7 Financial Lessons to Master by the Time You're 30

Welcome!  Well, this is the last day of September and this month I turned 39.  Another ten years of life is soon to be behind me.  I don't know about you, but it sure seems like time is speeding up.  I remember my days as a twenty-something when each year lasted a year.  These days a year feels like it goes by in nine months!  Totally not fair.  I suspect this warped sense of time loss has to do with how busy I am.  And this brings me to today's financial literacy lesson.

Source

Most people will jack-up their daily productivity upon leaving college and getting a job, and/or once they settle down and start a family.  It's easy to get in a rut of doing the things one needs to do to survive to the next day, and the next, and so on.  Out the window go important financial lessons that must be practiced often so that they become habits over time.  The sooner you develop strong financial habits, the better off you'll be at retirement.  That's why mastering the following 7 financial lessons by the time you're thirty, will put you leaps and bounds above your peers, and on pace to retire in style.

1.  Create a monthly budget and stick to your budget for at least three months.  Don't start and stop like a car on a busy expressway, choosing to budget one month, foregoing on the next, and getting on a monthly budget again months later.  You don't make it automatic this way!  If you can do three solid months on a budget, you can handle a whole year, and a lifetime of living within your means.

2.  Pay yourself first!  If you take out money from your paycheck as soon as you get paid you will force yourself to scrutinize every purchase and subsequently redefine your needs and wants criteria constantly.

3.  Write S.M.A.R.T (Specific, Measurable, Attainable, Realistic, and Timely) financial goals.  Example: By the time I am 30, I will have started my own _________ company, and made _$_________ in top line revenue.  What you fill in after the dollar sign will depend on what you fill in for the first blank.  Remember, your goal has to be attainable and realistic.  So if you write, "Cupcake company" and "$5 million," you are not being realistic and your goal will not be attainable unless you happen to be selling magic cupcakes with ingredients hailing from Colombia.

4.  Take on good debt.  Eliminate and become psychologically averse to bad debt.  Good debt is hard to come by unless you have great credit to finance your fledgling company, real estate purchase, etc., Or you have learned how to use OPM (Other People's Money) expertly.  At best, learn to leave no credit card with a balance each month so you never have to pay interest.

5.  Invest three months worth of your six month emergency fund money in a liquid account.  Most people let all of their emergency fund sit idle in a practically zero interest bearing account.  You can be in and out of the market in a matter of days.  If you encounter an emergency, use your three months worth of cash in savings first.  If you're in a losing position with your invested portion of your emergency fund, use rally days to get out one month's worth at a time, giving yourself more time to hold your position and perhaps get out at better prices.  If you're up, i.e., sitting in the green, liquidate a months worth of cash at a time so you don't miss out on additional upward price action.

6.  Contribute to your retirement monthly.  Putting money into your retirement account monthly is like going to the gym regularly.  There are people who can do it.  There are people who can't.  The people that go to the gym regularly began building this habit early on in their lives and stuck to it.  If you don't contribute to your retirement as soon as you get a full-time job, benefits or not, you will be one of those people needing to make a new year's resolution to lose weight every year!

7.  Use your credit cards and don't have more than three.  Yes, in your twenties you should be making as many purchases as possible with your credit card.  But the trick to establishing great credit is to never use more than one-third of your credit limit for each card each month.  Example, you have a $600 credit card limit on one card.  Don't charge more than $200 on it each month.  And of course, be sure you can pay off the entire amount when the statement comes in so you're not charged any interest. 

Okay, ladies and gents, I hope this has been useful information for you.  Your twenties are the peak of your physical self and it's all downhill (gravity taking over) from there.  Your financial self is just starting to ascend the mountain so you should be practicing your climbing skills.  A fall from low elevation won't be so bad if you learn where you stepped incorrectly.  However, if you wait until you've almost reached the top of this metaphorical mountain, realize you aren't hooked to a lifeline, get nervous, and fall, getting back up and starting up again won't be as easy as it was in your youth.  So take my suggestions above and strap on that backpack hiker! 

Write Your Own Ticket with This Career

Welcome!  Today's financial literacy installment is meant to encourage Millennials and people looking for a career change on their future job prospects.  Do I have a job for you!  Let me tell you...this career is already currently in high demand and with the right advice, you can practically write your own ticket.

The job is not easy; though it can be very meaningful sometime after the third or fourth year of employment when things start to make more sense.  You will always have mental stimulation.  In fact, with this job you can learn something new almost every day!

I'm talking about being a teacher.  And if this makes you immediately sick like the smell of sulfur on a hot day, put on a gas mask!  Teachers in the U.S. are a commodity right now, with employers like school districts and charters fighting for them left and right, especially in certain parts of the country.  Not to mention, there are countless of Baby Boomers leaving the profession every single year and this trend will not abate for quite some time.

Now, I understand that there is a whole lot of negativity out there about being a teacher.  Reasons people cite to discourage others from being a teacher include:

1.  Low salary/pay
2.  Under-appreciated by the press, politicians, and segments of the population 
3.  High stakes testing interwoven in the evaluation process and also taking curriculum choice away from individual teachers
4.  The workload expectation after school hours
5.  Student misbehavior enabled by administrator's need to reduce disciplinary statistics

Doesn't sound like fun, does it?  But let me tell you, as an educator on his 15th year, I can assure you that many of the reasons against being a teacher are exaggerated, and often times, comparable to what other professionals face in their own private sector world, i.e., routine stuff.  I have advice for anyone out there that is thinking about becoming an educator.  This advice will make your reaching veteran status a lot more likely. 

1.  Don't start your career in an urban, low-income setting if you want improved odds of making it past year three in the business.  It takes experience and excellent classroom management skills to thrive in this type of setting, and frankly, new teachers just aren't cut out for it this early in their career.  Instead, start out in an environment where students will be forgiving of your errors.  Once you gain teaching experience, you can move your career to the inner city if that's your passion.

2.  Do your homework and read the teacher's contract of the prospective school district where you want to be employed.  Immediately check the section on evaluation.  Find out what criteria is used to evaluate teachers.  If there's a mention of testing performance anywhere, click the "X" on that site and look elsewhere for employment.  The last thing you need as a new teacher is to worry about student performance on state tests affecting whether you get to make it to another year.

3.  Have a system to make the workload manageable.  For example, I come in one hour before the start of the day and grade notebooks or quizzes, enter grades, and find PowerPoint lectures/YouTube videos via Google on the content I need to cover in the upcoming lessons.  After school, I spend one hour taking down labs, setting-up new labs, grading, and planning curriculum.  I NEVER TAKE WORK HOME!  In fact, I haven't taken work home in over ten years.  I work about 10 hours a day now as a teacher (Monday through Friday...I don't do work on weekends) compared to the 11 plus hours I was putting in daily (M-F) as an administrator.

4.  Stay away from the Toxics.  The Toxics are the jaded, constantly complaining and whining staff members at every school.  Too much of them and your week will be depressing.  You're better off finding the people who look like they are enjoying what they do.  The positive energy you get from healthy, well-rounded, and balanced teachers will inspire you to model your own career after theirs.

5.  Win the hearts of your students before trying to win their minds.  Beginning teachers stress about staying on pace with their veteran counterparts, and indeed, sometimes they are pressured to move fast.  This is a recipe for disaster.  New teachers need to establish professional, yet caring relationships with their students as a necessity.  Only when students feel they can trust who's in front of them will they be willing to respect their teacher.  And since new teachers don't yet have the management skills needed to keep student discipline at bay, they will suffer the consequence of trying to put learning as a priority over relationships.  Explain this rationale to your evaluator and see them smile.  Trust me. 

How to write your own ticket as a teacher

Once you get your credential and are a free agent, so to speak, research the state you want to work in.  Find places and employers that will offer signing bonuses.  They do exist!

Negotiate your salary.  In states like Arizona, Nevada, and Indiana, where they are hard up for teachers, I would suggest every teacher new to the area negotiate for a better step on the salary schedule then where they would normally start.  Why not?  If they don't want to place you on step three (normally reserved for a third year teacher) see if they will settle for step two.  Don't sign anything until you get the best possible deal for yourself.

Get credentialed in a highly sought after subject area like Special Ed, Science, and Math.  If you have one of these three types of specialty credentials you will always have employers courting you.

If you move and will be working in a place that is begging for teachers, tell your future employer that a condition of your employment be that they take all of your years of teacher experience in consideration of where to place you on the salary schedule.  Certain districts only accept between five and seven years and will want to place you as far down as they can on the salary schedule to have less of their operating budget going to salary.  Tell them no thanks.  Find ones willing to give you what you deserve and these I suspect will be more abundant in the near future.

Look, there will always be challenges in someone's work life.  The corporate world/private sector is not immune from politics, top down management, and people with ingrained ideas about how things should be done.  As an administrator the past ten years, I interviewed many people who had left the private sector, frustrated by what they had encountered in the corporate world, who wanted to pursue their lifetime dream of working with young people and sharing of their knowledge.  Back in the classroom, I can tell you that I am much more relaxed and in control of my daily work functions.  I can't believe I did admin work for ten years!  Teaching is great when you don't let it define who you are, are flexible, and have a strong union helping to keep evaluation fair.  If change scares you, however, please don't become a teacher, because professional growth involves change.  One's the image, the other is the reflection.    
  
Thanks for reading!  See you next time.

How to Beat the Average Cost of Raising a Child

Welcome back amigos!  Today's financial literacy article deals with the costs of raising a child to the age of 18, and how to avoid failing to procreate out of sticker shock, so to speak.  I'm all for you feeling completely financially comfortable about bringing a new human into this world.  It makes total sense to crunch some numbers beforehand with your significant other before "going for it."  At the same time, planning for a baby monetarily should not lead to discouragement.

According to the U.S. Department of Agriculture, the average cost of raising a child born in 2013 to the age of 18 was $245K!  And of course the figures are higher nowadays.  I think the numbers are ridiculous, even when taking other factors into consideration like where you reside, a family's income, and whether or not you have other children.  Is it possible to spend this much money on a child from birth to the age of 18?  Of course!  Some parents will spend even more.  But let's face it, more than half of us would never keep a child clothed, fed, and alive if we had to shell out that kind of money.  That being said, here are my tips for parents who, like me, hate being part of a statistic.

1.  Make sure your wife has a baby shower.  Your wife should select her most social friend to organize the shower so scores of women can be in attendance.  Have your wife ask for diapers ranging from newborn to size 3.  Babies poop the most during the first three months of their lives.  Probably not a scientific fact...just going off experience here.  Anyway, diapers are super expensive so forego on asking for clothes and get as many free diapers as you can.  Trust me!

2.  Use cloth diapers.  So once you run out of free diapers from the shower, have cloth diapers ready to go.  According to my mom, I used nothing but cloth diapers as an infant.  Of course, we lived in Mexico at the time and it was the 70's.  I hear cloth diapers have staged a comeback.  I also read somewhere that it will take on average 8,000 diapers to fully potty-train a child.  The cost: $2,500!  There is an upfront investment fee when buying cloth diapers and brand selection is key, but if you do your homework, you'll save on one of the most expensive early costs of raising a child by going with cloth.



3.  Get clothes from mothers with older children.  Where on this planet does it say you have to buy your newborn, infant, toddler, or small child brand new clothes?  You know how my mom did it?  She got hooked-up from her friends and older sisters with kids of their own.  Your child grows like a weed.  If you are going to Oshkosh B'gosh or Baby Gap every time they grow out of their clothes you will undoubtedly pay $245K or more in child rearing costs by the time your kid is an adult.  Besides, kids don't even care about their looks until they start elementary.  And even then, their opinion doesn't count!  No friends who can give you hand-me-downs?  Go to the nearest consignment store.

4.  Eat at home.  America has become a nation of big name casual restaurants and eateries.  Back in the 80's there was no Chipotle Mexican Grill, or PF Chang's, and other eateries we frequent weren't as ubiquitous as they are today.  Going out to eat with the family is fun and all, but it should only be done on special occasions, like a birthday or anniversary.  Why are Americans obsessed with dining out?  Save money on feeding your children by cooking dinner at home!  Hello!  Kids need you to talk to them at the dinner table anyway, not be looking at the sporting events going on all around you.

5.  Ever hear of bunk beds?  Everybody wants to up and leave their small and humble abode as soon as the pregnancy stick shows a positive result.  It's an excuse to go out and buy a bigger home and you shouldn't follow the herd mentality.  Housing is the largest expense for families.  If you have a 2-bedroom home and you're expecting a second child, do what poor families have been doing for eons...have both children sleep in the same room!  This every child must have their own room syndrome is totally a middle-class thing.  Heck, I had to share a room with my older sister until my mom told me it was time for me to move my bed into the garage.  You can put two and two together there.

6.  Don't save for college.  If you have a child this year (2015), the cost of raising a child to the age of 18 will be substantially more than $245K if you factor in saving for future college expenses.  Instead, have your child start working in high school, save his or her money, and go to community college.  They can be part-time students at community college, save money of Gen Ed courses, and continue working.  When they are ready to transition to a 4-year school, they will have saved up some cash, and will not need as many loans.  Will they have college debt in the end?  Of course.  Sadly, there's no stopping the juggernaut that is the syndicate we know as higher learning.    

Okay, as you see from above there are ways you can avoid racking-up over $200K on raising a child to the age of 18.  Look, no way, no how, poor people have that kind of money.  So how do they raise children to the age of 18 with a lot less to work with?  Poor people hacks like the type I've shared here!  Thanks for reading.  Until next time.               

Don't Retire Early Without Replacing 4 Things

Welcome to another episode of CCM blog!  Today's financial literacy lesson revolves around early retirement.  C'mon, don't tell me the idea hasn't crossed your mind.  If you're part of the rat race like me, the thought of laying around on your patio, sipping on margaritas all hours of the day has undoubtedly crossed your mind.  Though this may describe your personal brand of paradise, for some, it could be the beginning of feeling more like they're lost in paradise.

Take the case of one, Markus "Notch" Persson, creator of the wildly popular game, Minecraft.  He sold his game to Microsoft for 2.5 billion and within a year, he had this to say on Twitter:  

"The problem with getting everything is you run out of reasons to keep trying, and human interaction becomes impossible due to imbalance."

2:48 AM - 29 Aug 2015

"In sweden, I will sit around and wait for my friends with jobs and families to have time to do shit, watching my reflection in the monitor."

2:51 AM - 29 Aug 2015

Yikes!  The age old adage, Money Won't Make You Happy, is certainly in play here.  But there is more to the psychology of being part of the rat race that meets the eye, whether you retire early filthy rich like Persson or with just enough money to take you comfortably to the afterlife.  What is early retirement?  For me, it's retiring before the age of 55.  If you're on an aggressive course of investing and saving, and are endeavoring to turn in your keys, so to speak, before 55, you may want to consider first having replacements for these next four things:

1.  What's life without a continuous fountain of purpose?  The projects handed to you at work by your boss may be cumbersome, but completing them provides you with a weekly or monthly dose of accomplishment.  As humans we are driven to perform, and purpose is the energy behind our daily performance.

2.  What is the meaning of life?  We don't have to spend our lives worrying about life's meaning, but we sure better hope to have had meaning in our own lives.  Meaning is hard to come by.  It takes time for a book to be written, and each chapter builds and adds substance to a story.  Will you feel like your personal story has been meaningful after only a pair of decades of service to society?

3.  Predictability anyone?  The rat race is about routine.  Getting ready each morning, driving to work, doing something somewhat predictable each day, and driving home, at minimum gets you out of the house.  Heck, on some days, your day at work may have been eventful and entertaining.  Imagine waking up whenever you want, taking a lengthy breakfast to pass the time, and having nothing else planned for the day.  This routine can get old.

4.  What will you be known for?  I'm talking about contribution.  Innovating and being a pioneer gives others a perception of depth about you.  When you leave a footprint in any one niche, your contribution to that space must have been impressive.  Okay, no one is saying you have to be a Steve Jobs, but bowing out before you've given yourself a chance to contribute is problematic.

Early retirement comes with its own pitfalls: worrying longer about your money lasting, losing your purpose and routine, and growing frustration at having lived a life devoid of meaning and contribution.  Studies have shown that some people often suffer from depression and anxiety when they retire.

Even though I fill my days with things to do pretty well during my vacation away from school, I start getting somewhat irritable deep summer.  I like the consistency of my job.  It is good for a person like me.  Having prepared this article, I now know that before I leave teaching, I better have replaced (with something else) the four key elements I mentioned above.  And maybe you should follow suit, friend, for your own good.  Until next time!  Thanks for reading.  Don't forget to subscribe to this blog and in return, I will send you some eBooks and make myself available for whatever inquiry you may have.  

Blooom Inc. In Search of An Angel

Welcome back!  Today's financial literacy article catches us up with the up-and-coming 401k service provider, Blooom Inc.  Now, if you have been following CCM blog for some time, or have taken a look at the Guest Author page, you might recall (or see) that I have had Co-Founders Chris Costello (CEO) and Kevin Conard provide my readers with insightful commentary on the problems individuals face managing their 401ks on their own.  Consider reading: Blooom Co-Founder, Kevin Conard: One of the Good Guys and Which 401k Investor Are You?

I must admit that I am a fan of Blooom.  And it's not just because Chris and Kev are cool dudes.  There's a bullish case for Blooom as a company, and it comes in the form of a growing number of people in this country getting signed-up by their employer into a 401k or similar type of plan.  A while back, I exposed the mishaps of both CalSTRS and NYSTRS, two of the country's largest pension systems for public employees, namely, teachers.

In, How the Devil is on the Loose in State Teacher Systems Nationwide, I criticized the ongoing ineptness of pension fund leaders at the state level, and how pension shortfalls will soon mean alternative pension systems for teachers and other public employees.  In Alaska, new teachers are being placed in Defined Contribution (DC) plans, and only veterans are allowed to stay in their Defined Benefit (DB) plans.  A DC plan is essentially a 401k.  Thus the outcome of more common folk, people like you and me, (remember I'm a teacher) needing Blooom's services, is a foregone conclusion.

With that being said, it is a great time to have a lot of money!  Money to invest with to be exact.  Just yesterday, the Kansas City Business Journal, published some exciting news about Blooom: Blooom surpasses $100M in AUM, looks to hire.  Blooom has reached 100 million in assets under management.  It is looking to grow its staff by at least 10 additional employees, mostly sales professionals and software developers.  Keeping Blooom afloat monetarily requires some tough decisions on the part of Mr. Costello.  He and his two partners are currently the only investors in the company.  That can change.

Mr. Costello has been actively communicating with some venture capital firms, as mentioned in the Bizjournal article, to no avail.  That's how things go sometimes.  Finding a match is not easy to do.  If he were to find the right Angel investor, Mr. Costello could more comfortably push Blooom into the next growth phase.  The article quotes Mr. Costello describing his dream scenario: 

"But if there was the right angel investor out there who was connected in the financial services space to help us strategically, we certainly would want to talk to that person. If we're going to give up equity to take in capital, we really want it to come from people who can offer more than just writing a check. We want someone who has been there and done that, or maybe who has a big Rolodex and can make some key introductions for us."

Are you this angel investor?  Now would be a good time to get in contact with Chris Costello.  The business model is working (proof of concept) as evidenced by the company's ability to quickly reach $100 million in AUM.  The demand for 401k services is going to continue to grow, and Blooom is positioned, as the low-cost, most convenient, provider of these services, to swallow-up some serious market share.  If I had Angel money, I'd be looking to get me a petal or two of that Bloooming flower.  Blooom's a winner, folks.  You betta' recognize!

Thanks for reading.   

3 Ways Universities and Colleges Fail Their Students

Welcome back!  Today's financial literacy post deals with career readiness.  I don't think it would be too far out there to say that some high schools in this country do a far better job of preparing students for a career than do U.S. colleges and universities.  There are still thousands of high schools in this country that offer career and technical education programs.  Similarly, high schools still enforce their cyber-etiquette policies, and occupation preparation teachers, as I would often observe, insert mention of their own work experience (as freelancers) to include what not to do on your phone.

What about colleges and universities?  What role do they play in providing real world experiences for the future workforce of this country?  In most cases, graduating college seniors leave the bubble world of their halls and buildings never having had a job.  Or an internship for that matter.  Colleges and universities have no problem letting their students get in deep debt.  What's more, top college officials do not seem to be in a rush to make positive changes that would impact the lives of the young men and women who will be leaving their doors.

Here are three ways colleges and universities fail students and the American public:

1.  They do not offer Freshman a College Finance seminar.  Every freshman should be mandated to take a college finance seminar and it should be subsidized by the university!  The credit card vendors giving out freebies (t-shirts, pens, other crap) for completed applications can't wait for every new school year to begin when a new batch of financial dimwits hits the pavement en route to lecture halls. 




2.  They do not provide (a few do, but not all) Seniors with debt counseling.  The least these higher learning institutions can do is have a debt counseling fair in one of their multiple state of the art gyms.  Senior students willing to get advice could wait in line behind one of many tables to hear a C.F.P tell them how best to deal with their mountain of debt.  This too should be at the expense of the university or college.


3.  They do not provide a career transition seminar for Seniors.  Universities need to bridge the huge gap between the theoretical knowledge their various colleges (Humanities, Business, Engineering, etc.) instill in students and the practicality of work relationships, teamwork, online etiquette, etc.  Imagine being able to learn about corporate culture from an executive.  Though it need not be this specific.  Many Millennials are self-involved, motivated, hungry...all great things.  But upon graduation, they're entering a world still owned by Baby Boomers and Generation X.  They need someone to tell them that sending emails out is not an effective communication method, e.g.  Continuing with my ongoing theme, all Seniors should be mandated to take this seminar and again, it should be provided expense free by institutions of higher learning.

The negativity surrounding the financial merit of obtaining an undergraduate degree continues to grow.  University officials have nothing to worry about.  There's still plenty of demand.  Yet, if I were a Dean or University President, I'd be looking for ideas to sway the public's economic mistrust of my work setting.  There is a moral obligation, I believe, on the part of institutions of higher learning, to give their soon to be alumni, a fighting chance at career and economic success.

The suggestions I've offered for every FAIL above may help lessen the financial burden graduates rack-up while earning their degree.  Deans and University Presidents: do what's right by these kids!

Thanks for reading. 

9 Mistakes to Avoid When Buying Your Starter Home

Thanks for being here!  Today's financial literacy piece deals with your first home purchase.  Looking at the residential real estate market, I think we are at a good point in time where it is safe (or at least safer) to expect some appreciation in value.  Of course, like any potential asset you buy, getting in as low as possible improves your odds at a profit.  I turn 39 today...happy bday to me!  I bought my first home at 26 and my fifth home at 37.  I've only sold one...guess which one?

My first one, of course!  That seems to be the trend among homebuyers.  They buy a home with the idea of using the 1031 exchange as a means to trade up to a second, and usually, final, home to live in.  For example, a couple may buy a condo, keep it for some time, paying down the mortgage, and sell after some considerable appreciation and equity in the home.  Why would they sell?  Maybe they're expecting an addition to the family and they've grown out of the condo.  Or perhaps they've procured more pay from job promotions and the idea of having a typical, 3 bedroom, two bath home is more appealing.

Although I've stated multiple times on this blog that a home is not an asset, you can make it less of a liability by not committing the following mistakes:

1.  Falling in love with a property you were shown that is highly coveted by other buyers.  Don't make buying your first home an emotional ordeal.  My ex-wife wanted to badly buy a particular home in San Jose back in 2002.  We entered into a bidding war.  Fortunately, a few losing rounds of bids gave me enough time to finally put some sense into her and we quit bidding.

2.  Only hit the top end of your budget if there is an extra bedroom possibility.  Say your budget is between $125K and $150K.  Your realtor will try to sway you into buying at the top end, giving you as much luxury (2 baths, 3 bedrooms plus granite counter-tops, big yard, etc.) as you asked for.  The extra bedroom is far more valuable.  With an extra bedroom, you can make your home into an income producing machine, renting that solo room out.  An extra $450-$600 a month to invest with will put you on the fast track to your next home purchase.

3.  You don't put enough of a down payment.  As great as it may seem to get 90-95% financing with first time homebuyer programs, these are for suckers.  Putting down so little will make your mortgage payment too high for you to handle should something change, e.g., loss of your job.  You will also have to get Private Mortgage Insurance, or PMI...yet another monthly chunk to pay on top of your principal, interest, taxes, and insurance!

4.  You don't ask questions about the loan origination and underwriting fees.  An agent must present you with a Good Faith Estimate (GFE) and a loan disclosure package.  Don't let them email it to you.  Have them mail it instead.  You can better scrutinize a hard copy, and won't tire yourself out staring at a computer.  Make sure you know every line item and the services you are paying for in the form of closing costs.  Typical closing costs are 2-5% of the home's purchase price.  Anything more and you're being taken to the cleaners.

5.  Buying an older home.  Your first home is a stepping stone to your next home.  So it should be plain, practical, and sturdy.  Buying an older home "with character" will place you in danger of having to spend more on upkeep and maintenance.  Maintenance and improvements are not tax deductible on a personal residence so basically they suck your monthly income dry with no benefit.  Similarly, be sure you get a proper home inspection even on a newer property.  New homes can have major issues as well!  


6.  You buy a home, townhome or condo, with high HOA dues compared to other similar properties.  Amenities and services that may be provided by a HOA are not worth a premium above what other HOAs around the city offer.  Skip the pool!

7.  You plan on moving, and therefore, selling, in less than 5 years.  You will lose money if you stay in your first home less than five years.  How?  You'll have to pay to sell and pay to buy (again) in a very short time period.  Since the first few years of any mortgage is essentially dead money going solely to interest (very little principal), you'll have nothing in equity unless there was a major boom in appreciation in your area.  I suggest you commit to seven years in your starter home.

8.  You lock in a crappy interest rate.  You won't have control over this as rates change daily, albeit in tiny increments, but...it is always a small victory when your agent locks you into a better interest rate.  Talk to your agent about this.

9.  You don't interview several realtors.  In your excitement to get on Zillow and go home shopping, you settle for the first realtor that answers your inquiry.  You are about to make one of the biggest decisions you've ever made in your life.  Wouldn't you want to have the best person you can find representing you?  I suggest you interview at least three realtors before going with one.  Here are questions I came up with for interviewing realtors: Kick-ass questions to ask...


The name of the game when buying your starter home is minimizing your purchasing expenses and making your home less of a liability each month.  Avoiding these nine mistakes will open more doors for your future self!

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5 Ways to Save On Rent

Welcome to another financial literacy installment at CCM blog!  Today's post is on ways to save on rent.  Rents are currently at some of the highest levels we've ever witnessed.  In fact, since the year 2000, rents have grown at roughly twice the rate of wages.  A renter can expect to pay about 30% of their income on the median apartment nationwide.  In some areas, like San Francisco, New York City, and Boston, renting is dangerous to your health...talk about the stress brought on by seeing so much of your money being swallowed-up on the rent.

Source

So how do you go about saving on rent in a seemingly unfavorable (for renters) rental market?  I've had the experience of renting apartments, and a 3 bedroom, 2 bath home.  I've also had the experience of renting rooms in my personal residence.  The following tips are a compilation of tricks of the trade, so to speak, and should help YOU save on rent.

1.  If you're an All-Star renter, meaning, you got great credit, awesome references from past landlords, bank statements showing fiscal responsibility in your Checking account, and emergency savings in a Savings or Brokerage account, you should negotiate on the rent.  Reliable renters are a landlord's best friend, and many, like I used to, would be willing to lower the monthly rent amount for the peace of mind of renting to a person like you.  Throw in a longer lease commitment or several months worth of rent upfront, and the deal becomes juicy for a landlord.  How much can you save?  If I were an All-Star renter, I'd ask for $70 off the top per month, and wait for a counter offer from the landlord.

2.  Move in the winter or early spring.  There may be fewer places available to rent during these seasons because people hunker down when it's cold.  However, the slowdown works in your favor as landlords with vacancies are desperate to get someone else to pay their bank notes.  Don't waste the opportunity to negotiate if you are looking for a place during the winter and early spring!

3.  When I rented a 3 bedroom, 2 bath home back in 2002, I negotiated $50 off the monthly rent by agreeing to take care of the grounds for the landlord.  He got me a lawnmower even!  In addition to mowing the lawn, I'd prune the fruit trees, rake leaves, and do what any homeowner would do to keep the lot looking tidy.

4.  If you're renting a room, you have many options for saving on your monthly rent.  I rented a room to a personal trainer once and he had a full gym sitting in storage.  I let him use one-third of my garage to set-up his equipment, and gave him $20 off his rent for full access.  I saved on a gym membership, and paying for gas driving to and from a gym.  Think...what are some tangibles (use of your Xbox, gym equipment, bicycle, etc.) you can offer your landlord in return for less rent?

5.  Again, if you rent a room, you may be able to reduce your rent by giving your landlord/housemate options.  Say you have Sling TV, HBO Go, Netflix or other streaming services.  You can explain to your landlord/housemate that he/she can save money by cutting the cord, and use your subscription for the whole house instead.  It is not illegal for you to share your Netflix password.  There is a simultaneous viewing limit though...between two and four users at a time for Netflix, three for HBO Go, one for Hulu Plus, and no limit for Watch ESPN.  Who knows, your landlord/housemate may be willing to reduce your rent if he/she can stop paying so much to provide you with cable.

Unfortunately, apartment dwellers are often dealing with a management company that won't budge, and that know nothing else but raising the rent each year.  Don't be a number on the front door!  Try to find a rental situation where you can deal with the owner and personalize the rental relationship.

Before you leave, it would be an honor to have you join my growing list of followers.  Subscribe to this blog and get posts like these sent to your inbox 2-3 times a week.  Thanks, have a great Labor Day, and until next time!

A Legacy Six Enterprise Update: The Detroit Dream

Hello everyone! Back in January, I had the honor of presenting the Legacy Six Enterprise Team on CCM blog: Legacy Six Enterprise, LLC: Creating Legacies in Detroit. In August, I contacted PR man, Deon Watkins, and asked for an update on the team. The update is in! Without any further, here is what the L6E team has been up to:

These past few months have been a great learning experience for us. We sold a house back in May to an investor. We bought this house from an old couple under a land contract. For those unfamiliar with the term, it is like seller financing.  After we put the house under contract, we got inside and did most of the rehab work ourselves. This helped us cut costs to insure a bigger profit margin in the end. For the work that we couldn’t handle ourselves, we hired local handymen that we knew.

While we were rehabbing, we marketed the house to potential buyers. We found a buyer and set up some terms in order to sell the house. The terms were to finish up the repairs that we had planned, and find a renter who was willing to sign a one-year lease. Our plan all along was to sell it as a turnkey property, so we agreed to the terms. After the contract was signed, Darrin quickly put up "For Rent" bandit signs throughout the neighborhood. We found a renter, finished the repairs, and got paid.

The entire ordeal wasn’t actually that easy though. The closing was longer than it should have been. The couple we had the land contract with was comfortable working with us, and they enjoyed the arrangement we had. Deon was mailing them monthly installments to pay off the land contract. They thought, however, that we were running a scam after we arranged the land contract to be paid off in our closing with the investor buyer.

The couple had to give the closing agent some personal information, so that the remaining balance could be wired to their bank account, and they weren’t comfortable with that. It took almost three months to close because of the couple's hesitation. We finally agreed to meet the couple at a bank with the buyer. The couple wanted to see all of the closing documents and get a cashier’s check in their hands from the bank manager.

That was the most painstaking experience for us. Other things we experienced and learned include the need to get a good inspector at the beginning of the project. We feel that we could have known about some problems with the house before purchasing. That could have helped us with the negotiation. Instead, we encountered those problems while working on the rehab.

We are currently working on a couple of projects. We are working with a company that purchases tons of houses in the Detroit area and offers land contracts. One of the members of the group bought a house from this company, and has been living in and repairing the home for the past month. We plan to buy a house on land contract, fix it up, and put a renter in it. We want to start building up the company’s portfolio and start earning passive income.

We also feel that we can utilize this company to work on our buy and hold strategy. We are working with a couple of hard money lenders, so that we can start a fix and flip project. We have been looking at some houses with our realtor, posting bandit signs, talking with wholesalers, and using our social network to try and find the right house to flip. We have found a couple of homes that were perfect, but the numbers weren’t, so we are still looking.

Deon is working with an investor that he met on biggerpockets.com. The investor has family that lives in the Metro Detroit area, and he has one property in the Detroit area. The investor lives in Europe at the moment, but he was visiting Detroit. Deon met with him, had lunch, and talked about a potential partnership with him. The investor has kept in touch and has been looking at houses in Detroit. He has also been seeking our advice on which areas are best to invest in. Deon has been talking about working with him, and this potentially being the start of the Legacy Six Property Management Company.