Personal Finance Resources

The real estate analysis spreadsheet presented at the bottom of this post is an extension of the spreadsheet provided in the Simple Guide to Real Estate Investment Property Evaluation. As noted in that article, I did not provide a space for you to enter any repair or holding costs. In this version of the real estate analysis spreadsheet, I provide the spaces to enter this information. But before I give you the link to download the information, I would like to give you a few pointers on how to estimate repairs and holding periods:

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Forget free groceries coupons, instead master the art of the “Fresh or Free” program provided by our friends, HEB. In this post I am going to detail the method we use to get the most out of the program. The basic overview of the program is provided in my Groceries for Free post.

The basic principle we use to maximize our gain is the law of large numbers. My wife and several lady friends assemble, usually in a group of about 6 or 7 ladies, and go out at night. They usually go out around 9 or 10 PM, with the goal being to collect items that are already expired, as well as targeting the midnight hour, to get items that have just expired.

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Want to get groceries for free? HEB has a spectacular policy called “Fresh or Free”. This is not a joke or hype or any kind of sales pitch. This grocery store actually provides an opportunity for anyone to get groceries for free. If you do not know of the HEB grocery chain, it’s probably because the chain is only located in Texas. My wife and I shop there almost exclusively, especially because of the Fresh or Free program. Here is a basic rundown of how to take advantage of this great policy:

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AD&D Insurance, also called Accidental Death and Dismemberment Insurance, is additional insurance which provides benefits for certain injuries and death due to an accident.  It is designed to pay out a large financial benefit to you in the event of a dismemberment (which can include either loss of limb or of sight), or to pay your beneficiary in the cause of an accidental death. AD&D Insurance is typically provided at no cost for some regular life insurance policies, and some companies provide an AD&D Insurance policy to their employees at no additional cost.  If you are a younger family or couple, than it is ideal to look into, as younger people are more likely to die from accidents than from natural causes.

Benefits

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The bi weekly mortgage plan has devoured countless victims. Everyone has heard it - “Paying your mortgage bi weekly will save you 7 years of mortgage payments”. But do you know why? I would like to elaborate why the bi weekly mortgage plan is flawed, and show you the most effective way to calculate the necessary payment to payoff your mortgage on the best schedule - your schedule. But first, let’s look at some reasons why most bi weekly mortgage plans are flawed:

1. The balance is only recalculated once a month.
   That’s right, even though you make 2, and sometimes 3 payments in a particular month, you mortgage balance is not reduced until the end of the billing cycle. This means that the mortgage company continues to collect interest on the mortgage balance as of the beginning of the billing cycle, so in effect, the lender gets to float your payment, and collect additional interest on it from other sources, until the end of the billing cycle. It’s like giving the lender a short term, no interest loan. Does that anger you? It should, because this is never disclosed openly to the borrower.
2. Typically the payment is “drafted” from your account on a schedule.
   This is a pet peeve for me. This guarantees the lender that they will get first priority at your money, regardless of your circumstance. But Jeffry, it’s so much more convenient! Maybe, until you have an emergency, and need money fast, then you are up a creek. I never, under any circumstances, give anyone access to my main checking account. I pay my bills when I am ready to do so, and I suggest you do the same, even though it is slightly more trouble. Use a quality spreadsheet, like my Free Home Budget Spreadsheet, to ensure you get all your bills paid, every month.
3. Often, the lender charges additional fees to setup the bi weekly mortgage plan.
   As if it is not enough that they get an interest free loan, draft your account automatically, they may have the nerve to charge another fee on top of all of this, to setup a bi weekly mortgage plan. It makes me sick to my stomach.

Ok, ok Jeffry, I see your point. But I still want to pay off my mortgage earlier, without having to come up with any additional money every month. This is the real misconception. Just because you are paying half of the would be monthly payment every bi week, doesn’t mean you are truly paying half the amount. About one month out of every six months, you will be making 3 payments, which is the only way for the bi weekly mortgage plan to show any benefits. So instead of making bi weekly payments, just do the math to make the equivalent monthly payment:

Bi weekly payment X 26 / 12 = equivalent monthly payment

By using this formula, you will be able to have the true fixed monthly payment, and still achieve the desired result - paying off your mortgage 7 years earlier. But if I could go one further - what if you want to payoff your mortgage even faster than that? Good news, I have compiled a spreadsheet that will allow you to compute a necessary monthly payment, based on a bi weekly payment and desired number of years. All you have to do is fill in the Input Section, and presto - you have the required monthly payment necessary to payoff that mortgage on your desired schedule. Here is a quick example:

Feel free to leave any comments / questions below. You may download the xls spreadsheet here:

Bi Weekly Mortgage Plan Converter.xls provided by Personal Finance Resources

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A debt management solution does not imply going for the best remortgages in the town. Anything but mortgages should be pursued. True, that a credit card application would take much longer, but in the end it teaches patience, and time management. Another better solution would be lender loans.

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A personal umbrella insurance policy, simply defined, is your protection in case you are ever involved in a high-dollar liability case. It’s the word that everyone fears, lawsuit. People and lawyers are suing for nearly everything today, and juries are awarding more and more money to the injured. That money comes from somewhere, and unless you have an extra five million laying around, a ruling in the 7 digit range can be financially devastating to you and your family. A Personal Umbrella Insurance Policy has been created to help you avoid such situations.

Do I Need A Personal Umbrella Insurance Policy?

While you may not ever see yourself accidentally rear ending a school bus on your way to work one morning, you may be able to imagine the millions of dollars you could be sued for if one or many of those children are injured. Accidents can happen frequently, and with so many people suing for these accidents, it is best to be prepared in the event one of these happens to you. What if someone gets hurt on your property, and sues you for it? Going out to the lake with some friends? What happens if someone gets hurt while in your boat or on your jet ski? You could be found negligent and be forced to pay. The fact is that even though you can’t keep these accidents from happening, you will be financially responsible for them.

Additional Personal Umbrella Insurance Policy Details

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The strategies contained in the article are not that advanced, but are very solid. The very first section “Pay your bills on time to maintain a good credit record and qualify for low rates.” DUH! Even if you are only able to pay the minimum payment, or less than the minimum payment, send the credit card something. All it takes is a couple of 30 and 60 day late payments on your credit report to plummet your credit scores. However, if you are just starting out, and have no credit, it would be worthwhile to run small balances on 2-3 credit cards, in order to build your initial credit. Always paying your credit cards off at the end of the month will not get you any substantial credit.

When I first started out, I did exactly that. Ran some small balances and began to build some credit. Beware, though, as this can be extremely dangerous for someone new to credit cards. A euphoric feeling tends to circle around the ability to get nearly anything you want without having the cash. Carefully watch what you spend and track your balances.

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Before continuing, you may want to catch the previous entry:

Tips for Monthly Saving Part 1

In the previous entry, I focused on small changes that you could make on a daily or a monthly basis that could save you significant money over time. Now I want to address larger savings that could be made. The key concept that is the hardest for Americans to learn is to delay gratification - you really don’t need it, at least not right now. The following is not rocket science, but it sure does make sense:

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A home equity line of credit, simply defnied, is a revolving line of credit, or loan that is taken against the equity that you have built up in your home, and can be obtained from most mortgage companies and banks.  In most cases, with a home equity line of credit, you can borrow up to 95 - 100% of the value of your home, minus the amount that you still have to pay on your mortgage. A home equity line of credit is rapidly becoming popular as property values increase, and consumers find that it is a great way to handle their personal debt and other financial issues far more efficently.  If you are wondering if a home equity line of credit is right for you, here are some frequently asked questions regarding home equity lines of credit to help you further understand the great benefits of getting one.

How is a Home Equity Line of Credit Different From a Home Equity Loan?

There are three main differences between the line of credit and the home equity loan. First of all, there is a difference in the interest rates you will receive. A home equity line of credit usually has a variable interest rate, while the loan has a fixed (or sometimes variable) rate throughout the life of the loan. Secondly, in a home equity line of credit, you are able to access your money anytime you like, so long as you pay back what you’ve used, but with the loan, you get all the money at once, and repay it over an extended period of time. In other words, with the line of credit you can borrow, repay, borrow repay as much as you like. Last, the home equity loan usually has fixed payments so that you will know what your payment is every month, while the home equity line of credit can vary based on the interest rate and the amount you owe.

Will Interest on My Home Equity Loan or Line of Credit be Tax Deductible?

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Previous Articles in this series:
Buying a HUD Home Part 1: How I Acquired 4 Homes in Under 2 Years

On to Buying a HUD Home Part 2: How I Acquired 4 Homes in Under 2 Years:

1. Knowing the HUD Listing System

You must understand that, like most government systems, there is no emotion or logic to the process. HUD has a process for buying a home, and you will not change it. The key advantage for the investor is, HUD doesn’t care about how nice the house looks, or what memories were made there, or any other bologna that most retail sellers use to not sell their house for the price we need to buy it for.

On that note, we understand that it is only a matter of time and market conditions for buying a HUD home at the right price. HUD is systematic in its approach, and uses a timeline for each and every listing:

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