Wednesday, June 13, 2012

Big homes are a mistake

Too much house – biggest personal finance mistake

Do not spend more than you earn. Everyone knows this. The one exception is your home. Not an investment home, but the personal house you will live in. You of course need a mortgage. But the biggest mistake people make is their eyes get too big when purchasing a house. A big home is a financial mistake and in my mind a sign that you have an ego problem.

You need to be in a financial positive to maintain a positive cash flow over a lifetime. This is real security. Learn the economic lessons others are paying for with their life savings when their house is foreclosed on.

I believe in the cash flow theory of security. In fact, I use to have a bumper stick in my room as a teen, that said ‘happiness is a positive cash flow’. I am writing this not out of arrogance or I know better, but because I personally see people’s lives destroyed by big homes. A rich man is one whose income exceeds his expenses, whatever that level of income is. Read more.....

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