Coach's Corner

House Hugger (not to be confused with Tree Hugger)

Jennifer Jaime — Tue, 01 May 2012 01:26:00 -3670

Is it possible to pay off the home mortgage? Absolutely! My clients, Cynthia and Pat, just did, and they are in complete joy.

I asked them what it feels like to owe nobody, not even the house. Here is what they said:

“It was scary to see all that cash leave our bank account! That uneasy feeling was quickly balanced with a feeling of security: this house is OURS! We looked at all the parts… that door is OURS! This land is OURS! That floor is OURS! If troubled times come our way, we know we have a house that is ours, all ours. And, that gives us the freedom to choose jobs that may not pay as much, but are jobs that we LOVE.”

True freedom is not having any debt payments. Freedom is getting to choose to do whatever you want to do. You can choose to use your money to save for the future, spend on the vacation home you always wanted, or invest in a second home.

There are many skeptics who disagree with paying off the home mortgage. Here is my view on it.

v Numbers don’t lie. It’s expensive to carry a mortgage. For example, on a $225,000 mortgage for 30 years at 4.5% interest rate, you would have paid $185,414 in interest over the life of the loan. With that amount of money, you could have bought a second home.

v It goes beyond the numbers. The emotional freedom from not having any more debt payments is huge. You don’t have to worry about staying at a job you don’t love because now you have choices. You can choose to do the work you love, apart from feeling obligated to stay.

v Give to charity, not the bank. I hear a lot about how you won’t get the tax deduction for mortgage interest if you pay off your home. Well, instead of paying the bank interest on your loan, you could now choose to give to a charity of your choice and still get the same deduction.

Susan B. Anthony said it so well that “independence is happiness.” Being free and living simply is the new American dream. I want to challenge you to hug your house today, like Cynthia and Pat, and join the Free Revolution.

Buy Local, Benefit Your City

Jennifer Jaime — Wed, 14 Mar 2012 15:26:00 -3670

Have you heard the advertisements urging consumers to “Buy Local” for produce? The advertisements list many benefits such as fresher produce since travel time is reduced and you don’t have to wait for produce to get shipped to your city. Are there any other benefits to buying local for other goods besides produce?

I did a little research and found the following. In Texas, we pay up to 8.25% in sales tax on all purchases of goods and services. A majority of the sales tax goes to the state and the rest is divided to local taxing authorities such as city, county, transit and special purpose districts. Below is a breakdown of Texas Sales Tax.

State 6 1/4% (.0625)

City 1/4% (.0025) - 2% (.02), depending on local rate

County 1/2% (.005) - 1.5% (.015), depending on local rate

Transit 1/4 % (.0025) - 1% (.01), depending on local rate

Special Purpose Districts 1/8% (.00125) - 2% (.02), depending on local rate[i]

In Austin, Travis County has Special Purpose Districts that include libraries and emergency services. For example, if one person for the month spent $100 on gifts, $100 on clothes, $400 a month on household supplies in their city, they would have put $144/year (($600/month *.02 Sales Tax)* 12 months) back to their local libraries and emergency services for the year. $144/year per person doesn’t sound like a lot; however, if everyone in Austin would buy local, they would have put $115,200,000/year (800,000 residents[ii] * $144) back to the own local community of Austin.

When you buy local, you are putting money back into your local libraries, emergency services, schools, highways, and parks. The next time you reach for your wallet, make sure you buy local to keep money flowing in your community.

[i] http://www.window.state.tx.us/taxinfo/sales/

[ii] http://quickfacts.census.gov/qfd/states/48/4805000.html

New-to-Me

Jennifer Jaime — Fri, 11 Nov 2011 02:45:00 -3670

Don’t you love finding a good deal? I do and I love to share it with anyone with a listening ear. I recently walked into a consignment store and found a “gold mine” in the clothing section. I got a nice pair of Banana Republic jeans and two casual tops. Do you know how much I paid for it? Zero, that’s right – I didn’t pay anything out of pocket. How, you may ask? I traded some items of clothing that no longer served me. I think it’s because my washing machine is shrinking all my clothes.

Used is IN and new is OUT. We have access to resources that can help us buy used for many of our purchases today - Craigslist, consignment stores, thrift stores and the like. You can buy used cars, used electronics, used clothes, and used food – o.k. I am getting carried away with that one. The point is, let’s go green – not only green to save the earth but also to keep green in our pockets.

The next time you are considering making a purchase, ask yourself “Is this something I can get used?” If so, take the challenge and dare to venture out into the new-to-me world.

S&P Changes U.S. Credit Rating – What does it All Mean?

Jennifer Jaime — Sat, 06 Aug 2011 05:36:00 -3670

Bloomberg just announced the United States has just been downgraded by S & P for the first time in history. Our country has held an AAA credit rating, which is the highest rating S&P can give. The downgrade was a result of the recent legislation that increases the nation’s debt to an all time high; and S&P is concerned the U.S. has too much debt and can’t pay it back. The downgrade to AA+ rating has turned the already panic stricken country to a state of shock.

What will become of us? What is next? Where is the stability of our country?

There is not an easy solution to a complicated situation. I am not here to solve the U.S. debt crisis but I am here to offer a message of hope.

I challenge you in the midst of uncertainty to look at your own personal economic situation. If debt crisis in the U.S. causes so much pain, what is our own debt doing to us in our lives? We can choose financial peace, even in the midst of the uncertainty.

One More Glass, Please!

Jennifer Jaime — Sun, 31 Jul 2011 13:39:00 -3670

My husband and I returned from visiting the beautiful Napa Valley in California several months ago. We escaped to see the rolling hills of vineyards on the countryside and the beautiful landscape of roses all around us. We enjoyed ourselves and learned a little about the wine making process.

“Grapes taste best when they are under stress,” the tour guide stated as we walked around the luscious grounds. Under stress? Yes, grapes that undergo extreme heat from the sun make the best wine.

I was perplexed by the phrase and I began to think about all the times I was stressed. I didn’t see the light at the end of the tunnel. All I could see was a thick cloud covering my eyes and clarity was nowhere to be found. Stress made me feel uncomfortable and I felt the pain. In the end, when the stress was over, I could see where I was going and how I grew from the uncertainty of the situation.

Stress doesn’t always have to be your enemy – it can be your friend. I challenge you to see stress as an opportunity to change and grow. The next time you reach for your next glass of Chardonnay or Pinot, remember the pain it went through to give you so much pleasure.

Right time to start a business

Jennifer Jaime — Tue, 01 Mar 2011 19:37:00 -3670

Q: Is it a good time to open up a small business?

A: The right time to open a small business is when you are ready! Starting a new venture is exciting and terrifying - all at the same time. The key to being successful is balance. At the same time you are excited about your new business, stay grounded by creating a practical, realistic action plan that will serve as the foundation of your new venture. How do you know if you are ready?

ü Are you passionate about your new business? Do you believe in your product or your new service? The road to being a business owner has its rewards and challenges. The level of excitement will change over time but will help sustain your level of commitment as your business grows and changes.

ü Are you ready to have fun? Yes, owning a business can be fun and I want you to remember that as you embark on this new journey. There will be times when payroll is due, taxes are coming up and the fun of business can fade away. Be conscious of this and include fun as part of your everyday habit.

ü Are you ready to look at the details? The numbers don’t lie. I encourage you to spend time evaluating your initial start-up costs and projections for income and expenses. A business plan is a great way to start looking at the details in a structured format.

If you answered yes to the above points, you may be ready to open up your small business.

Be encouraged to take the leap – remembering to stay passionate, have fun and keep looking at the details. I am here to help you turn your dreaming into doing.

Keep dreaming,
Jennifer

Money Management

Jennifer Jaime — Tue, 01 Feb 2011 15:00:00 -3670

Q: Jenn, do you have any suggestions for money management as one's income increases?

A: Congratulations on your success! Increasing income is always exciting when it comes into our lives. On the flip side, we can get overwhelmed on what to do with the new found money. In my experience, if you have a plan for your money ahead of time it takes any guess work out of the picture. Let me share my thoughts on what I would do in your situation.

I wouldn’t start with the numbers, I would begin with you. What are the areas of your life that need special attention that have been overlooked in quite some time? Do you need to take care of your physical health, your mental health or do you need help around the house? Begin to allow yourself the luxury of taking care of you first. Make that appointment, schedule the visit and do whatever it takes to give you the radical self-care you deserve.

After you take care of yourself, now let’s examine the numbers. Write a list of all your wants and needs on a sheet of paper. Include an estimated dollar amount for each want and need. Let’s use this example:

House cleaning $ 60

Gas for car $ 55

Electric bill $120

Once you feel your list is complete, number your wants and needs by order of what comes first. Keep in mind upcoming due dates for bills as you prioritize your list.

Gas for car $55 #1

Electric bill $120 #2

House cleaning $60 #3

As your income comes in, take care of the #1 item on your list and cross it off. Any additional income left over, will follow down your wants and needs list.

~~Gas for car $55 #1~~

~~Electric bill $120 #2~~

House cleaning $60 #3

Use the list as your guide to help you manage your increasing income and continue to keep moving forward.

Keep dreaming,
Jennifer

Home Office Deduction

Jennifer Jaime — Mon, 17 Jan 2011 15:00:00 -3670

Q: What are some of the home office deductions that I might overlook when doing my taxes this year?

A: I love small businesses and the number of businesses in the United States is growing rapidly each year. The number of small businesses in the United States in 2010 was 24 million and Texas holds 1.8 million of that total. For each small business owner, many questions arise on how to report certain income and deductions on your tax return. It can get complex to know all the tax rules for small businesses. However, I want to make the process easy and specifically discuss the home office deduction.

What is it? The Internal Revenue Service (IRS) allows a business deduction for the costs incurred for having a home office. The home office must be your exclusive and regular place of business.

Costs of your home - The total costs of your home can include mortgage interest or rent, qualified mortgage insurance premiums, real estate taxes, insurance, repairs, utilities, alarm system and services.

Direct vs. Indirect – The IRS allows you to take the full amount of direct costs associated with your home office. For example, if you put in hard wood floors just for the office in the amount of $1,000, you can get the full deduction. However, if you have expenses that are indirect, such as an alarm system that covers the whole house, you get a percentage of the deduction.

Percentage - The percentage of the indirect costs takes the size of your home and compares it to the portion you use for your home office. For example, if your home is 2,000 square feet and your home office is 200 square feet you will get a 10% = (200/2,000) deduction of all your indirect home office costs.

Deductions overlooked – There are some expenses that might be missed when doing your taxes. Don’t forget you get to deduct services performed at your home. Some examples of overlooked services are lawn care, carpet cleaners and pest control. You can also depreciate a portion of your home on your tax return as part of the home office deduction.

Check with your CPA to make sure you are in the know with all your tax needs.

Keep dreaming,
Jennifer

Dare to Dream

Jennifer Jaime — Mon, 10 Jan 2011 14:00:00 -3670

Q: How do you know if it is the right dream and not just a passing interest? What if you invest so much energy just to find out it was not really the right direction?

A: Beginning to dream and act can be overwhelming and scary. I remember wanting to run my first 5K. Before I started running, I put pictures of runners in my vision folder and visualized myself running. I would see it in my mind weeks before I ever laced up. One day I had lunch with a dear friend and I shared my dream of running. She was a runner and she asked me join her the next week. My dream was becoming reality and you think I would be excited. Nope, I was terrified and I made every excuse to postpone my runs. I asked myself why I was jeopardizing my dream of running. I questioned if my dream was really something I wanted or “just a passing interest.”

Many times we have ideas of what we want in life but how do we know if we should continue pursuing the dream? Consider these points:

Resources –Working on your dreams takes time, energy and money. Is your dream a now dream and ready to move forward? Or do you need to push your dream to a short-term or long-term dream due to the reality of your current situation?

Calculated Risk – There is a risk in living out your dream life. FEAR can creep in and allow you to settle for complacency. You may tell yourself it is better to be safe than to follow your dreams. I believe it is better to try and take a risk, than live your life with regret (a.k.a. the “should have, could have, would have” syndrome).

Be flexible – Dreams change and evolve over time. Give yourself permission to dream knowing the outcome might be different than you originally planned.

If you decide to move forward with your dream, know you are not alone on your journey. I am here to support you because I have yet to meet a dream I didn’t believe in.

Keep dreaming,

Jennifer

College Savings - Prepaid versus 529 Plans

Jennifer Jaime — Mon, 03 Jan 2011 14:05:00 -3670

Q: What about the Texas Tomorrow Fund? Since they have restructured it, is it a good place to invest for college? It seems like it should be more secure than the market.

A: There is a lot of uncertainty in the economy today. The changes are happening so fast it is hard to know the right choices to make when it comes to your money. Saving for college education is no exception. What is the best choice for you and your family?

Texas has gone through a lot of changes when it comes to the Texas Tomorrow Fund. I want to first explain what the Texas Tomorrow Fund is. The Texas Tomorrow Fund is a prepaid tuition plan, guaranteed by the State of Texas. With this plan, you are pre-paying tuition in today’s dollars to help cover rising tuition rates.

The Texas Tomorrow Fund is no longer in existence because the original fund lost money and had to restructure. The State of Texas now offers the Texas Tuition Promise Fund, a prepaid tuition plan and the Texas College Savings Plan LoneStar 529 Plan, a college savings plan. The funds are so new to make a specific recommendation. However, I prefer 529 plans for the following reasons.

Flexibility – Prepaid plans usually cover tuition and fees only at their state schools. A 529 plan covers tuition, fees, room and board, books, supplies for any state or out-of-state school.

Control – The donor controls the money in the 529 plan. Most plans allow you the option to transfer to new beneficiaries, as long as they are related.

High contribution limits – In some cases, 529 plans allow you to contribute up to $200,000.

Check with your investment advisor to help choose the right fund for you based on your risk.

Keep dreaming,

Jennifer