The year that was:
Overall, 2005 was a good year; my friends and family were able to get out of it alive and for the most part in good health. There were a couple of scares throughout the year, like when my son broke his arm, but there were joys as well, like when I found out my wife was expecting and we were getting a daughter. My business revenue increased by 29%, and I was able to add about 20 families to the list of those I help accomplish their goals. I also was able to get my first professional designation Chartered Retirement Planning Counselor (CRPC®) from the College for Financial Planning. Overall, I am well on my way to building the personal and professional life that I want to live.

The year that will be:
In 2006, I am looking to build on the success that I had in 2005 and not repeat any of the missteps. I eagerly await the birth of my daughter and look forward to all the joys that will bring. I look forward to working with my current clients to help them continue on the path towards their goals. And, I look forward to meeting new families that are looking for help accomplishing their goals and dreams.

The engineer and financial planner in me would be remiss if I didn’t spend sometime looking for what could go wrong. In that light, I need to review my budget and look for areas of spending reduction. This will help ensure that I am able to spend through the ups and downs of my income. (Base plus bonus can really be a pain sometimes!) I also need to review my protection coverage. Do I have adequate insurance to protect the things my family cannot afford to lose? I look at things like home owners, auto, life, disability, and health insurance. I reviewed some of that in November when open benefit enrollment occurred, but it doesn’t hurt to look at it again in a comprehensive review. The other thing I need to look at is my savings and investment strategy. I don’t plan on making any major purchases in 2006, so I just need to ensure that I have enough cash on hand to cover any emergencies that may arise. (I’ve already setup my Medical Flex spending account to cover the co-pays and deductibles associated with my daughter’s birth) On the investment side, I need to review my investment allocation and make sure that my investment mix hasn’t drifted since the last time I reviewed it. I don’t typically rebalance unless one asset class is more than 5% over or under weighted. Even then, I may not rebalance depending on where I think the investment world is headed. For example, if I think that international investments are going to out perform US investments, I’ll let them be a little over weighted. I never let any investment class get more than 10% out of spec. That’s taking too big of a gamble. Since most of my investments are in qualified accounts (Roth and Traditional IRAs) I don’t look to harvest losses for tax purposes, but if you have a regular brokerage account you may want to do that. Also, since I use load funds, I make sure all of my rebalancing occurs within the same fund family. That way, I avoid repaying the sales load.

That’s a small sample of what I’m thinking as 2005 comes to a close. I hope you found it helpful. In 2006, I’ll publicly announce what my 2006 resolutions are going to be. Have a great New Year’s and I’ll blog you next year.

Obviously, a good financial advisor can help you with items number 3 and 4. However, I would get to that financial advisor early in the year, because financial advisors are going to be very busy in 2006. According to a national poll conducted by KRC Research on November 17-21, that questioned 1,030 Americans aged 18 and older more than 58 million Americans aged 18 and older say they resolve to better manage their finances in 2006. I don’t think they are going to be doing that on their own. The question is will they have the wisdom to seek out help? Whether that help is discipline, checking assumptions and calculations, or getting access to the professional grade tools, a good financial advisor will be able to help.

The other question for the day is are you going to be making any resolutions? According to another survey, only 46% of Americans even make New Year resolutions. The rest have apparently given up the practice because they never keep them any way.

Just something to think about as we go into 2006. If I don’t post another entry before Saturday, Have a very happy holiday, what ever you celebrate.

I have to admit, I was a little worried that he was going to try to sell me his services. Of course Rodger knows he’s in the relationship business first, and the selling business second so there was no sales pitch.

He did stun me with one thing, however. Now, personally, I have an MBA. Finance was my focus, and I enjoy that stuff. So, when it comes to financial planning it’s not the what or how that is the problem. It’s the discipline to stick with the plan that’s key, and that’s why I’ve never hired a financial advisor. Discipline is a personal thing, right?

So there I am talking to Rodger, and he tells me about his decision to get into this particular field. Turns out financial stuff was a hobby, and when he got “right-sized” out of his corporate job, he decided to make financial planning a career. I love hearing about people who find a way to make a living doing what they really want to do. Anyway, later he was talking about how found his first financial guy. What? I thought this was your hobby, why’d you hire a financial guy?

“For the discipline”, he says. He needed someone to help him get the things done he wanted to get done.

Turns out it that being a good financial advisor involves a certain amount of wheedling, cajoling, and nagging to get your clients to follow through on the plan you put together for them. Just writing out a plan doesn’t help most people; it’s helping them execute it that matters. That’s something Rodger learned that he’s carried into his own practice. Kind of like when you hire a maid to clean the house, and then find yourselves scurrying around cleaning before she arrives, so she doesn’t see the mess.

That’s a reason for hiring an advisor I’d never thought of before.

The way I see it, there are advantages and disadvantages to owning your home, or renting it from someone else. When you rent, you don’t build up any equity in the property. That’s a major downside, but you are not responsible for the maintenance or upkeep of the property. If something goes wrong, you call the landlord and it is their expense to fix it. If you have a bad landlord, you move out. At worst you are out your security deposit. If the neighborhood goes downhill, you can move. You’re not stuck trying to sell it to some other poor schmuck. I think you get a lot of flexibilty with renting that you cannot get with home ownership. I even think that there’s a myth of your rent payment always increasing. When I lived in apartments or rented from landlords, my rent payments seldomly went up. When they did go up, it was because I was moving to a bigger place, or getting additional amenities. Since I’ve bought my house, my expenses have gone up every year. My mortgage payment (PI) has stayed fixed, but my home owners insurance and property taxes have increased every year. (Since I escrow, it feels like my mortgage payment is constantly increasing)

Home ownership does have one huge advantage, This place is mine and I can do whatever I want with it. That’s a lifestyle choice. I am choosing to pay more and deal with the maintenance expenses to live in a place that I can decorate however I want. I can financially afford to make that lifestyle choice and still accomplish my other goals, so it is an ok decision. However, I see more and more people putting their goals on hold so that they can buy a house. They delay saving for retirement, kids college, maybe even starting a family all together. Is there such a stigma attached to renting that people are willing to sacrifice everything just to say they own the roof over their head? Why are people so willing to put themselves in a tenuous financial position when they don’t need to? What is it about owning your home that is worth the stress, tension and potential martial strife? Is this just another case of I have to own my own home because that’s the way my parents and their parents did it?

Please sound off and let me know why you decided that owning or renting your home was the right lifestyle choice for you. Also, if you had to do it over again would you change anything? Would you buy a cheaper house or delayed your purchase for a couple of years? Would you have bought sooner? Picked a different neighborhood? Used a different agent to help you in your decision? Let me know.

Lawyers don’t, at least, didn’t.
Dentists and doctors don’t.

Why is it a picture’s so important?

Here are some thoughts on follow-up questions for recent new home buyers.

1. Did you use a real estate agent to help you purchase your first home? Why or why not?

2. If you had worked with a real estate agent, did you have a buyer agency agreement with that agent to work in your best interests?

3. Did your real estate agent explain the benefits of buyer agency?

4. How did you find your real estate agent, home inspector, and mortgage loan officer? What were the key reasons you choose to work with that individual?

5. What was the primary reason you had in purchasing your first home?

6. How long did you plan on purchasing a home before you seriously began to look for one?

7. Did you hire an attorney to represent you when purchasing your first home? Why or why not?

8. What part of the home purchasing process (if any) did you feel comfortable with? What part of the process did you feel uninformed or underinformed about?

9. Did you or a contractor facilitate any work to your new home? What type of work did you have done to your new home?

10. Would you recommend any or all of the professionals you hired to purchase your new home. Why or why not?

Over and out!

-Mike

You could start a blog by yourself. And worry about keeping it fresh with new content, and keeping the site up and running, etc.

You could hire someone to ghost-write a blog. And wait to be found out, castigated by readers who are dissappointed to find out that you aren’t the author of everything they’ve been reading.

Or you could join with a few others - people related to your business, who you know and trust - along with a blogger to help out with editing and keeping the site up. Combine your posts with others, along with interviews from your customer base.

Real-life experiences from the interviews give the experts a chance to demonstrate their knowledge in subsequent posts. All together, the content serves to educate newcomers to the local real estate situation and home-buying in general.