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It’s Not About the Money -Book Recommendation

I would highly recommend reading It’s Not About the Money by Brent Kessel.  I like his yogic take on money and balance in life. The part of the book that I liked the most was his breakdown of the 8 money archetypes: The Guardian (people who worry about money and never feel that they have enough -even when by all measures they do), The Pleasure Seeker (people who spend money on things that bring them pleasure, and live for today sometimes at the expense of tomorrow), The Idealist (people who believe money is a lesser pursuit than other values and so sometimes mistrust it and people with it), The Saver (people who seek more security and financial abundance through saving and investing but may be seen as cheap or frugal), The Star (people who buy things or use their money in order to be recognized or in higher esteem by others), The Innocent (optimistic, but naive people who believe that by just not thinking about or dealing with money, it will be ok), The Caretaker (people who give or use their money to help others sometimes to the detriment of themselves), and The Empire Builder (people who use money for power and innovation in order to feel achievement and in control). To read more about these types you can check out the author’s website: http://www.brentkessel.com/?page=tools

I think understanding our core tendancies (for instance in this case, mine are strongly The Saver and the Empire Builder and Britton’s is Guardian) we can see our strengths as well as our weaknesses (our strengths often hide our weaknesses). What we are great at obviously comes easily, but to be in balance (as in the yoga tradition) one must sometimes seek out the opposite traits than those with which we are comfortable.

Money as Debt -a Fractional Reserve Primer

I recently watched a very interesting video on our current money AKA debt system and the fractional reserve system. I really didn’t know much about fractional reserves, but this video helps clarify that it is basically wizardry. I think most people’s basic understanding of banking is along the lines of Bailey Savings and Loan in It’s A Wonderful Life, where your saved dollar is turned into someone else’s loan, but it is a far cry from that today. Your savings means virtually nothing today when they, through a clever scheme involving the central bank, can multiply your dollar into 10 or 100 with the stroke of a key. (The current US reserve requirement is only about 3%, sometimes lower.)

There is a lot to think about when you watch this video, but it makes sense that the interest rates could drop so dramatically and still the banks want to lend. It is because the money is not made on the interest (that is just the icing on top), but in the fractional system whereby they can magically make $100 grow zeroes just by creating a debt note. The debt itself is the currency. And the fraction multiplies it. Unfortunately this also makes a very unstable money system that is far removed from the actual value of the product of service and therefore will always need more debt and more inflation to keep feeding the monster. That is why “growth” and “jobs” are pushed over almost everything else in most industrialized systems that use a fractional system. Like an addict, there is never enough.

Why a Mortgage is Just Glorified Renting

We have bought houses with and without a mortgage and I can tell you that buying a house without a mortgage is WAY better than buying it with one. However, I also understand that most people cannot afford to buy houses outright -with their current way of thinking anyway. What is so silly to me, though, is that people would leave a rental in order to “buy their own home” without really understanding that if they buy that home with a mortgage they are just renting in a more glorified manner.

 

I know that many people will disagree with that statement because home ownership is a sacred golden cow in this country and well it should be -IF YOU CAN OWN IT OUTRIGHT. If you can’t own it outright in 5-7 years (by putting extra principal toward the balance or saying enough to just pay it off), you are basically just renting. Why would I say this? Well, the first 5 to 7 years of a 30 year mortgage is almost entirely interest.

Go to any of the banking sites out there like Bankrate.com for example and find a mortgage calculator with an amortization schedule. Type in the amount of an average house in your area, say $165,000, for 30 years at 5% interest. Your monthly principal and interest payments (not including any HOA fees, utilities, insurance or taxes) would be $886/month. Of that, only about $200 goes to actually buying the house, the other $686 goes to interest AKA the lender. If you bought a house today: April 2012, until July 2028 you would be paying more toward interest than toward principal. That’s 16 years of paying the majority of your mortgage to the interest -to the bank- not towards owning your home! And after 16 years of paying nearly 200 house payments you would still owe over $105,000!! You would have paid for 16 out of 30 years on the mortgage and not even paid half the mortgage ($82,500) off!! But the bank would have received checks from you for over $170,000 over those 16 years.

In this model, the lender acts as the Landlord, except they don’t have to do anything to maintain the property. They just collect that huge sum month after month, year after year while you get the warm fuzzy feeling of having “bought” something. And when you “buy” the house with a mortgage, the bank makes you get an appraisal, insurance, and escrows your taxes because they know that they actually own it and want to make sure THEIR asset is protected if/when the debtors default. But you don’t actually own it! Not for 30 years! And most people don’t last the full thirty. They get tempted by banks and others to refinance or sell and start all over. Because as you get closer to the end of the term you actually start paying more toward your principal -to actually owning the house. But if you refinance, you start all over again with a huge interest check to the bank. A perpetual cycle geared at keeping people always paying a mortgage AKA glorified renting.

In our rental business we see the starry-eyed quest for “home ownership” all the time from tenants who want to buy “their own place”. I think everyone has that drive for freedom and independence and that’s great. The problem is that if they are buying a house with a mortgage, they are buying that idea of home ownership, but not the actual home. They are buying into being in major debt for years and years, decades even. At least with renting you don’t owe anything except the next month’s rent. There is no huge balance hanging over your head.

In our rentals we have seen people leave $700/month rents to pursue buying houses with $1100/month mortgages (with $950 of that going to the bank’s pockets) just so they can say they own a house. Or others who leave renting one of our houses so that they can say they “own” a $2000 trashed trailer, not even considering that they still will have $600 in lot rent for the trailer to sit on and need to pay to fix and maintain the trailer. Now, because they have filled out a rental application we know their incomes, job history and credit. They would be best served just saving their money and then buying outright or buying a 10 year mortgage product that will result in some real ownership. Or put their rent money toward a rent-to-own house where they still have the freedom to walk away if they want, but they put some of the rent toward buying the house.

At least while renting they don’t have to worry about taxes, insurance, HOAs as well as roofing, water heaters, appliances breaking, drains clogging, sprinkler systems, and all the other various maintenance issues that the Landlord takes care of. Basically by buying into the home ownership dream without actually owning something outright, they have just become glorified renters with more problems and usually less money per month.

It is strange to me to see how people believe getting a loan is the only way to do most things anymore. You CAN actually go to college without a student loan. You CAN actually buy a vehicle without a loan. You CAN even buy a house without a loan. But most people want instant gratification and can’t see that that is even a possibility. Instead, the system rewards these frequent debtors with tax deductions, “first time home buyer” programs, and mass media promotes this as the only way.

And why would the system reward mortgage debtors? People who believe they actually own something are more likely to take care of the place and keep the neighborhoods safe and clean. However, the facade begins to crumble when we see foreclosures everywhere because the bank’s tenants (so-called home owners) couldn’t actually afford the debt/rent (house payment). This is the equivalent of renters just abandoning a house even if there is still a lease. It is frustrating to see so many people fall for the Emperor’s New Clothing when it is plain to see that there is nothing there. Not as long as debt is the clothing people wear and call it ownership.

Ask and You Shall Receive

One huge “secret” to success is as simple as asking for it. So often people complain about various things that they want to change or have, but they don’t actually “want” it deep down. When you truly want something, ask for it! When you put it out there, things start moving to get you what you want. And when it comes to you, don’t push it away. Giving is important, but receiving is part of that too. If you can’t graciously receive, why would anyone try to give?

I’ve found that just “asking” both literally and figuratively has helped to bring in more than I ever would have imagined otherwise. When you ask and you truly believe you should receive, it will come to you because you will be searching for it. Doors will open and you will suddenly “see” things that probably were always there, but that you were just blind to before. Here are some examples both minor and large.

Discount chicken: We were at the grocery store and we wanted some baked chicken. They had some but it had been under the heat lamp for a while. We were offered the fried chicken, but we try to avoid fried food. So we thought, let’s ask for a discount. This is a large grocery chain that doesn’t just mark things down willy-nilly. The deli clerk said she couldn’t give a discount, but she could price it as something else. We got the chicken for about 40% off. Just by asking. We could have just taken the chicken and mumbled about wanting a discount to ourselves, but instead, we got one because we asked.

Half-price photos- We had a similar experience at a huge box store where we went to print out some photos for Christmas. They were supposed to be “instant” photos but took nearly an hour to finish. We could have just paid full price and left, but instead we asked for the 1-hour photo price. The clerk had to ask a manager, but then it was approved. We asked, and we received.

No late fees- We use credit cards for large purchases in order to get a percentage of cash back. We always pay our bills on time and never pay any interest. However, once we never received the bill until the day after the bill was due which would have resulted in a late fee and possibly an interest charge. We called the credit card company and told them what had happened and asked for them to waive the fee since we had never been late and that we would pay the balance then and there. They agreed. If we hadn’t paid attention or asked for that, we would have been stuck with a late fee. This can work on any number of things including even library fines!

Poor service=free food -We were at a restaurant and ordered a steak “medium well”. It came out “very well done” almost like leather. We don’t complain much, but when the manager walked by and asked how the food was, we didn’t lie and told her that the steak was overcooked. She offered a new steak and we had lunch the next morning in addition to the dinner. Sometimes restaurants will give you a gift card or some other consolation if the service or product is less than desireable. Be honest about it and don’t take advantage of this, but if you feel slighted, don’t be afraid to be compensated.

Video games- We had been thinking about getting a Wii for some time. Then we finally “asked” and looked up on Craigslist to find a great deal on a whole console with games for a fraction of what the full-priced system would be. We also wanted to try a game but weren’t sure if we wanted to buy it. We mentioned it to a friend and she happened to have just the game. She let us use it for over a month, just what we had asked for.

Those are small examples where asking or not being afraid to receive have proven to be valuable. But what about large-scale desires? Those too, are a matter of asking.

Love-life and Relationships- If you put out the vibes for a committed partner (ask), that is what you will see gravitate toward you. If you put out just having a fun time and are ambivilent about giving up the single life, then you will have an ambivilent love-life. It’s not rocket science. Put out there what you truly want and do your part to make it happen. Both my husband and I had to define what we wanted in a relationship. When we came together on this we both were happy with what we had “asked” for from each other. This is a continous process and not just for a spouse or significant other but also for all the relationships in your life: family, friends, co-workers, etc.

A great new job- Both my husband and I have experienced this. I held off on my “ask” for a great new job until after I graduated with my master’s degree, got married and went on our two-week honeymoon. Within about two weeks of returning from our honeymoon, I had found the perfect job I had “asked” for, applied, intereviewed and started working shortly thereafter making double what I was at my previous job.

Our first house- We decided and “asked” for our first house. We made a list of everything we wanted in a house. Then we found our house in short order. Everything came together easily and quickly. At first it didn’t have everything we wanted, but we kept asking and working toward it and soon enough it had the finished basement with fireplace, the walk-in closet, the air conditioner, the fence and the pets in the yard.

Rental properties- We put it out there to people we knew that we were looking into the rental business. We let it be known that we were serious: We contacted a real estate agent, we did online research, we read books about rentals. Then we were able to find our first rental house. We specified even more what we wanted out of our rental business. We wanted good cash flow, so we found another house that offered us cash flow. We whittled down our specifics even more to wanting a house paid for with cash, and then the housing market crashed and we were able to afford a house and then another free and clear where we never would have been able to before. We were specific in what we asked for and then we worked and looked for it to all come together for us. Never doubting that it would.

A home in the tropics- We had asked for this for some time, but it wasn’t until we put about some specific “asks” that everything fell into place: the right town, the right price, the right adventure for us.

So, obviously there is a lot of what people would call “work” or planning involved in making your dreams or even your small desires come true. But it all starts with an ask. It really is pretty simple. What you ask for is what occupies your mind. You start seeing resources where you might have missed them before. Barriers get broken down and the path toward your desire starts to take shape. However, when you are ambilivent or worse, contradictory, in your desires and your actions toward those desires, those “asks” become tangled and harder to take shape.

For instance, self-sabotaging behavior or asking and then not taking are great examples of how “asking” can go wrong.
You say you want to fix ___________. You tell everyone you know that __________ needs to change. You would love ___________in your life. So helpful people  and circumstances around you, the “givers”, start trying to help you fix that problem or bring you the wonderful things you asked for. This could be anything: losing weight, cleaning out junk from your house, quitting smoking or drugs, surrounding yourself with people who are supportive and away from unhealthy relationships, making or saving money or getting out of debt, starting a sucessful business, getting a new car, finding the love of your life, etc, etc.

But then you do something that undermines the ask: you complain about not wanting to change, you come up with excuses why it won’t work, you ignore the good advice that will bring you to your goal, you find faults in the thing,  you say it’s too hard to change, you turn down the discounts and the gifts, you hold grudges. What you are really doing is saying “No I don’t REALLY want what I asked for”. So then the “givers” say, “Ok, I won’t keep trying to help you if that’s not what you really want.” And you continue with the life that you implicitly have chosen, that is to say, the life before the ask.

An example:
Should we stay or should we go now? My husband and I are very ambivelent about when we want to move to the tropics to our property there. We know we want it. We’ve asked for it, but we go back and forth on when we should do it. We like our jobs and the security we have here, but we would also love to experience the freedom and adventure of life there. So we vacillate. Doors start opening, but then we ignore them or say we’ll wait. So the “givers” wait as well. Our life remains where we have truly asked to be. Until that changes, that is where we will be.

The big news that really isn’t news is that we have all chosen the life we live. There are some circumstances that we were born into, favorable or unfavorable, but for the most part we have all sorts of decisions that we make all day long every day. We have all sorts of chances to influence our life to be more or less than what we truly want. When you ask for a better life, you will receive it. You will see resources where you never did before. You will see hope where there was once only despair. And the more you graciously take, the more you will also need to give. As your life improves, make it a point to help another person’s (or many!) as well. In this way the cycle flows. It’s not magic, but it is beautiful.