Wealth Equity Planning Services
Our Philosophy 

The single greatest asset that the majority of Americans will ever own is the equity in their homes. Yet, often the biggest problem they face is a general lack of knowledge about financial planning and how to manage equity. We strongly believe that one of the smartest thing Americans can do is own real estate (or some other assets that go up in value with or beat inflation) that pays them an ungoing income, indexed to inflation and independent of their other assets. As a general rule, as long as you have an asset that pays you to own it (such as real estate), it will always generate profits. Our focus is on what to do in order to never run out of income.

The core of the American Dream, residential property is the linchpin of government tax and investment laws designed to assist the middle class. Though few homeowners think of it in these terms, their houses are legally constituted "financial shelters" through which lawmakers aim to promote saving, the accumulation of personal wealth, and the empowerment of ordinary people to educate their children and secure their Golden Years.

Managed wisely, your home's equity can yield returns far in excess of your property's market value, while shielding a greater portion of your income against tax liability. But it requires real financial discipline and professional know-how. If you have a history of poor spending habits or unwise financial decisions, it may not be for you. For those who are serious about getting their financial house in order and planning for a comfortable retirement, however, responsible equity management is among the most powerful strategies available in today's market.

We can help you gain the necessary knowledge and discipline to manage your equity responsibly. Read more in order to find out about our philosophy, or contact us today for a 20-minute initial consultation!

Local Experts Agree:

“While some mortgage analysts say it’s beneficial—both financially and emotionally—to pay off the roof over your head as quickly as possible, the need to have extra money on hand for emergencies, college educations or parental health care often takes priority over paying down the mortgage”
--Tom Kelly, The Register-Guard July 29th, 2006

Shifting Perspectives

Did you know that...

• About 38% of U.S. households that are accelerating their mortgage payments instead of saving in tax-deferred accounts are making the wrong choice.*
• Nearly half of U.S. households do not own stocks and more than one third of the households eligible for employer-sponsored retirement plans do not contribute at all to such plans. Furthermore, a surprising number of households accelerate paydowns of their mortgageare because they are reluctant to carrying debt.**
• 31% of America’s wealth (approximately $10.2 Trillion) is now in the house, 20% of America’s debt is not tax preferred, and 67% of all American’s now have more wealth in their house that in all other investments combined.
• The traditional assets such as cash, bonds, and stocks have their place, yet wealth in the house is more difficult to manage because of the associated mortgage liability.
• The Return on wealth in a house is always 0%; wealth in the house can only increase two ways:
  1. Principal Repayment (your wealth)
  2. Property Appreciation (market wealth)
• Mortgage is the lowest cost liability available to most people, yet, it is also the largest single liability expenses. It is typically tax preferred to other liabilities because of interest rate deductibility.
• Between 2001 and 2004, something happened to America’s net worth that most of us still don’t comprehend. As the average stock portfolio lost 34% in value, the average house increased 21% in value. While the growth in net worth was practically stagnant, at a mere 1.5%, a huge wealth transfer occurred from equities to real estate.

*2006 Federal Survey of Consumer Finances.
**2001 Survey of Consumer Finances.

Here's why other philosophies are flawed...

• Former retirement plans are outdated:
• Reallocating savings to a tax-deferred account, instead of paying off mortgage, can yield a mean benefit of 11 to 17 cents per dollar, depending on the choice of investment assets in the TDA. In the aggregate, these mis-allocated savings are costing U.S. households as much as 1.5 billion dollars per year.
• Accelerated paydowns of mortgageare loans account for a much bigger share of people's debt.
• The 30-Year Mortage Plan that our grandparents used to utilize is outdated because:
• we no longer live in a house for 30 years (average american mortgage lasts 4.2 years);
• the average person will change careers 6 times in a lifetime (as opposed to our grandparents who might have had the same job for 30 years);
• 75% of workers want to retire before the age of 50, yet only 25% think they can;
• unlike our grandparents, we can no longer depend on our company's pension plan for a secure retirement.

Our Solution

3-Phase Process

• Phase 1. Financial Stabilization
  • 4-Step Cashflow Priority Model
    • Step 1– Liquid Cushion
      • Money for day to day events.
      • Borrow from yourself instead of from your credit cards
      • Provides day to day stability
      • Should be equal to at least 3 months salary
    • Step 2– Pay off all non-preferred debt
      • Non-preferred debt is classified as consumer debt
      • Not tax deductible
      • Subject to changes in the “prime” rate
    • Step 3– Establish a large cash reserve
      • Money in secure investments earning a good rate of return combined with safety of principal
      • Accessible if necessary for large unexpected emergencies
      • Should be equal to at least 12 months salary
    • Step 4– Pay off the mortgage
      • One of the most worthy goals for any family is to have their home paid off.
      • Two ways to pay off a mortgage: The old way and the balance sheet method
      • Proper financial planning should include a “freedom point” – the point at which paying off the mortgage is a choice
• Phase 2. Cash-Flow Maximization And Replacement
• Phase 3. Estate Planning/Distribution