A Great Testimonial for Having Patience and Following a Plan

I received this testimonial from a couple that graduated from my FPU class in March of 2010.  What a great story.

Here's our story...      We started FPU back in March with about $4,000.00 in debt and living on one income with a family of five. Most of what we heard and saw, kind of seemed like a far off dream. To be debt free, 3 to 6 months of savings just didn't sound so doable. Feeling mostly discouraged having used our emergency fund about 3 times and having to start over again and again and again just became frustrating! We were living with family which at times is no fun at all. We saw that we needed our own space and fast! We had already lived in an apartment and felt that it would not fit us at all, so we started looking at $150,000. to $200,000. homes that were not affordable but as frustrated as we were we didn't care. Out of the blue my husband told me that we should call Alex just to see what he had to say. I said no are you crazy he's just going to tell us don't do it. Knowing my husband was right I called and guess what Alex said, NO. He encouraged us to wait, til we had our EF, 3 to 6 months of savings and a down payment. Grrrrh! It just seemed hopeless, we were going nowhere. So with that we moved into another apartment with 2 bedrooms and one bathroom. My husband and I shared a bedroom with a screaming baby and our two older children Jordan and Ryan shared a room and at their age they need some privacy, especially being a girl and a boy.      Meanwhile, God had other plans for us! My husband applied for Habitat for Humanity which is a non-profit Christian organization that helps lower income families be able to purchase a home that is interest free. Instead of interest you work on your house for a total of 500 hours. They consider themselves a "hand up" not a "hand out". They make your monthly payments no more than 30% of your income. So, we as a family began to pray daily that the Lord would do what was best for our family. I decided that instead of worrying about whether or not we got this house that I would have "joy in hope". In the bible it says "Be joyful in hope. patient in affliction, faithful in prayer. Share with God's people who are in need. Practice hospitality." Romans 12:12,13. Faithful in prayer, joyful in hope, those are words I truly needed. God definitely gave me this verse when I needed it. The process went on for months with no word. Finally we started getting calls and learned of different stages we had to go through. After 6 months we were told we got the house!!!!!!!! We new it was all the Lord! And the Lord has his ways and His ways are Best! One of the things we knew for sure was that if we hadn't have gone through FPU we might not have had a chance. We're positive that having no debt, no car payment, no credit cards etc. played such a big part. Habitat for Humanity needed to know that this house would not be a burden to us. Thanks to Alex also because like Stacey says He tells people no more than he tells them yes. I cant imagine how big the hole would be if we would have tried to buy that house on our own. You know God's hand is in it when your daughters father lives in the houses new area and our lease is up right when our new move in date is, just before Thanksgiving, and we are thankful!!!

Is Your House Haunted?

With Halloween around the corner I think that it’s appropriate to provide a little checklist.  The last thing you want is to find out is that your house is haunted.  So let’s take a little tour and check.

The Garage:  open the garage door and look around.  You probably have a car or two or three in the garage.  Do you make payments on them?  Car payments can be scary.  The average car payment is $474.  Many people lease their cars which can be even more frightening.  Make sure you check thoroughly.

The Living Room:  we love our entertainment.  Nothing is more impressive than a nice big HDTV with surround sound, a Blue Ray disc player and a plush leather sofa.  So when you enter your living room, look around.  Where did you purchase the items in your living room?  Did you pay cash or did you charge them?  Are you still making payments?  Did you get 90 days same as cash?

The Kitchen:  the most social room in the house is the kitchen.  We gather there at parties.  We hang out and talk as a family there.  Over the past few years many of us have spent lots of money upgrading to granite counter tops, top of the line stainless steel appliances and expensive water filtration systems.  You may have even spent thousands of dollars on new cabinets.  Did you save up to pay for these upgrades or did you use an equity line?

The Yard:  we love to entertain.  Noting makes us feel better than having friends and family come over and hang out in the yard.  We spend lots of money making sure that our guests have a good time.  We have intricate landscapes with built in barbeques and fire pits.  It gets really hot in the summer time here in Chino Hills.  Nothing helps to beat the heat like a nice big pool with a waterfall.  How much did you spend on your back yard?  Did you pay cash or did you finance that too?

Especially in today’s economy nothing is scarier than having debt.  Our generation has mastered the concept of over borrowing and living well outside of our means.  Our country has a negative savings rate which basically means that as a nation we spend more than we make.  We don’t really have many good examples out there since our government is doing the same thing and has been for years.

There is one man that has been screaming from the mountain tops for over a decade.  Dave Ramsey is a personal finance expert who appears daily on Fox Business Network and also on 980 AM in the morning.  He helps people who live in these “Haunted Houses” to get out of debt and get their lives back.  I suggest that if you think you might live in a Haunted House, or if you know someone who does, that you check out Dave Ramsey.  He is kind of a modern day Ghost Buster. 

www.ChinoHillsMortgageMan.com

FPU Graduation

Last night 15 more families graduated from FPU.  You have heard me talk about Dave Ramsey and his course many times in the past.  Financial Peace University is a class that helps people get out of debt, stay out of debt, and build wealth by using common sense with their money.  As we all know it is the Tortoise that wins the race every time and not the hare.

These 15 households combined to pay off $106,480.80 in debt while also managing to save $59,803 during the 13 week course.  I am attaching a video slide show that was shown at the graduation.   enjoy...

10 Years From Now

Last month I shared with you how most people ‘take advantage’ of low interest rates by refinancing their mortgage but never really gaining ground on paying off their home.  If you recall, most people keep their 30 year mortgage for only 5 years before refinancing again to yet another 30 year loan.  I also shared my personal loan information and how by making my old / higher payment, I would pay my home off in 10 years rather than 30.  If you need to read this you can find it on my blog at www.debtmanschest.blogspot.com

Let’s pretend for just a second that you live on less than you earn, stop borrowing money, and you off your house in 10 years.  It can be done.

·         What would your life look like without a mortgage payment?  Could you visit your college aged children whenever you wanted no matter where they are?  Would you be able to help them graduate from college without any student loans?   Imagine the great graduation gifts you could give.

·         Would you keep your job?  If you like your job then sure but imagine the stress of downsizing melting away because you have no financial obligations.  Would you quit your job and do something fun just because you can?  Perhaps you could go back to school and get the degree you never achieved or the certification you always wanted.  There sure are a lot of options when you don’t have a mortgage.

·         Where would you go on vacation?  Better yet, where wouldn’t you go on vacation.  I always dream of my sons playing soccer in college.  My dream is to go to every game no matter where or when.  How cool would that be.  I am also a fan of the Pittsburgh Steelers.  I have never been to Heinz Field but as soon as I can I will be a season ticket holder and fly back for games, just because I can.  What would you do?

·         Who would you give your money to?  Your church?  An orphanage?  Imagine all of the wonderful charities right here in our own fantastic city that are doing amazing things for people in our community that you could support. 

Most people don’t believe that paying off your home is possible.  I am here to tell you that I teach people just like you and me how to do this.  Not with made up numbers and inflated projections but with your income and your budget.  Its called Dave Ramsey’s Financial Peace University.  I have been teaching it now for over 2 ½ years and have helped hundreds of people to get their lives back and start dreaming again.  Hope is a four letter word for so many in this economy but it doesn’t have to be.  As for me and my family we refuse to participate in this recession.  You should join us.  For more information on FPU please email me at Alex@ChinoHillsMortgageMan.com

Who Said 30 Years?

If you follow my articles each month, you know that I don’t write about mortgages.  My goal is to impart wisdom as it relates to your personal finances.  I teach a Dave Ramsey lesson each month.  This month however, the topic is mortgages.  You see, over the past few years I have become the mortgage man who tells you to STOP BORROWING MONEY!  Every other lender out there is telling you that now is the time to refinance.  Well, perhaps, but you have to consider more than just the rate.

When I talk to folks about their mortgage I always recommend the 15 year fixed.  Why?  Well, the 15 year mortgage always gets paid off in 15 years or less.  The 30 year mortgage never gets paid off in 30 years.  It get’s refinanced over and over.  People need money so they pull equity out.  Most people keep their 30 year loan for an average of 5 years and then refinance back to a 30 year again…never gaining, but losing ground on paying off their home.

Let’s run some numbers to put this in perspective.  Here is a real life situation for you to consider.  This is my personal loan scenario.  I had a loan amount of $334,582 on a 30 Year Fixed at 6.25% with a monthly payment of $2,060.08.  I recently obtained a loan modification and my lender reduced my rate to 2% for the first 5 years and extended the loan to 35 years in order to bring my payment down.  My new payment is $1,102.91. 

What are my options?  There are several, but let’s consider these two…

1.       If I make every payment as planned I will pay $615,808 over 35 years.

2.      If I continue to make my old payment of $2,060 I will pay the loan off in 15.8 years and pay a total of $390,576.  That is a savings of $225,232!  How can I afford to NOT do this?

Most people only dream of paying off their home but don’t think it is a reality.  They continually refinance and use the savings to buy more stuff.  If you are one of the fortunate ones who is able to refinance or obtain a loan modification, please make the right decision and start paying down that mortgage.  I plan on taking no more than10 years to pay my house off.  My kids will still be in high school and we will be 100% debt free. 

Don’t believe it takes 30 years to pay off your home.  Where did the 30 year mortgage come from anyway?  I am not sure but I suspect the idea came from a banker.

With rates at 4.625% on a 30 Year Fixed with no points you probably should refinance.  I strongly encourage that you to have a plan so that you finish paying it off in at least half the time. Go For It!  You can always reach me at    alex@ChinoHillsMortgageMan.com

No Matter What

We all have them.  They are things that are so dear, so critical to our beliefs, our morals, our faith, our very being, that no matter what, we would never compromise.  Have you ever considered your 'no matter whats?'  Our NMW's define who we are.  They shape our character and act as a window to our soul.  

When I think about this it blows my mind.  As a father, a husband, a business owner, a coach, a den leader, a church leader and a son I have expectations to meet and lives to impact in potentially powerful ways.  If I don't have strict and defined 'no matter whats' in my life it could be devastating.

Do you think that there would be less divorce if men and women upheld their vows, no matter what?.  Would our economy recover faster if our business owners where always honest and fair, no matter what?  

Then I think of my kids and I wonder if I am doing a good enough job of instilling some no matter whats in their lives? Imagine never having to worry about teenage pregnancy because you know your child has a 'no matter what.'  Imagine not having to wonder if you child is under the influence of anything because they have a 'no matter what.'

What are your no matter whats?

The Best Vacation Ever

What is your favorite summer vacation?  I have gone on some pretty cool trips over the years.  Just before my wife and I were married we spent 2 weeks in Argentina.  We visited family and spent a few days in Buenos Aires.  Soon after we were in Kauai on our honeymoon.  Several years went by but we went on this fantastic vacation to an all inclusive resort in Nuevo Puerto Vallarta Mexico.  That was super fun.  We have even gone back to Hawaii since then when my sister got married in Maui. 

This may come as a surprise but my favorite vacation is the one we took last summer.  Last summer we went camping by the beach in a borrowed tent trailer.  Why this over the others?  Well, quite frankly, it’s the only one that didn’t follow me home.

Most people feel that they work hard and therefore ‘deserve’ a vacation.  So they justify not only spending money they don’t have, but overspending money they don’t have by putting it on their credit card.  Then, a month after their vacation is over, they get to start making payments on it at an average of 18% interest.  This is the definition of a vacation that follows you home. 

I know the past two years have been rough.  The word staycation has become part of our vernacular and no one thinks anything of it.  That’s a good thing.  Everyone needs to take time to unwind but broke people shouldn’t go on elaborate vacations.  All of those great places I mentioned earlier were paid for with credit cards and some of those trips took YEARS to pay off.  That is no way to unwind.  I would have been less stressed had I worked the whole time and never took those trips.  What made my camping trip so relaxing is the fact that I paid cash.

Did you know that the smores taste better when you are debt free.  The fire is warmer when you are debt free.  Sand is less annoying when you are debt free.  Packing and unpacking is fun when you are debt free.  I could go on but that would just be irritating.  You get the point.  This was the best vacation because it did not follow me home.  I didn’t mind buying more ice, or making a trip to the store for something we forgot.  It was a truly relaxing and enjoyable experience for the whole family.  Ironically it had nothing to do with where we were physically, but where we were emotionally and financially.

I am not sure what your plans for vacation might be this summer.  I sure hope that those of you who have debt are putting things on hold until you get that debt paid off.  Take it from someone who has made the same mistake.  You don’t ‘deserve’ to do that to your family.  Pay off your debt, then go have a blast.

Chino Hills Mortgage Rates 4-12-10

The Perfect Tax Deduction

Every year about this time I get phone calls from people who have just met with their CPA or tax professional. They call me because they were told that they need to buy a house so that they can have the tax write off. This has always been troubling to me. A tax write off is not the reason to buy a house. Neither is a tax rebate by the way, but I will try to remain focused.
Homeowners get to deduct the interest that they pay over the year from the gross income thus reducing the amount of taxes that are paid. I get why CPA’s and tax preparers may be telling their clients to do this, but they are terribly wrong. I am always fascinated by financial people who cannot do math. It’s kind of like a shop teacher with missing fingers.
I want folks to buy a house. But broke people shouldn’t buy a house. You really shouldn’t buy a house until you do some things:
1. Pay off all of your debt. This includes cars, student loans, credit cards etc.
a. According to the Federal Reserve and U.S. Census Bureau the average American household has $91,000 in debt.
2. Save 3-6 months of expenses for emergencies.
a. According to the U.S. Courts, annual bankruptcy filings have almost doubled since bankruptcy laws were reformed in 2005. Now there are one million bankruptcy’s filed each year.
3. Save 15%of your gross income toward retirement.
a. USA Today has found that 60% of the 77 million baby boomers will not have the means to retire to support their current standard of living.
b. 28% of Americans polled by AARP said they spend more time watching reality tv than they do planning for their retirement.
You might be thinking, “This will take forever!” No. It may take a few years but that is hardly forever. The average family that lives on a budget, and is intense about their finances can pay off their debt in 18-24 months. Take another year or so to save up your emergency fund and then you can put money away for retirement while you start saving up for a down payment.
Back to the tax deduction. First we have to fully understand what a tax deduction really is. For example, let’s say you have a $400,000 mortgage and you pay 5% interest. Your interest payments are $20,000 annually. Your tax on $20,000 would be $5,600. Basically, in order to save $5,600 in taxes, you are sending $20,000 to the bank and your CPA calls that a “tax deduction.”
If you need a tax deduction while you are saving to buy a house try this. GIVE MORE MONEY. Yes, that’s right. Increase your charitable giving. It has the exact same effect.
To read more articles and to find out more about Financial Peace University email me at Alex@ChinoHillsMortgageMan.com or of course you can respond to this post.

Going For The Gold

I have been really caught up in the Winter Olympic Games.  I have to admit that typically the Winter Olympics don't do much for me.  I am more of a Summer Games guy.  But there has been something about the stories behind the Olympians that has really touched me.  Perhaps I am getting sensitive as I age but I think that most of us find ourselves rooting for people who at one point were considered to be non-factors.  We love the underdog.  We love the Cinderella team.

When it comes to real life, we see these stories as "inspirational".  But let's be real for a second.  We can all appreciate what some people go through and what they overcome to become great.  If you were to ask most people, they would tell you that they too would like to be great someday.

Everyone want's to be great but only an elite few can make it through.  It's not quitting that makes you great.  It's asking for help that makes you great.  It's realizing that this is a marathon and not a sprint - that is what makes you great.

Life is funny that way.  You must be present to win.  I see people get their lives back every time I teach a new FPU class.  I see people go from a has-been, to Olympic Champion just by coming to the realization that they do have a choice when it comes to their finances.  Don't quit.  Go for the Gold!

Planned Default? Really?

I went to an FPU Graduation tonight.  For those of you who have never heard of FPU, it's Dave Ramsey's Financial Peace University.  A class designed to help people get out of debt and manage their money in a practical and conservative manner.

Two years ago I went to Tennessee to be trained by Dave Ramsey's team as a Certified Counselor.  As I meet with people familiar with Dave I get many questions.  Tonight was no different.

I was approached tonight with a question I have received before.  "Is it ok to have a planned default?"  The real question is this.  "Is it ok to walk away from my home if it is upside down?"  This is the person who has the ability to pay his mortgage, but does not like the fact that his house is upside down, so instead, they walk away from the house.

This is never a good idea.  First of all, this is a moral issue.  It's not the bank's fault that you bought a home at the peak of the market.  That would be like someone who owes you money filing for bankruptcy just so that they wouldn't have to pay you even though they have the ability to pay.

If you find yourself in this situation, and you want out of your mortgage, then talk to your bank about approving a short sale.  If the bank is willing to let you do a short sale, then you can sleep soundly.

What Are You Waiting For?

I Write a monthly article in a community publication here in Chino Hills.  Here is my submission for March.

I was waiting to try to out-earn my stupidity.  I was waiting for some miracle,  check to magically appear in the mail.  I was avoiding conversations about money with my wife.  I was a mess!

I know there are more people like this still out there.  This all happened back in 2007 when I thought that I would lose everything.  I had never felt so trapped, so embarrassed, so inadequate, and so powerless.  Then, a good friend of mine mentioned Dave Ramsey.  He said that he had heard a podcast and thought that we could reach out to people who need help by offering his course.  We were sitting in a church leadership meeting at the time and not even my pastor knew what I was going through.  I was too proud and too stupid to let even those who would never judge me know how bad I was hurting.

Here I sit 2+ years later getting ready to celebrate the anniversary of being debt free except the house ($42,881.75 in credit card debt).  It seems like a bad dream but it truly happened.  We are far from being done.  I still have a mortgage to pay off and rental properties to sell.  I refuse to stop until the day comes when I owe nothing to anyone for anything.  The scriptures tell us in Proverbs that the borrower is slave to the lender.  All those years I was a slave to Visa and Mastercard.

I don’t look at my prior financial decision making as such a bad thing.  Because of everything that I have learned, my wife and I have made a commitment to teach others about Dave Ramsey and Financial Peace University.  This is not just a get out of debt class.  It teaches you to take control of your finances and to start working WITH your spouse.  I have a blog where I not only post these articles, but also other items about money, budgeting, relationships and common sense.  You can find it at www.debtmanschest.blogspot.com  If you have questions about your personal situation I can answer them on the blog anonymously; just email me.

I also continue to teach FPU.  I have another class starting the first week in March in Eastvale Corona. Eastvale is just east of The Preserve in Chino by about 5 minutes.  We meet Wednesday nights at River Heights Intermediate School in Corona at 7pm.  Childcare is provided free of charge.

Don’t you think it’s time that you took your life back?  No one is going to bail you out.  No one is going to stimulate you.  You have heard the saying “if you give a man a fish you feed him for a day.  If you teach a man to fish you feed him for life.”  Well, I would like to teach you how to fish.  Time to stop waiting.  Send your questions and comments to alex@ChinoHillsMortgageMan.com.

Study Shows Americans Crave Better Financial Knowledge

I received this article today from a contact in Dave Ramsey's office.  I thought I would share it.  Good Stuff...

Mintel Press Release

Source: Mintel Oxygen Reports, Mintel Comperemedia

Region: US

FOR IMMEDIATE RELEASE: Oct 2009

Study shows Americans crave better financial knowledge

Young adults particularly motivated to increase financial literacy in light of recession

Chicago (October 13, 2009)--Kids and teens aren’t the only ones going to back to school this fall. A new report from Mintel Comperemedia, a service that provides direct marketing competitive intelligence, reveals that three in four adults (75%) are trying to increase their financial know-how because of the current economic crisis. A third (32%) say they’ve already done so, while 43% say they plan to learn more about financial topics in the future.

People are also looking to professionals more for financial advice. While 65% say they feel unsure about investing because of the economic crisis, four in 10 (38%) say they’ve started meeting with a financial advisor, or plan to soon, to work towards securing their financial future. Thirty-one percent admit they’d like advice from a professional on how to invest their money.

Susan Menke, VP at Mintel Comperemedia, comments:

“The recession was a wake-up call for many Americans. They now feel unsure about investing and money management, so they’re turning to friends, family and professionals for help in learning more about money. Many people are determined not to repeat the mistakes of the past.”

Mintel Comperemedia reports that young adults are the most determined when it comes to increasing financial literacy. Five out of six Echo Boomers* (84%) say they’ve already become or plan to become more educated about financial matters, and four in 10 (39%) say they would like investment advice from a financial professional.

“Though young adults are the most motivated, people of all ages are looking for financial education right now. Financial services companies have a tremendous opportunity to provide information, guidance and support to these eager consumers,” states Susan Menke. “Financial literacy initiatives could help rebuild trust in financial brands, establish loyal customer relationships and help foster a more responsible, informed public.”

On average, financial services companies dedicate 22% of customer communication direct mail to informational mailings, per Mintel Comperemedia’s analysis of direct marketing. The insurance industry sends the highest number of informational mailings, followed by investment firms and credit card companies. Mintel Comperemedia sees many companies using direct mail to invite recipients to informative seminars on financial topics.

*Born between 1977 and 1994, Echo Boomers are currently aged 15-32

Visit Mintel Comperemedia (Booth 3022) at the DMA09 Conference & Exhibition, October 17-22 in San Diego, CA:http://mydma09.bdmetrics.com/CDT-6269788/Comperemedia/Details.aspx

For more information, please contact Joanna Peot
Telephone: +1 312 628 7946 Email: press@mintel.com

What To Do When Your Car Dies...

I was talking to a friend the other day who sheepishly confessed to me that he purchased a new car.  He knew that I would disapprove so he continued his story with all of the reasons that he "had" to buy a new car.

I can certainly appreciate that cars get old and need repair.  I can also understand that when your car is totaled (as in this case), that something needs to be done to remedy the lack of transportation.  However, buying a new car is not the answer.  Especially if your "new" car comes with new car payments.

I can't remember the exact make and model of the old car but I can tell you that it was your basic hoopty.  The insurance company gave him $5,800 for his totaled hoopty and he used it as a down payment on a new truck that now comes with leather interior, lower gas mileage and a $360 payment each month.

I did some research and I found the following cars on Auto Trader for $6,500 which means that if you waived $5,800 in front of the seller, you could probably get a deal on at least one of the dozens of cars I found.  Oh, by the way, I only checked a 10 mile radius of Chino Hills so you know that if you widen your target area, the deals would be even better.

a 97' Camaro, a 97' BMW M3, a 00' Expedition, an 04' Explorer, a 00 BMW 528i, and a 00' Miata.  Some of these cars did have leather interior but none of them had payments of $360.

The next time you find yourself tempted to buy a new car.....DON'T!

How Soon Can I Buy Again After a Foreclosure or Short Sale?

So many of the calls I get today are from people who want to take advantage of this great real estate market.  Prices are low, interest rates are lower and everyone wants a great deal on a foreclosure or a short sale because they hear that they can get a steal.  There are two sides to every coin.  In order for someone to buy a foreclosure, someone has to lose their home.  

Lender guidelines are always changing.  Just after the 'meltdown' there was a severe knee-jerk reaction and lenders went from giving away money to anyone who could fog a mirror, to denying anyone with less than perfect credit.  Today things are starting to settle down and lenders are slowly releasing their grip making it easier for people to qualify for a loan. 

Life after foreclosure will basically mean that you will be renting for a while.  Lenders today have a 3 year waiting period from the date of your foreclosure to the purchase of your new home.  The only way to get around this is to pay cash which means you would not be borrowing money anyway.  This is frustrating for many people.  Since they have stopped paying their mortgage, most people have piled up some cash hoping to use it for the down payment on their next home only to find out that they cannot obtain a loan.

Short sales are considered foreclosures by the lenders so the same rules apply with one exception.  You can qualify for a loan 30 days after your short sale as long as you did not miss any payments on your home in the last 12 months.  Now the tricky part is getting a bank to approve your short sale when you have not missed a payment.  Most banks will tell you that they will not allow you to do a short sale or a loan modification because you are current on your mortgage.  So you ask them, "Should I stop paying?"  Then you get the answer, "I would never tell you to not pay your mortgage."  It's a trap really...

The bottom line is that it's not the end of the world if you lose your home.  It's just a house.  As long as you learn from the process and make better decisions it could be one of the best things to happen to you financially.  Running out and taking on another several hundred thousand dollars in debt is not the best way to recover.

Waiting For Your Tax Return?

I used to be like many Americans during this time of year.  I couldn’t wait until January 31^st so that I could get my W2’s from my job and a 1098 from my mortgage company so that I could file my taxes and get my refund.  We used to get on average about $4,000 back each year.

In 2008 however I had an epiphany about my tax refund.   All this time I could have had about $400 more take home pay each month instead of loaning it to the government.  At the time I had accumulated $42,881.75 in credit card debt and was struggling to make $1,000 payment each month.  I was thrilled to plop down that refund on my credit card balance but if you do the math I would have been much better off paying $400 more per month to bring that balance down throughout the year.

Receiving a large tax refund is only a symptom.  It’s a symptom of not having a real plan.  Most people use their tax refund for one of the following: to pay off Christmas; to buy something they really can’t afford; to go on a ‘well deserved’ vacation; or to get ‘caught up’ on bills.  If this is you, then please pay close attention.

If you have read any of my articles you know that I am a huge promoter of Dave Ramsey and his teachings as it relates to handling your personal finances.  I have been teaching folks to create their budgets by spending their money on paper before the month begins.  When you do this, you basically give every dollar a name.  Everything then that you can squeeze out of your budget goes to paying off your debt. $400 in anyone’s budget is huge.  Imagine the dent you can put into your credit card bills, car loans, and student loans when you have an extra $400 a month.

Now just because my number was $400 doesn’t mean that your number is.  Your number may be even higher.  Here is what you need to do.  First, you need to make a commitment to get your finances on track.  I would strongly suggest taking an FPU class as a start. 

Next, talk to your tax professional and find out what to do so you can break even at tax time and maximize your take home pay.  If you have a real budget that works (like the one I teach people to use), then the extra money will go to eliminating your debt, saving for retirement, or paying your house off early.  I have to warn you though, that if you don’t have a plan, then your money will disappear and you will have no clue what happened to it.  Sound familiar?  According to the Wall Street Journal, 70% of Americans live paycheck to paycheck.  Are you one of them?

You are always welcome to contact me with comments and questions.  You can find me at www.ChinoHillsMortgageMan.com