Move Over Quicken and MS Money, There’s A New Dog In Town And It’s FREE

In my live events I always stress to the audience the need to track your expenses and your net worth.  In business terms you need to track your Profit and Loss and your Balance Sheet.  I often am asked if I would recommend Quicken or Money and I have to admit that I have tried both with NO success.  They both are too complex and require too much input from me.  If it takes a couple of hours per month of input, let’s be realistic, it’s not going to get done.

Recently, I became aware of Mint.com.  This site will aggregate your banking and credit card accounts and automatically categorize your spending.  It’s a beautiful website and it works exactly as described.  The problem that I ran in to is that it doesn’t track all of your assets, or all of your liabilities.

Enter the Yodlee MoneyCenter (moneycenter.yodlee.com).  First off, it’s FREE, just like Mint.com.  Second, it allows you to add assets like real estate (which it automatically tracks the value via Zillow.com, not perfect, but pretty cool), autos and jewelry so you have an accurate view of your total net worth.  It allows you to add all of your liabilities including mortgages and it tracks all of this automatically.

If you already have online accounts with your bank, mortgage holder and credit card companies, the entire thing can be set up in about 30-40 minutes.  On an ongoing basis, you can update your accounts to correct any miscategorized expenses or categorize what is unrecognized.  In about 30 minutes per month, you will have an incredibly accurate Budget and Net Worth statement.

You’ll know where your money is going and whether or not you are saving enough to reach your goals.

I HIGHLY RECOMMEND CHECKING THIS PRODUCT OUT.  It’s FREE, It’s EASY and It HELPS YOU reach your goals.

Check it out! 

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Money Magazine Weighs In on The Debate Between Prepaying the Mortgage Vs. Investing

It’s difficult to pick up a financial publication or listen to a financial broadcast without someone bringing up the question of whether or not prepaying your mortgage is a good idea.  If you’ve listened to me for any period of time, you now that I am not a fan of early mortgage prepayment.  It reduces your ability to save elsewhere, increases your tax bill and leaves you illiquid in times of need. 

With that being said, I am the first to admit that nobody ever went broke paying off their mortgage.  If you lack discipline and are prone to spend every penny you can get your hands on, then mortgage prepayment can be an enforced savings “lock box.”  But most people that I know using this strategy are actually highly disciplined.  They budget and know exactly how much extra they can afford to put towards the mortgage each month. 

The problem with their thinking is that they are defining wealth as a lack of debt instead of looking at wealth as assets in excess of debts.  An example would be Bill Gates.  As the world’s richest man, he is far wealthier than you or I will ever be.  He also has more debt than both of us combined will accrue in a lifetime.  The wealthy, such as Mr. Gates understand opportunity cost and utilize the power of other people’s money whenever possible. 

Here’s what Money Magazine had to say:

Prepay your mortgage OR invest

The feel-good choice isn’t necessarily the smart choice.

When some extra cash comes your way, it’s tempting to put it toward your mortgage. You’ll save on interest and pay off your house earlier. Buying stocks, on the other hand, feels like a risky leap into the unknown, especially now.

Strictly by the numbers Paying off your mortgage or any loan is an investment, and your return is essentially the interest rate on the loan. If you have 25 years left on a 30-year mortgage with a fixed rate of 6.2 percent and you deduct your interest payments on your taxes, you’ll earn 4.5 percent by prepaying the loan (assuming you’re in the 28 percent tax bracket).

Now let’s say you invest your spare cash in stocks instead. You’ll pay a 15 percent tax rate on your long-term capital gains and dividends. So to beat the 4.5 percent return you’d get from prepaying your mortgage, you’d have to earn just 5.3 percent a year on your stocks before taxes.

The odds of your doing that over the 25-year remaining term of your mortgage are excellent: Historically, a portfolio of 80 percent stocks and 20 percent bonds has returned 7.5 percent a year after taxes.

• But wait Paying down the mortgage earns you a risk-free 4.5 percent. That’s as good as you’ll do with Treasury bonds. True, and if you are investing for a near-term goal and don’t want to take any risk, you can make a stronger case for prepaying your mortgage. But if you are investing for a goal that’s more than a decade away, you can and should take more risk for a chance at a higher return.

• You do the math To run the numbers on how much money you could end up with by investing, use the savings calculator at CNNMoney.com. To see how much interest you’d save by prepaying your mortgage, use the payoff calculator at Dinkytown.net.

• Beyond the math Of course, all that mortgage debt may be keeping you awake at night, especially if you are worried about losing your job or you’re approaching retirement and hope to live on less. You’d be grateful to be rid of that major monthly bill sooner. In that case, prepaying your mortgage starts looking better.

Remember, though, that by prepaying your mortgage, you are reducing your liquid assets. If you suddenly need money, it’s easier to sell a mutual fund than it is to pull cash from your home, and you can always pay off your mortgage later with the money you invest now.

• The bottom line Investing wins.

To read the entire article, which includes other topics like rent vs. buy and lease vs. buy (autos), click here.

If you would like to learn more about integrating your mortgage into your financial plan, shoot me an email with your contact information and I will send you a copy of NY Times best selling author and financial planner, Ric Edelman’s DVD on managing your mortgage (a $39.95 value) at no cost to you.

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Why Mortgage Rates Are NOT Likely to Fall Much From Here

Here is a link to an article I contributed to Doug Fabian’s Making Money Alert.  There is more to this discussion but space limitations led to some editing.  The bottom line is if you need to get out of a bad loan or get some cash out of your home, the window of opportunity is closing due to decreasing property values and tightening lending guidelines.  Talk to your trusted mortgage advisor today.  If you don’t have one, give me a call and I’d be happy to discuss your options.

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All About ARM Resets and Plummeting Median Home Prices

For those of you who missed it and are interested, here is a replay of my guest host appearance on Doug Fabian’s Wealth Strategies.  We discussed the coming wave of adjustable rate mortgage resets and shed a little light on the massive drop in Orange County median home prices last month.

Enjoy!

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I’m Guest Hosting Doug Fabian’s Wealth Strategies This Saturday

For any of you who may be interested I will be guest hosting Doug Fabian’s Wealth Strategies on KRLA 870am this weekend.  If you are not in the Southland or would prefer listening online, KRLA streams their broadcasts at http://krla870.townhall.com/radioplayer/player.aspx.  The show is on from 10-11am on Saturday.

This week we will be discussing:
The California housing market - DataQuick releases figures showing home prices dropped 11% last month
The Coming Wave of Adjustable Rate Mortgage Resets - A recent poll by the AFL-CIO indicats some alarming news for those in adjustable rate mortgages.  As we see the biggest wave of resets in history over the next 6 months what should you be doing NOW to protect yourself.
WealthStrategies2008.com - We’ll be previewing my presentation at Wealth Strategies 2008 regarding how to prepare, protect and profit from the biggest real estate buying opportunity in California history.

 If you have a question that you would like to discuss on air, give us a call at 888-300-DOUG, between 10 and 11am.

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Welcome to my blog

We’re still working on the design so things will be slow around here for the next few weeks but in the future you can expect an ongoing series of content on how to manage your mortgage and real estate to maximize your wealth.

If you are eager to get started learning more, head on over to www.WealthStrategies2008.com.  This is a one day investing seminar that I will be presenting at along with Dough Fabian, Dr. Peter Navarro, Keith Fitz-Gerald and radio personality Tom Leykis.

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