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Stand out entrepreneur and multimillionaire Rob Drydrek was able to provide some truly amazing perspective on how to manage your finances. The man has done his homework financially, and it shows!

I was fortunate enough to have an intimate conversation with him — and there 5 major takeaways that I’ve got to share!

(spoiler: I’m giving you a little homework to really take these best practices to heart)

In today’s video we’re talking about:

1. Leveraging financial opportunities for results greater than just short term gains
2. Better places for your money than just sitting in the bank
3. Why it’s so important to educate yourself financially
4. Diversifying your investments ——> for a deeper dive, you can check out my previous video on the 7 streams of income millionaires use to create wealth, here!
5. How to live your life with purpose and passion, and apply that mentality to your finances!

And finally, for your homework: after you’ve finished watching the video, check out the PDF below to create your own “Wouldn’t it be cool…” list

???? Wouldn’t It Be Cool If

Getting from point A to point B is a lot more involved when you are moving your life from point A to point B. Chances are we’ve all moved, are in the process of moving, or will move homes at some point in our life.

Seeing as how my goal is to help you make financially smart decisions when buying or selling your home, I am touching on a very important topic: the actual physical move itself!

Moving expenses can range anywhere from $350 for a one bedroom apartment, to $2,000 for a four-bedroom home — and that’s just for moving services, locally! What about things like packing, packing supplies, unpacking, and new items you’ll need in your home?

I’ve comprised 5 tips (based on Money Tips from previous weeks) that I’m sure will save you time, stress, and money — and a couple free resources too!

1. Use a Checklist

With something that has so many moving pieces (pun intended?) — it’s crucially important to stay organized: for you budget, and for your sanity. Checklists will help you with a number of different tasks: moving essentials, timeline tasks, first night necessities… where there’s a task, there’s a checklist. And since my task is to give you everything you need to make smart home purchases, here’s a simple must-have checklist for when you are preparing to move!

MovingChecklist

2. Multiple Moving Quotes

Do your research, and I don’t mean scour the internet for the lowest price. Often times, the cheapest on the internet may not be the cheapest in the long run. Replacing items that are accidentally damaged or broken can end up costing you hundreds if not thousands of dollars. The horror stories are out there, and unfortunately they are not few and far between. Find quotes for at least 3-5 moving companies with great reviews and/or personal recommendations. Then, use your research to negotiate. Are they willing to price match? If not, can they add things like boxes, unpacking, or additional labor? The more information you have, typically the more money you will save.

3. Purge

It basically comes down to two simple questions:

“Will I be upset when unpacking this item?”
“Will I be excited to place this item in my new home, or will I groan at past me for packing it?”

Imagine yourself unpacking your least favorite pair of shoes, near empty shampoo bottles, knickknacks you have nowhere to place, and toys your kids haven’t played with in years. If you’re like me, these thoughts are less than appealing. Don’t pack things you won’t want in your new home. And remember, “purging” doesn’t simply mean “throw it away”, this could mean donating or selling items as well!

And of course, we’ve got a checklist for that, too.

MovingChecklist_Purge

4. Toolbox and cleaning supply box

This is one of the most practical, easily applicable tips, that can end up saving you so much money! Put your toolbox and a cleaning supply box in the front seat of your car. SO OFTEN when people move, they’ll end up buying extra things that you don’t need because you can’t place the ones that they already have. That extra duct tape, window cleaner, paper towels, or flat head screwdriver can end up costing you money that you just don’t need to spend. You can really take this tip to heart by labeling all of your moving boxes accurately! Don’t write something ambiguous thinking, “Oh yeah, I’ll remember what that means later.” You won’t. Moving is crazy! More details are always better. Give labels based on room and what’s inside, and try to resist from using “MISC”.

5. Amazon Boxes!

A simple tip. If you are planning to move, start collecting your Amazon (or any other boxes your might be getting) now! Seriously, you may feel like a hoarder, but if you break the boxes down and stow them in your garage or under guest bed or wherever until you need them, you’ll thank yourself you did! Also, if you personally don’t receive any boxes, I’m 99% certain that someone you know, does! Amazon boxes alone are everywhere. We get them almost daily. Email me for dibs. 😉

Okay, and a bonus tip! Because I personally am involved to some extent with so many families moving: plan your move a year to six months before you actually move! I know this sounds like an extended timeline, but believe me, this stuff takes time. The more prepared and organized, the more money you’ll save!

I hope these tips, bonus tips, and bonus checklists give you the can-do attitude you need to tackle any move. I know these tips will help you ensure that every hard earned dollar you make works for you, even during a whirlwind of a time like moving!

To those of you who have moved more than once, what advice would you have to those going through a move, maybe for the first time? Please feel free to share in the comments below!

What You Don’t Know About Mortgage Insurance (and How it Affects Your Monthly Budget!)

When you think of a mortgage, you think of the money you pay each month towards your home loan, right? Yes, this is totally true, BUT a mortgage payment includes more than just paying towards the amount of money that was initially borrowed. Mortgages consisted of what we call PITI — Principle, Interest, Taxes, and Homeowners Insurance. It can also include an additional payment for mortgage insurance (aka PMI) if you are borrowing more than 80% of the value of your home/purchase price.

PMI is an insurance policy that is collected that helps the Bank recoup some of their financial investment in the event their borrower stops making their mortgage payments and the house goes into foreclosure. It has become way more prevalent since the “Great Recession”. According to the latest study done by the Urban Institute approximately 48.8% percent of agency (Fannie Mae, Freddie Mac, FHA, or VA)mortgages done in 2016 had mortgage insurance.

So while the principal amount loaned and the potential interest rate on that loan are often in the forefront of homebuyers minds, I’m here to tell you that your mortgage insurance can actually make a bigger impact on your monthly payment than your interest rate.

Typical scenario: home buyer reaches out to a call center asking for a quote on a 30 year fixed rate mortgage at the lowest interest rate possible. Call center presents the lowest rate possible with buying points. Call center does not take the most important piece of the puzzle into consideration: your unique financial situation.

**To keep us all on the same page, “buying points” are what lenders will offer you, the borrower, to bring down your monthly payment by decreasing the interest rate on your loan. Anyone can buy them, but you’ll pay the lender a one-time fee as part of your closing costs. Think of it as “buying down your interest.”

It’s extremely rare that you will get a home loan analysis that compares a variety of different mortgage products. But quite honestly, if you don’t — red flag! Do not pass go do not collect 200 dollars.

Presenting options based on different mortgage insurance factors is an important step in applying for a loan. Let’s break it down and take a closer look…

The biggest three things that affect potential mortgage insurance options are your,

Credit Score
Debt to income ratio
Loan to value ratio

And there are four ways to proceed after mortgage insurance comparisons,

Monthly Payments – determined by the lender based on the above
Upfront Purchase – the option to buy out the price of mortgage insurance upfront, rather than in a monthly payment
Hybrid – Pay a certain percentage to bring down the monthly payment
Government programs – Subsidized Mortgage Insurance (interest rates are higher, but the mortgage insurance is a lot less)

Let’s take a look at the difference in a few mortgage insurance rates based on credit score,
***Please note these are just examples and NOT QUOTES for mortgage insurance***

Example A – $200,000 loan with 680 credit score

A monthly premium for mortgage insurance would be around $200/month
To buy it out completely is 3.68% would be about $7360
Pursuing a hybrid approach would be about $2000 and this bring payments down to $168/month

Example B – $200,000 loan with a 740 credit score

A monthly premium for mortgage insurance would be about $116/months
To buy it out completely would be about $4300 which is 2.19%
If you were to take a hybrid approach and buy it out at a half a percent, that would take the payment down to $103/month.

Example C – FHA Loan of $200,000 with a 680 Credit Score

If you do the minimum down program, the mortgage insurance payment stays with the loan for the life of the loan. No exceptions.
An upfront premium is included that is financed into the home loan, so you do lose a little bit of equity
Interest rates are a quarter to a half percent lower than a conventional loan (this is maybe a $60 savings)
Mortgage premium would be $141/month for the lifetime of the loan.

Make sense? Sometimes it might feel like 1,472 new terms are being thrown at you as you’re preparing to buy a home, but if you keep educated yourself one thing at a time, I promise you will have so much more peace of mind when you purchase your home. (not to mention some possible extra dollars in your monthly budget, too!)

The home buying experience is not a one size fits all gig! You need options that take your lifestyle, preferences, and financial history into account before you make a big decision like taking on a home loan. My team is committed to presenting at least three of four options to you to help you make the very best decision possible!

What questions do you have in regards to mortgage insurance? I want to hear it all! Please let me know in the comments below!

What is Inflation, Really?

I can remember learning about inflation in school. Germany’s economy during the Weimar Republic falling apart at the seams. Crazed civilians running around with wheelbarrows full of cash to buy a loaf of bread. Let me start by saying, NO, this is not the normal inflation that occurs in our economy. This was an extreme case scenario of hyperinflation and doesn’t reflect the typical effects of inflation. Thank goodness!

When you hear talk in the media of “next next recession” or “inflation” or anything of this nature, let me tell you, it is not a reason to panic. Making fear based decisions is actually the worst thing you can do, but we’ll get to that in a minute.

Let’s start with the basics.

What is inflation, really?

Simply put, inflation is the measure of the increase of costs of goods and services. This in turn means that as the cost of these goods and services go up, the value of our dollar goes down. This can happen a couple of different ways…

Supply and Demand:Think of something that’s released in a limited quantity. (ex: limited pairs of a certain type of shoe, or something that is difficult to make) We call this scarcity. And it creates room for resellers to buy the product and then sell it at a higher rate.
Cost Increase: When the cost of materials to make a certain product go up due to scarcity of resources (either physical resources or manpower to create the product), this in turn raises the price of the product. Think of the great avocado drought. Okay, I don’t know if it was actually called that… but for whatever reason avocado season’s crop return didn’t yield what it normally does a few years ago… so farmers had to charge more for avocados to make up for the deficit and keep things competitive between buyers… it was a sad day for everyone who wanted avocado toast.
Built-in: As costs increase, workers expect (and demand) higher pay to maintain the cost of living. However, this increase in pay results in companies charging more for products and services to make more money to pay employees, which then leads to higher prices for the goods and services, which then lead to demands for wage increases… and so the spiral begins. Because of this circular dependence, built-in inflation is sometimes also referred to as the wage-price spiral.

So what happens when inflation is present in our economy? (And are there any benefits?)

What happens is what economists call an erosion of purchasing power. Meaning, the dollars that we have today can’t buy the things that we want and need yesterday. When costs of goods increase, the same twenty dollar bill you have in your wallet won’t buy you the same products it could yesterday. It will actually buy you less. Make sense?

So if your twenty dollars doesn’t buy you the same things, or your gas tank costs double — it results in a decrease in purchasing power. Queue: FEAR. The frantic voice in your head telling you, “Buy now or you will never have this opportunity again!”

Fear is a terrible place to make investment decisions from. It’s what drove me to buy a home at the height of the market in 2006. Which, I’ve shared before, was not a smart decision that ended up losing me a lot of money. Herd mentality rules in financial crisis, and it often leads to poor decisions.

So, is this all just happening, or is somebody going to do something?

There is a weapon against inflation, and it lies within the power of interest rates. The Federal Reserve increases rates of loans given to banks and businesses from the government to invest in new technology or employment. This is turn slows production, which then controls the growth of the economy.

And this, is your moment, to carpe diem. One of the only benefits is in relation to mortgages. I know I know, “so bias”, but it’s the truth! Stick with me…

We find this benefit in what is called the “time value of money.” And it only occurs in fixed rate loans.

Let’s say you borrow sixty-thousand dollars to buy a home. The amount loaned to you by the bank is always going to be, sixty-thousand dollars. No matter what. The catch is, that sixty-thousand dollars may not have the same value 30 years from now. Remember what happens with inflation — the cost of goods and services goes up, and the power or value of our dollars go down. So your sixty-thousand dollar loan itself is worth less and less. When you attach it to an asset like a home, that asset will stay constant with whatever the value of money is today. Even though the value of YOUR loan is valued on what it was worth a long time ago. Pretty cool, right?

There’s always a silver-lining, there’s never a good time to make a decision out of fear, and inflation is a normal occurrence in any economy. Keep adding knowledge and wisdom to your tool belt, and I trust you will make the smart financial decisions that are right for you and your family. The key is to stay educated! What are the biggest takeaways you have about inflation? Let us know in the comments below!