With recent news overwhelmed by the financial difficulties of US state and national budget deficits, along with the continued financial difficulties in Europe there is a renewed focus on the impact of debt on national wellbeing.  This is especially important because most of the developed world is not far behind the major problems of these European nations.  The most important thing to understand about debt is exactly what it is, and by extension, what it is not.
What’s the Deal with Debt?
Fundamentally, debt is a financial magnifying glass.  It will amplify …

Most people have received a wide variety of financial advice over the years.  There is a particular brand of advice, supposedly dispensed by a semi-fictitious secondary parental character that has become particularly widespread.  This
philosophy contains many key points, some of which have validity and merit.
However, one of the key things that all investors need to consider whether the advice they are receiving is a fact, or a fallacy.  The unfortunate truth is that much of the advice being presented by popular authors and speakers as financial facts are actually financial …

In the aftermath of the bank failures, bailouts and financial scandals that emerged from the crisis of 2008, the common explanation is that “greed” caused the adverse behaviors that precipitated the collapse.  When thinking about this explanation in some more depth, one must consider that in order for “greed” to be the reason behind the collapse, then people would need to have become abruptly more greedy than normal.
The contrary view is that if greed is a constant function (meaning that people do not become more or less greedy over time …

Many overweight smokers know what they need to do in order to become healthy, but do not do it.  Most people that are smokers don’t suffer from a lack of knowledge that smoking is bad for them.  Most people that are overweight already know that there are health risks associated with being overweight.  In both of these cases, a lack of knowledge is not the issue.  Similarly, beating overweight smokers over the head with information about the health risks of their lifestyle isn’t very likely to make them change.
It is …

Our world is one where there is a considerable amount of risk and uncertainty.  Unfortunately, the current trend is that this uncertainty appears to be growing.  In nearly every facet of our personal, professional, and financial lives, the things that used to be taken for granted are no longer considered to be certain.
One of the most influential events of recent history is the financial crisis of 2008.  The credit bubble had escalated the stock market and real estate prices to unbelievable highs, just before they came crashing down.  A startlingly …

The terms ‘profit’ and ‘loss’ are common parts of the business vernacular, but not many people fully understand their role in a market economy.  This has become even more pronounced after the recent financial crisis, as the government has attempted to perpetuate a system of profits without losses.  The problem implicit within trying to build a market economy without both profits and losses is that it will inevitably lead to one of two extremely undesirable results.
One sentiment that was popular in the middle of the 20th century was the notion …

One of the things that we have been conditioned to believe in both business and in life is that mistakes and errors need to be avoided.  This idea pervades our education system, our mindset as employees, and our behavior as business owners.  It is important to understand that mistakes cannot be completely avoided.  Thus, an attempt to “eliminate” mistakes generally results in hiding them until they are so large that they become devastating.
This is what precipitated the financial crisis of 2008.  A long history of regulations that consolidated power in …

In the midst of the current sluggish economy that has engulfed the government and business sectors in an avalanche of difficulty and uncertainty, there is a great temptation to ‘curse the darkness’ by casting blame.  It is certainly true that the current financial situation has plenty of blame to go around.  Typically, entities such as “Wall Street Greed” and “Irresponsible Government” are dogs that frequently get kicked.  However, there is a very large elephant that frequently seems to be overlooked.  That elephant is personal responsibility.
The reason why personal responsibility plays …

One of the curious aspects of the human condition is that we grow to achieve comfort, but when we achieve that comfort it prevents us from growing.  It has long been said that luxury is the lull to apathy.  In practice, this means that it is difficult to reach new heights if we do not leave our present place.  For most people, this means that personal, professional, or financial growth will require that we “Dial up the Discomfort” of the conversations and decisions that we must make.
The reason why this …

One of the oldest and most frequently cited geometric axioms is that the shortest distance between two points is a straight line.  While this is most certainly true in the sphere of mathematics and geometry, the path we take through business and life rarely (if ever) moves in a straight line.  Because of this, much of our ability to realize success is dependent on our ability to adapt to the twists and turns that we are presented with on a perpetual basis.
This is especially important for our financial calculations and …