Money Reasons

Smart Reasons to Save, Use and Invest Money

Archive for February, 2010

I Am Debt Free, My Mortgage Countdown #1 – Equilibrium

February 22nd, 2010

At Equilibrium

We’re Debt Free! We don’t have credit card, car, mortgage or any other type of debt!

Two weeks ago, on the Wells Fargo Website, we chose the send “Payoff form” option for our last mortgage payment.

My wife filled it out, and we sat on it, waiting for Wells Fargo to pay our real estate taxes from our escrow. Now that they did that, we still have to pay our house insurance at the beginning of March, but… We sent in our last official mortgage payment!

Actually the check is sitting on our kitchen counter downstairs, waiting for me to put it in the mailbox! Tomorrow, I will drop it off at the post office, and then we are finished with it!!! (Booyah)

We ended up paying off our house in a little over 10 years.

So how did we do it?

Well, first we created an excellent excel spreadsheet (later converted to open office) to do some analysis on our amortization schedule.

Primarily, we used primarily 2 sheets in our House Payments spreadsheet:

The actual payment that was recorded sheet. This sheet was the real deal! As soon as I made a payment on the house, it was recorded in this sheet. Not much to this one, pretty cut and dry. At the top, I calculated the reduction in interest paid by pre-paying, the shorting of the life of the years of the mortgage by prepaying, and the total cost of the initial mortgage plus the interest.
The “What If” analysis sheet, was the same as the first sheet, but I copied the formula that referenced the payment amount all the way to point the mortgage would be paid off. This was my play sheet! I used this sheet soooo many times to calculation my payment schedule! It was truly great.

Next for the first year of the mortgage, we made double payments on the mortgage amount, with the excess going toward paying down the principal. Then later after our son was born (and my wife quit working), we lessened the payment amount to only 1.5 times the original payment amount.

I’m still in disbelief! I’m at a point of balance and having an “equilibrium moment”, so to speak!

As of this point forward, we will be solidly marching on a wealth building path (or at least I hope, life sometimes throws some wild pitches at you…).

As the last phase of this final numbness wears off, I’ll tell you what it feels like being debt-free in a future post!

-MR

Update: An equilibrium moment is when something is in perfect balance! I don’t owe any debt anymore and nothing is owed to me either! With the “debt phase“, I’m in perfect equilibrium. This phase is over! I don’t plan on ever going into debt that I can’t pay in a month’s time again!

Here are some links to former post in the Countdown series

26 comments »

Posted in Mortgages

Tags: debt free early payments on house financial freedom mortgage free payoff house totally debt free

MoneyReasons Weekly Cache 2010, Feb 21

February 21st, 2010

Weekly Cache - 2010, Feb 21

Random Thoughts:

Being a millionaire doesn’t really make you that much different than the non-millionaire crowd!

Most average millionaires really don’t spend their money like they are worth millions, instead most keep millions in the bank or other investment vehicles as security blankets. Instead of “living large”, they mostly keep it as an extremely large emergency fund. Most are a frugal bunch, although every now and they they will splurge (vacations, helping kids with down-payments on houses, etc)!

Personally, if I were a millionaire, I’d travel to places like Hawaii, Europe, the Far East, and … really to a lot of different locations! Probably for only a few week a year though! To travel much more than that, would take the excitement out of such trips.

I would also like the luxury of working in any profession that I choose to work in, instead of one that puts food on the table…

My Favorite Top 3 PF Blogger Posts For The Week:

ArtofManliness.com‘s post “The Art of Manliness Podcast Episode #16: Conquering Debt with J.D. Roth of Get Rich Slowly”. This is a podcast interviews J.D. Roth from GetRichSlowly.org, and his struggles with debt. After listening to the podcast, I started clicking around the site. I was impressed by it! It was very interesting!
MBABriefs.com‘s post “Easy ways to improve your memory“ – David continues to hit home runs with his blog posts, most are very high quality! This is yet another great post by David that impressed me. Thanks David (once again )!!!
Monevator’s post “Pros and cons of being wealthy“ - This is a great article about those individual/families that are truly rich ($15,000,000 and up). Once you’re in the millionaire range, the flavor of the having money starts to change a bit. And while I would still like to be at that 15 million dollar level, an individual does experience diminishing returns in happiness as they continue to make more money above a few million dollars (or so they say, I don’ t personally know any millionaires worth more than 15 million). This article does a great job weighing those pros and cons. Although I have to admit, I’m more familiar with “Network Access Storage” version of NAS than then singer that’s referenced in the article!

My Favorite Post From MoneyReasons This Week:

My favorite post this week is “10 Millionaire Lifestyle Secrets” which reveals some of the secrets about the average millionaire and their secrets. Such secrets as they shop at Walmart like us too! My post is about the 1 or 2 million dollar crowd, not the much more wealthy group (15 million +) that Monevator writes about in his post above.

Status on other thing’s I’m involved in:

Next week should be hectic! I’m with the kids alone for potentially the entire week. My wife is going down to help out my sister after she had her baby yesterday!
I’m going to learn to program in php and mysql. I usually work with Microsoft products, but I’ve decided to branch out!
My son scored points in both of the sports that he is currently play in this week, basketball and soccer. I’m just typing this line because I’m a proud Daddy and someday if he ever reads this he will know that!

Goal #1: 2010 Resolution #1, Losing Weight While Saving Money – Another subpar week… I’m building momentum, once I get really mad at myself, I’ll take action.


Date	Weight/lbs.		Loss/Gain

02/07/10	231		1

02/14/10	233		-1

02/21/10	233		0

02/28/10



Total Loss for the Month		:	-1

Conclusion: Overall this was a decent week! I had a lot of fun playing “pretend puppy”, checkers, trouble (a board game) or making up stories for story time with my daughter. My son and I don’t play too much, at least not like I do with my daughter. I think he will get his turn in summer, when we play golf and basketball (if I lose ever start to lose this weight! grrr).

-MR

5 comments »

Posted in Weekly Review

Tags: millionaires weekly cache

Saving By Paying Attention – Over-Analyzers, Part 2 of 4

February 20th, 2010

House elements

While house hunting, we trotted through plenty of previously owned homes and new developer houses. We encountered fascinating rooms that were all pink, all red, or some other strange 60s, 70, or 80s fade… The ultimate fade was when we looked at one house and the bathroom was decorated in hot pink with a pitch black commode and bathtub. Groovy baby!

Of course I had to check out the demographics for each house we looked at! Is the school ranked high, what is the crime rate, what is the composite of the types of crimes, what are the county and city tax rates, how do the utilities compare to surrounding cities, are the houses in the area appreciating more than surrounding counties… etc. The list was extensive!

Yep, all told, it took us over 6 months before we decided on a house and community. My poor wife, she started saying yes to any house we looked at after about 4 months into the process. She was tired (sorry honey)!

So was it worth all the extra time and analysis? Maybe, that’s debatable! Initially it was perfect, but things have changed in the community since then that makes it a bit different.

So what does this have to do with my title “Saving by Paying Attention – Over-Analyzers“? Everything! We wasted gallons of gas, driving from house to house, not to mention all of the personal time wasted checking out house after house.

Who was to blame for all of this extra house analysis?

That Over-Analyzer was me! I’m the one that took way to long looking at houses, waiting for that magic moment when I would exclaim EUREKA, this house is the ONE!

The Over-Analyzer‘s biggest waste is personal time and gasoline driving from deal to deal, or in my case, house to house looking for the best, smartest deal!

How can this weakness be combated?

Planning and time spend measuring twice and cutting once. By this carpenter’s saying I mean “take the time the do the research before doing the footwork”. Today especially, you can use google, yahoo, or bing to do the information gathering for you. Heck, there are some sites now that take you thru a virtual tour of some of the places you might be interested in!

I’m the same way at Christmas, when it comes time to pick out the Christmas Tree that we chop down (really saw down ) for the house.

Are you or do you know someone like this? If so, please do tell! This isn’t as bad as the Implusers I talked about yesterday… but hey it adds up!

-D

7 comments »

Posted in lifestyle

Tags: over analyzing procrastination

Saving By Paying Attention – Impulsers, Part 1 of 4

February 19th, 2010

Impulse Buyer

I have friends, lets call them Impulsers (yes, I made this term up), that are constantly driving to the store to get a snack, pop or ice cream or _________ (insert convenience item on the line to the left).

Typically the Impulsers group are non-financial people that don’t understand (or were never taught) finances so they never picked up even the most basic money skills. They usually buying everything on impulse, whenever they want it, including big ticket items like cars and boats.

The Impulsers typically live paycheck to paycheck, or worse, go into debt spiral! Money is like air to them; they breathe it in (salary/wage income) and breathe it out (consumer items and non-appreciating assets) and then some…

Impulsers are not bad people per say, but a little naïve about money management! So what do you to do if you have a close friend that is bad with money like the Impulsers?

2 Ways to overcome Impulsers’ weaknesses:

Budgeting! Yep, the “Impulsers” have the most to gain by using a budget versus any other group! Ironically, there is an excellent personal finance blog out there called www.Budgetsaresexy.com that actually is really cool. So cool, that I believe the Impulser’s group would appreciate it and perhaps get hooked on it. They might start to reading it on a daily basis. This would be a win-win for anyone in the Impulsers group, because they would derive entertainment value out of the Budgetsaresexy.com website, while at the same time learning a thing to 2 about budgeting! J.Money even has a special Millionaire Club group, that is basically a pledge of things to do to try to reach that elusive Millionaire level status. This hands down is the coolest blog about budgeting you will ever find!

What if they don’t want to do read a blog? Well, that brings me to what I’m trying to do currently with a friend. First, we are close… almost brothers, so that gives me a little extra wiggle room, versus a friend you might have know for only the last couple of years. What I’m going to do is have my friend and I do the budget together! You might be wondering what am I going to use as the carrot? Well, my plan is to use the old “I need help” and “Let’s try this out as a team” approach. The reason for this approach is that your friend doesn’t believe that he/she has a problem. But, like most good friends, if you come to them asking for help by doing something together, it might have a chance! You’ll have to spend some time creating the program in addition to the work creating budgeting program. But if you do it right, and have periodic meetings (monthly or maybe quarterly) somewhere fun (maybe a bar?) it might work! During these meeting times, voice your concerns to your friend about your financial goals and talk about your expenses and how you plan on controlling them. You might be able to even animate certain expenses. By animating certain expenses, it will give it a face! That will enable you and your friend to recognize the face of the enemy and try to conquer it by keeping it contained (via the budget)! He/she should be able to pickup your concerns and how they relate to him/her.

Also make sure you really do it all out (afterall it’s really a stealth mentoring thing). If you don’t follow through with your budget, how can you expect your friend to either? I think it might be fun, actually! Perhaps another win-win scenario.

If you have any additions or any questions about my suggestions please jump in and post a comment. The water is warm and friendly here are Money Reasons!

-D

13 comments »

Posted in Budgeting, lifestyle

Tags: Budgeting debt paycheck to paycheck

My Views On Robert Kiyosaki’s Financial Books

February 18th, 2010

Robert Kiyosaki

Why Robert Kiyosaki’s approach will not work for most of us!

I read “Rich Dad, Poor Dad” a few years back, and today I’m going to talk about why for most people his approach will not work. For one, you must be extremely desperate and somewhat conceited, both at the same time! You have to believe that you are the cat’s meow, and the rest of the population is gullible sheep waiting to be slaughtered. Unfortunately, the reality is different from the fantasy. For someone with kids (like me), this could be detrimental to my marriage, and could potentially scar my children!

What did I think of the “Rich Dad, Poor Dad” series of books?

You’d think I would say they are trash, and not to read them. However, I found them very entertaining and the 1^st book “Rich Dad, Poor Dad”, I believe is worth reading. He spins a good story, and if you want to believe his story, it’s very inspirational and motivational. There are many half truth in his story, but overall it’s a feel good, you are only limited by your fears, kind of book. I gained the most value out of the author’s attempts at success after a long chain of failures. Of course, Robert doesn’t spin it that way!

Another thing I like the the Cashflow game series (we have the “Cashflow for Kids” board game).

I have to admit, I don’t like his attempt at changing the financial rules (a house is an asset, no matter what he says). Another undesirable practice the author has is he likes to tell you only one side of the story, hoping you are not smart enough to rationalize or think of the negative aspects.

Mr. Kiyosaki is very aggressive, but he is not a quitter! And that is important!

John T. Reed, (a real estate author) voices his option about Robert here. I found his analysis of Mr. Kiyosaki very informative and worth a visit! John present an argument that “Rich Dad” never existed! And he even found evidence that Robert even said that to a certain extent. I really encourage you to visit his site by clicking the link above!

But what I found interesting on John T. Reed’s site is how many times Mr. Kiyosaki has failed in life, before hitting it big (this fact alone make the 1^st book an interesting read). You can see a lot of failures in his life below:

flunked sophomore year of high school and had to repeat
U.S. Merchant Marine Academy
3rd mate oil tanker (or was it “Love Boat” type cruise ship as he said in one of his books?)
Marine helicopter pilot (or was it fighters?)
refused to return to ship when it was ordered to return to combat (or just missed the boat)
Xerox salesman
Failed businessman (nylon surfer wallets)
Failed businessman (rock and roll memorabilia)
Failed author (1993 book If You Want to Be Rich & Happy, Don’t Go To School?)
Failed MBA applicant
Homeless person
Bankruptcy (or maybe not)

So unless you have a personality that is extremely aggressive and you are willing to do practically anything, I pretty sure Mr. Kiyosaki’s approach will not work for you! Or if you like to gamble big, then Mr. Kiyosaki’s approach might be for you too…, but not for me or most of the personal finance blogger’s out there! I”m pretty sure a lot of people today in real estate that are regretting their move into it after reading the “Rich Dad, Poor Dad” series.

For me personally, I’m more of a get rich slowly and steadily kind of guy.

Readers, I would love to hear your take on the book series! Mr. Kiyosaki’s approach is one of motivations and inspiration… Did reading his book inspire you to go do something big? Perhaps buy real estate? I have a friend at worth that now owns real estate after reading Robert’s books! So, even if the story is a fantasy, the end results sometimes justify the means! Or does it?

Please comment if you are one such reader that was prompted into action after reading his books! Or even better, if you are now rich after reading his books!

Thanks!

-D

8 comments »

Posted in Book Reviews, Inspirational

Tags: kiyosaki kiyosaki review poor dad rich dad rich dad poor dad robert kiyosaki