Thursday, October 14, 2010

My 10 Dumbest Money Moves -- And How You Can Avoid Them

Here's another informative article we've found about managing your money and living a better life! You can't do it all, but just start doing a little every week!

by Stacy Johnson
Thursday, October 14, 2010

My 28-year-old niece and I were recently talking about money. She's (finally!) become interested in accumulating more and spending less, and because I've been in the personal finance business in one capacity or another since before she was born, she logically assumed that I've always done everything right and know exactly what to do at all times.

Confession time: I've blown it big on more occasions than I care to mention. In fact, most of what I've learned about money I didn't learn in books or by being a CPA, stock broker, or financial reporter. I learned it the hard way — by making stupid decisions and missing opportunities.

So for her sake, and maybe yours, I've put together the following list of 10 mistakes — most of which I've made — that you really should try to avoid.

1. Not having a goal

Whether sitting in your car or standing at the airport, you'd never start a trip without a destination in mind. The same logic applies to money. You should decide exactly what it is you'd like to accomplish, then remind yourself of that goal early and often. Are you trying to buy a house? Become self-employed? Save for your kid's college education? Retire in your 50s? Whatever it is, write it down, picture it and share it with anyone else who you're counting on to help you accomplish it. Your goal isn't money — money's paper. Create goals — both short-term and long-term — then decide how much money you'll need to reach them. Take it from someone who wandered aimlessly for years: goals work.

2. Not having a spending plan

If you have a job of any kind, you can bet that your employer tracks every dime they make and every dime they spend. Granted, they have an incentive to do so — both income and expenses affect their income taxes — but it's only logical to want to know where your money is coming from and where it's going.

Tracking and categorizing your expenses with a budget — or spending plan, as I prefer to call it — is the single greatest tool you have to accomplish your money-related goals. A plan that includes what you intend to spend on things like entertainment, food, housing, etc., vs. what you actually spend allows you to fine-tune your finances and find places to save. Not doing this is like driving with your eyes half-closed: You might reach your destination, but you're certainly going to take more time getting there.

If you're not writing down every penny of money coming in and money going out,

3. Attempting to derive self-esteem from possessions

Although we all know that money doesn't buy happiness, very few of us act that way. Instead, we seem to go out of our way to appear successful by driving the right car, living in the right house, and wearing the right clothes. Nothing wrong with nice things — if you can afford them.

But here's something that life has taught me. It's a quote from my most recent book, Life or Debt 2010: You can either look rich or be rich, but you probably won't live long enough to accomplish both.

Attempting to derive self-esteem from possessions is dumb on two counts. First, it's expensive.

More important? It doesn't work.

NOTE FROM HAPPY HOME SOLUTIONS: We can't tell you how many times we've gone in to clean up a property after a tenant has moved out, only to be amazed (and saddened/disgusted) at the purchases made -- and often left behind -- by people who couldn't seem to pay to keep a roof over their heads! A bunch of $100 shoes aren't going to do you any good if you're homeless -- especially if you charge them to your credit card, and then leave them behind when you you get evicted!

Almost all purchases except real estate go down in value over the long term (if not right away). Yes, real estate goes down sometimes too, but it ALWAYS goes back up.

The moral of the story is, if you're living in a $500 per month apartment, you shouldn't plan on throwing away money on a big screen TV and a different pair of Nikes for every day of the week (I've seen it done)!

I'm still watching the 25" TV I bought in '98 -- and it works just fine -- and so does the money I invested in real estate! Don't be dumb about material possessions.

4. Doing what everyone else is doing

One of the world's wealthiest men, Warren Buffett, said, "Be fearful when others are greedy; be greedy when others are fearful."

During the recession-induced stock market rout that began in the summer of 2008 and bottomed in March of 2009, the Dow Jones Industrial Average plunged all the way from 10,000 to 6,600. It was at that time that I bought most of the stocks I now own in my online portfolio. I didn't buy then because somebody on TV told me to — the "experts" were as fearful as everybody else. I bought then because I'd missed similar opportunities in similar downturns before, and I was determined to learn from that mistake this time.

Likewise, when the housing bubble was at its zenith, many of my friends were buying as many houses as they could possibly borrow for, even though it should have been apparent that prices were over-inflated. Now they're broke — and I'm shopping for real estate. Again, not because I'm smart, but because I've also missed that opportunity before. Hence this recent story Why You Should Buy Stocks and Houses Now.

It's common knowledge the economy runs is cycles of boom and bust — yet when times are good, everyone seems to believe that trees grow to the sky. When they're tough — like they are now — the same people stand like a deer in the headlights.

If you're convinced the economy is going to zero, buy guns and canned goods. But if you can reasonably expect a recovery some day, invest — even if that day is a long way away, and even if it's possible things could get worse before they get better.

5. Starting to save large and late rather than small and soon

If you're 25 and you save just 5 bucks every day ... call it $150 a month ... and earn 10 percent, by the time you're 55, you'll have $340,000.

If you wait till you're 45 to start accumulating that same 340 grand, you'll have to save $1,700 every month for 10 years. True, you can't earn 10 percent today, at least without risk.

But over time and by taking a measured amount of risk, you can.

6. Paying interest to buy things that drop in value

There are only two situations where paying interest makes sense, at least mathematically. The first is when the purchase goes up in value at a rate greater than the rate of interest you're paying to finance it. Example: You borrow money at 5 percent to finance real estate that you think might return 8 percent on your overall investment. Other examples might include a business loan or a student loan — in other words, something that's going to return more (at least potentially) than it costs in interest payments.

The other situation where paying interest makes sense is when you can earn more on your cash than you're paying in interest. Example: After taxes, I'm only paying about 3.5 percent to finance my house. Since I think can make more than 3.5 percent after-tax in the stock market, I'll forgo paying off the mortgage, even though I have the cash.

Obviously there are times when we have no choice but to borrow. The point is that unless the math works out, the less you borrow, the better.

7. Turning down free money

If your employer is offering matching money when you participate in your company's 401k or other retirement plan — and you're not participating to the extent necessary to get the full match — you're literally refusing free money, not to mention ignoring an opportunity to get a tax deduction and grow your retirement savings tax-deferred.

There are only two kinds of people who turn down free money: people who really, truly can't afford to put up the money to get the match, and people who aren't thinking it through.

And yes, I've been one of those people.

8. Buying a new car

Everyone knows that cars drop 15-25 percent before you get them home from the showroom. Which makes it odd that so many people continue to buy one. My girlfriend just bought a 2009 BMW that still smells new for $26,000 — about $7,000 less than a new one would cost, and they look pretty much identical.

This is one mistake I can happily say I haven't made — I've never spent even that much on a car — or owned one that new.

If you're buying a car for transportation, it doesn't have to be either new or fancy. Cars are depreciating assets: the less you spend on one the better, especially if you're borrowing money to do it.

9. Buying more house than you need or can afford

It's practically gospel: spend 25 percent of your gross income on a mortgage, regardless of what size house you really need. While spending the maximum possible amount you can afford will make real estate agents happy, will it make you happy? When you buy more square feet than you're going to actually live in, you're required to insure them, furnish them, clean them, heat them, and cool them. All of that costs money, time and stress.

Buying a big house makes sense if you're trying to make a leveraged bet on the future of housing prices — or if you're trying to impress your friends.

If you're not doing either, buy what you need and put the money you save into more productive things, like meeting your financial goals.

10. Not protecting your good credit

Credit is like lots of things in life: simple to screw up, a bear to fix. And even though you may think it doesn't matter, some day it might, and probably will. If you've already messed up your credit, take the time and steps necessary to fix it and then keep in good shape.

That was my list of dumb moves to avoid, but I'll bet there are plenty of things that you could add. So let's hear it!

Friday, October 8, 2010

Maybe This Affects You: BofA Halts Foreclosure Sales in 50 States

We've reprinted this article from AP because we feel it may affect some who read our blog. If you are currently going through a foreclosure, the action taken by BofA (and most certainly to be followed by other banks very soon), may give you some hope of halting your foreclosure. If you think you might fall into this category, you might consider contacting your lender and/or your attorney regarding this matter -- it may save your home!

October 8, 2010

By ALAN ZIBEL, AP Real Estate Writer Alan Zibel, Ap Real Estate Writer – 20 mins ago

WASHINGTON – Potential flaws in foreclosure documents are threatening to throw the real estate industry into a full-blown crisis, as Bank of America on Friday became the first bank to stop sales of foreclosed homes in all 50 states.

The move, along with another decision on foreclosures by PNC Financial Services Inc., adds to growing concerns that mortgage lenders have been evicting homeowners using flawed court papers.

Charlotte, N.C.-based Bank of America Corp., the nation's largest bank, said Friday it would stop sales of foreclosed homes in all 50 states as it reviews documents used to process foreclosures. A week earlier, the company had said it would only stop such sales in the 23 states where foreclosures must be approved by a judge.

"We will stop foreclosure sales until our assessment has been satisfactorily completed," company spokesman Dan Frahm said in a statement. "Our ongoing assessment shows the basis for our past foreclosure decisions is accurate."

Bank of America did not disclose how many homeowners would be affected.

State and federal officials have been ramping up pressure on the mortgage industry over worries about potential legal violations amid growing evidence that mortgage company employees or their lawyers signed documents in foreclosure cases without verifying the information in them. Also Friday, Sen. Christopher Dodd, D-Conn, the chairman of the Senate Banking Committee, said he would hold a hearing on the issue next month.

"American families should not have to worry about losing their homes to sloppy bureaucratic mismanagement or fraud," Dodd said. "Regulators at the federal, state, and local levels have a responsibility to uphold the law and protect consumers from unfair foreclosure, and lenders have a duty to not cut corners around the law."

A document obtained last week by the Associated Press showed a Bank of America official acknowledging in a legal proceeding that she signed thousands of foreclosure documents a month and typically didn't read them. The official, Renee Hertzler, said in a February deposition that she signed 7,000 to 8,000 foreclosure documents a month.

Earlier in the week, Senate Majority Leader Harry Reid, D-Nev., urged five large mortgage lenders to suspend foreclosures in Nevada until they have set up systems to make sure homeowners aren't "improperly directed into foreclosure proceedings." Nevada is not among the states where banks had suspended foreclosures.

Also Friday, PNC Financial Services Group Inc. said it is halting most foreclosures and evictions in 23 states for a month so it can review whether documents it submitted to courts complied with state laws. An official at the Pittsburgh-based bank confirmed the decision on Friday, which was reported earlier by the New York Times. The official requested anonymity because the decision hasn't been publicly announced.

PNC becomes the fourth major U.S. lender to halt some foreclosures amid evidence that mortgage company employees or their lawyers signed documents in foreclosure cases without verifying the information in them.

In addition to PNC and Bank of America, Ally Financial's GMAC Mortgage unit and JPMorgan Chase & Co. have announced similar moves in the past two weeks.

In some states, lenders can foreclose quickly on delinquent mortgage borrowers. By contrast, the 23 states use a lengthy court process. They require documents to verify information on the mortgage, including who owns it.

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If you're in a pre-foreclosure situation, perhaps it's time to consider finding someone to take over your mortgage payments -- a rent to own tenant, or possibly a real estate investor willing to work with you to keep you from foreclosure. Call us and let us discuss your options: 630-780-HOME (4663).

Wednesday, September 29, 2010

The Road to the Worst Credit Score Ever

by Amy Fontinelle
Wednesday, September 29, 2010

Your credit score can range from 300 to 850 — the higher, the better. Most articles about credit scores focus on how you can improve your score to get approved for loans and get the best possible interest rates from lenders, but here, we're going to take the opposite approach and tell you how to achieve the worst credit score ever.

If any of these behaviors apply to you, watch out — you're in the process of doing some serious damage to your financial reputation.

1. Don't Pay Your Bills

The most important part of your credit score is your repayment history, so if you want to have terrible credit, don't pay your bills.

Did you get a bill in the mail from your credit card company today? Don't open it. Leave it in the envelope and throw it on top of the growing pile of paper on your dining room table. By refusing to pay even the minimum monthly payment, the repayment history on your credit report will look terrible, showing that you have bills you haven't paid for 90-plus days. Eventually, your account will go to collections, making your score plummet further.

Better yet, throw your unopened credit card bill in the trash. That way, a thief might be able to acquire enough information about you to steal your identity, leaving you with a gigantic financial mess to clean up and completely trashing your credit score.

While you're at it, don't open your monthly mortgage statement, either. Keep doing this month after month. Eventually, you'll lose your home to foreclosure. Between the unpaid mortgage and the credit card bills, you may even have to declare bankruptcy. Bankruptcies and foreclosures are a great way to ruin your credit not just in the short term, but for years to come.

2. Charge It!

The second most important factor of your credit score is how much you owe. So if you want to ruin your credit score, make sure to max out all of your credit cards. Better yet, try to spend past the limit! Then, don't pay the bill — ever. Let the interest and late fees rack up. Instead of keeping your credit card balances below 15-25% of your total available credit, as credit experts like Liz Pulliam Weston recommend, see if you can manage to owe $10,000 on a card with a $5,000 limit.

3. Apply, Apply, Apply

Ten percent of your credit score is based on how many new accounts you have applied for recently. So if you want to mar this component of your score, why not surf the web and see how many credit card applications you can fill out in a single day? Best of all, if you get approved, you'll have new tools to dig yourself into an even deeper financial hole.

4. Be a One-Trick Pony

Your credit score tends to be higher if you use a mix of different types of credit, such as credit cards, store accounts, an auto loan and a mortgage. Of course, to get approved for a mix of credit in the first place, you'd have to be responsible with your money. If you want to look bad, don't mix it up - stick with credit cards. These are one of the easiest types of credit to get.

5. Assume That It's Hopeless

Once you've thoroughly destroyed your credit, there's no sense in hoping that things could get better one day. After all, a bankruptcy can stay on your credit score for up to 10 years. So don't visit a nonprofit credit counseling service for help. Don't work out a budget to help you manage your money better. Don't cut up your credit cards or freeze them in blocks of ice. And don't take any baby steps toward paying off your debts. Just resign yourself to a life on the streets - it will be harder for your creditors to track you down if you don't have a job, an address or a phone number. Don't believe anyone who tells you that you can turn your situation around in a year or two if you're motivated enough.

What Won't Affect Your Score

While you're hard at work destroying your credit and ensuring that your life will one day revolve completely around clawing your way out of debt, please keep in mind that there are a few destructive behaviors that won't have any impact on your credit score.

Unless you do it so often that your bank sends your account to collections, overdrawing your checking account won't have any effect on your credit score (though it will be very expensive). Getting divorced, in and of itself, will not affect your credit score, so don't think that stepping out on your spouse will get you any closer to a 300. Losing your job won't directly impact your score, either, nor will receiving unemployment checks or signing up for food stamps.

Credit bureaus don't care if you're on public assistance, and they don't care if you have a job — they're only interested in whether and when you pay your bills, not how you derive the means to pay for them. But hey — why stop at just destroying your credit when you could destroy your entire life?

The Bottom Line

Please don't follow the tongue-in-cheek tips in this article - we really don't want to see you ruin your finances, your relationships or your sanity.
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We've reprinted this excellent article from Yahoo Finance.

Wednesday, September 1, 2010

Seller Testimonial: A Happy Homes Client Talks About Selling His Home Through Our Rent To Own Program

Kurt is a Happy Home Solutions client who had been trying to sell or rent his beautiful townhome in Carol Stream, IL, for months with no offers.

We found him a great Rent to Own tenant in less than two weeks, from the day we first spoke with him about helping to market his home.

"I wish I had done it months ago," is how Kurt now feels about Renting to Own his property with Happy Home Solutions.

Hear what else Kurt has to say:



Do you have a vacant rental property you can't seem to fill? An ongoing series of bad tenants and evictions? A home you're paying the mortgage on that is causing stress in your life and marriage?

If you'd like more info on how Happy Home Solutions can help solve these problems, please call Diane or Adam St. James at 630-780-4663, or email diane@myhappyhomesolutions.com

MyHappyHomeSolutions.com

Friday, April 9, 2010

Happy Home Solutions Can Help Move Your Home!

April 9, 2010 -- Happy Home Solutions can help you move your home now. Watch this video explaining how we can help you!



Whether you're in Wheaton -- or anywhere else -- Contact us today for more information, and an OFFER ON YOUR HOME: 630-780-HOME (4663) or email diane@myhappyhomesolutions.com

A Happy Homes Solutions Rent to Own Client Testimonial

Marlena is a Happy Homes Solutions client who found a home through our online video tours, and is now renting to own her first home!

See what Marlena has to say about Happy Homes Solutions in this video:

Thursday, March 18, 2010

How Anyone Can Qualify For A Rent To Own Home

Many tenants continue to rent year after year -- and give their money to their landlord with nothing to show for it -- because they don't think they can qualify to buy a home.

But many of them are wrong. Many of them can qualify to rent-to-own a home -- even if their credit score is low, or they haven't saved a big down payment, or they are between jobs, or they don't have a long rental history.

It just takes a little action to find the right program, and a little education to learn how it works.

If you ask the right questions, you'll discover how simple the process really is.

Tenants ask all the time – How can I qualify for your rent-to-own program?

At Happy Home Solutions, you just need to fill out an application and satisfy three basic requirements:

1) The tenant-buyers must commit to paying their rent on time every month.
2) The tenant-buyers must be ready to handle the minor repairs and maintenance that come with owning a home.
3) The tenant-buyers must be able to provide an option fee, or upfront payment, before they move in.

You can watch a video explaining each of these in detail at www.MyHappyHomeSolutions.com

Tenants also ask – Why do I need a significant option fee? Why can't I just pay a deposit?

The down payment necessary to secure a home in our rent-to-own program varies drastically, depending on the price of the home, the condition of the property, the strength of the applicant's credit score and employment history and rental history, whether the rent is lower or higher than market rents in the area, and many other factors.

The upfront payment for a rent-to-own property is generally higher than a typical rental deposit of one or two month's rent but lower than a traditional down payment for a bank loan of 10% to 20% of the purchase price.

The more a tenant-buyer has available to put down, the more likely that tenant-buyer's application will be approved and selected over another tenant-buyer with similar income and credit. We have many applicants for each property, so the candidate who beats out the competition is often the one who can show the strongest commitment to purchase.
A significant upfront payment shows a strong desire to buy!

Tenants still ask -- Why is a down payment required even though my rent is being applied towards the down payment?

At Happy Home Solutions, our tenants earn a signficant portion of their rent payment towards the purchase of their home. Although this payment keeps growing every month, an upfront payment is still required before the tenant moves in to distinguish a true "tenant-buyer" from a regular renter, and to help with the process of acquiring a bank loan. We usually offer a very generous 50% to 100% rent credit because we want serious buyers who can combine that with a significant down payment in order to qualify for a loan.

Finally, tenants ask -- Would we need to qualify for a conventional loan after the lease period?

The idea of our rent-to-own program is to work towards getting a conventional loan during the lease period. We will refer you to professionals who can help you improve your credit, apply for grant assistance for additional down payment, research available loan programs, and get the best rate. We can often negotiate to get some of the closing costs paid for you as well.

We want to help you every step of the way because your success is our success!

Just listen to Marlena, by clicking on the following link:

http://www.youtube.com/watch?v=SIMIOqzMr_4

Marlena's dream came true when she found a newly remodeled house that cost less per month than her apartment and gave her more space, more convenience and more of what she always wanted -- her own home!

Let us help you achieve your goal. Just call 630-780-4663 or email dianejstjames@yahoo.com
or visit us at www.MyHappyHomeSolutions.com