Pay Off Your Mortgage Faster with The Speedpay Strategy

I’m excited to tell you guys about a helpful tool called the Speedpay Strategy. It helps you to layout a plan for making additional payments to principle on your mortgage (or really any kind of loan). Its purpose is to help you pay off your mortgage faster than if you just made the minimum payment. Let’s take a look at what this tool is, when you should use it and what you should do before you use it.

Download the Speedpay Strategy in Excel.

What exactly is the Speedpay Strategy and how does it work? It’s a payment plan that uses increasing payments to principal that are based off of customized data that you input into the Speedpay Strategy Excel Worksheet. The Speedpay Strategy creates a schedule where each year the amount of what you pay directly to principal increase by a percentage of the original principal and interest payment. This allows you to anticipate how much faster your mortgage will be paid off and how much your monthly payment will need to be in order to reach your desired payoff date.

Why use increasing payments? One of the best parts about the Speedpay Strategy is the increasing payments. The reason this is a nice feature is because a person’s income tends to rise over time. Think about it, for most people, they will likely make more money next year than they did this year. So, it only makes sense to increase your mortgage payment, if you have a little more income, in order to pay your mortgage off faster.

I created a template for the Speedpay Strategy using Microsoft Excel and this template is available for free download on my website, buildwithkeegan.com. You can find it in the “Success Tools” section. As a side note, feel free to customize the Speedpay Strategy Template to fit your specific needs. To use the template from my website you don’t need to be a wiz at Microsoft Excel. First, simply download the template from my website and open the file. Please note, you will need the program Microsoft Excel in order to use the template. Second, enter in your loan information in the yellow boxes at the top left part of the screen. In this section, you will need to enter your original loan amount, which is the amount of loan that you started with when you either bought your home or when you refinanced. The next amount you need to enter is the current principal balance of your home loan. You can find this amount by either looking online, if you have online access to your mortgage, or by simply looking at the most recent mortgage statement available. Then, enter the amount of the original term. The original term is the number of months that you had at the beginning of the loan to pay back your loan. For instance, if you had a thirty year loan then the original term would be 360 months. Next, input the interest rate on your loan and the principal and interest payment amount of your loan. As side note, if you have a mortgage that requires bimonthly or biweekly payments then feel free to modify the Speedpay Strategy Template to accommodate your situation.

Once you’ve entered in your loan information, it’s time for the fun part! Enter in the percentage amount by which you would like your principle payment to increase each year. You can adjust this percentage up or down to meet your level of financial capabilities. You can also adjust this percentage to show you how long it will take to pay your loan off in a given amount of time. For example, say you want to pay your home loan off in 10 years. You would simply input different percentages until the loan balance is paid off within the 10 years as shown on the amortization schedule within the Speedpay Strategy Template. You can tell when the loan is paid off by looking at the “Loan Balance” column. When the loan balance hits negative and it is red, you know the loan is paid off.

If you want to put a little extra money to go to just the principal in addition to the Speedpay percentage then you can add that in the Speedpay Boost box. Whatever amount you enter will be added to the monthly principal payment amount for the entire life of the loan. For example, let’s say that you get a home loan and you know, right when you get the loan, that you want to put an extra 50 bucks towards the principal each month. Well then, you would enter the $50 in the Speedpay Boost box and this will show you paying $50 per month, every month, for the life of the loan, to just the principal.

Once you get all of the numbers entered into the Speedpay Strategy Template play with the Speedpay percentage and the Speedpay Boost amounts until you achieve a payment amount and a loan payoff date that you are comfortable with.

Next, let’s look at some recommendations on when you should use and should not use the Speedpay Strategy.

First, if you do not yet have an emergency fund of 3 to 6 months, you need to establish this prior to making additional payments towards your home loan. An emergency fund is crucial to keeping you from falling into high interest consumer debt. Most people who are living paycheck to paycheck use a credit cards, personal loans, and payday loans, in case of an emergency. This is a big mistake. In lieu of using short-term debt for an emergency, build up an emergency fund so you can pay cash for an emergency if you need to.

My second recommendation is that you eliminate any other consumer debt before using the Speedpay Strategy. After you’ve eliminated your consumer debt then you can start making additional payments to the principle on your mortgage. I recommend doing this because the rate on other credit items such as: credit cards, car payments, student loans, etc. typically have a higher interest rate than home mortgages.

My third recommendation is that you make sure to contribute to your retirement plan prior to making additional payments to your home loan principal. If you can contribute to your retirement plan and afterwards you still have room in your budget then great, do the Speedpay Strategy. If you are not contributing to your retirement plan, then you need to do this before starting the Speedpay Strategy.

Lastly, if you expect to live in your home for less than two years I suggest putting the Speedpay Strategy on hold while you put away money for the down payment, closing costs and moving costs on your next home.

3D Exercising with Natalie Harris

Natalie Harris is Personal Trainer and Exercise Physiologist who works with people to help them achieve their physical goals. In this episode, Natalie talks with me about functional training and 3D exercising. She helps us to understand that the benefits of exercising go much further than just helping us physically. As she points out, exercising can also help us to grow mentally and spiritually. If you’re someone who is seeking growth in your life, this is a great episode to listen to.

Natalie and her friend Irina Whittlesey have recently started their own blog and podcast called The Versatile Athlete. These are two very educated individuals that have an incredible wealth of knowledge to share and are quite fun to listen to. On their blog and podcast Natalie and Irina will debunk fitness myths and provide new and exciting ways to doing fitness and viewing health. I’m really looking forward to hearing and reading the content that they come up with.

If you would like to learn more about hiring Natalie as a personal trainer she can be reached at Pro-Motion Functional Fitness in Yakima Washington. The office phone number there is (509) 452-4187.

Natalie Nobbs

Achieving Maximum Performance with Dary Reed

Dary Reed is a Personal Effectiveness Coach and the founder of Assets LLC. His goal is “to help individuals operate in a culture of high performance by teaching intrinsic behavioral skills that direct ones path to elevated levels of success.” Dary shared a tremendous amount of success wisdom with me and I felt very fortunate to have him on the show. If you’re someone who wants to achieve your maximum performance in whatever you’re doing, this podcast episode is for you!

Here are just a few of the nuggets of wisdom that Dary shares:

  • “Once you can say that ‘failure is my leverage for effectiveness’ and truly believe that in your heart, then failure doesn’t frighten you anymore.”
  • “When I learn to be comfortable with being uncomfortable, when I embrace the suck, however you want to phrase it, you know, that’s really where I learn and where I grow.”
  • “Everything of high level quality is practiced, drilled, and rehearsed, which is discipline”
  • “Discipline establishes patterns and patterns establish effectiveness. You can’t have random effectiveness.”
  • “You don’t learn on the mountain tops, you learn down in the valleys.”

Dary’s words of wisdom in this podcast will help you:

  • Learn how fear destroys our success and how to overcome it.
  • Learn the importance of discipline while achieving success in your life.
  • Embrace the tough parts of your life as a way to learn, grow, and become better than you were yesterday.
  • Become a better leader both in business and in life.
  • Learn how to achieve on a whole new level.

Dary’s Contact Information: 

Life Insurance 101 with Steve Wagar

I recently had the pleasure of talking with Steve Wagar, Financial Representative with Northwestern Mutual, about life insurance and the benefits that life insurance provides. He offered some really great insight that you should listen to if you’ve been considering protecting your family by getting life insurance.

If you would like to talk to Steve about life insurance or other financial topics here is his contact info:
Steven M Wagar | Financial Representative
117 East Yakima Ave.
Yakima, WA 98901
P: 509-457-1660 | F: 509-248-3552
E: steve.m.wagar@nm.com   Website: www.stevemwagar.nm.com

Points Steve made from the interview:
• Life insurance is a contract between you and the insurer that, if premiums are paid, and the policy is in-force, meaning in effect, when the insured party passes away, a benefit is to be paid to the beneficiary.

There are three basic types of life insurance: Term, Whole life, and Universal Life.
Term insurance is great for covering a need for a specific period of time, like 10, 20 years or longer. Generally, it is the lowest price of the three types and allows families with any income to protect themselves.
Whole Life insurance is an insurance that is with you until the day you pass away, not for a specific time. It also can be a tax-deferred cash accumulation vehicle. Whole Life insurance has a bad reputation, given by a few people who have used it in a manner it was not intended for. If you buy a quality whole life insurance product from a quality company, it can be a worry-free asset down the road that can serve a lot of purposes. Here, it pays to do some research about the insurance company’s performance.
Universal Life policies are a sort of hybrid policy between Whole Life and Term insurance. They have flexible premiums, but not the guarantees of traditional whole life insurance. They work like Whole Life insurance policies, but can have certain pitfalls if not designed and executed properly. In other words, they require more maintenance generally, than traditional Whole Life policies.

• One of the most common questions I hear about life insurance is: If someone has a good chunk of money saved up, can this suffice as a “self insured” policy? Steve answered this question by asking another question:

“Do you think someone with a $300,000 house that is paid off, meaning they own it outright, would have home owner’s insurance still, just in case it was destroyed somehow?”

Questions to ask if you’re looking for life insurance:                                           • The best way to find a financial representative that you can trust will do what’s right for you, is to talk to those you love, respect, and trust yourself and ask them who they go through. If someone you know has had a very positive experience, and has trusted their representative, that is probably a good sign!
• What are the financial strength ratings of the company or companies you represent? Ultimately, when it becomes time to submit a claim for life insurance, you want a company that will be there, do the right thing, and be able to pay the claim. Look for companies with high financial strength ratings.
• Ask if these companies do financial planning as well. Life insurance is not usually a standalone product; it is something we use as part of a larger financial plan in order to insure your family’s financial security are met no matter the things life throws at us.
• Ask if the company the representative works with is a mutual company. Mutual companies by definition have no stock holders, only policy owners. So as someone who owns a policy with these companies, if a dividend is paid, it is paid to those who have policies with the company, not an outside stock holder. What this translates to, is the mutual company then has an incentive to perform well for those people who own the company, those who actually own policies with them. Historically mutual companies have provided life insurance at a lower cost than stock companies.
• Ask if the representative has professional distinctions pertaining to life insurance and financial planning, such as a CLU, ChFC, CFP, or are working towards such designations. Having these designations, or having a mentor of the representative holding these designations, shows that the representative has gone above and beyond to learn the ins and outs of life insurance to best provide for your needs.

Talking CrossFit with Irina Whittlesey

Hey guys! I recently had the privilege of interviewing Irina Whittlesey, a CrossFit coach, to talk about the benefits of CrossFit. As a special side note, Irina has her own podcast and blog called The Versatile Athlete. Irina told me about the many benefits that CrossFit offers and how it is different from having a regular gym membership. If you’ve ever considered CrossFit here are some of the benefits we discuss:
1. Strength: Become physically and mentally strong.
2. Endurance: Go harder – last longer.
3. Motivation: The coaches and other participants cheer you on.
4. Coaching: Have a knowledgeable person guiding you all they way.
5. Premade Workout Plans: Workout of the Day (WOD) is different everyday.
6. Nutrition: CrossFit gyms may also provide nutrition coaching.
7. Weight Loss: Getting lean and mean? CrossFit can do that for you.
8. Community: Make friends and take the CrossFit journey together.
9. Accomplish: Reach goals that you didn’t think you could.

Hop Valley CrossFit in Yakima Washington is owned and operated by Robb & Jenn Paul. Hear their story and learn more here: hopvalleycrossfit.com

 

Special Notes: Some CrossFit gyms may offer a free class as a way to let people try it out. CrossFit gyms typically have a monthly membership fee with a minimum commitment period. Contact your local CrossFit gym to learn more about their pricing structure and what they offer.

Decluttering Your Life

  1. There are several benefits of decluttering such as reducing clutter stress, being more productive, having more time to do what we want, and keeping more of your money.
  2. Prioritize the things you need to declutter. Start with the most important areas of your life.
  3. Get rid the things you don’t use or won’t use often. Organize the things that you want to keep.
  4. Make thoughtful purchases in the future. Don’t allow yourself to re-clutter your life!

Hey guys! What are the benefits of decluttering your life? What does decluttering look like and how do we do it? These are the questions that I am going to answer in this blog post.

We live a very blessed life. We have access to so many things and sometimes we fill our lives with too many of these things. Every once in a while we need to stop and assess the stuff that we’ve allowed in our lives and see what we can take out in order to make more room for things that matter. This means that sometimes in life, less is more. The less we fill our lives with junk the more time, money, and better health we’ll have. When we have more time, money, and better health we can focus more on doing the things that we really want to do and the things that will help us to reach our goals. Decluttering can be thought of as a type of investing. The time we invest into decluttering is going to be rewarded by the many benefits that decluttering offers. Also, by being intentional about avoiding clutter we can avoid the negative side effects that clutter has on our lives.

I can think of at least 3 main areas of life that we can declutter: things, time, and finances. Let’s take a look at how decluttering can be beneficial in these different areas.

Benefits of decluttering:

  1. Decluttering gives you more space and less stress. When I have a cluttered space the clutter makes the space feel cramped. I’m not someone who is claustrophobic but I would definitely say that I much rather be in a room that is clean and organized than a room that is jam packed full of stuff. A room full of stuff (like the current condition of my messy basement) makes me feel uncomfortable and adds more stress to my life. Decluttering can make you feel less stressed. Recently I walked into my garage that I’m moving into and I have tools that need to be cleaned, boxes of stuff that needs to be organized, shelves stacked with things that need to be organized, and I tell you what, I didn’t even know where to start. I asked myself, “Should I start cleaning tools, organizing shelves, or do one of the other millions things with all of this stuff?” I felt a little overwhelmed by all the stuff and it was easy to see that all this stuff was adding to my stress.
  2. Another benefit is that decluttering can help you to be more productive which ultimately can save you time. Think of a workstation area, maybe at work, maybe in your garage, maybe in a craft room, or maybe in your home office. If your work space is clean and organized than it’s going to be easier to find things and to get things done. This is going to make you much more productive.
  3. Having less stuff saves you money. When you spend less money buying stuff that you don’t need you have more money to put towards your goals like saving for retirement, your child’s education, or your down payment on your next home. Also, by not having as much stuff you’re not going to spend as much money maintaining things. The fact is that owning stuff costs money. Is that something that you thought of when you purchased the last big tick item? If you’re like me, probably not. I was just focused on how bad I wanted it. So, keep that in mind the next time you’re on the fence about buying something. Is it something that you’re willing to pay to maintain and store?

The benefits from decluttering go on and on. We can clearly see through these examples that decluttering has obvious benefits. The next question I want to answer is “How do we be intentional about decluttering and make sure that we’re not cluttering our lives even more in the future?”

Prioritize: The first step to decluttering is to prioritize. It’s impossible to declutter every aspect of your life all at the same time so you need to prioritize the areas that are going to make the most impact and benefit you the most. In the area of things, what things in your life need the most attention? Has your cluttered garage been weighing on you? Do you really need to clean your home office so you can be more productive which will allow you to spend more time with the family? What priorities do you have in the area of finances? Do you have a credit card that you don’t use but is still open? What things can you declutter that will give you more time to do the things you want?

Organize: The second step to decluttering is organizing. Organizing is the nemesis of clutter. The more organized you are the less effect clutter is going to have on you.

The first step of organizing in any aspect of your life is to get rid of the stuff that you’re not using. If you have a bunch of stuff that you don’t even use anymore then it’s time to get rid of it. In regards to your finances, do you have a reoccurring charge for a membership that you’re not using anymore? Then it’s time to get rid of it. Are you spending time doing something that doesn’t bring you or your family happiness that you can stop doing? It’s time to get rid of it. Eliminate anything and everything you can. Sell it, give it away, recycle it, or throw it in the garbage. It’s time to clean up and declutter your life. Let’s look at what organizing looks like in different aspects of your life.

Organizing your stuff: After you’ve rid yourself of the stuff that you don’t use anymore its time to organize what’s left. Make the things you use most often the easiest to access. Store the things that you don’t use often somewhere out of the way. The idea is to keep your space clean but at the same time you want your stuff easy to find when you need it. Get the family involved when you can so that everyone knows where stuff is and so that everyone has time spent keeping the house clean and organized. That way they’ll appreciate it more.

Organizing your time: Decluttering your time can be difficult. If you’re like me you sometimes probably feel like you say yes to way too many things and before you know it, you feel too busy to do anything. That seems silly to say but that’s the way it feels at times. I’ve heard it said that you shouldn’t do more than 3 big things at a time outside of your family time. This means, for example, that if you work full time that would be one, if you also volunteer throughout the week that would be two, if you have a big project a home that you’re working on that would be three. Life will be filled full of the little things but when it comes to the big stuff don’t overextend yourself.

Organizing your wealth: This is where it actually pays to be organized. Have a garage sale to turn that stuff into cash. A garage sale or selling your stuff on Craigslist can be a great way to both declutter and put more money in your bank account. Garage sales can be a painful but a good learning experience which is that stuff usually goes down in value. Like, way down. Buying a bunch of stuff is going to get you nowhere but broke. Another way to organize your wealth is to use autopay if you can. For example, using autopay to pay your electric bill, or your internet bill, or your mortgage can save you time each month.  Also, I recommend setting up auto-contributions to your investment accounts. The less time I have to spend keeping up on my finances the better in my mind and using some autopay and auto-contribute features is one way I can make sure I’m reaching my wealth building goals. Another money saving anti-clutter technique is to rent instead of buy. For example, if you need a specific tool for a home project consider renting it or borrowing it from a friend in lieu of buying it. This could save you a lot of money. For more peace of mind and to reduce the risk of financial fraud you should considering closing bank and credit accounts that you don’t use anymore. If you have several checking accounts or savings accounts I recommend consolidating them. I have only one checking account and one savings account. These two accounts are the only bank accounts that I have open for myself. I have seen people that have checking accounts at 3 different banks. This is absurd to me and I have no idea how they keep all of their accounts straight.

Minimize: The final step to decluttering is to minimize the stuff that you put in your life by being very selective about what you allow in your life. To help you avoid re-cluttering your life be intentional about not allowing more unnecessary stuff in your life. When you’re surfing Amazon next time, before you hit the “Add to Cart” button, ask yourself, “Do I really need this?” You probably don’t. Remember, a dollar saved is a dollar earned. The more you save now from not buying junk allows you to keep more of your money and reach your financial goals faster.

Winning by Creating a Success Schedule

The Success Schedule helps you win by design. It will help you to: 

  1. Keep on track to reach your goals.
  2. Break down your big goals to small actionable weekly, monthly, and yearly goals.
  3. Be intentional about making choices that will help you reach success.

You’re probably asking yourself right now, “What the heck is a success schedule?” In short, it’s a tool that helps you achieve your short-term and long-term goals. You’ve heard me time and time again say that you need to create goals if you want to reach your dreams, right? A success schedule is part of the goal creating and achieving process. It’s a one page document that lists your goals and action items out on a yearly, monthly, and weekly basis. But before we jump into more about success schedules let’s do a little review on goals. When creating goals the first thing you need to do is figure out what exactly you want to accomplish. Maybe you want to start putting away money for retirement or start a small remodel project at home. The thing that you want to accomplish can be anything. It can be something big like saving up for a down payment for a house or it could be something small like cleaning out the garage. So, what is your goal? Obviously in life you have a lot of goals. You have them for your work life, you have them for your home life, and you might even have goals that are not really a tangible thing, like maybe it’s finding more happiness by being a better person. The goal is the answer to “How do I get what I want?” It’s what you want to accomplish so you reach your dreams. Ok, we get, the goal is like a race with a finish line. But how do know where to go in order to get to the finish line? We get there by creating a road map, a game plan. In other words, we accomplish our goal by creating a step by step process. This process is where the success schedule comes in.

Once you’ve identified your goal and you’ve identified the steps that it’s going to take to get there, then it’s time to create your success schedule. This schedule is going to list the things that you need to do on a weekly, a monthly, and a yearly basis so that you know what you need to do in order to reach your goal. For me a weekly schedule works great because I tend to plan for my week on the weekends and it helps me to stay on track throughout the week. I’ve created a success schedule template that you can download for free on my website buildwithkeegan.com under the “Success Tools” page. You can use this success schedule as it is by simply filling in your goal information, you can use it as a model in order to create your own success schedule, or you can modify this success schedule to be customized to your goals. One thing to take into consideration is that you can create several success schedules for different goals or you can use one success schedule that lists several of your goals. So, let’s look at an example of what you might put on your success schedule. (As a side note, to help you follow along with this example, you might take a look at the success schedule template that I’ve put on my website.) In the yearly section of the success schedule I’m going to put an item for retirement because I want to be intentional about putting away money for retirement. For this yearly retirement goal I’m going to put a dollar figure amount so that my goal is a SMART goal. A SMART goal is one that is specific, measurable, attainable, realistic, and time-based. So, I’m going to type in the yearly section of my success schedule “Retirement goal: contribute $5,500 to Roth IRA”. For me, I contribute to my retirement once a month, so in the “Monthly” section I’m going to also write in “Retirement goal: contribute $460 to Roth IRA”. In this example I wouldn’t have a weekly goal since I contribute to my retirement monthly but if you contribute to your retirement weekly you could add a line in your weekly schedule that says something like “Retirement goal: contribute $115 to Roth IRA”. You see, the schedule breaks down my big goal of saving for retirement into yearly, monthly, and weekly goals. The nice thing about the calendar is that it tells you what you need to do, how much you need to do it, and it keeps your eye on your goals so that they are in the forefront of your mind. Reminding yourself of your goals can be a big deal because it’s easy to get really busy in life and loose sight of why we’re working so hard.

So, I would like to encourage you to create a success schedule of your own filled full of all your weekly, monthly, and yearly actions to reach your goals. Like I mentioned you can download a success schedule for free on my website, buildwithkeegan.com in the “Success Tools” page. Make your success schedule fun! Use different font colors and put pictures of things that represent your goals around the border. It doesn’t have to be structured exactly like mine but it should allow you to see what you need to do this week, this month, and this year in order to accomplish your goals. I put my success schedule on the wall just above my computer so that way every time I sit down at my desk I’m reminded of what my goals are and what I need to do in order to accomplish them.

Managing and Reducing Debt

  • Debt can be disastrous for your finances.
  • It can increase risk which can cause stress and worry in your life.
  • Minimizing and eliminating debt can create more monthly cash flow and therefore financial freedom.
  • Create a plan to minimize debt by clearly identifying your debt.
  • Create a monthly budget to see opportunities for cutting expenses and figuring out how much debt you can pay off each month.
  • A wealth builder does not use debt or uses debt to at a bare minimum.
  • As a wealth builder, your end goal should be to become someone who is collecting interest not paying interest.

When most people hear the word debt the first thing they think of is something that is probably negative. Maybe it’s just me, but when I hear the word debt the feelings that I get are similar to those feelings that I get when I hear my dentist tell me I have a cavity, or the feeling I get when I’m washing my car and notice I have a door ding. These feelings don’t feel good and could be considered a little painful. However, I can’t be too negative towards debt because there have been times throughout my life that I’ve used debt for something that was good. For example, when I was young there would have been almost no way for me to buy a car without the help from my dad. Through the financial help from my dad I was able to get a vehicle, which allowed me to get to a job, which allowed me to make money. Had the vehicle not been in place, the job wouldn’t have been either. Not that it was impossible to get a job without getting a car, it’s just that riding a bike an hour each way to and from the job would have taken a level of ambition that was way greater than where my 16 year-old self was at. I’m sure that many people have found themselves in the situation of needing a loan to buy a car. So, it’s easy to see how debt can be helpful. In another example of debt used in a good way was when I decided to build a house at the age of 26. There was no way I had enough money to even come close to completing the house with the savings that I had at the time. However, there was a bank that, surprisingly enough, was willing to give me a construction loan to build the house. Through this example we can see that debt gives people the ability to buy a home. This can be a good thing!

But, we all know there are always two sides to every coin. So, what are the reasons you wouldn’t want debt? One reason that you don’t want debt is because debt can be dangerous. I’ve seen time and time again people that take on too much debt and before they know it they’re struggling to keep up with all of the loan payments. They find themselves trying to work more hours, in order to make more money so they can stay afloat financially. They live worried lives, constantly stressed out because they don’t know if they’re going to be able to make all their payments. They live in fear of the phone ringing with the debt collector on the other end asking for their money. Taking on too much debt can be disastrous for your health, wealth, and happiness. The stress that debt can put into your life can cause your health and happiness to deteriorate.

The reason debt can be dangerous is because it increases financial risk. Let’s examine what financial risk can look like. This example is something that I’ve seen others experience in my life and I’m sure you’ve either heard of something like this happening or maybe even know someone this example has happened to. For this example I’m going to tell you a story about a guy named Bob. Say that Bob wants to get into the real estate game because he has a friend that has a friend that’s flipping homes and supposedly they’re making a bunch of money doing it. Bob has watched home renovations on HGTV so he thinks that makes him an expert remodeler. So, Bob rounds up enough money to make the minimum down payment on a fixer upper. He thinks, “Its real estate, I can’t loose!” He buys the fixer upper and start dumping his time and money into it. Ok, right there, let’s stop, take a step back and look at where Bob is financially. Bob already had one house payment and now he has another house payment. He also has a payment on a truck that he bought brand new two years ago. Bob used a majority of his savings for the down payment to buy the fixer upper so he’s been putting the cost of the home renovation on his credit cards. The credit card payments are starting to climb but Bob’s isn’t too worried because he thinks he will sell the house before the credit card payments get out of control. He thinks that he can get by making the minimum monthly payments. He’s already maxed out two credit cards and he’s close to maxing out a third one. Bob doesn’t know this yet but he’s heading right toward financial disaster. Ok, let’s continue Bob’s story. Bob get about half way done with fixing up this fixer upper and realizes that it’s taking him way longer and costing way more than he originally anticipated. Not only that, but all the work that Bob is doing on the fixer upper is taking way the overtime hours that Bob was use to getting which helped him get bigger paychecks. Bob was counting on the pay he would get from overtime hours at work to offset the added credit card payments. So, money starts to get really tight for Bob. At this point he’s exhausted all of his savings, he’s barely able to make the payments to everything he owes money on, and his fixer upper house that sounded like a great idea at the time has turned into his worst nightmare. He’s not even done with the fixer upper yet and Bob is out of money, out of credit, and Bob can’t keep up with the mountain of debt that he’s got himself into. Bob is completely burned out from working on the fixer upper nights and weekends. His marriage is struggling because he and his wife have been arguing about how they’re going to pay for all the debt that he has accumulated. He decides to sell the fixer upper as is with some of the renovations still incomplete. Bob knows that he wont get nearly what he originally thought he would get for the house by selling it as-is but he has run out of other options. After Bob pays the real estate commission, the excise taxes, and closing costs, Bob is left with just enough to pay back the loan he originally took out to buy the property. But unfortunately Bob not only lost all of his savings but now he’s left with three credit cards that are maxed out. Bob’s credit score has been destroyed because he was late a few times on the different loans that he had during the process. Ok, so Bob’s story is sad right. Here’s a guy that bets big and does so using a lot of debt. The mountain of debt that Bob accumulated basically killed his investment. Had Bob done a better job budgeting and used cash for the fixer upper he would have been able to complete the project and sold it for a profit. The moral of the story is that debt can be dangerous and by using debt it can put you at a high level of financial risk.

I am a firm believer that if you want to be a wealth builder you need to minimize your debt. A majority of the financially successful people I’ve met either rarely use debt or they don’t use debt at all. They have a paid off house, they pay cash for their cars, and they don’t have credit cards they use a debit card instead. Look, I’m not going to be naïve, I know there are sophisticated investors and wealth builders out there that very carefully use debt to their advantage. For some investors and business owners they can make money by borrowing money. However, it’s also obvious to me that far more people, in fact, I would say an overwhelming majority of people, get burned by using debt in some way. For most people, debt is more debilitating than it is something that will help you. My advice is to strive for a life free of debt. That means that you need to create a game plan to pay off the debt that you have.

The first way to manage debt is to get control of it. This means stop creating more debt and start paying off your existing debt. If you need to buy something use cash, check, or a debt card. If you don’t have the money to buy something then you need to really ask yourself if it’s something that you absolutely need. Do you need a vehicle? Yes, in our society today, in a majority of cases, people need a vehicle for them to function in the economic system that we’ve created. However, that doesn’t mean that you need a brand new vehicle with a huge monthly payment. You can get an inexpensive vehicle that will work just fine. Also, avoid credit cards. The only reason I will use a credit card is if my place of employment requires me to use it for business purposes. I will not use credit card for personal purchases. I will use my debt card for any purchases that I need to make. I don’t care what kind of miles I might be able to get or what kind of points I can earn. In my opinion credit cards are a waste of time and money. I’ve seen people destroy themselves financially because they’ve accumulated too many credit cards and I think credit cards are nothing but a trap to get people to pay a lot of interest when they get in a financial bind.

The second way to manage debt is to create a plan to pay off your debt as fast as possible. There are several ways to go about doing this. For example, Dave Ramsey’s program uses the “debt snowball”. The basic principle is that you list out all your debts. Dave’s plan has you list your debts out from the smallest to the largest. Some people list the debts from the highest interest rate to the lower interest rate. Do whichever way makes the most sense to you, just make sure that they’re all listed. The next step, is to focus with laser beam strength on paying down debt. Make extra payments to principle on your debt as often as you can but don’t forget to keep an emergency fund. You need to keep an emergency fund of one month’s of expenses in place throughout paying off the debt. Once all your debt except the house is paid off then build up a bigger emergency fund of at least 3 months of expenses.

If you want to get serious about paying off debt you need to create a monthly budget. The budget will help you to see things that you can cut out of your spending in order to pay off your debt faster. Your budget will also help you to better manage your cash flow (meaning you’ll make sure you don’t run out of money by the end of the month). I recommend making a zero-based budget. This means that you are telling every dollar where to go throughout the month. Every month you need to plan and you will have a plan through the use of your monthly budget.

Your goal should be to become debt free if you’re not already. Why? To avoid paying interest to other people. As a wealth builder you want to be the one collecting interest not the one that’s paying interest! By eliminating debt you are freeing up cash that can go to other things, like building your investment portfolio, traveling with your loved ones, giving to your community, or getting to do the things that you’ve always wanted to do.

Benefits of Having a Personal Trainer with Natalie Harris

There are a ton of reasons why having a personal trainer can help you reach your health goals. Natalie Harris, Personal Trainer and Exercise Physiologist talks to us about why having a personal trainer can be so beneficial. Listen to HWH podcast episode 13 for all the benefits and also to find out important questions to ask if you’re considering working with a personal trainer. If you live in the Yakima area and are looking for a personal trainer Natalie can be contacted through Functional Fitness 509-452-4187.

natalie-nobbs

 

The Importance of Rest

Have you ever felt like life was just go-go-go all the time and you didn’t have any time to just rest? I’ll be the first to admit that I’ve been in that boat before to the point that I just felt burned out. When you hit this burnout mark it should be a wake-up call to you that you haven’t been getting enough rest. It’s easy to keep putting more and more stuff in our lives and it can sometimes be difficult to get the amount of rest you need. Rest can come in different forms and can be applied to different areas of your life. You can have rest for your body which can help you to recuperate energy. You can have rest when it comes to building wealth which can help motivate you to continue to save and invest. You can even have rest for your mind which can help you to be in a better mood, reduce stress, and help you to feel happier.

Rest for our body is probably the first type of rest people think of when they hear someone say the word “rest”. We tend to think of going to bed for the night or kicking back in the easy chair for a catnap. This type of rest is really important for our body to recover from the energy it exerted throughout the day and to help us regain energy to use the next day. Many times when we get really busy this type of rest is one of the things that gets cut back in order to squeeze a few more activities in the 24 hours that we have. We often tell ourselves “I can just wake up a little earlier to get that thing done” or “I can just work on it tonight and go to be a little later”. When we cut back on our sleep in order to be more productive we might be getting a little more work done in the short-term but in the long-term we’re actually hurting ourselves. I’ve seen time and time again in my life and in the lives of those around me that not getting enough sleep means we’re more susceptible to getting sick. When we get sick it dramatically slows down our productivity and can erase what we gained when we were working hard while sleep deprived. Getting consistent sleep and resting our body is very important if you want to keep good health, avoid getting sick, and feel like you have the energy it takes to take on your day.

Rest from wealth building is, I’m sure, much less thought of than rest for your body. I know you probably have an eyebrow raised when I say rest from wealth building. What I mean by this is simply being able to take a break and rest from being focused on building wealth by saving up and buying something special for yourself or for you and your spouse or for your whole family. For me, I tell myself pretty often that I’m not going to buy something because it’s more important to me to save and invest so that I can have recourses to buy things later in my life. I know that by saving and investing now rather than spending all of my money will help me get to my goal of becoming financially independent. This goal is really important to me and it’s more important to me than being able to buy that next gadget or gizmo that catches my eye. However, on the other hand, it is really nice to occasionally treat myself to something special as a reward for working so hard and for doing a good job of saving and investing my money. This treat might be taking my significant other out to dinner or buying something that I really wanted for some time. Buying this treat is usually something small that won’t break the bank. In other words, resting from wealth building means being able to spend a little to make sure you remember why you’re working so hard to save.

Rest also helps us to be happier. When we sleep we rest our whole body including our mind but there’s another kind of rest where we rest in order to rest our mind. Examples of this kind of rest would be when we get to have some time just to ourselves to read a good book or sip some coffee in the morning. It could be when we get to do a hobby that we enjoy or it might mean taking the family out to the local park to enjoy a nice relaxing day having fun. Mental rest is attained when we can free ourselves from the stress that we regularly subject ourselves to. When I fill my life with too many activities I start to feel overly stressed and when I get to this point it’s a reminder to me that I need to be more intentional about creating mental rest. Sometimes when I’m really stressed I enjoy just taking about 15 minutes or so just to close my eyes, try to relax my brain, and clear out all my thoughts in order to enjoy just some silence. This, for me, helps my mind to not get overloaded and stressed out. This sounds obvious but when I’m not stressed out I’m more likely to be much happier. Therefore, if we can use rest to minimize the negative impact of stress we can become happier.

Overall rest is an exceedingly important aspect of being successful in health, wealth, and happiness. However, it’s also something that is often overlooked and not taken seriously. If you want to be all that you can make sure that you’re taking the proper time to get adequate rest.