Episode 32  Money is a difficult topic for most couples, especially early in their relationship.  We’re talking with Russell Baxter, a professional counselor (LPC LCDC-I) who works with couples to help them with how money impacts their relationship.  Russell runs a counseling practice in Grapevine, Texas.  He teaches clinical continuing education classes as well as classes on finances and marriage and is currently writing a book on the topic.  SHOW NOTES:  Money and Marriage - An interview with Russell Baxter LPC LCDC-I   Sharing Your Heart, Sharing Your Treasure -  book by Russell Baxter (coming soon)               
   
     “ Where your treasure is, your Heart will be also. ” 
   
   — Matthew 6:21 
       When you talk and agree on finances with your spouse you improve your    intimacy and share your heart.       Heart is:   Thoughts                     Passions Desires                        Dreams Intentions                    Interests Attitude                        Character     These are the things that we are trying to get our clients to share with each other.     Money Fights/Money Problems shows up in every major study as one of the most common reasons for divorce.     Common situations in marriages today      1. CPA Home    One partner manages all of the finances  Other partner knows little to nothing about finances  Very common in single income homes  One partner makes most decisions and even sometimes gives the other an  “Allowance” or lets them know that they can spend  “Don’t tell me, I don’t want to know.”  “You handle it.”    2. Joint Venture Home    Tend to not talk about a plan  Very common in remarried couples  Both partners manage their own accounts  Checking  Debit  Debt  Retirement    3. Wild West Home    No plan / budget  Spend as long as we have money  Talk about desires but lack a plan or accountability  Not stewarding well    4. A Team Home    Two people working together  Communications  Talking about what we want and a way to get it      Money is complicated because it represents:  Safety              Fulfillment                  Purpose                      Shame Security           Anxiety                       Self-Esteem                Guilt Future             Possibilities                Healing                        Inadequacy      Whether spoken or assumed we each associate with money in an emotional way.      Two main reasons money problem stick around:    Assumptions  Implications      How can managing money help heal or wound your spouse?   Wounding   Impulsivity = Insecurity, Uncertainty, Fear, No Trust No Communication = Decrease in self-esteem, Trust, and More Resentment No Plan = Chaos, Anxiety, Feeling Trapped/Stuck   Healing   Having a Plan = Comfortable spending, Decrease in Anxiety Accountability = More Impulse Control and Trust Planning for the Future = Foster Safety and Security in Relationship Communicate about Desires = More Vulnerability    Resources   Combining Finances for Couples - Episode 18   Managing Money Well for a Lifetime - Episode 29   More information about Russell Baxter

Episode 32
Money is a difficult topic for most couples, especially early in their relationship.  We’re talking with Russell Baxter, a professional counselor (LPC LCDC-I) who works with couples to help them with how money impacts their relationship.  Russell runs a counseling practice in Grapevine, Texas.  He teaches clinical continuing education classes as well as classes on finances and marriage and is currently writing a book on the topic.

     

 
 
      Episode 31  This is episode 2 of starting and operating a small business with Jordan Kennedy, the owner of a small photography, videography and media business.  Among other things, we’re discussing finance, marketing, sales and working with clients.  SHOW NOTES:  Managing the finances of the business    ·      Have Stewardship (Good Manager) Mindset      
   
     “ Be diligent to know the state of your flocks, and attend to your herds; For riches are not forever, nor does a crown endure to all generations. ” 
   
   — Proverb 
      Personal   Social Security  Personal Accounts  General Checking  Short-Term Savings  Emergency Savings  Giving Account  Debit / Credit   Business   EIN or S.S.  Business Accounts  Business Checking  Business Card  Retained Earning  Link to Paypal  Link to Intuit Quickbooks       Self Employment Taxes vs W2 Taxes  Business Structures:   Sole Proprietor  Partnership  LLC  C Corp  S Corp   Taxes   12.4% Social Security  2.9% Medicare  15% Federal  0%-13% State     1. Should I quit my job to start my dream business?   Don’t quit your day job just yet!    Starting a business can be financially draining.  Making a profit can take a while - 2 or more years is common.  Having a base income coming in will remove the stress of having to make a profit quickly.  Save a year's salary to live on while you build the business.  Spouse working can help cover some of the living expenses.  Working part-time or full-time while you build the business can provide the needed income.        2. Do I need a Support Network?  Being a business owner can be an isolating experience at times.  Especially if you’re a solo business owner.   Friends and family for personal support and encouragement.  Accountability partner - set goals and hold each other accountable.  Business coach - help you find solutions to problems and work through tough decisions.  Facebook and Linkedin.  Mastermind group (peer group).  Discuss problems and solutions  Hold each other accountable to goals  Support and encouragement when you want to quit.       3. How do you find clients?   Word of mouth (referrals) are generally the best.  Website.  Social media.  Marketing and advertising.      4. How do you find and work with clients?   Identify your ideal client.  Have a process for client acquisition.  Interview them as much as they are interviewing you.    Price your products or services correctly.  Offer a great deal of value.      What not to do when running a business  1. Don’t quit - keep trying   Running a business is like a marathon.    You will have ups and you will have downs, possibly in the same week or even in the same day.  You will gain clients and you will lose clients.  That’s just part of having a business.  I don’t know of any business that hasn’t experienced failure and disappointment, often many of them, before success came.    Instead of becoming discouraged, focus on becoming resilient, learning how to handle stress productively.  Don’t give up!  Keep trying!  Learn and grow from your failures.  Success will come eventually.  Don’t try to do everything yourself.  Don’t forget why you started.        2. Don’t stop evolving   Nothing you’re doing now is set in stone.  Your strategy, your marketing plan, your target market - it must change and evolve with time.  The world is changing more and more rapidly each day.  The best way to remain relevant is to keep your eyes open for changes that will impact your business and your mind open to new ideas.  You must stay flexible.

Episode 31
This is episode 2 of starting and operating a small business with Jordan Kennedy, the owner of a small photography, videography and media business.  Among other things, we’re discussing finance, marketing, sales and working with clients.

     

 
 
      Episode 30  In this episode, we’re talking about starting and operating a small business with Jordan Kennedy, the owner of a small photography, videography and media business.  Among other things, we’re discussing finance, marketing, sales and working with clients.  Show notes:  How to get started in a small business     1.     Find your niche  ·       Do what you’re naturally good at.  Don’t start something because it has the potential to make a lot of money.  You may end up successful but miserable.  Do what you like and what you’re passionate about.  ·       When researching your niche competition is a good thing - sign that the service or product you plan on providing is in need.  ·       Focus on one thing until successful. Trying to do too much too soon will only lead to a lot of work that will not produce a return.     2.     Be very specific with your goals  ·       Quarterly goals, 1-year, 3-year, 5-year goals.  ·       When it comes to revenues, break them down to into smaller numbers so they’re easier to obtain.  o   If you need to make $25K in a quarter, what does that mean in terms of sales?    o   How many items do you need to sell each week or each month?  o   How many speaking engagements do you need to book?  o   How many workshops do you need to teach and how many students do you need in each?        “You can’t manage what you don’t measure”  Your success relies on defining measurable goals, regularly documenting and assessing your progress and reviewing your results.     Add professionalism to your business  ·       Be as legitimate as possible  ·       Have clear and concise communication  ·       Have well-thought out, written contracts and other documents (stay away from the “handshake”)  ·       Don't be afraid to say "no!"  ·       Be organized   ·       Wave Apps      Branding  ·       Style Guide - Color Palette, Fonts, Look & Feel (pictures)  ·       Target customer?  ·       What’s the promise you make to the consumer. Brand is a promise.  ·       Consistent on website, social media, emails, ppt presentations, any marketing and products.     Delegate whenever possible  ·       Do the things that only you can do.  This will grow and make your business profitable.  ·       Delegate the administrative stuff or anything else you’re not good at.     ·       Hiring people may cost you money but if they’re the right people they will do a better job and they will do it faster than you.  This will free you up to do more of what will directly benefit the bottom line.          Passive/Freelance Income:  ·       If you're a creative, a great way to make passive income is through social media and stock photo/video.  ·       YouTube can be a great way to make passive income when utilizing ad-sense and monetizing videos.        Renting vs. Buying Equipment:   Purchase your "core" equipment and then rent "specialized" equipment. This could apply to tools, production gear, etc.  Sometimes you just have to do the math. If you have 5 prospective jobs in a single year and the equipment you need could be paid off with the same amount as it would cost to rent, then go for it!  Know the value of and longevity of what you're purchasing.    Ex. What will the item re-sale for it 5 years? Is this technology going to be obsolete in the near future?

Episode 30
In this episode, we’re talking about starting and operating a small business with Jordan Kennedy, the owner of a small photography, videography and media business.  We’re discussing finance, marketing, sales and working with clients.

     

 
 
      Episode 29  Managing your money well for a lifetime will provide you financial security and a comfortable retirement. Would you like to know how to do it? In this episode we're interviewing Ernie and Kirsti Frausto. Tune in to hear their story and learn how they managed to enjoy a good life while preparing for fun retirement.  In this episode you will learn:   How a financial plan can help you achieve your financial goals.  The secrets to reaching your retirement goal even if you suffer setbacks.  How to train your kids to manage money successfully.  Why working together with your spouse will help you go further faster.  Why it's never too late to start saving for your future.    

Episode 29
​​​​​​​Managing your money well for a lifetime will provide you financial security and a comfortable retirement. Would you like to know how to do it? In this episode we're interviewing Ernie and Kirsti Frausto. Tune in to hear their story and learn how they managed to enjoy a good life while preparing for fun retirement.

     

 
 
               Episode 27  In the last episode, we discussed the benefits of having a revocable living trust as your estate plan instead of a will.  In this episode we’ll cover how to set up a living trust and how to plan the distribution of your assets.   SHOWNOTES:    How to set up a living trust   You can use an online provider like LegalZoom or RocketLawyer, or you can find an attorney that specializes in estate planning in your area.  The cost for an attorney to set up your estate plan will be between $1,200 to $2000 for a couple or $1,000 to $1,500 for a single person.   LegalZoom.com  - Between $249 to $299 to set up a living trust.   Rocket Lawyer  - $39.99 per document or $39.99 per month membership,   which includes a 30 minute session with a lawyer on every legal matter, ask a lawyer your legal question, and all documents.  If you’re a church or non-profit organization, you can look into  Financial Planning Ministry , who specializes in estate plans and has a full-service process for your members or employees.  Whichever you decide to use, make sure you do your homework.    Learn about estate plans and educate yourself on the basics so you’ll know which one is best for you.  LegalZoom, RocketLawyer, and FPM are all great resources to learn from.        Checklist for creating a living trust   List of your assets you want to include in the trust including your house, car, jewelry, stocks, bonds, life insurance policies, etc.  Documents - titles and deeds of property, stock certificates, life insurance policies, etc.  Choose your beneficiaries.  Choose a successor trustee and a secondary trustee.  Choose someone to manage property for minor children.  Prepare the trust document.  Sign and notarize the trust.  Fund the trust - transfer property and assets into the trust.  Store and keep your trust up to date.      Medical Directive   Artificial feeding (feeding tube).  CPR ( cardiopulmonary resuscitation ).  Life-support equipment including ventilators ( breathing  machines).  Do not resuscitate (DNR).      Health-care proxy:   This is a legal document in which an individual designates another person to make health-care decisions if he or she is rendered incapable of making their wishes known. The health-care proxy has, in essence, the same rights to request or refuse treatment that the individual would have if capable of making and communicating decisions.     Durable Power of Attorney     Through this type of advance directive, an individual executes legal documents that provide the power of attorney to others in the case of an incapacitating medical condition. The durable power of attorney allows an individual to make bank transactions, sign social security checks, apply for disability, or simply write checks to pay the utility bill while an individual is medically incapacitated.      How to distribute your estate     Without specific instructions to direct asset distribution, family members can be left guessing what a deceased person would want -- or decide what to do themselves.  In some cases, a probate court has to step in and resolve bitter disputes by distributing numerous items. It’s a textbook example of the headaches, heartaches, and expense that can result from inadequate estate planning.  To help avoid this in your family, there are a number of steps you can take to distribute your estate:    Give away gifts while you are still alive.    Remember, you’re allowed to give up to $14,000 to as many individuals as you like.  Couples can give $28,000 per year.  If there are specific items you want to give to loved ones, present them now. In other words, get them out of your estate.  It can be rewarding to see your prized possessions go to individuals who appreciate them.  Depending on the size of your house, you may have thousands of items.  Throw away or donate things you no longer need. (A donation to a qualified charity may result in a tax deduction.)       Make specific bequests in your will or in a letter of intent.   If you want your car to go to your daughter or your golf clubs to go to your grandson, put it in writing.  Without detailed instructions and guidance, the executor may have to devise an equitable system for distributing your possessions.  That can place a large burden on the executor and lead to disputes among your heirs.       Choose your executor carefully.   The executor generally exercises discretion in distributing personal and household items.  So it's important to name a trustworthy person with a fair, impartial, reasonable personality -- especially if there are sibling rivalry issues.  You want someone who will fulfill your intentions.  The right executor can reduce the chance of litigation.      No matter who you name as an executor, he/she will appreciate clear, written instructions.      Guide for dividing your estate among your heirs    Use a “fair” division of all your assets when appropriate.   If one of your beneficiaries is disabled, they may need more resources to take care of themselves after you are gone. You might consider  establishing a trust  for their care.  Some of your beneficiaries might be your step-children. In this situation, they will probably inherit from their biological parents. You probably will want to leave them less than you leave to your biological children.  You might have given one beneficiary gifts during your life. For example, you might have provided the down payment for a child’s home.  One beneficiary might have been instrumental in growing a family business. It makes sense to leave them the business instead of your other children.  One of your beneficiaries might waste money because of a gambling or substance abuse addiction. In this case, a trust can help ensure that they cannot spend the money unless they meet certain conditions.       Ask your heirs if they want sentimental gifts.   Something small, like a tea cup, might not have much monetary value. However, it could be your youngest daughter’s favorite item from childhood, and she might resent you if you don’t give it to her. You can head off disagreements after your death if you ask your beneficiaries what they want.  In your will or trust, you can identify who gets what property using a separate memorandum. Make sure you mention the memorandum in your will or trust.  It might be easiest to give sentimental objects away during your life, particularly if they aren’t worth much.  However, problems can arise if the sentimental gift is valuable. Keep in mind the “fair” measure for distribution to avoid making the other beneficiaries resentful.       Set expectations in advance   Discuss your estate plan with your family.  Your heirs may be expecting a certain inheritance and perhaps planning on it.  If they aren’t inheriting as much as they expect, let them know.  The worst thing you can do is to blindside someone after death.  If you're worried about fighting or resentment, write out explanations and justifications for your gifts. Leave behind messages stating why each person is receiving each gift.        RESOURCES     Legal Zoom   Rocket Lawyer   Financial Planning Ministry         

Episode 27
​​​​​​​
In the last episode, we discussed the benefits of having a revocable living trust as your estate plan instead of a will.  In this episode we’ll cover how to set up a living trust and how to plan the distribution of your assets.

     

 
 
               Episode 26  In this episode of Getting Money Right we’re talking about estate planning and what you need to know about wills and living trusts so you can be prepared to manage your assets and ensure your family is taken care of even after you’re gone.    SHOWNOTES:     60% of Americans do not have a plan for how their estate will be handled after they die.      Perhaps it’s because they’re in good health or young and don’t feel they need to worry about it right now.  Unfortunately, life is unpredictable and no one is guaranteed tomorrow.   No matter what age you are, if you’re an adult and have any assets you should have an estate plan.      If you think you don’t have any assets you’re wrong.    If you have a checking or savings account, own a car, a home,  life insurance , furniture, or any personal possessions, you have assets and you need an estate plan.   Life insurance  - you should have enough coverage for you and your spouse to provide for  your children in case you or you and your spouse pass unexpectedly.  An estate plan is vital if you both die and you have children.     What is an estate plan?     An estate plan is simply a plan for how your assets will be managed or distributed after you’re gone.    No doubt you’ve heard of a will.  A will is one instrument you can use to direct how your assets will be handled.     A better instrument is a  living trust  because it better protects your assets , which is what you should be after.     Why should I have an estate plan?     Aside from the financial benefit of having an estate plan,  the most important reason to have one is to protect your family.     We’ve all heard of family’s squabbling over mom's and dad’s estate.  Don’t hope your heirs will play nice, guarantee it.  Not having an estate plan puts the pressure on the family to divide your assets in a way that’s good for everyone, which is asking a lot.     An estate plan allows you to decide how you want your assets divided.   If anyone’s unhappy about the division of the estate, they’ll be unhappy with you, and not each other.     What’s the difference between a will and a living trust?     A will is a legal document that sets forth your wishes regarding the distribution of your property and the care of any minor children.  A living trust includes a will for your medical directives, while giving you the most protection and control of your financial assets.  Because a will can only go into effect after you die, it provides no protection if you become physically or mentally incapacitated.  The court could easily take control of your assets even before you die.       A revocable living trust lets you keep control of your assets while you are living  - even if you become incapacitated, as well as after you die.     Why is a living trust better than a will?      A living trust will avoid probate while a will will not.   Probate is a legal process through which the court ensures that, when you die, your debts are paid and your assets are distributed according to your wishes.     If you don’t have a living trust, your assets are distributed according to state law.   A living trust can include a will and is used to designate how assets, that are not included in the trust, are to be distributed. Sometimes people don't move all their assets to the trust or obtain properties after the trust is created so they need a way to dictate how those assets are to be disbursed.      Why you should avoid probate    1. It can be expensive   Probate will cost the estate legal fees, executor fees, and other court costs, which must be paid before the assets can be distributed to your heirs.    The more assets you own and more dispersed they are the more costliest probate will be.   2. It takes time   Probate can take anywhere from 9 months to 2 years but can be longer.  Your assets will be frozen at least part of the time until an inventory can be made.  Nothing can be distributed without a court and executor approval.  This could affect your family should they need the money to live on.   3. It’s public   Probate is a public process, so anyone can see what you owned, whom you owed, and who will receive your assets.    This exposes your heirs to unscrupulous solicitors and can cause disgruntled heirs to contest your will.   What are the benefits of a living trust?    1. It Avoids probate   A living trust will keep your estate out of probate saving money and time and keeping your estate private.   2. Reduces or eliminates estate taxes   Federal estate taxes can be expensive (35%-55%) and they must be paid in cash, usually within 9 months after you die.    A living trust gives you the capability to control and manage your assets so you can legally reduce or eliminate estate taxes.  One way to reduce estate taxes is to reduce the size of your estate before you die.    Spend some of it and enjoy it!  Give some of your estate to your heirs before you die.  You’ll experience the satisfaction of seeing your gift bless your kids, grandkids, or perhaps a non-profit organization, something you won’t be able to experience if you wait until you die.  You’re allowed to give up to $14,000 to as many individuals as you like.  Couples can give $28,000 per year.  Example: A couple can give $14K to each of their 4 children for a total of $112,000 per year.  Give to causes you care about     3. Provides full control of your estate   As the trustee of your estate, while you’re alive, you can manage your assets as you wish.    The trustee you designate will manage your estate after your death, ensuring your wishes are carried out, all along your assets are protected and guarded against unnecessary expenses.   4. Customized distribution of your assets   Through a living trust you can designate who will receive your assets, retirement benefits, and proceeds from a life insurance policy.     You can direct the guardianship of your children  – especially if any of them have special needs, to whomever you think is best suited to raise them.  If your children are minors or young adults, you can coordinate the release of fund from the trust based on a timeline and the financial maturity of your children.       Conclusion   An estate plan is for everyone.   At the very least you should have a will.  A better option is a living trust.  Although it's more involved than a basic will and may require an estate attorney to set up, don't let that stop you.  The benefits are more than worth the expense because it provides the protection and flexibility you want for managing your estate.             

Episode 26
In this episode of Getting Money Right we’re talking about estate planning and what you need to know about wills and living trusts so you can be prepared to manage your assets and ensure your family is taken care of even after you’re gone.

     

 
 
               Episode 25  Buying a house is a BIG deal!  When purchased at the right time and within your financial ability, a house can be great for your family.  In this episode we help you understand how much house you can afford.  We break down all the housing related numbers to help buy the right priced house.  SHOWNOTES:      How much house can you afford?   “Mort” “Gage” =Death Pledge   Mortgage lenders use something called qualification ratios to determine how much they will lend to a borrower. Although each lender uses slightly different ratios, most are within the same range. Some lenders will lend a bit more, some a bit less. The ratios below are an average of what the industry uses as standard.  Rules to affordability (Bank's Method)   Max Principal + Interest + Taxes + Insurance (PITI) payment 28% of gross monthly income.  For an $80K combined gross annual income, mortgage should not exceed $1866.    Max housing cost 32% of gross monthly income, or $2133.  One of the best way to keep your finances healthy is to keep your housing cost as low as possible.  Having a lower cost mortgage payment and for a shorter period of time will free up money you can save to ensure your financial future.    Max total debt payments including your mortgage not to exceed 40% of gross income, or $2667.      Calculating how much house you can buy   Assuming a 30- year mortgage with a fixed 4.5% interest rate, every $100,000 borrowed costs $507 per month.  ($1244 / $507) x $100,000 = $245,000 + down payment    Example:   $245,000 house   Total Housing Cost = $2133 (32 % of gross income).  Mortgage (P & I) = $1,244  Insurance = $125  Property Taxes = $497  Other housing exp. = $267 (electric, water, gas, internet, cable).   $80,000 Gross - 18% (Federal and FICA) = $65,600  or $5467/mo.  Total Housing Cost $2133 = 39% of Net Income ($2133 / $5467)      Our Recommendations ( 30% of Net vs 32% of Gross)  Use 30% of Net Income to calculate your mortgage and housing cost  (Spending Guidelines)  $80,000 Gross = $65,600 Net Total for Housing Cost - 30% of $65,600 = $19,680/yr. or $1640/mo.   Example :  $170,000 Loan ($200,000 House with $30,000 down payment)   Total Housing Cost = $1640/mo.  Mortgage = $861  Property Tax = $340  Insurance = $110  Other Housing Expenses = $329  Electricity  Water  Gas  Internet         Shopping for your house    Determine what you  need  and what you  want  in a house.  Understanding the difference between what’s a need and what’s a want is important because once you start looking you’ll need to prioritize needs over wants.  You have to get all your needs but can skip out on some wants if the budget doesn’t allow it.  Start with your dream home.  Where would it be located?  What size would it be?  How many bedrooms? Bathrooms?  2 or 3 car garage?  Size of lot / backyard space?  Swimming pool?      Now, based on the price you know you can afford you can begin searching for a suitable house.  This is where a real estate agent can help.  You may need to compromise by doing the following:  Increase commute to get a bigger and better home that meets more of your wants or cross off some of the wants to have a shorter commute or be closer to the city.  Get a slightly smaller house (3 instead of 4 bedrooms) in the location or neighborhood you want.  Add the swimming pool later.  Get an older home in the area you want, which you can update later.     Focus on “value items”    Items that add value include:  Dual-pane windows  Granite countertops  Hardwood floors  More Land    Nice landscaping  A beautiful view  Top-rated school district.           How to find a realtor    A licensed real estate agent must also be a member of the National Association of Realtors. This requires additional training above the licensing requirements that all agencies must meet. Realtors:  Complete ethics courses and exams, and  Make a commitment to uphold the association’s ethics standards, which are more stringent than both federal and state laws.    Word of mouth referrals are generally how people find realtors but, be careful.  Make sure to interview the person to make sure they will do a great job for you.  Interview 2 to 3 realtors to make sure you can find one that will serve you best.  The realtor should take the time to educate you in the process so you understand every step of the transaction.  He/she should offer insight and knowledge but not push you or try to sell you something you don’t want       RESOURCES    RENT VS BUY CALCULATOR   MORTGAGE CACULATOR   BUDGET FORMS AND TUTORIALS   SPENDING GUIDELINES         

Episode 25
Buying a house is a BIG deal!  When purchased at the right time and within your financial ability,  a house can be great for your family.  In this episode we help you understand how much house you can afford.  We break down all the housing related numbers to help buy the right priced house.

     

 
 
               Episode 24  Buying a house is a BIG deal!  When purchased at the right time and within your financial ability, a house can be great for your family.  In this episode we break down the house buying process so you can be totally prepared for buying your first or next house.  Shownotes:    Should you buy a house?   Buying a house is a big deal!  It’s a lot of work and not always a good investment.  Before you take the leap it’s best to understand what you’re getting into because it’s a big commitment.   Where are you in your financial journey?   Do you have a written budget in place, so you know what’s coming in and going out?  Do you have 3-6 month emergency fund?  Have you paid off the majority of your debt? (student loans, credit cards, car loans)  Do you have a down payment saved on top of your emergency fund?  Do you have money saved for furniture or any needed maintenance?  Are you ready for closing costs?      Why do you want to buy a house?  Is now the best time to buy your first house?    Don’t buy because someone told you you should or because someone told you paying rent is “throwing money away.”  Don’t buy because all your friends are doing it.  Don’t buy because the interest rates are low or because it’s a buyers market.  Buy because you’re settling down and need a place to live for a minimum of 5 years.  Buy because a house would better meet your family’s needs.  Buy because you’re financially ready.      Financial Requirements      Great credit  - You might get approved for a mortgage with a score in the 600s but, a score of 720 or higher will get you the best rates and save you, quite literally, tens of thousands of dollars over your lifetime.   Credit Reports:  https://www.annualcreditreport.com/index.action   Credit Score:  https://www.creditkarma.com/       Cash down payment -  Although you can purchase a home with as little as 3.5% down payment (FHA loan) , we don’t recommend it.  Put at least 20 percent down to avoid being upside down on your loan and to avoid private mortgage insurance (PMI).     Cash on hand -  Aside from the down payment, banks want to see that buying a home isn’t going to drain your account. And it’s good form to have an emergency fund leftover after all the closing costs and moving expenses are paid.     Solid employment -  Next to your credit score, this is most important. The longer you’ve been at your job, the better. If you’re self-employed, prepare for a minor battle to get approved for your mortgage: Most lenders will want to see at least two years of tax returns and will figure your income as an average over the last two years, which could potentially reduce the amount of financing for which you can qualify.      Getting Financially Prepared      Step 1: Determine how much house you can afford    Keep your total housing cost at around 30% of your net income.  Check out the  spending guidelines  to get more accurate.  Will you live in it at least 5 years?  If not, renting will be cheaper. Use a  rent vs buy calculator    to determine if it makes financial sense to buy.  Don’t think of your home as an investment.  An investment puts money into your pocket, while a liability takes money out of your pocket.  A house costs money to buy and to maintain (taxes, insurance, maintenance and upgrades). It will likely go up in value, but so will your expenses as it raises in value.    Step 2: Get your finances in order to prepare for the mortgage application     Check your credit score.   Credit Karma or your bank.  If you’re under 720 work on improving the score (about 6 months) before taking on a mortgage.   Save for the down payment and closing costs.   No less than 10% down payment (20% preferred).  Closing costs can range between 2% and 5% of house price.   Gather your documents   Pay stubs / W2’s.  Bank statements.  Self-employed - tax returns for the last 2 years.      Step 3: Shop for a mortgage      Get pre-approved.   Mortgage pre-approval is free and you have no obligation to purchase.  It helps to present you as a serious, qualified buyer when buying a house .      Mortgage types    There are fixed-rates and adjustable rates (ARMs).  You can take out a mortgage for 30 years or as little as five years (interest rates are typically higher the longer the term of the loan).  We recommend a fixed-rate 15yr mortgage if you can afford it.  It’s good to become familiar with how mortgage rates work and the different kinds of loans that are available.  Run some scenarios through a  mortgage calculator  to see how different terms and rates will affect your monthly payment.      Mortgage fees    To make matters worse, mortgage lenders charge fees that aren’t necessarily reflected in the interest rate. There can be fees for appraising the home, checking your credit, and preparing documentation.  With some loans you have the option to pay “points” at closing that will reduce your interest rate. Points are essentially prepaid interest. This can be a tricky decision, but it can make sense if 1) you can afford to put down the extra cash and 2) expect to carry the mortgage for many, many years.       Private mortgage insurance (PMI)     If you put less than 20 percent down, your lender will charge you a monthly premium for what’s called private mortgage insurance (PMI). PMI protects the bank in the event you default on your loan and the value of your home declines significantly.  PMI varies from .3% - 1.2% of the loan amount per, paid annually. Typically it is around .5%, which is about $50 per month per $100,000 borrowed.  $200,000 = about $100 a month = $1200 a year      Don’t Forget Closing Costs    Closing costs vary, somewhere between 2-4%, average 2.5% of total purchase price:  $100,000 is about $2,500  $200,000 is about $5,000  $300,000 is about $7,500  $400,000 is about $10,000      Where to get mortgage rates and pre-approval    Shop around.   Start online or find a mortgage broker.   You can compare rates with any number of leading online mortgage lenders or find a local mortgage broker who will shop your application to multiple lenders on your behalf.  Many  real estate agents  have relationships with lenders and they can help you find a good lender if you want the transaction to be face to face.  Using an online lender like  LendingTree.com  or  Bankrate.com  can help you quickly get four or five competing mortgage rates from different banks.  These rates will be more accurate than the ones you see in advertisements and websites because banks provide real rates based upon your credit profile and the location and value of the home you want to buy.     Resources    REnt VS Buy Calculator   Mortgage Caculator   Budget Forms and Tutorials   Spending GUidelines         

Episode 24
Buying a house is a BIG deal!  When purchased at the right time and within your financial ability,  a house can be great for your family.  In this episode we break down the house buying process so you can be totally prepared for buying your first or next house.

     

 
 
               Episode 23  In this episode of Getting Money Right we’re talking about how to buy a used car.  Buying a used car is usually more economical while still providing you with the performance and reliability you need.  Follow the steps we outline to find, evaluate, and choose a great used vehicle that you’ll enjoy for years to come.    Show Notes:    Find the right car   There is no “best” car that is suitable for everyone.  The cheapest car is not always the best buy; neither is the most expensive.  You must consider the amount of maintenance a car requires, maintenance costs, mileage, resale value of the car, and the intended use of the automobile.  Most of this information is listed in consumer used car guides, which you can easily find on the internet.  The average family, during their lifetime, will put more money into automobiles—almost 50 percent more—than they will put into their homes. Your best hope of finding a good used car at the right price and knowing the quality of it is to buy it from a private individual.  Before you buy a car, you need to have it mechanically checked.  A good resource for reports of service histories, safety recalls, fuel economy, key advantages and disadvantages and current price ranges for all makes and models of vehicles is   Consumer Reports Complete Guide to Used Cars .   Each issue contains all models for the previous ten years.  Most libraries keep copies of the most current issue.       Pre-Purchase Steps      Determine the type of car and features.   Avoid making impulsive decisions and purchasing cars that don't match your lifestyle.  Make a list of your routine driving needs and select a car that best matches those needs.  Needless to say two-seater cars aren't ideal for big families.     Read car reviews and Forums.   It's advisable to read reviews for the specific type of used car you intend to purchase.  Several websites such as  Kelley Blue Book  and  Edmunds  and  Autobytel.com    provide information on car features, specifications, even cost of ownership.     Define your budget.   Consider the total cost of the car.   If you will finance the purchase determine the monthly payment that you can afford and look at used car listings bearing this price in mind.  Consider the overall cost.  Don’t just take in account the monthly payment, but consider the total cost of the vehicle.      Factor in additional costs.   Apart from the basic car cost, you should also budget for taxes and registration costs.     Cross-reference various online used car listings.   To get a quality car for a good price, putting in the extra time to comparison shop is a must.  Buyers should also research Kelley Blue Book (kbb.com) and Edmunds.com to determine the actual worth of used cars.     Determine vehicle history.   Ask if the owner has maintenance records.  Look for hidden clues that will help you assess the true condition of the vehicle.  Look under the hood - if the engine is dirty and looks like it’s been neglected so has the maintenance.  Fluid leaks - Be prepared to look under the car (flashlight).  If you see oil stained parts move on.  Interior condition - stained, torn, or abused upholstery are trouble signs you should not ignore.  There are too many cars out there to settle on something that’s not been maintained and cared for.    Consider running a vehicle history check (Carfax) to find out if the car has been in accidents, but don’t let it be your only source of information, because not everything will show up on the report.  A vehicle history report provides information on maintenance and on the number of times the car was previously sold, but since the information is not regulated a lot of information will be missing, especially for cars not maintained by car dealerships.     Car Insurance.   Once you find the ideal car, it's important to research insurance rates offered by major insurance companies.  Some cars with a higher probability of theft or damage require higher premium payments, so bear these factors in mind before selecting a used vehicle.     Watch out for scams.     Craigslist is a great source for finding cars but you have to be aware of scams.  Remember: if it’s too good to be true, it generally is!  A good deal is only good when it’s good for both parties.       Steps to buying      Call the owner   Get as much information over the phone before you drive out to look at the car.   Ask for additional pictures to get a better feel for the condition.   Ask the right questions to either confirm or remove the car from your list.  How long have you owned it and why are you selling?  How many ORIGINAL miles on the car?  Has it ever been in an accident?  Is the title a salvage title?  There are different types of titles such as flood, totaled, junk, salvage, reconstructed, and rebuilt.         Take it for a test-drive .   After you have found a vehicle that you would consider purchasing, take it for a test drive for at least 15 minutes (not just around the block).  Check all the accessories and features. Use an Inspection Checklist to ensure a thorough visual and operational check is done.  This is your opportunity detect obvious problems and eliminate a car from consideration.     Negotiate your best deal .  Your negotiated price is based on the assumption that the vehicle is in good working order and has never been in an accident or flood. Any known problems should be in the negotiated price.  Always make any offer contingent on  a professional pre-purchase inspection.     Get a professional unbiased inspection .   Never buy a car without getting a pre-purchase inspection done.  The only way to know if the vehicle is in good condition is to have it properly inspected.   There are many types of pre-purchase inspections.  However, only an inspection from an experienced ASE Master Certified Technician can give you a comprehensive inspection.  Once you have quality pre-purchase inspection information, you can renegotiate your deal based on that information.       Cash or Financing   We strongly believed the best way to buy an automobile is not to finance it but to save the money and pay cash for it.  However, if you are going to finance an automobile, there are some basic guidelines.    It is generally better to sell your old car yourself rather than trading it in on a higher-priced newer one.   This may take a little longer, but you will get more for it to put toward the newer vehicle.  Never use equity in your home (ELOC) to purchase a car or a cash out refinancing.  Don’t create a 10‑ to 15‑year note for an automobile, because the car will be worn out long before the note is paid.  If you have to borrow for a car this time, we encourage you to start preparing yourself to buy your next car with cash.   Car replacement fund!  Requires less per month than a car payment.  Use saved amount + the cash from selling old car to purchase your next car.       Extended car warranty    If you're considering buying an extended warranty, get the answer to the following questions first:     Does the warranty cover a period of time or number of miles that is not covered under any implied warranties?    If an extended warranty covers five years or 50,000 miles, the average driver will have that warranty for only about three years, since the average person drives more than 10,000 miles per year. However, if the extended warranty covers five years or 100,000 miles, the owner would get approximately five years of extended coverage.     Does the extended warranty cover parts and labor or just parts?    Does the price of the extended warranty seem reasonable in relation to the price of the parts covered?   When the extended warranty covers only parts, labor is usually so expensive that the owner will not get the full benefit of buying an extended warranty unless each part covered under the extended warranty is more expensive than the cost of the warranty itself.       RESOURCES     10 Used Car Buying Myths   Used Car Inspection Checklist               

Episode 23
​​​​​​​In this episode of Getting Money Right we’re talking about how to buy a used car.  Buying a used car is usually more economical while still providing you with the performance and reliability you need.  Follow the steps we outline to find, evaluate, and choose a great used vehicle that you’ll enjoy for years to come.

     

 
 
               Episode 22  Buying a new car can be exciting and a bit stressful.  Knowing how to maneuver through the process of finding and buying a new car can make the experience both enjoyable and financially sound.  In this episode we walk you through 7 steps to buying a new car that will ensure you make a great purchase.    Show Notes:    1. Research Vehicles and Features          Start by figuring out what type of vehicle you need and want and how much you’re willing to spend.  Use apps or websites such as  Edmunds.com  and  Consumerreports.org/cars  to learn about the vehicles you’re considering.  Expert and owner reviews.  Vehicle Invoice Prices.  Features, add on, etc.    Automaker’s websites are useful for seeing more photos and learning more about the features and options.  Once you have a short list (2-3), it’s time to figure out how you’ll pay for the car.     2. Financing   If you’re paying cash you can skip this step.  Get pre-approved for a loan.  Let’s you know how much you can borrow, and you’ll have an interest rate you can compare to the dealers, which you can use to negotiate a better rate.  We suggest credit unions, or online lenders to find the best rate.    We recommend a minimum of 20% down payment with a term of no more than 5 years (60 months) to keep you from being upside down after the purchase.  Have your salary and employer information as well as the balances of other debts you owe available before applying.  To avoid multiple hard inquiries on your credit report, be ready to shop within a couple of weeks of approval.  Get quotes from your insurance agent on how much your insurance price will be.     3. Plan Your Trade-In or Sell Your Old Car   You can skip this step if you don't have a trade-in or an old car to sell.  Whether you’re going to trade your old vehicle or sell it yourself, it's important to get your current car's trade-in or sell value.    Knowing the trade in value before you go to the dealership will help set your expectations for what the car is worth and gives you a reference point for any offers you'll receive.  The best way to get the value of your trade-in is to use the  Edmunds  or  Kelly Blue Book  sites or apps.  Be honest about the condition of your car. Most cars fall into the "good" or "fair" category. Very few cars are "excellent," no matter how much their owners babied them.  When you're done appraising, you'll see three figures.  The trade-in value is what the dealer may offer you — that's a figure to keep in mind when you're at the dealership.  The private-party value is what you might expect to get if you sell the car yourself.  The dealer retail value is a little different: It's what you might expect to pay for the car if you were to buy a similar used car at a dealership.    Armed with this information you can decide which way to go; sell yourself or trade-in your old car.     4. Locate and Test-Drive the Car   Once you’ve settled on a few car candidates, you should see them in person before making a decision.  Verify that the car you want is still in stock. It might have been sold recently, and what’s available on the lot may not fit your criteria.  Ask the salesperson if there are any dealer-installed options. Many new vehicles are sold with add-ons such as all-weather floor mats or theft protection packages. These can easily add $1,000 to the sale price.  Don't just show up at the dealer on a busy weekend or late at night. Waits may be long and you may not get the salesperson's full attention.  Schedule an appointment for a test drive. Having an appointment means the car will be waiting for you when you arrive.  Don't just drive around the block. Take the time to see how you and your family fit in the car and see how it handles on a variety of roads.  Don't feel obligated to buy the car the same day. Feel free to take a night to think it over.     5. Check Sale Price and Warranties  Once you have a target car, it's time to focus on getting a price. We recommend using one of these two ways to get the purchase price of your new car:   Call, text or email the internet sales department of three dealerships that have the car you want.  Ask each for the total selling price, including any additional accessories that may have already been installed on the car. The best price will be obvious.  You also can take that quote and ask the other dealerships to beat it.  Add sales taxes that will need to be paid (you can find the rate by googling your state and new car tax).  Don’t forget to add in the cost of insurance.  Add the cost of gasoline if you're buying a vehicle that gets less or more miles per gallon than your current car.        6. Review the Deal and Dealer Financing   At this point you’re pre approved for financing. See if there's a chance that you can get a better interest rate at the dealership by having them run a credit inquiry or by providing them your credit score to determine the interest rate they can offer you.  If it’s less, go for it.  Dealers will try to sell you on add-ons during the financing portion of your deal.  Most of these add-ons come at inflated prices and you don’t need them or can get them from other retailers.  An extended warranty is the only item I’d consider but the cost is going to be high so choose wisely.      7. Close the Deal   If the price, financing and fees look right, it's time to say yes to the deal. From here, you can proceed in one of two ways: 1) buy at the dealership or 2) have the car and paperwork delivered to your home.  Most people tend to wrap up the sale at the dealership. Once you've agreed on a price, the salesperson will take you to the finance and insurance office. Here, you'll sign the contract and fight off purchasing any of the additional products they will try to add on, such as an extended warranty.  The alternative is to make the sale contingent on having your new car delivered to your home or office. This is a great time-saver and allows you to close the deal in a relaxed environment.  Wherever you finalize the deal, review the contract carefully and make sure the numbers match the out-the-door breakdown. Be sure there are no additional charges or fees. A good finance manager will explain each form and what it means. Don't hurry. Buying a car is a serious commitment. And remember: There is no cooling-off period. Once you sign the contract, the car is yours.      RESOURCES   Edmunds.com   KBB.com   Autobytel.com   Consumerreports.org         

Episode 22
Buying a new car can be exciting and a bit stressful.  Knowing how to maneuver through the process of finding and buying a new car can make the experience both enjoyable and financially sound.  In this episode we walk you through 7 steps to buying a new car that will ensure you make a great purchase.

     

 
 
               Episode 21  In this episode of Getting Money Right, we’re wrapping up answering some of the most common money questions from our listeners.  Knowing the answers to some of these questions can help you tackle some of the challenging financial decisions you might face in the future with a greater chance of success.   Show Notes:    1.  I’m a business owner, how do I manage cash flow? [00:50]   Separate your business finances from your personal finances.  Managing the finances of a business is similar to managing your personal finances.  Track revenue and expenses so you can reduce your taxes legally.    In a business, you will have different expenses but you’re still dealing with income and expenses just as you do in a personal budget.  Create a detailed budget of anticipated expenses and expected income and track every expense.  Some business owners do the work and then also manage the books, which sometimes can be a lot of work.  It’s easy to tell yourself, I’ll take care of the invoices, and pay the bills, manage inventory later after you finish a job.    Unfortunately, not keeping up with the financials will usually result in big problems.  Here are a few keys to managing your business cash flow:  Don’t spend everything you get.  Build up a healthy amount of savings; you’ll need it!  Create margin (the difference between income and expenses) so you can leave room for the unexpected, which is bound to happen.   “Ensure you’re putting enough aside for taxes - many self-employed or small business owners don’t set aside enough for taxes, which gets them into trouble with the IRS.  It’s no fun owing the IRS 10K to 20K in back taxes!”     Make sure you keep good records so you can deduct everything you’re entitled to deduct - keep receipts, track and record your mileage, etc.        2.  When does it make sense to go to college? When does it make sense to go another direction? [11:25]   Depends on your career interest and whether a college education will adequately prepare you for it.  AN MBA will not make you a business person out of the gate.  There’s a lot of experience you’ll need to add to your basic business knowledge before you become an asset to a company.  Are you going to college because someone else (parents) want you to go or is it something you want and are focused on what you’re pursuing?  If a college degree will not provide you a clear path to your career interest, don’t do it.  Find the education that will.   With so many other options for learning today.  Trade schools, online classes for photography, marketing, sales, gaming, and so many others.  Some people will be better equipped to step into these careers through a non-formal education and not attend a traditional college or university.  Entrepreneurship is not learned in a classroom.  If you want to own a business, learn what it takes to start, grow, and operate one.  Work for someone who is an entrepreneur, learn all you can from others who have done it.  A college education has pros and cons, the best thing you can do is find what you’re interested and good at before you go to college.  Going to college won’t teach you what you love and what you’re good at!  If anything, it will make you conform to a path or career you may hate in a few years.  Don’t rush in with the herd from HS to college.  Take the time to determine your interest and what you’re naturally good at, then decide the best way to get trained for your chosen path.       3.  How can I avoid student loans? [21:30]    Grants  - typically found through Free Application for Federal Student Aid (FASFA).  Grants are often based on financial need and do not have to be paid back.   Scholarships  - there are scholarships for just about anything, and there are billions of dollars available for students to apply for it.  You don’t have to have a great GPA or be in from a low-income situation.  Billions of dollars go unclaimed because people just don’t apply for these scholarships.   Military Tuition assistance : For active military members. It’s capped at $4,500 per year, and it is a great way to start or complete a degree. The best part is it doesn’t take away from your GI Bill.     GI Bill : This is given to military members who serve over 90 consecutive days and provides up to 36 months of education benefits. This benefit can also be passed down to dependents.    For those who are already employed, check with your company, because some offer  tuition reimbursement assistance.    Job or work-study on campus   Paid intern job or freelance work in your field of industry  Tutoring  Babysit or Pet-sit  Write for online publications  Work for Uber/Lyft     Lower the cost of attending college   Attend a junior college for the first two years - lower cost and electives will transfer.  AP (Advanced Placement) classes in High School will give you college credits and reduce the number of classes you need for your degree.  Attend an in-state college instead of out of state - less expensive.  Take College-Level Examination Program (CLEP) exams to receive college credit without having to take the class. This is basically an AP exam for college students to show proficiency for the subject.  Attend school near home so you can live at home.  If you live on campus, don’t bring a car.  This will save you all car-related expenses (gas, maintenance, parking fees).  Rent books instead of buying or buy used.  If you live on campus, find cheaper housing near the college campus.       RESOURCES   Budget Forms and Tutorials   Spending Guidelines   Envelope System Video               

Episode 21
In this episode of Getting Money Right, we’re wrapping up answering some of the most common money questions from our listeners.  Knowing the answers to some of these questions can help you tackle some of the challenging financial decisions you might face in the future with a greater chance of success.

     

 
 
                   Episode 20  In this episode of Getting Money Right, we’re continuing to answer some of the most common money questions from our listeners.  Knowing the answers to some of these questions can help you tackle some of the challenging financial decisions you might face in the future with a greater chance of success.    Show Notes:    1.  How do I get started on managing money? [1:00]   Put a financial plan, what we refer to as a budget.   The most important piece to this puzzle is to set some goals and place them where you’ll see them every day. It’s got to keep you motivated & fired up.   Start by tracking all your income and expenses by categories.  Use the first 30 days of tacking to determine your income and spending.  Add in expenses that don’t occur every month such as, medical expenses, car repairs, vacation expenses.  Set your monthly budget based on your values and priorities.  If you have revolving debt, you should use a debt repayment plan like a debt snowball to help you accelerate your debt pay off and free up more money for your budget.  Make sure the payment is something your budget can manage.  Most important, set some goals and keep those goals in front of you, so you can be motivated to stay committed to the plan.  Continue to track income and expenses to make sure you’re sticking to your plan.  A budget does no good if it’s not being managed often, daily is preferred.      If you need help with managing your money better you can access the  debt and budget tools  on leosabo.com.  There are step-by-step videos that will show you how to get your plan in place.        2.  How do I budget with an irregular income? [6:32]   Budgeting with irregular income is similar to budgeting with a regular income.  The difference is in how your income is brought into your budget.  If your income is irregular you need to make it regular.  You can do this by first setting your budget based on your family’s needs.  Make sure it’s the average amount you know you can earn no matter what.  Once you have a monthly amount, you allocate that amount into the budget every month, no more, no less.  When you earn more than your budget amount place it into a  future income  saving account, which you can draw from when you earn less income than your monthly budget.  This way of budgeting may be hard to get started, but if you start as soon as possible, in a few months you’ll have enough saved in your future income account to allow for a stable and manageable budget.  In the meantime, if you have an income month that’s less than what you budgeted, prioritize your expenses to spend on the “must haves” and once you run out of money stop spending.      3.  Is gambling wrong? [10:48]   Many people say gambling is entertainment.  However, I’ve yet to see someone lose a boat load of money and say it was entertaining!  The truth is gambling is just not a good idea.  The payout rate is like 2% or less.  That means for every 2 people that win 98 lose.  You have to ask the question,  why gamble ?  What’s the real reason behind it?   I think if we’re honest we can all agree that it’s greed.   It’s the desire to getting rich quick, to get something for nothing.  We have to deal with our selfish desires and deal with any greed.  Gambling is not a good strategy for long term financial health.  Unfortunately, the people who can afford it the least are the ones that are influenced the most to gamble and play the lottery, and that’s not something we want to financially support.      4.   Avoiding “Get Rich Quick” schemes?  [21:06]   “Solomon, one of the wisest and richest persons that’s ever lived said, “If you plan and work hard, you will have plenty; if you get in a hurry, you will end up poor.” So, don’t get in a hurry.  Becoming wealthy takes time, and that’s ok because with time you'll gain the financial wisdom to manage wealth.”  The best way to avoid “get rich quick: schemes is by doing the following:  Never invest in anything you don’t understand fully.  Never believe in an investment that has no downside, there’s no such thing - risk is part of every investment because no one knows the future.  Never trust someone solely based on their word.  Too many people have been duped into get rich quick schemes because they trusted without verifying the information they were given.  Stay away from Ponzi schemes and multi-level marketing situations.  The motivation behind it leads to manipulations.  Refuse to get involved into any situation that involved manipulation.  Know your motive for investing.  If your motive is greed, having an unhealthy desire to get rich, you’re probably going to reason away any potential risk, and most likely pay dearly for it.        RESOURCES  Subscribe to Getting Money Right on  Stitcher  or  Itunes    Budget Forms and Tutorials   Spending Guidelines   Envelope System Video           

Episode 20
In this episode of Getting Money Right, we’re continuing to answer some of the most common money questions from our listeners.  Knowing the answers to some of these questions can help you tackle some of the challenging financial decisions you might face in the future with a greater chance of success.

     

 
 
               Episode 19  In this episode of Getting Money Right, we’re continuing to answer some of the most common money questions from our listeners.  Knowing the answers to some of these questions can help you tackle some of the challenging financial decisions you might face in the future with a greater chance of success.     Show Notes:    1.  How do I negotiate with my credit card company?      Take time to collect information needed to be in the best position to negotiate a new % rate with your credit card company.  Collect the following facts:   Current interest rate and the amount owed.  Length of time the account has been open.  FICO score.  Level set expectations by researching current credit card interest rate and determine how much you are willing to pay.    When researching, inquire only, but  do not apply  as traces of inquiries can hit your credit history leading to potential negative impact on your credit score.     Positivity, patience, and perseverance   Go in with a win/win mentality.  You have nothing to lose by asking.  You both win when your credit card company gets to keep your business at a lower rate!  When negotiating with your credit card company, be prepared, I’d even encourage practicing what you’ll say with a script.  Be patience and gracious in your exchange with customer service, but also be persistent.     Keep your conversation simple                                                        Representative: How can I provide you with exceptional customer service today.  You: Hi <Representative Name>. I am hoping you can help me out here.  I have been a loyal customer for ____ years and have made payments on time.  I noticed that my rate is pretty high compared to other offers I have received. Is there anything that you can do to help lower my rate?  Representative: Comes back with an offer that doesn’t quite hit what you had in mind.  You: I really appreciate you looking into this, but I am looking to be at a ___% at a minimum to match the offer I received with similar structure.  Is this the best that can be done.     What if negotiating doesn’t work to lower your rate?   Be ready to make the switch.  If you are not able to pay off the balance in full to close the account, then decide which credit card company offers the best rate for transferring the balance to a lower rate.  Use google search engine -  www.google.com   Once you narrow down your selection, pick the top 2 choices from your search and give them a call. You want to limit your inquiries to avoid negative impact on your credit history.  Inquire if there are any promotional incentives with a balance transfer.  Make sure you know all fees associated with the transfer before making a decision and when the promotional rate expires.  Do your best to remove credit card debt as soon as possible.  Work an extra job, sell some stuff, and get it paid down so you’re not losing your money on interest payments.  Always pay for basic needs first before paying credit card payments.  Prioritize food, housing, transportation and basic clothing before everything else.  However, notify and inform your credit card company that you’re having a hard time making the payments.   Run towards your creditors, not away from them.  Over-communicate when you’re not able to make minimum payments.       2.   Should I “cash out” or “rollover” my 401(k)?     You can cash out and pay:   10% penalty if under 59½ (with a few minor exceptions).     Federal & State income tax - 20% or higher.     You can leave it there   Set it and forget it…  Make sure your fees aren't high.  Make sure your investment options are good.  Personally, I recommend you not leave it with your old employer...direct transfer it to an IRA (Independent Retirement Arrangement).     Direct Transfer (direct rollover) to a new plan?   If it’s not “direct” then the employer holds onto 20% of the cash and you could get penalized and have to pay taxes and fees on that amount.  You can do a direct transfer to your new employer, but only if they have great options and low fees.  If not, I recommend you find a brokerage you trust (Vanguard, Fidelity, Charles Schwab, T. Rowe Price, T.D. Ameritrade).        3.   My parents are financially irresponsible; how can I help them?   First, please remember no matter how irresponsible your parents may be with money, they are your parents, so honor them by being kind as you discuss this topic with them.  It’s may difficult, but if they don’t want to take your advice they don’t have to, so don’t get offended.  They are adults and they should make their own financial decisions.  If their financial irresponsibility causes you or the family financial hardships you may need to get a bit more forceful.  Be aware that until a person has been told by a court that they lack the capability to manage their own finances, they are allowed to continue making their own financial decisions, even if their behavior is financially damaging to them – taking out loans, revolving credit, mortgages, and so on.  If your parents agree, you could get them to sign a power of attorney and work out an arrangement to let you or someone else manage their money.  If they don’t agree, unless there’s mental infirmity or some other incapacity, your option for guardianship is going to be difficult to get.  There are many requirements to guardianship, so if you do decide that’s a viable option get an attorney to help you through the process.  Approach this situation with wisdom.  The relationship is worth more than fixing the financial mess.     RESOURCEs   Budget Forms and Tutorials   Spending Guidelines   Envelope System Video         

Episode 19
In this episode of Getting Money Right, we’re continuing to answer some of the most common money questions from our listeners.  Knowing the answers to some of these questions can help you tackle some of the challenging financial decisions you might face in the future with a greater chance of success.

              

 
 
      Episode 18  In this episode of Getting Money Right, we’re talking with Rachel and Rudy Rupert, a young couple who have recently married and have had to work through combining their finances.  You’ll hear them share their experience, their challenges, and how they’ve worked together to make the blending of their finances successful.  You’ll really enjoy the nuggets of truth and wisdom this couple will share in this episode.      Show Notes:    1.    Tell us about yourselves.  How long have you been married? What do you do?  What’s something significant that’s going on in your lives right now?   Rachel:  We got married in September 2016, so we’ve been married a little over a year and a half.  We both work at Gateway Church in different departments, and we’re expecting our first baby, a girl, in August of this year.     2.    what has been the biggest adjustment to blending your finances together?   Rudy:  I didn’t have a lot of experience in saving and it was a huge adjustment to learn how to save.   Rachel:  The biggest adjustment was learning how to provide for everything we needed to make our life work.  Not having had to take care of some of the expenses we had when we lived at home with our parents meant we had to learn how to make our money provide for what we needed and wanted.     3.    What was the event or conversation that led you to believe and have hope in your ability to join your finances successfully?   Rachel:  Taking the time to sit down and talk about what our expenses were and build momentum based on our numbers and what our budget needed to be to work well.   Rudy:  Getting the clarity through the budget and managing it to realize that saving was definitely possible. No matter how much you make, saving a portion of it is possible if you gain the right mindset.     4.    Rudy, how did you deal with the fear or concern of being able to provide for you and Rachel?   Rudy:  I didn’t have fear about the budget but definitely wanted to learn and prove to Rachel that I could do it.  I didn’t want her to see me as someone who couldn’t save or manage money well, especially since she was more experienced than me at managing money.     5.    How would you each describe yourselves, as a Saver or spender?   Rachel:  I am definitely more of a saver now, although I did struggle with becoming more of a saver early on when I first started working.  I learned that focusing on goals helped me to become a better saver.   Rudy:  I was a saver as a kid but then when I started working and spending I didn't continue saving.  I formed the belief that the only way you could save is if you made a lot of money.     6.    How have you worked together to become better at saving?   Rachel:   My mindset was that saving was not “optional,” that it was part of the budget.  Rudy didn’t have the same mindset and together we didn’t make it a priority early on.  But, I kept bringing it up and encourage Rudy that we needed to make saving a priority and eventually it began to work, because the progress we made proved to me and especially to Rudy that we could have the things we needed and still save a significant amount.  Doing it is what made it more of a reality for us and convinced us together to make it a priority.     7.    What were some of the practical things you did hands on to make the blending of your finances possible and eventually more fun?   Rudy:   We started talking about goals and setting goals for how we were going to spend our money.  We were specific about what we were saving for and seeing the increase of our funds toward those goals was key to keeping us motivated.   Rachel:  We focused on making sure that each of us got to share and include their desire for saving.  Rudy wants to travel and I want for us to eventually buy a home.  Both of these saving goals are important to us individually and together.  Continuing to discuss these specific goals has been a great motivator in moving toward reaching them.     8.    How often do you talk about your finances and your budget?   Rachel:   Our goal is to do it often, at least weekly, and we do a pretty good job of that, especially now.  We’ll also take the time at the end of each month to talk about how we’ve done and if there are any changes or things we need to watch for in future months.   Rudy:   Talking and doing it together forces us to talk about what we’re trying to do and makes it more possible to succeed.     9.    What system do you use for budgeting?   Rachel:   We use  YNAB  and it’s been great software for us to keep on top of the budget.  I use the phone app to enter transactions almost every time I have an expense, something the app allows me to do easily.  Being able to enter the expenses and have real-time feedback has been a great way to stay accountable to what our budget actually is.   Rudy:   The software was confusing at first, but since I've learned how to use it it’s been a great tool to help me see what I have to spend on the go and for us to stick to our budget.     10.    Are you both engaged in managing the budget?   Rachel:   Yes.  We both take an active part in the budget.  Sometimes it can be a challenge but you have to roll with the punches and have patience and grace with each other to succeed.     11.    Who is the primary budget person?  Is there one person who owns the management of the budget or do you do it together?   Rudy:   At first it was Rachel because she had the knowledge and experience of how to do it.  Once I learned how to use it it became something we started doing together.  Once a month we go through every expense or area of spending.  We’re in this together and that’s where the joy of doing this comes from, in the sharing of this responsibility and finding agreement.     12.    How would you encourage couples in our listening audience to combine and start managing finances together?   Rachel:   What’s worked for us is having a combined ownership of our money.  Being fare to the other person and inviting them to dream with you about your plans for the future.  Managing the money and making decisions without including the other person is not going to work.  The potential and opportunities you'll have as you work together are greater than you could ever do on your own.   Rudy:  You have to have grace and patience for the person who’s not yet up to speed on how to budget.  Teach them if you can and give them time and encouragement and they'll learn to budget and value saving as much as you do.   Rachel:   I also believe it’s crucial that you continue to reassess your budget and make room for the needs you have.  Don’t be too rigid and keep your dreams and goals in focus and you’ll do great.     RESOURCES   Budget Forms and Tutorials   Spending Guidelines   Envelope System Video           

Episode 18
In this episode of Getting Money Right, we’re talking with Rachel and Rudy Rupert, a young couple who have recently married and have had to work through combining their finances.  You’ll hear them share their experience, their challenges, and how they’ve worked together to make the blending of their finances successful.  You’ll really enjoy the nuggets of truth and wisdom this couple will share in this episode.

     

 
 
               Episode 17  In this episode of Getting Money Right, we’re continuing to answer some of the most common money questions from our listeners.  Knowing the answers to some of these questions can help you tackle some of the challenging financial decisions you might face in the future with greater a chance of success.    Show Notes:    1.  What happens if I go over in my budget?   The money has to come from somewhere…savings, extra work, borrowing, but really, we need to deal with the root cause.  Usually, Housing, Transportation, and Food are budget categories that can easily go over.  Housing - Downsize the house or rent for a while.  This one category when reduced will have the greatest positive impact on your budget.  Transportation  Sell cars with payments and find a used car for cash until you can save for a better, newer car.  Lower insurance by having liability insurance or higher deductible - make sure you have enough saved to replace in case of an accident.    Food  Shop with a list - groceries.  Pack a lunch and reduce eating out on weekends or 3 to 4 times a month.  Buy off-brand items to save on groceries.    Other categories that can be a problem, entertainment, clothing and miscellaneous.  Create a realistic budget that you can stick to.        2.  What prevents a budget from working like it should?   Too strict.  Not having all the categories needed.  Not writing it down - lack of tracking income and expenses.  Finding a good method for tracking expenses.  No communication.    3.  Should I buy a car for my child who just got their driver’s license?   Buying a car for your child may entitle them to believe all of life’s big purchases should be handled by another person.  I’m ready to get married, my fiancé’s parents should pay for the wedding.  I want a house my parents should help me with my down payment.  I want to go to school I should borrow the government's money to do it.  I want to retire I should look to a welfare system to take care of me.    Obviously, this slippery slope is a little crazy, but just remember that you’re setting an expectation for your child with these large purchases.  I would never recommend going into debt to outright buy a car for your children, now you’re combining entitlement with examples of taking out large debts for instant gratification.  Now, let’s say you have the money and want to be generous, can you buy a vehicle for your child? Sure! I’d still recommend a used vehicle that has already depreciated the first couple years of value off, that way any dings and dents from young drivers won’t drive you crazy. Plus, insurance may be cheaper on an older vehicle with less value.  Help your child realize the time it took you to save for the vehicle and the sacrifices you made to give them the car, you want them to appreciate the value of the vehicle and not walk away entitled.  You also want to involve them in the car purchase. You want them to learn “walk-away” power when negotiating. You want them to see the cost and formality of filling out the paperwork. You want them to research the safety ratings and costs of different brands.  Another great method is the 50/50 match fund if you can afford it. You can offer to match any savings your child grows, up to a certain amount. You’ll need to put a limit on this since some kids can make incredible savings strides when they realize the benefit. Maybe $7,000 max match would be appropriate. As your child works and saves, they know that you’ll be doubling their savings to one day get a great vehicle. This way they have “buy-in”, but you’re still being generous.  The final method comes when you can’t afford a vehicle for your child. It’s time for them to get a job. They will need to save aggressively to be able to be able to purchase whatever vehicle their savings will afford.  You may be tempted to let your child take out a loan to buy a car, but this can backfire really quickly. Most teenagers don’t have the self-awareness to hold down a job through high school and college to make payments. They will need to budget for the monthly payment, the insurance, gas, repairs, and annual inspections etc. This can easily be:  $200 a month for the payment  $100 a month for insurance  $50 a month for gas  $50 a month for repairs, oil changes, tires, and annual inspections        RESOURCES   Budget Forms and Tutorials   Spending Guidelines   Envelope System Video               

Episode 17
In this episode of Getting Money Right, we’re continuing to answer some of the most common money questions from our listeners.  Knowing the answers to some of these questions can help you tackle some of the challenging financial decisions you might face in the future with greater a chance of success.

     

 
 
               Episode 16  In this episode of Getting Money Right, we’re continuing to answer some of the most common money questions from our listeners.  Knowing the answers to some of these questions can help you tackle some of the challenging financial decisions you might face in the future with greater a chance of success.  Show Notes:    1. Unique Terms on my credit report - what do they all mean?    Default  - A failure to make a loan or debt payment when due. Usually, an account is considered to be “in default” after being delinquent for several consecutive 30-day billing cycles.   Charge-off  - The balance on a credit obligation that a lender no longer expects to be repaid and writes off as a bad debt.   Collection  - An attempt to recover a past-due amount by a credit agency or collections department.   Settled in Full vs Paid in Full -  Paid in full means you paid the entire loan amount in full while settled in full means you negotiated the amount and paid a portion of the loan.   Delinquent  - A failure to deliver even the minimum payment on a loan or debt payment on or before the time agreed. Accounts are often referred to as 30, 60, 90 or 120 days delinquent because most lenders have monthly payment cycles.   Installment debt  - Debt to be paid at regular times over a specified period. Examples of installment debt include most mortgage and auto loans.   Bankruptcy  - A proceeding in U.S. Bankruptcy Court that may legally release a person from repaying debts owed. Credit reports normally include bankruptcies for up to 10 years.   Discharge  - Granted by the court to release a debtor from most of his debts that were included in a bankruptcy. Any debts not included in the bankruptcy – alimony, child support, liability for willful and malicious conduct and certain student loans – cannot be discharged.   Foreclosure -  A property has been foreclosed (house).  Check with each credit bureau for a glossary of terms and how to read your credit report.      2. What should I do if my auto loan is upside down?   Vehicles depreciate very fast in the first year or two - $2,000 or more immediately.  A $30,000 vehicle will $7,400 in the first year.  $600 a month lost, while the payment is about $550.  $100 of the payment is going to interest if you have a 5% interest rate.  That means that you’re actually not paying off the car as fast as it goes down in value.  That’s how you get upside down on a car loan.  After 1yr, you owe about $24,500, but it’s only worth $22,500 - upside down $2,000. You’d have to pay the dealer at least $2,000 to take back the car you just bought from them a year ago.  The problem gets bigger if you buy a more expensive vehicle, or something that is rare and unique so not many buyers are looking to buy it, so it’s harder to sell and the depreciation is even higher.  Imagine you buy a $45,000 truck, it could easily depreciate by at least $10,000 the first year, leaving you with big payments and no easy way to sell the vehicle and get out from under it.    General rule of thumb is to not have more than 35-45% of your household income wrapped up in vehicles (depreciating assets). So, if the family earns:  $40K * 35% = $14,000 vehicle  $50K * 35% = $17,500 vehicle  $60K * 35% = $21,000 vehicle  $70K * 35% = $24,500 vehicle  $80K * 35% = $28,000 vehicle         3. Should I use my 401(k) or other retirement funds to pay off debts?    4 reasons to never borrow from a 401(k)   You’ll miss out on the earning your investments would have generated.   No, you paying yourself back with 4% interest is not a good idea because it’s nowhere near what you would gain if you left it in.  Fail to pay and A $10,000 loan taken 20 years before retirement if not paid back could cost you as much as $57,000.  That 10K at a 10% interest compounded over 20 years would grow to $67,000.     You’ll pay tax twice on the money you borrow and the interest you pay   First, when you pay it back (after-tax money)  Second, when you take it out at retirement.    IRS cannot distinguish between pre-tax (your normal contribution) and after-tax (your loan repayment) money, so you’ll pay taxes on that money twice.     If you default on the loan you’ll get a large tax bill.   It will be considered income so you’ll get taxed at your income tax rate and if you’re under the 59 ½ the withdrawal will be considered an early distribution, which will add another 10% penalty.   Leave your employer and you’ll need to pay the loan back in full within 60 days.   Doesn’t matter if you left voluntarily, were fired, or the company failed.     Exception : you can’t pay your bills and have to file bankruptcy or default on a loan.  You should do whatever you can, get a second job, sell stuff, and spend less before you cash out your retirement account.  Assets should be minimized and not be a lifestyle.        RESOURCES   Budget Forms and Tutorials   Spending Guidelines   Envelope System Video         

Episode 16
In this episode of Getting Money Right we’re continuing to answer some of the most common money questions from our listeners.  Knowing the answers to some of these questions can help you tackle some of the challenging financial decisions you might face in the future with greater chance of success.

     

 
 
               Episode 15  In this episode of Getting Money Right, we’re answering some of the most common money questions from our listeners.  Knowing the answers to some of these questions can help you tackle some of the challenging financial decisions you might face in the future with a greater chance of success.  Show Notes:  1. How does the overall economy affect your personal finances?    Global economy  - what happens anywhere in the world can impact our economy.   National Debt impact on the economy.   If the U.S. is unable to pay its debts.  A rise in interest rates.  Drop in the value of the dollar.     Student loan debt impact on the economy.   Slows down their contribution to the economy.  Live with parents.  Put off having kids, buying a house, cars, etc.  All these factors will affect the health of our economy since a large part of our economy is based on people spending money.     Inflation   Hurts your buying power.  It means you have to pay more for goods and services.     Consumer confidence affects how much people spend   If they feel the economy is strong they’ll spend.  If they feel the economy is weak they’ll save.     Oil Prices   Affect everything not just gas at the pump.  High oil prices drive job creation but also increases the cost of manufacturing and travel cost.  Low oil prices benefit manufacturing through lower costs but can also affect jobs in the oil and gas sector.     The health of the economy affects your personal finances because it directly impacts how much things cost, from interest rates to the price of gas, and jobs.   Supply & Demand  Housing  Jobs  Unemployment rate      2. Should I have joint or separate bank accounts with my spouse?    If you’re married, definitely yes! If you’re dating, definitely no!    The benefits of combining accounts:   No temptation to hide money from your spouse.  Open communication catches financial issues early.  Two heads are better than one, having your spouse see the balance will help catch any errors.  You can easily pay bills from one location, making it easier to plan and budget the automatic expenses in your life.  Both spouses have access to the accounts in case something happens to one person, the other person can still access the money.  I tragically had a woman in her 50’s whose husband passed away and she couldn’t access any of their money for funeral expenses and common house needs for quite some time  The most important thing about this is the unity, this is “our” money, that “we” spend “together,” based on a plan that “we” created, and “together” we’re going to manage these finances.     Reasons not to combine bank accounts:   It’s harder to separate the rest of your lives if you combine finances in case of a breakup.  Dealing with an addict or someone who clinically can’t control their behavior.  This means it’s time for professional help.  Gambling addicts should not have full access to the accounts whenever they want, they should be portioned just enough cash for meals and gas etc.   Their online access should be shut down. This goes for pornography addicts, alcohol or substance abuse addicts, and for manic-depressive or bipolar disorders.     3. I’ve heard about Good Debt, what is that?   Debt is considered good when you’re able to borrow (leverage) money from a lender such as a bank, to purchase an asset that has potential to produce a profit, either through regular income or growth in equity (value).  Ex. business, real estate.  Difference between assets and liabilities  Assets put money in your pocket  Liabilities take money out of your pocket.  Borrowing to buy assets is better than borrowing to buy liabilities.  However, using too much leverage and owing a lot of debt is unwise.  Debt, even when used for assets should be minimized and not be a lifestyle.      Resources   Budget Forms and Tutorials   Spending Guidelines   Envelope System Video         

Episode 15
In this episode of Getting Money Right we’re answering some of the most common money questions from our listeners.  Knowing the answers to some of these questions can help you tackle some of the challenging financial decisions you might face in the future with greater chance of success.

     

 
 
               EPISODE 14  In this episode of Getting Money Right we’re talking about investing in real estate. We’re going to go over the types of real estate investing available and drill down on two or three that are most common for the average investor.    Show Notes:   Why Invest in Real Estate?   Diversification - multiple streams on income  More control than stocks or bonds  Multiple tax benefits not available with other types of investments     Types of Real Estate Investing Options:   Single-Family Home  Duplex/Multifamily - 2 to 4 units  Fix and Flip  Many, many, other types of real estate investing -  Commercial (offices, retail)  Wholesaling - deal making (find a buyer and connect to a seller)  Large apartments multi-family - 5 or more units (8, 16, 32, 64, 100+)  Mobile home parks  Owner finance owned properties       Multiple benefits of Real Estate Investing   Equity - Value of property increase  Write off for depreciation - less taxes/more income (explain this)  Cashflow - make money each month to reinvest or pay down principal  Returns are usually higher than investing in the market and you have more control (12-15% or more)  ROI (Return on Investment) = Gain (Gross) - Cost / Purchase Cost  Leo's results:  $113,000 purchase price  25% down - $32,500 (down payment and closing costs)  Average gain $16,700 (Gross) - $11,111 (Cost) = $5589 (Net Gain)  $5589 / $32,500 = 17.2% average (11.4% - 29.6%)          Real estate associated costs and requirements   20-25% down  Loan Payment - Principal and Interest (online mortgage calculator)  Insurance - Agent quote  Taxes - County Tax Assessor  Maintenance - 1% of property value per year for maintenance. Ex. $200,000 value = $2,000 in maintenance cost.    Single-Family Home  You can buy or build the property, or pick it up on a short sale or foreclosure. You may want to buy a fixer upper and flip it, or rent it out for income. Investments can be rather modest compared to those for larger properties and are generally 15%-25% of the total value of the home with a personal guaranty on the loan.    Pros:   Longer tenant leases can yield a higher annual ROI.  Value increase through upgrades and repairs - value may greatly exceed purchase price.  Holds its resale value if the community is thriving and the home is well-maintained.  Property taxes are often lower than those for multi-family units and commercial real estate.   Cons:   Less diversified rental income cash flow compared to multi-family properties. If the one tenant moves out, you have no cash flow from the property until you find another tenant.  Property costs may be higher due to homeowner association fees.  Fix-up costs may be high and you may have to renovate the property before renting it out or selling it.  Turnover cost could be high - More square feet to clean and repair between tenants.    Duplex/Multifamily  Usually two to four units, this is a popular investment for those just starting out. Owner occupancy is possible and is generally 15%-25% of the total value of the home with a personal guaranty on the loan.  Pros:   Less risk of zero income.  Always in demand.  Spreads costs of improvements and repairs over multiple units.  If four units or less, doesn't require special financing.  Convenient to manage rather than having multiple single-family homes geographically dispersed.  Can choose to passively invest in a professionally managed property.   Cons:   Higher turnover rate in multifamily - turnover is costly because property must be cleaned and repaired, plus the legal fees and other associated costs could eat into your profit.  Higher taxes due to higher value.     Real Estate Investment Trusts (ReiTs)   Passive investment in real estate.  Mutual Funds that hold real estate assets.  Similar returns as the general market.     Other things to consider   When looking to buy, take a general contractor with you to inspect the property - motivated to find issues because you’ll probably hire him to do the repairs  If you don’t have adequate knowledge of property condition, hire an inspector ($500) - well worth the cost.  Include a termite inspection when necessary ($100) - do this either way!  Learn your state laws regarding renters and landlord obligations.    Knowing what’s expected of you and what the renter’s obligations are will prepare you to navigate through issue that may come up and keep you legal.      Fears of real estate investing:   Nightmare renters: not typical and can easily be avoided by knowing how to screen your tenants.  Avoids 95% of bad renters.  Maintenance issues (inspection and basic knowledge, which can be learned will keep this number low and manageable).      How to succeed?   Save the first year’s income and build a cash cushion for unexpected expenses - the property should support itself through rents not through ongoing cash infusion from you.  Run it like a business - separate budget with all expenses allocated for (taxes, insurance, repairs and replacement costs, etc.).  Take the profit and reinvest or pay down the mortgage.  Don’t think of this money as a way to increase your lifestyle. Think of the long-term benefit!     Resources    The Intelligent Investor  by Benjamin Graham   The ABC’s of Real Estate Investing  by Ken McElroy   The Book on Investing in Real Estate with No (and Low) Money Down  by Brandon Turner   What Every Real Estate Investor Needs to Know About Cash Flow  by Frank Gallinelli   The Millionaire Real Estate Investor  by Gary Keller    

EPISODE 14
In this episode of Getting Money Right we’re talking about investing in real estate. We’re going to go over the types of real estate investing available and drill down on two or three that are most common for the average investor.

     

 
 
               EPISODE 13  In this episode of Getting Money Right we’re continuing our conversation on investing for retirement.   We want to equip you with modern philosophies for investing and show you where to start. This series will give you the confidence to go out and make some retirement investing decisions and teach you what it takes to become a millionaire.    SHOW NOTES:    INDEX FUNDS  A majority of actively managed mutual funds fail to beat broad indexes, like the S&P 500. We know that some hedge fund and mutual managers will beat the overall market, we just don’t know which ones it will be. We don’t know who the next Warren Buffet or Philip Fischer will be.    INVESTMENT ADVICE FROM WARREN BUFFETT      “My advice to my trustee couldn't be more simple: Put 10% of the cash in short-term government bonds and 90% in a very low-cost S & P 500 index fund. (I suggest Vanguard's.) I believe the trust's long-term results from this policy will be superior to those attained by most investors — whether pension funds, institutions or individuals — who employ high-fee managers.”     4% RULE   The four percent rule is a  rule of thumb  used to determine the amount of funds to withdraw from a retirement account each year.  This rule is used to calculate a steady stream of income to the retiree from their investment, while also keeping an  account balance  that allows funds to be withdrawn for a number of years.  The 4% rate is considered a "safe" rate, with the  withdrawals  consisting primarily of interest and  dividends  meaning, you won’t lose the balance of your investment, because you’re only taking out the amount it’s growing each year.   The four percent rule  was created using  historical data on stock and bond returns  over the 50-year period from 1926 to 1976.  Prior to the early 1990s, 5% was generally considered a safe amount for retirees to withdraw each year.  William Bengen (financial advisor) - skeptical of whether this amount was sufficient, in 1994, conducted an exhaustive study of historical returns, focusing heavily on the severe market downturns of the 1930s and early 1970s.  He concluded that even during weak markets, no historical case existed in which a 4% annual withdrawal exhausted a retirement portfolio in less than 33 years.  What does that look like in actual income?  To have at $75,000 yearly income you’ll need to have saved $1.875 million.     BROKERAGES  Now that you’ve learned about Mutual Funds & Index Funds, would you like to know where to buy them?   First go to your company 401(k) or 403(b) if you work for a non-profit, or TSP (Thrift Savings Plan) for government employees.  If they do a match, start there.  Review mutual funds - Google “where can I buy mutual funds?”    Or go to these brokerages  Vanguard  Charles Schwab  Fidelity  TD Ameritrade  Search Mutual Fund Lists.       WHAT TO LOOK FOR?   10-year track record or more  Average 9%-11% or more  Minimal fees / expense ratio  0.25% = low  0.75% = medium  1.25% = high     Don’t get sold, get educated.    IS IT TOO LATE TO START INVESTING?   Life expectancies as of 2011  Men 76  Women 81    People are starting business later in life.  Great potential for significant income.    Lowering lifestyle  60’s-70’s usually means less expenses.  Feeding less people.  Less car insurance.    House is paid off.  Less water & electricity when kids move out.  Downsize (apartment or townhouse).  Lower taxes.  Lower energy consumption.  Less maintenance.    Move to a cheaper state - low or no income tax states.  Lower property tax states.  Property taxes frozen.    40’s-50’s are highest income years.  Save more aggressively.  Try to add a catch-up amount when buying mutual funds.      Next week: Additional types of investing (more hands-on vs passive investing)      RESOURCES    Vanguard Mutual Funds    ETrade Mutual Funds    0 Likes        

EPISODE 13
In this episode of Getting Money Right we’re continuing our conversation on investing for retirement.   We want to equip you with modern philosophies for investing and show you where to start. This series will give you the confidence to go out and make some retirement investing decisions and teach you what it takes to become a millionaire.