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