General

Nerds run the world

Why Nerds Run The World

Money Maroon

Look around, think about who is making all the calls, then look behind that person. Typically, it is a nerd. For starters, look at the richest persons in the world. Look at the most powerful countries in the world, advances are made by nerds. Politically, whether you agree with one party or another, they are funded by nerds on both sides. The fact is, while there may be debates on the value of going to college, there is no doubt that nerds are running the world. Further, as we are in the computer age, nerds will continue to do so. Crypto and the metaverse are only recent examples of the power of being a nerd.

The Cool Kids

There is a saying, “he who laughs last laughs best.” For those who are intellectually gifted, this is certainly true. Cool kids have fun early in life, but it is the nerds who excel as adults. Whether your are the sports star or the cool kid that connects well with others, your early social years will be great, primarily in high school. However, for many cool kids, this will be the height of their influence. For nerds, high school is typically the last years of hell. Once high school is over, the world opens up, because intellect is valued.

Nerds

Let us look at the richest people in the world. Warren Buffet, Bill Gates, Jeff Bezos, Elon musk, they are all nerds. The fact is, they are at the cutting edge. They are coming up with new ideas and inventions that revolutionize the world and have in turn made them very wealthy. As is often true, money is power. With their monetary power and position, nerds are able to influence every part of life.

It is this wealth that is being used to run the world. When you have billions of dollars at your disposal, your pet projects are very impactful. Whether this is to go to space or to create a foundation to pursue a specific purpose. With funding, what is important to you become important to others. Your dreams shape the world that not only you live in, but that we all live in.

Crypto is one of the newest examples. Let us think of bitcoin that only a few years ago was worthless. Today, there are many different crypto currencies and this invention has made many millionaires. For the most part, crypto was invented by nerds and has become mainstream, making many ridiculously wealthy. We also now have NFTs, which are being sold for millions and let us not forget about the newly created metaverse. As the computer information age pushes on, nerds will continue to dominate.

Political Reach

Nerds are not only successful in the business world, but also the political world. A lot of those in political power today were not well adjusted in their earlier life. Yes, they were and still are nerds. But even if some of today’s political figures were well adjusted, look at who these politicians take their direction from. They take their direction not from the masses, but from the wealthy who are likely to be nerds. To run political campaigns, you need money. As noted above, who have the money? Nerds through their business successes have plenty of discretionary income to donate and shape the agenda of every political campaign. Even when you look to todays sport stars, look at who are employing them. Nerds are the owner of sport teams, sport arenas and are the bosses of the jocks you watch in amazement.

Why are they so successful?

Nerds flex their brains

Reasons

Not being in the in crowd have a lot of advantages. You read that correctly. Not being popular can be an advantage in life. It teaches you important lessons in survival and how to be self reliant.

The fact that many nerds are not in the in crowd allow them to spend more time working on their dreams. Nerds have more time to be themselves and know themselves because they do not have to succumb to social norms. They are essentially able to figure out who they are and what they are good at and just do it. Nerds have the freedom to become experts in the difficult, the new and the cutting edge.

Further, most nerds find comfort in knowledge. So not being invited to all the parties or social activities give nerds more time to hone their skills, in this case knowledge of a subject. They become masters of a subject area. Once they are masters of a subject area and confident in their skills they are motivated to show the world.

Because many nerds have been ostracized or physically intimidated, they operate with a chip on their shoulder and have a competitive drive to prove and show how good they are. All this leads to people who are very confident at what they do once they find that thing. Often times, these nerds are some of the most ruthless individuals that you will come across. They strive to be the best and often times, do not accept failure. Think of Elon Musk, Steve Jobs and Bill Gates.

These are some of the reasons why so many nerds have achieved the highest of business success, amass billions and strongly influence our every day life. 

Conclusion

Look around, think about who is making all the calls, then look behind that person. Typically, it is a nerd. For starters, look at the richest persons in the world. Look at the most powerful countries in the world, advances are made by nerds. Politically, whether you agree with one party or another, they are funded by nerds on both sides. The fact is, while there may be debates on the value of going to college, there is no doubt that nerds are running the world. Further, as we are in the computer age, nerds will continue to do so. Crypto and the metaverse are only recent examples of the power of being a nerd.

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Video Summary

Pay yourself first

It’s Best To Pay Yourself First

Money Maroon

If you are working and cannot afford to save, it may be time to take a step back and pay yourself first. From any pay check, no matter the value, it is incumbent upon you to ensure that a first portion of your pay check goes into your personal account. If you cannot trust yourself to perform this task consistently, automate. The simple fact is, if you are not paying yourself,  you are working to pay others. You are essentially building another person’s empire while neglecting your own.

Why Pay Yourself First

You should pay yourself first because if you do not, you run the risk of not paying yourself at all. Have you ever received a paycheck and after paying all your bills, you have a zero or a negative balance? Have you had money in your account after paying your bills, and that money quickly disappears due to frivolous spending? 

These situations occur when you do not pay yourself first. If you do not pay yourself first, it is likely that you will end up not budgeting and over spending, or you will simply spend what you have because you have not assign a task to that money.

By paying yourself first, it forces you to budget. For example, if your monthly salary is  $5000, and you automatically pay yourself by saving $1000, you really have $4000 to spend for that month. That $1000 makes a huge difference. You will no doubt adjust to having $4000 and will stop thinking about making $5000 per month. By having this mindset shift, you will live on $4000 and not $5000. By paying yourself first, you will force yourself to live below your means and budget accordingly.

Pay yourself first
If you are not paying yourself first,  you are working to pay others. Stop building another person’s empire while neglecting your own.

Force Budgeting

For many of us, budgeting can be difficult. It is difficult not because it is a mentally difficult task. It is typically difficult because if forces us to track our spending over a long period of time. Budgeting forces us to itemize what we are doing and forces us to be conscious of every purchasing decision. 

By paying yourself first, we are pushed to budget without actually making a budget. In the example above, if you are paying yourself $1000 per month on a $5000 monthly salary, you must now live on $4000 per month. You are in a force budget situation. You are forced to curb your lifestyle from one that spends $5000 per month to one that spends $4000 per month. This is not an easy feat for many, but it can be done. By cutting out a few items, you will be surprise by how much you can save.

If you do not budget and live beyond your means, paying yourself first becomes a moot point. The interest on your debts will easily out pace your savings. To get ahead on your financial journey, it is important to live below your means. Paying yourself first helps facilitate this mindset change.

Pay Yourself First And Build Your Empire

Let us not forget, if you pay yourself first, you are building your financial legacy and not someone else’s. Think about shopping at Walmart, buying a car, or any other consumer goods, by making that purchase your are making someone else’s family rich. If it is not the Waltons, it’s the Porsche’s or the Cargill’s, by spending you may be enriching the Dell’s or the Knight’s. You may get a fleeting enjoyment from your purchase, but someone else’s family just got your money. Your temporary satisfaction is building another family’s permanent wealth.

However, if you pay yourself first, your are building your own empire and not someone else’s. Pay yourself first and you are growing wealth. Money that you typically spend on consumer goods go to your investment/savings account. You are growing, you are opening up opportunities and will be afforded all the advantages that comes with being financially secure. Pay yourself first and lay the foundation for a financially secure future.

Conclusion

If you are working and cannot afford to save, it may be time to take a step back and pay yourself first. From any pay check, no matter the value, it is incumbent upon you to ensure that a first portion of your pay check goes into your personal account. If you cannot trust yourself to perform this task consistently, automate. The simple fact is, if you are not paying yourself,  you are working to pay others. You are essentially building another person’s empire while neglecting your own.

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Billionaire

The Billionaire And You

Money Maroon

The word billionaire is thrown around daily. But have you actually stop to think about what it really means. Yes, being a billionaire is having more than being a millionaire and who would not want to be that wealthy. But by comparison, what is the billionaire status compared to the average person. When you look at a comparison, it is truly mind boggling.

The Billionaire Compared To The Average Person

To get a full and clear understanding of what it means to be a billionaire, let us compare to the average household. In this comparison, we use the median household income because the median provides a better representation of central tendency as compared to the mean. Essentially, the median income gives us a better view of the average household income because the mean can be skewed by those in the super rich/super poor.

The median household income was $68,703 in 2019. In most parts of the US, the cost of rent/mortgage + child care would easily exceed this amount. But let us put this total in the context of a billionaire. If we do the simple math of $1 billion divided by $68,703, it tells us that it would take a person/family making $68,703 a year 14555 years to earn $1 billion. To be clear, it would take a household making the median income over 14 thousand years to earn a billion dollars. This is absolutely eye opening.

This further demonstrates why it is so financially dangerous to try and keep up with the Jones. The wealth disparity between you and the Jones can be so vast that it can take thousands of life times to amass comparable resources.

Billionaires

When we talk about billionaires, we must acknowledge those who have risen to this level of wealth. This includes Jeff Bezos, Elon Musk, Mark Zuckerberg, Warren Buffet and Bill Gates. These individuals have done extraordinary things and do deserve their wealth. But you can’t help but ask, when is enough, enough? With such accumulation of wealth, what is the plan? We know that if these individuals try, it would be a monumental task to try and succeed in spending all this money. No matter the interest rate or the return on investment, a billion dollars will accumulate so much on a yearly basis that it is really almost impossible to dispose of such sums of money. Not too many billionaires go broke.

Billionaire Fortunes Since The Pandemic

As our conversation about billionaires continue, it becomes factually crazy that many of these individuals have increased their wealth during the pandemic. For example, Jeff Bezos is reported to have increased his wealth by about $70 billion and Elon Musk has reportedly increased his wealth by about $132 billion. While the math is simple, the more you have the more you can make, it is mind blowing to imagine the difference between someone of Jeff Bezos’s wealth and that of the median household. It is a matter of $187 billion vs $69 thousand ($187,000,000,000 vs $69,000). The difference is a lot of zeros.

While the average household is thinking about mortgage/rent and child care, billionaires are thinking about legacy. And why not, the financial difference is truly a sight to see. The simple fact is, the purchase of a mega yacht to a billionaire may be comparable to you purchasing a shoe. While the cost matters, it does not change your life financially. Keep this in mind the next time you hear of someone purchasing a mega yacht, helicopter or an island. The billionaires can afford it.

Billionaire
I want to be a billionaire, don’t you?

Conclusion

The word billionaire is thrown around daily. But have you actually stop to think about what it really means. Yes, being a billionaire is having more than being a millionaire and who would not want to be that wealthy. But by comparison, what is the billionaire status compared to the average person. When you look at a comparison, it is truly mind boggling.

So why did we write this article. We wrote this article to show that we sometimes do not truly appreciate the sums of money that we discuss on a daily basis. It is only when we break it down and compare do we begin to see the full scope. Next time you hear/see the term “billionaire” realize that it would take the average household over 14 thousand years to earn that sum. 

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How to negotiate a salary

How To Negotiate A Salary

Money Maroon

At one time or another, you will have to negotiate your salary. It is not that the task is difficult, but it can be nerve racking. No matter your level, your initial negotiated salary is very important. It will be the basis from which you will gain raises over time. A miscalculation here can be very costly. Therefore, here is our how to negotiate a salary guide. If you are asking how to negotiate a salary, remember: (1) know your worth; (2) do not directly answer a question about the salary that you would accept; (3) never accept the first offer; and (4) know that your salary is only a part of your total compensation package.

How to negotiate a salary?

Know Your Worth

How to negotiate a salary 101, you must know your worth. Before you begin the job search, before you get the job offer, know your worth. Do your research. You must know the average salary for the position based on your skill level, the average range of the salary for someone of your abilities and experience for the size of the company that you will be working for. 

You must do this research. This is the only way that you can know if a proposed offer is too high or too low. In doing your research, ask your friends, look online, ask someone at the company in such a manner that they can provide you with the information needed. 

Do Not Give A Direct Answer To The Salary Question

In any interview, you will be told a range of the salary for the position. If one is not given to you, ask for the range. This gives you the bounds of the position, but do not take this as a definite range. If you are good enough, if you are attractive enough professionally, they will offer you more than that range. This is why it is so important to not give a number when asked what salary you are looking for. If answered directly, you may unintentionally lock yourself into a low salary, or turn off the employer by going too high. 

If you are asked a direct question about salary, inform the recruiter that you can negotiate on salary. This in effect continues the conversation. If the interviewers like you, they will pay you. The trick, have the recruiter give you a range. If the range is lower than what you will accept, you can negotiate up to your number if the interviewers like you. 

Never Accept The First Offer

How to negotiate a salary? One of the most important point is to never accept the first offer if the position is not a lock step position. Do not do it. Once an offer is extended, it is typically an invitation to negotiate. Never accept the first offer. If the offer is low, know what your low point is and counter above it. You will know that an offer is low based on your research.

If the offer is in your sweet spot, ask for more. If the offer is above what you think the range is, ask for more. Note that it is unlikely that any employer will match what you come back with in a counteroffer, but they are likely to meet you somewhere in the middle. As such, if your aim is $150,000 and you were offered $140,000, it is advisable to ask for above $150,000. Consider counter offering at $160,000 or above and have the potential employer meet you somewhere in the middle. Do not sell yourself short.

Remember, your first salary at a company will be the basis from which you will gain raises. So the higher your starting point, the faster your salary will grow. Also, typically, 401K packages and other benefits are based on a percentage of that salary. Do not sell yourself short.

Salary Is Not Everything

While your salary is important, it is not everything. When negotiating a salary, it is important to remember that the salary is only one part of your compensation package. If you cannot get the number that you want with regard to a salary, do not forget that you have other options as far as employers but also other areas of your compensation package to negotiate. Think about vacation days, retirement, stock, bonus, transportation and medical coverage to name a few. In some cases, a salary may be lower, however, total compensation may be higher in comparison to another job. The reason for this may be the employer’s health care plan, bonus structure, stock option and retirement plan.

While you may have a salary that is $5,000 lower than a comparably position at another company, you may have a higher 401K match percentage, higher bonus, or receive more stock. As such, while the salary may be lower, your total compensation package may be significantly higher. Therefore, before you accept a compensation package, do a full evaluation.

Conclusion

At one time or another, you will have to negotiate your salary. It is not that the task is difficult, but it can be nerve racking. No matter your level, your initial negotiated salary is very important. It will be the basis from which you will gain raises over time. A miscalculation here can be very costly. Therefore, here is our how to negotiate a salary guide. If you are asking how to negotiate a salary, remember: (1) know your worth; (2) do not directly answer a question about the salary that you would accept; (3) never accept the first offer; and (4) know that your salary is only a part of your total compensation package.

While every situation is different, we sincerely hope that this how to negotiate a salary guide helps you as you look for your next position. Journey to financial independence.

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Video Summary

Happy Mother's Day

Have The Mother’s Day Money Talk

Money Maroon

For Mother’s Day, instead of falling into the commercialization trend, let’s make our mothers proud. Have a Mother’s Day money talk with mom. This talk will not only impact your mother and show her that you are thinking about her future, but will also help you organize yourself to better care for her.  Buying flowers, cards, or taking your mom out for brunch is a nice gesture. But having a financial chat with mom is impactful. Be impactful on this Mother’s Day and show mom how much you truly care.

Sacrifice

On this Mother’s Day, remember the financial sacrifices that your mother has made. Think back to how much your mother worked or complained about her job. Yet, she continued on. While you are at it, it should become very clear why some people stay at jobs that they hate. At times, some people will stay at jobs that they hate in the name of love and responsibility. She did it for you.

Financial Education

Many have the luck of having a mom that inspires. For some, this is manifested in financial success or the search for financial success based on lessons learned. For example, save, invest, live below your means. It may be in the form of literal education or an education based on observation. Was it her struggle or was it her drive and position as an authoritative figure who did what was best for the family that motivates you to become financially independent? For some, it was the unfortunate mismanagement of finances that provided the teaching lessons that motivates today. Whatever your reason, I am confident that your mother contributed and continues to contribute to your reasons for reading a financial independence blog and this article.

Love you mom - Happy Mother's Day

Having The Mother’s Day Talk

With all that your mother has done to influence your financial life, it is time to have a Mother’s Day money talk. Check on her current financial situation and her future plans. Although it may be difficult to talk to family about money, it is important to start.

Previous generations had the now acclaimed three legs to their retirement stool: (1) personal savings, (2) social security and (3) a company pension. Over the years, the three legs have been significantly weakened.

First, many have very little to no personal savings; second, as it currently stands, the social security program is teetering on the edge of insolvency; and  third, for the most part, company pensions are a thing of the past. Taken together, the baby boomer generation have little saved for retirement, no pension plan and are dependent on social security. This is the reason for the talk.

The Talk

To have the money talk with mom, there is no reason to be aggressive. Do not forget that it is Mother’s Day. If you approach your mother’s finances aggressively, your mother is likely to get defensive. The point here is to begin a conversation or continue the conversation such that you know where your mom is financially. More importantly, these conversations will aid your financial planing.

We cannot control what another person does, especially our parents. However, if we can make them aware of potential issues that may be on the horizon, maybe they can and will take action to change course. 

The fact is, you as the child may be responsible for your parents during retirement. It is important that you begin taking steps to mitigate the impact on your financial future by talking to your mom this Mother’s Day. 

The Best Mother’s Day Gift

For most of us, as adults, it becomes a struggle to get the perfect gift for mom. Guess what, you have most likely provided a lot of her material wants over the years. There are only so may cruises, trips, massages, flowers or foods that you can gift mom. At this point, the best Mother’s Day gift may be just showing that you care by having an important conversation. Instead of gifting something that will be used for only a day, have an impactful financial conversation.

Conclusion

For Mother’s Day, instead of falling into the commercialization trend, let’s make our mothers proud. Have a Mother’s Day money talk with mom. This talk will not only impact your mother and show her that you are thinking about her future, but will also help you organize yourself to better care for her.  Buying flowers, cards, or taking your mom out for brunch is a nice gesture. But having a financial chat with mom is impactful. Be impactful on this Mother’s Day and show mom how much you truly care.

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Pay off mortgage early

Is It Worth It To Pay Off Mortgage Early

Money Maroon

If you have a mortgage, you have asked if it is worth it to pay off mortgage early? This thought is normal. No one likes to be in debt for a day much less for 30 years.  We all would like to have the freedom to do as we like with our money, and paying a mortgage is not one of those things. But should you pay off your mortgage early? The answer, it is a personal decision.

The Financial Perspective

When you ask if you should pay off mortgage early, you will hear a number of important things to consider. These considerations include the stock market, the mortgage interest deduction, and the potential safety net of having money on hand. 

The stock market argument goes something like this: if you have a mortgage, by paying it off early you will essentially be getting the interest rate of the mortgage that you paid off as a return. As a simplistic example, if you pay off your mortgage that has a 3% interest rate 10 years early, you will have earned 3% per year for that 10 year period. Essentially, the 3% that you did not have to pay. You will then be told that if you had place the same amount of money that you used to pay off your mortgage in the stock market, you would have earned 8-10%. This 8-10% is in reference to the average stock market return over the past decades.

As such, the upshot of the stock market argument is that by paying off your mortgage early, you would be losing out on the difference between the average stock market return and your mortgage interest rate.

Further, you will be informed that your mortgage interest payments are tax deductible. But you would have already known this as your taxes are due yearly and you would have taken advantage of this deduction based on qualifications.

Next, if you pay off your mortgage early, if you ran into hard times, your money would be locked up in your home. The fact is, houses or the money held in your home is not as easily transferable as money in the bank. As such, if you lose your job, or run into financial difficulties, it would be a bit more difficult to unlock the money in your home than going to the bank and withdrawing what is needed. 

These are all considerations that must be contemplated. As such, from a purely financial perspective, the answer to the question of whether or not  to pay off mortgage early looks to be a no.

Pay off mortgage early? It's personal
It’s a personal decision

The Counter To Pay Off Mortgage Early

Why would you ever answer yes to whether or not it is worth it to pay off mortgage early? The answer, life is not as simple as a mathematical calculation. Further, the only thing certain in life is uncertainty.

While there is a historical increase in the stock market on average, we do not know what the future holds. Will the next 30 years see the growth of the last 30 years? It is uncertain. The stock market is risky and your mortgage payment is always due. This is to say that if you lose money in the market, your mortgage is still due. No matter what happens with the stock market, by paying off your mortgage early you have a guaranteed return. I am sure you have heard the saying “a bird in hand is worth two in the bush.”

In view of the mortgage interest deduction, will this deduction continue? Will you continue to qualify for this deduction? This also is unknown. Change is a constant, we just do not known.

Peace Of Mind Is A Reason To Pay Off Mortgage Early

When assessing if it is worth it to pay off mortgage early, consider your peace of mind. Paying off your mortgage early may not make financial sense if you pay off your mortgage early and miss out on a significant stock market return. However, nothing beats being able to sit back in your home and know that it is paid for.  Peace of mind. 

By paying off your home early, you will not have a mortgage payment, therefore you can use that money to spend as you see fit and you will no longer need to worry much about foreclosures or repossessions. Pay your taxes and related utilities and keep on living. This is peace of mind.

What is your peace of mind worth? When assessing if it is worth it to pay off mortgage early, this is the real question. How much better would you sleep knowing that you have no mortgage payment.

In the end, it is your decision and it is about what you are comfortable with. In some ways, you can pay more on your monthly mortgage payment to pay off your mortgage earlier. You may find a middle ground and pay more on your monthly mortgage payment but also invest a portion. It is also your decision to not pay any extra at all toward your monthly mortgage payment. It is about your comfort level and what is good for you and your family.

Conclusion

If you have a mortgage, you have asked if it is worth it to pay off mortgage early? This thought is normal. No one likes to be in debt for a day much less for 30 years.  We all would like to have the freedom to do as we like with our money, and paying a mortgage is not one of those things. But should you pay off your mortgage early? The answer, it is a personal decision. On the journey to financial independence, sometimes, peace of mind is more important than financial returns.

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Never Give UP

Never Give Up

Money Maroon

As I get older, what I have learned time and time again is that it is not about how smart you are. It is really about persistence. Yes, the never give up mentality is one of the most rewarding attribute a person can have. Getting knocked down but getting up and continuing on is a hard lesson to learn. But once you master it, the world is yours.

Never Give Up

Learning To Never Give Up

There are certain things that we are each innately good at, and far more things that we are absolutely terrible at. Throughout our lives, we will discover these things on an almost daily basis. How we deal with these discoveries will have a profound impact on our lives.

Do you recall the first time you tried to ride a bike, or for that matter, attacked a difficult math problem? Our success in learning how to ride a bike or solving a math problem is somewhat based on our mentality, but also those around us who shaped that mentality. For example, if the first time you fell trying to ride a bike your parents rushed to you and gave in to your cries to never get on a bike again, it is highly likely that you will never learn to ride a bike. I know a few individuals where this is a reality. The issue here is much larger than learning to ride a bike, you may potentially develop the mentality of trying, failing and quitting. 

If on the other hand, you fell, and you decided to get up, or your parents or others around you encouraged you to get up and try again, it is highly likely that you eventually learned how to ride a bike. 

Again, this translates to other life events. Now let’s talk about the math problem. The same principle applies. If you are discouraged and give up once you notice that the math problem was difficult, you may never learn how to solve the problem. If you eventually do solve the math problem, you may develop a hatred of math and avoid math at all cost. I am sure you know many individuals who fall into this category.

On the other hand, if you are able to power through the math problem and never give up, not only will you solve the math problem but also appreciate the concept of effort and persistence. These seemingly basic events do have an impactful effect on our lives.

Practice Makes Perfect

Have you ever heard the saying, “Practice makes perfect.” This is only another way of saying never give up. Don’t forget, while Michael Jordan was good, he became great by practicing. For that matter, Usain Bolt lost a number of races before he came into his own and dominate his sport. 

Some call it being stubborn. For others, they are classified as having a short memory. It really does not matter what you call it, it is typically a manifestation of pride, self belief, and the never give up mindset.

To bring this close to home, I am certain that you know individuals who may not have been the best at an activity that came naturally to you. Unbeknownst to you, this individual wanted to get better. As it turns out, while you rested knowing that you were good, they practiced, put in the required work and became better than you. This occurs all the time.

Persistence Pays

I have known individuals who are amazingly smart. They are able to grasp new material ridiculously fast and never had to really study. Many of these individuals never achieved their full potential. They took their gift for granted. They thought everything would come easily. However, when they hit an obstacle, they were unprepared to deal with failure. They did not have the tools, mental strength or sadly, they did not have a support system around them.

On the other hand, I know a number of individuals who were not the best. You know these individuals as well. They were likely middle of the pack with regard to academics, but they worked hard, took the long route, persevered and ended up at the top. These were the individuals who did not make the team on the first try, they did not get accepted to their top choice for college, they were rejected from professional school, but instead of giving up, they went back to the drawing board, reapplied themselves and were able to move forward. 

The fact is, in life, you will hear a lot more no’s than yes. Get use to it. “No” is an opportunity. Rejection builds character. Never give up!

You Will Hear No Far More Times Than Yes

We have all come across individuals who have not heard “no” very often. These individuals cannot handle rejection and if anything, avoid the possibility of getting a rejection or simply flips out if they are rejected. We all know individuals like this. They are typically not fun to be around. An outburst for the simplest thing is typically just around the corner.

Rejection is apart of life, and if viewed in the right context, rejection can be a huge motivational factor in life. Rarely do we make it through life without being rejected. For many overachievers, rejection is their fuel. That person who other’s may say act as if they have a chip on their shoulder did not become driven by always winning. It is rejection that fuels their fire. The agony of defeat built them mentally to never give up.

For others, if the door was close on one path, they never give up, they simply found another way in. The never give up attitude is exemplified in the winners of life. The earlier we can see failure as an opportunity, the more likely it is for us to succeed. This is true in our financial life and otherwise.

Conclusion

As I get older, what I have learned time and time again is that it is not about how smart you are. It  is really about persistence. Yes, the never give up mentality is one of the most rewarding attribute a person can have. Getting knocked down but getting up and continuing on is a hard lesson to learn. But once you master it, the world is yours.

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Daylight Saving Time

Use Daylight Saving Time To Super Charge Your Finances

Money Maroon

Each year, many countries go through the process of setting clocks forward in the spring and falling back in the fall. This is the normal progression of observing daylight saving time. This time manipulation invention was put in place to save energy.  By moving clocks forward, people could take advantage of the extra evening daylight rather than wasting energy on lighting. As we try to save energy with daylight saving time, use this yearly interruption to fine tune your financial strategy and retirement. 

The Opportunity

Daylight saving time has a way of catching us off guard each year. When we spring forward, it usually greets us with one hour less sleep. Further, it typically takes weeks for your body to adjust to the new time. Springing forward also leads to longer days and in some parts of the country, the sun will set past 9pm at night in the middle of summer.

However, we are resilient. Overtime, this one hour shift becomes normalize and we continue on with our lives. But there is an opportunity here. The opportunity here is to use daylight saving time as a trigger. A trigger to assess your financial situation. As the time is moved forward in early spring, think financially. Think about getting your taxes completed and filed. Review your financial plan for the year. Look at what you are presently contributing to your 401k, monthly savings, IRA, and brokerage accounts. Adjust your contributions as necessary to put your financial plan in motion to reach your goals.

Use daylight saving time to turbo charge your finances

Daylight Saving Time Recalibration

As we approach the winter months and have to fall back one hour, this component of daylight saving time can be used as a recalibration point. Just as the springing forward can be used as an opportunity to set goals, the falling back period can be used as a trigger to recalibrate. Are you on schedule to achieve your goals? Can you recalibrate to achieve your goals before the year ends? As you fall back in the fall, it is a good time to make adjustments to your financial plan based on life events. The one constant in life is its unpredictability, use the falling back period of daylight saving time as a trigger for financial recalibration.

Fall also provides a time for you to begin to think about the begining of the next year. Get a financial jump start on the next year.

Adjust Your Routine

While daylight saving time has become a routine event, make your financial check ups routine as well. When you spring forward one hour, use this disruption to think about the financial year ahead. When you fall back one hour in fall, think about recalibration. Adjusting your financial plans such that you are able to achieve your goals by year end. If your plans change based on life events, adjust and refine accordingly. Further, a fall financial check up also allows you to plan for the coming year. The earlier you are able to take your financial situation in your own hands and plan ahead, the more rewarding the journey.

Use the disruptive nature of daylight saving time to your advantage. Use this disruption as a trigger to review your financial wellbeing.

Conclusion

Each year, many countries go through the process of setting clocks forward in the spring and falling back in the fall. This is the normal progression of observing daylight saving time. This time manipulation invention was put in place to save energy.  By moving clocks forward, people could take advantage of the extra evening daylight rather than wasting energy on lighting. As we try to save energy with daylight saving, use this yearly interruption to fine tune your financial strategy and retirement. Journey to financial independence.

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Refinance

Is It Time For A Mortgage Refinance?

Money Maroon

If you have not yet bought a house, you will be bombarded by messages to buy now. It is the American dream, or so we are taught. But in reality, whether or not you buy or rent is personal. For some, buying makes more sense than renting, while for others the reverse is true. Buying a home is a truly personal decision. If you do happen to have a mortgage, you are no doubt being inundated with mortgage refinance information and offers.

Typically, you are told that it is a good idea to refinance if interest rates are reduced by at least about 1 percent. The truth is, it really depends on you and your future plans. Namely, how long do you plan on living in the home and does it make financial sense to pay upfront closing costs for the offered lower rate. 

Do not forget, whether or not you refinance, the bank will be making money. This is simply a matter of will you save on your interest payments in the long term.

Compare Rates

The reason for mortgage refinancing may vary, but it is typically with regard to lowering payments or taking cash from your home. Simply put, are you trying to save money by obtaining a lower interest rate or are you trying to get cash by using the equity in your home?

In either case, when thinking about mortgage refinance, you must address interest rates. Interest rate differences are typically the trigger for considering mortgage refinance. Just like making the decision to buy or rent, interest rates are truly personal. The interest rate that you will be offered is likely base at least on your credit history, employment history, assets, liabilities, equity in your home, the type of loan (fixed rate vs adjustable), length of the loan, points, and the lender. As such, ensure that you are in great financial shape and shop around to get the best rate. Here, typically, the lower the interest rate the better the rate is for you. 

In view of what happened during the great recession, many of today’s mortgage refinancing are with regard to lowering monthly payments as a result of obtaining a lower interest rate. Less home owners are taking cash from their homes.

Points

Another factor that will affect your interest rate on a mortgage refinance will be points. Points represent a payment paid to the lender to reduce the interest rate on the mortgage. Each point costs about 1% of the loan amount. Some lenders may offer fractions of points in some cases. Note that to obtain the lowest advertised interest rates, it is likely that you will need to pay for some points. Depending on the amount of points and the size of your loans, this could be expensive for the promise of a lower interest rate.

Adjustable Or Fixed Rate

On the decision tree that is a mortgage refinance is the type of loan that you are seeking. An adjustable rate mortgage tends to have an initial lower interest rate as compared to a fixed rate mortgage. In essence, an adjustable rate mortgage promises a low rate now and typically raises over time. If the adjustable rate mortgage is held long enough, the interest rate will likely surpass the going rate for fixed rate mortgages. 

Unlike an adjustable rate mortgage, fixed rate mortgages are fixed throughout the life of the loan. The interest rate does not change over time.

15 years vs 30 years

Will you increase the life of your loan or decrease it with a mortgage refinance. Based on your lender, you may have a loan of any length. However, the two most common length of loans are typically 15 years and 30 years. With mortgage refinance, the shorter the length of the mortgage, the lower the interest rates that you will be offered. Because the interest rate will be lower, you will also pay significantly less on interest over time. Of course, the shorter the length of the mortgage, the higher your monthly mortgage payments will be.

If you decide on a 15 year mortgage, it is important that you are comfortable with your monthly payments. 

In certain situations, it may be best to take a 30 year mortgage with a slightly higher interest rate compared to a 15 year mortgage. In this case, if you chose to payoff your mortgage early, do so. This provides the benefit of a lower payment such that if you encounter financial troubles, you will have the financial room to maneuver and lower the likelihood of falling behind on payments.

Closing Cost

Let us not forget about the expense of mortgage refinance. If you are trying to save money by mortgage refinance, your lender will charge you for this opportunity to save. On average, the mortgage refinance closing cost are typically between 1 and 6 percent of the loan. However, it is important not to forget about escrow cost and the cost associated with any property taxes, and home insurance that must be prepaid. 

Many lenders will try to reduce or hide the closing cost by rolling it into your loan. So if a lender offers a low or no cost closing, your closing cost is likely not zero. You may not pay at closing but that amount is likely rolled into your loan. Of course, the higher your loan, the higher the total interest that you will pay. Do keep this in mind. As the saying goes, if you do not pay now, you will pay later. 

Note that you can demand to pay your closing cost and not roll an amount into your new mortgage.

Break Even Point

Another important aspect of mortgage refinance, will be your break even point. This is the number of months it will take for your monthly savings from refinancing your loan to exceed your closing costs.

This is important because if it takes you 5 years to break even and you will stay in the house for only 4 years, refinancing may not be a great financially beneficial idea. To benefit from a refinance it is important that  you stay in the home longer than your break even point.

As an example, if your new mortgage saves you $200 a month over your previous mortgage and closing costs are $5,000, then $5,000 / $200 a month in savings = 25 months to break even. If you plan to sell the house before you break even, refinancing may not be a good strategy.

Refinance

Make A Decision And Refinance

Once you decide to refinance your mortgage and you and your lender has agreed upon provisional terms, you will then need to get a rate lock. This will essentially lock you into a specific interest rate for a period of time. Based on who you are working with, to complete the required action to move to closing may take as little as a month or longer than a year.  The length of time will depend on how long it takes to complete a review of your financial situation. For example, inspections of the home, appraisals of the home, credit checks and other requirements. 

However, note that some banks will give you the run around for whatever reason. They will continuously request bank statements or proof of your employment each month on a repeated cycle. This will invariably continuously push back your closing date.

If you are in the position of a bank toying with you, stop it now. It is important to realize that it is your money that is being spent and that you can take your business to someone else. Give the lender an ultimatum, they will close shortly or you will take your business else where. The fact is, if you can get a low rate from one bank, you can potentially get a low rate from another bank. Do not allow a bank to treat you disrespectfully by toying with you on such an important matter as your home.

Conclusion

If you have not yet bought a house, it is not uncommon for you to be bombarded by messages to buy now. It is the American dream, or so we are taught. But in reality, whether or not you buy or rent is personal. For some, buying makes more sense than renting, while for others the reverse is true. Buying a home is a truly personal decision. If you do own a house, and have a mortgage, you are no doubt being inundated with mortgage refinance information and offers. 

With your home typically being your largest purchase and the foundation of generational wealth, any transaction that is associated with your home is an important one. Do not take a decision to mortgage refinance lightly. Mortgage refinance may be an important step on your path to financial independence.

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Self made lies

Self Made? I Doubt It

Money Maroon

You have heard it all before, pull yourself up by the bootstraps. Typically, the individual telling you to pull yourself up by the bootstraps will refer to themselves as self made. No matter how much you are able to “pull yourself up” the fact is, no one is self made. We all need help from others, but that alone is not enough to succeed. Even with help from others, you must be at the right place at the right time. In other words, to succeed, you must also be lucky. I am not discounting that hard work is necessary to achieve your goals, it is. But do not ever make the mistake of thinking that you are self made. In making that mistake, you are not appreciating or acknowledging the contributions of the people that have helped you along the way. Give them the credit and acknowledgement that they deserve.

Self Made

There are no self made individuals. For that matter, there are no self made millionaires. If you do not believe me, just think about it. Think of any so called self made individuals or millionaires. Yes, those individuals that are labeled self made. Pull back the curtain and look at the individual. Likely, they are very smart, hard working, and have a certain skill set combination that got them to where they are. Their dedication and skill set helped them navigate up, down, over, and around obstacles to become what we know them as today. They are good at what they do. But they did not do it alone. They are in effect, not self made.

You are not self made
You are not self made

The Team

Zoom out from our supposed self made individual and look at their team. Look at the people behind them who have implemented their plans and have mentored them to success. I am not talking about the new person that they have hired to fill a role. Nor am I identifying an easily replaceable employee that can be plugged into a specific role. I mean their team. The group of people who have been around them for years, or even decades. The group of people that have significantly impacted our so called self made millionaire’s life the most. The team could be made up of family members, a mentor or someone who has been a confidant over the years. The team is what give this individual strength. This team is the primary motivator and at times the inspiration from which our so call self made individual draws from.

The Big Break

Now pull back further to the individuals who gave our so called self made person his or her big break. This need not be one significant big break, it could be incremental breaks or transition from one point to the next. Who was that first client for a new business? Who was the first investor to believe in the idea or the employee that left their secure job to start a new company with our so call self made man? Find that person and you will find the catalyst for our self made man’s success.

Early Backers

If you still believe that some folks are self made, look at their childhood. Was it the parents or family members who gave our so call self made man a stable environment? What about their coach who saw the promise of a future star and spent the extra time to help hone his/her skills? Think about the teacher who saw the promise and provided the necessary encouragement. Who paid for the extra classes and tutoring lessons? These are the early backers. The early backers are people who saw promise and invested in our so called self made man’s future. Without the early backers, our self made man would be a shell of who he is today

Luck

Now, let us look at luck. It is difficult for us to admit that we have accomplished goals not by our pure skills and intelligence, but by luck. It is very simple, to be successful, you must have a bit of luck. Success is the intersection of luck, opportunity and skill. The Luck that you won the lottery with parents who may be able to nurture your developing mind. Luck that you had that coach or teacher that believed in you. Luck that you met that friend who profoundly impacted you and pushed you forward. In the simplest case, luck that you did not get hit by a car, affected by a disease or a situation beyond your control that left you ill-equipped to grab your future by the horns and move forward. Luck, you need it, so acknowledge it.

Conclusion

You have heard it all before, pull yourself up by the bootstraps. Typically, the individual telling you to pull yourself up by the bootstraps will refer to themselves as self made. No matter how much you are able to “pull yourself up” the fact is, no one is self made. We all need help from others, but that alone is not enough to succeed. Even with help from others, you must be at the right place at the right time. In other words, to succeed, you must also be lucky. I am not discounting that hard work is necessary to achieve your goals, it is. But do not ever make the mistake of thinking that you are self made. In making that mistake, you are not appreciating or acknowledging the contributions of the people that have helped you along the way. Give them the credit and acknowledgement that they deserve.

Do not be ashamed to acknowledge that your success is not attributed to you alone. Embrace those around you and achieve.

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