Productivity and the Digital Revolution

I just realized there are only 24 hours today and I will consume those hours in approximately the following way:

  • 7 Hours: Sleep
  • 1 Hours: Workout
  • 1 Hours: Get ready for the day
  • 2 Hours: Prepare and eat food
  • 3 Hours: Commute to and from work and attend client meetings
  • 2 Hours: Product demos with potential customers
  • 3 Hours: Catch up on email and phone calls
  • 1 Hours: Create this content
  • 2 Hours: Weekly team meeting and goal setting
  • 1 Hours: Attend a dinner meeting
  • 1 Hours: Maybe an a tv show before falling asleep

And yet after I get to the end of the day and still have a long list of outstanding items to do in my backlog. I’m sure many of you have felt the same way.

During my commute yesterday I listened to a podcast by Freakanomics in which the host, Stephen Dubner, interviews Charles Duhigg, author of Smarter, Faster, Better on the topic of productivity. Freakonomics had recently asked their listeners what they most wanted to improve about themselves, and the overwhelming majority of listeners responded that they would like to be more productive. Preach!

Productivity is everything. If we can become 10% faster at a task, then we have 10% more time to do things we would like to do, right? Well where is that 10% disappearing to?

Supposedly, we are experiencing a technological revolution which is supposed to increase our efficiency with each new app or desktop widget, yet we find ourselves having a harder and harder time keeping up with the demands of our busy schedules. So what is happening? Is this technological advancement not a revolution after all?

“There’s actually a big tension and a difference between efficiency and productivity.” Duhigg explains,  “There’s this debate about whether the digital revolution is really increasing productivity. And when economists and people with common sense take a step back, what they say is, ‘Look, it’s not about all these gadgets and apps; it’s about learning new ways to think about possibilities, new ways to think about our capacity for work.’ And when that really gets spread through the population, that’s when productivity really increases.”

So while we have been equipped with more applications and tools to increase efficiency, we need to rethink how best to use them and to what end, and thus increase overall productivity.

“Ah, but what are some deeper strategies for becoming productive?”, you may ask. Duhigg suggests the following strategies specifically for your workplace.

Motivation – We trigger self-motivation by making choices that make us feel in control. The act of asserting ourselves and taking control helps trigger the parts of our neurology where self-motivation resides.

Focus – We train ourselves how to pay attention to the right things and ignore distractions by building mental models, which means that we essentially narrate to ourselves what’s going on as it goes on around us.

Goal Setting – Everyone actually needs two different kinds of goals. You need a stretch goal, which is like this big ambition, but then you have to pair that with a specific plan on how to get started tomorrow morning.

Decision Making – People who make the best decisions tend to think probabilistically. They envision multiple, often contradictory, futures and then try and figure out which one is more likely to occur.

Innovation – The most creative environments are ones that allow people to take clichés and mix them together in new ways. And the people who are best at this are known as innovation brokers. They’re people who have their feet in many different worlds and, as a result, they know which ideas can click together in a novel combination.

Absorbing Data – Sometimes the best way to learn is to make information harder to absorb. This is known in psychology as “disfluency.” The harder we have to work to understand an idea or to process a piece of data, the stickier it becomes in our brain.

Managing Others – The best managers put responsibility for solving a problem with the person who’s closest to that problem, because that’s how you tap into everyone’s unique expertise.

Teams – Who is on a team matters much, much less than how a team interacts

I would highly recommend you take 38 minutes to listen to the entire interview, as I found it extremely interesting. AND I bet you will find yourself with an extra 38 minutes throughout the day if you can apply his recommendations to your daily workflow.

Maximizing your returns on your tax refund

If that title isn’t click bait, then I’m not sure what is. Regardless, you might want to hear me out because I may give you an idea that will help you earn a return on that tax refund that you are [hopefully] receiving.

It’s that time of year, again. Today, April 18th, is affectionately referred to as “Tax Day”, and many of us will be receiving a tax refund from Uncle Sam. Last year, about 109M tax refunds were sent back to taxpayers, and that number will remain relatively unchanged this year. The total amount doled out was just over $306 billion, with the average refund right around $2,800. That’s a nice little chunk of change considering many individuals don’t even have $1,000 in savings!

So, if you will be receiving one of these deposits back from Uncle Sam I’m guessing you have been considering what to do with it. Maybe a nice bathroom remodel, savings for your kids’ school tuition, or maybe even a vacation. There are plenty of options (some smarter than others) that you can do with that refund check this year.

Some of your may consider putting this refund directly back into your savings account, BUT if you have a mortgage there might be a better option for you. You should consider applying your tax refund to your principal mortgage balance to pay it down quicker. This could be a great (or dare I say “the best”) option to earn a return on your refund this year.

What’s my rate of return?

Simply put, when you apply your money toward your mortgage you’re earning a rate of return (ROR) equal to the rate of interest on your mortgage. So for example, my mortgage rate is currently 3.73%, so my ROR on my refund will be about 3.73%. Now let’s compare that to a “high-yield savings account” at your bank with a return of 0.99% (clearly, that name is a bit of an oxymoron if you ask me).

Let’s say your have a mortgage of $200,000 on a 30-year fixed set at 4% and put that $2,800 refund toward the principal balance. You’ll save about $6,300 in interest over the life of the mortgage and the mortgage will be paid off roughly nine months sooner!

A word of warning

Now to be clear there are always exceptions, this may not be the best decision for everyone. If you are one of the aforementioned individuals with minimal savings I would highly recommend putting your refund in one of those “high yield” savings accounts so you have some cash accessible in case of a rainy day. But for those of you looking to stretch that refund a bit further consider putting it directly to your mortgage principal balance.

The Truth about Pre-Approval Letters

Every real estate agent would love their client to jump into a car on a Saturday morning before looking at homes and hand over a pre-approval letter from a local lender. As we’ll explain, the new TRID regulations have made obtaining a true pre-approval trickier. Instead, we’re beginning to see lenders shift to tiered scales of pre-qualifications, which in many cases are just as good. Agents and loan officers should be aware of the distinctions when communicating to each other and when educating their homebuyer.

We’re wary of any lender offering instantaneous pre-approval letters. “Approval” is a weighty term, implying that the lender has taken steps tantamount to issuing a commitment to underwrite the applicant. A true pre-approval means that the lender has reviewed borrower documentation – such as proof of income (W-2 and paystubs), tax returns, assets (relevant bank statements) and pulled a tri-merge credit report. Where this gets difficult, however, is that under TRID guidelines, lenders are no longer able to require documents from a borrower or that the borrower submit themselves to a credit pull. A borrower may certainly provide documents voluntarily – but it’s a thin line that we find lenders are wary to cross.

A quick word on TRID: a loan application is considered “received” when 6 pieces of information have been provided to the lender, including the address of the property. Once these six pieces of information are received, the lender is required to issue a Loan Estimate and other disclosures. It is only after accepting the Loan Estimate that the borrower can be required to provide documentation by the lender. Challenging right? Let’s make it even more challenging: the lender is now bound to this loan estimate, even if some circumstances change. That means they’ll have to cough up money to cover any changes in their estimated costs.

In our view, the industry should shift to a standard tiering of pre-qualifications, which provide the homebuyer with a robust understanding of what they can afford without putting the lender in an awkward position should new information arise.

  • Basic Pre-Qualification: Phone or in-person discussion with the borrower with only self-reported credit score. This would not be a reliable pre-qualification, but does comply with ECOA, Reg B.
  • Credit Pre-Qualification: Phone or in-person discussion with tri-merge credit report pulled by the lender.
  • Full Pre-Qualification: Phone or in-person discussion, documents voluntarily provided to the lender (and even potentially reviewed with an underwriter), and tri-merge credit report pulled by the lender. This is the most reliable.

What would make a full pre-qualification even better? Ask the borrower to take some time to sit with the loan officer and talk through any issues that came up after reviewing their files. Not only will they have a good understanding of what awaits them when the process begins, but they’ll have much more confidence when they put their signature on that offer contract.

The way we built Maxwell should help agents and lenders accelerate their homebuyers to a full pre-qualification conversation. Our system makes it simple for the homebuyer to assemble their core document set voluntarily, and guides them through the process. It’s not uncommon for an agent who referred a client through Maxwell to have a full pre-qualification in-hand within 24 hours.

Now that’s refreshing!