5 tax increases that will affect you:

• Payroll Tax – 2% increase:  The FICA portion of your payroll tax deductions (social security and medicare) are 4.2% for the employee, and 6.2% for the employer.  These will go back to 6.2% for the employee portion, while the employer portion remains the same.

• Itemized Deductions – Phased out:  Tax filers who elect to itemize their deductions (mortgage interest, taxes paid, employee job related expenses, etc) will no longer have that benefit, and will be forced to settle for the standard deduction.  For those of you with large mortgages who travel a lot for work, this will hit you directly.

• Income Tax Increases:  Back to how Obama said he will not raise taxes of those making less than $250,000.  Beginning on January 1^st 2013, anyone who makes more than $35,350 ($58,900 married filing jointly) will see a tax increase on every dollar earned above that.  Yes, you read that correctly.  The marginal tax rate goes from 25% to 28% for what is considered the average per capita income across most of the country.  So much for not taxing the middle class huh?

• Capital Gains – 15% up to 20% + 3.8% “Medicare Contribution Tax”:  For those of us who have unearned income and capital gains on stocks for a period longer than a year (long term capital gain), we will pay 23.8% in taxes on those gains.  With the increase in the marginal tax rate we see that it also raises the short term capital gains rate (which happens to be considered income and taxed the same as your payroll income).  So either way investors, and the markets in general, will certainly pay more in taxes next year.  A terrible thing for the markets.

• Dividend Income – 15% up to 39.6% + 3.8% “Medicare Contribution Tax”:  This is what is going to kill a lot of the momentum in the stock market we have seen this year, specifically the higher yielding dividend stocks.  It will also crush the stock price of many good companies who are considered dividend stocks, and are held by a lot of pensions and mutual funds.  A 15%-20% drop in this group of stocks will have a huge negative impact on the US economy.  Not only are corporations going to see higher taxes next year, dividends too will get it’s cut, and if you held the stock for less than a year….well you too will again be taxed at your income tax rate.  I have never seen a single dollar earned, get taxed that much in my lifetime!  This means that even those who don’t own stocks will suffer as well.

Take an average working man, who has a company sponsored pension.  Well he will unknowingly pay more to Obama’s “no tax for the middle class” idea, as the value of his company’s pension fund deteriorates under these new tax rates.  Also, the working family that ritually contributes to their 401k at work, will suffer a deterioration of their retirement savings as a large portion of their “safe” mutual funds hold high dividend income stocks.  See how politicians can twist words?  Everyone who holds a job, will pay more taxes next year.  Every single one….

This article was written by Brian B. and is reprinted with his permission. Visit his site at http://timeofftrading.wordpress.com

America is unique in the world as a nation with a culture of super consumerism. I sometimes can’t believe the lengths people will go through to get what they want. The savings rate in the US is laughable. Compared to other countries, the US boasts one of the lowest savings rates in the world. This combined with the fact that debt and credit are out of control is a recipe for disaster. The next decade will be one of tremendous change, not out of willingness but out of necessity. Americans can no longer be reckless spenders and macro economic fundamentals will force them to change. At some point you have to ask yourself why you need two large flat screen HDTV’s, a laptop, desktop computer and tablet, an Acura and the largest house you can afford on your salary. In addition, the pressure to maintain this lifestyle can cause tremendous stress which can affect your health and even shorten your life. Why do people find it necessary to look like everybody else and have what they have? We’re teaching our children that owning 2 or 3 iPods because they want different colors to match their outfits is ok. Young women grow up and want expensive engagement rings, expensive weddings and are terrified if their date uses a coupon at a fancy restaurant because it’s seen as a sign of being cheap and not being able to provide for her. This is insanity! Being rich and financially free isn’t about having more or better stuff than another person, it’s about not having to worry about personal finances. Living a life of competition with others over salary, cars, houses and things will not get you there but will instead lead you down the path of debt and depression. Instead, learn to live without. This doesn’t mean not having any of these things but it does require you to be smart with your money. Buy a Chevy or Ford instead of a luxury car. Buy a smaller house and leave some room in your budget for piece of mind. Own one computer and find a way to share it with others. Use coupons and buy items on sale or used. Contrary to the marketing we see everyday; happiness is not a result of what you own. In the next decade two types of Americans will emerge. One will spend the rest of their life trying to dig out of a hole and barely scrape by probably never retiring. The other will have savings, own assets (gold, real estate, antiques) and buy lots of stuff on discount from people in the first group. Which group will you be part of? The choice to change is up to you and only you can change yourself but for those that become part of the second group, the future is bright and the path to financial freedom a reality.

Yes this is a blog about financial freedom and I’m talking about starting a garden. The health benefits are obvious, fresh food with fewer pesticides and more nutrients but have you ever thought about it from a financial perspective? I believe that inflation will really affect food prices in the coming years. Food costs are a major expense along with gasoline for almost every household. The best way to combat rising food prices is to grow the food yourself. Make a list of common fruits, vegetables and nuts you eat. You can then research what grows best in your area. Many fruit and nut trees are available in dwarf sizes that can be grown in your backyard. You can grow lots of food on ¼ acre of land and even less. If you grow more than you need you can either freeze it, can it or sell it at a farm market. Starting a garden does take a lot of time and effort to get up and running but you’ll see how much you can save by growing your own produce and learning to cook meals from scratch using the things you’ve grown. In addition, you can cut out many of the processed foods you eat that contain preservatives and lack the nutrients of fresh produce. Depending on how much you can grow and how efficient you are at making meals from your produce, I expect you could save 40-70% on your food bill while improving your health. If you choose to follow my advice, study the intensive agriculture method which yields many times more pounds of food than commercial agriculture in less space. If you decide to grow organic produce and sell it at a farm market, you will likely even make a profit from your garden even after you feed yourself from it.

Starting and running your own business has many benefits. Here I will try to list some that you may have never thought of. Many people never even try and make excuses like "it takes a lot of money", "I don't have the time" or "most businesses fail". These are excuses that unsuccessful people use to justify why they can't get ahead. Even if the business you start fails, there are numerous benefits that will help you invest better as an individual or launch a successful venture next time because of what you learned the first go round.

1. Be your own boss, live and work how you choose and make your own hours:

This one is obvious but it's funny how many people don't really believe this. I know many real estate investors that take multiple vacations a year and brag about a 4 day work week. They generally also work part time because they realize that they can delegate to other more experienced people for things they're not good at.

2. Become more intelligent than almost everyone else:

You can't help but become more intelligent. When you run a business, you have to be an expert in all areas at first (finance, marketing, sales, operations, administration). Eventually you will be able to hire more talent but you will still likely need to retain some expertise in all areas. You will also never manage money the same. Running a business will change how you look at investing and managing your own money. Owning my own business has also made me a more valuable employee because I don't specialize in one area anymore. I can be flexible and assist where needed and make intelligent business decisions based on the experience I have from running my own companies. In a competitive hiring environment, this is a huge plus.

3. Tax benefits:

Many of the largest corporations pay little or no tax. Yes you read that right and now you can too by owning your own business. There are so many tax deductions and incentives for people who run their own businesses that it's ridiculous. This is how the uber wealthy pay 14-15% tax rates while the rest of us pay much more. Here's just a few things you can deduct:

• Salaries and wages
• Property, plant and equipment cost
• Depreciation for property and equipment
• Rent for a dedicated room in your house
• Mileage and car expenses
• Accounting, registration and legal fees
• Business losses

4. Pride, Passion and Philanthropy:

How  many people can even say that they tried to start a business? Not many. You will feel a tremendous sense of pride by just having a go at it. Even if the business fails you will have many fond memories of that time. Most people also start a business that they are passionate about. You won't be stuck in that rut of being the typical person that dreads going to work every day. You can also choose to share your success with the charitable organizations that you choose.

5. Global Distribution Without High Costs:

The internet changed everything. You now don't need a store or warehouses all over the world. All you need is an internet store and you can sell products to anyone in the world who's looking for them. In addition, marketing can be very targeted online. If you sell amethyst jewelry and someone does a search for that and comes to your online store, they are more likely to make a purchase. This will be the key in the coming decades. Physical retail is a thing of the past.  Amazon and others are recognizing this and taking steps to become the place to shop in the future. You can too.

Almost everyone has a talent or hobby that they could use as almost a second job to make money on the side. Some of these include music, art, crafts, jewelry design, photography, hair stylist, handyman, cooking or baking and more. I've listed some ideas below for a few of the talents. Some I take part in myself.

Music

1. Form a cover band
2. Write and record songs to sell
3. Teach voice or instrument lessons

Art

1. Sell paintings, drawings, sculpture or other art
2. Teach a class in your specialty
3. Commission portraits or other works

Cooking/Baking

1. Start a catering business part time
2. Hire yourself out as a personal chef
3. Sell baked goods out of your house
4. Teach others to cook or bake

Not only can you use these to make money but you can also open your own business which has several tax benefits. Between the extra cash and the tax deductions you'll notice that you're slowly getting richer. Of course the trade off here is your time and sometimes additional education.

All eyes are on Germany. On September 12^th, The German Federal Court will decide if the EU bailouts are constitutional. Everyone is waiting to see what will happen. I suspect they will rule the bailouts are unconstitutional and trigger a massive market selloff. This will confirm that there will be no money for a 3rd Greek bailout or to save Italy and Spain. Defaults will start to happen and money will disappear faster than Bernanke can drop it from helicopters. You see, Germany is the only country that can actually bail them out and everyone knows it. The problem is that almost 80% of the German public is against it because they either remember or have heard stories of Weimar Germany and bailouts at these levels most likely will result in hyper-inflation, something they remember all too well and which gave birth to the Nazi party. If for some reason they deem the bailouts constitutional, expect inflation to take hold. The problem with this is that Germany only has so much to lend and will eventually end up in danger of defaulting themselves at some point. I believe that while we don’t know what will ultimately happen on Sept. 12, we can confirm that this is a check mate situation. Neither outcome will be pleasant, it’s just a matter of which one will be the one that ends up in the history books. I’m preparing my subscribers to prosper in either environment. It could be an exciting end to the year for those prepared. Sign up today to protect yourself and your family.

Ever here the term cash is king? Maybe you never truly understood what that meant but I'm about to explain what it means. First, let's address what you have to do just to get credit. First you have to find some lenders. This can be a bank, credit card company, private lender, hard money lender or a friend. That in of itself can take a lot of time and research. After that, you have understand the interest rate you will be charged, the terms of the agreement and the length of the loan period. For credit cards, it can be almost infinite but for mortgages, student loans or car loans, the term is fixed in years or months. For home loans, it can typically be 15 or 30 years, for a car loan 5 years. Next, you will have to provide all sorts of documentation to a lender for them to approve you and I mean every document you own that provides proof of your money and assets. Bank statements, tax filing information, paycheck stubs, investment account statements, all other assets you own (antiques, art, jewelry) that are really valuable. They will also check your credit. The list goes on and on. Then you have to wait and pray you get approved. This process can easily take 5 days and it could be 30 days before you get any money. What you have to think about here is how much of your time it takes you to get money via credit and if it's worth it. You then have to think about how much interest you'll pay just to buy the thing you'll need. Lastly, you have to understand that the more debt you take on, the less you'll be able to get later. If you already have a lot of debt and want to buy a house, good luck. So in terms of savings stratgies, credit doesn't sound that good, right? Now on to cash. Cash requires none of the time credit does. The money is in your account so there's no approval process. You're approved. Talk about a no doc loan! Once a contract is signed, you spend 10 minutes at your bank and bring a certified check to the closing or the dealership For lower priced items you can just write a check or pay cash on the spot and save on credit card interest too. You won't have to pay any interest on your purchase and seller's will salivate knowing you're a cash buying. You can typically get a better deal on price with all cash purchases. You can easily get a 20% reduction on a house purchase this way. Just think how estatic the seller will be when they hear the offer is from an all cash buyer and they can close in 10 days! They know the deal will close and will trade the price for the stress of waiting or someone else being denied a loan. To really bring home the point, I'll leave you with two simple illustrations of a car and home purchase. Each will highlight the difference when purchasing these with cash and credit. I know you'll see what I'm talking about now.

Options are higher risk futures that you can buy and sell against stock you own or don’t own. Investors have made and lost fortunes trading options. Jim Cramer made enough in one options trade to quit Goldman Sachs and start his own hedge fund. I only want to mention it briefly because it can be a powerful tool as a hedge or even to add gains on stocks you already have. There are two types of options in stock markets which is what I’ll be focusing on. They are calls and puts and you can either buy or sell them. There’s an easy way to remember what they mean by associating common phrases to them. You buy a call when you think the price of something will go up. So just like you “call up” a friend, you buy a call when you think the price of a stock or ETF will go up. Selling a call gives you instant cash that you keep as long as the stock price stays the same or goes down (the opposite of buying a call). A put is the exact opposite. You buy a put when you think the price of something will go down. So just like you “put down” a friend, you buy a put when you think the price of a stock or ETF will go down. Selling a put gives you instant cash and you keep it as long as the stock stays the same or goes up (the opposite of buying a put). As if this isn't confusing enough, options come with expiration dates. You're free to buy and sell until the expiration date but on the expiration date, two things can happen. One, your option can be exercised for stock shares with you making some profit and now owning shares of the stock. Regular stock trading strategies apply then. Two, your option expires worthless and you lose all your money! This can be tricky to comprehend at first but you’ll get used to it after some thought and additional study.  Trading options on individual stocks is very time consuming. For average people, I recommend only trading options against ETF’s or selling options on stocks or ETF’s you already own. For example, if you think the economy will crash then you can buy some calls on an UltraShort or Bear fund. Not only does this strategy require less capital upfront but it doesn’t require too much research. All you need is a feeling on the overall direction of the economy to profit. You can also sell calls on stock you already own and pocket money every month if you’re right. This is a very complex subject and I will be going into more detail on how to make money in this area with my subscribers, so sign up to learn more. I only want you to be aware of its existence. It’s never a bad idea to invest a little play money in options but be advised that you can lose your whole investment very easily, so tread lightly. On the other hand, if you hit a home run, you’ll be telling your friends about it for years. It’s not uncommon to make 30-100% on your money trading options but the stress and heartache is sometimes unbearable.

From the time we are born we’re told that making mistakes is bad. When we’re young, we’re scolded for misbehaving. When we get older and start taking exams we are punished for getting the wrong answers and given a bad grade. Our society views good grades as success and you get good grades by not making mistakes. The problem with this is that we learn by doing and when we’re punished for making mistakes we can’t grow. We become afraid to do for fear of making the mistakes which we’ve been conditioned against. The same fear of making mistakes is what holds people back from being truly successful. Part of the learning process is to learn by doing, and even though you’re guaranteed to make some mistakes, this is the fastest way to learn. Once you learn what not to do, you also learn how to become successful faster. Some of the world’s richest people have declared bankruptcy more than once only to come out of it and become just as wealthy within a few years. The main difference between us and them is that they actually went out and started learning by doing. Many of them opened their own business or became real estate investors while most of us got a standard 9 to 5 job because we were afraid to take a chance for fear of making a mistake. The fact is that the fear of failure or making mistakes is what is ultimately holding most of us back. For all of us, success lies not in knowledge, connections or financial means but rather in our belief in ourselves, the ability to take chances and accept that we will make some mistakes while learning from the process. There is no faster way to learn than when your money’s on the line and the sooner you get started; the better off you’ll be in the future. Many people wonder how I know so much about investing and wealth building and it’s not because of my education or even luck. It’s because I took the time to learn different areas of investing and most importantly, after educating myself, I went out and actually started investing and learning from real life experiences. I’ve made my fair share of mistakes but learning from those mistakes was as valuable as the money I lost. That’s why I’m far ahead of most people my age and wiser than many others that are much older. Don’t wait another minute or give yourself more excuses. Get out there in the world of investing and start learning now! No matter how many times you fail, you’ll be glad that you took the journey and you’ll be light years ahead of many others.

4 Types of Bonds:

1. Sovereign

2. Corporate

3. Municipal

4. Zero Coupon

Bonds, types of bonds and how they work can get confusing. I’ll do my best to describe what I know about this area of investing. There are different categories of bonds that you can invest in. All bonds carry a maturity date and coupon rate. The coupon rate is the annual interest rate paid and can be compounded annually, semi-annually, monthly or daily while the maturity is when the bond expires. 5, 10 and 30 year maturities are common. Most people are familiar with US government bonds, also called treasuries. If you bought a 10 year treasury in 2009, it means you bought a government bond that matures in 2019. This bond would pay you interest every year for ten years until it matures and the balance is returned to you in 2019. Bonds also carry ratings. AAA is the highest and considered very safe. AA is next, then A. After A is BBB, BB, B, etc. And as the rating goes down, so does the safety of your investment. Corporate bonds tend to offer higher coupon rates than treasuries because they carry more risk as a company can go bankrupt (i.e. GM) while the government can print more money to pay the bonds off. Muni bonds are issued by local municipal governments to pay for school, road and service support or improvements. Municipal bonds are great investments because the interest you make on them is not taxed by the US government or by your state (if you buy munies from the state in which you reside) since they directly help local governments. Zero coupon bonds are just what they’re called, they carry no coupon rate. Instead you pay a decreased price now for a lump sum payout at the end. If you bought a 5 year zero coupon bond today that will pay $1000 in 5 years, you might pay $800 today for $1000 in 5 years. The difference is you won’t receive any interest payments during those 5 years. It’s also important to note that some bonds require substantial minimum investments. You can check out the most updated rates, investment requirements and trade these through most online brokerages just like stocks and options. The last important note about bonds is that the base price of bonds changes over time as interest rates change. The value of your bond will increase as interest rates fall and decrease as rates rise. This is because someone is willing to pay extra for additional interest they can no longer get from CD’s or savings accounts and vice versa. So while you’re getting you interest payments, the value of your bond can also increase and give you the opportunity to make a little more return if you sell early.

While everyone was fascinated by the Greek situation, I was warning people that Spain was the REAL issue. You can verify this by my blog post in early May where I warned my followers that Spain was insolvent. I also was speaking about it in April when I appeared on the real coaching radio network which you can listen to in the videos section.

Let's get down to it. The bailout that happened this weekend did nothing. The problem is now astronomical. The market closed down 1.3% after reversing from mid-day gains. This is a very bad sign and signals that the stimulus is no longer working. Greece is already a mess and will need another bailout when they run out of money next week. Yes, next week! Who will bail them out when they won't accept austerity? After Spain just got 100 million Euros, is there even any money left? This is one for the history books folks, only this time it's not isolated to one country. There will be ripple effects EVERYWHERE. Lehman's collapse will look like a picnic in comparison. However, in the midst of chaos, there is opportunity for profit. That's why I'm preparing 2 very important videos for my subscribers.

The first will detail how to invest during deflationary or hyperinflationary environments. It's hard to tell what we're going to get at this point but one thing is guaranteed, we'll get one or the other. The "norm" is over. There are too many insolvent banks and bailouts for everything to stay like it has been since 2008. We'll pull from history which tells us the story of what happens in these environments. People react very similarly and will again when the financial landscape changes. We can draw from the US, Germany, Zimbabwe, Argentina, Chile and many others to prepare before everyone else who will be wondering what's happened and listening to CNBC advise them to buy stocks at bargain prices.

The second will talk about the very real possibility of an EU breakup, a Euro restructuring and sovereign defaults that are now very close to reality. I will prepare you for the scary truth and educate you how you can come out on top. I believe that the greatest wealth transfer of the last century is upon us and I will help you to profit from it. This year will be full of change and I'll keep you prepared no matter what is happening. I expect to record and post these new videos within the week. Only my subscribers will have access to this important information, so sign-up today if you haven't already.

Debt is bad and you want to get rid of it right away. Nothing destroys more lives, marriages and creates more stress than being in debt. The way out is not hard in theory but requires a life change. This is usually were people pass or fail; many times they are unwilling to make a lifestyle change to save their financial future. When you want to buy that Lexus, remember: the ancient Greeks and Romans walked around in sandals and wore robes and they were just fine. Cars are luxury items, so be a smart purchaser.  Remember that expensive doesn’t always mean better quality.  Many vehicles carrying moderate price tags are better performing than overpriced luxury cars so do your homework.  And always remember that a vehicle depreciates the moment you get behind the wheel.  Billionaire investor Warren Buffet still lives in a modest house in Nebraska; the same house he’s lived in for over 50 years!. This is the mindset I’m talking about, this is key. If you can’t change your lifestyle, you will never get out of debt. The rest is easy. First, downsize.  Get rid of the extra gadgets, unnecessary expenses and re-budget so that you have positive cash flow every month. Next, you want to take your extra monthly income and pay down your debt in the following manner. First pay off the account that is accruing the most in interest charges every month. This doesn’t necessarily equate to the account with the highest interest rate. In most cases, this will be the account with the highest total balance but do the math anyway to compare finance charges on all of your accounts.  Continue to pay the rest of your accounts in the same manner.  If you have multiple accounts with similar interest rates, try your best to pay them equally.  It never does any good to pay a significant amount on one card but only the minimums on another high balance, high interest card.  Minimum payments are the credit card companies’ way to keep you in debt forever as many times the minimum payment barely covers or is less than the monthly interest you are being assessed. Here’s an example for clarity: Let’s say you have $1,000 per month allocated for the pay down of credit card debt. This is what I would do in this scenario:

Example:

Credit Card
 
#1  $3,500 balance 15% interest
#2  $500    balance 19% interest
#3  $800    balance 17% interest
#4  $2,000 balance 16% interest

In this scenario I would pay down credit card #1 first by allocating 100% of my monthly $1,000 until it was completely paid off. Then I would use the same process for #4. This is because even though the interest rate is lower for both, the total balance for each is greater and you’re paying more in total interest than on the lower balances with higher rates. That’s why I don’t agree with paying down the debt with the highest interest rate first as some experts suggest. I always pay off the debt that is costing me the most in total interest payments. This is powerful to understand. The reality is that you can do this on your own without the help of a credit consolidation company. It just takes time and effort. The most important thing will be to learn from the experience and manage debt better in the future.

Understanding types of debt is crucial. Good debt is debt that you have that pays for itself. For example, a rental property or business that you own pays for the loan you took out for it; your money is not going into it. This is the defining line. Bad debt is just about any debt that most of us have and includes credit cards, mortgages, loans for school (contrary to what some of us may have been told), cars, etc. I’m not saying that you shouldn’t take out loans for school or a house but just that it’s bad debt and should be paid off quickly. For years banks have marketed mortgages and educational loans as good debt in order to make money off of you. Do you know if you take a mortgage on a $200,000 house at 6% for 30 years that you will pay an extra $200,000 in interest? So in 30 years, you’re house is hopefully worth $400,000 which means you made NO return on your investment, you broke even. If you don’t believe me, look at a loan amortization schedule. A better plan is to pay it off as soon as you can to save on the interest. How can you do this? Pay an extra one or two payments a year towards principal or larger lump sums. This will decrease the loan period from 30 to 15 years or less. Let’s think about it for a second. Let’s say your monthly payment is $1,500 month. As you pay your mortgage, you pay down your principal with the extra payments. As you pay the loan down, more of your money goes towards the principal and less to interest. After 15 years making one extra payment per year, you would pay an additional $22,500 towards your house. That means you gain an additional $22,500 in equity AND save in interest payments by paying off your loan sooner. Say you also save $45,000 in interest payments. That means you just made 100% on your money! I know it’s hard to grasp but it’s true. By doing some simple math, you can find out for yourself how the numbers line up. This is a powerful tool for you to realize. Banks never want you to pay your mortgage off early; it costs them their huge profits from interest. Take this advice and you’ll be one step ahead of the game. Imagine what will happen when you pay off your house in 15 years and invest the money that would have gone towards your mortgage into other areas! I go into more detail on this in my subscribers area to show you how to really make this work in your favor. There are also personal finance planning documents there to help you plan a strategy to start moving towards your goals. This is the road to financial freedom: cash is always king.

Ben Bernanke is so busy computing academic formulas that he forgot to go shopping and take a look at what’s really going on out there. He is famously called helicopter Ben after he made the statement that he could drop money out of helicopters to fight deflation. Is that a joke? This guy has a PhD in economics and has studied the great depression for the most part of his career, yet he thinks these tactics will work when there are clear examples in history that prove otherwise. You can never print money forever, period. Eventually the local economy will fail under such policies as evidenced in Zimbabwe and Germany within the last century.

The greatest insult to our intelligence is the consumer price index (CPI). For those of you who aren’t sure what this is, it’s simply a measurement the government uses to track inflation or rising prices of goods we buy. The CPI for the first quarter of 2012 was 2.8%. What hogwash! You see, the CPI measurement conveniently leaves out price increases in food and energy (gasoline included) which are two of the most important goods all people buy regularly. In addition, prices have increased in these two areas well over 2.8%. Other tricks I have seen while shopping at the grocery store is less food being packaged in the same size bag, smaller portions for the same amount of money as last month, etc. You see, even if the price stays the same and you’re getting less product, that is inflation. In addition, gas prices have risen almost 15% since December of last year. Real life tells a different story and when you actually do the shopping you see real world data. If you are one of those people that really trusts the CPI data, I beg you to reconsider. Many financial advisors will use this figure to advise you the minimum amount you need to make to not lose purchasing power on your money. If you only looked to make 2.8%, you would be misled and actually losing purchasing power because of inflation in energy and food which is not counted. The better number to look at is non-core CPI which does include food and energy. This figure is fluctuating between 1-2% higher than the 2.8% core CPI number that is reported in the media. The problem with the non-core number is that it averages inflation across all goods. Again, most people spend a much larger ratio of their money on food and gas. These two areas are seeing much larger price increases than in other categories and this must be considered when planning investment strategies. Once you get to the real analysis, you may find that you need to grow your money at 4-5% just to keep up with inflation. You can easily track inflation on your own by keeping a journal of gas and food prices when you do your shopping. This will actually be better data for you to use than those supplied by the government.

I know that sometimes there are some really tempting “deals” out there. Some once mammoth companies trade for less than $3 per share. $10,000 for a condemned house? Let’s put all our savings into buying it and fixing it up. It seems too good to be true, right? Wrong. No one ever became wealthy by making irrational decisions with their money and letting their emotions take over their actions. When you’re investing wisely, you can argue a case in defense of why you’re making an investment decision. I like to think I’m arguing my case in front of a jury. What are the holes they will knock in my plan? If you’re about to “invest” in anything and you don’t really know why, consider taking a minute to review your data before proceeding. “It’s a great deal” doesn’t count. In my experience, I don’t make the same tempting investment once I review the facts. And what about the times I lunge in for the kill? Well it feels like I just got punched in the stomach by Mike Tyson.

Why? Because buying shares of a company is not the same as shopping at Wal-Mart. 99% of the time, the company's stock is priced fairly for what the market sees as its value. The cheaper the stock, the higher the likely hood is that the company will go bankrupt and you’ll lose all your money. In 2009 companies like Sprint, Citigroup and yes even AIG looked tempting, but recall how it went from there. Control your emotions and think rationally about it. At one time, these once great companies were “on sale” but remember there is a reason for it all. I don’t want to invest my nest egg in companies like this. Chances are good that these companies will take a long time to recover. The same was true not too long ago. Companies like Cisco and Lucent were exploding to higher highs every day. Once a $100 stock 9 years ago, Cisco now trades around $20. Lucent was another superstar of it’s time, flying into the $70 per share range, only to fall to $1. Yes, $1! It rallied to $3 and was bought by another company. These companies never bounced back and this is not uncommon. They are called penny stocks for a reason. It’s because they are cheap and don’t have much value. Fund managers don’t really carry many penny stocks in their portfolios and neither should you. The government is considering doing away with minting pennies. Maybe we should consider getting rid of our penny stocks too.

The following may shock you but it’s based on focus groups and research conducted by Thomas Stanley. He has dedicated much of his career to studying the traits and habits of people who have $1 million or more net assets. This is vastly different from people who earn $1 million or more. Net is the amount of money left over after debts. So let’s get to the lists. All data is from the book Stop Acting Rich…and Start Living Like a Real Millionaire by Thomas J. Stanley (2009).

Cars: Most Recent Acquisition

1. Toyota (Camry, Avalon, Highlander, Sequoia, Sienna)
2. Lexus (RX 300, RX 330, ES 300, ES 330)
3. Mercedes (E-class, S-class)
4. Ford (Explorer, F series pickups, Expedition, Escape)
5. BMW (3 series, 5 series)
6. Chevrolet (Suburban, Tahoe)
7. Honda (Odyssey, Accord)
8. Chrysler (Town & Country)
9. Cadillac (Escalade, Deville)
10. Volvo (S60, XC90)

The average price paid was $31, 367 which means many of the higher end brands were bought as used cars.

Watches:

1. Seiko
2. Rolex (over half of the Rolex owners received the watch as a gift!)
3. Timex

Spend range was $100-$300.

Shoes:

Women’s median price: $140

Stores:

Suits:

Average spend for a suit: $299

I admit this was not shocking for me but for many it will be, you see, I have shopped exclusively at Kohl’s for the past 6 years and Macy’s before that. I knew it would be on the list before the list was determined. I admit that I’m not the most fashionable at work. Although I’ve been complimented on my pants at work by co-workers who are into fashion; I've never spent more than $29 for them. I also get heckled for wearing “hoodies”. I drive a 1996 Pontiac Sunfire which refuses to quit. When I go somewhere, I never get the special treatment because I don’t look wealthy. This just proves you aren’t what you wear. Now that you know the truth, which was derived from real millionaires, you can change your habits. I’ll see you at Kohl’s!

I expect many of you are hearing about the events in Europe and wondering what the big deal is. There are 2 major events happening in Europe this week, the French and Greek elections. Almost everyone expects the socialist parties to gain major victories after all the rioting over losing welfare programs from austerity measures. If this holds true, it would spell the end of Sarkozy, one of Germany’s last allies. Bailouts are highly unpopular in the German mindset and Merkel already took massive criticism for the earlier bailouts that didn’t include social program reform. If Sarkozy loses, Germany will be alone in the austerity fight. You see, Germany is the only country able to bailout other insolvent countries but is unwilling to do so without imposing severe austerity measures. Socialist leaders will never agree to these terms. This could lead to the worst stalemate ever witnessed as countries like Greece, Italy, Spain and Portugal will need bailouts or face defaulting on their debt. Greece has already received 2 bailouts and will still need another one, which only proves the bailouts aren’t working, and Greece isn’t anywhere near the size of Spain or Italy. A bailout for Spain and Italy would be very difficult because of the amount of cash that would be needed. There are many intelligent experts predicting the breakup of the EU in its current form and also defaults by Spain and Italy. I have to admit that I think they’re correct. A default by Spain would be catastrophic and make Lehman look like a summer picnic. That’s the main reason the ECB is throwing everything and the kitchen sink at the default problems and hoping they disappear. I strongly believe that there will be a major event in Europe this year that will have massive repercussions to the global financial markets (yes everywhere). I’m preparing a video for my subscribers that will explain why and how to profit from this. I believe that we could be on the brink of the greatest wealth transfer in history. Many people will lose a lot of money and may not ever recover, but for others who are ready, there will be great opportunities to profit and help others. So far it looks like Spain will be the first to fall but events in Europe are changing by the hour. Winter is coming, make sure you can weather the storm.

Today I'm starting a new five part post on 5 things that can really set you back in your goal to financial freedom. Although many things can go wrong in life, these are some of the most damaging to people's personal finances. The first one is posted below. Check back every few days for the next four.

#1 No Insurance:

You’re really taking a risk if you’re not insured. I’m a big proponent of insurance as an investment in wealth protection. This includes homeowners, auto, life and health. We all admit that things happen in life that aren’t pleasant. The problem is that many people just think that bad things won’t happen to them, especially young people. When something goes wrong though, it can be devastating. Major medical bills are a leading cause of bankruptcy. I knew investors who were rehabbing houses that burnt to the ground during the rehab process. Bad things happen every day and one thing is guaranteed, some people won’t be covered because they opted not to spend a few hundred dollars per month to protect themselves. One of the saddest things I hear happen is when a young married spouse with young children dies tragically from a sudden health issue, auto accident or similar event. Many times they haven’t bought a life insurance policy and their family is left to pick up the pieces and struggle to get by. Don’t let this story be your legacy, spend some money on insurance; you’ll be glad you did. I can’t tell you how many times it’s given me financial protection when things go wrong.

#2 Failure to Plan

People have different personalities and tolerance for risk. Because of this people will naturally have different goals. The one thing that is not acceptable is to not have a plan. If you don't know what areas you will invest your money in, don't set aside time to educate yourself constantly on investing or don't have a timeline for hitting your goal, you're setting up a plan to fail. One of the most common mistakes younger people make is to procrastinate on saving or investing with the mentality that "I've got plenty of time, I'll start next year" but time flies when you're having fun and before you know it you're 55 with no money and only one option: the work until you die plan. 

#3 Getting a Divorce

I have an investment opportunity for you. You give me half of your money, your house and pay me $3,000 per month until my last child turns 18 years old. In return, I’ll give you no return on your money. Does this sound like the opportunity of a lifetime or what? I’m not arguing for or against divorce, I’m merely trying to educate you on the financial fallout that will occur. People that go through this multiple times face this scenario each time. Although they might gain emotional or mental benefits, it does sometimes take many years to recover financially.

#4 Fear

So many people never succeed because they don’t take the plunge. They’re afraid that they’ll lose money, but what’s the alternative, to be an employee and barely get by for the rest of your life? Anyone who ever made a lot of money has conquered fear. Some very successful people have lost everything multiple times and even declared bankruptcy only to come back stronger than ever.

#5 Winning the Lottery

75% of all multi-million dollar prize lottery winners declare bankruptcy within 5 years. All of a sudden they have millions of dollars but no plan, no financial education and a bunch of “friends” looking for gifts. The scenario typically plays out like this. The winner buys gifts for friends and family members, a nice house for themselves, quits their job and lives off the rest of the money for the coming years. The problem is that they’re usually living a new more expensive lifestyle and the only cash that’s moving anywhere is flowing out. There’s no more income coming in! Eventually the money well dries up and they’re forced to look for work again after being out of the work force for years. The property tax and mortgage expenses that are leftover are massive compared to their previous income level. Even if they do find work, the financial strangle hold is too strong to break. Most declare bankruptcy, fight depression and can’t forget the wealthy lifestyle they used to lead. If you win the lottery, please put the money in savings until you learn to manage money. Invest it in positive cash flow investments so you have enough income coming in to pay your expenses for the rest of your life.

Gold seems like a pretty lucrative investment right now considering the coming inflation and slow global growth outlook. So how can you actually invest in gold? There are several ways actually. Just please make sure that you know the spot price of gold if you’re buying or selling gold you own or want to own. As of this writing the spot price is about $1642 per ounce. The price fluctuates daily but can be found easily on the internet or in financial newspapers. This means you shouldn’t buy an ounce of gold for much more than the spot price (unless it’s a rare coin) and you should never sell an ounce of gold for much less than this. I’ve heard horror stories of people selling a lot of gold to cash for gold companies and getting a quarter of the weight value back in payment. And the worst part is they’re usually happy about it until someone points out it was worth 4 times more. Please educate yourself so you don’t get ripped off. It’s easier than you think to invest in gold. You can buy jewelry, coins, gold bars or other tangible items with gold content. You can also buy a gold or precious metals ETF or mutual fund if you have a brokerage account. The last way is to buy gold futures on a futures exchange. This is more risky and requires a lot more capital but is still another way to do it.

Define millionaire. The fact that you make a million dollars or more per year means nothing. It’s your net worth that really matters. You can also look at it in terms of assets to expenses. In other words, if you sold all your assets, how many years could you live off of the sale of your assets? For a lot of “millionaires” it’s not very long. Many of them have high debt and low income to expense ratios. Every year that goes by creates added pressure to keep large amounts of income coming in to pay the high costs of living. In some cases, the need to appear wealthy causes them to take on more debt to finance expenses and maintain this appearance. The real goal is to have enough money so you don't have to worry about your future. This number differs for everyone based on their expenses and desired lifestyle. Creating cash flow investments can greatly assist everyone in reaching this milestone. If you subscribe to this site, you’ll find a personal financial tracking document inside the subscriber’s area where you can plug in your financial info and the form will automatically calculate some ratios for you including the asset/expense ratio mentioned in this article. In general, if you have a 10 year or more asset/expense ratio, you’re moving in the right direction.

I want to take a second to talk about being a smart consumer. This is something I learned from my mom, the queen of finding a deal. I don’t know if she ever bought anything that wasn’t on sale. This is not being cheap, it’s actually smart. There's no reason that you need to buy something right away, period! If you wait or search for a sale or a better price, you will eventually find it. Just think of all of the people that purchased an iPhone during its first release.  Had they only waited a few months they could have saved about $300. This doesn’t sound like a big deal but a lifetime with this money-saving mindset can work wonders with your finances. Inflation is our enemy and will almost always go up while salary increases and raises may flatline. It’s important to buy smart. If you can pay off your credit cards every month in full, it’s a great idea to get one of the credit cards that offer discounts on purchases. American Express, Discover and Chase all offer cards with discounts of 1% on everything and 5% on food and gas or other quarterly specials. How smart is that? Now you can beat inflation! Just make sure you can pay it off in full every month. Finance charges can easily outweigh the savings the cards give you and you don't want to end up with debt using this strategy! Once you start getting into this habit, you can easily save $1,000 per year. You can then use that extra money to invest in the other areas you're learning about here and make it grow even more!

There’s nothing better than owning your own home. Not only is there a sense of pride in owning real estate but if you take care of it, there are few returns that can match it over the long term. For most people, their primary residence will fall under this category. If you don’t own a home, now is a good time to lock in low interest rate mortgages. Find a way to buy something even if it’s a one bedroom condo. Real estate is one of the most consistent performers over time and will always be in demand. There is still some downside risk over the next few years but if you’re planning to hold your real estate holdings for awhile, you should be able to ride it out. If you still maintain a full-time job, the best way to get started in this investment segment is to buy multi-family units in well-established or up-and-coming locations. Buy a few multi-family properties that generate enough rental income to pay the properties’ mortgages and maintenance expenses and hold them for awhile. Have a good property management company deal with upkeep, screening tenants, collecting rent and evictions; you just want to get a check every month. Don’t get me wrong, there are many ways to make money in this area but my experience is that other methods require too much time while working a full-time job. Having experienced a successful flip myself, I realized I never would have had the time to oversee the project had I not been unemployed and only going to school.  It consumed as much time as a full time job and required a great deal of supervision. If you want to learn about this area of investing, please don’t buy anything you see on TV. Most no money down ideas sound too good to be true because they are. I’ve also found most books to be less helpful than real life experience. The best way to educate yourself is to join a local real estate investment club. Join subgroups, learn as much as possible before you start and be sure to partner up when needed. Learn what works in real life and buy a few good properties. You don’t need 1000 units, just a few to have some security, but as they say, the sky’s the limit.

Studying the price history of gold and silver is fascinating. For over a hundred years the value of an ounce of gold was $20 and an ounce of silver $1. Silver historically has a ratio of 20:1 to gold, so eventually it should match that again - meaning the price should increase. At today's gold prices, we should expect that silver would be priced around $80 per ounce. There are various theories on why this is not the case including demand and industry fluctuations, the US leaving the gold standard and market manipulation. No one can be certain why the historic ratio is out of whack but we can infer that the ratio should correct back to historical averages. On the other hand, gold has historically equaled the DJIA. If this were to become reality again, either gold will skyrocket or the Dow will crash. In either case, I think holding a mix is a better option because of diversification and to have flexibility if you do need to purchase things in the future using these assets. It will take a strong person to lug a heavy bag of silver into a store to buy a nice TV. Why not just hand the cashier an ounce of gold instead? This was standard practice 100 years ago in the United States. Empires dating back to Egypt, Greece and Rome all traded in silver and gold coins. This was a time tested practice. Fiat currency systems are a rather new invention and don't have a good track record economically. Recent failures in the fiat experiment were witnessed in Zimbabwe and Germany to name a few. Because the historical significance of gold and silver is so proven, I recommend that everyone should own some as an investment and safety net.