Lifestyle

We live the good life here in Fort Collins! Here are some life enhancing articles you'll enjoy.

Book Review
by John Hudetz, Nationwide Mortgage Banker with 1stCity Mortgage Group, Fort Collins, CO

If personal financial planning concepts interest you, a new book, “Missed Fortune 101: A Starter Kit to Becoming a Millionaire”, by Douglas Andrews might catch your attention.

The book is a scaled down version of Andrews 530 page “Missed Fortune – Dispel the Money Myth-Conceptions” which has been a hot read by financial planners and mortgage lenders this past year.

Following “Rich Dad, Poor Dad” and other get rich books, it seems financial planning books are gaining as many titles as the “diet book” category.

So, as a seasoned mortgage banker, I approach this type of book with a bit of skepticism; wondering if there is anything really new and whether an author is harboring any hidden agendas.

I found a mixed bag of information reading Andrews’ recent book.

The basic money myth-conception postured by Andrews is a strong one. Andrews argues, quite convincingly, that home equity trapped in a house is a lost investment opportunity. He clarifies how home equity, inside a house, never earns a rate of return, is truly not very liquid and is not as safe as one might think.

We have been taught it’s a good thing to maximize the equity in our homes by paying off our mortgages early; a) using 15 year fixed loans instead of 30 year fixed loans, providing we can handle the increased payments; b) making extra payments towards principal; c) bi-monthly payments that take seven plus years off our 30 year fixed mortgages, etc. Anything to get that darn mortgage paid so we can own our house free and clear. Andrews says this logic is all wrong.

Andrews suggests we separate out our home equity from our houses, via maximizing our mortgage loan-to-value and investing the equity in a tax-sheltered side fund. With the tax-deductibility of our mortgage payments coupled with the use of tax-sheltered, compounding interest investment vehicles for our side fund, we realize a genuine return on investment from our equity, maintain liquidity of our equity, and provide greater safety to our equity.

In Andrews’ primary example he illustrates a borrower with a $150,000 mortgage, using a 30 year fixed loan versus a 15 year fixed loan, who invests the difference in loan payments (the 30 year fixed loan will always have a lower payment than a 15 year fixed loan) into a tax-sheltered side fund. In his illustration, after 15 years, the borrower who used the 30 year fixed mortgage has enough money in the side fund to: a) pay off the loan balance and b) walk away with an extra $25,000. Also, after 15 years, the option exists to use withdrawals from the investment account to continue tax-deductible mortgage payments and still realize investment account growth.

I ran my own calculations through Excel spreadsheets, changed some of Andrews’ assumptions I disagreed with, and came up with a lesser “walk away” amount: $13,000 using a straight 30 year fixed loan and $20,000, using a 30 year fixed loan with a 10 year interest only option.

Where I find myself disputing Andrews is in some of his rationale, reaching certain assumptions I think are inflated, and his heavily fee-loaded preferred tax-sheltered investment vehicles, which he markets through his financial planning practice. There is no doubt some powerful creative financial planning can be realized with his strategies but I feel each borrower’s situation is unique. Careful analysis needs to be done with one’s own financial planner(s) before blindly jumping into any get rich scheme. However, for the right situation, Andrews’ basic approach and results can truly be incredible.

If you have comments or questions to share with reviewer John Hudetz, he can be reached at 970 266-9111 or email: john.hudetz@mtggroup.com. 

Your Style, Your Wardrobe
By Robin Salls

I love to scrapbook my life in pictures! Sometimes, I’m really good at keeping things up to date! Other times, I have years of sorting through to do. It’s a process of picking and choosing the best items, letting go of the so-so or bad, picking colors to complement them and then organizing it in a creative way to enjoy it! Why am I speaking about scrap booking?

What does this have to do with your wardrobe? I believe everything!

I dare you to open your closet door; take a good look inside and then ask what scrap booking has to do with your wardrobe! I’m willing to bet that your wardrobe is a scrapbook of your life, present and past! Are you holding onto those size 2 jeans you haven’t fit into for years (the last time they fit, you were in your twenties!) just in case? How about that outfit your mother bought you, but you’ve never worn? Or that sweet little number that turned your spouses head (before children and remote controls became the norm). Scrapbooks are great reminders of our lives, but if your wardrobe/closet is a living scrapbook, perhaps it’s time to give it a boost!

Cleaning out your closet and updating your wardrobe doesn’t have to be a chore. When you approach organizing your wardrobe and closet for the person you are TODAY and being true to her style and personality it becomes rewarding. If you’re hyperventilating at the thought of the time and money you’ll have to spend after you sort through things, take a deep breath and relax. This doesn’t have to break the bank. Challenge yourself to embrace the current you and celebrate her! Clear out your closet of old and make room for the person you are this very minute! Perhaps you want to loose weight to fit into those outfits you don’t want to part with. Go for it! I encourage staying healthy and fit, but if seeing those items in your closet daily sends negative messages to yourself that you’re not there yet, tuck them away for now, in another room! Wear the colors and clothes that tell the world about you! The things that make you sparkle like a star. Fashion and colors change constantly and what looks good on one person may not fit you. That’s okay! Style is defined more by who you are than what the trends of the moment are. So, take a look in your closet and ask yourself, do I need to organize this scrapbook to enjoy it? If your answer’s yes, then do it and know that there are plenty of organizations out there that could use the items you can’t. You could help someone feel like a star too!

Robin Salls

Robin Salls is a Designer and Wardrobe Consultant and can be reached at www.robinsallsdesigns.com or 970-622-9000.