Author Archives: Money Reasons

About Money Reasons

A offbeat personal finance blogger that comes from the tech world.

When Water Is Worth More Than Gold

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There are many reasons that the price of gold has gone up so much over the past few years.

One reason is that the developing countries (especially India) is buying more gold as these countries become more wealthy.  Another reason is that it’s a scarce resource so naturally as the population all over the word grows, people will naturally accumulate it whether they know it or not.  By this I mean that there are sometimes trace elements of gold used in electronics (especially older PCs) – a very, very small amount but there nevertheless.

 

Asteroid

 

Another reason that gold is rising so quickly is the believe that in a mass destruction, end-of-the-world scenario, gold will be the only investment that holds value… And to be honest, it will hold value!  The governmental currencies (especially the ones with a fiat currency) will be worth less than the paper that it’s printed on (since the paper no longer makes a good writing surface).  But I have to wonder is the end-of-the-world folks acquiring the most valuable assets?  What about water?

Wouldn’t water and canned goods along with MRE a more valuable asset?  Or even metal like guns and knives?  Not to mention blankets, clothes, shoes, horse (no infrastructure means no gas…) and water… lots and lots of water.

Of course to get the system moving again, practically everybody would either barter, write IOU notes, or use gold.  Gold is the lowest common denominator and practically has a universal value versus fiat currencies, and personally I wouldn’t want an IOU from anyone.

What if water was contaminated or restricted in flow?  In addition to the desert states obviously in trouble, potentially so could all the other states.

I wonder if those houses with solar panels would somehow be a critical part to the recovery of a destroyed society?  After all, if somehow the utilities companies were destroyed, those houses outfitted with solar panels would be able to provide electricity for small-scale manufacturing.  Perhaps even powering the pump for houses still fitted with water wells.

While you never know what will happen in the world, personally I’m not concerned about doomsday scenarios… but perhaps it wouldn’t be a bad idea to get a month’s worth of cans and bottled water (especially if you already buy bottle water for consumption).

Thanks for readying my meandering thoughts today,

MR

Debt Free… Now What? Real Estate

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I’ve been Debt Free since the beginning of February 2010!

I became Debt-Free in the article called “I Am Debt Free, My Mortgage Countdown #1 – Equilibrium“.  In the article, I revealed the technique I used to become Debt Free in 10 years and how I felt. It was truly an exciting moment in my life. But now life has stagnated from a financial perspective, I feel kind of lost without the instant feedback in my monthly debt levels.

Oh sure, I’m investing in a 401k and my regular brokerage account, but the accumulation of money is slow going and not as exciting as paying down my debt monthly.  Yes, I’m accumulating money, but at the same time, I find that I’m almost bored by the process since the cashflow from my earned income is so low.

So I’m considering going back into debt to increase my cashflow. It’s not consumer debt though, it’ll be debt used to buy assets to speed up my progress on becoming wealthy.  I hope to use debt for the two opportunities below:

  1. Own real estate
  2. Start and invest in small businesses.

Colonial Home

Some may find it odd that I’ve never had credit card debt that lasted more than a month and I paid my cars and house off early, but now I’m contemplating going into debt to buy real estate.  You might think that I’m even a bit off-kilter, and perhaps I am?  But I still want to try to own real estate, for the following reasons:

  • Find out what it’s like
  • Help renters in a positive way
  • Try to make some money off of it
  • Diversify my assets, but having both investments and real estate
  • Increase my wealth
  • Develop verbal people skills to become more proficient in the process.

So over the next few months or years, I’m going to look and call around trying to find a great deal on properties that I won’t lose on.

We’ll see…

Don

Fixing The Penny Problem With A New Currency?

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In my article “Should Pennies Be Made From Recycled Plastic“, I suggested replacing pennies with recycled plastic.  The idea being that if we replace a penny with a plastic instead of metal, the benefits would be two-fold.  First, the recycled plastic version would be much cheaper to create that the metal version, and secondly we would be cleaning up the environment by recycling plastic instead of dumping plastic in landfills and the oceans!

Since the plastic penny idea has multiple ways that it could benefit our society, I still think it holds some merit.  That said, perhaps we should consider upping the ante by creating a new secondary currency system.  In this new currency system, the zinc penny equivalent would be replaced with a penny that would be equivalent to what a dime is worth in the current currency model.  Then have the rest of the coins and dollar bills flow the same proportional valuation system as today.  So a new currency nickel would be worth 5 old dimes, and 1 new currency dime would be worth one dollar in the old currency.

The two currencies could float together for some specified time period, oh let’s say 10 years, with the old currency no longer accepted at the end of the 10 year time-frame.  Obviously, the old currency could be taken to banks to be converted into the new currency at that point.

The approach of using a new version of our currency would breathe value back into the penny and make coins worth picking up once again.  I think it’s important to have the penny because it makes the money valuation system make sense.  Not having the penny would be like having a piano without certain keys missing.  After all, the currency system is based on math, and we wouldn’t consider skipping numbers in math would we?

Initially, I thought the government could implement some type of country-wide deflation, but too many clever crooked people would find ways to take advantage of such conversions.  The rolling currency idea would be less painful that forced deflation, and in a way, it would have the save benefits of deflation since the money value would jump scale 10 fold.

Perhaps this process could be performed every 100 years, if inflation make the penny not worth minting again in the future…

Well here are my two “outside of the box” thoughts on the penny problem, and I’m done thinking about it now.  What do you think, do you have any clever ideas that you would like to share other than dropping the penny altogether?

MR

Is Now The Time To Buy Real Estate?

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With interest rates are a ridiculously low rate, I have to wonder “Is this the time to buy real estate“?

Since interest rates are below 4.0% for both the 15 year and 30 year mortgage loans, I’ve started to unconsciously notice the houses and multi-family apartments for sale.  For the multi-family units, I’m mostly looking at duplexes, although I would definitely consider a triplex building if I could find one selling in my area at a decent price (actually, I didn’t see any triplexes selling at all in my area).  I might have to go out of my city to look for deals that are elsewhere, but still within a comfortable distance from where I live.

Colonial Home

Alternatively, I’m also tempted to scale up to a larger primary home with more land.  With the dip in interest rates, I could find a bigger home that would have a smaller monthly payment than the prior mortgage for the house where we currently live.

Actually, I’m considering both paths at the same time.  Why not look around for a new house to scale up to, and buy investment property to boot.  It’s a tempting way to go, but more than likely, I’ll choose one over the other.  I think if I had more income rolling in monthly, I would take the plunge and pursue both, but since that’s not the case, I’ll probably choose the investment property if I can find a decent deal.

While not all conditions are perfect, from a low interest rate perspective, it seems to be a pretty good time to consider making such investments.

I’ll keep everybody updated on what path I pursue.

MR