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Never Cancel a Credit Card and More Advice

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Even if you no longer use a credit card, canceling it will drop you credit rating for one simple reason. Plus, a rule of thumb that can prevent you from sinking costs into a losing venture and more useful financial information.

— A study of 2,360 companies from 2005 to 2011 showed that corporations that have women on their boards outperformed those with all male boards by 26%. The two posited explanations are that 1) women tend to be more defensive economically (they trade less in the market than men, for example, and have higher returns), which helps in lean times. And 2) perhaps better-run companies tend to appoint more women.

— Rule of Thumb: If repairing an appliance costs half or more of replacement cost, replace it. It is easy for us to fall into the “sunk-cost” fallacy that says “I have put so much money into this thing that it would be foolish to scrap it now.”

— If you have any unused credit cards, consider this before you cancel them; doing so will drop your credit rating, regardless of how much you used it or whether you paid on time. Thirty percent of your score is based upon your "balance to limits" ratio, meaning that your score is higher if you carry a higher potential amount to draw upon, even if you don't use it. And 15% of the score is based upon how long you have had the card. So whatever your reasons for getting the card or giving it up, consider just throwing it in the drawer to keep your score up.

— $448 million: that's how much the 20 highest paid Olympic athletes were paid last year. There's a lot to think about there....

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— Only 1% of households globally control 40% of the world's wealth. In China, it is 70%.

— An old economic principle is that if you want to draw a crowd, charge a ridiculous price. In the end, people value what they can't afford. I heard a story, unsubstantiated, that when Alton Ochsner of the Ochsner Clinic was aging, he went to his business manager to ask how he could slow down. His manager told him to double his fees and let the market take its course. Three months later Ochsner complained to his manager that his bookings had also doubled!

— People are unprepared for their demise: 2.5 million Americans die every year and 64% of Baby Boomers do not have a living will. According to a recent magazine article, at the low end, even making a living will with a lawyer might only cost $75. Likewise a basic will ($600), living trust ($600), power of attorney ($150) and health care proxy ($75). I might add that I have never met a lawyer who would even answer his phone for such numbers, but the point was to get people off the dime to do some basic estate planning. What's really expensive is not doing so.

— Data shows that writers and poets are10 times and 40 times, respectively, more likely to be bipolar than the general population. Hurray! I think I'll kill myself…

— "Momentum investors" are those who the investing industry notes for having the talent to jump onto a winning horse just before it pulls up lame.

— The current average monthly Social Security benefit for retired workers is $1,182.

— The United States Patents and Trademark Office issues about 3,000 patents per week, yet only about 1% ever get successfully commercialized. Why? Because innovation is the easy part.

— Suze Orman, the ubiquitous financial guru, says the worst profession at taking financial advice is "Doctors, hands down. They don't listen…"

Perhaps, but here at PMD we want to know, "Do they read?"


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