Daddy Financials

Mortgage loan modification is a process by which your lender agrees to change the existing terms and conditions of your mortgage loan. More and more people are opting for this option so that they can repay their loan in a comfortable manner. You need to qualify for the same. Let us take an instance to understand how mortgage loan modification works.

Antony Hare residing in his own house had applied for a mortgage loan with ARM or adjustable-rate mortgage. He continued making payments for the first few years. A sudden medical emergency depleted him of his savings. He started missing his mortgage payments. Antony took out the mortgage loan prior to January 1, 2009. After calculating it was found out that his house payments were more than 31% of his gross monthly income. However, Antony’s loan was within limits set by Fannie Mae. When Antony took out the mortgage loan, he had agreed upon ARM. Since Antony had opted for ARM, he had to pay lower rate of interest initially. Later, the rate of interest escalated and this created all the trouble for Antony.

Recently, Obama administration announced the Homeowner Affordability and Stability Plan. It is assumed that the bail out program is likely to help about 7 million homeowners and save their property from foreclosure. Antony spoke to a financial expert to find out whether he qualified for the mortgage loan modification program or not.

It was found that he had qualified for the mortgage loan modification program. So, he sent a loan modification request to his lender. Whether a loan modification request will be approved or not solely depends on the lender.

There are a number of factors that are taken into consideration while deciding whether a loan modification request will be approved or not. So, in case of Antony loan modification request, lenders enquired if his property had enough equity or not. Antony was also asked to give documentary evidence that he was facing financial hardship.

Antony had to produce the following documents-

• Hardship letter
• Financial worksheet
• Recent and a valid driver’s license
• 2 Recent pay stubs
• 2 Recent year’s tax returns
• Attorney Retainer Agreement
• 3 Recent bank statements
• Mortgage payment statements/coupons
• Property tax statement

Once the loan modification request is approved, it is sent to the loan processing division and the existing terms of your loan are modified.

Lenders help borrowers in 3 ways. They can either extend the loan term of the existing mortgage or change the rate of interest. The principal balance is also reduced at times. In Antony’s case, the rate of interest he had opted for initially was an adjustable-rate mortgage. The lender changed ARM to FRM or fixed-rate mortgage.

However, it takes a week or 2 before the loan modification request comes into effect. Loan modification can help you in a number of ways provided you are eligible for the program.

Benefits of loan modification

Let us see how Antony benefited from the loan modification program.

• Loan modification doesn’t have any adverse effect on your credit rating.
• There are no negative tax consequences
• In majority of the cases, no new appraisal is required
• No closing costs
• No refinancing
• Your home equity is maintained
• A flat fee is charged for the services offered.

Loan modification is a good option for paying off your mortgage loan without refinancing. It can help you save a lot of money and you can pay off your loan as per a new payment schedule.

About the author: Jessica Bennet is one of the financial writers associated with the Mortgagefit Community. With her in-depth knowledge and vast experience, she has had a profound impact through writing and advising on all mortgage issues such as loan modification and foreclosures and has presented useful tips for the same. Her remarkable guidance and support has improved the community into a global hub for the mortgage related situations. She is highly appreciated by the forum moderators and other authors of our community.

Image Credit: cumortgageservice.com

(This is a guest article by Jessie Hepzie*)

Most folks have a problem with handling money and family finances, and this is indeed one of the main causes of stress and trouble in families. As most of us find that the money we make is never enough to meet the spending, evidently it is due to poor financial planning.

Planning the way you spend has a lot to do with the attitude you have with respect to investments. Some people believe in making big things happen and this reflects in their "big" investments, and they end facing "big" debts that they are in no position to handle.

Others think they are saving a lot of money by putting it in a locker, but they end missing a lot of investments that they could have possibly made. There is no use of keeping money idle. Idle money never grows. As the value of money keeps on decreasing with time, and the cost of stuff like real estate keep skyrocketing, it is necessary to make at least some investment with minimum risks, if at all you want your money to grow.

Knowing your spending and planning it is very important if you want to reduce financial stress and plan for an economically secure future. You can also think about going for a financial consultant to help plan your finances, although you can do it yourself if you put in some work. If you delay taking control over your finances, it will ultimately go out of proportions and will be too late for you to handle at a later time.

You need to know the value of the investments you make and the stuff you spend on. You need to minimize on spending for things that depreciate in value. For example: Toys like electronic gadgets always get cheaper and cheaper, but certain possessions like land or property keep increasing in value with time. So, you should see that you avoid spending on things that have poor resale value and invest on those that keep increasing in value.

The best way to plan your finance is to prepare your family budget. You should include ways of saving money for the future in your budget. Sell off the useless stuff in your home, these include expensive gadgets and stuff that occupy your house but are of no big use. Most often we buy things because it is a status symbol. You need to avoid such spending, as having control over your funds is more important than showing off your status. There is no use of spending money to impress others. These people who you try to make an impression on will only get envious when you have pricey stuff, the same people will mock at you when you go bankrupt.

Another important part of improving your family finance is to clear any debts that you may have. The dangerous aspect of debts is that it keeps growing rapidly with time and unless you find some way of getting rid of it, it is sure to cause huge problems. When you have debts, and don’t do anything apart from paying the minimum interests every month; what happens is you don’t get money to save. Instead, you keep giving away the money for paying interest. You can avoid this with some quick action to get rid of the debt. This could be anything including selling a part of your property and using the money to get rid of the debt. Once you get over the debt, you will be able to plan your finances more clearly.

If you can’t afford to take drastic measures like selling off some property, you can find other ways like decreasing the spending on unnecessary investments and also saving some spending on the necessary stuff like food and shelter. You can use the money you save every month to reduce the debt and not just for paying interest. You can also go for loans that offer lower interest rates and use that to get rid of a debts having higher interest. And don’t postpone, the more you postpone, the more your debt grows to unmanageable proportions. Remember, a debt free family is a happy family.

*About the author: Jessie Hepzie maintains Oscommerce Template and Membership Logos.

*Image Credit: Photograph by lucias_clay [via Flickr Creative Commons]

(This is a guest article by Lewis Bennett*)

A lot of families are becoming more conscious of their spending these days, from getting rid of a second vehicle to rethinking many consumer purchases. It’s not always the big things that are breaking the bank though. There are lots of simple & practical things you can do to save money in 2009.

1. Most stores sell “loss leaders” which are products that stores discount drastically – sometimes even taking a loss – just to get shoppers into their stores. Go to two stores every week and stock up on these products. Do not get distracted by freshly baked bread or the smell of a chicken in the rotisserie – head straight for the checkout!



2. Many dentists suggest that people are using twice the toothpaste they really need. This is apparently the result of toothpaste commercials featuring people applying excessive amounts of toothpaste on their brush. Use less, squeeze the tube out to the last drop, and don’t forget to brush thoroughly for a few minutes!



3. Make a price book and fill in the items you regularly buy and the best prices for those items at specific stores. Don’t waste all day driving around town though; you don’t want to spend more money on gas than you save on the cost of groceries.



4. Just because a deal is advertised as two for a certain price doesn’t always mean you have to get two or three to still get the bargain. See what the store’s policy is and only buy one if you only need one.



5. Pour water into empty shampoo bottles, soap, and other bathroom & cleaning supplies and give them a quick shake. This way there is no waste and if you do it with lots of things it will really add up.



6. Sell things you don’t need. Do your research though and see what is selling well on Craigslist or eBay or even your local newspaper. Sometimes selling your used goods to a friend or neighbor can save you a lot of time, effort, and money in the long run.



7. Learn! Learn basic car repair and maintenance like oil changes. Learn to cut your hair. Learn simple home repair. The Internet is a great tool for learning how to do almost anything and the extensive knowledge base of your friends and family would pleasantly surprise you.



8. One tip that people often neglect mentioning is a budget. All you need is a pen, a calculator, and a piece of paper. Although not terribly unique or exciting it is still one of the best ways to organize your money and get your financial life back on track.

Are you wondering how these little things can save a lot of money? Well, its all in the mindset. Slowly you begin to be aware of how much you are spending and come up with ways to save some money here and stretch the dollar there... In the long run, that goes much farther than any one time temporary reduction in lifestyle.

An interesting read related to this topic: The World’s Richest Frugal People


*About the author: Written by Lewis Bennett, from a debt resource site based in the United Kingdom.

*Image Credit: Photograph by Lanterna [via Flickr Creative Commons]

(This is a guest article by Melanie Taylor*)

Faced with a declining economy and slumping property values, it’s easy to think ‘Why me?’ – or, more accurately, ‘Why us?’.

When the pay-off for years of working hard and paying the mortgage seems threatened by economic conditions beyond our control, many of us wonder what it is about the US that’s invited all that economic turbulence.

It’s a question that’s prompted endless blogs, discussions and learned articles, many of them dissenting or even contradictory. We don’t have the space to go into it here, but suffice it to say:

1. The US is not alone in its woes.


2. We can help our kids avoid some of the problems we’re seeing today.

Across the Pond

Cross ‘the Pond’ and you’ll find another country with similar – perhaps surprisingly similar – problems. Already one quarter (of negative growth) into a probable recession, the UK is facing its own crisis, largely due to problems in the housing market. Like the States, it’s dealing with distinctly different generations of homeowners and would-be homeowners:

• Would-be first-time buyers unable to get a mortgage.


• Baby boomers worrying about their kids’ mortgages/property as well as their own.


• Grandparents and great grandparents carrying mortgage debt with them well into their retirement years.

Homeowners aren’t the only ones affected, of course, but the problems in the US / UK housing markets are a poignant example of how macro-financial problems affect normal people – people who’d assumed:

• They’d be able to get a mortgage.


• Their property would appreciate in value.


• They’d be able to turn some of that value into cash when they wanted.


• They’d be able to sell it (for a substantial profit) when they wanted.

Should I care?

On the one hand, no. The US, many think, has enough problems of its own.

On the other hand, yes. Deciphering trends in another country often helps us understand our own problems. With the right attitude, it can even help us solve them, whether we’re following another’s lead or learning from their mistakes.

A news release from pensions and investment provider Scottish Widows revealed a few startling facts. For example:

‘Adult children are ‘sapping’ their parents’ savings and investments at an increasing rate of knots, as Scottish Widows reveals the position has got even worse over the past year. Over half (55%) of parents have given or loaned their children or grandchildren thousands of pounds compared to a figure of 39% last year – an increase of 16%. The second annual report from Scottish Widows reveals the average amount given by parents to their offspring is £12,610 making a total ‘Savings Sap’ of £67 billion.’

The figures might relate to another country, but the news itself will sound disturbingly familiar to (grand)parents throughout the USA. The question is: how can we avoid this kind of situation in the years ahead, protecting our children’s finances and our own?

What can I do?

In terms of the wider economy, there’s little any of us can do. Our children – and their children, no doubt – will grow up in an economic environment very different to the one we know.

However, there’s plenty we can do to give our children greater financial independence. After all, it’s every parent’s goal to bring up a child who can make their own way in the world. Being tied to the financial ‘apron strings’ might hurt Mom and Dad, but it’ll hurt Junior a lot more.

A few ideas to help your kids develop the respect for money they’ll need when they fly the nest...

• When your child asks you to buy something for them, tell them you’ll think about it. If you decide to buy it, calculate how much they should put towards it, whether it’s contributing a percentage of the price, mowing the lawn from now until X, giving up half their allowance for the next X months...


• If they break / lose something because they’ve not taken care of it, simply refuse to replace it.


• Get out the calculator and show them what price tags really mean. For example: “You can have either
  
  • the $100 sneakers, or
  
  
  • the $20 sneakers AND a trip to the cinema AND a new CD AND five ice creams AND $15 to spend on toys.”


• Tie all / some of their allowance to household chores.


• If they’re saving, offer to match whatever they put in.

These are just a few ideas – and only you can judge what’s fair, and what’s too harsh / too lenient.

What works?

No-one can answer this but you. You know your child better than anyone, and you know how they respond to differing stimuli. It’s almost impossible to track the effects of any one decision you make about your child’s upbringing, but you could try this:

• Think about the people you’ve known for years – the ones whose life-stories you’re reasonably familiar with.


• Look at the way they manage their money.


• Reflect on what you know about their upbringing – in particular, the way their parents approached things like allowances, responsibility, etc.

There’s a fine line between displaying generosity and encouraging dependence, and it’s up to each parent to decide when and where to say ‘no’ – but if you can learn from other people’s mistakes, it makes sense to do so.

*About the author: Written by Melanie Taylor, of Think Money, who offer debt, loan & mortgage solutions.

*Image Credit: Photograph by Extra Medium [via Flickr Creative Commons]

Talk to any frugalist, a simple living advocate, a health junkie or a personal finance guru and at some point in time or the other, you will very likely hear the mantra “cook and eat healthy food at home”. And why not – it is the one way to ensure that you can both get good nutritious food and save some money at the same time. But there is one small problem with this – in the crazy busy lives we live, it is a lot easier to just take out food, eat out or grab something on the go. I have been struggling with this for a while and have slowly started getting into the habit of cooking at home. I still falter and cheat every now and then, but more often than not we eat at least a few meals at home every week. Most of them healthy and nutritious :) Here is a list of things that helped me. I hope you find them useful and if you have any tips to add, I hope you will share.

Set some realistic goals
In my case I started out with the goal that for every night that we eat out I should cook at least two nights at home. This helped set up a rhythm and also a rough schedule. Also, when I cook I know I can take a break on the third day without feeling guilty about “not cooking”. Once I got settled into the routine, I slowly tried to stretch it to cooking three nights in a row. So now we eat out roughly every third/fourth night making sure that we eat at home 5 – 6 times a week.

Plan your menu ahead of time
At the end of a busy day, while I am headed home, if I have to worry about what to cook, I am most likely to just say “dang it” and get food from outside. So I got into the habit of planning a rough menu when I do my groceries. This helps in two ways – (a) I now have a simple multiple choice option to decide what to cook every night and (b) I save on the grocery bill by only getting what I need. When you start out, I would say don’t worry too much about the nutrition aspect – just plan on something that is easy and convenient. As you get into the habit of cooking regularly, you can work the nutrition in slowly.

With just those two steps half the battle is won! Now it is a matter of making cooking interesting and making the habit stick.

Start out by investing in sensible equipment
Trying to chop tomatoes with a blunt knife or struggling with the can opener every time you have to open a can will add just a little bit of frustration, and slowly that piles up into discontentment with cooking in general. Set up your kitchen with some good quality equipment. You need not buy the whole array of kitchen tools – just the ones that you use most often. Quality costs more upfront, but in the long run, it usually pays for itself.

Start collecting recipes and update them with your observations
If you cook the same things over and over again, both you and the family will be bored and there will be little enthusiasm left to cook. Start collecting new recipes, so you can add some variety. You don’t have to buy expensive recipe books (though I did get a few – some for the authentic recipes and others for the pretty pictures). There are a many websites which allow you to download recipes for free. Print them out and stick them in a binder. This way you can write little notes about what you liked about the recipe, or the changes you made, the kind of side dishes that seemed to go well, any disasters etc., right there. If you have a large enough collection of recipes and don’t repeat them often, then such notes can come in real handy when you return back to a dish after a long time!

Don’t hesitate to experiment
Once you are comfortable with cooking, start experimenting with food a little. Give that old recipe a new twist. Try new cuisine, new spices and new ingredients. Add your own personal touch to suit the recipes more to your family’s tastes. Create you own fusion cuisine. You will be surprised how addictive cooking can get as you start having success with some of *your* recipes.

Add some glamour
Dress up your dishes. It is just a little extra work, but making food visually appealing is worth the effort. Usually, even before we take the first bite, our brain pre-judges the food based on how it looks. So if you make it look good then automatically the brain is more inclined to be a lenient judge in the taste test, and let some of the small slip-ups pass. When you hear the ooohs and aaahs from the family, it not only makes the time spent on cooking worth it, but also encourages you to continue cooking.

Get your spouse/roommate/friend/kids involved
For even better results, get folks involved and make cooking a fun way to pass the time. As you get into the habit, cooking starts to become a comfortable way to unwind from the busy day and swap stories, instead of a chore that is dreaded. It might take a while to get to this stage, but work towards it and you may just surprise yourself!

Watch food network and find other ways to motivate yourself
Boy, when I see some of the food challenges on food network, or the Iron Chef cook up a storm in the kitchen stadium, I really get all charged up. It makes me want to experiment and cook up some wows of my own in our little kitchen. I also keep a few recipe books with tantalizing pictures handy for the days when I can’t make up my mind about cooking. Usually spending a few minutes looking through the pictures makes my mouth water and puts me in the right mood for cooking :)

Show off your successful dishes
Whether you create your own recipes or turn up great dishes cooking by numbers, make sure you celebrate your success. Have some friends over and cook up a storm (if you don’t want to cook too much, have a pot luck dinner). When folks start to praise your cooking and ask you for recipes, it creates that beautiful positive feedback loop that makes you want to cook more often. Before you know it you will be the gourmet chef you never knew you were!

Take a break
This brings us back a full circle to the very first tip – for every few days you cook, make sure you take a day of break in the middle. Like everything else, if you don’t take a break, eventually fatigue will set in and things start to slip and slide and crumble. Every now and then if you take a break, you can keep things interesting and fun!

I hope you all cook up some fancy stuff in the kitchen. If you have any tips of your own to cultivate and motivate the habit of cooking at home more often, please do share. I am slowly getting there, but could always use some extra help!

*Image Credit: Photograph by bengarland [via Flickr Creative Commons]

PS:This article was featured as an Editor's Picks in the Festival of Frugality #139 over at Our Fourpence Worth. Head on over there for some really good reading...

One of the complaints I have about the way I was raised was that my parents barely took us out on vacations while we were kids. While my cousins had stories to tell us about the fun places they visited and fun people they met, all we had to counter were stories about fun in the backyard. I hope those of you with kids will not raise kids that feel left out of the travel circuit as we did when we were kids. If money is an issue, here are a few tips to help plan the frugal family vacation. Or you can also look up some money making ideas to try and raise some cash before your vacation.

Before the trip

Budget and save for the trip
Determine well ahead of time that you want to take a trip with you family that year and how much you are willing to spend on it. Remember vacations are luxuries, and it doesn’t make sense to go into debt to indulge the travel bug. Based on your other circumstances, set aside a budget for a trip and start saving for it well ahead of time.

Plan a rough itinerary ahead of time
Once you have a number in mind about how much you can afford to spend, start looking for vacation destinations that fit your budget. If you are planning on dream vacations that cost a lot, start planning for off peak periods when the crowds are less and it will cost less. Be flexible with your dates. When you choose a destination, make sure that there is a good mix of paid attractions and free fun – so that for every day that you spend the big bucks for park admission, you spend a couple of days on activities that are free or cost very less (example, lazing on the beach, hiking the trails at a national park etc).

Book ahead of time
Next plan whether you want to fly or drive. If you choose to take a flight, look for bargain airfare online and book early. Here is a list of 19 sites for finding great airfares. If on the other hand you choose to take a road trip, then start by looking at this list of 8 cool sites for road trips. One other site that I have used before and found to be very handy for planning road trip is the Rand McNally road trip planner. And next determine your options for lodging. Do you have relatives or friends that you don’t mind piling on? Do you prefer places with a kitchenette so you can cook a stray meal and some money? How about a vacation rental? Here is a list of 10 sites for finding great hotel rooms. Currently, for finding good bed and breakfasts or vacation rentals, I just use Google search :( So if you have a site that you use often for finding cheap deals on these digs, I hope you will share it with me and the readers via comments.

Collect coupon books for your destination
Depending on how long you plan to spend on the vacation, you may want to plan ahead and collect a few coupons for the place. For instance, obtaining the entertainment book for the place can save quite a bit on food and entertainment. They generally cost $9.99 to $25 depending on when you buy them, and you can sell the book after it is used on ebay (with a list of the coupons that have been used). Or you can go to restaurant.com and purchase $25 gift certificates for under $10. Remember though that there are many catches that you need to watch out for when you buy the restaurant.com certificate. For entertainment, there are many sites that sell coupons for particular destinations. For instance mousesavers.com claims to have 200 pages of discounts for your next Disneyland vacation, vegascoupons.com has a ton of coupons to use on your Vegas vacation, skicoupons.com has coupons for ski destinations and so on. The best way to find these local coupons is to try Google search ("your vacation destination" & "coupon") and scan though the sites that show up. Finally, don’t forget that several hotels offer free breakfast – so choosing a hotel with free breakfast can save you the money spent on one meal every day!

During the trip

Give your kids spending money ahead of time
Kids tend to get extremely excited while on vacation and want to buy everything that they lay their eyes on. In order to avoid ugly tantrums and overspending, give your kids some spending money ahead of time. As a matter of fact, having them save some money for the trip (and maybe matching it dollar for dollar) may not be a bad idea to help them understand the cost of spending on souvenirs and trinkets.

Speak with the locals to find the local digs
Stores in the tourist areas generally have a “dumb tourist” markup on everything they sell. If you don’t want to spend this markup, speak with the locals and find out the places that they spend their money at. You may be amazed to find shabby looking seafood restaurants that offer the most delicious seafood for reasonable price, local farmers markets where you can find organic local foods and nice handmade handicrafts that would make great souvenirs etc.

Rearrange the trip so you need car rental for only a few days
If you are going to spend the entire day in the amusement park and if your hotel offers a complimentary bus ride to the amusement park, it does not make sense to have a rental car sitting in the parking lot all day! Plan you vacation in such a way that all the days that you are not interested in the car rental are closer together, and you can pick up the rental mid-way through the vacation. Watch out though – some can rental companies offer huge discounts for weekly rental, in which case you may just be better of getting the rental car for the entire vacation.

Bring your own entertainment and even food
If you are taking a road trip and have room for it in your car, then you may want to pack your DVD player and a few DVD’s to relax in the evenings after a hectic day of vacationing. Or you may want to pack in some of your board games to have quality time with the family while lounging after supper. You can stop at a local walmart and stock your room with inexpensive snacks and cold ones so you do not have to get them from room service when your kid gets a urge for the midnight snack or the spouse gets the urge for a cold one.

Plan your meals
Most places have different prices for the lunch menu and dinner menu. So plan on having a nice hearty meal at lunch time and a quick stop at the fast food joint or room-made snacks (if you have a kitchenette) for dinner. Also, if you can pick up sandwiches and take it with you in small picnic size packs to amusement parks where food tends to be extremely expensive, you could possibly save some more money. And do not forget to carry your own water bottles or soda!

After the trip

Find inexpensive ways to print your family photos
When you return back from the trip, your vacation is over but the expenses are still not done. While many people these days have switched to online photo archiving and sharing, some still prefer to print hard copies and save it to albums or scrapbooks. When you print your pictures, make sure you can save some money. xpbargains has a list of the latest deals for online photo printing. Consumersearch.com has a review of some of the digital printing services.

Find great ways to reuse the souvenirs
It is likely that no matter how careful you are, you have picked up a handful of souvenirs and trinkets that you find extremely tacky or silly when you come back home and open the boxes. Find ways to put them to good use. If they are small, you can mark the date of your trip on the back with a permanent marker and turn it into a Christmas tree ornament. Also remember that one man’s thrash is another man’s treasure – so see if there is interest for it on eBay or Craigslist.

Hopefully, the tips here have stoked the burning desire in you to take your family out on a vacation this year. Be safe and enjoy – before you know it your kids will be all grown up and the time the make memories will be long gone!

*Image Credit: Photograph by mallix [via Flickr Creative Commons]

PS:This article was featured as an Editor's Picks in the Festival of Frugality #137 over at Frugal Homemaker Plus. Head on over there for some really good reading...

~~~oOo~~~

Use cash back credit cards during trips. Find credit cards using credit card comparison websites.

~~~oOo~~~

Single Ma had a great article on her plans for her daughter's college education.

This really got me thinking about how much support is too much when it comes to your kids.

While I think it has helped me a lot in life to have gone through what I had to go through to get myself out of college with my BA, I always say that I will do whatever I can to help the piglet not have to worry about money. Would I be doing her a disservice by taking that out of her mind?

I don't plan to keep her ignorant when it comes to money. I do plan on teaching her the virtues of compounding interest, saving early and often, and controlling your impulses so you not paying off debt for the better part of your life. The lessons on ROTH vs. pre-tax 401K will come when she's a little older :)

I hear/see all the time where kids become super dependant on their parents for everything, from housing, cars, "get me out of trouble money", and anything else that comes up. While I do want her to have all of the things that I did not have as a kid (house, trips, a decent hairstyle [my mom cut my hair more times than I care to mention]), I don't want her to miss out on the lessons I learned from all of my hard work, it does build plenty of drive and character to dig yourself out and try to make your own mark without much help from anyone else. But I don't want her stressing about every last dollar and having to work crazy hours and missing out on life.

Even though we were poor, and I mean ppooooorrr, my childhood is full of wonderful memories. Material things meant nothing to me growing up, I was happy just walking through the park with my mom or visiting Grandma's house and racking up on all the cookies she gave me :) I want her to have this same mindset, even when she gets older. To appreciate the moments with family more than the trips to the mall (this will get harder the closer she gets to teenage-hood...I know). This also pushed me to work harder when I got older, to bring my family up with me and not depend on anyone for anything I wanted.

I guess like all things in life, balance is the key and learning the power of "no".

I think I'll just stick to the original plan, save enough in her 529 to where she will still have to work, but not as much as if we had nothing saved up. And keep her separate savings account in ING to get her a little head start, we plan on keeping $1,000 in there and anything on top of that is up to her. Aside from that, we'll deal with things on a case by case basis. PRAY FOR ME PEOPLE.

Why is this so hard? They should have handouts at the hospital on what the formula is to raising a Bill Gates, Denzel Washington (does more charitable work than he gets credit for) or Oprah.

Thanks for reading
Love ya babe

I mentioned this briefly in yesterday's post.

I'm sure by now you've all read about President's Bush's proposal to "stimulate" the economy. CNN Money covered the proposal and negotiation sticking points here.

The jist of the plan is to give an $800 tax rebate to taxpayers (families can get up to $1,600) so they can then go out and spend this "windfall". This, in theory, is supposed to get us out of an oncoming recession.

I may be naive or ignorant, but I don't really see how this will solve anything. Also, this makes the gov't seem like the dopeman, trying to give the junkie a little taste just to get him going on his merry way down that debt highway again. I say this because they have also lowered interest rates by 75 basis points (100 Basis points = 1 Percentage point) which is a pretty big cut.

So not only are they giving you $800, they are also making it easier for you to go out and get a loan, or worse yet apply for a store credit card while your out spending your $800. Banks will lend more money out when rates are low, but you are going to have to pay it back eventually.

So with all the debt problems this country is having, people losing their homes, people making only $30K/year that are over 100K in debt, the country itself has the largest trade deficit it has ever seen, the plan to give the economy a boost is to give everyone a little money and hope they spend every last dime and maybe a little more. PURE GENIUS. If they really want to show us how to deal with this, they would ride out the recession, in the same way you would ride out a dip in the stock market, and just wait it out. If the recession last longer than planned, regroup and then come up with a strategy. Show the people that investing for the long term is the best way to invest, don't panic at the first sign of peril. Ride out the highs and lows, but still keep an eye on things to make sure their not getting out of control.

Say everyone goes out and spends their rebate, what happens after that? Stores will see a big surge in sales for about 2 months and then everything goes back to normal. This is like an overweight person locking their refrigerator in order to keep from eating....we're not dealing with the underlying issue.

If the gov't were to sponsor financial planning courses, teach people/families the perils of getting too deep into debt, or maybe even reduce taxes at every bracket (which would boost the economy on a more long term basis in my opinion), this would be much more beneficial than giving a rebate and hoping everyone goes out of their mind and digs themselves deeper into the hole and gets closer to claiming bankruptcy.

If this plan does get approved, and selfishly I hope it does because I could use $800 to reduce my credit card balances, I hope everyone opens an ING Direct account and puts the money right in there and show Bush that we're not playing these games anymore. We're getting serious about our money over here

Thanks for Reading

Love Ya Baby

Well here goes, the debt mountain that must be climbed to get us to the Promise Land :)

Visa #1: $4,000
Personal Loan: $1,200
Visa #2: $910
Visa #3: $290
MasterCard: $280

On top of this, I am 1 month behind on my car insurance, we will be making a double payment at the end of this month. I also have a $211 speeding ticket that I got while we were on vacation in sunny Florida (apparently sunny skies increase the weight of my foot and makes the car speed without me noticing), I also have a $55 parking ticket, a $35 parking ticket and a $75 ticket that I got on the train for crossing in between trains.

I just paid off a separate $110 dollar parking ticket and my utilities were 2 months behind but I paid them and they are now up to date. When I tell you things got bad, I meant horrendously, kick me in the wallet bad.

The tickets kill me because it feels like a waste of money. I have vowed that I will not get any more parking tickets this year.

To make things worse, our savings are down to basically zero (not counting any piglet funds) which really hurts because I worked so hard to build them up to a respectable level.

The plan of attack is your basic snowball:

MasterCard 1st
Visa #3 2nd
Visa #2 3rd
Personal Loan 4th
Visa #1 5th

I will pay the minimums on everything but the MasterCard until that is paid off, then I will apply the MasterCard payment plus the minimum I was paying before to Visa #3, and so on down the line.

The personal loan carries a large minimum payment so I am considering using my income tax money to pay that off completely.

I know this may not seem like a lot of debt, considering you have folks out there who are working on paying over $20K in credit card bills, but this is huge for me. More so because I have already been down this road and vowed to never travel it again, I didn't like the scenery or the food, you can only eat Ramen Noodles so much :)

What's happened has happened so no sense in crying about what should have been. I will climb this mountain again with the wife and McNugget by my side.

Sometimes life happens, but you can't let it get the best of you. If you fall into a pity party and look for someone to blame, you'll never get out. That's not my style and I don't want my child seeing that.

Another option may be to get another personal loan, especially with the Fed's recent rate cut (speaking of which, how exactly is an $800 tax rebate and cheaper money supposed to boost our economy? Once everyone borrows up to their eyeballs for new cars/clothes/houses, aren't we just setting ourselves up for another collapse? Does this country ever learn, just ride out the recession and let people figure it out; Ill save that for another post), but that isn't too attractive to me and I'll save that for a last resort.

Some of you will also be happy to know that I am trying the budget thing out again, just to get a better handle on our expenses. You ever notice that when your broke you have no idea where the heck your money went, during prosperous financial times you know where the bulk of it is going, give or take $50.

I am putting away $15/paycheck to rebuild our emergency fund, just because I still think savings are important even if your reducing debt. If you have an emergency while paying off debt, where will you get money? If you use the cards again your back at ground zero. Just my opinion. $15 is all we can afford for now.

Thanks for reading guys

Love You Babe

Feels like ages since I last posted anything on this blog.

To all of you who were daily readers, I apologize for leaving so abruptly, but I assure you that everything is OK, at least physically.

Financially, the family has hit some hard times due to an uncontrollable family situation which basically ran my emergency fund and all other savings dry (save for the baby's college money/savings account).

We are back in debt and everything seems to be a mess. I have been down this road before so I know I can get out of it, no matter what, this will be the last time I have to go through this.

At least now I can share a get out of debt journey with my fellow bloggers/readers.

This week, I will be tallying up the final numbers (scary thought, I think it's more than 5K which is a big number to me) and detailing the plan to get out and get the savings train back on the tracks.

If the system wasn't set up this way...... nah, I'm not even going down that road

If someone would just cut me a break..... another stupid excuse

I'll just wait 'til my income tax money comes in.... lame

I got myself and my family into this, it's on me and the wife to work our way out.

Currently the plan is to minimize savings (can't stop completely, I am an addict after all), and focus on paying down the debt. 1 year of dedicated payments should be enough, after that, saving go back into high gear.

You never know what tomorrow might bring, but I can sure control today.

Thanks for reading and hopefully you guys aren't too upset that I left.

I have still been reading other blogs from time to time.

Sistah Ant, hope you still planning on buying that house before the year is up.

Dimples, homegirl you really have made some serious progress, keep it up.

SingleMa, you already know you are the Oprah of female financial blogging so I won;t even say anything.

Jonathan, how you find the time to put up so much useful information on your blog is an amazing gift.

Thanks to everyone I forgot to mention

The wife and I differ on this topic quite a bit. I personally don't carry any cash on me anymore. It can be a pain in the foo foo (the piglets word) when you have to pick up a gallon of milk from the grocery store but generally I prefer this strategy. Why, you may be asking yourself (or you may not be depending on your interest in my writing :) )

First of all, whenever I do hit the ATM and take out $20 just to buy some milk for $4, I'm left with $16 in my pocket. Now, as dedicated as I am to saving money and not getting into debt, $16 will burn a hole in my pocket after a while. Either I'll get hungry and convince myself that I can just factor the $20 into the budget and spend that last $16 on lunch for a few days, or maybe even pick up a CD that was on sale at Best Buy, or worse, see something on sale at Pathmark that we don;t really need but I just have to have because "well I already took the money out"...it always those Oreo's that are on sale at the worst times. Truth is, I can give myself over 15, 134 reasons why I should spend this already withdrawn money instead of walking into the bank in the morning and making a $16 deposit. Its weak, I know, but I get around this by not keeping money in my pocket and by making sure most places I frequent accept my trusty debit card. I also keep $20 in the house for an emergency cab ride or if we need something quick. Expense tracking is also made simpler by debit purchases, I can look at a reciept or go to my online bank statement if I forgot to write something down.

For the most part it works. The other way around cash is to use rewards cards to purchase everything and pay them off monthly. Well we are still working on getting a few rewards cards lined up. The credit card monster still scares me I must admit. Once I have more stable footing,I will jump on that ship. It took me a long time to get out of debt, and those flashbacks haven't gone away just yet. As responsible as I have become, I know how quickly temptation can take over. "The will is strong, but the flesh is weak". I can admit my limitations, I'm grown :)

The wife is of a different school of though, leave the debit card and carry cash. Cash is more readily acceptable and accessible than a debit card. In her method, we would withdraw once every pay period for what we would use (groceries, gas, cleaning supplies, etc), plus about $40 for variable expenses for the next 2 weeks. It makes practical sense, but I just don't trust myself with over $200 in cash sitting in my house/wallet. She has a little more control than I do, or at least she's never been in the hole that I was in, so she is more at ease with this. She is afterall, my better half. aaawwwww :)

In the end, we stick with the minimal cash method. Keeps everyone happy and safe and with money in the bank....where it should be :)

Thanks for Reading

I Love You Baby

Most of my friends know that I like to save money and I hate to spend it. This wasn't always the case but most of them understand now. Some of them ask for help, but when we get down to specifics I get these looks like I'm preaching some kind of cult-tactics from high on a mountaintop.

After the initial shock from my "try to hang out less so you don't spend $200/month on eating out and drinking", we generally change the subject :) Not that my friends are alcoholics, but even a few nights a month of dinner and say 1-2 drinks can add up pretty fast.

I am by no means a guru, I preach saving to no one, but if you ask I will share my thought and/or strategies. It is up to you to listen, 'cause I ain't got the time to babysit and hold your hand. If your paying me that's a different story, I'll walk with you all the way to the bank to deposit that check for a small fee :)

To give an example, I have one co-worker who constantly asks me, "how do you save money on what we make." As if we make just enough to keep us out of the poor house, AND SHE MAKES MORE THAN I DO. I tell her the same thing every time, I bring lunch as much as I can, if I forget to bring it, I only spend $3-4 if I have to buy outside (i don't mind eating food from a truck, chicken and rice platter baby) if not, i always keep some dry oatmeal in my desk that can be mixed pretty easy and popped in the microwave. Not as good as Chinese food or even some good ole' Diner food, but it's filling and free. I also don't shop too much (barely ever) for clothing or unnecessary things (nick nacks, accessories, etc.) When I am more financially stable of course I will get myself more wants, but for now, my goals are set and I am getting only what me and family need. I used the shopping and food examples for her because this is where most of her money goes. She is constantly finding a sale somewhere, running up the total on her credit card and instantly regretting it. "You can still return it and get your money back" is what I tell her every time. She of course refuses and says she will pay it off "little by little". I even tried explaining to her that because you are paying it off "little by little" you are pretty much canceling out the "sale" price of whatever you purchased and are actually paying more than the original price for it after 4-5 months of interest charges. Still she doesn't quite understand, "I can't just give everything up". People must really think I live like a hermit, staying at home and just stashing away money for a rainy day. I told her, your not giving everything up, just prioritizing where your money goes, you asked me how to save money, don't kill the messenger. I tried to get her to at least bump her 401K contributions to 6% since that the max for our company match, free money woman...she said she can't afford it. She didn't even know what she had her current 401K balance was invested in, "I think it's all in the long term stock market" I don't even know what that means and I think she was just saying that because someone mention investing for the long term. I thought about telling her to build up at least a $1000 emergency fund but decided against it. Once I get her to bump the 401K (I think this is the easiest step), then we can move on from there.

Needless to say the conversation took a turn elsewhere. She has also has children, when I told her I had a 529 for the piglet, she tells me "I had to pay my way through school and I work hard, let them kids work. Their not getting anything from me." I think this is just a sad way of thinking so we don't even bring up saving for the children anymore.

Should I push harder when friends actually ask for help, or let it go once they are no longer interested? I'm not sure what my duty as a friend is, I hate getting all up in peoples business, and I'm definitely not one to preach to anybody about how to live their life. Where do you draw the line? Some people just aren't ready to take that next step.

Again, I live the way I live because I think it appropriate for me and my family. I'm not a financial planner and I don't pretend to be one. If you have the means to "live the good life" as Kanye says, then live it up. Just make sure to put something away so you can make the rest of your life just as good.

Spend less than you earn, invest in what you know and think long term (not "what's hot" today), minimize debt as much as you can, the rest is yours to play with.

Check out MoneyMonk's post on how simple this really can be.

Thanks for Reading

I Love you Baby

When I finally decided to use a budget, I noticed myself looking at numbers and playing with the figures and trying to maximize interest on money we're not using and all the little things I used to look at when I was studying cashflow statements and balance sheets in my college Finance and Investments courses. It was actually pretty cool. Big thanks to all of you who encouraged the use of a budget. I thought I was doing enough with just expense tracking, but this is a much better picture of my financial health.

Looking at you financial life like a business can give you more of a perspective on where you stand with lenders and also help you understand investing in general. Would you put money into a company that owed $500,000 more than it was worth with decreasing revenue streams? By that same token, do you expect to get a decent mortgage if your debt far outweighs the value of your assets?

By doing this you can see just how much you are maximizing your revenue, if you are getting a decent return on the funds you are not investing, if your investments are bringing up your net worth or dragging it down. There are numerous ways to look at it and also many ways to over analyze the numbers. Bottom line is, take your finances as seriously as you would if you were investing $1 million into a company, think of yourself as that company.

How can you bring in more investors (banks, mortgage companies, 0% credit cards, etc.), instead of having cash sitting in a checking account, make that extra $5/month by putting it in savings, try to bring down that cable bill by cutting HBO and invest that $15/month to better your future prospects. If not cutting costs, how can increase revenue to make more funds available for investing? A small 2nd job can provide enough capital to fund the new project you have set for your expansion (House) with the help of some investors of course (mortgage). Think long term when it comes to investing, you want to build the next Johnson & Johnson or GE, not another .com bust. Little thing like these (on a much larger scale of course) are what successful business do, make your dining room the boardroom for your family. And don't pull an Enron and fudge the numbers just to make yourself feel better, your the CEO, make yourself accountable.

By the way, this budget has helped me find that food is the biggest variable expense we have in our house. We are hemorrhaging money at a rapid pace and something has to be done. I am considering cutting out supermarket shopping all together and making us an all-COSTCO (Wholesale) household. I'll crunch the numbers and see if it will work out.

Thanks for reading

I Love You Baby

I want to start by thanking everyone for the kind and supportive words from my last post "It's Ok to Fail." I know it was more of a slip than a failure, but the title wouldn't have as much impact with "It's OK to Slip" :) Seriously, thanks for the encouragement. Saving money means a lot to me, along with financial security which go hand in hand.

I am back on the horse, I took Dimples' advice and I am trying the budget thing out. I normally don't like budgets, I try to just be as frugal as possible. I feel that budgets tend to be too restrictive and you start to feel controlled by the budget after a while and you end up throwing it out the window like a child fighting against his parents. But I'll give it a try to see if we can supercharge this horse and get him running down the track a little faster.

Anyone have any opinions on budgets? Good or Bad? Do you use them?
I tried to break down all the categories after necessities (Rent, Car Insurance, ConEd, etc), these are bills you HAVE to pay each month, without question. I included the emergency account as a bill (ING Direct automatic withdrawal) to give it more importance. But then I have like 5 different other categories for my money to go to. Between the saving account for the baby, the 401 K, the IRA, the vacation savings, blah blah blah Am I micro-managing this too much?

Is it better to use general categories like just "Savings", but the I don't really get the detailed picture of whats going where....

See this is why I didn't even want to start :) Just kiddin

Thanks for reading

Love you baby

As long as you don't quit. Keep trying and keep pushing to reach your goals, most times the only thing stopping you is YOU.

I know that sounded very "motivational speaker"ish, but it's true. I thought about this after I wrote my last post. We had to dig into our reserves a bit and we had to use a few credit cards, but instead of sitting back and sliding down the debt hill again (I've been on that ride and it can be fun, but afterwards you get really nauseous), I am doing a thorough review of my finances, seeing what I can cut out, using a quasi-budget(I don't really like budget because of their restrictive feeling), and attacking my savings with everything I have. I liked where my emergency fund was, it just looked pretty when I logged into my ING account to see such a big number ($1,600 is a big number for someone who has saved nothing for their entire life), so I m determined to get up there again and surpass this number.

I know the old me would just use this little slip up as an excuse and just say "see, theres no point in saving, might as well use whatever i have left on my credit card and try to pay it off later." Not the case anymore, and you should try to be the same way. With finances, weight loss, at work, whatever it is, don't let anything stop you from getting where you want to be. Everybody slips, everybody fails, even Bill Gates was a drop out, Micheal Jordan got cut from his high school basketball team, get up and try again, no matter how hard it is. This is your life, there is no reset or rewind button, if you make a mistake, realize it and move forward, stop wishing you could go back in time because you can't. What you can do is make the present and future a whole lot better. There I go again, I feel like Tony Robbins, minus the giant Gorilla hands :)

So I'm back on rack and pushing this train again, the push is almost all uphill but I have to keep going. My family is what motivates me, find something that motivates you and just keep that in your mind when you feel you have nothing else to give.

Alright, now that I've annoyed most of you with my cliches :)

Thanks for reading

I Love you baby

This is a question I used to ask myself a lot. When I wasn't really making any money, which is when you should be really tight with the little you have (a.k.a. frugal), I rationalized every little purchase as "it's just $5 and I haven't had Starbucks all week" or "I only spend $4 for a chicken platter when I go to lunch, my co-workers spend $6 so I'm doing OK" or even "I don't really need a PDA but it's on sale for only $399" or even worse "Damn I haven't hung out all week, I could use a drink, lemme call the boys. It's my last $50 but I get paid again next week". If this sounds anything like you, be verrryyy careful how far you take that mentality.

I'm not telling anybody not to have fun, not to penny pinch and become a hermit. I like to enjoy life as much as anybody, I just go about it differently. What I used to see as lunch for $4 for today, I now as a $20 weekly expense, which adds up to $1,040 a year for the privilege of eating lunch in Manhattan. $4 may not seem like much, but think of it long term. If your a smoker, $7/pack on average and if you smoke even 3 every week. That's $84 a month and $1,008 every year. So if you brown bag lunch and quit smoking, your halfway to a fully funded IRA. If you don't want to quit or it's too hard, cut down to 1 pack a week and see how much extra money you have in your pocket.

For me, I was a heavy drinker. This took a real toll on me physically and financially. On average I would spend at least $50-$75 every time I hung out with my friends, that's without food. We hung out about 4-5 times a week and if I didn't have any cash I ran a tab on a credit card. And I would rationalize probably the same you many of you do, I was young, I was having a good time, I'll pay it off later, it's not like I'm out smokin' crack. I was also into gadgets, PDA's, disc men, Sony PlayStation's, cell phones, anything that used electricity found its way into my hands one way or another. It's 0% financing, I'll pay it off little by little is what I would say to myself.

The lesson here is, what may seem like just $3 today or even just $10 is actually a lot more if this a recurring expense/habit. And just because you put it on a credit card does not make it better, interest counts as money owed too. If you can afford it, go ahead and spend it. Travel, see the world, expand your horizons, go out with your friends, LIVE IT UP. If you know your on a tight budget and can;t spend much, think about how much money would you have in your 401K, ROTH IRA, or your savings account if you put that $4 in there every time you would have spent it on that habit? Think about it......

I will keep this post short and sweet to give it more effect. A lot of people who are in debt, don;t even know they have a problem. They think the debt is either manageable or that someday they will hit it big and be able to pay everything off in one shot. My advice to you is:

WRITE DOWN EVERYTHING YOU OWE!!!

When I was at my deepest debt pool, I didn't even know how deep the water was in this pool of hopelessness. I had signed up for this website, Iwon.com, in which they give away $10,000 once a day to random members of the site. I was thinking, "damn if they pick me, I'm paying everything off and starting fresh." Going over the numbers in my head, I realized that $10K would not even get my back to zero, I would still be in the hole by a couple of G's. It just hit me square in the face, like a bully at the playground, "a $10,000 jackpot is not enough for me." You can either let this break you, or fight back against your own foolishness.

I wrote down every debt I had, and where the money from my last paycheck was going. I was spending so much money on hanging out, clothes, Discmen, TV's and other crap that would have no value in a few years, and I was paying minimums on my credit cards. I was under the impression that paying the minimum would help build my credit and help em get what I really wanted later....MORE CREDIT :) I stopped hanging out, got a second job, got a 3rd job and put all my extra money towards paying off debt. I'll save the strategy for another post.

WRITE DOWN WHAT YOU OWE and you might just be surprised by what you see. Absorb it, look at it....accept it. Don't let it get you down, come up with a plan (I'll try to help with that in my next post), and get yourself out. Don't just keep going down the road your going and "hope for the best", hope and $1.50 won't even get you on the train in NY. Get proactive and righteous with your finances, its your money, don't just give it away!!

Thanks for Reading

I Love you baby

In one of his smarter moves, maybe the only one but we won't get into a political discussion here, President George Bush declined to offer a "bail out" to homeowners who are in danger of losing their homes. The federal government was considering this proposal for a few months now, but decided against it.

Not that I was people to become homeless or that I don't think people need help, but what good would it do to help so many people in financial crisis and how exactly do you decide who needs the help? A person could have a $60K mortgage balance with a $500/month house payment, but he just lost his job and he has no savings due to his frivolous spending. His neighbor makes $100K/year with a $800,000 mortgage balance that comes with a $3,000/month payment, he also has to pay for his two cars that he got to match the big house so he saves no money and his credit card debt is steadily rising. Who needs the money more? How do you decide that? And why is it just homeowners who would get a bailout, I know plenty of people who have financed $90,000 cars while making only $30K/year, don;t they deserve some help if your giving out money? I think the government was more interested in helping these people to keep the American economy from collapsing in on itself and they decided to put a good spin on it "we want to keep Americans in their homes." After doing some research, they must have realized that the problem was not as serious as first though, and decided against the proposal.

Even if they had done it, it would have saved tons of people a whole lot of money, but where would the lesson be in this. If enough people screw up in the same way, the gov't will come help you? Spend all the money you want because help is on the way, don't worry about buying a house that's too big or building up a savings account.

Some families were taken advantage of buy unscrupulous mortgage companies, taken out of their excellent mortgage rates and put into adjustable mortgages with no idea of what was going on. Some were mislead to believe that their houses will continue to gain value at a rate of 150% each year, when in truth they were already losing value. These families should at least have a chance to petition their cases and have their situation reviews for some form of relief if this program is implemented in the future.

Don't buy a house if you truly cannot afford it, you now how much you make and how much you spend more than the mortgage guy who just won't stop calling your house. Take control and stop before you end up looking for a government handout to try and keep your home.

Thanks for reading

I Love you Baby

Why is it that every time the Market, or more specifically the Dow Jones Index drops two or 300 points, everyone points to some impending apocalyptic event? I know the 300 point drop was a few weeks ago, but the market has since jumped up in leaps and bounds, but no one talks about the promise land being within reach. This should be a lesson to us all to go by your on knowledge and instincts and take the word of "experts" only but so far. The market is always going to have dips, but the general progression will continue to rise. So keep investing in that IRA or 401K even when there is a drop, you'll be glad you did when prices start to rise again. I mean even the Great Depression couldn't prevent the US stock marker from gaining value, why should interest rates.

Thanks for Reading

I Love you Baby

I just realized that I left single parents out of my last post about parenting breaks. Single parents deserve just as much of a break as the rest of us, maybe moreso since they are doing the jobs of two people. If your a single parent and feel yourself getting burnt out, ask mom or dad or your sister or someone you trust to watch the baby for the night or even a couple of hours. Light some candles, thrown on some Marvin Gaye/Sade and enjoy a nice soak in the tub, fellas don't be afraid to enjoy a nice soak in that tub with some candles providing some ambiance, you know you want to :)

If that's not really your thing, call some friends and go hang out for a bit, or go for a stroll in the city by yourself. Whatever gets your mind off of things, that's what you need to do, unless your dimples with her ESS (emtional shopper syndrome) :) I'm just playing girl, shop it up and enjoy for one night.

Thanks for reading

I Love you baby