Find out approximately how long and how much principal it will require for your accrued interest to be equal to or greater than your current income.

1. How much do you currently make annually?
   
2. In percentage points, how much is your current yearly raise?
   %
3. What is your maximum possible salary?
   
4. How much of your income do you want to invest?
   %
5. How much interest do you expect to earn on your money?
   The stock market returns ~10-12% in the long run.
   
6. How often will the above be compounded?
   MonthlyYearly
7. How much will Uncle Sam take?
   

Year

Salary

After Tax

Amount Invested

Principal

Interest Gained

Press “Calculate” to continue…

” The most powerful force in the universe is compound interest” ~ Albert Einstein

It’s easy to ignore the quote. It takes a great deal of time to see any results from compounding interest. So much so that many don’t bother at all at giving it a chance to work for them. I was one of those people for the longest time.

Growing up during the 90’s, I didn’t bother with a savings account. The APY at my local bank was (and still is, actually) abysmally low. As a teenager, I didn’t really have any money to put into a savings account. So, the thought of putting it away for such a low return and possibly having to pay a fee to withdrawal….well, I just didn’t see the interest (pun!). But, now that I’m beginning to make a decent income, I’m looking for more ways that my money can work for itself.

So far, I’ve managed to open up an online savings account with a relatively high yield of 4.5%. The results so far have been addictive. Every month I get an email letting me know that “Hey, we just gave you $XXX, that you didn’t have to do a thing for!”

And, it’s easy to see that if I continue to repeat this process, eventually it will yield a recurring substantial amount of money that involves little effort on my part.

My next goal is to try increasing my return by investing some of my income in mutual funds. In particular, I’d like to invest in the Janus Overseas (JAOSX) mutual fund. According to Schwab, it’s a High Return, High Risk mutual fund (which is fine by me since I’m pretty young) with No Load. Here’s a screen-capture of the JAOSX’s yearly returns:

Even if it doesn’t have a return of 50 or 30% next year, 16.5% is substantially higher than 4.5% in the long run. Plus, it will be a nice complement to my growing number of investments.

So, what are my current guidelines for investing? (I say “Guidelines”, because there are always exceptions. e.g. Customer Service vs. No Customer Service or High Quality vs. Low Quality, etc.)

• Invest in appreciating assets - Don’t leave all your money in a checking account with little to no yielding interest. Find some way to invest your money. It doesn’t matter whether it’s an index fund, mutual funds, stocks, or bonds. Sure, in some cases you may only gain $10/month, but that’s over $120/year (or $122.50 on an initial balance of $2666.70 with an APY of 4.5% and no additional contributions….to be exact) and you didn’t have to do anything to get it!
• Separate your Savings - Try to have your savings account at a separate bank than your checking account. Doing so has been shown to help in growing your nest egg because it’s not as easy to make withdrawals (…actually, it is pretty easy with some banks).
• 401k First - Studies show that you can save more money by increasing your 401k income deferral as opposed to paying more towards your mortgage. This is because the money being invested in your 401k isn’t taxed until you you start withdrawing it(same with the interest it accumulates).
  
• Say “NO!” to assets that quickly depreciate - Nothing pisses me off more than to purchase something only to find out it’s worth much less after I walk out of the store. If you aren’t able to keep the outstanding balance of a purchase below the actual value, then perhaps it wasn’t really a deal after all.
• Research Everything - Their are so many online tools available for free that it’s silly not to do any research. Find out what investment strategies work best for you and have at them.
• Don’t Trust Everybody - Not even the cool talk of a guy named Zach. Do your own research and invest carefully.

It takes a lot of hard work and time to build up your assets, but it only takes a second to lose your ass.

I discovered a great website for house-hunting this past weekend, www.Trulia.com, and I can honestly say it’s now my favorite site for looking up homes for sale.

The feature that sets it apart from all others is that it maps out all of the results so you can see exactly where all of the homes reside. For those that are familiar with the area(s) that they want to live, this is a must have features as it makes narrowing your search results really simple.

Even for those that aren’t familiar with the area they live in, it’ll let you see which houses are closest to the Interstate or to where you work.

But, Trulia has other unique features that make it a great website.

• Recently sold homes are displayed on the map.
• Recently updated listings are listed as such.
• You can subscribe to receive notices for individual properties when they are updated.
• Viewing a property also provides you with any available comps.
• Housing trends for your area are also available (The larger the city & the closer to Atlanta, the more detail they can provide)
• Post questions about real estate and have them answered/discussed by many different individuals in the real estate community.

I had always talked about creating a site like this, but didn’t know the whereabouts to get the data. But, I’m not dissappointed, this website is greater than what I could have created by myself. Make sure to check it out sometime.

For those that have taken an interest in foreclosures, you may have come across a document known as a Property Condition Report at one time or the other. At first glance, it looks just like a Home Inspection report. However, buyers should take note that a Property Condition report is not the same as a Home Inspection report.

A Property Condition report is a report prepared by an Appraiser, not a Home Inspector, for HUD.

HUD requires that for a home to be listed with HUD, it meet their minimum property standards. Appraisers make sure of this by checking through HUD’s home valuation sheet (HUD Form HUD-92564-VC). Thus, what you get in the Property Condition Report is the minimal amount of information that is necessary for the home to be listed.

Further,the Property Condition Report is more focused on what is easily visibile. Conditions such as a cracked foundation, gas leak or leaky roof may not be covered in this report. So, don’t believe that just because it’s not in there, nothings wrong.

A Home Inspection is much much more thorough ( you’ll notice this right away when your Home Inspector hands you a small tree worth of paper ). It also usually has a number of photos to go along with each section in the report.

Also, a Home Inspector may be held liable for the representations made in the Home Inspection report. (Whereas an Appraiser would probably not be liable to a buyer for mis-representations in a Property Condition Report; since a Property Condition Report shouldn’t be relied upon for a house purchasing decision - but, I’m not a lawyer, so take that with a grain of salt.)

Conclusions?

Home Inspections > Property Condition Reports

UPDATE: BTW, for those who haven’t seen a Property Condition Report, they can be pulled up by doing a home search on www.bidselect.com. Just view the details of a property and then click on the link to view the report (where the big red arrow is pointing below):

Click Image to EnlargeWould you buy the house above? Typically, when people are looking for a house to either live in (or flip for that matter), these are the houses that people don’t consider. For good reason too! Housing in this price range usually have a multitude of problems, such as:

• Asbestos
• Lead paint
• Termites
• Deteriorated Structure
• Rough neighborhood
• The list goes on and on…

Any one of the above could easily cost you more than the house is worth. But, if you were able to get past the potential problems, would you be willing to purchase a house below the $50k threshold?

After reading this article, I was curious as to what I might be able to find in my area (namely, Kingston and Rome, GA). So, I first did a search in Kingston and came up with zero houses. But, I hit paydirt when I searched for houses in Rome. The house featured at the top of this article is one of the homes.

Here are a few more of that house, including its interior:

Listed at $41,995, this home is located minutes away from Shorter College, Floyd Hospital, and numerous places to shop and eat(Click here for a map). Most of the homes in this particular area are just older homes in established neighbordhoods.

One of the immediate items that would require attention would be the lack of central heating and air. With temperatures reaching 100+ in Rome, this would be a required update with a cost of approximately $10k. Plus, it’s probably going to require additional electric work, which is going to run the bill up another $10k if you have to rewire and then repair the walls.

Furthermore, some mortgage companies may be willing to roll the renovation costs into the mortgage if your debt to income ratio isn’t too high.

My personal opinion is that if you can avoid the potential pitfalls above, it could be a worthwhile endeavor. Especially if the city is experiencing substantial growth (as Rome appears to be). With an approximate mortgage payment of $300/month, that wouldn’t be so much of a burden that repairs and improvements couldn’t be made within budget.

As always though, I would recommend doing your homework before considering any such high-risk purchase and, of course, spending the money for a thorough home inspection prior to making any purchasing decisions.