Schedule a meeting online

Book session

Changing the Game

By: Ernie Neve

July is here and we are in the downhill to the end of the year. The third quarter has started, and by the time it’s over, we’ll be into football season and the World Series will be around the corner. 

Then?  2022 is over and tax season will be here soon.

I wanted to discuss that (of course) today.

Not just about taxes, but about how regular folks, like me and you, can rethink our financials to allow a better quality of life.

First, let’s get some facts:

·         The average American will move and sell their home every 5-7 years.

·         That same “average” American will change careers 3-4 times throughout their working life.

Using those two guidelines, then, we can make some assumptions…

Since the vast amount of the debt service paid on a home in the first decade is interest, the actual equity “created” by home ownership is on the “backside” of the loan – years 10-30. If you move every 5-7 years and sell your home, the savings most of us believe we have in the equity of our home never gets the chance to mature and be capitalized on.  That’s even MORE true today, given rising interest rates and cooling markets across the country. 

When you consider that residential real estate runs in roughly a 20 year cycle, some of the moves you make will be in an “up” market and some in a “down” market.

So it’s likely you’ll never be able to save the real money you want as equity in a home.

When you take that loss and couple it with the regular 401(k) retirement plan many employees have – and the fact that new jobs often won’t let you join their retirement program for up to a year; again we see that the two “easy” ways our parents and grandparents created financial savings and, to an extent, freedom, is not in the cards if we decide to be “average.”

So what is the secret?

Each of us has to figure that out for ourselves.  It could be holding on to that home and renting instead of selling it. Perhaps a different investment strategy.

But no matter what you choose to do, NOT choosing is still a choice, and the worst one.  If you see you’re on this type of merry-go-round, then it might make sense to sit down with me and my team and take a hard look at what your goals are, how your tax bills can be mitigated with the right strategies, and how you could potentially invest those monies into better and smarter places to allow you to be financially free faster.