Suze Orman is Wrong too, but about What?

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Posted on September 29, 2011 by admin

A few days ago ABC national news asked the infamous Suze Orman, (another self-proclaimed financial guru) whether a home owner who owes more than 20% over what their home is currently worth should just pack their stuff and walk away (basically telling the bank to shove it). What do you guess Madam Orman answered? Suze said take a hike – walk away from your underwater mortgage. But is that ethical or morally correct advice?

How can that be sound personal financial planning?

The world and especially Europe seemingly coming apart at the seams proclaims a new era and philosophy in personal budgeting and financial advice. Apparently (and according to an ABC News study), almost 12 million Americans are upside-down or underwater on their mortgages being valued at more than the homes they hold as collateral. And while billions of dollars were earmarked for assistance for mortgage modifications and mortgage renegotiations, only a small fraction of those funds have been allocated or lent out by the banks.

What will happen when homeowners begin learning that some of their neighbors aren’t paying and in most cases, haven’t paid their mortgage payments for months and in some places, years? The real estate and mortgage industry’s house of cards may just come crashing down. You can’t fault Peter for not paying on his upside-down underwater home mortgage if his neighbor Paul isn’t paying.

The process of home mortgage refinancing or loan modification is daunting, horrible, cumbersome, confusing, embarrassing and overall broken. The number of homeowners who barely hanging on but are still paying their mortgage payments along with those home owners that have not made payments but the bank hasn’t yet posted for foreclosure are the “shadow inventory” that is becoming a huge concern for law makers and Bankers alike. When there is an oversupply of anything, common sense dictates that the price will decline to get rid of excess inventory.

Over the past five years, home prices have fallen between 25% – 50% all across the country, and one in four homes is worth less than the mortgage on them! Plus, getting a loan or mortgage to buy a home is reportedly tricky and difficult for all except the Kardashians these days. So what does taking a hike from your mortgage mean to you and your credit rating? Certainly not a good thing for you credit wise but it gets frustrating to watch the big fish get federally funded financial “do over’s” while the tiny minnow consumer home owner personally suffers the humiliation and the financial Armageddon like set back.

Fact is that it’s much cheaper to rent than own a home these days than to own your home and pay a mortgage. Property taxes and cost of repairs and materials are at all time highs. If you’re in the ‘undecided but need to figure it out’ group, consider that you should at least go through the motions of working out a deal with your mortgage bank. And if you can’t see how or why you can make ends meet without a “bail out” or loan modification, here’s the first steps:

Call your bank or mortgage company and tell them your plight and ask for their loan modification package. Also, tell them that you will not be able to make any more payments on your loan until something can be worked out with them. (Note: unfortunately lenders seldom if ever begin to negotiate with you until you are way past due on your payments. So be prepared to not make payments to your mortgage company but as a safety net, make payments to an escrow type account to indicate “good faith” on your part later in case the bank plays hardball)

Send a certified letter to your bank stating what was said in item #1, and reference the time and date of your phone call made to them previously. (Keep those saved payments in your quasi escrow account as your cash reserve to use for rent deposit and possibly needing to pay for several months rent up front if you do vacate your home)

Contact a realtor in your area and ask them if they would list your home pending a short sale scenario. There are lots of realtors that actually specialize in this process and will work directly with your bank. (This is important too, even if the current market value is thousands below what you owe on your mortgage, it shows good faith on your part to work out of this bad situation)

Contact a professional debt advice source or consumer credit counseling service. (This is where www.mymoneytrack.com or similar service will assist you in getting your ducks in a row financially; once you default on your mortgage, it is likely that your credit cards will be severely limited or cancelled)

Forewarned, this will crater your credit score and rating by hundreds of points, and you’ll likely not be able to get reasonably affordable credit for up to 5 years. Chances are that if you’ve maxed out your credit cards and have loans on everything such as cars, boats and motorcycles your likelihood of getting more new credit is nil in this market anyway. But with savvy personal financial planning and use of protected assets such as IRA’s, insurance, retirement plans such as 401k’s and annuities you may be able to come out ahead in the long run. You must plan ahead and not just decide one day to pack it in and leave.

The bank took a risk and was compensated for their risk in the form of the interest they charged and you paid. Business deals go awry all the time – don’t beat yourself up too much over it. Major corporations run by Ivy League MBA graduates have needed US Government financial assistance.

When you need the best local financial advice or budget help available, contact My Money Track to help you get your life back on track. Your IRA or rollover is just too important of an investment to ignore. Local professional advisors are willing and able to help. Shouldn’t the regular Joe or Josephine catch a break too?

The Greatest American-Born Player, Ever…

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Posted on September 26, 2011 by admin

We all have our own heroes. Ours are those who have persevered and not only achieved but also excelled in their field. Today, the greatest American-born hockey player, Mike Modano, retired from his sport after playing most of his career with the Dallas Stars. What makes a really great athlete is the same thing that makes anyone exceed beyond their wildest expectations.

Perception and vision: The greatest hockey player ever was Canadian Wayne Gretsky who when asked what he thought made him so successful Gretsky replied; “good hockey players skate to where the puck is, but great players skate to where the puck is going to be.”

And so it is and so it should be in everyday life and in setting up your personal budget or expense worksheet. To be successful in saving money you need to be cognizant of not just where you “are” but where you are heading. Often we do not really want to know the answer to where we are headed financially but it’s something that will ultimately make you great for yourself and for your family.

Those amazing athletes didn’t get to the lofty perches alone or without help. They had coaches and trainers… and so should you. Whether it’s simple income tax strategies, or using a book keeping service to get you on the right track, assemble your team and get the best adviceso that you can achieve personal financial greatness and peace of mind. Even our US Treasury Secretary Timothy Geithner proclaimed that he used Turbo Tax which resulted in careless and avoidable (and very embarrassing) mistakes in preparing his own tax return.

Seek out the resources that are free or very affordable to get you back on track to being fulfilled with the warmth of knowing that your financial well being is preserved. For answers to your questions about how to be great financially, contact www.mymoneytrack.com for your free unbiased answers and advice.

You Need a Personal Holiday Budget Plan Now!

Posted on September 20, 2011 by admin

Brisk mornings are here finally and the leaves will soon be turning which means the Holidays are just around the corner… YUK! Money and schedules are tighter than ever this year and most of us do not have money saved for all of the expenses that are coming. Worse, even the words “personal expense management planning” sounds awful.

We understand how boring personal budgeting can be and it’s difficult to admit you’re an idiot when it comes to making a simple budget spreadsheet. But hey, we are only human and it can be a huge holiday buzz kill thinking about (dreading) shopping when times are pretty tough economically. My Money Track is here to the rescue!

There are hundreds of expense software programs and budget templates you can buy on the internet but most of those planners are way overkill and too complicated for what you need. So we are offering a totally free, no strings attached, excel budget plan especially for your Christmas or Holiday shopping list. Just click on the link at the bottom to get the personal spreadsheet (there are no bugs or viruses) and you may open it with either Microsoft excel, office or even the free version of office called “open office,” and we’ve posted their free software link at the bottom of this blog too. Take these 3 easy steps;

1. Start your list now, not at the last minute on Black Friday at 5am in a freezing car parking lot outside your nearest Wal-Mart or Target. Keep a pen and pad or your iphone or ipad and occasionally add those “nice” who you wish to give a gift. Do it now while the pressure is off.

2. Get our free budget plan and enter all of your gift recipients into our exclusive worksheet where the names are already uniquely separated into categories (Family, Friends, Co-Workers, etc.), just enter their names where indicated and then how much you plan to spend on each person.

3. After you purchase some gifts, go back to your budget spreadsheet and enter the amounts you actually paid for each person and badabing, the amount you are over or under in your budget plan will immediately reveal itself.

So maybe you don’t want to know, maybe you can’t handle the truth… sure you can. Just don’t delay. Why? Because as you keep adding names you will soon get a very clear picture of how much money you will need to budget and if you will also need consumer credit counseling help or money advice (hopefully no bankruptcy advice!).

Seriously it’s not worth it anymore to make yourself feel good with “retail therapy,” you will just feel much worse later. Make a change in your finances; keep the money working in your IRA, 401k or retirement plan. Take the pressure off this year.

You’ll so much more enjoy the Holidays without that financial cloud of guilt or credit card debt or worries about how to make ends meet afterwards. Trust us on this. Try it now. Download our free personal budget worksheet and start making your list. Should you have questions about how to download or use the My Money Track Free Personal Budget Spreadsheet, simply call or email laurie@mymoneytrack.com

Free Personal Budget Spreadsheet

Free Open Office Software

Worse than Death

Posted on September 12, 2011 by admin

Not much if anything really is worse than death but leaving your family in dire straits or with regrets is truly awful. Tragically the remarkable and very young British born artist and songwriter Amy Winehouse had many ups and downs during her short life. She was married for a brief time to a man who’s now in prison and fortunately their divorce was final. Otherwise he would likely be privy to a large portion of Amy’s estimated $16 million estate.

Marriage will usually negate any prior wills one has put in place; and luckily in this case, Amy had taken the time to get what looks to be an iron clad will that is protected from predators (and hostile ex’s). Death is an uneasy topic but this illustrates why it’s never too early to get a will. They are relatively simple documents and templates with instructions may be found online for little or no charge. Obviously, for something that is pretty important (your life contents) seeking an attorney to assist you would be ideal.

Meanwhile, back on the ranch… Winehouse and her ex were married briefly and under English law, marriage negates any wills made before the marriage. Even if a couple divorces and there is no new will, the ex-spouse is the favored beneficiary.

Luckily Amy had reportedly updated her will to ensure that the ex, (who is currently in jail for burglary and possession of an imitation firearm, we’re talking genius here, no?), would not inherit any of her estate. Under the will her fortune will go to her divorced parents and her brother.

Back stateside, if you die without a will, your home State dictates who will inherit and what they will inherit from you (very sad but very accurate statement). If you are married, most states award one-third to one-half of your estate to your current spouse, with the rest divided among your children or, if you don’t have children, to other living relatives such as your parents or siblings. If you are single, most states provide that your estate will go to your children (or to other living relatives if you don’t have children).

If you have absolutely no living relatives, then your estate will go to the state.

If you have accumulated some assets (it doesn’t have to be Winehouse’s millions) or have young children that will need a guardian, then it is time to start thinking about an exit plan. Planning how you’d want your possessions and investments allocated once “you’ve left the building,” is a semi-drag but oh so necessary. The alternatives are distasteful at best. Use My Money Track’s free resources and advice to help you get back on your life’s dreams.

3 Tips for Singles and One Big Mistake

Posted on September 7, 2011 by admin

Do you ever feel like you’re on Noah’s Ark; everyone is matched up but you? One can get that same feeling when reading about retirement planning and budgeting advice.

Seems like the majority of information focuses on couples, rarely the single guy or gal. What’s even crazier is the increase in single retirees in the past ten years. Would you believe that according to the Census Bureau, about 35% of 50 to 54 year-olds were single in 2010, up from almost 29% in 2000. Among 55 to 64-year-olds, 33% were single in 2010, versus 30% in 2000. Factoring in both age groups, that’s about one more single out of ten. Whether these statistics are due to increases in divorce rates or the proportion of the population that never married, it’s extremely important that these individuals take extra precautions to ensure a secure retirement.

Most couples have two incomes and share the expense of one home, utilities and cable bills. Married couples have a back up person to help carry the load (at least hypothetically). The lone ranger single person has to carry the load for saving and unforeseen setbacks on their own. Thus, the cost of living for single retirees is about 40% to 50% higher than for empty-nest couples, which is why it’s recommended that singles save at least 15% of their pay for retirement. The most important elements that singles should take into account while preparing for retirement is safeguarding their nest egg from creditors and predators. The chances of becoming of unemployed or disabled and it affecting household income are more than 50% greater than married couples. Start with these three things to protect yourself:

PROTECTION: Safeguard your nest egg. Finding any job in this economy can be tough, let alone a job with decent benefits or one that comes with an increasingly elusive traditional pension. But when you have a choice, opting for a position with good benefits can give you more financial security. If you can’t find a job with a pension, shoot for one that has a 401k with a match. Even though Pensions are attractive, over the long haul, disciplined savers can actually accumulate a bigger retirement benefit with a 401k than they could with most traditional pensions.

LIFEBOAT DRILLS: Prepare for unemployment. You never know when your “pink slip” will arrive. Stay “ready” by first paying off as much debt as possible and of course, not adding any lavish purchases. You can purchase mortgage insurance that will keep your mortgage current in case of job loss but you need to get help from a professional to see if that makes sense for your situation.

CRAP SHOOT: Feel lucky? The chances of you needing disability income are much higher than needing life insurance! While both life and disability insurance are the best ideas, In the event of an illness or injury, disability insurance replaces a set percentage of your income for a certain period of time. But for single adults, replacing their income with less than the full monthly amount can be a tough pill to swallow. Some money is better than “no” money but an additional reserve is mandatory for your full sense of financial security.

Lastly, long term care will be something that one out of two retirees will need in America. Newer types of life insurance called Hybrid policies now offer both a benefit to build a tax-free retirement income stream and a much higher monthly amount in the case of needing help with some of the daily living personal chores. Hybrid life insurance policies can almost be like having your cake and eating it too. The sooner you check into these types of insurance, the better your chance to be able to obtain coverage and at affordable cost.

What’s the biggest mistake made by single retirees? Not using available resources to help with selecting the proper types of investments and insurance plans to suit your individual situation. In many cases, you are already paying for the help, but you generally do not know how to access it. If you have questions on how to get your answers, contact www.mymoneytrack.com.

Ramsey’s Wrong, and it Could Hurt You More than You Think – Part II

Posted on September 1, 2011 by admin

If your only goal is to get out of debt, then cost is the most important factor. Cut expenses (eg. cost) and hopefully increase income. One should NOT invest money until they completely have their debt under control. Business cannot run without debt. Some debt is useful and can be financially advantageous, but only if you understand how to use it.

Think about this: if you can earn 6% on your money, risk-free for ten years and can pay a fixed 4% interest rate on a ten year loan, then you will make a “free” 2% profit on your money. If you have $100,000 in this type of strategy, you will realize a $20,000 gain. But that is before income taxes…

Taxes are the most often forgotten about part of investing and yet the easiest to account and plan for, even predict their direction. We are living in an era with the highest ever amount of debt ($14.4 trillion) and the lowest federal income tax rate in modern history. Will interest rates rise? Since they are near fifty-year record lows, it is likely that interest rates will rise. But ask if income taxes will rise? ABSOULTEY. How could they not increase?

Thus, the Ramsey method of “investing” rarely if ever considers future events such as tax rates, economic cycles, and basic supply and demand stuff that affect prices for things we buy to eat or use. If federal income taxes increase, then the value of tax free investments also increases. There are only three places to earn tax-free income: 1) ROTH IRA’s 2) Municipal Bonds and C) The use of Life Insurance to “overfund” to build excess cash value. (Yes, we used 1, 2 & C to see if you’re paying attention)

Using life insurance for tax-free investing was so great back in the 1970’s – 80’s that the government had to step in and curtail its uses – it was that beneficial and advantageous. Usually anytime the US Government regulates how much we can buy of something; it must be pretty good for us and not-so-much for Uncle Sam. The ability to potentially grow your money and then spend your growth all tax-free is remarkable. It is a bit tricky to comprehend and you’ll need to be aware of slick sales presentations. But the cool fact is that life insurance for use to fund future expenses such as college for your children or for retirement income can certainly be tax-free. Using traditional tax deferred places such as IRA’s and 401k’s and 403b’s could be potentially creating a ticking tax time bomb.

One of the few things that have decreased in cost over the past 30+ years is the cost of life insurance. And new options, bells and whistles that provide lifetime income streams, creditor and predator protection, different choices to invest the excess life insurance values, all are very lucrative to both you and the person who sells you the policy. Likewise, I am certain the person who sells you a new car or refrigerator also makes a profit from your purchase. It is your job to shop around and find the best deal for you, but please do not rule out cash value life policies in the face of what we are dealing with in our economy and nation.

Ask about less expensive life policies that don’t pay off until the last insured person has died (eg. both the husband and wife). Since these policies do not pay out a death benefit for a longer time, they can cost much less than insuring each life individually.

A cynic is someone who knows the price of everything but the value of nothing. If you get caught trying to save a few nickels when you could have obtained $100 dollar bills, well let’s just say you’ll forever regret it.

Monthly Archives: September 2011

The Greatest American-Born Player, Ever…

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