Too Much House?

As so often is the case, inspiration for this post comes from personal experience. I’m in the market to purchase a home for my son and I, something he can stay in long after I’m gone. I’m shocked, to say the least, at what mortgage companies are willing to offer prospective buyers; it’s easy to see how people can become “house poor”. In the buyers’ defense, “dream homes” are expensive and from what I’ve been hearing many purchasers are looking for “move-in ready” – which further drives up the price.

Why am I concerned? Because we’ve had a very flush economy for the last (9) years, and I’m afraid people have short memories. Recessions, or US Business Cycle Contractions as defined by the National Bureau of Economic Research, happen; they are not freak events – although I cannot predict when the next one will occur I feel absolutely 100% confident we will see another one in the not too distant future.

When it does occur, and people are down-sized or retire early, will they be able to afford the home they’ve bought? This isn’t a mortgage company’s problem, nor should it be. The mortgage company is evaluating a buyer to determine how much the buyer can afford to pay the company each month for the loan they give. It’s not their business to figure out your living expenses; and although they will consider your debt to income they do not project future car or other major purchases.

Here’s a breakdown I think anyone can use. Most experts agree we should be saving 20% of our income for the future. This leaves 80%. If you spend 30% of your income on mortgage payments (let’s include taxes and insurance), and if you don’t consider income tax; this leaves you 50% to spend on a car payment, groceries, cable tv, eating out – you get the picture. So let’s put some numbers to this.

The following calculation is not a perfect representation, it’s meant to provide a rough overview. The median US household income is $57,617 (source US Census Bureau). For simplicity we’ll assume they are married filing joint returns, so in the 22% tax bracket (source Tax Foundation). We’ll also assume they are saving the recommended 20% into a Roth 401(k). So after taxes and Roth contributions their estimated net income is $35,953, or $1,382.80 if paid biweekly (26 pay periods). This is what is available to pay a mortgage, buy groceries, etc.

Some will use the first month’s paycheck to cover their mortgage, and their second month’s paycheck for everything else – which works out to be about 29% of their gross income. This is as high as I would want to see it. Unfortunately, many families are NOT saving 20%, and still using an entire paycheck to pay the mortgage – for my fellow nerds approximately 36% of gross income. This leaves very little wiggle room if something negative (translation life) happens.

This is the drawn out version of why I recommend people rely on no more than 30% of their current (not promised or estimated future) income when accepting a mortgage. If you want more house, use a bigger down payment. The mortgage company will almost certainly approve you for more than this, but YOU DON’T HAVE TO TAKE IT. You are the master of your financial destiny, don’t let yourself get caught up in the emotion of buying a home. Yes, this is a major decision, and yes this will have a significant impact on your family’s quality of life – but it’s not the ONLY influence. Give yourself enough financial breathing room to enjoy life (without going into further debt).



Independence Through Technology

Technology is really leveling the playing field – and it’s exciting to consider the possibilities. Some of the more obvious (to me) are home delivery of groceries and restaurant meals; ride-share apps; and the large number of apps tablets (iPad, Samsung, etc) provide access to.

But let’s take it a step further – with the advent of “smart homes” individuals can potentially gain almost complete independence; to the point where if they need an aide the aide could be more in the background, making sure everything is moving smoothly. Families could set up a refrigerator with the grocery list, and when items need to be replenished the fridge could automatically order – followed by a delivery from a local grocery store. You could even use an app like Task Rabbit to hire someone to help put the groceries away.

Theoretically, a phone/tablet could be programmed to run anything in your home – just imagine. Concerned about elopement, you could control the locks – reducing the risk, and receiving an immediate alert when/if somebody enters/leaves. You can even get real-time video, eliminating any uncertainty about what is happening.

I don’t remember the last time I stepped foot into a bank; and, depending on the State, an ABLE account could provide the same capability. There are current limits on how much can be contributed and saved; but it’s a start. Money could be deposited into the ABLE account; and, through the use of a debit card, individuals could make online purchases through a retailer (with care being taken to ensure they meet the guidelines of “qualified expenses”).

Of course there are drawbacks – it’s no different than anything else. And, some of the technology may be too expensive; so it’s out of reach – right now. One thing I can say for certain, based upon past experience, is as technology becomes more mainstream costs will come down. You don’t need to be an early adopter; let someone else work the bugs out and you can reap the benefits later. But allow yourself to dream, imagine the possibilities. I feel too often we, as parents, get caught up in the now – head down, pushing forward; and don’t allow ourselves to stop, put our heads above the treeline and look around. See what’s available – even if it’s in the future.

Those things in the future – those are our hopes. Will everything work as advertised, or be the 100% solution. Probably not. But isn’t a 50% – 75% solution still better than where you are now? Don’t just allow yourself to hope, give yourself permission to take some time – even if it’s only once/month – to spend an hour or two exploring the app store; or listen to what others are saying. Often this is where I get clued into tech advances. And then, instead of dismissing it out of hand (I think if we’re honest we all do this more than we’d like); pick one or two things to try. And don’t just try it once, give it time to allow yourself to become comfortable with the technology. Then, if it’s not for you – get rid of it, and try again.


Next Steps (Saving More Part 2)

You should be feeling pretty excited, you’re building momentum and financial independence is on your horizon – not just a dream to be lived by someone else. You’re becoming more aware of your spending habits, and this awareness is allowing you to identify what’s a want vs need; and make the harder decision of postponing gratification for a future goal. You’ve not only identified the goal(s); you’ve also set up account(s) for them and you can now watch the money – bringing you closer to accomplishment!

Now, let’s tackle debt. If you don’t have any – stop reading here. There are several methods of attacking debt, the (2) I focus most heavily on are highest interest rate and lowest balance. I think paying the highest interest rate first is pretty self-explanatory, these are costing you the most money. However, many people need help staying motivated; so paying down the lowest balance first will give you a “win” and show you what’s possible in the shortest amount of time.

You could build an excel spreadsheet to graph out  your options, work with a debt counseling agency or use an online debt snowball payment calculator. The online tool I’m most familiar with is, however if you Google debt snowball you will find many more options – pick the one you are most comfortable using (and is free). All of the tools listed only work if you are honest and realistic about your current situation. If you only have $25 extra each month, then use that number. Using a higher, unsustainable, number will only lead to this being discarded.

Initially don’t include your mortgage. If you have a higher than average interest rate (> 6.5%) on your primary residence, consider talking to a mortgage lender for a refinance – but don’t start adding additional payments to be mortgage free (again, this applies to those with a lot of other debt). Typically the first debts you are going to want to address are going to be your credit cards, because they generally have high interest rates – especially store cards.

Understand your spending habits (see part 1). If you are still using the card(s),  you will need to stop to realize any success with the snowball. You want to get the balance down as quickly as possible so the finance charges stop – if you get to a state of equilibrium, where you have a balance but it’s not increasing through purchases; you are still paying additional amounts in interest every month. Once you’ve got the card(s) paid down, if you want to continue using it – and you can pay it in full each month – go ahead.

When you’re using a tool like the debt snowball you should focus on (1) debt at a time. This allows you to maximize the amount you knock down each month. When the first debt is paid off, you will take the payment you had been making and add it to the payment of the second debt (and so on). This is the power of the snowball – you gain momentum over time, and can in some instances shave years and tens of thousands of dollars of interest off – if you are disciplined and consistent. Good luck.

How To Save More (Part 1)

Welcome to the New Year – things are definitely going to be different this time, right? You’re going to get back into the gym, start spending less and saving more and overall be the person 2.0 you know you can be. Great! Here’s a few ideas for how to help yourself be successful.

First, if you haven’t established a baseline for how you spend (for whatever reason – it doesn’t matter); start passively tracking using a tool like Mint. In apps like this you will link your bank accounts and they will work in the background, keeping track of your spending. Your bank may have something very similar; it’s less about which you use and more about just using one. Here’s the first tough part – you need to be patient and allow these programs to gather at least (3) months of history. Why? Because we want to understand where you are spending, and you may find some easy “wins” – things like the random convenience store purchase or just how often Amazon is charging your account.

It’s become super simple to link credit cards to online stores, which leads to almost unconscious spending. Unconscious, because we don’t have any time to process what we are purchasing. Instead of a “cool down” period while you get up and get the card, you just click through and it’s done. Removing the card data and not allowing the sites to remember could be a great first start.

But wait until you have at least (3) months of historical data. This is important for all the tips I will be sharing, because the baseline is going to be what shows you your success. Without a history, it’s easy to become discouraged and feel like you’re not accomplishing anything – which can lead to a regression to old habits. The history showing how much you’re not spending on a monthly basis, in comparison to previous months, reflects the work you’re putting in to better yourself.

Note I said “not spending”, I didn’t say “saving”. That’s the second part of the equation. Once you’ve identified where you can get a few “easy” wins, you want to earmark that money for a specific goal. Set up an account just for this goal, and move the money into it – immediately (when you are reviewing your account). If you wait until the end of the month, or some other arbitrary date, you run the risk of spending it on something else. Stay tuned for additional ways to not spend so much.

Medicaid Work Requirements

In an article I came across by David Frank, AARP (; I discovered Arizona, Arkansas, Indiana, Kentucky, Maine, New Hampshire, Utah and Wisconsin are trying to make employment a condition of receiving Medicaid. On the surface, this may seem pretty reasonable – especially if you’re not too familiar with the program itself.

“Medicaid is a jointly funded, Federal-State health insurance program for low-income and needy people. It covers children, the aged, blind, and/or disabled and other people who are eligible to receive federally assisted income maintenance payments.” ( I added the emphasis in red, because from what I’ve personally experienced the focus is on “other people”. This focus is usually followed by an assertion about how they should be able to get a job (I’m stopping here, but almost invariably there will also be some condescending or insulting remarks as well).

I’m all for everyone working, but this is a free-country and the government can’t tell businesses who to hire. Sure, it can prevent discrimination, and there are laws in place; but at the end of the day a business is going to hire the best fit for the positions they need filled. And with increased automation, there is less and less need for unskilled labor. Schools are getting better at developing skills, but the curve is steep – and in my experience the focus is still centered around food, filth and flowers; because historically these were the job types assumed to be best suited.

Companies are recognizing those with disabilities have more to offer, and several (AT&, Prudential Financial and IBM – source DiversityInc) are leading the pack – but it’s going to take time. From what I have personally experienced, most people want to be independent – and working goes a long way towards fostering this. Families can help by focusing on what their children CAN do, rather than what their challenges are. Easier said than done; but setting the foundation is key.

From there, schools and employers can, and should, build the necessary skills. Bring back journeyman programs and focus less on college; the need for trades (plumbing, electrical, HVAC, etc) aren’t going away. But none of this needs the State governments to legislate a demand to work for Medicaid.


The Learning Community International

For my last non-profit spotlight in 2017, I want to introduce you to The Learning Community International School (TLCI). It’s a unique way to approach education, offering a home-school feel (because students’ classroom is their home) with accredited diplomas. Each student’s course of learning is mapped out through collaboration between the student, parents and TLCI’s professional advisor.

Who They Are 

The Learning Community International website says they are the “perfect marriage of private and home school”; and when you talk with the Executive Director or look at their program it’s easy to see why. They bring in subject matter experts, who may include (but aren’t limited to): College professors, college/career counselors, as well as special education and child psychologists. This range of professionals is included in the tuition, providing resources many who home school struggle to find or fund.

What They Do 

TLCI take the time to understand what the prospective student and family are looking for, and if it’s not a good fit, acknowledge this right in the beginning – before the student is enrolled. They’re not trying to serve everyone, but those who fit they serve very well. TLCI can, and does, accommodate those with different learning needs; providing an IEP. Additionally, they use the Myers Briggs and Rockport Institue Strengths and Talents tests to help the student pick the path allowing them the most opportunity to succeed

TLCI has a standardized curriculum, after all they are a school. But they also offer customized courses, and will offer concierge services as requested/required. Custom courses include travel, experiential learning, and OpenCourseWare (link provides an example I found, may not be the student’s experience).

Concierge services are meant to enhance the students’ programs effectiveness, not every student will require/desire them. Some of these services are tutors who have been vetted – test prep (ACT, SAT, etc); Specialists (ABA therapists, differentiated instruction, etc); and college/career coaching.


What Else Should I Know

As I mentioned above, The Learning Community International isn’t for everyone. If you have a child whose school doesn’t seem to “get” him or her; you move frequently and want to maintain continuity; you really like the home school model but are not necessarily interested in being the teacher; or you are just curious I encourage you to check them out. The preadmission discussion is free of charge, and in my experience they have been completely transparent and readily answered the questions I asked (even those which were no doubt silly given my lack of experience in the education field).

To be completely clear – although they are a non-profit, they are not a 501(c)3; no charitable deduction is available nor do they seek charitable contributions.


I am not an employee of The Learning School International and any errors noted are my own. The links to Myers Brigg, Rockport Institute and OpenCourseWare were researched by me; I encourage anyone interested to talk to TLCI to confirm the references I provided are accurate. If I have misrepresented, or misstated anything please provide constructive feedback so I may make the appropriate change(s). All opinions and views are my own.

Give Yourself A Head Start

We have one week left in 2017, and some of us may already be thinking of how to get ahead in 2018; heck a few may even be taking the necessary steps. I think it’s a shame, how commercialized holidays have become – and I feel for those not of the Catholic/Christian faith because Christmas seems to monopolize the airways this time of year.

Stores are packed with shoppers looking for the “perfect” gifts – leading to “Black Friday”, “Cyber Monday” and lately, “Giving Tuesday”. What has happened to us? How did we let ourselves become so driven by words like “Clearance” and “One Day Sales” that we seem to have become mindless wallets and credit cards?

Most of us don’t exhibit these behaviors at any other time of the year, it’s almost like there is a switch in our brain that’s turned off after Halloween and doesn’t come back on until the week after New Year’s.

What if, instead of trying to “out-gift” each other, we took some time to ensure our lives were in order? Doing “boring” things like verifying our beneficiary forms, ensuring our estate plans are up to date and even, maybe, increasing the contribution to our retirement plans by 1 – 2%.

No – it probably won’t release the same endorphins gift giving does; but I’m willing to bet another thing it WON’T do is make you feel bad after the holiday has come and gone. Take the time you have with your friends and family to have real conversations – they don’t have to be dark and gloomy. Celebrate them, by being with them and giving them the gift of your time and attention (real attention, i.e. without a device present).

Ensuring your estate plans are in order are, in my opinion, one of the BEST gifts you can leave someone. I cannot imagine anything more tragic than not knowing what to do to honor you when you’re gone; or worse, family and friends fighting over who gets what (which I’ve seen all too much of).

So please, as this year draws to a close, take a look at what you have in place for when your time is up. Give yourself a head start going into the New Year, before vacations end and the mad dash towards new goals/resolutions kick in. Take the next few days and reflect on where you are and where you’re going. You’ll be glad you did, and so will those you treasure most.