20 Lessons in 2015

hroughout the next year, I’m going to review the top 20 lessons learned from Stan in my book “Your Mortgage Matters” (see last chapter for the list). As relevant news comes up, like Fannie’s new policy on appraisals going into effect on January 26, I’ll make sure to cover those and push the lessons from Stan back a week. Just wanted to give you a little heads up as to what is coming throughout the first half of 2015.

Lesson #1: You Must Have a Plan for Your Money

We’ve all heard the old adage “if you fail to plan, you plan to fail”. Well, I’m not trying to beat a dead horse here, but that statement could not be more true as it relates to personal finance. Starting off a new year, there is probably no better time for us to help our home buying clients get their finances in order. It's also a great time for us to do that individually as well. Whether we are talking about big ticket items that need to be purchased or saved for (house, car, college, wedding, retirement, etc...), or simply breaking down a monthly budget to align our priorities, unless we become the boss of our money, it will always tell us what to do.

I had a great conversation this past week with a group of college kids. I love their enthusiasm for life in general, but I’m concerned about how naïve they are as it relates to the financial world. I’m not going to go down the “student loan debacle” rabbit hole that I’ve gone down before. I believe that is a looming crisis and I’ll leave it at that. But that crisis is symptomatic of our young people today – those that will soon be our first time-homebuyers. Most don’t even have a clue what a budget is, let alone how to create one. They are graduating from college and immediately becoming a servant to money. I’m amazed at the potential first-time homebuyers that I talk to whose lives are spent on the month to month merry-go-round of bringing just enough money in so that it can go right back out to cover their life’s expenses – with nothing left over. They never had a plan for their money and never made savings a priority. So their expenses dictate their behavior.

The key to financial success can be found by simply mapping out an exact plan for every penny earned – before it is earned and certainly before it is spent. Call it a state of mind from a big picture perspective or call it budgeting from a rubber meets the road standpoint. The bottom line is that we need to lead by example by having our own plan for our money and help our clients do the same. They’ll be better homebuyers as a result – now and in the future.