In the Mind of Mike

The Power of a Decided Life

I recently attended the funeral of a rock star.  Not one that sings or plays in a band, but a metaphoric rock star; and one whose legacy will far outlive her days.  As I learned of the impact she has made in this world, it caused me to challenge my own self-limiting beliefs and the thoughts they create in mind.  I wondered what others will say about me at my funeral.  As her surviving husband pointed out that each of our days are numbered, and how our time is limited, I realized that she did not finish her life like a rock star by accident.  Without question, she lived an “intentional and decided life.” 

What does it mean to live a decided life?  I found the definition of “decided” to be, “Free from doubt or wavering; determined; of fixed purpose; fully settled.”  I assume that by applying this definition to our lives, it means to have a plan, know where we are, where we want to go, and then being committed to the process of moving in that direction.  So, how exactly do we create a “plan” for our lives?

When I was first introduced to the concept of a life plan, I thought that mapping out my life seemed far too rigid and controlling for me.  It wasn’t until later that I realized it is discipline that creates freedom in my life.  This understanding allowed me to dream, and create the life I want vs. living my life as it comes.  Similar to the analogy of a ship without a rudder, I found that by knowing my direction and having a map, I can move in the direction of the life I desire. 

To prepare myself for the process, I planned to spend an entire day in seclusion at a cabin on a mountain.  I spent about five hours imagining what my perfect life looks like, and another five hours writing and dreaming.  (The most important part of this process is that there are no distractions, and that the environment is conducive to the flow of creative thoughts.)

I started by writing what I wanted others to say about me after I die.  I realize this may seem morbid at first thought.  However, I found the exercise to be both enlightening and liberating.  It gave me a vision of the person I want to be.

The next step was to write out the top 6-8 categories of importance in my life.  They will vary from person to person, but often include spouse, children, health, spiritual, career, finances, etc.  For each category, I mapped out what my future will look like, and my vision of the desired end result.   I then detailed the actions and activities that will help me to move towards each vision on a daily, weekly, monthly, and annual basis. 

I assure you that success rarely happens accidently.  For the “rock star” whose funeral I attended, I assure you that her life legacy did not happen without a significant amount of thought, purpose, and intentional action.  Her path was “decided” upon long ago.  I hope those who know me best will say the same for me when my time on earth is through…. 

The Most Valuable 15 Minutes

For most people, a mortgage is the largest debt they will carry.  However, few homeowners have a mortgage professional continually monitoring their mortgage against the market, and making suggestions as to when it is wise to make a change.  As a result, too many people pay more than they should for the debts they carry.

Why Work with a Certified Mortgage Advisor?: As a Certified Mortgage Advisor, my role is to ensure that my clients are in proper and responsible mortgages.  With the massive amount of mortgage misrepresentation lately, it is more important than ever to ensure you are in the right loan.  For many, their misunderstandings of the terms of their loans have led to a loss of equity in their homes.  Sadly, others found themselves in situations where they were no longer able to keep their homes. 

Another fundamental role I play is managing the debt and equity portion of my clients’ balance sheets.  Many families have a financial planner to manage their cash and investment assets.  However, few families have a mortgage planner watching over the equity they have in real estate, as well as mortgage and consumer debts they carry.  A comprehensive balance sheet management plan helps keep people on track to accomplish their long term financial goals and objectives.

The Process of a Mortgage Review: My team and I make the process of a mortgage review quick and simple.  We start with a 15 minute phone conversation where we gather the information we need to analyze your mortgage.  This will include residence history, employment history, income, assets, etc.  Once we have the information, we will do a credit check.  We then analyze the information and put our recommendations together to review with you. 

When to have a Mortgage Review: There has never been a better time than now to have a mortgage review.  Mortgage rates have been at historic lows.  However, the party will soon be over.  The primary driving force of low rates has been the Federal Reserve’s Mortgage Backed Securities Purchase Program.  The Fed allocated $1.25 trillion to buy up mortgage bonds.  The Fed has purchased to date in excess of $950 billion, and have set March 31, 2010 as the date this program will expire.  This means that the Fed will be averaging about $14 billion a week in purchases, which is a lot less than the $25 billion they have been buying each week until recently.  Anytime the demand for an item slows down, the price will go down.  In this case, it means that mortgage rates will move higher.  I anticipate a progressive increase from now until the end of the program next March.

How to Arrange a Mortgage Review: You can contact me by calling (801) 501-7950, e-mail mike@citycreekmortgage.com. We would love the opportunity to review your situation and determine if you are currently on the right course with your mortgage, or if a change should be made.  We are able to serve clients needing to refinance, purchase, or with reverse mortgage loans.  Please call us for an initial 15 minute phone conversation and your no-cost Mortgage Review.

The Psychology of Money

Why is it that many feel they will forever struggle financially?  Why is it that most feel they need an extra 10% or more income each month just to meet their monthly obligations?  How did they survive when they made 10% less?  The answer is often found in their perceptions about money and how that plays out in their financial habits.

I have told my clients for years that it is not about how much income we earn.  Rather, it is the habits that we develop.  I know many people who would fit most people’s definition of having achieved financial success who are so incredibly in debt that they struggle to meet their obligation with their seven figure income.  On the other side, I have clients with one income and several children who live very comfortably on what most would consider a low income.  How can both extremes exist?  Shouldn’t their situations be reversed?  Not necessarily.  It is not about the income earned, it is about the habits.

For many, the topic of money and spending is far too difficult a subject to discuss with their spouse.  All it leads to is a fight.  The reality is that change is hard.  There will be decisions that must be made.  You will have to give up something in order to improve your finances.  Either you add income, or you take away expenses.  This is a simple balance sheet equation. 

How can people change their habits?  Prepare for the storm.  You can either change by choice or you can change by force.  Overspending will eventually catch up to you.  If you are in trouble, face the reality of your situation, and commit to change.  Then, seek help.  There are many resources to help.  If you need budgeting help, we can help you with simple tools.  Most of us must also deal with our perceptions of money, and change the way we feel about money and how that plays out In our lives.  If you are looking for resources to deal with your physiology of money, call me and I can make suggestions to you.

As I look at my own life, I realize that there are areas in which I need to change my own psychology.  I am continually “eating my own cooking,” so to speak.  I frequently go through books and financial programs so that I can increase my knowledge and financial understanding.  It is not an easy road, but together we can make the journey as we strive for financial freedom.

Converting your Traditional IRA to a Roth IRA

If you could lock in your tax rate now, would you?  One way to do this is to convert your traditional IRA into a Roth IRA.  Although this may seem like an insignificant decision now, when you retire, it may mean more to you than you think.

Unimaginable amounts of government spending will eventually lead to higher tax rates for all.  At some point, this debt will have to be paid back.  Although tax rates may be low now, it would be unreasonable to assume that they will continue to stay low, even in the lower tax brackets.  For many holders of traditional IRAs, it makes sense to pay the taxes now while they are still making an income.  By doing so they will not have to pay taxes on their IRA withdraws when they are retired, and depend upon the income to survive.

I have a passion in helping my clients understand the implication and opportunities of all financial areas.  As a mortgage planner, all I do is mortgage loans.  However, I would be happy to refer you to a financial advisor that can answer any questions you may have.  Please call or e-mail me and I will send you some free information on IRA options, or put you in touch with an advisor.

Pick Up Your Weapon and Fight!!!

Many of us have learned tremendous lessons from this recession.  It is often through our most painful experiences that we grow the most.  This is the time for all of us take action and commit to make things right in our finances so that we are better prepared if this happens again.  I know that for me personally, I have discovered areas of financial risk that I will never allow myself to be as vulnerable to again.

The past couple years have been extremely difficult for many of my clients.  Between job losses, investment losses, home value losses, and loss of overall financial stability, I think it is about time we see some improvement.  Just so happens that lately we have seen signs of recovery. 

Economic indicators have been increasingly suggesting that we finally found the bottom, and we have started the long process of recovery.  Although the extreme loss of wealth, combined with increased government regulations and taxes will make the recovery process more difficult, we may officially be out of this recession as early as the first quarter of next year.  This is great news for homeowners!  As we see stronger demand for housing, we should also see our home values stabilize, and hopefully increase. 

As for the mortgage industry (and my business), it has been quite a rollercoaster the past few months, with mortgage interest rates swinging wildly from week to week.  As economic conditions continue to improve, we are forecasting mortgage rates to increase in the near future, and feel that we may be in for a much higher rate environment soon.  (If you have already locked in a historically low rate, you made a wise decision.  If you are still waiting, now is the time to act.)

Moving forward, my team and I are going to focus on helping our clients be financially empowered, and have more stability.  This will include education on mortgage and housing, as well as financial planning, estate planning, insurance planning, and tax planning.  As part of this, we will be inviting some of our financial partners to write articles that are relevant to their areas of expertise.  We work with some of the best financial professionals in the valley, and are excited to have them share their wealth of knowledge with us. 

I personally understand the challenges this economy creates, and I honor each of you who have faced significant hardship.  One key thing to remember is that we all have the power within to sustain and recover.  The human will and spirit are two of the most powerful forces.  Just when we think we don’t have any fight left in us, somewhere we find a new gear, and the strength to keep going.  With that, pick up your weapon and continue the fight!