Personal Finance

It has been said many times by financial experts that we should pay ourselves first before all other debts. This philosophy will ensure that money is put away in savings before it is consumed by living expenses. The habit of saving is one that should be developed even before paying down consumer debt. Once the practice has been established and there is at least one month of living expenses in a savings account, then eliminating consumer debts can be the primary goal. However, if saving is forgone and paying down debt is the only focus, there will be no cash reserve to ensure you don’t fall back into the debt trap when unexpected events occur.

A healthy rule of thumb is to save 10% of your gross income. If managed safely and conservatively, this should provide for a healthy retirement when the time comes. The most difficult step is always the first. Remember, it isn’t about the size of the savings you begin with; it is about the habits you develop that will benefit you the most in the future.

While most companies hide their interest rates, or make you call them for rate information, we post our rates publicly! In addition, we also show the interest rates available for each loan option along with the fees associated to obtain each interest rate. As you price your own loan, look for the options that show $0 closing costs or even a negative number. If they are avaialbe for your scenario, that is what we consider a no-cost loan. Be sure to watch the video where I explain why we suggest no-cost loans and read the explanation attachment. If you would like me to review your options, you can either apply on-line using the “Apply Online” tab at www.dev.citycreekmortgage.com, or call me at 801.501.7950 and I will walk you through the process.

In the past it has always been said that owning a home represented the model of “The American Dream”. After recent years of challenging economic times that have tested the resolve of nearly every American, many have realized that the real “American Dream” is Financial Freedom.

Today, countless people find themselves stuck in the proverbial rut of debt. With the cost of credit card interest rising and credit of any kind harder to obtain, some have reached the end of their rope. Others may not be in such critical circumstances, but may have mounting debts that are costing more interest than they should. Oftentimes, the monthly payments of poorly structured debts can create significant burdens on a household budget.

Tax Deductible Interest

One of the greatest financial tools is tax deductible mortgage debt. For someone in a 25% marginal federal income tax rate with a 7% state income tax rate, a mortgage with a fixed interest rate of 5% will have an after-tax interest rate of 3.4%. When fighting to get out of debt, it is much easier to make progress paying down a mortgage costing only 3.4% after tax vs. an unsecured credit line at 10%, or even a car loan at 5%.

Compounding Interest

A second financial tool is compounding interest. Take for instance a $100,000 mortgage financed over 30 years at a rate of 5.5% with a monthly payment of $567.79. If payments are made on this loan over 30 years, the total amount paid will be $204,405 (without considering the tax benefits of a mortgage). Although that seems like a lot, the same $100,000 invested over the same time frame earning only a 4% rate of return will provide $331,349! How can one borrow at 5.5% and invest at 4% and make a spread of $126,944? That is the value of compounding interest, which presents a strong argument for not paying off a mortgage.

A Debt Strategy

As a debt and equity adviser, one of the common mistakes I often see is people focusing on paying down theirmortgage before they have paid off their unsecured consumer debts. Personal finance most oftentimes is a reflection of financial habits. Many people in the habit of making extra payments on their mortgage simultaneously carry revolving debts. Although they are making progress on paying down their home loan, the same person often ends upRefinancing their home loan to consolidate consumer debt down the road, effectively erasing the progress they made towards paying down their mortgage. After a few times through this cycle (each time thinking it will be the last), many realize they have developed unhealthy financial habits that need to be addressed.

Monthly Cash Flow

Another concern is monthly cash-flow. Most family’s budgets are structured based upon the stream of one paycheck to the next. With mortgage loans offering lower monthly payments than most other forms of debt, the increased monthly cash-flow can make the difference of financial success or failure.

If you, or someone you know, could use a mortgage review, call my office and schedule a time. A fifteen minute review will help ensure you have a properly structured mortgage and that your debt, cash-flow, and equity objectives are on track. A long-term mortgage strategy is one of the most important financial decisions you will ever make.

John Maxwell, a mentor of mine, once said that, “Successful people make right decisions early and manage those decisions daily.” He goes on to explain that when people make important decisions early, they can then focus their energy on managing those decisions for the rest of their lives. This inspired me to create what I believe to be the 12 critical decisions that people should make in order to achieve long term financial protection and success. I strongly believe that when people focus on each of the 12 Decisions, while creating plans and strategies for each, they will be better prepared and greatly improve their long term results. For a list of the “12 Decision Points”, visit our website atwww.dev.citycreekmortgage.com and click on the 12 decision points tab.

In the past it has always been said that owning a home represented the model of “The American Dream”. After recent years of challenging economic times that have tested the resolve of nearly every American, many have realized that the real “American Dream” is Financial Freedom.

Today, countless people find themselves stuck in the proverbial rut of debt. With the cost of credit card interest rising and credit of any kind harder to obtain, some have reached the end of their rope. Others may not be in such critical circumstances, but may have mounting debts that are costing more interest than they should. Oftentimes, the monthly payments of poorly structured debts can create significant burdens on a household budget.

Tax Deductible Interest
One of the greatest financial tools is tax deductible mortgage debt. For someone in a 25% marginal federal income tax rate with a 7% state income tax rate, a mortgage with a fixed interest rate of 5% will have an after-tax interest rate of 3.4%. When fighting to get out of debt, it is much easier to make progress paying down a mortgage costing only 3.4% after tax vs. an unsecured credit line at 10%, or even a car loan at 5%.

Compounding Interest
A second financial tool is compounding interest. Take for instance a $100,000 mortgage financed over 30 years at a rate of 5.5% with a monthly payment of $567.79. If payments are made on this loan over 30 years, the total amount paid will be $204,405 (without considering the tax benefits of a mortgage). Although that seems like a lot, the same $100,000 invested over the same time frame earning only a 4% rate of return will provide $331,349! How can one borrow at 5.5% and invest at 4% and make a spread of $126,944? That is the value of compounding interest, which presents a strong argument for not paying off a mortgage.

A Debt Strategy
As a debt and equity adviser, one of the common mistakes I often see is people focusing on paying down theirmortgage before they have paid off their unsecured consumer debts. Personal finance most oftentimes is a reflection of financial habits. Many people in the habit of making extra payments on their mortgage simultaneously carry revolving debts. Although they are making progress on paying down their home loan, the same person often ends upRefinancing their home loan to consolidate consumer debt down the road, effectively erasing the progress they made towards paying down their mortgage. After a few times through this cycle (each time thinking it will be the last), many realize they have developed unhealthy financial habits that need to be addressed.

Monthly Cash Flow
Another concern is monthly cash-flow. Most family’s budgets are structured based upon the stream of one paycheck to the next. With mortgage loans offering lower monthly payments than most other forms of debt, the increased monthly cash-flow can make the difference of financial success or failure.

If you, or someone you know, could use a mortgage review, call my office and schedule a time. A fifteen minute review will help ensure you have a properly structured mortgage and that your debt, cash-flow, and equity objectives are on track. A long-term mortgage strategy is one of the most important financial decisions you will ever make.

Security VS Risk

We are all wired with the drive of two opposing needs in our lives: The need for certainty and the desire for risk. Although each of us may feel the drive of one to be stronger than the other, in a marriage there is often one partner who is more of a risk-taker and one whose drive for security is their dominant need. How do we develop a balance where both partners’ needs in the relationship are recognized and fulfilled?

I often meet with couples who live each day in constant turmoil over their inability to come to terms with their opposing needs. For example, while one pursues their dream of being self employed, the other deeply longs for the stability of a consistent paycheck and cash in the bank. This is frequently the primary conflict in a relationship with each person fighting for their core beliefs. Since neither can control the way they are innately wired, this battle often leads to relational destruction.

The human need for certainty is one that can never be ignored. Those who have this as their primary need will have a difficult time experiencing internal peace until this need is met in their finances. Although sometimes this can be challenging, it is often as easy as making a few key decisions that will lead to the fulfillment of such desire.

When advising couples who face this relational battle, I suggest the following to help find common ground:

1. Establish a budget and live within it-This will help provide security that cash will be available to meet the needs of the family, as well as the comfort of knowing that the spending will be controlled.

2. MAKE SURE you have a cash reserve-This is especially true if there is a self employed income earner in the household with unpredictable levels from one month to another. When there is a cash reserve, money is available to balance the lean months and it can be replenished in the higher income earning months.

3. Eliminate all consumer debts and free up the burden of monthly expenses-Eliminating consumer debt frees up cash flow. The extra cash flow can increase savings and thereby increase financial security.

4. Always accommodate the needs of the more conservative partner-The needs of a risk-taker as well as a certainty driven person can only be met simultaneously if the financial security is in place for the more conservative partner.

As a part of the services we provide, we advise clients on steps to help fulfill the need for financial security. There are often opportunities to reallocate how the assets and liabilities are held to expedite the process. Otherwise, the solution lies in establishing a plan and a budget that will accomplish the goal over time. For some, the results are fast and easy. For others, it will be a process that will require patience and determination. Call or e-mail me to discuss your individual situation in greater detail, and to see the tools we have available to assist you.

Behaviors repeated over and over become habits. When it comes to personal finance, many of our behaviors have created unhealthy habits that can lead to financial destruction. Whether it is in our own lives or in the lives of people we love and care about (i.e, children, siblings or parents) each of us has witnessed the devastating effects of over-spending, over-leveraging, and living beyond our means. Prepare your food at home more often. Eat out less often.

The typical family’s largest monthly obligation is their house payment. Today many families have become “House Poor.” This is a situation where the house payment consumes a dangerously high percentage of the household income leaving too little money left to support the family after the house obligation is met. For many other families the amount of consumer debt payments is the culprit for cash flow challenges. Both of these situations tend to cause tremendous anxiety and pain within a family. All too often the results are financial and/or relational destruction.

The first step for people in challenging financial situations is to review the habits that have led up to their current situation. Is there unnecessary spending that has developed into bad habits? Maybe there are small luxuries that can be satisfied in a more cost effective way, or given up entirely. People often discover that eating at home more often, making their own beverages or purchasing less expensive versions of products can save the money needed to live more comfortably.

Once a thorough review of monthly spending has been completed, it is time to review how the debts are structured. Often times, a simple reallocation of debt will reduce the monthly outflow to a more comfortable level. If the budget is still too tight, then it is time to consider items that can be sold or downgraded. This may be a car, boat, or more significantly a home. Given the thousands of homeowners with mortgage payments that will increase as interest rates rise, this will be the best solution for many.

As people go through the process of re-establishing financial habits, it is important to remember that the experience will be emotional. It is difficult to downgrade a lifestyle and/or give up indulgences that have been a part of everyday life. The key is to remember that the joy of feeling financially in control will significantly outweigh the pain of what will be sacrificed.

If you or someone you know is in a situation where the monthly budget has become uncomfortable, perhaps it is time for a no cost, no obligation financial “check-up”. As part of our “Wealth Care” plan my team and I help hundreds of families each year to gain control of their financial habits and re-establish new ones. As part of the process we will evaluate your cash reserves, debt, long-term savings, and equity and make recommendations on ways to improve your situation. If you are comfortable with your budget but you would like to make sure you are getting the best interest rate possible on your mortgage, call 801-501-7950 or e-mail me to see how you can benefit from the unique mortgageexperience provided by my team. We look forward to welcoming you into the City Creek Family, your Wealth Care provider for life.

Who says recessions are all bad? From my chair, I have noticed a silver lining through the pain and heartache people are experiencing. In the midst of the financial chaos, many are finding a new beginning. Could it be that people are realizing there are financial habits in their lives that have been destructive and need to change? Somehow, there seems to be peace and healing going on in the lives of many families as they face the realities of years of over indulgence and financial leveraging.

I know people are suffering. All too often I am having gut wrenching conversations with families who are hurting financially, relationally, and emotionally as a result of financial downfalls. Many of the people I have talked to ultimately find peace and acceptance and growth through the process of deleveraging and developing habits of living within their means. I have learned a great deal from those who have used their painful experiences to create a better future. The lessons they have taught me are both powerful and insightful, and are certainly worth sharing. Below is a summary of the top ten lessons from my notes written during countless interviews:

  1. Recessions cause you to be more creative and frugal.
  2. Tough times force you to make difficult decisions and give up material luxuries.
  3. You learn that the most important things in life are relational not material.
  4. You realize that living beyond your means is not sustainable.
  5. It reminds you that real wealth isn’t about the stuff you own.
  6. You learn that cash flow management and cash reserves are the most important components in your personal finances.
  7. If you are still employed, you appreciate your employer even more.
  8. It is wise to spend less than you make and save at least 10% of your income.
  9. Tough times can further develop a spirit of gratitude and appreciation for what you have vs. continually focusing on what you want.
  10. At the end of the day, regardless of whether there is a paycheck each month, or money in the bank, family is what matters. Don’t sacrifice what you want most for what you want at the moment.

While you may not be able to control what happens with the economy, you can control your own mental focus. Usually, this determines whether you feel anxiety and fear or peace and hope. The many who have grown through tough circumstances have found that by releasing the pressures of living an unsustainable life, they discover the possibility of a new future. Difficult decisions must be faced. Rather than avoid making the tough choices, I encourage you to face them head on, without delay.

It is my hope that each of you who are hurting will find peace and comfort in your circumstance. If there is anything I can do to help, please let me know. I appreciate your friendship and the trust you place in me as your mortgageplanner.

At City Creek mortgage we are committed to not only making your mortgage healthy but also making you healthy as well. Our staff has a wide variety of tastes and flavors and every so often we want to pass along different recipes that you can try and share with your friends and family. Today’s recipe comes from Julie Love, Michael’s Production Assistant.

Halibut with Zesty Peach Salsa

Ingredients

  • 1/3 cup orange juice
  • 2 tablespoons canola oil
  • 2 tablespoons lime juice
  • 1 tablespoons brown sugar
  • 2 teaspoons grated lime peel
  • 1 garlic clove, minced
  • 1/2 teaspoon salt
  • 4 (6 ounce) halibut steaks

Salsa

  • 2 cups chopped fresh or frozen peaches
  • 1/4 cup chopped sweet red pepper
  • 1/4 cup chopped red onion
  • 1 jalapeno pepper, seeded and chopped
  • 2 tablespoons orange juice
  • 1 tablespoon minced fresh cilantro
  • 2 teaspoon lime juice
  • 1/4 teaspoon salt

Directions:

  1. In a bowl, combine the first seven ingredients; mix well. Remove 1/4 cup for basting; cover and refrigerate. Pour remaining marinade into a large resealable plastic bag; add the halibut. Seal bag and turn to coat; refrigerate for 2 hours. In a bowl, combine salsa ingredients; cover and refrigerate until serving.
  2. If grilling the fish, coat grill rack with nonstick cooking spray before starting the grill. Drain and discard marinade from fish. Grill, uncovered, over medium heat or broil 4-6 in. from the heat for 6-10 minutes on each side or until fish flakes easily with a fork, basting occasionally with reserved marinade. Serve with peach salsa.

(Recipe from Allrecipes.com)

Many Americans today are stuck in the proverbial rut of debt. With the cost of credit card interest rising, and credit harder to obtain, some have reached the end of their rope. Others may not be in such critical circumstances, but may have improperly structured debts that are costing more interest than they should.

One of the greatest financial tools is tax deductable mortgage debt. For someone in a 25% marginal federal income tax rate with a 7% state income tax rate, a mortgage with a fixed interest rate of 5% will have an after tax interest rate of 3.4%. When fighting to get out of debt, it is much easier to make progress paying down a mortgage costing only 3.4% after tax vs. an unsecured credit line at 10%, or even a car loan at 6%

A second financial tool is compounding interest. Take for instance a $100,000 mortgage financed over thirty years at a rate of 5.5% with a monthly payment of $567.79. If payments are made on this loan over thirty years, the total amount paid will be $204,405 (without considering the tax benefits of a mortgage). Although that seems like a lot, the same $100,000 invested over the same time frame earning only a 4% rate of return will provide $331,349! How can someone borrow at 5.5% and invest at 4% and make a spread of $126,944? That is the value of compounding interest.

As a debt and equity advisor, one of the common mistakes I see is people focusing on paying down their mortgagebefore they have paid off their unsecured consumer debts. Personal finance most often times is a reflection of financial habits. Many people get in the habit of making extra payments on their mortgage simultaneously carry revolving debts.

Although they are making progress on paying down their home loan, most often times the same person ends upRefinancing their home loan to consolidate consumer debt down the road, erasing the progress they made toward paying down their mortgage. After a few times going through this cycle, each time thinking it will be the last, many realize they have developed unhealthy financial habits that need to be addressed.

If you, or someone you know, could use a mortgage review, call my office and schedule a time. A fifteen minute review will help ensure you have a properly structured mortgage, and that your debt, cash-flow, and equity objectives are on track. A long-term mortgage strategy is one of the most important financial decisions you will ever make. Do not leave this decision to amateurs.