How serious are you about getting out of debt? Well if you follow the debt rules you will hopefully kick American Express to the curb and drown discover card in the fish tank. The secret to the debt rules I will share with all of you today is first a disgusting desire to be free from all of these imaginary bosses telling you where to send those fabulous green dollars.
Do you want to continuously fund the credit card companies profit margin or would you rather increase your household profit margin? I think we all know the answer to that question, but it will take a long time coupled with an intense commitment to complete your debt repayment journey. If you are willing to step up and live life far from the average person then follow the debt rules below I will lay out for all of you. I will tell you a few strategies and far from average methods, but ultimately it will all be worthwhile.
The title question is probably asked millions of times a day by people in random situations. Where do I see myself in five years? I wanted to give you a personal post where I answer the question. By doing this publicly I hope to achieve all the goals I have for my family in the next 5 years. Hey you reading this, have you ever written down your 5 year goals list for your current life situation. If not then I recommend you proceed diligently to find a pen and paper to complete a 5 year list today. Why did I finally decide to write a post about this now? First off because I lose paperwork all the time. Secondly because files on my computer can get lost for a myriad of techie reasons. Third reason is primarily because I freaking want to.
I talk with people from time to time and they either do not have goals or could care less to think about where they will be in 5 years. If you are not forward thinking then you might as well start literally taking steps backwards. Just take a post it, write down the goals you want to accomplish in 5 years, laminate it and put it on the fridge. That’s a fun weekend project you can do with your kids. So where do I see myself in five years?
How can you develop financial fitness? Well it is simple by working every dollar that crosses your hands and taking the time to see how the money plan you have now will give you what you want later. Real financial fitness can take place, but the trick is you have to want to work those dollars. Many people love working out physically, and on the flip side give up financially. Most of the readers of this blog are in the 25-35 age range, and that means you guys are abundantly blessed with physical energy. Now if you could just direct some of that energy to daily financial fitness workouts, life can be a nice walk in the park.
I think there is a misconception behind what an asset is and what a liability is? The truth behind assets and liabilities is that one puts money in your pocket while the other takes away money. If you question this monetary foundation then please reevaluate the stance on how to distinguish both of these financial terms.
If you can early on capture the real essence of the assets and liabilities game you will succeed with money and possibly have the freedom from worrying about money. The real conundrum that can be simply solved is to ask yourself before a purchase will this put money in my pocket or take away. That shiny new car might seem to many as an asset, but it is really a liability. Why you may ask because you then have to fork over thousands of dollars per year now after owning it that you didn’t have to before owning it. Hence your cash flow is now affected negatively. The costs include insurance, car payments, gasoline costs, maintenance costs. Before you signed on the purchase order dotted line, you never had to worry about having the money for the newly found car costs.
What’s up! I think it’s time to give you a refresher on my random facts. I did a previous post way back in February and I want to do this at least 2 – 3 times a year. I want to break up the seriousness of money management with all the trials and tribulations about that topic. What better way to switch it up than to get a little personal with you guys, sort of like an online journal I am keeping for myself. One day I can go back and read how awesome I was to make a record of all the random facts I am sharing. We as humans tend to forget almost everything, so why not reminisce a little from time to time. Let me know what you think in the comments below.
I think this will be a good post because anything with the number 3 must be good luck. Hey readers and bloggers have you shared a recent random fact with anybody today? If you do you might get a new friend.
If you could trade something, anything for Freedom what would it be? Maybe the desire to not have to work for someone else forever would change something to attain that freedom? This idea might seem far-fetched for many of you today, and that is the exact message I want to instill in how you think for a moment. Every day deals are exchanging hands in the form of currencies, barters, favors, and political power exchanges. Did you know that with every unfavorable exchange you make, you are giving up the chance to possibly have freedom sooner? What can you trade for freedom? The answer should be that you will do anything legally possible to get it.
A simple choice that you must decide can give you a few months of freedom later from having to punch that dreaded time card. Whomever told you that they enjoy working for others is either unaware or in denial, because when working for others is counter productive to allow you much opportunities to work for you. It’s a complete catch 22, because security can be developed greater when working for yourself, but many people do not have the vision to pull it off so they make due and try to find security with working for corporate America. Does corporate America really have your best interest at heart or are we just another source of revenue for the corporations. Did you know that on average employees make the companies they work for about 2-3X the amount they are getting paid as a salary. It’s time to realize that nobody has your best interest at heart except for you.
Money should drop from the sky to your piggy bank.
After reading many books, hundreds of blogs, and hundreds of financially related websites I have come to decipher the 4 basic principles of personal finance.
Home Buyers did you know there is a company that is offering down payment assistance in certain markets for a 40% equity stake in the eventual sale of the property. If you could not afford the 20% down payment would you consider this as a viable option? This company is willing to give up to 10% of the down payment for mortgages above 625K.
I think this can bring complications later down the line, but if you plan to stay in the property forever I see some benefits with it as well. The company is listed in the article below and they will be sort of living in your basement with a second lien on your property. I will discuss the pros and cons of this type of arraignment later in the post, but let’s think about the emotional rationale first. If and when you finally pay off your mortgage, this company will assume the first lien, and if you ever sell they will take 40% of the proceeds. Wait one second they only invested 10% of the down payment and now they want 40%. That is a big difference to the tune of 30%, and a big capital appreciation for the company. On top of that your house if in a decent neighborhood will appreciate about 3% per year, and they will get all that wonderful increase in market value for doing a one-time investment. Now that you heard this shocking news, does it change your mind?
Home Buying with Down Payment Assistance
Pros:
Help with half of the down payment
Avoid PMI (Private Mortgage Insurance)
Less mortgage interest to payoff over the life of the loan
Increased cash flow because you borrowed less from Mortgage Company
You can always pay back the investing company and remove the lien (But at what % cost)
Invest the other half of the down payment in other investments (If you saved it)
Cons:
Investing company will always have a lien on property (Have rights to it)
Loss of 40% equity Stake in property when sold (Sacrifice Upside Market value)
The property is never fully yours
Only available for Jumbo Mortgages above 625K
AS you can clearly see the pros list outnumbers the cons list. But the reality is the cons future losses might be more devastating to your net worth. The 40% share of the future property value might be 300 thousand dollars in 15 -20 years. I now will ask you this, will you trade with me 62,500 for $300,000? The difference is 237,500 dollars in eventual proceeds of the property assuming the mortgage is completely paid off. I would not take that trade if I were you, and I would rather be patient and save the other 10% if I didn’t have it right now.
Resource: Article
Comment if you are in the process of home buying and you do not mind taking down payment assistance?
