The tight credit market and business losses are making card issuers reduce credit lines, much to the distress of those who got in over their heads.
I thought that going to law school would benefit me economically; turns out, not so much, but I'm not doing as bad as this guy! Who knew that a little thing like crazy student loans could keep you out of the bar? I wonder if part of it is the change in the economy and the fact that unless he got a highly-paid job, he would have real trouble repaying the loan. Then again, not allowing him in sortof makes that all too likely.
In a Federal case, a guy who made it into the bar in Minnesota attempted to discharge his $350k in student loans through bankruptcy; my understanding is that ship sailed in the early 80's, courtesy of people like a colleagues sister, who attempted to discharge a month or so after the rules changed, moved out of state and didn't pay for years. Until a friend was over, answered the phone and gave the caller her employment information. That's an awkward friendship moment!
It seems that many things seem like a good idea at the time, but turn out later not to have been. We're conditioned, in American society, for immediate gratification, unlike a few generations ago where cash was king and you just plain didn't get something if you didn't have money.
People did crazy things, too, like save.
Friday, July 31, 2009
Thursday, July 30, 2009
Credit Card Debt
There's a lot of talk about the credit market and the result of upcoming changes in credit regulations; in my case, my card is from my credit union and has a small credit line, though a fairly high interest rate. Someone much more financially smart than I said that credit card interest isn't a problem until you carry a balance of more than $1,000. Currently, I have a balance, though in the last year, I have not carried a balance; I try to make one purchase on the card each billing cycle but think I missed one.
My current balance is a result of a blowout the other day and a trip to the tire store, where I made an unplanned purchase of two new tires. Of course it happened in the middle of my pay cycle, so I didn't have a whole lot of unallocated funding; I get paid every other week, so pay dates change monthly, but my student loan comes out of my account on the same date each month. It's meant to come out of the second paycheck in the month, but this time it didn't work out that way. The money is scheduled to leave my account two days before payday. And I have a substantially similar sized check outstanding that's making me nervous. I have money in savings and am only concerned about whether it gets pulled into checking. So far that large check hasn't cleared and I hope it holds off until payday. At that point, I know I'm fine, as my next bills aren't due until more than a week after payday.
Now that my tax return took care of some small outstanding debts, I'll be in a much better financial position, once that big check clears. My total monthly payments have gone down by $400 for the moment. Because I want to buy a house, I'll put as much as possible into savings. Theoretically I would be able to pay off my bar loan next year, upon receipt of my income tax refund; while the interest rate is lower than a mortgage would be, the interest isn't tax-deductible so it makes more sense to eliminate it first. It's also my smallest payment. Whether or not I buy a house, I would like to pay off that debt as soon as possible.
My current balance is a result of a blowout the other day and a trip to the tire store, where I made an unplanned purchase of two new tires. Of course it happened in the middle of my pay cycle, so I didn't have a whole lot of unallocated funding; I get paid every other week, so pay dates change monthly, but my student loan comes out of my account on the same date each month. It's meant to come out of the second paycheck in the month, but this time it didn't work out that way. The money is scheduled to leave my account two days before payday. And I have a substantially similar sized check outstanding that's making me nervous. I have money in savings and am only concerned about whether it gets pulled into checking. So far that large check hasn't cleared and I hope it holds off until payday. At that point, I know I'm fine, as my next bills aren't due until more than a week after payday.
Now that my tax return took care of some small outstanding debts, I'll be in a much better financial position, once that big check clears. My total monthly payments have gone down by $400 for the moment. Because I want to buy a house, I'll put as much as possible into savings. Theoretically I would be able to pay off my bar loan next year, upon receipt of my income tax refund; while the interest rate is lower than a mortgage would be, the interest isn't tax-deductible so it makes more sense to eliminate it first. It's also my smallest payment. Whether or not I buy a house, I would like to pay off that debt as soon as possible.
Wednesday, July 29, 2009
Multiple Programs
It turns out there are a lot of different programs out there; the lender who came to talk to my last class reviewed three programs which may be used together. That includes money from the federal government and the county, but does not include money from the city in which you're looking, neighborhood-specific programs or money from foundations designated for certain areas. In some cases, $25-30K may be available. Per borrower.
Conventional loans require a credit score of 700 or above and/or a downpayment of 20%. Most of us with student loans don't have the 20%. There are VA loans for veterans and surprisingly, the Department of Agriculture has programs in some rural areas; at the break, our lender told someone who qualifies for both that she should check further as the VA loans have a fee that she doesn't think the Ag loans have.
Me? I'm looking at FHA financing, which is kind to those without great credit, doesn't require huge downpayments and may be available for people without great employment history. There are fees involved but the benefits of some available programs outweigh the fees greatly; while the downpayment required is 3.5%, half of that can be provided by programs but because the loan can't be for more than 100% of the sale price, the borrower must provide half. That's 1.75%, the amount of the fee; on a house costing $100,000.00, that's $1,750. Even I can manage to have that amount of money. This is money you must pony up yourself, though it may be given as a loan or gift from family, or may be withdrawn or borrowed from a 401K or IRA.
Excess money from programs for which you qualify goes to pay down your mortgage. The upshot? Because I live in an area with lower cost housing than many metropolitan areas, and housing prices have gone down, so long as I can find a lender, I should be able to qualify for programs and get a loan that is reduced to the degree that I can afford it.
Combined with the income tax reduction provided by a) the Federal Stimulus; b) mortgage interest, so long as that remains a deduction; and, c) one of the county programs, which 1) has a fee to get into but reduces personal income by 80% of mortgage interest paid, reduces tax obligation by the other 20% of mortgage income paid, and is valid so long as it's your homestead, buying a home now has huge tax implications. In a good way.
Conventional loans require a credit score of 700 or above and/or a downpayment of 20%. Most of us with student loans don't have the 20%. There are VA loans for veterans and surprisingly, the Department of Agriculture has programs in some rural areas; at the break, our lender told someone who qualifies for both that she should check further as the VA loans have a fee that she doesn't think the Ag loans have.
Me? I'm looking at FHA financing, which is kind to those without great credit, doesn't require huge downpayments and may be available for people without great employment history. There are fees involved but the benefits of some available programs outweigh the fees greatly; while the downpayment required is 3.5%, half of that can be provided by programs but because the loan can't be for more than 100% of the sale price, the borrower must provide half. That's 1.75%, the amount of the fee; on a house costing $100,000.00, that's $1,750. Even I can manage to have that amount of money. This is money you must pony up yourself, though it may be given as a loan or gift from family, or may be withdrawn or borrowed from a 401K or IRA.
Excess money from programs for which you qualify goes to pay down your mortgage. The upshot? Because I live in an area with lower cost housing than many metropolitan areas, and housing prices have gone down, so long as I can find a lender, I should be able to qualify for programs and get a loan that is reduced to the degree that I can afford it.
Combined with the income tax reduction provided by a) the Federal Stimulus; b) mortgage interest, so long as that remains a deduction; and, c) one of the county programs, which 1) has a fee to get into but reduces personal income by 80% of mortgage interest paid, reduces tax obligation by the other 20% of mortgage income paid, and is valid so long as it's your homestead, buying a home now has huge tax implications. In a good way.
Tuesday, July 28, 2009
Homebuyer Programs
I used to think that the first time home buyer programs provided only funds for closings and downpayments. Turns out I was wrong. While there is a significant amount of money available where I live, there are many programs available, some of which reduce interest.
My county has a program with an initial fee, which you can negotiate for the seller to pay, and provides you with an income reduction. Whatever the amount you pay in mortgage interest, 80% of the total goes to reduce your income; if you earn $50K on your W-2's, and had paid $10,000 in mortgage interest, your income is reduced by $8,000, so down to $42,000, not counting any other deductions you have that would reduce your income. One you calculate your tax liability, the other 20% of what you paid in mortgage interest goes to reduce that liability; if you end up owing money, that amount would be reduced by $2,000 in my example.
While this may not mean much with the stimulus credit of up to $8,000 for those who buy homes this year, it isn't limited to one year; this program lasts as long as you own your home.
My county has a program with an initial fee, which you can negotiate for the seller to pay, and provides you with an income reduction. Whatever the amount you pay in mortgage interest, 80% of the total goes to reduce your income; if you earn $50K on your W-2's, and had paid $10,000 in mortgage interest, your income is reduced by $8,000, so down to $42,000, not counting any other deductions you have that would reduce your income. One you calculate your tax liability, the other 20% of what you paid in mortgage interest goes to reduce that liability; if you end up owing money, that amount would be reduced by $2,000 in my example.
While this may not mean much with the stimulus credit of up to $8,000 for those who buy homes this year, it isn't limited to one year; this program lasts as long as you own your home.
Monday, July 27, 2009
Realtors
Realtors are good and bad; my understanding, is that they're always working for the seller, whether it's the listing agent or the one you're working with, unless you have a representation agreement. I do know that some are good and some are bad; fortunately, I know someone who was happy with his realtor so may end up working with that realtor if I move forward with this.
Like Mortgage Bankers, Realtors make their money on commissions; back a few years ago, when the housing market was going like gangbusters, there were mortgage brokers who couldn't be bothered with the low end of the housing spectrum; they'd leave 6 loans on the table because the houses were only selling for a couple hundred thousand. Easy money. Instead, they opted to chase the high priced deals for which they had to work harder to find a loan. Silly brokers! They could've taken the low-hanging, less bragworthy fruit and made plenty of money.
I assume that some realtors are the same, though I know my friend is considering selling and has been told to wait; his house is in a good neighborhood that isn't too far from the neighborhoods I'm talking about, where housing costs are much lower.
Like Mortgage Bankers, Realtors make their money on commissions; back a few years ago, when the housing market was going like gangbusters, there were mortgage brokers who couldn't be bothered with the low end of the housing spectrum; they'd leave 6 loans on the table because the houses were only selling for a couple hundred thousand. Easy money. Instead, they opted to chase the high priced deals for which they had to work harder to find a loan. Silly brokers! They could've taken the low-hanging, less bragworthy fruit and made plenty of money.
I assume that some realtors are the same, though I know my friend is considering selling and has been told to wait; his house is in a good neighborhood that isn't too far from the neighborhoods I'm talking about, where housing costs are much lower.
Sunday, July 26, 2009
Home Inspections
Home Inspections are generally required as part of these programs; in fact, the programs that provide funding for repairs, cosmetic or otherwise, have people lead you through the process of hiring someone from their approved list. I think that's great because I wouldn't have a clue in the world where to start.
Home Inspectors look at the house from a maintenance/issue perspective and determine if there's a problem with anything that isn't up to standard or if there's a foreseeable future problem. I don't know how to tell the age of a roof, whether there has been water in the basement or if the foundation is sinking. Never mind if the floorboards need to be replaced to to leaky plumbing. I believe that lenders in my state require a housing inspection for underwriting purposes; no sense in providing a mortgage for problem properties.
One person asked about "other hidden costs" not meaning hidden costs, but expenses about which those who have not previously bought a house may be unaware. Hidden costs are things that are slipped in without your knowledge.
Home Inspectors look at the house from a maintenance/issue perspective and determine if there's a problem with anything that isn't up to standard or if there's a foreseeable future problem. I don't know how to tell the age of a roof, whether there has been water in the basement or if the foundation is sinking. Never mind if the floorboards need to be replaced to to leaky plumbing. I believe that lenders in my state require a housing inspection for underwriting purposes; no sense in providing a mortgage for problem properties.
One person asked about "other hidden costs" not meaning hidden costs, but expenses about which those who have not previously bought a house may be unaware. Hidden costs are things that are slipped in without your knowledge.
Saturday, July 25, 2009
Mortgages
Mortgages are available through many sources and the changes in lending habits may eliminate some of us as home buyers. I know my credit is okay, but not necessarily great, same with my work history. I did talk to someone who used to be in the mortgage business and learned that since I've been working at least 9 mos. of the year, the last couple of years, that may be sufficient; the fact of an FHA loan may make a difference. Of course, he has been out of that industry for a couple of years; on the other hand, it's well-known that jobs have been few and far between for several years now so doing contract work may be sufficient. I wouldn't be concerned if I had steady employment through one agency, but my pattern has been a project from agency A, followed by one from agency B, lather, rinse, repeat.
This is an area about which I need to learn more and it may be that what I learn indicates that this is not my time to buy a house.
This is an area about which I need to learn more and it may be that what I learn indicates that this is not my time to buy a house.
Friday, July 24, 2009
Homestretch, HUD Homebuyer class
I found my Homestretch class on a link from the HUD page. I was able to find the cheapest available option; while all classes shown are HUD approved, prices vary. My particular class is three evenings, though it's also offered on a Saturday. While that may have been easier, I had conflicts on the dates with my location.
Pricing in your city will vary; the first classes I found were $50, which is a lot to determine whether you can afford to buy a house. Then I found some for $45, $35 and one for $25, but for county residents, only $15. It's my county of residence so it's the best location for me to take the class. I live in the suburbs, in an area that's fairly well-off; the urban counties have a lot of other things with which to be concerned, so don't have such a cheap program. I know that often programs of this nature are at least in part funded with grants so it's possible that there was a grant involved that reduced the out-of-pocket cost to attendees.
Other places to seek information; if your state has a Housing Agency of some sort (mine has a Housing Finance Agency), counties, cities and neighborhood associations. All of these entities may have information on financing programs, either for first-time buyers, people working to stave off foreclosure and those who need home improvements, either for cosmetic reasons or for energy efficiency. In addition, there may be foundations or other non-profits that also provide funding; I read a tiny article in the paper that told about the foundation providing funds for the neighborhood hardest hit with foreclosures.
The only issue I have about that, since it's a neighborhood in which I have rented, is that this was a foreclosure neighborhood back before foreclosures were rampant. I lived in a duplex when I was in school, and the house on one side of it was foreclosed upon. The former homeowners attempted to take the dryer with them and created a big mess; natural gas filled the home and the gas company called the Fire Department, which blocked off the street at both ends of the block so they could safely go in, turn off the gas and let that which had accumulated in the house dissipate.
Pricing in your city will vary; the first classes I found were $50, which is a lot to determine whether you can afford to buy a house. Then I found some for $45, $35 and one for $25, but for county residents, only $15. It's my county of residence so it's the best location for me to take the class. I live in the suburbs, in an area that's fairly well-off; the urban counties have a lot of other things with which to be concerned, so don't have such a cheap program. I know that often programs of this nature are at least in part funded with grants so it's possible that there was a grant involved that reduced the out-of-pocket cost to attendees.
Other places to seek information; if your state has a Housing Agency of some sort (mine has a Housing Finance Agency), counties, cities and neighborhood associations. All of these entities may have information on financing programs, either for first-time buyers, people working to stave off foreclosure and those who need home improvements, either for cosmetic reasons or for energy efficiency. In addition, there may be foundations or other non-profits that also provide funding; I read a tiny article in the paper that told about the foundation providing funds for the neighborhood hardest hit with foreclosures.
The only issue I have about that, since it's a neighborhood in which I have rented, is that this was a foreclosure neighborhood back before foreclosures were rampant. I lived in a duplex when I was in school, and the house on one side of it was foreclosed upon. The former homeowners attempted to take the dryer with them and created a big mess; natural gas filled the home and the gas company called the Fire Department, which blocked off the street at both ends of the block so they could safely go in, turn off the gas and let that which had accumulated in the house dissipate.
Thursday, July 23, 2009
ABA information on Loan Forgiveness Programs
Here's information from the ABA on some loan forgiveness programs. I didn't read through all of it so don't know how it would work with the capped repayments.
Wednesday, July 22, 2009
More on Student Loans
We all went to school optimistically and I graduated, from high school, college and law school during times of great economic distress so have a history of trying to find a job when the market sucks. Now that all I have are student loans, it's not so bad; it was horrid a few years ago, when I had consumer debt as well.
I feel bad for the recent graduates, who grew up in better economic times and are part of the spoiled generation. There's a whole generation out there unaccustomed to adversity in any form and now they're learning that mommy and daddy can't fix everything.
The so-called helicopter parents who intervened in every part of their children's lives, provided them with every possible consumer good and gave them the expectation that they could have whatever they wanted immediately, no question, did them a huge disservice; these same parents aren't necessarily in a position to follow through on tuition payments, new cars, condos and unlimited use of credit cards due to the current economy. Their kids just don't have the tools to cope with that.
I feel bad for the recent graduates, who grew up in better economic times and are part of the spoiled generation. There's a whole generation out there unaccustomed to adversity in any form and now they're learning that mommy and daddy can't fix everything.
The so-called helicopter parents who intervened in every part of their children's lives, provided them with every possible consumer good and gave them the expectation that they could have whatever they wanted immediately, no question, did them a huge disservice; these same parents aren't necessarily in a position to follow through on tuition payments, new cars, condos and unlimited use of credit cards due to the current economy. Their kids just don't have the tools to cope with that.
Tuesday, July 21, 2009
Japan's Stimulus
Back on the chain gang. Young Japanese, working on the farm for the first time.
Like the CCC of old, who built a lot of parks and roads in the US, unemployed youth are being trained to do farm work instead of whatever it was they thought they were going to do.
Like the CCC of old, who built a lot of parks and roads in the US, unemployed youth are being trained to do farm work instead of whatever it was they thought they were going to do.
Monday, July 20, 2009
Paying Down Credit Card Debt
Your Credit Card Company is here to help. Of course, with default rates escalating, it's in their best interest to help you. In fact, they're eager to do so because they have evaluated all your expenditures and calculated the likelihood that you'll default within six months.
Rep. Maloney is helping too.
Rep. Maloney is helping too.
Sunday, July 19, 2009
Income Based Repayment
I found the calculator, unfortunately at a time it was broken but am just not sure about this; currently I'm working for government and if I sign up for this, my Federally Subidized loan will have reduced payments and if I work for eligible entities and make payments for ten years while I'm in this program, the remainder of the debt will be forgiven.
Because my job is temporary, I don't know if this is worth it; I keep hearing rumors that a position will come open but it hasn't yet happened; I have less than four months to go, though it's possible my position would be extended. Because I have a few other questions, I'm not sure this is the way to go.
If you look at the fine print, while the cap is 15% of income, it's based on household income, not individual's income. The problem I have with that is that student debt is owned by the student, not the spouse; in effect, with the higher payments with joint income, the spouse is required to pay on this loan. That doesn't make sense to me. If I change to this, my payments go down a couple hundred bucks; if I were married to someone with a job so had higher household income, my payments would go up.
The interest rates are higher than on my current debt and people who graduated a few years after me have even lower rates so not necessarily a good idea. When employment is so uncertain, this might not be that good of a deal for those of us currently mired under in debt. Especially for those married folks who would have higher payments and higher interest.
Because my job is temporary, I don't know if this is worth it; I keep hearing rumors that a position will come open but it hasn't yet happened; I have less than four months to go, though it's possible my position would be extended. Because I have a few other questions, I'm not sure this is the way to go.
If you look at the fine print, while the cap is 15% of income, it's based on household income, not individual's income. The problem I have with that is that student debt is owned by the student, not the spouse; in effect, with the higher payments with joint income, the spouse is required to pay on this loan. That doesn't make sense to me. If I change to this, my payments go down a couple hundred bucks; if I were married to someone with a job so had higher household income, my payments would go up.
The interest rates are higher than on my current debt and people who graduated a few years after me have even lower rates so not necessarily a good idea. When employment is so uncertain, this might not be that good of a deal for those of us currently mired under in debt. Especially for those married folks who would have higher payments and higher interest.
Saturday, July 18, 2009
Giving Notice of Debt Collections
In New York City, they have a problem with debt collectors failing to notify the debtors of court order to seize their bank accounts.
That's horrible! I know that in my state, you must be notified and only the money in the account on the day of the order can be seized; if the amount seized was less than the full debt, another court order would be required to attach money put in the account later.
That's horrible! I know that in my state, you must be notified and only the money in the account on the day of the order can be seized; if the amount seized was less than the full debt, another court order would be required to attach money put in the account later.
Friday, July 17, 2009
Alice's Wonder Spray
A low-cost household cleaner.
~~~
~~~
ALICE'S Wonder Spray
This cleaner will kill 82 percent of molds and 99 percent of bacteria in a household, according to Ami Voeltz of Do It Green Minnesota. It costs only 14 cents, whereas a store-bought cleaner runs $4 to $20 a bottle. Making your own is kinder to the environment, and you save packaging by using your own reusable bottle.
• 1 c. white vinegar
• 2 tsp. borax
• 32 oz. (4 c.) hot water
• 20 drops essential oil, optional
•1/4 c. liquid dish soap
Directions
Combine vinegar and borax with 32 ounces hot water. Add an essential oil (if desired, for fragrance) and dish soap. Place in a spray bottle and be sure to label it.
~~~
I have all the ingredients but need to make sure I have a clean spray bottle. I wonder if the dollar store sells them?
Thursday, July 16, 2009
Wednesday, July 15, 2009
Changes to Student Lending
The private student loan industry is not happy with Obama's plan to change the game on them; they make crazy amounts of money, and if you recall, there was a big scandal a few years ago about gaming the system so that the loan officers would recommend loans with whatever company made it most beneficial to the school. I believe that was mostly for-profit institutions but could be wrong on that.
It used to be that people could get part time jobs and work their way through school. Tuition costs have escalated so that isn't possible. It's even worse once you get into advanced degrees.
Remind me now, why did we do this?
It used to be that people could get part time jobs and work their way through school. Tuition costs have escalated so that isn't possible. It's even worse once you get into advanced degrees.
Remind me now, why did we do this?
Tuesday, July 14, 2009
Credit Card Debt
While it's true that I have a balance on my credit card right now, based on date incurred, it isn't due yet;I haven't yet changed cycles so won't have to pay for awhile yet. I may have two additional purchases but am still being very careful with my card.
As changes imposed by Congress are coming up, Credit Card companies are doing what they can now to make more money. The mistake may have been leaving too big of a gap in passage and implementation of legislation. I don't expect changes in my terms; I have a fairly high interest rate and a low credit line with my credit union. Credit card defaults reached record highs in May and aren't going down any time soon.
I'm very happy not to have default as a possibility. At least not with my credit cards.
As changes imposed by Congress are coming up, Credit Card companies are doing what they can now to make more money. The mistake may have been leaving too big of a gap in passage and implementation of legislation. I don't expect changes in my terms; I have a fairly high interest rate and a low credit line with my credit union. Credit card defaults reached record highs in May and aren't going down any time soon.
I'm very happy not to have default as a possibility. At least not with my credit cards.
Monday, July 13, 2009
Jobs
Here's an article from April, talking about jobs. While Joe Biden says the administration "Misread" the economy, unemployment has gone up to 9.5%. Jobs aren't being lost in as great numbers, but not too many companies are hiring. More families are becoming homeless. The outlook is grim and people keep talking about the Depression.
I find that depressing; in my area, hourly rates for temporary attorneys have gone down. While there were a few corporations that paid $3 less an hour a few years ago, a couple of the agencies are going to the lower rates. Because I'm not actively seeking temporary attorney projects, I don't know if that's a reflection of firms lowering their rates generally or the agency thinking they'll have an edge.
I find that depressing; in my area, hourly rates for temporary attorneys have gone down. While there were a few corporations that paid $3 less an hour a few years ago, a couple of the agencies are going to the lower rates. Because I'm not actively seeking temporary attorney projects, I don't know if that's a reflection of firms lowering their rates generally or the agency thinking they'll have an edge.
Sunday, July 12, 2009
I'm Back!
For no apparent reason, except that I didn't post, I stopped posting. In April. I just couldn't muster up another post at that point but have returned, to hopefully continue daily.
Subscribe to:
Posts (Atom)