Living the 10-10-80 Life

Are You Up For The Challenge?

First, let me make clear that I’m not talking about a piggyback mortgage where you put 10% down, get a 10% second mortgage and an 80% first mortgage. This is a different concept entirely. I had the pleasure of speaking to a high school group this week and I shared this simple concept with them:

Give the first 10% of everything you make
Save the next 10% and
Live on the remaining 80%.

Granted, it takes discipline and strategy (yes, budgeting requires both) to live on 80%, but learning to do this, truly live on 80% of your take home pay, is the key ingredient to making this strategy work. Doing this allows you to “pay yourself first”. I’m sure you have heard that concept before. It’s why the 10-10 comes in front of the 80 and not vice-versa. By putting the important things first and committing to them, they get done instead of becoming an “afterthought” of something to do once all the monthly expenses have been paid.

In my mortgage career, two things stick out to me that cause most financial disasters – over-extension, or spending more than you make, and lack of savings to deal with emergencies. Many times the two go hand in hand. By following the simple principal of the 10-10-80 Rule, you overcome both of these obstacles. The things that you are able to accomplish in life, at least from a financial perspective, are accomplished via those first two components of the 10-10-80 Rule – Giving where there is a need and Saving to be able to address future needs. That is how you become a difference maker. It is how you grow your legacy and it is the key to your financial freedom. If a group of high school kids can get it, all of us can. Are you up for the challenge?

The Week Ahead
The important monthly Employment report will come out on Friday. As usual, this data on the number of jobs, the Unemployment Rate, and wage inflation will be the most highly anticipated economic data of the month. Before that, ISM Manufacturing, Personal Income, Core PCE inflation, and Construction Spending will come out on Monday. ADP Employment, ISM Services, and the Fed's Beige Book will be released on Wednesday. Factory Orders, Productivity, and the Trade Balance will round out the schedule. tion Spending will come out on Monday. ADP Employment, ISM Services, and the Fed's Beige Book will be released on Wednesday. Factory Orders, Productivity, and the Trade Balance will round out the schedule.

The Week That Was
The economic data released this week contained mixed results and had little impact on mortgage rates. Strong demand for US fixed income securities was the main influence this week, helping mortgage rates end the week a little lower.

There were strong indications this week that foreign investors, most likely in Japan and China, increased their purchases of US bonds, including mortgage-backed securities (MBS). The currencies of Japan and China have weakened recently versus the dollar, and the economic policies currently in place in both countries have caused investors to expect their currencies to weaken further. This makes US bonds more attractive to investors in those countries as the investor not only receives interest on the investment, but also expects appreciation in the value of the investment.

After a couple of months of weaker readings, the New Home Sales report released this week was a pleasant surprise. January New Home Sales jumped 10% from December to an annual rate of 468K units, far above the consensus of 400K. This was the highest level since July 2008. Also released this week, January Pending Home Sales posted a slight increase.