Buy a Home and Subsidize Your Retirement

We all know how historically low interest rates have been over the past few years. The federal Government has been pumping money into the system, and although they have been rather selective, banks have been lending at very affordable rates.

Along with this trend has been the spike in rental prices. As fewer people could buy and more needed to rent, rental property prices started to go up. This has also been influenced by the unemployment rates, which have been higher than usual as well, although they are starting to pull back. Despite this, many economists believe that the level of unemployment might remain higher than what we've been used to.

So while rates are still lower than usual and home prices very attractive, you still have time to jump in and take advantage of some serious savings. The following scenario compares renting vs. buying and is based on an actual active listing located at 2957 Raking Leaf drive, Abingdon, MD 21009.

What does this mean? Basically, at today's interest rates (4.5% rounded up from 4.44%), according to Bankrate.com, you will save $125.42 per month buying instead of renting. If you were to invest those savings and only received an average of 6% over the next 30 years, you would have over $118,985! The best part is that this doesn't even factor in the home equity you could expect to gain over that time frame. 

While this strategy would only represent a small portion of your retirement planning, it will definitely help. It could also be applied to the idea of saving for your childrens' college, and we will address that in the coming weeks. Think about taking advantage of the rent vs. buy disparity and save money for the long term. 

2957 Raking Leaf Drive, Abingdon, MD 21009

What Have You Done?

Isn't this the first question we ask someone in the business world we don't know? "What have you done, and where have you done it?" If their answer is insufficient, you will probably reject them without further consideration.

Why do we do this? Mostly because we assume that past success is a predictor of the future. This applies well to the real estate field, where the number of transactions one does measures their worth. An important factor to this is that the details don't matter; if your father was a successful developer, and you his assistant, you will be credited with being a real estate magician. No questions asked.

Another reason for the tendency to rely on past "success" is that it's a quick filter. Are you a hiring executive, combing through resumes in search of the right fit? If so, I can imagine that in the job description, listed first is the amount of experience that is required for the given field. If an applicant does not meet your stringent criteria, their resume will be banished from the pile and burned, never to be seen again.


Just recently, when the 2013-14 NFL regular season came to an end, a number of head coaches were fired immediately on the day now known as "Black Monday." This is done for a variety of reasons, ranging from the lack of the teams' success to the organization would like to start over. The Cleveland Browns fired their coach after only one season, citing their own mistake for having hired him in the first place.

While Cleveland hasn't hired a replacement yet, other teams began to hire as quickly as possible, mostly because of the amount of work required between now and next season. The Washington Redskins hired Cincinatti Bengals' former offensive coordinator Jay Gruden as soon as the Bengals were eliminated from the playoffs. The Bengals won their division, but despite the home field advantage, they grossly underachieved in the playoffs.

The Houston Texans fired head coach Gary Kubiak after a disastrous season, and then appointed former Penn. St. head coach Bill O'Brien. What is the premise for the belief that Bill O'Brien can succeed in this position? He took over a program at Penn. St. that had more stigma than Alex Rodriguez, but somehow, had two winning seasons while being heavily sanctioned.

So is past success always a predictor of future success? Definitely not. We need to look beyond the surface to determine whether or not someone is right for the job. I am not saying that either of these coaches doesn't deserve their positions, but I wonder how many candidates didn't make it past the initial sniff test?