investing

Recently I’ve been going through the process of building a new house and their is no better time than right now.  In fact, with a little bit a preplanning it could be one of the best investments you could make with your money right now.  For example, I’m building a 2150 square foot home with 4 bedrooms and 2 and a half baths for right around $200,000.

Now that’s a great deal and in this article I’m going to give you three huge factors why you might want to consider investing in a new house.

Mortgage Rates

First off, let’s consider the financial end of things.  Mortgage rates are at the lowest in history, in fact my loan officer is offering me a rate of 3.5 percent for a 30 year fixed home loan.  That can be a huge savings on interest payments alone right now.

For example just a few years ago rates were at 6 percent. If you were to put 10 percent down on a $200,000 mortgage you would pay around $208,000 in interest over the life of the loan.  However with a rate of 3.5 percent on the loan you would only pay around $111,000 in interest payments saving you a total of $97,000.

Now that’s a big savings with a little money down, some excellent credit scores, and a little know how, and you’ve just saved yourself a ton of money.

Cost of Materials

The next thing to consider is the cost of materials to build and right now their are some big deals to be had.  With the housing market on a slow rebound and not nearly as many people building, lumber yards are cutting some big deals.

How do I know this you might ask?  After talking to several area builders almost all of them could start building my house right now which means contractors and lumbers yards are looking for work right now. In fact when I signed with my builder they planned to start immediately.

However don’t take my word for it contact several builders for yourself and ask them, you might be surprised.

Discounts

Finally, the last and biggest reason you should build a new house is because of the discounts.  As I mentioned in the last section builders are slow right now.  This also means that if they want to get your business they will do almost anything to get it.  In fact, I even asked my builder straight up what kind of discount they could give me.

To prove how much builders are willing to work with you, our builder gave us a $14,000 discount but that wasn’t it.  I was also able to save an additional $1500 on the lot I bought as well.  Some lots will sell faster than others but the lot I bought was sitting for sale well over a year and as a result allowed me to cut a bigger deal for my house. Together this saved me a total of $15,500 on my new house.  Not a bad deal.

Final Thoughts…

So is building a new house a good investment in your future or not?  With low mortgage rates, low cost on materials, and some big discounts going on right now is the best time get started on build that new house of yours.

 

{ 0 comments }

There are ways that we try to save money that actually hurt us in the long run or cost more than they seemingly save us. Here are five ways to avoid harmful saving techniques.

Whole Life Insurance

Whole life insurance policies are considered a horrific waste by financial experts like Suze Orman and Dave Ramsey. When you borrow from a whole life insurance policy, you are borrowing against money saved in the account. You would get a similar interest rate on a home equity line of credit or small business loan. And you wouldn’t run the risk that your family receives less money than the face value of the life insurance policy to pay off the loan. If you want to save money, put it in a savings account and use it to pay your bills. Don’t pay front loaded commissions for a low rate savings account.

Solution: Don’t buy whole life insurance. Buy term life insurance instead.

Freebies That Are Not Free

Sometimes the most expensive things in life are “free”. A free credit check on a website could be a criminal’s method of getting your Social Security Number and committing identity theft. Free trials for goods and services can result in a monthly charge that you can’t stop. Free shipping is not a good deal on an over-priced item or something you wouldn’t normally purchase. Free upgrades on goods and services may actually be a lead in, with consumers agreeing to pay the full cost for the items in the next month’s bill.

Solution: Review every freebie offer and determine whether or not it is worth the cost.

All By Myself

Do it yourself legal forms can cost you a fortune if you give up property you didn’t have to lose during a divorce or bankruptcy filing. Do it yourself repairs often result in greater damage than the initial problem or a wrong diagnosis that results in the problem getting worse. For example, that flaky floor board diagnosed as termites and treated with spray around the house could be a sign of a leaky pipe that you just let run that much longer. Do it yourself medical diagnosis for a back sprain could result in severe pain or surgery when a slipping disk becomes herniated. The desire to save money and avoid an expert opinion can cost us a fortune when we have to go to an expert to get it fixed.

Solution: Think of the worst case scenario. What could happen if you are wrong and have to pay a professional to fix the problem?

Dollar Store Disasters

The dollar store does not always offer great bargains. That small, dollar container of cleaning supplies like laundry soap may cost more per ounce than the larger container in the grocery store next door. The canned goods for a dollar each may be sixty or seventy cents at the grocery store. Cheap toys from the dollar store may have been made from toxic substances from China, as many parents discovered with knick knacks with toxic metal backing and melamine, a poison used to artificially inflate protein test results, in the dog food.

Solution: Buy items based on unit costs, not the price tag.

Coupons

Coupons have become increasingly popular due to shows like “Extreme Couponing”. Yet coupons have their costs. The first cost is time. You may do better comparison shopping than hunting, clipping and sorting coupons. The second cost is the price. You may pay more for the item after using a coupon than you would if you bought the product on sale. You could save both time and money if you bought the generic brand or store brand over the fancy brand with a coupon. Driving to stores that offer double and triple coupon deals may cost more in gas than the money saved on food.

Solution: Value your time as much as you value your money. Buy generic brands or items on sale instead of investing time and money on coupons.

–About the Author

Rick Abelmann is a Hawaii bankruptcy lawyer at Abelmann Law in Honolulu, making sure Hawaiians have a representative when they have hard financial times.

{ 0 comments }

Because we are emotional beings, most of our decisions are made not because they are the rational things to do, but simple because “it feels right”. This holds true for most of our moves, including the major ones such as investing money. However, we must not let our emotions take control over us especially when making decisions related to investing. If an investor invests through listening to and following his emotions most of the time, then this may end to less than stellar returns.

This is the reason why a clear mind is very essential when it comes to investing. After all, the truth is that the normal market cycle includes periods of prosperity and periods of decline – and only a person with a mind full of clarity can think properly on how to handle things during the period of decline. It is undeniably true that investors feel excited and confident when the market soars high. However, it is also undeniable that when the market falls, our trust and confidence in the economy also falls.

Diversification of Assets Through IRA

Employed individuals who have IRA investments must know how to be aware of their emotions when it comes to choosing the types of investment accounts to entrust their hard-earned funds with. We all know that an IRA is an investment vehicle which can hold several types of investments, and so diversification of funds can easily be achieved. This makes is so much easier for the investors to create a better portfolio through distributing his assets to different investments, as this is a good way to lessen the risks of incurring unnecessary losses.

So how do we choose the right investments? Many experts’ investing advice is for the investors to choose the kind of investments which they are familiar and comfortable with. Note that the word “familiar” comes first. This means that an investor must get himself educated about certain investments and he must know and understand the risks that may be involved with such. This is the rational part of investing – and that is, to get one’s self educated.

Once an investor understand all the possible risks that he may encounter, he has to evaluate himself as to how much he is willing to take such risks. Of course, he must also study the strategies on how he could surpass the downfall, in case the market will be down. He must also know how to handle these risks when they arise without having to suffer too much. As soon as the investor finished assessing himself, he can then make a decision about investing his funds to a particular asset class when he “feels” comfortable despite all the risks that he knows he will most likely encounter.

Seeing the Bigger Picture

Most often than not, investment goals cannot be achieved overnight (or in just a few days or weeks or months). Daily fluctuations should not affect an investor. It is also important to choose the best IRA company where we open our account with, and make sure to choose the one that charges lower fees.

{ 0 comments }