Should You Buy A Home Or Should You Keep On Renting?

If you currently don't own your own home you might be wondering.... should I take on a mortgage loan and buy a house or should I just keep renting?

To figure the question out of mortgage loan or rent, you need to do an analysis on the cash flows of buying a home and mortgage verses renting. Also you would need to determine the length of time that you plan to live in the home or area.

The cash outflows from renting would be:

1. A security deposit
2. Utilities
3. Monthly rent.

The cash inflows would be:

1. The deposit returned when you leave
2. Any monthly savings in the difference of a lower rent payment verses a home payment.

When buying a house the cash outflows include:

1. The down payment on the house
2. Points, closing costs
3. Mortgage payment
4. Property taxes
5. Insurance
6. Home maintenance costs
7. Utilities
8. If the house eventually sells for less than the purchase price.

The cash inflows :

1. Tax deductions for interest, points, and property taxes
2. Any rental income from the home
3. The appreciated value if the home sells for more than the purchase price.

Also consider the length of time that you plan to stay in the area. If you plan to stay for many years then buying a home might have an advantage--a fixed rate monthly mortgage payment will stay pretty much the same over the course of time that you spend there where your rent payment will increase to keep up with the rising rate of inflation and the supply and demand of apartments or rentals.

If you plan to stay a short period of time then renting might be a better option because of the cost of the down payment,points and fees associated with buying the home.

Stretching Your Retirement Buck--The Reverse Mortgage

As my mom spins into retirement she is on a never ending quest to increase her retirement income and make her life more enjoyable. At some point I suggested that she check out reverse mortgages and see if that would work out for her. She loved the idea and applied for the loan. She loves her home and it's in a good safe neighborhood so, she has no interest in selling her house and moving to use the equity. The reverse mortgage increased her income by over four hundred dollars a month and she has been delighted with the extra money.

Many people aren't aware of reverse mortgages. If you own your own home and have equity built up in it, you should consider a reverse mortgage to help generate extra income as you retire and make your life more comfortable.

You need to be 62 or older to obtain a reverse mortgage and how it works is that You obtain a loan based a percentage of the equity in your home. The lender will pay you monthly payments depending on the terms of the agreement usually until the day you die or until you move out of your home. In the end your home is sold to repay the loan--usually after you die, (grim huh?) If you decide to try out a reverse mortgage read the terms of the agreement carefully and ask any questions of the lender that you might have. It's something to think about anyway.

The Home Equity Line of Credit

If you have equity built up in your home consider applying for a home equity line of credit. Home equity, which is the difference between the market value of your home and the outstanding balance of your mortgage can be used as an asset to secure lines of credit. Is it a good idea to use the equity in your home to secure a loan?

The good points of using your home equity for a loan are:

1. Because it is a secured loan interest rates are lower than other forms of consumer credit
2. The interest paid on a home equity line of credit is tax deductible.
3. No repayment obligation exists until funds from the home equity line of credit have been accessed.

The drawback of using the equity of your home to secure a home equity line of credit or a second mortgage is that if you can't repay the loan you will be forced to sell your home to pay the debt. In some areas where home values have dropped you could find yourself owing more then the home is worth. If you wind up in this situation the home will be sold and the original home lender will be paid off but the remaining balance of your home equity loan will still be owed by you.

The lovers and Haters of Wolves.

The first light of the day is starting to break and I am on my second cup of coffee--I love Starbucks Kenya coffee. A huge owl is sitting on my roof outside and his song is the only sound I can hear. It is a peaceful and relaxing calm. Ill try not to be too superstitious about it. The last time I had an owl stop by I had a death in the family.

A friend of mine asked me to look at a website called Save Our Elk and I have been checking it out this morning. http://saveourelk.com/

It looks basically like an anti-wolf pro-hunter website with rather graphic pictures of elk that have been killed by wolf packs. The website didn't excite me too much after all the elk is the natural prey of the wolf but, looking at the pictures the wolves do look like vicious and wanton killers. I would hate to see this devastation in livestock herds or my own pets or children. When it comes to protection, my son's BB-gun just isn't going to cut it, I can tell. The website talks about the decimation of the elk herds and how the wolves will kill just for sport. Looking at the website you can understand why ranchers, hunters, and the people living in this area would be concerned about the growing wolf packs and the desire for an effective management program.

Just so you know from the get-go I have always loved wolves. They are one of my favorite animals and I know quite a bit about them. Several years ago when the government decided to reintroduce Canadian Grey Wolves into Idaho it worried me considerably. As desolate and wild as Idaho still is, it isn't desolate enough for packs of wolves to populate at the rapid pace that is now occurring. A wolf can travel 60 miles in one day bringing him into populated areas or ranch lands.

A rancher friend of mine called me last night and told me that they are branding this afternoon. I was invited out to a ranch last fall and watched them brand the calves. It's a way of life that is far removed from the urban sprawl and super centers. The range land was beautiful and undeveloped with rivers,cottonwood trees turning yellow leaves and sagebrush every where with elk and deer herds sharing the land. It was dry and dusty but sunny and crisp--a typical fall afternoon. They drove me out to the corral in their pick-up--thank God they didn't ask me to bring my own horse! She is a big Thoroughbred and has out grown her horse trailer and I have never replaced it. They herded the calves into a corral and the cowboys and cowgirls roped the calf, branded it, and then castrated it all with in a five minute period and then the calf trotted out.

Multi Level Marketing Opportunities and Pyramid Schemes.

My mother maintains a vendor booth at an indoor swap meet and farmers market in her city. She is keeping it mainly to promote her cheesecake business by handing out samples and business cards. She also likes to go to meet new people and has made friends there.

She called the other day and was a little vexed about a man that befriended her there. She said he was really charming and before long had pulled up a chair inside of her booth and had just kind of moved in-- talking about how he was recently widowed, etc, etc. Then all of a sudden he started pressuring her into some business deal where she would invest $1,500 dollars and she could make loads of money in return. He handed her some glossy pamphlets that looked professional. My mom responded to his gesture with, "aren't you just running a pyramid scam?"

"Oh no--that would be illegal. Just invest $1,000."

"I'm not giving you a $1,000!"

"Just five hundred then...you can write me a check."

So then, to get rid of the guy, my mom says,"My daughter Penny handles all of my business and finances." So she gives him my name, phone number and address! So, I have that to look foreword to--a call or visit from Ralph--you would think that being a con-man and all he would change his name to Alfonse or Jonathon or something wholly more attractive and affluent sounding. I am looking foreword to it...almost salivating at the thought...oh yeah...it's on Ralph!, it's on like Donkey Kong!

Multi level marketing is in many business opportunities a legitimate form of selling products. The difference between a legitimate multi level marketing business and that of a pyramid scam is easy to spot. The legitimate multi level marketing company places an emphasis on selling a product where the pyramid scam places an emphasis on recruiting people or asking for investments and in some cases like gifting clubs they will ask for donations where you in turn will recruit people below you to ask for donations or investments. The gifting clubs will sometimes use religious "feel good" terms or names like Renewal Celebrations or Jacobs ladder and might come as a special invitation from a church member.

A pyramid scheme is set up so that there is a hierarchy where people are recruited below those who have been previously recruited. Those who have been recruited make payments to the people above them in the hope of making their money back by recruiting others and gaining payment from them. In pyramids, most of the sales are made to the recruits and not the general public. The nutritional supplements or what ever they have going only serves as way to make the scheme look legitimate.

1. Never feel pressured into joining a multi level marketing group.
2. Never feel pressured into signing or investing in something that you aren't sure of.
3. Take the time to investigate any business opportunity.
4. Check the business out on the Better Business Bureau website at http://welcome.bbb.org/
5. Never make investments at the swap meet!

Always keep in mind, that it's a felony in the United States to participate in a pyramid scheme and is punishable by fines and time in jail. People participating in the scam are viewed as engaging in illegal activities rather than being a victim.

Satellite Radio as an Investment

Long ago and oh so far away

I fell in love with you before the second show

your guitar, it sounds so sweet and clear

but your not really here

it's just the radio.......

I heard a remake of this classic beat Superstar by The Carpenters not too long ago on my favorite XM satellite channel Ethel. It had a new edgy techno feel that was both hauntingly beautiful and familiar. I started to blink away tears when I heard it. On Ethel I know that I can find the edgy and the alternative that my heart craves. It's music like this that keeps me tuned into my XM channels, that, the superior sound and the lack of commercials (on 69 0f the 170 channels). Really, It was love at first sound! To me it's worth the annual subscription price of $143.00.

"If you love it so much, why don't you marry it?"

"O.K., I will."

I decided to look into Satellite Radio as a stock pick and was slightly shocked at what I found. The analysts opinions on XM Satellite Radio Holdings, symbol XMSR, were all over the place with most of them being in a neutral position not really recommending it but, not actually dissing it either. Today, they are leaning toward a buy position.

There is a friendly merger between Sirius Satellite and XM satellite that has been going on for over a year and it has been held up by the Department of Justice and the Federal Communications Commission. They need to approve the merger. The Federal agencies have a fear that combining the two companies will create a monopoly in the medium and hurt competition for consumers. I don't believe so. You can easily switch over to FM/AM, your CD player, your Ipod, your DVD player etc,etc...... I am optimistic that it will go through eventually. In my opinion, they need to merge for both to survive and thrive at all.

In the event of a merger you want to look at the company that is being bought, this is the stock that will rise--if it's a good fit and can benefit the company acquiring it. In this case XM is the one being bought.

I took a look at the financial statements and ratios of both companies and understand why the analyst opinions are so varied. Presently XMSR stock is at $11.35 a share with a beta of 1.2 which makes the stock slightly riskier than most. It has increasing annual Revenue which is good but, their Expenses are so high that it entirely wipes their Net Income. It might just be the nature of the satellite radio medium though--Sirius had similar results. XM has no P/E ratio or dividend, which isn't uncommon for a fairly young company. I would classify it as a highly speculative stock investment.

I ended up picking up fifteen shares of XM but, they say that love is blind.

O.K. so, I did marry it but, there was a shotgun involved and I might get an annulment by the end of the year--but, at least I was wearing underwear!

http://xmradio.com/

Hostile Takeover Attempts "I'm Going to Disneyland!"

I think it's a good idea to own stock in the Walt Disney Company if you have children in your household. It teaches them how a corporation is run, how to read the financial statements, how to invest their money, and learn about new movies and rides that are coming out before the general public does. Kids can easily identify with the movies, T.V. and theme parks that are run by Disney.

I remember sitting in the theater when the first Pirates of The Carribean movie came out. When it was over, my oldest son who was eight or nine at the time turned to me and goes, "we are going to make so much money off of this!" Here, I was just thinking about where I could put a tattoo of Captain Jack's name on my body! Anyone who can take a drunk, slightly effeminate pirate with bad teeth and make him that appealing deserves an Acadamy Award!

Growing up my parents kept stock in Disney and we would go to the annual stockholders meeting at the Anaheim Convention Center. This is how I became interested in Corporate Finance and Investments. Children were welcome to stand up and ask questions of the Board of Directors or make suggestions. At the time they would always show a movie that was "in the works" and give shareholders free passes to Disneyland across the road there. They don't do this anymore, I think the shareholder's meeting is in New Mexico this year--I'm sure Alburquerque will be just as much fun as going to Disneyland.

One year at the annual shareholders meeting for the Disney Company, A group of Corporate Raiders had been buying up shares of the company and tried to take it over. The word was that they were going to buy up Disney and then dismantle it, selling off it's various attributes. At that time The Walt Disney Company lacked vision and innovation in it's leadership, especially in it's movie making capacity. It became a target for a hostile takeover attempt.

When a company wants to grow either in a new direction or expand in the same capacity it will look to a another company that has the attributes that are desirable for it's expansion and try to buy it. The buyer can go directly to the management and make an offer or it can bypass the management and make a tender offer to it's shareholders. This becomes a hostile takeover attempt. They will make a statement offering to buy each share of stock for a certain amount of money--usually a great deal more than it's worth. The aquisition company will attempt to buy up as much of the target company's stock as to have a controlling share of the company and take it over.

Can the target company prevent a hostile takeover from occuring? If a company is the target of an aquisition there are measures that they can take to prevent the action.

• Pac-Man: This is where the targeted company turns around and attacks the company by buying up it's shares in an attempt to take control of the attacking company.


• The White knight: At the request of the company being targeted for takeover another company can come in and buy up shares at a higher value than the aquisition company coming to the rescue of the target company.


• Poison Pill: The target can issue stock to it's investors (except the aquiring firm) at a discount so that there are more shares that are out there for the aquiring firm to have to purchase making the buyout more expensive.


• Golden Parachute: This is a provision where the aquiring firm will have to pay the management of the target company large sums of money if a takeover happens.


• Suicide Pill: The target company will ruin the company rather than let it be bought out.
  

At the end of the day The Bass Brother from Texas came in to Disney and bought a controling interest saving Disney from a hostile takeover. The new management team of Micheal Eisner, Jeffery Katzenberg, and Frank Wells was introduced. Over the following years the company was revitalized with the new leadership and vision.