One method of home sharing and ownership that is often proposed by late-night infomercials is the “equity sharing” program.

In it’s simplest terms, this is an agreement between two people to share in the money or labor and to share in the profit. The idea is often advanced as a method for handling the party facing foreclosure. It is a bad idea. If you’re going to be sharing a title with people who are constantly in financial hot water, you are asking for trouble. 

We caught this headline across Bloomberg, “Manhattan Apartment Sellers Cut Prices Most in 5 Years in 2008.” According to Miller Samuel, the average listing discount climbed to 4.1%, the highest since 2003. The number of condos and coops for sale jumped 41%. In 2007, the number of sales dropped 23%. Fewer sales and a rising number of units for sales suggests continued price declines going forward.

You have to know the territory, and you have to know the numbers. So how do you learn the numbers?

The National Association of Realtors released its housing affordability ratio for January and it surged for the sixth consecutive month to 166.8 in January from 153.2 in December. Yet over this sixth period of rising affordability we saw new homes go from 505K units annualized in July, to 448K, to 434K, to 404K, to 380K, to 344K, and all the way down to a record low of 309K units in January. This jump in affordability also came in a month that saw homebuilder sentiment crater to a record low and mortgage applications for purchase run nearly -30% YoY. Affordability is not the issue. The issues are first, a weakening in the demand for housing. At the margin, folks would rather rent than own an ever depreciating asset class. Second, down payment requirements are between 20-30% and there are few who have $70-80,000 lying around to put down on a house. And finally, banks are continuing to tighten their credit standards for residential mortgages as the latest Fed Senior Loan Officer Survey attests.

“Half of learning is learning. The other half of learning is unlearning.”

Recently I saw this quote and thought how it applied to our financial lives. It was attributed to Mark Batterson from his book “In a Pit With a Lion on a Snowy Day”. Although I doubt that Batterson meant to talk about finances, the quote certainly does apply. Especially today.

Many people throughout the world are re-evaluating their finances. They recognize that they might not want to keep doing the things they did last year. That means that not only do we need to learn new skills and methods, but we also need to unlearn habits and beliefs that are part of our lives today.

Home sales in California were flying; and that 45% of nationwide sales are now foreclosure sales. At the same time, we can see from the weekly MBA statistics that mortgage applications for new home purchases fell 2% in January and through the first three weeks of February are down a further 20%. So, whoever is doing the buying is not exactly having to rely on the local banker for financing – indeed, a report shows that homes financed with cash are now representing one-third of sales in places like Phoenix (ditto for Miami), up from less than 20% a year ago. Sacramento, where cash sales accounted for 3% of all transactions two years ago, 8% a year ago, is now up to a 24% share.

The main purpose of a variable annuity is for retirement planning. It has two major parts designed to coincide with the two phases of a person’s life: a wealth accumulation phase that coincides with your income-producing years when you’re in the best position to accumulate money, and the income management phase, which begins with your retirement years when you need to efficiently manage your income flow to meet your needs. Here’s an example of a variable deferred annuity.

Wealth Accumulation Phase

The most important rule of investment is so simple, it’s easy to be taken lightly: You decide what will happen with your money. What it can do for you is up to you.

What to do with it

The moment you receive money, you have to use it. Whether you can’t let go of it, need to keep it close by, or can easily trust others to borrow it, you always have something to gain or lose. Here are the main choices.

Spend It

You can buy things with it (always the crowd favorite).