 You Are Creating the Largest Debt in Your Life, Now What?Saturday, August 30, 2008 - Article by: Paul M. Johnson -
Financing a home can affect many aspects of your financial picture, positively and negatively, including liquidity, taxes, overall debt and investment strategy. The goal now is to create an approach to enable you to manage this debt to maximize your financial future and prevent you from living "House Poor!" Through eight areas Home Asset Planning and working with a Certified Financial Planner you'll be able to determine the suitability of a financing a home, the income available for the mortgage payment, all of your debts; your financial savings goals and finally, whether or not the mortgage program can truly prevent you from living "House Poor". The eight areas of Home Asset Planning are; Cash Flow and Credit - The sufficiency of your income to fund your primary daily activities is critical important including - Food, Clothing, Shelter, Heath Care, Transportation, Entertainment, Charity Contributions, etc. Additionally, you will want to also examine your credit profile and maintain a plan for identity protection and or theft. Savings/Emergency Fund - The existence of funds set aside to be utilized in case of emergency: job loss, injury or illness, liability, etc., i.e. any event that would limit income production for up to a year. Hazard/Flood Insurance - The sufficiency of coverage to protect against any hazards that are prone to the area of which you live. Health/Liability Insurance - To identify your protection against serious financial hardship as a result of injury, illness or personal liability. Life/Disability Protection - To identify your protection from the loss of income caused by death or extended or permanent disability. Retirement/Estate Planning - The sufficiency of your savings and investments to provide for your expenditure needs in retirement. Long Term Care - The sufficiency of your planning for the long term care needs of both yourself (selves) and your parents. Education - The sufficiency of planning to fund your and your children's education. This should become an annual event with both your Home Asset Advisor and your Certified Financial Planner as the suitability of any financial product, including a mortgage, is dependent upon a variety of factors, both objective and subjective (facts and opinions). These factors must be carefully measured and or discerned. They also must be reviewed again and again over time to insure that products and strategies continue to be appropriate for your goals and needs. |
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