Coffee to Car Payments

Happy Thanksgiving

2008-11-26T16:17:01-06:00

Hope your day is better than this guy's.

Peter Schiff: The Man Who Called the Collapse of Our Economy

2008-11-21T12:17:00-06:00

So, GM has said that they are taking a pass on advertising during the Super Bowl. So, that means that Kate Walsh's Cadillac commercials will probably not be airing as much either. Maybe she could do a short take on our economy. It might sound something like this:

"In today's economic game, the real question isn't about the "Big Three", the "Big Two", or the "Big One". It's not about "too big to fail" or what type of a company you are. It isn't about whether you are a bank or a candy store. No. The real question is "If you buy from other countries, do they return the favor?""

Well not if your trade deficit is negative and going lower every year.

Here's a video of Peter Schiff on CNBC last night. Peter Schiff is the man who called this economic collapse.

Anatomy of an Economic Meltdown

2008-11-20T15:35:25-06:00

This is a blog post. Not a thesis on the economy. So, I'll keep it short. How can you describe the current financial crisis on the back of a napkin? Let's start with a concept that everyone hopefully understands. If you spend more money than you make, you are in for a head-on collision with reality and bankruptcy. The only other solution is to increase your cash flow to the point it exceeds your spending.

So, how does it work if you're a country? Well, your exports are your income and your imports are your spending. So, if you continually import more than you export, something's gotta give. In his book "Crash Proof: How to Profit from the Coming Economic Collapse", Peter Schiff starts out by illustrating how, as a country, we've been consuming more than we produce for the last three decades. Written in 2006, the book predicted everything that is happening right now and then outlines what you can do about it.

So, what allows you to spend more than you earn? It's called credit. Just like in your personal finances, there's a tipping point where credit is no longer available. That's why everyone's talking about a credit crisis. But it's about more than just credit. It's about more than what companies are "too big to fail". Anything that Congress does at this point will only push the problem forward. What we need, painful as it may be, is to start producing and exporting more than we import.

Introducing Guest Author: Jeff Williams

2008-11-20T14:45:40-06:00

Hello everyone. Up until this point, this site has kinda been my soapbox and as such, offered only one point of view. A few months back, I had the pleasure of meeting Jeff Williams. We meet the last Thursday evening of every month to play Robert Kiyosaki's game, Cash Flow 101. We also meet the first, second, and third Thursday of every month at noon to discuss Cash Flow investing. I feel that Jeff and I share a kindred spirit and after reading some of his emails, I invited him to be a guest author here. The last post was the first of what I feel will be a valuable addition to this site.

One really large bill.

2008-11-20T13:45:09-06:00

Recently a friend of mine from South Africa gave me $10,000,000. For a while I carried it around in my wallet just for the novelty of it, but then I felt a little silly. After all I couldn't actually spend it.

The issue isn't that it isn't real, it absolutely is. The problem with my money is that it isn't worth the paper it's printed on. It's a Zimbabwean $10,000,000 bill.

Zimbabwe is going through what several other countries have experienced, most notably recent being Argentina earlier this decade. It's a disaster called hyper-inflation.

At one time, their dollars were actually worth something. But because the Zimbabwean and Argentinian economies use what is called fiat currency--that is, a currency that is not tied to anything intrinsically valuable like gold or silver, their governments weren't able to resist the urge to print more and more money when their countries were facing challenging economic times.

Hmmm. Guess which other country has fiat currency. Heard anything in the news lately about the United States Government's printing press? Sad but true.

Oh, but certainly we couldn't experience the same problem here...our government is much more established and savvy to succumb to that error, right? Well, one would hope so, however, with the amount of pseudo expansion we've already taken part in, it wouldn't take much for the U.S. to reach the tipping point of a rapidly devaluing of our currency.

Once all of the countries (think China) who hold of our national debt realize they might be holding potentially value-less dollars, how fast do you think they'd try and dump them? Our situation is kind of like standing at the top of the St. Louis arch and wondering how far down either direction you can go before you reach the point of no return. You won't know until you get there.

So what's a country supposed to do when recession looms? Nothing? The livelihoods of it's people are on the line. Yes that's true. And it's also true that for the long-term financial good of the people, recessions are necessary. It's the natural ebb and flow of the financial tide.

I think one of the best things a country can do for it's people is encourage financial education and responsibility. And it starts within their own house. The United States government needs to live within it's means and model for it's citizens how to properly use financial resources. Over-leveraging, out of control spending, and general lack of discipline reaps what it sows.

I'm Not Here to Make You Rich.

2008-11-17T13:50:36-06:00

Over the last couple weeks, the talking heads on CNBC have been debating whether or not "buy and hold" investing is dead. If you've been listening to all the noise, you are probably just as confused as I am. "It's too late to sell." says one guy. "We've got to be close to a bottom and if you sell now you're just locking in all of those losses and you'll likely miss the beginning of the recovery". "It's time to buy." says another. He then quickly qualifies it buy saying you need to ease into it slowly, buying a little here and there until we're sure we've reached the bottom. Then you have the pompous hedge fund manager who puffs out his chest and says "We've been sitting mostly in cash since February." February? Why February?...and why in the heck wasn't this genius being interviewed in February? The truth is that even very competent experts are confused by the way the market is behaving right now. Nothing makes sense and the only thing that makes is worse is lack of investor confidence. So, they have to be a little reassuring to keep you from putting everything in a coffee can.

My last two posts were intentionally focused on the short term to set the stage for this one. It's easy to become very despondent watching your retirement funds tank in the short term but if you take a little broader view, the picture still isn't pretty, but it certainly illustrates that it may be OK to consider other options.

Let's look at the last five years. From October 2003 through October 2008, the Dow has returned a -.97% per year. It still sucks but you've only lost a little less than 1% per year over the last 5 years.

How about the last ten years? Well, from October 1998 through October 2008, the Dow averaged a .83% gain annually. So, a little less than 1% per year average gain.

So, yes if you only look at the last month or the last year, things look pretty bleak and it seems you may have no choice but to ride it out. But if you look at the last 5 or 10 years, all you've lost is time and a little bit to inflation. For anyone who is 15 years or less from retirement, this is a good time to start considering options that you can count on to ensure that your money lasts as long as you do.

I always tell new clients that my job isn't to make you rich. It's to keep you from becoming poor.

Ol' Joe Six-Pack Might Not Have the Stomach For This Market. Doncha Know.

2008-10-10T13:38:51-05:00

My post yesterday was intentionally focused only on the last two weeks and probably sounded a little like Andy Rooney. This is going to be a very short post about the past year. If you want differing opinions about what to do with your money right now, just ask two people. The CNBC anchors and "experts" they interview keep talking about a "bottom". This morning they were talking about the difference between "a bottom" and "the bottom. Well, one thing is for sure, the "top" was a year ago yesterday when the Dow hit 14,164. When I checked just now, the Dow was at 8,180.07. So, let's see we're down 42%. That means you just have to make 42% to get back to even. Right? Wrong!!! You need 73% return just to get back to even. Now, back to the experts, where is "the bottom" if we're in it for the long haul. I'm kind of a big Phil Town fan and here's his take on "DJIA Estimates and What's Coming Next with the Market". Ouch!! Did he just say 5,700. Does the average investor have a stomach for this market. I'm not trying to be a fearmonger here. The fear is already out there and lil' ol' me ain't gonna change nothin' 'cept ta tell ya that unless you're the last one to panic, you lose.

Do We Still Call This a Market Correction?

2008-10-09T15:26:59-05:00

I was watching the news Monday night and there was a segment on a local insurance company that is big in the 401k market. The cameras were on the inbound call center and you could hear what the agents were saying to worried investors. The statement that stuck in my mind was "If you sell now, you are only locking in those losses." and if you do a quick Google blog search on "locking in losses", you'll find a number of people saying the same thing. The TV segment was filmed on Monday when the Dow traded between, 10,322 and 9,503. So, would you have been locking in losses or right now as the market closes today (Thursday, Oct. 9) around 8,579, would you be breathing a sigh of relief to be sitting in cash? Now we need a 9-10% rally just to get you back to where you were on Monday. The next question is "Why didn't that same insurance company ramp up their outbound call center a year ago today, when the Dow hit an all time high of 14,164, and tell you to put your money in cash for a while because they expected a correction?" After all, in times like these, everyone keeps telling you that every time there is an bull market, there's always a market correction. Why do they wait till it's down 20% to call it a bear market instead of a market correction? I'm just asking questions here. I've been taking Dramamine and watching CNBC.

On a final note, here's what happened last time we had a 7-day losing streak. This is a time to use your own good judgment and look for safer places to put your money if that's what your gut tells you. The market will do whatever it's going to do with or without you.

Plant an Acorn in Your Youth. Sit Under an Oak Tree in Your Old Age.

2008-09-03T08:27:10-05:00

But, what if the government came along and made you cut a limb off every year after you reached a certain age? I was reading the paper this morning and this headline caught my eye Retirement Account Rules Catch Many By Surprise . Sen. Charles Grassley, R-Iowa, wants to see a review of a somewhat antiquated law that requires retirees to start taking distributions from their IRA and 401k accounts when they turn age 70 1/2. This is know as your "Required Minimum Distribution" or RMD. This distribution is mandatory whether you need it or not and carries a hefty penalty of 50% of the amount that should have been withdrawn if you don't take it. The purpose of the law is to prevent people from abusing the tax advantages of these accounts. Uncle Sam let you defer taxes all those years and now he wants his money. The article further stated that 6 out of 10 households that owned traditional IRAs that made withdrawals in 2006 did so just to satisfy the RMD requirement.

On the surface, it looks like a Republican Senator looking for more tax advantages for his wealthy constituents. I beg to differ. I would estimate that closer to 80% of my clients who are over age 70 1/2 and are subject to RMDs say something like "Well, the government makes me take out so much every year. What's that called again?". It's your RMD. A recent study by Cogent Research called "The Retirement Income Dilemma" showed that outliving assets was #4 on the list of Top 10 Investor Concerns. My personal thoughts are that the retiree who had the foresight to save for retirement and not rely on entitlement programs alone should be allowed to have greater control over their money in retirement. Uncle Sam wants his money but why not wait and enforce the RMDs on their beneficiaries? This is currently a concept know as a stretch IRA. This would lead to more tax revenue over time, make the inheritance last longer than six months, and provide greater financial security for the retiree who diligently saved all those years.

Watch for more upcoming posts on this topic:

What will happen to the market in 2016 when the first baby boomers are forced to take RMDs regardless of whether they need it or not and regardless of other market conditions.
Review of Ed Slott's book, "Parlay Your IRA Into a Family Fortune"

Shawn Johnson: Spoiler Alert

2008-08-19T08:27:06-05:00

If you don't know how she did yet, don't worry. I'm not gonna spoil it.

I gotta say that I've never really been into the Olympics much until this year. Two Des Moines natives, Shawn Johnson and Lolo Jones trying to bring home the gold. Wow! Since all the action happens while I'm sleeping and then airs that evening, I try really hard to avoid any hint of the results. My girlfriend, on the other hand, goes online to find out the results first thing in the morning. When she calls, she asks me if I want to know or if I want to wait and watch it that evening to find out. I always opt to watch it. It's just more interesting that way. After all, who would throw a Super Bowl party the following Tuesday and watch the game on their DVR. The big plays mean nothing if you know the end result. So, I'm the guy running around covering his ears saying "No. No. Don't tell me." Anyway, on my way to work today I was listening to my favorite country station and Kim Chase (you gotta read her bio) at "the Hawk" was politely making every attempt to let me know I needed to turn the volume down for a minute if I wanted to wait till tonight to find out how Shawn Johnson did on the balance beam. She repeatedly said "Spoiler Alert! Spoiler Alert!". However, with my hands at 10 and 2 and my attention on morning traffic, she did not have my undivided attention like my girlfriend does when she asks. So, it wasn't until she told me exactly how Shawn did that I realized I could watch whatever I wanted tonight instead of watching several hours of boring stuff like another Kerri Walsh and Misty May-Treanor victory celebration just to catch the few tense minutes of the balance beam competition. I was really looking forward to hearing more commentary on biased judges and underage Chinese gymnasts.

So, some people can't wait to see the results and others want to experience the event and emotion by watching it live (or something like it). Neither one is right or wrong. It's just a matter of preference.

When it comes to planning for retirement, what type of person are you? Do you thoroughly enjoy taking the good with the bad and hoping for the best? Do you like saying "So far, so good."? Do you enjoy the big plays or would you just find out how the game ends? How much could you afford to lose? Again, neither approach is right or wrong and they're both better than a coffee can. It's just a matter of preference. People choose me when they want to know exactly what they can count on for their retirement. This frees up their time to do other things. Sort of like tonight. I'm going to go to a potluck that I had originally been iffy about because I wanted to watch Shawn Johnson.

Ask me about Guaranteed Lifetime Withdrawal Benefits.

Quit Smoking Your Nest Egg!!!

2008-07-18T11:55:33-05:00

Calculato

Been looking for a silver bullet or magic pill? Try the Sticker Shock Method of quitting. Thanks to my girlfriend, Sheri, for taking my crude spreadsheet and turning it into the lovely calculator you see here. All you have to do is enter the amount you paid for your first pack and your age then, your age now and current cost and how many packs per day. The calculator will tell you how much you will spend on your habit between now and retirement age of 65 based on an annual price increase calculated from your inputs. You know how it goes. Every time the state passes a new cigarette tax increase, you scream "That's it!! I'm quitting." Maybe you do but then you bum one from a friend. Then you bum another. Then you're embarrassed for bumming so you buy a pack. The tax increase wasn't that big of deal after all. No matter how ridiculous the results look on here, remember they are based on what has already happened to you.

What age did you start smoking?
How much did you pay for your first pack?	$
How old are you now?
What do you pay per pack today?	$
How many packs/day do you smoke?
Annual Price increase:
Years projected into the future:
By the time you retire at age 65, a pack will cost you:	$
for a total annual cost of:	$
By that time you will have spent a total of:	$
which, had you invested earning 7% would be:	$

Not a bad nest egg. Is it? Well, that's the real cost of your next cigarette. The spread sheet I referenced above was one that I put together for myself based on my own addiction. The cost of my next cigarette is $178,238.93 and if invested means close to half a million bucks for me in retirement. After calculating it for myself, I wanted to provide the same resource for other people who may be trying to kick the habit and could be motivated by money.

Are You a Rancher or a Dairy Farmer?

2008-07-11T08:03:42-05:00

If you answered "vegan", go ahead a read this anyway. I'm just trying to make a point.

Yesterday I attended a meeting of the Cash Flow Investors Group here in Des Moines. It is a great group of individuals who meet to share ideas and learn together how to become financially independent. The "lead learner", Jeff, was presenting ideas on cash flow and introduced an analogy I found very intriguing. He was comparing how differently a rancher and a dairy farmer make use of the exact same asset, a cow, to produce different results.

A rancher raises cattle for the sole purpose of selling them for their meat. A rancher will spend anywhere from 3 to 5 years feeding them, keeping them healthy, and fattening them up for the big payday. The primary motivation is capital gains. The herd is all about numbers.

A dairy farmer, on the other hand, takes care of the herd, pampers them, and makes sure they are comfortable and happy so they they will produce milk regularly for 7 to 9 years. During this time, the dairy farmer is generating income from the milk. But guess what. 25% of all the beef consumed comes from dairy cows. So, just like the rancher, the dairy farmer still has their big payday too when they take the cows to market that are no longer producing milk. Their primary motivation is cash flow and producing income but they still get the capital gains and held on to the asset nearly twice as long.

Focusing solely on capital gains is a "rancher" mentality. It makes a lot more sense to me to look at your money as a vehicle that will get you where you want to go. Look at it like a dairy farmer looks at a cow. How can you make your money produce an income stream for you and still have an asset that you can sell later on for even more profit. Treat your money with respect and protect it and it will take care of you.

Dairy farmers click here to contact me.

Pet Insurance Protects All the Ones You Love

2008-06-06T13:18:42-05:00

A couple years back, our wiener dog, Winston, suffered a ruptured disc in his back and ultimately lost the use of his back legs. Over the following months, he spent several days in the hospital and also had to undergo two very painful surgeries. It was a very trying time for my girlfriend and I watching him drag his hind legs around and look at us wondering what was wrong. Sheri sat in the grass and cried. I waited till she went to bed and then sat on the porch and cried too. He is doing very well today and you can barely tell there was ever a problem. He is not allowed to go up and down stairs anymore and gets scolded a little for bypassing his doggy stairs and jumping on the furniture.

We ended up spending close to $5,000 in veterinary bills but fortunately were in a position to do so. One of the many thoughts in my head was "How would it feel to have to make a different decision because 5 grand was simply out of the question?" and another was "How many people would have had to choose differently?" I began looking at pet insurance programs back then. Many of the plans I looked at had either a confusing reimbursement schedule with a specific dollar amount for a laundry list of procedures or they had a network of veterinarians that limited your ability to choose who was best suited to treat your pet. Some plans had both.

I finally found one that has no network and reimburses you 80% of the bill minus your deductible. Surveys have shown that the average pet owner will spend $1,200 before they have to make that difficult decision while the average pet owner with pet insurance is able to spend between $3,000 and $3,500 since they will be reimbursed. That's an extra $1,800 to $2,300 to keep your best friend around a little longer.

It's obviously out of the question to put a child with a serious illness down for financial reasons.

www.petsbest.com/MMPC128

Please Share My Umbrella (Insurance).

2008-05-21T12:49:29-05:00

What did the homeowners' insurance policy say to the auto insurance policy? The punchline of this rather corny joke is both the title and topic of this post. I came across this great article the other day about how personal umbrella policies plug holes in your coverage. It does a great job of explaining what an umbrella policy is and how it works. I want to go into a little more detail here on just a few of the points of the article. The author starts by addressing three common misconceptions about umbrella insurance.

"They are only for rich people."
Let's say that you were at fault in an accident that resulted in a judgment against you for $500,000. Your auto insurance would typically provide coverage for the liability up to a $300,000 limit or whatever limit you had selected. You would then be responsible for the difference of $200,000. Now, if you don't have $200,000 to cover that obligation, then you would just have this huge debt looming over you and you would pay as you are able (most likely for the rest of your life). On the other hand, if you had $200,000, you would pay it off right away out of your own pocket. So the reason people believe that umbrella policies are only for people who are well off is because those people are more inclined to spend the money to insure that such an event would not wipe out a lifetime of successful planning. They will spend hundreds of dollars to protect thousands. But even if you don't have a huge pile of cash, who wants to run the risk of "...a whole lot a tryin' just to get up that hill." before you can finally put it behind you and start "Movin' on up"?

"It's too expensive."
Having just said that "people will spend hundreds of dollars to protect thousands", a basic personal umbrella policy is more affordable than you may think. I've recently quoted several umbrella policies for my clients and the premiums for $1 million in coverage has ranged from $100-$200 per year or around $8-$15 per month.

Adding additional coverages like uninsured and under-insured motorist coverage may be advisable and can add to the premium a little. But, adding this coverage extends your protection beyond just damages that are caused by your personal negligence. This post by David Lowe, a personal injury attorney, entitled "How Big is Your Umbrella?" sheds some additional light on this topic.

"It's too complicated to coordinate it with your existing coverage."
It really isn't that complicated to coordinate with your existing home and auto insurance even if you purchase it separately from a different carrier. In some cases, the other carrier may ask you to adjust your liability limits on your current coverage in order to provide you with the most cost efficient means of acquiring the additional coverage. They will tell you what the limits need to be and, once you've adjusted the limits, they will issue the policy. Not that complicated really. More on that here.

In conclusion, whether you rent an efficiency or own a mansion, drive an old used car or have a chauffeur, if there's any chance that you could cause someone injury or damages that would allow them to sue you, a personal umbrella policy is a very cost effective and simple way to protect and preserve what you've worked so hard for, whatever that may be.

Contact me for a quote.

I'm Normally Not This Tall. I'm Sitting On My Wallet

2008-05-06T15:42:11-05:00

What's in your wallet? If you're like a lot of us, you have several different cards for different things. You've got the card that pays you cash back for gas purchases. Then there's the one that earns you airline miles...the one that pays you 1% back on all purchases or, the one that pays you 3% back for the category where you spend the most. On top of that, you may even have little sticky notes on each card to remind you which one to use for what. Then there's your Barnes & Noble or Border's membership card, Petco, Petsmart, T.G.I. Friday's, etc... You really can't afford to leave any one of them at home unless you know before you leave the house in the morning exactly where the day will take you. As a result, if you spend more than 20 consecutive minutes in the car, your butt starts to fall asleep. OK, maybe that's just me but, at one point, I actually tried to put together a weekday wallet and a weekend wallet since the weekend is when we do most of our shopping and consequently need to stop at T.G.I. Friday's.

The number one reason people choose the Home Ownership Accelerator is simplicity. You can clean out all of those cards and just use the debit card associated with your account since your entire income gets deposited directly into your account and then every dime you spend, from coffee to car payments, stays parked against your mortgage balance until the day you actually spend it. So, if your interest rate on the Home Ownership Accelerator is 4.5%, it is equivalent to earning 4.5% on your checking and savings. You can still juggle all those cards if you want to but, it really isn't doing as much for you as your Accelerator loan is doing automatically with only one card in your wallet.

Will it work for you? Contact me to find out.

This ARM could cost you an arm and a leg

2008-04-24T08:13:31-05:00

Whenever I meet with a homeowner to discuss the Home Ownership Accelerator, I always look at different scenarios based on their actual cash flow. The Home Ownership Accelerator is an adjustable rate loan that adjusts monthly based on the 1-month LIBOR index. The loan allows you to take a higher margin and pay less up front or, you can buy the margin down. You pay 2 points up front to buy the margin down 1%. In general, your break-even point is two years because you prepaid 2% interest up front to pay 1% less per year thereafter. However, your cash flow may be so strong that the higher margin makes sense. I've seen this happen several times. Here's an example. I had a husband and wife come to see me and they have good but modest income and no outstanding debt other than their 15-year mortgage on which they had about 10 years left to pay. I ran the simulator using a margin of 3.25% over the 1-month LIBOR which historically has averaged about 4.5%. That makes for an average rate of about 7.75%. Then I added 5 points to the starting balance to reduce the margin to .75% which would mean an average of about 5.25% over the life of the loan. Here are the results:

Using the high margin, their home would be paid off in 6 years and 9 months.
Using the low margin, their home would be paid off in 7 years and 4 months.

This example shows that the actual rate you get is not as important as the actual dollar amount you pay in interest. You can't take your family to Disneyland with an interest rate. You can with the thousands you save in actual interest paid.

So the conclusion we can draw from this is that if your cash flow is strong enough, you may not want to buy down the margin. On the other hand, if two years is the break-even point for buying down the margin, this loan could cost you an arm and a leg but you get your arm back the first year and your leg back the second year.

How powerful is your cash flow?

Des Moines Real Estate Professional: Becca Hendricks

2008-04-21T08:13:15-05:00

About me: I grew up in Manhattan, KS and moved to Iowa in 2000. I have an extensive background in market research. I enjoy helping people find the right home or sell their home-and making the process as painless as possible.

What I do to get away from work: I love to travel; my most recent excursion was to the beautiful country of Ireland.

Words to live by: Trust: give it to others and earn it yourself

The best place in central Iowa to entertain clients or colleagues and why: I love local sporting events. Even though Des Moines doesn't have any pro teams, it's great to treat clients (and myself) to local team spirit.

One thing I would change about the Des Moines area: I wish it were in Arizona

What Iowa can do to attract more people like me: Des Moines has really grown in size and in culture over the last few years...keep it up!

My mentor: My father...he taught me how to work hard and really loved the earned-right to play.

My leadership philosophy: Be what you want in others.

Contact me.
Becca Hendricks
Realtor
JDR Group
4520 University Ave. STE 130
West Des Moines, IA 50266
cell: 515-778-7763
office: 515-224-4002
fax: 515-224-4452
bhendricks@jdr-group.com
view my current listings at www.beccahendrickshomes.com

All Shook Up: Check Your Homeowners Insurance

2008-04-18T10:38:12-05:00

One of my favorite things to do on the weekends is to sit and watch the History Channel. A few weeks ago, I was watching a program about the 8+ magnitude New Madrid earthquake that rocked the Midwest in 1811. Tremors were felt right here in Des Moines, IA (520 miles away). This massive quake changed the landscape of the Midwest, permanently changing the course of the Mississippi River, and temporarily causing it to flow backward.

This morning, 197 years later, a smaller 5.2 magnitude earthquake again rocked the ground. Fortunately, so far, there are no reports of damage or injuries. However, my girlfriend's sister, who lives in Martinsville, Indiana (just south of Indianapolis) said she thought her house was going to fall down. Here in Des Moines, WHO radio morning co-host, Bonnie Lucas, was sitting in her office and felt her chair move, grabbed her desk, and heard the ceiling panels start to shake. At first, she thought it was Van Harden working on another invention (like cheese-crust pizza). Then she read the newswire and realized it was just an earthquake.

This morning's quake likely didn't change the course of the Mississippi but, maybe you should check the fine print of your homeowners insurance to see if it covers earthquake damage. This is NOT included in most homeowners insurance policies. It is an available, affordable endorsement that can be added to most policies. But, especially here in the Midwest, with the last major earthquake happening nearly 200 years ago, it probably wasn't even something you asked about when you took out your coverage. The risk is nominal but so is the premium. On the other hand, in the even of an actual loss, it could be financially devastating.

Want a free checkup?

Static to Dynamic: What's a Sweep Account?

2008-04-17T12:35:15-05:00

What normally happens when you get your paycheck? If you're like a lot of people, it gets deposited into your checking account. From there, you manage all of your spending. You first make sure that you meet all of your monthly obligations (credit). These are static obligations. Then, you probably have a pre-determined amount that you allocate to savings for vacation, college, and unforeseen expenses. Then there's the long-term investments that you don't plan to touch until retirement. The money that's left is what you spend on groceries, coffee, dining out, and clothing. This money is your everyday spending. You've been doing it for so long that it's practically automatic. You've got it figured out. It's called a budget.

What if there were an easier way to make your money work harder for you? Check this out. This chart shows you how businesses and higher-net-worth individuals manage their cash flow using sweep accounts.

What does this mean to you? Well, your home is likely the biggest investment you'll ever make, and the Home Ownership Accelerator is a sweep account linked to your mortgage. It works for ordinary people with ordinary income, generally positive cash flow, and equity in their home. It makes the money that would have gone to interest go to principal instead. The result is a significant interest savings over the life of the loan, and more rapid equity buildup in your home. The last and most important benefit is your mortgage is "cheap money". You can also systematically divert a portion of the equity you are rapidly accumulating to outside investments and still watch your mortgage shrink and your supplemental nest egg grow.

You've done it by switching your biggest investment from a static obligation to a dynamic tool to manage your money more effectively without any extra effort or change to your spending and lifestyle.

I'll pay for your appraisal.

2008-03-14T14:31:33-05:00

Did you know that only $13 of every $100 spent at a big-box retailer stays in the local economy while $45 of every $100 spent at a local merchant stays local?

With the help of Sherry Borzo over at dsmbuzz.com, Des Moines area business owners are able to promote their business by offering discounts to her consumer members. You can check out her merchant list to see some of the perks currently offered.

I have agreed to reimburse DSM Buzz members the cost of their appraisal at closing. This usually runs between $300 and $400. So, if you're considering the Home Ownership Accelerator, stop by her site first and sign up for only $10/year, show me your membership card, and get your appraisal cost refunded at closing. It's a great return on your investment....spend $10 to get $350.