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Lessons from Hockey
By admin | September 25, 2008
Once again hockey season is in full swing with our first game last night. Let me just express to the world that I am HURTING.
At some point last year I had a thought to myself, “I could play hockey all night and still not be tired.” I was “in hockey shape.” After games my feet would NOT hurt, my back would NOT hurt, my legs would NOT hurt. It felt amazing to get off the ice and still feel great.
Not so much the case anymore. Let me explain why this change occured. I did nothing related to hockey for the past 3 months. I did not get on ice; I did not pick up a stick; I did not ever work on my health. Essentially it would be safe to say that while I was on track and loving it last season, it was that easy for me to get off track.
Yes that is correct, the same is true with the way we handle our MONEY. You can be in control of your money one month, then realize a couple months later…it is OUT OF CONTROL.
The guy who puts in a lot of effort all at once then does not have a sustainable system will surely falter (it is just a matter of when). If I were to work really hard at hockey for 1 week and then do nothing after that, would I be back into hockey shape? Absolutely not.
The same is true in money. If you are in a financial mess chances are you didn’t get there over night therefore you won’t be out of it overnight.
Creating a sustainable system of improvements is incredibly important.
I am confident that I will be back in hockey shape soon, and I am just as confident that you can “win” at the money thing as well.
Topics: Fresh Bread, Life, Tracking | No Comments »
Break up with Debt
By admin | September 24, 2008
In the situation yesterday I talked about one “action item” for them was to get out of debt. Today I want to show some steps on how to accomplish this action item.
I will show you what is called the debt snowball method. This is a proven method that helps you stay on track with attacking your debt. This method gets criticism and I will explain why. It is your life and your money, and all I can do is show my work to why I believe it to be the best method.
The first thing you have to do is make a budget and set aside however much money you are going to put towards debt each month. I am not going to go into this but I am assuming you have canceled the cable, lowered your cell phone plan, got rid of the gym membership, and done any and everything to free up money in your monthly budget to attack debt. Now once you have that number that you are going to attack your debt with it.
List all your debts from smallest balance to largest balance. Pay the minimum payment on all of them except the smallest debt and destroy it. Then once its gone, add the money that you were paying on the little one, to the next little one (this is a little more because you are adding the minimum payment plus what you were paying on the now eliminated debt). Continue in this method until each debt is gone and move on to the next one with a bigger amount to attack it with.
Just so you can see the example:
Weaponry: $1,500
Visa: $250……………………………..$25.00 Minimum Payment
MasterCard: $2,100………………$100.00 Minimum Payment
American Express: $2,500…….$120.00 Minimum Payment
Medical Bills: $10,200……………$400.00 Minimum Payment
Total Minimum Payment……….$645.00
So in this example you have $1,500 to attack debt with. $645.00 is going out for minimum payments and that leaves $855.00 to attack with. This means we can put $225.00 of that towards Visa and get it out of our life forever, then still have $630.00 left that we can put on Master card. After that month our new debt will look like this (will be different baring interest):
MasterCard: $1,370
American Express: $2,380
Medical Bills: $,9.800
Then attack it again the next month and have a blast crossing stuff off the list. The reason why this method gets criticized is because other people think that you should keep the debt with the lowest interest rate and therefore not to rank or pay them off according to balance but interest rate. The thing is I agree with them and they are correct mathematically. But I have realized that personal finance is just as much personal as it is finance.
The reason why this is a proven method is because it offers the emotional pat on the back that is NECESSARY in order to keep the passion and motivation needed to attack debt. You may have intensity at the beginning with doing the interest rate method, however, it is so much easier to lose that intensity when you are not seeing results. Its just like when a Shark tastes blood, he wants to attack more. The same happens when we start seeing results from attacking our debt.
Now, if you want to do some balance transfers or consolidation and get a lower rate on something that is fine with me. But the reason why I am not harping on that is because balance transfers and consolidation are just smoke and mirrors. The real issue here is the DEBT. And by you shifting your problem around tricks you into thinking that you are doing something when in actuality you are mistaken.
The way to get out of debt is to attack. It’s going to take a half a year or more living on beans and rice, grilled cheese and ramen noodles. But it’s worth it to be free. I was listening to a radio program and the host asked the caller who was a hundred thousand dollars in debt, “What would your life be like if in 3 years you had no more payments?” She had to use every bit of energy to respond over her overwhelming tears and sniffles and all she could muster was, “I can’t even imagine what life would be like if that happened.”
That broke my heart that she was in BONDAGE. This is serious stuff and it matters. It affects everything in people’s life, and for this lady she was at the end of her road. She could not take being in this bondage anymore to the point that life was not life anymore.
I know things may seem bleak and overwhelming but chances are the reason why is simply that you need to get organized. Getting organized and putting a plan down like I am suggestion allows you to see the light at the end of the tunnel that isn’t an on coming train.
I can’t say this enough, if you need to attack debt don’t “get caught up” and play around with the balance transfer games and think you are addressing the problem, just attack it with intensity and that is how you will break up with debt for good.
Topics: Debt | No Comments »
Too Much House
By admin | September 23, 2008
I recently received a question regarding house payments and wanted to share some thoughts:
My husband and I are thinking about selling our house but we are unsure. Our mortgage payment is $2,000/month. This may not be pertinent but we LOVE our house. I recently received a large amount of money from an inheritance that we can use to pay down the mortgage. My husband and I have about $6,000 worth of debt plus I have a large amount of medical bills from an accident. We bring home about $3,200/month.
My thoughts:
The way I like to answer questions and share my thoughts is to answer it as if I were in your shoes. To give you my honest answer I would sell the house that I love. And I mean it would be on the market today.
Almost 2/3 of your income is wrapped up in a mortgage and this makes things very tight and stressful. I normally recommend that your house payment should be 1/4 of your monthly income and with what you bring in, your house payment should be around $800.
If I am in your shoes I am selling the house and finding a decent, inexpensive apartment to live in for a year or two while I am getting my finances back in order.
The action items that I would do:
#1) Sell the house
#2) Set aside $1,000 for an Emergency Fund.
#3) Pay off debt
#4) Get finances back in order (should have 3-6 months of personal expenses in your emergency fund) before becoming a homeowner again and finding a house with a mortgage of 1/4 of my income
Depending on how large your inheritance is you may be able to plow through those steps quicker than normal. After you do this I am confident you will be able to breathe easier and able to live life as though it were intended.
Topics: Debt | No Comments »
Why Investments Are Good
By admin | September 22, 2008
Wifey and I are ready to make “family” investment decisions now and we are doing our homework. I recently was reminded how good investments were:
97% of the 5-year periods in the entire market history made money
100% of the 10-year periods in the entire market history made moneyAll 5 or 10 year periods in the market’s history have MADE MONEY. This includes during Sept 11th and the Great Depression.
I like my chances with LONG TERM investments. However, short term deals are a different story.
Only 66% of the 3-year periods in the entire market history made moneyThat is a 1 in 3 chance that I will LOSE some of my money.
Long term investments are a GREAT thing.
Topics: Investments | No Comments »
Real Estate Time
By admin | September 18, 2008
I love real estate. In fact my major while in school was literally in Financial Management with a concentration in Real Estate. I am so interested in it.
Wifey and I made a decision that we would rent for the first year of marriage. We made a pros and cons list and actively said that renting is the best option for us. We ended at looking at it from two angles #1) Cash Flow would be much tighter (for those that own a home, especially when you first move in, there are many expenses involved as opposed to just maying the mortgage) and #2) We wanted to give time to familiarize ourselves with the market and areas before we made a decision.
At this point me and wifey are in our lovely apartment until April according to our lease. But we have officially contacted a realtor and will start the interview process for someone to represent us.
Wifey and I talked last night and said because we want to know everything there is to know about houses in our area we are going to look at 50 houses before we buy. Like I have said I am compulsive. Its ingrained in me, I can’t stop it, I can only put helpful principles in my life to avoid it.
With that being said, as much of a real estate guy I am, the first house that I see with either a: Circle Driveway, Basement that can be turned into a man-room, an island in the kitchen, or carpet in the living room so I can lay down, I will likely jump at it regardless of other circumstances that might make it a bad idea to get it.
I said all that to say this: I am looking for lessons.
Wayne Cordeiro says this best. There are millions of lessons that others before you have learned the hard way that you don’t have to re-learn. Go out and find them.
We have all learned things the hard way. When you run into a tree you now know, “don’t run into tree…it hurts nose.” You get to tell others now, “guys don’t run into a tree it hurts.”
There are many of you who I do not know who check this blog, about half of my readership are from states outside of South Carolina, North Carolina, & Georgia. So, for those of you who have owned real estate…give me your lessons. What have you learned?
I am going to put together some helpful material for others while I am embarking on this process and would love for all those who have experience to share what they have learned!
I will find it hard to believe that if you have made a decision to buy house; looked at different houses; have gone through the loan process; closed on a house then moved in; and maintained your house, that you do not have any lessons learned that will help others.
So here is what I am asking, if this is you, send me an e-mail at chriskakarasblog@gmail.com. I do not approve comments as many of you know (half the time it is someone trying to plug their website or product so I just don’t even mess with them) so send me an e-mail with your Real Estate Lessons Learned.
Many of you will not need help with what to write because there are tons of lessons that you have learned that I would love to hear about. However, I will provide some questions to help you get started anyway.
1.) How did you know you were ready to buy a home?
2.) Were there any complications in the process to buy?
3.) What type of things were you looking for in a home when you first were looking? Have the things that were important to you then now changed?
4.) Did you have expenses related to owning a home that you didn’t expect/weren’t prepared for?
5.) Would you do anything differently if had the chance (what you looked for in a home, loan process, repairs, etc.)?
That should be enough to get you started. Shoot me an e-mail with your responses at chriskakarasblog@gmail.com.
It will help many people just by sharing the things that you have already learned.
Topics: Investments, Life | No Comments »