extra money | Bigg Success

Tag Archive: extra money

Should I Pay Down My Mortgage or Make Home Improvements

Written on May 11, 2009 by George Krueger & Mary-Lynn Foster in Money

Bigg success is life on your own terms. The five elements of bigg success are money, time, growth, work and play. Today our focus will be on money.

One of our listeners, Bob, called us with a bigg question. He and his wife have some extra money and they are wondering whether they should use it to pay down their mortgage or make some home improvements.

___

Hear George & Mary-Lynn answer Bob's Bigg Question on The Bigg Success Show! Click the purple player to listen while you read: Play Now | Play in Popup | Download

___

Both options are very illiquid

You can’t get your money back once you spend it with either option. So make sure you have enough extra cash to cover between six to twelve months of living expenses before you do either one.

A guaranteed return

Paying down your mortgage is one of the safest investments you can make. It’s a guaranteed return equal to your mortgage rate.

For example, if your mortgage rate is 6% and you pay it down early, you’re essentially earning 6% on your money guaranteed!

That’s a decent rate of return right now.

Returns on home improvements are often more sketchy. Start by asking yourself this question:

How does the value of your home compare to other homes in your neighborhood?

If you’re one of the most expensive homes already, making improvements probably won’t do you a lot of good financially. However, this is your home. It’s more than just an investment. So ask yourself a second question:

How long do you plan to live there?

The longer you plan to stay put, the higher the emotional returns – an important point to consider because money isn’t everything. What types of improvements yield the best financial returns? Most major outlays don’t return much if anything. Cosmetic improvements usually show a better return – paint, new floor coverings, landscaping, and those sorts of things. Remodeling the kitchen or bath can yield a reasonable return, particularly if they look a little outdated, as long as you don’t go over-the-top.

Weighing your options

Determine how much it will cost for your desired improvements. Then ask a Realtor or an appraiser to find out the expected increase in your home’s value. Now calculate your return:

Return = (Increased Value – Cost of Improvements) ÷ Cost of Improvements

Compare that to your mortgage rate. If the return for making the home improvements is significantly higher, you might consider making the improvements instead of paying down your mortgage.

Just keep in mind, this is not an apples-to-apples comparison. Paying down your mortgage offers a guaranteed return. Making home improvements does not.

Choosing between improvements

If they go with the improvements, Bob wants to replace the windows. His wife wants to remodel the kitchen. Which would be better for the money?

We wonder why you want to replace the windows, Bob. Is it for cosmetic reasons or are you thinking about energy-efficiency? Perhaps it’s both.

Stimulus for you

We hate to disappoint your wife, but right how is a great time to replace windows or make other energy-efficiency improvements. The Economic Stimulus Act extended and improved the tax credit for these types of repairs.

You get a 30% tax credit up to a $1,500 limit. So you can spend up to $4,500 on qualified improvements.

A tax credit is better than the deduction you’re used to getting on Schedule A. Deductions reduce your taxes by the amount of your marginal rate. Credits reduce your taxes dollar for dollar.

So $1,500 of your new windows could be paid for by the government!

The one cash outlay that pays you back year-after-year

However, it doesn’t stop there. It’s amazing how much air can leak out through poor windows. You’ll save money on your utility bills for years with the right windows.

Your returns for making any energy-efficiency improvements aren’t guaranteed but they’re close. They may also be higher than the returns on a lot of other investments these days. Improving your energy-efficiency is a cash outlay that pays you back year after year!

Thanks for your bigg question, Bob!

Do you have a bigg question?

Please share it with us by calling us 888.455.BIGG (2444) or sending an e-mail to bigginfo@biggsuccess.com.

Please join us next time when we talk about two recent examples of saying, “We’re sorry.”

Thank you for sharing your time with us today. Until next time, here’s to your bigg success!

Subscribe to The Bigg Success Show in iTunes.

Subscribe to the Bigg Success feed.

Direct link to The Bigg Success Show audio file:
http://media.libsyn.com/media/biggsuccess/00391-051109.mp3

Are You Throwing Money Away by Owning Your Home?

(Image in today's post by svilen001)

19 Comments

Finding a Job After an Extended Time Off

Written on April 9, 2009 by George Krueger & Mary-Lynn Foster in Challenge, Networking

Kathryn called us on the Bigg phone. Not the Bat phone … we don’t live in a cave!

She said that life on her own terms meant staying home with her two boys until they were both old enough to be in school all day. They’ve reached that point so she wants to return to the workforce. Besides that, she and her husband are looking forward to having some extra money available.

She says she has been checking classified ads and the job boards just about every day. Unfortunately, she’s not seeing many jobs that she’s both interested in and qualified for.

She’s applied for several jobs and had a couple of interviews which she doesn’t feel went so well. She thinks that the eight years she’s been out of the workforce may be hurting her chances. She asked us for our suggestions.

___

Hear George & Mary-Lynn discuss today's challenge on The Bigg Success Show! To listen while you read, click the purple player: Play Now | Play in Popup | Download

___

It’s who you know

Keep in mind that we’re facing a tough job market right now, so you’re not alone in your frustration. One thing to add to your efforts is reaching out to your network. It’s something that a lot of people overlook or don’t place enough value on.

Start by making a list of everyone you know. Then start contacting them. You may start with an e-mail, but try to meet them in person or at least catch up with a phone call.

Be yourself, but make sure you tell them what you’re up to. Also find out what they’ve been doing. You never know … something they say may spark an opportunity for you.

Ideally, you’ll get a referral as a result of this conversation. However, don’t be disappointed if that doesn’t happen. You got to spend some time with a friend or got to know an acquaintance better. They can keep their eyes and ears open for an opportunity for you.

Follow-up, follow-up, follow-up

Be sure to follow up after your meeting or phone call. Let them know how much you enjoyed seeing them. Help with any challenges they may have brought up if you can. If you can help them, they’ll probably go out of their way to help you!

Keep in touch with them. If you see an article they may be interested in, share it with them. If you see a great deal on something you know they like, let them know about it.

The bottom line is: follow-up, follow-up, follow-up.

Interviewing

In her message, Kathryn said she’s had some difficult questions in her interviews. For example, one woman asked her if she thought she’d be able to get to work on time even with her two kids.

Of course, that’s an illegal question, which you have every right to point out, Kathryn. However, you’re probably better off emphasizing that you’ve always been punctual if that’s the case. For instance, we bet you were on time for the interview. Point that out!

The job you’ve been doing

You’ve been a full-time manager for the last eight years. You just haven’t been getting paid directly for it in cash. Don’t underestimate the skills you’ve learned.

Stress what you’ve done and what your strengths are. Bring the skills you’ve learned out in your answers. Have specific examples ready. These will depend on the job you’re seeking. Some examples:

Do you keep your family’s schedule or oversee the finances?

Have you coordinated a remodeling project?

Think about it. You’ll quickly see that you gained a lot of valuable experience.

Preparation

There’s a great way to prepare for interviews: role-playing. Simulate an interview by putting yourself in an environment as close to an actual interview as possible.

Get your husband to ask you questions or find a friend, preferably someone who interviews people as part of his or her job, and practice interviewing until your answers just roll off your tongue.