Robert G. Yetman, Jr.

Loving the Workplace

There is a saying attributed to Al Davis, the eccentric, long-time owner of the NFL’s Oakland Raiders, that sums up his policy regarding the indulgence of individual expression on the part of his players: “Just win, baby.”  In other words, as long as his teams are winning, he is not concerned with the color cleats they choose to wear, how long they keep their hair, or anything else that might violate the more button-down policies enforced by other teams.

That sort of represents how I feel about a workplace that flies in the face of convention.  I have always believed that if you have a company full of adults…real adults…then those people can handle a work environment that makes concessions on behalf of quality of life, and if anyone in the group cannot seem to manage the greater freedoms and flexibility that come with that, the answer is to rid the company of that person, rather than configuring the workplace into something unfeeling, unbending, and even suffocating.   

Glassdoor (www.glassdoor.com) is a free website that offers visitors the ability to get an inside look at jobs, careers, and workplaces.  One of the more interesting pieces of information they’ve created is a list, compiled on the basis of votes from the employees themselves, of those companies that are best at balancing work with personal life on behalf of their workers.  The results of the 2011 survey can be found here:

http://www.glassdoor.com/Top-Companies-for-Work-Life-Balance-LST_KQ0,35.htm

Some of the names on Glassdoor’s list aren’t surprising, given that they’re companies that are a manifestation of more recent cultural and technological evolutions, and thus maintain a more “progressive” outlook on life and work: for example, Facebook makes the list, as does MTV.  However, a number of companies are those that have been around for a long, long time, and that provide goods and services of a more traditional nature – Chevron, Dupont, and General Mills among them.

In my capacity as a manager, I’ve always chosen to create a benevolently-managed workplace.  I see no compelling reason not to do so, and can instantly think of a lot of good reasons to do it.  Accommodating the basic family needs of hardworking employees, including the last minute crises that come up from time to time, is something I’ve always considered to be quite reasonable, and making that investment in my people always yielded great dividends in terms of productivity and loyalty.  Moreover, there’s no reason why the workplaces themselves cannot be environments from which the employees derive great pleasure and enjoyment during the day.     

In the end, I expect adults to be adults.  I have always managed people on an assumption made at the outset of the relationship that an earnest adult believes in working hard while he’s getting paid, knows right from wrong, and is replete with common sense.  In the rare cases I found myself with an employee who lacked any or all of those basic components, I chose to terminate the employee rather than change the enjoyable culture of our workplace.  Believe me…when you offer a workplace that is respectful, fun, and family-friendly…finding good people is in no way a difficult task.

Agree or disagree; please register your comments below.

Follow me on Twitter at www.twitter.com/robertyetman.

Follow me on Christian Chirp at www.christianchirp.com/robertyetman. 

Bob Yetman, Editor-at-Large at Christian Money.com (www.christianmoney.com), is an author of a variety of materials on personal finance and investing, as well as on topics of fitness and self defense, to include the book Investor's Passport to Hedge Fund Profits (John Wiley & Sons, Inc.) and the unarmed combat training DVD Thunderstrikes - How to Develop One Shot, One Kill Striking Power (Paladin Press).

Tags: small+business+management,+workplace+environment

Is the 30-Year Mortgage On Its Last Legs?

Financial planners and other prudent financial “types” have long held a grudge against the 30-year mortgage, and with good reason.  The (now) standard 30-year mortgage term has cost Americans, on the whole, unfathomable sums of money since they became, well, standard.  Banks have historically loved the longer-term mortgages because they ultimately put far more money into their pockets, and financial advisors have despised them for that same, exact reason.

Now, the very survival of the 30-year mortgage mechanism is at risk, thanks to the economic upheaval that we’ve all come to know so well.  Beyond the tightening of underwriting standards overall, Fannie Mae and Freddie Mac, the “government-sponsored entities” that have gone such a long way to fueling the American Dream of home ownership through their mission of implicitly guaranteeing mortgages and thus keeping them cheap and easier to obtain, are faced with the very real prospect of seeing themselves drastically reduced or even eliminated outright.  Should that happen, the cost of the mortgages would likely rise, and jeopardizing the only real benefit that mortgage term offers: the lowest payment available, in general.

This is good news, truthfully.  Although I believe the 30-year mortgage will remain among us in some form or fashion, as even without any government backing, the free market will keep it available for those who can pass the new, more stringent underwriting standards that will accompany it, the point is that it has always been a bad deal.  It has led people to pay far, far more for their houses than they should, and demands that homeowners wait years to build up any real equity because of how slowly the loan amortizes.       

Frustratingly, one of the reasons people have so quickly opted for 30-year mortgages is due to a simple lack of awareness of how the time value of money really affects a mortgage payment when the mortgage term is adjusted for varying lengths.  A lot of people are aware that the longer the mortgage term, the lower the monthly payment, which is pretty obvious because the repayment period is spread over decades.  So, right off the bat, “lower” always equals “better” for most people.  The Part B to this, however, is that when people consider the possibility of a 15-year mortgage instead of a 30-year mortgage, they make the mistake of assuming that because the repayment period is cut in half, that must mean the payment doubles.  It doesn’t.  It is certainly higher, but it is not even close to being twice that of the 30-year payment. 

Here’s a quick example.  If you buy a $200,000 house with a 30-year mortgage at 5.5% fixed, the monthly payment (principal and interest) is $1,135.  If you buy the same house with a 15-year fixed mortgage that’s priced at 4.5% (the interest rates on 15-year mortgages are often about a point less than those on 30-years), the monthly payment is $1,529.  Higher, for sure, but nowhere near double that of $1,135.  In fact, it’s about $400 per month more.  In exchange for agreeing to a monthly payment of $1,529 instead of $1,135, the buyer could own the home outright in half the time, and pay a lot less for the privilege.  How much less?  The $200,000 home, financed for 30 years at the terms noted above, will ultimately cost a grand total of $408,000 when it’s all said and done.  The same $200,000 home financed for 15 years at the terms noted will ultimately cost the buyer $275,000.  So, for an unwillingness to find a way to come up with another $400 per month, the 30-year buyer…the “standard” buyer…will pay an additional $133,000 for the same house over what the 15-year buyer pays.        

One of the silver linings of the recent economic collapse is that the population seems generally more aware about things like debt management, and how much debt costs in the long run.  More generally, we’re all, it seems, getting a just a little smarter about money and how it works, and less tolerant of the way things have been done for years.  This increasing consumerism is going to save us a lot of dough in the long run, and it’s high time that we look to applying this new outlook to the most expensive single purchase we will ever make.  Refer back to the example I cited above.  If you can pay $1100 a month for a house, then you can probably pay $1500; if you cannot, then it’s probably less a case that you absolutely cannot not, and more the case that you’ve decided to apply that additional $400 to something else.  Now you have to ask yourself this question: Is whatever I’m spending that additional $400 a month on now something that’s worth me taking an additional 15 years to eliminate my mortgage altogether, and spending another $133,000 more than I have to?    

Agree or disagree; please register your comments below.

Follow me on Twitter at www.twitter.com/robertyetman.

Follow me on Christian Chirp at www.christianchirp.com/robertyetman. 

Bob Yetman, Editor-at-Large at Christian Money.com (www.christianmoney.com), is an author of a variety of materials on personal finance and investing, as well as on topics of fitness and self defense, to include the book Investor's Passport to Hedge Fund Profits (John Wiley & Sons, Inc.) and the unarmed combat training DVD Thunderstrikes - How to Develop One Shot, One Kill Striking Power (Paladin Press). 

Tags: 30+year+mortgage

The Irrational Fear of Home Ownership

Seemingly, in every neighborhood across America, there are empty homes.  Empty.  What’s more, many of these homes have been empty for years now.  I’m not talking solely about fixer-uppers in rundown neighborhoods, but about perfectly nice homes in perfectly respectable neighborhoods, as well.  In my neck o’ the woods, which is about the average size of a typical neighborhood, I count roughly 10 empty homes.  Some are still at the point where there is an active sales effort ongoing…while the others are basically now “ghost” houses, with no signs of life or activity of any kind. 

As you would expect from a housing market that has offered us so many empty houses from which to choose, the prices of these very available units are low, to the point of being sickeningly low if you happen to be the owner.  Buyers are, in many cases, getting the deals of a lifetime on real property in the United States, and yet…the market is not moving upward in any noticeable fashion at all.

A recent article in The Boston Globe about the current state of home buying in America mentioned a property manager, of all things, who has decided to continue renting expressly because she has watched the value of the homes of her friends and acquaintances fall so far in the last few years.  She is deciding not only against buying right now…she’s thinking she may never buy.

Really?

If you’ve decided to continue renting presently because you believe that the market will continue to fall into the foreseeable future, that’s one thing; that is a person who actually is paying attention to what’s going on, and has developed a strategy, of sorts, to secure the best deal possible when he ultimately buys.  However, what’s disconcerting to financial professionals is to hear so many renters decide against buying real property entirely because of what has happened over the last few years

Count me as one financial pro who has always felt that home ownership is not the no-brainer that it is generally touted to be.  There are a lot of examples of people who, for one reason or another, are better off remaining renters.  Those people have always existed…the person who has little patience for maintenance is a good candidate for lifetime renting, as is the person who sees himself moving very regularly.  However, if you are an otherwise good prospect for home ownership who is simply running and hiding because of what the market has done recently, that is a major mistake.  Although I have never considered the purchase of a primary residence to be an investment, per se, it is still something that carries with it some investment-like features, and thus is open to be considered in terms of timing of purchase; right now, it’s a great time to purchase.

Methinks the aforementioned property manager will buy at some point in the future.  You know when she’ll do it?  After prices have already begun to rise, and after mortgage interest rates do the same thing.  For many people, they quite unnecessarily set themselves up for future disappointments by waiting too late to take advantage of great deals staring them in the face.  You don’t even have to trust your instincts in conditions like these – simply trust the facts. 

Even taking into account the historic collapse in property values over the past few years, real estate has increased in value at a rate of a little over four percent per year over the past 20 years.  That’s another thing – “historic.”  What are the chances that another collapse of “historic” proportions will follow anytime soon?

In the end, it’s OK to pull over to the side of the road and wait for the storm to pass before continuing…but you also have to be willing to recognize when it has passed and when the sun is back out…or you’ll just remain forever at the side of that road.

Agree or disagree; please register your comments below.

Follow me on Twitter at www.twitter.com/robertyetman.

Follow me on Christian Chirp at www.christianchirp.com/robertyetman. 

Bob Yetman, Editor-at-Large at Christian Money.com (www.christianmoney.com), is an author of a variety of materials on personal finance and investing, as well as on topics of fitness and self defense, to include the book Investor's Passport to Hedge Fund Profits (John Wiley & Sons, Inc.) and the unarmed combat training DVD Thunderstrikes - How to Develop One Shot, One Kill Striking Power (Paladin Press).

Tags: should+you+buy+or+rent+a+home