Friday, October 31, 2008

A Moment

A stormy day when noon felt like twilight.
A stray sunbeam lit red, gold and green trees on fire.
A doe ventured onto the road, then disappeared.

A moment.

Photo by capn madd matt / Matt

Thursday, October 30, 2008

Strange Bedfellows--Oh the Debtor and the Lender Can be Friends

This post has been included in the Carnival of Debt Reduction hosted by the Financial Wellness Project. Visit the carnival for more information on getting your financial house in order.

One man likes to borrow now
The other likes to charge him, Wow!
But that's no reason why they can't be friends.

A bizarre coalition of consumer advocates and credit card lenders has asked the U.S. Comptroller of the Currency to change the rules and allow lenders to forgive up to 40% of the credit card debt of folks in serious trouble.

The coalition isn't asking for bailout money, although they do want to change the rules so that the forgiven debt wouldn't be taxable as income. The proposal is for a pilot program that could reach 50,000 people. The lenders could write off the debt. The borrowers would have to be receiving credit counseling and not otherwise eligible for existing credit card repayment programs.

Here's an example where I think it might help. In the summer, when Mr. Poorhouse was working part time because he hadn't been able to find a full time job, we talked to a credit counselor, who told us that we were not eligible for a repayment plan because our expenses exceeded our income. Obviously, entering into a repayment plan when you have negative cash flow isn't a good deal for anybody. The counselor suggested we try to improve our income or consider bankruptcy.

Luckily for us, Mr. Poorhouse and I have fixed our income problem. But it looked pretty bleak for a while there.

I have already heard people criticize this plan because it rewards the irresponsible. I think that's too simple.

I'd be interested in seeing how a pilot program would work.

Further reading from Credit Card Debt Law

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Saturday, October 25, 2008

The Other Side of the Equation--Reducing Debt by Increasing Income

My best friend's dad used to say, "You have to have a horse to get a horse." Well, somebody offered me a new horse Friday.

I already have a job. I've only been there for six months. I like the work, I like the people. I like the owner. I like my boss. Sure, there are politics and frustrations. But where are there not? Really, what's not to like?

The money, that's what. The truth is I am not making enough money at this job to deal with the aftershocks of our financial hard times. In fact, I was making less than I did 10 years ago.

Still, I wasn't looking for a job. I work in a small industry. Everybody knows EVERYBODY.

But a friend of mine left her position, where I have long dreamed of working. They were a former client.

I put off calling the head of the organization for a week or so after I found out she was gone. I couldn't imagine how I would tell my current boss I was leaving.

But then I got it together. I want this job. The cliches clicked. Opportunities like this don't come up every day. My family is depending on me.

So, I interviewed. The recruiter asked me why I was looking for a job after such a short time. I told the truth. I'm not, but I just couldn't pass this by.

And I got an offer. It's a great offer. More money. A really generous 401K match. 100% paid family dental coverage and 90% paid family medical coverage. Option to work at home several days a week. A shorter commute. Shorter working hours. Did I mention a really generous 401K match?

I'm still working out the details, but I'm going to take it. And I'm going to have to tell my manager, his manager, and the owner of my company that I'm leaving.

I want to be honest and say, I'd love to stay here, but I'm financially desperate, and I just can't. But I won't. I'll give them platitudes. I'll thank them for the opportunity. I'll tell them how much I enjoyed working there. I'll ask them to keep in touch. The platitudes, in this case, have the advantage of being true.

And they'll be bitter, angry, in denial, bargain, and eventually accept it. They'll blame effing Polly Poorhouse for everything that goes wrong after I leave.

Change is stressful. Change is necessary. Change is good. Yay.

Polly's Pointers:

* Always be looking for your next job.

* It's not personal, it's business.

* Value yourself, and others will value you as well.

* Be authentic.

Photo by Christina Matheson

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Crunching the Numbers--How to Decide Whether to Take a New Job

I just went through this exercise, so I thought it might help someone else.

I got a new job offer at a little over 10 percent more than my current salary. In economics, we learned "more is better". So far, so good.

Does that mean that if my current employer offers me more than a 10 percent raise to stay, I should?

The answer, as in many things, is "It depends."

I made myself a little spreadsheet. Down the side of the first column I listed income:

Base Salary
Commission (if any)
Education Benefit
Any other cash benefit (in my case a subsidy to buy life insurance)
401K Match

Then I listed deductions

Current personal 401K contribution
Current personal 401K contribution percentFamily Medical Coverage
Family Dental Coverage

For my purposes, I didn't include taxes, but you could.

The second column includes the data for all those fields from my current job. The third column includes the data for my job offer.

So then I calculated the net income before taxes (all the income less pretax deductions like medical and 401K contribution.) So far, so good.

Then I figured my commuting expenses. I took the government milage reimbursement rate (currently 58.5 cents per mile, according to the IRS) times the number of miles roundrip, times the approximate number of commuting days. If you commute every day, like I do, that is approximately 220. If you telecommute a couple of days a week, like I will in my new job, you can prorate the amount by the number of days you'll be driving in.

(Note: although I drive a hybrid, and I'm pretty sure my costs are lower than the IRS rate, I went with it anyway.)

I subtracted my current commuting costs from my current net income in column two, and my projected commuting costs from my projected net income in column three.

Then I compared the bottom line between Column 2 (current adjusted income) with Column 3 (prospective adjusted income). Again, I didn't figure in taxes, but you could. (You could also calculate the value of the vacation days and compare the existing job to the new one.)

In my case, I discovered that I'd be better off at the new job even with a 15 percent CUT is salary. When people say to take the benefits into account when evaluating a new job, they aren't kidding.

Of course, in this post I haven't said anything about whether the new job is a good fit for you (or me). Let's assume it is for now.

Tomorrow: a word on salary negotiation.

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Friday, October 24, 2008

I'm Too Debty for My Hair

This hysterical post comparing hair to personal finance got me to thinking. I've vowed not to cut my hair until I get my financial house in order.

Have you ever heard the old maxim, "Long hair after 30 is desperate"? Well, I'm well over 30, but I just can't bring myself to spend the money on a salon visit these days. So, it's getting longer...and longer. Just call me poor Rapunzel.

I wonder if it's a false economy though. I mean, I AM spending a lot more on conditioner and shampoo.

Photo by Anne Hornyak

Thursday, October 23, 2008

10 Tips for Cheap Eats at Work

No puede faltarImage by Roberto_Garcia via Flickr
This post has been chosen as part of the Festival of Frugality, #141, Monster Mash edition at Living Well on Less. Muhahahahah....
This post at Clever Dude got me thinking about how I save money on food. It shocks me that where I live it can easily cost more than $7 per day for lunch. Stop off for a bagel and a cup of coffee at Dunkin' Donuts, and you may be paying over $10 a day. At an average of 220 working days a year, we're talking about $2200! Ouch!

I do not have that kind of money any more. So here's what I do:

1. Keep a stash of instant oatmeal packets
in my desk drawer. I'm not an early riser, so I generally don't have time to eat breakfast at home. I get to work, nuke a cup of water, and Voila! hot breakfast. It would be cheaper to put some rolled oats, raisins and a little brown sugar in a baggie at home, but I don't always have time for that.

2. Don't buy coffee out. There's a reason Starbucks is closing a bunch of stores. That $2-5 a cup for caffeine treats is low hanging fruit. (Actually, I don't drink coffee, so I don't have to worry about that expense. A few herbal tea bags in my drawer is all I need.)

3. Pack a doggie bag when you are cleaning up after dinner. It's pretty close to free, since you probably would have just thrown the leftovers away anyway.

4. Pack a sandwich or salad if you don't have leftovers.

5. If you don't have time in the morning, keep a bulk pack of microwavable soup in your desk drawer. That with a roll from the supermarket makes a satisfying emergency meal. You can get the soup at a discount at BJs or Costco or other warehouse clubs.

6. Another good buy from the warehouse clubs is 4-packs of microwavable frozen light meals. They are usually edible, and at 4/$10 they are much cheaper than the cafeteria or sandwich places like Panera or Fresh City or Au Bon Pain. Some of them come with plastic dishes--I wash those and reuse them--for my oatmeal and as saucers for the plants on my desk.

7. Drink water from the cooler, not soda from the machine or deli, and save $1.50-$2 or more a day. Ahhh, refreshing.

8. Save lunches out for entertaining clients (which can be expensed or deducted) or social events (birthdays, new employees).

9. When eating out, order an appetizer and a bowl of soup for variety, small portions, and cost savings. Skip the alcohol.

10. Keep some veggies and crackers on hand so if you get stuck working late you don't starve and splurge on unhealthy, expensive, and high-packaging fast food on your way home.

You could certainly save even more money by making all the lunches from scratch at home, but families with two working parents are often strapped for time, so while these tips may not be the absolute cheapest possibility, they still save me a bundle.

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Wednesday, October 22, 2008

The Stock Market: Oy and Veh!

NASDAQ in Times Square, New York City.Image via WikipediaIt's been quite a rollercoaster the past week or so. Despite our debt problems, we do have a substantial stash saved for retirement...or we did.

But I am not panicking. I checked my asset allocation (what percentage stocks is in stocks, what percentage is in fixed income investments like bonds, what percentage is in cash.) Even with the market plummeting, I'm over-invested in stocks for my age.

I think common wisdom still applies. If you need the money soon, it should be in cash or cash equivalents. If you need in within 10 years, it should be in fixed income investments. Beyond that, the stock market is where I'd keep mine. I'm pretty sure the market will go up in ten years, more than what I could make on "safer" investments.

If I had any money, I'd be buying now. Warren Buffet is. He says.
A simple rule dictates my buying: Be fearful when others are greedy, and be greedy when others are fearful.

Dana Levit, a Massachusetts financial advisor on NPR's Here and Now had another good piece of advice yesterday. Everybody, she noted, knows they should have six months living expenses in cash for emergencies like health problems and unemployment. But nobody does it. And young people are less likely than others to have that safety net. So young people should actually have more in cash then the conventiontial wisdom would suggest.

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Tuesday, October 21, 2008

Employers May Check Your Credit Report

And you need to know it. This article from Experian, one of the credit reporting agencies, provides a quick overview of what's in the report, and why a prospective employer might want to see it.

If an employer fails to hire you based on a credit report, they must disclose that information to you, according to the Fair Credit Reporting Act. (Source). This requirement is true even if the credit report wasn't the only, or even the major reason you were turned down for a job.

The employer or prospective employer must get your written permission to run a credit report on you, according to Steve Bucci, of Money Management International. Bucci, like many financial advisors, suggests that you check your credit report on a regular (maybe annual) basis, so you know what's in it.

According to the New York Daily News, as of about a year ago, none of the three reporting bureaus included your actual credit score or details of your credit cards in employment reports, nor do they report date of birth or marital status, factors which cannot be legally used in hiring decisions.

My suspicion is that the rise in employer use of credit reporting has a lot to do with marketing by the credit agencies. See, for example, Experian's "Employment Insights" product description.

Here's what Experian includes on the report:
* Consumer identification, including Social Security number
* Address information, including length of time at current and previous addresses
* Employment information, providing insight regarding an applicant's previous work history
* Other names used, such as maiden names and aliases
* Public record information on bankruptcies, liens and judgments against the applicant
* Credit history providing an objective overview of how financial obligations are handled
* Demographics Band (including driver’s license and phone number verifications), Profile Summary (including payment patterns), Fraud ShieldSM and Direct CheckSM are optional add-on services

Experian will also provide the applicant with a free credit report, regardless of the outcome of the employer's decision.

My take: Ugh.

This post has been included in this week's Carnival of Debt Reduction, , where you can find lots of other goodies. This week's carnival is hosted by Green Panda Treehouse. May the force be with you.

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Monday, October 20, 2008

Understanding your FICO Score

Ask Mr. Credit has a very easy-to-understand breakdown of credit ratings, how they are influenced, and what you can do to improve your score. It's worth a read.

Sunday, October 19, 2008

TV Unbound Catching On

Came across this article that expands on my earlier post about saving money by unbinding your TV from cable or satellite. Since then, we have watched all the presidential (and VP) debates on TV. Almost all of "our" shows are available legitimately. (That means not through pirated sources.)

I think it's important to support only legitimate entertainment suppliers. Once the networks and other content owners see the number of people enjoying the streaming videos (and yes, watching the ads) they will be less hesitant about putting them up. Plus, the other way is, you know, not, um, legal.

It's catching on among bloggers too. See how Prime Time Money is saving $75 a month.

Photo by Linus Bohman

Since this post was published we've changed our strategy for saving on TV service Find out how here.

Saturday, October 18, 2008

How to Avoid Fraudulent Credit Counselors

Mr. Credit Card explains how to stay out of the clutches of the nefarious ne'er-do-wells who may, at worst, take your money and run, and at best may give you bad advice. The key point?
They should be non-profit and they should belong to either the National Foundation for Credit Counseling (NFCC) or the Association of Independent Consumer Credit Counseling Agencies (AICCCA).
Check it out.

Photo by Gareth Simpson

Friday, October 17, 2008

Happy Birthday, Mr. Poorhouse!

fresh ramen noodle (:ja:ラーメンの生麺)Image via WikipediaEnjoy your boxed mac & cheese. Or would you like to splurge on ramen tonight?

They say our love won't pay the rent
Before it's earned, our money's all been spent
I guess that's so, we don't have a pot
But at least I'm sure of all the things we got
-Sony Bono

Concidentally, Fabulously Broke recently blogged about a study of people's perception of Kraft Mac & Cheese.

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Thursday, October 16, 2008

"Thanks for Your Payment" from a Neighbor

My daughter's dance instructor (who owns the dance school she attended for the last few years and is also a neighbor) sent me an email last week, thanking my for my payment in these tough financial times and wishing me and my daughter well.

We were 9 months overdue on our last payment. I paid it last week. It wasn't the highest interest debt. It wasn't the smallest balance. It was just the right thing to do.

I feel better.

Wednesday, October 15, 2008

The Phones Have Been Quiet Lately

I just thought about that after work. I checked my voice mail. Only messages about Girl Scouts. No creditors. No collectors. Radio silence.

It's nice.

Tuesday, October 14, 2008

For Richer, For Poorer

Mr. Poorhouse and I celebrated our 15th wedding anniversary this week. Rather than exchange crystal, or watches (the "traditional" 15th anniversary gifts), we exchanged a hug.

We splurged and went out for Chinese food with the kids. Très romantique, n'est pas?

Our struggles are far from over. But we have each other. And we have our senses of humor, most of the time.

So here's to the next 15!

that's all right my love
cuz you're my home.
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Monday, October 13, 2008

OK, Let's Go There--Why Did My Business Fail?

I haven't really wanted to think about this. I was an independent consultant for 7 years.

So what happened? Why couldn't I pay my taxes? Why did I have to borrow money for business trips and computer equipment?

I can't blame the economy.

I can only blame myself.

I'm a procrastinator. I wait until the last minute to do a project. I do it well, but it may be late.

I put off billing my clients. Stupid, but I always felt somewhere down deep that billing them invited criticism of my work--kind of like having a performance appraisal every time you turn something in.

I was isolated. My clients didn't have time to participate as a team in my projects. If they had that time, they would have done what they needed internally, without me.

I wasted time. I wasn't aggressive enough about looking for new work. I got really good at Suduko.

I think I can say that nobody who ever hired me was sorry they did. But I didn't value myself highly enough.

And this effected my business, and ultimately my family.

What was I thinking?

Sunday, October 12, 2008

Bankruptcy and Foreclosures

The really smart people at Credit Slips made a good point the other day about homeowners in bankruptcy. Mortgages are the only loans that bankruptcy cannot modify! So it is possible to discharge or modify all your other debts, but if you can't make your mortgage payment, you're still outta there. I did not know that.

So pay your mortgage first, folks. And talk to the mortgage company when you first get into trouble, because if you get to bankruptcy, it may not help.
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Saturday, October 11, 2008

Which Debt to Pay Off First--Not so Controversial After All

I had another thought about my earlier post about debt reduction strategies. Paying the highest interest rate debt first shouldn't really be inconsistent with paying the smallest balance first. I don't know what the rest of you do, but if I have a high-interest rate on a credit card and the credit issuer won't do anything about it, I transfer as much as possible to a lower-rate card. So by definition, my higher rate cards are also my smallest balances. Don't know why I didn't think of that before. Duh.

Futher Reading:
Five Essential Skills for Living with Plastic from Get Rich Slowly (This article is for people who are not in trouble.)
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Friday, October 10, 2008

Common Sense Advice for When You Can't Pay Your Bills

I liked this very practical article from the University of Florida about what to do when it all starts to fall apart.

First, prioritize your bills. Pay for food, shelter, and utilities.

Then, talk to your creditors. You might be able to work something out.

Third, keep talking to your creditors.

Fourth, negotate with the collectors.

Fifth, talk to your creditors again. (I'm sensing a theme here.)

The article also talks about the Wage Earner Plan which is an alternative to bankruptcy, and then bankruptcy itself. Let's see if we can keep it from getting to that point, shall we?

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Wednesday, October 8, 2008

Greed on Main Street

An editorial in the New York times by author Bethany McLean sums up the attitude that many have towards the debtors of the financial crises. Wall Street may be to blame, in part, she says, but let's not overlook Main Street.
...Who made the decision to take on that mortgage she couldn’t really afford? Who lied about her income or assets in order to qualify for a mortgage? Who used the proceeds of a home equity line to pay for an elaborate vacation? Who used credit cards to live a lifestyle that was well beyond her means? Well, you and I did. (Or at least, our neighbors did.)
Undoubtedly, there are people who fit this description. And many say, and I agree, that in our consumerist society we spend too much and borrow too much and live beyond our means. But articles like this overlook the very hard-working people who just get into trouble because of factors beyond their control.

I do believe in personal responsibility. I know that I made the mess I'm in now. But believe me, I haven't been buying gold watches or taking fancy vacations. Ever.

Photo by Jeff Turner
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Prioritizing Debt: From Lowest Interest Rate to Highest? Say What?

Credit card art?Image by hankoss via FlickrYou and I know that the rational thing to do is to pay off your high-rate, non-deductible (i.e. non-mortgage) debt first. (Except you need to prioritize your mortgage payment before anything else so you can keep your house--but any EXTRA payments need to go to non-mortgage debt.)

Isn't it ironic that that's exactly the opposite of how credit card companies apply your payments? I was smart enough to avoid this particular trap, but it's easy to get snared in it.

Let's say you take a low-rate balance transfer offer, intending to pay off a higher rate card. Cool. Just don't ever use your new card to charge anything. Ever. Because if you do, they'll charge you a higher rate for purchases than for balance transfers. OK, that's fair, you think. But then they apply your payments to the lowest interest debt. So you are gaily wracking up new debt at a higher rate, and retiring the cheap debt. This policy is fairly universal among credit card issuers.

Good plan for the credit card company. Not a good plan for you. What tangled webs they weave when they practice to deceive. Can you say "Bait and Switch"?
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Tuesday, October 7, 2008

Amazon Chase--Thanks for Nothing

What if everyone practiced universal defaultImage via WikipediaThe story is the same--a couple of years ago, I got what looked like a great balance transfer offer from Amazon Chase. Plus I would earn points for Amazon purchases--a readaholic's dream.

Except, you guessed it, the Amazon Chase card has one of those deadly universal default clauses. The good news is that I haven't had a late payment on this card since before January--probably long before that. I have called them every month asking them to lower my interest rate. It has been as high as 29% and has been hovering at a usurious 27% for months now.

Last week, like every month, I called them. They always start the call, "How may I help you today, Ms. Poorhouse?" I always reply, "You can lower my interest rate, please." Every month they say there is nothing they can do. Last week, I said I was in trouble and I couldn't afford to pay this rate. The excessively cheerful representative said she would transfer me to another department to work out a payment plan. Oh, but sorry, says the automated attendant, that department is closed. I must call back during business hours....from cubeville.

From my experience with Bank of America, I'm guessing a payment plan means another black mark on my credit report and closing the account. I don't charge anything on this account, but closing it will change my debt to credit limit ratio, which will further damage my credit rating.

But, (and this assumes that they will offer me a reduced rate for a payment plan), it's either that or continue to pay 27 percent. Twenty seven. Sigh.

So I call back today. "How may I help you today, Ms. Poorhouse?" "You can lower my interest rate, please." The slightly less chirpy representative tells me they cannot review my rate until November.

Actually, since writing the above, I looked at this again. I have a little credit left on some lower rate cards, so I could transfer about half of my balance to them. At my current accelerated payment rate, I could pay off the balance in three months. So maybe I'll do that instead of setting up a payment plan.

And I'll call back in November. "How may I help you Ms. Poorhouse?" "Lower my rate please.."

You know I'm really trying to pay what I owe. But sometimes it ain't easy.

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Monday, October 6, 2008

Bailout for the Little People?

I don't normally agree with conservative Ben Stein, but in a conversation on NPR's On Point last week, he was making a lot of sense. Like the bailout plan should be directed at the people who can't afford their mortgages rather than at the "masters of the universe" at the top who made the mess in the first place.

Charles Calomiris, professor of financial institutions at the Columbia University Graduate School of Business, pretty much felt the same way

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Sunday, October 5, 2008

CitiBank Wants Me to Pay Off My Debt

Citibank N.A.Image via WikipediaCiti sent me a letter yesterday offering me to participate in their Payment Partner plan. Here's the deal: agree to stop spending on your card for 4 months, and at the end of 4 months they give you 10% of any payments you make over the minimum balance due up to $550. At the end of the period, they also reduce your credit limit by the amount of the payments over the minimum balance.

Not a good deal for me, because I have very low "for life" interest rates of 2.99, 3.99, and 4.99 on this card, and I have too much other high rate debt that I'd rather pay off first for this to make sense. The spending freeze is no big deal because I've never charged anything to this card--I just used it for balance transfers from higher cards. And this is one card at least where I haven't missed payments or any other such nonsense.

According to some quick Googling, this offer from Citibank has been around for a couple of years. Some speculate that it is only extended to those with damaged credit as a way to get folks to voluntarily reduce their credit line, reducing Citi's risk. See the article below on the recent trend of credit card issuers of reducing credit limits.

I have to say, that in all of my credit mess, Citi has been the best to deal with. They don't have the dreaded universal default clause that jacks up your rate if you are late with payments to other creditors. They have had reasonable balance transfer rates. Yes, you pay lower rate balances off before higher rate balances, but some of these low rates are for the life of the balance. You just have to be careful not to incur any higher rate charges that would negate the advantage.

Further Reading:
Consumer Credit Limit Crackdown by Jessica Dickler,
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Saturday, October 4, 2008

Did Fannie and Freddie's Demise Help Me?

Welcome Carnival Goers.

This post has been included in The Carnival of Debt Reduction and in Political Calculations On the Moneyed Midways, best posts from the past week's business and money-related blog carnivals.

I find myself wondering if my loan is owned by Fannie Mae or Freddie Mac. Apparently there's a 50-50 chance that it is. It is notoriously difficult to discover who owns your loan, according to ABC News's Betsy Stark, due in part to the complex mortgage-backed securities that have brought the economy crashing down around us.

I find the timing curious. After months of relentless collection calls (like a couple a day) from our mortgage company, and their inability to acknowledge our third-party request for a loan modification , all of a sudden, with no warning, we got a loan mod out of the blue. And it was after the federal goverment took over the mortgage giants. The company didn't ask us to verify our income or anything. Curiouser and curiouser.

Mortgage News Daily speculated after the takeover that since the government doesn't want to own thousands of homes, homeowners already in danger of foreclosure may actually fare better under the bailout. It's probably too soon to tell.

This thing is huge, isn't it? And I have to say that it actually makes me feel better to know that we are not alone in this, that we aren't just irresponsible, that there's something larger at work here. Or so I tell myself. Sometimes.

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Friday, October 3, 2008

Prioritizing the Bills--Pay Your Mortgage First

I wish I had come across this list of Top Tips to forestall foreclosure from Laura T. Coffey at MSNBC a few months ago.

Here's her list, with my comments.

1. Face the problem head-on.
No more piling up the bills and refusing to read them.

2. Contact your lender and explain your situation.
The best outcome is that you'll get a loan modification, like we did. The trick is that your mortgage servicer is unlikely to grant a loan modification if you can't show sufficient income to carry the new terms of the loan. So it may not work if you request it, say, if you're still unemployed. But, hey, it couldn't hoit. And if you're talking to them, they know you haven't abandoned the property for a South American hideout.

3. Understand your mortgage rights.
In other words, read your loan.

4. Consider selling your home.

5. Explore the “short sale” or “deed in lieu of foreclosure” options.

These last too are horrible to contemplate, but if you can't afford the house and have no prospects of being able to afford it, they may be your only choices. (I know. I KNOW. This is where it gets tough.) Read the article for how these sales work.

(By the way, this is EVERYWHERE. My daughter's teacher is buying a house closer to the school from a buyer through short sale.)

6. Don’t give your money away to the wrong people.
No matter how little money you have, there are always unscruplous low-lifes willing to help you part with it.

7. Seek out legitimate help.
Find a legitimate debt counselor, perhaps one affiliated with the National Association of Credit Counselors.

8. Set financial priorities that fit your current circumstances.
In other words, pay your mortgage first. The other bills can wait.

9. Consider filing for personal bankruptcy protection.
This is not something we considered. I mean, we borrowed the money, didn't we? We bought the stuff, or paid the taxes, or whatever with the money, right? For some people it may be the only way out, and you may be able to keep your home to boot.

10. Maintain your self-esteem.
Now that's easier said than done, isn't it?

Another suggestion is to pay mortgage payments sporadically, even if you can't afford them monthly. It's when you go 60, 90, 120, or 150 days with no payment or communication that the mortgage company starts to get a little antsy.

Further Reading:
Forestalling Foreclosure by Gerry Willis at
suggests trying all the tactics above before raiding the retirement account.

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Thursday, October 2, 2008

Breaking the Silence

I had a long talk with my sister on the phone today. She's a single mom. She makes do on less income than Mr. Poorhouse and I make. She' s frugal, and she's not in debt. Her ex-partner has a compulsive spending problem.

I told her everything that's been going on. She didn't say this was all our fault. She didn't say I told you so. She just listened. She said she was sorry. She said it sounded awful. She said she was glad I told her.

What a great sister.

Photo by magerleagues/Andrew Mager

Polly's Pointer

No need for shame or silence. People who love you love you regardless.

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Wednesday, October 1, 2008

To Do List: Mortgage Loan Modification