Personal Finance (Sec. 2)

Fundamentals of Finance by Adam J. McKee

SECTION 2:  Big Ticket Items

This work is licensed under an Open Educational Resource-Quality Master Source (OER-QMS) License.

Open Education Resource--Quality Master Source License

If you are a college student (my target audience for this book), you probably haven’t made many big-ticket purchases.  You probably don’t own a home yet, and you most likely can’t wait for a “real” job so you can get a nice vehicle instead of the modest transportation you have now.  This is the perfect time in your life to consider these big purchases!  Once you make them, you are like a sentenced convict:  You are doing 72 months to life.  Your decisions better be good ones.

Before we move on, I’d like to underscore the importance of two financial terms that I’ll ask you to consider with every purchase you make.  When an asset (anything you own that has value) appreciates, it goes up in value.   That’s why investors mention capital (money) appreciation with a gleam in their eyes.  If their investment appreciates, it means that they are making money.  If an investment depreciates, it means that the investor is losing money.  About the only time that depreciation is good is when it relates to paying taxes on business equipment.  A key to becoming wealthy is to put most of your savings into appreciating assets (e.g., homes and equities), and avoiding depreciating assets like the plague.

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