There are so many things that I want to say. I’ll just start by saying my heart goes out to all those who have experienced the loss of family and friends during this time. I can also empathize with those who have had financial difficulties and challenges, and hopefully with the grace of God, you will have an opportunity to turn your situation around. In dire times, it is important to maintain hope while we are still on this earth. I hope we all rise to our challenges.
I also want to wish a great big mazel tov! to all those who have celebrated happy occasions (bar and bat mitzvahs, engagements, weddings etc.). Although your celebrations may have been in smaller groups then you would have liked, know that your happy milestones brought light to the pandemic that we are all experiencing (and the bottom line is you celebrated a simcha). To all those children who are graduating from elementary school (I have one: Aliza at Yavneh), high school (I have one: Temima at Ma’ayanot), college and graduate school, yes you are missing the big fanfare and the walk down the aisle to receive your diploma, but I guarantee that your friends and family will be just as happy and just as proud of you within the confines of your own home.
What next? There’s so much information on forbearance of mortgages and debt, and refinancing, so I don’t feel like I have to write about that because you can go on the internet, and it’s all in front of you. I would suggest that you speak with a mortgage professional and/or an attorney to sort out any research, so you can come to a solid decision as to the best direction for you.
A bit of financial introspection. I’ve spent so many years as a self-employed financial professional always concerned with cash flow and profitability (makes sense right?). Almost 20 years ago I was blessed to get married and have an additional five blessings (and a dog) added to the family, and I totally became immersed in providing for my family, as I’m sure many of you can identify with (and yes I did and do spend quality time with my kids although they may differ on the definition of “quality time”). The years flew by, and there were financially important things that in hindsight I wish I had known about, but just eluded me. I would like those reading this article to benefit from what I may have missed early on.
I’m going to start with low-hanging fruit. If you currently have mortgage financing on your home, depending on your cash flow situation it might be prudent to either stretch out your mortgage to lower your payments if cash flow is needed, or, if there is enough income, to start building equity by taking a shorter amortization like a 10- or 15-year mortgage. The big takeaways are: Stay away from funky mortgage products, and do not, I repeat, do not, wait for the 1% rate. If the deal makes sense now, take it! Why? Because, as you can see, unexpected things happen, and so “a bird in the hand is worth two in the bush.”
Many people today have outstanding student-loan debt, and while many people refinance the mortgage and consolidate their student loan debt depending on the situation, it may pay to revisit the refinancing of the student-loan debt and not include it in the mortgage, as there are good student-loan rates out there. If you can reduce your student-loan debt, you may have some excess cash that you can channel into assets that grow.
We all know that a great topic of conversation centered around the stock market and its ups and the downs. I’m not a big one on generalizing and of course for the most part when the market is going up many stocks are going up and when the market is going down many stocks are going down. It’s very individualized because if you bought certain stocks a long time ago they still may be up on a comparative basis even though they might be lower today, or you may have bought something recently that went down and now you’re holding and praying that it will go back up. It’s tough to know what to do because there are so many individualized variables in terms of savings, cash flow and capital gains (losses). Restructure your liquid assets, look into other viable alternatives and “don’t cry over spilled milk.”
Don’t go around worrying, as worry does not help anything (this is coming from the king ruminator). Planning for the future as best as we can is all we can do, but the daily “keeping our head above water” gets in the way. Try and identify the root cause of any of your concerns. My suggestion is to simply look where you are now, envision where you would like to be and design or re-design your current financial situation. Think about “What keeps you up at night?” “What are your top three financial concerns?” “What are some of your financial goals for you and your family?”
I know from experience that when you are younger, you rarely think about aging unless it’s in reference to your parents. When you are younger (which is relative) though, that is exactly the time to think about, not necessarily getting older, but planning for the future. From a financial-product perspective, there are advantages to being younger (and no, it’s not discriminatory to say that—it’s factual). It is important to establish a plan that builds a financial and protective moat for the ones you love, and it should address the following savings for college and retirement, and insurance for illness, disability and death (which we unfortunately have seen too much of). If you’re over the age of 62 and in some cases 60, a reverse mortgage might be one of the most important financial tools to incorporate into your arsenal of financial planning, specifically using a “sequence of returns” model, which is a plan that allows you to draw on a reverse mortgage line of credit to (1) keep liquid assets in place, allowing them to grow in an up market, (2) keep liquid assets in place in the event of a downturn in the market, allowing for recovery, (3) defer social security for a greater pay out and (4) create a sophisticated parlay of funds into strategic insurance products.
I am here if you need me for advice on anything mentioned in this article. The smoke will clear, and may God grant you the ability to see the horizon.
Carl E. Guzman, NMLS# 65291, CPA, is the founder and president of Greenback Capital Mortgage Corp. NMLS# 5668. He is a real estate mortgage banker and business financing expert with over 30 years’ experience. He currently has 185 five-star reviews on Zillow. Carl and his team will help you get the best mortgage financing for your situation and his advice will save you thousands! Visit www.greenbackcapital.com or email [email protected]