When I get this question, I try to shift the conversation away from “Which strategy is best?” and towards “Are you sure you want to pay off your mortgage early at all?”  While I think it’s admirable to get out of debt and stay out of debt, I don’t believe “paying off your mortgage early” should be your number one financial priority.

“Paying off your mortgage early may NOT be

the smartest financial strategy for you.”

Instead, I believe you should use your financial resources to prepare for the future and all those mean, nasty twists and turns that life can throw at you.  I’m not suggesting a gloom-n-doom approach to the future, but we just don’t know what will happen, and paying off your mortgage early may NOT be the smartest financial strategy for you.

Focus FIRST on Building Liquid Assets 

My advice is to focus first on building liquid assets (resources you could access with little difficulty to pay for stuff) vs. paper wealth (resources that cannot be accessed easily).  Equity in your home falls under the “paper wealth” category because it is difficult to access in an emergency and you may not be able to access it at all when you really need it.

An example of what I’m talking about came across my desk recently.  The applicant wanted to refinance his home to access some of his paper wealth.  For several years, he had been paying extra on his mortgage and only owed about $70,000 on a home worth around $400,000.  On paper, things looked good, but…

…he was facing total financial collapse 

I’ll leave the gory details of his set-backs out of my story, but when he came to me, his wife had left him and the divorce had drained his bank accounts, he had lost his ability to work due to an injury and lost his business, he was 6 months behind on his mortgage payments, and he was facing total financial collapse.  He needed me to help him access some of his $330,000 in equity (paper wealth) to live on. 

All that “paper wealth” made his home an enticing target.

But because his credit scores were bad and his income was gone, he didn’t qualify for a new loan.  The bank who owned his mortgage – that same bank he had been paying extra to all those years – wouldn’t help him.  I’m sure they saw his home as a great foreclosure opportunity – all that “paper wealth” made his home an enticing target.

His only solution was to try to sell the home before it was foreclosed on in order to keep some of his “paper wealth”, but since he had been so determined to keep his home – not wanting to uproot his children who’s mother had just abandoned them – he failed to act quickly enough and now it was too late.

I wish I could tell you his story had a happy ending, but it didn’t. 

What I can tell you is that if this man had had $330,000 of “liquid assets” instead of $330,000 of “paper wealth” – his story would have turned out much differently. 

So if you are prepaying your mortgage now, but don’t have enough liquid assets available to handle life’s emergencies, please remember: 

You cannot go grocery shopping and tell the cashier, “I don’t have any money, but my

mortgage is paid off”.  Even on double coupon day, that won’t buy you any fruits and veggies.

“Should I pick an adjustable rate mortgage, like a 3/1 or 5/1 ARM, or go with a 30 year Fixed Rate?”  How many times has a buyer or borrower asked you that question?  How do you help them choose in a way that makes sense to them?

I’ve found that “Pizza” is the best illustration to use to help them understand this question.  If I give this illustration, it all of the sudden makes sense to a borrower and allows them to make an informed and confident decision.  Here’s what I’m talking about:

When you go in to a pizza parlor to order a pizza, you’ll be faced with the decision of “What Size” to choose.  Some places have only a couple of sizes to choose from, other places have as many as 6 sizes to pick from.  How do you choose?

Get Maximum Value for your Money 

Well, if you’re looking to get maximum value for your money, you can start calculating the cost per square inch of each size.  Since pizzas are round, you’ll have to pull out your handy geometry cheat sheets (I can still see mine faintly etched on my forearm – where I wrote down the formulas to help me get through those high school math tests) to get through the diameter, radius, pi-r-squared issues.

You’ll soon discover that in most pizza places, the larger sizes cost you less per square inch than the smaller sizes.  (This is why, when buying for large groups, you avoid buying individual personal-sized pizzas for each person and instead go for the largest sizes for everyone to share.) 

Why would you EVER buy a smaller size? 

After you’ve figured out that you get more value per square inch out of the largest sizes, why would you EVER buy a smaller size?  The answer, when buying pizza, is obvious to you.  If you’re by yourself, for example, and buy an extra large pizza because it’s the best per-square-inch value, but eat only a few slices and throw the rest away – you’ve wasted your money.  Yes, you bought the best “total” pizza value, but by NOT USING the entire pizza – you wasted your money. 

The answer to your pizza buying size question, therefore, comes down to “How much pizza will I use?”  To get the most for your money, you should always buy the largest size you will actually use.  And so it is with choosing a mortgage ARM or Fixed Rate product.  Huh?

Is a 30 Year Fixed Rate ALWAYS the Best Value? 

The assumption I will ALWAYS use when comparing an ARM with a Fixed Rate mortgage is that over the entire 30 year term, the 30 year Fixed Rate loan will cost you less than an ARM – which tends to start out with a lower interest rate for a few years and then will eventually adjust higher.  So if you’re going to keep the loan for the entire 30 year period, a 30 year Fixed Rate loan is – just like the extra large pizza – the best value per year (per square inch).

BUT, if you take out a 30 year Fixed Rate loan and only keep it for a few years, it is just like buying that extra large pizza, eating a few slices, and throwing the rest away.  If you ABSOLUTELY KNOW that you are only going to keep that mortgage for a few years, then you need to give serious consideration to choosing an ARM if the rate you can get is less than the 30 year Fixed Rate.

Be sure to buy ENOUGH! 

A final word of caution:  Be sure to buy ENOUGH pizza to start with.  It is not good to find out you don’t have enough to feed everyone because it is a hassle and expensive to go back and order some more after people have already started eating.  Likewise, be sure to get ENOUGH term on your ARM to start out with.  If you think you’ll stay in the home for 3 years, but aren’t 100% sure, you may want to get a 5/1 ARM to start with – just to be sure you’ll have enough. 

Don’t get caught short – almost EVERYONE expects rates to rise significantly in the future, so don’t get stuck with a house payment you can’t afford.

When I first entered the mortgage business after a successful stint as a sales training manager under Sunny Kobe Cook of Sleep Country USA fame, I was very nervous about working in such a volatile industry and scared about whether or not I could attract enough clients on my own.  Sunny had a way of making sure we always had a steady stream of customers to serve.  Like her ads or hate her ads, people came in to buy her products. 

Turns out I was right to be nervous about the mortgage biz 

I would have months where I had too many customers to serve properly, followed by months where I couldn’t find a customer to save my life.  I would embark on month’s long campaigns focusing on a certain type of borrower or lending program, start reaping the rewards from the effort, only to wake up one morning to news that guidelines had changed, programs or products  had been eliminated, and I no longer had anything to offer these potential clients I had spent so much time and effort attracting.

I’ve learned so much about myself

This roller coaster ride was exciting and challenging, filled with extremes of exhilaration and frustration.  I’d start each day believing I could do it and then face and almost constant bombardment of roadblocks and doubt.  Yet I continued on because each client that I successfully helped brought joy and satisfaction and hope for tomorrow.  Through it all, I’ve learned so much about myself, about risk vs. reward, about money, success, perseverance, and security.

As I’ve dealt with clients who are struggling – hit hard by the economy, being affected negatively by the changes in lending, living under the assumption that home values always go up, that jobs last forever, that disaster cannot happen to them, and that credit will always be available to those who need it – I’ve been working on solutions and strategies to help people succeed, regardless of outside forces.  I’m driven by the desire to help my folks get from “Here” to “There”, regardless of where their “Here” is right now.

Help for those struggling with credit, debt, spending, earning…

That is why I am so excited about being asked to present at this Summit.  It has given me a deadline to gather and organize and compile these ideas I have.  I’ve spent a lot of time recently updated and revamping this website to accommodate these ideas and I will add to it as I expand these areas.  The plan is to continue to offer help to those struggling with credit, debt, spending, earning – with specific ideas and strategies.

We’ll expand on the creative ideas about home buying and selling strategies, how to manage your home’s equity wisely and safely, and how to grow wealth.  The “There” I’m shooting for, for all my clients and readers, is the “Peace of Mind” that can only come through “Financial Security”.  I’ll create my Legacy by helping others create their own Legacies.

If you’re a Women Veteran who wants to register for the Summit, here’s the link:  http://www.dva.wa.gov/women_vets.html.  Deadline for registration is Sept 7^th.  Again, it’s free!  There should be well over 1,000 other attendees there too so don’t be surprised to see old friends!  And you’ll come out of the day with loads of information and resources you didn’t know before, better prepared to face an uncertain future.

Contact info for Glenn Leach can be found at http://legacyg.com/gleach.htm 

Collection companies are buying up old debts – often called “Zombie Debts” – in huge volumes right now and turning them over to their collection agents.  But before you enter into any sort of agreement to repay that old debt, be aware you just might not legally owe it anymore.

The Federal Trade Commission and the State Regulators have agreements in place called “Statutes of Limitations” that set specific time frames for how long you are legally obligated to repay your old debts.  The confusing part of all this is that different types of debts are treated differently, and each State has set their own rules for time frames.

States have different time frames

So an old credit card debt in Nebraska, for example, will be treated differently than that same debt in the state of Washington.  Making it even more confusing is that if you have moved from one state to another since you opened that account, the creditor gets to choose which State’s law to use.

Still, it is worth checking out the Statutes of Limitations for your State before you repay something you don’t have to.  A real good sign that your old debt is beyond the time limit is the way your collector is handling your account.  Of course they’ll try to get the whole amount out of you first.  And then they’ll start offering you discounted settlement amounts.  But the final step is where they get very aggressive:  “Could you just make a small payment as a show of good faith?  Even $5.00 will do it.”

Why do they want you to make such a small payment so badly? 

Don’t they have better things to do with their time than try to collect $5.00 from you?  The answer is that ANY payment that you make towards these old debts will reset the time limit.

If you make even a $5.00 payment towards an old account – your Statute of Limitations starts over again.  Why?  Because the time limit starts from the date of your last activity on that account.  If you make a small payment, you are acknowledging that the debt is yours and are agreeing to repay it.

When dealing with phone collectors, I have two rules for you to follow:

• Never admit over the phone that the debt is actually yours – even if it is.  Just ask them to send you proof that the account is yours and a summary of what you owe.  Once you get that, you can decide to deal with them or not.  But (and remember that all these phone calls are being recorded) once you admit that account is yours, you are making it that much easier for them to get a court judgment against you.  
• Never pay a collection over the phone.  ALWAYS ask for a settlement letter by mail before you send any money in.  And while they are sending you the settlement letter, make sure the debt is yours and that the Statutes of Limitations haven’t expired.

In my State (Washington), the Statute of Limitations on a credit card debt is a surprisingly low 3 ½  years.  No payment in the past 3 ½ years?  No more legal obligation to repay the debt.

Want to find out more or find out your State’s limits?  Just search “Statutes of Limitations __Your State__” and you’ll find charts a-plenty.

I’m not sure if it is politically correct to call someone a “Gypsy” these days or not, but that’s what they were called when I was a little boy back in the 1960’s.  During the summer months, I remember seeing a large flatbed truck loaded with wooden patio furniture slowly driving up and down the streets of my neighborhood – parking at various corners for awhile before moving on to the next corner.

The hand-painted sign attached to the side of the truck said “Gypsy Furniture For Sale”.  The furniture was a simple design made out of unfinished wood – much like recycled pallet wood. 

The furniture was certainly nothing fancy – just solid and simple.  Single chairs, Double chairs, and small tables.  Perfect for patios and basements.  (How do I know?  Because to this day, my mom has pieces of that furniture on her patio and in her basement.)  People came out and bought it – all cash – and it didn’t take long at all to unload a whole truck full of furniture.

Could you become a Gypsy furniture maker too?

With a simple design that you repeat over and over again, until you can produce each one in a matter of minutes – you can create a load of inventory in your “spare” time.  You can do the door to door route if you have a truck or display a few pieces in front of your home with a for sale sign on ‘em.

You could utilize Farmers Markets and Craft Fairs to display your wares.  Use Craig’s List to sell locally.  Sell them at garage sales or sell on consignment to other folks doing garage sales.  Find one of them corners on the weekend to hang out displaying a few pieces for sale.

The point is that you don’t have to be highly skilled to sell something of value quickly and easily.  You can get started with a skill saw and a hammer.  Got a kid who doesn’t know how to pay for college?  Hey kid!  Have I got a job for you!

Chairs and tables too bulky for you? 

Try birdhouses and feeders, quilts, lawn ornaments, old-fashioned toys.  My grandfather made beautiful baby cradles and couldn’t keep up with orders – but I’m wondering if he could get away with that today with our litigious society.  So you might want to stay away from selling items that could cause injury.

If you do this on a large scale, be sure you follow tax laws and get any necessary business licenses you might need.  I doubt if them Gypsies had business licenses back in the day, but don’t get yourself in trouble!   As with the majority of the extra income ideas, I suggest you set a short term, fixed amount idea that you have a specific target for the money.  “Earn enough to pay off this credit card” or “Earn this amount to use as Christmas money”.

My business is mortgage lending and I love the whole business of money.  I hope you’ll feel my passion for people, my hate for the shackles of excess debt, my anguish for those who are struggling, and my love for history – especially the history of success and triumph!

As you read the articles, my hope is you’ll be entertained, educated, and enlightened.  There are suggested resources you can use to help you along the way.  I’m constantly posting new articles and new information, so please check back often.  Thanks for reading!

King gave his speech standing on the steps on the Lincoln Memorial in Washington DC.  The speech was the culmination of the massive day-long “March on Washington” event that King helped to organize.  Thousands of people rallied together, peacefully marching the streets before listening to songs by Bob Dylan and Joan Baez and speeches by Charlton Heston, Roy Wilkins, and John Lewis before King got up to speak.

March on Washington for Jobs and Freedom

Although the event is remembered today as the “March on Washington”, the full title of the event was actually “March on Washington for Jobs and Freedom”.  Should we be rallying today for “Jobs and Freedom” too? 

An excerpt from the speech reads:  “When the architects of our republic wrote the magnificent words of the Constitution and the Declaration of Independence, they were signing a promissory note to which every American was to fall heir. This note was a promise that all men, yes, black men as well as white men, would be guaranteed the unalienable rights of life, liberty, and the pursuit of happiness.” 

You don’t have the “right” to be happy

I love the reminder that King gave of the “dream” of our Founding Fathers:  that all Americans should have the right to pursue happiness.  We don’t have the right to “be happy”, only the right to pursue happiness for ourselves.  The underlying theme of the Civil Rights Movement of the early 1960’s was that hatred and predudice was preventing others from pursuing life, liberty, and happiness by limiting opportunities for employment and free association.

King wanted all people to be allowed to pursue their own individual dreams – to become all that we can become without artificial barriers in our way – to be judged by “the content of our character”.  We as a country have accomplished much since his speech and that should be celebrated today.

What is your dream?

Do you have a dream?  Are you actively pursuing happiness?  Thousands of American soldiers, civilians, and even King himself gave the ultimate sacrifice to ensure that you have the right to pursue your dreams.  Are you doing it?

Do you need a better job?  What are you doing today to put yourself in position to have a better job?  Are you daily improving your skills so your work has more value?  Or maybe you are struggling with the burden of debt?  What are you doing to attack that beast in your pursuit of financial freedom?  You have the right to be your own bailout!  To fight your way out of it!

As King said:  “I am not unmindful that some of you have come here out of great trials and tribulations. Some of you have come fresh from narrow jail cells. Some of you have come from areas where your quest for freedom left you battered by the storms of persecution and staggered by the winds of police brutality. You have been the veterans of creative suffering. Continue to work with the faith that unearned suffering is redemptive.”

Identify your dream and pursue it with all your might!  Don’t let anything get in your way. 

Be warned that this is NOT a great job to take on for many people.  There is a lot of pressure placed on you when you find yourself in the middle of the action.  Split-second decisions must be made and you MUST know the rule book inside and out to be effective.  And even when you are good at what you do, you’ll still never receive much appreciation from your clients (which are those screaming players and their parents questioning your every call).

Still, I like this idea as an extra source of income for a number of reasons:

• You get to take assignments on when you are available.  If you have a lot of time to devote one week, you can usually get a lot of assignments.  If you are too busy that week, they usually don’t mnd you turning down assignments.  As long as you are organized when accepting assignments and don’t have to make last minute changes, the organizations that hire you are generally very accomodating.
• You are providing a much needed service.  These organizations are giving kids a positive outlet for their energies and they are often short-handed for people willing to provide this service (which is one reason they are able to pay you quite well for your time).  You are helping kids, and earning money.  What could be better?
• The pay usually comes in a lump-sum at the end of the season.  For a baseball season, for example, most organizations offer you a bonus if you will complete the entire season with them.  They hold your pay until the very end and then will add on a nice chunk if you’re still accepting assignments at the end.  So you get a nice big chunk of money all at once – which you can use to solve some specific financial problems or use for something special.
• Tournaments usually offer cash on the spot.  When you become established as a good official, you’ll often be asked to serve for weekend tournaments – which are generally outside of the organization who assigns you to weekly games.  These weekend tournaments typically pay you cash at the end of the tournament for all the games you’ve worked – which gives you some pocket spending money and isn’t something you’ll have to report on your taxes.
• You can earn better assignments by becoming better at what you do.  These organizations are always coming around to monitor new members (and keep an eye on old timers to make sure they’re still performing well).  Once you’ve shown that you can perform at high levels, you start getting better games – which pay more!  I love jobs where your pay is based on your performance!

To give you an example of this last idea, I was called at the last minute one time during my very first umpiring season to work a high school JV game.  I hadn’t been assigned anything above the 12-13 year old leagues yet, but they needed someone that next day and was wondering if I could do it.  I eagerly said “yes” and showed up.  I was supposed to have a partner work with me, but they couldn’t find one.  So I worked the game all by myself.

“Your Momma wears army boots!”

About the 3rd inning, one of the pitchers pulled an illegal pick-off move, and I immediately called a “Balk” on the pitcher - allowing the runner on 3rd base to score.  The coach of the pitcher’s team came unglued!  Their pitchers have been using that move all year, he told me, and not once had it been called a balk, and I must not know what I’m doing, and had I ever umpired a game before, and did my mother wear army boots??? 

I calmly told him that my understanding of the rule book was that it was a balk.  He was welcomed to protest the game it he wanted to, but I believed it to be a balk and it would continue to be called a balk so he better inform his pitchers not to do it again.  (I was really nervous that I was wrong, but I held my ground anyway because my gut told me I was correct.)

After the game, that coach pulled me aside and thanked me for the way I performed.  He said it was true that I was the first umpire to call that move a balk all year, but that I was also the first one to be correct.  He was impressed that I had gotten it right and impressed with the way I had handled the confrontation.  He patted me on the back and told me he’d put in a good word for me with the organization, and the next thing I knew, I was getting JV assignments the rest of the season and was even invited to do the post season playoff games – a big honor (and big money).

Will you get rich off of umpiring?  No.  But getting that check for a few thousand dollars at the end of the season for working a few evenings and weekends doing something fun and performing a service – I think it’s a great thing to do. 

How to get started:

Check with local little leagues or schools and find out who assigns the umpires or officials.  They usually work several months in advance of the actual season (baseball umpires are getting started as early as December in some places for the coming season, for example).  These organizations will have orientation meetings and some training programs (usually an all day Saturday clinic for newbies) to help you get started.  You’ll have some equipment and uniforms to buy (check second hand stores and ebay for bargains) and you’ll be ready to go.

Have fun and “Play Ball!”

This article is not intended as instructional manual for “How to become a doula”.  But I’m including it here as an illustration of the types of extra income opportunities you can find if you look for them.   And this type of “job” fits my ideal for extra income – short-term, well-defined, and a “burst” of income.

To become a doula…

To become a doula, there are many training courses you can take to get started.  Figure to get certified in your area, it’ll cost you around $600 for an approx. 40 hour course to learn the basics.  After that, it is up to you to get some clients.

How much can you earn?

How much can you earn?  For one birth, the going rate will vary by your location and your experience level, but figure you can charge anywhere from a few hundred dollars up to about $2,000.  Obviously, as you gain in experience, you’ll be able to charge more, and it will become much easier to find clients once you’ve developed a reputation for excellence and reliability.

There are very few “full time” doulas because the hours are unpredictable and the compensation is not large per birth.  It is very, very difficult to take on numerous clients at one time because you can’t predict when each birth will happen, and you simply MUST be available for each birth when the baby is ready to come.

But for people looking for a part time extra source of income, you can easily taken on one client a month with few time conflicts.  The “average” doula can expect to make around $5,000 a year for this type of schedule.

How do you find clients?

How do you find clients?  Get to know childbirth class teachers (or become one yourself), OB’s, Mid-Wives, and Pediatric physicians (because young mothers tend to have more children – so this is a good target market for you). 

You can place free ads on places like Craig’s List.  You can even be so crass as to hand information about the doula process to expectant mothers you meet every day.

Do you love the child-birth process?

If you love the whole child-brith process, love offering physical and emotional support, have a flexible schedule, and are confident enough to act as an advocate for your client during stressful times, this could be a great way to supplement your income and add some extra excitement to your life.

In all likelihood, you have a bad credit report. All the information in your report is statistically collected into a score, and this score was uncomfortably low for the loan officer. What do you do, and what the heck is on your report to warrant such a rejection?

Your Credit Report and the Law

By law, you are allowed to order a copy of your credit report for free, once per year, from each of the three main credit bureaus. These bureaus are in the business of collecting all the financial information about you and sell this information to institutions and people who wish to know your financial history. These people include bankers, insurance companies, potential landlords, potential employers, and anybody else who needs to make sure you are financially reliable. If your credit file is inaccurate, it reflects badly on you. Fortunately, your credit report is not set in stone. By law, you are allowed to dispute any item in your file.

Click to learn how to order your credit reports.

Once You Get Your 3 Credit Reports

You will want to order a copy of all three, since different financial institutions subscribe from different agencies. Each agency collects your credit information a different way. Your information isn’t verified – it’s all collected from creditors, who may not send info to all the credit agencies, but only the one they most often deal with. Thus, all three reports will likely be very different, and are bound to have errors.

Scan through each report, circling each item that is wrong or unfamiliar to you. Information goes back seven to ten years, and inquires on your file (which also negatively affects your score) is kept for two years. Note that if the information is old, ask the particular agency’s report to remove it. Take note of any accounts you may have opened, those you have closed, bankruptcies, unpaid or late bills (did you, in fact, pay them on time?), and any other financial information.

You will very likely find information you can dispute. Once you do, the next step is to begin the dispute process.

Disputing Your Credit Report – Do it Yourself Or Hire a Credit Repair Service

You can easily do this yourself, however, there are reputable credit repair services who have attorneys to make your case on your behalf. If you decide to do it yourself, it will take some work, letter-writing skills, and a trip to the post office.

Document each item you think is in error, and be prepared to dispute it with backing documents. If you do not have the necessary documents, you can still dispute the item. The credit bureau must then prove the item with their own supporting documentation, and if they do not have it – which they won’t, if it is a genuine error – then they must by law remove it.

If you have a negative item on your report that is accurate, such as a late payment or a loan default, nothing but time will repair your report. Contrary to some “too good to be true” advertisements from credit repair services promising to erase your bad credit, “GUARANTEED!”, there is no way to remove accurate, negative information in a credit report. Such strategies to erase bad credit are ill-advised, may be illegal, and could even be an outright scam to get your hard-earned money. A strong financial plan, debt reduction strategy and paying your bills on time is the best way to improve your score.

Once you have documented all the information on your reports that you believe are either inaccurate or just plain wrong, you can either write a letter to the appropriate credit agency who sent you the report, or order a dispute form through them.