I’ll Start Saving, Just As Soon As…

Posted by Glenn Leach on April 28th, 2009 filed in Building Your Wealth
Comments Off

Of course you’ve heard that you need 3-6 months of spending money tucked away in a savings account – just in case.  And “someday”, you’ll start working on that.  Just as soon as you start making more money, and you’ve paid off the car, and paid down those credit cards, and… um… start making more money (did you say that one already?).

The problem with the idea of “just as soon as…” is that it is a sure fire strategy for disaster.  It’s called “procrastination”.  It doesn’t work – never has, never will.   Nobody likes to save.  Savings involves “delayed gratification”, and who wants to wait and hope you can enjoy your money later when you are absolutely certain that if you spend it today on a designer pair of jeans or a leopard-print steering wheel cover that you’ll enjoy it? 

But look around – the economy is becoming scary.  Unemployment is increasing.  Once “Too Big to Fail” companies have failed.  Once proud financial institutions and huge corporations have stocks trading in the pennies and the government is printing money at an alarming rate, telling us the solution to the crisis is to spend more money.

But the real solution is “Saving”.  Reduce spending and SAVE!  Don’t Delay - Start Today!  Great minds in history have warned us against delaying the building of our savings accounts.  Minds like:

• Benjamin Franklin (“Have you somewhat to do tomorrow, do it today.”) or
• Mark Twain (“Never put off until tomorrow what you can do today.”) or maybe
• God Himself (“In the house of the wise are stores of choice food and oil… THAT MEANS SAVINGS… but a foolish man devours all he has… THAT MEANS NO SAVINGS – Proverbs 21:20)

If you think the government is going to “bail you out” if you run in to trouble in the future, think again.  Start taking care of your own future – don’t be that “foolish man” God warns about.

I Don’t Have Enough Money To Even Start Saving…

Absolute nonsense.  You got change in your pocket?  The ashtray of your car?  That coffee cup above the washing machine?  Then you have enough to start saving.  Go open a savings account – even if all you have is two plastic baggies filled with loose change.  That’s the first step – that “journey of a thousand miles begins with a single step” first step.

Then COMMIT to adding to that account on a regular basis.  And by “commit”, I mean “figuring out a way to trick yourself” into doing it.  Because if you leave it up to your own good intentions, you won’t do it.  Here are some ways to “trick yourself”:

·        Make it automatic:  Have your bank automatically transfer a fixed amount every payday from your checking account to your savings account.

·        Make it automatic II:  Request that your payroll department direct deposit a percentage of your paycheck each month into your savings account and the rest into checking.  Many companies have started offering this service to employees – go ask!

·        Make it automatic III:  Contribute to your 401K.  If you’re not already in your company’s plan – start!  Start with 3% of your income – you won’t even miss it!

·        Make it automatic IV:  Go in to your payroll department and reduce your exemptions by 1 on your W-4 withholdings form.  That means your company will start withholding slightly MORE money each month from you.  It’ll go to the IRS, which will increase your tax refund next year.  (I know, EVERY other financial advisor tells you “Don’t let the IRS have your money – they don’t pay you interest on it”.  But if you’re not saving anything now – can you think of a safer place to park your savings each month?  You CAN’T spend it, and you’ll get a lump sum back next year.  Just commit now to how you’ll use this lump sum to save for the future.)

·        Make it automatic V:  Save your change.  Many banks offer a “keep the change” program with your debit card purchases where they round up each purchase to the next dollar and put the rest into your savings account.  Cool!  And put a big jar next to where you empty your pockets when you come home, and put all your change into it – and once a month, add it to your savings.

And some other ideas:

• Make it inconvenient to access:  Just like you might have to put your alarm clock across the room so you actually have to get out of bed to turn it off, if it’s too easy to access your savings – you’ll just end up spending ‘em.  Maybe you need to set up your savings account at a different bank?  I LOVE these new on-line banks, like ING DIRECT.  They pay a great interest rate, they’re safe, and you have to go out of your way to access your money – which isn’t hard to do, it’s just slightly inconvenient so maybe you’ll think twice before you dip in to your account so you can buy those designer jeans.
• Give the account a “goal” name:  Use names like “Emergency Fund”, “Vacation Fund”, “Kid’s Education Fund”, “Christmas Fund”, “New Home Fund”, etc.  Taking money out of your “savings” account is easy.  Taking money out of your “Start My Own Business and Fire My Boss” account to pay for something frivolous might be enough deterrent to keep your spending in check.

Saving a few bucks every day may not seem like much when you first start out, but those few bucks grow as long as you can keep your fingers out of the cookie jar.  And when it begins to become a sizable amount – you’ll actually start sleeping better and feeling better about yourself.  And if you can resist the temptation to blow it on something you don’t need – you may be able to enjoy that thing you’ve heard of, called “Peace of Mind”.

Credit Scoring is like a Teeter Totter

Posted by Glenn Leach on May 7th, 2009 filed in You and Your Credit
Comments Off

Back in the days when it was okay and acceptable to have dangerous, limb-breaking, skull-cracking playground equipment on school playgrounds (You know, the kind of toys that were actually fun to play on?), I remember fondly the HUGE Teeter Totters we had next to the Kindergarten Portables at Fern Hill Elementary in Tacoma, WA.

Possibly my perspective is affected by my advancing years and the fact that the memory was placed in my brain using my elementary-school-size brain, but I swear that those 3 side-by-side teeter totters had to be 45-50 feet in length.  I mean, if the kid on the other side tried to yell a challenge or taunt at you, he was so far away that you’d see his lips move long before the sound ever reached you.  Yup, those were some big teeter totters.

Having one person on each side - gently teetering and tottering back and forth?  Nah!  (Well, sometimes the “girls” would do it that way.  But not us “BOYS!”)  It might start with one kid on each side, but the fun began when others started piling on. 

If a big kid had a little kid pinned to the sky, you’d see 2-3 other kids come to the rescue - rushing to add enough weight to the little kid’s side to send that big kid up to the sky himself.  And if they could do it fast enough, and they lifted their legs up so the end of the board smacked into the ground, they could sometimes make the big kid go flying off the end as the impact vibrated through the fulcrum and slammed full force into his unsuspecting bottom.  Oh the fun of that Oh No look in his eyes and the subsequent flat on his back splat! 

And then you’d move to the next stage where each side of the teeter totter was rushed by “teams” of boys.  Having 10-20 kids on each side (and again, maybe it’s possible the memory might have added a few kid’s bodies over the years) became a contest of wills and strategy.  Pretty soon, you’d have the manly boys standing towards the center of the teeter totter, trying to push each other off to reduce the weight of the opposing side in order to give their own side an advantage.

The winning strategy came down to two ideas:  1)  Increase the weight on your side while 2) Reducing the weight on the other side.  That’s how you won - make your side heavier AND make the other side lighter.  All at the same time.  Both strategies going at the same time.

And that’s how credit scoring works! 

Over the years, I’ve helped hundreds and hundred of folks improve their credit scores so they can qualify for a home loan or get a better interest rate.  There are many tips and tricks I share with them (Check out the many articles here for more ideas), but ALL the strategies are filtered through the Teeter Totter Test.

If the strategy helps reduce the weight on the “Bad Side” of the credit teeter totter, it is a good strategy.  If the strategy helps increase the weight on the “Good Side”, it is a good strategy.  But what is hardest to communicate to these clients is that they must absolutely work on BOTH sides of the teeter totter at the same time!  You cannot just reduce the weight on the bad side and hope the score will go up if you have no weight on the good side.  Teeter totters don’t work that way and neither does credit scoring.

You cannot just reduce the weight on the bad side and hope the score will go up

A potential client with lots of bad credit should start right away building good credit accounts.  Don’t wait until you have all the bad credit taken care of.  Open active good accounts gain momentum and points the longer they have been opened.  Waiting to open them until the bad stuff is gone will delay the credit score improvement.

And if you get enough good credit going - just like suddenly adding several kids to one side of a teeter totter - you can create enough momentum to “bump” some of the bad credit off the other side.  It may not actually go away, but it will be so outweighed by the good stuff that its impact will be diminished to the point it doesn’t really hurt all that bad anymore. 

Free IRS Money for Home Buyers

Posted by Glenn Leach on April 27th, 2009 filed in Mortgages and Your Home
Comments Off

Great news for First Time Homebuyers!  The massive economic stimulus bill that was just signed into law has a great incentive in it for First Time Homebuyers.  If you buy your first home between Jan 1, 2009 and Nov 30, 2009 (and “First Time” means “Haven’t had any ownership in a home for the past 3 years”), you get an $8,000 IRS Tax Credit.  This “Tax Credit” is actually real money in your hand.  You buy the home – IRS gives you the money when you file your taxes.  If you would have received no refund, now you’d get a check back for $8,000!

AND, there is a provision in there that says if you stay in this home for 36 months, YOU DON’T HAVE TO REPAY THE CREDIT!  It is yours to keep, no payback, no penalty.  This is different from the previous $7,500 credit that DID have to be repaid.  If you bought your home in 2008 under the $7,500 rules – those rules still apply.  That credit still has to be repaid over the 15 year period.  Sorry.

Now, questions you have are something like this:

How soon do I get the credit?  If you buy in 2009, you can get the credit very quickly if you’d like (and why wouldn’t you want to get it right away?).  If you haven’t filed taxes yet this year, just include this credit with your filing (and it is my understanding that even if you don’t have to file a tax return – you should file anyway and claim the credit).  If you have already filed this year, you can simply file an amended return and claim the credit.  You do NOT have to wait until next year to claim this.

Are there income limits?  Yes.  If you are a single filer, you can make up to $75,000.  Married filing jointly can make up to $150,000.  If you make a little more than this, check with you tax attorney or the IRS guidelines for specifics on partial tax credits available.

What happens if I sell or move before the 36 months?  If you sell the home or move and rent it out in the next 36 months, you’ll have to repay the $8,000.  So, if you’re buying this year and claim the credit, try to buy something you want to stay in for at least 3 years.  Otherwise, say bye-bye to this big benefit.

If you are considering buying a home this year – or already have – make sure you get full details of this new law.  I am not a tax attorney and cannot give legal advice on such matters, but the basic provisions of “you have to buy in 2009 BEFORE Nov 30 to qualify”, “$8,000 is the agreed-to size of the credit”, “36 months is the amount of time you have to stay in the home”, and “this will only be for first time buyers” are pretty clear.  Rumors of different proposals for non-first time homebuyers or for larger credit amounts didn’t happen – this is what we got.

This is great news for new buyers – so let’s get out there and buy, buy, buy – and great news for sellers who have been waiting for new buyers to offer, offer, offer.  Interest rates continue to be awesome – we have plenty of money to lend – our closing times are still terrific – home prices are incredible – and I’m still willing to take on new clients (ain’t that nice of me?) – so what are you waiting for?

We’ve Decided to RAISE our Borrowers’ Interest Rates

Posted by Glenn Leach on March 30th, 2009 filed in You and Your Credit
Comment now »

“We appreciate your loan business very much, but because the economy has gotten difficult we’ve decided to TRIPLE your interest rate effective immediately. When your next statement comes, the payment and interest rate will be higher, but don’t panic – it’s just our way of staying profitable so we can continue to serve you…”

OKAY, BEFORE YOU CALL ME IN A PANIC – THIS IS NOT TRUE!!!

But are you one of the lucky credit card owners who have received such a notice recently from your credit card company? With so many banks in trouble because of their poor lending practices – many have decided that the best way to generate some extra revenue is to target their credit card borrowers – even their BEST credit card borrowers.

Forget the fact that you’ve been a good client for YEARS and never been late. Forget the fact that they promised you that low interest rate on that balance transfer “for life”. Forget that your credit score is 800 and you’ve never missed a payment in your life! They have decided that YOU are their solution to all the other stupid lending choices they’ve made.

So, you’ll get the letter that says “We’re changing your terms – tripling your interest rate (or more) and increasing your minimum payment calculation too!” If you don’t accept these changes, your account is immediately closed. Faced with this choice, many of you decided to pay the higher interest rate rather than closing your account – because closing your account would hurt your credit score. Ouch! Rock / Hard Place!

Is there hope in sight?

Maybe. If you follow the financial markets at all, you’ve no doubt noticed that many banking stocks have stabilized and are starting to recover. The news coming out lately suggests that the stimulus money pouring in to these financial institutions is having a positive affect on bank balance sheets. Money is starting to flow through credit markets again.

But if you did get hit with those increased credit card rates, please realize that your credit card company is NOT going to send you one of them letters saying, “Whew! Crisis is over! We’re lowering your rate again!” If you accepted the higher rate – they are happy to let you keep it.

Did you Opt-Out?

Over the past few years, fears of identity theft have prompted many of you to use www.OptOutPreScreen.com to eliminate those pre-approved credit card offers from filling your mailbox. IF you’ve done this, and IF you just got whammied by your credit card company, may I suggest that you remove your name from the Opt-Out list?

Credit card business is VERY profitable to banks – so it won’t be long, as the bank balance sheets improve, before they start mass-mailing low-interest balance transfer offers again. If your name is on the Opt-Out list, you won’t be getting these offers – essentially Opting Out of Better Options.

What do you do Now?

If you did put your name on the Opt Out list at some point, it is very easy to “opt out” of the opt out list again.  On the www.OptOutPreScreen.com website, it is simple to “Opt Out” or “Opt In”.  Enter your info, and couple mouse clicks, and you’re back on the marketing lists again.  Soon, your lonely mailbox will start filling with offers again. 

No one likes junk mail, but when good credit card offers start coming out again, you’ll be glad you took this simple step.

Does Your Home Have A Story To Tell?

Posted by Glenn Leach on March 28th, 2009 filed in Mortgages and Your Home
Comment now »

I am often asked by my real estate partners to assist them in marketing their listings. They know I like to write and tell stories and that history is a passion of mine, so when they land a listing for maybe an older home in a community or a home being sold by a long time member of the community, they come to me for help in telling the story.

The stories I write, with maybe some historical pictures of either the home itself or the people or events I write about, end up on the backs of listing flyers, on blog sites, linked to MLS listings, displayed in the home during open houses, and are used to blanket the surrounding neighborhood, etc. The intention is to raise a little more awareness of the listing, create some intrigue and mystery or elevate the historical significance of the home, and most of all – to increase the emotional attachment a potential buyer might have for the home.

Who are these people?

It is amazing what you can find with a little internet research. I often start my search with County Records – available in most communities on-line. Go through the sales history of the home and make note of sellers and buyers names. Who are these people? Find out! Google the names, check the archives of local newspapers, check out the public library.

If the names of the people aren’t “significant”, then what was happening during the time the home was built or sold or what changes has that neighborhood seen over the years. There are stories that can be told about almost any home.

What a Wonderful Tribute!

A recent example of such a story is below. This took me a few hours to put together. I knew absolutely nothing about the home when I started, and the agent knew very little himself. I wrote a rough draft on what I could find out about the people and then asked the agent to “get approval” for the story from the seller (which was the daughter of the previous owners). Once she saw the story we were trying to tell, she was more than willing to share extra details and give us a few more tidbits. With her input and the research, I ended up with this story.

And after blasting it out to my contact lists and putting it on my blogs and blanketing the neighborhood along with open house invitations, the listing has become a hot topic around town. I have no doubt that this story will help find a buyer sooner than a listing with no story.

(And just think how this real estate agent can now use this listing to gather in more similar listings around town! If you don’t believe people want their stories told like this – you are wrong! What a wonderful tribute and gift you are giving when you include this strategy with your listings!)

Here’s the story

(I dressed it up on the flyers with pictures and graphics of course):

Rose Bowls, Blueberries, Daffodils, and Silent Snap-Counts

The last time this home came on the market was in 1947, so when I say that this “For Sale” offering is truly a rare and special event, I don’t think I’m over-exaggerating the unique opportunity that sits here before you. The home and surrounding land is known to local residents as “The Bond Blueberry Farm”, and this home has a wonderful place in the history of the Puyallup Valley and beyond.

Chuck Bond was a star for the University of Washington football team - one of many such UW stars to come from Puyallup High School over the years. Chuck was Captain of the Huskies team that faced the University of Pittsburgh in the 1937 Rose Bowl. Chuck was a defensive tackle but as good as he was, he and his teammates were unable to stop the Panther’s “Dream Backfield” of Bobby LaRue, Frank Patrick, Bill Daddio, and Marshall Goldberg who rolled up 254 yards and two rushing touchdowns enroute to a 21-0 victory.

One thing that was interesting about that Husky’s team was the way they won a key victory over powerhouse USC to secure that Rose Bowl birth. USC’s homefield advantage featured rowdy fans with megaphones and a HUGE marching band that would play as loud as possible while opponents had the ball, making communication and play-calling very difficult (Sound familiar Seattle Seahawks fans?).

So the Huskies came up with a unique system of silent hand signals to call plays - much like many of today’s NFL teams use. Years later, when asked about the “new” system of silent snap counts that teams were putting in to combat the noise levels at the Kingdome, Chuck responded, “We used them in 1936 to help us beat USC. You’d think that now, 50 years later, the pros might have perfected that particular tactic.” After graduation, he was drafted and played 22 games as an Offensive Tackle for the NFL Washington Redskins.

Chuck returned to Puyallup, married his sweetheart Francis, and in 1947 they purchased this home and started their blueberry farm. (Oh, and their son, Chuck Jr. later played for two UW Rose Bowl Teams in 1961 & 1964 - also playing Tackle. They were the first Father/Son Rose Bowl players in UW history.)

Chuck and Francis worked hard raising and selling their blueberries together, but they also loved to play hard too. They were avid tennis players and formed a formidable doubles team. The family joke was that Chuck would use his long arms to cover most of the court but he made Francis do all the running to get to the tough shots.

In 1971, the Bonds built the Puyallup Valley Tennis Club on a section of their property. They hosted tournaments and some of the local high schools would use the courts for matches and try-outs over the years. After Francis passed away, Chuck met Mary in 1979 who also loved to play tennis and she became Chuck’s new double’s partner and second wife. The Puyallup Valley Tennis Club later became the location for Puget Sound Gymnastics - which is still using the facility today.

Chuck and Francis (and Mary) were active supporters of Puyallup, including our famous Daffodil Festival. They were an important part of Puyallup history, and their beautiful brick farm home with the amazing interior woodwork, lots of square footage, lush acreage nestled into a wooded hill (the perfect combination of “secluded” and “close in”) is an important example of local historical architecture.

Don’t miss your chance to own this home! Make an offer today. Last offered For Sale in 1947 - If history holds true, the next time you’ll get an opportunity to own this home, if you miss out this time, should be around 2,071.

(Please contact me for your financing needs. I’d love to help you write the next chapter of this home’s history!)