Friday, May 23, 2014

Make the Right "BIG" Decisions (pt. 1 of 5)

By Olivia Sandham

Earlier this week, an email circulated through our office with this article.  It is typical for us to share work-relevant articles every so often, but what was NOT typical was that for the next several minutes, everyone in the office emailed their thoughts and responses to the article.  The most memorable quote one of our advisors pulled from the article was:

“Make the right BIG decisions, and the small ones won’t mean so much.”  We even jokingly (okay, maybe seriously) considered ordering coffee mugs with this quote.

This article and our comments got me thinking (and researching) about the “small decisions” we make when attempting to better our financial position.  Several decisions could include:
  • Cut back on expensive coffee (the premise of the article)
  • Cut back on monthly subscriptions
  • Use homemade shampoo, laundry detergent, cleaners, etc.
  • Use coupons
  • Use a fan instead of air conditioning, or more clothes/blankets instead of heat
  • Buy generic brands at the grocery store
  • Buy from second-hand or thrift stores
  • Eat out less
  • Drive less
Somewhere along the lines of researching small financial changes (and maybe because it was lunch time), I ran into articles about making small diet and exercise changes to improve lifestyle.  This got me thinking, does the same quote apply?  So, I put together a list of “small decisions” we make when attempting to better our diet and exercise:
  • Use a food journal
  • Cut back on alcohol, sweets, fat, and carbs
  • Eat out less (repeat item!)
  • Walk/bike more (aka drive less - repeat item!)
Does anyone notice a trend with most of these ideas, besides the fact that they are “small” changes?  When I read this list, all I see is the word SACRIFICE.  I can’t speak for everyone, but when it comes to making any decisions that are going to stick for the long-haul, I need to be motivated and I need to feel like the change is worthwhile.  But cutting back on the small joys in my life is not motivating, and putting in a lot of extra time and effort for a small result is not a worthwhile change to me.  Here’s what comes to mind for me when I look at these ideas:
  • Cut back on expensive coffee:  The couple of extra bucks for expensive coffee might be worth it.  A smooth and flavorful coffee is either a morning ritual to get your day started (as necessary to waking up as showering in the morning), or as is the case for me, it is an occasional indulgence because I don’t drink coffee that often, so it better taste really good when I do.
  • Cut back on monthly subscriptions:  There seems to be no better deal than movies or TV shows on demand in my living room (or on-the-go smart devices) for a monthly price of what it would cost for me to go out to or rent a movie only ONE TIME.  And don’t get me started on movie theater snack prices versus snacks at home!
  • Use homemade shampoo, laundry detergent, cleaners, etc.:  Anything DIY (do-it-yourself) almost 99% of the time ends up being a BWTM (big-waste-of-time-and-money) because I make a big mess and don’t use half of it anyway because it never works as well as the real stuff.
  • Use coupons:  I am already panicking just thinking about how much extra time I would have to spend finding, cutting, organizing, and remembering to actually use coupons.
  • Use a fan instead of air conditioning, or more clothes/blankets instead of heat:  My house is a place of solace, and the temperature being (as the nursery rhyme says) “not too hot and not too cold, but just right” is an extremely important part of that.
  • Buy generic brands at the grocery store:  Most generic brands just aren't the same - they don't taste right, they don't smell right, they don't feel right!
  • Buy from second-hand or thrift stores:  Second-hand and thrift stores are okay for certain purchases (I have found some neat furniture and gifts), but there is something that just irks me about buying some items like clothes and children’s toys that have been used before by someone I don’t know.
  • Use a food journal: I feel anxiety just thinking about how much effort it takes to measure and write down every little thing that goes into my mouth.
  • Cut back on alcohol, sweets, fat, and carbs:  I don't know what happens, but if I am trying to eat less of something, I suddenly feel deprived and as if it is the only thing I want to consume, and then I feel guilty for wanting what I am not supposed to have, and it's just a big awful cycle that always seems to backfire.
  • Eat out less:  Eating out is already a once-in-a-while affair, and usually involves an event or celebration of some sort.  This would just be taking away all my fun!
  • Drive less OR walk/bike more:  If I didn’t drive as much, I would either stay at home all the time or I would have to bike/walk, and I have no desire to arrive to work or other engagements either freezing with icicles of snot running down my face, or sweating profusely out of every pore.  Plus, imagine how much earlier I would have to leave...
Okay, so you might be thinking that my inner child ("But I want that!") and my inner laziness ("But I don't wanna!") is definiting sneaking out between the lines.  But isn't that just what happens with any decision?  If we make decisions that dissatisfy our inner needs on a regular basis, how can we expect to succeed at these changes?  As you can see, it’s pretty obvious for me that the “small” changes listed above (sacrifices!), no matter how many times I try, probably aren’t going to stick.  So what kind of decisions would?  As the quote says, “Make the right BIG decisions.”   Here is a list of a few financial “BIG”s that might be better to think about:
  • Automate payments
  • Renegotiate rates
  • Earn more money
And now a list of the lifestyle “BIG”s that might stick better:
  • Plan and prepare ahead
  • Completely remove and replace “bad” food items
  • Focus on getting MORE
The “BIG” financial decisions can be exciting when accomplished and can take very little time and work, sometimes just a few minutes online or over the phone.  And the lifestyle “BIG”s can be fun and effortless, too.  What's great about these decisions is you only have to find the nerve once in a while to implement these changes, and the best part, they could actually SATISFY your inner needs instead of making them feel like sacrifices!

Read our blog for next week as we dive into the tips and tricks on how you could accomplish each of these “BIG” decisions!

Tuesday, May 13, 2014

Build Weath and Discover Financial Freedom
1) Spend Less: Align your values and goals, and track your spending so you can focus on being accountable and staying disciplined.  Consider eliminating wasteful expenditures, repairing instead of replacing, and selling unused items.  Also, avoid using credit cards for bills or to extend purchasing power.
2) Earn More: Increase your working value by personal and professional development through education and training.  Seek higher paying jobs or additional income through part-time or freelance work. Consider turning your hobby into an income stream or even starting a side business.
3) Invest Wisely: Connect with a credible and knowledgeable investment advisory firm to wisely invest your funds.  Re-evaluate your investments every so often to make sure you are on track.
4) Financial Freedom: Enjoy living the life you want and deserve!

Friday, May 9, 2014

Home Buying Tips

Considering buying a new home?  Dave Ramsey suggests a few helpful tips for those getting started.  Check out the section on Dave's website "Home Buying Tips" for more information.

Step 1:  Evaluate Your Finances
Before considering buying a house, you may want to get your finances in order.  Buying a home is a blessing but can be quite a financial commitment, so consider having a fully-funded emergency fund before anything else.  Also, ask some important questions such as 1) Can I make a 10-20% down payment? 2) Can I afford a 15-year fixed rate loan? 3) Can I keep the house payments below 25% of my monthly income?

Next, in order to increase your chance of getting the best deal when buying your home, try getting a pre-approved mortgage.  Taking time to compare offers from trusted mortgage providers can make sure you stay within your price range and allow you to make an instant offer when you find the perfect home.

Also, remember to consider the extra costs involved with owning a home.  Home owners have added expenses of property taxes, utilities, insurance, and more.

Step 2:  Call The Pros
Start by making a list of features you would like in your new home.  A new house is a significant financial AND time investment, and you and your family will want to be happy for many years to come in the new place.  Having a good idea of where you would like to live (city, suburbs, country), how many stories/levels you want, if you want a garage, walk-in closets, and backyard size are just a few considerations to pass along to your buying agent.

Next, find the right buying agent to help you buy your house, to help you save time and money.  A good buying agent could  be someone who only takes commission from the seller of your house and does not charge you, someone who makes sure you never pay more than you should by representing you well in price negotiations, and someone who makes sure all the appropriate paperwork is completed.

Also, take time to find the right home inspector in advance, so when you find the perfect home you will already have someone to inspect it for you.  A good home inspector could be reliable, come highly recommended by people you know, have solid references, and a good background.  The home inspector you pick could have a broad knowledge of home systems and structures and a long history in the inspection business, and should also be independent and have no connection to the seller.  Finally, you may want to make sure your home inspector will give you a complete report.

Step 3:  House Hunting
Location of your new home may be very important, not only now but in the future.  Unless otherwise planned, you may eventually want to resell your house, and you might want it to be in a good location.  Some considerations to make regarding location include 1) How close is the home to your office? 2) Is the home in a good school district? 3) Is the home conveniently located near shopping centers, churces, etc? and 4) Is the home in a low crime area?
Also, remember that not every seller may own up to the physical details that need to be fixed.  Consider getting the home inspected early in the process, and possibly hiring an independent inspector to objectively view the home inside and out.  Then consider including anything the inspector finds that needs to be fixed (plus the estimated costs) in the final contract.

Step 4:  Close The Deal
Before making the final moves to buying your home, consider getting a property survey, which could reveal boundaries, easements, encroachments, and other legal concerns which could alter the value of your home and property in the future.   Common issues (such as your neighborhood lots having Public Utility Easement) could allow a utility company to, for example, place a large electricity pole in your front yard, thus changing your home's value.
Now is the time to consider utilizing the home inspector you may have already picked.  The inspector may examine the home's condition and look for problems you may not have noticed, with key areas including the roof and gutter, house foundation, basement, and crawl space, heating and air condition systems, electrical systems, plumbing, kitchen counters, cabinets, faucets, etc., and bathrooms.
Once the home has been inspected and you are ready to make an offer, this may be the time your buying agent could come in most handy.  The buying agent should have access to a wide variety of information to keep you on track for offering the right amount to buy your home.  When negotiating offers, it may be best to keep the communication going through your buying agent, because they could be your best advocate and your best advisor at this point.
Finally, before you sign the mortgage and make the long-term commitment of buying (and continually paying for) your house, you may want to re-evaluate your mortgage to your financial capabilities.  The recommendation is a 15-year fixed rate, with your down payment at 10-20% of the home's value, and your house payment less than 25% of your monthly, take-home pay.
This article was written based off information provided by the section "Home Buying Tips" on Dave Ramsey's website (click here).