How to Buy Your Perfect Homes

Buy Your Perfect Homes

Home ownership brings along the pride of being a home owner, social status, and not to mention many monetary benefits.

1. Tax breaks. The U.S. Tax Code lets you, the home owner, to deduct the interest you pay on your mortgage, your property taxes, as well as some of the costs involved in buying your home.

Related article: The Tax Benefits of Home Ownership

2. Appreciation. Ownership of real estate provides long-term and stable growth in value. While year-to-year fluctuations are normal, median existing-home sale prices have increased on average 6.5 percent each year from 1972 through 2005, and increased 88.5 percent over the last 10 years, according to the NATIONAL ASSOCIATION OF REALTORS®. In addition, the number of U.S. households is expected to increase 15 percent over the next decade, creating continued high demand for housing.

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3. Equity. Money paid for rent is money that you’ll never see again, but mortgage payments let you build equity ownership interest in your home.

4. Savings. Building equity in your home is a ready-made savings plan. When you sell your home, you can generally take up to $250,000 ($500,000 for a married couple) as gain without owing any federal income tax. That's another tax break.

5. Predictability. Unlike rent, your fixed-mortgage payments are fixed over the years so your housing costs may actually decline as you own the home longer. However, keep in mind that property taxes and insurance costs will increase.

6. Freedom. The home is yours. You can decorate and remodel any way you want and benefit from your investment for as long as you own the home.

7. Stability. Remaining in one neighborhood for several years gives you a chance to participate in community activities, lets you and your family establish lasting friendships, and offers your children the benefit of educational continuity.

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How to Make Money and Achieve Financial Freedom

In any wealth building and investing endeavor, you’ll need money. It can be your own money or other people’s money. But you need to start with some money.

There are 2 types of income

Active or earned or W2 income - requires your time and attention to actively participate in income-earning activities, such as having a job, driving uber, selling things on eBay or Craigslist.

Passive or leveraged income - still requires your time and attention in the beginning. But once a system is set up in place. It generates income on auto-pilot. Income comes in the form of rental income, capital gain, dividends, interests, commission, royalty, lease rent, profit, revenue, etc.

There are mainly 3 ways to make money

Best ways to make money

Trading time for money. 94% of people use this method. They are employees and self-employed. Sorry, if you’re self-employed, you’ll still an employee because you’re doing all the work. The only difference is you’re the boss too. So you actually have 2 jobs. How many hours do you have in a day? We all have 24 hours in a day, why some people make minimum wage, and others make millionaire while sleeping and having fun. Employees make earned income or W2 income. These income are taxed at highest tax rate because of social taxes.

Trading money for money. Only 3% of the population can make a good living investing their money to create more money. Investing requires special knowledge and experience. Many people say they invest in stock market or real estate by timing the market. Well, guess what? Most of these people are just “speculating” because they’re just hoping that their money will appreciate. If you know how money works, any time is a good time to buy or invest. “Timing the market” is not an investment strategy. It’s speculation. People who trade money for more money earns portfolio income, which is still a type of passive income.

Leveraging other people’s money and other people’s time. This is 1% of population. And these are mostly business owners and business investors. They invest in a “business system that generates money on auto-pilot”. Most of us are familiar with these business system, because most of us at one time or another work for a company that you never meet the owner.

So which is the best way to make money?

Let’s see what the wealthy people do, or the millionaires.

75% of millionaires are business owners and investors.

25% are professionals, such as doctors, lawyers and accountants.

What do millionaires do differently?

The wealthy invest in profitable businesses, and that’s how they accumulate their millionaires. Poor people buy stuff and the middle class buys liabilities.

Just Starting Out in Your 20s

This is probably the scariest moment in your life. You’re starting out and living on your own the first time.

Your parents are there, but not close enough.

Your don’t have any saving, or if you do it’s a small sum only. You don’t know much about money or investing because it was never taught in school or from your parents.

You’re earning a beginning income, which is eaten up with high tax rate, because you have no business, real estate property or family to take advantage of any tax deductions.

According to the x-curve, you are in the beginning of your life with many responsibilities and minimal wealth. You are in the very beginning of your journey to financial freedom.

But it’s okay. This is a good thing, because you have "time" on your side. According to the wealth formula, you need time to grow your money.

You're lucky at this stage.

Take advantage of this benefit as time waits for no one. The earlier you start saving the more your money compound as time goes.

Here are a few Strategies to Achieving Financial Freedom for the Beginners.

Get financially educated. I can’t stress it enough. Learn how money works now, or work the rest of your life for money. Sign-up for FREE financial strategies workshops in Honolulu to get financially educated.

Get an income from a job, a gig or a business. Whatever you can get some money in. You can’t get money without doing anything. But you can in fact start making money without spending much. For example, driving for uber or starting a business in the financial industry.

Now that you have some money coming in. Be sure to Pay Yourself First…put aside at least 3-5% of your income every month in your “rainy day” bucket. Start with a small insurance policy, because if something happens to you, your family immediately would have $100,000 or more. Once you have an insurance policy in place, put the rest of the money in an emergency fund that can provide for 3-6 months of your living expenses.

Live Below Your Means and spend what is left after your saving. This is the money that you can use to pay off your debts, go out to nice dinner, buy a few nice things for yourself. Buy only what you can afford with your money NOW, not your future money. This is avoid getting into debts.

Manage Your Debt. Some of you may have college debts, and some of you may also have consumer debts. High interest on credit card debts can compound quickly and eat up your savings and slow your progress to financial freedom.

When you have saved a big enough chuck of money, then you can use that for down payment for your first property or invest.

New Parents and Life Insurance

New baby

You may not have ever given a thought to life insurance until this little bundle joy rest helplessly in your arms. With the addition to family, there is an increase level of responsibility and everything is changed.

Babies come with lots of responsibilities and expenses all the way until they’re in college. You want to provide your child with the best life possible to achieve their full potential. You want to be sure that you’re there to provide and protect your child as best as you can.

Getting life insurance coverage is a simple way to provide and protect your child and family in case you no longer can do it yourself.

A life insurance policy cannot replace your love and passion for your family, but it can definitely replace the income and monetary value you provide to your family so they can continue to maintain their current lifestyle, continue to stay in their “home” that you work so hard to purchase for your family, and also college tuition for your children.

A recent report puts the average cost of raising a child born in 2015 at a whopping $233,610. Families with lower incomes are expected to spend $174,690 per child, while higher-income families will spend $372,210 on average.

It is estimated that a middle-income family will spend between $12,350 and $13,900 a year on child-rearing expenses from birth to 17 years old.

If you pass away today, can your spouse raise your children, support the household, pay for mortgage and save for college all by him/herself?

Even with emergency fund in place, most households would feel the financial impact from the loss of a primary wage earner in less than 6 months. One in three households would have immediate trouble paying for living expenses if the primary wage earner were gone.

Insuring Both Parents

In most families in Hawaii, both parents work, sometimes 2-3 jobs just to provide for household expenses, costs of caring for their children and mortgage payment. That's one reason for both spouses to be adequately insured.

RELATED ARTICLE: Turn Your Cash Flow from Negative to Positive

Even in cases where one parent stays home to care for a young child, that parent should be insured. It’s a misconception that a stay-at-home parent doesn’t need life insurance.

But think again…

If you're providing for someone it's not just income that you make as an employee, it's the value you're providing taking care of a dependent.

If you’re the stay-at-home parent and you die uninsured, who’s going to take care of your child? Can your surviving spouse stay quit his/her job to stay home to take care of your child or can he/she afford to pay for childcare?

With a life insurance policy in place, your benefits can help cover these costs as well as other necessary expenses required to raise your child.

Your workplace policy isn’t enough

Many companies offer group life insurance as a benefit for employees. The payout is often pretty low and it is not meant to be enough to replace your income.

Your employer-provided life insurance policy doesn’t follow you when you leave your job. What happens if you lose your job or leave to work someplace that doesn’t offer life insurance?

RELATED ARTICLE: Protect Your Family with Permanent Life Insurance

Get Insured Now When the Premium is Low

The cost of life insurance is not based on your credit rating, savings or assets. It's determined by your age and your health.

If you're a couple in your 20s and healthy, you'll pay a lot less than what you would have to pay in your 30s and 40s.

Get insured now before your health start to deteriorate and affects your ability to qualify for affordable life insurance.

The younger you buy, the cheaper it is.

Contact us today to get a customized policy to meet your family’s growing needs at an affordable rate.

Financial Needs of Retirees

Golden Egg of Retirement

Most of us work hard most of our lives in hope that when the magical moment, aka retirement, comes, we’ll have no responsibilities, debt-free, all children are on their own, mortgage all paid for, life insurance and estate planning all set. The only thing missing is destination and itinerary.

We all spend a lot of time dreaming about retirement, when all we do is sit at beaches all over the world chilling with a glass of wine in our hands.

My retirement dream is to play tennis, play golf, hang out with friends for lunch and dinner, travel around the world (for free), continue to help families with their financial needs and building wealth (because that’s something I enjoy doing).

Ok…hold on a second. Where’s all the money coming from?

That’s right, we all love to dream big, then reality sets in. How do we fund our retirement?

Well, my full-time job does have retirement plan for employees. Remember, it’s not your employer’s duty to make sure you have enough to retire.

You need to start planning…

Income may not be as important as what your expenses will be in retirement when determining the size of your retirement nest egg.

Most retirees can live on far less than they make once they have independent children and a paid-off home.

Unfortunately, your level of financial independence also determines your ability to maintain independence in other areas of your life, such as maintaining dignity during any long-term or chronic illness.

That’s right, we keep thinking about all to fun things to do about in retirement, we forgot we’re also older and eventually may need long term care.

How much do I need to retire comfortably without compromising my current lifestyle?

Some financial advisors would suggest a specific dollar amounts, but that’s arbitrary. And percentages of income do not matter much at all either since many people's incomes fluctuate dramatically over time.

The only thing that really matters is your expected expenses in retirement. I would suggest aiming for enough savings to cover 25 years of expenses in retirement. That's a reasonable assumption for people nearing retirement age now. An average man who is 65 is expected to live until 84, according to the Social Security Administration. And an average 65-year-old woman is expected to live to 87.

1. Have personal and financial goals for your retirement

There’s nothing more important than knowing where you’re going. Knowing what you want to do during your retirement will help you determine how much money you’ll need, and how long you’ll need.

If you plan to move to live in Philippines for the rest of your life during retirement, your retirement income need would be a lot lower than if you stay in Honolulu, Hawaii.

If you plan to stay in Honolulu, Hawaii and travel the world, you will probably need a fortune to completely retire.

2. Project your retirement expenses

Now that you’ve some ideas and goals of what you want to do during retirement, you can start with figuring out how much money you’ll need in expenses.

Your annual income during retirement should be enough (or more than enough) to meet your retirement expenses. That's why estimating those expenses is a big piece of the retirement planning puzzle.

To help you get started, here are some common retirement expenses:

• Housing: Rent or mortgage payments, property taxes, homeowners insurance, property upkeep and repairs
• Utilities: Gas, electric, water, telephone, cable TV
• Transportation: Car payments, auto insurance, gas, maintenance and repairs, public transportation
• Food and clothing
• Insurance: Medical, dental, life, disability, long-term care
• Health-care costs not covered by insurance: Deductibles, co-payments, prescription drugs
• Taxes: Federal and state income tax, capital gains tax
Debts: Personal loans, business loans, credit card payments
• Education: Children's or grandchildren's college expenses
• Gifts: Charitable and personal
• Savings and investments: Contributions to IRAs, annuities, and other investment accounts
• Recreation: Travel, dining out, hobbies, leisure activities
• Care for yourself, your parents, or others: Costs for a nursing home, home health aide, or other type of assisted living
• Miscellaneous: Personal grooming, pets, club memberships

RELATED ARTICLE: Pay Off Your Mortgage in 7 Years

Don't forget that the cost of living will go up over time. The average rate of inflation over the past 20 years has been approximately 3 percent per year. And your retirement expenses may change from year to year.


To protect against these variables, build a comfortable cushion into your estimates (it's always best to be conservative).

3. Decide when you'll retire

The earlier you retire the more years of retirement you have to fund. And the longer you live, the more years of retirement you have to fund too.

To determine your total retirement needs, you have to determine how long you'll be retired.

The length of your retirement will depend partly on when you plan to retire. This important decision typically revolves around your personal goals and financial situation. For example, you may see yourself retiring at 50 to get the most out of your retirement.

4. Identify your sources of retirement income

Now that you know how long you and your spouse want to continue working, then determine who you will be responsible for in retirement, all your sources of income (including Social Security).

Once you have an idea of your retirement income needs, your next step is to assess how prepared you are to meet those needs. In other words, what sources of retirement income will be available to you?

Retirees today face two main challenges: not saving enough for retirement and fear of outliving their retirement savings.

RELATED ARTICLE: Retire Rich Tax-Free on Your Own Term

Protecting your assets

Additional sources of retirement income may include a 401(k) or employer-sponsored retirement plan, IRAs, annuities, and permanent life insurance. The amount of income you receive from those sources will depend on the amount you invest, the rate of investment return, and tax treatment. If you plan to work during retirement, your job earnings will be another source of income.

The older we get, the more likely it becomes that we will need healthcare. For retirees, the concern is whether they will be able to pay for good quality healthcare when they need it. After working for a lifetime, retirees want to know that their golden years will be just that - golden, and spending some of those years in a sub-par nursing home is sure to make the experience much more difficult to enjoy.

5. Invest in long term care insurance

Medical expenses and private nursing home care can quickly wipe out a lifetime of savings. A retiree's ability to pay for the cost of in-home healthcare, adult day-care and nursing home expenses may determine the quality (or lack thereof) of healthcare the retiree can receive.

Retirees should look into purchasing a long term care insurance. LTC insurance not only cover expenses during long-term illnesses, it also protects you from having to spend down all your assets to qualify for Medicaid.

Some long term care insurance allow you to choose where to receive the care - a nursing home, an adult day-care center or at home.

6. Sign up for Medicare

Eligible retires should sign up for Medicare, which can be used to cover most medical expenses. Medicare provides two types of insurance - hospital insurance for in-patient care and certain follow-up care, and medical insurance coverage for physician services that are not covered under the hospital insurance.

The hospital insurance portion of Medicare is available at no additional cost, as it is paid for as part of an individual's Social Security taxes during employment. The medical portion of the insurance is available at a premium and is optional.

Medicare can cover medical expenses that you would have to pay with your own savings.

7. Leave on a good note

Have all your funeral and final expenses taken care off by a final expense insurance. The Everest final expense insurance provides planning tools and a 24/7 concierge service that takes care of everything for your family in the time of stress.

So instead of spending time looking for funeral homes and purchasing plans, your family can focus on what’s more important - the ones left behind.

Now you should have most of your financial needs taken care of for retirement. With good planning, your income sources will be more than enough to fund even a lengthy retirement, including any unexpected expenses.

What if it looks like you'll come up short? Don't worry.

You can always work part-time or start a new business to supplement your retirement income. Many retirees choose to continue working part-time during their “semi-retirement” years doing things they love. Some retirees do so for personal-fulfillment reasons, others may do it for the extra income it provides.

Starting a small business is a great way to supplement retirement income because you’ll also receive tax benefits that are reserved for business owners, further helping you to save on retirement expenses.

Whatever the reason you have, it’s great to know that you’re working because you CHOOSE to, and not because you HAVE to.

Don’t Waste Your Money on Mortgage Life Insurance

First of all, what is Mortgage Life Insurance?

Mortgage Life insurance is an insurance policy designed specifically to pay off your mortgage in the event that you, the mortgage borrower, die before the mortgage is completely paid off.

Don’t confuse mortgage life insurance with private mortgage insurance or PMI. They are different animal. But both are equally hurtful to your wealth accumulation plan.

Mortgage life insurance are somewhat similar to traditional life insurance, but different in very significant ways. Both traditional life insurance and mortgage life insurance can provide a means of paying off your mortgage. With either type of insurance, you pay regular premiums to keep the coverage is in force.

A traditional life policy pays out death benefit when the borrower dies. But a mortgage life insurance policy doesn't pay out unless the borrower dies while the mortgage itself is still in existence. And the death benefit goes to the mortgage lender, not the family members as in traditional life insurance.

Why would you buy life insurance to pay money to your mortgage lender, and not your family?

With mortgage life insurance, your mortgage lender is the beneficiary of the policy instead of beneficiaries you designate. When you pass away, the death benefit pays out to your lender to pay off the balance of your mortgage, so you family does not have to worry about the mortgage.

Well, it’s true that mortgage is taken care of for your family. But wouldn’t it be better for your loved ones to receive the death benefits and decide how they want to use that money and decide whether to pay off the mortgage. There may be more pressing needs than paying off the home, such as final expenses, private school or college tuition, etc.

Related article: Why Final Expense Insurance should be part of every solid financial plan

Let’s look at mortgage life insurance more closely.

There are two basic types of mortgage life insurance: decreasing term, where the size of the policy decreases as the balance of the mortgage is being paid down until both reach zero; and level term, where the size of the policy does not decrease.

With a level premium, your premium stay the same for the duration of the policy. This feature sounds great – until you realize that while you’re paying the same premium, your coverage is shrinking as you pay off your mortgage over the years, which also means the potential payout decreases as well.

Some insurance company offer to return your premium if you pay off your mortgage before you die. Does this make up for the fact that your coverage declines although you keep paying the same amount? Not really.

After 15 or 30 years, when your mortgage is paid off and you get your premiums back, they’ll be worth far less because inflation will have eroded their value.

You also will have lost the opportunity to invest what you saved from purchasing cheaper life insurance instead of mortgage protection insurance. That’s 15 or 30 years of potential compounding returns down the drain.

Related article: How to Make Money Work for You

Traditional life insurance is often more affordable and allows you to name your children or spouse as the beneficiaries rather than the mortgage company.

The premium of the mortgage life insurance is usually lumped into the home loan, which means you are paying finance charges on the premium, which is already expensive.

Also, a mortgage life insurance stays with the house and it is not transferable. Now you’re stuck.

Basically, a mortgage life insurance is a waste of money. Any traditional life insurance (whether term or permanent) can offer much better level of protection for considerably smaller premiums.

A traditional life insurance maintains its death benefit value throughout the lifetime of the policy, and the death benefit pays out to your family whether or not your mortgage is paid off. It gives your family option to pay off the mortgage or use the money for more urgent things. And if the mortgage is paid off when you pass, that’s even better, your family can have all the money to use for whatever is important.

Mortgage life insurance is extremely profitable for mortgage lenders and/or insurers, but totally obsolete to borrowers. Remember, there are two lifespans to consider - your lifespan and the mortgage’s.

Mortgage protection insurance companies might try to convince you that you need their product in addition to life insurance. They’ll tell you that paying off the mortgage will eat up a major portion of your life insurance proceeds, leaving much less for your survivors to meet their basic living expenses.

If you are concern you don’t have enough life insurance, you should buy more. It will likely cost less to increase that coverage than to purchase a separate mortgage protection policy.

If you cannot qualify for traditional life insurance because of health reason, you would still be better off with a no-medical-exam (also called “guaranteed issue”) term policy with level premiums and a level death benefit. These policies cost a bit more, but at least you and your family will be protected.

You should consider mortgage life insurance only as a last resort.

Related article: Protect Your Home with Life Insurance

Why Private Mortgage Insurance Sucks?

If you're a home buyer, avoid private mortgage insurance like a plague.

Private mortgage insurance is an insurance policy that protects mortgage lenders against losses that result from you defaulting on a home mortgage, dies, or is otherwise unable to meet the contractual obligation of the mortgage.

It is usually required from mortgage borrower if their down payment is less than 20 percent

That’s right, you pay the insurance to protect your bank.

Private mortgage insurance may come with a typical “pay-as-you-go” premium payment, or it may be capitalized into a lump sum payment at the time of mortgage origination.

As an alternative to private mortgage insurance, some lenders may offer a “piggyback” second mortgage, which serves as or part of the down payment to avoid private mortgage insurance.

This option may be marketed as being cheaper for the borrower, but that doesn’t necessarily is true. Always compare the total cost before making a final decision.

Another alternative is “lender-paid insurance”, which sounds so much more reasonable. With lender-paid insurance, you are required to put down at least 10 percent as down payment.

That’s still a lot better than you paying for private mortgage insurance, which can add up to a lot of money, which could have been use to pay down the principal.

Not every lenders offer lender-paid insurance, so you have to shop around and ask, especially mortgage brokers. You can always get better deals from mortgage brokers than big banks.

Once you’ve paid off some of your loan and/or your equity in your property has increased to where your loan is less than 80% of your property value, you may be eligible to cancel your mortgage insurance. Once the mortgage insurance is cancelled, you will stop paying the monthly premium, which you can now use that as additional payment to the principal and pay off your mortgage a little bit faster.

Related article: Pay Off Your Mortgage in 7 Years

The private mortgage insurance does not cancelled automatically when your loans reaches less than 80% of your property’s value. You have to initiate the cancellation. So check your mortgage and property tax assessment value at least yearly.

Related article: Don’t waste your money on mortgage life insurance

Why an Indexed Annuity Should Be Part of Your Retirement Plan?

There are two major challenges most retirees face today - lack of retirement savings or income and outliving your retirement savings.

Sources of Retirement

We frequently talk about the 3 traditional retirement income - pension, social security and personal savings.

3-Legged Stool of Retirement

Are Pensions Disappearing? Do You Have a Pension Plan?

In the 2013 Bureau of Labor Statistics reports, only 10% of private industry establishments offer defined benefit pension plans.

If you still have a pension plan, good for you.

Will Social Security Be Enough?

When Social Security first started in August 1935, there were 42 people working for every one retiree. Currently there is less than 3 people working for one.

Besides, people are also living much longer compared to 70 years ago.

Social Security is the largest source of income for most elderly Americans today. Unfortunately, it was never intended to be your only source of income when you retire.

With 2 of the 3 legs on the stool crumbling away, there has been a shift to personal responsibility.

Sources of Retirement Income

Did you know financial support from families is one of top 3 sources of retirement income? And most retirees were financially more worst off than before retirement?

Since you can’t rely on your company’s pension or social security, do you want to rely on your children, grandchildren, for your retirement?

They have their own share of financial responsibilities.

Are you saving enough for retirement?

Are We Saving Enough?

Most people would prefer to continue their preretirement lifestyle. Others choose to down size with hope that that will make their retirement income last longer.

How can an Indexed Annuity help solve your retirement dilemma?

An annuity (or income insurance) can provide you with income for life that you can’t outlive.

There are mainly two types of annuity - single premium immediate annuity and deferred annuity.

A single premium immediate annuity are most beneficial for someone who just retired and can roll over a lump sum of money from their companies’ 401(k) or Thrift Savings Account, or an individual retirement account (IRA).

The pay out starts one month after roll-over.

On the other hand, any individual can start contributing to a deferred annuity, that function similarly to an IRA. The money stays in the account and grow tax-deferred until a pre-defined time, usually at least 59 1/2.

When pay out starts, you get a monthly income for the rest of your life.

Another benefit of an indexed annuity is safety. Because your money in the annuity is not exposed to the stock market, your money is safe to grow tax-free.

With an indexed annuity, the insurance company assumes the risk of the market. While with variable annuity, you (the consumer) assumes the risk of the market.

If you, the contract owner, passes before payout starts, your benefit will payout to your beneficiaries as death benefit, just like life insurance.

Overall, an indexed annuity provides you with the security knowing that your money grows safely, you can a supplemental stream of cash flow that you cannot outlive.

Watch Tony Robbins talks about fixed indexed annuity.

Contact us to see how an indexed annuity fits into your retirement plan.

Financial Strategies Workshops – REGISTER HERE…

Are you tired of living paycheck to paycheck? Are you worry you're not saving enough for emergency, for retirement or for college? Do you want to learn better ways to make money? We might have just the solution you're looking for at Perfect Homes Honolulu.

Wealth is within reach…you just have to need to know how.

The reason why many people live paycheck-to-paycheck is the lack of financial education. Have you noticed that you're now making more money than you were 10 years, but you'll still struggle every month with nothing left to save or invest?

Financial literacy and building a financial foundation is the first step toward financial freedom...

Attend one of our FREE workshops to learn how money works, increase your cash flow so you can start investing in your future. Stop being a slave to money and make money your slave instead.