Archives For Brent Pittman

Did you know there is a ‘secret’ way to pay off your mortgage early? No doubt you’ve heard ads on the radio willing to sell you this secret for only thousands of dollars.

Guess what? I like you, so I’ll tell you for free.

Pay Off Your Mortgage Early

Before you start paying extra on your mortgage, make sure you’ve 1) paid off all other consumer debt, 2) have at least a 3-6 month emergency fund, 3) begun investing in your retirement, and 4) saving for your children’s college

Yes, you do want to pay off your home early, this is a key to wealth building. You’ll loose your tax deduction, but it’s not worth staying in debt and paying interest to get a tax deduction.

If you have a paid for house, just think of what you can do with all that money! You can pay it off early with a simple little trick.

I’ll assume that you already have a fixed mortgage of 15 or 30 years that is around 25% of your take home pay.

Also, if you have an ARM and plan to stay in your home for another few years–Now is the time to refinance and get a lower %–even if you have to pay 1 or 2 points

Bi-weekly Payments

This is the ‘secret’ that you hear many ads on the radio about. They’ll try to sell you software that magically helps you pay off your mortgage early. Bi-weekly mortgage payments.

It’s not magic, it’s math. If you pay bi-weekly, you’ll end up making an extra payment per year and thus paying off your mortgage early. You’ll also be knocking out interest, so more money goes towards the principal balance.

You could end up paying a 30 year loan off  years faster with this method? Sounds crazy right? Let’s look at an example below. If you want to figure your own bi-weekly amortization schedule try bankrate.com.

Bi-weekly Payment 30 Year Mortgage Year Example

In our 30 year example at 5% you’d save $44.417.33 and end up paying off your mortgage about 4 years early.

Mortgage comparison

Monthly payment:

$1,342.05

Biweekly payment:

$671.03

Total interest:

$233,139.40

Total interest:

$188,722.13

Avg interest each month:

$647.61

Avg interest each biweekly period:

$241.33

 

 Tips for Setting Up a Bi-weekly Payment Schedule

  • Make sure you don’t have a penalty for paying off your mortgage early. If you do, you’ll have to crunch some numbers and see what your break even point is.
  • Be certain the extra payment goes to principal and not to future interest. Your goal is to take a chunk out the principal with this method. The banks want you to keep paying.
  • Check with your specific bank or lending agency to see if they use a 3rd party to administer their bi-weekly payments. There is sometimes a set-up fee to get on a bi-weekly schedule.
  • Monitor your mortgage to make sure they are applying your payments correctly.

Have you set up or thought about setting up a bi-weekly schedule? 

Photo Credit  j l t (Creative Commons)

Lego Doctors

Injuries occur through either natural disasters or man made situations. When those injuries happen, medical attention is needed and needed quickly.

Triage is a technique to give care quickly–Do the most good for the most patients. Sometimes in our financial lives triage needs to be performed. We need to act and act quickly to preserve life.

Financial Triage Basics

Financial injury prevention is best, but if injury occurs the goal is to reduce the impact of the injury and preserve life.

1. Determine the severity of injury- Asking a series of questions and observations to determine how bad is it?

Are you behind on your bills? facing foreclosure? Thinking of bankruptcy? Spouse threatening divorce due to money matters?

2. Initiate management- quick fixes, tag, prioritize, and basic treatment.

Apply a quick bandage if you are financially ‘walking wounded’ or you might need immediate treatment.

3. Perform field triage- This involves sending to the appropriate treatment center (trauma center, closest hospital, or hospital further away).

Depending on the level of your financial wound determines what kind of help you’ll need. You may need  financial coaching, bankruptcy advice, tax advice, or another financial profesional that can help with treatment.

S.T.A.R.T Financial Triage

As a first responder gets on the scene they’ll go through their triage checklist and begin assessing those injured on the scene.

Simple Triage and Rapid Treatment (START) is a method they might use. Let’s adopt this method and ‘field triage’ to a financial crisis.

Remember if you’re hurting, there is hope–your situation CAN improve.

1. Start where you are- No need to go back to the beginning of how your family didn’t teach you about money. Start where you are and begin to move forward.

2. Stop the bleeding- In order to get out of your financial crisis, you’ll have to stop bleeding money. Stop borrowing money and going further in debt.

3. Clear the Airways- Breathing is essential to life. Your financial airways need clearing to make income greater than outflow.
  • Sell unneeded items for quick cash and to establish an emergency fund.
  • Get a 2nd job for a short amount of time until you make ends meet.
  • Start the short sale process if your home is in foreclosure and no way to make up payments.
  • Do what it (legally) takes to get out of crisis mode so you can breath.
4. Prioritize- Keep the important at the top of the list. Faith, Family, and Friends.You’ll also want to keep the 4 Walls before paying any debt:

  • Food
  • Shelter
  • Utilities
  • Basic Transportation

5. Seek Treatment- This is where longer term solutions are found.

  • Minor wounds could be fixed with a good financial book or a financial support group like Financial Peace University.
  • More serious financial wounds might need a financial coach who can refer you to other trusted financial professionals.

If you are in financial crisis, it is scary and hard to know what steps to take. Seek help from friends, clergy, or financial professionals.

Ignoring financial problems can lead to more serious injury. A small scratch can become infected and need surgery. Seek help. Contact me and I will help or find someone who can.

Are you or have you been in a financial crisis? What did you do immediately that helped? 

Photo Credit atomiclizard (Creative Commons)

Moving Truck

Penske is now my first choice in moving trucks. Credit Crashmaster007.

I have been a lifelong user of U-Haul for moving trucks, but now I am switching allegiances. After a friend recommended Penske and I saw dozens of yellow Penske trucks on my 1,400 mile road trip, I decided to investigate Penske for our upcoming cross state move.

I am now convinced that Penske is a better choice for long distance moving over the traditional U-Haul, so I’ve added Penske to my Tips for Moving list and given several reasons why Penske trumps Uhaul.

5 Reasons Why Penske is Better than U-Haul for Long Moves

1. Newer Trucks- Penske replaces nearly half of their self move fleet a year, so you’re guaranteed a truck with low miles and high quality condition. The truck I drove had only 56,000 miles. U-haul trucks are traditionally older and in less than desired condition.

2. Unlimited Miles- With Penske you don’t have to worry about milage on one way moves. With U-haul there is the stress of being penalized for every mile driven over the allotted miles given. This can easily happen by taking a wrong turn or using an alternate route due to bad weather.

3. 7 Day Rental- 7 day rental gives extra time for packing, driving, and unloading. The extra time is a big plus for a long move. U-haul allows only 5 days.

4. Comparable Price or Cheaper than U-Haul- With Penske the price is comparable or cheaper than U-haul depending on which state you are traveling from and what state the truck will be dropped off in. Penske gives a discount for AAA members, military, and students too!

5. Guaranteed Truck Rentals at quoted prices- No fear that your truck or trailer won’t be on site or that you’ll be charged more. U-haul only guarantees your truck on site if you reserve it within 48 hours and has a history of overbooking and thus overcharging above the quoted price.

6. Great Customer Service I had to add another. A few days before my move date, I received a phone call to ensure my order was correct and to inquire if I had any questions. At my Penske pickup and drop off locations I had enthusiastic customer service and both reps had positive views about the company.

Penske is also Business Friendly with a large commercial fleet of vans, semis, and trucks.

Based on my experience and the large numbers of Penske moving trucks and semis on the road, I believe Penske has quietly overtaken Uhaul as the go to company for long DIY moves.

Consider Penske for your next out of state moving van rental needs.

Have you used either Penske or U-haul? I’d love to hear about your experience in the comments below!

www.ontargetcoach.com

Photo Credit: Leo Reynolds via Compfight cc

This last month we missed out monthly budget party. I figured we have budged for 81 straight months! Pretty good streak if you ask me; comparable to the Harlem Globetrotters 2,495 straight wins over Washington Generals. (32 other famous sports streaks)

It was a time of flux, transition, and [insert excuse here]. So my wife and I failed to have our monthly pow-wow over how we’ll spend our money and guess what…it didn’t matter that much.

6 Years of Budgeting and Marriage

A funny thing happens after 81 months of marriage and learning how to communicate about money–namely you figure out a plan and stick to it. That’s what ended up happening for the most party. We did what we always did.

I still kept up with spending and found out that groceries were pretty much the same, under actually. We did go a bit crazy with eating out, but that was part of the transition and celebrations over job promotions.

Our budgeting streak is over, but we had a good run. We do plan to jump back on the budgeting train; after all our income will be increasing, so we need to really keep our eye on the ball.

If you want to learn how we budget or tips on budgeting, read this series of articles about budgets.

Typical Hipster in NYC

These days hipsters are everywhere. There are a few I’d even consider friends (yes, geeks and hipsters can get along).

I remember a time I didn’t know what a hipster was. Wait you don’t know either or want to be a hipster just because it is deck (cool)? That’s just stuff hipsters say.

Hipsters gotta earn money and budget too. Here are some Hipster tips for your finances.

Side Hustle Like a Hipster

  • A typical hipster income might be from graphic design, jewelry design, or anything with design in the name. Need a guide to finding a hipster job?
  • You could also make some side money from the chicken eggs you harvest in your Brooklyn apartment or sell homegrown organic vegetables. Those DINKS Uptown will pay a bundle for your organic goods!
  • Protest for pay. I see those ads on craigslist all the time…I wonder if they are a scam?
  • Be a tourguide of Williamsburg, Broooklyn (home of hipster) to out of town hipsters.
  • Paid reviews of music and books. Trick is you have to hate everything not mentioned on Pitchfork.
  • Sell something at a farmers market. Make it, grow it, knit it, and then sell it at 200% markup at a Farmers Market no one has ever heard of. Deck!
  • Make your own home brew or roast your own coffee beans. Organic and Fair Trade of course. Take out an ad in the Brooklyn Vegan and you’re set.


Budget Like a Hipster

There are certain items that must be included in a hipster’s budget.   Here are a few:

  • Home brewing equipment. PBR is so 2011.
  • Yarn for knitting your own I-pad covers.
  • Clothing is such a large percentage of hipsters budget that each clothing item gets its line item: Fedoras, scarves, shoes, vintage T-shirts, skinny jeans, new shoes that look old, flannel shirts, big watches, handmade jewelry, hipster glasses, etc.
  • Counseling because they are being labeled as a hipster and can’t deal with being put in box.
  • Yearly Airfare to Williamsburg to soak up the essence of hipster and eat at the hipsterest places on the planet.
  • Tattoos- Better save up for that full sleeve tattoo…it’s gonna cost you.
  • Indie Music and Shows- Rare music is going to cost you, especially when you’ll have to ditch your favorite band once 5 other people like them. Oh yea. you’ll need a lot of dough for vinyl.
  • Vintage Bike repair. Your beach cruiser will need some fixing from time to time. How about a new basket to hold your vegetables from the farmers market?
  • Apple- no not the ones you eat, but you’ll need to save up for the latest Apple products in order to stay hipster. A Blackberry is so 1%.
  • Bail- You’re going to protest and probably get arrested sometime this year. Go ahead and save up for that bail $.
  • Food- Hipsters don’t eat. They only drink coffee and nibble on organic vegetables. Meat is out of the question, a very frugal move indeed.

Hopefully you’ll find these funny and I don’t get flamed from the hipster community. Hipsters, I’m secretly jealous I’m not as cool as you. If you really want to know how to budget please read my How to Budget Like a Pro Series.

Help ensure this article is up to Hipster Standards. Any suggestions or additions to my lists are welcome in the comments below. 

Photo cred Joel Bedford