Do you understand everything you have purchased over the years?
Your VCR? How to set the time on it??!
What about all of the functions on your cell phone? I only know one person on this planet who knows everything about his cell phone. He is a certified cell phone junkie.
What about your computer? Can you use it well?
What about your car? I discovered just four months ago that there is an extra cup holder in our car. The problem? I have owned this car for nearly 10 years!
All of these purchases cost money. They cost YOU money. Yet, I would be willing to guess that many of us who have purchased these items do not understand FULLY how it works or all of the features it offers.
Why? Why do we refuse to take the time to understand how these products work? One reason is that we care only about a few features and the rest really do not matter to us. That’s OK. However, you will never be able to fully utilize that product until you fully understand what it has available.
What are some personal finance items you have purchased that you do not understand?
Government Savings Bonds?
New Rule: When it comes to YOUR MONEY, never purchase anything you do not understand fully! While the learning process about the product can be boring, tiresome, awful, terrible, or horrible, you will prevent being “taken” on a rip-off financial product. The cost can be huge if you do not fully understand the product you have purchased.
Example: For a 35 year old, Whole Life Insurance for $100,000 can cost you around $100/month. You can get the same amount of coverage in Term Life Insurance for about $10/month! That is $90/month cheaper! That is $1,080/year cheaper!
I have learned this lesson the hard way. Think about the personal finance products you currently have. Do you understand each one of them?