MONEY

You Can Buy ‘Silence of the Lambs’ House….Not That You’ll Want to Sleep There

It's one of several famous movie homes that have come to market in real life—though not the nicest one.

The home where Clarice Starling (played by Jodie Foster) tracked down serial killer Jame “Buffalo Bill” Gumb in the 1991 movie The Silence of the Lambs is up for sale. Other than being part of your nightmares, it’s a pretty nice place: Four bedrooms, one bath, a four-car garage on 1.76 acres in western Pennsylvania, not too far from Pittsburgh. As the real estate listing notes, the 1910 home has the original glass door knobs, “even the original skeleton keys.” An open pit for terrorizing people, however, does not appear to be included.

This is only the latest house made famous by a film to come on the market in real life, though it’s probably not the most glamorous. Other noteworthy homes include houses from Home Alone, The Godfather, and Sleeper.

MONEY financial literacy

The Financial Literacy Test You Need to Pass

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Martin Shields—Getty Images

Answer these 5 questions to find out how much you know about money.

It’s generally useful to be literate in at least one spoken and written language. But that’s not the only kind of literacy that matters. We need to be savvy about managing (and growing!) our money, too. Here’s a financial literacy test that will help you figure out where you are on the road to financial success.

Answer the following questions without reading below them until you’re done:

  1. What is your net worth?
  2. Is it more important to pay off high-interest rate debt or save for retirement first?
  3. When should you start saving for retirement?
  4. How much money will you need to have accumulated for retirement?
  5. Do stocks, bonds, or real estate grow fastest over long periods?

Now let’s review each question and what your answer reveals.

What is your net worth?
There isn’t exactly a right or wrong answer to this question, though an answer of $0 or negative $100,000 would clearly be undesirable. Instead, the way to get this question right is to know what your net worth is, roughly.

Many people have no idea, because they haven’t given much thought to the matter. But as you take control of your finances, and aim to build a comfortable future, it’s important to have a handle on how financially healthy you are.

To determine your net worth, add all your assets together, including cash, savings and investing accounts, and the value of your home, car, and other belongings. Then subtract from that total all your debt, including the balance on any mortgage, car loan, or credit card account. What do you get?

Ideally, your net worth is positive — and poised to grow. If it’s negative, or lower than you want it to be, start figuring out how much money you have coming into your household, where it’s all going, and what changes you might be able to make to boost your net worth.

Is it more important to pay off high-interest rate debt or save for retirement first?
Tackling the debt should be your priority. With pensions having been phased out at myriad companies, it’s more important than ever for us to save for our retirements. But don’t do so while carrying high-interest rate debt, or you’ll likely end up losing ground.

You can hope to earn close to the stock market’s long-term annual average growth rate of around 10% with your stock investments, and that can turn a single $10,000 stub into almost $26,000 in a decade. But if you’re carrying $10,000 in credit card debt and are being charged 25% interest, you can expect that balance to soar to more than $90,000 in a decade, if you don’t pay it off pronto.

It’s OK to maintain low-interest rate debt, such as a mortgage, while saving and investing for retirement; but debt with steep rates should be tackled as soon as possible. Otherwise, what you owe is likely to grow faster than what you own.

When should you start saving for retirement?
The right answer here is as soon as possible. It’s easy to assume that it’s safe to put it off while you’re in your 20s and even 30s, but that would be a big mistake. The later you start saving and investing for retirement, the more aggressive you’ll have to be. If you start at age 45, for example, you’ll have only 20 years to accumulate your nest egg, while someone starting at age 25 will have 40 years — twice as long.

That’s important, because the longer your money has to grow, the faster it can do so. Consider that if you save and invest just $5,000 per year, and it grows at 10% annually, it will become $315,000 in 20 years. That total wouldn’t just be twice as much over 40 years — it would be $2.4 million! If you sock away just $1,200 at age 18 and it grows at 10% for 47 years until age 65, it will top $100,000. Your earliest dollars have the most growth potential.

How much money will you need to have accumulated for retirement? There’s no one-size-fits-all answer here. You’ll probably need to crunch some numbers on your own to arrive at a decent estimate.

For starters, note that, per many experts, a relatively safe annual withdrawal rate from your nest egg in retirement is 4% (adjusted for inflation each year), if you want your money to last. Thus, estimate how much annual income you’d like in retirement, and multiply it by 25 to determine how big a nest egg you need. Want $50,000 annually? Aim for $1.25 million.

Of course, you can also factor in Social Security income and any other expected income. (As of June, the average Social Security benefit was $1,335 per month, or $16,000 per year.) If you earn an above-average income, and assume an annual income of $22,000 from Social Security, then you’ll only have to aim for $28,000 annually on your own, which would mean a nest egg of $700,000.

Do stocks, bonds, or real estate grow fastest over long periods?
The answer here is clear, and it’s stocks. If you don’t understand how much you can expect to earn on various kinds of investments, you can leave thousands or hundreds of thousands of dollars on the table during your investing lifetime.

Check out this data from Wharton Business School professor Jeremy Siegel, who has calculated the average returns for stocks, bonds, bills, gold, and the dollar, between 1802 and 2012:

Asset Class Annualized Nominal Return
Stocks 8.1%
Bonds 5.1%
Bills 4.2%
Gold 2.1%
U.S. Dollar 1.4%

Source: Stocks for the Long Run.

The annualized rate for stocks from 1926 to 2012 was 9.6%, by the way. Stocks overpower bonds over both the long run and — usually — the short run. Siegel’s data shows stocks outperforming bonds in 96% of all 20-year holding periods between 1871 and 2012, and in 99% of all 30-year holding periods.

Meanwhile, the research of Nobel-prize-winning economist Robert Shiller, famous for his studies of the housing market, has home prices averaging annual growth of about 5% in the post-war period since World War II.

Don’t doom yourself to financial illiteracy. Keep reading and learning about smart money management, and your future may be much brighter. Give yourself a financial literacy test every now and then, too, to keep yourself on your toes.

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MONEY Utilities

Google Can Now Tell You How Much You’d Save Going Solar

Google's newly announced Project Sunroof is now available in only three cities.

Google has unveiled Project Sunroof, an effort the company says it has launched because it wants to make installing home solar panels “easy and understandable for anyone.”

Built on Google Maps, Project Sunroof uses that mapping information, along with other data, to calculate a “roof analysis” letting you know the size of the solar panels you might install to cover up to 100% of your energy usage, along with the money you’d save under different financing options.

Should you decide to install solar panels on the roof of your house, Google can also put you in touch with local solar providers.

At present, the service is available in only three cities: Fresno, Calif.; Boston; and, of course, San Francisco.

Read next: Why You Should Think Seriously About Going Solar

TIME real estate

Trader Joe’s vs. Whole Foods: Which Store Boosts Your Home Value The Most?

Analysis shows that living near one store boosts your home value more than living near the other

There’s no doubt Trader Joe’s and Whole Foods go head-to-head to compete for customers, but when it comes to which store could boost your home value the most, there’s a clear winner.

Housing data site RealtyTrac compared home values, appreciation, and property taxes of zip codes with a Trader Joe’s nearby to those with a Whole Foods in the area. The site found that residents with a nearby Trader Joe’s saw their home values increase 40% since their home purchase. Compare that to homeowners near a Whole Foods, who saw the value of their houses appreciate 34%, which matches the nationwide average for all zip codes. Homes near a Trader Joe’s also had a higher average value overall: $592,339—5% more than homes near a Whole Foods, which are valued at $561,840. Houses in close proximity to either store are worth quite a bit more than the average American home, valued at $262,068.

But it’s not all dark chocolate peanut butter cups and jumbo cinnamon rolls for Trader Joe’s devotees — there’s a downside to living near a TJ’s, too. Homeowners with a Trader Joe’s close by pay higher property taxes on average—$8,538 annually, a whopping 59% more than homeowners with a nearby Whole Foods, who fork over $5,382 per year.

TIME real estate

Why Renting in America Is More Expensive Than It’s Ever Been

Vacancy Rate For U.S. Apartments Reaches Highest Rate In 20 Years
Justin Sullivan—Getty Images

Folks on the West Coast have it especially bad

Strong demand for rental units has given landlords leeway to jack up apartment prices and they’ve certainly done so. Americans are now spending more on rent than they ever have before.

According to a new report from Zillow that tracked data going back to 1979, rents hit their least-affordable point to date in the second quarter of this year. U.S. renters can now expect to spend 30.2% of their income each month on rent payments.

Some renters on the West Coast have it even worse. People in Los Angeles, San Jose, and San Francisco can expect to dedicate more than 40% of their monthly income on rent, that’s 10 percentage points above historical norms. The same goes for renters in Miami.

The news is better for prospective home owners. Mortagages continue to remain relatively affordable. Homebuyers should expect to spend 15.1% of their income on a mortgage payment. That’s down from the 21.3% they paid prior to the real estate bubble and burst.

TIME neil young

Why Neil Young Is Selling this $24.5 Million Estate in Paradise

Neil Young Opening Night Reception For "Special Deluxe" Art Exhibition
Angela Weiss—Getty Images Musician Neil Young.

It's a shrewd business move

Neil Young doesn’t want to wait until after the gold rush, so he’s selling his Hawaii estate before the market tops.

According to a report in Bloomberg, the legendary rock musician is listing his nearly 3,000 square-foot, five-bedroom, four-and-a-half-bath estate on the Big Island of Hawaii. The property also features two guest cottages, and “830 feet of prime ocean frontage is located on the Kohala Coast near the world class surf break and white sandy beach known as 69’s,” according to the listing.

The likely reason Young is selling the estate–on an island he once wrote had powers of “magical healing,” is simply business. According to Bloomberg:

Homeowners in Hawaii are seeking to capitalize on demand from wealthy California technology executives by listing opulent estates, leading to a record number of $20 million-plus homes for sale . . .

Just as the Hamptons have long been a retreat for Wall Street executives, Hawaii is becoming a favored playground of Northern California’s wealthy digerati, though they have to get on a plane rather than drive a couple of hours. Property prices in the Aloha State have soared past the heights of the last housing boom as buyers seek island getaways.

MONEY Savings

5 Money Tips for Millennials Who Want to Start Planning for the Future

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Jenner Images—Getty Images

Many millennials have a pessimistic outlook on their personal finances because of the financial crisis.

Pilar Belendez-DeSha was trying to figure out her next move.

When the financial crisis hit in 2008, she was getting her geography degree at the University of Kentucky, but she did not have a plan.

“All the jobs I was looking at paid really poorly, and I wasn’t hearing about anyone getting hired except for internships that paid less than $25,000 a year,” said Belendez-DeSha, 30, now a graduate student in New York City. “College wasn’t paying off at that time … And I was kind of freaking out about having a financially sound life.”

There was an emerging consensus that so-called millennials – or people who reached young adulthood around the year 2000 – would face tougher financial challenges than their parents’ generation. At the same time, Belendez-DeSha saw her father lose money on the stock market and her mother struggle to find a job.

“When you see your parents try to figure things out, everything becomes a little iffy,” she said.

Belendez-DeSha is not alone. Many millennials have a pessimistic outlook on their personal finances because of the financial crisis.

According to insurer Northwestern Mutual, 28% of millennials are less comfortable taking risks with their finances than they were in 2008 and 71% prefer to play it safe with investments, even at the risk of lower returns. Additionally, 62% agree that over time there likely will be more financial crises.

“This generation is particularly concerned, confused and maybe even a little distrusting,” said personal finance expert Farnoosh Torabi.

Here are five financial tips for millennials who are concerned about their financial future.

Take Advantage of Your Age

Your youth is one of your biggest assets. Take advantage of your time and energy to make as much money as possible.

Not all of your income has to come from one source, said Torabi. You can rent out your apartment via Airbnb, find side gigs at TaskRabbit.com, a tutoring job via tutor.com and discover freelance opportunities at upwork.com.

But do not expect to hit pay dirt right away: With a friend, Belendez-DeSha started a small design business that made no money. She was also walking dogs, catering and cooking at various restaurants on the side.

Rethink Real Estate

During the financial crisis, many parents of millennials thought that real estate was a safe investment. “Property is just like any other investment,” said Chantel Bonneau, wealth management adviser at Northwestern Mutual. “Just like buying a stock, it won’t always work out.”

Buy a home because you want to live in it, not because you assume you will make a profit, experts say. Make sure you are not borrowing more than you can pay off.

Diversify

Every four years, a dip in the financial market is expected, said Bonneau. That is why it is important to diversify your investments. Examples of different assets are permanent life insurance, rental properties, emergency funds, cash holding accounts, primary property and nonretirement investments.

Save Early and Often

Bad and unexpected things can happen. Spend less than you earn and build an emergency fund to cover three to six months of expenses. Automatically deduct cash from your checking account weekly or monthly to fund the emergency account.

“The more money you have set aside, the better position you will be in for whatever life throws at you,” said Stuart Ritter, senior financial planning analyst at T. Rowe Price .

Make a Financial Plan

Work on your financial plan. Set goals. What is important to you? Is it having a family or owning property – or both?

Track your cash flow with apps like Mint.com or LevelMoney to see what comes in every month and what goes out. That will provide financial clarity.

MONEY shoes

This NBA Player is Building an Actual House for His Shoes

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Thearon W. Henderson—Getty Images Shoes worn by NBA star LaMarcus Aldridge

LaMarcus Aldridge has a lot of footwear.

After nine seasons with the Portland Trailblazers, Dallas native LaMarcus Aldridge is coming home to an $80 million contract with the Spurs—and a brand new house he commissioned.

The one problem?

His “massive” closet turned out to be too small to contain his collection of more than 150 pairs of shoes.

In a new video interview with Slam Magazine, the NBA player says his solution is to build a mini-house behind his regular house to act as “a little showroom” for his footwear.

Here’s the full interview, below.

Read More: How To Choose an Appraiser to Value Your Collectibles

MONEY Estate Planning

Why My Grandparents’ Home Got Torn Down

Empty residential lot
Shutterstock

Estate planning can prevent a lot of heartache.

My family loves get-togethers—we find any reason to gather and eat. We credit this wonderful trait to my grandparents. They were gracious hosts with amazing culinary skills. Their home, built with my grandfather’s hands, was a sanctuary for family, friends, and welcome strangers.

My grandparents didn’t just leave legacy of memorable gatherings; they also left their home to their children, expecting regular family reunions after they were gone. My grandparents would not have it any other way!

My grandmother died in 1994, eight years after my grandfather’s death.

Their children tried their best to embrace my grandparents’ vision of maintaining the family home. But time, distance, and money wreaked havoc on implementing the plan. Our hearts sank as the house slowly fell into disrepair. It took almost 14 years before the children agreed that one sibling would buy out the other childrens’ shares of the home.

By then, however, the damage to the home was done. Now, only the land and memories remain.

I believe that if my grandparents had addressed certain questions about the house, they might have been able to protect it after their death with some thoughtful estate planning. Here are those questions:

  • Who wants to keep the home?
  • Who would prefer their inheritance to be cash instead?
  • Who can afford to buy the home?
  • How will the children handle multiple owners now? How would they handle ownership upon their own divorce or death?
  • Who will pay the property taxes?
  • Who will ensure upkeep?

One option might have been an estate-planning provision requiring the home be sold, with the first rights to buy given to the children. Or maybe the home could have been left to one or more children, and other assets left to other children to equalize inheritances. Maybe they could have established a trust in order to fund perpetual care of the home, and to manage generational ownership.

These considerations and others in the estate planning process might have allowed the children to preserve both their wealth and their legacy.

A significant amount of wealth is transferred through real estate. According to a 2014 study by Credit Suisse and Brandeis University’s Institute on Asset and Social Policy, the primary residence represents 31% of total assets for the top 5% of wealthy black families in the U.S. and 22% for the wealthiest white Americans. The percentage of wealth embodied in a primary residence is even greater for less well-off households.

Now it’s up to my aunts and uncles to get it right for the next generation. Will wealth be lost again or will it transfer for the benefit of their descendants? It’s a great question for the next family gathering…at a place to be determined.

———-

Lazetta Rainey Braxton is a certified financial planner and CEO of Financial Fountains. She assists individuals, families, and institutions with achieving financial well-being and contributing to the common good through financial planning and investment management services. She serves as president of the Association of African American Financial Advisors. Braxton holds an MBA in finance and entrepreneurship from the Wake Forest University Babcock Graduate School of Management and a BS in finance and international business from the University of Virginia.

MONEY home selling

How to Sell Your House Without Paying an Agent’s Fee

For Sale sign illustration
Robert A. Di Ieso, Jr.

Q: Do we really need a real estate agent to sell our house? — Peter Koo, Kent, Ohio

Real estate agents typically charge a 4% to 6% commission on the sale price, so selling without an agent could certainly save you big bucks. Even after you pay $1,000 or so for your own online ads, open-house brochures, and a lawn sign, you would still probably clear an extra $14,000 on a $300,000 sale, $24,000 on a $500,000 sale, or $36,500 on a $750,000 sale.

And that’s not the only advantage to selling it yourself — a process often referred to as “for sale by owner,” or FSBO (pronounced “fizz-bo”). “You get to control the negotiation, rather than having it filtered through a middleman,” says Los Angeles real estate attorney Zachary Schorr.

While a good agent can certainly help with the negotiation process, he or she also has a vested interest in the transaction. “And closing the deal may in some cases be more important to the agent than getting you the absolute best price,” Schorr says. If you’re a good negotiator and can handle the process without emotion and with clear eyes, you might do better on your own.

You will need to write your own description of the house, take your own photos, and give your own tours to prospective buyers. “If you excel at these things — or if you’re a control freak like me — you may do a better job than some realtors would,” Schorr says.

The Downsides

Make no mistake, though: Working without an agent requires a huge investment of time, knowhow, and effort. You need a wide range of skills, from home staging to salesmanship to negotiating. And you need to be able to completely divorce yourself from the emotions that can arise when a buyer takes a dig at your curb appeal or lowballs the offer on the beloved home where you raised your family.

If these factors don’t dissuade you from attempting to sell it yourself, here is how Schorr suggests overcoming the three biggest challenges you’ll face:

Limited pool of buyers: Most serious house-hunters are working with a real estate agent; the commission would normally get split between the buyer’s and seller’s agents. But without a commission on the table, no agent is going to bring clients to see your house. In fact, many shoppers are contractually obligated to purchase their home through their agent — meaning even someone who finds your house while out on a drive or surfing the Internet may not easily be able to buy it.

If you don’t get any offers, Schorr suggests a compromise solution: State in big bold type in your online ads and your lawn sign that you will pay a 2.5% commission to the buyer’s agent. You’ll only save half as much in commission costs, but you’ll get a much bigger pool of potential buyers coming to look at your place.

Bargain hunters: Of course, some buyers may find you even without a buyer’s agent. “If you have a great house, in a sought-after neighborhood, and you’re on a busy road where you’ll get a lot of visibility, then you might do fine working with only the unsigned homebuyers who discover your house on their own,” says Schorr. If you’ve got a charmer with a great kitchen in an affordable price range, they’ll find it online no matter how far off the beaten path you are.

The trouble is that those buyers may seek to discount the purchase price: Because they know there are no agents involved, they may feel that they should benefit as well.

How should you handle that? It depends. If you’re in a great house that sells itself, stick to your target price. But if you’re thrilled to get an offer because you can’t stand showing the house anymore, split the commission savings and make a deal.

Lack of advice or tools: You may miss an agent’s help throughout the process, starting with when you set a listing price. Online price calculators may not be sufficient to determine the fair market value of your home because they use completed sales, which tend to lag the market by a few months. Also, the algorithms don’t necessarily account for factors like curb appeal, landscaping, recent renovations, or school district lines.

A smarter idea is to hire an appraiser to value your house, likely for around $300 to $500.

You may also want a lawyer to produce and review contract documents; some states actually require you to hire one. Although you can find much of the paperwork online, Schorr says, “you need to tailor it to your deal — and the way you fill it out is just as important as what the boilerplate language says.” You’ll probably pay $1,000 to $3,000, depending on the cost of living in your area, but you’ll get an experienced pro who’s in your corner and can make sure the deal gets done right.

Obviously, these solutions all can eat into your sell-it-yourself savings. So try going it on your own for several months.

If your house gets lots of attention and you get good offers, stay the course and be prepared to give up a little of your savings to close the deal. But if the process drags on without any real bites, hire an agent. You’ve lost nothing but time, and you’ll enter the agreement with a far better understanding of how it works and how to get the most from your agent.

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