by Derek Sisterhen on July 28, 2010
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Past Due: Radio 116 – Is Easy Credit Hard To Get?
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Today, we built the whole show around an email that Dave sent in via the mailbag recounting some recent experiences of his. Dave shared that in going to a bank and in going to a store he was offered overdraft protection credit lines and credit cards (for only a $41 purchase!) Dave wanted to know if easy credit was still easy to get since the media makes it sound like no one can borrow money.
I shared how banks work, that they are compensated in many ways – not just through the interest that you pay on debt, and why they are still extending credit to the little guys.
Today’s Mentionables:
Get Naked: Stripping Down to Money & Marriage – my latest book has just been published!
Easy – Song by the Commodores (hat tipped to Lionel Richie)
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by Derek Sisterhen on July 27, 2010
This is a guest post from the newest member of the Lukas Coaching/Past Due Radio team, Jaime Thompson. Jaime is a Financial Coach with great insight on answering the question, “What next?” so that our money isn’t wasted.
I recently had a conversation with a friend who mentioned what a great investment his house had been after he sold it. Then I asked him how much money he paid in interest, real estate taxes, insurance, repairs, and maintenance over the past ten years. And more recently what his realtor fees, closing costs, and moving costs were.
As those numbers mounted up, he realized he didn’t make nearly as much profit as he thought. In fact he didn’t make a cash profit at all. He rolled the money he received from the sale into a new mortgage. Yes, his net worth has increased, but as long as that money is in the house he lives in, I wouldn’t consider it a great investment. After all, he hasn’t put a dime in his pocket.
Don’t get me wrong I’m not against home ownership. I am a homeowner myself. But do we have a realistic view of what home ownership is and has to offer? What’s the difference between buying a mutual fund versus buying a house? If you need immediate cash, could you sell your home quickly? Where would you live? How diversified is the neighborhood, town, and local economy you live in? Do you have $10,000 or more to pay your real estate transaction costs (i.e. realtor fees and closing costs)?
That’s not to say real estate can’t be profitable, but if you’re looking at it as your retirement nest egg, a way to finance college, or to pay for some other expensive life goal, you might need to take a step back and reevaluate. The current economy has taught us just how volatile the real estate market is. Remember your home is where you seek shelter, create memories, and enjoy life. Make your house your home and if you end up ahead when you sell, lucky you.
by Derek Sisterhen on July 26, 2010
If you could go back and talk to your teenage self, what would you say? I can think of a whole host of things. My guess is many of us would tell our teenage selves what to do differently.
“Don’t bother with that girl, she’s a heartbreaker…”
“Don’t ‘borrow’ mom and dad’s car without them knowing, you’ll get grounded for a month…”
What would you tell yourself about money? Maybe you’d impart some wisdom about credit cards, or mortgages, or how to buy furniture without financing it. Maybe you’d say you need to have a plan for your money.
Ultimately, I think we’d all agree that the most important lesson we’ve learned since growing out of that younger-looking body is that we should’ve saved more money. Even if it was just $20 here or $10 there; I have yet to meet someone upset by how much money they’ve saved.
I spoke to a group of 30 teenagers the other day on preparing for the financial responsibilities of life outside the nest. Did you know that if a 16-year old began saving $1,000 a year until she turned 21, that $6,000 would grow to nearly $550,000 at retirement age? If she puts that in a Roth IRA, that money is completely tax free. Why parents aren’t teaching their kids this simple, fundamental principle of wise financial management is beyond me.
I told the teenagers I met that the writing is on the wall – Social Security will be a shell of its current self when they retire. They understood that they are on their own for their retirement savings, but didn’t know where to begin.
So, if you could go back, what would you tell yourself? Is it any different than what you should be telling your kids right now?
by Derek Sisterhen on July 21, 2010
