In the last post I identified the personal savings rate as the most important measurement in personal finance (What is the Most Important Measurement in Personal Finance?) In this post I will teach you how to calculate your personal savings rate and how to interpret the results. Historical Perspective Americans are notoriously poor savers. The…
“Save” – the sum of all financial planning wisdom in one word. –Phil DeMuth, author and investment advisor Moneyball I recently finished reading the excellent book Moneyball, by Michael Lewis. The book tells the story of how the Oakland A’s, with a payroll well less than half of baseball’s glamour teams such as the New York…
Hopefully you have calculated your net worth. Now you might be asking yourself, “What does it mean? Is the number I calculated for my net worth good or bad?” As a financial scoreboard your net worth is useful but limited. It’s like having your score on the scoreboard, but not your opponent’s score. It provides…
I find the great thing in this world is not so much where we stand, as in what direction we are moving. -Oliver Wendell Holmes, Jr., United States Supreme Court Justice from 1902 to 1932 The Stockdale Paradox teaches that facing the reality of your current situation is a necessary step to improving it. The…
There’s no difference between a pessimist who says, ‘Oh, it’s hopeless, so don’t bother doing anything,” and an optimist who says, “Don’t bother doing anything, it’s going to turn out fine anyway.” Either way nothing happens. -Yvon Choiuinard, rock climber, environmentalist, and founder of the outdoor clothing company Patagonia Admiral James Stockdale was the…
A cliché and a joke about money and happiness: The cliché: Money can’t buy happiness. The joke: Those who say money can’t buy happiness just don’t know the right places to shop. My son, Colton, added the perspective of an adrenaline-seeking young adult when we were discussing this topic around the dinner table recently by…
