Start thrashing now. Do it early while it is cheap. If you wait it is only going to get more expensive.

Over 150 years ago, Henry David Thoreau said “If one advances confidently in the direction of his dreams, and endeavors to live the life which he has imagined, he will meet with a success unexpected in common hours … In proportion as he simplifies his life, the laws of the universe will appear less complex, and solitude will not be solitude, nor poverty, nor weakness.”

Be wary of blanket statements such as: “I need to have my cell phone.” “I can’t get up without my morning cup of coffee.” “How do you live without a DVR?”

Why surrender so much power? You don’t need this. You don’t need that. What you need is essentials (shelter, food, water, clothing) not luxuries.

Try thrashing to the point where it is uncomfortable. A little discomfort in a comfortable world is not a bad thing. Who knows you may even like it. You can always bring that thing back in your life.

Ask yourself one question when deciding what to thrash; do I need this item or am I using this thing to distract myself from the world? If you don’t thrash this item this time and you are on the fence commit to saying if in 3 months I don’t use this item then it needs to go.

The cost of not thrashing, not taking away the distractions, can be insurmountable. We have more time and access to knowledge and resources than we ever had before in the history of the world. How are we using it? How are you abusing it?

Transactional people

We have all met someone who is purely transactional. That person always needs something from us. They need our money, they need our time, they need our attention.

It won’t be enough though. Ever.

Simply smile. Apologize that you can’t help and move on.

It may seem cruel. But completing the transaction will only make you feel worse. It will make you feel sticky and cheap.

Help everyone you can. But provide the kind of help that can change lives. The kind of change that can help us grow more than it will help others.

Try something new for the first time

When is the last time you can say you tried something new for the first time?

If your answer is “it’s been a while.” Maybe it’s time to step into the unknown. There is a problem. We don’t want to start something new unless we can see the ending. We are afraid. Afraid of shame and guilt. We are afraid of failure. So unless we have a map or set of instructions; we won’t start.

So…start. Start walking down the tunnel of uncertainty. Embrace the fear. Use your candle; it doesn’t have to light the whole way. It just needs light the next step. Then take it. And then another. And then another.

Pretty soon we will make it through this.

We can enjoy the outcome. The thrill of victory. The agony of defeat.

But it is not over. We need to start again.

A suckers game: mortgages vs rent

“Owning a home is better because I rather invest in something then waste money on rent”

30 year vs 15 year loan argument

Scenario #1:
$200,000 House
3.5% Interest Rate
30 year mortgage
Zero Down
Loan amount $200,000
No Extra Payments
Total of $323,000
Scenario #2:
$200,000 House
3.0% Interest Rate
15 year mortgage
Zero Down
Loan amount $200,000
No Extra Payments

Total $248,000

Paying a 15 year note will not only save you $75,000 but you will have 15 extra years of freed up cash to invest in retirement, purchase a second rental property, pay for your kids college, etc.

20% down vs 0% down
When you fail to reach 20% down on your house, you will most likely have to pay PMI to get a loan. PMI is Private Mortgage Insurance. Essentially, you are paying money each month that protects the lender in case you can’t make your payments. You can avoid PMI by putting 20% down on your house.

Scenario #3:
$200,000 House
3.5% Interest Rate
30 year mortgage
$40,000 down (20%)
Loan amount $160,000
No Extra Payments
Total $258,000
Scenario #4:
$200,000 House
3.0% Interest Rate
15 year mortgage
$40,000 down (20%)
Loan amount $160,000
No Extra Payments

Total $198,000

Again you will save anywhere between $10,000 – $25,000 on interest alone PLUS saving on not having to pay PMI.

Let’s say PMI will cost you $100/month (which is on the low end of mortgage insurance).

$100/month x 12 months = $1200/year
$1200/year x 6 years = $7,200
Assuming you made your payments you would have around 20% of equity around 6 years after starting. At that time you can request to cancel your PMI with a REFI (which will cost you).
Apartment Living vs Owning a Home
Average rent in Utah is $670/month. Let’s round that up to $700 to make the math easier.
$700/month x 12 months = $8400/year
The average income in Utah is $60,000/year which is $5,000 per month.
The average cost of living is about $750/month in Utah per person. The average family size is just a little over 3. Which bring your total expenses to $2250/month + $700 for rent to a whopping total of $2950/month of total expenses.

$5,000 of income/month – $2,950 in expenses (lets round that to $3,000) will give you $2,000 to save each month. That is 24,000 a year.

Put this all together
By moving into a house in Scenario 1 with no money down, on a 30 year note, with PMI you will have a mortgage payment of about $1000/month which in 2 years is $24,000. Lets not pretend that their not hidden expenses when moving and operating a house too (HOA, lawn service, plumbing, heating, cooling, trash, etc all go up) but I won’t factor this in. First two years in an apartment you will spend $16,800 on your rent. That is $8000 you will save in 2 years alone just by living in an apartment!

By saving 24,000 a year in 2 years you can be at $48,000. You will not only have enough money to put 20% down but you will have the luxury of having $8,000 for an emergency fund to handle these hidden expenses and if you are able to switch to a 15 year and pay the house off quicker you will have more money to invest into something else down the road.

You spend less and save more by living in an apartment. While the argument that a house is a better investment is correct; it is not a better investment long team if you too don’t have any money down and putting it on a 30 year note. Saving for 20% down and taking 2-5 years living in apartment to do it is the smartest way to move into real estate. While you are at it; cut up the credit cards and pay off the car.

Still not sold? Look at the numbers. The difference between Scenario 1($323,000) vs Scenario 4 (238,000) that is an $85,000 difference!! Not to mention you are out of a mortgage 15 years earlier.

The argument that I rather invest in a house then pay rent is absolutely foolish. It is a sucker’s game. Put 20% down on your house and have a 15 year fixed rate. It is the only way to go.

1 year of experience repeated 30 times

Millennials have learned that 30 years of working in 1 place, doing 1 job is really only 1 year of experience repeated 30 times.

In this model there is no evolution. No growth. No resistance. No change. No opportunity to create something new.

Those who are leaving are not really worried about passing the torch. They are jealous. Remember this: Those before us have passed opportunities because they were scared. It has resulted in regret, boredom and jealousy. You don’t have to be this way.

Learn from your mistakes. Better yet, learn from the mistakes of those who have come before you.

Contributions that matter

Start small.

Begin by knocking on doors in your community and talking with people on a weekly basis.

At first they may be hesitant to say much. They may even find it inconvenient or a chore to come to the door to speak with you.

Be diligent. Eventually as people open up and begin to share what is actually happening in their life; you will begin to notice similarities in these conversations on what the people in your community actually need.

You don’t need to ask them anymore how you can help. Now you can actually start helping people by bring something of substance.

You are now contributing something that actually matters.

The elevator connection

How can you connect with someone in the length of an elevator ride?

Be trustworthy and capture their attention.

Two examples:

I was in a rougher part of the neighborhood dressed in a button shirt and tie trying to get into an apartment building. A man let me in. We exchanged a few words. He began to tell me a story of how he had just finished a trip down south for the funeral of his brother. I offered my condolences and what must as seemed as an empty gesture asked if there was anything I can do for him.

I knocked on a door to speak with someone and a stranger opened the door. The person I was looking for wasn’t home. Talking to this stranger I asked how this person was related to the family. He replied he wasn’t. He went on to say that he was a struggling alcoholic and that he was just here for the weekend. Seeing the shock on my face he attempted to cover up his statement as a joke.

How can anyone of them know I was trustworthy? I am a stranger. The shirt and tie seemed to have given me an appearance that I was trustworthy. It certainly captured their attention since most where not dressed this way in this part of town.

People desire a connection. By being trustworthy and giving people attention it is amazing what people will share to get a connection. Even if it is with a total stranger and it is only the length of an elevator ride.