2015 New Year's Resolution Breakdown

2015 was not a great year for my personal finance goals.  Here’s a quick rundown of my 2015 financial resolutions and how I plan to meet them in 2016.

1.       Max out my IRA.

a.      Accomplished.  It’s the first thing I do every year so I have money to invest with.

b.      2016:  This is always my first goal, so I’ll definitely accomplish this.

2.      Save $X in my savings account.

a.      Accomplished.  This is the second thing I do every year now that I have a house, to cover large maintenance expenses.

b.      2016:  This will come second after my IRA, and I have no doubt I’ll accomplish this.  I plan to buy a car in cash this year too, so this near-term goal will be a primary objective.

3.      Save at least $X every paycheck.

a.      Not accomplished.  We had some large expenses this year, and we basically took 3 vacations.  We went back home for two weeks, Vegas in December for two weddings, and my in-laws came to my house for the holidays.  I came close though; just needed one more paycheck in the year.

b.      2016:  I’ve already implemented some routine deductions in expenses throughout the year.  This should help balance some of the larger expenses like car and housing maintenance.  I’m also going to try and publish blog posts more frequently and build some side income.

4.      Increase 2015 passive income (dividend/interest/mutual fund distributions) by 50%.

a.      Not accomplished.  I waited too long in my investing career to focus on passive income from investments—which explains the goal of trying to reach a 50% increase.  There were several factors contributing to me not reaching my goal in 2015.  The first was a reduction in end-of-year mutual fund distributions.  There weren’t a lot of short- and long-term gains with the market dropping this year.  Additionally, some of my dividend stocks gained quickly and I sold the profit.  For example, WWE offered a 5% dividend when I bought it a low of $9, but then it skyrocketed to $18—doubling my money, and I sold it.

b.      2016:  I’m going to put more money into mutual funds during large market drops.  I will also put more money into large dividend payers whose industry isn’t doing well like oil companies and Real Estate Investment Trusts (REITs).  I have a solid chunk of money in bonds, so I’ll need to keep a close eye on the bond market and make sure that I don’t take a huge capital loss by keeping my money in those bond mutual funds just to get a passive income.

5.      Net assets of $X on 31 Dec.

a.      Not accomplished.  I rarely reach my net asset goal, mainly because the percentage increase is always higher than the market average.  I’ve also never measured my progress monthly or quarterly.  I guess I just hoped I would land on the arbitrary amount at the end of year.  The main reason for not meeting my goals this year was the massive loss I took trying to get quick money.  I invested in some speculative, risky, short-term investments and underestimated how quickly I could lose money. 

b.      2016:  I’ll need to split the goal into monthly and quarterly goals and work harder if I’m not meeting those goals.  I won’t make those same risky investments I tried in 2015 either.

I have a feeling that 2016 will be a great year for those prepared and ready to take advantage of it.  What are your 2016 New Year’s goals?

USAA Mover's Advantage Program Review Part 4: Closing, Moving In and My Recommendation

Read Part 1 here: Part 1: First Contact
Read Part 2 here: Part 2: Update
Read Part 3 here: Part 3: The Offer and The Loan


To recap so far, we initially used USAA's Mover's Advantage Program and were considering a USAA Mortgage.  After some initial communication hiccups with the Mover's Program we were assigned a USAA-sponsored realtor and we put an offer down on a house.  After going through the logistics of me coming back from Korea and taking leave before traveling to my new assignment and several unresolved communication problems, we decided not to go with a USAA Mortgage and chose a local mortgage company.


On December 16th, we closed on the house using a local notary, a service the local mortgage company offered and USAA did not.  One of the problems I had was with trying to communicate the whole process over e-mail.  I asked the mortgage company if a personal check for the down payment and final closing costs would suffice and they said yes, but really meant that a wire transfer or cashier's check would have to be used.  I used USAA's wire transfer service but had to pay a $20 wire transfer fee.


After leave and a week in TLF (Temporary Lodging Facility) waiting for our household goods to be delivered, we finally moved in.  All in all, it was a much smoother process than I thought.  There are quite a bit of expenses that are normal to moving and purchasing a new house.  Here are some that you should consider.

• 1 year of homeowner's insurance due at closing
• VA Funding Fee due at closing (based on amount of loan)
• Closing Costs (ours was paid by our seller)
• Utility set up costs

In summary, I RECOMMEND USAA's Mover's Advantage Program so they can assign you a realtor that deals with the uniqueness of military moves and at this time I do NOT RECOMMEND USAA's Mortgage's company for people with unique military moves.  I'm disappointed that a bank that deals almost solely with military members is not set up to handle unique military moves like mine with me being stationed in Korea and my wife doing the house hunting.  The initial communication and customer service problems were inconsistent with other USAA products and services.

USAA Mover's Advantage Program Review Part 3: The Offer and The Loan

Read Part 1 here: Part 1: First Contact
Read Part 2 here: Part 2: Update

As I mentioned in Part 2, Louisiana has complicated school zoning laws so my wife had to go there two months before and try to find a house so we can close before we arrive.  Louisiana was going to allow us to use the Temporary Lodging Facility zip code but that placed our kids in undesirable schools.  We had to find the schools we wanted then find which housing communities are in that zone and then refine our search.

Our USAA-sponsored realtor had his site populated with houses in those zones, in our price range with the requirements we wanted so we had a good idea of what we wanted to see.  My wife flew in and saw a couple of houses that night.  The next day she saw more houses, and using Skype, we discussed her top three houses.  To her surprise, I picked one of the more pricier houses on her list and was her #1 choice.  The reason why I chose that is because all of the houses were comparable in meeting our requirements, but the more expensive one was actually a better value. 

The value of comparable houses is expressed in cost per square foot.  This house was only $125 a square foot versus $133 and $136 for the other two in her top three.  Based off asking prices, the average for the Barksdale AFB area was $135.  So I was getting this house for $10 a square foot cheaper; or a 7% discount to the area average.  Our realtor told us he would calculate all the prices of our top three and see what kind of flexibility we had.  The next day my wife told our realtor that we selected the more expensive one and he told us that the house's, we picked, price was just lowered so we didn't have any price flexibility.  But since the owners were trying to move out quickly, our offer was the asking price minus closing costs and to keep the hot tub (our realtor's idea, not ours...lol).  Our offer was accepted!

A surprise to us, our USAA-sponsored realtor actually recommended that we at least consider a local mortgage company versus going with the USAA-mortgage company.  I was already concerned with USAA's mortgage company's communication and response (read more about that in Part 1, link above) so we got the information from a local mortgage company.  They were very friendly and gave us an Itemized fee worksheet for each loan at each percentage rate.  USAA Mortgage company didn't offer any of that visibility/transparency.  I used that itemized worksheet and called USAA to go over each fee.  Since I was using my Veteran's Affairs loan, there was little difference in the fees, but the advantage was that the local mortgage company was able to work with the logistics of us not being in Louisiana during closing.  USAA's mortgage company did not offer that service.  We would have to close by mail and could significantly extend the closing price if we went through USAA.  We chose the local mortgage company.

So far, these were the costs that I've incurred while purchasing a house:

• $50 for the USAA pre-approval (they were going to charge another $300 if I chose to go with them).  I will have to call them and tell them we are going with a different mortgage company, so that $50 may be lost.
• $1,000 for my wife to fly out, rent a car and stay in a hotel to find the house and put an offer on it
• $1,200 for the escrow deposit
• $350 for the home inspection.  The buyer pays this cost to ensure that the seller doesn't purchase a shady inspector
• $400 for an appraisal fee but this check won't get cashed unless we (the buyers) back out of the deal

I look forward to hearing other stories of purchasing homes using any other method specific to military members.  

USAA Mover's Advantage Review Part 2: Update and Pre-approval Increase

To read my first review go here: Part 1: First Contact.

After the troubles with the first contact, I was referred to a realtor.  Since then, house hunting has been going great.  We gave the realtor our wish list and he updated his website which automatically gives us houses to look at in the areas we are searching for and in the price range we indicated.

Due to the uniqueness of Louisiana's school zoning laws, my wife is going to travel to Barksdale two months prior for a couple of days and look at homes; and possibly put an offer on one we like.  The zoning laws complicated our search because we must be living in a zip code to attend the schools that we want.  The school system will allow us to use Barksdale's Temporary Lodging Facility's (TLF) zip code but the respective schools aren't ranked well.  So we are going to try and get an established zip code before we get there so our kids can go to the higher rated schools.  Louisiana's public schools aren't rated that well and as you get further from certain locations, it gets really bad really fast.

In Part 1: First Contact, we initially set up a pre-approval and then I called to get it increased before my wife gets there.  I just called the mortgage center and it only took about 10 minutes and the representative was really nice.  Things will move quickly once we put an offer down on a house and as promised, I will keep this blog updated.

If you have any experiences using USAA's Mover's Advantage Program please leave a comment.

USAA Mover's Advantage Review Part 1 - First Contact

In June of 2013, I found out that I was going to be stationed at Barksdale AFB, LA.  After 14 years in the military, I decided it was time to buy my first house.  I did some research and wanted to try USAA's Mover's Advantage program to purchase a house.  This is the first of many posts about the whole process so people can learn from my process.

The first thing I learned was that USAA offers up to $3,100 in cash bonus for buying or selling a home in certain states.  One of the states that you can't get that bonus is Louisiana, so that was disappointing.  I still pressed and applied to be entered in the program on the USAA website.  At the time of applying, I am/was stationed at Kunsan AB, Korea so in the comments section I put that my primary means of communication is my e-mail.  For some reason that request was ignored, because it's most likely an automated process.  They called my wife's phone number and sent correspondence my mail to my home address in California.  I was disappointed in this because USAA is usually well equipped to handle these type of situations where the primary means of contact is e-mail.

I decided to call them directly and talked to a nice representative and explained my situation.  She said she would update my primary means of contact to e-mail and then transferred me to the mortgage section.  Again, I was disappointed because I still get charged for 1-800 numbers from the Korean service I have.  But, the USAA is customer service was still far superior to any other bank I've ever dealt with.  After about 10-20 mins of questions, and after pulling me and my wife's credit report, I was pre-approved.  I chose to go with the VA loan pre-application.  Here were some considerations that the mortgage representative brought up:

• There is a VA Fee of 2.2% of the home loan (you can put it on your loan)
• As of August 2013, the VA was 1/8th of a percentage better and less likely to impacted if interest rates were too rise before January
• There is a $50 pre-approval fee that you have to pay upfront to USAA but they can automatically take it from your USAA Checkings and/or Credit Card
• Once you find the house you like, then you will have to pay another $300 for a conversion fee from pre-approval to actual approval
• I approved for the VAs' no down payment loan and there is no Premium Mortgage Insurance

I'll be interested in my readers' experiences.  Please share them by leaving a comment.

Why Do I Need a Good Credit Score?

Some people are very scared of credit and they are right to be scared of it.  But not having any credit can cost you as much as having bad credit.  In my opinion, our current financial system "rewards" people for over utilizing credit.  I've always called it "playing the game".  But here's why living without credit can be costly.

Without "playing the game" you will have a low credit score just like those with bad credit from credit "mistakes".  Having a low credit score can quite literally cost you thousands of dollars.  Using MyFico's national averages today, a $250,000 house with a 760-850 (the max bracket) credit score at a 4.025% interest rate will cost you $1,197 a month in a mortgage payment and you will pay $180K in interest over 30 years.  A credit score of 700-759 will cost you $1,229 a month and you will pay $192K in interest...over $12K more in interest.

Here's a breakdown of what the score brackets will cost you:

 

Image/Calculator courtesy of MyFico.com http://www.myfico.com/myfico/CreditCentral/LoanRates.aspx

5 States with Highest Foreclosures (Marketwatch)

All states with Air Force Bases near them.  Potential opportunity for those with patience.

http://finance.yahoo.com/news/5-states-highest-foreclosure-rates-160446395.html