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American Plumbing Company Satisfaction Guaranteed

December 23rd, 2011

About three months ago my brother stopped by my house to borrow a book. Fortunately I was not at home because he and his wife were able to smell gas before even entering the house. Lacking an acute sense of smell I brought a couple friends who immediately validated what my brother had told me. I called the gas company but the gentleman who responded was unable to pinpoint the source of the leak. After about a thirty minute examination of the house he decided the only course of action available was to disconnect the gas. I would need to get a plumber to test the pipes and locate and fix the leaks before the gas could be reconnected.

Obviously some time was required to save up the necessary funds. So following several months of cool mornings and cold showers I finally managed to scrape together enough money to have someone come look at the problem. Now before disclosing the resolution of my tale, I should offer a bit of criticism of our dear inspector here in Tyler, who recently mandated that all gas plumbing be tested at a pressure of ten pounds per square inch, (p.s.i.), a very high bar considering the gas companies only provide their product at four p.s.i. The increased pressure actually creates a real problem for owners of older homes like mine. The higher pressure can actually create more leaks than would otherwise exist. Of course it could mean more work for area plumbers and local inspectors, but I’m fairly sure the high standards are merely a means of increasing safety, and not a city make-work program… right?

All this being said; after briefly speaking with a number of area plumbers, I settled on a good company. The guys at American Plumbing Company did a great job for me. They climbed under my house, diagnosed the problems, removed some unnecessary plumbing under the house, and fixed some leaks that were very difficult to reach. They did all this while I was on a tight budget, helping me keep track of the money I spent on labor and materials. Most importantly, they were honest, keeping me informed of everything they had done, and advising me on what they needed to do. At the end of a long day the pipes were fixed and I enjoyed the first hot shower I’d had at home in weeks.

For more information on American Plumbing Co. call their office at (903)592-5508. Customer satisfaction is guaranteed.

Related websites related to gas leak repair: Heating Repair in Tyler TX

 

Home Loan Investment Strategy

June 6th, 2011

Home mortgage strategy tyler txThis strategy I like to call Integrated Cash System. I think this strategy will be unbelievably valuable to you as it has been for me.

It is important to understand how cash flows although there is nothing necessarily earth shattering about this but understanding the process will help lay out the principle.

As long as you have good fiscal habits everything is going to work out for you, ok.

Step 1: You need an emergency fund. Simply create a cash cushion of some kind to safe guard you from the possibility of Murphy’s Law. These type of things could be like your hot water heater breaking down, Your water pump on your car needing replaced, etc. How much do you need as a cash cushion? You only need about $3,000 – $10,000. No matter how much money you make you only need at the most $10,000. This is for short term type things and not a long term emergency fund.

Step 2: You need to eliminate debt. This means non-preferred debt such as credit cards, car loans, and basically anything that is not your mortgage. Your mortgage offers tax advantages where as all other debt does not and is considered non-preferred debt. Again remember hold on to no debt other than your mortgage.

Step 3: You want to have an element of liquidity. If you are an entrepreneur and you have an interruption of income you want to have enough money to carry you through. This applies to business or personal finances. You want to have one year worth of income or one years worth of expenses typically available to carry you through a tough situation.

You do not want to just plan for a small interruption in finances and that is what this liquidity step is about. This liquidity is not just for long term bad interruptions in income situations but for having money when you run into a good thing such as a new opportunity.

Again how much is good liquidity? One Year Salary.

Step 4: Pay Off Home. Free and clear. There are two ways to do this. You can pay it off to the bank or pay it off on your actual balance sheet. This just means you have an offset account equal to or greater than the mortgage is. So for instance, if you owe $350,000 on your home mortgage but you have $350,000 in assets then they basically nullify each other out. Some financial planners and CPA’s might tell you that there is a cost associated with this plan but you are not hearing the whole story.

For example lets look at two different people. Each person is a simple W2 wage earner. They each have $40,000 in savings and they are both going to buy a $200,000 house. We have Jim Pilgrim as example number 1. Jim believes in a more traditional way of paying off his mortgage. Jim wants to pay his home off as quick as possible and even send in extra money each month to pay off on principle above his set mortgage payment amount. He was likely told by mom, dad, grandad, and grandma to pay off your mortgage quickly.

In example 2 we have Susan Smith who believes in a money creation strategy of carrying a bigger and longer term home mortgage that is an interest only loan.

Jim takes on a 15 year mortgage at 6.38% APR while Susan goes with a 30 year interest-only loan at 7.42% APR. Note: The home mortgage interest rate has been artificially inflated to factor in the PMI which is the Private Mortgage Insurance.

Jim put down a big $40,000 down payment which is a 20% down payment and has zero dollars left to invest. His monthly mortgage payment is $1,383 and 57% of that is tax deductible the first year. His average monthly net after-tax cost is $1,227 because the deductions he takes on his taxes because of home mortgage interest reduces that mortgage amount when you look at the discount he gets on his taxes.

Jim also pays an additional $100 on top of his mortgage each month to pay off the mortgage a little sooner.

Now looking at Example 2 we see that Susan is going with a 30 year interest-only mortgage loan at 7.42% APR. She puts down a $10,000 tiny down payment which is only 5% of the mortgage. She keeps $30,000 in a side investment fund rather than pay a large deposit like Jim.

Susan’s monthly mortgage payment is $1175 and is 100% tax deductible the first 15 years. When calculating the money she saves from tax deductions she has a monthly net after-tax cost of $799 for her home mortgage.

Susan repositions $100 monthly to a side investment account plus $428 into this investment fund she is saving from the lower mortgage payment. She has her money put into a tax favored account earning 8% interest.

Now CPA’s might be hyperventilating at this point as they see that Susan is paying on an interest only home loan as they will say that she will never pay off that mortgage. If you look at her monthly net after tax cost she is only paying $799 for her mortgage compared to Jim who is paying $1,383 a month on his.

If you are self-employed you can actually reduce your quarterly tax payments to the government instead of waiting for the refund from the government at the end of the year. This means you don’t have to pay the full $1175 monthly mortgage payment because even though you are paying this you are reducing your quarterly tax payments to bring your cost to $799 a month.

Why give uncle Sam an interest free loan?

Now looking at the interest rates you see that Jim is paying a lower interest rate but it is costing him more than the higher interest rate Susan is paying on.

Now after seeing these two examples which person do you think made the right decision?

After 5 years what are the results.

  • Jim gets $14,216 in tax savings
  • Jim has $0 in his bank savings and investment accounts.
  • Susan has received $22,557 in tax savings
  • Susan has $83,513 that she has saved in a side investment fund.

Now what if both Jim and Susan lose their jobs or interruption in income?

  • Jim has no savings to get him through income disruptions or loss of job
  • Jim cannot get a loan because he has no job and home equity no longer helps to get a loan in this economy.
  • Jim must now sell his home because he cannot make his mortgage payments.
  • Jim likely will need to sell his Tyler home quickly for cheap and pay realtor commissions of 6% – 7%.
  • Susan has $83,513 to keep her going because she lost her job.
  • Susan doesn’t need to take out a loan.
  • Susan can continue to make her mortgage payments no problem.
  • Susan is not in panic mode because she has tons of cash.

Income results after 15 years with the Jim and Susan Examples

  • Jim has gotten $25,080 in tax savings
  • Jim has $30,421 in investments and savings. (From paying in $100 on mortgage each payment this is what he saved)
  • Jim owns his home with no money owe the bank.
  • Susan has $67,670 in tax savings.
  • Susan has $282,019 in savings gained in the side investment fund.
  • Susan has enough money to pay off mortgage and still have $92,019 sitting on the side.

Jim and Susan financial situation after 30 years

  • Jim has $25,080 in tax savings
  • Jim has $613,858 in investments and saving accounts.
  • Jim owns his home with no money left to pay the bank.
  • Susan has $107,826 in tax savings
  • Susan has $1,115,425 in investments and saving accounts.
  • Susan never plans to pay her mortgage off as she is happy with the liquidity, security, tax savings, and investment returns more than home ownership.

When real estate values go back up rather than letting that equity just sit ideally by you can use it to your advantage. You take that money and invest it when real estate values are up.

If there is any point to be made with all of this it is that you should separate your equity from the brick and mortar. When your equity goes up in your home you can do nothing with that money if it is tied up in the home. By separating that money from your home and investing it you are making the smarter investment decision with your money.

Step 5
Financial Independence. Houses are designed to house families not store cash. Investments are designed to store cash.

  • You want to get to a point where you are not trading hours worked for dollars.
  • Making enough money from the income your assets generate to have the lifestyle you desire.

Commit to conserve and not spend your equity from now on and forever! HAVE A CASH BUDGET ONLY! (Not literally but just that you do not spend more than you have)

In Summary

1. Have an emergency fund.
2. Become debt free
3. Liquidity (1 years salary)
4. Pay off Home (Paid off on balance sheet).
5. Financial Independence (No longer working hours to get dollars) Maintaining the lifestyle you want to live from the income your assets give you.

We recommend speaking to a Tyler TX financial advisor to see if this type of plan is right for you: Achieve Financial, Feliciano Financial Group

Texas Teachers Protest Education Cuts

June 6th, 2011

Last week I wrote an article on the job situation in Texas. New statistics show our state far ahead of others when it comes to expanding employment opportunities. One of the categories showing growth in the Dallas, Ft Worth metroplex, was health and education, and not so much general education, but specifically private education. Well, Texas school teachers are holding protests in the capital in Austin demanding the legislators reverse planned cuts to the school system in Texas.

As a teacher myself I never like to see other teachers out of work. I do agree that the public school system has a history of making cuts on the wrong end. It’s never the assistant administrators, (or rather assistants to the administrator), who end up getting laid off. Too often the public system becomes so top heavy because the existing bureaucracy protects its own. But beyond that, there are a number of reasons for me to support these cuts. First off, the teacher’s union; as a successful (albeit private school) teacher I’m just not willing to tie my employment to teachers who are unable to make the cut. I know that sounds callused. I’m not some kind of hardnosed control freak, but I’m just not willing to put my own career at risk for those who would otherwise be weeded out to make room for a good teacher. Look, I know some terrific teachers in the public system. Some of them have jobs endangered by the cuts. But these are teachers who should be able to rise through the system on their own merits, without the need for joint bargaining.

Another reason to support the cuts is that there simply is not enough money! We can’t afford it! Some of these protestors are insisting that the state break into its “rainy day fund” in order to support their government funded lifestyle. This is the same approach that has put other states on the path to insolvency! How can these teachers insist that the state bring itself (and its citizens mind you) to financial ruin, for their sakes! Ironically we saw examples last week of schools that are not only growing, and being successful, but also hiring new faculty. Where are these schools, and what is the key to their success? They’re all over the state, and they’re succeeding in the private market by virtue of their merits! But the teachers union insists that we as a state continue to prop up a generally failing product, when success is on full display at the church school just up the street.

The protests scheduled for today are intended to frighten lawmakers with the prospect of losing their jobs in the coming election. What the protesters and the legislature need to understand is that, while there may be a fair number of people in the capitol today, there’s a much larger electorate in the state overall who supported this agenda, and refuses to be taken to the financial cleaners because the teachers union wants to retain its inflated powers of negotiation. As a state we just can’t afford to continue dumping funds into a failed system. It’s a road that will lead us to the same end as states like California. The Texas voters spoke in favor of financial responsibility, and the NEA can kick, scream, carry signs, stage naked protests, and cram people into the capitol building like college students into a VW bug, but at the end of the day we won’t be blackmailed into watching our state sucked down the financial drain for them.