Be Wealthy & Smart

Learn which mutual funds are significantly outperforming the S & P 500 on a 5 year basis. The charts are posted in the Podcast section on www.lindapjones.com.

Learn how to make decisions with real estate, overcome real estate regrets and stop feeling anxious about buying or selling. There are a lot of people stressing about real estate right now. Should they buy? Should they sell? Should they invest? With real estate at all time highs in many cities, it's causing stressful decisions to be made. I'm not talking about affordability. Obviously, if you can't afford it, don't stretch yourself beyond your means. I was talking with someone who was stressing about money. In this case, not because they had too little. She couldn't decide the right time to sell her house and lock in gains. They weren't ready to sell it, but were afraid the real estate market would crash. People with a little or a lot of money get stressed. No one is immune! Everyone wants to make the right financial decisions. For some it's taking the right job, deciding to start a business, having enough money to survive or maybe how not to lose their money. There is a lot of anxiety around real estate right now. Should you buy a fixer upper or not? It's a major investment. Should you downsize and move to another home? In this case, the woman was worrying about when to sell her house and maximize her gains. Living life is more important than selling at the absolute top of the market. She was feeling torn between trying to make the right financial decision and making the right life decision. Life has to win out! You can't run your life putting money first or you will be miserable. Your happiness matters. I recently met another woman who sold her house in Canada. She sold it for $600k and it went on to be worth over $1 million. The next time I saw her she was trying to buy back into the Canadian market at a higher price. She had a lot of regret about selling her home too early and it was making her want to capture the gains of the past, but that is impossible. She was making herself sick because of the gains she missed out on making. You make the best choices you can. Fear is not a good reason to make a financial decision. At first she was afraid of loss, now she's afraid of missing out or FOMO. Either way, her fearful thinking is not serving her. Where was the right place for them to live? What city did they want to retire in? They sold and moved away for a reason, did that change due to home prices rising? What can you do to avoid real estate regret? Here are 5 tips to help you avoid financial regrets: 1. Live in the present moment. Don't stress about the future or the past. You can't change the past. In the future, your circumstances available to make decisions will change, so how can you make the decision today when you don't have all the information? Living in the present moment will help you stay out of fear. 2. Put your health and happiness first. What is going to be the best decision for your families' health and happiness? 3. Money is a tool for you to use, don't let money use you. Don't put money before health, happiness, etc. When you're in a job that makes you miserable, you won't be as successful as if you love what you do. Try to connect with your happiness and purpose. 4. Try not to stress about future decisions. Realize that when the time is right, you will make the right decision. You will have more information to make the right decision. Trust. 5. Create a plan. Life is dynamic and things change constantly. There is no way to control it. You can't freeze real estate prices until you are ready to move. Accept it. Make the best decisions you can and go with the flow. If you make a bad decision, try to move forward and plan for the long term. Short-term thinking can get you in trouble. Long-term thinking is having a plan and working your plan.

Learn how affirmations worked for a Be Wealthy & Smart podcast listener. Her affirmations helped her pay off three debts, keep off weight, get a promotion, and more! Saying affirmations, and inserting true statements in between each affirmation, is a unique way to make them more effective. Learn how affirmations helped Maria get great results and why you can too.

Learn the 3 things you shouldn't change to get rich and stay rich according to Thomas J. Stanley, author of The Millionaire Next Door. I just talked about 2 of the 3 things on podcast #290. If you haven't listened to it, I go into depth about why people are watching the small expenditures and missing the huge ones that keep you from achieving financial independence.

Learn 5 things to do before purchasing a home, why the debt snowball is not the method to use to improve credit quickly, and how to find a loan officer. Before you do anything, first check your credit report and raise your credit score. Go to www.Annualcreditreport.comand get your FREE credit report once annually. Pay off any credit cards using my system and NOT the Debt Snowball. My version will improve your credit WHILE you are paying off debt. The Debt Snowball delays improving your credit until it's mostly paid off. This is because the Debt Snowball leaves the largest balances to be paid last, while credit is improved when you take maxed-out balances and reduce them to half. Therefore, you must reduce your largest balances first, not your smallest in order to simultaneously improve your credit. Listen to my podcasts on how to pay off debt quickly while improving your credit and paying off debt (debt re-do). Here are your action steps: 1) Perfect your credit as much as possible. It's necessary to begin asap. 2) Save for the maximum down payment. 3) Find a loan officer and educate yourself. 4) Get pre-qualified. 5) Be aware with interest rates about to rise, this may be near the top of the market, so don't get into a bidding war and don't overpay. Patience may be your friend here. Of course, if you are selling your existing home to buy a new home, you'll want to listen to my podcast on how to sell your home for top dollar.

Learn why new cars can be a deterrent to your wealth and what opportunity cost means. Maybe you like cars or you just want a new car. Perhaps you want to buy a new car because it's for safety (too many miles), or status (need it for your job/image), or change of objective (had a child), etc. Whatever your reasons for a new car, re-think it because cars are one of the largest deterrents to your wealth. Take a doctor who grosses $1 million a year, but has virtually no wealth accumulated. How does that happen? Moves from house to house. Buys a new car every 3 years. I've talked about the cost of moving - commissions, loan fees, remodeling to sell, remodeling after purchase, etc. Buying homes and cars too frequently can be deterrents to your wealth. For now, let's just focus on the car. He HAD to have a new BMW 650i. MSRP is $99,000. Let's look at the true cost over time, which is what would the money be worth if you had invested it? We call that Opportunity Cost. What is the depreciation on the car? According to edmunds.com, depreciation on a BMW 650i is: 1. $10,168 2. $5,837 3. $4,987 4. $4,249 5. $3,627 Total in 5 years = $28,868 Mind you, this is happening every 5 years and total depreciation is $29,000. Let's call it an even $30,000 for ease of math. Over 5 years it's $30,000 in depreciation. Let's take the $6,000 depreciation, which he is getting nothing for, and see what it would amount to in 20 years after being invested in the stock market. On average, the stock market over the long term will compound at about 10% per year. We'll take $6000 per year, invested at 10% for 20 years. Remember, this is money that is the depreciation on his car, not money he will ever see go through his fingers. It's lost forever, like making a bad investment every 5 years and your investment is worth less. What is the opportunity cost if he had invested the $6,000 per year instead? Guess. So $6,000 x 10% x 20 years = $418,380. Can you believe it? Do you see why cars are one of the largest deterrents to your wealth? According to Kelley Blue Book, average price of a car was $36,270 in January 2018. New-car prices have increased by $1,360 (up 3.9 percent) from January 2017. Looking at edmunds.com, if you bought a car for $29,873, the minute you drive it off the lot, you've lost $2,559! By the end of year 1 you've lost $5,687, year 2 another $3,607, year 3 another $3,173, year 4 another $2,813 and by year 5 another $2,524. Guess what the total depreciation is over 5 years? $17,804 or a 60% loss! According to edmunds.co, a new car loses 11% the minute you leave the lot, during the first 5 years loses 15% to 25% each year. After 5 years the car is worth 37% of what you paid for it at the dealership. Let's say you invested the $17,804 or $3,560 per year. Invested for 20 years at 10% is $248,238. Invested for 30 years at 10% is $706,278. Remember, you're not shelling out cash, this is money slipping through your fingers! These are the kinds of things that make a difference to your wealth. It's the choices you make. Does that make sense? Hopefully you agree that new cars are not helping your wealth. What can you do? Here's 5 things for you to do: Buy gently used cars in mint condition with low miles. That way a lot of the depreciation is already gone. 2. Don't buy new cars until you have achieved your financial goals. Until then, it's not a good investment and the opportunity cost is too high. 3. Buy buy cars that are too expensive. Put a limit on how much you spend. 4. Listen to Be Wealthy & Smart podcast #10 about cars that last for 250,000 miles. 5. Beware of cars that are coming from the Houston flood! There are thousands of damaged cars from Houston that will hit the auction blocks. Most used cars will be fine. Make sure your dealer didn't buy the car at an auction. It's better to know who the previous owner was and where they lived. Do your due diligence before you buy.

Learn how some people got wealthier faster and the reasons why. This is an article in Investor's Business Daily from April 30, 2018 by Paul Katzeff.

Learn 17 potential places to invest a small amount of money. It's listener question day! Here is our question: Linda, I only have a small amount to invest, about $300 to $500. Where should I start? Sam There are many options you have. Since I don't know anything about your circumstances, I'm going to give you a list of choices. Assuming all your consumer debt is paid off. If not, start there to get back to stability. 1. Start an emergency fund. Keep it in a separate (no-fee) checking or savings account, if possible. 2. Flexible Spending Accounts (FSA) and Health Savings Accounts (HSA) are both great ways to reduce your income taxes by paying for medically-related expenses with pre-tax money — that is, money deducted from your paycheck before income taxes are calculated on your pay. You put money into that you use to pay for certain out-of-pocket health care costs. This means you'll save an amount equal to the taxes you would have paid on the money you set aside. 3. Pay 1/12 extra on your mortgage to pay it off faster and save thousands of dollars in interest. 4. Invest in an ETF or mutual fund. ETF's are passive, mutual funds are actively managed, but more expensive. Spyder S & P 500 fund (SPY, .09% expense ratio) or Vanguard All Market Index (VTI, .05% expense ratio). Dividend Aristocrats – 25 years of consecutive increasing dividends (NOBL, .35% expense ratio). 5. Term insurance. Creates an immediate estate in case of your untimely death. Can buy $100k to $500k depending on your age, health, gender, smoking, dangerous hobbies, etc. 6. Silver coins, still about $25 a piece. 7. Shares of stock. One share of Disney to get the special stock certificate, or Starbucks, etc. 8. REIT. Vanguard REIT (VNQ, .12% expense ratio) Now for some ideas outside of the box… 9. Bitcoin 10. Hire a CPA – to help you reduce your taxes if you make $75k + 11. Subscription to IBD, WSJ or Kiplinger's 12. Condo down payment fund 13. Start a business 14. Have a garage sale to raise more funds 15. Hire an organizer 16. Buy a bus pass 17. Invest in a computer to start an online business Although you can consider all of these, if you are around age 30 or under, making your first real investment, I'd start with the Vanguard All Market Index ETF.

Learn the one thing to focus on for financial success this year. This is the most important thing you can do financially this year. You'll have to listen to find out what it is! Please subscribe to the Be Wealthy & Smart podcast and get new episodes as soon as they are added.

Learn 3 ways to protect your wealth when interest rates are rising. The economy operates on cycles. There is a key indicator of where we are in the cycle. The key indicator is interest rates. Interest rates are controlled by the Federal Reserve. They set the rates and determine when to raise interest rates. Interest rates are the cost of money. It's how much we pay to borrow money from banks. It's something I want you to pay attention to because many people were surprised by the crash of 2008. They thought housing prices would only go up. They thought is would continue forever. But interest rates were rising, which meant the Fed was slowing down the economy. When rates rise, people rush to buy homes. There can be a big boost to prices at the end of the bubble. If you don't understand it, you can be caught thinking you have to rush out and buy a home because appreciation is going crazy. Just as people do that, the market slows, sale reduce, until prices have to drop and supply increases. It can become a downward spiral. Be aware when interest rates are being lowered, that is positive for the economy. When interest rates are rising, it's negative (slowing) the economy. That's not the time to take a big risk, it's time to reduce your risk. Step 6 to wealth is "Protect your wealth." It means don't stay too leveraged too long. Here's what you need to do: 1. Pay down high interest rate debt. 2. Refinance from variable rate mortgages to fixed rate mortgages. 3. Start being more cautious with real estate, which is interest rate sensitive. Take less risk. When interest rates rise, it's a time to become more cautious with real estate. Not the time to be over-leveraged. Watch the cycle and understand what rising interest rates mean and where you are in the cycle.