real estate | Online Savings Blog

U.S. Households See Net Worth Drop $1.7 Trillion
06.05.08 | Money | 1 Comment | by junger

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Americans $1.7 trillion poorer — CNNMoney.com

Americans saw their net worth decline by $1.7 trillion in the first quarter - the biggest drop since 2002 - as declines in home values and the stock market ravaged their holdings.

Meanwhile, the amount of equity people have in their homes fell to 46.2%, the lowest level ever.

The net worth of U.S. households fell 3% to $56 trillion at the end of March, according to the Federal Reserve's flow of funds report, which was released Thursday.

Wowzas, right?

Some of this is obviously inflated, since falling housing prices (which were off the scale during the bubble) made up $305 billion of the decline. But the news isn't that encouraging.

At the same time, there are now more than 1 million homes in foreclosure.

Are you a part of the net worth decline? Even if your home value has dropped, is your net worth (outside of real estate) doing the same?

Leave a comment and tell us.
The Retirement Conundrum: Near-Term vs. Long-Term Goals
03.03.08 | Money | 4 Comments | by Tom Valenti

Everything I read tells me the same thing when it comes to saving for retirement: contribute to your 401(k) and start a Roth IRA.

I contribute to my 401(k) so that my employer-match is maximized, but that's it. I don't max out on the overall contributions, nor have I yet opened an IRA.

Many people would tell me I really should either max out the 401(k) and/or start funding a Roth. I totally understand why they'd say that; I realize the benefits of tax-free growth.

But the reality is, I have near-term goals that need addressing, namely purchasing a larger house, getting ready for a family, and saving up for a possible business venture.

Socking away a bunch of money for use when I'm 60 or beyond is the practical, conservative thing to do.

But what happens if I never reach that age? Or what if I do reach that age and do get to my money, yet I realize my "prime years" were spent living in a cramped house, working for someone else, and did not contain any luxuries?

Has it been worth it?

I'm not saying I'm not planning for a retirement, because I am with my 401(k) and other investments, including mutual funds and real estate.

I am planning to use those investments wisely and spread them out over my life. So I'm not so sure the bulk of my savings should go into formal retirement programs.

If anyone has any advice or has been in the same situation, I'd like to hear it.

Tom Valenti is a marketer and project manager who currently works for a financial institution in New Jersey. For more info, visit him at http://tomvalenti.com.
House Hunting: How Much is Help and How Much is Sales?
02.26.08 | Consumerism | 0 Comments | by junger

We went to look at house today — it's the first house we've looked at, and we may or may not be ready to actually buy it.

It's a bank-owned house — most likely it was foreclosed upon — in kind of crummy condition. The carpeted floors are dirty, the walls need to be painted, and there's some junk around.

It's a decent price for the neighborhood, and has potential — but since it's owned by the bank, it's sold as-is. Meaning, even if we are getting a good price for it, there's still a lot of work to be done on it.

It was also our first experience working with a real estate agent, and with that brings a lot of questions.

The agent is technically working on behalf of the bank to sell the home, so we don't have to pay her anything, but I'm always skeptical of how much what she offers is actual help and what is sales.

For example, using the realtor's lender. I'm open to getting a quote, but would never not shop around.

When it's such a big life decision, it's difficult to work with someone you can't necessarily fully trust. You know what I mean?
Are You Saving For the Right Reasons?
01.30.08 | Money | 0 Comments | by junger

One of the most basic questions anyone committed to saving money has to ask themselves isn't as easy to answer as you might think.

Are you saving for the right reasons?

I touched upon this briefly when talking about saving aggressively, but it deserves its own discussion.

When you say you're putting 10% of your salary into your 401(k), or you're pinching pennies to start a college fund, do you really know what you're saving for?

It's not enough to say "for retirement" or "for college." Sure, it's easy to say this when the goal is far off, but there's a deeper answer here.

For example, I'm saving for a house — not because I want to get into the real estate market, but because I want to provide for my family.

If you're saving to start your own business, chances are you're not doing it for the money — you're doing it for the challenge and the freedom to work for yourself.

The next time you put some money into your savings account or you decide not to make that big, unnecessary purchase, think about what you're really saving for.

Money is not the be all end all. Money is the fuel on the road to get to the be all end all.
When You're Saving Aggressively, It's Easy to Forget How Well You're Doing
01.29.08 | Money | 1 Comment | by junger

We've got some pretty aggressive savings goals for the near-term future, mostly centered around buying a house while still contributing a lot to my 401(k) and to both of our Roth IRAs.

And we're doing a really successful job, too; we've got automatic transfers going into our housing fund every month (in addition to automatic Roth IRA contributions), we track our spending and live within our means.

But when you have such aggressive savings goals, sometimes your mentality overpowers reality.

I forget sometimes that we are doing a great job saving for a house and for retirement (and have an emergency fund, too). I want to save as much as we can — I think I am going put nearly my entire 2007 bonus toward the housing fund — and succeed.

But there's a line between being a smart and aggressive saver and just being cheap. I try hard not to cross that line — having money is not the goal. Creating a happy life for my family is the goal. Money is just the means to the end.

The next time you think you're being cheap, step back. Think about how well you're doing on your savings goal and how much the situation is going to affect your bottom line.

This isn't an excuse to go out and buy whatever you want; it's a reality check to determine if you're saving for the right reasons.

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