A Common Sense Financial Plan for 2011 (Part 1)

I am not a financial planner, insurance salesman not a mortgage person. The following are just some common sense ideas I came up with by following what’s happening.

This is what I call a realistic Financial Plan for the Average Guy for 2011.

First of all, most of what you read in the “financial” columns, if you wish to read them, is not for the average person. Maybe you consider yourself the average person, but as you read them you’re probably saying, “who are they talking about?”.

At one time, we were all in the “average guys” category. But were we? The average guy at the time and even now, as  portrayed by the “esteemed financial columnists”, not only had a house, but a mostly funded 401(k), enough insurance, as well as significant cash left over.

Back when everything was going great, when  we needed cash we went to the “Giant ATM in the Sky”- in other words, we refinanced our home. Now we can’t refinance our home because we owe more that the house is worth and our debt to income is too high! As a matter of fact, some people are now having to pay PMI insurance where they never had to before.

But what do we do now, when we find out we don’t have all those things? We use our “Financial Plan for 2011”:

1. 1. Pay your mortgage and the household bills you need to give your family it’s basic elements, first. The way most people get into trouble with their mortgage is by paying all the other bills and leaving their mortgage till last; “I can catch up later”.
2. Once you miss your first mortgage payment, you are at the pleasure of your Lender.
3. From the first day past the due day, they are adding late charges. If you get into the second month of arrears, your Lender may may call in the legal department. From that day forward, you are sunk. You can literally never catch up.
4. In order to “catch up”, you must pay your current payment, plus all arrears, plus legal fees and late payments. Your $1200, one month late, can turn into $3000-3600 real fast.