Natali Morris

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Natali Morris is a technology and finance contributor for CNBC and MSNBC. She also writes about personal finance on her own personal site, www.natalimorris.com. She is the wife of Clayton Morris an...
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Natali Morris is a technology and finance contributor for CNBC and MSNBC. She also writes about personal finance on her own personal site, www.natalimorris.com. She is the wife of Clayton Morris and mother of two (soon-to-be three) children. Her constant preoccupation is in not screwing them up.
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Personal Development

7 Ways to Convince Your Spouse That Real Estate Is the Way to Invest

In my recent episode of the BiggerPockets Podcast, I was asked how someone could talk their spouse into real estate investing. I’ve thought about this question a lot since the episode, and I have to say, I am not satisfied with the way I responded. So please allow me a do-over on this important question! Hey Natali, how do you talk to your spouse about real estate investing? Oh, thanks for asking! I have some thoughts! Even though I was raised by real estate investors, I still felt weary about taking money out of our savings and retirement accounts to buy property. I would wager there is usually a conservative investor in each partnership that feels this way. Meanwhile, my husband is the cowboy — always ready to hop on the horse and start swinging his lasso to round up investments. So, how does the cowboy convince the pioneer to start investing? Here are a few things your conservative spouse may need to know. 7 Ways to Convince Your Spouse That Real Estate is the Way to Invest Know your stock and bank-based investments are not as safe as you may think. Market crashes are cyclical. History tells us that a market crash happens every 10 years. Some economists believe that our current level of volatility means that we may see one every five years now. Most investors are hoping that they don’t need their investments during one of those downturns, but we can just never know. The stock market has made many a millionaire and many more a fool. It is not the only game in town when it comes to investing. It is just one of many tools. Realize your investment accounts are probably pretty expensive. Most people don’t know how much they are paying in fees inside of their investment accounts. Once you see the cumulative effect of this, you will start to break your faith in the stock market as the only way to build wealth. I use a site called FeeX to track the fees in our investment accounts. The first time I did this, I nearly choked at the analysis! Try it with your spouse! Understand real estate is not an appreciation game. Coming from the San Francisco Bay Area, this mindset took some breaking for me. Buying for appreciation is not how you make money in real estate. Oh, sometimes you can, but prudent investors buy for cash flow, not appreciation. Tell your conservative spouse that you are investing to add to your current level of cash flow. You are not buying to hope that investment goes up in value in order to sell someday. Explain the difference between performing and non-performing assets. Don’t present a deal that you intend to sell, unless you are an experienced flipper. Present a deal you intend to keep for cash flow! Explain the return on the deals that you are proposing to buy. You have to be ready with numbers and explain the difference between your proposed investment and your current investment. My husband and I had real estate deals before we were married, but when we made our first purchase as a family, he was able to bring this deal to me — single family home, $35,000 purchase price, $900 per month rent. This is an 18% cap rate! None of our investment accounts, no matter how well diversified, could get anywhere near this! It is hard to argue with value. Use your budget as ammunition. What could your spouse do with that $900 per month in the above deal? That is $900 per month that you don’t have now with your money in a bank account. Take your monthly budget and point out how cash flow will give you freedom. Is this your total mortgage? Is this your child’s tuition? Is this your credit card payment? Allow them to see dollar signs and imagine them in use! Use the literature. When my husband and I decided to jump into real estate as a family, we read Rich Dad Poor Dad out loud together. We did this on road trips. I read aloud while my husband drove. Most of you have read this book, and you know how this book sets your hair on fire. In addition to this book, listen to podcasts, read some blogs. Link your spouse to these resources, too. This is free education! Know your spouse. If you’re like me, you can play out your spouse’s arguments in your head before they fly out of their mouth. You already know the arguments your spouse uses against you. Be ready to dodge their punches. Be ready with the answers to the questions that you already know they will ask. What are the things that make your partner hesitant? I’d love to hear how other couples come together to agree upon and execute shared wealth-building goals! Free eBook from BiggerPockets! Join BiggerPockets and get The Ultimate Beginner's Guide to Real Estate Investing for FREE - read by more than 100,000 people - AND get exclusive real estate investing tips, tricks, and techniques delivered straight to your inbox twice weekly! Actionable Advice for Getting Started, Discover the 10 Most Lucrative Real Estate Niches, Learn how to get started with or without money, Explore Real-Life Strategies for Building Wealth, And a LOT more Sign up below to download the eBook for FREE today! Click Here to Download the eBook Now! We hate spam just as much as you

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Personal Finance

Should I Pay Off Debt or Use Those Funds to Invest?

Should you pay down debt or start to invest with your expendable cash? Despite what Dave Ramsay may say, I do not think this is a one-size-fits-all question. I believe you should be able to evaluate your situation holistically before you come up with your answer. So let’s examine the elements that go into this decision. What Kind of Debt Are We Talking About? Have you run up high-interest credit cards on designer purses or shoes? To me, this is the worst kind of debt: high-interest status debt. If this is your vice, stop it! You have better ways to prove your worth than designer accessories. If you have this kind of debt, get rid of it first and learn to change your spending habits. But are we talking about low-interest debt on a sensible car or home? A Home Equity Line of Credit for solar panels? To me, this is acceptable debt. This debt knocks itself out slowly but surely without breaking you in interest and fees. I believe debt is like fat: some good, some bad. Look closely at the terms and what you are getting for this money. When I secured my first home mortgage, my father said to me, “Natali, you’re paying for money. It’s an acceptable service to pay for, but you should want the best deal on it.” We all need to pay for money from time to time. The point is to minimize this effect on your monthly cash flow. In this economy, my rule of thumb is not to pay anything over 4% in interest unless it is an investment that I know will return more than that. Let’s discuss this trade off. Related: How Debt & Taxes Make the Rich Richer and the Poor Poorer What Kind of Interest Rates Are You Paying on This Debt? Albert Einstein said this of interest: “He who understands it, earns it. He who doesn’t, pays it.” I find this to be an extremely motivating quote! The point being: You want your money performing for YOU and not for a creditor. So weigh your options! Do you have an investment that you know will perform at 10%? Great! Yet you have debt that you are paying at 17%  interest? You’re losing money. Pay down the debt first. OR Maybe you have an investment that you know will perform at 10% but have some acceptable debt at 5% interest? You’ll still be making 5%! Make that investment! We recently bought a family car (because we are expecting our third child and needed a third row, God help us!). We financed half of it at 2.99% interest. To me, this is debt worth carrying because we got a safe car out of the deal and our investments do way better than that. Related: How I Went From $100,000 in Debt With No Job to Debt-Free in 5 Years You want to weigh your investment option against your debt service like a scale. See how you come out year over year. Can You Use Your Investment Cash Flow to Accelerate Your Debt? Maybe your debt and your cash flow are going to be pretty even. For example, your rental property pays you $600 per month (after taxes and insurance), and your debt service costs you $450 per month. Can you use the extra $150 to pay down your debt service faster so that the entire $600 per month is eventually yours to spend? How long will that take? How long can you afford to take a small profit until it is all profit? Run the numbers! Remember this: Every parenting book I’ve ever read (and I’ve read A TON) tells us to teach our kids delayed gratification if you want them to succeed in life. We need that, too. Can we invest in something and wait for the payoff? Can you live on little cash now to see big rewards later? In my experience, buying into your investment portfolio sooner rather than later is usually better. Your debt should not be your excuse to wait. If you wait too long, deals go by you in the fast lane. Of course, you don’t want to strap yourself so thin that you can’t buy groceries. But you don’t want to watch other people make money from the sidelines. You must be continually weighing your options and ready to take a leap sooner than later. I hate to end with a cliche but it is true: Fortune favors the bold. [Editor’s Note: We are republishing this article to help out our newer readers.] What do you think? Under which circumstances should someone pay off debt first? When is it better to use funds for investment? Let me know your thoughts with a comment! Free eBook from BiggerPockets! Join BiggerPockets and get The Ultimate Beginner's Guide to Real Estate Investing for FREE - read by more than 100,000 people - AND get exclusive real estate investing tips, tricks, and techniques delivered straight to your inbox twice weekly! Actionable Advice for Getting Started, Discover the 10 Most Lucrative Real Estate Niches, Learn how to get started with or without money, Explore Real-Life Strategies for Building Wealth, And a LOT more Sign up below to download the eBook for FREE today! Click Here to Download the eBook Now! We hate spam just as much as you

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Personal Finance

Want to Build Wealth for Your Family? Then Your Household NEEDS This.

A Fidelity study recently showed that more women are taking charge of the family finances. This sounds great, but if you read the study closely, you’ll see that this refers to bill pay — and not investments. “Women are less likely to be the primary decision maker,” says the study. “Regarding retirement decisions, men are significantly more likely to see their role as ‘primary’ compared to women.” Ahem! To me this says that women are the secretaries, while the husbands make the “big decisions.” “You just manage the passwords and bill pay, sweetheart. I’ll take care of the heavy lifting when it comes to investments.” I do not believe this has anything to do with aptitude. Women make awesome investors! Unfortunately, most of them just don’t know it yet, so they simply handle the clerical work in their families and stop there. Related: 5 Simple Ways to Improve Your Personal Finances — Starting Today This has to stop, no matter the gender. Managing passwords is only the first step in managing your finances. It’s admin work, and we need more than admin work in order to thrive. I am convinced that every household needs a true money manager, emphasis here on the word manager. I’m talking about upper level management. I’m talking about chief financial officers, Chief Home Officers (CHO). The Path Towards Building Wealth for Your Family So let’s talk about the broader scope of responsibility towards family wealth building. What do managers do? They make sure deliverables get done, yes, but they also strategize for continued success. They take stock of their resources and make plans to turn those resources into profit. Do you do this in your family? Someone has to if you don’t want to live paycheck-to-paycheck into your golden years. I’m not convinced that any one gender is better at this than another, but I am convinced that women don’t empower themselves enough to try — which means too often that no one is the CHO. Which means that bills get paid, maybe savings accounts get contributed to, but no strategizing and goal setting is done thereafter. This is an expensive oversight. How will you retire? How will you deal with deflation of your savings accounts? These are questions a good CHO regularly asks themselves and addresses with their partners. Why don’t women make the “big decisions”? I’ve thought about this a lot. Maybe we’re scared. Maybe we’re nervous about investing on behalf of our families. Maybe we are unfamiliar with the language of the financial industry. All of that is understandable but not insurmountable. Here is a little data that should make the ladies feel better: Research shows that when women do make the “big decisions” about investment, they are more profitable than their male counterparts. Sadly, most of us just don’t know how capable we are yet because finance seems so inaccessible. A colleague recently admitted to me that she was the begrudging Chief Home Officer because finance seemed too intimidating. Believe me, I get that! Learning About Finance the Old Fashioned Way When I stopped working full-time, I went through a brief period of feeling powerless for not contributing a regular paycheck to my family. In order to combat that powerlessness, I started to study finance. I remember sitting at my desk and saying to myself, “OK, if you’re not going to have a regular paycheck, you’d better figure out how to do the best you can with the money we have now and the investments we are making.” So I started to binge read personal finance books, and to my surprise, I learned that investment did not have to be scary. I learned to read the hieroglyphics on my bank statements. I researched and executed trades in our investment accounts to great effect. And then I went to real estate school and learned to co-pilot our real estate investments. Related: 4 Steps for Getting Your Finances in Order BEFORE You Quit Your 9-5 to Invest I gained financial literacy the very old fashioned way — with my library card. I do not have a fancy degree in finance, but when I sit down to my computer to execute plans on behalf of my family, I feel perfectly capable (most of the time). If I were to write a job description for a Chief Home Officer, it would go a little something like this: Seeking financial manager to take stock of, strategize, and execute quarterly budgets and investment strategy. This is what I do. I assess my family’s net worth every quarter. I figure out how we can maintain a healthy budget, increase savings and investments, and invest the resources we have in those investments. And yes, I manage the passwords, too. Conclusion “Chief Home Officer” is the term marketers use to refer to the person who makes the financial decisions in the household. But it is also a term of empowerment. It means more than just deciding what detergent to buy. It means deciding which investments to buy and how best to fund those investments. There is no reason that a woman can’t employ the same strategies she puts towards grocery budgets towards investment budgets. And there is no reason that a man can’t, either. But someone in your house has to be promoted to this C-level role — and the sooner, the better! Who plays this role in YOUR household? How did you educate yourself on investing and finance? Let me know your experiences with a comment! Free eBook from BiggerPockets! Join BiggerPockets and get The Ultimate Beginner's Guide to Real Estate Investing for FREE - read by more than 100,000 people - AND get exclusive real estate investing tips, tricks, and techniques delivered straight to your inbox twice weekly! Actionable Advice for Getting Started, Discover the 10 Most Lucrative Real Estate Niches, Learn how to get started with or without money, Explore Real-Life Strategies for Building Wealth, And a LOT more Sign up below to download the eBook for FREE today! Click Here to Download the eBook Now! We hate spam just as much as you

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