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 I answered the phone and after greetings, Jenny said, I saw your retirement planner and have some questions.  Continue I said.  Well, what you’re doing sounds wonderful and I wish it were for us, but I don’t see it’s relevance.  I asked her to explain with that trite old phrase - A penny for your thoughts:

Well my husband’s hours were cut by 25% and for 14 months, we’ve glared at our life savings being reduced by 39%.  I know that’s exact because we watch it closely.  Years ago we took a seminar that taught us how to budget and plan.  For years now, every quarter we take a weekend away from the kids and our usual life to update our dreams and goals.  We then discuss how we’re going to make them happen.

Six months ago we chose to stop our get-away-weekends, to cut expenses.  Since then planning has stopped.  Why I questioned?  It’s just too depressing getting worse everywhere.  We feel like we’ll be better off if we just don’t look for 2 or 3 quarters.  We’re hoping it will be better by then.

Fear of finances dominates the general public or “The Masses” so intensely that people struggle to avoid it.  The consequence, they continue loosing more and more wealth, without conversations that inspire them to think outside the box.  Perhaps they could change their situation entirely, thereby controlling the very situation that has been controlling them.

We talked, Jenny got re-acquainted with their dreams about a vacation in the summer, the winter, new cars and a new timeshare they planned to buy.  Looking closer at the real numbers and discussing their meaning, they could see they were on track for their dreams and future they wanted, although it now required extending their retirement plans 6 years out.

Over the next two weeks, I noticed in our coaching sessions a sense of hope and inspiration re-appeared, a genuine excitement about being able to live the life they love.  They did it by buying a resale timeshare at fire sale prices and getting a different car.  Also booking 3 vacations instead of two far in advance with two other couples, which reduced the cost and only required a deposit.

The time value of money compounded over 19 years, in their case, made a big difference in their planning for the future.  The lessons here: Manage your fear & look ahead, take decisive action toward your goals, and always be willing to pay a penny for a thought that just might give you your world!

A common thread in todays’ world is how busy we all seem to be.  As you grind your teeth, sweat that next deadline and do your best to get through email and return calls, do you wonder if it’s possible to think about abundance and joy, let alone have that experience?

Occasionally you meet one of those rare people who appears to have life figured out AND is enjoying it - Amazing!  How do they do that having some of the same stuff to deal with that you do?

Just for a moment, with nothing else to pay attention to, see if you can imagine the experience of having these 7 habits fully developed in your life:

1. Build every day with the raw materials of your values and the vision of the future you want to live.  For this habit to be developed, DISCIPLINE is the practice.
2. Live life moment by moment.  PLANNING is a habit to master since the next moment is upon us.  Choose how to use it, or let it pass and deal with the next… oops, that one just went by.
3. A part of abundance is wealth.  What you have and need to live now, and what you will need in order to accomplish what you are going for.  The skill for this is FINANCIAL GOALS, a practice that will get you to and through your retirement years.
4. Sweep away tired uninspiring goals and replace them with an inspiring life purpose, from which an endless supply of relevant goals will emerge.  The practice to develop here is REGULAR REVIEWS.
5. Fight fear with action and get yourself an accountability partner who will hold you to account to accomplish your desires.  INTEGRITY is the practice of saying what you will do, by when, then doing just that.
6. Nourish yourself and others in small ways every day with simple things; like cleaning up your vocabulary and never complaining to anyone who cannot make a positive impact on the object of your complaint.  How many of us “Tell The Truth” in a negative way about our financial situation?  This is complaining and only ensures that things stay as they are, or get worse.  ANTICIPATION or POSITIVE EXPECTATION are skills well worth the time and practice to develop.
7. Finally, CELEBRATE everything you can.  There is much to celebrate if you look for it.  If you have trouble with this one, start an appreciation journal and commit yourself to write in it daily.

Live life by design, think about your credit, your budget, the impact of financing, saving, and investments on your long term planning.  Biggest of all, is your plan abundant enough to live a joyous life?

Try this     (click to follow) new tool to build a great plan in a short session.

Would you like advance warning about where to put your money?

Today we got a read on one of the direct consumer indicators in the economy, the consumer price index (CPI).  From our friends at Mortgage Market Guide, this from their glossary:

“The Consumer Price Index (CPI) is a measure of the average price level paid by urban consumers (80% of population) for a fixed basket of goods and services. It reports price changes in over 200 categories. The CPI also includes various user fees and taxes directly associated with the prices of specific goods and services.”

I mention this because this “basket of goods and services” is now costing you less.  In fact costs to the consumer have not dropped this much since 1950.  This is a reflection of how much consumers are NOT buying and how much providers are reducing prices to get us to buy.  Should we count our blessings?  Is this Nirvana?

It is for the moment because the impact this low inflation reading has on interest rates is high, meaning that the pressure to increase interest rates we’ve seen in recent weeks is subsiding.  For those of you in mortgage financing transactions, this gives you just a little tiny bit of additional time to close your deals at the low rates you wanted before the HAMMER drops!

The hammer you ask?  Well the current fiscal stimulus program has doubled our national debt for the sake of economic stimulation and growth which will occur in the next few quarters.  However, not without its own cost, the hammer - INFLATION!

In times of high inflation hard assets (gold and real estate for example) increase in value and securities (stock market and the dollar) or soft assets decline.

Words for the wise. . .

“3 Insider secrets to help you predict where interest rates will be headed”

While this seems like a promising headline, for the last few weeks the mortgage backed securities market and the stock market have resumed their previous predictable pattern of behavior which is good news, or is it?

For years those in the mortgage lending industry were able to with relative confidence learn to predict where interest rates were headed by what was happening, in general, in the stock market and the bond or treasury market.  I don’t at all mean to suggest that anyone could accurately determine what rates would be but those with experience would “study the tea leaves” and make a relatively good prediction and hit it more times than not.

1 - When bond yields are up mortgage interest rates will move down.  Even though these two are not related but are distant cousins, it was a pretty reliable assumption.

2 - If the stock market is doing well the bond market tends to react in the opposite direction.  This used to be reliable because if investors liked putting their money in equities (stock) they would usually take it out of securities (bonds) to do that.

3 - Talk about the threat of inflation and the bond market would sell off and rates would rise within a few days and stay up in a protective mode until the conversation changed or inflationary fears subsided.

For the past year or so, these have not been dependable measures to predict where interest rates are headed due to the overall lack of enthusiasm and trepidation about the financial markets.  Interest rate behavior was pressured down, they stayed there & nothing negative about the market would have much of an effect on rates.  It has been a hay-day of low, good rates so to speak. . .

My friend Ray Avanzino presents a very straight up picture of current market conditions, check out his work.  Bottom line, the fear of inflation surrounding the increase in federal debt is increasing and therefore the bond market has sold off more dramatically than ever in the past.  This usually means higher rates and indeed they have gone up quite a bit in the last 2 weeks.  However, higher rates threaten our fragile recovery so now the pendulum is poised to swing the other direction so as not to slow down or stall what little recovery we might have going.

The lending industry is doing all it can to get clients locked and closed before major increases threaten already weak business.  So if you are in line, hopefully you have a skilled agent who can see these trends developing and will tell you when to achieve your home run for this cycle.

As usual, please comment, don’t be afraid, you’ve got a couple of minutes, just do it!

Howard Steele is a mortgage consultant with Plaza Loans

In Campbell California.  Howard has the unique perspective of having sold real estate as a Realtor as well as arranging financing for his clients.  In these conversation with Silicon Valley Realtors I have relationships with, I encourage their opinion on market conditions for the benefit of the reader.  So here is how Howard see’s it:

As a mortgage consultant the questions that I am often asked is “how are you doing in the real estate and mortgage market?”

Actually there are a surprisingly strong number of qualified buyers who are actively searching for that perfect first or second home.  Yet, since the majority of the homes for sale are either “short sales” or bank owned properties known as REO’s (Real Estate Owned) there are some large obstacles in the path to home ownership.

To buy a home as a short sales one is enrolled in a long process of waiting for a bank to agree to take less money than what is owned on the first loan or even worse, the second currently on that property.  Since banks work at their own pace and their loss mitigation departments are definitely overworked, timing translates into 3 to 6 months of hoping that this bank will agree to the sale and allow the buyer through.  Most buyers and agents do not have patience for this.

Bank owned properties are no easier since banks know that if they market the house for considerably less than actual value they can create a bidding war.  Any family making an offer on those homes needs to be prepared to make an offer substantially over the list price just as they did in the heyday of real estate several years ago, just to have a chance to buy the home.

Transaction are taking longer, the buyers are more frustrated and more research and negotiations are required to assemble successful transactions.

Thanks Howard for your insights and I guess if we are to draw conclusions from Howard’s subtle coaching it would be, build a relationship with a qualified and aware professional you trust then be patient!