Stocks vs. Real Estate

Check out this article on CNN/Money.com

The column begs the question: is now a good time to buy real estate? The best time to purchase an asset, any asset, is when prices are depressed (part of the whole “buy low sell high” theory that Wall Street seems to forget from time to time). If you subscribe to this theory, anyone who has not been living under a rock recognizes that real estate prices, regardless of geographic issues, have declined in the last 18 months. Interest rates, while not at their record lows from 2-3 year ago, are in the low 6% range, which comparatively speaking is pretty good.

Now might be a great time for first time home buyers, some freshly out of college, to think about stepping into the void. Supply is fairly robust so you can take your pick, not to mention a lot of sellers are looking for the first available buyer so negotiations can be made to entice the sale.

But for those fresh out of college or new home buyers, cash for down payment (which contrary to the mortgage loan industry of the last few years IS a necessity) can be in short supply. Now would be a great time to go back to mom and dad and ask for a short term loan. Mom and dad may not be too keen on the idea, but the idea of purchasing an asset at a low price with future price appreciation potential, could be an attractive idea to them. Lots of baby boomer parents are flush with cash at the moment and looking for investment ideas. The idea of helping their children get their piece of the “American dream” plus purchasing an asset that should appreciate over time is a worthwhile goal.

For Sale

1999 35^th Anniversary Edition Ford Mustang!

4.6L V8. Power everything, moonroof, 4 wheel ABS, driver & passenger SRS, Automatic. 50,000 miles. White, garage kept and a total blast to drive (unless you’re in the snow wherein this vehicle could be referred to as “the death mobile”).

Know anyone who wants to purchase my Mustang? With twins coming in late June, there isn’t enough room in the backseat to house the twins. So like all responsible parents we’re upgrading “the fleet” and plan to get rid of the Mustang and pick up something more in line with having two kids: a minivan.

I can’t believe I just wrote that. My wife can’t believe it either. We’re shocked. We’re dismayed. We’re becoming everything we hate about suburban America. We’ll no longer be referred to as “dinks” (dual income no kids).

Now we’ll be “parents”.

Oh the humanity!

Anyway, the whole automobile purchasing scene is a nightmare and makes my skin crawl so the least time in the dealership for me, the better. I emailed my local Honda dealership (we’re getting an Odyssey minivan) and got their best price for the new vehicle. Not bad.

On a whim, I took the Mustang in there to see what they would give me for it. I have to say, I was shocked and amazed at what they offered me for it. It was $1,500 higher than what NADA.com says its worth. Not bad I said. Next stop, Carmax to see what they’ll but it for.

After that, I may just advertise it myself on autotrader.com. If I can sell it in 6 weeks or less, great. If not, then I can fall back on the dealership or Carmax. Either way, buh bye Mustang and hello minivan.

What is this world coming to?!

1 in 7 Americans Are Asking For Trouble!

I always knew people, despite their age, where digging themselves into serious financial trouble by depending too much on credit cards. Well, I was proven RIGHT with the release of a study by Experian that shows 1 in 7 Americans have 10 or more credit cards. That's NUTS! Click HERE to read about it.

The Buzz Is Growing!

A couple of good friends in the media have recently written about Getting Started: The Financial Guide For A Younger Generation. I thought you would like to check out what was said.

From Kara McGuire at the Minneapolis Star Tribune, here is her article titled "No Magic Formula"

From Eileen Alt Powell at The Associated Press, here is her article titled "Financial Fitness Starts Early"

Budgeting In 2007

Budgeting has always been something that people look at as a complicated chore or an activity for people with higher incomes. Nothing can be further from the truth. Budgeting is important for everyone regardless of income. How will you know what you can spend on that new Sony Flat Screen HDTV if you have not determined what your budget is for it?

Here is my challenge for you. Try to set up your budget early in 2007 and revisit it it monthly to make sure you are holding to the budget. It can really help you in the long run.

Also, be sure to check out this great article by Kara McGuire at the Minneapolis Star Tribune on budgeting.

A New Year's Resolution

For many people, 2007 brings hope that they will either be able to buy the home of their dreams or sell their existing home in the hopes of upgrading. Either way, 2006 was a rough year for the real estate market and we are all hoping 2007 will be better.

In my spare time when I am not trying to help young professionals address their most pressing financial dilemmas, I am reading. Take a look at this article for a housing forecast.

While you're reading, take a gander at this article discussing the billion dollar scandal involving Fannie Mae.

I Would Make A Terrible Burglar!

My wife and I were working outside this weekend removing leaves from our yard, when we discovered that we had managed to lock ourselves out of the house. Our neighbors who had an extra key were all gone for the weekend, our parents (who live close by) were also out of town for the weekend. We didn’t even have a cellphone with us, with which to call our dog walker who has an extra key. We searched in vain for an unlocked window, and even tried to pick a few of the doors. No such luck. We ended up deciding to break through the French doors that lead to the deck. No problem I figured; just take the crowbar and swash a little section in the French doors (which we had just one week prior agreed to have Sam the window man replace) and unlock it from the inside.

I learned a few things about French doors. First, its not multiple pieces of glass in the door. Its one single piece and when you smash one side, the whole thing shatters. Second thing I learned: double paned windows mean if you are trying to break and enter, you get to break twice as much glass.

The third thing I learned: cleaning up is an unbelieveable pain. We had glass EVERYWHERE in the remote vicinity to the French doors. We were sweeping and vacuuming up for at least an hour. Then I got to take card board and duct tape and seal the door.

Thank goodness Sam the window man is coming to replace the French doors. I didn’t mind breaking that door too much, knowing we had already paid for the new one. But it was not how I wanted to spend my Saturday afternoon.

On another note, my good friend and well-known columnist, Kim Lankford of Kiplinger's Personal Finance magazine responded to a great reader question that you should check out!