I am tired of hearing how investing is risky and how a house & a 401k are someone’s largest investments. Why is it hard for people to realize that these can be the worst investments you can make? Personally, a 40-year mortgage with an adjustable rate based on a bad credit report is extremely risky but droves of people signed up. And I’d imagine the same people who may now be in foreclosure still believe starting a business; self-managing a stock portfolio and holding real estate are risky strategies.
You want to know the ugly truth? Your home is not an asset. If you don’t believe me, answer this: Does it cost you money to own your home? Unless you operate a bed and breakfast or some other money making venture through the use of your home, your house is a liability. And your 401k? I understand it’s nice to know that in a few decades you will be a millionaire, but what about today? (Or what if the market tanks as you approach retirement?) If you and your spouse sacrificed your holiday vacation, continued driving that clunker another year or even canceled your XM subscription, forget the “don’t worry, we will one day be millionaires mentality!” Life is meant to be enjoyed day in and day out. (And with religious views aside) We have one life on earth, let’s live it to the fullest everyday. The simple cure? Don’t drop most of your income into a mortgage while hoarding the rest away like a pack rat into an untouchable fund.
Hey! Life isn’t all about money!
I completely agree there is more to life! However, if you are saying this, ask yourself:
Do I truly love working 40+ hours a week just to pay the mortgage, plan for retirement and occasionally splurge on soon-to-be closet clutter?
If you absolutely love your job and answered yes, stop reading. You are one of the lucky ones. Conversely, if you dream of working less, while making (or donating) more money, it is absolutely vital to continue reading.
[click to continue…]
