The Right Time Without Timing

Many financial planners – including me – will tell you that market timing is not a good idea.  But that doesn’t mean that we should all bury our heads in the sand and ignore opportunities.  It’s a fine line, but there is a difference.

One example is the current mortgage rate environment.  Look at whether it makes sense to refinance your mortgage while rates are still low.  Whether you want to lower your payment, stretch out your payments over a longer time, or let a lower rate so you can get the mortgage paid off more quickly, now is a time to explore that.  But be careful.  There are mortgage lenders who will refinance anyone who asks without looking at whether you improve your situation with a refinance or not.  So get some good referrals on who to work with.

It’s also a good time to buy up in terms of housing.  Yes, you may get less for your little house than you feel it’s worth.  But all factors being equal, you lose less on selling your small house than what you save on buying a bigger house.  In other words, let’s say you get 10% less on your $200,000 house (lose $20,000), but you save 10% on a $350,000 house (save $35,000).  You’ve come out ahead.  Once again, having a realtor who can tell you if that’s the case is vital.  So don’t just pull out the phone book and start shopping.  Get a good referral.

If you think it’s time to change your portfolio approach, this may be the perfect time to do it.  If you took a bath on your individual stock portfolio and want to move to mutual funds and ETFs, this is probably a great time.  That portfolio change might have cost you big bucks in taxes a year or two ago.  But you might actually get some tax losses if you make that move now.  And – at the risk of sounding like a broken record – talk to a good financial advisor about it.  This is definitely a time when you want a fee-only and not a commission or fee-based professional.  If someone makes big bucks over making the changes, you may never know if the change was in your financial interest or theirs.  The good ones are still alive and well in this economy.  Look at http://www.acaplanners.org/Advisors.aspx  or http://findanadvisor.napfa.org/Home.aspx  to find one.

Experiential Learning for Parents

Parenting is an art as much as a science.  What nurtures creativity and responsibility in one child may breed wanton disregard in another.  What is a great instructional tool one day is seen as useless and starts an argument the next.  And while there are many helpful and well documented methodologies for parenting, the best informed parent will make some mistakes – and learn from them.  As someone who has literally written the book on teaching kids about money (The Ultimate Parenting Map for Money Smart Kids – $10 including free shipping at www.brightleitz.com), I continue to learn from mistakes when I put theory into practice. 

One of the hard learned lessons for me as a parent is that every stage of life for kids brings new lessons for the children and for their parents.  The child who saved all her allowance as a grade schooler may have spent all her pay check within three days of every pay day as a teenager.  What can be learned from this is that phases in kids’ lives are temporary.  The outlook of the grade schooler isn’t lost, it’s just on vacation.  And the teenager will learn to pace her spending if her parents resist the temptation to either lecture her about budgeting or give her extra money.

Another lesson is that most operating procedures work best when well defined. Here’s an example.  This summer my family had multiple teenage drivers as well as my husband and me sharing cars.  In the past we pretty much had a one-driver-per-car ratio, so the rule had been that each teen driver paid for their own gas.  As we started playing musical chairs with car usage, I decided to generously allow the kids to use our gas card.  We had them pay for a few more things we generally pay for.  Feeling particularly kind, I’d often encourage the kids to get a soda at the gas station store. Hey, it’s summer!  Live it up! 

Then the gas card bill came in.  OMG!  The bill for the first month of summer was literally over four times the size of our average bill for that card.  None of the kids was around when I opened the bill, so no shouting or bloodshed ensued.  But the system changed immediately.  Of course, it wasn’t entirely their fault.  My card, my decision.  So defining things up front – and thinking through potential outcomes – can make for less painful learning for everyone.