The Newest Status Symbol

February 3, 2012 by / 32 Comments

This is guest post from my dad.  In an old post, he described his thoughts on the business of relationships.

When you get to looking back on things in your life that seem important one day and have very little lasting impact on your quality of life, the biggest one has to be the status symbol.  Advertisers, bankers, friends and others convince you that these things are something you have to have and your life will not be as good as everybody else’s without them.  I can recall many things that were at one time considered status symblols if you had them.  Vacation homes, expensive cars (Mercedes or BMW), trendy Christmas toys and clothing brands that are too many to remember have come and gone over the years.  I think even the most frugal and level headed among us will admit to falling victim to a status symbol for the value of it. Most are no longer considered to have much status as the $100 pair of jeans has been replaced by the $185 pair of jeans.  The price of attaining status has continued to go up over the years.  I think the air Jordan craze started it all in clothing.  Nobody wanted their kid in Converse all stars anymore, and no kid wanted to be wearing Converse all stars when Air Jordan’s’ came out (Jeffs note: unless you were/are an L-7 weenie)!  I think I have finally noticed a new status symbol creeping into people’s financial discussions- Paying off a mortgage!

Lasting Impact

This latest status symbol has been seen sneaking into the main steam now is one with more value and more lasting impact than your worn out BMW that now costs an arm & a leg to fix.  I believe that symbol of having a paid off mortgage on your home has come to the forefront since the aftermath of the financial crisis left people gasping for their financial lives.  The current state of the financial meltdown has upended many people’s financial life and lifestyle.  Using your house as a piggy bank and emptying out the equity that you build up propped up many unsustainable life styles. Those chickens came home to roost and now I hear people talking about having there mortgage paid off and how much better they feel.  Although the U.S. tax system makes it seem like you should always have a home mortgage (I subscribed to the theory for a long time) to get the tax write offs, I recently decided that having a paid off mortgage would allow me to pay whatever I owed as my fair share of the national tax burden.  The old fashion 30 year note is now so low that making double principle payments is within many average income peoples reach.  A 15 year loan makes the most sense for those just starting out as they will save a load of interest over the life of the loan and get it paid for just when kids’ college bills may be kicking in.  Interest rates are so low now you could easily get into a 15 year note.  My first home loan was 19% and the owner bought it down to 16%.

Jeff’s note: I agree with this.  Many people have seen family members, friends or neighbors lose their home, and I think it has rattled a lot of cages.  Once you pay off your mortgage, no one can take your home from you – it’s yours (Unless you fail to pay taxes, but we wont get into that).

Less Stress (and Cash Needed) Later in Life and Retirement

Having a paid off mortgage would make many people’s lives and retirement a much simpler and less stressful process.  I cannot imagine having a mortgage to pay going into retirement.  I think that is why they say you should have 70-80% of your pre-retirement income when you retire.  Not having a mortgage will enable you to get by on much less.  The pride that I have seen in people with a paid off mortgage note is unmistakable.  This has been a much more difficult goal to attain, but worth the long term commitment.  Having a paid off mortgage demonstrates an ability to plan and make sacrifices over the long term to attain a truly worthwhile goal. Having accomplished this, it will enable a person to make many more choices in their life and be much more financially secure. Owning your home (not living in a bank owned home) has now taken up its rightful place in the American consciousness again.  For true financial security, you should strive to pay off your home.  You will be able to sleep better at night because of it.  Time is your ally in this endeavor and getting in a hurry will almost always lead to dire consequences.

Readers: Do you have a paid off mortgage?  If not, are you working on paying it early, or are you focused on other debts?  Those of you with a mortgage, how would it feel to not have to pay that  amount every month, but instead keep it?

Filed Under: Finance  / Tagged: , ,

Got burst pipes? Source your tradesman carefully

February 14, 2011 by / 1 Comment

Note: This is a guest post courtesy of homeserve

Suffering the inconvenience of burst pipes in your home is bad enough on its own – it’ll certainly ruin your day, week or even month. However, not having adequate insurance in place can make it doubly troubling, meaning may have to fork out to cover the work, making a significant dent in your savings or even sending you tumbling into debt.

If you find yourself in this situation, you’ve little choice but to put it down to experience, learn from it and avoid it happening again in the future. Putting this to one side, however, it’s also important to focus on the here and now; choosing the right person to do the work is essential.

According to Clive Dickin, chief executive of the Association of Plumbing & Heating Contractors, there are a number of simply steps you can take to make sure you end up with a skilled and reasonably priced tradesman rather than a rip-off merchant or a cowboy  (We here in the Cowboy state take offense to that).  “People who need work done need should use recommended traders, get at least three quotes, use a trader signed up to a reputable trader scheme – such as Buy With Confidence – and check the credentials of anyone coming to the door,” he told BBC News.

Finding an engineer who is on the Gas Safe Register is another important credential, which ensures that the person you get is fully qualified and trained. The accreditation was introduced in 2009 to replace the old Corgi system and tradesmen on the register are subject to a number of checks to verify their suitability. “If gas is involved you must use someone on the Gas Safe Register,” Mr Dickin said.

The expert also highlighted the issue of distraction burglars using the weather as an opportunity to steal vulnerable householders’ valuables. “Criminals are gaining access to people’s homes claiming to be from a water company and looking at frozen pipes. Once they have gained access to the home, they distract the householder and make off with their belongings,” he explained.

Keeping Mr Dickin’s comments in mind, it’s clear that finding the right tradesman can make all the difference in getting your home back on track. One of the easiest ways to do this is to get plumbing insurance, which ensures that you’re able to call in a fully qualified expert when you suffer a problem with your pipes or boiler, without a nasty bill to worry about at the end of the work.

Why waste time and money trying to find an engineer – and avoid a cowboy – in a telephone directory when getting the right man for the job is as simple as paying a low monthly premium?

Filed Under: Uncategorized  / Tagged: , ,

The Five Eco Principles – Healthy Environment

September 8, 2009 by / Leave a Comment

While in Chicago in April, I had a chance to visit the museum of science & industry.  The experience was great, and my friend and I thoroughly enjoyed the museum.  We were both intrigued enough to pay the extra ~$25 or so to see the smart house.  We were not disappointed, and left with some good ideas about things to re-use and things to purchase made from re-used items.  Recently, I thought it would be a good idea to share the principles with the readers, and figure out how you can best take advantage of them.  Today is the fifth one, focusing on a Healthy Environment.

Ensuring that you live in a healthy environment is paramount.  You are in your residence a significant portion of time, so if something potentially harmful to you (or your loved ones) has the potential to cause problems at best, and can be lethal at the worst.  There have been some spectacular incidents that can illustrate this problem perfectly, and show you a few:

  1. Asbestos - This used to be used in multiple products in the home (floor tiles, roofing, fire retardant) and elsewhere around the home (brake pads).  Asbestos poses no threat until its been disturbed.  During a home remodel or other disturbing event to the asbestos, the fibers can become airborne and inhaled.  This is obviously not good for you, and can lead to serious lung problems in the future.  Asbestos is no longer common in building materials, and is currently regulated by the EPA.
  2. Lead – This used to be found in gasoline and paint.  Poses huge risks to our children (those six & under), and can cause learning disabilities, behavioral problems and possibly death.  This is also something that you dont want floating in the air in the place where you spend most of your time.
  3. DDT – Probably one of the most infamous products ever used in or around the home.  Typically, it was used to kill mosquitos carrying malaria.  This chemical became very popular around the home, and was eventually linked to multiple problems, such as appearing in humans, thinning eggshells of wildland creatures and showing up in the fats of fish.  It was one of the first major environmental campaigns, and was brought on by the book Silent Spring by Rachel Carson.

There are also plenty of modern day examples.  One of the current ones is VOC Paints.  VOC (aka Volatile Organic Compounds) are in some paints, and can seep out after the wall has been painted.  Something else that could pose a problem is your granite countertop.  Some granite countertops house uranium, which is not only radioactive, but can release radon gas, which can cause lung cancer. The amount of uranium that is most likely contained in your countertop is not suspected to be enough to pose a significant risk to your health, but are you willing to find out the hard way if that ends up not being true?

Now, think about how much time that you and your loved ones spend inside your home.  There are a few things to think about when it comes to these type of pollutants.

  1. How worried do I need to be about these products? No one really knows what the long term effects of these chemicals will be.  Do you want to be one of the first to file a lawsuit because you found out?
  2. To what degree do I want to protect myself and my loved ones? – Many of the things that can mitigate potential sickness cost more.  How much more  are you willing to pay?

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Filed Under: Health, sustainability  / Tagged: , , , , , , ,

Green Roofs

August 20, 2009 by / 1 Comment

While at the American Planning Associations 2009 National Conference in Minneapolis, Minnesota, I was able to attend a conference session on green roofs in urban areas, and this post has been created with information from that session, as well as more sources.

Green roofs are a simple concept, and they date back to the time when humans were first learning to farm.  Green roofs are simply roofs planted with some type of vegetation, or a growing medium.  They are meant to replace the vegetation that was (or will be) displaced by the footprint of the house.  They are also called “living roofs” and I will discuss the benefits of the roofs below.

Many people see the urban rooftop as a missed opportunity to grow things, increase solar reflectivity, fight the urban “heat island” effect and absorb (or in some cases, clean) rainwater.  There are two types of green roofs, extensive and intensive.  Along with this, there are benefits beyond the strictly environmental.  Green roofs have a longer life span, and can reduce heating and cooling costs of the building.    The extensive roofs are much heavier and can support a wider variety of vegetation than the intensive counterpart.

There have been many people calling for increasing green roofs, and there are a few great examples out there.  Ford Motors has taken an interest in the green roofs, recently covering its truck assembly plant in Dearborn, MI with a green roof.  Below is a section of the plant roof, obtained from greenroofs.org

The City of Chicago, IL is also becoming a leader in green roofs in the US.  Many corporations are beginning to give green roofs a serious look due to their low maintenance costs and longer life span which is estimated to last ~ 2 times as long as a traditional roof.

Lets do a cost comparison between a green roof and a traditional (asphalt) roof for a 2,000 sq ft house.

Estimates put the cost of a green roof at $5-10 per square foot, and according to improvenet‘s calculator, a roof in the zip code 82070 will cost ~$3,000-4,000 dollars, and has a lifetime of approximate life span of 20 years.  Clearly, a green roof is more expensive, costing ~$10,000 for the same size roof.  However, we need to take in the replacement cost, as one wouldn’t replace the roof on a house they were not planning on living in for a while.  So, in 20 years when your asphalt needs to be replaced, your green roof will still be going strong.

If you are of the unfortunate case that you need to replace a roof when you buy the house and plan to stay in the house for a while, you could easily replace the asphalt roof 2 or even 3 times during your tenure in the house (although I hope you are not that unlucky).  The replacement cost of the asphalt comes close after the second, and will eclipse after the third ($12,000 v $10, 000).  Or, using the lower estimates, would put it at a measly $1,000 difference.  Factor in the heating and cooling savings you’ll get, and your payback period will get even shorter.  If you’re ambitious enough to garden up on the roof, then you can recoup faster with food savings.

After reading about green roofs, you may think “well, if the last so much longer and the cost is comparable, then why aren’t more people (like you) doing it?”

Well, that’s a question I cant answer, but maybe you can, in the comment section.

Thanks for reading!

For more information, see www.greenroofs.org

Questions? email me at info@sustainablelifeblog.com

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Filed Under: sustainability  / Tagged: , , , ,

Income from Properties

July 30, 2009 by / Leave a Comment

Money Spent today: none.

Weekly total: $27 (gas)

I felt like I gave a fairly detailed view of retirement cash accounts in my earlier post this week, and can be found here.  So, today I will cover income streams from income properties.  I must admit that I have never owned an income property, and am fully aware of the fact that I will not be able to afford one anytime soon.  From my outside perspective, I can offer a few tips, however.

1) Income properties are a risk.  There is no gaurntee that someone will live in your property, nor how long they will stay.  Things change for everyone, and people will break leases and could leave you scrambling.  If you dont want to deal with this, I suggest you find another type of investment.

2) Make sure that the rent you charge is going to be competitive in the area, and more importantly, covers the carrying costs of the dwelling.  Those of you who think you have the extra cost to make up the $50/100 per month and will make it up in equity are playing a dangerous game.  I hope the recent catering of the housing market has shown you that future appreciation is not garunteed.

3) Make a decision if you’re going to take care of the property or have a property management company doing it.  I am always of the view that one should do things themselves, but purchasing an investmetn property in another state makes this option less than feasible.  Dont get killed on the fees charged by the property management company.

4) Just like a home you live in, there will be unexpected expenses.  Will you have the funds when the heater breaks? or what about if a tenant destroys the carpet and it needs to be replaced?  This is not just as simple as purchasing a home, finding a renter and letting the cash roll in.

5) Your Property may not always have tenants.  Can you afford the carrying costs of the property for a month? 3 months? 6 months? or more?

The same care should be taken when examining an investment property as you would a home you’d live in.

Here are some tips to reduce expenses:

  1. Some expenses can be passed directly on to the tenant, however, some tenants will gladly pay more upfront if the house is well insulated and has other energy saving measures.  Remember, while you’ll be getting the income from the property, having a more environmentally friendly home may make a renter thing twice about vacating.  Also, just because you dont live there doesnt mean you can allow the place to defile the environment.  Remember, your name is on the title.
  2. Rental markets are competitive, and if you can illustrate how your going green will save the clients over the term of the lease, they may accept a higher rent.
  3. You’re not going to be owning the house forever.  Any improvements that save energy will allow for a higher sales price down the line.  It may not always be a rental property.
  4. Consult the appropriate professionals when doing this.  Tax professionals, lawyers and others, to make sure that it is a possibility in your situation.

As with all financial decisions, this one requires alot of thought, and should not be an impulse purchase.

Get ready to set a budget for yourself tomorrow.  After monitoring your spending for the week, you should have an idea of where your money goes.

Questions? email me at info@sustainablelifeblog.com

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Filed Under: Finance  / Tagged: , , ,
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