Gen X, student loans, credit cards, and the wealth that isn't

Interesting article on finances of generation x. Basically, between high lifestyle expectations, lots of college loans, credit cards, and uncertain employment we're not doing so well. I guess that might be part of the reason why savings rates nationwide are at their lowest levels since the Great Depression! Also important to note, many gen. xers are delaying having a family. For many of these that will mean not having a family the "conventional" way at all. By the time a woman is 30 her chances of getting pregnant are already 15%-20% lower than if she's 20 and fertility only goes down as age increases. . .

Young and Broke: Your Money

They better not let me out much

Today Eric worked from home and Candela took a nice afternoon nap. Know what that means? I actually got to leave the house without a toddler attached to me! I had one goal. Go to Menards and return a drill that broke on its first use. (Internal gear at that!) I actually had a positive customer service experience. The fraud protection stuff was pretty funny though. If I was going to steal stuff I don't think it would be the kind of drill that breaks on its first use. Give me some credit :) Okay, so life is going well and I still have a few minutes of nap time so I head over to Kohl's to try to find some shoes for Candela. Now, Candela's wardrobe is about 95% hand-me-downs and they're great so I don't do very much shopping for her. That's a good thing!!! Have you seen the prices of some of this stuff? I'm not going to pay 3x more for my two-year-old's shoes than for my own. Any shoe that has Elmo on it should not cost $20 -- "on sale"! Then I saw the sleeper on clearance for $20. $20?? So my toddler can have something to sleep in? Needless to say I left Kohl's empty handed, but my sister still swears by their clearance . . .maybe I'm just looking for the wrong stuff.

HELOCs for The Avacado Green of the 00s?

I'm no design expert, but does anyone worry that the current remodeling craze (with people taking out intrest-only loans to pour tons of money into stainless steel appliances) will give us a bunch of kitchens that look really strange in 20 years? Not to mention, really prone to fingerprints?

Marriage, money, and wealth building

Good news for married folks out there -- In a study conducted over 15 years married people amassed 93% more wealth than people who were single or divorced.

However, finances are also a big reason for divorce, so you've gotta communicate to get those wealth building effects :)

Wedded, Wealthy, and Wise: Money & Happiness

Real estate short sales (for less than the mortgage)

This article gives the VERY BASICS of a real estate short sale. If you're new to the idea of a short sale, basically you're trying to get a bank to sell to you at a reduced price (lower than the amount owned on a mortgage) so they don't have to go through the foreclosure process. This technique evidently works best with fixer-uppers because the last thing a bank wants to own is a house that they can't sell.

Creating a Successful Short Sale Package : blackburnri

Smart Investing Amidst Real Estate Mania

I'll be the first to admit I'm not a huge fan of everything Robert Kiyosaki (of Rich Dad, Poor Dad fame) says, but this article makes sense. Here's the problem though . . . people determine whether prices go up or not and if 90% of the people are investing "unwisely" they'll still control the market. Maybe not forever, but for how long?

Smart Investing Amidst Real Estate Mania:

Much better than a HELOC :)

You won't need a loan or even an equity line for this one. Free ultimate Cold Stone creation on your birthday. You can sign up your kids too!

Welcome to the Cold Stone Creamery Birthday Club

ING vs. Emigrant - saving, Heloc, mortgage

ING direct bank just up the ante in the savings rate wars. 4.75% until April 15 on NEW deposits. In reality I suspect this means little to most people, but the psychological impact is going to be pretty high. I hope it compels Emigrant direct bank to make a savings rate jump . . .time will tell. Is that a giant sucking sound I hear? Going from Emigrant to ING?

In the meantime, I did a little bit of checking on ING's loan products while I was at their site checking out the new savings plan. Looks like they're offering 5/1 ARMs for only 555 closing costs until the end of February. The interest rate isn't as competitive as some I've seen (5.65% I think . . .sorry . . .I don't remember), but for a short term thing it might be worth it. (Hopefully you're not considering an ARM for a long term thing :)) Looks like their Helocs are at prime, which is pretty typical. It does look like their Heloc product has a lock feature. (So if you borrow a bunch of money at a reasonable rate you can lock in that rate. I'm pretty sure the "locking" function has some extra charges associated with it though.)

Does a HELOC have a place in your life?

Well, there's been lots of talk among financial gurus about HELOCs lately, so what's the deal? Well, here's my take, but remember you're reading a blog so be sure to do your own due diligence :)

A HELOC is a home equity line of credit. So, if you have equity in your house you can usually get access to about 80% (90% if you shop around) of that equity. You can get one from just about anywhere including your local bank, internet banks, etc. So, they give you a checkbook and you can spend it however you want. Generally the interest is tax deductible. Common terms are: No closing costs. No fees. Prime rate (currently 7.25%). SECURED BY YOUR HOUSE. 10 year "draw period" (spend the money and only pay interest) and 15 year pay-back period (pay interest AND pay off the principle.) Of course shopping around might get you a little bit lower rate (at least in the beginning) or some other perk I'm not aware of. Also be sure to sure for any "closing early" fees/terms.

Can I get a HELOC? If you have some equity and sort of okay credit and some sort of job you probably can.

Do I want a HELOC? If are a spender or inclined to spend money you don't have, DEFINITELY NOT. Banks that offer HELOCs want to make money off of you and if that involves foreclosure, so be it. If you're going to spend money recklessly do it on your credit cards where they destroy your credit rating if you don't pay but at least they don't foreclose on your house. Of course I'd suggest not spending money recklessly at all :)

How about if I'm a responsible spender? A HELOC might be something to look into then. Generally speaking, (check the details of the individual HELOC you're looking at) if you don't use it, it just sits there costing you nothing. Why would I want something sitting there costing me nothing? Well, sometimes life happens in ways you don't anticipate and having instant access to reasonably inexpensive cash can be a good thing. Here are some circumstances I can think of: 1) You lose your job and don't have enough of an emergency fund to pay your mortgage. Make your mortgage payments with your HELOC until you find another job or sell your house. (Which, strangely enough, might AVOID foreclosure, which is the big fear associated with HELOCs) 2) A good friend of your finally wants to sell the car that you've been eyeing for years, but your car cash is locked up in a 6 month CD. 3) A house comes up FSBO and it's exactly what you want at a great price, but you need ernest money now. 4) You want to buy an investment property to rent out, but need 20% to get good rates (of course leveraging your own home for the sake of a rental generally isn't a great strategy, but as a long as you have cash in other places you can avoid PMI that way.) 5) Other life stuff . . .

BTW, if you decide a HELOC is right for you, you should apply for it before "life" happens. Trying to get one after you lose your job is going to be more difficult.

An interesting real estate business model

Well, we looked at another house yesterday. Much less disgusting than most of the other fixer-uppers that we've looked at, but you'd think the owners would take some care to hide their porn. This one is going to go fast because of the asking price. After looking into the listing and agent's website, etc. I think I figured out his business plan (and if I'm wrong it's a business plan that somebody should use!) For 5.2% he'll do all the normal stuff that a realtor will do when it comes to selling your house. For 6.7% he'll do all the normal stuff and negotiate with the bank to lower your payoff. So, this guy has been listing for only a few months and he has about 10 listings currently, gee, I wonder why? Now, he also works with some "we buy houses" people, so it's possible this isn't the only way he makes money, but even if it is, let's take a $200,000 house example:

$200,000 house is in pre-foreclosure because of a $198,000 mortgage that can't be paid.
Owner offers 6.7% to this guy.
He spends a couple of days arranging a short sale with the bank.
The bank settles for $160,000 to avoid the foreclosure and invariably lose more money.
The house sells almost instantly listed at $170,000.
Guy pays out $4590 to buyer's agent.
Guy (and his broker if he has one) keeps $6800.
It's really a win win win win
*Realtor gets $6800 for a couple days work (do that once a month and make $81,500 a year -- and that's if you only deal with the bottom of the market. That number goes up if you deal with more expensive houses or do more than one a month.
*Bank loses money, but not as much if they spend another 6 months foreclosing and try to sell a totally trashed house with no disclosure and the "distress" of having gone through foreclosure.
*Owners don't have much, but at least they don't have a foreclosure on their credit records.
*Buyers get a house significantly under market.

If that isn't this guy's business plan it should be somebody's :)

See, I read about more than property flipping

Here's the benefit of having a multi-purpose blog :) I really don't have any commentary on this article . . . it pretty much speaks for itself. I just can't imagine a Prime Minister telling people it's okay to come because the resorts aren't haunted afterall . . .

"Hungry" Ghosts Keep Tourists From Tsunami-Hit Resorts

Suze Orman makes me laugh again

I'm sure there are people out there (maybe even reading this blog) that might find some of these tips helpful, but . . . wow. Save money by stretching your $50 every 6 week haircut to every 8 weeks??? Don't pay 15% on your credit cards???? Let's just say the more frugal among us probably won't be able to save an extra $5000 with this plan :) It's good for entertainment value though :)

Easy Ways to Save $5,000 a Year