Owner: Beyond the Consumer URL:http://beyondtheconsumer.blogspot.com/ Join Date: Thu, 21 Jun 2007 18:26:47 -0500 Rating:0 Site Description: Personal finance, consumerism, and business news. Site statistics:Click here
What would being debt free mean to me? 2007-07-31 09:52:00 What if I had no mortgage payment, no car payment, no debt at all? Here's a fun activity. Take all your essential bills, not including the debt and the 'luxuries', with the average you pay each month and multiply it to a year. My list includes:water, electricity, gas, telephone, taxes, insurance, fuel, foodAltogether this is a yearly expense of $15,680. This is what we live on if we own our home (paying taxes/insurance on it of course) and cut back to the bare essentials. Could you make $16,000 net a year? What is the cost of your "bare essentials"?
How do we feel about debt? 2007-07-31 09:09:00 Here's a nice MSN article on how we feel about debt. Some of the quotes they have from message board posters is a real eye opener."The people who have a game plan are much less likely to wind up in trouble again,So says the author of Credit Card Nation, which by the way was a dreadfully dry book. Why? Are we so entrenched in debt that we can't even imagine that we can live without it?Marie thinks so. She writes A reader posting as "Marie38" believes that "being totally debt free is impossible." She makes $42,000 a year, and savings and 401(k) contributions are automatically deducted. Marie38 does not defer vacations and other extras, although she does pay cash. "My plan is to live while I am still young enough to do it," she wrote. "No one can predict the future. . . . None of us are guaranteed even one more day."Marie has her head in the sand. She has the "have it now" attitude that plagues people. How old is Marie? We don't know, but we do know that she will never be debt free. Mo
Does "my house" = "my money"? 2007-08-03 09:43:00 A comment in one of my articles reviewing a mortgage product got me thinking hard about the way we view our homes. What does a house represent? Sure its our homestead, where we raise our families and build memories. But is it an investment? Is it an asset or liability? Is it an ATM machine? Anonymous wrote:in the 30 yr, I have to apply for HELOC 2nd or refinance again to get that money (MY MONEY) back!" Thus, I HAVE TO PAY (MORE MONEY)TO GET MY MONEY BACK!What struck me about this was this idea that the HELOC was allowing us to get back "our money".Is a house a source of cashflow? Let's look at that for a second. A house worth $200,000. You own it, you may or may not have a mortgage on it (so technically the bank owns most of it), you have (hopefully) "equity" in it. A HELOC is a "Home Equity Line of Credit". If I buy a house, I've purchased something. The only way to really get my money back is to liquidate it. To sell it. Real estate is an "investment" because unlike just about eve
Auto Loan Problem Revealed! 2007-08-07 15:09:00 Mystery solved! The finance company no longer had my insurance information. My insurance company no longer had my finance company information. The declaration page didn't get sent for the insurance renewal, and the finance company charged me their own insurance.The interesting part is that this isn't at all reflected on the payment. The numbers simply don't add up. If I had not checked it, found the problem, called to determine why the money was missing, and called both companies to get the paperwork back in order, I would have continued to be charged this extra insurance while already being covered. I do not know how long the finance company would have done this before bothering to notify me that there was a problem, but I am guessing that they never would have.In fact, this happened before at the beginning of the loan, but was apparently corrected after 2 months. However instead of taking it from the monthly payment, as they did this time, they just tacked the insurance (I did not Read more:Problem
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Mismanaged Auto Loan 2007-08-07 12:25:00 As if I needed another reason not to want to do business with loan companies, my wife's auto loan has been misapplied this month. I have vowed never to take another loan or finance a car again. When you pay in cash, you aren't dependent on some guy in an office somewhere entering your information into their computer. The more businesses you work with, the more problems you will inevitably have. You will always have human error.Since I hate my debt and I distrust companies, I always double check my payments and make sure the companies are doing their jobs. Since I started to handle my wife's auto loan, I began checking the deposits made each month. The payment I just made has a problem, a big problem. Out of a $300 payment, only $175 was applied to principle with a $30 interest payment. $95 vanished.So I went back and looked at all the payments all the way back to the origination of the loan. No other problems. However, I noticed another huge issue.2 months after she signed her loan,
Want to go broke? Build a pond 2007-08-06 17:52:00 I am exaggerating, but I never knew a pond could be so expensive! When my wife and I moved into our house, we set about redoing our backyard. We literally had a clean slate; the whole yard was mostly dead grass and mud pits. Our first project was building a small pond, which is 5x6 kidney shaped. Around it we extended our patio with natural stone and added beds around the entire yard. 2 years later we have just started adding foliage. It's been a long project.Unfortunately, our pond has been a real money pit.As it turns out, some drainage problems resulted in a lot of mud from a failed and unfinished elevated flower bed to wash into the pond. So for several months it has been completely clouded. We only see the 3 big fish and half a dozen babies they spawned when they come up to feed. So, this winter we are going to have to empty it all out, clean it, refill it, put the fish back in and start over. Let's not forget the huge string algae problem that developed over the summer.Otherwis Read more:broke
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Not living paycheck to paycheck 2007-08-06 14:20:00 When my wife and I married 2 years ago, we were literally living paycheck to paycheck. A paycheck would come in and we would pay the bills we had received, the minimums on the cards and loans, buy the essentials like food, splurge a little, and then try to save whatever was left over.After we were married we decided to tackle our finances. We wanted to manage our personal finances, not just sit along for the ride.One of the best feelings I got was when I realized we no longer lived paycheck to paycheck. We started saving off the front end of our paychecks instead of the back end, saving money for bills that did not arrive regularly (like insurance), saving for retirement, delegating a huge chunk of our savings rate to paying off debt after having established an emergency fund, stopped carrying balances on the credit cards, and only splurging after all those things (and food and bills) had been paid.Now that we have money sitting in a bank in emergency fund and our bill savings, we have
Broke making $150k a year 2007-08-06 11:17:00 Here's a depressing story from CNN about a couple with 4 kids who are now neck deep in debt and broke. They had 1 kid, planned on having a second and instead had triplets (another reason not to use fertility drugs!).The real tragedy of this story though is that they had $175k in savings and an income of $90k a year entirely from one spouse. After their triplets came, their savings vanished and they went into debt. I wondered how 3 healthy babies could drain $175k in such a short time when you have $90k a year in income and a stay at home mom!Now 4 kids is a lot. But many families have more and make it just fine. Yet this couple was spending $2k a month on 3 part time caregivers! Then they had real estate investments, which began to become unprofitable (or even break even). In 2 years they went from $90k a year and $175k in the bank to over $155k in DEBT plus a loss of the $175. 3 extra kids had cost this couple $165,000 a year! That's $55,000 PER CHILD.It gets worse. They sold some g Read more:making
Mortgage loans are hard to come by 2007-08-06 09:37:00 With less than perfect credit, mortgage loans are becoming scarce. Even prime mortgages are facing harder scrutiny in underwriting. It is a situation that has been growing slowly over the last couple of years as defaulting subprime loans everywhere hit lenders hard. Foreclosures, I read in a recent news article, are up around 50% now. So it was not surprising to me when a family member of mine called to tell me that getting approved for her mortgage was like trying to squeeze juice from a turnip.Indeed, this article on the mortgage crisis perfectly described this situation. Some are just not funding any loans, even for those who had been already approved. And no doc loans? Forget it!Wells Fargo, my mortgage lender, recently took themselves out of the jumbo loan market with a voluntary rate increase that is, needless to say, not competitive. Still others are downsizing their lending departments or getting rid of them altogether. American Home mortgage is in bankruptcy. Another laid off Read more:Mortgage
Online security questions - ugh 2007-08-05 15:58:00 Am I the only one who finds online securityquestions
completely annoying? As near as I can tell, the only purpose of these security questions is so that I can lock myself out of my own account.First, many of them are case sensitive. So inevitably even if I know the answer, it doesn't recognize it.Then most of the time the questions are all things that I don't even remember. Mother's middle name? Hmm, how is it spelled? My first cat? I can't remember the name of my first cat! Well, I can remember the name of a cat, was it the first? Or does the first one I remember count as first. Sure, but what if I remember some other cat 2 years from now when I actually need to answer this question again?Others, like the ones I'm trying to figure out, are so ridiculous that no thief could know the answer. Because there isn't a chance in hell I'd remember it either. What were my wedding colors? My bosses first name at my first job? My spouses nickname (gee, isn't it lucky that everyone in the
FNBO locks my account 2007-08-10 13:33:00 I received a satisfaction email yesterday from FNBO. I filled it out as being very satisfied with their service. So I found it incredibly funny that the day after I fill out this survey, they send me an email telling me they've locked my account.Apparently, they want my employment information to comply with the "Patriot Act". I find this amusing, since I bank with 3 other banks and none of them have this.So, I have to call them up. Why? Because I'm locked out of my online account - I can't even sign in. Why? Because even though I have my user name and password, the online website is requiring me to answer 2 security questions. Security questions are more of a hassle than a benefit. Especially when one of the questions they are asking is "What's your favorite sports team". Hey FNBO, not everyone likes sports. And I don't even remember answering that question.Do you hate the phone trees that companies have now? Do you hate being on hold? At least when you are on hold with most compa Read more:locks
Embracing the debt culture - auto financing 2007-08-10 12:19:00 I think financing an automobile is absurd. This is my opinion after having dealt with financing vehicles myself and currently being indebted to a financial institution for my wife's car. Financing a car, let alone financing a new car, doesn't add up. You pay more for the price of a purchase that is constantly depreciating. By the time its done depreciating, it's nearly worthless and you've spent thousands of dollars while paying interest on top of it to a bank.There are 2 winners here: the bank and the dealership. The dealership wins again when you trade in your $30k car for $10k and they resell it for $13k!But, consumers are more than willing to accept these terms in order to get into a new car. In fact, they are accepting even worse terms than our parents did. Compared to this, spending $500 on "rust-proofing" sounds like a good deal.Buyers are paying more, extending loan terms and making smaller down payments, according to a recent study by the Consumer Bankers Association. Many Read more:Embracing
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$3,000 state voucher to buy a new car 2007-08-09 13:04:00 Representatives of the state of Texas feel that the way to curb pollution is to get older cars off the roads. This isn't a bad idea, but I'm not so sure about the way they are doing it. I've discovered other states, Vermont specifically, have offered this as well.Here's how the program works. Say you are a family of 4 with a pre-1996 vehicle. If your annual income is less than $41k, you qualify. You can take your old car to a dealership where you can get a $3,000 voucher towards the purchase of a new or 3 year old used vehicle. The dealers get no money for your trade, which is given to a salvage yard at no cost, and there is no indication that the dealer offers any trade in value other than the state sponsored voucher.You can then use that voucher to purchase a 2004 and up car or light truck.Here's the problem. The cheapest 2004 vehicle in the state of Texas (from autotrader.com) is $4,500 plus TT&L (remember this is a dealer, so you will likely be paying many fees on top of the a
Have $80 million to spare? Buy a sub 2007-08-08 14:40:00 No, it's not an expensive sandwich. For only $80 million
dollars (a bargain if you ask me) you can have your own luxury 5,000 square foot submarine. Expect your friends to trade in their private yachts for one of these in the near future. If you don't have at least the base model, which starts at $25 million, please don't bother showing your face at the billionaire's country club.Each sub comes with a custom interior, extravagant viewing windows, and even a carport to park your Bugatti and a minisub that you can take afternoon jaunts in.Sales information is not known, but there's a good chance this guy has one. Nothing says "living off the backs of stockholders" like buying a submarine with your $200 million severance package after 5 years of doing a mediocre job. If you can't afford it, chances are good that American Home Mortgage will lend you the money.Torpedoes not included.
Hillary wants you to pay your neighbors mortgage 2007-08-13 15:25:00 What would you do if your neighbor knocked on your door and told you that his ARM is adjusting and he can't afford his mortgage anymore? Would you write him a check? Hillary
Clinton thinks you should.Direct from her website:Hillary will establish a $1 billion fund to support state programs that help at-risk borrowers avoid foreclosure. Some state programs help borrowers make the single payment necessary to become current on their loans; others help borrowers renegotiate their loan terms, or simply provide financial counseling. These foreclosure mitigation efforts are more important than ever right now. Federal assistance for state programs that assist at-risk borrowers supplements Hillary's call earlier in the year for "foreclosure timeout." At-risk borrowers and lenders should be encouraged to work out alternatives to foreclosure.In other words, your tax money is going to help pay other people's mortgages so they can keep their homes. Never mind that the borrowers chose to dive int Read more:wants
FICO score no longer includes authorized users 2007-08-13 11:36:00 This was a given when the news came out about companies that were artificially boosting people's credit scores by attaching them to the credit of others who, for payment, have excellent scores.Now the typical "sign up a dependent" for a credit card to help them establish credit will no longer work.FICO 08 rolls out in September. Other scores like the VantageScore do not include authorized users
either.I personally agree with their decision. For students with no credit, a secured credit card will do fine.Here's an article with more information.
Democrats and subprime mortgages 2007-08-13 11:12:00 The word from the democrats on subprime mortgages
is an all too familiar one: We need more regulation, its not your fault, someone else is always to blame.I would be upset if my bank gave me a higher interest rate than I deserved. You protect yourself by shopping around. Does that lead me to foreclosure? Of course not, it just means I'm buying less house and paying more interest. Foreclosures are up because of one thing: homebuyers can no longer afford their payments. This is a combination of poor loan terms, inflated appraisals, and lots of easy credit. However all of this comes down to the person signing up. Your payment is right there on the document. Is it an adjustable rate? Then why are you signing up for a monthly payment you can barely afford knowing it will increase in 2, 3, or 5 years?There are many people taking (and who do bear) the blame: brokers, lenders, Wall Street. See anyone missing from that list?Instead, they call for more regulation. Isn't a bank supposed to make Read more:Democrats
Things my home office can't do without 2007-08-13 09:32:00 Everyone needs a home office
. Even if you don't work at home, you need some place where you can quietly go over your budget, bills, and finance management. Even if it is just a desk in a room. We have a library/office in my home that we use to do the budget, pay bills, research, and talk about finances. The most important thing, in my opinion, is good organization. Here are some elements of my home office that I couldn't live without.A computer: Just any desktop computer with some good software programs. These include spreadsheet (either MS Excel or the free open source OpenOffice), a desktop calendar (I use Active Desktop Calendar), an address/contact book (Outlook for me).Online access: I would be lost without the Internet. Via email we can quickly contact companies, through the net we can find corporate phone numbers instantly, conduct research, and manage our bank accounts.A filing cabinet: We use a large 5 drawer steel filing cabinet to store our documents, all well organized in
Reader inquiries: bankrupt mortgages and the Texas car credit 2007-08-14 10:32:00 I have been getting a lot of directs to the site with questions input into Google. I thought I would make some comments on the two most common.First, a common question is "What if my mortgage company goes bankrupt?" - some people, from their searches, seem to think that their mortgage might be forgiven! Actually, it will just be sold to some other bank. Your lender in bankruptcy should send you a letter notifying you of the transfer. In any case, it is up to you to continue making payments to the right place. So if you see your mortgage company about to fold, call them up. If you send the check to the old bank after your mortgage transfers, it won't be applied to your mortgage. The bank might even cash it, leaving you scrambling for 2 payments in a single month while waiting for a refund (because as we all know, once a company gets your money they will drag their feet giving it back). Maybe they are legally required to pass on the check, who knows. If you assume they'd send on the ch Read more:Reader
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Suddenly it's all clear 2007-08-14 08:29:00 So my pond has been a monumental struggle, and it seems like everything we did could not help. It was just dirty, cloudy, and mucky. Our solution was to just empty it and start over. We did water changes, vacuumed it, threw money at it left and right with chemicals and cleaning tools - it was exhausting! Then this morning I woke up and it was completely clear!I thought this was so much like getting out of debt. You struggle, throw money at it, get frustrated, make mistakes, sometimes just want to throw in the towel and start over...but eventually after all that work, you'll wake up and it'll all be clear!Hard work does pay off. Becoming debt free is hard work. You are going to struggle. It is not going to be fun. But the end result? It is all worth it. Read more:Suddenly
Do you hide your spending? 2007-08-21 17:59:00 In a completely unscientific survey by Parenting Magazine, editors asked "What's the largest amount of money you've ever spent without talking it over with your partner?"Although called "Parenting" this magazine is geared almost entirely towards women, so we can assume most of the respondents to the survey were female.6% said $25, 8% said $75, 11% said $150, 22% said $250 and a staggering 53% responded with "It's my little secret".Do you hide your spending from your spouse? Have you made a major purchase decisions without consulting them? Do you think that's okay?
Living like a king - when you're not one 2007-08-21 09:04:00 Tricia over at bloggingawaydebt.com recently posted a link to an article in a Kansas newspaper about a couple deep in debt. This couple has 1 kid and a second on the way. They are only 24 and 26 and already in almost $100k of debt. Their total debt, including their mortgage, is $187k.The question this couple has is “How can we get caught up with our bills and get our expenses together to start saving?” and the answer, apparently, is “Reducing your big tax refunds will almost correct your negative cash flow. But cutting expenses and paying off credit cards will be critical for longer term success.”What? What kind of useless advice is that? This couple is completely broke and in debt. Adjusting their withholding isn't going to help much. Worse, they sugar coat their situation by claiming a net worth of $24k. But when you look at their "assets", they include $55k of "stuff" and $150k in home value. Though we don't know how they calculated their home value, the market is tanked. Read more:Living
Surge in subprime advertising? 2007-08-20 16:47:00 Back from vacation! With all the problems of the subprime market, is it just me or does it seem like advertising for these horrible loans has actually increased? I cannot visit a single website without seeing an add for a $500,000 loan for $900/mo. or some other such deal. The dancing green aliens and wide-eyed cute animal Flash ads are everywhere. Out of curiosity, I tried clicking on a few but none of them would disclose the terms of their so-called loan without entering an SSN. But it's quite obvious that these are not good loans. The payments they claim would not even cover the interest on a 50 year loan even if I assume a ridiculously low rate, like 1%, with the balances they are advertising. Further, they sometimes include interest rates that are so far below the actual rates being assigned to mortgages it isn't funny. I wonder why these ads exist, and worse how reputable online news outlets can display them next to an article about someone foreclosing on their house after thei Read more:Surge
Bad news always comes in threes 2007-08-23 12:41:00 First, my wife is laid off from her second part time job. Second, my car breaks down on the way to work. And finally third, our cat poops on the floor.This morning.Here is how we dealt and are dealing with these problems. First we list them by urgency, come up with a plan, then execute said plan.Priority 1: Cat poop on our floor. Above losing a job and the car breaking down, the most urgent situation is that there is now a pile of poo on our carpet. This problem is two-fold. One is that the poop is there, which has now been cleaned up. The second is the smell is there, which may attract the cat back and send guests into a coma. What we need is a good disinfecting cleanser and let it soak in. When cats poop, they pee, which means we have pee soaked into the under-padding. Will do this evening.Priority 2: The car. I believe this is going to be a relatively easy fix, but unfortunately it had to be towed back to the house and put to sleep in the garage for the day. My estimated cost for pa Read more:always
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How to eat less and spend more 2007-08-23 12:30:00 My wife and I went out to dinner last night at a decent asian restaurant. The bill for the two of us? $67 including $9 for tip.You might expect this from a restaurant that starts off with $23 plates. What you wouldn't expect is such a large bill when my wife and I split one of those plates. Some friends invited us out and such a sudden impact to our budget wouldn't have been pretty, so we agreed to split the meal. Unfortunately what we didn't plan for was buying a couple glasses of (their cheapest) wine each, which ended up costing more than the food!Alas, it is the alcohol that breaks the bank at restaurants, not always the food. And at $5-6 each, it is easy to nickel and dime yourself to death.
Couples - how do you divide chores? 2007-08-22 13:09:00 How do couples split up the household chores? Does she cook and clean while you drink beer? Do you handle all the finances while she just complains about not having any money?Although we really didn't have a defined chore list when we got married, we had been living together for 2 years prior so we had settled in to assigned chores based on our skill sets and - well - tolerance.Me: Cooking, household maintenance, vehicle maintenance, finances.Her: Cleaning dishes, organizing our social schedule, laundry, litterbox.This is the big category. We have many things that we just like doing together.Us: Cleaning the house (vacuuming/disinfecting/dusting/etc), lawn/gardening, basically everything else.How did you come up with your chore arrangement? Are you happy how things are, or do you feel you do more/less than your fair share?
Envy thy neighbor 2007-08-22 12:32:00 Here's a fun article from MSN about how the wealth around you can make you feel poor. We get to hear a couple of stories, sounding very typical, of young people entering the workforce and finding themselves surrounded by rich, successful people. So what do they do? They spend themselves deep into debt to keep up.When you hang around people who spend lots of money, you're probably going to do the same (or be miserable that you can't). Odds are also good that it will leave you broke.it is a daily struggle to keep it from skewing her financial perspective. "I find myself looking at something and saying, 'Oh, it's only $200.' Then I look at my accounts, and I have to remind myself, 'You can't afford $200!'"Personal finance has a lot to do with perspective. Especially for younger generations, sometimes its hard to focus on what the true value of a dollar is. We grew up with parents who spent, spent, spent. New cars, bigger houses, leveraging loans. What we didn't realize was that
Credit card holders affected by subprime - good! 2007-08-28 19:49:00 This is a good lesson in credit card use. Unfortunately, if you carry a balance, you will be affected by the mortgage crisis. Apparently banks that also have mortgage divisions are hiking interest rates to keep profits high.Capital One, which is among the largest credit-card issuers in the nation...said it was raising rates because it could and because of unspecified economic conditionsShocking! A company whose only interest is in making money off of the money you borrow decides to use the clearly defined terms to make more money to offset its losses elsewhere. Hilarious is that the customer mentioned in the article seemed upset about this. Why? You agreed that they can change your rate whenever they want and you borrowed money from them anyway. If you don't care what they charge you, fine. I imagine most people do care.This is the same kind of whining that came about when they raised the minimum payments. The immediate logical response? Good! Raising the minimum means that any idiot
17 year old sells modded iPhone for depreciating good 2007-08-28 15:02:00 When I heard about the 17 year old hacking the iPhone
to work on the T-Mobile network, I was pretty impressed. If you are not familiar with the story, the boy spent about 500 hours over the summer physically modifying the new Apple phone with the help of 2 online friends. Someone give this kid his engineering degree, already. No doubt he has a fine future in the technology industry ahead of him.But I was disappointed to hear he just gave away gadget for a car. The Nissan Z Roadster starts at $27k, though is probably worth a few thousand less now that it has been titled. I don't think a 17 year old would balk at $50/hr as a summertime job, but I just can't help but think a much better deal could have come out of this.The real question is what Apple's response will be. If they keep their phone locked, the company that bought the teen's idea could stand to make a lot of money. Much more than a Nissan Z. On the other hand if Apple renegotiates with at&t and unlocks their phone, the $27
The advertising bombardment 2007-08-28 11:03:00 Ads are everywhere. They are so pervasive that most of the time we register a product, brand, or message without even paying attention to the ad itself. I am a firm believer that if you want to cut a very large chunk out of your spending, the first thing you should do is stop reading magazines and turn off the TV.It takes a long time of being unplugged into these consumerism machines before you realize just how insidious they are. Open a magazine and you will likely find more pages of advertising than actual content (remember, you paid them to subject yourself to this). Worse, many of the ads are often disguised as articles. Even some of the genuine articles themselves focus on what products you should buy.I spent about 2 hours watching television recently, which is more than I've watched in the last 2 months. What struck me most is how very little content is on television anymore. Flip between the channels and you will encounter an advertising bombardment on a mind boggling scale. Li
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