The American Dream – Asset or Liability?

Ah – the American Dream – own your own home!  We’ve all heard this – it’s been programmed into our heads.  “When you rent – you’re throwing money down the drain, you can’t take a tax deduction for the mortgage interest”.  Robert Kiyosaki, author of “Rich Dad, Poor Dad”, takes a total opposite view.  He believes a house is a liability unless it is bringing in income.  But I challenge both- is it true?

If you’ve been following me long enough, you know how much I dislike “cookie-cutter” solutions.  Well, the American Dream of owning a home is a “cookie-cutter” belief to me, as well as the piece of advice to “pay off your mortgage as soon as you can” AND what Robert Kiyosaki believes.
WHY,  YOU ASK?

usa realty concept

EVERY SITUATION IS DIFFERENT

A home can be an asset or liability not only FINANCIALLY but EMOTIONALLY.  It doesn’t always come down to dollars and cents.  Consider the following situations – is it an asset or a liability?

  • It is bringing in income – you have a rental home
  • You are in some type of transition – divorce, relocating, retiring – or just not sure of any of the above
  • You have a young family and need a stable place to raise your kids
  • You plan on living there for a long time (paid off or not)
  • You have the nicest house in the neighborhood and the company in town that employs 50% of the population is closing it’s doors
  • You need some cash flow, you want to use the equity in your home to refinance

See what I mean?  Can you say a definitive YES or NO to any of these situations?  Do you know all the details behind each situation?

 

 

Why Women Are Different

I am revisiting the whole reason I started doing what I do now. Women are DIFFERENT when it comes to finances. All the stereotypes that are out there can be basically done away with. These are facts – with women being 51% of the population in the U.S. – this needs to be addressed.

Why Women Are DifferentI am going to share a couple statistics and why this is so important.

  1. 90% of us will manage our own finances due to death or divorce of a spouse
  2. Statistically, we live longer than men, but have smaller nest eggs.

You say – “OK great – thanks for sharing, but what can we do?”

 
Understand your finances. Know how the money come in and where it goes out. Get involved.

  • Make sure you have credit in your name ONLY – a credit card will work. Trying to establish credit once something happens is tough – there is no record of “just you” unless you’ve done this.
  • Know where the money is – how it comes in, where it goes out
  • Know who owns what and who gets it when someone doesn’t come back for one reason or another

The reason we have smaller nest eggs are various.

  • We are in and out of the workforce, usually as caregivers, so contributions to 401(k)s and Social Security can be inconsistent and don’t build up as much as our male counterparts.
  • We still get paid less than our male counterparts.
  • We take lesser paying jobs like teachers and administrators for one reason or another.
  • We tend to be more conservative in how we invest.

Some of the above reasons are out of our control, but here are some actions to take

  • we can learn to be more assertive and negotiate pay or a raise or “toot our own horn”, all which traditionally women have been taught not to do.
  • Get advice and knowledge about investing – it will help you be more confident and maybe help you take a bit higher risk.

I work with many couples. It is usually the woman who comes to me first in these cases. Once the woman feels comfortable asking her spouse the questions I coach her on, they end up coming as a couple. I think this happens because most spouses want to take care of each other – they just don’t take the time or know how.

If this is you and your spouse – give me a call or email (Contact details are in the side bar).

People who have a financial plan are more confident

More and more people are delaying retirement, concerned about having enough money now and in the future. But guess what? Studies have shown no matter what your income level, having a financial plan builds more confidence about your financial future. Those that have taken the time to look at their finances report more success managing money, saving and investing. When low income families have a financial plan, they are more likely to pay their credit cards in full and avoid debt.

Are you heading for your fiscal cliff?

It may be time for a money makeover. Because too often, women fail to put themselves in the driver’s seat of their own financial lives. No matter how little or how much you have to work with, Deb Schmitz shows you how to get wherever you want to go, financially speaking, in style.

Just like you update your wardrobe, you need to look at your financial closet and check the contents for keeping and protecting what you have, as well as seeing that your money will get you where you want to go.
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Year End Tips

As 2012 winds down, it is a good time to review your finances. One big piece of that is your health insurance. Some things to consider:

  • Did you meet your deductible?

If you did and it resets January 1st, now is the time to take care of of medical tests that you may have been putting off. It will cost you less out of pocket if you do it now.

  • Does your deductible roll over?

Sometimes insurers let you apply money spent in the last few months of the year toward your next year’s deductible. Ask about it. Planning elective medical procedures and being smart about it financially is the way to go!

  • Did you use your FSA funds?

If you are lucky enough to have a Flexible Spending Account (FSA) through your employer, check with HR to see if there are unspent funds. If so, use them – they usually do not roll over.

  • Are there coverage changes?

Watch the mail. Now is the time insurers have open enrollment and change coverage and premiums for the new year.