Wes Moss: Think real goals, not resolutions, for new year

Certified financial planner Wes Moss provides personal finance advice and accessible investment strategies. His guest post appears here weekly.

Wes Moss hosts 'Money Matters' Sunday mornings on AM750 and 95.5FM News/Talk WSB

Wes Moss hosts 'Money Matters' Sunday mornings on AM750 and 95.5FM News/Talk WSB

Harvard University once did a study on goal-setting, using members of its class of 1953. The result: Twenty years after graduation, the 3 percent of that class who wrote down their career goals had a higher net worth than the 97 percent who did not write down goals.

My most productive years have been those in which I write down very specific New Year goals, which I take much more seriously than mere “resolutions.” My wife and I sit down every December and draft a “Moss Family Goals List” for the coming year. It covers seven categories, each containing three to five goals.

Here are a few of my goals for 2012:

Health/Wellness

• Continue exercise with boot camp and CrossFit workouts four to five times per week.

• Finish a half triathlon. Right now I can see being able to do the run and bike, but can barely swim across a large puddle. This will be a tough one.

• Maintain ideal weight range. For me, that’s 190 to 195 pounds.

• Eat a higher-protein, lower-sodium diet

Family

• Continue our Friday “date nights,” three times a month.

• Keep the children active in sports.

• Find a name for our baby, due at the end of January!

• Use local memberships with the kids at least once a month — Atlanta Zoo, Botanical Gardens, Georgia Aquarium.

Financial

• Continue to max out 401(k) and IRA accounts.

• Continue to provide 401(k) matching at our firm

• Open college savings account for the newest member of our family (due Jan. 28!).

• Begin DRIP account to buy shares in Coca-Cola, Procter & Gamble, Southern Co., Johnson and Johnson and AT&T.  (A Dividend Reinvestment Plan is a way to buy stocks directly from publicly traded companies, with any dividends going toward buying additional shares, rather than cash payments.)

These companies fit my 2012 stock theme –  the SHUT index (for Staples, Healthcare, Utilities and Telecom). The SHUT index targets defensive dividend-paying sectors of the stock market that should do well (relative to other industries) in times of flat or very moderate economic U.S. growth.

• Redo monthly household budget and see how we can lower our expenses despite adding a new baby to the family (did I mention the due date’s at the end of January?).

I’ll keep you guessing on my Career, Social, Charity and Home goals, but these categories cannot be overlooked.

Last year I hit 14 of my 16 listed goals. That makes me want to stretch a little further in 2012.

I wish you a wonderfully prosperous 2012. And I’d love to hear some of your goals for the new year.

– By Wes Moss, for the Atlanta Bargain Hunter blog

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Wes Moss: How to get cash from your house

Certified financial planner Wes Moss provides personal finance advice and accessible investment strategies. His guest post appears here weekly.

Wes Moss hosts 'Money Matters' Sunday mornings on AM750 and 95.5FM News/Talk WSB

Wes Moss hosts ‘Money Matters’ Sunday mornings on AM750 and 95.5FM News/Talk WSB

I’m getting a lot of questions these days about “reverse mortgages,” which offer a way to unlock the equity in your home without selling it. The mounting interest in this topic speaks to the desperation many Americans feel as they struggle to fund increasingly long retirements.

In order to qualify for a reverse mortgage you must be 62 or older, own your home, have equity in that home, and can never have defaulted on a government loan. In addition, you must receive Home Equity Conversion Mortgage counseling before the loan can be consummated. The purpose of this last rule is to ensure you understand the unusual nature of the commitment you are making with a reverse mortgage.

The amount you can receive in a reverse mortgage heavily depends on your age. The older you are, the larger the percentage you will be allowed to “borrow” from your home. For example, say you are in your late 60s, your house is worth $250,000 and your mortgage is paid off. A reverse mortgage lender may loan you approximately $155,000 with a 5 percent interest rate.

That money, which is tax exempt, is now yours to use. But, like the proceeds of any loan, it must be paid back to the bank, along with interest. In this example, the interest would run about $7,750 per year. You don’t make monthly payments. The money is due when you die or sell the home. Whoever inherits your house becomes responsible for any remaining balance on the reverse mortgage.

Reverse mortgages aren’t cheap. Based on my research, our example loan would cost the borrower about $12,000 in closing costs, including origination fees and required insurance coverage. That’s almost 8 percent in closing costs, compared to the 1-2 percent you might expect to incur when closing a traditional mortgage. Interest rates for reverse mortgages are steep, too – currently just north of 5 percent. And remember – your loan balance goes up every year, not down, as interest accrues.

In my opinion, reverse mortgages should only be taken as a last resort for those in desperate need of retirement income. A reverse mortgage might allow you to stay in your home for the rest of your life (assuming you are able to keep up with taxes, insurance and condo owner fees.) And, unlike a home equity loan, a reverse mortgage can’t be randomly cancelled on you. But, again, reverse mortgages are expensive to obtain and pay off.

Think carefully and get lots of advice before signing on this particular dotted line.

– By Wes Moss, for Atlanta Bargain Hunter

8 comments Add your comment

Pam at MoneyTrail

December 26th, 2011
10:18 am

Do you have any specific goals for teaching your kids about financial literacy and money management?

Kar

December 26th, 2011
5:00 pm

I hear you. I started using goals and they’re a lot more realistic to work towards than starting with a steep start come Jan 1.

Beverly Fraud

December 26th, 2011
5:08 pm

“Harvard University once did a study on goal-setting, using members of its class of 1953. The result: Twenty years after graduation, the 3 percent of that class who wrote down their career goals had a higher net worth than the 97 percent who did not write down goals.”

Wes for future reference: The study NEVER happened! It’s a “staple” for the Tony Robbins and Brian Tracys of the “personal development” crowd, but Fast Co. THOROUGHLY discredited this study awhile back.

wizard of odds

December 26th, 2011
6:37 pm

resolutions are made to be broken but, writing things on paper works like magic

a few 2012 goals:

ride silver comet trail to alabama and back
get in the ‘woodshed’ 2 hrs daily, learn to master my craft
open a (music) school and church
get my wife a ‘03-05 black c or e class mercedes

live long and prosper!!

Wes Moss

December 27th, 2011
9:12 am

@pamatmoneytrail,Yes…we gave my 4 yr old the Learning Resources Teaching Cash Register (learning resources) – we found it at Learning Express on Roswell Rd. He and my two year old both seem to like it, and it really can be a great tool to learn coins/math etc. We’ll see how it goes after the Christmas glow wears off…

Wes Moss

December 27th, 2011
9:14 am

@beverlyfraud I’ve read that stat in more than one book…BUT, regardless of the study it’s hard to deny that writing down goals is a powerful tool.

Beverly Fraud

December 27th, 2011
10:34 am

@Wes Moss I do get the point of writing goals is a powerful tool. I can’t help if I am a “skeptic” about some things (even to my own detriment) The problem is everyone refers to “someone else” as the source of the study, but when confronted with the truth of the matter says “Don’t know if it’s true, but it’s a good story”

As a somewhat “risk averse” person when it comes to investing, I want to know if it’s true! LOL So I can believe the REST of the story, as Paul Harvey used to say.

Kat

December 29th, 2011
3:06 pm

I agree with Wes. I have always enjoyed success when I write down my goals. They say if you don’t write down a goal, then it’s just a dream. What I NEED to write down is “Write down goals!”