Borrow Smart Repay Smart

A while back I flew to Dallas to spend some time with my mentor and a few colleagues around the country talking about business, money, and life.

One of the most powerful thinking exercises I took from our discussions was this: Life is simply a series of events.

Over the course of a day and throughout an entire year, we experience thousands and thousands of “events”.  Yet, it is WE who choose to label these events as good or bad, positive or negative, sad or happy, etc.

My daughter occasionally misses the school bus in the morning chaos of getting ready.  I can get frustrated and label this as “bad”, or I can decide to appreciate the unplanned opportunity to spend some additional time with her as I drive her to school instead.

A new home-buyer chooses to work with another mortgage company.  Is this bad?  Or is it an opportunity to work on improving the value we provide to the next client?

When you can take pause, and sum things up as just another “event”, you will find that the emotional roller coaster many of us are on throughout life…suddenly settles down.

By Trevor Hammond

The mortgage industry is full of insider buzz words that seem to have been created to beguile all but the most seasoned insiders, in fact this topic trips up even veterans of 20 years and more; Pre-qualification and Pre-approval.

This due largely because when these two terms originated many years ago it was simple, or at least the mortgage process was simpler. It was simpler in terms of compliance and technology. Originally,   Pre-qualification was just based upon some simple math and information used to determine the loan amount that the applicant(s) could qualify for using income and debts. Pre-approval was a more in-depth process of analyzing credit, assets and income by an underwriter and providing a decision as to whether or not a loan could be approved. Simple right?

Then came automation and something called Automated Underwriting where a computer using an algorithm arrived at a credit decision. Pre-approvals were simple and blazingly fast, but there was one small point that eventually became a big one, the data that was used in making the decision was not always accurate, so sometimes the Pre-approval was meaningless. During the time this was happening, it didn’t make much difference because it was at about that time when lending guidelines became, shall we say, beyond liberal and we all know now what that led to.

After the melt down in the mortgage industry, new laws designed to protect the consumer were adopted and the industry began to return to the more traditional method of             Pre-approving a borrower. Until another set of new laws came into play, which depended on the technology solutions and interpretations of these new laws by the lenders themselves. Many of the new laws are vague and guidance from regulatory bodies is either not provided nor clear. As  result many lenders have become reluctant to provide             Pre-approvals and opted to beef up their Pre-qualification standards where this would now include credit analysis and verification of income and assets prior to issuance.

While this could all change down the line, the best course is to be sure that your lender is doing a thorough review of your financial picture by asking what their process is to qualify you for a mortgage.

Happy House hunting!

By Tim Hattan

By: Trevor Hammond

Nobody really likes the big “B” word…budget. Budgeting isn’t typically fun, and many adults struggle with budgeting.  Unfortunately our children will learn a lot about money from us, so if we aren’t good at budgeting and handling our personal finances successfully, it will be extremely hard for our children to learn how to do so.  By learning how to teach your kids how to budget successfully, you will probably realize some ways to improve your own at the same time!

Last month we discussed why budgets typically fail, why having a budget is so important, and how to begin setting financial goals.  Now let’s dive deeper on how to set up a real budget with your child.

Reminder:  If you are just getting started on paying your child an allowance and wondering how much to pay, a simple plan to start is making their weekly allowance equal to their age.  Thus, a 5-year old has the chance to earn $5 per week, and a 9-year old can earn $9 per week.  Click here for some other past FAQ’s we’ve covered.

The Three Parts of a Budget

1. Savings
2. Giving
3. Spending

With your child, take a piece of paper and draw two vertical lines to create three equal columns.  At the top of the first column write “SAVINGS”, then write “GIVING” at the top of the middle column, and “SPENDING” at the top of the right-hand column on the paper.

Together, decide how much money will go into each column from their weekly allowance.  If it’s easier to start by explaining how the percentages work, do so.  For example, you might help them decide that 20% of their money will go into the SAVINGS bucket, 10% into the GIVING bucket, and the remaining 70% will be available for spending.

Then, show them in real dollars how this will work.  Let’s assume you have a 9-year old daughter (like me!).  (HINT:  Be sure to get change next time you’re at the store to make this easier.)

On the piece of paper, calculate out with your child the actual dollar amounts from their allowance that will go into each column.  Taking my 9-year old daughter, for example, would mean we would write $1.80 to go into SAVINGS each week.  Then, 90 cents would go into GIVING, and the remaining $6.30 would be available for SPENDING.

Then, on your pre-established PAY DAY, help them divvy up the amounts into three separate piggy-banks, or clear plastic baggies, or clear jars.  It’s great when they can see their money grow.

Keep in mind that even though they only put 90 cents into GIVING, the ultimate goal is to establish a life-long habit of giving to others and feeling great about being involved in charitable activities.

Don’t get too caught up yet in short-term versus long-term savings, as well as the various types of “spending” money.  That will come later once you’ve established this fun and simple way to help them learn how to successfully budget!

Yes, there may be many “keys” to being happy and feeling a sense of success or accomplishment, but these are the two that have helped me the most.  I hope they are already familiar to you, and that this is just a reminder, but I find that reminding myself over and over about critical ways of thinking and living my life is incredibly helpful.

1. Relieve everyone else in your life, and whoever has been in your life, of any responsibility for your success…personally, professionally, and financially.

2. Do not expect any opportunities to be opened up to you by others until you’ve created value for others.

Let’s dive into the first one.  This equates to taking 100% ownership in all that you have (or don’t have) in your life.  Nobody else is responsible.  No excuses.  If it’s to be, it’s up to me.

If you don’t have the job that you wish, don’t blame your boss, or the marketplace.  Look inside, at yourself.  Ask yourself how much time you’re putting into increasing your capabilities at the job you want?  Are you frustrated you aren’t making more money?  How are you making yourself irreplaceable?  What are you doing to become so incredibly valuable that your company would do nearly anything to keep you?

What happens if you don’t adopt this mindset?  If you allow yourself to think others are responsible for your success, then they have control over you and your future, not you.

Let’s move onto number two.  We all know someone or possibly many people, who walk around with a sense of entitlement.  They act like they are owed something by others around them.  Most people don’t think kindly of those with an attitude of entitlement.

Rather, we should focus on how we can create incredible value in the lives of others.  This can be very simple actually if you just spend more time being interested and less time trying so hard to be interesting.

If you run a business, or have business associates you enjoy referrals from, how are you constantly trying to create value for them before asking for more business?

By: Trevor Hammond

I’m sure you can think of a lot of examples beyond what I’ve shared that tie to these two keys to lifelong happiness and success.  We all define happiness and success in our own way, but however you define it, I bet following these two keys will enhance both.  They have for me.