by Miata on October 13th, 2014
I was reading a Yahoo! Finance story this morning about housing prices and saw that for the first time in a long time, prices might be falling. Are you looking for a house? Now might be the perfect time.
So, should you buy?
Let’s talk first about the market. You definitely don’t want to buy a home when the market is hot….and the trend is in a seller’s favor. But if prices are dipping and the number of people buying is light, you’re more likely to find a steal. However, real estate markets are very much regional, not national, like the stock market. That means that while prices might be tanking in Las Vegas, they could be rising in Miami. It’s important to check with pros in your area to see just how weak your local market is before wandering off into the home buying scene.
A weak market means more desperate sellers, so do brush up on your negotiation skills. A few thoughts on this front:
- Remember that the seller isn’t your friend. It’s up to them to put their best foot forward and make their best deal.
- You aren’t trying to “put the screws” to someone when you negotiate. You’re only trying to adequately protect your interest, which means paying as little as possible.
- Don’t expect your real estate agent to negotiate on your behalf. Studies have also shown that real estate agents prefer not to negotiate (mostly because when you consider how they make money….on the sale price….there’s no real incentive for them to bargain).
Okay, the market might be right, but should I buy?
Anyone can look at market trends and think “Now’s the right time,” but it’s much more personal to ask “Is it the right time for me?” That’s the much better question, isn’t it?
Here’s how to know if it’s the right time for you:
- You’re going to need money for a down payment and for furniture, immediate maintenance and initial decorating. Where is this going to come from? If you’re betting on mortgages that allow you to have “zero down” like in the days prior to 2008-2009, think again. You’ll need a downpayment of at least 10% and most probably 20% to secure a home. You also might have, among other expenses, closing costs on the transaction and an initial payment for homeowner’s insurance.
- You don’t want to spend every last penny on your house, so you should also be able to maintain an emergency fund worth a few month’s expenses.
- Mortgage companies are going to severely examine your credit. Grab a copy yourself to make sure that there aren’t weaknesses in your credit score. ABC News has reported that over 90% of credit reports have at least one problem. You’ll want to avoid credit surprises during the process and secure lower interest rates by driving your credit score as high as possible.
Beyond those economic numbers, there are other considerations. Home ownership is a big responsibility and can also be a time sink. Instead of calling your landlord to fix the oven, that becomes your problem. Have you thought about the effects (positive and negative) owning a home will have on your craft?
There’s a reason many people are deciding that renting is for them. Simply put: it’s easier to hand the hassles over to someone else than to focus on the (often large) expenses of keeping your property up-to-date.
Isn’t owning property a good investment?
Yes, real estate IS a good investment, but I’d argue that calling the home you live in an “investment” is a bad idea, for many reasons.
- There’s a big difference between a house and a “home.” You’re emotional about your home. You shouldn’t be emotional about investments.
- Investments are bought to be sold. Who wants to sell the place where they’ve made lots of memories?
- You’ll work on upkeep differently on a house you live in than an investment. If you’re investing in a property, you’ll make sure it’s “good enough.” However, because your own home is special, you’ll spend extra on items/fixes that’ll never add to resale value.
In short, you should buy a house because it fits your lifestyle, supports your craft AND is maybe going to appreciate in value. While I think you should make a good investment decision with a home you live in, you shouldn’t consider it an “investment” unless you’re only talking about an investment in you. If owning a home is a part of your goals and supports your creative dreams, then get going! This just might be a great time to make that move.
Abundance Bound Recommends
MONEY MATTERS: A Home? My Own Home? What? Really? How?
A Free Live Los Angeles Area Workshop
The Actors Fund is hosting an information packed workshop on Buying Your Own Home. They will be exploring the following topics:
- Getting Ready for Homeownership
- Understanding the Terms Used in Home Buying
- Interest Rate Types
- Options for Financing and Down Payment
- Budgeting & the Importance of Credit
- Foreclosure Prevention/Fair Lending Act
Date: Monday, October 27th
Time: 3:00 PM – 5:00 PM
Location: The Actors Fund, 5757 Wilshire Blvd., Ste. 400, Los Angeles
You MUST RSVP to email@example.com if you would like to attend!
by Miata on September 22nd, 2014
Let’s Cut The Cord But Keep Your Entertainment
I’m inspired by quality television. I’m against cutting out dramas or a good comedy from my routine, but I absolutely love saving money and getting the same value.
So, let’s start with $100 per month that you saved on cable and see how much we’ll have to spend of it to replace your favorite shows.
Netflix: For a fraction of the cost of your cable bill, you can stream many great (and some original) content from Netflix. Double the fee and you have access to nearly every DVD on earth. Cost? from $8. ($92 left)
Hulu: I get annoyed by Hulu premium plans because they keep commercials AND make you pay. But, then I think….”I was watching commercials when I had cable, and I was paying a ton!” Great point. Most top shows from all the major networks and more. Cost? $8. ($84 left)
Amazon Prime: The newest kid on the block, Amazon Prime, offers TONS of shows from many different sources, including most of the networks. That’s not all: you also get a music streaming service and access to many book-sharing programs PLUS (of course) free two day shipping on many products. Cost? $100 per year or $8.33 per month. ($75.67 left)
Sports: Missing your favorite sport? Sign up to watch them online. Major League Baseball allows people to watch every out-of-market game for $130 per year. Most major sports have similar packages. Cost? $10.83/mo. ($64.84 left)
Using four sources we just cut out the cable subscription and saved around 2/3 of the fee! Plus, you don’t have to wait….watch shows whenever you want!
One Time Costs
Any person who’s cut the cable knows that these aren’t all of the fees. There are some one-time costs associated with keeping your entertainment level high.
Let’s tackle those:
Digital antenna: With the digital version of “rabbit ears” you have full access to all of the local channels in full HD. Cost? $30
Roku, Rabbit TV, Google Chromecast, or similar: there are lots of options here, but you need something to bring your internet signal to your television. The Google Chromecast is the least expensive at $35, but unless you’re using an Android device, it’s difficult to control. A Roku box hooks up to the back of your television and presents you with a menu of “channels” based on your tastes (you decide which channels to add to your menu). The most expensive option weighs in at $95 but comes with a remote that includes a spot for earbuds to plug in. No more keeping your roommate or spouse awake while you catch up on CSI! Cost? $95 max.
Total one-time costs? $125 to switch.
Ready to Jump?
It’s easy to save a ton of money on entertainment without sacrificing all of your fun. By cutting the cord on cable or satellite you’ll keep access to your favorite shows AND can schedule to watch entertainment whenever you want. Some people have found that this helps them stay focused on their creative pursuits—no more cutting an artistic session short because you have to catch a scheduled broadcast!
What are you waiting for? Call the cable company NOW!
by Miata on September 8th, 2014
(This article continues the discussion on lowering expenses found here)
In our first installment two weeks ago, I discussed ways you could drop the cost of the American Dream by lowering your essential expenses such as groceries, car expenses and apparel. Today, I’d like to tackle lowering the cost of the “extras” that USA Today calculated are important parts of what many consider a happy lifestyle. We’re creative people….lowering the cost of creative activities should be easy for us, right?
USA Today assigns $17,009 to extras, and breaks them down like this:
Family Summer Vacation: $4,580
Cable, Satellite, Internet, Cell Phone: $3,100
Miscellaneous Costs: $2,000
Good news! All of these costs can be lowered without giving up any happiness. How? Let’s dive in!
Family Summer Vacation: Let’s start with the most expensive parts of the trip and work down:
- Rethink your definition of “vacation.” Sure, the trip to Europe sounds wonderful but for many, so does hiking in the closest state or national park. Wisely choose your vacations based on your overall budget. There are many things to see in your own back yard.
- Use airfare tricks. Lots of websites can share how to get the best deals on air travel, but here’s a little-used one: widen your search to the day before or after you plan to travel and then “agree” to travel on a different day (your originally intended travel date). Many online studies have lately shown that you’ll get a cheaper rate on your intended travel date if the booking company thinks they’re talking you into a deal.
- Discount websites. Try out hotel discount firms like Hotwire or Priceline. On a recent trip with his kids to Indianapolis, a good friend scored a room in downtown Indianapolis for $58 on a $145/night room. That’s some serious savings.
- Watch the food budget. It’s fun to eat at neat places when you travel, but it’s also entertaining to grab food from a grocery and check out the local park.
- Souvenirs? Are you really going to drink out of another coffee mug? Most souvenirs are brought home and forgotten. Take pictures and enjoy the sites rather than the junk shops.
Entertainment: You don’t want to cut the fun out of your vacation but also don’t want to pack two bags of money? Homework is the key to savings.
- Research free entertainment around the destination you’re visiting. Many cities and parks offer free or low cost programs that often beat the paid attractions. Outdoor movies in a park, ranger programs, free museum days and farmer’s markets are all opportunities to have some fun while keeping your wallet intact.
- Rethink the days/dates you’re traveling. The offseason in resorts might be a little less ideal weather-wise, but you’ll have the area to yourself and you’ll score some great deals from establishments just hoping to fill seats. Amusement parks are more crowded on some days than others (regional parks generally are crowded on weekends while destination parks are crowded on weekdays).
- Staycation? If you’re really tight on money, ask yourself if this is the year you take some time off but explore your own hometown. Many people travel the world but never see the sights close to home.
Restaurants: Coupons, specials and drinks are the key here.
- First, how often do you eat at restaurants? Try to cut back by eating in more often. Use a meal plan to have some fun with your dine-at-home dollars. Cooking together doesn’t have to be a chore. Turn up the music or ball game and have fun cooking and spending time with friends or family!
- Check for coupons online when you visit a restaurant. Nearly all of the national chains have deals online (or can tell you which days offer the best value).
- Ask your waiter if there are any discounts on the day you visit.
- Buying alcohol? It pays to drink water and then pick up an after-dinner drink at the local liquor store. Instead of buying an $8 glass of wine, a $15 bottle of wine can last multiple meals!
Cable, Satellite, Internet, Cell Phone: You’ve heard most of the advice I’ll give you here, but most of us have some easy money-saving opportunities in this category.
- Think about cutting the cord on cable or the satellite bill. Especially now with Hulu, Netflix, Amazon Prime and others, it’s easy to lower your cost of television while keeping the quality high. Love sports? Buy an antenna to pick up the local stations that cover many of the local and national interest events.
- Internet – I probably can’t save you money here, but I can possibly add value. Many friends have been surprised when they’ve called their internet provider to find out that they can get a faster/better package for the amount they’re currently paying.
- Ditch the expensive cell plan. Are you usually found in an area with wifi? Check out some of the new carriers offering wifi-based telephone. You only incur charges for your phone when you have to use the data plan. Watch out, though: data through these carriers can be more expensive than many of the big boys when you’re “off the wifi grid.”
Miscellaneous costs: $2,000 per year on miscellaneous costs doesn’t really surprise me, but let’s try and minimize these “unknown” expenses anyway!
- Use apps like Mint or a good banking app to track your expenses.
- Don’t carry cash. While people who carry cash are more likely to spend less at places like the grocery store, they’re also more likely to spend money on a whim that someone with only plastic would avoid.
…and there they are! Hopefully many of these tips help you lower your budget costs so that you have more money available to spend on your craft. At the very least, try to pick out one in each area for fun and see if you can find some new savings. And please write to let me know what worked! I love hearing success stories!
by Miata on August 25th, 2014
A recent USA Today article caught my eye. They said that the “American Dream” now costs $130,000 a year. Wow! Even as someone who works with people on their money, I was astounded. For those wanting to focus on creative endeavors that can feel like an impossible amount.
….then I began reading.
Let’s take a look at their list of expenses and consider how we might be able to make the dream more affordable (for a complete list of expenses and how they arrived at each portion, here’s a link to the actual USA Today story). Today we’ll tackle just the essential expenses, and then in my next blog post I’ll break down the rest of the budget.
These expenses assume a family of four living in a $275,000 home.
Car Expenses: $11,039
Medical Expenses: $9,144
Education Expenses: $4,000
Essentials Total: $58,491
Before I tear into these numbers, it’s important to note that most people don’t know what they spend, so all of these numbers look high. When I work with people on their budget they nearly always find that they’re spending more in each of these areas than they thought. Those little one-time expenses really begin adding up. Read the rest of this entry »
by Miata on July 11th, 2014
This week I want to focus on debt. Why? Many people have debts, but few have a debt strategy. If you’re going to focus on your craft, you should minimize distractions with confusing terms and high repayment options.
The biggest debt for most people is their mortgage, so we’ll start there.
Here’s some good news: mortgages don’t have to be ominous, and if you do them wisely, you can come out ahead on your mortgage decision.
Let’s start with what a typical mortgage looks like and then we’ll talk about money-saving strategies. Read the rest of this entry »
by Miata on June 30th, 2014
A friend emailed me asking for help.
“I care so much about (my craft). Why does it always end up coming last?”
There’s a short answer to this question.
It isn’t enough to care.
I’d submit it isn’t even just about hard work.
It’s about systems.
Setting up systems to win is the key to your success. Financially, having systems for the right tasks is equally important.
The Sherlock Holmes Story
In one of the Sherlock Holmes books by Sir Arthur Conan Doyle, someone asks Sherlock about a piece of current events. Holmes replies that he has no idea what the person is talking about. The questioner is shocked. The great Sherlock Holmes doesn’t know something? Holmes replies that the mind is only so large. If you fill it with trivia, there won’t be room for the information you really need to be successful.
Practice The Sherlock Holmes Method of Systems
Your goal should be to fill your brain with your craft and the things that really matter to you. Therefore, everything that isn’t important shouldn’t take up very much space. Read the rest of this entry »
by Miata on June 16th, 2014
“Being the richest man in the cemetery doesn’t matter to me…Going to bed at night saying we’ve done something wonderful … that’s what matters to me.”
I was speaking with a friend the other day who said, “No offense, but money people are so obsessed with cash that they forget to create. They’re so obsessed with profits that they miss the point of life.
To some degree, I think that’s true.
There are actually studies that have shown that many uber-rich people are mean and unkind, and money helped them become that way. The issue is when we believe we’ll avoid ever becoming that type of person, by simply never focusing on money.
That’s where the wheels come off the bus, so to speak.
Money isn’t a problem if you’re using it to create good in the world. Money isn’t an issue if you’re developing your craft and trying to ensure that your art is noticed.
Money only becomes an issue when all that you can think about is the pursuit of the next dollar. Read the rest of this entry »
by Miata on June 2nd, 2014
A business plan…. many creative people I know shy away from those two words….
First, they’ll tell me, their craft isn’t a business.
Second, they’re overly in love with the term “winging it.”
Yet, if you talk to top artists in nearly any field, they have a workmanlike precision to their art. They seem to be in the right place at the right time. How do they do it?
After studying successful people, I’ve found they all have one thing in common…. One thing that they may not all admit to, but that I’d refer to as a “business plan.”
A business plan is something that helps you focus your thoughts. It helps you decide where your opportunities are in life, so you can manage your time most effectively.
Sound like something you want for yourself and your craft?
Great! Then let’s help you climb to the top, shall we? Read the rest of this entry »
by Miata on May 12th, 2014
We’ve all had them: everything’s humming along fine with our craft and then there’s a special trip that “everyone else is going on.” Suddenly you’re spending money like a half-crazed couponer at a going out of business sale.
We call it the “budget buster” moment.
What is a budget buster moment? It’s when you’ve been a good saver for a long time and then feel like you deserve a treat.
Maybe you’ve worked on your craft harder than ever before.
Maybe you’ve kept a tight lid on your spending.
Maybe you’ve worked out and lost ten pounds.
Whatever the reason, you decide it’s time to celebrate. The budget goes out the window and you’re a money-spending, budget-busting fun person to hang out with… Read the rest of this entry »
by Miata on April 25th, 2014
In our last newsletter, I shared some tips on picking the right investment for your goals. But for many of us, another big question is this: “Where do I actually hold my investments?”
Much like artists generally have themes that run through their work, a prevailing theme you’ll find in financial planning is, “take advantage of tax shelters whenever possible.”
What’s a Tax Shelter?
Right now, the concept of a tax shelter might be as foreign to you as someone speaking an unfamiliar language. Honestly, for years I didn’t know the difference between a 401k and an IRA… However, once you’re able to work through this mumbo-jumbo of alphabet tax shelter soup, you’ll find that it isn’t as hard as it seems.
For most of us, the place to start is a Roth IRA.
Read the rest of this entry »