My wife has an interesting theory about the people on the show Extreme Couponing: They are really just organized hoarders!
A TLC "Extreme Couponer" Digging in the Dumpster for Coupons
How can you not come to such a conclusion? As seen on the show, they turn their entire garage into store-like aisles full of goodies they got for “free”. They have rows upon rows of frivolous items such as +800 toothbrushes or +500 sticks of deodorant. How about the sacred 6-inch thick binder that is packed full of coupons but is still somehow categorized? My personal favorite: When they go dumpster diving looking for newspaper circulars! Heck, in one episode I saw, they even bring along their kids and friends! Yes, people do some pretty crazy things to save a buck.
Before I upset any couponers, I want you to know that this post is not about you. I applaud any and all attempts to try to responsibly save money. If couponing has made a dent in your budget, then good for you!
No, what worries me is the false prescient that this show about extreme couponing will give to the general public: That spending all your time couponing is the best return on your effort.
It’s one of the oldest clichés in investing: “Time” is an investor’s best friend.
Unfortunately, few people ever fully take advantage of this concept or grasp just how it works. So why is “time” an investor’s best friend? In two words:
• Compound interest.
There’s an urban legend that Albert Einstein once said that “compound interest is the most powerful force in the universe”. If he did, he was right. Consider two scenarios:
Which one would you rather have? How can it be that one is worth way more than the other?
This is the power of compound interest:
• Eventually you will make MORE money off the build-up of returns from your earnings than off the original money that you put in.
I will show you an example of why this is.
Click the image to visit Amazon.com
No, this isn’t a mistake. I didn’t just publish the same post twice. This summer, I read two separate books titled “Aftershock”. Each one was about our economy and fortunately they were both outstanding! For my review of the other “Aftershock” book by Wiedemer, Wiedemer, and Spitzer, click here.
“Aftershock” by Robert Reich was a liberal perspective towards understanding our economic mess, what it could turn into, and how we can solve it. The theme of this book is simple:
• Without change, the middle class will not be able to sustain our economy.
Wow. That’s all I can say about this book. Wow. If everything they predict in this book is coming true, we are all in TROUBLE!
Aftershock: Protect Yourself and Profit in the Next Global Financial Meltdown is a book about economic “bubbles”. In short, a bubble is when the price of something grows out of control beyond its true value. Eventually, the erratic price becomes unsustainable, and the bubble “pops” meaning that it rapidly drops in price. Bubbles are nothing new; they can be found all throughout history. Some examples of recent, prominent economic bubbles include the “dot.com” bubble and the “housing market” bubble which many of us are still suffering.
This was very exciting read. It was written in 2009, and some of the events of 2011 have leaned towards their otherwise haunting predictions. The authors vividly and thoroughly explain away the financial breakdown of the past decade, explain why our current recovery is basically artificial and a fake, and paint a very bleak picture of the world to come.
Let me be the first to say “Congratulations”! Despite the intimidating packet of papers you need to review and fill out as well as the dozen 401k questions you probably have, this is a great opportunity for you!
Not only will you be starting down the road to financial freedom (in other words: retirement), but you’ll also be given the opportunity to make FREE MONEY! Yes, I said free money! Why is it free?
1) The money you put away comes out of your paycheck BEFORE taxes and it grows tax free until you retire!
2) Your company will likely (as a lot of companies often do) kick in a little bit extra cash in addition to the money you plan to put away. Who wouldn’t take a little extra money for free!
Without further ado, let’s see if we can tackle some of your 401k questions with a few of the topics below:
/ Tags: 401K
, 401k questions
, asset allocation
, free money
, Stocks & Investing