THE DREAM OF BEING YOUR OWN BOSS

#BeingYourOwnBoss #entrepreneurs #BusinessOwners #freelancers
The trend is growing.
Americans say they intend to become their own boss, with all the flexibility that may entail.
According to MetLife study on employee benefits trends, 57 percent of workers say they are interested in becoming a freelancer, according to an article by Charisse Jones for USA Today. It was also published April 22, 2018, in The Atlanta Journal-Constitution.
The 57 percent, the article says, is up from 51 percent just last year.
Millennials were the most interested in such work, with 74 percent of those in that age group saying they were curious about becoming a freelancer. That compares to 57 percent of those in Generation X and 43 percent of Baby Boomers, the article quotes the study.
Certainly, the lack of job security working for someone else has contributed to this feeling. Younger folks can look forward to a work life of not knowing whether they will still have a job when the walk into work on a given day.
Younger folks, it seems, want more out of life than just working, working, working. But they may not realize that becoming a freelancer has many pitfalls.
First, until the U.S. can figure out how to make health insurance affordable, buying such insurance on the individual market is incredibly expensive.
Second, it’s been said that one doesn’t own a business. A business owns him or her. If you want to be successful as an entrepreneur, you can’t really tell yourself that you are only going to work X number of hours, with certain days off etc. You have to work when work finds you, and, you have to keep hustling to make sure you have enough work to make a living.
Third, there are duties that you have to do – or pay someone else to do – to keep your enterprise afloat. There is bookkeeping, keeping records for taxes etc. – the kind of work you may not like to do, or find boring.
In short, the flexibility you sought by not working for someone else may not be there for you.
Certainly, there are advantages.
There is something to be said for starting a business from the ground up, and making it successful.
Perhaps, eventually, it can be successful enough that you can pay others to do much of the work, so you can be more flexible.
Usually, though, that takes many years to achieve, and many, many hours of being chief cook and bottle washer.
Perhaps there is a happy medium – having a regular W-2 job that pays the bills, while using some of your own time – say, a few hours a week — building a business for yourself – one that potentially could allow you to eventually ditch the W-2 job and be on your own.
There are many vehicles out there that would allow you to do that. To check out one of the best, message me.
No matter how you decide to earn a living, there is good and bad about each. Independence is a lofty goal, but it’s not for everyone, or every situation.
Here’s a rule of thumb, as you contemplate how you construct your life: if it is to be, it’s up to me. Working for someone else has some benefits, but those benefits can be taken away at any time. Working for yourself has many benefits, but you have to know whether your skill has a market and, if you believe it does, be willing to go out to find it.
Write out your dreams for your life, then put together a game plan that will get you to those dreams.
Peter

THINKING ALONE WON’T MAKE YOU RICH

#IWannaBeRich #ThinkingRich #RichMindset #OpenToOpportunities
The duo Calloway sang it best in 1990: “I Wanna Be Rich.”
But, Personal Finance columnist Barry Ritholtz writes that just thinking about getting rich won’t make you rich.
“What’s the main thing that separates the rich from the poor? Ask any of the financially free people, and they will tell you the same: their mindset,” Ritholtz writes in his column, also published in the April 16, 2018, edition of The Atlanta Journal-Constitution.
Ritholtz calls this thinking, “deceptive nonsense … rampant in the marketing materials aimed at gullible and desperate consumers.”
Still, he writes, Napoleon Hill’s 1937 classic “Think and Grow Rich” sold 20 million copies. “In the context of that very difficult time (the Depression era) we can give Hill a pass for reminding Americans of their can-do attitudes and boosting their self-confidence,” he writes.
For the less cynical, people who succeed first have to believe that they can. They have to have a strong “why” that pushes them to do what they need to do.
So the message in Ritholtz’s column should be: put your positive thoughts into action.
As leadership expert John Maxwell has said, the axiom “if you can believe it, you can achieve it” may not be true in all cases. To be a great opera singer, for example, one must not only believe they can be one, but have the natural talent and put in the hard work to hone that talent. Naturally, without the God-given talent – not just the ability to carry a tune — all the belief and hard work you can muster probably will not get you to the Met.
But positive thoughts, and the desire to succeed, are vital to success. Many of us have been engrained to “settle” for security. A good education gets you a good job, which gets you a good life.
But if you indeed want more than that – if you have a dream you believe you can achieve – you have to have your head in the right place.
You also have to be open to opportunities that may be presented to you, and recognize them as such.
There may be folks out there who want more than just security, have a great mindset, but don’t really have the vehicle to get them to where they want to be. If you are among those, there are actually many such vehicles out there. To check out one of the best, message me.
Ritzholtz is correct in saying that there is a whole industry out there that involves get-rich-quick schemes that don’t include hard work.
For some things, no matter how hard you work at them, you’ll never achieve what you want.
But, most of us are smart enough to know the difference between real and phony opportunities.
Some “millionaire mindset” suggestions have value, Ritholtz acknowledges. He cites becoming goal-oriented, living within or below one’s means, using extra money to invest in yourself or the stock market etc.
“You can become rich – but only if you meet or create great demand for a real service or product,” Ritholtz writes.
To shorten his message, think of it this way: “Just thinking or (believing it) does not mean that you will achieve it,” he writes. “Doing, on the other hand, at least gives you a shot at it.”
Peter

WHAT YOU COULD DO WITH YOUR SUMMER-JOB MONEY

#saving #investing #SummerJobs #stocks
It’s summer, and students (college and high school) are getting jobs as lifeguards, cooks etc. that pay an average of, say, $10 a hour.
In practical terms, most of those students will sock away a good bit of what they earn to pay for college, or some other higher education.
But Rubicoin, an educational investment app., calculated what you could do in the future if you decided to invest that money in the stock market.
Adam Shell wrote a short piece for USA Today on the study. The article also was published June 8, 2018, in The Atlanta Journal-Constitution.
Rubicoin calculated how much money a worker earning $10 an hour in a 25-hour workweek for 13 weeks, each summer for the past four years, Shell writes.
“If they invested half of their before-tax pay equally on Aug. 31 each year in the four FANG stocks (Facebook, Amazon, Netflix and Google), the $6,500 investment since 2014 would be worth $15,899 today, Shell quotes Rubicoin. If a student favors a bigger bet – investing in Netflix alone – it would have been worth $22,639, or $19,544 if they invested in just Amazon.
Certainly, these FANG stocks have skyrocketed recently. Doing that now, when they are at high prices, would be impractical. Doing it then, when their prices were relatively low, would have been a big risk for a student.
Perhaps planning your financial future would be better after your education is finished. Every dime you earn should be saved for the expenses for school – unless, of course, you come from a wealthy family and can do what you want with what you earn. Most students, however, are not in that position.
So, here’s another thought: what if you could take a percentage of what you earn in ONE summer, invest it in something that might give you the kind of bright financial future that no one will take away from you? A small investment, plus some part-time effort on your part throughout your life, could lead to an income stream that could allow you to never worry about money again.
There are several such ventures out there that could do that. To check out one of the best, message me.
There are few financial advisers who would recommend that a student invest a chunk of his summer income in stocks – despite their potential – would be a big risk.
Young investors should start out conservatively. They should move gradually from a bank savings account – get out of that as quickly as you can – to conservative funds, to stocks with some potential as your nest egg grows.
The important message from Shell and Rubicoin is to start saving your money while you are young. The more you can do at a young age, the more you will have as you get older.
Remember that the job you think is secure now may not be so in the future. Having the discipline to save and invest carefully, with the proper advice, will hopefully prevent devastation later in life.
In short: when you are off from school in the summer, work (more than 25 hours a week, if you can). Use that money to invest in your education. When your education is finished, continue the pattern of saving a certain percentage of your income, progressively investing over time.
If you use the money before retirement, make sure it is for something like buying a house. Don’t blow it on vacations and other non-durable items. Keep saving for a retirement that could come before you want it to.
Remember: the little things you do when you are young will give you more options in the future.
Peter

LONLINESS IN THE WORKPLACE CAN BE QUANTIFIED

#LonelinessInTheWorkplace #loneliness #workplaces #SolitaryJobs
Some people are lonely at work.
So what? Who cares?
Well, loneliness has a cost to employers, according to an article by Danielle Paquette for the Washington Post. It was also published March 31, 2018, in The Atlanta Journal-Constitution.
“According to researchers who study the issue, the economic damage caused when employees suffer feelings of isolation could soon worsen as offices become increasingly automated and more people work remotely,” Paquette writes.
“Employers who tackle the issue now – rather than brush it off as a personal matter – will save money in (the) future,” Paquette quotes Gabriella Rosen Kellerman, a psychiatrist and chief innovation officer for BetterUp, a workplace consulting firm in San Francisco.
According to the article, Kellerman’s team crunched data from a survey of about 1,600workers across the country to better understand the risk by profession. The results, published in the Harvard Business Review, alarmed Kellerman: “Sixty-one percent of the lawyers in her sample ranked ‘above average’ on the loneliness scale from UCLA,” Paquette quotes Kellerman.
“Generally, the happiest – and most productive – workers feel like valued team members,” Paquette quotes Kellerman.
So, are you feeling lonely at work? Do you often – or always – work by yourself? Do you get to talk to anyone during your work time? Does your employer ONLY care about what you do, rather than who you are?
What if someone could show you a way to make money that would essentially REQUIRE you to interact with people. What if someone could show you a way that could not just potentially put extra money in your pocket, but also potentially exceed your current income? And, what if someone could show you a system in which advancement depended on how many people you helped succeed? To learn about such a vehicle, message me.
The article quotes a Gallup poll that found 42 percent of working Americans said they did some of their job remotely, a four-percentage-point jump from 2012. It also quotes a recent study from the global consultancy firm McKinsey, which predicted that demand for office workers in the U.S. will drop by 20 percent over the next decade because of technological advances. That could mean smaller or more siloed teams, it said.
So if loneliness at work has a grip on you, get a grip. Look for a situation that will allow you more interpersonal interaction. Oh sure, dealing with people can be a pain. But, as the article says, the alternative not only takes a toll on workers, but is costly to employers in terms of productivity.
The proverbial water cooler, cafeteria or other workplace gathering spots may be going out of favor. Try making it a point of sticking your head into someone’s workplace every day, just to see whether they are receptive to people.
Who knows? Maybe you can find people with common interests that you never knew had the same interests as you. Perhaps you can become friends and socialize outside of work, if it’s not possible to socialize at work.
If you are an employer, you might look at ways to conduct team-building exercises, personal growth seminars etc., for the folks that have solitary jobs. You may get a lot more productivity from them by doing that.
Peter

ATTENTION GRADUATES: SIFT AND SORT THE ADVICE YOU GET

#graduation #GraduationMessages #GraduationSpeeches
Graduation speeches, at least to the graduates who are just looking to celebrate and party afterward, can often draw a groan.
It seems to many of them to be something they must sit through. Perhaps it’s good training for the next corporate meeting they will have to attend.
But they also may find a few nuggets of good advice among the long, drawn-out talks.
Jena McGregor, in a Washington Post article, highlighted some well-known speakers’ pearls of wisdom. The article was also published May 29, 2018, in The Atlanta Journal-Constitution.
Oprah Winfrey, for example, gave the typical “do what you love” advice when she spoke at the Annenberg School of Communication and Journalism at the University of Southern California, the article says. Then, she said:” You need to know this: Your job is not always going to fulfill you,” McGregor writes.
Yet, Oprah also advised the graduates to be so good at what they will do that “your talent cannot be dismissed,” the article quotes her.
Undoubtedly, some of those graduates will find out that even though they are very good at what they do, perhaps even winning awards etc., whoever they work for might not recognize it. And, they may also discover that even good people get laid off when each of the many reorganizations they will witness takes place.
Meanwhile, Hamdi Ulukaya, CEO of the Chobani Greek yogurt company, told this to grads of the Wharton School of Business at the University of Pennsylvania: “It’s great that you are a Wharton MBA. But please, don’t act like it,” the article quotes him.
His point was the great training that Wharton has given the graduates shouldn’t make them think less of others who have not been so academically blessed.
“Don’t let (your degree) get in the way of seeing people as people and all they have to offer you, regardless of their title or position,” the article quotes him.
Certainly, graduates have their own ambitions. They have come this far and have put in the work and time – hopefully having some fun along the way. Some may come out of school not knowing exactly what they want to do. For some, it may be a craps shoot as to what opportunities their degrees will give them – or not.
Then, they face the issue of jobs not turning into what was expected or promised. Will they be able to roll with whatever happens? Make no mistake: the unexpected will happen.
If you are a new graduate in a period of indecision about your future, know that there are many ways out there to earn a potentially substantial income with a few part-time hours a week away from your W-2 job. To check out one of the best, message me.
Meanwhile, sift and sort every piece of advice you get. Some advice, though well meaning, can stifle what you might want, or be destined, to do. Other advice can encourage you to shoot for the moon. Know that the moon can be there for the taking if you shoot properly and consistently over time.
See the good in everything you do, and everyone you encounter, as you endure some drudgery in each endeavor. Don’t ever be afraid of pursuing your dream. It, too, could be there for the taking with the right effort and strategy.
Peter

A DISTURBING TREND: RETIRING BEFORE YOU WANT TO

#retirement #RetirementPlanning #layoffs #buyouts
It’s an alarming trend, a letter writer wrote.
People in their 50s are getting laid off, he continues. The workers may get an optional early-retirement package which, if not taken, leads to a layoff a short time later, he continues.
Or, he says, it may mean becoming a contract worker making half the money with fewer, and more expensive to you, benefits. “A friend who refused a package last year will retire with much less this month because of shortsightedness,” he writes.
The letter writer signed his missive “B.” He wrote the letter to Peter Dunn, the USA Today columnist known as “Pete the Planner.” His column was also published March 4, 2018, in The Atlanta Journal-Constitution.
To sum up Pete’s response, he advises: “Draw a horizontal line on a piece of paper, and create a series of hash marks on the line, representing future age markers. Next, list major life events on the timeline. Be sure to note events such as your mortgage payoff year, when you reach age 59.5 (when retirement funds become available) and when you hit 62 (the first chance to activate Social Security). …
“When I drew my line, I noticed my need for money peaked at age 53,” Pete continues. “If I were to lose my job at or around 53 years old, I would be in big trouble. Therefore, I want to be sure not to take on any additional obligations around that time in my life. Knowing when you’re the most at risk is a reasonable way to avoid additional risks,” Pete writes.
He goes on to say that the age timeline will help people evaluate any early buyout options.
This topic is trending at a rapid pace. Pete advises that retiring at a normal age, with “normal” benefits etc., is challenging enough. Retiring early because one is forced to can be torture, he writes.
Planning is obviously a wise decision, but the best laid plans can go awry when you least expect them, or want them, to. So, we are in a milieu in which we have to PRESUME that we will not be able to work at our current jobs for as long as we want. Reorganizations will come frequently. Bad managers will come into your life and throw you out – or force you to leave on your own.
The age-old advice is to spend less and save more, as consumer adviser Clark Howard preaches. If you “have to have” the latest, up-to-date gadgets, think about whether your current gadgets are serving you well. A rule of thumb might be: if a new gadget will give me pleasure, and is not a necessity of life, postpone buying it and live with the older technology. When the old stuff craps out, then replace it.
If you have, say, a daily habit of buying a cup of coffee in the morning, you might think about buying a Thermos and brewing your own coffee to take with you.
In other words, examine the little things you do in life that cost you money. Do you really need to spend it? Remember, too, to think value rather than price. Sometimes, buying better stuff up front will keep you from buying multiple cheap things later on.
Finally, if you are planning your financial life as best you can, but you don’t think it will be enough when you get shown the door at work, think about investing a few part-time, off-work hours in something that may not only augment your income, but could surpass it. There are many such vehicles out there. To check out one of the best, message me.
Meanwhile, draw the diagram Pete suggests. This is especially good for folks who are less careful about their spending. Save well. Invest well – or as best you can – with a good, trusted adviser.
In today’s world, for many people, retirement decisions, unfortunately, are made FOR them by others. Be prepared for that decision to be made for you, as early as tomorrow, no matter how old you are.
Peter

ROBOTS, OTHER COUNTRIES KILLING U.S. JOBS?

#robots #AmericanJobs #efficiencies #CreativeDestruction
Do you believe robots, or manufacturing in other countries, are killing American jobs?
A recent article in The Guardian carries the headline, “Robots will destroy our jobs – and we’re not ready for it.”
Economist Joseph Schumpeter describes technological change as “creative destruction.” Actually, the Bureau of Labor Statistics says that the U.S. labor force in 1950 was 62 million. By 2000 it was 79 million and it’s projected to reach 192 million by 2050.
These bits of information come from an article by Walter E. Williams of Creators Syndicate. It was published Feb. 21, 2018, in The Atlanta Journal-Constitution.
“Though the ‘creative destruction’ process works hardships on some people who lose their jobs and are forced to take lower-paying jobs, any attempt to impede the process would make us all worse off,” Williams writes.
It’s tough to understand the value of technological progress if you’ve been shown the curb from your job. Many people have lost relatively good-paying jobs, and been forced to take lower-paying jobs, if they were lucky enough to find a new job at all. The recession of 2008 has taken a toll on many.
The Williams article tells of the 62 million in the work force in 1950. Back then, progress was definitely slower. People could count on the jobs they had to be around for as long as they wanted to work. Some of those jobs were hard, either on the body, mind or both.
Back then, many workers were represented by unions, which helped impede some process innovations and efficiencies to keep more people working.
Today, fewer workers have that kind of representation, and the number keeps decreasing. Workers are essentially on their own to plan their careers.
As a result, in many cases, careers come to a premature end, and workers are left figuring out what to do next.
But just as technology has been, by and large, a good thing for the U.S. and the world, having workers determine their own destinies can also be a good thing, if you want to look at it differently.
It’s been said in several different ways that hardship creates opportunity. Though the opportunity may be difficult to see if circumstances have dealt you a difficult blow, they are out there for those willing to look for them.
If you have lost what appears to be a good job, and are not yet ready to retire, there are many ways out there to make money other than through a traditional W-2 job. To check out one of the best, message me. You might even see a great way to help your friends overcome difficult circumstances.
The U.S. has moved over the centuries from a primarily agricultural economy, to a primarily manufacturing economy, and is continuing to move into a more technologically based economy. You, as perhaps a temporarily displaced worker, can’t do anything to fight that. In fact, no governmental entity can do anything to fight that. If we try to impede innovation here, someone else somewhere will innovate, leaving the U.S. in the dust.
So the next time you try to blame robots, cheaper overseas labor or other advances on your circumstances, remember that you can’t stop those things. You can only look for ways to help yourself to a better life.
That may require a change of mind-set, or departing your comfort zone, but ANYONE can do it. If you don’t find a solution immediately, keep looking. You just might meet the person who will show you how YOU can change your life for the better.
Peter

OVERSTATING PROBLEMS

#OverstatingProblems #optimists #pessimists #poverty
“Can’t overstating problem energize us in terms of solving them?”
So asked Philip Galanes, during lunch with Bill Gates, founder of Microsoft and the Bill and Melinda Gates Foundation, and Steven Pinker, professor of psychology at Harvard University and author of 10 books.
Galanes wrote about his conversation with the two for The New York Times. The article was also published in the Feb. 11, 2018, edition of The Atlanta Journal-Constitution.
“There’s a paradox in letting yourself be very, very upset about what remains to be done (for the common good),” Gates said. “There are still parts of the world that are still like 40 years ago. But to read (Pinker’s) book and think it says, ‘don’t worry, be happy’ (borrowing from a Bobby McFerrin title), is to misread it. Because seeing the world through the eyes of that poor kid ideally wants to make you give some money, even though there are many fewer such kids than 50 years ago,” Gates said.
“Extreme global poverty has been reduced from 90 percent 200 years ago to 10 percent today. That’s great! Or you can say: more than 700 million people in the world live in extreme poverty today. They’re the same fact, and you have to be able to describe them to yourself in both ways,” Pinker says.
This snippet of a long conversation illustrates that there is more than one way to look at the world.
Some of the information we hear would lead us to believe that the world is going to hell in a hand basket, and perhaps we need to straighten it out. Or, others would have us believe that past efforts to solve problems have had a great effect, and that, though the problems are not completely solved, the situation is much better than it was years ago.
It’s perhaps the classic difference between an optimist and a pessimist. The old adage talks about viewing a glass of water as either half empty or half full. But it is more than that.
It starts with how you feel about yourself each time you wake up in the morning, or later in the day if you work at night. Is every day you do so a good day? Or, is it just another day?
Do you long for weekends, and dread the weekdays? Do you feel as if you are on a treadmill during the week, and finally get a break from it on weekends (or whatever your regular days off might be)?
Experts say you can change how you think. You can take stock of what’s good in your life, and be thankful, rather than think of what’s not so good and be resentful, or sad, or feel doomed.
You can think about what you really want in life, or you can presume you’ll never get what you really want, and settle for something OK, or tolerable.
You can see retirement as a goal to allow you to do what you want, or you can do what you want sooner, rather than later. Or, worse yet, you can see yourself as working at a job you hate until you die.
So, are you thankful, or dreadful (meaning full of dread, as opposed to an awful person)? Give yourself a break. Always – and you can pull this off – look at yourself as blessed and grateful.
If you need a vehicle to help you turn your life around, there are several such vehicles out there for those willing to look for them. To check out one of the best, message me.
Meanwhile, if you are on that treadmill of dread, stay on it only as long as you need to. Start looking for things that will help get you off it.
Your thoughts have the power to improve your life. Be an optimist, for there are very few, if any, successful pessimists. Take stock of the good in your life and build on it. It could start you on a path that will allow you to achieve your dreams sooner rather than later.
Peter

PENSIONS, RETIREMENT AND DECUMULATION?

#pensions #retirement #decumulation #MoneyandTime
The news stories appeared next to each other on the same day.
One headline read, “As pension plans fade, workers find retirement more elusive.” The story, written by Peter Whorisky for The Washington Post, talks about how pension plans are on the decline and workers are increasingly dependent on their own savings for retirement.
The second headline read, “Why you should resolve to spend more money.” The story, written by Suzanne Woolley for Bloomberg News, talks about how retirees who have diligently saved and invested for their retirement, should consciously decide to spend down some of those savings after years of frugality.
Both stories were published Jan. 28, 2018, in The Atlanta Journal-Constitution.
The obvious question here: what retirement position are you in, and is it the right place for you?
Many can relate to the former. Perhaps they were promised a pension by their employer when they were hired, but that pension is no longer offered. Or, perhaps the pension benefit disappeared.
Perhaps not nearly as many can relate to the latter. If you are fortunate enough to have a good retirement nest egg, by all means, enjoy it. Do what you like to do. But, as any financial adviser would tell you, it’s best to take out the dividends, interest and other earnings your money produces first. A good rule: if you never touch your principal, you will never outlive your money. So, spend, but spend with some care.
Retirement didn’t used to be this complicated. In decades past, one was hired for a job and, if they stayed out of trouble, showed up every day and did what was expected of them for many years, they could count on retirement benefits.
They would get whatever pension their employers gave, combined it with Social Security and, perhaps, some savings and/or a no-stress, part-time job that provided some pocket money.
To live in such a retirement, one had to spend carefully. Perhaps they had enough to enjoy some hobbies, travel, spoil grandchildren etc. But most had to watch how they spent their money. You may have heard the pleas of, “we’re on a fixed income, you know.”
Hopefully, by this time, their mortgages were paid off and there were very few other debts.
Contrast that with today. Job security is non-existent. Pensions, as the article says, are not offered to as many people. Many don’t have a great deal of savings for retirement, and perhaps have vowed to work until they die – or until their employer forces them to leave.
The “fixed incomes” of many fortunate retirees is greater than those of many of the younger, working cohort that’s helping to fund their parents’ Social Security payments.
The part-time “retirement” jobs many are forced to take involve longer-than-desired hours, much stress and take away whatever fun retirement might offer.
There is some good news in all this. There are many ways people can earn potentially good incomes by spending a few hours a week – and have some fun doing it. The good news: it doesn’t involve taking a second, or “retirement,” part-time job. To check out one of the best, message me.
If you are young, you can think about doing this using some time when you aren’t working at your traditional job. If you are diligent, you could be in the position of having a comfortable, spendable nest egg when you retire, and have the kind of decision the second article features.
If you are retired, either by choice or force, time is on your side, and you may find a less stressful way to earn an income.
So think about your retirement position today, and bear in mind that what you were promised, or what you thought you might get, may not be there. Build enough of a nest egg, however you choose to, so you won’t have to “work until you die.”
Peter

ECONOMY AFFECTS MILLENNIALS’ HOMEOWNERSHIP

#HomeBuying #homeownership #millennials #RealEstate
Contrary to what one might think, millennials actually want to buy houses.
But, the economy is stopping them from doing so, in significant numbers.
As with previous generations, they believe owning is better than renting.
“We’re wasting money where we are right now,” said Chris Eidam, 27, who lives with his girlfriend near Bridgeport, Conn. “We just take our rent and we throw it away. That money doesn’t go to anything,” said Eidam, who was quoted in an article on the subject buy Agnel Philip for Bloomberg News. It was also published in the Jan. 1, 2018, edition of The Atlanta Journal-Constitution.
The article points out that stagnating wages, rising housing costs and lack of supply are hindering first-time home buyers.
Still, the article says, for two straight quarters, homeownership rate among those 35 and younger has increased.
But, these are not their parents’ times. Decades ago, a lender would look at a young person that had a steady job, figure out what payments they could afford and determine whether they could buy a certain house. The lenders actually bet on a person’s good name and reputation and loaned them the money.
Today, lending restrictions are stricter. Buyers, sellers and real estate agents, too, have to hope that the agreed upon price meets the lender’s appraisal. Often, the appraisal comes in less than the agreed-upon price, prompting sellers to back out of the deal. Lenders have encouraged appraisers to be strict, to come in less than the fair market value.
Secondly, today’s young folks don’t have the job security that their parents often did. If their parents worked at, say, the local phone company, and had a decent wage, the lender could look at that as an income unlikely to go away. Today, no job is “secure,” and paychecks could dry up just like that. Lenders don’t really want to own real estate and, during the recession, that real estate often came back to lenders worth less than the money owed. Some of that can be blamed on homeowners playing fast and loose with home equity, but that’s another story.
In the overall scheme of life, stricter lending standards may be a good thing. But to those wanting to buy their first home, they are a detriment.
Lending standards have relaxed some in recent times, the article says, but younger folks are carrying record levels of student debt and can struggle to qualify, according to the article.
Home building today is also geared more toward high-end homes, and away from so-called starter homes, the article says.
Still, the experts, according to the article, believe the home-buying market among millennials will equal, or come close to, that of their parents decades ago, the article quotes Ralph McLaughlin, chief economist at Trulia.
So what is a young person, or young couple, that wants to buy a home, to do? First, figure out what you can afford. Don’t expect your first house to be perfect, especially, as the article points out, if you expect to change jobs, or move away from your location. You can always trade up, or remodel, later.
If your income, debt load etc. is making home buying difficult, look for a vehicle that can augment your income by devoting a few, part-time, off-work hours a week. There are many, non W-2 vehicles out there to do that. To check out one of the best, message me.
Finally, if you see a house you can afford, and you are reasonably happy with the location, overlook any cosmetic deficiencies. You can fix those eventually with time, patience and elbow grease. Remember, too, that perfect houses, like perfect people, don’t exist. Every house will have something about it you don’t like. Don’t dismiss good deals out of hand over something you can ultimately fix.
Remember, too, that homeownership is not for everyone. It may have been part of the American Dream, but it’s no sin not to own. Owning your own home comes with great responsibility. If you don’t want or need that, rent, and invest in other things. In short, do the math, figure out the kind of life you want and proceed accordingly.
Peter