Financial Elite - Marriage and Debt

Heading Towards Third To Payoff Debt

noreply@blogger.com (John Sholtz) — Tue, 02 Jul 2013 05:52:00 +0000

Now that we've returned to telling our journey to payoff debt, it's been decided that a new format will be followed. The format will now be similar to Blogging Away Debt or $12 a Day, but from a guys perspective. This doesn't mean that the female side won't crop up from time to time, but for now let's hear it for the boy.

We're heading towards third with just a year and a half to go until we've paid off the majority of our massive debt.
Part of me is excited and the other half feels like we're not going to make it.

If we were at the same point we'll be at this time next year I would feel a whole lot better. Mainly because we would be just six months away from this nightmare to be over, but right now I feel we've made some errors that are going to make things tighter than ever. One of these errors or technically two of these errors was buying new cars too soon.

Even though there is an emergency fund, I just hate cutting things so close. At times I feel we need a mountain of money to feel secure, but we've come so far without a hitch that I must maintain my faith that we will see this too the end. We'll make it, won't we?

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Coming Back To Tell Our Financial Success Story

noreply@blogger.com (John Sholtz) — Wed, 26 Jun 2013 06:19:00 +0000

It has been quite sometime since we've done a post here at Financial Elite. Not because we gave up on our finances or failed on our journey to payoff over $200,000 in debt, which does not include our homes, but we've been busy with life in general.

We are now 3 and a half years into paying off our massive debt that mainly consisted of credit cards.
During these past three plus years we have paid off or eliminated over $150,000 of that debt. We have also put back on more debt by buying new cars, but we'll be back to discussing the ups and downs of our financial decisions, whether they are good or bad, and the toll it has put on our marriage.

We are now more into this journey than not with the remaining $36,000 of debt to repay from the original amount of $200,000. The payments on that amount equate too over $2,000 a month and we look forward to the $2,000 a month pay raise we will receive when we pay that off a year and a half from now.

Join us for the remainder of this journey and let's wrap this debt thing up for good already. Thanks for following.

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Clinton Gets How to Fix the Mortgage Mess, Why Doesn't Obama?

noreply@blogger.com (John Sholtz) — Mon, 10 Oct 2011 16:45:00 +0000

Too bad we can't re-elect President Clinton because he has some idea's I think will help start turning our mortgage mess around. In an interview with Fortune managing editor Andy Serwer, President Clinton discusses what he would do fix the mortgage market.

I cannot emphasize the boost I think it would give the economy if we had a system that said to people whose homes are worth less than the mortgages that you can write down your mortgages to the value of your home if you can make the payment.
Or you can extend the mortgage out and lower the interest rate. I don't think we ought to keep dumping these houses on the market when it's so depressed. Can we get the votes to do it? I don't know. When the Tea Party started, they seemed to object to the bailout of the big banks, claiming they were being protected from their own mistakes. That was true, but irrelevant. If a financial collapse had happened, we would have all paid. Now a lot of people argue that you shouldn't rewrite these mortgages because people never should have taken them out in the first place. There's a big problem with that thinking. The market is so depressed that it's hurting everyone else.

He hits it right out of the park. We're past the point of people loosing their homes because they took out loans that they shouldn't have. We are now facing homeowners just walking away because they are paying for something that isn't worth what they're paying for it. Is a McDonald's McDouble worth $1? Sure, but would you pay $30 dollars for one? Probably not and McDonald's would be out of business. Start making homeowners feel like they are getting there money's worth and have a feeling of wealth and things will turn around.

There are all these options and I don't think we ought to keep dumping these houses on the market right now when it's so depressed. I'd like to see them converted into rental property in an aggressive, comprehensive way, and let people rent it for the price of the utilities, the taxes, and the maintenance, just to maintain the housing stock. Then as the economy picks up, you can put it back on the market in a way that will support economic growth, not undermine it. That's what I think should be done.And in a larger sense, the market is so depressed that it's hurting everyone else. It used to be as a rule of thumb, people would say, well, if the mortgage is foreclosed on your block, it will drive down the value of your house because it's on your block, by 10, 15, 20%.But now there are so many houses that have been foreclosed on, it's driven down the value of almost everybody's houses, except -- let's talk about the upside -- the people that are in the prosperity centers of America: in Silicon Valley, in San Diego, in Orlando, and places where the economy is booming. Except for those places, this is a problem.I can't -- I think it would really get us going in a hurry if we could flush this out

Another great idea. Keep people in their homes, instead of dumping these unlived in, unkept homes on the market and driving property values down further is the way to go.

We must stop home prices from falling any further and keep homeowners in their homes. This is the only way we are going to claw our way out of this economic disaster.

(via CNN)

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Where Has Financial Elite Gone?

noreply@blogger.com (John Sholtz) — Mon, 16 May 2011 02:40:00 +0000

We're still here, but have been extremely busy. There has also been some thought of changing the direction of the blog and discuss just how the Financial Elite have an effect on our very financial lives. Stay tuned to what happens next.

In the meantime, so far this year we have paid down additional $12,000 of debt and our debt snowball is about to really get rolling as we will be paying off our first two credit cards in July.
After that we'll start applying the money that was going towards the paid off cards and put it towards the next card in line.

We're happy how fast the year is going. Not that we are wishing our lives away, but this time next year we will have at least three credit cards paid off and will have made the last of our car payments. At that time our snowball will be huge and we can knock each debt out right after the other.

Good things are here and more to come soon.

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Civil War Coming from Declined Loan Modifications

noreply@blogger.com (John Sholtz) — Wed, 20 Apr 2011 05:40:00 +0000

I received a call today from a long time friend of mine, who is in the process of having his families home sold due to the on going Great Recession, and was not happy. Why you ask? Because the whole loan modification program is a joke.

So, let me back track a little with my friends situation. About a year ago my friends financial house of cards had collapsed. Because of his income decreasing he was charging excessively to continue to keep his household going and make his mortgage payments, but eventually he had reached his max.
Credit cards maxed out and a continuing declining income situation had him and his wife considering bankruptcy. They decided against this option and instead settled on their credit cards. While during this settlement process, they also started looking into getting a loan modification. A year later and a long story short, they were declined for the loan mod. Well, not really, but they might as well have been.

My friend eventually lost his job and was offered a loan modification from Freddie Mac (Chase is the servicer of the loan). You might be thinking well, what's wrong with that? The thing that is wrong with that is, his unemployment is $1,400 a month, but Freddie Mac offered him a payment of $1,600. That's better than nothing, but $200 over his total monthly income. So, of course, they declined the offer.

They then were offered a short sale and began the process of putting the house up for sale. The good news is the house sold quickly. They other good news is they qualified for HAFA. Under HAFA you may qualify to get back $3,000 from the sale of your home for moving expenses. Today they learned they didn't qualify.

To be eligible for HAFA, homeowners must first apply for a loan modification through the Home Affordable Modification Program, or HAMP. Owners who do not qualify for a loan modification or miss payments during the initial loan modification period qualify for HAFA. Hence, Freddie MAc declined to pay the $3,000 for moving expenses. My thinking is they weren't actually denied a modification. They were offered it, but the declined the offer. In reality they probably should have taken the the deal and then defaulted again on the re-structured loan.

My friend went on to say he couldn't believe someone has not gone into a bank and started shooting it up. I am in no way condoning this behavior, but it seems like more people have been killed themselves over losing their home then taking others out with them.

I continue to hear more and more about unsuccessful loan work outs and there seems to be a common denominator and that seems to be Freddie Mac. As I have learned that not all loan mods are created equal and there is definitely a difference when it comes down to Fannie and Freddie Mac, with Fannie being the more easy going parent than Freddie. People may not go around shooting up banks, but I feel if there isn't something done soon to turn this mess around, there will be a revolt on a civil war scale.

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Financial Elite Has Not Been Forgotten...For Now

noreply@blogger.com (John Sholtz) — Fri, 08 Apr 2011 06:30:00 +0000

Fear not citizens. We're still on duty. Since we've returned from vacation, however, things have begun to take re-shape in our lives.

Blogging has been put on the side burner for a minute as we have shifted our priorities. Now this doesn't mean finance is no longer a priority.
As it most certainly is still our focus to be debt free in the next 3.5 years as well as rebuild our wealth, but things in our lives are shifting. Shifting so that we can more efficiently and more quickly payoff our debt, spend more time with family and friends, and explore new opportunities.

As this new year continues on, so does our business. Business continues to improve and sales are continuing to rise month after month. We are also looking into offering other services and maybe even create new businesses altogether. We are also concentrating on our other passions and these other passions may be part of those new business opportunities. A move may also be involved, but how soon that will take place is uncertain. However, wherever the trail leads us, we will soon let know what that is. Until then sit tight. We'll be right back after these messages.

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Want to Know How to Become a Millionaire? Ask Jaime Tardy

noreply@blogger.com (John Sholtz) — Fri, 25 Mar 2011 07:00:00 +0000

Ever dream about becoming a millionaire? According to the research firm Spectrum Group, only 7% of American households actually become millionaires, and Jaime Tardy is working on becoming one of the financial elite. We've followed this debt buster since her first videoblog describing how she paid off $70,000 of debt.
Lately, this eventual millionaire has been popping up on financial sites everywhere and spreading the word on financial freedom.

However, in an interview posted on Yahoo, I was appalled at how many negative comments have been posted about Jaime's accomplishments. I have to think that this negative thinking is the reason that there are so few millionaires in our country or the world for that matter. Because people are not willing to do what it takes to become one. I remember when "The Millionaire Mind" came out and how so many raced to pick up a copy, only to be surprised that most millionaires are just average people, but worked hard, saved regularly, and invested wisely. I guess instant gratification is more important to most people rather than financial freedom. Anyway, I say, "Great job Jaime! I am looking forward to joining you in being one of the financial elite." You can read Jaime's latest interview HERE.

Here are some interesting statistics about millionaires:

14% of millionaires say their parents were wealthy.
42% say they don't feel wealthy.
95% say hard work is how they made their million. 83% say smart investing, 81% frugality, 67% say risk taking, and 41% say luck is how they made their million.
90% of millionaires are college graduates.
The median price of a millionaires car is $31,400.
States with the highest amount of millionaires includes: Alaska, California, Connecticut, Hawaii, Maine, Maryland, New Hampshire, New Jersey, Washington D.C., and Virginia. Hey, Jaime Tardy lives in Maine.
Millionaires invest on average $39,300 a year.
61% say they still have a great deal to learn about investing.
1 in 6 millionaires are single.
Millionaires give up to $13,000 annually to charity.

Here are some other articles I found interesting this week:

How Much Interest We're Paying - March 2011 @ Debt Free Adventure- Keeping track how much money going down the drain by having to pay interest is a great debt control device.
Secrets to Building Wealth @ Life and My Finances - This is right in line of what we just talked about and becoming a millionaire and building wealth.
Plan, Do, Check, Adjust Your Way to Financial Freedom @ Passive Family Income - I love this concept and it can be used in all aspects of your life. Wash, Rinse, Repeat.
Get Out of Debt by Blogging? Introducing the "Get Out of Debt" Blog Network @ Debt Kid - Blogging about debt is fun.
Credit Card Debt - Debt Down But Not Out @ Yes, I am Cheap - Everything isn't always as it appears. Credit card debt is going down, but it may be due to charge off and not actual payoffs.

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From the Mailbag: Getting Life Insurance for Your Children

noreply@blogger.com (John Sholtz) — Wed, 23 Mar 2011 07:00:00 +0000

How much life insurance should my spouse and I have and should we have it for our children as well? Derrick N.

There are different opinions between financial advisers on this topic. Some say you should have at least ten times of what each of you make a year and some say you should carry at least a million dollars each. Currently, my wife and carry 10 times our salaries, but we have been discussing raising it to give us a million each. I say the more the better as long as it is something you can afford to pay for several years to come, but you can generally get million dollar policies for each of you for a $100 or less a month.

As far as getting life insurance for your children, this topic just came up with my own family this past week while on vacation with my in-laws as my mother-in-law asked if it would be alright if they bought our daughter a life insurance policy. For one thing, I am pretty sure she wanted to buy a whole life insurance policy, which is an absolute no-no with any insurance policy. Whole life insurance is exactly what it means. You are putting your money in a hole. Secondly, never buy life insurance for your children. Life insurance is meant to replace income in the event of of your or your spouse's death. Since your child is probably not contributing to the household income it is really just a waste. You could however get a $10,000 to $15,000 rider on your own policy to cover burial expenses should something unfortunate happen to your child.

You are much better off investing the money in a college fund such as 529 plan (educational IRA) or mutual fund for your children. In the meantime, check out Zander Insurance for affordable quotes on term life insurance if you are not currently carrying a policy at least 10 percent of your income.

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Chillaxing and Catching Up on My Reading

noreply@blogger.com (John Sholtz) — Fri, 11 Mar 2011 08:00:00 +0000

I am going to be taking some time off next week and I have decided I am going to spend part of my sabbatical reading. A recent article from Jaime Tardy over at Eventual Millionaire, regarding The Millionaire Next Door, had me considering revisiting the book that inspired me to pay off the massive debt I acquired the first time and paid off seven years ago. However, I decided to save that for a later date and begin reading The 7 Wonders That Will Change Your Life, which I picked up a couple of weeks ago. The book explores how Glenn Beck had lost it all and decided to make a series of changes. Changes that changed his life.

If time permits I will probably take another look at Dave Ramsey's The Total Money Makeover as well. In the meantime, here are articles I found interesting this week. Look out weekend 'cause here I come.

Top 10 Red Flags That Trigger IRS Audits @Wise Bread - Glad we have an accountant and we follow these suggestions to a tee.
Mortgage Applications Rise Even as Rates Inch Up. Is Time to But Refinance? @Bible Money Matters - I hope home buying is on the rise. It's the only way we will get the economy going again.
Why We Crave More Stuff @Frugal Dad - Especially loved this article. I have read how the ego contributes to our craving for stuff in "A New Earth: Awakening Your Life's Purpose" and in turn this can cause us to have more expenses and create more debt.
Social Welfare Program Payments Account For Over One Third Of U.S. Wages! @ KNS Financial - This has been something on my mind for a long time that people get stuck in a dependency rut and feel they are entitled to a lifetime of welfare. It's for temporary help, not to support people for a lifetime.
Pay Off Your Debt Fast: A Personal Story @Life and My Finances - I expect to be telling this same story in a couple of years.

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From the Mailbag: Having Someone Else Do Your Taxes

noreply@blogger.com (John Sholtz) — Wed, 09 Mar 2011 08:00:00 +0000

We have been so lucky to have always had a great accountant. There have been a few years when I had sweated our taxes, but it has been sometime since we have actually owed. I had taken several different accounting classes while working towards my finance degree, but I really don't know anything about the latest tax laws and tax deductions.

It's always best to deal with a certified public accountant when it comes to your taxes. You would go to the dentist if you had a toothache or a hair stylist if you needed haircut, right? Well maybe some of you would pull your own tooth or cut your own hair. Hey, the economy is tough, right? Wrong! When it comes to your income tax, an accountant is always the best person to help you out.

Since it's tax season this question comes in at the right time.

What are the pluses and minuses of having someone else prepare my tax return? Paula D.

Doing your own taxes is almost as bad as getting a tooth pulled or worse. You can spend hours digging through possible tax deductible receipts, filling out a bunch of tax forms, and when you are finally done, you will still be asking yourself: Could I still pay less? Could I get more back? Did I know to take every possible deduction that I am allowed to take?

A certified tax accountant can save you a lot of grief and, in most cases, can point out deductions that you had no idea you could take. Like I was getting at earlier, you need an expert in this area. It's what they do best and they know the tax laws much better than we do. They prepare tax returns for a living, while the best the rest of us can do is maybe fill out a 1040EZ. Even so, the type of accountant you need can depend on the complexity of your return and how much you are willing to pay, but in the end it is all worth it.

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Thank God for Babies and Business Deductions

noreply@blogger.com (John Sholtz) — Tue, 08 Mar 2011 06:37:00 +0000

The sweat is over. Our accountant finished our taxes today and we don't owe any money. Actually, we are getting a tiny bit back.

I was really sweating it this year. Since we really didn't have mortgage interest to deduct and I raised my withholds to 9, I thought for sure we were going to owe. In the end however, we just about broke even.

Our accountant ran some different scenarios for us of what would have happened if we didn't have our new daughter to deduct or if it wasn't for the losses we took on our business last year. We would have owed if we didn't have either of those options.

So, I basically sweated the small stuff for nothing, but if wasn't for the beautiful little lady in our lives we would have owed a couple thousand dollars. In the end fear is worthless.

Worry is being afraid of something that hasn't happened yet and if it hasn't happened, it isn't worth your time worrying about it.

(photo via Only Positive News)

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20 Ways to Find Money Now

noreply@blogger.com (John Sholtz) — Mon, 07 Mar 2011 06:49:00 +0000

Finding extra money to help reduce your debt can be a challenge. We have tried everything from selling items at garage sales to selling gold jewelry. There is always something you can do to cut back and find extra cash.

While working on the grocery portion of our budget, we had determined that we were buying too much milk every week. It would either go to waste or we were guzzling it down before it went bad. So, we decided to to buy a gallon less every week. By doing this we save $3 a week. You might say," Wow! A whole three dollars." But, actually that adds up to be $12 a month. Now imagine finding ten ways to cut back $3 a week. That would add up to $120 a month. Would $120 a month make a difference in your life?

Here's 20 quick ways to raise or save cash fast:

Sell your investments.
Sell assets, like a boat, coin collection, second car, the previously mentioned jewelry, etc.
Seek a reduction in your child support obligations.
Use your tax refund or alimony payment.
Transfer your credit card balances to a card with a low interest rate. (I am putting a ban on credit cards and it may be hard to get a card these days, but give it a shot).
If your credit card company charges an annual fee see if you can get it waived.
Get rid of overdraft protection on your bank accounts. This just gives you a reason to overdraw your account.
Destroy any checks you are given by your credit card company. Interest on cash advance checks will make it harder to pay off your debt.
Always make ATM withdrawals at your banks ATM. Making withdrawals at other banks we cause you to pay additional fees.
This one CAN hurt your your credit score, but if you are tempted to spend more than you make, canceling your credit cards may be the way to go.
Increase the number of dependents you claim on your W-2 forms (Watch out! This could cause you to owe on your taxes at the end of the year).
Learn how to start a budget and stay with it.
See if you qualify for assistance from a local food bank or other charity.
Keep your extra cash in a money market where you can earn extra interest.
Apply for public assistance if you lose your job or are disabled. This money may not be enough to pay all your expenses, but it will at least put food on your table.
Do not take cash advances on your credit cards. This is just a high interest loan.
Raise the deductible on you car insurance or reduce the amount of coverage you have.
Block texting on you cell phone. Texting can really add to your cell phone bill.
Cancel your cable service, or reduce the number of premium channels you pay for.
Sell things on Ebay or on Craigslist.

This is just the tip of the iceberg. Once you get started with these tips, finding cash will begin to snowball.

(photo via The Smarter Wallet)

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Yuck! I Hate Tax Time!

noreply@blogger.com (John Sholtz) — Fri, 04 Mar 2011 06:55:00 +0000

Here's one of the first of many roundups and links to articles I enjoyed this week. These will be held regularly on Friday's from now one. But first, it's that time again.

Well, our accountant contacted us today and she is done with the corporate portion of our taxes. So, we now need to finish up the personal half and away we go.

I have not owed any money for taxes in about ten years, when I made the stupid mistake of taking a 401K withdrawal. I ended up with a $7,500 tax bill plus late penalties. I paid the taxes owed by April 15th, but the IRS had decided that that money should have been paid throughout the previous year and charged me interest and late fees. How fair is that? They hold our money for a year and we don't get paid interest and penalties.

Anyway, there have been a couple of years since then that I thought we would owe, but it hasn't happened. This year though I am really concerned since we really didn't pay any interest on our mortgages because of our attempts to get loan modifications. We'll know in a couple of days. I'll keep you posted.

Here are some of the articles I found interesting this week. TGIF!

I don't owe $20,000 in taxes!!! @ Budgets Are Sexy (And I am worried about our taxes)
Downgrading Your Job Without Downgrading Your Life @ The Simple Dollar (This is my dream)
How To Start Your Budget From Scratch @ Bible Money Matters (We go through this every month)
Debt Update $83,177.00 Wohoooo! @ Debt Kid (If we stay on our financial path, we will owe around this amount by next year at this time)
How to Work Giving Into Your Budget @ Frugal Dad (This piece of our financial puzzle is sorely missing from our budget)

Find an article interesting you think other readers would be interested in? Drop a note and will share with everyone.

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From the Mailbag: Spreading the Wealth

noreply@blogger.com (John Sholtz) — Thu, 03 Mar 2011 05:01:00 +0000

I get asked a lot of questions here at Financial Elite and as always I am eager to answer the questions and send readers on their financial way. Beginning today I will be spreading the wealth (the wealth of financial knowledge that is) and will be having a weekly question and answer session. If you have questions about money and finances in general, drop me a note.

I am proud to say that my niece came to me the other day to ask about saving for her two children. She has quite a nice little nest egg saved up for them and wants to save about $500 a month, which is $250 for each of them. We are going to have lunch this week to discuss this, but the discussion is going to be about not only the children's future, but hers as well. I received this question, which falls along the same lines I plan to discuss with my niece.

My oldest child is getting ready to go to college next year. I want to stop contributing money to my 401k to fund my child's education. Is this a good idea? -- Connie B.

No, it is not. Your retirement comes first. Like my niece discussed above, I think it is great you are planning on helping your children by paying for their education. However, I know that my niece has no retirement of any kind. Not a pension, not a 401k, no IRA, absolutely no retirement savings. So I am going to tell you the same thing I am going to tell her. There is nothing more important than having a six to eight month emergency fund and to continue to invest in your future retirement.

Again I think it is awesome you want to give your child the opportunity to better him/herself and start their adult life in the best possible way, but not at the threat of jeopardizing your own financial future. It can be disappointing to tell a child that you can't afford to pay for college or maybe ask them to pay a portion themselves. They might even have to take out a student loan. Now, if you can afford to fund your retirement and pay for their college tuition then there are no issues here. However, it is never a good idea to stop saving for retirement. For you to continue to save for another 10, 20, or 30 years is HUGE.

With company pensions and social security eventually a thing of the past, you will need to have retirement savings. If not, you will most likely end up being a financial burden to your kids. Unless you plan on working until the day you die, you need to save for retirement. Now, I am not telling anyone to kick their kids to the curb, but if you cannot invest for your future, you may have to look into other alternatives like a federal loan to help invest in theirs.

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Make Sure You Qualify for a Mortgage Modification Before You Try to Get One

noreply@blogger.com (John Sholtz) — Sun, 27 Feb 2011 23:37:00 +0000

Like us, many people are stuck in the middle of a mortgage modification mess. The Obama Administration's program to help financially stressed homeowners reduce their mortgage payments is a dud. I am still in utter disbelief that, whether your mortgage is with Fannie Mae and Freddie Mac or if you have a FHA or conventional loan, can make a difference whether you are approved for a loan modification or not.

The House GOP wants to end "failed and ineffective" housing programs, such as the Home Affordable Modification Program (HAMP), the Neighborhood Stabilization Program, the Federal Housing Administration Refinance Programs and the Emergency Homeowner Relief Fund.

"In an era of record-breaking deficits, it's time to pull the plug on these programs that are actually doing more harm than good for struggling homeowners," Rep. Spencer Bachus, an Alabama Republican who chairs the House Financial Services Committee, said in a statement."

While these programs are not gone yet, I think Bachus is completely correct. Just over a third of households enrolled in a trial loan modification through the Home Affordable Modification Program (HAMP) have been given a permanent modification. This was as of November 2010 and until June 2010, banks were still enrolling homeowners in trial modifications without verifying whether they qualified or not. So, you may have been given false hope that you qualify only to find out months later that you were turned down.

Here are seven main points of supposedly what you need to qualify for a loan modification:

Your loan must be less than $729,750.
You must live in the property. (Investment properties are not allowed. However, I was able to get a mortgage modification on my investment property.) Odd very odd. Sounds fishy to me.
You will have to fully document your income. You will have to provide your most recent tax returns and your two most current pay stubs. Have your bank statements ready while your at it too.
You must have received your original mortgage before January 1, 2009.
You will have to sign an affidavit financial hardship.
The total payment on your mortgage including principal, interest, taxes, insurance and homeowners association dues (HOAs) must exceed 31% of your current gross income.
If your total household debt, which includes loans, credit cards, and alimony payments, total more tan 55% of your income, you will have to agree to sign up for financial counseling.

I had originally found all of those qualifications to be true (with the exception of the investment property portion), when Bank of America granted us a loan mod on our rental property. I thought for sure we were going to receive the same deal on our primary residence. Boy, was I wrong.

If you are planning to try and get financial help and apply for a mortgage modification with your bank, be sure that you are ready for the worst. Here is what you should be prepared for:

Your credit score will drop. Even if you are offered a trial modification, the lesser amount that you are now paying on the mortgage during the trial will be reporting to the credit bureaus.
It may take three months or more (In our case fourteen months and counting) to know if you were approved or not. HAMP's original goal was to give homeowners a three month trial period. However, the more people I talk to more I keep hearing six months, a year or even two years, before getting an answer. Hold on this could be a bumpy ride.
Making timely payments during the trial does not guarantee you will receive a permanent modification. See the 7 points discussed above. I am now suggesting that you know the bank's criteria for eligibility before you attempt to get a modification.
Be ready. If you are turned down for the permanent modification, the bank will make due the difference you haven't been paying between the normal payment and your trial period payment for every month you were not making a regular payment. If you cannot pay the back payments, which could be 12 or even 24 months worth, you will most likely be facing foreclosure. If you are going to attempt a modification you need to put aside the difference in savings or will most likely lose your home.

On one hand I say the loan modification program is great, but only if all loan mods were like the one we received on our rental property. It was exactly what the doctor ordered. An interest rate of 2% for five years, followed by an 1% increase until the rate reaches the prevailing rate, which at the time was 4%, for the life of the loan. If we received the same deal on our primary residence I would be a full supporter of the program. I do know the program has helped hundred's of thousands of homeowners and maybe will still help more by its expiration in 2012, if not sooner, but it still gets be going that the guidelines can be modified by who the investor is or by what type of loan program you have. The program doesn't necessarily need to be bust, but something need to be done to give everyone a fair chance. especially, for those who truly want to save their home.

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Mortgage Modification Madness

noreply@blogger.com (John Sholtz) — Thu, 24 Feb 2011 06:40:00 +0000

A recent report from the nation's mortgage bankers revealed that mortgage delinquency rates have fallen to the lowest level since the end of 2007, which was the beginning of the recession, but we are still not one of the homeowners who are making payments on their mortgage again.

I received an email today from our mortgage negotiator, who once again told me that there was nothing she could do to help us, but that she would review the file with management and try and find a solution. The primary problem is Bank of America wants us to settle on our business credit cards that were charged off with them. The other being of course, that our loan is with Freddie Mac. Unlike our investment property, which is with Fannie Mae, and with which we received a loan modification with the greatest of ease.

I was recently reading an article in "O The Oprah Magazine," yeah, whatever, I read "O," where Suze Orman worked with a couple that had a similar situation to ours. In the article, the couple had debt payments and a mortgage payment very close to our own. They had a mortgage payment of $2,641 and monthly debt payments of $2,475. Now these are not an exact match to our own debts, but the average is pretty darn close.

The couple was put on a trial payments and waited 14 months for an answer for approval of a loan modification, but were ultimately declined. The bank then wanted the couple to pay the back payments and difference between the modification trial payments and their regular payments. The couple could not afford to make the back payments and now face foreclosure. Does the couple have any hope of saving their home?

Here is the 6 point action plan that Suze recommended for the couple:

Don't pay the mortgage. Suze recommended, since the bank is foreclosing, that the couple stop paying the mortgage. However, she said the money they were paying monthly on their trial modification needs to be put into savings. It could be two months, six months, or even longer before they actually need to move out of their home and they should save as much as they can.
Do pay back the credit card companies. Since they have not missed credit card payments it was the best way to raise their credit scores.
Scale back. Find even more ways to save money. The couple was paying a combined $250 on their cell phones, landline, and cable. She suggested they get that combined total down to $100. She also recommended they reduce their eating out budget and taking no vacations.
Get more protection. The couple already had term life insurance, but not even close to half of the $1,000,000 each she thought they should have. She feels they both could get coverage for less than $100.
Focus on saving. The couple needed to take the extra money they were saving once they moved to create their 8 month emergency fund. After that they needed to get going on their retirement.
Accentuate the positive. Even though they were losing their home they had to look at the money they would be saving as the beginning of building a brighter future.

Suze felt the couple was doomed from the beginning and that they never could really afford their home. With us having similar income and debt as the couple mentioned, does that mean we can't afford our house either? Should we just give up and let our house go into foreclosure? That's a hard pill for me swallow.

Our debt snowball is about begin with the first of our debts to be paid off in just the next few months. After that, by this time next year we will have paid down at least another $25,000 in credit card debt and have several more accounts and loans paid off. At that time we will have an extra $1,000 a month available to us to either easily pay our mortgage or put more towards our debt and speed up our five year balance liquidation plan. I only hope we can hold on another ten months, but I am begging to feel like our time is running out.

(Via O The Oprah Magazine March 2011)

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6 Ways to Help Grow a Business

noreply@blogger.com (John Sholtz) — Tue, 22 Feb 2011 07:21:00 +0000

Just like many businesses these days ours has suffered just like the rest. A good portion of the six figures of debt we have is from keeping our business afloat.

Like so many other aspects of our finances, we have been experiencing improvement with our business as well. However, we are no where near to our pre-recession sales. Just as we have been diligently chipping away at our credit card debt, we are working on getting our business booming again. Here are our six ways we plan to do it:

Getting an Edge - We have been looking at what our biggest cost and time constraints are and working on improving those areas. We have already re-wrote our lease payments and lowered our phone and computer costs.
Own Your Tag Line - Check Google and see if anyone else uses or owns your tag line.
Hyperfocus - Focus on an area in your business. We want to focus on our Google ranking, but you can work on cutting cost or turning your sales faster, whatever you choose, work on it for 90 days straight.
Write - Use media like Twitter, YouTube videos, blogs, and Facebook.
Control Your Spending - Growing costs money. Stay focussed and look for ways to fuel growth without using outside capital. Watch your cash position daily.
Pulse Faster - Executive teams of the most successful companies huddle daily. If anything, discuss these 6 steps in your meeting to create a habit.

Tempted to Go Back To My Old Spending Habits

noreply@blogger.com (John Sholtz) — Mon, 21 Feb 2011 06:10:00 +0000

The recession has definitely put my spending habits back in check. After my divorce and before the economic boom I was debt free, had a six month emergency savings, and was saving 15% of my pay. I won't be able to do all that again until our massive six figures of debt is paid back in full. But I am not only one thinking this way.

"According to recent a Citigroup survey, 52% of consumers say the recession has "forever changed" the way they spend and save, but that's down from 63% when the same survey was conducted a year ago."

As you can see these numbers are shifting back to the old ways. On one side this is good for the economy, but not good for consumers financial future's. My wife and I have a monthly budget of $100 each for clothes, shoes, etc., but I never have really utilize my share, until this weekend that is. I have been going for months with blessed clothes. Yes, we are extremely blessed for all that we have, but my clothes are not exactly blessed...more like holy. As in getting hole's in them.

The soles of my shoes were cracked, my socks and underwear are getting embarrassing holes in them and I thought it was time to use my $100 clothing allowance. So, I bought a new pair of shoes and socks. I threw out my old underwear and socks too, but I still have enough underwear that is in in good shape and as not to go over budget, I didn'y buy new ones just yet, I will wait until next month and probably throw in some new t-shirts while I am at it.

It felt good to spend again. I really could keep doing it again and again, but I am determined to stay within budget and not to overspend. So, as i said earlier, others are feeling the same way.

"The fear of getting fired or not being able to find another receding, at the same time you are noticing that you have holes in your socks and your car is old and you are no where near your credit card limit and your savings has grown," says Lakshman Achuthan, managing director of the Economic Cycle Research Institute."

If that savings account that you have been growing steadily has been burning a hole in your pocket, stick to your guns. Don't deprive yourself of your needs, but remember the difference between your needs and your wants. Because nothing you buy feels as good as being debt free and having money in your pocket.

(via CNNMoney.com)

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7 Money Rules Everyone Should Live By

noreply@blogger.com (John Sholtz) — Sun, 20 Feb 2011 00:22:00 +0000

With the economy ever changing since the beginning of our disastrous recession, we have all had to find ways to adapt to keep our finances a float. Here's 7 money rules that everyone should remember with adjustments for the new economy:

Save at least 15% (20% would be even better) of your income - It used to be 10% for the longest time, but this is quickly becoming old school. With people no longer having pensions to look forward too, shorter retirement periods, better market retirements returns, or even social security it is now more important to save then ever. The more you save the better.
Keep your debt to income ratio below 30% - The old school number was 36%. Dropping that number an additional 6% gives you more cash flow to put towards your emergency fund and retirement saving.
Invest less in stock - Don't invest more than 5% of your portfolio in company stock. The old way was 10%, but it's safer to diversify.
Determine how big your nest egg needs to be - Figure out how big your nest egg needs to be by multiplying your ideal annual income by 30. This is 5% higher now because people are living longer.
Only refinance if interest rates are one percentage point lower than your current rate - Do the math and determine how long you plan to live in the house. It will usually take a few years to make up what you will have to pay in closing costs.
Keep your discretionary spending under 20% - This includes items like clothes, dining out, or going to the movies. The rule used to be 30%, but with debt going up you need that extra money to pay it down.
Figure out how much of your portfolio should be in stocks - Use this formula 110- Your Age = In Stocks %. Subtracting 100 from your age was the way to go, but with rising medical costs and people living longer 110 is safer. Try 120 if you really want to be safe.

Hello...Bank of America. Can You Hear Me?

noreply@blogger.com (John Sholtz) — Sat, 19 Feb 2011 06:49:00 +0000

As suggested by our loan modification negotiator I contacted Bank of America's business card department to attempt to get a settlement on our charged off credit cards, which was not very successful.

The bank was more than happy to settle on these cards, but with payments that were not affordable. We have two business cards one with a charged off balance of over $40,000 and another of over $10,000. The settlement offer was for 3 payments of a combined total of $6,000. Another alternative was to pay back the entire balances and make payments of a combined total of almost $1,000 a month for five years. This is basically the same balance liquidation programs our personal credit cards are on.

It's not that we don't want to pay what we owe on these cards and we will after we finish paying our other debts, but there is no way we can pay these amounts. Even the payment reduction plan is out of reach once we started paying our mortgage again.

So, I emailed our negotiator and let her now what has happened. She has always been fairly quick to respond back to me, but not this time. She could have been too busy or just didn't feel like telling me, "Well, there is nothing more we can do than."

I probably won't hear anything for sure now until Tuesday. But Bank of America I warn you. If you don't approve this loan modification because we owe you other money, you will awaken a sleeping giant, who will strike back with a force you have yet to reckon with.

The fact that we are denied because payments are being added to our debt that have been charged off and are not being paid is ridiculous. That you tell me because our loan is with Freddie Mac is a problem as well and that all loan mods are not created equal is outrageous. That you gave us a loan modification on our rental property over our primary residence is absurd.

The public must be made aware of the inconsistencies with the banks and the whole loan modification process and I might just be the guy to do it.

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No Loan Modification, No Interest to Itemize

noreply@blogger.com (John Sholtz) — Fri, 18 Feb 2011 06:05:00 +0000

I have been anticipating that we are going to owe money this year on our income taxes. This is partially due to the fact that we have been trying to get a loan modification on our primary residence for the past year and don't have any interest to deduct.

I know so many people with this same situation, but no one has filed their taxes yet. These are all people who generally get a large return, but are in no hurry to file. Mainly for the fear of having to pay the IRS.

I have heard from a few tax prep people that we will probably be alright since we now have our new daughter to deduct for the first time. We'll see how this turns out. Our accountant is great and I know she will do whatever possible to help us.

Interestingly, while we're on this subject. I received an email today in regards to the recent proposal to limit deductions from mortgage interest. There is already an organization against this proposal. The new organization is called Save My Mortgage Interest Deduction.

In a nut shell Save My Mortgage Interest Deduction (SaveMyMID) has been created by the National Association of Home Builders to raise awareness about the threat to the mortgage interest deduction and the dire consequences that could result if it is eliminated or reduced. These resources help people understand the widespread economic ripple effects - far beyond the individual home owner - that could occur if the mortgage interest deduction is eliminated or scaled back.

You can read more about this new organization at http://savemymid.info/.

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Never Give Up Trying to Get a Loan Modification

noreply@blogger.com (John Sholtz) — Thu, 17 Feb 2011 05:30:00 +0000

As suggested, I contacted Bank of America's credit card department, which is the same bank that holds our mortgage to see if we could reach a settlement on our business credit cards. They took down all our financial information to see what we could work out. One thing that I thought was cool was the representative looked to see if we could adjust our payments any further on our personal credit cards. These cards were all previously placed on a balance liquidation program, but any additional help we may be able to get is worth a try. However, he really couldn't help with our business cards either.

He had to transfer us to the business credit card division, which happened to be closed by the time I had called. So, no answer today on whether we will be able to settle on those cards and see if removing those debts from our debt to income calculations will bring us down to an acceptable amount to get approved for the loan mod.

One other interesting note is the credit card rep knew about our attempt to obtain a loan modification already. This may help or hinder us. Will they say, "Ok, lets give these folks a hand" or " These guys most really be desperate. lets sock it to them." We'll just have to wait and see what unfolds. Tomorrow is another day.

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Bang Your Head...Getting a Loan Modification Can Drive You Mad

noreply@blogger.com (John Sholtz) — Wed, 16 Feb 2011 07:58:00 +0000

Day 411 of My Financial Freedom Countdown

As expected we heard back from our lead negotiator today and didn't receive the news we had hoped for. The bank is not budging on the business debt we have charged off with them. With that debt, which we do not pay a dime towards currently, we do not qualify for a loan modification.

It was suggested to us by the negotiator to call the card services department and see if we can work out a settlement. I am fine with this. Especially, since we may be looking at a law suit sooner or latter regarding the charge off and that would really put us in a pickle. So in some ways this may get that monkey off our back and at the same time finally qualify us for a loan mod.

I will be calling the credit card department tomorrow to see what we can do. We were offered settlements before, which were not workable at the time, but now may be doable. I am hoping that they offer us a similar offer as before or maybe even better. The only concern I have is next year at tax time. If they send us a 1099c we could very well owe some money to the IRS. Have I told anyone how much I hate debt?

[This post is written and copyrighted by Financial Elite (http://financialelite.blogspot.com/ ).] Did you enjoy reading this article? You can receive free full-text articles from Financial Elite by RSS in your email inbox daily by entering your email HERE. Your email will only be used for this daily subscription, and each email will include a link you may use to unsubscribe at any time. Also follow us on Twitter.

Getting a Loan Modification Can be Such a Drag

noreply@blogger.com (John Sholtz) — Tue, 15 Feb 2011 08:23:00 +0000

Day 410 of My Financial Freedom Countdown

We are going into our 13th month of attempting to get a loan modification on our primary residence. Again we were declined because we have a business card charged off with the same bank that services our mortgage. So it looks like this will be continuing to drag on for God knows how long.

If this charge off was with another institution this would not even be a question or if the loan was held with Fannie Mae rather than Freddie Mac. All loan mods are not considered equal as it may seem. We were able to get a mod on our rental property with the greatest of ease because that loan was with Fannie Mae. Because the primary residence is with Freddie Mac we're a no go. Fannie does not look at outstanding debt while Freddie does.

Even though one looks at debt and the other doesn't, why is the bank throwing the charge off in our face? It doesn't make sense to me and seems like it is just another excuse. We have already called the president of the mortgage division's office, which we have been receiving call backs, but that does nothing because we are back at step one anyway. We did however receive another call today form a new negotiator. We will be calling him tomorrow to see what he has to say.

I am thinking our next step is to contact our state senator, who is Harry Reid, and discuss this travesty. The fact that all loan mods, regardless of investor or loan program, are not the same is outrageous. There is also not much out there laying out this type of scenario. The public needs to be made aware of this, as I don't feel that this information is public knowledge. Am I to be the guy who has to start a crusade to get this fixed? Even if we do not get a loan mod in the end something needs to be done about this.

My wife did find one bit of hope out there. According to Freddie Mac, if the borrowers debt is greater than 55%, the borrower must take a free debt counseling course in order to qualify. This may be our saving grace as this as yet to be offered to us as an option. We'll have to see what this new negotiator has to say, but I feel a war coming on.

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How Bad Does Bankuptcy Affect Your Credit Score?

noreply@blogger.com (John Sholtz) — Mon, 14 Feb 2011 08:04:00 +0000

Talk of bankruptcy has reared its ugly head again today between my wife and I. We have been doing so well over the past year and have paid off almost $30,000 of our debt so far.

All of our bills are paid on time, with the exception of our primary mortgage and our business accounts. We have been working on a loan modification for our primary mortgage and the business accounts are looking like they will be going to court. We refuse to let our house go and will ultimately default on all our other accounts if need be to prevent from losing our house. As for the business accounts, any judgement will put us over the edge and either circumstance may require us to file bankruptcy.

We did look into bankruptcy last year, but decided against it because we wanted to do the right thing. We borrowed against the cards, we took the mortgages out for our homes, we owe the money. But, why not just file bankruptcy?

Bankruptcy should only be used as last resort. Bankruptcy will ruin your credit for 10 years. Not that our credit isn't in rocky shape right now, but if we can get these last couple of things worked out it will improve quickly. In today's economy it will be highly unlikely to get any type of credit. Not that we have interest in getting any right now, but in the end it all comes down to repaying what we owe and keeping our character intact.

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