I just wanted to share with you a personal story about how the pressure of credit card debt and other types of debt and financial pressure can really add unneeded stress and resentment to a relationship, in this case a marriage. However, what I do want to point out is that if your marriage is strong and you really have a deep love and respect for one another, finances should not ruin you.
Of course, there are the stray stories of people who are really sick and just can’t stop themselves from spending or doing something like gambling, but let’s face it we’re all human and most of us have been in financial trouble at one point in our lives.
My husband and I are very fortunate. We’ve worked really hard to get to where we are today, which is almost credit card debt free, but it took a long time to get there, and we’re still working on one of his college-days credit cards he racked up.
We’re able to take the occasional small vacation, although we rarely go anywhere really expensive. We didn’t even go no a honeymoon after we got married because we wanted to be smart and wait until the economy improved and our incomes improved since we rely partly on sales to feed our wallets.
We’ve made sacrifices, but we’ve also been able to have a great home with great furniture that was all paid off right away thanks to excellent incomes when the economy was good. My husband and I realized that in order to be truly financially independent, we had to be totally free of credit card debt, so we immediately went to work to clear up his debt.
I myself had a lot of credit card debt, but that was many years ago and I tried to teach him the prinicples I had learned to live by out of necessity which were that you never used credit cards unless you knew for SURE you were paying them off that same month. That way, there was absolutely no danger to get into.
The emotional toll it took on our relationship for him to confess to me the debt he was still in from years ago was pretty rough, but by talking through it and promising to be honest and open and not afraid to talk about these things, we actually made a deeper bond, and forged a new, deeper chapter in our relationship.
Of course, we all know that it takes care to know when you should actually apply for a credit card. Especially with all the competing offers out there from hungry creditors. At least that’s the way it used to be. Now it’s more like creditors are picky because they know they can be. A lot of people out there are hungry for good low apr credit cards, and they are only offered to those with the best credit scores now.
Creditors simply don’t want to take the same risks they used to when it comes to lending money, especially with credit cards. More to come on this one, it’s a hot topic…
August 1st, 2010 in
Credit Cards |
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With all the focus on saving money and the battered job market and the recent disheartening statements made about the economy’s prospects by none other than Ben Bernanke, I figured it would be a good time to sort of reiterate some of the best ways you can save money. I put many of these methods into use in my own household, and I’ve found that over time, they can save you a significant amount of cashola, which is just what everyone is short on these days.
I’ve really been able to use these consistently, and I actually make a kind of game out of it, and it can be kind of fun. Not only that, it may even help you to lose weight! Just listen and you’ll understand why.
Let’s talk about these five ways, I’ll list them.
1.) Clip coupons. I used to laugh my butt off about this one when I was younger. Now, I’m older and much wiser, and I’m such a fuddy duddy now that I LOVE to clip coupons. Finding a good one is akin to winning a small lottery, and it’s really fun to see the tally on your grocery bill go down several dollars when you have some really good ones in your wallet. Find something to carry them in though, they do accumulate, and can be a pain to carry around. And try to remember to actually use them before they expire. that was my biggest obstacle when I first started using them!
2.) Turn off the lights and all electronic appliances in your home all the time when you are not using them. Turn down the A/C when you leave for work during the day, and then increase it when you get home, or better yet, get one of those timed thermostats from your power company. Many power providers will actually give you a free one!
3.) If you buy bottled water, get yourself a Brita water pitcher. These things are great, and if you’re a huge water drinker like I am, you will save tons of money on bottled water, and you’ll be helping the environment too! While you’re at it, recycle. It cuts down dramatically on the number of garbage bags you use, and oh yeah, it’s great for the environment too!
4.) Cook at home, and cook large amounts, so you can have leftovers the next day. This saves not only money, but time. It also saves your butt from getting bigger. If you don’t have time to cook, a great way to experience many different types of foods and restrict calories is to get Lean Cuisines when they’re on sale and add a veggie to them.
5.) Make sure you have the right tire pressure in your car, as your tire’s pressure has a big impact on fuel use.
Going through our recent debacle with refinancing our primary mortgage, and not being able to roll in our secondary mortgage with it and make it an FHA loan (this was the only way the bank could roll them into one unfortunately), I can tell you how frustrating it is. We are very responsible people who pay our bills on time, make a decent living and have never been late on our mortgage payment.
But because of some little rules they have about part of our income being from a business (we both also have full time corporate salaried jobs mind you, but do receive a portion of our income that allowed us to buy our house from side businesses), we were denied getting a full on FHA loan to cover both mortgages.
Combining our mortgages would have made it a hell of a lot easier for us to pay them both together, but it also would have afforded us a much better interest rate on the one mortgage loan because our secondary mortgage is a much higher interest rate.
This apparently is not unusual for a secondary mortgage since the bank views it as a sort of gift since you didn’t put down a down payment. Heck, I don’t even think you can still do this these days with all the new rules surrounding loans.
Now, FHA loans are going to become even harder to secure. The government recently announced that they may not be offering FHA loans at all to people with low credit scores. From a business perspective, I suppose one cannot blame them too much. However, from an economic recovery standpoint, this really may not bode well for a lot of citizens and lenders because now the market of potential home buyers will become even more narrow than it already is.
July 28th, 2010 in
Mortgages |
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Well, it seems that we just can’t seem to get away from the never ending, yet somehow also see-sawing waves of bad news about the American economy, our way of life being threatened, and generally just dismal financial news about how far we’ve come as a nation. Or more like, how far we’ve back pedaled in the past 2-3 years is more like it.
We keep hearing different news about the housing market, mortgage interest rates, the stock market, people losing money in their retirement accounts, the job market, and more. Now, we’re hearing about how the threat of global markets may derail our already fragile recovery. Fabulous! Let’s order a bottle of wine around the table, right?
Not exactly. There’s even more bad news. Apparently, Americans are suffering some of the worst credit they’ve ever had. That means that you, me and the guy next door are probably showing the worst credit scores we have in several years, thanks to a combination of events. Joblessness, house abandonment, you name it.
Now, are you ready to the really depressing data? Somewhere right around one fourth of the American population right now are considered poor credit risks. What this means is that creditors may not even consider 1/4 of the population right now for general loans, mortgage loans, or heck even credit cards.
This is especially rough right now because creditors are also much more stringent about who they select money to, thanks to getting burned to the tune of billions of dollars on everything from credit cards to abandoned mortgages. Oh, no sir, they are not going to lend to you unless your credit is pretty much golden these days. And golden it most certainly is not for the majority of us.
Conversely, the amount of people on the higher upper spectrum of the credit chart has actually increased, if that makes any sense. So now we have a bigger imbalance. We need to tip the scales a little more in favor of “ok credit”, and then we’ll be even more on our way to a true sustained credit recovery.
Since the economy’s stability has come into question, some areas of the United State of America have noticed serious downfall, the reason not being precisely detected (even though it is suspected to be a result of the economic crisis which has shaken the economic state on a global level).
Where the situation is really tough right now is New York, the most populated part of the United States where high levels of unemployment and a drastic fall of the home value are everyday issues every man and woman from this state encounters.
Bankruptcy filings ran up about 14 per cent by the first two trimesters of this year which is a documented testimonial by the American Bankruptcy Institute. To be precise, the number of bankruptcy filings amounts to the unexpected number of 770.117 this June which is significantly bigger than that of June the previous year and it was 675.351.
Now, let us summarize: when we put high rate of unemployment, years and years of rising of the consumer’s debt and housing crisis together we get the picture of the current economic situation in the United States of America and it is far from good and the state of this situation can be compared to the economic issues that shook America in 2008.
For those not really familiar with that situation we will just mention the highlights of the economic crisis that shook America in 2005. Namely in the year of 2005, the American Congress made small yet significant changes in the Bankruptcy Code. This made the job of American citizens much harder which resulted in bankruptcy filings of a terrifying number of over 2.000.000.
As for this year, about 1.6 million bankruptcy filings are expected by the end of 2010. The economy state of this great force seems to go down. Only this June there were 126.270 bankruptcies on record, a number almost 9 per cent higher than that of June the previous year when there were 116.365 bankruptcy filings.
As for the reactions of American citizens after seeing these numbers and facts, they are very diverse. Many of them think that the American Dream is slowly but surely turning to their worst nightmare and even there is a number of those who think that this is only the beginning. However, there is a small number of the real enthusiasts who still believe in the healing powers of their country and state that there will be a better tomorrow for America. I’m one of them!
One of the leading initiators of stress is related to everyday job problems. There is no doubt that a normal job can affect your mental health. There are people all around the world that begin a new job position; get promoted; transfer to another city or country; start their own private business; relocate the business and etc.
Now these situations are mostly positive and don’t seem to have stress in their vocabulary very often. Well, an occasional stress might arise when you are being transferred to a different city; and it is also stressful to change living environments all of a sudden. But that is just a tiny stress that is not endangering your mental health.
The reasons why everyday Job is in top three stress-starters are numerous. The number one reason of stress and a serous danger to your mental health is redundancy. The feeling that you are not wanted anymore is very painful and leads to serious stressful situations that can not leave over night.
The longer enduring stress is there, the more the danger for your mental health increases. Despite of people that love their job and don’t want to get fired, there are those that don’t like what they do for living. Every now and then everyone has gone through the period when you hate your job, that is quite normal and human. But instead of cutting the timeline of that period, sometimes they seem to stay longer.
Stress and anxiety follows you everyday and affects your work and mental health. That leads to quitting on your own and start searching for better jobs. Job searching is never easy. Mostly people start from scratch and look for the right job that suits their skills and abilities. Having difficulties finding it fires up the stress gradually.
People start to doubt their decision of leaving their former job. The reasons reviewed so far are just tips of the iceberg. Other reasons that can affect your mental health in you job environment are bosses that are way to comfortable with their authority disposal; colleagues not doing their work on time which is connected to your job description; low motivation; no bonuses; cut down on salaries; and etc
Probably the worst part of stress and anxiety at work is that it is hard for them to stay at work. People have a bad habit of bringing their work problems at home, where they start mingling with family issues. ‘Spreading like a virus’ is a great statement to describe unhappiness at work. Since we are at work for a good chunk of our time, problems at work starts affecting everyday life, interactions with friends and family, and slowly begin eroding your mental health.
In a shocking report I read recently, apparently the rich who have those “jumbo mortgages” that are hundreds of thousands of dollars, and often exceed a million dollars for a home, are now the biggest population of defaulting mortgages here in the US. Areas where the rich notoriously buy second homes or esteemed first homes, like a lot of areas in California, where you pretty much have to be rich to afford any kind of nicer home, are seeing skyrocketing amounts of foreclosures and defaults on these huge mortgages.
While the huge housing bust and subsequent increasing amounts of foreclosures really started at the ground level with folks like you and me, more blue collar types of incomes and also correspondingly modest home loans, it now appears to be much more rampant in this upper echelon of mortgage lending. One thing puzzles me though. Even though these are the rich who are dumping their homes, aren’t they at all worried that this will give them bad credit?
That is what would be first and foremost on my mind. But speculation is that the rich will be much more decisive and quick to drop a property that clearly has become a “bad investment”, especially if it is a second property or vacation home. And really especially if it is a home they bought for speculation – in other words, for reselling for a profit.
I gotta say that this mentality bugs me. Especially when it’s done by people who can afford the mortgage, they just no longer want the burden of paying a mortgage that they don’t think will do them any good in the near future on a property that’s diving in value. I mean, there are millions of us who have homes that have taken a nose dive in value, but you don’t see everyone marching off into the sunset and leaving their homes for foreclosure?
Let me emphasize that I get there are many times extenuating circumstances, and I understand that. But a lot of these are pure impatience and lack of responsibility, which is what has gotten us in this mess in the first place, that and irresponsible lending by banks. Well, now a lot of people will suffer because banks are much tighter on their lending restrictions than they used to be.
This is going to have a widespread devastating effect on the already faltering economy. It’s a trickle down effect. Not only are people like this hurting themselves by seriously dinging their credit for future purchases, but they are also hurting the greater economy, the job market and everything else that makes this once great economy of ours tick.
It’s time for people to take responsibility for their actions, and wait it out. These homes will go back up in value, it’s not as if they never will, it just may be a longer wait than we’d like at this point.
July 16th, 2010 in
Mortgages |
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I know how there can be a sense of urgency to get a mortgage paid down. Especially when you look at those mortgage interest statements at the end of every year. And also when you look at the calculations that you’d almost rather not see that show the total amount of interest you would have paid the bank that gave you the home loan in the end, after you’d paid off the mortgage, assuming you’ve kept it for thirty years and not accelerated your payments. Believe me, I feel that pain.
I do, you see, because when we bought our home (first time home buyers, mind you), we did something that I sort of regret now. This was before all the financial and economic hoopla hit the proverbial fan, so they were giving out secondary mortgages so that if you didn’t want to lay down that large chunk of money as a down payment, you could essentially get another bank to loan you that money you would have used as a down payment.
The only trick is that since it isn’t the primary mortgage, and since they just know they can get away with it because they are offering you something you clearly need because you really want to buy the house and don’t have the full down payment, they charge usually a higher interest rate on these types of mortgage loans. It can be as high as a few points higher, and that adds up to QUITE BIT OF CASHOLA in the end, trust me!
Well, every time I look at that one bill, I cringe when I see how much my payments are dropping down the principal – which is pretty much nill, so it’s very tempting to throw every extra dollar we have at that mortgage. But there are other considerations when thinking about paying off a mortgage and paying your credit card debt off first.
First of all, even the worst home mortgage loan isn’t as bad as most credit cards when it comes to interest, so the credit card will almost always win out as being the first priority to pay off over a mortgage bill.
Second, you do get some benefits to paying out the hind quarters in interest on your mortgage. At least with this interest, you get to deduct it from your yearly taxes, thereby lowering your total taxable income (I’m not a tax professional, so I don’t know how it actually works, I just know that it helps us out a lot on our end of year tax payouts).
Usually, it’s no contest when deciding between credit cards and mortgages when figuring out which to accelerate payments on. When you consider also that credit cards are just old debt, and at least with a mortgage you are owning something that will increase in value eventually, it really isn’t even a question.
In an effort to again prop up the flailing home buyer’s market, congress has approved an extension on the infamous, and very generous, tax credit for new home buyers that helped to stimulate the market prior to this. Here’s the catch though, that three month extension is for people who have already signed a contract, they just haven’t closed the loan yet. This is designed to help people who have already committed to buying a home for the first time, not for people who are just now shopping, in other words.
They really want to give the benefit of the doubt to those that have committed to a mortgage payment and home purchase already (this is probably because they have already mentally committed, or at least that is probably the line of thought also the government is taking on this), so that they may have more time to close the deal, which we all know if you’ve ever purchased a home, can take a lot more time than you think it would. The first time home buyer must have signed a contract before or on April 30th in order to qualify for this extension.
The extension is also an imposed measure to try to combat fraud when it comes to the tax credit. Apparently some fraudsters are trying to claim the tax in a manner that benefits their taxes, but this measure should help at least to make that more difficult. There always seem to be a few that try to cheat the system!
The tax credit is still the whopping $8,000, which is a nice tidy sum for new home buyers! So, if you’re in the middle or wrapping up a home buying deal and you’re a first time home buyer, this is definitely something you’ll want to consult with your accountant on, who should be up to speed on the latest tax developments from the IRS and the US government.
In other news, consumer confidence is down again, and also the housing market, seemingly propped up by the same tax credit we were just speaking of, has taken a nose dive as well. I guess we’ll see once all this government spending has ended if it has truly helped fuel a self sustained economic recovery that’s fueled by consumer spending, not government spending.
That is the big, lurking question right now in everyone’s mind, particularly economists who are worried that it may turn into a double dip recession if that’s the case.