Money Tips Network

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Are people always asking to pick your brain?

My personal portfolio is predicated on the idea of building “firewalls” between my assets.

I’m referring to the original meaning of the word firewall — an actual wall constructed, often between buildings, to prevent the spread of fire. I invest in multiple uncorrelated assets so that if a “fire” breaks out (e.g., the stock market tanks), the losses won’t spread throughout my whole portfolio. Because I’m committed to financial diversification, it would take an unprecedented downturn of all asset classes simultaneously to completely derail my investments.

I like this idea of firewalls so much that I’ve been thinking about how I can be better at using the same principles in other aspects of my life.

First-time homebuyers who found it difficult to enter the housing market a year ago due to fast-rising prices are now getting squeezed from a second direction, as rising interest rates erode their purchasing power.

An analysis by national brokerage Redfin found that a homebuyer with a budget of $2,500 a month and a 20% down payment saved up could afford to spend as much as $473,750 on a home at the beginning of 2018, when 30-year mortgage rates were averaging around 4%. With mortgage rates now closer to 5%, that same buyer can only pay up to $444,000 at the most—a loss of almost $30,000 in purchasing power.

The majority of home buyers need a mortgage, so that drop in their financial firepower has led to a market-wide weakening in home prices this season, a morsel of good news for buyers.

Once a month (or so), I share a dozen things that have inspired me to greater personal, professional, and financial success in my life. I hope they bring similar success to your life.

1. Anaïs Nin on courage

“Life shrinks or expands in proportion to one’s courage.” – Anaïs Nin

Think about it. You’re at a social event where you don’t know many people. Your tendency is to be quiet and just listen, but it’s pretty hard to build friendships that way. On the other hand, speaking up takes courage. Do you have the courage to expand your horizons.

In 2008, I quit my rather steady job to be a full time writer. That took a ton of courage. It also opened up life opportunities I didn’t even know existed.

At the start of each month – typically on the evening of the last day of the previous month or in the morning of the first day of the new month – I spend a couple of hours doing a monthly review of my life and my financial situation. I look back at the month just past, tie off any loose ends, and look ahead at the coming month and consider what it will hold.

Doing this kind of review is a pretty routine thing for me. I set aside time each week (about an hour on Sunday mornings) to do a similar weekly review and figure out major tasks for the coming week, and once a quarter I do a quarterly review where I set bigger goals. A monthly review sits somewhere in the middle, but it’s useful in its own way, which you’ll see shortly.

When you're a kid, making friends is one of the easiest things you can do. Walk up to someone roughly the same height, say "Hey, wanna be best friends?" and congratulate yourself on another buddy in the bag.

Join our Tweetchat Thursday 11/1 at 12pm PST/ 3pm EST for lively conversation and a chance to win a $200 Amazon gift card or one of two $50 Amazon gift cards! Use #WBChat and #MyMoneyBalance to participate.

This week's topic: Millennials and Money!

Most people who love their pets go the extra mile to make sure they receive the highest quality of care possible. This includes taking the time to get them to the veterinarian’s office for wellness checkups and shots, making sure they have nutritious food and fresh water, and providing them with a cozy place to sleep. None of these basics are cheap, but most animal-lovers believe their furry friend is well worth the cost.

Unfortunately, the price tag for keeping a pet can surge dramatically if your pet becomes ill or is diagnosed with a chronic condition. And, many times, these costs can creep up with little or no warning, meaning you have no time to prepare your finances for the expense. The American Veterinary Medical Foundation also notes that, as veterinary medicine becomes more technologically advanced, costs can and will increase even more.

My friend Amy recently wrote with an interesting dilemma. “Should I pay off my mortgage early?” she wonders.

Amy has a high-paying job and has managed to save enough that she could be completely debt-free if she wanted to. And she kind of wants to! But is this the best choice? She's aware that this is a nice problem to have — but it's still a bit of a muddle. She'd like some guidance.

Here's an abridged version of her email:

I'm wondering if you have any advice for me related to paying off a mortgage vs. keeping it for tax purposes.

Here’s the basic rundown: I have 22 years and $103,000 left on a 30-year fixed-rate mortgage at 3.95%. My monthly payment is $668 per month. I will pay about $48000 in interest this year. I pay both my taxes and insurance out of pocket annually.