Wednesday, January 20, 2010

Notes from Calibrate Teachings - Credits to John Marsh

Kingdom Finances 1/12/10

If we didn't have any debt we wouldn't be in this. Debt is not bad.

Financial principles are learned. Mr. Martin got into real estate at 30 years old. Must see money in your mind first. If you can't see it in your mind, it won't show up in your pocket. Money is digital. Our belief drives our mind drives our behavior.

If you want to help poor people, don't be one first.

You Measure, You Manage, You Multiply - Money is an amplifier of your character. If your character isn't right, money will amplify it.

Hedonics- changing the way they figure inflation. Started monitoring weird items. If technology costs went down, they figured inflation was not happening. If you move inflation 1% it changes our governments money, and they have to pay more.

Inflation eats our money. If save a 1000, by the end of the year you have 900. Have 8% less than what you had at the beginning of the year.

Ask brokers- how much money are you making off your own investments and how much are you making off of mine? If they can't manage their own, they sure can't manage yours.

Dollars need to work for you.

You have a personal money management team.

Need a mix of money and time to have a life.

Need goals 1,3,5,10 year goals.

God wants multiplication.

Budget is the best way to measure money. You must know how you are spending it. Everything you buy is 40% more plus 8% more for taxes.

Impulse buying - if you can't come back a day or two later and think on it, don't.

Set measurable financial goals. How much is enough. How much does it cost me to live now? How much with the size family i am going to have? With inflation (6%-7%)/year - If i had to live off the interest from money? How much will we need? To live well and not have to work for money, how much cash will it take?

Rental is hedged against inflation. Rent climbs with inflation.

If need 5000 dollars a month. You will need 500,000 dollars worth of rental property. If property cost 100,000 then want rental to be 1,000. For every 100,000 dollars cash, 4% a year will bring in 4000.00

If you need 80,000/year cash coming in you need 2 million dollars cash.

This thing is going to come out and the people who get it aren't going to be rich, they will be really rich.

There is so much money on the side lines.

A year and over is 15%. A year and under is 25%. Primary Residence- live in it yourself for a minimum of 2 years to get no tax.
If live in it a year, you are subject to capital gains tax. If want to sell, person who is buying, have him pay an intermediary (my attorney) and attorney invest in something else i want. No tax.

Own a tri-plex and live in one of the units for two years. How did you classify it tax wise. If wrote it off as primary residence. If you wrote off some as your office, you can't count the part of your office.

Why rent and not flip? It plows you tax wise to flip. The gov't is trying to stop by legislation. Fani mae, freddi mac loan. Have to own a house for 12 months, they give the person buying it a hard time getting the loan. They are trying to stop flipping. Holding property builds your financial portfolio and net worth. We wanted long term benefits rather than short properties.

We want to be the bank. Buy and owner finance to someone.

First 5 years of a mortgage pay 55% interest.

I hope you never have a job. Work and do what you love.


Your home mortgage is your largest investment. 1 point on your mortgage makes all the difference (10s of 1000s of dollars)
Paying property tax is like renting. You cannot ever truly own.
Leverage is amplification and multiplication. Over leverage is horrible. Doesn't mean money was wrong but the leverage was wrong.
If you wouldn't do what you are doing for nothing, you need to ask yourself why you are doing it.
Goal: To not work for money. We want to work for influence.

Leverage tools:

Fico- Fair Issacson Corp. Score. Compiled of 3 fi. institutions. Affects your interest rate, car insurance.

How to Build your fico score- Get a secured credit card. 680 and above you can borrow money. If you don't have this your interest rates are higher.
You can give yourself a loan to get your score to come up.
Only use 40% of every card. Every % you own you do not want to exceed 40%. Get a copy of your credit report often and from all 3 bureaus.
Banks have filters on their system for pulling credit score. The banks treat not paying your house, or not paying car the same. Every time you sign up for a card it is 15 points off your credit score. This could cost you a point on your mortgage.

FICO score goes from 300 to 850. If you have no credit card they give you 15 points. If you have 1 credit card they give you 22 points. If you have 2 to 4 credit cards you get 30 points.

If you have cards you don't use, it looks like you have an available balance but you don't need it. Always keep you card below 50%.
You lose 10 to 15 points every time an inquiry was made. Tax lien, judgement, costs 75 points.
Some delinquencies outweigh other delinquencies. THe biggest thing is your mortgage. IF you miss it your rates go up in everything.
Most cards you can call every 90 days and get them to raise your limit.
Most times 680 and above you have don't even have to have a job to get a loan. All they care about is the fico.
You can't earn your way to wealth unless you make a lot of money. It is hard to have an amazing life without a lot of money.

Buy as much stuff as you want if someone else is paying for it.
Taking out a 2nd mortgage. So many people want to get rid of their homes that it has opened up the door for owner financing.
They bank will loan you 80% of your equity as a 2nd mortgage. How do i guarantee to pay you off in two years? because i am going to refi.
If you look at 100 pieces of property, then you will find 1 owner finance property.

Money can't buy happiness, but neither can poverty. Leo Rosten

Credit- You can't fix the bad. You have to put good credit in. The creditor wrote that stuff off on their taxes the first year you didn't pay and forgot about it.
Every time you make a payment on time it makes an R1. No matter the amount of credit you have, every on time payment gives you an R1- whether you have burrowed 1000 or 1,000,000.

Poverty is a curse. We are not built to be poor.

If you add users to a credit card, it doesn't affect the user at all.

Common Types of Mortgages:
Principal and Interest fixed
Principal and Interest ARM
Interest Only- ARM - just pay interest, no principal
Interest Only Fixed
Negative Amortization - every time you pay on these you own more.

Libor- London INner Bank Offering Rate - INterest rate offered by a group of London banks for U.S. dollar deposits of a stated maturity. Prime rate is the prime rate. Libor is a london rate. Everything cost 25% more in London. You can hook your loans to the Libor. If you buy a piece of property you can hook it to Prime or Libor. Prime right now is 3. Rate is based on risk.

Your bank buys money from the Fed for 3% and they charge you 7%. If they are loaning it out at 5% they are earning 2%. If you go to burrow money, ask the bank what they are paying for the money. They make a 3% margin, so if they offer you 7% and they are paying 2%, then say you need to give me 5%.

If loans are variable, you want them to have a cap.

Inflation in its current figures is around 13%.

In an interest only Arm- they have 5% set for 5 years, and then the let it go variable.

In a negative amortization or Option Arm, you have an interest rate. You pay 1/2 of the interest rate on this interest only loan as the monthly payment, and the other 1/2 is taced on to the principal due at the end.

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