DISQUS

Russ · 1 year ago

Great post. I think emotions that manifest themselves through behavior is the most important factor in our ability to earn, save and invest money and our other resources. Unfortunately, it doesn't make for as exciting TV as does the regular fare on CNBC, etc. so most people aren't exposed to this.

Thanks for sharing.

Rassah · 1 year ago

Regarding debt and emotions, I actually had to deal with this one recently, but from a different angle. A friend of mine really hates being in debt. Any kind of debt. So he is trying as hard as he can to pay off his mortgage, his only debt, by putting all of his excess money into it. Thing is, he's not planning on moving out of this house in the next 20 to 30 years. My suggestion was to just pay the mortgage minimum, since he has a low rate and very low monthly payment, and put the rest into a different investment. What people rarely realize/think about is that 30 years is plenty of time for inflation to have descent effect. For instance, if you get a mortgage with a $750 a month payment, at 3% inflation 30 years down the road that mortgage will be the equivalent of $309 in today’s dollars. Hopefully your income will have grown considerably by then, too (at least by 2% to 3% as well). So, while feeling like you'll be stuck in debt for so long is uncomfortable and many people feel like they want to get out of it as quickly as possible, in some situations, including his, this debt will soon become quite negligible, and with the time effect of compounding interest, this friend of mine will be much better off putting his extra money into investments with a better return.

Ron · 1 year ago

Thanks for the mention Flexo. My wife and I purchased a house one time based solely on emotion. This was the ONLY house for us and no other would do. Not only that, but we were under some severe time constraints. Biggest mistake of my life ... live and learn, right?