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If You’re Renting Your Home You Need to See This

I was in my late 30s and still renting. I knew I was throwing money away each month. Hundreds of thousands of dollars down the drain by then. I knew I had to do something about it. But just thinking of scraping together a down payment and paying a mortgage on pain of losing the house seemed overwhelming. Then I did the actual math and realized I actually could afford to buy a home. A couple of months later, when I first stepped into the first home we owned, the feeling was indescribable. Now, doing the math to compare renting to buying in general, I show that (with a few important exceptions) if you're renting you need to seriously consider buying a home as quickly as possible. Here's the proof.

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Save Money on a New Car in 4 Simple Steps - A Definitive Guide

Since arriving here in 1992, I bought a grand total of 5 cars. Each time I bought a car, I learned something new. For example, I learned that it’s much better to buy cars new and drive them for at least 10 years. Next, I learned the importance of buying reliable cars that get good gas mileage. I also learned the critical importance of a good credit score. The most important thing I learned is that even if you're not a born negotiator, spending some time to educate yourself on the market for the car you want can save you thousands of dollars. Here's a step-by-step guide on how to do that.

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How a Side Hustle Lets You Reach Financial Independence Faster

There are three separate but related ways to reach financial independence earlier. Increase your savings rate, decrease your planned retirement budget, and/or increase your income while investing the new money. Any of these will work. The first two are harder to sustain than the third, but even that one isn’t easy. Here's a table that shows you in actual numbers what it would take.

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Why Buying a New Car Makes More Sense than Buying Used

You’ve thought about it and ruled out walking, public transportation, Ubers, and even renting a car only when you must. None of that works for you. You’re getting a car of your own and that’s that. Your options are to (a) buy new, (b) buy used, or (c) lease new. Which makes the most sense? Many financial experts will tell you that buying a used car is your best bet. Here's why they're (mostly) wrong.

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Here’s How to Shock-Proof Your Retirement Plan (Once You Have One…)

Dad was several years older than Mom, and toward the end of their lives, in poorer health than hers. "Do you guys have a plan in place to take care of you if and when Dad passes away before you?" I asked. For obvious emotional reasons, she refused to even think about it. Less than two years later, Dad passed away and we had to scramble to make sure Mom was financially secure. Dad’s pension and social security benefits dropped more than 40% once he passed, while Mom's expenses dropped by only 20%. Shocks like this can derail your retirement plan, if you even have one. The following details some of the more likely shocks, and tells you how to keep your plan on track.

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Over a Trillion Dollars! The Costs You Pay for High Credit Card Debt

Credit card debt in the US recently topped a trillion dollars, $1.08T, according to debt.org. That’s over 26% of the $4T-plus total US consumer debt. On average, each household with credit card debt owes nearly $8400 on their average of four-plus credit cards. If you’re part of those statistics, do you really know all the costs you pay? Check it out…

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How to Safeguard Your Retirement Plan from the 7 Biggest Risks - Abridged Version

You spend a lifetime working hard, and saving as much as you can for when you no longer can or want to work (a.k.a. retirement). The last thing you want is to get to that point, only to have something devastate your retirement fund just as you're about to start drawing it down. Here are the top 7 risks, and what you can do to minimize them.

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You May Need a Lot More (or Less) than you Thought to Retire

The well-known 4% retirement rule says that you can expect to safely withdraw 4% of your retirement portfolio in your first year of retirement as your initial draw amount. Inverting that, you'd need 25x what you expect to need in your first year in retirement. However, new research points out that your personal situation can change your personal safe withdrawal to a lot more or less than 4%. Here's what that research says.

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Here Are the States Whose Residents Are Really Best at Managing Their Money

CreditCards.com recently reported that the state whose residents are best at managing their money is South Dakota, followed by Montana and a three-way tie between Wisconsin, Maine, and Vermont for 3rd place. This ranking places Texas, Maryland, and Washington DC at the bottom of the pile. As a Maryland resident, I smelled something fishy here, so I started digging at the data. Here's what I found.

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Why a Roth IRA Is Almost Certainly Better for You than a Traditional IRA (and When It Isn't)

It was 1993 and I was a post-doc at Texas Tech. I had just had a conversation about saving for retirement with a grad student from UCSD. Although he was still in his twenties, he was already setting aside money and investing it for retirement. I guess I should be doing the same, I thought, and invested in a traditional IRA. Back then, the Roth IRA had yet to be established. Now that it is available, you would most likely be better served by a Roth than a traditional IRA. Here's why, and the few situations where it might not be so for you...

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3 Things You Need to Know About Advice from Financial Gurus (that They Won’t Tell You)

I love quotes with a delicious twist like “It ain’t what you don’t know that gets you into trouble. It’s what you know for sure that just ain’t so.” or “Always remember that you are absolutely unique, just like everyone else…” (apparently both mis-attributed, the first to Mark Twain, the second to Margaret Mead). Here’s another, that may have originated from Albert Einstein, “Everything should be made as simple as possible, but not simpler.” So, what do all these quotes have to do with advice from financial gurus? Simple (pun intended), finances are complicated, the right thing to do depends on your unique circumstances, and following gurus’ advice slavishly will frequently get you in trouble because you think you know something, but in your specific case it may just not be so. Here are some examples where advice that's great for most people may be the worst advice for your personal situation.

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Easily figure out your average expenses (and a plausible budget)

Article after article on personal (and business) finance exhorts you to create a budget and a financial plan. You’re finally (reluctantly) willing to do it. But if you’re gonna do it, you really want to get it done already. Waiting with that budget for months to track your spending doesn’t cut it. You wish somebody would tell you at least if your spending is in line with your income, without having to go through every line of every statement of every account for the past year! Well, wish no more. Here’s a quick hack that will tell you exactly how much you spent in the last 12 months by just adding and subtracting a few numbers, and help you create a plausible budget from it.

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Three simple secrets to financial success (that don’t involve budgeting and forgoing a daily latte)

“When I was trying to buy my first home, I wasn’t buying smashed avocado for $19 and four coffees at $4 each” - Tim Gurner, Australian multi-millionaire. Deriding millennials for eating out too much isn't new, nor more true of them than other American generations. Any number of financial gurus have repeatedly suggested that people bootstrap themselves out of financial problems by brown-bagging lunch instead of buying a sandwich, forgoing a daily latte, or avoiding any other of a host of small daily or weekly purchases. However, that advice simply ignores our humanity. Here are three simple ways that don't involve denying yourself small daily pleasures, that are mostly within your control, and that will help you reach financial independence more quickly.

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Achieve Financial Freedom by Asking Yourself This Before Buying Anything Significant

... and It Isn't "Do I buy or not?" As I shared previously in "Embrace Your Humanness – A Practical Guide to Having More," I would have been better off had someone shared with me this hard-won piece of financial wisdom when I was 30. It was November ’92, and I was looking at the first car I’d ever buy in the US, a 3-year-old 3.8-liter Ford Taurus LX. Buying it took most of my cash on hand, plus $6000 borrowed at 10.4% annual interest rate. The payments were almost 10% of my after-tax salary! I could have, heck, should have found a car that cost half as much, even if it meant buying a 5- or 6-year-old midsize. But I was hooked, and the used-car salesman reeled me in. Here's what I wish someone had taught me.

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Should You Buy or Rent a Home

I recently read a piece called “Buying vs Renting A Home (DEBUNKED),” where the author makes the case that renting is much better than buying for a variety of reasons mostly having to do with how little of your mortgage payment goes toward the principal for many years, and all the other expenses of home ownership. As a landlord myself, I’m all for people wanting to rent, especially my properties :). However, I believe most people in most situations would do better buying their own homes. Here's why.

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Make a Massive Difference in Your Life Through 1% Changes

When I moved to the US many years ago, I was married plus two, just out of grad school, and in debt. My salary was a whopping $31,000, and being over 11,500 miles from home, Ramen noodles frequently served as dinner— you know, the type that comes dried, powdered, and sells for under $0.30 a packet? When we discovered that a hot meal at a local hospital cafeteria was under $3, that became our new go-to place for lunch. Creating a plausible budget and sticking with it wasn't easy, so I was always on the lookout for opportunities to improve our situation. Fast forward many years, and our situation is frankly unrecognizable (in a good way). Here's what worked, and how.

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Embrace Your Humanness – A Practical Guide to Having More

At first glance, personal finance may seem disconnected from running a practice, but it’s really all part of one (financial) system. How much you need to support your family informs how much you need to charge clients. Your ability to control spending at home translates to a similar ability in your practice. What’s left over after you cover business expenses determines what goes into your personal account. Here's a simple painless strategy for saving a lot more for the future without scrimping on your current budget.

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I Have Good News and Bad News for You

I love telling stories, and this time I have a few short ones to share that all combined in my head and led me to an important insight on dealing with the ups and downs of life in general, and our practices in particular.

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Reframe Your Procrastination to Power Breakthroughs in Your Practice

Mark Twain jokingly attributed to Benjamin Franklin a celebration of procrastination – “Never put off till to-morrow what you can do day after to-morrow just as well.” Joking aside, I’ve come to appreciate my own instances of procrastination as a deep probe into what my mind shies away from. If you’re like me, when you find yourself procrastinating, it’s almost always because your subconscious mind finds the task overwhelming, unpleasant, or unclear. Here’s how you can reframe that procrastination from something you might be ashamed of to a source of breakthroughs, both personal and in your practice.

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5 Secrets You Can Use to Achieve Long-Term Success - Part 2

In the first part of this article, we looked at how acknowledging our emotional/cognitive limitations is a crucial, if perhaps non-intuitive part of your long-term financial success. I also explained why I disagree with financial “gurus” and much of their advice on buying homes and prepaying mortgages. In this part, we start with another non-intuitive but compelling factor to your success, follow with a system/process “secret,” and conclude with how and why opening your own practice can be a critical part of your roadmap to success.

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5 Secrets You Can Use to Achieve Long-Term Success - Part 1

If you’re a fan of Suze Orman or Dave Ramsey, this article will challenge you. My advice on how to achieve financial success is very different from what such financial “gurus” have to say, but I have good reasons for it as you’ll read here. While I don’t know of any way to get rich quickly without unacceptably high risk (e.g., playing the lottery or day trading), you can achieve long-term financial success. Good fortune (think great stock market returns or marrying somebody who’s already wealthy ;)) helps but isn’t up to you or me. In this two-part article I cover five things you can control in your professional and personal life that help achieve long-term success.

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Lessons from My Accidental Journey into Entrepreneurship

Have you ever found yourself in a job where you’re required to do things you don’t care to do, paid less than you’re worth and less than others in similar positions, underappreciated by your supervisor, and with no path forward? That’s exactly how I felt. Despite years of attempts to change things without leaving, or to find a position at a different institution, I couldn’t seem to get unstuck. After 16 years with a mostly stagnant salary, fear was stopping me from making the sort of radical change that was my only hope. This was not a situation unique to me, and my journey from that low holds some important lessons about entrepreneurship and starting your own private practice.

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How to Make Your Kid a Tax-Free Millionaire

Year-end is a good time to think about your taxes, especially in a year that saw the biggest changes (like them or not) to our federal tax code in more than a generation. The famous (and often misattributed) quote goes, “‘Tis impossible to be sure of any thing but death and taxes.” (Christopher Bullock, 1716). More than 200 years later, medical researchers keep trying to disprove the certainty of the former, while Washington DC keeps proving that of the latter. A while back, I found a loophole that lets you legally help your teenager become a millionaire without his or her paying a dime of income tax, for less than $20,000! This loophole seems to be unaffected by the new tax law, and I can show exactly how to take advantage of it.

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The Best Way to Pay Off all Your Debt

We’ve all been there. Student loans to help pay for tuition, a business loan to help rent an office space and furnish it before you see any paying clients, or credit card debt to cover expenses while you start building your practice – it’s tough to get your education and start a practice without incurring debt, and usually many sorts of debt. If that describes you, what’s the best way to pay off all that debt?

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Retirement Plans for Solo Practitioners

Retirement plans are an important topic for solo practitioners, which I plan to cover more fully in my upcoming video course. However, I don’t want to hold off

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