April 16, 2009

Criticism & The Stress of Leaders

Posted to Brian Morris

I have the blessing of managing several homeowners’ associations (HOAs) along the Wasatch Front. As part of that responsibility, I work with board members in establishing budgets, collecting monthly dues, overseeing expenditures and a myriad of other items related to day-to-day operations. I also have the chance to get to know board members on a personal level and see the stress they deal with while giving voluntary service to their communities.

Much of the stress in serving on an HOA Board is a result of criticism coming from a few homeowners who feel the board should handle any given situation in a different way. In an HOA, it is always good to hear from every homeowner because that makes the process better… and at times criticism is justified and necessary. However, my experience has been that a homeowner with a concern will be better received if they get the facts first and then express their concerns with civility and according to the process outlined by the CC&Rs which are the rules accepted by every member of the community.

The greatest quote I have heard on criticism of leaders comes from a story told by President Abraham Lincoln. He spoke with a group of critics and drew their minds to a performer of his day named Blondin. Blondin excited the country by crossing the Niagara River on a tightrope during the Civil War days. I quote:

“Gentlemen, suppose all the property you possessed were in gold, and you had placed it in the hands of Blondin to carry across the Niagara River on a rope. With slow, cautious steps he walks to the rope, bearing your all. Would you shake the cable and keep shouting at him, “Blondin, stand up a little straighter; Blondin, stoop a little more; go a little faster; lean more to the south; now lean a little more to the north?”

Would that be your [behavior] in such an emergency? No, you would hold your breath, every one of you, as well as your tongues. You would keep your hands off until he was safe on the other side.”
~ John Wesley Hill, Abraham Lincoln: Man of God [New York: G.P. Punam’s Sons], page 402)

It would be wonderful if each member of the community would remember that more will be accomplished with constructive criticism rather than with harsh words or ranker as the Board walks this tight rope. No, HOA Boards are not dealing with the weighty affairs of the country; but they are dealing with the struggles and difficulties of their neighborhoods. Not everyone will not agree with how every situation is handled; but if each member of the community would show patience and common courtesy for those who are striving to do their best, more will be accomplished. HOAs allow for a democratic process where everyone can run for the Board to make the changes they feel strongly about. As neighbors work together to solve their various issues, respecting difference of opinions, it makes life in an HOA a very positive experience.

Posted By: Brian Morris





April 07, 2009

This Isn't Rocket Science

Posted to Brian Morris

My wife and I have recently been contemplating whether or not we should refinance our home to a lower interest rate. As we have researched the advantages and disadvantages of refinancing, we stumbled across some “exciting math” that could save individuals large sums of money. I understand that most people may already know how this happens; however, I believe most individuals simply don’t take full advantage of the opportunity. Let’s take a look at a common scenario.

Given:

Purchase Price: $150,000
Term: 30-year fixed
Rate: 5%
Cash On-hand: $5,000
Loan Amount: $145,000

Let’s say the above mentioned criterion describes your current situation. That being said, you would have a monthly principle and interest payment of around $780. However, over the life of the loan you will pay approximately $135,000 in interest. That is a large amount of money going to someone else besides you. But assume that you are a bit more aggressive and pay an extra $50 per month on your loan. What would this do? Could you scrape together another $50 every month? If so, you will save over $20,000 in interest over the life of the loan and cut almost four years off the term. Those are definite savings!

Some will say: “Big deal, I am not even going to be in my house that long.” Well that’s just fine, but say you still pay the extra $50 per month anyway; what would that do for you when you go to sell your home in say 10 years? Well, first you will most likely be able to sell your home for about $180,000 based off a yearly average appreciation rate of 2%. If you sold it at that price you will see gross proceeds in the amount of $70,000 versus $62,000. Still you may say: “big deal, what is $8,000.” Based off of your proceeds and a 20% down payment this could be the difference between moving into a $290,000 home versus a $250,000 home. In short, your $6,000 investment over ten years could buy you $40,000 worth of more home. In short, by putting more money towards the principle, you build your equity quicker. This isn’t rocket science just common sense and self discipline.

Posted By: Brian Morris