Homes in Order

Pay off mortgage, Save Money

Buy what thou hast no need of, and e’er long thou shalt sell thy necessaries

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Today is Black Friday, the biggest shopping day of the year.  I’ve ventured out on Black Friday before.  Shoulder to shoulder, combat shopping.  Needing to get that deal TODAY, because today is Black Friday.  And after filling the shopping cart with amazing deals, I’ve gone home wondering ‘what was I thinking?’  This Benjamin Franklin quote is insightful.

Buy what thou hast no need

Several years ago, I got to the store early to get a 42″ plasma TV that was on sale for $1,200.  It was a smokin’ deal!  I got the 2nd to last one, and the person 2 people behind me really started a commotion.  All for a TV.  The interesting thing is that a week later, the same TV was now in stock.  For the same price.  A month later, the price dropped even more.

I’ve also been out on Black Friday and have gotten killer deals on other things, that I never even opened the package for.  It’s easy to blow money on things we don’t need.  And as Benjamin Franklin says, if we buy things we don’t need, we’ll likely be selling what we need.

 

How to save $149.58 (then thousands more!) with LED Christmas lights

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I don’t know if it is trying to share the joy of the season with the kids, or more probably if it is flexing machismo like Clark Griswold, but somewhere along the lines, we started hanging lights on our houses.  And the more you hang, the better dad/husband you are, right?  You might remember this exchange from the movie National Lampoons Christmas Vacation:

Bethany:  Is your house on fire, Clark?

Clark:  No, Aunt Bethany, those are the Christmas Lights.

ChristmasVactionHouse

 

For years, I’ve had the same white “icicle” style lights that have hundreds of lights per strand and dangle from the roof.  But the problem with these little guys is — if one light goes out, a whole section of lights goes out.  So 6 years ago, I probably had 10 strands.  Then each year, lights would burn out or go loose, and entire sections would go dark.  Last year, I was down from 10 strands to about 4 barely-functional strands.

So, this year I went to Costco (see another post about a $13,002 TV at Costco) and upgraded my lights:

  • New LED technologyLights front
  • Colored lights
  • Single strands (not the icicle mess of lights)
  • $14.97 per 50 foot strand.
  • “Constant On ™” technology.  Set continues to operate even if an LED is burned out or loose.  AWESOME!
  • Average life:  20,000 hours.

How much electricity expense will I save this year?

I am just going off of the box, but it seems to make sense from what I know about LED technology.  Let’s just compare sets of lights (even though I know there were a bunch more lights on the icicle sets.)  According to the box, I’ll save approximately $15/strand in electricity expense.

LED Christmas Light Energy Savings

Electricity Cost of old incandescent Strands:  10 strands * $15 = $150

Electricity Cost of new LED Strands: 3 * $0.14 = $0.42.

Season Savings:  $149.58!

So that’s pretty good savings for a season.  But don’t stop there!!!  Now do something good with the savings!  Some might say “That’s only $150,” or others might say “Yay!  $150 more to spend!”  But Homes in Order would tell you that investing in your mortgage is a pretty good way to use that extra money.  You could just add that $150 to your next payment.  Try it for yourself with the mortgage payoff calculator to see how much you would save.  Or, here’s how to add that simple savings to the rest of a mortgage.  Let’s divide $149.58 by 12 months.  $149.58/12=$12.47 per month.  Now, plug that into the Homes in Order calculator and you’ll be surprised at how much a typical new homeowner would save.

Christmas Light Savings

Summary:  Total savings:  Approximately $8,900.

Pay off your mortgage early!  It’s easy, and you will save a ton.  When you have a mortgage, every little bit you can save literally pays off.  Did you ever think that just upgrading Christmas lights could save $8,900 and almost 6 months of mortgage payments?

Saving is good.  Saving + Investing is really great.

 

(If you want to get really wonky, consider this: these lights have an average life of 20,000 hours.  So, 6 hours * 60 days = 360 hours per season.  20,000 hours / 360 hours = 55 seasons with these new lights!  That’s about 10X longer than my last sets lasted.  So, $15/strand * 10 strand * 10 more seasons replacing = $1,500 of saved replacement costs over 50 years.  Multiply 50 years * 12 = 600 months.  Divide $1,500 (savings) / 600 = $2.50 extra savings per month.  Add $2.50 + $12.47 (electrical monthly savings) = $14.97.  Now input $14.97 as a regular monthly prepayment into the payoff mortgage early calculator and see how much you would save on your mortgage!) 

 

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Black Friday Specials: Would you pay $13,002 for a TV?

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Tis the season for shopping!  I went into Costco yesterday and was immediately greeted by this beautiful work of art:

IMAG1267

What a bargain!  $200 off!  This 80″ TV is on sale, this week only, for $3,699.99.  I jokingly said, “I need that!  If we had that, we’d be so much more happy.  We could just sit around all day and watch TV, even more than we already do.”  As I looked at the TVs, I was amazed:  there were 2 80″ TV’s on carts, loaded to go out the member’s only door.  I guess there will be some happy husbands out there this holiday season!

Financial Analysis:  Could have saved $13,002.

I had lunch yesterday with some clients who just closed on a brand new home.  We were talking about Homes in Order, mortgages, and about how much they could save by paying off their mortgage early, even a little each month.  They were blown away when I showed them the savings.

That’s insane how much money you can save by just paying a little extra!

So, just a few hours later, I saw this at Costco.  I thought about my new homeowning clients who were just moving into their brand new home, and I decided to see how much this TV would cost them if they were to go buy it.

80 inch TV

 

TV’s are great.  But when you have a mortgage, TV’s can be pretty expensive.  Especially when you have a brand new mortgage.  Would you rather have an 80″ TV, or would you rather have $13,002.52?  Would you rather have an 80″ TV, or would you rather have 6 months of life without a mortgage?

My client is a very smart guy, and he is definitely not in line to buy this TV.  They just drained some savings by putting a nice down payment on their home (and will pay no PMI).  His wife says before they start spending, they need to replenish some savings.

So, no new 80″ TV for my client this year.  He will just have to be happy with a brand new home.  But then again, there will be at least a couple of husbands out there somewhere with new 80″ TVs!

 

 

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We really don’t know what we’re doing, but we have worked hard to save money….

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A few years ago, I received the following email from some clients just getting ready to buy their first home.

Dear Jeremy, Thanks for all of your help!  Please don’t let Jed and I make any major mistakes during this process.  We really don’t know what we’re doing, but we have worked hard to save money and we want to spend that money wisely. We appreciate you. Tami

Perhaps better than anything else I’ve ever heard or read, this nails my job description and my responsibilities to my clients.  These clients happened to both be college graduates and both had successful careers.  Most of my clients are high achievers.  That’s why they’re buying homes!

But somewhere along the line, we agree to take jobs that pay us money to work 40 hours per week.  We spend most of our lives working for money.  And I guess we assume that somewhere along the line, we learn how money works.  This email hit me hard.  My good friends were trusting me with their hard-earned money.  My professional advice would have a huge impact on these good people.

Success Failure SignMaybe my negotiation skills or my home finding skills can save someone $5,000 or $10,000.  But the real secret is that the savings begin AFTER they get into their homes.

These clients had really done a remarkable job saving money for buying their first home.  And they practiced good financial sense after they got into their home.  Like most homeowners, these clients ran into some unforeseen financial difficulties after they got into their new home.  But because they had made good financial decisions, they weathered the storm.  In fact, not only did they weather the storm, but they came out much, much better.

Financial Success or Failure depends on decisions we make today.  $1=$5.  Would you rather have $1 today, or would you rather have $5 tomorrow?  Would you rather have $2 this month, or would you rather have $1,000 later.

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Michael J. Maher, SYSTEMS for 7 Levels of Communication

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7LWhen #1 National Bestselling author Michael J. Maher, author of (7L) The Seven Levels of Communication, Go From Relationships to Referrals asked me about my personal systems, I was surprised and excited to share with him.  But I shouldn’t have been surpised.  This is Michael Maher who preaches that the more you give, the more you’ll get.  And the more you think about others, the less you’ll have to think about yourself.  Pick up a copy of (7L) today.  It is transformational.

Michael posted something on Facebook saying that anytime we get in trouble in business, it’s because we were outside of our system, or lacking a system entirely.  I replied back (in Facebook fashion) that his point was true, but not to be limited only to business.  As a dad, husband, and friend, when I get in trouble, it’s usually because I was outside of my system.  Michael asked for some examples of my systems.  Here are a few.

  1. The bedtime system.  Getting a 4 year old and a 1 year old to bed takes a very good system!  My wife and I tag-team and it works pretty well.  First, I tell the 4-year old that I’ll time her running upstairs to go potty and brush.  Then we go to her room and read a chapter from a book (currently Moby Dick).  Then it’s scriptures, prayers, tickling and laughing, then kisses and lights out.  She also gets 3 pennies which we put on her nightstand by her piggy bank.  If she gets out of bed, she loses a penny.  This is amazing incentive to help her stay in bed.  This usually takes about 20 minutes, but we hit lots of important things.  It’s a good system!
  2. Saturday morning crepes.  When I was a kid, I loved “big pancakes,” or crepes on Saturday mornings.  My dad’s grandma fed them to him, and he passed it on to us.  I started it again a year or so ago.  My little girl knows the recipe:  4 eggs, 2 cups flour, 1 cup milk, 1 cup water, a smidge of salt, and a half cube of melted butter — all blended and then cooked on medium to high.  We look forward to Saturday and “big pancakes.”  It’s a time I can give my wife a break, to go running, or just take it easy.  And the kids love it and won’t ever forget it.  “Is tomorrow Saturday?  Yes!!!  Big pancakes!”
  3. The spotlight game.  We try (it’s hard with jobs and schedules) to have dinner together in the evenings.  It’s our chance to talk as a family.  But how do you have a meaningful conversation with a 4-year old or a 18-month old?  Make it a game!  We’ve started “the spotlight” game.  We pick one person at the table (25% chance it will be you!) and then everyone goes around the table and says something nice about that person.  Then we go to the next person, and the next person (100% chance you’ll get a turn!).  Our 4-year old loves it.  And it’s a great way to practice being positive.   We don’t do it with every meal, but maybe weekly.  Actually, if this is going to be an effective system, we should probably assign it a day and make it regular!   (Soapbox:  Being nice and saying nice things is hard in our world today!)

The key to these systems are the same as any good systems:  purpose, regularity, and fun.

Homes in Order Systems

So how does this relate to Homes in Order?  Simple.  HiO is a money saving system, with your life’s biggest and most important investment.  Let’s take the “system” of $2 = $1,000.  If the typical homeowner were to pay just $2 extra towards their mortgage every month, they’d save $1,000 on their mortgage.  That’s typical.  What about YOU?  How much can you save?  Could you come up with just $1/day?

Michael Maher MortgageJust $1/day for these homeowners saves a year of payments and over $20,000.  Paying off your mortgage early is a system, and if you’re good at it, you’ll save an amazing amount of money.  Does this qualify for a system?

  • Purpose.  Investing, and getting out of debt.
  • Regularity.  Just add it to your regular monthly payment.  But regularity is the key.  You have to do it every month for maximum benefit.
  • Fun.  $20K?  Yeah, I can think of something fun with that!

Absolutely.  So whether it is a business system, a financial system, or a daddy system, if you can make it fun, make it purposeful, and do it with regularity, you’ll be on track for success.

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