Proficient Note Buyers
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August 25, 2008
Can't Even Afford to Buy Time
Inflation is the new cancer in American economists' collective mindset. It seems it's now a bigger worry than even the credit and mortgage markets, and that's daunting in its scope.

On Saturday, I hopped into our local grocery store to pick up some chips and soda for a barbecue. Let me preface by saying this was my first trip to a grocery store in several months; my wife handles 99.9% of the household shopping. I walked all the way up the snack aisle and back again, thinking there must be some kind of mistake. Nothing was on sale! No specials, no 'twofer' offers, nothing. The price on the bag was the price I was apparently paying. I don't recall ever seeing anything like that before. Something was ALWAYS on sale, wasn't it???

Befuddled but by no means upset, I wandered over to the drinks aisle to grab a 12-pack of Diet Coke. $5.49?? I thought 12-packs normally cost around $3! Again, no sales anywhere. How is this possible? Sure, I've read countless times that trips to the grocery store were getting more expensive, but I figured a cost-conscious consumer like myself could still find the deals, even if I had to look a little harder. WRONG.

Energy prices have pinched the nerve of most consumables. It costs more to make the products, it costs more to ship the products, so it inevitably costs more to buy the products. The scariest part is there doesn't seem to be an end in sight, which gets to the reason I'm writing this today.

If you are receiving payments on a real estate note, you've undoubtedly lamented their diminishing purchasing power. It may be the right time to consider selling your note and realizing a lump-sum cash payment, rather than waiting for future installment payments that will buy even less than they do now.

I'll leave you with this example, which I used for the July issue of the NoteWorthy Newsletter: Gas prices have doubled since 2004. The cost of a barrel of oil has tripled over those same four years. Letís play devilís advocate and assume that trend continues for the next four years. That puts the price of a gallon of gas around $8.00 in 2012.

I own a Chevy Suburban - it costs over $100 to fill it with today's gas prices. In 2012, it will take $200. (using the assumption above) Thatís $100 (in 2012 dollars) I will have to re-allocate from whatever I use it for today (dining out, movie tickets, clothing, etc.) to gasoline. Additionally, all those other things are going to cost more, too. The net effect is less disposable income if all other things stay the same. Unless you hold an adjustable rate note, the payment you receive each month is going to stay the same, and its buying power will be significantly affected.

Is it time to sell YOUR note? Give us a call and let us give you some options.

Make it a great day.


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