What is the difference between APY and APR? How is interest actually computed in my savings account or on my loan?
Whether you are financing a loan or getting a savings account, you need to know about interest rates. Banks talk about interest rates using the acronyms APR and APY, but what exactly do they mean? I'll explain why banks conveniently quote one figure or the other. But first, I will ...

Motivational tool: paying yourself first
Today, I focus on the method known as “paying yourself first.” Chris Johnson at Wisebread explains the principle: The key to increasing your wealth without knowing it, is to take away your money before you even think you have it. This money is not actually being lost, you are simply just ...

What is game theory?
It’s strange when you think about how television and movies affect your life. It was the Teenage Mutant Ninja Turtles that inspired me to take seven years of Shotokan karate. And it was the movie A Beautiful Mind that motivated me to study and discover my passion for game theory. Game ...

Why buying on credit online may make sense: my experience buying business cards
Recently I received business cards from an online purchase. After checking the quality and looking for misprints, I was satisfied with the cards. But being a paranoid, I wondered if I got all 500 cards I ordered: I mean, if they sent fewer cards as standard practice, what sane business ...

The lowest gas price you’ll ever see, and other decimal mistakes
I almost caused an accident when I saw this gas price today: To my dismay, it turned out the station was undergoing maintenance, and the attendant apparently chose this price on purpose. What a lousy way to indicate a gas station is closed...Blatant false advertising I say! The incident did remind me ...

Three ways you can value your time for money decisions
I don't know what happened to me at that hypnotherapist and, I don't know, maybe it was just shock and it's wearing off now, but when I saw that fat man keel over and die - Michael, we don't have a lot of time on this earth! --Office Space Every one ...

Understanding how taxes affect personal finance
I like to pay taxes. It is purchasing civilization–Oliver Wendell Holmes Taxes are a big consideration in many financial decisions, including retirement accounts, tax-advantaged investments like municipal bonds, and renting versus buying a house. These financial decisions are so important that knowing basic tax information is critical. Here are four traits ...

Understanding the time value of money
A bird in the hand is worth two in the bush–Miguel de Cervantes The time value of money is fundamental to money management. It is the key to understanding stocks, bonds, financing your loans, and making good business investments. It's the reason why lottery winners often take lump-sum payments at a ...

Lifestyle funds make little sense for people who want the best
Simplify, simplify–Henry David Thoreau The chef Alice Waters promotes an elegant cooking philosophy in her book Chez Panisse Vegetables: “Good food depends almost entirely on good ingredients…Never cook slavishly, rigidly following a recipe and thoughtlessly adhering to measurements it gives.” She really has been successful following this philosophy. As one story goes, ...

Understanding your risk tolerance
“Fortune favors the bold”—Virgil Do you buy a new laptop for $1,000 or reconditioned one for $900? The reconditioned product is $100 cheaper, but presumably more likely to fail. Do the savings make it worth taking a chance? Situations like this, where decisions are made under uncertainty, warrant risk analysis. The ...