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Make Your First Home Your Last: The Case for Not Moving Up

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Home has become work and school for millions of people. Many residences needed to somehow shift overnight to accommodate two workplaces and multiple classrooms because of the coronavirus.

With schools and businesses signaling that these conditions will extend at least through the spring, it’s no surprise there is a stampede of people seeking more space. But when so many are acting on instinct, the best move may well be to slow down and ask some counterintuitive questions.

Try this one on for size: Should the house you’re thinking of as a starter home be your forever home instead?

This is a tricky subject, like many of the biggest questions in personal finance, because of the complex stew of money and feelings that are involved.

First, the money. A home is an asset with a value that could make up a substantial proportion of your net worth. Hopefully, that value grows over time. And right now, with mortgage rates at record lows, it’s tempting to go as big as possible.

But there are other things you could do with any extra money that you might otherwise put toward a bigger or better home. That incremental amount could go into retirement savings instead, or a 529 college savings plan. Or you could give it away to people who don’t have the luxury of contemplating these sorts of trade-offs.

The case for staying small need not be some scolding ode to parsimony. A more modest home can leave more money in the budget for travel, expensive hobbies, or a getaway abode by a lake or mountain. Living smaller also helps the environment.

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Now, those emotions. Spending more for a bigger dwelling doesn’t make sense unless there is a high psychic return on the extra space. But if you’ve never lived bigger, it’s hard to predict how much happier it will make you. And how do you weigh that qualitative return against quantitative trade-offs rendered in dollar figures?

There are some facts to keep in mind.

Ever since the collapse in the housing market during the last big recession, the idea that your house is not, in fact, an investment vehicle has become common. Wise as this is, it doesn’t change the fact that a home is still an asset. And you should think hard about how any such asset might appreciate (or not) over time.

So much of any growth will depend on where you live, and too many of these kinds of conversations are framed around places like the San Francisco Bay Area, parts of Brooklyn or gentrifying areas where there have been enormous gains in property values.

Nationally, however, the numbers aren’t so steep. Data from CoreLogic’s home-price index shows that over the past 20 years, the average increase for single-family homes priced at 125 percent or more of the median home price in their region is just 3.4 percent annually. For homes at the 75 to 100 percent level, the gain has been 4.3 percent.

Consider maintenance costs, too. A newer home — say, less than five years old — might require just 1 percent of the purchase price in annual expenses, said John Bodrozic, a co-founder of HomeZada, a tool that helps owners keep track of costs and improvements. But if your home is 25 years old or more, 4 percent is a better estimate. If history is any judge, putting money into stocks over periods measured in decades should yield a better return.

Good professionals really can help determine what “return” ought to mean to you, though. Joe Chappius, a financial planner in Buffalo, suggested one basic strategy: Consult a few elders.

Find someone you trust who traded up 10 years ago, Mr. Chappius said. Very few of his clients who did so now think it was the best financial decision they ever made. More often, they have two rooms they rarely use.

A financial pro can also help you prioritize, including getting you and your spouse, if you have one, to agree on goals and dreams — and what’s worth sacrificing in the present to achieve all of the former and reach for some of the latter.

Once that baseline is set, they have specialized software that can make talking about the financial trade-offs easier. Mr. Chappius and Jeff Wolniewicz, partners in the firm Complete Wealth, walked me through their process this week using numbers that are typical for their home-seeking (or home-reaching) clients.

For any given trading-up transaction, a client might need to move $1,000 more per month to the housing budget. What might that mean right now? Perhaps it’s just a severe reduction in travel or eating out. But if money is already pretty tight, it could mean that no saving for a child’s college can even begin — and a $500 slug of monthly savings can ultimately pay for well over half of the cost of a state school.

Or trading up could require a reduction in retirement savings that might extend your time in the work force. For people who love what they do, perhaps that’s no problem. But how prepared are you to decide that now?

“We’re using the numbers to bring things back to a values-based conversation,” Mr. Wolniewicz said.

There may be a compromise solution if you’re craving more space. An addition to your home might be possible — and cheaper than a move. Ditto an interior renovation that allows for more people to be more productive without interruption.

“The thing about Covid is that it’s hopefully a short period, but it really puts a very fine point on the need for flexible spaces that can do double duty,” said Sarah Susanka, who has been preaching that gospel ever since 1998, when her book “The Not So Big House” came out. “It’s an acoustical issue.”

Danika Waddell, a financial planner in Seattle, suggested another framing question: What might you regret if you stay small?

Get granular here and think beyond the pandemic, if you possibly can.

Is your love of hospitality and large gatherings one that you would act on frequently? Hosting Sunday supper each week in a newly oversized great room can bring joy beyond measure. But maybe you’re just letting your desire to host a few holidays each year dictate your feelings about a six-figure real estate decision.

If you’re a parent, are you fine with your house not being the place where the gang gathers? (Or would you actually rather not have teenagers hooking up in the basement guest room or smoking pot in the yard?)

And when relatives come to visit, will you regret having to put them up in a hotel? Maybe not! But if you want them around for an entire season each year, for many years to come, the bigger house could make sense if you are certain.

“The people who are generally the most happy are the ones who avoid the more, more, more and understand what is enough for them,” Mr. Wolniewicz said. “That takes courage, to stand firm on what your enough is, especially if it’s in contrast to what the world says you should want more of.”

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Ai Lab School presents a week of conferences about the AI industry in Mexico

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The event will be 100% online and will last five days.

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October 20, 2020 2 min read

This article was translated from our Spanish edition using AI technologies. Errors may exist due to this process.

  • This week Ai Lab School wants to promote the development of technology through a space and environment that encourages innovation, creativity, learning and growth of those interested.

Are you interested in Artificial Intelligence? Ai Lab School will hold a week of conferences, workshops and panels about this industry in Mexico. It will be 100% online and will last five days.

“For three years, through the company Ai Lab School, we have set out to promote and link young programmers, since our country and its students have potential, talent, and exponential growth goals. Therefore, we created two great events that promote innovation paths: AI Hackathon and AI Week Mexico . Through AI Hackathon we create solutions for companies with the support of programmers within a period of five days, and at AI Week Mexico we invite professionals and experts in the area of Artificial Intelligence to share their knowledge, taking place virtually from 16 to November 20 ”, explain the organizers.

The event will begin on Monday, November 16 at 10:00 AM and will end on Friday, November 20 at 6:00 PM (Central Time). There will be four to six conferences per day where AI experts will discuss various topics focused on programming and business.

This week Ai Lab School wants to promote the development of technology through a space and environment that encourages innovation, creativity, learning and growth of those interested.

If you want more information, you can enter the official page where you can purchase tickets for the event.

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The 10 Biggest Mistakes My App Development Company Made in Our First 10 Years in Business

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October 20, 2020 11 min read

Opinions expressed by Entrepreneur contributors are their own.

Ten years ago, on October 14, 2010, right before I graduated college, I went to Boston City Hall, paid a filing fee and registered my company, Yeti, LLC

I soon brought on my business partner, Rudy Mutta, and now, 10 years later, we’re still in business and, despite Covid throwing us some major curveballs, growing.

We are a bootstrapped service business, so compared to some of our peers in our hometown of San Francisco, we can really only claim modest success, having never IPO’d or become a billion-dollar unicorn. 

Looking back on our decade running this business, we’ve had the highs of being in a Netflix documentary, building high profile apps with top-tier clients and making it into the Fortune 5000. But, what you don’t hear a lot about from entrepreneurs is the mistakes they’ve made.

As we look back over the past decade, those mistakes are the moments when we learned the most. So, instead of touting 10 years of triumphs, I thought I would share 10 of my biggest mistakes and the lessons that came out of them. Knowing very little about running a company 10 years ago, I could have saved myself a lot of time, money and energy knowing these things.

1. The taxman cometh

In our first year of business, we thought it would be wise to show just how profitable we were. We even made sure we cashed a massive check from a client at the end of December to close out the year with even more earnings. 

We didn’t realize that no one really cares about your profits at this stage, but the taxman cares that you pay what is due. 

Not having kept track of our expenses properly, not paying monthly or quarterly taxes and not saving adequately left us almost completely decimated after our first year. 

In hindsight, it would have been hugely beneficial to understand some of the basics of business tax going into this venture.

2. The world is not flat

When we started our company, we got really excited about the idea of keeping our organization completely flat, where everybody had the initiative and self-organized to hit company goals. This works when your company is six people, but as it grows, it becomes impossible.

Reflecting back, I think it was because I was scared of doing the work necessary to be a leader. I had one business coach eventually tell me, “It sounds like you are trying to operate a pirate ship.” That might sound fun, but in actuality, pirate crews don’t perform very well.

Leadership is an artform that is important to study and practice — you can often give people more freedom and job satisfaction by providing them with a structure to do their best work.

3. Establish core values

As our business grew, so did our team. However, we kept hiring and losing employees, which, as it turns out, is quite costly. In fact, a conservative estimate puts the cost of replacing an individual employee at one-half to two times the employee’s annual salary.  

What was frustrating is that there wasn’t always a tangible reason some people didn’t work out. We couldn’t quite put our finger on it. After consulting with many other business owners, I learned that having established core values would help us make sure we were aligned with employees during the interview process before bringing them on board.

We made it a priority to have constant communication with the team about our core values and have since used them to promote and retain employees. It is important to have everybody understand and align around these. It makes for more harmony in the business.

Related: 9 Common Mistakes Made by New Entrepreneurs

4. Enjoy the moment

Running any business is going to come with its headaches. I have yet to meet an entrepreneur who has had an entirely stress-free go of it. Whatever the struggles, be it struggling for cash or dealing with personnel issues, it’s important to appreciate the moment and time and space your company is in. 

For a while, we tried to be a company that we really weren’t and it took a toll. We were trying to be who people thought a software development firm in San Francisco should be. It resulted in a lot of wasted time and money and left us frustrated and dissatisfied, chasing something we were not. 

5. There are no silver bullets

When you are growing a business, it’s really easy to think, “I just need to make this one silver bullet hire or execute on this one tactic. After I do that, we will get to the next level.”

It never works out.

The honest truth, which it’s taken me many attempts to learn, is that no one person or thing is going to come in and solve all the problems at your company or just immediately take you to the next level. It’s all an iterative process, and you need to find the people that want to go through that process with you. Make very clear to everyone on your team that you all are in the business of working on the business. 

Even if someone you are thinking of hiring has been amazing at another company and has done awesome things, it’s not the same company as yours and it will take work to make your company that way. One person alone, new to your company, isn’t going to do it.

What’s most important with any new strategic initiative like hiring is to take your time, know your core values and share honestly with your team where you are and the work it’s going to take to level up. Get people aligned so they know the path you are on — running a business is more about creating and navigating a roadmap than going out searching for silver bullets.

6. Design your culture to have a cadence

Company culture doesn’t mean “cool” swag, being BFFs with your co-workers, or in-office happy hours every Friday. Those are superficial. 

I started this business right out of college, so you can imagine that, at first, this is exactly what I thought company culture was. We rented a fun office with a roof deck, had bands come and play, threw parties. It was a lot of fun, but the business didn’t really gain much … and I lost a lot of Saturdays cleaning up beer bottles.

The company would have benefited from more meaningful team bonding, and I’m pretty sure we lost some clients when they saw our office looking more like a hacker house than a place where professionals worked.

As I’ve grown into becoming a “real”” business owner, I have realized culture is how your team all comes together, holds each other accountable, supports one another, gets the work done and celebrates victories together. We now have more structured team days and meetings focused on themes with actionable takeaways that our team finds more impactful.

Build the systems, make space and have a cadence for how these things are done.

Related: 8 Huge Mistakes Most Entrepreneurs Don’t Realize They’re Making

7. Marketing should be authentic

Any entrepreneur who’s been in the business long enough can give you a laundry list of marketing tactics they’ve tried. 

It’s hard not to fall for some of the “get rich quick” schemes out there, ourselves included. (We’ve literally spent hundreds of thousands of dollars learning this lesson, folks, so if you don’t take any of the other advice, at least listen to this tip.)

But what we have found is that when it comes to sales and marketing, if it seems too easy too good to be true, it absolutely is. This sort of thing works in the movies and people love to brag about how they gamed the system but in actuality, nothing replaces doing the hard work.

We have found that to resonate most with leads and potential customers, we need to be authentic and true to who we are as a company. The more authentic you can make your outreach and communication, the more you’ll resonate with people — maybe not everyone, but the people who are right for your business.

8. Focus on building relationships

As a young company, we didn’t realize the power of relationships in our business, but as we’ve grown up, we are continually reminded of how important they are.

When we started out we were very focused on getting a job done and then moving on to the next one. We were very focused on the here and now. We weren’t looking at the bigger picture of three, five, 10 years and beyond. 

No matter how much “lead gen marketing” we’ve done, the primary driver of our business has been referrals. They may not be referrals we get right after we finish a project with someone, but putting effort into maintaining and strengthening our relationships has absolutely paid off over the years. (Plus, people on my team and I have made some lifelong friends along the way!)

I wish I had spent more of my time focused on that in our early years. There are really simple things you can do to stay in touch, check in with people and develop relationships. For a service business especially, this is some of the best marketing you can do. 

9. Know when to say “no”

This one was a real struggle for us at first. We took on bad clients because we hadn’t identified how we bring value to the table. They had the money to pay us so, why not? 

It has always resulted in more pain down the road. 

Every. Single. Time.

For us, bad clients usually come in the form of independently wealthy individuals that have no business building apps but have stumbled upon a significant amount of money and have dreams of being the next Mark Zuckerberg.

At the end of the day, these people didn’t want to do the work to build the business or take the time to understand some of the complexities involved in building a product from scratch. We now have the experience to be able to identify specifically where we bring value to our client relationships and where we won’t be a good fit. 

Since building relationships is important to us, we now have tools that make it very clear when there are red flags during sales conversations so we can be honest and tell people when it’s not appropriate to hire us. This saves everybody time and money, even if it seems wrong to pass up a potentially lucrative opportunity.

10. Don’t let your gas tank run out

You probably would not believe how we managed our finances when we began (or maybe after reading this article, you would). We would periodically sketch out on a whiteboard all our receivables and payables and get a rough idea of when “D-Day” was. We used this to motivate ourselves to get new projects and complete work. 

As you can imagine, this was not super effective nor sustainable and scalable. As our business grew and got more sophisticated we nearly ran out of cash, this is very common as you grow and your expenses go up but you are waiting on payments. It’s scary as hell when you have 15 or more people who are depending on you for their jobs. I never had more sleepless nights.

We ended up with a 12-week cash flow forecasting tool which has been a vital tool to our success as a business. It means we know if and when we’ll ever run out of gas.

Using financial tools like this to help you properly plan for the future is essential to the longevity of your business and enables you to effectively communicate with your team why you are making certain decisions. Also, when in doubt, turn to the experts. Don’t be afraid to hire a consultant to help if finances aren’t your area of expertise. 

A good financial reporting structure and a basic understanding of your P+L and Balance Sheet will ensure you catch issues before they kill your company. Use accounting to hold yourself accountable!

It’s well said that you learn more from your mistakes than you do your successes, and I honestly believe that to be true. I like to think of the hundreds of thousands of dollars I’ve spent learning these lessons as my unofficial business school tuition.

If we hadn’t made the mistakes we did, we wouldn’t have been able to so effectively right ourselves. With the recent turmoil of the Covid pandemic, we are leaning on these experiences more than ever to navigate our way through it and come out stronger.

You’ll no doubt make your own mistakes, it’s how you’ll ultimately succeed. I hope these 10 mistakes can help you avoid some troubles but more so inspire you to overcome and learn from whatever challenges you face on your entrepreneurial journey.

As Richard Branson says “You don’t learn to walk by following rules. You learn by doing, and by falling over.”

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We Don’t Pay You to Think!

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How those six words changed my approach to management forever.

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October 20, 2020 4 min read

Opinions expressed by Entrepreneur contributors are their own.

Recently, my assistant Dana made a couple suggestions to me. Afterwards, she asked if I minded her giving these suggestions. I immediately said that not only did I not mind her ideas, I actually wanted her to share them with me. I then told her the following story about an experience I had many years ago. 

When I was 21 years old, I was finishing up my bachelor’s degree in . I had scholarships to help, but I still needed to work a to pay for my living expenses. I found a good-paying position working for a large chain stocking shelves from midnight until 7 a.m. four days a week. Ugh. That was brutal. The night crew had some serious quotas for boxes that had to go up on the shelves each and every night. While it might not sound very hard, the is that it was back-breaking work and one of the most physical jobs I ever had. On some days, I would work all night, go home to get a shower and then go straight to classes at 9 a.m.  

Even then, I believed that sometimes you gotta do what you gotta do to get to do what you want to do. Early on, I knew one thing for certain, and that was that I did not want to work at a grocery store stocking shelves (at any hour of the day) for a career. I came to that realization because of one conversation that I had soon after I started my

One morning as I was coming off a break, I suggested to the assistant manager that I help move the many pallets of boxes that had to be taken by dolly to every aisle in the store. It was a small suggestion, but I thought it might help. That’s when the assistant manager gave me a “life lesson” that I would take with me for the rest of my career. He said,“Ivan, we don’t pay you to think! We pay you to get lots of boxes on lots of shelves every single night. Now get back to work.”  

Related: 6 Tips on How to Be a Leader 

I remember so vividly standing there and thinking, “Someday, I’m going to own my own business, and I promise that I will never, ever, say that to anyone who ever works for me. Ever.” In fact, I decided I would tell them the opposite: “I pay you to think!” And that’s because I want ideas. I want input. I want engagement. 

I kept track of that assistant manager for about 10 years after I left the company. At that point, he had been promoted to “Main Shift Assistant Manager,” and I was well on my way to building a global enterprise that now has operations in more tha 70 countries. And while I have no where he is today, if I ever met him again, I would tell him that I appreciated his admonishment, because it cemented my beliefs about accepting input from others.

Not all will be gems, but listening shows you care about them and their ideas. It also encourages engagement and possibly even a certain amount of when an employee feels that their input matters. I may not have applied this perfectly over the years, but it is something that I have truly strived for.

Related: 4 Crisis-Proofing Lessons for Owners

I believe that “paying people to think” is exactly what entrepreneurs and managers should always be willing to do. Sometimes we get our life lessons from people who give us great advice, and sometimes we get our life lessons from people who give us horrible advice. By applying a little discernment, they can both be a gift.  His certainly was for me. And I did my best to never, ever follow it. 

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