Guest Contributor on Money Questions and Answers Blog

The Opportunity Cost of Debt You Are Holding Onto in Life

Opportunity Cost - How Debt Is Ruining Your Life

The following is a guest post from the crew over at Kasasa, a financial technology and marketing services company for the banking industry. Kasasa provides local banks and credit unions with marketing, resources, and innovative products including free checking. If you haven’t checked out their services, I highly recommend you do so and find an institution near you that offers Kasasa’s free checking.

It’s hard to avoid debt.

Without it, the idea of buying a home or going to college would be unattainable for many. Even the people who we see as successful or enviable most likely have debts in some form.

So how can you utilize debt to grow your worth without digging a hole you can’t get out of? Simple: minimize the opportunity costs of the debts you hold.

What is opportunity cost?

In laymen’s terms: opportunity cost comes down to weighing your options and calculating the most efficient path to achieve your desired outcome.

It’s represented by this equation:

Opportunity Cost = Return of Most Lucrative Option – Return of Chosen Option

Why is opportunity cost important?

Since debt has become such a norm for many Americans, we’ve lost the urgency to get out of debt. The mindset can easily become: “Well, these minimum payments are so small, they don’t really impact my lifestyle. Why should I rush? Being in debt isn’t so bad, right?”

Wrong.

This mentality will cost you in the long run. Let’s look at a practical example that will reveal just how much you ultimately pay for your debt. And how much you could be saving if you calculated the opportunity costs of your debt now.

Example:

Let’s say you have $30,000 in student loans you need to pay off over the course of 40 years at a 5% interest rate. That’s a pretty long time to pay off your loans, and if you have a good job, the estimated $144.66 you need to pay each month might not hurt your lifestyle so much.

However, by the time you pay off that loan, you will have paid a total of $69,436. That’s almost $40,000 in interest over the life of the loan.

We don’t need to tell you what you could have done with that money.

Now, taking into account the opportunity cost, what if you paid $50 extra on the principal each month?

Top 5 Rules for Picking a Business Name

by Guest Contributor

Rules for Picking a Business Name Every business needs a name. But, what you may not realize is that choosing the name of your new company could be the most important decision you’ll make in the beginning.

When customers hear your business name, it can either have a powerful impact on the way they view the company or it could have a negative impact if you choose the wrong name.

Today, we’d like to help you make the best decision possible when picking your name.

So if you take the time to learn and use these five rules, you’ll have no problem picking a name that inspires confidence in your abilities to help customers far and wide.

1. Pick a Name that’s Easy to Remember and Pronounce

Some companies like to use made up names when creating the name of their company. Other companies like to choose nonsensical phrases.

Guess what?

This isn’t always the best idea. But, that’s not to say that it’s a completely terrible idea since companies like Google, Yahoo, and the like have had some success with this type of name.

In truth, these names really don’t mean anything to people. So they are easily forgettable and they really don’t tell people the identity of your brand.

Instead, you should choose a name that is simple to pronounce, straightforward to remember, and one that helps promote your brand.

2. Simplicity Is the Key to Choosing a Great Business Name

It’s a good idea to choose a shorter, simpler name when naming your business.

Why a Financial Blueprint Can Give You Financial Freedom

by Guest Contributor

Can You Afford The Cost Of Starting a Family?

The following is a guest post by Greg Powell, author of Better, Richer, Fuller: How Building Your Financial House Can Help Protect Your Loved Ones, Grow Your Assets, and Free You to Live the American Dream. If you’d like to submit a guest post, check out Money Q&A’s guest posting guidelines for more information.

Everyone needs a financial blueprint. Why use the term blueprint? Because people understand the value of a blueprint.

If you are building your dream house you wouldn’t give your money to an architect or builder who after an hour says to you, “I’ve gotten enough ideas, I’ll start on your house tomorrow.” No, you would review with an architect the vision you have of your home, how many rooms, bathrooms, fireplaces, and etcetera. Then the architect would develop a set of blueprints from which the builder and construction team would work.

Too often in the financial services industry, the “I’ve gotten enough ideas” approach is used by advisors when someone meets them for the first time and begins to share their vision for their life.

Financial planning doesn’t have to be complex or intimidating. However, it does need to be in depth and take into account the dreams and goals of your life and your family. There are questions in the financial blueprint process that everyone needs to ask or have discussions about.

What is the One Most Important Financial Step Everyone Should Take?

by Guest Contributor

My first book, Mindful Money: Simple Practice for Reaching Your Financial Goals and Increasing Your Happiness Dividend, just came out, so the last few weeks have been a flurry of radio interviews and satellite television appearances. I’ve talked to folks from Berkeley, CA, Buffalo, NY, and several points in between, and no two interviews have been the same. Some people are really curious about my Buddhist background, others want to know my “secret” for investment success, and still others are looking for my take on the stock market now that we have a new president. But there is one question I have been asked in pretty much every single interview: What is the one thing I should do if I … Read more

Life Is Expensive! So, Is Now the Time for a Pay Rise?

by Guest Contributor

When did you last have a pay rise? For a fair few people, the answer to that question might be hard to answer. Wages have been incredibly slow to recover from the financial crisis of 2007-08. Indeed, the last decade has been characterized by fairly stagnant salaries, with ‘real wages’ – accounting for inflation – falling by 10.4 per cent between 2007 and 2015.

That’s all left us with some pretty tough choices to make. With pressure on packets, many of us has had to pinpoint items of spending to trim down so that the essentials could be purchased.

Yet, there might be light at the end of the tunnel. The Bank of England predicts that wages should rise by about 3.5% in 2017. That should mean good news for your bank balance – or at least give you the chance to broach an awkward subject with your boss.

Getting the pay you deserve is important. By maximizing your earnings, you can be in a better place to be able to afford everything life throws at you. As this infographic shows, there are plenty of challenges that crop up throughout our ‘financial lifecycle’ and preparing for what’s to come is key to managing your money…

Should You Wait for a Stock Market Correction Before Investing?

by Guest Contributor

The following is a guest post by R.J. Weiss, Certified Financial Planner™, who blogs about building wealth and living the good at The Ways to Wealth. If you’d like to guest post on Money Q&A, check out our guest posting guidelines. The Dow Jones Index recently reached 20,000 for the first time. Never before has the stock market reached a higher valuation. Yet, it’s easy to remain quite pessimistic about the future. And, when there is fear about the future, it’s harder to make good decisions today. One of those decisions is committing to invest in stocks. With the stock market at all-time highs, it’s common to think: “I’ll just wait to invest until the market corrects itself” The issue is many … Read more