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					           GOALS OTHER THAN RETIREMENT & EDUCATION
Do not include education or retirement planning goals here as they have a separate worksheet.
This is a Microsoft Word document that can be filled out on your computer. After you and your spouse have
completed this form, please email it to Karen@ContourFinancial.com.
Client Name:                                Spouse Name:                                  Date:


     QUESTIONS TO ASK YOURSELF ABOUT NON-RETIREMENT, NON-EDUCATION GOALS
The Basics – Everyone has the primary goal of being able to retire, and that should be your constant focus.
There are however other sub-goals that we have on the road to life. We must never forget that these sub-goals
are always secondary to the primary goal of retirement. The question to ask then is what will be the impact of
these various sub-goals in total on your overall retirement goal? Some of these goals will help us reach our
retirement goals easier, while others can be viewed more as roadblocks. Here are some examples:

      Helpful Sub-Goals – Savings that will be used to fund education or well thought out business/real estate
       venture.

      Detrimental Sub-Goals – Spending used to purchase a bigger home, vacation home, restaurant meals,
       vacations, clothes, cars or badly thought out business or real estate venture.
Remember that just because a particular sub-goal is detrimental to your retirement goal, that does not make it
necessarily bad. You need a car to get to work, and you need clothes to wear. Just be honest with yourself and
take a hard look at the sub-goal. Is it helpful or detrimental and if detrimental, how much? How will the
inclusion of this sub-goal affect your chances of retirement?
Essential or Not –How really important is this sub-goal to you? Is it a perk that you are going to give yourself
because you are well on your way, or just because you feel like it? If you need it, is there a less costly
substitute available?
Digging Yourself into a Hole – Will this new sub-goal add substantial debt to your balance sheet? How much
harder or longer will you have to work to pay this off?
Digging Yourself into a Hole – Once your sub-goal is attained, does it have lasting value? Will it be gone
immediately (e.g. – expensive vacation), depreciate quickly (e.g. – sports car), hold its value (e.g. – vacant
land), or appreciate (e.g. – well run business). Are you commiting the cardinal sin of taking a loan to buy a
depreciating asset?
Expectations – Is the business or real estate venture really going to pay off like you think? Are you just buying
yourself a minimum wage job, or even buying a money pit? Have you taken off the rose colored glasses? If the
investment goes bad, is there an exit strategy to cut your losses.
Comment on any of the points above or any additional that you may have:
Page 2 of 6



      BUSINESS OR COMMERCIAL REAL ESTATE (NON-RESIDENTIAL) FUNDING GOAL
               If your goal is not business or commercial real estate related, skip to next section
            Investment                    Target      Cash           Capital            Cash         Cash Flow
            Description                   Date1      Outlay2     Growth Rate3          Flow4        Growth Rate5
                                                   $                            % $                            %
1
  When do you expect to make this purchase? Place the YYYY here.
2
 What is your projected total cash outlay in today’s dollars? More than simply the purchase price, include any
other startup costs such as fees, taxes, commissions, and renovations.
3
This is the capital appreciation (e.g. – land appreciation or the increase in business value) growth rate only.
Do not include any cash flow that is generated by the investment (e.g. rent or dividends). Place in this field:
   a) Vacant Land and Rental Properties – A good rule of thumb is 4% annual increase in capital
       appreciation.
   b) For businesses purchased recently, refer to your marketing plan for this growth figure.
4
 Once everything is up and running and all extraordinary expenses are past, what do you expect the cash flow
dollars to be in your first “normal” year in today’s dollars. This figure could be negative or positive. Did you
list out a separate loan or mortgage payment for this property? If so, don’t double count it. Add back the
principal and interest (not taxes or insurance) to your cash flow. (e.g. – You currently have a negative cash flow
of $20,000 on a business, but are making $35,000 in interest and principal payments on this business per year.
Place $15,000 in the Amount/Yr line.
5
 This growth rate is solely what you expect your cash flow to grow year after year. Do not include any capital
appreciation here (e.g. – building appreciation or the increase in business value). Place in this field:
     a) Vacant Land – Unless farm land has no cash flow, therefore no growth rate.
     b) Rental Properties – A good rule of thumb is 5% annual increases in cash flow.
     c) For businesses purchased recently, refer to your marketing plan for this growth figure.
                                                Structured Loan
   Amount of Loan Needed                                            $
   Projected Interest Rate1                                                       %
                                                     2
   Total Number of Payments as per Original Terms
   Monthly Payment (Less property taxes & insurance) 3              $
 1
   If you have not spoken with your loan officer, we can provide an estimate for you. Reference BankRate.com
 for more information.
    2
     Even that your lender may amortize the loan over payments over 30 years, most commercial loans will go
    out to a maximum of 7 years or so. A balloon payment is due at the end of 7 years.
    3
 If you have not spoken with your loan officer, we can provide an estimated monthly payment for you.
Anything else that we need to know about your business or commercial real estate funding goal?
Page 3 of 6



       NEW PERSONAL RESIDENCE OR VACATION HOME FUNDING GOAL – THE FACTS
      If your goal is not related to purchasing a new personal residence or vacation home, skip this section
Special Note – Now is as good as a time as any to clearing up the confusion as to housing used for personal
purposes. Always remember the equation “Personal Real Estate ≠ Commercial Real Estate”. Over the long
term, you can make money on commercial real estate, but you are guaranteed to lose money on personal real
estate. Why is that? Real estate earns money from two components. The first is the income generated from
capital appreciation. The second is the income generated from rents less expenses.

Historically over long periods of time, real estate appreciates roughly 1% over inflation. Using a 3% inflation
rate, this means that you are gaining on paper but not in real terms 4% a year. Certainly some areas and some
years are hot and can appreciate more, but that also means some areas are cold and will appreciate less. We are
looking at long-term averages here, and that means a 1% real gain.

The second component deals with rental income, but since this asset is held for your personal use, you have
none. Whereas the commercial holder gets perhaps 5% a year positive cash flow, all you have is the negative
cash flow items. You still have to pay the utilities, taxes, maintenance, etc. like the commercial owner, but with
none of the income. Yes, you may get a few weeks rental income from your summer home in the off season,
but how much is really that?

On the expense side, we have found with clients that a good rule of thumb is that it costs 7% of a home’s market
value every year in ongoing non-mortgage expenses. This is a rough rule of thumb and can fluctuate somewhat,
but we have found it to be fairly accurate. We have found that the people, who disagree with us, are those that
don’t track home expenses accurately. Remember that your property taxes alone are 1.5% - 2% of the market
value alone. You also have to amortize the new roof, windows, new appliances etc. over their useful life.
Using the 7% annual expense figure, a $400,000 house can be expected to cost its owners $28,000 a year in
upkeep in depreciation, utilities, property taxes, and minor improvements each and every year, and that doesn’t
even include the monthly mortgage payment!

By looking at this from this perspective, you can see what most people do. They load up on expensive homes
with a giant mortgage. After doing that, they have the honor of paying 7% in ongoing expenses for a 1% real
gain, or a net 6% loss. If that is not enough, the average American moves every five years or so, usually into a
bigger home yet. In addition to this annual ongoing loss, they can tack on a big charge every five years for
commissions, fees, points, moving costs, renovation costs, and lost time. After that, we can take the usually
higher value of the new home and multiply it by 7% to see what the new, higher ongoing annual expenses will
be. Talk about bad math.

Still, you need a place to live, so what is the answer? The answer is obviously to live in the lowest house for
which you feel comfortable. It is hard to put a price on good schools, good neighbors, good services, and low
crime. We can’t tell you to live in a certain value house, but in your heart, you know where you are
comfortable. The key is to avoid the “house creep” problem. Just remember the equation “Personal Real Estate
≠ Commercial Real Estate”. If you want to make money in real estate buy a commercial property or a “Real
Estate Investment Trust (REIT)”, but forget about making money off of your own home.
Page 4 of 6



    NEW PERSONAL RESIDENCE OR VACATION HOME FUNDING GOAL – SELLING & BUYING
      If your goal is not related to purchasing a new personal residence or vacation home, skip this section
If you are seriously looking at changing homes, fill out this section. Please override any figures that you have
more accurate information:

    Address of Old Home You are Selling:                                   Sale Price1:   Outstanding Mortgage2:
                                                                           $              $

    Address of New Home You are Buying:                       Purchase Price3:    Refurbish4:    Capital Growth5:
                                                              $                      10%                4%

    Projected Move Date6:    Moving Costs7: Lost Time and Wages8:
                             $12,000           $
1
  The sales price is for what the house was ultimately sold. It is generally the price you listed it with the broker,
less what the buyer negotiated off, less the brokerage commission (normally 6%, but can vary).
2
 What you still owe on the house after it is sold. Note that we are assuming that when your one mortgage ends
the other begins, and that you are not overlapping by owning two homes at the same time with double
payments.
3
 The purchase price is for what the house was ultimately bought. It is generally the price the seller listed it with
the broker, less what you the buyer negotiated them down.
4
 You can never move into a new house right away. There are always added costs to be incurred, in order to get
the home just as you like. Some examples would be the costs of new curtains, repainting, new carpeting or
wooden flooring, new furniture (big $$$), added landscaping, new light fixtures, replace an appliance you don’t
like, or the major repair that everyone missed but needs to be done right away. We once had a client that found
out that he needed a new roof right after he moved in, because it turned out it wasn’t in as good of shape as
everyone thought. Here is a big warning. People tend to low ball this figure. We have found that 10% is a
good basis to start with. Be wary of lowering this number, as you don’t need any negative surprises.
5
    Over the long-term, what your house is expected to appreciate year after year.
6
    When do you expect to make this purchase? Place the YYYY here.
7
 $12,000 is an estimate for a local move. For a moving costs calculator go to
http://tools.gmsrelo.com/ToolsFas/Tool_MovingQuoteState.asp.
8
 In addition to lost work hours, your time is leisure time is worth more than you think. How much is this costing
you in lost hours, both on the job and recreational? Multiply these hours by what you think your hourly rate is.
Page 5 of 6



NEW PERSONAL RESIDENCE OR VACATION HOME FUNDING GOAL – FINANCING & NOTES
   If your goal is not related to purchasing a new personal residence or vacation home, skip this section
If you are seriously looking at changing homes, fill out this section. Please override any figures that you have
more accurate information:
                                                Structured Loan
   Amount of Loan Needed                                                           $
   Projected Interest Rate1                                                                     %
                                                     2
   Total Number of Payments as per Original Terms
   Monthly Payment (Less property taxes & insurance) 3                             $
                                                                               4
   Mortgage loan closing costs for buyer less points and loan origination fees     $3,000
   Loan origination fees as a percentage of mortgage value5                                  2.5%
   Amount of Loan Needed                                                           $
                           1
   Projected Interest Rate                                                                      %
   Total Number of Payments as per Original Terms2
   Monthly Payment (Less property taxes & insurance) 3                             $
                                                                               4
   Mortgage loan closing costs for buyer less points and loan origination fees     $3,000
   Loan origination fees as a percentage of mortgage value5                                  2.5%
 1
   If you have not spoken with your loan officer, we can provide an estimate for you. Reference BankRate.com
 for more information.
 2
     e.g. – For 30 year fixed place the number 360 here.
 3
     If you have not spoken with your loan officer, we can provide an estimated monthly payment for you.
 4
     This can vary widely.
 5
 This can vary widely.
Anything else that we need to know about your personal residence or vacation home funding goal?
Page 6 of 6



                                     MISCELLANEOUS FUNDING GOAL
If your goal is to fund that very special vacation for your anniversary, a daughter’s wedding, or that sports car
you always wanted, use this section
                                                                                        Target           Cash
                                     Description
                                                                                         Date1         Outlay2
                                                                                                    $
                                                                                                    $
                                                                                                    $
1
  When do you expect to make this purchase? Place the YYYY here.
2
    What is your projected total cash outlay in today’s dollars?
                                                   Structured Loan
      Amount of Loan Needed                                            $
      Projected Interest Rate1                                                       %
                                                        2
      Total Number of Payments as per Original Terms
      Monthly Payment (Less property taxes & insurance) 3              $
    1
      If you have not spoken with your loan officer, we can provide an estimate for you. Reference BankRate.com
    for more information.
    2
        e.g. – For 5 year fixed place the number 60 here.
    3
 If you have not spoken with your loan officer, we can provide an estimated monthly payment for you.
Anything else that we need to know about your miscellaneous funding goal?

				
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