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Summary of the New Financial Reform Law

Here is a summary of the New Financial Reform Law. Whether it’s a good law is not an issue here, I’m just providing this for you to see.

George

From Brad Lee, Focal Point Financial

The financial reform bill recently signed into law is an attempt to address some of the problems that contributed to the 2008 financial crisis. The legislation, officially known as the Dodd-Frank Wall Street Reform and Consumer Protection Act, is considered the most wide-ranging overhaul of the U.S. financial system since the aftermath of the Great Depression. Because the problems it addresses are complex, the legislation itself is complex; much of the real impact will be felt only after regulations are developed to implement the law’s provisions. Also, some provisions, such as those dealing with lending practices, will have a direct impact on individuals and investors; others will primarily affect the ways in which Wall Street functions. This is only a brief summary of some key provisions; consult your financial professional to see how these changes may affect you.

Credit and lending practices are revised

The Act requires originators of residential mortgages to disclose any conflicts of interest and compare costs and benefits of mortgages offered to a potential borrower. Lenders also will be required to verify whether, based on income, credit history, and other data, a borrower has a reasonable ability to repay a loan plus its associated taxes, insurance, and other costs. This could mean that self-employed people and others whose income is undocumented or irregular will need better documentation to qualify for a loan.

Lenders will no longer be able to give loan officers financial incentives that induce them to steer customers to a mortgage with a higher interest rate simply to increase their own commission. Their ability to impose prepayment penalties when a borrower repays a loan early also will be more limited, and a holder of a hybrid adjustable rate mortgage must receive notice of any change in the interest rate six months in advance.

Lenders are prohibited from refinancing an existing mortgage unless the new mortgage offers a net benefit to the borrower, and they may not coerce or induce an appraiser to make a faulty appraisal of a property’s value. Loan applicants must receive a copy of the appraisal on the property no later than three days prior to the closing.

High-cost mortgages are subject to special regulations. Any balloon payments on high-cost mortgages cannot be more than twice as large as the average of earlier payments, and a borrower must receive qualified counseling on the advisability of a high-cost mortgage before credit can be extended.

Homeowners who are unable to make mortgage payments as a result of losing their jobs or because of a medical condition may now qualify for up to $50,000 in assistance loaned through HUD’s existing Emergency Mortgage Assistance Fund.

Increased protection of bank deposits becomes permanent

During the financial crisis, the Federal Deposit Insurance Corp. (FDIC) temporarily increased from $100,000 to $250,000 the amount it will insure on deposit accounts in FDIC-insured banks. The $250,000 limit is now permanent. That means that a couple who each had separate deposit accounts as well as a single joint account could qualify for up to $750,000 worth of protection on those accounts.

Greater transparency and accountability for investments and related services

Institutional investors’ inability to determine the amount of global financial exposure to derivatives–investments based on the value of other investments–contributed to the panic at the height of the financial crisis. Over-the-counter derivatives must now be traded on a public exchange, and trades must be cleared through a registered clearinghouse. Nonstandard derivatives can still be traded privately, but must be reported to a central authority in order to increase regulators’ ability to monitor the overall level of activity.

Hedge funds and private-equity advisors will be required to register with the Securities and Exchange Commission (SEC) and disclose to the commission information such as investment positions and the amount of leverage involved. Also, the $1 million minimum net worth required to be an accredited investor eligible to invest in such funds will no longer include a principal residence, and that $1 million threshold will be reviewed every four years.

Credit rating firms, which were criticized for being too lax in their evaluations of securities based on subprime mortgages, will be subject to oversight by the SEC, which can fine those that issue too many faulty ratings over time. Also, investors will now have the right to sue an agency for issuing ratings it knew or should have known were flawed.

Shareholders of public companies will have the right to a nonbinding vote on compensation for the company’s executives. Also, protections for people reporting securities law violations have been enhanced. Whistle-blowers with information that leads to monetary sanctions of more than $1 million will be eligible for 10 percent to 30 percent of the funds collected from the offender; if an employer retaliates, a whistle-blower can sue without waiting until administrative remedies have been exhausted.

An Investor Advocate office will be established within the SEC to help individual investors resolve significant problems and to promote investor interests.

Risky banking practices are addressed

Banks will be required to hold additional capital to cover potential losses, and some securities are no longer acceptable as vehicles for capital reserves held by large banks. Banks also will be required to retain at least 5 percent of a loan on their books if the loan is sold and/or repackaged with other loans and securitized. (However, some relatively low-risk mortgages, such as fully documented loans with a fixed interest rate, are exempted.)

Banks also will be more limited in their ability to engage in proprietary trading in their own accounts, which could represent a conflict of interest with their responsibility to their clients. They also will have to set up separate operations to handle their most risky derivative trades, such as swaps. A bank will not be permitted to invest more than 3 percent of its core capital in hedge funds and private equity, but it may still organize and offer them as long as certain conditions are met.

A Consumer Financial Protection Bureau overseen by the Federal Reserve will be created to regulate consumer financial products and services.

Systemic risk will be monitored, and liquidation of large banks will be overseen

A new Financial Stability Oversight Council is charged with assessing and managing risks that could threaten the entire U.S. financial system. Also, the FDIC will manage the liquidation of a bank whose failure the Treasury Secretary determines would disrupt the stability of the nation’s financial system. That will include firing corporate management responsible for the failure and prohibiting any payments to shareholders until all other claims are paid. The FDIC may borrow from an Orderly Liquidation Fund to pay for a liquidation, but those costs must be replenished not from taxpayer funds but from claims on the bank and, if necessary, assessments on large financial institutions. The Act does not permit the Federal Reserve or the FDIC to lend to or provide a guarantee for individual or insolvent companies or banks, but both may lend funds to provide liquidity.

Aug 03, 2010 | 1 comment | View Post

Four tips for recovering from unemployment.

Provided by Bradford G. Lee, RIS

Any period of unemployment is fraught with stress – both personal and financial. While landing that formerly-elusive new job can be a relief, it is only the first step on the road to recovery from unemployment. This transition time is akin to breaking the surface after being underwater for several minutes. It’s a relief to be breathing again and feel the sun on your face, but it’s no time to relax. You must start swimming right away to get back to a healthy financial shore.

Here are four steps that may help to make sure your recent unemployment doesn’t cast a long shadow across your future financial health.

Continue to live lean. More likely than not, you weren’t buying $4 coffees while unemployed. Five star restaurants were out too. Hamburger may have replaced steak. You may want to continue to follow that pattern. We tend to grow into our incomes, our budgets bloating along with our salaries. Fighting that urge will help with the rest of the steps to unemployment recovery.

Protect yourself ASAP. The longer your unemployment lasts the more important basic survival becomes. Someone who is unemployed may let life insurance, disability insurance or health insurance policies lapse as they try to keep current on the mortgage, pay utilities and put groceries in the pantry. Sometime during the first few days of your employment you should enroll in whatever benefits you need that your company offers. If the new firm does not offer the coverage you need, make an appointment with an insurance professional and use part of your first paycheck to protect you and your family. Remember, the income from your new job won’t benefit anyone if a catastrophic illness, disability or death suddenly takes it away.

Develop a plan to pay down your debts. When you have a job, debts are a nuisance. When you don’t have a job, they may become a threat to your future financial well-being. While it’s normal to hope that you never have to go through unemployment again, you must start preparing for the possibility.

If you are behind on your mortgage, call your lender to let them know of your new job and to work with them on a plan to catch up on your payments. If they are unwilling to work with you, consider using a Federal resource such as those offered by the U.S. Housing and Urban Development Administration.

While there are fewer similar programs for car loans, calling your lender and trying to develop a plan for a loan you’re behind on should be your first step.

All too often during unemployment, credit cards may be used to get by when cash is low. While your interest rates may have been low when you initially signed up for the card, new legislation has caused a spike in credit card rates.¹ Rates of 20% – 30% are not uncommon as banks react to new rules. Paying down these balances should also be a primary goal.

Remember to start paying yourself. Whether you call it a rainy day fund, a nest egg or emergency cash, slowly, paycheck by paycheck, begin paying yourself a fraction of your salary. Some experts will argue that a family should keep six months to one year’s worth of expenses in the bank for unexpected events such as a blown car engine, the roof caving in, or another round of unemployment.¹ For many families, that may feel like an insurmountable sum. But as the old joke goes “How do you eat an elephant?” The answer: “One bite at a time”. Paying yourself has to be done paycheck-to-paycheck, little by little.

Brad

Feb 22, 2010 | 0 comments | View Post

What is cash back shopping?

The term “cash back shopping” in this instance means the cash you can get back from shopping on certain websites on the internet.

If you shop on the internet at all, you’re probably searching for stores that offer you discounts, coupons, etc. Though discounts and coupons and discounts are good, they’re not cash.

If you’re like I was, you probably search for the type of product you want and then go to each site that looks interesting. The trouble with strategy is that you may or may not find the exact product you’re looking for. Then there’s the problem of security and trust. Can I trust this site or store to process my payment and actually deliver the product?

Worse yet, are they going to plunder my credit card account, my bank account or steal my identity?

One of the best ways to get a higher comfort level is to go to the site of one of well-known retailers, Like Macy’s, Target, Home Depot. That’s probably one of the best strategies. Of course do they offer discounts or coupons all the time? You know the answer to that one is “no”. You might as well drive down to the store and pick it up in person!

There’s a better way to shop and not get only discounts, coupons, etc., but to get actual cash as well.

That’s the type of “cash back” shopping I’m talking about. The websites are called “cash back shopping sites”, and offer you all the things I mentioned. They’re often referred to as cash back shopping portals or gateways.

Here’s the bird’s eye view of how you use them:

· Join for free and login

· Search for the store or item you want from within the portal

· Check on the percentage of cash back you get

· Check on the coupons or specials offered

· When you click on the store’s website, you’re taken to the exact website you would have gone to outside of the portal

· Shop

· Check out

When you’re done you’re have gotten not only any discounts, coupons, specials, etc, you would have gotten on the website outside of the portal, but you’ve also gotten some cash back!!

Cool, huh? That’s saving money.

Dec 04, 2009 | 0 comments | View Post

IS AMERICA PREPARED TO RETIRE?

Two-thirds of us have no financial plan.

provided by Bradford G Lee, RIS

64% of Americans have no financial strategy at all. That’s right – no plan whatsoever to build wealth or keep it. That finding comes from the 2009 National Consumer Survey on Personal Finance conducted by the Certified Financial Planner Board of Standards, Inc. (The survey collected data from 1,700+ U.S. residents.)¹

Only 17% of us have a written financial plan that is updated regularly. So congratulate yourself if you are in that group. The CFP Board found that just 17% of the 36% polled who did have a written financial plan had reviewed it in light of changing times. Notably, 48% said they had benefited from having a written plan.^1,2

Just 38% of the 36% having written financial plans retain a financial advisor. The really troubling part: 37% of those with written plans are doing their financial planning on their own. Another 12% of respondents with written plans have consulted a friend or family member who isn’t a financial services professional for advice.¹

Why don’t more people have a financial plan? After all, Americans of all incomes and savings levels certainly are free to set financial goals. In the survey, the reasons varied. Some cited the expense of engaging a financial advisor; some said they get along just fine without a financial plan, and others felt their finances weren’t complicated enough to warrant one. Others were hazy about financial services industry qualifications – 40% of respondents had no idea that there were professional credentials or designations for financial advisors.

Syndicated financial columnist Humberto Cruz recently noted that when he told some fellow vacationers in Orlando that he wrote about financial planning, they all asked him if he gave stock tips. He had to explain that he was simply a journalist, not a financial planner.^3,4

Defined goals lead to definite plans. If you set financial objectives and plan for them, you vault ahead of most Americans – at least according to the CFP Board’s findings. A written financial plan does not imply or guarantee wealth, of course; nor does it ensure that you will reach your goals. Yet that financial plan does give you an understanding of the distance between your current financial situation (where you are) and where you want to be. Too many Americans, it seems, have little comprehension of their financial situation or their financial potential.

How much planning have you done? Retiring without a financial plan is an enormous risk; retiring with a financial plan that hasn’t been reviewed in several years is also chancy. A relationship with a financial advisor can help to bring you up to date about what you need to do, and provide you with more clarity and confidence when it comes to the financial future.

Brad

Bradford G. Lee, RIS

Focal Point Financial Services

Nov 05, 2009 | 4 comments | View Post

Coupons, Coupons, Coupons!

This is a post about one of my Daughters and her recent venture into coupon shopping:

Hi Dad,

I know you’re interested in people saving money, so I thought I’d tell you about my Rainbow shopping trip today. I attached a picture of everything I bought, with a list at the bottom. Today is double coupon day at Rainbow. You can double 5 coupons up to $1/ea with a purchase of $25 or more.

The full price for all those groceries without sale prices or coupons is $141.26. This is how I used to shop — very little regard for sales or coupons.

Factor in the sale price and the cost would be $101.00 — a savings of $40.26. This also resulted in a $10 coupon good on my next order along with a free milk coupon good on the next order.

My price was $42.85 — a savings of $98.41 from full price and $58.15 from sale price. I did it by matching items on sale with coupons and splitting it into 4 different transactions allowing me to double 20 coupons. With the exception of the bananas, crackers, and muffin cup liners, everything I bought was on sale or had some sort of deal attached to it. I also used the $10 coupon and free milk coupon right away, which was possible since I had 4 transactions.

I’ve spent the last 6 weeks building up our pantry and freezer which allows me to shop this way — just the sales. I plan our menu one month at a time based on what we already have. But, I do adjust it, if necessary, based on what I may have bought. For example, the cabbage will need to be eaten this week. So, I’ll change one of our meals to incorporate it in. But, I’ll only use what ingredients I have on hand, so no quick trips to the grocery store.

Here’s a picture of all my groceries:

Here’s the stuff I ended up getting for free:

4 cans of Campbell soup
1 gallon of whole milk
3 frozen Healthy Choice meals
2 packages of Yoplait Delights
Welch’s grape jelly
1 lb of green split peas

Here’s the complete list of what I bought:

2 gallons whole milk
4 Tombstone frozen pizzas
2 Pop tarts (12ct)
2 Cheerios
1 Lucky Charms
1 Reese’s Puffs
1 Cocoa Puffs
1 Cinnamon Toast Crunch
1 muffin cup liner
8 Yoplait yogurt
3 Yoplait Whips
2 Yoplait Delights (4ct)
Welch’s grape jelly
3 Land O Lakes Butter w/Olive Oil
4 Campbell Soup (Cream of Broccoli; Broccoli Cheese; 2 Beef Consommés)
Saltines
4 Healthy Choice Fresh Mixers
3 Healthy Choice frozen meals
Dawn (19oz !!)
2 Speed Stick deodorant
2.25 lbs banana
2.25 lb cabbage
1 lb green split peas
10 lb bone in ham (this will be 3 meals for us: ham/cabbage/potatoes; creamed ham on toast; split pea soup)

Well, this it for my Rainbow shopping trip!

Georgette

Oct 01, 2009 | 9 comments | View Post

Don’t forget These 2009 tax breaks!

Plan to exploit them before they expire.

provided by Bradford G Lee, RIS

The year goes by, you get busy … and tax-saving opportunities slip away. So as a reminder, this article is here to reacquaint you with some of the notable federal tax breaks offered this year.

The first-time homebuyer credit. This is the up-to-$8,000 credit available in 2009 to anyone who hasn’t owned a home during the previous three years. (It is subject to phase-outs at certain income levels.) The home you buy has to be your principal residence, and you have to buy it before December 1, 2009. The credit does not have to be paid back.¹

The IRA charitable rollover. This is the move that lets your IRA trustee make a tax-free direct transfer of up to $100,000 from your IRA to a charitable organization. This option is scheduled to go away in 2010. You must be age 70½ or older to do this.²

3 don’t-miss deductions for businesses. When it comes to new cars and light trucks used for business means, the maximum first-year depreciation deduction has been increased by $8,000 for cars placed in service before 2010. The Section 179 deduction (that’s the one that lets you write off the costs of certain new and used business assets during their first year of use) is still at $250,000 for 2009, instead of the prior $133,000. The first-year bonus depreciation break of $50,000 is still in place for 2009, and even the biggest businesses can take advantage of it.³

The new car sales tax deduction. Okay, “cash for clunkers” is over, but you still may be able to deduct state and local sales and excise taxes if you buy a car, motorhome, motorbike or light truck. You can itemize the deduction or just add it to the amount of your standard deduction.⁴

A major tuition tax break. In 2009, you can claim an above-the-line deduction for “qualified tuition and related expenses” relating to the enrollment or attendance of you, your spouse or your dependent at an eligible college or university. While it is subject to phase-outs at higher income levels, the deduction can be as large as $4,000.⁴

The classroom teacher credit. Are you a primary or secondary school teacher? If you were an educator who worked more than 900 hours on campus in 2009, you can claim an above-the-line deduction for up to $250 of personal expenses for schoolbooks and school supplies that see classroom use. You don’t even have to itemize.⁴

COBRA continuation. Did you get laid off this year? Were you insured under an employer-sponsored health plan? Well, you may qualify for up to nine months of (COBRA) coverage. As for the company where you worked, it can claim a credit for the COBRA subsidy it extends to you.⁴

$2,400 in unemployment income tax-free. That’s right: this year, the first $2,400 of federal unemployment compensation benefits you receive are excluded from gross income.⁴

An extra deduction for state and local property taxes. Do you usually claim the standard federal deduction? If that’s your plan, this year you can take an additional deduction for state and local property taxes. The ceiling is $500, $1,000 if you are filing jointly.⁵

The capital gains tax break. If you are in the 10% or 15% tax bracket, note that the current tax rate for long-term capital gains is 0% – and it is slated to stay at 0% through 2010.⁶

The homebuilder tax credit. Do you build homes? If so, you may claim a credit of up to $2,000 for each qualified energy-efficient home constructed and acquired from you for use as a residence. This credit is set to expire December 31, 2009; President Bush’s signature extended it into this year.⁷

And of course, the exemption from required IRA distributions. The federal tax mandate requiring IRA owners age 70½ to take Required Minimum Distributions (RMDs) was suspended for 2009, but it will be reinstated for 2010. Worth noting: in 2010, anyone will be able to convert a traditional IRA into a Roth IRA.^4,8

This is just a sampling. There are other tax breaks out there during this unusual year for the federal tax code, and it is worth asking your accountant or advisor to do some research and/or collaborate to find you as many as possible.

Bradford G. Lee, RIS is a Financial Advisor with SagePoint Financial, Inc

Sep 28, 2009 | 0 comments | View Post

8 Ways to Look and Shop for Bargains

With so many people needing to cut back on their budget, it’s probably a good time to talk about saving money and finding bargains for groceries and household items.

I’ve posted about this before, but it’s a real good time to do it again. Many people just don’t know where to start looking for bargains, so let’s list just a few places to look:

Your Sunday and mid-week newspapers. Your local grocery stores, pharmacies and department stores usually have special prices on “stuff” that can be seasonal as well as year-round items. TIP – Shop only where you can get the bargains and shop only for those bargains. Resist the temptation to get stuff you don’t need “just ‘cause it’s on sale.”
Go to the same Sunday and mid-week papers for coupons. Yeah, I know, you don’t want to be a coupon clipper. Just to give you an example of how much money you can save, my Daughter paid $19 and got $38 worth of groceries from one trip to a local grocery store using coupons! I don’t know about you, but 1/2 off is pretty cool to me.
Try different stores. Don’t go to a certain store ‘cause you “like” the store. You can learn to “like” a different store or two or three if you can save money and get good product. And you may be better off trying two or three different stores.
Shop in WalMart. Yeah I know, the media gives them a bad rap because they’re “big business”. Maybe they are, but you sure get some great bargains. Not only on name brand products, but on their own brand also. Just go past your local WalMart and see how crowded the parking lots are now. The reason is great prices!
Shop Sam’s Club or Costco. It may cost a little bit for a membership, but you more than make up for it in a few months or less. We belong to Sam’s Club and have for many years. I’ll give you an example of great pricing. For the past two weeks you can buy a whole boneless pork loin for $1.38 per pound. The loins average around 10 pounds. Take it home, put it in your freezer for about an hour just to make the meat a little stiff and then slice it into 1” thick slices. Talk about great taste!
Shop Aldi Food Mart if you have one near you. Great prices on off-brand products and a lot of name brands.
Shop the dollar store for stuff like band aids. You can get 110 for $1.00. The off-brands in most drug stores are around $2.50 for 25!
Check out organizations like Fare Share Coop. You pay a certain amount and the organization, mostly volunteers, buys food in large lots and get great bargains. Go to this link and see the type of foods you get http://www.faresharecoop.org/. Check for this type of coop in your area.

Well, I’m sure I’m missing a lot of things, but this is a good start for people new to shopping for great bargains.

George

Sep 10, 2009 | 7 comments | View Post

COULD SMALL BUSINESSES COPE WITH MANDATORY HEALTH INSURANCE?

What would they have to do if health care reforms pass?

provided by Bradford G. Lee, RIS

Provide employee health insurance, or pay a penalty? Small business owners worry about having to face that choice. That possibility moved a step closer to reality in mid-July, as three of five Congressional committees approved new legislation to remake American health care – legislation that could expand health insurance coverage to 46 million uninsured Americans, with potentially harsh consequences for business owners.^2,3

Two variations of pay-or-play. The House version of the bill would levy a fine on employers that don’t offer health coverage – a fine as large as 8% of a company’s annual payroll. However, some businesses could qualify for tax credits and some very small firms wouldn’t have to pay such penalties.²

The Senate alternative would spare small companies (25 workers or less) from annual penalties. It would require a business with 25 or more employees to fork over $375-750 per worker annually if that business refused to offer health coverage or paid less than 60% of employees’ monthly health plan premiums.^2,3

Could businesses handle this? After all, some companies have considered dropping health plans altogether. Health insurance premiums paid by businesses have increased more than 200% in the last ten years, according to a Kaiser Family Foundation report; in 2008, single coverage averaged $4,704 and family coverage $12,680. The report found that less than half of businesses with three to nine employees offered health plans at all last year. ²

The House version of the bill would require a small business with a payroll of $250,000 or more to provide coverage or be penalized. The penalty would actually be a sliding-scale payroll tax: it would be 2% of payroll at $250,000 and climb to 8% of payroll for companies with $400,000 payroll or greater.³

What if you’re self-employed? No break for you. In the Senate version of the bill, any self-employed individual would have to buy health insurance or pay a $750 penalty annually. However, insurers could not use past claims history or pre-existing medical conditions to deny you coverage. Individuals whose income

is within four times the poverty level (i.e., $88,000 or lower for a family of four) could qualify for subsidies. ³

As for the House version, it asks self-employed individuals to buy coverage or pay a tax equivalent to 2.5% of the difference between their adjusted gross income and the tax filing threshold (which was about $9,000 in 2008). Slidingscale subsidies would be offered to self-employed Americans so that they would not have to spend more than 11% of their income on health coverage. As in the Senate bill, insurers could not wiggle out of providing coverage by citing pre-existing medical conditions.³

What would the long-term impact be? In the bleakest scenario, businesses would be hard pressed to offer workers decent wages or decent health coverage. Nationally, fewer and fewer companies are offering health benefits in the first place. A 2008 National Small Business Association poll found that just 38% of small companies could afford health plans at all, compared to 67% of small businesses in 1995.⁴

A sunnier outlook comes from the Small Business Majority, a nonprofit advocacy group founded by small business executives. Its report examined three scenarios using different levels of employer tax credits and employer

payments. It concluded that the proposed health care reforms could save small businesses as much as $855 billion, and preserve as many as 128,000 jobs that would have been lost because of runaway health insurance costs.⁴

Stay tuned. Will Congress give business owners more of a break? Could penalties be reduced, or requirements eased? Will fewer businesses offer health plans, assuming that their employees could qualify for federal subsidies toward individual health insurance? At this point, there are more questions than answers – but with the median health insurance cost for U.S. businesses already at about 11% of payroll, any increase would be unkind.²

Bradford G. Lee, RIS is a Financial Advisor with SagePoint Financial, Inc. and may be reached at 426-73750

These are the views of Peter Montoya Inc., not the named Representative nor Broker/Dealer, and should not be construed as investment adviceAll information is believed to be from reliable sources; however, we make no representation as to its completeness or accuracy. The publisher is not engaged in rendering legal, accounting or other professional services. If other expert assistance is needed, the reader is advised to engage the services of a competent professional. Please consult your Financial Advisor for further information.

Citations.

1 nytimes.com/2009/07 /18/health/policy/18health.html?hp [7/17/09] 2 dallasnews.com /sharedcontentl dws/bus/stories/DNlocalhealth_16bus.ART.5tate.Edition2.4bde27c. html [7/16/09] 3 businessweek.com/smallbiz/contentljuI2009/sb20090716_683119.htm [7/16/09] 4 cbsnews.com/stories/2009/06/16/politics/main5092451.shtml [6/16/09]

Aug 08, 2009 | 0 comments | View Post

Stop Spending on Unnecessary Stuff

This is my first rant but it probably won’t be my last.

What I do daily is look at people’s bank statements and financial data. People come to me to help them out of financial messes. What I see is totally sickening. People are losing their houses to foreclosure, and:

Pay more than the minimum on their credit card bills
All I see on their bank statements is “Chipotle, Don Pedro, Taco Bell, Burger King . . .
Hundreds to thousands minutes of text messages on both the adults’ and children’s’ cell phone bills

Let’s talk about the credit card bill first. I believe that what we’re seeing in the Financial columns has a lot to do with this mindset. “You have to keep a good credit score”, is what they say. What good is a great credit card score is you’re living in your car? Pay your mortgage and let the credit card bill go . Or at the very least pay a minimum on the credit cards. If you lose your house or go into foreclosure your credit scores go in the basement anyway!

The reason I mentioned the restaurants is the fact that after all the bills are added up, a preponderance of of the “expenses” are in fluff!

Whatever happened to talking to people in person? Or talking on the phone. The teenagers love chatting, but does that mean you have to? You’re not a teen anymore. Try chatting on Facebook. That can be fun and its free!

If you’re going to:

Go on a budget – budgets don’t usually contain frivolous things such as eating in restaurants or texting. Cook at home, buy Hamburger Helper and cook at home, get frozen entrees and cook at home. Even if you only do that twice a week, the amount of money you save is unbelievable. Ditto what I said above on texting.
Convince your Lender that you want a loan modification, for example. Lenders look at your bank statements when you apply for a loan modification. Their logic is that if they’re going to give you something, you have to give them something in return. A lot of times loan modifications can be denied because of “frivolous ” spending. If your bank statement shows you don’t care enough to pay your mortgage but you pay your credit card ahead, what are the Lenders to think? To a Lender, eating out all the time and texting is really, really frivolous. If you are trying to get your mortgage modified, at least give them a modified budget which doesn’t include all the habits of the wealthy. Give them a modified budget and show them you want to stay in your house.

Enough for today. Just get your priorities in life straightened out – not for me, but for yourself.

Jul 15, 2009 | 5 comments | View Post

Repairing your TV remote

Most people throw away their remote when it goes erratic or it fails. How about trying to fix your remote before you chuck it? Check out this video first.

Good luck!!