I was talking with one of my co-workers the other day about my home refinance. As we were talking, one of our other co-workers overheard the conversation.
This is a new co-worker that transferred from another office a couple of weeks ago so we do not know each other that well. She and her fiancee are in the process of buying their first home and she had a couple of questions about the process. I answered her questions to the best of my knowledge and told her that I'd bought two homes in my lifetime.
They have a good down payment but they are having problems getting a loan because her fiancee has poor credit. I suggested if she can afford the payment on her own, she should get the loan in her name only. She gave me a funny look and said "they won't let me buy a home by myself".
I asked her what she meant and she said if she did that, she would be considered "single" and they would not give her the loan. She has a strong credit score and she is fronting the down payment. I don't know where she got this impression from but I advised her that I am single and I have bought two homes on my own. She was really surprised and said "I thought you were married and had kids since you owned a house."
My other co-worker almost fell out of his chair when she said that. I had to explain to her that yes, single people can buy homes too. As long as you can afford the payment, have good credit and a down payment, pretty much anyone can buy a home.
Once I paid off the last of my credit card balances, I made a vow to myself to never carry credit card debt again. So far, I've been true to my word.
I still use my credit cards, but only for the rewards. Each month, I payoff the balance in full so I don't have to pay interest.
My rental property needs to have the carpet replaced on the second level. The carpet is the original builders grade carpet from when the house was built in 1998. The previous owners had kids so the carpet was in pretty bad shape when I bought the house. I was going to replace it a few years ago until I decided it was going to be a rental property. I felt that with a good cleaning, the carpet would last a few more years.
My current tenant has been there for 3 years and hasn't really said anything negative about the carpet. I was over at the house this past weekend checking on another issue and noticed the carpet was looking pretty bad.
I went to one of the "big box" stores to get some pricing and get an idea of how much replacing the carpet would cost. The cost was actually a lot less than I thought it would be. The store has an ongoing offer of entire house carpet replacement for only $139. The total cost to remove the old carpet, haul it away and replace with new carpet and paid should be around $1300.
I have the money sitting in a savings account earmarked for rental property repairs. When I got home, I had a coupon in the mail from the same "big box" store for a 12 month "no payment, no interest" promotion. Generally, when I get these, I just trash them because there isn't anything I need to have done to my house.
This time, I'll be taking them up on their offer. I will keep the money in my savings account and just make equal monthly payments instead of totally emptying out the account. I'll make sure the balance is paid in full before the interest starts to kick in and I'll setup automatic payments to make sure I don't miss the due date.
Usually when companies have offers like this, they are hoping that you:
A. miss a payment so they can jack up your interest rate and charge you interest on the full amount you originally charged.
or
B. haven't paid off the balance by the time the interest free period is up and they will start charging interest. Like this post? Want to see more? Subscribe to my RSS feed!
I'm absolutely speechless right about now. I almost made a $15,000 mistake a few months ago.
I was considering giving my car to my mother and buying a reliable used car for myself. I found a car I liked and went to the used car dealer to check it out. I liked the car but I had a bad feeling about the dealership. I took the car for a test drive and really liked the car...but something about the dealership just struck me as odd. I asked if they provided a Carfax report and they said yes and were more than happy to show it to me.
While watching the news last night, Fox 5 Atlanta reported on a story of a customer who purchased a 2004 Infiniti G35 from the dealer I almost bought a car from. He was told the car had never been in an accident and the car was bought at an auction in Florida and driven to Atlanta, GA.
He was given a copy of the Carfax report that showed the vehicle had not been in any prior accidents.
While the gentleman's wife was driving the car at about 50-60mph, the rim came off. Luckily, she was not hurt. When the car was taken in for repairs, it was determined that the car had sustained frame damage.
Fox 5 researched the dealership and found that 45 of the vehicles on the lot had reports of frame damage from the auction house. The frame damage showed up on the Autocheck reports but not on Carfax reports. Even if the dealer says they didn't check the Autocheck report, it was announced on the auction block.
Apparently, Carfax has not been able to work out a deal with the auction houses to get the missing information on their reports.
If you are in the market for a used car, you may need to check both the Autocheck report AND the Carfax report.
I'm so glad I went with my gut feeling and avoided making a $15,000 mistake. The gentleman in the story wasn't so lucky; he ended up selling his vehicle at a loss. It doesn't say whether or not he advised the new owner of the vehicle's history.
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Getting out of debt is not an easy process. It won't happen overnight and it takes a great deal of patience.
Each time I am faced with something that seems like it will impossible to do, I always remember a little saying I've heard. It goes "How do you eat an elephant? One bite at a time".
It may seem really hard but if you take it one step at a time, you will get rid of the debt that is holding you back and hindering your financial life.
How do you start getting out of debt?
1. Make a budget. You need to know where every penny of your money is going. Once you know where your money is going each month, you can find areas where you can cut back. The money you were wasting in those areas can then be used towards debt reduction. If you aren't sure how to get started with a budget, check out Mvelopes to get some tips. There is a small fee to use the service but you can use it for 30 days for free to get some ideas of how to create a budget.
2. Increase Income. If you are saying that you can't find the extra money to apply towards debt, it may be time to look for additional income. Can you pick up a second job? Can you work overtime at your current job? How about looking around the house and getting rid of those things you don't need. Do you have a stack of CD's and DVD's sitting around collecting dust? Get rid of them and apply the cash towards your debt. Better yet, stop buying DVD's, get rid of cable and rent them from Netflix or Blockbuster instead.
3. Eliminate Temptation. Assuming you have multiple credit and/or store cards, take all but one credit card out of your purse or wallet. The one card you keep should only be for an emergency and I would recommend keeping the card with the smallest credit limit. The credit cards should be frozen and the store credit cards should be destroyed.
4. Use Windfalls Wisely. If you are one that gets a large tax refund from the government each year, you should use that money strictly towards reducing your debt. Better yet, adjust your W-4 to boost your paycheck throughout the year and apply the additional money towards your debt.
5. Transfer Balances. If you have a good credit score, consider moving your debt to a 0% credit card. Usually, when you apply for a new credit card, you will get an offer to transfer a balance for a low interest rate for a limited period of time; usually 6-12 months. Cardoffers.com offers a list of several cards that offer low rates on balance transfer credit cards. Remember though, this card is to be used for balance transfers only!!! Once you receive the card in the mail, cut it up immediately.
The above are tips to get you started but ultimately, debt reduction is about spending less than you earn and not incurring additional debt.
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I haven't written about my quest to quit smoking in awhile. Unfortunately, the reason for that is because I fell off the wagon. In other words, I'm smoking again.
If you've never smoked before, it may be easy to say to "just quit". If you are a current or former smoker, you know how hard it is. I've read in several credible sources that tobacco is "more addictive than heroin". I've never done heroin but I can imagine it would be pretty hard to kick that habit too.
I can make excuses for why I started smoking again but I don't need to. I am human and I make mistakes. I've beat myself up about it many, many times. I'm very disappointed in myself. I felt even worse when my Mom found out I was smoking again. The look of disappointment on her face was worse than anything else. I could have been punched in the face by Mike Tyson and it wouldn't have hurt as much as her look of disappointment.
I'm not done with my quest to quit smoking. I still want to kick the habit. Not only because it sucks paying almost $5 a pack but I need to quit for my health.
If you're a smoker and you are trying to quit, I feel your pain. We will kick this habit.
Have you quit smoking and been successful? How many times did you quit?
Any words of advice?
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Any words of advice?
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When you attempt to talk about money with family members, the situation is usually pretty tense. I had this happen recently with my mother. My mother has no interest in personal finance. The closest she comes to managing her personal finances is writing out a check and hoping it clears.
I've been after her for years about letting me help her get her finances in order. She finally said that if I "wrote some things down", she would take a look at it.
I knew things were bad, but I didn't think they were this bad.
Bank Accounts
I setup online access to her bank account and logged in to take a look. There was craziness all over the place. She is paying a maintenance fee of $8.95 a month for her account. She's had the account for over 3 years so she's given the bank almost $300 just for having a plain vanilla checking account. She has bounced a couple of checks so there were more fees for NSF funds.
It only gets better......... Her savings account has a balance of $1.26.
Retirement
I setup her 401k a few years ago. I thought she was still contributing to the account. Not only is she no longer contributing; she cashed out the account a few months ago. She is 55 years old and has nothing saved for retirement.
Credit
My mother filed bankruptcy when I was in my early teens. At the time, I didn't realize what that was or what effect it had on your finances. I knew my mom's credit was probably not good so a few years ago, I put her as an authorized user one of my cards. Apparently, doing this hurt her more than helping her. At some point, she received a credit card from the bank that she has her checking account with. The credit card has a $5000 limit and a balance of $4977.
Result
When I met with her to go over everything, I tried not to let the anger show on my face. I couldn't believe she has been so irresponsible with her money. I wanted to just fix the problems and be done with it. I could pay off her credit card and have her close the account but she would probably just get another one and do the same thing. I could get her account balanced but she would just lose track again.
I told her she was an adult and it was time for her to fix her problems. If she had legitimate questions, I would answer them but she has to be responsible for her own finances. I'm tired of just fixing everything for her. She has just come to expect me to fix it and I don't think I should do it anymore. I love my mother more than anything but I can't be her crutch.
Does anyone else have this problem with their parents when it comes to money?
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Financial Resources:
- Up to $150 from WT Direct
- $50 Cash Back from Discover Card
- Plan your budget with Mvelopes
For a limited time, WT Direct is offering a cash bonus to new clients for opening a new savings account.
To get the bonus, here's what you need to do by July 31, 2009.
- Apply online for a WT Direct account. (It's quick and easy. I opened an account with them a few months ago. Unfortunately, there was no bonus at that time.)
- Deposit $10,000 or more before July 31, 2009
- Keep funds on deposit through October 31, 2009
- Must not have had an account in the past twelve months
- $25 bonus for a $10,000 balance
- $50 bonus for a $20,000 balance
- $75 bonus for a $30,000 balance
- $100 bonus for a $40,000 balance
- $150 bonus for a $50,000 balance
WT Direct is part of the Wilmington Trust family of companies with a strong 105 year history.
The account is FDIC insured up to the maximum Federal limit of $250,000. The WT Direct savings rate is consistently among the top 5% of US Banks. There are no fees to maintain the account and no minimum balance; although you will need a minimum of $10,000 to open the account.
Don't have $10k to open an account? You can also try HSBC instead. No fees and no minimum balance. Easy transfers to and from other accounts.
After about six weeks of gathering paperwork, submitting paperwork and waiting, waiting, and more waiting, my refinance is finally done!!!
I closed yesterday on my new loan. I bought my house over three years ago using 100% financing through a combination of a first and second, 5 year, interest-only adjustable rate mortgage. The rate on my first mortgage was 6.375% and the rate on my second mortgage was 8%.
For those of you that have been keeping up with the housing crisis, this type of loan is one of the causes of the problem. Some people used this loan to get into a home they couldn't afford in the first place. When the rate adjusted, they couldn't afford the new increased payment and had the house go into foreclosure or were forced to do a short sale.
I chose an interest-only adjustable rate mortgage for a number of reasons:
- I knew what I was getting into. I knew that if I did not pay anything on top of the interest-only payment, my loan balance would never decrease. I reduced the balance of my loan by about $9,000 by making principal payments.
- I didn't plan to stay in my home more than 5 years.
- All of my closing costs were paid by my builder so I didn't have any out of pocket expenses.
- If I changed my mind and decided to stay, I could refinance to a fixed rate mortgage.
Yesterday, I closed on my new 30-year fixed rate mortgage. I was able to lock in an interest rate of 4.875% and will save thousands of dollars in interest. Not only that, since my mortgage is now a fixed rate loan, I never have to worry about the payment going up.
Need another reason to adjust your federal and/or state tax withholding? How about because you may not get your money back when you expect it.
Due to the recession and falling tax collections, some states are having a problem making ends meet.
One of the solutions they are turning to is delaying the payment of state tax refunds. Another cause of the delay is that due to budget deficits in many states, the revenue departments have had to reduce their workforce.
Even though they may have the money to pay, they don't have enough employees to process the tax returns. Georgia Revenue Commissioner, Bart Graham, said his department had to cut about 280 jobs since October. Of those, 150 where processors who helped file refunds. I did not have any problems getting my refund from the State of Georgia but some people who filed later in the year will still have to wait. More than 320,000 refunds still need to be processed.
What can you do to avoid this problem next year?
Adjust your W-4 Withholdings. The number of allowances you claim will affect the amount of money taken from your paycheck. The best way to determine how many allowances you can claim is to use the IRS Withholding Calculator. If you are not sure how or where to go to adjust your W-4, you should contact your Human Resources or Payroll department.
I used to look forward to getting a nice fat refund check from the government. Now, I would much rather have a larger paycheck throughout the year and get either a small refund or no refund at all.
Jonathan over at My Money Blog posted a photo of his California Tax Refund IOU.
I can't believe the blog has been around for 2 years now. I enjoy writing the blog and I hope you guys continue to read the blog. How did things go in June?
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I usually start working on my budget for the coming month in the last few days of the previous month. While working on my budget for July, I realized it's going to be a nice month for my savings account.
I am paid bi-weekly and two months of every year, I am paid three times per month instead of the usual twice a month paycheck.
Back when I had piles of credit card debt, I had to apply the extra paycheck towards my ever increasing debt or towards trying to make ends meet since my spending usually exceeded my income. Every penny of my paycheck was already spoken for by my landlord, the gas company, the electric company, the credit card and the car loan.
Nowadays, I am no longer trying to figure out how I am going to divide my extra paycheck between the various credit card balances. When I get an extra paycheck now, 90-100% of it usually goes directly to my savings account; unless I have something I want to buy that isn't included in my regular monthly budget.
After tallying all the numbers, I should be able to save over $3300 in July.
How will I save this much?
- Regular $250 biweekly contributions. $750 instead of usual $500.
- Savings From Extra Paycheck - $1300
- No Mortgage Payment for July - $1350 (due to refinance)
When you get an extra paycheck, what do you do with it?
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