I started saving just a tiny bit, and then as I made more cash online I started saving a lot and I spent very little. This was the total opposite of what I had done for 30 years. My savings grew, I made some investments and I started building wealth.

Then…I started investing in my little Internet operation. I started hiring people to do things and grow, which was smart. But! And this is a big but, in the process I started losing my newly formed habit of saving - the reason being that I reinvested every last cent and never accumulated anything in my business account.

This worked well for a while as traffic grew but I always assumed whatever I was investing in would keep bringing me greater returns, or maintain the returns. I never thought that all my investment could be rendered worthless or worth much less at the flip of switch. Therefore, I never saved in my business any of the good returns I had for a while. So now I’m left with much less cash flow and no business savings.

My lack of discipline saving in my business also corroded the good habits I formed with my personal expenses. I saved much less than I could have and I stopped keeping my cash flow sheet.

So my lesson is this: I must always save something; hold on to some wealth and let it accumulate. Even if the intention is to invest and grow, a portion must always be carefully saved (not necessarily in cash). I think even the governments of the world could apply that lesson.

The golden rule is that he who owns the gold makes the rules!

“The top .1% of taxpayers in the US, people who make more than 1.8 million annually receive $82,000 in tax returns while Americans earning between $27,000 and $47,000 get a $20 return.”

– May 11, 2006 ABC News

The more money you have the better accountants you can hire and the more financial knowledge you have the less you pay in taxes.

That’s nothing really compared to recent Wall Street bailouts by the US Government and equivalent European bailouts bank bailouts by the Central European Bank. The large powerful  financial corporations should have failed because of careless investing but instead they were given money by the government. How many small businesses and average citizens received money, zero. Meanwhile the public is outraged as the managing officers of these companies are paid millions in bonuses.

It’s always been that way throughout history and will probably always be that way. Those who have money also have the power and influence and can control or greatly influence  government policy and action. Politicians need to return favors.

What does the world’s greatest investor Warren Buffett say about diversification?

“Diversification is only required when investors do not understand what they are doing.”

There you go, right from the horse’s mouth. Diversification is ok if you don’t know anything about money and investing but it’s not a recipe to win, just to be safe.

Nevertheless when reviewing our tiny holdings Sally and I are pretty diversified. We have some savings in the bank, some Gold and Silver bullion, our 2 small rental flats and my internet business / Website income, 4 different asset classes, more or less.

I really like physical assets, things you can taste and touch that have real value. I guess the Web sites aren’t so physical but that’s my business so there’s not much I can do there. But paper assets don’t thrill me because you always have counter-party risk. What if the company you buy the paper from goes belly-up? Your certificates are worth nothing. But if you own a house for example, that’s a real physical asset, not a piece of paper or a bunch of numbers in a computer.

Then again, managing physical assets like properly is hassle. That’s what I like about Websites, everything is built and managed online, it’s just so convenient! It’s all a question of what comes most natural for you I guess. Where can you have success in investing with the natural abilities you have?

We started our blog to try to make up for our little housing investment blunder (which still loses us money by the way, especially with community voted work and repairs) so maybe other people could learn from our mistakes and improve their financial education. Although I quickly discovered that there wasn’t much to say about our limited investing experience so i would have to cover as much personal finance as possible.

Get Rich Slowy is very similar but instead of starting it to make up for an investment blunder it was started as the author found himself deep in debt and in the beginning stages of turning his financial life around and just decided to share his findings with everyone.

I found myself in a similar situation about 7 years ago (wow, time flies.) That’s when i started learning about money and not too long after – paid off my debts and started building my semi-passive online income.

This is a really nice resource for anyone interested in learning more about personal finance. And it has a great name by the way.

So a 401(k) is a seemingly good deal right? Wrong! At least I don’t think so.

While you are contributing money to the 401(k) account you don’t pay taxes but when you decide to take it out, come time to retire, you get taxed at the highest level. But that’s not actually the worst part. In my opinion, the worst thing about 401(k) is that your money is actually invested in the stock market, in mutual funds. It’s not safe and sound tucked away in an account accruing interest. If the stock market tanks, and recent events shows us that it can and does, you can lose a good portion of whatever you saved.

Basically, it’s very risky and not too smart in my opinion. You hand your money over, not really tax free, and you can potentially lose it all in a stock market crash. You would actually be better off just saving it in a bank account, as the lesser of two evils. Of course, your cash will also lose value as the US government prints more and more debt and devalues your dollars.

Has there ever been such an important time like the present to improve your financial IQ?

A bond is an IOU, or in other words, a debt security (A security is an investment asset).

Governments or businesses issue bonds to borrow capital. In return for the money they receive, the bond issuer promises to pay back the bond on the due date and pay interest on the bond from the time of issuing it until its due date.

A treasury is simply a bond issued by the US government.

Not just the US, many governments all over the world issue bonds to finance themselves and this is one of the reasons the world’s economy is in such a mess. Governments seem to be the worst examples for society. They can’t even spend within their means and stay out of debt.

I remember going for a walk with my dad a couple years ago and he regretted not buying US government issued bonds when he was younger to build his wealth over his lifetime. US bonds and treasuries are only backed by the “full faith and credit” of the U.S. government. I’m not sure that’s a safe investment any more. In fact, I wouldn’t want to touch it with a 10 foot pole.

As we already know, the US government will probably print its way out of debt and make the US dollar worthless, instead of making hard choices like cutting spending and benefits. They will probably do what it takes to stay in office and avoid public protest like that we’ve seen in Greece. How much longer can they delay the inevitable?

There are various types of brokers – commodity, insurance, stock, investment, real estate, etc.  It is vital to get a broker that can maximize your investments and at the same time share your common values and personalities.  Below are 4 simple steps you can follow in selecting your broker:

Step 1: Set your goals

Like any other venture it is a must to establish first your targets.  Determine how much are you investing, how much return you are expecting to gain and when do you want to get it, or how much risk you are willing to take.  These are basic questions that need to be answered to give your account executive an idea on what he needs to accomplish with your investments.  When objectives are set, you can evaluate anytime if your investment or broker is doing good or otherwise.

Step 2: Ask around

If you have friends or colleagues who have invested in the past or acquired the service of a broker and can recommend a good one then better for you.  You can also contact authorized government agencies such as the National Association of Securities Dealers (NASD) and other trusted organizations who can suggest good and trusted brokers.  This is also the best time to conduct background checkup of each brokerage firm and their list of representatives.

Step 3:  Make a shortlist

After all those researching and asking around it is now time to list some prospects.  You can schedule a meeting or interview to know more about them – education, experience, personalities, customer references, fees and commissions, etc.  You can do these through phone or in person.  This will initially establish your relationship with your soon-to-be broker.  Tell them about your financial goals or what you know about securities business and the things you want to learn.  Observe how they respond to your questions and if your plans coincide with his or her skills.

Step 4: Look for positive traits

You will be talking, discussing, and negotiating with your account executive majority of the time so it is highly recommended to choose one that you are comfortable working with.  The securities industry is quite complicated may give you some difficulty once in a while.  Do not hesitate to ask your account executive for any information regarding a transaction.  Also, do not be intimidated if you hear a technical term for the first time or not sure what it meant.  This is the best time to inquire and learn a lot from your broker.  He must be patient enough to guide you in every step of the way.  Do remember that every decision of your account executive has an effect to you and your investment.  It pays to know!

As expected, credit card companies and other lenders are glad to make accessible as much money as they believe their borrowers will repay.  They assume risks, but those are calculated risks.  They look at default rates, current interest rates and cautiously evaluate credit history when they make loans.  Borrowers can gain by following a few aspects of their strategy.

Prior to taking out new credit, think about the chances that you will have to default on repayment.  Don’t factor in to your assessment the prospect of deliberately defaulting or filing bankruptcy.  You’ll find the outcomes are hardly ever worth it and that should be set aside as a very last resort.

You can factor in anticipated increases in income - banks and other business do - but you should be very sure you’re really going to get it.  A promised salary increase or hoped for income from a stock sale is far from sure money.

Consider current interest rates and make a forecast about where they are directed, businesses do.  That’s a very complex thing to be certain about, but general trends are not accidental.  Look at bonds, futures and other indicators.  If 6% bond option prices are coming down, lots of pros are gambling interest rates will go up to above that in the future.  These correspond to the bets of professionals about the future course of inflation and interest rates.

View your own credit history the same way a bank would.  Try to see it from their standpoint.  Would you loan yourself $10,000 at 7% for 48 months?  Avoid justifying late payments or defaults.  You may have had a valid reason, or you may not yet have developed the resources (inner and financial) to pay back all your debts on time.

Think about your total income and expenses logically.  You may badly wish for a new car, but can you pay for an additional $500 per month without sacrificing basics while still meeting your present obligations?  Be truthful with yourself.

No one can decide for you whether it’s worth putting on an ongoing $200 per month credit card payment at 12% just to have a luxury you’ve been yearning for.  You may value having the item today more than you value the additional money it will cost you over what you keep by saving for it.

But you should at least ponder it.  Impulse buying is the most familiar way credit card users get in over their heads, financially speaking.  See the possibility that if you hold back (and saved for, say, a year) you will have both the item and something else you can buy with the money you would have paid in interest.

Evading the fact, if it is a truth, that you can’t really afford the payments is the most certain way to get into financial trouble.  That kind of dilemma can take months or years to escape from.  Think long term, be practical, and you’ll be able to settle on what is the right amount of debt for you.

One of the most frequent options is a Stafford loan. Hundreds of thousands of students have utilized this as a means of partly financing their education and they do have some helpful aspects.

The Stafford loan has no pre-payment penalization - you can pay off any outstanding balance any time. There’s no credit check performed, so approximately everyone will be eligible. There are no payments necessary while the student is taking courses, provided they sustain at least a half-time status. After getting out of school there’s a six-month allowance during which no payments are obligatory.

But there are restrictions on the amount that can be borrowed in a year. Also, although Stafford rates frequently look attractive relative to normal loans, they hold extra charges that can make the cost of borrowing bigger. Up to 3% in fees (plus a 2% Federal ‘origination fee’ and a 1% Federal default fee) can be applied.

Further, there are programs in which the repayment is made over a 10-year period. That may sound appealing given the relatively low monthly payment it normally includes ($116 per month in the following example). But the amount of interest piled up on a 7% loan of $10,000 (and nearly all students borrow more) over 10 years is: $3,933. That’s more than 39% of the principal amount paid in interest; absolutely, not cheap money.

Even if it may involve beginning repayment right away, a lot of parents attempting to help finance their son or daughter’s schooling will find it useful to look into other options. Even students should try to look for other ways, including a combination of grants, scholarships, and standard loans paid back with money earned from part-time job.

Savings plans, evidently, are one of the best options to explore and the earlier they’re started in the child’s life the better. The risk with all such plans is that inflation, financial crises, and other irregular elements can have that investment to be worth extremely little by the time it is needed.

Consider options - tax-free municipal bonds, inflation-adjusted hedge funds, and others, for instance - that can help make up for those effects.

Unfortunately, there is no simple way to finance today’s high cost of education; however doing the basic homework to investigate all alternatives will save all concerned time and trouble in the long run.

A secured loan is one in which the money borrowed is assured to be repaid or a number of asset will be forfeited.  The most general example is a home loan.  The borrower agrees to pay back on the terms of the contract, and if he or she defaults, the lender can legally take the home as payment.

In principle, that means that if you miss a payment on the home loan, the lender has the lawful right to foreclose and sell the assets.  In practice that never takes place.  Among other rationalities, lenders know that reclaiming a house is a time-consuming, unpleasant task and they would be left with the inevitability to sell the home to get back the money.

No lender is going to do that for such a small slip-up as missing a single payment.  Even if the borrower lags by quite a few months, at most the lender will normally send a series of firm letters requiring payment before taking any other step.  Even in an active seller’s market, lenders have lots of important things to do and don’t like to carry out efforts of getting rid of a homeowner and selling a house.

Even so, it’s clever to understand that the lender has this right.  How important or not that right is can be evaluated by knowing that even with an unsecured loan, creditors have the lawful right to grab hold of assets like salary, stocks and property.  This calls for only undertaking a fairly simple and inexpensive legal course of action to proclaim the borrower in default.

But, legal procedures are only reasonably uncomplicated and inexpensive - and lenders will almost at all times try to figure out a repayment alternative before choosing that step.

There are further differences between secured and unsecured loans that borrowers should be mindful of.  Since the money in an unsecured loan is not, in essence, supported by the right to seize the property in case of default, the interest rates on them are typically higher.

The lender in that case is taking a bigger risk, and they are rewarded by charging larger interest.  That covers losses from nonpayment (which are higher on unsecured loans) and is one way to alter borrowers’ incentives.  Nearly everyone will more effort to meet a debt that is coupled to their home over an unsecured loan.

So, there are advantages and disadvantages for both borrower and lender to obtaining one type of loan over the other.  As a borrower, you may find it essential to take a higher rate of interest if you don’t have a house, bonds or other assets to offer as collateral.  Or, you may just want not to put those at risk.

Only you can make a decision in your particular situations whether the benefits outweigh the risks and costs.