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.

Fannie Mae is getting tough on people. The days of people having the opportunity to stay in their home and delay foreclosures are OVER. Fannie Mae and Freddie Mac are forcing servicing agents to foreclose on the homeowner.

Homeowners need to have a plan in place now. You cannot wait to see what is going to happen. The banks are no longer waiting and dragging their feet. We’re seeing foreclosure like never before.

Several clients had gotten a trial plan and had made all their payments on time and were foreclosed on 21 days after the conclusion of the trial plan. Don’t let this happen to your client.

This news is not all bad. It will push homeowners to get off the fence and do something about their situation. It may the start of a recovery and people that want to save their home will be forced to work on it or get out.

From George:

If you’re in foreclosure, getting close to foreclosure or even have a Sheriff’s Sale date set, get off the fence and get moving NOW. Don’t wait until you have a sale date or it may be too late.

Get your Loan Modification done now!! There are loan modification specialists who will start your loan modification with no upfront fees, which means  absolutely no fees unless and until the lender approves you for a modification.

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

The cost of living is getting higher all the time and most experts don’t see most prices going down any time soon.  The price of  most of the things we purchase is usually out of our hands – we pay what they charge. There are some things we can control, though. One of these things is the price of food. Now I don’t mean buying truckloads of food to get a lower price. I just mean we can save money by doing some things on our own.

Baking your own bread at home. is one of those things.  The price of bread is running between $3. 00 and $4.00 for a loaf of a name brand bread. Not too expensive for some people, but if you’re struggling to make ends meet, or you kids eat a loaf a day, that’s expensive!

Several years ago baking your own bread involved a long drawn-out process. Now, as we all know we can get a bread machine to do it for us. But many people still don’t realize is how easy it is to bake your own bread using a bread machine.  Some people don’t  have the time to learn. Some people don’t care to learn. Using these machines is really easy. You can find all about that on the internet. The hardest part is the planning, but once you’ve got everything and tried it once or twice, it can be done in about ten minutes.By the way, I baked the bread before my wife wrested the chore away from me.

OK. so what does it cost to make the bread?

We’re talking prices here and saving money so let’s look at what it costs to make a loaf of bread:

The bread machine is the major upfront cost. Look at all those wedding gifts you got and have nevr use, and you might even find a bread machine you don’t even know you had. Barring that, you have to buy one. Online, the cost of a Breadman bread Machine is between $51.9 to $59.99 online.  The cost is probably similar at your local Target or WalMart. This particular bread maker can make up to a two pound loaf of bread. That sounds like a chunk of change, but how much did your MP3 player, (substitute any “toy” here), cost? Did you save any money in your budget with it? A bread maker can last you many years and save you a ton of money.

The next biggest expense is probably the bread flour. It costs $2.44 for a five pound bag of white bread flour at WalMart. If you like making the bread and have a place to store the flour,  it costs $7.72 for a 25 pound of bread flour at Sam’s Club.

Other things you will need:

1. Yeast can cost about anywhere from $.75 per loaf to $.05 per loaf. Buy at least in two pound packages to save the most money.
2. Oil, other types of flour . . . Only if you want other kinds of bread.  Add another 10 – 20 cents for oil and whatever.

My wife says most bread recipes call for 4 cups of flour, on average, of whatever kind of flour she uses for the different kinds of bread she makes.

That means she can get 5 loaves of bread from one five pound bag of flour, (if she makes French or white bread), or 125 loaves of bread or more out of a 25 pound of flour. So at five loaves per five pound bag that’s about .50 for flour. If we include the price of  the bread machine for a year, at about $1.00 per week, that’s about:

• $1.85 for one loaf a week
• $1.35 per loaf for two loaves a week
• After a year the bread costs on average about $.50 per loaf

Are there any other benefits?

There are definitely some additional benefits of baking your own bread, which are probably better than saving the omoney:

• Fresh bread all the time
• No preservatives
• Make many different kinds of bread

The Bottom Line

So here’s the question: do you want to save money baking your own bread and get the other benefits above? That’s your choice, but it sure makes sense for us.

George