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Should I Pay Down My Mortgage or Make Home Improvements

bigg_question.jpgBigg 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.

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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 Remodeling the kitchen or bath can yield a reasonable return, particularly if they look a little outdated, as long as you don’t go over-the-top.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!

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100 Tips to Succeed Bigg!

100

Today is a special blog for us – it is number 100!

Bigg Success was born on Nov 12, 2007 with our first Bigg Success Show. It’s been a bigg ride so far!

Comments from you
It’s always great to hear from you. One of our favorite comments was a listener who told us that The Bigg Success Show is her daily mojo!

We also love it when people tell us they got a good laugh. Admittedly, it’s easier to deliver a laugh on the show than in our blog – sometimes it doesn’t translate well. By the way, to hear the show, just click the  button near the top of this page.

We strive to deliver a daily lesson and a laugh in five minutes or so. We believe that it’s better not to be too serious, but still give practical suggestions. It’s been great to hear from so many of you that you did indeed use one of our tidbits.

We don’t know it all and we don’t pretend to. In fact, on the show, George said, “I usually assume that I know less than anyone in the room. Unfortunately, it usually turns out that I’m right!”We value your input and it’s so easy to give it – all you have to do is type! Just click on the article title and look for “Leave a Reply” at the bottom of the page.

Celebrating a milestone
So today is a milestone for us. When we discussed Climbing the Stairway to Success, we said you should give yourself a treat when you hit a goal. Well, we’re practicing what we preach by taking some time to savor the moment with you today.

100 tips – we’ve delivered three times our promise
We promised 100 tips to succeed bigg in our title today. We include a bigg quote in every blog. So go to our Bigg Quotes page and you’ll find a link to the blog where that quote was featured. You can count them – there’s 100!

We would count them ourselves but between the two of us we only have twenty fingers and toes!

In reality, we discuss at least three tips on every show, so you’ll find over 300 tips to succeed bigg! That’s three times what we promised! Check it out for yourself! We dare you!

Two of our favorites
You’ve heard us say that when you face an obstacle, you have to find way past it. At Super Bowl time, we did a show called Fumble Forward. We wanted to highlight one of the most famous fumbles of all time, but we couldn’t get licensing permission to air the original broadcast. So we recreated it ourselves. (Hear the clip in The Bigg Success Show. Click above.) 

Mary-Lynn said she’s never been a sports broadcaster. It was fun! Finding a creative solution to the problem was even more rewarding.

We did a show on multi-tasking – Can You Walk and Chew Gum at the Same Time? Unfortunately, George showed all of you that he can’t.
(Hear the clip in The Bigg Success Show. Click above.)

Mary-Lynn said George better give up on Dancing with the Stars!

Announcement

On February 29, we did a special leap year show about the growing trend of people traveling while working, Leaping from Place to Place.

And speaking of taking a leap, we got married that day! George said it’s great – he only has to remember an anniversary every four years!

Will you help?
We started Bigg Success to bring together a community of like-minded people who would help each other succeed bigg. We may be the conductors, but it takes an orchestra for the music to be sweet.

Here’s one thing YOU can do to help – tell everyone you know about Bigg Success!

When you hear a show or read a blog that you like, share it! An easy way to do this is to click on the “Share This” button at the bottom of each post. There are a number of options – one is to e-mail a friend.

We thank you so much for being part of Bigg Success!

Our bigg quote today is by David Joseph Schwartz, who said,

“The person determined to achieve maximum success learns the principle that progress is made one step at a time. A house is built one brick at a time. Football games are won a play at a time. A department store grows bigger one customer
at a time. Every big accomplishment is a series of little accomplishments.”

Your accomplishments may seem tiny on their own, but when you put them together, they’re mighty.

That’s the mighty tinies, not the tidy whities!

Next time, we’ll discuss five laws of stratospheric success. Until then, here’s to your bigg success!

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Making the Most of Every Contact

By Bigg Success Staff
05-22-08

Bigg Success in Sales

grand_prix 

There’s a small portion of the tire on a race car that actually makes contact with the race track. It’s called the contact patch. Racing crews do everything they can to get a good contact patch because it’s one of the more important factors in winning the race.

As a sales person, you also have a contact patch. You spend a small portion of all your time in front of your prospects. What happens in those moments is essential to making the sale.

However, what happens in those moments is dependent on what you do before you get to them. Preparation is what makes the difference. You need to be sure you’re ready when the opportunity presents itself.

You’ll succeed when product knowledge, prospect knowledge, and people skills meet.

Product knowledge
You need to fully understand the features and, more importantly, the benefits of your product. But don’t stop there. You also need to fully understand the features and benefits of your competitors’ products.

And when we say “competitors”, we mean every alternate way your prospect might meet their need. It goes beyond people who do exactly what you do. You also need to understand what substitutions your prospect could make for your product.

Prospect knowledge

What problem do you solve for your prospect? Find a problem your prospect wants to solve and show them how to solve it. In order to do that, you’ll need to do some research on your prospect.

Problem-solving is a case-by-case thing. One prospect may be experiencing difficulties that another one isn’t. If you take the time to find the unique needs of a unique prospect, and then offer them a unique solution, you’ll make the most of every contact.

People skills

You also need to develop the people skills necessary to communicate your message and understand what the prospect is saying. And not saying. Learning how to read non-verbal cues is an essential art of being a great sales person.

So listen as much as you talk. Question your prospect to make sure you fully understand their responses. Watch them to see what they’re not saying with words. Then use your product knowledge, your prospect knowledge, and your people skills to make the sale!  

Hear today's lesson and laugh on The Bigg Success Show. 

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The Other Pause that Refreshes

By Bigg Success Staff
04-07-08

Career Builders

In 1929, Coca-Cola proudly proclaimed that Coke was the pause that refreshes. In your communication tool box, you can also use a pause to refresh. 

That is, you can pause to refresh.

Pause when someone is talking to you.
When you’re having a conversation with someone, one of the most important things you can demonstrate is that you are listening attentively. After they make a point, pause before you reply to show them you’re listening carefully.

Pausing also insures that you don’t interrupt them. Perhaps they’re just catching their breath before continuing. By giving them a second or two, you’ll know if they want to add to their point or if they’ve truly completed their thought.

It also gives you time to fully digest what they said so your response will be better. For example, you may need to ask a follow-up question to clarify something you didn’t completely understand.

Pause when you are talking.
You can use pauses to your advantage when you’re doing the talking as well. Pausing gives them time to fully comprehend what you said. For example, you may see something in their body language or facial expression that suggests confusion. Follow-up to make sure they understood your message.

Sometimes, by pausing, they’ll immediately interject a question or a point. Perhaps they didn’t understand something you said. If you continue talking, they’ll be mentally trapped with the point that needs clarification, so they won’t hear you anyway. Pause to give them time to ask questions or make a point.

Pausing when you’re talking also signals that you’re not a conversation hog. You show them that you’re interested in a two-way dialog and that you value their input. 

Pausing is a useful communication tool for both sides of your conversation. Use it to build trust and make sure your message is understood. Too many people are so focused on what they’re saying or going to say that they fail to actually communicate. Pausing is refreshing!

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