Can I Save My Home?
As we all sit around, glued to our bank accounts, waiting for our stimulus check, the country is hurdling towards an unknown that won’t officially be settled until July. Once the magic “R” word comes out, I would imagine that there is going to be a new shock to the system as a whole. Thats going to happen even without considering when the monstrous ARS issue thats going to hit the federal government to the tune of about $330 billion dollars.
It brings up another important issue that millions of Americans are currently facing. What to do about their home. If you bought your house in the past 3 or 4 years and it has a jumbo loan or more amount on it, then you are probably seeking as much information as possible about what to do to remedy your situation. Let’s discuss some of your options and see what is out there that can help you…
Renegotiate
If you have an ARM and its about to reset, or you just got some bad terms, one option you might look into is simply calling your mortgage company and begin some discussion about reformatting your loan. Many times, they have done things that aren’t even legal anymore and you were grandfathered in and they are taking money unfairly. Granted its every buyers responsibility but it takes two to tango. Lenders should now be in the position of trying to appease their customers and bending over backwards to keep you. In theory, they should be more than willing to renegotiate your terms and have everyone come to a new agreement. In theory.
Refinance
A more specific goal in the renegotiation process, would be to refinance. But, you are thinking, Isn’t it too late? No. No it is not. Rates have never been lower and banks have never wanted your business this bad. I can only imagine that given the right circumstances, they would want to keep you in your house as long as possible because at least its consistent. And if you are still the owner, the probability of you trashing it on your way out is much lower. In addition to going back to your original lender and telling them the deal, shop around. Where one lender might have a crazy scheme that sounds like a fool proof plan, find out if that is best-practice. See if you can get hold of someone knowledgeable and that you trust and ask them about the terms of your new loan. Refinancing is little expensive but it beats selling right now. Its very similar to when you consolidate a credit card: one card company basically pays off all your debt and you owe a new group at, hopefully, a more favorable rate.
Government? Help?
So what is the US Government doing to help out these home owners? Well they are trying to do quite a bit. I am not going to muddy things up and start an endless, irrelevant discussion about my personal politics here in this venue so I will stick strictly to the facts. The Democrats have been cranking away on a bill that would rescue quite a few homeowners at risk of foreclosure. Their ultimate goal is to slow the rate of foreclosures and trying to do something about the “sliding of home prices.” Not only has Barney Frank (D-Mass, the author of the Bill) made every effort to appease the current administration, but there is a majority of Republicans that are in favor of it as well. Even Bernanke is a fan of it and would like to see it go through. But President Bush would not. In fact he has threatened to veto this Bill “if and when it reaches his desk.” The reasoning for him is that it would constitute a “bail-out.” Bear-Stearns got a $30 billion bail-out, why not the taxpayers and hard working people of America? “It would reward speculators and lenders,” is Bush’s reply. There must be another reason that we don’t know about. Without tipping my hand as to what side of the political fence I am on, thats all I have to say about that. I can see both sides of the aisle.
[UPDATE: The House officially passed the Mortgage Bill…Watch as Bush vetoes it.]
Selling
It boils down to a sludge. If none of the above options are available, then it still might be best to due what you can to increase your income and muscle through it. I think that option is better than selling. Selling right now just seems to difficult and too expensive. If you are having a local financial crunch, and have paid a small fortune already, and would end up selling at a loss, THEN on top of that paying a realtor 5% of your selling price…You have lost much more money than if you refi/reformatted OR got another job and scrimped through this mess. Its hard to say that selling is even a last resort at the moment. Give it a year and see what happens…
Why Didn’t I Receive My Economic Stimulus Check?
It’s early May, the last two digits of my social security number are between 00-20 and I filed my taxes on time with a direct deposit and I have some serious spending to do – where is my stimulus? Well, serious spending is more like a new ceiling fan and light fixtures, but hey, I can’t do my part to stimulate the economy without my stimulus check.
It seems I’m not the only one who hasn’t received theirs either. Countless websites are reporting people who fulfill all of the requirements to receive their direct deposit by May 2 but haven’t. Are any of you still waiting? Don’t worry, your not the only one. More than likely, if you have not received your direct deposit yet, you will receive a paper check instead (look at the possible reasons why below).
If you wish to check on the status of your stimulus payment, click here.
Possible Reasons You Have not Received Your Stimulus Check
(If any of these apply to you, then you will receive a paper check instead.)
• If you had filing or preparation fees deducted from your 2007 refund
• If you received a rapid refund
• If you amended your original 2007 tax return.
• You owed taxes or paid into the federal government rather than received a refund.
• If the tax refund you received via direct deposit has “RALDEPT” in the transaction description at the bank. (This means that the refund went through a third party bank because the IRS didn’t have your banks information…not your fault but it still happens.)
As a reminder, the payment scheduled based off of the last two digits of you social security number is below.
Stimulus Payment Schedule for Tax Returns
Direct Deposit Payments
If the last two digits of your Social Security number are: Your economic stimulus payment deposit should be sent to your bank account by:
00 – 20 May 2
21 – 75 May 9
76 – 99 May 16
Paper Check
If the last two digits of your Social Security number are: Your check should be in the mail by:
00 – 09 May 16
10 – 18 May 23
19 – 25 May 30
26 – 38 June 6
39 – 51 June 13
52 – 63 June 20
64 – 75 June 27
76 – 87 July 4
88 – 99 July 11
Once you do finally get it, here is an article that discusses what we think you should do with it. Push down credit, save it, invest….just don’t blow it.
If you enjoyed this post, consider subscribing to our RSS feed, or better yet, get us in your Email, Stumble it, or give it a Digg!
My Credit Card Interest Rate Raised for No Reason
Credit card companies are coming under fire lately, and in our opinion, deservedly so. Credit cards of all kinds are now taking advantage of the 10 pages of fine print you agree to when signing up for a new card, which gives them the rights to basically do whatever they wish to your interest rate. It is not uncommon now for good customers, those that pay their card in full every month on time, to have their rates raised. Sound unfair, well it is. Because of the problems associated with the mortgage mess and even hedge funds, banks are now looking for other ways to balance their books, and they are turning to the average consumer.Congress is now in tune to the problem and has held various oversight hearings. However, we feel it is unlikely that any major reforms in the industry are likely during the election year, but attention to the issue will only heat up. Half of Americans carrying total credit card debt average around $10,000 each (according to the U.S. PIRG). Because of the enormous amount of debt people are facing in other areas of their life with student loans, ARM mortgages etc., it’s hard for anyone to afford jacked interest rates on their credit cards.
Common Practices Credit Cards are Using to Get More From You
Double-cycle billing: This is a practice, which is confusing when explained in plain English, let alone when sifting through the fine print. Here, banks issuing credit cards will charge you interest on the entire amount you charged during a billing cycle, regardless of the amount you actually pay off. For example, if you charge $2,000 one month and pay off $1,900 leaving a balance of $100, the bank will make you pay interest on the full $2,000 in the next month and beyond, until the remaining $100 is paid off.
Universal Default Pricing: This is a practice where banks are taking advantage of good responsible customers. Regardless if you have never missed or had a late payment on your current credit card, companies may now raise the current interest rate on your card if you are late on a completely different bill with a completely different company. In addition, they can raise your current rate if your credit score falls.
Zero-Tolerance Late Payment Policies: Little leeway now is given to customers
from certain financial institutions. You can now be charged the same late fee for being an hour or a day late as those customers who are months late on their payments. Keep in mind that due to the magical fine print you agreed to, any late fees may also result in a penalty rate imposed on your account, which according to CNN can top 30%, which can be applied to not only purchases you are going to make in the future, but also the ones you made last week!
Suggestions
Milk Your Money is troubled by these practices, which are becoming more common, and has a few recommendations you should take as a cardholder to ensure you are not a victim of these rate hikes.
1) Read your statement each month. Look to make sure that the interest rate remained the same from the previous month. Look to see if any fees or penalties were charged to your account. If any of these appear on your statement, call you company and get explanations, you many see these charges dropped, just for asking.
2) Stop using multiple credit cards. The more credit cards you are using, the more likely you are going to “break the rules,” with one of the companies. For example, you might go over your credit limit or forget a payment. Focus on using one card and really understand the terms of the card to ensure you use the card only to your advantage.
3) Forget about rewards programs if you are paying interest month to month. Rewards from credit cards should only be taken into consideration for those that are truly responsible with their spending. Rewards average around 1% of your total purchases. This is a number, which is wiped out with one late fee assessed to your account or a month-to-month interest payment. Companies love that people are obsessed with earning frequent flyer miles or any other reward when using a card, many of these people don’t look at their credit card statement, but do look at how many miles they have earned. Money is money, so treat it that way.
4) Call your card issuer and ask for a lower rate. We have stressed this before in an earlier post. Nearly half of the people who call into their company asking for a reduced rate are successful. This is an amazing number! Credit card companies spend so much money marketing their cards and gaining new customers, that once they have you, they don’t want to lose you. Take advantage of this and ask for a lower rate today! $
5 Quick Tips For Milking Your Money in the Market
As we move ahead with this diabolical ARS issue, its becoming more and more clear to me that the way Americans might be best suited for investing is a little more robotic and a lot less emotional. At least on some level. I am guilty of making decisions within my portfolio that are less than admirable and some I am even embarrassed about. But I have also had a few times where I really nailed something and I have seen it pan out really well. This whole thought process is an evolution, at least, it seems that way as financial are so improperly addressed in formal education settings. This all became very well illustrated in a little blurb in Money Magazine that I would like to paraphrase and expound on for a few…
Print this list out and put it in a place that you see frequently on a daily basis:
-
Step out and you miss the point- Had you invested in an S&P 500 index in August 1997 and done nothing 10 years, you would have realized an 88% return. Had you missed just 20 days out of all of that, you would had a 20% loss. Market returns come in bursts. Be patient and weather the storm.
-
Remove your emotions- Invest automatically. Start with a small amount and have it automatically transfer. ING is doing it, Sharebuilder is doing it, and since they have merged, you can even get a deal on trade fees by doing both. Check with your bank, they all do it. If not, change banks because this has been around almost since money has been invented and if your bank doesn’t do it then they are doing something wrong and you should not have your money with them. Fire and forget and take a look in a few months and when you do, leave a comment here and tell us how surprised you are.
-
Focus your control- It is impossible to time or predict the market. There are about 300 million variables that you simply cannot account for. The one thing that you CAN control is fees and costs. Minimize them and do research so that you know you aren’t getting hosed. Assuming an 8% annual return, if you invest in an actively managed fund with a 1.5% expense ratio versus an index fund that charges 0.2%, you will give up almost 20% of your profits.
-
Give yourself a taste of power- Set aside a small portion of your investment monies, like 5% perhaps, and have that be diverted to the wild hunches you get. It will feed the craving of being rewarded (or punished, depending on who you talk to) and your gut feeling will be exercised without a huge blow to your whole portfolio.
-
Seek help- If you start jerking your money around every time the market flinches, get a pro to help you. You need advice and it will be cheaper for you in the long run to have a financial planner fee rather than taking your money out and you miss an opportunity when you should have been sitting tight.
These sound harsh and a little extreme but think about it…If you are cautious and take a good hard look at what you are putting your money in, you will be fine and it will all be worth it.
If you enjoyed this post, consider subscribing to our RSS feed, or better yet, get us in your Email, Stumble it, or give it a Digg!
Withdrawal IRS Stimulus Payment From Your IRA Penalty and Tax Free
By choosing to have your 2007 tax refund directly deposited into an individual retirement accounts (IRA) or any other tax-favored account, your stimulus payment will follow suit and also be directly deposited into the same tax-favored account. But don’t worry, the Internal Revenue Service (IRS) is allowing you to withdrawal your money tax-free and penalty free. Why, to stimulate the economy of course.
In order to qualify, you must request to have your funds taken out of your tax-favored account by April 15, 2009 or October 15, 2009 for anyone who obtained tax-filing extensions. Types of accounts that qualify are: Traditional and Roth IRAS, Archer MSAs, Health Savings Accounts, Qualified Tuition Programs (QTPs or Section 529 plans), and Coverdell education savings accounts.
If you are reading this and it pertains to you, congratulations! By using your tax refund to fund your IRA, you are jump-starting your retirement. If you think depositing a thousand dollars here and there won’t do much, think again. If you receive on average a tax refund of about $1,000/year and invest it, instead of blow it, look at what you could acquire over a 30-year period….
Assuming: 30 Years of $ 83.33/month (1k divided by 12 months)
Interest Rate of 8.000 % Compounded Annually
| Year |
Balance |
| 0 |
$ 1,037.45 |
| 1 |
$ 2,161.01 |
| 2 |
$ 3,377.83 |
| 3 |
$ 4,695.64 |
| 4 |
$ 6,122.83 |
| 5 |
$ 7,668.47 |
| 6 |
$ 9,342.40 |
| 7 |
$ 11,155.27 |
| 8 |
$ 13,118.60 |
| 9 |
$ 15,244.89 |
| 10 |
$ 17,547.66 |
| 11 |
$ 20,041.56 |
| 12 |
$ 22,742.46 |
| 13 |
$ 25,667.52 |
| 14 |
$ 28,835.37 |
| 15 |
$ 32,266.14 |
| 16 |
$ 35,981.66 |
| 17 |
$ 40,005.58 |
| 18 |
$ 44,363.47 |
| 19 |
$ 49,083.07 |
| 20 |
$ 54,194.39 |
| 21 |
$ 59,729.95 |
| 22 |
$ 65,724.96 |
| 23 |
$ 72,217.56 |
| 24 |
$ 79,249.03 |
| 25 |
$ 86,864.11 |
| 26 |
$ 95,111.24 |
| 27 |
$ 104,042.88 |
| 28 |
$ 113,715.84 |
| 29 |
$ 124,191.65 |
