Tag Archives: wealth building

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.

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Learn how to money works, build wealth, and protect your income and assets.

There is no magic for building a solid financial foundation.

You can make more money. The old way of thinking—getting a good job, working until 65 and retiring happily—is over. Nowadays you should be more proactive in your thinking about making money.

If you look for it, you’ll find it.

Make it a mission to change your family’s financial future.

1. Increase your cash flow. Make more money when you can, while you can. Have multiple sources of income.
2. Spend less. Cut down your expenses. It’s not how much you earn that counts. It’s what you keep. Set aside 5, 10, 15% of your income to savings.
3. Reduce your debt and liabilities. Interest on the debt will interfere with your goal for long-term asset accumulation.
4. Understand how money works. You must take time to understand how money works. You must learn how to make money work for you.
5. Have a financial goal. Set up a plan of action.
6. Take care of your responsibility. Have proper protection.

This book is the first step to your financial freedom...

How to Make Money Work for You

Understanding how money work is the first step to building wealth.

Remember, money is a tool. When used properly, money can build you great wealth. But, when used in the wrong way, you can be digging your own grave.

Consider this your user guide to money.

Wealth Formula

The Power of Time

Time can be your worst enemy or your greatest ally. No matter where you are in life or in building a financial strategy, the key is to begin saving now. The sooner you begin, the less money you need to set aside to create a solid financial future.

Pay Yourself First & Save Early

Mr. Save Early saves $3,600 per year for 7 years in an 8% tax deferred account.

Mr. Wait Longer starts saving the same $3,600 per year for 17 years in an 8% tax deferred account, 7 years later than Mr. Start Early.

Procrastination is one of the main causes of failure.

Pay yourself first each month, so you have money to invest and take advantage of the time and compound interest.

Don’t wait until you pay off all your debts to invest. That’ll be too late.

The Wealth Formula only works with early investing, high rate of return, and minimizing tax.

Make small changes in your lifestyle and spending habits to save at least $10 a day.

Related article: Turn Your Cash Flow from Negative to Positive

The Rule of 72 is an estimation of how long it would take for any amount of money to double.

You simply divide the number 72 by the rate of return, and the result is the approximate number of year for your money to double.

Take a look at the following hypothetical example that shows how an initial $10,000 investment grows over time.

How Fast Can Your Money Double?

Notice how a $10,000 investment at age 29 doubles faster as the rate of return increases. Your $10,000 compounded to a grand $640,000 at age 65 with a 12% return versus a merger $40,000 at 4% return.

That’s the magic of compound interest - money keeps making money, which continues to make more money, and saving early.

The Magic of Compound Interest

That’s exciting…but consider the interest rate on your credit card.

Is it 18%? Or higher?

The Rule of 72 can work against you just as powerfully as it can work for you.

The Rule of 72 does not consider impact of taxes. Taxes can increase the amount of time it takes for money to double.

Money or wealth needs time and compound interest to grow.

KNOW YOUR INVESTMENT RISK

How Fast Can You Recover From a Loss?

Stock market fluctuation can greatly influence how fast and how much your money can grow. Any loss will take an even great rate of return to recover. Therefore, you want o avoid risk of loss as much as possible.

Don’t underestimate even a small loss of 5%. It’ll take 10% to recover back to your previous position. A 20% loss will take a hefty 40% return to recover.

So proceed with caution when investing in stock market, if that’s your choice of investment.

Related article: Invest in Real Estate

Impact of Tax and Inflation

In addition to procrastination, tax and inflation are also enemies when trying to build and maintain savings.

Tax and inflation is like the infection that eats at your money tree. However, you cannot avoid tax and inflation completely.

But you can increase your odds to minimize their damage.

Related article: How to Become Rich and Build Wealth

Can You Afford Long Term Care?

Will you need long term care?

Most of you would answer “I don’t know”.

I don’t know either.

If I have a crystal ball that can tell the future, I would give you my honest answer.

Unfortunately, I don’t.

But my best advice for you is “be prepared when the need for long term care does arise in your future”.

And here’s the statistics.

https://instagram.com/p/BSVI-X4Fimr/

Let’s see what options are available.

Medicare covers only a portion of long-term care costs up to 100 days; 20 days are provided at no cost and the remaining 80 are at a significant co-pay for the insured.

Long-term disability covers your lost income only, but doesn't pay for any LTC needs. Oftentimes, when your job ends, so does your coverage.

Health insurance does not cover long-term care expenses. Medigap policies are health insurance and also do not cover LTC expenses.

Medicaid covers long-term care expenses for individuals with countable assets of $2,000 or less and care could be limited to a nursing home. You can no longer just transfer all your properties to your children to be qualified for Medicaid. They look at your assets in the past 5 years. If you sold a house in the last 5 years, they want you to spend down all that proceed until you’re poor enough to qualify.

If you don’t want to spend down all your asset to qualify for long term care…can you afford to pay out of pocket?

Is this a good option for you?

You can always pay for long term care out of pocket. But how deep is your pocket? Do you have the assets to pay for long-term care, and how long can that asset support your long-term care?

Rising Long Term Care Cost

Can your family members take care of you when you can’t take care of yourself?

Even the most responsible family may not be prepared physically, emotionally or financially to care for their loved one. 53% of Americans caring for a loved one lost income due to the demands of providing that care.

Hidden Costs of Long Term Care

Long-term care insurance provides funding to cover home healthcare, assisted living, nursing home and even family member who takes care of you.

Long term care insurance premium are a lot more affordable than long term care. Besides, stand-alone long term care insurance policy, many life insurance policies offer long-term care insurance as a rider at very affordable rate.

So, can you afford NOT to have long term care insurance?

Creative Real Estate Investing

Millionaires Invest in Real Estate

Do you want to invest in real estate but short on cash? Not having to deal with tenants?

Real estate investing does not require lots of your own money. Not only that. You can pay down your 30-year mortgage in less than 10 years, use OPM (other people's money) to invest in real estate AND generate a stream of "passive" income. Income that goes automatically to your bank account without you doing anything or lifting a finger.

Sounds pretty good. I can see you putting on your skeptical thinking hat.

Don't worry. I was in your same position when I first heard of this strategy and was skeptical too. But after I learned what it is, the light bulb in the head just light up.

This is exactly what I've been looking for. I was looking for a way to finance my current mortgage so I can have access to my equity because I realized early on that in a traditional mortgage (the one that you and I have) accumulates equity, which is a good thing. But you can't use that money until you sell your property. That's why some homeowners are "home poor" because most of our money are locked in our homes.

I have always wanted to make some real estate investment, but I don't have the cash available for the down payment. All my cash is tied up in my home equity. And I don't want to take a home equity loan, because that means another loan I have to pay every month.

I started looking into selling my property, which has accumulated quite a bit of value in just 5 years (of course, it is in the highly-sought after Waikiki neighborhood), and purchased another residence with extra units for rental income.

One day while talking to a friend who is in similar situation, she mentioned about "off-set mortgage". Apparently, it is something that has been around for years in Australia and United Kingdom. According to Investopedia, the reason why off-set mortgage is not available in the United States is because of our tax law, which translates to "banks does not reap much profit from off-set mortgage". That's why it be banded by our tax laws.

Investopedia explains the off-set mortgage in a very simple and easy to understand way. You should check it out here.

Then I started asking my real estate broker, who has been in real estate business for over twenty years if he had heard of off-set mortgage. Of course, the answer is no. I asked banks, loan officers, etc. They all gave me a negative answer.

Out of nowhere one day, another friend of mine called and want my opinion about a property she and her husband are contemplating whether to buy or not. And during the conversation, she mentioned some kind of financial education that helps people with their mortgage and it's called "Sweep Strategy". I have no idea whatsoever. But I looked it up anyway per her recommendation.

Voila...the information on the website caught my attention. I attended the introduction presentation, which is totally and purely informative. No pressure or obligation whatsoever to buy anything or sign-up.

After the presentation, I was like "God just answered my prayer". This is exactly what I was looking for.

How funny?

I always say be careful what you ask for, because you always get what you ask for.

Visit www.sweepstrategies.com to learn more. And if you're curious, schedule to attend an introductory class. They have offices in Ward area and Aiea.

Disclaimer: I have no financial ties with the Sweep Strategies other than being one their potential clients and partners. I'm just a purist who loves to spread the joy and any good information that I have to my friends and family. It surely would be nice if you mention my name as the one who refers you to them. They will treat you exceptionally well.

Here are few creative strategies to help kick start your real estate investing career:

What is a Home Equity Line of Credit or HELOC?

What is home equity line of credit or HELOC?

If you have used a credit card, you'll easily understand the concept of the home equity line of credit or HELOC. In simple term, a HELOC is a revolving credit, like the credit limit with your credit card. The difference is that a HELOC uses your home's equity as a collateral. Basically, it's a credit card secured with your home's equity.

And what is home equity?

Home equity is the difference between what your home market value and the total home mortgage you owed. For example, your home is now worth $1 million, and you have a home mortgage of $300,000. So in this case, your home equity is $700,000.

Most banks do not let you borrow 100% of your home market value. The most I've seen are 90% and 95%.

How much home equity line of credit can you qualify for?

The qualification is very similar to qualifying for a home loan. You still have to show proof of income, good credit score, appraisal, etc. The general rule to figure out how much you qualify for is 80% of your home equity.

We'll use the same example we used earlier. So your home is worth $1 million in the current market. 80% of that $1 million is $800,000. We then subtract your current outstanding mortgage of $300,000. Therefore, you qualify for up to $500,000 in HELOC, given you meet income and credit score requirements.

What Can You Use a HELOC for?

You’ve probably hear many times radio or TV advertising HELOC to finance your dream vacation, wedding, dream car, dream wedding, etc.

You should see me roll my eyes when these advertising show up…these are the worst way use the money.

First of all, when you borrow money to buy things that do not return money, that’s bad debts. You’re digging a hole for yourself.

A better use of the HELOC is to pay of your bad debts, such as high interest credit card balance, car loans, college loans, etc.

Even though the bank generally does not want you to use the money for real estate investing (because they think any investing is risky), but that’s the way to go.

I purchased my first rental property with a HELOC from my primary residence. And my rental property is making money for me while I’m sleeping, and the equity is of course growing every day like a healthy child.

Some banks may allow you to refinance your existing home mortgage into a HELOC. This is a rare strategy that not many people know of.

You can technically use the HELOC to pay off your mortgage in 5-7 years . I’m serious, no kidding…

Many local banks and federal credit unions offer very enticing introductory rates.

American Savings Bank offers 1% APR first year and 2% APR second year.

Bank of Hawaii offers 1.75% APR for the first 24 months or 2.75% APR for the first 36 months.

Central Pacific Bank offers 1% APR for 1 year OR 1.75% APR for 2 years OR 2.75% for 3 years.

Hawaii State Federal Credit Union offers 0.99% APR for first year OR 1.99% APR for 2 years OR 2.99% APR for 3 years OR 3.99% APR for 4 years OR 4.99% APR for 5 years.

Hawaii USA Federal Credit Union offers 0.75% APR for 1 year OR 1.75% APR for 2 years OR 4.25% APR for 3 years.

HELOC vs HELoan

9th Annual Wahine Forum October 27, 2016

Don’t miss out on Hawaii’s largest leadership development conference for women, presented by Hawaii Business magazine and The Queen’s Health Systems.

Join over 800 professional women for this year’s inspiring line-up of topics and speakers at the 9th Annual Wahine Forum, on October 27, 2016 at the Hilton Hawaiian Village Coral Ballrooms.

Global Keynote Speaker

Jane Miller
*COO and Executive VP of The Gallup Organization
*Author of world poll study "Women, the Workplace, and 'A Life Well Lived'"
*Keynote speaker at the 2015 Global Women’s Leadership Initiative

Special Performance by

Kimie Miner
*Na Hoku Hanohano Award winner
*Accompanied by the La Pietra School Choir

Featured Workshops

Finance for your Future

New Way to Lead

Enhance Your Digital Reputation

Think Globally, Act Locally

Advanced Negotiation

Build a Legacy

Being the Best

Work-Life Integration

Creating Change

2016 Speakers

Judy Bishop - Owner, President, Bishop & Company, Inc.

Coralie Chun Matayoshi - CEO, American Red Cross

Jodie Duvall, CFP - VP & Sr. Wealth Advisor, First Hawaiian Bank

Brooke Dominy - Director Wholesale and Corporate Business, Honolulu Cookie Company

Susan Eichor - President & COO, aio Group

Elisia Flores - CFO, L&L Hawaiian Barbeque

Kim Gennaula - Executive Director of Advancement, Iolani School

Phyllis C. Horner, PhD - Vice President, Executive Development, Servco Pacific Inc.

Kathy Inouye - Chief Operating Officer, Kobayashi Group, LLC

Meli James - Head of New Ventures, Sultan Ventures

Kat Lin-Hurtubise - Chief Festivities Officer, Gourmet Events Hawaii & Staffing by GEH

Laura Lucas - Managing Partner, Carlsmith Ball

Robbie Melton - Executive Director & CEO, High Technology Development Corp.

Ani Menon - Senior Associate, Advisory, KPMG

Sherry Menor-McNamara - President & Chief Executive Officer, Chamber of Commerce Hawaii

Linda Miki - Principal, Vice Chairman, Group 70 International

Unyong Nakata - Senior Director of Development, Shidler College of Business at UH Manoa

Polly Nelson - Managing Director, DFS Hawaii

Barbra Pleadwell - Partner, Hastings & Pleadwell: A Communication Co.

Lisa Y.T. Rapp - Principal, Architects Hawaii Ltd.

Mahealani Richardson - Director of Marketing and Communications, Shriners Hospital for Children - Honolulu

Crystal Rose - Creative Business Litigation, Bays Lung Rose Attorneys at Law

Monica Salter - Vice President, Corporate Communications, Outrigger Enterprises Group

Emily Santiago - EVP, Chief Human Resources Officer, UHA Health Insurance

Stevette Santiago - Chief Administrative Officer, Y. Hata & Co., Ltd.

Yancey Unequivocally - President, Empowered Presentations

Nicole Velasco - Executive Director, Office of Economic Development, City & County of Honolulu

Rosanna Vierra - Account Director, iQ360

Leslie Wilcox - President and CEP, PBS Hawaii

Cheryl Williams - General Manager, The Royal Hawaiian A Luxury Collection Resort, Waikiki

Shelley Wilson - President & CEO, Wilson Care Group

Alison Zecha - President, Alison Zecha, Inc. Coach AZ

All attendees also have an exclusive chance to win two roundtrip tickets, courtesy of Alaska Airlines.

For more information, visit:
www.hawaiibusiness.com/wahine16

Hawaii Foreclosure 101

Hawaii Foreclosure Process

What is a Foreclosure?

A foreclosure is a legal process by which a homeowner’s right to the property is terminated, usually due to default. It typically involves a forced sale of the property at public auction with the proceeds applied toward the mortgage debt.

In Hawaii, mortgage lenders may foreclose on deeds of trusts or mortgages in default using either a judicial or non-judicial foreclosure.

In judicial foreclosure or “foreclosure by action”, the mortgage lender files the appropriate documents with the court to rule that the homeowner is in default.

The mortgage lender then delivers the notice of default to the homeowner, or publishes the notice if they have trouble contacting the homeowner.

The homeowner has 20 days to respond. If the homeowner does not respond in 20 days, the court would find the homeowner in default and the mortgage lender can proceed with scheduling the foreclosure sale.

However, the homeowner has 30 days after the notice of default to file a notice of appeal.

A commissioner is usually appointed to sell the property at the public auction, which are usually held at the court house steps. The commissioner publishes the notice of foreclosure sale in the local paper showing the auction dates and open house dates, if any.

Any party may bid at the auction and the winning bidder is required to pay 10 percent of the bid cash or cashier’s check.
Unfortunately, the highest bidder does not automatically get the property. Additional bidding may continue at a confirmation hearing. If the court find the price fair at the confirmation hearing, then the sale is confirmed.

Non-judicial foreclosure or “foreclosure by sale”, does not involve any court action.

The mortgage promissory note usually contain a provision called a “power of sale” clause, which allows the mortgage lender to foreclose on the property upon default to satisfy the unpaid mortgage loan.

In a non-judicial foreclosure, the mortgage lender’s attorney would publish a notice of foreclosure sale once a week for three (3) consecutive weeks in a local newspaper in the county the property is located.

The last publication cannot be less than fourteen (14) days before the sale.

The copy of notice must be posted on the property and mailed or delivered to the homeowner no less than 21 days prior to the foreclosure sale.

The foreclosed property is auctioned off to the highest bidder. The auction maybe rescheduled, which happens frequently. And the notices of sale must be re-sent and re-published.

The homeowner has up to the three (3) days prior to the foreclosure sale to save the default by paying the defaulted debt along with any costs and reasonable attorney’s fee.

Hawaii offers no right of redemption for homeowners once the sale of the property is confirmed. However, homeowners in Hawaii do have up to one (1) year to redeem a tax lien foreclosure.

After the foreclosure sale, a homeowner may still face deficiency judgement if the proceeds from the foreclosure is not enough to pay off the mortgage promissory note IN FULL, meaning the property was sold SHORT.

A foreclosing mortgage lender who completed a non-judicial foreclosure of residential property is prohibited from pursuing a deficiency judgement against the homeowner unless the debt is secured by other collateral.

Read Avoid Foreclosure at All Cost.

Owner Financing Win-Win for Both Sellers & Buyers

What is Owner Financing?

Owner financing or seller financing, is as the name implies, the owner finance the deal, meaning the own is now also the bank. Instead of the buyer getting a loan from the bank, and paying monthly payment to the bank, the buyer will pay the owner a monthly payment.

Owners usually offer owner-financing to make their properties easier to sell because the seller now has a larger pool of buyers, who are unable to obtain mortgage from banks. Sellers may finance part of the purchase price - 30% or 50%. Sometimes they may even finance up to 100%.

A typical owner-financing deal looks something like this. The owner or seller has a property that he/she wants to sell for $500,000. With more stringent bank requirement, mortgage loans are hard to come by. So the seller offers owner financing to less qualified buyers. The seller finance 50% of purchase with a small down payment, which means the buyer only has to come up with the other 50% from the bank. So instead of coming with $100,000 down payment (20% of the purchase price) and getting a $400,000 conventional loan, the owner may only require a $10,000 down payment, and owner-finance the $250,000. The buyer now would need only to borrow $240,000 from the bank for this purchase.

Seller financing are usually short-terms 3-5 years long, at which time the buyer, hopefully with better income and credit score, would be able to re-finance with the bank. Most seller financing charges higher interest rates, something around 5-6% now, for 3-5 years, then balloon payment at the end of term.

Why is Seller Financing a Win-Win Strategy for Both the Sellers and Buyers?

The benefit for the seller is that he/she would earn the interest that would normally goes to the mortgage bank. The seller is acting as the bank and the money he/she is lending is secured with the property, which means if the buyer default or is not able to refinance at the end of the financing term, the property goes back to the seller.

The benefit for the buyer is that he/she can buy the property now, instead of waiting to save up enough down payment or repair their credit score, or whatever their reasons for not getting a mortgage from the bank.

Hopefully at the end of the owner-financing term, the property would have increased in value or equity either through appreciation and/or consistent monthly payment. Now with more equity in the property, the buyer should be able to refinance to a conventional mortgage easily.

Isn't it brilliant?

Owner Financing