Managing Compulsive Shopping
One of the keys to debt consolidation is stopping debt from continuing to accumulate. Indiana University Ruth Engs suggests:
How do I prevent shopping binges?
* Pay for purchases by cash, check, debit card.
* Make a shopping list and only buy what is on the list.
* Destroy all credit cards except one to be used for emergency only.
* Avoid discount warehouses. Allocate only a certain amount of cash to be spent if you do visit one.
* “Window shop” only after stores have closed. If you do “look” during the day, leave your wallet at home.
* Avoid phoning in catalog orders and don’t watch TV shopping channels.
* If you’re traveling to visit friends or relatives, have your gifts wrapped and call the project finished; people tend to make more extraneous purchases when they shop outside their own communities.
* Take a walk or exercise when the urge to shop comes on.
* If you feel out of control, you probably are. Seek counseling or a support group such as Debtors Anonymous.
Proper management of debt, and carefully limiting one’s shopping habits can have a huge affect upon one’s financial situation, and allow one to quickly build up savings over time.
Home Sales Hit Slowest Selling Pace in 5 Years
The AP reports that it is now harder than usual to sell ones house. They provide the following figures:
The National Association of Realtors reported Monday that sales of existing homes dipped by 0.2 percent in July, compared to June, to a seasonally adjusted annual rate of 5.75 million units.
The median price of a home sold last month slid to $230,200, down by 0.6 percent from the median price a year ago. It marked the 12th consecutive month that home prices have declined, a record stretch.
With such a dip, many buyers are finding it easier to pay off their home and wait until the market rebounds through mortgage acceleration. Selling certainly seems more difficult, as home prices are falling, which buyers obviously look to take advantage of. No one is going to buy a home, if they’re reasonably certain that the same home will sell for less in a year’s time.
With such issues plaguing home owners, the situation often becomes dire. Homeowners that hoped to sell quickly are finding their homes on the market for increasingly long periods of time, with their losses often piling up as they find themselves unable to sell. The result is often seen in even lower prices, which further drives down the value of surrounding homes.
Mortgage Delinquencies Climb Upwards
An FDIC Report is casting a grim shadow over the US housing market with reports of all time highs in mortgage delinquencies. The Wall Street Journal writes:
Loans at least 90 days delinquent rose in the second quarter by $11.4 billion, or 36.2%, compared with the second quarter of 2006, the Federal Deposit Insurance Corp. said Wednesday, marking the largest increase in 16 years.
With such a jump, banks are writing off more loans than ever, a 50% jump from last year, as they see losses continue to amass with delinquent loans.
Hundreds of banks that were formerly profitable have become the opposite, and as a result, mortgage loans are getting difficult to find. One option for those wishing to no longer deal with having to get a mortgage is to pay if down early through the proper use of bi weekly mortgage payments, applying extra income towards their mortgage loans.
Such a move certainly seems like an easier prospect than that of finding lenders in the future, as lenders find themselves with historically low interest margins, and a lack of liquid capital for funding new loans.
Britain Suffers With the US
The New York Times has an interesting piece on the situation of Britain’s housing market:
A private company bought her home, allowing her to avoid foreclosure; then the company rented the house back to Ms. Whittaker and her partner and they did not even have to move.
The catch? The company paid the couple less than the value of their apartment.
Such deals are uncommon in the United States, and mortgage brokers say they discourage them because of the possibility of unscrupulous and dishonest lenders exploiting distressed homeowners.
But desperate times call for desperate measures; and while Americans fear an epidemic of foreclosures, brought on by the subprime mortgage meltdown, Britain is already suffering one.
With such practice becoming common overseas, one must certainly wonder what desperate measures are in store for the desperate times in the US housing market.
One method of avoiding such troubles can be found in making bi weekly mortgage payments in order to avoid having to struggle to pay a mortgage down for a full thirty years.
Should the Government Bail out Homeowners?
Bill Gross, manager of the world’s biggest bond fund has stated that the federal government ought to act immediately to halt the housing panic.
Bloomberg quotes:
“Why is it possible to rescue corrupt S&L buccaneers in the early 1990s and provide guidance to levered Wall Street investment bankers during the 1998 LTCM crisis, yet throw 2 million homeowners to the wolves in 2007?” Gross wrote. “If we can bail out Chrysler, why can’t we support the American homeowners?”
A good question, but one which makes a silly point. A bailout for homeowners would really be helping mortgage lenders and financial institutions which made the bad business decisions to lend huge sums of money to anyone who asked.
It’s a terrible tragedy that so many stand to lose their homes because of how banks acted, but by allowing homeowners to pay back the banks, such corrupt institutions will continue to exist rather than naturally fade into bankruptcy. What Americans really need right now is the means to manage debt consolidation, and escape from the unfair burden placed on them by corrupt lending practices.
Perhaps a better solution than a bailout would be for the government to begin to prosecute the bankers, mortgage loan officers and brokers who contributed to this mess, rather than fixing it for them.
Should you Sue your Lender?
Thanks to the corrupt practices of lenders across the nation, many home owners are now finding themselves locked into too much home with not enough income to afford their payments. Often the homeowner is not the one at fault, but was tricked or lied to.
Christopher Solomon of MSN advises that homeowners in such a situation may have a case to sue if:
* Your broker falsified your income;
* Your broker hid his or her fees;
* You weren’t immediately given a copy of the good-faith estimate and weren’t given an accurate HUD-1 statement breaking down all fees at closing;
* After signing the contract to refinance your mortgage, you don’t walk out with a “notice of rescission” that explains your rights to cancel the refi within three business days;
* You were led into a subprime loan though your credit would’ve qualified you for a be4tter loan; or
* In short, you were lied to or deceived.
Regardless of how you proceed, you can always choose to give your lender less money by paying off your loan early with mortgage acceleration.
Skipping a New Car and Buying a New Home
Chances are fair that at one time or another you will be tempted to purchase a new car. Maybe it will be the Jones’s next door that get to you, or perhaps you’ll just stroll onto a lot one day and realize, amidst the constant barrage of high pressure sales, that yes you do want that new car feel.
Perhaps you’ve even given in already, and currently drive a car that was once upon a time new. Sadly, as time goes on you often find yourself paying high payments on a vehicle that depreciates faster than you can pay if off.
Leasing a new car results in an even worse situation. You pay high amounts every month for a car that you never own, but actually end up giving back to the dealership. Often people spend thousands on a down payment for a lease on a vehicle they’ll never own.
Avoiding such unnecessary vehicular expenses throughout your life can easily be the difference between fully owning a home and not. As a simple example, a $100,000 home could be completely paid off in 15 years by just applying an extra $400 a month to your mortgage payment, instead of that car lease payment. Regardless of how much you owe, applying the extra money saved from car payments will result in heavy mortgage acceleration.
3 Little Savings you didn’t Know About.
One of the biggest excuses for not saving, is people falsely claim that they have nothing left to save. This is just plain wrong, and here are three under tapped sources of cash that can easily be saved and built into a considerable savings over time.
1. Bring a lunch to work/school. This $5 a day savings amounts to $100 a month. Use it to make a bi weekly mortgage payment, or save in a high yield savings account. Considering a modest 5% growth either from saved interest payments or compounded interest and you will have $83,712 within 30 year’s time.
2. Mow your own lawn/do you own gardening. Waking up an extra hour early on saturday, or finding some other small weekly expense to cut can easily save $20 a week, which will add up to $66,970 over 30 years.
3. Skip eating out once a month. Avoiding restaurants altogether just isn’t possible for most of us. But saving $30 a month certainly is. And you’ll be much happier eating out occasionally when you realize you’ve saved $25,113 over 30 years.
Help for Credit Addiction
Many find themselves consistently carrying credit card balances at high interest rates as a result of compulsive shopping habits. Thankfully, such bad habits can be turned around in less than a month’s time. Most habits can be changed with 21 days of work forming a new one.
First off, remove your credit card from your wallet. Keep it far from your computer, filed away if possible, so as not serve as a temptation. If you have to, consider freezing it, or even cutting it up. Avoid closing your account however, as that can have negative effects on your credit score.
Next, get in the habit of using your debit card for all of your purchases. Using cash to make payments will keep you from splurging on things you can’t afford, and help you to better budget for the future.
When shopping, make a shopping list and stick to it! You do not need that magazine at the checkout, or the overpriced candy. Try to avoid multiple trips out, particularly ones which involve shopping or spending. Try to consolidate all errands to one or two days a week, in order to carefully plan and budget for spending, as well as save lots on gas.
Finally, explore options for debt consolidation, and enjoy your debt free life!
Jumbo Mortgages Becoming Difficult to Obtain
Jumbo Mortgages, loans on homes over $417,000, are generally not grouped on the secondary mortgage market as either Freddie Mac or Ginnie Mae. As a result, such loans in the past have generally incurred higher interest rates, as well as higher down payment requirements.
As a result of constant bank closures, increased foreclosures, as well as general market weariness is leading to a shortage in Jumbo loan availability. No down jumbo loans are now impossible, and even those able to make a standard down payment are now required to have superior credit scores.
In many areas of the country this is a serious problem, as the average prices of homes has increased heavily in recent years. Most metropolitan areas in the coastal states now command well over $400,000 for an average home.
One manner of being able to afford a home without getting a Jumbo loan is provide a sufficiently large down payment to get the borrowed amount under $417,000. Making such a large payment will not only decrease your monthly payments, but will also contribute to mortgage acceleration, and help you pay off your home quicker.