We Want Your Feedback!

People have been knocking down the door to have Gallup FCU come present about Financial Wellbeing. It’s awesome! If your group would like us to come present about Financial Wellbeing feel free to shoot me an email.

Wellbeing is about more than saving a few dollars and having an adequate insurance plan. It’s about finding peace in your financial situation and using your money to create memories.

We have had the opportunity to chat with a couple of different groups over the last week. From our conversations it has become pretty clear that you guys understand the basics of what Financial Wellbeing is all about. What you have asked for, are more solutions to help you get there.

I would love your input, try answering these questions:

• What do you expect from a financial institution that is improving your Wellbeing?
• What is Gallup FCU doing that helps you improve your Wellbeing?
• What could Gallup FCU do better to improve your Wellbeing?
• What can you be doing to improve your own Financial Wellbeing?

Think about these questions and leave a comment!

A Second Career – At Age 50

I was reading an article this week at www.Inc.com by John Brant called “How I Did It: Bob Moore, Bob’s Red Mill” and it really made me think. Bob Moore recently retired from his second career at 81. The kicker is, his second career was as the owner of a start up that generates $70 million a year in revenue. That’s awesome!

So often when we think about retirement we tend to picture quitting that ball-in-chain job at 65 and cruising the open road in a magnificent 40-foot  RV… for the next 20 to 30 years? I don’t know about you, but I don’t think that driving around the country or any leisure activity for that matter, would be enough to fill my time for  all of retirement.

Is it really appropriate to plan for retirement as if you were never going to work another day in your life? I don’t think so, at least not for me. Bob Moore’s ideal retirement was about being an entrepreneur and grow a business that he loves until he reached a point where he could give it away. 

What will you do in retirement? The funny thing is, we spend all our adult lives saving and dreaming about getting there but once it finally arrives often people don’t know what to do! For most of you retirement could be 15 or more years away but that doesn’t mean you can’t or shouldn’t start thinking about what will fill your time. Try answering these questions:

In retirement will your life be the same or very different?

Will you live where you are now or far, far away?

What will consume your time work or leisure?

Will your days be scheduled or spontaneous?

Will you prefer to be home or traveling?

To have success at saving for the future you must have an end point. If you don’t know what you are going to spend the money on, how will you know if you are saving enough? Take an hour and read about Bob and how he did it, and then dream about how you will do it.

The 15 Year Mortgage – Why It Makes Sense

I think most people know that a 15 year mortgage is a good deal. But I think a lot of folks don’t know how great of a deal it really is. I think there are two good reasons why you should consider a 15 year instead of a 30 year mortgage.

First, the math works - let me break it out for you:

The 30 year $150,000 mortgage at 6.00%:

Monthly payments of principal and interest = $899.86

Total interest cost over the life of the loan = $173,944.96

The 15 year $150,000 mortgage at 6.00%:

Monthly payments of principal and interest = $1266.31

Total interest cost over the life of the loan = $77,924.92

As you can see, the 15 year mortgage saves the borrower almost $100,000 in interest cost over the life of the loan! This example is even a little unrealistic – a 15 year mortgage will have a lower interest rate than a 30 year mortgage, which saves even more money! What is the extra cost to you? It only requires approximately $350 extra a month.

The second reason I like the 15 year mortgage is simple. How cool would it be to own your home free and clear in just a few short years? From that point on, all you have to pay are the taxes and insurance! Wow, I don’t know about you, but that gets me all kinds of excited.

So after you decide that this is the route you want to go, the natural question is: how much house should you buy? Well there is a simple rule of thumb we use in the industry. Your total housing expense (principle, interest, taxes and insurance) should not exceed more than 25% of your monthly take home pay. So here are two calculations to help you determine what that is for you.

If your household makes $70,000 annually and your monthly take-home pay is about $4650 (assuming a 20% tax rate) then:

$4650 x .25 = $1,162.50 total monthly housing expense

Conversely, if you are looking at a house and the monthly estimated costs of the home on a 15 year mortgage total $1600 per month. Your monthly take home pay would need to be:

$1600/.25 = $6400 total monthly take home pay

This is a very conservative way to determine how much house is affordable for you. Some other people might say that this is too conservative, but in my opinion I would rather be in a house I can afford with a few extra dollars to spare than the alternative. Once you start looking at mortgages and the costs associated with closing on a property it might get confusing. If you have any questions give us a call, we would be happy to help.