LIVING OFF DIVIDENDS & PASSIVE INCOME

I just read an article about a reporter who had his finances critiqued by a group of multi-millionaires. The results were surprising.

Tiger 21 is an investment club, where members get together once a month to discuss money. They share investment ideas and personal finance tips. Membership at the club costs $30,000 a year, so it’s definitely not cheap. But guess what, rich people love talking about money. Maybe, that’s why they’re rich to begin with?

The reporter submitted his personal finances and agreed to have the members give him advice. He thought they’d tell him to stop spending so much on eating out. Otherwise, he thought he was in good shape.

But they didn’t care about how much he spent on eating out.

Instead they gave him some really good advice.

One, start saving more.

Saving just 10% of your income isn’t enough. He could easily bump it up to 15%.  Read more... (575 words, 8 images, estimated 2:18 mins reading time)

Some of the best advice is timeless. Here’re some nuggets of wisdom from the late Harry Browne.  Read more... (176 words, 9 images, estimated 42 secs reading time)

• Your career provides your wealth
• Don’t assume you can replace your wealth
• Recognise the difference between investing and speculating & speculate only with money you can afford to lose
• No one can predict the future
• No one can move you in and and of investments consistently with precise and profitable timing
• No trading system will work as well in the future as it did in the past
• Don’t use leverage
• Don’t let anyone make your decisions
• Don’t ever do anything you don’t understand
• Don’t depend on any one investment, institution or person for your safety
• Create a bulletproof portfolio for protection
• Keep some assets outside the country in which you live
• Beware of tax-avoidance schemes
• When in doubt, err on the side of safety

Regular readers know I’m currently pursuing an MBA. What they don’t know is that I’m currently taking 6 classes plus an Applied Management Research project which is almost twice the usual workload. I’m a third of the way through the quarter and I’m already feeling burnt out.

To help take my mind off things, I decided to look at vacation packages. Once my quarter gets over, I might travel for a week.  I’ve been dying to visit South America or the West Indies for quite a while. Several packages look pretty good. And by  good, I mean from the aspect of being good value for money. Yes, I like to travel cheap, or as I like to emphasize, I’m a price-conscious consumer. Some of the places that had good deals were Costa Rica, Puerto Rico, and Mazatlan. Argentina also looked enticing, but the flights were slightly more expensive. One of the things I noticed was that my Discover Card was offering 5% cashback on travel booking until the end March 2010.  Read more... (483 words, 9 images, estimated 1:56 mins reading time)

Suzie Orman is a famous financial planner who appears regularly on TV and is a prolific writer. I’m not a big fan, mostly because her ideas are too simplistic for me although they must appeal to a lot of people who have no knowledge of financial information.

But now and then she has a good nugget of information. Check out this short clip about paying off your home mortgage as soon as possible.

The only counter argument I can think of is inflation.

If you bought your house in 1980 for $50,000 and never paid off the mortgage (that wouldn’t be possible unless you refinanced the home loan along the way), the value of $50,000 today is a lot lower than it used to be 30 years ago.

But on the flip side, the mortgage interest tax deduction on $50,000 is rather small too. So maybe you should send in that extra $100 every month!  Read more... (204 words, 10 images, estimated 49 secs reading time)

You must have read the recent post about the New York Times economics reporter who is facing foreclosure himself. Edmund Andrews covered the US economy and Alan Greenspan for over six years, but despite his financial accumen still got suckered into a loan he couldn’t really afford. He hasn’t made a mortgage payment in 8 months and is wondering when the bank is going to throw him out of his house. Instead of making his payments, he has been busy spending money on a beach rental, clothes, gifts and other necessary expenses. At some point, I think foreclosure is inevitable.

But could he have avoided foreclosure?

I think so. Let’s review some of the financial mistakes he made. The real ones, not the excessive spending that set in once he stopped making house payments!

1. He divorced his wife of 21 years  Read more... (707 words, 9 images, estimated 2:50 mins reading time)

Yesterday I got a call from American Express.  I was curtly informed that my True Earnings American Express Cash Rebate Credit Card limit was reduced 90%.  It isn’t a really big deal because I don’t need that sort of limit. I’ve never used more than 40% of the limit anyway. But I was still pissed. It’s very useful when traveling and I enjoy the cash rebate I get with the card.  I’ve been putting my tuition on it and then paying the balance off, which allows me to get some free cash.  Some of the benefits include:  Read more... (445 words, 9 images, estimated 1:47 mins reading time)