The word “investment” gets tossed around a lot. Just about anything can be called an investment these days. The definition of an investment is the purchase of something with the expectation of favorable future returns. We tend to think about financial returns when we talk about investments. But, even if there isn’t a reasonable expectation of a financial return, we often still describe a purchase as an “investment.” Here are three things that may not actually be investments — even though we talk about them as such:
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Sometimes, what makes sense on the surface actually makes no sense.
I just scheduled my first ever mortgage payment, and I am pretty impressed with the simplicity of Bank of America’s interface. Choose the source account, schedule the date of delivery, the amount to be paid, and if you want to apply any extra to the principal. Click, click, and you are done.
The payment is now scheduled to be made on the same day payment is due, some two weeks from now. I know the majority of you don’t make payment until the day it’s due (hey, I just decided to do the same), since everyone knows the benefits: no interest free loan, better to keep the money with you etc. But is it really worth the hassle? Are you actually benefiting from schedule the payments at a later date? Here are five potential problems.
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Sooner or later, just about everyone ends up needing to rent a car. Whether it is because they are on vacation and need a set of wheels, or their own car is in the shop and a rental becomes a necessity.
If you have looked at prices lately you know that getting a car, even for a short period, can be expensive. Advertisements may imply that you can rent something for $19 a day, but once you tack on extras, the price skyrockets.
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Most people dream of winning the lottery, but most people underestimate the impact of such a extraordinary event. Whether you are ready or not, cashing the winning ticket is almost certainly a life changing event.
A couple weeks ago, our family decided to try our hands on a lucky game called the lottery. It was fun. After all, the jackpot was over $100 million dollars. I don’t know about the others, but I had a few dreams of my own that I wanted to fulfill. Of course, we didn’t win, but while looking at the options of cashing out, I noticed that you could either cash out in full, or get multiple annual payments for the next 26 years.
Many of you probably talked about this amongst your friends before, so I’m curious to know. Would you take the cash, or would you take the 26 equal payments over many years?
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With home values still relatively low, it can be frustrating to try and increase the value of your home. You might not have the financial means to remodel, and the chances of recovering the costs associated with such a move are slim at best. However, if you have a little extra cash coming, say due to a tax refund for example, you might increase the value of your home, and your enjoyment in it by considering some spring simple touch-ups:
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Are you willing to sacrifice?
Last week’s money mailbox featured a long time reader who was running out of money. One of the steps seemed obvious to many outsiders who saw the situation clearly: cut that cable and save at least $50 – $100 a month. It was easy for us to make the suggestion, but it must be very difficult for the elder lady. After all, watching cable television was one of the few activities she still enjoys.
Cable is one of those services that I constantly tell everyone to cut down. That $100 cable bill, while a big waste of money, is affordable for many of you. When I talk about it, some of you always retaliate and I back off. I do it because you are right. You can afford the monthly cost, and this is just a personal choice.
But before you write everything off as “I have the money and it’s my choice”, please consider what you are risking.
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